Thursday, 10 September 2015

THURSDAY, 10 SEPTEMBER 2015

THURSDAY, 10 SEPTEMBER 2015

Mr Speaker took the Chair at 2 p.m.

Prayers.

Visitors

Timor-Leste—Delegation, Women’s Parliamentary Caucus

Mr SPEAKER: I am sure that members would wish to welcome a parliamentary delegation representing the Women’s Parliamentary Caucus from the Democratic Republic of Timor-Leste who are present in the gallery. [Applause]

Business Statement

Business Statement

Hon GERRY BROWNLEE (Leader of the House): When the House resumes on 15 September it is the Government’s intention to progress a number of first readings on the Order Paper, including the Māori Purposes Bill, the International Finance Agreements Amendment Bill, and the Child Protection (Child Sex Offender Register) Bill. Wednesday will be a members’ day.

Grant Robertson: A good day’s work, Gerry.

Hon GERRY BROWNLEE: I tell you what: only you would know. You are the expert in this House.

Mr SPEAKER: Order! The Leader of the House would be better not to bring me into the debate.

Sittings of the House

Sittings of the House

Hon GERRY BROWNLEE (Leader of the House): Pursuant to Standing Order 56(1)(a), I move, That the sitting of the House on Wednesday, 16 September 2015 be extended from 9 a.m. to 1 p.m. on Thursday, 17 September 2015, as advised to the Business Committee for the consideration of Government notices of motion Nos 1 through 4, the third reading of the Reserves and Other Lands Disposal Bill, and the first reading of the Building (Pools) Amendment Bill.

Motion agreed to.

Speaker’s Rulings

Written Questions—Availability of Material Referred to in Answers

Mr SPEAKER: Yesterday Chris Hipkins asked that I consider the adequacy of some replies to written questions. The particular issue raised with me was whether a Minister would meet the requirements of accountability of the House in answering a question by referring a member to another source of the information requested. Ministers have a responsibility to the House, and through the House to the country, to account for the public offices they hold. Questions are an important element of this accountability, and Ministers should provide informative answers to them, where doing so is consistent with the public interest.

Requests under the Official Information Act 1982 may be refused if the information requested is or will soon be publicly available. A question to such a Minister is not a request under the Act and should not be treated as such. While that Act may provide some guidance when replies to questions are being prepared, it does not exempt Ministers from their accountability to the House through the question procedures. The House has established its own rules for replies to questions, and its entitlement to information exceeds that under the Act. A Minister may answer a question by referring a member to information that is already publicly available. That may be the appropriate response where a significant amount of information is requested. However, if a Minister chooses to reply by directing a member to information already available, he or she must do so with some particularity. It is not acceptable to simply state that the information has already been released or that it was provided to a select committee. Rather, the Minister should provide a sufficiently detailed answer to enable the member to directly locate the information.

If the information requested cannot be easily found, then the Minister should provide it in the reply to the written question. That will ensure that the Ministers meet their responsibility to be accountable to the House.

The Leader of the House also invited me to consider the related matter of the nature of written questions to Ministers. Members may ask any number of written questions, and with that ability comes a requirement to ask questions responsibly. Vague or very broad questions make it difficult for a Minister to meet accountability requirements and are less likely to receive an informative answer. I will circulate a copy of this ruling to all Ministers today.

Hon GERRY BROWNLEE (Leader of the House): I raise a point of order, Mr Speaker. I am just seeking a little bit of clarification on your ruling—not questioning your ruling. The question, it seems to me, is: who determines what is readily available in the public arena? The point I made yesterday was that when the questions go in for either estimates or appropriations, that information is available in the public arena, but is it considered to be readily available? It takes an awful lot of work on the part of Ministers’ offices to go through and be particularly specific, in many cases. I would have thought it reasonable that there should be an equal amount of work done by those who are seeking the answer in the first place.

CHRIS HIPKINS (Senior Whip—Labour): The Leader of the House makes an interesting point. This issue also arises in relation to another ruling that you have made around the tabling of documents, where you have indicated that if documents are publicly available, then leave should not be sought to table them, and the onus is on the member seeking leave to table them to establish whether they are publicly available. This involves a similar amount of work, in some cases, to the amount of work that the Leader of the House is referring to in providing answers indicating that information is already publicly available. I think that the same principle should apply. If a Minister is going to indicate that information is publicly available, they need to actually do the work to ascertain that, in fact, it is publicly available and to give, as your ruling has indicated, a much more specific indication of where that information can be obtained.

Mr SPEAKER: I think that is exactly what I have just read out to members. If it is a reference to information that is publicly available, I expect the Minister in the answer to direct that member to where that information is easily obtainable, and that must be done with some particularity.

Ron Mark: I raise a point of order, Mr Speaker.

Mr SPEAKER: A fresh point of order? Ron Mark—a fresh point of order.

RON MARK (Deputy Leader—NZ First): Thank you for your ruling. It is an issue that has vexed us for a little while now. Can I bring to your attention and ask for you to further deliberate on—and if you require some specific documentary evidence, we are quite happy to provide that for you—the new trend of Ministers refusing to provide information or reports under the Official Information Act, stating that they will be releasing those reports soon, and then not releasing those reports for some 6 to 8 weeks.

Hon GERRY BROWNLEE (Leader of the House): I do not think the mechanism of asking a question has ever been available for any member to beat some of the genuine concerns that there will be that require some documents that will become public to remain confidential for an extended period of time. [Interruption]

Mr SPEAKER: No, I do not need any further assistance on the matter. We are taking too much time here. If a Minister answers by saying the information will be available readily or shortly, I expect it to be available readily or shortly, and not delayed for 6 or 8 weeks. I would invite the member, if there are such occasions like that, to actually come and see me and mention them specifically to me. It is probably a better way forward than raising them as points of order in the House.

Oral Questions

Questions to Ministers

Economic Outlook—Reserve Bank and Treasury Forecasts

1. ANDREW BAYLY (National—Hunua) to the Minister of Finance: What reports has he received on the New Zealand economy?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: The Reserve Bank this morning issued its latest monetary policy statement. The Reserve Bank indicated that economic growth has slowed since its previous forecast. It now expects growth of around 2 to 2.5 percent over the next 18 months, before increasing to 3.1 percent in the year to March 2018. The bank cut interest rates from 3 percent to 2.75 percent and signalled it may cut further. The bank expects inflation to be back in the 1 to 3 percent target range early next year. Lower interest rates, of course, support businesses wanting to invest and also help households with a mortgage.

Andrew Bayly: What are some of the drivers of the Reserve Bank’s economic forecast?

Hon STEVEN JOYCE: The Reserve Bank’s lower growth outlook was driven in part by a softer international outlook, particularly in Asia, which has led to financial market volatility and renewed falls in some commodity prices. This has been offset to some degree by expansion in the United States. Closer to home, the Reserve Bank also outlined a number of risks—in particular, the decline in export prices and lower business and consumer confidence. The bank also highlights several factors continuing to support growth domestically, including robust tourism, immigration, the large pipeline of construction activity in Auckland, and, importantly, the lower interest rates and the depreciation of the New Zealand dollar.

Andrew Bayly: Given global economic uncertainty, how is a lower interest rate supporting New Zealand’s economic resilience?

Hon STEVEN JOYCE: New Zealand’s independent monetary policy and floating exchange rate frameworks are natural buffers from which New Zealand is now benefiting, following recent volatility in the commodity prices and increased global economic uncertainty. Rising interest rates and exchange rates in the upswing of the economic cycle lean against growth, and reductions in the interest rate and exchange rate support the economy when growth slows. For example, US dollar exports that were worth NZ$100 in July last year are now worth around NZ$140. Exporters who were forced to become more efficient when the exchange rate was US88c have reaped the rewards now the exchange rate has fallen.

Andrew Bayly: What other reports has he received on the resilience of the New Zealand economy, and how does that compare internationally?

Hon STEVEN JOYCE: Treasury has collated a list of which countries have, firstly, a broadly balanced Government budget; secondly, have net debt less than 40 percent of GDP; thirdly, have economic growth greater than 1.5 percent; and, fourthly, have scope to further cut interest rates should the economic situation worsen. New Zealand meets all of those criteria, and is in fact doing considerably better in some of them. There are only four other OECD countries in the world that meet those criteria. The others are Australia, Norway, Iceland, and South Korea. So by those measures the economy is well placed to deal with any turbulence in the international economy.

Health System—Funding

2. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: Why did he say on 29 July that core Crown health expenditure covers “most, but not all, inflationary pressures”, and why does he deny this shortfall is having an impact on patients?

Hon Dr JONATHAN COLEMAN (Minister of Health): Because the Government is delivering 50,000 more elective operations, 60,000 more surgical appointments, 50,000 more medical appointments, faster cancer care, 5,500 more doctors and nurses, and free GP visits and prescriptions for 750,000 children. The big picture is that everyone knows that patients are getting more health services under National’s stewardship. The real question is why the member continues to deny that.

Hon Annette King: What was his response to the Rotorua GP who wrote to him this week outlining his horror at the refusal of a specialist appointment for his patient with an enlarged prostate, because the specialist could not see the patient within the required time limit, something the GP called “a schizophrenic approach”?

Hon Dr JONATHAN COLEMAN: I read that letter last night, and I think the GP may have a bit of a misunderstanding of how the sector works, so I am writing back to him at the moment to discuss how we can best manage that prostate patient’s needs.

Hon Annette King: If the Minister has read the GP from Rotorua’s letter, did he note that the doctor says that this is not the only case he has had, that it is now happening on a regular basis, and that he describes the situation as “very serious” and “a scandal”?

Hon Dr JONATHAN COLEMAN: Yes, I did read those comments, I noted them, and I am writing back to the GP.

Hon Annette King: Do you agree?

Mr SPEAKER: Order! No, I do not agree. I do not necessarily agree, but do not bring me into the debate.

Hon Annette King: If there is sufficient funding, why has an 85-year-old man who lives alone and finds household chores very difficult had his home help reduced from 1 hour a week to 1 hour a fortnight to save the district health board money?

Hon Dr JONATHAN COLEMAN: I am not familiar with that particular case, but if the member would like to forward the details, I am very happy to look into it. As she has said before, it is better to help patients rather than to use them, as she continually does.

Hon Annette King: Why, if everything is as good as he claims, has the district health board written to this elderly man saying that demand is outgrowing available funding, which means that cuts have to be made, and it looks like it is going to be the old people affected first?

Hon Dr JONATHAN COLEMAN: I have not seen that letter. I doubt that those are the words that have been used. But do not forget: this member has been publicly very supportive of health decisions made since the election. She supported the replacement of Health Benefits Ltd, she supported the commissioner in the Southern District Health Board, she supports free GP visits for under-13s, she supports more surgery, and she has even stated publicly that she thinks that, overall, we have got a very good health system and that it is working well.

Hon Annette King: I seek leave to table a letter from MidCentral District Health Board dated 24 August 2015 saying that demand for these services—

Mr SPEAKER: Order! There is no need to further describe the document. Leave is sought to table that particular letter from MidCentral District Health Board. Is there any objection? There is none; it can be tabled.

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

Hon Annette King: Why should an elderly woman living alone who has multiple disabilities have her home help cut from 1 hour a week to 1 hour a fortnight on the grounds that it will assist people to stay in their own homes longer, something the woman has called “an affront to the elderly”?

Hon Dr JONATHAN COLEMAN: I am not familiar with that case, but what I know is that back in 2006 the Labour Government took 367 people off home care in Wanganui in one fell swoop, and then it did the same straight again in 2007. So I think that might make the member look a little bit—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! The Minister can resume his seat. [Interruption] Order!

Hon Chester Borrows: I raise a point of order, Mr Speaker. There was absolutely no way that we could hear the answer that the Minister gave to that last supplementary question. I would like the House to have the benefit of hearing that answer. [Interruption]

Mr SPEAKER: Order! No, I need no further assistance. There was a very significant interjection during that point of order. If I could identify that person, I would be asking that person to leave. I do not need any assistance from Grant Robertson. [Interruption] Order! The question was answered right at the start; the Minister then went on with further answering that did incite a fair reaction from the Opposition side. That is not an excuse for the reaction from that side, but that is certainly what occurred. Both sides need to settle down with their answering if there are further supplementary questions.

Hon Annette King: Why does he keep saying that there is sufficient funding in district health boards when thousands of letters like this one are sent to patients every week saying that district health boards are able to take only limited referrals that are the most urgent?

Hon Dr JONATHAN COLEMAN: Nothing has changed for decades. District health boards have had to prioritise the most urgent patients, and we are doing more all the time—more operations, more appointments, and better cancer care. We are actually doing a lot more than the previous Labour Government was doing. The answer to unmet need is actually to do more, which we are doing. That is the simple answer.

Hon Annette King: I seek leave to table a letter from Hutt Valley District Health Board dated 15 March 2015, pointing out what I said—

Mr SPEAKER: Order! Leave is sought to table that particular letter. Is there any objection? There is none. It can be tabled.

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

Colonoscopies—Statistics

3. Dr SHANE RETI (National—Whangarei) to the Minister of Health: Can he confirm that 36,076 colonoscopies were performed in the last financial year, a 12 percent increase on the year before?

Hon Dr JONATHAN COLEMAN (Minister of Health): Yes, I can. The number of colonoscopies performed in the 2014-15 financial year rose by 12 percent on the previous year, up from 32,324 to 36,076. Additionally, the percentage of urgent colonoscopies being performed within the 14-day target increased from 55 percent in June 2014 to 75 percent in June 2015. This improvement shows that real progress is being made, and further projects are under way in district health boards to increase the number of patients being seen.

Dr Shane Reti: How is this increased volume of colonoscopies helping develop a possible roll-out of the national bowel screening programme?

Hon Dr JONATHAN COLEMAN: District health boards have been provided with additional funding to provide more colonoscopies, and we are working hard to boost the endoscopy workforce by increasing training and technology. The Ministry of Health is consulting with the sector on the next steps towards a possible national bowel screening programme. Already, more than 6,000 people have received a colonoscopy through the Waitematā District Health Board’s bowel screening pilot. Budget 2015 invested $12.4 million in extending the pilot to December 2017. Do not forget: Labour said that this was a priority, but over 9 years it did not put a single dollar into it.

Employment Relations—Zero-hour Contracts

4. CLAYTON MITCHELL (NZ First) to the Minister for Workplace Relations and Safety: Does he stand by all his statements?

Hon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): Yes, I do, and I particularly stand by my statement earlier this week announcing that parents of preterm babies will be entitled to receive additional weekly payments for each week their baby was born prior to the 37-week gestation period. I want to acknowledge Mr Seymour of the ACT Party for his advocacy and the very good outcome for preterm parents.

Clayton Mitchell: Does the Minister stand by his statement in relation to zero-hour contracts on 12 July that it “is unfair and makes it difficult for employees to plan their financial and personal lives.”; if so, why?

Hon MICHAEL WOODHOUSE: In answer to the first part of that question, absolutely yes.

Clayton Mitchell: Is a job advertisement that reads “Hours will fluctuate. There is no guaranteed minimum number of hours per week.” something he would consider unfair for a job seeker; if so, why?

Hon MICHAEL WOODHOUSE: No, I would not consider that to be unfair, nor would I consider it to be what is popularly known as a zero-hour contract. That would be a casual agreement where there are no mutual obligations on either the employer or the employee regarding specific hours of work. Those types of agreements have been in New Zealand’s employment relations landscape for a very long time. The zero-hour agreements are not going to change that.

Clayton Mitchell: Is he aware that this Government currently employs Customs Service officers on variable-hour contracts, which is what the job advertisement I read in my previous supplementary question was for; if not, why not?

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

Hon MICHAEL WOODHOUSE: I refer the member to my previous supplementary answer. The important aspect of the unfair agreements that people describe as zero-hour contracts is where there is an obligation on one party but not on the other. The circumstances you describe would be either a casual agreement or an agreement for part-time hours with the opportunity to pick up other hours in the future.

Clayton Mitchell: No, that’s not true.

Hon MICHAEL WOODHOUSE: Well, if it is not true, then they would be casual agreements.

Clayton Mitchell: I seek leave to table a document that was sent through to our office this morning, an advertisement—

Mr SPEAKER: Order! [Interruption] Order! The member will resume his seat. If it is an advertisement, I would imagine that they will have put it in the papers, so it is available to all members if they want it.

Clayton Mitchell: I raise a point of order, Mr Speaker.

Mr SPEAKER: A further point of order?

Clayton Mitchell: Just speaking to that point of order—

Mr SPEAKER: I will hear from the member, very briefly.

Clayton Mitchell: It is not very easily available. It was from 2014. This cannot actually be found. It was actually sent through by a member—

Mr SPEAKER: Order! I will be in a generous mood on a Thursday. I will put the leave to table this particular advertisement. Is there any objection? There is objection.

Clayton Mitchell: Is he aware that currently zero-hour contracts are of dubious legality, and yet under his Government’s proposed Employment Standards Legislation Bill these zero-hour contracts will be legitimised?

Hon MICHAEL WOODHOUSE: I reject the member’s question on two parts. Firstly, the description of the advertisement that he has just read out is not a zero-hours contract. It would probably be a casual agreement. And, no, we will be banning the things that people describe as zero-hours contracts through the Employment Standards Legislation Bill.

Economic Outlook—Risks

5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by all his statements?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: Yes, in the context in which they were made.

Grant Robertson: Does he stand by his statement that the Government has “left nothing ‘undone’ to tackle skyrocketing house prices in Auckland”, given the Reserve Bank Governor’s call today for more to be done to address the lack of supply in the Auckland housing market?

Hon STEVEN JOYCE: If the member has been paying attention, the Government is working very hard on the Auckland housing market in areas such as combating speculators who are not meeting their tax requirements, with bills which, I think, are currently before the House at the moment. There is also the work that is being done very much on lifting housing supply with special housing areas. In fact, housing supply more generally is at its highest level in just over a decade.

Phil Twyford: Where are those houses?

Hon STEVEN JOYCE: A lot of work going—as I just said, the highest level of construction in just over a decade. Also we have very significant investments going on in the social housing area. I think we are seeing a very significant housing response, and I note that the Reserve Bank Governor also notes very high levels of construction activity in Auckland currently.

Grant Robertson: In light of that answer, was the Reserve Bank Governor wrong when he told the Finance and Expenditure Committee less than an hour ago that the Auckland housing market is in dangerous territory?

Hon STEVEN JOYCE: Not necessarily at all, and I think that it is important for people to understand that if they are buying houses, you actually can pay too much for a house, and there are risks because although interest rates are very low at the moment, they do not stay low for ever and people generally stay paying off their houses for a very long time. So I think it is appropriate for the Reserve Bank Governor to make comments about housing prices in Auckland, because people do not want to make the decisions to pay too much. But in terms of the Government’s supply response, it is the highest level of construction—

Phil Twyford: Since the GFC.

Hon STEVEN JOYCE: —since 2004, Mr Twyford.

Grant Robertson: Is the Auckland housing market in dangerous territory?

Hon STEVEN JOYCE: I am not going to paraphrase the Reserve Bank Governor’s comments.

Grant Robertson: No, I’m asking you.

Hon STEVEN JOYCE: My response to that on behalf of the Minister of Finance is that there is a very significant supply response in Auckland, but people do need to be careful about paying too much for houses in Auckland, and therefore they should be concerned.

Grant Robertson: I raise a point of order, Mr Speaker. That was an extremely direct question, which the Minister did not address—

Hon Gerry Brownlee: He said: “I’m not going to”.

Grant Robertson: No, he said he is not going to—

Mr SPEAKER: Order! [Interruption] Order! Can I just ask the member to have a look at Speakers’ Rulings, particularly 187(4). It might assist him before raising such a point of order. Further supplementary questions? Supplementary question, Grant Robertson—[Interruption] Order! Order on my right-hand side.

Grant Robertson: Laurel and Hardy are a bit upset.

Mr SPEAKER: Order! That is the sort of interjection that is totally unnecessary, and I invite the member to stand and withdraw that remark.

Grant Robertson: I withdraw. [Interruption] Ha, ha! Is he concerned about the level of debt being carried by New Zealand dairy farmers given that it has increased from $12 billion in 2003 to $35 billion today, and that dairy debt now accounts for 10 percent of our trading banks’ assets?

Hon STEVEN JOYCE: I am not sure that I would look to relate the 2003 levels to today’s levels because, actually, there has been a very significant increase in the size of the industry over that period and a very significant increase in production. I note that the general consensus is that those levels are not of concern, but obviously, in their approach to increasing further debt at this point, I think all farmers will be very responsible about that.

Grant Robertson: Does he agree with the Reserve Bank Governor that a continuation of the downturn in China and having El Niño stretch further into the summer would lead New Zealand into recession, particularly noting NIWA’s view that there is a 80 percent likelihood of El Niño carrying on into the summer?

Hon STEVEN JOYCE: I do not think that the Reserve Bank Governor actually couched it in those terms. He was asked about things that could potentially cause a recession, and there are things that could cause concerns. One of those could be a prolonged El Niño, and there is another one that could be China, but I do not think that he was talking about them in particular as leading to those things. The good news is that the New Zealand economy is very resilient and we have the capacity to adapt and respond, and that is what we are actually seeing right now, in combination with both the changes to the exchange rate and the changes to the interest rates, and, of course, the Government has the continued opportunity to provide a fiscal response, given that our books are in balance.

Grant Robertson: How concerned is he then that the statement in his Budget in May that unemployment would drop below 5 percent has turned out to be completely wrong, with the Reserve Bank joining Treasury today in predicting that unemployment will go over 6 percent and stay there for some time?

Hon STEVEN JOYCE: I did not read it as saying that it would go over 6 percent and stay there for some time. Actually, it said that it would reach 6 percent, which is not necessarily a surprise given that we are currently at 5.9 percent. Obviously we are all keen for that to continue to come down. The way to do that is to encourage more investment in the New Zealand economy and in a range of industries, and that is what this Government is doing.

Kiwifruit Industry—Exports

6. TODD MULLER (National—Bay of Plenty) to the Minister for Primary Industries: What recent reports has he received on growth in kiwifruit exports?

Hon NATHAN GUY (Minister for Primary Industries): Recent reports show that Zespri’s total New Zealand - grown fruit and service payments are up 17 percent this year, to $939 million. The volumes of New Zealand - grown kiwifruit sales are up 11 percent, to over $95 million trays, and global kiwifruit sales are up 16 percent, to over $1.5 billion. Kiwifruit orchard prices are now higher than they were pre-Psa, and kiwifruit volumes are forecast to increase by about 36 percent, to 130 million trays in 2019-20.

Todd Muller: What is the Government doing to help support this growth in the kiwifruit industry?

Hon NATHAN GUY: The Government will continue to support the kiwifruit industry through research and development and by enabling greater market access. The Government has committed $25 million, in partnership with the kiwifruit industry, to assist with managing the impact of Psa, including new research. Under the Korean free-trade agreement, kiwifruit exporters will have duty-free access to the Korean market 5 years after its entry into force. New Zealand’s kiwifruit exporters paid over $20 million in duties last year. Through our trade deal with Chinese Taipei, all duties on kiwifruit will be eliminated over the first 3 years, with an estimated annual duty saving of nearly $15 million.

Flag—Design Process

7. JACINDA ARDERN (Labour) to the Minister for Arts, Culture and Heritage: Was she, as Minister for Arts, Culture and Heritage, consulted during the flag design process, and is she satisfied with the outcome as one of the responsible Ministers?

Hon NICKY WAGNER (Minister of Customs) on behalf of the Minister for Arts, Culture and Heritage: No, the Minister was not consulted during the flag design process, which was deliberately kept at arm’s length from Ministers to ensure its independence. The Flag Consideration Panel was established to conduct an independent process to engage with New Zealanders about alternative flag designs and to choose four to appear on the ballot paper for the first referendum. Yes, the Minister is satisfied with the outcome. The Flag Consideration Panel has undertaken its work conscientiously and chosen what it considers the four best alternative flag designs.

Jacinda Ardern: Did she, as Minister for Arts, Culture and Heritage, recommend any designers or artists for the Flag Consideration Panel; if so, whom?

Hon NICKY WAGNER: No. The Flag Consideration Panel included New Zealanders with a variety of backgrounds and areas of expertise, and they took advice from designers.

Jacinda Ardern: Did she recommend anyone for the Flag Selection Advisory Group, a group that included the creative director from Nike; if so, whom?

Hon NICKY WAGNER: As I am not the Minister concerned, I am unable to answer that question.

Jacinda Ardern: What is her response to those who have called for the Red Peak option to be included in the referendum?

Hon NICKY WAGNER: On behalf of the Minister for Arts, Culture and Heritage—[Interruption]

Mr SPEAKER: There is a fair bit of noise coming from many parts of the House. Could the Minister start her answer again.

Hon NICKY WAGNER: There has been a robust process involving public input, and I am satisfied with the outcome. Red Peak was considered by the panel, along with a number of other designs, and the panel made its decision on the final shortlist. I am interested to see that the UMR Research poll of 1,000 New Zealanders ranked the Red Peak flag 37th out of 40—nearly the worst.

Jacinda Ardern: As the Minister who has apparently taken an objective view, and in light of her role as Minister responsible for World War I commemorations, did she—

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. The shadow Leader of the House has been very assiduous in the last couple of days in making sure that you considered answers to questions. That was completely out of order as a question. It does not meet any of the tests of the Standing Orders. It could easily be brought into line without the extra bits that were thrown into the middle.

Mr SPEAKER: On this occasion the Minister, the Hon Gerry Brownlee, is absolutely right. Can I ask the member to rephrase her question consistent with the Standing Orders, without the lead-in, which is causing some disruption.

Chris Hipkins: I raise a point of order, Mr Speaker—

Mr SPEAKER: I hope the member is not in any way questioning where we have just got to.

Chris Hipkins: No, I am not questioning that particular ruling. I am simply asking for consistency. You will note that Andrew Bayly, in his question today, began with a preamble for a Government patsy question. The same ruling must apply to all sides of the House.

Mr SPEAKER: Order! There are many questions that if I ruled absolutely strictly on, according to Standing Order 380, would not be acceptable in this House. I am relatively lenient, but when I get one like I have just had, which has clearly created some disorder, then I am required to rule. I will appear to be consistent as well, but if members consistently want me to toughen up and take out all qualifications on supplementary questions, I am happy to do so. But I suspect that about 80 percent of the supplementary questions asked so far would have been ruled out of order. So if that is the wish of Mr Hipkins, I ask him to consider it carefully. But if it is his wish, I am happy to comply.

Jacinda Ardern: Did she consult with the RSA as the Minister responsible for World War I commemorations, or, indeed, anyone else, before she adopted a position in support of the Lockwood option, which she has been wearing as a badge since Monday and is hanging in the front of her electorate office? [Interruption]

Mr SPEAKER: Order! [Interruption] Order! If members on my right-hand side want to catch an early flight, I can assist. The question has been asked; the question is in order.

Hon NICKY WAGNER: I am not the Minister concerned, so I am unable to answer that question directly, but I am very pleased to see that the Labour Party is taking an interest in the referendum, and I hope it will support the right of every New Zealander to have an opinion.

David Seymour: Is the Minister concerned that colour-blind voters will, effectively, have only three options to vote for with the current line-up?

Hon NICKY WAGNER: No.

Employment—Women

8. JOANNE HAYES (National) to the Minister for Women: What reports has she received relating to the benefits of employing women in trades and construction for the Canterbury rebuild?

Hon LOUISE UPSTON (Minister for Women): I was thrilled to launch the Ministry for Women’s report Getting it done: Utilising women’s skills in the workforce in Christchurch on Tuesday. This report presents the lessons learned in Canterbury, which can work in all parts of New Zealand to encourage employers, industry groups, training organisations, and schools to increase the number of women training and working in trades and construction jobs. The report was a collaboration between the Ministry for Women and its partners in Canterbury, including the Canterbury Employers’ Chamber of Commerce, Christchurch Polytechnic Institute of Technology, the Stronger Christchurch Infrastructure Rebuild Team, and the National Association of Women in Construction.

Joanne Hayes: What evidence does she have that employing women in industries such as construction can be beneficial for businesses?

Hon LOUISE UPSTON: The Ministry for Women commissioned research in the year 2013 to better understand why women were not applying for construction jobs, given that there was a demand in Canterbury. Their research found that women were available and wanted to work, and they were open to working in construction, but there was a perception that these were jobs for the boys. Women employees bring benefits to businesses, such as stronger connections with customers, improved business performance, and greater diversity of leadership. Construction is one of the many growing industries where there is a shortage of women. However, over the past 2 years, the number of women in construction has more than doubled in Canterbury. I think that this is a great result for New Zealand women, for Canterbury, and for New Zealand.

Joanne Hayes: How can the findings from this report be rolled out to other regions around New Zealand?

Hon LOUISE UPSTON: With the high demand for skilled workers in industries varying from trades and construction to engineering and IT forecast to continue, some businesses are continuing to have difficulty in attracting skilled workers to fill these jobs. These industries are likely to drive New Zealand’s growth in the next 5 to 10 years, and it makes good business sense to attract more women to industries that have been traditionally male orientated. I encourage employers to learn from Canterbury the actions that they can take to attract and retain more women in their businesses and to look forward to ways to better utilise women leaders and talents when going through recruitment.

Sue Moroney: I seek leave to table a document from the Employment and Vocational Guidance Service. It is a poster, “Girls Can Do Anything”, from the mid—

Mr SPEAKER: Order! The member will resume her seat and stop trifling with the House.

Economic Policy—Oversight and Monetary Policy Framework

9. JULIE ANNE GENTER (Green) to the Minister of Finance: Does he have confidence in the Reserve Bank in light of today’s official cash rate cut which has now reversed 75 points of the 100-point hike it made in 2014?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: Yes.

Julie Anne Genter: Does he think that a panel of experts from across the economy, instead of only one Reserve Bank Governor, might make better decisions around monetary policy; if not, why not?

Hon STEVEN JOYCE: The suggestion that the member makes, of having a panel of people making the decision, is, I have to say, not the silliest suggestion in monetary policy we have heard from the Greens over the years, and many countries—

Mr SPEAKER: Order! Just answer the question.

Hon STEVEN JOYCE: I think the challenge is, though, the way the member phrases it, if I may be fair, because I think it is a very important point. The suggestion is that she is unhappy with the decision that the Reserve Bank Governor has made; therefore, she would shop around to find a group of people who would make a decision that she agrees with. The whole idea of having an independent Reserve Bank Governor and an independent process is that politicians may or may not agree with that process at some time but the decision is independent. On that basis, I could not support the member’s proposal.

Julie Anne Genter: Does he agree with Treasury’s advice to him that “The current single decision-maker approach poses risks”, and that “on balance, we think there would be benefits to moving towards a monetary policy committee in the future.”; if not, why not?

Hon STEVEN JOYCE: I am, of course, aware of that policy advice. But it is important to note that the New Zealand system has served us very well, I think, over the last 26-odd years. Yes, you could have a change at some point, but, again, I think that if you wanted to do it, and it is not a proposal that we are at all considering at this point, but if it was something that you wanted to do, you would have to do it for the right reasons and not because you disagreed. The member framed her primary question in such a way that suggested she was concerned about what had happened. In fact, in her press release today she was concerned about a mistaken decision by the Reserve Bank Governor. I just cannot agree with that.

Julie Anne Genter: Given that the Reserve Bank’s own analysis suggests that last year’s unnecessary official cash rate increases will have cost the economy up to $2.4 billion, why is he so complacent about the governance structure surrounding these decisions?

Hon STEVEN JOYCE: I am not remotely complacent, but, again, I think the member is just—I do not know whether she wanted to do this or whether she just inadvertently made the point I was making, in that she said that it was a wrong decision last year. I think that is a very interesting statement to make, because, actually, if you look at the situation that was in place last year, a number of those things have subsequently changed. I think it is very interesting that the member would seek to second-guess the Reserve Bank Governor in that way, because they can only make the decisions that they make at the time based on the information that is available at the time.

Julie Anne Genter: Is the Minister aware that we are basically the only OECD country that has this single decision-maker structure and that there are a whole number of other countries that use a broad panel of experts?

Hon STEVEN JOYCE: I said at the outset in one of my earlier answers that there are different ways of doing it. I acknowledge that. I am not saying that you would never want to move from that, but you certainly would not want to do that just because one or a number of members of Parliament had decided that in their view the Reserve Bank Governor had made “the wrong decision”. I do not believe that that has happened, and, actually, that would be the wrong basis on which you would make any decisions about independent monetary policy.

Julie Anne Genter: I raise a point of order, Mr Speaker. Mr Speaker, I seek your guidance on this. I am struggling because I do not believe that there has been any assertion in any of my questions that implies what the Minister is saying that I have said, and therefore he is changing his answers.

Mr SPEAKER: I think there has been some assertion, because if I go back to the previous supplementary question, the member inserted the words herself—“the unnecessary adjustment to the official cash rate”, etc. But the point that I think is fair is that on that particular occasion the question was not addressed, and I think it is really because perhaps the Minister did not hear it correctly. The way forward is to repeat that supplementary question to the Minister.

Julie Anne Genter: Thank you, Mr Speaker. Is the Minister aware that we are one of the only OECD countries to have this single decision-maker—[Interruption]

Mr SPEAKER: Order! I declared that I was not happy with the answer. It had not been addressed. That is it. So I am going to invite the member to ask it again—I do not expect interjection from the two Ministers on my right-hand side—and then the Minister can have the opportunity to answer.

Julie Anne Genter: Is the Minister aware that no other OECD country with a central bank gives so much legal power to a single official?

Hon STEVEN JOYCE: As I said previously, I am aware of that. Actually, as I said to the member in one of my earlier answers—this is on behalf of the Minister of Finance—actually, there is a range of ways in which that is done internationally. But the basis on which you would change that is not on the basis that a number of members of Parliament think that the Reserve Bank Governor had made the wrong or unnecessary decision in a previous year, which the member asserted in one of her previous questions.

Julie Anne Genter: Given that the only independent review of New Zealand’s monetary policy framework since the 1989 Act was put in place recommended changing the law in regard to bank governance, and that no other OECD country with a central bank gives so much power to a single individual, will his Government consider updating the law?

Hon STEVEN JOYCE: I thought I had answered that previously, but the answer is no, we have no plans to do so at this stage.

Tertiary Institutes—Monitoring and Investigation into Funding

10. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister for Tertiary Education, Skills and Employment: What is the name of the tertiary education institution he referred to in his answer to Oral Question No 9 yesterday that had its focused review “elevated to a full review”, and what is the nature of the allegations that his officials are now investigating?

Mr SPEAKER: Before I call the Minister, my office has been advised that this answer may be longer than normal.

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): The tertiary education system is under constant evaluation, with the Tertiary Education Commission and the New Zealand Qualifications Authority undertaking a range of different levels of review and investigations of tertiary education organisations at any one time. In the interests of natural justice these are not publicised until they are completed, or, indeed, for the majority where no issues at all are found, they may not be publicised at all. Six focused reviews were initiated in 2014 to look at tertiary education organisations that had some features in common with Te Whare Wanānga o Awanuiārangi and the Western Institute of Technology at Taranaki. As indicated to the member yesterday, five of those have been concluded completely satisfactorily with no concerns. The sixth investigation will come to a conclusion shortly. As I said to the member yesterday, at an appropriate time I would be more than happy to publicise the outcome of that investigation and name the institution involved, should there be a necessity to do so, but I do not consider it in the public interest to do so at this time before the investigation has concluded.

Hon David Cunliffe: Do the allegations against the institution currently still under an elevated review include inflated credit values for course delivery, such as an 11-month course being delivered and assessed in just 7 days?

Hon STEVEN JOYCE: I am not prepared to go into the details of that at this point, but as I said to the member yesterday, and also announced in my primary answer, the issues that we are talking about are with some similarity to what has been announced recently in relation to Te Whare Wanānga o Awanuiārangi and also Taratahi Agricultural Training Centre, so there will be some similarities in terms of funding commitments that may not have been met in terms of the amount of teaching that has been provided.

Hon David Cunliffe: Do the allegations against this institution include the enrolment of tutors as ghost students for more than a decade across a range of programmes?

Hon STEVEN JOYCE: My answer to that is exactly the same as the answer to the previous one. The member will be aware that the Taratahi Agricultural Training Centre had some issues with some tutors being enrolled in programmes and those moneys being paid. Those are both subject to a current Serious Fraud Office investigation but also have been announced in terms of the Deloitte review. In relation to the other investigation he is referring to, I am not willing to provide the details at this time, but I am happy to do so once the investigation is complete.

Hon David Cunliffe: In what year—in what year—was he first made aware of allegations of systemic credit and level rorting and of tutors being enrolled in courses to boost numbers and funding at Tai Poutini Polytechnic in Greymouth, and why has he not acted sooner, given that Search and Rescue Institute New Zealand says that as a result of this delivery lives have been put at risk?

Mr SPEAKER: The Hon Steven Joyce—either of those two supplementary questions.

Hon STEVEN JOYCE: The matters that the member raises are not, for his edification, the subject of any current review. I am aware of the issues that the Search and Rescue Institute raised—

Dr David Clark: What year?

Hon STEVEN JOYCE: I do not have the year in front of me. They were satisfactorily resolved at the time.

Hon David Cunliffe: Given that Tai Poutini Polytechnic is not the institution that his officials are still investigating, can he assure the taxpayers of New Zealand that he will now immediately order a further investigation into these allegations; if not, why not?

Mr SPEAKER: Again, either of those two supplementary questions.

Hon STEVEN JOYCE: The matters that the Search and Rescue Institute raised—and, again, any number of people raise any number of prospective issues, particularly in a competitive environment, of which this one is—as far as I am aware were addressed at the time. If the member has any new and recent information, I would be happy for him to supply it to me and I would have a look at it.

Hon David Cunliffe: How would the Minister respond to the acting general manager of the Search and Rescue Institute New Zealand, who says in a letter of today’s date: “How can training that formerly occurred over 1 year now all be taught and assessed in one 7-day period? Are the students aware that as search and rescue responders, their lives are being forsaken so the polytechnic can make money? How, despite previous complaints to TEC, to the Minister of Tertiary Education, and public notification of such occurrences, has this been allowed to continue for so long?”

Hon STEVEN JOYCE: The member may or may not be aware that that is a statement by a competitor, I believe, of that particular course, but again I make the offer that I made in the previous answer—

Grant Robertson: So it’s all right then?

Hon STEVEN JOYCE: No, I am just making the member aware that different people make different claims about competing providers at different times, but my invitation to the member is that, rather than grandstanding about it, if he would like to provide the information to me, I would be more than happy to investigate it.

Broadband, Rural—Southland

11. RIA BOND (NZ First) to the Minister for Communications: Does she stand by all her statements?

Hon AMY ADAMS (Minister for Communications): Yes, in the context in which they were given.

Ria Bond: Does she stand by her statement yesterday on broadband speed that “So the residents of Southland should be very grateful that at least this Government is addressing it, something the Labour failed to do?”

Hon AMY ADAMS: Yes.

Ria Bond: If rural broadband speeds have tripled, as the Minister said yesterday, has the member of Parliament for Invercargill raised constituents’ concerns with her about internet services and Ms Dowie’s own concerns about officially reported broadband performance; if not, why not?

Hon AMY ADAMS: I cannot recall every item of constituent correspondence that I have had from colleagues, but I know that the member for Invercargill, like most members, wants to see better broadband rolled out in their communities because members understand the fundamental importance of connectivity in all our communities, and they understand that New Zealand’s thirst for connectivity is growing exponentially, which is exciting and which is why this Government has spent $2 billion on improving that very connectivity.

Ria Bond: I seek leave to table a letter written by Ms Dowie to Venture Southland, dated 25 June 2015, in which she outlines concerns—

Mr SPEAKER: Order! [Interruption] Order! I have just been advised by interjection that it is available on the internet. [Interruption] Order!

Ria Bond: It is not publicly—

Mr SPEAKER: Is the member saying it is not available on the internet?

Ria Bond: As far as I am aware, Mr Speaker.

Mr SPEAKER: Sorry, I cannot hear the member.

Ria Bond: As far as I am aware, it is not in the public domain.

Hon AMY ADAMS: I raise a point of order, Mr Speaker. The same member yesterday tabled a report from Venture Southland and assured us it was not readily available. It is readily available on the internet, and that letter is a part of it.

Ron Mark: I raise a point of order, Mr Speaker.

Mr SPEAKER: Order! [Interruption] Order! This is a point of order.

Ron Mark: Thank you Mr Speaker. I am struggling, because what you just—[Interruption]

Mr SPEAKER: Order! It is a point of order.

Ron Mark: Thank you. What you just said is that during a point of order you were advised by an interjection—

Mr SPEAKER: That is right.

Ron Mark: —which is against the Standing Orders—

Mr SPEAKER: It is. [Interruption]. I do not need the member to assist in that way. It certainly is against the Standing Orders, but the point is that there has been one other occasion when I was assured that the document was not freely available. I put the leave, it was tabled, and I subsequently found out it was very easily available. So I think the member who is seeking leave needs to be very, very clear that if she stands in this House and seeks leave to table a document, I will be asking whether it is freely available. It is her responsibility to have ascertained whether it is freely available, and I warn all members in this case that the risk of then misleading this Parliament is serious. I invite the member Ria Bond to request to table the document again, but I will be asking whether she has done the homework to find out whether it is available.

Ria Bond: Has she seen a letter from her colleague Todd Barclay, drafted on 1 July, in which he raises concerns regarding her $300 million Rural Broadband Initiative, in which he stated—

Ron Mark: I raise a point of order, Mr Speaker. I know that in times past it has been very difficult when—

Mr SPEAKER: Order! Can I have the point of order quickly.

Ron Mark: We cannot hear because of the level of interjection, and we seek your protection—

Mr SPEAKER: Thank you. Well, then, if you could assist by giving some lessons to your members about asking supplementary questions and keeping them short, that would assist. [Interruption] Order! I did not hear the interjection, which is possibly just as well. I invite the member Ria Bond to ask her supplementary question, keep it concise, and I expect silence from my right-hand side whilst the question is being asked.

Ria Bond: Has she seen a letter from her colleague Todd Barclay, dated 1 July, in which he raises concerns regarding her $300 million Rural Broadband Initiative, in which he stated that it is not an effective solution?

Hon AMY ADAMS: Yes, I have seen the letter, and I do not believe that that member’s categorisation of it is correct at all. What he is doing is supporting the pitch for a new solution, under phase two of the Rural Broadband Initiative, and making the point that providers in his electorate want better connectivity. This Government agrees, and that is what we are doing. [Interruption]

Mr SPEAKER: Order! Again, the level of interjection coming from members on my right-hand side is to cease.

Māui’s Dolphin—Oil and Gas Exploration

12. KEVIN HAGUE (Green) to the Minister of Conservation: Does she stand by her statement, “We are doing everything we can to protect the Māui’s dolphin”?

Hon NICKY WAGNER (Associate Minister of Conservation) on behalf of the Minister of Conservation: Yes.

Kevin Hague: How is the Government doing everything that it can to protect the Māui’s dolphin when the Minister of Energy and Resources has just proposed, as part of Block Offer 2016, new oil and gas exploration in 22 percent of the Māui’s dolphin sanctuary, where at least 14 reliable Māui’s dolphin sightings have been made?

Hon NICKY WAGNER: We have layered and sophisticated Māui’s dolphin protection mechanisms in place. They range from the core of the marine mammal sanctuary, and they have protections for trawling, for set-netting, and for seismic activity. Also, we are very focused on protecting the Māui’s dolphin in terms of seismic activity, and we have world’s best-practice protective regulations in seismic work within the marine mammal sanctuary, and we require compulsory adherence to the seismic code of conduct within the exclusive economic zone legislation.

Kevin Hague: Can the Minister explain how “doing everything it can” is consistent with the Government introducing additional risks to the Māui’s dolphin, such as exploratory oil drilling, as these permits will likely require, given that there are fewer than 55 Māui’s dolphins left in the world?

Hon NICKY WAGNER: As I have said, we are very focused on protecting the Māui’s dolphin. We do not believe that we are increasing that risk, because we have world’s best-practice protective regulations for the seismic work inside the marine mammal sanctuary, and outside it we have compulsory adherence to the seismic code of conduct.

Kevin Hague: Is there any way she can possibly guarantee that new drilling will not cause a spill and cause harm to the critically endangered Māui’s dolphin, which it is her job to protect?

Hon NICKY WAGNER: As I have said, we have layered and sophisticated protections for the Māui’s dolphin. They cover the most important threats to dolphins, which are trawling and set-netting, and it is important to note that there have been no deaths from fishing since 2002. We also have ongoing research—the very best local and international research—and this year we are going to be introducing c-pods that actually listen to the dolphins and make sure that we can identify their exact range and their exact frequency. We believe that that will protect our dolphins.

Kevin Hague: I raise a point of order, Mr Speaker. My question asked about the risk associated with oil drilling—a point that was not addressed even slightly by the Minister’s answer.

Mr SPEAKER: The question asked whether there was any way that the Minister could guarantee a situation. Well, clearly a Minister cannot guarantee a situation—[Interruption] Order! The member did ask that in his question. The question has, without doubt, been addressed.

Kevin Hague: Thank you, Mr Speaker. I agree with your analysis of the answer. If she has the opportunity, as Minister of Conservation, to prevent oil drilling and seismic surveys in the Māui’s dolphin sanctuary, will she take it?

Hon NICKY WAGNER: I am not convinced that there are risks to the Māui’s dolphin, because we have the world’s best practice of regulations within the sanctuary and we also have compulsory adherence to the exclusive economic zone legislation.

Kevin Hague: I seek leave to table a map prepared by the Green Party’s parliamentary office today, which indicates the Māui’s dolphin sightings in the area of the proposed block offer.

Mr SPEAKER: I suspect that that information is very readily available, but I will put the leave. Leave is sought to table that particular map. Is there any objection? There is objection.

Question No. 11 to Minister

TRACEY MARTIN (NZ First): I raise a point of order, Mr Speaker. Can I ask you to reflect on an incident that happened here today with regard to my colleague Ria Bond. I would like you to have a look at the way that Ms Bond was treated by the House during her attempt to ask questions that she has every right to ask and also about some of the sexist remarks that were made by Mr Joyce, in particular with regard to a comment about “sweet pea”, and so on and so forth. If you could have a look at the tape and, perhaps, just reflect on how, in the future, we may be able to treat woman with more dignity in this House.

Hon GERRY BROWNLEE (Leader of the House): I think it may be a good idea if you were able to look at the tape. I know that you do regularly have a look and see just how things are going and how members are faring. I would also ask you to listen very carefully to that tape and, perhaps, indicate to some others in the House how you feel about it, because there was, most certainly, an unparliamentary remark made that was addressed to you. I accept that it is your choice to act on that or not, but I think there have been a few fractious moments, and perhaps Ms Martin’s idea is not such a bad one.

Hon Members: Point of order.

Mr SPEAKER: No, I do not need any further assistance—[Interruption]. I do not need any further assistance, but I thank members for offering their assistance. I normally certainly take the time to go very carefully through the Hansard and review the situation to see some of the rulings that I have made. On this occasion I will look at the tape—I do not normally bother—but I am aware of a very unsatisfactory remark that was made across the House, which I did not hear at the time, but if I had heard it would have led to a very severe reprimand. There is a lot of interjection occurring from the House, particularly in the far corners of the House, which may get picked up on the microphones and get displayed publicly via the TV system, that are not heard by me as Speaker. I think members need to be aware of that, but I just warn all members that some comments made in the heat of the moment and some of the language used in the heat of the moment is totally unparliamentary and it must cease.

Hon STEVEN JOYCE (Minister for Economic Development): I raise a point of order, Mr Speaker. I just feel the need to respond to the comments from colleague on the other side of the House because she is incorrect and she has misheard. I think, for the benefit of the House, I would like to make the point that the comment I actually made was in reference to Mr Mark and it was “sweary bear”. That was what I was saying, which I have said before. So please—I did not make the comment that Tracey suggests I did.

Mr SPEAKER: I have said to the House I will review the tape. I think that is the most appropriate way forward, and after reviewing the tape I will then decide whether any further action is required.

Bills

Land Transfer Amendment Bill

Tax Administration Amendment Bill

Third Readings

Hon LOUISE UPSTON (Minister for Land Information): I move, That the Land Transfer Amendment Bill and the Tax Administration Amendment Bill be now read a third time. These bills were divided in the Committee stage from the Taxation (Land Information and Offshore Persons Information) Bill. These bills enable improved compliance with tax laws by allowing for the collection of information to ensure that people who buy and sell property for profit, including overseas buyers and short-term speculators, pay their fair share of tax. They are part of a suite of measures announced as part of Budget 2015 to bolster the tax rules on property transactions, including those by overseas buyers, and to help the Inland Revenue Department enforce them. Taken together, these measures will help the Inland Revenue Department to enforce tax rules, provide it with extra resources, and ensure that property investors and speculators pay their fair share of tax, whether they are from New Zealand or from overseas. Everyone here will agree that it is perfectly reasonable to expect that anyone who has an obligation to pay tax does so.

The Land Transfer Amendment Bill supports the new brightline test set out in another bill currently before the House. The brightline test supplements the Inland Revenue Department’s current intentions test. Under this test, gains from residential properties sold within 2 years of purchase will be taxed unless the property is the seller’s main home, inherited from a deceased person’s estate, or transferred as part of a relationship property settlement. The bill collects the information needed to support tax measures. It therefore, rightly, focuses on those who have or are likely to have tax obligations. Therefore, the bill provides an exemption from the need to provide tax numbers when you are buying or selling your home. Those people are not speculators and they have no tax obligations, so that information is not needed. There is no need for us to unfairly impact on New Zealand owner-occupiers who have worked hard and saved to buy a family home.

The bill acknowledges that some of us own more than one property, but only one of them can be the main home. To help people identify which is their main home in these circumstances, the bill includes a greatest connection test. This test is drawn from case law and will be supported by advice and guidance. Although it is not a register of foreign property-owners, it will help us better understand the residential property market and inform housing policy according.

To better understand who is buying and selling houses in New Zealand, the bill provides for the asking of two questions. First, whether a buyer or seller, or a member of their immediate family, is a New Zealand citizen or holds either a resident, work, or student visa. The second question is whether or not they intend to live at the property being transferred.

The Tax Administration Amendment Bill contains important measures to support New Zealand’s anti - money-laundering initiatives. To ensure that our anti - money-laundering rules apply to non-residents before they buy a property, the bill requires offshore persons to provide a bank account number in order to get a New Zealand IRD number. Both bills will apply only to contracts entered into on or after 1 October 2015. The information will have to be provided after 1 April 2016, irrespective of when the contract was entered into. This means that it will apply only to new contracts that have gone unconditional after the commencement date of 1 October. It will give people time to comply with the requirements of this bill.

New Zealanders have a right to know that everyone who should pay tax does pay tax. These bills will make sure that this happens. I commend these bills to the House.

GRANT ROBERTSON (Labour—Wellington Central): Well, what better testament to a Government that is not straight-up with New Zealanders and is out of touch with New Zealanders could there be than this piece of legislation? It is the ultimate in window dressing. It is the ultimate in appearing to do something while doing as little as possible, or, as some colleagues have said, it is deliberately doing that—deliberately making sure that the regime put in place through this legislation will not work. That is probably the less charitable interpretation—that it is deliberately being put forward so that it will fail to achieve the goal that the Minister just told us she had, which is to get more information about who is buying and selling houses in New Zealand—or it could be just pure incompetence.

We saw this from the get-go with this piece of legislation. It was brought forward at the time of the Budget, when the Government was under significant pressure to do something about housing. What the Government realised was that there was nothing in the Budget on housing, and so at the last minute it had to come up with two ideas—two ideas to scratch the political itch, but not do too much lest it offend the Property Investors Association, or whoever else it is that National was worried about offending.

This piece of legislation should have been the legislation that did give New Zealanders accurate information about who is buying and selling houses, so that we can use that to make better public policy. Today, at the Finance and Expenditure Committee, the Reserve Bank Governor himself raised his concerns about the number of property purchases being made by speculators—the fact that it has increased over the last year from 33 percent to 41 percent, according to the Quotable Value data. It is a problem. Everybody in this House knows it is a problem. The piece of information missing is how big a problem, and these bills would have been the piece of legislation that could bring that information in front of New Zealanders and give us that information. But this Government has failed to do that. It was rushed. There was nothing in the pre-Budget documentation that was released in July about this piece of policy work because it has not been thought through properly.

Just how bad it was was revealed last night in this House, when my colleague Dr David Clark and I tabled information released to us by Land Information New Zealand that showed that the implementation date of 1 October—the commencement date of this legislation—means that for 3 months all information collected for the Landonline database will be done by pen and paper. It is not the 1960s; it is actually the 2010s, and the members on that side of the House are not ready. Land Information New Zealand, I suspect—and, actually, this is being generous—may not be ready by 1 December, either. So now we have this great advance in the information about who is buying and selling houses in New Zealand, and Land Information New Zealand has to do it with pen and paper because it is not ready. This is half-baked, poorly thought through, and it is not being straight-up with New Zealanders.

This legislation was a knee-jerk reaction to what is a significant problem. So what do we have left in front of us, then, in such poor lawmaking? We have an inching, grudging step by the Government in the right direction—the idea that people actually can contribute their IRD number.

An exemption was put in place by the Government. The exemption is for the main home. The justification for that exemption was outlined in the Government’s commentary on the original bill, and I want to quote from it: “… the majority of us accept that not making such an exemption for the main home would greatly increase the volume of information to be managed by Land Information New Zealand at the Inland Revenue Department, and could lead to people worrying needlessly that the transaction will be taxable, even though in most cases it would not be.” That is complete rubbish. Virtually everybody in New Zealand buying their main home already has an IRD number. It is a simple moment for the conveyancing lawyer, a new box on the form—there it is, IRD number written in, information provided—but, instead, a giant loophole has been set up in this law by the National Government by exempting the main home.

It then made that exemption even worse by using the definition for “main home” to be the place with which people have the “greatest connection”. Again, in the Government’s own commentary on the bill it said: “We note that the term ‘greatest connection’ is not used in New Zealand tax law at present. … We recognise that there could be some confusion about the rules,”. This is the Government’s own law, and it is saying in the commentary on the legislation that was brought before this House that there is going to be confusion. That is not the point of making law—do I need to say that to the Government benches? The point of making law is to clear up confusion, not create confusion, but that is what it has managed to do with this exemption.

We had it clarified for us by Alistair Scott, the member for Wairarapa. He clarified that the greatest connection for him was the feeling. He said that the main home was where the heart was. He said that in the House last night—the main home is where the heart is. So not only do we have confusion; we have the Hallmark card guide to lawmaking: take it from the vibe, the feeling—that is where you main home is.

This is a complete farce. The exemption for the main home is unnecessary, it creates a loophole, it means we do not have the kind of data that we should, and the definition of that being the place where someone has the greatest connection is, as the Government itself acknowledges, confused and is poor law. Mark my words: we will be back here changing that and correcting that because the definition simply will not be adequate.

But having had such deep concern about the bureaucracy and the added compliance of people having to provide an IRD number for their main home purchase, at the other end of this legislation the Government has managed to put in unnecessary compliance by asking offshore persons making purchases to provide both a bank account number and an IRD number. The advice that was given to the Ministers by the Inland Revenue Department was that this was of limited benefit because the Inland Revenue Department has the power to require relevant identity verification upon application for an IRD number. So that was the advice that the Inland Revenue Department gave to the Government—it does not need the bank account number. Interestingly, the Inland Revenue Department also said that it should not exempt the main home, either. Two pieces of very sensible advice from the Inland Revenue Department, ignored by the Government.

It is interesting because I suspect that Todd McClay, and possibly Louise Upston, actually went to their Cabinet colleagues and said: “Listen, we’ve had this advice from the Inland Revenue Department. We think it’s pretty sensible. We’re going to go through with it.” That is what I think probably happened here, but then they were rolled. They were rolled at Cabinet by those who thought: “We’d better be a bit careful about those property investors who support us. We’d better watch out for them.” So they rolled over and ignored the Inland Revenue Department’s advice, and now we have a situation where we have unnecessary bureaucracy on one hand and a failure to get the correct information on the other.

New Zealanders do deserve to know more about who is buying and selling property in this country. Speculators, be they both onshore and offshore, are forcing young New Zealanders out of being able to buy their first home. That core element of the New Zealand dream, of being able to get in there and buy your piece of property, is now priced far out of the capability of many people. In Auckland we have a house price to income ratio of 9:1—of 9:1. That puts Auckland in amongst the top 10 most expensive housing markets in the world. That is the situation we are facing here at the moment. That is what happens when property speculation runs riot.

We need good quality information so that we can make the judgments about what public policy response we should have and how we can crack down on speculators, but this Government does not want to know about that. This Government has put up the weakest possible law that it could in this area. It is hopeless. It is one small, tiny step towards what we should be doing and, therefore, we will vote for it because it is one small, tiny step towards what we should be doing, but we could be doing so much better than this. We could be giving New Zealanders the information that they need. We could be creating a system that is low on compliance and high on quality of data, but that is not what this legislation is.

DAVID BENNETT (National—Hamilton East): It is good to see that the Labour Party members are voting for this legislation. It is quite different from what they have done for the last—when they were in Government for 9 years they did nothing in this area, absolutely nothing. This Government has done something, and it is more than the Labour Party ever will do. The Labour Party sat there for 9 years in Government and never even thought about doing anything like this.

The property market has not just created itself; it has been going on for many years. The Auckland property market has had major increases in prices under the Labour Government, and it did nothing—did nothing at all. Then Labour members have the gall to come into this House and say that this legislation is not enough, when they did nothing. That is the nature of the Labour Party in this area. They did nothing, zero, squat.

But then what would the Labour Party have done? The Labour Party one day wanted to have a capital gains tax, and took it to the election, and then its leader said no, no capital gains tax. So what are the Labour Party members going to do? The Labour Party has still got nothing. Labour members have got nothing that they would do now. Their plan was for a capital gains tax, and then they threw it away. Andrew Little threw it away after the election. He threw away the capital gains tax. So the Labour Party has got nothing. Labour did nothing, and will always do nothing because it has got no plans in this area.

Phil Twyford is sitting there. I want to see Phil Twyford get up and talk about the new housing policy that David Clark mentioned last night. David Clark told us this week that you have to live in New Zealand to own a home. David Clark’s policy is that if somebody—

Mr DEPUTY SPEAKER: Come to the bill.

DAVID BENNETT: —is not living in New Zealand, they do not have the ability to own their own home. They have to sell it. That is the Labour Party policy. That is what David Clark said in this House this week. He is about nothing—

Sue Moroney: I raise a point of order, Mr Speaker. I think that we are about, oh, 2½ minutes into this speech, and we have not heard anything about the legislation yet. Could you bring the speaker back to the purpose of the legislation, please?

Mr DEPUTY SPEAKER: You have made your point of order. Please take your seat. I call David Bennett, and ask him to remember that he is speaking on the legislation arising from the Taxation (Land Information and Offshore Persons Information) Bill.

DAVID BENNETT: Yes, Mr Deputy Speaker. That bill is a very important bill because what we are doing in that bill is we are asking for IRD numbers and getting people to register. Opposition members said that that was too little, too late. Well, they did nothing when they had the chance, and they do nothing now, because they have thrown away all their policies in this area, apart from the new policy that David Clark came out with, and that is that you have to live in New Zealand to own a home. That is the Labour Party members’ approach to this bill when they talk about it doing much more in this area. This is a good bill. It is actually part of a suite of measures in this area, and we commend it to the House.

Dr DAVID CLARK (Labour—Dunedin North): I do take the focus of the last member’s speech on my every utterance on this bill to date as some kind of flattery. It is, I guess, the only area that he is going to find some substance to speak about, because we have heard nothing from that member about the bill.

But on to the bill, because I think that it is important. It is important that we understand what this bill does and does not do, because as a Parliament we are going to be required—I have little doubt—to come back and fix this mess. The history is there of bills such as this one, that have not got the systems in place behind them to deliver, and then require further parliamentary legislation.

We know that it is a flawed bill. We know that it is not going to capture all the information that would actually be useful to capture, and a widening of its scope would also require a visit back to Parliament. We know that each bill that goes through Parliament, from memory, costs over $1 million in terms of staff time, in terms of the researchers—in terms of all of those things. It seems kind of crazy that we as a Parliament would put something through like this—that the Government would be so out of touch with New Zealand that it would put something through like this, without recognising that it could have done a much better job. It seems arrogant to take that approach, but that is what we are seeing more and more from this Government.

We do support the policy objective of gathering information on offshore residential homebuyers, but, because of the loopholes in this legislation, we think that it will not prove particularly effective in gathering data that will be of use for making policy decisions in the future. We know that Auckland house prices are out of control. They rank on world unaffordability tables, and we know that something needs to be done. But here is a Government designing window dressing measures, rather than actually addressing the nub of the problem: to bring those house prices down, to ensure that New Zealand families can afford homes in their own country so that that Kiwi dream of homeownership is kept alive, to earn decent wages, and the other things that have been undermined by this Government.

The register of buyers, as it is proposed by the Government, proposes exemptions for the main home. It will increase compliance costs and create loopholes in the way that this is defined, and in the data collection measures. Let us for a minute consider what this new “greatest connection” test might mean. I suspect that we will hear soon from Alastair Scott again about the feeling—you know, “the vibe”; maybe “home is where the heart is”—and we will ask ourselves, if Alastair Scott finally bought a house in his own electorate, would his feeling be in that house, or in the house that he lives in in Wellington? I know from talking to Kieran McAnulty, who runs in the Wairarapa as Labour’s candidate—a very strong candidate—that his heart is there, where he lives, in the Wairarapa. He has run a strong campaign against Mr Scott, who is seen as being a candidate from elsewhere, and it is very hard to believe that the sense of connection is so great when he chooses to live somewhere else—I mean it really is hard to understand.

Mr DEPUTY SPEAKER: Maybe it is your turn to come to the bill.

Dr DAVID CLARK: Thank you, Mr Deputy Speaker. But, joking aside, I think this is a very serious issue. It is not defined in law what the “greatest connection” to a property means.

We are here creating unclear law. We are creating law that is going to require the courts to address it, or Parliament to fix it. That is crazy stuff from our Parliament; that is crazy stuff from this Government, which is really focused on the window dressing and not on actually delivering a solution that will make a difference for New Zealanders, for Aucklanders facing those crazy house prices, and for the New Zealand economy where, in real value, wages have dropped. Wages are in recession right now, in the last quarter, if you look at it that way. This is an economy that has stalled. It is an economy with a Government that has not managed it; has not diversified it. We have got multiple problems, and yet we have this kind of half measure—this kind of watered-down measure—as a proposal.

We know it was rushed through, we know it was announced at the last minute, and that is why there are so many inadequacies in the legislation. I refer here, especially, to the material that was tabled last night in the House that outlines the period of time in diagrammatic form from Land Information New Zealand that it is expected that these records of buyers will be recorded by hand—handwriting; there will be officials handwriting for 3 months.

I would also like to point out a point that was not raised. In the fine print here it says “Even under ideal conditions, LINZ cannot guarantee with this legislation passing in August”—and we are already beyond August—“that the desired changes can be efficiently and effectively implemented by 1 October.” This scenario we have been presented with—with officials writing this foreign buyer register by hand—is an extremely optimistic scenario. It says that. It says in the points to note underneath the scenario that has been drawn up by officials: “The dates and the time frames in this time line are based on the best-case scenario and are highly dependent on a range of parties agreeing to work at a very fast pace.” I do not hesitate to say that that also requires nothing to go wrong in the process.

This is a rushed process. The Government knew it was under pressure. It introduced some half-baked measures to make it look like it was doing something on housing, but, of course, whomever it was trying not to offend—the property speculators in Auckland that it is associated with—it did not want to offend them, and it did not want to put through legislation that actually made a difference, and here we are in the Parliament now, passing cynical legislation.

In my view, it does not achieve what it ought to achieve, and it costs the taxpayer money to put it into place. It will increase compliance costs, and not produce the outcome that was its originally stated purpose. It does create some small bit of information, and that is why we will be forced to support it—because it is a small, tiny step in the right direction—but it is needlessly weak. These half measures could be made so much better if a proper bill was adopted. If the Treasury advice was taken on how this package was put together, it would have been way more effective. The Government departments were very clear that the Government was not achieving the things that it had verbally said it wanted to achieve, and we know that we are going to have to revisit it. It is from a Government that has been more and more often afraid or deliberately not straight-up with New Zealanders, and we on this side of the House recognise that that is not a long-term strategy.

I want to also highlight some of the quotes from recent times that point to just what a rushed piece of legislation it is. John Key said: “We are not hostile to the idea of a register, we just don’t think it takes you very far.” John Key said: “I genuinely don’t know. We haven’t asked for any work on a register.” John Key said: “It’s quite a tricky thing, the register. It’s not quite as straightforward as people think. So we’re not afraid of a register.” He said: “I wouldn’t want to say never do anything forever, because that would be a bit silly.” He said: “We are not sort of absolutely resolute that it’s such a terrible idea. We just think that we have fairly good information already.” Well, if the Prime Minister believes that, why on earth are we here again today? If he believes that the information is good, why would we be here again today? Of course, the answer is that this is a politically driven bill; it is not designed to actually solve the problem that we have been given.

Nick Smith—again, some wonderful quotes from Nick Smith. A register would be “a distraction” that would cost “mega millions without doing a thing to tackle house price inflation.”—this is Nick Smith, of course, before the legislation. It is a real shame he is not here making a speech to explain how he has come to his current position. He is probably out researching housing sites in cemeteries in Auckland. Or maybe he is out looking—

Phil Twyford: Power stations.

Dr DAVID CLARK: —for power stations to build them next to. It is hard to know. Nick Smith also said “This is just about politics. It would be a waste of public money.”, and here we are doing it.

This Government is at sixes and sevens. It is so obvious, when you look back at the quotes, that this is a politically inspired move, not a solution to a public policy problem. Then—Nick Smith again: “I do stand by my statement that a register would be a waste of money.” We have Nick Smith saying it over and over again. I could go on. There are so many quotes. Let us have one more—let us have one more: “It is a non-issue. It has not changed in the 5 years that we’ve been in Government. Let us focus on the things that matter.” That is Nick Smith arguing why we should not be here today. But here we are, working a bill through the House that officials have said will not work anyway.

It is a bill that is a political solution to a public policy problem. We will be back here to fix it. It is a damned shame that this Government has not seen fit to actually—actually—address the Auckland housing crisis. It has not seen fit to look after the interests of the economy by tackling that problem as well. It is a Government that is out of ideas, I am afraid; out of touch, and arrogant enough that it thinks it can put this through Parliament without any protest. Well, New Zealanders are getting wise to this Government, and I think that when we come back here, they will not be happy.

ALASTAIR SCOTT (National—Wairarapa): In responding to Dr Clark’s comments and his reasons to perhaps postpone the passing of this legislation as far as—and rending handwriting as some sort of impediment to slow the progress of this bill down just demonstrates his attitude to what is simply work. If it is too hard, just do not do it. I suspect that that is his attitude to work—if it is too hard, do not do it. This bill will pass, whether some articles need to be handwritten or not.

This bill is around gathering information, relevant information, and the information that relates to people owning their own homes is not relevant. It is not relevant. We are after real information on who is buying and selling property with a view to making a profit. This bill is supporting what is already legislation, which is about taxing people who buy a property with the intention to sell for a profit. That is all it is doing, but this bill is the gathering of the information. So what we are going to end up with is real information, real facts, and real numbers around who is buying and selling property in New Zealand. It is not going to be made up. It is not going to be created or sought from a friendly real estate agent. It is not going to be statistically incorrect—that is Mr Twyford’s plan, to gather information. He just makes it up. He asks a friendly real estate agent and blames the Chinese—anyone with a Chinese name—for housing speculation. This bill allows us to gather real data so that we can make informed decisions and reinforce the existing legislation around taxing property speculation fairly.

This bill is part of a suite of legislation that exempts the family home. There is simply no point in gathering information regarding the family home, given that the family home is an exemption to the taxation rules. This is a very good part of a comprehensive suite of legislation dealing with offshore ownership of property, and I commend it to the House.

JULIE ANNE GENTER (Green): The Green Party is interested in creating an economy that is cleaner, greener, and works for all New Zealanders, not just those who are already doing really well. To that end, we need a simpler, fairer tax system, and we need to ensure that there are not loopholes like the ones that have been partially driving the out-of-control housing market in Auckland.

There are multiple factors at play in Auckland. One of them is the fact that we treat tax on capital very differently than we do the tax on income that you get from—well, we treat it differently than on labour. So people go to work—they are a nurse or a doctor—and earn a pay cheque. An engineer, a teacher—whatever they are, they have to pay tax on their income. But if one person buys a house and later sells it and makes $100,000, as is regularly happening right now in Auckland, no tax is paid on that income.

There is an intention test where we say: “Well, if the house was purchased specifically with the intention of making a profit, then you should pay tax on it. But if you don’t have that intention, one doesn’t pay tax on that.” So now the Government is trying to ensure that people who are buying and selling within a short period of time will be subject to that tax if it is not their main home, and so there are several bills that are going to enable this to happen. One is the Taxation (Bright-line Test for Residential Land) Bill, which is currently before a select committee. That means that anyone who buys or sells property within 2 years for investment purposes will be subject to tax.

But in order to carry this out, we needed information. The Inland Revenue Department, in its regulatory impact statement on the original bill, the Taxation (Land Information and Offshore Persons Information) Bill, states: “Although we do have provisions that impose income tax on certain property transactions, and also on rental income earned from property, it is very difficult to assess compliance because there is no linkage between the property sales transaction data and tax identification.”

So this bill exists to now require a tax identification number if the person is from overseas or an IRD number here in New Zealand on all property transactions, except it does not. It would be really useful if it did, because it would give us a lot of data and there are no real compliance costs associated with it. In the regulatory impact statement, it says “Collecting an IRD number and linking that to the LINZ property sales transaction data would maybe take an extra 1 to 4 minutes for conveyancers.”, and it may, I think, add $1 to $4 to the cost of the transaction. It is a transaction that obviously costs a lot more than that. So it is a tiny percentage overall. But it would be incredibly useful and actually simplify our ability and the officials’ ability at the Inland Revenue Department and at Land Information New Zealand to understand who is buying and selling properties.

What happened here—and I am really disappointed about this process. It was, as other members have said, a truncated process, and maybe it is for that reason that this bill has been changed, I think, through the process—or, at least, it does not reflect the advice provided by officials in the regulatory impact statement to exclude the main home from the IRD number.

It is really hard to explain how unbelievable it is that the Government has made the exemption for the IRD number. Yes, we understand, OK, that you are making an exemption for the main home in respect of the brightline test, but why would you do that with the IRD number, especially when, in the regulatory impact statement, the Inland Revenue Department says that its preferred option would be for it to apply to all property sales transactions? There are no additional compliance costs. That is something the Minister and members from the Government have claimed—that somehow requiring the IRD number for people buying and selling their main home would add compliance costs—but the regulatory impact statement says that the compliance costs would be maybe an additional minute of work for conveyancers, for maybe an additional $1 to $4.

When the regulatory impact statement laid out the options, requiring IRD numbers and tax identification numbers to be provided to Land Information New Zealand for all property transactions was the preferred option. It said it “would enhance Inland Revenue’s abilities to enforce the income tax obligations of those who buy and sell New Zealand real property”. It would also “help prevent non-residents from evading foreign tax on their New Zealand land sale or purchase by ensuring that the foreign tax authority can match the transaction with the taxpayer.”

So it is a good idea. It makes sense. Yet for some reason when the bill came to the Finance and Expenditure Committee and when it came to the Committee stage it had this bizarre exemption for the main home. Submitters certainly did not suggest that the main home should be exempted. We heard from Chartered Accountants Australia and New Zealand, which said that, actually, this main home exemption does not make sense; it adds complexity to the rules and it means that we will have less complete information. We heard from Ernst and Young that the exemption should not be made and that it made it more complex. And here in the regulatory impact statement we see that it was the Inland Revenue Department’s preferred option to just keep it simple: get the IRD number and tax identification number for all property transactions.

It makes sense, right? But no, this Government, for whatever reason, has chosen to make the rules more complicated. There is no reason to think there would be any additional compliance costs. As noted above, in the regulatory impact statement it says: “A conveyancer is likely to spend an additional 1-5 minutes entering information into Landonline, resulting in an additional cost of between $4 and $20 for purchaser and seller.” I know that under option 3—that is the option that the Government has adopted, which was not recommended by officials and which was not particularly recommended by submitters, who are experts in this area—compliance costs will be at the lower end of the scale for those exempted, but it makes the rules more complicated and it means that we have less information. So the benefits of collecting the information, which is the whole purpose of the legislation and is the purpose of the policy that the Government is implementing, are reduced under this option.

Under the brightline test there is a limit to how many times one can claim the main home exemption within 2 years. One can only do it twice, because, as it says in the regulatory impact statement: “some individuals who are purchasing their main home could still be subject to tax if they have a regular pattern of buying, improving, and selling their main home.” So the way to solve that is the brightline test, which says that one is no longer exempt from the brightline test if it is one’s third time buying and selling one’s main home within 2 years. But, of course, how would we know that? How are officials supposed to know whether the buyer or seller has done it three times if they have not had the IRD number linked to the property transaction for the first two?

It is a silly rule. It is a silly law. It adds complexity. It does not reduce compliance costs, and yet for some reason the Government voted against my Supplementary Order Paper 121, which I introduced yesterday, that would have removed the exemption for the main home from this legislation. Unfortunately, ACT’s David Seymour voted against my Supplementary Order Paper, even though it was right in line with what submitters recommended, the charted accountants recommended, Ernst and Young recommended, and the officials recommended.

So, obviously, the Green Party is going to be supporting the legislation, but it is really a shame. It is a shame that lawmaking has come to this in this country—that the National Government gives us so little time to scrutinise legislation to actually make good law. It cannot agree with other parties in the House that are simply trying to make better law. It has got nothing to do with any ideological perspective. We just want to accept the advice of officials and that of submitters and get good information to make it easier for us to enforce tax law. Instead, very typically of this National Government, you have crazy exemptions that do not make sense, that nobody recommended, and that have no good, solid, factual basis for their arguments. Yet those members come in here and say “Oh, it’s going to be less administration if we don’t require people to supply their IRD number.”, which takes about 30 seconds. So I am just sorry. I am sorry that yesterday, in the Committee stage, we could not get some cross-party agreement on what would have vastly improved this bill—very, very sorry. Thanks.

FLETCHER TABUTEAU (NZ First): Let us be clear, Mr Bishop, who is shaking his head and grinning at me, that this is a poor, poor response from this Government. The Government is singing from a song sheet, but when you look at the legislation arising from the Taxation (Land Information and Offshore Persons Information) Bill there is nothing in it. There is no substance, and you are told by your own experts that it will achieve absolutely nothing, even in combination with the other piece of legislation that was supposed to address the issue. Let us be clear. This is in response to what we all know to be a very serious housing price bubble in the Auckland property market. It is still ongoing. It has been growing almost exponentially month after month, and even—some of the calculations are telling us—day after day. It is moving at a staggering speed, and the problem for New Zealand First is that we already have this problem of Generation Rent and this is just increasing it day by day. It is a huge problem, and this legislation is doing nothing about it. Real New Zealanders are worried, and the National Party knows that its support base is worried. Here we now have a piece of legislation that, unfortunately, does not address the issue but will be spun out in the media, and the people of New Zealand will be placated and told that something is being done. But it is not. It is absolutely not.

Although I am reticent to do this and am always reluctant to hold my colleagues on this side of the House to account, I can, unfortunately, say that over the last few days the Labour and the Green members have spoken more eloquently against this piece of legislation than I have. They have spoken about it being a waste of the piece of paper it is written on, and about how hollow it is and how full of loopholes it is, and, yet, here we are and New Zealand First is the only party in the House opposing this absolute waste of time, presented to us in the House by this National Government. I say to my colleagues on this side of the House, I have believed every word that you have said. You have said it eloquently. Stand behind your convictions and actually show New Zealanders what this piece of legislation is—that it is a waste of time.

New Zealand First does support an initiative to increase tax, especially on overseas speculators, as outlined by the Minister for Land Information in her opening address. But the legislation does not actually do this. It has been rushed through with limited consultation and limited opportunity for New Zealanders to have their say. The legislation does not achieve this. The Government has been advised by its own experts that this legislation—even combined with the brightline, or “dim-line” bill, as I am so wont to call it—will achieve absolutely nothing. It will not achieve anything. We have been told that by the Government’s own experts. Land Information New Zealand also told this Government that it is not ready. It is not ready to process the data. It does not have the software. It does not have the information and communications technology to process this information, and, as has been so eloquently pointed out by members on this side of the House, it literally means that it will be writing out this information by hand. It just seems like a waste of time, when we know from the Government’s own experts that this piece of legislation will not increase tax take and will not put any kind of stymie on overseas speculation in the market.

The main home exclusion—we were told that New Zealanders would worry needlessly about having to present their IRD number, and, yet, of other parts of the legislation it was said “Well, we’ll have to tell New Zealanders what this means.”, but the Government is not willing to tell them about it now. New Zealanders will not worry needlessly. It does not add complexity. It would be a straightforward tick of a box to add this information for all home purchases so that we can actually create a comprehensive land transfer database that produces meaningful information. In terms of the main home exclusion, we were told about the greatest connection test. The Minister in her opening address told us that they were going to use case law to help them implement it. Yet, the Government’s own legal experts advised this Minister and the Finance and Expenditure Committee that there is no precedent in New Zealand law for this term—absolutely no precedent in case law in New Zealand. It makes no sense whatsoever, and the confusion has already begun on that side of the House. The main home should not be exempt from this data collection. We want meaningful data. We can turn that into useful information.

Let me just highlight a couple of points that I have spoken about earlier, in relation to this combined piece of legislation. There are exclusions. A speculator who buys a piece of rural land—you know, the rural lot; a couple of acres that has a few sheep on it—but who then decides to rent it out and then, for whatever reason, they decide to sell it within the 2-year brightline period is not included in this. Living in the property, doing it up, and then selling it within the 2-year brightline period—it does not matter if you have got the information; you are not included in the tax provisions of that legislation. Speculators will not be identified. Then I put this to the Minister, actually: what are the provisions within this law, or even other pieces of legislation, for the actual collection of the tax burden required of those overseas speculators who did not actually manage to fall through the multitude of loopholes? Where is it that we will be able to actually go and collect that tax? It has been suggested to this Government that those people pay a bond on the purchase of their homes. Although I would not agree to overseas speculators buying homes in New Zealand at all, I think that you would not be able to implement that. It just makes no sense. We want to develop meaningful information.

I just want to address something that Mr Bennett said earlier in the piece about Labour’s shifting on capital gains. The problem with this piece of legislation is that what it is doing is actually adding another level of complexity to current and existing legislation. Without doubt, categorically, this Government has in place already a capital gains tax. It just chooses not to implement it, it chooses not to ask its appropriate ministry to implement it, and it chooses to call it by another name—I do not know what. But the law says that if you make a gain on the sale of your property, you will pay a tax on that. If that is not a capital gains tax, I do not know what is. This Government simply chooses not to enforce it and here we are not only creating loopholes but adding more levels of complexity. It seems to be a contradiction in terms, but this Government in its absolute—I do not want to say it—has managed to do that. New Zealand First, unlike the rest of the side of this House, cannot support this legislation, even though its intent is something New Zealand First would like to see. It is truly a waste of this House’s time. Thank you.

CHRIS BISHOP (National): “Professor” Tabuteau is a new member, as I am. We are both new to this House—just coming up to our 1-year anniversary as members of this Parliament. But even I know that this Government has a very proud record of enforcing our existing tax law that, as Mr Tabuteau, rightly, points out, says that if you buy and sell property with the purpose of making a profit, you pay tax on it. Actually, as a Government we have significantly enhanced the ability of the Inland Revenue Department, both through funding and the logistical operations that sit behind that funding, to go after people who do that. So the allegation he made right at the end of his speech is completely incorrect.

In my brief contribution to the debate this afternoon I want to focus on just a couple of points of contention that have come up so far in the discussion just before from Mr Robertson and from Miss Genter from the Greens. The first issue I want to just briefly canvass is this issue of why the main home is exempted from the requirement for people to supply their Inland Revenue Department information when a property transaction takes place. Miss Genter was very perplexed by this. She spent basically her entire speech with this quizzical, kind of querulous look on her face, and she kept saying: “I don’t understand why the Government’s doing this. It makes no sense. It makes no sense. Why are they doing this? Why are they doing this?”.

Well, there are a couple of good reasons why the Government has done this, and, actually, those reasons have been pointed out in the first reading debate, in the second reading debate, during the Committee of the whole House, and, indeed, in the third reading debate. Here they are again. The first and the most fundamental reason is that this legislation is companion legislation to the Taxation (Bright-line Test for Residential Land) Bill, which was sent to the Finance and Expenditure Committee only a couple of days ago. The brightline test will not apply to people who are buying and selling the main home. It is just not necessary for people who are buying and selling a main home, which means, in the vast bulk of circumstances in New Zealand, ordinary people buying and selling the family home, moving from one suburb to another, and moving from one city to another—not buying and selling investment properties, but buying and selling their main home. The brightline test does not apply to them and it is not necessary for them to rock up every time they make a property transaction and supply their information to the Inland Revenue Department.

That would lead to—and this is the second reason—having information supplied to Land Information New Zealand and to the Inland Revenue Department on hundreds and thousands of transactions. There are real concerns about how those organisations would be able to cope with that information and it is just simply not necessary. It would also mean that a lot of people would needlessly worry when they supply that information that they may be taxed on that transaction, when in the vast bulk of circumstances they are not going to be taxed on that transaction. That is the reason for the main home being exempted from the requirement to supply the IRD number.

The second issue I want to briefly canvass is this issue of what the term “greatest connection” means. We heard some slightly strange assertions made by Grant Robertson before in the House and, indeed, I have been reading back through the Hansard of the first and second reading debates and members consistently misrepresent this position. Grant Robertson said that this is an invention—that this is a new term and it is an invention. Well, that is a little bit trite, I have to say, because I suppose that new law—all new law, all bills that are not on the statute book already—and new phrases and new words that do not exist already on the statute book, by definition, are all inventions. I mean, that is actually the way Parliament makes law. We put a bill before Parliament and if it does not exist on the statute book already, then I guess it is an invention. So OK, maybe it is an invention but, you know, that is actually Parliament. Grant has been here a while, so it is slightly strange that he does not know that.

Then we heard in relation to this the allegation that there is no case law behind it, it is just an invention, the Government has just come up with this out of the middle of nowhere, there is no case law behind it, and it is absolutely unprecedented. Well, yes, it does not exist on the statute book already, but what Mr Robertson is ignoring—and members have consistently ignored this point—is that we heard advice in the Finance and Expenditure Committee that the phrase “greatest connection”, although it does not exist literally on the statute book now, has been carefully crafted to reflect existing case law that underlies that test. I have actually checked this with officials. There is a plethora of case law that will be used by the courts and used by the Inland Revenue Department to interpret this section. So it is not true for members opposite to say that there is no case law—it is not true for members to say that there is no case law. There is case law and it will be used.

Then we heard from Mr Robertson that people will interpret this differently and it is really going to be a disaster. Dr Clark went so far as to say: “I think that people like property speculators will interpret the ‘main home’ and the ‘greatest connection’ as the one where they make the most amount of money.” Well, if speculators do that, if speculators try to game the law by saying that the house that they are buying and selling is where they have the greatest connection to and therefore is the main home and therefore exempt from the legislation, they will very quickly find, I suspect, that the Inland Revenue Department will come down on them like a ton of bricks, because that is not going to be a way of getting around the legislation. They will very quickly find that that is not a particularly smart thing to do. That suggestion is just really redolent of the inaccuracies from Dr Clark and others in their contributions today.

Finally, there is the suggestion that the Inland Revenue Department has suggested one thing and the Government has taken a different course. Well, actually, we do not have Government by the bureaucracy in this country. I made this point in my second reading speech. It was very rich, sitting here, to hear Julie Anne Genter saying: “Well, the IRD says this and the IRD says that, and Treasury says this.” Look, Labour and the Greens have been ignoring Treasury advice about the economy for pretty much the entire time that Treasury has been in existence. Dr Cullen used to come down to the House all the time and talk about ideological burps and how the Labour-led Government could not follow Treasury advice, and all sorts of things. Labour members made a virtue out of not following it, so it was bit strange to hear them lauding the work of the officials and lauding the work of the bureaucracy, saying: “Oh my God! You must do this. The Government has been advised to do this and shame on the Government for not following their advice.” If they were true to their word, then Labour and Green Party policies would certainly be in a lot different shape if they did actually follow the official advice on a range of matters.

Look, the point is that we do not have Government by the bureaucracy in this country. Ministers and Governments are entitled to take a different course. That is exactly what we have done. You weigh up the competing options. That is why we have Parliament; that is why we have Cabinet. This is good legislation and I commend it to House.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Eugenie Sage—5 minutes.

EUGENIE SAGE (Green): Well, Mr Bishop was indeed trying too hard and waxing lyrical. There is certainly a difference when Government takes a policy issue and does not take the advice of the public sector, but here this is a technical issue of tax law and the strong advice of the Inland Revenue Department and submitters was that this notion of “greatest connection” is too subjective and is going to cause confusion.

If he had read some of the submissions—and I would just like to quote from Ernst and Young: “We are not aware of that term being used in any relevant New Zealand revenue legislation, so there is not any existing or accepted understanding of how it should be interpreted and applied. It is therefore open to various interpretations, assessment approaches and subjectivity where the relevant party has other residential land. Alternatives which come to mind include considering connection based on relative values, relative net worth, days spent there, history, sentiment or other connections with the specific location, region or New Zealand as a whole compared with residential land in any other jurisdiction.”

When you have got that amount of potential for confusion and subjectivity and when you are dealing with tax law, it is not good law. We are supporting this because, as Mr Bennett said, something is better than nothing, but there is a great deal—

Denis O’Rourke: It is nothing!

EUGENIE SAGE: —and I recognise the comments that New Zealand First made, but there is a need for a clear register of overseas land purchasers. The Government and the public have invested significantly in Landonline. It was described as a world first when we digitised paper land records and enabled the electronic filing of land titles and survey documents back in 2003. That came at substantial cost—$141 million, I think—and there was a substantial cost blowout. So when there has been that amount of public money invested in maintaining the land title database and when, as other speakers have noted, it would take a minute or so of a conveyancer’s time to file the necessary transactions, why can we not have good law that provides good, solid information so that we have then got the information to inform good policy-making to control the overseas speculation in New Zealand property that is driving up house prices?

Instead, with this legislation the Government, with this main home exemption and the failure to take the good technical advice of not only the Inland Revenue Department but also of submitters like Ernst and Young and others who have got specialist advice in tax law administration—by failing to take that advice, we are not getting a good information base to drive good policy-making decisions. So that is one of our objections. The other one is the very wide regulation-making powers in the legislation to make some other property transfers exempt from the information requirements if it is impractical or if it involves high compliance costs, and to make regulations around what are non-notifiable transactions. That potentially leads to further loss of transparency in the transactions that are noted.

So we will support this legislation because it is a tiny step to having a register of land and house purchasers, and the extent to which overseas purchasers are involved in that, but Parliament should be making good law. The National Party in Government should have taken the advice of those who know about the technical administration and not had things like this main home exemption. We will support the legislation, but it has a number of defects and I suspect we will be back here remedying those. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I call David Seymour—5 minutes.

DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in support of this legislation. I just want to reflect a bit on the road that brought us to making this legislation. We do have in New Zealand very high house price to income ratios. In Auckland, where I am from, it is a ratio of almost nine between the median house price and the median income. When you have a problem in a political marketplace, sure enough a whole range of different remedies are provided. We saw a remedy from Mr Twyford, which was to blame people with Chinese-sounding names. It might interest the member to know that I have had reports of Chinese real estate agents on the North Shore who are using Labour’s data to demonstrate that they really do have lots of demand from Chinese buyers. So sometimes in politics you create unintended consequences, but you do have to admire the entrepreneurship in particular of real estate agents and new New Zealanders, if that is who they happen to be.

Of course, it is not just that the Labour Party has indulged in this demand side issue so far as the housing market is concerned; it also decided to engage in xenophobic racism. The New Zealand First Party, of course, has made it its stock-in-trade. Jacinda Ardern is horrified at what the party has done to her opportunities to compete in Auckland Central, and, of course, the Green Party only last week—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member must come back to the content of the legislation.

DAVID SEYMOUR: I have one more sentence, Mr Assistant Speaker. Only last week Julie Anne Genter of all people, that doyenne of liberalism, also said that the problem is foreign capital. So we find ourselves here today trying to find a way to measure just how many of these nasty foreigners are on the demand side of this housing market. So the Government has found it necessary to do something to at least placate the howling masses on the other side of the House.

Phil Twyford: Is that the point of this bill?

DAVID SEYMOUR: That is the reality, Mr Twyford.

Phil Twyford: Is that what you think of it?

DAVID SEYMOUR: Yes, it is. Let us tell it like it is, Mr Twyford. Yes, of course, there are all sorts of loopholes that will never be properly policed. It will be very difficult to decide whether a lifestyle block is truly being farmed economically. It will be very difficult to decide what a person’s greatest connection to—

Fletcher Tabuteau: What is a loophole?

DAVID SEYMOUR: You are just shocked because you have never seen a politician tell the truth before, especially in your party.

The ASSISTANT SPEAKER (Lindsay Tisch): No.

DAVID SEYMOUR: Sorry, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): The member will sit. To make an allegation like that is unparliamentary and I will ask the member to withdraw and apologise for it.

DAVID SEYMOUR: I withdraw and apologise. We also have to consider in this case the costs and benefits of regulation. We heard from a member earlier: “Let’s have more compliance costs. Let’s have more administration. It’s only a few dollars more.” Well, I actually believe that given the unsavoury political prerogatives created by some of the simpler Opposition members and, more latterly, by the usually sophisticated ones, this legislation strikes the right balance of allowing people who wish to buy and sell homes to go about their business most of the time but only when they get into a very large quantity of on-selling or speculation, as some may call it. They find themselves so far over a so-called brightline that their activity will end up being recorded, will clearly be in contravention of the law. So the worst extreme of what some people are concerned about as speculation, will finally find itself reined in with minimal costs to compliance on the part of every other Kiwi who is fair-minded, who actually welcomes foreigners and the fact that we are a multicultural nation, and who wants to go about their business without being caught up in excessive compliance costs.

With that, I commend this legislation to the House.

ANDREW BAYLY (National—Hunua): I am not going to spend too long talking about this legislation arising from the Taxation (Land Information and Offshore Persons Information) Bill this afternoon. But it is a little bit of a shame that we have got a number of speakers talking this afternoon who obviously have not spoken in the previous debate nor, in fact, have listened very carefully to what has gone on during the course of this legislation, as it has worked its way through the House. At the end of the day this legislation is about protecting New Zealand’s tax base and making sure that every person pays their fair share of tax. The underlying theme is that if you are trading in residential property, then you have to pay tax. I heard one speaker just a moment ago describe it as a capital gains tax. It is not a capital gains tax; it is a reinforcement of existing tax laws. The best analogy is that if you buy and sell shares with a view to making money on them, you will have to pay income tax. It is exactly the same for this.

There are a number of exemptions to this legislation. As I said, it is focused on residential property. The exemptions are if it relates to your main house—and I am going to come back to the definition around “connection” in a minute; if it is inherited property; or if it is subject to a matrimonial dispute. You will note that we have excluded farmland and we have also excluded land a business occupies that may also have a residential component to it. That property would be excluded unless the residential component occupied more than 50 percent of it. A previous speaker just read out a definition of “connection” that she had picked up from Ernst and Young. Unfortunately, she should have picked up the preamble to the bill. I just want to reinforce what this definition of “greatest connection” means, in relation to the main house. Of course this becomes pertinent only if someone has more than two houses—it becomes pertinent only if someone has more than two houses. [Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt, but could the member move to another microphone. There is some static. [Interruption] Please continue, but I say to those who are controlling the sound that there is some static coming through.

ANDREW BAYLY: In relation to greatest connection, that is where their personal property was kept, relates to the time they occupied each dwelling, where their immediate family lived, where their social ties were the strongest, where their business interests were located, and there are a number of these other issues. So it is quite a clear test.

As I said before, and I do not want to speak for too long, the provision around this legislation should also be seen in light of the Taxation (Bright-line Test for Residential Land) Bill, which is also going to come into play on 1 October, around the brightline test. There is a third bill that is going to come through to the House that is also about how we ensure that people overseas pay withholding tax, so we can also apply some control around it and, if they do need to pay tax, we have suitable money set aside to be able to meet those legitimate claims that they should be paying for. I think this is great legislation. It has been pragmatic in the way it has been implemented and applied. Also, as a final point, it meets our anti - money-laundering obligations as a country. I commend the legislation to the House. Thank you.

PHIL TWYFORD (Labour—Te Atatū): This legislation, as David Seymour explained most candidly to the House just a little while ago, is the National Government’s political response to the overwhelming public concern about the effect of offshore money pumping up the Auckland housing market. I thought it was the first useful contribution that I had heard from the National Party’s auxiliary Epsom brand for some time in this House. I want to say thank you to David Seymour for that very candid explanation—something that we have not heard from his National Government colleagues throughout this entire debate.

This legislation is a classic of its kind—a classic of its kind. It is what the National Government does constantly. For the past 3 years National Government Ministers Bill English, Nick Smith, and the Prime Minister himself have denied that speculators are a problem in the Auckland housing market, in spite of the Reserve Bank Governor and deputy governor repeatedly raising the problem of speculators pumping up Auckland house prices. The National Government has denied, denied, and denied that foreign money is a problem, and its members have repeatedly accused anyone in this House, including myself, of being racist and xenophobic because we have raised the problem of non-resident foreign buyers bidding up the price of houses and outbidding Kiwi first-home buyers.

But finally, finally, in the lead-up to the Budget, they cracked—they cracked. And why? Because their polls were telling them that 82 percent—82 percent—of New Zealanders want to see a full, proper, comprehensive register of foreign property buyers; 82 percent. And 72 percent of New Zealanders support a ban on foreign buyers buying existing houses in New Zealand. That is the Labour Party policy. It is the policy of the Australian Federal Government, and 77 percent of New Zealanders support it. In fact, 54 percent of National Party voters want to see a ban on foreign buyers buying existing houses. It is the policy of the Australian Government. It is also the policy of the UK Prime Minister, David Cameron. David Cameron wants to see a register of foreign property ownership in the UK. He does not want to see corrupt foreign money pumping up the price of houses in the UK.

This legislation finally takes a little baby step in the direction of collecting a little bit of data. But it is not a register, it is not comprehensive, and it is not going to create a searchable database of foreign property owners. The public listening at home to the objections and interjections from the National Government members will know very well by now that the National Government wants to make this an issue of race. The National Government members want to make it an issue of race, and one speaker after another in this debate has got up and mischaracterised the policies of the Labour Party, of New Zealand First, and of the Green Party, because all of the major Opposition parties in this Parliament want to see a full, comprehensive, and publicly searchable register of foreign property buyers. All of the Opposition parties in this House want to see a ban on foreign property ownership of existing houses. That is our policy.

Repeatedly, the Government has tried to say that Labour is opposed to new migrants buying houses. Well, that is not our policy—that is not our policy. It never has been and it never will be. In this debate, the National Government members have tried to say that this is an issue of race and that we do not want to see people of a particular race buying houses in New Zealand. Well, that is not our policy. It never has been and it never will be. Our policy is to look after the interests of New Zealanders, not the interests of foreign property speculators. We are the party that stands beside young Kiwi first-home buyers; that is the party that stands behind foreign property speculators.

The reason why the National Government does not want to see effective legislation and does not want to see a register of foreign property buyers is that it does not want the flow of foreign money into its party coffers to dry up. That is why it will not touch this issue except with this pathetic, superficial charade of a bill that pretends to do something for political reasons, as David Seymour confessed to this House. But it will not do anything substantial to tackle the problem.

Chris Bishop: I raise a point of order, Mr Assistant Speaker. Mr Twyford just made an unparliamentary remark about the motives of the Government in passing this piece of legislation. There are various Speakers’ rulings—

The ASSISTANT SPEAKER (Lindsay Tisch): I have the Speakers’ rulings open in front of me, and I am noting very carefully what is being said.

PHIL TWYFORD: Thank you, Mr Assistant Speaker—

David Seymour: I raise a point of order, Mr Assistant Speaker. If I could assist, I am fairly certain it is Standing Order 120 that says it is wrong to impute a motive on to a member—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member will sit. This is a robust debate and these are debating points. I am listening very carefully to the content. I have the Speakers’ rulings open, and I know the page and I know the line number.

PHIL TWYFORD: Protecting affordable homeownership is a proper and legitimate goal for the New Zealand Government, but not according to the members on the National Government benches. The movement of hot money across national borders is a problem that Governments all across the world are grappling with. It is about the instability of markets, and it is about protecting important social and economic goals like access to affordable homeownership. But that does not mean anything to the National Government.

Putting New Zealand’s tiny real estate market into a global market place is a fool’s errand. It is a recipe for what is already happening under the policies of this National Government—that is, New Zealanders are standing by and watching housing and land being sold out from under their feet. That is why Malaysia, Singapore, Hong Kong, and Australia have all enacted policies in the past few years to limit the effects of foreign property speculation in their real estate markets. That is why Beijing and Shanghai do not allow non-residents to buy houses in those cities. Is that racist? Is it racist when Beijing and Shanghai prohibit non-residents from buying houses in their cities? Of course it is not racist. That is their Government looking after their local citizens by protecting affordable homeownership. That is what it is about.

There is a particular issue with foreign direct investment from the People’s Republic of China, and we need to be able to discuss it without the pathetic and juvenile trivialisation of this issue by MPs like David Seymour and Jami-Lee Ross. Juwai.com, the preeminent Chinese website that markets international real estate to Chinese citizens in China, has estimated that $15 billion of private investment from the People’s Republic of China is heading towards the New Zealand real estate market in the next 5 years—$15 billion from China, which it predicts will be invested in the New Zealand real estate market. We need to be able to talk about this. This is about managing the stability of our markets in the face of huge volumes of international investment that will serve only to pump up the price of real estate and deny young Kiwi families their dream of affordable homeownership.

The National Government is in denial. It does not want to know that—it does not want to know it. It is not only because that party benefits politically from the donations of property—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! Now you have crossed the line, and you will withdraw those comments. You cannot say that someone has benefited, and I will refer the member to Speaker’s ruling 56/4. I ask the member to withdraw that comment and to move back now, in the last few minutes, to the content of the bill and not something that may be hypothetical.

PHIL TWYFORD: It is not the only—

The ASSISTANT SPEAKER (Lindsay Tisch): I asked you to withdraw the comment.

PHIL TWYFORD: Oh, sorry. I withdraw that comment.

David Seymour: I raise a point of order, Mr Assistant Speaker. Immediately after you resumed your seat Ruth Dyson repeated exactly the same allegation, and by the same standard, I think she too should withdraw and apologise.

The ASSISTANT SPEAKER (Lindsay Tisch): Well, I did not hear that, but did the member make an unparliamentary comment?

Hon Ruth Dyson: I’m happy to tell you what I said.

The ASSISTANT SPEAKER (Lindsay Tisch): No. [Interruption] Order! The point has been made that while I was adjudicating on this, there was an interjection. The question is: was there an unparliamentary interjection? The answer is either yes or no, so that is what I am asking.

Hon Ruth Dyson: I certainly did interject, and I do not believe that it was outside of the Standing Orders. That is my view.

The ASSISTANT SPEAKER (Lindsay Tisch): I will take your word for it.

PHIL TWYFORD: The point has been well made in this debate by members on this side of the Chamber that this bill is inadequate. It will not capture the information that is needed. It has a giant loophole at its heart—that is the main home exemption—and the very definition of “main home” contains another loophole that will make this bill worse than useless.

The point I made earlier that so upset members on the other side of the House is not the only reason why the National Government does not want to tackle seriously the effects of foreign money in the Auckland housing market. Those members do not want to touch the effect of foreign money in the Auckland housing market also because they like it that foreign money is pumping up house prices, because there is nothing else going on in the economy. After the Christchurch rebuild has come off its peak and after the dairy slump, National’s housing bubble in Auckland is the only thing that is left going on in the economy. The last thing that the National Government wants to do is turn off the tap of foreign money, which is driving up Auckland house prices and denying an entire generation of young Kiwi families the chance to own a home of their own.

The Prime Minister was incredibly candid the other day on Newstalk ZB when he said that he thinks there are some Aucklanders who are very happy with rising house prices. He made it very clear that that is National’s political strategy. It wants to harvest the votes of homeowners who think they are getting rich. They do not give a damn about the half of Aucklanders who rent or the whole generation of young people who will never ever own a home of their own in Auckland under this Government’s policies.

The ASSISTANT SPEAKER (Lindsay Tisch): Members, just before we continue, we are operating on an emergency sound system. I understand that the sound quality is not good outside the House, so just be mindful of that. I do apologise to the House, and I apologise to any member and to those who may be listening and watching the telecast on TV. I apologise for that.

Hon TODD McCLAY (Minister of Revenue): That bit of information that you gave us then, Mr Assistant Speaker, that people outside of the House cannot hear this information as well as they need to, will actually help the Labour Party, because that last speech from Mr Twyford was atrocious. He spent his whole time saying that Labour members are not interested in race—that was the first 5 minutes of his speech. The other 5 minutes of his speech was purely about Chinese people. Mr Twyford cannot on the one hand say that Labour members are not interested in race-based policies when it comes to this issue, when he is the man who released a list of names that are just Chinese-sounding. In the other half of his speech he talked about Chinese people and Chinese investors.

I would say that this is a very important piece of legislation, and it is good legislation. It is well-thought-out legislation. Before it was brought to the House it went through full public consultation. But, more important, when it comes to tax policy in this country we have a very long process and precedent in place where we engage with the tax advisory community before we bring legislation forward, so that we can seek their views. They give us input, and they do so freely and willingly. These are tax experts in New Zealand who come from all parts of the world. We are interested in good tax policy and we are interested in the assistance they give us. We are not interested in where they have come from, unlike Mr Twyford in everything he says when it comes to housing in Auckland and New Zealand.

So this legislation was brought to the House well-thought-out. It does a number of things. We have an expectation on this side of the House that where tax is owed, people should pay it. But we also want to make sure that it is easy to pay tax and that the Inland Revenue Department can use the resources, the scarce resources, we give it on behalf of the taxpayer to target those who choose not to pay tax. We do not want to burden everyday New Zealanders who meet their obligations.

This legislation is one of three measures announced around the time of the Budget by our Prime Minister. The first is the collection of IRD numbers when a property transaction takes place. I will come to that in a moment. The second is the brightline test, which has gone through the House this week, that will clarify a tax obligation. These two pieces of legislation go hand in hand. If you take only one of them, you are seeing only half of the picture. It is very important to look at the two together. The third is a withholding regime upon overseas people when they sell a property and they have made a gain—and more legislation will come to the House; we are consulting on that at the moment—whereby some of that gain will be withheld in lieu of their tax obligation.

So in this piece of legislation everybody but those who have a principal residence in New Zealand must provide their IRD number when they purchase a property. That is the first thing. The second thing is that if they are an overseas person, they must get an IRD number before a transaction can go through. As of 1 October of this year they must have a New Zealand bank account before they can get that IRD number, and for that New Zealand bank account to be given to them they have to go through the suite of anti - money-laundering legislation that is in place in New Zealand and that the banks have an obligation to enforce.

That overseas person must also give the equivalent of their tax number from the tax jurisdiction they are based in. So if they are in Australia, or London, or Fiji, or, for the purposes of Mr Twyford, if they are in Beijing in China, they must provide us with that information. The reason for that is that—actually, as with anybody who has a tax obligation in New Zealand—we expect them to pay their fair share of tax. We also have arrangements in place with a number of countries in the world where they should be paying tax. This information that we collect will be able to be shared with that overseas tax jurisdiction to make sure they are paying their fair share of tax.

The one exception to that—and I know that earlier in the debate, in other stages, this was an issue of some contention, at least for the Opposition—is that there is a group of New Zealanders who will not have to provide their IRD number. They are the people who are buying a principal residence—their own home, their own residence where they themselves live, or, in many cases, live with their family.

The brightline test imposes no tax obligation upon those New Zealanders. So I would challenge members of the Opposition and say that actually we would be burdening them, for no reason, with providing an IRD number when there is no tax obligation as a consequence of the purchase and sale of that property. Under the brightline test if you purchase a principal residence and you sell it within 2 years, irrespective of a gain, there is no tax consequence. So why is the Opposition saying we should collect information from these New Zealanders when they will not face a tax obligation? Should we collect information on them upon taxi rides even though they do not pay any tax personally? Why would we do that? It does not make sense.

But what we have done for that very small group of people who may look to avoid their tax obligation is given tens of millions of dollars to the Inland Revenue Department to enforce compliance around property tax. They will be very good at that. In fact, as we go back, the last Government, towards the end of the Labour Government, started this by giving the department some money. Back then they must have had some concerns, not about Mr Twyford’s concerns—Chinese people buying and selling property in New Zealand—but about people meeting a tax obligation they have. They started it back then. We are continuing with this so that the Inland Revenue Department can focus on those who are not meeting their obligation. Target them, and leave alone all the other law-abiding citizens of New Zealand who have no tax obligation when they purchase a principal residence—leave them alone.

To other members of the House who say that we should actually just collect that information, well, some would argue that, but I do not, because I actually trust New Zealanders to meet their obligation to the tax department. But where they do not, we are giving the Inland Revenue Department resources to focus on that.

The final thing I would say to you, Mr Assistant Speaker, is that I agree with Mr Twyford, at least to the degree that I could sense he might have been genuine. This is not about race. It is not actually about where people come from. This is good tax policy. It is about people paying the tax that is due in New Zealand, under the tax laws that are set in New Zealand. We do that so that the Government can afford to provide the many services New Zealanders demand and deserve. I would say to Mr Twyford that it is not good enough just to say that it is not about race and then only talk about one race all of the time. Others outside of here—if the sound has come back on—will judge him for that. This is good tax policy, and I am proud to recommend it to the House.

A party vote was called for on the question, That the Land Transfer Amendment Bill and the Tax Administration Amendment Bill be now read a third time.

Ayes 108

New Zealand National 59; New Zealand Labour 31; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 12

New Zealand First 12.

Bills read a third time.

Bills

Passports Amendment Bill (No 2)

Second Reading

Debate resumed from 8 September.

The ASSISTANT SPEAKER (Lindsay Tisch): When we were last on the Passports Amendment Bill (No 2) the next split call went to the Labour Party. Does it wish to take the 5-minute call?

POTO WILLIAMS (Labour—Christchurch East): Thank you, Mr Assistant Speaker, for the opportunity to take a call on the Passports Amendment Bill (No 2). When we were last in the House debating this bill, I recall my colleague Adrian Rurawhe referring to New Zealand passports as taonga, and I recall commenting on that at the time. New Zealand passports are taonga. The value of a New Zealand passport on the international stage cannot be diminished. We have a reputation in this country for being good global citizens and having a sense of responsibility to our fellow global citizens. Our passports are valued in that regard. Our New Zealand passports actually permit us to travel with relative ease around the globe, given that they are held in such high regard. New Zealand is considered a safe and secure country, so it is right and proper that we acknowledge the significance that we hold as New Zealanders carrying New Zealand passports.

When we were previously talking about this the member for Invercargill did make a comment about the huge inconvenience in having to renew your passport every 5 years. I think, as I recall it, the statement was something like—and I am paraphrasing—it being the “worst thing ever” to have to renew your passport every 5 years. I think that if you put that alongside—

Hon Ruth Dyson: First World problems.

POTO WILLIAMS: —house price inflation in Auckland, the number of children living in poverty, and the fact that our health and safety laws in this country mean that you cannot be guaranteed to go to work and come home safe, I think, yes, having a 5-year passport and the inconvenience of having to renew it every 5 years is right up there with that! As my colleague says, that is a First World problem.

I do want to commend my colleagues the Hon Phil Goff and the Hon Trevor Mallard for their campaign to increase the expiry time of a passport to 10 years, so thank you very much for bringing that to the House’s attention. Thank you to the Government for actually taking on what is a very good idea, and my acknowledgments to the Government Administration Committee for the hard work that it has been doing on this piece of legislation. There has been a bit of public pressure to ensure that we can now have 10-year passports instead of 5-year passports.

I know that it is inconvenient, especially to certain people in Invercargill, to renew their passports every 5 years. The reason we actually had 5-year passports in the first place was in some part a result of what happened on 9/11, but technology, and the ability to track individuals, has advanced since those times. We now have amazing technology with our passports, which means that we no longer have the requirement to renew them so frequently. But that increase in technology also creates an issue, which I think was acknowledged and discussed in the select committee, in that technology does move on, and having a 10-year passport may mean that we are no longer using the latest technology to protect the holders of those passports.

I do want to make a comment on the bill not requiring the physical copy of your passport to be handed in, in order to have it cancelled. That could potentially pose some problems. If we cancel passports electronically but do not have the physical document, there may be an opportunity to use that document in a fraudulent way.

I do not think there is much more to say on this bill. We do support it and I commend it to the House. Thank you.

JONO NAYLOR (National): It is a pleasure to rise and take a short call on the Passports Amendment Bill (No 2). This is good sensible policy that is responding to an ever-changing world. As we have just heard from the previous speaker, Poto Williams, there were very good reasons to reduce the validity of passports from 10 to 5 years, but now that we are able to extend it back out to 10 years again, that makes a lot of sense. I think that for a significant number of New Zealanders this will be very much welcome news. Although some people may get to use their passport every year for a holiday, I know that for many New Zealanders, an overseas trip is something that perhaps might happen only every 5 or 6 or 7 years. For those people to perhaps have to go to the expense of getting a passport only to find it has expired the very next time they want to go overseas certainly would add a fair amount of cost to them for an overseas trip that is not going to occur very often. Technology has moved forward as, again, other speakers have referred to—we have got the SmartGate ability with our new passports, and that kind of thing.

For anyone who was considering perhaps extending the length of passports for people under the age of 16, there are clearly really good reasons why we would not do that. I experienced that a little bit myself earlier in the year when we went to go through the SmartGate with my two boys, and neither of them were actually able to go through the SmartGate because their faces had changed through their teenage years to such a significant level that, actually, the face recognition software did not recognise them. So, given how quickly young people can change, it is obviously a clear reason. Interestingly enough, though, it still accepted me, even though I had considerably less hair than the last time my passport photo had been taken. So it is obviously able to accommodate some things like that, but just not some of the changes that young people will have as they go through those early phases of life.

So I am absolutely pleased to be able to see, as I said, good sensible policy coming through, good practical responses, and an ability to provide good services for New Zealanders with regard to their passports. I commend this bill to the House.

Hon RUTH DYSON (Labour—Port Hills): It has increasingly become an habit in this Parliament to conclude on a Thursday afternoon with bills that we all agree on. I think it is a nice way for us to leave Parliament, but I look forward even more to next Tuesday afternoon when we will be debating perhaps more contentious subjects.

I am really pleased to be supporting this bill. It has been a long time in coming, but I am very pleased that the select committee that dealt with it, the Government Administration Committee, which is the committee I have the privilege of chairing, was able to do so in a pretty efficient manner. Not only are we reporting it back in good time but we are also recommending that the implementation date be moved forward by a month.

Before I get on to the specifics of the bill, I would like to just refer to why we changed the provisions in the passport legislation originally so that we would move from 10-year passports to 5-year passports. I guess it is particularly appropriate given that it is 14 years ago this week that New Zealand watched in horror as the planes crashed horrifically into the World Trade Center, the Pentagon, and other places. Tomorrow, or the next day, is the 14-year anniversary of those events. The world was pretty shaken up by those events. I remember people walking around this building, just unable to believe that what we were seeing on television was actually happening in a part of the world that many of us had visited—I had been in the World Trade Center on a number of occasions. I think the whole world was shocked by those events, with the exception of a very small number of people who, through their own fanatical beliefs, supported the sort of action that killed so many innocent people.

So as a result of those attacks and, I guess, increased awareness of terrorist threats, New Zealand, like many other countries, decided to increase its security profile, and, as a result of that, we moved from 10-year provisions in our passports to 5 years so that they would expire in half the time that they had previously. When this bill came to the committee—in fact, I will go back a further step. When a petition was presented to our select committee calling for this measure to be taken, one of the first questions our committee asked our advisers was “We moved to 5-year passports because of the increased security risk. Would we be diminishing the security of New Zealanders”—the people coming into New Zealand or leaving on New Zealand passports—“and increasing the threat if we changed to a 10-year passport?”. Of course, because that was the primary driver for changing it from 10 years to 5 years, we wanted to make sure that we were not recommending something that would increase our security risk. As the select committee, we were given very confident assurances that that was no longer the case and that changes in technology, changes in the exchange of information, etc., now mean that we could confidently move from 5 years back to 10 years on the understanding that we were not increasing the security risk. Of course, that was one of the major things that we wanted to tick off.

Can I acknowledge Kyle Lockwood, of flag fame, who actually was the person who instigated the petition to the committee in the first place. He came along to the committee and made a robust presentation. Our committee recommended that the Government considered this favourably. The Minister responsible, the Hon Peter Dunne, took that recommendation and translated it into the legislation that we now see coming back from the select committee with, again, I think, all parties in this Parliament supporting it, which is a very good thing.

The select committee made just one change, as I alluded to in my opening comments, and that was to recommend that instead of starting it in, I think, December or January—I cannot remember the original date, but we are recommending that this come into force in November.

Tragically, it was not in time for the member for Invercargill, Sarah Dowie, to have her passport renewed for 10 years! I just want to extend my sympathy and support to the member, who in the House during an earlier part of the debate said that one of the worst things that could happen to a person was to have to renew a passport after 5 years rather than after 10 years. She has had a pretty good life is all I can say if that is the worst thing that could happen to her. So we were not in time. The member had to renew her passport and, unfortunately, in 5 years’ time she is going to have to go through that trauma yet again because her passport will expire. But I hope that if she is in the House for the next 5 years, she will be exposed to a little more robustness and may understand that that is not the worst thing that can happen in her life.

The reason that we wanted to bring this forward as early as possible was so that more New Zealanders could have the convenience of renewing their passports prior to the summer travel, when a lot of people move out of New Zealand over the summer holidays. They would be able to renew their passports for a 10-year period. So I hope that our committee has made life a little more convenient for people, but I still do not share the member for Invercargill’s view that it is the worst thing that you can have happen.

The other point that we considered a lot as a select committee—and I just want to alert members of the House to this consideration, because I am sure a lot of them have heard this concern as well—is that there was some early speculation, when we were debating this at the select committee, that the fees for the passport would double. So if we went from 5 years to 10 years, the fees would, you know, match the increase in size. The Minister made a very prompt response that he would not be looking at that very favourably, and the officials gave the members of the select committee very confident assurances that passport issuing would be on a cost recovery basis—full stop. There would not be an opportunity for additional revenue gathering as we move from 5 to 10 years; they will just be doing simple cost recovery.

The select committee have included that in its report to the House and we will be keeping an eye on that, because we do not want people to have to pay a huge amount more. There will be a little additional cost because some of the infrastructure costs remain the same, and, obviously, if people renew their passports only after 10 years rather than 5 years, there will be fewer renewals and therefore a lower level of income. But it is not significant.

Can I just refer in passing to the Hon Peter Dunne’s Supplementary Order Paper 115. He has tabled it, everyone has seen it, and I know we should not be referring to the detail of it until the Committee stage, but I just want to say that I am really sorry that we missed putting “2” after the word “Schedule” in the bill as reported back. We will be supporting that typo correction when it comes to the Committee stage.

As my colleague Poto Williams did earlier, I want to acknowledge the hard work that both the Hon Phil Goff and the Hon Trevor Mallard have done in ensuring that this matter was raised at an appropriate time. When we knew that the security risk that had driven the change from 10 years to 5 years had now been eliminated by other factors, the Hon Phil Goff and the Hon Trevor Mallard both took this up within Labour and then more publicly, and they actually drove the petition that Kyle Lockwood brought to our select committee. So I want to acknowledge both of them.

I also want to acknowledge what was a very conscientious presentation from the officials to the select committee. These officials were probably the same group of people or were in the same part of the Department of Internal Affairs that gave the original advice to Ministers to move from 10 years to 5 years. So I said to them “Right, what’s changed, other than the view of the Minister?”, and they were very competent in—not justifying; I do not mean that in a derogatory way—explaining very well all the factors that could lead us to confidently proceed with this legislation. It is something that we took seriously, because no committee would want to recommend to the House that any New Zealander holding a passport and travelling around the world was at an increased risk as a result of legislation we passed, or that our country was exposed to an increased risk as a result of this change. I also want to say that the Clerk’s Office and the members of the committee have all worked really diligently on this bill.

I think it is a good bill. As I said right at the beginning, it is nice to finish on a Thursday with a bill that we all agree on. I look forward to it being passed and implemented in time for New Zealanders who need to renew their passports to be able to do so for a longer period of time.

Dr PARMJEET PARMAR (National): Thank you, Mr Assistant Speaker, for the opportunity to speak on the second reading of the Passports Amendment Bill (No 2). Since the validity period of passports for adults was reduced, people have been very keen for it to be changed back, so this bill is in response to that need. This bill is going to extend the validity period of passports from 5 years to 10 years for citizens aged 16 and over. We know that the reason for reducing the validity period of passports was security, and it was not just us; other countries also took such measures, but since then some countries have gone back and increased the validity period of their passports. It is the right thing to do to increase the validity period of our passports from 5 years to 10 years.

A passport is a travel document, and people travel for various reasons. Those who travel for business reasons travel quite often, and it adds extra work, inconvenience, and expense to renew a passport every 5 years. Given that we are a very multicultural country—one in four people in Auckland is born overseas—people have extended families overseas and they visit them quite often. Sometimes there can be an emergency in the extended family requiring travel. The 5-year period is seen to be too short. I say this taking into consideration that, with technology, we can renew passports online—filling in forms, etc., can be done online—but still this 5-year period for passports is seen to be too short. So I support extending the validity period of passports from 5 to 10 years, and I commend this bill to the House. Thank you.

Bill read a second time.

Bills

Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill

Second Reading

Hon TODD McCLAY (Acting Minister of Trade): I move, That the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill be now read a second time. I would like to thank the Foreign Affairs, Defence and Trade Committee for its consideration of this bill and the good work that it did not only in consulting with the public on the earlier draft of the national impact assessment but also in the detail of this legislation.

This is an extremely important piece of legislation for the House and for the country because it amends New Zealand law to implement our obligations under this free-trade agreement. It is a free-trade agreement that will help to level the playing field for so many New Zealand producers and exporters to Korea, who work very hard to send goods there and are at a disadvantage because of tariff barriers that are in place when their goods arrive at the border in Korea. But more than that, they are at a disadvantage compared with some of the countries that we compete with for production of these goods that also export to Korea. That is why successive Governments—and I hope the bipartisan approach of good trade policy to help New Zealand business and industry is still shared by parties across the House—have worked so hard in this area: to level the playing field for hard-working, diligent New Zealand companies and, of course, the people who work for them.

So the bill will particularly amend the Tariff Act 1988 and will add the Republic of Korea to the list of preferential countries that we trade with in note 3 of the Tariff. It also provides transitional safeguard mechanisms contained within the trade remedies chapter of the free-trade agreement, so that they are applied appropriately under the circumstances.

I want to touch on just a few of the issues I think are important in this bill, at least in the agreement, and what the bill will implement. The first is this: why is Korea important for us? Well, it is our sixth-largest export destination for goods and services and our eighth-largest import source of goods and services. Two-way trade between New Zealand and Korea in 2014 stood at $4.5 billion. That is significant for New Zealand and New Zealand businesses.

The free-trade agreement is a significant development in our bilateral relationship with Korea, and what this does is it means that New Zealand companies are able to sell more produce to Korea and more goods and more services to Korea. They become more productive. These barriers that some around the world have, when we look at the restriction of trade when it comes to tariffs, we would say restrict trade. Traditionally when we look at the evolution of trade around the world that is what they were there for.

Many years ago the significant barriers that were in place with the European Union were to protect local industry, which we know can stifle innovation, and to restrict access for goods from others who produce well, as New Zealand does. Well, this levels that playing field as far as our relationship with Korea goes.

New Zealand exports currently are constrained by these tariff barriers. Without the agreement, in the Korean market our exporters currently pay approximately $229 million of duties every year—$229 million of duties on our goods that go into Korea. None of that is returned to the New Zealand economy or these New Zealand businesses. So on entry into force of this agreement, duty-free access will be bound in and tariffs eliminated on approximately 48.3 percent of exports. That is a saving of $65 million in duty in the first 12 months alone. In the first 12 months of the entry into force of this agreement, negotiated by Minister Groser with Korea, $65 million of duty will be reduced. That makes our producers more competitive; that makes them more productive; that returns more to them to invest in their businesses and to invest in their workforce.

Under the agreement, approximately 98 percent of tariffs on New Zealand’s current exports to Korea will be progressively eliminated. That means 98 percent of what we currently export to Korea will go in without a tariff upon it—without any barrier around cost when it arrives there. Extremely important—but that is only what we export at the moment. As you will see with other free-trade agreements, particularly the China agreement—under that agreement our trade with China has grown significantly. Under the economic agreement that has been put in place with Taiwan, we have seen our trade grow significantly—and $4.5 billion of trade with Korea is already significant. I expect with this free-trade agreement entering into force we will see trade from New Zealand to Korea also grow significantly.

There is one aspect of trade agreements that is not often spoken of, and that is what happens when you do not have one. Let us take the situation with Korea, where others have entered into an agreement with Korea before we have. What this means is we still have the same access and the same relationship, but some of these goods that we compete against actually get in there at a preferential rate compared with New Zealand. What that means is we end up competing on a platform that is less than fair. It means our access is eroded because of the preference of others.

It is as simple as this: let us take the kiwifruit industry and their trade with Korea. Korea is a very important market for New Zealand kiwifruit. The kiwifruit industry has faced tariffs of about 48 percent, from memory, into that market. Other countries of the world—Chile, for example, from memory, also produces kiwifruit—export there at a much lower rate. From memory, it is around about 10 percent. So those countries have our producers in New Zealand at a disadvantage straight away. The cost of our kiwifruit when they get to the border is competitive, but when the tariff rate is applied that competitiveness is no longer as obvious.

Under this agreement we will see a significant reduction, over a short period of time, of the tariff rate against New Zealand kiwifruit to zero—right down to zero. At the same time, for countries we compete with that also trade with Korea that will not be the case. So our producers now have an advantage over some of those others, and that is a very good thing. That will be worth, on average, from memory, $12,500 per kiwifruit grower in New Zealand—cash in hand in respect of the erosion or the taking away of this tariff. So that is really important.

But the main point I am making here is that, actually, without these free-trade agreements, without us entering into them, without us moving forward with them, without us making sure that we remain competitive of two others, when our competitors who are trading into markets that are important to us get a preference that we do not—for instance, if there is an agreement that we do not sign but they do—then over time, and it does not have to be a very long period of time, our companies in New Zealand, our producers, are hampered. They are held back. Their trade is eroded, based upon price. Well, the good news here is that this agreement with Korea does not do that. In fact, it goes in the other direction. It gives us some advantage.

Finally I will speak on some of the substance of the agreement that this bill enacts through changes to legislation—a number of wide-ranging measures to help us to facilitate trade, both in goods and services, and to also assist with investment flows and to encourage cooperation in areas that we must work in together.

Investment flows in both directions. So the first around this is that there are improved rules of origin—sanitary and phytosanitary rules are very important for agricultural production in New Zealand—our recognition of standards, technical regulations, and customs procedures. Procedures—these are not tariffs but these are all barriers that can have the same effect as a tariff. If it makes access more difficult, it puts cost upon New Zealand businesses. So us moving forward with this is a good thing for New Zealand.

The agreement includes a modern, high-quality services framework and commitments that will mean greater service opportunities in both countries. I think there are a number of very good New Zealand businesses that can take advantage of that. A most favoured nations provision means that should Korea give better treatment to other similar nations, it must also extend that to us, so that is, in as far as negotiations that others will have in the future, a very large degree of futureproofing.

The agreement also includes commitments to facilitate the movement of business people between New Zealand and Korea. I think that is another important aspect. It is often overlooked in new, modern, responsive free-trade agreements and their negotiation. It is actually not just about tariff line any longer; it is about facilitating business and giving New Zealanders better treatment when they go into other countries.

I will finish by saying that we are a very fair nation. We do not have that many tariffs in place for goods that come into New Zealand. But we are a country of very able producers. We are a country of traders. As a Government, and with other members of this House, we need to make sure that we look at the very best way to ensure these great producers and traders in New Zealand have at least the best chance at a level playing field in other parts of the world. There are still far too many countries that have significant barriers in place that we view as unreasonable and unfair. That is the reason I commend this bill to the House and this free-trade agreement, which is good for New Zealand. Thank you.

Hon DAVID PARKER (Labour): This is the only piece of legislation that comes before the House in respect of the New Zealand - Korea free-trade agreement. It is the only opportunity that we as politicians have to talk about the pluses and the minuses in the agreement, and I propose to do so.

Labour shares the ambition of National to grow our trade, and we think that reducing tariff barriers to the entry of our exports into other countries is an important part of the Government’s agenda to improve trade. Sadly, the need for these tariff reductions and the need for better export performances are laid bare by the current statistics for the New Zealand economy, where exports as a percentage of the economy have dropped from 30 percent of GDP when the Government took over, to 28 percent now, and they are projected to drop further still. That should be contrasted with the Government’s ambition to lift exports. Its target was to lift exports from 30 percent to 40 percent of GDP, which it is plainly failing on because its economic settings are wrong.

This legislation is supported by Labour because, for once, National has it just about right—it is not perfect but it has got it just about right—so we can support this piece of legislation. Indeed, as the Acting Minister of Trade correctly records, tariffs that are currently paid by New Zealand exporters that are going to be reduced in the first year alone amount to about $65 million, which will mean that the net proceeds of sale that are received by New Zealand exporters selling into Korea will be higher, because they do not face those tariff bills and, therefore, more of the sale price will end up in their pocket.

That is good for the New Zealand economy because it means that more money will come into the New Zealand economy, we will be able to afford to buy more things from overseas as a consequence of the things that we export, and those businesses will be more competitive and will be able to expand and afford higher levels of cost, including, over time, higher salaries and wages. That is how an economy like New Zealand’s grows in value and prospers.

That is the reason why the Labour Party is clearly pro-trade, as evidenced by the most important trade agreement that we currently have, which is the New Zealand - China free-trade agreement, which was negotiated by the Hon Phil Goff, who will take a call in this debate. That agreement shows how important trade agreements can be to growing trade. I do not agree with some of the other parties in this House that say that free-trade agreements are irrelevant to our trading prospects. They most certainly are relevant.

One of the reasons why we find it easy to agree to this agreement is that, other than this amendment to the Tariff Act, there is no change required to New Zealand’s legislation. There is no change required to our tax legislation, to our environmental legislation, or to our labour laws. All of them remain as they are and can be properly changed in the future. We had good advice from officials in the earlier part of this process that confirmed that we could, for example, properly regulate for public health and safety, for environmental laws, for labour laws, or for tax laws. All of those things are unaffected by this free-trade agreement. So the sovereignty of the New Zealand Parliament to govern in the interests of New Zealanders is not undermined in those ways.

There is a problem with this agreement that we have highlighted already—and I was surprised that the Minister did not address it in his second reading speech, just as he did not address it in his first reading speech—which is the mistake that the Government has made in respect of what can be controlled in terms of South Korean investment into New Zealand. At the moment the New Zealand Government is able to change what it screens for. It can say, for example, that it wants to ban the sale of New Zealand’s houses to overseas buyers. This agreement constrains that ability, and Labour says that that is wrong. Labour also points out that this is poor negotiating by the National-led Government, because the Australians were able to protect that same right. Australia does control who can buy its existing houses. It does so including in respect of South Korea and is able to do so under its free-trade agreement that was negotiated in recent years with South Korea—between South Korea and Australia. So I have got no doubt in my mind that if the Government had wanted to retain the right to control who buys New Zealand houses in its agreement with South Korea, it could have done so.

Why did the Government not do it? It did not do it because it does not care about that. It does not think that a future Government should be able to ban the sale of New Zealand houses to overseas buyers. That was made clear by both Minister Groser and the Prime Minister, John Key, respectively about a month ago speaking on The Nation and Q+A. They both said: “Well, we don’t want to ban the sale of New Zealand homes to overseas buyers, notwithstanding the fact that other countries like Australia do.”

We in the Labour Party think that we should be able to. It is proper for National members to disagree with our position. It is not proper that they curb the sovereignty of a future Government’s ability to do so, and that is our complaint with this. Our request that we made at the time of the Foreign Affairs, Defence and Trade Committee report was that the Government clarify this by way of a side letter or renegotiation of this aspect of the agreement, and it has, to all appearances, not done anything. It has not responded to the select committee. It has certainly given no signal that it is trying to do that.

What are the consequences of this? The Minister made reference to the most favoured nation clause in this agreement, meaning that if South Korea does something more favourable to another country, New Zealand gets the benefit of it. What he did not say was that most favoured nation agreements do not actually apply to goods, so they could have different tariff rates and that would not flow through, but they do apply to investment protocols. I find that somewhat inconsistent but that is as it is in a number of other agreements.

What is the effect of that? Well, the effect of that is the same as it is under prior agreements. The most favoured nation agreement under the Chinese free-trade agreement applies to things that are given away by the National Government in the South Korean free-trade agreement. So by the action of National not retaining the right to screen for new categories of investment, i.e., to ban the sale of New Zealand homes to South Koreans, the most favoured nation provision in the Chinese free-trade agreement means that that flows through to the Chinese free-trade agreement. The effect of this is that New Zealand could not have a future ban on land sales that exempted South Korea but applied to China, because that would put us in breach of the Chinese free-trade agreement. So the effects of this flow through to other trade agreements. The current Government is putting future Governments in the position that if they wanted to ban the sale of land to foreigners—we have the position that if you have got the right to live here you have got the right to buy here—we would have to renegotiate the South Korean free-trade agreement in order to avoid breaching the Chinese free-trade agreement.

We have five bottom lines for free-trade agreements. This is true in respect of the proposed Trans-Pacific Partnership agreement and it is true in respect of this agreement. Those conditions are that Pharmac has got to be protected, and corporations cannot be able to successfully sue Governments for regulating in the public interest—I have talked about that. We would actually prefer in agreements with First World countries not to have investor-State dispute resolution clauses. The officials told us this time that they could not have had an agreement with South Korea because that was a bottom line with the South Koreans; they needed investor-State dispute resolution clauses from their perspective. We think that New Zealand has to have the ability to control who buys our farmland and our houses, the Treaty of Waitangi must be upheld, and we have got to have meaningful gains in tariff reductions for our exporters.

All of those conditions were met in the Chinese free-trade agreement. All but one, the land one that I talked about, are met in respect of the South Korean one. We do not yet know what is happening in respect of the Trans-Pacific Partnership agreement, but we know that at the start of the process Minister Groser, Prime Minister Key, and Bill English all said that they were going to be huge reductions in tariffs such as those that have been achieved in the Chinese free-trade agreement and, to a similar extent, in the South Korean free-trade agreement, but we do not yet know.

With those comments I reiterate that the Labour Party recognises that we are a trading nation. We have got a proud record in favour of free and fair trade, and for those reasons we are supporting this bill.

Dr SHANE RETI (National—Whangarei): It is a pleasure to stand and talk to the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. I would like to start by acknowledging the Foreign Affairs, Defence and Trade Committee, and the chairmanship of Mark Mitchell, and other colleagues. I would also especially like to commend Labour members for their support of this bill. I think this bill is better with the additions and the support that has come from, clearly, very strong trade people: the member David Shearer, the member Phil Goff, and we had the observer, the member David Parker as well. I would like to commend them and thank them for their contributions to this. Indeed, there was a sort of bipartisan murmur of “the sooner we do this, the sooner our exporters will benefit”. I think that was a rule of thumb that was well applied.

I will crystallise some of the key points of this bill. New Zealand receives import tariff revenue of around $4.2 million, and that is from Korea from where we import refined oil, cars, electronic equipment, and machinery. Officials tell us that lower import costs on these factors of production will actually lower many New Zealand firms’ costs and improve their international competitiveness. Consumers may also benefit directly from cheaper products. On the other side of the equation we actually pay export tariffs of $229 million to Korea. We export industrial goods, forestry products, dairy, beef, lamb, kiwifruit, and squash. On entry into force we get immediate benefit. On entry into force nearly 50 percent of New Zealand export tariffs will be eliminated immediately. Those are export tariffs on $793.7 million, which will become duty-free. If we look at 5-yearly increments—this roughly changes every 5 years—immediately there is a 50 percent reduction in export tariffs. By year 5 that reduction is approximately two-thirds, by year 10 it moves to three-quarters, and by year 15 there is nearly a 100 percent reduction in export tariffs, which become duty-free.

The obvious immediate benefactors from this agreement includes the kiwifruit industry. We had Zespri people present to us, and they told us that they have $1.4 billion of sales worldwide and that they are projecting to double the volume, particularly of gold kiwifruit, in the next few years. The South Korean market is well-suited to New Zealand gold kiwifruit because they appreciate quality and they are actually prepared to pay for quality. As has been mentioned, we have an incumbent competitor in Chile kiwifruit. They actually have a tariff of close to zero percent and we are paying close to 45 percent. So here is our immediate benefit to the kiwifruit industry.

I think we are paying a lot of attention, as we must, to the fiscal and economic benefits of the free-trade agreement, but I would like to focus on some of the indirect benefits that come to us as well. These are the strategic benefits of having good relationships with a significant regional country, which will also carry through to all our international dealings with South Korea. If we have a look at some of those indirect benefits, a large part of them are relationship benefits. Let me talk about some of them.

The indirect benefits from enhanced trade with Korea—as well as offering direct economic benefits the free-trade agreement advances a number of New Zealand’s broader strategic interests. New Zealand and Korea are both members of the World Trade Organization. Trade reform and liberalisation through negotiations at the World Trade Organization remains New Zealand’s primary trade policy objective. Entering into a comprehensive free-trade agreement with Korea, which has relatively high tariff barriers, particularly in agriculture, contributes towards New Zealand’s wider goal of multilateral trade liberalisation. New Zealand and Korea also work together on trade and economic issues—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! [Interruption] Order! When I stand up, the member sits down. Thank you. The member is now reading something very directly. Is he quoting to the House? I did not hear at the beginning whether he gave the source of the quote. I think if he is going to read out a report like that, he had better give the source of the quote. Otherwise it will look like it is just part of his speech and then he would be reading it.

Dr SHANE RETI: I would like to quote from the national interest analysis that was presented—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Well, can I say that reading out the national interest analysis, which is available to all members of the House, I think does not actually—having an odd quote from it would be all right, but reading out paragraphs of it is not an appropriate use of a member’s time. Otherwise members could just totally waste the time of the House and read the whole thing out and pretend it was their own words.

Dr SHANE RETI: Thank you. I was anticipating three sentences and I am coming to the last line, if I may. The last sentence here is: “A government-to-government agreement of this nature has further value beyond the rights and obligations negotiated under the FTA.” This is the point I was making—that there is a strategic benefit here that is hard to give tangible dollar value to on top of all the economic benefits that we are talking about. So I just wanted to comment on those indirect benefits.

We received a few submissions on the amendment bill, having previously received 3,582 submissions on the free-trade agreement itself. Most of the submissions on this amendment were positive and supportive. One made the case that it was not a good bill because it would lower New Zealand’s standard of living to that of Korea’s. We challenged that quite vigorously, and department officials reported back to us saying that that was not correct—that, roughly, we have the same standard of living as South Korea—so we could put that to rest.

I think there are many protections in this free-trade agreement—protections around sovereign authorities—so I take some issue with what the member Mr Parker is saying. There is a disputes resolution to tribunals of three people—one whom we select, one whom the others select, and one whom we agree on. There would seem to be some intrinsic fairness in that. Let us remember that we also, through an agreement like this, get reciprocal protection for our investors in South Korea. So against this background is New Zealand’s strong history of fairness and success in any World Trade Organization disputes process that we have been involved with.

I would like to congratulate our negotiators on this body of work and I would like to commend this bill to the House.

Hon PHIL GOFF (Labour—Mt Roskill): I would like to support the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. The bill is necessary in order to bring into effect the free-trade agreement negotiated between New Zealand and Korea. I want to set out the reasons why I think it is important. It is not a perfect free-trade agreement by any extent. There are some major omissions in this free-trade agreement, but the conclusion that I come to is that New Zealand is better off for having it than not having it—and by a significant margin.

We did not spend a lot of time in the Foreign Affairs, Defence and Trade Committee looking at this particular bill because we had previously examined the national interest analysis on the free-trade agreement when we reported to the House on the free-trade agreement. What interested me was that every party represented in the select committee agreed that, on balance, we need to have this free-trade agreement, which is why I do not understand why two parties in the House are going to oppose it. I hope that when New Zealand First and the Greens get to their feet they will explain why they would vote against this agreement when there are clear and worthwhile benefits for New Zealand in supporting it, which they acknowledged, I think quite fairly, because they were conscientious in the work that they did looking at the national interest analysis. I think that when it comes to trade, we try to make sure that we do what is right for the country first and foremost. Over a long period of time there has been an endeavour to have a bipartisan policy in this House on trade agreements.

Why does Labour support this agreement? Well, first of all, we have a long track record of being a free-trade party. I remember that under my predecessor Jim Sutton, we negotiated the P5 agreement, which is a high-quality and comprehensive agreement. I was the Minister responsible for the New Zealand - China Free Trade Agreement and the ASEAN free-trade agreement. Both of those agreements met the highest standards in terms of eliminating tariff barriers on all of our major products and of being comprehensive. I am proud of both of them. I am particularly proud of the China free-trade agreement, which helped alleviate what would have been a much more severe recession for New Zealand if we had not had that free entry into China and if we had not had the track record that we had in building up that relationship.

I also take some responsibility for the initiation of the New Zealand - Korea free-trade agreement, and I say that on the basis of a study that we initiated between the New Zealand Institute of International Research and the Korea Institute for International Economic Policy. In 2007 we got a report from that study group, and that report said that New Zealand and Korea had a strong and complementary relationship, that a free-trade agreement was feasible, and that there were mutual benefits for both countries in negotiating a deal. That was in 2007. Well, we are now in 2015. So the negotiation took some time. I am not casting aspersions on the Minister of Trade. I think that Tim Groser did the very best he could. He has worked on it conscientiously, and the agreement that we have got is worthwhile. But it is also fair to say, as Russell McVeagh has said in its analysis of the free-trade agreement, that those expecting similar results to China are going to be disappointed. There were some disappointing results in that analysis.

First, let us talk about why this agreement is important. It is important because we were not first in line. We were first in line with China; we were not first in line with Korea. Korea already had free-trade agreements with the United States, Australia, Canada, China, the European Union, India, ASEAN, Chile, and some others. What that meant for us was that our inability to get the agreement meant that our exporters were disadvantaged. The clearest example of that was with our kiwifruit exporters. We were paying a 45 percent tariff to get into the Korean market, while Chile, our major competitor in this area, had tariff-free entry. Our people were placed in an impossible position. So this free-trade agreement was a catch-up, in many respects. It does not give us advantages over those who have already negotiated free-trade agreements, but it removes the competitive disadvantage that we could not possibly have tolerated our exporters continuing to face. For those who oppose this agreement, explain to the beef industry how it could have competed with the United States when the United States was going in tariff-free, or to the Zespri people who are having to pay the 45 percent tariff.

Obviously, there are some good aspects to this agreement. Wine—15 percent tariffs gone overnight. We have kiwifruit, which I have mentioned already. Those tariffs will be phased out over 6 years. We will still have a disadvantage for the next 6 years, but if we get this bill in, we will get the first cut by the end of this year. Butter—89 percent tariffs; they will go over 10 years. Cheese—36 percent tariffs; they will go over 12 years. Wood—10 percent tariffs; they will go over 10 years. And salmon—20 percent tariffs; they will go over 4 years. There are some winners. Let us acknowledge the good things in this bill.

There are also losers. Milk powder is one of our critical exports. The 176 percent—176 percent—tariff on milk powder remains. We get an expanding tariff-free quota, but we are still faced indefinitely with that huge tariff on milk powder. Seventy-five percent of our deer velvet exports are frozen. They will have an ongoing 15 percent tariff barrier. For pāua and frozen squid, there is a 22 percent barrier. So we did not get comprehensive tariff reductions, and I am disappointed in that. I know that the Government will be disappointed in that. I still say that what we did get is worth having, and we should not walk away from it.

Why is it important to have the deal? Well, Korea is our fifth-biggest export market. Up to the point of the free-trade agreement, it has been growing by about 10 percent a year. The purchasing power of 51 million Koreans has been going up. They are the thirteenth-biggest economy in the world. They are the eighth-largest trading nation in the world. We needed a free-trade agreement with Korea, and, again, I say to my colleagues who share the Opposition benches with us: with such an important trading partner, you cannot walk away from having a free-trade agreement that is so important. The trade agreement eventually eliminates $229 million worth of tariffs. It helps not only in the agricultural areas but also in areas like medical devices, like aviation, like marine, and like precision engineering. There are benefits for us in those areas and in services like education, legal, and professional. My key point is that the benefits outweigh the disappointments in this agreement, and we should do it.

So why were people opposed to it? Well, most of the submissions came on the national interest analysis of the free-trade agreement, and they were using Korea as a surrogate for the Trans-Pacific Partnership agreement. In particular, they were opposed to investor-State dispute settlement. Personally, I would not have cared if we had not had the investor-State dispute settlement with Korea. Korea is a country with the rule of law. We did not need an outside disputes procedure if there was a fight over some investment deal. But the fact was, as officials advised us, the Koreans insisted on it. We would not have had the deal, the officials said, without the investor-State dispute settlement, and we were not going to walk away from this deal. The fact is that the wording in the investor-State disputes procedure is pretty much the same as what I put into the China deal, and it protects our sovereign right to legislate for the public good. So I am not blaming the Government for having it there, except for one thing. I will make excuses for the Government for the things that it could not get in to it, but one thing that the Government could have kept out of it was the automatic right for Korean investors to invest in our residential property.

I want to talk about the dishonesty of the Prime Minister. He said: “We’ve put this in there, and because Labour has the most favoured nation clause in its free-trade agreement with China, China will get it too.” John Key knew that. He knew it at the start. He knew that the most favoured nation clause goes into every trade agreement, which is why you do not set a precedent, like this Government has set a precedent on the sale of residential property. In Auckland, we know that foreign investment is driving up house prices. We know that it is making it impossible for Kiwi first-home buyers of whatever ethnicity to get their own homes. So my question to the next National speaker is: did you allow that to go through deliberately, instead of carving it out like the Aussies did, or was it incompetence? Those are the only two explanations that you can have. Was it deliberate to allow that in, which would extend to everybody that we have ever had a free-trade agreement with the right to buy residential property, or were you incompetent and just not noticing it when it went through?

By and large, this is a good deal. I give credit to the Minister of Trade for working hard on it. It is not perfect, but it is as good as he could have got. But he should have dealt with maintaining our sovereign right to protect residential housing against overseas investors, who are pushing prices up.

DAVID BENNETT (National—Hamilton East): From the first Labour speech there you would think the Labour Party was actually a party in favour of trade. From the second speaker from the Labour Party, Phil Goff, you actually would have thought for the first 8 minutes that he also was in favour of trade. I respect the past history of Mr Goff, but the last 2 minutes of his speech were just rubbish.

Mr Goff negotiated the free-trade agreement with China. When that member negotiated the free-trade agreement with China, did he put in a rule saying that Chinese cannot buy property in New Zealand? Did he put that in there? Did he do that? Is there a rule stopping Chinese purchases in New Zealand? Chinese purchasers can purchase in New Zealand, can they not, Mr Goff? A Chinese national can purchase in New Zealand, can they not? That is the truth of the matter. That is allowed under the New Zealand - China free-trade agreement. There is the ability for a Chinese resident to purchase in New Zealand. And yet, when we do a South Korean agreement the Labour Party wants to have a different rule. It wants to make sure—

Hon Phil Goff: No, it’s the same rule.

DAVID BENNETT: No, no, no, no, it is not. It is not, actually.

Hon Phil Goff: It’s your fault.

DAVID BENNETT: The reality is—no, no, no, no, Mr Goff. A Chinese resident can purchase in New Zealand, and you are saying that South Korean residents should not be able to purchase in New Zealand. That is what he is saying in this House tonight. That is what Mr Goff is saying here, and it goes back to the Labour Party around free trade.

The Labour Party does not know where it stands on free trade. Its members are coming into this House and supporting this free-trade agreement, voting for this free-trade agreement, and looking at the Opposition parties that are against it and tearing strips off them. But the reality is, does Labour support the Trans-Pacific Partnership? No, it does not. The Labour Party does not support the Trans-Pacific Partnership—

The ASSISTANT SPEAKER (Hon Trevor Mallard): All right, order! We are now 2 minutes into the member’s speech. I think it is fair to say that he has been attacking members in a way that if they had taken a point of order they would have had some support. The member will, first of all, stop shaking his head like that, and, secondly, he will address the bill.

DAVID BENNETT: Well, the bill is the trade agreement with Korea, and a big part of that trade agreement is looking at where the political parties stand. Labour members have said that they are voting for this bill. They have mentioned in their speeches the Trans-Pacific Partnership agreement as well, and they are speeches that have come from the Labour Party.

But the Labour Party will not support free trade in general. It will not support it. That is the problem in the Labour Party at the moment. On one side of the Labour Party we have people like Mr Goff and Mr Parker, who came here and spoke about free trade. They said that it was a good thing. But then you have got Mr Little, who is there only because of the unions. He was not voted in by his members—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member will resume his seat. The member will now address the bill. There is nothing in this bill on the area that he is currently speaking on. If I have to interrupt him again, his speech will be terminated.

DAVID BENNETT: The members over there want to know what the bill is about. Well, it is about free trade. Look at New Zealand First and the Green Party. They are against this bill. The most bigoted party in this House is against this bill because it does not believe that New Zealanders should have free-trade agreements. The New Zealand First Party does not believe in free trade—

Chris Hipkins: I raise a point of order, Mr Speaker. I appreciate the comments were not directed at this particular party, but I am pretty sure it is unparliamentary to refer to a member or parties or a collective group of members as bigoted.

Richard Prosser: I raise a point of order, Mr Speaker. I appreciate the comments from the Labour senior whip. I did hear the term, and if it is necessary to note an offence on behalf of the House we will do that, but, in actual fact, my colleague and I did not regard the member’s opinion as being worthy of taking offence to.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Well, I think the first thing we will have is that Mr Prosser will withdraw his last comment.

Richard Prosser: I withdraw.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Mr Bennett will withdraw and apologise.

DAVID BENNETT: I also withdraw and apologise, but the New Zealand First Party goes—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Right, order! The member will now resume his seat. The member’s speech is terminated. The member knows that he does not say “but” after withdrawing and apologising. Dr Russel Norman.

David Bennett: I raise a point of order, Mr Speaker. I never used the words “but after”. I started with the next part of my speech, so I request the Assistant Speaker—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will now resume his seat. Dr Russel Norman.

David Bennett: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am warning the member. If he is going to dispute the ruling that I have made terminating his speech after two warnings and, I think, a deliberate contravention and continuation of something that I had indicated he was to stop—if he does it again then his speech will not only be terminated, but so will his presence.

Dr RUSSEL NORMAN (Green): I rise on behalf of the Green Party to speak to this bill, which implements a very small part of the New Zealand - Korea free-trade agreement. Of course, these free-trade agreements have very large-reaching consequences, but only very small elements of them actually require legislative change. This bill implements those small elements.

What these trade agreements are really about is what kind of global governance we want to have. The Green Party supports global governance. We want global rules around climate change emissions, for example. We want global rules around protecting people from cluster munitions, for example. The question is, when we implement these kinds of trade agreements—the New Zealand – Korea free-trade agreement in this case—we are implementing a series of global rules, in this case bilateral, but in some cases multilateral and in some cases plurilateral. These kinds of rules determine the way that the global order is to be rolled out.

In these kinds of agreements, and in this agreement in particular, there are the investor-State dispute settlement elements. It is part of this trade agreement that this bill is implementing a part thereof. These trade agreements and these investor-State dispute settlement clauses, what they do is that they restrict the ability of Governments to regulate, and of parliaments to pass laws. They restrict the scope of action of democratically elected parliaments.

If you were to think “Well, what are the kinds of rules for global governance we’d like to have in place?”—should, for example, Governments be allowed to eliminate nuclear power if they decide it is unsafe? I think that is a legitimate question of global governance. Should Governments and parliaments be allowed to decide that they no longer want to have nuclear power? I think that is a legitimate question, and, in my view, we should have a set of rules of global governance that enables and allows parliaments to decide to eliminate nuclear power. I just think that that is what the global rules should allow.

The problem with investor-State dispute settlement clauses, which are part of the New Zealand - Korea free trade agreement, is that if you try to do that you will be sued literally for billions of dollars. The reason why I can state that so confidently is that right now, at this very moment, the German Government is being sued for billions of euros because it passed a law in its Parliament to phase out nuclear power. It is being sued under exactly these clauses, the investor-State dispute settlement clauses, that are in this trade agreement. The German Government is currently being sued by Vattenfall, which is a nuclear power company, because the German Parliament dared to pass a law to phase out nuclear power.

So the question is this: should the global governance rules that we establish enable democratically elected parliaments to phase out nuclear power? My answer is yes. This bill’s answer is no. And that is what it comes down to. Let us have another question. Should Governments, democratically elected parliaments, be allowed to restrict tobacco advertising by legislating for, for example, the use of plain packaging for tobacco? Should you be allowed to do that? Should the rules of global governance allow parliaments to pass those rules? I say yes; this bill says no.

This bill implements the New Zealand - Korea free trade agreement, which includes investor-State dispute settlement clauses. What those clauses say is that if I remove the right of Philip Morris, a tobacco company, to use its intellectual property, which is its brand, it can sue me under the investor-State dispute settlement clauses. The reason we know this is because Australia is currently being sued by Philip Morris under one of these clauses in a Hong Kong - Australia bilateral investment treaty that has one of these clauses in it. So why would we support clauses that implement global governance rules that restrict our right to protect human health from tobacco companies? Why would we do that? I do not support that.

Let us take another example. What about if you wanted to restrict the sale of land to offshore buyers? I would say that a democratically elected parliament should be allowed to pass a law to restrict the sale of land to people from offshore. It is not xenophobic; it is simply saying we want to control the price of land in our country so that the people who live here can afford to buy it. This bill before us right now is part of a trade deal that will prevent this Parliament from passing a law that restricts the sale of land to offshore buyers.

That is what this bill does right now. That is exactly what this bill does, not only in respect of Korea but China as well, because, unfortunately, the previous Labour Government stupidly signed a free-trade agreement that had a most favoured nation clause in it, which meant that any following Government, like the one we have at the moment, that implemented really stupid trade agreements, like this one, would have all of the impact of that pushed backwards on to the New Zealand - China free-trade agreement. And that is, in fact, what this bill does.

I am shocked that the Labour Party is voting for this bill. I am shocked that the Labour Party is voting for a bill that it knows will mean that we cannot place restrictions on—

Hon David Parker: The member should listen to the debate.

Dr RUSSEL NORMAN: —the sale of land in New Zealand to offshore buyers. I listened to the debate, Mr Parker, very closely. It was because the Labour Government put a most favoured nation clause in the New Zealand - China free-trade agreement, and then this Government introduced clauses that remove our right to stop offshore buyers of land—right? That right, in this agreement, the one right before us, gets taken back into the New Zealand - China one because the Labour Government put a most favoured nation clause into that agreement.

So anyone who votes for this bill in Labour and National is voting to prevent this Parliament from passing a law that says that New Zealand land has to stay in the ownership of New Zealand residents and citizens. That is what it means. In my opinion, good global governance leaves the space for democratically elected parliaments to say that the land in this country will be sold only to New Zealand residents and New Zealand citizens. I believe that they are good rules. Good global governance rules say that if a parliament wants to do that, it should be allowed to do that. What this treaty does, and what this bill, which implements it, does is it removes that right. I think that is bad global governance. That is why we are not going to be voting for it.

I want to address—there are so many elements to this thing. Let me just talk about that particular part of it. There is a lot more to it. But that is all about restricting the ability of Parliament to prevent sales of land to offshore owners. If you wanted to eliminate nuclear power, if we had it, we would be prevented from doing that. If we wanted to restrict tobacco advertising, we would face big problems if we tried to do that—because of this agreement, which those parties, Labour and National, are going to vote for tonight in this bill.

Let us talk about the China deal, because that has been brought up as an example of a great success. There is an old saying in statistics, that correlation is not causation. It is true that after the passage of the New Zealand - China free-trade agreement, the sale of dairy milk and logs to China increased very significantly. There is no question about that. The question is: was that caused by the New Zealand - China free-trade agreement? Is there a causal connection, or is it just a correlation?

One way to examine this would be to say: “Well, let’s look at other countries who were also selling products, particularly commodities, into China over that period that did not have free-trade agreements.” What about Australia, Brazil, and South Africa—also big commodity exporters? What happened to the commodity exports from New Zealand, Australia, Brazil, and South Africa after the passage of the New Zealand - China free-trade agreement? None of those other countries had free-trade agreements during that period. If you look at the exports from those other countries, they also dramatically increased after 2007-08. They did not have free-trade agreements. So if the cause of the big increase in New Zealand’s exports to China was the free-trade agreement, why is it that those other commodity exporters also had dramatically larger increases in exports? New Zealand had roughly a $4 billion increase. Australia had a $50 billion increase, in terms of its exports into China. Brazil had a $10 billion increase. South Africa had a $30 billion increase.

Hon David Parker: A lower percentage, though.

Dr RUSSEL NORMAN: However you measure it, as a percentage or just in basic numbers, all of those commodity exporters had a dramatic increase in their exports of simple commodities into China, and it had nothing to do with the free-trade agreement.

China needed commodities because it had a booming economy. It is really simple. That is why our exports of simple commodities into China increased. That is why all countries like us who exported simple commodities to China over that period had a huge growth. All of us had exactly the same experience. So yes, free-trade agreements matter. Do not get me wrong. Tariffs are a problem, right? I agree with that. But we should not have to sign up to removing all of our democratic rights to implement bad global governance in order to reduce tariff barriers. I do not agree with that.

I think that that is a real problem because it restricts our democratic rights in the future, and it creates real obstacles at a time when we need to take really coordinated action—to reduce greenhouse emissions, clean up our waterways, a whole bunch of environmental problems that we face, not to mention what is going on with the Auckland house prices—and when we need Parliament and Government to have the tools in order to take that action. This Parliament, if it votes for this, is voting to take away those tools, and that is why the Green Party is not going to support it.

FLETCHER TABUTEAU (NZ First): I would first like to address a comment from Dr Reti, whom I respect as a fellow member on the Foreign Affairs, Defence and Trade Committee. He talked about this bill as a relationship builder, and it is the first time that that argument has been raised in relation to this bill.

What I would like to point out is that Dr Reti and I actually had dinner with the South Korean Government contingent when they came to New Zealand. I told them very openly that New Zealand First could not support the trade deal, and I told them it was because of the investor-State dispute settlement. I said, actually, that it was a bad trade deal and that they had got the better of the bargain. They nodded and they acknowledged, and they agreed—the point I am making is that you can disagree with friends, and you can carry on and build relationships. This opposition does not compromise our relationship with the rest of the world.

But what I really want to point out to this House, especially after the attack from Mr Bennett and some of the rhetoric from the National Party, is that New Zealand First is a party that in its founding document, in its policies, and in its manifesto—our principles have not changed for 22 years—we absolutely endorse trade. We say that the export of New Zealand products and goods overseas is an absolutely essential necessity to our small regional economy—it is absolutely essential.

But New Zealand First opposes this trade agreement, and the alteration to the legislation in support of it, for two main reasons. The first one is the investor-State dispute settlement that I have mentioned. The second is that it is actually a bad trade deal. New Zealand First agreed completely with the Minister when he spoke about New Zealanders being fine exporters, and about how important the work of our primary industry is in the main in terms of the growth of this country. What he did not acknowledge, and what he should have acknowledged, is that most of that comes from our regions.

New Zealand First adamantly debates and contests that this Government has a policy that results in, essentially, absolute apathy with regard to—well, actually, the whole economy, but specifically to our regions. The Northland by-election result and the resulting uproar from other regions around New Zealand saying “You’re not taking notice, you’re not taking us seriously, and you have no policy.”, created a real uproar, and the Government took notice. As I have said already today, what we are seeing from this Government is a beautifully written song sheet with wonderful lyrics, but its actions belie its true intent, and in this case there is no substance. We are not seeing anything meaningful from this Government.

We are told by our trade negotiators that the investor-State dispute settlement provision was actually the only part of the Koreans’ counterargument to the trade agreement. We have such an open economy already—we already have pretty much open borders for the rest of the world—so what could the Koreans ask of us? The only thing that they asked of us was for the investor-State dispute settlement tribunal process to be included in this trade agreement, and this is perhaps the main reason that New Zealand First cannot support this legislation.

It is imperative that I remind the House why. I say to the Government: what price sovereignty? We are told about the tangible benefits of the trade of tangible goods, but I say it again: what price sovereignty? There are no calculations done on that. There are no estimates done on the compromise that we give away—the undermining of this nation’s right to rule our own nation.

New Zealand First abhors the investor-State dispute settlement provision because it enables an international foreign corporate to sue a Government, not in a court, but in a—deliberately named—tribunal. It is not a court; it is a tribunal. That tribunal is closed, usually, at the request of the international corporate, so we do not know what has gone on in the proceedings. It costs millions of dollars whether we win or lose in those proceedings. It is run by three corporate lawyers—no judge, but three corporate lawyers—and because its results are in secret, we do not know how it came to the decision that it has made.

What is really important here for the other side of the House to note is that because it is a tribunal and not a court, there is no right of appeal. If New Zealand were to be sued under the investor-State dispute settlement by a foreign corporate, it could not look at the text of the proceedings and it could not go back and contest it and ask: “By what right did you make this decision? Under what terms did you consider the actual provisions in our trade agreement?”.

I will point out for the members opposite that there are far too many examples now of trade agreements with investor-State dispute settlement provisions in them where it has been proven that the investor-State dispute settlement tribunal has ignored the very provisions of the trade agreement and has decided in favour of a corporate, despite robust and comprehensive clauses in these agreements.

Debate interrupted.

The House adjourned at 6 p.m.