Thursday, 17 September 2015

THURSDAY, 17 SEPTEMBER 2015

THURSDAY, 17 SEPTEMBER 2015

Mr Speaker took the Chair at 2 p.m.

Prayers.

Business Statement

Business Statement

Hon GERRY BROWNLEE (Leader of the House): When the House resumes on Tuesday, 22 September the Government will progress a number of bills on the Order Paper, including the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill, the Passports Amendment Bill (No 2), and the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill.

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, 23 September 2015 be extended from 9 a.m. to 1 p.m. on Thursday, 24 September 2015, as advised to the Business Committee, for the consideration of the third reading of the Environmental Reporting Bill, the third reading of the Standards and Accreditation Bill, and the third readings of the New Zealand Superannuation and Retirement Income Amendment Bill and the Taxation (New Zealand Superannuation and Retirement Income) Bill.

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

Ayes 63

New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 58

New Zealand Labour 32; Green Party 14; New Zealand First 12.

Motion agreed to.

Oral Questions

Questions to Ministers

State-owned Enterprises—Financial Returns

1. DAVID SEYMOUR (Leader—ACT) to the Minister for State Owned Enterprises: Is he satisfied with the financial returns being achieved from the Government’s portfolio of State-owned enterprises?

Hon TODD McCLAY (Minister for State Owned Enterprises): In general, yes, although I would note that the performance of State-owned enterprises is varied for a number of reasons. Although the majority of State-owned enterprises are performing well and are returning reasonable dividends to the Crown, others are not. It is the Government’s expectation that State-owned enterprises be well managed, that they be of low risk, that they focus on their core business, and that they generate a return on investment for the taxpayer.

David Seymour: In light of the Minister’s answer that some variability is to be expected, has he considered that technological change is, in fact, systematically undermining the value of Government investments in State-owned enterprises? For example, digital technology is reducing the value of postal services, the internet is reducing the value of TV and radio stations, and fracking technology is boosting gas supplies and is damaging the viability of coal businesses.

Hon TODD McCLAY: State-owned enterprises face the same challenges as other companies that we have both in the New Zealand economy and around the world. The member is right that there are a number of changes that are likely to impact upon their businesses. This is a conversation that I, as Minister responsible, and the Crown are having with a number of those businesses, but I would note that in the case of New Zealand Post, there have been significant changes in the number of letters that are being posted by New Zealanders. New Zealand Post and its board are looking for a number of opportunities and ways to make sure that that business, just as it is sustainable today, will remain so into the future.

David Seymour: In light of the Minister’s answer that all enterprises face challenges, could he address the significant difference between State-owned enterprises and private enterprise—that is, that the taxpayer provides the equity—and whether there is a Government strategy to deal with these technological challenges, or should the taxpayer just wait for the losses to mount?

Mr SPEAKER: Hon Todd McClay—any of those three supplementary questions.

Hon TODD McCLAY: No, that is not the case, although I would note that in the correspondence I receive—

Grant Robertson: By mail?

Hon TODD McCLAY: —from taxpayers, both by email and mail, and, of course, over the telephone for the member opposite, taxpayers are interested in a number of things. Yes, they enjoy the services that are provided. They want those services to be of a very high quality. But there are also many New Zealanders who are proud of the involvement that the Government has in these companies. As the Minister responsible, I am talking to all of the boards to make sure that they are aware of our desire for better and increased returns to the taxpayer.

GDP—June 2015 Quarter

2. STUART SMITH (National—Kaikōura) to the Minister of Finance: What recent reports has he received on the performance of the New Zealand economy?

Hon BILL ENGLISH (Minister of Finance): The June quarter balance of payments was reported yesterday, and today Statistics New Zealand published the June quarter GDP. The measure of GDP expanded for the 18th consecutive quarter, rising 0.4 percent in the 3 months, taking the annual growth rate to 2.4 percent and annual average growth to 3 percent. The current account balance was a deficit equivalent to 3.5 percent of GDP for the year ended 30 June, and New Zealand’s net liability position, which measures the value of our overseas assets less our overseas liabilities, is equivalent to 62.2 percent of GDP, the smallest net liability position recorded since 1990.

Stuart Smith: What sectors drove the overall expansion in economic activity in the last quarter?

Hon BILL ENGLISH: The service industries, which comprise around two-thirds of the economy, expanded by 0.5 percent. Primary industry activity rose by 0.2 percent. This is a pretty solid pace of activity for an economy adjusting to the reduction in dairy income, and this kind of growth is providing sustainable opportunities for new jobs and higher incomes.

Grant Robertson: In light of his new-found interest in quarterly GDP figures, can he confirm that it is correct that GDP growth per capita in the first two quarters of this year is the worst since 2011?

Hon BILL ENGLISH: I would not be surprised. New Zealand has a fast-rising population because of the confidence of so many New Zealanders who have decided to stay home and New Zealanders who are coming home. At the same time, the economy has softened, so it is pretty obvious that per capita GDP is not going to be growing fast and may be shrinking at the moment.

Stuart Smith: What reports has he received on the outlook for the economy?

Hon BILL ENGLISH: Last week the Reserve Bank set out its latest quarterly economic forecasts, which expect over the next 3 years growth of 2.2, 2.8, and 3.2 percent through to March 2018. This growth will be underpinned by the benefits of a significantly lower exchange rate and interest rates that are—if not at—certainly headed towards the lowest interest rates in 50 years. So that is a reasonably solid outlook.

Grant Robertson: Is he satisfied that, based on figures released today, exports as a percentage of GDP are at their lowest level since 1997?

Hon BILL ENGLISH: No, we are not satisfied. In fact, part of the energy of this Government is its relentless drive for a brighter future for New Zealand.

Stuart Smith: What does the Reserve Bank forecast for employment?

Hon BILL ENGLISH: Job creation is pretty important for our households and communities. New Zealand has recorded 11 consecutive quarters of employment growth, with 69,000 more jobs created in the past year, and the Reserve Bank expects continued employment growth of between 1 and 2 percent over the next 3 years. It expects that the historically high labour force participation rate will persist—that is, we will continue to have a large proportion of our working population available for work.

Health System—Funding

3. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: What inflationary pressures have not been covered in Vote Health since 2009/10?

Hon Dr JONATHAN COLEMAN (Minister of Health): The average inflation increase since 2009 has been 1.7 percent, while the average increase in the operating baseline for health in this time has been 2.6 percent. Only a National Government can both handle the country’s finances and deliver more health services.

Hon Annette King: Is it an honest approach for him to say on 29 July that health funding covers most but not all inflationary pressures, and then on five occasions since in this House deny that he said it, slither around the answer, or blame the previous Labour Government of 8 years ago?

Hon Dr JONATHAN COLEMAN: Dear me, that sounds like it is inviting a political answer. Look, it is, but what I can say is that I do not think it is particularly honest for Annette King to come into this House and make it look like everything in the health system is bad when in actual fact when she is out in the community, and she says that the National Government is actually doing pretty well. She also says that the decisions around the Southern District Health Board were the right ones, that the Health Benefits Limited decision was good—[Interruption]

Mr SPEAKER: Order! The member will stand and withdraw that remark immediately.

Dr David Clark withdrew from the Chamber.

Hon Annette King: Has he now been made aware that district health boards are cutting home help to frail old sick New Zealanders because they do not have the funding to meet the demand; if so, what is his response?

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

Hon Dr JONATHAN COLEMAN: I think you will find that the member is referring to the situation at MidCentral District Health Board, where the budget has gone up by $98 million under this Government. I am actually well aware of this issue, and this Government and MidCentral District Health Board are determined to deliver the best possible home and personal care for patients there. I think she will find that this will all be sorted out.

Hon Annette King: In light of that answer, why should a 74-year-old sick and disabled woman, Catherine from Whangarei, who has written to him twice and he has not replied, have her home help cut from 3 hours a fortnight to 1 hour a fortnight, something her doctors called “elder neglect”—not MidCentral District Health Board but Whangarei?

Hon Dr JONATHAN COLEMAN: I am not aware of that case, but if the member would like to forward it to me, I will have a look at it, because we are determined that people receive the services that they deserve and that they need.

Hon Annette King: Well, in light of that answer, if he gets around to reading this woman’s—

Mr SPEAKER: Order! That sort of interjection into the question will cause disorder. I invite the member to start her question again.

Hon Annette King: If the Minister answers the woman’s correspondence, in which she tells him that she has lots of falls, lives alone, and has diabetes, will he then realise that tricky figures and finger-pointing are no replacement for sufficient funding and good care?

Hon Dr JONATHAN COLEMAN: As the member said herself, it is better to help patients than to use them. I suggest that she forward me those address details, and we will look into it, because, actually, if what Mrs King is saying is correct, it is unacceptable. So we have got to make sure that that person gets the right help. Mrs King would do a lot more good by picking up the phone, working collaboratively—as she claims to do when she is outside the House—and saying “Hey, Jonathan, there’s an issue here with a sick patient.” But no—she cannot resist the temptation to make political capital out of it. It is very unfortunate.

Hon Annette King: Has he replied to Mrs Oliver, who wrote to him on Friday saying that cuts to home care for older people will lead to more injuries, more older people requiring residential care, and will cost the health system more—bad optics and even worse economics?

Hon Dr JONATHAN COLEMAN: Well, I get about 200 letters a week. I cannot recall that particular one, but, once again, if Mrs King wants to be as collaborative as she claims when she is out in public, why does she not just pick up the phone and talk over this case—if there really is one there at all and if it is not actually a member of the Labour Party? [Interruption]

Mr SPEAKER: Order! I do.

Climate Change—Displacement of Pacific Island Citizens

4. DENISE ROCHE (Green) to the Minister of Immigration: Does the Government have a plan to allow people displaced by climate change to relocate to New Zealand; if so, what is that plan?

Hon MICHAEL WOODHOUSE (Minister of Immigration): New Zealand acknowledges the concerns of Pacific Island countries and others around the impacts of climate change. The Government does not have specific climate-related immigration policies, but New Zealand does a lot in this area through direct assistance and support to regional organisations.

Denise Roche: Is he aware that all the aid in the world will not stop small Island States from sinking if countries like New Zealand refuse to do our fair share in stopping the effects of climate change by cutting emissions by at least 40 percent?

Hon MICHAEL WOODHOUSE: Setting aside the hyperbole in the question, I think New Zealand does an extraordinary amount in mitigating and adapting to the effects of climate change on sea level, in particular in the Pacific Island nations, where around $100 million is being spent converting their sources of energy from fossil fuels to renewables.

Denise Roche: Does he agree with the Prime Minister that we do not need a plan to deal with people displaced by climate change because “that’s not an issue that we’re going to face in the next year or two.”?

Hon MICHAEL WOODHOUSE: Well, yes, I do. The Pacific nations as well, first and foremost, want to stay in their home countries. To suggest that they all want to dash across to New Zealand to be saved is a form of colonial paternalism that I think does not do the Greens any good whatsoever.

Denise Roche: Does New Zealand need a plan to deal with people who have been displaced by climate change, given that the courts have already dealt with two cases where climate change was a factor in their seeking asylum?

Hon MICHAEL WOODHOUSE: As far as I am aware, the courts did deal with them by saying that climate change is not a criterion to be considered in the determination of somebody’s refugee status. If in the future it is untenable for some areas to live in their home countries, then an appropriate response would need to be developed at that stage and as part of a broader international response.

Denise Roche: What is New Zealand’s responsibility towards people displaced by climate change, given the Secretary-General of the United Nations, Ban Ki-moon, has warned: “By 2050, we estimate that up to one billion people could be displaced by climate change.”?

Hon MICHAEL WOODHOUSE: As I said in answer to an earlier question, New Zealand’s response is an appropriate one of mitigation and adaption. If at some stage in the future it is a situation where some nations and some citizens find their situation untenable, then I am sure New Zealand will contribute to a global response in that regard.

Denise Roche: Does he believe New Zealand has a responsibility to help our Pacific neighbours who will be displaced due to rising sea levels and adverse weather effects?

Hon MICHAEL WOODHOUSE: Yes, and it discharges that responsibility in a number of ways—through its humanitarian response, including in immigration policies, where there are Pacific access categories of Samoan quota places for residency here in New Zealand. As I said, we make a significant contribution towards greenhouse gas mitigation through things like the global agricultural alliance and the specific investments that we are making into Pacific nations, and I think that is a very good record.

Denise Roche: What do you say to our Pacific neighbours whose homes are literally drowning? Do you think it is adequate to say that we do not need to do it now?

Hon MICHAEL WOODHOUSE: I certainly would not be giving that sort of paternalistic, colonialist, white person’s guilt response to it. I am not going to apologise for this country’s response now, and I am confident that future Governments will respond appropriately in the future.

Kevin Hague: I raise a point of order, Mr Speaker. The Minister has responded to the question with a gratuitous insult that was not required to respond to that question.

Mr SPEAKER: No, I think—[Interruption] Order! I appreciate members may well be offended or alarmed by the answer, but when I consider the tone of the question, which said that some of our Pacific neighbours are literally drowning at the moment, etc.—I think that in light of the tone of the question, an answer like that could almost have been expected.

State and Social Housing—Supply

5. PAUL FOSTER-BELL (National) to the Minister for Social Housing: How is the Government ensuring there is a diverse supply of social housing?

Hon PAULA BENNETT (Minister for Social Housing): The Government’s social housing reform programme is increasing the supply of housing that suits the needs of some of our most vulnerable New Zealanders. Since April last year, registered community housing providers have been eligible to house tenants and, of course, receive the income-related rent subsidy. Just this week, I opened eight brand new two-bedroom homes in Miramar, built by Accessible Properties. The tenants whom I met could not have been happier with the new homes that they are going to move into. That is 147 units completed by Accessible Properties, and more are on the way.

Paul Foster-Bell: How will the Crown’s land development programme improve social housing?

Hon PAULA BENNETT: Along with the work that the Hon Nick Smith, as well as others, is doing on opening up that land so that it is available for affordable housing, there will be a 20 percent component that will be social housing—or up to 20 percent. I am absolutely thrilled with this because I think that it will increase the number of houses that we have in New Zealand and in Auckland, obviously, which is the most important. Also, we see those community housing providers getting an opportunity.

Paul Foster-Bell: How is Housing New Zealand Corporation ensuring its portfolio is better suited to the needs of today’s tenants?

Hon PAULA BENNETT: Along with a very intensive maintenance programme and the work that Housing New Zealand Corporation has done on “warm and dry” in the last few months, where it has got a specialist team making sure that those homes have the right kinds of curtains and carpet and that there is extra insulation for those houses that need it, its rebuild programme is well under way. Just recently, along with Minister Bill English, Nick Smith also visited the Fenchurch development in Glen Innes. It was really impressive to see 11 new homes that have been constructed on a site where there used to be only three. This makes a huge difference to those tenants and to the types of houses that they are living in.

Finance, Minister—Overseas Investment and Fossil Fuels

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

Hon BILL ENGLISH (Minister of Finance): Yes, in the context in which they were made.

Grant Robertson: Does he stand by his statement of 6 September 2014, in relation to the sale of Lochinver Station: “We will not block that sale.”?

Hon BILL ENGLISH: I do not actually recall the context in which that statement was made. What I can say is that decisions made about that sale have been made consistent with the law, with the Minister exercising their statutory responsibility, knowing that, like the CraFarm decision, it could be reviewable by the court.

Grant Robertson: Which of the following statements is correct: Paula Bennett’s, who said that the large size of the Lochinver Station was a factor in the decision to reject the bid to purchase it, or Steven Joyce’s, who said it was a “ridiculously small amount of land” in the North Island?

Hon BILL ENGLISH: I think the member needs to understand the way that this process actually works. Anyone can have an opinion about any particular transaction, but the decision is actually made by two Ministers, who have to ensure that the application complies with, I think, 23 separate tests. The fact is that New Zealand has, by any world standard, a tough set of tests for anyone to be able to buy sensitive land in New Zealand.

Grant Robertson: Does he agree with Steven Joyce’s statement that opposition to the sale of Lochinver Station is “xenophobia”? [Interruption]

Mr SPEAKER: Order! We are descending back to where we were last week, with a continual interjection going across the House between the front benches. It will cease.

Hon BILL ENGLISH: If he was making that statement about Labour Party opposition, then it certainly would be xenophobic because those members oppose anyone with a Chinese name buying anything in New Zealand. What else could he call it?

Grant Robertson: Does he stand by John Key’s statement that “we as a Government try to be both predictable and consistent and I think that’s really important when it comes to foreign investors.”, and how does he think that accusing anyone who opposes the sale of xenophobia, accepting 716 applications and now accepting one, might be inconsistent and hypocritical rather than consistent and predictable?

Mr SPEAKER: Order! That was a very long question.

Hon BILL ENGLISH: No, I do not believe that the Prime Minister is hypocritical. I believe that a party that pretends that it stands for diversity and welcoming of migrants, and then says that if you have got a Chinese name you are not allowed to buy a property, might meet the criteria the member referred to.

Dr Russel Norman: Does he stand by his statement that climate change presents a significant challenge to the country’s infrastructure, and therefore will he extend the sentiment in that statement to agree with Pope Francis, who said recently in his encyclical Laudato Si’ that climate change represents one of the principal challenges facing humanity today?

Hon BILL ENGLISH: Yes, and no.

Dr Russel Norman: Does he agree with the International Energy Agency, the World Bank, the OECD, and the United Nations, which have warned that at least two-thirds of discovered fossil fuels will have to stay in the ground to avoid catastrophic climate change, and, hence, will he support moves to divest from fossil fuels?

Hon BILL ENGLISH: I have not seen the advice given by those organisations. But probably the best thing the member can do to ensure those fossil fuels stay in the ground is to stop using his car, stop catching a bus, and bike everywhere—oh, and stay out of the airplanes.

Dr Russel Norman: Does the Minister understand that it is about structural change so that we can have low-carbon alternatives; and is it ethical for the New Zealand Superannuation Fund to be investing in fossil fuel companies, effectively taking a bet that the world will take no action to avoid catastrophic climate change?

Mr SPEAKER: Again, either of those two supplementary questions—the Hon Bill English.

Hon BILL ENGLISH: I think it is a kind of Green Party ethics that said it is a structural problem, about which they do not have to do anything in their personal capacity—like stop catching planes.

Dunedin Hospital—Redevelopment and Southern Partnership Group

7. TODD BARCLAY (National—Clutha-Southland) to the Minister of Health: What are the next steps for the redevelopment of Dunedin Hospital?

Hon Dr JONATHAN COLEMAN (Minister of Health): The Government is committed to the redevelopment of Dunedin Hospital and to ensuring that the people of the Southern District Health Board region receive the future health services they need. The first stage involves investing $22.5 million to upgrade Dunedin Hospital’s intensive care unit and other wards, as well as for urgent hospital maintenance. In addition, I have announced today the appointment of the Southern Partnership Group to oversee Dunedin Hospital’s redevelopment. It is just a pity that Mr Clark could not stay in the House—

Mr SPEAKER: Order! The member does not need to go there if he wants to remain to answer a supplementary question.

Todd Barclay: How will the Southern Partnership Group deliver the upgrade of Dunedin Hospital?

Hon Dr JONATHAN COLEMAN: The Southern Partnership Group is responsible for working closely with the district health board to review current services and to prepare the service planning component of the business case. This is the same process as used for the current Christchurch and Greymouth Hospital rebuilds. The immediate upgrade and maintenance projects will ensure that services continue to be delivered while the planning for future redevelopments progresses. I would be delighted to brief Mr David Clark of Dunedin North on this issue, seeing he is missing this—

Mr SPEAKER: Order! I am going to ask the Minister to leave the House. I warned him earlier—[Interruption] Order! He knows full well that it is against the Standing Orders to refer to a member who is not in this House. The Minister has now finished answering the questions; he can leave the Chamber.

Hon Dr Jonathan Coleman withdrew from the Chamber.

Welfare Reforms—Mental Health and Sole Parent Employment Trials

8. CARMEL SEPULONI (Labour—Kelston) to the Minister for Social Development: Is she satisfied with the results of the Mental Health and Sole Parent Employment trials, given they cost $7.3 million?

Hon JO GOODHEW (Associate Minister for Social Development): on behalf of the Minister for Social Development: Yes. These trials are designed to assist people who are most at risk of long-term benefit dependency but who want to return to employment as quickly as possible. Therefore, a wraparound service is provided, including case management, employment placement, and in-work support to assist them. A full mid-point evaluation is still being undertaken and is due to be completed by the end of this year. The evaluation, once completed, will allow us to better understand what is working well with these clients and what changes we should be making. Unlike members opposite, this Government is committed to helping those who want to get back to work to get into the workplace, and we are willing to try some different approaches to achieve that.

Carmel Sepuloni: Does she think that $7.3 million was well spent, given that there were no improved outcomes from both of these trials compared with standard Work and Income New Zealand services?

Hon JO GOODHEW: As I have already said in my primary answer, the full mid-point evaluation is still being undertaken and is yet to be completed. What I do know is that the Government is not afraid to try some new approaches, and, therefore, in order to do so, we have to undertake the trials, let them get to the end of the time, and be evaluated properly.

Carmel Sepuloni: Given the failure of these trials, will she cease experimenting on people without their consent?

Hon JO GOODHEW: These people are all voluntarily in these trials—the member has obviously missed that point—so we are not experimenting on them. But what I have to say is that the Government is certainly saying “Just business as usual and leaving people on benefits without hope of getting into work is not our style.”, though it may well have been the style of the previous Government.

Carmel Sepuloni: I seek leave to table an Official Information Act request from the Ministry of Social Development dated 4 September, which states that there were no detectable improvements and there were also no consent forms, and clients did not know they were part of a treatment group.

Mr SPEAKER: It has been well described. Leave is sought to table that particular Official Information Act request. Is there any objection? There is objection. [Interruption] Order! I am going to issue a final warning to the front bench on both sides. If they are going to carry on an interchange during question time, then they will be asked to go outside to the lobbies to do it. We are not going to have questions interrupted by very senior members of this House taking a conversation across the floor of the House.

Carmel Sepuloni: Why has the evaluation been delayed for both the mental health and sole parent employment services by 6 months? Is it because the results are abysmal and the experiment has clearly failed?

Hon JO GOODHEW: No.

Carmel Sepuloni: Will she rule out a further extension of these trials, given that the results are abysmal and the experiment has clearly failed?

Hon JO GOODHEW: The member will just have to wait and see what the evaluation shows. However, what I can tell the member is that the Ministry of Social Development is certainly able to respond to finding out what is working well and what is actually getting people into work, and assisting these beneficiaries in their lives rather than being completely hell-bent on just leaving them on a benefit.

Electricity Market—Pricing and Generation

9. BRETT HUDSON (National) to the Minister of Energy and Resources: What recent reports has he received on the electricity market?

Hon SIMON BRIDGES (Minister of Energy and Resources): The latest energy quarterly released by the Ministry of Business, Innovation and Employment today for the June 2015 quarter shows that the average residential electricity cost fell by 1.4 percent, driven by a fall in both lines charges and retail costs. The last time there was a fall of any kind was in late 2001. The largest factor in this drop in residential electricity cost was an increase in the effects of competition—that is, discounting by retailers. This Government believes that competition is the best way to keep downward pressure on prices, and the latest data shows competition action making a real difference for households.

Brett Hudson: What does the energy quarterly show in relation to electricity generated from renewable sources?

Hon SIMON BRIDGES: It makes clear that nearly 83 percent of electricity was generated by renewables in the last quarter. Hydro, geothermal, and wind were all up, and non-renewable generation was down by nearly 20 percent. Geothermal electricity generation in particular had a very good quarter. More than 1,800 gigawatts was generated from geothermal, the highest level on record.

Fletcher Tabuteau: How does the Minister respond to Northpower, which said that the rebalancing of transmission costs would have a material adverse impact on the Northland community’s social and economic well-being?

Hon SIMON BRIDGES: The transmission pricing methodology process that the Electricity Authority is running is independent and has an incredibly long way to go. It is looking at many options, so I would say to the people of Northland that it is far too soon to be jumping to those sorts of conclusions, which I appreciate the member tries to scaremonger on.

Mr SPEAKER: Order! That will not help the order of the House.

Fletcher Tabuteau: What has Electricity Authority chair Dr Brent Layton done to deserve $200,000 a year for a pricing methodology that makes regions like Northland subsidise profitable generators and foreign-owned energy intensive businesses?

Hon SIMON BRIDGES: Unlike that member, he has degrees. I think the other thing you will find is that he has made an excellent contribution to the electricity sector—[Interruption]

Mr SPEAKER: Order! I am hoping this is a point of order.

Denis O’Rourke: I raise a point of order, Mr Speaker. It is to do with Standing Order 286. The Minister included personal references in relation to the person who asked the question, which should not be permitted.

Hon Gerry Brownlee: Mr Speaker, the question asked about what qualification he had, and he gave the answer. Presumably, the person asking the question is making a statement about the person who is the subject of it, which is also, I think, inappropriate in this House. It is quite inappropriate to bring a servant of the State from outside the House into question time. But clearly that comparison was made, and the Minister answered appropriately.

Denis O’Rourke: The particular point is that the Minister referred to qualifications in respect of the person who asked the question, which is completely irrelevant and is not permissible in the Standing Orders.

Mr SPEAKER: I do not think it is right, actually. I think the answer was perhaps not particularly helpful to the order of the House. However, given the tone of the question—“What qualifications did Mr Brent Layton have to receive his salary?”—the Minister took the opportunity of, effectively, saying: “Well, substantially more qualifications than the member.” I do not think that that is at all derogatory to the member. I think it is the sort of answer you may well have expected to a question like that. It is not a helpful answer, but my job is to see whether it addresses the question. It addressed the question. If members are not happy with it, I guess they should tighten up the conciseness of their supplementary questions.

Fletcher Tabuteau: Speaking to the point of order, Mr Speaker.

Mr SPEAKER: No, I have dealt with that point of order. If the member has a fresh point of order, I will hear it, but I have dealt—

Fletcher Tabuteau: Could I seek leave to make a personal statement, Mr Speaker?

Mr SPEAKER: The member can seek leave. That is over to the House. You want to make a personal explanation about what?

Fletcher Tabuteau: I at no point referenced qualifications—

Mr SPEAKER: Order! No, no. The member wants to seek leave to make a personal explanation. I am inviting him to briefly describe it, and I will put the leave. [Interruption] No, the member—[Interruption] Order! I do not need that help from Mr Brownlee. I should not have to read the Standing Orders. The member has been here a long time; he now should understand the way this place works and the way the Standing Orders work. I doubt whether he has got a legitimate point, but if he wants to try it, he can. I would suggest that a quicker way forward would be to continue with his line of questioning.

Fletcher Tabuteau: Thank you, Mr Speaker. I actually asked what the—

Mr SPEAKER: Supplementary question, is it? [Interruption] Order! If the member does not know—[Interruption] Do you want to ask a supplementary question. [Interruption] Sorry?

Fletcher Tabuteau: Supplementary question.

Mr SPEAKER: Supplementary—[Interruption] Order! Supplementary question, Fletcher Tabuteau.

Fletcher Tabuteau: Why can the after-tax profits of Transpower New Zealand not be used to smooth electricity line charges?

Hon SIMON BRIDGES: Because it is a State-owned enterprise.

Ron Mark: Point of order.

Mr SPEAKER: Order! Before the member starts his point of order—and I want to hope that it is a genuine point of order—can I warn the member that if it any way relitigates the territory that I have just covered and ruled on, the member will be immediately leaving the House. [Interruption] Question number—

Tracey Martin: I raise a point of order, Mr Speaker.

Mr SPEAKER: Again, I need to caution this member as well, in the same way. Fresh point of order, Tracey Martin.

Tracey Martin: Mr Speaker, I seek your clarification. With regard to Mr Tabuteau’s question, he did not ask—

Mr SPEAKER: Order! [Interruption] Order! The member will resume her seat. I did not issue the same warning I did to Mr Mark, so I will not act on it. I said that that matter is closed. I have ruled on it. If the member is then to—[Interruption] Order! To Mr Mark, I am on my feet. If members then take the opportunity to relitigate those decisions that I have made, whether they agree with them or disagree with them, they must accept them. To continue to relitigate leads to disorder, and as I have said to Mr Mark—I did not issue the same warning to Tracey Martin, so on this occasion I will not carry the matter further—in future, after giving a warning as severely as that, the only action I then have is to be asking members to leave. Question number 10—

Tracey Martin: I raise a point of order, Mr Speaker.

Mr SPEAKER: Is this a fresh point of order? Is it in any way—

Tracey Martin: It is speaking to the point of order to ask for your clarification, Mr Speaker.

Mr SPEAKER: No, no, I have already dealt with the matter. The member will immediately resume her seat, otherwise she will be leaving the Chamber.

Taratahi Agricultural Training Centre—Investigation

10. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister for Tertiary Education, Skills and Employment: Does he require high standards of governance from tertiary education provider boards?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): It is certainly my expectation that tertiary education organisations have a high standard of governance. In regard to requiring it, tertiary institutions are, of course, autonomous institutions. They have primary responsibility for their own governance and management. My ability to require such matters is, of course, subject to the provisions of the Education Act 1989.

Hon David Cunliffe: I seek leave to table a document compiled by the Parliamentary Library that sets out the duties and responsibilities of directors under the Companies Act 1993, in particular section 135(a), which requires—

Mr SPEAKER: Order! It does not need further description. I will put the leave. Leave is sought to table that particular document prepared by the Parliamentary Library. Is there any objection? Yes, there is.

Hon David Cunliffe: Speaking to the point of order, Mr Speaker.

Mr SPEAKER: No, no. I put the leave. It has been declined.

Hon David Cunliffe: Does he believe that the board of the Taratahi Agricultural Training Centre has complied with its obligations under the Companies Act 1993 when Deloitte found serious and systematic breaches, such as 67 tutors being enrolled as students, multiple courses being under-taught and overcharged, and inflated attendance numbers while—

Mr SPEAKER: Order! The questions need to be concise.

Hon David Cunliffe: —its board chair publicly downplayed the board’s responsibility, saying that it was just mistakes, administrative errors, and a systems hiccup?

Hon STEVEN JOYCE: In regard to those matters, which are canvassed in a report commissioned by the Tertiary Education Commission, it is my responsibility to ensure through the Tertiary Education Commission that organisations meet their responsibilities. They have not in this case, and funding is being repaid. It is a matter for the board of that organisation to respond to the matters raised in the report, and, of course, I would note for the member that there is a Serious Fraud Office investigation currently being undertaken into some of these matters.

Hon David Cunliffe: Can he confirm that Mrs Mavis Mullins was a ministerial appointee to the board of the Taratahi Agricultural Training Centre in 2012, and that her elevation to the role of chair was confirmed by Ministers this year; and can he now express his confidence in her as chair of that organisation, given that she—

Mr SPEAKER: Order! That was two questions, and it is still going on. The Minister can answer either of those two questions.

Hon STEVEN JOYCE: I can definitely confirm that Mavis Mullins is the current chair of the organisation—I think that was one part of the question.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The question was whether he can confirm that she was a ministerial appointment—

Mr SPEAKER: Order! The difficulty with this situation is that the question went on and on and on. The Minister has attempted to answer it. I advise members to keep their supplementary questions concise, and then I can assist them.

Hon David Cunliffe: Why did he say that he was “surprised and disappointed” at the level of issues at the Taratahi Agricultural Training Centre laid out by Deloitte, and is it because he has lost control of his portfolio and has no idea what is going on in that organisation or across the sector?

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

Hon STEVEN JOYCE: No, not at all. I have been aware of those matters for some time and have been fully briefed on them. My level of surprise and disappointment was that they had occurred.

Hon David Cunliffe: Can the Minister confirm his answer to a parliamentary question yesterday when he said that he had no idea that Barbara Kuriger MP was a member of that board?

Hon STEVEN JOYCE: No, the member is wrong. The member asked a two-part question; I answered the second part.

Food Safety—Online Tools

11. SARAH DOWIE (National—Invercargill) to the Minister for Food Safety: How is the Government helping businesses understand the requirements of the new Food Act 2014?

Hon JO GOODHEW (Minister for Food Safety): Today I launched an online tool so that anyone providing or selling food can easily find out how the new food safety rules will apply to them when they come into force in March 2016.

Sarah Dowie: Why will this tool make the transition easier for businesses?

Hon JO GOODHEW: This online tool takes people through a series of yes/no questions to help people understand where their business sits on the food safety risk spectrum and which food safety rules will apply to them. This is necessary because the new Act is flexible and risk-based. It is designed so that people can manage food safety themselves in a way that best suits their business activities. It means that low to medium risk businesses will not be overburdened by the stringent requirements necessary for higher-risk businesses.

Overseas Investment—Lochinver Station

12. RON MARK (Deputy Leader—NZ First) to the Prime Minister: Does he stand by all his statements?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes, in the context in which they were made.

Ron Mark: Does he stand by his statement he made during the election campaign last year that said “Selling lots and lots of land to China I don’t think would actually deliver massive amounts of benefit to New Zealand.”; if so, why did it take him 12 months to reject the Shanghai Pengxin offer to purchase Lochinver Station?

Hon BILL ENGLISH: In answer to the first question, yes. In answer to the second question, the member should look at the Overseas Investment Act, which makes it very clear that the relevant Ministers make a decision about the land sale, exercising statutory responsibilities, and in order to approve a sale or otherwise, they have to look at the evidence around, I think, 23 separate tests. That is how the decision is made. The Prime Minister does not make those decisions.

Ron Mark: Given that he said when he was gathering votes in the election that “Selling lots and lots of land to China I don’t think would actually deliver massive amounts of benefit to New Zealand.”, why has the Government signed off on 50 land sales to foreign buyers in the last 6 months?

Hon BILL ENGLISH: Well, in the first place my understanding of it, to the extent one can know from approvals, is that the number of sales to people with Chinese-sounding names is probably pretty low. The other ones have been signed off because they passed the tests laid out in the Act, which was written and voted for by New Zealand First. If it does not like the consequences of the Act that it passed when it was in Government, then I suppose it should try to win an election to change it.

Ron Mark: If there is no substantial benefit in selling Lochinver to a foreign company, where is the substantial benefit in the Government’s allowing the sale of our largest beef exporter or half of Silver Fern Farms to a foreign company, or, for that matter, to the Pinny Farms in Northland?

Hon BILL ENGLISH: Again, the Overseas Investment Act does not work on political slogans. It works by laying out 23 tests for sensitive land, and those have to be applied consistently to the individual proposal. These are two quite different transactions. You would not want to prejudge how they will be dealt with, but the tests for businesses are different from the tests for sensitive land, and that was what was voted into the law by New Zealand First when it was in Government and wrote the Act we are now applying.

Ron Mark: If this National Government is genuinely working for New Zealanders, as it said it was during the election campaign, why has it rubber-stamped the sale of 50 farms over the last 6 months and allowed farm sales that have, effectively, jacked up the price of New Zealand land such that New Zealand young farmers are being priced out of the market—[Interruption]—such that New Zealand young farmers are priced out of the market—Gerry?

Mr SPEAKER: Order!

Hon BILL ENGLISH: With respect to jacking up the price, I am not sure about the member’s familiarity with land transactions, but if the price is higher, it is being paid to a New Zealander. He may be opposed to New Zealanders getting a fair price for their farms, but the law that his party wrote says that if the particular transaction meets all 23 tests, then it is a legal and permissible transaction. We are administering law written by New Zealand First.

Grant Robertson: Does he stand by his statement in regard to the Lochinver Station sale that it would be a dangerous position to pre-judge the decision “and that could be reviewed by the courts”; if so, is he concerned by the statement by the Hon Bill English on 6 September 2014 in relation to Lochinver Station that “we won’t block that sale.”?

Hon BILL ENGLISH: No, not at all. We did not block the sale because a Government cannot block the sale. What it does is that two specific Ministers assess the proposition against the 23 tests laid out in the Overseas Investment Act. That is how the decision gets made. If we were asked to “block” the sale, we made it clear there would not be a political decision, as the Labour Party would make, to refuse to sell land to people with Chinese-sounding names, because we are not xenophobic like the Labour Party.

Mr SPEAKER: Order!

Point of Order—Speaker’s Rulings

RICHARD PROSSER (NZ First): I raise a point of order, Mr Speaker. If a member raises a point of order in this House that contains an assertion, that assertion then leads yourself to pass a ruling based on that assertion, and that assertion can then subsequently be proven to be incorrect—

Hon Member: False.

RICHARD PROSSER: —false, will you take action against that member?

Hon GERRY BROWNLEE (Leader of the House): It is not hard to work out what this is all about, and I would suggest that the member, rather than asking for clarification from the Speaker, take out his Standing Orders of the House of Representatives and go to Standing Order 359 to find that the person who was, I think, the person seeking a clarification over a matter, etc., etc. does have some remedy for his concerns.

Mr SPEAKER: From my point of view, and as I have said many a time in this House, I certainly go back and examine the way that the proceedings have gone. I acknowledge to this House that I sometimes make decisions that, in hindsight, I might not have wanted to make. However, they are made, and as I said earlier, when I make a decision, members may not have to like it but they have to accept it. I will assure the member that I will go back and have a look at the Hansard today.

Bills

Accident Compensation (Financial Responsibility and Transparency) Amendment Bill

Second Reading

Hon NIKKI KAYE (Minister for ACC): I move, That the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill be now read a second time. This bill amends the Accident Compensation Act 2001 by making important amendments to the existing approach to funding ACC’s levied accounts. In particular, the bill strengthens the stability of the accident compensation scheme by creating a more financially responsible and transparent approach to setting levies and enabling more sustainable and stable levy reductions in the longer term.

ACC has become a critical part of New Zealand’s economic and social fabric, providing no-fault cover for all New Zealand residents and visitors covering motor vehicle, non-work, and workplace injuries. In 2008 this Government inherited a $4.8 billion hole in the ACC accounts. The Government and ACC have worked hard over the last 6 years to improve the scheme’s finances and the way we treat injured people. The bill before the House achieves this through its objectives by making two key changes to the ACC scheme. The first change is to introduce a more principled and transparent approach to setting levies. This is achieved through Part 1 of the bill, which proposes three core measures. First, the bill consolidates and clarifies important principles of financial responsibility that will underlie the levy-setting process. These principles signal the importance of setting levies to meet the expected lifetime costs of claims, ensuring the long-term solvency of each account and avoiding large changes in levies.

Second, the bill requires the Government to set the overarching funding policy through the publication of a funding policy statement, and, in turn, requires ACC to give effect to this funding policy statement. The statement will set out the target level for the funding of each account, an approach to managing deviations from this target, any limits on annual levy changes, and any circumstances in which levy changes are not required. As such, the funding policy statement will provide the Government with a suitable method of expressing its funding preferences. It will support a closer match between the levies that ACC consults on and recommends and the final decisions on the levy rates made by the Government. Levies are significant compulsory charges and it is important that the role of the Government in setting levies be reflected from the very beginning of the levy-setting process, not just at the end.

Third, the bill increases the reporting requirements for ACC so that the public is better informed about the impacts that the new levy rates will have on future levy rates and other aspects of ACC’s funding. This will help to ensure that emerging pressures are fully transparent and can be managed.

The second change in the bill is set out in Part 2. This part helps to ensure that residual levies are not over-collected, by allowing for their collection to be discontinued sooner than is currently required in legislation. Recent evaluations suggest that the residual liabilities are now lower than the amounts specified in the Accident Compensation Act. Since 2009 there has been a significant improvement in ACC’s claims management, regulatory changes reducing the cost of claims, changes to discount rates, and continuing excellence in the performance of the ACC investment portfolio.

I turn now to thank the Transport and Industrial Relations Committee for its consideration of this bill. During the select committee process the committee received a number of submissions on this bill. Submitters generally expressed support for the reform, although they held different views on the best way to effect change. As a result of the select committee process, the bill returns to the House with a number of amendments that support the bill’s core objectives of promoting increased financial responsibility and transparency.

An important change to Part 1 of the bill is that the Minister for ACC will now be required to consult such persons or organisations as the Minister considers appropriate before issuing the funding policy statement. This requirement to undertake targeted consultation will complement the public consultation on levy rates that already takes place and that is an integral part of the levy-setting process providing key stakeholders with an opportunity to present their views on the overarching approach to funding ACC’s levied accounts. This will help to enhance the transparency of the funding process and the accountability of the Government to levy payers.

Following on from this, the Minister for ACC will be required to issue a funding policy statement within 12 months of the passage of the bill rather than 3 months. This will ensure that sufficient time is allowed for consultation and to ensure the introduction of the funding policy statement occurs before a levy round and not part-way through. A further important amendment made following the select committee process is to ensure that it is clear that the principles of financial responsibility in the bill are balanced against each other and alongside the public interest under section 300 of the Accident Compensation Act 2001.

The select committee also agreed to some important amendments to Part 2 of the bill. The first change is a consequence of a recommendation from the Regulations Review Committee. The committee recommended a change in approach to removing the residual levy provisions in order to reduce the complexity of these provisions. Rather than setting the date for removing the residual levy provisions by an Order in Council, the bill now provides for the Minister for ACC to set this date by notice in the Gazette.

I thank the Regulations Review Committee for its contribution to the bill. I want to personally acknowledge the chair of the Transport and Industrial Relations Committee, Jonathan Young, for the good work that has been done on this bill, and all of the other members of the committee. I welcome their report. I also appreciate the contribution of the Regulations Review Committee and I thank all those who made submissions on the bill.

The Government has delivered a significant reform and improvements to the ACC scheme and more than $1.5 billion of levy reductions, with more planned over the next few years. As I have noted, in 2008 this Government inherited a $4.8 billion hole in the accounts. The Government and ACC have worked hard over the last 6 years to improve the finances and the way we treat injured people. Now that the scheme is finally in a position where it is essentially fully funded, this bill will enable successive Governments to make funding and levy decisions in a more principled and equitable way and to smooth out the effect of economic shocks over time. This means more stable and certain levies for all New Zealanders. I commend the bill’s progress to the House.

SUE MORONEY (Labour): If only the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill did actually reflect the title that it has been given, that would be great. That would be a really good start, because those who have been following this debate might well imagine this bill to be the bill that will actually stop the Government from overcharging ACC levies, as that Government has been doing to the tune of $350 million a year because of a decision that it made—and the decision was announced publicly; it was not even embarrassed about it. When Judith Collins was the Minister for ACC, she said that the Government had set a levy that was higher than recommended by ACC in order to get to surplus. What the Government was doing was unnecessarily hiking up ACC levies to try to get the books into surplus. And guess what? It still failed. Even though it ripped off every worker and every company right across New Zealand with higher than necessary ACC levies, it still failed to get to surplus. That is the record of this Government.

So here we are with the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. Surely this is the bill that will say to the Government: “Hands off ACC levies. They’re to be used only for the outcomes of accidents and injuries, not for propping up your failure to get to surplus.”? Sadly not—sadly not. What a missed opportunity. But the Labour Party can save the Government from this embarrassment, because at the Committee stage—

Iain Lees-Galloway: Here to help.

SUE MORONEY: We are here to help, and at the Committee stage, we will propose an amendment that will make it absolutely clear, with regard to this bill, that the part of the Accident Compensation Corporation Act that requires the Minister to act in the public interest is the public interest in reducing accidents and injuries. It is not the public interest in just any old thing that the Government thinks it wants to do, like propping up its failure to get to surplus. No, no, no—our amendment will ensure that the public interest argument can be used only in order to reduce accidents and injuries. That is how it should be if this is truly an Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. So I am looking forward to the Government supporting this amendment, because if the name of the bill is going to be fulfilled, the Government will genuinely do that.

I do want to put the Government on notice, because at the moment there is very tenuous agreement from the Labour Party towards this bill, and I will explain why in a minute. If the Government does not accept our amendment, then that is very likely to change, because, clearly, the bill is not going to deliver what it purports to deliver. Actually, it is even worse than that, because when people made submissions on this bill, they made submissions on the basis of the bill that came to the Transport and Industrial Relations Committee. The amendments that the Government members pursued in the select committee have, once again, fundamentally changed the bill that was supported by many of the submitters. I would hazard a guess that many of those submitters would not agree with the bill in its amended form.

Here is one submitter who I believe would not approve of this bill in its amended form: Business New Zealand. That is right—the Labour Party has found itself in the enviable position of being in agreement with Business New Zealand; or should I say that Business New Zealand has decided to agree with the Labour Party that, actually, ACC levies must not be used to prop up the Government’s fiscal position? That was, in fact, the submission from Business New Zealand. It came along to the select committee and said that it wanted a change in the bill in order to reflect that. The Labour Party is delivering exactly that change in the amendment that we will come forward with at the Committee stage, because we do not believe in cheating the system in that way. ACC levies are, in fact, for improving and treating injuries and accidents at work, on the sporting field, and in the home. That is their purpose; not propping up Bill English’s failed attempt to get to surplus.

The reason why we find ourselves inclined, though, to support this bill none the less is that, actually, what it does is expose the sham, which was started by Nick Smith and is being continued today by Nikki Kaye, of pretending that the ACC system was in deep, deep trouble under the Labour Government. The part that we strongly agree with is the part that says that the system is actually doing so well that the residual levies that were put in in 1999 in order to cover the full lifetime costs of injuries and accidents—the system is going gangbusters—are likely to be able to come off much earlier than planned. That very act exposes the sham of Nick Smith’s trying to pretend that the whole system was bankrupt. That is what he tried to tell the country. It was utterly wrong, and this bill proves it. Why would the residual levies be coming off much earlier than planned if that was, in fact, the truth? It clearly was not the truth, and this bill proves it. What did the Government do at that stage? It pretended that the system was bankrupt. It hiked ACC levies way up. The National Government hiked up ACC levies and then kept them at an unnaturally and unnecessarily high level for years, by its own admission, in order to prop up the failure to get the Government’s books into surplus. What a rip off—what a rip off—that has been for every worker and every company in New Zealand that has been paying those ACC levies.

I would be much fonder of this bill if, in dealing with accident compensation financial responsibility and transparency, this was the sort of bill that fixed up the shambles that Nikki Kaye has created over ACC motor vehicle levies, because if it did that, it would have my full support. What a shambles. It has been like watching a slow car wreck happen, actually. I was going to say “train wreck”, but in this instance it is a slow car wreck, because, before these new ACC levies with these risk ratings came in, 24 models amounting to about 115,000 cars had to be reclassified because she had simply got it wrong—she had simply got it wrong. The travesty is that she then went and convinced the Hon Michael Woodhouse to use exactly the same sort of risk rating process to decide what was a high-risk and a low-risk industry, and, wow, did that work! Now we know that worm farms are more dangerous than cattle farms, of course!

What we find out from Nikki Kaye is that cars that have exactly the same safety specifications and are exactly the same model but that have been called a different name in Australia are actually more dangerous than each other when it comes to the New Zealand environment. Simply putting that Australian information together with the New Zealand crash data has been a complete and utter shambles. It has also resulted in thousands of New Zealand motorists being overcharged for ACC levies for their motor vehicle registration, and that is continuing. Although the Minister has accepted that she made a mistake in 115,000 instances—and that was on day one—still today when people raise their issues with ACC about other mistakes that it has made with other models, it refuses to acknowledge them and it does not refund the ACC levies for those motor vehicle registrations. So, again, we have the Government overcharging thousands of New Zealanders for their ACC levies, and that needs to stop. Sadly, this bill will not achieve that, and I look forward to debating this further at the Committee stage. I look forward to the National members actually agreeing with an amendment coming forward from the Labour Party and supported by Business New Zealand to stop the rort.

JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand and speak and respond to some of the comments of the previous speaker, Sue Moroney. Business New Zealand made some comments when it submitted to the Transport and Industrial Relations Committee. One of the comments it made, which that member is speaking about—whether we agree with it or not, and I have no doubt that she would agree with it—was that the previous Labour Government also did what it said. It said it was across Governments. And it was not just Business New Zealand who said that; there was another submitter. That is their view—that is their view.

Sue Moroney: No, they didn’t. Be honest.

JONATHAN YOUNG: Under Labour—if you go back and read those submissions, you will find what I have said is true. Under Labour the cost of claims increased by 57 percent in 4 years. We know that there was a hole. Some of it was because of that and some of it was because of the volatility of funds that ACC managed. In fact, the chair of ACC reported to the Transport and Industrial Relations Committee earlier this year and said that ACC’s equity position had worsened, from negative $108 million on 30 June 2014 to negative $600 million by 31 December 2014. Then in January this year, for reasons beyond ACC’s control, the asset base diminished by $4 billion in that month, and then bounced back by $2 billion in February.

What we are identifying is that there is a lot of volatility in managing the asset base and the resource base of ACC, which is what the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill is about. It is to smooth that out, to ensure that it is not just the Government making decisions at the end of the process of ACC’s consultation but it is the Government setting policy frameworks at the beginning of that process in order to manage that volatility. That is what this is about. It is about good management and stabilising. Under Labour, under its watch, ACC’s long-term liabilities increased to $15 billion and that is in part the reason why Nick Smith had to do what he did. It is all a matter of being able to have a system of accident compensation and care and rehabilitation here in New Zealand that the taxpayers, the levy payers, the people of this country, and even visitors who come to this country can rely on and that it is going to be there, sustainable, for the long term. All around the world people do acknowledge our ACC system and say that it is a great provision. This is why we are doing what we are doing.

I want to thank the people who came and the entities that came to submit to the select committee: Business Central, the Wellington Employers’ Chamber of Commerce, Business New Zealand, the Employers and Manufacturers Association, Federated Farmers of New Zealand, the Insurance Council of New Zealand, the Meat Industry Association, the New Zealand Association of Accredited Employers, the New Zealand Council of Trade Unions, the New Zealand Nurses Organisation, the New Zealand Automobile Association, and the Port of Tauranga. We had only 14 submitters, but they represented large workforces. They were obviously very large levy payers. We came back with four recommendations for amendment and change. One of them was around the principles of financial responsibility. There are three principles. The first principle is to provide that levies should be set so as to meet the expected lifetime costs of claims, the second principle requires levies to be set to ensure the long-term solvency of each levied account, and the third principle provides that large changes in levies are to be avoided. This is intended to safeguard or reduce uncertainty for levy payers.

A number of submitters spoke to us about that third principle, and said they were concerned that there could be adverse circumstances that affect ACC’s asset base—whether they be natural disasters or economic crises, like we have seen with the global financial crisis—and that we needed to balance that. That is where section 300 of the Act comes into play, whereby the Minister must balance all of those aspects in terms of what is going to enable this fund to be sustainable long term, for the benefit of all New Zealanders. We recommended that the bill should be amended to clarify the nature of the principles of financial responsibility in clause 5, and how they fit together. As the Minister for ACC said in her speech, we also spoke about funding policy consultations. That is a measure that has been added in, particularly in response to my colleague Kevin Hague’s request earlier on, when he attended one of our meetings.

The residual claims liability was one provision that went to the Regulations Review Committee—in fact, it had the whole bill—and it came back with a recommendation that we could have some flexibility in this, and, instead of a decision in terms of when those residual levies stop being an Order in Council, it would be decided by the Minister in an instrument published under the Legislation Act and gazetted. That does give some flexibility to that. We know that the New Zealand Association of Accredited Employers requested that. It said: “ACC has flexibility in the date when they decide to cease the payment of the residual levy. E.g. we must not have a situation of paying extra levies which would be the case if it was found to be funded in June 2016 and a full year’s levy had been paid, through to March 2017.” It is good to see that flexibility in the way in which we can approach those residual levies in the bill. I am happy to commend this bill to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North): The Accident Compensation (Financial Responsibility and Transparency) Amendment Bill is essentially about how we fund ACC and how we maintain ACC in a good, robust financial state. There has been a lot of rot spoken about the financial state that ACC has been in in recent years. So I think the House, and particularly members on the opposite side of the House, need a bit of a history lesson about how we got to this bill. It starts back in 1999 when the Government at the time decided to shift from a pay-as-you-go model—i.e. ACC raised as much money as it needed in one year to pay the claims in that year—to a fully funded model, where ACC would have enough money in the bank to actually pay the lifetime of all claims that it had on its books. That was a fundamental shift in the way that ACC ran its books. It was always going to be something that was going to take time—to transition from the old model to the new model.

From the day that change was made you could technically have said that ACC was insolvent. If it was an insurance company, it was technically insolvent from 1999 onwards. But the National Government at the time did not have a problem with that, because it knew it was going into transition. The Labour Government of the early 2000s never raised this as an issue, because we were transitioning from the old model to the new model. Then along came Nick Smith as the new ACC Minister after the election in 2008. All of a sudden the fact that ACC was technically insolvent became a problem. It was a crisis and it was caused by the Labour Party—blah, blah, blah. We are used to the National Party blaming Labour for everything. But this had not been a problem for the 10 years previous. Suddenly, according to Nick Smith, this was a problem. And there was another issue at the time. It was a little thing called the global financial crisis, which the Prime Minister is often keen to remind us about during question time, and, yes, that had an impact on ACC’s assets.

So Nick Smith created a crisis out of nothing. Why? Because he wanted to increase the levies. Why did he want to do that? Well, actually, at the time, National’s policy was to privatise aspects of ACC—to privatise some of the accounts, particularly the work account. Unfortunately, no private provider could have competed with ACC with the levies that ACC had at the time. No private provider could compete with ACC. So National found a way to artificially increase the levies so that the private providers actually had an opportunity to compete. Then we had a good report from PricewaterhouseCoopers, I think it was. It actually came and said: “Look, don’t privatise ACC. That is madness. If you look around the world, the ACC is a world leader. There is no better way to do it. Do not privatise it.” Mercifully, I think it was Judith Collins who actually said: “We’re going to back away from this silly idea of privatising ACC.”

But we still had these elevated levies, and all of a sudden that became quite a happy coincidence for the Government because the Government needed revenue from somewhere. It was failing to meet its promise of getting the books back into surplus. It had slashed its own revenue by giving tax cuts to the very wealthy. So it needed to find a new way of generating revenue, and keeping those ACC levies artificially inflated was a very convenient way to keep revenue up in the pursuit of the surplus, which, as yet, still has not been reached by the Government. And that is the long and sordid history of how we get to this bill.

Actually, when we saw the title of this bill, we thought “Aha! The Government has actually responded to the pressure that has been applied by the Labour Party and other Opposition parties and the public”—who were becoming increasingly aware that there was a rort going on, and that we were being ripped off by a National Government that was actually taking far more in ACC levies than it needed to. We thought that this was the answer. We actually thought the Government was prepared to bring itself under control, but, unfortunately, that has not been the case.

Once again—this is becoming a bit of a mantra for this National Government—the legislation has been watered down at the Transport and Industrial Relations Committee, and, in fact, there is nothing now in the legislation that says that the levies set for ACC have to be appropriate for what ACC’s costs are. Instead, what the Government now has to do is to be prudent in managing its entire financial situation. So, quite possibly, we could carry on with the rorts that we have experienced over the last few years. [Interruption] Andrew Bayly, that is exactly what is happening.

We propose an amendment to this legislation that would sort that out, an amendment to the legislation that would actually make it do what the Government said it was going to do—

David Seymour: What’s that?

IAIN LEES-GALLOWAY: —and that is to say, David Seymour, that the ACC levies must be set so that the ACC accounts can be prudently managed, because that is missing from this legislation at the moment. We agree that over time we need to set levies in an appropriate fashion, so that some of the volatility that Jonathan Young talked about can be managed. We also need to make sure that we do not have drastic changes in levies—that we do not have levies plummeting and we do not have levies being put back up again—because businesses like to have security and stability. They like to know what they are dealing with. So we agree with that.

But unfortunately that is not what this legislation provides for. This legislation allows the rort to carry on, and that is an absolute shame. The Government, as is so often the case, wants to look like it is doing the right thing, but, in fact, what is actually going on is that very, very little will change as a result of this legislation. We are continuing to support it at this stage because we want the opportunity to go to the Committee stage and make the case for the amendment that we propose—the amendment that Business New Zealand actually came and said needs to be made to this legislation to make it function properly. If the National Government is genuinely interested in ensuring that we take only enough money off ACC levy payers to ensure that ACC is in a good, robust, and stable financial state, then National will support that amendment, and so will every other party in the House if they feel that way as well. If they do not support that amendment, then it is absolutely clear that they intend for the rorts to continue in the future.

ACC should not be there to prop up the Government’s surplus. ACC is a world-leading New Zealand treasure that should be there to take a fair levy and in return provide fair treatment and fair compensation to people. That is all that people ask. People actually enjoy ACC because it does provide a level of security for people that is not available to citizens in a lot of other countries. We do not have to go through some of the rigmarole that you have to in the United States, for instance, around having to go to court just to prove that you ought to be paid out compensation because of medical misadventure or because you have been injured at work. People appreciate the fact that it is a no-fault, no-liability scheme and it is there when we need it. And we appreciate that we have to pay a levy for that—nothing comes for free. We have to pay a fair levy. But we expect to pay a fair levy and get fair treatment and fair compensation in return.

What we have got right now is that people are paying a grossly unfair levy, which is far more than ACC actually needs. Many of the accounts are now 140 percent or more funded. We appreciate that you need, probably, a little bit more than 100 percent funding, but 140 percent funding—and increasing—is a gross misuse of taxpayers’ money.

What we also expect from ACC is that people should get fair treatment. They should not be messed around by ACC, being told that, actually, their injury has been caused by a pre-existing condition, or all the myriad of other ways that are used to deny people treatment and compensation. A fair levy in return for fair treatment and fair compensation—that is what people expect from ACC, but that is not what they are getting from this Government. Only if it amends this legislation as we propose, will this bill actually do what it purports to do.

ALASTAIR SCOTT (National—Wairarapa): I rise in support of this bill. The words “Financial Responsibility and Transparency” in the bill’s title are absolutely appropriate. The last speaker, Iain Lees-Galloway, spent most of his time looking backwards, describing his point of view of the history of the Accident Compensation Act. I am a person who likes to look forward. I am not interested in what has been; I am more interested in what is to be.

The last speaker talked about unnecessarily high levies—artificially increasing them and elevating rip-offs was what he talked about. Well, that is why this bill is here: so that there is no debate and there is no argument. This bill is about financial responsibility and transparency, so it will eliminate the question marks about whether levies should be here or there—here, there, or everywhere. So that is what it is about, and, I guess, that is why the members on the other side are supporting this bill, which is a good thing.

I would like to point out the principles. There are principles involved in this bill. There are funding policy statements that must be made by the Minister for ACC. There are reports that must be prepared and published by the corporation. Those policy statements and reports must turn their mind to a number of things. The word “must”—Mr Lees-Galloway is looking for the word “must” in new section 166A, in clause 5, in that ACC should have no flexibility around the setting of the levies. But, as we know, the assets on the balance sheet of the ACC levy accounts move around hugely. The volatility was described by Jonathan Young earlier. Because of that volatility, because interest rates move around, because equity markets move around, and because foreign exchange markets move around, so does the liability and the asset involved, and to varying degrees. So, for that reason alone, the reports must include things like long-term projections.

The bill talks about projections. It talks about notifying key assumptions. Three times in new section 331(5B)(a)(ii), in clause 6, there is the word “assumptions”. That is because there is no crystal ball in this thing. That is why flexibility must be ingrained in this bill, because there is no certainty around the assets that are held by the corporation. That is why, again, the principles in new section 166A, in clause 5, are referred to as “the levies derived for each Account should meet the lifetime cost of claims … if an Account … has accumulated surplus funds, that deficit or surplus should be corrected … [and] large changes in levies should be avoided.”, thus giving the flexibility that is required and necessary in this bill.

That is the thrust of this bill. It is a good bill. It is similar, in my view, to the target band that the Reserve Bank should be targeting. That is the analogy that I would like to bring to the House. If we made it compulsory that the Reserve Bank be within its band and, you know, have consequences via the Reserve Bank if it was not, we would have been through many Reserve Bank Governors by now. Again, it is a target, and then when the inflation target is outside the band there is explanation, there is reporting, and there is transparency.

The Accident Compensation (Financial Responsibility and Transparency) Amendment Bill does the same thing. It gives information to the public so that they themselves can see how the levy is being collected and understand why the levies may be rising and falling, and gives the public the confidence that the ACC levies are being collected and administered fairly. I am very pleased to support this bill.

KEVIN HAGUE (Green): I rise to continue the Green Party’s support for the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill, and, given this is a second reading debate, I want to begin by thanking the submitters. They were relatively few in number, but their submissions were of pretty high quality. I also want to thank the officials, who served the Transport and Industrial Relations Committee very well, and I want to express my personal appreciation to the other members of the select committee and, especially, Jonathan Young, its chair, for enabling me to participate in at least part of the committee’s process. Unlike, I think, the National and the Labour parties, the Green Party policy around funding for ACC is that the scheme should be funded as it was originally intended, through pay as you go and a moderately sized reserve to be able to deal with fluctuations from year to year. We oppose full funding or future funding or, as I like to call it, full future funding for ACC—a principle that is enshrined in the existing legislation and is also specifically enumerated in this bill as one of the financial responsibility principles.

We oppose full future funding because it mimics the way that private insurance works. A private insurance company needs to use full future funding because the person who pays a premium this year and who makes a claim on an insurance policy may not be a policyholder for that insurance company next year and the liability would none the less still exist. So it needs to be able to capture that with full future funding, but that same principle does not apply to ACC because if one is intent on ensuring that ACC remains a core Government service, then the person who pays a levy to ACC this year and may make a claim will still be a levy-payer next year and the year after and the year after that. So the case for needing full future funding simply is not made out in the case of ACC, unless, that is, the intent of the Government is to privatise or at least to open up the scheme to competition from the private sector. Iain Lees-Galloway has, in fact, spoken in this debate about that dishonourable history around the ACC scheme.

I will give some of the reasons we oppose that full future funding. First of all, actually, because of the uncertainty around valuation of future liabilities that Jonathan Young and the previous Government speaker, Alastair Scott, have spoken about, that uncertainty about the value of future liability leads in fact to the kind of volatility in levies that all speakers in the debate so far have said they are interested in trying to control. This bill, contrary to what several speakers in the debate so far have spoken about, is not intended to actually address that volatility. It is about ensuring transparency, which is a different, but worthy, goal. The other problem with future full funding—funding ACC as if it were a private insurance company—is that then that starts to create some of the behaviour that you might expect to see in a private insurance company. It starts to create what I have called in this House over a number of years now a culture of disentitlement, where people working on the board of ACC, in its management, and at all levels think that their job is to be able to say no to claims rather than to honour the social contract on which this great scheme is actually founded. As I say, I think the Greens are pretty alone in the House as advocates of pay-as-you-go funding. We would, if we had the opportunity, return the scheme to that basis. But, actually, since the scheme is now more or less fully funded, that debate, for the sake of this bill at least, is largely academic. For this bill, as we have indicated and as all of the submitters indicated, the purpose of improving the transparency of the levy-setting process for ACC and making sensible adjustments around residual levies is absolutely a sensible thing to do. I think both the small number of submissions and the content of the submissions indicate that most people accept that these are worthy things to try to achieve.

I want to talk about two particular things in relation to the detail of the bill. One is around the process for levy setting. Several submitters commented that the existing process for levy setting involved a process of consultation that was sometimes tokenistic and actually bore little relationship to the results that actually came about in the levy-setting process—in other words, a disingenuous process. That is because of the conflation of both technical and political goals in the levy-setting process. I, indeed, have expressed some criticism of the Government for its use of both the ACC reserve and its levies as a kind of ballast for the Government’s overall financial position, which I believe to be inappropriate. I accept the point that Labour speakers have made that that is not properly addressed in this bill and the bill would be improved if it were properly addressed. Both unions and Business New Zealand would agree with that being done. If the Government is serious about what it said about the purpose of the bill, it too will agree to making that specific and clear.

I thank the select committee for picking up my proposal that the setting of the funding policy statement should also be the subject of consultation, because that is the political part of the process. So separating out the political part from the technical part is important, but the consultation is, actually, more important, about the political settings that levies are based on rather than the technical side of things, which, actually, is really not amenable to all that much change. So it is great that that change has been made by the select committee. The funding policy statement will then be tabled in Parliament, and I think that is a very useful stage in the process. I want to take that further still and say that once that statement has been tabled in Parliament it should then be subject to parliamentary debate. I am not sure whether it is the place of this bill to make that explicit or whether Parliament needs to express to the Business Committee, and to any future Business Committee, that it is the expectation of Parliament that there should be debate around that policy statement, but it should certainly occur.

I just want to say something briefly around the residual levies process. The changes that are being made in the bill, and actually improved by the select committee, are sensible ones. But there was also an important submission made by New Zealand Council of Trade Unions around occupational disease and the poor basis that exists in legislation and in ACC processes for setting levies appropriately to deal with occupational disease. The advice the select committee received was that that was outside the scope of this bill. I guess I have to accept that. But if that is indeed the case, then it now becomes incumbent on Government and on this House to create a process where it is appropriate to discuss the ongoing basis of funding occupational disease claims appropriately. It is certainly my hope that one of the things that can come about as a result of this bill is perhaps a cross-party negotiation so that we can achieve some consensus around the basis for ACC going forward that enables us to discuss those outstanding issues—the culture of disentitlement, the basis on which occupational disease will be dealt with, and potential expansions of the scheme—as was originally intended. In other words, we should be creating the basis and creating the platform for us to return to honour that original ACC social contract and to return integrity to the scheme. Thank you.

CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to join in the chorus of sound in opposition to this current legislation. Mr Scott, being on the select committee with me, would have read our minority view.

To be clear, I would like to take just a moment to read that out for the people back home who do not have that there. [Interruption] I know—it is very good. Here we go: “New Zealand First does not support this bill. Clearly there are benefits to businesses and individuals with the reduction of ACC levies. However, this Government should acknowledge that the reason that levies are so high in the first place is due to this Government’s unwillingness to rectify a higher than required levy problem which they knew existed, but instead increased those levies higher, and further, to offset the books. Moreover, nowhere in the bill is there a clear reference to levy reductions. New Zealand First supports open and transparent government at all times, and not just when the Government thinks that it is necessary. We support the setting of a funding policy that improves the transparency of the levy-setting process, which would ensure the public is better informed.”

Mr Scott, you talked about Labour looking back all the time, but the only thing that I was looking forward to was the end of your speech. But to be brutally honest, sometimes in order to move forward you have to look back, and what you have to do when you look back at those mistakes that this Government has made is apologise to the people of New Zealand for the muddying of the waters and the deceit that has been created under the current organisation of the running of the ACC.

There is not a New Zealander, there is not a person who enters this country, who does not think that our ACC organisation is absolutely stellar. It is a sterling organisation because, of course, it looks after those people who have accidents in workplaces, on the sports field, and in their homes. It gets them rehabilitated, mended up, and back out there into the real world. But how we are funding it is absolutely a disgrace. Many businesses around the country have been gouged, have been sent absolutely unacceptable charges—and using ACC as the way to fund it—it is just unacceptable. When I have got my ACC levies put in front of me, there is no breakdown of where this money is going. There is no breakdown letting businesses know what they are actually paying for and where it is actually going to. In actual fact, if you get anybody to do work in your business, you would expect a full breakdown of the mileage that they have travelled, the equipment that they have used, and the hourly rate that they are charging out. ACC does not give you that breakdown, because, of course, where this money has been going to is to try and balance out the books, to try and get this Government into some sort of surplus.

When we look at this, the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill—goodness me, that does sound good. I mean those words in themselves sound good: “financial responsibility” and “transparency”. Yet this Government has to put a bill together to actually be financially responsible and transparent. It is beyond me why we have even got this bill sitting here in front of us. It is an absolute nonsense. This Government should have always been open and transparent with the public, with New Zealanders. This Government should have always been responsible with the money that it has collected, and made sure that it has gone for the purposes of New Zealand.

New Zealand First is very concerned that, given a legislative stop date of 2019 for these residual levies being paid by current rates of collection, the Government will have over-collected $852 million from the work account, $155 million from the earners account, and $468 million from the motor vehicle account. What a disgrace. By 2019 that is $1.475 billion that New Zealanders are going to be forking out under this current legislation. It is $350 million a year that has been overcharged to New Zealanders, and with no apology, no looking behind themselves and saying: “Look, we might have done a little bit of a disservice to the businesses of New Zealand. We apologise to all those people who have overpaid. We would like to give you some of that money back.” But no, it has gone out into your whimsical direction, trying to somehow wastefully spend money on foreign Saudi Arabian farm deals, flag referendums, and everything else that they can waste New Zealanders’ money on.

It is not good enough, Mr Bayly and Mr Scott. You should be ashamed of yourselves, and if I was your mother, I would be looking for a disownment. At the end of the day, the Minister for ACC, Nikki Kaye, has come out and said in a statement here that this will actually reduce levies by around about $500 million. That is commendable—if I could just find my piece of paper with her comments on it; here it is—do not panic, I have found it. Here it is. I knew it was here. She said: “Budget 2015 will signal ACC is on track to provide further levy cuts to around $375 million in 2016/17 and a further $120 million in 2017/18”. It is not coming fast enough. You have been over-collecting for such a long time that this should be an immediate saving. Nowhere in this bill—nowhere—does it say that those savings are going to be coming forward immediately.

New Zealand First does have some serious concerns about the use of the term “Order in Council”. There are some serious issues with Order in Council. Just for the House’s information, in current legislation in New Zealand there are 798 references—in current legislation—referring to an Order in Council. For those people back home and those people who do not fully understand what an Order in Council means, it basically means that Cabinet gets to decide what happens and when and how. Look, it happens all the time. Orders in Council are absolutely rife in this current Government. It is interesting to note that the United Nations Convention Against Corruption came out and said that a place that corruption thrives is—hear this—in lack of transparency of decision making; for example, large numbers of decisions being made by Order in Council.

So the United Nations is concerned about it, and yet you just fob it off. You throw it into your legislation by Order in Council so that the rank and file New Zealanders are not part of the decision-making process, and that is a shame on this Government. You are talking about being open and transparent, you are talking about being fiscally responsible, but you are not doing it by putting in an Order in Council. I will settle myself.

We are also concerned in relation to the proposed levy-setting framework, which was put out in the explanatory notes or just came through with one of the briefing notes. It goes through a series of steps of how the ACC levies are going to be set. I would just like to step the people through this, if I could. So it starts off with: “Government sets a funding policy target – horizon and transitions.” It goes on to say: “ACC calculates the levies based on Government funding policy.” It moves to the next step: “Public and stakeholders consultation.” It is where the public can get involved and have its say about what is going on. To date it is ticking all my boxes; it is giving me the two thumbs up. It moves on to: “ACC board recommends levy rates.” The next box says: “Minister for ACC also receives levy advice from the Ministry of Business, Innovation and Employment and the Treasury, incorporating concentration of public interest.” The final step we go into is: “Cabinet sets new ACC levies considering recommendations from ACC, the Ministry of Business, Innovation and Employment, and Treasury.” But when we get to the very last part, it says “Cabinet may”—let me quote that—“may follow ACC’s recommendations.”, but more than likely, probably, it will not. Moving down it says: “Cabinet may choose to set alternative rates, having regard to broader public interests.”

This Order in Council, when we have got the Cabinet making final decisions on things, is exactly what has got us into this situation where we are discussing this bill in the first place. It is unnecessary. We have to go back and look at the past of this country to know where we are heading in the future. An apology and some repayments back to those people who have been overcharged those levies would go a long way in our book to resolve this.

To finish off, I just want to bring your attention to the situation that we find ourselves in under the “ACC transparency”—and whatever the nonsense that they talk about is. With regard to what is happening around high-risk cars, we know that it is a real issue. We have heard it time and time again, and I can give you an example of a very, very dear friend of mine who has two cars. He has a very high-powered 4.2 litre super-charged V8 and he has got a nice around-the-town car for a little bit of the shopping, which is a 1.3 litre Hyundai Getz. And yet, the around-the-town car is being charged the exorbitant rate of $138 for its registration fees for ACC, whereas the big 4.2 super-charged V8 is at $68. I dare say that this big piece of legislation here in itself—and with no recourse for changing that—is actually a taxation on those people who are buying affordable small cars and it is a tax on the poor, which this Government constantly does. Thank you.

Hon MAURICE WILLIAMSON (National—Pakuranga): What a great delight it is to speak at this time in the afternoon, when my adorable drive-time audience in Auckland will be getting into their cars—

Hon Simon Bridges: Adorable? Oh.

Hon MAURICE WILLIAMSON: Adoring, actually—not adorable; they are adorable as well—and I thought I may try to take these speaking opportunities to do a bit of a traffic forecast.

I am going to be quite brief on this, because I think that the specifics of the bill have been covered, but I want to bring it down to what I think is a really good thing to do in a little sort of analogy that your general public can understand. When an accident occurs it has both a time frame and so on for the injury to have a cost to it and a magnitude—sort of an “x” axis and a “y” axis.

The accident can be quite small. You could hurt a finger, go to the doctor, and 2 weeks later it is all gone, the cost was 20 or 30 bucks, and it lasted a week. Or the accident could be quite horrific, and the costs could go on for year after year after year. In fact, in many cases, some of the big costs may be in 15 or 20 years after the actual accident has occurred. So what the Government has said is that we have got to try to find a way of setting levies so that when an accident does occur, be it small, medium, or big, we have got funding now to cover the costs to fully fund the cost of all that treatment and revenue and so on for those years out in the future.

What if I asked an ordinary family: “How would you cope if you had to put some money into an account—a dedicated account—for your children’s education?”. You could have four or five kids and you have put money in, but suddenly a big hit comes because the daughter is off to play netball in England and you did not budget for it. Well, in the case of the ACC, it cannot just go and raid another account like the health account or whatever—the family would be stuck and could not do it.

So ACC has got to try to almost have the wisdom of Solomon to work out what it predicts will be the level of accidents, what it believes the severity of them will be, what it thinks the long time period for the cost of each individual accident will be, and then add them up with this ginormous sort of estimates spreadsheet and say: “Here’s where we’ll set the levies this year to try to fund the cost of those accidents.” It is not fair to ask a future generation to pay for this, and I agree with that. We should be using today’s levy payers, who are covered by it, to be funding the cost of those accidents that they have.

This bill is to try to get a better regime. It will never be perfect. There will always be a case where you have either slightly overestimated or underestimated, because it is just like the Earthquake Commission having to try to estimate the number of earthquakes that are going to happen—it cannot do it. There may never be another one or there may be a couple of massive ones, but it has got to try to make some sort of estimated guess on that.

This bill, I think, puts the ACC on a really sound footing, gives the public a really good view about the transparency of the settings, and gives some consultation process. I think the Minister for ACC is to be absolutely congratulated, and that is my 3 minutes.

DENISE ROCHE (Green): I rise to take a short call for the Greens on the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. The details of the bill have been discussed in depth by previous speakers and particularly by my colleague Kevin Hague, so I will keep my comments fairly general, and quite short, I hope. We support this bill. It is not as far-reaching or, certainly, as reformative as we would like it to be, but the objectives around improving the framework for determining how ACC’s levied accounts are funded and making it clearer and more transparent are, obviously, something that we do support. We support the idea of more stable levies and we also support the idea that the residual levy is not over-collected or under-collected.

Although we acknowledge that it is a technical bill, we do sort of think that it could have gone a bit further. The Greens actually support a pay-as-you-go system of funding accident compensation, and what we are concerned about is that the current system that the Government has set up, and has been tinkering with, essentially takes it towards an insurance company model. ACC is more than that. There are, of course, the social good aspects to it, and when it was set up in 1974, after the Woodhouse report, the social good aspects were certainly a key part of this world record - breaking system that we introduced here.

One of the aspects of the social good part of the ACC is around injury prevention and using the levies to fund that. It is kind of tricky for ACC, I guess, to concentrate on funding accident prevention when at the moment we have a Government that is deliberately introducing legislation that cuts across that and creates more accidents, in lots of ways. I am referring to the relaxing of alcohol control laws, and Mr Seymour may want to comment on that. We know that when alcohol is freely available and when attitudes around alcohol are relaxed there is a huge increase in accidents and assaults, and a huge number of claims are made. Another example of how this Government has introduced legislation that cuts across the injury prevention area is the recent introduction of its health and safety reform legislation, which has the potential to undermine our workplace health and safety by basically undermining a culture of safety by, essentially, weakening what we had previously in our health and safety laws. When you consider that a couple of years ago—last time I looked—we had something like 200,000 work-related injuries, it is really essential that ACC should be funding injury prevention programmes.

So the Greens support risk-based levies to encourage injury prevention where that is appropriate. We believe that ACC should be funded through a mix of levies on employers, employees, motor vehicle users, and the like, but we certainly believe that it must be people-centred and that the financial bottom line is not the most important aspect of this. Certainly, we need to cover the basics, but actually we need a system that puts people at its heart and where their rehabilitation and their care are taken into account as primary purposes. Thank you.

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

DAVID SEYMOUR (Leader—ACT): It is a great pleasure to rise on behalf of the ACT Party in support of this bill. I think one way that part of this bill might be characterised is that it is the fiscal responsibility legislation for ACC that is long overdue. There was a time when Governments would enter the Beehive and discover what the books really said, all too late. As Muldoon said to Lange on election night: “Ha! I’ve got a surprise for you in the morning.”

The Fiscal Responsibility Act changed that because it required the books to be open and transparent and it allowed voters, in full knowledge of the facts, to hold the Government to account. For that alone, I commend the Minister—perhaps a young Ruth Richardson—for this fiscal responsibility legislation for ACC.

But there is another aspect to this bill that is a boon to younger generations of New Zealanders. It was very interesting to listen to Kevin Hague’s contribution, which, I have to say, I thought was, in many ways, a very sound contribution right up until he arrived at his conclusions. He argued that a normal insurance company—that is, a private enterprise insurance company—would make sure that it fully funded its future liabilities because it might not have the same set of premium payers next year or the year after as it had this year. Therefore, it has to fund its future liabilities this year. It is true of ACC as well, because there are differences in the size and the activity and behaviour of different generations. There are people who enter and exit the workforce and there are people who enter and exit New Zealand—as New Zealand First knows, sometimes people with funny-sounding names come here—so it is not true to say that we have exactly the same set of levy payers from one year to the next. So it is correct that in any given year the future liabilities generated by the activities of the levy payers that year should be fully future funded, just as a private firm would do.

The most significant part of this bill is what it brings forward in terms of fairness between generations. As the much larger baby-boomer workforce retires, those of us who are a bit younger and who will be paying ACC levies for some time yet will be relieved of our smaller workforce having to pay this particular aspect of the social contract for that much larger workforce that did a lot more dangerous stuff back then.

So this is a very positive move, not only for fiscal transparency but for intergenerational fairness. However, I think we have heard, particularly in the contribution from the Labour members, an eerie warning that the politics will always be with ACC. So long as the people who contest the power to sit on these benches ultimately hold the purse strings of ACC, it is inevitable that in spite of the very able Minister’s bill to try to introduce fairness and transparency to ACC, different Governments of the day pursuing different prerogatives in different fiscal conditions will try to use ACC to either top up the surplus, as Labour accuses the current Government of doing, or to perhaps give people a discount on their ACC levies, as the current Government accuses Labour of having done.

The lesson is that so long as ACC remains an entity and a creature of the State, the politics will always be with it. Inevitably political meddling will mean that people get a little bit less sometimes and a little bit more other times, and the only people who really win are the politicians.

Sue Moroney: Oh, not the privatisation? There it goes. So predictable, David.

DAVID SEYMOUR: The answer Sue Moroney gives, that it would all be better if good people like me were running it, quite frankly does not pass muster.

So I commend this bill to the House. I commend the honourable Minister for ACC, who has done some very good public policy work in introducing what is a fiscal responsibility bill for ACC, and for striking a blow for generational fairness in this very large account. None the less, it would be much better to sell it all and have a private enterprise system. Thank you.

ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on this Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. It is interesting to hear some of the perverse sort of history that people have conjured up about ACC. Look, if you go back just a few years, back to 2008, ACC reported a deficit—a deficit—of $2.6 billion, and it had net assets or funds under management of roughly about $9 billion.

You go forward 7 years and you find that it has actually reported a surplus of $2.1 billion, and, actually, the funds under management have grown to $27 billion. So here we are: we have had major fluctuations over that period of time—that 6 or 7 years. But, as one of my colleagues explained before, even month by month, due to changes in discount rates and all those sorts of things, there can be substantial change in the value of the funds under management.

What this bill is about is that we are going to stop ACC being a whipping boy. What we wanted to do, in the spirit of the Financial Reporting Act, was to put in some framework to ensure for future Governments that they cannot play around with the ACC account and so that we get proper levy setting. My colleague on the Transport and Industrial Relations Committee from New Zealand First who talked before, Clayton Mitchell, talked in the present tense. This bill is designed to be forward looking and to be, actually, an imposition on future Governments.

In essence, it is about putting in place a framework to make sure that levy setting is set at a consistent and a stable level. It essentially has two parts to it. The first part is to have a framework that determines how that levy is set so that it is clearer, it is more transparent, it has a long-term focus, and, also, it supports a flattening of that levy change so we do not see large changes.

The second thing that it is about is ensuring that the residual levy is not over-collected, and we have heard a bit about that today. During the select committee deliberation we had quite a conversation about the level of consultation in that decision-making process, and we were pleased to receive a number of submissions from a number of parties—including the august Regulations Review Committee, which I am lucky enough to be a member of—that led to some changes to the consultation process, which I believe, personally, are much more effective and much more appropriate for future setting.

There is widespread support for this bill. I know one of the members talked about Business New Zealand. I want to just quote you something that I actually picked up from Business New Zealand: “the ACC Financial Responsibility and Transparency Amendment Bill … will ensure levies reflect sound insurance principles, and is a major breakthrough towards ensuring public trust in ACC.” I support this bill.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call. Poto Williams—5 minutes.

POTO WILLIAMS (Labour—Christchurch East): ACC was set up as a no-fault, no-blame system. It is a system that is the envy of the world, in that we are able to ensure that, should we have an accident that means that we are incapacitated and we are unable to continue to earn an income or a living, we actually have the ability not only to have treatment but to be rehabilitated back into work.

But ACC also has another function, and that is around education and supporting the prevention of accidents into the future. I think that that is part of the argument that has not been highlighted today, because we have concentrated on the notion that ACC will continue to balloon out of all proportion, collecting funds. Actually, ACC has a really significant role in supporting good and safe practices, particularly at work; good, safe practices in terms of our sport and our leisure; and sometimes good, safe practices in saving us from ourselves. There is a role in ACC to support that.

We have spoken a lot about the oversubscription to some accounts through the levies, and we cannot deny that that has happened—140 percent of some accounts oversubscribed. That means that employers have been charged—and employers have spoken to me about this, about the cost of ACC, in my own electorate when I have been doing visits to businesses. The cost of ACC to business can sometimes become quite prohibitive, so why is it that we continue with a system that promotes this oversubscription to some of these accounts that actually damages the ability of businesses to perform as well as they can? We do have to look at covering the costs of future liabilities going into the future, but do we have a mechanism that actually adequately monitors these future liabilities, given the face of increased technological advances that mean that we could potentially be safer—say, for example, around the use of airbags in cars? Technology has a big role to play in this, as much as education does, as I have said.

But it does speak to having an overall look at the general health and well-being of our community, and that must include the health and safety practices of our businesses. We have had a shocking few years, I must say. We have had also legislation come to this House that could have improved the health and safety of workers, had the plans gone through as we had expected. But what has happened is that classification and categories of risk have gotten in the way of identifying where we can make adequate and good advances in health and safety practices for our workplaces. That goes hand in hand with what happens around ACC and what happens with the levies that we are going to charge into the future. I am concerned about the risk classification and the categorisation that has spilt over into this legislation, as my colleague Ms Moroney spoke of before, where in respect of classifications of vehicles, for example, the data that was collected in Australia has been forced into a New Zealand context and actually has made a mockery of safety classifications. We have seen that happen in our health and safety legislation and we are seeing it again in this piece of legislation around ACC.

I just want to say that we should all be striving to reduce the level of accidents and increase the safety in all of our activities, and thereby we can in the future hopefully reduce levies to employers and as a cost for business to the country. Thank you.

JENNY SALESA (Labour—Manukau East): Thank you for the call on the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. Labour supports this bill, but with some reservations.

As this House has heard from other members, this bill is designed to reform how levies are set, as well as to ensure that the residual levy is not over-collected. It is about time that there is more transparency about setting ACC levies. It is also time for more fairness for businesses, as well as fairness for our workers, with regard to ACC levies. They have borne the burden of overly high levy payments over a number of years. Businesses and ordinary workers have paid this for too long, and this Government has rejected the proposal that this funding should go back to businesses and ordinary workers. I commend especially the concerted pressure that my colleagues have brought to bear on this issue, particularly my colleague Sue Moroney, who is Labour’s spokesperson on ACC. Sue Moroney has been tireless in exposing the facts and realities around the Government’s attitudes to the levies and in her strong defence of businesses and workers who have been overcharged for too long.

This is a Government of broken promises on moving into surplus not yet realised, broken promises on wage and unemployment targets not yet reached, and broken promises on no new taxes and no more asset sales. There are no plans for addressing the long-term challenges facing New Zealand at this time. The attention of this Government has been on trying to make the books look good by hook or by crook: by putting band-aids over cracks, by stripping New Zealand’s assets, and by hoping that the proceeds from their bargain bin sales will make the books look good, as well as by taking a $118 million dividend from Housing New Zealand that should be better invested in improving our State houses so that they are more fit for our most vulnerable and our children to live in. Now the Government is looking at ACC levies and at making sure that the cause of the books looking good is actually addressed.

This bill does absolutely nothing to address the overcharging of businesses and workers in respect of ACC levies to the tune of $300 million a year. The bill simply codifies the criteria that ACC has already got in place, requiring it to take into account the recommendations on the level of levies. In practical terms the Government should not be waiting. It should acknowledge that businesses and workers have been overcharged and bring some relief to both businesses and workers by cutting ACC levies immediately. The National Government has ignored the authoritative recommendations about ACC levies for several years. Treasury, ACC, and the Ministry of Business, Innovation and Employment have all been advising this Government to cut ACC levies, but it has never cut them to the extent that the advice has told it to. It has preferred instead to keep a firm grip on the overcharged cash.

It must be made as clear as day that National cannot keep collecting ACC levies to prop up its failed attempts to get the accounts into surplus. When a Business New Zealand economist came to give his oral submission to the Transport and Industrial Relations Committee he stressed that the Government’s fiscal position should not be a consideration when setting ACC levies. Labour has a Supplementary Order Paper to address this issue. Last year the Government held levies much higher than recommended by the ACC board, and it has overtly used the levies to improve its Budget numbers. The Minister for ACC admitted in answers to written questions that she has not sought Crown Law advice on the legality of collecting ACC levies for the purpose of getting into surplus. Why, then, would the Minister claim she has the legal right to do this but not test her proposition with Crown Law? It is probably because she knows that it is not, in fact, lawful. Labour supports this bill, but with reservations. Thank you.

SARAH DOWIE (National—Invercargill): I rise to take a very short call in support of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill.

Listening to some of the arguments opposite I find it bamboozling, actually, when it comes to our no-fault, 24/7 scheme for cover of injuries, which is the fabric of New Zealand, that anything that moves to make it more transparent and to make levy-setting more accountable and in line with the standards of our Public Finance Act—that people would have a problem with that. It is a good thing. This is a good bill. We are updating the framework so that we ensure that solvency ratios and levy ratios do not fluctuate more than necessary. This is a good thing.

But I also pick up on what the Green Party mentioned before. The Minister will be consulting with stakeholders as to the setting of those levies, finding out what they think, and explaining the situation we find ourselves in with those funds. That is about accountability. This is a good thing. This is a good bill that is moving our ACC framework forward. It is all about transparency and accountability. Again, this is a good thing, so I commend this bill to the House.

A party vote was called for on the question, That the amendments recommended by the Transport and Industrial Relations Committee by majority be agreed to.

Ayes 108

New Zealand National 59; New Zealand Labour 32; Green Party 13; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 12

New Zealand First 12.

Question agreed to.

A party vote was called for on the question, That the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill be now read a second time.

Ayes 108

New Zealand National 59; New Zealand Labour 32; Green Party 13; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 12

New Zealand First 12.

Bill read a second time.

Bills

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

Second Reading

Debate resumed from 10 September.

FLETCHER TABUTEAU (NZ First): I wanted to take just the last bit of this time to point out to the House that it is not just New Zealand First that opposes the investor-State dispute settlement provisions in these trade agreements, and to put it to our trade experts that they could have been a bit more conscientious in the negotiations.

We like trade, we want trade, and we do want our businesses to make that money by selling New Zealand goods overseas. The reality is that, back to the point, it is not just New Zealand First that opposes these provisions. Around the world now, you are talking about countries such as South Africa, Germany, and France all investigating how to remove themselves entirely either from trade agreements that have investor-State dispute settlement provisions in them, or to remove the investor-State dispute settlement provision itself from their trade agreements. They understand that this is an insidious attack on the democracy and the functioning of their Government within their country. They understand that. They have seen the evidence of it and they are desperately now trying to do something about it. The unfortunate reality for them is that they are beginning to discover that it is not that easy to get yourself out of these trade agreements once you have signed up to them. We are talking about 20 to 25 years’ notice in order for those countries to take themselves out of these trade agreements with the likes of the investor-State dispute settlement provisions in them.

I just want to talk about the European Union, to finish. The European Union has said categorically that investor-State dispute settlement provisions are dead and that they need to go. That is New Zealand First’s stance. There are other ways. There are open and transparent ways to undertake and protect the rights of businesses, which they do have, in trade agreements, but having investor-State dispute settlement provisions through a secret tribunal is not the way to do it.

It was a pleasure to come down to the House to take that last call. It is unfortunate that New Zealand First cannot support this trade agreement legislation. There are two reasons, as I said to the House: firstly, and most important, because of the investor-State dispute settlement provisions but, to conclude, it is actually a bad trade deal for New Zealand. Thank you.

PAUL FOSTER-BELL (National): Tēnā koe, e Te Mana Whakawā. I rise to take a brief call in this second reading debate of the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill in the name of my colleague the Hon Tim Groser, our country’s hard-working and supremely sophisticated Minister of Trade. This bill amends the Tariff Act 1988 to implement the free-trade agreement that was concluded in Seoul on 23 March this year. Our exporters currently pay $229 million worth of duties each year on the products they shift to Korea. This bill implements immediate reductions in the order of $65 million on those duties in the first year alone. It will allow growth in the $2 billion worth of exports that we shift to Korea every year.

This is very important for our exporters. The trading relationship with Korea is a balanced one. It is worth about $4 billion in total and it is around $2 billion each way. It is a highly sophisticated and advanced trading relationship, given the diverse nature of goods that we shift—from both agricultural products through to highly sophisticated industrial and technological products. The industry has welcomed this bill and the free-trade agreement itself. There have been particularly warm comments from the kiwifruit industry and the wine industry, and that might have something to do with the advantages in the reductions in duties that they will experience in the first year of implementation. In fact, wine, cherries, sheepskins, aluminium, and a wide range of industrial goods will enjoy those reduced duties immediately.

This is very good for New Zealand, not just for the people who own those companies but for the many, many thousands of New Zealanders who are employed in those valuable sectors. It is also useful in that Korea is a significant source of imports into New Zealand—everything from heavy machinery, which is used in agriculture and other sectors, through to the consumer electronics we all enjoy in our households, such as the Samsung Galaxy phones and the LG LED televisions, which we all get a lot of entertainment and enjoyment from. This is a positive measure. It is yet another successful free-trade agreement concluded by that hard-working Minister Tim Groser. For that reason I commend the bill to the House.

The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Denise Roche—5 minutes.

DENISE ROCHE (Green): I rise to take a call for the Greens on the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. We will be opposing this bill. You will have heard from previous speakers from the Greens, co-leader James Shaw, Julie Anne Genter, and Russel Norman, who all talked about the reason, which is around the lack of enforceability of the so-called labour and environmental protections in this bill and the insidious investor-State dispute mechanism.

Let us look at the so-called benefits to the New Zealand economy that this deal will bring. Too many times this Government has announced something that was supposed to be a good deal, but that has later flopped. Too often the analysis has been around the short-term view of what constituted economic efficiency, and it leaves the people behind. I guess the Skycity deal is a classic example. Another sad case of this was when the Government awarded the KiwiRail contract to a Chinese company, gutting the Hillside railway workshops in Dunedin and degrading the industrial capacity of this nation. The fact that this Government thought that that was good economic policy and thinks that this deal is good economic policy should have members across the House extremely worried.

The investor-State dispute process is also of concern. It has the potential to impose a number of unplanned costs and threatens the sovereignty of our country. Consider the recent case of Bilcon and Canada, where the Canadian Government was sued by a global mining company for $300 million in damages for daring to put in an environmental review. There have been more cases where environmental, labour, and cultural rights have come up against the profit imperative, and, frankly, they have lost. The investor-State dispute provisions are too threatening to New Zealand’s sovereignty and impose, in the Green Party’s view, an unacceptable risk. The Australian Productivity Commission’s review on trade agreements concluded that the investor-State dispute settlement process has created “potentially large unfunded contingent liabilities dependent on decisions by international arbitration tribunals”, and that the costs to defend these decisions were “unknown, unfunded and likely to be substantial.”

I would also like to talk about workers’ rights and how this bill has the potential to exacerbate an already bad problem of labour rights. The Greens stand up and will defend workers’ rights, both here in Aotearoa New Zealand and also around the world. South Korea has a particularly bad problem with migrant farm labour abuse. In 2014 Amnesty International released a report describing the industry in Korea as rife with exploitative practices. This bill does contain a very nice chapter—some protocols around labour standards—but, as my co-leader has already pointed out, they are neither binding nor enforceable. A recent report in May 2015 by Channel NewsAsia quoted the National Human Rights Commission for Korea investigator, Yook Seong-cheol, who said that making sure the Korean agricultural sector remains competitive is a priority for authorities and that drastic changes to immediately improve pay and conditions for workers may not be welcome or sustainable. There are essentially already incentives for migrant labour abuse in South Korea, and they will be strengthened if they have to compete with New Zealand in what is our most competitive area, agriculture.

We are big fans of trade agreements, but they must bring mutual benefits for everyone.

David Shearer: No, you’re not. You vote against them every time. When was the last time you voted for a trade agreement?

DENISE ROCHE: We support trade agreements that respect sovereignty, Mr Shearer. We support trade agreements that have respect for human rights, for labour standards—and I would have thought Labour would support that—and the promotion of sustainability. There is too much at risk in this trade deal, and so we will be opposing this bill.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Clare Curran—5 minutes.

CLARE CURRAN (Labour—Dunedin South): There have been some very good contributions to the second reading debate on this bill, particularly from my two colleagues David Parker and Phil Goff. Also, I particularly want to acknowledge the contribution of Russel Norman to the debate on this bill last week. Sadly, though, there have been some very poor contributions—the worst of them coming from National MP David Bennett, who last week unleashed a deeply personal attack on Phil Goff, and on Labour, New Zealand First, and the Greens also. He could not string an argument together, so he resorted to juvenile name-calling. It is members like him who give this Parliament, the debate in this House, and politics in general a bad name.

I just want to touch on the two main points that David Parker made in his contribution, which are relevant to my contribution. This is the only time that we will get to debate this free-trade agreement in this Parliament, so the quality of the debate is very important. I think that the quality of the debate from the Labour side and from the Greens and New Zealand First has been very thoughtful. They have been willing to engage in debate. Unfortunately, I have not seen a lot of that from the other side of the House.

Labour supports this bill because we have come to the conclusion that it is, on balance, about right. The thing about this that really annoys the Government is that Labour has negotiated better trade agreements than it has, and we are prepared to stand up and articulate clearly what our bottom lines are and to say what we will support and what we will not support, and with a lot of credibility behind that. That really annoys the Government, and that is why you get the likes of David Bennett, who just hurled abuse because, really, he could not come up with an argument.

The Labour Party accepts that the South Korean free-trade agreement substantially reduces the tariffs currently faced by New Zealand exporters to South Korea. Currently, our exporters are suffering substantial disadvantages when competing with sellers to South Korea from other countries that pay lower tariffs because their earlier trade agreements have already reduced tariffs. That is the main basis for our support. We support growing our trade and we support exports. This is another thing that National is not so good at—that is, growing the percentage of exports. Just today it was revealed that the ratio of exports to GDP is at its lowest since 1997. The target was 40 percent of GDP then; right now it is at just 28 percent. So it is really not much to write home about.

If you are going to take advantage of these free-trade agreements, then, really, you have got to put the effort in behind the scenes to boost the industries that are exporting. I am a champion of the tech export industry, which accounts for about 7 percent of our GDP, more than 124,000 jobs, and growth of 16.5 percent a year. But we could be doing a lot more to grow jobs in this sector. In particular, I would just like to touch on the video gaming industry, which is one of our fastest-growing tech sectors—83 percent of that sector is exported. It could do with just a little bit of help from this Government, such as getting the post-production digital and visual effects scheme and qualifying for that 20 percent rebate, which it cannot get access to. That is something that this Government could be doing.

We acknowledge the concerns of submitters on this bill. We will not blindly support free-trade agreements, like this Government does, but, also, we will not blindly oppose them. We negotiate good ones and point out the flaws. We know that there has been a botch-up in this bill, but we say that, on balance, we support it. Our biggest concern is the lack of engagement with civil society.

JONO NAYLOR (National): It is a pleasure to rise to make a short contribution on this debate on the free-trade agreement with the Republic of Korea. With so much attention being on some of the sideshow issues that have been going on around the place with regard to the Trans-Pacific Partnership, many people have overlooked the benefits of free-trade agreements in general and, in particular, of this one with the Republic of Korea.

New Zealand has been a trading nation since its inception, really, and it is important for us to be able to trade, where possible, on equal terms right around the world. With Korea in particular, it is really important for us to be able to continue to trade with it because it is in fact our sixth-largest export destination. We need to do what we can to protect the trade that is going on with the Republic of Korea already and to give ourselves the best possible opportunity to be able to trade on very good terms for our exporters moving into the future.

This free-trade agreement does secure the long-term future for New Zealand exports, which, I have to say, has been under threat because of Korea’s other free-trade agreements with other nations. It now means that with this free-trade agreement we will be able to compete with the likes of the United States, Chile, and the European Union, in terms of our ability to trade with Korea. That, of course, is very important because there are particular products that we want to expand, in terms of exports to the Republic of Korea, including kiwifruit, beef, lamb, and dairy products and the like.

If you look at the likes of Chile, which is also in some of these markets, it is really crucial that we can attain an even footing with it and be able to compete really well in Korea. Obviously, there is going to be a transition period as some of these tariffs are removed, but, actually, over time 97.9 percent, I am told, of New Zealand’s current exports to Korea will be duty-free by the time this agreement comes into full force. I think that is good news for New Zealand’s economy, I think it is good news for exporters in New Zealand, and that is why I am happy to commend this bill to the House.

DAVID SHEARER (Labour—Mt Albert): I want to take probably not a full call on this bill just to reiterate that the Labour Party supports the bill. This bill was brought about because we have to pass some enabling legislation to enable this treaty to come into force. We do not get to have the purview of the treaty before it is signed, but we do have the ability, in a sense, to debate the merits of the enabling legislation to bring this into force.

The Korean free-trade agreement was a tough deal. It was very tough for our negotiators, and they did it over a period of about 5 years. Why was it so tough? Well, it is on the basis that Korea will benefit by $4 million from the tariffs that we impose on their trade to us, and we, on the other hand, will benefit in the order of $229 million. You have got to look at that and think that is a pretty good deal. In any view of this, it is a pretty good deal. If Korea is sitting there and saying: “We’re only getting $4 million and you’re getting $229 million.”, obviously it is going to be bargaining pretty hard. So in a sense I want to commend our negotiators, because I think they did a good job.

As the last speaker, Jono Naylor, said, New Zealand exists from trade. We do not have a huge internal market like the United States. Trade is enormously important for us. Exports are enormously important for us, and enabling our exporters to get their goods into countries without having tariffs imposed is, obviously, of great benefit to New Zealanders. Just imagine what $229 million, effectively, can get to and give to those industries that are going to be benefiting from that. That is the first thing.

But the second thing is—and let us use the example of kiwifruit—right now our kiwifruit exporters are paying about 40 percent in tariffs to get into Korea. Our main competitor, Chile, is paying nothing, because it already has a longstanding free-trade agreement with Korea. If you are competing against Chile with zero tariffs and your price is being hiked up by 40 percent, you can see the difficulty and the amount of money that we are not making as a result of that competition.

This free-trade agreement will not only give us benefits immediately but it will enable us to be able to get our products like kiwifruit into this market and have them more widely sold at a reasonable price that Koreans are willing to pay, because our quality—certainly in kiwifruit—is better. The same thing applies to beef, where the tariff is 40 percent, and to lamb, where the tariff is 22 percent. They all, over time, reduce to zero. So, once again, we get immediate benefit from those tariffs going down, but we have longer-standing ongoing benefits because we get to compete against the European Union, the United States, and others that have no tariffs on their goods whatsoever—a good deal.

There are some “buts” though—some exceptions. I do not think we did as well as we would have liked in the area of milk powder, in particular; milk and dairy products; and, possibly, in deer exports as well, even though the deer exporters group came and saw us and they still favoured the deal that we have got in front of us.

There were some areas where we did not get quite as much as we would like, but let us look at Korea in the whole. Korea is a country where we have a two-way trade of about $4 billion. It is not as important as Japan, but it is just below Japan. Korea is certainly more important than the UK, and it is a nation that is growing its wealth. In GDP figures it is the country that is immediately behind us, and catching up fast. I would expect its GDP per capita to surpass ours in the coming years. So this is a country that we strategically should have an agreement with as well.

The other “but” that I would like to have, and this is something that my colleague David Parker talked about at length in his contribution in both the first and second readings, is that we have left ourselves open to the issue of not being able to legislate about foreign buyers coming in and buying residential property in New Zealand because of this free-trade agreement.

This free-trade agreement enables Koreans to come in and trade in residential property freely in New Zealand. Unlike Australia’s free-trade agreement with Korea, we did not close that particular door. That means we cannot say no to foreign buyers coming into New Zealand to do that. We may be able to do other things, but we certainly cannot do that.

Sadly, because there is a most favoured nation status clause in the free-trade agreement, which means that if we extend a benefit to one country then other countries that we have done free-trade agreements with as well also benefit from those benefits, that will also enable it to be opened up to some ASEAN countries, and certainly to China.

Mr Key said that was Labour’s fault for signing the free-trade agreement with China. Well, that is absolute nonsense because we actually closed the door with China, but we have left it open with Korea. So that is an issue. It was brought to our attention by an expert in the field from Auckland University, and the Government, up until now, at least, has not provided a very good explanation of why that was not closed off, because it seems pretty blatant and pretty obvious to us.

I just want to say a couple of other things about this free-trade agreement. There was a discussion from both New Zealand First and the Greens about free-trade agreements. The Greens said that it supported free-trade agreements. I have yet to see any free-trade agreement that it has agreed to. With the one that we signed with China, our exports to China have gone from $3 billion to $10 billion in the space of about 6 years. That was signed by Phil Goff and it was carried on by this current Government in the same spirit. It meant that during the financial crisis, when the rest of the world was suffering badly, New Zealand, because of the increasing access that we had to the Chinese market, was actually pretty well safeguarded. If we did not have that, we would have been in a much worse state than we are today, certainly. So I am very pleased that we had the free-trade agreement with China, despite the fact that the Green Party voted against it.

New Zealand First’s opposition to this in terms of saying it is a bad deal—for the life of me I cannot see the logic in it. I can understand some of its reservations around the investor-State dispute settlement parts of the bill, but I certainly cannot understand how this is a bad deal. We give up $4 million to Korea and we make $229 million overnight. That, to me, is a pretty good deal. That is $225 million we end up ahead rather than behind, and that is before we are able to compete better with some of those other countries that have already got in and got those free-trade agreements before us.

So the deal is a good one. There is some concern, but I will say that we had a very good select committee process, and I commend all members of the select committee and Mark Mitchell’s chairing of it. We asked the Ministry of Foreign Affairs to go back and reply to some of the reservations that we heard from submitters at least three times, to give us fulsome advice in response to the issues that were raised. I think that the investor-State clause that we have, and we have it in this New Zealand - Korea free-trade agreement—we insisted on having it in the New Zealand - China free-trade agreement. Why did we insist? Because we were concerned that our companies trading in China might not get the legal representation that they would need in order to safeguard our interests.

In the case of Korea I do not think that is really a big issue. Certainly, our legal framework is in the top three or four in the world—the Koreans are ranked at about 12th, or 13th or 14th and so that is certainly a robust legal system—so we could do it through our domestic courts without having to resort to the investor-State disputes resolution. That, I believe, is unnecessary. However, the Koreans wanted it to go into their free-trade agreement and we agreed to it. New Zealand has never come before the courts there, and I do not expect it to have to in the future either. Thank you.

JAMI-LEE ROSS (National—Botany): Following on from David Shearer in this debate, can I just say thank you to the Labour Party for the constructive approach that it takes in the Foreign Affairs, Defence and Trade Committee to trade matters.

Hon Nathan Guy: That’s right. Looking forward to TPP support.

JAMI-LEE ROSS: Yes. As Minister Guy just pointed out I am looking forward to a similar constructive approach to the Trans-Pacific Partnership. Once it is finalised and implemented by Minister Groser and once it comes to the committee, I am looking forward to a similarly constructive approach being taken by the Labour Party. I wish all parties on the select committee took such a constructive approach, but, sadly, that is not the case.

As has been pointed out in this debate, this agreement is very good for New Zealand. Korea is our sixth-largest export market with about $4 billion worth of exports going to Korea—having a free-trade agreement is good for New Zealand. Immediately, in the first year, we see a $65 million benefit for New Zealanders who are exporting to Korea, and right now $229 million in tariffs are being paid by New Zealanders exporting, so seeing those reduced over time is very good.

I just want to make a point to the House. It is quite ironic that many of the people out there at the moment who are opposed to free-trade agreements like to say that Parliament, the people’s House, never gets to consider these free-trade agreements because they are signed in secret by those evil Governments. Well, I think this is the second or third debate we have now had in this Parliament on this free-trade agreement. This House does consider free-trade agreements. There is a thorough select committee process that they go through in the Foreign Affairs, Defence and Trade Committee. For Government, for Parliament, and for New Zealanders to implement any decisions taken in a free-trade agreement, we have to have enabling legislation, and this is what we are debating right now and will be voting on in a few minutes’ time. New Zealanders, through their representatives in Parliament, do get a say on these issues—they do get debated thoroughly, and they do get examined thoroughly—and they should not be afraid of that.

People also should not be afraid of investor-State dispute settlement mechanisms, one of which is in this agreement. As Mr Shearer pointed out, we require it, as do our trading partners that have these free-trade agreements. We require it because it actually protects New Zealanders. It protects New Zealanders so that they can have confidence when they are investing in foreign markets. We should also not be afraid of the potential implications of these agreements, because, firstly, New Zealand has never been challenged, and, secondly, there are over 3,000 agreements out there in the world that have these mechanisms in them. The State typically wins more often than it loses, and only 25 percent of cases are settled in favour of the investor. So should we ever be challenged, there is a high likelihood we will win, provided we have good-quality Government policy. We should not be afraid of that because it actually, overall, helps New Zealanders and gives them protection. This bill is good for New Zealand and it should be supported at its second reading.

A party vote was called for on the question, That the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) be now read a second time.

Ayes 95

New Zealand National 59; New Zealand Labour 32; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 24

Green Party 12; New Zealand First 12.

Bill read a second time.

Bills

Weathertight Homes Resolution Services Amendment Bill

Second Reading

Hon NATHAN GUY (Minister for Primary Industries) on behalf of the Minister for Building and Housing: I move, That the Weathertight Homes Resolution Services Amendment Bill be now read a second time. I would like to take this opportunity to thank my colleague Scott Simpson for his work in chairing the Local Government and Environment Committee, and, of course, the rest of the committee members for their consideration of this very important bill. I believe they have brought some well-thought-out recommendations back to the House that, I think, will improve the overall clarity of this bill. I am proud to commend this bill and the select committee’s amendments to the House.

I would like to briefly reiterate the key changes proposed by this bill. The bill is a package of three important areas of change to make sure that the options available to homeowners under the Weathertight Homes Resolution Services Act continue to work effectively. In particular, the bill amends some of the provisions around the Financial Assistance Package under the Act, which focuses on getting leaky homes repaired. Instead of homeowners having to go down the track of litigation, they can apply for funding from the Government to contribute to the overall repair costs. Two of the main changes are aimed at clarifying the way that eligibility under the Act is interpreted, firstly so that there is no doubt about the validity of some of the criteria that homeowners have to meet to qualify for the Financial Assistance Package. The bill lifts some of the contribution criteria out of a Gazette notice and puts them into the Act. It is crucial that these two criteria work to ensure that territorial authorities continue to participate in the Financial Assistance Package.

Another main area of change in the bill is deeming some people eligible if they had previously had claims held to be ineligible under the Act because of the way that courts and tribunals have interpreted the 10-year period from the date that a house was indeed built. These amendments mean that around 70 homeowners who might have had eligible claims if their cases had been decided using the interpretation that the Supreme Court used in its decision in Osborne v Auckland Council will have their claims deemed eligible. If they meet the other eligibility criteria in the Act, those people can access the Dispute Resolution Services and the Financial Assistance Package under the Act.

Finally, the bill makes some changes to the expiry of the Financial Assistance Package. Under the Act, claimants need to have issued a notice to proceed by 23 July 2016. There are several steps required before a person can issue a notice to proceed, and it can take varying amounts of time depending on the circumstances of the claim. So the bill includes a provision to enable people who are actively working their way through the process to be able to continue with their claim after 23 July 2016, and not be locked out of this process.

The select committee got some very helpful submissions that raised issues about whether some of the drafting was sufficiently clear for claimants and territorial authorities. Particular areas of concern were around the exact requirements for Financial Assistance Package claimants to meet the contribution criteria once they moved into the Act, and also the potential for confusion arising from the various dates that code compliance certificates can be issued. I would like to thank the people and organisations who took the time to make very important submissions and express their views in front of the select committee. The select committee has recommended a number of improvements and clarifications to the drafting, which I believe will address the concerns that were raised and better achieve the Government’s policy intent.

I would also like to take an opportunity to outline some of the key changes that the select committee recommended. Submitters were concerned that lifting just two of the contribution criteria out of the Gazette notice into the Act would result in loss of clarity as to how the criteria interrelate and exactly which criteria a claimant would need to satisfy. The committee therefore recommended a stand-alone provision that groups all the related matters to do with being a qualifying claimant into one subpart. It also recommended inserting a new provision making it clear that in order to receive a contribution from a participating territorial authority a claimant must first have qualified for a Crown contribution.

Submitters also raised concerns that homeowners whose claims had been ruled ineligible because of the interpretation of “built” applied by courts and tribunals before the Osborne v Auckland Council decision, and who had repaired their homes subsequently, would not be able to access the Financial Assistance Package even though they would have been able to meet the contribution criteria at the time their claim was held to be ineligible. It was not the intention that those people should be excluded, so the bill has been amended to allow for this.

Other key recommendations of the committee were around the issues raised around the timing of the issuing of code compliance certificates. Historically, there has been considerable variability around when a territorial authority issues code compliance certificates. To make sure that the bill applies only to those in similar situations to the homeowners in the Osborne case, the committee recommended amendments to make it clear that a code compliance certificate must have been issued by the date of eligibility decision and, in any event, before 1 January 2012, which is in line with the rest of the Act.

I support all of the recommendations of the select committee, and I have no doubt that the bill has been enhanced through this very important process. I commend this bill to the House.

Debate interrupted.

Points of Order

Unparliamentary Language—Withdrawal

The ASSISTANT SPEAKER (Hon Trevor Mallard): Before we go to the next speaker I invite David Clark to make a withdrawal.

Dr DAVID CLARK (Labour—Dunedin North): In respect of my previous comment during question time, as requested by the Speaker, I withdraw.

I raise a point of order, Mr Speaker. This is a separate point of order. I seek your considered ruling on the use of the phrase that I withdrew, and on similar phrases. A quick search of the Hansard has revealed that raising questions about the honesty of members appears to have become more commonplace, and that the exact same entreaty that I used today during question time is recorded on more than one previous occasion in the Hansard, with no such rebuke from the Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am not prepared to give an undertaking on behalf of the Speaker or to say that he will come back with a considered ruling. I do not think that it is my place to do so. It may well be that the Speaker does, in fact, look at this and consider whether it is appropriate. However, I will warn the member that Speakers as far back as Statham and Oram have indicated that one has to take particular care with anything that might be a reflection on the Speaker. Alleging inconsistency of that sort is one of the things that is a reflection on the Speaker. I was not in the House this afternoon; I did not hear what happened. I have been briefed on it. The particular words used have been used in the past—there is no doubt about that—and they have also been ruled out of order in the past. It is, I think, a question of context.

If members are, in fact, alleging that a Minister is deliberately not telling the truth, then the appropriate thing to do is to write a letter to the Speaker and to ask for a reference to the Privileges Committee. That is, I think, the approach of the Standing Orders, and members may get more satisfaction through that approach than they do by making comments that sound as if they lead to disorder and cause problems for the House. So what I will do is leave it at that. If Mr Speaker wants to make a considered ruling, then I have no doubt that he will. [Interruption] Sorry, I have just had a quick briefing and, as is often my case, I have declined to take the advice.

Bills

Weathertight Homes Resolution Services Amendment Bill

Second Reading

Debate resumed.

Su’a WILLIAM SIO (Labour—Māngere): After that intervention, I feel that we need to stand for a moment of silence. I am very pleased to have heard the Minister declare his acceptance of the amendments to this particular bill as recommended by the select committee. Also, I am happy to convey to the Minister that the Labour Party will be supporting this bill at its second reading. Considering that the committee received only three submissions on the bill and heard only one, I think that the committee worked really, really well in terms of attempting to ensure the clarity of the bill and that any issues related to those who have the right to make claims in respect of their damaged buildings or homes are being addressed. As the Minister rightly said, it gives about 70 claimants the opportunity to be able to receive support through the financial package that has been prepared, provided they are able to meet the 50 percent mark.

I want to say, though, recognising the Minister’s ability to take advice from the committee and recognising also that the committee genuinely worked to try to find appropriate recommendations, I think we also need to recognise that this came about as a result of John and Helen Osborne, who won their legal battle in the Supreme Court last year, arguing that the 10-year limitation on leaky building claims should start from the time that the property is issued with a code of compliance by the council and not from the date that the construction is complete. We need to recognise and acknowledge their contribution to this, because I think that if they had not done it, not only the Government but all of us parliamentarians would have just forged through without due consideration of the impact on the lives of those people whose homes have been affected because of the leaky syndrome.

I think that we have got to recognise also that many of these people have just gone through such dreadful and stressful situations. I think that these people had no other choice but to come to the Government, failing to receive any support from their local governments, who are also facing financial difficulties. If it were not for the efforts of John and Helen Osbourne, I do not think that we as a Parliament would have been able to look genuinely at trying to address this particular matter. So I acknowledge those people in particular.

I want to say that I thought it was important in the recommendations that the select committee made that it looked at the three specific aims of the bill first and then made the various recommendations, which I am pleased to hear the Minister accepts fully. The committee recommended inserting via clause 5 new section 125BA into the principal Act, which groups together all related matters into one section, and it said that this definition would make it clear that a claimant must meet the contribution criteria in either clause 1 of the 2011 Gazette notice or in any other notice issued by the chief executive of the Ministry of Business, Innovation and Employment.

There is another matter that I just want to highlight, and it is that there was some wording to the effect of—I think it said—“all reasonable effort.” I think the committee found that you could not rely on some sort of definition that would be made by the local council etc. and that we had to be quite fair on people and take into consideration all the efforts that they were making to try to achieve an amicable outcome in respect of their claim. There was something that the select committee considered, and that was: “We note a suggestion by the Regulations Review Committee that the full content of the Gazette notice contribution criteria be inserted into the Act. However, we note that the criteria are the result of PTA negotiations, and for future flexibility we consider it unnecessary for them to be included in the Act in full.”

Those are really the only comments that I would like to make on this particular bill. The reality is—and I am not trying to be political in this regard—that we need to take note of how the leaky situation occurred. It goes back to 1994, when the National Government of the day decided to open up the market in order to free up the situation and to allow the market to dictate what happens to the building of new homes. The point that I would like to highlight by airing this is simply that this is an example of where the market has failed our communities. So I think that those opponents of the market place need to take note that when the then National Government opened up the building criteria in this regard, it actually took away the role of local government in ensuring that the quality and nature of building materials are of such a state as to ensure that this kind of incident does not occur.

I know that in the 1990s the Government of that particular time felt that the market was wonderful and that the market was the answer to everything.

Hon David Parker: Who was the Minister? Mr Williamson.

Su’a WILLIAM SIO: That is right. I think it was Mr Maurice Williamson. To his credit, though, he identified that it was he and his Government—and that has been reported publicly—that were responsible, although he—

Hon David Parker: They haven’t fixed it.

Su’a WILLIAM SIO: That is right. So I think the House needs to take note of the mistakes of the past if it genuinely wants to move forward. The House needs to, I think as a result of this example, recognise that the market does not provide the answer to all things. I think that when New Zealand was a mixed economy, it was a country that was thriving. It was a country that was able to have jobs for all and higher incomes and where the unions played a significant role, and, clearly, that is different from the situation we have now under this National Government. I just thought that I would highlight that, but, as I said, we are not trying to be political here. We are just simply trying to ask this Government to take heed of the past mistakes as we move forward. As I said, the Labour Party will support this bill in its second reading. Thank you very much.

SCOTT SIMPSON (National—Coromandel): With the indulgence of the House, I would like to take a moment before I comment on this bill to just send a message to my constituents on the east coast of the Coromandel this evening, who later tonight will be confronting what may or may not be a tsunami alert—well, the alert is out, but my advice to constituents on the east coast of New Zealand, and particularly those on the Coromandel Peninsula, is to keep yourselves updated, look at social media, look at websites of the Thames-Coromandel District Council and civil defence, and listen to radio and TV for updates, and do not be at all afraid to take careful, cautionary, prudent action tonight and this evening. So—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member’s time starts now.

SCOTT SIMPSON: Thank you, Mr Assistant Speaker. This bill is a small bill. It will not go down in the history of Parliament as being a hugely significant bill, but it is an important bill, none the less. I am delighted to have heard the comments from the Minister in his speech earlier on in the debate that the recommendations made by the Local Government and Environment Committee will be accepted in full, so I think that that is a good place to start a brief discussion on this bill.

This bill is all about creating certainty for a relatively small number of properties—we estimate about 70 in total—that are going to be impacted on if we do not enact this legislation by the time frames in the principal Act, the Weathertight Homes Resolution Services Act of 2006. So, as a previous speaker indicated, there was a Supreme Court decision last year brought by John and Helen Osborne against the Auckland Council and, as a result of that decision in the Supreme Court, it became necessary for some clarity and some decisive legislation on the part of this House to give those 70 property owners some certainty about their way forward and the future for them and their properties.

This is all about ensuring that people do not get bogged down in lengthy, costly litigation that does not actually do much in terms of achieving the purpose of the bill, which is to create a weathertight home. So this bill actually seeks to do three things: it seeks to provide certainty in terms of the location of eligibility of the properties; secondly, it seeks to define the definition of built date; and, thirdly, it seeks to ensure that at the expiry of the Financial Assistance Package, which was originally due to expire in July 2016, the bill will extend that claim date for properties that are actively being progressed prior to that date, and I think that is a very sensible, pragmatic, and prudent thing to be doing on behalf of those people.

The bill was not one that received a huge number of submissions. In fact, there were only three, and we heard from one submitter in person. But they were all useful, constructive submissions that helped us come to decisions as a committee that I think meant that we could make recommendations that made the bill a better bill. I was pleased to hear that the Minister acknowledged that in his contribution earlier on, because I think that the way that the committee worked on this bill is a good example of how select committees should work. We worked collaboratively, we worked collegially, and we were able to hear a range of points of view that were designed to ensure a better outcome for all involved. I am absolutely sure that the bill that we are debating this afternoon is the better for that process.

I am not going to carry on at any length about the detailed provisions because those have been covered very neatly by the Minister in his comments, nor am I going to go into any detail about the recommendations that we have made as a committee other than to say that they are largely administrative and that they help provide clarity and certainty. This is a good bill. As chairman of the committee, I am delighted that the committee was able to work so well together to bring it back to the House for its second reading, and I commend it to the House.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to rise to take a call on this bill. I think this is a very important piece of legislation. This is about fixing a problem that impacts on a small number of people but, none the less, it is very important.

For most New Zealanders, their home and their house is the biggest asset that they will ever own in their lives, and I think we need to acknowledge the uncertainty that a group of New Zealanders have been put through over the last few years in terms of weathertight homes. When you read through some of the media reports about families who have suffered through the leaky homes saga, I think you will really be struck by what a terrible piece of the history of housebuilding in New Zealand this really has been.

There is the story of the de Roo family in Porirua, who discovered on Christmas Day 1999 that their home was a leaky building. They thought that it had been fixed, but they discovered that their home was a leaky building when they got up to find that all the presents under their Christmas tree had been destroyed because the roof had leaked. So I think that we need to think about the human cost that sits behind the legislation that we are talking about here.

As previous speakers have noted, this bill went through the Local Government and Environment Committee with only three submissions coming in on it, and only one submitter asked to be heard in person. I think that that really speaks to the fact of how far we have come on this issue. We are getting close to a resolution, and I think that it was good that we were able to work in a non-partisan way to find a fair solution, and, of course, with the legislation expiring next year, there was an impetus on making sure that we did not leave people dangling. The changes that the select committee was able to make to this legislation have made it a piece of legislation that is all the better for that, but it is another patch-up that we are doing in this area.

Labour is supporting this legislation, as my colleague Su’a William Sio has indicated. We do want to tidy up the Act because we want to ensure that those who deserve it get the compensation that is due to them. I think that, without doubt, all of us in this House can have a great deal of feeling for the people who have been through this. It has been going on for years, and it is another piece of legislation we are having to be here to fix up.

The claimants have been fighting for years for the right—we all think when we buy a house, and it really is part of the Kiwi dream, that it is going to be a warm and a dry house and it is not really going to become one of the biggest millstones around your neck. I think in the first reading of this bill my colleague Clayton Cosgrove noted how the Minister who is putting this current legislation through the House, when he was in Opposition, used to sit on the Opposition benches and bellow: “Just write a cheque.”—just write a cheque. That was Nick Smith’s approach when he was an Opposition spokesman, but when he came to the Cabinet table and he came to finding some solutions, maybe he found that the situation was a little bit more complicated, a little bit more nuanced, and maybe required a bit more thought than just simply bellowing across the House “Just write a cheque” to the then Labour Government. So I think that stands as an important reminder that what you interject in this House may sometimes come back to haunt you.

Todd Muller: Indeed.

Dr MEGAN WOODS: Well, some people choose their interjections more wisely than others, Mr Muller. So “Just write a cheque” did not prove to be, under Nick Smith’s solution that we are seeing in the legislation that is before us today.

I think it is important that we get on record—to pick up on the point that Su’a William Sio also raised—why we are in this situation that we are in. I think that it is an important point about deregulation and the fact that a whole cast of cowboys under the Bolger-Shipley Government was sent to go forth and build—anyone who wanted to. In his speech in the first reading debate my colleague Clayton Cosgrove said that he could have strapped on a tool belt, God forbid, and gone to build some homes. So I think that these are days that we can never return to—never return to.

Regulation is there for a reason. We need to have people who are properly trained and we need to have legislation that properly regulates these industries. Reading through and listening to some of the comments that are being made today—I think that the chairman of the Local Government and Environment Committee talked about how great it is to have certainty and decisive legislation, because otherwise homeowners are going to be put through lengthy and costly processes—I cannot help thinking of the parallels that we are currently seeing with the situation with foundation repairs in Christchurch at the moment.

Again, what we are seeing there is inaction and a lack of leadership from a Minister who will not make the decisive calls, a Minister who will not give certainty to people. A number of people have been warning that the situation with many foundation repairs in Christchurch actually risks becoming the next weathertight homes saga—the next leaky homes saga—that we are going to have to deal with over a number of decades. My fear is that in a decade or so we are going to be in this House, in this Chamber, talking about legislation similar to this: a fix-up for what has been another blunder from another National Government that thinks that it does not have to show leadership, that it can just let the market dictate, and that it can just let things go willy-nilly.

So that, I think, is an important and a very timely reminder, for all of us as parliamentarians and as legislators, that is contained in this because this is not something that we can allow to happen again. We have to learn the lessons of the leaky homes saga; it has been incredibly difficult for a number of individuals, incredibly difficult for them to get on with their lives, and we have to ensure that we never get there again. We have to remember how this first manifested itself, first of all thinking it was decaying timber framing that was to blame. I mean, we saw just how much more complicated the situation was as we went through.

So Labour is happy to support this legislation. I am sure my colleague the ever-learned Hon David Parker will pick up the point about the area of law that this is in and the many fix-ups that we have had to make here, but we do have to make sure we learn from this saga. We have to learn from this chapter of history. We have to see what just letting the market dictate in an unregulated and unfettered way can lead to, and that is the personal hardship and the very personal stories that we have to remember lie behind the numbers that we talk about when we say that only a small number of people are affected by this and only a small number of people are going to need to have recourse to the fund to fix their homes.

We have to remember that family that got up on Christmas Day 1999 to find not only that their Christmas presents were ruined but that the very place in which they thought they were safe, they thought they were secure—their home—was not that at all. They found that the Government had failed to put in place the things to protect them, to make sure that the people who were building their home were qualified, and to make sure that there was a regulated industry that was going to ensure their home was safe and that the local authorities were inspecting it in a safe way. I just hope we are not back here in a few years, talking about shonky foundation repairs in Christchurch and the same kind of fix-up legislation that may be required. Thank you.

TODD MULLER (National—Bay of Plenty): I rise to take a short call on the Weathertight Homes Resolution Services Amendment Bill now that it has been reported back from the Local Government and Environment Committee. I think my colleague and chairman Mr Simpson summarised our process in the select committee very well. It was collegial, which is becoming almost a habit in the Local Government and Environment Committee—

Grant Robertson: Oh, we’ll sort that out.

TODD MULLER: Yes, I am sure you will, Mr Robertson, but it was a very good process. Obviously, this particular bill came from the history of the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Act 2011, which was a very good law that we had put in place, and it was immediately taken up by a number of people. But as they went through the process, a couple of little anomalies were identified. It is appropriate to make sure we do this once and right and properly. If it becomes clear that some people could potentially fall out of eligibility through no fault of their own, it is absolutely appropriate that we go through this process and get those issues tidied up.

So, as we have heard, there are three main provisions in this bill: the definition of the built date, the legislative location of eligibility criteria, and, finally, the expiry of the Financial Assistance Package. Obviously, the issues around the built date and the definitional issues around that became very stark as an issue post the Osborne v Auckland Council decision in June 2014, when the definition moved from the final point of council inspection to the point where the code compliance certificate was issued. This potentially opened up the eligibility for a slightly smaller—but obviously very critical, if you are one of these people—pool of people who could potentially be eligible for the Financial Assistance Package. So, obviously, this bill will enable that to occur.

There were some technical changes with respect to, essentially, bringing the contribution criteria together and moving them into the Act to reinforce their validity. Finally, the third—the key—component is the expiry date of the Financial Assistance Package. It is due to expire on 23 July. All claimants will need to have been issued a notice to proceed, but we wanted to ensure there was a mechanism that enabled people who could demonstrate they were close to that notice to proceed to still be part of that cohort, if you like. So this is some sensible law to ensure that we do the right thing by these people.

We did have a good select committee process, as discussed. The recommendations that came through were very technical in nature, but I think they can be summarised as just providing absolute certainty. Yes, there were only three submitters, but they pointed to the risks associated with ongoing ambiguity and to the extent that we could be as precise as possible in respect of a couple of the components in the draft bill, they thought that would be useful. In particular, the definition of “qualifying claimant” was an area, and, again, the Financial Assistance Package eligibility requirements were an opportunity for us to further tighten the definition.

I think we have done some good work—if I can say so—as a collective committee. I think we are well served by the officials who are guiding us through what are pretty technical legislative amendments to make sure we get the effect that we are wanting through this proposal. Ultimately, this is ensuring that those who do qualify and should qualify for the Financial Assistance Package are enabled to do so through good enabling legislation. As we know through this process, it is potentially around 70 properties. It might not sound like a lot in the context of the many thousands who have been through this process, but for those 70—for those families—this legislation will enable them to get the right outcome. I, obviously, commend this bill to the House and look forward to the further discussions of the Committee of the whole House, which no doubt will be pending. Thank you.

JAN LOGIE (Green): I rise to take a call on this bill, the Weathertight Homes Resolution Services Amendment Bill, which the Green Party is, of course, supporting. We supported the original legislation in 2006 and then we supported the next round of amendments in 2010, so of course we are going to be supporting this third round of amendments in 2015 to fix up a problem that was initiated by, I believe, a National Party Government in 1994. Although we do not believe that any of the actual legislation from 2006 onwards has actually done justice to the problem or taken responsibility for the fault, anything to make things better for these families is worth supporting, which is why we have continued to stand in this House and support the bills that are, at best, in some ways a token effort.

So this latest amendment bill is, at the heart of it, going to provide the ability for 70 claimants to receive support through the Financial Assistance Package, providing, still, that they can come up with the 50 percent of the cost of the rebuild of their houses. It is really, as has been stated by other speakers earlier, a very small and technical bill. There were only three submissions to the Local Government and Environment Committee on this, though there were amendments, and it has been great to hear from those members who were on the committee about how constructive the process was and to see Parliament working effectively to iron out some of the amendments needed.

I would note, too, that this bill has, in part, been prompted by a court case that happened last year when the Osbornes won in the Supreme Court against Auckland Council. It is very nice to have the opportunity in this House, when a court has found that there was an injustice or a lack of clarity, to come back and clarify that legislation in accordance with what the court found—as opposed to the family carers legislation that we had under urgency at last term’s Budget where this Government chose to override the findings of the court, and as opposed to what we are currently going through in the Social Services Committee where the Government is again trying to cover its butt, basically, through legislation overriding the finding of the court that this Government had not taken responsibility for its misinterpretation of the policy. It is a rare moment, which I am going to revel in—that the Government is taking a moment to accord the legislation properly with the interpretation of the courts and the needs of the community.

But the core of this bill, along with the 70 claimants being able to receive support, relates, I think, to the provision that will expand the definition of “qualifying claimant” to include those who prior to the cut-off date of July next year were engaged or will be engaged actively in working towards meeting the eligibility criteria. That is clearly an important thing to do. I do think it is worth restating in the House some of the things that people need to do to meet those criteria, so that we acknowledge that it is not an easy thing. People need to obtain an assessor’s report; arrange funding, which is that 50 percent of the rebuild costs; sign a homeowner’s agreement; commission a repair plan; obtain a building consent; obtain quotes—and all of this needs to be in place before that payment plan can be signed off. This is not an easy thing to do.

A friend of mine has been in that invidious situation of having bought a leaky home. Just from a place of significant distance, I have seen the massive stress on her and her family. Their savings all of their life had gone towards buying this house that they found they could no longer live in and that was actually a physical threat of collapsing on top of them and their children. They ended up having to move towns to find new jobs to be able to—to have to—start renting while still paying off this house in the hope of repairing it. I have seen the extraordinary stress of that and the injustice of it. Even the fact that they have to come up with 50 percent of the repair cost when it was not their fault, when they had been told that this house was safe, does seem to me really unjust. But that is the best that this House could come up with at previous times and that was agreed to. As we have said, of course, it is better than nothing.

The point has been made earlier, but I am going to reinforce it, that this leaky home crisis is a salutary lesson on the importance of regulation and the dangers of leaving our critical infrastructure, which is our houses, up to the market. I do note, too, that in Auckland at the moment in terms of the building consent process 40 percent of the houses being built now are failing those building consents. We have an ongoing process. Part of the problem that caused the leaky homes was the loss of the apprenticeship schemes and the loss of the skills in our building industry. That was part of the problem, and we have not fixed that problem. We are seeing that right now in Auckland, in the 40 percent of houses that are not able to meet the required level of quality to get their building consent.

This is an ongoing problem that this House desperately needs to put our attention to—not on a patch-up basis, not on a piecemeal basis, but from a very considered place of considering our housing as core infrastructure that affects the health of our community, that affects the basic economic flow of our communities, and that affects the well-being of all of us. It is essential that we take this seriously. The estimated cost of this leaky home crisis—the consensus that was agreed on on it, even though there were differing views—was $11.3 billion and 42,000 affected houses. From leaving things to the market, this is the cost. And only a tiny percentage, 10 to 25 percent, of that cost is being borne by the people who caused the problem: by the Government. Other outside estimates have actually estimated that the cost of the leaky building crisis is $23 billion and 89,000 houses affected. This is not a minor issue.

Although the bill that is in front of us is a small, technical bill to support 70 families before the expiry date hits next year, the underlying issues and the cost to our economy and our families are ongoing. We need a much more considered response, and particularly one focused on prevention in the future. I remain unconvinced we have those measures in place at the moment, but the Green Party will support this bill and give our best to those 70 families. We hope that you can come up with that 50 percent of the cost of the rebuild of your house. Thank you.

RON MARK (Deputy Leader—NZ First): Well, once again here we are, at speaking slot No. 7. I am reminded often, Mr Assistant Speaker, how you do remind us, particularly at the Committee stage, how we should try to introduce new material and not be repetitive. It is always hard in the second reading speech when you really want to encapsulate in your speech the purpose clause, the aim of the bill, and what happened and transpired in the select committee, and make a valued contribution. But it has all pretty much been said, so I will try to touch on a couple of things.

The first thing I want to say is that it is really quite astonishing for me—working in the Local Government and Environment Committee, we have a very collegial committee that gets on very well and we are able to progress legislation through that committee in a very collegial manner. As can be seen in this piece of legislation, to have the Minister stand up and say he accepts 100 percent of the recommendations made by the select committee is a tribute in itself to the way in which the committee goes about doing its work. I guess I can only say that there are a couple of people from the National Party side of that select committee who, probably, if they were on the front benches of the Government today, behaving and working in the way in which they do in the select committee, there might be a far better relationship between the National Party and the New Zealand First Party. We would probably get on a whole lot better and would see less of the rubbish that we are seeing recently in the House from some of the front-bench members.

So I am looking forward to Scott Simpson becoming a Minister and replacing Mr Joyce—no, he will replace Mr Brownlee. And I am looking forward to Todd Muller moving through and taking over from Mr Joyce, who probably does need to be moved on and put out to pasture. So I want to thank the National select committee members for the way in which they have worked on this legislation, and the whole of the committee—the Labour team as well—because it really does make life pretty simple.

What can we say about this legislation that has not already been said? I do want to put on the record that sometimes when we are moving legislation through the House—and this piece of legislation is probably a good example of it because it is technical, it is small, it is brief, and it was easily managed—we do sometimes forget where this all came from. The points were raised by the Labour members here today about what was an idealistic drive towards deregulation, which, I have to say, started in the era of the Labour Government in the 1980s when deregulation by Roger Douglas and all his acolytes—Phil Goff, I think, was an Associate Minister of Finance around those times; there was the mantra for deregulation. He actually wrote to me when I was in the Middle East, explaining to me why I had to pay tax as a contract officer in Oman, employed by the Sultan of Oman—a letter that I still have, actually.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I think we might come back to the bill.

RON MARK: We talk about the drive towards deregulation—that actually created the problems that are still being addressed. It is that drive that put enormous stress on families; we heard the stories about marriage break-ups, suicides, and bankruptcies. It is easy to forget that sort of thing, at this point in time in the debate.

I want to put on the record again that New Zealand First is very aware of the trauma that was inflicted upon families who unsuspectingly bought these homes. Then to have ratepayers, who had nothing to do with this problem at all, being forced to pay for the remedial work on these homes—25 percent from local government. Interestingly, Carterton had one leaky home—one leaky home. This from a district council that is able to put through consents in 4 days—not like Auckland. What are you talking—4 years, four millenniums, four generations? We do not know. In Carterton, consents are through in 4 days—4 days—and only one leaky home. It is interesting that in certain parts of the country, builders would not build houses in the way in which they were being built in Christchurch, in Auckland, and in Wellington.

But here we are, thanks to the bravery of a couple who went to the Supreme Court and forced the Government’s hand by winning their case in that court, and the Minister at the time, Nick Smith, picking up the legislation, realising that something had to be done for these 70 people—hence the legislation he brought to the House. But it is interesting, is it not, the comments that were repeated here in the House by the Labour Party about Nick Smith’s response to the Labour Government of the day, when this issue was being worked through and the Government was struggling with how to compensate these people for the silly decisions of a former Government. Mr Smith, as we have quite rightly been reminded, told the Government to just write the cheque.

This is the same Mr Smith who ended up being sued by Osmose New Zealand for comments that he made as a member of Parliament about TimberSaver. It is all a matter of record and you can read it on Stuff. But it is interesting that we have the Minister, finally, who was concerned, obviously, about the preservative techniques and wanted to sheet home the blame for the leaky homes, I guess. I am not sure. But as a member of Parliament, he made a comment about a company that defamed it and resulted in the company taking him to court. Of course, the taxpayer ended up subsequently providing some funds towards the defence.

It was all back to leaky homes though—all back to leaky homes. The impact was not just small and focused on a few homes in New Zealand. As we have heard from the Greens, it affected tens of thousands of homeowners and, ironically, in a strange way, it personally affected the Minister who brought this bill to the House, as he fought the case and spent around, I do not know how much—hundreds of thousands of dollars on defending himself in the court and eventually settling out of court. A long sordid story—

Hon David Parker: The Government funded that. The Government funded his legal costs.

RON MARK: Yes, Parliamentary Service paid $209,000 towards Nick Smith’s defence. It was taxpayers’ money. It is really interesting. A horrible set of decisions made right at the outset around deregulation—[Interruption] That member—I cannot remember his name but he is clearly a deregulation fan. He is chipping at me. A horrible set of decisions on deregulation, made by a Government, led to—what are we talking now? Is it 15, 20 years? Twenty years—deaths, suicides, bankruptcies, marriage break-ups, a member of Parliament, probably inadvertently, saying the wrong thing and ending up getting sued, a couple of hundred thousand dollars of taxpayers’ money, and a law suit brought by a couple against the Government, in order to get treated fairly.

And here we are today, finally, hopefully, passing the last piece of legislation that will see, in some way, some of the wrongs being redressed. Seventy people who were not eligible up until this point in time are now made eligible, and are now able to get funding assistance. Hopefully—hopefully—this is the closing of what is a terrible chapter in New Zealand’s history on an experiment in deregulation, driven myopically by free-marketeers who believe that the market will fix everything. Oh, how wrong we are.

PAUL FOSTER-BELL (National): Tēnā koe e te Mana Whakawā. In rising to take a call in this second reading debate on the Weathertight Homes Resolution Services Amendment Bill I do want to congratulate and thank John and Helen Osborne of Remuera, who did bring the case against the Auckland Council, which has spurred the Government on to correcting the technical deficiencies in the Weathertight Homes Resolution Services Act, which can broadly be put into three categories.

No one claims that this piece of legislation is wide ranging, is large, and is going to make an enormous difference to those who have suffered the terrible issues around having a leaky house, a leaky home, but it will correct three specific technical deficiencies that were identified by the court as being significantly problematic.

Firstly, it gives clarity around the definition of what constitutes the built date of a property. In some cases there can be significant differences in the time frame between when a council certificate is issued through to when the final inspection has happened. So this gives clarity around the interpretation of when a building is designated as having been built. Secondly, it deals with the issue of the location of the criteria in the legislation. The court was very clear that the criteria could be challenged simply on the grounds that they were contained within the New Zealand Gazette instead of being in the regulations or in primary legislation. This bill corrects that issue and gives greater clarity so that the courts in the future will not identify that particular problem.

Thirdly, it does address the expiry date of the Financial Assistance Package, which the Government has put in place for a fixed period of 5 years and which expires on 23 July next year. So it gives greater flexibility to those who would seek to have redress for the issues that they have suffered in having a leaky home and, I think, a more liberal interpretation of when they need to start their action, rather than having a formal issue of notice to proceed. That will actually bring in place, I think, a more liberal approach when dealing with those people who have been affected.

Contrary to what some members, I think, have been arguing—and Jan Logie from the Green Party was saying that not enough has been done—significant investment has been put into assisting those with leaky homes. The liability for the Government, as it stands right now, is $115 million, and that is estimated to generate a further $460 million worth of home repairs. So this is, clearly, part of a significant amount of work that is going on.

This particular series of small technical amendments is only applicable probably to around 70 properties in New Zealand. But it is still a valuable change and will mean a huge amount to those people who are affected in these ways. For this reason, I commend this bill to the House.

ADRIAN RURAWHE (Labour—Te Tai Hauāuru): I am happy to take a call on the Weathertight Homes Resolution Services Amendment Bill this afternoon. The leaky home saga has been going on for years, as has been acknowledged in the House today. The numbers around that, of course, are quite staggering when you consider that, depending on who is doing the estimating, it is somewhere between 42,000 and 89,000 buildings, at a cost of $11.3 billion through to $23 billion.

So this bill deals largely with around 70 claimants or families and improves their situation—their situation of having been fighting on this issue for many years. They finally have a piece of legislation that comes to the House that actually effectively deals with that. As my colleagues have already said, we on this side of the House are supporting this bill in its second reading. We look forward to the Committee stage, of course. The many families that this issue has affected, which is corrected by this particular bill—I want to pay particular acknowledgment to them for their resilience, I guess, and for pursuing this issue, and, in particular, to the Osborne family, who actually persevered with this issue and really need to be acknowledged for making this change happen.

One of my colleagues, Dr Megan Woods, mentioned that the Minister for Building and Housing, when he was in Opposition, challenged the Labour Government to just write a cheque, and I can understand that. He knew that Labour knows how to balance a cheque book and produce surpluses, unlike the Government benches opposite, so that was an easy thing for the member, then, to actually say.

I am not going to take up any more time, except to say that for all of those families who are dealing with issues around housing, whether it be leaky housing or just not having a house or not having a dry, warm house, we in Labour support those families and we look forward to the time that we can, again, from the Government benches, actually do a lot more for the families involved in this huge housing issue that we are facing in our country. Nō reira, tēnei te mihi atu ki te Whare nei i tēnei pō [And so I acknowledge the House this evening].

JOANNE HAYES (National): I stand to take a short call—a very short call—on the second reading of the Weathertight Homes Resolution Services Amendment Bill, sponsored by the Hon Nick Smith.

As a member of the Local Government and Environment Committee I am really pleased to take this short call because the work that has gone on behind bringing this bill to the House has been, for want of a better phrase, a very smooth and collegial process. A lot of it, yes, we can attribute to the very good chairmanship of Scott Simpson. I was in his select committee last year, and he also chaired that select committee very well back then—it was the Justice and Electoral Committee.

My colleagues have given lots and lots of explanations about this very short, very important bill that affects a lot of people who have suffered leaky homes or leaky buildings. I understand that time is of the essence, I am watching that clock tick on by, and I want to be able to get as many people as possible through this process of being able to share their contributions to this bill. So, without any further ado, I stand to commend the bill to the House. Kia ora.

Bill read a second time.

Sittings of the House

Sittings of the House

JOANNE HAYES (Third Whip—National): We have done a lot of work this week, so I seek leave for the House to rise.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Leave is sought for the House to rise early. Is there any objection to that? There appears to be none.

The House adjourned at 5.58 p.m.