Tuesday, 2 July 2013

Tuesday, 2 July 2013

Tuesday, 2 July 2013

Mr Speaker took the Chair at 2 p.m.

Karakia.

Speaker’s Statements

Chamber—Commemorative Plaques

Mr SPEAKER: Honourable members, I draw your attention to the three new plaques installed at the back of the Chamber to commemorate military deployments and peacekeeping missions since the 1950s. The plaques will be unveiled during a ceremony scheduled for the dinner break this evening.

Hon GERRY BROWNLEE (Leader of the House): I seek the leave of the House for the Speaker to make a statement about the unveiling of the commemorative plaques when the House resumes after the dinner break this evening.

Mr SPEAKER: Is there any objection to that course of action being followed?

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I just want an indication as to whether or not such a statement would breach urgency.

Mr SPEAKER: Does the Minister wish to clarify? It will not if leave is sought. Leave is so sought. Is there any objection to that leave? There is none.

Points of Order

United Nations Security Council, New Zealand’s Candidature—Leave to Move Motion

H V ROSS ROBERTSON (Labour—Manukau East): I raise a point of order, Mr Speaker. I seek leave to move a non-debatable motion, No. 14, in my name. It is to do with New Zealand’s candidature for a non-permanent seat on the United Nations Security Council.

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

H V ROSS ROBERTSON (Labour—Manukau East): I raise a point of order, Mr Speaker. If I could just clear up something for the Government, this notice of motion has been cleared with the Government through John Hayes and also through Katrina Shanks.

Mr SPEAKER: I am afraid the leave has been put. It has been denied. I am sorry, but there is nothing else I can do to assist the member. What I suggest the member does is take an opportunity to talk to some other members of the House. There may be an opportunity to do so at the end of question time.

Questions for Oral Answer

Questions to Ministers

Government Communications Security Bureau—Dotcom Case and Appointment of Director

1. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Rt Hon Winston Peters: When he said on 25 September 2012 that he was not briefed on who would be involved in the Kim Dotcom raid, saying: “The activity in question did not require a ministerial warrant, and I am not briefed on operational matters on every operation it undertakes.”, was he telling the truth?

Rt Hon JOHN KEY: Yes.

Rt Hon Winston Peters: When he was asked on 25 September 2012 regarding when he was first briefed about the ministerial certificate that the Deputy Prime Minister signed on his behalf and he answered “Last night.”, was he telling the truth?

Rt Hon JOHN KEY: Yes.

Rt Hon Winston Peters: When he replied to a question on 26 September 2012 on when other agencies knew about the Government Communications Security Bureau’s involvement in the Kim Dotcom case: “I am simply not in a position to understand whether those organisations knew that or not. What I do know is that the first I was aware of it was on Monday, 17 September. Whether those other organisations had some information I am not sure.”, was he telling the truth?

Rt Hon JOHN KEY: Yes.

Rt Hon Winston Peters: On 8 September 2011 when he said in regard to the appointment of Mr Ian Fletcher as the director of the Government Communications Security Bureau: “Mr Fletcher has extensive policy and operational experience” and, further: “Mr Fletcher is a skilled leader who will make a valuable contribution to the bureau and wider New Zealand intelligence community.”, does he stand by those statements?

Rt Hon JOHN KEY: Yes.

Housing, Affordable—First-home Buyers and Capital Gains Tax

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

Rt Hon JOHN KEY (Prime Minister): Yes, particularly the one where I said: “Wow, it’s going to be an interesting 61 days before September.”

David Shearer: Does he stand by his statement that “this Government is successfully managing the economy to make sure that New Zealanders can afford to buy a home.”; if so, can he guarantee that any of the 39,000 homes to be built in Auckland will be affordable to first-home buyers?

Rt Hon JOHN KEY: In answer to the first part of the question, yes.

David Shearer: Can he guarantee that any of the 39,000 houses to be built in Auckland as part of that agreement will be affordable for first-home buyers?

Rt Hon JOHN KEY: I am not responsible for the actual building of the homes, but in answer to the question, yes, I am pretty sure they will be.

David Shearer: What measures is he prepared to take to ensure first-home buyers are preferred over speculators in the 39,000 new homes that are going to be built in Auckland?

Rt Hon JOHN KEY: The first important step is to make sure that 39,000 homes are built. Supply is one of the big issues, because if we look at Auckland in recent times, the number of new homes and dwellings that have been built has been roughly around 3,500. The second thing, of course, is to make sure that New Zealanders have jobs, and increasingly that is the case. The third thing is to make sure they have affordable interest rates. Well, we know interest rates are about half what they were under a Labour Government. And making sure that consents can actually happen quickly is why there will be reform of the Resource Management Act under a National-led Government. I think the chances of a first-home buyer getting a home under a National Government are a lot greater than they would be under a Labour Government.

David Shearer: Given his statement: “I don’t think it should be a tool that is used to write high LVR ratios for a bunch of rich people, and lock out a whole lot of first-home buyers.”, what action has he taken to ensure the Reserve Bank does not do exactly that?

Rt Hon JOHN KEY: Well, as the member will know, the Reserve Bank is going through a period of consultation at the moment, so the Government is talking to the Reserve Bank. I would point out, though, that the preference of the Government would be that the Reserve Bank actually does use the other tools that it has in the tool box—in particular, those macro-prudential tools that the member is talking about—as opposed to raising interest rates, which, of course, is the alternative. So the Government will be working—

Hon Members: Or a capital gains tax.

Rt Hon JOHN KEY: —alongside the Reserve Bank. Well, a capital gains tax actually will not work. It does not work anywhere in the world when it comes to that.

David Shearer: In light of his last answer, will he rewrite the agreement with the Reserve Bank to ensure that first-home buyers are preferred over speculators in the event that loan-to-value ratios are introduced?

Rt Hon JOHN KEY: It is a bit early to go through any sort of rewriting. The Reserve Bank is going through a consultation process. The Government will participate as part of that consultation process. But if the member seriously thinks that a capital gains tax is going to solve the problems, then he needs to think again. Show me any place in the world that has a capital gains tax and prove to me that it has not stopped a bubble. And, as the member wells knows, a capital gains tax is a realisation tax. All that people do is buy it and do not sell.

David Shearer: Given that every OECD country bar the Netherlands has a capital gains tax on property, why will he not introduce a capital gains tax here to dampen demand and give first-home buyers a first, decent crack?

Rt Hon JOHN KEY: Well, it actually would not dampen demand, and it has not dampened demand anywhere in the world where they have it. In fact, what happens with the OECD and the IMF when they recommend a capital gains tax—

Dr David Clark: Why is the OECD wrong? Why is the IMF wrong? Why is the Treasury wrong? Why is the Prime Minister the only person who believes this?

Rt Hon JOHN KEY: —is that they want a comprehensive capital gains tax. You see, the reason Mr Clark is trying to shout me out is a very good reason: he knows that, privately, within their caucus, those members are talking about putting a capital gains tax on the first home. That is what Labour is going to do, on the first home for New Zealanders.

Economy—Reports

3. PAUL GOLDSMITH (National) to the Minister of Finance: What reports has he received on business and economic conditions in New Zealand?

Hon BILL ENGLISH (Minister of Finance): Last week the ANZ issued its business outlook survey for June. After a bit of a flat patch, which the Leader of the Opposition acknowledged at the weekend, the survey confirmed business confidence continued to lift across all sectors. The majority of component indicators are also rising. A net 50 percent of businesses expect general business conditions to improve over the next year. There were strong readings in construction, in agriculture, and in manufacturing, which posted a significantly higher reading for the outlook than a year ago.

Paul Goldsmith: What did the latest business outlook survey report about businesses’ views about prospects for their own operations over the next year?

Hon BILL ENGLISH: The survey confirmed that firms remain upbeat about prospects for their own businesses as well as for the wider economy. A net 45 percent of businesses expect better times over the year ahead for themselves. Similar positive themes were apparent across the rest of the survey. For instance, profit expectations are the highest since April 2010. Among the best news in the survey is that a net 17 percent of firms expect to increase employment, the highest reading in 2 years. Investment intentions are at their highest level since late 2003. Even excluding the construction sector, optimism is widespread with a net 48 percent of firms outside of construction expecting better times ahead, so the positive views are not all driven by construction.

Paul Goldsmith: What reports has he received on the employment intentions of businesses in light of the general pick-up in business conditions?

Hon BILL ENGLISH: The Westpac McDermot Miller Employment Confidence Index was issued this week—it increased for the fourth quarter in a row. The index now stands at cautiously optimistic levels—the highest levels since September 2011. The improvement in employment confidence is not surprising, following employment statistics showing that the unemployment rate is falling. The report also noted that the official data can be volatile, and job opportunities and the net percentage of people reporting wage increases have picked up. However, these levels remain low by pre-recession standards, and there is much more work to do to see the better outlook for business confidence actually translated into more jobs and higher incomes.

Hon David Parker: Has he been advised that the most recent ANZ Job Ads data shows job advertisements declining a seasonally adjusted 3.8 percent in May, which according to the ANZ “would be consistent with a sharp recoil in the unemployment rate”; if he has not seen that, has he seen the statistics from Statistics New Zealand that show that 44 percent of all working New Zealanders got no wage increase in the last year?

Hon BILL ENGLISH: I have seen those statistics, which is why I made the point that the indicators are cautiously optimistic, and I would emphasise the caution. Employment indicators have over the last 2 or 3 years been more volatile than was historically the case. However, in the light of forecasts of 2 to 3 percent growth in the economy and rising business confidence, the outlook for employment continues to improve rather than deteriorate.

Paul Goldsmith: If the Minister had to name one sector that has contributed to the more positive outlook for business conditions and the economy, what would that sector be?

Hon BILL ENGLISH: There are any number of sectors I could point to that have contributed. Some of them are totally opposed by the Opposition, such as the oil and gas sector. But one that has had its attention is the manufacturing sector, so I thought I would pick that one. Since the beginning of 2009 the manufacturing sector as a whole has grown by 9.2 percent—

Hon Dr Nick Smith: How much?

Hon BILL ENGLISH: —9.2 percent—as measured by GDP by industry. However there was scope for it to grow because—

Andrew Little: How much did it fall in 2008-09?

Hon BILL ENGLISH: That is a very good point. In 2008, under the Labour Government, it shrank by 12 percent. [Interruption]

Mr SPEAKER: Order!

Government Communications Security Bureau, Review of Compliance—Investigation into Leak and Access to Electronic Records

4. Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: Does he stand by his answer to written question 07314 (2013) when he said: “The inquiry team, itself, did not seek permission from Peter Dunne before it obtained his email logs” and does he think it should have?

Rt Hon JOHN KEY (Prime Minister): In answer to the first part of the question, yes, and in answer to the second part, no.

Dr Russel Norman: Did the Henry inquiry get written consent from Peter Dunne before obtaining his parliamentary email logs; and, for the purposes of clarity, we are talking about his parliamentary email logs, not his ministerial email logs?

Rt Hon JOHN KEY: I would need to check, but to the best of my knowledge, no.

Dr Russel Norman: Did Mr Dunne agree to cooperate with the Henry inquiry by agreeing for it to access his parliamentary email logs, and what evidence does he have of that agreement?

Rt Hon JOHN KEY: What is quite clear is that Mr Dunne actually did not agree to comply with the inquiry, because on numerous occasions his office or he was directly asked to release his emails and he refused to do so. In terms of the wider issue of the metadata, what I can say is that the terms of reference for the inquiry, on 15 April, made it quite clear that they would be accessed and no Minister raised any concerns with me about this fact.

Dr Russel Norman: So with regard to the letter in April, in which the Prime Minister says some form of consent was obtained—it would appear from his answer—did Mr Dunne reply to the terms in this letter by agreeing to cooperate with the inquiry by allowing his parliamentary email logs to be accessed by the inquiry?

Rt Hon JOHN KEY: I do not have the details of whether or not Mr Dunne wrote back. The member could put that down in writing to my office and we would be able to give him an answer. But I go back to the original point, which is that the terms of reference were quite clear, and they were: “Stage 1 will include reviewing communications and copying equipment and records, log books and any other material considered relevant of the persons (and/or their offices) who had or were likely to have had access to the compliance review report,”. No Minister raised any concerns with me. In fact, when I announced the inquiry, and Dr Norman thought it was a member of National who might have leaked it, he was screaming for there to be an inquiry with access to all information and to get to the bottom of it.

Dr Russel Norman: So is the Prime Minister saying that the extent of the consent obtained by the Henry inquiry, acting under the authority of the Department of the Prime Minister and Cabinet, was simply that the terms of the inquiry were published, and there was no reply from Mr Dunne agreeing to those terms of inquiry, and there was no explicit consent from Mr Dunne for Mr Henry to access Mr Dunne’s parliamentary email log?

Rt Hon JOHN KEY: All of those can be checked in case there is other correspondence, but I think it was quite clear, if one looks at the terms of reference, what was going to be accessed. As I said, no Minister made it clear that they had concerns, but what is becoming increasingly clear, actually, is that if the Greens were ever in Government with Labour they are obviously concerned that they might do such dodgy things that they want nothing—

Mr SPEAKER: Order! That is an unnecessary part to the answer.

Dr Russel Norman: Given that Mr Dunne received the Kitteridge report as leader of the United Future party, not as a Minister; given that the emails concerned were parliamentary, not ministerial emails; and given that Mr Dunne never gave his consent for the Henry inquiry to access his parliamentary email account, under what authority did Mr Henry access Mr Dunne’s parliamentary email log?

Rt Hon JOHN KEY: In my view, the authority that was vested in him when I asked him to conduct the inquiry, when I made it quite clear that all communications, copying equipment, records, and log books would be looked at, that no Minister raised concerns, and when the member himself went on to say that not only was this a very serious matter but that if I did not know who had leaked the report, I should launch an inquiry and get to the bottom of it, and that, fundamentally, I should leave no stone unturned to get an answer.

Dr Russel Norman: So is the Prime Minister saying that the authority of the Department of Prime Minister and Cabinet, which was the sole authority that the Henry inquiry had, is sufficient authority to access the parliamentary server and parliamentary emails without the consent of the member of Parliament concerned?

Rt Hon JOHN KEY: Well, I think this is going to come as a shock to the member, but, for very good reasons, when a ministerial inquiry of this nature is established, then, actually, there is a responsibility to try to get to the bottom of that. And, in fact—as I have just tried to point out with what the member himself was saying when he thought it was a National member—he was quite happy for all information to be accessed. No Minister and no staff member at any time, from the moment we actually went out there and put out the terms of reference, ever came and complained or was upset by that.

Dr Russel Norman: So the Prime Minister is now giving himself and his staff the authority, or the Henry inquiry appointed by the Department of the Prime Minister and Cabinet—and only with the authority of the Department of the Prime Minister and Cabinet—the right to access the parliamentary emails and parliamentary email logs of members of Parliament, without first obtaining the consent of those members of Parliament?

Rt Hon JOHN KEY: No, the member is not correct. No emails have actually been looked at. What has been established is an inquiry, the terms of reference of which made it quite clear that communications, log books, records, and other material considered relevant would be reviewed. I think, as I have said earlier, the member would be—because he was, already—one of the first to be off out of the blocks claiming that this was a serious matter, that I needed to find out who leaked the report, and that I should “get to the bottom of it”, and all of those things, but, today, all of a sudden, he does not like it.

Grant Robertson: Did his office request the email metadata from the Parliamentary Service that identified there were 86 emails between Peter Dunne and a journalist, discussing the Kitteridge report?

Rt Hon JOHN KEY: No, that was done by Mr Henry, as he conducted the report.

Grant Robertson: Is it correct that his office became aware of 86 emails between Peter Dunne and a journalist discussing the Kitteridge report on 22 May, and why did he come to this House on 29 May and say he did not believe for a moment that any of his Ministers were involved in leaking the report?

Rt Hon JOHN KEY: In relation to the first bit, that is probably correct—that is probably the right date, although I do not have that with me; I would have to check it, and the member is often wrong. In relation to 29 May—because that is what I believed to be correct.

Transport Projects, Auckland—Network Development

5. SIMON O’CONNOR (National—Tāmaki) to the Minister of Transport: How will the Government progress the delivery of the next generation of transport projects for Auckland?

Hon GERRY BROWNLEE (Minister of Transport): On Friday the Prime Minister announced this Government’s commitment to begin work on a new generation of transport projects to futureproof the development of Auckland as our major urban centre. We have taken an approach that incorporates rail, roading, public transport, and some tunnelling solutions. Combined, they will greatly expand the capacity of Auckland transport to carry people and freight as the population expands. We look forward to other parties supporting these excellent initiatives.

Simon O’Connor: What are the Government’s priority projects to enhance and futureproof the Auckland transport network?

Hon GERRY BROWNLEE: The Government sees an opportunity to build on the work already started in Auckland by speeding up the Auckland Manukau Eastern Transport Initiative project and combining it with the East-West Link project. These projects will improve connections to the State highway network, and upgrade the links connecting to the eastern suburbs, East Tāmaki’s industrial area. The Government’s other key priorities are the second Waitematā Harbour crossing and the City Rail Link. Route protection on the City Rail Link began earlier this year, and we expect to have the preferred alignment for the Waitematā Harbour tunnel by the end of this year. The Government also intends to speed up three motorway projects that will, one, deliver a complete motorway to motorway link between the upper harbour highway and the Northern Motorway at Constellation Drive, upgrade the Greville Road Interchange and improve the Northern Busway; two, widen the southern motorway between Manukau and Papakura; and, three, reduce delays on the final stage of the State Highway 20A link to the airport from the north, by upgrading it to motorway standard. We look forward to the support of other parties, particularly New Zealand First, which seems over-eager to get these jobs done.

Simon O’Connor: What enhancements has this Government undertaken so far to develop the Auckland transport network?

Hon GERRY BROWNLEE: The member will be aware that this Government has taken a very proactive approach to developing a transport system in Auckland. We take a network-wide approach. We have supported the route protection for the City Rail Link, funded the purchase of new rolling stock for the train network, and fast tracked new major new roading projects such as the Victoria Park Tunnel. In 2017 we will see delivery of the Waterview Connection. That is a project that will be New Zealand’s largest roading project ever. Along with this, the State Highway 16 upgrade, which of course Phil Twyford opposed, will greatly enhance connections and improve movements in and around Auckland. The Government sees Auckland transport in a network sense, not in the narrow sense projected by other parties.

Question No. 4 to Minister

GRANT ROBERTSON (Deputy Leader—Labour): In light of the Prime Minister’s answers to the questions earlier—I know this is unusual—I seek leave to table written question No. 7472—

Mr SPEAKER: Order! No. [Interruption] Order! They are available to all members.

Point of Order—Accuracy of Quotations in Supplementary Questions

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I think we are getting to a point where the Prime Minister is regularly saying that he doubts members’ words and their figures. When someone is quoting from the Prime Minister I do not think they should be disparaged in that way. If it was wrong, it was his fault.

Rt Hon JOHN KEY (Prime Minister): I am more than happy for members, if they want me to, to go back and look at all the quotes that they have put to me and you will find that more often than not they are not accurately reported, they are quite incorrect, and I can only accept the member’s word if I think it is right. Often it is not right.

Mr SPEAKER: Order! I have heard quite enough. The reason members seek to table a document is to help further inform members. When it is an answer to a written question they are published and are available to all members and it is not necessary for them to be tabled.

Hon TREVOR MALLARD (Labour—Hutt South): I think you missed my point of order. Members are not meant to doubt members’ words in this House without some sort of evidence. The Prime Minister did that to Mr Robertson.

Mr SPEAKER: I invite the member to go back and have a look at the Hansard. The member quoted a specific date—from memory, 22 May—and the Prime Minister said he could not be absolutely sure, offhand, that it was 22 May. It was certainly not helpful for the Prime Minister to then add the point that the interjection from Grant Robertson has just made.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker.

Mr SPEAKER: If it is a fresh point of order, I am happy to hear it.

Hon TREVOR MALLARD: It is. I am going to agree with you but suggest that we look at that tape together. [Interruption]

Mr SPEAKER: Order! I can deal with this very quickly. [Interruption] Order! I can deal with this very quickly. The Hon Trevor Mallard is always welcome to come and see me after question time.

State-owned Assets, Sales—Purpose and Use of Proceeds

6. Hon DAVID PARKER (Labour) to the Minister of Finance: Are the proceeds from selling power companies and other assets being used to pay down debt, to build schools and hospitals, to fund irrigation projects, to rebuild Christchurch, or to fund Auckland transport projects?

Hon BILL ENGLISH (Minister of Finance): The Government has been clear that the proceeds of the share offer programme will be used to buy a variety of new public assets and will help the Government avoid having to borrow to procure those assets. The Future Investment Fund was outlined in Budget 2012 and further details were provided in Budget 2013. The purpose of that fund is to ensure complete transparency about the spending of the proceeds from asset sales. The Budget confirmed another $1.5 billion of these proceeds will be invested in schools, Christchurch hospitals, KiwiRail, and irrigation projects. However, the share offer proceeds are only a proportion of the Government’s overall new capital spending.

Hon David Parker: Does he agree with John Key that asset sales are necessary to “avoid a credit downgrade”, or does he agree with Tony Ryall that asset sales are necessary to pay down debt, or does he agree with another John Key that asset sales would be used to build new schools and hospitals, or does he agree with Nathan Guy that money would be used to subsidise irrigation on multimillion-dollar farms, or does he agree with Gerry Brownlee that asset sales money be used to rebuild Christchurch, or does he agree with yet another John Key that asset sales will fund the Auckland rail link?

Hon BILL ENGLISH: Yes.

Hon David Parker: How much funding has already been allocated for spending from asset sales via the Future Investment Fund, and how much has actually been raised for the Future Investment Fund from asset sales to date?

Hon BILL ENGLISH: The details of that are set out in the Budget, but, as the member will be aware, the Government’s programme hopes to realise between $5 billion and $7 billion, which is, actually, quite a lot of money. I would have to say that that $5 billion to $7 billion is much more useful as cash than it is as 49 percent shares in electricity companies owned by the Government.

Hon David Parker: I seek leave to table documents showing that $1.7 billion has so far been raised—

Mr SPEAKER: What is the source of the document?

Hon David Parker: There is a combination of documents: the National Party manifesto and Treasury documents.

Mr SPEAKER: No, both are freely available to members if they so want it. Has the member got a supplementary question?

Hon David Parker: Yes. Why does he continue to claim asset sales will reduce debt when Treasury—his own department—states that from 2017 the Crown is worse off to the tune of $50 million a year, growing to $100 million a year worse off because of asset sales thereafter?

Hon BILL ENGLISH: We do not claim it will reduce debt. What we have said it will mean is that the Crown does not have to go and borrow the money from overseas bankers. We have never understood why Labour and the Greens would rather borrow money from offshore bankers than get the money from New Zealanders who want to invest in a large New Zealand company.

Hon David Parker: Has he been advised that in January 2011 John Key said the Government needed to sell power companies and other State assets to avoid a credit downgrade; if so, is he aware that 8 months later New Zealand was downgraded by both Standard and Poor’s and Fitch Ratings?

Hon BILL ENGLISH: Yes, I am aware of those things. I am also aware that the sale of the assets means that 49 percent of the ownership has gone largely to New Zealanders but also to some offshore investors. In return for that, they have put cash in the Government’s bank account. I know it is profoundly irritating to the Labour Party, but we are able to use that cash to buy new public assets. The public is starting to understand that Labour’s arguments against the asset sales were poorly conceived and wrong.

Police—Use of Mobile Technology

7. IAN McKELVIE (National—Rangitīkei) to the Minister of Police: What updates has she received on how Police are using technology to prevent crime?

Hon ANNE TOLLEY (Minister of Police): Today police have completed their initial roll-out of 6,259 smartphones and 3,702 tablets to front-line police officers throughout the country. These smart devices allow officers to view offenders’ photographs, input and access information, access email and maps, dictate information, and take photos, all while out in the community. The access to this information means that police will spend less time in police stations accessing databases and doing paperwork, and much more time being visible out on the streets, tackling and preventing crime.

Ian McKelvie: How are smartphones and tablets being used to prevent crime?

Hon ANNE TOLLEY: Smartphones and tablets allow our front-line officers to have access to critical information when they need it, allowing them to make better-informed decisions. An 11-month trial last year found that the use of these smart devices allowed each front-line officer to spend an extra 30 minutes per shift out in their community. This translates to an additional 543,000 front-line police hours per year, or the equivalent of an extra 354 front-line staff out there focused on preventing crime. And this is all on top of the 600 extra police delivered by this Government and a 70 percent increase in foot patrols, which has seen the lowest crime rate in 30 years.

Kris Faafoi: What risks were highlighted by police for the use of mobile devices, especially in situations of major events where mobile coverage can be overloaded; and does she think it is appropriate that details like this were blacked out in an Official Information Act response, preventing the full picture of the roll-out from being presented?

Hon ANNE TOLLEY: Well, as I said, there was an 11-month trial of these devices run across four different districts of New Zealand last year, including the West Coast, which we all know has difficulty with some of its coverage for mobile devices. This has been identified and taken up with the suppliers. This very good contract, which has been negotiated by Deputy Commissioner Bush, is particularly focused on the service that was delivered, rather than on the capital expenditure. So those risks have been clearly identified and are being addressed by the suppliers of the equipment. And, in fact, if the member goes to the police website this afternoon, he will see that there is in fact a comment from a West Coast officer detailing when he was able to use his mobile device to locate and find two lost hunters.

Kris Faafoi: I seek leave to table the business case for police mobility, dated 14 November 2012, where the main risks and the key risks to this project were blacked out.

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

Inequality, Economic and Social—Income Gap

8. JACINDA ARDERN (Labour) to the Minister of Finance: Does he agree with The Economist that “inequality is one of the biggest social, economic and political challenges of our time”; if so, what is his Government doing to address the fact that New Zealand now has the widest income gap since detailed records began?

Hon BILL ENGLISH (Minister of Finance): No, I have not seen The Economist piece, so I cannot comment on that, but I can tell the member that her assertion about the situation in New Zealand is wrong. The widest gap between incomes in New Zealand actually occurred in the mid-2000s and peaked in 2004. Incomes were more unequal in the mid-2000s than they are today and more unequal than they were in the 1990s. That information is from the most recently available Ministry of Social Development incomes report, which also shows that income inequality in New Zealand is close to the OECD median, similar to that in Australia, Ireland, and Canada, and that redistribution through transfers, which we have maintained, like benefits, Working for Families, and accommodation subsidies, reduce inequality significantly.

Jacinda Ardern: Can he confirm that, despite his claim that New Zealanders are better off, in the last year 44 percent of people’s incomes did not increase but the cost of living continued to rise?

Hon BILL ENGLISH: Surveys of the labour force have always shown that in any given year a proportion of the workforce does not receive a wage increase. Given that we have been in a period of relatively high unemployment and emerging from a recession, it is not a surprise that a proportion of the workforce did not receive a pay increase. However, over time, disposable incomes in New Zealand have risen consistently each year, and that is unusual among developed countries.

Jacinda Ardern: Based on that answer, is the Minister saying that the 80 percent of Kiwis who when recently surveyed said that they were either no better off or worse off than they were 2 years ago are, in fact, wrong about their own circumstances?

Hon BILL ENGLISH: It is almost always the case that New Zealand households feel the pressure of constrained budgets. Whether they get pay rises or they do not, it never feels like a lot more than the expenditure. However, the facts are reasonably clear, and that is, on average, disposable incomes have risen moderately in the last 4 or 5 years. The factors behind that are pretty well understood—the lowest interest rates in 50 years and the highest purchasing power of the New Zealand dollar in 30 or 40 years. That has helped to sustain household incomes through a period when across most of the developed world household incomes have dropped.

Jacinda Ardern: Does he agree with the IMF that inequality limits growth by denying low-income families the money they need to invest in their children’s future and by allowing top-income earners to influence politicians to pass laws that favour their interests, not those of the wider economy?

Hon BILL ENGLISH: Yes, I do, and that is why the Opposition should be supporting two particular Government policies. The first is the implementation of national standards in our schools, to ensure that every young New Zealander gets the proper rewards of a public education system, and that is the social mobility that goes with educational achievement. The Labour Party should also be supporting our changes to ensure a greater supply of housing, particularly in the Auckland market, because planning rules there reinforce the wealth of those who already own expensive houses, and lock out those who want access to the housing market. I look forward to support from Labour on both of those policies, to prove its integrity on these issues.

Jacinda Ardern: How do national standards or Resource Management Act reforms help the 63-year-old woman who cleans the Prime Minister’s office and is still on just $14.60 an hour, after 19 years of cleaning at Parliament?

Hon BILL ENGLISH: In the ways that I outlined—to ensure that her children or grandchildren actually get the social mobility that a public education system promises them, and I hope that the Labour Party does not agree with the teacher unions that her grandchildren cannot learn because they are poor and schools cannot do anything about it. But I understand that that is the Labour Party position—that if you are the grandchild of the cleaner of the Prime Minister’s office, then you probably cannot achieve, because it is the family’s fault and not the schools’ fault.

Better Public Services Targets—Mobile Community Offices

9. PAUL FOSTER-BELL (National) to the Minister of Justice: How is the Government improving its justice and other services to local communities?

Hon JUDITH COLLINS (Minister of Justice): I have recently launched the Hutt Valley mobile community office. This is an initiative by 13 front-line service providers in the Hutt Valley area. Some months earlier the justice sector began a discussion about improving front-line community services. That discussion resulted in this specially fitted out mobile van, which will deliver a range of justice, health, and social services, including victim support, neighbourhood support, health immunisations, Plunket, Work and Income services, ACC services, budget advice, and probation services. The police, health, corrections, and local bodies will all be providing staff to the mobile office, which will operate throughout the Hutt Valley, including Wainuiōmata. They may even have some anger management courses available.

Paul Foster-Bell: How does the mobile community office contribute to the Government’s Better Public Services?

Hon JUDITH COLLINS: Yet another excellent question. The whole justice sector, including the police, corrections, and the courts, is focused on driving initiatives that make a real difference for New Zealanders. The Hutt Valley mobile community office is a first for New Zealand because it delivers a range of public services from different agencies through a single community office. The justice sector is delivering on its Better Public Services targets of reducing crime, reducing reoffending, and reducing youth crime. Bringing services into local neighbourhoods delivers on these promises to keep our community safe.

Christchurch City Council—Building Consent Accreditation

10. Hon LIANNE DALZIEL (Labour—Christchurch East) to the Minister for Canterbury Earthquake Recovery: When was he first made aware of the September IANZ report which warned the Christchurch City Council that “Continued accreditation beyond May 2013 will depend on a satisfactory outcome of that assessment” and was he advised by CERA or a Ministerial colleague?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): I was advised on 7 June that International Accreditation New Zealand had had concerns about the Christchurch City Council consenting process from as far back as 2007. At that point I decided that this situation was intolerable and we have been taking action since that time. We will have further discussions with the city council tomorrow, because this situation cannot continue.

Hon Lianne Dalziel: How did the Minister not know about the assessment report that was prepared by International Accreditation New Zealand back in September, given to the council in October, and copied to the Ministry of Business, Innovation and Employment the same month; were they not monitoring that process, and did the Minister not bring it to the Cabinet committee?

Hon GERRY BROWNLEE: I certainly knew that the Ministry of Business, Innovation and Employment had been working with the Christchurch City Council for a very long period of time, and I have on numerous occasions expressed to the city council concerns about its consenting processes. But I would note that the Christchurch City Council has at all times been responsible for its own consenting. There has been quite a bit of public concern about the degree to which the Government was getting involved in council activities; most of that was expressed by the member asking these questions.

Hon Lianne Dalziel: Is the Minister telling the House that he was not aware that the September International Accreditation New Zealand review identified building consents that did not meet the requirements of the code and/or the Act, these having the potential to cause damage to the property, other adjoining property, or injury to people; if so, how on earth is this the coordination role that we are expecting from the Minister for Canterbury Earthquake Recovery?

Hon GERRY BROWNLEE: If I were to know that level of detail from inside the council, then the allegations made by the member that we have been overly meddling in council affairs might be reasonable. The reality is that it is now exposed, we are very unhappy with it, and we are doing something about it.

Hon Lianne Dalziel: Is the Minister telling the House that there was nobody within the Canterbury Earthquake Recovery Authority tasked to go next door to the council building to see how it was getting on with accreditation, when it was given 17 corrective action requests in September, reported to it in October, and obviously was not met, because now we have the situation with the Christchurch City Council losing its accreditation next Monday?

Hon GERRY BROWNLEE: Firstly, I have already said that the Ministry of Business, Innovation and Employment was working with the council for quite a time on its issues. But I would also point out to the member that she wrote a letter to the Prime Minister on 4 December, lamenting, in her words, the loss of democracy in Christchurch, referring to the dictatorial and disempowering nature of the Canterbury Earthquake Recovery Authority’s involvement in Christchurch, and now she comes into the House and says “Although we were criticising the department for being involved, we actually think they should have been more involved.” Well, I am grateful to the member that we have at least one mayoral candidate in the Christchurch election who wants the Government to get more involved with the council. We will certainly take that invitation up should the unlikely event of her winning occur.

Hon Lianne Dalziel: I wish to table the three International Accreditation New Zealand reports—the one from 24-28 September 2012, the one from Monday, 27 May 2013, and the most recent one, which is dated 1 July 2013.

Mr SPEAKER: Leave is sought to table those three International Accreditation New Zealand reports. Is there any objection? There appears to be none. They can be tabled.

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

Hon GERRY BROWNLEE: I seek leave to table the open letter to the Prime Minister sent by the Hon Lianne Dalziel, quoting even the Chief Human Rights Commissioner, lamenting—

Mr SPEAKER: Leave is sought—[Interruption] That is enough information. Leave is sought to table the open letter. Is there any objection? There is none. It will also be tabled.

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

Television, Switch-over to Digital—Progress

11. JONATHAN YOUNG (National—New Plymouth) to the Minister of Broadcasting: What progress has been made on the regional rollout of the digital switchover for New Zealand television viewers?

Hon CRAIG FOSS (Minister of Broadcasting): At the end of April the remaining areas of the South Island had successfully made the switch to digital television. Recent research shows that at the end of April 99 percent of South Island homes had switched over to digital. I would like to congratulate the South Island households on a very smooth transition to digital TV. That is a significant milestone in a project, with fewer than 6 months to go until the remainder of New Zealand is entirely digital. We are looking to the North Island to make the move to digital TV just as successfully. Many households have gone digital and are enjoying more channels, more choice, and better-quality pictures and services. Going digital will free up the radio spectrum for the next generation of mobile phone and data services, benefiting New Zealand families and supporting our continued economic growth.

Jonathan Young: Which is the next region to go digital?

Hon CRAIG FOSS: The lower North Island, including Taranaki, and the East Coast will go digital on 29 September. We recently marked 100 days until these areas make the switch to go digital. To keep watching TV, households need to go digital by getting FreeView, Sky, Igloo, or Vodafone cable TV in Wellington. I must remind listeners that they do not need a TV to go digital. Practically any TV can go digital with the right equipment.

Hon Trevor Mallard: Of course you need a TV to go digital.

Hon CRAIG FOSS: People wanting to find out what they need to do to go digital—including members opposite—can go to www.goingdigital.co.nz or call 0800 838 800.

Māui’s Dolphin—Preservation

12. GARETH HUGHES (Green) to the Minister of Conservation: Will he implement the recommendations to protect Maui’s dolphins contained in the report of this year’s meeting of the International Whaling Commission Scientific Committee; if not, why not?

Hon Dr NICK SMITH (Minister of Conservation): The Government will certainly be giving careful consideration to the committee’s advice, released over the weekend, as part of our review of the threat management plan for Māui’s dolphin. In respect of the member’s “why”, I note four points about the committee’s report. Firstly, the committee commends the Government on its interim measures to protect Māui’s dolphin. Secondly, it acknowledges a mistake in last year’s report, which is not a criticism, but notes that it is not foolproof. Thirdly, it has dropped last year’s advice that the gill-net and trawl fisheries ban extend offshore to the 100-metre depth contour—a provision the member was insisting last month that we implement. And, fourthly, I note this is the committee’s recommendation to the International Whaling Commission, which has not yet considered or adopted the report.

Gareth Hughes: If so, then will he implement the International Whaling Commission recommendation for “full closure of any fisheries within the range of Māui’s dolphins that are known to pose a risk of bycatch”; if not, why not?

Hon Dr NICK SMITH: The key issue is about defining where that habitat is. At the moment we have an area of many thousands of square kilometres included in the trawl ban and also included in the set-net ban. The question is how wide out that should be. We do not want to be in the business of either banning trawling or set-netting where the Māui’s dolphin is not, but we are also determined to make sure that we do all practical steps to ensure the survival of this pretty special species.

Gareth Hughes: Given that both trawl nets and set nets can kill a Māui’s dolphin, why is the Minister currently allowing lethal trawling in areas where set nets are already prohibited to protect Māui’s dolphins?

Hon Dr NICK SMITH: Yes, by nature, fishing is somewhat lethal; it catches fish. The question is that—

Gareth Hughes: 55 left; 55 left.

Hon Dr NICK SMITH: Well, let us be clear about the numbers over the period of the last decade. Last year there was one dolphin caught. The Government immediately responded by banning set-netting in that area and extending the role of observers. Sometimes I wonder whether the only way to satisfy the Green Party would be to shut down the entire fishing industry.

Gareth Hughes: It is a clear question. Will the Minister prohibit trawling in areas where set nets are currently prohibited to protect the last 55 Māui’s dolphins?

Hon Dr NICK SMITH: Currently, we have prohibited set-net fishing in an area of 6,000 square kilometres—that is, 100 square kilometres per dolphin. In respect of the trawl ban, we have banned trawling in 1,700 square kilometres for 55 dolphins. So a huge area has been set aside for the very reason that we want to ensure the survival of this species.

Gareth Hughes: I raise a point of order, Mr Speaker. It was a simple question: will he ban trawling in the areas where he has banned—

Mr SPEAKER: Order! The Minister has very adequately addressed the question.

Hon Ruth Dyson: Will the Minister be promoting a precautionary approach in the areas where Māui’s dolphins have been found, rather than continuing the debate about whether they are found in those areas, given that there are currently only 55 adult Māui’s dolphins left, which is predicted to go to 10 within our lifetimes, or will he put his name alongside the extinction of that species?

Hon Dr NICK SMITH: It is very easy to say precautionary; the question is how precautionary, because if you want to be absolutely precautionary about protection of the Māui’s dolphin, then you would ban fishing around New Zealand’s entire coast. That would be impractical. What I do say to the member is that this Government will take all practical steps to ensure the survival of the Māui’s dolphin, but we are not going to ban fishing in areas where it is highly unlikely that there will be a Māui’s dolphin.

Questions to Members

Vote Social Development—2013-14 Estimates Review

1. JACINDA ARDERN (Labour) to the Chairperson of the Social Services Committee: On which date and time, if any, did he receive the Minister for Social Development’s written responses to the pre-hearing questions for the 2013/14 Estimates review for Vote Social Development?

PESETA SAM LOTU-IIGA (Chairperson of the Social Services Committee): Tēnā koe, Mr Speaker. As yet, the responses to pre-hearing questions for Vote Social Development have not been received by the Social Services Committee. However, I am advised by the clerk that the responses will be provided this afternoon.

Jacinda Ardern: On what date were the written responses to the pre-hearing questions for the 2013-14 estimates for Vote Social Development due, and what explanation has he received as chair of the select committee for the delay?

Peseta SAM LOTU-IIGA: The request was sent out on 30 May. The responses were expected by Tuesday, 4 June, given the hearing was scheduled for 5 June, and in the interim period there was Queen’s Birthday on the Monday. The ministry has advised the clerk that the Minister’s office has asked to inform that the answers will be provided in one lot in due course.

Vote Social Development—2013-14 Estimates Review

2. JACINDA ARDERN (Labour) to the Chairperson of the Social Services Committee: On what date did the Minister for Social Development appear before the committee to answer questions regarding the 2013/14 Estimates review for Vote Social Development?

PESETA SAM LOTU-IIGA (Chairperson of the Social Services Committee): The Minister appeared on 11 June 2013.

Jacinda Ardern: Given the significant delay between the Minister’s appearance and the completion of what were meant to be pre-hearing questions, has the chair approached the Minister or her staff about the potential for having her reappear before the committee, as Minister Parata offered to do?

Peseta SAM LOTU-IIGA: No, I have not, and that is not my role as chair of the committee.

Vote Education—2013-14 Estimates Review

3. Dr MEGAN WOODS (Labour—Wigram) to the Chairperson of the Education and Science Committee: Did he consider inviting the Minister to appear again to answer questions around responses to questions on the 2013/14 Estimates for Vote Education, if so, did he receive any advice about the Minister’s willingness to appear again?

Dr CAM CALDER (Chairperson of the Education and Science Committee): Kia ora te Kaihautū. No. The chairman is a servant of the committee. Following her lengthy appearance and her comprehensive answers to the wide variety of questions posed by members, the committee resolved not to ask her to return.

Dr Megan Woods: Has he received any briefings or advice as to whether the Minister of Education, her staff, or her officials contacted her Government colleagues on the committee to discuss her willingness—

Mr SPEAKER: Order!

Dr Megan Woods: —to return—

Mr SPEAKER: Order! That question is not in order.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Could you explain why the chairman of the committee receiving advice from the clerk of the committee is out of order to be the subject of questions in this House?

Mr SPEAKER: Because I did not understand the question to be from the clerk of the committee. I understood it to be whether the member Cam Calder had been talking to the Minister’s office and staff.

Chris Hipkins: It asked about advice.

Mr SPEAKER: Let us be clear. We will have the question read again, but it had better be in order this time.

Dr Megan Woods: OK. Has he received any briefings or advice as to whether the Minister of Education, her staff, or her officials contacted her Government colleagues on the committee to discuss her willingness or otherwise to return to the committee at a later date to answer questions around the responses to the 2013-14 estimates review for Vote Education questions received by the committee; if so, from whom and what was the nature of those briefings or advice?

Mr SPEAKER: Order! No. That question is not in order. The chairperson, as the chairperson of the committee, is not responsible for the actions of the Minister. The question must relate to a matter that the member, as the chair, is responsible for. I refer the member to Speakers’ ruling 175/7.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Repeatedly in this House Ministers are asked about reports they have received or advice they have received. This question was very clearly and very carefully drafted to include advice that that member, as chairman, could have received from the clerk of the committee. If the member receives advice from the clerk of the committee that is about a matter that the clerk should not be advising on, that does not exclude it from examination in this House.

Mr SPEAKER: I have ruled on the matter. If the member wants that particular question, the member should frame it in such way that it is a question to the Minister.

Urgent Debates Declined

Christchurch City Council—Building Consent Authority Accreditation

Mr SPEAKER: I have received a letter from the Hon Lianne Dalziel seeking to debate under Standing Order 386 a local authority being stripped of its building consent authority accreditation while a range of Government agencies failed to address the need to intervene prior to accreditation being revoked. An urgent debate is a way of holding the Government accountable for an action for which it is responsible. There must be distinct governmental responsibility for the particular case that is sought to be debated. There is no direct ministerial responsibility for the Christchurch City Council’s failure to respond adequately to the concerns of International Accreditation New Zealand. The responsibility for the fact that accreditation is to be revoked lies with the Christchurch City Council. I acknowledge that the Government has a general power to revoke accreditation, but that does not render this particular revocation a matter of direct Government responsibility. Further, the absence of action on the part of the Government has long been held not to be a particular case of recent occurrence that can be raised under Standing Order 386. The urgent debate procedure is a means of debating matters that have occurred. It is not a means of debating matters that might or might not occur as a result of meetings involving Government Ministers announced for later this week.

Bills

Food Bill

Referral to Primary Production Committee

Hon NIKKI KAYE (Minister for Food Safety): I move, That the order of the day for the second reading of the Food Bill be discharged, and that the bill be re-referred to the Primary Production Committee for consideration.

Motion agreed to.

Urgency

Urgency

Hon GERRY BROWNLEE (Leader of the House): I move, That urgency be accorded the second reading of the Companies and Limited Partnerships Amendment Bill, the first reading of the Royal Succession Bill and its referral to a select committee, the introduction and first reading of the Copyright (Parallel Importing of Films) Amendment Bill and its referral to a select committee, the first reading of the Local Government (Auckland Council) Amendment Bill (No 2), the second reading of the Building Amendment Bill (No 4), the second reading of the Families Commission Amendment Bill, the second reading of the Financial Reporting Bill, the second reading of the Bail Amendment Bill, the second reading of the Family Court Proceedings Reform Bill, the second reading and Committee stage of the Psychoactive Substances Bill, the Committee stage of the Legal Assistance Amendment Bill, the Committee stage of the State Sector and Public Finance Reform Bill, the Committee stage and third reading of the Plumbers, Gasfitters, and Drainlayers Amendment Bill and any bills into which it may be divided, the Committee stage of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters Bill, the Committee stage of the Airports (Cost Recovery for Processing of International Travellers) Bill, the Committee stage of the Administration of Community Sentences and Orders Bill, the Committee stage of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, and the Committee stage of the Medicines Amendment Bill. It is a long list that the Government has expressed a desire to make some progress with. Urgency is a very legitimate tool for a Government to be able to claim some extra time to get business on the Order Paper further progressed. I think it would probably come as some surprise to most New Zealanders that the House sits for only 31 weeks a year. It sits for only 3 days in each of those 31 weeks, and each of those days accumulates to around about 13 hours of legislation in any given week. That adds up to twelve 40-hour weeks a year to progress the Government’s programme. That is a very, very limited amount of time. Given that members of Parliament are elected primarily to be legislators, it is not surprising that there should be strong support for more time taken on the legislative process.

I asked the Business Committee to consider using the extended hours provision for some of these bills to make progress, but there is one party, New Zealand First, that does not accept that that Standing Order should exist. The Labour Party has a view that only bills it agrees with should be progressed during those sessions, or if there is a Wednesday morning session caused by the Government, not the Thursday evening session as the Government proposed. Therefore, I think the only option we have open to us to get on with the business of the Government is to in fact have this urgency at this time.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I would just like you to confirm that as well as having a lecture on the shortness of time, we have had a specific reason for the urgency for these bills.

Mr SPEAKER: I am satisfied with the reasons that have been given by the Hon Gerry Brownlee.

A party vote was called for on the question, That urgency be accorded.

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 55

New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1.

Motion agreed to.

Bills

Companies and Limited Partnerships Amendment Bill

Second Reading

Hon CRAIG FOSS (Minister of Commerce): I move, That the Companies and Limited Partnerships Amendment Bill be now read a second time. I would like to thank the Commerce Committee for its timely consideration of this bill. The committee considered 13 written submissions and heard from eight submitters. The bill brings together three strands of policy, along with many other recent reforms in the financial markets sphere, which aim to increase confidence and ensure that New Zealand remains a trusted place to do business. These are crucial objectives that we must promote in order to achieve long-term growth of our economy.

The bill proposes amendments to the Companies Act 1993 and the Limited Partnerships Act 2008, which will strengthen the rules applying to governance, registration, and reconstruction of companies and the registration of limited partnerships. New Zealand continues to be the No. 1 place for starting a business in the World Bank’s Doing Business index of the world economies. It is unfortunate that that same situation of trust, which supports the ease of doing business in New Zealand, is to a few undesirable individuals also, sadly, viewed as the opportunity to easily register and operate New Zealand companies under the cloak of secrecy.

The genesis of this bill was a response by my predecessor to the use of a New Zealand registered company to facilitate international arms trading. The ease of registration and the use of shell companies to undertake criminal activity is damaging to New Zealand’s international reputation. It is in the public’s interest to know who is behind any company or limited partnership they are dealing with. Likewise, enforcement agencies need effective tools to monitor the market. A key aim of the bill is to increase the transparency of companies and limited partnerships to an appropriate level, but to a level that will not impede the ease of doing business for the vast majority of companies that are legitimate.

I would like to comment on some of the most significant changes in the Commerce Committee’s report on these provisions. In relation to registration some submitters raised concerns that the measures in the bill as introduced, and to deal with shell companies, were not strong enough and were easily able to be circumvented. The Commerce Committee has now recommended that every company and limited partnership must have an identifiable individual who is the point of contact in New Zealand and that this person must be a director of that company or a director of a company in a country where New Zealand has reciprocal arrangements for the enforcement of criminal sanctions. I support this amendment.

Most companies already have a resident director. At most, 4,200 companies of the over 550,000 companies registered will need to adjust their circumstances, and there are a range of options available for them to do so. Those companies that this measure intends to target could have used the previous resident agent option as a loophole to prevent transparency and accountability. In addition, the Commerce Committee recommended requiring the date and place of birth of those running companies and limited partnerships, and the disclosure of a company’s ultimate holding company if it has one. Again, this will increase transparency, with minimal additional compliance costs for companies.

I am pleased to note that the committee has also brought forward the commencement date for the new registration requirements to 6 months after the Act receives the Royal assent rather than 12 months. This will put the provisions in place sooner but still with sufficient time for any affected companies and limited partnerships to adjust their circumstances as required.

I have taken on board the Commerce Committee’s support of a power for the Registrar of Companies to require information about the true owners and ultimate controllers of companies and limited partnerships. This is an important amendment that will further assist New Zealand in meeting the Financial Action Task Force recommendations about the transparency of legal persons.

I have introduced Supplementary Order Paper 249, which picks up this recommendation. The Supplementary Order Paper firstly sets out the purpose the registrar must have regard to before exercising either of two new powers for the purpose of the enforcement of specific laws relating to detection, investigation, and prosecution of serious crimes including money-laundering and the financing of terrorism.

The first power is that the registrar can ask about beneficial interests in shares of a company and the circumstances that give rise to those interests. This is called a control interest in the Supplementary Order Paper. Several new sections define the concept of a control interest and where it applies and whom it applies to. Secondly, the registrar has the power to require a director to disclose control information about a company. This includes directions or instructions given to the directors or the board by that person or any management or administrative powers delegated by that person.

Both of these powers are recursive, and the information provided can in turn be followed up the chain of control and ownership. The registrar can specify deadlines in the form of information and whether the information needs to be verified. Finally, the registrar can share this information with named Government agencies or their overseas counterparts. New offences for failing to comply are provided with a maximum fine of $10,000.

These changes will also be applied to limited partnerships with slight modifications to take into account the different structure of a limited partnership. Many submitters commented on the provisions in the bill that deal with breaches of two director’s duties. The Commerce Committee recommended only minor changes but also further consideration of the drafting to ensure the provisions would not have a chilling effect on legitimate business risk taking. Although the bill never intended to do this, I have taken the committee’s recommendations on board and officials have consulted further with submitters in an effort to tune the provisions so that they more clearly capture only behaviour that crosses the appropriate criminal threshold.

The Supplementary Order Paper that I have introduced contains these redrafted offences. The good-faith offence has been amended to clarify the behaviour intended to be caught and to set out the defences, as are available, for the existing civil offence. The offence of reckless trading has been removed as a stand-alone offence, and has been included as a new offence under section 380 of the Companies Act. An important feature of this new offence is that if affected creditors agree, companies that are close to insolvency can enter into arrangements with their creditors to save the company, without the directors facing the risk of prosecution. The new provisions will more directly capture blameworthy behaviour related explicitly to breaches of directors’ duties, and will more closely align New Zealand’s company law with other countries, including Australia.

The offences introduce a concept of serious loss. This is intended to encompass a loss that would be more than material to the creditors involved. Creating offences for serious breaches of directors’ duties will deter behaviour that is harmful to markets and will sharpen the focus of directors on decision making, compliance, and good governance. Competent directors will never need to worry about these provisions. This, in turn, will increase investor confidence in the financial markets, and strengthen New Zealand’s reputation for honesty, integrity, and transparency.

The last part of the select committee’s report deals with amalgamations and arrangements for code companies. The bill will require all arrangements and long-form amalgamations that affect the voting rights of a code company to follow a modified court process. This process will mean that code companies will need to seek greater participation from—and in particular—small minority shareholders, when considering undertaking these transactions.

This new process is internationally consistent, and will promote increased confidence by investors in capital markets. The Takeovers Panel will be empowered to regulate these transactions by way of issuing a “no objection” statement for the consideration of the court if it is of the opinion that the arrangements will not adversely affect shareholders. The select committee has also taken the opportunity to align the definition of a “director” across the Takeovers Act and the Takeovers Code, to include reference to limited partnerships as well as companies. I support these amendments. The Supplementary Order Paper that I have introduced makes further minor amendments to these reconstruction provisions.

It is important that the governance of companies, the registration of companies and limited partnerships, and the reconstruction of code companies work together in a consistent manner to promote New Zealand and to ensure that New Zealand remains a trusted place to do business. I am confident that these reforms will not only do this but also impose the necessary costs on legitimate businesses. I commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): The Companies and Limited Partnerships Amendment Bill is the daily bread of the House. It is the kind of work that needs to be done and needs to be progressed to ensure that the systems we have in place in this country are fair and are seen to be fair. It goes along with the good governance principles of transparency, of information, of lines of accountability, and of clear sanctions and rewards—those things that make for good management practices.

There is no doubt that we need this kind of legislation. New Zealand’s reputation has been at risk recently, with increasing media attention around the issue of potential tax havens, and around the way in which some of our company structures have been used—often by malicious overseas players—to hide things that should not be hidden. So at the heart of this bill is a desire, I believe, to progress issues of honesty, transparency, and fairness. From my perspective, I would say that these are important things for New Zealand’s international reputation—the fact that we get these things right matters when New Zealand turns up at the international trade table and wants to argue that it should have a place there. New Zealand’s reputation as a good and proper place to do business matters in that international context.

So what does this bill do? Well, in terms of transparency, it gives new powers to the Registrar of Companies to investigate and deal with non-compliance with the Companies Act. We ask ourselves: what is the alternative? The alternative is that the Registrar of Companies does not have powers to investigate and deal with non-compliance with the Companies Act—it does not make sense, so of course we want to support this kind of measure. This measure includes the power to flag companies on the register that are under investigation currently, thereby signalling the registrar’s intention and signalling that he or she has suspicions. We would hope that that power is used appropriately, and we have got no reason to suspect, at this stage, that it might not be.

In terms of consequences for breaches, this legislation allows the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act. There can be no disagreement with that across the House, I do not think. Companies that fail to comply with the Act, clearly, ought to be facing consequences. The registrar will also be able to ban the directors of such companies from taking part in the management of any company for up to 5 years.

In order to avoid other unintended consequences—when one tightens up the law in one area, suddenly an opportunity for someone who is mischievous might appear in another—the bill will make similar changes to the Limited Partnerships Act, so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead. Further, in terms of transparency, and in the interests of better information, the bill will better align the Companies Act with the Takeovers Code to ensure shareholders understand the effects that changes in company control will have on the value of their shares. Again, there is little to disagree with here.

Then there is the further consequence of introducing criminal offences for directors who commit a serious breach of their duties to act in good faith and in the best interests of the company. I expect that there will be nobody in the House who will want to disagree with that, either. When we see criminal offences by directors who commit serious breaches—they have a duty to act in good faith—nobody would want to see them getting away with that. Directors who commit offences of a serious nature will be liable for imprisonment of up to 5 years or for fines of up to $200,000. These consequences, this transparency, and this provision for avoiding further unintended consequences is all something that the Labour Party wants to support, so we will be supporting this bill from here, as it stands.

As Mr Foss has said, New Zealand has always had a reputation, an international reputation, as a trusted place to do business. As I said in my opening statement, this is something we need to defend heartily. The World Bank and the International Finance Corporation have ranked New Zealand the easiest of 183 countries in which to start a business. We in the Labour Party have concerns about this reputation being undermined. We note from the recent International Institute for Management Development competitiveness survey that New Zealand went down from 15th place in 2009 to 24th place today. So it appears that New Zealand’s competitiveness in the business sphere is dropping, and, interestingly—and in line with the policies put forward by this side of the House—research and development was recognised as a driver of that poorer ranking. That is a concern.

There are things in the business environment that severely concern the Labour Party. We on this side of the House are concerned about small business, and about the fact that it is getting harder and harder for those hard-working New Zealanders to get ahead. They put everything into a business, often mortgaging against their house in order to start a new business and introduce their new idea. They take risks themselves and this Government is introducing additional compliance costs. It is making New Zealand a less competitive place to do business, relatively. Recently, it put on to businesses the cost of retrieving child support for overdue payments. It has put on additional compliance in respect of collecting information, and in respect of cleaners and paper boys in the Budget before last.

This is a Government that does not seem to be terribly interested in small business generally, but at least in this piece of legislation it is trying to preserve our reputation as a trusted place to do business, and that is why we on this side of the House will be supporting it. This international—and local—media attention so far has focused on overseas interests exploiting New Zealand’s incorporation process by using New Zealand - registered shell companies to undertake illegal activities. The Government has been aware of this issue for some time—how could it not be; it has been in the media—and this bill, it seems, is finally part of addressing this issue.

It is unfortunate, I have to say, that the Minister of Commerce has been dragging his feet on this matter. Day by day our reputation is in jeopardy as further incidents come to light over time. Former Minister of Commerce Simon Power was, in fact, the one who originally introduced this bill to Parliament, and yet it has languished at the bottom of the Order Paper for its first reading for some time and only now is it proceeding through its second reading and through the House. So our concern from this side of the House is for the time it is taking for this bill to pass through the House.

We will also know, if I can take a minute, in light of the fact that it is Māori Language Week, to note te ōhanga—excuse my Te Reo; I am going to start that again—te ōhanga ripoata koretake rawa i ngā tau e 50 [the worst economic record in 50 years]. This Government has the worst economic record of any Government in the last 50 years, and so there are wider issues that we think need to be addressed. We think that issues such as pro-growth tax policy ought to be brought in. We think that universal savings ought to be brought in. We think that affordable housing is a necessity. John Key says that Kiwis are not paying too much for their power. He says that the power companies are on the right side of this argument.

The ASSISTANT SPEAKER (Lindsay Tisch): Order! This is a second reading speech.

Dr DAVID CLARK: These wider issues do affect New Zealand’s reputation as a place to do business, and that cuts to the heart of this bill. We know that these policies, and particularly the power policy, if I may, do introduce an element of competitiveness into business—a 5 to 7 percent reduction in costs for small business will make a serious impact on small business in New Zealand, and that is Labour policy. Labour wishes to bring in New Zealand Power, which will reduce the cost for small business.

Jonathan Young: I raise a point of order, Mr Speaker. The speaker’s time must be up. [Interruption] Stick to the context.

The ASSISTANT SPEAKER (Lindsay Tisch): That is not a point of order. I have indicated to the member that we are on a second reading speech and this is about a report back from a select committee. It is not about introducing new material. Dr David Clark, 50 seconds remaining.

Dr DAVID CLARK: Thank you, Mr Speaker, and I do need all of those 50 seconds, because the issue of New Zealand’s reputation is what I am getting to—its reputation as a place to do business—and I am sure that speaker will get his chance to put the case for New Zealand having a good reputation. We will not argue that that is not important, but he will struggle to defend the economic record of his Government, which genuinely is the worst of any Government in the last 50 years in this country.

So despite the damage being done—the Minister of Commerce has dragged his feet—we in the Labour Party are glad to see this bill going through the House. We will support this bill, because we value New Zealand’s reputation as a place to do business, as a good place to do business, as a fair and trusted place to do business. It is important for our country going forward, and so we thank the Minister for the efforts he is now making to progress this through the House.

JONATHAN YOUNG (National—New Plymouth): Well, just in reply to the previous speaker, David Clark, a good 48 to 50 percent of New Zealanders think that the economic record of this Government is pretty good.

Dr David Clark: I raise a point of order, Mr Speaker. Surely the member’s time is nearly up.

The ASSISTANT SPEAKER (Lindsay Tisch): That is a debatable point, but I am going to give it to Jonathan Young.

JONATHAN YOUNG: Did you say that was a debatable point? Coming to the Companies and Limited Partnerships Amendment Bill, it is a bill that went through a very thorough select committee process and received a tremendous amount of comment and interaction, particularly from directors in the country. This bill will strengthen the rules that apply to the governance, registration, and reconstruction of companies, and it also adds criminalisation of serious breaches of certain directors’ duties. We know that getting the balance right is very important, because this country does have a good reputation of ease of doing business, but sometimes that ease of doing business lets people through who do dishonest business and can tarnish this country’s reputation. So getting the balance right is important.

Many submitters raised concerns about the bill having a chilling effect on legitimate business risk-taking and this was something that the Commerce Committee members from both sides of the House paid particular attention to. One thing that we do want to see is the entrepreneurial aspects of business encouraged. At the same time, we want to not see lawbreaking take place, which puts New Zealand incomes in unnecessary jeopardy and also we want to see our country safe from the antagonism and attacks from overseas that happen on occasion.

We know that in Mr Brian Gaynor’s New Zealand Herald column on anti - money-laundering, he said: “In 2010 the Financial Intelligence Unit of the NZ Police estimated that approximately $1.5 billion was laundered through the country every year.” That is a huge amount; it shocked me to read of that amount. So we know that definitely we need to see some strengthening and some protections around that sort of behaviour. The column continues: “For example, Geoffrey Taylor, a Queensland resident, registered over 1,000 New Zealand shell companies, many through Vanuatu. In December 2009 one of these companies, SP Trading, leased a plane that was caught transporting 35 tonnes of weapons and explosives from North Korea to Iran.” And that was based out of here in New Zealand. We would be horrified to think that this sort of activity takes place through the shell companies set up here in this country. So what this bill is to do is clamp down on that and bring certain controls in order to protect New Zealand.

As I said, it is important to find the appropriate balance. One of the areas that the committee worked on was this area of registration, because this bill brings together three strands of policy to strengthen the rules applying to registration as well as governance in the reconstruction of companies. So, when it comes to registration, we require a director who lives in New Zealand to ensure that they are identifiable, with a substantive connection with the company, who can be questioned about the activities of the company and who can in certain circumstances be held to account. The option of appointing an agent who lives in New Zealand was intended to provide an alternative with lower compliance costs for overseas-based New Zealand companies, but we considered that such agents would be of limited help to enforcement agencies. And in many cases, they would not be accountable for the actions of the company. The Commerce Committee recommended that the requirements for an agent living in New Zealand be omitted and that a New Zealand - based director or a director who lives in Australia be the requirement, as it was considered that resident agents risk becoming also criminally liable for actions of the company or its directors over which the agent had little or no control. So working through some of these issues and trying to find the place where these pieces of legislation would work was something that the committee did.

There are 4,200 registered companies out of a large total of over half a million companies that do not already have a compliant director. Of these, 1,200 were deemed high-risk by the registrar. So this bill will come into enactment, and what we will see is that there will be a small group of high-risk companies that the registrar—who I understand is already working in these particular areas—will bring compliance to, and that will be a good thing, as we see this bill come to pass and bring some certainty and some protection to our companies, and also bring accountability to directors. Thank you.

Hon DAVID CUNLIFFE (Labour—New Lynn): Here we are in the dead of the afternoon with the Leader of the House having thrown the House into urgency to debate the Companies and Limited Partnerships Amendment Bill. Somehow it seems to me emblematic of the sense of drift and listlessness of the Government that this is the best that it could throw up in order to justify this period of urgency.

There is nothing wrong with this bill. Labour supports the bill. It will provide limited steps forward to help improve the transparency and the integrity of commercial markets, and we think that that is a good thing. I think all New Zealanders would think that that is a good thing, and we commend the Government for doing that. But here we are, throwing the House into urgency to debate a bill that is relatively routine and on which the Commerce Committee has done a relatively good job to tidy up at the edges.

So what does this bill do? This bill gives new powers to the Registrar of Companies to investigate and deal with non-compliance under the Companies Act. It includes the power to flag companies on the register that are under investigation. It allows the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act. It gives the registrar the power to ban directors of such companies from taking part in the management of any company for up to 5 years. It makes changes that are of a similar nature to the Limited Partnerships Act, so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead, which is very important because limited partnerships were exceptional structures that were allowed to deal particularly with professional services firms’ challenges, and were not seen as an alternative to the regular company structure.

The bill better aligns the Companies Act and the Takeovers Code to ensure shareholders understand the effects that changes in company control will have on the value of their shares—Allied Nationwide Finance springs to mind—and, quite important, it introduces criminal offences for directors who commit a serious breach of their duties to act in good faith and in the best interests of the company, and more on the detail in a minute. But I think it is very important for us to reflect that New Zealand does already have an international reputation as a trusted place to do business. I think we all celebrate that. We are all proud of the rule of law.

The World Bank and the International Finance Corporation have ranked New Zealand No. 1 as the easiest place in the world to do business. That is both a good thing and a challenging thought. The good thing is, of course, we want business to be able to flourish, because it provides jobs and it provides incomes. It is a bad thing in the sense that if we are already No. 1 for the ease of doing business, then what is holding the New Zealand economy back—because it cannot get out of first gear at the moment—cannot be the fact that we are over-regulated, because it is already the easiest place in the world to do business. It cannot be a deregulation problem. I see the Minister of Conservation over there. He wants to gut the Department of Conservation because it gets in the way of commerce. Cutting the budget, cutting the number of rangers—anybody would think we were No. 183 out of 183 countries in terms of the ease of doing business, not No. 1.

So if this is already the easiest place in the world to get a business started, why is the Government on a further deregulation crusade, laying waste to the Resource Management Act, trampling over local democracy with the Housing Accords and Special Housing Areas Bill, making it illegal to protest against oil companies—because you could go to jail for exercising your democratic rights—and ensuring that if there are any little legal snags in the way of the surveillance agencies undertaking their work, no problem, we will just change the law to make it all legal? The Labour Opposition, although it supports the bill, is concerned at some of the subtext that lies around this. We are already an easy place in the world to do business. This bill actually strengthens some of the requirements on companies in terms of integrity and transparency, and strengthens the duties of directors, and we think that that is appropriate. We think that it is a good thing. We commend the Government for doing that.

Just turning for a second to the arrangements, amalgamations, and compromises of code companies, under the current law companies that are subject to the Takeovers Code can use the provisions of the Companies Act 1993 relating to schemes of arrangements, amalgamations, and compromises to effect mergers with or acquisitions of other companies. Those provisions are being utilised by code companies to avoid the provisions of the Takeovers Code, which protects shareholders in respect of transactions that result in a change of control to those companies. The bill provides a number of changes to ensure that shareholders of code companies will not be disadvantaged by changes to the company being effected under the Companies Act.

I wish to turn briefly to the criminalisation of breaches of certain directors’ duties. The recent finance company collapses—and members opposite would not have any firsthand knowledge of that at all, would they? None at all, no, none at all, and the Minister would not have any firsthand knowledge of those issues, I am sure. The recent finance company collapses in New Zealand have highlighted weaknesses in corporate governance and investor protection under New Zealand’s corporate law, and the names are already legion: Bridgecorp, Hanover Finance, and the granddaddy of them all, South Canterbury Finance.

The bill, in new section 138A in clause 4, provides for offences in relation to serious breaches of the following duties: “section 131 (duty of directors to act in good faith and in best interests of company)”; and, in relation to section 135, the duty not to agree to or cause or allow company business to be carried out in a manner that is likely to create a substantial risk of serious loss to the company’s creditors. Well, thank goodness! Here we are in 2013 passing a law that actually should have been there a little earlier, because we all know that there is a generation of new poor: the senior poor. They are New Zealanders who worked hard, played by the rules, saved hard, built up a bit of a nest egg, put it in finance companies because they were told by some celebrity that it was as safe as houses with a return just a little better than a bank, and then in hindsight we found out on their behalf that actually the business models that a lot of those finance companies were based on could never have worked. They were a one-way bet. They were securitised on equities and other leveraged instruments, so that if markets kept rising, they were fine, but the moment that the underlying investment turned southwards, the business model was—to use a technical financial term—stuffed, and the investors were out of pocket. The directors often knowingly carried on with business models that could not have succeeded, and, in some cases that are a matter of court record now, knowingly misled investors to disguise those problems until it was too late.

I do want to mention South Canterbury Finance. I grew up in South Canterbury. It has always been kind of close to my heart. That was the biggest disaster on this Government’s watch—$1.7 billion of gross cost, and $1.2 billion of net cost. That is about as much as the Government is flogging off in Mighty River Power. That is the power company, for those watching, whose shares are now worth less than they were when the Government privatised them, so that those investors have taken a minor bath as well.

What is really tragic for those viewing here is that, of course, the taxpayer could have been indemnified to a maximum loss of $500 million instead of the $1.2 billion it actually cost them, because the Hon Craig Foss’ predecessor, Mr Power, and Mr English and Mr Key decided, in their wisdom, to veto the recapitalisation deal that South Canterbury Finance could have effected and—

Hon Dr Nick Smith: Nobody believes this rubbish.

Hon DAVID CUNLIFFE: Oh, yes, they do. It is all well documented. You talk to the brokers—

Hon Dr Nick Smith: No—trying to rewrite history.

Hon DAVID CUNLIFFE: No, no. If you go and talk to the brokers, you will understand the full extent of the Government’s failure. That failure has cost the taxpayer $700 million—give or take $10 million, or $20 million, perhaps—because the Government allowed this finance company to trade on, and even renewed its licence. It issued further prospectuses and it took more investors’ money while the Government watched it and waved it through.

Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. He is clearly going outside the scope of this bill and talking about another bill that had been passed—

The ASSISTANT SPEAKER (Lindsay Tisch): I am listening very carefully, and his time is nearly up.

Hon DAVID CUNLIFFE: Sad but true, time is nearly up. So let me conclude by saying thus: South Canterbury Finance could have been saved with a recapitalisation deal that limited the taxpayer’s exposure; it was not. Instead, the Crown wore the full cost. The strengthened disciplines in this bill would have addressed some of the issues that we saw writ large in the South Canterbury Finance case. This is a useful little bill. It is a shame that the Government has thrown the House into urgency to get it through. The Commerce Committee has done a good job on it. We support the contents of the bill. We need to ensure that New Zealand’s reputation—

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

Peseta Sam Lotu-Iiga: Sorry, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): Is this a point of order?

Peseta Sam Lotu-Iiga: No, I am taking a call.

The ASSISTANT SPEAKER (Lindsay Tisch): No, I have called Julie Anne Genter.

JULIE ANNE GENTER (Green): E te Kaihautū o te Whare, tēnā koe. E ngā mana, e ngā reo, e ngā mātāwaka e rarau mai nei, tēnā koutou katoa. Tēnā koe, Mr Assistant Speaker.

[Mr Assistant Speaker of the House, greetings to you. To the authorities, languages, and ethnicities settled here, salutations to you all. Thank you, Mr Assistant Speaker.]

I rise to speak on behalf of the Green Party on the second reading of the Companies and Limited Partnerships Amendment Bill. I would like to start by discussing some of the broader issues of companies and company regulation in our current, globalised economy, and then I will speak to the specifics in the bill before us.

The Green Party is very interested in tools that we can use to get a clean, green economy that works for all New Zealanders, not just the few, not just the mates of the National Government. Our global reputation as a clean, green, and fair place to live and do business is essential to this end, and the Green Party believes that it is an important responsibility of government to make sure that the reality backs up and enhances our global reputation. This John Key - led National Government is doing just about everything it can to ensure that New Zealand does not live up to its global image as a clean, green, and fair place to do business, and the Green Party—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I must remind the member that when we are on a second reading, speeches must be related to the bill. You can comment on things related to the bill, but you cannot make the substantive matter of your speech other than what is in the second reading. There are a number of Speakers’ rulings. I refer you to Speakers’ ruling 110/6 and Speaker’s ruling 112/2. I ask the member to come back to the contents of the bill.

JULIE ANNE GENTER: Thank you, Mr Assistant Speaker. I was getting to the contents of the bill, which ultimately is a consequence of this Government’s failure to manage the economy well. This Government knew about the problems related to company registrations in New Zealand and the large number of New Zealand - registered companies that were engaged in international, illegal, fraudulent activity—money-laundering—3 years ago, and it has taken 3 years for the second reading of this bill to come before the House. It took over 2 years for this bill to get its first reading before the House. I think that it is an example of the Government’s failure to manage the economy well and its failure to put in place important regulatory frameworks that would protect those New Zealand businesses that want to do the right thing.

Most business people and most citizens are honest and want to do the right thing, but those who want to make an honest living and want to do business without ripping off people or the natural environment are disadvantaged by a lack of Government regulation that levels the playing field. They are disadvantaged in a number of ways. First of all, they can be easily undercut by competitors that cut costs by cutting corners; or, in the case of the problem addressed by this bill, New Zealand businesses that trade overseas have had a layer of compliance cost and regulation foisted on to them by this Government’s failure to act on fraudulent and irresponsible companies for 3 years. This amendment bill finally addresses a serious problem that the Government has been extremely slow to act on, which is the large number of New Zealand - registered companies that have been engaged in large-scale tax-laundering, money-laundering, and fraud internationally.

In 2011 and again in 2012 my colleague Dr Russel Norman asked questions and called media attention precisely on this issue, because the Government was taking so long to act. It had not prioritised the issue. It was back in July 2010 that Simon Power, a former Minister of Commerce, got Cabinet agreement to tighten up the rules and deal with the serious problem of money-laundering. We are now in July 2013. Why did this bill, which is not even as tough as international best practice would have it be, take 3 years to get to its second reading before the House?

We are happy to see the minor moves towards tightening things up that are proposed in this bill. The criminalisation of serious breaches of certain directors’ duties is well overdue. We would like to see the same sort of tough-on-criminals stance that this Government likes to talk about all the time applied to white-collar criminals and company directors who have not been living up to their responsibilities.

The requirement to have a director who lives in New Zealand has actually been watered down in the bill as it has come back to the House from the Commerce Committee. We did think that it was probably appropriate to at least have an agent who was in New Zealand, to ensure that we had some identifiable individual who had some sort of substantive connection with the company, who could be questioned about the activities of the company, and who could, in certain circumstances, be held to account. Unfortunately, that requirement was dropped during the select committee process.

There is a question about whether or not the Government is actually living up to its responsibility to put in place the boundaries that will enable honest, clean, green businesses to thrive here in New Zealand when it is listening primarily to company directors. Is this Government sufficiently independent to put in place a serious regulatory regime that is going to enable those businesses that are doing the right thing to continue doing the right thing?

Today in the House we have heard a lot from the Government, from the Minister, about the need for balance. We hear the word “balance” used quite a lot, but we do not see a lot of actual balance. We see a lot of preferential treatment for some big companies. Actually, it strikes me that the National Government is kind of like a parent who gives in to every demand of an already spoilt child when it talks about being pro-business. Instead of putting in place the boundaries that will enable companies to thrive and enable new companies to be formed, and instead of creating a truly competitive environment, it tends to privilege the existing big businesses like Skycity, like its mates.

So it is not actually a pro-business environment that is being facilitated by this bill; it is a kind of knee-jerk, anti-regulation approach, which does not recognise the important role, in the wake of the global financial crisis, that the Government has to play in ensuring that consumers and investors have the appropriate information to make decisions. As the global financial crisis proved, the neo-liberal consensus of the 1980s and 1990s—that the least-regulated economy was the one that functioned best—is not the case.

As our economy becomes ever more complicated, complex, and globalised, that asymmetry of information makes it easier for companies to make a quick buck and for international organisations with nefarious activities to set up shop and get some sort of registration in New Zealand, which they can then use to ends that actually undermine the reputation of New Zealand business internationally.

The Green Party will be supporting this bill, even though we regret that it does not require registered companies to obtain Inland Revenue Department numbers, it does not address the problems around nominee directors, it has dropped the requirement for an appointed agent to be resident in New Zealand, and, ultimately, it does not go very far. We are quite happy to support it because finally, after 3 years, we are seeing some action on this important problem, which is a threat to our reputation globally. Thank you.

Peseta SAM LOTU-IIGA (National—Maungakiekie): It is a pleasure to speak on the second reading of the Companies and Limited Partnerships Amendment Bill. I am glad that the last speaker, Julie Anne Genter, has stated that the Green Party is prepared to support this bill, because the Green Party has become known in this country for opposing anything related to growth, to jobs, to opportunities, and to promoting the prosperity of our families and our communities. So thank you to the Green Party for once in this House during this term supporting a bill that is promoting jobs and opportunities.

What does this bill do? Well, as all the other speakers have stated, it requires each company registered in New Zealand to have an identifiable individual who is the point of contact in New Zealand. Transparency and accountability have been the catchcry of this Government, and this bill supports the Business Growth Agenda that we have put on the table as part of our long-term plan to bring this country out of recession and put it forward in terms of prosperity and in terms of our desire to live the Kiwi life—the good Kiwi life—that we have become accustomed to. This bill also gives new powers to the Registrar of Companies to investigate and deal with non-compliance under the Companies Act. It will allow the removal of companies from the register if they provide inaccurate information or persistently fail to comply with this legislation. It really is about providing to the registrar tools to get after those companies that do not comply with the accountability and transparency provisions within this bill.

This bill does not do everything. In response to some of the concerns around the transparency of companies, the Companies Office has established the registries integrity and enforcement team, which in the short time it has been in operation has seen the removal from the register of over 6,000 companies—those that were not doing anything and those that had been covertly in operation and not transparent with their operations.

The Commerce Committee received 13 written submissions, and we heard eight of those submissions. In response, the select committee has said companies must have a director who lives in New Zealand, or who lives in and is a director of a company in New Zealand. We have required the provision of date and place of birth information of company directors, as well as requiring the name and details information of any company that ultimately controls a New Zealand company to be disclosed to the registrar. Supplementary Order Paper 249 allows the Registrar of Companies to bring about more transparency.

Again, I support this bill, because what it does is bring more confidence and trust into the financial markets and more confidence and trust into the operations of the Registrar of Companies, and it brings prosperity to this country. I support this bill.

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

Hon Trevor Mallard: So do we.

The ASSISTANT SPEAKER (H V Ross Robertson): I am pleased about that, Mr Mallard.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Companies and Limited Partnerships Amendment Bill. Can I say that we are disappointed that the first reading of this bill was on 24 July 2012 and that we are now in July 2013, with this debate being done under urgency. One would wonder why it has taken 12 months for the bill to be back in the House, when 12 months ago—and I am reading Hansard from 12 months ago here—all parties were basically in agreement with the bill and saw this as being a requirement that should not be held up by the Parliament.

The whole process, including the select committee process, has been very slow. That is somewhat disappointing, because we also heard a year ago that, as a result of New Zealand not taking action in these areas, we had been dropped off the European Union white list. The white list is a list the European Union keeps, basically to ensure that those countries on it keep up a certain level of corporate governance oversight. New Zealand was dropped off that white list.

We were warned a year ago that this bill had already taken 2 years from first sight in Cabinet to come to the House. As a result, that did affect our standing with the European Union. It is most disappointing that now, 12 months on, we are looking at the second reading, and we still have some way to go. In actual fact, the only good thing out of this would be to get the bill through in its entirety so that corporates operating in this country and also international corporates operating here are under stricter controls.

We do note that the bill as reported from the Commerce Committee includes the recommendation to drop the requirement for a company to have a resident agent living in New Zealand, although a director resident in New Zealand is required. We do wonder whether that is the right way to go. We feel that it still leaves loopholes and avenues for certain operators to, perhaps, flout the law. However, certainly the requirement for a company to have a director resident in New Zealand does go some way in that regard.

There have been activities with window companies and shell companies operating here, and certainly as a result of that New Zealand has, perhaps, been taken for a bit of a ride on occasions, and that has affected our integrity in terms of the way we operate here. We certainly do not want to be seen as some sort of cowboy market for unscrupulous operators from offshore.

The bill gives the ability for the public to be warned about suspect entities by way of a note in the Companies Register. That, again, is a good thing. The public can be warned about anything that is, perhaps, of concern, and a red flag can be raised in terms of some of the activities of an entity that might be operating here. In that regard, in terms of criminalisation for breaches of certain directors’ duties, this bill allows for imprisonment for a term not exceeding 5 years, or a fine not exceeding $200,000. That sends the right message that if you are going to operate within this country, you could face a significant term of imprisonment if you break the laws in this regard.

This bill basically tidies up a lot of administrative errors in terms of some of the commerce matters under the Limited Partnerships Act and other similar Acts to do with commerce and commercial acts. It is a positive move. New Zealand First has said before that we will support good policy that helps to tighten up the laws in this country. We have always been the vanguard and the champion of good legislation that ensures that New Zealand operates at the highest level in terms of corporate integrity and that our Companies Act is at the highest level of company standards.

New Zealand has a good reputation in terms of corruption. I think we are something like No. 2, after Finland, in terms of a world ranking for perceived corruption in terms of both government and companies. It is a good thing that we keep that standard. We want to maintain the highest level. This bill certainly goes a long way to tidying up many areas and tightening up a lot of the loopholes. Therefore, New Zealand First will certainly continue to support the bill, as we did 12 months ago, but, again, we urge the Government not to just sit on its hands with this for another 6 to 12 months. Every month that goes by—and the Minister would take cognisance of this—leaves a potential loophole for unscrupulous activities to take place in this country. The sooner we can close those loopholes, the better and the safer it is for our country, our sovereignty, and the people of this country.

KANWALJIT SINGH BAKSHI (National): Sat sri akaal. Thank you for the opportunity to speak on the Companies and Limited Partnerships Amendment Bill. The Companies and Limited Partnerships Amendment Bill proposes significant changes to both the Companies Act 1993 and the Limited Partnerships Act 2008 to strengthen the rules applying to the governance and registration of companies and the registrations of limited partnerships. Of course, the larger aim is to protect New Zealand’s interests and ensure that it remains a trusted place to conduct business. The bill will promote investors’ confidence and participation in our capital market.

The Government is introducing measures to tighten the requirements around companies’ registration and resident directors, such as ensuring that for every company and limited partnership there is at least one person who lives in New Zealand who is legally responsible for the entity and administration. This resident agent will be responsible for providing the Companies Office with accurate information. In the case accurate information is not provided, then the agent stands liable for breaching the record-keeping and filing requirements under the Companies Act.

This bill empowers the Registrar of Companies with investigative authority in order to deal with non-compliance with the Companies Act. The bill also introduces criminal offences for directors who commit a serious breach of their duties so as to lead to risk of significant losses to the company’s creditors. Directors who commit such offences are liable for imprisonment of up to 5 years and a fine of up to $200,000. The registrar will be granted enhanced investigative and removal powers to take action where there is any concern that a company or a limited partnership is not being used for a legitimate business purpose. It is not surprising that such a law is being enacted by the National Government, because it believes in providing such confidence to the financial sector. I commend this bill to the House.

Hon SHANE JONES (Labour): We rise to support this bill, the Companies and Limited Partnerships Amendment Bill, and I intend to take the entire 10 minutes in traversing why this bill should be supported, unlike the speaker who has just resumed his seat. For those of you who may have wondered, that member was Kanwaljit Singh Bakshi, an obscure backbencher from the National Party. He did not explain why this bill has been languishing, yet he and a host of other speakers have accentuated that the bill represents us defending and maintaining, in the eyes of international investigators and international regulators, our high-quality reputation in terms of transparency.

I am the first to agree that those of us who have had some experience in business should treasure the reputation we have—and confirmed by the World Bank—that we are one of the easiest, if not the easiest, of countries in which to start a business. Indeed, last year, as I listened to a Canterbury Earthquake Recovery Authority presentation about people going to Christchurch, it was evident that Christchurch was having visitors from the Middle East, Asia, North America, and Europe, and one of the people at the authority told me that what they could not get over was that as these international analysts and investors came into New Zealand to look for opportunities in and around Christchurch, they marvelled at the ease in which you could start a business in New Zealand.

I think that is something we should treasure. I do not think that there is much disunity between the two major parties on that question, and I would like to think that it is something we continue to uphold. It is disappointing to see nefarious interests, perhaps tied up with the drug moneys, perhaps tied up with moving around ill-gotten gains etc., in and out of New Zealand. An example of that is the case of an American promoter of a Ponzi scheme who is about to face 15 to 25 years of jail. That person exploited a loophole and was able to contribute in a degrading way to the erosion of our commercial reputation. That needs to be stamped out.

I would like it said that at a broad and base level I am in agreeance, I think, with the majority of the members of the House. Ease of business is something that we should celebrate. Transparency is an ongoing hassle. I know a bit about transparency, having suffered an Auditor-General report into an immigration decision I made. So I have been at the sharp end of what is expected of a public official in respect of transparency and adherence to process. That is why we do support this particular bill.

But, as is the wont of Opposition politicians, there are aspects we can find that could be remedied, not the least of which is why the bill has languished at the bottom of the Order Paper for so long. I am not suggesting that it is reflective of the pecking order that exists on that side of the House and the rather diminished status of Craig Foss. Craig Foss came into politics when I came in. He holds the seat of Tukituki, which, as I have told you in earlier times, means “to beat”. I actually have got quite a lot of time for Craig Foss, but I do think that his stewardship of this particular bill is perhaps reflective of the ebbing fortunes that Craig Foss is suffering, and we need look no further than the languishing nature of the economy, investors, punters, and garden-variety Kiwis in Hawke’s Bay.

I would like to think that Mr Foss dedicates a small degree of his precious time to improving the fortunes in that area, because they are bleak. If you have any doubt, just look at the information that we amassed and the glorious number of new members when the newest parliamentarian from that part of the motu, from Heretaunga via Ikaroa-Rāwhiti, came to the House and unveiled the fact that there is a great deal of pain and a great deal of squandered talent and missed opportunities. Really, like other parts of provincial New Zealand, that area is the economic orphan child of the current Government.

I am sure that the Minister responsible for this bill is not totally at fault in that regard. The other part of the fault is probably with Mr Tremain, but, unfortunately, that would take me somewhat beyond the guts, or the purview, of this bill. But it should be said that on this side of the House we think it is good to give a prod now and again to the responsible Ministers to remind them that it is essential that they remain not aloof but directly engaged in promoting pieces of legislation of this nature.

This bill, amongst other things, enables regulators to flag companies that could be under investigation. There could be a host of reasons as to why that might happen. In the context of improved trans-Tasman business relations, and as investment opportunities grow over time—when this side of the House gets over to the other side I am sure they will grow exponentially—I think it is important that people have a high level of confidence that an institution they might be buying into, an institution they might be forming a relationship with, is regulated in such a way that there are limited opportunities for mischief-makers or people who might use companies to ruin the prospects of shareholders.

The bill also extends this level of vigilance to the Limited Partnerships Act through a host of changes, so that folk who are of a mind to misuse our companies do not also move into infecting that particular regime. It also seeks to better align the Companies Act with the Takeovers Code, and it ensures that shareholders understand the effect that changes in company control will have on the value of their shares.

So I only hope that the owners of Mighty River Power are apprised of what lies in front of that company. Anyone who owns a company, or who is a shareholder in a company, needs to maintain vigilance as to the statutory or regulatory framework within which a company is operating, and that is one company that is going to have to learn to live with a new norm, and that norm is the changes, the policy reforms, and the moderation and improvements that we will be bringing to the power sector. In that sense, shareholders need to be confident that when they invest in these vessels, when they invest in a company, they are shareholders. But when the citizens of the nation require or demand an improvement in the behaviour of a company, the interests of shareholders have to be measured against the interests of the citizenry.

In a democracy we by and large rely on citizens to make conclusive decisions about the distribution or the exercise of power. We rely on shareholders to drive directors and the executive to generate wealth. There is a clear distinction between the interests of the citizenry and the interests of shareholders. This is designed to give more confidence to the interests of shareholders. But be under no doubt that any company operating in the area of the power sector needs to bear in mind that this party is there to ensure that consumers and the broader citizenry do not have their fortunes held to ransom by rapacious, ill-informed, or dangerously driven executives hoping to continue to grow their own personal wealth by dint of their remuneration, at the cost of growing and gouging cost behaviour from such companies.

That is slightly different from the range of duties that a director has to observe. They are well established in terms of good practice and good law, but this is designed to enable the Registrar of Companies, formerly, in popular parlance, known as the Companies Office, to root out bad apples and ensure that companies being exploited or abused by overseas interests—and from to time there will, potentially, be New Zealand interests that fall into that trap, although I dare say the ardour for bending companies’ rules etc. has been brought to heel with the large number of people facing jail time or time being virtually incarcerated in their houses. That is an improvement that is reflective of the greater awareness, the resources amongst those regulators who have those punitive powers.

We support this bill. Naturally, we do not completely support the faltering stewardship that lies behind the bill, but being parliamentarians upholding the qualities of democracy and the stature of the House, on this occasion we will support the bill. Thank you very much.

MARK MITCHELL (National—Rodney): It is a pleasure to take a call on the second reading of the Companies and Limited Partnerships Amendment Bill. I would like to acknowledge the Minister of Commerce, Craig Foss, because he brought a very important bill to this House. We have all seen as a country the amount of suffering and hurt that have been caused to Kiwis and Kiwi families through the poor and sometimes criminal behaviour of company directors. So this is a very, very important bill.

I would like to refer to just one of the provisions in this bill. It is a provision that requires each company registered in New Zealand to have an identifiable individual who is the one point of contact in New Zealand, and that this person must be a director of the company or a director of a company in a country where New Zealand has a reciprocal arrangement for the enforcement of criminal sanctions. What this means is that if you do get a company director or directors who behave poorly, who behave criminally, actually, there is nowhere to hide. I think that this is a very, very good and a very, very important provision in this bill. It is my pleasure to commend this bill to the House.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. I just advise members that this is a split call. I call the honourable member Clare Curran.

CLARE CURRAN (Labour—Dunedin South): In the second reading of this bill, the Companies and Limited Partnerships Amendment Bill, I would like to just start off by saying that on 27 June 2012—so that is 27 June last year—an article appeared on interest.co.nz that said that “New Zealand’s removal from the White List means EU financial institutions and banks could undertake additional measures to ensure customers (including companies) from New Zealand are who they say they are,”. New Zealand got dumped from that list a year ago, and that dumping came amidst growing publicity around New Zealand - registered companies being linked to crime overseas. There was a report by the Organized Crime and Corruption Reporting Project on how Tormex Systems Ltd, which is a New Zealand - registered company, allegedly laundered $680 million through a Latvian bank account. But this was just one of many examples of the entities that were exploiting New Zealand’s simple company registration regime. I could go on to list more, but I will not.

The issue was that the question of whether there was a case for criminalising directors’ statutory duties first arose in the Ministry of Economic Development—as it was known then—2010 securities law review discussion paper, and it was later approved by Cabinet in 2011 as part of its policy decisions on securities law reforms. There were two Cabinet papers, as I understand it, that related to this from 2011. It is now 2013. It took 18 months for a piece of legislation that was identified as being so important, that had New Zealand struck off a white list, to appear in the House for the first time—for the first time. I think its first reading was on 24 July last year, and then it has taken another year for it to get to the second reading—another whole year.

When you think about the fact that we were struck off this list, and it was seen as part of our international reputation as being a good place to do business, as being an easy place to do business, but also as being a sound place to do business, you would think that that would be a piece of legislation that this Government would treat as being important and urgent. Instead, we have many other pieces of legislation that suit the Government’s agenda that get rushed though this House under urgency, including something as important as this bill, which had broad support in the Commerce Committee. There were serious discussions amongst all of the members involved, but, ultimately, good work was done to produce a piece of legislation that is sound. No doubt it is not perfect, but it is sound. Good work was done in order to do that, but it has taken another year to get to this point.

I want to talk about a couple of points in this legislation that particularly stood out for me, sitting on the Commerce Committee, and I would also like to take the opportunity to thank the officials for the work they have done and the good, sound way in which the analysis was provided to the committee. This bill seeks to do a number of things, but I will talk about a couple of them. One is the introduction of the criminal sanctions, which is to be done in two ways, really. Some of the existing conduct by directors that is not currently subject to criminal sanctions but is sufficiently blameworthy to warrant criminal punishment is seen as being one of the areas that needed attention. We also considered the new provisions in the bill that would allow, in certain circumstances, certain contact that was already subject to criminal sanctions to be prosecuted more directly. So there were new criminal sanctions and there were existing criminal sanctions that would perhaps have stronger criminal sanctions attached to them.

The committee did take care, though, to ensure that directors and advisers in companies would not be inadvertently criminalised through this legislation, and there was a lot of discussion on this issue. We went backwards and forwards on that. It is important to note in this House that this side of the House does not want to produce legislation before this House that creates a chilling effect on innovation and on companies being able to do what they do best. But what we do need to do is provide the sanctions that prevent and punish the behaviours that we do not want to produce and the behaviours for which New Zealand found itself struck off that white list in the European Union and for which we should feel ashamed, in particular, that we did not actually act faster on this piece of legislation.

Just on that point, it is a criminal offence for directors who commit a serious breach of their duty to act in good faith and in the best interests of the company and to not carry on their business in a way that risks serious loss to the company’s creditors. Directors who commit those offences will now be liable, as I am sure you have heard today, for a term of imprisonment of up to 5 years or a fine of up to $200,000. We listened carefully to the submissions on this. We heard that there were a number of submitters who were reluctant to increase those penalties and who expressed concern about that, but, ultimately, I think the committee came down on the right side on this issue. We had to show that we took this issue seriously, and that there would be serious penalties for directors who were not acting in good faith.

Linked absolutely with this is the requirement for directors to ensure that there is a director of the company—which I know other speakers have spoken about—who lives in New Zealand. We thought, absolutely, that we had to address this issue because of the shelf companies that were being established in New Zealand, where there was no person associated with them and they were effectively being used as money-laundering organisations. We have to have legislation in place that addresses that issue. We also had to ensure that there could be balance achieved by requiring a company to have either a director who lived in New Zealand or a director who is a director of a company with which New Zealand has reciprocal arrangements for the enforcement of low-level criminal fines. Again, there was a lot of discussion on that point, as well. The purpose of requiring a director who lives in New Zealand was to ensure that there was going to be an identifiable person, somebody who actually existed, not somebody who potentially existed or where there was just an address with no actual company behind it—an identifiable individual with a substantive connection with the company, who could be questioned about the activities at that company and who could, in certain circumstances, be held to account.

That was the important test that we in the select committee agreed upon. There was a lot of discussion, and we also noted that, again, there were a lot of submissions that raised concerns about that particular point. But in the end the committee came down on the side of the advice that we were given, which was that we disagreed that a resident director would not be effective in preventing the misuse of New Zealand’s company registration system. Of the companies that were identified as being involved in money-laundering, fraud, and tax evasion in overseas jurisdictions, the vast majority do not, or did not, have a New Zealand - resident director. I think that is the important point here, and that is the point in one of the key parts of this legislation. It is to ensure that if there is a company operating in this country, there has to be somebody, a person, who is associated with it. The information that we received was that this was not going to create an enormous financial burden for companies, because less than 1 percent of New Zealand - registered companies do not have a director who lives in either New Zealand or Australia. So we support this bill and look forward to further discussion in the Committee stage.

Debate interrupted.

Points of Order

Royal Succession Bill—Procedure

BRENDAN HORAN (Independent): I raise a point of order, Mr Speaker. I came at the earliest possible convenience, but I would like to ask for your considered ruling, in the time available before the conclusion of this debate, as to whether the Royal Succession Bill, the next bill on the Order Paper, can properly be debated today. The reason I ask this is that this legislation is subject to judicial challenge through the courts. As you know, in this House we are guarded by the principle of comity, the mutual respect of Parliament and the courts for each other’s jurisdictions. We work in ways to maintain this respect, and I am concerned that we may be about to breach these.

What is unusual about the Royal Succession Bill is that changes are required in 16 nations where the Queen is head of State. Papers were filed several weeks ago—and I am happy to provide you with a copy now—in the Superior Court of Quebec by Professors Motard and Taillon. They are two of Canada’s pre-eminent constitutional experts. The motion for declaratory judgment is set down for hearing on 18 July. Normally, I would not think that proceedings half a world away would give the House reason to pause, but given the unique nature of this bill and the need for concurrent changes in multiple legislatures, I suspect that it would be best for this House to wait until the Quebec proceedings are resolved. For that reason, I ask for your considered ruling.

Hon JUDITH COLLINS (Minister of Justice): This House is not subject to the courts of Quebec, in whatever form they might be. This House has full jurisdiction to hear the Royal Succession Bill and to deliberate accordingly. The member should know that. He is supposed to be a member of this Parliament. He should know that we are not subject to the laws of Quebec.

The ASSISTANT SPEAKER (H V Ross Robertson): All right, well, thinking about that, I would have to take advice on that because it is another jurisdiction. I take on board what the Minister has said and I am inclined to agree with the Minister, but I will seek some advice and I will come back.

Bills

Companies and Limited Partnerships Amendment Bill

Second Reading

Debate resumed.

JAMI-LEE ROSS (National—Botany): I commend the Companies and Limited Partnerships Amendment Bill to the House.

Bill read a second time.

Bills

Royal Succession Bill

First Reading

Hon JUDITH COLLINS (Minister of Justice): I move, That the Royal Succession Bill be now read a first time. I nominate the Justice and Electoral Committee to consider the bill. The Royal Succession Bill will make three changes to modernise the historic rules of royal succession. The changes better reflect today’s values while still preserving the important traditions of the monarchy.

Firstly, the bill will ensure that royal succession is no longer dependent on a person’s gender. Secondly, it will remove the bars that prevent a person married to a Roman Catholic from possessing or succeeding to the Crown. Thirdly, the bill will remove the rule that all descendants of King George II require the Sovereign’s consent to marry. Instead, only the first six in line to the throne will need consent.

The first change will mean that the rules of succession are gender-neutral. An elder daughter will be able to precede a younger son in the line of succession. This will update the rules of succession in a crucial aspect, removing the outdated rule of male superiority in the line of succession. This change will apply to any children born after 28 October 2011. It will, therefore, apply to the child of the Duke and Duchess of Cambridge due to be born in July. This has been agreed by all of the 16 realms that share Her Majesty the Queen as head of State.

The bill will also remove the current restrictions that prevent a person married to a Roman Catholic from succeeding to or possessing the Crown. The current restriction does not apply to other faiths. The heir to the throne may succeed to the throne if married to a person of any other faith or of no faith at all. This anomaly can no longer be justified. This change will apply to all marriages where the person concerned is still alive. Some people will be reinstated into the line of succession as a result.

Finally, the current rule that all descendants of King George II must seek the Sovereign’s consent to marry will be removed. It will be replaced with a rule that this requirement applies to the first six in line to the throne. The current rule regarding consent to marry applies to many hundreds, perhaps thousands, of descendants. Many of them would not have been aware that they needed the king or queen’s permission to marry. Their marriages may be legally void as a result. This bill will correct this situation. These marriages will be validated for all purposes other than succession, provided they meet certain criteria.

I should note that the changes to the bill do not mean that a Roman Catholic will be able to accede to or hold the throne. The separate rule that the king or queen is also the Supreme Governor of the Church of England will remain; so will the requirement that the Sovereign swear an oath to uphold the Protestant religion.

Changes to the rule of royal succession require the agreement of each of the 16 realms, as the Queen is head of State of each of them in their own right. In order to maintain this, the rules of succession must be consistent across the realms. Most of the changes were agreed between the realms at a meeting coinciding with the Commonwealth Heads of Government meeting in Perth on 28 October 2011. Further changes were agreed through later discussions among the realms.

New Zealand has played an essential role in coordination among the realms, and the Government wants to thank the Clerk of the Executive Council, who has been undertaking this role, for her endeavours in this respect.

A bill changing the laws of succession is currently proceeding through the UK Parliament. That bill will not, however, automatically apply to New Zealand. Separate legislation is needed in New Zealand to achieve the same changes to the rules of succession in New Zealand law. Our Royal Succession Bill is consistent with the United Kingdom’s Succession to the Crown Act.

In closing, it is important that our constitutional institutions, such as the monarchy, retain and maintain their history and traditions. But it is also important that the rules that govern these institutions evolve to reflect the times in which we live, and this bill will allow this to happen. New Zealand has a grand tradition of removing undue discrimination in its underpinning legal framework—most notably by being the first country in the world to give women the right to vote.

This bill builds on this proud history and tradition, as well as meeting our commitments to the other realms. I commend this bill to the House.

ANDREW LITTLE (Labour): I rise to talk on this bill, the Royal Succession Bill, and note that of the three things the bill does, one of those is an act of validation. I have to say that it is a pleasure to be able to speak on a bill that validates past actions without upsetting the good citizens of Mangawhai and, indeed, of Tasman district. But that is kind of where the positive aspects of this bill stop and start.

We are dealing, in this bill, with an anachronism, and every citizen in this country who has their radio and television tuned to Parliament this afternoon will be wondering why it is that we are taking the very expensive time of this House and the people who work here on this piece of legislation about the Queen, the Crown, or the Sovereign of England. They will be wondering why it is that in this day and age, in this little corner of the world, in a nation that is reputed—and indeed this Government trades off it, as indeed the last one did—to be a country that punches above its weight and that does extraordinary things all in its own name, with its own identity and with its own culture, we find ourselves on this wintry afternoon legislating for gender neutrality in the succession of the Sovereign. How on earth does that absurd situation arise?

I might hasten to add that Labour will support this bill. We do not want to cause offence to the Sovereign, because there are bigger issues at play when it comes to this nation’s relationship with—

Hon Trevor Mallard: Soft on royalty.

ANDREW LITTLE: Yes, soft on the causes of royalty as well. There are bigger issues that come into play when it comes to the relationship between the nation State of New Zealand and the Queen of England.

Who would have thought, in this day and age, that we would find ourselves legislating—

Simon O’Connor: Hasn’t been a Queen of England for 500 years until this one.

ANDREW LITTLE: There is the resident monarchist of the House. He has to chip in. He takes great offence, because here we are, having to legislate against primogeniture. Who would have thought that in the 21st century we would be having to pass legislation about that? Who would have thought that in the 21st century we would have to pass legislation to overcome prejudice against Catholics? Oh, now Mr O’Connor is very silent on that point—very silent on that point. Mr O’Connor needs to be reminded that without this legislation he would have absolutely no chance of getting anywhere near succession to the throne or any part of it, and once upon a time he would have been deprived of public office in the home country. That is how bad it was.

You have only to look at the old Bill of Rights of 1688, which is held up as such an important document around the Commonwealth. What a dreadful piece of legislation that was. Here it is: “Papists debarred the Crown.” That is not the bad thing, actually. That is not the bad thing, because we can overcome that. It is what they said about the papists. Here is what they said about the papists: “And whereas it has been found by experience that it is inconsistent with the safety and welfare of this Protestant kingdom to be governed by a Popish Prince,”. That is what they thought of the Catholics in that day and age. And here we are, in the 21st century, having to pass legislation to prevent discrimination against Roman Catholics by the Crown that is meant to be of this country. How patently ridiculous.

The third thing we are doing is we are legislating to validate the marriages, potentially hundreds of marriages, that have not been personally consented to by the Crown. Of course, there is still an issue, in my humble opinion, about why the Crown should be called upon to approve any adult marriage. What is wrong with the autonomy of the individual, and the Queen’s or the King’s adult children being able to decide whom they marry? That has been the cause of constitutional crises as recently as last century but, not so far, this century. It was a cause of constitutional crisis. Poor old Princess Margaret was deprived of her beau and King Edward had to abdicate because of his favoured spouse. Thank goodness we have got past all that. We have got through the age of the charleston, and we have not had the same problem ever since.

These measures will at least give the appearance of modernising the succession arrangements for the royal family. But the reality is that there should never have been, in the modern world at least, any gender or religious discrimination or any discrimination at all. We should ask the question—and Mr Foster-Bell no doubt will be called upon to answer, along with Mr O’Connor, the self-professed monarchists of the National Party—why on earth it is we are being called upon to pass this legislation in this day and age. It highlights, as I said, a much bigger issue of New Zealand’s relationship with the monarch. The question is: how relevant is it? How relevant is it that the time of this House should be spent on this legislation for New Zealanders, who simply want to go about their business. They want this Parliament to devote its time and attention to making sure that life in New Zealand is worth living and is bearable, that the distribution of wealth is fair, that job opportunities exist, and that people can be cared for and looked after and can ultimately be happy.

The constitutional arrangements that we now live under and thrive under, in terms of this Parliament, mean that we have to participate in this charade of passing this legislation, along with 16 other sovereign nations—[Interruption] I take the advice—

Hon Trevor Mallard: She’s the Queen of New Zealand.

ANDREW LITTLE: She is the Queen of New Zealand, and that is the point. That is the issue. It is because of those constitutional arrangements that we have to participate in this charade. So we must now ask the question: is this really 21st century New Zealand? I do not want to cause offence to the royal family—never have done—and for that reason, as I said, we will support the bill. But it is not the New Zealand way that we support the idea of status and privilege as a birthright. That is not the Kiwi way. It never has been and never will be.

The good people of the United Kingdom who came out here 180 years ago, or 170-odd years ago, to become the second peoples of this land, the second set of settlers on this land, came here to get away from exactly that cultural aspect. They came here to get away from privilege and status, delivered as a birthright. They came here to forge a new way, to pioneer a new country with new values, and to pioneer a country built on freedom, built on hard work, built on reward for that hard work, and built on getting ahead under your own steam. That is the New Zealand way, not cuddling up to and seeking succour from those sorts of institutions that are outdated and outmoded—interesting as they may be—and producing good music occasionally, as they may do, although not the theme songs that we get from old has-been pop stars like Elton John and others, and Cliff Richard. Of course, that does not necessarily go with royalty, but—

Hon Trevor Mallard: What’s the member saying about Elton? What’s he promoting Elton for?

ANDREW LITTLE: Well, we are talking about queens this afternoon, so why not? We are not talking just about the Crown. But the thing is—

Hon Member: Shameful.

ANDREW LITTLE: I do not think there is any offence caused there. He called it himself. The point is that he keeps on being rolled out in every royal gala performance they have. Can we have something slightly more modern?

But this is the question that young New Zealanders are now asking. This legislation will give rise to that question in the minds of even more as to whether we should spend the time of this Parliament priced at, what, $350,000 an hour to debate these important issues—

Hon Trevor Mallard: No, the marginal cost is almost nothing.

ANDREW LITTLE: My learned friend Mr Mallard says that the marginal cost is almost nothing. But the truth is that we have now been compelled to consider this legislation under urgency, as part of this urgency motion. It is a piece of legislation that will not touch the ordinary lives of ordinary New Zealanders or, for that matter, any New Zealander, even those living overseas and even those living in the United Kingdom. It will not touch the ordinary lives of ordinary New Zealanders one single bit, but we are corralled into it. We are driven by it, by our constitutional arrangements, and if this bill does anything, let it be a clarion call. Let it draw attention to the arrangements that we now have and let it attract a real curiosity about whether this is the way we should go forward.

We are a nation State. We are a bold, proud nation State. We hold our heads up proudly around the world. We contribute our people to support our allied nations like the United Kingdom and many others, in the Commonwealth and out of it, but we do that in our own name and in our own right. We should not be drawn into, or be required to spend the valuable time of this House on, issues like this when there are more compelling issues to be dealing with and when we have our own history to celebrate.

I would just conclude by saying that this week is an important week, of course, in labour history. It is the centenary of the second Unity Congress, which led to the formation of the United Federation of Labour and the Social Democratic Party, the precursors to the Labour Party. That is the history that we should be celebrating. That is the real history that has touched New Zealanders’ lives—the lives of all New Zealanders—and has made a difference, not this legislation.

We will support the bill. We do not want to cause offence to the Sovereign today, but it is time we reconsidered, moved on, and stood on our own two feet.

SCOTT SIMPSON (National—Coromandel): It is a pleasure, as chairman of the Justice and Electoral Committee, to stand in support of the first reading of this Royal Succession Bill. I am very much looking forward to the deliberations that the committee will have on this bill. I am looking forward to the submissions that we will receive and hear, because our constitutional monarchy is a rich and proud one. It has tradition and history on its side, and I personally believe that it is a model that has served us well in the past, and will continue to serve us well into the future.

One of the hallmarks of our constitutional monarchy has been its ability to modify itself, to modernise, and to remain relevant over the centuries. For us here in New Zealand, even though we are a young nation, we have a proud tradition of our own in terms of being at the forefront of social change. It is not often that this House debates matters relating to the very core foundation stones of the monarchy that form the basis of our constitutional roots. As one of the 16 realms that have Her Majesty as Queen and Sovereign, we are a member of an elite group of nations. This bill modernises royal succession by removing aspects relating to both gender and religious discrimination. New Zealand supports gender and religious freedom, so as this bill has that as an outcome, we will be in line with the principles we hold dear as a nation.

Later this month New Zealanders will be amongst millions of others from around the Commonwealth and around the world who will welcome the birth of the first child of the Duke and Duchess of Cambridge. This bill will mean that for the first time in the entire history of the monarchy, the child, no matter its gender, will succeed His Royal Highness the Duke of Cambridge in due course. The bill implements changes to the rules of royal succession agreed to by all 16 Commonwealth realms. Most of the changes were approved in principle at a meeting held in October 2011, and the rest were agreed at subsequent meetings. All 16 realms will implement legislation to ensure concurrent and united change. No longer will royal succession be dependent on a person’s sex. The bill allows for an older daughter to precede a younger son for the first time ever. That is a good thing in terms of where we come from as a nation here in New Zealand.

Another aspect of the bill relates to the removal of exclusions preventing people married to a Roman Catholic from succeeding to the throne. This change will apply to all marriages where the person concerned is alive, which means that it will reinstate some people into the line of succession who are currently excluded from it. The Minister of Justice, in her introductory comments, made an interesting point that was relative to how the ancient law of the Royal Marriages Act 1772, which dates back to the time of King George II, relates to the Sovereign approving all marriages of the direct descendants of King George II, and the anomalous and slightly bizarre situation that now exists where clearly there could be hundreds, if not thousands, of people who technically have marriages that are not valid in terms of that law. This bill will change that.

This is a bill that I think helps modernise the monarchy. It makes the monarchy relevant to the 16 realms, and it is a model that has served us well. Our constitutional monarchy is one that we can be proud of. It supports us. We support them. It is a good process. It is a good model. I am very much looking forward to the progress of this bill through the committee stage, and I commend it to the House.

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the Hon Trevor Mallard, an issue was raised by a member of Parliament, Mr Horan, regarding the right of the House to legislate on this. I just wish to advise the House that under Standing Order 112(1) the House has the ultimate discretion to legislate on any matter, including those under adjudication in a court. This is doubly the case of court proceedings in foreign jurisdictions. The Royal Succession Bill has been subject to considerable thought, including our relationship with other Commonwealth countries, prior to its introduction. The member’s point, therefore, is not valid, and we will proceed in due course to the vote.

Hon TREVOR MALLARD (Labour—Hutt South): I rise to speak on this Royal Succession Bill as someone who thinks that at some stage we will move beyond having a monarchy. It is something that I think is important for our integrity as a country, but it is something that I do not regard as urgent. I also think that there is something slightly unseemly about Parliament taking urgency on a royal succession bill. The idea that we are trying to get something quickly sorted out when there has been so long to have it sorted out is something that I do not think reflects well on us. If people in London look back, if they have any consideration of what we are doing here—and I doubt that they are taking much interest in it at all—they will just ask the question about why this legislation could not have been dealt with properly in an ordinary time rather than as some urgent matter to be pushed through because of a current pregnancy. It does not look good, and it reflects very badly on the Government’s organisation that we do it in what is an apparently hurried manner of this sort. This is especially true because it is now well over 18 months since there was an agreement made between Prime Ministers on the way forward on this.

The next point that I want to make is that I am not one who believes absolutely that the King or Queen of England also has to be the King or Queen of New Zealand. I think that as an independent nation—a country with our own constitutional integrity—it is and should be open to us to choose to have a different set of rules for succession in New Zealand from those the people of the United Kingdom choose to have for themselves through their changes. That is why I think, therefore, it is important that this bill gets a full consideration at the Justice and Electoral Committee, and I understand that that is to be the case; we are not going to have a shortened arrangement at the select committee.

I think that does leave some questions as to what the hurry is all about. If the child is to be born before the legislation is passed, then it is hardly going to be a matter of urgency for Parliament. Of course, there is the terrible possibility of an accident or something that might involve three generations of the royal family, and I can accept that it is important to get this sorted out as soon as possible, but that is an argument for the bill being introduced and proceeded with at first reading earlier than now. So the first point is really a rejection of the need for absolute coordination between nations on the question of royal succession, and the ability of New Zealand to assert its own rights in this matter.

I do not think that any reasonable person will have an argument around the core part of this legislation, and that is the abolition of precedence of younger brothers over older sisters. I think that it is something that was not appropriate in the past. It has been some time since it did actually apply in fact, but I think that in the 21st century it is something that is just no longer appropriate. I think that whatever system we have, the suggestion that males take precedence over females when it comes to succession is just wrong.

It then comes to the next really fundamental question, and that is the question of the relationship between the Queen of New Zealand and the Church of England. I just want to do a real underlining of those points. We are today discussing who should be the Queen of New Zealand, but we are doing it in the context that that person is also the Defender of the Faith, and the faith in this particular case is no church in New Zealand but is the Church of England. It is one of the points on which I think there should be reasonable debate—whether, in fact, New Zealanders could accept having someone who is a Catholic as their monarch. In this particular case we are talking now about the abolition of exclusions of people who marry Roman Catholics, but I think it does open up the fundamental question about whether the King or Queen of New Zealand could be a Roman Catholic, and whether we would automatically exclude someone on the basis of their religion. That is something that is quite serious.

I know that in times past—not going back more than a generation or two—the antagonism was such that I am pretty sure that many New Zealanders would not think it was acceptable, and I am pretty sure that most Catholics would not have been the slightest bit interested in being the King or Queen of England. Of course, going further back—going further back—it was something that was common. So I just want to leave for the House, on this particular issue, the question of whether we want to tie our law so tightly that a person is automatically excluded from being the King or Queen of New Zealand because of that role also being the Defender of the Faith—i.e., the Church of England. In my view, that goes too far.

The next question is the abolition of the requirement of the Royal Marriages Act 1772 that all of the descendants of King George II must seek the Sovereign’s consent to marriage. We know that this does not happen now. We know that actually it is a much more limited group. What the bill does is to tie it back to the first six people in line to the throne and require those people to have the Sovereign’s consent. I think this is a clause that also needs to get very careful consideration. We have got some rules around the freedom for New Zealanders to marry. I have a sincere question as to whether or not there should be a special role for a Sovereign to deny his or her children or grandchildren the right to marry the person of their choice. This has occurred on occasion. We have seen it occur, and we have seen disaster. We have seen in the generation of the current Sovereign’s children a number of relationships that have not worked, as a result of the people not being able to marry the person with whom they had what might be considered their primary and first relationship. That has not been healthy for that family, and my question is whether we want to continue that sort of arrangement.

I will support this bill going to the select committee. I look forward to the submissions. It is going to be interesting to see whether Government members are prepared to have a country that stands up for itself.

Dr KENNEDY GRAHAM (Green): The bill before us, the Royal Succession Bill, proposes three changes to the rules of royal succession for the New Zealand monarchy. This emerges from a political agreement at head of Government level at the Commonwealth Heads of Government Meeting 2 years ago. First, it would abolish primogeniture—the precedence of younger brothers over elder sisters—thereby ensuring that succession is not dependent on a person’s gender. Second, it would allow individuals within the royal line of succession to marry a Roman Catholic. Third, it would restrict the requirement of royal consent for marriage to just the first six individuals in line to the throne.

The bill raises issues of a deep constitutional nature, and these are, of course, placed in a historical context. There is often a tendency to justify any shortcomings in universal human rights in the context of historical anomalies. There was a case not so long ago where the UK Supreme Court argued, in asserting that particular electoral laws pertaining to a particular bailiwick were consistent with the European Convention on Human Rights, with the quote that laws, even anomalous laws, have to be considered “in the round in light of historical and political factors relevant to” a particular place. Although, if one were starting from scratch, there could be few who would think that the law might be satisfactory, it did not follow that human rights would be breached. So you have issues that are not simple, and inevitably will occasion a penetrating discussion not only in this House but in the wider society. People can hold strong views on these issues.

There are various points to consider, both constitutional and political. First, there is the right of primogeniture. There can be no opposition, surely, to abolishing the right of primogeniture. The only point to note is one of astonishment that it has taken so long to bring the British and Commonwealth law up to speed with universal human rights, which reflect the Western values that we all delight in trumpeting. It was Scott Simpson, just a moment ago, who spoke about an elite group of nations moving to legislate. With great respect, that is absolute rubbish. Our 16 jurisdictions are a group of nations; we are not an elite group of nations. There is no such thing as an elite group of nations within the universal context of human rights. He also was animated enough to say that we were bringing our law on this matter up to speed with universal human rights—not totally correct. We are inching along in that respect to bring it up to speed with universal human rights, but we are stopping short of it.

The second issue is the freedom of royal marriage. Allowing the British and Commonwealth monarch to marry a Roman Catholic is fine and, indeed, necessary. But as I understand it, although the Act of Settlement states that a monarch may not marry a Roman Catholic, it also states that the monarch “shall join in communion with the Church of England,”. That is, the monarch must be an Anglican, and must perform the duty of Defender of the Faith, at least in England and Wales, though not in Scotland or Northern Ireland. So the exclusion applies to all other faiths, including any declaration of non-faith. As such, it is an infringement of the UN International Covenant on Civil and Political Rights, which would accord the right of any human to have freedom of religion and occupy any position notwithstanding.

Crown Law’s view is that the bill is consistent with the New Zealand Bill of Rights Act because “The rules that govern succession [in a shared, hereditary monarchy] are historically and politically complex. They are inapt for detailed Bill of Rights Act scrutiny.” This seems, with respect, to be a weak argument. The current succession laws of the British monarchy, including these proposed reforms, undeniably infringe upon universal human rights, even in the context of this draft bill. There is a strong argument for republicanism, although let me emphasise that republicanism is not Green Party policy.

The third change is restricting the requirement of royal consent. The requirement to seek consent from the monarch by the first six in line to the throne is also such an infringement.

It is a minor point in terms of New Zealand domestic debate, but it might be queried whether the New Zealand legislation will or will not apply to the Cook Islands, Niue, and even the Ross Dependency. Presumably the British legislation will “directly pass through” the New Zealand Governor-General acting in right in a different capacity in those jurisdictions. We would be interested to get an opinion from the Government on this point. The shared monarchy makes it required that all 15 realms outside the United Kingdom pass identical legislation. Agreement to that effect was given, including by New Zealand, at the Commonwealth Heads of Government Meeting in 2011. This requirement for collective legislation by 16 jurisdictions effectively circumscribes New Zealand’s freedom of constitutionality—another argument for republicanism.

These constitutional considerations effectively rest on a set of broader considerations. This is probably another case of the New Zealand public needing to judge whether a reform goes far enough. There will be those who think it does and those who think it does not. For its part, the Green Party regards the draft legislation as being useful in so far as it rectifies some serious shortcomings in the New Zealand constitutional system. But we also regard the bill as not going as far with the reforms as it should.

In so far as the current New Zealand constitutional system precludes a Roman Catholic from being head of State—or a Hindu, or a Muslim—then it breaches the Universal Declaration of Human Rights. Whether that applies to the Governor-General, representing the head of State, is another issue. It may have been the case that previous Governors-General converted to Roman Catholicism, and that would be an interesting point of fact.

Does the bill go sufficiently far with reform as to warrant our support? Our answer is no, yet we do not wish to oppose the bill, since it does effect some positive change. The Green Party will therefore abstain on the bill. If it were a normal piece of domestic legislation, we would work to strengthen its provisions and advance some amendments in the Committee of the whole House. But this is not a normal bill. It is a piece of the constitution that addresses the monarchy, and that monarchy is shared across 16 sovereign jurisdictions. As such, the rules have to be identical; you could not have rules for New Zealand choosing a shared monarch and different rules for Britain or Australia. Our rules, no doubt, would be regarded as null and void to the extent that they differed from those of the UK.

It is a supreme irony that 16 so-called sovereign nation States are unable to make their separate sovereign determination of the rules choosing their own head of State. I note the intriguing judgment in a Canadian case that “One cannot accept the monarch but reject the legitimacy or legality of the rules by which this monarch is selected.”—true up to a point, but this bill before us is altering the rules and thereby rejecting or casting out the previous rules. So the matter is relative, though not so relative as to enable freedom of legislation over one’s own head of State. The Minister of Justice said just a moment ago that the rules have to be consistent across the realms, and that a bill is proceeding through the UK Parliament, but that this does not, of course, work for us; we must do our own legislation. So be it. We shall abstain on the bill while making it clear, as appropriate, what our views are on certain of its aspects.

SIMON O’CONNOR (National—Tāmaki): I rise to speak to the Royal Succession Bill. I did not think I would be quoting Voltaire, but to Dr Graham can I say: “Don’t let the perfect be the enemy of the good.” Voltaire was quite correct—there are always ways that we can improve things, and I encourage the Green Party to support democracy, to support good constitutionalism, and to support gender equality in this Parliament.

It is interesting too that we have been talked to by people over 50 years of age who have been telling us that the youth are not interested in the monarchy, whereas, in fact, the second biggest group of supporters in New Zealand are people my age and younger. We have heard from one speaker that the 1688 Bill of Rights was a bad bill. We heard that from Andrew Little. That was legislation that allowed Parliament to actually overrule the monarchy.

We have heard people talking about the Queen of England. Well, there has not been a Queen of England for hundreds of years. We have heard about the Church of England in New Zealand. Well, strangely enough, the Church of England is a problem for the English, not for the strong, independent, mature, bold country of New Zealand, which freely chooses to engage with 15 other realms to share a head of State. You would think that the likes of the Labour Party and particularly the Greens would like that idea of cooperation—that we freely share a head of State with 15 other nations, which have between themselves a remarkable record of democracy. Here is an interesting fact. For about 70 percent of New Zealand’s history since the Treaty, we have had a woman as head of State. That is almost unrivalled in any other place in the world.

I just want to sum up my position with a quote that I think sums up the importance of this bill—the importance of this bill in constitutionalism, and the importance of this bill for democracy. Excuse me that this is gender-specific, but we can always substitute: “A king is a king, not because he is rich and powerful, not because he is a successful politician, not because he belongs to a particular creed or to a national group. He is King because he is born. And in choosing to leave the selection of their head of State to this most common denominator in the world—the accident of birth—[people] implicitly proclaim their faith in human equality; their hope for the triumph of nature over political manoeuvre, over social and financial interest; for the victory of the human person.”

This bill comes down to the birth of a child. New Zealand’s democratic constitutional system rests on the birth of a child, which this Parliament freely and democratically accepts to be our head of State, a New Zealander, a New Zealand head of State. I support this bill.

DENIS O’ROURKE (NZ First): This Royal Succession Bill is one of the most unusual bills before Parliament this year. We do not often get to debate the potential future chief of State of 16 different countries, but this is an important change for the New Zealand constitution, and it is good that New Zealand First has had a chance to consider this constitutional change and debate it. It is very sad, of course, and utterly unacceptable that the consideration of other constitutional changes now being considered by the Government, being those generated by the National - Māori Party confidence and supply agreement, have excluded New Zealand First. New Zealand First will support the Royal Succession Bill, but we have grave concerns about the constitutional changes being considered under the current process to implement the National - Māori Party agreement.

Of great concern is the very biased make-up of the 12-member Constitutional Advisory Panel that is managing that process. There is also a cross-party reference group that does not include New Zealand First. The panel will make recommendations to Pita Sharples and Bill English, who are the responsible Ministers, and then to Cabinet in November this year. These parties may then try to ram another constitutional bill through Parliament, and the issues to be discussed in that are much greater in weight than those we are currently considering this evening. They include a written constitution, the size of Parliament, the size and number of electorates, the length of the parliamentary term, Māori electorates, including the Māori electoral option—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are on a bill that does not cover those points, so I will ask the member to concentrate on the bill. He can mention those things, but it must relate to the substance of the bill.

DENIS O’ROURKE: The reason I am mentioning them is simply this: we have much greater issues before us this year in terms of the New Zealand constitution than we are dealing with this evening, and those constitutional changes are much greater in weight than the Royal Succession Bill we are talking about this evening. We in New Zealand First will be taking great note of those, including flawed concepts such as incorporating the principles of the Treaty of Waitangi, whatever they are supposed to be—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! [Interruption] Order! The member will sit. I just mentioned that the member must concentrate on the bill. It has been 2½ minutes and the member must focus on what this bill is, and I would ask the member to come back to it.

DENIS O’ROURKE: Well, Mr Assistant Speaker, if you had given me a chance, I was just about to move on to that—

The ASSISTANT SPEAKER (Lindsay Tisch): Sit down. Do not challenge the ruling of the Chair or the Speaker. If one wants to do that, I will terminate the speech. You have 7½ minutes going, and I will ask the member to come back to the bill.

DENIS O’ROURKE: I am very happy to come back to the bill because that is what I was about to do, anyway.

We will be supporting the Royal Succession Bill. It implements changes to the royal succession agreed by the 16 realms of which the Queen is sovereign. These changes do modernise historic royal succession rules, firstly by ensuring that the royal succession is not dependent on a person’s sex, and it also allows an older daughter to precede a younger son in the line of succession. In other words, it abolishes the archaic concept of primogeniture. Regardless of when the bill is enacted, it will apply for all royal births after midnight on 28 October 2011.

The bill also removes the current restrictions that bar from the throne people married to a Roman Catholic. These barriers can no longer be justified. The change will apply to all marriages where the person concerned is alive, thereby reinstating some people into the line of succession. But, of course, there is no change to the law under which the monarch must be a member of and the head of the Church of England. In this respect, the law will remain discriminatory. That is not appropriate in this day and age and ought also to change. But we in New Zealand First accept that New Zealand alone cannot achieve this while we retain the constitutional monarchy, which we share with 15 other countries.

Lastly, the bill abolishes the requirement of the Royal Marriages Act 1772 that all descendants of King George II must seek the Sovereign’s consent to marry. It also introduces a new requirement that the first six people in line to the throne must seek the Sovereign’s consent to marry. There are likely to be hundreds of descendants of King George II who were or are unaware of the marriage consent requirements of the Royal Marriages Act 1772, and whose marriages are, therefore, technically invalid. The bill therefore also validates the relevant earlier marriages for purposes other than royal succession. So for that reason also, New Zealand First is happy to support the bill.

Although New Zealand First does support the bill, it does so without approving the continuation of religious discrimination in the way the monarch is still required to adhere to under current arrangements. We also await with interest the more substantive changes to the New Zealand constitution which I suspect will be foisted upon us later this year.

ALFRED NGARO (National): I rise and take a call on the Royal Succession Bill in its first reading. Its purpose is very clear and, again, it is heartening to hear that both New Zealand First and Labour are also supporting this going to the Justice and Electoral Committee, where there will be robust debate. There are issues that do need to be discussed and talked about. This bill changes the restrictions around royal succession to make them better reflect today’s modern values while still preserving the important traditions. It is important that New Zealand’s constitutional institutions maintain their history and traditions, but it is also important that these rules that govern those institutions evolve with the times.

There was some conversation around the constitution and there was also from the Green member Kennedy Graham some concern about the impact of this on the other nations of the realm. In fact, recently I attended a meeting for constitutional consultation where three nations of the realm, the Cook Islands, Niue, and Tokelau, did talk about this. Under this bill, those countries do not have to make any legislative changes for themselves, as they are under the realm of New Zealand and effectively share the same head of State. Therefore, New Zealand law changes will flow through to them as well. There is also the Ministry of Foreign Affairs and Trade leading some consultation with those territories as well.

This is a bill that, again, has three parts to it: the abolition of precedence for younger brothers over older sisters, the abolition of exclusion from succession of people who marry a Roman Catholic, and the abolition of the Sovereign’s consent to, and the invalidity of, certain royal marriages. This bill is a good bill. We look forward to it going to select committee. There is room for conversation, consultation, and debate. We commend this bill to the House.

Hon SHANE JONES (Labour): Tēnā tātou katoa. I join my colleagues on this side of the House in saying we will support this Royal Succession Bill going to the Justice and Electoral Committee. Hopefully, while it is at the select committee we will hear some submitters remind Parliament why it is important that we emulate what this party sought to achieve by ruling out any further fresh challenges via our judicial system up to the Privy Council. This bill, although it actually seeks congruence with other members of the Commonwealth that have as their Sovereign the current Queen of England, Queen Elizabeth II, is also a timely reminder that over time this set of institutional arrangements will not last, just as the Privy Council has been replaced by the Supreme Court.

But one of the great obstacles that stand in the way is ensuring as we move forward with addressing anomalies, addressing anachronisms—which this bill does do, not the least of which is banning people who practise the Roman Catholic faith. I suppose that goes back to King Henry VIII, who, as you would recall, became the supreme leader of the Church of England. I would like to say that my tribe was—I suppose “colonised” is the right word. It was evangelised by the Church Missionary Society, so we are Anglicans, although our relations in Hokianga fell under the spell of Bishop Pompallier when he turned up for the Treaty of Waitangi resplendent in all his vestments, etc. But we have remained faithful to the Church of England.

I should just recite a little history for the other side of the House. King Henry tired of Catherine, and then had the misfortune to fall into the arms, breasts, and various other parts of the anatomy of Catherine’s lady-in-waiting. That was Anne Boleyn. Actually, there is a play on in Auckland dealing with the wiles of Anne Boleyn. Of course, at the end that sort of all went to her head, and she lost it. That saw Jane Seymour rise to the occasion. Of course, Jane Seymour then, after a coupling—probably an illegal one if you look at it from the Roman Catholic Church’s point of view—led to Edward. Edward, however, was the youngest sibling of Elizabeth, the Virgin Queen. Various racy histories say that that is not entirely correct, but that is another matter. Of course, the first-born was Mary, and she sort of pined endlessly for her mother, Catherine.

Hon Trevor Mallard: Hell of a whakapapa, this one.

Hon SHANE JONES: Yes. So I just want to demonstrate, as someone who is looking forward to an eventual republican evolution, that it should never be said by those make-believe monarchists over there that we are kūware, or that this Māori does not know the whakapapa of the Anglican Church. Knowing a thing or three about the dangers of wahines myself, I cannot imagine what the hell possessed him to have six wives, but that is another matter. I have no intention, despite recent behaviour, to emulate that.

Naturally, we will support this. It is a timely reminder that this is part of our heritage. Heritage is not static; it evolves. I cannot be quite as pointed as Mr Little was, because I certainly have a little affection for the current Queen. But the notion that Camilla should arrive at Waitangi and be welcomed by Hone Harawira is probably quite suitable, actually—probably quite suitable. But I just cannot imagine embracing Charlie and his hoa rangatira as the new King and Queen of Aotearoa. That may be an issue for the mokopunas and children. Of course, then it will go down to the current poster girl, but I will not be quoted in Kaitāia by my mother and her generation saying anything destructive about Kate or the one in the puku.

Let me come back to the notion that a piece of legislation should validate or invalidate marriages. I just hope that there are no parliamentarians in the House requiring such statutory interventions. Perish the thought.

Hon Trevor Mallard: There was a county clerk who slipped his own divorce into a local bill.

Hon SHANE JONES: Ha, ha! I only fear that that was not John Carter. David Lange told very, sort of royal stories, rude stories about that fellow Northlander of mine, John Carter. But anyway, let Rarotongans deal with him for the moment until the poor Ngāpuhis, the hapless Ngāpuhis, have to deal with him. I understand he is coming back to stand against my friend Mr Wayne Brown—brown in name, red in disposition, and blue in temper. But anyway, that is for another day.

We will support this bill. We do not actually support some of the sentiments on the other side of the House. There is a big Māori agenda in terms of where royalty actually goes; I will leave Tainui to talk about their own royal problems. I am a Ngāpuhi, so we can never agree. We are probably born to be republicans through the ringa kaha. However, this is necessary. It seems somewhat incongruous to the modern functioning of this House, but we cannot allow this House or our institutions to be completely cut adrift from Queen Victoria, her whakapapa, the Treaty, and the rights and responsibilities that we have inherited by dint of our Judaeo-Christian ethic and Westminster parliamentary democracy, which we have received and must be proud and honest stewards of in our time.

I do not know whether or not this bill will capture the imagination of the young people, as an earlier National Government member referred to; he must have different young people in his area, because the young people of Kaikohe are not talking about this. The young people of Kaitāia over the weekend were talking about grassroots rugby. Unfortunately, the word “grass” has a different meaning the further north you go. So—

Hon Trevor Mallard: It’s a secret word.

Hon SHANE JONES: I could not possibly comment—I could not possibly comment. John Carter has left the House. That would be something more appropriate to be delivered by my fellow Northlander and erstwhile colleague John Carter. I just feel that to suggest that the young people are somehow going to race forward and embrace these amendments is an exaggeration. We are doing it by dint of our responsibilities as parliamentarians and to support the Government of the day. After all, we are Her Majesty’s loyal Opposition.

I have no doubt that it is important, however, that congruency be achieved, because I am quite confident that before the next election the current Prime Minister will receive a knighthood and not lead that party. He will not want to lead that party into Opposition. Well, it is kind of related, because we call the Opposition “Her Majesty’s loyal Opposition”. OK, I will take that hint. I cannot really say much about Roman Catholics, and I do not want to for fear of alienating most of the Christchurch MPs, so I do not want to say much in that regard.

But, as I said, we will tautoko the bill. It does not represent where the imagination and the spirit of the rank and file Kiwi are today, but it is a part of our parliamentary heritage. In that sense, I hope not to sit on the select committee, but look forward to hearing what might come to that select committee. Kia ora tātou katoa.

KATRINA SHANKS (National): It is my pleasure to take a call on this bill, the Royal Succession Bill, especially after that great orator Shane Jones, who was obviously filling in his 10 minutes with whatever he could think of at the time. This bill modernises the historic royal succession rules by removing aspects of both gender and religious discrimination. This is a really timely bill in terms of Kate and William expecting their first child coming up. What it will do is allow an older daughter to precede a younger son in the line of succession if that need be—obviously, maybe not so much in this case. I think the timing of this bill is really nice, actually.

New Zealand is a country that has a proud tradition of being the first country for positive social change. We led the world in women’s suffrage. We had the first women to occupy the highest levels of Government, judiciary, and business. And, in fact, an interesting fact is that we have had a female head of State for 70 percent of the time since the signing of the Treaty of Waitangi. This bill is very timely and very relevant, and I am proud to be part of the Government that is supporting this. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call. I call Sue Moroney.

SUE MORONEY (Labour): Yes, it is. It is indeed a split call, and I am very pleased that it is. I am not sure whether I have gone through the looking glass and ended up in Narnia or this is actually an episode of Blackadder, but what a bizarre bill for us to be actually spending our time debating in this day and age, in 2013, in our New Zealand Parliament. Yes, Labour is supporting this bill, the Royal Succession Bill, because it would probably seem a bit churlish not to support something that actually is making something that is so archaic a little less archaic. So we will support it on that basis. But for goodness’ sake, I think nothing would show the New Zealand public how irrelevant and out of touch the current Government is getting with the core issues going on in this country than if they were to tune in to this debate this afternoon and hear us talking about this as if it were a piece of progressive legislation. I am sorry, but the last speaker, Katrina Shanks, was trying to present this as if it were a progressive piece of legislation. It is making something that is extremely archaic a little less archaic. Let us be honest about that.

I am not sure how exactly I ended up on the speaking list for this, but I imagine that it is because I am supposed to be thrilled with the prospect that this is somehow bringing about something that is good for women.

Hon Trevor Mallard: It’s got racing in.

SUE MORONEY: Oh, it has got racing in it, has it? Is that how I am on the speaking list for this bill? I was really unclear about that. I thought maybe I was supposed to say this is great for women. Well, look, it might be great for women who are members of the Windsor family, but, generally, it makes no difference at all to any other women. Particularly, it makes no difference to women in New Zealand. And is it not about time that that Government did something that was positive?

Hon Trevor Mallard: The Mountbatten family.

SUE MORONEY: The Mountbatten family? I do not know. Who are they—Windsors or Mountbattens?—whoever they are. But is it not time that that Government did something that was good for the women of this country? Last week we had a Minister of Women’s Affairs say that equal pay was nothing to do with her, that she was not even interested in it.

The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not part of this bill.

SUE MORONEY: I was inclined to bring the last speaker, Katrina Shanks, to order, if she thought this was a progressive bill. I thought she might have been speaking to a different bill as well. I thought that maybe I ended up on the speaking list because I am, in fact, a Roman Catholic and perhaps this is good for Roman Catholics. But, again, it actually does say that someone ascending to the throne can marry a Roman Catholic, but, no, we cannot have any Roman Catholic sit on the throne. Again, it is not awfully progressive from that perspective either.

I cannot see why we are taking up a lot of time in this Parliament debating something that really is archaic. I know that the Government members opposite have tried really hard to talk about how progressive this legislation is. Well, look, if this is as good as it gets under the National Government, then its members really need to get out more. They need to get out more and talk to people about the issues that really matter, because while this Government is going into urgency to debate issues like this and other matters that actually do not affect any New Zealanders at all, at any level, it is stopping from being debated tomorrow night a bill in my name on redundancy, which actually does affect a lot of—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! That has got nothing to do with this bill. I ask the member to come back to the bill.

SUE MORONEY: I am trying to get the Government to focus on things that are relevant to New Zealanders, instead of this irrelevant waffle that actually does not make any difference, because, yes, I am a woman, and I am a Roman Catholic, but I am still not going to benefit from this bill, and neither is anyone in New Zealand.

Hon Trevor Mallard: How do you know?

SUE MORONEY: Well, I do not know. How could they? How could anyone in New Zealand actually benefit from this bill? I suppose if they were a Roman Catholic and they were to marry someone from the Mountbattens or the Windsors—that royal part of the breeding—then perhaps they would. But, basically, in summary, this bill is completely irrelevant to New Zealanders and the everyday issues that they face. Labour is supporting it simply because it makes something that is terribly archaic a little less archaic.

GARETH HUGHES (Green): Kia ora. Ngā mihi nui ki a koutou. Kia ora. I would like to acknowledge Te Reo week in New Zealand. I guess that is an iconic part of our culture, about being New Zealand, yet what we are debating today under urgency with this bill is something foreign. It is something distant—in fact, it is something 16,000 kilometres distant. It is a totally different part of the world. It is not about New Zealand. This bill is a relic of the monarchy in New Zealand—a dying institution, I believe, for New Zealand. So I welcome the ability to rise and take a call on this, the Royal Succession Bill.

I think it is fair to say I am not a monarchist; I am a republican, and proud of it. I voted for Keith Locke’s bill last term. I support a discussion on a head of State. I believe that the monarchy is discriminatory. I think it goes against our Kiwi values. I think it goes against that spirit of a fair go for everyone, not just for those of privileged birth.

You know, it was pretty galling to have to swear allegiance to the Queen to take my seat and speak in this Chamber. I think many members probably find it a disconcerting and an odd institution to have to go through for what is the Parliament of our country, of all New Zealanders, to have to swear allegiance to someone who lives on the other side of the world and her heirs and successors. I find it troubling. Luckily, I can just think about Freddie Mercury when I am swearing allegiance.

The Greens will be abstaining from voting on this bill. We are not voting against it. We are not opposed to it. Likewise, we are not supporting it. We do not support this institution, which is discriminatory, and the discrimination that is still contained in this bill. This bill is trying to bring about gender balance. It is trying, on the fringes, to impact on the bar on Roman Catholics and those of other religions from taking the throne and marrying successors, but it is still discriminatory.

First up, we have got a terribly poor process. I mean, this has been around for a long time. We have known about this discrimination for a long time. The agreement came in Perth, with some of the Commonwealth countries coming together and agreeing it just had to be changed, because it was just so embarrassing—so embarrassing to have the future monarch having a baby but there being problems with royal succession. I have not heard once why we have to have this bill debated under urgency. I think this is not a law we need to pass under urgency. I guess we question, given the select committee process, what the point is. Is the Government going to amend anything based on expert evidence, based on the New Zealand Bill of Rights Act vet, or based on submissions? Given that 16 other realms have to agree to this identical text, my question is this: are we going to get a real select committee process there?

The bill changes three main things: succession does not have to be dependent on a person’s sex, it takes away the bar on people on the throne marrying a Roman Catholic—obviously, the monarch still cannot be a Roman Catholic; they must be an Anglican—and it abolishes the requirement that all descendants of King George II must seek the Sovereign’s consent to marry. That is a pretty good change, but the monarch still gets a hand in arranged marriages for six people in the succession line. I do not like the idea of supporting the monarch still being able to pick arranged marriages. I do not think it is in keeping with our Kiwi culture or 2013, the year we are in right now.

I personally believe this bill and the entire institution of the monarchy are a relic of the past. I think these changes come too late for this relic of the past, for this discriminatory institution of the monarchy. I guess the catalyst has been the wedding of Will and Kate, and the baby. I wish them all the luck. I have got to admit I did actually watch the wedding on the telly. I wish them all the best. But although I welcome the ending of discriminatory practices against their first-born, I think this is too little, too late.

Again, of course, it is discriminatory in the sense that in no way—or almost no way—can a New Zealander be the head of State of New Zealand. I want to have a New Zealander as my head of State. I want to be swearing allegiance to the people, to the voters. I do not want to be swearing allegiance to someone who lives on the other side of the planet and still arranges marriages for their children. I am against discriminating against Roman Catholics, and that is why I will not be supporting this bill tonight. I am against arranged marriages.

I agree with this quote from the Republican Movement of Aotearoa New Zealand: “This is a poor attempt at modernising an arcane and increasing irrelevant institution. It emphasises that the monarchy is a foreign remnant of our Colonial past—we’re only keeping the clause discriminating against Catholics because England has an established protestant church.” It is going to be interesting to see the New Zealand Bill of Rights Act vet being discussed at the Justice and Electoral Committee.

Ultimately, New Zealand coming under a monarchy is like the stereotypical 30 or 40-year-old still at home with their parents. We know they have got to move out, but maybe it is a bit cruisy, maybe they do not have to think for themselves, or maybe there are some advantages. It is time for New Zealand to grow up, get a real job, move out of the home of its parents, and make our own way in the world. I support a New Zealand head of State.

PAUL FOSTER-BELL (National): Tēnā koe, Mr Speaker. There is eager anticipation here in New Zealand and all around the world about the imminent arrival of our Queen’s newest great-grandchild. Thanks to the provisions in this Royal Succession Bill, backdated to 2011, for the first time this baby will become our monarch irrespective of its gender. This contrasts with the status quo, where a first-born girl would become an heir presumptive, but younger brothers could gazump their big sister upon arrival. Frankly, I find it a little bit mystifying and somewhat disgraceful that any party would abstain on a measure that brings gender equality into the New Zealand law.

We can be very proud of the role played by New Zealand at the vanguard of these reforms. The Prime Minister, John Key, was acknowledged by the British Minister of State for Justice, Lord McNally, as leading the discussion on modernising royal inheritance among the premiers of the Commonwealth realms. As a former vice-chair of Monarchy New Zealand, I am delighted we are moving to a system that is more in tune with our modern values of everyone, male or female, being treated equally before the law, while retaining all the advantages of a constitutional monarchy—its stability, its surety, and its strong sense of service to the nation. I take pleasure in commending this bill to the House.

The ASSISTANT SPEAKER (Lindsay Tisch): Members, this debate has concluded. The question is that the motion be agreed to. Those of that opinion will say Aye, to the contrary, No. The Ayes have it.

Holly Walker: Party vote called for.

The ASSISTANT SPEAKER (Lindsay Tisch): When I put the vote, the member must call for a party vote at the time, not after we are moving on to the next piece of legislation. I do—

Holly Walker: Point of order, Mr Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): No, I am on my feet. I do know that during the two speeches that were given by the Green Party we were told that it intended to cast a vote other than in the affirmative, so I am prepared to allow it to do that. But I am making it very clear that in the future when I put the vote, that is it, and we will have no exceptions. It was clearly indicated, however, by the two members of the Greens that they would not be supporting the bill in the affirmative.

GARETH HUGHES (Musterer—Green): I raise a point of order, Mr Speaker. Just to explain the position, previously I had advice from the Clerk—and this is something that needs to be fixed up at the Standing Orders review. We are not calling a No vote, but we still have to cast a vote. When the Speaker calls for those in favour to say Aye and those against to say No, we cannot say No, and that is the only point we can actually call a division.

The ASSISTANT SPEAKER (Lindsay Tisch): I accept that, and that is why I am prepared to accept it.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. Just to give a little bit of advice to my friends in the Greens, the appropriate thing is that when the Speaker declares that the Ayes have it, that is the point when you say: “Party vote called for.”

Holly Walker: And that’s what I did.

Hon TREVOR MALLARD: Well, we did not hear it.

The ASSISTANT SPEAKER (Lindsay Tisch): I am going to ask the Greens to cast a vote. The Green Party—if it would like to stand and cast its position.

Hon Trevor Mallard: No, everyone else has to.

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry, a party vote has been called for. We will start the process again.

A party vote was called for on the question, That the Royal Succession Bill be now read a first time.

Ayes 104

New Zealand National 59; New Zealand Labour 33; New Zealand First 7; Māori Party 2; ACT New Zealand 1; Independents: Dunne, Horan.

Abstentions 15

Green Party 14; Mana 1.

Bill read a first time.

Bill referred to the Justice and Electoral Committee.

Bills

Copyright (Parallel Importing of Films) Amendment Bill

First Reading

Hon CRAIG FOSS (Minister of Commerce): I move, That the Copyright (Parallel Importing of Films) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 16 August, and that the committee have the authority to meet at any time while the House is sitting except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House. I acknowledge and am thankful for the support and cooperation of parties across the House in facilitating the introduction of this bill, and I look forward to their continued support, and I offer my cooperation as it progresses through its various stages.

The Copyright (Parallel Importing of Films) Amendment Bill imposes a temporary ban on the parallel importation of films for commercial purposes for a period of 5 months from the date of the film’s first release to the public. A ban on parallel importing is necessary to enable cinemas to exclusively screen films for a limited period, before copies of films on formats such as DVD and Blu-ray are brought to the New Zealand market. Although many films are released in New Zealand cinemas at the same time as international releases, many films are delayed for several weeks or months due to factors such as seasonality, screen availability, profitability assessments, and competition with other films. Without a ban in place, parallel-imported copies of films could potentially be sold in competition with screenings in cinemas. This could potentially affect the viability of cinemas.

The bill reinstates the existing ban for a reduced period. The current 9-month ban, which is due to expire on 31 October this year, is now outdated, as the gaps between international and New Zealand film releases have reduced considerably since the ban was first introduced. Although the ban is still necessary, the ban needs to be shortened to reflect developments in film distribution and technology. A 5-month ban will continue to protect the cinemas for a limited period while enabling retailers to parallel import copies of films earlier than is currently the case. The ban will also have flow-on effects to New Zealand consumers. The ban will continue to give authorised distributors confidence to bring a wide variety of film into New Zealand.

The film industry is in the middle of a large-scale makeover, as cinemas across the country convert to digital technology. The conversion is well under way and is expected to be completed within the next 2 to 3 years. The ban will remain in force for 3 years to support the film industry through the conversion to digital technology. I commend this bill to the House.

JACINDA ARDERN (Labour): I appreciate the opportunity to speak on the Copyright (Parallel Importing of Films) Amendment Bill. I appreciate the engagement of the Minister of Broadcasting in recent weeks over this particular issue. It is fair to say that, as the Minister has already pointed out, Labour supports this bill, and I will run through, in the brief time that I have left available before the dinner break, a bit of background about this bill—

Hon Trevor Mallard: 5 minutes after it.

JACINDA ARDERN: —and for the period afterwards, of course.

I did just want to say that although Labour supports this bill, we have proactively engaged with the Minister to get to this point. We had some initial concerns that this might not have been the outcome and we were seeking this particular outcome for now. This process, I think it is fair to say, would have been smoother, Minister, if perhaps we were not debating this one in urgency. I know that that may not have been what you were necessarily seeking when you took it to your esteemed colleague the Leader of the House, but given that we now have this in an urgency motion, that will bring with it some complications, just in terms of our continuing to make sure that we debate it in full, as we are entitled to do with this process. But that does not lessen the degree to which we support the notion of what we are doing within this bill. A bit more time with the bill would have also been helpful and appreciated. Although, as I have said, we support the content, we have not seen the content in writing till just now. I am literally just opening this bill as we speak, but I take the Minister on his word that it is, as discussed, an extension of the Copyright Act 1994 to allow a temporary ban on parallel importing.

Just to go back to the beginning, in 2003, as I understand it, Labour introduced a 5-year temporary ban that prohibited the commercial import of a film for a period of 9 months from the film first being made available to the public. There is a very explicit reason for this and it is very much based around the motion picture industry—in particular, our small cinemas that many of us may have frequented over the years. I particularly want to highlight the ones in some of our smaller towns and provincial areas that really do rely on the ability to at least get a first foot in the door when it comes to a release. The staging of releases is pretty important to remember: something that is released in the United States, for instance, that is timed around a school holiday period, does not naturally coincide with that period within New Zealand. So having that little buffer period for that industry, as it claims, is the difference between 165 jobs existing or not. Let us be really clear on that. That is work that PricewaterhouseCoopers has done on behalf of the industry to demonstrate that a loss of that window would have that effect.

Let us be clear, though: the industry does have to move with the times. Things are changing, and rapidly. So that is why, as I understand, this bill will put an expiry date of 2016. It also reduces the window from a period of 9 months, which is what we currently have, down to 5 months. That is a compromise that we feel very comfortable with. This is a message, I guess, to the industry that this is unlikely to be a tenable, long-term way of maintaining its ability to stay in front of the game in a digital age. This is, as it were, extra time for the industry to try to develop where it goes next, in the same way that the music industry is doing—and has started doing a very good job of it, I must add. So too does this industry have to start looking at that, and much more rapidly, as well. This bill will allow it the time to do that. It will allow those jobs to be retained while the industry works on how it tries to ensure that it remains viable in the future.

So that is the reason that Labour will be supporting this bill. We are pleased that the Minister has listened to the feedback of those who have an interest in it, and we look forward to debating—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.

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

Debate interrupted.

Speaker’s Statements

Chamber—Commemorative Plaques

Mr SPEAKER: During the dinner break we have unveiled three commemorative plaques for Afghanistan, Timor-Leste, and missions in support of peace. These plaques acknowledge and honour our service personnel and are a reminder to us as members, as we sit in this House, of the magnitude of each decision to send our service personnel overseas on active operations.

I will now read the names of those who have fallen during these operations. Captain Kelly Ross Banks, Major Neil John McNutt, Warrant Officer Class 2 Tony Michael Walser, Staff Sergeant William Edward White, Private Leonard William Manning, Private Boyd Reagan Hēnare Atkins, Private Dean Russell Johnston, Lieutenant Timothy Andrew O’Donnell, Private Kirifi Mila, Corporal Douglas Grant, Lance Corporal Leon Kristopher Smith, Corporal Douglas Charles Hughes, Lance Corporal Pralli Durrer, Lance Corporal Rory Patrick Malone, Corporal Luke Douglas Tamatea, Lance Corporal Jacinda Francis Elyse Baker, Private Richard Lee Harris. I thank members.

Bills

Copyright (Parallel Importing of Films) Amendment Bill

First Reading

Debate resumed.

JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand in support of the Copyright (Parallel Importing of Films) Amendment Bill. It was interesting to hear the preceding speeches, as everybody talked about, I guess, their history, their memories, and these sorts of things. I think that there is a very good case and cause for us to see the extension of this provision in the Copyright Act, which ensures that we retain the opportunity for employment and incomes and provision of movie theatres in our communities, in which many people find great enjoyment.

I remember, of course, all those times as a kid, as I am sure everybody else does as well, when we enjoyed the latest and greatest movies—Tarzan, The Terminator—as they came rolling through our communities. It was fantastic for kids. I remember 50c to get in and 10c for an iceblock. [Interruption] Clare remembers the first talkies.

I received correspondence from people in Taranaki who are involved in the cinema industry, imploring me to speak about this to the Minister of Broadcasting and the Minister of Commerce, the Hon Craig Foss, and it is great to see that he has supported the concerns of people in our communities. They say, for example, that fewer titles will be released to cinemas if we do not extend this provision, meaning fewer movie choices for customers. Holiday titles will have to release on the same dates as in the US, which means they will not release during New Zealand holiday periods at their peak earning time in New Zealand. All of this will affect the earning capability of these theatres. They went on to say that they need to maximise earnings during the peak holiday periods to survive between holiday periods. It is quite a seasonal industry, as we know.

Also, cinemas are currently facing the prospect of having to make major investment to convert to digital projection technology. If they do not invest in the new technology, they will have to close and they cannot afford the deterioration of their financial viability. So this bill goes a long way to bring reassurance to these people. In consideration of these submissions and engagement with the other parties, the Government has agreed to introduce legislation, as we have done tonight, to amend the Copyright Act to extend the ban that was due to expire on 31 October 2013. Thank you.

CLARE CURRAN (Labour—Dunedin South): This Copyright (Parallel Importing of Films) Amendment Bill aims to provide a window, and one would hope that it is a window to the future and not to the past. Unfortunately, there is some doubt as to whether that is the case, but I want to talk about what the future could be and should be, and where copyright does fit in.

This bill provides a provision for an industry to adapt, and I would argue that that adaptation should be happening faster than it currently is at this point. It is important that we allow our industries to adapt, because our film industry in New Zealand is critical to our own economy. However, this bill is not actually about our film industry in our economy; it is ultimately about the film industry in other economies. The reason for this bill is to take account of that need to adapt, the need for it to have an expiry date until 2016, and to shorten that period, where parallel imports are allowed, to 5 months rather than 9 months, which we support. But we do say, and it is important to say this very firmly in this House, that the world has moved on. I just want to quickly bring the House up to date as to why this bill is necessary and why it is necessary that we move on as a Parliament in considering copyright generally in our country.

Before the widespread use of the digital exhibition technology, as it is called, the release of films in New Zealand was often delayed because of the limited availability of the cheaper second-hand film prints and the distributors that waited to see whether films were successful in overseas markets before bringing them to New Zealand. The ban was intended to give sufficient time for cinemas to screen films without the competition from DVDs, and therefore to increase cinema and distributor revenue. Increased revenue, of course, enabled distributors to reinvest more into bringing films to New Zealand, which provided consumers with greater access to a wide variety of films. As we know, the internet has changed all of that.

This ban was always intended to be a temporary measure. It was always going to be a temporary measure to allow the film industry to adapt. The ban was introduced in 2003 for a period of 5 years, to give cinemas enough time to transition to digital exhibition technology. In 2008 that ban was extended for another 5 years, which we are now up to, because cinemas had not fully transitioned. Well, they still have not transitioned, so they are being given another 3 years to do that. Yes, it is important, but there are a couple of things to note. The first is that cinemas throughout the world and in New Zealand are not in decline. The number of cinema businesses has risen from 66 in 2005 to 87 in 2012, suggesting that the industry has financial flexibility to invest in new cinemas. Digital technology has enabled cinemas to screen films closer to first market cinematic release dates. About a third of films are now released in New Zealand within 1 month of the first market release date, around 57 percent of cinemas have now converted to digital exhibition technology, and it is expected—as we should expect—that 100 percent will convert within the next 2 years.

This year, 2013, was supposed to be the date that a copyright review would occur in New Zealand. Labour supported there being a copyright review in New Zealand, and, in fact, our policy supported it. Labour said that we would undertake a full review of the Copyright Act, with the aim of introducing a new copyright bill within 18 months that would update and extend the framework for digital copyright in New Zealand. The first phase of that review would have been to commission an independent analysis of the problems within the status quo from an eminent expert, such as the review done by the independent UK report Digital Opportunity, produced by Professor Ian Hargreaves, which was created for the UK Government. We would then have undertaken a period of consultation. That was a really important piece of work to undertake, and it has not occurred in New Zealand, despite the Government actually saying that it would go ahead with that. I would be very interested to know from the Minister of Commerce why that has not occurred, and I am sure that we will be trying to tease that out when we get to the select committee process.

The US itself is actually undertaking a copyright review right now, but there has been a suggestion—and I want to put it on the record in this House—that the copyright review that was agreed to by this Government has been suspended on account of New Zealand’s ongoing negotiation of the Trans-Pacific Partnership agreement. The United States has reportedly tabled terms during the Trans-Pacific Partnership negotiations that, if implemented, would require amendments to our current law. For example, there are some leaked texts that show that New Zealand has been asked to extend the duration of copyright by 20 years, to 70 years, depending on the type of work and the date that it was published. It has been suggested that this could also result in the expansion of the regulatory regime under which internet service providers must assist rights holders in enforcing copyright online, pulling New Zealand closer into line with the US Digital Millennium Copyright Act. We could also see a new criminal offence for the act of circumventing a technological protection measure or a digital lock, even in the absence of copyright infringement. Another proposal might require New Zealand to afford rights holders an exclusive right over temporary electronic copies, which could mean changing the provisions in our Copyright Act that carve out the liability for transient reproductions of copyright works as part of normal technological processes. These issues are all extremely important. They relate to New Zealand’s intellectual property laws, our regime, and also our intellectual property itself. We ask why that review is not occurring and why we cannot have a public conversation about these issues, especially in light of the US having just announced its own copyright review.

I have said in this House many times that we have to get our heads around the internet. The language of copyright policies in many regimes, including our own, likens a physical copy to a virtual one. This, if actually recognised in law, would become a problem for internet service providers of all kinds, because internet traffic is transmitted from point A to point B by making temporary copies. Strictly applied, this right would pretty much make the internet illegal. I think it is really important to have this public discussion in our country, and I would like to refer to some of the work that has been done by InternetNZ, which has recently said that we must take a principled approach on these issues. We must set down some principles upon which we are going to have this discussion.

In the last year—last October—I spent 3 weeks travelling through the United States on a trip devoted to intellectual property. Despite the reality of counterfeiting and fraud in the physical world, most of the discussion that I had in that period of time revolved around intellectual property in the digital environment. I would just like to say that the United States measures its intellectual property. Its intellectual property supports at least 40 million jobs and contributes more than US$5 trillion, or nearly 35 percent, to the United States GDP. I ask why we do not measure our intellectual property. We do not. I have asked the Ministry of Business, Innovation and Employment whether we do, and we do not. We do not get the importance of our intellectual capital to our economic growth—either that or we remain in thrall to our trade partners. Our economic development, the growth of our weightless economy, depends on this, and it is time we grew up.

HOLLY WALKER (Green): E te Kaihautū o te Whare, tēnā koe. E mihi ana ki ngā mema o te Whare Pāremata, tēnā koutou katoa. Ngā mihi nui ki a koutou mō te Wiki o Te Reo Māori. I rise to speak to the Copyright (Parallel Importing of Films) Amendment Bill. The Green Party has been aware for some time that legislation of this nature would soon be coming before the House, but I have to say that it is very disappointing to have it come to the House in the manner that it has today, under urgency with only a few hours’ notice and no advance copy of the legislation.

Under different circumstances it is likely that I would be thanking the Minister of Broadcasting for the open way in which he consulted with parties across the House about the need for this legislation. Indeed, to give the Minister credit, he did do that and he did proactively consult with parties about options for amending the Copyright Act to address the fact that the current ban on the parallel importation of films will lapse at the end of October. However, unfortunately, some of that goodwill has been undone by the decision to introduce this bill under urgency and without notice in the middle of the time during which the Minister had sought the views of other parties. There is no apparent need for such a high degree of urgency.

We in the Green Party consider that we have not had sufficient time to consider this legislation, and, indeed, for that reason we will abstain on the bill at its first reading, but we will revise this position and either support or oppose the legislation at subsequent stages after a select committee has considered it. But with such an unjustifiably poor process as was followed today, we are unable to take a firm position in the House tonight.

I would like to take a step back and talk about the issue that this bill seeks to address, and it has been covered by other speakers, as well. Between 1998 and 2003 the parallel importation of films and DVDs was unrestricted in New Zealand, but in 2003 the then Labour Government introduced a 5-year, temporary ban to prohibit the commercial importation of films for a period of 9 months after the film’s first public release. The Green Party supported the introduction of this 5-year ban at the time. This restriction was renewed in 2008, but it is due to lapse, as we have heard, on 31 October of this year.

The film industry contends that it would be detrimental to allow the restriction to lapse at this time, and it has requested that it be continued in some form. As I understand it, there are two main issues here. The first is the impact that unrestricted parallel imports of films and DVDs would have on local cinemas, particularly smaller regional cinemas in provincial New Zealand, and the people whom they employ.

Secondly, there is a risk that small, independent, local films, which are a marginal proposition in terms of profitability as it is, may not be made if there is not a guaranteed period during which they can be exclusively screened in cinemas. The example that I guess we could use would be the damage that was done to the film Sione’s Wedding when counterfeit copies of it were extensively distributed during its theatrical release. That was not an issue of parallel importation, but it did illustrate the impact on a film’s profitability that the circulation of copies of a film can have during that early period of its release.

We certainly would not want to see anything that would result in a constraining of the New Zealand film industry. In addition, I understand that there are some questions about the future viability of both large and small film festivals, because if there is no way to restrict the distribution of the same films by DVD before they are released at a film festival that could be problematic for securing films and audiences for film festivals. I am sure this will be close to the hearts of many members as they pore through the programme for the 2013 International Film Festival at the moment.

There is, of course, a counterargument to all of this, and it was expressed quite nicely by the previous speaker Clare Curran. She said that the world has moved on, that we really should not be favouring one particular form of distribution of film content over another. In an era of increasingly digital distribution, in which New Zealand does miss out currently, often for months, on high-profile international titles that have been released overseas, and during which time people are given a perverse incentive to illegally download titles, in frustration that they are not legally available in New Zealand, there is an argument that it does not make much sense to continue to artificially hold parallel importation at bay.

Indeed, it effectively takes place at the moment because, as Clare Curran said, the internet has changed the situation dramatically. There is rapid circulation of unrestricted copies of films on the internet, and in the light of this reality I think there really is a strong argument that we should explore how to facilitate legal file-sharing sooner, rather than trying to cling on to the idea that we can limit films to release through cinemas only.

No doubt these issues will be teased out by the select committee in the submission process, and we will listen very carefully to these submissions because we think there is a lot of merit in these arguments as well, as we come to a decision about whether to support or oppose the bill at future stages. However, these concerns notwithstanding, we do share the concern of the Minister that we need to retain regional cinemas and the jobs they create, the employment they create, in these communities and we do need to protect and maximise the opportunities for the New Zealand film industry.

The particular legislation that the Minister has put before the House tonight would extend the current ban until 2016, but it would shorten the restricted period from 9 months to 6 months. It is not clear from this particular vantage point the rationale for that particular configuration of the extension of time and reducing the number of months. It will be interesting to hear from officials—and, hopefully, we will—at the select committee about why this particular combination of years and months was chosen.

I note that it is in fact another temporary solution, which may require Parliament to revisit it in 3 years’ time. I do wonder whether it might be better, or possible, to undertake a more comprehensive process at this time to effect a permanent solution to this issue, rather than continuing to legislate for it in a rather ad hoc way every few years, as has happened in 2003.

Essentially, that is our discomfort with the legislation and the reason that the Green Party is abstaining at this first reading—because it does all feel very ad hoc. It is beyond me why this bill needed to be introduced in such a rush today—in such a rush, in fact, that we were unable to obtain a copy this afternoon because it was still being written—when the Government has known since 2008 that the temporary restrictions would lapse at the end of October this year, and it has had months, if not years, to figure out a policy response to the lapse of the ban.

I know that the industry has been actively engaging with the Minister for several months, so there has been plenty of time to take a decision and to bring it to the House in a timely manner. In fact, there is still plenty of time, because the provisions do not lapse until the end of October, and it is only the beginning of July. There are still 4 months for Parliament to consider legislation on this matter, so it is not at all clear why we are looking at it in such an urgent process tonight. It smacks of a very ad hoc, poor process on the part of the Government, in relation to this legislation.

We think the Minister would have been better off to finish engaging with the other parties to seek a permanent solution, rather than another temporary solution, and to allow time for a fulsome select committee process to take place. But, instead, we are here in the House debating this bill with only a few hours’ notice, and the Green Party cannot support it, so for this reason we will abstain on the bill until future stages. Nō reira, Mr Assistant Speaker, kua tae mai au ki te mutunga o taku kōrero. Tēnā koutou katoa.

[And so, I have come to the end of my address, Mr Assistant Speaker. Greetings to you all.]

Peseta SAM LOTU-IIGA (National—Maungakiekie): Tēnā koe, Mr Speaker, and good evening to you and my fellow colleagues here. Before I talk on the Copyright (Parallel Importation of Films) Amendment Bill, may I just acknowledge the service that we held tonight in this Chamber for the dedication and unveiling of commemorative plaques, which are to my right in the Chamber, for Afghanistan, Timor-Leste, and missions in support of peace; those who have given their lives so that we can stand in this Chamber and debate issues that matter to New Zealanders; and their families who are here tonight to commemorate the sacrifices of our armed forces overseas.

But I will return to the bill. As has already been stated across this Chamber, there is great support for this bill. I am glad that the Minister of Broadcasting is in the House to hear the deliberations and the oral submissions of members on the first reading of the bill. As has already been stated, this bill imposes a temporary ban on the parallel importation of films for commercial purposes, not personal use of films, for 5 months from 31 October this year. Given the two 5-year periods under which the ban has already been imposed in previous legislation, I think it is welcome, given the consultative process that was conducted in February of this year, that that period is reduced to 3 years and that the ban on importation from the first release of the films to the public has been reduced from 9 months to 5 months.

It is a commendable bill, and it is one that we will certainly debate rigorously in the select committee process. It provides for digital expansion and transition to occur in the next 3 or 3½ years, and it is certainly to be accepted that in that period, as Clare Curran and my other colleagues have stated, we will see a convergence of technology, such that, hopefully, we will not be requiring this bill after 2016. I commend this bill to the House, and I thank the Minister for bringing it to this Chamber.

TRACEY MARTIN (NZ First): Kia ora. I rise on behalf of New Zealand First to speak on this bill. The title of the bill on the Table is the Copyright (Parallel Importing of Films) Amendment Bill. The provisions it is altering were originally in an Act called the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Act 2003. I have some questions as to what has happened to the “Onus of Proof” part of the original legislation, and how that will be addressed by this amendment. But perhaps that will be dealt with at a later time.

New Zealand First supported this provision at its first introduction in 2003. New Zealand First supported the provision’s retention in 2008, just as we supported the Copyright (New Technologies) Amendment Act, which also includes a 9-month ban on copyright infringements. But times change, and inside the world of digital technology times change very, very quickly.

If I can just make sure that we all understand what the original Act did that we are amending here this evening. The provisions of the original Act meant that no one, other than the producers of a new film or their licensed distributors, was able to import into New Zealand any copies of that new film for a period of time following its public release anywhere in the world. This law covers all commercial films, regardless of their format. Private individuals were, and are, still able to buy these films from overseas in whatever form via the internet and bring them in for their own use. The restriction on parallel importation was, and is, directed essentially at commercial distributors.

The original 9-month period—in this legislation there is a 5-month period suggested—for new films was selected as an appropriate period within which copyright owners and cinema operators could derive an economic return on the cinematic release of these films. New Zealand First wishes to acknowledge that it is recorded that film exhibitors employ approximately 10,000 New Zealanders directly, and indirectly another 21,000 New Zealanders gain employment from contributing industries. We want to acknowledge that a major driver for the staggered protection was the viability of cinemas, and perhaps more specifically the protection of rural cinema owners. New Zealand First most certainly supports all those in our very stressed rural economies.

Much of this viability was based around the fact that the major film producers in the US—as has already been mentioned—release their new films in time for the US summer, spring, or Thanksgiving breaks. These do not directly align with the New Zealand school term breaks, where the maximum audience participation happens. This is where, historically, cinemas have made the profits that sustain them over the quieter weeks of the year. It is during those quieter weeks that they show New Zealand films such as This Way of Life, and have film festivals. It would be a concern if cinemas closed or chose not to show the sometimes less profitable New Zealand films, as this would have a downstream effect on that section of our artistic community.

The definition of films covered by these measures relates to those intended for commercial release, having been specifically amended during the passage of the original legislation to exclude films intended for educational distribution. The 2003 legislation had a sunset clause provision that enacted in 2008. The Act was renewed by the Labour Government with another sunset clause of October 2013, hence we are here today.

Coupled with the delay to parallel importation was a provision to protect against the imports of counterfeit films, sound recordings, and computer programs. Infringement would occur if the importer knew or ought to have reasonably known that the imported item was an infringing copy—a counterfeit copy. The onus of proof was reversed at the 2003 introduction, with imported copies being presumed to infringe in the absence of evidence to the contrary. It is up to the importer to prove that the parallel imports are not pirated copies. Where has that protection gone? Or is that protection being retained under the original Act even while this new one amends it? If we could have clarity on that, that would be really great. This is part, unfortunately, of the problem of only just seeing the legislation and not having an opportunity to discuss this deeper.

This part of the legislation, this protection around counterfeiting, was essentially technology-driven. The ability to mass-produce identical perfect copies at the push of a button made it much harder to distinguish counterfeit copies from genuine copies that had been parallel imported.

New Zealand First wants to recognise that both of the areas covered by the original Act still have merit. This was witnessed, as I mentioned earlier, by our clear support for this legislation in 2003 and 2008, but whether it is now necessary is the question. New Zealand First sees print media comments along the lines of: “Cinema attendance numbers have shown strong growth in recent years due to the explosion of multiplex venues …”. When we look at rural cinemas to gauge their survival we look at examples such the Matakana cinema complex, which services my local community, or the Te Awamutu Regent Theatre with its investment in a new screen, which gives a sharper picture, and 3-D format projection equipment. We see the innovative way that film exhibitors have risen to the challenge of DVD and Blu-ray, remembering that the current Act has never stopped a New Zealander from going online to purchase copies of new release films from overseas for personal use and to view in their own homes.

New Zealand First believes that through the initiatives such as Imax, 3-D showings, and exceptionally civilised introduction of premium showings where large, comfortable chairs and outstanding glasses of New Zealand wine are available to an appropriately mature audience, cinemas have created a sellable experience that may now be countering what were very real dangers to their viability back in 2003.

As a mother of three teenagers, I would also go so far as to say that it could be argued that it is the DVD manufacturers who now have to create a point of difference for this generation to compete with the cinema experience, which is now to many of today’s younger generation, just as it was to the generation of the 1950s and the 1960s, the place to go with mates. In my research for this speech I spoke to students from the 1960s who told me of going along with a gaggle of mates and sitting through four movies in a row after a day of study at Auckland University. I recognise in that story the number of times that I have ferried my own 15-year-old son to the local cinema to meet up with his gaggle of school friends, where they watch a Sunday movie and then adjourn to the neighbouring ice cream parlour until ready to call the mum and dad taxi to collect them.

We will be interested—we will be very interested—if this bill passes this reading to see the select committee report and its conversations around these topics. Should this Act gain enough support to pass the first reading we would suggest that the select committee consider section 35(2)(b) of the Copyright Act. This section stipulates that courts must not require a defendant of copyright infringement charges to reveal its source of product in circumstances where it would be unreasonable for it to do so. In normal court proceedings for copyright infringement, revealing the source of the product would be an expected outcome of the discovery process. For the conflicting reasons verbalised above, New Zealand First will be abstaining from voting on this bill.

KANWALJIT SINGH BAKSHI (National): Sat sri akaal, Mr Speaker. First of all, I would like to pay my tribute to the New Zealand Defence Force for its peacekeeping role around the world. Because of its sacrifices, we are standing here today and debating freely in this Chamber.

Talking about the Copyright (Parallel Importing of Films) Amendment Bill, this bill imposes a temporary ban on the parallel importation of films for commercial purposes for 5 months from the date of the first release to the public. The ban applies only to the importing of films for commercial use, and does not prevent consumers from importing films for their personal use. In February 2013 the Ministry of Business, Innovation and Employment undertook a public consultation in order to review the ban on the parallel importation of films. The ministry received submissions in support of both extending the ban and allowing the ban to lapse. In consideration of these submissions and in engagement with other parties, the Government has agreed to introduce legislation to amend the Copyright Act to extend the ban, which was due to expire on 31 October 2013.

Before I conclude, I would like to share that I am also a big fan of watching movies. I go to the theatre every month with my family to have some entertainment. In India the cheapest form of entertainment is watching films. They produce almost 1,200 movies every year. So I have followed that same passion over here, and I go to the theatre every month to watch movies. The cost of production is going up every day, and we have to protect this industry. With these words, I commend this bill to the House.

Hon TREVOR MALLARD (Labour—Hutt South): I want to join with the members who have acknowledged the ceremony that took place in the House during our dinner break commemorating the people who have fallen in the most recent campaigns. I think all of those campaigns have been in the time that I have been a member of Parliament, and I know that Governments make very serious decisions to commit troops to them. We have done it in the knowledge that the chances were that we would lose people. We have, but that does not make it any easier. As many of us know the families of people who have fallen, it makes it harder still. One lives in the hope that we will not have to add to the names on our wall, but in the end I think that the Governments of New Zealand will do what is right, and that sometimes involves the deployment of our troops overseas.

I would now like to move to the bill before the House, the Copyright (Parallel Importing of Films) Amendment Bill. I commend the Minister of Broadcasting for listening to the submissions, but I have to say that I am very disappointed that the bill has come up under urgency. I think that even if, frankly, Michael Woodhouse was still a whip and had something to do with the organisation of the House, this bill would not have come up under urgency. It could have come up on Thursday afternoon next week, when we have an extended sitting. It is something where I think the policy is supported unanimously. It probably could have gone through the House in half an hour in an extending sitting, and we would not have had an extended debate, as we will have after this, on the referral. But, whether a bill is supported or not, because it has come up under urgency it is the tradition—and really the only approach that an Opposition can take—to use its time in order to debate this.

I would say that having read the regulatory impact statement, it is a bill that is not supported by the Minister’s officials, and it is good to see a Minister acting with some backbone to stare down the officials and to make decisions.

For the owners of around 120 cinemas, as there are in New Zealand—I will just say that I am surprised that there are only that many. Because of the way that they have been developing and redeveloping and opening around New Zealand in recent years, I thought there would have been more. At this point I do want to acknowledge and pay tribute to Dick Werry, who is a local Hutt Valley former regional councillor, the son of a former mayor, and someone who bought the old Labour Party hall, which was built in 1926, I think, and opened in 1927 by the then leader of the Labour Party, Harry Holland. Over many years—I cannot remember all of them, especially in the early stages—there were lots of Labour Party dances, concerts, meetings, and film shows. But that is now very well preserved and commemorated in that hall.

Dick Werry has got it pretty much right, with light meals, lots of food available, wine, high-quality ice creams, and other things. He gets a regular clientele because there is a good range of movies. He has sessions for young mothers and kids, and sessions that are designed in particular for older people. Both of those are run during the daytime, and it works well to build up the use of the cinema.

It has changed a bit since the days when, from memory, I think I used to be given 1s 6d to go from Wainuiōmata to what I think was called the Empire Theatre, which was on the corner of Whites Line East. [Interruption] What was that?

Kris Faafoi: Were they silent movies?

Hon TREVOR MALLARD: No, no. They were not silent movies, but one of the earlier ones that I can remember—I think I was 5—was Ben-Hur. I think it won an Academy Award.

Kris Faafoi: It was an epic.

Hon TREVOR MALLARD: Well, it was. And I want to say to members that, yes, I did see it the first time round. It was not—

Hon Member: Yes, and it was in black and white, wasn’t it?

Hon TREVOR MALLARD: You cheeky young thing! It was not on a rerun. I think that it is fair to say that tastes have moved on and theatre styles have moved on a bit since that time.

We have seen some unusual ones. I think that probably the most unusual theatre that I have been in is the wharekai at the—my friend Tau Henare might be able to remind me—main marae at Tikitiki, where the van used to come around every month with the latest movies. There was one particular occasion, just before we had been visiting up there—the van would back up to the door of the wharekai, and the projector would go in and the screen would go up. All the locals would come, mainly on horses, because it was the early 1970s and that was the main method of transport around Tikitiki—[Interruption] Yes, around Tikitiki there were lots of hitching posts, and people would come along. But as old KD—Koro Dewes—told me, there was a cowboys and Indians movie going on, and—

Kris Faafoi: You can’t call them that these days.

Hon TREVOR MALLARD: What?

Kris Faafoi: You can’t call it that these days.

Hon TREVOR MALLARD: Why can you not call it cowboys and Indians?

Dr Rajen Prasad: Hang ‘em high.

Hon TREVOR MALLARD: Oh, steady on, Rajen, steady on! Oh, come on—oh, come on.

Dr Rajen Prasad: Who are you calling a cowboy?

Darien Fenton: Ha, ha!

Hon TREVOR MALLARD: Darien! The bad guy was lining up a shot at the good guy when from the back of the wharekai out rang a shot. One of the locals had put a hole in the temporary screen at the front, and right out the back wall of the wharekai, as well. So that was an unusual type of theatre, and Koro Dewes did indicate to me that if I did not behave myself, then he would call those people back.

But times have moved on, and I think all of us have our favourite movies. I am not ashamed to admit that Notting Hill is mine. It is, you know—[Interruption] What? Notting Hill.

Hon Members: Notting Hill!

Hon TREVOR MALLARD: Oh, come on! Can anything be more beautiful than Julia Roberts—you know, Anna Scott. I have got some doubts about this. I mean, I think we are unlikely to ever see another movie like it. Therefore, waiting 5 months might not be the end of the world, but back in the old days, if I knew I had to wait 9 months for Notting Hill to come back, I would have been very disappointed. That film, of course, had Hugh Grant, who played William Thacker in it, and Rhys Ifans, who played Spike. I think that that was an unforgettable character. I mean, there is nothing like a decent romantic comedy.

Hon Member: Ha, ha!

Hon TREVOR MALLARD: I noticed some laughter over there from the member sitting next to—this was in the pre - Divine Brown days of Hugh Grant. It was when we had him in a different class. A lot of us are not quite sure what we think about Hugh Grant these days.

But the thing that we are certain about is that this bill is an important window in a transition that is occurring. I think the one thing that we do know is that we do not know what is going to happen as far as movies, IT, and the convergence of television and the internet are concerned. I think that what this does is give us a bit of a transition period so that organisations and people can invest in theatres. They are good social opportunities for people. They are a good place for people to get out to, and this will help their survival.

I will repeat right at the end what I said at the beginning: this bill would not be being debated now if it was done in normal time or in an extended sitting. We could have got through it in 10 minutes or a quarter of an hour. The fact that the Government has decided to take an hour and a half under urgency just seems to me to be disorganisation on its part. Thank you.

The ASSISTANT SPEAKER (H V Ross Robertson): And watch silent movies.

MARK MITCHELL (National—Rodney): Could I also please just mention that it was a real honour to be a part of the commemorative service tonight for the servicemen and women of our New Zealand Defence Force, and also our New Zealand Police Force, for the service that they have given in Afghanistan and Timor-Leste, and on missions in support of peace. Can I just acknowledge the families who were with us in this Chamber tonight, and tell them that we cannot really feel or understand the pain and the suffering that you are going through, but certainly I know that all my colleagues in this Chamber and New Zealand as a whole try to share and carry some of that burden with you.

I would just like to speak very briefly in support of the Copyright (Parallel Importing of Films) Amendment Bill. It is another very good bill that Minister Foss has brought to the House. It makes perfect sense. It allows cinemas time to make the switch-over to digital, and I know that I have spoken to the owners and operators of the two cinemas in my own electorate—in Matakana and Whangaparāoa—and obviously they are both very supportive. This is important for them, in terms of their own business. I am very happy to commend this bill to the House. Thank you.

The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member Dr David Clark. A split call.

Dr DAVID CLARK (Labour—Dunedin North): I join all my colleagues in the House in acknowledging the servicemen who are remembered in the plaques at the back of this Chamber.

In discussing this bill, the Copyright (Parallel Importing of Films) Amendment Bill, I am a little disappointed that the previous speaker, Mark Mitchell, did not tell us a little about his favourite movie. Mr Mitchell is a man of much imagination, and I am quite certain that we could have learnt a little more about his character. There is speculation over this.

Hon Trevor Mallard: But why is he keeping it secret?

Dr DAVID CLARK: Members on this side are wondering why he is keeping it secret, and we will leave it to those at home to imagine, or not, why that might be. I am, of course, a fan of one of the earliest movies I saw, which was Star Wars: The Empire Strikes Back, with Yoda on the big screen. Do colleagues remember R2-D2 and Obi-wan, and many other characters?

I have on occasion sat in this House and thought about who might fulfil those roles in a remake. I will not go into too much detail here, because I think I will get myself in trouble, but there are many members around this House who bear some of the characteristics, and, of course, the Speaker and the other presiding officers all have Jedi characteristics of one nature or another in that parallel. There are obvious members for the Chewbacca link. We can all clearly see which side the Force is on at any given time, but the Dark Side across the House are offering the kind of unhelpful speculation that will not take this conversation much further.

I should put on record that it is a shame this bill is here under urgency. It surely is not a bill that needs to be here under urgency. In fact, it probably could have been tucked away in an omnibus bill or a Statutes Amendment Bill. If what Mr Mitchell said is true—that it is a common-sense bill; and from my brief look at it, it does appear to be that way—then surely it could have been dealt with behind the scenes.

The bill could have been brought in, essentially, as a fait accompli to deal with through the processes of the House, with consultation, as is appropriate, with other parties. But, unfortunately, this Government is a little bit disorganised, it seems, and so it is bringing us bills under urgency. As a consequence, the bills will, in fact, take longer to deal with, because when members do not have the bill more than an hour or so before it is to be debated—in fact, in this case we had it for only 1 minute, Ms Fenton tells me, before it was due to be debated—it becomes a more challenging prospect.

Members feel that they then have to work their way into the bill to make sure that it is really all that says it is and that we are not doing any disservice to the taxpayers who ensure that we are here to debate the issues on their behalf. Having put that on the record, I would like to go back to Star Wars for a minute or two, because Star Wars contains so many metaphors that are apt to this House.

Alfred Ngaro: This member hasn’t even read the bill.

Dr DAVID CLARK: Mr Ngaro opposite is claiming that I have not read the bill. I have, Mr Ngaro. I can point to the many scribbles here and the underlinings. I know that the bill shifts the effective current ban of 9 months down to 5 months for a release of a parallel imported version of a film. I have read a little bit about the reasons for that. We have the regulatory impact statement supplied by the Ministry of Business, Innovation and Employment, and we have a view expressed by officials that is different from the view taken by the Minister. We have all of that there. But I think Star Wars is the more interesting topic, having had a look at the bill, if we are all honest.

I would like to take some nominations from around the House for some of those key roles: the Han Solo, the Luke Skywalker, the Princess Leia, from around the House.

Hon Members: Jabba the Hutt.

Dr DAVID CLARK: Jabba the Hutt, a colleague suggests. There may be no obvious candidates for some of these, but we will let our minds wander. But Mr Assistant Speaker reminds me I have only half a minute left to wind up my speech on this bill. I do also want to make the comment that in some ways this is debating the issue of today, and it does not take into account the issue of tomorrow when ultra-fast broadband finally gets here—probably under a Labour Government. We will have a much bigger issue to deal with and that is how we ensure New Zealand content is generated and protected. That is an issue for the future of our film industry.

GARETH HUGHES (Green): Kia ora. Ngā mihi nui ki a koutou. Kia ora. I also would like to share my acknowledgment of the ceremony that was in the Chamber earlier tonight and the new plaque on the wall. It is a fitting addition to this Chamber—the fourth-oldest democracy in the world, I understand. So I guess it is disappointing to have to be debating another copyright law under urgency in Parliament. I do not know what it is about copyright laws and this Government, but somehow, for some reason, they have got to be debated under urgency. The Greens will be abstaining on this bill. We want to hear the arguments.

I think it is a ridiculous process that we are discussing an issue with such a heads-up. This ban on parallel imports, on copyrighting films, which this bill deals with, was first implemented in 2003 and extended in 2008. It is not like we have not had a long amount of time leading up to this decision. There is no actual urgency. In fact, the bill was tabled on the Table only when the Minister started speaking. That is unacceptable for a bill like this. In fact, our caucus was discussing a letter from Minister Foss only today asking our opinion. Yet a few hours later we see this bill slammed down on the Table with no justification. I think it is a disappointing practice. There has been no urgency. In fact, it turns out that they were literally writing it today, and we still have not heard a reason why it had to be implemented under urgency.

What we want to have is a good debate about copyright. This is vexing international legal experts all around the world. It has moved from arcane, dusty rooms of law libraries and law professors discussing it, to the front pages of our newspapers and literally the front lines of global treaties like the Trans-Pacific Partnership or the new Copyright Tribunal in New Zealand. Huge political movements around the world are debating these very issues, and I do not think it serves this Parliament or this Government very well to be debating such an important issue under urgency.

What we see under this bill is very much a temporary solution, a band-aid over the ban that was extended in 2008. All this bill does, and I note that it is only two pages, is extend the temporary ban on parallel importing of films for another 3 years, but it does reduce the length of the ban from 9 months to 5 months. It is very much a temporary measure. They call it a transitory measure, but how many times can you keep extending a so-called transitory measure? Will we be back in another 3 years’ time extending it again because the movie industry has said it has not had enough time?

It is important and it is good to see the regulatory impact statement. It says there were only 16 submissions during consultation, so not exactly overwhelming public debate on this very issue. What we actually see is the Government officials advising against this legislation. It is clear: they are advising against this legislation for a number of reasons. The bill and the regulatory impact statement raise a number of very important issues, and they need considered thought, not this rushed, botched little process. On one hand, you get the arguments of people saying we need to protect the cinemas, we have got to protect Kiwi films, and this is the only way we are going to do it. People say we need a temporary monopoly of distribution rights favouring one technological distribution method. It is an idea that has its opponents, and what you see is industries in New Zealand like Quickflix, which wants to provide online content distribution channels, raising some concerns. Obviously, DVD providers are raising some concerns. I guess this is why the Greens do not have a position on it: we are going to hear the arguments from both sides.

The legitimate question that has to be raised is why you would pick the cinema industry to protect, vis-à-vis all the other industries they could be protecting, or maybe just having a level playing field, as the regulatory impact statement states. Why can we not have competition in the sector? Why would you pick this sector? I did not see the National members outside saving Video Ezy stores and trying to protect VHS. I did not see National members trying to protect the carbon arc projector and then the reel projectors. Why would you protect this one sector? I think if cinemas are going to be competitive, it should be because of the atmosphere. There are some great Kiwi cinemas around the country offering a service and not needing statutory protection to protect what some people would say is an old-fashioned business model.

The bill is framed as a transition, but we have got to ask whether we will be back here in 3 years. The officials say that lifting the ban would have only minor impacts on the sector. In fact, it would encourage those legal distribution methods, and all the international data and data from New Zealand shows that providing legal alternatives, and different distribution methods legally and affordably, is the best way to crack down on infringing piracy. This is what we see in the submissions.

Actually, what this bill is going to be doing is encouraging online infringement of copyrighted materials. We heave seen this punitive, lobby-first approach from sectors involved in this debate, and, ultimately, we need to embrace the modern. We should not be scared of it, like the carbon arc projector. We should be looking to the future. But there are arguments on both sides. We will hear both sides in the select committee debate. We think it is an absolutely shocking process to receive this bill literally when it starts being debated. So that is why we are not voting for it and we are not voting against it. Kia ora.

TIM MACINDOE (National—Hamilton West): Tēnā koe. Tēnā koutou e te Whare. I too was moved and considered it a privilege to be in this Chamber earlier this evening for the dedication and unveiling of the three commemorative plaques. I wish to acknowledge all those who served our nation in Afghanistan, Timor-Leste, and recent peacekeeping missions. In particular, I acknowledge the sacrifice of those who fell. They will be for ever remembered in these plaques. It is a wonderful thing that they have been unveiled in this Chamber.

I thank all who have contributed to the debate on the Copyright (Parallel Importing of Films) Amendment Bill, and I am pleased to offer it my support.

A party vote was called for on the question, That the Copyright (Parallel Importing of Films) Amendment Bill be now read a first time.

Ayes 96

New Zealand National 59; New Zealand Labour 33; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 1

Independent: Horan.

Abstentions 21

Green Party 13; New Zealand First 7; Mana 1.

Bill read a first time.

Bill referred to the Commerce Committee.

Hon CRAIG FOSS (Minister of Commerce): I move, That the Copyright (Parallel Importing of Films) Amendment Bill be reported to the House by 16 August and that the Commerce Committee have the authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 188 and 191(1)(b) and (c).

The ASSISTANT SPEAKER (H V Ross Robertson): The question is that the motion—point of order, the Hon Trevor Mallard.

Hon Trevor Mallard: No, no. I am just going to make a speech.

The ASSISTANT SPEAKER (H V Ross Robertson): Well, you have jumped up too soon, Mr Mallard. I have not put the question yet.

Hon Trevor Mallard: Well, away you go.

The ASSISTANT SPEAKER (H V Ross Robertson): The question is that the motion be agreed to. Those of that opinion will please say Aye—

Hon Trevor Mallard: Mr Assistant Speaker, I am calling. I called. It is a debatable motion. Wakey-wakey!

The ASSISTANT SPEAKER (H V Ross Robertson): Oh, I am sorry. I call the Hon Trevor Mallard. It is one of those evenings, Mr Mallard.

Hon TREVOR MALLARD (Labour—Hutt South): Thank you, Mr Assistant Speaker. That was a shocking abuse of process, which is coming very close to the approach from the Minister of Commerce. Can I say that the Labour Party will be opposing this motion, not because we are opposed to the timing involved in it and the report back but because of the oppressive approach of requiring a select committee to sit during House sitting time and on a Friday in a week in which the House has been sitting.

Can I say I have not heard anywhere in this House today any argument against this bill, the Copyright (Parallel Importing of Films) Amendment Bill—I think there are a few questions around the House, and I think probably all sides have questions about the bill—but there are a lot of questions around the process. I say to the Minister of Commerce that if there is a bill around which someone expects agreement and it is coming in under urgency, the practice is normally to supply to each of the parties a copy of the bill—a confidential draft—before the House goes into urgency, so that members have an opportunity to study it so that they are prepared for the debate. Then when they come to the debate they will have a view and it is properly made up. The practice—I think generally last used under Muldoon—of dumping a bill, having it introduced, and going straight to the first reading is something that is not conducive to positive practice in the House or to support.

I will reiterate a comment that I have made previously, and that is that as this bill is one that is generally, I think, likely to be unanimously supported at its later stages, it could well have been a very good candidate to come up on a Thursday morning in an extended sitting and go through in a quarter of an hour or half an hour, rather than having an hour and a half debate on the first reading, and another hour or an hour and a half on a referral motion. I think it is something that is generally not a good use of House time, and it is an abuse of process.

There is not much doubt now that this bill needs to get through by a date in October in order for there not to be a gap, although I am not quite sure what the massive problem would be if there was a small gap between the current law and the new law. That is something that the Minister, who has the ability to have a reply in this particular debate, might want to explain when it comes to his reply. But I think I can accept that it is logical to have this bill, when it becomes an Act, coming into force at the time that its predecessor goes out. Therefore, having a shortened select committee process is logical.

But I say again to the Minister, who has got the chair of the Commerce Committee, I think, sitting behind him—is Jonathan Young the chair of that committee? I say to the Minister that compared with a number of the chairs, and certainly compared with one that I have experienced recently, he is exceptionally competent. The member, especially when he has got support of the major Opposition parties and, I understand, other parties as well, could have called for submissions over a short period, had hearings over a day or two, and got the bill reported back inside the time that we are currently obliging the committee to have now. Jonathan Young knows that when one works in a cooperative manner, things can go through pretty smoothly, and especially where there is legislation that is widely supported within the House, the process can be truncated. There is nothing in the Standing Orders that says that a bill has to take 6 months or 4 months or whatever to get back. If there is cooperation within the committee, there is no reason why it could not have been back in 5, 6, or 8 weeks anyway, with plenty of time to have it passed before the due date, without this sort of oppressive motion.

I must say that it is important that the bill is looked at pretty carefully. There are certainly some doubts from the people within the Ministry of Business, Innovation and Employment as to whether the bill should be passed or not, although I think it is fair to say, given the current direction or, on occasions, lack of direction—the wild, free-market approach of the Ministry of Business, Innovation and Employment—I am not sure that we should rely that heavily on a regulatory impact statement that it has made. But it will be an interesting part of the select committee process to have the officials interrogated on that and to see whether there is any deeper rationale behind what they are saying than what has come out in the regulatory impact statement. Frankly, it sort of reeks a bit of ideology—the sort of ideology that permeated through Treasury in the 1980s and the 1990s and appears to have spread into parts of the Ministry of Business, Innovation and Employment, I think it is fair to say. It has not spread into all parts of the ministry, but it was certainly the sort of free-market approach that has caused problems for our economy and problems across quite a wide range of areas.

I hope that the select committee in its hearings has the good sense to call in the New Zealand Motion Picture Industry Council. It is an organisation that is an industry group of both the major and the independent exhibitors and distributors. It is fair to say that it is almost like we are back where we were when I was a kid, when the local theatre was run by someone locally, it was not part of a massive chain, and it was not a big multiplex with 17 theatres, most of them with uncomfortable seats. We are now getting back to the relatively small and local approach, but there are still some of these big ones, even though they are failing. [Interruption] If I were that member, I would just be quiet on this particular subject. I think it is not one that he should interject on. I think it is fair to say that most movie theatres, the more modern ones, are relatively small. In fact, one that I have spent some time in, in Taupō, I think had only 11 seats in one of the theatres, and one of them was on the other side of a pillar. So it is fair to say that there is a range. Bringing together these different groups in a group like the New Zealand Motion Picture Industry Council means that you can get a united voice and one that I am sure will be interested in talking to the committee.

I think it is probably fair to say that it will tell the committee that this legislation does not go far enough, that it would like the sunset period to be further away, and that it would like the 5 months held at 6 months or 9 months or some figure closer to that. It will be interesting to hear the logic. But, having said that, I do accept that the Minister in bringing the bill to the House has worked a compromise. He has shown that he has been able to listen, and I hope that the select committee process is such that that continues to be the case. Thank you.

KEVIN HAGUE (Green): Tēnā koutou anō. Tēnā tātou e huihui mai ki roto i te Whare.

[Greetings once again to you collectively. Acknowledgments to us assembled in the House.]

The ASSISTANT SPEAKER (H V Ross Robertson): Tēnā koe.

KEVIN HAGUE: It is a source of some regret for me that I was not able to speak in the first reading of this debate, because I would have loved to reminisce about Flipper and Dr Who—some of those films that I saw in my youth.

Hon David Parker: Back when you had hair.

KEVIN HAGUE: I did have hair at the time, Mr Parker, yes. I rise now to express some thoughts from my colleague Holly Walker on this debatable motion around the shortened period for select committee consideration. Our decision to abstain on the Copyright (Parallel Importing of Films) Amendment Bill itself notwithstanding, the Green Party will support this motion, but not because we are happy with the 7-week select committee process on a piece of legislation like this. Rather, we are supporting this motion because the alternative was for the Commerce Committee to have only 4 weeks to consider the bill—something we consider to be totally unacceptable. A 7-week process, although far from ideal, is better than a 4-week process, which is why we requested that the Minister of Commerce extend that as much as possible. It is, I guess, a source of further regret that this bill has been introduced under urgency, which is a further abuse of process in our view.

As Holly Walker noted in her substantive contribution to the first reading, we can see no reason why the select committee process needs to be this short, given that we have until the end of October to pass the legislation required before the provisions of the current ban lapse. We certainly recognise the Minister’s concern that ensuring that something is passed before then is important, because if the ban were to lapse in October, followed by a period of unrestricted parallel importation, it could be that that could give rise to problems that may be difficult to reverse. But I am mindful also of Trevor Mallard’s comments about that, and I am not sure. I would like to know what those possible unforeseen consequences might be. I guess if we knew what they were, they would not be unforeseen. It is likely that some form of shortened select committee process was always going to be necessary, but we in the Green Party do not see why it should not be 2 or 3 months, rather than a matter of weeks only.

It is a good innovation in this current Parliament that we now have debatable motions when the process for select committee scrutiny is being curtailed. That greatly increases the transparency of parliamentary decision making and requires Ministers to actually justify their decisions to curtail the level of parliamentary scrutiny—or, rather, it should require Ministers to justify that curtailment of parliamentary scrutiny. On this occasion I notice that the Minister has not yet taken a call, and I look forward to him doing so to explain the reason why that shortened scrutiny is necessary.

It still seems to be increasingly common for members to be dealing with bills that have a curtailed process, such as this one. Recent examples include the Plumbers, Gasfitters, and Drainlayers Amendment Bill, which was given an extremely short select committee process of only 2 weeks, yet has then languished for months since the Government Administration Committee reported back; and the Housing Accords and Special Housing Areas Bill, which currently stands before the Social Services Committee.

Very often the consequence of shortened select committee scrutiny is a worse bill that actually needs this House to go back and repair errors that were made and could have been avoided in the first place if proper process had been followed. What might not be so apparent to members when we make these rather arbitrary decisions to approve shortened select committee processes is that this puts the staff and officials who serve the select committee under incredible pressure. This includes select committee clerks, report writers, and administrators, as well as the officials who are appointed to the committees as advisers, and staff from the Parliamentary Counsel Office, who are faced with the often mammoth task of producing revision-tracked versions of bills with substantial changes in a very short period of time, sometimes only days. This is often invisible to members but very apparent to the staff affected. It is not appropriate unless vitally important, which it does not appear to be in this case, or, indeed, I would say, in the other cases that I have mentioned already in this contribution.

Shortened select committee processes, of course, also constrain the ability for members of the public and affected stakeholders to have their say on legislation that affects them. This should also be avoided wherever possible and should be used only as a last-resort measure. In this case it very clearly is not a last-resort situation. In this case 7 weeks is too short, but it is a lot better than 4 weeks, so the Green Party will for that reason support the motion. We wish, however, to have our concerns about the whole process surrounding this bill noted for the record. Nō reira e te Whare, e huihui mai nei kati au i konei, tēnā koutou katoa.

[And so to you the House who have gathered, I end here and thank you all collectively.]

Thank you.

Hon DAVID PARKER (Labour): As the Hon Trevor Mallard has said, we will be opposing the motion, in part because the Copyright (Parallel Importing of Films) Amendment Bill has been introduced under urgency. I just wanted to state some of the principles that lie behind why it is that we generally have longer select committee processes than will be provided for with regard to this bill if this motion is passed. The Standing Orders were changed in this Parliament because there is recognition across Parliament that one of the few protections that we have against unwise legislation lies in having a proper and fulsome select committee process—a select committee process that is long enough for the issues that are, or might be, of concern to be thought about properly by submitters who could have time to reflect on complexities and submit, and then there should be time for select committees to properly consider the issues that are raised by submitters.

Let us take this case in point. In this situation we are dealing with a conflict involving monopoly rights of copyright holders, some of whom want to restrict the parallel importing of films, and who say that that is, in part, because they want to protect the local cinemas. I for one am a believer in copyright. I believe that it is important that we protect the rights of the creators of creative content to get an economic return on their creativity for a period of time.

If we did not have copyright, we would be worse off as a society, because the creative work of authors, film makers, painters, and sculptors would be less. They would not be able to get as much of a return for their creative efforts, because someone else would be able to just rip them off the next day and produce a copy that could be sold at a cheaper price, and that would not enable the salary or the profit to be paid to those who produced the creative content. Therefore, you would have less creative output in society.

These things have to be founded on their underlying principles. The other side of that—and we see this issue coming up in the Trans-Pacific Partnership at the moment—is that if you extend the term of copyright beyond a fair period, then the disadvantages that accrue to society of having conferred monopoly rights to a monopoly property right in respect of copyright are extended in a way—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! Could I remind the member that when we are debating motions such as this, it is a very restricted debate. It is not a debate on a much wider subject; it is actually restricted to the special powers on the instruction of the Committee of the whole House to have a truncated report-back period for the Commerce Committee. Standing Order 286(3) applies. I ask the member and other speakers to just be mindful of that. Although you can certainly canvass other things, debate must be restricted to the special powers or instructions that this motion is about.

Hon DAVID PARKER: Thank you, Mr Assistant Speaker, and I am just about coming to the end of this point.

The point I was trying to make is that some speakers have said that this is a simple bill, that there is only a small number of clauses, and that, therefore, there is no difficult principle involved and we can have a truncated period. I was trying to illustrate that this tension between length of copyright and the interests of protecting creative content compared with not extending copyright periods beyond the period that is necessary to generate or to encourage that creative content is where the policy tension arises. It is quite proper for other parties like the Green Party to say that they have not made up their mind on this yet, and they are abstaining in the vote on this legislation at its first reading. They have not yet got to the position that they know whether this legislation should be supported or not, and neither has New Zealand First. That shows that there are some complexities that surround this legislation, which means that a fulsome select committee process could be necessary in order to tease out the issues.

I do not actually understand properly where the tension lies here. Is it really the copyright holders who are saying that they want there to be a restricted period free from parallel importing? If that is the case, then I am quite sympathetic to that view. Some of the parallel imports may actually be in breach of copyright because the right to copy and distribute DVDs might have been constrained in their agreement with the original copyright holder. I am not sure whether this is being driven by the copyright holder of the film or whether it is being driven by the cinematic industry, and I think that that is a very relevant thing that the Commerce Committee should have time to explore.

I thought that the comment made by the Hon Trevor Mallard in his contribution was valid, too. Why is it that this legislation is so late as to be introduced now, when, according to the Government, it has to be passed by 31 October 2013 to meet the expiry date of the existing legislation? Well, the answer is that it is up to the Government to introduce legislation in sufficient time for it to be properly considered in advance of deadlines like this, and I am surprised that it did not introduce the legislation earlier so that it could have a decent select committee process.

The second point that follows is, given the reality that the Government is now where it is—and if you had a normal sort of 6-month period from now, you would go past 31 October. Well, Trevor Mallard made two good points. Firstly, with a relatively simple bill like this, you would expect that the select committee would clear this off its agenda and bring it back to the House well within that 6-month period. The Government controls the majority on the Commerce Committee. It could ensure that there was a fair, not overly prolonged, period and that it could get the bill back pretty promptly. Would that be by 16 August, in a way that enabled the new legislation to be passed by 31 October 2013? Well, it would be then or thereabouts, and if it were a bit late, what would be the great harm caused by a hiatus? Does anyone really think that for a hiatus of a 1-month period the industry is going to change what it does and bring in parallel imports in respect of films that might be released overseas during that short window? I do not really think that would be likely to be a big problem.

Hon Trevor Mallard: If so, what’s the problem? And, if so, is the world going to fall apart?

Hon DAVID PARKER: No, that is right. If there were a slight detriment from that occurring in the occasional case, the world is not going to end. As a consequence, the more proper principle to be given primacy is to not override the normal select committee process, which this Government has got into the habit of doing, and is doing often. We have had it in respect of not only this bill but other bills. We have had it done under urgency. We have had bills pushed through all stages under urgency, with no select committee process, as was the case, I think, in respect of the ouster clause ousting the jurisdiction of the court in respect of family members who provide care for disabled members of their families. That was an even worse example of an abuse of power, but this is somewhere in that spectrum. It is not nearly as bad, but it is still bad.

We have had other things done through poor process in respect of Supplementary Order Papers being introduced that did not go to a select committee but that introduced new concepts. We saw that in respect of the truncation of the right to protest at sea, which was done by way of a Supplementary Order Paper that did not even go to a select committee. So there is a habit forming with this Government, which is abusing the proper processes of the New Zealand democracy.

I commenced my contribution by saying that in New Zealand we have very few protections against hasty or ill-considered legislation because we have but one House of Parliament, and as a consequence the protections that are to be found in select committee processes are all the more important. One of the most important processes is allowing time to enable people who might have a contrary view to that which is espoused in the legislation to understand the issues, to get others who are in support to back them, and to get the fourth estate on their side. Members of the fourth estate might have a view on this, but they will not really have much time to get their heads around this bill because the report-back period is so short. What this effectively means is that to have a report-back period ending on 16 August, the advertising period has to be much shorter than that, so there will not be much time for the public to make submissions on this bill.

Having said all of that, I do not want to say that this is as bad as those other examples where we have had ouster clauses ousting the jurisdiction of the court or truncating civil liberties through a Supplementary Order Paper, but I do think this is poor process. For that reason, amongst the others that Mr Mallard has articulated, we will be opposing this motion.

JACQUI DEAN (National—Waitaki): I move, That the question be now put.

KRIS FAAFOI (Labour—Mana): Tēnā koe. I join other members of this House who have acknowledged the unveiling of the commemorative plaques that now adorn our Chamber. I acknowledge the service that the men and women of our Defence Force and our Police Force have had in those three theatres, and, obviously, I pay tribute to those who paid the ultimate price in those areas, and also to their families, some of whom were here earlier tonight for the unveiling.

As has been said by our two previous speakers to this motion, the Hon Trevor Mallard and the Hon David Parker, the Labour Party will not support this motion to truncate the select committee process. The process around this bill, the Copyright (Parallel Importing of Films) Amendment Bill, actually started before it got to this House. The discussion document was put out to the industry by the Ministry of Business, Innovation and Employment, and it is dated February 2013. There was a relatively good period of time when those who wanted to have their say got to have their say as part of the agreed document. The process went horribly wrong today, when, 1 minute before we started debating this piece of legislation, we got to see the legislation.

Then the process got even worse when the Minister in charge of the bill, the Minister of Commerce, said he wanted to truncate the period in which the public and members of this industry will have to give their submissions to the bill, and also for parliamentarians to scrutinise the details of this bill. Another member on this side of the House—I think it was David Parker—said that this is a relatively simple bill. Reading it, we certainly would agree with that, and that is why we have agreed to support its referral to the select committee.

We are not going to support this referral motion, because although it might be a simple bill, that does not mean that the process can be thrown to the wind. The process cannot be thrown to the wind so that you can start playing around with the time for the report back and also when the select committee can sit. At the moment, the Minister would like this bill to be reported back on 16 August, which is slightly shorter than the usual time, but also he wants permission for the select committee to sit when the House is sitting and also to sit on Fridays.

We questioned the need for such a simple bill—a bill that we have seen for only the last maybe 2 or 3 hours—to go through that select committee process and not receive the scrutiny that other bills would receive. This is becoming a growing trend with the Government. I understand that the Government asked to truncate the select committee process on the Telecommunications (Interception Capability and Security) Bill, which is going through the Law and Order Committee. That is anti-democratic. It does not give the right amount of time to those people who want to come and give their submissions on those bills and have their say if parliamentarians have that extra scrutiny.

They are two very different bills. One really does change the way that the Government can access telecommunications companies and the information that they have, and this bill simply looks at changing the way that parallel imports, and the ban of parallel imports, are administered here in New Zealand. But the Government is using the same roughshod process to try to get things through quickly. Also, I failed to mention that the House is under urgency, and this bill has been introduced. The Hon Craig Foss is the Minister in charge of this bill. I thought he might have learnt his lesson with Novopay. Taihoa a little bit. Do not rush things too much. Do no rush things too much, because if you rush things, you can find that things get bungled, and that certainly was the case of Mr Foss’ experience with Novopay. So we do not want that to be the experience with this bill. The Minister wants it to be reported back earlier than usual, and also to change the way in which this bill is considered by the select committee.

I would like to borrow some words from Gareth Hughes. What we have seen in the last 2 or 3 hours is a shocking process. This is a simple bill, but we do not need to see it treated this way through what the Government hopes to do through the select committee process. I do hope that maybe some people who own the 120 cinemas around the country will be able to make some submissions during this shortened select committee process if the Government gets its way.

Hon Trevor Mallard: Dick Werry.

KRIS FAAFOI: Dick Werry, the owner of the Light House Cinema in Pētone and also the Light House Cinema in Pāuatahanui and the Light House—

Hon Trevor Mallard: Central Wellington.

KRIS FAAFOI: —in Central Wellington, would certainly be one of those people who would like to submit—

Hon Trevor Mallard: Wigan Street.

KRIS FAAFOI: —on this process. Thank you very much for those exact details. He certainly is someone who is showing movies, and if there were parallel imports of those movies, he would have an issue with that because of the competition. He does show a lot of arthouse movies to very specific audiences, and if those movies were to come in pretty much straightaway from their introduction in other parts of the world, that would certainly close down his window of availability to get those movies shown at his cinemas.

Of course, there are other big multiplex cinema operators around the country, and most of them, I am sure, would love to have had a bit more time to consider this bill, particularly the regulatory impact statement, which is not redacted—a change for this Government. Around 57 percent, I think it says, of those operators have gone from the old film technology into the digital technology in showing their films, which is a big change from the time when Trevor Mallard started going to the movies.

I just want to go back to one part of the process, which has been mentioned earlier during this debate, and that is the fact that—and if people are watching Parliament TV tonight as a form of entertainment, as opposed to watching a movie, credit to you—we were given only 1 minute to have a look at this piece of legislation.

Hon Trevor Mallard: That’s why you’ve got to be careful about the process later on.

KRIS FAAFOI: That is why you do have to be careful about the process later on. Because we had such a short period of time to be able to mull over what we thought about this bill, we should have the standard amount of time to look at this bill through the select committee process. Someone who wanted to come and submit to the select committee—who went to Parliament’s website and looked at the Hansard to get some more information about what this bill is about—might not get as much information as they wanted to because on this side of the House we did not have enough time to think about the legislation. We got only 60 seconds to think about some of the ins and outs of it.

Thankfully, though, we have had plenty of opportunities to talk about this bill through this referral motion. This bill could have been treated a different way. As has been mentioned, there could have been a much better collaboration process if, as per usual, the Minister had given us a confidential copy of the bill much earlier, and then this bill may not have been put through this urgency process. Then, as many speakers on this side of the House said, we would not have created such a fuss over this, because it would have been what we understood to be a normal process where we would have the time to mull over the details of the bill and then give a considered approach to it. Also, I do not think we would have had to have a change in the time that the select committee can give this scrutiny.

As I said, we hope that some of those local cinema operators can come along and give their opinions about this. Many people during this debate have given their first and favourite movie options. The first movie for me—it is unfortunate that this is to be put in Hansard—was The Smurfs and the Magic Flute, and my favourite movie would be Crimson Tide.

I would like to reiterate, just to finish up, that we do oppose this motion for the fact that the process has been dodgy from the beginning—since this legislation has been put forward to the House. The public and the industry should have the full time available to them to make submissions, and if the Government can just take the warning from this side of the House that if it did it collaboratively, then we would not be doing this through such a roughshod process. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): At the start of my contribution this time I want to just elaborate further. A member of the public has emailed in and pointed out that I must have misspoken when I mentioned only the servicemen and not the servicewomen who have given service and their lives previously, and that is remembered in the plaques at the back of the House. I also wish to remember the police personnel.

This bit of feedback from members of the public is important in and of itself, but it is also important because this is what we are doing here. We are having a debate about this particular set of special powers—the instructions that the whole House can give or have or make for a truncated process—and I am hopeful that as we on this side of the House have given feedback to the Minister of Commerce, he will consider whether the special power instructions he is trying to give are appropriate, and he may even choose to withdraw in due course the motion that he has put forward to this House.

We on this side of the House, I think, have put a fairly compelling argument as to why this bill, the Copyright (Parallel Importing of Films) Amendment Bill, need not follow any kind of rushed, hurried, special process. It is a bill that has been able for a long time to be put before the House. The sudden urgency that perhaps saw it being written this afternoon, and certainly it being tabled with only a minute for many of us to consider before we were making speeches here in the House, need not have been the case, and it also need not be the case that we continue with a rushed process. A considered process is well worth doing.

We have 120 cinemas, we are told, around the country, including commercial, independent, and community cinemas, that will be affected by this legislation. Many of these community cinemas are funded by local councils and trusts, and they may have only one or two screens. They will not have a lot of resource to put in submissions. Often, certainly in the case of a cinema I attend in Dunedin, it is the same person who sets the film going who also serves the drinks in the intermission and takes the ticket fare at the beginning of the evening. That person, I suspect—strongly, in the case of the Metro Cinema in Dunedin—will probably also be the person writing the submission to the select committee, if they so choose.

These people who run these things often do it out of love, out of a sense of the value that they are contributing to society through the telling of stories. Let us not forget that many people today get their life’s meaning, their sense of purpose, from experiences in the cinema. It is no longer the case that they head along to the local parish church on a Sunday in the same numbers that they once did. As a minister of religion, I might say “More’s the pity!”, but I actually think that film has a huge amount to contribute to our society, and people do really interact and get a lot of value out of these screenings.

So we do have an issue here that needs proper debate, and we do have a sector of society that has a limited resource to contribute and to get the submissions in. It then follows that we should have a proper process to enable us to have—we have talked about the downside. Some of my colleagues have mentioned some of the potential downsides of the different options that were considered by officials and mentioned in the regulatory impact statement: that there will be a lapse where no regulation governs this and that there will be a short period where parallel importing could take place higgledy-piggledy, as it were. My colleagues, I think, have argued quite reasonably that that is unlikely to have a huge effect if it is only a short time span.

What seems to be far more important is that we actually have the debate properly about what the proper measure is to take, in order to protect the industry suitably or to prepare it for a future transition to what is more likely to be an online environment where people access films, either in groups or individually—and we are certainly seeing it individually, as it happens. It will be pretty soon the case that Mr Faafoi will be able to look up The Smurfs and the Magic Flute in the leisure of his own room, probably through an online service dedicated to doing just that. But what we are dealing with here, with the length of ban before a parallel import, is the precursor to that new world.

I suspect that when the Commerce Committee does come to consider these issues it will consider also the future. It will not limit itself to this ban right now, and what the effect on the industry will be in the next 2 to 3 years; the members on that committee will be exercising their minds as to what the future consequences of it will be, as will those submitters who will take time out of running the movies, out of serving the drinks, out of issuing the tickets. They will be thinking about what comes next. What impact will this legislation have not only now but also in the future? Should they wish to in a future time import The Smurfs and the Magic Flute to show in their cinemas, how is that going to line up with what people are able to access at home through a digital environment, where there is ultra-fast broadband where this can be downloaded almost instantaneously?

This really does come back to this issue of a truncated process, which we are debating now, and which we on this side of the House think is completely unnecessary and actually unhelpful, because we do need to have a proper process—

Hon Trevor Mallard: It might even slow the process up.

Dr DAVID CLARK: It may even, as my colleague says, slow the process up if we go down this track, because we may end up having a more—how shall we say—edgy debate, as people feel that their voices have not been heard in a truncated process. They may feel that some issues have been ridden roughshod over in the debate because they have not been considered, because members may or may not have had time to wade through the associated papers and to consider the issues at their leisure, to have conversations over a cup of coffee or to debate across the House, not just in the Chamber but actually in those conversations that often take place in the corridors of Parliament, where often little insights are shared and often a consensus view is formed. So sometimes this hurried process can lead to not only poorer outcomes but a longer process when spanners are thrown in the works, when unintended consequences come to light late in the piece. These can often be ironed out through a smoother and more normal process, where there are the regular means for input, and when officials are able to generate timely advice. These are the consequences of rushing down this path with the truncated process.

As I said at the beginning of my contribution, I am hopeful that the Minister, who is pushing for this hurried process, will take another call. I am not sure whether he is entitled, in this debate, to explain whether he thinks that for some reason this is deadly urgent—this bill that all of a sudden was popped in this afternoon, which still has got 4 months to run and could even be run through a normal process, probably, if there were willing participants who could see that everything was in order when they had due time to consider it. If that Minister is not able to make another speech, I would be keen for him perhaps to withdraw the motion, if he thinks it is appropriate, because there has certainly been a strong case put as to why hobnailed boots are not required for this particular piece of legislation.

To pick up again the earlier point around the other processes available, this could have been put through an omnibus bill, a Statutes Amendment Bill, which could have taken that usual longer process, if indeed it is so simple as the Minister would have us believe. There are other means and methods that would take less time in the House but that would give the due process that is really required.

To finish, I do want to come back to that point of what happens in the future. We are dealing with not only how this ban affects the industry now but also the kind of capital expenditure they will make for their own business decisions as they invest in new equipment, because there are still some cinemas that have not converted to the most modern equipment. Will they be investing in a certain type of equipment in a certain type of reality where parallel imports are delayed, or are they likely to shift at a future time to a much more immediate availability of content? And how do we protect and advance New Zealand’s interests and the producers of New Zealand content so that The Smurfs and the Magic Flute, which Mr Faafoi might wish to watch today, might become The Kiwi and the Magic Flute of tomorrow? Thank you.

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

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 48

New Zealand Labour 33; Green Party 13; Mana 1; Independent: Horan.

Abstentions 7

New Zealand First 7.

Motion agreed to.

A party vote was called for on the question, That the Copyright (Parallel Importing of Films) Amendment Bill be reported to the House by 16 August and that the Commerce Committee have the authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 188 and 191(1)(b) and (c).

Ayes 78

New Zealand National 59; Green Party 13; Māori Party 2; ACT New Zealand 1; Mana 1; Independents: Dunne, Horan.

Noes 33

New Zealand Labour 33.

Abstentions 7

New Zealand First 7.

Motion agreed to.

Bills

Local Government (Auckland Council) Amendment Bill (No 2)

First Reading

Debate resumed from 25 June.

JACQUI DEAN (National—Waitaki): What the Local Government (Auckland Council) Amendment Bill (No 2) does is amend the Local Government (Auckland Council) Act 2009. What that is going to do is enable local boards to delegate various functions and powers to committees of the local board or to a council officer, so it is a further devolution of responsibilities that were there by regulation under the Local Government (Auckland Council) Act 2009. The transitional powers that were given under that Act will expire at the end of October this year. The provisions of this bill replace the current provisions, and, in fact, do not add any new policy. What the bill does is replace regulation with new legislation—so it lifts the provisions, if you like.

The Auckland Council has stated that the power of the local boards to delegate really gives local boards the opportunity to operate efficiently and effectively. It really forms part of National’s Better Local Government reforms package, with the intention, very clearly, of helping make local government more efficient. It is a large body now, the Auckland Council. It is more efficient and more responsive to local needs. In particular, it is well focused on the needs of its ratepayers—I was going to call them constituents; I guess they are, but they are also ratepayers—in its local area.

So what this Government is doing is recognising that it is important to empower local boards and to put the “local” back into local government. So with this brief contribution, I do look forward to the consideration of the Local Government and Environment Committee on this bill. I commend the bill to the House.

ANDREW WILLIAMS (NZ First): I will take a call on behalf of New Zealand First on the Local Government (Auckland Council) Amendment Bill (No 2). Following on from my fellow Local Government and Environment Committee member Jacqui Dean, I am a little bit confused after hearing what Mrs Dean has just commented. I think she perhaps is a little confused. She made the comment that this bill would allow the local boards to delegate powers and that this was an improvement in local democracy under the National Government. In actual fact, all this is doing is allowing a continuation of the status quo that was provided for under the transitional powers of the Auckland Council set up by the Auckland Transition Agency. Really, this is just rolling over something that otherwise, on 31 October, would lose its powers. It would lose its right to delegate those powers to other entities or to council staff or to a subcommittee of its own board or, indeed, to a member of its own board. So basically this is just a technical bill to ensure that what it is currently doing it will be able to do after 31 October 2013.

But moving on from that fact, one thing that we do want to ensure out of all this, with local governance in Auckland having gone through a huge amount of upheaval in recent years—having merged the seven former local authorities plus the Auckland Regional Council into one entity, and then having created these local boards, and also, at the same time, created some seven or eight council-controlled organisations, which are at arm’s length to the council and which are effectively boards with appointed directors, who are not elected and who are not accountable to the general public. In many cases, they are outside the arm of the Official Information Act in many respects. Their meetings can be held in private and are confidential, and that is where much of the dealings of these council-controlled organisations go completely under the radar for most Aucklanders. Where 75 percent of the business of Auckland now comes under these council-controlled organisations, and where effectively they are controlling a huge amount of what is going on in Auckland, it is most important at this local board level that when they are delegating to these council-controlled organisations or to any of these other entities, they still have the governance power to have control over them.

One thing that we do not want to see is the situation that we have seen in the last year or two where even the councillors of the Auckland Council have been denied access to minutes, to records, and to official information of those council-controlled organisations. Indeed, the likes of even the Deputy Mayor of Auckland, Penny Hulse, was asked to leave a meeting of one council-controlled organisation. It did not want her in attendance when it moved into a confidential subject. This sort of thing has got to stop. We cannot have a situation where the largest city in this country, with 1.5 million people—which is effectively the state of Auckland; it is the equivalent of a state of Australia—is controlled by a group of people behind closed doors with very little accountability and where its governors, the councillors of that council, are themselves in many respects denied the very information that is being discussed by those entities.

In this respect, when it comes to the local boards, you have to remember that, for instance, with Auckland Transport, every road and street and avenue in Auckland, and every verge and every footpath and every grass strip that is publicly owned by the council, all come under Auckland Transport. It goes through all the suburbs and areas of Auckland, through all these—is it 21—21 local board areas, and, effectively, those local boards have no control over Auckland Transport whatsoever. It can just go through whole suburbs and whole urban areas and decide what it will do as Auckland Transport—

Tracey Martin: What they won’t do.

ANDREW WILLIAMS: —or what it will not do; exactly—and the local board has very little control over it. It has very little power over it and is basically just told: “Well, this is how it’s going to be.” This is the sort of thing that if there is delegation from these local boards under the Local Government (Auckland Council) Amendment Bill (No 2) and if they are delegating some of their powers out to some of these entities and some of these various organisations, they need to still ensure that they have the right to get the information back from those very entities so that they can scrutinise it, because at the end of the day they are the elected local boards. They are elected local representatives, and they have every right, having delegated the authority, to then, in turn, receive the appropriate reports advising them of what is going on in their particular patch.

So in this respect, New Zealand First will be monitoring this very closely. We do not want to give, carte blanche, another 3 years’ approval to just roll on over and then just entrench a situation where some of the smoke-and-mirrors organisations that say that they are acting in the best interests of Auckland and Aucklanders are, in actual fact, in some instances, not necessarily doing the best by the local communities, at all. In that respect, we would not want to see a situation where these local boards are kneecapped and are basically neutered and left powerless to control the very entities that they have given the powers to.

Similarly, there is always a worry—and in the case of the Auckland staff of the Auckland Council, I was advised in the last week or so that the staff numbers that were there prior to the merging of the councils, some 8,000 to 8,500 staff, were significantly reduced by the Auckland Transition Agency down to 7,000-odd, or whatever it is. It was about a 1,500 to 2,000 staff reduction with the merger of the councils. I am advised that the Auckland Council is now back up to the same number of staff as before the merger. It is now back up to the same level. It has over 8,000 staff again. This is incredible for the fact that we were promised savings and we were promised reductions and we were promised that the ratepayers would have reductions out of all this. The council bureaucracy is now ballooning. What you do not want to see out of this bill is a situation where council staff are also delegated powers and are given authority to do things outside of these local boards, and then those very bureaucrats, who are swelling in number as we speak, take advantage of that situation to use those powers to their own advantage, to simply swell the bureaucracy even further.

We will support this bill because we do trust the local boards of the Auckland Council to have sufficient wisdom and governance abilities to determine how they will delegate their authorities, but, at the same time, we will be keeping a very watchful eye on it.

Hon PHIL HEATLEY (National—Whangarei): I rise to support the Local Government (Auckland Council) Amendment Bill (No 2). The Auckland Council itself has stated that the power of local boards to delegate enables them to operate efficiently and effectively. Legislation, rather than regulation, is required to give effect to this and to provide certainty for the Auckland Council and its local boards. The regulations were enacted to meet the time frame for the constitution of local boards on 1 November 2010, you will recall, and this interim measure allowed time for better understanding of local board operations to develop, which could then be developed into amending legislation.

I think all members recall that reforming Auckland local government was recommended by the Royal Commission on Auckland Governance. At that time, of course, the Labour Party called for the royal commission because it was not actually prepared to move on anything. Those were the heady days when the Labour Party would call committees and then it would call an inquiry and then it would get someone else to head up some sort of an investigation and then it would pass it on to the Auditor-General. Decisions just were not made. They were sort of kicked off to inquiries, kicked off to committees, and kicked off to judges and all sorts of eminent people, but actually acting and doing something were not taken up. New Zealand sort of stagnated because decisions were not being made.

Anyway, the royal commission came back, and thank goodness we were in Government. We took those recommendations and we put them into place. I think the Labour Party possibly would have had an inquiry into a committee to look at what the royal commission said. Rather than have another committee, another inquiry, and another investigation into the royal commission, we decided to act, and, of course, this legislation is a part of putting those recommendations into actual operation.

Ratepayers need to know that their council is spending money wisely. These reforms are a part of that also to introduce transparency. I happily commend this bill to the House, and I trust that New Zealanders prefer action, rather than more inquiries, more committees, and more investigations, which the Labour Party tends to have rather than decision making.

CAROL BEAUMONT (Labour): I rise to speak on the Local Government (Auckland Council) Amendment Bill (No 2) 2013 and to give Labour’s support to this bill. I do want to go through what the bill actually does and does not do, and then talk about the context. It will be quite interesting to follow on from the comments across the House and talk about the rewriting of history around how the Auckland governance legislation was forced through under urgency, and Rodney Hide trampling on democratic rights.

But anyway, first of all, let us just talk about what this bill does do. It amends the Local Government (Auckland Council) Act and essentially, as Mr Williams said, puts into legislation the provisions that currently exist in regulation and that would otherwise expire on 31 October this year.

What that does is really twofold. First of all, it enables local boards to delegate responsibilities, duties, or powers conferred on or allocated to them under the Act, and that means they could do that to committees, to members of the local board, or to an officer of the local council. It also provides that a local board to which the governing body has delegated a responsibility, duty, or power may, without confirmation by the governing body, exercise or perform the responsibility, duty, or power in the same manner and with the same effect as the governing body could itself have exercised or performed it. The bill provides for delegations by local boards, without relieving them of the liability or legal responsibility to perform those duties or responsibilities.

Essentially, some of us were, of course, in the House during the urgency when some of this was pushed through, and we will recall that one of the concerns that was raised at the time was that the powers of local boards were actually not outlined in legislation. They were left to be delegated to them by the Auckland Council governing body, and that was seen as a real worry. As it has happened, it is fair to say that that delegation has worked reasonably well, but that is probably just as much to do with the leadership of the governing body, and it would not have necessarily worked out that way with different leadership. So I think it is important that these are put into legislation. But, as Mr Williams said, this does not extend it or anything else. It merely codifies, if you like, into legislation what is currently happening.

I also want to just say that I thought Mr Williams’ contribution was a very important one in relation to so-called council-controlled organisations. I have had some dealings over recent times with council-controlled organisations—so-called—and in particular with Auckland Council Investments and the appalling role that it played in the Ports of Auckland dispute where it was, so-called, responsible for Ports of Auckland Ltd. What became very obvious during that time was that Auckland Council Investments had very limited control by council, and certainly had no desire to involve the Auckland Council or to make sure that it was across the issues in that dispute. I do think that there are a number of issues like that that are going to need further work as we move forward in cementing in the changes in Auckland local government.

But specifically back to this bill, it is being referred to the Local Government and Environment Committee to consider. I think that that provides an opportunity to look at whether there are further changes needed, because this bill itself is primarily technical. It is a short bill with only five clauses, and essentially—as I have said—it continues existing arrangements. I am sure that Opposition members of that committee will be considering these matters quite carefully.

I also want to just put on record that as a list MP working in the Maungakiekie electorate I work closely with the local board that primarily operates in the electorate, and it is hard-working. It is seeking to represent our community, to build and support the community, and to ensure that we have good facilities available to the community. I think it is important to think about the role of local government, and particularly for those listening now I would just say that local government is often something that passes many New Zealanders by. People do not think too much about what it is that local government does. But you think about the sorts of facilities, the libraries, the recreational facilities, the local roading, the parks, and all sorts of things that actually day to day are very important in people’s lives. I would urge everybody in this House and those listening to this debate to do their utmost to ensure that we strengthen democracy in local government, and in particular make sure that people are on the roll, and make sure that people take the time to vote in the local government elections this year.

Most of the local boards in Auckland are working effectively. In the area that I am working in, the Maungakiekie electorate, I also work with the Puketāpapa and Ōrākei local boards. I would say that they equally are working hard. It is an important role. It is a two-tier council with the governing body and the local boards. Only two of the 21 local boards have fewer than 45,000 people.

With that I will draw this contribution to a close, but I say that it is important to note that this Government has severely attacked our local government, and that is something that we will continue to challenge.

The ASSISTANT SPEAKER (Lindsay Tisch): This is a split call, and Eugenie Sage has 3½ minutes left.

EUGENIE SAGE (Green): Tēnā koutou, tēnā tātou e huihui mai nei ki roto i te Whare. Thank you. The Green Party is pleased to support this short, relatively uncontroversial, and technical bill, the Local Government (Auckland Council) Amendment Bill (No 2)—in what will be a very short call—because it does allow the 21 local boards in Auckland to continue to delegate some of their powers, duties, and responsibilities that the principal Act, the Local Government (Auckland Council) Act 2009, gives to them.

The boards cover the area from Franklin to Rodney. These powers of delegation have been in place since the super-city was established in 2009. They are currently set out, as other speakers have noted, in transitional regulations, but it is certainly preferable that the powers be in primary legislation, which this House and the public, through the select committee process, can scrutinise. That is one reason to support the bill.

It obviously needs to be supported too because if the boards are going to continue to operate effectively, these powers of delegation need to continue, whether it is the boards delegating to a member of the board, a subcommittee, or a staff member from the Auckland Council.

It is worth looking at the purpose of the boards that was established under the 2009 Act, and that is: “enabling democratic decision making by, and on behalf of, communities within the local board area;”—similar to local government—and, at the time, “better enabling the promotion of the social, economic, environmental, and cultural well-being of communities within the local board area, in the present and for the future.” But, of course, that second purpose got stripped out when the Government changed the Local Government Act last year. So now the boards have a rather circular second purpose of “better enabling the purpose of local government to be given effect to within the local board area.”, rather than that promotion of community well-being. It is interesting that the Auckland Council has asked for and drafted this bill. The Government has listened. But last year when councils were asking that the four well-beings stay in the Local Government Act, the Government did not listen.

But going back to the bill, the boards can delegate any of their powers and responsibilities except for a number that are set out in clause 5, which inserts new section 31A into the principal Act. They are not allowed to delegate the duty to identify and communicate the interests and preferences of the people in their local board area in relation to the content of plans and strategies. That is quite an important restriction on the powers of delegation, because the boards’ powers include preparing local board plans, which set out the key projects and programmes that the board is proposing and the key spending priorities, and, of course, these local board plans influence the development of Auckland Council’s long-term plan. This is quite a crucial area of engagement with the community, so it is entirely appropriate that the powers not be delegated. I hope in my next call on the next reading we will get a bit more time. Thank you.

PAUL GOLDSMITH (National): It is my pleasure to speak in accord with this Local Government (Auckland Council) Amendment Bill (No 2), which is allowing local boards to continue delegating responsibilities as they currently do under the Auckland Council arrangements. There is no question that we have had a massive change in Auckland’s governance since the rearrangement. It is important, because it is a multibillion-dollar exercise, that it is running its own affairs efficiently and that its regulating powers do not add costs, making houses more expensive or making doing business more expensive and difficult.

I think that, overall, the impression is that the Auckland arrangements at both the council level or the governing board level and the local board level are settling down reasonably well. I do commend the energy and enthusiasm of a number of the local boards. They are, I think, in terms of Desley Simpson over on Ōrākei Local Board, where I am based, doing great work in the community. But it will take years for the system to work itself into a stable state. I am not sure that the council has quite got the share of the rating burden right, for example, but we are making good progress on transport. I am sure the mayor has been singing “Pokare Kare Ana” a great deal over the last week, because the Government and the council are working closely together to get Auckland moving. We see that the Auckland Unitary Plan, which is such a vast task, will take years to get right.

There is no question that we will need to monitor and consider the arrangements in Auckland carefully over the next years, but that is not really the task of this bill. The task of this bill is to make sure that we can continue with local boards delegating responsibility as they currently do. On that basis, I commend this bill to the House.

Bill read a first time.

Bill referred to the Local Government and Environment Committee.

Bills

Building Amendment Bill (No 4)

Second Reading

Debate resumed from 16 April.

JAMI-LEE ROSS (National—Botany): This Building Amendment Bill (No 4) is a piece of legislation that the Government is fully supporting and wanting to get through the process of Parliament, and I commend the bill to the House.

Hon SHANE JONES (Labour): I join my other colleagues and do not support this bill, the Building Amendment Bill (No 4). It is with a considerable level of disappointment, because many of the reforms that Maurice Williamson has shepherded through were actually begun towards the final stages of our tenure under the leadership of Helen Clark. There remains a hang of a lot to be done in respect of the building sector. Really, with the growth of activity in Ōtautahi/Christchurch, with the inevitable increase in activity in Tāmaki-makau-rau/Auckland, especially in 15 to 18 months’ time, once we begin and embark on our ambitious programme—highly popular, as well—of building 10,000 houses a year, and 100,000 houses over the course of 10 years, we need to ensure that the statutory framework that will be relied upon is capable of assuaging the concerns of homeowners and property investors.

It might come to pass that there is a valuable lesson being learnt in the context of this debate, in terms of how long the Government has allowed the situation in Christchurch to really spin out of control. I have no doubt in my mind that considerable damage has been done to the reputation of that place in terms of dealing with building consents. Although it is easy meat to blame the current mayor, who in my view is a show pony—and the sooner he disappears, as our colleague, the favoured candidate, moves into the boxing ring, the better. But it is for the ratepayers and the voters of Ōtautahi to pension off the current mayor. But as much as one is tempted to lay a lot of the blame at his feet, in terms of the stripping away, more recently, of the authority to deal with building consents, really, overall stewardship rests with Maurice Williamson. Overall stewardship rests with those members of the Executive Council who are charged, by dint of the warrant they hold, with ensuring that the building industry is suitably regulated, not squashed to death. It is difficult to imagine what the current Minister for Building and Construction is trying to achieve.

I was recently in Tai Tokerau and had, I guess you could say, the pleasure or misfortune, depending on what end of the argument you are at, in relation to our Mayor of the Far North, Wayne Brown—but there is a new system that has been introduced by this Government that has put between $5,000 to $7,000 of additional costs on every section likely to be created by subdivisions in the north. It is an example of where the Government talks about freeing up opportunity for industry to build jobs, but in actual fact this bill does nothing of the sort. In addition to that, there is this additional $5,000 to $7,000 worth of dough that has been imposed on the purchasers of sections because of a new sort of bureaucratic freight that has been tossed on top of the subdividers. It deals with a policy that was conceived in isolation here in the bureaucracy about perceived hazards. The indiscriminate way in which that policy has been applied, which, unfortunately, will not be simplified through this bill, is to treat farms and orchards as if they are akin to old tips, and requires an enormous level of analysis—in my view, a waste of time—and petty bureaucracy to do with potential hazards.

The entirety of the area that I come from at one stage probably was a farm, or, if it was not a farm, it was land that was not involved in a tip, but it was used for productive purposes. I think that is a small example where this current Minister talks the language that he wants to simplify process and expand opportunity for industry, but, when you get down to it, I do not think that he is actually in charge of, or he has not got enough authority over, his own bureaucrats. That is unfortunate, but the only happy thing about that is that within 15 months he will be out of that role. I thought he might have stood, actually, to contest his credentials. For a brief period of time they reached the sort of starry heights of sitcoms in America—that is Maurice Williamson I am talking about—but when he had the opportunity to step up to the plate and take on Mayor Len Brown, despite keeping people dancing as if it was some sort of exercise of the seven veils dance, he did not prove to be either confident or, I suppose, at the end of the day, interested.

We cannot support this, because, as earlier speakers have pointed out, what is needed is a comprehensive set of changes, not this piecemeal, reactive, bit by bit approach to the point that the majority of the submitters who came to this particular committee, the Local Government and Environment Committee, expressed a complete lack of confidence in terms of this particular bill. It is bill No. 4; there have been other bills, which we supported. Indeed, I held the spokesperson role on behalf of the Opposition—Her Majesty’s loyal Opposition—in an earlier period of time in the last 5 or 6 years, and I have to say they have passed rather tediously. In that period of time we did agree with some things, but we will not be agreeing with this.

We have received some very good advice from our member who is focusing on these issues, Raymond Huo, and, without a doubt, he understands the importance of ensuring that petty bureaucracy and inflexible rules do not actually frustrate the ambitions of young families wanting to own their own home, whilst at the same time holding accountable those who are putting investment capital at risk and creating subdivisions and then going on to build houses. But house owners, young families, at the end of the day, are consumers. They come to the task trusting in the quality of the craftsman or woman. They trust also in the robustness of the statutory allocation process. More recently, over the last 10 to 15 years we have learnt that elements in the industry have let us all down. It may prove to be the case that our Government in 2002 and 2003, in the days of George Hawkins, perhaps should have initiated and funded a class action against Fletcher’s and allied companies, which did bring product to the market grossly unsuitable for the climate, conditions, etc., in New Zealand, but that has come and gone. That is why many of us supported what Maurice Williamson sought to do in trying to get a compromise to enable people to escape from houses that have begun to resemble aquariums, but this, unfortunately, does not capture our support.

The licensed building practitioner regime, which, to a certain extent, is covered in this piece of legislation, was initiated by my colleague Clayton Cosgrove, a person whose stature might rise in Christchurch; that remains to be seen. He was a very, very knowledgable and competent Minister for Building and Construction at the time, and what we sought to do was to build a regime so that builders could have a similar level of authority to a plumber and an electrician—i.e., to a certain level, one did not need to require a statutory consent in order for them to do the job.

When I was the Minister for Building and Construction for a lamentably short period of time, what we sought to do was identify a range of building things that a qualified tradesperson could do that did not require a consent from the council. In order for that to be expanded so it emulates the powers enjoyed by plumbers and electricians, they need to go through the licensed building practitioner regime, and that has not worked. Not so much that it has not worked; the momentum has not been developed to the extent—we thought people would go through the process, achieve a level of qualification, and free themselves from bureaucracy underneath a certain level of building complexity. That was the theory. It is a theory I actually agree with. I think that if there are competent carpenters, construction workers, and supervisors who can build to a certain level, one should not need to go to the council to get a permit; one should just treat it like a plumber’s task or an engineer’s task, but, sadly, this bill does not take this House or the country anywhere in that direction. Consequently, we will not be supporting the bill.

CLAUDETTE HAUITI (National): I congratulate the Minister for Building and Construction, the Hon Maurice Williamson, on his tireless efforts in bringing this bill, the Building Amendment Bill (No 4), to the House. Nō reira, mārama nui ngā mahi kei riro i a noho.

[Let industry be rewarded lest idleness get the advantage.]

Ka whakamihi ahau i tēnei pire ki to Whare. I commend this bill to the House. Kia ora.

The question was put that the amendments recommended by the Local Government and Environment Committee by majority be agreed to.

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 55

New Zealand Labour 33; Green Party 13; New Zealand First 7; Mana 1; Independent: Horan.

Question agreed to.

A party vote was called for on the question, That the Building Amendment Bill (No 4) be now read a second time.

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 55

New Zealand Labour 33; Green Party 13; New Zealand First 7; Mana 1; Independent: Horan.

Bill read a second time.

Bills

Families Commission Amendment Bill

Second Reading

Debate resumed from 9 April.

DENISE ROCHE (Green): I am not sure I am going to get through my speech before the bell goes tonight either. However, just to go back to what I was saying before I was interrupted, we were looking at the Families Commission, the work that had been done before the changes that are in this Families Commission Amendment Bill, and particularly the changes and their impact on evaluation and research.

I am making a case that the changes under this bill will mean that there will be a loss of independence in the research that will be compiled around the Family Status Report. This is particularly important when we look at how the committees are being set up—in particular, the expert advisory committee. We do not believe that this bill will actually benefit families and children the way the commission has.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)

Tuesday, 2 July 2013

(continued on Wednesday, 3 July 2013)

Business of the House

Business of the House

Hon GERRY BROWNLEE (Leader of the House): I seek leave for there to be a question time at 2 p.m. on Wednesday, 3 July 2013 and on Thursday, 4 July 2013, and for questions to be lodged in the normal manner pursuant to Standing Order 378.

The ASSISTANT SPEAKER (Lindsay Tisch): Leave is sought for that purpose. Is there any objection?

Hon TREVOR MALLARD (Labour—Hutt South): Just before we say that we do not object, I want to make it clear that those are calendar days, not parliamentary days, because they will not exist, otherwise.

Hon GERRY BROWNLEE (Leader of the House): Mr Speaker, you will notice that I had my head down, very carefully reading the words provided to me by the Clerk of the House to give effect to this agreed position.

The ASSISTANT SPEAKER (Lindsay Tisch): I think it is very clear. Leave has been sought for that purpose. Is there any objection? There is no objection.

Bills

Families Commission Amendment Bill

Second Reading

Debate resumed.

DENISE ROCHE (Green): Our main opposition to the Families Commission Amendment Bill is that it takes away the likelihood of independent and thorough research into families and issues that concern families. We will be opposing this bill. We do not believe it is good for New Zealand. We do not believe that it is good for New Zealand families. We will be voting against it.

MELISSA LEE (National): Tēnā koe e te Matua Kaikaranga. Huri noa i te Whare i runga i te reo karanga o Te Wiki o Te Reo Māori. Tēnā hoki tātou katoa. It says: “Greetings, Mr Speaker and my colleagues in the House. I acknowledge you in Te Reo, in celebration of Māori Language Week. Greetings, one and all.”

It is a great pleasure to rise to speak on the second reading of the Families Commission Amendment Bill. The well-being of families is crucial to our society. The family passes on culture, and we all come from very different cultures. In New Zealand we have more than 200 ethnicities, with the values that those different ethnicities bring and the knowledge that the family is at the very heart of our community. We are going to make a difference for the families in New Zealand that are struggling. We need to be able to invest in interventions that we know will actually work.

The Families Commission Amendment Bill is about streamlining the Families Commission’s core activities through a learned and more focused structure. It will remain an autonomous Crown entity, but it will be more streamlined, with a single Families Commissioner, which is down from the original seven. This will put the commissioner on the same footing as most other Crown entities, and the structure will be more focused. The board will be made up of members from the public sector and academic and philanthropic representatives, and there will be scope for the appointment of a member other than the Families Commissioner to be the chair of the board.

These are significant changes for the Families Commission in terms of its structural arrangements, work programmes, capability requirements, and size. Functions will be introduced, such as independent monitoring and evaluation, to drive quality services for families. So I am a little bit confused as to why Denise Roche actually said what she said just before, saying that she feels that the independence will be taken away in terms of research. The new functions will definitely provide for more independent monitoring and evaluation of the functioning of the Families Commission.

A social science experts panel will be created. This panel will complement the work of the commission’s board. It will provide guidance and academic peer review of research done by the commission, which to me says that it is definitely independent. The commission will prepare and publish an annual families status report, which will measure how New Zealand’s families are getting on. I think that it is very, very important, at any point in time, that we look at the way our families function. Over the years the functions of families have sort of changed because we have come from very extended families to more nuclear families—we have fewer children and fewer people living in one household—and the way we operate has also actually changed. But the fact is the core value system of families has not really changed, and the ways we nurture our children have not really changed.

The Families Commission currently receives $8 million in funding each year, which equates to $32 million over 4 years. We are prioritising $4 million over 4 years into parenting programmes. We have identified in different bills that have actually gone through this House that we have a major issue with parenting. We need to teach our young people how to parent. For some reason they do not seem to be getting that kind of nurturing to find out how to best become parents. When I became a parent, I guess I did not really know what a good mother or a good father should be. I guess the only role models we have are our own parents, and we do not really get that kind of education at school. I think learning how to look after our children is actually a good thing.

Relationship education and youth mental health initiatives are also very important, and $14 million over 4 years will be reprioritised into the Social Policy Evaluation and Research Unit, because if we want to make a difference to families, we have to make informed decisions about programmes that will actually work for our families.

The Social Services Committee considered 11 submissions on the Families Commission Amendment Bill and many, including the Salvation Army, the National Council of Women, and the IHC, supported the changed services. This is a great bill. I commend it to the House.

BARBARA STEWART (NZ First): I rise on behalf of New Zealand First to speak to the Families Commission Amendment Bill. Yet again we have been left totally disappointed by this bill. The Social Services Committee failed to make any changes that would change our position on this particular bill. New Zealand First opposes this bill because it has failed to make any worthwhile difference to families in New Zealand. Again, we are very surprised that the Hon Peter Dunne has not ensured that the commission, which he advocated for with the Labour Government back in 2002-03, has been left to wallow and fall into this level of disarray. Where was his support to ensure that it remained a vibrant, worthwhile, successful operation that could produce the results that were required to ensure that it remained operational?

In our minority report we also stated that we believe that these changes are detrimental to the well-being of New Zealand families and whānau and that reducing the number of commissioners from seven to one will negatively affect the work that the commission carries out. If the complication of the projected budget that will be invested into the Social Policy Evaluation and Research Unit is added, the situation gets disorganised and issues will inevitably rise to the surface regarding accountability. So we have got a lot of questions about this revised Families Commission.

We also question whether or not this Families Commission organisation is worthwhile when it does very much the same research as that carried out by the Ministry of Social Development. We believe that the Families Commission can no longer be justified. It is time really that we worked towards protecting the family unit rather than making steps that would be detrimental or provide no added value for it. We believe that this amended bill has actually undermined the efforts to protect the family unit and children. The proposed changes do not really do any good whatsoever. These alterations will be more harmful than good.

Although we realise that it may be economically and politically desirable to minimise the number of commissioners that we currently have, that number should not be pared to just one. That is far too small. We fail to see, when seven were not doing the job properly, how one person can actually pick up all of that slack and improve the lives of families in New Zealand.

What we are actually seeing here is a major revamp of the role of the Families Commission. One has to ask whether this revamp really goes far enough and whether we really need the Families Commission any more. We in New Zealand First do not think that we do. We know that hard economic times are upon us, and research in these hard economic times must be forward thinking and very, very focused, and the money could be better spent towards research in some other area.

In New Zealand First we think that the Families Commission has got a long way to go to improve—far further than what this bill actually stipulates. We know that the commission reports directly to the Minister for Social Development, the Hon Paula Bennett, who justifies the amount that is actually being invested into the research unit. However, there is a lack of consideration of the fact that the issues and the themes on which the research unit will be focused are interrelated and they cross many social sector boundaries. For example, the White Paper for Vulnerable Children that the ministry and the research unit produced last year contains issues and themes that are directly related to the work that the commission carries out. These kinds of underlying problems will surface again and again, and, basically, complicate the work that the commission administers, especially now that it will have just one commissioner overseeing the entire organisation. This will inevitably have dire consequences, and we believe that Parliament will most likely be re-evaluating the work of the commissioner in the future.

What we are seeing here is that version 1 did not really work out in 2003 so we now have version 2, which is more focused and leaner. Our best hope is that the new version 2 of the Families Commission will be carefully monitored on a regular basis, to ensure the best-possible output. There is a definite limit on how many versions of the commission there can be before people actually lose confidence in it totally, and version 2 almost reaches that limit.

Greater emphasis needs to be placed on promoting and carrying out more groundwork that creates better understanding and fosters better outcomes for all New Zealand families. We know that New Zealand families are already experiencing economic and social hardship. Changing the governance of the Families Commission and reprioritising its budget will do nothing to help in this particular instance. In fact, we believe that it will just produce further barriers to their development. Paying for a group of professionals and academics through the social science experts panel will only emphasise on paper all of the problems that New Zealand families are facing on a daily basis. Research and groundwork are needed to work simultaneously and in conjunction with one another.

New Zealand First would have liked to see something that would be useful to New Zealand families, for the money that is spent. We are going to be carefully monitoring the outputs, and ensuring that the money is not spent on consultants to travel around New Zealand and overseas at the expense of families. It is for these reasons that New Zealand First opposes this bill.

MIKE SABIN (National—Northland): It is good to hear a member of the House talk about the sort of fiscal prudence that this National Government has become known for. The Better Public Services that this Government has committed to is a very, very important part of changing the economic fortunes of this nation through some very tough times, with the global financial crisis and the Canterbury earthquakes. The Better Public Services model can, once again, be seen in the work that is being done in this bill, the Families Commission Amendment Bill. The programme of work has seen, through the select committee process, very little in the way of consequence or issue brought to the table, because I think it is quite clear from the manner that we have gone about reorganising these sorts of structures that what it is about is delivering better outcomes. It is not necessarily about the structure or how much money is thrown at the issue; it is about the structure that sets about achieving the resolutions and the outcomes that are required.

The Families Commission moves from having seven commissioners down to having one, and it introduces the new function in a research, monitoring, and evaluation setting. I take note of the comments made with some scepticism by the member who has just resumed her seat, Barbara Stewart, about this sort of function. The whole point is that what we have arrived at here is a leaner, more functional model that has some very clear targets. We have found through other work in the Better Public Services efforts that we have made that when you set some clear expectations and when you have a structure that supports that—when you are driven towards outcomes—you are far more likely to achieve those. You can achieve those—sorry, not you, obviously, although I am sure you will be contributing markedly to those. We can achieve those by ensuring that we get better bang for buck in the way we go about business—so removing the title of commissioner from six and leaving the single commissioner, and requiring the Families Commission to develop an annual families status report goes to the heart of those sorts of outcomes, ensuring that there is a more deliberate and accountable structure.

There will be new functions, as I mentioned, that include the independent monitoring and evaluation. I will look very closely at that to see just how that sort of monitoring and evaluation function falls into shape. One thing is for sure: the family dynamic in New Zealand—or anywhere, for that matter—is quite diverse, and there are a number of different challenges that families and communities do face and confront. So I guess the important note here is that for the structure and what we are looking to measure and how we are measuring it, the devil will be in the detail, but I am sure the Families Commissioner will be taking on that challenge.

The Families Commission currently receives $8 million in funding each year, which is $32 million over 4 years, obviously. We are reprioritising $4 million over 4 years into parenting programmes, relationship education, and youth mental health initiatives. Youth mental health is something that this country has some significant and severe challenges with, and that is intrinsically linked, of course, to the family. Over 4 years $40 million will be reprioritised into social policy evaluation and research units, which are now known as “SuPERU”. These acronyms seem to spring up from nowhere but I think it will stick, that one.

I have no trouble in commending the work done by the Social Services Committee in this bill. It is about better public services. It is about outcomes. I commend it to the House.

MOANA MACKEY (Labour): Ā, tēnā koe, Mr Speaker. Ngā mihi nui mō Te Wiki o Te Reo Māori.

[So salutations to you, Mr Speaker, and in regards to Māori Language Week, a huge one at that.]

The problem with that speech by Mike Sabin, who has just resumed his seat, is that that is not what the Families Commission Amendment Bill does at all, not even vaguely. The disestablishment of the Families Commission is not something that the Labour Party necessarily has a problem with. In fact, it was its policy in the last election. It is what you replace it with that is key, and what we are replacing the current Families Commission with, this watered down weakened Families Commission, is not a good step forward for families. It seriously undermines the advocacy role—the independent advocacy role—of the Families Commission and makes it something more akin to a Government department.

If that is what the Government wants, then it should just roll it into the Ministry of Social Development and put the funding there. But that is not what the Government is doing. It is keeping this fig leaf of a commission, this fig leaf of autonomy, and yet constantly sprinkled right the way through the bill we see the phrases “on behalf of Government” and “Government’s priorities”—that is not autonomy. That is not autonomy at all. That is simply another Government entity controlled by the Government, which is not what the Families Commission was set up to do.

We supported the bill going to the Social Services Committee, because we wanted to look at what the changes would mean, at the role of evaluation and research within the Families Commission and where that would now sit, and at the reporting around outcomes. Unfortunately, we now have to oppose this bill because it is a step backwards for the Families Commission. The cut in funding for the commission is also going to severely limit the role of the Families Commissioner, especially now that they are being required to produce an annual families status report.

Well, we have to ask ourselves why the Government got rid of producing the social report through the Ministry of Social Development every year and will now be doing that every 3 years. It was a report that was providing good information on how the Government, Government departments, and all the relevant Government entities were doing in dealing with the issues facing not just families but all of our community. That is gone. It is now only every 3 years and it is now being replaced with this families status report, but the funding that would be required to actually do that work in a robust manner is not being provided; in fact, the commission’s funding is being halved. There is nothing wrong with parenting courses and more assistance for youth mental health is great. There is nothing wrong with that. But that is just a distraction from what we are actually doing to the Families Commission, which is the issue that we are discussing under this bill, which is slashing its funding, reducing its ability to advocate on behalf of families, and limiting its independence.

We had seven commissioners before, and that number recognised the complexity of the issues facing families. So we had people who covered a broad range of disciplines, particularly in the research field, all of which were relevant to families and all of which had something to bring to the table in terms of advocating for good policy for families.

Well, now we have got one commissioner. I am sorry, but there is absolutely no way that one commissioner can have the required depth of understanding across the broad range of disciplines that the Families Commission covers, which just shows the complete lack of respect for evidence-based policy-making from this National Government. If it did respect good research and having good research underpinning policy for families, then it would not be moving from having seven experts to one—seven experts to one.

Even our Prime Minister’s Chief Science Advisor, Peter Gluckman, does not have the experience across all the disciplines that we are talking about that are currently represented. He is a very knowledgable man and very useful to have there, but I think even he would acknowledge that the broader the range of disciplines represented, the better. I note that he is one of the people who are going to be on the social science experts panel; it has mentioned the Prime Minister’s Chief Science Advisor.

What if the next Prime Minister’s science adviser has nothing to do with family research? What if the late Sir Paul Callaghan had been the science adviser? With his experience in physics, would he still have been on the social science experts panel? So I hope the flexibility is there, in case the next science adviser does not have an expertise in the area of families or child development, as Sir Peter Gluckman has. I suspect that is how short thinking this bill is—we are not even thinking about what discipline. It might be an astrophysicist. It might be from my discipline—a biochemist—and that would be a wonderful and beautiful thing, but perhaps not the best person to sit on the social science experts panel. That just says to me that this has not been thought through properly.

You see that again in the very, very confused governance structure of this organisation. We are not clear about whether the Families Commissioner will actually be the chair of the board. We do not actually know what the role of the Families Commissioner is. The National Government keeps saying that this is just like all the other commissioners—this is just like bringing it into line with the other commissioners. That is actually not true. Their roles are clearly defined in legislation.

The role of the Families Commissioner is no longer defined in legislation. There is a confused governance structure. We are not clear what the roles of the various parts of the organisation now are. The chief executive role is retained. It appears from first reading that the chief executive might be the chair of the board, not the Families Commissioner. This is very, very confused lawmaking and it will not result in good outcomes. The member Mike Sabin said before that it will deliver lean and efficient outcomes from the Families Commission. In fact, I suspect it will be the exact opposite as they muddle their way through trying to work out who is in charge of doing exactly what in this new and confused structure.

The other thing that worries me is the new social policy and evaluation unit within the commission. The bill says that this will provide independent monitoring and evaluation of programmes and interventions in the social sector. Well, that is all very well and good. It is now sitting within the unit, so I have to question how independent it is given that this unit is now far more beholden to the Government than the Families Commission once was. Of course, currently the commission uses peer reviewers from universities, from other research centres, and from independent experts. It does not just use the people it has within its own commission. It goes broader, outside, to really maintain that independence and get that expertise, and that is now not going to happen.

Currently the Families Commission has the independence to identify where the gaps in research are, and child poverty is a good example of where the Government is not putting a focus on research and where the Families Commission will step in and say: “This is somewhere where we need some robust, independent research, so that we can have good evidence underpinning good public policy.” Well, now, where the Families Commission has this function of identifying opportunities for evidence and research, it is now only where it will assist in achieving the Government’s priorities in the social sector—commissioning research on behalf of the Government and managing contracts on behalf of the Government. That is not independent at all.

So currently the commission can go out and see where Government is failing to step up to the mark in protecting our families, and where the Government is failing to do the research because it does not want people to know what is going on out there. The Government knows that the evidence will show that it is not taking issues like child poverty seriously enough, so it does not want that research done. It does not want that evidence pointing to its utter failure as a Government to address the growing inequality in this country, the growing inequality within families, and the increase in child poverty. It does not want that research done. So it is changing the rules for the Families Commission to say that it can identify gaps only where it is working to achieve the Government’s priorities. That is unacceptable—completely unacceptable. So it is a shame. As I said, we would have no issue with the disestablishment of the Families Commission if what was being put in its place was going to guarantee better outcomes for families and for children in this country.

The key question is: what are you replacing it with? What is the Government replacing it with? It is replacing it with a fig leaf that is going to be hamstrung—the new commission is not going to be independent. It is not going to be allowed to carry out research where it feels that the Government is falling through the gaps. Also, the new commission will be shambolic in its structure, and it is going to cause enormous uncertainty. The Government is limiting the pool of experts within the commission across the broad range—and as for the number of disciplines, you need only look at that Otago University longitudinal study to see the incredible range of disciplines that are included when you are talking about families.

A reduction in the number of commissioners, from seven down to one, means that it will be a hard task to get that broad range of disciplines represented effectively. That just shows the scant regard this Government has for peer-reviewed independent research underpinning good public policy.

ALFRED NGARO (National): Tēnā koe e te Rangatira. Whakanui i Te Wiki o Te Reo Māori. I want to acknowledge the celebration of Māori Language Week. Before I do, I was here last night during the dinner break, and I want to acknowledge the dedication and the unveiling of the commemorative plaques for Afghanistan, Timor-Leste, and the missions in support of peace that are here today as a reminder. Last night, what was also to remind us were the families and the whānau who were here to celebrate the sacrifice that was made. That leads me into my brief speech in regard to the Families Commission Amendment Bill, because it really speaks to the importance of the role that the Families Commission plays. The previous speaker, Moana Mackey, talked about the importance of independence. It is quite interesting. She may have forgotten that for a while there the Labour Party talked about “hands on”, and now it wants to preach about hands off, so it is a bit confusing to sort of hear that speech about that. I think that this actually, seriously, is a combination of the two things.

So let us see what the commission actually does, Ms Mackey. The Families Commission, established in 2003, was important because it was about identifying the needs of families and whānau in our community. Most important, it was about the research that was a part of it, and I was a part of that previously, especially around the Family Violence Clearinghouse and information relating to family violence, and that was quite critical. That function has not been removed. There is still the importance of evidence-based information that informs policy makers, NGOs, and others, so that when we are focusing our focus of energy and effort, it goes into the appropriate places.

It is important to see that under the Crown Entities Act 2004, the Families Commission still has that sense of autonomy, even though there have been arguments against that. So its role is as an advocate for the interests of families inside of our communities. Also, it is to monitor and evaluate those programmes and interventions. What was mentioned was about Sir Peter Gluckman. Well, in the Social Services Committee, where we interviewed with the Families Commission, it was important that Sir Peter Gluckman actually confirmed, commented on, and celebrated the shifts of the Families Commission in these amendments. In fact, he said to us quite clearly at that point in time that the focus on evidence-based research was absolutely important. So when we went from seven commissioners down to one, the other commissioners had an engagement role. This would ensure that by having a families status report and a Social Sciences Expert Panel, we would have an even greater sense of an evidence base, and we would have a clear focus on what that could provide for the policy makers and for our communities at large.

Moana Mackey also talked about the longitudinal study, and I know Professor Richie Poulton. In fact, I met him last week and spoke with him about the work that he was doing—the longitudinal study, which is world leading, absolutely—and the importance of that impact on families. We also talked about the role of the Families Commission, and we could see the benefits and the pluses of the Social Sciences Expert Panel and the evidence, combined with that longitudinal study, that could make a difference. So we do not agree on this side that these amendments will in any way discredit or take away the credibility of the Families Commission. Our view, quite clearly, from the experts who have been quoted and talked about, from the communities, and from those who are on the ground, is that in actual fact this will truly make a difference. So I support this bill. I think that actually these amendments will both help and support the direction and the focus. Most important, at the end of the day, will it truly make a difference to the families in our communities? We believe it will. I commend these amendments to the House.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call. Carol Beaumont.

CAROL BEAUMONT (Labour): I just really want to follow my colleague Moana Mackey in explaining our concerns, because Labour did support this bill, the Families Commission Amendment Bill, to the Social Services Committee. We wanted to look closely at the implications of the bill and to look at what the role of evaluation and research should be in relation to what was being proposed. We now oppose this bill, having considered it carefully during the select committee process. We believe that the changes proposed to the commission in this bill continue an agenda that is about fundamentally altering the commission’s nature as an autonomous Crown entity and, really, making it something more akin to a Government department or ministry. We believe that the net effect of that is really to compromise the commission, and to limit its independence and, most important, its ability to advocate effectively for families.

So, given those changes, we stand by our policy for the disestablishment of the commission, instead replacing it with a “Ministry for Children” in order to focus on policies and programmes to ensure that children and families are the centre of all policy. I just want to say that my colleague Jacinda Ardern is doing a great deal of work in this area, because, in the end, what happens to our children is the most important thing. As members of Parliament, we should be considering everything that is done in this House in light of what the implications are for the future generations. At the moment in this country, we can see the fact that we now have a situation where many young people do not believe that they have a future in this country. They do not believe that they have a right to a job or do not believe they will get a job. They do not believe they will own a house. What are the implications of that? What are the implications of so many children living in poverty? How will that flow through over the next decades? The implications are very, very serious, which is why in Labour we do believe that children and families should be at the centre of all policy. So, as I said earlier, this bill does limit the advocacy function of the commission, and we believe that that really, effectively, means that it is meaningless. It is not going to be sufficient for doing what needs to be done.

Probably the final point I would make is that the governance structure as established is very confused. I think my colleague Moana Mackey went through the fact that there will not be the ability to have the range of disciplines reflected in this that is necessary for something as multidisciplinary as this. So, with those few words, I just again repeat that Labour is opposing this bill.

JAN LOGIE (Green): I rise to add another Green voice to our opposition to this bill, the Families Commission Amendment Bill. I have heard words from the other side of the House about the streamlining of the Families Commission to make it leaner and more functional. You know, they are good words. We like “functional”. We like “streamlined”. But I have to let the other side of the House know that when the community hears those words from you, alarm bells go off. That is not what they are looking for, and they know, when they hear those words, that it is about an agenda that is different from theirs.

I would just like to read some statements from two submissions that were made to the Social Services Committee in response to this bill. The first one is from the Women’s Refuge, and in its conclusion it said: “we oppose the Families Commission Amendment Bill 2012. The Bill will shift the focus of the Families Commission away from the very important function of advocating for families. Indeed, the Bill undermines the Commission remaining a commission at all.” Alarm bells are going off in our communities because of the intent that lies underneath this bill.

I quote also, in a little more depth, from the Child Poverty Action Group submission. From its perspective it is saying that “The proposed Bill also removes the autonomy of the Commission by ceding decision-making and direction to the 4-member Social Science Experts Panel who are appointed on the direct recommendation of the Minister and the Prime Minister’s principal Science Advisor. At the same time, the functions of the Families Commission are considerably extended to absorb many of the research and monitoring roles currently performed by the Ministry of Social Development. The changes proposed in the Families Commission Amendment Bill 2012 would transform the Commission into an arm of Government, further undermining the diminishing support available to families in New Zealand. Child Poverty Action Groups strongly urges that the Amendments should not proceed.”

Our comments on this bill are not based on our own ideological view of the world. They are based on the experience of those in the community and their desire for a community where children are able to live to their potential, where families are supported and nurtured, and their needs are met by the Government. Sadly, we find this bill to be another nail in the coffin of those aspirations of our community. It is a sad day—another sad day—in this House, when we see those needs being so undermined.

I would like to take a moment to speak, as well, to one of the functions that sit within the Families Commission at the moment, and that is the White Ribbon campaign, which will be moving out of the commission. I want to speak a little bit more on this. It seems to me that there are two major challenges to our country at the moment in terms of our overall well-being and specifically the well-being of our children, and those are domestic violence—violence against women and children—and child poverty. They are two enormous tasks, challenges, and harms to our country at the moment that we need to be focusing as much of our resources as possible towards addressing. And what is this bill doing? It is taking resources away from those challenges. It is undermining our ability to actually to be able to provide the safe and healthy future for our children.

The White Ribbon campaign sits within the Families Commission at the moment, but now we are hearing from the Chief Families Commissioner that she does not believe that it fits with the new shape of the Families Commission. In 2011 the White Ribbon campaign produced 623 media reports. It led to 7,000 Facebook users a day going towards its page, and to 58,000 hits on its website. When I look at its website now, I have not seen any action pretty much all year. It seems that already, even though things are not supposed to shift until 2015, because of the direction of this bill the ability of the campaign has been undermined to the point where it is hard to see any action whatsoever. That is a shame for this country.

Hon PHIL HEATLEY (National—Whangarei): I rise to support the Families Commission Amendment Bill. It introduces a new function in research, monitoring, and evaluation; establishes a social science experts panel; and requires the Families Commission to develop an annual families status report.

There are some changes, absolutely. There will be one commissioner. The new functions include independent monitoring and evaluation to drive quality services for families. The commission will remain an autonomous Crown entity, which should give members a lot of confidence about what we are doing.

The Families Commission currently receives $8 million in funding each year—$32 million over 4 years. It is still a substantial body and does substantial good in this country. I support this legislation.

The question was put that the amendments recommended by the Social Services Committee by majority be agreed to.

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

Ayes 64

New Zealand National 59; Māori Party 3; ACT New Zealand 1; Independent: Dunne.

Noes 56

New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Question agreed to.

A party vote was called for on the question, That the Families Commission Amendment Bill be now read a second time.

Ayes 64

New Zealand National 59; Māori Party 3; ACT New Zealand 1; Independent: Dunne.

Noes 56

New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Bill read a second time.

Bills

Financial Reporting Bill

Second Reading

Hon CRAIG FOSS (Minister of Commerce): I move, That the Financial Reporting Bill be now read a second time. The overall objective of the bill is to make financial reporting in all primary legislation consistent with the accountability and transparency goals associated with general purpose financial reporting. It makes three major changes. First, it removes the requirements for small and medium companies to prepare general purpose financial reports. This change will reduce compliance costs for many companies with revenue between $2 million and $30 million per annum. The Commerce Committee has not recommended any major changes to those provisions. Second, it will empower the External Reporting Board, or XRB, to make accounting standards for registered charities. Registered charities are already required to file financial statements, but there is no consistency, due to the lack of standards. Having standards will benefit registered charities because it will remove uncertainty about what is expected. It will also increase the quality of reporting and make it easier for users to analyse the financial statements and to compare charities.

The Commerce Committee made one significant change relating to charities. It has changed the definition of “specified not-for-profit entity” by increasing the threshold from $40,000 annual operating expenditure to $125,000. The main impact will be to reduce the percentage of registered charities that must report on an accrual basis from 45 percent to 25 percent. It will mean that an extra 5,000 charities will benefit because they will be able to meet their reporting obligations by using the External Reporting Board’s proposed cash reporting standard. In total, about 18,500 of the 25,000 registered charities will be able to report on a cash basis. I agree with this change.

The third major reform implemented by the bill is to generally tidy up the financial reporting across the statute base. Many different approaches have been taken to financial reporting over the decades, and there are numerous inconsistencies. The Financial Reporting Bill amends more than 80 other Acts. Taken as a whole, these amendments to other Acts represent a significant improvement to financial reporting settings in ways that are fully consistent with the accountability and transparency goals of general purpose financial reporting. For example, there are many different financial reporting deadlines in legislation at present. The bill as introduced proposed these deadlines be standardised at 3 months after balance date for preparation, plus 20 working days for filing what is required. Several submitters stated that these deadlines would be impractical for some classes of reporting entities.

The committee made two main changes relating to deadlines. First, for reporting entities to have filing obligations, the intermediate deadline for preparation serves no purpose and has been removed. For example, the deadline for entities that will eventually become financial markets conduct reporting entities will be 4 months to file, without there being any mention of a preparation deadline. This will provide those entities with more flexibility to allocate time between preparation, audit, and filing. Again, I think that is a sensible change.

The other main deadline-related change is to require other classes of reporting entity to discharge all their reporting obligations within 5 months of balance date. This change will, for example, benefit large companies that are not issuers by providing 1 more month than was originally proposed by the bill. This is a 1-month reduction in the deadline compared with the current requirements for companies under the Financial Reporting Act 1993. All told, the position that the committee has reached on the deadline issue represents a good balance between the benefits of timely reporting and the need to provide a realistic amount of time for the work to be completed.

The last major change considered by the committee relates to the proposals to consolidate financial reporting obligations for all financial markets conduct reporting entities. These changes were not included in the Financial Reporting Bill, because the Financial Markets Conduct Bill has not yet been enacted. Instead they appear in Supplementary Order Paper 93, which was tabled on the same date that the Financial Reporting Bill was introduced, on 28 November 2012. The committee has not recommended any changes to the Supplementary Order Paper. The Commerce Committee has made a number of other amendments to improve the bill—for example, removing an audit requirement for a large company that is a subsidiary of another company that is required to have its consolidated statements audited.

To sum up, the bill makes changes that will both reduce compliance costs and strengthen accountability and transparency. There are some very important and useful improvements, although I note that there are no fundamental changes to the bill. I would like to conclude by thanking the members of the Commerce Committee for their work in considering the bill and the related Supplementary Order Paper, and by acknowledging the contributions of those who provided submissions on the bill. I commend this bill to the House.

Hon DAVID PARKER (Labour): The Labour Party supports this bill, the Financial Reporting Bill. Can I thank the Minister of Commerce for his comments. This is housekeeping legislation that is, none the less, important housekeeping legislation that regulates the way in which our commercial sector has to prepare its accounts and the standards that it has to apply.

In respect of financial reporting, we are trying to get the balance right between standardisation and proper principles being applied in respect of accounts that are prepared for entities that have lots of people who rely upon them and the accounts that are prepared by smaller organisations, where it is really a small group of people with no public outsiders who need to have access to the information in a reliable and comparable form.

This bill tries to do that by making some differentiation between larger companies and smaller companies. Larger companies and large overseas companies that carry on business in New Zealand have a slightly different regime. “Large” is defined as companies that have assets exceeding $60 million or revenue exceeding $30 million, and that is assessed over the two preceding accounting periods. I am not sure whether that is $30 million in total over those 2 years, from memory, or whether it is $30 million per annum average. In any event, you can see in respect of companies that have got $60 million of assets or revenue exceeding $30 million that they are large companies, and for them the compliance costs of being required to comply with each and every one of the increasingly complex requirements of the general accounting principles and the specific requirements that come through from the accounting rules bodies that are run by the New Zealand Institute of Chartered Accountants and the like, which are increasingly international rules. You can see that it is no great cost for them, relative to the size of their business, to go to the nth degree and prepare accounts that are very detailed.

In respect of companies that are not quite that big, but might have 10 or more shareholders, if they have a vote amongst their shareholders, and the shareholders by 95 percent majority want to opt out of compliance, they can. I support that measure as well. That is very sensible. I agree that it ought not to require unanimity, because one shareholder who was a troublemaker or who had fallen out with the other shareholders could effectively impose quite a large financial burden on the rest of the company, despite the fact that 95 percent of the shareholders were happy to opt out of strict compliance with the most precise form of financial reporting.

In respect of companies with fewer than 10 shareholders, the rules are slightly different again, as I understand it. If shareholders who hold 5 percent of the company’s shares require the company to comply, then it must comply, but unless they do, it does not have to. So the onus is different there. In respect of the 10-shareholder company, the default position is that it has to comply unless there is a resolution with 95 percent support that says that it does not have to. In respect of the smaller company with fewer than 10 shareholders, the default position is that it does not have to comply, but if 5 percent of the shareholders say that they want the company to comply, then it has to. I think that that is an improvement on the status quo, and I think that will reduce compliance costs and accounting bills.

I was not on the Commerce Committee, which heard this submission, but I would imagine that the New Zealand Institute of Chartered Accountants was supportive of the changes. Can I thank the institute for that, because it has tensions within its own organisation. Some of its members profit from the more complex requirements of greater specificity of compliance with accounting rules, and for them to put their self-interest aside and say that on occasions they think that companies should be released from these more onerous obligations shows that they have an interest in the performance of the New Zealand economy and keeping compliance costs at a reasonable minimum.

In respect of audit requirements, the same opt-in and opt-out rules apply. Again, this is a very good change. Large companies, other than those that are required to register their financial statements—if you are a public issuer of securities to the public, for example, you have to file your financial statements with a regulator every year. Effectively, you cannot opt out of audit requirements. I am not sure whether that arises from this legislation or the securities legislation, but if you are a public issuer, you have to have audited accounts.

Hon Craig Foss: FMC.

Hon DAVID PARKER: What is that? FMC. It is from the Financial Markets Conduct Bill. Large companies that are not public issuers can opt out if they have a 95 percent majority vote from their shareholders. So, again, the default is that they have to have an audit, but if the shareholders pass a positive vote with 95 percent support, then they do not have to go through that audit cost and they save that cost. In respect of those audits, they have got to be carried out in accordance with auditing and assurance standards, but the registrar in respect of overseas companies can recognise overseas standards.

Charities will be required to prepare financial performance statements in accordance with generally accepted accounting practices. Currently, there are no requirements in respect of charities. Given that a lot of these charities take money from the public, it is appropriate that we have some level of transparency as to what is happening with the money that they say is to be used for a charitable purpose, and that we want to ensure is.

The PricewaterhouseCoopers view was that removal of the preparation requirements for detailed accounts for small and medium sized companies, and the relatively high large entity threshold, means that most companies, in numeric terms, will no longer be required under the legislation to prepare generally accepted accounting practice financial statements. That is an interesting point to note and an important point to note.

I know that in the past politicians often got it in the neck from people who were running businesses who said that it was the taxman who drove a lot of compliance cost. Actually, in some cases, it has not been the taxman who has been driving compliance cost; it has been increasingly complex financial reporting requirements, which have been required at a high level by Government legislation, but at low level have been made more complex every year by way of changes to the accounting rules that actually have not been considered by Parliament but have been imposed by the bodies that are responsible for financial reporting rules—namely, the accounting body that is responsible for those rules.

I do not have time to go through the finer technical details of this bill, which runs to 169 pages. I thank the Commerce Committee and the chair of that committee for the work that they did to bring this back to the House with the support of all parties. The changes that were made at select committee have the Minister’s agreement and we have got a better bill as a consequence. Again it shows the importance of the select committee processes. I think that is a wonderful thing that we have got in New Zealand, that the likes of PricewaterhouseCoopers or other people who are interested can come to a select committee and say: “Look, we agree with this in general, but could you tweak this? It is not quite right as it is.” We do that at select committee, and then, as a consequence, we get more practical legislation. I think that is probably one of the reasons why, although New Zealand has got a small bureaucracy by international standards and we have only one House of Parliament, we still manage to run our country in a way that is pretty efficient, because of the quality of our legislation overall. So the Labour Party is supporting this Financial Reporting Bill and recommends it to the House.

JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand and speak in support of the Financial Reporting Bill at its second reading. Thank you to the previous speaker, David Parker, for his comments regarding the select committee process, which I believe worked in a way that was very conducive to seeing some very important changes take place in this bill.

Tim Macindoe: A very efficient chairman.

JONATHAN YOUNG: Thank you, “Mr Whip”.

One of the aspects that I want to touch on in terms of the select committee process was that we received a number of submissions—quite a considerable number—regarding the charities sector and the not-for-profit entities. Many of these entities—essentially charities—run on the smell of an oily rag, so to speak, and it is important, as the previous speaker so rightly said, that they are accountable to their donors. But at the same time we do not want to encumber them with such expensive accounting requirements so that probably too great a proportion of their receipts are spent on that administrative burden. So finding the balance was important.

The committee, on receiving many submissions, came to the place, in terms of the difference between a cash set of accounts and an accrual set of accounts, where we lifted the threshold that was stated in the original bill for a cash basis set of accounts from $40,000 up to $125,000. Essentially, a charity or a church, or whatever, that is able to employ a full-time worker or minister would generally have an income of around about $100,000-plus, perhaps a bit more, and may not have the administrative support, when they have that level of income, required to do an accrual set of accounts. The difference, essentially, between a cash set of accounts and an accrual set of accounts is that accrued revenue is revenue that is incurred or recognised before the cash is received, and accrued expenses are expenses that are recognised or incurred before cash is paid out.

So it is actually quite complex to create a set of accounts. It often needs a professional and often also an auditor to check on the work that has been done in that regard, as opposed to just a cash-in, cash-out system, which is far simpler. There are many software packages in the vicinity of $100 to $200 that handle cash book accounting very, very proficiently. We felt that once a charitable organisation was receiving an annual income of greater than $125,000, it was a reasonably sized entity that was probably incurring a reasonable amount of accrued expenses or revenue, whether that be from interest or perhaps an invoice for maintenance on a property it owns or whatever. We felt that members of organisations that have that vicinity of income probably do need to have a more thorough set of accounts. So we worked through that process. I think some submitters wanted that threshold to be higher, but we felt that that was a reasonable balance to find.

The intention of this bill, as I come to a close now, is to rationalise the financial reporting obligations by doing a number of things apart from what I have just mentioned. It aligns such obligations with the goal of financial reporting to provide information, obviously, to external users, to members of societies, to clubs and charitable organisations, and also to shareholders and the like, who need an entity’s financial statements but cannot demand them. It also serves to standardise the interface between the Financial Reporting Act and other Acts by setting out core definitions and provisions with broad application to reporting entities in a new Financial Reporting Act. More important, it makes the language of financial reporting consistent in all the pertinent Acts. So it is harmonising such terminology so that it becomes understandable and becomes a useful document for people.

I am very happy to stand in support of the Financial Reporting Bill. I thank the members of the Commerce Committee for their cooperation in getting this through in a timely way. I think this is going to be of benefit to organisations throughout our country. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): I rise to support this Financial Reporting Bill. The Labour Party recognises that this is good and important legislation that is being progressed by the Government, and we like to support good legislation. We support it because, in principle, we believe in reducing unnecessary compliance costs for businesses so that they can get on with the job that they have of growing the economy and creating jobs. It is sobering to remember that under this Government currently there are 2,500 fewer businesses per year being created. That is very disappointing. We have an environment that is not particularly supportive of small business in New Zealand, and our international rankings on competitiveness have dropped in a recent survey, from 15th to 24th in the world. That speaks volumes about the priorities of this Government, which sit at the big end of town. It is not terribly interested in looking after the little guy in business generally.

However, in this case there is an important exception, and it is great to see the National Government actually stepping up and making some things simpler for small business. Before we get much further in, it is important to remember the new Māori proverb: “Te ōhanga ripoata koretake rawa i ngā tau e 50”.

Iain Lees-Galloway: What does that mean?

Dr DAVID CLARK: It is a proverb important in Māori Language Week. It is a contemporary proverb. My colleague Mr Lees-Galloway asks what that means. “Te ōhanga ripoata koretake rawa i ngā tau e 50” means “The worst economic record in 50 years”. It speaks to the performance of this Government, which has seen in real terms real wages, the median wage, drop, fewer jobs in the economy, and many New Zealanders struggling. Te ōhanga ripoata koretake rawa i ngā tau e 50. This Government can and must do better if it is to improve its record, and not be regarded as the worst Government in the last 50 years. Certainly so far it has the worst economic record of any Government in New Zealand in the last 50 years.

To return to some of the detail of this bill, its overall effect is that most small to medium sized enterprises will no longer be required to prepare generally accepted accounting principles—GAAP—compliant accounts. That is a good thing. Such accounts are important for large international firms that are to be compared internationally, but the requirements are burdensome, onerous, and, in many cases, completely unnecessary. There is a balance to be struck, as previous speakers have mentioned, between accountability, which is important and must be found at an appropriate level, and the ability of small firms, charities, and others to get on with the business that they are there to do, without spending a huge portion of their revenue on preparing accounts. We can imagine that in the case of charities that is completely counter-productive. It is also counter-productive in the case of small business.

The objective is to provide information for external users who have need for an entity’s financial statements but are unable to demand them. This bill sets out the appropriate circumstances for that information to be available. It is about public accountability and transparency where the public do have a vested interest—for example, if an entity is effectively owned by taxpayers or ratepayers, where it has sought funding through debt or equity instruments that are offered to the public, where it takes deposits from the public or it holds assets in a fiduciary capacity, or where it receives donations and bequests. In those circumstances, of course, public accountability is important, and higher standards are required. Likewise, size matters, and there is in the bill a rule suggesting that larger entities must report, because it is more significant to a national or regional economy if they fail.

Finally, there is an element of accountability, in terms of separation, to owners or members of an entity if they are likely to need financial statements. If they do not manage the entity, this gives them the option of having those statements. In all those cases we can see it is important that there is a higher level of accountability and of transparency, and that it is well worth having these statements available. Markets, as we know, make excellent servants but very poor masters. We need efficient and effective markets, particularly where they are large and particularly where they have an impact in a broader national or regional community, particularly where the board members are removed from the management on a day-to-day level, and particularly where taxpayer interests are concerned.

So for all of those reasons we think the Financial Reporting Bill is a good piece of legislation overall. It does actually reduce the compliance on small business in some small way. It is better to have a few small tentative steps from this Government in that respect than none at all. We want to see small business prosper. We want those hard-working New Zealanders who will put their mortgages on the line, who borrow money, or who try to scrimp to get by to have a successful enterprise in which to create jobs and opportunities for New Zealanders. We want them to get ahead. We want there to be an appropriate level of scrutiny—not too burdensome, nor too light—and we think that this legislation moves New Zealand towards that end in some small way.

Supplementary Order Paper 93 for the Part 2 reading of this bill makes some amendments that are primarily due to proper process and to the interaction between the Financial Markets Conduct Bill and this bill, and therefore we think that, broadly, they seem to be in line with what should happen and, again, show good process on the part of the Government. That is in stark contrast, I must say, to some of the bills that were put forward under urgency last night, particularly the Copyright (Parallel Importing of Films) Amendment Bill where we discussed Mr Faafoi’s interest in The Smurfs and the Magic Flute and Mr Mallard’s interest in Notting Hill. It was an entertaining session, but arguably quite an unnecessary one and a sign of poor process on behalf of this Government. But Labour is happy to support a bill where there is good process, where it reduces the compliance on business and charities so they can get on with their jobs, and where there is an appropriate level of scrutiny. Therefore, Labour will be supporting this bill. Thank you.

JULIE ANNE GENTER (Green): Tēnā koe. Tēnā koutou e te Whare. E ngā mana, e ngā reo, e ngā mātāwaka, e rarau mai nei, tēnā koutou katoa.

[Thank you and greetings to you collectively, the House. To the authorities, languages, and ethnicities settled here, salutations to you all.]

I rise to speak on the second reading of the Financial Reporting Bill, which is quite a huge bill that generated a lot of interest. We heard a lot of submissions on the Commerce Committee. Although, unfortunately, I was not able to be present for all of those submissions, I have gone through them at length. The primary purpose of this bill was to simplify the financial reporting and remove the onerous requirements for small and medium businesses to comply with generally accepted accounting practice, or GAAP. The Green Party can support this bill as it is, although it probably does not make all of the changes that we would like to see.

Financial reports are important for a couple of reasons. It is important that investors, consumers, the general public, and shareholders are able to get information about what is going on with the financial health of an organisation. I, personally, in my work as a parliamentarian, find financial reports quite a useful source of information, particularly on State-owned enterprises. It has been a very interesting process for me to learn how to read financial statements, because it is not something that they give us training on when we are elected to Parliament. The Victoria University of Wellington has excellent short courses on accounting for anybody who would like to learn more about reading and interpreting financial statements.

It is really important—and PricewaterhouseCoopers made this point in its submission to the Commerce Committee—that the financial reports are important not only for those who are reading them and using them but also for the organisations themselves who are going through the process of complying with the financial reports. Having an acceptable standard that large entities are all complying with is extremely important for those reading and using the financial reports, and also for the organisations themselves. But, as has been noted by previous speakers, in New Zealand the requirement for small organisations—and we have quite a lot of small to medium enterprises here in New Zealand. The Green Party very much supports small business, and we would like to see more great, smart, green, entrepreneurial activity and more small business that is helping our society and our economy transition to a sustainable and fair footing.

For those small to medium enterprises, having to comply with the generally accepted accounting practice—or GAAP standard—was extremely onerous and required quite a bit of resource, so the main proposal in this bill is to remove the requirement on small and medium companies to prepare annual financial statements in accordance with those GAAP standards.

There was widespread support for this change. Four submitters disagreed with the provisions that define a large entity. One stated that fewer firms should be regarded as large, while three stated the opposite. I think that the officials did quite a good job in identifying the balance for what should be considered large and what should be considered small to medium.

A second proposal in the bill was to require registered charities to prepare financial statements in accordance with accounting standards issued by the External Reporting Board, also known as the XRB. All submissions that commented on this issue agreed with the broad proposal but disagreed with some of the specific provisions. Several submitters considered that the dollar amount for eligibility for simple format cash accounting—which is annual operating payments of less than $40,000—should be substantially increased. No submissions stated that the amount should be reduced.

So we heard from a large number of submitters at the Commerce Committee, and there was broad support for the bill, but there were quite a lot of small points of disagreement that were raised by submitters. It was quite a wide variety of organisations that came and submitted to us. We heard from the big accounting firms, of course, like KPMG and PricewaterhouseCoopers. We also heard from quite a lot of small not-for-profits and charities that were going to be affected by the changes in this bill. We heard from community law centres and we heard from companies like Air New Zealand, Meridian Energy, and State-owned enterprises, and they all had quite a lot of useful information to bring. I found it a very edifying process sitting on the committee, listening to submissions, and reading through the submissions.

Another big issue that was raised by organisations was the proposal to change the time line on which financial reports need to be completed. There had been a recommendation, I believe from the IMF—New Zealand previously had a deadline of 5 months, and the proposal was to move it to 3 months for financial reports to be prepared and submitted. We heard pretty much all of the submissions suggest that the shift from 5 months to 3 months was going to impose quite large costs, because it would suddenly mean that there was a shorter period in which everybody was competing for accountants and having to get their books in order. I think the compromise that was reached was that the deadline would be 4 months. So there is a requirement to have those financial reports done a little bit earlier but not quite the 3-month period.

I suppose that was particularly important to organisations like, for example, retirement villages. Their shareholders and the people investing in those retirement villages do not actually use the financial statement as much as other means to determine whether or not the accounts are being handled properly and whether the organisations are in good financial health. So imposing this shorter time frame on them would impose big costs, and, at the same time, it would not necessarily bring any benefit. I thought that was quite a reasonable compromise, to go with it for 4 months.

There was another change around the true and fair override provision, which previously was something that happened in legislation and is now being incorporated in the accounting practice and accounting standards. Fair and true override allows the reporting entity to depart from the recognised rules and accounting standards if the management concludes that compliance with the standards would conflict with the objectives of financial reporting. In other words, if there were some facts about the financial state of the organisation that were going to be less clear by the way that the financial reporting standards require them to be reported, then the organisation does have the possibility to depart from those standards to give that information in a clear and true way.

The current approach was seen to be working well by the submitters who commented on it, that was the big four accounting firms, the Institute of Chartered Accountants of New Zealand—and there was one other submitter who commented on this. They thought that it would be best if all jurisdictions used the same approach to measurement and recognition, like those appearing in the standards by the External Reporting Board, and that it would be clearer if the issue was covered in legislation rather than accounting standards. We heard from officials that there were issues with that, and we have decided not to change the bill. So true and fair issues will be governed by accounting standards rather than prohibited by legislation.

I am sure that New Zealand citizens at home watching Parliament TV this morning under urgency are absolutely riveted by the detail of the Financial Reporting Bill, and if they have any other interest, I am sure they can find out more online. I welcome their further participation. I look forward to the Committee stage of this bill. Thank you.

Peseta SAM LOTU-IIGA (National—Maungakiekie): Tēnā koe, Mr Assistant Speaker, in this Māori Language Week. I also speak in support of this Financial Reporting Bill. It is a very good bill. It was introduced by the Minister of Commerce Craig Foss. What it really does is it improves the way that we report on financial entities across this country, whether they be large or small, by making all-purpose general financial reporting consistent—consistent with the objectives of our financial reporting system. It has got to have the confidence and trust of investors, and the confidence and trust of creditors, but also the trust and confidence of those who read financial statements and who must make decisions based on those financial statements. It is another example of this Government demonstrating its ability to support not just small and medium sized enterprises but also large businesses, and supporting them to go about their duties and obligations, not constraining them with red tape and bureaucracy—as we found under the Labour Government, the 9 long years of the Labour Government—but allowing them to prosper, and not bogging them down with red tape and bureaucracy.

By cutting down on expensive and unnecessary reporting obligations, it builds a competitive economy. It allows employers to hire more people. It also means that financial reporting is done in an appropriate, constructive, and transparent manner. We know that more than half a million companies are registered in New Zealand, and all of them, regardless of their size, are required to prepare financial statements. We know that small to medium sized enterprises are the engine room of the New Zealand economy. They provide many jobs and opportunities across our country, and it is important that they feel confident in a system that supports them.

What does this bill do? Well, it clarifies what is expected of charities, improves the quality of financial reporting, and allows for easier comparisons between charities. The Commerce Committee received and considered 44 submissions, and we heard 16 submissions. I am glad the previous Green speaker, Julie Anne Genter, also enjoyed, and received well, the submissions that were made, because we did at least hear from practitioners on the front line who are dealing with their constituencies, who are dealing with their customers—their consumers—and who are dealing with people out in our communities.

The committee responded to that by increasing from $40,000 to $125,000 the threshold at which not-for-profit entities must prepare financial statements on an accrual basis rather than a cash basis. That was a reflection of, and in response to, some strong submissions from various charities, as well as from accounting firms and others that deemed the $40,000 threshold level to be insufficient. What it does is it reduces the burden on small charities, which may not have the capacity to prepare such accounts. They are often one-person or two-person operations and they do not have the capacity, the abilities, or the resources to prepare such accounts.

We also extended the deadline by which large companies that are not issuers must prepare financial statements, from 3 months to 5 months of the balance date—again, in response to submissions we heard—in order for those companies to have sufficient time and sufficient resources to apply to their accounts from the balance date.

The committee did its job. The Minister has done his job. This Government is doing its job to promote our small to medium sized enterprises in this country, which supports our economy and supports our families in our communities, and that is why I support this bill.

ANDREW WILLIAMS (NZ First): Kia ora, Mr Assistant Speaker. Thank you very much for letting me take this call on the Financial Reporting Bill. Is it not interesting, hearing from the previous speaker, Peseta Sam Lotu-Iiga? The Government is obviously under some illusion that this is all new to New Zealand commerce, all new to New Zealand companies, and all new to this economy, and that National has suddenly come up with these bright, brilliant ideas. These are the sorts of ideas that have been talked about for many, many years, by many parties in this House and many administrations in this House: how to reduce compliance costs, how to make the economy more efficient, and how to reduce the burden on, particularly, small to medium sized enterprises, which do find it very, very painful trying to meet the bureaucratic hoops that they have to jump through on a daily basis. In this respect, New Zealand First has always said that we want to reduce the cost to business, we want to make this economy more efficient, we want to help New Zealand business grow the economy, and we want the economy itself to be far more competitive.

In that respect, New Zealand First supports this bill because, although it is very much an administrative bill and it tidies up something like 80 other Acts, and it tidies up the Financial Reporting Act 1993 to improve those compliance and reporting standards, it also is common sense. New Zealand First has said in this House time and time again that if the Government puts up common-sense, good policy, we will support it; if it does not, we will oppose it. In this case, there is common-sense, good policy throughout, and we welcome it, particularly, as I said, for smaller companies. They will not have the same level of complexity of reporting as larger companies have. Many of our small to medium sized enterprises in New Zealand are run by small family operators—husbands and wives, small management teams—and really they do struggle, at times, to meet all the red tape. In this respect, this bill will help. It will help them get on and actually do what they need to do: actually sell their goods, sell their services, and do business. That in turn will help employ more New Zealanders, which in turn will help grow the economy, which in turn will result in more revenue coming to the Government in the way of an increasing economy, with more money going around, rather than those businesses spending so much time filling out forms and filling out bureaucratic nonsense, half the time, just so that bean counters and bureaucrats sitting back in their offices can justify what they are doing.

In this respect, I will highlight one particular aspect, which is the amendments to the Retirement Villages Act. We are not on the Commerce Committee, but it was brought to my attention that the original legislation that the Government had brought before the committee was going to provide a huge burden on the retirement villages throughout New Zealand in terms of their reporting. The time frames that were being laid down were just going to be simply impossible, reducing it to 3-monthly reporting. Also, I note in new section 35B(2) that originally it was going to be: “The operator of a retirement village must lodge a copy of the financial statements of the operator and each village, within 20 working days after the financial statements are required to be signed”. Those 20 working days now, under the bill, have changed to “5 months after the balance date of the operator,”. So is not that interesting, Mr Lotu-Iiga? He says what a wonderful job this Government is doing, but this Government put up original legislation that was going to put such an incredible burden on retirement villages to report within 20 days of their financial statements. Now they see that a 5-month period is more suitable, so that they can actually do the reporting correctly, and not try to, under an absolutely pressure-cooker situation, try to get information into the system.

This bill also brings into line the obligations of charities and other such entities. That is a good thing because, as we have heard from other speakers today, increasingly there is the growing need for more and more charities in this country because often the Government itself is not delivering. Often the Government itself is handing over the needs of our communities, the needs of New Zealanders, to the charities, asking them to perform the functions that previously central government used to provide, and now more and more New Zealanders are having to go to charities for their assistance. However, it is, as a result, important that those same charities be required to report in a responsible manner, to the same level of reporting as is the case with many other small business enterprises, and that is a good thing.

I will not go any further, but I will say that this 169-page bill does tie things together; it does bring a lot of things together. It refers to a huge number of previous Acts that will also be brought into line with this Financial Reporting Bill. It does help the New Zealand economy be more efficient. It does help with the overall cost of compliance of doing business in this country. Therefore, it can only be a good thing, and New Zealand First supports the bill.

KANWALJIT SINGH BAKSHI (National): Sat sri akaal, and mōrena, Mr Assistant Speaker. It is my pleasure to stand in this second reading of the Financial Reporting Bill. First of all, I would like to congratulate the Hon Craig Foss on bringing up this bill, which is consistent with the policy of this Government to reduce red-tapism. National is focused on boosting growth and creating jobs. Only a strong economy can provide financial security for families, real opportunities for young people, safer communities, and the high-quality education and health services that all New Zealanders need.

I would like to congratulate Jonathan Young, the chair of the Commerce Committee, on his leadership, and other members who have really worked hard on this bill. I would also like to thank the officials for their work during the deliberations on this bill.

I would like to speak to this bill from the perspective of the ethnic community. I would like to touch on two things from the perspective of small to medium sized enterprises and charities. I owned a small business, and I know it is difficult to meet those obligations under the statute, because a lot of paperwork is required and a lot of time goes to accountants to prepare the financial reporting. As a volunteer, I served in a charity for 8 years, and I know it is very difficult for charities to prepare and get volunteers to do the work for their financial reporting.

The Financial Reporting Bill replaces the Financial Reporting Act 1993 by reforming the Act. This National Government seeks to rationalise financial reporting obligations across the statute book in three ways. First of all, the bill ensures that all reporting obligations are consistent with the goals of financial reporting so that the external user can use simplified data in a meaningful manner. Secondly, definitions and provisions are standardised between the Financial Reporting Act and other legislation. Thirdly, the new bill makes the language of the financial reporting in different Acts broadly consistent. The reform is needed in legislation to ensure that out-of-date rules and regulations are replaced with the current requirements.

New Zealand has got more than half a million companies registered that are under the size of 20 employees. For small and medium sized companies, financial reporting can be an expensive and unnecessary exercise. The Financial Reporting Bill has requirements that allow small businesses and medium-sized companies to direct their resources to where their need is greatest—that is, growing their businesses. From the charities’ point of view, the bill proposed that there should be a $40,000 threshold for charities’ financial reporting, but when the select committee heard the submissions, it was deliberated that $125,000 should be the minimum requirement for a charity to report back its financial statements. So with these changes, I think the bill will be very well received by the different submitters, and I hope this will go a long way. I commend this bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn): Tēnā koe. Ko Titirangi te maunga. Ko te Whau te awa. Ko Hoani Waititi te marae. Ngāti Pākehā te iwi. Te Roopu Reipa te mahi. I would like to honour Māori Language Week. I would like to acknowledge members who have spoken and to reaffirm that Labour supports this Financial Reporting Bill. This bill has benefited from the work of the Commerce Committee, and I recognise the chair and the members of the select committee who are here in the Chamber today.

The bill seeks, as my colleague David Parker said earlier, the right balance between the reduction of unnecessary compliance costs and the maintenance of proper standards of accountability and transparency for companies, for charitable organisations, and for other forms of entities such as friendly societies. The select committee and the Government have wrestled with where that boundary line should be, and in these brief remarks I would like to draw upon several of the boundary issues. But before I do that, let me say that Labour’s support for this bill reflects our determination to reduce unnecessary compliance costs wherever available. Compliance costs—red tape—are a bit like a hedge. You need regulation to maintain boundaries, but if you do not take the clippers to it occasionally, it tends to get a little overgrown. As David Parker said earlier, this bill is a worthy tidy-up bill. It is a bit of housekeeping, if you like. It is where Parliament gets the hedge clippers out and tidies up some of those boundary fences around our company law, and that is an appropriate thing.

I would note, though—if members will forgive me, in a fairly technical bill, a slightly political comment—that there is a bit of spin from the other side sometimes that Labour somehow likes compliance costs. I think our support for this bill really puts that ghost to rest. It is about as true as the spin that Labour somehow likes fiscal deficits. Of course, members of the public know very well that in the last 15 years, certainly since I have been in Parliament, Labour has never ever, ever when in Government run a fiscal deficit, and we do not plan to. National, since I have been in Parliament, has never ever, ever run a fiscal surplus. It does plan to, but, as we have said in earlier debates, there is so much smoke and mirrors in Budget 2013 that it is very difficult to discern whether that will actually occur. The third piece of spin that I would just draw attention to on the way through is that somehow Labour is anti-growth. As I have said before in this House, if one examines a 30-year history of economic growth data and matches it against the periods when Labour and National have led the Government, the conclusion is irrefutable that growth rates, on average, in a 30-year cycle have been higher when Labour has been in Government. We have taken the concept of growth strategy very, very seriously. We have been prepared to get the efforts of the State squarely in behind that. It does not always follow, to be fair, that business confidence reflects higher economic growth under Labour, but none the less I make the point.

May I just quickly pick up the point that several previous speakers have made about small and medium enterprises and endorse what members opposite have said. Small and medium enterprises are absolutely crucial to New Zealand. They are about 80 percent, by number, of our businesses, and they employ about half of the total employed workforce. But, as David Clark said earlier, there are currently 2,500 fewer new businesses being created per annum, and that is something that I think both sides of the House would wish to see turned round. Our business failure rate is that four out of five new businesses go belly-up in the first 2 years. That is a matter that is not new; it has been across different Governments. But it stands in huge contrast to some of the rapidly developing countries of South-east Asia, where the small business survival rate is the other way round; it is an 80 percent survival rate. I think the House and the Government need to think carefully about how we can reverse that trend.

Let me go to the key issue here, which is the boundary between transparency and reduction of unnecessary compliance. The requirement under the bill to prepare general-purpose financial statements will apply to large companies and large overseas companies that carry on business here. They are defined as having assets including $60 million worth of turnover; having revenue exceeding $30 million; having more than 10 shareholders—through a 95 percent vote they can opt out; and having fewer than 10 shareholders, if shareholders who hold at least 5 percent of the voting shares require the company to comply. A number of different audit and financial statement requirements follow from those definitions, but those are really at the heart of this. What the bill is trying to do—and Labour supports, with some need for ongoing vigilance, this attempt at a boundary—is say that if a company has a large number of disparate owners or shareholders, then it absolutely needs to provide a full set of financial reports, provided it is not effectively de minimis in scale.

If a company is either very small or it is very closely held, then it may not be necessary to provide the full set of audited financial accounts. That is the core principle in the bill. That is a principle we agree with. But let me just lay down a slight caution that if it were to transpire that the new flexibility was abused because, for example, companies that were effectively large and relatively widely held found a back-door way of redefining themselves as being narrowly held for the purposes of avoiding legitimate accountability, that is something that I think a future Labour Government should and would want to take seriously and could cause re-amendment of the law in this area.

I would like to compliment the Commerce Committee very briefly on two amendments that it made. The first was to increase the threshold for registered charities to not have to prepare full financial statements. That threshold has been increased, appropriately, on the basis of latent CPI movement from $45,000 to $125,000 per annum turnover. It also looked at the provisions of the Financial Reporting Act 1993 that restores an exemption that was omitted that would exempt inactive companies from the requirement to prepare financial statements. That is good, common-sense stuff. The select committee also—and I think Carol Beaumont would particularly agree with this, given her work in the area—assisted friendly societies to take a common-sense approach to their financial reporting obligations where they are small or closely held.

With those remarks, may I compliment the select committee. Often we have pretty vigorous debates in this House, and the public does not always see Parliament working harmoniously in a bipartisan fashion on the sort of nuts and bolts legislation that affects us all. I think that the public of New Zealand would be pleased to see Parliament working consensually on matters of detail of this kind. It does, as other speakers have said, reflect well on our parliamentary system.

MARK MITCHELL (National—Rodney): It is a pleasure to take a short call on the Financial Reporting Bill. It is a very good bill. It is a bill that is in line with the Government’s Business Growth Agenda. It is a big part of our aim to reduce red tape and compliance costs for small and medium sized businesses, especially as they make up 70 percent of the New Zealand economy.

I would just like to address the comments made by Andrew—Williams, was it?

Peseta Sam Lotu-Iiga: David Cunliffe.

MARK MITCHELL: Oh, David Cunliffe. It was also Andrew Williams too, actually. The select committee process is actually a very good process that does work. If there are changes that need to be made to bills and tweaks that need to be made, it is the select committee process where this happens.

There were two very good changes made through the select committee process, as Mr Cunliffe and Mr Williams mentioned. The first was to increase the threshold at which a not-for-profit entity must prepare financial statements on an accrual rather than a cash basis from $40,000 to $125,000. That is actually a big move, and that will help reduce compliance costs.

The second was to extend the deadline by which large companies that are not issuers must prepare financial statements from within 3 months after the balance date to 5 months. This too is a very, very good change. I am very happy to commend this bill to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North): Tēnā koe, Mr Speaker. Ngā mihi o Te Wiki o Te Reo Māori. Labour supports the Financial Reporting Bill because our primary focus in all things right now is to get New Zealanders back to work and to grow jobs in this country. That is why, in the way that this bill seeks to do, we are seeking in all possible ways to reduce structural costs for businesses, such as seeking to reduce the price of electricity for businesses as well as households, and to try to boost innovative companies through things like research and development tax credits. It is only by doing those sorts of things that we will really see job growth in New Zealand.

I am not talking about the kind of job growth that sees everybody working at Burger King, McDonald’s, or Pak ’N Save, I am talking about the kind of job growth that gives people decent salaries so that families have enough to take home so that they can make ends meet, so that they can afford their house in Auckland, and so that they can raise their families in a stable and financially secure situation. That is the kind of thing that Labour is focused on.

We believe that in a small way this bill contributes to that. It will do two things. One, it does reduce unnecessary compliance costs for businesses, so that they can get on with the job of growing their business and creating those jobs that New Zealand so desperately needs. The other thing it does is that it improves transparency and gives the public greater confidence in the conduct of those entities.

What I particularly like about this bill is the flexibility that is contained within it. Large companies and large overseas companies that carry out business in New Zealand will have quite stringent reporting expectations on them, although those larger companies, where there are 10 or more shareholders, with a 95 percent majority vote, can opt out of the compliance if their shareholders are comfortable with that. Indeed, in respect of smaller companies, if their shareholders want their companies to adhere to greater levels of compliance, so that there is greater transparency, then that is possible in this bill, as well.

A lot has been made of the select committee process. I know that the Hon David Parker talked about the excellent process we have whereby companies, organisations, accounting firms, and the people who have knowledge about the issues of business financial reporting were able to come and suggest changes to the bill, and it has come back to the House in a better form than when it went to the select committee. That is part of creating a robust, transparent, and secure business environment in New Zealand, knowing that we have a sound legislative process that is designed to make for good lawmaking, and that is important for growing businesses as well.

An important aspect of this is also that charities will be required to prepare financial information in accordance with generally accepted accounting practices. A lot of charitable organisations rely on public money as well as money raised from our communities. It is important that they are able to transparently advise the public of how those moneys are being spent.

All in all, although this is pretty minor in comparison to the significant economic shift that the Labour Party proposes and that the Labour Party will institute once it is next in Government, in its own small way this bill helps towards the Labour Party’s vision for New Zealand, where people are working in high-paid, high-skilled, and meaningful jobs. For that reason we will support the bill.

Bill read a second time.

Bills

Bail Amendment Bill

Second Reading

Hon ANNE TOLLEY (Minister of Police) on behalf of the Minister of Justice: I move, That the Bail Amendment Bill be now read a second time. This bill makes changes that will improve public safety and ensure the overall integrity of New Zealand’s bail system. In particular, the changes will make it harder for those accused of serious offences to get bail. We want to ensure that bail decisions strike the right balance between keeping the public safe and maintaining fundamental rights such as the presumption of innocence and freedom from arbitrary detention.

I would like to commend the Law and Order Committee for its thorough consideration of the bill and for the sensible amendments it has proposed. The Government has adopted all of the proposed changes. The committee received 282 written submissions on the bill and heard 42 oral submissions. A number of the oral submissions were from victims of crime and their families. On behalf of the Minister of Justice, I would like to thank those people for their courage and their willingness to share their experiences in order to inform the committee in its consideration of the bill. I note that 119 submitters supported changes contained in the bill. Many submitters referenced the petition of Tracey Marceau on behalf of the Christie’s Law group and 58,000 others. Some proposals in the petition, such as those relating to judicial accountability, were outside the scope of this bill. They are being addressed by the Law and Order Committee separately.

The bill contains two parts. Part 1 makes amendments to the Bail Act, and Part 2 makes amendments to other related legislation, including the Children, Young Persons, and Their Families Act and the Sentencing Act. The changes contained in the bill fall into six broad categories. The first set reverses the burden of proof in certain cases, to target defendants charged with the most serious offences and those with the highest risk of offending while on bail. A reverse burden of proof means that the defendant must prove that he or she should be granted bail. Under the bill, there will be a reverse burden of proof for defendants charged with murder. These defendants will need to satisfy the court that they will not commit any violent offences while on bail. Public safety will be the court’s primary consideration in these cases. The bill also extends the list of very serious offences that currently carry a reverse burden of proof when the defendant has a previous conviction for one of these offences.

Secondly, the bill improves the courts’ ability to deal with defendants facing serious drug charges. Defendants charged with class A drug offences will now be subject to a reverse burden of proof when being considered for bail.

Thirdly, the bill strengthens the ability of the police and the courts to deal with young defendants on bail. The bill retains the strong presumption in favour of bail for 17-year-olds who have not previously been imprisoned. Those aged 17 who have previously been imprisoned and those aged 18 and 19 will be subject to the standard adult test for bail. The bill also gives the police new powers to deal with defendants under 17 years of age who repeatedly breach their bail conditions.

The fourth set of important changes contained in the bill relates to police bail. This is bail granted by the police before the defendant appears in court for the first time. The bill increases the penalty for failing to answer bail in these circumstances to 3 months’ imprisonment, in addition to the existing maximum fine of up to $1,000. The bill abolishes monetary bonds and sureties for defendants on police bail. These bonds and sureties are not available in the District Court. They were seldom, if ever, used by the police, because they are very difficult to enforce.

The fifth group of provisions relates to electronically monitored, or EM, bail. Currently, electronically monitored bail is granted by the courts under the generic power to impose bail conditions. The Government believes, however, that there should be specific provision for electronically monitored bail in the legislation, to ensure that it is applied consistently and effectively. The bill formalises the current arrangements whereby defendants can apply for electronically monitored bail only after they have been remanded in custody. The statutory regime will ensure a consistent process for assessing the suitability of defendants for electronically monitored bail and for monitoring them in the community.

The final set of provisions promotes the integrity and operational effectiveness of the bail system. These amendments will reduce situations where a defendant will be bailable as of right, and will restore the jurisdiction of justices of the peace and community magistrates to deal with certain defendants who breach bail.

Finally, the committee has recommended a number of minor and technical amendments to the Bail Act. These recommendations follow on from the recent reforms made by this Government under the Criminal Procedure Act, and ensure consistency with recent changes to criminal procedure. This Government recognises that a person charged with a crime has the right to be considered innocent until proven guilty, and the right not to be arbitrarily detained. However, these rights must be balanced against the safety of the public. The Government is committed to bail laws that make New Zealand a safer place and keep victims at the heart of our criminal justice system, and this bill demonstrates this commitment. The New Zealand public deserve bail laws that protect them.

The Minister of Justice will be tabling a Supplementary Order Paper that will clarify the drafting and technical amendments required to bring the bill in line with the recent changes to criminal procedure. The Supplementary Order Paper will also propose changes to the management of the electronic monitoring regime, so that Department of Corrections staff as well as the police may undertake assessments for electronically monitored bail. I believe that the amendments recommended by the committee respond appropriately to issues raised in submissions, and, once again, on behalf of the Minister, I thank the committee members for the work they have done on this bill. I commend this bill to the House.

Hon PHIL GOFF (Labour—Mt Roskill): Kia ora katoa. The Labour Party will be supporting the Bail Amendment Bill. In supporting it, that does not detract at all from our commitment, and, as expressed by the Minister, her commitment, to the presumption that is fundamental to the New Zealand system of justice, that everybody is presumed innocent until proven guilty. There has to be just cause to deny people the right to be freed on bail pending the hearing of the charges against them.

Traditionally in our system there are three areas that the court will take into account when considering whether an accused person should be granted bail. The first and most important, I think, is whether that accused person is at risk of reoffending. There has to be a counter set against the presumption of innocence, an absolute commitment to protecting the safety of the New Zealand public, particularly where a person is accused of a very serious offence or where that person has a track record that predisposes them to being at serious risk of continuing to offend, albeit under the restrictions imposed by their bail conditions. The second consideration taken into account by the court is the risk of absconding. Obviously, if you think that a person who is going to be given bail, or there is evidence to suggest that a person who is going to be given bail, will abscond and not show up when the charges against them are being heard, that is another risk that means you might remand a person in custody. The third is the risk that the defendant might pose in interfering with witnesses and perverting the course of justice. In New Zealand, the judge has considerable discretion as to whether or not a person should be granted bail, but it works on the presumption of innocence.

In any particular year, there will be something like 91,000 cases considered for bail. In most instances bail is given, and in most instances there is no problem while that person is on bail, pending the court case to hear the charges against them. But we do have a serious problem with bail in New Zealand, and that problem is set out in the Ministry of Justice’s own statistics, which show that nearly one in five persons on bail—17 percent, to be precise—offend while they are on bail. Much of that offending is of a minor nature—it may be not meeting all the conditions of the bail—but some of that offending is serious, and, in a small number of cases, but with huge implications, very serious offending.

The figures from the ministry, looking at the period from 2006 to 2010, were that 23 people were convicted of murder at the time they were on bail issued by the court; 21 were convicted of homicide while they were on bail; 7,146 were convicted of acts intended to cause injury while they were on bail; 1,132 were convicted of abducting, kidnapping, or threatening behaviour while they were on bail; and 763 were convicted of sexual assaults while they were on bail. Set in the context of over 91,000 cases a year of the court granting bail, it is relatively small. Set in the context of the victims or the families of victims who came before the Law and Order Committee, whose family members and whose loved ones had been murdered or seriously injured or damaged by people on bail, you understand why there is public concern.

That is not to say that this House has ignored the question of bail laws being sufficiently tight. One of the first Acts I passed as Minister of Justice in the year 2000 was a new Bail Act, and that Bail Act had dramatic consequences. It increased by 200 percent the number of people remanded in custody, from around 500 in 1998 to over 1,700 in 2007, which was the end date of the statistics I looked at. So there was a dramatic increase in the number of people remanded in custody. New Zealand is not soft when it comes to denying bail. The figures suggest that the rate of remanding in custody in New Zealand pending the court case is 43 per 100,000, much higher than the United Kingdom at 25 or Australia at 30. The laws are not soft. Laws were changed again in 2011, but I have got to say it was more for political purposes—lots of rhetoric, not much substance, and it did not have much impact.

This bill will make a difference, but it will make a difference on the margins. The Ministry of Justice predicts that it will result in an additional 350 people per year being remanded in custody, with the necessity of an additional 50 prison beds. It is significant; it is not huge. The difference that this bill will make is on the margins, where the judge is considering whether bail should be granted or whether the risks to public safety outweigh the presumption of innocence until proven guilty. One of the ways in which this bill does that is to extend the situation where there is a reverse onus of proof. Normally it is up to the prosecution to prove that the defendant cannot be trusted to be on bail. Where there is a reverse onus of proof, it is up to the defence to prove that the person will not commit offences while on bail. The judge still has the discretion, but the judge will look more carefully at those cases because of the reverse onus of proof, and it is appropriate in cases of serious offending or serious risk to the public well-being that the judge does look more closely at those cases. In the cases of murder, there will be a reverse onus of proof, but right now two-thirds of those who are arrested and charged with murder will spend the entire period awaiting their trial in custody. That may increase slightly at the margins.

When we look at the reverse onus of proof in regard to people who have already been convicted of serious violent and sexual offences, many of those offences were previously included in the original legislation—murder, attempted murder, manslaughter, sexual violation, wounding with intent, aggravated wounding, use of a firearm. But other offences have been added, and appropriately so. They are things like aggravated burglary, assault with intent to rob, kidnapping, and abduction. For those charged with serious class A drug offences, we know that more than a third of those who are granted bail will reoffend, and often reoffend quite seriously, while on bail. So it is appropriate that there is a reverse onus of proof there. The bill makes other changes, one of which is to make the law regarding the age of adulthood consistent. So you will not be treated differently in regard to bail if you are 18 or 19; you will be if you are 17, unless you have previously served a term of imprisonment, and that is because there is a very high rate of reoffending on bail if you have previously been in prison—over 50 percent. I want to say that by and large those changes are positive changes, but that we also need to look at systemic causes of offending while on bail.

The committee, as you will be familiar, is looking at the Christie’s law petition and is looking at some other factors. I sat in court the other day, along with you, Mr Assistant Speaker, and we watched the process of bail being granted. It is a production line - style process. The judge considers it seriously, but there is limited information that may be available to the judge. There is reason to look at that to see whether we can provide better information to the judge, whether there can be risk factors for which we can provide a proper tool of analysis. That ought to be done. One other factor—I am going to finish on this factor. One reason why there is a lot of offending on bail is that it takes so long to bring people to trial. For serious class A drugs, it is well over a year. If we can get a more efficient court system and we can deal with the cases more quickly, that will be a major factor in reducing offending on bail. We support the bill.

JACQUI DEAN (National—Waitaki): I want to acknowledge in this second reading of the Bail Amendment Bill the work of the Law and Order Committee and the willingness of committee members from across the House to have a decent look at the issues surrounding the Bail Amendment Bill matters that were brought before us. I also want to acknowledge with thanks those families and family members who came to our committee to make their submissions and to tell their harrowing stories of the loss of partners, children, and family members at the hands of people who were out on bail at the time that their family members were then murdered or grievously harmed.

I want, in particular, to acknowledge Tracey Marceau for her petition, and the 58,000 people who supported and signed that petition. The committee thought very carefully about how we would best consider the Bail Amendment Bill and the Christie’s Law petition matters that were brought before us. The committee agreed that in order to do justice to both those matters, we would separate the two matters—deal with the Bail Amendment Bill, which this House is doing now, and the committee would then consider the matters raised in the Christie’s Law petition. The committee is doing that. The committee is working carefully and thoroughly on the issues raised that were out of scope of the Bail Amendment Bill consideration. That work is ongoing, and in due course the Law and Order Committee will be reporting back to the House on that very important bill and the issues it raises.

The Bail Amendment Bill amends the Bail Act. It also amends the Children, Young Persons, and Their Families Act, the Sentencing Act, the District Courts Act, and the Summary Proceedings Act, and that is done to improve public safety. I do not agree that the changes proposed in this bill are around the margins. I believe that the changes promoted in this bill will make a real impact on public safety, which is the primary reason for bringing this bill to the House.

When National took office we promised to review aspects of the bail system. What we did do was we reversed Labour’s 2007 amendments that made it, in fact, easier for defendants to get bail. Labour made amendments that restricted the test for remand in custody and, in fact, made it easier for defendants to get bail. We reversed that, and then in 2011 we did wide consultation with the public on their views about what else needed to change; hence this bill has come to the House.

The main provisions of the bill are in reversing the burden of proof in bail decisions for those charged with serious class A drug offences such as manufacturing or dealing in P, which in 2011, when this Government came in, was at epidemic proportions. It is known that more than a third of defendants arrested for serious class A drug offences do go on to offend while on bail. We are also moving to reverse the burden of proof in bail decisions for defendants charged with the most serious crimes, such as murder.

The current list of specified offences has not been reviewed since the Bail Act was enacted, and it now does not reflect the risk posed by defendants charged with other serious offences—violent and sexual offences—who do have a history of serious offending. So the bill expands the list of violent and sexual offences that result in a defendant being subject to a reverse burden of proof. If they have prior history of such offending they need to convince the judge, through their counsel, that they should be allowed out on bail.

The bill will strengthen bail conditions around young defendants. It will make defendants aged 17 to 19 years old subject to the standard adult test for bail if they have previously served a prison sentence. What this does is remove the strong presumption in favour of bail that currently applies to them. The bill allows the court to detain defendants under 17 years of age who significantly or repeatedly breach their bail conditions. The bill enables the police to uplift young defendants found in breach of court-imposed curfews, and return them to their homes and to approved places of safety—not only so that they cannot reoffend, and to keep society safe but also in an endeavour to keep them from further harm and further reoffending. Police bail is granted by the police before the defendant appears in court for the first time, and so the penalties for failure to answer police bail are increased under this bill to be an offence that carries up to 3 months’ imprisonment, in addition to the current maximum $1,000 fine.

The electronically monitored bail regime will be put into law under this bill, to ensure that it is administered consistently and effectively. Courts have been able to impose electronic monitoring, as a condition of bail, since 2006. The Government has reviewed electronic monitoring of bail, and it is turning out to be an effective and safe way of managing defendants in the community.

Finally, before National came into office in 2008, crime was increasing, gangs were growing stronger in number and in influence, prisons faced a critical shortage of beds, the drug P was at epidemic levels and was seriously damaging communities, violent repeat offenders were being freed on parole, and the courts were truly congested. National is turning that round. This bill is part of that, and I commend it to the House.

ANDREW LITTLE (Labour): I rise to speak on the Bail Amendment Bill. In acknowledgment of the last speaker, Jacqui Dean, I just say what a pity it is that when the House is able to come together and talk with almost one voice on a very important measure—a criminal justice measure, a measure that deals with trying to strike the very important balance between the liberty of the individual and the protection of public safety—a member should rise to try to score cheap political points about criminal justice. The truth is that the only real toughening of our sentencing laws and bail laws in criminal justice happened under the last Labour Government. We have a lot to thank the Hon Phil Goff for for that work, which he himself gave an account of.

When the bail laws were changed in 2000, about 500 defendants were denied bail. That number increased to 1,700 over the 5 or 6 years following the implementation of that legislation. Look at the National Government’s change to the bail laws in 2011 and you see that the impact was on 10 people. Ten people were detained who otherwise might have got bail. Then, if you have a look at the assessment of the impact of this bill, it is that it will affect possibly around 50 people. But we come from the principle of justice where if an innocent citizen is harmed, hurt, or negatively affected by another citizen committing a crime when the justice system might have prevented that harm through proper risk assessment and properly managing a previous charge of that offender, that is still an injustice. So any measure that takes us a step further towards ensuring that that sort of injustice does not happen is a step worth taking, and that is why we support this bill.

The way we handle criminal offenders is vital to public safety. It is the public safety aspect that underpins this legislation that cries out for proper consideration and, ultimately, for our support.

We note and acknowledge, of course, that offenders on bail either have merely been charged or, of course, are in the situation where they have been convicted but not sentenced. But in those situations where a defendant has simply been charged and has yet to be tried or to admit the guilt of their offence, then they are entitled, ordinarily, to a presumption of innocence. However, when we look back over the last couple of decades, the reality is that there has been an increase in the reported instances of those on bail committing other offences, and in some cases very serious offences. It would be a neglect of our duty as a Parliament if we did not take note of that and ensure that the courts and the judges have the tools to make a proper assessment in a bail application of a defendant who comes before them of whether that defendant poses a continuing or real risk to the community in terms of further serious harm.

Clause 8 of this bill expands the number of offences to which the reverse onus that originally appeared in the Bail Bill of 2000 applies. Somebody charged with murder faces the reverse onus, regardless of whether or not they have any previous convictions. That is a sensible balance. Murder is a serious charge, and I think the track record of the New Zealand Police now is that the police do not charge somebody until they are satisfied that there is at least a strong prima facie case. So I think a judge is entitled to look at the prima facie evidence and decide whether or not the defendant poses a further risk to the community.

Then, of course, the reverse onus applies in relation to other serious offences where there have been previous convictions. In my view, that is a good balance to strike in terms of the court exercising its discretion over bail and having the ability to make a proper assessment of the risk posed by a defendant. The new serious offences added by the bill include kidnapping and aggravated robbery, and a handful of others as well. In this situation, the defendant must satisfy the judge that they will not commit any other violent offence or pose a danger to any other person.

These changes, as I think the Minister correctly pointed out, arise largely out of the killing of Christie Marceau and the petition that arose out of that. I think it pays to dwell for just a moment on the details of that case. There is no question that it was an unspeakable tragedy for the Marceau family to lose their daughter and sister and granddaughter in that way.

The facts known about that case ultimately resulted in the defendant pleading guilty to some kidnapping charges for the first incident, and then being found not guilty by reason of insanity for the ultimate act that he committed, which took Christie Marceau’s life. There is no question that the defendant’s poor mental health played a large part in that offending. The sequence of events was that the defendant had committed a very serious set of offences when he detained, effectively kidnapped, and threatened other serious offences on Christie Marceau. Then, when he was arrested, he was detained, denied bail, and kept in custody for a period of time because the court was aware, and the police knew, that his mental health was an issue. Through the detention he had at that time in custody he had his mental health issues addressed and he was placed on medication. Some weeks later, when he had a subsequent bail application, which at his age he was entitled to make, the judge, faced with a call about whether or not the defendant should be given bail because this was not a defendant who had any previous convictions, made a judgment call that was in accordance with the law at the time.

Without wanting to detract at all from the pain and the suffering and the trauma that the Marceau family has felt, there are others who have peddled those events into a case for something other than what appears in this bill. The truth is that the balance that has been struck in this bill means that were there to be another tragic event such as this case—and, hopefully, there will never be—the reality is that even under this bill, it is likely that the court would find it difficult not to grant bail for a defendant of the nature of the defendant involved in the Christie Marceau killing in the circumstances in which that defendant was. That is not about avoiding giving comfort to the New Zealand public at large, but it is a reality about legislation like this drawing an appropriate balance in the criminal justice context.

This legislation also puts tighter restrictions on defendants charged with more serious drug crime and, given the prevalence of it and given the prevalence of criminal offending in relation to drugs such as methamphetamine, that is an entirely appropriate path to take. Then, finally, the bill deals with making more explicit the management of, and the risk assessment associated with, the granting of electronic bail.

When it comes down to it, that is what we in this day and age call on the courts to do. When they are dealing with offenders in this modern age, we need the courts to have the confidence to make an appropriate assessment of risk that those defendants—and some are former offenders, they are convicted offenders—pose to the community, as the judge considers whether or not an ongoing detention is an appropriate status for the defendant to face. That poses for judges an enormous responsibility. They are responsible for community safety, as much as they are responsible for ensuring that the defendant has and can get a fair trial and is not presumed to be guilty before the facts of their charge are properly tried in the court. This is always a difficult balancing act to achieve. So on that basis, and with those comments, we will support this bill.

DAVID CLENDON (Green): The stated purpose of this bill we are debating today, the Bail Amendment Bill, is “to improve public safety and to ensure the overall integrity of New Zealand’s bail system. The changes will make it harder for those accused of serious offences to get bail.”—and that is quoted directly from the bill, of course. We are actually not persuaded that the changes that are proposed in this bill will achieve those outcomes. We cannot argue with the intention of the bill, clearly. Those are perfectly sound aims. But, really, this legislation will not achieve those ends. It will compromise some of our commitments to our own New Zealand Bill of Rights Act, and to various international conventions to which New Zealand is signatory, and it will not, overall, achieve the preferred outcomes.

In part, we think the failure of what is intended in this bill to present a long-term solution to problems that undoubtedly do exist is, in part, arguably due to the fact that it is a very reactive bill. It seeks to amend, to shift, and to chop and change a few existing provisions in law. I think we could have taken a lesson from the Australians. We used to hear a lot from this Government about catching up with Australia. That language seems to have been a little more subdued of late. But in this instance we could have usefully looked to the New South Wales Law Commission, which a year or so ago produced a very useful report in that context. It recognised that bail legislation, in terms of the practice of the courts around issuing bail, had been chopped and changed and much amended over time, and it got to a point where it was not satisfactory, and it was not fit for purpose. So the New South Wales Government took a clean sheet approach, basically, and thought “OK, what’s the nature of the problem here?”. That is something we could usefully do here, but unfortunately this bill does not take that approach. It does not take that clean sheet approach to say: “OK, what is the problem? What are the issues? How can we best achieve the outcomes that we need to achieve?”.

In the Australian example they came back to some basic principles, asking what the purpose of bail law was, how that purpose should be reflected in legislation. Then they looked at the workings of bail law in practice and how that might be amended and modified and generally made better. I think that is what is absent from this legislation: taking one step back, taking the big-picture approach to looking at our bail laws. Some of the amendments have value, clearly, and we could support them, but others we cannot support, because they are substantial challenges to the constitutional and legal norms. As we have heard from Mr Goff, for example, the outcomes will actually be very marginal. It will not make significant difference to the outcomes. We think that there should be an approach of supporting a judiciary to interrogate some of the outcomes of decisions that have been made, to seek to establish whether errors were made—errors of judgment—and to ask whether we can put in place means, tools, and processes that will at least reduce, if not eliminate, those errors that have led to some acknowledged tragedies over time.

The New South Wales review came up with a set of key principles about bail law and suggested that those principles were public interest and freedom; securing justice according to the law; the integrity of the criminal justice system overall; the likelihood of harm or threat of harm to people in a relationship or in some other relationship with an offender, or with an alleged offender; the protection and welfare of the community, having regard to the likelihood that a person may offend or commit serious offences if released and not kept on remand; and the interests of that person and their family and associates. They seem to be some pretty sound principles on which to establish a comprehensive set of legislation around bail and its practice and whether or not bail should be allowed to individuals in individual cases.

What bail does not and ought not ever be used to do, of course, is to punish offenders. The granting, or not granting, of bail ought not to be seen as a deterrent to offending. That is not its function; there are other mechanisms within legislative and judicial process to ensure those things. One sees hints of this in this legislation, in the idea that somehow the likelihood of bail or reduced likelihood of bail will be a deterrent and, indeed, a punishment to people who are before the courts on charges, and indeed quite serious charges.

In that context, I think it is worth recalling that the most recent numbers we have, which I think come from 2006 to 2007, tell us that over half of people, something like 56 percent of people, who are remanded on charges and are not given bail are later found not guilty of whatever charges they were facing. That is, more than half of people who are remanded are ultimately found not guilty, despite the fact that they have by that point often spent significant time in custody. That is no trivial matter. The point was made earlier, particularly with drug charges, that it is perfectly common these days to have a year or 18 months on remand before a person actually gets their day in court, before the matter is settled. If people are spending a year or 18 months in custody, that is a huge cost to their family life, their professional life, and their employment. Inevitably, people lose their income and end up in debt. The consequences of that are significant and ongoing, and we need to think very carefully about the extent to which we are imposing that burden on people, given that more than half those individuals are found to be not guilty of the charges that they are facing.

It is not a trivial matter to deprive somebody of their liberty. It is the ultimate sanction of our legislative process, our judicial process, and to make it more difficult for individuals to get bail, based on a response to a very small number of cases, albeit tragic cases, we think is not the way to make good law.

The bill would undoubtedly compromise New Zealand’s international commitments to a number of conventions around human rights, not least of all the United Nations Convention on the Rights of the Child, which says very clearly that, in this case, 17-year-olds should not be treated as adults. Yet within this legislation we see a requirement that 17-year-olds who have previously served a term in prison will be treated, effectively, as adults; the reverse burden of proof will apply in those instances. We think that is very unfortunate. It is also an admission, a quite explicit admission, that imprisoning young people generally does not work in terms of dealing with their offending. We know that prison is actually a cause of crime, and that provision acknowledges that having been in prison means a young person is much more likely to reoffend. Prison is not effective in rehabilitating young people. It does not deter them from crime on the whole. Most often we see that it actually is the first step to a career of crime. Over some 15 or 20 years, typically, a young person in prison will continue to offend until their mid-30s or beyond. The prison sentence has very little effect on them. We see that the provision in this bill around the expectation that 17-year-olds who have served a previous sentence in prison is unreasonable. It is an admission of defeat, effectively, an admission that prisons do not work.

We believe that this bill, and the provisions in it, would reduce judicial discretion. There is always a tension between the rights and powers of this Parliament and the rights and independence of the judiciary—the independence of the judiciary to make its own decisions as it sees fit. We think some of the provisions of this bill take a step too far in terms of reducing the discretion of the judiciary. I forget for now the number of bail decisions that are made each year, but it does run in the tens of thousands. Often the decisions are quite straightforward, around relatively trivial matters, but, nevertheless, judges do get it right most of the time, and I think we need to acknowledge that. To the extent that this House seeks to limit the discretion of the judiciary, I think that is unfortunate and we ought not to be going that way. The Greens will continue to oppose this bill.

MARK MITCHELL (National—Rodney): It is a pleasure to take a call on the Bail Amendment Bill. Firstly, I would just like to acknowledge Ministers Collins, Tolley, and Borrows, the three Ministers achieving great results in our criminal justice sector. I would also like to acknowledge the Law and Order Committee. I would like to acknowledge our chair, Jacqui Dean, who has done a very, very good job chairing the committee in its hearing of the submissions on this bill. I would like to acknowledge the Hon Phil Goff, Kris Faafoi, David Clendon, Richard Prosser from New Zealand First, and, of course, my own colleagues Jami-Lee Ross, Ian McKelvie, and Lindsay Tisch—you, Mr Assistant Speaker.

This was actually quite a difficult bill to debate and for the committee to have in front of it because, obviously, it deals with victims of crime. We had a lot of brave submitters come along to the committee and make submissions that were deeply personal. Some of them had been victims of crime and others had been supporting families and friends who had been victims of serious crime. It was, actually, really important for us as a committee to hear submissions like those, because we can sometimes live in a bit of a sterile world down here in Parliament in Wellington, and to actually hear submissions like those allows us to get really focused and to understand how law changes can really affect victims and people in the community.

I listened to what Mr Goff said. I understand that as part of the Opposition’s role it does a fair bit of work trying to analyse and work out how much of a real impact legislation is going to make. He talked often about how this bill operates and touches just around the margins. You know, I just cannot buy that. Personally, I think that if we can prevent one other Kiwi or New Zealander from becoming a victim of a serious crime, then it is our duty and our role to make sure that we pass law that can stop that from happening.

I do have to take a short call, so I am going to get to the crux of the bill, which I think is a very, very important part of it, and that is one of the main provisions, which is around reversing the burden of proof. The bill will reverse the burden of proof in bail decisions for those charged with serious class A drug offences, such as manufacturing or dealing in P, as more than a third of defendants arrested for serious class A drug offences actually offend while they are still out on bail. It will also reverse the burden of proof in bail decisions for defendants charged with murder. Obviously, murder is the most serious offence in New Zealand law currently, but it is currently subject to the same test for bail as other, less serious offences. So this, obviously, was a no-brainer. This had to be corrected. We will make this change to reflect the seriousness of the charge of murder.

The current list of specified offences has not been reviewed since the Bail Act was enacted. It does not reflect the risk posed by defendants charged with other serious violent and sexual offences who have a history of serious offending. These were very, very important changes to make, to actually put the onus of proof back on the defendant, to ensure that they could show a judge or a court that they are not going to be a danger, that they are not going to reoffend against the community.

The bill also expands the list of violent and sexual offences that will result in a defendant being subject to the reverse burden of proof if they have a prior history of such offending. We have only to read our papers, watch the television, or turn on the radio to understand that, sadly, our communities are still at risk and exposed to these offenders, who are habitual reoffenders. This bill, with this reverse burden of proof, is going to strengthen the laws around them being able to be granted bail. This is a very good bill, and I am very happy to commend it to the House. Thank you.

RICHARD PROSSER (NZ First): I am pleased to rise on behalf of New Zealand First to speak to the second reading of the Bail Amendment Bill. New Zealand First supports this bill. This bill has been examined by the Law and Order Committee, under the fine chairpersonship of Jacqui Dean. I sit on the committee, but at the time that this bill was first referred to it I was not a member, so this is the first opportunity I have had to speak on this bill.

In general terms, New Zealand First finds itself most often in agreement with the National Government on matters of law and order. We find that we agree with it more closely than we do with the Labour Opposition on these matters, and this bill is no exception to that. However, we also find that we frequently feel that the measures taken by National that are intended to improve public safety and law and order do not go far enough. Again, this bill is no exception.

New Zealand First believes that some further changes could have been made within this bill in order to make it an even more robust tool that the courts could use to improve public safety and to protect innocent people from the actions of criminals. But our dissatisfaction with that aspect is not sufficient for us to not support the bill, nor is it enough that we felt compelled to submit a minority report to the House as part of the bill’s report back from the select committee, as Labour and the Greens have done.

We are satisfied that this bill will improve the bail system and that it will contribute to the enhancement of public safety. We hope that in future a New Zealand First - influenced Government, of either potential flavour, will have the opportunity to revisit the subject of court bail yet again, and, when that times comes, we look forward to tidying up some of the aspects that we feel to be insufficient at this time.

New Zealand First supports the provision in this bill that will introduce a reverse burden of proof for offenders charged with serious violent offences and class A drug dealing. We support the provision that will remove the strong presumption in favour of bail for defendants aged 18 and 19. We are not particularly happy that the removal of the strong presumption in favour of bail will not extend to 17-year-old defendants as well.

We do not agree that the international obligations referred to, namely the United Nations Convention on the Rights of the Child, should take precedence over the requirements and processes of lawmaking here in New Zealand. New Zealand First believes strongly that laws applied in New Zealand should be made in New Zealand, with the realities of our society and the rights of our citizens being placed first and foremost. We do not believe that the United Nations should be making our laws or influencing our lawmaking processes.

We are also not happy with the provisions that will empower the police to arrest only those young defendants who they believe have significantly or repeatedly breached the conditions of their bail. New Zealand First believes that, as a matter of principle, any breach of bail should be regarded as significant and should be classed as grounds for arrest.

We understand the objections raised against this position by the Labour Party and some submitters that a person on bail has not been convicted of a crime and should not, therefore, be penalised for any so-called minor breach of the bail conditions imposed prior to a court appearance. We understand that objection, but we do not agree with it. We hold—I reiterate—that any breach of bail conditions constitutes an offence in its own right, and the police should be empowered to arrest a person on that basis. Indeed, as the committee’s report states, we were told that some young people disregard their bail conditions because they are aware of the restrictions on their arrest—they play the system. We do not believe that a requirement for breaches of bail to be significant or repeated will be sufficient to deter them from doing that.

We note that the changes to bail that this bill will bring about will have an impact on prison capacity. We accept that reality as, we believe, do the majority of New Zealanders. There will be more required of the prison system. There will be more beds required. There will be a greater cost. We accept that cost. We accept that it is going to cost more. But we believe in protecting New Zealanders and in keeping people safe, and if it costs more to do that, then it costs more.

There is a cost in not locking people up as well, which is often not taken into account when the cost of running prisons is being talked about. There is a social cost and there is a financial cost—the cost of dealing with offenders when they commit further crimes while on bail, and the cost associated with helping and assisting their victims.

Sometimes the cost of not locking someone up is unacceptable, as we saw with the tragic case of Christie Marceau. The committee received the Christie’s Law petition at the same time as we were considering the bill, and, because the appeal in the case was still before the courts, there were aspects of it that we were not able to take into account. There remain some deficiencies in the bill with regards to the concerns raised by Christie’s Law petitioners, which will not be addressed by this new law. That is something that I am sure all members of the House find as unacceptable as do those fine people who campaigned on behalf of Christie Marceau and her family.

I salute those brave people. I believe that this House owes all of them a debt, and we must undertake to revisit the matter of bail yet again, as soon as is practical, in order to address the deficiencies that still remain and to put in place the learning that we took from considering the petition. I believe that the Government must sponsor such a change, and I call on the Minister of Justice and the members opposite to give this possibility serious and urgent consideration.

In closing, I would like to highlight an issue that the Labour Party raised in its minority report, and with which we in fact do agree. Labour says: “A critical issue that the Government must address is delays in the court system.” Indeed it must. New Zealand First agrees with Labour that the time taken from arrest to court appearance, and from court appearance to trial, and the length of too many trials is far too long. Justice delayed is justice denied, I say to this House. Two weeks may be an acceptable time frame but 2 years is not.

Delays in the court process system put great pressure on judges to grant bail, rather than keep accused people in custody, and this in turn results in more offences being committed by people who should be locked up, and in innocent people being hurt, raped, robbed, and, in some cases, murdered. This is not good enough, and it is the Government’s responsibility to address this issue, to resource the courts sufficiently, and to look at matters of procedure that lead to unacceptably long delays. That said, we believe this bill is a step in the right direction, and we are happy to support its passage into law while reiterating that the deficiencies in it still need to be addressed and should be addressed as soon as possible.

IAN McKELVIE (National—Rangitīkei): Tēnā koe e te Rangatira. E te Whare e tū nei, tēnā koutou, tēnā koutou, tēnā tātou katoa. This Bail Amendment Bill is another in a list of bills introduced to this House by this Government with a view to improving and reforming the law and order sector in New Zealand. There is an extensive list of those bills, and many of them have been successful.

The Law and Order Committee spent much time on this bill, receiving a large number of submissions, many of which related directly, as has been said by a number of speakers already, to the Christie’s Law campaign. The chairperson of this committee had a very difficult task in, firstly, sifting through those submissions and appropriately placing them, and, secondly, dealing with what were some very testing submissions during the course of the select committee process. Some of these submissions described some very challenging and tragic issues, so I congratulate the chairperson, Jacqui Dean, on her performance in handling this select committee. I would also congratulate the select committee on what was a very difficult task for its members. I found it quite testing at times.

The select committee has reported back to Parliament a number of sound recommendations. A number of those have been dealt with already. I would like to deal with just a couple of them in the course of this short speech. One is related to defendants under the age of 20, and David Clendon referred to this in his speech. I would remind the House that these people are not amateur criminals. Many of them are hardened criminals, and as we went through the submissions on this issue, we came to the conclusion that a lot of these young people really need to be dealt with very firmly by the courts, and we needed to give the courts the opportunity to do that. That is the first issue I wish to deal with.

The second one relates to the amendment to the Children, Young Persons, and Their Families Act, and it is the power to arrest a child or young person more than 14 years of age and less than 17 without a warrant where they have been released on bail and have repeatedly breached their conditions. Again, this refers to the issue that David Clendon raised. These kids, as you might call them, are by no means amateurs, and I think we needed to deal with that strongly too. The reverse burden of proof and a number of other issues have been dealt with very competently earlier in this discussion.

I want to briefly touch on some issues that Phil Goff raised in the course of his speech, related to numbers. He used a lot of numbers, all of which are historical. I contend that changes this Government has made will transform those figures. You see, our objectives of reducing crime and the effects of crime and the rehabilitation of prisoners and so on are having a great effect and they are working, and the Bail Amendment Bill will add to that.

Our judges carry a great deal of responsibility. They often carry the community’s safety with them as they make their decisions on bail. Our role is to give them the best possible tools to achieve that. This Government has a great record when dealing with law and order, and I am pleased—in fact, I am quite proud—to be part of a law and order section in this Government that I think is achieving great results. I have no problem in supporting this bill as it proceeds through the House. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East): I rise to speak on the Bail Amendment Bill. I wanted to start with a quote from some briefing papers to a former Minister of Justice. “It was stated that the problem of offending on bail could be addressed by remanding more people in custody than at present. There are, however, several major difficulties with this approach. The first is that it remains difficult to predict with any certainty who will offend while on bail, and, secondly, it is difficult to see how a greater use of custodial remand could be based in principle simply on the seriousness of the offence since it picks out one variable and ignores others, which the research concludes are much more important in determining the rate of offending while on bail. For example, only 2 percent of those charged with a violent offence committed a violent offence while on bail. Research indicates that a large proportion of those remanded in custody who are subsequently convicted do not receive sentences of imprisonment.” That report was to the then Minister of Justice, the Hon Douglas Graham, in 1991. I spoke on the Bail (Miscellaneous Provisions) Bill 22 years ago, and we are still debating the same issue today.

I think that it is possibly time for a consideration of bail laws on a basis where, basically, we get all parties together to actually consider what the evidence says and what would be effective in terms of identifying what the drivers of crime are. I attended a ministerial meeting on the drivers of crime when the Hon Simon Power was the Minister of Justice, and very little has flowed from that, and yet such a good beginning was promised at that meeting when we had people presenting evidence on what were those fundamental underlying drivers of crime. Yet we continue to deal with the ambulance at the bottom of the cliff instead of building a really strong fence at the top of the cliff. I would like us to think about bail in that sense.

Mike Sabin: What was that? Crime at a 30-year low? What’s that all about, then?

Hon LIANNE DALZIEL: The member is just really defeating his own argument. The point that I am making—

Mike Sabin: Well, hold on—if there is less crime, is that not an example of more activity at the top of the cliff?

Hon LIANNE DALZIEL: Well, why are we passing this legislation without the evidence to back it up? I heard members on the other side of the House basically saying that as long as we save one person’s life, it does not matter how much we spend, and that it does not matter how many people we lock up as long as one person’s life is saved. I think that Parliament owes this issue much more in-depth attention than those members are prepared to give it, because they seem to be debating around the emotionalism, which is always the case when one is presented with a petition, as the Law and Order Committee was in this case.

I sat on the Justice and Law Reform Committee, as it was back in 1991, when it considered the bail legislation back then. We are always hearing from people who present a very compelling case based on the tragedy that has befallen them, and we are right to listen to their concerns. But we are not responsible unless we actually address them by doing something that is effective and actually makes a difference, so that those lives that are lost are not lost in meaningless political debate that does not actually advance the cause. That is simply the point that I am making.

That being said, in 1991 we voted against the Bail (Miscellaneous Provisions) Bill; today we are voting for, with reservations, the Bail Amendment Bill. I hope that the next Parliament does decide to make more progress in this area. I think that would do more to honour those who see themselves as families of the victims of crime than political rhetoric.

MIKE SABIN (National—Northland): I take exception to what the member resuming her seat, Lianne Dalziel, has just said about more activity at the bottom of the cliff and not at the top because if there is one Government that has actually done something about the drivers of crime, it is this Government. Yet the Labour Government sat for 3 years in a position to be able do something about it—

Hon Member: 9 years.

MIKE SABIN: —sorry, 9 years. So that is three sets of 3 years. It sat for 9 years and did nothing. It did absolutely nothing. Labour is a very effective Opposition party because Labour members like to sit on the Opposition benches and criticise the fact that we are actually doing something—the very something that they never did themselves. That is a constant irony that we see, and I think that that is something that New Zealanders have completely woken up to. They actually realise that the disingenuous words are never followed by any real actions from that party.

This Government has got on and made the changes that are required at the top of the cliff but is also doing things at the bottom of the cliff. The reality is that laws are made for law-abiding citizens and there are some citizens in this country who feel that those laws do not apply to them. The criminal justice system and the corrections facilities must deal with those people.

There are some very, very important changes being made in this Bail Amendment Bill, in its second reading. As a former police officer, and certainly as a detective dealing with some of the more serious crimes—reversing the onus of proof, or the burden of proof, back to the offender is a very, very positive move because there are so many who will reoffend, knowing full well that the likelihood of consequences is insignificant and diminished.

There are many who are suffering under the burden of drugs like methamphetamine, and the idea of remediating their criminal activities will simply not enter their heads. They are driven by other forces. The ability for the criminal justice system to be able to put the onus back on that offender, back on that defence team, to say “Well, they must prove that this individual will not reoffend.” is a very positive move.

We have also seen the idea that if youth aged 17 to 19 years who have been in prison—and make no mistake about it, people have to do something very significant at that age to be in prison—come out of prison and they reoffend, then they should be treated as adults. They should be treated as adults because clearly they are in a very troubled state and in a position where they simply do not get it. They must not be in a position where they can single out—

Jacinda Ardern: They don’t get it, so just moving the line helps!

MIKE SABIN: I am not going to listen to what that member says, because if we are talking about disingenuous chance, that member knows how to sing them long and loud.

Jacinda Ardern: Tell me what you mean.

MIKE SABIN: There are some very good—

Hon Member: Motor mouth, with no evidence.

MIKE SABIN: Bring it on. There is some very good—come on, Mr Faafoi, you are supposed to speak on this sort of stuff—work being done here with youth.

The changes to the granting of bail as of right are also very positive, because so often, as a policeman, I saw people bailed because the law said that they had to be bailed. The rights should remain with the victims, and that is what this bill is about. It is about putting the rights back with the victims.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split-call.

KRIS FAAFOI (Labour—Mana): I am glad that Mike Sabin has had the opportunity to have his daily rant. There are some things that I have agreed with him on, and there are some things that I have disagreed with him on. I will get to the stuff that I agreed with him on soon; it will be a very short part of my speech. What I did disagree with him on is that that side of the House has got some kind of longstanding record on law and order. It relies on it a lot, but it is actually quite shallow. He says that on this side of the House, any moves that we have taken in this area have been—I think he said we were sitting on our hands. But, as Mr Goff pointed out in his speech, the changes that the last Labour Government made in the areas of sentencing, parole, and bail are much more fundamental than the changes that are taking place in this bill, the Bail Amendment Bill, so I fundamentally disagree with Mr Sabin on that issue.

I just want to begin by acknowledging the other members of the Law and Order Committee. I know we have had our challenges as of late, but I do see Mr Mitchell; Mr McKelvie; you, Mr Assistant Speaker Tisch; David Clendon; and also Richard Prosser. The process of listening to the many submissions on the Bail Amendment Bill, I think, as Mr McKelvie said, was challenging. We had a lot of submitters who had very emotional stories to tell, and I think that all those people who did come through with some personal stories are very, very brave. I did want to point out two people—the first one being Tracey Marceau, the mother of Christie Marceau, and also someone who at the session we had in Auckland stood out for me, and that was Charlie Borrell, the father of Augustine Borrell, a young man who was killed by someone who was out on parole.

As has been said, the Labour Party will be supporting the Bail Amendment Bill. One area that I do agree with Mr Sabin on is that we do support the reverse onus of proof operating in cases such as those with, I think it was, class A drugs and serious offences. We support—[Interruption]

KRIS FAAFOI: Excuse me?

Hon Tau Henare: You heard.

KRIS FAAFOI: I prefer not to listen. We do support that reverse onus of proof, because that will put more of an onus on the judges to look more carefully, especially at the high-risk cases, when using their discretion about applying for, or whether or not to give, bail. I guess that in the case of Christie Marceau—and that is certainly one case we heard a lot about during the submission stage—that would have made a difference.

Mr Sabin also talked about the discretion of police to arrest youths without an arrest warrant. We also do support that, with a proviso, and this is something that Youth Court judges said needs to clearly exclude the trivial while providing the police with the ability to be effective when faced with serious and significant breaches of bail with young people. As Mr Prosser said in his speech as well, we think an issue that the Government does need to address is the serious delays in the court system, which are creating long periods of time for people waiting for their cases to be heard and which are increasing the likelihood of offending while out on bail.

Another thing—a practical thing—that the select committee heard was around a risk assessment tool that may be able to be provided for the judiciary. I understand that the Department of Corrections does have one called ROC*ROI, and there was some talk about being able to see whether we could implement a similar risk assessment tool for the judiciary to use. Hopefully, that is something that is followed up by the Government when it starts implementing some of the changes in the Bail Amendment Bill, because we think that that is one practical way that could help.

Just to finish up, this is a bill that we hope will make a difference to a lot of people who we do not want to have the same experience as the people who came to us and submitted to the select committee.

JAN LOGIE (Green): Tēnā koutou, tēnā tātou, e huihui mai nei ki roto i te Whare. I would like to add to my colleague David Clendon’s voice in offering the Green opposition to this Bail Amendment Bill, recognising that that voice is in a minority in this House.

There are some key reasons that we oppose this bill. One is that it widens the range of offences that call for a reverse burden of proof, despite the challenge that this poses to that basic principle of law that a person is innocent until proven guilty. We also oppose it because it significantly reduces judicial discretion when hearing bail applications, despite the exercise of discretion also being a very basic principle in judicial practice. Thirdly, it compromises the presumption in favour of bail for those aged 17 to 19 where the accused person has already served a term of imprisonment. That is despite there already being a provision within the Crimes Act that allows for the detention of people in this age group, which really means that no extension of power to detain is necessary. So it signals to us that this is about more of a dog whistle to those who have that misunderstanding of what works in this system and the sense of needing to get tough on crime and the misunderstanding that that kind of approach will actually make a difference in our community, when we know it will not.

I would like to also note the Human Rights Commission submission on this bill, when it looked at whether there was a basis for going against the New Zealand Bill of Rights Act. It noticed: “Statistics demonstrate that most people who commit murder do so only once and the figures appended to the [regulatory impact statement] itself indicate that homicide and related offences amounted to only 0.1% of offences committed on bail from 2004-2008. The case for change therefore effectively relies on a reverse onus preventing less than one instance of a serious violent offence a year.” Therefore, that is hardly the basis for undermining the New Zealand Bill of Rights Act for many, many people.

I would also like to point out and reinforce what my colleague reminded us: that in cases where people are remanded on bail, 60 percent are found not guilty, and that in terms of remand people are now waiting between an average of 1 year and 18 months for a hearing. So I just really want to ask people to think about what those two things together mean.

I would like to now speak more specifically around the provisions in this bill and what they mean for young people. As I have highlighted, we believe that the provisions are more of a dog whistle than anything substantive to address reducing crime. I would like to refer this House back to a piece of meta-analysis research that was done by the Ministry of Youth Affairs in 2000 on the consideration of youth crime. It was titled Tough is not Enough—Getting Smart about Youth Crime. It noted that effective interactions with young people will touch on the four cornerstones of a young person’s life, which are family, school and work, peer group, and neighbourhood, and be fair and respectful in terms of treatment by the youth justice system. It noted that those kinds of approaches will make a positive difference. But, sadly, arrest has little positive impact, and particular types of sentences seem to have little impact on offending, except for the situation of probation or restitution and fines. Things that really, really struggle to work are residential interventions, and I think we can consider prison the most obvious example of a residential intervention.

Getting tough on crime offences almost always fails, and the primary reason for that is that a lot of the young people who are most at risk of being serious offenders are young people who have come from situations where physicality and physical responses and tough responses to anything were the norm. These young people have been inured to that type of approach. What will make a difference in their lives are strength-based approaches. Sadly, this bill is another example of a dog whistle to conservative interests.

JAMI-LEE ROSS (National—Botany): Thank you, Mr Assistant Speaker. I appreciate the opportunity to speak on this bill, the Bail Amendment Bill. This Government’s focus in the law and order area has been all about ensuring that New Zealand is safer for New Zealanders. We are seeing great results. Crime is at a 30-year low. We have got more police officers on the street. Public confidence in law enforcement in New Zealand is on the increase, and long may it be so. But this bill is all about ensuring that we have our bail laws correct. It is an important thing that we ensure that we both balance the rights of those who are rightfully innocent until proven guilty but also ensure that New Zealand’s streets are safe for those who want to go about their daily lives in the normal manner. The changes in this bill will help to achieve that. The changes in this bill will ensure that New Zealanders are kept safer.

Firstly, we have got a reverse burden of proof, which will be beefed up around murder, and I think that anyone out there in New Zealand who looks at the bail situation for accused murderers would appreciate the fact that for a first-time offence an individual is subject to a reverse burden of proof. They will also appreciate the additional offences that will be included in the list for the reverse burden of proof for people who are accused of a crime and have previously had some time inside at Her Majesty’s pleasure. I am also particularly pleased that in the Law and Order Committee we had quite a long discussion about the situation for 18 and 19-year-olds, and now they will be subject to the adult test for bail at the age of 18 and 19, rather than the youth test. I think that most New Zealanders would accept that the age at which you become an adult is 18, and therefore the age at which you should be subject to the adult test for bail should be at 18 not at 20.

I am pleased, though, to follow the Green Party member Jan Logie, because, like a number of members on this side of the House, we are actually quite offended by some of the comments the Greens have to say. I want to read out for the record what the Green Party said in its minority report. It said: “Many of the provisions contained in the bill appear to be a purely political response to expressions of public concern about crime …”. So, for those out there who are listening at home, the Green Party thinks that ensuring public safety is a prime consideration when it comes to bail for murder is purely a political response. It also said: “Unfortunately much of that concern is based on misinformation aided by a vocal minority calling for excessively punitive measures,”.

I do not know whether the Green Party members were actually listening during our hearings, but we had family members who had suffered significant losses at the hands of criminals. We had in front of us mothers and fathers whose children had been killed by offenders who had committed heinous crimes against their children. I would not call them a vocal minority. I would call them New Zealanders who are hurting. I would call them New Zealanders who want to ensure that the ratbags and rascals who commit crimes against their family members are given the proper test for bail. I would call them New Zealanders who want to ensure that this country is a safe place to raise a family, a safe place to live in, a place where we are not soft on criminals, and not a place where we have politicians who care more about reducing prison numbers than ensuring that our streets are safe. This bill is an important part of ensuring New Zealand is safer for New Zealanders, and it should be passed by this House.

The question was put that the amendments recommended by the Law and Order Committee by majority be agreed to.

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

Ayes 101

New Zealand National 59; New Zealand Labour 33; New Zealand First 7; ACT New Zealand 1; Independent: Dunne.

Noes 19

Green Party 14; Māori Party 3; Mana 1; Independent: Horan.

Question agreed to.

Bill read a second time.

Bills

Family Court Proceedings Reform Bill

Second Reading

Hon JUDITH COLLINS (Minister of Justice): I move, That the Family Court Proceedings Reform Bill be now read a second time. The bill is an omnibus bill that amends nine Acts. The Acts to be amended include the Care of Children Act 2004, the Domestic Violence Act 1995, the Family Courts Act 1980, and the Legal Services Act 2011. The bill will implement the Government’s decisions that are based on the findings of a Ministry of Justice review of the family justice system in 2011. The reforms will ensure a modern, accessible, and sustainable family justice system—a system that supports the children and vulnerable people who most need the Family Court’s protection. The reforms are the first significant changes to the Family Court since it was introduced more than 30 years ago. The slow pace of resolving Family Court applications is creating additional pressures on children and families. Currently, Care of Children Act applications are taking, on average, 238 days to resolve; domestic violence cases are taking, on average, 117 days to resolve; and relationship property applications are taking well over a year, on average.

The bill emphasises the needs of children and vulnerable people in order to ensure ongoing support and protection for them. It clarifies the provisions relating to care of children cases involving allegations of violence, and improves the Family Court’s response to domestic violence. The bill encourages parents to resolve matters themselves. Families will be supported to reach agreements and resolve disputes outside of court. The successful and free Parenting through Separation course will be expanded, and a new out-of-court family dispute resolution, or FDR, service will be introduced.

The bill focuses the Family Court on resolving parenting disputes that require a judicial decision. It targets the use of professionals, including lawyers, to help resolve the more serious cases. To help people to independently navigate the court for more straightforward matters we will introduce improved information services, a simplified three-track court system, and easy-to-use forms. The Government believes that parties should contribute to the cost of a lawyer used in Family Court proceedings, unless this causes serious hardship. This view is reflected in the bill, which also allows regulations to cap the proportion of cost to be paid by parties.

The Justice and Electoral Committee has considered the bill. I thank the committee and officials and commend them for their efforts. There was significant public input into the bill. There were 386 written submissions, and the committee heard 217 oral submissions. I have listened very carefully during the committee process to submitters’ concerns. The modifications to the family justice reforms support the Government’s key priorities—a court that protects vulnerable people, provides fast and efficient resolution of private disputes, and puts the needs of children first. I am very comfortable with these changes, and I have received positive feedback from many in the family justice community.

The changes to the family justice reforms are to provide up to 4 hours of legal support prior to court entry for parents who meet the legal aid threshold, to provide up to 3 hours of preparatory counselling to help eligible parents to make the most of family dispute resolution, to enable a judge to refer parties back to family dispute resolution or Parenting through Separation courses if it is likely to help resolve the case, to enable lawyers to participate earlier in the court process at the judge’s discretion if they believe it would increase the chances of a successful resolution, and to enable provisions of the Act to be brought into force by Order in Council, as opposed to a specific date, to provide greater flexibility in implementing the reforms. Cabinet agreed in April to these changes, most of which are now incorporated into the bill as reported back to the House. Additional legal support and preparatory counselling will be provided operationally.

The bill as reported back provides Family Court judges with more options to help resolve disputes. Judges will be able to refer parties back to family dispute resolution or Parenting through Separation courses. Judges will be able to allow lawyers to participate earlier in the process, where they believe that it is going to help the chances of success. As a result of the changes to policy, parents may be provided with some initial legal advice prior to court entry. They may also be provided with some preparatory counselling to help them make the most of family dispute resolution. Currently, pre-court, taxpayer-funded counselling is available to anyone on request, for up to 3 hours. Under the reforms, the focus will shift from dealing with private relationship issues to resolving parenting issues and reducing conflict, for the benefit of children. Family dispute resolution will be free for the estimated 60 percent of participants below the income threshold for civil legal aid. For those over the threshold, the cost of family dispute resolution is likely to be less expensive than retaining a lawyer and proceeding to a defended court hearing.

The bill recognises that the Family Court should be one part of the wider system that helps families resolve issues. The court is often not the best means, though, for helping families settle disputes. The reforms in the bill are designed to support people to more quickly resolve disputes out of court, where appropriate. They will ensure that the court focuses on the most vulnerable and on the most serious matters. They will also bring much-needed clarity to court processes and rules. Users will have more certainty, and it will be easier for them to understand and navigate the court system.

It is always good, I think, for the House to remember, when children are involved, that their parents once, at one stage, loved each other so much that they decided to have children. I think that is something that sometimes gets lost in the Family Court system. As a lawyer with over 20 years’ experience, I have seen it happen time and time again that people’s best interests have not been put first but, actually, those of professionals have been. I believe that this bill will help reduce that situation. As a result of the bill, the Family Court will better meet the needs of families today by reforming a system that was introduced into a very different world more than 30 years ago. I commend this bill to the House.

ANDREW LITTLE (Labour): I rise to talk on the Family Court Proceedings Reform Bill and to confirm that the Labour Party will oppose this bill. Far from providing a better process for parents separating and for protecting vulnerable parties—both adults and children—it will do the reverse. The Minister of Justice made a play for the emotions by saying that this bill deals with the situation where two adults who once loved each other so much that they had children now find themselves moving apart. Well, actually, it is exactly that fact and that situation that explains the intensity of emotion around separation for separating adults and, in particular, separating parents. That is where the practicality of this legislation, I think, is going to be put to the greatest test.

The origins of this bill were honourable in intention. There were delays in getting some cases dealt with and disposed of; there is no question about that. There were participants who were playing, and continue today to play, the game or to play the court system off against each other to express their anger or whatever else it is—the sociopathological behaviour that they might have towards each other. It is correct that court time is being used for arguably trivial matters, although, of course, in matters of human affairs and the human heart, one is very reluctant to accuse anybody of regarding the matters that are important to them as trivial. I think there is some substance to the allegation that perhaps the Family Court, which was conceived with the intention of creating an environment of conciliation, has moved away from that in many respects. So all those allegations and those complaints about the Family Court were known and are known.

In response to that, the Minister of Justice of the day, Simon Power, convened a conference of stakeholders at Parliament, and that thrashed out the issues. That led to the establishment of an expert reference group. That led to other consultation, and the end product was this bill, which has been modified only slightly as a result of the Justice and Electoral Committee process. The original bill included measures that were not, however, reflective of that consultative process. The select committee was put in the somewhat embarrassing position of having the expert reference group come as a group to make a submission to distance itself from the bill as it was originally drafted. That is not a particularly pretty picture for a select committee to have to confront. At the heart of the reforms is what is called the family dispute resolution process. A mediation approach to family disputes is not unknown to, or unusual for, the Family Court even today. One of the changes made under the previous Labour Government was to promote and encourage greater mediation. One of the things that the previous head of the Family Court, Peter Boshier, did was to allow this process of lawyer-led mediation, which meant that the judges did not have to get so heavily involved in it. That process has been remarkably successful. It is interesting that the select committee heard that between 75 percent and 85 percent of cases that are filed with the Family Court are resolved without the intervention of a judge. Nevertheless, this Government has gone ahead with its family dispute resolution process. The family dispute resolution process is a pre-litigation process. If a party files a matter or makes an application to the Family Court, it will then be mandatory to undergo the family dispute resolution process before the court will properly seize itself of the application, unless there is an allegation of violence or abuse involved and then there will be a fast-track process that will place it before a judge. But in the absence of that, and the vast majority of cases do not involve allegations of violence and abuse, there will be this mandatory process.

The parties—and they are parents, let us face it—will be expected to participate in the family dispute resolution process without representation and support during the process. One of the concessions that the Minister made, announced on Easter Saturday this year, was that there would be some pre - family dispute resolution legal advice allowable, particularly for those who do not have the means and are reliant on legal aid. Legal aid will be available to those who need advice prior to the resolution process, as, indeed, there will be some counselling as well, bearing in mind that the amount of counselling available to separating parents was reduced at the end of last year from six sessions now down to three. Those three sessions will continue under this regime for the purpose of preparing parties for family dispute resolution.

In cases where the care of children is an issue, the separating parents will be expected to represent the best interests of the child or children in that situation. There will be restrictions on the appointment of counsel for the child. That is one of the issues that concerns us the most, not only because of our international obligations on the rights of children and their rights to be heard in judicial processes that concern them but because it is simply impractical for parents in the heat of and the intensity of separation to be able to properly represent the best interests of a child or children involved in that separation. It is just impractical for many parents. Indeed, the evidence that the select committee heard from parents who had been through the process was the important role that counsel for the child played in assisting mediation between the separating parents, which is something that counsel for the parents could not easily do. The role that counsel for the child played became a very pivotal role, indeed—a mediating role and a brokering role—between the other parties. That was the evidence that the select committee heard.

This bill will take that away. It will place on the shoulders of the facilitators, who will be registered and go through the processes—in addition to trying to get the parents to talk to each other in the intensity of this very difficult, emotional period—a focus on their view about the best interests of the child. And, guess what, we can predict it now. Separating parents will have a different view about what the best interests of the child are, and there will be no mediating influence at all. I want to read what the United Nations Convention on the Rights of the Child says in this regard. Article 9 talks about ensuring that children shall not be separated from their parents against their will except when competent authorities subject to judicial review determine. That includes where “Such determination may be necessary in a particular case such as one involving abuse or neglect of the child by the parents, or one where the parents are living separately and a decision must be made as to the child’s place of residence.” Article 9 goes on to say in paragraph 2: “In any proceedings pursuant to paragraph 1 of the present article, all interested parties shall be given an opportunity to participate in the proceedings and make their views known.” This legislation runs directly counter to it, because the children involved will not be represented in any discussion about where they should go.

Article 12 goes on to provide that “State Parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child.” Paragraph 2 of Article 12 goes on to say: “For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body,”. This bill does not provide for that. This bill places us in direct contravention of that United Nations convention. That is one of the reasons we are opposing the bill.

We are opposing it also because it is simply impractical. The expectation that parents who are going through the dreadful, unfortunate, and traumatic experience of separation, particularly when they have been together for a long time, have amassed assets together, and have formed a family together, will be able to, with the assistance of a single facilitator and without the benefit of advice on the legal effect or impact of what they are doing, happily form some agreement over a period of time is just, frankly, bananas. It is off the planet and it is out of this world. It is for that reason that we simply do not see that this bill is going to achieve the so-called efficiencies that the Minister thinks that it will.

There is no question in my mind that this bill is driven by fiscal considerations. It is not driven by practical considerations about what is needed for the effective resolution and disposal of family disputes. For the avoidance of any doubt, let me make it very clear that on the Labour side we believe that the State does have an interest in effective family dispute resolution. That is why we have a Family Court. That is why, in 1980, the Government established a Family Court. Everything this bill does runs counter to that notion, and that is why we are opposed to the bill.

SCOTT SIMPSON (National—Coromandel): It is a pleasure to stand and rise in the second reading debate of the Family Court Proceedings Reform Bill in the name of the Minister of Justice, the Hon Judith Collins. As chairman of the Justice and Electoral Committee I am more than a little disappointed to hear the comments from Andrew Little, the previous speaker. I think that, probably, what we have heard from him today really goes to the core of the differences between how members on this side of the House see people’s individual private lives and their ability to solve their own issues, versus members on that side of the House, where they take the view that the State must be in control of every aspect of people’s lives. We would accept that the State does have a role, but, as a first priority, people should be allowed to and encouraged to sort their affairs out for themselves in a way that is going to be far more productive to them than going to court. The evidence is overwhelming. The evidence is overwhelming that if couples can sort out their matrimonial relationship issues out of court, then that proves to be a better result every time.

This bill aims to ensure a modern and accessible family justice system. As the Minister said in her address, it is the first major, significant reform of our Family Court system in the more than 30 years since it was established. I would like to thank the Minister for her careful consideration of the submissions that were received by the committee. I would also like to thank the other committee members, because I think that, notwithstanding our political differences and our philosophical differences, the committee did an exceptionally good job. There were 386 written submissions, and we heard 217 oral submissions. That is a big piece of work for a select committee to do. I wanted to thank members for their patience and for their careful considerations of all the submissions. We heard evidence in Wellington here, in Auckland, and in Christchurch. The committee’s recommendations changed significantly the first draft of the bill, and I think that indicates that in fact the select committee system can work very well when there is an opportunity to allow it to do so in a way that produces better legislation.

The changes that have been incorporated into the bill, for instance, will provide up to 4 hours of legal support before entry into the courts for parents who meet the legal aid threshold. The bill will provide up to 3 hours of preparatory counselling for eligible parents, so that they can make the most of the family dispute resolution process. A judge will be empowered to refer parties back to family dispute resolution or the Parenting through Separation course if it is likely to help resolution. These are all steps designed to bring about a good solution for the people and the children involved. Lawyers will be able to get involved earlier in the court process, at the judge’s discretion, if that would increase the chances of a successful resolution. Provisions of the bill will be able to be brought into force by an Order in Council, as opposed to a set date, and that is to enable a more flexible approach in terms of implementing the reforms that the bill contains.

This bill has its genesis arising out of serious concerns about issues that users of the Family Court have made clear over such a long period of time. We heard some evidence from people, some of it in secret and some of it in private, and that evidence was harrowing. The sorts of concerns that people have, the type of time frame that is taken, and the amount of money involved are very, very scary. So this bill really is based on trying to make the system better and to get better outcomes. There was a review, and the review found that although the complicated court process can cause lengthy delays, that was probably no surprise to the people who have had experience of being involved in the Family Court. People know that it is adversarial, that it places stress on already stressed relationships and situations, that it is negative for the children involved, and that it is not focused enough on their needs.

I commend this bill to the House. It is a significant advancement in the course of our Family Court system. The process will ensure better outcomes. I reject completely the suggestions from the Labour Party lead on this, who said that in fact it will cause problems. This is a bill designed to create solutions rather than problems. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East): I believe that this legislation, the Family Court Proceedings Reform Bill, represents a very serious retrograde step in the history of the Family Court. I remember when the Family Court legislation was passed. I think it was back in 1980. I do not have the information in front of me, but I was completing my law degree at the time. There was a lot of interest in the Family Court—[Interruption] Yes, I know. I was just a child. The point was that the Family Court course was changing because the law was changing, and that was the point I wanted to make. It certainly was designed, as we said in our minority report, “… with its jurisdiction covering care of children, domestic violence and property matters, with a high degree of state assistance provided to the parties, [signalling] an important policy principle: the state has an interest in effective and just resolution of family disputes.” That is what the law was based on.

Apart from the money-saving driver that really is behind this bill, the ideology that lies underneath it is that family disputes are private matters. Two adults whose marriage, civil union, or relationship is unravelling cannot expect to call on the State for any support in resolving the disputes that necessarily arise in such a case, and potentially the conflict that arises. Of course, we all know that conflict can be healthy. How one manages conflict is really the primary consideration. The Minister of Justice made it very clear in her comments that it was really up to private individuals to deal with their private disputes, and that that was not an issue for the State.

The chair of the Justice and Electoral Committee, I will say, has chaired the process extremely well, but we do disagree on this matter. It is not a matter purely for private consideration, and I do not think that the divide is as he stated it to be. He said that the Government has a view that a family dispute is private and the Government should stay out of it, and therefore the opposite is that Labour believes that we have an interest in the private context. No, we do not. It is the peaceful resolution of the dispute—it is the conflict resolution—that is very much in the public interest. That is the public good and that was what the counselling services that were made available—six sessions per couple for free, funded entirely by the State—were for.

I think that that public good could actually be framed by reference to the legislation from the Family Proceedings Act at the time, which had the focus of everyone on reconciliation and conciliation. That really does put a line underneath what is the most fundamental aspect of the Family Court legislation as it was established more than 30 years ago. It was also very much focused on ensuring that the best interests of the parties were able to be served, in dealing with what was a difficult situation. When we go to the regulatory impact statement, we find why the Government wants to get rid of the six free counselling sessions. As my colleague Andrew Little has already said, that was reduced to three sessions, and it is down to one session, I think, in October. We discover in the regulatory impact statement why we are getting rid of the counselling sessions. It is not because we do not like people sorting out their own disputes; it is because it is costing $9.7 million—$9.7 million. That is the reason for getting rid of the counselling provisions. Nowhere in the regulatory impact statement can I find what the absence of free counselling sessions will cost in the medium term or the long term.

Reduced relationship breakdowns—we have been told that there were a number of couples who reconciled as a result of the free counselling, and that, of course, there are flow-on effects to children as a result of relationship breakdown and how that is managed. Agreed day-to-day care arrangements, more understanding about the relationship, more ability to cope, less disputes between separating parents—the list goes on and on. I could go on to the intergenerational impact, because we know that relationship breakdown has an ongoing effect with children. We know that domestic violence is intergenerational. All of these issues are matters that should be the subject of the regulatory impact statement, but the regulatory impact statement is very short-sighted. It is interested only in how much cost is going into counselling at the moment. It does not seem that the Government is really interested in the long-term costs. It is really about individual Ministers who are interested in reducing their budgets in the here and now, and it does not really matter that a future Government will have to pay the price in another Minister’s budget down the track.

The process for changing this law was excellent. It was the best process that you could possibly imagine. Members might have heard me commenting on a previous bill about how important it is to get people around the table to look at the evidence and to actually bring the experts to the table—

Hon Ruth Dyson: Oh, not that evidence again!

Hon LIANNE DALZIEL: I know that an evidence-based approach is not popular with the Government, but I do think that it has got something to offer us as a nation. What happened was that the Government released a discussion document and the Minister got together with the profession, the academics, the officials, and the NGOs. Everyone who was anyone in the whole area came to the table or actually came to Parliament—to the Legislative Council Chamber—where they held an in-depth conference where they workshopped the issues, where they traversed the issues, where there was good, healthy debate and understanding. Out of that there was an expert reference group established.

So what could possibly go wrong? What could possibly go wrong when such a good process was established? Well, I think the requirement to cut money out of the justice budget is what went wrong. An online survey was given more weight than the expert advice, and that is unfortunate, to say the least. What we ended up with was legislation that pretended that early legal advice does not make a difference to people’s behaviour. We had lawyers, but not just lawyers; we also had some of their clients—previous litigants—who came to us and said that they understood that their rights were quite different, until they had received advice from their lawyer. There were a lot of men who felt that the Family Court was biased against men, against male litigants. There were a lot of women who assumed that they were automatically entitled to have day-to-day care of their child. There were a number of misconceptions that were remedied in that first consultation with the lawyer.

Then, second, we heard what happened. These clients had the initial conversation with the lawyer and then the lawyer would refer them off for counselling—as I say, reconciliation and conciliation. There were a number of lawyers who told us that they saw people for that initial advice, they sent them off for counselling, and they never saw 95 percent of them ever again. That is because the counselling service works. It might cost $9.7 million, but it is incredibly effective. So why would we remove the one thing that is known to be effective and replace it with something—the family dispute resolution process—that we do not know the detail of? And, actually, we will make people pay for that and we will actually indicate that that could be as much as $900 for X number of sessions because we do not even know the number of sessions that we will pay for either. That is nuts. Why would you throw out what works and replace it with the unknown, unless all you cared about was saving the money up front, instead of thinking of the long-term consequences.

The cases that came back had a range of problems that were highly complex. So, basically, the Government wants to see only those cases going to the court and everything else being dealt with in family dispute resolution before they can come near the court. I think the trouble with that is that it ignores the dynamics of a relationship in meltdown—completely ignores it—especially where one has already made the decision to move on and has maybe entered into another relationship. We heard that from submitter after submitter after submitter. It depends where you are at. Whether your husband comes home and says: “I’m leaving you for the person I’ve been having an affair with for the last 15 years.”, or, the other way round, the woman comes home and says: “By the way, I’m leaving you for the person I’ve been having an affair with.”, the bottom line is that these are enormously emotional, difficult issues for people to face up to. These people actually need support, and power imbalances can be extremely well hidden when they do not know who is on their side. At least when they have a lawyer sitting with them, they know that they have got somebody who is on their side whom they can tell everything to, and we can get good results.

I think this bill has a lot of problems within it, and that is why the Labour Party will not be supporting it.

METIRIA TUREI (Co-Leader—Green): Tēnā koe, Mr Assistant Speaker. Tēnā koutou e te Whare. Let us just be really clear about who the people are who will be most affected by this Family Court Proceedings Reform Bill and its attack on the rights of New Zealanders to access genuine justice. Because that is what the Family Court has been designed to do: to provide for those most vulnerable New Zealanders, particularly women and their children, access to a system that can provide them with genuine justice and support, particularly in circumstances where their lives and their well-being are threatened.

First, let us have a look at some of the numbers in this country. One in every three women in this country has suffered some form of psychological or physical abuse from their partners—one in every three. There are around 2.25 million women in this country, so we are talking about 750,000 women in this country who have suffered from some form of psychological or physical violence at the hands of their life partners. There are 14 women, six men, and 10 children killed by a family member every year in this country. They are women, men, and children who are living in unsafe environments in their own home who are killed by a member of their family because they could not escape.

The police attend around 200 domestic violence incidents every single day. That is around one incident every 7 minutes in this country—200 a day; one every 7 minutes. That means that a women, most likely, or a child, often as well, is in a situation where their life and their well-being are being threatened by someone who most likely lives with them in their own home. The cost to the public purse of these statistics is somewhere around $8 billion a year. Those are the costs of the police. Those are the costs of failed housing because a person has to run—a mother, particularly, with her children—from an abusive partner. It is the costs of the hospitals dealing with the beatings and the bruises. It is the costs of loss of schooling for the children who are suffering in these circumstances.

What institutions do we have that make it possible to help reduce these appalling numbers in this country? What options do women and children have when it comes to finding someone who will help not only with the practical issues of finding somewhere else to live, securing an income, and getting on with their lives but with making sure that the legal arrangements that they must provide in order for their kids to do well and be settled are available to them? What are those legal avenues open to them? It is the Family Court, actually. The Family Court is the only legal avenue for these women and children—some 750,000, arguably, in this country—who need to know that they have a legal institution that they can go to that is accessible to them, that provides justice for them, and that provides services for them and their children, so that when they are in really difficult circumstances where they fear for their safety and well-being, they have some legal protection.

So what does this Government do with the institution that is designed to protect these women and these children? What does Judith Collins, so-called Minister of Justice, do with this institution? She complicates it enormously from the process that is available currently, she increases the cost significantly for the women who are trying to access justice and support, and she cuts access to legal advice and support for exactly those women. And what does she say? How does she justify this? She justifies this on cost-cutting grounds, when she knows—she must know, just as I do, from the statistics—that it costs about $8 billion a year to deal with the consequences of this kind of family violence that occurs. She must know that the fewer the women who are able to access the Family Court to get justice and real legal protection when they need it, the more the cost to the public will increase.

But, you know, she would rather see that $8 billion being spent on fixing up the bruises and repairing the broken bones than on providing counselling sessions or providing a lawyer for the child or making sure that women are able to access free legal advice that they can then use to protect themselves and their kids in the Family Court. She would much rather see that cost being borne by the public overall than make sure that the Family Court is able to provide genuine justice and support to the women, families, and children who need it the most.

This bill is an appalling piece of legislation. We have known that from the start. In fact, when the Minister put out the proposals for this review, the legal profession was horrified by what she was trying to do, because of the cost that their clients would bear, not just in money but in terms of the safety and well-being of the clients who desperately need legal support and justice to protect them from some of the worst violence and the worst circumstances.

Let us have a look at some of the provisions. It is now going to cost families around $1,000 in order to access the compulsory family dispute resolution service. The median-income family in this country has around $2,000 in the bank. That is a couple with a couple of kids and they are doing OK, right? They have got a couple of thousand dollars, maximum, in the bank, on average. Yet this Government wants to take, in effect, half of those annual savings that these families have got in the bank in order to pay for family dispute resolution services that have been provided for free in the past, and that are asked for and sought because these parents and these families are wanting to find a way to resolve their issues so that they do not continue to bear the costs of a failed relationship or a difficult circumstance.

What does Judith Collins do? She makes them pay up. “Give us the cash.”, she says. The bureaucratic costs will be imposed on these families. Report writing costs will be imposed on these families. The costs of the lawyer for the child will be imposed on these families. Where do children get access to justice when they do not get access to genuine legal support? Judith Collins has decided to take away legal advice for our most vulnerable citizens. She says that somehow this is a good thing, and that it is going to provide better access to genuine justice for children. No, it is not. We all know that the whole process of court can be a very complicated one, and that it does often need real skill and understanding of how to navigate through any legal process. Yet that has been denied to the women and, particularly, to the children of this country because Judith Collins has such a mean approach to the real costs that families bear when there is a relationship breakdown.

I have said before that the Green Party opposes this legislation, and I agree with other colleagues who again have also stated their clear opposition to this legislation. This Government intends to take dollars, take money—desperately needed money—from the most vulnerable families while, in the process, denying them the justice to which they are entitled. She will do it with a smile, no doubt, and try to sell it as being a good thing for our country and for our kids. At the end of the day, the one in three women who we know have suffered some form of abuse by their partners, and their children, many thousands of their children, whom these women are trying to protect from the worst circumstances of domestic violence, are the ones who bear the cost of this legislation. It is a disgrace.

ALFRED NGARO (National): E rau rangatira mā, tēnā koutou. Ki aku nui, ki āku rahi, tēnā koutou katoa.

[To the esteemed of a hundredfold, greetings to you collectively. To all my superiors and numerous, hello there.]

That speech by Metiria Turei was probably the worst grandstanding speech heard in this House for over 50 years, or by me as a new member. What concerns me is that that member can walk out of the House and can make those assertions. Yet if she was really serious about doing something about it, she would have subbed on to the Justice and Electoral Committee, she would have heard over 270 oral submissions, and she would have made a contribution that makes a difference. Instead, we just heard a whole lot of gobbledegook. But what is of most concern is that she uses the statistics of everyday men, women, and children who are suffering under family violence, and what the Minister of Justice has done in her wise leadership is look at a bill that will actually address these issues.

In April 2011 Cabinet directed the Minister of Justice to undertake a review of the Family Court. This included the concerns raised by the public, judges, lawyers, and counsellors. This was a wide consultation of all those key stakeholders, and this is what they said. They found that the Family Court was adversarial at times, placing additional stress on already strained relationships; it was negative for children and not focused enough on their needs; it was not focused enough on the most serious cases of domestic violence that were talked about; it spent too much time on simple, private matters that are better resolved outside of court; and it was too complex and too difficult to resolve these disputes. The purpose, then, of the Family Court Proceedings Reform Bill is to ensure a modern and accessible for families justice system that is responsive to children and vulnerable people, and is effective in that regard. We have heard about the growing costs over there, rising up to 70 percent—from about $84 million to $142 million—and yet the number of applications for court proceedings has been lower.

I want to just actually talk about some of the concerns that have been raised. I note that Mr Little talked about Christchurch, where we heard some of the submissions. He regarded it as a bit of a shame that we heard from one of the members of the expert panel, which was Mr Garry Collin. He spoke there. In fact—I want to give the fullness of that story—he talked about the good things in the bill and the intent of the bill. He applauded that. There was one aspect that he was concerned about, which was new section 7A. So I just want to give the full picture. You are absolutely right, Mr Little; there were concerns. But there were also some areas that the expert panel of judges, of those in the judicial system, and of counsellors as well, who actually gave an overall picture around recommendations that have been followed through.

Just very quickly, Family Court lawyers said: “The new system is a complex maze of procedures with different entry points, criteria and exemptions.” So here is the response that is coming through from this bill. The reforms will support people to resolve disputes out of court where appropriate. Improved information services, simplified contracts, and easy-to-use forms will be available to help people navigate the parts of the court system independently. The bill still removes the right of a party to choose to be legally represented in all Family Court processes, which was also talked about. In court, people can have a lawyer represent them in complex matters, such as for a defended hearing or without-notice applications. Judges will be able to allow lawyers to participate early in the court process if it would increase the chances of successful resolution.

The reform was talked about in regards to counsellors. I know about and have supported the work of the counsellors, as was talked about by Mrs Dalziel, and the importance of their role. So there is a concern at the reduction in the level of counselling. We heard from Relationships Aotearoa in its submission. It talked about the fact that counsellors were contracted for four sessions, but they were averaging three sessions in all. So here is the response from this bill and from the select committee. Currently, pre-court taxpayer-funded counselling is available to anyone on request for up to 3 hours. Under the reforms, the current focus on private relationship issues will be replaced by a focus on resolving parenting issues and reducing conflict for the benefit of the children.

I also want to commend the Minister, the chairman of the select committee, and members of the select committee, because we went the extra mile. We actually even had a session on Parenting through Separation. We saw the importance of this role around information that was given, so that the impact on children was clearly understood by parents in that situation.

My final comments are this. We know that children are often at the heart of these matters. They are the ones who are most vulnerable. These reforms are designed in a way to improve the system, for it to be accessible. Where possible, where these disputes can be addressed outside of the court system, they should be. That is simply what we are doing here. We are responding to the concerns and ensuring that there is a clear and direct process that is accessible. We hope and we know that it will truly make a difference to the lives of these children, who often go through very difficult circumstances. I commend this bill to the House.

DENIS O’ROURKE (NZ First): At the first reading of the Family Court Proceedings Reform Bill I thought that, overall, it was a good bill, but I said then that the devil would be in the detail and, in particular, in the costs that it would impose for the out-of-court processes. I said that the bill would fail to attract cross-party support if those issues were not reviewed, and that New Zealand First would then have to reconsider its support.

We in New Zealand First have carefully examined the detail of the bill, and we have listened to the very large number—over 200—of extremely well-argued submissions in various parts of the country. We initially supported the overall thrust of the bill, which was claimed to be as follows. Firstly, it would encourage faster and less expensive resolution for broken families who have issues concerning the custody and care of children, by requiring parties to participate in a new family dispute resolution process instead of having to go to court for determination unless that was necessary, especially in cases of family violence. Also, lawyers were not to represent parties at family dispute resolution, but were able to give initial advice if a party was on legal aid.

The bill would focus the Family Court on matters genuinely needing a court decision, where protection of vulnerable people and children were prioritised. It would encourage parties to take responsibility for their own arrangements concerning the care of their children where possible. The bill would also seek to reduce the exacerbation of family disputes by making it not so easy to get to court, because legal proceedings often make relationships worse, but, of course, the court would still be there as a backstop.

The bill would also seek to be more responsive to the victims of family violence. We note that the bill expands the definition of “psychological abuse”, increases the maximum sentence for this from 2 to 3 years, and improves delivery of mandatory non-violence programmes. The intention overall was to make the Family Court more efficient and cost-effective by refocusing its resources. It was always clear that the major objectives were to save money and also, of course, to speed up court applications by reducing the court’s rapidly increasing workload.

But New Zealand First’s support was always on the condition that, firstly, access to lawyers and to legal aid was preserved from the beginning of a dispute, including the family dispute resolution process; and that, secondly, access would be provided to publicly funded counselling prior to family dispute resolution—and that means preservation of the full system of counselling, not just 3 hours—and, of course, that the costs of the proposed family dispute resolution process would need to be reasonable, that children’s rights to separate representation would need to be preserved, and that the effect of the bill would have to be to reduce and not increase power imbalances that would result from a party having financial means, whether privately or through legal aid, that the other party did not have.

Debate interrupted.

Sitting suspended from 1 p.m. to 2 p.m.

Questions for Oral Answer

Questions to Ministers

Prime Minister—Electricity Market and Skycity Convention Centre

1. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements and have confidence in the statements of all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes, I stand by all my statements, and, although I have confidence in all my Ministers, I do not have specific knowledge of all of their statements or the context in which they were given over the last 4½ years of this Government.

David Shearer: Does he agree with his Minister of Finance and Minister of Energy and Resources, who both said that New Zealanders are not paying too much for their electricity?

Rt Hon JOHN KEY: Yes, in the context in which they made those statements.

David Shearer: Does he think that electricity prices are too high?

Rt Hon JOHN KEY: I certainly thought they had gone up way too much under a Labour Government. I often hear Labour members privately talking of the shame of when electricity prices went up 72 percent under a Labour Government.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Although the question sought an opinion, it was a straight, non-political question asking the Prime Minister his view on current electricity prices. It did not ask for a historical explanation.

Mr SPEAKER: No, I do not think that is correct on this occasion. The question was: “Does he think that electricity prices are too high?”. It was not qualified as to whether it was current prices or whether it was past prices.

David Shearer: Does he think that current electricity prices today are too high?

Rt Hon JOHN KEY: They are slightly less than the current OECD average. Some of the cost increases that occurred in the last 4½ years have been in relation to transmission increases. What I do know is that an emissions trading scheme that Labour and the Greens would put on the average consumer would add $500 per household a year. I know that Stalin-type nationalisation of power companies would be a disgrace.

David Shearer: I raise a point of order, Mr Speaker. That was a pretty straight question that did not need a political comment at the end.

Mr SPEAKER: That is true. It was answered earlier. It did not need the latter part. Would the member now continue with his supplementary question.

David Shearer: Does he think that New Zealanders are paying a fair price for their electricity today?

Rt Hon JOHN KEY: I think that they are paying a price that is cognisant and fair in relation to the environment we find ourselves in, having to invest in infrastructure. As I say, given that they have gone up half the amount they did under Labour, what I mainly find is New Zealanders who are outraged at the way Labour ran the economy and who are disgusted with the economic management that this Government had to inherit.

David Shearer: In light of his comment about Transpower and upgrades, why has his Government insisted that Transpower pay $472 million in dividends over the last 2 years, rather than invest them in upgrades to our system?

Rt Hon JOHN KEY: I do not have all the details on their dividend flow. You can put that question down to the Minister for State Owned Enterprises. I do know that they have spent about $3 billion in terms of upgrades of the national grid. Where I find myself a bit confused is that the Labour Party went on that the mixed-ownership model was terrible—[Interruption]

Mr SPEAKER: Order! And the Prime Minister can resume his seat, as well.

David Shearer: What does the Prime Minister say to the thousands of Genesis customers who, as a result of the decision to take the dividends rather than invest them in the national grid, are now paying for the upgrade to that grid through higher power prices?

Rt Hon JOHN KEY: I do not accept that assertion. I go back to the point that I was making, which is that I have seen statements that, actually, the Government should be taking more dividends, not fewer dividends. Those statements came from David Shearer.

Metiria Turei: Does the Prime Minister stand by his statement “the Government has been very transparent about its dealings with SkyCity”?

Mr SPEAKER: Order! Can I just clarify—the member just called to take a supplementary question and has now moved immediately, as far as I can see, to question No. 2.

Metiria Turei: No, Mr Speaker. Question No. 2 is to the Minister for Economic Development and asks him about that statement. Mine is a supplementary question to question 1.

Mr SPEAKER: So it is a supplementary question. Can I hear the supplementary question again, please.

Metiria Turei: Does the Prime Minister stand by his statement “the Government has been very transparent about its dealings with SkyCity”?

Rt Hon JOHN KEY: Yes, but in the context I would have made it.

Metiria Turei: Why has his Government refused to release advice on the social harms associated with this deal until after it is signed?

Rt Hon JOHN KEY: I do not have those details, but if you put the question down to the Minister I am sure he will answer that for you.

Metiria Turei: Is the Prime Minister refusing to release information on the social harms from this deal because he knows that it will increase the opposition to the deal by Aucklanders, after 61 percent have said that they oppose it and the Auckland Council voted against it?

Rt Hon JOHN KEY: To the best of my knowledge, my office is not refusing to release it, but if you put the question down to the Minister I am sure he will answer that for you.

Metiria Turei: Does the Prime Minister believe that the cost of the social harm of the deal is a relevant consideration for Parliament when deciding on whether to support gambling law changes that he has promised will be part of this dirty deal?

Rt Hon JOHN KEY: I do not have the details of that with me, so I cannot answer that question.

Metiria Turei: I raise a point of order, Mr Speaker. I asked the Prime Minister whether he believes that these issues were a relevant consideration, not to provide specific information. He does have the ability to answer that question.

Mr SPEAKER: Order! The member was very lucky to have the question left in order, particularly with the qualification she added to the end of it. Does she have further supplementaries?

Metiria Turei: Yes. Will the Prime Minister agree to allow a personal vote on any changes to relax gambling law in SkyCity’s favour so that MPs can vote with their consciences on this dirty deal?

Rt Hon JOHN KEY: No, that is not my intention.

Metiria Turei: When the Prime Minister told this House that his Government was being “very transparent” about its dealings with SkyCity, was he deliberately lying to us?

Mr SPEAKER: Order! That question is out of order.

Question No. 2 to Minister

METIRIA TUREI (Co-Leader—Green): I raise a point of order, Mr Speaker. I refer you to Speakers’ rulings 151/5 of Gray and Tapsell. My primary question was originally accepted and authenticated by the Clerk of the House and directed to the Prime Minister concerning his own statements. Only the Prime Minister can know whether or not he agrees with or stands by his own statement. This is not a question that could reasonably be answered by any other person, and therefore should not have been transferred, according to Speakers’ rulings.

Hon TREVOR MALLARD (Labour—Hutt South): This is an area that we have had some experience in recently, and I thought the point we had got to was that when questions are transferred like this, they should at least be reworded to say: “Is it the Minister for Economic Development’s understanding that the Prime Minister stands by his statement?”. What that does is it at least goes to the real question, and that is what is in the mind of the Prime Minister, not his subsidiary Minister, because that is the right of members to ask.

METIRIA TUREI (Co-Leader—Green): I would also refer you to Speaker’s ruling 152/5, where although it is accepted that questions can be transferred to Ministers, and that in those circumstances there may be some grammatical changes that need to be made to the question to make sure that it is relevant, it is none the less an issue if a question is in effect out of order as a result of the transfer. So it is not sufficient to simply say a question can be reworded but that, actually, there is a serious issue if a question is out of order unless it is reworded. That suggests that it should not have been transferred in the first place.

Hon GERRY BROWNLEE (Leader of the House): Two points on that last point from the member. I think what we are seeing more frequently are attempts by, particularly, the Green Party to rewrite the Standing Orders by virtue of Speakers’ rulings. There is a process for the rewriting of the Standing Orders and I would suggest that those members do participate more fully in that process. But on this occasion Speaker’s ruling 152/1, which does protect the Government’s right to transfer questions to the appropriate Minister, where there is going to be the most information available, does stand. Indeed, the member has proved to the House that that is the right course of action in this case by insisting on asking this very question directly to the Prime Minister during the supplementary questions to question No. 1. The Prime Minister, while answering as well as possible, clearly said that there was other information that would be better answered by the Minister responsible for this particular aspect of Government involvement. Therefore, the transfer is not some deception, but a genuine understanding of what is required by the House when a question is asked and the expectation that the answer is better given by another Minister.

Hon David Parker: Speaking to the—

Mr SPEAKER: No, I need no further assistance on this, thank you. There are a number of Speakers’ rulings around this particular issue and I particularly want to refer Ms Turei to Speakers’ rulings 152/1 and 152/2. It is the Government’s right to transfer a question. There would be only very exceptional circumstances when the Speaker would rule that not appropriate, and that would be if I in any way anticipated that the Government was avoiding answering a question. In my mind this question can very easily and justifiably be transferred, and it has been. Subsequent to the transfer, clearly the wording then required some alteration, because it was a statement made by the Prime Minister and not by the Minister for Economic Development. There was further discussion between the Office of the Clerk and the member for that wording to then be approved by the member. So the question stands, if the member wants to ask it. If the member does not want to ask it, she does not have to, and we will move immediately to question No. 3.

Metiria Turei: Point of order, Mr Speaker.

Mr SPEAKER: Is it a fresh point of order?

Metiria Turei: It is on a different issue.

Mr SPEAKER: It is not in any way disputing the ruling given?

Metiria Turei: No.

Mr SPEAKER: I will hear a fresh point of order.

METIRIA TUREI (Co-Leader—Green): I raise a point of order, Mr Speaker. I refer to Speaker’s ruling 152/2, which you have referred to also, but I refer to a particular matter that is referred to in that Speaker’s ruling, where Speaker Wilson said: “Ideally, such changes”—transfers—“should be rare, arising only from real and significant conflicts of interest. Where they do occur, it would be helpful if the Government were to ensure members are officially informed.” I would ask that you seek from Government members what the Prime Minister’s conflict of interest in answering this question is.

Mr SPEAKER: Order! That is now disputing the decision I have given as to the right for this question to be transferred. I have got a mind to move immediately to question No. 3, but I will on this occasion show a little bit of goodwill to the member. I now invite her to ask her question.

Metiria Turei: I raise a point of order, Mr Speaker. A different issue—genuinely—

Mr SPEAKER: No. [Interruption] Order! I will give the member one more chance to move to question No. 2, otherwise we are immediately going to question No. 3. I will—

Metiria Turei: Point of order—

Mr SPEAKER: No, the last point of order was meant to be a fresh one; it was, again, disputing my ruling. If the member wants to ask the question, she should proceed to do so.

Metiria Turei: Point of order—

Mr SPEAKER: Question No. 3, Alfred Ngaro.

METIRIA TUREI (Co-Leader—Green): I raise a point of order, Mr Speaker. I would ask you for two clarifications. One is that where, in the past, members have stated that they are raising a point of order on a different issue, those members have been taken at their word, and I am concerned that you did not take me at mine—that is the first issue. The second is that I seek leave of the House, which I am entitled to do, for this question to be transferred back to the Prime Minister.

Mr SPEAKER: No, we have had this in the past. The question has already been transferred, and that is the matter that has been raised. I have given the reason, and I am not going to put up with the member jumping up to her feet and down, raising points of order, when the point of order was clearly questioning a decision. I took the member at her word that it would not, but she did do that.

CHRIS HIPKINS (Senior Whip—Labour): I raise a point of order, Mr Speaker. I think there are a couple of issues here, one of which is that you are absolutely entitled to rule at any point that you have heard enough about a matter, and insist that a member either raise a new matter or move on. You are absolutely entitled to do that, Mr Speaker. But where a Minister has transferred a question, a member is entitled to seek leave to transfer it back. So the situation that we have here is that Metiria Turei, having had your clear ruling, did not contest that, and asked to seek leave to transfer it back. She is entitled to do that.

Mr SPEAKER: The difficulty with the point the member is raising is that the member did contest my ruling with a subsequent point of order. She then attempted to raise, I think, a fourth point of order, seeking leave to transfer it. For the cause of goodwill in this House, I am prepared to let the member seek that leave. I think we can anticipate the result, but she can so seek leave. I will then go back to question No. 2 on this occasion. But I warn members that if in the future they are going to continue to challenge rulings, the likelihood of me moving forward reasonably rapidly to the next question will occur. The member can so seek leave.

METIRIA TUREI (Co-Leader—Green): I seek leave of the House to have this question transferred back to the Prime Minister.

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

Hon DAVID PARKER (Labour): I raise a point of order, Mr Speaker. In your last ruling you said that you will move on and not hear applications for leave. I would ask you to reconsider that ruling, because it is a different matter to ask for an interpretation from the Speaker as to whether something is in order or not—which is answered one way or the other—and then, whatever that answer is, to seek leave for another course. In the second case, it is not your decision that is being asked for; it is the House’s decision.

Mr SPEAKER: I accept that, and that is why I did reconsider the matter. Question No. 2, Metiria Turei.

Hon Members: Point of order.

Mr SPEAKER: This is now getting to the very ridiculous stage.

Hon GERRY BROWNLEE (Leader of the House): I raise a point of order, Speaker. I do not want to prolong things, quite obviously, but we are in an interesting situation where you have got Speaker’s ruling 152/1, which says: “The Government is perfectly entitled to transfer questions from one Minister to another …”. You have upheld that the transfer was quite reasonable in the circumstances, yet we have had something that I think may have crept in before, but it appears quite new to me: a Government having made a decision about where a question should go, members can then seek leave, so the House can overrule a Government. That is not a good place for us to land in. Might I say also that I note that you have previously ruled that the member had lost her question No. 2, and we were moving on to question No. 3.

Hon Ruth Dyson: Did not.

Hon GERRY BROWNLEE: Well, question No. 3 was called, Ms Dyson—very, very loudly called—

Mr SPEAKER: Order! I thank the member. The member raises a very good point, but at the end of the day a member does have a right to seek leave for anything in this House. The chances of it then happening, I think, because the Government has transferred the question, are very, very slim, and I anticipated that and I stated that. Listen, at this stage we have had a long session of points of order. I am going to go back on an earlier decision I made. I am going to give the member a chance to ask question No. 2, but I am not going to put up with that member rising to her feet and raising yet another point of order. I call question No. 2.

Metiria Turei: Point of order, Mr Speaker.

Mr SPEAKER: On the basis that a member has a right to raise a point of order, I will allow it, but if it in any way relitigates any of the matters that have been discussed this afternoon, then the member will lose that question.

METIRIA TUREI (Co-Leader—Green): Under Speakers’ ruling 152/6 I withdraw question No. 2. Thank you.

Retirement Savings—Trans-Tasman Portability

3. ALFRED NGARO (National) to the Minister of Finance: What recent developments have further contributed to building the closer economic market between New Zealand and Australia?

Hon BILL ENGLISH (Minister of Finance): New arrangements allowing New Zealanders to transfer their retirement savings between complying Australian superannuation schemes and KiwiSaver took effect from 1 July. This welcome development follows confirmation from the Australian Government in May that it had completed the legislation allowing this to happen. It is a direct result of the strong commitment between the New Zealand and Australian Governments to remove another obstacle to the free movement of labour between our two countries. Trans-Tasman portability of retirement savings will make it easier for people to take advantage of employment opportunities in both countries and take their retirement savings with them.

Alfred Ngaro: How did the agreement to allow trans-Tasman portability of retirement savings come about, and how significant will this be for New Zealanders saving on either side of the Tasman?

Hon BILL ENGLISH: Negotiations were begun and significantly progressed under the previous Government by Dr Michael Cullen. I signed an agreement with the Australian Treasurer in July 2009. Legislation was passed in this Parliament in September 2010. This is significant for New Zealanders who are currently working or have previously worked in Australia. The Australian Taxation Office has estimated there are billions in lost accounts in the Australian superannuation system. We expect that some of that money belongs to New Zealanders who have worked in Australia at some stage and have returned home. These new rules will allow those New Zealanders to find their account and bring those funds back to New Zealand, into the New Zealand KiwiSaver scheme.

Alfred Ngaro: How will the new portability arrangements work for New Zealanders who want to bring their retirement savings home?

Hon BILL ENGLISH: From 1 July New Zealanders are able to transfer funds in their Australian superannuation schemes into participating KiwiSaver schemes, and vice versa. Retirement savings transferred from Australia will be exempt from any taxes. Amounts transferred from Australia will generally be subject to KiwiSaver rules. However, KiwiSaver members will not be able to withdraw money transferred from Australia for buying their first home, but they may use interest earned on those savings for that purpose.

Alfred Ngaro: What are the rules setting out when retirement savings transferred from Australia to New Zealand and vice versa can be withdrawn?

Hon BILL ENGLISH: Retirement savings transferred from Australia into New Zealand KiwiSaver schemes can be withdrawn when members reach the age of 60. KiwiSaver savings transferred to Australian schemes can be withdrawn when members reach the age of 65, which is in line with KiwiSaver rules. One effect of the new arrangements is that individuals will no longer be able to withdraw their savings as cash 1 year after permanently migrating to Australia, but they will be able to take with them any Government contributions, such as the kick-start and member tax credits, when they move KiwiSaver funds to Australia. And they will be able to access their first-home subsidy. It is worth noting that participation in the superannuation portability scheme will be voluntary for members deciding whether to leave their funds in New Zealand, for instance, or transfer them to Australia.

Apprenticeships and Trades Training—Minister’s Statements

4. GRANT ROBERTSON (Deputy Leader—Labour) to the Minister of Education: Does she stand by all her statements?

Hon HEKIA PARATA (Minister of Education): Tēnā koe e te Mana Kaiwhakahaere. Yes, I do in the full context in which I made them.

Grant Robertson: Given her statement at the weekend that there is “a danger of a shortage of tradespeople in New Zealand”, is it correct that Tertiary Education Commission figures show a 20 percent drop in the number of apprentices since National’s first Budget in 2009?

Hon HEKIA PARATA: I do stand by my statement—[Interruption]

Mr SPEAKER: Order! The question has been asked. I, at least, want to hear the answer.

Hon HEKIA PARATA: I stand by my statement, as I said, in the full context, and that was that this Government is committed to providing multiple pathways, including vocational pathways that increase options for all our young people.

Grant Robertson: I raise a point of order, Mr Speaker. I appreciate the fact that I introduced the question by saying “Given her statement …”, but the question I actually asked was whether it is correct that the Tertiary Education Commission—

Mr SPEAKER: Why does the member not just ask the question again.

Grant Robertson: What a good idea. Given her statement that there is “a danger of a shortage of tradespeople in New Zealand”, is it correct that Tertiary Education Commission figures show a 20 percent drop in the number of apprentices since National’s first Budget in 2009?

Hon HEKIA PARATA: I am not responsible for the Tertiary Education Commission, but I am happy to speak to my response, which was about providing multiple pathways so that we could get more young people through. In my area, what I know is that we have had an increase to 3,700 young people participating in trades academies. We have had an increase to 8,700 young people participating in Youth Guarantee pathways.

Grant Robertson: I seek leave of the House to table figures from the Tertiary Education Commission industry training performance information that show that—

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

Grant Robertson: Given her statement “that there is too much of a focus on channelling students to university and academic pathways”, can she confirm that her Government cut $55 million from industry training in 2010 and gave it directly to universities?

Hon HEKIA PARATA: As I said, again, I am not responsible for the tertiary education system, but I can talk about the statement that I made, which was that we are increasing the options for young people to have choices, both the academic pathway and also the five vocational pathways that we have established and that parents and young people are very excited about.

Grant Robertson: I know it is unusual to table press releases, but this is from some time ago and the Minister was unable to answer. I seek leave of the House to table the press release from Steven Joyce—

Mr SPEAKER: No. I am not—[Interruption] Order! That is available to any—[Interruption] Has the member got further supplementary questions?

Grant Robertson: Given her statement that there is too much of a focus on channelling students to university and academic pathways, has she raised with the Minister for Tertiary Education, Skills and Employment why $83 million has been taken out of the polytech sector over the last three Budgets, seeing thousands of student places cut and programmes in areas like automotive engineering, carpentry, and other core trades cut?

Hon HEKIA PARATA: Again, I am not the Minister for Tertiary Education, Skills and Employment, and the member could put that question to him. But the context of my statement was that this Government is committed to getting every kid across the line and giving them a range of options, including tertiary academic pathways and the five vocational pathways that we have also established. This Government has put our money where our mouth is: we have invested in fees-free places for all these young people.

Grant Robertson: Is it not correct that nearly 5 years in, after a 20 percent reduction in the number of apprentices and millions of dollars being cut from polytechnic funding for trades courses, the fault for the lack of tradespeople lies firmly with that Government over there?

Hon HEKIA PARATA: I am not the Minister for Tertiary Education, Skills and Employment, but my statement, which the member was ostensibly interested in, was about how we created more pathways for more young people to be successful, because this Government is interested in giving every kid a chance.

Business Research and Development—Funding

5. Peseta SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Science and Innovation: What investment is the Government making in business-related science, innovation and research?

Hon STEVEN JOYCE (Minister of Science and Innovation): Alongside our massive investment in the tertiary sector, we are making significant investments in science and innovation because they are key drivers of economic growth and making New Zealand businesses more internationally competitive. That is why we have invested total funding for science, innovation and research across Government agencies. We have increased it to $1.36 billion in the financial year just started, which is up from $1.24 billion last year, and an increase of 28 percent over the last 4 years. A very sizable proportion of this increase is in the area of business research and development. Increasing funding in this area will help our businesses grow, deliver more and higher-paying jobs for New Zealanders, and improve our living standards.

Peseta Sam Lotu-Iiga: What support is available for businesses wanting to invest in research and development?

Hon STEVEN JOYCE: Well, over the course of this financial year, which started last Monday, the new Government agency Callaghan Innovation will allocate $141.5 million in research and development co-funding to innovative New Zealand businesses. This is easily the highest amount ever, and is a 24 percent increase on the funding available just last year. This funding is being invested in a number of ways, including nearly $91 million for research and development growth grants, $46.6 million for research and development project grants, which are targeted at new firms with smaller programmes, and $4 million for research and development student grants to provide support for undergraduate and postgraduate students to get work experience alongside research and development - active businesses.

Rt Hon Winston Peters: Can I take it from the Minister’s long answer that his Cabinet and he himself, in particular, never talk to, for example, Sam Lotu-Iiga or the backbench, and that is why he has to inform them in the House in this lengthy way?

Mr SPEAKER: Order! That question is out of order.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. What on earth is out of order with that question?

Mr SPEAKER: It was an unsatisfactory question. If the member wants to phrase it with something that has got a responsibility of the member, I will entertain it.

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

Mr SPEAKER: Is this a fresh point of order?

Rt Hon Winston Peters: If the Speaker thinks that the Minister talking or not talking with the backbench is not a matter of his ministerial responsibility, that would be a very new one. That is simply what I asked him. It is not out of order, and I want an answer.

Mr SPEAKER: The question was out of order. I have ruled it out of order. If the member wants to attempt it again to get it into order, then we will have a go. [Interruption] Order! I am giving the Rt Hon Winston Peters an opportunity.

Rt Hon Winston Peters: Can the Minister advise us as to whether or not he thinks it is appropriate to come to the House to pass information on to backbench colleagues, or does he have another means of communication hitherto unknown to us?

Hon STEVEN JOYCE: Well, I am not sure how it works in that member’s party, but, actually, we do talk to backbenchers in this party—indeed, we know their names. What I can say is these questions are for the benefit of the whole House, and going on the member’s knowledge of our science and innovation investment, I think he could do well to listen.

Peseta Sam Lotu-Iiga: What support is the Government giving to the manufacturing sector through research and development funding?

Hon STEVEN JOYCE: The manufacturing sector is a very important partner in the research and development co-funding. It is, in fact, the biggest recipient of the Government’s research and development co-funding programme. Countless internationalising New Zealand firms have received assistance over the last 4 years to develop new products and services to help them move up the value chain and export more effectively. These include firms such as Douglas Pharmaceuticals, Buckley Systems, Compac Sorting Equipment, WilliamsWarn, Fisher and Paykel Healthcare, Tait Electronics, Altitude Aerospace Interiors, and a company known as HamiltonJet, which has been in the news recently, just to name a few random examples. The Government has established Callaghan Innovation as a high-tech headquarters for business research and development. We are investing hundreds of millions of dollars annually in business research and development across all export-focused sectors. This may have made a contribution to the BNZ-Business New Zealand Performance of Manufacturing Index, which was released last month—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. It would have occurred to you—it occurred to everybody else in the House who was watching the Minister—after that very long answer that when he switched to page 2 it was well time for you to stop him.

Mr SPEAKER: It was certainly a long answer, and I think the Minister was coming to the end. I was watching him switch to page 2, and I was confident that he had very little left to add to the question.

Hon STEVEN JOYCE: Hardly half a sentence, Mr Speaker. The New Zealand manufacturing sector is now expanding at its fastest rate since 2004, and at one of the highest rates across the world.

State-owned Energy Companies, Sales—Share Price Stability, Revenue, and Purpose

6. Hon DAVID PARKER (Labour) to the Minister of Finance: How much have investors lost on the value of their Mighty River Power shares compared with the price at float on May 10 and what effect will this have on the price the Government expects to receive if it proceeds with the partial float of Meridian?

Hon BILL ENGLISH (Minister of Finance): The market price of the shares has declined about 10 percent, but investors who have retained their shares, of course, have not lost anything. They still have their shares. They are in line for significant dividends. In addition, New Zealand investors will receive bonus shares if they keep their shares for 2 years. Many investors, of course, disappointed the Labour Party by taking a view of these shares as a long-term investment proposition, and so they will retain them in order to earn the dividends and the long-term capital growth. In terms of the second part of the question about the effect on the price of Meridian Energy, I do not intend speculating on future floats. As the Labour Party should know, financial and political markets move around and can go through flat patches, a bit like opinion polls.

Hon David Parker: Will he proceed with the partial float of Meridian Energy if the money forecast to be raised is significantly less than the $3.1 billion predicted by Treasury in 2011?

Hon BILL ENGLISH: Treasury has not done any accurate predictions of the value of any particular float. We have always said that we would anticipate proceeds of $5 billion to $7 billion. It is a bit rich for the Labour Party to be criticising the impact on the value of Mighty River Power shares after it set out to reduce that value, and—

Mr SPEAKER: Order! I do not think that is necessary to that part of the question.

Hon David Parker: How can moneys raised from asset sales through the Future Investment Fund be utilised to fund the Auckland City Rail Link in 2020, when the Future Investment Fund is due to expire in Budget 2016?

Hon BILL ENGLISH: Of course, what happens with the Future Investment Fund will depend on what view the Government takes as it lays out subsequent Budgets and we get the proceeds from the sales, because the timetable for the sales is going to be flexible as well. But the general point is correct—we are selling 49 percent of these power companies. As a result of the Mighty River Power sale, we have $1.7 billion in the bank, which I have to say is much more use to the Government than 49 percent ownership of that company.

Hon David Parker: Given that the Government has pledged the asset sales cash several times over, is it true that its new economic plan is to photocopy State-owned enterprises sale proceeds to cover spending—National’s version of printing money?

Hon BILL ENGLISH: No, the handling of the proceeds of the asset sales is set out transparently in the Future Investment Fund, as laid out in the Budget. Of course, the Labour Party will have to be transparent with the public about its plans to borrow a lot more money from foreign bankers to pay for the assets that we are paying for from the proceeds of asset sales. I look forward to the transparency with which Labour sets out its extensive borrowing plans.

Hon David Parker: Does he agree with the 2011 version of John Key that asset sales are necessary to avoid a credit downgrade, or the late-2011 version of John Key that asset sales are necessary to fund Kiwibank, or does he agree with Tony Ryall in 2012 that asset sales are necessary to pay down debt, or does he agree with the 2012 version of John Key that asset sales would be used to build new schools and hospitals, or does he agree with Steven Joyce in 2012 that asset sales will fund KiwiRail, or does he agree with Nathan Guy—

Mr SPEAKER: Order!

Hon David Parker: I raise a point of order, Mr Speaker. This is considerably less than the length of answer that we had from Mr Joyce—

Mr SPEAKER: Order! The question is now getting very, very long. Would the member bring it to conclusion.

Hon David Parker: Does he—I will not start again. Does he agree with Nathan Guy that it should be used for irrigation, or with Gerry Brownlee that it should be used to rebuild Christchurch, or with John Key that it should be used to fund the Auckland City Rail Link in 2020?

Hon BILL ENGLISH: Yes, because the asset sales give this Government the choice of paying for almost all of those things without borrowing from foreign bankers. What is even better is that our choices to invest in those things allow New Zealanders to invest in a large New Zealand company. I am pleased that the Labour Party finally understands all the reasons for the asset sales.

National Certificate of Educational Achievement—2012 Results

7. Dr CAM CALDER (National) to the Minister of Education: What reports has she received on the NCEA Level 2 results of last year’s school leavers?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. I have received a report from the Ministry of Education indicating that overall in 2012 we have improved to 74.3 percent—which is nearly three-quarters—of all our senior students. That is an over 10 percent increase since 2009, which translates to more than 5,000 more students leaving with National Certificate of Educational Achievement level 2 or higher than there were before we became the Government.

Dr Cam Calder: According to the report, which particular regions showed significant improvements in school-leaver results?

Hon HEKIA PARATA: Although there has been improvement across all regions since 2009, our Government is committed to getting every young person across the line. This has seen, for instance, in Northland an increase of more than 12 percent over that time, or more than 250 kids; in Gisborne an increase of more than 15 percent, or another 113 kids; on the West Coast an increase of a whopping 29 percent, or another 50 kids; and in Auckland an increase of nearly 9 percent, or over 2,100 more kids, achieving level 2 than otherwise would have.

Hon Trevor Mallard: What proportion of the change she has outlined to the House just now followed the reduction in standards after moderation?

Hon HEKIA PARATA: I do not agree with the basis of that question. There has been no reduction in the quality of moderation, but there has been in the instances of it, because we are dealing with workload issues.

Health and Safety, Workplace—Forestry Industry

8. DARIEN FENTON (Labour) to the Minister of Labour: Does he stand by all his statements on safety in the forestry industry?

Hon SIMON BRIDGES (Minister of Labour): Yes.

Darien Fenton: Does he stand by his statement to the Transport and Industrial Relations Committee on 6 June that “the message I got loudly and clearly from, yes, the business owners but also the workers on the ground is that in December we brought into play … this approved code of practice … that this is working, it’s starting to work, but it does need time to bed in.”?

Hon SIMON BRIDGES: Yes.

Darien Fenton: When he visited forestry workers on 2 May is it not true that the workers, in fact, raised a number of very serious health and safety concerns and that they confirm the opposite of his statement to the select committee—that the new regulations for forestry safety are not addressing the key risks in the industry?

Hon SIMON BRIDGES: No, not at all. I was very impressed with what the young Māori men I talked to said. It showed that they had very good knowledge of this approved code of practice, they understood what it meant, and it was delivering good safety benefits for them. What is true is that the member’s good friend, and my dear friend, Helen Kelly, did lead the witnesses, as it were, and asked them very directly a number of very negative questions not about their situation but about what might be happening in other places. What was quite clear—

Grant Robertson: And you decided to ignore that.

Hon SIMON BRIDGES: No. What was quite clear was that this is bedding in and that we need to do more to get it out there, and we are.

Hon Trevor Mallard: Why do people keep on dying?

Hon SIMON BRIDGES: Well, they did under you too, buddy.

Mr SPEAKER: Order!

Hon SIMON BRIDGES: What did you do? What did you do?

Mr SPEAKER: Order! The member does not bring the Speaker into this debate.

Darien Fenton: Did he listen when the workers told him that many workers were working in very dangerous conditions, including working in the dark, working long hours, and without sufficient support; if so, why is he refusing to hold an independent inquiry and continuing to assert that his code of practice is working when there have already been six forestry-related deaths this year?

Hon SIMON BRIDGES: What is true is that throughout the 2000s too many people have died in this industry, and this Government has done much more than the last Government did to prevent that. The fact of the matter is we have had many documents and many reports. We know what the problem is. Actually, we know what the solutions are. We need to give this approved code of practice, which came in in December 2012, time to bed in, because what I am hearing and, actually, what Helen Kelly would have heard if she chose to listen, was that it is working.

Darien Fenton: I seek leave to table a letter from Helen Kelly to the chairperson of the Transport and Industrial Relations Committee, copied to me, disagreeing with the transcript—

Mr SPEAKER: Right. Leave is sought to—[Interruption] Order! Leave is sought. It has been used by the Minister in his answer in terms of the reference to Helen Kelly. Leave is sought to table it. Is there any objection? It can be so tabled.

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

Superannuation—Overseas Pensions and Deductions

9. DENIS O’ROURKE (NZ First) to the Minister for Social Development: Does she consider the direct deduction policy of overseas pensions from New Zealand Superannuation under section 70 of the Social Security Act 1964 to be fair and consistent?

Hon CRAIG FOSS (Minister of Commerce) on behalf of the Minister for Social Development: As the Minister answered to a question very similar to this 3 weeks ago, yes.

Denis O’Rourke: When an overseas pension is paid to a pensioner, what justification is there for applying section 70 to the spouse in respect of their entitlement to New Zealand superannuation?

Hon CRAIG FOSS: The spouse deduction is just one aspect of the direct deduction policy. The rationale for the direct deduction policy is that all New Zealanders receive the equivalent amount of New Zealand superannuation. This may be made up of the full amount of New Zealand superannuation or a combination of an overseas pension and a reduced amount of New Zealand superannuation. This applies to individuals and couples.

Denis O’Rourke: Has the Minister received legal advice on the human rights implications of applying section 70 to the spouse of a pensioner who receives an overseas pension; if so, does that advice raise the possibility of a claim under the Human Rights Act by the spouse?

Hon CRAIG FOSS: I understand that the Minister has not received advice on that matter.

Denis O’Rourke: How would the Minister respond to a human rights class action by New Zealand superannuitants affected by the direct deduction of overseas pensions?

Hon CRAIG FOSS: I am sure the Minister would seek advice on such matters.

Denis O’Rourke: Does she review the use of her chief executive’s discretion under section 70 in so far as it affects overseas occupational pensions under the direct deduction policy; if so, when was the last such review?

Hon CRAIG FOSS: I understand that the last comprehensive review of all of these matters was in 2007 under the Labour - New Zealand First Government, out of which no substantive changes to any of these matters were made.

Schools, Partnership—Authorisation Board Chair and Potential Conflicts of Interest

10. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Has she read and understood each Cabinet paper she has signed off as Minister of Education?

Hon HEKIA PARATA (Minister of Education): E te Mana Whakawā, āe kā mōhio tūturu ahau ki ngā pepa katoa i haina e au, i ahau i roto i tēnei tūranga Minita mō te Mātauranga.

[Mr Speaker, yes, I certainly stand by all the documents that I signed in this position as Minister of Education.]

Chris Hipkins: Did she read and understand her 5 February Cabinet paper outlining her intention to appoint Catherine Isaac as the chair of the partnership schools authorisation board, where she recommended that Catherine Isaac’s conflict of interest with the Partnership Schools/Kura Hourua Working Group be managed by her resigning with immediate effect from the working group, formally disclosing any interests she had in any school that may be considering applying to be a partnership school, and having no further contact with any potential applicants; if so, why is Catherine Isaac still listed as a member of the Partnership Schools/Kura Hourua Working Group?

Hon HEKIA PARATA: To the first part of the question, yes, I did know that that was what I had asked her to do.

Chris Hipkins: Is Catherine Isaac still the chair of the Partnership Schools/Kura Hourua Working Group?

Hon HEKIA PARATA: The working group has been disbanded.

Chris Hipkins: Was Catherine Isaac still the chair of the Partnership Schools/Kura Hourua Working Group when it met in February and in March this year?

Hon HEKIA PARATA: I do not have the detail of those dates. I think it is unreasonable to expect that I might, because that was such a wide primary question, but I am happy to come back with that detail.

Chris Hipkins: Did she ensure that her recommendation to Cabinet on 5 February that Catherine Isaac resign from the working group with immediate effect was actually implemented?

Hon HEKIA PARATA: Yes, I did. I provided that instruction to the Ministry of Education, which carried it out.

Drinking-water Supplies—Contamination

11. EUGENIE SAGE (Green) to the Associate Minister of Health: Is the Minister concerned that in 2011/12 92,000 New Zealanders relied on drinking water supplies with an excessive number of E. coli breaches, which are a marker of faecal contamination, and if not, why not?

Hon JO GOODHEW (Associate Minister of Health): Tēnā koe e te Mana Whakawā. Yes, I am. However, in the majority of cases where contamination was identified, water suppliers took immediate remedial action. I am not satisfied that the response was quick enough in a small number of cases covering 0.4 percent of the survey population. But I have been assured that these suppliers were followed up with district health board assessors immediately. The good news is that the Institute of Environmental Science and Research Ltd has advised me that there were no outbreaks of disease reported as a result of these breaches.

Eugenie Sage: Is the Minister concerned that the number of people reliant on water supplies with an excessive number of E. coli breaches increased by 20,000 between 2009-10 and 2011-12?

Hon JO GOODHEW: What the report does show is that although there were some breaches, in fact we are achieving some quite remarkable results. I point to the most remarkable side of this; we are looking at chemical breaches, bacterial breaches, and protozoal breaches. The most important improvement is the 79.1 percent of protozoal standards improved to 79.8 percent. They are the most expensive to treat and the most difficult to treat. And it is also in protozoal prevention that we actually have to spend the most money, which we do through our subsidies to the drinking-water schemes.

Eugenie Sage: Does the Minister agree with the Ministry of Health that the most important way to manage drinking-water supply is to protect the source of the supply; if not, why not?

Hon JO GOODHEW: What I do understand is that each supplier that is covered in the drinking-water scheme will receive very good advice from the Ministry of Health about either having protection for their scheme—that might be chemical protection—or, in fact, that they will have a public health risk management plan. That will mean that they have to give effect to understanding where the water supply is coming from, and that there will be enough testing so that they immediately detect if either chemical, protozoal, or bacterial breaches occur so that they can protect the population concerned.

Eugenie Sage: Why has her Government cut funding for small communities to upgrade their drinking-water supplies by $16.3 million in Budget 2012 while allocating more than $80 million to subsidise irrigation when agricultural intensification is a major cause of water pollution?

Hon JO GOODHEW: The first thing I would like to actually deal with is that this report, this annual review of drinking-water quality, does not find any causes of these particular breaches. So, if the member feels that she read that in the report, she is quite wrong. It is not there. Secondly, I want to tell the member that in fact we changed the way that the subsidy scheme was actually delivered. What there is is still 3 years of $10 million per year of subsidies to deprivation index seven to 10. We have spent $66 million already actually providing 171 suppliers with fully upgraded water supplies. There are 72 projects under way. In fact, this is targeting the areas of the country that most need the money—something this Government is far better at than the previous Government.

Eugenie Sage: Why is the last round of funding for the drinking-water subsidy scheme in February 2015, when the ministerial advisory committee on drinking water compliance is concerned that 48 percent of medium-sized schemes do not comply with the New Zealand drinking-water standard for protozoa, which of course include giardia and cryptosporidium, and when that same committee is concerned with the low level of compliance by small and medium sized schemes; so why is the scheme ending in February 2015?

Hon JO GOODHEW: What I am able to tell the member is that the applications that we are receiving from the water schemes all around the country are receiving the subsidies that they require. The $10 million has not been fully subscribed, so therefore no schemes are missing out on the subsidies they are actually applying for. We have structured this so that the schemes come in on a rolling basis during a period of time when this Government has taken into account that territorial local authorities need to plan for the future in a reasonable way, not in fact going holus-bolus and going broke in the process. This Government is very mindful of clean drinking-water for New Zealand’s population.

Digital Literacy—Computers in Homes Funding and Other Initiatives

12. COLIN KING (National—Kaikōura) to the Associate Minister of Education: What recent announcements have been made to support digital literacy, particularly in low-income communities?

Hon NIKKI KAYE (Associate Minister of Education): Tēnā koe, Mr Speaker. Yesterday Ministers Parata, Goodhew, and I announced that the Government will fund $1.6 million to Computers in Homes. This additional funding will mean that 1,500 families across low-income communities are provided with a computer to take home, IT support, and subsidised internet connections for 12 months. Parents will also receive 20 hours of computer training at their children’s school. This is great news. I want to acknowledge the 2020 Communications Trust for its hard work and effort in running this highly successful programme. The 21st Century Learning Group, which I have also recently established, has a mandate to look at improving device access and more learning opportunities for New Zealand students.

Colin King: What other initiatives is the Government supporting to improve digital literacy for New Zealanders?

Hon NIKKI KAYE: Along with Computers in Homes, this Government has a strong commitment to improving digital literacy for all New Zealanders. There is a $1.5 billion investment in fast connections to give 2,500 schools across the country access; $136 million over the next 4 years to speed up the school network upgrade project by 2 years; and $9.8 million per year specifically for e-learning professional development. We are providing more than $21 million for laptops to teachers. Recently we announced the Computer Clubhouse programme, now called the High Tech Youth Network, and that will receive another $1.9 million. We are also investing in online resources, such as the Enabling e-Learning community and a virtual learning network, and I can confirm that there is more to come.

Bills

Family Court Proceedings Reform Bill

Second Reading

Debate resumed.

DENIS O’ROURKE (NZ First): Before the lunch break I mentioned that New Zealand First had wished to support this bill, and I gave some reasons why. I said that, fundamentally, we were not against the principle of family dispute resolution, but I also said that there would be a number of conditions, and I listed what they were. In the end, despite a very large number of amendments having been made to the bill as introduced, New Zealand First’s reservations and concerns have not been met, and so New Zealand First will now vote against the bill.

The bill targets the use of professionals, especially lawyers for the parties and lawyers appointed to represent children. Under clause 5 legal aid will be available only to a limited degree prior to, but not during, any mandated dispute resolution process, and, secondly, if a dispute goes before a judge. New Zealand First does not agree to penny-pinching of this kind, which results in a lack of adequate legal representation and severely reduced legal aid entitlements.

As a fundamental principle of justice, parties with a reasonable need—not regulations—should decide whether they need a lawyer. Family dispute resolution would be free for those under the income threshold for civil legal aid, estimated at about 60 percent of participants. So most parties are already legally aided, out of necessity. But the availability of legal aid should not be the basis upon which parties decide whether they should have a lawyer or not for these family dispute matters.

Although family dispute resolution is likely to be less expensive than hiring a lawyer and proceeding to a defended hearing in court, these requirements are so tough that many people—many of the 40 percent not entitled to legal aid—will simply not get a lawyer when they really need one. There is also the very real problem of power imbalances being created as a result. These reductions in legal representation and legal aid are the main reasons for New Zealand First opposing the bill. These reductions are likely to be a false economy anyway, because costs in other areas are likely to increase, and several submitters described why this is likely.

Fundamentally, if the quality of the process is compromised, the resolution of disputes may be illusory, resulting in another dispute later. Another reason for opposition is that the bill prohibits the court from appointing a lawyer to represent the child, unless it is “necessary”. Clause 5 of the bill as introduced would allow a lawyer to act for a party in a proceeding if the application was made without notice, if it relates to international child abduction, if the party is the Crown, if a judge has directed the case proceed to a defended hearing, or if the lawyer is lawyer for the child who is party to the proceedings.

The concern, though, is that lawyers would no longer be involved in all of the cases where they are needed. The problem is that the bill requires the court to have concerns for the safety or well-being of the child, and to consider that an appointment is necessary. It should be the other way around. The court should appoint a lawyer for the child unless it finds that it is unnecessary. That is what it is in the current law, and that really is the way it should stay.

The official advice is that parents are expected to represent the best interests of the child in the process, but parents in too many cases are not really able to objectively look after their children’s interests as one would hope. In these cases a lawyer for the child is needed, and the test of necessity is too tough. Children cannot always rely on their parents, especially in the stressful atmosphere of a relationship breakdown. The interests of children must be paramount, which is the foundation of the Care of Children Act 2004.

This bill fails children with its restriction of independent representation for them. New Zealand First also believes that the full Government funding of counselling services should be reinstated. The bill would repeal existing provisions for Family Court counselling under the Family Proceedings Act and the Care of Children Act, except for up to 3 hours of counselling, and it would replace them with a new scheme. The provision for only 3 hours’ counselling is not adequate. Not all families will break up if they get adequate counselling before the other process is used. In the past most matters were resolved by counselling, and it should be reinstated. The court will be able to appoint a lawyer to assist the court in appropriate cases under this bill, but the parties would have to pay for this—probably a one-third apportionment. That is also wrong and is opposed.

Another issue of concern to me, not addressed by the bill, is the lack of enforceability of agreements in the family dispute resolution process. These agreements lack the status of a court order. They are likely to be recorded and may be signed, but they depend on the commitment of the parties to carry them out. The risk, of course, is that they will simply be ignored.

Although the bill started out with good intentions and although New Zealand First is not opposed to family dispute resolution in principle, the overwhelming thrust of the bill is clearly just to save money, and the effectiveness of our Family Court system will be compromised. The bill fails to ensure the availability of adequate publicly funded counselling when it is needed most. It fails to ensure that parties will have legal representation at all stages when they need it. For those reasons, New Zealand First is obliged to vote against the bill.

KATRINA SHANKS (National): It is my pleasure to take a call on the Family Court Proceedings Reform Bill this afternoon. The best outcome for all families who are going through tough times, conflict, and separation is to find their own solutions, define their own resolutions, to make them sustainable and enduring for their own families. We know that roughly 90 percent of New Zealanders manage to do that. Their families find their own resolutions and sustainable outcomes. About 10 percent of New Zealanders, roughly, have to use the Family Court system.

For those 10 percent who use it—because they cannot find their own resolutions, they need a bit of help—this is where the Government can come in and support these people. What the family dispute resolution does is give them another way to find that resolution. We are doing that by allowing them to stay out of the court system for as long as possible, to give them access to parenting courses, to allow them to have somebody work with them to see whether they can find some resolution and to resolve some of their conflict and then, if they need to, to go into the court system and use that court system. Of course, there will always be a safety net for those who are vulnerable or at risk to be able to go straight into that court system and use it, but this is to assist those people who do not need it straight away.

We had about 64,000 people in the 2011-12 year who were applicants to the Family Court, and we know that 40 percent of those applications were made under the Care of Children Act. So about 26,000 applications that went through the Family Court system involved children. We are here today to debate this bill about giving a solution to keep people—families who are in conflict—out of the court system. From all the submissions that we heard, one thing that we did hear from those parents who came in to talk to us about their experience was that it is time-consuming—it takes a long time to get through it—and it is very expensive to get through the system. And, actually, they kept on going back and back and back into the court system. It was not good for the children, it was not good for their relationships, and, actually, in many instances, the outcomes were not sustainable. This bill is to offer an alternative to that—to offer an alternative.

Some of the main issues raised through the submission process were the ability to access legal aid; access to lawyers for the child; allowing a screening process for fast tracking those who are vulnerable; the ability to refer parents back to family dispute resolution from the court system, so if you have gone through family dispute resolution and you get to the court system, the courts can send you back again for more parenting courses or can send you back again to resolution; allowing relationship counselling to be part of the tools for the family dispute resolution; the importance of parenting courses—we heard that over and over again through our submitters, how important those parenting courses were—and understanding what the needs of the children are when you are going through. It is not necessarily about the needs of the parents but about the needs of the children, and about putting them first when they are making those decisions. The lawyers’ involvement in the family dispute resolution system was what we heard of a lot, but then 46 percent of the submitters were lawyers, so that was most probably reflective of that. And also we heard of the skills needed in the family dispute resolution system. Who do you need in that process? Do you need an arbitrator? Do you need a dispute resolution person? Every family may be slightly different, with slightly different needs. We listened to all these concerns, and we addressed them before the bill came back into the House.

I think this is a good new system in place to allow families to stay out of the court system for as long as possible. I look forward to the debate in the future. Thank you.

Hon PHIL GOFF (Labour—Mt Roskill): The Labour Party will be strenuously opposing this bill, the Family Court Proceedings Reform Bill, which, far from achieving the objectives set out in the bill, does exactly the contrary. It is damaging to equity, it is damaging to the interests of children, it is damaging to the ability of parents who have separated to reconcile their differences and to find a way through, and it has nothing to do with improving the quality of the Family Court process in this country. It is inherently dishonest in what it says it sets out to do, when it is absolutely clear and set out in black and white in the regulatory impact statement that this bill is all about cutting costs.

In her comments, the Minister of Justice said that this was the biggest change that has ever been made to the Family Court system since 1981. You know, the experts who appeared before the Justice and Electoral Committee did not deny that comment, but they added this—and this comes from five people, four of whom have 30 years’ experience and professional expertise in the Family Court. They said this about the bill: “If this Bill proceeds as drafted, the very fabric of the New Zealand family justice system will be destroyed.”

Hon Bill English: Rubbish.

Hon PHIL GOFF: Continuing the quote: “The Bill is based on flawed policy development without a statistical or research base justifying such fundamental and radical changes.”

A member of the Government side said just then that that was rubbish. These people—these five practitioners—were not simply the most experienced and expert barristers before the court and psychological experts; they were so well regarded for their expertise that the then Minister Simon Power appointed them to the experts reference group. The National Party says that it is rubbish, but this so-called rubbish is actually the advice of very experienced, very professional people appointed by Simon Power to advise him on the bill. And they say that this bill is a disaster.

You know, when I picked up this bill, I thought that this might be a piece of legislation that I could support. I looked at its objective, which was “to ensure a modern, accessible family justice system that is responsive to children and vulnerable people, and is efficient and effective.” What do I find when I read the submissions and I read the detail of this bill? That that is a truly Orwellian quote, because the bill does exactly—exactly—the opposite of what it purports to do.

I want to actually again take some of the evidence that was received by the Justice and Electoral Committee and refer it to the House. You know, Judith Collins said that this bill would make it easier to understand and navigate the court system. Her namesake Garry Collin, Chair of the Law Society family law section, says that this change will actually “create a more complex system than we currently have … The new system is a complex maze of procedures with different entry points, criteria and exemptions.” He says that this will cost more rather than save money. And when he says that it will cost more, he is talking not only about the financial cost but also about the basic costs to the most vulnerable people in this system, who will lose their right to legal representation and will lose the ability to go to the dispute on an even footing with the opposing party, who may be well funded, who may be educated, and who may be articulate.

What we find is that the lawyers who have watched the way this system has evolved over decades say that this will be damaging to the interests of the child. For heaven’s sake, the bill reduces the funding available for counsel for the child. So the child may be in a situation where nobody is representing his or her interests, and the funding will be taken away from a person who has the professional expertise and the knowledge to actually ensure that the interests of the child are well looked after.

The other thing that worries me most about this bill is when I read from that submission, it says this about the bill: it is not based on empirical evidence. This is the biggest change in the Family Court’s history, and it is not based on any empirical evidence. It says that, in fact, it is contrary to extensive existing evidence of best outcomes for families and children. Not only is it not based, nor does it even pretend to be based, on factual evidence, but it runs contrary to the wide body of research that has been done on family law and what would be good for the interests of families and children.

The submission says the bill will create a two-tiered family justice system: “The more vulnerable members of society will have limited access to services to assist them in the resolution of family disputes. For those who do have access to the services, the services will be of lesser quality.” It goes on to say: “It is entirely foreseeable that inequalities arising from gender, socio-economic status, and ethnicity will become entrenched, resulting in increased costs to the health, education, child protection, and criminal justice budgets.”

That evidence from people who ought to know, from people who were appointed to advise the Minister of Justice, shows that this bill is a disaster. But for any doubting members on the National benches, all of whom have their heads down at the moment, what that expert evidence showed was actually what was put into the regulatory impact statement by the Government’s own advisers. As well as saying that this is driven by the overall fiscal situation and the need to lower the costs of the current justice system—they were honest. At least the officials were honest about it; not so the Government members who have spoken on it. They also said that the bill was based on “limited” research, which is exactly the point that the submitters to the Justice and Electoral Committee were making in their evidence. The regulatory impact statement said that “There is insufficient historical fiscal and statistical data …”. It said: “There was insufficient time for piloting proposed processes or for undertaking … ([a look] at court documents) to obtain further data ...”.

All of the evidence on this bill points to the fact that it will be an absolute disaster. It is about cost cutting. It is not about equity, it is not about fairness, and it is not about getting a good outcome from the bill. It is about saving the Government money. The Government’s own advisers and the experts warn the Government that it will not save it money; it will cost it more money and, worse still, it will cost those families and, particularly, the vulnerable children of those families unnecessary misery, because the situation will not be resolved as quickly or as fairly as it could be.

It was not time that prevented the Government from going back to its expert advisory group. First of all, the Government claimed that the bill was consistent with the expert advisory group. The group, in an outraged statement, said: “That is simply not true. It couldn’t be more inconsistent—on four key points of what the Government is doing.” It was not time that stopped the Government from going back to its expert advisory group. It was the knowledge that this bill is dishonest, it is fraudulent, it will not do what it claims it is setting out to do, it is not even motivated by what it sets out to do, and it will be a disaster for the New Zealand courts system.

The Minister says that it will save money. I want to remind the Minister of the change that was introduced by, I think, the Minister for Courts for processing Family Court cases in Auckland. What did the Principal Family Court Judge say about that botch-up? He said that urgent custody cases involving domestic violence, previously dealt with in 14 days, were now taking 2 months. Was it saving money? No, it was costing a million dollars more. The Government has made one disaster in the Family Court system, it is compounding it with another disaster, and it is not even honest enough in this House to admit that it is doing it for purely fiscal reasons and that this bill will be a disaster in terms of the principles of justice.

PAUL FOSTER-BELL (National): Tēnā koe, Mr Speaker. Kia ora tātou katoa ki te Whare Pāremata o Aotearoa. I would like to take a brief call on the Family Court Proceedings Reform Bill, in part because I was not actually sworn in at the point of the introduction of this bill or, indeed, the proceedings of the Justice and Electoral Committee. But I have read very carefully the deliberations of the committee, the bill itself, and some of the reports that fed into it. It is obvious to me that this is a positive measure. It is reforming the Family Court in a way that will solve some of the concerns that were raised in the report by the Ministry of Justice in April 2011.

Those concerns included that the Family Court is an adversarial environment that places additional stress on already strained relationships. It has been a negative environment for children, and is not sufficiently focused on their needs. It is also not focused enough on the needs of the most serious cases—that is, ones that involve abuse or violence, which is a point I will come to later. It spends far too much time on personal disputes and private matters, rather than resolving those serious issues and the legal issues. It is too complex and slow in resolving disputes. I think these are issues with the system as it currently stands that do need to be addressed and resolved, and I think the provisions of this bill do a very good job of resolving those issues.

I mentioned the issue of domestic violence. We have heard from other speakers on the Government side that this bill does a lot in terms of improving the environment of the Family Court for children and the people who are going through it, but also in terms of improving the process and the efficiency of the court. There are three specific measures in this bill that respond to domestic violence in a way that, I think, is appropriate and positive. Firstly, this bill is expanding the definition of psychological abuse in the Domestic Violence Act 1995 to include financial and economic abuse. Secondly, it is increasing the maximum sentence for breaching a protection order from 2 years to 3 years. Thirdly, it provides for greater flexibility in the development and delivery of mandatory non-violence programmes. Given that domestic violence is very much a bane of this country and something that we are working very hard to combat, I think these are positive measures, and, when taken with the other provisions of the bill, I think this is both timely and appropriate legislation. I have no hesitation in commending this bill to the House.

CHRIS HIPKINS (Labour—Rimutaka): I am happy to take a brief call on the Family Court Proceedings Reform Bill. I just want to state at the beginning that I guess any member of Parliament who meets regularly with people in their constituency office will deal with issues that are very sensitive and very difficult all of the time, and some of the most difficult ones that we deal with are where there has been a relationship breakup. Regularly, I get people coming into the office to talk through difficulties they have with the child support system, for example. That seems to take up an awful lot of time, and I acknowledge that relationship breakups can be incredibly difficult for all involved. So the changes that are being debated today around the Family Court Proceedings Reform Bill are actually incredibly important for us to get right, because when relationships break up, people need to have an adequate level of support. That is just an absolute bottom line. They have got to have an adequate level of support. We also have to recognise that in relationship breakups there can be all sorts of external factors that create a huge power imbalance in the relationship, which can be very difficult to work through.

I am not as familiar with this legislation as the members of the Justice and Electoral Committee are, but, having listened to the debate, there are certainly some aspects of this legislation that concern me greatly. For example, if we take the removal of lawyers from large chunks of the process, on one level I might look at that and say that that is actually probably quite a good thing, because if there is a family dispute, maybe it is better that it is not a legal proceeding but that, in fact, we get people together—we get them to sit down and talk things out—and maybe getting lawyers involved makes things more difficult. But, actually, a lot of the evidence suggests that by having a good process around things and ensuring that all of the parties to that process are well supported with good, rational, sensible advice, removed from the emotions of the situation, we get a better outcome.

In something like the Family Court, where the interests of children are involved, it is really, really important that everybody involved is adequately supported so that we can get the best possible outcome. This is not something where we should make decisions based on saving a bit of money, because, in fact, if we get these things wrong, it is costly in fiscal terms for the country but it is hugely costly in a whole lot of other ways for those who are involved in that process. So for the children and for the parents who are going through or have been through a separation and are dealing with disputes, it is important that the process is right and that they get the support they need.

I am really concerned about some of the reforms—for example, limiting the access to court-funded counselling at the time of separation. Actually, this is a time when we want to make sure that parents have all of the support they could possibly need in order to deal with the issues that are before them. The bill is limiting the role of lawyers in the processes of the court and is therefore limiting access to legal aid. What we have to recognise again when a separation occurs or when a relationship breaks up is that there are going to be huge economic disparities in the way things happen. So limiting parents’ access to legal aid can be very difficult for some of them.

The establishment of a new process called family dispute resolution will cost around $900 just to get into it in the first place. That is a big barrier for some people, and I think we have got to really consider the cost that we are going to be imposing—that this Parliament will be imposing if this bill passes—on people who are at a very, very vulnerable stage. I do not think that that is a time when we should be imposing costs on them and making things more difficult for people who are going through this process. We should actually be doing all we can to support people who are having relationship and family issues, so that they can resolve those satisfactorily and so that people can reach the best possible outcome, particularly, as I said, where children are involved.

I am very, very concerned about limiting the role of counsel for the child by raising the threshold for the appointment by the court. Children are the people who need to be the most supported in this process, and removing from children any level of support in Family Court proceedings cannot be good for those children. They should have as much support as we can possibly provide them with.

I was not a member of the select committee and I was not part of the debate in the earlier parts of these proceedings, so I look at it from a much higher level, perhaps, than those who were engaged in the detail. I simply ask the House this question: will this bill leave children, particularly, and also those experiencing family difficulties better off, or is it about saving money? My analysis of reading what I have seen so far is that it is about saving money, and that is the wrong motivation for these sorts of changes.

DAVID CLENDON (Green): I would like to begin by acknowledging and referring to the petition that has formed part of the report back from the Justice and Electoral Committee, the petition of Christopher Perry and 4,470 other ordinary New Zealanders who have signed their name to a petition that sought to have this House not impose certain reforms on the New Zealand Family Court. I think it is significant. It is a representation of considerable public disquiet and concern about the direction that this bill, the Family Court Proceedings Reform Bill, is taking. I do not think there is particular concern about the fact of a reform or a review of the practice of the Family Court, but about the way in which it has been carried out, particularly the cost-saving focus and the fact that it will disadvantage many, many people, that it will reduce access to the court for many people, and that it will give worse outcomes for some of our most vulnerable citizens, not least of all our children.

The petitioners sought to get four key things. They sought to protect the right to a lawyer for parties in the court, and we have lost that, frankly. We have qualified access to lawyers now, and that is very unfortunate for all sorts of reasons, not only because the right to legal representation is a constitutional underpinning, if you like—it is absolutely essential to our judicial process, and in this instance it has now been compromised—but also the fact that even to the extent that perhaps we might seek to take some cost out of the court, having self-litigants in the court will slow the process down. They will impose costs on the courts. There will be significant cost, both personal and financial, when people try to represent themselves in the court, which they will typically do quite badly.

The petitioners sought protection for lawyer for child. They wanted to see no barriers to the appointment of lawyer for child. Again, we have a qualified situation here, where a judge may appoint lawyer for child, but it will not be as automatic or as spontaneous as it has been up to now. The children in this, of course, are the innocent parties, invariably. They are not the ones who are having disputes or relationship failures, but, unfortunately, their interests will not be as well served as they might otherwise be.

The petitioners sought the protection of legal aid in the Family Court and, of course, that has been reduced. Of course, later this afternoon we will also be debating the latest onslaught against the provision of adequate legal aid to people who might need it in order to be fairly represented in the courts.

The fourth and final thing these petitioners required was to have no fee, no financial barrier to people entering the dispute resolution process. Unfortunately, that barrier does still exist, to the tune of about $1,000 or so, which is a significant barrier to many people, and, of course, that is only the beginning of the cost.

I think it is unfortunate that there seems to be a key presumption from some of the Government spokespeople, or in speeches we have heard from Government members on this bill, that the intention of the bill is to ensure that people sort out their own problems without recourse to the courts. But that is nonsensical in a sense because, as one of the earlier Government speakers made the point, something like 90 percent of relationship breakups, marriage failures, or whatever it is are resolved without recourse to the courts, albeit on occasion through using the counselling service, which is extremely good value for money and an inexpensive way to assist couples to deal with their issues. But the notion that we are dealing with hordes of people who could otherwise deal with their own problems outside of the legal process simply is not borne out by the numbers: 85 to 90 percent of couples do resolve their own issues without coming to the court. It is not a matter of overuse of the court; in fact, it is underused, if anything.

By definition, the court sees only the hard cases, the difficult cases. The idea of requiring couples to go straight to dispute resolution, rather than going into the court process, overlooks the fact that there are a whole host of issues of circumstances that may make that inappropriate, and some of those circumstances could be family violence, hidden family violence, which means that a person who has been subjected to some form of physical or psychological abuse could be required to sit in a room and engage in a dispute resolution process, and that is simply unacceptable. On paper it might look nice and clear-cut; in practice, it will not work. Neither will this bill, and we will continue to oppose it.

LOUISE UPSTON (National—Taupō): I am pleased to take the final call in the second reading of the Family Court Proceedings Reform Bill. I think there would be one aspect that we agree on in this House, and that is that courts are no place for children. If you think about the reform that this bill is undertaking, it is really looking at the needs of children first, and making sure that the environment and the reform that we are putting in place really provides a structure that is going to be the most useful for them, that provides the most safe environment, and that provides a lasting resolution. That is why the emphasis is not on what the last speaker, David Clendon, was implying but on using the family disputes resolution process more so that you can get really lasting outcomes.

As a constituent MP, I think some of the most difficult cases that I have had before me have dealt with families who have parenting issues, income support issues, and separation issues with their children, and it is very clear to see that it is actually the children who come off the worst in these environments. I am a firm believer that the more we can keep them away from the court process and put other processes in place that assist resolution not just for a month or 3 months but for the lifetime of that child, the better. That is why this is quite a different process when we are talking about courts and when we are talking about resolution, because children have very different needs from those that can be met by some of the other court processes that we have in place. Yes, we have had some significant cost implications in terms of the use of the Family Court, but the driver of this, really, is looking more at how we can have lasting solutions for those who are most vulnerable. And in this case I am particularly interested in the children who are in those families that have had separation and breakup issues, so that we are able to have a solution that works for them long term.

I disagree with some of the other speakers. This reform is clearly aimed at those who need court assistance—absolutely. But it is not making that the most desirable option. It is trying to look at making sure that those who need legal representation and legal aid absolutely will get them, but not making them the most desirable channel for people to go through in terms of resolving these issues. The Government recognises that the Family Court provides only one component that is important in terms of people sorting out their issues and problems. And for the long-term benefit, people should be encouraged, and other mechanisms provided for them, so that they can seek that assistance and get long-term resolution, which is, of course, going to be in the much better interests of the children involved. Thank you.

The question was put that the amendments recommended by the Justice and Electoral Committee by majority be agreed to.

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

Ayes 61

New Zealand National 59; ACT New Zealand 1; Independent: Dunne.

Noes 58

New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; Mana 1; Independent: Horan.

Question agreed to.

A party vote was called for on the question, That the Family Court Proceedings Reform Bill be now read a second time.

Ayes 61

New Zealand National 59; ACT New Zealand 1; Independent: Dunne.

Noes 58

New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; Mana 1; Independent: Horan.

Bill read a second time.

Bills

Psychoactive Substances Bill

Second Reading

Debate resumed from 27 June.

CLARE CURRAN (Labour—Dunedin South): It is not every day that a young woman walks into your electorate office just straight out of a psychiatric institution, where she had been hospitalised and was receiving intensive treatment for an addiction to, and symptoms arising from taking, synthetic cannabis. This young woman was very sick. She was 24 years old and did not have a history of drug taking. She had got herself into a situation where she had taken some synthetic cannabis and had quickly become addicted. She was very sick and she was very adamant that she wanted a law change as quickly as possible.

That was in March this year. Subsequently, my office has been besieged with a number of phone calls from schools, from concerned parents, and from other organisations around this issue.

This is, as we know, a huge issue for parents, for our children, for our community generally, for schools, for the police, and for our health services, and there has been some very good work done in my community by our health services. We have a toxicologist at the Dunedin Hospital, Dr Leo Schep, who has been doing some very good work on this issue and some studies on this issue. His work is yet to be released, but it will help with the treatment of addiction to these substances.

Following those representations, I visited dairies. I wrote to dairies—every dairy in my electorate. I visited them. I visited users in prison. I supported a petition in my electorate. I went back to those dairies that had said they were still selling it, and I asked them to cease. I spoke to the Dunedin police on a number of occasions and I met with organisations such as the Salvation Army.

Two weeks ago I was invited to and attended a symposium in Dunedin at the Wakari Hospital, which is run by the district health board and mental health services, and it included people working in inpatient services, community-based mental health services, emergency psychiatric services, specialist alcohol and drug services, and others. Here are some of the things that they said, arising from that meeting. They said that synthetic cannabis was a clinical burden on health services, that emergency department patients had cyclical vomiting and seizures from smoking synthetic cannabis, and that many of the patients had experienced delayed seizures up to a day after smoking synthetic cannabis. A 22-year-old man had been in the emergency department 14 times with synthetic cannabis - related issues in the past 6 months. Thirteen percent of admissions to the acute psychiatric ward at Wakari Hospital in a 14-week period earlier this year were related to synthetic cannabis. In 2010 there were no synthetic cannabis - related admissions to that hospital. The average age of patients admitted was 10 years younger than in 2010.

A community mental health nurse said that some of the synthetic cannabis manufacturers were using extremely clever marketing to target children, that we were fighting a losing battle, and that it was going to get worse before it gets better. This was said in the knowledge that this law was going to pass through Parliament. They said that patients were being admitted daily to the psychiatric wards to detoxify and that many of them had no prior history of mental illness or substance abuse.

I could go on and on about this issue. Thankfully, and as a result of the inputs to this bill, particularly the work put in on this side of the House by the Labour members—and I would especially like to acknowledge Iain Lees-Galloway—there is in the commentary on this bill a section headed “Possible increased demand on health services”, which states: “We acknowledge that with the banning of some substances currently available there could be increased demand on mental health and drug and alcohol services, which health providers will need to make provision for.” In the Committee stage of this bill I will be putting a question to the Minister as to what provisions are being made in the health services for the effect of this bill, and what this will mean for our communities such as the community in Dunedin, which is no different from many other communities around our country where the significant effects of these drugs will not cease as a result of passing this bill in the House.

As the police have said to me and my colleagues in Dunedin, these drugs are likely to go underground. People who are addicted to these drugs will still want to try to get them. There will be increased effects from these drugs. We need to know how we are going to handle them as a community, and in this House I think there has to be some responsibility taken by the Government for putting increased services into the services that are needed. Thank you.

SHANE ARDERN (National—Taranaki - King Country): It is a privilege and a pleasure to rise in the second reading of the Psychoactive Substances Bill. National is, obviously, sponsoring it and supporting it, and wants to see it passed as soon as possible. I must acknowledge my colleagues from both sides of the House on the Health Committee, and the great chairmanship of our very good chairman, Dr Paul Hutchison, on this particular issue. He actually brought quite a high degree of expertise to the debate, given his medical background.

When you look at something like the issue we are considering here, or when the House considers something like the issue it is considering here—not you entirely, Mr Assistant Speaker—there is a range of different arguments that you can put forward. The previous speaker, who just resumed her seat, Clare Curran, brought forward a lot of the constituent-type issues that each and every one of us has experienced since this became a common thing. There was an example right in my own electorate, in the Stratford area, where my good colleague and friend, the Hon Chester Borrows, took it upon himself, as a member of Parliament and a former police officer, to visit a dairy and suggest to them that it was not in their best interests, or certainly not in the best interests of the young people of our area, for them to be selling this substance, and they just said: “Well, it’s legal, so, you know, we make money from it.”

I am reminded of a very heartfelt submission we received from the Mayor of the Ashburton area. She brought forward a very good submission, in my opinion, on the type of investment that some of the retailers of this product were making and the type of return they may get from it. All of that leads to a sort of discussion about why we do not just ban it—why we do not just pass a law and make it illegal. Well, as most in the House will be aware, when you put in place a total prohibition, it seldom works. In fact, if you look back in our history, you will find that the King Country, an area I represent, in the late 1940s and early 1950s decided it was going to introduce a prohibition on alcohol. There were more moonshine distilleries and underground clandestine activities—

Hon Trevor Mallard: My uncle ran the Manunui Club through the entire period.

SHANE ARDERN: I am not surprised by that, Mr Mallard. That does not surprise the House at all. In fact, we have often wondered what type of psychoactive substance might have been employed. The reality is that prohibition seldom works. It tends to drive these types of activities underground, and the end result is that you do not end up with the outcome that the community that wanted it banned in the first place might see as the ultimate outcome.

With all of those issues and all of that as a problem for the Government—it is where the rubber actually does meet the road—the Health Committee listened to a substantial body of evidence that would suggest that if the onus of proof as to the safety or otherwise, the lack of harm, and the minimisation of harm from these substances could be placed on the manufacturers and could be properly policed and checked regularly by an expert panel, which will be set up as a result of this, then the outcome for this would likely be much better.

Hon Trevor Mallard: Why does the member want to kill dogs?

SHANE ARDERN: The member asks a very good question: “Why would the member want to kill dogs?”. Well, there are some different individuals whom we would like to try these substances on. Dogs are not among them. The argument about animal welfare is one that I think most New Zealanders will be concerned about. The member needs to take a look at what the expert panel membership looks like. What he will find is that the head of the SPCA is on that panel. Does the member not understand that the SPCA is the organisation in New Zealand that, along with a lot of concerned people, looks after the welfare of animals? Why would you not take the advice of that body, as opposed to someone baying from the other side of the House about the misuse of animals? If the member were to care to look at the substance of the bill, he would find that even though that may possibly happen—there may be animals used in testing—all other testing systems will be exhausted before that happens.

What the member probably needs to have a closer look at—and clearly has not, to this point—is what the make-up is of the expert panel that will make recommendations on whether or not a substance is of minimum harm, and what the likely chances are of animals being used in the testing process to determine that outcome. I do not know whether the member is suggesting, because I would not even attempt to suggest that the member might suggest this, that perhaps this experimentation should take place on young people as opposed to animals.

Hon Trevor Mallard: No, not at all.

SHANE ARDERN: No. Well, I would be surprised if the member had been suggesting that. But if without using animals you cannot test something to a point where you can establish that it has minimum harm, then what would the member suggest happens?

Hon Trevor Mallard: That it not be approved.

SHANE ARDERN: That it not be approved, so that the substance could actually then be made available without evidence that it is of minimum harm, and it could be experimented on in society. How would the Minister of Health or the expert panel advising the Minister know whether the substance is of minimum harm, without thorough testing?

Hon Trevor Mallard: Just shocking—the member’s for the drug dealers.

SHANE ARDERN: The member over there baying, who suddenly has a new-found love for dogs, or other animals, as it may be, may go and have a look at what the—

Hon Trevor Mallard: I’ve been breeding dogs for 40 years, not killing them for drug dealers.

SHANE ARDERN: The member has been breeding dogs for 40 years. Well, I have been farming for that long, and I know that the member would not understand, but farming requires humane treatment of animals. There are plenty of other people who have been training and breeding dogs for that long as well, so he does not have a unique franchise on that. I have no doubt, if that member has been breeding dogs for 40 years, and lives in an urban environment, there would have been several animal welfare issues in the activity that the member has been involved in, because you cannot breed dogs in an urban environment without creating such an animal welfare environment. So there you go. The member has his own animal welfare expertise, obviously, and I would suggest that the member knows about as much about that as he knows about the bill that he is interrupting on. The reality is that this bill ends up in a situation where the best attempt at minimising risk to society, to young people in particular, has been achieved by going through the process that we have.

There are a number of other issues that I care to touch on. One of them is the fact that there has for a long time been a range of very suspect processes in terms of the production of these products, particularly party pills, which are becoming more and more common. I think the previous member to speak, Clare Curran, who made a lot more sense than the one who is interrupting, said that the incidence of hospital treatment and admission has substantially increased in the period since 2010, and there was a high degree of evidence to back that up. What has changed since 2010? Well, what has changed is the number of organisations that are producing this product, the amount of money they are able to make by selling it, the number of outlets that exist that trade in it, and the, I guess, societal acceptance that this is going to happen.

Of course, that is other than in the case that I mentioned earlier, where society said: “We do not accept that this should happen in our area. We do not accept that our dairies should sell it.”, and boycotted those premises. I understand that, at least on the front, they have stopped selling it. Whether or not it is still happening in a way that is not so public, I am not sure. But certainly that is one way that those who feel so strongly about it could do something about it—that is, of course, they could boycott those who are making this available, particularly to young people.

This law, or this bill once it becomes law, will give some certainty to, I guess, the safety of legal products. It will place the cost of that burden of proof on those who produce it, and it will help substantially in bringing about a change of behaviour, particularly amongst the young, who have been severely affected by it. I support the bill.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I am pleased to take the opportunity to have a short call on this speech—

Eugenie Sage: I raise a point of order, Mr Speaker. My apologies to my colleague for interrupting. Could I confirm that this is a split call?

Mr SPEAKER: Correct, it is a split call.

Hon DAMIEN O’CONNOR: What a quagmire of contradictions in this bill, the Psychoactive Substances Bill. For a party that believes in the power of the market and the wisdom of the market, it is good to hear some reality from the members on the other side.

I would firstly like to acknowledge the Hon Peter Dunne for pushing ahead. I am sure that the National Party was probably far more reluctant to push ahead with this bill and intervene on its sacred market. The market, as the member acknowledges, is both dangerous if not regulated and potentially lethal, of course, for too many people.

Although I have some concern for dogs, my primary concern is for kids. It is a shame that the National Government does not think beyond this bill and show that same level of concern for kids and for people who have no ability and no control. If I was to grow a few boysenberries, throw in a bit of sugar, and then try to sell it, I have to go through the Food Bill, which is about this thick, because of the requirements to sell that. But what we have here is a reluctant Government that is, thankfully, passing a piece of legislation to try to control drugs. I know that Peter Dunne pushed for it and I acknowledge that. I was rung by a friend who has suffered for a long time the monkey on his back of drug addiction, whose brother is a general practitioner who said: “Please, please carry on with the good work that Peter Dunne has done in this area, because I face on a regular basis young people coming into my surgery, who are all but destroyed by an addiction—by a problem created from legal highs.” So we must move in this area. I acknowledge that the Government has, with the provocation of Mr Dunne, dare I say, moved in this direction. I am less concerned about the effects on animals than I am about the effects on human beings. It is important that we move ahead here.

But I suggest that the bill is not perfect and I suggest that we do need to look carefully, and there will be some Supplementary Order Papers and some amendments that come up that the Government should look at very carefully. We cannot create more harm in our attempt to, of course, reduce harm in one area—two wrongs never make a right. We have to be sure that we are moving ahead, that the onus of proof of safety falls upon any chemist or any weirdo who wants to create these drugs that they say are recreational, but that we know are very, very harmful. My concern is particularly for a young woman who might be pregnant, who might consume these because she is told you can have a good time on them and they are safe, so therefore they must be OK. That is the worst possible outcome—in vitro effects on unborn children, and the effects on their lives from there on is the one thing that we have no idea of.

So I go back to the, I guess, precedents set in the Food Bill, where the Minister has indicated that we should go back and look at that bill and make improvements. It is this thick, and that is fair enough, because we do not want to produce anything in this country and sell it offshore that might in any way harm our consumers. Yet for how long have we had the ability for some wacky chemist to produce some—

Mike Sabin: And what did Jim Anderton do for 8 years with BZP?

Hon DAMIEN O’CONNOR: —weird outfit? And dare I say to the member over there be careful, because if he can guarantee that this piece of legislation will keep any of these harmful drugs off the shelves and off the market, that is great, and I acknowledge his faith.

What I say is that because of the reluctance of the National Government to move in this area, I am concerned that this bill will not do all the things that we know need to be done in this area—that is, to completely ban these unless someone can prove that any product sold for any consumption must be safe. We do that with food; we must do that with any other substance that may be ingested. I am not sure that the Government has got it right. The Opposition will scrutinise this, and look very carefully at all of the outcomes. But I state clearly that the most important focus must be on the kids and on the people who are affected by these drugs and who have no ability to control that ingestion—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member.

EUGENIE SAGE (Green): Tēnā koutou, tēnā tātou e huihui mai nei ki roto i te Whare. E te Māngai o te Whare, tēnā koe.

[Greetings to you and to us collectively assembled here in the House, and to you, the Speaker of the House.]

I am pleased to take a short call today on the Psychoactive Substances Bill on behalf of my Green colleague Mojo Mathers. The Green Party, and particularly Mojo Mathers, has worked with thousands of New Zealanders to oppose unnecessary and unethical testing on animals, which this bill still allows. The Green Party certainly supports the bill because we support minimising the harm that party pills cause and we want to have a modern, proportionate, and rational drug policy, as Kevin Hague has previously outlined. But we do not want the testing to ensure that these psychoactive substances are safe for humans to be done at the expense of animals, causing them pain, harm, and suffering.

Many, many New Zealanders support freedom from animal testing. We have seen that, when in just 1 month 60,000 people have signed a petition calling for animal testing of party pills to be ruled out. Many organisations put quite considerable time and effort into making submissions on this bill focusing on animal testing, and that was based on good faith and on the advice of the former Associate Minister of Health Peter Dunne that that was the best way for their concerns to be addressed. So the democratic process was seen to be very wanting when the chair and majority on the Health Committee decided that those submissions were out of scope and returned them. The Green Party then organised a separate hearing so that we could listen to the evidence—and it was very good and relevant evidence—that the Health Committee chose not to hear. So I want to thank everyone who made submissions.

On the basis of the evidence, the Green Party, through Mojo Mathers and her Supplementary Order Paper 260, is proposing an amendment to the bill. That amendment would ensure that any information from animal testing cannot be used in support of an application to register a psychoactive product. That would include information that came from overseas, and that would have the force of law once the bill came into law. In the last 6 days more than 7,700 people have emailed MPs asking for their parties to support Supplementary Order Paper 260 in Mojo Mathers’ name, so we are very pleased by the level of support that is getting, and we hope that parties in this House will also support that. Some have already; we hope others will follow suit.

We certainly acknowledge the change in the bill in clause 11A as reported back by the select committee. It is a significant improvement, particularly given the earlier decision around submissions. This new clause 11A would require that the advisory committee not rely on animal testing for psychoactive substances “if suitable alternatives exist.” and if those alternatives comply with the Animal Welfare Act. But the implementation of this clause would be very difficult to monitor, so it provides absolutely no certainty that animals would not continue to suffer for human benefit, and that they would not continue to be subject to pain and harm. Animal testing is notoriously unreliable, and that is why the United States Environmental Protection Agency, the National Institutes of Health, and the Food and Drug Administration have begun a process to replace all toxicology testing on animals with alternatives. That is because these alternatives produce results that are much more relevant to humans. Those alternatives include things like in vitro human cell line studies, computer models, micronucleus assay, in vitro absorption tests, and so on.

When other countries such as the United Kingdom are so much further ahead of us and are putting a ban on animal testing for all recreational substances, including alcohol and tobacco, we must act. We are lagging. We are not ahead of the field here. Why do we continue to use animal testing in New Zealand? Because it is cheaper than non-animal testing. We should not be making decisions around the safety of these psychoactive substances to protect the profit margins of industry. We should be making them on an ethical basis, and that ethical basis is to ensure that animals do not suffer pain and harm in order to protect humans. So we can vote for a modern, ethical, 21st century safety testing regime, if we vote—

The ASSISTANT SPEAKER (Lindsay Tisch): The member’s time has expired. I understand that the next call is a split call.

MIKE SABIN (National—Northland): I want to just reflect a little bit on the history of the synthetic drug scene and the background that really has been consequential in this bill, the Psychoactive Substances Bill. That is that back in the late 1990s and early 2000s when Matt Bowden and Logan Williams pioneered benzylpiperazine (BZP), or party pills, as they were commonly phrased. What was discovered through that was that the ability to manufacture a synthetic drug—something that people could get high on, and that could mimic the effects of the illicit drugs—found a popular market, particularly within the youth of New Zealand at a time that was quite critical because that was the same time that methamphetamine was growing. It sort of said to New Zealanders: “If you want to get high, let’s go out and take pills.”

Around 2008 BZP was banned, but long before that Logan Williams and Matt Bowden had signalled their ability to simply change a chemical make-up to derive analogues of BZP to achieve the same purpose. In fact, they almost saw it as sport, in my view. That is exactly what they did do, so by the time BZP was banned there was already a large volume of similar drugs out there and making their way into the market. That has really precipitated the cat and mouse situation that has brought about this bill. So the temporary class drug notices that were put in place to actually try to capture the drugs as they moved and were obviously classed as harmful, to some extent were able to put a stop to it, but only for the amount of time that the drug chemists could then remanufacture something else, and that is exactly what they did. Some 33 temporary class drug notices were issued. But what we can say both here in New Zealand and overseas is that, as long as there is the demand, the chemistry will always beat the legislation.

So what does this bill do? Well, at the heart of this bill it actually places the onus back on those who are producing the drugs to say that if they are producing a substance that a human being is going to consume, then it needs to be safe for consumption—

Dr Paul Hutchison: Minimal risk.

MIKE SABIN: —or minimal risk, low risk, or whatever. To me, “safe” is what it is all about. Ultimately, what we do know is that drugs such as K2 or some of the other synthetic cannabises and drugs of scene are far from low risk and are far from safe. The onus now goes back on to the manufacturers of the drugs. They must prove that they are of low risk for human consumption.

Some would say, and I have heard it certainly from Labour and the Greens, that this means we are creating a regulated drug market. Actually, I do not think that is what we are doing. There is nothing in this bill that says taking drugs is a legitimate thing. It is simply a way to get ahead of the ability to constantly chemically re-engineer the drugs to beat the legislation. This is not about legitimising the idea that drug taking is a good thing. The only safe drug-use is actually no drug use, and that conversation should not be lost in this bill.

When we talk about low harm—that is where the crux of this will come down to—we have to ask what would constitute low harm. I am pretty sure that any medical physician would say that smoking something would not be of low harm. Certainly, no doctor says to go and smoke your aspirin, or smoke this or smoke that, as part of a medical practice. So I cannot see anything that can be smoked as being of low harm. I cannot see anything that would cause depression or anything that would trigger any sort of mental illness as being of low harm. I could not see anything as being of low harm that had any addictive impact—that would cause withdrawal, craving, and bingeing. So that then says that anything, basically, that stimulates dopamine to a degree that would create a high would be harmful because it would create withdrawal, cravings, and bingeing, which is the nature of the addictive cycle, which means that people typically turn to something more significant.

In the Committee of the whole House I will talk to Supplementary Order Paper 260 in the name of the member Mojo Mathers, but, suffice to say, what is being tested at the moment, what is the guinea pig at the moment, is human beings. This bill is about taking control out of drug-peddlers’ hands, the people who prey on vulnerable young people. I have no hesitation in commending it.

SCOTT SIMPSON (National—Coromandel): As a member of the Health Committee, it is a pleasure to take this final split call on the second reading of the Psychoactive Substances Bill. The bill is being sponsored by the new Associate Minister of Health, Todd McClay, but in my opening comments I would like to congratulate and give credit to the Hon Peter Dunne for his work in preparing this bill to bring it to the House, and for the credible way in which he has developed it so that it represents a new and revolutionary way of addressing the pernicious dangers of so-called legal highs. This bill, as Peter Dunne said in his speech earlier on in this debate, will be a game-changer in the way we regulate party pills and other so-called legal highs. I support this bill, and I congratulate both Peter Dunne and Todd McClay on bringing it to the House.

The bill regulates psychoactive substances, or legal highs, so that substances have to be proved to be low risk before they can be sold. Cleaning up the legal high industry is part of this Government’s drive to deliver Better Public Services, and this bill is all about safety—human safety. New Zealanders deserve to know that products available to them are safe, and that they are not being put in harm’s way with untested, risky, unknown substances. The cost of testing these substances will also be borne by the manufacturers rather than the taxpayer. This bill will seamlessly replace the current temporary class drug notice regime, which has until now worked reasonably effectively. This new bill, when it becomes law, will change that regime and replace it with a whole new level unknown in other places in the world, so we will be a world leader.

This bill includes provisions to establish a regulatory authority within the Ministry of Health, and part of the ministry’s job will be to consider and approve or decline psychoactive substances. It will be required to issue a manufacturing code of practice; it will issue importation, manufacturing, and sales licences; and it will conduct post-marketing monitoring to audit and recall product if necessary. New Zealand has faced an acceleration in the development of these new recreational drugs. They are all over the place. They are in dairies and supermarkets. They are dreadful products that are being sold over the counter all over the country at the moment. The regulatory authority established by the bill will consider and approve or decline psychoactive substances, and it will assess the toxicological and clinical data for each product. But even if products meet that standard, the Government will still be insisting that tight controls be in place around their availability. So from the day that this bill is enacted, neighbourhood dairies will no longer be allowed to stock any such products, and nor will sales to those aged under 18 be permitted.

The bill has, to a large degree, been hijacked, if I can put it that way, by the issue of animal testing. Although everybody, I think, would accept and understand that animal testing is an issue, and most people—probably all people—feel pretty strongly about it, the bill provides that if there are suitable non-animal tests, then they must and will be used. This bill is a response to the harm caused by untested products, and the countervailing consideration here is human safety. I think that is a fact we should not lose sight of.

One of the things that interest me is that in the select committee consideration of the bill we had unanimous approval for what I thought was a very sensible approach. Labour members bought into it. It seems to me that Labour’s science spokesman, one David Shearer, seems to have been rolled now by a faction within the Labour Party to change what is a very sensible piece of science and to turn it into an animal rights issue. That is detracting from the big picture here, which is the harm and injury being done to mostly our young people. And so despite Labour members, including Annette King, all having been in favour of voting for that compromise, it seems now that a faction within Labour has rolled David Shearer, its science spokesman. For a serious mainstream political party to have been put in that position is clearly very worrying.

This is a good bill. I support it. I commend it to the House. It is good legislation.

Bill read a second time.

Bills

Legal Assistance Amendment Bill

In Committee

Debate resumed from 11 June.

Part 2 Amendments to other Acts (continued)

The CHAIRPERSON (H V Ross Robertson): The House is in Committee. Kia ora tātou, nō reira e te Whare, e ngā iwi, e ngā reo, e ngā hau e whā. Tēnā koutou, tēnā koutou, tēnā koutou katoa. Good afternoon, honourable members. We are in Committee—

Hon Trevor Mallard: Following the standards of the Speaker.

The CHAIRPERSON (H V Ross Robertson): Well, thank you, Mr Mallard. We are in Committee for further consideration of the Legal Assistance Amendment Bill; for consideration of the State Sector and Public Finance Reform Bill, the Plumbers, Gasfitters, and Drainlayers Amendment Bill, and the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill; for further consideration of the Airports (Cost Recovery for Processing of International Travellers) Bill; and for consideration of the Administration of Community Sentences and Orders Bill, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, and the Medicines Amendment Bill.

Members, we move first to the Legal Assistance Amendment Bill. When the Committee was last considering this bill, we had reached Part 2. It is my understanding that the Hon Lianne Dalziel had the call, and she has 4 minutes 55 seconds remaining if she so wishes. We do certainly have a significant number of bills here to consider, Committee—

Grant Robertson: I raise a point of order, Mr Chairperson. I just want to clarify whether we had begun the debate on Part 2 of the bill at the last point at which this was done, or were we just ending Part 1? I just want to get a clarification of that matter. I am just going to continue talking for a little moment longer. Yes, so were we on Part 1 or Part 2?

The CHAIRPERSON (H V Ross Robertson): We were, Mr Robertson. I have it in front of me that we have here—and I have it written down here—Part 2 read. The honourable member Lianne Dalziel was speaking at 2150 and 2155, and therefore she has 4 minutes and 55 seconds remaining if she so wishes. The question is that Part 2 stand part. I call the Hon Lianne Dalziel.

Hon LIANNE DALZIEL (Labour—Christchurch East): Because of the time that has elapsed since we last spoke on this bill, I am going to start again. That is actually quite useful because I cannot remember what I have already said, so it is probably a good thing to start again.

Part 2 actually deals with amendments to other Acts. Quite often when you get to the amendments to other Acts, you are really just seriously looking at amendments subsequent to what is dealt with in the substantive part of the bill that we have already addressed. However, there are a number of areas that I think it is worth traversing and that in particular relate to the Care of Children Act 2004. This is where a lot of the controversy has arisen in terms of some of the changes that have been brought into place. It is not clear in terms of the legislation exactly what all of the implications of some of these amendments might in fact be. I seem to recall from the hearings that we had at the Justice and Electoral Committee that there was a lot of discussion about whether parties would be required to reimburse the costs associated with counsel for the child. I am looking to the Opposition spokesperson on justice, Andrew Little, for some assistance here. I think that there was a lot of debate around contribution to the costs for a lawyer for the child potentially able to be ordered, which would be split between the two parents.

Andrew Little: They could be different proportions.

Hon LIANNE DALZIEL: They could be in different proportions. That was of some concern, I think, because there was certainly a fear that any payments that were required to be made in relation to the legal aid coverage or the payments for lawyer acting for child could actually make people feel quite uncomfortable about their role in the hearing itself. I must say that there is a degree of disquiet around this particular change so that each party must pay an equal share of the prescribed proportions. I know that we had a discussion on another bill, the Family Court Proceedings Reform Bill—which is perhaps not relevant to having a conversation about the Legal Assistance Amendment Bill—and there was a deep concern about it because, of course, some may qualify for legal aid and others may not. So you have got one of the parents up for a substantial proportion of the cost, and the other parent up for a funded share. That, I think, created again some sense of disquiet about whether that would make the dealings between the parties more or less comfortable—and probably more uncomfortable—as a result. So there are some significant issues in respect of that.

There are also issues around enforcement of orders to refund fees and expenses of court-appointed lawyers. There is a whole process to be gone through in the legislation to order a refund as a debt due to the Crown by that party, and being enforceable in a District Court or the High Court, as the case may require. Again, this is forcing people into a situation—well, in relation to the enforcement of a debt—of seeing themselves in a position where perhaps they are not seeing that their contribution is necessarily their legal responsibility.

But it all really comes back to that same issue that we were debating before in the other legislation, and that is that essentially when you have got a Government that thinks that family disputes between couples are private matters, and therefore not eligible for any form of State assistance, and the only interest the Government has is in helping parents agree to the care of the children arrangements, it does seem to be a real mismatch because, of course, the whole focus is actually on reducing costs. This makes absolute sense when you tie it in with the Family Court Proceedings Reform Bill, but it does not make sense when you are looking at what might actually be in the best interests of children.

When people are facing these enormous costs, what they end up doing is entering into agreements that may in fact not be in the best interests of their child. I will give you one example that came up in one of the hearings that we had, where a couple had agreed that they were going to share care. They were going to share the day-to-day arrangements for the care of their child. As a result of them reaching this agreement, which was going to be 1 week about—so 1 week for one parent and 1 week for the other. The child—remind me again, our spokesperson on justice. I think the child was 18 months old—

Andrew Little: 6 months.

Hon LIANNE DALZIEL: 6 months old. The parents thought they were doing the right thing. They—

Scott Simpson: The Family Court bill.

Hon LIANNE DALZIEL: Yes, I know. The point that I am making is that it is relevant when it comes to cost-sharing arrangements because a lot of people enter into these arrangements because of the costs associated with them. There are three sets of costs that are now in play. One is the cost of now going to a family dispute resolution, which, of course, is the other bill. The other is the cost of the child support because eligibility for child support is dependent on the number of days, or the number of hours, essentially, for the primary caregiver. That has created an incentive for people to look for ways to share the arrangements, so that basically it is like an insurance knock-for-knock arrangement, where you can cancel each other out. But then, on other occasions, they are not able to achieve that, so none of the costs that the non-custodial parent, or the one providing day-to-day care—that parent is not allowed to take into account the cost of holding an extra bedroom open, which is an issue for people, especially who are renting. They are not allowed to take into account the extra costs for food and entertainment and things like that for that time. So they continue to pay their child support every week. The point that I am making is that all of these issues come into the decision-making process, and have nothing to do with the best interests of the children.

The final one that we have decided to add to the whole mix is that you can pay for counsel for child as well. Well, we have already heard from our debate on the other legislation that there are some limitations around that. That lawyer acting for the child—in the best interests of the child—may, in fact, provide the only legal advice that anyone gets at any point in time, and it is at the point that they get to family dispute resolution. Now we are going to send them the bill as well—to both parties.

I actually think that people should take a serious, serious look at what this Parliament does from time to time. We should join the dots. We have had an issue down in Christchurch around building consents where we have got a silo mentality within the council and we have got a silo mentality outside the council in all the different Government departments. Even with the Canterbury Earthquake Recovery Authority in play there are still all these silos all doing their own thing and not joining the dots. Well, for goodness’ sake, when we are talking about the best interests of children, should we not be joining the dots? Is that not probably the most important thing that we could do for those little dots?

I think that it is irresponsible to go through a process of decision making on these separate issues in silos and not see that they have a huge impact on children. That is why the word “sustainability” went out of the title of this bill; it is now the Legal Assistance Amendment Bill. The word “sustainability” has gone because actually it is not a sustainable proposition. I know that the Government took it out because it did not really want people to focus on the fact that it was only about the money, but actually it has gone for another good reason, and that is that this is not a sustainable approach. If we really care about the best interests of children and ensure that they are at the heart of all decision making, then we would not be doing child support separately from legal assistance, and separately from Family Court proceedings. I actually know that there are a number of people who agree with that point of view. I know that there are many, actually, on the other side of the Chamber who secretly agree with that point of view too and would like to see something done about it.

The other part of this particular bill talks about the costs of court-appointed barristers or solicitors. When the court finally reaches the nightmare situation of having two self-represented litigants in front of them, who are both going hammer and tongs at each other, it finally brings in a court-appointed barrister or solicitor to help sort the mess out, which is going to happen much more often as a result of the previous legislation that we have been dealing with. We are going to end up in the situation where the parties are going to be required to pay for that barrister or solicitor as well, even though they were appointed to represent the interests of the court. I think that there has been a fundamental flaw in the thinking here. Early legal advice is what actually helps resolve disputes.

Hon CHESTER BORROWS (Associate Minister of Justice): I take a call just to respond to some of the points raised by the Hon Lianne Dalziel. Obviously she has, with her experience, recognised that there have been some issues that need to be addressed that have been spoken about amongst the family legal fraternity. It is important to point out that in the consideration of this Legal Assistance Amendment Bill, and further on in the implementation of it, there will be some regulations that will, for instance, prescribe the portion of lawyer-child costs that parties are required to pay as two-thirds. But by default this cost will be split in equal shares between the parties. It is also important to note that, however, the court may substitute a different share for a party if satisfied that in the circumstances of the case it would be inappropriate to require each party to pay an equal share. The substituted share may not exceed the prescribed portion, so no party may be required to pay more than two-thirds of the cost of the lawyer.

There obviously needs to be built into this some safeguards—and the safeguards are all around the paramount principle of the Care of Children Act 2004 under which most orders are made—that the welfare and best interests of the child are paramount. Therefore, any decisions about orders of costs must be taken with that principle in mind. The court may decline to make an order of costs if satisfied that it would cause serious hardship to either party or to a dependent child of the party, and the court may adjust the default equal share of costs if it is considered inappropriate.

It is also to be noted, for instance, that even as part of the Family Court review, which the previous speaker mentioned, there are a number of alterations that have been made there in respect of, for instance, allowing legal aid to be granted for counsel to be provided in the preparation of parents who will be representing themselves, because it recognised that there was “inequity of arms” if, for instance, one party with a substantial income was able to go and get coaching, if you like, from a legal counsel, and would be better prepared. So it was important, in the interests of justice, to allow that to happen under that particular bill, and I think it is important to know that legal aid is moving to recognise that there have been these issues.

My final point to make is in response to the courts’ ability to alter or to waive the imposition of the costs of counsel for the child. In the institution of fees and filing fees in the Family Court, there was a lot of noise about the fact that these had never been in place before. The point was made that waivers would be granted or would be able to be granted in circumstances. In actual fact, 70 percent of the matters appearing before the Family Court now receive a waiver. Any argument that says the Ministry of Justice would be unlikely to give waivers is actually not an issue. It has not proven to be an issue under that particular regime, and no one would expect it to be in the future.

ANDREW LITTLE (Labour): I rise to make a further contribution on the Legal Assistance Amendment Bill, in the very important Committee stage. Having listened to the contribution of the Associate Minister of Justice, Mr Borrows, I simply reiterate the concern that the Labour Party has about the regime that is now to be set up for the recovery of a proportion of the costs associated with the appointment of counsel for the child.

I am not reassured by the Minister’s attempt at reassurance just now, and I refer him specifically to new section 131A of the Care of Children Act, inserted by clause 27, and to the definition of “serious hardship”, remembering that under the regime that the bill proposes there is, first of all, a presumption that the costs or part of the costs of counsel for the child will be levied across the parties. There is scope to have the share between the parties different across each party—I understand that. But the basis on which one party or both might not be levied at all is on the grounds of serious hardship.

Serious hardship, as defined in new section 131A(6) “(a) includes significant financial difficulties that arise because of—(i) the party’s inability to meet”—and this is the phrase I want to focus on—“minimum living expenses according to normal community standards;”. With all due respect to the Minister, that language is somewhat vague. What is a judge to make of “minimum living expenses” and what is a judge to make of “normal community standards”, understanding that that sort of language sounds like a very shifting sort of standard: the shifting sands of minimum living expenses, and the shifting sands of normal community standards?

It looks to me like this provision, in its current form, is more likely to cause more confusion and anxiety than to give any greater assurance. Perhaps the Minister could answer the question about what a judge is to make of that sort of language when it comes to this sort of cost recovery. I know it appears in the previous part of the bill, but it relates also to the other powers of attachment that will now apply when it comes to cost recovery, including for cost recovery of counsel for the child. It is also related to the part that allows not only attachment orders but that attachment orders can be up to 40 percent of the net pay of a grantee of legal aid, or of someone who has had the benefit of counsel for the child or whose child has been represented by counsel for the child. Up to 40 percent of net pay can be the subject of an attachment order to meet these costs that can now be levied.

There is nothing in the bill, unless the Minister can point it out to us, that suggests there is any potential for alleviation—for a judge to avoid levying a party or both parties who have had the benefit of counsel for the child in their care of the children proceeding—other than the general discretion of the court on the very vague “serious hardship” condition. This still remains highly problematic for us. This does not give us any reassurance that this bill will not lead to some people facing considerable hardship and considerable debt. Once the amount is levied it will be subject to interest and it will be subject to recovery action, not the least of which would be an attachment order that could see up to 40 percent of a person’s net pay being extracted from them before their pay lands in their bank account.

That has the potential to cause significant problems for people, and to really create a great sense of fear in people who are in the position, often not by choice, where they are utilising, in this case, family proceedings where they are subject to this type of levying. That makes the legal aid scheme not a scheme of fairness, not one of ensuring access to justice, but a scheme that will become one of great fear. People will fear that they may be plunged into permanent or long-term hardship or poverty or destitution as a consequence. That is not good.

As a matter of public confidence, what we need is a legal aid scheme that does what it is intended to do. We need a scheme that provides legal assistance for those who simply do not have the means to meet the cost—one that provides legal assistance to those who are in a position where they must pay legal costs, the costs of representation and advocacy, in a situation where they would prefer not to, or in a situation that they have not necessarily chosen. These sorts of clauses are enough to suggest that a legal aid scheme that is built on these sorts of provisions will not be a legal aid scheme worthy of the name.

I call on the Minister in the chair, the Associate Minister of Justice, to give some clarity about just exactly what the Government has in mind when it comes to recovery of costs for these matters, for the lawyer for the child, under this part, and what it means in terms of the test for serious hardship for a party to be afforded their minimum living expenses, according to normal community standards. That is not meaningful to me, and any black-letter lawyer looking at that is not going to be reassured that this is going to provide any assurance at all. That remains a very important and very serious question in terms of this very important piece of legislation.

Given the changes that have already happened, there are going to be costs and expenses that lawyers are no longer going to be willing to pick up, whether it is the $50 user charge or other charges that may be imposed. Lawyers providing this sort of work under legal aid are simply not going to be able, under the current regime, to pick up those costs and they will fall on the parties. These are already impecunious parties—that is why they are seeking legal aid and apply for legal aid—and to then be subject to a further test of serious hardship does not look like good justice to me. Let us hear from the Minister on those points.

KRIS FAAFOI (Labour—Mana): Taloha ni and tēnā koe, Mr Chair. It is a pleasure to take a call on Part 2 of the Legal Assistance Amendment Bill. This is an issue that has played quite largely in my electorate of Mana. There was a quite well-attended public meeting around the issue of access to legal aid, organised by someone who I think knows the Minister in the chair, the Associate Minister of Justice, quite well and who has, I think, lobbied him on many occasions around her concerns with many of the provisions in this bill.

Pointing directly to Part 2, I want to also head towards clause 27, I think it is, as I think my colleague Andrew Little did. This is the insertion of some new sections, sections 131A to 131C, around the advocacy for children. One submission during the select committee process that I did want to highlight was from the Children’s Commissioner, Dr Russell Wills, where he had serious concerns about where this bill was heading in terms of looking after children. In point 21 of the submission that Dr Wills made to this bill, he said: “In addition, I note that the Bill makes no reference to the best interests of the child in the explanatory note to the Bill, despite the fact that it will clearly impact upon children and young people who are involved in Family or Youth Court proceedings.” He goes on to say that “These children and young people are among the most vulnerable in our community and it is therefore imperative that their interests are given primary consideration.”

I think that is very interesting—I think that is probably one way to put it. But it is quite a damning statement from the Children’s Commissioner, the fact that this bill has not really taken the best interests of children to heart, both within the explanatory note and also within the provisions of this bill. That was in essence the substance of the meeting that was held in Porirua. There was a lot of concern from the legal community, from a lot of agencies who deal with children in this situation, about the ability to advocate properly for children in these situations where you have families who are separating, especially because there is a lot of legal assistance offered in this situation. A lot of the families that these lawyers are acting for do find themselves in serious hardship.

Just as Andrew Little did, I want to point to, I think new section 131A(6), inserted by clause 27 of this bill, and ask whether the Minister in the chair could try to clarify for us the definition of “serious hardship” as it is in the bill as it stands at the moment. As it stands, section 131A(6) says that “serious hardship” in relation to a party or a dependent child of that party: “(a) includes significant financial difficulties that arise because of—(i) the party’s inability to meet minimum living expenses according to normal community standards;”.

For any judge to try to make sense of that, I think, would be difficult. If that judge were to be sitting in the Porirua District Court, that would be difficult because I would say that most of the families appearing there would meet that test and would therefore be able to get some kind of compensation or get legal assistance, but some others may not, depending on where they were at the time or which court they were being seen in. Could I ask the Minister in the chair whether he could clarify that for us; that request comes from me and also from Andrew Little.

I did want to make the point, just before my 5 minutes is up, that we do not believe that the best interests of the children are at heart here. We can look at the change in the title—and we will get plenty of opportunity to debate that. It was originally the Legal Assistance (Sustainability) Amendment Bill; the title has been changed. But we believe that the real driver of this bill is in its original title, and that is to make, in the eyes of the Government, legal assistance much more sustainable, which in “real speak” is to cut costs to the detriment of justice and access to justice and, unfortunately, in this case to the detriment of the ability of families to get access to justice for their children in these situations.

That was certainly made clear by the Children’s Commissioner, and I just want to read that quote once more to make the point. In that submission the Children’s Commissioner said that “the Bill makes no reference to the best interests of the child in the explanatory note to the Bill, despite the fact that it will clearly impact upon children and young people who are involved in Family or Youth Court ...”. That also goes back to the access to justice issue, which I know we have already debated in Part 1, but this is very much related to it, around the fee that some families would have to pay to access legal aid. I understand, and I may stand corrected, that it was originally $100, but I think the select committee process has brought it down to a fee of $50. But I know, certainly from the people in my area, that they have been saying that if they have someone who comes along, arrives at their reception area, whom they have dealt with in the past—they have a history, they have a relationship with that family—they are very reluctant to turn them away just because they cannot afford to perhaps pay $100, as it originally was, or $50 as it stands now. So what they will do is more than likely accept the case because they know that the family does have a very important case to be heard and, as I said, there may be children involved.

There are three options that could potentially happen in that situation. The provider will simply just pay that fee itself and wear the costs; all the clients will end up wearing the costs over that financial period or that financial year, if they just aggregate all those fees; or, in the end, the legal provider will just end up slapping another $50, or what could have been potentially $100, on the bill that the Crown gets. We do not think that is necessarily the cleverest situation to be in, especially when it is asking a lot of legal firms, many of which are considering getting out of the legal aid arena, to wear the additional costs of getting over the first hurdle for many of these families in order for them to access legal aid.

So that was one of the concerns that were certainly raised in the Justice and Electoral Committee by a number of submitters and, again, it was raised by one very strident legal provider in my area, who, again, knows the Minister in the chair quite well, and who, I am sure, has had a conversation with him about it.

We are concerned around the ability of this bill to look after the best needs of the children—that has been made pretty clear in the quote from the Children’s Commissioner that I have used twice—and the ability of families to access legal aid in that situation in order to get the best advocacy for children. Then, on the other side of things, we are also very concerned about the access and, I guess, some of the barriers that have been put up under this bill to access to justice for a lot of families.

Just before I finish off, I want also to commend the select committee. As I have said in a previous contribution on this bill, I think the committee has taken what was an awful bill and made it just bad, which is an improvement, because I think the committee has taken into consideration some of the submissions that it heard through the process. I guess members on this side of the Chamber have tried to make some changes, and there has been some movement from the Government to support changes around, first of all, reducing the fee from $100 to $50. That is an improvement, but it is still, we think, a hindrance to access to justice. I do not want to be too harsh on that select committee, because it has made some changes that make the bill better, but we still do not think it is a very good bill in terms of making the legal aid arena more efficient and, I guess, a little bit more sustainable, and also in terms of balancing that up against access to justice and fairness, especially for those vulnerable families.

I will leave it there, and hopefully the Minister in the chair can answer some of those questions, especially around section 131A, in clause 27, in terms of serious hardship—if he could try to explain to the Committee what the spirit of that clause means, where it says “the party’s inability to meet minimum living expenses according to normal community standards;”. If the Minister in the chair could elaborate on that for us, it would be quite useful for this side of the Chamber.

Hon CHESTER BORROWS (Associate Minister of Justice): I just want to address three points that have been raised by the previous two speakers, and put their minds at rest in respect of those issues. In respect of clause 27, the point was made that the Children’s Commissioner had made a submission that the best interests of children were not mentioned in the Legal Assistance Amendment Bill. The fact is that clause 27 amends the Care of Children Act 2004, and the paramount principle of that Act is what is in the best interests of the child. When a decision is being made by a judge under these clauses that go to amend the Care of Children Act 2004, he must consider what is in the best interests of the child. So just because it is not mentioned in this bill, it does not take anything away from the fact that when the Care of Children Act is amended by this bill, the judge will have to make those considerations.

Another question that was raised by the earlier speaker Mr Little was around how the costs of child contributions were going to be recovered by the court. I had, I think, quite extensively covered that in my previous speech, which said that the regulations that will accompany the bill make provision for the judge to be able to recover no more than two-thirds of the cost of counsel for the child. The judge can apportion that, by default, fifty-fifty, but has the opportunity to move that or to remove it completely if he believes that there is hardship or that it is not in the best interests of the child to try to recover those costs.

So then the question was around what “serious hardship” means and, as this is not defined within the bill, how a court could possibly understand what “serious hardship” means. The term “serious hardship” is a term that is used in other legislation, and so is interpreted now by judges in the course of their deliberations in respect of these other Acts. Two examples are the Income Tax Act and the Tax Administration Act. This term has been defined by case law—by the common law—so judges seeking to interpret the term “serious hardship” have precedents that they can fall back on.

I guess it is important to note in global comments in respect of this particular bill that the cost of legal aid had blown out by 55 percent over a 4-year period. That is something that any Government has to address. The previous Government, which had the means and the resources to be able to do more in this area, did a couple of unusual things. One of them was that it spent more money in this area by widening the boundaries for which legal aid could be granted. But what it did not do at all was take up the legal aid rates that legal aid lawyers were paid. So what we found when we came into Government was that there were a number of firms providing legal aid that were getting out, as the previous member indicated. They were getting out because those levels of remuneration were not there.

To be fair, that member’s Government did nothing about it in the 9 years that it was there. I accept that what the National Government has done now is to restrict access to legal aid in some areas, but at the same time it has extended it in others. Where an initial premise of restriction or constraint has been promoted in the bill and there have been submissions made against those constraints, we have responded by way of folding those back. The previous speaker mentioned that too, in respect of the filing fee moving from $100 back to $50.

I can understand that there will be members of the Committee who will not be voting for this legislation. I understand that. I hope they do reconsider that if that is their current standpoint, bearing in mind that even they accept—in rather derisory terms—that some improvements have been made. I believe that it is a bill that will ensure ongoing sustainability of legal aid. I do not expect that in a sector that is bound up in convention and tradition we are going to have huge accolades for changing anything until those changes have been proved to be worth their salt. Thank you.

Hon PHIL GOFF (Labour—Mt Roskill): I want to pick up on a couple of points that the Minister in the chair, Chester Borrows, has just made. He repeats the justification for a bill that in the end could not be justified. That is why, when we look at Part 2 of the Legal Assistance Amendment Bill, as in Part 1, page after page of the bill is struck out. Even “(Sustainability)” in the title is struck out. Can I suggest that the reason that the word “sustainability” has been struck out is that in relation to what the National Government was proposing in terms of fairness, in terms of decency, and in terms of having a justice system that actually deserves that title, there was not anything that was sustainable in the original bill, if you judge it on the basis of those particular principles.

The Minister talks about the blowout, as he terms it, in legal aid. What the Minister does not tell the Committee is that before legal aid was increased under the last Government, it had been static for 20 years. Legal aid had not been increased in 20 years, and, of course, it was going to cost more when you decided that, actually, if the principle of legal aid—affording justice to all—is to be realised, then you cannot make the threshold for being eligible for legal aid as low as it is. The threshold, it will surprise listeners to hear, for a single person getting legal aid is an income of $22,000 a year. That is less than what you get on the minimum wage. So, effectively, what we had, and what this Government was seeking to worsen, was a situation where if you are at the lowest level of income in society, if you are on a benefit, you could get legal aid, but if you are out there working, working every hour that you are able to, to try to get things together for your family, you would be rendered ineligible for legal aid because the threshold was—[Interruption]—“you” meaning the person who is receiving it, Mr Chairman—that they were not so poverty-stricken that they would get it.

What this Government seems to be saying in this part of the bill, and in the bill as a whole, is that if you are absolutely poverty-stricken, then you might get some assistance, but the Government ignores the fact that a great many people—ordinary, hard-working New Zealanders trying to get justice through the system—will get no assistance, because the threshold levels are so low. You will be denied the right to justice. And there are tens of thousands of New Zealanders who come into that category. So when the Minister talks about, as he did, a blowout of legal aid, what he was effectively talking about was an extension of legal aid so that people who could not reasonably be expected to pay for the cost of justice themselves would not be denied justice.

One of the basic principles by which you judge any society is that access to justice should not be based on the amount of money you earn. What this section of the bill shows more than anything is that Ministers on more than a quarter of a million dollars a year do not understand what it is like for people on $30,000, $40,000, or $50,000 a year, when they are confronted with the huge cost of legal bills. They cannot afford it, they do not get represented, and justice does not get done. Surely—surely—there would be bipartisan agreement in this House that a priority must be that nobody is denied justice by virtue of their inability to pay, but the tragic reality of the system in New Zealand, worsened by this bill, is that, time and again, people are denied access to justice. Justice is for the rich. Justice is for those who can afford the Queen’s Counsel—and those who can afford the Queen’s Counsel end up getting away with things that they probably should not—and those people at the bottom who are struggling to see justice done are denied justice by this Government. I refuse to believe that this is about the fact that the Government cannot afford to pay for it. The Government could afford to give John Key a couple of hundred thousand dollars a year in tax cuts. Surely, it can afford to ensure justice for people. In this clause of the bill, surely it can afford to give justice to the child who might otherwise be unrepresented—the child, the most vulnerable person in the system. If there is a need for counsel for the child, that means that their life has been pretty miserable, they have had a hard go of it, and they do deserve justice. But this bill constantly, in every clause that was put into it by Simon Power, denies people justice.

If you look at the report back and the summary from the Justice and Electoral Committee, you will see how appallingly bad this legislation was when it was introduced. It was so appallingly bad that a new Minister of Justice coming in could not sustain it, particularly not one with leadership ambitions, and trying to take away the flinty-faced image that she had. She realised that this was poison to her, and particularly poison to her when justice to children is being denied. But the Minister has not realised that very effectively, because this is the second bill that we have had in the Chamber this afternoon that has sought to take away the rights of representation that children can have. I think that that is an absolute disgrace. This legislation has been gutted of about maybe 70 percent of the appalling—appalling—original clauses that it had in it. What I am saying to members today is that the remaining 30 percent is not worth the paper that it is printed on, either.

When you look at it, there are so many extra procedural things that the court will have to go through that this will not be saving money; this will be costing money. This becomes a bureaucratic nightmare when you work out what the interests of justice involve and where there is serious hardship, all for the saving of $50 as a fee on legal aid or for trying, under Part 2, to force the parents to pay the cost of counsel for the child. There will be battles between the parents, who may be at odds with each other. In the end, for the sake of saving a little bit of cash up front, there will be huge administrative costs, and the child runs the risk of not seeing justice done in his or her case.

The regulatory impact analysis of this bill, applying to Part 2, says that “The purpose of the legal aid scheme is to provide access to justice by providing legal services to people of insufficient means. It contributes to fairer outcomes by ensuring that parties with unequal financial resources have equal access to justice. Consequently, legal aid helps underpin confidence in the justice system.” That is the Government’s own regulatory impact statement. I want the new Minister in the chair, the Minister for the Environment, to explain how in any way Part 2 of this bill—or, for that matter, Part 1—meets the objectives set out in the regulatory impact statement. How is it that this bill helps provide access to justice? The whole purpose of this bill is to deny access to justice. It is to deny access to justice, to save money. There are many areas where the Government could save money without denying access to justice, and particularly without the punitive areas that are involved with changes to the Care of Children Act that are made in Part 2 of this bill. The Minister of Justice, under the pressure of submissions that were made to the Justice and Electoral Committee, has tried to make this bill acceptable. She has taken out some of the worst features of it, but she has, equally, left features that render this bill unacceptable to our side of the Chamber.

In relation to clause 27 of the bill, the Minister previously in the chair, the Minister for Courts, said the paramount principle of the Care of the Children Act was the best interests of the child, and that because that was in the principal Act it did not need to be included in Part 2 of this bill. That is not a very good reason. It is abundantly apparent that when you are charging for counsel for the child and putting in obstacles in the way done by this bill and the previous bill that the Parliament has just considered, the Family Court Proceedings Reform Bill, you are not acting in the best interests—

The CHAIRPERSON (H V Ross Robertson): Order!

Hon PHIL GOFF: “You” meaning the generic “you”, Mr Chairman. I am sure that you would want to see the best interests of the child protected in this bill. You are a very good Chair and member of the Parliament. We are interested in upholding what every New Zealander believes should be upheld: that the interests of the child should be paramount. Why is it that this bill is so miserable—

SCOTT SIMPSON (National—Coromandel): It is always very interesting to follow the Hon Phil Goff, and particularly one of his vein-popping, angry presentations. That was, I think, probably an indication that he has been following Australian politics very closely this week. One of my colleagues was unkind enough to think that maybe a new name for him might be “Phil Rudd”, but probably I should refer to him always by his true and proper name, which is the honourable member for Mt Roskill.

Speaking in the Committee stage on Part 2 of this Legal Assistance Amendment Bill, there are several point that I would like to make. Part 2 is the part that makes amendments to other Acts—notably, amendments to the Accident Compensation Act 2001 and the Care of Children Act 2004. Clause 26 relates to the costs of court-appointed counsel: “the court may, if it thinks it is appropriate, order a party to the proceedings to refund to the Crown an amount the court specifies in respect of any fees and expenses that relate to” the appointment of counsel. During the select committee stage, the Justice and Electoral Committee considered this point carefully. It is appropriate that I just mention the good work of the committee. These were issues that were in some cases quite technical, quite complicated, and committee members addressed themselves to them with full keenness, vigour, and attention to that detail.

The clause that I was referring to goes on to say that “no order under section 131A may be made against—(a) the Crown, … (b) a person in whose custody the child concerned has been placed [following] an order made under the Children, Young Persons, and Their Families Act 1989.” Proposed new sections 131A through to 131C have been inserted into the bill. Proposed new section 131A allows for an order requiring refund of payments in respect of a lawyer acting for the child. Proposed new section 131A(2) says that each party must pay an equal share of the prescribed proportion, and that such an order may be declined to be made by the court against a party if the court is satisfied that the order would cause serious hardship to the party or serious hardship to the dependent child of the party. The court would need to be satisfied that, in its view of the circumstances of the case, including the conduct of any party—that is important, the conduct of any party—it would be inappropriate to require the amount payable in accordance with the court’s view.

The test for serious hardship is important and one that I know the courts already take seriously, and it is well considered in other legislation. Kris Faafoi, in his contribution to this debate a few minutes ago, spoke about this. Serious hardship includes significant financial difficulties that arise for a variety of reasons. Those reasons can include such matters as the party’s inability to meet minimum living expenses according to what is known as normal community standards. Also relevant for consideration in a determination of serious hardship will be the cost of medical treatment for an illness or injury of the party or a dependent child of the party, and I think that is right and appropriate. Serious illness suffered by the party or by a dependent child of the party is also to be considered in the measure of what serious hardship is, and I am pleased to see that the cost of education for a dependent child is another relevant factor the court would take into consideration in determining serious hardship.

The clause goes on to exclude some factors that are not to be included in the definition of serious hardship. Again, I think the legislation will address those matters appropriately. For instance, social activities and the entertainment of the party or the dependent child are not to be considered. The party’s inability to merely fund or afford goods or services that are expensive or of a higher quality or standard than the normal community standard of goods and services is also excluded from the consideration in terms of the definition of serious hardship.

As I said, the committee has dealt very carefully with these sections. They are complicated. They are worthy of the careful consideration of this Committee. I am very grateful for the work done by all members of the select committee.

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

Ayes 61

New Zealand National 59; ACT New Zealand 1; Independent: Dunne.

Noes 58

New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; Mana 1; Independent: Horan.

Part 2 agreed to.

Clauses 1 and 2

ANDREW LITTLE (Labour): I rise to take another call. It is quite clear from the Legal Assistance Amendment Bill and from the debate we have had so far on it—and by the removal already, before we even came to the Committee stage, of the word “(Sustainability)” from the bill as was originally presented to Parliament—that this is not a bill about legal assistance, at all. It has departed so vastly, so greatly, from that original objective that it cannot possibly be described as a legal assistance bill in any measure, at all.

This bill is fiscally driven. It is about this Government’s desperate bid to drive down the cost of legal aid. We know that legal aid is expensive. It comprises a significant proportion of the Ministry of Justice budget—I think about 50 percent, and that is a big chunk. But that is because legal aid plays a very important part in the life of our justice system, and I underscore “justice” because, knowing what legal costs are in this country, as they are in other developed countries, without legal aid a large number of people would be deprived of the right to access our justice system. They would be deprived of the right to representation. So when we are considering matters of legal representation and the assistance that people need to get legal representation so that they can stand up and have their views heard in court and they can defend themselves, whether it is against the power of the State or whether it is against the power of other citizens who are well funded and well founded, then we should tread very carefully and very cautiously. And we should bear in mind the fundamental principle that there is no such thing as a justice system that shuts out a significant proportion of the population.

We, as a developed country, celebrate our participation in, and our adherence to, the principle of the rule of law. I have talked about that before in this House, and it is absolutely fundamental to a developed country. In fact, one of the markers of a civilised and developed country is that we observe the principles of the rule of law, and a fundamental principle of the rule of law is that all citizens have equal access to justice, which means that they have equal access to the institutions of justice, which include our court system. So when citizens are called upon to be in court because somebody else sues them or they are in a situation where they have faced an injustice—it might be a consumer malfeasance, it might be a family matter, it might be a criminal matter, it might be a regulatory matter—and they are required to appear in court to argue their case or defend their position, then those who cannot afford legal representation must be given assistance to do that. That is a constitutional principle. It is not about private rights. It is not about the private realm. It is a constitutional matter that if people are caught up in private disputes and must call upon the justice system, or if people are called upon to answer the powerful hand of the State, then they must be afforded proper support so that they can be represented and be advocated for in court.

The legal aid system that we have at the moment already sets a very low threshold—in fact, actually a very high threshold but a low income threshold, which enables them to get access to State assistance to be represented in court—of $22,000 a year. There are a lot of people who are earning considerably more than that who would have great difficulty affording the legal fees that would be required to mount even a small or brief legal case. Even a plea in mitigation for a small criminal matter is going to cost a few hundred dollars, and if you are on $30,000, $35,000, or even $40,000 a year, an extra few hundred dollars at a point in time in your earning year is going to be a significant burden. Those people do not have access to legal assistance. If it is a serious criminal matter, they may do, but the income threshold that entitles a person to legal aid is very low.

This bill compounds that situation when it comes to civil matters. The imposition of a $50 user charge to somebody who is on $22,000 a year is a significant obstacle. That is a huge burden. That is the difference between buying some food that week, paying the power bill that month, or meeting other important costs, and not. It might be a school bill or something like that. Fifty dollars is a significant imposition on somebody on $22,000 a year, but this bill puts it on them.

This bill also potentially levies other costs. When it comes to a care of children matter, a person on legal aid may be required to meet the cost of counsel for the child, if the court appoints counsel for the child in a case in which they are involved. They may have access to time payments. There may be means for them to do that, but that will be a significant burden on them, as it would be, obviously, to somebody on much less than $22,000 a year. The bill provides for debt collection measures, which add to it, and they include attachment orders, and attachment orders to the extent of 40 percent of people’s net income—their net weekly pay. That is a huge proportion of their pay, and that is enough to tip people over into absolute, dire poverty.

This bill is not about legal assistance. This bill might be more appropriately named the “Legal Costs (Imposition of a Cost Burden on the Poor) Bill”, because that is what it will do. In a desperate bid by this Government to drive down the cost of legal aid, it has lost sight of the wood for the trees. What is an important constitutional principle that is about access to justice has got completely lost in the Government’s desperate bid to recover costs and make its books look better. Although no one would argue against proper fiscal responsibility in the management of the Government books, we cannot overlook the important principle that access to justice will be put at risk, at least for some people, as a consequence of this bill. So the title must reflect that. “Legal Assistance Amendment Bill” simply does not speak to the reality of this piece of legislation, which is the imposition of significant hardship and a much greater burden on people who are least in a position to bear that. We are opposed to it for that reason.

KRIS FAAFOI (Labour—Mana): The title and commencement clauses debate for bills is usually an opportunity for members of Parliament to take some licence and have some fun with the titles of bills. But in this instance I am certainly not going to do that, because this is simply not a funny issue, at all, and to do that would be belittling the effect of what this bill is having on our communities. It is a serious issue.

As it stands I believe the title of the bill is the “Legal Assistance Amendment Bill”; the word “(Sustainability)” has been struck out by the Justice and Electoral Committee. The question has to be asked—and I have commended the select committee for making such changes—as to why the select committee thought it fit to remove one word from the title, that being “Sustainability”. Wanting to be accurate, the Chair has given me the ability to borrow his dictionary. It does not exactly have the word “sustainability”, but under “sustain” one of the descriptions is “to provide for or give support to, esp. by supplying necessities:”.

Therein lies the reason why this select committee has taken out the word “Sustainability” from the title of the bill. It is because this certainly does not provide for or give support, “especially by supplying necessities”, to the legal assistance arena of our justice system. In fact, we would argue that it does exactly the opposite of that, by taking away support for, and not supplying, the necessities for legal assistance, especially for our most vulnerable families. As Andrew Little argued, we do not want to get to the stage where access to justice and the ability to go through the justice system, whether it be a civil matter or a criminal matter, is all based on how much money you have in your bank account.

We believe that the motivation for this bill is simply fiscal, and that is to cut costs. Unfortunately, one of the effects of that is, as we fear, that access to justice for many New Zealanders will be removed. So we do believe, when looking at the dictionary here, that the select committee was right to remove the word “sustainability” from the title, because this bill does not provide any support and it certainly does not provide the legal assistance arena with the necessities to do what we believe the legal assistance provisions in our justice system are there to do. We do think it does exactly the opposite.

We need to think of this from three different perspectives. One is, as I have mentioned before, the perspective of the child. There are no words in the title at the moment that I can see that point towards it being in the best interests of the child, nor in the explanatory note, and that was a point that was made by the Children’s Commissioner. I will take the liberty of taking some quotes out of his submission to the select committee. He made a number of very good points. He noted that “the Bill makes no reference to the best interests of the child in the explanatory note to the Bill, despite the fact that it will clearly impact upon children and young people who are involved in Family or Youth Court proceedings.” He went on to say that “These children and young people are among the most vulnerable in our community and it is therefore imperative that their interests are given primary consideration.”

You cannot argue with the Children’s Commissioner on that. You may think that his being the primary advocate for children in our Government set-up would mean that he is purely focused on that, but as we can see and as I have referenced before, there is no reference to children in either the explanatory note or the title.

The recommendations that the Children’s Commissioner made were, basically, not to proceed with this bill. His recommendations were “That the Bill is amended to expressly provide for the continuation of the current Court-administered selection processes;”. Also, basically, he thought that the provisions for access to justice for the best interests of the children were not in the best interests of the children.

There are other pieces of legislation that are going through this House that we also think are down to cost cutting, and one has been on the Order Paper earlier today. I do want to read a quote from Mark Henaghan from Otago University. This is going back to working in the best interests of the children. Professor Mark Henaghan expressed his feelings in a very concise quote on the removal of child advocates, and this is certainly something that is covered in this bill. He said—it is a very quick quote—“So if we take their representation out, we kind of doom them to not be heard.” In essence, if we do make the barriers much higher for families to access justice, which is what we are doing here in the Legal Assistance Amendment Bill, I think that Mr Henaghan’s quote becomes quite apt. As Mr Little said, we believe that one of the effects of this bill is there will be fewer child advocate counsels being able to be accessed by families, and we do think that is of major concern to a lot of communities.

Certainly, as I have mentioned, in my community in Porirua the legal fraternity is very worried. Family lawyers are very worried about their ability to be able to act for families that they have had a relationship with for many, many years. I think they are a bit frustrated with some of the commentary that came back in their direction when they were opposing the moves that the Government is making—that the lawyers were trying to keep the gravy train going, and that they were concerned only about the fees that could be got out of prolonging what is already in place, or taking away any legal assistance that might be open to them. There was a deep level of frustration at that, and I think that is well founded, because if you go to most communities around New Zealand and you talk to lawyers who are acting in Family Court proceedings or family proceedings, they very much have the interests of children and families at heart. I am sure some of them also need to eat, so they want to make sure that they get paid, but the insinuation that these lawyers were basically out to look after themselves was something from the Government that certainly upset them.

As I said, this is not one of those title and commencement debates where you have fun with the title of the bill or with the commencement of the bill—not that I think anyone has ever had any fun talking about the commencement of a bill. This is a serious issue. I note that the word “Sustainability” has been removed from the title. I have noted that this dictionary, which has been loaned to me momentarily, talks about sustainability being the ability “to provide for or give support to, esp. by supplying necessities:”. We do not believe that this bill does that to the legal aid framework. We believe it does the exact opposite. It is appropriate that that word “Sustainability” was removed from the title. Maybe the Government should not have put it in there in the first place, and it has been exposed for that. We do not believe that the bill does make the legal aid framework sustainable. We think it takes away the rights for many, many New Zealanders to access justice, especially for the most vulnerable. Especially on this side of the Chamber, we do not want to get to the stage where access to justice depends on whether you can afford it or not.

Hon LIANNE DALZIEL (Labour—Christchurch East): I would like to follow on from that excellent contribution from my colleague Kris Faafoi, where he basically ended with reference to the original name of the bill, the Legal Assistance (Sustainability) Amendment Bill. Of course, the word “Sustainability” has been removed. I too agree with him that “Sustainability” should have been removed from the bill and probably should not have been in there in the first place, although it was there for a particular reason, and that was that it was a cue for explaining what the Government was actually trying to do, which was to cut costs—cut the costs of legal aid.

Of course, when one cuts costs in one area, there is something else that always happens somewhere else. And is it not unusual that, normally speaking, in a regulatory impact statement you cannot find where that blowout is going to occur, because it looks only at the short-term impact and the impact on the particular budget, and it is not looking in the long term. But, actually, in this regulatory impact statement they have done an excellent job, and I want to congratulate those who put it together, unfortunately without the benefit of wide public input, because of time pressures and the budget-sensitive nature of the issues under consideration. We were told that the select committee process would, of course, substitute for the public input. I actually do not think we do justice to the need for public input on matters as important as this by saying that the select committee process will do. You can put in a written submission and then turn up and have your time in front of the committee for 5 or 10 minutes as an individual. I think that that is a bit of a problem.

I will quote from an individual’s submission because I want people to know that this is not about what lawyers think or about what people who work within the system necessarily think. It is the very direct and real impact that makes this bill not sustainable. That is why the word “Sustainability” has appropriately been withdrawn. But let me just read out the number of risks that were discerned. One was that a change of purchase approach is required but is likely to be resisted by some parts of the legal profession. Well, that has happened. There are people who have pulled out of legal aid all around the country. In fact, we heard evidence from one person down in Christchurch who had actually left her firm and set up her own practice so that she could continue to offer a degree of legal aid work to her client base, which was largely made up of refugees and migrants. I say good on her. She was extraordinary.

The regulatory impact statement states: “Reductions in the price paid to lawyers could create gaps in provision, particularly in the family and civil jurisdictions …”, which is exactly what has happened, particularly in smaller centres; “The introduction of income and asset thresholds for the criminal means test will be in tension with section 24(f) of the New Zealand Bill of Rights Act”, and that was something raised by this individual submission that I am going to refer to; and “It could also delay some court cases if judges defer proceedings because of inadequate representation. Restrictions to eligibility will disadvantage people on low incomes, who have few options to find legal services elsewhere. Generally this includes young Māori men in the criminal jurisdiction and women and children in the family jurisdiction.” I went through the list of the sequence of events that actually discriminates—not deliberately, but in fact discriminates—against Māori, and that is why we have a higher proportion of Māori in our prisons. It starts right from when they get stopped in the street, all the way through the process. They are much more likely to end up in jail for longer.

The final risk, which was the interesting one because it is raised in another submission that I want to refer to, is that “Withdrawing legal aid for low income groups is likely to lead to additional costs elsewhere in the justice system. In particular, it may increase the number of self-represented litigants, with flow on costs dues to delays, additional assistance required from court staff and the judiciary, and higher numbers of appeals of decisions.”

This refers me to Anita Cochrane from Auckland, who has made this submission, saying that she believes it to be “a travesty and makes a mockery of the New Zealand Bill of Rights Act …”. I congratulate her on being so forthright in her presentation to us. What she was saying was that section 24(f) of the Act makes it absolutely clear that people “shall have the right to receive legal assistance without cost if the interests of justice so require and the person does not have sufficient means to provide for that assistance;”. She talks about not having the right to get a fair hearing if you cannot afford to pay for a lawyer, and I think that that is a statement that is well made.

What she went on to do was to speak of her own experience, and she did not talk about the particular matter that took her to court, but it was a case that took her “1 year and 5 court attendances, 4 of which were all remanded by the prosecution due to some reason”—for example, the documents were not there, it lost some evidence, or there was another important case going on. She says: “It was only on the 5th attendance and the 5th attempt by the prosecution to remand the case yet again, that I demanded that the case go to court or they withdraw their charges.” Each time, she had to pay her lawyer $2,000 to appear. She makes the point that she earned $51,000, owns a car worth $2,000, could not afford to own her own house, and had no capital or other assets. “The opposition”—meaning the prosecution—“then tried to bully me into pleading guilty. I had to weigh up the cost of trying to find more money as I had paid out so much and still had not even seen a judge or the possibility of the end of the case. So what did I do? I was forced to agree to a $500 fine and pay court costs. It was cheaper than trying to find more money for the Lawyer, yet, the prosecution had lost the evidence!”.

This was in 2010, under the current arrangements. She asks: “Has anyone looked at how much a person earning $22000 a year actually is in real terms? After tax, a person earning $22000 takes home $330 a week. The cheapest rent for 1 bedroom in Auckland is approx $200 a week. That [leaves] $130 for food, transport, medical, and possibly child care. They could possibly have 1 dependent. What portion of New Zealand earners are in that area? Those people working in the fast food business, waitress staff and the likes. Students working part time, shelf packers … The low income earners.” Then she went on to talk about her daughter falling into that bracket but owning a car—again, that being her only asset. “The changes to the current bill,”—she says—“will require 90% of the population to pay for their own defence. From the person packing shelves right up to the company directors and owners. The 10% of the population who can get legal aid are the Zero to $21000 a year earners. These are people that are unemployed, or on sick benefits, maternity benefits or other benefits or those that fall into this criteria, … who take home $315 a week after tax.

Where is the fairness in saying, only 10% of the people are entitled to assisted legal representation?”. She made the point that actually in the Crimes Act—she quotes the Crimes Act—“ ‘The fact that an offender is ignorant of the law is not an excuse for any offence committed by him’ The reality is that many people are ignorant of the law.” She says: “There are so many laws. The people trust Parliament with the making of the laws to protect them, [not] to disadvantage them so they can represent themselves in court or plead guilty due to ignorance of the law.” That is the problem: she pleaded guilty due to ignorance of the law. She was not guilty of the offence; she would have got off if she had been able to defend herself, but the system failed her. The system let her down.

That is what my major concern is, and that is exactly what the concern was when it was expressed in the regulatory impact statement. Be careful what you wish for. Be careful what you do. The regulatory impact statement states: “Withdrawing legal aid for low income groups is likely to lead to additional costs elsewhere in the justice system. In particular, it may increase the number of self-represented litigants, with flow on costs due to delays, additional assistance required from court staff and the judiciary, and higher numbers of appeals of decisions.” And the one they missed out? Pleading guilty to a crime you did not commit. And that is going to happen time and time and time again, because it is much cheaper to plead guilty and end up with a conviction—$500 and court costs—despite the fact that the prosecution has lost the evidence. I wanted to mention a real case, a real submission in front of our Justice and Electoral Committee, because I think it makes it real for this Committee.

ALFRED NGARO (National): I rise to take a call on the Legal Assistance Amendment Bill, especially in regards to its title clause. I actually do agree with the Hon Lianne Dalziel. I think that hearing those real cases of real people and real places and the impact that they have is important because when we are doing this, we take those into consideration with the regulatory impact statement. The member Kris Faafoi talked about the word “sustainability”. If the member would actually read the bill, he would see that the intent talks about the importance that legal assistance be affordable into the future and available to those who need it most. I think that really is our concern.

When we look at the ongoing, growing costs that there are, we know that, for instance, the honourable member Lianne Dalziel and former member of Parliament Charles Chauvel petitioned the Minister of Justice to consider pausing the progress of the Legal Assistance Amendment Bill so that we could take into account the review that was taking place in the Ministry of Justice in regards to the Family Court. It is acknowledged that that time was taken, the Family Court review was then conducted and completed, and then, therefore, the Legal Assistance Amendment Bill was taken into consideration with that. So it is important to be able to see that the fact is that when we talk about electorates, our communities that we are talking about—

Tim Macindoe: I raise a point of order, Mr Chairperson. I am sorry to interrupt my colleague, but ever since he started speaking, the level of interjection, particularly from Mr Cunliffe, has been unreasonable, and I would ask you—

The CHAIRPERSON (Lindsay Tisch): I am the judge of that.

ALFRED NGARO: It very much was the concern of the Justice and Electoral Committee when we heard the submissions to ensure that legal aid was available, but, most important, not just for now but into the future as well. Sustainability was absolutely important to us. We realise the importance of that at the moment. The budget for 2011 included $103.5 million in short-term funding, while longer-term sustainability issues were addressed through both this bill and the wider review of the Family Court, which would include $138 million over 4 years.

We know that adjusting the eligibility for legal aid was important, and it does make it sustainable in this. The reforms include tightening the merits test by no longer needing to take into account the interests of other vulnerable parties, and adjusting the special circumstances consideration in the means test for family and civil cases so that it focuses on expensive cases. We know—and I know Mr Faafoi knows in his community in the electorate of Mana, and even the legal fraternity there talks about it—that in the number of cases and for the number of our people who needed legal aid and should have accessed legal aid, this bill will not remove it from them. In fact, if anything, it will make it easier and more accessible, and if he reads the details, he will see that. He will see that. What is important is that—

Hon David Cunliffe: I raise a point of order, Mr Chairperson. I believe that under the Standing Orders governing misrepresentation, the member has misrepresented the Government’s position—

The CHAIRPERSON (Lindsay Tisch): No, sit down. Look, that is not a point of order; those are debating points.

ALFRED NGARO: Thank you, Mr Chair, for your wise counsel. We know that adjusting eligibility for legal aid is important. The reforms include removing the requirement to index means thresholds to movements in the Consumers Price Index, and simplifying the administration of funding of legal aid for offenders for Parole Board appearances so that all such cases are classified as criminal legal aid. This bill increases payments by legally aided people. This change encourages people to actually take consideration of whether they need legal aid or not, and to think about whether they wish to proceed with litigation, and it provides incentives for repayment of legal aid.

We believe that the changes that are being made through this legislation, in consideration of the wider context of the Family Court review and the Family Court Proceedings Reform Bill, not only are sustainable for the future but also make legal aid accessible to our communities of need and to our vulnerable communities. I commend this clause.

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

Ayes 61

New Zealand National 59; ACT New Zealand 1; Independent: Dunne.

Noes 58

New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; Mana 1; Independent: Horan.

Clause 1 agreed to.

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

Ayes 61

New Zealand National 59; ACT New Zealand 1; Independent: Dunne.

Noes 58

New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; Mana 1; Independent: Horan.

Clause 2 agreed to.

The Committee divided the bill into the Legal Services Amendment Bill, the Accident Compensation Amendment Bill, the Care of Children Amendment Bill, the Child Support Amendment Bill (No 2), the Family Proceedings Amendment Bill, and the Property (Relationships) Amendment Bill, pursuant to Supplementary Order Paper 251.

Bill to be reported with amendment presently.

Bills

State Sector and Public Finance Reform Bill

In Committee

Part 1 Amendments to State Sector Act 1988

The CHAIRPERSON (Lindsay Tisch): This is debate on clauses 3 to 57C and schedule 1.

Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a large number of calls on this detailed and very important bill, the State Sector and Public Finance Reform Bill, and to confirm that Labour supports this bill with certain reservations and it will be supporting a number of the Supplementary Order Papers, despite the late timing in which they have been brought to the Committee.

It would be remiss of me to continue with this debate before adding a quick personal comment about the proceeding. May I enter into the record my deep, deep concern about the removal of access to justice and the tightening of the legal aid provisions. That is a huge backward step for this country.

Labour supports this bill with reservations. We were opposed to it at the first reading, and it is not often that an Opposition that opposes a bill changes its vote to support the bill at the second reading and at the Committee stage. This, for those watching, is a rarity, and it has occurred for the following reason. The bill as introduced had a fundamentally damaging effect on the rights of civil servants. It made it much, much more difficult for them to transfer between agencies while retaining their existing rights to redundancy provisions. It trampled all over the negotiation rights in wage bargaining that civil servants have under the law. There were a number of other provisions that were at odds with the existing standing of public sector rights and good practice.

I am very pleased to be able to offer compliments to the Minister of State Services, the Hon Jonathan Coleman, to officials who worked very hard on the bill, and to members opposite who, chaired by the Hon Todd McClay, entered into a good-faith process of negotiation by which the core intent of the bill was preserved. Its good effects in terms of introducing more flexibility and teamwork across the public sector will be achieved, but the offending provisions that had an undesirable effect on the rights of public sector workers have been changed. They have been changed so dramatically that I am able to enter into the record the support of the State sector unions, not only for the changes but for the position that our party is taking in supporting the bill. That is a significant turn-round, given the state of the bill as introduced.

I would like to address some of the specific provisions in Part 1 of the bill, which covers the amendments to the State Sector Act. We understand that the Government will move to split the bill into a number of bills that affect different underlying core legislation. Part 1 of the bill was, in fact, the most contentious. Mr Chairman, I hope that you will allow the Minister to take a number of calls to underline the Government’s thinking on the bill as introduced, and on the changes that it has made. Mr Chairman, I hope that given the importance of this part of the bill that you will allow members on this side of the Chamber to debate its provisions in some detail. Several of the issues that we will wish to canvass in our comments today include, firstly, that the redundancy provisions have been improved so that State sector employees retain their entitlements, unless accepting a position that is “no less favourable” than the position that they currently have in terms of terms and conditions.

You know, sometimes there is an argument in lawmaking about one word. I think it was Oscar Wilde, the writer and poet, who said a long time ago: “I spent all morning putting the comma in [to the sentence], and all afternoon taking it out again.” He might have said it with a slightly different accent, of course. We spent the best part of a day arguing about whether we were going to put the word “overall” into clause 49, which says the terms and conditions had to be no less favourable, and we ended up taking it out again. The reason that we were able to take it out by agreement—and we appreciate the work of officials on that matter—was that it was agreed common ground that the existing case law in fact allows a court to look at a package of terms and conditions, and no change was needed. From this side of the Chamber, we would want to underline the fact that the core principle that is being given effect to remains that the terms and conditions must be no less favourable, and in seeking to address this as a package, a court must not sell short the key provisions of the existing—[Bell rung]

Reminded by the bell, let me move on to the transitional provisions in Part 1. These have been improved so that collective and individual agreements are sunsetted equally 3 years after the bill takes effect. There was a considerable debate about this issue, too. It was of concern, quite rightly, to the Public Service Association, to the Council of Trade Unions, and to a number of individual submitters that the bill as introduced would have given individual employment agreements—individual contracts—longer life under the provisions of bills than some collective agreements, which would have expired before the individual agreements. By a process of discussion and mutual agreement in the Finance and Expenditure Committee, the 3-year sunset clause, clause 49, was introduced to ensure that collective agreements did not expire before individual agreements and, therefore, that the results of collective bargaining by State sector employees were not undermined.

I have to recognise members opposite who were members of the select committee. It was a good-faith discussion, ably assisted by officials. As with a number of bills that Parliament has been debating today, it was an example for the public of where Parliament can, through select committees, actually do its job of changing the detail of legislation to iron out, in this case, some pretty fundamental kinks and creases, so that we have ended up with a bill that in our view does achieve the intent of the Government—the Government would be pleased about that—and also removes at least the most part of the issues that would have been at odds with worker rights and social justice.

Another example of that was the Government Workforce Policy Orders, as introduced. This would have been a problem legally, because an order would have been potentially construed as legally binding upon the chief executives of Government agencies and Crown entities, so that they could not enter into or sponsor employment discussions that, for example, might end up in a wage settlement at a higher level than the order prescribed. In so doing, our advice was that that could undermine the existing rights to good-faith bargaining that State sector employees enjoy. It is, therefore, gratifying to be able to record in this Committee stage of the debate that, by a process of good-faith discussion, amendments have been made not only to change the word “order” to “statement” to better reflect its actual status as providing guidance rather than as a binding proclamation but also to ensure that clauses were introduced into the bill that actually enshrine in very specific terms the existing legal rights of State sector employees to good-faith bargaining.

There are a number of other clauses that attracted the attention of the select committee, which we will have the opportunity to go through as this Committee stage works through the different parts of the bill. I would like to mention just a few of them. The conflict of interest provisions have been strengthened, there is enhanced governance for delegated powers, and there are strengthened accountability requirements, which we will detail later, about public sector financial reporting.

We have worked very hard to ensure, and we will come on to this, that the proper constitutional cascade—that line of moral authority—of the voice of the people vested in the balance of Parliament, which is in turn vested in Ministers of the Crown, and is then reflected in the ability of Ministers to direct their departments, is not lost in seeking to streamline the Public Service. Crucially, the key accountability instruments, such as the statement of intent, which is a binding contract between the Minister of the day and the chief executive of the day—in seeking to make that more flexible and on a multi-year basis, we have preserved the rights of Ministers to amend and update the “SOI”, as the statement of intent is known, each and every year, and placed an obligation on their Civil Service advisers to inform the Minister of those rights.

Speaking personally, I would be very keen to ensure that the accountability contract between Ministers and civil servants remains effective and remains in place, because ultimately that is the moral authority upon which departments of State must operate. In these days—[Bell rung] Mr Chairman.

The CHAIRPERSON (Lindsay Tisch): You can have only two consecutive calls, unless some other member takes a call, and I see Dr David Clark is anxious to take a call.

Dr DAVID CLARK (Labour—Dunedin North): I am very, very pleased to take a call, Mr Chair, and thank you for the opportunity. The State Sector and Public Finance Reform Bill is one the Labour Party will be supporting, albeit with some reservations. We opposed the bill at its first reading, and those present here in the debate will remember that, but ultimately changes that were forced at the Finance and Expenditure Committee by Labour and the State sector unions have averted disaster for Government workers who were set to lose their redundancy entitlements and employment rights. I guess I want to thank the members opposite who engaged in those negotiations in good faith, because it has become a better bill, and one that, hopefully, will stand the test of time. These public sector bills are important for their longevity, for the fact that they survive various Governments and provide some kind of certainty for future planning for the good of all New Zealand. So I do thank members opposite who were involved in that process, as well as the unions—the Public Service Association and the Council of Trade Unions—and the Labour members of the committee, who fought hard to ensure that that disaster was averted for Government workers who would otherwise have lost redundancy entitlements and employment rights.

The bill, as I said, was heavily amended in the committee, in response to the strong submissions from State sector employees themselves, and from their representatives. Tough negotiations at the committee have produced this better bill, and these employees’ rights are now better protected than they otherwise would have been. The redundancy provisions that were improved mean that employees retain their entitlements, unless they are accepting a position that is “no less favourable” than their existing package.

David Bennett: Put a bit of meaning into it. Give it a bit of feeling.

Dr DAVID CLARK: Mr Bennett opposite, I can see, is bursting to make his contribution too, but, Mr Bennett, I will look forward to your contribution in due course. In the meantime, I am just outlaying the important provisions that are now in the bill. The transitional arrangements have been improved too, in our view, so that collective agreements and individual agreements are now sunsetted equally. That is important, and that will take effect. The Government Workforce Policy Statements have been revised to ensure that all existing legal and bargaining rights have been protected, and there are conflict of interest protections in there, as well. Although Labour has some concerns with some aspects of the bill, with the support of the unions significant change was brokered, and that means that Labour will support this passage of the bill.

Overall, the bill is an omnibus bill that amends the three principal statutes governing the management of the State sector and the public finances in New Zealand, so it is not be underestimated just how important this bill is to the future of our country. It will not be one of the sexiest bills to be debated in this Parliament, if I can put it that way, but it is an extremely important bill. The powers that it will give to chief executives and to Ministers in terms of reporting requirements, in terms of the way that happens, and in terms of the way in which they can work with appropriations, will have long-term effects. They will make some things more efficient, and hopefully the right balance has been struck in terms of providing accountability to go with these measures.

In Part 1 of the bill, the main changes it makes involve strengthening the role of the State Services Commissioner—that is the first one that should be noted—to make sure that the role of the State Services Commissioner, in leading the State services and ensuring that agencies work together collaboratively as a system, is strengthened. It is set out for the first time ever in legislation—the commissioner’s role. That is a very significant step, but an important step. The commissioner’s functions will be broadened to include the ability to transfer chief executives within the Public Service when a vacancy arises, and to draft Government policy on workforce and employment matters from the perspective of the State sector system as a whole. This power would not extend, of course, to determining pay or conditions. Extending the responsibilities of chief executives to their Ministers, to include matters relating to the collective interests of the Government, and stewardship of the interests of the Crown and departments in the medium and long term, is another significant change that is being proposed. Chief executives will have the power to delegate statutory functions and powers between agencies and, subject to certain safeguards, to non-government service providers.

The proof will be in the pudding with these particular amendments. How these interests are played out, the kinds of delegated statutory functions that we are asking—and I speak collectively—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the chair for the dinner break.

Sitting suspended from 6 p.m. to 7 p.m.

Dr DAVID CLARK: When I was rudely interrupted by the dinner bell, I was discussing the strengthened role of the State Services Commissioner and the effects of the changes to the amendments to the State Sector Act 1988. I was about to introduce a person as an example of why this is important policy. These new powers will give a formalisation to the role of the commissioner. It will also mean that he or she has the ability to transfer chief executives within the Public Service as a vacancy arises. It gives them the ability and responsibility for Ministers and chief executives to have a greater interest in the stewardship of the interests of the Crown and departments in the medium and long term.

An example of this might be if a future Government, for example, had a priority to change the way in which the electricity system worked. As it happens, currently, the Prime Minister has said that he thinks that Kiwis are paying about the fair amount for power prices. Most New Zealanders—

Hon Ruth Dyson: What? He didn’t say that!

Dr DAVID CLARK: No, he did say that. Most New Zealanders think that power prices are far too high, but the Prime Minister thinks that they are about right. Labour sides with most New Zealanders in thinking we should have a fair price for power—

The CHAIRPERSON (Lindsay Tisch): Order!

Dr DAVID CLARK: I am coming to a point here—

The CHAIRPERSON (Lindsay Tisch): Yes. Well, you are meant to be.

Dr DAVID CLARK: —which is that if we wish to change the policy, it would very much involve implementation by the public sector, by people who are tasked with implementing changes, whether you agreed with the policy—not meaning you, Mr Chair—if changes need to be made. This flows on to the responsibility of Ministers and agencies concerned, and these additional powers should ease the ability to change policies. So where one party has decided that capitalising the value of free water is not the fair way to build a system, where you think the cost of electricity should not rise at double the rate of inflation for the last 15 years, and where you wish to implement a new policy that says instead of the long-run marginal cost, you would look at a model that looked at a fair return on capital and paid only the marginal cost for new generation, you could implement that—I do not mean you, Mr Chair. But the Government of the day could implement that change through the powers of the State Services Commissioner filling a vacancy in a relevant department and/or having the sanctions and rewards necessary—

Hon Ruth Dyson: As long as it wasn’t privatised.

Dr DAVID CLARK: —as long as that department had not been privatised, as my colleague alludes to. Subject to the normal powers, there is a wider range of abilities, or a strengthened range of abilities, for the State Services Commissioner to effect change. That, at least in theory, is partly how this legislation could play out, and we in Labour think that is a good thing, and that is why we will be supporting this bill. The Government thinks it is a good thing also. It should enable the Government to achieve its objectives more easily, if it has any that are clear and in the interests of New Zealand.

There is no accounting for bad policy. If the Government has bad policy or no policy or no idea or no plan about how it is going to get ahead—and we have argued often on this side of the House that this Government seems to have no direction and no plan—then that cannot be accounted for by this legislation. This legislation really is about implementing the plan. If the Government does have a plan, how will it be implemented? What is the role of the State Services Commissioner? That will be spelt out more clearly. How does that flow on to chief executives in the Public Service? What are the implications for their workloads and the way that their responsibilities are set up? That flows into the State sector system as a whole. So if, as is done by members on this side of the House, good policies are put forward and the party has the opportunity in Government to implement them, this State Sector Act amendment bill will allow for those policies to actually take effect and actually make a difference for real New Zealanders.

So that is why we will be supporting the bill. We are satisfied with what has been achieved in terms of protecting the arrangements for State sector workers, the redundancy provisions that have been approved, as opposed to what was originally proposed, the transitional arrangements, and the conflict of interests protections—all of those things that were negotiated in the select committee and fought for strongly by the Labour Party, along with the New Zealand Public Service Association and the New Zealand Council of Trade Unions.

PAUL GOLDSMITH (National): I rise to take a call on the State Sector and Public Finance Reform Bill. I just wanted to pick up on a couple of things. I want to pay tribute to the previous chair of the Finance and Expenditure Committee, Todd McClay, who shepherded this piece of legislation through the committee stage—

Hon David Parker: Through the Committee stage? Through the select committee?

PAUL GOLDSMITH: —through the select committee stage, with the full cooperation and good work of the members on both sides of the House, in particular David Cunliffe, who was very thorough and detailed in his examination of the particular issues and, in fact, was indefatigable in the way that he worked through the issues.

I think we have landed in a good space here, looking at the amendments suggested here in Part 1 relating to the purpose of the State Sector Act and the definition of ministerial staff and the independence of chief executives. We have made some amendments concerning their ability to delegate functions of powers. There are amendments relating to the restriction of redundancy payments, which has been discussed at length on the other side of the Chamber. Finally, there is a part that makes further recommendations in relation to the protection from liability for Public Service chief executive employees. We had a lot of debate about that issue in relation to whether indemnity was a better approach. The Law Commission was strong in its views on that, but I think that after due consideration we have come down on the right side of that argument. All in all, this piece of legislation is part of the broader Government approach in terms of delivering better public services to New Zealanders.

I do think we have to pay tribute to the Public Service generally in this country. We have had 5 years now where there have been relatively few increases in terms of resources. It has been tight. It has been a tough period, when the Public Service in general has been asked to deliver productivity gains and less with more, as every other business in the country has been dealing with. We do have to pay tribute to the work that aspects of the Public Service have done in many different parts. This bill is about trying to give better tools to the leaders in the public sector so that they can have some clarity around what they do and so that they can work together more effectively. On that basis, I recommend this bill to the Committee.

Hon DAVID PARKER (Labour): Can I begin by thanking the officials. We see a range of officials, and they are generally very good at the select committee, but it is refreshing when we see officials who are so on top of their understanding of complex issues that they are able to engage with the select committee, and not just hold a line in defence of what is proposed but engage in discussions that both educate the committee and show some movement on the part of officials at times when, perhaps, the policy intent is clear but there are details that need to be addressed. We found the officials—or I found the officials—advising the Finance and Expenditure Committee and providing advice to be of the highest calibre, so thank you.

There are a couple of issues that I want to address in this contribution. The first relates to why it was necessary to change provisions relating to Government Workforce Policy Orders. That is the language that was used in the form of the State Sector and Public Finance Reform Bill when it came to select committee. The new provisions in Part 5 of the Act, as inserted by clause 42 of the bill—to insert new section 55A into the Act, more precisely—provide for Government Workforce Policy Statements. These workforce policy statements are very broad in their ambit. They were described as orders, and the Governor-General could by Order in Council, on the recommendation of the Minister, approve a Government workforce policy as a Government Workforce Policy Order, as if it were something akin to a Government regulation of some kind. But then it went on to say that those orders were not a regulation for the purposes of the Regulations (Disallowance) Act or the Acts and Regulations Publication Act 1989.

Labour members of the select committee were concerned that the ambit of these regulations was so wide as to allow the Government to effectively issue a directive that was akin to an order by the executive, which would have enormous power across the whole of the State services, but it did not need to come to Parliament in respect of it, and there was no ability for people to challenge it under the Regulations (Disallowance) Act 1989. That was wrong.

On the Labour side we were aware, of course, that the Government that was the most egregious in its use of statutory regulations in the past was another National Government, under Mr Muldoon, who gave himself hugely broad regulation-making powers under the Economic Stabilisation Act, which allowed him by Government regulation to impose a wage freeze, and he did. Incredible though it now seems, he did that by way of statutory regulation. We on the Labour side thought that the subsequent Lange Government, with Geoffrey Palmer’s assistance in this regard, cleaned up a lot of that silly, overly broad regulation-making power, and tried to make sure that the big decisions for New Zealand were taken by Parliament and not by Ministers using executive powers.

We were concerned that this proposed provision allowing Government Workforce Policy Orders to be made was so broad as to allow the Government to effectively say that there will be a wage freeze across the public sector. We asked officials whether that was the case, and they said that was not the intention, but it did appear to be that that was the effect of the words, or at least that was a concern that I had. The select committee agreed across both party sides that that was inappropriate, and that the power of the executive, the power of the Government to make workforce policy orders, should not be that broad. Indeed, it would be absurd to be giving the executive powers that broad.

So the select committee has recommended to the Committee that we amend the provisions in respect of Government Workforce Policy Orders, and that we start to call them Government Workforce Policy Statements rather than orders. So already you can see that they are not sounding as legislation-like as the original language proposed. They still are a statement. They still are not a regulation for the purposes of the Regulations (Disallowance) Act, but there is a statement at the proposed new section 55D that says that, notwithstanding that “A department must give effect to a Government Workforce Policy Statement.”, the policy statement cannot “create, alter, or remove employment or other legal rights or obligations;”. So if there is an existing employment right, that cannot be taken away by a workplace order. If there are existing legal rights or obligations on the employer—for example, to embark upon good-faith bargaining—then this provision could not be used to cut across those obligations and impose a wage freeze. The Labour Party is pleased that that was picked up by submitters and that this change has been made.

I want to raise another issue, which I have spoken of previously, and which is raised in our minority view. The Labour Party is still not convinced that it is right in principle that the Public Service is immune from liability as opposed to being indemnified for the consequences of its actions. In the Labour Party we do believe that public servants who are acting in good faith, no matter how negligent they are, should be protected from the consequences of civil liability for their actions. But that does not mean to say, in our view, that they should be immune from prosecution—sorry, immune from suit is a better way to put it, or immune from prosecution of the suit, if I was trying to cover my own language there, which was rather loose.

We had submissions from the Legislation Advisory Committee that said that it is wrong in principle that the Public Service is immune from liability in civil proceedings. The committee thought the Public Service should be indemnified in its duties rather than have an immunity from prosecution. There are a couple of reasons behind that. Firstly, it says: “Do we really want to live in a society that a public servant who acts egregiously”—egregiously—“cannot be brought before a court and suffer the embarrassment in a civil proceeding of being involved in the proceeding?”. The Legislation Advisory Committee—or was it the Law Commission? I forget which. I might have that the wrong way round. One of those two august bodies—

Hon David Cunliffe: Law Commission.

Hon DAVID PARKER: The Law Commission. Thank you, David Cunliffe. It was the Law Commission that came to us and said that what we risk doing is actually creating a faceless bureaucracy, and that there should be some accountability for conduct. So if conduct is egregious, why in the public sector would you not be required to appear in court in civil proceeding as a party and suffer the consequences of that process, as opposed to the consequence of the award of damages that might flow from the end, and why is it that indemnity is not enough? If you look at the comparison—and I know the comparison is not perfect, but there is some truth in it—where someone was in the private sector, and you were acting in the course of your employment for a private employer and you made a mistake, then you could be sued in your own name, probably, in some situations. You certainly would not have immunity from prosecution. You would at most have a right of indemnity.

And in the case of the injured party in society who has had harm caused to them by an arm of the State through this public servant doing something wrong—and it could have been deliberately wrong, even if it was not maliciously wrong—why is it that there is some question as to whether the private citizen who suffers that injury has got a right of action against the individual? One of my concerns in this, and it was something that we explored with the Law Commission, is that there is a difference between the liabilities of the Crown, which is vicariously liable for the actions of its employees, which are sometimes not as broad as one might think. I can see I am running out of time here.

DENISE ROCHE (Green): I want to start my contribution by thanking the staff who have been involved in the process, during the Finance and Expenditure Committee examination of this bill, to bring this State Sector and Public Finance Reform Bill to the Committee. I also want to acknowledge both the Labour Party and the National Party members who worked together very closely and very diligently to bring, effectively, a new bill to the Committee—a bill that has been softened from the original—and I particularly want to pay tribute to David Cunliffe for the work that he put into that. The Green Party position, however, is that at the end of the day workers in the State sector will be worse off as a result of this bill’s passing.

I have checked with the Public Service Association tonight, which also says that it does not give unqualified support to this bill. However, it does acknowledge the work—particularly, the work of the Labour Party and the members from that party—in softening and in making amendments to the bill, and it says that that strategy has meant, and will mean, that the workers are not as badly off as they may have been when the original bill was before the House in the first reading.

I acknowledge that the amendments that have been softened include the restrictions around redundancy. The redundancy provisions have been loosened since the first reading. However, it is still a restriction.

I have put forward Supplementary Order Paper 265 for discussion and consideration tonight. It talks about actually restoring one of the provisions that was lost from the original 1988 State Sector Act, and that is the provision that relates to the transfer of employees, to the transfer of functions and duties to new agencies, and to giving the workers the right to apply for those jobs. This bill actually contains an amendment that gives chief executives that right, but that right has been taken away from public servants.

This is a really important amendment, if you consider that last week the first reading of the Health and Safety (Pike River Implementation) Bill was before the House. One large part of that bill was about the provisions whereby workers and health inspectors who are currently employed by the Ministry of Business, Innovation and Employment can transfer to a new agency that is being created through that legislation, which is before the House. That has to go into legislation for every piece of new legislation that is developed that creates a new entity or a new agency, and that is because it is being taken out of the State Sector Act. We will have to do that, time and time again, every time a new agency is formed, and there may be times when they are.

We will also not be supporting this bill because of the things that have been left out—not just the transferral arrangements but other things, including in the purpose statement the equal employment opportunities mentioned in the first part of the Act, which is around the purpose. Equal employment opportunities are not stated explicitly elsewhere in the bill, and you can combine that with another change from the original Act, which is again in the purpose statement, for State sector employers to be good employers. It has been changed to “meets good-employer obligations;”, which is a slight tweaking but also a weakening. So when you put the loss of the specific mention of equal employment opportunities together with that, we are starting to look at some weakening of some of the overarching principles of the Act, which works against workers. It does not work in their favour.

I think we have to remember that we do need equal employment opportunities—we need equal employment opportunities—and that is because the State sector, the Public Service, is female-dominated a lot of the time. Yet, for all that, women in the State sector are still earning sometimes 8 percent, sometimes 10 percent, or sometimes 12 percent less than their male counterparts. Before 2009 this Government was actually exploring and investigating what was happening to pay rates between male and female employees in the public sector, and that was an investigation that was being undertaken with the Government’s support. However, the Government pulled that support in around February 2009, and the reason it gave at the time was that the Minister at the time, Tony Ryall, said that we could not afford to increase levels of remuneration.

We have had equal pay legislation in this country for over 30 years, and we still have an average weekly income for women that is 23 percent less than the average male weekly income. When you consider that the Public Service has been the bastion of good employment practices and it has been a leader in setting decent standards for workers—standards that the private sector frequently follows—then we must fight very strongly to maintain the provisions in the bill that will protect those workers.

Again, I do acknowledge the work that has happened, particularly the Labour Party’s efforts to soften the bill and make a heck of a lot of amendments to it. However, we will not be supporting the bill.

MAGGIE BARRY (National—North Shore): I rise to speak in the Committee stage of the State Sector and Public Finance Reform Bill. It came through my select committee, the Finance and Expenditure Committee, so I sat through the submissions and the animated discussions that ensued within the committee ranks. It is a bill, of course, that was sponsored by the Minister of State Services, the Hon Jonathan Coleman.

This is, as others have pointed out, an omnibus bill. It amends the State Sector Act, the Public Finance Act, and the Crown Entities Act to provide the legislative grunt, really, to deliver Better Public Services. There have been some proposed changes, which I will briefly outline to you tonight, to the State Sector Act 1988. Effectively, the bill is about strengthening, extending, and improving the management of the State sector and public finances.

When it comes to the strengthening provisions, it strengthens the State Services Commissioner’s role in leading the State services. It extends the chief executive’s responsibilities, to consider the collective interests of the Government and the longer term sustainability, rather than being focused on individual departments and a shorter-term view, which has to be good. Also, it improves governance across the system, which is part of the overall thrust of this National, John Key - led Government to improve the sector. When we look at some of the new provisions within the bill, it does put in a new organisational arrangement, called the departmental agencies. That is going to really provide more for the options available for delivering public services.

Among the more contentious aspects that were considered by the Finance and Expenditure Committee, and certainly exercised the attention of a lot of the submitters, was around that issue of redundancy, which other speakers have spoken of. As a result of the discussions, some changes were made. But it is important to note that the key provision of the bill relates to civil servants who have been made redundant but have a new State sector job to go to, and therefore they will not receive a redundancy. You are not going to receive a redundancy—and these are the provisions that were argued through—if, for example, you start your employment the next working day or, indeed, perhaps even before your term is up. You will also not be paid a redundancy if you are taking on a job that is treated as undertaking continuous service and that is within the body of the State Service itself.

You also have to have had duties and responsibilities that are comparable to the current job. You cannot really have been someone who works here in Parliament and then suddenly be expected to go out and man the roads somewhere. There has to be a comparable set of skills, and they have to be matched. Perhaps some might argue that there is a match of skills in that, but there is not enough time in a debate of this kind to go into that. But having a collective package of terms and conditions that are no less favourable than those that apply to the current position has been spelt out. Also, you cannot be expected to travel very long distances for the job that you are doing. These are the kinds of provisions that the submitters who came to us were very keen to have, but I think really it is important to note that not every single aspect of every element of their conditions has to be exactly the same, for the redundancy to not apply.

I commend this bill to the Committee because it is part of what we are doing as a Government to reform the State sector, to ensure it delivers better public services to New Zealanders. Thank you.

Hon PHIL GOFF (Labour—Mt Roskill): It is my pleasure to support the State Sector and Public Finance Reform Bill, and it is worth noting that it is not the initial position that the Labour Opposition adopted. I have to applaud the members of the Finance and Expenditure Committee, on both sides, but particularly the Government side, for actually listening to what the Opposition was saying on this occasion. That is not a common occurrence, regrettably, but when it happens, the select committee—

John Hayes: Oh, I don’t know.

Hon PHIL GOFF: Mr Hayes, on a good day, will listen to what the Opposition spokespeople say at the Foreign Affairs, Defence and Trade Committee, as you well know, Mr Chairman Hayes. It happens from time to time. But looking at this bill, it was a rare occasion on which members on both sides of the select committee were prepared to listen to the evidence, particularly the evidence from the stakeholders before the select committee, and to act on the evidence. I have to also acknowledge that the Minister of State Services, Jonathan Coleman, was prepared to listen to the select committee.

In a perfect democracy—and, regrettably, we fall well short of that—that would happen in a commonplace way. However, we have seen with the Family Court legislation and the legal assistance legislation that we debated before this bill that this is, unfortunately, using tonight as an example, a rare occasion. But it is good on this occasion because I think all sides of the House have a vested interest that the legislation that relates to the State sector should have as much continuity as possible between Governments, rather than being used as a political football that goes one way and then the other way when there is inevitably a change of Government. So I want to welcome the role of the select committee and I want to welcome the readiness in this instance of the Minister to take on board the advice that the select committee gave him. As a result, we end up with a better piece of legislation. That is most important, but, equally important, we end up with substantial support across the House for this legislation, which therefore makes it stronger legislation.

There were three changes that were made that I think were very positive changes and which allow Labour to support the legislation. The first was in relation to redundancies. It is a really important principle that when a person loses his or her job through no fault of their own, they are protected with the compensation that a redundancy payment gives. They are not being sacked because of wrongful behaviour; they are losing a job because of structural change. What Labour was able to achieve on the select committee was a protection of those redundancy provisions. The one exception is that if a person goes to another job that is no less favourable than the existing one, within the public sector—they are not losing anything, and there are various provisions, including, you know, that it needs to be reasonably convenient in terms of travel and so on—then that is fair enough. It is an equivalent job with no less favourable pay and conditions, and we would not expect redundancy in that situation. But in other situations the redundancy provisions are protected, and that is the right and proper thing to do. I am glad—again unusually from the National Party on industrial relations—that the Government was prepared to do the right and proper thing. The second change that was achieved was a better transition, so that the existing agreements are covered for 3 years. There is a sunset provision for 3 years. It means that those on collective agreements will not be disadvantaged in relation to those on individual contracts of employment. The third change that was made was to change Government Workforce Policy Orders, which in the original bill would have had the effect of being Orders in Council, into statements, so that when a policy was being pronounced, it was a statement rather than having a legally binding effect. That ensures that existing legal and bargaining rights have been protected. Each one of those changes was important, and those changes justify the decision by Labour to support this legislation rather than oppose it, as it did on the first reading.

There is a lot about this bill in terms of what its objectives are that I think all sides of the House could support. We support a framework that encourages an innovative, flexible, efficient Public Service. I think everybody should be in favour of those things. And we also support a joined-together Public Service where there is cross-sector collaboration, and those are positive changes. When I look at the purpose clause, new section 1A, inserted by clause 5, the purposes of the bill are purposes that generally should get the support of the Committee. We want a State sector system that “(a) is imbued with the spirit of service to the community; and (b) operates in the collective interests of government; and (c) maintains appropriate standards of integrity and conduct; and (d) maintains political neutrality; and (e) is supported by effective workforce and personnel arrangements; and (f) meets good-employer obligations; and (g) is driven by a culture of excellence and efficiency; and (h) fosters a culture of stewardship.”

I want to say a little bit about what those purpose statements mean, because it is all very well having a purpose clause in the bill that talks about good-employer obligations on the State sector, but, regrettably, we have seen in recent times a practice that is quite different from the theory that is being proposed here. I think, for a start, of the changes that were made in the Ministry of Foreign Affairs and Trade, where people had their working conditions unilaterally stripped away from them and were given inferior conditions, particularly security of employment, where people lost pay—for example, those people transferring overseas together with their partners. There is no point in having legislation before this House that states that there should be good-employer obligations if the Government is not going to carry that through in practice.

I want to use another example of this, and it is pertinent to the Minister of State Services because he is also Minister of Defence. You know, I have talked before about the need for redundancy provisions, but it is also about how you go about it and whether this bill will translate into a change of practice. I want to read this to the Committee. This is a standard letter from the Defence Force, in this case to employees in the army: “You are in the New Zealand Army, which is a rank from which the army was directed to release a number of military personnel.” That means that it was going to cut costs, and people were going to be made redundant. “When considering you against the army business rules for future potential, you were assessed as having Low Potential, given that your future employability was limited to a small number of employment streams, your medical grading is permanently downgraded, you are unable to attempt the minimum required fitness standard.” This is a case of a letter—there were hundreds of them sent out to each of the services—that told people who were the victims of restructuring that they were to blame for the loss of their jobs. Everybody in this Committee knows that loyal members of the Defence Force who had served this country for 20 or 25 years were being made redundant. So why send out a letter that insults and degrades the personnel who were being made redundant? That was an absolute disgrace.

Yes, the Defence Force has now said that it is sorry and that it should not have happened, but I want to know how it happened, and I want a guarantee from the Minister in the chair, the Minister for Courts, that this legislation, which sets good-employer obligations, would not allow that sort of thing to happen again. What we saw through that process of civilianisation was a high level of attrition—21 percent. Every year, one in five of the Defence Force was turning over. We saw the lowest morale in the history of the surveys, and we saw a lower capability of the Defence Force. Hopefully, this legislation, in setting an important condition like good-employer obligations, would not allow that to happen. Why did that happen? It happened because the Defence Force handled it badly but also because it was instructed by the Government to save $400 million a year, and that meant laying off—you know, the Defence Force is down a thousand people. So let us not waste our time debating legislation that is theoretical legislation, unless we have a Government and a State sector that are prepared—

JOHN HAYES (National—Wairarapa): The last speaker, the Hon Phil Goff, who was jumping up and down and thumping the table, needs to realise a couple of things. First of all, when you train a body of men to go and kill people and defend our country, you are not training them to write letters—

The CHAIRPERSON (Lindsay Tisch): No. Order! Whatever the member says must be related to the content of the bill. I will ask the member to come back to it. He can comment on what the previous speaker has said, but it must be in relation to the State Sector Act amendments in Part 1, which we are talking about.

JOHN HAYES: This bill is about delivering better public services to New Zealand and that is one of our priorities. If we were able to develop and ensure that better services were being delivered, as this bill proposes, then we would not find ourselves in the situation that we inherited from the last Government, where we had a military that was trained to kill people, not to write letters. The amendments in this bill create a range of public sector management tools to foster an innovative, efficient public sector that will, I think, deliver far better identified results for New Zealanders. I think the last speaker would realise and understand, and has been around this House for long enough to know, that all the legislation in the world, no matter how carefully constructed, does not force management to write letters of a particular sort. So I think we have to have some latitude in these bills that we are considering here tonight.

I particularly support those comments made by colleagues in the Labour Party and also in the Green Party who talked about our working together in the Finance and Expenditure Committee, because certainly that was the case in preparing this legislation that is now before us this evening.

One of the important things, I think, in the legislation is that it will strengthen the State Services Commissioner’s role in leading the State sector. That is really, really important. I think it is also important in this legislation that it will extend chief executives’ responsibilities to consider the collective interest of Government, and long-term sustainability, rather than operating in silos, as happened under Mr Goff’s tenure as a Minister of the Crown. What we are trying to do is, rather than focus on a single department, encourage much less of a silo mentality and a much more inclusive Public Service.

We also want to provide for a new organisational arrangement—departmental agencies—so that options are available for delivering better public services. These operational agencies will be set up within a department to carry out specific functions, and the chief executives of these organisational arrangements will report direct to the Minister—a much more inclusive system, which I think will improve governance across the system. I feel that this is a good piece of legislation. I think it will ensure that the State sector is modern, is flexible, is fit for purpose, and will deliver far better outcomes for all New Zealanders. Thank you.

Hon DAVID CUNLIFFE (Labour—New Lynn): I thank the member John Hayes, who has just resumed his seat, for contextualising the State Sector and Public Finance Reform Bill in the Better Public Services programme. The Better Public Services Advisory Group has indeed been one of those groups that has fed into the early design of this bill, seeking to establish a framework to support and encourage innovative, flexible delivery of public services. Unfortunately for the Government, the Better Public Services targets look like they are not going to be met in at least five out of the 10 key priority areas. So nervous was the Minister of Finance on that subject when he recently testified before the Finance and Expenditure Committee that he would not confirm how many targets were on track and how many were off track. We look forward with great interest to the release—we hope this very month—of the Government’s interim report on the achievement or otherwise of its Better Public Services goals.

Strengthening the role of the State Services Commissioner is one of the core parts of the amendments to the State Sector Act that are contained in Part 1 of this bill. We share the Government’s aims to come up with a set of legislative amendments here that provide a framework that will endure across party lines and across terms of Government, to ensure that the public sector will be flexible and will be responsive, that Government agencies will work together to solve problems, and that they will pool resources to create innovative approaches, but that the use of those resources will remain trackable and accountable to the people through the parliamentary process.

We think that having a State Services Commissioner as the lead manager of the managers, who can ensure that Government agencies work collaboratively as a system for the first time, is a good thing, and we commend its inclusion in the bill. We commend broadening the commissioner’s functions to include the ability to transfer chief executives within the Public Service when a vacancy arises. One can think of—and I will not dwell on it now—a number of occasions either where underperforming chief executives might be transferred out of an agency as part of a rescue plan or where particularly able ones might be transferred in. Of course, Peter Hughes, currently the Secretary for Education, springs to mind as an incredibly able public servant who has been deployed to assist an agency that is clearly having trouble with even the basics of pay and rations with the Novopay system.

The bill also seeks to extend the responsibilities of chief executives to their Ministers, which is a good thing, to include matters relating to the collective interests of the Government, not just the individual interests of the department. I think that that is a useful innovation. What it shows is that we are as a system becoming more focused on the outcomes, and a little less silo-driven about how the outputs contribute to those outcomes, to use the jargon of the State Sector Act. That is about putting the horse in front of the cart, and that is sensible in anybody’s book.

The risk, of course, is that if too much focus is taken off the output measures, because we speak only in generalities about the aims and outcomes, there will be a blurring of accountabilities. It is for that reason that, when the Finance and Expenditure Committee wrestled with the detail of this bill, we were very, very concerned to maintain the trackability of expenditure and the rigour of accountability on an output class by output class, programme by programme basis. And where the new innovation that is included in the bill, of a multi-category expenditure class, is employed, the bill now, following amendments made in the select committee, makes it mandatory that in the budget reporting of that expenditure and in the estimates process it is fully trackable from the preceding years, when things may have been individually accounted, to how they fall into the multi-category appropriation, or MCA. That is a very important discipline because, otherwise, one could imagine, in certain circumstances, a department trying to hide an underexpenditure or an overexpenditure might simply change the structure of the output classes so it was impossible to follow the money, honey.

It is important to give chief executives the power to delegate statutory functions and powers between agencies, but the select committee also wrestled with the issue of whether the safeguards were sufficient. So the language in the bill has been tightened up to ensure that where power is delegated—not just an activity but a decision-making power—very clear responsibility and accountabilities follow that delegation, so that the delegated decision maker remains accountable upwards through the chain, to, ultimately, the Minister and to Parliament. So we agree with the objective. We thought the bill as introduced was a little loose in the way those accountabilities were written. As other speakers have said, we think that the committee worked very well together and was well served by our highly capable professionals to improve that accountability.

Part 1 also creates a new organisational arrangement called a departmental agency. This is not a Crown entity in terms of being a separate body. It is not a department. It is a separate, stand-alone agency that operates within the overall structure of a department, and it regularises what has been experimented on with mixed success. I think one example that has been largely successful is NZAID, a semi-autonomous body within the Ministry of Foreign Affairs and Trade. That has brought a renewed focus on poverty alleviation and aid-driven principles of delivery. And another is the Crown Ownership Monitoring Unit, which has existed with perhaps a little less success within Treasury—less success possibly because it has been one step removed from key Treasury decision-making, possibly because it has been a little subscale relative to the heft of some of its State-owned enterprise and Crown entity clients.

Hon David Parker: Solid Energy.

Hon DAVID CUNLIFFE: Solid Energy, as my colleague David Parker has said, being the classic example where a runaway train developed. Solid Energy was investing like there was no tomorrow, at precisely the same time that the bottom was falling out of the coal market. Common industry understanding is that when the market is in a down cycle, you tighten your belt. Unfortunately, that did not happen. And what is worse, the monitoring unit appears to have had some lags in terms of getting on top of it. The structure of the entity that is provided for in this bill is not going to solve every problem of foresight or every problem of management, but what it does do is it provides a coherent legislative framework within which best practice can be followed. So we hope that that makes a useful and positive contribution.

The bill also increases the flexibility of provisions relating to the appointment of chief executives and senior leaders. Some flexibility is good; too much is bad. We want to put on record that we do not want to go to the extent of a Prime Minister ringing up an old school friend—

David Bennett: Oh, come on.

Hon DAVID CUNLIFFE: —and overriding this. No, do not laugh, Mr Bennett. One day, history will judge that as a low point for this administration. There can be no more important appointments to be politically neutral than, for example, the Commissioner of Police, the head of the SIS, and the head of the Government Communications Security Bureau. If those most sensitive positions are not only not politically neutral and independent but also are seen to be so, then public trust in the institutions of the State will be fatally eroded.

I do not think, Mr Bennett, that it is any laughing matter that a Prime Minister rejected all of the nominees shortlisted by the State Services Commission, rang up his old mate, invited him out for breakfast, briefed him on the job, got him the job, and is now, having done that, playing catch up—as former religious studies lecturer Jim Veitch so appallingly said on the radio today—waiting for the law to catch up with practice. Actually, ladies and gentlemen, the rule of law is the other way round: practice is subject to the law. That applies to the intelligence community and to the Prime Minister in the same way it does to everyone else, or the people whose memories are enshrined on the walls of this Chamber did not get remembered as they should have been.

History will judge these matters as fundamental to the corrosion of public trust in John Key and the Government that he, for now, leads—for now leads, because this Government is on a slippery slope to electoral defeat. It is on a slippery slope to electoral defeat because the public of New Zealand, when they realise—

The CHAIRPERSON (Lindsay Tisch): Order! Order!

Hon DAVID CUNLIFFE: —what is being done to their hard-won freedoms, will not tolerate it. Mr Chair, you are right, it is time to return to the substance of the bill. There is much in this bill that is good, there is much in this bill that is better, and we will be supporting it.

Hon DAVID PARKER (Labour): The State Sector Act, which this State Sector and Public Finance Reform Bill amends, is a 1988 Act.

Hon Trevor Mallard: Yeah, who sat on that select committee?

Hon DAVID PARKER: Well, the Minister who was in charge of that legislation before it became an Act was the Hon Stan Rodger.

Hon Trevor Mallard: A good man for technical amendments.

Hon DAVID PARKER: Exactly. That is the very point I was going to make. It is still famous within the Labour caucus, some two decades later, that the Hon Stan Rodger was said to have said in respect of the State Sector Act, which made some very fundamental changes to the arrangements of the time, that it was a minor technical amendment. It went through caucus and it was duly passed by this Parliament. I think Stan Rodger, for a period, was stripped of his life membership of the Public Service Association, which was later to be reinstated.

Hon Trevor Mallard: A part-of-life membership, really.

Hon DAVID PARKER: Yes, that is right, a part-of-life membership rather than a life membership, as it proved to be. The Hon Stan Rodger is still alive and well. I met him again the other day, actually. I think he can be proud that his legislation from 1988, that minor technical amendment that slipped through the Labour caucus, has really lasted close to three decades before being substantially amended.

I want to make reference to an amendment made by clause 6 of the bill in respect of ministerial staff who are on time-limited contracts. This provision is intended to refer to the people who are, largely, in quite political roles within Ministers’ offices, whose entitlements are not the same as those of normal long-term ministry appointments, because they are very political in terms of their duties and their fortunes and services are tied to the Government of the day or the Minister of the day.

To show that this legislation is intended to have effect across more than one administration, the example that the Finance and Expenditure Committee or the officials inserted was of “The Hon Honour Able’s ministerial staff”—a description that probably applies more to Ministers of other administrations than this one. What the provision says is that “employees ... who are employed on events-based employment agreements—(a) by the department that is responsible for the employment of ministerial staff across all Ministers’ offices; and (b) to work directly for a Minister in a Minister’s office rather than in a department” are covered by these unusual provisions. That amendment was made at the select committee to make it clear that we are not talking about the secondees who come from a ministry, work inside the Minister’s office and assist the Minister but remain a departmental official and are not party political, and to defend the principles of the Public Service, which are politically neutral.

The problem with the prior legislation was that this distinction was not made. Despite the fact that some of the people who are under the old definitions “ministerial staff” and were theoretically covered by codes of conduct that require political neutrality, some of these staff who were really very political and clear in their political agencies—and it is proper that they are—were caught up in the provisions of the Act that require political neutrality. That is fixed by the amendments we agreed at the select committee.

Another issue that was raised by submitters, which I do not think we have properly addressed in this bill—although it is not so serious a flaw as to mean that the Labour Party is going to vote against it—is that we have, in a description sense, weakened the provisions relating to equal opportunity. The provisions that are in the existing Act relating to equal opportunity are still there in some way in the replacement legislation, but they are not as up there in lights as they were. Given that there remain substantial disparities in the remuneration of women, there are also substantial income gaps—[Bell rung] Mr—

Paul Foster-Bell: Mr Chair, I move that the question be now put.

The CHAIRPERSON (Lindsay Tisch): No, I had actually indicated to the Hon David Parker. And the member must call. You do not just state what you want to do; you must call “Mr Chairman”, so that it gets my attention. All right? You must do that. I am giving the call to the Hon David Parker.

Hon DAVID PARKER: It is a new point, and it is notable in respect of the contribution of the last member, the Hon David Cunliffe, that there has been no repetition; we are actually all covering new points, because there are many of them to make. The—now I have lost my train of thought.

Hon Ruth Dyson: I’m sorry about that.

Hon DAVID PARKER: That is all right. One of the other amendments made by this legislation, to which we agree in principle, is the broadening of objectives across the State sector. I do not want to give this too much elevation, because what is now being given statutory effect to, in terms of the way in which appropriations can be voted across departments, should be able to be achieved through cooperation between departments now.

It has always been the case that certain complex initiatives reach beyond one department. An instance that I personally was involved in was, of course, trying to get down New Zealand’s emissions growth rate in respect of climate change emissions. The ministries that touch the parts of the economy that interact with emitting industries include, to name but some: the Ministry for Primary Industries; obviously, the energy division of the former Ministry of Economic Development, now part of the Ministry of Business, Innovation and Employment; the Ministry of Transport; and the Ministry for the Environment.

In respect of the need to change our direction across departmental efforts, that was achieved under the existing legislation. Although the Government claims that the changes that are proposed by this legislation will ensure that you can get more cooperation across departments, I think it is somewhat of a slight to the Government departments of the past to suggest that that cannot be achieved if there is a political will to do so. The key to that lies, more often than not, in the personnel, the forcefulness of Ministers, the clarity of direction from Cabinet, and the capability of the different parts of the Public Service that need to cooperate in respect of achieving complex change.

The area that I did not finish talking about in my previous contribution was this issue as to indemnity compared with immunity from prosecution. The area that I—and I am a lawyer—felt that we did not quite get to the bottom of was whether we are creating a lacuna, or a gap in the rights of an injured party where the public servant, acting in good faith but in a way that is against an express instruction of their employer because they have made a terrible mistake and they did not read the instructions or do whatever they were told by their employer, might do something that causes harm to a citizen that might give rise to a right of civil action against the public servant but not against the Crown because the actions of the public servant are so wrong as to not fall within the vicarious responsibilities of the Crown as the employer.

By granting immunity from civil suit, we risk leaving the injured New Zealander without remedy. It is a very narrow set of circumstances, but it is, I think, possible, and I was not satisfied that through this legislation we are not—because we are taking the immunity route rather than the indemnity route. We are giving immunity from civil suit, rather than indemnifying the public servant against the consequences of civil suit. I think there is a possibility that an injured party can have no right of civil redress because they have not got a right to include the public servant in a civil proceeding and they have got no right of claim against the Crown itself. So I thought the Law Commission advice in that regard was correct and that we should not be trying to fix it in this legislation. We should await the review that the Law Commission has under way into that serious point of law. The other point I was going to make will have to wait for a later contribution.

Hon TREVOR MALLARD (Labour—Hutt South): I have had some experience working in this area as the Minister of State Services for 6 years, and I was one of the lucky people who sat for many hours through the night in 1987-88, when the original legislation was passed. I think, by way of introductory comment on Part 1 of the State Sector and Public Finance Reform Bill, it became my concern as a Minister that in fact the original legislation set up silos to too great an extent. As a result of that, there were a number of areas of whole-of-Government action that could not be implemented, because the priorities of the chief executives were to their specific responsibilities rather than to the Government as a whole or New Zealand as a whole. So I certainly do support the policy intent behind Part 1 of the bill, which is really around reducing or removing barriers to closer cooperation and alignment of agencies within the State sector. I think there has been a bit of loose talk in this debate, especially from members opposite, and a little bit of a lesson about the Public Service and the State sector is something that is worth some focusing on as far as members are concerned.

Members also need to understand the different position of Crown entities and the relationship of Ministers to them, and the relationship of the State Services Commissioner to those different organisations. There are some areas where he has some quite direct responsibility, including the appointment and the reporting function for the chief executives as far as their performance is concerned, and there are others where he or she has an advisory role. It is important, I think, that we do not get that mixed up, and there has been a tendency to do that. Again, there cannot be much argument about the primary focus here—about the need to deliver value for money from taxpayers’ funds. To do that there needs to be properly coordinated leadership across the Public Service in particular, and this bill, especially in Part 1, does go towards that, to some extent.

I think there are questions, though, that need to be asked about the term—about whether we are talking about value for money in the short term, whether we are talking about this year’s Budget, or whether we are talking about value for money in investment over a period of time and the building up of a Public Service that works in the medium and longer term, and the investment that is required to do that. It is more in the next part, but there is some relationship here around the Public Finance Act and the multi-category appropriations, which I am sure we will get back to.

I do want to say, having reviewed the bill when it was first introduced and when it came out of the Finance and Expenditure Committee, that I think the select committee did a very good job. There are some significant improvements in the bill. What I am not sure of—and I am sure one of my colleagues will be able to, by way of interjection, let me know—is who was chairing the select committee at the time.

Hon Phil Goff: Todd McClay.

Hon TREVOR MALLARD: Was it Todd McClay? Oh, well, I was going to be complimentary, but seeing that the man wants to line dogs up and kill them for drug dealers, I will not be as complimentary as I would otherwise be. But maybe there are some talents—

Hon Ruth Dyson: He wants to do what?

Hon TREVOR MALLARD: Well, it is only right at the edge of this, but I think it is fair to say that it does go to the question of policy advice, and the question of which Ministers are run by departments and which of them have their own opinions, and the balance here. It is clear that Todd McClay showed some independence as the chair of the committee in order to get a bill around which, if not full consensus, then a large consensus could be built. But, apparently, now that he is a Minister he has fallen straight into the arms of the bureaucracy, and he wants to kill dogs so that drug dealers can have bigger profits. Normally, it takes 4 or 5 weeks for a Minister to fall into the arms of the department and to stop showing any independence—

Hon Ruth Dyson: He ran.

Hon TREVOR MALLARD: Well, he ran and he jumped. He ran and he jumped, straight into the arms of the department. It smothered him, and any sensible opinion went with it. But I think we will be talking about that more as time goes on. The idea of sacrificing dogs so that drug dealers can have bigger profits is something that I just cannot believe. I just cannot believe any Minister would accept any such advice that came from a department that was set up under the legislation that we are currently amending.

As I indicated, there are some reservations that we are concerned about. Some areas have been strengthened. Conflict of interest provisions have been strengthened where the delegation of powers is proposed from any State sector entity, and the application of the Ombudsmen Act has been clarified. That, especially the clarification, is useful. I think there are still some discussions to be had, as we go on, as to the question of the delegation of powers and the appropriateness of that.

There is one area where I want to take issue with both the decision of the select committee and maybe even some of my own colleagues, and that is around the statements of intent and their usefulness as actual planning documents. I have been around long enough to see a whole pile of different contractual arrangements between Ministers and their departments, and I think there is some overrating of the statement of intent process, as to whether or not they are actually useful. It does depend very much on the Minister and the department.

As we look particularly at clause 49, which replaces sections 61A and 61B, and areas around that part of the bill, I think we will end up finding that in respect of redundancy and the advice in that area there will be different opinions and different approaches that are appropriate.

I am certainly of the view—and I think I share it with my Labour colleagues—that the delegation of powers from the core State sector to non-State partners and implementing agencies is constructed too broadly. I think it is fair to say that we will be watching very carefully how these delegations occur, and what use is made of them. In a funny way, it does not matter whether they are used—if they are used not at all, well, then they are useless, and if they are used too much, then there is a problem. It might well be that there is an overlap between the two.

My colleague David Parker has spoken on the question of immunity and indemnity. That is a technical legal area that I am sure pointy-head QCs will be—

Hon Ruth Dyson: Probably Jonathan Hayes.

Hon TREVOR MALLARD: No. Pointy-head QCs will be having some discussions about going forward. No doubt when David Parker is the Attorney-General, he will be involved in some of that as well.

It is my view that on balance this bill is something that is now worth supporting. [Interruption] Sorry? Well, actually, Mr Bennett will never ever be in a position where he has any chance of being directly involved in the State Sector Act as a Minister. He is someone who has been leaped over by talented colleague after talented colleague. He has been left behind. The sort of inane interjections that we are hearing from David Bennett on this bill are just an indication—and even his colleagues are looking embarrassed. He is going red, and his colleagues are rolling their eyes because they know that David Bennett just does not understand this area at all.

Hon PHIL GOFF (Labour—Mt Roskill): As the Committee knows, the purpose of the Committee stage—if David Bennett wants to cease his inane interjections across the Chamber, I will continue—of a bill is to get the Minister in the chair to answer questions about what the bill will actually do. We had a series of very laid-back Ministers in the chair, and this one, the Minister for Courts, is no exception. I would like to see the Minister take the call, because I think there are a lot of serious questions about this bill that need answers.

In particular, Minister, I want to ask you about the utility of this bill in achieving the objectives of Better Public Services. The Minister in the report-back stage of the bill, the second reading, said: “The changes are designed to enable the delivery of Better Public Services and more effective and efficient achievement of results.” He went on to say that the Better Public Services programme was one of the four key priorities of the Government. Well, I have in my hand a document that I have received under the Official Information Act. It is the Ernst and Young report, and it is entitled: FINAL DRAFT: Better Public Services Programme: Independent Quality Assurance. It is dated December last year. It is 6 months old. The summary of Ernst and Young—

Hon Trevor Mallard: Is this another leak?

Hon PHIL GOFF: Well, it is officially leaked, this one, because the Government had to give it out when it was requested.

This is a document that is designed to see whether the Public Service, the State sector, is delivering better public services and the Government is achieving the goal of its programme. What does it say? I want to quote this one sentence: “Our assessment is that the programme has yet to develop critical elements that are fundamental and necessary to achieve its aims …”. You know what that means: it means that the Better Public Services programme, Minister—one of the flagships of the National Government—has so far failed. It gives the reasons for this. I want to summarise the reasons—there are three. It lacks ownership, leadership, formal accountability, and prioritisation. Well, that is a responsibility, surely, Minister, of the Minister of State Services and his chief executive.

Secondly, it says: “The programme does not yet have an explicit and widely agreed model or strategy for achieving change.” You have got a key goal of a Government department and there is no strategy to achieve it. This is what the Government pays hundreds of thousands of dollars to Ernst and Young to tell it. Well, Minister, why is it that you do not have a strategy to achieve it, and will this bill actually help to deliver that outcome?

The third thing—the third thing is important too—is that it says that the programme does not have sufficient resources allocated. Well, that is a budgetary function of Government. So we have an official analysis of the Better Public Services that the Minister said this bill is designed to achieve, and the Government is committed to achieving, and it is not achieving them, because it lacks leadership, it lacks strategy, and it lacks resources.

I would like the Minister to tell the Committee how this bill will turn that round. This is a key goal of the Government. It is not being achieved. That is what the report says. I am happy to give the Minister a copy. I will table it for you, if you like, Minister. I presume you have read it. It says that you are not succeeding on those goals. Firstly, how are you going to turn round those factors? I do not believe that the legislation before us addresses any of those factors in terms of making sure that we achieve the Better Public Services goals that the Government uses rhetoric about but fails to deliver on in terms of leadership, strategy, or resources.

I want to look at the amendments to the State Sector Act that we are examining right now. The first change says that it will strengthen the role of the State Services Commissioner in leading the State services. I would like to ask the Minister whether strengthening the role of the State Services Commissioner will help overcome what the ministerial inquiry into the Novopay debacle found. What did the inquiry find? It found, first of all, that it was a debacle, that teachers were not getting their salaries paid correctly 6 months after it was introduced. It said that the cost of the programme had doubled—another $23 million. It said that all of this was avoidable, and it said that the Government had ignored the lessons of the past. In 1996 the education payroll had similar difficulties. Here, 16 years later, we have got the same thing again.

The INCIS experience, which cost $100 million of money put into the police, was a parallel case. Steven Joyce said that this was the result of failure of leadership of the State Services Commission. I would like to ask the Minister how the provisions put in this bill might have turned round the Novopay debacle. Could that have been prevented with the provisions in this bill; if not, what is the Government doing to make sure that we do have an efficient Public Service, and not one that results in a debacle such as we saw with Novopay? Secondly, of the changes made, the bill said “Broadening the Commissioner’s functions to include the ability to transfer chief executives”.

Well, Minister, I want to stay with education and use another example and ask you how the Act would have applied in this case. Lesley Longstone left after a year in the job of chief executive officer, at the expense of $425,000 in costs to the taxpayer, and she left, essentially, if you read between the lines, because she could not get on with her Minister. So would that have been the case under this bill, if this bill had been enacted before that event? Hekia Parata is apparently a very hard Minister to work for. Nobody was saying that Lesley Longstone was incompetent in the job. In fact, the Minister of State Services refused to say that. Would you be able, when you have an incompetent Minister who is hard to work with, to transfer the chief executive to another department so that the taxpayer is not paying over $400,000 to get rid of somebody whom you have just put in the job?

Hon Trevor Mallard: We have done that in the past.

Hon PHIL GOFF: Well, it has been done in the past but this gives an explicit power to the chief executive to transfer.

The next one is extending the responsibilities of chief executives to their Ministers. That is what the bill says. It is the third change. If there is a responsibility on the part of the chief executive to the Minister—I hope you are listening, Minister—is there a counter-responsibility of the Minister to the chief executive? As long as I was a Minister, there was always a strong convention that Ministers did not go out and bag their chief executives, and yet we saw Murray McCully bag John Allen. We know that Murray McCully was behind the change programme. It got unpopular, so he bagged John Allen and said “You got it wrong.”, even though John Allen was carrying out all of his responsibilities.

So if this bill creates a responsibility of the chief executive to the Minister, what responsibility does it create of the Minister back to the chief executive? Is it permissible, under this bill, for a Minister to go out and bag his chief executive, who cannot reply, who is defenceless, and who can be slandered by his Minister and forced to take the responsibility? If that was an isolated example, I would feel more comfortable, Minister, but clearly it is not, because Nathan Guy—the Committee will recall—did exactly the same thing. Nathan Guy was responsible for meat exports sitting on the wharves in China for 3 weeks, at a loss of millions and millions of dollars, because the Government got it wrong. The Government restructured the Ministry for Primary Industries, it did away with the Food Safety Authority, which worked very effectively, and we jeopardised our trade in meat with China, which has doubled in the last year.

I want to know why it is that a Minister can go out again and bag his department but not take responsibility himself. So is this bill one-sided in creating a responsibility on the part of the chief executive to the Minister but taking away the responsibility of the Minister to the chief executive, or, in fact, is it taking away the responsibility of the Minister to be responsible and to actually earn the quarter of a million dollars that he or she earns each year by actually doing their job and not sitting back and waiting for the Civil Service to do it and then blaming them when they do not? So that is the third question, Minister, and if you are having trouble following these, they are all set out in the bill, one by one—the changes that are being made.

One of the other changes is about creating a new organisational arrangement called a departmental agency, as a way of providing public services. This sits in a host department and would administer the appropriations used by the departmental agency, but it would have its own chief executive. Can the Minister give the Committee—

KRIS FAAFOI (Labour—Mana): Thank you very much, Mr Chair, I think, for allowing me the call.

Hon Trevor Mallard: The police spokesperson will be back on the beat.

KRIS FAAFOI: Yes, that is right. Oh, well—numbers are dwindling. Thank you very much for the chance to speak to Part 1 of the State Sector and Public Finance Reform Bill. Every so often, John Hayes says something in this Chamber that needs to have some kind of rebuttal, and I was watching from my office the very brief contribution he gave to the bill, where he did say that this bill is about Better Public Services, and about the objective for the Government to try to make sure there are much more efficient and effective public services here in New Zealand. But as Mr Goff has pointed out, there are many examples that show—and he also cited an Ernst and Young report that says this—that the Government has failed in that respect.

I did want to point out another very apt example of where the Government has failed to deliver better public services, which has been highlighted by the Police Association in its latest Police News magazine, in July. This is a Government that says it wants better public services, and law and order is certainly one of those places where it trumpets its success. But in the latest Police News magazine out from the Police Association this week, it shows that what the Government is trying to achieve in terms of better public services with our police is failing dismally with the people who are trying to deliver that public service. A survey of nearly 4,000 members of the Police Association, just three shy of 4,000, has shown that only 6 percent of our Police Association members—of 4,000 members, I will point out again—more likely our front-line police officers, think there has been improved efficiency, effectiveness, or service to the public as part of the Government’s Better Public Services push within the police. So 6 percent of our front-line police staff think that the Government is doing a good job of restructuring and its push for Better Public Services—6 percent. Six out of 100 police staff think that this Government is doing a very good job of the services that they offer to the community to make sure that our communities are safer.

In that respect, Mr Hayes’ objective—this Government’s objective—in the State Sector and Public Finance Reform Bill is an absolute failure, and that is not just in the eyes of the public but also in the eyes of the people who are delivering the service: our front-line police officers. There are concerns within the ranks in terms of the Government’s objective of making things much more efficient and effective. Of those staff members who were surveyed, 61 percent said that staffing shortages were in the top three concerns that they had. That is 61 percent of those 4,000 people surveyed who said that staffing shortages within police in our communities is a concern. That is hardly achieving that goal of better public services. Of the 4,000 people surveyed in this Police Association survey, 45 percent said that resourcing shortages were one of their top three concerns—hardly this Government delivering better public services to our communities.

This is a very concerning message from our Police Association because we are talking about our public safety here, which is something that this Government over there is full of rhetoric about. But it is clear from the people who are delivering the services that the Government’s claim that it is delivering better public services via our police is not the actual reality. That side of the Chamber is full of plenty of rhetoric, but the reality and the message back from those people who are delivering the services is that this Government is doing a very bad job of delivering those better public services when it comes to police. As I said, just 6 percent of those 4,000 front-line police staff think this Government is doing a good job and is helping them deliver improved efficiency, effectiveness, and a good service to the public.

We also had some reservations around some redundancy provisions within this bill. I must commend some members of the Finance and Expenditure Committee who are on this side of the Chamber who did manage to make some very big changes around the redundancy provisions. We did manage to make some amendments to the bill at the select committee consideration. Before we got to the select committee, things were awful, but due to the hard work of the Labour members on the Finance and Expenditure Committee, we managed to make some amendments to make sure things were much better for those within our public sector who were going to face redundancy.

Redundancy is also a very important word in terms of the police restructuring. Last year the Government announced that because of the effect of budget cuts to the police, somewhere between 150 and 170 back-office police staff were going to be made redundant. There was very little prospect of them being able to be shifted to different jobs within the police organisation, because things were so tight because this Government cut the police budget.

I did just want to point to clause 49 within Part 1, relating to a restriction of redundancy payments in certain situations, where people might be able to be moved to an alternative position. I just did want to quickly go through each of these situations where someone could not have a redundancy payment offered to them, because an alternative position was found. The select committee said on the insertion of sections 61A and 61B that someone who “begins before, on, or immediately after the date on which the employee’s current employment ends;” is not open to get any redundancy. Someone who is offered “a position with comparable duties and responsibilities to those of the employee’s”—

Hon Ruth Dyson: Comparable.

KRIS FAAFOI: —comparable, or com-parable, Ruth Dyson—“current position;” probably would not be able to get redundancy. Someone who “is in substantially the same general locality or a locality within reasonable commuting distance;” would not necessarily be able to get this redundancy. And someone who “is on terms and conditions of employment ... that are no less favourable;” would not be able to get a redundancy payment. I am wondering right now whether those 170-odd people who used to work for the police about a year ago, and who no longer work for the police, would quite like those provisions within their termination agreements that they have with the police.

The changes that are made within this bill do certainly go to the heart of some of the changes that are happening in our police sector at the moment. It is clear from the Police Association survey that the police staff themselves are not happy, because of those changes, which really restrict their ability to be what the Government wants them to be—more efficient and more effective. And it is plain to see that they think the changes and the budget cuts that the Government is putting them through are not helping them deliver those better public services that Mr Hayes has pointed out. That is quite sad, and it is also very risky, in terms of our public safety, because I think everyone in this House would agree that we do want to have, in terms of our police, better public services. But when the Government is putting our police force under extreme budget pressure, which is leading to front-line staffing shortages and resourcing shortages, that could have a very damaging or very dangerous effect in our community if our police are not able to respond to or prevent crime, which we would like them to do.

If this Government were to be true to what Mr Hayes has pointed out—wanting to be delivering better public services for the safety of all of our communities—maybe it should not act with its intentions to cut the police budget, which, as I have said, has really damaged the confidence of our police staff through their ability to do their job and to be properly resourced for their job. I think, subsequently, when people read this, they will be upset or concerned that our police force is out there trying to do a job, trying to be effective, and this Government has said it is delivering better public services, but the reality and the rhetoric do not match up.

We are supporting this bill but we are doing it with reservations, and the reservation I pointed out in the police arena is certainly one where this Government should take heed.

CAROL BEAUMONT (Labour): E ngā mana, e ngā reo, e ngā tangata o te wa. Tēnā koutou, tēnā koutou, tēnā koutou katoa. I rise to speak, along with my colleagues, in support of this bill, the State Sector and Public Finance Reform Bill. We have, however, some reservations that we will be outlining throughout this.

It is probably clear to people, and I am sure the point has already been made, that we did oppose this bill at its first reading. But I am very proud of the fact that my Labour colleagues on the Finance and Expenditure Committee, along with the State sector unions, have averted disaster for Government workers, who were set to lose their redundancy entitlements and employment rights. Part 1 of the bill that we are talking about covers this quite comprehensively. The Labour members of the Finance and Expenditure Committee did fight long and hard to get some very important changes. I am aware that the unions that represent our public servants believe that those changes are sufficient.

It is interesting to come into the Chamber to talk on this bill and this particular matter of the treatment of public servants, as, during the dinner break, I was at a meeting with people from Transparency International New Zealand, and they were talking about the Corruption Perceptions Index. One of the points they made was that the New Zealand public sector is perceived as the least corrupt in the world. That is pretty amazing. That is about the quality of our public servants, and it really says to me that how we treat our public servants—the working conditions, the rates of pay, obviously, but also the other conditions of employment—is actually very important. To maintain a corruption-free Public Service is critically important. It has a range of benefits, and we are looked up to internationally still for that.

I thought that that was quite amazing. Recognising the work of our public servants is something that often is not done. Quite often, people make cheap political points about bureaucrats. They make cheap political points about there being too many of these people who are not doing front-office functions—that they are actually a drain on the taxpayer. Well, actually, they perform vitally important roles.

We were concerned that the attempts in this bill that were around trying to have a more flexible, innovative, and efficient set of State services, and the ability to move people and to restrict entitlements to redundancy, and so on, were actually going to undermine public servants and treat them in a way that was not fair and reasonable. I am glad that the redundancy provisions have been improved, and that State sector employees—public servants—will retain their entitlements unless accepting a position that is no less favourable than their existing package. That was quite an important debate, as I understand it, because originally the wording had a qualifier—“overall” no less favourable. The interesting thing is that in law the debate about what that would look like certainly did not require the terms and conditions to be exactly the same. But we were satisfied with deleting the word “overall”, because we felt that that actually was likely to maintain protections for employees. We do note, though, that we have some reservations about this. There is a risk that courts could be too liberal in their view of interpreting what “no less favourable” means.

We are concerned also, along with the Public Service Association, that the right for Public Service workers to bargain their redundancy provisions has been removed, and a proper redeployment scheme has not been reconsidered. It is important in times of high unemployment, and when in fact there have been cuts throughout the Public Service, that we do consider things like redeployment, that we do consider people’s needs for job security. There are many public servants who have lost their jobs, and who are now in the situation of being unemployed. I think it is a shame that there was not greater consideration around those redeployment provisions. The transitional arrangements have also been approved so that collective agreements and individual agreements are “sunsetted” equally.

One of the other things that I think is interesting in this part of the bill is around the Government Workforce Policy Statement. There has been some revision there to ensure that current legal and bargaining rights have been protected. That is really important. Originally, there was a mechanism for a Government Workforce Policy Order, and the select committee has recommended renaming the Government Workforce Policy Order as a Government Workforce Policy Statement—so a statement, rather than an order—to clarify the provisions and to constrain them to their intended effect.

The important thing here is that the orders indicate a broad Government policy intention around how the State services should approach employment relations and workforce capability, to create a more transparent and consultative mechanism for developing formal workforce policy for the State services. These orders, though, were not intended to have legislative effect nor to override existing legal rights or obligations, including negotiated terms for pay and conditions in existing bargaining rights. That is really important, and, certainly, we on this side of the Chamber strongly support the rights of workers to negotiate their terms and conditions of employment, and to ensure the right to bargain and the right to protection of those negotiated terms and conditions of employment. We are very pleased that the amendments to these provisions make it clear that these statements do not have legal force and do not undermine existing bargaining rights. But, having said that, we have ongoing reservations that notwithstanding the clarity of these provisions the Government may try to use these instruments as a binding force. So, for the avoidance of doubt, Labour would like to reiterate that we and the committee, in its consideration of the bill, do not consider these statements to be legally binding.

It is worth noting, I think, as we are discussing these types of provisions, that, of course, we are in a situation in this country where workers’ rights are under attack. Since National was elected in 2008 we have seen the undermining of a whole number of provisions that affect workers—things that would, basically, reduce wages. The Employment Relations Amendment Bill, which is now before a select committee, is certainly in that category. So you can understand why, when looking at a bill like this, we might be concerned and might, along with the unions—the Public Service Association, the Council of Trade Unions, and others—be very concerned about these types of provisions around redundancy clauses and around workforce policy statements. This is a Government that does not respect workers’ rights to collectively bargain. It does not respect workers’ rights to be in unions, and certainly it has done nothing to see us move to the kind of high-wage, high-skill, highly productive economy that this country so desperately needs. In fact, wages have been flat-lining or reducing for many New Zealanders. We are a low-wage economy, and that will continue to hamper our ability to move forward economically.

So those are the sorts of, I guess, umbrella concerns that we had when we were looking at this legislation, and I think anybody listening to this and anybody who is aware of the record of the Government and its current intentions around the Employment Relations Amendment Bill would think it made absolute sense that we were very concerned about those provisions.

Again, I reiterate the fact that I am very proud of the work that was done by the members of the Finance and Expenditure Committee, particularly around the provisions of this part, Part 1, which involves amendments to the State Sector Act, to ensure that some of these concerns around redundancy and the possibility of these workforce policy statements undermining legal and bargaining rights have been significantly improved. I have outlined, however, that we retain some existing concerns, so that is why we are supporting this bill with reservations. I think that it is not surprising to see—

The CHAIRPERSON (H V Ross Robertson): I call the honourable member the Hon Trevor Mallard.

Hon TREVOR MALLARD (Labour—Hutt South): Thank you, Mr Chairperson. It is something I like to be called. I want to start off with not entirely agreeing with Carol Beaumont, my colleague whom I am following, because I had a period as Minister of State Services and it is fair to say that for a period of time it was relatively frustrating. One of the frustrating things was the “siloisation” of the Public Service. You would have people who were doing exactly the same job from department to department, but their conditions were all different. They were all higgledy-piggledy. We used to, especially in areas of shortage—in those days we were not firing public servants. We were looking for good policy people and people who wanted to work hard in the implementation areas, and there was actually something of a shortage of skills. One of the problems that Dr Cullen used to complain about occasionally to me as the Minister of State Services was that there used to be interdepartmental bidding. You know, one department would bid for someone, and someone would bid more and they would go back. I think it is fair to say that over a period of time, salaries moved in a way that Dr Cullen was uncomfortable with as Minister of Finance.

The other point I would like to make to the member is that, unfortunately, because too many of the chief executives, especially in our early days, had been appointed in the times of Bill Birch and others, they were of the group who were much keener on having individual contracts and much less likely to want to bargain. In fact, we had this awful intransigence on the part of many employers, some of whom—the chief executives—actively resisted putting salary or wage levels into agreements. The problem was that under the law, as Ministers, we did not have the power to work towards a set of policies that were enforceable and could properly be implemented.

That is why I would say that I—and I am going to, sort of, maybe, admit that if this detail was carefully discussed within our caucus, I missed it. But I want to say to my colleagues that, in fact, actually having Governments that have policies rather than high-level statements, and policies that can be enforced in the hands of a good Government, is a good thing—in the hands of a good Government. But you then go to the question about whether Parliament should be designing legislation on the assumption that Governments that are going to be using it are always going to be bad. What I want to tell my colleague Carol Beaumont is that good Governments will do good stuff, and bad Governments will do bad stuff, no matter what the law is. Therefore, my view is that even from Opposition what we should be doing is developing the law in the format that we can use properly from November next year or at some point earlier, if John Key gets the pip and tosses in the towel.

So if members opposite can see division in the ranks over here, it is probably true. You know, there is a bit of difference of opinion as to approach. I would like to see more multi-employer arrangements within the Public Service, and, in fact, where there are employment categories, or employment classes, I would like to see common conditions.

While we are at it, I will really get the frustrations going in saying that I worked for about 18 months trying to get some common leave provisions across the Public Service.

Carol Beaumont: How about in collective agreements?

Hon TREVOR MALLARD: I wanted to get them into collective agreements, yes. But, you know, some of the chief executives, at the very thought that a Minister might have an opinion about having particular sets of leave arrangements that are common and that it would not matter if you were working in the Ministry of Social Development or in the Department of the Prime Minister and Cabinet—I will not mention Treasury, because it basically did not have any common conditions. There were no collective agreements within Treasury at all. But even the organisations that had collective agreements shuddered at the very thought that someone might have the same set of leave or sick pay provisions that were the same in one agency and in the one next door, where people were doing exactly the same work.

There are a number of areas as a Minister I failed in, and one of them that I failed miserably in was in my attempt to get a system going where common conditions could be developed for people who were doing very much the same work from agency to agency. The fiefdoms were absolute. The silos were not made of concrete; they were made of reinforced titanium, and people could not move. People could not move from one to another.

Actually, if you are looking at areas like redundancy and things like that, sometimes it is by far the best thing for the Public Service overall if a particular individual shifts from one agency to another—slightly better for them, but sometimes, because of the skills that are required, it is better for the Public Service for the individual to shift. But when the conditions are so tight that in shifting from one agency to another the individual loses a whole pile of long service leave arrangements or sick pay or holidays or a number of areas, it just does not happen, and the Public Service becomes inflexible and staid as a result. So I say to my colleagues that the idea of having more than just common statements, having policies that are actually implemented, is something that I think is desirable.

Carol Beaumont: Not instead of collective bargaining, though.

Hon TREVOR MALLARD: Well, the member says not instead of collective bargaining. Actually, it should be the employer’s position for the collective bargaining. My view is that the best advocate for common positions across the Public Service is, in fact, the Public Service Association. In fact, it was the one with the most interest in having a Public Service that was relevant and flexible, and people were employed.

The problem with the approach that happened under Birch and is happening now—who is that cigar-smoking Minister? What is his name?

Dr David Clark: Mr Coleman.

Hon TREVOR MALLARD: Coleman.

The CHAIRPERSON (H V Ross Robertson): Order! Jonathan.

Hon TREVOR MALLARD: The Hon Dr Jonathan Coleman, or Dr the Hon—which way? He is the one who gets on so well in the corporate boxes. The problem is that there are a number of departments where people are leaving and coming back as contractors. They are getting sometimes quite a handsome redundancy arrangement and coming back weeks later, sometimes working only 3 days a week but for double the money. That is something that is outrageous, and it is something that we have to work against. [Interruption] Well, this bill does not address it properly, and it is a gap in the amendments that we are currently deliberating.

The other question that I would like to ask the Minister of State Services—and I am not going to refer to the absence of the Minister, but I will refer to the fact that the Minister of Labour, who is in the chair, might be familiar with the legislation, and I am sure he is capable of reading the briefing notes that come up. What I would like to ask is what the implications of this bill are for the State Services Commissioner if, in fact, the State Services Commissioner is going to be used as the recruiting agent by the Prime Minister for the new Commissioner of Police. Are there any changes as a result?

One of the early problems that we had when we were in Government was a man called Doone. There was a rapid appointment of a successor, but that also highlighted for a number of Ministers that the recruitment process was just completely undefined. It was just up in the air; there was nothing. I would like to know whether there is something here, because we have a very serious problem coming up. The heir presumptive for the position of the Commissioner of Police is someone who has very recently shown excessively bad judgment, someone who has told the—

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, te Tiamana.

The CHAIRPERSON (H V Ross Robertson): Tēnā koe.

TE URUROA FLAVELL: Tēnā koe. I te mea ko tēnei Te Wiki o Te Reo Māori me tuku au i taku kōrero i roto i te reo o ngā mātua o ngā tūpuna ki a tātau i tēnei pō, kia whai wāhi au ki te kōrero ki taku kupu whakahōunga, ka mutu, kia taea ai te whakamārama ake i te āhuatanga o tāku kupu whakahōunga. Āpōpō e eke ai ki te tuawhā o tēnei marama i te tau 1868 i eke mai ngā mema Pāremata e whā ki roto i ngā pakitara o tēnei Whare. Nō reira, me whakanui tātau i te ekenga mai o ngā Māori tuatahi ki roto i tēnei Whare āpōpō.

He aha i haramai ai rātau ki konei? Te tikanga ia kia whai wāhi Te Reo Māori i roto i ngā nekeneke o te Whare Pāremata, ka mutu, e ai ki tā tētahi o aua mema, e ai ki tā Tāreha Te Moananui, te mema Pāremata me kī, ki taku mōhio, mō Te Tai Rāwhiti, nāna tonu te Kāwanatanga i āki ki te hanga i ētahi ture pai mō te Māori me Te Ao Pākehā. Koinā tāna whakahōu i te wā i eke mai ia ki roto i te Whare Pāremata. Arā anō a Hone Paratene Tamanuiārangi mō Te Tai Tonga. A Takarangi Mete-Kīngi Te Rangipaetahi o Te Tai Hauāuru, ka mutu, ko Tāreha Te Moananui o Te Tai Rāwhiti, ko Frederick Russell nō roto o Te Tai Tokerau. Koirā rātau ngā mema. Nā rātau te kī me hanga te Kāwanatanga i ētahi ture pai mō Te Ao Pākehā, mō Te Ao Māori, mō tātau katoa. Nō reira, anei tātau e 145 tau i muri mai e pēnei anō te āhuatanga o ngā mahi kei mua i a tātau. Nō reira ā kāti.

Koinei au e whakaara ake i taku kupu whakahōunga ki roto i te Whare Pāremata i te mea, e kore te Pāti Māori e tautoko i tēnei pire i tōna hanga i tēnei wā. Nāku nā te Pāti Māori tonu i kōkiri tētahi kupu whakahōunga ki te whakaara ake i tētahi tikanga kua roa e kōreroia ana e mātau, arā, kia whai wāhi Te Tiriti o Waitangi i roto i ngā nekeneke o te Whare Pāremata. He aha te take kua huri atu ki Te Tiriti o Waitangi? I te mea, nā Te Tiriti o Waitangi i whai wāhi te Kāwanatanga ki konei ki Aotearoa nei. Ka mutu, i roto i Te Tiriti o Waitangi ā-Pākehā nei ko te kupu “Kāwanatanga”. He aha te tikanga o tērā ki tēnei pire? Ā, ko ngā tari o te Kāwanatanga te whakatinanatanga o te kupu “Kāwanatanga”. Mā reira ka whai wāhi ahau ki te kōrero mō te whānuitanga o Te Tiriti o Waitangi i roto i tēnei pire.

E te Tiamana nāku tonu tētahi kupu i whakatakoto ki mua i te Whare Pāremata me taku whakamārama ki a koe, i tuhi reta mātau ki te Minita mō tēnei o ngā kaupapa ki te Hōnore Tākuta Jonathan Coleman ki te kī atu, me whai wāhi tētahi kupu kōrero mō Te Tiriti o Waitangi ki roto i tēnei pire ēngari, kāre i aro mai. Hāunga, kei konei te Whare Pāremata. Ka riro mā tātau tērā e whakatika. Kia pēnei tonu taku kōrero ki a koe, kāore tētahi kupu mō Te Tiriti o Waitangi i roto i tēnei pire. Ko tā mātau ko te kī atu, kei te hē rawa atu tērā. Mēnā ka whai wāhi tētahi rārangi kōrero mō Te Tiriti o Waitangi i roto i tēnei pire, ko te tino pūtake o tā mātau āki i tēnei take, ko te kī atu ki ngā tumuaki, ki ngā kaihautū o ngā tari Kāwanatanga, kia tuhia ki roto i wā rātau kupu whāinga, ngā tāhūhū kōrero, o tēnā tari, o tēnā tari, o tēnā tari o te Kāwanatanga, i ō rātau ake hiahia, ō rātau tūmanako, ka mutu, wā rātau whakatau mō ngā painga ka pā mai ki te iwi Māori, ka mutu, ko te hunga manene ka eke mai ki Aotearoa nei. Mā reira pea ka kitea mai ai he painga.

I ngā tau kua hipa ake, kua rongo nei tātau i ngā rārangi kōrero e hia kē nei e mea ana, kai raro Te Ao Māori e putu ana ā-mātauranga, ā-hauora, ā-whare karukaru nei. Kei reira tonu Te Ao Māori i ngā whare herehere nei. Mēnā ka taea e tātau te tuku i tētahi kupu kōrero mō Te Tiriti o Waitangi i roto i ngā kupu whāinga, mēnā ka taea e tātau te kī atu ki ngā tumuaki o ngā tari o te Kāwanatanga, me whakarite rātau i ētahi rārangi kōrero e hāngai tonu ana ki ngā hiahia o Te Ao Māori, mā reira pea ka kitea mai ai he painga.

Nō reira, kei roto i tēnei pire, ko tā mātau kua kī atu ko te State Sector Act, Crown Entities Act, Public Finance Act me whakarite i tētahi kupu ki a rātau ki te kī atu me whai i tēnei kaupapa. Mā reira ka taea e tātau te whakamātautau i a rātau, ka tahi, mēnā āe rānei, i eke ki tā rātau i kōrero ai, i whakatakoto ai, i tuhi ai, kāre rānei. Ki te kore, a panaia, panaia. Kāre wā rātau take. Ēngari i tēnei wā, kāre tētahi paku whakaritenga e pērā ana i roto i ngā nekeneke o ngā tari o te Kāwanatanga. Nō reira ko tā mātau i roto i tēnei rārangi, i tēnei wāhanga o te pire, he kupu kōrero mō te rara e 5, e āki ana i ngā tari o te Kāwanatanga kia pēnei tonu, kia āmine atu ki Te Tiriti o Waitangi, ka tahi. Ka rua, ka whai wāhi anō hoki i roto i wētahi atu o ngā wāhanga o te pire.

Nō reira waiho ake tērā ki reira. Kotahi pea, e rua pea ngā wā ka tū ake au ki te whakamārama i ngā hiahia o te Pāti Māori. Koinei te tino pūtake o tēnei pire ahakoa poto, inā kē te nui o ōna toronga, inā kē te nui o ōna whāinga, inā kē te nui o ōna painga mēnā ka whakaaetia mai e tēnei Komiti tāku kupu whakahōunga. Kei reira tonu, kei te rara e 162, he wāhi anō rā kai roto i tētahi wāhanga anō o te pire e kī ana, anei tētahi huarahi. Me whakatuwhera i te kuaha o te Kāwanatanga kia whai wāhi ki te tohutohu anō hoki i ngā tari o te Kāwanatanga, ki te whaiwhai haere i ētahi painga i tua atu o ngā mea e kitea nei e tātau i tēnei wā mō te iwi Māori, ā, ka mutu, mō ngā momo iwi katoa e noho mai nei i Aotearoa nei. Nō reira, me titiro tātau ki tērā 162. Ko tērā wāhanga tērā.

Ka mutu, ehara i te mea he nui ngā mea i tua atu o tērā ēngari, mā tēnei kaupapa ka whai wāhi tētahi akiakinga o te Kāhui Tikanga Tangata. I roto i wāna kōrero i ngā tau kua hipa ake, nānā tonu te kōrero ki te āta titiro ki te āhuatanga o te nohotahitanga o Te Ao Pākehā me Te Ao Māori, ka mutu, me āta rangahau, me āta arotake i ngā ture o roto i ngā whiriwhiringa o tēnei motu, kia whai wāhi ngā tikanga, ngā ahurea o Te Ao Māori i roto i ēnei āhuatanga katoa ēngari, mō tēnei pire, kāre mātau te Pāti Māori i te tino kite i tērā. Koinei mātau e whakatakoto nei i tēnei kaupapa, i tēnei kōrero ki mua i te aroaro o tēnei Whare Pāremata. Te tūmanako ia, anā ka āmine mai, ka tautoko mai tēnei Komiti i tēnei kupu whakahōunga ki mua ia i te Komiti, anā, mā reira pea ka eke ki te taumata e wawatatia ana e mātau o te Pāti Māori. Nō reira, tēnā koe kia ora tātau.

[Thank you. As this is Māori Language Week, I will deliver my speech tonight in the language of my ancestors so that I can speak to my Supplementary Order Paper and, furthermore, explain aspects of it. Tomorrow reaches the fourth of this month, when on this day in 1868 four members of Parliament entered the walls of this House. So we must celebrate the arrival of the first Māori members into this House tomorrow.

Why did they come here? It was to ensure that the Māori language was involved in House procedures. Eventually, and according to my understanding, one of those members—namely, Tāreha Te Moananui, member for the East Coast—urged the Government to create appropriate legislation for Māori and non-Māori people. That was the change he advocated at the time he came into Parliament House. There was Hone Paratene Tamanuiārangi of the south, Takarangi Mete-Kīngi Te Rangipaetahi of the west, Tāreha Te Moananui, of course, of the East Coast, and Frederick Russell of the north. Those were the members. They were the four who urged Government to make good legislation for Europeans, Māori, and all of us. And so here we are 145 years on and still addressing matters similar in nature in the business before us.

Hence this Supplementary Order Paper of mine, which I am raising in the House because the Māori Party will not support this bill as it stands at the moment. We the Māori Party drafted a Supplementary Order Paper to include the Treaty of Waitangi in Parliament procedures, which we have advocated for a long time. Why turn to the Treaty of Waitangi? It was the Treaty of Waitangi that gave the Government a place here in New Zealand. Furthermore, “Government” is referred to in the English version of the Treaty of Waitangi. In terms of this bill, what does that mean? Government departments are the manifestation of the word “Government”. That is the avenue that enables me to speak about the broad implications of the Treaty of Waitangi in this bill.

Mr Chairman, I raised a point of order before Parliament and explained to you that we wrote to the Minister the Hon Dr Jonathan Coleman to implore him to include a reference to the Treaty of Waitangi in this bill, but he chose to ignore it. Nevertheless, Parliament is here. We can rectify that. There is no reference at all to the Treaty of Waitangi in this bill. Our assertion is that it is a major oversight. If there was a statement about the Treaty of Waitangi in this bill, then our main thrust in this matter would be to urge chief executives and general managers of Government departments to write their aspirations and hopes into the aims and mission statements for each Government department and, furthermore, their conclusions about the benefits that will accrue to the Māori people and, subsequently, migrants that settle here in New Zealand. Gains may be seen through that process.

Over the past years we have repeatedly heard statements made that in terms of education, health, and housing, Māori are in an abysmal state. As far as the rate of imprisonment for Māori is concerned, the situation is the same there. If we can make a statement about the Treaty of Waitangi in the objectives, say to the heads of the Government departments to consider making statements that relate specifically to the aspirations of the Māori people, then gains may be seen.

So in terms of this bill we advocate that in the State Sector Act, the Crown Entities Act, and the Public Finance Act we should consider a statement directing Government departments to follow this policy. In the first instance this would enable us to evaluate them and to determine whether they achieved what they stated, set down, and wrote, or whether they did not. If they do not achieve, then sack them, get rid of them. They are no good. But at this point in time there is not a single mechanism like that in the workings of Government departments. So for this part of the bill, our Supplementary Order Paper for clause 5 urges Government departments to follow this and agree to the Treaty of Waitangi in the first instance. Secondly, we urge that it be included in other parts of the bill.

So I leave that there. I will take another call or two later to explain what the Māori Party hopes to achieve. This is the real gist of this bill and although it is a short one, the implications, aims, and benefits of my Supplementary Order Paper, if agreed to by this Committee, will be huge. There is another place that is still there in the bill, in clause 162, which states that here is another way. We need to open the door of Government to find an opportunity to direct Government departments to follow up other benefits beyond those we see Māori getting at the moment, and subsequently all kinds of people living here in New Zealand are getting. And so we should consider clause 162. So that is that part.

Furthermore, there is not much else, but this Supplementary Order Paper will give traction to some of the urgings of the Human Rights Commission. In his addresses in past years, he has stated that we must examine the situation relating to how Māori and Europeans live with each other, and how laws of negotiations in this country need to be researched and evaluated thoroughly so that Māori customs and culture are taken into account in all these situations. But as far as this bill is concerned, we the Māori Party do not really see that. This is why we are placing this Supplementary Order Paper and making this address before this Parliament. The fervent desire is that this Committee agree and support this Supplementary Order Paper before it. Perhaps it might reach the level of desire that the Māori Party is striving for. So thank you and salutations to us collectively.]

The CHAIRPERSON (H V Ross Robertson): [Interruption] Oh, gee. What am I bid? I call the honourable member Jacinda Ardern. Sorry, guys.

JACINDA ARDERN (Labour): Thank you.

Kris Faafoi: What a gentleman.

JACINDA ARDERN: I smiled a lot. This is my first call on the State Sector and Public Finance Reform Bill. I am pleased to have—

Hon Trevor Mallard: You only get four on this part.

JACINDA ARDERN: —an opportunity to speak to Part 1. I am pleased also to know how many opportunities I have to speak on Part 1, because it is an extensive part, and I think probably that the points I have to make will take some time.

I want to start with some of the recommendations and comments that were made by the Finance and Expenditure Committee on Part 1, particularly around the purpose of the bill. From someone who obviously did not sit on this committee, some clarification from the Minister in the chair, Nikki Kaye, on some issues would be beneficial to me and, perhaps, to other members of the Committee—in particular, the recommendation around amending clause 5, new section 1A(e), of the bill. There was obviously some debate amongst members of the select committee around the wording in the objective. If I could flick to the purpose clause of the bill in new section 1A, it says: “The purpose of this Act is to promote and uphold a State sector system”, and then it goes on to list the things that are required by the bill that are upheld.

An important question, I think, though, is to what degree does upholding become defending? To what degree does upholding then transition into defending, when there is potential for the erosion of certain objectives for the State sector? I say that because when we come down to paragraph (e), where the wording has been changed from “provides for” to “is supported by effective workforce and personnel arrangements;”, there was obviously some debate by select committee members. As that currently stands on the face of it, it sounds like it is almost a passive role for the State sector actors in that regard, but, obviously, I come at it from looking at an area of the State sector like the Ministry of Social Development, and like those who are working in Child, Youth and Family as public sector servants. To what degree is this bill to defend the role that they have when they are no longer able to act as an effective workforce because of workplace issues, for instance?

What role is there for intervention in order to support that workforce? What do I mean by that? Well, we know that the Government has pursued what, at various times, it has called capping, it has called streamlining, it has called efficiencies, it has called various things. But let us cut to the chase of what that has meant. It has meant that in some of our departments, despite demand and workforce demands increasing for those departments, it has outstripped their ability as a workforce to grow and meet that demand. In the past several years alone for Child, Youth and Family, for instance, there has been a 33 percent increase in substantiated notifications, so notifications that require further action. Over that period we have had 16 new social workers per annum. One might be able to claim that it is very difficult for that workforce to be an effective workforce under those circumstances—to fulfil their requirement as public servants to act appropriately and according to their own Acts that they are required to fulfil and be governed by. So to what degree is this bill about just upholding a State Sector system, and to what degree is it one that is able to defend it when that position becomes untenable for them?

The second part that I want to speak to relates to chief executives’ ability to delegate functions or powers. This was obviously in clause 35, another area of contention and discussion for the select committee. In particular, I see that they have distinguished between Public Service chief executives being able to delegate functions or powers from, of course, the separate ability to contract out the delivery of services. I would like to hear from the Minister in the chair, though, as to what examples she may have of those distinctions between the contracting out of services, which happens daily within Government departments, and other forms of delegation that might occur by a chief executive, to just give a little flavour as to the kinds of circumstances we might be looking at. That would be important for us to consider, because I think it is right that we be concerned when we are delegating any powers to ensure it is done properly.

The reason I imagine the select committee said: “Look, contracting is distinct.” is that we assume transparency. We assume that through the contracting system—because it is tendered and because, to a certain degree, of course, the portals that the Government provides are meant to be a process that even the public who may not be engaging in those particular contract arrangements are at least able to see. My concern is that in recent times, perhaps our trust, even the select committee’s trust, that we can treat the contracting out—that form of delegation by a chief executive—to be sacrosanct and fine is something that we may need to question whether or not we still actually have that layer of transparency within that tendering process.

The reason I question that is because in recent times—very recently—for instance, we discussed at the Social Services Committee the welfare reform bill where, for the first time, significant parts of the Social Security Act were being delegated to external agencies. For the first time we were seeing the administration of welfare payments, particularly as they related to young people, taken out of the Social Security Act and delegated to contractors. We are now seeing a second stage of that. We are now delegating the important role of support mechanisms for the transitioning into work of mental health patients and the like to contracted authorities.

We have very little transparency about how that is working. We could not get it through the select committee process. I have requested tender documents and I have not seen them there. So in respect of the transparency in this bill that I think we assume through the delegation and contracting, I question whether or not that necessarily exists, particularly, as I have said, for this latest set of delegations, because it is a very new delegated power in that regard. It is one, given that it is such a core service, that I think we would be right to ensure we do have that transparency. So, as I say, I would be very interested to hear from the Minister in the chair about the delegated functions and the decision-making powers—the kinds of examples that may have been considered by the select committee. I would be very interested to hear what it may have considered and what it considers to be carefully defined circumstances.

I will throw up one other example. I query, for instance, the Work and Income board that the Ministry of Social Development has established recently under the leadership of the Minister. That Work and Income board is working directly with Treasury. In fact, we have the bizarre circumstance now where the Ministry of Social Development is being asked to account directly to Treasury on whether or not it is decreasing the actuarial valuation that has been done on the Ministry of Social Development around the overall cost of benefits. It is also having to report to a Work and Income board, which has delegated powers from the Minister, not from the chief executive. This is an important point. This is where things get very murky. In fact, there were questions on whether the chief executive departed from her role because those delegated powers came directly from the Minister, and there were questions as to the hierarchy of who actually held seniority in this case. Is the chief executive reporting to the Work and Income board? Or is the chief executive reporting to the Minister for Social Development, and vice versa? It became very murky.

I would like some clarity because, increasingly, we are seeing roles like that emerging. That is a significant amount of power that the Work and Income board has now. Paula Rebstock, by virtue of being appointed to this board, basically, could have delegated powers from almost every chief executive in the Public Service, the way that things are currently running. She is the one individual who seems to be delegated the power of everything. So I would be interested to hear from the Minister on those situations, because we lacked clarity for a very long period of time, and we just cannot afford to have that for a ministry as significant as the Ministry of Social Development.

I note that the bill expanded on the range of conditions and restrictions where they are using delegated powers. For instance, after any delegation, a chief executive would have to report on it in the annual report and comment on its effectiveness. That is an interesting point, but, again, how far does that extend? Just a little more. I do completely acknowledge that I was not on the select committee for this, so there actually may have been much more clarity on the select committee as to the circumstances where that would apply. I would love to see that kind of requirement exist for some of the delegated powers that we have seen in more recent times.

The restriction of redundancy payments in certain situations is another area that I think is extraordinarily interesting and worth a degree of clarification. Obviously, it is an area of much contention, and we have seen many times in the past couple of years where redundancy payments have caused some distress—

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I will take the opportunity to speak on Part 1 of the State Sector and Public Finance Reform Bill on two particular areas. One follows on from my colleague Jacinda Ardern on the issue of delegation, and the other one is on the protection of liability for Public Service chief executives.

If I could just refer to a recent situation—and I am glad the Minister for Food Safety is in the chair, because she can probably answer some of these questions—around meat getting into China. Clearly, there were delegated responsibilities to a public servant in China who had the responsibility for clearing large consignments of meat. Yesterday, in fact, we had an announcement from the Minister for Primary Industries that the Government is going to increase resources into China. I think, actually, the truth is that they are going to go from one person to three people up there. The question is whether the delegation was a responsible delegation that put with it the resource to do the job properly. We had a bizarre situation where, presumably, the Minister delegated to the chief executive and then to an employee powers, very important powers, for certifying and clearing the meat. As it turned out, the Minister criticised the chief executive and all the staff. So the question I have for the Minister in the chair is whether in that delegation the resources went with the delegation to ensure that the work was carried out properly and therefore the employee was responsible, back through the chief executive, or, indeed, whether the chief executive could have said that, actually, they did not have enough resource to be delegated the role, and that is why the inadequacies and, in fact, the lack of performance occurred.

The bill has got a whole lot of detail here, and I acknowledge the Finance and Expenditure Committee, which has clearly gone through and looked at this very, very carefully and recommended that “… delegations must be in writing, and that functions or powers delegated to a chief executive by a Minister ... may not be delegated further without their prior written approval.” So the question is when you have such an important market in meat, such as China, where you have hundreds of millions of dollars going through, and we are told that there was one employee in China to deal with the certification for that huge meat trade, whose responsibility was it for the delegation? And when something went wrong, who should take responsibility for that problem? The Minister very quickly shunned it on to the ministry, so we assume that it is the chief executive’s responsibility. He or she could say: “Well, we didn’t have enough allocations through the Budget process, so we had to have only one person there.” In fact, we have found a bit more money for two other people. It is pleasing to hear that for that particular incident.

The issue of delegation that has been clarified, as to how the chief executive should delegate the powers and how the Minister delegates them to the chief executive, is all nice and dandy and all tidied up here in the bill. But the issue of accountability, I suggest, is something that also needs to be clarified. The age-old assumption—and my colleague Mr Mallard here would know this all too well—

Hon Trevor Mallard: I’m not that old.

Hon DAMIEN O’CONNOR: Sorry, he has been around for a while.

Hon Trevor Mallard: Unlike the member.

Hon DAMIEN O’CONNOR: I have not been the State services Minister, I have to say, like he has.

Hon Trevor Mallard: And the member never will be, either.

Hon DAMIEN O’CONNOR: No, that is probably true, and I do not want to be. Can I say that the issue of a Minister taking responsibility for the actions of his or her department is something that has been kind of accepted in politics for a while. But we had the very unusual situation with the Minister for Primary Industries dumping fairly and squarely on his ministry. That was a new situation. I am not sure whether that is perhaps an indication of the new approach that the Government is going to take, under these changes here, or whether it is the right approach or not. Did the select committee discuss it? That would be my question. Perhaps the Minister for Food Safety, who is in the chair, can answer that.

If I can move on to the second issue, which is in some way related to the incident I referred to, and that is protection from liability for Public Service chief executives and employees. The Prime Minister, who is also a Minister, indicated through that whole meat debacle that there was a possibility of compensation being paid. I guess that what we have here, of course, is clarity of the status quo—that is, that no single individual should be liable for such a mistake. Indeed, the chief executive should not be. A Minister, on behalf of the Government, then carries the can for liability—in fact, the taxpayer does. One of the questions that the taxpayer does raise quite often is whether bureaucrats should be made accountable, and why it should be that a Minister or we as the taxpayers carry the can for any compensation from what they would call a stuff-up or a mistake or a major logistical problem or clearly inadequate performance. What this bill does is confirm that the public servant, the civil servant, should not be liable if they have done something in good faith. When a Minister then turns round, as the Minister for Primary Industries did, and criticises the ministry for its lack of performance, then the question of liability being sheeted home in some way, maybe not in a monetary way, to an employee or, more appropriately, to the chief executive is a very fair question that each and every taxpayer should ask, because it is their money that is paying compensation.

In Part 1 here we have, as has been the accepted norm, removal from the chief executive or an individual employee any liability for mistakes. So the Prime Minister rides in on his white horse and says to the meat industry: “Well, there may be compensation payable.” And then the Minister, instead of saying: “My department got it wrong and therefore I should be liable.”, muddies the water by saying: “No, actually, the ministry, the department, didn’t perform here. It was at fault.” So the taxpayer, rightfully, might say: “Well, what, then, is the penalty that should be imposed upon the public servant or the individual who made the mistakes?”. In every other part of the law or, I guess, Government systems, there is general accountability. People should be held to account for their mistakes, but this bill is actually shifting it up the line, effectively, to the taxpayer. Is that the right thing? Maybe the Minister in the chair can take a call and answer that, because if the Government is going to change and alter these things, then it should look at the situation that arose quite recently. I am not saying that the Minister for Food Safety was just as liable as the Minister for Primary Industries, but I am not sure whether she would have dumped on her agency in the way the Minister for Primary Industries did.

The hard-working New Zealander out there who pays their taxes to run these Government agencies to carry out these crucial roles expects performance all the way down the line, and expects liability all the way down the line. So when, as has happened in the past, a Minister says: “I take full responsibility.”, if it is a big enough mistake, such as happened in Cave Creek or, indeed, at Pike River, then the appropriate Minister resigns. I think people see accountability in that way. But when the Minister does not resign but turns round and dumps on the chief executive, then the question should be whether this protection here provides adequate accountability for taxpayers’ money. So I leave it now to the Minister in the chair to maybe take a call and explain those things. It is a complex area of State sector accountability and responsibility. I can see her being really keen there.

Hon Trevor Mallard: Not really. There’s a lot of common sense involved. What does Peter Dunne think about it?

Hon DAMIEN O’CONNOR: Well, there could be. I do not know, actually. We are not allowed to talk about the absence of any Minister, but I am sure that common sense could come into play here.

Hon Trevor Mallard: Well, he’s permanently absent as the Minister now.

Hon DAMIEN O’CONNOR: Well, I think the party is, anyway. I am not sure about the member, but the party certainly is.

Hon Trevor Mallard: No, no, he’s not a Minister any more.

Hon DAMIEN O’CONNOR: Look, I must come back to the point here. I do not want to be distracted by my colleagues—

Hon NIKKI KAYE (Minister for Food Safety): I am very pleased to take a call on this legislation. Can I start by acknowledging a previous speaker, actually—Ms Ardern—because I want to address some comments that she made previously, and just deal with that issue of delegations. As has already been canvassed, there is nothing in the bill that will change the Crown’s power to contract. That has always been there. So I want to just address Ms Arden’s comments in regard to that.

But what is really important is that the Finance and Expenditure Committee was quite clear—and I think it is a point that has been missed by Ms Ardern and Mr Damien O’Connor—that in terms of the extensive controls in this area, it requires the responsible Minister’s prior written consent in every case. It prevents any sub-delegations, it requires conflicts of interests to be avoided or managed, it requires delegates to comply with the State services code of conduct, it makes delegates subject to the Official Information Act and the Ombudsmen Act, and it requires the delegation to be reported to Parliament. So what I will not accept is comments by speakers on that side of the Chamber trying to imply that this has not been thought through incredibly carefully in terms of delegations.

The second point that was made, by Ms Ardern in particular, was around Government workforce policy. This bill will establish a new, simple process for consulting on and distributing workforce policy to Public Service departments and Crown entities. That is very important, and I think it is important as well for members opposite. I know that they are not listening now because they do not want to hear what is actually within the legislation, which is that the bill ensures that the workforce policy statements will not be regulations and cannot override any legal rights or obligations, including any relating to good-faith bargaining.

So, in terms of answering, the final point that I just want to touch on, which was raised by Mr O’Connor, was around immunity in terms of public servants. Obviously, I do not intend to comment on some of the substance. I do not agree with a number of assertions that he has just made in the Committee. There is a review under way in terms of the recent situation in terms of meat, and he has made a number of assertions that I do not agree with. But what I would say is that what this bill does, and it is incredibly important—and if there is one thing that I have learnt in the last 4 months as a Minister, it is that we have some outstanding public servants in New Zealand. It is really important that this bill implements the original policy intent that public servants will have immunity from legal action for good-faith action taken in pursuit of their duties.

I am not going to comment specifically on the issues that the member has raised regarding the subject of meat, because he knows there is a review under way. But what I would say to him, and what I would say in relation to this bill, is that that member knows better than any other food producer in this country that when you are trading with 50 percent of your exports, there will always be food issues.

So what I would say to the member is that he knows that in this bill not only are there substantive provisions around the delegations—they are comprehensive—but also there is a clear immunity for public servants in this legislation. So I appreciate taking the call on this bill.

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to Part 1 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 259 in the name of Te Ururoa Flavell to Part 1 be agreed to.

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

Ayes 50

New Zealand Labour 33; Green Party 13; Māori Party 2; Mana 1; Independent: Horan.

Noes 68

New Zealand National 59; New Zealand First 7; ACT New Zealand 1; Independent: Dunne.

Amendments not agreed to.

The question was put that the amendments set out on Supplementary Order Paper 265 in the name of Denise Roche to Part 1 be agreed to.

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

Ayes 55

New Zealand Labour 33; Green Party 13; New Zealand First 7; Mana 1; Independent: Horan.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Amendments not agreed to.

Part 1 as amended agreed to.

Part 2 Amendments to Public Finance Act 1989

The CHAIRPERSON (Lindsay Tisch): The debate on this part includes schedules 1A to 3A.

Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to convey Labour’s support for this part of the State Sector and Public Finance Reform Bill. In doing so, I wish to tender an apology to you, Mr Chair, and to the Committee. In my initial remarks on Part 1, I made the misplaced comment that Part 1 was the most major part of the bill. I see on closer examination that Part 2 is equally substantive and important, amending as it does, very significantly, the Public Finance Act.

The bill proposes a number of amendments to the Public Finance Act, and principally the following: firstly, the establishment of a new appropriation type, to be called a multi-category appropriation or MCA. The purpose of this is to allow different types of expenditure to be grouped into a single appropriation where they support a single policy objective or overarching purpose. This is one of the principal innovations in this Act, in the way that the design of the Government’s machinery is carried out. It calls us to reflect on the nature of what we are doing here today. This is not just tinkering legislation; this is framework legislation—and that is why it is good that it is bipartisan across the House—that governs the major rules and regulations by which the organs of the State operate. So that is everything from the rules upon which they are structured, principally delivered through the State Sector Act reforms in Part 1, and, of course, the rules by which their finances are governed, which are dealt with in this part, Part 2, as amendments to the Public Finance Act.

Members of the public will recall—and members opposite will, hopefully, recall—that the Public Finance Act is a very extensive piece of legislation that contains the provisions for fiscal accountability and the ability for Parliament and the public to be able to trace subventions or appropriations from year to year, to be able to track the movement of public funds, and to give effect to that age-old tenet of our inherited constitution that there is no taxation without representation. This is where the rubber, as it were, meets the road, because it is through the legal framework set out in the Public Finance Act, as amended by this bill, that we get the rules about accountability. The main point here is to allow a new form of accountability, multi-category appropriations, which allow policy purposes to be driven simultaneously through several different agencies or votes.

In the past, what has had to happen under the rules of public finance is that a lead agency has been designated and it has borne the financial responsibility, but through that it has also maintained primary control through the Cabinet process. That has not, I think it is fair to say—and both sides of the House that have sat on the Treasury benches over the years would agree—always favoured the highest levels of cooperation between the agencies of the State. So what we are doing here is we are plumbing a whole new beast into the financial reporting rules. It is a beast called a multi-category appropriation, and it is based on the presumption that the behaviour will follow the money. And if the money is in a common pot, where several different agencies have to draw from it, then we are more likely to get truly unified behaviour. The Labour Opposition agrees with the Government that it is a good thing to have that type of provision available, provided that there are sufficient controls around it. I am pleased to say that following the amendments put in place by the Finance and Expenditure Committee, it is now our view that those controls do exist.

As our colleagues have said in relation to Part 1, for the Labour Opposition this is a relatively unusual bill, an unusual process. We quite strongly opposed the bill at its first reading. There were a number of provisions in it, quite a lot of them in Part 1, that we very trenchantly opposed. We are very pleased that through the negotiation process in the select committee there has been an extensive range of amendments and we can now support the bill. The amendments here have been around two principal aspects of multi-category appropriations—firstly, requirements for full and complete traceability down to the sub-output class level. It is a very granular approach so that members of Parliament and the public can trace changes in public expenditure through the years and across categories.

That is particularly important where a multi-category appropriation has the potential to blend appropriations from different departments from prior years. It is too easy to do smoke and mirrors without the amendments made to this Act. It follows that it is made clear in the amendments that other departments as well as the one administering an appropriation can incur expenses against that appropriation. It is a second principle, if you like, that follows from the multi-category appropriation principle. The idea there is that where there is a group of agencies cooperating towards a policy outcome, they can incur expenses against a single appropriation, if that is appropriate. That, again, plumbs into the operations, the machinery of government, cooperative behaviour at every level.

The information required in the estimates and supporting information is being changed to focus more closely on the policy intent of what is being achieved within each organisation. We talked about this in Part 1, the shift from simple output monitoring to outcome monitoring—that is, measuring the work that the State does against the questions of why we are here and what we are trying to achieve; how we are trying to achieve it follows. As we said in Part 1, the risk with that is that if we lose sight of the output measures completely, sometimes outcome reporting can be a bit vague, but a proper combination of the two has been shown to deliver the best balance in terms of strategic thinking and specific behaviour tracking.

The provisions allow annual reports of more than one department to be presented together in one document, where this would more meaningfully convey information. So there is a third significant change. As well as multi-category appropriations and multiple departments drawing upon a single appropriation, now we can have multiple departments reporting through one accountability document that applies to a particular programme. Again, we are designing into the machinery of government the ability to require cooperation of our agencies from the ground up. We are standardising the governance and performance reporting requirements for companies that are listed in schedule 4 of the Public Finance Act—that is, companies where there is a substantial element of Crown ownership. As I look through the bill—and I will be picking this up in my next call—I will go clause by clause through some of these key changes, because there are 60 pages of amendments.

Let me draw the attention of the Committee to one particular matter that I think is pretty important, which is around proposed new clause 59B, amending section 3A of the Public Finance Act, as represented on Supplementary Order Paper 262. That is where proposed new section 3AB(1)(a)(i) states: “Ministers of the Crown hold, on behalf of the Crown, more than 50% of the issued ordinary shares in the capital of the company;”. I do think it is necessary to put on record that this is not a provision that applies to the Government’s harebrained partial privatisation scheme; this is about the development of mixed-ownership entities other than those in the privatisation scheme for the energy companies, which we have heard so much about in the media. The reason for making that clear is that there are a number of strategic disadvantages with the partial privatisation programme that the Government is currently engaged in, which include the loss of strategic control for the portfolio; having to have regard in law to minority shareholders’ rights; the loss of the controls normally contained in the State-Owned Enterprises Act, including the no-surprises policy and the power to direct; and the loss of dividend flows, which means that the programme is often cash value - negative.

I will come on to it in subsequent calls, but there are a large number of schedules—schedule 1A, schedule 2, schedule 3, and schedule 3A—that apply to the Public Finance Act and pertain to amendments in this part, and we will be touching on some of them across the debate on this part. There are a number of Supplementary Order Papers that contain measures on Part 2 that we will want to touch on in this debate. So I think, with your leave, Mr Chair, we will be here for quite a long time going through this. Supplementary Order Paper 168 from Minister Coleman bears upon the Public Finance Act. Supplementary Order Paper 262 from the Minister, which is very extensive, bears upon it. We have disposed already of Supplementary Order Papers 259 and 265. Supplementary Order Paper 261 also has some provisions.

Let me note two things on the Supplementary Order Papers here, as an introductory comment. The first is that it is somewhat disappointing—

Dr DAVID CLARK (Labour—Dunedin North): As I begin my call I will just request that Mr Cunliffe give me my notes, which are under there. I have prepared some quite extensive notes on this part of the State Sector and Public Finance Reform Bill, Part 2. The bill itself does make some quite significant changes to a very significant Act. The Public Finance Act, of course, is one that, as a former Treasury official, I took quite a lot of interest in.

I am very grateful to have this opportunity to speak in the debate. It is true that the changes to the Public Finance Act will, I hope, have some really positive impacts on the way the public sector is run. The establishment of a new appropriation type, to be called a multi-category appropriation, will allow different types of expenditure to be grouped into a single appropriation if they contribute to an overarching purpose. There are always debates around this kind of change because effectively what happens is that the nature of accountability changes. With the change in the nature of accountability is a commensurate concern for the impact that that will have on the accountability of Ministers through to the taxpayer and the public of New Zealand, who want to see the investment they make through their taxes creating a better society.

These changes, which allow for a wider grouping of expenses, will, hopefully, allow Ministers greater flexibility to achieve the ends they are wishing to achieve through various pieces of legislation or appropriations, which is the money they vote towards specific purposes. But that comes with the risks of being in a bigger pool and of being shifted around without the same kind of attention it has had historically. We find ourselves here in Parliament debating that balance between providing Ministers with flexibility to achieve the outcomes they want to achieve on behalf of the public and, on the other side of that balance, the accountability proper to the taxpayers, who have provided those funds.

We in the Labour Party are supporting this legislation because we believe that roughly the right balance is being struck. It is important that this legislation is enduring, that it survives the various administrations, that the public know what they are looking at when they look at the votes and the appropriations, and that when they look at where departmental spending is going, they can understand what the purposes of that spending are, how the money is being spent, and so on—those members of the public who follow it that closely.

It is, of course, relevant that these changes should be considered here in Parliament, and debated fully, because this is the place where we have the overview of that spending. We had our estimates debate earlier on. We have scrutinised here the Government’s spending and asked questions about moneys that have been moved around between different classes of output category. We have satisfied ourselves, more or less, that the Government has spent that money as it said it was going to spend it.

Whether or not we think it has been spent wisely is a separate debate—that is a separate debate. It is related, and it is often overlaid. Mr Chair, you will have heard—I should not bring you into this debate. Members of the Committee will have heard me express political opinions, views about how money should be spent, whether it is being spent in the right way—and by that I mean on the right things. Here we are talking about whether it is being spent in the way that the Government says it is going to spend it—whether it is true to its word. That kind of accountability is important no matter which administration is in place, because each administration will have its own view as to how money should be properly spent.

This legislation changes the requirements for information about departments’ strategic intentions, including the frequency of its provision. Again, here I think this is about striking that same balance between accountability and how often departments have to outline their strategic intentions. Should they have to do it every year? Is that a good spend? Is it a good use of public moneys to update things, when they may be entirely relevant from the previous year and the intentions may be the same? Just how much public servant time should be spent on judging whether or not the strategic intentions should be updated, as opposed to delivering on the objectives of the Government of the day? This, again, is where a balance is being struck. We believe that in this legislation, by and large, that balance is being struck correctly.

Specifying the financial responsibilities of departmental chief executives to make it clear that they include financial stewardship for the long term is another initiative found in this legislation that we think is good. The proof, again, will be in the pudding in this particular one, we think. Just how we consider the long term—how any Government of the day considers long-term stewardship—is yet to be proven. There will need to be measures put in place to say whether we think that a measure is really in the long-term interests of the country or not. Governments will try to outline those measures. There will be political debate. There will be a political overlay to the particular debate on these matters, and that is natural. It is the job of the elected representatives of the people to try to represent their concerns.

For example, on this side of the Chamber we might be concerned about rising power prices and we might take exception to Mr Key saying that Kiwis are paying about the right amount in power prices. We on this side of the Chamber simply do not think that is true, so that is why we have launched our New Zealand power policy. We think that there should be a different way of organising the electricity market in New Zealand. Our objective will be different from that of the current Government, which seems very satisfied with the rising power prices. Power prices do not bother it. It seems unconcerned that power prices in New Zealand keep going up and up and up, so it will be concerned that the money being spent here is spent preserving the status quo, whereas if the Labour Party was elected into Government it would be concerned that its policy of reducing power prices for ordinary New Zealanders—

The CHAIRPERSON (Lindsay Tisch): Order!

Dr DAVID CLARK: —would be put in place.

That goes precisely to the point here in the legislation in which we are talking about financial stewardship for the longer term. In that particular policy example, Labour thinks that stewardship of that resource in the long-term interests of the country is about delivering lower power prices to businesses so that they can develop and contribute to New Zealand, whereas the Government may take a different view. That is its prerogative. That is the nature of Governments and of parties representing interests in this Parliament. But we will be having the debate, and I think that is the important thing. We will be having the debate about whether the financial stewardship is in the long-term interests or not. I think that is a good thing.

I congratulate the authors of this bill and those who served on the Finance and Expenditure Committee, which managed to work this into the legislation. I join also in congratulating the officials. Although I did not sit on the particular committee for all of the consideration of this bill on its way through, I know, have met, or have dealt with several of the officials before, and regard them as being exceptionally good officials. I heard David Parker recount his experiences and congratulations, and I want to echo those.

This bill will survive administrations. It is a step forward for the public sector. It is a step forward for New Zealand. It is not going to address that fundamental question of whether or not the policies are right. The wrong policies cannot be helped. No amount of fine-tuning how departments deliver what they have been tasked with doing will address the fact that, I think, this Government has terrible policies on some things, but it will fine-tune the Government’s ability to deliver on the policies it says it is going to deliver on. It will fine-tune the accountability measures for the Government so that it can be held to account by members of Parliament and by the general public to say whether or not it is delivering what it has said it is going to deliver. That will become obvious, and then we can have the debate. I can stand up here, as I am wont to do, and say that this Government has the worst economic record of any Government in the last 50 years. It will be a political debate, because Government members can be clear that they have done what they said they were going to do, they have implemented the policies that they said they were going to implement—

Hon David Parker: They didn’t say they were going to raise GST.

Dr DAVID CLARK: —and have spent the money on the things they said they were going to spend it on. My colleague raises the issue of GST, and says the Government never said it was going to raise GST, and then it did. Unfortunately, I do not think this legislation is going to solve that.

Kris Faafoi: They said they wouldn’t.

Dr DAVID CLARK: It said it would not raise it—quite right, Mr Faafoi; you have corrected me. The Government said it would not raise GST, and then it did. Well, that shocked New Zealanders and it was, I think, the wrong thing to do.

The CHAIRPERSON (Lindsay Tisch): Order! That is not part of this debate.

Dr DAVID CLARK: Coming back to this particular debate, this legislation will not, I guess, stop Governments doing the wrong thing, but it will—

SUE MORONEY (Labour): It is a pleasure for me to take a call on Part 2 of the State Sector and Public Finance Reform Bill. This is the part, of course, that amends the Public Finance Act and is, therefore, the part of the bill that I think does need a large amount of scrutiny. In amending the Public Finance Act, this is the part where the way the Government’s Budget is structured is being altered. There are often very good reasons why the way in which Budgets are structured can be altered, and I think that some of them are inherent in the changes that this bill brings about.

But we do need to be cautious, because changing the way Budgets are structured is often a way that Governments can actually create a bit of a smokescreen so that it is difficult to compare—

John Hayes: As your Government did for 9 years.

SUE MORONEY: —from year to year what is happening with the expenditure. So it is right and it is proper to give a lot of scrutiny and debate and discussion to this particular part of this bill. I know that Mr Hayes agrees with that, because he obviously shares the concerns that I have raised.

An example of that, which I will give for anyone listening to this debate, is in Vote ACC, in the ACC area. Between 2008 and 2012, if we look at the way Budget documents are currently constructed, we can see in the area of funding for injury prevention in ACC that there has been something in the order of a 42 percent decline over those 4 years. [Interruption] I know, it is shocking. It is actually over a period of time in which workplace deaths have been increasing, a time in which there has been real concern—

The CHAIRPERSON (Lindsay Tisch): Order!

SUE MORONEY: —around what has been happening in that area.

I want to bring it back to the bill by using that as an example of why it is important that there is some consistency between the way the Budget is constructed from year to year. When it is constructed in a similar way, we can actually track that through. We can see that the injury prevention funding has been cut by 42 percent over the course of 4 years. However, when change in the way in which the Budget is constructed occurs, as per the changes being proposed here in this part of the bill, it does sometimes make it difficult to actually compare apples with apples—that is, to say that the way the appropriation was brought down in 2008, for example, is a direct comparison with the way in which it was constructed and brought down in 2012. So, I guess, the question that I would pose to the Minister would be to explain to the Committee how these changes will still be able to allow comparisons between years, in terms of what is happening with those estimates, so that we can be sure of how the money is being moved around.

One of the changes that is being proposed in this part of the bill is a way in which the estimates can change so that it makes it clear that other departments, as well as the one administering a particular appropriation, can incur expenses against that appropriation. Again, the example that I just used is, I think, really relevant to this part of the bill and this particular amendment, because in the instance where there was a rapid decline in the appropriation for injury prevention spending from ACC, there was a corresponding rise in spending on injury prevention in a different department, under the Department of Labour, or what has become known as “MoBIE”—the Ministry of Business, Innovation and Employment. So this particular change would allow some transparency around the shifting of money, which is how I read this particular amendment. It would, therefore, make it clear that even though there had been a huge decrease in funding of around 42 percent in injury prevention in one area and just, I think, about a 15 percent increase in the other area, you would be able to put those together by using this amendment and see that overall there had still none the less been a substantial decrease across those two appropriations of funding in the injury prevention area. I think that this will create better transparency.

Hon DAVID PARKER (Labour): I rise to take a call on Part 2 of the State Sector and Public Finance Reform Bill, which involves the amendments to the Public Finance Act. I want to start with the change that is heralded at clause 63 of the bill, which changes the way in which the annual financial statements of the Secretary to the Treasury are published. Currently, annual financial statements have to be published on paper. This legislation, and this is an example of why the Labour Party is supporting this legislation, updates it so as to take advantage of information technologies that are now available to “ensure that the annual financial statements, the audit report, and the statement of responsibility”—of Treasury—“remain available on that Internet site for inspection by members of the public for at least 5 financial years after the financial year to which the annual financial statements relate.” If I read that correctly—and the Minister in the chair, the Minister for Food Safety, can tell me whether I have got that wrong—that effectively means that they are going to be available to the public for 6 years, and people will be able to make comparisons.

Using the example that my colleague Sue Moroney just gave, where they are trying to track a change in expenditure—and I think the example you used was in respect of ACC—if there was a 42 percent decrease in funding over 4 years, you would actually be able to track that year by year through the internet to see what was happening over time. Assuming I am reading this correctly, I presume that that would extend to the likes of the ACC, although it may be that because it is a separate corporation it is dealt with specifically in its separate legislation. Certainly, in respect of Treasury, the Secretary must ensure that those statements remain available on the internet site for inspection by members of the public for at least 5 financial years.

The next issue I would like to briefly address, because I am not sure I quite understand it properly, is clause 75 of the bill, which amends section 80. This amends the ability of Treasury to give instructions to departments. Before doing so, I would note that elsewhere in the Act we make it clear that chief executives of departments are responsible for the financial management of their departments. If we look at new section 35, inserted by clause 85 of the bill, where it says “Responsibilities of chief executives: financial management of non-departmental matters”, it makes it clear that in addition to the other responsibilities of chief executives for the financial management of departmental matters, which are referred to in the prior part of clause 85, which amends section 34—and new section 34 requires that the financial management of departmental matters be the responsibility of the chief executive. That is how it should be. New section 34 says that “The chief executive … is responsible to the responsible Minister for the financial management, financial performance, and financial sustainability of the department; and (b) must comply with any lawful … actions required by the Minister or the responsible Minister.” It is a very, very important provision, which states that the chief executive of a department must comply with any lawful financial actions required by the Minister or the responsible Minister.

At times I have heard it said by some Ministers that they feel that the relationship of power goes the other way, so it is quite good to see that this Parliament is emphasising in this piece of legislation that the chief executive of a department “must comply with any lawful financial actions required by the Minister or the responsible Minister.” I do not think that that is meant to imply that any Ministers are irresponsible, so I am not quite sure what the difference is between “the Minister or the responsible Minister.”, and perhaps the responsible Minister in the chair could take a call to clarify what the difference is in that clause between “the Minister and the responsible Minister.”

What new section 34 says is that the chief executive of a department that administers an appropriation—and they all do—is “responsible to the appropriation Minister for what is achieved with the expenditure under that appropriation;”. So that is making the link through—not only do they have to comply with lawful financial actions required by the Minister but also they are responsible to the Minister for what is achieved with the expenditure under that appropriation. So they have got to comply with those financial directives, and they have got to make sure that they are responsible for what is achieved. Then there are similar obligations in respect of non-departmental matters that I do not have the time to properly address.

That then brings me to clause 75 of the bill, which somewhat confuses me, and the amendment of section 80, which relates to the instructions that Treasury can give to departments or departmental agencies. Clause 75 of the bill says: “Subject to the provisions of this Act and of any regulations made under this Act, the Treasury may—(a) issue instructions to departments”—not chief executives—“or departmental agencies for the purposes specified in section 81(1)(a) …” of the principal Act. Of course, the principal Act is the Public Finance Act 1989, unless I am confused as to which Act this particular clause is amending.

I have got the Public Finance Act 1989 in front of me—[Interruption] Yes, thank you to my colleague Kris Faafoi, who already had it out. Section 81(1)(a) of the Act talks about “requiring information to be supplied to the Treasury by departments and any entities referred to in section 27(3)(a) to (f) to enable the Treasury to properly fulfil the functions imposed on it by the Government or any Act:”. I am not sure what the purposes are of the change to section 80 from the existing Act, which currently provides: “Subject to the provisions of this Act and of any regulations made under this Act, the Treasury may issue instructions to departments for all or any of the purposes specified in section 81(1)(a), (ab), (b), (bc), (bd), or (c) to (e).” So I am not sure what the import is of that change, and I would invite the Minister in the chair to take a call and clarify that important point for me.

The next point I would like the Minister to address, if she is to take a call, is what it is that she envisages in the provision that a “chief executive of a department that administers an appropriation [for which that chief executive] is responsible to the appropriation Minister for what is achieved”. The second part of this provision that I want the Minister to address is what happens, given that clause 85 of the bill requires that chief executive to be “responsible for advising the appropriation Minister on the efficiency and effectiveness of departmental expenses and departmental capital expenditure under that appropriation.” This is getting to the nub of how you hold chief executives and the departments for which they are responsible to account for the objectives of the Government.

For example, when a Government sets as an election promise the fact that it is going to narrow the wage gap with Australia, or eliminate it, I think it was—it was going to eliminate the wage gap with Australia—where is it that we see, in these various accountability documents, that being devolved down to departments in a way that the Government can expect accountability from them and then be held accountable to the population for that promise?

Hon David Cunliffe: What if the gap widens?

Hon DAVID PARKER: Well, Mr Cunliffe, you are quite right. If we have those sorts of accountabilities, I would expect it would be of importance to the electorate to understand that those targets were not being met, but rather that the gap between the incomes of those working in New Zealand and Australia is widening.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take my first call that I have on the State Sector and Public Finance Reform Bill in its Committee stage. I am in particular very happy to speak to Part 2 of this legislation, the part of the bill that deals with the amendments to the Public Finance Act 1989, and to look at some of those. As my colleagues have canvassed at great length, Labour has made a decision to support this bill with reservations. My colleague Sue Moroney pointed out that we have talked in some detail about our views on this bill, but there is still plenty more that needs to be canvassed in the course of this debate on this piece of legislation.

Although we opposed this bill at its first reading, the changes that did eventuate at the select committee process, that were worked through with Labour and the State sector unions by and large, have really made this a better piece of legislation that has come back to the House at the Committee stage. We are very happy to be able to say that we can offer it our support, but we do still have some of those lingering reservations. It was heavily amended at the Finance and Expenditure Committee consideration, and I think that that as a process is something that this Committee should applaud. That select committee consideration was allowed to work fully and really fulfil its function in making legislation better.

As I said, in terms of Part 2, “Amendments to Public Finance Act 1989”, which we are talking about, one of the issues that I really want to pick up there is the information requirements for appropriations that come under this part of the legislation. The intent of the bill is that all appropriations should be traceable and accountable from year to year: “Traceability must be explicit where an appropriation or categories within an appropriation have changed, including where a multi-category appropriation is used.” My colleague Sue Moroney has touched on a very current example of where this has been brought into relief. This legislation has meaning for every member in this House. There is no member in this House who has an interest in a portfolio, either on the Government benches or on the Opposition benches, who does not have to deal with the issues that are covered by this bill. For those of us who have been covering appropriations that have been brought under the umbrella of the Ministry of Business, Innovation and Employment, the “Ministry of Everything”, it actually has been a real challenge to follow those appropriations through.

My colleague Sue Moroney talked about trying to follow through ACC budget lines from years before the Department of Labour was absorbed into the Ministry of Business, Innovation and Employment. I myself in the area of research, science, and innovation have been trying to cover through budget lines and trying to track how it is that our funding of things like postdoctoral fellowships has gone from when we had an independent Ministry of Science and Innovation, and how that has gone when it was absorbed into the much larger Ministry of Business, Innovation and Employment. I think that any change to the legislation like we are seeing in this is to be applauded, because I think that the purpose of the House, the purpose of our select committees, and the purpose of members of this House is to make sure that we are scrutinising those appropriations. Members of the public also need to be able to have clear and transparent ways of scrutinising what is happening with public money. That is what we are talking about. We are talking about the use of public money here, and anything we can do to make that more accessible and more transparent is something that we can support.

Other changes that we think are important under this part of the bill include making it clear that other departments, as well as the one administering an appropriation, can incur expenses against that appropriation. Increasingly we are seeing that in the way in which Governments are run. We are having the idea of issues and themes starting to cluster around and appropriations occurring in other departments, and I think it is really important that the legislation that administers the way in which we follow through our public money in our State sector recognises the changes that are happening around governance and the way in which we govern our country. It is in changing the information required in the estimates and supporting information—it is a pleasure to conclude some of my statements around this—that the focus moves more closely on to what is intended to be and what has been achieved with each appropriation. It is increasingly and incredibly important that we do have that. It is important that we can make sure that we know what it is that a Minister sets out to do with a sum of public money, what it is that they want to achieve, and, most important, what has been achieved, so that at the end of each financial year we can go back and we can have a look at whether or not the money that was set aside for something was actually used for what was intended. The bill is changing the requirements for information about departments’ strategic intentions, including the frequency of the provision.

My colleague David Parker touched very briefly on the idea around the departments’ statements of strategic intents. These are incredibly important documents for members of the public, for parliamentarians, and for society at large, really, to know what it is that a public organisation is wanting to achieve. Allowing the annual reports of more than one department to be presented together in one document again speaks to the much more clustered way we are thinking of doing Government, the way in which we need to bring things together. This does provide much more meaningful information about the department’s performance and achievements, and this is what we are all looking to achieve. We are all looking to see that we can have meaningful and real information that can be there to show how it is that a Government department has spent Government money.

So we are very happy to be able to say that we can support the State Sector and Public Finance Reform Bill at this stage because of the incredibly good work that the Finance and Expenditure Committee did, and I would like to congratulate members of the committee from all sides of the Chamber on the work that they have put in. I think that it shows what this Parliament in its committees and in its House can achieve when people put their minds to addressing a piece of legislation, trying to make it the best piece of legislation that it can be, and working with the submitters and listening to the submitters when they come to the committee to see how these changes can be made for the better. Thank you.

Hon DAVID CUNLIFFE (Labour—New Lynn): Tēnā koe. Kia mahi toa. Let me just draw the Committee’s attention to the considerable size of Supplementary Order Paper 262, which contains a significant number of pages—60-odd pages’ worth—of amendments to this part. It is not ideal practice for us to have a Supplementary Order Paper brought to the Committee that is of this length and complexity, because it has not had the same level of scrutiny—for example, John Hayes’ minute scrutiny—in the Finance and Expenditure Committee that the rest of the bill has benefited from. It has not had the “Hayes effect”. It may still have a haze, with a “z”, but not the “Hayes effect”. It is true that officials have given us their word that these are purely minor, technical, and non-controversial amendments that are consequential upon date changes and other such things, and of course, therefore, there can be no policy intent in them.

I want to turn the Committee’s attention to the substantive amendments to Part 2, which start on page 60 of the Supplementary Order Paper. We have an updated purpose statement and we move through to the substantive provisions starting on page 64. Proposed clause 59B replaces section 3A, “Power to amend Schedule 4”. This allows the Governor-General by Order in Council to add to schedule 4 of the bill the name of any body, office, officer, trust, or organisation; and apply or disapply to any organisation any provision of the Crown Entities Act. The Governor-General can change, add, or subtract the name by Order in Council. Section 3AB, in clause 59B, provides similar amendment proposals for schedule 4A of the bill. If we move through, we see that clause 60A, proposed by the Supplementary Order Paper, inserts new section 7C, which is “Responsibility for, and administration and use of, appropriations”.

On this one I just want to make a couple of general points that are not really drafting points. It is to echo the words of my good colleague David Parker, who I think really emphasised the need to have a clarity of legal appropriation authority from Parliament to the Minister to the chief executive, down through the output classes to the sub-output classes. It is provisions such as the new section 7C on page 66 and their like that make clear that the Minister or the appropriation Minister is responsible for the appropriation. So it is through provisions such as this that we are really underlining that the ethical basis of the expenditure of the taxpayers’ money is through the parliamentary process as vested in the Minister. It clarifies, as David Parker has said, that the chain of command, after advice has been listened to and understood, does go from the Minister to the department, because that is how we account for the use of public money, and that is very, very important.

It makes the further point, in new section 7C(3) that “the Speaker is responsible for any appropriation administered by the Office of the Clerk of the House of Representatives or the Parliamentary Service.” I would be remiss if I did not state publicly that our staff in Parliament have not had a decent pay rise for a good 5 years. So when the Speaker is next considering his or her powers under this innocuous little subsection (3) of section 7C on page 66 of the Supplementary Order Paper, I ask him or her to please have a thought for our hard-working parliamentary staff, whose pay and rations really have not kept up with either the private market or the inflation index. I understand that they may be facing yet another year of severe restraint, and I do not think that any of us think that they should be in that situation.

On page 68 we move to clause 61D. This amends the power of the secretary of the department to receive information, and clause 62 amends the power of the Auditor-General to be the auditor of the Government reporting entity. That is an important power because it means that the Auditor-General has his or her full powers when dealing with a potentially sub-delegated entity, body, Crown entity, or company in which the Crown holds a number of shares or some other organisational form. What this bill is really saying is that that concrete chain of accountability and command can apply—must apply—across a range of organisational forms for which the Crown is responsible. The bill is trying to get, in short, the right balance between clarity of delegation, rigour of accountability, and yet a new flexibility to devolve across a range of organisational forms.

In these post - global financial crisis days of fiscal constraint and fiscal prudence writ large, all of us—but, actually, particularly social democrats—know that we are going to have to do more, if not with less, then with not much more in terms of taxpayers’ funds. Therefore, we need to be absolutely focused on getting the best value for the taxpayers’ dollar that we can. I am reminded of an example early in my time in Parliament where we were considering the cost of delivering social work into one of New Zealand’s remote regions—I think from memory it was the Gisborne - Poverty Bay area. The salary cost for the social workers in those days, quite a while ago, was in the $30,000s a year, but the total cost per social worker was around $120,000, the other $90,000 being departmental overheads. I have never forgotten the example. The actual salary of a social worker was only about a quarter of the total cost; the other three-quarters was overhead. That impressed upon me then that even social democrats have to have an awareness of the best and most cost-effective way of delivering services to our people. Sometimes that might be through an agency that is semi - at arm’s length from the Crown, such as an NGO or a Crown entity. It may be something that is lean and adaptable to those communities.

It is interesting now to come full circle and to see a piece of legislation that, with a lot of good, cross-party cooperation, is trying to achieve a good balance between having the flexibility to deliver those services in a variety of ways as are most appropriate without compromising on the rigour of the accountability back to the taxpayer or the chain of command back to the Minister. That is a sweet spot, if we can achieve it, that will allow modern social democracy to be cost-effective and active and flexible and in tune with our communities, and we are reasonably excited about that possibility.

New section 34, proposed in clause 65B of the Supplementary Order Paper, underlines the responsibilities of chief executives for financial management and for reporting both for departmental and non-departmental matters. In proposed clause 66A on page 71 of the Supplementary Order Paper it dives down. This is quite specific, prescriptive language because Parliament is wanting to leave the departments in no doubt whatsoever as to the nature of their responsibilities and the clarity of their delegations. I think it is well written in that regard. Clause 66A states that departments must prepare annual reports. There is some detail about what must be in them, and it is the same for departmental agencies—obligations to publish, to put the information in the public domain, whether it be in hard copy or on a website. There are time limits of no later than 15 working days after it is presented to Parliament. Again, there is a lot of prescription, a lot of rigour, here to make sure that the public is as well informed.

Earlier this evening I went to a presentation by Transparency International with a number of colleagues. That is an agency that rates the level of corruption in different countries around the world. Guess which is the least corrupt country on the planet? No. 1 on their rankings is New Zealand. We can be really proud of that fact, and we score incredibly well for the integrity of our public sector. So today it might be hard graft. It might not be the sexiest bill in the world. It is rather a large bill, and it contains the kinds of provisions that keep New Zealand safe. It keeps New Zealand safe from either graft or just inefficiency and ineffectiveness because the rules are not clear about how we account for public money. It is in the dense drafting of bills like this that we make good our promise to the taxpayer that we are going to deliver the very best services for them at the very least cost, and we are going to do it in a way that is accountable, rigorous, clear, and efficient. It is this kind of work that underlies the fact that we are the least corrupt, the most transparent Government on the planet, and every New Zealander should be proud of that.

In closing, can I just again start where I began in the last part, and that is to compliment the Government, our high-quality officials, and colleagues across the Chamber for their work on the bill.

Hon TREVOR MALLARD (Labour—Hutt South): I apologise to my colleague David Parker for the confusion, but I think he might have had a crack already and no doubt he can be involved in a sandwich—I can be before and after him, if he wishes.

The first point I would like to make is to compliment the officials who have been involved in the State Sector and Public Finance Reform Bill, and also the Office of the Clerk, on what is for me a new approach, and that is writing the Supplementary Order Papers into the bill in a substantive way. I know that we had some discussions about this process at some stage in the past. What it does do is make a bill much easier to understand for people like me who are interested in the changes that the committee has made, which are not quite as well shown in the version of the bill now. More important, when the Minister of State Services’ Supplementary Order Papers as proposed are incorporated in this way, it makes it much easier to focus—rather than trying to work on two large pieces of paper and trying to integrate them and work out how they interrelate with each other. So I want to thank the officials and I thank the Office of the Clerk and, I think, the Parliamentary Counsel Office too for their suggestions and their work in the area. Having said that, it may be that officials and the Minister regret the fact that it is now easier to understand, because there are more questions that flow from a better understanding of it.

The very first one that I have is on clause 78(3) and the definition of “departmental”. It really is a question of why we need to define “departmental”. Who does not know what departmental expenses are? For a very long time we have had departmental expenses, and we have had departmental capital expenditure. Most of the stuff has been around ever since we divided out the accounts to have a profit and loss account, as far as the Government is concerned, and a balance sheet. That is at the point when operating expenses and capital expenditure were divided. My question is, really, why we need to get to the level of pedantry in having this level of definition. There might be a good reason.

The next point I would like to ask is whether—oh, they do not number the lines the way they used to; this is a bit shocking. Now we are going to have some criticism. What we used to have down the side in well-drafted bills, about every—[Interruption] Have we? Well, I cannot see it.

Hon David Parker: You are looking at the tracked version.

Hon TREVOR MALLARD: I am looking at the tracked version. What is the point of having a tracked version if you do not have the lines on it? For people like me who want to speak and focus, it makes it a lot easier, rather than having to count down all the lines—you know, using our fingers and toes if we have to go too far—to have the lines numbered every 10 or so. If we want a suggestion for people who are doing tracked versions in the future, put the lines in, the way they are in the report-back version. Clearly they will be at different points, and as long as we know what we are referring to, it would be helpful.

I want to refer to the definition of “lend money”, paragraph (a). It is right below the bit about host department. To make it clear, it is in Part 2, clause 59, “Section 2 amended”, which is the interpretation part. I want to refer to “lend money” in section 2(1), amended by clause 59(3) in the Supplementary Order Paper, and, first of all, to ask whether paragraph (a)(i) could be better referred to as the MediaWorks exemption clause. This is “deferring payment for any goods or services supplied or works constructed for any person, organisation, or government;”. The question is whether this deferred payment arrangement should be known as the “Steven Joyce previously owned companies” clause, or some other approach like that. [Bell rung] Mr Chairman.

The CHAIRPERSON (H V Ross Robertson): The Hon Trevor Mallard.

Hon TREVOR MALLARD: Is it 5 minutes already? That is hard to believe. I had hardly started, Mr Chairman.

The next question I have is that under “lend money” paragraph (a)(ii) it talks about where the department—or I assume it is the department—is “entering into hire purchase agreements or agreements that are of the same or a substantially similar nature;”. The question I have got is does it not depend on which end of the hire purchase agreement they are in? If they are buying something on hire purchase, surely they are borrowing rather than lending. It is unlikely that a major Government department would enter into a hire purchase agreement. But under subparagraph (iii), which is the next section, where they are entering into finance lease arrangements, again, the normal finance lease arrangements are those where they are in fact borrowing, where they are getting goods and entering into some sort of finance leasing arrangement, done, I think, often by Government departments, and which involves those massive, big printing photocopiers, cars, or some similar arrangements like that—what are effectively lease-type arrangements.

I cannot conceive where it would be appropriate for a department or a Crown entity or a Crown agency to be the lender in such a circumstance. Do we really want the Ministry of Social Development to start getting into the car lease business—you know, the hire purchase finance company for cars? Maybe it is a plan for the Minister in the chair, in her area as Associate Minister of Education, as far as technology is concerned, and maybe it would be valid. It might well be valid if we are going to go into schools and have arrangements whereby there are computers, iPads, or iPhones given to families on some sort of arrangement. I do not want to characterise the Minister in the chair as one of the loan shark type people who enters into the high - interest rate arrangements, because I think that would be unfair. But my question—and she could answer it with some of her other experience—is whether in fact this clause is designed for arrangements such as that. Frankly, I cannot think of arrangements where it is appropriate for the Crown, a Crown agency, or a department to be the loan shark or finance company end of a hire purchase arrangement with the public or in a finance lease arrangement.

I do want to ask questions in relation to “responsible Minister”, as far as it relates to the Speaker and the Officers of Parliament. I do not want to go back over too much of the previous part of the bill, but I want to ask—through you, Mr Chair—the Minister who is currently the Minister in the chair about the interrelationship between the salary setting and the responsible Minister being the Speaker. It is something that I have clearly got some interest in—making sure that the rules are right in this area. I want to ask how this interrelates, for example, with a policy decision to move within this complex towards a living wage over a period of time. Is it a policy decision that the Minister responsible can take under section 2(1) as amended by clause 59(5) in this particular area? Or is it something that can be done by only the chief executive, whom I understand is called the General Manager in the case of the Parliamentary Service, the Clerk in other cases, and in other cases again the Ombudsman, or a number of others? Can the Minister in charge make those policy decisions?

Hon NIKKI KAYE (Minister for Food Safety): It is a pleasure to take a call on Part 2 of the State Sector and Public Finance Reform Bill. I have listened to several very technical speeches from the Opposition, and I want to also, just briefly, remind us why we are here. It is great to see cross-party agreement in terms of public sector reform. It is also great to see, as well, that members are paying such attention to detail.

I want to touch on a few speeches that have just come before us. Firstly, I was surprised, given David Parker’s extensive legal experience, that he needed me to walk him through some definitions in the bill. He asked what a “responsible Minister” is and what the difference is between that term and “the Minister”, so I am happy to walk him through that. “The Minister” refers to the Minister of Finance, and “the responsible Minister” refers to the Minister responsible for a department. I am very pleased to correct that for Mr Parker.

Hon David Parker: Clarify.

Hon NIKKI KAYE: The second clause—the other clarification that Mr Parker asked for was around amendments to section 80, in clause 75, so I am, as well, very pleased to give him some clarification regarding that. That change is specifically to enable Treasury to also be able to issue instructions to new departmental agencies for the purposes of section 81(1)(a), so I am glad that I am able to clarify that, as well. The other thing that Mr Mallard raised was around defining “departmental expenses”, and whether we need to do that. There are a couple—

Hon Trevor Mallard: “Departmental”.

Hon NIKKI KAYE: That is right—“departmental expenses”, and the reason that we need to do that. There are a couple of things. We want to be more explicit about chief executive responsibilities for departmental, versus non-departmental, expenses. That is the first reason. The second thing that I wanted to make clear is that “departmental” and “non-departmental” are mutually exclusive. The third point is that the terms are used throughout the bill, and not everybody who is reading that bill will necessarily have the experience that that member has in terms of that difference between “non-departmental” and “departmental”. So I am very, very pleased to be listening so intently to the Opposition speakers. But I want to make this point about why we are here. We are actually here to create greater flexibility in terms of our public sector, so that we can focus on outcomes.

I want to finish with one quote by a member opposite, because I think it was the best quote that we heard tonight. It was a speech by David Cunliffe. It was a great quote. Compared with some of his colleagues who focused on very technical issues, he said “We need to do more with possibly a little bit more, but even less.”, and I felt that that is a seismic shift in New Zealand politics. It is a seismic shift from the Opposition. I am delighted that members opposite have now supported our policy in terms of public sector reform.

Hon DAVID PARKER (Labour): Well, I am very glad that the Hon David Cunliffe made the earth move for the Minister. That brings me to capital expenditure incurred in emergencies, some of which will be seismic.

Clause 127 of the State Sector and Public Finance Reform Bill repeals section 23 of the Public Finance Act, then the next clause amends section 24, and then we jump to inserting new section 25A after section 25. On that order, it seems that we are not repealing the existing section 25; we are just inserting a new section 25A after section 25. I thought, well, why are we doing this? I thought that maybe this is arising out of the Canterbury earthquakes, because now new section 25A says: “Capital injections may be made in emergencies … The Minister may approve a capital injection to meet an emergency or disaster described in section 25(1).” So I went and looked up section 25(1). It says: “This section applies if—(a) a state of emergency or state of civil defence emergency is declared under the Civil Defence Act 1983 or the Civil Defence Emergency Management Act 2002; or (b) a situation occurs that affects the public health or safety of New Zealand or any part of New Zealand that the Government declares to be an emergency.” So I thought, yes, I could see where those capital injections that can be made in emergencies could be authorised under new section 25A.

But then I saw that under section 25(2), the Minister can already do something very similar. Under section 25(2) of the existing Public Finance Act, which is not being repealed by this bill, “The Minister may approve expenses or capital expenditure to be incurred to meet the emergency or disaster and, whether or not there is an appropriation by Parliament available for the purpose and despite [some other sections] the … capital expenditure may be incurred accordingly.” Then section 25 goes on to say that if it has not been appropriated in advance, then, under subsection (5), that amount has to be included in the annual financial statements and in an Appropriation Bill for confirmation. So you can do it in the interim, but eventually the appropriation has got to be confirmed by Parliament.

That is already allowed for under section 25, and I would like some clarification. I am sure there is a proper reason as to why we need the new section 25A, inserted by clause 129, in addition, but it seems to me to be very close to the situation that is already covered by section 25, which already allows appropriations for capital expenditure in those emergency situations. So to the Minister in the chair, the Minister for Food Safety, I would ask her to explain why it is that the new section 25A extension to the sorts of capital injections in emergencies is necessary, because it seems to me that it is pretty well covered already by section 25 in the existing Act.

This is just following on the theme that the Hon Trevor Mallard has raised as to why it is that we sometimes overcomplicate legislation. I thought the point that he was making earlier was that if you have already defined “department”, why do you have to define “departmental”, because “departmental” obviously refers to a department. That was the point that he was making. Perhaps the Minister in the chair, the Minister for the Environment, could address that because I am not sure that the previous Minister in the chair, the Minister for Food Safety, quite got the essence of my colleague Trevor Mallard’s point in that regard.

The other point I would like clarification on is in respect of strategic intentions. Sections 38 to 41 of the existing Public Finance Act are being replaced. They are being replaced, in clause 136, with a new section 38, which refers to strategic intentions, whereas previously the departments had to provide information on future operating intentions. I am not sure whether this is because the Government has formed the view that the information that departments have been providing on their future operating intentions has become so detailed or so general as to not be strategic, and whether, either because it is too detailed or it is too superficial, the Government does not think the existing information being provided is strategic enough. But in the new wording the point of difference seems to be that instead of providing information on future operating intentions, the departments have now got to provide information on strategic intentions.

In terms of the timing of that information, the Minister can at any time require the department responsible to that Minister to provide new information on strategic intentions. I can see a number of areas where that would be necessary in the current Government, given its failure to meet election promises that were made to the electorate, which it must be feeling at risk about in terms of future voting intentions.

John Hayes: That’s not true.

Hon DAVID PARKER: “That’s not true.”, says John Hayes. Well, I would like to list a few examples: “Wave Goodbye to Higher Taxes. Not Your Loved Ones.” Remember that one?

David Bennett: Oh, come on.

Hon DAVID PARKER: “Come on.”—you do not like being held to account for your promises, do you? That was one of your election promises. Mr Chairman, sorry. I did not mean to—the member for Hamilton—

David Bennett: Name one.

Hon DAVID PARKER: I will name you more than one, not just the promise to halt the people going to Australia. To halt the reason for them leaving, National said it was going to overcome the wage gap. It was going to deal to the wage gap. What has happened since? It has grown—it has grown. So I would have thought that Ministers who were up to their game would be revising the strategic intentions for their department so that they do a bit better in that regard, because until now it has been an abject failure. I mean, this Government talks about introducing national standards for schools, but maybe instead of strategic intentions being the topic here, it should actually introduce some standards for itself, including being held to account for its election promises.

There was another area of strategic intention that Bill English used to talk about. He came to power saying he was going to rebalance the economy towards exports. Exports as a percentage of GDP are flat. They are flat and, indeed, this year they may go down as a percentage of GDP. Another strategic area of failure—and I can see how it might be more meaningful for members of the public. Instead of requiring more information on strategic intentions for the department, it might be more useful for the public to have some report on whether the strategic objectives of the Government as promised prior to the election were being met by actual outcomes in New Zealand. So I wonder why it is that the Government has moved from information on future operating intentions to strategic intentions.

It is interesting that once these strategic intentions are produced, a department must, as soon as practicable after providing the information to its responsible Minister, publish the information on an internet site maintained by, or on behalf of, the department. That is provided in the new section 39, which is also inserted as part of this clause 136. So clause 136 does not just insert a new section 38; it also inserts a new section 39, which says that these things have to be put up on a website as soon as practicable, except if there is a Budget coming up. Then, if the Government wants to keep it secret during that period, in the 3 months before the Minister delivers a Budget, that department must not publish the information. When I say “information”, that means the strategic intentions that the department is identifying, perhaps after the Minister has asked it to change them.

SUE MORONEY (Labour): I was very interested in the Minister for Food Safety’s contribution a short time ago on this part of the State Sector and Public Finance Reform Bill. She did say that she was going to address the questions that had been raised by the Opposition speakers, but she declined to actually answer the fundamental question that I had posed earlier about seeking an absolute assurance from the Minister in the chair, the Minister for the Environment, that we would be able to compare estimates from year to year by comparing apples with apples, even though in this part of the bill we were changing the way that those estimates were going to be brought down. I still would like to hear an assurance from the Minister in the chair about that issue, because I think that is fundamentally important.

It is worrying to me, and of some concern, that we have members in the Chamber from the Government who are here and who sit on the Finance and Expenditure Committee but do not seem interested in taking a call in the debate around how we are amending the Public Finance Act. I really did expect that we would hear them getting up to defend these amendments and these changes, but there has been nothing thus far. Hopefully, that will change quite soon.

The part that I want to address of the amendments in Part 2 of this bill where the Public Finance Act is being amended is the part that refers to the frequency of statements of intent from various departments coming forward. I happen to have here, actually, a copy of a statement of intent so that people can understand what sort of document we are talking about. This one is actually from the Accident Compensation Corporation. I happen to have it with me in the Chamber. I was just perusing it for the vote estimates that we will be looking at, hopefully some time tomorrow, in our select committee. Of course, we are meeting outside the hours of urgency, as is right and proper. They are documents that do actually inform the Government and therefore the public of what the department’s—in this case it is a corporation, the Accident Compensation Corporation—priorities are for the forthcoming year. The amendment that this bill brings forward is actually to move that, where there has been an annual requirement for it, to just a 3-yearly requirement. I note that the select committee was concerned about that, and quite rightly raised issues around moving to just a 3-yearly requirement of statements of intent, and what that means for incoming Governments.

I think we on this side of the Chamber have a particular interest in this because we do intend to be the next incoming Government. If statements of intent were there and were binding for 3 years, then that may actually curtail the ability of an incoming Government and an incoming Minister to implement policy that they have been elected on. It might curtail their ability to actually make a quick amendment to things that they did not approve of that were in, for example, the Accident Compensation Corporation’s statement of intent, or that of any of the other departments. So the select committee quite rightly raised that and did come to an amendment of the amendment, if you like, to give the Minister the right to require a statement of intent to be brought in between that 3-yearly requirement. I think that is right and proper. It might not even be a change in Government; it actually might be a change in Minister, who comes forward from within the same Government. And we have seen that, where Ministers have, you know, maybe slightly different priorities that they want to promote.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): Again, I will not take too much of your time, but I will take the opportunity—

The CHAIRPERSON (H V Ross Robertson): I am sure you will take 5 minutes, Mr O’Connor.

Hon DAMIEN O’CONNOR: No, no. I will take the opportunity to speak on Part 2 of the State Sector and Public Finance Reform Bill. There are couple of issues here that I would like to refer to in particular, and they are the presenting and publishing of departmental annual reports and the issue of responsibility of directors—responsibility for, and administration and the use of, appropriations. I must refer, I guess, to my portfolio area of responsibility of primary industries. I have been studying the reports of the Government in this area for 4 years now. I am assuming that the responsibility here as stated is that these must be accurate. I think it is: “We consider this desirable to allow whole-sector or cross-agency reporting.” The Finance and Expenditure Committee has clearly said that it wants clear and accurate reporting.

If I can take the Ministry of Agriculture and Forestry as an example—and I know that has now been merged into a new superministry—there was one particular issue there on rural proofing, which was a policy introduced by the last Labour Government. It was to ensure that in every area of Government policy there was to be consideration of the effect on rural communities. In fact, a template had been developed, and the Ministry of Agriculture and Forestry and the rural affairs unit, it was kind of assumed, were responsible for ensuring the implementation of that. In fact, the annual report stated that. But it was not happening—it was not happening. And, of course, only through the select committee process—a relatively brief period—did we have the ability to ask the Minister and officials why it was not happening. Indeed, what often happened was that other issues overtook the investigation into this area. So what I am hoping that this bill will demand of Government agencies is not only reporting but accurate reporting. The issue I referred to in the debate on Part 1 is about, I guess, the accountability of the chief executive officer or the Minister, and who should take what responsibility. So I raise that as one of the points.

The second one—in fact, I had referred to two before, but there is one other one—is the authority to lend money. Can I refer to the current situation of the Ministry for Primary Industries, which is that it has a grand scheme called the Primary Growth Partnership. The Minister has indicated that $600 million - plus will be allocated on a basically one-for-one system, where the taxpayer will put up over $300 million and the industry will put up over $300 million. It will get on with projects that have, no doubt—we have been told—been scrutinised. What we have not been told is how they are accountable.

The question I ask is—and there is no authority to lend money in Part 2 here—if the money that was allocated to a project is deemed not to have delivered, is there a requirement to repay, and could that be considered loaned money? It is a technical question, but the bill is technical. If an agency like the Ministry for Primary Industries does not have the authority to lend money, and it allocates money—and we are talking tens, if not hundreds, of millions of dollars—to a project that has a joint-venture arrangement, is that appropriation or allocation deemed a gift, or is it a loan? Is there any requirement for the money to be repaid if there is no delivery on the key performance indicators or the projected outcomes? At this particular point there are a few projects that have been running half their lives, and there is not one substantive narrative report on progress—

Hon Trevor Mallard: “Narrah-tive”.

Hon DAMIEN O’CONNOR: Narrative—sorry. Thank you for that, Mr Mallard. There is not one substantive narrative report on the progress of the Primary Growth Partnership. So if, indeed, the select committee, Audit New Zealand, or anyone deems these projects to have been a failure, will that money have to be repaid, and will that therefore mean that the lend money, or the requirements and provisions that are in this Part 2 for an authority to lend money, should have taken account of that possible scenario?

The next part I will go on to—and, hopefully, the Minister will answer a few of these questions—is the responsibility of directors. There is a good lesson in here. Although the directors of Crown entities are different from the directors of State-owned enterprises, basically, they have the same moral responsibility—that is, to return to the taxpayers. But I am not quite sure whether these provisions here mirror those of the State-owned enterprises. We have had a classic example in Solid Energy, which is a State-owned enterprise, not a Crown entity, but none the less is owned by the taxpayer and is returning to the taxpayer, hopefully, returns on their investment and efforts and dividends. There was a clear—in my view—failure of the directors of that company to keep it in order.

What we have in the commentary regarding clause 92 is: “The intention of this clause is to allow directors of companies listed in Schedule 4A of the Act to act in certain circumstances in the best interests of shareholders, rather than in the best interests of the company.” I guess a State-owned enterprise would act in the best interests of the company, and this is saying, I assume, that directors should always act in the best interests of the shareholders. It is one and the same if the Crown owns the company, although we appreciate that with the idiotic sell-down of State-owned enterprises by this Government, it is determined to hand 49 percent of State-owned enterprises into the hands of wealthy New Zealanders who can afford to buy a whole lot of shares or, worse still, as we know, into the hands of a whole lot of offshore investors. That is a difference of the State-owned enterprises. There are, however, some Crown entities—and I am not sure, but I am told, that AsureQuality is a State-owned enterprise, and that is one that has done a deal with the Chinese. But I will not carry on, as I know this will be slightly out of the scope of the bill. I will stay within it. So the responsibility here is clearly to the shareholders, as it should be, rather than to the company as an entity. Well, that is the way I read it. Indeed, it is refreshing, and it is something we should perhaps apply to the State-owned enterprises as well. I think that there are some interpretation issues there, and I guess that the select committee has gone through that.

I do not have too much more to say on Part 2 of the bill other than to re-emphasise and repeat the questions that I have raised, of course, around the accuracy of reporting on the departmental annual reports. They are generally glossy. Most people do not read the detail often, but, indeed, it could be said that too often the reports are inaccurate.

The second point, as I said, was the authority to lend money. If money is appropriated or handed over or allocated to projects, then is there a requirement for that money to be repaid? I am suggesting that with the Primary Growth Partnership there is probably not a requirement for it to be repaid. I am hoping that this particular clause, or this part of the bill, does not eliminate the possibility that money could be repaid, as a loan would be, if there are not the outcomes as laid down in the proposal that might have been accepted by officials. It is not terribly complex, just a point about basic accountability. I have to say that with the Primary Growth Partnership there is a lot to be learnt and a lot to be explained, and, indeed, there may be a lot of money to be repaid if, in fact, those projects have not delivered on what they said they would.

Hon TREVOR MALLARD (Labour—Hutt South): I have got lots of dog-eared corners of this State Sector and Public Finance Reform Bill, but there is a particular issue that I would like to start with and that is on page 69 of Supplementary Order Paper 262, about 10 lines from the bottom, at new section 34(1)(b), clause 65B, where it says “by the Minister or the responsible Minister.” The question I have got is whether the words “the Minister or” are, in fact, superfluous. Do we need to have “the Minister or the responsible Minister.”? If one goes back to page 63 of Supplementary Order Paper 262, at subclause 5 of clause 59, “responsible Minister” means in relation to the Office of the Clerk, etc., or the Speaker; in relation to any other department, the Minister for the time being responsible; in relation to a Schedule 4 organisation, the Minister responsible for the financial performance; and in relation to a Schedule 4A organisation, the Minister and the other shareholding Minister. The question I have got is who the Minister could be who is not the responsible Minister, except if one goes further into Supplementary Order Paper 262 to page 127, where you might have a Minister other than the responsible Minister who is responsible for a big report, and this part of the reporting requirements are part of a bigger report, and therefore the Minister who is not the responsible Minister is, in fact, the Minister responsible for the report that this particular segment is part of.

I think that at least the officials know relatively well that Ministers act for other Ministers. That is part of the parliamentary process. Ministers can act for other Ministers and can act for responsible Ministers in fulfilling both their parliamentary and their statutory functions. The question I have is—and it might be a bit pedantic, and there might be a very simple answer for it that is passing me by—going back to that original point: who might be the Minister who is not the responsible Minister who is being referred to in that particular clause? I cannot think of a circumstance, and I have been going back and forth a bit. I have been worrying at it now for about 20 minutes. I cannot work it out. I do not want to call it a non-responsible Minister, because I think having the words “the Minister” indicates that it is, in fact, the Minister who is responsible. But then why do we say “or the responsible Minister.”? Is it belt and braces, or does it have a particular meaning that adds some value to it?

I do want to say to the current Minister in the chair, the Minister for the Environment, that the previous Minister in the chair, Nikki Kaye, was most helpful with some of the explanations that she gave on these technical points.

Hon David Cunliffe: That’s right.

Hon TREVOR MALLARD: She was quite good at reading out the responses that were given to her by the officials behind her. She did not know the name of the actual bill, but that did not matter that much. I would be interested in a response from the Minister on this. In fact, I would be interested in a response from any Government member. I think we could have a bit of an exemption if Mr Ryall, who used to be responsible for these areas, is across the detail about the difference between “the Minister” and “the responsible Minister”, and the added value. In fact, I would be prepared to wager quite a lot that he would be more across it than the current Minister in charge of the bill or the Minister who is currently sitting in the chair. If anyone knew the difference between “the Minister” and “the responsible Minister” in this particular context, I would say, other than the officials, it is likely to be Mr Ryall.

The next question I would like to ask is whether anything should be read into the last couple of lines on page 117 of Supplementary Order Paper 262, where there appears to be an exclusion for “an intelligence and security department”. The question that goes with that is whether “an intelligence and security department” is defined within this legislation. I have been looking for it, and I cannot find a definition of “an intelligence and security department”. I think the one thing we have learnt in recent weeks is that there has been a bit of bouncing around as to what these different agencies do and how they work and interrelate with each other.

Is, for example, the Ministry of Defence an intelligence or security department for the purposes of this Act? Do we still have a Defence Force as opposed to a Ministry of Defence? Is the Defence Force a security or intelligence department? [Interruption] Is it? Is the Police an intelligence or security department?

John Hayes: It’s in the Act.

Hon TREVOR MALLARD: It is in the Act? Sorry, I did look for it in the Act. Mr Hayes says it is in the Act. Can you tell me which section of the Act, Mr Hayes? Mr Hayes has grunted that it is in the Act, but he appears not to be able to point out the particular section—

Hon David Cunliffe: Which Act?

Hon TREVOR MALLARD: Well, I assume it is in the Public Finance Act. That is the Act to which we are currently referring. If it is, that is good; if it is not, or if there is something—just forgive me for being suspicious. I think there are a number of things that used to be above the radar and used to be pretty clearly legal or illegal, and now they are being blurred. What appears to be the case here is that expenditure, which should previously have been transparent, is, in fact, becoming less transparent under the Act.

The next question I would like to ask goes to page 80 of Supplementary Order Paper 262 and the replacement of section 65K of the existing Act. That is the very old one: “The Crown must not lend money except under statute.” I want to say that when I was Minister of Education, one of the things that used to drive me spare was schools that got into trouble for either borrowing or lending when they did not have the authority to do it. It happened all over the place. They were borrowing and lending money. One of the questions I have got, in fact, is whether schools have actually had the legal authority to lend money from their boards of trustees’ operational funds to teachers who have not been paid by Novopay. I am just going to venture a guess, unless there has been a change in the legislation—I think that in the time I was the Minister of Education, they would not have been permitted to lend money in that way.

What I would like to ask is which Acts are being referred to in new section 65K? Is there any intention of doing a list or a cross-reference? It is all very well to say unless “expressly authorised by any Act, the Crown [shall] lend money to a person or an organisation.” Actually, if some lending occurs, it is pretty hard, on a random basis, to work out the authority for that lending if, in fact, there is not the sort of decent listing and cross-referencing that is normally the case.

Something that I do very much support is clause 70AAG, set out on Supplementary Order Paper 262, which is the Auditor-General directing “Ministers to report to House of Representatives in cases involving unlawful expenses, etc”. I have some experience in this area. I had the unfortunate experience, back when I was the member for Hamilton West, of chairing the Māori Affairs Committee when we were doing “the supplementary estimates to the supplementary estimates to the supplement to the supplement to the supplement”—I think we had about seven levels of it. I get a slightly knowing nod from the officials’ bench as to the problems—

CHRIS HIPKINS (Labour—Rimutaka): This is the first opportunity I have had to take a call on the State Sector and Public Finance Reform Bill. I am happy to make a few observations about these particular clauses in Part 2 of the bill that deal with financial reporting for Government agencies. There are a few points of clarification that I would like to seek on these matters as well, not having been involved in the Finance and Expenditure Committee deliberations on this bill.

It is clear that one of the things that the bill seeks to achieve is a more connected and joined-up Public Service, to break down some of the silo mentality that exists within the Public Service at the moment. I think that is a worthy aim and it is something that we in the Labour Party are very, very supportive of. But one of the tensions with that has always been that, ultimately, under the existing arrangements with public finance, in particular, the chief executive is going to be the person who is responsible for how public agency money, public money, taxpayer money, is spent. Under this legislation that we are debating at the moment, where we are talking about specifying the financial responsibilities of departmental chief executives to make it clear that they include financial stewardship for the long term—so that is what we are doing in one part—we are saying to the chief executives that we want them to take a long-term view of the financial stewardship of their departments. But then in another area we are making it clear that other departments as well as the one administering the appropriation can incur expenses against the appropriation. It sort of highlights the tension that we have.

In order to get a more connected and joined-up Public Service and to get the agencies working more closely together, to some extent we have to erode the autonomy of an individual chief executive over the way their department spends its money, yet we are still going to be holding that chief executive to account. They are still going to be the person who comes along to the financial review process at a select committee to explain how that agency or department has spent its money. There are going to need to be some pretty clear controls in place here, because different chief executives and different agencies may also be getting slightly conflicting priorities or conflicting directives from the Ministers for whom they work. One of the things that I think we risk here—and it is certainly not an insurmountable problem, and I am supportive of what the bill is trying to achieve—is just making sure that we make it clear that where one department incurring expenses against an appropriation of another department is doing that, the accountability is quite clear, the lines of decision making are clear, and we can keep track of what is going on there. That flows right the way back up the system to Ministers as well.

Certainly, most large areas of Government expenditure involve several different departments and agencies. If we take education, for example, I can think of several issues that we would deal with in education that would involve the Tertiary Education Commission, the New Zealand Qualifications Authority, and the Ministry of Education, and they would all be working on the same goal. They would all be working towards the same objective and outcome, yet at the moment they are very much defined separately, although there is, I guess, a coordinating role for the Ministry of Education in overseeing the work of the other agencies. [Interruption] There are other agents, and Megan Woods has just pointed out other agencies involved in transitions—Career Services and various agencies like that. We want those agencies working together towards a collective goal. We want the Government to be able to specify that this is the direction it wants to go in in these areas, and that it wants to make sure that they are connected up and that the public finance requirements do not, effectively, act as a barrier to all the agencies working together. Potentially, it is quite possible—well, I certainly think that it is the intention—that the changes being made in this legislation will provide opportunities for that to happen.

Turning back to the accountability issue and the way that accountability information is presented in annual reports, I point out that it is the annual reports, effectively, that form the starting point for Parliament’s scrutiny of how money is spent. When we get together in our select committees and we go over departmental expenditure and we review departments, we look first at the annual reports and then at a whole lot of supporting information that is supplied, usually in relation to quite extensive questions that members of Parliament will ask through that select committee process.

What the changes in this bill before us allow is for annual reports of more than one department to be presented together in one document, where this will provide more meaningful information about the department’s performance and achievements, and it will allow end-of-year reporting on appropriations that contribute to a common purpose but are administered by different departments to be presented in one document. In education, for example, unless I am incorrect, this could mean that we end up with an annual report for education, rather than an annual report for the New Zealand Qualifications Authority, an annual report for the Tertiary Education Commission, and an annual report for the Ministry of Education—unless I am mistaken; some clarification on that would be quite good.

Then what we do is we get to the point where we start to ask whether, you know, at the other end of the process, some of the documents specifying what we want departments to do should also be common. So rather than the Government specifying a statement of intent for all of the different agencies, the Government can then start specifying “This is our statement of intent for education. This is what we are trying to achieve in education.” Then all of the other things that flow from that contribute to that overall directive, and the annual reporting coming back again contributes to that. That is all positive, in my view. I think that is what we want the Public Service—the public sector and all of the agencies—to be doing. We do not want to have them competing with each other, and we do not want the silo mentality. But within that we have still got to make sure that, ultimately, at the end of the day, someone is responsible and accountable back to the House.

In our estimates we get the opportunity to grill Ministers on what it is they want money that is being spent to contribute towards—what are the outcomes that they are trying to seek. We get to grill them a little bit on their plans and on the decisions that they are making—not always successfully, of course; that relies on them providing the answers. Megan Woods has just raised a very good point. In the scrutiny of all of the votes and all of the departments and agencies that we have through the financial review process, we very much rely on there being timely information to the select committee. For example, we start, as I mentioned, from the annual report. That is the starting point for our scrutiny of where departments are spending their money. But we then ask an extensive range of questions. Normally, there will be around 100 or 150 standard questions that go to all departments and agencies, and that is actually where we get the really useful information. Then, from that, there will probably be more supplementary questions that go backwards and forwards—in a small department, not very many; in a controversial or big-spending area like education, health, or social development, there will be a lot of questions.

By getting that information, we are able to give really good scrutiny to what these departments and agencies are doing. If that is not supplied, because Ministers simply do not require their departments to supply that information, the select committee cannot do its job. And too often in this year’s financial review process, we are seeing that happen. We are seeing agencies not supplying information that is being requested by select committees, and even more so in the most recent round of estimates that we have dealt with. Ministers have been asked for a whole lot of information and it has not been supplied to the select committee at the point where Ministers are showing up in order to answer questions about it. How can the Parliament do its job effectively if we are not actually being given the information before the hearings take place?

One of the things that I am concerned about—and I just, I guess, seek some reassurance from the Government about how it is going to handle this—is that in making the information provision more multidepartmental, and stretching the boundaries of that a little bit more, we have still got to have a mechanism to ensure that there is accountability, to ensure that the follow-up information that is requested is actually supplied and is actually provided. It certainly can be done. There is no reason why it cannot be done. We just need to have an assurance that processes will be put in place to allow that to happen.

I am very concerned that we are departing from some pretty well-established processes—just in practice—around the House and around select committees at the moment, and information is not being provided in the timely manner that select committees should reasonably be able to expect. That is of real concern. It is frustrating for us, of course, but it is actually very concerning for the public, because they rely on us, as members of Parliament, to scrutinise Government decision-making, and to scrutinise in a very robust manner where their money is being spent, and we are not getting the information that we should get to allow us to do that effectively.

Dr RAJEN PRASAD (Labour): At this late hour it is a pleasure to take a call on Part 2 of this particular bill, the State Sector and Public Finance Reform Bill. The bit that I want to talk about—

David Bennett: You are really getting to the bottom of the barrel, Cunliffe.

Dr RAJEN PRASAD: Will the chattering classes be quiet and listen. You might learn something. The risk exists—[Interruption] Those three members there, just be quiet. It is late now, and I know you are tired. You are making noise for nothing. We know you are tired. We know you are tired. Just concentrate—concentrate. Those members sitting at the back have got no mortgage on financial thinking.

I am particularly interested in the new category, the multi-category appropriation, the MCA, and the notion of a single, overarching purpose, because I think there is something quite fundamentally radical about these proposals, particularly as we apply them in the social development area, as I will attempt to do. It is a commendable idea to bring those two things together. Indeed, other members have spoken about—and the Opposition whip just spoke about—the accountability in this. When David Clark was speaking he raised a fundamental question, and he said that it does change the fundamental nature of accountability—just these particular provisions. I agree with him; it does. I wonder how this will unpack itself as we go on.

One reflection one can make is that over the years, or over decades—and I am going to focus and apply this to the social development area—we have increased expenditure in social development, and in every decade problems in social development have increased. We are talking about children, we are talking about families, and we are talking about that sector of our society that, for some reason, multiple generations get locked into. The interpretation that this Government has made is that that is all about welfare dependency, and I do not agree with them, of course.

But here is an approach that could possibly signal that there is something different that the Government anticipates, and if it does, then certainly we support that. But it does present some major challenges to the Government and to those who are considered to run programmes and deliver services in different ministries and departments that contribute to this single, overarching purpose—in this case, social development or development of children. I wonder how the Government has conceptualised this, because here we are in silos, as others have said, and here is an attempt to link the Public Service together and to join it up a little bit more. We have been trying for probably over a decade now to join the Public Service departments together. But here is something conceptually different.

I wonder—and maybe the Minister in the chair, the Minister for the Environment, might want to give us some ideas as to what the thinking was here—whether it is anticipated that there will be a different type of conceptualisation of the overarching purpose that the Government wants to achieve, and if it has anticipated that, then what that might be. [Interruption] They are still chattering in the back there. Obviously, they are not following the argument. Those three are not following the argument, the chattering classes up the back there.

How would the Government conceptualise this? If we applied that to the welfare of children, for example, as a single, overarching purpose—here the Government has decided that there is a single, overarching purpose to increase the development, if you like, of children, to remove risk, etc. We know from all of the science that is available to us that there are multiple contributions to that development pathway, the trajectory that children have, whether it is in housing or in health or in income adequacy or actually in physical environments in which children live—the communities in which they live and the neighbourhoods in which they live. If there was here a single, overarching purpose to improve the outcomes for those children, then one can anticipate that, indeed, those ministries and those departments—the ones I have mentioned and a number of others—are actually going to be doing something quite different. All of the science that I know actually does reflect the fact that the conceptualisation of what contributes to those problems is at multiple levels, is ecological, and is holistic.

So I wonder whether the Minister can tell us that the officials and others have conceptualised this in such a way that there actually will be a different way of doing business, a different way of addressing the needs of children rather than leaving them in silos. At the moment it is just a rough schema stating that there will be multi-agency appropriations and there will be a single, overarching purpose. But what will make that effective, and this will be fascinating to see, is the conceptualisation behind it: how the area that the single, overarching purpose is designed to address has been thought through, whether all of the ministries and departments that have contributed to it have actually done the work to design, if you like, this schema in which they contribute, and then how those services will be delivered.

This comes back to what I was saying earlier. We have poured money down these silos, and, in the end, social exclusion has actually increased. The problems have not gone away. If this is a different way of doing it, then, clearly, there has to be some fundamental change in our education system, in our housing system, in the child welfare system, in the social development system, and in our environmental design and how we design our environments in which our—

Maggie Barry: His speech is as irrelevant as he is.

Dr RAJEN PRASAD: Will Maggie Barry please listen for a moment, because I doubt whether Maggie Barry is actually following the argument. We are not planting a shrub now at the moment; we are talking about something quite serious. I doubt whether those three members have actually understood at all what this is about. I know that it is late in the evening. Go back to sleep. You will probably be much better off tomorrow morning.

If that thinking has taken place, then I believe that this is indeed quite a radical change. Other speakers from this side have actually already indicated that there is a huge promise in what this model gives us, but to actually deliver it is something quite different. Of course, the other point, and Chris Hipkins was talking about this earlier, is that when the reports come back to the select committees, and the reporting frameworks that are being used—and that is being changed, as well, under Part 2—then we actually have a whole different way in select committees of interrogating the performance of those Ministers and departments that contribute to the overarching purpose.

So really this is a radical change. If it works and if it is well conceptualised, then it will be effective. But if some of the light-minded people who have been interjecting are responsible for actually designing how these things work, then I doubt very much, Mr Bennett, whether any contribution that that member might make is actually going to have any effect on this. God help us if that member becomes a Minister. Some of the others might. But the Ministers have got to be smart enough to demand the kind of conceptual thinking that this very simple change actually requires.

David Bennett: What’s the name of the bill? Tell me the name of the bill.

Dr RAJEN PRASAD: I beg your pardon?

David Bennett: What’s the name of the bill?

Dr RAJEN PRASAD: Oh, come on. Does the member think that I am that stupid? Just take something seriously. Do not be an idiot all your life. I do not think that that member remembers the bill, and if that was all that that member required me to understand about this bill, then I think that member is in cuckoo-land. The fundamental clause I am addressing concerns the multi-category appropriations and the single, overarching purpose. If that member has not understood that, then I do not know whether that member has anything useful to say. I challenge those three members on the other side to take a call and explain their understanding of this particular provision in the bill.

David Bennett: Are you voting for the bill?

Dr RAJEN PRASAD: Come on, go back to sleep—go back to sleep.

There is something quite serious about these provisions, which we support on this side of the Chamber. I think they could fundamentally change the silo thinking that prevails in many Government departments and agencies. The overarching purpose is a very important way of trying to bring it together. If that is the intent of these provisions, then I think it is a very good bill, and we support it. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): Kia ora, Mr Chair. Kia ora e te Whare. Kia ora koutou. And special greetings to the noisier members over the back there, who seem to be enjoying the proceedings of the evening. I am sure I am not alone in looking forward to their particular contributions later in the debate.

Andrew Little: You’ll be waiting a long time.

Dr DAVID CLARK: I may be waiting a while, says my colleague. They have been remarkably quiet when it comes to their turn to make a constructive contribution, and are more focused on the interjections. I will not claim any high ground there myself, but I would enjoy any contributions.

To come to the substance of the State Sector and Public Finance Reform Bill, lest I be hoisted on my own petard, Mr Chair—

The CHAIRPERSON (Lindsay Tisch): I am listening.

Dr DAVID CLARK: —I wish to discuss the nature of these departmental agencies and the reporting mechanisms that will apply in future, as we see right up front in Part 2. We come straight to the crux of the matter in clause 58A, which says: “In section 1A(2)(d), after ‘departments,’, insert ‘departmental agencies,’.” Then we have a series of other changes that the bill proposes that will be about ensuring that these departmental agencies are more widely considered in the legislation, that other pieces of legislation fall into line, and that those agencies can incur expenses or capital expenditure under the Imprest Supply Act in the same way that a regular department would.

My question, I guess, for the Minister in the chair, the Minister for the Environment—and I know that this Minister is a capable Minister and will probably not shy away from such questions—is about this creation of a new organisational arrangement, called a departmental agency, as an option for providing public services. We are told that such an agency would sit legally within a host department, which would administer the appropriations used by the departmental agency, but the departmental agency would have its own chief executive directly responsible to a Minister for its specific activities. My question really is around how the lines of accountability would then run. It is interesting that these departmental agencies would, presumably, have a different type of accountability; otherwise, there would be no need to create them. This entity is a new type of entity. Is there a hierarchical arrangement here? Is the departmental agency within the department now in some sense, tacitly at least, responsible to the chief executive of the original department? They report directly to a Minister, so one can imagine that if conflicts occurred over the use of building space or the use of meeting rooms—you know, if we pare it back to the basics of everyday departmental life—then solutions would need to be found.

It is not immediately clear to me how this kind of conflict would be addressed or what the real purpose of introducing these new agencies is, unless it is for some decreased level of scrutiny. This Government does have a track record for favouring a decreased level of scrutiny, and the example that springs to mind immediately is the asset sales legislation—

The CHAIRPERSON (Lindsay Tisch): Order!

Dr DAVID CLARK: This is quite on point—

The CHAIRPERSON (Lindsay Tisch): I am listening very carefully.

Dr DAVID CLARK: —and I will bring it back directly. The public becomes concerned when there is a decreased level of scrutiny on public affairs.

As I have stated earlier, in Part 1, and what is set up in Part 1 is actually brought into practice in Part 2, we are striking a balance here in this Parliament with this legislation between accountability on behalf of the members of the public for the spending of money—and that is particularly relevant in the amendments to the Public Finance Act 1989, which we are discussing in Part 2—and the freedom of Ministers to achieve the goals that they wish to achieve, which they have said they are going to achieve, through the employment of those funds in a way that is flexible, so that they are not bound by unnecessary constraints, by constraints that are artificial in their nature, for a reporting requirement that actually does not serve a public purpose. That is a reporting requirement for its own sake that spells something out in detail because that is the way it has always been spelt out, not because someone has taken a fresh look at it and asked the question: “Is this something we need any more? Are we scrutinising things in a way that is in the public interest, or are we scrutinising things in a way that is actually beyond the public interest and actually inhibits departments and their ability to carry things out without the offsetting public benefit of that wider public scrutiny in a way that is meaningful to the wider public?”. So we are trying to strike that balance here.

That cuts to the issue that I was raising about these departmental agencies. I have not heard a convincing argument from that side of the Chamber as to why these departmental agencies should have this specific piece of legislation that separates them out. I expect Mr Hayes will leap to his feet shortly to articulate—

John Hayes: If you’d come to the committee, you’d have found out.

Dr DAVID CLARK: —exactly why these departmental agencies—Mr Hayes says that if I had come to the committee, I would have found out. Well, I was not privileged to sit on the Finance and Expenditure Committee, where this issue was discussed, so I do invite Mr Hayes to share that, if it is within his ken, if he understood the issues at the time and is willing to share them with the wider members of this Committee. I invite him to take a call and explain why these departmental agencies should be created and what advantages they will create for the taxpayer, because I am certain that at some level this Government will be very, very clear that it does want to make sure that money is well spent for the taxpayer. The public at home may not have that impression from watching this, because what they will observe is that members opposite have not really entered into the spirit of the debate. They seem to be content to sit and listen to many members on this side of the Chamber raise important issues.

That said, I must commend the previous Minister in the chair, the Minister for Food Safety, who did take a call and answered some of the questions that were raised. That is an important part of what we are doing here. We need to convince ourselves that this is weighing that balance—which I raised earlier—right, between proper public scrutiny and not being entirely cumbersome on the Government of the day in a way that ties it up in red tape and makes it unable to achieve the purposes it sets out to achieve. We know that this is the right thing to be achieving, and that is why Labour will be supporting this bill. I must reiterate that the balance that has been struck is one that we think is appropriate and is one that makes this bill one that will survive the test of times.

I think, as I mentioned earlier, that the processes laid down here—the accountability mechanisms—although appropriate, cannot inoculate the Government against bad policy. If the Government wants to implement bad policy, this legislation enables it to do that in a more efficient and effective way. One of the earlier contributors to the debate made the very good point that bad Governments will do that anyway; they will implement bad policy come hell or high water. What this legislation really achieves is that it enables Governments that want to implement good policy and do it through proper process to be able to do that in an efficient way. That cuts to the heart of the matter as to why Labour is choosing to support this bill.

One of the other matters I wish to raise in respect of Part 2 is the standardising of the governance and performance reporting requirements for companies currently listed in schedule 4 of the Public Finance Act and proposed to be moved into the new schedule 4A by schedule 2 of the bill. The standardising of performance reporting requirements must on the surface appear to be a good thing. The standardisation of reporting requirements, making them easier and less burdensome, means that these agencies can continue to do their tasks with Crown entities and get on with the tasks that they exist to carry out.

If we look at some of the earlier legislation that was passed here in this session this week, there was the standardisation of the generally accepted accounting practice procedures so that fewer small to medium sized enterprises are required to undergo those onerous requirements—another good step. That is another good step, and we need more of this kind of thing. We know that recently New Zealand slipped from 15th to 24th in the world business competitiveness stake according to the IMD World Competitiveness Center’s survey. We know that New Zealand business is facing tough times. This Government has skewed the playing field against small business. There is a lot of red tape it has introduced—

The CHAIRPERSON (Lindsay Tisch): Order!

Dr DAVID CLARK: —the child support legislation requirements—

The CHAIRPERSON (Lindsay Tisch): That is not part of the bill.

Dr DAVID CLARK: Mr Chair, the point is that that contrasts, as an example, with this piece of legislation. Those areas in which the Government has put a further burden on small business—those businesses are struggling, they are not being created. There are 2,500 fewer a year than there were under Labour. This piece of legislation contrasts with that. This is an attempt to make sure that business can perform better.

LOUISA WALL (Labour—Manurewa): Kia ora. E ngā mana, e ngā reo, rau rangatira mā, tēnā koutou, tēnā koutou, tēnā koutou katoa. Ngā mihi ki ngā kaimahi o te Whare Pāremata, tēnā tātou.

[Thank you. To the authorities, languages, and leaders of a hundredfold, greetings, salutations, and acknowledgments to you all. Greetings to the workers of Parliament House and to us collectively.]

It is my pleasure to take a call on Part 2 of the State Sector and Public Finance Reform Bill. I particularly want to commend the Minister of State Services for trying, I think, to make a better Public Service, which is the whole intention of this bill—trying to make a better Public Service that will achieve some objectives such as increasing participation in early childhood education, increasing immunisation rates, decreasing—

The CHAIRPERSON (Lindsay Tisch): Order!

LOUISA WALL: —rheumatic fever rates—

The CHAIRPERSON (Lindsay Tisch): No. Order! That is not part of Part 2, and I will ask the member to concentrate on Part 2. It is about the Public Finance Act. It is not about these other things.

LOUISA WALL: It is about the Public Finance Act, but it is also about establishing a new appropriation type, which is multi-category appropriation. As a member of the Health Committee, I am particularly thrilled about this multi-category appropriation. The Health Committee has before it an inquiry that is looking at improving child health outcomes—

The CHAIRPERSON (Lindsay Tisch): Order!

LOUISA WALL: —and preventing child abuse—

The CHAIRPERSON (Lindsay Tisch): I will say to the member that we are on the Public Finance Act—

LOUISA WALL: We are on Part 2.

The CHAIRPERSON (Lindsay Tisch): We are on the Public Finance Act, Part 2. I ask the member to concentrate on Part 2.

LOUISA WALL: Thank you, Mr Chair. What this part of the legislation is creating is this new multi-category appropriation, which will allow different types of expenditure to be grouped into a single appropriation if they contribute to a single, overarching purpose. I think that was the point that I was trying to make—that, in fact, there are a number of inquiries and some work that this Parliament is currently engaged in that this particular multi-category appropriation is relevant to. Hopefully, with your discretion, Mr Chair, I am able to elaborate on the relevance of that within the current context.

The whole Better Public Services agenda has been driven because we are wanting to achieve more for less, and so I do want to commend the Government for creating opportunities for Ministers to work together. I mean, that is essentially what this new appropriation type is going to allow. It will, in fact, break down silos. It will, in fact, provide opportunities for Ministers to start working together to address issues such as housing, which is a fundamental driver of rheumatic fever. I have made the connection of the relevance of this piece of legislation with the Better Public Services agenda, and from my perspective that is one of the reasons that the Labour Party is supporting this piece of legislation. We want an efficient and effective Public Service that meets the needs of New Zealanders and that particularly and specifically meets the needs of the most vulnerable New Zealanders. In supporting this particular aspect of this piece of legislation, I think it is fair to also highlight my expectations and the expectations as the member of Parliament for the electorate of Manurewa that this type of appropriation has the possibility to—and is, in fact, going to—improve and transform the lives of my constituents.

I would also like to take the opportunity to highlight within Part 2 of the bill the changing of the requirements for information about departments’ strategic intentions, which includes the frequency of that provision. Essentially, we are talking about statements of intent. Those statements of intent currently are an annual requirement of Crown entities, and the purpose of those statements of intent is, I think, relevant to the Committee to note because they very much set the strategic directions of the ministries. They are set by the Minister and are obviously set by the Government, so within that they are very specific about how the Government, the sector, and the entity will achieve certain outcomes. That is very much about setting the expectations and priorities. I think it is fair that all New Zealanders know what the priorities of Ministers are and what the priorities of chief executives are within that context. So the reason I bring it up, and the relevance of that to this part of the legislation, is that that requirement is going to be discretionary, so Ministers will choose whether they—

Hon MARYAN STREET (Labour): It is a pleasure to take my first call—it will not be my last call—in the debate on this bill, because it is of real significance. I am aware that we are on Part 2, and Part 2 is what I wish to direct my comments to, but just before I go to that I do want to note the timeliness of this bill, because, of course, there has been a number of celebrations during the course of this year of 100 years of quality public services. This is the same year that the Public Service Association is celebrating its own existence, and we celebrate with it the delivery of quality public services. So when we come to looking at the State Sector and Public Finance Reform Bill, and at this part, which I am going to detail in a moment, it seems to me to be a significant bill—and obviously a very substantial bill—to bring in this year. I hope that because of the nature of the accommodations that have been reached during the course of the select committee process, this bill will be durable and will contribute to the improved delivery of public services.

To get to Part 2, I too want to follow my colleague Louisa Wall and talk about the multi-category appropriation type, which is a new appropriation type to be provided for and enacted under Part 2 of the bill. I am aware that there are amendments to this part that have been agreed to across the House, which include the full traceability of funds from year to year. I want to state my support for this by using an example where that has not been so apparent in recent times, and I want to refer to the appropriation for Whānau Ora.

The Whānau Ora appropriation was a health initiative—in fact, the words say that. It was a health initiative, and one might have thought it would come under the rubric of the Minister of Health, and so might have been examinable through the estimates and appropriations that come before select committees for consideration. But, no, when the Minister of Health appeared before the Health Committee to justify health appropriations in the last few years, he was unable—or unwilling, really, but had made himself deliberately unable—to offer transparency around the appropriation of Government moneys for the delivery of the Whānau Ora programme. So we were not able to examine the Minister who was best qualified to know whether this health initiative was achieving health outcomes.

My concern is not that the appropriation was handed over by that Minister there, the Minister of Health, to Te Puni Kōkiri and the Minister of Māori Affairs to answer to, but that it was taken away from the transparency that needed to be delivered to the purpose for which that appropriation was established. In the setting up of a new appropriation type, to be called a multi-category appropriation, I hope that this means, together with the agreed amendment that will require full traceability of funds from year to year, that if any appropriation—let us take the example—for health purposes is to be diverted out of the jurisdiction, if you like, the care, or the oversight of the Minister of Health to somebody else, then that is entirely traceable by cross-referencing, by calling it a multi-category appropriation, and by ensuring that the numbers of Ministers who are responsible for that appropriation are able to come before a select committee for examination and that the essential scrutiny can be applied.

What has happened, if I go back to my Whānau Ora appropriation example—which is an example of bad practice, I think, not best practice—is that nobody seems to be able to find what precisely has been done with the money that was appropriated. I would have thought that Mr Ryall, as Minister of Health, could easily come in before a select committee—a man of his ability—and said: “This is what has happened with the Whānau Ora money. We have done it jointly with Te Puni Kōkiri, but it is a health initiative, so it sits under my portfolio.”

If such things are to happen, and a health appropriation is to go somewhere else, let us use this facility that this part of the bill now gives us and call it a multi-category appropriation, so that it may go across departments, across ministries, and across purposes—not at cross purposes, but across purposes—but, at the same time, the appropriation and the accountability for it remain entirely transparent and accountable. That is what a good Public Finance Act ought to deliver. That is the quality that our State servants, despite their battering over the last 5 years, wish to provide for the citizens of this country. If this bill can help us deliver that kind of accountability and transparency across increasingly complex areas of activity by the State, then that is a good thing. But let us make sure that that is what happens to this provision.

I absolutely respect the good intentions of the members opposite, and I respect the fact that members on the Finance and Expenditure Committee have agreed on improvements to this bill. Having been very, very involved—not as a member of Parliament but as a very interested citizen and activist—in the development of the first State Sector Act in 1986, and, in fact, having written the Labour Party’s paper in opposition to it, I have a real interest in how these kinds of services are delivered. The integrity of our Public Service structures are critically important to the quality of our Government, the quality of our accountable apparatus, the quality of the transparency of that apparatus, and our reputation for governance and transparency. We have a very fine reputation for that. It is my hope that this new appropriation type, the multi-category appropriation type, can be used to ensure that this Public Finance Act, now amended for modern times, will deliver exactly the kind of transparency and accountability that a complex piece of legislation like this and the complex operation of the delivery of State services require in a modern society.

I am very supportive of this. I have great optimism for this part of the bill, and I hope that we can proceed with this in a way that in the end can make us all proud of the Public Finance Act and the delivery of State services under its jurisdiction. Thank you.

RINO TIRIKATENE (Labour—Te Tai Tonga): Tēnā koe, Mr Chair. It is a pleasure to speak at this Committee stage on Part 2 of the State Sector and Public Finance Reform Bill. I would like to start with a verse from a rap from Vincent Price: “Darkness falls across the land. The midnight hour is close at hand.” You might know the rest, Mr Bennett. But maybe not; maybe he was not into Michael Jackson. Maybe he might know another one. But the midnight hour is close at hand. I shall make my contribution on Part 2 because this is a very important piece of legislation.

The Public Finance Act is a key piece of legislation that governs the use of public financial resources. It provides the framework by which Parliament gives its authorisation and scrutiny of Government expenditure. It establishes the lines of responsibility for effective and efficient management of the use of public financial resources, and it does many other things. It is a very core piece of legislation governing the use of public resources.

I want to pick up from my colleague the Hon Maryan Street regarding her comments around multi-category appropriations. They are commendable because anyone who has spent a bit of time or worked within Government departments or agencies knows that they are very much patch protectors. They very much sort of keep to themselves. They very much like to spend their money or try to get the money spent by the end of the financial year, and there are not necessarily those sorts of close relationships with other departments, particularly when there is a common outcome that they should be working towards. So it is commendable that there are now provisions provided for in this bill that there be multi-category appropriations, which are across multiple categories, to allow different types of expenditure to be grouped into a single appropriation. That is a very laudable aim.

The bill also makes it clear that other departments as well as the one administering an appropriation can incur expenses against the appropriation. We see that a lot in the Ministry of Māori Development appropriation. There are a multitude of different agencies and Government entities and all sorts that are involved in Māori affairs, as my colleague touched on with the Whānau Ora situation. We could rattle off a whole host of other organisations that are involved with Te Puni Kōkiri, Māori affairs, or contracts between various agencies or Crown entities to provide outcomes. So there is a whole multitude of different relationships that they have, and it is important that they get better structure and more financial discipline around the way that they conduct their affairs, and that they also report on their outcomes. So those are very commendable aims in Part 2.

The bill is also allowing the annual reports of Government to be presented together.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Thursday)

Tuesday, 2 July 2013

(continued on Thursday, 4 July 2013)

Bills

State Sector and Public Finance Reform Bill

In Committee

Debate resumed.

Part 2 Amendments to Public Finance Act 1989 (continued)

IAIN LEES-GALLOWAY (Labour—Palmerston North): It is a pleasure to take a call on Part 2 of the State Sector and Public Finance Reform Bill. Should any notes become apparent in front of me in the near future, that would be excellent. I know that members have made a considerable contribution to this debate and that Labour members have come to be able to support this bill, thanks to some robust discussion at the Finance and Expenditure Committee.

Of particular interest in Part 2 is the fact that there are adjustments being made to the Public Finance Act that allow for a more multi-sectoral, cross-departmental approach to a range of issues. I certainly welcome that. I think of issues such as mental health, which, obviously, sits firmly in the health budget—and it is good to see the Minister of Health in the Chamber today. I personally would like to see mental health as more of a priority in the health system, but there is no doubt that factors that contribute to good mental health sit in the education sector, they sit in the employment sector—they sit across a range of different departments. The idea that these amendments to the Public Finance Act would allow for, perhaps, a single budget that draws together a package involving a range of different departments and agencies with a single focus and a single line of reporting—with a focus on something like reducing the incidence of mental illness or better managing the incidence of mental illness or supporting people with mental illness into work and using that range of departments in that way—is, I think, an excellent step forward.

It is actually fantastic that the aspects of the bill that the Labour Party was not able to support at the first reading have been tidied up, because I think this is something that many, many people working in the Government sector and many people working in non-government organisations that deal with the Government sector will be very, very pleased to see. I think every member of this House will have heard people say that they want to see the breaking-down of the silos between Government agencies, and this would certainly support that happening. The fact that the information in the estimates and supporting information would be more closely aligned with that cross-sectoral approach would, I think, be welcomed by members as well, because there are often times when we really want to drill down to an issue and look at all the different factors relating to that issue and to be able to see in a simple document and in simple terms how the different agencies and departments of the Government are working together to alleviate that issue.

That just simply has not been clear in the past. Often, something like mental health might be discussed at the Health Committee, it might also be discussed at the Education and Science Committee, and it might also be discussed at the Social Services Committee. Members would not have a full understanding of what was happening across those different agencies. So the idea that that type of reporting would be able to occur is an important step forward and well supported by this side of the Committee. Standardising the governance and performance reporting requirements for companies currently listed in schedule 4 of the Public Finance Act and proposed to be moved to a new schedule 4A to make the framework more consistent with the provisions that apply to Crown entities companies covered by the Crown Entities Act is also, I think, a sensible move. Standardising practices across agencies is very helpful. I listened to the Hon Trevor Mallard last night talking about his frustration—

Hon Ruth Dyson: It was a very good speech.

IAIN LEES-GALLOWAY: It was a very good speech. He talked about his frustration as a Minister at discovering that people employed in different agencies were essentially doing the same job and not talking to each other and not reporting back to Cabinet in a way that made it clear that that kind of redundancy was occurring within the Government sector. So with those few comments, I would certainly like to add my weight to this piece of legislation.

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to Part 2 be agreed to.

Amendments agreed to.

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

Ayes 95

New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independents: Dunne, Horan.

Noes 24

Green Party 14; New Zealand First 7; Māori Party 2; Mana 1.

Part 2 as amended agreed to.

Part 3 Amendments to Crown Entities Act 2004

The CHAIRPERSON (H V Ross Robertson): I advise members that the debate on this part also includes the schedules 3B through to 4.

Hon DAVID CUNLIFFE (Labour—New Lynn): Tēnā koe, Mr Chairman. It is delightful to see you at this hour of the morning, which I think is still technically part of Tuesday, but you are looking in pretty good shape. I am so pleased that you have mentioned the schedules, because I am sure that they are going to excite a lot of attention from members on our side of the Chamber. Part 3 is a very important part of the State Sector and Public Finance Reform Bill, and I hope that with your good grace, Mr Chairperson, we will have ample time to scrutinise its clauses, because this is fundamental legislation. This might sound like housekeeping, but, believe me, it is not. This is some of the core legislation that amends the Public Finance Act, the State Sector Act, the State-Owned Enterprises Act, and other core Acts that actually determine the machinery of government so that when the Ministers of the day, the Cabinet of the day, pull the levers of power, something happens and we can tell what happened. For that to occur, we need to make sure that the rules of delegation, of financial probity, of accountability, all are tight as a drum and work as they should.

In the past, one of the things that has happened is that in an effort to make sure that the Public Service and the public sector operate efficiently and accountably, there has been a tendency for departments to work on an individual basis and for their differing views to ultimately be brought together around the Cabinet table, if they have not been harmonised prior in a Cabinet committee. For many, many years Governments of both sides have viewed that as an imperfect state of affairs. We look forward to hearing the Minister in the chair, the Minister of Immigration, with his long experience, give the Committee the benefit of his views as to how this could be made to work better. But for members opposite, the objectives set out in Part 3 of the bill are incontrovertible. That is, that the Government should be able to issue whole-of-Government directions and employ a range of new legislative powers set out in this part of the bill to require, if persuasion has not already done it, Government agencies to work together for a common cause.

It might be, for example—let us think of a random example—border security requiring immigration and customs to cooperate by data sharing to pool their information to better identify risks coming across the border. A lot of that happens anyway. I do not wish to create any false impression. There is excellent cooperation between those two agencies, but at the level of detail, if necessary, this part of this bill will give the Crown the authority to legally require cooperation between departments, which is particularly important for enforcement agencies.

Of course, this is an interesting week to be discussing this bill, because outside the Chamber in media-land, public attention has been focused on cooperation between a number of other agencies, some of which have been decidedly outside the law, where some of our security agencies have been subcontracting to others without legal authority. There is now a desperate scramble by the Government to legalise activities that have hitherto, by its own admission, been outside the law in some 88 known cases. That is certainly something that neither side of the House could countenance. The question is whether the solution to that is actually to rein in some of those behaviours or otherwise to adjust the law to catch up with reality. The Labour Opposition believes that the rule of law should be paramount and that at no time should there be any actions outside the law, but that is a debate for another day.

The amendments to Part 3 are crucial. They are just aspects of the Crown Entities Act 2004, and they bring that alignment to bear not only on Government departments but on entities that are one step removed from departments—Crown entities. This is also an extremely interesting avenue for debate, because there is a well-known and very visible oxymoron going on on the part of the National Government here. On the one hand, it is passing this legislation, which we heartily agree with, that there should be ways of improving cooperation between core Crown agencies and Crown entities and getting Crown entities to work together, and, on the other hand, it has embarked on a partial privatisation programme for the State-owned entities, which will make it harder for the Crown to govern those State-owned enterprises as a portfolio, and puts them further away from cooperative effort.

The key example is the electricity system. We are an energy-dependent country. Right around the country, New Zealanders are either shivering through the winter or facing bigger power bills, and the Prime Minister thinks that that is just fine and dandy, and that power prices are not too high. He thinks they are “about right”, but New Zealanders know they are not about right at all. Power prices have been going up faster than wages, faster than incomes, and they are putting huge pressure on our families. Last weekend I was doorknocking in Upper Hutt and I had the privilege of meeting some families who are doing it tough in flats that looked more like dog kennels that leak, that had mould growing up the walls, that had children growing up in them with respiratory disease. Every time I go out doorknocking in areas of high deprivation, I am shocked all over again by the way some people live. Why do I mention that? Because energy poverty is part of the bigger picture. Privatising our energy system, as the Government is trying to do, is going to be putting more pressure on family budgets because power prices are going to rise.

What is the relevance to this bill? The relevance is very clear. In this bill the Government is trying to draw Crown entities into closer cooperation by requiring that cooperation through whole-of-Government directions. At the same time it is removing the existing power to direct State-owned enterprises, the power companies, currently residing in the State-Owned Enterprises Act, and scrubbing that out because they will just be publicly listed companies like any other in which the Crown happens to hold 51 percent. But there is no power to direct, no no-surprises rule, no portfolio synergies, no sense of strategy—that will be the oxymoron at play. The Government is probably doing the right thing in this bill, but it sure as heck is doing the wrong thing with the privatisation of State-owned enterprises.

Broadening the grounds, as this part does, on which the Minister of Finance and the Minister of State Services can issue whole-of-Government directions, and allowing those directions to be issued either to all departments or to a smaller group of entities, including Crown entities, presupposes a more important point, a prior point: does the Government have a strategy upon which to direct? We have a Government here, which, at best, resembles parts of the Holyoake Government of the 1960s—steady as she goes, don’t fiddle with it, she’ll be right. I have never seen four less effective, more boring Budgets than the last four that Bill English has brought down. The bits that were not boring and meaningless were positively downright awful, like giving huge, fiscally negative tax breaks to rich people and putting GST up on everybody else. What has this Government actually done in the way of economic strategy other than making New Zealand’s incomes more unequal through the tax system and putting off paying for superannuation so our children face higher taxes?

The Government wants to issue whole-of-Government directions. This part of this bill gives it the power to do so. We think that is a good thing. But in order to issue whole-of-Government directions, it has got to have a direction to travel in in the first place, and the problem with this good-for-nothing, lackadaisical, lazy, useless National Government is that it would not know a direction if it tripped over it. Government members would not know a strategy if it bit them on the behind. They would not know an economic plan if it fell off the top of Steven Joyce’s glossy head. I have seen so many glossies out of “MoBIE Dick”, the Ministry of Business, Innovation and Employment, that I am so sick of public relations spin, rebranding and reissuing things that have been done since Adam was a cowboy. What I am still waiting for is a real plan that will grow jobs and incomes and employment and well-being. It is all very well in this part of this bill—Part 3 of the innocuous, boring State Sector and Public Finance Reform Bill—to give themselves the power to issue whole-of-Government directions, but there is no direction to issue, because they have no idea what direction the country should be heading in.

Hon MARYAN STREET (Labour): It is a pleasure to rise to talk on Part 3 of this legislation, the State Sector and Public Finance Reform Bill. [Interruption]

The CHAIRPERSON (H V Ross Robertson): Order! Order! I know it is Thursday morning—

Hon Member: It’s not Thursday.

The CHAIRPERSON (H V Ross Robertson): Well, Tuesday morning, then. I know that everyone is in jovial spirits, but the reality is that we have one speaker addressing Parliament, and when members who do not have the floor interject on each other, it is not permitted. All of you may have a call or take one shortly.

Hon MARYAN STREET: I raise a point of order, Mr Chairperson. I wonder whether you could clarify for the member opposite which part—[Interruption]

The CHAIRPERSON (H V Ross Robertson): Order! There is a point of order on the floor. The member is a long, long experienced member and he knows.

Rt Hon Winston Peters: Point of order.

The CHAIRPERSON (H V Ross Robertson): I already have a point of order from the Hon Maryan Street. [Interruption]

Hon MARYAN STREET: I think he has just recognised my point of order.

The CHAIRPERSON (H V Ross Robertson): I cannot take two.

Hon MARYAN STREET: Thank you very much, Mr Chair. I wonder whether you could clarify for the members opposite which part of the bill we are discussing. Is it Part 3?

The CHAIRPERSON (H V Ross Robertson): It is Part 3.

Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. I hate to interrupt my colleague, but that was, in part, what my point of order was, because I was actually shocked to find out that across the Chamber someone thought it was Part 2. But, then again, that is the person who would have things not happen over her dead body.

The CHAIRPERSON (H V Ross Robertson): Thank you. As I said, it is Thursday morning, but we are still in Tuesday.

Hon MARYAN STREET: Thank you very much, Mr Chairperson. In case some of the members opposite who were also here in the Chamber late last night when I spoke on Part 2 of the bill, which we have just passed, were asleep at that time, I would like to repeat the importance of this legislation and the timeliness of it. I glossed over the fact that it is 100 years this year of good-quality public service in New Zealand. That is being celebrated by Transparency International New Zealand as it moves to do its audit on our processes and the apparatus that keep us at the top of the indices on transparency and on the perception of a lack of corruption. Those are parts of our reputation that I personally—and I know my colleagues also—hold very dear. That reputation is absolutely predicated on the transparency and the quality of the Public Service.

So it is 100 years of public service and, simultaneously, 100 years since the formation and of the work of the Public Service Association. In case people were not up at midnight last night when I said that, I would like to draw that to people’s attention again. I would also like to invite people to come to the opening of the exhibition of 100 years of the Public Service Association’s banners at the Nelson Provincial Museum in a couple of weeks’ time. If people wish to have a weekend in Nelson—which, of course, is a lovely place to be—come on the Friday night and come to the opening of that banner exhibition, which is part of the history of the Public Service Association, an organisation that has always prided itself on defending the quality and the independence of our Public Service.

In accordance with this bill, that is apposite, because amendments that have been made to this legislation have been done with agreement across the House and have also been taken to the Public Service Association and the Council of Trade Unions as appropriate stakeholders in this legislation. That is important, and it is one of the things that allows us to have a robust Public Service—that it also has union representation that not only protects the terms and conditions of the people who work in the Public Service but also works to ensure the highest level of integrity of that service. So I would like to pay my particular tribute to the Public Service Association in its centennial year.

But one of the things I want to focus on especially in Part 3 is the point that my colleague David Cunliffe has been talking about just now in a slightly different context. It is the requirement that boards of statutory Crown entities—and this is the relevant part, because we are talking about amendments to the Crown Entities Act—ensure that those entities collaborate with other public entities where appropriate.

Again, I would like to give an example that may highlight the importance of this. That example is that for the moment in time—the moment in history—when I was the Minister for ACC, a portfolio that I really loved, one of the things I enjoyed about it was the fact that I chaired a cross-government working group. In those days we had an Injury Prevention Strategy. We no longer have an Injury Prevention Strategy under this Government, which is a tragedy. But when we did, there were six work streams in that Injury Prevention Strategy and they covered a huge array of Crown entities and ministries and departments, so they covered all kinds of interests.

When that committee met to consider the Injury Prevention Strategy and its success or otherwise in each of those streams, it meant that the people in the room were from the Ministry of Justice, they were from the Ministry of Transport, they were from the police, they were from Water Safety New Zealand, they were from the Ministry of Health, and they were from mental health organisations, in particular. They were from a whole range of interests. If this is one way of getting the Government to work more horizontally than vertically, then I welcome it. That committee I am using as the example worked horizontally because it needed to look at suicide prevention, it needed to look at deaths and injuries caused by water, and it needed to look at road transport accidents. It needed to look at six areas where injuries could be prevented. It had a work stream on falls. Well, it is unfortunate that this Government has now taken away the funding for the National Falls Prevention Strategy that was in place. It really enabled lots of elderly people to prevent themselves from falling and having those injuries that we know are so tragic and difficult in older age.

So the point is that in this committee room—and, yes, it was almost bigger than Ben-Hur—to have all these people talking to each other was critically important. The prime example I give, which will be of interest to my colleague Iain Lees-Galloway, is that across each of those work streams, 28 to 35 percent of the accidents, if I remember correctly, were caused by alcohol. In seeing that synergy across six different work streams of injury prevention, it was patently obvious that an area that the Government needed to focus on was harm caused by alcohol. That, I have to say, is another lost opportunity that this Government has committed in recent months—that it did not take the opportunity to reduce the harm caused by alcohol in the way that it could have.

When I as a Minister was sitting there with all of those departments there, they could all listen to each other. In transport, we could talk about road transport accidents. We could talk about deaths by boating, injuries from boating, or water-related accidents, and so on. Then it became clear that there was an underpinning commonality amongst all of those that should become a priority for Government action, and so it did with our Government, with the inquiry and the report on alcohol reform from the Law Commission.

I use that as an example in order to point out why this legislation is important. It is so that we can ensure that requiring the boards of statutory Crown entities, not even departments or ministries but just Crown entities, to talk to each other—like requiring Housing New Zealand, for example, to talk to other parts of Government apparatus—would be an advantageous thing for the people of New Zealand. I welcome this provision, in particular, and I welcome it as a little step. I do not see it as a huge, cataclysmic step or an improvement in Government administration, but I do see it as an important small step to learning how we might govern horizontally across portfolios and Government departments and Crown entities, rather than vertically in the silos that we have been accustomed to administering in the past. I think this is a useful harbinger, I hope, of change—

PAUL GOLDSMITH (National): I am very pleased to take a quick call on Part 3 of this bill, the State Sector and Public Finance Reform Bill. We have had a very long and thorough debate on this legislation so far, and—

Hon David Cunliffe: More to come.

PAUL GOLDSMITH: I am looking forward to further comments from the honourable member Mr Cunliffe. I was just interested to see that the main point of Part 3 is to create a range of public sector management tools to foster an innovative, effective public sector to deliver better-identified results for New Zealanders. What we mean by that is that all these public entities, these Crown entities, have grown like Topsy over the years. Some of them are doing their own thing, and it is not unreasonable—indeed, it is a perfectly reasonable idea that we would—

Hon David Cunliffe: I raise a point of order, Mr Chairperson. The Standing Orders provide that in instances where a member is reading from an official document, there is an opportunity for that document to be tabled so that the Committee might have access to the underlying information. If the member is reading from an official document, I seek leave for it to be tabled.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member for that. The member should know that normally a request like that is done at the end of the member’s speech.

PAUL GOLDSMITH: Given the fact that we have heard many lengthy comments from that member, perhaps he might have the courtesy of listening to the short and succinct comments that I prepared to make on this bill. As I was saying, the member did ask and question—

Hon David Cunliffe: You write books.

PAUL GOLDSMITH: Well, yes, but I write about successful people; that is the difference there. I want to remind the Chamber that we are talking about—

Hon David Cunliffe: John Banks.

PAUL GOLDSMITH: That was one of the earlier ones. I want to remind the Chamber that the member was talking about the lack of overall direction by this Government, so I thought I should just remind him that there is no lack of direction. It is very clear that we are focused on those four things: getting the books in order, creating a competitive economy, building better public services, and rebuilding Christchurch. That direction is very well articulated, and it is consistently prepared and consistently driven forward by this Government.

This legislation is one piece of the jigsaw, one piece in that delicate lattice structure that is the arrangements of the Government in order to enable the Government of the day, where it has worked out what its priorities are, to effect those priorities through the work not just of Government departments but also of Crown entities, so that we working together and pulling in the same direction.

One of the details is around the area of statements of intent, and one of the proposals in this bill is to enable a Crown entity’s responsible Minister to require the entity to prepare a new statement of intent at any time. Again, this is just another mechanism by which we can call the parties to account and make sure that everybody is singing from the same song sheet at the same time. So on that basis I am very keen to have continued with this detailed discussion of Part 3 of this bill this morning. Thank you.

Dr Rajen Prasad: Mr Chair.

Jacinda Ardern: Mr Chair.

Dr Rajen Prasad: Oh, a difficult decision.

The CHAIRPERSON (H V Ross Robertson): Front bench.

Dr Rajen Prasad: I was first.

The CHAIRPERSON (H V Ross Robertson): It is not a race. I call the honourable member Jacinda Ardern.

JACINDA ARDERN (Labour): Thank you, Mr Chair. It is a gamble every time, but I appreciate the opportunity. And I know that this only gives Mr Prasad more time—

Hon David Cunliffe: Dr Prasad.

JACINDA ARDERN: —Dr Prasad; what an outrage of me—to prepare further queries for the Minister in the chair. I certainly have some of my own. I think, though, just for the purposes of those who may be watching this crucial debate and may be seeking a summary, perhaps, of what we are debating here—Part 3 of the State Sector and Public Finance Reform Bill—obviously, my colleague the Hon David Cunliffe has already talked about the ability for the Government to set whole-of-Government directions. There is some debate around whether or not that is, indeed, possible. He has set that out. I will have a little bit more of a discussion about that, but other elements of this part include requiring the boards of statutory Crown entities to ensure that the entities collaborate with other public entities where practicable. I wonder whether or not the Minister in the chair could talk us through some examples that may have been canvassed at Finance and Expenditure Committee level of what that collaboration may look like, and some situations where we could have benefited from that previously, but, without having that set out clearly in the Crown Entities Act, which is what that amendment amends, we were not able to. I think it would be beneficial to the Committee if we had some tangible examples there to work from.

Equally, Part 3 enables the broadening of the grounds for which the Minister of Finance and the Minister of State Services, as I have already said, can issue whole-of-Government directions, and allow directions to be issued to smaller groups of entities. I do have some questions at that point around the degree to which that then hands over, I guess, the discretion or the power of the primary Minister who oversees a particular department, by broadening the role of the Minister of Finance. For instance, clause 162 amends section 107, and that is about the whole-of-Government directions, which, of course, have been changed to directions to support the whole-of-Government approach. It sets out there that “The Minister of State Services and the Minister of Finance may jointly direct Crown entities to support a whole of government approach by complying with specified requirements for any of the following purposes: (a) to improve (directly or indirectly) public services: (b) to secure economies or efficiencies: (c) to develop expertise and capability: (d) to ensure business continuity: (e) to manage risks to the government’s financial position.” That is quite a broad set of criteria that would allow that specific intervention.

I raise this because I have seen, particularly in recent times with the management of the Ministry of Social Development, that recently the Minister undertook a process where a company by the name of Taylor Fry carried out an actuarial evaluation of the future liability of welfare, essentially, in New Zealand. It put a figure on it, and the reason that the Government claimed that it wanted to do that was to put requirements, set directions, for the Ministry of Social Development by Treasury as to what it then had to achieve to bring that future liability down. Potentially, the Ministry of Social Development could lose future funding, baseline funding, almost putting it on a whole-of-Government performance pay. That whole ministry could lose future funding if it did not reduce its future liability. You can raise significant questions over that. As soon as you hit financial trouble or you hit a recession and you have an increase in the number of people placing demands on the welfare State, and then suddenly you have a department unable to meet its requirements as set out by Treasury, its baseline drops, as does its ability to then do its work and reduce its future liability, and it becomes a self-fulfilling prophecy, if you will.

But my concern is that all of this actually has been governed, has been driven, by the Minister of State Services and the Minister of Finance. In fact, Cabinet papers that I have read on this particular issue have all been signed off by the Minister of State Services and the Minister of Finance. They are the ones driving an agenda within the Ministry of Social Development to the degree that now their departments have significant oversight, significant power—which has always existed, but this is much more explicit now—over the operations of the Ministry of Social Development, to the degree that it almost feels like the chief executive is secondary in their own department to the Secretary to the Treasury. That is almost how the hierarchy now seems within the Ministry of Social Development. I have concerns about that in itself. That has already happened. Now, with these directions to support the whole-of-Government approach, I guess my concern is to what degree our own ministries are able to manage internally their own statements of intent, and to what extent this is actually now being overseen by the Minister of State Services and the Minister of Finance. And, as I say, it is already happening to a degree, so it is hard to necessarily know whether or not this changes that that much or actually just sets out the legislative framework for that.

I did want to also point out that we do have some changes to the statement of intent. It looks like there was some select committee debate around the issuing of statements of intent. Obviously, a statement of intent sets out not just the priorities for a Government department but how it will get there. In the summary of the Finance and Expenditure Committee discussion on the changes to the issuing of statements of intent there have been changes, it appears, to ensure that there is transparency if there is ever any recommendation by a Minister to extend the amount of time available to issue a statement of intent, or, indeed, issue a waiver for an issuing of a statement of intent. I applaud the attempts to ensure that there is transparency when those decisions are made. I will just cover off where that is covered in the bill. New section 139A, “Minister may grant extension of time for, or waive, requirement to provide statement of intent”, states: “If a Crown entity is likely to have a significant change in the nature or scope of its functions, the responsible Minister may grant the Crown entity an extension, of up to 1 year, of the period specified …”.

I thought it would be useful for the Committee to hear, perhaps, the process that was undertaken for “Mobie”—we do not call it that any more. What are we meant to call it now? Is it “M-bie”? What process did the Ministry of Business, Innovation and Employment, the new giant entity, go through for its reissuing of a statement of intent? I think it would be useful to know how it managed that process, and what kind of time period was required, because that was a significant change. I would assume that there would not be much beyond that scale, so if it was able to complete that within a specified time frame, I wonder whether a year is perhaps too generous a time frame to be issued. I would be interested in the view of the Minister in the chair on that.

But the legislation also states that “the responsible Minister must not grant an extension unless he or she is satisfied that the extension will enable the entity to improve the quality of the statement of intent that it provides.” That seems to me to be quite a broad provision because surely any Minister could create justification that in just looking at a statement of intent they need extra time because they think it can be better than this. You do not really need much beyond just the opinion of the Minister to decide under that quite broad set of criteria.

But I am satisfied that, even though that is broad, there is the transparency around when they are making that decision that it must be published, and I think probably the balance there is about right. My question, though, is this: if it does seem clear that there is some kind of stalling tactic at play around a statement of intent, what right of redress to keep in check the use of the Minister’s power and discretion in that regard is appropriate? It is a genuine question. It may well, indeed, be contained in the legislation that, for instance, an appeal could be made to the State Services Commission or the Minister of State Services to check that the discretion had been used appropriately around that extension of time. But is that, indeed, intended to be the way that you would seek redress if an extension or a waiver was granted and there was concern that that power had not been used appropriately? How is that redress sought, particularly when one assumes that to improve the quality of the statement of intent one would be able to access a draft?

Dr RAJEN PRASAD (Labour): There you go. Thank you very much. You cannot pull rank all the time. That is great, Mr Chairman.

I am pleased to take a call on Part 3 of the State Sector and Public Finance Reform Bill. I want to refer to a number of the provisions here. I will put them in the context of the independent Crown entities and the autonomous ones in the advocacy area, if you like: the Human Rights Commission, the Privacy Commissioner, the Children’s Commissioner, and the Families Commission. That is the context in which I want to make my comments.

Clearly, these provisions in Part 3 around Crown entities begin to codify a number of the aspects of Crown entities’ practice, and particularly in relationship to their purchasing ministry and the Minister. It is codifying. A lot of this is happening already, and here it is now translating into legislation. Many of these changes started, my recollection is, around 2004, and it is now that we are seeing them coming through in legislation. Some of them are tried and true.

But along the same lines as my colleague Jacinda Ardern, who just sat down, I will talk about clause 162. These are the directions to support a whole-of-Government approach that is possible. My colleague took the line that two Ministers now have the ability to direct in any number of different ways. I agree with those kinds of comments. But in section 107(1), as amended by clause 162(1), paragraphs (a) to (e) in themselves are actually quite broad. We do not have an idea as to what the limits are of some of these directions. Look at the first one in clause 162(1), section 107(1)(a). We can direct independent Crown entities, for example, “to improve (directly or indirectly) public services:”. That could be anything. There are no limits to what is being suggested here. Indeed, Crown entities generally, in terms of the delivery of public services, cannot be directed as such, and many Crown entities actually do not offer a public service in terms of the traditional sense. I wondered what the limitations there were.

The second purpose is “to secure economies or efficiencies:”. That also is so broad. Will the two Ministers be able to take under this provision very specific directions on how an independent Crown entity might want to use its resources for structuring itself? I see some difficulties and some dangers here.

Some of the others are so self-evident, it is difficult to understand why they are being included here. The third purpose is “to develop expertise and capability”. It is self-evident that Crown entities, Government departments, and ministries will develop expertise and capability. In fact, that is why they are appointed, but here is the ability to give another direction. Does the Minister have some other ideas in mind about these directions?

Without any qualifications from paragraphs (a) to (e) on those kinds of provisions, I see some difficulties, some dangers probably, and some difficulties in the future if these provisions were going to be relied upon by a Minister to instruct a Crown entity to do or not to do certain things. Therefore, I see some difficulties in that particular area.

Moving on to the provisions of clause 164, here we have again codified procedures for ministerial directions on Government policy. Ministers under the present Crown Entities Act have the ability to direct. Indeed, there is quite a well set out series of steps in the Crown Entities Act on what the procedures are if the Minister intends to direct, and then how it is to be reported to the House or gazetted. Some of that is being restated here again.

I can see how officials have worked on this as a provision, but there is another parallel track that operates, and this is the very subtle, almost surreptitious way in which currently Ministers direct Crown entities. If we take, for example, the Families Commission, here over a period of the last 4½ or almost 5 years the Minister has been directing that commission and reshaping it in a very different way. Much of that is by way of “direction”—in quotes. Yet nothing has been gazetted about what those directions are. There is a bill before the House at the moment where all of that comes together. But the Minister has shaped it by the appointment of the chief commissioner. The Minister has shaped it by the appointment of other commissioners, and putting in the kinds of commissioners who have been put in there, in probably not so subtle ways, has begun to shape that particular Crown entity and, indeed, others.

So although the provisions here are clear and precise and I support them, I would expect the Minister to actually follow this and not go along the parallel track that currently is in vogue, which is the surreptitious and subtle shaping of the role and activities of Crown entities. I hope the Crown entities will rely upon this much more than the Ministers might, to say: “Well, if you’re going to direct me, there are particular ways in which you might need to do certain things.”, according to the provisions of section 115(3A), amended by clause 164.

Then section 115 and subsequent sections begin to talk about the review of those directions. Quite interestingly, the Crown entities I have been talking about in the advocacy area, in the rights area, have rarely received a direction from the Minister, and the subtle ones have never been reviewed. I know that for a fact. What is the Government contemplating here? What is being signalled here? How can you review something that, in a sense, you have rarely, if ever, used on these particular entities that I am talking about?

Then, under section 115A(3)(b), in clause 165, if there is to be a review, the expectation here is that there will be consultation with key people outside. I hope that the Government intends to follow those, because in many of the changes it has made to Crown entities, particularly to the Families Commission, there has been no consultation with the stakeholders outside, and yet they have been restructured and reorientated in quite significant ways, and they will be a shadow of what they were before if the bill currently before the House is passed.

So both the codification of the opportunity to direct and the review of those directions, and the time-limited nature of those directions, are very good provisions. They are now here, they are now codified, and I encourage Crown entities to actually utilise them and Ministers to utilise them. I rather suspect that Ministers and heads of Crown entities in the human rights area and the rights and advocacy area will find this a very, very useful and transparent process, which is what is being talked about here, rather than the underhand, secretive, almost surreptitious way in which some of those Crown entities have currently been shaped.

I want to talk a little bit now about the provisions of clauses 168 and 169, about office holders in Crown entities. I am glad to see this, particularly clause 168, because it was just a month or two ago that the Social Services Committee was doing the financial review of the Retirement Commissioner. It amazed me that this was actually there—that in answer to questions for written answer the Retirement Commissioner had refused to give information to the select committee, saying that this was the privacy of contractors. It took a couple of goes, going backwards and forwards, to say: “Well, hang on, they are still working as public servants.”, which is what is clarified in section 135(1A), inserted by clause 169. Those provisions are particularly useful, and now make it very clear as to the kind of information that select committees can have on these Crown entities.

I want to talk a little bit now about the obligations to prepare and report statements of intent. Again, this is simply—

The CHAIRPERSON (H V Ross Robertson): I call the Hon Philip Goff.

Hon PHIL GOFF (Labour—Mt Roskill): It is always nice, Mr Chairman, to be addressed in such a formal manner. That is what my mother christened me. The Labour Party is supporting this bill, the State Sector and Public Finance Reform Bill, as a whole, and in particular it is supporting the third part of the bill, relating to Crown entities.

The reason why we are supporting the bill and the section is that the Finance and Expenditure Committee was allowed to act in a more independent way to listen to evidence, to respond to evidence, and to correct basic flaws in the legislation. That meant improved legislation, and, to give credit to the Minister of State Services, he went along with what the select committee recommended. As a result, we have a bill that does achieve support from across the House. I think that is particularly important in terms of the State sector because we want to see continuity and we want to see the State sector working as effectively and as efficiently as possible, and not subject to the whims of a changing Government and being a political football.

There has been flexibility shown by the Government in responding to evidence on the ground, but I have some questions for the Minister in the chair, the Minister of Immigration, about how this section will work in relation to the performance of Crown entities. I hope that the flexibility shown on this bill might be shown in regard to the Crown entities and the Government’s intention to dispose of Crown entities, when all evidence suggests that that will not be in the public interest.

Under Part 3 the amendments to the Crown Entities Act do a couple of things. In the first instance they support sectoral leadership, by requiring the board of the statutory entity to ensure that the entity collaborates with other public entities, where practicable. I think that is important because too often what happens in the public sector is that you have a silo mentality and each organisation goes its own way, does not think about the wider picture, what is in the interests of the country, and what the Government wants across the board. I think that that is a very good principle that is set down in the bill. It also supports functional leadership by expanding the scope for the use of whole-of-Government directions, and that really goes down the same track—it follows the same theme. I think those two aspects in this section of the bill are really important.

What I want to ask the Minister is for him to perhaps give some practical ideas about how these new powers might operate. In particular, I want him to address the Crown entities in the energy sector—Meridian Energy, Genesis, and Mighty River Power. These are three Crown entities—no, I am sorry, these are now 2½ Crown entities, so I want to know how this bill deals with the other half that the Government has sold off. The Government has established, in this bill, the principle that it would be really good to get the Crown entities working together for the good of New Zealand, and now it has sold off half of one of them. I wonder how that sale might undermine the principle that is set out very clearly in Part 3 of this bill.

I want to ask the Minister how these principles will work in relation to the problems that we find in the areas that relate to these three Crown entities. It is about energy generation and it is about energy prices. The Minister is perhaps aware that since 1997 the prices for power to households have increased at double the rate of inflation. This must be a real worry to the Government, and even more of a worry because in the last year, I think, power prices to households have gone up at five times the rate of inflation. We are debating this bill in the middle of winter, and although those on ministerial salaries of a quarter of a million dollars probably do not even know what they are paying on their power bills, people on this side of the Chamber represent electorates where households are really feeling the pinch. Old people are suffering, we have the problems of hypothermia, and we have young people, children, living in cold, damp conditions. Those young people are being hospitalised, they are missing out on school time, and they are missing out on career opportunities.

I want to bring this bill to bear on those particular problems that are worrying so many New Zealanders. We have got this problem that we have 2½ Crown entities in this area of producing electricity, yet the prices have run at double the price of inflation for about 16 years. They have been doing that since there was another change by Government in the way the Crown entities operated, which was the Bradford reforms, which were supposedly about competition. But the Minister will be aware that there was a formal report sought and commissioned by the last Labour Government, called the Wolak report. The Wolak report found that the four power generators made super-profits over a 6-year period of $4.3 billion—

Hon David Cunliffe: What?

Hon PHIL GOFF: —$4.3 billion. The only upside of that was that that money went back to the taxpayer because the companies were Crown-owned. So it was a bit of a cycle. We paid more for our power, but we got the dividends back to the Government. That is not going to happen with the sale of the assets. Those super-profits are going to go to those wealthy enough to invest in the shares and to the overseas investors, indeed as they did with Contact Energy—you know, $200 million a year flowing out of the country to the Aussies, making them rich at the expense of the New Zealand taxpayers, who paid for the dam on the Clyde.

This bill is about getting collaboration. I wonder whether the Minister has considered using the provisions of this bill to set up a single buyer of wholesale electricity. That would seem to be really sensible, if we wanted to tackle the problem that ought to be worrying the Government of escalating power prices. The gap between what the household consumer and the industrial consumer pays is one of the biggest—the second biggest—in the OECD. The cost of electricity is going up at a faster rate than in almost any other country, notwithstanding the fact that we produce this electricity through water, which is free, in assets that we invested in 60 years ago.

I agree with this bill that you actually need to have collaboration. You need to have the Crown entities working together, but I am asking the Minister whether there is a fundamental contradiction between that very good objective in this bill and what the Government is doing in selling off the State assets, so that that collaboration will no longer be possible. New Zealanders ought to be worried that the price of electricity has gone up five times faster than the overall rate of inflation in the last year. They ought to be worried that the super-profits from these companies are now going to private investors and to overseas investors. Here we have a bill that potentially has a solution to the problem of electricity prices, but it is being undermined by another set of policies that the Government is pursuing.

I go back to what I said about the select committee. It made sensible changes, because we looked at the facts, and the Government was in this instance prepared to respond to evidence on the ground. I wonder whether the Government will likewise respond to evidence on the ground about the failure of its Bradford reforms, which will be exacerbated by the privatisation of half of the Crown entities, in that regard.

There is a second area set out as the objectives of the changes to the Crown Entities Act that occurs in Part 3. That is to formalise the role of the monitoring department and the ability of the Minister of State Services to request information, and also to make provision for more meaningful performance information to Parliament. Those are absolutely appropriate goals, but I wonder how those goals sit alongside the privatisation of the Crown entities, which takes them out from the Official Information Act and takes them away from the role of the Ombudsman.

We have in the bill good, sound objectives about greater accountability. That is why we are supporting this bill. But at the same time the Government is doing exactly the opposite in privatising these companies so that they are no longer accountable to the New Zealand taxpayer, who paid for their construction. We no longer get the information we need, and there is no longer the protection of the Ombudsman and the other things that apply to Crown entities. We have, in essence, very sound provisions in Part 3 of this bill. We absolutely applaud the objectives of greater collaboration and greater openness, but those goals are fundamentally undermined in regard to those objectives by what the Government is doing, against the public opinion, in privatisation.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I appreciate the wisdom of my colleague Mr Goff, but I have to say that on reading through some of the provisions of Part 3 of the State Sector and Public Finance Reform Bill, I am starting to wonder whether the Opposition should indeed support the bill. Following on from his statements and our belief, of course, that this might bring better accountability, I went to section 139 in clause 179, “Obligation to prepare statement of intent”. This goes right to the heart of what the Government is trying to do here, and that is to privatise every single thing it can get its hands on. It is good to see the “Minister for Private Prisons and Prison Riots” in the chair, and I am sure that she can get up and answer this question.

What this effectively does is move away from the current obligation of Crown entities to provide a statement of intent every year, where every single taxpayer, who is a part-owner of these entities, can ask the question: “What is this organisation, this entity, doing?”. As a former Minister I can appreciate the oversight of a Minister through this process. The ability to check the statements of intent for Crown entities and be assured that they are heading in the right direction has now been shifted to a 3-year, and possibly a 4-year, statement of intent process, because the Minister—

Hon David Cunliffe: Three.

Hon DAMIEN O’CONNOR: Three, and if you go to section 139A, the Minister may grant an extension of time of up to a year. So what we have is potentially one statement of intent for—

Hon David Cunliffe: Two parliamentary terms.

Hon DAMIEN O’CONNOR: That is right. Or, indeed, the question is whether the National Government has an intent to shift to a 4-year parliamentary term. That is maybe something the Minister can come back to, because if we are shifting from an annual statement of intent to a 3-yearly one, with the possibility of a 4-yearly one, then is that what the Government is intending to do? Is it intending, firstly, to reduce the accountability for agencies that it intends to partly privatise, as the obligation to have a yearly statement of intent might be a little onerous for some of the wealthy shareholders who come in to buy these entities? They may see it as a bit too much taxpayer scrutiny.

I say that without the ongoing oversight of a Labour Government—that is, a Government that is here for the good of all taxpayers—then, in Part 3, the objectives and the statements of intent of these partly privatised Crown-owned entities might be different from those of the fully taxpayer-owned ones; in fact, we know that. We know that the partly privatised State-owned enterprises and Crown entities will, in fact, be there to maximise profits, end of story—end of story. The statement of intent—that is, the focus on providing services, providing reliable electricity supply, and providing sound infrastructure, which has always been a core part of Governments’ intent, or certainly of a Labour Government’s intent, anyway—may, in fact, be diluted.

I am concerned that the provisions in sections 139 and 139A shift from a clear annual statement of intent of what this organisation is about to one possibly every 4 years. That is a huge change in the way that any entity can account back to its core shareholders. I guess in a modern dynamic economic, which we have, where we have markets that change in milliseconds, and trading that occurs at the push of a button, then I would have thought that we should move to a more direct accountable system and one of maybe on an annual basis, as has been the case.

Although I applaud strategic planning, long-term planning, this may be a step backwards. I accept the wisdom of the Finance and Expenditure Committee, which has made a lot of very sound changes, and maybe a Government member over there might want to get up and explain why these changes have occurred and how this can—

David Bennett: Get in there, Hayes.

Hon DAMIEN O’CONNOR: And I welcome that opportunity from Mr Hayes, because, as I say, the Opposition is supporting the general intent of this bill on the basis that it does provide a better accountability regime. But from my reading of sections 139 and 139A in Part 3, we are stepping back from the intent of this, and certainly from the reason that the Labour Party is supporting this bill. So if Mr Hayes wants to get up and answer that question, that is great. It is clause 179 and it is replacing section 139.

The other issue in here, which should not be overlooked, is section 139(2)(b): “no member of the Crown entity group other than the parent Crown entity needs to prepare a statement of intent”. This may seem like an innocuous little clause here that does not mean a hell of a lot. It means that if a Crown entity or Crown-owned enterprise can set up a subsidiary company, there is no obligation whatsoever on that company to provide a statement of intent. I see that as a serious step back, and maybe it is a question the Minister can answer—maybe it is the one that Mr Hayes is going to answer. But that specific section 139(2)(b), in clause 179, says “no member … needs to prepare a statement of intent.”

So how many subsidiaries can a Crown entity set up? I guess that under the new partial privatisation arrangements that the Government is going to put in place for many of the Crown entities, it can get on and roll out a number of companies, none of which has an obligation to tell us what they are about or what they are intending to do. Even if it is just for the 4-year period that this bill can now extend them out to, there is no obligation for that subsidiary to provide a statement of intent. What shareholder would buy into a company or be part of a company that does not have to tell them what it is going to do? So maybe Mr Hayes can get up and answer that very clear question—in my view. I think I will leave it at that.

I come back to the point that Labour is supporting this bill, on the basis that we believed we were getting better accountability regimes. But from my reading of clause 179, it says that in section 139—actually, section 139 of the principal Act is replaced in clause 179. I should clarify that; sorry if I got a little confused. Under clause 179 of this bill—that is, the replacement of section 139 of the old Act—we are indeed stepping back because of the extended time lines of statements of intent and the removal of the requirement of any subsidiary to provide a statement of intent. I think that is a retrograde step for Crown accountability, and taxpayers should have a clear explanation as to why that has gone ahead.

JOHN HAYES (National—Wairarapa): Maybe I can help the member Damien O’Connor. One would have thought that a man of his experience, with many years as a Minister in our system of Government, would actually understand the day to day mechanics of how the Government’s finances work. Every one of the public servants whom you will find in this country knows that when you have a 12-month budget, May and June are spent furiously trying to get rid of all the unspent money because if it is not spent by 30 June, you lose it. This is an incredibly inefficient and stupid process, because the world operates on a much longer time frame.

If you think about the problem—let us take, for example, the aid programme, where you are spending $600 million - plus a year on aid projects—it is really difficult to spend that sort of amount of money annually on an annual budget. You have got to have a longer time frame, because you will get much more sensible spending of taxpayer money. That is why you and I are in this Chamber. That is why we are held accountable as electorate MPs, because our communities expect us to be here doing the right thing, making sure that their taxes are being spent wisely. That is what the changes in this bill are going to provide for. They provide for a much more rational time frame, and they get rid of the irrational, huge expenditure that is very often on wasted items because you are trying to get rid of the money within 12 months, when the real world does not work in 12-month segments.

Hon David Cunliffe: I raise a point of order, Mr Chairperson. The member who is addressing the Committee is a new member, but he should know not to bring you into debates.

The CHAIRPERSON (Lindsay Tisch): Look, I am listening very carefully, and that point of order was just an interruption of the member’s speech. I will take note if I am offended by the speech. I call John Hayes.

JOHN HAYES: Thank you, Mr Chair. One would have thought that the interrupter, as an ex - public servant himself, would know that what I am saying is absolutely straightforward, is absolutely straight up and down, and is in the taxpayer’s interest. So my only conclusion is that the comments that are coming from these very experienced people are simply filibustering. Thank you.

Hon DAVID CUNLIFFE (Labour—New Lynn): Firstly, I would like to pay a compliment to several previous speakers—not the one who has just immediately resumed his seat, John Hayes, so much as the Hon Damien O’Connor and the Hon Phil Goff. Both, I thought, gave absolutely outstanding contributions, which really nailed two key points. Mr Goff said—and I think it is a hugely important point—that there is a huge irony in this State Sector and Public Finance Reform Bill quite rightly conferring the power on the Crown to issue whole-of-Government directions, but at the same time removing Mighty River Power from the State-Owned Enterprises Act by its partial privatisation, and thus removing a core ability of the Crown to issue directions across the energy sector. If that partial privatisation programme continues, that will be a terribly risky thing for our energy sector, and flies completely contrary to the intent of this bill, which we strongly support.

However, the Hon Damien O’Connor has raised a very important point, which I would like to turn the Committee’s attention to further. This is in relation to the statement of intent provisions, which are vested in clauses 178 and 179, and so forth, of the bill. This was a matter of some debate at the Finance and Expenditure Committee. It was, indeed, a matter that we sought additional advice for and have made amendments on.

Can I introduce listeners to the issue by telling a very brief war story from a time when I was one of the then economic development Minister’s team. There was a habit for draft statements of intent to arrive in Ministers’ offices for signature the day before the deadline. It may be that civil servants were watching Yes Minister, the TV series, which the public thinks is a comedy, members of Parliament think is a documentary, and the Public Service thinks is a training video. Yes Minister behaviour is not unknown. The statement of intent is absolutely crucial, but “Oh, Minister, this is just a routine piece of correspondence. Sign here.” is too often being heard in the Beehive.

I can tell you that when it was my turn, having watched Yes Minister, I rang the chief executive of a department and said: “Why don’t you pop over for a cup of tea and a chat”—this was about 6 weeks before the deadline—“because I would like to co-draft the statement of intent with you in person.” This caused a long silence on the other end of the phone. When the chief executive was departing my office after the first 3-hour session, he was heard to mutter to one of his colleagues—fortunately in the hearing of one of my staff: “We’ve got a real problem with this one.” So we invited him back—[Interruption] Yes. He would not be the only one to have reached that conclusion. But I intend to continue to be a problem for as long as I have the privilege of being in this House.

Hon Lianne Dalziel: What took him so long?

Hon DAVID CUNLIFFE: My colleague asks what took him 3 hours to work that out. So we had a couple more sessions. I see that the Minister in the chair, the Minister of Police, is smiling benignly, because I think all politicians of whatever stripe have shared some of these experiences. There is always a little bit of a polite and constitutional arm wrestle in Wellington between the political layer and the professional Civil Service. We are very well served. Again, I would like to record the select committee as being excellently served by our highly skilled civil servants and advisers on this bill, so there are no complaints there.

But it is not just National versus Labour, left versus right, thoughtful versus shallow, or whatever you would like to—

David Bennett: Oh, communist versus capitalist.

Hon DAVID CUNLIFFE: Sorry that you reacted to that one, Mr Bennett. It was not intended for you. But the other aspect of this is always the political layer versus the Civil Service layer, and it is in that context that these provisions of this bill are actually really, really important.

What the Civil Service has recommended is that there really is no need to have a compulsory, formal contractual statement of intent, updated every year. Unfortunately, John Hayes, who has never been a Minister, swallowed that line and thought it was about just reducing paperwork. But, actually, there is a real risk, as the Hon Damien O’Connor has pointed out. He has been a Minister, and he understands that unless there are required contractual processes to nail people’s feet to the ground with hard-wired key performance indicators, things can slip, and that is why the statement of intent provisions were so hotly debated at the select committee.

We reached a compromise, which was that Ministers will have the ability to require a new, or an updated, statement of intent, a renewed contract, at any time, at least annually, or more frequently should they require it, and that there be an obligation on the part of their Civil Service advisers to advise Ministers of that right. Although flexibility is being introduced here, the obligations on the system to have clear and binding performance agreements have not been gainsaid.

The incoming Labour Government will, in a year or so’s time, be watching this extremely carefully. If it is our experience that these clauses have weakened the contracting process with the professional Civil Service, they will be reviewed. But, for now, we are happy to give this compromise a good chance to work. We believe it is being entered into across the Parliament in good faith, and we think that there is the potential for it to be streamlined and effective. But we are not blind to the possibility of slippage, as the Hon Damien O’Connor, from experience, has pointed out to the Committee.

I think it is helpful that in new section 141 in clause 181 the content of the statement of intent is well set out. If I could direct members’ attention to that, new section 141(1) places a big emphasis on strategic objectives. What we are trying to do here, through this law, is lift the gaze of the system from the trees to the wood, from the minute to the fundamental, from the operational to the strategic. We are writing here, in quite clear language, that Ministers and their advisers must be focused on the strategic goals. The rest of the design of this bill supports that, with its interagency cooperation, its multi-category appropriations, its enhanced reporting requirements, and its full traceability of appropriations. All of those things come together here to try to hit a sweet spot. It is a sweet spot that combines flexibility and acuity. That is our shared goal—shared between National and Labour, shared between politicians and officials. That is where we are trying to aim: a modern, streamlined, flexible, delegate-able, interactive, and community-integrated Civil Service that achieves more with not much more money, that achieves better outcomes for the public, and yet is parsimonious—there is a good word for a morning session—with the taxpayer’s dollars. In so doing, if we can cut some red tape, that would be nice too—if we can cut some red tape, that would be nice too.

We look forward to the Minister of Police, who is an experienced Minister—I note that as this debate has hotted up, the Government has put a more experienced Minister in the chair, and we look forward to her sharing her experience with the Committee on the intent of this bill and how she believes it is going to work. I am sure members on this side would love the Minister to take a quick call and respond to the points that the Hon Damien O’Connor has made, and, if she is feeling really brave, she could respond to the points that the Hon Phil Goff has made.

The CHAIRPERSON (Lindsay Tisch): Order! You cannot say that.

Hon DAVID CUNLIFFE: I cannot say “the Hon Phil Goff”?

The CHAIRPERSON (Lindsay Tisch): No, the word you said before.

Hon DAVID CUNLIFFE: Brave?

The CHAIRPERSON (Lindsay Tisch): Yes. That is a reflection on the member.

Hon DAVID CUNLIFFE: I was emphasising her courage.

The CHAIRPERSON (Lindsay Tisch): No.

Hon DAVID CUNLIFFE: But I take your guidance, Mr Chairperson.

Hon Member: You were being snide.

Hon DAVID CUNLIFFE: Never.

Maggie Barry: And devious.

Hon DAVID CUNLIFFE: Never. Would members opposite like to add any other adjectives to their morning pot-pourri? “We love you too, Mr Lange.” Ah, yes.

New section 141(1) sets out the strategic objectives of the statement of intent. The Committee has debated at some length its provisions. New section 146(2) in clause 184 indicates the process that must be followed. What is really interesting about clause 184 is its degree of prescription; for example, clause 184(2)(a) says: “the Crown entity must provide a draft statement of intent to its responsible Minister (i) no later than 2 months before the start of the first financial year to which the statement of intent relates;”, and it even provides sub-subclauses for the cases of newly established Crown entities. That is how careful we are all trying to be to ensure that no delegated instrument of the Crown can escape the chain of accountability, either for good outcomes or for the wise use of public money. The reason that this is so prescriptive about Crown entities—

MAGGIE BARRY (National—North Shore): When we look at Part 3 of the State Sector and Public Finance Reform Bill, it falls, really, into three main areas. This includes subsidiary reporting, where the reporting regime focuses on a group reporting and auditing with the Minister of Finance. That group will have the power to require reporting from any member of the group, so that is a tightening up of those procedures. The group reporting change does not apply, however, when you have school boards of trustees or tertiary education institutions that have an investor or a multi-parent subsidiary—enough said, really, on that aspect of it.

Another aspect is greater reporting flexibility, which is going to provide more meaningful information. This is an area that my colleague John Hayes dealt with a little bit earlier—the reporting changes at the start of and at the end of each year. Those are not dissimilar to other provisions in other Acts.

But it is the first aspect of Part 3 and the amendments to the Crown Entities Act 2004 that I wish to concentrate on in my call, and that is the collaboration with other public entities. The thing about this bill is that it amends the collective duty of statutory Crown entity boards, relating to how the board is to perform its functions. Under these changes, boards will be required to ensure that the entity collaborates with other public entities where practicable. That is a very important measure that comes up in these amendments, because it really helps break down the silo approach to providing services, which this Government has identified as being part of the problem with public services. So we have a situation where we need to have these entities working much more in combination with other agencies. The limitation of the phrase “where practicable” really gives the board the ability to determine the efficiency and the effectiveness of collaboration with other agencies in any given situation.

That, once again, is in keeping with the overall policy of our Government that there are directions to support a whole-of-Government approach. This whole-of-Government approach is very much at the heart of this piece of legislation and at the heart of Part 3. In particular, there will be two smaller groups of Crown entities than currently. There is also going to be a broader range of objectives, including to secure economies or efficiencies, which is something we commend; to develop expertise and capability, and who amongst us would argue with that; to ensure business continuity; or to manage risks to the Government’s financial position. These are all very sound policies and philosophies that underpin the legislation and that are spelt out in this amendment.

The amendments will also make the use of Government directions more useful and more selective, but in a way that respects the entities’ legal separation and arm’s-length relationship. These directions to entities will not come, as they have in the past, from public servants in part, but will come, much more appropriately, from the Minister of Finance and the Minister of State Services.

Those are the three main elements of Part 3—the amendments to the Crown Entities Act 2004. I am not going to dip into the petty politics, as have others in the Chamber before me. I will leave my call at that. Thank you.

GRANT ROBERTSON (Deputy Leader—Labour): It is fantastic to be present in the Chamber and for Maggie Barry to break the habit of a lifetime and not go into petty politics. It is a moment that I will truly remember for many, many years.

Hon Member: It’ll only be a oncer, I’m sure.

GRANT ROBERTSON: It will never happen again, that is right, so I am delighted to have made my way to the Chamber to hear that beautiful moment.

It is a pleasure to take a call on Part 3 of the State Sector and Public Finance Reform Bill. As somebody who has been a public servant here in Wellington and who represents public servants, as the MP for Wellington Central, and also as a former spokesperson on State services, I want to say there is a lot in this bill to be very happy about. This is a bill over which, I know, some concerns have been raised. They have been worked through in the Finance and Expenditure Committee. The idea, the principles that lie behind this bill, of trying to create a more responsive and more integrated State sector that can be more flexible and responsive to the needs of our communities is a goal that I do think is shared across the Parliament, and I want to say, from this side of the Chamber, that there things in this bill that we genuinely believe will be very helpful to those overall principles.

If we refer specifically to Part 3 of the State Sector and Public Finance Reform Bill, I want to make a couple of comments. The first of those is around the question of whole-of-Government directions. This is what is covered by clause 162 of the bill, and in this case we are talking specifically about Crown entities and the ability of the Minister of State Services and the Minister of Finance to jointly direct Crown entities to support a whole-of-Government approach. This is a very good clause, in my view, because one of the things that anybody working both inside Government and also with Government agencies and Crown entities hears—the criticism that is so often directed at them—is that there is a silo mentality. All of us will have, in our lives, interacted with a Government agency that says, quite simply, “I cannot help you because that is not my responsibility.” That is something that members of the public struggle to understand. Members of the public do not wake up in the morning and think: “Today I am going to deal with the Ministry of Social Development, followed by Inland Revenue Department, followed by another.”; they think about the Government. They think about the Government acting as a single entity. People who use the services of the Government, and who interact and have to come up against those silos, are frustrated. We need to be able to create a public sector and a wider State sector that actually meets the needs of those individuals and communities.

But for politicians and as public servants, there is a whole other level of frustration that is created. I can remember as a staff member in the Prime Minister’s office having to come up with creative ways of trying to get the public sector to work together. Anyone who was in the public sector in the first decade of the 2000s will quake with fear at the phrases “economic transformation”, “families young and old”, and “national identity”. I had three little boxes on my desk in the Prime Minister’s office with information on each of those, and we did actually sit down and say: “How are we going to get the Public Service to work together on the priorities of the Government?”. It does not matter whether it is a National-led Government or a Labour-led Government. Whatever the Government’s priorities are, how do we shift the ship of State to support the things that the Government wants to do?

Hon Lianne Dalziel: By turbocharging the economy.

GRANT ROBERTSON: For instance, that may well be one of the phrases: turbocharging and finding a brighter future.

Hon Lianne Dalziel: They haven’t switched on the engine yet.

GRANT ROBERTSON: Well, unfortunately, I think that at this very moment, the ship has run aground, so that is not even a concern. But if we generalise it, enabling the Government agencies to get out of the silos—we took that approach with those three themes—was what we chose to do. And we actually went as far as saying the Budget bids had to come through one of those three themes, and they were consolidated. That actually cuts against the Public Finance Act, and some of the amendments in this bill start to deal with the problem that was underlying that. The problem was that each Public Service chief executive, through their statement of intent, had set themselves up in an agreement with the Minister, and that was it. They were the apex of everything. The amount of money that they could share between agencies was severely restricted, severely limited, and, in many ways, actively discouraged. So the fact that this bill is putting in place some mechanisms that will break up some of those silos is a very good thing.

Dr Richard Norman, who is an academic at Victoria University, talks about the fact that the State Sector Act and the Public Finance Act, written as they were in the late 1980s, are products of a time that, he says, was the time of the spreadsheet. In other words, it was all about rows and columns, and, if you added it all up, at the end of the day you would come up with the answer that you needed. We now live, as Richard Norman would say, in the age of Google when it is actually all about the networks and the connections between issues, rather than setting up artificial barriers. At the moment the structure of our State sector lives in the age of the spreadsheet, and we do need to move it into the age of Google where we focus on the networks and we focus on the connections between the issues that face our communities. This bill—and, in fact, Part 3, in terms of Crown entities—does go some way towards doing that. The idea of whole-of-Government directions is a useful way of going about that, but I would venture to suggest that, actually, we could go much further. We could go much further by saying what the problems are that we want the public sector and the State sector to address, what the structures are that best address those problems, and then work on them that way. At the moment form is still leading function. If the State sector is going to deliver to the needs of New Zealanders, function needs to get out in front. At the moment we still struggle with that inside the State sector. This bill does good things to move us in the direction of breaking down those silos, but it fails, in my view, to go as far as it might.

I want just in the time remaining to me to briefly talk a little bit about the question of statements of intent. I know that my colleague David Cunliffe was speaking about this at some length earlier on. All of us—former Ministers, current Ministers, and people who have been public servants—are aware that there is a danger in the statement of intent process that it simply becomes a box-ticking, form-filling - type exercise. Again, there are good things in this part—

John Hayes: You’d certainly know about that—box-ticking and form-filling.

GRANT ROBERTSON: John Hayes and I both worked for the Ministry of Foreign Affairs and Trade, and we know a good deal about form-filling and box-ticking. Actually, Mr Hayes, to his credit, was never very interested in form-filling or box-ticking at the Ministry of Foreign Affairs and Trade. As somebody who occasionally had to go around the Pacific in the wake of Mr Hayes, I can say that he was much more focused on function than form—

John Hayes: Outcome.

GRANT ROBERTSON: —and outcomes at that point, and that is to his credit. [Interruption] That is right—no, the wake was sometimes quite large, and I am not referring to size at all here; I am just referring to the impact of Mr Hayes arriving in a community. But he was focused on the outcomes, and I think the statement of intent does run the risk of being less about the outcomes and more about the process. I think there are some things in this part that do go to that. The note of caution that has already been raised is the fact that what the statement of intent process usefully does is open up to the rest of us what is going on and what the priorities are. If we can get that process—the development of those statements of intent—right, then I think we will go a long way towards actually having a meaningful document.

Again, a big part of that is ensuring that the statement of intent, when it is drafted and created, takes into account the views of other relevant entities and agencies. We have all had that feedback about the 10 cars in the driveway. When you have got the family with the complex, messy, and difficult problems, you arrive along and there are the 10 cars in the driveway from the 10 Government agencies. Does Child, Youth and Family know what the police have done? Does the Ministry of Education know what Work and Income is doing?

Hon Member: Or what the school’s doing.

GRANT ROBERTSON: Or what the school is doing, indeed. We all know that those are difficult problems, but, if we take that all the way back to the statements of intent of those agencies, when the agencies are talking to one another on the creation of those documents, and they are creating those documents on the basis of the issues and the outcomes that we want, that is what will get us there. If we start at that point, we will get a good outcome. If we start at the point of “Here is our formulaic statement of intent that we must produce on our own and we must look good about.”, then we will not get anywhere.

What I am saying here is that Part 3 of this bill, I believe, does offer us some positive ways forward for creating a more integrated and more responsive State sector. I believe we could go significantly further in that. I encourage the Government to adopt a cross-party approach, to find a way in which we can focus on the outcomes of the State sector and the way in which it serves our communities, and break down the silos. If we do that, I believe that we will be proud of our efforts. But I do believe that in Part 3 there are some good measures that we can and should all support.

Hon LIANNE DALZIEL (Labour—Christchurch East): I could not agree more with my colleague Grant Robertson when he says that the need to focus on breaking down those silos is fundamentally important, which is why I am pleased that this part of the State Sector and Public Finance Reform Bill deals with the whole-of-Government approach that we so need.

If there is one place in New Zealand that needs a whole-of-Government approach, it is Christchurch. What we have had established there, I think, was a mistake in terms of the nature of the organisation. I think there have been a few comments lately about my views around the recovery effort, and I want to place it clearly on the record that the Government has to be involved in Christchurch. It is so big, and that whole-of-Government focus that is dealt with in this part of the legislation is fundamental to getting it right. But the model chosen for the Canterbury Earthquake Recovery Authority, which sounds like it is an independent Crown entity or an autonomous Crown entity—in fact, it is not; it is a Government department. It has a direct line of reporting to the Minister for Canterbury Earthquake Recovery. It has a statement of intent, as set out in this part of the legislation as well, but not as a Crown entity; it is as a Government department. It should have been a Crown entity. Everyone in Christchurch who has any understanding of the need for good governance in a recovery situation agrees that there needed to be a layer of governance between the Minister and the Chief Executive of the Canterbury Earthquake Recovery Authority.

But the real problem lies in the fact that there is not the joined-up approach that we have been looking for. I was speaking to an engineer recently, a geotechnical engineer, when I was up in Auckland and I said to him: “I have discovered the problem. I have discovered why things are not working in Christchurch and why we have not got the joined-up approach.” I said it was here in the report of the Controller and Auditor-General: Roles, responsibilities, and funding of public entities after the Canterbury earthquakes, which is of course extremely relevant to Part 3 of this bill, because it is precisely the issue that is concerned. I said it was all on one page. He actually could not believe me, that I could have found the solution for the problem—the statement of the problem—in such graphic terms, until I opened the report like this. This diagram shows what the Canterbury earthquake recovery looks like.

I think that everyone on that side of the Chamber should take a very careful look at this document—a very careful look at it. What it identifies is the whole range of public sector entities, private companies, Ngāi Tahu, and Canterbury earthquake recovery tasks as they are undertaken by regional or local public entities, and whether they are part of the central government entity. So we have got Treasury, the State Services Commission, the Ministry of Social Development, the New Zealand Transport Agency, the Tertiary Education Commission, the Ministry of Education, schools and tertiary providers, Housing New Zealand Corporation, the Ministry of Business, Innovation and Employment, Southern Response, Waimakariri District Council, the Earthquake Commission, the Ministry of Business, Innovation and Employment—it appears again because one represents when it was formerly the Ministry of Economic Development and one when it was formerly the Department of Building and Housing—Selwyn District Council, the Department of Internal Affairs, Te Rūnanga o Ngāi Tahu, Christchurch City Council, Canterbury District Health Board, the Ministry of Health, the Department of the Prime Minister and Cabinet, and Environment Canterbury.

You know, if anything is screaming out for a joined-up approach, for a whole-of-Government direction, it is the Canterbury earthquake recovery. In fact, when the Canterbury earthquake recovery legislation was passed in this House its intention was clear. It was to facilitate, to coordinate, and to direct the recovery—anything that supported the recovery. And yet we have not got anyone in charge. Still, there is no authority; nobody stands in charge. So you have got the Minister for Canterbury Earthquake Recovery not knowing what is happening under the Minister of Building and Construction’s watch. We have ended up with a situation where the Christchurch City Council loses its accreditation on Monday next week, and it is losing it because of a report that was prepared for International Accreditation New Zealand back in September last year. It was sent to the city council in October and it was copied to the Ministry of Business, Innovation and Employment.

I cannot for the life of me understand why there has been no connection made, no joining of the dots. Yes, there are lots of dotted lines, lots of squiggles, but guess what is completely missing from all of this? What is completely missing from all of this is people, the community, the people who live in Christchurch.

The CHAIRPERSON (Lindsay Tisch): The member must relate this back to Part 3. To use Canterbury as an example is fine, but you must bring it back to the content of Part 3.

Hon LIANNE DALZIEL: In clause 162, amended section 107 states: “(1) The Minister of State Services and the Minister of Finance may jointly direct Crown entities to support a whole of government approach by complying with specified requirements for any of the following purposes: (a) to improve (directly or indirectly) public services: (b) to secure economies or efficiencies: (c) to develop expertise and capability: (d) to ensure business continuity: (e) to manage risks to the government’s financial position.”

I would say that a direction to the Canterbury Earthquake Recovery Authority—which, OK, is not a Crown entity, it is a Government department, but it should have been a Crown entity—could actually have brought this whole thing together. But, given that it is not, there are many Crown entities that are operating in the Canterbury region, but they are not joined up. They have not received a direction around the whole of Government, or, if they have, it is not obvious to anyone. People who ring the Earthquake Commission, EQC, for example, are told to ring Fletcher’s—Fletcher EQR. Then they are told by Fletcher EQR: “No, it’s really still an EQC matter.” So they ring back EQC and it says: “Well, ring the Christchurch City Council.” So there is this lack of a joined-up approach.

The ministry—formerly the Department of Building and Housing—issued new guidelines part-way through the process of the rebuild and that has led to people having to go to the Ministry of Business, Innovation and Employment, as it is now. That is the problem. We do not have this whole-of-Government direction approach. So it is important that we have this, not just within Government departments, because Government departments themselves are operating in silos, but within Government entities and where they connect in.

So another Crown entity that could really benefit from a whole-of-Government direction is International Accreditation New Zealand. That is New Zealand’s accreditation body, which enables an organisation to have confidence in its processes and provide assurance to customers and clients. It is part of Telarc, the Testing Laboratory Registration Council, which is an autonomous Crown entity that was established way back in 1972. It has a really important role around accreditation. But now we have got a huge question mark over what buildings are safe and what buildings are not safe in Christchurch. It should be in there, as part of a whole-of-Government response to the issue, leading the issue alongside the Christchurch City Council and the Canterbury Earthquake Recovery Authority, and, obviously, the Minister of Local Government will now be in there today, with a Crown manager.

I presume that that will have a similar role or maybe even a more extensive role than the monitor’s role, which is also provided for in Part 3 of the State Sector and Public Finance Reform Bill, and what it is allowing itself to do is to assist the responsible Minister to carry out his or her role. The trouble is that sometimes there is not a responsible Minister, when there are many Ministers who cut across, and I think we heard that from the Speaker the other day when I tried to get a snap debate on the issues that were occurring in Christchurch. We could not get that responsible Minister, and the failure to take any action was not regarded as a matter of recent occurrence because the failure to take action did not form a ground for a snap debate.

That is the problem that we have got. I hope that this legislation has been designed with addressing problems like we have in Christchurch in mind. I hope that it does and I am really looking forward to seeing how it works in practice. But it really cannot come soon enough for Christchurch. We have had enough of the silo thinking and the inability to bring everything together for the sake of Christchurch.

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to Part 3 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 259 in the name of Te Ururoa Flavell to Part 3 be agreed to.

Amendments not agreed to.

Part 3 as amended agreed to.

Schedule 1

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 1 be agreed to.

Amendments agreed to.

Schedule 1 as amended agreed to.

Schedule 1A

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 1A be agreed to.

Amendments agreed to.

Schedule 1A as amended agreed to.

Schedule 2

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 2 be agreed to.

Amendments agreed to.

Schedule 2 as amended agreed to.

Schedule 3

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3 be agreed to.

Amendments agreed to.

Schedule 3 as amended agreed to.

Schedule 3A

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3A be agreed to.

Amendments agreed to.

Schedule 3A as amended agreed to.

Schedule 3B

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3B be agreed to.

Amendments agreed to.

Schedule 3B as amended agreed to.

Schedule 3C

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3C be agreed to.

Amendments agreed to.

Schedule 3C as amended agreed to.

Schedule 4

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 4 be agreed to.

Amendments agreed to.

Schedule 4 as amended agreed to.

Clauses 1 and 2

Hon DAVID CUNLIFFE (Labour—New Lynn): This has been an important and lengthy debate on a framework piece of legislation, the State Sector and Public Finance Reform Bill, that is critical to the efficient and effective functioning of our Civil Service. It may not be, at first glance, the sort of legislation that someone might pick up and find exciting to read, but it is, none the less, fundamental to how we do our job collectively of serving New Zealanders to the best of our ability and extracting the very best value that we collectively can from their hard-earned tax dollars.

This has been appropriately a reasonably wide-ranging debate, and I appreciate your willingness, Mr Chairperson, to accommodate the various issues that have arisen. Let us cast our minds back to the original process that this bill went through. The Labour Opposition opposed this bill strongly at first reading. It did so because the bill as drafted, particularly through the amendments to the State Sector Act, would have gutted the rights of civil servants—their negotiation rights, their redundancy provisions, and a host of other hard-earned employment obligations and privileges.

I am very, very happy to reiterate that as a result of a careful and good-faith negotiation with the Minister of State Services, which was led by the Labour Party and supported by the Public Service Association and the Council of Trade Unions, the Government has seen fit to introduce extensive amendments that now allow us to support the legislation, with the support of those union representatives. Let me clarify that that is not to say the unions themselves think this legislation is a wonderful thing. They still have, as we do, significant reservations about the potential interpretation of some aspects of it.

When the bill is taken as a whole, we are now in the position where we are satisfied with language like a State servant facing a transfer must be offered a position that is “no less favourable” than what they have in order not to be given their full redundancy entitlements. We are reasonably satisfied that the changes to the Government workforce orders, which now make them workforce statements, and the explicit language written into the bill during the select committee process protects and preserves all existing employment rights in that process, and offers sufficient protection to State servants, for us to be able to confer support for the bill.

There are a number of other similar changes made at the select committee, particularly in relation to the State Sector Act provisions, that have given us sufficient comfort that at this stage we can support the bill, again with caution, with some reservations, with a careful eye to how it is implemented by the current Government, and with a view to potentially reviewing it when the new Government comes in, in just 15 months’ time. But we do offer our support for the bill at this point.

Having disposed of those very serious reservations and acknowledging the good work of the Minister, the Hon Jonathan Coleman, and the then chairman of the Finance and Expenditure Committee, now the Hon Todd McClay, let us move back to the central purposes of the bill, which we commend and support. Through this legislation we will help to modernise the public sector. I think our deputy leader, Grant Robertson, made a very good point when he talked about moving from the age of the spreadsheet to the age of Google. We are seeking to build a flexible, networked, interactive, service-oriented, lean-but-not-mean public sector that will serve the interests of all New Zealanders, while being careful and prudent with the expenditure of public moneys. It has been a shared goal of both sides of this House for many years now that the Civil Service would be able to move towards a more collective enterprise, in the best sense of the word, and that agencies of the State, whether they be Government departments, Crown entities, or contracted agencies, work together to achieve common goals. And it has not been that easy. Managing for Outcomes has come and gone. The Government is having real trouble, I understand, with its Better Public Services programme, where at least half of the objectives, soon to be revealed, are not on track.

It is not that easy to bring Government departments together in common goals, and this legislation will, we hope, make a real contribution in that regard. There are several ways in which it does that. The first is the multi-category appropriation. That allows agencies to receive a common funding pool across traditional silos. As introduced, the bill sacrificed the specificity and accountability requirements in the name of that cooperation. As amended at the select committee and with the further useful advice of our high-calibre officials, there is a better balance because we now have full traceability of funds from year to year, including when they have changed the jargon from output class to output class, and including where they move to a multi-category appropriation as provided for. We are now comfortable that we have not sacrificed the accountability, to get the flexibility.

Another aspect of trying to build a more flexible Public Service has been to make somewhat less prescriptive the provisions around a statement of intent. For the public, the statement of intent is one of the key contractual documents, alongside a chief executive’s performance agreement, by which Cabinet and the political layer, which is the people’s representatives, bring the direction of the Government of the day to the Civil Service, and they are absolutely essential documents. What is important is that in this bill, although the Government has sought to reduce the requirements to make that an annual process, the Finance and Expenditure Committee has reinserted the option for Ministers to make those statement of intent updates annual. In its commentary the select committee emphasised that civil servants need to make clear to Ministers that that annual update provision or ability still exists because we do not want to lose accountability in the search for flexibility.

As a number of my colleagues have noted, there is a certain irony in the Government moving to introduce legislation that provides for “whole-of-government directions” at a time when it is busily seeking to privatise part of our energy system and to gut the State-owned enterprises portfolio. Why is that ironic? Because the power to direct those crucial entities—and energy security is going to be one of the key strategic issues facing our future—is already there in a fundamental piece of legislation. It is called the State-Owned Enterprises Act. But when Mighty River Power, for one, is partially privatised, it is no longer in law a State-owned enterprise, so the power to direct is rescinded. The obligation of no surprises is rescinded.

Look how important that was in the case of Solid Energy, a huge black elephant—now a white elephant—on the Government’s books. It should have been even more prescient in its advice to Ministers, and Ministers should have been even more hands-on to avoid the blood bath of taxpayers’ money that has occurred in relation to that entity. But to make those rules looser by partially privatising the entity, as was announced—even though the Government now cannot, because it is such an embarrassment—while introducing this responsible legislation to allow for whole-of-Government directions, I think the public will get the irony in that situation. I see members opposite kind of shuffling, looking at their feet. They have got their heads down. That is the traditional reaction when you know you are up the legislative creek without a paddle.

But enough on that; back to this bill. This is responsible legislation. I am very pleased that it has the overwhelming support of Parliament, and that there has been a good-faith negotiation process between the Opposition and the Government. That has, I think, in everybody’s understanding resulted in a better piece of legislation. Is it perfect? No. Will there be implementation issues? Yes. Will the incoming Labour-led Government watch it like a hawk? Of course it will. Will it be prepared to fine-tune it with further amendments, if necessary? I am sure that the future Government will want to do that, if required.

We believe that this is a step forward, not a step backwards, now that the employment rights of civil servants have been protected. It is a step forward because it gives more flexibility. It is a step forward because it confers a greater sense of common purpose. It is a step forward because it allows for flexibility and includes some limited forms of delegation of powers and functions to interactive work with the community.

CLARE CURRAN (Labour—Dunedin South): I am really pleased to take a call on these final clauses in the Committee stage of this bill, the State Sector and Public Finance Reform Bill. I would like to reiterate some of the things that have been said by my colleagues and put the emphasis on the importance of transparency and accountability in this bill. I certainly think that the Government, through the negotiations that have occurred around trying to come up with a solution to the problems that were obviously apparent after the first reading of this bill, has seen an enormous amount of hard work that has gone on, and I certainly think that the members on this side of the Chamber have put the Government on notice around how this bill is actually implemented and how it will actually work.

We certainly do want legislation in this area that is geared towards a flexible, interactive Public Service. It certainly is the age of Google. Technology is driving so many of the changes that we are seeing in legislation. We certainly need the joined-up-ness between Government agencies and the directions that Government agencies are receiving from Ministers, but along with that comes the absolute importance of the transparency of those instructions and changes and the accountabilities back to the public. I have been looking closely at some of the provisions throughout the discussion on this bill and I remain with some serious concerns around how those transparencies and accountabilities will actually be delivered to the public of New Zealand.

I do want to say that it is important that the work that has been done by the members on the Finance and Expenditure Committee—in particular, the Labour members on the select committee—on trying to come up with real solutions to get this piece of legislation through the House should be commended. We know, as there has been much discussion, that this bill was heavily amended by the select committee. There were some very tough negotiations on that committee around trying to make this a better piece of legislation, which is, ultimately, what the work of this House should be about.

I just want to reiterate some of those things that have resulted from that, because we support—and absolutely support—an enhanced focus on the need to deliver value for money for taxpayers’ funds. We absolutely support the principle of developing and coordinating leadership across State services and the intent of amending the Public Finance Act to provide for those multi-category appropriations. I know my colleague David Cunliffe has talked about that at length. But clarifying and enhancing the expenditure tracking and accountability within revised budget and performance management documents is also so important, which is why there were so many problems with this bill.

The progress made during the select committee really has been around those conflict of interest provisions, which were strengthened around where the delegation of powers were proposed for any State Service entity, and improvements around the provisions for strategic intentions through those statements of intent. I would just like to say with regard to those statements of intent that the potential for conflict between the statements of intent, the ministerial expectations, and the actual legislation on which they are based is of absolute importance. It is of absolute importance that the people of New Zealand can be reassured that those conflicts are able to be managed and are transparent, and that officials are able to provide advice—and have to provide advice—where there are conflicts.

We have seen countless occasions where the way an entity is operating appears to be in conflict with the legislation that it is actually based on. The Television New Zealand Act is one of those very good examples. Before the Television New Zealand Amendment Bill actually went through this House, the way that the entity was operating was in direct conflict with the legislation upon which it was based because of expectations that had been put on it from Ministers. It was therefore operating completely on a commercial basis, which was in direct conflict with the legislation. We have to ensure that that does not happen and that people then do not start to believe that Government is operating its entities in conflict with the legislation upon which they are based. Those things and those accountabilities are absolutely critical.

The full traceability of those votes and appropriations have been clarified in the provisions relating to Budget documents, including where the title of appropriations and the output and sub-output classes have changed, and where those multi-category appropriations have been instituted. Another improvement has been balancing the efficiency objectives within a broader notion of effectiveness, which includes the procedural and substantive fairness considerations. We do support this bill. We have serious reservations that I know we have outlined at length in this Chamber over the last 12 hours or so, and the reason why we have outlined them is the nature of those reservations. They need to be on the record so that if it is demonstrated through the implementation of this legislation that there remain substantive issues, we can come in as the next Government and change them and have the mandate to change them because we have outlined what our concerns are.

We remain concerned that the protections in redundancy provisions relate only to the Public Service. We remain concerned that the delegation of powers from the core State sector to non-State partners in implementing agents is constructed too broadly. We think that close monitoring will be required to ensure that this practice is used only in circumstances where benefits to the public clearly outweigh the costs and the risks. We remain concerned that immunity from suit, rather than indemnity, is being afforded, and we note, as we think the Government should note, the Law Commission’s concerns in this regard.

Amendments to the Public Finance Act that will assist in removing barriers to greater cooperation between public sector entities need to be balanced in practice, with greater clarity of the financial accountability documents.

So returning to those statement of intent processes, we know that it is important that there is a clear contractual arrangement, a relationship between the Ministers and public sector executives. We know that this is a crucial link in the accountability chain to Parliament and the public, but the reduction of the frequency of required statement of intent updates to 3 years risks diluting that ministerial accountability for the agencies. We absolutely believe that it is important that we keep a close eye on how that plays out.

The amendments to this bill, we believe, have given us cover to provide support. We know how important it is to get cross-party agreement on these sorts of pieces of legislation. They are absolutely foundational pieces of legislation for the ability to run Government and to run accountability right across Government. But we remain absolutely vigilant on a number of these issues and will be keeping a close eye on how they play out.

Hon LIANNE DALZIEL (Labour—Christchurch East): As colleagues have said, Labour actually opposed this bill, the State Sector and Public Finance Reform Bill, at its first reading. I think it is significant that we are now in a position to support its passage through the remaining stages in the House, and, speaking to clauses 1 and 2, I think that it is an important point to place on the record of the House. It was really picking up the point that Clare Curran ended on, and I refer to the commentary from the Labour minority view, where we stated that the amendments to the bill provide sufficient protection for Labour to be able to support it as a whole, acknowledging that bipartisan consensus on framework legislation of this type is desirable where broad agreement can be forged. Can I just say that that is really important. I think it is absolutely vital. If we can get cross-party consensus on framework legislation, then we end up having debates about the detail, as it were, rather than about the most fundamental aspects. If we can get agreement across party lines on the framework, then, in fact, that is good for New Zealand, it is good for certainty, it is good for business, and it is good for the community as a whole. So that is why I am very pleased that we are able to support the passage of the legislation.

But I have been asked to display one more time why this could not come soon enough. Perhaps the Minister in the chair, the Minister of Conservation, would like to cast his eyes upon this document, because this diagram is the Canterbury earthquake recovery. It is actually pretty obvious what is going wrong with the Canterbury earthquake recovery when one looks at this web of particular agencies that do not all connect with each other and certainly do not all connect with the people.

When I was the Minister for Small Business and the Minister of Commerce, I had undertaken a quality regulation review. What I came out with was a very simple phrase, because—and colleagues and Ministers on the other side of the House will know this as well—we do think in silos because we are responsible for an individual silo. We are responsible for the Department of Labour or we are responsible for foreign affairs or we are responsible for a different component of Government. But when Government actually sees itself as all these individual arms, that is not how the public sees them. So when business looks at the Government, it sees the Government and it says: “Why on earth is the Government asking me for exactly the same information we provided it with last week?”. That is because the public do not see the Inland Revenue Department, they do not see ACC, they do not see all these individual departments and Crown entities—all of them covered by this legislation. They do not see individual departments and Crown entities; they see the Government, and they ask it why it is putting them through the mill, yet again. The simple solution that I came up with, which I think is a very simple solution, is to ask why the many arms of Government cannot extend a single hand to business. Why can they not?

In the Canterbury earthquake recovery, why cannot the many arms of Government extend a single hand to the people? I personally think actually that in this legislation, as we have debated it, that has become crystal clear. That is exactly what we need in Christchurch. So I actually think we are on the same page. We actually do understand that the framework has to be across these silos. It has to break down all of the silos. But in Christchurch what has become crystal clear is that it is not just with the Government departments and the Crown entities; it is also all of the organisations that they interact with as well, and in Christchurch it is the councils that have to have the silos broken down. So what we have got in Christchurch is we have got the council with its own silos, we have got the Government with all of its silos, and we have got the Canterbury Earthquake Recovery Authority, which looks like it is the overarching organisation because its purpose is to coordinate, facilitate, and direct all of the issues that relate to the recovery. [Interruption] Well, the Canterbury Earthquake Recovery Authority is in there, but it is only one of the many things. All of these squiggly lines tend to lead to the Canterbury Earthquake Recovery Authority, but the Canterbury Earthquake Recovery Authority does not have any overarching authority, and that is the problem.

The Minister for Canterbury Earthquake Recovery does not know what the Minister for Building and Construction has been discussing. That has been obvious over the last few weeks. But there are so many other things. The Minister for Canterbury Earthquake Recovery did not know that the Minister of Education had not consulted with the schools before announcing the massive shake-up of the schools. It is not knowing what the left hand and the right hand are doing, it is not knowing what the impact that will have on the recovery of Christchurch, that is the fundamental flaw. All of that can be fixed if we have our focus on the framework, and the framework cannot—cannot—be like this one. We cannot have all of these different lines operating in this particular way. We actually have to have the whole thing as a coordinated whole and meeting the objectives of the recovery.

I think that Canterbury has served to provide a very clear example of why this legislation, and the approach that this legislation is adopting, is so needed. The cross-agency breaking down of silos is absolutely fundamental, but I think that you also have to think about the silos that exist within the Government departments themselves. In the Canterbury earthquake—

Hon Trevor Mallard: Especially “MoBIE”.

Hon LIANNE DALZIEL: Yes—the Ministry of Business, Innovation and Employment. I have never understood why the Government decided to put the Department of Labour into a brand new, huge, expanded organisation, after the two reports—

Hon Trevor Mallard: It’s because of Steven Joyce.

Hon LIANNE DALZIEL: Yes, but the Pike River coal mine tragedy report would have actually said: “No. Hold off. Do not put the Department of Labour in there right now. It might be the right thing to do later, but do not do it now.” The second group that you would not put into the Ministry of Business, Innovation and Employment right now is the Department of Building and Housing. The royal commission report on the building collapses in Christchurch—it is just crazy to have all of these different departments come together.

I think this is the fundamental problem: the Government thinks that by putting the departments together, it solves the silo problem. It does not. Silos exist within Government departments. All that has done is made the silos less obvious, but they exist all the same. If I use as an example the Canterbury Earthquake Recovery Authority, which has been set up for a single purpose, it is riddled with silos. It has got one silo for economic development, it has got one silo for the central city development, it has got one silo for social recovery, it has got another silo for the built environment and the natural environment, and it has another one for cultural matters. So what it has done is manage to create silos in a brand new department, where it actually could have ensured that there were no silos to have to break down. That is the problem that we have got in Christchurch. This legislation—

Hon Trevor Mallard: What happened to the doctrine of the indivisibility of the Crown?

Hon LIANNE DALZIEL: The indivisibility of the Crown?

Hon Trevor Mallard: What happened to that doctrine?

Hon LIANNE DALZIEL: Well, I know it is a doctrine, but I do not know how it is relevant to this.

Hon Trevor Mallard: Well, the silos.

Hon LIANNE DALZIEL: Yes, I know, but the silos—

Hon Ruth Dyson: Trevor will take a call.

Hon Trevor Mallard: I will.

Hon LIANNE DALZIEL: Oh, Trevor is going to take a call to explain the doctrine of indivisibility.

I actually think that one of the problems that we have had, and I think Ruth Dyson could also comment on this, is when you have got reporting lines that do not allow for the money to flow with the decision making. For example, back in 2000-and-something, we managed to get a high and complex needs formula, which had funding directed to it from health, education, and Child, Youth and Family, and we got the three together. It was a massive change. We broke down the silos. How long did it take to write the rules for access to the fund? It took 2 years—2 years—to write the rules, and that is the problem. We have got to fundamentally change the culture, and the cultural change will come about if we start to think about those whole-of-Government outcomes that are so fundamental. Christchurch, I think, would be a classic case, where we could start right away. We do not actually have to wait for the legislation to be passed to do the right thing. Canterbury is waiting for this mishmash to be resolved, and—

Dr DAVID CLARK (Labour—Dunedin North): There have been several points raised by the Hon Lianne Dalziel that I wish to pick up on. The first amongst them is the shambles that is “MoBIE”—the Ministry of Business, Innovation and Employment. She spoke about how the Department of Building and Housing would appear to be out and the Department of Labour would appear to be out. It is true also that health and safety is something that needs specific attention. This Government is talking about pulling that out. It has folded things in; it is pulling them out. There is a huge amount of cost that has gone into that particular organisation over recent years.

Minister Joyce has, until now, avoided answering questions on the costs of restructuring and rebranding the Ministry of Business, Innovation and Employment. It is an organisation that is not performing terribly well. Mr Joyce himself was unable to answer questions before a select committee recently in a public session on the costs of restructuring in the organisation. We had the Ministry of Research, Science and Technology and the Foundation for Research, Science and Technology, or “MoRST” and “FoRST”, as one limb in there. They got divorced, and then we had the Ministry of Science and Innovation, which could not reconcile them, and so on and so forth. There are a bunch of departments shoved in together, with no seeming logic to it, and they are not performing well. There are ones that should come out. It is a shambles, what is going on in the Ministry of Business, Innovation and Employment, and we are only just touching the surface of it.

This bill, the State Sector and Public Finance Reform Bill, is one that we will, of course, be supporting. The title could be different. To bring it into the title and commencement clause discussion, we could call it the “Ease of Good Government Bill”. We are delighted that the Government has seen fit to include changes that were put through in the Finance and Expenditure Committee at the behest of Labour and the State sector unions that have averted disaster for Government workers, who were set to lose their redundancy entitlements and employment rights. We are pleased that members of that committee could work together to ensure that those things did not happen. We voted against this bill initially and now we are supporting it, and that is as a result of that committee taking a longer view and saying that this legislation needs to survive different Governments. So those things have made this a better bill.

We could also call it the “Can’t Stop Bad Policy Bill”, because no matter how good the regulations are and how smoothly the apparatus of Government works, you cannot account for bad policy. You just simply cannot. Nobody can—not even you, Mr Chairperson. If the Government wishes to push bad policy through, it can do that despite legislation. It can pursue anything it wants to. We know, for example, that in the electricity sector power prices are going up and up and up and up. John Key says that Kiwis are paying about the right amount for power; most of New Zealand disagrees with him, I think. This Government is pursuing that same strategy with the same electricity sector that it has always had, with prices continuing to rise. That is something that Labour thinks we need to do something about.

This kind of bill will actually enable good policy to be put in place more cleanly. It will mean that the apparatus of Government is not tied up with unnecessary reporting or overly burdensome reporting. It will, hopefully, be more effectual in reporting the kinds of things that the public needs and wants to know about. The Government will be held accountable to the public in an appropriate way, with a minimum burden on officials to deliver accountability mechanisms, but an appropriate one. It is a balance, as I have said earlier. Again, we could call it the “State Sector and Public Finance Reform (Providing Balance) Bill”. We could put brackets in there, and that would be an alternative name.

I think that some of these names I am discussing will be considered by the Minister in the chair, the Minister of Conservation, who I can see is deep in thought. I would welcome the Minister in the chair’s views on the appropriateness of these names as he thinks them over.

Part of the job of us here in Parliament is to decide just which names for bills are appropriate. As people search through them online—and I know, as I have searched through bills online—sometimes they are hard to locate. Sometimes it is hard to find the bill you are looking for because it is named in a way that is not intuitive. I think that bills ought to be named in a way that is accessible for the public.

This bill here does pick up good governance practices. It attempts to make sure that things are done in a transparent way, that there are sanctions and rewards for departments, that those are clearly laid out, that they are reported, that there is transparency, and that there are clear lines of accountability.

We see in this bill the State Services Commissioner’s role outlined for the first time ever, in a way that now means that we can better understand what his or her role is in the State sector, and we can see how chief executives can move their own resources around from one area to another much more easily as a vacancy arises, and so on. This smoothing of the paths of Government should indeed, over the longer term, make for a better Government.

The point I raised earlier, though, is incredibly relevant, which is that the actions taken in this bill will not stop a Government putting bad policies in place. They simply cannot.

If a Government like this one thinks that the current housing shortage in New Zealand is simply unavoidable and that if we carry on with the same policies, suddenly, magically, houses will appear, despite the rate of new house builds dropping steadily over the last 20 years, that may be its ideology and it can stick to it. This bill will do nothing—absolutely nothing—to address that. Labour, on the other hand, thinks that we need proactive policies. So, for example, the KiwiBuild policy, which Mr Peseta Lotu-Iiga over there is admiring from afar but knows he cannot publicly endorse, is a policy that will improve the lot of Kiwis. For those who currently cannot afford housing, we know that this kind of policy, the New Zealand KiwiBuild policy, will actually make the world a better place for them. So that is what Labour is committing to—10,000 new houses a year with the KiwiBuild policy, affordable houses. That is 10,000 new houses a year and affordable housing for New Zealanders, because we think that that is a priority.

Likewise in the energy sector, with the NZ Power proposal, we will make sure that ordinary Kiwi families pay $300 less a year for their power bills. That is significant, because New Zealand families are struggling.

This Government has the worst economic record of any Government in the last 50 years—

Peseta Sam Lotu-Iiga: How many?

Dr DAVID CLARK: —50 years, Mr Lotu-Iiga; I am glad you asked—and that terrible economic record needs to be addressed, but this Government seems to have no plan to do that. This piece of legislation will not give the Government good ideas; it will only enable Governments that have good ideas to put them into practice in a timely, effective, and efficient way. So the real effects of this legislation will have to wait for a future Labour Government, I suspect.

This Government is doing the right thing by putting the conditions for good government in place, but, unfortunately, it seems to lack a plan that will really appeal to New Zealanders and make New Zealand a better place for ordinary New Zealanders to live in. As inequalities rise, the Government does not seem willing to put in place the kinds of necessary economic changes such as more savings, a pro-growth tax policy, and monetary policy reform that would actually improve the lot of ordinary Kiwis. Instead, we see median wages dropping in New Zealand consistently under this Government. Kiwis are struggling, small businesses are struggling, and that is because this Government is prepared to sit on its hands and stick with the policies of the 1980s, which have not been working for so very long now, sadly.

This legislation will mean that policies that are good, like those that Labour has, can be introduced in an effective and efficient way in years to come. It will not help this Government, which has no plan to reform the economy, in the meantime, because it will carry on doing what it is doing, which is just taking a hands-off approach—hands off the steering wheel—as the economy goes further towards the interests of those who already have and further away from the interests of the have-nots in our country.

Labour is very happy to support this legislation. As I said at the beginning, we are pleased with the changes that have been made in the select committee to avert the disaster for Government workers, who were set to lose their redundancy entitlements and employment rights. We congratulate the New Zealand Public Service Association and the Council of Trade Unions on their good work, and I congratulate the members of the committee, who worked together to make sure that this legislation did not end up dividing the House but, instead, ended up being legislation that, with some reservations, the Labour Party will happily support. I am looking forward to the Minister in the chair’s contribution. Thank you.

Hon TREVOR MALLARD (Labour—Hutt South): It is my pleasure to take, well, three or four calls on the concluding stage of this legislation.

John Hayes: Only three or four?

Hon TREVOR MALLARD: Yes, only three or four. One of the things that I might say I am slightly perplexed about is that we have sitting in the chair the Hon Nick Smith.

Hon Ruth Dyson: Well, at least he’s good compared with the others.

Hon TREVOR MALLARD: Well, I would not go that far, and I do not know him that well. But we have sitting right at the back of the Chamber a newly minted Minister who chaired the Finance and Expenditure Committee and actually knows about the bill.

Hon Dr Nick Smith: He’s good.

Hon TREVOR MALLARD: Sorry?

Hon Dr Nick Smith: He’s good.

Hon TREVOR MALLARD: Well, I am told he had potential. I would have picked Sam Lotu-Iiga to become a Minister ahead of him. My understanding is that he is going to get his best publicity ever next week when he becomes the “Minister in charge of Killing Dogs So Drug Dealers Can Make Bigger Profits”. That is Todd McClay, the Minister who is going to take responsibility for that going through this House, with advice from a number of departments under this legislation. He is going to be the Minister who says: “We will kill dogs so that drug dealers can have bigger profits.” I know that if Sam Lotu-Iiga had been the Associate Minister of Health, he would never have had a bar of that sort of policy.

Hon Ruth Dyson: He’s the only one who thinks he should be Minister.

Hon TREVOR MALLARD: Who?

Hon Ruth Dyson: Sam.

Hon TREVOR MALLARD: No, no. I think Sam would have been a better Minister than Todd McClay.

Hon Ruth Dyson: Well, that’s two of you.

Hon TREVOR MALLARD: Well, no, no. That is not true. A number of the member’s colleagues tell me that they think that he would be a much better Minister for Pacific Island Affairs than, for example, Hekia Parata. I mean, for goodness’ sake! [Interruption] Well, no, I am praising the member opposite, Mr Chairperson. And, actually, the responsibilities of a Minister of the Crown and how they are discharged are very much a part of this bill.

Members opposite invited me earlier to talk to them a little bit about the divisibility of the Crown, or what used to be, when I was first a member of Parliament, the indivisibility of the Crown. And, you know, it is relatively historic. It dates from the days when the Crown in the United Kingdom—probably the English Parliament at the time—was the agent for the King or the Queen on occasion. And because it was acting in the name of the monarch, it could not have internal divisions. What it had to do was sort it out: “This is the Government division, and that cannot be divided.” You did not have the nonsense of one Government agency suing another Government agency, because they could not sue each other. They should not have been able to sue each other, because they were a part of an undivided Crown. Obviously, now, with the National Government’s splits and divisions, and stuff like that, that doctrine has become slightly dated. I think the time of Ruth Richardson was the time when it took its biggest dive downwards.

But I want to say it is relatively good that there is a tiny step back towards the concept of the Government working as a team, working together, and working out what is the best thing for the people of New Zealand, rather than heading, as it had been, into the many, many agencies, all heading off in their own directions, sometimes quite independently. I am sure all those people who have been Ministers in the past would have found agencies actually working in contradiction to each other. One of my colleagues, Lianne Dalziel, reminded me earlier about high and complex needs, and just really the inability of the agencies to come together and to work properly as a team to get something that was logical for those young people who were really at most risk and amongst the most marginalised people in the country. The agencies could not do it.

The other point that I would like to make is that sometimes some of the best policy advice does not necessarily come from the big agencies, which sometimes get caught very much in their own ruts. I noticed this as the Minister of Education and the Minister for Sport and Recreation. Actually, some of the best policy advice came from a tiny policy team of three, four, or five people, because they could cut through, cut to the chase, work out what the issue was, get the evidence, and you could have evidence-based decision-making. Whereas in education, especially in the early days when I was Minister, there was so much long-term prejudice and not the ability, not the habit, of looking at the evidence. They were tied up in what had been the policy of the agency for a long time rather than working necessarily for the best for the young people of New Zealand.

This State Sector and Public Finance Reform Bill is a tiny step, and I do not think it goes far enough. I would like to refer to new section 47(1) of the bill, “Responsibilities of Commissioner”. I am now going to plead guilty, as I did to the Hon Stan Rodger a month or two ago, for being the Minister of State Services who abolished the senior executive service because basically it did not work. It was a very good idea as part of the original State Sector Act to build up a team of senior people who got some special training and were more available for secondment to move from one agency to another. People who were being, if not targeted, if not anointed chief executives of the future—

John Hayes: Groomed.

Hon TREVOR MALLARD: Sorry?

John Hayes: Groomed.

Hon TREVOR MALLARD: Yes, well, grooming is a word that has different connotations these days. I think the idea that John Hayes was grooming public servants is probably not quite the approach that is appropriate. In the old sense of the “groomed” word, then certainly that was the idea—that you were building up a team of people from whom the vast majority of the future chief executives would come, because the skills had been developed. Basically, it did not work. It did not work because of the very narrow approach of the majority of the chief executives of the Public Service, who were focused on their own agency, on their own outcomes, and on their own statements of intent rather than considering the good of New Zealand and the quality of the Public Service, both immediately but more especially in the medium and the longer term.

Clause 38 of the bill puts back on to the commissioner the responsibility for developing and implementing a strategy for senior leadership and management capability in the Public Service. But what it does not do is give the commissioner any authority to actually implement it. What it says is that if a chief executive gives the State Services Commissioner two fingers, then they are allowed to get away with it. The bracketed phrase at the end of new section 47(1), “(with the agreement of the relevant chief executives)”, essentially goes back to the failed senior executive service model whereby they will, I am sure, focus more on their own agencies rather than the overall good of the Public Service. In my view—and Todd McClay might want to take responsibility for this—there is a failure within that provision to actually achieve what is a noble objective.

I think all of us now agree that we have had far too many chief executives come in from offshore who do not understand the New Zealand culture. I am not going to use Lesley Longstone as an example. I do not want to go into it in any depth. As far as that one is concerned, if you are working for Hekia Parata you basically have to be a saint in order to cope. It may well be that the new chief executive is a saint, and he will be able to cope, or more likely, actually, he will be able to manage the Minister in order to achieve the outcomes that are required.

The CHAIRPERSON (H V Ross Robertson): I call the honourable member Darien Fenton.

David Bennett: Excellent choice. Excellent choice.

DARIEN FENTON (Labour): Excellent choice. Thank you to the member for that.

Hon David Cunliffe: What are all those backbenchers doing just sitting there?

DARIEN FENTON: That is right. It has been a very, very interesting discussion in the Committee stage of this bill, the State Sector and Public Finance Reform Bill. I have been listening as I have been working in my office as people have been talking about silos and their experiences with the State sector. I wanted to remind my colleague Trevor Mallard of one of the things that he tried to do, I think when he was Minister of State Services. You were Minister of State Services?

Hon Trevor Mallard: I was. Only for 6 years though.

DARIEN FENTON: Yes, I remember one of the things that he tried to do was to get the chief executives together and do a simple thing like having common leave provisions across the State sector. There was enormous resistance to that, as I understand it. It was the most difficult job because the chief executives could not get their heads around doing something together. They were all precious about their departments. They all thought that they should just have the direct say on whether their staff should have, I think it was, 4 weeks’ annual leave then. They did not actually want to be—

Hon Trevor Mallard: Some of them had 4 weeks and a day for this reason or that, and they’re all bloody different.

DARIEN FENTON: Oh, OK. Yes, they were all bloody different, as Trevor Mallard just said. All the leave provisions were different. But it was such an enormous job for a very sensible proposition. I would have thought that that would be something that chief executives in the State sector would embrace, actually—that they would actually embrace that. I am not convinced that the State Sector and Public Finance Reform Bill will actually change that culture. If anything I think it has gotten worse.

But I should say that I am pleased that we have made progress on this bill, and we have got to a point where we can support it. I am pleased that part of the hard work done by the Labour members on the Finance and Expenditure Committee in negotiation with the National Government has ended with a conclusion where we can accept—I will say it is not perfect—the changes made, particularly around redundancy entitlements and workforce policy statements where the State Services Commission cannot interfere in wage bargaining.

I will say again, as I said in one other speech about this, though, that I find it very confusing that on the one hand we can get the Government to the point where it accepts that redundancy and redundancy entitlements are fair for public servants. We on this side, of course, think that is very right. But it does not think it is fair for other workers who work outside of the State sector. It continues to oppose basic redundancy entitlements for all workers throughout New Zealand. It has done that through a bill that I brought to the House as a member’s bill, which is now back in the House under the name of Sue Moroney. The Government will continue to oppose that, so I get confused about the conflict that there seems to be in the Government’s mind. It can have one set of rules on the one hand for public sector workers but it is not good enough for other workers throughout the country.

The same goes for collective bargaining, actually, because there is an acceptance in this bill that collective bargaining is a good way of reaching agreement across the State sector. But then on the other hand we have Simon Bridges’ bill to completely undermine collective bargaining for all workers, including State sector workers as well. So I get very confused about the Government’s messages. I think that it is not only a silo mentality in the State Service but a silo mentality amongst Ministers, where they do not seem to be able to bring their policies together. They have some alignment between them, and it is a little bit like that with the Employment Relations Amendment Bill as well, and the health and safety reforms that the Government is bringing through. Health and safety reforms are great, but then on the other hand we have the same Minister bringing forward reforms that will completely undermine health and safety by reducing workers’ rights.

Talking about silos too, I also heard my colleagues talking about the Ministry of Business, Innovation and Employment, that mega-monster, that creation of Steven Joyce, which he has put together, which is gradually being taken apart. I, like my other colleagues, never saw why the Department of Labour—a department that we have had dedicated to workforce policy issues and workplace relationships for more than 100 years; for more than 100 years we had a Department of Labour in New Zealand—has disappeared and been swallowed up into the Ministry of Business, Innovation and Employment. It is even hard to know what to call it any more. I think the inspectors, the miserable number of 35 labour inspectors that we have throughout New Zealand, still call themselves labour inspectors. But there is no resemblance in the ministry to that wonderful—

Hon Trevor Mallard: “Mobie” inspectors.

DARIEN FENTON: They may well be “Mobie” inspectors, I am not sure, but all I do know is that there is only 35 of them and they are supposed to enforce labour rights for all workers.

Hon Ruth Dyson: Isn’t there meant to be more than that?

DARIEN FENTON: Well, there are meant to be more health and safety inspectors, and that is another matter, because what is happening now is that the Ministry of Business, Innovation and Employment, and the Department of Labour part of that, is being unwound as the Government is forced to set up a new agency for health and safety. It started this brave new world on 1 July, Monday this week. There were supposed to be more than 150 health and safety inspectors in place in this Lifting Our Game programme that they have been going through—yet another restructuring—that has become known as “shifting the blame” by the health and safety inspectors. It has been very disgraceful—one of the worst restructurings and botch-ups that has ever been seen. The Minister in the chair, the Minister of Revenue, agrees with me. I can see him nodding. This restructuring that has gone on has been an absolute botch-up. What we have in place are 74 inspectors, fewer than half of what we had 2 years ago.

Here we are creating a Crown agency for health and safety and moving over the health and safety enforcement part, or the direction part, of the Ministry of Business, Innovation and Employment, or what used to be the Department of Labour. But the transition is awful—the transition is awful. It is scary, as well, because how on earth are we going to make sure that people are kept safe and healthy at work in the next 12 months while the new Crown agency is established? The Government is gutting the Department of Labour part of the ministry, and it is getting smaller and smaller, and I really have to wonder what its purpose is. I do wonder, actually, whether the real agenda of the Government is to not have anything like a Department of Labour, not to have anything that is responsible for making sure that workers’ rights are enforced and making sure that employment legislation actually works.

Of course, what we find is that because the department is so short on resources now, it cannot even tell us, for example, whether the legislation this Government has brought in around employment rights actually works. I asked a question the other day about the 4 weeks’ annual leave that can be cashed up, and the other changes that were made in 2010. The department has done no research on that. How can a Government and a department in the State sector bring forward legislation, argue it, and push it through because the Government has the numbers, and then do no follow-up to see whether it is working or whether there is a problem? It cannot even tell us whether there have been any complaints about it. This is shocking—this is shocking. Although I am pleased we have got to a point where we can support the bill because of changes that were made during the select committee process—as I said, it is not perfect; there are still some issues here—I am not convinced that this is going to change, first of all, the Government’s attitude to making sure that people are provided with proper information and the proper policy and guidance, but, second of all, the attitude of chief executives.

As I started out by saying in my contribution, chief executives in Trevor Mallard’s time openly resisted changes that we were trying to make around having common leave provisions. I also know that they openly resisted collective bargaining, which was a policy of the Labour Government and part of our legislation. They openly resisted it, and they refused—and still, to this day, refuse—to include wages in collective agreements. That fight has been going on for 10 years, because chief executives came out of the 1990s, had an ideology, do not believe in collective bargaining, and do not believe wages should be included in collective agreements, and that battle is still going on 9 years later. What I can say is that if we are the Government next year, that will change—that will change. It is not acceptable to have direction from a Government and have so much resistance because of the particular ideology of the State sector executives. As I said, I do not believe this will change the attitude. I think it is good that we have got to a point where we can vote for it. I do think there are ongoing problems in the State sector.

I am looking forward to seeing what develops with health and safety. I am looking forward to the Ministry of Business, Innovation and Employment—the old Department of Labour—recommending there should be an inquiry into forestry safety, after the forestry owners came out last night and said they supported one. There is some good advice that they could get, and it could be given to the Minister of Labour. He should be acting on that today.

The CHAIRPERSON (H V Ross Robertson): I call the Hon Nanaia Mahuta. Tēnā koe. Kei te pēhea koe?

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato): Ka nui te ora. Pēhea tērā ki a koe mō tēnei wāhanga o Te Wiki o Te Reo Māori?

[Very well thanks. What do you think about that for this part of Māori Language Week?]

I just wanted to pick up where my colleague Darien Fenton left off. There are some issues with the State sector, and if the intention of this legislation, the State Sector and Public Finance Reform Bill, is to enable Government departments to work more collaboratively together, by way of merging some of the aspects of their statements of intent to some higher-level priorities, then that will be a positive thing. The Government must have mechanisms, through the State sector, to be able to drive its priorities. That is absolutely clear. But if the Government is unclear on the nature of its priorities, we have got some big problems.

When I think about, I guess, the litmus test from a perspective that I bring to the Chamber, for Māori, that would be how the Government would work in partnership with Māori to advance economic and social development. It is a very important space to be considering the nature of this legislation, because what we know is that since the emergence of Treaty settlements and, more definitely, in the post-settlement landscape, significant resources have been transferred to iwi, who are then in a position to take on some quite critical partnerships with the Government and with third-sector parties to focus on regional growth strategies and outcomes, to invest more in social development outcomes, and to be innovative in a very different way. The interface between the State sector and iwi, I believe, is part of what could be a litmus test as to whether or not what we are trying to do here today will achieve some broader outcomes.

As I said, I have listened to the debate all the way through this particular bit of legislation and it got me considering a number of things. If the Government has a priority around Māori development, Māori economic growth and social development, why then did National reject the proposal of Te Ururoa Flavell in terms of making some stronger recommendations around the way in which the Treaty would be recognised within this legislation? Silence. So that then urges me to ask that, if the intent of the Government—

Hon David Cunliffe: It’s not question time.

Hon NANAIA MAHUTA: Silence, except from the backbenchers, who will not take a call on the bill. If the intent of the Government is to ensure that there are going to be productive collaborations with iwi, and iwi who have growing economies—Tainui, just this week, announced it has got around about a $780 million asset base, and Ngāi Tahu will be slightly over that amount. There are significant opportunities for the Government to partner with iwi to be able to better effect transformational change within specific regions, so that we are looking at innovative solutions to some very age-old problems, not because the Government is taking a parochial approach to these challenges, but because it is expressing itself in ways that are actually more reflective of what is being urged through a regional, community, iwi type of perspective. On that basis alone, I would have thought that the Government would consider quite seriously what the positive implications of Te Ururoa Flavell’s amendment to the legislation could provide for.

The next point I want to raise is in relation to the task force that the National Government set up, and that is the Crown Māori Economic Development Panel that was established, looking at priorities between 2012 and 2017. It outlines six particular goals: in the area of education, lifting educational participation; lifting the skilled workforce, and certainly the skill sets amongst Māori; improving the financial literary and savings aspects amongst Māori, especially at the grassroots; invoking more collaborative relationships with iwi and Māori; developing natural resources and having an ongoing dialogue about how that could coexist with strong kaitiaki principles amongst iwi; and, having a concept of where the “Māori Inc.” strategy sits within the broader Government growth strategy. All of those have been identified by the National Government as key priorities to lift Māori economic growth and to support it, but the way in which this legislation seeks to try to achieve that is unclear.

It is unclear because, obviously, this provides structural change for inter-agency collaboration, but it is unclear also because the Government on the one hand will have a certain conversation with iwi and Māori around the necessity to ensure a collaborative relationship for growth, but on the other hand, when it has the instruments or mechanisms to try to achieve that through legislation like this, it does not make some of the hardest yet most important calls so that we can get to a really good point where, actually, the Government is saying that we must work differently together, just as we need to get out of that silo way of thinking. That whole bringing the whole of Government approach together, engaging in critical partnerships and, in this instance, with iwi, and certainly with Māori—that whole aspect of the nature of relationships going forward for the State sector is not contemplated within the context of the changes and the amendments that were rejected.

I am slightly sad by that silence over there in the corner from people who initially criticised my comments. I would say that going forward the real litmus test for Māori on the effectiveness of the changes that have been achieved, and promoted today, will come back to some very critical points of convergence: where there is a common interest to have a growth strategy that is more aligned, and where there is a common interest to have a social development strategy that lessens the level of inequality and poverty in our communities. That is a point of convergence between the Crown, the Government, and iwi, where the necessity to improve the skills of our people is not just a Government objective; actually, it is a nationwide objective, where iwi can play a critical role to help achieve that outcome.

At the end of the day, we have heard colleagues, certainly on the Labour side of the Chamber, say that the new normal for the State sector is a stronger reporting framework around outcomes. I would have to absolutely endorse that. If we take an outcomes perspective in the way in which the Government asserts its leadership on fundamental priorities of economic growth and development, and social advancement, then the extension of changes to the State Sector Act could go a little bit further, taking into account the role—the critical and positive role—that iwi and Māori can play in this space.

I had said that I wanted to comment very briefly—I have taken two part-calls on this. I want to say that although this is a start, this is by no means a finish. This is an opportunity to have in the top of our minds the question of what some of the litmus tests are to ensure that the State sector is operating in a way that will, I think, change the nature of the way the Government interfaces with iwi but also with community. Kia ora koutou.

Hon MARYAN STREET (Labour): I rise to take a call on clauses 1 and 2. It is worth restating the significance of this legislation, the State Sector and Public Finance Reform Bill, as I have mentioned in previous contributions, but the thing that is becoming increasingly apparent as the speeches unfold is a point I referred to earlier. This is only the beginning of something that could be a substantial rethink of the way we actually administer the Government in this country and administer those parts of Government activity that receive Government appropriation and therefore taxpayers’ money.

This bill will, of course, become three bills—the State Sector Amendment Bill, the Public Finance Amendment Bill (No 2), and the Crown Entities Amendment Bill. In each of those respects, it takes us further along. It takes us further towards an integrated system of administration. We have administered Government for the last umpteen decades in this country according to siloed portfolios, and people have made a lot of the fact that this is a course of action that has probably run its time. I think that this bill presents a novel opportunity, but it is still just a small step in the direction of alternative ways of running the Government that could, in fact, deliver more integrated services to New Zealand citizens.

As far as the State sector amendment part of this legislation is concerned, I just want to reiterate one of the old principles. I was put in mind of this by the Hon Trevor Mallard’s discourse on the indivisibility of Government. This is that, in my view, the Public Service, the State sector, not only delivers the programme of the democratically elected Parliament of the day, but it also acts as a buffer between executive power and the citizenry. So it is there, and it has several things that it is charged to do. Of course, it must implement the Government’s programme, because one would assume that the Government has been elected to implement the programme. That is, of course, less decisive under MMP than it was under first past the post.

Often we hear the Government taking liberties with that notion of having been elected with an overwhelming mandate. Certainly, if a party goes to the polls saying it is going to sell State-owned assets and it gets 40-something percent of the party vote—even if it is 44 percent of the party vote—that is still not a majority in favour of that mandate. One would assume that if it wanted to really be honest about getting a mandate for a divisive policy, such as the selling of State assets, it would try to go for a 50 percent or greater portion of the vote, in order to be able honestly to say that it had a majority mandate for that policy.

But the point behind this is that the State Service, the Public Service, has operated and accumulated knowledge and wisdom over time. Our Public Service is held in extremely high regard by all of those agencies that measure such things. The integrity of our Public Service and its independence are critically important to our ability to score highly on the lack of corruption index and on the transparency index, which Governments are measured by around the world. It is in large measure that our reputation and our scoring highly on Transparency International’s various indices, including the lack of corruption one, have us coming at first or first-equal position in successive years.

I trust that this piece of legislation will actually enhance the operation of the Government’s departments and ministries so that integrated services, which are increasingly being seen as necessary, can be delivered for the effective provision of those services to New Zealand citizens. But I do not want to leave that point just yet about being a buffer between executive power and the rights of the citizens. I think the State Service, the Public Service, has sat there for a long time as a buffer between overwhelming and dictatorial executive power. There are things that the Government cannot do, because of the rights and the structures that are in place in our democratic system, and that is how it should be.

So this is important in that it changes the workings of the apparatus of government. Whether it is a Crown entity or whether it is reporting mechanisms—as in the Public Finance Act amendment part of this legislation or, as I say, Crown entities in the Crown Entities Act amendment part of this legislation—the principle is the same. If we can begin to integrate appropriations, operations, and accountabilities of government through these mechanisms, then that is to be applauded. I use again the example I used late last night of the appropriation for Whānau Ora. Being a health initiative, one would have thought that it could have come before the Health Committee for scrutiny. One could have thought that the Minister of Health would be able to say to the Health Committee that this is how the appropriation around Whānau Ora has been expended, and these are the accountability mechanisms and the performance indicators around that appropriation. But, no, because it is not something the Minister of Health was very fond of, it was sent out to the Minister of Māori Affairs and to Te Puni Kōkiri, when, really, the people who had a serious interest in scrutinising it were not only the members of the Māori Affairs Committee but the members of the Health Committee as well. So if there can be better ways of ensuring that appropriations are both reported on and accounted for and made more transparent by the provisions of what will become the State Sector Amendment Bill and the Public Finance Amendment Bill (No 2), then let us proceed with that.

But let us not imagine that we are there yet. What we do need is a new way of looking at how to deliver integrated services. This is particularly apparent in health, but also it is really apparent in the social development portfolio. It is very apparent there. It became apparent to us, when we were delivering the Strengthening Families initiative, that in fact numbers of organisations needed to be involved and engaged with the welfare of a particular family and a particular child. So not only did we need to have police, justice, corrections, education, and health organisations involved, but we needed to ensure that they were singing off the same page and that they were able to deliver the services that that family needed at that time. So I am hopeful that this is the beginning of something new.

As far as the Crown Entities Act part of the bill is concerned, the more of those entities that talk to each other and that operate in conjunction with each other, the better. This is simply a subset of that working across ministries, departments, and other parts of Government. I welcome this bill and I look forward to what it may bring next.

Hon TREVOR MALLARD (Labour—Hutt South): I want to thank you, Mr Chairperson, for giving me another call, even if it is slightly before when I thought I was going to have it. I would like to focus in this call back where I completed my previous call, and that is on the responsibilities of the State Services Commissioner with regard to the development of senior leadership in the Public Service. I want to reiterate the comment that, in my opinion, quality leadership in the Public Service is important.

In the end, despite the interjections from some of my colleagues, we are never going to compete for chief executives on the basis of the money that they get. I do not have much doubt that the particular individuals in the private sector could earn more than they do in the public sector, and repeated Hays surveys have shown that to be the case. In fact, there is a pretty clear hierarchy of incomes in senior positions, which goes, first, private sector; then after that, generally, State sector organisations other than the Public Service; then the Public Service; then local authority politicians; and then central government.

Andrew Little: Community organisations.

Hon TREVOR MALLARD: Well, community organisations like Parliament, as the member said. But there is a hierarchy that works in that way vis-à-vis the Hays surveys. Therefore, when the State Services Commissioner is fulfilling his tasks under this legislation, the State Sector and Public Finance Reform Bill, money is not going to be the main thing that is going to get people across the line into senior Public Service positions.

It is worth looking at those two words, “public service”, because there is a major element of public service involved in this. Although it is my opinion that having loyalty to a particular agency for which you are working at a specific time is important, what is more important is that the individuals within the Public Service are, in fact, loyal to the Public Service overall and to the common good of the Public Service, rather than to the particular agency that they are working for at that time.

Although some things probably go beyond some of the privacy things that we find acceptable today, back in the not too distant past—certainly within my memory—they had a thing called a stud book, whereby you could look up people who were employees in the Public Service and you could see when they became public servants. You could see their career history and their particular level of appointment and what their current salary was. Apparently, we have moved on from that level of transparency. I am not sure why, because I think—

Andrew Little: They’ve got Novopay now. You can do it on your own.

Hon TREVOR MALLARD: Well, the problem with Novopay, of course, is that people do have the ability to adjust their salaries. Unfortunately, the ability to deliver is not particularly good.

The point I am attempting to make is that we have to be offering to the people whom we expect to be leaders in the Public Service something that is challenging, where they feel that they are doing some things that are extra and that involve, basically, making New Zealand and making the world a better place. I hate to do it, but if I move over slightly to my left and look across the Chamber, I can see—

Hon David Cunliffe: Move to the left?

Hon TREVOR MALLARD: There is not much room on my left politically.

Hon David Cunliffe: There’s me. There’s me.

Hon TREVOR MALLARD: The member is certainly not on my left politically, that is for sure. We just need to see the policies he implemented when he was in Government. We will just leave that on one side now. Interjections like that are not helpful, Mr Cunliffe. I am actually looking at John Hayes at the moment. I think he is a very good example of someone who was a relatively senior public servant and who in his area of work, and especially in the western Pacific, made a real difference.

John Hayes: And the Middle East.

Hon TREVOR MALLARD: Well, I do not know the member’s details. That might have been before my time. I think he managed to get some peace in the western Pacific. I do not know whether he totally succeeded in the Middle East, though I understand that his close friend Mr McCully is about to bring peace to the Middle East. I just want to say one thing. I am not going to hold my breath. I am not going to hold my breath for that.

Andrew Little: Let him have a go. Let him go over and have a go.

Hon TREVOR MALLARD: In fact, I think he is there. Well, I do not know. He is either there or he is going or he has come back.

The point I am making—and I am almost inviting John Hayes to take a call—is to say to him that the difference that he made as a public servant in the world was more important than some marginal cash, that there was some degree of job satisfaction that was involved. I can see that he is nodding, and it is not through sleep. That is the case for many people who are true public servants. There are a lot of them who could earn significantly more money in a private sector situation.

One of the unfortunate things that is happening under the policies of this Government is that as these massive mergers, changes, and reconfigurations occur, people are, effectively, invited to apply for redundancy—I think they call it “rightsize” now. Back in the day, it used to be called firing people. As these ministries are being downsized, far too often there is a general invitation to people to take redundancy. Unfortunately, often the people who take redundancy are those people who have the skills and talents that are vital to the organisation. They take redundancy, and generally it takes about 2 weeks, sometimes 6 weeks, for the organisation to work out that it has a gap that it is required to fill, and what does it do? It contracts the person back in, often for 3 days a week, often for more than it was paying them before anyway, and they have got a redundancy payment as well.

Hon Shane Jones: They’re mates of the Government.

Hon TREVOR MALLARD: Well, some of them are mates of the Government, and some of them are just people who are sick of being treated badly by Ministers and like to have the option of providing the advice, which generally goes through senior people, without the indignity of having to attend on Ministers’ offices, which, I understand, in a number of cases, is something that is dreaded by public servants. Again, I make no reflection on the Minister of Revenue, who is currently in the chair.

You just have to wander up Lambton Quay often enough and have a number of friends—I have friends whom I have known for 35, 40, or 55 years in some cases—and you can just sense this from their body language. They are all proper public servants, but you can sense from their body language, as they come out of the Beehive, when the meetings that they have had have been proper and courteous and professional, and when they have been in a meeting with Tony Ryall or some of the other people who are not good Ministers. To be fair to the Minister in the chair, the Minister of Revenue, I make no reflection on him yet. The only comments that I have had about that Minister are about a total lack of understanding, and people are just beginning to understand the issue, and questions about where he got the advice—was it joined-up advice to cut puppies up?

The CHAIRPERSON (Lindsay Tisch): Order!

Hon TREVOR MALLARD: I ask the Minister in the chair: has he been applying the rules that sit within this legislation to get the advice that would sacrifice dogs for drug dealers? That is a relatively simple question. We want to stop drugs, but where do Ministers these days get such silly advice—

Hon DAVID CUNLIFFE (Labour—New Lynn): Thank you very much for the opportunity to contribute to this clause 1 debate. Thank you to the member to my right, Mr Mallard, who has just resumed his seat. His was a very useful summary of the issues. I join him in inviting the Minister of Revenue to explain to the Committee his use of these rules in reaching his extraordinary decision about puppy poisoning—but anyway.

The clause 1 debate provides an opportunity for us to sum up the arguments that have been deployed through the Committee’s consideration of the State Sector and Public Finance Reform Bill. I would like to take this opportunity to thank our colleagues, who really debated this bill with, I think, considerable depth over the last 24 hours. It is instructive to note that the Labour benches are relatively full and the Government’s benches are relatively empty on a bill that is supposedly a Government bill but that has actually, I think, benefited quite significantly from the efforts of the Labour team to redraft it.

I want to recognise the excellent input of officials, who have served the Finance and Expenditure Committee very well, and have facilitated significant—significant—amendments to the bill. I thank the Minister of State Services, Jonathan Coleman, and the Minister of Revenue for his work when he was formerly in his role as the chair of the Finance and Expenditure Committee, which undertook some significant changes.

I would just reiterate that when the bill was introduced, Labour opposed it. It is not very often that an Opposition will start out opposing a bill and then change its mind and end up supporting it. Quite often an Opposition will reserve its position during the first reading of a bill, let it go to a select committee, hear the submissions, and then form a final view. Occasionally, it will support a bill to go to a select committee, to allow the public to have its say, and then end up opposing it. But very rarely does it oppose and then support. That is what is happening today, and that is because some very significant amendments have been made that take the rough edges off the bill and allow it to better achieve the purposes, which we agree with.

I would like to quickly touch on some of those significant amendments, because they are also sources of ongoing concern. I do want to emphasise that our team, although we are supporting the bill, is going to be watching its implementation very carefully, to ensure that the issues that were the cause of heavy amendment in the select committee process actually work out the way that they are supposed to. The first of those was, of course, the redundancy provisions in the State Sector Act changes. Tough negotiations resulted in a better bill, with employees’ rights now better protected. The bill as introduced did present a considerable danger to redundancy provisions. The key words here are that in order for a State servant not to qualify for their full redundancy package on a situation of transfer or job change, they would have to be offered a package that was “no less favourable”. It is not “no less favourable overall” and not “sort of close to the current package”, but “no less favourable”. They should not be worse off than they were before the change. That is a core principle of our support, and we will be watching very closely to see how that is interpreted.

The second issue was the use of Government Workforce Policy Statements, originally orders. In the original draft of the bill those orders could well have been construed as conferring legal weight to a Government’s central direction to its various agencies and to chief executives to bind the hands of those chief executives in wage and salary negotiations, and terms and conditions negotiations. The select committee has turned that on its head. It has explicitly ruled out the use of Government Workforce Policy Statements—as they are now called—to do anything that would affect wages and terms and conditions, and it has explicitly written in a provision that will enshrine all of the existing bargaining rights that currently apply to State servants and Crown entity servants. We have taken the presumption that was in the draft and turned it on its head. The bill now specifically protects and enshrines those issues. But, like the Public Service Association and the Council of Trade Unions, we retain a degree of reservation about how that will be implemented in practice, and we will be watching very carefully.

There was also significant discussion and amendment at the select committee in respect of the ability of chief executives to delegate functions or powers. We join with the Government in wishing to see a more flexible, responsive, and networked public sector. Notwithstanding that, and while recognising the importance of being able to delegate functions and, occasionally, powers to hybrid agencies, subsidiary agencies, and possibly non-governmental entities, it is very important that that chain of delegation is rigorous, so that the accountability back to Parliament and to the taxpayer, to the citizen, is unbroken. For that reason the select committee supported amendments to the bill that tightened the conditions and placed restrictions on when and how such delegations could happen.

Labour supported the committee’s amendments to increase the accountability of the delegations, including an amendment that the delegation must be in writing—that sounds obvious enough, but it was not there at the start—and that the functions or powers delegated to a chief executive by a Minister or the State Services Commissioner may not be delegated further without their prior written approval. That is like a tenant not being able to sublet a flat without the prior approval of the landlord. The sub-delegation that we are seeking to make sure is rigorous is the powers of the Crown, which are legitimate only because they go through the electoral process—Parliament is accountable to the people. Parliament vests that authority in Ministers of the Crown, and Ministers, in turn, vest it in departments. The State Sector and Public Finance Reform Bill allows departments’ chief executives to vest some of those functions and powers in subsidiary entities or agencies. So we are just being very careful with that. It is a bit of an innovation, but we think it could work, provided the powers are rigorously mandated.

A fourth area of ongoing vigilance will be in the area of multi-category appropriations. We have had quite extensive debate on this through the Committee stage of the bill. I think there is general agreement in the Committee on the idea, although it is, to be fair, experimental, that we would allow multi-category appropriations—that is, Budget lines that are shared between different departments or entities. So it might be the Ministry of Fisheries, which is now a part of the Ministry for Primary Industries—it might be the Ministry for Primary Industries and the Ministry of Business, Innovation and Employment sharing with Callaghan Innovation a new research budget. We want those agencies to work together. We are allowing them to share a common pot of money, but several things follow. The first is it must, in all cases, be possible for the public, through Parliament, to see where the money came from and where it went. That includes being able to trace back from Budget 2014 to Budget 2013 and Budget 2012 so we can see the time line. The amendments require what we call strict traceability of funds, including how they got into and out of the multi-category appropriations, right down to the nitty-gritty, which in our language of the bill is called sub-output classes. What we are trying to enshrine here is that the accountability to Parliament through the Budget cycle is no less than it was, even though we are allowing for a new hybrid funding instrument called a multi-category appropriation.

There have been a number of Supplementary Order Papers brought to the Committee, and we have received explicit assurances from officials and the Government that there are no new policy issues embedded, for example, in Supplementary Order Paper 262, which is a multi-page Supplementary Order Paper. It is quite a large one. We are advised that it is purely consequential, partly because of date changes, and technical in nature. We are, of course, willing to take our highly qualified advisers at their word, but we are acting in reliance on that advice in conferring our support for the bill, and we will be aware of the possibility that there could be subsequent issues that arise in respect of those Supplementary Order Papers. We will give them the benefit of the doubt.

We would note, also, that the Green Party has brought Supplementary Order Paper 265 to the Committee in support of further enshrinement of State sector employees’ rights. We supported that Supplementary Order Paper, even though it was not passed by the Committee. The Government voted it down and we think that was a shame, although the Green Party might have brought that amendment to the Finance and Expenditure Committee for earlier consideration. We might have been able to swing it as part of the earlier negotiations, but we recognise the Green Party’s good intent in bringing it to the Committee at this stage.

Clause 1 agreed to.

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to clause 2 be agreed to.

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

Ayes 94

New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independent: Dunne.

Noes 23

Green Party 13; New Zealand First 7; Māori Party 2; Mana 1.

Amendments agreed to.

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

Ayes 95

New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independents: Dunne, Horan.

Noes 23

Green Party 13; New Zealand First 7; Māori Party 2; Mana 1.

Clause 2 as amended agreed to.

The Committee divided the bill into the State Sector Amendment Bill, the Public Finance Amendment Bill (No 2), and the Crown Entities Amendment Bill, pursuant to Supplementary Order Paper 261.

Bill to be reported with amendment presently.

Bills

Plumbers, Gasfitters, and Drainlayers Amendment Bill

In Committee

Part 1 Extension of purposes for which Board may impose levy

RAYMOND HUO (Labour): Tēnā koe, Mr Chair, and good afternoon to all parliamentary colleagues. I am enjoying this urgency session, as I always do, and I am not quite sure whether—

Hon Trevor Mallard: It is still the 2nd—it still says “Tuesday” on the wall.

RAYMOND HUO: Of course, it is Tuesday. Of course, it is Tuesday, because it is an urgency session. I am not quite sure whether we will carry on into Friday or Saturday, but, if we do, it will be more exciting. Just imagine—a group of parliamentarians engaged in a kind of a fierce debate, but a quality and a fair debate, on the Plumbers, Gasfitters, and Drainlayers Amendment Bill on a Saturday for the purpose of protecting the public safety and all other good things associated with this particular bill.

To the surprise of the Minister for Building and Construction, the Hon Maurice Williamson, I did read his second reading speech. I was not in the House when the bill received its second reading, because I was overseas as part of the Prime Minister’s business delegation. Three or four people from the sector—probably three, because one of the emails was sent twice—believed or decided that I should read the Minister’s speech, so they sent the speech notes to me by email, and I did read it. Juggling between functions, events, and meetings, I did read the Minister’s speech, and I enjoyed it. There is merit in his speech, and on that basis I should acknowledge that the issues or problems around the Plumbers, Gasfitters and Drainlayers Board and the entire sector are historical. So the issues or problems are not necessarily associated with one particular board or one particular Minister, and I believe that is a fair comment. Fairness, or a lack of fairness, is one of the reasons why this sector or a significant number of tradespeople from the sector have taken the case so far, and why many of the tradespeople in the sector have chosen to oppose the bill.

I should congratulate the Campbell Live team on its television report “The politics of plumbing”, which picked up some interesting points that I had not picked up. The confession from me is that I did not pick up the show and I did not watch it until yesterday afternoon—until a group of people, again from the sector, decided that I should watch the show. This was because my mind was directed to some other issues and some other bills, so I had not followed the developments of this particular bill that closely.

The show addressed some interesting but important issues. First of all, who are the cowboys? One of the purposes of this bill is to ensure that the Plumbers, Gasfitters and Drainlayers Board is properly funded to carry out its statutory duty in order to protect public safety and health. In order to carry out its statutory duty, including the board’s prosecution function, it must be funded in some way. Nobody would argue against that. Nobody would disagree with that. But who are the cowboys? Yes, there are a number of untrained, unregistered, and unlicensed tradespeople in the sector, but if we look a little bit deeper into this particular issue concerning this particular bill, the matter is not that clear-cut regarding the so-called cowboys.

In no way would I defend cowboys if they are genuine cowboys, but, as presented in the television show, among the tradespeople in the sector a number of good, competent, and skilled tradespeople, like Mr Allan Day, who have chosen to boycott what they call unlawful levies and fees in whatever form—or, to borrow the Ombudsman’s words, it is a new form of tax. They have chosen to boycott it because what the board has been doing was against the law. This bill is intended to validate the board’s unlawful action—

Hon Ruth Dyson: Retrospectively.

RAYMOND HUO: —exactly, as the Hon Ruth Dyson says—and to make, retrospectively, what was unlawful lawful. If “retrospective”, “ultra vires”, or “validation” are too much like legal jargon, simply watch the Campbell Live show, “The politics of plumbing”.

Where there is a breach of law by the tradespeople, there is a prosecution from the board and by the board, and the entire sector is being asked to fund the prosecution. But where there is a breach of law by the board, we have now a Minister for Building and Construction trying to ram through this legislation in an urgency session to validate retrospectively what was unlawful and make it lawful. That is exactly why we have been asked to be here today to debate a bill that is being rushed through in an urgency session.

Secondly, the information made available to the Government Administration Committee was shocking. In 2001 the cost to relicense for two trades—I am not quite sure which two trades; they could be gasfitting, drainlaying, or plumbing—was around $50, and $75 for three licences. But today a 5-year licence, configured around the board’s regime, costs $10,000.

Andrew Little: What?

RAYMOND HUO: It is $10,000, according to the information made available to the select committee. Many of the tradespeople who are employed or self-employed have no choice—

Andrew Little: No wonder we’re running out of tradespeople.

RAYMOND HUO: —exactly, as Mr Little says—but to pass on the cost to consumers. Many cannot afford it, and some have chosen to boycott. Therefore, they become unregistered and unlicensed and therefore they are nicknamed cowboys. The same 5-year licence in Australia costs only $330. It is no wonder that we are losing quality tradespeople to Australia and our housing prices are getting higher and higher. I welcome and urge the Minister to rebut the claim. But what is more scary, and what should cause more concern, is that if we let the sector carry on under the leadership of the Minister and the leadership of the board, sooner or later to get a plumber, gasfitter, or drainlayer to your doorstep will be as expensive as it is to instruct a lawyer.

I feel so sorry for the Minister for Building and Construction, the Hon Maurice Williamson, who is one of the most experienced and longest-serving MPs in New Zealand. But watching him on Campbell Live, where we saw a picture of him framed by a toilet seat too, I felt saddened. I felt saddened when I watched the television show yesterday, and I still feel saddened. Although politics is not designed for the faint-hearted or the thin-skinned, this is not a good look for his National-led Government, supported by ACT and Mr Peter Dunne. This reflects, to a large extent, the level of frustration of the sector. Again, I feel saddened because it is not a good look for the Minister, it is not a good look for the Government, and it is not a good look for all politicians. Again, this reflects to a large extent the level of frustration of the sector, and this is one of the many reasons why Labour finds it hard to support this bill.

In my subsequent contributions I would like to touch upon some details in this bill. Thank you.

HOLLY WALKER (Green): Well, Mr Chair, this is your favourite bill, no doubt, and mine, and it is one of the most interesting and unusual bills I have had to deal with in my short time in this House. The Green Party opposes the Plumbers, Gasfitters, and Drainlayers Amendment Bill, and we will continue to do so in this Committee stage, for a number of reasons. Probably, actually, chief amongst those is the incredibly poor process that has been followed with regard to this bill.

I thought I would begin my contribution by outlining briefly just what that process has been. The bill was introduced in March, as we know, with an incredibly short select committee consideration period of initially just 1 week. It was later extended to 2 weeks, but it was still an incredibly short period of time. That was due to the apparently urgent need to pass this legislation—

Hon Ruth Dyson: Sorry, when was that?

HOLLY WALKER: Before 1 April, apparently. Very urgent—before 1 April, we needed to pass this legislation. I know that the dates on the walls here are slightly behind today, but they still say 2 July, and 1 April was quite a long time ago. Here we are in the House with the bill at only its Committee stage, yet the Government Administration Committee has done quite heroic efforts, I think, to consider this bill in an incredibly short period of time due to its apparent urgency.

Due to that constrained period of time, many submitters were unable to be heard. Many had to have their submissions recorded as correspondence, rather than as submissions, because they were received after the closing date. They had very little notification of the time available in which to make those submissions. Given that we know that what, in part, has given rise to the need for this bill is a large amount of dissatisfaction in the plumbing, gasfitting, and drainlaying sector, the incredibly short time that was applied to the select committee process and the fact that many individual stakeholders who felt that they had a very strong interest in this were not able to make submissions and had very little notice of the bill coming up in the House will have only added to that high level of dissatisfaction in the sector.

As we have said, to add insult to that injury, despite the rush and the select committee reporting back in time, that deadline of 1 April came and went with no change, and the bill has been languishing for months since its second reading. It is now July and we are finally having the Committee stage. Despite the fact that we are sitting under urgency, clearly no urgency has actually been accorded to this bill in terms of the priority given to it by the Government after that initial panic of its introduction and short process. Clearly, it could have had months longer at the select committee, it could have had a proper period of scrutiny, it could have had a proper period of submissions, and we could be back here right now in a much different position.

I want to acknowledge at this point the pressure that such shortened select committee periods place not only on submitters and members of the public but on the select committee staff, on the Parliamentary Counsel Office drafters, and on the officials who advise the committee. It is not actually really the members of the committee who suffer the most—although we often go to considerable efforts to make sure we have read all of the submissions in a short period of time—but the staff and the advisers, who quietly get on with it and bust a gut behind the scenes to meet these urgent deadlines. In this case, it appears that it was all completely unnecessary, because here we are, months later, with absolutely no priority having been given to the bill since then. So those are the procedural reasons for our opposition to this bill.

In terms of the substantive reasons for our opposition, they are very clear. It comes down, really, to the point that retrospective legislation should be extremely rare in this House and that when it occurs, it should be subject to a very high bar. It is not clear at all in this case that that bar has been met.

As we know, this bill retrospectively validates fees and levies that have been collected in what turns out to have been an unlawful manner since 2006 by the Plumbers, Gasfitters and Drainlayers Board. This unlawful practice has been the subject of complaints to every available adjudicator. The matter has been to the Regulations Review Committee, it has been to the Ombudsman, it has been to the Auditor-General, and it has been back to the Regulations Review Committee, and in every case those complaints were upheld. They were rightful complaints, they had a right to take them, and the adjudicators in every case upheld those complaints. So there is a real issue of natural justice when, after someone’s complaint has been upheld by every channel available, Parliament simply legislates to make it go away. It said: “Ah, there is a problem there. Congratulations on taking this complaint. Thank you for bringing it to our attention. We are now going to retrospectively validate this unlawful conduct so that your complaint will go away.” That is not acceptable. It is unfair, and it should not be happening in this case.

Even if the Plumbers, Gasfitters and Drainlayers Board believed—and I believe the board to be frank and honest when it says it believed it was acting lawfully. But believing one is acting lawfully is not the same as acting lawfully. Much in the same way as we are seeing at the moment with the Government Communications Security Bureau, believing one is acting lawfully does not make it so. It is offensive to the rule of law for Parliament to come in and say, effectively: “Well, we have to make the law catch up with the practice.” It should not be done lightly, and we think it is being done lightly in this case.

We do agree—and this is where we do agree with parts of the bill—that there is a need for legislation to validate the collection of the offences fee by the Plumbers, Gasfitters and Drainlayers Board in the future, because we agree that the board should be able to prosecute non-licensed practitioners when complaints about them are received. Indeed, we think it is in the interests of the whole industry to ensure that that can happen—to ensure that the so-called cowboys are regulated. It has negative consequences for all plumbers and gasfitters when those unregistered, unlicensed practitioners bring their industry into disrepute, and it is a logical, natural thing that the board should be able to prosecute those complaints. So we could absolutely support legislation of this nature if it applied only to how the board collects levies and how it prosecutes complaints in the future. But we cannot support its retrospective application.

The reason we have been given as to why it is so important to apply this law retrospectively is that if the board was required to pay back the unlawfully collected levies and fees, it might be left bankrupt. We can agree that it is not a desirable outcome, obviously, for that to happen. But our question is why should the Government not provide the board with some financial support to ensure that this does not happen? After all, it was poorly drafted legislation in 2006 that led to this problem in the first place. It created the situation where the board thought it was acting lawfully, but it turned out that it was not. Surely, there is some responsibility on the part of the Government, of the Crown, to help put that right, including making a financial contribution to ensure that if the board was required to pay back those fees and levies, there would be some financial support from the Government to enable it to do that without falling over financially.

The best estimate we were able to obtain at the select committee was that in order to do that, we might be talking in the vicinity of $1 million. I know that $1 million is a lot of money, but in the scheme of the Government coffers, it is hardly going to break the bank. It seems like a perfectly reasonable thing to do in this situation, given it was a Government error in the first place, that the Crown should help with some of the financial liability if, indeed, those fees and levies need to be paid back.

Those are the substantive reasons why the Green Party continues to oppose this bill. We have both procedural and substantive reasons for doing so.

The Committee is in quite an interesting position, because it has a select committee report where the select committee said that it was “unable to agree” on whether the bill should pass. That, I think, is indicative of what a mess this whole process around this bill has been.

There was one substantive amendment that the committee could agree on. That was an amendment to clause 5, to insert new subsection 171B(2) to make it clear that although the board could continue to collect the offences fee in future, it could not change the fee, and that in order to change the fee, it would need to replace the fee with an appropriate disciplinary and prosecution levy imposed under section 143. This change, I think, speaks to the need to get the process right for the future collection of fees and levies, and that is why the Green Party can support that one technical amendment to the bill.

But we cannot support the bill as a whole, because of its retrospective nature. We will continue to oppose it in this Committee stage and in the third reading because of both the process and the substance of this rather interesting bill. Tēnā koe.

Hon RUTH DYSON (Labour—Port Hills): I am really pleased to be able to contribute in the Committee stage of the Plumbers, Gasfitters, and Drainlayers Amendment Bill. Can I begin by commending the members of the Government Administration Committee, two of whom have already spoken, and I certainly hope that the National members of the select committee are able to contribute later in this debate, as well. We worked really hard on this bill because we all agreed there was a problem. We heard from the Minister for Building and Construction when the bill was referred to us that this was a matter of some urgency. When the Hon Maurice Williamson introduced the bill on 14 March, he actually said that the bill would be reported back to the House by 22 March, just 1 week later. He expected the select committee to call for submissions, to ask for and receive advice, to consider the submissions, to then get the officials’ comments on the submissions, and to deliberate at one meeting. We agreed to try to do that, even though we thought it was pretty impossible to ask for advice and receive it on the same day, and call for submissions and receive them within a week, let alone deliberate carefully on what was clearly a very contentious issue.

We then asked the Minister for another week, which made it 2 weeks in total, and we reported the bill back to the House. We were unable to reach agreement. Holly Walker has very eloquently outlined our deliberation, including the amendment that we made to Part 2. We got it back to the House in good faith, believing that the matter was urgent and that it had to be all done and dusted by 1 April. I resent standing here on 4 July in the real world—2 July in Parliament’s terms—debating a bill that we had given such a high priority to at the select committee because the Minister said it was a matter of critical importance to have it back, done and dusted, in this House before 1 April. So here we are under urgency, 3 months after the self-imposed deadline, debating this matter.

Debate interrupted.

Sitting suspended from 1 p.m. to 2 p.m.

Motions

United Nations Security Council—New Zealand’s Candidature

H V ROSS ROBERTSON (Labour—Manukau East): I seek leave for a non-debatable notice of motion No. 14 in my name supporting New Zealand’s bid for a non-permanent seat on the UN Security Council.

Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There appears to be none.

H V ROSS ROBERTSON: I move, That this House support New Zealand’s candidature for a non-permanent seat on the United Nations Security Council for the 2015-2016 term and note the important contribution made by New Zealand in its last term on the Council in 1993-1994; and express the determination that New Zealand will again be a distinctive, independent, principled voice on the Council, and will bring to that Council the qualities for which it is known at the United Nations, namely those of a small, diverse country which listens to others and is a fair-minded and reliable partner in world affairs.

Motion agreed to.

Points of Order

Business Statement—Delivery During Urgency

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I just wonder whether, notwithstanding the fact that we are in urgency, the Leader of the House might like to share with the House his plans for next week, which is the normal practice.

Questions for Oral Answer

Questions to Ministers

State-owned Energy Companies, Sales—Benefits and Use of Proceeds

1. DAVID BENNETT (National—Hamilton East) to the Minister of Finance: What are the advantages of using proceeds from selling minority shareholdings in energy companies to buy new public assets, instead of borrowing that money from overseas lenders?

Hon BILL ENGLISH (Minister of Finance): Very significant advantages. In the case of the share sales programme, the Government is swapping one asset—that is, a minority stake in an energy company, which it can only hold and collect dividends—for another asset, which is cash, which it can use for all sorts of purposes. Over the entire programme we expect to free up between $5 billion and $7 billion of cash as a replacement for the asset that we are selling. This will be invested in schools, hospitals, irrigation schemes, the rebuild of Christchurch, and other infrastructure projects. The alternative is to borrow the money from overseas bankers rather than get it from New Zealand savers.

David Bennett: How are proceeds from the share sales programme being allocated to reinvest in other priority public assets?

Mr SPEAKER: Order! The level of interjection coming from this side of the House is excessive. Could it please be toned down.

Hon BILL ENGLISH: The Government has set up the Future Investment Fund. The money going into that fund comes mainly from New Zealand savers who have had the opportunity, and chosen, to invest in large New Zealand companies. The Opposition despises them for this, but we think it is good for the country. The Future Investment Fund will show transparently where that money is going, and it is going to other public assets.

David Bennett: What investments in new public assets has the Government so far confirmed will be made from the Future Investment Fund using proceeds from the share offer programme?

Hon BILL ENGLISH: As the Opposition has pointed out, it is amazing just how many new public assets you can procure. Last year’s Budget allocated $33.8 million for modernising schools, $250 million towards a KiwiRail Turnaround Plan, $88 million for health sector capital, and $76 million for the new Advanced Technology Institute. This year’s Budget allocated $426 million for the Christchurch and Burwood hospitals, $50 million to speed up the School Network Upgrade Project, $94 million for the 4th year of the KiwiRail Turnaround Plan, $80 million for irrigation projects, $700 million in contingencies for projects such as new schools in Christchurch, Christchurch’s justice and emergency services precinct, and supporting Canterbury’s tertiary institutions to recover from the earthquake. The Government also agreed that over the life of the fund $1 billion will be allocated to other health capital projects.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Unusually, I am seeking leave for an extension of time so the Minister can outline the other hundred projects the money is going on, as well.

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

Hon Clayton Cosgrove: Does he stand by his statement yesterday that the forecast $5 billion to $7 billion raised from asset sales will pay for “almost all of those promises”, including Kiwibank, irrigation schemes, schools and hospitals, the rebuilding of Christchurch, KiwiRail, paying down Government debt, and building the City Rail Link, which totals up to a grand total of $84 billion; if so, does he agree that asset sales cash is the National Government’s version of printing money?

Hon BILL ENGLISH: No, I disagree with that, and it just shows how little respect the Labour Party has for New Zealand’s savers. We did not print the money; they saved it from their hard-earned weekly wages and decided to invest in it. If the Labour Party cannot tell the difference between that and the Greens’ mad scheme to print money, it will never be the Government.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. It is a simple point of order. Given the noise, I just want it confirmed: is the Minister disagreeing with the statement he made yesterday?

Mr SPEAKER: Order! If the member listened, he would have heard that the Minister said he disagreed with that, right at the start.

Hon Annette King: Well, you couldn’t hear.

Mr SPEAKER: Well, I could hear it, on this occasion.

David Bennett: How does New Zealand’s approach to investing in new public assets while limiting extra debt compare with approaches in other countries?

Hon BILL ENGLISH: Although some regard this idea as extreme, in fact it is very common around the world. The following OECD countries have Governments that partially own companies that are floated on the stock exchange: Austria, Belgium, Chile, the Czech Republic, Finland, France, Greece, Japan, Korea, Norway, Poland, Slovenia, Switzerland, and the United Kingdom. Unfortunately, the Labour Party models itself on Albania, which does not have any of these sorts of companies.

Dotcom Case—Prime Minister’s Statements

2. GRANT ROBERTSON (Deputy Leader—Labour) to the Prime Minister: Does he stand by all his statements on the GCSB and Kim Dotcom?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes.

Grant Robertson: Does he stand by his many statements that 19 January 2012 was the first time he had heard the name Kim Dotcom?

Hon BILL ENGLISH: The Prime Minister does stand by his statements.

Grant Robertson: I raise a point of order, Mr Speaker. That was a specific question about a statement.

Mr SPEAKER: And it was answered—the Prime Minister does stand by it.

Grant Robertson: By that answer, does he mean that it was simply the name Kim Dotcom that he had not heard but that he was aware of a person in New Zealand whom the FBI and other American authorities had an interest in pursuing over copyright-related issues?

Hon BILL ENGLISH: I can only repeat that the Prime Minister stands by his statement. If the member wants to know what was in the Prime Minister’s mind, he would need to ask the Prime Minister directly.

Grant Robertson: Does he stand by his statement on 24 January 2012, in relation to the Coatesville Mansion in the Helensville electorate: “I was aware that there was a German resident living in the house.”?

Hon BILL ENGLISH: The Prime Minister stands by his statements.

Grant Robertson: Is he telling the House that having become aware that “a German resident” was living in the largest property in the Helensville electorate, he was not told or did not seek out the name of said German resident?

Hon BILL ENGLISH: Unlike the deputy leader of the Labour Party, the Prime Minister focuses on the big issues. [Interruption]

Mr SPEAKER: Order!

Grant Robertson: Can he confirm that none of the list of people that Campbell Live drew up who knew about Kim Dotcom before 19 January 2012 ever mentioned Mr Dotcom to him as Prime Minister, with that list including John Banks, Maurice Williamson, Jonathan Coleman, Simon Power, his deputy chief of staff, his electorate office staff, the Solicitor-General, the police, the Immigration Service, the 80 contractors who worked on Mr Dotcom’s property in his electorate, and the hundreds of thousands of Aucklanders who witnessed the fireworks display paid for by Mr Dotcom? Can he confirm that none of those people mentioned him to the Prime Minister?

Hon BILL ENGLISH: The Prime Minister stands by his statements, and I would repeat what I said before. Unlike John Campbell or the deputy leader of the Labour Party, the Prime Minister focuses on the big issues.

Grant Robertson: In light of that answer, does the Prime Minister agree with John Armstrong that if Mr Dotcom’s allegations stand up, his resignation will be in order?

Hon BILL ENGLISH: Certainly not.

Grant Robertson: Does he believe that if a Prime Minister does not tell New Zealanders the truth about a matter of public interest, then the Prime Minister should resign?

Hon BILL ENGLISH: Certainly that is the reputation of the current Prime Minister. I would be hesitant for the Labour Party to apply standards that it may not have applied to the Prime Minister who led its party recently.

Rt Hon Winston Peters: Does the Prime Minister still stand by his statements—numerous statements—that none of his ministerial colleagues talked to him about Kim Dotcom before the raid?

Hon BILL ENGLISH: The Prime Minister stands by his statements.

Benefits—Outstanding Arrest Warrants

3. MARK MITCHELL (National—Rodney) to the Minister of Police: What announcements has she made to hold people with outstanding arrest warrants to account?

Hon ANNE TOLLEY (Minister of Police): Yesterday the Minister for Social Development and I announced that beneficiaries with outstanding arrest warrants will have their benefits stopped if they fail to clear their warrant within 38 days. At any one time there are about 15,000 people with outstanding warrants, and 8,000 of those are on a benefit. This Government believes that it is totally unacceptable for the taxpayer to continue to fund the activities of those avoiding the law, and we are putting a stop to it. This initiative delivers a very clear message that people need to be responsible for their actions and comply with the law. As the police say, no show, no dough.

Mark Mitchell: What benefits will this initiative deliver to the police?

Hon ANNE TOLLEY: These changes will free up significant police time and resources. The risk of having their benefit cut provides a strong incentive for an individual to turn up to court when required, resulting in fewer arrest warrants being issued by the courts. However, if an individual fails to turn up, there is a high chance that they will contact the Ministry of Social Development or the police when their benefit is stopped, leading to quicker apprehensions. This means that police do not have to spend as much time running around looking for people who have failed to appear in court, and they can spend more time out preventing and fighting crime.

Ship Grounding, Rena—Removal of Wreck

4. BRENDAN HORAN (Independent) to the Minister of Transport: Is he aware of reports that the owners of the Rena may prepare an application for resource consent to leave the remaining part of the wreck of the Rena on the Astrolabe Reef, and if an application is lodged will the Crown oppose such an application?

Hon GERRY BROWNLEE (Minister of Transport): Yes, and if an application is made the Crown will look at the application before judging its merits. I made all of those positions clear in a press statement on 2 October 2012.

Brendan Horan: On what occasions did the Minister or his officials consult with local iwi and/or the Department of Conservation regarding a confidential agreement between the Crown, Maritime New Zealand, and the owners of the Rena to consider supporting the owner’s pending application to leave the rusting wreck of the Rena on the Astrolabe Reef?

Hon GERRY BROWNLEE: I am unaware of the circumstances that the member is referring to. What I do know is that the Crown maintains that the owners are legally required to remove the wreck, and they, of course—just as anybody is entitled to seek compensation from them for damage they might have incurred—are free to seek resource consent to leave the wreck there.

Brendan Horan: I seek leave to table paragraphs 13.4 and 13.5 from the Crown response regarding Wai 2391 and 2393 disclosing the sordid agreement to leave the wreck of the Rena on the Astrolabe Reef.

Mr SPEAKER: Leave is sought to table that. Is there any objection? There appears to be none. It can be tabled.

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

Brendan Horan: How long has it been National Government policy that if one pays $10.4 million for a public interest fund—the cost of 10 houses in Parnell or St Heliers—one can pollute New Zealand seas and foreshore for years, thereby saving polluters, potentially, hundreds of millions of dollars?

Hon GERRY BROWNLEE: That is not Government policy. In fact, the New Zealand Government, like many other Governments, is a signatory to international limitation arrangements around shipping. We are heavily reliant on shipping as an exporting nation. The member should really read all of the report so that he can ask questions that show he does actually know a little bit about what he is talking of.

Rt Hon Winston Peters: Is he saying in principle that no entity, be it a company or an individual, should be allowed to abuse and misuse assets that do not belong to them and escape the consequences of such actions?

Hon GERRY BROWNLEE: What I am saying is that I think the owners of the Rena, given their obligations under New Zealand law, have acted most responsibly.

Te Ururoa Flavell: Āe rānei kua rongo ia i te kōrero a Buddy Mikaere mō te tū o te iwi i tērā takiwā, te tikanga ia me nuku te Karauna i ngā waihotanga mai o tērā o ngā kaipuke; mēnā āe, he aha ngā kōrero i waenganui i te Kāwanatanga me te iwi mō te take e kore ai ia e pīrangi ki te tuku, ki te whakawātea i tērā wāhi o ngā parapara ka tukuna mai ai, ka ngahoro mai ki tērā o ngā kāinga?

[Has he indeed heard Buddy Mikaere’s statement about the stance taken by the tribe of that area, where essentially they are demanding that the Crown remove the remaining refuse of that wreck; if so, what negotiations have taken place between the Government and the tribe as to the reason why he will not allow the area to be cleared of the refuse that continues to slip away from the remaining part of that wreck upon the home area?]

Hon GERRY BROWNLEE: Can I say at the outset that, notwithstanding the view that Mr Mikaere has expressed, the relationship between the company and the iwi is one where there has been, mutually, a degree of trying to keep communications constructive. However, the Crown maintains that the owner does remain legally required to remove the wreck as a consequence of the notice that was issued under the Maritime Transport Act. No arrangements that we have made with the owner or anyone else have compromised the ability of the iwi or anyone else to seek compensation for damage that they can legally prove to have occurred to them as a result of the wreck. There is, of course, also no restriction on the owners of the wreck seeking a resource consent through proper channels to leave the wreck in place.

Te Ururoa Flavell: He moni kua tukuna ki ngā iwi nei, kua pātai rānei ngā iwi mō ētahi moni hai āwhina i ā rātou, hei whaiwhai haere i wā rātou mahi nui nei ki te whakapaipai ake i te takutai moana, pēnei i ngā iwi e noho mai rā ki runga o Mōtītī; mēnā āe, he aha tā te Kāwanatanga whakautu i taua pātai mō te moni utu nama?

[Have these tribes been allocated any funding or have they requested any that will assist them to follow up key tasks they have identified that will clean up the foreshore, like the ones living over there on Mōtītī; if so, what is the Government’s response to that question about funding to pay expenses?]

Hon GERRY BROWNLEE: The owner has established a limitation fund through the High Court of some $11 million. This is available to meet claims for all private entities affected by the Rena wreck, provided they are able to prove that the damage they suffered or the costs they incurred related to the wreck.

KiwiSaver—Disclosure Rules

5. Dr JIAN YANG (National) to the Minister of Commerce: What progress is the Government making on its commitment to introduce new KiwiSaver periodic disclosure rules?

Hon CRAIG FOSS (Minister of Commerce): New disclosure rules that will give New Zealanders better information to compare KiwiSaver funds came into effect on 1 July. The KiwiSaver disclosure regulations will benefit savers by requiring KiwiSaver schemes to regularly report on fund performance, fees, asset allocation, and other matters in a simple and standardised form. These changes allow KiwiSaver members to directly and easily compare funds to make an informed investment choice. The new KiwiSaver disclosure rules are part of the Government’s Business Growth Agenda to promote confidence of investors and businesses in the regulatory settings that support New Zealand’s capital markets.

Dr Jian Yang: What other requirements are there in the new disclosure rules?

Hon CRAIG FOSS: Under the regulations, KiwiSaver providers will have to publish quarterly and annual disclosure statements online. KiwiSaver providers will also need to publish the information in a consistent data set that can be easily assessed and viewed on websites such as the Sorted website. The first disclosure statements are due to be published in mid-October 2013.

Mining Industry—Development and Employment

6. CATHERINE DELAHUNTY (Green) to the Minister of Energy and Resources: Does the Government still think that increased mining should be a priority for creating jobs, given the recent spate of mine closures and layoffs, including the announcement this week that the Reefton Oceania Mine will be mothballed?

Hon SIMON BRIDGES (Minister of Energy and Resources): Yes. We have seen clear evidence in New Zealand over the last year that companies have been able to raise money and that the local mining industry is expanding. To give the member a sense of that, in 2012 total exploration expenditure was estimated at a record high for New Zealand of $50 million, showing continuing confidence to invest in mining in New Zealand. It is probably right to say that, internationally, mining, like so many other sectors, is in a contractionary phase, but New Zealand is bucking that trend, and the Government does not want to be a slave to cycles. We think long term, Ms Delahunty.

Catherine Delahunty: So is the Government still pinning its economic hopes on the mining boom, despite plunging prices for coal and gold, and despite the hundreds of job losses in recent months?

Hon SIMON BRIDGES: Well, no. What is true is we have been raising the profile of the sector, but it is only a part—some would say a small part—of the much wider Business Growth Agenda and the jobs agenda, which include intensive farming, aquaculture, and the like. But I would make it very clear to the member, who in her questions implies a dislike of coal, that it is opportunities like what Bathurst Resources is wanting to do in the South Island that actually lead to the steel that makes the wind turbines that she pins her hopes on.

Catherine Delahunty: Given that the gold price has plunged 25 percent this year, has he read reports by mining experts that warn that the gold price could collapse further and that now is not the time to invest in goldmining, and why is he gambling the country’s economic future by betting that these experts have it wrong?

Hon SIMON BRIDGES: Yes, I have read many reports on these things, but we do not take a boom-and-bust approach to things, Ms Delahunty. Actually, as I said in my primary answer, we take a long-term view. If the member wants to bet against the fact that people will be wanting, consuming, and using gold for many, many, many years to come, I would say she is foolhardy.

Catherine Delahunty: Does he agree with Buller mayor Pat McManus, who said in response to the Reefton cutbacks that the district has to diversify its economy, and does that not mean it should not be reliant on his boom-and-bust gold industry?

Hon SIMON BRIDGES: Well, I would like to see the comments in their proper context, but the fact of the matter is that goldmining at Reefton has been contributing $45 million each year to that community for some time. Actually, as we have seen in recent regional GDP figures, the West Coast is one of the strongest performers. Yes, that is on the back of agriculture, but it is certainly also on the back of mining. We have been doing it well for a very long time, and I think it is right that this Government seeks to lift that profile.

Catherine Delahunty: Given the fact that companies like OceanaGold have started mothballing their mining projects, and that towns like Waihī, after 25 years of goldmining, are still struggling economically, is he prepared to revise his strategy and support more sustainable economic development?

Hon SIMON BRIDGES: Well, the member is simply wrong. The fact of the matter is that if one looks at OceanaGold, although it is right to say it is putting on hold the Reefton mine, it has also got other opportunities in New Zealand that it is continuing with. This Government does not back any particular business. We actually take, as I have said, a long-term view, and although one business may not be doing so well, there are a number of others that are increasingly doing more and that are raising capital, like Chatham Rock Phosphate, like Trans-Tasman Resources, and like many others I could list. But I come back to it. If she talks about sustainable growth, I would say to the member there will be a place for mining. Take, for example, that coal that she loves to hate so much. It is necessary in all the renewable projects that she likes to think of.

Catherine Delahunty: Is it really worth destroying unique landscapes like the Denniston Plateau for the sake of an industry that employs few New Zealanders, is laying off workers, and sends most of its profits offshore?

Hon SIMON BRIDGES: Well, the bankruptcy of that member’s position is that she wants to just get coal that is done much dirtier from other parts of the world and bring it back here in the form of the steel and so on that we need in this country in a modern economy. But the fact of the matter is that my colleague the Hon Dr Nick Smith has been working very hard and sensitively on the kind of issue she raises. And the premise in her—

Hon Members: Sensitive?

Hon SIMON BRIDGES: Well, he is a sensitive, new-age guy. But the premise of her question is just plain wrong.

Catherine Delahunty: Equally sensitively, rather than betting all its chips on the environmentally destructive bust-and-boom mining industry, which creates few jobs, will National instead take on more green policy and invest in information and communications technology, green manufacturing, and ecotourism, which already employ more people than mining does?

Hon SIMON BRIDGES: Well, kia ora, Ms Delahunty. The fact of the matter is that actually we have been investing more in the areas she talks about, in information and communications technology and in tourism. Maybe she should go back and read the Budget.

Catherine Delahunty: I seek leave to table a metals report from Ernst and Young, which states the 10 major reasons why you should not invest in—

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

Homelessness—Definition and Statistics

7. JACINDA ARDERN (Labour) to the Minister of Housing: How many people, if any, are currently homeless in New Zealand?

Hon Dr NICK SMITH (Minister of Housing): There is no precise current measure of homelessness, although the Housing New Zealand waiting list is a measure. The total number in the A and B categories is currently 3,811, which is actually 551 fewer than when the Government took office. I am advised that 20 percent of the people in category A could be classed as homeless—or about 250. Housing New Zealand housed 200 people in June, or about 40 high-need families per day.

Jacinda Ardern: Why is the definition of homelessness used by Statistics New Zealand different from that used by Housing New Zealand, which does not, for instance, consider someone living in a night shelter to be homeless?

Hon Dr NICK SMITH: No change has been made. Inevitably there is some degree of arbitrariness. In terms of Housing New Zealand’s definition, if a person is living in a car, we could treat them as being homeless. If a person is living in a tent or something that is quite clearly not a physical, safe roof over their head, they are certainly considered as homeless. I would also remind the member that this Government is spending over $2 billion on the accommodation supplement and on the income-related rent to support people with housing challenges—

Hon Tony Ryall: How much?

Hon Dr NICK SMITH: —over $2 billion—as well as $2.9 billion of capital over the next 3 years with Housing New Zealand, which is the biggest investment ever in the corporation.

Jacinda Ardern: Will he ensure that his department includes in its definition of homelessness someone who uses a night shelter, which includes up to 850 people a night, or, for instance, someone who is forced to couch surf because of a lack of shelter?

Hon Dr NICK SMITH: We could get into some esoteric arguments—

Grant Robertson: It’s not esoteric if—

Hon Dr NICK SMITH: Well, but—[Interruption]

Mr SPEAKER: Order! Order!

Hon Dr NICK SMITH: Housing New Zealand provides funding for a number of organisations to provide—

Hon Clayton Cosgrove: Answer the question.

Hon Dr NICK SMITH: Well, for the member, Mr Cosgrove, actually there is less homelessness now than when you were a Minister, mate.

Mr SPEAKER: Order! [Interruption] It would be helpful—[Interruption] Order! It would be helpful if the Labour front bench ceased from interjecting while the Minister attempts to answer the question.

Hon Dr NICK SMITH: There is not—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. In fact there are two points of order. One is that there used to be a rule in the House that when you got to your feet, the person who otherwise had the call sat down. That did not occur. The reason I thought you were getting to your feet was that the Minister indicated that things had changed since you were in Government. They may have, but only a little.

Mr SPEAKER: With regard to the first point of order, because I was looking at the Labour front bench, I did not actually notice, but I accept that the Minister may not have sat down, which is not helpful. The reference to the Speaker occurs on occasions, and it is well-known to all members of the House to not bring the Speaker into the debate. But I am trying to attempt to get an answer for Jacinda Ardern, who has asked a reasonable question. But it is very difficult for the Minister to answer when he is continually responding to interjections that are coming from the Labour front benches, which are interrupting the answer the Minister is giving. Would the Minister now please answer the question.

Hon Dr NICK SMITH: A common-sense definition that I take of homelessness is a person who does not have a roof over their head. We can put a whole lot of energy into arguing the definition, or we can do what this Government is doing and get on and build the homes that New Zealanders need.

Jacinda Ardern: Is he concerned that his department, or indeed himself as Minister, is grossly underestimating the scale of this issue when, based on an Official Information Act reply we received from his department, Housing New Zealand has housed on average just 250 homeless people per year, when in the last year alone just one service provider in one city had more than 200 brand new homeless clients walk through their doors, and another had a further 130?

Hon Dr NICK SMITH: In the last month—June—Housing New Zealand housed 200 people. The current waiting list of people waiting for a house is smaller now than when members opposite were in Government. We are investing record amounts in new housing. We have actually got the economy growing. I would also remind the member to have a look at the record of her member’s Government in terms of the increase in housing costs, because it was an awful shame.

Peseta Sam Lotu-Iiga: Tēnā koe, Mr Speaker. How much have housing costs risen over the past 5 years, and how does that compare with previous years?

Hon Dr NICK SMITH: Since 2008 house prices have increased by 16 percent or 3 percent per annum. Between 2000 and 2008 house prices increased by 105 percent—

Hon Tony Ryall: How much?

Hon Dr NICK SMITH: —105 percent, or 10.5 percent per year: i.e. housing costs are going up by a third of what they did under the previous Government.

Jacinda Ardern: Does he have a strategy for this issue, given his own Government has two different definitions for homelessness—his own now is a third, and could include, for instance, someone living under a bridge as being housed—and he does not know the scale of the issue, no one Minister or department has responsibility for it, and the NGO sector is essentially being left to deal with growing demand?

Hon Dr NICK SMITH: I take issue with the member claiming that when you say someone is homeless when they do not have a roof over their head, somehow a bridge is a roof. That is a somewhat unique definition coming from the members opposite. In terms of whether this Government has a strategy, let me tell you about it. We are spending $2.9 billion over the next 3 years on building thousands of extra bedrooms on to existing State houses. We are building 500 infill houses. In fact, over this financial year the Government will be directly building more houses than any Government has in the history of New Zealand.

Eating Disorders—Treatment Services

8. Dr PAUL HUTCHISON (National—Hunua) to the Associate Minister of Health: What investment has this Government made to improve eating disorders services?

Hon TODD McCLAY (Associate Minister of Health): Tēnā koe, Mr Speaker. I am pleased to report that in 2012, 920 people were seen by specialist—[Interruption]

Mr SPEAKER: Order! Would the Minister please start his answer again.

Hon TODD McCLAY: I am pleased to report that in 2012, 920 people were seen by specialist eating disorders teams in New Zealand, compared with only 483 in 2008, 1 year before this Government’s extra funding began. The improved services began in 2009, after this Government invested an extra $26 million for treating eating disorders, which is paying for crucial earlier detection and family-based therapy for sufferers of eating disorders. The situation this Government inherited meant that many anorexics in New Zealand would quite likely have ended up having to be sent to Sydney for treatment, because services were inadequate here.

Dr Paul Hutchison: What progress has been made as a result of this extra funding?

Hon TODD McCLAY: Oh, important progress. The extra funding has more than doubled the number of dedicated beds and doubled the number of patients accessing specialist care. There are now 27 dedicated national beds around New Zealand. We are also ensuring community teams around the country are working better together and have stronger links to resources, training, and support from their specialist services in Auckland, Wellington, and Christchurch. Anorexia is a terrifying illness. It has the highest mortality rate of any mental illness, but I am advised that this improved treatment is making a significant difference to the many young sufferers and their families.

Christchurch City Council—Building Consent Accreditation

9. Hon LIANNE DALZIEL (Labour—Christchurch East) to the Minister for Building and Construction: When was the Ministry of Business Innovation and Employment first made aware of the September IANZ report which warned the Christchurch City Council that “Continued accreditation beyond May 2013 will depend on a satisfactory outcome of that assessment”, and when was he advised of the content of the report?

Hon Dr NICK SMITH (Minister of Conservation) on behalf of the Minister for Building and Construction: The ministry received the report in mid-October 2012. It was a regular accreditation assessment done biannually on all 69 building consent authorities. Nearly all these reports recommend some corrective actions. A follow-up assessment was done in May this year to check that the corrective actions had been taken. They had not, and a final 1-month warning was given then. Minister Williamson was advised of this on 6 June, Minister Brownlee was advised on 7 June, and the matter was raised as an oral item at Cabinet on 10 June.

Hon Lianne Dalziel: So is the Minister saying that his officials did not provide him with any briefing on a report that contains 17 corrective action requests and warned that continued accreditation beyond May 2013 will depend on a satisfactory outcome of the assessment and that the 17 corrective action requests had to be completed by February this year?

Hon Dr NICK SMITH: I note that the accreditation system that is run by International Accreditation New Zealand has been running since 2007. The Christchurch City Council received unsatisfactory reports in its biannual reports for that period—

Hon Annette King: Always trying to blame someone else.

Hon Dr NICK SMITH: No, the point I want to make, Annette King, is this—

Hon Annette King: It’s 5 long years—5 long years.

Hon Dr NICK SMITH: Just listen for a moment; you will learn something. When those reports were done, all of the councils—all 69 of them—had corrective actions recommended. What the member is suggesting is that every time any corrective action is required, Ministers would have to be advised. That has never been the practice under the previous Government or this one.

Hon Lianne Dalziel: Did he receive reports from the Ministry of Business, Innovation and Employment in relation to the extensive work it was undertaking to assist the council to meet its requirements to maintain accreditation, prior to 30 May; if so, did he pass these on to the Minister in charge of the recovery, or did he not actually read them?

Hon Dr NICK SMITH: The Christchurch City Council building consent department has, I am advised by the ministry, had difficulties in terms of its accreditation since 2007. The Ministry of Business, Innovation and Employment and its predecessor, the Department of Building and Housing, have been meeting weekly with that council for more than a year on these issues. Both Minister Brownlee and Minister Williamson were aware of the support that the ministry was providing to the city council as those issues became more acute with the extra workload flowing from the earthquake.

Hon Lianne Dalziel: Has he read the report of May and September—because it is quite clear in both of those reports that, in fact, the Christchurch City Council did not go through its regular assessment in 2010 because we had an earthquake, and in 2011 it was put off for a year because the Government passed an Order in Council to enable the accreditation to stay in place for another year. The first assessment by International Accreditation New Zealand that it had was in September 2012. Has the Minister read the report?

Hon Dr NICK SMITH: I am not Minister Williamson, to be able to answer to what degree all those reports have been read. But I would note again that of the 30 councils or building consent authorities that are reviewed each year, all of them have reports, and all of them have recommended corrective actions. The part I find so ironic about the member’s question is that all last year she was criticising the Government for daring to interfere in the council, and is now on her feet saying that my colleague Mr Brownlee did not interfere nearly enough.

Hon Lianne Dalziel: Can he confirm that the report on the review of the Christchurch City Council building consenting system, which will be released by the Christchurch City Council today, identifies that one of the reasons that crisis point was reached was information to senior management about the need for corrective actions and/or the seriousness of the Christchurch City Council situation was not accurate, or was not read, or was not followed up on; and is that why everything has gone wrong in terms of the relationship between the council and the Government—nobody is reading any of the reports?

Hon Dr NICK SMITH: The ministry has been working with the Christchurch City Council, trying to provide support to improve their building consent system. What it had noted in its reports to Ministers is that there has been a lack of buy-in by the leadership within the Christchurch City Council to the sorts of changes that were needed in its building consents system. That is why the Government has been providing support. Again, I find it ironic, and I welcome today the fact that the council has agreed to the appointment of a Crown manager, although I note that members opposite opposed the legislation that would enable the appointment of a Crown manager.

Hon Lianne Dalziel: I seek leave to table the report on the review of the Christchurch City Council building consenting system by the Ministry of Business, Innovation and Employment.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? It can be tabled. There was no objection.

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

Women—Representation and Recognition

10. JAN LOGIE (Green) to the Minister of Women’s Affairs: What has she done to address the Human Rights Commission’s criticism of the prevailing “pale ambition for women’s progress in New Zealand”?

Hon JO GOODHEW (Minister of Women’s Affairs): Tēnā koe e te Mana Whakawā. I disagree with the statement from the previous Equal Employment Opportunities Commissioner. The Government’s targets for women’s progress are very ambitious. We are focusing on achieving greater economic independence for women, more women in leadership, and women’s increased safety from violence.

Jan Logie: Did the Minister consider, when she used her only opportunity to appoint to a statutory board, that to appoint a man to the National Advisory Council on the Employment of Women undermined her commitment to advancing the representation of women at board level?

Hon JO GOODHEW: The way that I will answer that for the member is to talk about what this Government believes, and that is that when, around the table, there is diversity of thought, diversity of representation—be that age, gender, ethnicity—then there are better decision makers. The person that the member is referring to, Michael Barnett, with his work in the Equal Employment Opportunities Trust, is ideally suited to bring a particular view, skills, and knowledge to the table to advance progress for women. This particular Government believes in diversity.

Jan Logie: I seek leave of the House to table the Human Rights Commission report from 2012 that shows a decline in the number of women on statutory boards.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is none. It can be tabled.

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

Jan Logie: Did the Minister meet with the Prime Minister regarding the Queen’s Birthday Honours List to discuss why only 15 percent of the top 40 honours went to women?

Hon JO GOODHEW: I am trying to be really sure about whether I have ministerial responsibility for this, but when I have met with the Prime Minister to discuss the advancement of women we have certainly discussed bringing in more nominations. And I certainly put to my colleagues that I am very keen to see as many nominations as possible not only for appointments and honours but also for appointments to boards. In fact, we rely on all members of this House, and the public as well, to nominate women for honours. Yes, I was disappointed that there were not more women, but we have to deal with what is actually put forward in the way of nominations.

Jan Logie: Is the Minister comfortable that although her ministry monitors the gender pay gap, there is no ministry responsible for the delivery of initiatives to close it?

Hon JO GOODHEW: Could I ask the member to repeat—

Mr SPEAKER: Order! Could the member repeat the question, for the benefit of the Minister.

Jan Logie: Is the Minister comfortable that although her ministry monitors the gender pay gap, there is no ministry responsible for the delivery of initiatives to close it?

Hon JO GOODHEW: The member is simply incorrect. The Ministry of Women’s Affairs is a policy ministry that does a lot of work to assist New Zealanders to actually close the gender pay gap. I might remind that member that it is now at its lowest level ever. Although not responsible for the legislation, the ministry, in fact, is working very, very hard to assist in closing the gender pay gap.

Tracey Martin: Kia ora. As the Minister of Women’s Affairs, has she requested any reports on the effects of her Government’s previous cuts to adult and community education funding for Māori, Pacific, and migrant women, in light of these women being identified by the Human Rights Commissioner’s report as the most vulnerable; if not, why not?

Hon JO GOODHEW: No.

Rt Hon Winston Peters: I seek leave to table two reports. The first is of the National Party in 1975 appointing a man as Minister of Women’s Affairs. The second one is a report where at the first world indigenous conference, the Australians sent a white man.

Mr SPEAKER: On the basis that they could assist members, leave is sought to table those documents. Is there any objection? There appears to be none. They will be so tabled.

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

Jan Logie: Does the Minister understand how her actions and her inactions add to the current perception—

Metiria Turei: I raise a point of order, Mr Speaker. My apologies to my colleague behind me, but it has been, and continues to be during this point of order, impossible to hear my colleague’s question, because of the constant and persistent barraging from the National Party side of the House. I would ask that they be asked to be quiet while she delivers her question.

Mr SPEAKER: The member is making a reasonable point. The level of noise from many parts of the House has been quite excessive today. Jan Logie, supplementary question, without interjection from the back right-hand corner of the House.

Hon Gerry Brownlee: What about down here?

Mr SPEAKER: And that also includes where Mr Brownlee happens to be sitting.

Jan Logie: Does the Minister understand how her actions and inactions add to the current perception that she is failing to take leadership on anything positive for women in New Zealand?

Hon JO GOODHEW: The member started her first question by quoting from Sex and Power: A Report Card, and I will do similarly. I quote from page 3: “The Prime Minister John Key, and successive Ministers of Women’s Affairs, Hekia Parata and Jo Goodhew, have helped mainstream the debate about women on boards.” That is just one example.

Jan Logie: Point of order—

Mr SPEAKER: Order! On a point of order, Jan Logie, and this point of order will be heard in silence.

Jan Logie: I seek leave to table the 2012 survey that shows only 5 percent of New Zealand women consider women have equality—

Mr SPEAKER: The member needs to identify the source of the survey.

Jan Logie: It is from the Next magazine investigation.

Mr SPEAKER: Order! That is available to members if they so want to subscribe.

Jan Logie: No, it’s really hard to find, Mr Speaker.

Mr SPEAKER: Order! [Interruption] Order! That is available to members if they want to subscribe to the Next magazine.

Conservation Legislation—Minister’s Priorities

11. Hon PETER DUNNE (Independent—Ōhariu) to the Minister of Conservation: What are his legislative priorities for the balance of this year?

Hon Dr NICK SMITH (Minister of Conservation): My first priority is progress on marine protection and, particularly, the Subantarctic Islands Marine Reserves Bill. I am also keen to progress the Game Animal Council legislation, for which the member has been the architect, and the issues around the confidence and supply agreement with the member over game hunting. I am also working on a conservation law reform bill to improve management of conservation lands, which make up about a third of New Zealand.

Hon Peter Dunne: When does the Minister expect the Game Animal Council Bill to be passed and the council formally established?

Hon Dr NICK SMITH: I am working on a Supplementary Order Paper, with the member, amending the bill to address the interests of the professional hunting guides and game estates. My ambition is to have the legislation through the House this year, and the Game Animal Council formed on that timetable as well.

Hon Peter Dunne: What steps is he taking to outlaw heli-hunting, as per the National - United Future confidence and supply agreement, and will those steps be in place before the current heli-hunting permits expire in February 2014?

Hon Dr NICK SMITH: The Government is committed to the changes around heli-hunting. It is my intention to include those changes in a conservation law reform bill. There is the issue of the concessions for heli-hunting, which is coming up, and I am working with the department on finding a solution so that it is consistent with the Government’s direction of reform.

Police Resourcing—2013 Police Association Survey

12. KRIS FAAFOI (Labour—Mana) to the Minister of Police: Does she agree with the issues raised by the 2013 Police Association survey referred to in the July edition of Police News; if not, why not?

Hon ANNE TOLLEY (Minister of Police): This was a survey of union members, and I agree that unions will always say they need more resources. However, I was very pleased to see that the survey showed that under the previous Labour Government police were more concerned about front-line resourcing. To aid the House, I have provided the graph. In 2008, 69 percent of those surveyed felt that additional resources were required—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The Minister has been going for some time, to the extent that she is now referring to a chart. The question talks about issues raised by the 2013 Police Association survey, and she went straight back to 6 or 7 years ago, and that cannot be relevant.

Mr SPEAKER: No—[Interruption] Order!

Hon ANNE TOLLEY: If the member looked at the survey that the question is about, it actually has the chart in there. I have just reproduced it for the House. Can I continue?

Mr SPEAKER: Yes, the Minister can continue with her answer, using the chart, if it is being used.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The Minister might have difficulty grasping this, but the question begins “Does she agree with the issues raised …”. The issues raised are the issues raised in the 2013 survey. They may well have a chart, but she—

Mr SPEAKER: Order! The Minister is saying that this issue was raised within that survey. The Minister can continue her answer.

Hon ANNE TOLLEY: If I can continue, this chart shows that in 2008, 69 percent of front-line police felt that additional resources were required. That has fallen under National to 61 percent. This Government—

Mr SPEAKER: Order! That is a sufficient answer from the Minister.

Kris Faafoi: What will she do—[Interruption]

Mr SPEAKER: Order! The member can start the question again.

Kris Faafoi: What will she do, and what is her message to police and New Zealanders, about the fact that 44 percent of the close to 4,000 Police Association members who were surveyed say that restructuring within the police has lead to worse efficiency and effectiveness, and has had a negative effect on the police’s ability to serve the public?

Hon ANNE TOLLEY: Actually, what this survey says is that 60 percent of the union members say either that the 4 years of restructuring, which has only just finished being rolled out this month, has created more efficiencies, that it has remained the same, or that it is too soon to tell—60 percent of them.

Richard Prosser: How—[Interruption]

Mr SPEAKER: Order! I have called Mr Prosser for a supplementary question. [Interruption] Order! I think that just goes to show the difficulties being created by the level of noise.

Richard Prosser: How can rural New Zealanders have confidence that when they are in need the police will have enough staff to respond in a timely manner, given the 2013 Police Association members’ survey has the drop in staffing as its No. 1 issue?

Hon ANNE TOLLEY: As I say, the police have been through 4 years of unprecedented change. Particularly in the last 12 months, there have been backroom police jobs that through restructuring, through HR and finance and case management, have gone. I think it is perfectly explainable that people will be concerned about staff, but the reality is that crime is at a 30-year low, including in rural areas. My own area of Gisborne has seen an unprecedented drop in recorded crime of over 10 percent. Whatever is happening in the police is certainly working, and New Zealanders are certainly feeling safer in their homes and out in their communities.

Kris Faafoi: What will she do, and what is her message to police staff and to New Zealanders, given that 61 percent of the 4,000 Police Association members surveyed believe that shortages of front-line staff and non-sworn support staff are “the areas of police being most at risk of service failure because of recent cuts and deficiencies”?

Hon ANNE TOLLEY: I refer the member back to the chart that I started with. The reality is that it may well be 61 percent now, but under the Labour Government, it was at 69 percent, so actually they are much happier under a National-led Government.

Richard Prosser: Does the Minister concede that the drop in staff numbers has put public safety in rural areas at risk, and does she agree with one Police Association member who said that staffing numbers need to continue increasing, especially in the smaller areas?

Hon ANNE TOLLEY: No, I do not agree, because front-line policing numbers have not dropped. In fact, this Government has added an extra 600 front-line police. In addition to that, there has been a 70 percent increase in foot patrols, so our police are far more visible out in the communities. I think that under this Government we have seen crime at a 30-year low, and that has made our communities much, much safer.

Kris Faafoi: Can the Minister assure the New Zealand public that their safety and the service that they receive will not suffer, given that just 6 percent of Police Association members believe the restructuring has been effective, while 62 percent believe that the restructuring has made things worse or made no improvement at all?

Hon ANNE TOLLEY: The figures that I think tell the real tale are in the independent survey of public satisfaction and confidence in our police—

Kris Faafoi: I raise a point of order, Mr Speaker. I am asking the Minister specifically about this survey, and she is bringing in another survey, so—

Mr SPEAKER: No, if the member reflects on the question asked, it was, “Can the Minister assure the New Zealand public ...”, and it then went on. The Minister is very adequately using another survey, which reflects, in her opinion, public confidence in the police. So the Minister can certainly continue that answer.

Hon ANNE TOLLEY: Thank you for the question, because public confidence and satisfaction is at an all-time high of 87 percent.

Kris Faafoi: Does she take responsibility for these major concerns in this survey and in the police ranks, given that the Minister has closed 15 police stations and cut the opening hours of a further 12, one station is no longer open to the public, the police Ten One magazine shows monthly sworn resignations are skyrocketing, there are 155 fewer sworn police than at this time last year, there are 191 fewer police support staff than at this time last year, and her own estimates figures show a real cut in funding of $113 million over the next 4 years?

Hon ANNE TOLLEY: I really refute all of those assertions that that member has made. But I do not understand why Labour continues to run down our police. I can understand why police are much happier under a National-led Government, when crime is at an all-time low, than when they had a Labour Government and crime actually went up.

Kris Faafoi: I seek leave to table a document obtained under the Official Information Act showing that 15 police station closures have happened since January 2009.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is none. It can be tabled.

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

Kris Faafoi: I seek leave to table my graph—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! This is a point of order.

Kris Faafoi: Can you see it all right? I seek leave to table this graph, prepared by the Parliamentary Library, showing the monthly average of police staff resignations since January 2009.

Mr SPEAKER: Leave is sought to table that graph.

Hon Steven Joyce: I raise a point of order, Mr Speaker. The explanation—

Mr SPEAKER: Order! That is not a point of order. Leave is sought to table it. I am asking whether the House wishes that document to be tabled. Is there any objection? There is objection.

Hon ANNE TOLLEY: I seek leave to table this graph from the Police Association showing that the police are happy.

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

Kris Faafoi: Does she agree with the New Zealand Herald editorial on Saturday, 29 June, which read “Mr Faafoi says claims that the police are more accessible than ever before seem a little far-fetched in communities that lose their stations.”, and then went on to say “It is hard to disagree.”?

Hon ANNE TOLLEY: I do not agree with any of Kris Faafoi’s press releases. They are works of fiction.

Question No. 1 to Minister—Amended Answer

Hon BILL ENGLISH (Minister of Finance): I need to correct an answer I gave to an earlier question.

Mr SPEAKER: So you are seeking leave to correct an answer. Is there any objection to that course of action? There is none.

Hon BILL ENGLISH: In response to a question from David Bennett regarding public assets, I implied that Albania does not have any partially privatised companies. I am advised that, in fact, it does have mixed-ownership companies. We cannot find a single country where the Labour policy is in place.

Hon Trevor Mallard: Point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! Order! I am trying to hear a point of order from the Hon Trevor Mallard.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I think that I am making the same point of order that my colleague was making before he stood up. Ministers get permission to correct answers when they are factually inaccurate and not to make cheap political points. If—[Interruption]

Mr SPEAKER: Order! This is a point of order.

Hon TREVOR MALLARD: If the process of giving leave is to continue, we will need some assurances from the Leader of the House that that does not happen again.

Mr SPEAKER: From the point of view of raising the matter, it was raised, and the leave was put to the House. The House then accepted that the Minister would correct an answer. As I understood it, he was correcting something that was factually incorrect in the substantive answer earlier. It is certainly unhelpful then to add the political connotations. It may lead to difficulties where leave is sought to correct an answer and it, in fact, may not be given.

Questions to Members

Manukau City Council (Regulation of Prostitution in Specified Places) Bill—Submissions Received

1. Le’aufa’amulia ASENATI LOLE-TAYLOR (NZ First) to the Chairperson of the Local Government and Environment Committee: How many submissions have been received on the Manukau City Council (Regulation of Prostitution in Specified Places) Bill?

NICKY WAGNER (Chairperson of the Local Government and Environment Committee): The committee received 229 submissions.

Le’aufa’amulia Asenati Lole-Taylor: What was the percentage of submitters granted the opportunity to present at the select committee oral hearings, and how many submitters were declined to be heard in person?

NICKY WAGNER: The committee travelled to Auckland to hear submissions. We heard 18 submissions, and, as far as I know, none were declined.

Bills

Plumbers, Gasfitters, and Drainlayers Amendment Bill

In Committee

Debate resumed.

The CHAIRPERSON (Lindsay Tisch): Members, the House in Committee on the Plumbers, Gasfitters, and Drainlayers Amendment Bill is resumed.

Hon Trevor Mallard: I raise a point of order, Mr Chairperson. It is a tradition that some Minister is proud enough of the bill to sit in the chair.

The CHAIRPERSON (Lindsay Tisch): Sorry, yes—I cannot proceed. Thank you. Members, we will start again. The House in Committee on the Plumbers, Gasfitters, and Drainlayers Amendment Bill is resumed. Before the lunch break we were debating Part 1. The Hon Ruth Dyson had the call and she has 2 minutes 50 seconds remaining, should she wish. Before I call the member, I ask those who are leaving the Chamber to do so expeditiously, please, so that we can actually hear the speeches.

Part 1 Extension of purposes for which Board may impose levy (continued)

Hon RUTH DYSON (Labour—Port Hills): Thank you very much for the opportunity to conclude this speech that I began before the luncheon suspension. In that earlier contribution I reminded the Committee of the whole House that when this bill was introduced, the Hon Maurice Williamson, the Minister in charge of the bill, said on 14 March 2013 that it was critical for the continued solvency of the board that the bill was sent to a select committee, that submissions were called for and heard, that advice from the officials was asked for and received, that the bill was deliberated on—all in one week—that the report-back date was 22 March 2013, and that it all had to be done and dusted in this House by 1 April. Even according to our rather wonky calendar, it is now 2 July. I do not know why the Minister could not have taken the advice of just about everyone in the House, and certainly every member of the select committee, taken a deep breath and a step back, and looked at what the actual problems are and what a fair resolution of the problems would be.

There is not one person in this Chamber who does not respect the trades that we are discussing in this bill and the need for safety in those trades. And I am sure there is not a single tradesperson throughout the country who would disagree with that either. The people who are impacted by this retrospective legislation took their complaint to the Regulations Review Committee not once, not twice, but, I understand, now for a third time. They have taken this issue to the Ombudsman. They have taken the issue to the Auditor-General. Where else could they go? Every single body that they legitimately raised their complaint with said their complaint was justified. And instead of looking at the real problem, instead of looking at the real issues and asking as a Parliament how we address that—because we all agree on what we want the outcome to be—Maurice Williamson said: “I have seen the disallowance motion from the Regulations Review Committee. I know they’ve got further consideration here again. I will introduce and ram through the House in a 1-week session retrospective legislation to validate the actions of the board.”

We agree with a solution to this. We pledged to work across all parties to find a fair solution to this issue. I am pleased that the Hon Gerry Brownlee is in the chair at the moment, because he might redeem the situation. He knows what it is like to have a big issue and to work across all political parties to try to get solutions. This is not the answer.

CHRIS HIPKINS (Labour—Rimutaka): I am very pleased to have this opportunity to take a call on the Plumbers, Gasfitters, and Drainlayers Amendment Bill. It would be fair to say that this bill has had a very long history and is a result of a number of serious issues over quite a long period of time. A few years ago, I had the opportunity to sit on the Regulations Review Committee when we were considering issues to do with the Plumbers, Gasfitters and Drainlayers Board, and it would be fair to say that members of the community, the professionals who do this work, have legitimate concerns about the way the board is operating, legitimate concerns around the legislation that governs it, and legitimate concerns around the actions of a number of people involved in the industry.

What we are seeing here today is that the Government is simply going to override, by way of legislation, by narrow majority, what have been clear breaches of the Act by the Plumbers, Gasfitters and Drainlayers Board, and that is wrong. One of the reasons it is wrong—well, there are many, many reasons it is wrong; it is manifestly unjust. One of the reasons that Parliament sets up an organisation like the Plumbers, Gasfitters and Drainlayers Board is to provide leadership to the industry. And how can the board provide that leadership that the industry needs when so many in the industry have no confidence in it? They have no confidence in it, because it has breached its own Act on several occasions. Every time they have gone through some kind of process to have their grievances addressed and acknowledged, they have been proven to be correct. Yet this Government is simply turning a blind eye to that and is just saying to the board: “Just go on doing what you’ve always done.” That is not right. It is simply wrong. Actually, this board, to operate effectively, must have the confidence of the people who are required to pay the levies to it, and, at the moment, it does not. So how can it do the job if no one has confidence in it or if the majority of people practising in the profession do not have confidence in it?

So this legislation, far from fixing the problem, actually makes the problem worse, because it simply rides roughshod over the whole process and simply discounts all of the legitimate concerns that have been raised. It says that those concerns do not matter, and that that whole process—after the huge amount of time and energy that people have put into having their concerns addressed—is going to be simply overlooked.

I will turn specifically to what happens in Part 1. There are two parts to this legislation. Part 1, which we are dealing with now, is the part that effectively enacts the legislation as the board thought it should be. The board had been acting in a way that was inconsistent with the legislation as it was. Part 1 of this legislation simply says: “We’ll just change the law in order to allow you to continue doing what you have always done.” That is what this Government has said to the board.

Part 2, which we will talk about shortly, then retrospectively validates decisions that have been made. I am looking forward to that part of the debate, because there are a number of National Ministers who have been on record in this House when they were in Opposition lambasting the then Labour Government for anything that had even the slightest hint of retrospectivity to it. And now suddenly here they are retrospectively legislating to approve a whole lot of decisions that the board made that were against the law.

So turning to Part 1 of the legislation specifically, and looking at the clauses that are in the legislation, we see that clause 4 amends the Act to allow the Plumbers, Gasfitters and Drainlayers Board to impose on registered plumbers, gasfitters, and drainlayers a disciplinary levy to fund the costs arising out of investigations into allegations or complaints against registered persons and proceedings covering dispute under Part 3 of the Act. It is that last part that is actually really important, because the Act previously allowed the disciplinary levy to be collected to cover complaints against only registered persons and not against other people who might be practising. This is where the board got itself into difficulty, because it was collecting a disciplinary levy that it could then use outside disciplinary matters concerning just registered practitioners under this Act.

So what it effectively does is say that those who are registered, those who go to the trouble of being registered, are now being asked to fund potential investigations and disciplinary action against the people who do not make that step of becoming registered. There may well be good arguments for that, but simply imposing this by way of a legislative override, effectively, of a whole lot of organisations—the Regulations Review Committee, the Ombudsman, and various others that have all said that the practitioners who have raised the concerns have legitimate concerns—and to ride roughshod over those organisations through a legislative process is not the right way to do it. It is manifestly unjust. It is simply not right. Retrospective legislation is not right.

We know that there have been major problems with this board, as I mentioned. There have been some very good people involved with the Plumbers, Gasfitters and Drainlayers Board, and there are still some good people involved in the board. It is not in any way a reflection on them, and I do not want to cast aspersions on their characters or anything like that, but the board itself has had major systemic problems. In order to deal with those issues, one of the things that must be done as a matter of priority is to restore confidence in the board. This legislation, sadly, is not going to allow that to happen, because, if anything, it is going to add to the sense of grievance that people who have concerns with the board already have expressed. The bill raises natural justice issues; retrospective legislation often does. We are certainly not convinced it is justified in this case. Sometimes there are rare occasions where retrospective legislation can be justified, and in this case I am certainly not convinced that there is quality justification for that.

A number of complainants concerned about the illegal collection of the disciplinary levy and offences fee have had their claims vindicated through a number of the mechanisms, including, as I mentioned, the Auditor-General, the Ombudsman, and the Regulations Review Committee. All of that vindication of their concerns is now being overturned. We in the Labour Party acknowledge the major problems that have existed within this industry and the way this board has operated. We are committed to finding a solution to those problems, but that must start from the point that we have got to have a board, an organisation, that the whole industry can have confidence in. Unfortunately, this legislation that Maurice Williamson is bringing before the Committee today does the opposite. It simply reinforces a legitimate sense of grievance that many people feel. That is the reason why we cannot support this.

BRENDAN HORAN (Independent): Before I start, I would like to thank the Chair for the opportunity to speak. As one of now two independent MPs in Parliament, I get the opportunity to truly partake in the democratic process only during the Committee stage of each bill, along with seven other MPs who have to beg, steal, or borrow speaking slots from the major parties. For me, this rarely occurs, so I really do appreciate being able to take this call. I also look forward to taking calls later this evening, and certainly after dinner, whereby I can partake in the democratic process, because, as we know, sometimes deals are made between major parties but they do not consider those other MPs who are in the House.

This Plumbers, Gasfitters, and Drainlayers Amendment Bill is somewhat akin to the Government Communications Security Bureau debacle and Kim Dotcom. The Government has this Plumbers, Gasfitters and Drainlayers Board, which was investigated by the Ombudsman, who found dubious, illegal, and unlawful activity. Rather than pay back the $600,000—Ministers pay themselves a Wellington accommodation allowance of over $600,000 annually, so it would have been quite easy for the board to repay that money—to the plumbers, gasfitters, and drainlayers whom the board illegally took that money from, the board went to the Minister, and here we have now a retrospective change in legislation. It is not fair. It is not the Kiwi way. I wonder what is happening to our country and the message that we are sending out to the children of New Zealand when something so wrong can just be turned round and we change legislation.

When we look at legislation, I think it is very, very important that we ask whether this is good legislation. As we have heard from everybody on this side of the Chamber, this is clearly not good legislation. This is a board that has adopted a heavy-handed approach. It is turning this great industry itself—the 17,100 tradesmen in the industry—against the Government. We need to look only to some of the other price increases that this board has wrought upon the plumbers, gasfitters, and drainlayers. If we look at the cost to plumbers, for instance, to get an apprentice through the system, what used to be $6,000, thanks to levies imposed by the board, is now $12,000 or $14,000 an apprentice. I spoke to a plumber earlier this week who normally has three apprentices, but because of the costs imposed by this board, he now has only one apprentice. He told me himself that once that apprentice is finished he is not going to get another one. So we have a board that is really turning the industry against itself.

I cannot support this bill. Thank you very much.

Hon ANNETTE KING (Labour—Rongotai): I want to continue on from where Chris Hipkins was in his contribution to this Plumbers, Gasfitter, and Drainlayers Amendment Bill.

Hon Members: Oh!

Hon ANNETTE KING: Oh, I am so pleased members opposite are welcoming my contribution. It is going to be a serious one. In fact, I am going to quote from probably one of the member’s own constituents, whom I met with recently. Chris Hipkins said we know that problems exist in this area, and we are very keen to find solutions. I think where we ought to start is to take seriously complaints that have been made about what is going on in this industry. I am aware that there are three complaints currently before the Regulations Review Committee—three complaints that those who have made the complaints want heard before this bill passes. They have asked for them to be heard before this bill passes.

I have spoken to the chair of the Regulations Review Committee, Maryan Street. She is keen to put these complaints on the agenda and have them heard. I will predict, however, that the members of the National Party, who now have the majority on that committee—it is unheard of in this Parliament that you have the Regulations Review Committee without it being a committee that has even numbers on it—will not allow those complaints to be heard. I will predict that. If the members opposite can tell me that they will support the hearing of these complaints when the chair calls for them to be heard, say it today. What I suspect is that this bill is going to be rushed through and the complaints are going to be denied to be heard by that committee before the bill is passed. That is what I believe is going to happen, and so do those who have made the complaints.

You see, this is what has happened because of uncertainty this last year, in particular, around this bill and around what is going to happen. The bill was introduced in March and the House was told that the Government needed to pass it very quickly in a short time, and then it truncated the number of submissions that could be heard. In fact, not all the submissions were heard. It needed to be passed by 1 April, I think it was said at the time, and here we are really on 4 July, although it says 2 July on the Chamber calendar, and it is still only now being debated. In that year I have received, as other members have, from the Plumbers, Gasfitters, and Drainlayers Board the figures on the number of certified and licensed plumbers, gasfitters, and drainlayers for the year 2012-13. So what has happened while we have had this uncertainty—the lack of resolution around the problems in this area? We have seen in the last year an overall loss of certified plumbers of 558. We have seen the loss of certified gasfitters of 88. We have seen 761 certified drainlayers lost. In fact, the total loss of licensed and certified drainlayers over this last year is 2,173. Can we afford to have that sort of loss, particularly of licensed drainlayers? They are the ones who actually go out and do the job. Can we afford it at this time—

Mike Sabin: The board’s there to make sure the unlicensed ones don’t get away with the rubbish they do.

Hon ANNETTE KING: —when we need to have such—what is the member over there crowing about?

Mike Sabin: The unlicensed ones are the ones whom the board is there to protect the licensed ones from.

Hon ANNETTE KING: Well, the licensed ones are leaving the industry because of the lack of certainty—

Mike Sabin: And I think you’ll find they’re being replaced.

Hon ANNETTE KING: I am not talking about unlicensed plumbers, gasfitters, and drainlayers, Mr Sabin. Get the figures. These are the licensed ones, so stop yelling and listen for a change. We have seen a loss of 2,173 gasfitters, drainlayers—[Interruption] Mr Chairman.

The CHAIRPERSON (Lindsay Tisch): Order! Interjections should be rare and reasonable, and barracking across the Chamber is unacceptable. I ask the member to calm it down, and I come back to the Hon Annette King.

Hon ANNETTE KING: Thank you, Mr Chairman. Maybe Mr Sabin would like to take a call rather than just scream from his seat. What I am saying to this Committee is that that is a huge loss of licensed plumbers and certified plumbers, drainlayers, and gasfitters over the last year.

There does need to be resolution around this bill. I have had something to do with it in the past. This Plumbers, Gasfitters, and Drainlayers Act used to be under the Minister of Health, so I did have some contact with this Act in the past. But now we have so much uncertainty, and we have those who will not pay a licence fee, because they believe—

Hon MARYAN STREET (Labour): I rise to take a call on this bill, the Plumbers, Gasfitters, and Drainlayers Amendment Bill, yet again. It is a shame that this situation has been allowed to get to the point of needing validating legislation. When it was first introduced to the House it was clear that nobody was particularly happy about it, but the Minister for Building and Construction had decided that this was the way to correct the inappropriate purpose for which the Plumbers, Gasfitters and Drainlayers Board extracted a levy from its members.

This does go back a long way, and it is entirely true that the Plumbers, Gasfitters and Drainlayers Board has been problematic for a long time. I would suggest that, in fact, instead of passing this legislation, it would be good for the Government to go back, as we did when we were in Government, and look at the whole membership and performance of that board again. We did that once because the board was behaving in ways that were particularly disreputable and it was denying perfectly competent young tradespeople the chance to get a ticket. In a sense it was gaming the labour market by making certified tradespeople rare. That was inappropriate, and, besides that, there was all kinds of behaviour from the board at that time, which I have never seen in an industry association before or since.

The Plumbers, Gasfitters and Drainlayers Board is not out of the woods yet. There is another alternative. I am talking about Part 1 of the bill, “Extension of purposes for which Board may impose levy”, because this is one possibility. It imposed a levy that it was not entitled to impose, for reasons that are defensible—it wanted to clean the industry out of cowboys. Unfortunately, it has now had the reverse effect. We have plumbers, drainlayers, and gasfitters who now have their licences and are able to practise, but who will not pay the registration, because this board has increased it substantially and has treated them with disdain.

In legalising the purpose for extracting this disciplinary levy, which the law did not give the board the right to do, funds have been amassed that, in my view, ought to be repaid. So another possibility, other than Part 1, is to arrive at an accommodation with the disgruntled plumbers, gasfitters, and drainlayers, and say: “All right, we’ll come to some arrangement where some of the levy that you have paid, which we extracted from you illegally, will be refunded.”

That is why we have submitted Supplementary Order Paper 204, which seeks to enact the recommendation of the Office of the Ombudsmen that a proportion—not even the whole lot—of those levies and fees, but the levies in particular, that were extracted unlawfully should be repaid to the members of the Plumbers, Gasfitters, and Drainlayers Federation. Our Supplementary Order Paper provides that the retrospective validation component of the bill, which is this Part 1, will be effective only after a percentage of those levies and fees is repaid, in accordance with terms specified in an Order in Council made under section 172 of the Plumbers, Gasfitters, and Drainlayers Act.

That would address some of the concerns that plumbers, gasfitters, and drainlayers have over this issue. But the effect on the industry, because of the board’s behaviour, is really profound, and we are now seeing perfectly well-qualified tradespeople relegating themselves to the category of cowboy—by virtue of being unregistered—because they do not wish to pay fees to a board that misappropriates them or that extracts those fees unlawfully.

The only remedy the board has ever entertained has been retrospective validating legislation, and that is what is in front of us in Part 1. That is not the only alternative, and I would ask the Minister to consider Labour’s Supplementary Order Paper and consider supporting that, in order for this industry to be mended somewhat. I personally think that there probably needs to be another clean-out entirely of the Plumbers, Gasfitters and Drainlayers Board. I would rather that the Minister acted in that way and had a close look at the actions of the Plumbers, Gasfitters and Drainlayers Board, instead of simply going with its request to make legal what it did illegally.

I understand the disgruntlement of these men. George Clarkson comes up to me on a regular basis at the Nelson market on Saturdays. He is so wound up about this—and he is not alone—that I find it difficult to say anything to him other than: “I agree, George. It needs to be started over. It needs to be done again.”, but this legislation is not going to be the answer.

The legislation as it stood was, I think, perfectly OK. I do not think there was anything wrong with the legislation. The Plumbers, Gasfitters and Drainlayers Board has, in fact, stepped out of line with the legislation and done something that everybody who has been asked to pass judgment on its action has found to be illegal, from the Ombudsman to the Regulations Review Committee and onwards, and this piece of legislation is not going to appease the plumbers, gasfitters, and drainlayers who feel not only hard-done-by but led inappropriately in their industries.

The numbers the Hon Annette King was quoting a moment ago are seriously scary. In the space of 10 years, where there used to be one drainlayer per 939 people, we have now one drainlayer per 2,471 people, and the population has not increased that much. I use the example of drainlayers in particular in this instance because they were under the administration of the Ministry of Health because of their impact on the health of communities. They lay the sewers. They put down the waste-water pipes. These are the people who connect up all the services that are required for us to not all be dying of E. coli, the plague, and anything else that might be carried by waste water and through sewers. So they were always under health previously. They are important and we will need them—Christchurch will need them. Christchurch needs them now, and yet somehow, overall, we now have 761 fewer certified drainlayers than we did in 2012.

This behaviour of the Plumbers, Gasfitters and Drainlayers Board is causing the industry to diminish, for two reasons. One is that it behaved badly towards those in the industry and will not apologise for doing things that are illegal, and, secondly, it whacks up the charges on them, so that it costs far more to register as a qualified and licensed tradesperson in New Zealand than it does in Australia. So is it any wonder that our young tradespeople are being driven offshore, being driven to Australia, where the prospects—

IAN McKELVIE (National—Rangitīkei): Given what we have listened to in the last half-hour, I think it necessary to refute a number of issues that I think have been raised slightly erroneously. We should remember that this issue arose from legislation put in place in 2006, so it goes back quite some time. That is the first point I want to raise. I want to briefly talk about Supplementary Order Paper 204, introduced by Raymond Huo. In my view it is clearly impractical. It does not achieve anything other than to give some money back to an organisation, or a group of people in an organisation who will then have to pay it back to the organisation, in order for the organisation to continue to function. We heard the Greens earlier thinking that it would be a great idea for the Government to just pay the difference. Well, we could just pay the difference in a whole lot of issues in this country, but we would run out of money. That, clearly, is not going to work. The Plumbers—

Andrew Williams: You could sell more assets.

IAN McKELVIE: We will use the asset money productively. The Plumbers, Gasfitters, and Drainlayers Amendment Bill is being put in place to allow plumbers, gasfitters, and drainlayers to act in the same manner as any other good industry-good body would act. It is being put in place to protect those members from the activities, I guess, of what we might call cowboys. I think it is logical that any industry-based organisation should be able to operate in that manner and operate with the protection of legislation put in place by this House. That is what this bill does. It cleans up a messy situation created in 2006. Sure, there have been complaints to the Regulations Review Committee. Those complaints have been dealt with, one way or another.

There has surely been a complaint to the Ombudsman. The Ombudsman made a call on this, and in the process of making that call, he suggested there was a fine line between what was right and wrong and what was the best way to deal with this. He thought that the Plumbers, Gasfitters and Drainlayers Board was doing the best it could with a slightly, I guess, poor piece of legislation. It is not an opportunity for us to attack an industry body. The course of this bill certainly should not provide that opportunity. I think that the Plumbers, Gasfitters and Drainlayers Board is doing the best it can, as the Ombudsman, indeed, said, with a piece of legislation that certainly is not perfect. We have got to understand that this board collects about $600,000 a year, so for it to be putting in place levies of the magnitude that were mentioned earlier in this Chamber—$11,000 to $14,000 a year per member—is quite ridiculous.

The next issue I think we need to refute is the claim that the numbers of these people are dropping as a result of the poor management of this board. That clearly is not the case. We have to look only at the record of our building industry over the past 7 or 8 years and we will see why the numbers are dropping. Quite clearly, the numbers of all sorts of professionals in this area have dropped in that time. They have dropped for a very good reason—they have dropped because there is no work. The other thing that happens in an industry like this, which happens frequently in all sorts of industries, is that a significant amount of efficiency comes in. New methods arise and, obviously, that has played a large part in the changes in this industry.

So the opportunity that this bill puts in place is, firstly, to give the plumbers, gasfitters, and drainlayers legislation that supports their industry-good body, which allows them to contest and, I guess, investigate unlicensed people practising in the industry. As one of the Opposition members mentioned earlier, this organisation used to come under the Ministry of Health, for very good reason. That is why we need to have legislation and strict management of the opportunity for registered people to be operating in this industry. [Interruption] As my compatriot Mr Sabin says, gas is not the safest thing to be operating within our houses, and it certainly needs to be regulated very well there.

I do not want to dwell on this much longer, but I think there is a very good reason for this piece of legislation to be put in place. I do not think there was a suitable alternative to it, and I think that the Minister for Building and Construction has done a good job of bringing this to the fore.

I just want to say one last thing. All organisations are going to have internal disputes. All organisations are going to have disagreements as to how they should be run. This legislation will give this organisation the opportunity to put its house in order and to manage the process that it needs to manage around the licensing and the control of those licences in a proper manner. So I think that aside from not supporting the Supplementary Order Paper, which I think clearly will not work, I am all in favour of this bill proceeding. Thanks.

ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Plumbers, Gasfitters, and Drainlayers Amendment Bill. New Zealand First will not be supporting this bill, as we have said in this Chamber before. We do not favour bringing in retrospective legislation to sort out what was basically something of the past. It should have been picked up a long time ago. The Government should have sorted out the Plumbers, Gasfitters and Drainlayers Board back in 2006, 2007, and 2008, at the beginning of the National Government, and it should not have taken 5 years for the Government and for Minister Maurice Williamson to bring it to this House. It is wrong, we believe, to impose, effectively, a retrospective tax, in a sense. It is a tax on small business—this levy, these charges, these fees. It is wrong to go back and attack these small businesses and try to penalise them and charge them for errors of the past.

We have received a lot of correspondence from a lot of concerned plumbers, gasfitters, and drainlayers around the country, who simply say that in this current environment and in the way they have been conducting business in recent years, they cannot afford to start paying these retrospective moneys for a number of years going back. These small businesses are not able to suddenly start coughing up retrospective fees, so it is not fair for them to be attacked in this manner—for the board to go after some of these organisations in this manner.

It is also driving a wedge right into the middle of this industry. You are now seeing one side versus the other. It is not healthy in a small economy like ours to have such an important area as the provision of plumbing, gasfitting, and drainlaying ending up with the two sides at loggerheads. In this instance the Minister has very much been on the side of the board, which has ended up alienating such a large percentage of people in this particular industry. As a result we are seeing more and more disappearing off to Australia and further afield, and, as we have heard already in this Chamber today, there have been 761 fewer certified drainlayers since 2012. That is an alarming sort of figure.

At a time when our country needs to be developing our capacity and increasing our capacity, it is most alarming to be seeing so many trained people disappearing out of the system. They are not just disappearing overseas; we are hearing that they are just disappearing—giving up and getting out of the business because they have had it up to their back neck with it.

So in this respect we feel this is wrong. We feel that the Minister should have worked through a far more conciliatory process to find a way to get buy-in from the whole industry, instead of just taking one side of the argument. He has not worked through all the other alternatives that were available to him in order to find a better solution to this. He has tried to ram this through in very quick succession, despite it being a 5 or 6-year-old problem, instead of sitting down and working with the industry to come up with a solution that, although it might not meet every single need, would at least have some compromises in there to appease those who are aggrieved by this. Instead of doing that, as is the usual Maurice Williamson way he has just rammed it through with a sledgehammer, the same as in the days when he rammed through changes to legislation that ended up with us having the leaky building situation in this country.

It is the same way that he has been ramming through changes to the building code, through the building amendment legislation, to reduce the requirements on building in this country. Again, this legislation is being pushed through with little regard for the final effects in terms of the situation in our building industry. This is what we would call a litany of continuous errors on the part of the Minister, Maurice Williamson, who just seems to think that you can sort it all out in retrospective situations like this with legislation, you can turn a blind eye to leaky buildings, and you can turn a blind eye to errors within the building code. Quite frankly, we do not think this is the right way to go, so New Zealand First will not be supporting this. We really do feel that it is wrong.

Once again, when this Government keeps talking about supporting small business in this country, supporting and developing the economy, growing the jobs, helping small to medium enterprises get ahead, reducing compliance costs, and making this a more competitive economy, it sends all the wrong signals to then go after just the plumbers, gasfitters, and drainlayers in this manner. Basically, it is not warranted.

BRENDAN HORAN (Independent): I would like to put forward an amendment to clause 4(2) in the Plumbers, Gasfitters, and Drainlayers Amendment Bill, a clause that amends section 143 of the Act, to replace the words “of any amount it thinks fit for the purpose of funding the costs arising out of—” with “of a reasonable and justified amount for the purpose of funding costs directly attributable to the functions of”. I believe that any amendment should define what “a cost arising out of” is. It is far too broad as it stands, and it is being applied to items that the Regulations Review Committee has already stated do not appear to be costs arising from investigations.

So the bill, as it is, is validating expenditure by the Plumbers, Gasfitters and Drainlayers Board on items that may not be costs arising out of investigations. The validation at this stage simply gives the board a clean slate, another start point to cover its total incompetence and that of the Minister for Building and Construction and the Building and Housing Group. We ask where the accountability is. For instance, was the legal firm that gave wrong advice to the board held accountable, and did that legal firm repay the money, the fee that it was paid? I would suggest certainly not.

I would ask too where the accountability is in the bill as it stands. Is anybody on the board going to lose their job because of the debacle that occurred? Saying that they are going to be held accountable through the Minister’s accountability agreement is certainly a long bow to stretch.

The industry started as a victim. The industry had followed the correct procedures to get accountability, which the Government has taken away with this bill. The industry is once again the victim. This bill will create more problems than it will resolve. Bully-boy tactics will no longer be accepted, and those in the industry who disagree with the board have clearly indicated that they will stand their ground. What happens from here on is the responsibility of the Government and the board. If the industry declines and fails, it is this Government’s failure and the board’s failure. So to that end, I would like to put forward this amendment.

The CHAIRPERSON (Lindsay Tisch): Members, we come to the votes on Part 1. We have an amendment in the name of Brendan Horan to clause 4(2). The question is that the amendment be agreed to. Those of that opinion will say Aye, to the contrary, No. The Noes have it? [Interruption] The Noes have it? Can I just remind members that if you want a party vote, you must challenge my vote at the time, not many seconds later, because I was ready to move on. But this is probably the first amendment the member has put, and with the goodwill of the Committee, I am allowing a party vote.

The question was put that the following amendment in the name of Brendan Horan to clause 4 be agreed to:

in subclause (2), replace the words “of any amount it thinks fit for the purpose of funding the costs arising out of—” with the words “of a reasonable and justified amount for the purpose of funding costs directly attributable to the functions of—”

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

Ayes 14

Green Party 12; Mana 1; Independent: Horan.

Noes 103

New Zealand National 59; New Zealand Labour 33; New Zealand First 7; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Amendment not agreed to.

The result corrected after originally being announced as Ayes 14, Noes 105.

Part 1 agreed to.

Part 2 Validation of disciplinary levy and offences fee

The question was put that the amendments set out on Supplementary Order Paper 204 in the name of Raymond Huo to Part 2 be agreed to.

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

Ayes 54

New Zealand Labour 33; Green Party 12; New Zealand First 7; Mana 1; Independent: Horan.

Noes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Amendments not agreed to.

The CHAIRPERSON (Lindsay Tisch): We have a correction to the previous vote, and this was Brendan Horan’s amendment. The correct vote should be the Ayes 14 and the Noes 103. The record will be changed accordingly.

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 54

New Zealand Labour 33; Green Party 12; New Zealand First 7; Mana 1; Independent: Horan.

Part 2 agreed to.

Clauses 1 to 3

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 54

New Zealand Labour 33; Green Party 12; New Zealand First 7; Mana 1; Independent: Horan.

Clause 1 agreed to.

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 54

New Zealand Labour 33; Green Party 12; New Zealand First 7; Mana 1; Independent: Horan.

Clause 2 agreed to.

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 56

New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.

Clause 3 agreed to.

Bill to be reported without amendment presently.

Bills

Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill

In Committee

Part 1 Amendments to Income Tax Act 2007

The CHAIRPERSON (H V Ross Robertson): I am looking for someone to take the call.

Hon David Cunliffe: Mr Chairman.

The CHAIRPERSON (H V Ross Robertson): Wonderful! I call the Hon David Cunliffe.

Hon DAVID CUNLIFFE (Labour—New Lynn): Kia ora, Mr Chair.

Hon Trevor Mallard: You’re meant to be listening for someone to seek the call, not looking.

Hon DAVID CUNLIFFE: Mr Chair can look and listen, Mr Mallard, which is a wonderful thing that we have such a—well, yes, it is too late in the week to think of long “p” words. But anyway, congratulations, Mr Chairman. Thank you very much.

Here we are in the Committee stage of the very famous Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill. I see that the Minister in the chair, the Minister of Immigration, is smiling. That could be because he is about to be advised by the Hon Trevor Mallard, which will be of great assistance to his career, no doubt, or it may be that it has dawned on him that he is not the Minister of Revenue. That, as you will see, is very lucky for him, because what is so important about Part 1 is not exactly what is in it but what is not in it—what is not in it. What is not in it is the famous car-park tax. It was not long ago, Mr Chairman, ladies and gentlemen, and colleagues that National introduced what has now got to be one of the most infamous tax ideas that this House has ever seen: the idea that you would place fringe benefit tax on the personal use of a company car-park, but only if you are in the central business districts, not a street away, and only if it was in Wellington or Auckland, not Hamilton, Rotorua, Taupō, Tauranga, or anywhere else around the country.

Hon Lianne Dalziel: There aren’t any parking buildings in Christchurch.

Hon DAVID CUNLIFFE: And there are no parking buildings left in Christchurch, the “Minister for Earthquake Removal” tells me.

Hon Lianne Dalziel: Removal?

Hon DAVID CUNLIFFE: Well, I am just saying that in honour of the Christchurch City Council having knocked down all the buildings that it has attempted to consent over the last year. Well done, Bob Parker. That reminds me that we are talking about car-parker tax, and this has been withdrawn. It has been withdrawn because it was going to cost, according to some independent accounting estimates, $2 to collect for every $1 it raised.

Dr David Clark: How much?

Hon DAVID CUNLIFFE: How did that one—$2 to collect for every $1 it raised—get past the goalie at the Inland Revenue Department quality control centre? That is what I want to know. But even if it got past the goal line in the boffin building, what happened in the Minister’s office? What happened in—it was then the Hon Peter Dunne, Minister of Revenue; we have had musical chairs in the hot seat since then—his office? Where was the political advice? Minister, this is a dog and it barketh. Actually, that is a bit tactless. I apologise. We should not be talking about dogs because Todd McClay, the Minister of Revenue, is also trying to poison them all for psychoactive substances—

Hon Trevor Mallard: The drug dealers.

Hon DAVID CUNLIFFE: —and to make drug dealers rich, but we are not going to go there. That is not a tax matter, Mr Mallard. It may be an animal rights outrage, but it is not a tax matter. So, finally, common sense prevailed and the car-park tax was withdrawn under the steely hoofs of an unlikely combination of Matthew Hooton and the Council of Trade Unions. Matthew Hooton and the Council of Trade Unions joined forces to stampede the Minister of Revenue—aided and abetted by the loyal Labour Party trying to stand up for truth, justice, and the Kiwi way—and bang, there goes the car-park tax.

What is also not in Part 1 of this bill are three, now four, other stupid tax proposals of a similar ilk. Last week, when we were doing the first reading of the bill, I was able to report to the House on three equally idiotic taxes, and since then the Government has taken notice of our advice. I am pleased to report that a new one has emerged. In fact, the fourth, extra-stupid tax, other than the car-park tax, came out in the public domain in the same week. Fringe benefit tax is now to be applied to—wait for it—the clothing allowance of plain-clothes policemen. Not only that, as if it is not bad enough to penalise the hard-working cops, risking life and limb, it gives new meaning to “the emperor’s got no clothes”—the emperor’s new clothes; the bobby’s new clothes. As if it was not bad enough to impose a punitive tax on the poor, near-naked bobby—I mean, the phrase “bobby on the street” now has extra meaning, does it not—this was done retrospectively. [Bell rung] Mr Chairman, I have to complete this story. This was done—

Hon Trevor Mallard: Sounds like the naked truth to me.

Hon DAVID CUNLIFFE: The naked truth is that not only has the Government imposed yet another stupid tax on the public but it has done so retrospectively. Why? Was it that if it did it prospectively, people would stop it before this outrage got across the line? Why would the Government commit the double sin of stupidity retrospectively? Let us hope that good sense will prevail, and that our poor, near-naked undercover police will once again be clothed, so that if they are not shot to death, they will not freeze to death. I do not want to make light of what is often a high-risk situation, and their clothing allowance is there for good reason.

Let us recall the three other stupid taxes currently at issue, none of which appear in Part 1 of the bill we are discussing today, but which are relevant because they are akin to the one that was, in Part 1 of this bill. They are the iPad tax, where the Government was going to charge everybody fringe benefit tax on the private use of their iPhones, iPads, and other electronic communications. You are going to have to go through your phone bill and apportion your data charges and work out which calls were work calls and which were private calls, and pay tax on the private ones. Does not that sound like a really good idea? Imagine the time spent on that. Imagine the red tape. How did that one get past the goalie?

But if it was not bad enough that that got in the Inland Revenue Department’s discussion document, the Government, at the self-same time, gave up on taxing Apple, the people who make the iPads that the Government was going to charge you, the public, extra fringe benefit tax to use. Apple pays only about 1 percent tax on its profits in New Zealand. Why is that? Because, apparently, it does not make any money because that is part of a bigger problem called—technical term—base erosion and profit-shifting, which is a matter that the OECD is looking at, but which the Government has done sweet nothing about. Why not? Because it is too busy retrospectively applying a clothing tax on cops and poisoning poodles. It is ridiculous.

The Minister is obviously overworked. All right? Hopefully, if he does not do too well in this life, there may be redemption in the next, but it is unlikely because he is also imposing a punitive tax on clergy—grossing up the value of church housing, and then imposing fringe benefit tax on an income that is not even earned by clergymen, so that the Government can charge fringe benefit tax on clergy housing. This is ridiculous. What is systemically wrong at the Inland Revenue Department that it keeps coming up with these stupid, stupid, crazy ideas? I am hopeful that the Minister will stop that one.

But in honour of the Hon Lianne Dalziel, the Opposition spokesperson on earthquake recovery and, we hope, soon to be the Mayor of Christchurch—I just want to say that again; soon to be the Mayor of Christchurch, because poor old Bob Parker is not having a good week down there—I say that she has brought to my attention the problem of the accommodation tax. This is the fringe benefit tax being applied on temporary accommodation used for over a year. Christchurch is full of temporary accommodation, and it is expensive enough to live there now or stay there if you are part of the rebuild, but the Inland Revenue Department wants to impose personal fringe benefit tax on anyone lucky enough to live in a shipping container in Bexley. This is madness. What is going on at the Inland Revenue Department? What is going on in the Minister’s offices? Where do these crazy ideas come from, and how did they get into Part 1 of this bill?

The only good thing one can say about this bill is that David Bennett has had a road to Damascus experience. David Bennett, the member for Waikato-something, thinks Damascus is between Tīrau and Pūtāruru, but it is not.

Tim Macindoe: No, it’s between Parnell and Herne Bay.

Hon DAVID CUNLIFFE: Touché. He has had a road to Damascus experience. After 55 years of helping farmers rort their taxes, he has now recanted and decided that he is going to find absolution by ratting on his former clients, and he has dobbed them in by putting some livestock valuation rules in this bill. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): It is a pleasure to rise to speak to this bill, the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill. I think the honourable member David Cunliffe raised a very good point at the beginning of his speech. This bill is not so noteworthy for what is in it but for what is not in it. He raised immediately the issue of the car-park tax, which has been ditched since the first reading as this Government fled for cover, recognising the foolishness of imposing these petty taxes. It is a shame that the Government did not see this earlier, that it did not look to avoid the paper girl and paper boy tax that it imposed in the previous Budget, that it looked to not impose additional burdens on businesses that now have to collect child support, and that it did not look to not impose further red tape on businesses to deal with those child support changes. This bill is full of these mild, tinkering measures. It is typical of a tax bill put through under this Government. Some of them cannot be disputed as kind of sensible, step-by-step little measures, patching up tiny holes here and there, rearranging the deckchairs on the Titanic perhaps, and who can say that you would not get a little bit of sun if you put the deckchairs over here, rather than here, on the Titanic and make the most of the time you have available. But that is not a long-term strategy—that is not a long-term strategy.

This is a Government with no plan. That is what it comes back to. This Government has been muddling along, making tinkering little tax changes here and there, taking the time of the House, in order to rearrange the chairs on the “Tax-Titanic”. What it ought to do—

Hon Member: Worst economic performance in 50 years.

Dr DAVID CLARK: The member over there quite rightly points out that this is the Government with the worst economic record of any Government in this country in the last 50 years.

Andrew Williams: How long?

Dr DAVID CLARK: In the last 50 years, Mr Williams—quite right. It is shocking. But in some ways it is no surprise. If you do not have a plan to change things, things will carry on as they are. Things will continue to get worse. The gap between rich and poor will continue to grow, and the studies coming out say that it is. The gap between the rich and the poor in New Zealand has never been as great as it is now. This Government is shrinking median wages—they have gone down since it took over—and the people in the street know that. Ordinary Kiwis know, when they go out to make their extraordinary contributions, that they are less well off than they used to be because this Government is acting in the interests of the wealthiest.

We as citizens know that something is not right when people in this country who have over $50 million are not on the top tax rate—when people earning over $50 million are not declaring income of $70,000 or more. What we also know is that 75 percent of New Zealanders who fall into that category are not paying the top tax rate. That cannot be right. Are there any members opposite who think that is right?

Hon Member: No, not one.

Dr DAVID CLARK: Not one. Not one member opposite thinks that those top tax earners should not be on the top tax rate, and I am not surprised. But will they do anything about it? Will they do anything about it? They will not. Is there anything in this bill to do anything about it? No, there is not. This is a bill that is all about the status quo, that is all about ensuring that those wealthiest New Zealanders are protected, and that those who cannot avoid paying tax are clamped down upon more and more and more.

If this bill was accompanied by pro-growth tax reform, we would be able to support it more enthusiastically. We will be supporting this bill because the measures in it are the little stitches that need to be made here and there to make things mildly better, but making sure that the deckchair is placed in the sunny spot on the Titanic is not enough—it is not enough. We think that the Titanic should also be repaired. We think it should be done up and we think it should be sailing a course for a brighter future. There used to be another party that said that, but it does not say that any more. It has given up that slogan because it knows it is not delivering on it. It has just shifted away from its goal of closing the wage gap with Australia. It has given it away. We know that 200,000 Kiwis have moved permanently to Australia under this Government’s watch. This is a Government that is not improving the lot of New Zealanders.

In this bill we also see nothing that reverses the tax changes made in 2010 that saw the wealthiest 10 percent of earners in New Zealand get 40 percent of the value, and the bottom 20 percent of earners in New Zealand saw just 2 percent of the value of those tax cuts. That is why the gap between rich and poor is growing in this country. This bill does seek to make amendments to several Acts, including the Income Tax Act 2007, the Tax Administration Act 1994, the Goods and Services Tax Act 1985, and the Income Tax Act 2004, in order to improve fairness. That stuff we cannot disagree with. What we see there is an attempt to tighten up the rules for deducting expenditure on assets such as holiday homes, boats, and aircraft that the user uses both privately and to earn income. I would be interested to hear the Minister in the chair take a call to explain why the approach taken in this bill has been adopted, rather than one similar to that used for company cars, where a fringe benefit tax applies. It seems logical that the same could be done here. If it could be enforced properly—it works perfectly well for company cars—why was that approach not taken here? I see the Minister in the chair looking confused. He looks very confused and I am wondering whether he will take a call to explain—

Hon Trevor Mallard: No, no, that’s not confused. That’s a normal state.

Dr DAVID CLARK: The member in front of me, Trevor Mallard, assures me that that is what he normally looks like. I give the member more credit than that, and I am sure he will take a call to explain why this present policy has been adopted, this present approach, rather than the one that is similar to that used for company cars, which would be more straightforward. That would be less burdensome to administer, and it would be potentially a better use of taxpayer resource—unless the Minister does not care. But I suspect he does, so I will look forward to his contribution.

This bill also changes the time periods for claiming refunds. It changes the GST rules for business-to-business, cross-border transactions and there are several other GST-related amendments. Let us not forget that this is a party that likes to tinker with GST. It might not tell you that. It might go into an election saying “We won’t put up GST.” I think John Key said that, did he not?

Hon Damien O’Connor: It was a lie.

Dr DAVID CLARK: Oh, my colleague says it was a lie.

The CHAIRPERSON (H V Ross Robertson): Order!

Dr DAVID CLARK: I could not say that—

The CHAIRPERSON (H V Ross Robertson): Order! And the member will not say that.

Dr DAVID CLARK: I did not say that, Mr Chairperson. Other members may have a view. But Mr Key, in my view, did say he would not put GST up and then he did—and then he did. We can call that what we will. He said one thing and then he did another thing. He said “We will not put up GST.” and then he put up GST. The members opposite might want to tell me what that is called over the other side of the Chamber. It might just be what happens. It might be that we live in a dynamic environment, that things change with time, and that we can change our principles when it suits. That might be the approach that Government takes, but we on this side of the Chamber believe in higher principles. We believe everyone should pay their fair share when it comes to tax, not just those who cannot get through the loopholes.

Facebook in 2010 paid just $5,000 in tax in New Zealand—$5,000. It has 2.2 million users, but it paid just $5,000 of tax. The next year, that went up to $15,000 worth of tax, with 2.2 million users. It says that it is doing nothing illegal, and that is true, but just because it is not doing anything illegal does not make it right. But this Government continues to allow multinationals to avoid paying their fair share. It is doing nothing to sort out that problem, just as it is doing nothing to stop those wealthiest New Zealanders avoiding paying the top tax rates. This is a Government that is protecting the big interests, those at the big end of town. This Government will bring in this kind of tax bill that will tinker, that will try to “base broaden”, and that will try to make sure that it tapes up little loopholes, here and there, that cannot be avoided by people from lower backgrounds and some middle-income earners. As long as it is fair, we will support that aspect of it.

But what we really want to see on this side of the Chamber is an overall fair tax policy that makes sure every New Zealander pays their fair share and that makes sure we can afford the schools and hospitals that our future generations will rely on in order to enjoy the prosperity that we are enjoying now. Those who are wealthy have benefited from those institutions in our society and they, like everyone else, ought to pay their fair share. Most New Zealanders do. Most New Zealanders do not quibble with that. But it is those who are the very wealthiest who are avoiding this, and this Government is on their side and not on the side of ordinary New Zealanders who go about their day-to-day business working hard, trying to save, but experiencing a New Zealand where the Kiwi dream of owning your own house is getting further and further and further away.

Labour policies will change that. We will bring in 10,000 affordable homes every year for 10 years, to make sure that there are affordable homes. We will introduce a power policy that will ensure that power prices drop for ordinary New Zealanders. We care about those ordinary New Zealanders who are struggling. Mr Key says that ordinary New Zealanders are paying about the right amount for electricity. We disagree. But I will come back to the tax issue, and that is that this bill is a tinkering bill. We will support the tinkering for the meantime, but we think rearranging the deckchairs on the Titanic is not enough.

ANDREW WILLIAMS (NZ First): Thank you, Mr Chairperson—a wise choice. The Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill—I was just very interested in the comments from the previous speaker, Dr David Clark, because I actually thought at one stage that he had read some of the notes I had for my speech, because he made some excellent points.

The first point, which I think we all have to be reminded of and which most New Zealanders do remember, is the fact that 2 years ago this Government gave something like close to $2 billion in tax cuts to the wealthiest of New Zealanders at the expense of the rest of New Zealand. As a result of giving those tax deductions to the likes of the Prime Minister, who got another $1,000 a week in his pay packet; to the likes of Paul Reynolds, the Chief Executive of Telecom, who got another $5,000 a week rebate on his tax—$5,000 a week, can you believe it—and to the likes of many other National Party - supporting high rollers who got a lot of money back, we end up with the Hon Peter Dunne, the Minister of Revenue at the time, who is now very much the “done Minister” rather than Minister Dunne, who brought forward this bill, 167 pages long, to tinker around with the tax, to basically find the rats and mice, to find the little nickel and dimes, to do what he could to try to claw back some money to help offset the couple of billion dollars that the Government gave to the likes of John Key and Paul Reynolds.

We were very sceptical about this legislation in the first place, because we could see that it was very much just tinkering around the edges. However, we have come round to the viewpoint that we will support it, in that it does state that it is “in order to improve the fairness of existing tax law and regulations, protect the tax base, and minimise the burden on businesses.” These are very much in line with principles that New Zealand First has to support streamlining the tax system, to support the reduction in cost to business, to help the New Zealand economy, to help grow the New Zealand economy, and to help make our people, basically, a more prosperous people and nation as a result.

We do note that there are some areas in this bill that are worthy of note, and they are that there have been some changes to the GST laws, which remove the inequitable situation of non-resident versus resident businesses. That is fair enough.

There have also been some changes to the livestock valuation rules, around the whole livestock valuation area. It also provides—and we think this is an important aspect in this bill—

Hon Clayton Cosgrove: Speaking of livestock.

ANDREW WILLIAMS: Speaking of livestock? Oh, speaking of livestock—really? It also provides tax deductibility for expenditure on trees and plantings for erosion, shelter, and water protection purposes, and we think that is a good thing. With the increasingly erratic climate that we are suffering, and with what we saw as recently as last week with storm damage in different parts of New Zealand, it is increasingly important that we do have increased planting of trees and other such planting to reduce erosion, to provide more shelter, and to help with protection of our important waterways around New Zealand.

Similarly, this bill has a part in it that provides donee status to three charity organisations that operate internationally. Again, we feel that that is fair, and it recognises those particular three organisations in order to treat them in a fairer manner. It also eliminates tax treatment mismatches to certain foreign currency hedges. Again, it helps our currency markets to perhaps operate in a fairer manner. It does in the end withdraw what was going to be a silly tax, the car-park tax on Auckland’s central business district and Wellington’s central business district. Again, we are pleased that that was withdrawn from this bill, because that would have been a complete nonsense. We have heard from so many people who said that you could literally be across the street from your biggest major competitor, and on one side of the street you would be paying for your staff to be parking, and on the other side of the street your major competitor could be getting off scot-free. What a total nonsense. How the Minister and how this Government allowed that sort of thing to get into this legislation is beyond us. [Bell rung] Mr Chair—

The CHAIRPERSON (H V Ross Robertson): The honourable member Andrew Williams.

ANDREW WILLIAMS: Thank you. Another wise decision, Mr Chair—another wise decision.

We also remind New Zealand that in terms of the tinkering around the edges, this Government does have to face up to the fact that all New Zealanders need a fair go when it comes to tax. What we are seeing increasingly is that the Government is getting behind and doing backroom deals with those who can take advantage of situations and who can do very well out of the system, while others—the general, everyday, good, solid, Kiwi hard workers—are not being treated in the same manner. It is not right. We certainly hope in this House that every politician would be aiming to get a fair tax system for everyone. Aspects of this bill go some way to address that, but there is still a long way to go and there is still a lot to be done to streamline our tax system in order to make it simpler, to make it fairer, to reduce taxes in this country, to make this economy more affordable and more competitive, and to put us on a stronger level pegging with many other economies that are moving forward at a much greater rate, with lower company taxes and lower taxes for the likes of the export sector. Again, New Zealand First is very strong on the fact that we are not doing enough to support our export sector. If we do not make more money offshore, and if we do not bring more overseas funds into this country, we, as a nation, will suffer. The Inland Revenue Department is also going after some silly areas in taxation, instead of looking at the much bigger picture of how to reform the taxation system for the benefit of all.

Just in closing, we hear that the Inland Revenue Department is about to spend $1.5 billion on a new computer system to oversee its revenue and tax collection. That is a vast amount of money by anyone’s standards—by any country’s standards—to spend $1.5 billion on a new computer system. One would hope that if New Zealand is spending that sort of money, we would get, hand in hand with that new computer system, a lot more of a streamlined system that would make this country really tick over a lot faster. We would hope we are not going to get another Novopay, another INCIS, and another debacle, and that we will not look back in years to come on the Inland Revenue Department in terms of having some disastrous Titanic of a computer system strung around our necks. New Zealand First will be supporting this bill, but we do so with some reservations.

The CHAIRPERSON (H V Ross Robertson): I call the Hon Damien O’Connor.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): Thank you, Mr Chairman. Your wisdom shone through, if a little slowly.

The CHAIRPERSON (H V Ross Robertson): Oh, I might take that call back, actually.

Hon DAMIEN O’CONNOR: Mr Chairman—[Interruption] That is right. That is right; I apologise. If there was any offence taken, I am prepared to withdraw.

I know that some people may think that my colleagues have strayed off track, but I am going to stay in the part of the bill, the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill, that we are discussing here. I refer to a part of it that I am unclear of. The “Minister for Prison Riots”—Minister Anne Tolley—is the Minister in the chair. Maybe she could explain clause 5, which is around “Premiums from issue of rights to subscribe for shares”. It seems reasonably—

Hon Trevor Mallard: No, no, it wouldn’t have “premium”. It’d have to be “premia”.

Hon DAMIEN O’CONNOR: Well, premiums, premia, premiums—no, no, well, I am not quite sure. But do you know, what sprang to mind—and maybe the Finance and Expenditure Committee chair or members could answer the question—was, has this been changed to give more benefit to those people who can afford to buy Mighty River Power shares?

What we have had, of course, with the sell-off of State-owned enterprise shares are premiums and incentives for so-called New Zealand investors. I am sure some of my colleagues here who are a little more knowledgable in this area of taxation may be able to answer it, but I would appreciate the Minister getting up and answering my question about the premiums from issue of rights to subscribe for shares. If I go here in the bill, it says: “A distribution by a company to a shareholder is not a dividend if—(a) the company issues to the shareholder a right (the ‘shareholder right’) to subscribe for, or dispose of to the company, a share in the company at a given price (the ‘shareholder price’);”.

The point is that we have a loyalty bonus share scheme. That is the way that John Key promoted the retention of ownership in New Zealand hands of the sell-off of half of our State-owned enterprises, starting with the electricity sector. What was effectively a lie—and I will say “a lie” because it has been an untruth—was that these companies will be sold off to New Zealand investors. It is an untruth because they have not been—

Hon Tau Henare: Call it a lie.

Hon DAMIEN O’CONNOR: I will call it a lie if you would like. In fact, of all the hype around the sell-off of Mighty River Power shares, I go back to the reality that there were 113,000 investors who took up the share offer, and I am guessing that all of those people were then entitled to a loyalty bonus share scheme. That might, on the face of it, seem like a good deal for Kiwi mum and dad investors, because that was what we heard from the Prime Minister and all the idiots over there on the other side. We heard that this was an opportunity for mums and dads to go and buy shares in a company that they already owned. Well, let us look at what actually happened. Those 113,000 so-called Kiwi investors included trusts, companies, and investment institutions—hardly mum and dad investors, I would say to you. In fact, half of those shares went to a mere 13,000 investors—

Hon Anne Tolley: I raise a point of order, Mr Chairperson. I am sorry. I have been listening to the member—sort of—for quite some time. I fail to see what the sale of State assets has to do with the bill in front of us.

The CHAIRPERSON (H V Ross Robertson): We are actually speaking to Part 1, but—

Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. Like the Minister, I was also listening intently to a large number of these speeches. They have been wide-ranging, covering all sorts of issues, and you, quite rightly, have used your discretion not to pull people up. So it may be that the truth hurts, but she cannot have it both ways.

The CHAIRPERSON (H V Ross Robertson): Order! The member was doing very well—

Hon Clayton Cosgrove: Thank you.

The CHAIRPERSON (H V Ross Robertson): —was—but can I just say that I ask the member to continue in the vein of his speech. Relevancy is my discretion.

Hon DAMIEN O’CONNOR: I appreciate that, Mr Chairman, and I do appreciate your wisdom, as I said at the start. Can I say that if the Minister of Police is not on top of her game, if she does not know what we are debating here, she should go to clause 5 of the bill and then get up and explain to me whether the bonus offer loyalty scheme for the sale of the State-owned enterprises will apply to new section CD 29B(3) in clause 5, which states: “A distribution by a company to a shareholder is not a dividend if—(a) the company issues to the shareholder a right (the ‘shareholder right’) to subscribe for, or dispose of to the company, a share in the company at a given price …”. What are the rights attributed to the loyalty bonus share scheme shares offered to the so-called Kiwis—[Bell rung]

The CHAIRPERSON (H V Ross Robertson): I call the honourable member, but focus on Part 1.

Hon DAMIEN O’CONNOR: Absolutely. Well, I read it out, Mr Chairman. I can read it out again, if you like.

The questions I ask about the loyalty bonus share scheme in relation to the sell-off and the sell-down of our State-owned enterprises apply to this taxation bill. I would like some answers. The lie that we are referring to was that this company would be sold to Kiwis. They would be offered a bonus scheme, a loyalty share offer, and I wondered whether this legislation in any way undermines the benefit that will come with that loyalty bonus share scheme. It is a relevant question, and I think there are a whole lot of Kiwis who currently own this State-owned enterprise who have been conned. They thought that the 49 percent might actually go to Kiwis. The reality is quite different. The question will be: do these institutional investors have the right to the loyalty bonus share scheme and do they have the right to the provisions, or are they affected by the provisions in this piece of legislation? Meridian Energy, we are told, is going to be next off the block, so it is only fair that we clarify for mum and dad investors—that is to quote the Prime Minister and Mr Bennett, who is up there trying to sell it to all the people in Hamilton—what they might get.

We have seen a slide in the share price. In fact, many of those mum and dad investors have lost money at this point in time. I do not know what the share price is today. Maybe someone could let me know.

Hon Clayton Cosgrove: Oh, they’re pretty low.

Andrew Little: Not good.

Hon DAMIEN O’CONNOR: Are they still on the negative side? [Interruption] Less than $2.50. So, indeed, the promise by all the share traders, by the Minister, and, in fact, by the trader who is the Prime Minister—you cannot believe most of what a trader will tell you, because they are basically a glorified salesperson who clips the ticket on the share price or the derivative price going up and down. That is exactly what John Key is doing. He is clipping the ticket. I have to say that it is a really sad thing to admit that it is a popularity ticket. He is clipping it, and meanwhile the dividends are going down for most New Zealanders across the board. It is harder for them to live, they are working longer hours, and the share trader clips the ticket on the way up and down.

I come back to the bill; I have not strayed too far from it. The other danger in relation to the sell-off of our State-owned enterprises and the need for us to clarify in this legislation how the distributions and how the loyalty bonus share scheme will work for people, so that the Kiwis who might, who can afford to—and I would have to say that 10 percent of the shares of Mighty River Power went to 400 people, which is an average investment of $250,000. Was that your average mum and dad? I doubt it—I doubt it.

To come back to the reality and the hype around the next sale—that is, of Meridian—we need to know what might happen to any bonus scheme that will be offered there. I would suggest that the Prime Minister is going to have to offer a sweeter deal, another deal, or some other kind of twisted arrangement that looks good on the face of it. But, as many of the investors, the mums and dads who have invested in Mighty River Power, will be finding, it is not all beer and skittles. In fact, that share price has gone down. I am not sure whether they will get their dividend. It has not been terribly positive for anyone, really, other than the Minister of Finance, who has got a bit more money to play with, and he is spending it about 10 times over.

I will come back to the bill, and ask: can the Minister of Energy and Resources, who is now the Minister in the chair, hop up and answer the questions as to whether the distribution through a loyalty bonus share scheme will be affected by this piece of legislation. I have many things to comment on in the livestock part of this legislation, but I will just start in this first part of the legislation. I know the Minister of Energy and Resources, he is a smart Minister—he says so all the time. Can he get up and answer these questions? That is the least that an up-and-coming, knowledgable Minister could do in the Chamber this afternoon.

BRENDAN HORAN (Independent): I greatly appreciate the opportunity to participate in the democratic process. Being an Independent member of this Parliament, I note an anomaly in that seven MPs of the Parliament do not get the opportunity to fully participate in democracy, in that we are denied the opportunity to speak in the first, second, and third readings of a bill. I look forward to these opportunities, these rare opportunities, that I get to participate in the Committee stage, and I thank you very much for this opportunity to rise to take a call on Part 1 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill.

I would say that much courtesy matters. A little bit of courtesy at the beginning of the week would, therefore, see a lot of courtesy at the end of the week. I started off this week flying in from that beautiful place called Tauranga, where there is plenty of livestock. I arrived in Wellington and drove straight away to Foxton. As I was doing that, I was having my caucus meeting. I was able to get to Foxton and sort out some problems that some of the local people there had with a couple of dairies. I came back, but whilst I was doing all of this, I had no idea that the Parliament would be going into urgency. I had no idea of some of the bills that were being rushed through and placed in front of the Parliament. The Hon Gerry Brownlee did not feel it necessary to inform me at all. I would stress that courtesy at the beginning of the week means a lot at the end of the week. To that end, I would say that it is very important that at the Committee of the whole House stage we do thoroughly examine the legislation that is before us. I look forward to hearing, after the dinner break, contributions from members like David Bennett.

Taxation bills appear regularly from the policy advice division of the Inland Revenue Department, as regularly as the passing seasons. They are some of the most complex that we consider and they are thoroughly deserving of debate.

The CHAIRPERSON (H V Ross Robertson): Order! Could I ask the member to talk to Part 1 of the bill, because the member has had half of his time. Otherwise there will be an issue of relevancy.

BRENDAN HORAN: Thank you very much. I am going to miss you. Part 1 of the bill, in clauses 3 to 61, comprises amendments to the Income Tax Act 2007. I would like to address several aspects of some of the provisions in these clauses. We are told, for instance, that in the category of remedial adjustments there are provisions affecting us—that is, affecting all members of Parliament—and that is why I brought up the issue of members of Parliament earlier. One provision is “Correcting an unintended minor change to the tax treatment of allowances for members of Parliament.” Another provision at clause 12 and elsewhere is to “correct an anomaly arising from changes to fringe benefit tax provisions to ensure that the tax applied only to the private element of any payment or service provided to members of Parliament under the Civil List Act 1979. This would accord with the original policy intent.” I am sure that is a relief. We are all heartened to know that the original policy intent will apply. I can see the Hon Tau Henare is breathing a sigh of relief.

I am equally sure, equally certain, that this will be the talk in the cowsheds throughout the Waikato, where the honourable member David Bennett resides, and also in Southland, and in every dairying region throughout New Zealand. The talk in the cosmopolitan clubs and the RSAs throughout town and country will be of nothing else but the original policy intent that will apply to members of Parliament.

Equally, I am sure that the press gallery will be riveted by this news. Patrick Gower and Corin Dann will no doubt be ready in their reports for the first stories in their 6 p.m. bulletins, and then later on, with all the other content, they will be able to fill up their late news bulletins from all the contributions after dinner. They will no doubt be including the changes also included in this part, changing the rules for livestock valuation. That will be important to the men and women in the cowsheds. I would note that rules for livestock valuation were introduced just 12 months ago in that riveting Budget 2012. If you think this speech is boring, check out that Budget. So this Government—

Hon CLAYTON COSGROVE (Labour): All I can say about that previous contribution by Brendan Horan is that I was chloroformed by that speech, absolutely. The Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill does a number of things—

Brendan Horan: I raise a point of order, Mr Chair. I do not mean to interrupt that member’s speech because I love his speeches, but I was just wondering whether my microphone was working, because earlier today I noticed that the Chair found it difficult to hear me, and I was wondering whether we had that same problem.

The CHAIRPERSON (H V Ross Robertson): You can rest assured, Mr Horan, that I heard you.

Hon CLAYTON COSGROVE: This bill makes a number of adjustments, but I have got to say this is not the big tax bill. This is not a major set of reforms that we were promised by this Government. The major set of reforms that it embarked upon, of course, was what it called, in its sort of spin-like way, a tax switch, which saw the top 10 percent of New Zealanders get 40 percent of the tax cuts—40 percent of the tax cuts.

Hon Anne Tolley: Don’t tell lies.

Hon CLAYTON COSGROVE: Pardon? What was that? What was that? Somebody said: “Don’t tell lies.” Well, that is really interesting, because we have made a couple of speeches on this and I have challenged members opposite at every stage through this debate to get up, take a call, and tell us whether they think the so-called tax switch, where the top 10 percent got 40 percent of the tax cuts, is equitable. So I ask them again—in fact, I will yield to one, if they would like, if they are prepared to get up and say that that is an equitable tax switch.

Hon Anne Tolley: Don’t tell untruths.

Hon CLAYTON COSGROVE: Hang on, there is a noise. There is a squeak from the middle row. Was that an admission of guilt? Oh no. Of course they will not. What New Zealanders want—[Interruption] Pardon?

Andrew Little: Her head’s gone down again.

Hon CLAYTON COSGROVE: Oh yes—

Hon Anne Tolley: Talk to the bill.

Hon CLAYTON COSGROVE: Talk to the bill? Well, part of any bill, I say to that Minister over there, when we are talking about tax, is that people want equitable and fair tax. They want confidence in their tax system, and they want a simple and transparent tax system. There is no equity in this.

There are a couple of issues. For instance, in Part 1 there is an item that deals with Learjets, or private jets, whereby the scheme of arrangement is tightened, as I understand it. If you buy a Learjet, say, as Sir Peter Jackson has done, for about $80 million, and you use it a couple of days a year and you try to claim that it is a major commercial expense for, say, 50 percent, as I understand it, those rules are tightened. Well, I have got to say that is a good thing, because otherwise that is a swindle. But I have got to say, compared with substantial reform in the tax area, that does nothing for Joe or Joanne Public in the street in terms of the other 90 percent of New Zealanders, who got very little, if anything, and get very little, if anything, out of the so-called tax switch.

Hon Anne Tolley: That’s not true.

Hon CLAYTON COSGROVE: Well, if it is not true, Ms Tolley, get on your feet and take a call in the debate. Get on your feet and actually justify it.

Paul Goldsmith: I am happy to take one. We will.

Hon CLAYTON COSGROVE: Oh, “Goldfinger” at the back. He is going to justify it. Good stuff! Well, I wait for that speech, and I wait for that member to tell us whether the top 10 percent getting 40 percent of the cuts is equitable. Just like, of course, what the Prime Minister said about power prices, which is that nobody is paying too much for power, as did—

Hon Simon Bridges: That’s right.

Hon CLAYTON COSGROVE: That is right, says the Minister in the chair, the Minister of Energy and Resources—old “Jed Clampett”. “That’s right.” he says. “That’s right.” Let us get it on the record again: no one is paying too much for power, according to the National Government. But I asked that Minister in the Finance and Expenditure Committee. I said: “Can you tell us at what point you believe, if power prices go up, they would be paying too much for power?” Oh, absolute silence. To quote him out of the transcript: “I can’t give you a dollar figure.” That is what he said. So the Government cannot justify its position now. No one believes the Government, as people get their first set of power bills in the cold and dreary weather, not to mention the tax reductions and the tax breaks that they are not getting because of the inequity of the so-called tax switch.

So, OK, it has done a couple of things for the owners of private jets. That would be Kim Dotcom, I presume. That would be Sir Peter Jackson and a couple of other people. I do not know how many people in the gallery or listening to this own their own private jet and will be shaking in their boots tonight as they feel they may have to pay a little more tax if they go out and purchase a Learjet. But I will tell you that the other great tax reforms that this crew embarked upon, of course, are being mean to paper boys and girls, and the car-park tax, which it stuffed up completely—absolutely stuffed up. The old worker in his or her car-park, the old paper boy or paper girl trying to get a few bob, a bit of pocket money—oh, there is “Uncle Scrooge”, the National Government, round the back pocket, grabs the wallet, and pilfers it. But if they own a Learjet and this legislation goes through, then, as we said today, they might have to pay a bit more tax—a great, groundbreaking reform from this mob.

Of course, the problem that this crew have when they are looking at the revenue side is what we found out today. Referring to clause 5(3) in Part 1, that is the point that Damien O’Connor raises. If you look at the State-owned assets sale, what we know about the revenue side of this Government’s Budget is that it says it is going to get $5 billion to $7 billion from State-owned enterprise sales. It stuffed up the first one, Mighty River Power, and now Meridian Energy. As proof of that, the Government now says it is going to have to do Meridian Energy in blocks or slices, or whatever. It said it was going to get two or three away earlier this year. It cannot even get that right. But it says, even though it has got an under-investment in Mighty River Power, that it is going to still get $5 billion to $7 billion of revenue out of those sales. What is it going to spend it on? Well, the list is long: KiwiRail, schools, irrigation, hospitals—all these things that actually, by the way, do not generate any revenue. Last time I checked, a school or a hospital does not. A hospital is there to make patients healthy. So the Government sells a revenue-generating asset, which brings in ongoing dividends to the taxpayer, to spend on those things. It purchases non - revenue-generating assets, and it can do that only once because the money runs out.

But it gets better, colleagues, because $5 billion to $7 billion, apparently, is going to pay for the Christchurch rebuild and a whole set of other things, and that total bill adds up to $84 billion—billion with a B—worth of expenditure out of $5 billion to $7 billion revenue of sale proceeds, if the Government gets all those assets away. So, to quote the Prime Minister’s favourite phrase, I say to those opposite, show us the money, because there is a big gap and a big hole in the fiscals that this Government puts forward. That is why you would think it would actually make some substantive reform, not just the odd Learjet or private jet, as it is doing here—not just clause 5(3) of the bill, of course, in here, in respect of the dividends from the sale. I ask the Minister the same question that Damien O’Connor asked.

I see Gerry Brownlee is here. He is the third most powerful man in New Zealand, according to the Christchurch Press. He will know the answer to this: is clause 5(3) of the bill going to affect the bonus shares, the loyalty bonus, from the Mighty River Power sale? Any takers? Gerry, have a crack—all of your fingers and toes? No. No, of course. No, the Government will not answer that. It does not know.

Hon Gerry Brownlee: I’ve got all of my fingers and toes.

Hon CLAYTON COSGROVE: All your fingers and toes, Gerry. Try that. Count up. You know, I am sure he bought some shares. He may get part of the loyalty scheme. He may be able to tell us whether clause 5(3) of the bill actually impacts on that.

Then, of course, finally, we have the tinkering with GST and some adjustments. What we do not have here is the Prime Minister, or Gerry Brownlee, or the Minister in the chair getting up and apologising to the people of New Zealand for National lying to them—and it did—when it went back on its word in respect of the increase in GST. This is not the brave new world that we were promised by National, or the brighter future. This is fiscal piffle.

PAUL GOLDSMITH (National): I was very interested to hear from the previous speaker, Clayton Cosgrove, about his concerns about equity in the tax system. He was terribly worried that Joe Public in the street is having a hard time and that all the tax cuts are going to the wealthy. So I thought I would just remind him of a couple of statistics. At the moment 6 percent of income tax payers pay 37 percent of the income tax. So the higher-income earners pay a lot. But that does not anywhere near explain the actual extent of massive redistribution that we have in the system. When you take into account Working for Families at the same time—and I am trying to focus here on the first part that we are talking about—take for example, Joe Average on the street, whom Mr Cosgrove referred to. If you were on the minimum wage and effectively earning $30,000 a year, and you happened to have three children, it would be interesting to know how much tax you would expect that person to pay under this iniquitous arrangement, which the Labour Party thinks is a terrible one. Do they pay any tax—someone on the minimum wage, with three children? No, they actually get given $10,000 extra, so that their after-tax income is $40,000. Rather than paying any tax under this massively redistributive system, they are actually paid $10,000 extra so that their after-tax income goes from $30,000 to $40,000.

I am responding to the issue that Part 1, it has been suggested, is not doing enough to reform the tax system. Actually that person, having been given an extra $10,000, would pay maybe $2,000 or $3,000 in GST, but for that, of course, you get free health-care, free superannuation, free education at the point of delivery, and all the sorts of things that the Government provides.

I will just use one final example before I step up. What happens if there are two income earners in the family and the household income is $50,000? What tax would you expect them to be paying, if they had two children—two income earners with $50,000 in household income. If they had two children, well, they would not be paying any income tax at all; they would actually be given $1,600 on top of that. So their actual after-tax income is higher than their pre-tax income. Again, it is hardly the most inequitable system, unless, of course, you are suggesting that maybe there is too much redistribution, and I think that is an issue that we need to resolve.

If there are three children in that household with $50,000 of income, in fact, the tax is not zero; they are given an extra $5,000. So their after-tax income goes from $50,000 to $55,000. I just thought I would put those figures down on the table so that the people in the Parliament can realise that when we hear all this nonsense about the Government letting off the wealthier people from paying tax and making Joe Public struggle, we—

Hon Trevor Mallard: Do you want to speak again this year?

PAUL GOLDSMITH: Sorry? I think I have probably said enough on this issue, so thank you very much.

BRENDAN HORAN (Independent): I look forward to being able to participate in democracy. I note that the rules for livestock valuation were introduced just 12 months ago, in Budget 2012, so this Government is having to make changes almost before the ink is dry on the original legislation. We saw a parallel of this around about 6 weeks ago in this Chamber. Simon Bridges rushed through the Crown Minerals Amendment Act in April, and it had so many flaws that this House, under Budget urgency, was asked to debate the “Crown Minerals Amendment to the Amendment to the Amendment Bill”. When the House is put into urgency, as I said earlier, a little bit of courtesy at the beginning of the week would go a long way. Members such as me have to cancel or rearrange constituent appointments, so it has a great effect.

But, anyway, this taxation bill with “Livestock” in its name, the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill, is another fixer-upper bill. But to return to members of Parliament and the way the taxation law applies to us, in clause 12 the final wording, after many changes and revisions, provides that in respect of services for members of Parliament: “An amount is exempt income of a person to the extent to which it is income of the person and is not exempt income under another provision of subpart CW, if the amount is travel, accommodation, attendance, and communication services, as defined in section 20A(7) of the Civil List Act 1979, and,—(a) the amount is—(i) referred to in section 20A of that Act: (ii) paid under section 25 of that Act; and (b) the amount is—(i) provided to a person to whom any of section 25 (1)(b) to (e) of that Act applies:”. Honestly, it is a relief to know that the original policy intent applies, and I suspect that none of us would have been able to divine that from reading clause 12 as it was written.

I welcome the opportunity to thoroughly examine, to scrutinise, and to debate the important business the Government puts before us today. There are another 17 parts and provisions of several bills to debate, and I look forward to the debate and contributions of members after the dinner break. Thank you.

The question was put that the amendments set out on Supplementary Order Paper 266 in the name of the Hon Todd McClay to Part 1 be agreed to.

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

Ayes 118

New Zealand National 59; New Zealand Labour 33; Green Party 14; New Zealand First 7; Māori Party 2; ACT New Zealand 1; Independents: Dunne, Horan.

Noes 1

Mana 1.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Amendments to other Acts

The question was put that the amendments set out on Supplementary Order Paper 266 in the name of the Hon Todd McClay, and the amendments set out on Supplementary Order Paper 272 in his name, to Part 2 be agreed to.

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

Ayes 103

New Zealand National 59; New Zealand Labour 33; New Zealand First 7; Māori Party 2; ACT New Zealand 1; Independent: Dunne.

Noes 16

Green Party 14; Mana 1; Independent: Horan.

Amendments agreed to.

Part 2 as amended agreed to.

Schedule

The question was put that the amendments set out on Supplementary Order Paper 266 in the name of the Hon Todd McClay to the schedule be agreed to.

Amendments agreed to.

Schedule as amended agreed to.

Clauses 1 and 2

1 agreed to.

Clause

The question was put that the amendments set out on Supplementary Order Paper 266 in the name of the Hon Todd McClay to clause 2 be agreed to.

Amendments agreed to.

Clause 2 as amended agreed to.

Bill to be reported with amendment presently.

Hon GERRY BROWNLEE (Leader of the House): I move, That the Chairperson report progress.

Progress to be reported presently.

House resumed.

The Chairperson reported the Legal Assistance Amendment Bill with amendment, and that the Committee had divided it into six bills; the State Sector and Public Finance Reform Bill with amendment, and that the Committee had divided it into three bills; the Plumbers, Gasfitters, and Drainlayers Amendment Bill without amendment; the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill with amendment; no progress on the Airports (Cost Recovery for Processing of International Travellers) Bill; no progress on the Administration of Community Sentences and Orders Bill; no progress on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill; and no progress on the Medicines Amendment Bill.

Report adopted.

The ASSISTANT SPEAKER (Lindsay Tisch): Members, the Government has indicated to me that it no longer wishes to progress the business for which urgency was accorded. Therefore, the House stands adjourned until 2 p.m. on Tuesday, 9 July 2013. Good evening, members.

The House adjourned at 5.13 p.m. (Thursday)