Thursday, 7 May 2015

THURSDAY, 7 MAY 2015

THURSDAY, 7 MAY 2015

Mr Speaker took the Chair at 2 p.m.

Prayers.

Appointments

Clerk of the House of Representatives

Mr SPEAKER: Honourable members, I am pleased to announce that, pursuant to section 7 of the Clerk of the House of Representatives Act 1988, His Excellency the Governor-General has appointed David Martin Wilson as the Clerk of the House of Representatives for a term of 7 years commencing on 6 July 2015. [Applause]

Business Statement

Business Statement

Hon GERRY BROWNLEE (Leader of the House): Mr Wilson—ah, Mr Speaker, may I—

Mr SPEAKER: Not yet.

Hon GERRY BROWNLEE: We all know who the boss is! May I first congratulate Mr Wilson on his appointment. It did sound a little bit like a sentence, the way you read it out, but I am sure the 7 years will pass successfully and that he will grow into the role of Clerk, continuing a long history of excellent Clerks who have provided service to this House in the past. I am sure we will have occasion to farewell our existing Clerk when her appointment finally comes to an end.

When the House resumes on Tuesday, 19 May the Government will look to progress a number of bills, including the New Zealand Superannuation and Retirement Income Amendment Bill and the Waitangi National Trust Board Amendment Bill. Thursday, 21 May will be Budget day.

CHRIS HIPKINS (Senior Whip—Labour): Can I simply add to the Leader of the House’s acknowledgment of the new Clerk of the House and the departing Clerk of the House and wish both of them well. We certainly recognise the importance of the role of the Office of the Clerk as an impartial adjudicator in the proceedings of the House and ensuring that the House continues to run smoothly, despite whatever attempts we may make to thwart that. We acknowledge that the Clerk has a very important role in making sure that this House and the authority of this House is respected and upheld.

Obituaries

Ērima Hēnare

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato): I seek leave to move a motion without notice and without debate relating to the passing of Ērima Hēnare.

Mr SPEAKER: Is there any objection to that course of action? There is none.

Hon NANAIA MAHUTA: I move, That the House note the passing of Ērima Hēnare, chair of Te Taura Whiri i te Reo Māori, former chief executive of Ngāti Hine Health Trust, director of The Open Polytechnic, board member of the Waitangi National Trust, and a member of the Waitangi Tribunal, and acknowledge the contribution of this great New Zealander.

Waiata

On behalf of the New Zealand Labour Party we would like to acknowledge the contribution of a great New Zealander. Ērima Hēnare sadly passed in the early hours of this morning. He was here, just yesterday afternoon, to witness the swearing-in of a fellow member Ria Bond, a Ngāti Hine kinsman.

Ērima was the son of the late Tā Hemi Hēnare, the founder of the kōhanga reo movement. His contribution was significant, but that of this son Ērima was too. He was the chair of Te Taura Whiri i te Reo Māori, the former chief executive of the Ngāti Hine Health Trust, the director of The Open Polytechnic, a board member of the Waitangi National Trust, and a member of the Waitangi Tribunal. He was a trusted adviser to many, and certainly to Tuheitia. He is the father of Robert; Peeni, our colleague; Tātai; and Tāpeka. So to them and his partner, Debbie, we grieve with them at this particular time as he makes his journey from Wellington back home. Our deepest sympathy goes to them, the people of Ngāti Hine, and all the people of the north for their sad loss. Nō reira e te matua, haere, haere atu rā.

Motion agreed to.

Oral Questions

Questions to Ministers

Budget 2015—Return to Surplus

1. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he agree with the Prime Minister with regard to achieving a budget surplus that “If we had to take $300 million out of the health budget or something to achieve that, I think most people would think that’s a bit silly”; if so, why did he reduce the new operating spending allowance by $500 million for 2015/16 after the Treasury forecast a deficit for that year?

Hon BILL ENGLISH (Minister of Finance): Yes, I agree with the Prime Minister. In regard to the second part of the question, the member is simply wrong. We did not reduce the allowance for new spending at all. What we did say is that we allowed an average of $1.5 billion across 3 years for both spending and tax reductions, and in light of the forecasts, we moved the $500 million in the first 2 years into the third year. This is all simply Government accounting. What we know the member is going to try to do is say that there is $500 million of cuts, because that is what he has been saying since he was a student protest leader, and his economics have not changed since then.

Grant Robertson: So to clarify, is it correct that he increased the spending allowance for Budgets 2015 and 2016 by $500 million in an election year Budget, and then cut them again by $500 million just a couple of months after the election?

Hon BILL ENGLISH: No, that is not correct. As I explained before, the Government allowed $1.5 billion over the next 3 years, on average. That was all quite transparent in the election campaign, and we always said it was for spending and tax cuts and reductions in ACC levies. We have this year simply used the $1 billion that we specified for spending and pushed the $500 million for moderate tax reductions into 2017. It does affect the surplus numbers, as the member has pointed out.

Grant Robertson: Is this not, as he has just described it, exactly the kind of fiddling around with the books that has led New Zealand businesses and workers to be overcharged by hundreds of millions of dollars for ACC—in search of a Budget surplus that he has now pushed out to the never-never?

Hon BILL ENGLISH: No, and the member is giving a misleading impression that it is the Government’s books. The Government’s books are absolutely transparent. The spending allowance is simply a construction that we use to discipline our spending; it is not Government accounting. But it brings me back to the heart of this issue, which is that Labour always wants to spend more, regardless of whether it works and regardless of whether it changes anything, and it cannot stand it when it thinks someone may be being careful with the spending.

Grant Robertson: How is it responsible to be “manipulating the books” or “using a construction”, in his words, to offer the prospect of tax cuts in an election year in 2017, when over successive Budgets he has failed to meet needs in core areas like health and education? How is that responsible, Minister?

Hon BILL ENGLISH: The member is simply wrong. The impact of our health and education systems on New Zealanders is better than ever. There is more of pretty much everything that New Zealanders need, despite the fact that money has been pretty tight. There are a lot more children—for instance, Māori and Pacific students—achieving the National Certificate of Educational Achievement level 2. Māori immunisation rates are now almost as high as the general population’s, when for 30 years they lagged by a long way. Actually, the key to this Government’s management is Better Public Services, even if we are a bit tighter with the money.

Grant Robertson: With our exports dropping, a failure to diversify beyond commodities, leaving a $7 billion hole in the economy, and the Christchurch earthquake rebuild peaking, can he give New Zealanders today just one new idea that he has to grow the economy, or is he just plain tired and out of ideas?

Hon BILL ENGLISH: The great thing is we have a country where there are thousands of people with thousands of new ideas about developing the economy. It is my job and the Government’s job to support them. Labour’s view is that the country should wait around for Grant Robertson’s new idea, and apparently his new idea is work. Labour has discovered work; it is just that it is against all of the policies that create work.

Government Financial Position—Public Services

2. ANDREW BAYLY (National—Hunua) to the Minister of Finance: What steps has the Government taken to get on top of its spending?

Hon BILL ENGLISH (Minister of Finance): It is a continuous job of the Government’s, not just through Budgets but day to day across the Public Service, to improve value for money. After all, we have hundreds of millions of dollars only because people working in the rain today will next week hand over $200 or $300 of PAYE, money that they could have used a lot better. So we take a very serious view of the stewardship. The total annual cost of new initiatives in this Government’s previous six Budgets is less than $2.9 billion. The last six Budgets of the previous Governments had $20 billion of new spending, and the best measure of the problem with that was the Salvation Army in 2008 saying that it had not seen any measurable improvement in social outcomes, for all the huge new spending.

Andrew Bayly: Will the Government take further steps to cut spending in light of lower than expected revenue?

Hon BILL ENGLISH: No, we will not be pursuing cuts in services or income support in a knee-jerk response to lower tax revenue. It is not to say that there will not be some services that we stop paying for because they are ineffective and they are not making a difference to New Zealanders’ lives. Such measures, if we were to cut services randomly to chase revenue targets, would undermine the confidence of New Zealanders in the quality and effectiveness of public services at a time when public trust in public services is the highest it has been. So we do not want to upset that level of confidence.

Andrew Bayly: What is the Government’s record in delivering better public services while staying on top of spending?

Hon BILL ENGLISH: The Government’s record is good but, of course, we need to do a lot better. Three years ago the Prime Minister set 10 challenging targets for the Public Service that ranged over better health, better educational achievement, reducing crime, and lowering welfare dependency. We are making improvements in pretty well all of these areas, and we are not satisfied that continuing with all existing programmes just to keep people happy is good enough for New Zealanders. We have also been reprioritising. In fact, over the last six Budgets there has been around $15 billion of reprioritisation to make sure we get better results.

Andrew Bayly: What is the Government’s approach to delivering long-term cost savings in relation to the provision of public services?

Hon BILL ENGLISH: Of course, the Government is focused not just on savings this year, we are focusing on intergenerational savings. If we resolve problems in complicated families and struggling communities, then we will be spending less in the long run. For example, 1 percent of the children born in 1990 had contact with Child, Youth and Family before the age of 5. They had parents who were in contact with the corrections system and had been in households supported by benefits for most of their lives. Thirty-six percent of people with these three factors will be on a benefit at age 35. So you know that pretty much from when they are born, compared with 9 percent of the general population. Almost 5 percent of this group will be in prison at the age of 35. Some of these individuals will cost around $1 million each, just in corrections, Child, Youth and Family, and income support costs, and that represents significant misery in families and communities. We will continue to change things in order to change their lives.

Grant Robertson: With reference to the first supplementary answer that the Minister gave, which of the following items of spending from Labour Budgets that he likes to criticise has he got rid of: 20 hours of free early childhood education, Working for Families, interest-free student loans; or is it not just true that the Minister has failed to come up with new ideas and now has failed to get new ideas to grow the economy, as well?

Hon BILL ENGLISH: I can confirm that even by Labour’s measure of those programmes, its best years are behind it.

Whānau Ora—Auditor-General’s Report

3. Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) to the Minister for Māori Development: Does he agree with the Auditor-General that one-third of the $137.6 million appropriated for Whānau Ora was spent on administration and could have been spent “on those people and providers who Whānau Ora was meant to help”?

Hon TE URUROA FLAVELL (Minister for Māori Development): I te tīmatanga me whai wāhi au ki te whaiwhai haere i ngā kōrero o taku tuahine i tuku poroporoaki ki a Ērima, otirā, ki a Peeni e tangi nei. Ka tangi ake ki a ia, ki a koutou o te Reipa mō tērā āhuatanga, ā, ka tangi ki te whānau. Ērima, te pou o Te Reo Māori, moe mai, moe mai, moe mai!

[First of all, I take the opportunity to follow up on the tenor of the farewell tributes accorded to Ērima by my sister colleague. Furthermore, condolences to Peeni grieving here. I grieve for him, for you in the Labour Party as well, and for the family. To you, Ērima, pillar of the Māori language, sleep, sleep, sleep.]

In response to the question, I can say that although I welcome the findings of the Auditor-General and her report, I do want to emphasise that in 2010 Whānau Ora was a new initiative and required that level of administrative support. Many of the costs were one-off costs for the design and implementation of the programme, and included research and evaluation. So I believe that the building of this infrastructure was an important step in ensuring that long-term benefits for whānau could be achieved.

Hon Nanaia Mahuta: Is he satisfied that the $7.9 million of taxpayer dollars allocated towards research and evaluation between 2010 and 2014 is justifiable, given that there is no published ethnicity data, no ability to measure short-term gains, and no ability to measure outcomes across key Government agencies in a consistent manner?

Hon TE URUROA FLAVELL: My information says that the amount of money that was used on research and evaluation was $9.7 million, which equated to about 22.9 percent of the overall spend. As I say, the Auditor-General—you cannot have it both ways, and on one side call for accountability for the spending of funds for Whānau Ora, and not follow the fact that there was, and clearly is, an amount of money set aside for those sorts of things, such as evaluation. Those things were put in place to ensure that the programme did have a robust background to it and was able to add to the development on into future years. Having cut away pretty much all of those costs identified earlier, the officials tell me that about 20 percent was left, which under current circumstances, according to the information I have, is a pretty responsible amount of money available for the administration of the programme.

Hon Nanaia Mahuta: I raise a point of order, Mr Speaker. The question was specific—

Mr SPEAKER: Order! The member will resume her seat. I listened very carefully to the question. I listened very carefully to the answer. That question was certainly addressed.

Pita Paraone: Thank you, Mr Speaker, ēngari, i mua o te haere tonu o tōku pātai, kei te tautoko i ngā mihi i mihingia e te tuahine, e Nanaia, ahakoa ko Ngāti Hine tēnei e mihi hoki ki a Ngāti Hine ēngari, tika ana i raro i te kaupapa o ō tātou mātua tūpuna, kei te tautoko i ngā mihi ki te rangatira, a Ērima.

[Thank you, Mr Speaker, but before I continue with my question, I endorse the tributes accorded by the sister colleague Nanaia. Although this is Ngāti Hine applauding Ngāti Hine as well, nevertheless it is appropriate under the custom of our ancestral forefathers that I support the tributes accorded to the leader Ērima.]

How long will we have to wait before the issues raised within the Auditor-General’s report on Whānau Ora are addressed; if already addressed, which of the issues have, in fact, been addressed?

Mr SPEAKER: The Hon Te Ururoa Flavell—either of those supplementary questions.

Hon TE URUROA FLAVELL: The audit report was from 2010-14, which was phase one of the roll-out of Whānau Ora. We are now moving into a new phase, and I can give the member an assurance that as a Minister, indeed a new Minister, I have taken up the recommendations of the Auditor-General and intend to keep a close watch on how those are dealt with into the future.

Hon Nanaia Mahuta: Does he believe that the $6.6 million for the three commissioning agencies was money well spent; if so, are they best equipped to make decisions about funding of Whānau Ora providers?

Hon TE URUROA FLAVELL: The decision to roll out into a commissioning model was another bold move on the part of this Government in association with the Māori Party, and allows us to move into a new phase, building on the information that came out of the Auditor-General’s report and, indeed, the Productivity Commission’s report. So I am comfortable enough with the fact that we are moving into a new phase and that commissioning agencies are an important ingredient in that picture. Having been around all of them, I am clear that they have the processes and infrastructure in place to ensure that the same accountabilities required of Ministers will in fact be able to be measured and reported back to the House, as they are required to do to me as the Minister, over the years to come.

Pita Paraone: Can the Minister guarantee that the changes already made to Whānau Ora ensure public funds can no longer go towards events such as Ōtaki’s Rahui Rugby Football Club’s $60,000 one-day hui; if not, why not?

Hon TE URUROA FLAVELL: The approach taken with Whānau Ora is that it is not about one approach fits all, and that there are many ways in which we can support families to achieve their goals of being resilient, of living healthy lives, of being economically sustainable, and of being able to be full participants in society. I can say that, in answer to the question from the member, I will be having a close look, as will the Whānau Ora Partnership Group, at all proposals that come our way. But in the end we have commissioned certain outcomes from the commissioning agencies. We expect those outcomes to be delivered.

Hon Nanaia Mahuta: In a nutshell, what outcomes has the Minister sought from the Whānau Ora commissioning agencies?

Hon TE URUROA FLAVELL: Those are far and wide ranging—a desire on the part of this Government, and indeed me as a Minister, to have families be strong within themselves and to be resilient. It can range from everything from helping those mums who happen to be associated with violent lives to be able to live in a safe environment—a warm, healthy home—and that the children will be brought up in a safe environment, all the way through to allowing those who want to seek a new way of doing things in the economic development sphere to be able to do so. It is wide ranging, and that is the beauty of Whānau Ora.

Hon Nanaia Mahuta: Has the Minister sought an assurance from the Whānau Ora commissioning agencies that existing Whānau Ora providers are informed of the new contracting and funding process, and that there is a clear time line that has been explained to them to implement those decisions to support whānau?

Hon TE URUROA FLAVELL: That is a rather difficult question at this point in time because much depends on the Budget, and I am unable to provide too much information about the very good Budget coming out shortly. Under those circumstances, I am rather restricted in what I can say, but there is an expectation, as I said, when there has been so much work done in this particular kaupapa. I am not about to let it lie as the Minister, and I will ensure that systems and procedures in place will deliver the best possible results for Māori and, indeed, the country.

Surgery, Elective—Funding

4. SIMON O’CONNOR (National—Tāmaki) to the Minister of Health: What steps is the Government taking to increase access to elective surgery?

Hon Dr JONATHAN COLEMAN (Minister of Health): Yesterday the Prime Minister and I announced that an extra $98 million will be invested in Budget 2015 to provide more New Zealanders with timely elective surgery and to improve the prevention and treatment of orthopaedic conditions. Of this, $48 million over 4 years is to continue this Government’s ongoing commitment to increasing elective surgery by an average of 4,000 operations per year. An additional $44 million is being invested over 3 years to support extra orthopaedic and general surgeries.

Simon O’Connor: What other steps are being taken to help those with muscle and pain conditions?

Hon Dr JONATHAN COLEMAN: In addition to increasing the number of elective surgeries, the Government has announced that $6 million will be invested to establish early intervention multi-disciplinary teams in every district health board. These community-based teams will provide broader and earlier treatment options for patients with a range of musculoskeletal problems. It is an innovative initiative that will help alleviate suffering.

Dr David Clark: Is the $48 million to increase elective surgeries by 4,000 a year he announced yesterday completely different from the $48 million Tony Ryall announced to increase elective surgeries by 4,000 a year in last year’s Budget; if not, why is the Government putting old wine into new bottles?

Hon Dr JONATHAN COLEMAN: The member is absolutely incorrect. Last year it was $110 million over 4 years. This is new money—$98 million in total. He is referring to $48 million over 4 years.

Housing Market—Overseas Buyers

5. PHIL TWYFORD (Labour—Te Atatū) to the Minister of Finance: Does he stand by his statement that determining who is foreign for the purposes of restricting residential property ownership by foreign speculators is a “swamp”?

Hon BILL ENGLISH (Minister of Finance): Yes.

Phil Twyford: Why has he ruled out restricting the purchase of existing homes to New Zealand citizens and residents given that Australia, Canada, and Singapore have all enacted such policies or similar restrictions, or is it that these successful nations are just xenophobic?

Hon BILL ENGLISH: No. I would note that all of them have more intensive house price cycles than we do, for a start, and, secondly, actually, observation of those systems shows just how difficult it is to determine and enforce this type of measure. But, you know, we are gradually picking our way through the swamp.

Phil Twyford: Is he aware that the state of Victoria, Australia, now has a jail sentence for foreign speculators who rort its homeownership rules, and, given that ANZ data shows that in New South Wales and Victoria foreign speculators account for between 25 percent and 30 percent of purchases, why has he repeatedly refused to even collect the data here?

Mr SPEAKER: The Hon Bill English—either of those two supplementary questions.

Hon BILL ENGLISH: I think that the member has just highlighted the problem. They have had rules in Australia that foreigners cannot buy existing houses, and they have got data that shows that 35 percent of house sales are to foreign buyers. The reason they are bringing in prison sentences is that they have not been able to enforce the law, and now they are trying to scare the wits out of foreigners who have been getting round the law on a large scale.

Phil Twyford: Why does his speculator-friendly Government deny that demand pressure caused by property speculation is contributing to skyrocketing house prices in Auckland when the Reserve Bank thinks that speculation-driven demand is a threat to financial stability, or is it wrong too?

Hon BILL ENGLISH: In fact, the Government set up a memorandum of understanding with the Reserve Bank, which is enforcing macro-prudential measures in a way that they are not doing in Australia, and with some success. The Government keeps an eye on how these other jurisdictions are dealing with the pressure of overseas capital. Looking at those systems shows how complex it is, and that is why we are picking our way carefully through the swamp.

Metiria Turei: Will the Minister rule out selling State houses such as those that are soon to be on the block in Invercargill, Tauranga, and elsewhere to non-resident foreign buyers?

Hon BILL ENGLISH: We have not put in any such rule, but they would have to be registered as a community housing provider, and, as far as we know, there are none of that sort that have registered. We are very pleased to be able to proceed with those transactions because I think we can get a better deal for tenants, and give the opportunity for those communities to redevelop parts of their housing stock, and, except for the Greens and the Labour Party, everyone else in New Zealand thinks we can do a better job with State housing.

Metiria Turei: Can the Minister, then, confirm that he intends to place no restrictions at all on a non-resident foreign buyer organisation registering as a community housing provider in New Zealand for the purpose of purchasing State housing?

Hon BILL ENGLISH: No, there are not restrictions, just as in the same way in our register of charities we do not restrict global lobby groups like Greenpeace, which is another foreign multinational that tries to impose its views on New Zealand.

Metiria Turei: Can the Minister rule out State houses that are sold by this Government, such as those in Invercargill and Tauranga, being sold on at a later date and not, therefore, being used for social housing?

Hon BILL ENGLISH: No, not only are we not ruling it out but we do not want to rule it out, because part of the thing that needs to change in our State housing—and the Greens might have missed this; the population is different from what it was in 1950 when we built thousands of three-bedroom houses for two-parent households with three to five children. Now a quarter of all New Zealand children are born into a sole-parent household. The fastest-growing category of households in New Zealand is the single-person household. The Greens and the Labour Party are the only ones who seem to think that that bit of New Zealand life should be frozen in 1950. We disagree and we are proud to disagree, and we are going to make rules that ensure it changes.

Metiria Turei: I seek leave to table a letter to Housing New Zealand tenants dated 6 May 2015 that assures them they will remain in social housing.

Mr SPEAKER: Leave is sought to table that particular letter. Is there any objection? There is no objection. It can be tabled.

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

Oil Spill, Tauranga—Clean-up

6. CLAYTON MITCHELL (NZ First) to the Minister of Transport: Does he stand by his statement that “the recent oil spill was not a disaster for the Tauranga environment”?

Hon SIMON BRIDGES (Minister of Transport): Yes, of course the oil spill was incredibly unfortunate and must be—and I think has been—treated very seriously. But to say it was a disaster, in my view, is going too far, for Tauranga. Can I take this opportunity to acknowledge the very hard work of the many involved in the clean-up—it has been a laborious, painstaking job, and I am sure the House wishes to thank them.

Clayton Mitchell: With that answer in mind, how can he possibly say that 20 tonnes of oil and waste on our pristine Tauranga Harbour and on our beaches is not a disaster?

Hon SIMON BRIDGES: Of course, I accept that it is highly regrettable. No one in this House or in New Zealand would wish that to happen. I think it is worth bearing in mind, though, that we have a tiered response in New Zealand, and this is tier 2. That means that it is able to be dealt with in this case by the Bay of Plenty Regional Council. There is of course tier 3, and Tauranga, as the member well knows and as I well know, has had some experience of those tier 3 incidents, which I think in some cases are disasters.

Clayton Mitchell: Can he assure this House that not a single cent of taxpayers’ or ratepayers’ money will be spent cleaning up this big oil company’s mess?

Hon SIMON BRIDGES: There is still some time to elapse before we work all of those things through. What we know is that Mobil has accepted full responsibility for this. At the moment there is a clean-up going on, and we are the majority of the way through that, but, of course, what is also happening and will continue to happen after the clean-up is an investigation where those sorts of issues will be entirely worked through.

Clayton Mitchell: Is the Minister aware of any reports showing that Mobil is considering abandoning its New Zealand operation and, as a result, has not been maintaining its infrastructure to safe levels?

Hon SIMON BRIDGES: No.

Clayton Mitchell: What are the consequences, if any, for these fuel companies when they spill oil on our waters?

Hon SIMON BRIDGES: I think that we have seen very clearly the consequences from these things. The reputational damage from these sorts of incidents around the world is probably first and foremost, above anything else, but, of course, there is also a full spectrum of other civil and criminal penalties that can be applied.

Clayton Mitchell: Can the public expect inaction on essential improvements to the maintenance of Mobil’s pipelines in our ports, given his comments that “he could not ensure further spills in the future” and “there needs to be some realism”?

Hon SIMON BRIDGES: I think we need to wait and see what the investigation and other potential actions are before we decide on that.

Research and Development—Centres of Research Excellence and Māori-led Research

7. JOANNE HAYES (National) to the Minister for Tertiary Education, Skills and Employment: How is the Government investing in more collaborative and innovative research?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): This morning I announced the funding of four more centres of research excellence over the next 5 years, increasing the number of cross-institutional centres of research excellence around the country from six to 10. All 10 will receive 5 years of funding from 2016 to 2020. Of the 10 that will be funded, five are existing centres of research excellence (CORE) and five will be receiving CORE funding for the first time. They provide an excellent collaborative environment for the delivery of world-leading, innovative, and strategically focused research. The work of all 10 COREs will deliver benefits to New Zealand across a range of areas and will make a difference to the lives of New Zealanders.

Joanne Hayes: What areas of research do these additional centres cover?

Hon STEVEN JOYCE: Sixteen applications were presented for the four available centres. Three of the four COREs selected were previous COREs that were not successful in the first funding round last year. The successful ones are the Bio-Protection Research Centre at Lincoln University, the Riddet Institute at Massey University for food science and human health, the new QuakeCore, which is the centre for earthquake resilience at the University of Canterbury, and the revamped Māori CORE Ngā Pae o te Māramatanga, based at the University of Auckland, which stood out for the quality and coverage of its research programme. [Interruption] Get a supplementary question. Shh! To accommodate these additional COREs, the CORE fund increases by $14.94 million, up from the existing $34.8 million to $49.8 million, from 2016-17, and does not the Labour Party hate the fact that this Government is investing in science and research?

Joanne Hayes: And we are all going to love this one. What other research is undertaken by COREs?

Hon STEVEN JOYCE: The COREs support growth in research excellence through the increase in quantity and quality of research and they contribute to New Zealand’s development. Other COREs include the Dodds-Wall Centre for Photonic and Quantum Technologies based at Otago University, the Brain Research New Zealand institute, also based at Otago, Medical Technologies, the existing Maurice Wilkins Centre and the McDiarmid Institute, and the new Centre for Complex Systems and Networks, which works to develop the methods and tools for transforming data into knowledge. With the increased funding for additional COREs, the Government’s total science investment will be over $1.5 billion in 2015-16. That is an increase of more than 70 percent since 2007-08.

Hon Te Ururoa Flavell: How has the Māori Party Budget gain for 2014 of $12.45 million over 3 years contributed to maintaining the depth and calibre of Māori research capability within the tertiary sector?

Hon STEVEN JOYCE: I would like to acknowledge the Māori Party’s strong advocacy for a dedicated Māori centre of research excellence, which has resulted in a process for a—

Grant Robertson: Yes, after you cut it and then put it back in again.

Hon STEVEN JOYCE: Shh! Grant, you just—is it not hilarious that Mr Robertson, “Mr Fiscal Conservative”, has, once again, never found a bit of expenditure that should ever be changed, despite the fact that he tries to hassle Bill English for not balancing the Budget? That is the sort—[Interruption] I should be able to continue on. He will not stop; why should I?

Mr SPEAKER: Order! The answer is complete.

Hon Te Ururoa Flavell: I raise a point of order, Mr Speaker. The Minister did start but I did not quite hear the rest of the answer.

Mr SPEAKER: Order!

Hon Te Ururoa Flavell: No?

Mr SPEAKER: I am concluding that the question was addressed—maybe not very satisfactorily, but we are leaving it at that.

Hon Te Ururoa Flavell: Since the successful lobbying by the Māori Party to ensure the continuation of high-quality Māori research, what steps has the Minister taken since 2014 to ensure the maintenance of Māori research into the future?

Hon STEVEN JOYCE: A range of initiatives, actually. Again, I would like to acknowledge the Māori Party’s advocacy in this area.

Grant Robertson: Get a room.

Hon STEVEN JOYCE: The new strengthened Ngā Pae o te Māramatanga will be an institute that delivers—I do not know, Grant. It is just one of those things—

Mr SPEAKER: Order! Can the Minister just complete the answer.

Hon STEVEN JOYCE: The new strengthened Ngā Pae o te Māramatanga will focus on the Māori economy, environment, and human flourishing, which I think is very important. We have also got a range of other areas that we are investing in, including the new Vision Mātauranga Science Fund, which is investing significantly in the Māori communities, the Māori Innovation Fund, and the Māori Information and Communications Development Fund. So it is great to see the opportunity to invest in science and research in the Māori research community.

Foreign Workers—Conditions

8. SUE MORONEY (Labour) to the Minister of Immigration: Does he agree with the statement made by the Hon Michael Woodhouse in Parliament last week with regard to Chinese engineers repairing KiwiRail trains that the Minister of Immigration “is very satisfied that the Chinese workers in this instance were on short-term visas, and these were generally for no more than 3 months per year”?

Hon MICHAEL WOODHOUSE (Minister of Immigration): Yes, I am satisfied that the Minister for Workplace Relations and Safety articulated my advice to him accurately. However, I have since been advised that some of these workers were provided, as an exception to instructions, a subsequent visa for another 90 days. I am comfortable with the original visas being granted.

Hon Trevor Mallard: How many times?

Hon MICHAEL WOODHOUSE: Is that a supplementary question, or would you like to hear the primary answer first? [Interruption]

Mr SPEAKER: Order! I am not putting up with that level of interjection. I want to hear the answer.

Hon MICHAEL WOODHOUSE: I am comfortable with the original visas being granted, but, given that these visas are for projects of a very specific and temporary nature, I have made it clear to my officials that they should not be granting any further subsequent visas for those in New Zealand unless there are truly exceptional circumstances.

Sue Moroney: Is he aware that the New Zealand - China free-trade agreement stipulates that the duration stay of people doing this type of work shall not exceed 3 months; therefore, how does he justify the decision that he has made?

Hon MICHAEL WOODHOUSE: I do not have the full details of the arrangements that the member specifies. I am quite happy to take advice on it. I am advised that special purpose visas are for that purpose, and I have made my expectations very clear to immigration officials.

Sue Moroney: Well, in granting these visas as the Minister of Immigration, is he aware that the New Zealand - China free-trade agreement stipulates that the granting of temporary employment visas does not replace the requirement to carry out an activity according to the specific laws and regulations in force in the country; and how does this reconcile with the views of the Minister for Workplace Relations and Safety, Michael Woodhouse, that New Zealand’s employment laws probably do not apply to these very Chinese engineers whom he has granted these visas to?

Mr SPEAKER: The Hon Michael Woodhouse—either of those two supplementary questions.

Hon MICHAEL WOODHOUSE: I refer the member to my answer to her previous supplementary question.

Sue Moroney: Is the Minister of Immigration, who ought to know the rules under which he has—

Mr SPEAKER: Order! Ask the question.

Sue Moroney: Will he revoke the work visas of the Chinese engineers given that their employer is in breach of New Zealand laws requiring employers to provide wage and time records, and that the workers in question have been here longer than allowed under the provision he granted them visas for?

Hon MICHAEL WOODHOUSE: I reject the prefacing statement in that comment that these workers were employed in breach of New Zealand employment laws. The labour inspectorate, on its best advice, did not find that to be the case.

Air Services—Agreements

9. JACQUI DEAN (National—Waitaki) to the Minister of Transport: What progress has the Government made on strengthening New Zealand’s global air links?

Hon SIMON BRIDGES (Minister of Transport): I was very pleased to announce recently that the Government has approved new air services agreements with Bahrain, Colombia, Egypt, Greece, Oman, Serbia, and the Seychelles. The new agreements mean that airlines from these countries will have the opportunity to offer services to New Zealand. It also means that New Zealand airlines now have the opportunity to offer services to these countries, including on a code-share basis. All up, the new agreements will provide New Zealand with more travel, tourist, and trade opportunities within these countries. That has got to be a good thing.

Jacqui Dean: How does the Government’s work to improve global air links benefit New Zealand?

Hon SIMON BRIDGES: Well, in a number of ways. New and expanded aviation agreements with other countries give New Zealand many opportunities to expand tourism, trade, and personal ties globally. That is why the Government has managed to position New Zealand as a world leader in liberalising international aviation: from just a trickle to over 40 new or amended agreements having been negotiated in the last 3 years. We will continue to work hard on seeking opportunities to open and expand new and existing air links with other countries around the world.

Electricity Market—Prepay Schemes

10. GARETH HUGHES (Green) to the Minister of Energy and Resources: Does he think that there is sufficient competition in the pre-paid retail electricity market to keep prices low for consumers?

Hon SIMON BRIDGES (Minister of Energy and Resources): Well, yes, but in a sense it is wrong to say that competition in the markets is ever sufficient. There is always room for more of it. The other thing I would say is that competition, the Government thinks, needs to be viewed not as just some theoretical prepaid retail market but across the pre and post paid retail electricity market, which represents the real choice, the real spectrum of choices available to consumers of electricity.

Gareth Hughes: Well, does the Minister consider it a competitive market at all when in rural Northland, the Hawke’s Bay, central North Island, Nelson, Tasman, rural Canterbury, and the West Coast, according to data released from the Parliamentary Library, there is only a single retailer provider of prepaid electricity?

Hon SIMON BRIDGES: It is an exceptionally competitive market. I do not think it is actually arguable to say anything other than that it is the most competitive it has ever been in New Zealand. We have got more electricity retailers than ever before—21—running 28 brands. We have seen a million switches since 2011. As I said in response to the member’s primary question and I say again in response to his supplementary question, it is not just the prepaid market, it is the entire electricity market that is more competitive than ever.

Gareth Hughes: How on earth can it be a competitive market for prepaid electricity when the Minister’s answers to consumers are to shop around, yet that does not apply to prepaid customers because in many regions a single supplier has a regional monopoly?

Hon SIMON BRIDGES: It is an incredibly artificial position that the member has taken. He is right in some areas—Mighty River Power’s GLO-BUG is the only prepaid service. This is a relatively new innovation, which, broadly speaking, is very competitive with post-paid retail plans. Again I say that consumers all over New Zealand, in every single region, have many effective choices between prepaid and many post-paid retailers. Shopping around does provide real answers and real competition for consumers.

Gareth Hughes: Is the Minister aware that many consumers are literally forced on to a prepaid plan and, for some of the tens of thousands of households on such plans, compared with the cheapest standard plan, it is 25 percent more expensive in Auckland for the average family household on a prepaid plan, 24 percent more expensive in Dunedin, 20 percent more expensive in Northland, and 18 percent more expensive in Christchurch?

Hon SIMON BRIDGES: One can always cherry-pick answers. What is very clear is that across the spectrum, prepaid—[Interruption] They do not like it, but these are the facts. Prepaid is competitive with post-paid, and in some instances it is cheaper. We have the most competitive market ever, and that is why even David Shearer has dropped David Parker’s barmy NZ Power scheme.

Gareth Hughes: Is the Minister concerned that 58 percent of households with children that have prepaid electricity have run out of credit and run out of power in the space of a single year, according to the New Zealand Medical Journal?

Hon SIMON BRIDGES: The manner in which the member has asked that question is highly misleading. There are times, of course, where they have gone straight back out and reconnected on to those prepaid plans within minutes. As I say, there is very effective competition in New Zealand in our power schemes, and it is more competitive than ever.

Gareth Hughes: For the House’s benefit, I seek leave to table the report in the New Zealand Medical Journal titled “Kids in the Cold: Outcomes for New Zealand Households with Children Using Prepaid—

Mr SPEAKER: Order! You have described the document. We now need the date.

Gareth Hughes: That was just the title. The date is 15 March 2013.

Mr SPEAKER: On the basis that it may be informative I will put the leave. Leave is sought to table this particular article in the New Zealand Medical Journal. Is there any objection? There is objection.

Gareth Hughes: Would the Minister consider immediately starting work on a code of conduct for the prepaid electricity market, to help protect what are some of our most vulnerable families?

Hon SIMON BRIDGES: There is a vulnerable consumer code of conduct, and to all intents and purposes it is working very well.

Foreign Workers—Conditions

11. Hon TREVOR MALLARD (Labour—Hutt South) to the Minister for Workplace Relations and Safety: Does he agree with the report of the labour inspectorate that found that it is unclear whether New Zealand minimum standards law would apply to Chinese workers employed by CNR and working in New Zealand?

Hon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): Firstly, I accept the overall findings of the labour inspectorate’s independent investigation, which concluded it “could not identify any welfare issues or find evidence of breaches of New Zealand minimum employment standard law.” The report went on to say more than the member has quoted in his primary question. It said that after taking independent legal advice, it also formed the view that it was more than likely that the Minimum Wage Act did not apply in this case. It said that the evidence pointed to the workers receiving adequate pay for their daily needs and living in sound, well-maintained accommodation that appeared to provide no concerns for the workers. There was no evidence pointing to the workers’ welfare being undermined.

Hon Trevor Mallard: I seek leave to table a letter to me from Mr George Mason, the general manager of the labour inspectorate, dated 17 April, which says there is considerable doubt about whether the workers are in fact covered by New Zealand minimum employment—

Mr SPEAKER: It has been described. Leave is sought to table that particular letter to the Hon Trevor Mallard. Is there any objection? There is none. It can be tabled.

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

Hon Trevor Mallard: Who has ministerial responsibility for ensuring that employment minimum standards law in New Zealand is clear?

Hon MICHAEL WOODHOUSE: That would fall to me as the Minister, and if investigators thought that these workers were covered by those laws, they would have continued to press for more information. I am sure of that. But the best advice they received was that they were not.

Hon Trevor Mallard: Is there a specific exemption for foreign firms from the requirement to produce time and wage records to the labour inspectorate in New Zealand?

Hon MICHAEL WOODHOUSE: The requirement to produce time and wage records is a New Zealand law that covers minimum employment standards for those workers covered by it.

Hon Trevor Mallard: Do New Zealand health and safety laws apply to Chinese workers removing asbestos from locomotives at Woburn?

Hon MICHAEL WOODHOUSE: Yes, they do.

Hon Trevor Mallard: Does he believe that it is realistic to expect Chinese workers to complain about conditions to New Zealand officials when they have to return to China and their families are currently held there?

Hon MICHAEL WOODHOUSE: Regardless of whether the answer to that question is yes or no, I am aware that the local MP complained vociferously on their behalf. The labour inspectorate took that complaint seriously and investigated in a very thorough manner. I am satisfied with the outcome of that investigation.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The question was very specific and asked about Chinese workers complaining to labour inspectors. That was not addressed.

Mr SPEAKER: I think it is a very marginal call, to be honest, but I will allow the member to re-ask his question, and it is over to the Minister then as to how he answers it.

Hon Trevor Mallard: As best as I can. Does he believe that it is realistic to expect Chinese workers to complain about their conditions in New Zealand to New Zealand labour inspectors when they have to return to China and their families are still there?

Hon MICHAEL WOODHOUSE: The member calls for an assessment of my belief about a hypothetical scenario. I believe that a local MP in that scenario complaining vociferously on their behalf would prompt a very thorough and fair investigation by the labour inspectorate. And in the case that relates to this primary question, I am satisfied that it did.

Businesses—Company Register

12. ALASTAIR SCOTT (National—Wairarapa) to the Minister of Commerce and Consumer Affairs: What changes has the Government made to better protect New Zealand’s business reputation?

Hon PAUL GOLDSMITH (Minister of Commerce and Consumer Affairs): Recently the Government announced changes to legislation to protect New Zealand’s integrity and reputation as a good place to do business. Changes to the Companies Act began to come into effect from 1 May and are being phased in to ensure that all companies have the time they need to prepare for and meet their obligations. New Zealand is seen as an easy and transparent place to do business, and the National Government is committed to ensuring that this reputation is maintained and protected.

Alastair Scott: What obligations will businesses be required to meet under the changes to the Companies Act?

Hon PAUL GOLDSMITH: The new obligations are designed to reduce the misuse of New Zealand’s company register regime. For example, from 1 May all new companies will need to have at least one director who lives in New Zealand, or who lives in Australia and is a director of an Australian company. This new obligation will apply to all companies from 29 October. These changes will make it more difficult for criminals to operate undetected in New Zealand, while keeping down compliance costs for new and existing New Zealand businesses. They are an important part of this Government’s Business Growth Agenda and our goal to improve regulation and lift confidence in New Zealand’s capital markets.

Bills

New Zealand Superannuation and Retirement Income Amendment Bill

Second Reading

Hon BILL ENGLISH (Minister of Finance): I move, That the New Zealand Superannuation and Retirement Income Amendment Bill be now read a second time. First of all, I would like to thank the chair, David Bennett, and the members of the Finance and Expenditure Committee for their report. It was good work on what is quite a technical piece of legislation. However, it is an important piece of legislation. The New Zealand Superannuation Fund is a large and growing part of the Crown’s total balance sheet, and it will continue to grow. At the end of March the New Zealand Superannuation Fund had over $29 billion in funds under management. In the last 10 years this has been a very significant addition of financial management and financial risk to the Crown balance sheet. Over time, along with the other funds, it will become a more and more significant part of the economy.

The fund was well set up originally by Dr Cullen in the previous Labour Government with a very clear governance structure, in the first place, to prevent politicians from being able to exert influence over this now substantial fund, which will grow to a much larger size than $29 billion, and, in the second place, to administer the fund in a way that encourages the good governance and management of the fund. Certainly, judging by its returns, it has functioned competently.

This bill is aimed at administrative improvements, not governance changes. It should lead to some cost reduction. For those who are familiar with the financial services sector, they will know that even small reductions in costs and fees have a big impact over time. Small reductions achieved through this bill will have a big impact in 2030, 2040, and 2050, when people who today are only 25 or 30 years old will be in a situation where the Government is drawing on that fund to support their retirement.

The bill implements changes in Part 2 of the New Zealand Superannuation and Retirement Income Act. The bill will allow the Guardians of New Zealand Superannuation, as the managers and administrators of the fund, to control entities formed for the purpose of holding or managing investments of the fund, described as fund investment vehicles. This has been important because there are restrictions in the current legislation that prevent this fund from being a majority owner of any particular investment. That has had the effect of preventing it from using some pretty well-tried and tested fund management instruments.

Enabling the guardians to structure and access investments more efficiently should result in better performance of the fund. The guardians will still be prevented from holding or taking substantial controlling interests in any underlying operating entity, whether directly or through the use of a fund investment vehicle. The bill will not change the investment universe available to the guardians, and that is a pretty critical point. It does not remove any restrictions that currently exist on their ability to have a substantial controlling interest; it simply enables them to use these particular types of investment vehicles. This is consistent with the guardians’ mandate. It is particularly pertinent to their fiduciary duty to maximise return without taking undue risk for the fund as a whole.

The bill will also make administrative changes aimed at increasing the efficiency with which the fund’s assets are managed. These include giving the guardians some delegation powers. Importantly, the board will still be responsible for the actions of any delegate acting under the delegation. I am informed that all of the submitters provided useful suggestions and comments. In particular, the Legislation Advisory Committee provided specific recommendations to clarify wording around the bill’s validation clause—that is, clause 5, the validation provisions—and to clarify whether fund investment vehicles would be subject to the Official Information Act.

The committee decided that fund investment vehicles should be excluded from the Official Information Act, given the investment risks this would pose. However, the committee was comfortable that there are sufficient safeguards around this, given that the Guardians of New Zealand Superannuation are subject to the Official Information Act. I must say that the transparency of its reporting has meant that at least in my role as the Minister responsible for the guardians, I have had very few Official Information Act requests, and that is as it should be. Every New Zealander needs to be able to see what is happening with a $29 billion fund that will exist for the next 40 or 50 years.

The select committee was also concerned to ensure that the ability to use fund investment vehicles did not undermine the principles of section 59 of the New Zealand Superannuation and Retirement Income Act. This is the section that prevents the guardians from controlling any entity. The committee was comfortable that the guardians’ approach to date has struck an appropriate balance between the need to maintain a balanced portfolio, by investing in 100 percent of some real assets such as farms and forests, and a requirement to not control entities. This is particularly relevant in the New Zealand situation, where a $29 billion fund can pretty quickly own a significant proportion of the assets available for it to invest in. As the fund grows from $29 billion to who knows what—$39 billion, $49, billion, or $59 billion—there is even more of a challenge in a small economy such as ours. The committee wanted to ensure that the guardians maintain this balance in the future, so it inserted new clauses to provide that the Minister of Finance could approve fund investment vehicle investments, or classes of investments, that go beyond a passive holding of financial products.

The way the fund is organised to manage the significant risk it is taking on is critical. In recent years the fund has made high returns. It can make such high returns only by taking fairly significant investment risks. This means, inevitably, it will also sometimes make negative returns. I think this is an important point. In the shorter term the fund has been a stellar performer, returning over 20 percent on its funds under management. But in the long run it is very difficult to beat the market average returns, which these days are much lower than 20 percent. At some time, no matter how competent and professional this fund is, it is likely to make negative returns.

So I am intending here to introduce a Supplementary Order Paper in the Committee of the whole House on the bill. As I said in the bill’s first reading, the biggest risk to the taxpayer around this fund is politicians getting involved and overriding the legislation and interfering with the management of the fund. I appreciate that there is a balance of views here, and it is a bit of a fine line. However, in my view it is not consistent with the guardians’ independence as originally set up by Dr Cullen in a very thorough manner, and supported, I think, by most of the Parliament at the time. That independence means that the Minister of Finance should not be approving investments or classes of investments. That is why I want to introduce a Supplementary Order Paper that will remove the clause—as recommended by the select committee—for ministerial approval over investment decisions. I agree with the select committee that the guardians have struck the right balance, and I believe it is the guardians’ ongoing role, not the role of Ministers, to ensure that that balance continues.

I want to acknowledge and thank the committee members and the submitters for the time and effort that they put into that particular issue, because it is a complex one. I am comfortable that the controls in the Act and the bill ensure the guardians will not use the fund investment vehicles to expand the scope of what they can and do invest in. These controls include that the bill limits the use of fund investment vehicles consistent with the fund’s existing mandate, and the requirements of the guardians’ statement of investment, policy standards, and procedures to include the governance framework for the implementation and operation of the fund investment vehicles.

If this fund were to show that it could not find that balance remaining independent, then I am sure the Government would want to see legislative action taken, but it is certainly my experience, as the current custodian of the Crown balance sheet of $250 billion, that it is best to have these assets managed by people who know what they are doing, with clear parameters framed by the Government, rather than have the Minister of Finance involved in complex investment decisions that, speaking only for myself—at least, this Minister of Finance would not know what he was doing. It is best to leave those decisions to the guardians of the fund. Thank you.

GRANT ROBERTSON (Labour—Wellington Central): In 2 weeks’ time, when the Minister of Finance, who has just resumed his seat, comes to deliver the Budget, we on this side of the House will be looking expectantly forward to what we were told we would be getting in the Budget this year, which is a surplus, which, in turn, would have allowed the Minister of Finance to restart contributions to this fund. Sadly, from what we have heard in recent days, the finance Minister is set to break the promise to New Zealanders that there would be a surplus this year, and presumably, in turn, he is set to break another promise, which is that he would restart contributions to the Cullen fund—the Superannuation Fund—once we got into surplus.

It is, on this side of the House, regrettable that the fund does not have that. It is performing extremely well—that is true—but the bottom line is that in order to continue to provide New Zealanders with security in their retirement in the future, we would like to see contributions restart. I know that Chris Bishop wants to see contributions to the scheme restarted, but that will occur only when this Government sorts out its finances, finally follows through on what it promised New Zealanders, and actually gets us into surplus. Sadly, from what we heard today from the finance Minister in question time, I do not think we are going to see any new ideas. I think those members are out of ideas, they are out of touch, and they are not able to come up with things that will allow them, in this Budget, to restart contributions to the New Zealand Superannuation Fund.

The Labour Party will be supporting this legislation, although I do note that it will be good to see the Supplementary Order Paper that the Minister of Finance referred to. It did not come through the Finance and Expenditure Committee, and it will be interesting to see it arrive, I guess, on the floor of the House at some point. Obviously, we would want to read that before committing to supporting it. In general, this bill is largely of a technical nature. The Guardians of New Zealand Superannuation came to the committee and explained in some detail the way in which they wanted to use fund investment vehicles to continue to grow the fund in a sustainable way.

At the moment, as the Minister has articulated, section 59 of the principal Act, the New Zealand Superannuation and Retirement Income Act, prevents the guardians from controlling any other entity. When the legislation was created, the purpose of that was to ensure that this was genuinely an investment fund, a fund that took the resources of New Zealanders and turned that into superannuation payments for the future based on strategic and good investments. It was not based on the guardians of the fund being the controllers or the owners or the directors of entities, but rather they used those resources to invest—guardians of investment. Section 59 made that clear.

What has become clear to the guardians, and what they brought to the committee, was the notion that, actually, in order to be the most effective investors of New Zealanders’ funds, they needed to be able to make use of funding investment vehicles. They were challenged in the committee about what this really meant. Did this make them the controllers of these entities in some way or other? But they were able to make a case to the committee that, actually, what it will mean is that they will control the assets created by these entities, but they do not have control of the businesses themselves.

To put it in layperson’s terms, we are not expecting the guardians to go out and run farms or forests, or whatever it is that they invest in, but we are expecting that they have asset investment vehicles that will allow them to be more efficient and more effective in getting returns for taxpayers. On that basis, we on this side of the House consider that that approach is good. There are enough rules around ensuring that the investments are prudent. We feel that means that the overall balance of the Act is not unduly changed by this particular amendment, but, clearly, it does make a change to section 59, and we thought that that was justified in this case.

The Minister raised some questions about the role of the Minister of Finance and whether or not a particular funding decision should be made. I want to make clear that we on this side of the House support the independence of the guardians. We think that has served the fund well. Quite clearly, the guardians operate under whatever the parameters of the Act are, and today we are changing one of those parameters.

It would be completely possible and conceivable and within the spirit of the law for a future Government to decide to change some of those parameters. An example of that would be in the consideration of how much investment happens in New Zealand. That would not be telling the fund what investment to make. It would not be directing the fund and saying: “You must invest in a particular company or in a particular class of asset.” But what it would be doing is recognising something that the fund itself has said, which is that it would like to increase the proportion of its investments into New Zealand.

From a Labour Party point of view, we do think that is something worthy of consideration. We do think that, for example, it would be possible to take a very small portion of the fund’s resources and see it invested in small and medium enterprises, or in funds that would in turn support small and medium enterprises. That is not the Minister of Finance directing how an investment would be made; it is merely creating the framework in which the guardians would operate. So I do not think the Minister should take any indication that we are interested in the fund having a kind of role that compromises the way that the guardians work or the way that their independence operates. We certainly, on the main provision in the bill, have been convinced by the argument advanced by the fund and by the controls that are around that.

There are a number of other matters that are dealt with that are largely of a technical nature. I want to refer to one of those now, and that is the question of the application of the Official Information Act and the Ombudsmen Act to these new fund investment vehicles that are going to be created, or the use of them that is going to be enabled, under this legislation. We did discuss this in some detail in the select committee. One of the things that the Minister and others have noted is that the transparency of the fund is a good thing. For instance, it enables parties in this House to raise concerns about some of the classes of assets and some of the investments that the fund makes, and that is exactly as it should be. However, what we discussed at the select committee was whether, actually, it is right that the actual fund investment vehicles themselves will be subject to the Official Information Act.

What was brought forward to us was, of course, the fact that the guardians themselves are subject to the Official Information Act. So in their actions all information that they hold about the fund investment vehicles is now subject to the Official Information Act. The fund investment vehicles themselves are at arm’s length and will now not be subject to the Official Information Act or the Ombudsmen Act. I have to say that on this side of the House there is a balance to be struck here, and I think we need to see how the vehicles operate over time to ensure that we are getting the level of transparency that we have got used to in the overall operation of the fund.

So we certainly can support that clause on the grounds that all of the information that the guardians themselves hold about an investment vehicle is subject to the Official Information Act, and, indeed, through that to the Ombudsmen Act, but that the fund investment vehicle itself is not directly under those Acts. We will watch to see how that works, but I am pretty clear that we should continue to get the same level of transparency that we have had up to now. So those are two of the main issues that arose in the consideration of this.

Just in the brief time remaining to me, I want to say two things that arose around the time that we were considering this bill that are relevant. The first of those is the excellent returns of the fund. We should be proud that the fund has now got itself up to nearly $30 billion worth of value. It has done a good job, and we should respect that. However, that does not mean that the fund is not open to scrutiny for particular types of investment, and at the time that this arose we learnt of the nearly $200 million that had been lost in the investment in the Portuguese bank, the Banco Espírito Santo of Portugal. We are still concerned on this side of the House about the cash fund that is used for those investments. Investments that go through several pairs of hands will be inherently more risky, and in this case they were trying to save a bank that was already known to be in trouble. So we do need our fund to be careful in that management. We do need to know that due diligence is done. The fund managers have assured us they did that due diligence, but that kind of investment is the one that, obviously, we want to know about. We are not saying that it cannot be made, but we do believe that that level of risk through that series of transactions is one we need to look out for.

I and other members of the Labour caucus have met with those administering the fund. We have discussed this. We are aware that they are following through on this. We want to make sure that they do follow through. They believe what has happened is illegal, and they should be able to have remedy through the courts, but it is an example of where transparency is important so that we can see that kind of investment and raise questions about its suitability. But on this side of the House we are very proud about the Labour Government’s association with this fund. We thank Michael Cullen for his involvement in creating it, and we do believe it continues to serve New Zealanders well.

CHRIS BISHOP (National): It is a pleasure to take a call on the New Zealand Superannuation and Retirement Income Amendment Bill. This is a sensible and prudent bill that will allow the guardians of the Superannuation Fund to run it better—the Cullen fund, as it is affectionately known by Labour members. I do want to start my speech with a couple of points in rebuttal of Mr Robertson’s comments. The first is about the case that he has been prosecuting recently about the National Government’s apparent failure to achieve a surplus in the 2014-15 financial year. Of course, we will not actually know whether or not that has been achieved until some time in the next financial year. But it is, I have to say, a rather comical complaint from Mr Robertson and Labour members, after 7 years of complaining about the cuts that the National Government has made—or the fiscal restraint, as we would term it on this side of the House—and after 7 years of claiming that the only thing the Government is getting wrong is that it is not spending more money. I remember the days of David Cunliffe and other finance spokespeople—there have been a few of them in the Labour Party over the last 7 years—talking about Keynesian spending and deficit spending being required. After all that time, and after the fiscal legacy left to us by the Labour Government, it is rather amusing, I have to say, to—

Dr David Clark: Nine surpluses in a row.

CHRIS BISHOP: It was not nine surpluses in a row, actually, Mr Clark. It was not nine surpluses in a row. The 2008-09 financial accounts ended up with a deficit of $4 billion because of your woeful mismanagement of the Crown accounts. So it is comical to hear the Labour Party complain about the failure to achieve surplus.

The second point in rebuttal I want to say is to the claim by the Labour Party that the Government should have been, basically, putting money on the State credit card to invest in the sharemarket over the last 7 years through the Cullen fund. Because let us make no mistake about it: the equivalent of what the Labour Party has said is that over the last 7 years the Government should have been whipping out the Government credit card, going down to the ANZ cashpoint on Lambton Quay, whipping out as much money as possible, paying exorbitant interest rates on that money, and investing it in the sharemarket. Another equivalent would be borrowing more money on a mortgage in order to invest in the sharemarket. Well, the Government, I think, quite rightly and quite wisely took the view that that was not a prudent use of taxpayers’ money in a time of fiscal restraint, and declined to do that.

Let me come to the objective of this bill. The major change the bill makes is to amend Part 2 of the Act to allow the guardians to control what is known in the terminology as fund investment vehicles, or FIVs, as some have called the, and of course, the current section 59 of the Act stops the guardians from controlling any other entity. The submission by the Superannuation Fund’s guardians was that this is inconsistent with the obligation under the Act to invest consistently with best management practice. The change this bill makes allows the guardians to lower their cost to manage their risk better and to structure their investments more efficiently. I think there is widespread unanimity across the House that this is a sensible change to make. It was interrogated pretty clearly and diligently by the Finance and Expenditure Committee. I was not a member of that committee, having entered Parliament only in September 2014, but I have diligently gone and read the select committee report, as all diligent members of Parliament do. That is right, is it not, Mr Mitchell?

Dr David Clark: Very hard-working committee it was.

CHRIS BISHOP: It is a very hard-working committee indeed. I have got to say that since the new chair and deputy chair have stepped on to that committee, the workload has really increased. It really has. I also have to pay tribute to the ranking member from the Labour Party on that committee who has been a very conscientious member of Parliament on that committee.

Let me talk briefly about the Superannuation Fund because I think it is not wrong to acknowledge that it is one of the better things that Michael Cullen did. The member who spoke before me, Grant Robertson, described Michael Cullen in a newspaper article at the weekend as one of his political heroes. That is fair enough. Michael Cullen kept things pretty tight fiscally for the first 6 years of his administration, but I have got to say that in those last 3 years, from 2005 to 2008, spending went massively out of control—and, I might add, for actually no tangible outcome. It was the Salvation Army in 2008 that lamented the lack of social progress under the last Government, despite the very large increase in State spending.

It is fair enough that Michael Cullen set up this fund. It is also fair to acknowledge on this side of the House that the National Party in those days opposed the setting up of the fund. But I think we would acknowledge nowadays on the Government benches that the Superannuation Fund has proven to be a useful, effective, and, as the Minister of Finance rightly pointed out in his first reading speech on this bill, quite elegantly structured scheme in order to maximise returns for taxpayers. It is essentially a form of pre-funding New Zealand superannuation, essentially preserving tax rates at the rates they are now and, in effect, lowering real tax rates for taxpayers today to avoid increases in the future. Of course, Grant Robertson rightly pointed out that the fund has made pretty good returns in the time since it was set up in 2003.

I do want to briefly deal with the suggestion that we should change the independence of the Superannuation Fund. Every now and then you do get political parties or commentators or people involved in the financial industry who say that the fund should do something different from what it does now. The beauty of the fund as it is at the moment is that it is wholly independent from the Government. I believe, and members on this side of the House believe, that that is the right structure for the fund. When it comes to dealing with something like $30 billion worth of assets for the Crown, about 40 percent of the Crown’s balance sheet, that has to be managed prudently and effectively, and that means independence from Ministers. But you do hear groups every now and then say that the fund should do something with the money that is invested in it.

I was reading back through the first reading of this bill, and we had a suggestion from Russel Norman that the Superannuation Fund should perhaps consider investing in the forestry industry. Well, that is fair enough. It is Russel Norman’s prerogative to call for that. If he thinks it is a good investment, I invite Mr Norman to go and borrow some money and invest in the forestry industry if there is a good return. But, actually, the right thing to do is to make sure that it is not what individual politicians standing in Parliament think; it is actually people who know how business works and, actually, people who know how to maximise returns. I am certainly not in a position to do it. No disrespect to my colleague Mr Norman, but I do not think he is in a position to do it. You just heard a concession from Mr English, the Minister of Finance, that he is not either. So you have got to leave it to the experts. There is a real risk with interfering with the independence of the fund.

You also hear a suggestion every now and then from the New Zealand First Party—which, I have got to say, is all over the shop on this issue—that there should be some tie-up between the New Zealand Superannuation Fund, KiwiSaver, and KiwiSaver guarantees. Indeed, just a few moments ago you heard from Grant Robertson a suggestion that the fund should consider redirecting some of its money into small and medium sized enterprises. Again, that is a thing that Mr Robertson wants. It is fair enough for him to call for that, but I think when you start to have politicians interfering in the direction of the fund, what you do is you potentially compromise the returns to the fund. The view on this side of the House is that you should have experts, independent from the Government, investing the funds on behalf of taxpayers and trying to maximise returns. Once you start fiddling with the independence of the fund, there will be no end to what areas you might get involved in.

The New Zealand Superannuation Fund is independent. It is regarded as one of the best sovereign wealth funds in the world. People often say that New Zealand should set up a sovereign wealth fund. Well, we actually already have one, and it is regarded as one of the best-practice sovereign wealth funds in the world. The changes promoted by this bill will allow the guardians of the Superannuation Fund to exercise their responsibilities to maximise returns for taxpayers. Mr Robertson rightly pointed out a bit of back and forth in the committee about allowing the use of funding investment vehicles. The Finance and Expenditure Committee came to the view that the changes would be OK, and I acknowledge the Supplementary Order Paper being moved at the Committee stage by the Minister to further preserve the independence of the fund. I commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): Well, that was high praise from the National Party list member from the Hutt, Chris Bishop, for Michael Cullen’s good work in setting up the Cullen fund. The way it rolled off the tongue was most impressive. It was like reading Paul Goldsmith’s biography on John Banks. It was effusive, the praise was forthcoming—only in this case, it was well due.

Hon David Parker: Bill English called it a dog.

Dr DAVID CLARK: Well, we know that Bill English called the Cullen fund a dog, of course. He has changed his tune, and there should be some credit there for having the wisdom to recognise good ideas eventually, even if the Government does not have any of its own and even if it is a Government that is getting a little tired, and even if Bill English, when challenged today in Parliament to come up with one new idea, could not. I credit that member Chris Bishop for acknowledging that this has been a very, very successful fund. The Cullen fund changes that are proposed are to the fund investment vehicles, as we have heard, and those changes are consistent with the mandate for the fund. So it is not a huge change; it is a change that is in tune with what was intended when the fund was set up in 2003, and it is a change that is welcomed by both sides of the House.

The member is quite right—we did have some extensive conversations in the Finance and Expenditure Committee about the New Zealand Superannuation and Retirement Income Amendment Bill. We sought plenty of information from officials, they were forthcoming, and we had some really quality interactions. We debated at length whether or not the Official Information Act provisions should apply and sought information on that. We were convinced in the end that it may dissuade private investors from investing in the fund if they were subject to the Official Information Act investment vehicles, for a variety of reasons that were then hammered out, because you need to dig beneath the surface to discover whether that is really true and what the reasons are. We were convinced in the end that the governance arrangements for the Guardians of New Zealand Superannuation themselves would provide enough transparency for the public. The guardians have to show that they are comfortable with the governance arrangements of the fund investment vehicles, they can appoint the people who are going to be in charge of them, and they are then responsible for those appointments. They are responsible for the general purpose of the fund investment vehicles, obviously, and all of that information can be made available to the public in so far as it is not commercially sensitive.

So, as a committee, we did spend quite a lot of time on this bill. The folks at home should know that often those select committees do an awful lot of work that makes the legislation better. It comes to the House and we end up agreeing. It does not make headlines when that happens, but it is actually probably some of the more important work that we do in this Parliament. I also want to acknowledge the constructive way in which the whole select committee worked together to ensure that this bill will be progressed and be a useful one. We are all concerned, of course, that New Zealanders can live with dignity in retirement and that they can have security in the longer term, knowing that this fund is there to help pay for our future retirements as a country.

We do, though, have to acknowledge the history here, however, because National itself opposed the introduction of the Cullen fund originally. It said that New Zealand could not afford it. That was its argument then—that New Zealand could not afford this fund. That was when Labour ran nine surpluses in a row when it was in Government. That contrasts, of course, with the zero surpluses this Government has delivered in 7 years. These are the facts. So this Government opposed the Cullen fund and said that we could not afford it, but then went on to make changes to the tax regime that saw over 40 percent of the tax cuts it gave go the top 10 percent of earners in New Zealand, while the bottom 20 percent got just 10 percent of the tax cuts by value, and that was swallowed up in a GST increase. John Key changed his tune. Having promised not to increase GST when he was campaigning, he then went about changing GST. And many New Zealanders will think back to that broken promise as we come up to the current Budget, where we are about to witness another broken promise in the form of a surplus that will not be delivered. Of course, contributions to the Superannuation Fund were to be resumed when the surplus was delivered. That promise was made too, and it looks like it is also about to be broken by this Government.

This Government used to be a Government that made many promises, looked forward, and said to New Zealanders: “We will give you hope.” “We are ambitious for New Zealand.” was the phrase. Unfortunately, it now looks tired and out of touch and, in fact, we hear more excuses than anything else. We have heard a lot of explaining from Bill English over recent weeks as to why he not only will not make surplus this year as promised and as campaigned on—the most important thing in the National Party’s campaign—but cannot promise that it will happen the year after either, any more. This is a Government that, unfortunately, is coming apart at the seams. It seems to have no new ideas as to how to get to surplus. It has a Business Growth Agenda that actually has a target of increasing exports as a proportion of our economy from 30 percent to 40 percent, but that percentage is going backwards. It is now below 30 percent and going backwards. This is a Government that is not only failing to deliver on its promises but failing to produce a vision for the future that is convincing and that is actually going to take the country forward and generate the wealth that we know is needed to top up the likes of the Cullen fund to ensure that we can live in secure retirement. If this Government does not do that, New Zealanders are going to be a lot worse off in the future.

So we on this side of the House are concerned that this bill gets through. We will approve the minor amendments, apart from a Supplementary Order Paper that we reserve judgment on, having just heard about it from Bill English. It is an interesting prospect that he is bringing to the House—that he will not have oversight of these fund investment vehicles. That was one of the checks and balances that the select committee thought could be put in place—having the Minister of Finance sign those off, probably in a largely perfunctory fashion, to say that he is comfortable with them, because he is in a position of oversight of the whole of the Superannuation Fund. If the Minister of Finance signs it off, that gives the public confidence that it has been done with due process and that there is a check in place. By moving a Supplementary Order Paper to rid himself of that public responsibility, the Minister is taking a serious step that we will need to examine a little more fully. We will need to see the logic and exactly what that will mean. That is the one part where we are reserving judgment. The Supplementary Order Paper has come as a surprise today to the House.

But, as I have said, we will be supporting the bill. We know that in the Western World the fund is a model of what can be achieved. It has had returns that have averaged over 10 percent per annum since it was set up in 2003, which is a fantastic return. In fact, in 2014 it returned 13.89 percent on its investments, and that is around $5.6 billion worth of value that it has added to New Zealand’s retirement savings. Even in 2013, the year of the last calculation that I have seen from the Superannuation Fund, it estimated that $10 billion had been forgone from the lack of contributions made by the Government because, again, it said that we could not afford it.

This is a Government that cannot see an opportunity when it is staring it in the face. These returns from this fund are well worth investing in. Unfortunately, this Government seems more concerned with funding tax cuts for the wealthiest New Zealanders while middle New Zealand is missing out, real wages are stagnant, and ordinary folks who go to work every day are struggling to make ends meet. We have seen that small business creation is well down on what it used to be. All of these things are hitting New Zealand hard, particularly when we are also facing a drop in commodity prices. The failure of the Government to diversify the economy is having a very real cost and one of the costs that we are seeing is its failure, again, to re-engage in investing in this fund to bring the returns that are intergenerational, that create an sustainable economy, and that we know we need in this country. The Government has failed to achieve its surplus target, which it campaigned on. Labour had nine surpluses.

This is a sensible policy—one of the few—and we will support the bill through to the next stage. Thank you very much.

JAMI-LEE ROSS (National—Botany): I am pleased to be able to speak on this bill. It is a relatively small bill but one that does have quite a positive impact on New Zealanders, so that they can continue to see the New Zealand Superannuation Fund go from strength to strength. Credit must be paid where it is due, and this side of the House is pleased to say that the New Zealand Superannuation Fund has been performing well. It was set up in 2003 and has been doing well since. It started with $2.5 billion in cash and it has returned, I understand, over 10 percent per annum. At the end of March this fund stood at about $29 billion and the return over the past 12 months was 18.85 percent.

The Guardians of New Zealand Superannuation, however, have been discussing over some time with the Government some changes to the legislation that they operate under. These changes are contained in this bill that we discuss today. The changes would effectively enable the fund to use fund investment vehicles to enable them to invest more efficiently and effectively in some certain areas where they have otherwise been inhibited in the past.

Before I go on a bit further about what is in the bill, I have to comment and rebut some of the comments that have been made today by our friends on the other side, Mr Robertson and Dr Clark. They seem to think that we should have been going to the bank and borrowing even further to continue with our contributions to the Superannuation Fund. Yes, the contributions that the Government makes to the Superannuation Fund were suspended some years ago. It was done for a very good reason. They argue that we should have continued to provide contributions to that Superannuation Fund, but why on earth would the Government do that whilst at the same time it has had to borrow to maintain services for New Zealanders?

Labour members like to stand in the House now and say that we should be getting back to surplus faster than we are planning to and that we are not doing the Superannuation Fund favours by not going back to providing contributions because we have not been able to make surplus so far. But I remember, as many others on this side of the House remember, during the election campaign and in speeches from the Opposition members during the past year or two, when they continually came up with ideas for spending more money. Spending more money, of course, would have led to even more debt being accumulated by the Government—by the Crown—which would have made it even harder for Superannuation Fund contributions to have gone back to the way they were when the Government was making those contributions.

So I say to Mr Robertson and Dr Clark, please do not stand in this House and argue that we are not doing the right thing by ceasing Superannuation Fund contributions. Do not say that we should be getting back to making Superannuation Fund contributions faster than we are planning to, because under Labour members’ prescription, which they outlined to the public and which was rejected by the public, there was a whole lot more debt, there was a whole lot more spending, and it would not have been good for New Zealanders. We do have a Minister of Finance who is working hard and has seen our economy continue to improve and continue to get back on its feet. I think that New Zealanders are pleased with that and are happy with the economic prescription that we have.

The Superannuation Fund, though, is there effectively for the protection of New Zealanders and their retirement opportunity through the superannuation they are paid by the Government. This Superannuation Fund is there to protect the funds available to continue to make those Superannuation Fund contributions. The guardians of the Superannuation Fund do a very good job. They are providing very good returns for New Zealand taxpayers. I believe—and the Minister of Finance has outlined this earlier today—that their independence is fundamental to their ability to continue to provide those high returns.

We are politicians in this Parliament. We are very good at arguing points of view. We are very good at going out and selling to the public what we believe is fundamentally important for this country. Some of us are better at it than others when it comes to elections, as it turns out, but I have to say that we—

Iain Lees-Galloway: Oh, don’t be so smug. Your time will come, my friend.

JAMI-LEE ROSS: Just talking about the election results, Mr Lees-Galloway. We are politicians, though. We are not experts on investing funds through the Superannuation Fund. We are good at arguing in Parliament, but when there is $30 billion of assets sitting there that we want to continue to see increasing in size every year, the guardians, through their independence and through their structure, are best placed to be making the investment decisions.

The Minister of Finance has quite rightly outlined that he plans to bring in a Supplementary Order Paper during the Committee stage. When we were considering this matter in the Finance and Expenditure Committee, we did feel as though some extra checks and balances were warranted, but those are worth exploring even further during the Committee stage, and I look forward to Dr Clark—as he was saying—and the Opposition examining those as well.

It is worthwhile just going to the Guardians of New Zealand Superannuation submission, which they made to the select committee. They outline quite well in their submission some of the reasons why they wanted to have these changes around fund investment vehicles implemented and some new legislation through this amendment bill. They believe that some of the costs that they have incurred by having to go through a relatively complex way of achieving the goals they want to achieve have led to about $30 million of cost to the fund. They believe that they could have effectively saved that $30 million if they were able to have the ability to invest through the fund investment vehicles that they are proposing.

I just want to read out some of the comments that they made in their submission. They spoke about the fact that having the ability to establish and control fund investment vehicles “formed for the purpose of holding, facilitating or managing investments” would allow the guardians “to negotiate a [more] specific mandate with an Investment Manager as opposed to being one of a number of investors in a pooled fund.” Again, we talked about independence earlier in this Chamber, and there is greater independence there, should they be able to use fund investment vehicles. They would “have more say over the jurisdiction where the Investment Vehicle is located.”, and that is important for the Superannuation Fund to be able to make the best decisions for New Zealanders through the fund. They will be able “to increase and reduce the level of investment over time.”—more flexibility, which will enable the Superannuation Fund guardians to do better for taxpayers. Having this ability to use fund investment vehicles would “protect the fund from disproportionate liability”, such as liability being limited to the value of the specific investments.

What we have here is a group of people who are experts in their field, who want to see the New Zealand Superannuation Fund increase at the high rates that it has. It has a $30 billion fund, which, in a relatively small country like New Zealand, makes them some of the most significant fund managers in the country. For them to have more flexibility through fund investment vehicles and to look elsewhere for more opportunities is a very good thing, and good on them for coming to us to ask for this.

So, the Superannuation Fund—yes, set up by the Hon Dr Michael Cullen—has done well. Dr Cullen should be congratulated on the foresight that he had with the fund. However, it does need to look wider as to where it invests in the future, it does need to look for future opportunities, and it is doing that.

The Official Information Act provisions were seriously looked at by the committee, too. We know that transparency and accountability is important for the public. We on the committee felt strongly that the current Official Information Act provisions around the Superannuation Fund are working well and that there was no need to progress those further and include fund investment vehicles. One of the very reasons why you would not do that is so there is greater flexibility available through those fund investment vehicles.

I am pleased to see this bill go further through the House. I am looking forward, hopefully, to some good support from the Opposition on this change as well. It is sensible, it is practical, and it will enable the New Zealand Superannuation Fund to continue to improve and increase over time for the benefit of New Zealanders.

Dr RUSSEL NORMAN (Co-Leader—Green): I rise to speak to this amendment to the New Zealand Superannuation Fund and the legislation that governs it. The New Zealand Superannuation Fund was established by an Act in 2001. That Act was put up by the Labour Government and got the numbers in the House by the Green Party voting for it. So Labour and the Greens provided the numbers; the National Party opposed it. It was far too sensible for the National Party to support. The reason the Greens supported it and allowed the Superannuation Fund to come into existence—because without our votes, it would not have come into existence—was that we thought it was important to put money aside at a time when we were running large surpluses in order to pre-fund some of the costs of baby boomers’ superannuation further down the track. It does not pay for all of it—it does not even pay for most of it—but it does deal with some of the costs that are going to come down the track in the 2030s, and possibly before then, as we deal with some of the retirement costs.

It is important to understand that the fund is not here for ever. It is not a permanent sovereign wealth fund, nor is it designed like that—although it may end up becoming one. Who knows what future parliaments will decide? But it was meant to prepay some of the cost. That is why Michael Cullen put it up, and that is why the Greens gave the necessary votes for it to come into existence. We were very supportive of the arm’s-length operation of the fund. We negotiated, at the time, for a clause within the bill, whereby the Superannuation Fund—it was a kind of a responsible investment clause, basically—could not operate in a way that would damage New Zealand’s international reputation. That was the compromise that was reached at the time between us in the Green Party and Michael Cullen. We wanted a stronger responsible investment clause in the Superannuation Fund. If you look at the Norwegian fund, for example—the world’s biggest sovereign wealth fund at US$1 trillion—it has a much stronger responsible investment clause in it. But Michael Cullen would not accept as strong a responsible investment clause as we wanted, so that is how we came up with a compromise. For us, that was the kind of parliamentary direction under which the fund should operate.

I think that the fund has tried to work within a responsible investment framework. There have been a number of times when we have raised issues about the fund’s investments. Over time, the fund has pulled out of a series of investments—for example, cluster munitions, which are small bomblets designed to target children. We got the fund to pull out of those. We are very pleased about that. Of course, the next battle is going to be about fossil fuels. That will be the next thing that the fund pulls out of, as leading financial institutions all around the world move away from fossil fuels.

In terms of interference in the fund, the main interference in the fund has been by this National Government, by its giving a direction to the fund that a certain percentage of the fund should be invested in New Zealand. Prior to that, we had all operated a hands-off approach, but, unfortunately, the National Government interfered with the fund and gave it a direction that a certain percentage of the fund should be invested in New Zealand. Our view was that you should leave that decision up to the fund. But the National Government thinks that it knows better about where to invest money than the fund managers, and it was certain that this approach would get a better result. Of course, the National Government was quite wrong about that. There is, of course, an argument for investing a certain percentage of the fund in New Zealand. It is a reasonable argument. But prior to that, those of us who supported it—which was Labour and the Greens—had taken a hands-off, arm’s-length kind of approach to the fund. So that was important.

The next interference in the fund by the National Government came in the form of stopping the contributions. We supported the argument that during times when the Government is running a deficit you should not make ongoing contributions to the fund—and we differed from Labour on this. We supported that argument. The problem was that the Government’s deficit is largely one of its own making. As a result of the big tax cuts to upper-income earners, there was a big cut in Government revenue, and the result was that Bill English and National drove the books into the red. There were obviously a number of other factors, but we would now definitely be in surplus had it not been for the big tax cuts to upper-income earners in New Zealand, and we would be in a position to start reinvesting in the fund. Contrary to what Chris Bishop said, we have not directed or encouraged the fund to invest in forestry. He is obviously unaware that the New Zealand Superannuation Fund has already invested heavily in forestry.

In terms of the fund investment vehicles, we discussed this at some length, and after a debate, we decided not to support this bill because we do not support the fund going to use fund investment vehicles. This is largely because, essentially, it will facilitate the greater use of tax havens for tax efficiency purposes. The New Zealand Government and the OECD are trying to run a global campaign to protect tax bases for sovereign countries, for countries all around the world, and so we have been concerned that the fund has been using a bunch of investment vehicles based in the Caribbean that are notorious for tax avoidance—last time we looked, it had about $1.6 billion going through there. So, although I acknowledge the assurances from the fund that it does not use aggressive tax avoidance measures, none the less these kinds of investment vehicles based out of the Caribbean and elsewhere—the Isle of Man, and so forth—are notorious for tax avoidance, and so we have not supported them for that reason.

Of course, the broader issue is really about what the investment policy of the fund should be. Really, the kind of live debate in that space is now about fossil fuels. This year we released a report showing that the New Zealand Superannuation Fund has investments of about $676 million in companies involved in the production and mining of fossil fuels—currently, about 2 percent of the funds under management. It seems to me that a fund that we all voted for in order to protect a secure future for New Zealanders should not be investing in the production of greenhouse gas emissions, which is all about insecurity for the future of New Zealanders. If we continue to release greenhouse gas emissions in New Zealand—and globally as well—at the rate that we are currently doing, we will produce tremendous insecurity for our children and for those who are going to come after us. The whole purpose of the fund was to provide security. In fact, by investing in coalmining, in particular, the fund is, unfortunately, contributing to insecurity. I think that part of the investment strategy is a mistaken investment strategy because that is not what the fund was set up for.

We have now a series of reports about what kind of investment strategy makes sense both for sovereign wealth funds like the New Zealand Superannuation Fund and also for private wealth funds, as to how you should treat fossil fuels. We have seen reports from the World Bank, the OECD, the International Energy Agency, the United Nations, and many others that are now saying that the majority of discovered fossil fuel reserves needs to stay in the ground if we are to avoid 2 degrees Celsius of warming. We cannot burn the existing fossil fuels that have been discovered, and so those companies whose major assets are fossil fuel reserves are part of a carbon bubble—they are tremendously overvalued. So for the fund to be investing in those companies, it is not only bad because, of course, it is supporting fossil fuel production and out-of-control climate change but it is also a bad investment because it means that the value of those investments in fossil fuel companies will collapse at some point. This is part of what is also known as the unburnable carbon thesis.

Recently, the Governor of the Bank of England said that the vast majority of fossil fuel reserves that we have now are unburnable if we are to avoid out-of-control climate change. If we are to keep greenhouse gas emissions below a level that would cause 2 degrees Celsius or more of warming, then the vast majority of fossil fuel reserves simply cannot be burnt. That is why the Governor of the Reserve Bank is worried about those companies and those investment vehicles that have high exposure to fossil fuel companies. It is because when the carbon bubble pops as we realise that you cannot burn all of those fossil fuel reserves, the value of those companies that the funds are invested in drops dramatically. So we will continue to advocate to the New Zealand Superannuation Fund, as we have been, that it is a bad idea for it to continue to invest in these fossil fuel companies. It is a bad idea in terms of the climate and our kids but it is also a bad idea in terms of a robust financial investment because of what is going to happen in terms of the value of those companies once we get on top of climate change.

We continue to support the New Zealand Superannuation Fund, as we did at the very beginning, when we provided the necessary votes for the fund to come into existence. We continue to support its engagement in a responsible investment framework, which it has done extensively. Over the years since the fund was set up, we have had many discussions about issues around responsible investment, and it has always been pretty respectful about that and has listened to our arguments and has pulled out of a number of companies as a result of the arguments put forward by the Greens and many others about certain companies. So even though we are not supporting this particular piece of legislation today, we do retain our support for the concept and we retain our support for the guardians themselves, who, in general terms, have a done a very good job. Thank you.

FLETCHER TABUTEAU (NZ First): New Zealand First stands in support of this piece of legislation but I will just touch on a few issues raised by previous speakers. Perhaps borrowing at 3 percent, or even zero percent, to grow your investment at what was acknowledged as 18 percent last year makes more sense in terms of Government spending than selling off capital assets that were returning such strong dividend returns to this Government and the people of New Zealand, although I think, actually, the argument was that a surplus would be needed in order for the Government contributions to begin once again. Look, this is a large $29 billion fund. It is a successfully managed fund and New Zealand First has supported it since its inception. It is still disappointing to note that the Minister of Finance has previously stated, even knowing how well it has performed over recent history, that he would still not have contributed to the Government’s contributions, perhaps even with a surplus.

If you will forgive me, I will just go through some of the detail here. I was not part of the Finance and Expenditure Committee, so it is important that we go through for New Zealand First some of the detail and acknowledge the work of the select committee members. The bill seeks to amend Part 2 of the New Zealand Superannuation and Retirement Income Act 2001 to facilitate the efficient and effective investment of the New Zealand Superannuation Fund by the guardians of said fund, and to help protect the guardians from liability. The principal change would be to allow the guardians to control fund investment vehicles, which we have discussed in quite some detail here.

The committee received and considered only three submissions, heard oral evidence from one submitter, and received advice from Treasury. No submissions opposed the bill or identified any real problems, although two matters were raised by submitters where amendments to the bill could be considered—namely, the Legislation Advisory Committee’s recommendation around validation provisions and the applicability of the Official Information Act.

The Guardians of New Zealand Superannuation is an autonomous Crown entity, with the sole purpose of managing and administering the fund. Consultation with the guardians was undertaken on the original policy decisions prior to the submissions by Cabinet and during the drafting process, which New Zealand First acknowledges. The Inland Revenue Department, the State Services Commission, the Ministry of Business, Innovation and Employment, and the Office of the Auditor-General were also consulted on the relevant issues.

Questions raised related to taxation—I note that the previous speaker, Russel Norman, spoke to that issue, which I will come back to—and to responsible investment. At present, section 59 of the Act prevents the guardians from controlling any other entity. This restriction is considered inconsistent with the guardians’ obligations under the Act to invest the fund in a way that is consistent with best-practice portfolio management and to maximise the returns, without undue risk to the fund as a whole. Allowing the use of the fund investment vehicles is expected to enable the Government to structure fund investments more efficiently, resulting in cost savings, and to manage risk more effectively—clauses 6 and 7. These clauses amend section 59 and insert new section 59A to permit the guardians to use fund investment vehicles for the purpose of the investment fund.

The current legislation has had the effect of preventing the guardians from using some very effective tools. Now the guardians can own assets, without the presumption or inference that they will be running the business themselves. The guardians have estimated in their information to the Government that the historical cost of not being able to control these passive holding companies, for example, is around $50 million. This is quantified as net opportunity costs, additional risks, and agency costs, although they acknowledge the difficulty of doing that. Treasury’s view is that the cost savings calculated by the guardians are not the primary driver for the legislative change. Treasury notes that the $50 million itself and the $25 million cost of large short-term movements in particular investments are not, in total, a significant amount of money, given the actual size of the fund itself.

I turn to my next point. New Zealand First—and it has been spoken of as a negative by the other side of the House—has always said and always suggested that investment in New Zealand by the fund itself is a critical investment in this country and the people of this country. I note that the guardians themselves are actually working to increase the proportion of the fund invested in New Zealand assets. The limited size of the New Zealand market means it must purchase real assets as well as shares. It is my understanding that it is these fund investment vehicles that will enable the guardians to do this very thing.

Prohibition on control does not preclude the fund from 100 percent ownership of assets. The select committee considered it desirable to reinforce the intention that the fund investment vehicles themselves be related to the passive holdings of entities, and that the Act provides a mechanism for scrutiny and control of the Government’s arrangements. The select committee suggested two new sections. We have talked about this as a positive, but there is some debate on that. But I think in this context, and I think my caucus would approve, this would mean that the Minister of Finance would specify the class of investment or entity for which a fund investment vehicle could be used and would stipulate governance arrangements for the entity. I think that is reasonable control. I think it is not interference by the Minister. At least initially, at this stage of this piece of legislation, we will support those additions.

The other proposed amendments make three relatively minor changes. Clause 5 aims to strengthen confidence in commercial transactions entered into by the guardians and protects the guardians from any potential challenges that their investment decisions lack statutory authority. The select committee recommended replacing clause 5 in the bill as introduced with different formulations that would achieve the intended purpose in a much more straightforward way. The second recommendation would be to allow the board of the guardians to delegate operational functions. The third recommendation would be to make it explicit that the fund is not an entity separate from the Crown. We note that the current wording does leave some uncertainty about the fund’s sovereign nature.

It is important to note that the bill also makes consequential amendments to the Income Tax Act. We were assured by the statement of the select committee, but the previous speaker did note that some of these fund investment vehicles have allowed what we would consider to be classed as perhaps minor tax evasion and standard tax evasion tools. But the last thing New Zealand First would support would be introducing fund investment vehicles in order to allow large-scale tax evasion.

The reason for the support for this bill from New Zealand First is that fund investment vehicles are a simple and commonly used tool that will allow the guardians to make more effective investment decisions. I note that this would allow more investment in New Zealand, and would efficiently and effectively provide a suitable balance when allowing the guardians access to new vehicles in terms of the investment funds. We also note that the Act makes sure that the fund investment vehicles themselves are not subject to the Official Information Act but that the guardians are. With all that detail in mind, New Zealand First will support this bill. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Andrew Bayly. You must go for the call.

ANDREW BAYLY (National—Hunua): Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): You call out “Mr Speaker”.

ANDREW BAYLY: Yes, I thought the way you were looking at me, Mr Assistant Speaker.

It is a pleasure to be talking on the New Zealand Superannuation and Retirement Income Amendment Bill. It is great to hear members of the Opposition supporting this bill, because it is actually a good piece of legislation. Just to put it in context, nearly all New Zealanders will have worked and paid taxes over their working lifetime, with the prospect of having a prosperous and healthy retirement. Retirement plans are often individual, but in terms of the role of Government, there is a principal concern to ensure that every citizen has the comfort of knowing that they will have some income provided to them by the Government in the form of the New Zealand Superannuation Fund. That is why we as a Government have an obligation to our superannuitants to ensure that the funds are managed efficiently, effectively, and in a way that is prudent over the long term.

We are focused on ensuring that the Government’s own finances are appropriate across all the sectors that we manage because not only does that help in terms of building a robust economy but also it means that there is going to be further money in the future to be able to meet our future commitments to superannuitants. Of course, the end result of all of that is that we have got a determination that will see more jobs, better incomes, improved standards of living, and a continuation of the excellent public services that we all need and require.

The purpose of this bill is that it addresses the financial security of the older members of our community. The Superannuation Fund invests money effectively on behalf of all New Zealanders to meet the future requirements of superannuation. By doing so in a good manner it obviously creates wealth for the Crown’s own accounts, it improves the ability of the Government to fund New Zealand superannuation, and, thirdly, it reduces the tax burden on future New Zealanders when we get to the stage where high superannuation payments are going to be required. New Zealand superannuation is, in effect, a form of savings for today’s taxpayers, who, ultimately, will become the future’s superannuitants.

In terms of the performance of the New Zealand Superannuation Fund, it has been exceptional. It started in 2003 with a cash injection of $2.5 billion. It has now grown to just on $29 billion and has achieved a staggering return over that period of, on average, just over 10 percent—10.2 percent annually. When you compare this with the fund’s long-term objective, which was to beat Treasury’s bill rate by 2.5 percent over a rolling 20-year period, this has been an outstanding return.

At $29 billion, the New Zealand Superannuation Fund actually represents close on 40 percent of all the funds under management held by the Government. It is a huge part of that industry, a huge part of the Government holding, at 40 percent. ACC is obviously the next-largest component of all that. There are two other funds that contribute to that. But it is a huge part of the total assets that the Government has. And, of course, although we are continuing to invest in infrastructure such as schools and roading, and projects like that, the value of those assets is not significantly increasing. The importance of the funds management industry, and particularly the part that New Zealand superannuation plays in that, is that it is always going to be a growing asset class for this Government in terms of the future net assets for the Crown accounts.

This robust result that the New Zealand Superannuation Fund has achieved is due principally to the Guardians of New Zealand Superannuation, currently chaired by Gavin Walker, and, of course, the management and leadership team led by Adrian Orr at the New Zealand Superannuation Fund. They have achieved a sterling result. Given the size of the fund—just on $29 billion, as I said—it has been absolutely necessary to have a diversification in terms of not only asset class but also the geographical mix of investments.

It is interesting to note that at 31 March 2015, in terms of the asset class breakdown, just on 60 percent was invested in global equities—i.e., a range of international equity markets around the world—12 percent was in fixed interest - type investments, which are things such as bonds, Treasury stocks, and all those sorts of things, often with a geographical separation as well; 5 percent was in property; and 4 percent was in forestry.

It is interesting. One of the things that has been fascinating to watch with the evolution of the New Zealand Superannuation Fund is the different types of investments it is prepared to undertake. In terms of forestry and the investment that the New Zealand Superannuation Fund made alongside other partners in the Central North Island Forestry Partnership, here we see it taking strategic roles. In terms of geographical diversification, nearly 40 percent is actually invested in North America. The next highest is 25 percent in Europe. Interesting is that third on the list is actually New Zealand, at 15 percent, followed by 9 percent in Australia.

You might ask yourself why only 15 percent is invested in New Zealand. The reality is that with a fund size of $29 billion, it would swamp the New Zealand equity market and the bond markets. That is why the fund is almost absolutely obligated to diversify both in asset class but also, which is probably more important, in geographical terms.

It is interesting the types of investments that the fund has made in New Zealand. They are in many of the top companies and primarily in the listed market area. Not only is this fund recognised as one of the best-structured sovereign wealth funds in the world but also it was named the most innovative sovereign wealth fund by CIO magazine in 2012.

Just turning to the purposes of this bill, the primary purpose is to facilitate the efficient and effective investment of the New Zealand Superannuation Fund by allowing the guardians, who are the managers and administrators of the fund, to control entities formed for the purpose of holding, facilitating, and managing its investments—commonly referred to as fund investment vehicles. Another way of describing those, effectively, is holding companies for a range of investments that funds take in. The New Zealand Superannuation Fund is not unusual in terms of using these vehicles. These fund investment vehicles can be used as investing entities—i.e., such as a holding company for taking equity stakes in a range of investments, as well as other investment funds. They can be used for investing in internally or externally managed funds, again with the view around equity stakes or debt, and investing equities for real estate.

When you look at New Zealand’s investments that the fund has made, as I said before, a lot of them have been in the major stocks, but the biggest holding we have got is, actually, 20 percent in Z Energy. This is where the New Zealand Superannuation Fund took a very strategic view and invested alongside other partners in that venture as a private company, listed that entity, and made a substantial amount of money on that investment. But in terms of controlling interest, that is the highest one that we have, at 20 percent. Typically, the fund invests less than 20 percent in a range of investee companies around the world.

Allowing the guardians to control funding investment vehicles will permit them to structure and access investments more efficiently and will also protect them from liability. It should be recognised that the guardians are actually a Crown entity. At the moment, the legislation prevents the guardians from having control of an entity, which at the time of the establishment of the New Zealand Superannuation Fund was a good idea, but with migration and the scale of New Zealand superannuation as it now is, it is appropriate that the guardians be given this flexibility concerning official investment strategies, structures, and access.

The key parts that are going to make changes around this bill will enable the guardians to have the ability to grant a power to appoint a power of attorney, to appoint an investment manager, and to appoint a custodian. Those are very, very relevant and appropriate vehicles that all fund managers use. Thank you very much.

The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Iain Lees-Galloway—5 minutes.

IAIN LEES-GALLOWAY (Labour—Palmerston North): That was a very eloquent contribution from the member Andrew Bayly. It was lovely to hear him extolling the virtues of the New Zealand Superannuation Fund—the Cullen fund, as it is affectionately known. It is good that Mr Bayly is a new member of the House and was not here back in 2001, because otherwise the National Party would have deployed him to tell us all the reasons why the Cullen fund was an appalling idea and something that was a waste of money and something that New Zealand could not afford. It is good to see that the National Party has finally come around to the idea that, actually, the New Zealand Superannuation Fund squirreling away some money now and investing it very wisely—and Mr Bayly did discuss at length the success of the New Zealand Superannuation Fund—in order to fund our superannuation needs in the future from 2030 onwards was actually a very wise and forward-thinking idea from the then Labour Government, introduced by the finance Minister, Michael Cullen.

Of course, National said: “No, no, no, no, we can’t do this.” In fact, National bemoaned the fact that Labour ran surpluses. It said we should provide tax cuts and, of course, that would have made it impossible to save that money. National is always thinking about its mates first and always thinking about the here and now. It has no vision for the future—no foresight whatsoever. It opposed KiwiSaver and it opposed interest-free student loans and it opposed a whole host of things that it now, actually, supports. That is the nature of conservative Governments—no ideas of their own. They have all sorts of reasons why you should not do things, but then when those things actually bed in and turn out to be good ideas, oh, actually, they supported them all along.

It is interesting to hear Chris Bishop, actually, because he is the master of spin, we all know that—perhaps not after the Northland by-election, but he was one of the National Party’s spin doctors before he came into Parliament. He said that Labour likes to call this the Cullen fund. Actually, people may not remember this, but the “Cullen fund” as a term was an invention of the National Party members, because they thought that by associating Dr Cullen with this awful superannuation fund, it might actually damage Labour.

Chris Hipkins: Communism!

IAIN LEES-GALLOWAY: Communism, yes—not by stealth at that stage; I do not think they had coined that term at that point. Of course, this was in 2001 and we all know what happened to the National Party in the 2002 election, with its 20 percent result. Maybe National members have realised that actually the “Cullen fund” is now a term of endearment and they want to try to say that the term was something that Labour invented, but, actually, it was the National Party in an appalling effort to try to spin against the New Zealand Superannuation Fund.

I was also quite pleased to hear from Mr Bayly that he was impressed by both the success of the superannuation fund and ACC with its investments, and they are actually two of the best investment vehicles in New Zealand. I think, actually, as a private citizen I would quite like to be able to invest my money in either of those, because they do a very, very good job. It is a really good demonstration of how the State actually can run things extremely well. The State can be prudent managers of finance. The State can be prudent investors. Actually, the decisions that the State agencies, essentially—ACC and the New Zealand Superannuation Fund—are making around investment are actually doing wonderful things for the country. It flies in the face of what the National Party believes in—that you have got to privatise everything and that the private sector will always be better than the State at absolutely everything, particularly around matters of finance. Andrew Bayly actually used the word “innovative”, and it again proves that the State can be a source of great innovation, much in opposition to what the National Party believes.

This is a good piece of legislation that Labour is happy to support. It will improve the efficiency and effectiveness of the way the Guardians of the Superannuation Fund are able to administer the fund in order to carry on the absolutely superb results that the superannuation fund has achieved since it was created and established back in 2003. That is important because this is a long-term investment. This was something set up by a Labour Government that was interested in ensuring that the security of future generations was supported by the actions that we take now. So we do support this bill because this is a good fund and a good way to secure New Zealand’s future.

The ASSISTANT SPEAKER (Lindsay Tisch): I call James Shaw—5 minutes.

JAMES SHAW (Green): I would like to start by echoing the words of Iain Lees-Galloway, warmly commending the words of Andrew Bayly about the New Zealand Superannuation Fund. Of course, Andrew Bayly is very credible in this area. He is one of the few people in the National caucus who knows a few things about finance, having come from a long background in it. So we should accept his word as it comes. I just want to start by pulling out something that Bill English said when he was introducing the New Zealand Superannuation and Retirement Income Amendment Bill earlier, referring to the fact that most parties in the House supported the introduction of the Cullen fund back in 2001, implying somehow that National was actually one of the parties that had supported it, which, of course, it did not. National’s preferred solution, as to what to do with these vast Government surpluses, was to cut the top tax rate and not to save for the future and not to worry about the demographic bubble that is approaching as the baby boomers retire. That is entirely consistent with the National Government’s policy of sticking its head in the sand when it comes to the demographic tsunami that is approaching us.

It is interesting to note, of course, that National’s preferred way of dealing with the fund since getting into Government has actually been to replicate its policy back in 2001, which is to cut taxes so that there is not enough money to run surpluses, so that it does not have to put anything into the Superannuation Fund. I will just say it again. Back in 2001, when it was opposing the creation of the New Zealand Superannuation Fund, the preferred approach of the National Party was to cut taxes and reduce Government revenue rather than to put it into savings. What it has done since getting into power is cut taxes to the point that Government revenue is running below its ability to run surpluses, and so has not put money into the New Zealand Superannuation Fund. So although Government members wax lyrical, extolling the virtues of the fund, they are actually acting completely consistently with their earlier policy of not supporting the fund.

I just wanted to say, as my colleague Dr Russel Norman said earlier, that the Greens have consistently supported the fund since its creation. In fact, it was only Green Party votes that actually got the fund created and got it over the line in the first place. However, in relation to this bill, we do have a deep concern that the types of vehicles that are being authorised by this bill will enable the use of tax havens. The risk is that New Zealand’s Government-owned, State-owned, sovereign wealth fund is actually exploiting loopholes in other countries’ taxation systems, and we do not think that that should be enabled. Of course, a lot of people will say that countries choose to be tax havens; they choose to have the kinds of laws that they do. The United Kingdom, which is verging on being a tax haven, is simply tied up in knots in terms of its own legislation—something like 70,000 pages of tax law. We should not actually be exploiting other countries in terms of their ability to gather revenue to pay for education or health care or anything like that. We would not want other countries to be doing that to us, and so we consider that to be a risk of these fund investment vehicles here.

In conclusion, we should be setting an example, not selling out. We should be upholding the ability of other countries to gather the revenue that they need, rather than exploiting loopholes for our own benefit. And New Zealand’s own sovereign wealth fund, our own savings fund, should really embody Kiwi values of fair play. So, although we do and always have supported the New Zealand Superannuation Fund, we will not be supporting this bill.

ALASTAIR SCOTT (National—Wairarapa): Thank you for this opportunity to speak on this bill. I rise in support of this bill. Just to clarify a couple of things that were mentioned by Mr Lees-Galloway, for his benefit, the State does not manage the New Zealand Superannuation Fund. It never has and, I hope, it never will. The independence of this fund is paramount to the success of the fund. Twenty-nine billion dollars is a significant fund. It is well set up, and we do not want even the slightest thought that Mr Lees-Galloway or Mr Robertson would participate in the decision making on the investments of that fund.

We already heard that Mr Robertson wanted to invest more into the New Zealand Exchange, or the New Zealand market. He even specified that he wanted to invest in small businesses. This is not doing a service to the New Zealand taxpayer. This is not doing a service even to those small businesses that he would like to support. We know that many small businesses fail, and all he is asking is for the taxpayer to invest in a lot of failed businesses. It is just a statistic. We also know that overweighting an investment in any particular index increases the risk of the fund overall. We heard from Mr Bayly that 15 percent of the fund is invested in New Zealand, and, obviously, that is significantly higher than the weighting of the New Zealand sharemarket across the global equity markets. So already we are supporting the New Zealand market by providing liquidity in that market.

Getting to the point of the bill, it is very important that we do manage the administrative side of this fund efficiently. A small percentage difference will make a significant difference to the return of the fund. My colleague Mr Ross suggested that there had been $30 million of opportunity lost because of the lack of this flexibility, which the guardians are requesting. So this flexibility will allow the guardians to do some actions that they, to date, have not been able to participate in. For example, they will be able to negotiate fee structures. They will be able to accumulate their investments, approach an investment manager, and negotiate hard for reduced fees.

The location of the entity, the fund investment vehicle, is relevant, because, again, they will potentially be setting it up in a different location to reduce costs. Of course, if you have got an entity, a fund investment vehicle, you are able to limit the liability of that entity to the assets of that entity without recourse to the Superannuation Fund, which would potentially be the case in some instances.

This is restricted to passive investment opportunities—for example, farms, forests, or a financial instrument that is not a business. And, again, the opportunity to save $30 million is there for the taxpayer to take advantage of, because we know $30 million after 10 years will be $60 million—in fact, it will take less than 10 years at the current rates of return on the fund.

I would also like to turn to New Zealand First’s support of this bill, which I appreciate. But I wonder whether that member, Fletcher Tabuteau, can see the irony in this support, when the fund is mostly invested offshore. In other words, this fund is a foreign investor in other people’s lands, and of course that is exactly the policy that that party opposes for this country. It does not wish to see foreign investment in New Zealand, yet it supports the Superannuation Fund, which does exactly just that. It invests in other countries’ jurisdictions, in other countries’ equity markets, and in other countries’ financial markets.

Hon Paul Goldsmith: You’re not saying they’re confused, are you?

ALASTAIR SCOTT: I think, Minister, they are confused and perhaps they may revise—I would be interested to hear from their next speaker whether they really do support this fund, which does invest in foreign shores.

Of course, the fund investment vehicles are not going to change the restrictions that are already on the fund, which restrict the investment to less than a controlling interest. That is a good thing because that forces the fund to diversify, to not interfere—because it is a big fund—and diversification is important. Without the diversification we do not get the spread of risk, and again I come back to the point made by Mr Robertson where he wants to overweight this fund in the New Zealand market, overweight its investment into small businesses. The risk is, of course, that any index that one overweights their investment into loses money. I mean, even the New Zealand market—over the last 20 years we have seen the likes of Telecom and Brierley’s completely disappear off the share market.

So imagine if that was the case, if Mr Robertson had been in charge of that fund, invested in those companies because of his interest in that particular sector, for whatever reason, political or otherwise. It would be a disaster. Of course, I have respect for Mr Robertson’s political ability, but I would not want him to manage my money.

Grant Robertson: Why?

ALASTAIR SCOTT: I am giving him some credit, but, for investing my money—the taxpayers’ money—I would give him no credit whatsoever. Why would you want to give a penny to a politician of any sort?

Of course, coming to the Greens’ argument—Mr Norman’s suggestion again—trying to pick winners or trying to restrict the fund is a dangerous thing, because we would have Mr Norman investing only in forestry, I would assume, and certainly not in any oil exploration, or anything that involved anything to do with carbon fuel, or anything that might make a dollar for and on behalf of the New Zealand taxpayer. So it is really important that we do not restrict the guardians of this Superannuation Fund. It is important that we give them the flexibility to independently invest, given their level of expertise.

We know that diversification across currencies, across indexes, across financial instruments is important, because that manages the risk. We have seen the Portuguese bank—or is it a Spanish bank—that the fund is having trouble with. That is exactly why you need to diversify, because although that is potentially an ugly end to an investment, we know that it is only a very, very, very small portion of the fund. If we allow Mr Norman and Mr Robertson to get together and invest in the things that they like, they will over-invest in things that would create an unbalanced, dangerous, highly risky investment for the taxpayer and on behalf of the taxpayer.

So just to sum up—just to clarify for Mr Lees-Galloway’s benefit—the State is not managing the Superannuation Fund; the guardians are managing this $29 billion fund. It is significant. It is important that we keep politicians of every colour away from the fund. It is important that we leave the independence to those who are capable and experienced in managing the fund. This legislation allows an increased flexibility to the fund investment vehicles to decrease costs, to save the taxpayer some dollars, so that future generations are able to benefit from investments made today. Thank you.

STUART NASH (Labour—Napier): Yes, I am standing up to support the New Zealand Superannuation and Retirement Income Amendment Bill. But the last member who spoke was a little disingenuous, I think, in the way that he represented the Labour Party. No, we understand that the State does not manage this fund. What we do understand is that the State set this fund up, and there is a fundamental difference there. In terms of Labour not being in favour of foreign investment, Labour absolutely welcomes foreign investment. However, what we do say about foreign investment is that it has to add value over and above that which can be added by New Zealanders.

Grant Robertson: Productive, not speculative.

STUART NASH: Absolutely. In the last 3 years there has not been one—not been one—application to the Overseas Investment Office under the Overseas Investment Act that has been turned down. We would put stricter controls on this because we believe that if foreigners are going to come into our country and buy our land, buy our strategic assets, and buy our fishing quota, which they are able to do, they must prove by law that they are adding value. The interesting thing is that one of the major conditions around overseas investors buying our land is that they create jobs. However, the Overseas Investment Office has absolutely no idea how many jobs foreign investment has created in this country. That is one of the reasons why we need to better control who is investing in our country—where, what, how, and why.

What Labour would look to do, I believe, is just sort of put a little bit more structure around foreign investment in this country, which we absolutely need. The last speaker, Alastair Scott, talked about investing in forestry. Bring it on. Forestry is one of the lifebloods of our regions. It has the potential to create so many jobs. Unfortunately, under this Government, over 60 percent of all logs harvested in this country head offshore without a cent of value being added.

Let me give you an example of a fantastic Minister for Economic Development and what he did as a spokesperson. When Jim Anderton was Minister for Economic Development, he paved the way for Juken Nissho to set up a mill in Gisborne that employs 400 people. That was because of Jim Anderton’s intervention. This Government believes that you take a hands-off approach. That is the difference between Labour and National. This Government believes that if you leave it to the market, the market has all the solutions; whereas Labour believes that the Government has a very important role to play in driving economic growth. Nothing epitomises this more than the work that Jim Anderton did. In fact, the interesting thing is that Jim Anderton is one of only two people who have been given the keys to the region of Northland. The other one was Sid Going. He was an All Black in the day.

Grant Robertson: Oh, is that right?

STUART NASH: Absolutely—absolutely. There is an interesting fact. Sorry; he was created an honorary citizen because of the work he did in that region—an honorary citizen. That is what a good, proactive Minister for Economic Development does under a Government that believes in the regions.

Let me quote to you, if I may, from the Minister of Finance in his first reading speech on this bill. He said that the bill “was set up under the previous Government by Dr Michael Cullen with an elegant legislative scheme and funding formula designed to allow New Zealand to pre-fund some of the costs of national superannuation—in fact, pre-funded to the extent that tax rates would hold steady while the population aged. In that sense it is a form of savings for today’s taxpayers, where they will avoid tax increases in the future.” That pretty much epitomises the difference between Labour and National. What Dr Cullen said was: “I have a vision for the future. What I want to be able to do is to make sure that New Zealanders, as they age, are going to be looked after in their retirement.” What he said was: “I’m going to put this money aside, and I’m going to grow this fund.” This was a vision, whereas what National came in and said was: “No. No money for the super fund. We’re going to cut taxes.” It was a very short-term, really opportunistic policy, and it blew the long-term policy out of the water.

In fact, if we look at the Superannuation Fund’s past history, National has a way of sort of scuttling these things. In fact, I was talking to Emeritus Professor WE Wilson—you may know WE Wilson, actually. I was talking to him about the Kirk superannuation fund. It is estimated that if the Kirk superannuation fund was still around today, it would be worth about $240 billion. It would be an absolute game-changer. In fact, there would be no debates about the sale of State assets. There would be no debates about how we are going to raise money for this or that form of infrastructure, because we would own them. We would absolutely own these assets. We would have a superannuation fund worth $249 billion. Just imagine that. I suppose that the approach to superannuation epitomises, as mentioned, the difference between our two parties: visionary in the sense of Dr Cullen, visionary in the sense of Norman Kirk; short-term and opportunistic in terms of Robert Muldoon, and short-term and opportunistic in terms of John Key and Bill English.

You can hypothesise about this, but it is believed that the amount of money that has been forgone because Mr English cut contributions to the Superannuation Fund is around $10 billion. The Superannuation Fund has made, on average, about 10.3 percent over its whole life. That includes during the global financial crisis. In fact, last year it made 14 percent on its investments.

Again, when I talk about the difference between National and Labour, National believes that you give the money back to the people, and they know what to do with it. Well, we do not believe in high tax rates. Of course we do not. In fact, we would love to run a Government where we gave tax cuts to all. In fact, if I look at the last Government that gave massive tax cuts, it was a Labour Government that cut tax rates from 66 percent to 33 percent. A Labour Government was responsible for the last major overhaul of the tax system, whereas National has always tinkered. In fact, it is quite interesting, when you look over the history of Governments, Labour Governments have always been ones of social evolution, whereas National Governments have been ones of tinkering. It is actually quite interesting.

But anyway, what I would like to say is that we support this bill because we understand that, in fact, you need a diversified portfolio. That is vital. We know that if you invest too much money in the New Zealand Exchange and capital markets, it will create distortions that are just, you know, not right for the market. So we have to invest overseas. We understand that, and it is why we support this bill.

However, what we also support is ethical investment. This is where the Greens—Russel Norman and James Shaw—and the Labour Party agree. We cannot just be going out investing in absolutely anything. It plays into our brand. You know, we have a global brand that is around clean, green, and 100 percent pure. It does not relate just to our environment; it relates to how people perceive our country. We must work incredibly hard to protect this brand. I truly believe that one of the really damaging things this Government has done is to devalue our brand to such an extent that the leverage that a lot of our companies that go offshore get from our brand is diminishing. I reckon that we have about 3 to 5 years to sort this out. If we do not, then we are in real trouble. We are going to go to Paris, and for me, I think we are going to get absolutely caned. We used to be leaders in this, and because we were leaders, we sort of held the global moral imperative. Now we do not. This started with David Lange and his denying nuclear ships entry into our harbours. The unintended consequence was that people saw a little country that stood up for its principles, but under this Government we have slipped. We really have, and it is an absolute shame.

That is why our sovereign New Zealand Superannuation Fund must be seen to invest in an ethical way. It plays into who we are as a country and how people perceive New Zealanders as business people and as a country. One thing I would urge this Government to do is to make sure that it protects our brand over absolutely anything, because they reckon that in about 2005 it was worth $20 billion per year. Devalue that, and we become just another small economy selling commodities into an ever-shrinking global market place. We support this bill, we understand that the New Zealand Superannuation Fund must practise a balanced and diverse portfolio, but we also believe that it must invest in an ethical manner. Thank you very much.

The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call—Jono Naylor, 5 minutes.

JONO NAYLOR (National): Well, it has been a funny old afternoon here, as we have been debating the New Zealand Superannuation and Retirement Income Amendment Bill. I have got to say that I was listening very attentively throughout the afternoon. Actually, as I was listening to the co-leader of the Green Party and I heard greenhouse gases being talked about, I had to wonder what sort of vehicle this fund investment vehicle was, and whether or not it had, in fact, a combustion engine inside it.

We have seen all sorts of weird and wonderful things occur. We saw Chris Bishop and Dr David Clark almost fawning over each other, offering praise and saying what a fantastic contribution the other had made. It made me wonder, actually, whether the Finance and Expenditure Committee holds hands and sings “Kumbaya” at the end of its committee meetings, such was the sort of warmth that was oozing across the Chamber. We heard the previous speaker, Stuart Nash, who was drawing analogies between a former All Black halfback and a Minister for regional development who was not actually even a member of the Labour Party, and we got some contributions there. What I thought was—

Dr Megan Woods: He was the president of the Labour Party.

JONO NAYLOR: He was the president of the Labour Party, and then he saw the light and left. We also heard the previous speaker full of praise for the founder of the ACT Party, and then I thought that it really had been a funny old afternoon. I was pleased to hear praise from the other side of the House for Mr Andrew Bayly, who spoke earlier, and to hear all that members had to say about his expertise in this field. Although I cannot claim to have the same financial expertise as Mr Bayly, in terms of speaking to this bill, I am a New Zealander, and I feel that since this is a bill that speaks to the ongoing superannuation requirements of all speakers, I am, I think, in that light, quite qualified to speak about it.

It has been a great debate this afternoon, as I said. We have heard from almost all speakers about how well the fund has been performing over this time, so I do not need to fill you in on the details of how much was invested, how much is there, and what sort of a return it has been getting. In this regard, I do just want to acknowledge the great work that has been done by the guardians. If there was ever an appropriate name for someone who is managing this fund on behalf of New Zealanders, it is “guardians”, because they are, in fact, guardians of the future for many of us who are probably going to rely on the dividends of this fund to pay for our superannuation in the future. I think the way that they have approached this and the way that they have been working to develop and grow this fund for future generations needs to be acknowledged and deserves some level of praise. When such a group that is doing so well comes to Parliament and says to us that it would like to see some changes, I think it is appropriate that we take notice of what it is that it is asking for and that we take notice of what it thinks it needs in order to be able to do an even better job for us, moving forward.

I had a look back through the submissions to the select committee—I was not on the committee, as I said—to see just what it was that they were saying, in terms of their submission, about why it was that they made this request of Parliament to bring these changes into place. One key thing that they said was that they talked about the bill enabling them to discharge their duties more cost effectively and with less risk. I think, at the end of the day, that we would all agree that that is a very good thing for them to be doing—to be able to deliver things with less risk and more cost-effectiveness. They have sought to establish these fund investment vehicles, which I think will ensure, going forward, that we are going to get an even better result. It will enable them to negotiate a specific mandate with an investment manager as opposed to being one of a number of investors in a pool fund. It will protect the fund from disproportionate liability, and it will increase and reduce the level of investment over time. So there are all sorts of things that these actions are going to help us with. I commend the bill to the House, and I think that it will be a better thing for New Zealand.

Dr PARMJEET PARMAR (National): Thank you for the opportunity to speak on the New Zealand Superannuation and Retirement Income Amendment Bill in its second reading. It is a pleasure to take a call to support this bill. The purpose of this bill is to facilitate the effective and efficient investment of the New Zealand Superannuation Fund. For that, this bill proposes to allow administrators of the fund to control entities managing various investments of the fund.

The New Zealand Superannuation Fund invests on behalf of the Government in order to help pay for increased superannuation entitlements in the future. It also helps with creating balance in respect of the burden that we want to put on taxpayers, and not just current taxpayers but future taxpayers as well. So this will help to avoid increasing taxes in the future.

We know that our economy is doing really well, and it is doing well because this National Government knows how to manage it. There are numerous indicators of our great economy under this National Government—for example, the number of jobs that have been created. We know that household disposable incomes are rising faster than inflation and that businesses and households are happy because interest rates are lower and inflation is low. This National Government is focused on sustainable growth to support higher incomes and to support people in retirement. So our focus is to provide a better life for our families, from our youngest to the oldest. The National Government is working hard to make our country a better place to live, work, raise a family, and also enjoy retirement. This bill is about increasing efficiency in terms of how the Superannuation Fund is managed, with the potential for material increase in the Crown’s balance sheet.

We have an ageing population in our country, and those people are an important part of our community. A few weeks ago I was in a meeting with the police and I learnt that it is seniors over the age of 65 years who are an easy target of crime. We want a society where people get a positive ageing experience. Our seniors are a highly valued part of our communities and our families, and that is why we want them to have security, especially financial security.

This bill is a great example of how the National Government’s policies are futuristic, because the National Government does not want to increase the superannuation age. We want keep our superannuation age at 65, and while keeping it at age 65 since 2008 under this National Government, the superannuation weekly rate after tax has gone up by 31 percent. Also, we have been able to maintain the superannuation married rate at 65 percent of the average wage. This has been possible because we know how to manage our economy, and as a result we are able to invest in other sectors. For example, in the health sector we are able to provide more hip, knee, and other elective surgeries to help our seniors so that they become independent as soon as possible.

This bill is about getting better returns from our investment. The New Zealand Superannuation Fund needs more efficient investment so that it adds to the Crown’s wealth, so that it improves this Government’s ability as well as future Governments’ ability to give increases to superannuation entitlements, and also to keep this balance—as I said before—regarding the burden that we want to put on our taxpayers. We want to put a minimal burden on our taxpayers. This is about the successful management of our economy and, as I said, this bill is a great example of that.

Just recently, we released the 2014 Report on the Positive Ageing Strategy, which shows that we are making great progress in most areas. This National Government is committed to our seniors having security, especially the financial security that they deserve. This fund is set up in a very sensible way that allows that reasonable level of independence, which is important for their investment policies. This bill is about strengthening the investment fund and strengthening its ability. I support this bill and commend the bill to the House. Thank you.

A party vote was called for on the question, That the New Zealand Superannuation and Retirement Income Amendment Bill be now read a second time.

Ayes 101

New Zealand National 59; New Zealand Labour 26; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 13

Green Party 13.

Bill read a second time.

The result corrected after originally being announced as Ayes 101, Noes 14.

Bills

Environmental Reporting Bill

Second Reading

Debate resumed from 5 May.

The ASSISTANT SPEAKER (Lindsay Tisch): Members, when we were last debating the Environmental Reporting Bill, Dr Megan Woods had the call and she has 7 minutes remaining to speak, if she wishes.

Dr MEGAN WOODS (Labour—Wigram): It is my great pleasure to take the remaining 7 minutes. If I can recap from where I was last time, what happened in the last episode was that Labour was incredibly disappointed that it cannot support this bill. We support the purpose of it, which is to have independent environmental reporting. Having independent environmental reporting would bring us in line with what happens internationally, and, in fact, New Zealand is the only country in the OECD not to have such a system in place. But, as I previously outlined at the beginning of my speech, we cannot support this bill because this bill does not have independent environmental reporting.

This is another example of how this Government has lost its way. It is out of touch and does not recognise the need that when we say that we need independent environmental reporting, we should actually have independent environmental reporting, and we should not have Ministers of the day making those decisions instead of having independent bodies doing so. That is something the Labour Party will be more than happy to abide by when we are in Government in 2017. It will not be our Minister for the Environment and our Minister of Statistics making those decisions, because we believe, wholeheartedly, that this is too important, and this is, actually, something that should sit outside politics. We should have that level of independence from ministerial control when deciding what the decisions are to be.

We are not the only people to think that. In fact, most of the submitters who came to the Local Government and Environment Committee—the vast majority of submitters who came before the select committee—shared our view on this.

If I could turn to some of these submissions, there is the Parliamentary Commissioner for the Environment herself, who did not believe that the bill, as presented by the Government, did offer that level of independence. A number of speakers and submitters before the select committee suggested that it should be the Parliamentary Commissioner who made this final judgment on what it is that should be reported on, but Dr Wright made it very clear that she did not think that that was actually a satisfactory function for her to fulfil, given her other statutory function within this piece of legislation in terms of offering the commentary and that level of oversight. But what she did say was that the way in which this bill is currently before us in the current bill that we have means that the topics would not be chosen independently. Giving the selection of topics to the Government of the day creates the opportunity for political interference. For instance, it would be possible to avoid reporting on an environmental topic that is important but also controversial.

I think that we have a duty to be good legislators in this Parliament, that we have a duty to produce legislation that does remove those risks from our statute book, and that if we purport to say that we want independent environmental reporting that is going to put us in line with the rest of the world, we actually deliver that. It was not only Dr Wright, it was people who understand these issues incredibly well who also came before us and said it.

A very full submission from the Environmental Defence Society went through a number of aspects of the bill. What it had to say on the issue of independence was very telling. It said: “It is not clear how the requirement for the Minister for the Environment and the Minister of Statistics to recommend regulations specifying topics to be covered in synthesis reports and domain reports … sits alongside this duty for the Secretary and Government Statistician to act independently or the objective of independent environmental reporting.” It also said that “Allowing Ministers to select topics to be covered in synthesis reports and domain reports will politicise what should be an independent process as topic selection could be utilised to introduce bias into environmental reporting”.

When you are getting learned advice such as this on a piece of legislation, it really does require a committee to take notice. Unfortunately, that was not the case. This was not something that Government members of the committee were willing to entertain. That is the reason why I am introducing Supplementary Order Paper 74, which seeks to amend clause 18 of the legislation to replace the Ministers. It seeks to remove the Ministers from making the decision—that being the Minister for the Environment and the Minister of Statistics—and replace them with the secretary for the department and the Government Statistician so that you have the removal of the potential for political interference.

No one is alleging that a given Minister is going to politically interfere. What we are saying with our amendment, and why I am hoping that members will consider supporting this amendment, is that as legislators we should be removing that potential. We should not be putting on to our statute book the very opportunity for there to be bias and political interference in something as important as making decisions around what it is that we are reporting on. There should be decisions made on the state of the environment, not on what is going to be politically expedient or will avoid a potentially politically embarrassing situation for a Government. That is what is going to happen if the Ministers are left to make the decision.

Really, what we have to have is a Government that will stand back and look at the big picture. Instead, this is yet more evidence of a Government that has lost its way, a Government that is arrogant, and a Government that is out of touch and does not understand the very purpose of this legislation. In its 2008 election manifesto it promised us independent environmental reporting. When I began my speech—well, it seems an age ago now—I said that National promised this in its 2008 manifesto, but then it also promised us a surplus in that 2008 manifesto. So I guess that the race for environmental reporting is at least before this House, but National has yet to produce a surplus. That is yet another broken promise from that 2008 manifesto.

I urge Government members to consider an amendment that will allow for truly independent environmental reporting. Thank you very much.

Debate interrupted.

Voting

Correction—New Zealand Superannuation and Retirement Income Amendment Bill

EUGENIE SAGE (Green): I apologise to the House, but the Green Party’s vote on the previous bill, the New Zealand Superannuation and Retirement Income Amendment Bill, should have been 13 votes in opposition, not 14. Could the record be corrected?

The ASSISTANT SPEAKER (Hon Trevor Mallard): I will seek the leave for the Journals to be so adjusted, unless there is any objection. There is no objection. The Journals will be adjusted.

Bills

Environmental Reporting Bill

Second Reading

Debate resumed.

SCOTT SIMPSON (National—Coromandel): It is a pleasure to rise and speak in the second reading of the Environmental Reporting Bill in the name of the Hon Nick Smith. I do so in my capacity as chair of the Local Government and Environment Committee. The select committee did, I think, good work on this bill during the submission stage and through the process of the select committee.

I noted with interest the comments made by the previous speaker, Megan Woods, who leads the Labour team on the select committee on this subject. I got a sense today, from listening to her speech, that she was opposing for the sake of opposing. There is a cloud of politics being played here that is so obvious. It is kind of sad, in a way, that a party that really should be supporting the bill—wants to support it, wants to be part of a good piece of legislation, wants to be supportive—is not going to do so because it feels that it needs to oppose for the sake of opposing.

This is a bill that creates a national-level environmental reporting system and puts that in place. The objective is to ensure that reporting happens on a regular basis and that the reports that are created and generated will be able to be trusted by the public as being independent, fair, and accurate. I think that the bill in its current form will neatly achieve that.

This bill has its origins back in National’s Bluegreen policy initiatives that are so well based and that are so well liked by National Party supporters, and, indeed, by the wider community. People who have a green streak actually understand, mostly, that there needs to be policy that is tempered with common sense, with reality, and with a measure of brand awareness that is something more than just absolutes.

This is a Bluegreens initiative, and the Hon Nick Smith made reference to that during his second reading speech only the other night. It was, as Megan Woods indicated, part of a policy that we put to the electorate and I am very pleased now to be part of a Government that is bringing that to fruition.

We are actually as a nation an outlier in terms of the OECD. We are probably the only member of the OECD that does not currently have a statutory framework for environmental reporting and this bill puts that to right. It is an anomaly that we are out of step and it goes against what we like to know as our clean, green image, so this bill will ensure that we get into line in a way that is meaningful and purposeful.

We should not as a Parliament underestimate for one minute the power of reporting systems to improve performance in a whole range of areas, so this bill seeks to do that. This is an area that I think New Zealanders actually want us to achieve more in and to perform better in. So by having standardised reporting in a way that is clear and transparent and formulaic it will actually not only improve our standing in an environmental sense as New Zealanders but it will also improve our standing in terms of where we sit in world best practice.

By having standardised reporting in areas like water quality, air quality, how well we are doing on protecting our biodiversity and on the survival of our most important species like kiwi, and what sort of job we are doing of managing our oceans, we will have a much better view and it will be a good step along the way to ensuring that future generations have the same access to the quality environment that we enjoy today. It is part of a broader role that this Government is taking and part of what we have been doing as Government. It is part of strengthening the institutions of government and public office.

This particular piece of legislation really supports three heads—if I can put it that way. Firstly, the Ministry for the Environment as the policy maker is supported and encouraged. It is the Treasury equivalent of what occurs in the economic space in terms of our legislation. Secondly, the Environmental Protection Authority acts as the agency created by this Government to act as the effective and independent regulator in this area, and that is not too much different to the role that, for instance, the Reserve Bank plays in the financial sector. Thirdly, just as we have an auditor, we also have an important role with the Parliamentary Commissioner for the Environment acting in the environmental audit capacity. Her job is to provide overall independence of the system and provide environmental management. It is my view that we will be actually strengthening the role of the independent Office of the Parliamentary Commissioner for the Environment by passing this legislation.

A great deal was made of clause 18 at the Local Government and Environment Committee and also by speakers in the first reading and, most recently, earlier in this debate. This is the provision that sets down which topics will be reported. The controversy that members of the Green Party and the Labour Party tend to make out of this is something of a nonsense. They seem to think that there is something wrong with having the Minister of Statistics and the Minister for the Environment setting the topics. Well, I do not see any issue or problem in that area at all and nor did the majority of the select committee.

The first thing I would like to point out is that this legislation makes plain the five domain areas that the topics must cover. They are going to be set out in the legislation. There will not be any ability to wriggle out of those. There will not be any ability to change those unless it is by further amendment to this statute, so those five domains are cast in stone. The bill goes further and requires the process of public consultation with the Government Statistician and with the Parliamentary Commissioner for the Environment. It goes further in requiring consultation with the public, with iwi, and with local authorities. Each of those subjects will be discussed with those various stakeholders.

But the problem for members of the Opposition who are wanting to hang their hats on clause 18 is that these provisions that are in this piece of legislation are exactly the same as exist in our financial legislation—and that is not for 1 minute considered by them as something that we would want to change. Why is it good enough for our financial institutions and our financial ministries to have the reporting of financial matters and the dollars and cents of State perfectly adequately governed and monitored by the appropriate Ministers but not so the environmental area?

I cannot see the logic of that and I think it goes to the point that, actually, Opposition members, on this matter, are really just playing politics. They are opposing really just for the sake of opposing. In their hearts they know that the position they have taken on this bill is actually right in terms of the main thrust of it, but the point they are hanging their hat on in terms of opposing it, is actually dancing on the head of a pin. They just cannot bring themselves to support the Government in this very good piece of legislation. In any other arena they probably would support it because the detail of it would be of such small consequence that they, in fact, would not be willing to cast it asunder in order to oppose it. As Nick Smith said the other night, it is just crude oppositional politics and I concur with him on that.

This is a bill that will ensure that New Zealand does not just brand itself internationally as being clean and green, but that, in fact, we now report and monitor on our status in that term of being clean and green. What this bill will do is it will provide an honest, open reporting environment on the environment and show just how we are doing. It is the sort of bill that a National Government will always support and will champion because it is pragmatic, it is sensible, and it goes to the heart of the blue-green philosophy that we have as a Government.

We are a practical Government that wants New Zealanders to achieve economically, but, at the same time, we want to support and encourage and conserve our very precious natural environment. This bill and the reporting mechanisms that are established in it go a very long way to ensuring that we come to be world best practice in terms of our OECD role. This is also because we want to make sure that future generations of New Zealanders have the same access to the beautiful clean and wonderful pristine environments that we make so much of and enjoy so much as a nation. How we manage those resources is important to us as a nation. This is a good bill. I encourage members to support it and not to play politics with it. It is too important for that. I commend it to the House.

Su’a WILLIAM SIO (Labour—Māngere): I had difficulty accepting that Mr Simpson was genuine in the argument that he put forward. I do not really think he believes what he was saying. He will have heard from the submitters to the Local Government and Environment Committee how seriously flawed this bill is. At the beginning it was the intention of the Labour Party, like all the other Opposition parties, I suspect—we were looking with much expectation at the introduction of this bill. We supported its referral to the select committee because we believed that there was going to be some genuine work done in terms of this Government reporting on and highlighting our environmental standards. But sadly, despite the evidence presented by significant individuals and organisations to Government members, they have gone ahead and continued with the present bill in a flawed state. I wonder whether the Government members who will support this bill at its second reading can, in 10 years’ time or 20 years’ time, come back to the House and tell us what the state of our riverways will be, what the state of our environment will be. If we adopt this bill it will do very little, if anything. In fact, what this bill does is it enables a Minister of the Government to play politics with the way the environmental situation is to be reported.

I think sometimes, because we live in a much bigger country than most of the Pacific Islands, we have difficulty understanding how real the environmental issues are. But I think if members were to travel outside our country and visit some of the Pacific Islands, they would see that there are real environmental issues, climate change issues, that our region is facing. The reason why, along with my colleagues, I was looking with high expectations at this bill is that if this bill is to be adopted and we get a standard measure of reporting on how our environment exists currently, then we will be able to set a standard that we could measure as the years go by. Unfortunately, the bill is contrary to what we heard in that select committee in terms of best practice. It is best practice that rather than having a Minister control what topics, what issues, are to be reported on, it should be independently reported on. Scientists should also be involved in the choosing of topics and how they are to be reported to this House. Unfortunately, that is not the case.

I have to say that despite what the previous speaker said about our clean, green image, is that really what we are trying to protect here? It does not sound like it. It does not sound like we are talking about the protection of the environment. It sounds more like we are trying to cover up the harm that we will cause to the environment, for the sake of economic development. I do not believe for one minute that what we are adopting in this bill is going to enhance, protect, and ensure the safety of our environment, not only for the present population but for future populations. We have often said—

The ASSISTANT SPEAKER (Hon Trevor Mallard): I ask the member to sit. I am going to ask the Clerk at the Table to ring the bell as there is not a Minister present.

Hon Simon Bridges: Yes, there is.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am sorry. I apologise. [Interruption] It is all right. I apologise. I did not anticipate the Minister crossing over there. There is a New Zealand First sort of relationship—a Tauranga relationship—but we will go back to Su’a William Sio.

Su’a WILLIAM SIO: In terms of the branding, what is the brand that we want for New Zealand? Do we want the brand of 100 percent pure, clean, and green? Is that the brand that we want? If it is, the reporting regime that this bill provides for does not guarantee that we are going to strengthen, enhance, and protect that branding. In fact, sadly, I was surfing on the internet to see what the international arena would throw up in terms of our branding. HBO had a clip on John Oliver. It was a teaser about the Prime Minister, ponytails, and wine. I am not going to get into that—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No.

Su’a WILLIAM SIO: —but the branding of 100 percent pure, clean, and green is the branding that we should be collectively looking to protect and enhance. The only way that that can be achieved is by ensuring that the reporting on our environment is independent, is scientifically robust, and is assessed. The best practice that is used, not only locally but at the international level, should be the topic. It should not be that a Minister in any Government, whether it be them, or us in 2017—Ministers of any political persuasion should not have the unfettered power to be able to choose what topics are reported on and how they are reported on. What can then arise is that Ministers may choose not to report on a topic because there is public opposition to it, or Ministers may choose not to report on the way our waterways are because they do not want to highlight the current situation.

I could not help but hear earlier the member talking about our waterways being protected and safe. I have to say, there is a lake out in Ōtara. In the 1970s we used to go fishing in there and we used to swim in there. Today you can no longer do that. Over the years, as a result of development and the runoffs, it is unsafe. There are signs there: “Do not swim.” and “Do not eat anything out of this lake.” If in the 1970s it was safe and in 2015 it is unsafe, should it not be the desire of this House, and certainly any Government that has any sense, to ensure that we return that lake to how it was when people were able to eat from it, swim in it, and use it on a day-to-day basis? If that is the case, then this bill cannot proceed and should not proceed. Any right-thinking, good, sensible Government that has no arrogance whatsoever would know that this is what it has to do. It is not about politics; it should be about doing the right thing for present and future generations.

I note that in the department disclosure statement it says that it spoke to Te Puni Kōkiri. There is a requirement when it comes to the environmental issues that Māori ought to be consulted. If memory serves me right—and my Māori colleagues may want to correct me—Māori, similar to many indigenous cultures, are well versed in terms of tradition in how they protect the environment. It is embedded in much of the thinking of the elders that when we are using the land, the rivers, the air, etc., not only do we need to use it for the present generation but also leave something for future generations. That is what should be our goal. That is what we should be aiming for.

Unfortunately, the way this bill is drafted, it is more about economics. I want to read something that highlights this point. It is more about economics, and if that is the case, it is not going to last very, very long. Here, again from the departmental disclosure statement, it reads: “Improved access to consistent, high quality information on New Zealand’s environmental performance is expected to assist businesses in marketing their products and services overseas.” That seems to be the basis for why this Government is prepared to allow a flawed bill to proceed. It is not about protecting our environment for present and future generations but about promoting goods and services to international markets. I have to say that that is not a principle that will allow future generations to enjoy the kind of environment that we have been fortunate to have.

PAUL FOSTER-BELL (National): Tēnā koe e te Mana Whakawā. Just before I address the issue at hand in this second reading debate, the Environmental Reporting Bill, I would like to add my voice to the congratulations that have already been offered in this House to Mr David Wilson, who is taking up the position of Clerk of the House. Last week I travelled to Kota Kinabalu, Sabah state, in Malaysia to attend a Commonwealth Parliamentary Association conference. One of the focuses there was the importance of the role of the Clerk in good governance and transparency in a democracy such as ours. So well done to Mr Wilson for taking on that very important position.

Turning to the matter at hand, the Environmental Reporting Bill, firstly, I would like to congratulate the Minister Dr Nick Smith. The Hon Dr Smith has been a longstanding and very passionate advocate for the environment, for conserving our endangered species—in fact, all New Zealand indigenous species—and for advancing sensible and pragmatic policies that allow us to continue to have economic growth and a robust economy in New Zealand, to provide for those goods and services and lifestyle that we would like to have as a country, whilst balancing that against the need to make sure we have clean air and water and sensible regulations in place to protect species and that environmental lifestyle that we also value here in New Zealand.

As part of that legacy that Dr Smith has, this bill fits in perfectly. It is a very credible piece of legislation to bring us in line with the majority of the other OECD countries that have some form of environmental reporting regime. I have to say, sitting on this side of the House and hearing some of the previous contributions from the Opposition, that it is with a sense of irony—in fact, it is a little bit rich—that I hear that this is an inadequate measure, given that in 9 years of the previous Government nothing was done to advance an environmental reporting regime of this nature. Similarly, we have had many comparisons made so far in this debate between environmental reporting and financial reporting, which was implemented in the early 1990s to ensure that we did not have another situation whereby the population of New Zealand was misled as to the finances of the country going into an election. I think that is a very valid comparison to make.

If the members across the other side of the House were serious in their concerns about aspects of this legislation, they would note that the legislation in the financial area does provide exactly the same degree of independence for officials in terms of what is chosen to be reported on in that area. It would not be useful or helpful for the people of New Zealand, for members of this House, or for the functioning of our democracy, for instance, if Treasury or the Reserve Bank or other financial agencies of State were to branch off into weird and wonderful and bizarre areas of financial academic interest and report those at great expense to the taxpayer rather than those core pieces of important information that the people of New Zealand need to know.

Similarly, it would be equally strange to empower officials to be making expensive decisions around what areas of the environment should be reported on, and this piece of legislation—

Dr Megan Woods: Read the bill.

PAUL FOSTER-BELL: —contains very clear guidance. I have read the bill, Dr Woods. You may interject across the House with the regularity of the world’s most tedious metronome, but I am here to say that we have in the bill very clearly laid out the five domains that the public of New Zealand need to know about and certainly members on this side of the House are interested in—that is, air, land, fresh water, atmosphere, and climate—and noting that our climate change reporting is covered elsewhere as well.

On aspects of the climate such as particulates in the air, we have heard recently a very interesting report from the Parliamentary Commissioner for the Environment that actually demonstrates the need to have legislation of this sort that will futureproof. There is no point in locking in a reporting regime that is based on old science, that is based on the old levels of particulates, given that we know now that when it comes to dust from building sites or particulates that may come out of the petrochemical industry, emissions from our vehicles and fireplaces, etc., it is the very small, nano-sized particles that are actually the most dangerous to human health and most injurious to the environment.

That is just one small example of how science has evolved and why we need legislation that is futureproofed and will give us some assurance into the future that we can report in a sensible fashion and in a useful way, but also in a cost-effective way, given the significant investment of taxpayers’ money that goes into commissioning any of the reports in these areas.

I would like to turn now to some of the definitions we have actually used, because I think this is quite pertinent, so that we know we are getting reports on these five domains on a 6-monthly rotational basis that will be useful. The air domain—the clean air that we value in this country—means the domain surrounding the earth is composed of gases, vapours, and particulates. We have heard some gases and vapours from the other side of the House, but those that we are concerned about on this side are the variety that make our environment good and healthy to live in, so that we can breathe clean air and so that our species that depend on levels of gases and vapours as they are now can continue to survive, given recent reporting around some of the scientific challenges that those species face in terms of climate change.

The biodiversity that we are talking about is the living organisms and ecological complexes. These are very broad categories; they are broadly defined. We are not talking merely about individual animals, but we are talking about diversity within species and the relationships between groups of species and their ecosystems. In terms of the climate, we are talking about meteorological conditions and variations, solar radiation, temperature levels, humidity, clouds, precipitation, atmospheric pressure, and wind. These environmental conditions that can be impacted upon by human activity, and I for one am by no means a denier of climate change being an anthropogenic factor. That is something that human activity has influenced. It is important that we keep that broad definition here in that regard.

In terms of the freshwater domain, we are talking not only about the physical water—the rivers—but all the animals, vegetation, and structures associated with our rivers. So far, in the last few weeks on the Local Government and Environment Committee, we have heard about the long-finned eel, the tuna, as Māori may call it, and the challenges that we face in accurately measuring but also understanding that population of important creatures—which Māori regard as a taonga; not simply as a source of food or as an interesting feature to put in an aquarium but actually as a treasure of their people—to make sure that they are preserved and protected. So that is just one example, again, of the sorts of domain reporting that would be useful, rather than having officials launch off into new, interesting, and innovative areas at great expense to the public purse.

One area that my colleague Nuk Korako may address later but that I just wanted to, perhaps, presage before he got on to it was the amendment that the committee has suggested to clause 4A in the bill, the “Treaty of Waitangi/Te Tiriti o Waitangi” clause. We have suggested a change there to take into appropriate account the Treaty of Waitangi and to provide for Te Ao Māori to be an impact category when we are preparing the synthesis and domain reports, and to ensure that the reports are informed by a Māori perspective. That is something that we on this side of the House do consider to be important. I think there was a rather spurious contribution from Su‘a William Sio before about how Māori, perhaps, were better stewards or guardians of the environment. Actually, as a person of Ngāti Kahu ki Whangaroa descent I am not entirely sure that we can talk about being better or worse, but I can say that we have, perhaps, different perceptions among Māori and other New Zealanders as to the meaning and the importance and the ways to manage the environment better.

So for that reason I am happy to see that we have, under clause 4A(b) required consultation with iwi authorities before regulations pursuant to this legislation are made. I think that is a positive change and a useful amendment, and evidence that the committee has worked hard on this and come up with some useful contributions. Thank you very much.

EUGENIE SAGE (Green): Tēnā koe, and congratulations, Mr Wilson, on being appointed as the incoming Clerk. The Green Party supported the referral of the Environmental Reporting Bill to the Local Government and Environment Committee. We did that, but we made it very clear at the time, in the first reading debate, that we had significant concerns about the bill, because although it is good to have regular, consolidated, and accurate national-level environmental reporting guaranteed by law—and we would be catching up with the rest of the OECD—we need to have independent reporting. This bill will certainly bring a measure of consistency and coherence to our very devolved system of environmental decision-making and management, but it is not the real deal on state of the environment reporting, because it fails to provide for independent reporting.

We are dealing with a Government that has repeatedly increased the powers of Ministers and the executive at the expense of a strong and independent public sector, at the expense of local government, and at the expense of democratic accountability. It has increased the powers of Ministers to direct councils. It has increased ministerial regulation-making powers. It has replaced elected councillors with appointed commissioners. It has abused the provisions of the Official Information Act by manipulating the release of official information, and blocking and delaying release for as long as possible.

So where we have something like clause 18, where the Minister for the Environment and the Minister of Statistics get to decide the topics on which environmental reporting is to occur, we see that as the latest chapter in National’s undermining of local democracy, and it sets the scene for quite Orwellian manipulation of public information and of what the public understands as the state of our environment and what “clean, green” New Zealand is really all about. It is certainly not crude oppositional politics, as the Minister has claimed, to oppose this provision in the bill.

The Green Party made quite constructive contributions, we think, to the debate at the select committee, which did result in some improvements to the bill in terms of clause 16 and some of the other clauses, but this clause, clause 18, is the heart of the bill. We need to know what state our environment is in, the severity of our biodiversity crisis, how water quality is continuing to decline, and what sorts of land uses are contributing to that decline.

If state of the environment reporting is to be credible, if it is to be robust, it needs to be independent. It is not independent because in clause 18 we have got those regulation-making powers for the Minister for the Environment and the Minister of Statistics. Those powers include prescribing the topics that are to be covered in the domain reports, which are going to be published on a rotating basis every 6 months. Those powers also prescribe topics that are to be in the 3-yearly synthesis reports—the pressures that are changing the state of the environment, and the impacts that those changes are having.

So that gives quite sweeping powers to Ministers. They can interfere in and restrict the scope of the matters to be reported on and the types of information that will be relevant. So it is another example of the very centralised decision-making that we are seeing under this National administration. The Environmental Defence Society in its submission opposed these significant powers being given to Ministers, as did about half of the submissions on this bill. The Environmental Defence Society said that this would politicise what should be an independent process. The Parliamentary Commissioner for the Environment highlighted that clause 18 created the opportunity for political interference.

If you have got Ministers having control over topics to be reported on, then you have got that risk of environmental reporting becoming another exercise in spin. Recent history has highlighted that our concerns are real. In 2008 the Green Party showed that the Labour Government had suppressed the final chapter of the 2007 state of the environment report, Environment New Zealand 2007. That suppressed chapter showed that increased car use, dairy intensification, and over-consumption were driving environmental decline, and that chapter concluded that regulation was needed to protect the environment and our clean, green reputation. Why was it suppressed? Presumably, it was an attempt to play down the need for both policy and legislative change.

So it has happened in the past where the Government has intervened, and with clause 18 it could happen in the future. Clause 18 could be amended, and we pushed for amendments at the select committee so that the topics to be reported on could be set out in a schedule to the bill. The Parliamentary Commissioner for the Environment could set the topics on her own or in consultation with the Government Statistician and the Secretary for the Environment. Another suggestion that came through in submissions was that a panel of scientists could set the topics. We will be promoting Supplementary Order Papers in the Committee stage to make some changes to clause 18 to give that independence and to make the bill much more robust.

The Minister has sought to justify this ministerial power by saying that because environmental reporting can be expensive in terms of collecting information, it has budgetary implications and therefore it should be within the Minister’s domain to set those topics. Well, of course, Ministers have a perfect right to set budgets through the whole Budget process, so they can take care of those concerns there. National members have also sought to discount the need for independence here by claiming that it is a parallel with the way financial reporting is done. But the Ministers under the Public Finance Act, where you have got GDP and those traditional indicators of economic progress, are way out of step with what is happening overseas. If we had the Government Statistician herself setting the indicators, then there is a potential for those indicators to follow what is happening overseas with a much broader suite of sustainability indicators, which shows us how the economy is in real terms, in terms of the health of the environment, the health of our society.

The Green Party’s Dr Kennedy Graham has drafted a Public Finance (Sustainable Development Indicators) Amendment Bill, which has a much wider suite of sustainable indicators, which would be a much better indication of the health of our economy and society. That bill is in the name of my colleague James Shaw. The indicators in that bill are set out in the bill, rather than requiring Ministers to set them. So we have got that problem of very narrow indicators—

Hon Simon Bridges: We know who she’s voting for. She’s standing by him.

EUGENIE SAGE: —because they are being set by the Minister.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

EUGENIE SAGE: Thank you, Mr Bridges.

Another problem with this bill is that there is no regulatory impact statement that analyses the implication of the bill’s implementation and what is going to be needed at the local government level to align the reporting that councils do with national environmental reporting. The bill puts a lot more work on councils, but, once again, there is no funding being provided by central government to support that. Even the Government’s own appointed commissioners at Environment Canterbury complained about this. They said that the new reporting system would require quite considerable input from councils, in terms of the practicalities of data gathering, staff time analysis, and interpretation of raw data, if you were going to get that consistency. So that is going to have an impact on councils’ work programmes, and there should be funding provided to assist.

In concluding, I would like to thank the over 320 submitters on the bill. Their submissions and their analyses have helped the select committee to improve the bill, particularly the submissions from the Officers of Parliament. One useful change that the select committee has made is to clause 16, which was quite a major concern of the Green Party and submitters, because in the bill as introduced it cut across the statutory responsibilities of the Officers of Parliament, such as the Ombudsmen, and their ability to do their work and to undertake their investigations. The changes to clause 16 also constrain the non-disclosure provisions, which were in the bill as introduced, and ensure that the Government Statistician is only able to decide to withhold access to untested and unpublished information.

We are opposing this bill because you cannot have credible and robust state of the environment reporting unless that is independent of Ministers and free from the potential for political interference. This bill does not do that because of the problems in clause 18. Thank you.

DENIS O’ROURKE (NZ First): New Zealand First opposes this bill, and we opposed it at the first reading too, because, as Andrew Williams then said, the bill appeared to sideline the Parliamentary Commissioner for the Environment, and that is absolutely true. The bill does allow the Parliamentary Commissioner for the Environment to report, but that should actually, in our view, be mandatory, too.

But there are other reasons, and I want to acknowledge the opinion by Sir Geoffrey Palmer, obtained by Fish and Game New Zealand. New Zealand First agrees with him, and supports the position of Fish and Game on the bill. They, of course, have an obvious and serious dependence on the need for good-quality environmental reporting, and, above all, they need to be assured that there is independent environmental reporting in this country.

Like them, New Zealand First wants to see improved environmental reporting in this country, but this bill is not what is needed. The purpose of the bill, following a select committee amendment, is simply to require regular reports on the New Zealand environment. The reason why the purpose no longer refers to reports on the environment that can be trusted by the public as independent, fair, and accurate is that the public will not now actually be able to have that trust, as a result of this bill, because the bill actually gives the Ministers full control of the topics to be reported, or, in fact, not to be reported. So how could such a system possibly be regarded as independent? Of course it is not, and independence is absolutely essential.

This is not saved by clause 14, which requires the Secretary for the Environment and the Government Statistician to act independently, because the Ministers actually, as I have said, get all the power, far too much executive power in this case. The domains to be reported on include those in respect of air, atmosphere, and climate; freshwater; and land and marine domains. But under clause 12 the topics to be reported on are to be chosen by way of regulations made under clause 18—agreed on by the Minister for the Environment and the Minister of Statistics, and not Parliament.

Even the term “topics” is not well defined in the bill, and it is vague as to what will actually be covered. In addition, there is the strange clause 15, under which the Secretary and the Government Statistician are required to assure, in their reports, “a fair and accurate representation of the state of New Zealand’s environment … or the state of the domain being reported on”, but only “so far as it is reasonably practicable”. The words “so far as it is reasonably practicable” completely compromise the assurance of fair and accurate reporting, which is the core of this legislation.

In agreeing on the topics, the Ministers must have regard to pressures on the environment that could cause adverse environmental impacts, and they must be satisfied that the pressure topics chosen have an impact on significant areas, resources, or numbers of people, measurability, and the relationships between topics and impacts. But in the end these requirements actually place very little limitation on ministerial discretion. So the Ministers could simply decide to report on the sum topics, but could also simply decide, without telling anybody, not to report on other topics at all, and that is a gross defect, in my view, in this bill. Not only will the bill fail the transparency test in this way but it will also prevent the Official Information Act from operating as intended, by limiting access to what is called untested information. The officials will be able to withhold the information that they prefer to avoid for that reason.

Clause 16 of the bill now exempts from this requests made under the Ombudsmen Act and the Public Audit Act, but members of the public cannot get the so-called untested information they should be entitled to. There is scope for data and other information not reported on to be withheld permanently, for no satisfactory reason. All of this raises one fundamental question: why would the central aim of the bill, which is to enable decisions on what should be reported, be achieved by way of delegated legislation—regulations decided by two Ministers under clause 18—when this would be better achieved by the legislation itself by way of schedules annexed to it? These could still be amended from time to time by way of the full parliamentary process.

The Government, of course, has argued that matters like changing environmental measurement techniques require flexibility, and that would be too difficult if left in the legislation, but I think that that is a very weak argument. Parliament should retain control over matters of this scale of importance. Schedules to other legislation are often amended in this way, after all.

The new requirements for consultation are a step in the right direction but are actually not nearly enough. The truth is that the Government wants to increase the power of the executive, sideline Parliament, and increase secrecy. In this way, the Ministers can protect their Government from adverse reports, which might cause it political embarrassment or damage. Some regulation will, of course, be necessary, but this should cover only matters of detail and other administrative issues, not the substance of the reports themselves. So this is another way in which this arrogant Government is building its own power for its own purposes. The question of what should be reported to Parliament and the public should be decided by, and subjected to the scrutiny of, Parliament, not the executive members of the Government.

This bill is an example of what Sir Douglas Kidd called “the ongoing tendency of all Governments to stray from the paths of constitutional righteousness, seduced by the sirens of power, efficiency, and convenience.” But one of the worst features of the bill is the treatment of the public, which I have already alluded to in respect of unpublished information on the spurious basis that it is untested. Nowhere else is that excuse used. Information, after all, is just information. People should be able to judge or test its worth for themselves. This new regime of secrecy of information relevant to environmental reporting is actually contrary to the New Zealand Bill of Rights Act, which guarantees freedom of expression. That includes the freedom to obtain official information, tested or not, and to discuss and offer opinions on it if that is what they want to do.

Although the Government-dominated select committee responsible for this bill has made some useful changes, overall, the bill, if enacted, will give the Government more executive power to create a regime of secrecy and potentially incomplete environmental reporting—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I have rung the 2-minute bell, but I am going to give the member a warning with regard to the reading of speeches. There have been some pretty clear rulings from the Speaker and the Deputy Speaker that we are moving away from the reading of speeches, and I am ruling that the member is, at the moment, doing that.

DENIS O’ROURKE: Mr Assistant Speaker, that is strange because, in fact, there are only notes here, not a written speech. So if it sounds written, then that is not actually the case.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Well, that, therefore, is a compliment to the member.

DENIS O’ROURKE: Thank you, Mr Assistant Speaker—thank you. In any event, I will repeat my last paragraph because that is what it is. The select committee dominated by the Government has ensured that this bill will enhance the power of the executive, and will mean that environmental reporting in this country is likely to be incomplete, and will certainly not, under the provisions of this bill, be independent. As you can see, Mr Assistant Speaker, that statement certainly was not read.

JOANNE HAYES (National): Before I start my speech, I want to take this opportunity to pay tribute to the sudden passing of Ērima Hēnare, son of the late Tā Hēmi Hēnare, father of our parliamentary colleague Peeni Henare, and grandfather to his mokopuna. He was a tribal leader, a statesman, and a true rangatira, taken all too soon in the prime of his life. My aroha goes to Peeni, the Hēnare whānau whānui, and the many iwi who will feel this loss. Kua hinga te tōtara o Te Wao-nui-a-Tāne, takoto mai, takoto mai, takoto mai, e te rangatira. [The podocarpus of the Great Forest of Tāne has fallen, lie down, lie down, and lie there, esteemed one.]

I am pleased to stand to take a call in the second reading of the Environmental Reporting Bill in the name of Nick Smith, Minister for the Environment. This is a highly important piece of legislation, because for the first time the New Zealanders of this country will get an opportunity to read an environmental report that has all the information they require and that looks across the five domains at the same time that the Ministers will receive it from the independent reporters.

I just want to talk a little bit about a couple of the domains, because they are very dear to what I have been part of. One of the first domains is all about the water. I have heard a lot of people talking about water, and farmers, how farmers treat the water, and all the rest of it. I come from a farming background, and I can tell you that the regulations around the discharge and use of water on our property are horrendous. We have a highly regulated regime for looking after the water supply on our property. Actually, since this Government has been in power, there has been $103 million invested in cleaning up the waterways of this country. With the work that we have been doing, I am proud to say that we have been part and parcel of helping to clean up those waterways on our property that drip down into Coal Creek, which goes out to the Pohangina River and out to the sea.

Todd Muller: Excellent, well done.

JOANNE HAYES: Thank you—thank you.

Todd Muller: So are many other farmers.

JOANNE HAYES: Thank you. I also want to put a plug in—even though we are sheep and beef farmers—for the dairy farmers, because I do know that they have a strict regime for keeping the water clean in the use of their milking facilities and making sure that they are recycling some of their water so that they can put it out either for cleaning up the facilities in their dairy sheds or using it to help water their properties. These have been very big regimes of regulation that they have had to come to terms with, abide by, and comply with, otherwise they would not be able to run their businesses.

I want to talk a little bit about the total investment that this Government has put into cleaning up those iconic water bodies like the Rotorua lakes, Lake Ellesmere, and the Waituna Lagoon. That is $350 million. When we look over the history of the previous Labour Government, there was no money that went into helping to clean up those waterways.

Hon Member: Shame.

JOANNE HAYES: It was very shameful. I remember when I was doing a degree at Massey University—I did a biology degree—we were sent down to—

Paul Foster-Bell: Is that right? Very pertinent.

JOANNE HAYES: Yes, I am full of surprises. We were asked to go down to do some testing on a little, kind of discharge area over at Aokautere. It was quite amazing how what we found in that particular area was quite high in a lot of unwanted discharge with bits and pieces in it. I can say that that has been controlled through the regulation that the Government has put in for managing our freshwater environment.

May I say, while I am talking about water, that I am going to carry on with the marine environment as well. We have been very clear in making sure that through our exclusive economic zone policy we are looking after the environment—the substrate of our oceans and the marine life—to make sure that we can still have some economic advantage there without wrecking the environment that animals and plants live and subsist in.

So that is my spiel around water, because it is dear to my heart. We have got it flowing. It bubbles out of our ground. It is spring water and it bubbles out of our ground, and we know that it is a very special thing that Papatūānuku gives to us, and we have to look after it.

Talking about Papatūānuku, I want to talk a little bit about the clause—I cannot remember the name of the clause—inserted in the bill for the Treaty of Waitangi. We all know that Māori have had a vested interest in wai māori for mai rā nō—for ever. It has been what we have been interested in—the air, but mainly the water.

I am pleased to note that through the iwi leaders we have a group of iwi representatives who sit on the Te Wai Māori Trust, chaired by Ken Mair from Wanganui. I know Ken, and he is a no-nonsense kind of man. He does not take any rubbish, and he makes sure that we stick to looking after the freshwater environment. Look at the Whanganui River, for instance. Look at that big body of water and the signing of the Treaty settlement legislation around the—I see you are standing up, Mr Assistant Speaker.

Debate interrupted.

The House adjourned at 6 p.m.