Tuesday, 8 December 2015

TUESDAY, 8 December 2015

TUESDAY, 8 December 2015

Mr Speaker took the Chair at 2 p.m.

Prayers.

Visitors

Viet Nam—Delegation, Parliamentary Friendship Group

China—Delegation, Development Research Centre of the State Council

Mr SPEAKER: I am sure that members would wish to welcome members of the Viet Nam - New Zealand Parliamentary Friendship Group led by Dr Tran Van, Vice Chairman of Finance, and a delegation from the Government of the People’s Republic of China led by Professor Liu Shijin, former vice president of vice Minister rank, of the Development Research Centre of the State Council, who are all present in the gallery.

Oral Questions

Questions to Ministers

Question No. 5 to Minister

ANDREW LITTLE (Leader of the Opposition): I note that question No. 5, in my name, which was originally directed to the Prime Minister, has been transferred to the Minister of Health. I seek leave of the House to transfer that question back to the Prime Minister.

Mr SPEAKER: I am not prepared to put the leave, and that is well stated in a Speaker’s ruling, on page 168 of Speakers’ Rulings. The Government has a right to decide who is answering the question. I have a duty to make sure that it would not be anathema to justice if it was transferred in a way that the Government could then dodge giving an answer to the House. I do not believe that is the case this time.

ANDREW LITTLE (Leader of the Opposition): I raise a point of order, Mr Speaker. I am not challenging the original transfer. I have a right to seek leave to have the question put to another Minister, and I am seeking to have that leave put to the House—to transfer the question back to the original Minister to whom it was directed.

Mr SPEAKER: Before I decide whether to put the leave, can I ask the member to have a look at Speaker’s ruling 169/5. There I say that the matter of transfer is over to the Government. The Speaker will not put the leave to transfer the question back, because the Government has already made its decision. It seems to me that we just waste the time of the House if we then put the leave, because inevitably it will be declined. Does the Leader of the Opposition still wish to seek leave?

Economic Outlook—Half-Year Economic and Fiscal Update

KANWALJIT SINGH BAKSHI (National): My question is to—[Interruption]

Mr SPEAKER: Order! I apologise. Can we just have a little less interjection, so that we can hear the question that is being asked.

1. KANWALJIT SINGH BAKSHI (National) to the Minister of Finance: What upcoming announcements will the Government deliver on the economic and fiscal outlook?

Hon BILL ENGLISH (Minister of Finance): Treasury will update its Economic and Fiscal Update as part of the Half-Year Economic and Fiscal Update next week, on 15 December. A lot has changed since May, when the forecasts were last done, with growth a bit lower than expected in the first half of 2015, lower commodity prices, lower interest rates, lower inflation, and a lower exchange rate. Although there are some risks to the economic outlook, recent lifts in business and consumer confidence, including in the rural sector, along with further growth in the manufacturing and servicing sectors, support an outlook for moderate growth of 2 to 2.5 percent over the next few years.

Kanwaljit Singh Bakshi: What reports has the Minister received confirming that the Government is continuing to control its spending, and how is this reflected in the Government’s financial statements?

Hon BILL ENGLISH: Financial reporting covering short periods of time can give fluctuating results, but the Government accounts issued today for the first 4 months of the financial year to October show that the operating balance is around $690 million better than expected back in the Budget. The residual cash position is around $900 million better than forecast. Spending has fallen from 35 percent of GDP 4 years ago to around 30 percent this year, while at the same time we are getting better public services, which goes to show the benefits of being thoughtful when spending has to be restrained.

David Seymour: Is the Minister looking forward to receiving the next long-term fiscal outlook from Treasury?

Hon BILL ENGLISH: Well, I am not sure whether my enthusiasm for it matches Treasury’s, because I always think that long-term economic forecasting is somewhat speculative. Treasury almost always paints a picture that we are going to hell in a handbasket and that politicians had better do something about it.

Kanwaljit Singh Bakshi: What is the outlook for continuing jobs and wages growth for New Zealand families over the next 5 years?

Hon BILL ENGLISH: In the short term: pretty good. New Zealand has among the highest labour-market participation rates and the highest unemployment rates in the OECD—a sign that the labour market is performing pretty well. Outcomes for young people are strong, with the rate of 15 to 19-year-olds who are not in employment, education, or training at the lowest level ever recorded. Wages are up 3.1 percent, well ahead of inflation of 0.4 percent.

Kanwaljit Singh Bakshi: What are some of the consequences of low inflation, including for the spending power of New Zealand households?

Hon BILL ENGLISH: For households, price stability is generally welcome, as it means more spending power from their take-home pay, with inflation currently at 0.4 percent and wage increases of up to 2 to 3 percent. However, lower inflation means less tax revenue, and that does put pressure on the Government’s finances.

David Seymour: Will the Minister cancel Treasury’s programme of producing long-term fiscal outlooks in light of his answer that they are merely speculative?

Hon BILL ENGLISH: No, in fact, they are a statutory obligation of Treasury. They do give an indication of where Government would end up if it stayed on its current track, and I am pleased to say that long-term forecasts based on this Government’s current track look reasonably manageable. The long-term forecast based on the track that the previous Labour Government was on looked completely out of control.

Corrections, Minister—Confidence and Reappointment

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he have confidence in all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes, I do.

Andrew Little: Is the reason he has reinstated Judith Collins as Minister of Corrections that he now recognises that she was the one who negotiated the disastrous Serco contract and it is time for her to clean up her own mess?

Rt Hon JOHN KEY: There are many reasons why I reinstated Judith Collins, but one of them is that she was an excellent Minister in corrections and police.

Andrew Little: How can he have confidence in a Minister who used a taxpayer-funded trip as Minister of Justice to promote her husband’s company, met with Chinese Government officials on Oravida’s behalf, failed to see any of that as a conflict of interest, and, what is more, misled him about the whole thing?

Rt Hon JOHN KEY: I just note to the House that she is actually not a Minister yet. I suppose there are many reasons why I made the decision, but one of them of course was that I followed the advice of Annette King, and it is a shame that he does not follow the advice of his own deputy leader.

Andrew Little: How can he have confidence in a Minister who leaked the private details of a public servant out of pure spite?

Rt Hon JOHN KEY: Well, I reject the proposition in the member’s question.

Andrew Little: You should have had the health ones—they were easier, John.

Mr SPEAKER: Order! We will just have the supplementary question.

Andrew Little: What assurances has he sought from Judith Collins that she will stop misusing her position to malign public servants and line her husband’s pockets?

Rt Hon JOHN KEY: Well, I take offence at that question.

Australia—Deportation of New Zealanders

3. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei: When the Prime Minister said that New Zealanders detained in Australia are “free to come home and process their individual case from New Zealand.”, did he know that the Australian request for removal from Australia form removed the right of those deportees to continue their visa appeals?

Rt Hon JOHN KEY: I believe the member to be wrong. The member is relying on her interpretation of the form. Actually, the form predates the assurances given to both me by Prime Minister Turnbull and by the immigration Minister Peter Dutton to Amy Adams. The immigration Minister has confirmed as early as this afternoon that the form does not apply to New Zealanders who have been deported back to New Zealand applying to go back to Australia under appeal. The Minister has confirmed—and we accept his advice—that there have already been successful appeals here in New Zealand of New Zealanders going back and the Minister has confirmed, again to Amy Adams, that there will be no cost for deportation. Unfortunately, the member is working off incorrect information. Had she gone to the Minister, not Radio New Zealand, I could have cleared that up for her straightaway.

Metiria Turei: So is the Prime Minister standing by his statement that he is 100 percent confident that New Zealanders being deported from Australia will get a fair hearing on their appeals when the form they are required to sign in order to return to New Zealand expressly says that Australian agencies may discontinue their appeals once they leave Australia?

Rt Hon JOHN KEY: I have not looked at the form but I am advised that the form says they may face that issue, and, as I said, the assurances we have had from the Minister of immigration in Australia is in fact that that is not the way it is going to be interpreted. There is a special position afforded to New Zealanders on the back of the assurances given by the Australian Prime Minister.

Metiria Turei: Has he, then, asked the Australian authorities to provide written confirmation to every New Zealand deportee who has been required to sign this form before they can leave Australia that the provisions relating both to them paying their own airfares and to the discontinuation of their appeals by the Australian authorities do not apply to them?

Rt Hon JOHN KEY: Firstly, I am making it clear to the House today that that is the advice I have received from the New Zealand Minister of Justice on the back of the assurances she has received from Peter Dutton, the Australian immigration Minister. Secondly, my understanding is that Mr Dutton is actually going to put out a statement this afternoon to make sure that that position is understood by New Zealanders, but the position is very clear: although the form says they may be precluded from an appeal, in fact the way it will be interpreted in Australia for New Zealanders is that that does not apply.

Metiria Turei: Will he ensure that every New Zealander who is required to sign this form is provided written confirmation to them that these provisions will not apply?

Rt Hon JOHN KEY: You would have to really put that question down to the relevant and responsible Minister.

Metiria Turei: Has the Minister, or his Government representatives, requested of the Australian authorities that these provisions are removed from the form that New Zealand deportees are being required to sign in order to return to New Zealand?

Rt Hon JOHN KEY: I cannot be sure of that because I have not had a full debrief of the conversation that Amy Adams had with the Australian Minister, but my understanding is that it is a generic form used for everyone, so I doubt that would be the case, but the position is not about what is on the form, which says “may”. The issue is how the form is processed by the Australians, and the Australians have been very clear that the assurance that the Australian Prime Minister gave me and that Peter Dutton gave to Amy Adams is that New Zealanders are free to come back to New Zealand and have their appeals processed from New Zealand. They already are doing so, and some, on the advice of Mr Dutton, have successfully returned to Australia.

Metiria Turei: Is the Prime Minister saying that he is prepared to take their word for it on the basis that, despite their assurances, New Zealanders are still being required to sign a legal document, which is required to be signed before they can come home, that removes those rights from them; and what guarantees can he possibly give to New Zealanders that he has not misled them over this issue?

Rt Hon JOHN KEY: Firstly, the member is incorrect. It does not remove their right. It says it “may”. Secondly, the assurances I can give them are the assurances I have had from the Australian Prime Minister when he came over to New Zealand, and now from the Minister of immigration. If the best the member can come up with is that the Minister of immigration in Australia is going to make those assurances to the New Zealand Minister of Justice, that the Minister of immigration in Australia is going to say to the Minister of Justice in New Zealand that already some successful appeals have taken place, and, thirdly, that the Minister of immigration in Australia is going to put out a statement confirming all this, but that he is lying—well, that is not a very strong argument she has got.

Andrew Little: Does he stand by his statement in relation to the lack of Pharmac funding for Keytruda that “we’ve got to give health more money” given that his Government has cut health funding in real terms by $1.7 billion?

Rt Hon JOHN KEY: The member is incorrect about health funding, but he has never been terribly good with numbers.

Mr SPEAKER: Order!

Rt Hon JOHN KEY: The health funding has gone up from $11.8 billion in 2008 to $15.9 billion, so that is a $4.1 billion increase. We have also increased the Pharmac funding by $150 million, from about $650 million to about $800 million. But, yes, if Pharmac was to fund Keytruda, by definition, it would need more money. And if that was not the case, then, by definition, it would have to cut funding to some other drugs.

Andrew Little: Is it not true that Pharmac could buy Keytruda and other lifesaving medicines if it had the money, but he has tied Pharmac’s hands by starving it of funding?

Rt Hon JOHN KEY: No, that is not true. Not unless you think increasing its budget by $150 million, or putting $4.1 billion extra into health, is cutting its funding. In the end, one of the great things about modern science is that there are more and more of these great drugs coming along and as a country, actually, we will be buying more and more of them. I have no doubt that a National-led Government will continue to increase Pharmac’s budget, and that will allow Pharmac to buy more drugs.

Andrew Little: Why has his Government increased Pharmac’s budget by only 2 percent since 2012, when it needed 10 percent just to keep up with population pressure and inflation? Is that what he calls investing in health?

Rt Hon JOHN KEY: We have increased Pharmac’s funding from $650 million to $800 million. We have increased health expenditure from $11.8 billion to $15.9 billion. There are clearly new and modern drugs coming on to the market. But, actually, the way for Pharmac and New Zealand to be able to afford those is to have a strong and vibrant economy, and that is what a National Government is delivering.

Andrew Little: Is it OK that Australians, right now, are getting lifesaving treatment with Keytruda for free, while Kiwis, like Tessa Taylor, are selling their homes and begging for money to buy it?

Rt Hon JOHN KEY: There is always a range of drugs that are not funded by the Government or that take some period of time to be funded by the Government. We rely on the efficacy advice from Pharmac, and if you look at the current advice that Pharmac has had, it has examined 8 months’ worth of data when it comes to Keytruda. One interesting thing about that is that one in three patients in the trial has had a clear benefit. The other two-thirds have not. That is not to say that it would not work for the particular individual in question; it may. The Government, over time, will be increasing Pharmac’s budget, and we will see where that goes in terms of which drugs it funds.

Marama Fox: How would the Prime Minister respond to the detainees who report that food is being withheld in order to pressure them to sign the papers that will have them removed to New Zealand?

Rt Hon JOHN KEY: I would need that to be actually clarified as being correct. It sounds extremely unlikely, but, as I said earlier, the form in question that the member is talking about predates this particular issue. We have had these assurances, and successful appeals have already been processed according to Mr Dutton.

Marama Fox: Is the Prime Minister aware of whether or not the detainees who are being deported back to New Zealand know whether or not they can have legal aid in New Zealand to appeal their decisions?

Rt Hon JOHN KEY: The advice I have had from the Minister of Justice is that they are not eligible for legal aid in New Zealand.

KiwiRail—North Auckland Line

4. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister for State Owned Enterprises: Does he condone the action of KiwiRail in closing bridge 143 over the North Auckland Line, thereby severing the connection between two parts of the property owned by Owen Clements?

Hon TODD McCLAY (Minister for State Owned Enterprises): I am advised that KiwiRail made the decision to close bridge 143 after 2 years of engagement with Mr Clements due to concerns with the condition of the bridge. An engineering inspection assessed the bridge as being in a dangerous condition and unsafe for use. In accordance with KiwiRail’s health and safety obligations, it decided to close the bridge with immediate effect. KiwiRail takes its responsibility for safety on the rail corridor seriously, and I encourage it and Mr Clements to continue to work together to resolve this issue as quickly as possible.

Rt Hon Winston Peters: Is he aware that because there is no alternative access to one part of the severed land, the farm has become uneconomic, resulting in the forced sale of the owner’s dairy herd?

Hon TODD McCLAY: Although this is an operational matter that KiwiRail is responsible for, I did receive a letter from Mr Clements on 24 March of this year. On 25 March I wrote to KiwiRail on his behalf. KiwiRail has said that it is not responsible for the maintenance of this bridge. In this case the responsibility to maintain, upgrade, and replace the bridge lies with the bridge’s users. I do understand that KiwiRail is in discussion with Mr Clements, and I would encourage both parties to continue to work together towards an outcome where there is safe access to the rail network for all concerned and equal access to the property owner.

Rt Hon Winston Peters: Does he acknowledge that the bridge was built because KiwiRail’s predecessor had severed the property in 1922 with the railway line, that KiwiRail was responsible for maintenance and repairs for decades, and that KiwiRail should keep it open; if not, why not?

Hon TODD McCLAY: No. I do not have that degree of detail. However, what I can speak to is that in 1919, at the time the rail was built, the farm had access via Wairere Road on both sides of the rail corridor, and it was not landlocked. I understand that access changed to Mr Clements land and this occurred as a result of council roading initiatives in 1997, which resulted in the bridge becoming the only viable route for access to the two parts of his farm. Again, I understand that KiwiRail is in discussions with Mr Clements. This is an issue of safety on the rail corridor and for users of the bridge. I encourage both parties to discuss this.

Rt Hon Winston Peters: Does he accept that under section 169(1) of the Public Works Act 1981 and prior legislation that KiwiRail and the Minister, because of that section, have a continuing statutory obligation to “provide access to the land so cut off or between the … land so separated”?

Hon TODD McCLAY: KiwiRail first raised this issue with Mr Clements in December 2013. There have been many ongoing letters and discussions between them. I do not have the level of detail the member has raised. If he would like to set me down a question, I would be happy to look into it for him.

Rt Hon Winston Peters: Given that the Minister wrote a letter to Mr Clements, and looking at the Act in the decades under which KiwiRail maintained that bridge, will he now act to see that KiwiRail maintains and reopens the bridge with the appropriate compensation for Mr Clements, and not use its funds to try to beat a farmer down; if not, why not?

Hon TODD McCLAY: No. There is no question that KiwiRail is beating a farmer down. Its focus is on safety for the use of that bridge, and I encourage both parties to continue to talk together in good faith to resolve this situation as quickly as they can.

uestion No. 5 to Minister

Q

Mr SPEAKER: Question No. 5, Andrew Little.

ANDREW LITTLE (Leader of the Opposition): I decline to ask the question.

Rt Hon WINSTON PETERS (Leader—NZ First): I raise a point of order, Mr Speaker. With regard to question No. 5, which is pretty important to this House, we did not hear what just transpired down there.

Mr SPEAKER: I apologise—there was a bit of noise. The member whose name the question was in has declined to ask the question. It therefore moves to question No. 6.

Rt Hon WINSTON PETERS (Leader—NZ First): I seek leave for the New Zealand Public Health and Disability (New Medicines and Rare Conditions) Amendment Bill to be set down for first reading forthwith.

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

State and Social Housing—Supply and Providers

6. SIMON O’CONNOR (National—Tāmaki) to the Minister for Social Housing: What recent announcements has she made about community housing providers increasing social housing supply in Auckland?

Hon PAULA BENNETT (Minister for Social Housing): Yesterday I announced that the Government is contracting with five community housing providers in Auckland, which will deliver more than 500 new social-housing places over the next 3 years. The response from the sector was very positive. We are contracting for more than 200 places more than we expected to, and a range of providers are on board, including the Salvation Army, which will provide 87 places, Accessible Properties, and the Chinese New Settlers Services Trust.

Simon O’Connor: What does the success of this process reveal about community providers’ ability to supply new places?

Hon PAULA BENNETT: Getting new housing in Auckland is challenging, but community providers have consistently said that if we give them long-term, flexible contracts, they can fund new social-housing developments. That is what we have done, and they have stepped up to the plate. We changed the law so that the Ministry of Social Development can negotiate contracts for up to 25 years, giving providers a Government-backed, guaranteed income stream that they can then borrow from.

Phil Twyford: Will she admit that her announcement yesterday will not house a single extra family, because of the fixed allocation of subsidies, and that because of her Government’s refusal to actually build houses and increase the stock of housing, people will continue to languish in cockroach-infested caravan parks on her watch?

Hon PAULA BENNETT: Absolutely not. Of course more people will be housed, because there will be more places and because they are also building new ones. As they are built, it means that they will take people off the wait list and place them in the houses. I know that the member does not like good news, and I know that he would like to see those people stay in those cockroach-infested cabins—

Hon Steven Joyce: Then he can talk about it.

Hon PAULA BENNETT: —because he can then talk about it and try to blame the Government—but we are taking action, we are seeing progress, and this is evidence of that.

Mt Eden Corrections Facility—Serco’s Performance

7. KELVIN DAVIS (Labour—Te Tai Tokerau) to the Minister of Corrections: Does he agree with former Minister of Corrections Judith Collins that: “Serco has a strong track record in managing prisons. I’m confident that the company will bring the high standards of professionalism, safety, rehabilitation and security expected by the Government to Mt Eden.”?

Hon Peseta SAM LOTU-IIGA (Minister of Corrections): The statement the member quotes is from December 2010, when Serco’s contract to manage Mt Eden prison was announced. Since that time there have been a number of issues at Mt Eden prison, which have all been well canvassed in this House. Those matters are subject to a report by the Chief Inspector of Corrections, and I await the outcome of that review.

Kelvin Davis: Are organised fight clubs, widespread contraband use, dropping, dodgy reporting, and guards teaching prisoners sparring representative of high standards of professionalism, safety, and rehabilitation; if so, how?

Hon Peseta SAM LOTU-IIGA: As I have said in the answer to the primary question, all those issues are subject to a report by the Chief Inspector of Corrections. That is subject to legal action and I will say no more about that.

Kelvin Davis: Does he think that the Department of Corrections having to retake control of Mt Eden Corrections Facility because of Serco’s terrible performance represents a “strong track record”?

Hon Peseta SAM LOTU-IIGA: The Department of Corrections took this step as an appropriate action to the events that took place up to that point.

Kelvin Davis: How many other times has the Government been forced into holding a major investigation into a private service provider, and how is this evidence of high standards?

Hon Peseta SAM LOTU-IIGA: Look, I cannot give an answer to that question—I do not have the facts. But if he would like to put that in writing, I am happy to get the answer for him.

Mahesh Bindra: Does he stand by his answer to my supplementary question on 23 July: “Now that he is caught between his own career and Serco’s survival, which will he choose?”, when he answered: “I believe in my own career, thank you very much.”?

Hon Peseta SAM LOTU-IIGA: I stand by the answers to my questions at the time that they were made, thank you.

Kelvin Davis: If he believed he was “doing an effective job in managing the Department of Corrections”, why does he think the Prime Minister is replacing him with the person who created the Serco problem?

Hon Peseta SAM LOTU-IIGA: I have got no responsibility for that; the Prime Minister does.

Rt Hon Winston Peters: Can the Minister advise as to whether or not during the time that he has been the Minister he has had the full support of the Prime Minister, his Cabinet colleagues, and his caucus on this issue.

Hon Peseta SAM LOTU-IIGA: Yes.

Climate Change Agreements—2016 Paris Climate Change Conference

8. MARAMA DAVIDSON (Green) to the Minister for Climate Change Issues: Will New Zealand join Canada, Australia, Tuvalu and the 43 other low-lying islands, and support the inclusion of a goal to limit global warming to 1.5 degrees in the Paris climate agreement; if not, why not?

Hon PAULA BENNETT (Minister of Local Government) on behalf of the Minister for Climate Change Issues: New Zealand’s position has been consistent. We support the international consensus around the goal of limiting global temperature increase to no more than 2 degrees, but we recognise that an increase of even 1.5 degrees could severely exacerbate the particular challenges facing the most vulnerable smaller Island States of the Pacific. We are working actively with others to find a solution to the issue. Obviously, there is a week of intense negotiation ahead of Ministers, so it would be premature to judge an outcome at this point.

Marama Davidson: To clarify, is the Minister saying the Government will not support an explicit and binding goal in the Paris climate agreement to limit warming to 1.5 degrees?

Hon PAULA BENNETT: We have been very clear and very consistent that we believe that we can manage 2 degrees, and that that is what the 196 countries will sign up to. However, we have sympathy and recognise 1.5 degrees and the difference that does make to Pacific countries, and will support them in their endeavours to push that agenda.

Marama Davidson: Does the Minister stand by his statement that a 1.5-degree limit is “just an aspirational” goal, and does he also consider keeping Pacific Islands habitable, and their people alive, to be an aspirational goal?

Hon PAULA BENNETT: Yes, and no.

David Seymour: What is the relationship between the intensity of carbon emissions and poverty?

Hon PAULA BENNETT: Certainly, as far as I am aware, the Minister has not seen one. What I will say, though, is that even in the negotiations that are going on in Paris at the moment you can see some of the positive things that are coming out for developing countries. For example, in Africa I see that they are signing up to an agreement where they will commit to a delivery of 300 gigawatts of electricity-generating capacity to Africa from clean energy sources. That has got to be good for poor people. So, actually, in some respects you can see some of the outcomes of discussions on climate change, meaning we will see more renewable and clean energy going to those who need it most.

Marama Davidson: Is the Minister really saying that New Zealand is willing to ignore the voices of its Pacific Island neighbours and some of its closest allies by refusing to explicitly support a 1.5-degree limit to global warming?

Hon PAULA BENNETT: Not at all, and that is why we have committed $200 million more to actually support our Pacific cousins in helping them get clean renewable energy and doing what we can to support them. We recognise the effects of climate change on those small nations and that it is felt more acutely by them than even by us here in New Zealand. So we stand next to them. We recognise their request for a 1.5-degree limit. However, we have made a commitment. We believe it is more likely that the other countries will sign up to it, and we are committed to the negotiations that are currently going on.

Hon David Parker: Has the Prime Minister explained to her why New Zealand was awarded a “Fossil of the Year” award immediately after he spoke to the climate change conference?

Hon PAULA BENNETT: On behalf of the Minister—so that would make me a “him”, just to be clear—as far as I am concerned, the current Minister has not had those discussions.

Rt Hon Winston Peters: Why has the Government, in Paris, posed as having a new $200 million initiative for the Pacific Islands when successive Governments have been promoting renewable energy in the Islands for over a decade now?

Hon PAULA BENNETT: That is quite simple. Some people talk about it, and others do it, and that is what this Government has been doing.

Police—Human Resources Management Information System

9. STUART NASH (Labour—Napier) to the Minister of Police: Does he have concerns that the Police’s planned new Human Resources Management Information System has been classified by Treasury as having “major risks or issues apparent in a number of key areas”?

Hon MICHAEL WOODHOUSE (Minister of Police): I am concerned to ensure that this project delivers both for Police and for the taxpayer. That is exactly why the Government has the monitoring and plans in place that it does. The report the member refers to is exactly part of this oversight.

Stuart Nash: Does he agree with a total budget of more than $56 million for the project; if he does, is this really the best use of resources for the Police?

Hon MICHAEL WOODHOUSE: It may surprise the member, but police actually like to be paid. There are 12,000 staff in New Zealand Police, and it is a very, very complex system. The biggest risk, actually, is to the legacy system, which is coming to the end of its useful life. I think everybody would appreciate that that is requiring replacement.

Stuart Nash: Has he had any advice that the cost of the Human Resources Management Information System could blow out by $10 million?

Hon MICHAEL WOODHOUSE: Sorry, can I—by how many?

Mr SPEAKER: I could not hear the—[Interruption] No, can we have the whole question again.

Stuart Nash: Has he had any advice that the cost of the new Human Resources Management Information System could blow out by $10 million?

Hon MICHAEL WOODHOUSE: The report that the member refers to does identify that stage one of the project is over its initial budget by nearly $10 million, but at this stage that can be managed within the overall project appropriation of $56.2 million. There have been no requests for further funding.

Stuart Nash: Would he tell the House why Police might have to spend $10 million on a cost blowout in the Human Resources Management Information System on top of the $56 million for the system, when the $10 million blowout alone would fund the salaries of 150 community police officers?

Hon MICHAEL WOODHOUSE: I simply do not agree with the member’s math. What I said was that stage one of that project has incurred costs greater than those that were originally budgeted. It does not automatically follow that the project overall will be over budget by that amount, or that the New Zealand taxpayer will be asked to stump up more money. These are very expensive projects, as the member knows, and it is important that we get it right.

Drivers’ Licences—Schools

10. SCOTT SIMPSON (National—Coromandel) to the Minister of Education: What recent announcement has she made on driver licences in schools?

Hon HEKIA PARATA (Minister of Education): Today I was pleased to announce, together with my colleague the Associate Minister of Transport, the Hon Craig Foss, that students will now have the opportunity to earn National Certificate of Educational Achievement (NCEA) credits by obtaining a driver’s licence. This initiative is the result of a cross-agency group that has been working for over 12 months on removing obstacles that prevent young people getting into employment. Schools currently are able to offer driver training as part of their curriculum, but this initiative will provide further structure to that learning. From next year, students will be able to gain up to a total of eight credits towards NCEA levels 1 and 2. This initiative has widespread support from employers, who see the lack of drivers’ licences holding young people back from getting jobs.

Scott Simpson: How will this initiative assist young people in regional and rural New Zealand?

Hon HEKIA PARATA: Many National MPs have been working hard on their provincial priorities meetings up and down the country over recent months, listening to regional and rural New Zealanders on the issues that matter.

Grant Robertson: I raise a point of order, Mr Speaker.

Mr SPEAKER: Order! I hope I have a point of order.

Grant Robertson: You do. The Minister has no responsibility in a ministerial role for what National MPs may or may not have been doing in the regions. It is a ridiculous answer.

Mr SPEAKER: That was part of the answer, but it actually was not the question. The question is: how will this initiative help in rural New Zealand? The Minister has every right to answer that.

Hon HEKIA PARATA: And completing that answer—as a result of all that hard work it has been raised with my colleagues that the difficulty in obtaining a driver’s licence is preventing many young people from getting into employment and extracurricular activities like sport and volunteer work. Employers also tell us that not having a licence holds many young people back. For example, a licence is necessary to carry out work as a builder’s apprentice. This initiative will also further incentivise students to gain their licence, ensuring safer roads for everyone. [Interruption] Get some anger management.

Tracey Martin: Kia ora. Will the Minister look to fund and increase the number of driving simulators stationed at schools, to reduce the cost for learner drivers as they work towards the recommended 120 hours of practical driving, as per New Zealand First policy; if not, why not?

Hon HEKIA PARATA: No, I will not be doing that, because schools are already funded for the curriculum they choose to deliver.

Prime Minister—Statements on Sexual Violence

11. POTO WILLIAMS (Labour—Christchurch East) to the Prime Minister: Does he stand by his statement “you back the rapists” during question time on 10 November 2015?

Rt Hon JOHN KEY (Prime Minister): Yes, in the context of a robust debate.

Poto Williams: Does the Prime Minister understand that his statement “you back the rapists” has caused offence to members of the Opposition, victims of sexual and domestic violence, and more than 13,000 people who signed a petition asking for him to apologise?

Rt Hon JOHN KEY: I stand up very strongly for the victims of sexual offences. This Government also supports that. The comment was in relation to what I believed was advocacy only for the criminals, from the Opposition.

Poto Williams: Does the Prime Minister believe that his statement “you back the rapists” is consistent with the principles of being a White Ribbon ambassador; if not, will he consider returning his White Ribbon badge?

Rt Hon JOHN KEY: Yes, because that is the point, is it not—that I am actually defending the rights of victims.

Poto Williams: Has he discussed his role as a White Ribbon ambassador with the trustees of the White Ribbon campaign since he made this statement in the House?

Rt Hon JOHN KEY: I personally have not, although I am aware of a complaint from one of the ambassadors, and it was a member who ran for the Labour Party, as I understand it, who made that complaint.

Law Commission—Legislative Reviews

12. ALFRED NGARO (National) to the Minister of Justice: What new projects has she asked the Law Commission to begin in 2016?

Hon AMY ADAMS (Minister of Justice): Last week I announced that the Law Commission will commence three new projects in 2016. These are to review the Property (Relationships) Act 1976, the Search and Surveillance Act 2012, and the Declaratory Judgments Act 1908.These three pieces of legislation each have a significant impact on New Zealanders, although operating in quite different areas. I look forward to the Law Commission’s careful consideration of the complex issues involved in these areas.

Alfred Ngaro: How is the Law Commission progressing with this year’s work programme?

Hon AMY ADAMS: The Law Commission has informed me that it is very close to finalising its reports on both the justice response to victims of sexual violence, criminal trials and alternative processes, and the review of the Crown Proceedings Act and national security information and proceedings, which I intend to release before Christmas and respond to early in the New Year. Earlier this year the Law Commission also completed its review of the burials and cremation legislation, which has been referred to the Minister of Health for consideration.

Bills

New Zealand Public Health and Disability (Southern DHB) Elections Bill

First Reading

Hon Dr JONATHAN COLEMAN (Minister of Health): I move, That the New Zealand Public Health and Disability (Southern DHB) Elections Bill be now read a first time. I nominate the Health Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 11 April 2016. The effect of this bill is to allow for the term of the Southern District Health Board commissioner to be extended until the triennial election scheduled for 2019. This provides the commissioner with sufficient time to develop, oversee, and implement a financially sustainable turn-round plan for quality health services for the people of Otago and Southland.

Without legislative change the commissioner would have less than 18 months to improve the position of the Southern District Health Board. The bill will provide for the Southern District Health Board to be exempted from holding an election for its board scheduled for October 2016 in the triennial cycle, as currently required by legislation. In June 2015 I dismissed the board of the Southern District Health Board and appointed a commissioner for the district health board following my serious dissatisfaction with the performance of the board—in particular, its management of the district health board’s finances had caused me to lose confidence in its ability to deliver on its strategy for the region, including delivering much-needed capital redevelopments at Dunedin Hospital.

Financial deficits have been a feature of the performance of the Southern District Health Board for some years. However, earlier this year the situation deteriorated considerably. The district health board recorded a deficit of approximately $27 million for 2014-15, which was nearly twice its originally budgeted plan of a $14.8 million deficit. For 2015-16 the district health board submitted draft budgets as part of the annual plan process that ranged up to a $42 million deficit. I have recently agreed to a planned result of a $35.9 million deficit. This is an improvement on previous budgets submitted, but needs to continue to improve in future years.

Early indications from the commissioner are that resolving the Southern District Health Board’s financial issues will take some time and that they are unlikely to be completely addressed by the end of her current term on 2 December 2016. She has developed a work plan to begin to address the financial challenges, which she has been consulting on with the district health board’s staff. The plan spans a range of solutions, including more medium-term actions that need to be implemented after December 2016. It is important that the district health board’s financial performance improves so that the Government can invest with confidence in the health infrastructure for the region.

In parallel with the work undertaken by the commissioner on the district health board’s financial and clinical sustainability, the Government is working with the district health board on two streams of capital development. In September the Government approved $22.5 million for urgent hospital maintenance, as well as upgrades to gastroenterology, audiology, and intensive care units. These projects will ensure that the immediate demands around delivery of services continue to be met while planning for the major redevelopment progress. To ensure the robust oversight of this significant project, I also established the Southern Partnership Group in September. The Southern Partnership Group will work closely with the district health board and commissioner to oversee the redevelopment of Dunedin Hospital. I have also recently appointed an experienced clinician to work with that group.

I did not propose the cancellation of a local district health board election lightly. The bill therefore impacts on only one election at the Southern District Health Board and will help ensure that the next board to be appointed as part of the 2019 local body elections will begin its term on a more secure financial footing. I have asked the select committee to report back early on the bill because preparations for local elections will begin around May next year. The appointment of a commissioner offers an opportunity to resolve the district health board’s financial challenges and to help secure more sustainable health services and health facilities for the people of the southern district. The commissioner has already begun to address the deficit challenge, and it is vital that she is given time to complete this important work.

It is also challenging work, and I want to acknowledge and thank the commissioner, Kathy Grant, and her deputies, Richard Thomson, Graham Crombie, and Dr Angela Pitchford, for all the work they are doing. I also want to acknowledge the input, the advice, and the ongoing support of my National Party colleagues based in the Southern District Health Board region. They are doing a great job. I am also looking forward to Labour Party colleagues based in that region getting behind the Government’s plans for the Southern District Health Board, because in the end this is all about getting the best possible health services available for the people of Otago and Southland. [Interruption] I greatly look forward to the contribution of the member for Dunedin North as he steps in to endorse the sound work that we are progressing in the Southern District Health Board. I commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): This bill cancels the 2016 triennial general election for the Southern District Health Board. It is not a bill we should passing lightly. Democracy was suspended at the district health board 6 months ago, and so far, as far as outputs go, we have not seen a lot from the commissioners.

We have got a one-page strategic planning document that looks more like a Christmas card than a plan, and that is it. The partnership group, which was supposed to be appointed a long time ago, has only finally received its last member in recent weeks. It has been asked by this Minister of Health to produce very little, and it seems to be obliging.

This Government has been slow to act in the Southern District Health Board, given years of deficits and months of adverse publicity—months and months that have turned into years. Perhaps the most surprising thing about the appointment of the commissioners was the fact that it took the Minister so long to act.

I guess that is the problem. This Government has been struggling with this district health board, amongst many, for such a long time. It has tried to maintain the façade of an arm’s-length arrangement. The Minister always chooses the board chair and five out of 12 board members. He has effective control of the board. He had a Crown monitor on there, or his predecessor had, for nearly 6 years before this commissioner group was appointed, and still the Minister and his predecessor made no progress.

The Minister is now tied to the outcomes. I made this point in an earlier contribution to the House. Any remaining impression of ministerial distance from decision making was sacrificed with the appointment of the commissioner. I imagine the Minister now has a few sleepless nights, because he now has a commissioner team in place and New Zealand, and particularly those in the south, is expecting results. Mr Coleman has nowhere to hide. He can no longer blame the board.

Fixing the Southern District Health Board will not be easy. The cultural challenges, indeed, are well canvassed, and some departments have some work to do to work out how to work together since the boundary between the southernmost district health board and the Otago District Health Board was removed, along with $30 million of cross-border funding.

Of course, funding matters—funding matters. The inquiry that Jonathan Coleman launched into the national health funding model is entirely narrow. It seems designed to fit public demand for some kind of inquiry, without delivering a result. There is certainly a prima facie case to reform the funding model. It seems to have an adverse effect on some district health boards, and particularly in the south.

We know that the health workforce training appears to be more expensive than the compensation given to the Southern District Health Board. It takes a long time to treat patients whilst training students at the same time. We know that having the largest geographic area in the south—a district health board the size of Belgium—is not matched with the largest rural funding component. That needs some explaining. We know that old buildings—and this one is over 50 years old—force less-efficient, older ways of operating.

It is there for the explaining, and the Government does need to front up and have a full review of the health funding formula. It has been 10 years since the last review, and Labour was in power then. It is time the health funding formula was reviewed and made more transparent.

The glacial progress under the commissioner team towards a hospital rebuild should bother us all. Delays are a big deal. The hospital has lost accreditation across a number of areas. It has lost Medical Council training accreditation for house officers, it has lost orthopaedics accreditation, it has lost intensive care accreditation for training—and the latter being directly attributed to old buildings.

This loss of status has a knock-on effect: it harms the medical school, it harms the university, and it harms the city of Dunedin and the district right across Otago and Southland. It also means that we cannot attract the calibre of staff that we would want to. There is so much uncertainty in the district health board that specialists around the world are going to think twice before they move to the south.

This Government needs to give some certainty of direction. It needs to give assurances, it needs to put capital up front, and it needs to outline a credible plan for an appropriate rebuild. The Beca Group consultancy report last year confirmed that the clinical services building is outdated and that the ward and clinical layouts are beyond their use-by date.

The modern clinical services buildings that are being built across Australasia have a wider footprint. They have more ceiling space to allow for ducting and modern surgical equipment to be housed in them. It just means that everything happens a little slower in the old buildings, and that carries a cost, which adds to all the other costs that the Southern District Health Board is carrying and the depletion in the funding that it appears to have. These problems are not going to go away overnight, but the Government needs to act credibly. It needs to lay out a plan and it needs to stop dilly-dallying and duck-shoving.

We need the urgency. The signalled appointment of the partnership group was delayed time and again. The Southern Partnership Group appointments, the last of which has just occurred, are now in place, but the deliverables are minimal. The previous Minister of Health, Tony Ryall, indicated he expected a business case to go Cabinet this year for a hospital rebuild, the current Minister, Jonathan Coleman, indicated in February he expected it by the end of this year, and now the latest timetable has merely a scoping report by the Southern Partnership Group being delivered at the end of next year.

The time frames continue to slip, and there is no indication, once this strategic business case is completed, of a time frame for that to go to Cabinet, for decisions to be made, and for people in the south to have assurances about their health system. The Minister simply must step up. It is not good enough that previous assurances that a business case would be considered this year have been pushed out into the never-never. The only thing we have certainty of now is that it is not going to happen this year. We have got an amorphous promise of a rebuild being completed in around 10 years’ time. Without a concrete start date and committed capital, the promises and assurances the Minister is giving amount to little more than duck-shoving, making the rebuild the problem of some future Government.

The real test of commitment from this Government is a guarantee that before this term of Government ends in late 2017 there will be bricks and mortar being built—that there will be a rebuild under way during the term of this Government. I very much look forward to the speakers who follow me confirming that.

Perhaps those who are in the south—and I expect some of them to speak; perhaps Mr Barclay opposite will speak—will assure us that this will happen, because the Minister has said they have been very supportive. Well, I have heard nothing but sycophancy from them. I want to hear the concrete steps that will be taken to deliver a hospital to people in the south. I think it is shameful—shameful—that members down south are parroting the Minister’s words and offering platitudes and obfuscation to the citizens whom they represent.

Those members need to step up. They need to encourage their own Minister to get focused, get on with the rebuild, and give some assurances to the people of the south that they are being taken seriously, that their taxes matter, and that the rebuild will get under way. Affordable access to decent health care should be something every Kiwi can count on, but something that we have come to expect of right is becoming harder and harder to access under this Government.

We have had an independent report done that shows $1.7 billion worth of underfunding under this Government’s watch—$1.7 billion of health underfunding. That is why, when Jonathan Coleman admits—and he has admitted to this House—that he is not funding the health system to keep up with cost pressures, New Zealanders are now seeing the level of health care declining. That is the reason why the Prime Minister is saying that Pharmac will not fund Keytruda. That is why the Government is dancing on the head of a pin when it comes to every health question.

If you underfund a system by $1.7 billion, it is no wonder that health care is suffering and that New Zealanders are suffering in a way that they have not before. This Government is simply not committed to public health, and here we have a bill that suspends democracy and no assurance from this Government that it will not do the same thing if it is re-elected for another term—that it will not suspend democracy further.

We have seen it do it with Environment Canterbury—we have seen it do it with Environment Canterbury. It has pushed out democracy and pushed out democracy and pushed democracy, with no respect for the community representation that comes through with that. And now we have a similar situation here. We need assurances from the Minister—

Mr DEPUTY SPEAKER: Sorry to interrupt the member, but his time has expired.

SIMON O’CONNOR (National—Tāmaki): I am thinking, as I stand to speak on the New Zealand Public Health and Disability (Southern DHB) Elections Bill, that we may have to move an immediate amendment to appoint a commissioner to replace the previous speaker, David Clark. We have just heard around this particular bill a long sort of diatribe, if you will, around problems in health. It is the same, usual, tired material we have heard from the Opposition. It is tired for two reasons. One is that it is constantly repeated. The second is, of course, that it does not go with any of the facts.

Just to give very quick context actually about the Southern District Health Board, and I am sure you will hear it more from the excellent members who represent the people down in that area, the Southern District Health Board has actually benefited from over $800 million of funding. In fact, there has been an increase of over $130 million for that district health board over the last 7 years. There are 66 more doctors and 195 more nurses, but, in saying that, this Government is very clear—very clear—that there is always more that can be done.

In fact, that is one of the falsities, if you will, that has just been put out by the Opposition. Somehow there is the idea that there is a magic number that can be spent in health and that all of a sudden everything can be taken care of. Those of us who have engaged with or have worked in the health sector, public or private, know that there is an insatiable need, and the question for the Government is to work in the best way to ensure the best access to health care for all New Zealanders, be it in the Southern District Health Board or in any of the others.

In fact, the other area that was incorrect was this talk about needing to look at the funding models. It is all very well and good for the Opposition to say that. It is what Oppositions do. Of course, those who were on the Health Committee last week would have heard that the Ministry of Health is looking at the funding models. So there is actually proactivity there from the Government, and there has been for a while. I just encourage the Opposition to get a bit more involved and up to speed.

This bill is a very simple bill. As has been noted, it is basically suspending the elections at the Southland District Health Board next year. It is common sense. It makes an enormous amount of sense. A commissioner has, rightly, been appointed very recently to assist this district health board, particularly around its fiscal management, and it does not make any sense at all to de-appoint the commissioner and reappoint board members just as the commissioner has begun the job.

This is a simple bill. I think it is an excellent bill. It is a prudent bill. We want, I think, as a Government, to see the commissioner and the team have a bit more time. I fully support it. The Health Committee is a busy committee. We have moved through quite a bit of legislation, but we welcome more coming to us. I agree with what the Minister is saying around the report-back time. I think, without presuming the committee’s business, that we will take that into account. Again, this is a fairly simple and narrow bill to achieve a path back to democracy and a path back to better funding. Thank you.

CLARE CURRAN (Labour—Dunedin South): This is a bill that is not just little and simple, as the previous speaker, Simon O’Connor, said. This is a bill that suspends a democratic process, and it could otherwise be titled the “Buck Stops Here Bill” because this bill, if it passes through Parliament, will put the buck firmly with the Minister of Health. The Minister will be ultimately accountable for what happens in the Southern District Health Board area and for whether or not we see real and meaningful change. He will not be able to duck for cover. He and his Government will be accountable.

We would not have had to leave the commissioners in for a longer term in the Southern District Health Board if the Government had acted sooner in putting our district health board on a credible path to financial stability. The problems have been evident and they are complicated, and the issue behind this—the underlying issue—is the funding model, despite what the previous speaker said.

These problems have been evident for some time. There was a Crown monitor appointed in 2009. The board was under intensive monitoring by the National Health Board way before the appointment of the commissioners. In 2013 and 2014 we had front-page stories and we had stories on television every night about our leaky hospital and the problems in our hospital. Earlier this year we had asbestos in Dunedin Hospital. The need for action, the need for change, has been evident for a long time.

The need for significant change and the deep problems in the district health board have been evident for a long time. The underlying problem, as I said, is the population-based funding formula. We need the Government to be announcing a comprehensive review of that funding formula that decides how much money each district health board is allocated. That is what is ultimately needed, rather than just passing a bill that suspends democracy and tries to make it sound as if it is just an everyday occurrence. This is not an everyday occurrence. If you ask the people of Otago and Southland what the major issue on their minds is right now, the state of the health system in our region is the top one, and the Government ignores that at its peril.

The posted deficit of $35.9 million for the Southern District Health Board and its new, vague plan for the future is a real cause for concern. The Minister gave the district health board $7 million to stop its deficit going into the $40 million range, which was what was predicted—around $42 million—and it was basically evidence of the stop-the-haemorrhaging approach that this Government has taken.

Dunedin Hospital is in a real crisis. It has lost, as my colleague David Clark said, its Medical Council accreditation to train house officers. It has lost orthopaedics accreditation and intensive care accreditation. These things are really significant, and the question you have got to ask is: what is next? What could happen next? Are there going to be job losses? I am hearing reports that there are significant job losses coming in Dunedin, at the university and at the medical school. I hope it is not true, but, given that the buck stops with the Minister on this, we need the Minister to be giving us reassurance that we are not going to lose more accreditations, that there is not going to be a slippery slope for our medical school in Dunedin, and that there is not going to be a slippery slope for our dental school. We need reassurance on these things.

A bill that stops democracy and stops the election of people from our region to govern our district health board is not giving us that certainty. It is not giving us that comfort. What we are left with is just a load of questions, and we need answers.

This has been a year of immense stress in the Otago-Southland district around our health system and where it is headed. If it was not for that insufficient Government-funding model, the district health board would not be in the woeful predicament that it is in now. We have the only major metropolitan hospital in New Zealand that has not had an upgrade or a rebuild. Labour pledged to rebuild Dunedin Hospital in 2014, and we stand by this commitment. We want to know a date and we want to know a timetable for a rebuild.

An amount of $22.5 million has been announced to be spent on interim works at Dunedin Hospital. This is a band-aid remedy in response to the public outcry. This is what this Government does. It offers band-aid remedies; it does not do real, substantial change that gives comfort and certainty to the people of Otago and Southland, where money is being poured into short-term measures rather than into long-term planning. Four years of a commissioner at the district health board—it is an unprecedented decision to bypass those elections. We need certainty on when there is going to be a build announced. It is an erosion of democracy. We know that there are times when this is needed, but what we need is not vague statements. What we need is a concrete plan so that the people of Otago and Southland can be reassured.

We have many, many people who are desperate for health services, who are waiting for hip surgery, who are waiting for breast-reconstruction surgery, who are waiting for bowel cancer surgery, and who are needing home-based equipment to maintain their ability to be independent and mobile in their homes. All of those services are being eroded in our area at the moment, in Otago and Southland.

I know that the member for Dunedin North, David Clark, and myself, in Dunedin South, have a steady stream of complaints from people who are not getting the kinds of services that they have had in the past, who are being turned away, who are not being allowed to get on waiting lists, who are not being able to see specialists, who are receiving a degraded service of home-care support in their homes—and the list goes on and on. All there is, in our region, is uncertainty—an uncertainty that is being reinforced today by a bill being put through Parliament that takes away the democratically elected ability for local governance. And what is left in its place? No certainty and no sense of when there is going to be a plan.

There are deep concerns. There is no easy panacea for the woes in our local health system. The major issue is the funding formula, and this Government refuses to acknowledge it. But with this bill, the buck certainly stops with the Minister. If our local health system continues to be starved of funding, patient care will suffer. If our hospital continues in a state of neglect, patient care will suffer. If our democracy continues to be eroded in the bypassing of elections, patient care will continue to suffer.

So it is time for the Government to listen to what people are saying in Dunedin, in Invercargill, in Otago, in Southland, and in all of the towns and communities in between. This is the biggest issue on their minds and it is the biggest stress in their lives as to where and what is happening to the health system. The buck certainly stops with the Minister, and the buck stops with the National Government.

BARBARA KURIGER (National—Taranaki - King Country): It is a pleasure to speak briefly on this bill this afternoon. We have heard quite a bit this afternoon about Dunedin Hospital, which is an important component of what the Southern District Health Board does. I have been down there recently with my good colleague here, Todd Barclay, and the people out in the open spaces are really thinking about primary health care and how it is delivered close to where they live.

I really support the reappointment of the commissioner and the delaying of the election because a plan will be developed. Something was not working down there before, and they are really having a look at how the plan may be developed. There will be new ways of thinking, there is consultation going on with staff, there will be consultation going on with the community, and, hopefully, there will be something that will come out that is much better than it was before.

So I support this bill. It needs time. A good picture will be built, and a good plan will be built, and I commend this bill to the House.

METIRIA TUREI (Co-Leader—Green): I really hope we get to hear some of National’s southern MPs speak on this legislation, given that they are the MPs who represent those voters in that area—the National Party voters in that area. We would expect to hear from some of them, rather than from people who have no idea what they are talking about, no connection with the place, and, actually, not even any awareness of the legislation.

This is the way the National Government treats the democracy of communities in New Zealand—by putting up people who have got no clue what they are talking about—when the legislation here is designed expressly to remove from the people of the southern regions, the deep south, their right to a democratic say. I guess that is what we have come to expect from the National Government, of course. The Government is gaining a great reputation—a fantastic reputation—for being allergic to democracy and to communities in the regions being able to exercise their democratic rights. An example of that is in this bill today.

The Green Party will oppose this legislation. The year 2019 is too far away—too far away—for the people of the southern area to have their say on their district health board. I have listened to the contributions from the MPs from the south who understand what they are talking about, and I agree—you know, we have had terrible issues with the Southern District Health Board over a number of years. You know, it is a very close community down there, everybody knows what is going on, and it has caused real harm to those who have needed high-quality health support. It has caused real harm to those who know the people involved in the district health board and to those who work for the district health board, and the families there.

The appointment of the commissioners was welcomed in order to try to get some progress on what was going on with the Southern District Health Board, but let us not forget how important these kinds of agencies are. Where you elect the officials and those people, you know them and you can have contact with them as community members.

These kinds of agencies are critical to a community’s engagement with the things that affect them every day. Health services affect New Zealanders every day. That is one of the reasons why we have elections for district health boards. It is the direct connection between the decisions that they make and the well-being of families—of our older people, of our kids, and of our families.

District health boards play a critical role in our communities around the country and so the retention of democratic engagement is absolutely critical. But this is a Government that will take any opportunity—the merest opportunity—to take away from communities their right to have a say. Environment Canterbury has already been raised. I mean, just look at what has happened after 5 years. There is still no right for the people in Christchurch and of the Canterbury region to have a say over Environment Canterbury. Environment Canterbury is essentially being run by Wellington. If this bill proceeds as it is, that is what will happen with the Southern District Health Board in the deep south. The Southern District Health Board will be run by Wellington, according to Wellington interests, and the people of that region, who have already suffered a great deal from weather events, from the loss of jobs, from the failure of this Government to have any kind of regional economic development approach—all of those things—and who are really suffering as a regional area, will now also be removed from having a democratic say.

I want to just acknowledge my colleague Kevin Hague, who led the call, actually, in urging the Government to look at the massive financial discrepancies of the Southern District Health Board more than a year before the Government finally decided to take any action. These are serious issues, and that is why the commissioners are in place. Most people support the commissioners in the work that they are trying to do. People have a lot of confidence in a number of those commissioners, and we certainly have supported their stepping in.

But there is no justification for this legislation coming into the House. There is no justification now for the removal of the elections in 2016. Even if this bill passes—and it may do at its first reading—we will be seeking advice and submissions and talking with people who live in the region who are affected by this bill about when they might want to next have elections, because mid-term elections are also possible. Not in this legislation, of course, because the Government does not want there to be a democratic engagement with the district health board there, but mid-term elections are also on the table. That should be a proposal that is available in this legislation, and it might have helped build more community support.

The whole point here is making sure that we maintain the strongest possible, the most open, the most transparent, and the most engaging democratic process around the world. New Zealand prides itself on its democracy. We can maintain that pride only if we respect the right of New Zealanders to have a say. This bill strips that away. This Government has no respect for the rights of New Zealanders to have a say over their democracy. This is yet another attack, which the Green Party will not support. Thank you.

RIA BOND (NZ First): I am proud to rise on behalf of New Zealand First to speak to the New Zealand Public Health and Disability (Southern DHB) Elections Bill. This is because I actually reside in Invercargill, in Southland, and I am really passionate and proud to say, on behalf of New Zealand First, that we passionately oppose this bill.

I have three main objections to this bill that I would like to talk about today. The first is that this bill is an appalling affront to the southerners’ democratic right to vote for their own health board representatives. Secondly, we know very little about the work done by the current commissioners to date, but we are expected to take it on trust that they are doing a great job and give them the job until 2019. Thirdly, the real culprit for the state of the Southern District Health Board’s fiscal woes is the Government’s terrible population-based funding and the amalgamation of the Southland and Otago district health boards. That has been referred to as a science experiment, and we feel that there has been a hidden agenda that will see lead services redirected to Dunedin Hospital, and Southland Hospital playing a lesser role.

But, first, what this bill means for democracy in this country. One of the basic principles in this country is the right to vote. It is how I got my job; it is how the Minister of Health got his. In New Zealand First we respect democracy, but this bill is an appalling affront to democracy. The Minister wants to play this down as one election, but what this really is is another example of this Government putting all the power in the hands of a small, unelected few because it believes that it knows better than anybody else, and because it thinks it knows better than Southlanders and Otago residents—residents who have been kicked off the waiting list, residents like Dave Savage, who was a victim of the system and who, like many other New Zealanders spread across this country, was simply kicked off the list.

Southlanders are entitled to a right to vote on who should be managing their local health-care needs. Locals know our regional concerns better. Southerners understand the state of our local district health board. They are not naive to the problems it faces, but they want them fixed now more than ever. We oppose this bill because New Zealand First objects to the Government taking the decision-making power away from the people.

This bill also is a complete and utter turn-round from what the Minister told southerners in June, when he appointed the commissioner. The Minister is quoted in the Otago Daily Times, from a press conference he held, as saying: “The plan is really for the commissioners to stay on as appointed members of that board, and new elected members to come on in at the local body elections.”

I cannot understand why this could not still be the case. Why the change of heart? What happened, no one knows. It is all cloak and daggers. Why can the elections not go ahead and allow Southlanders on to the board to have their say as well? The irony here is that this bill strips Southland and Otago residents of the right to hold a referendum on the work of the current commissioners—this from the Government that never met a flag referendum it did not like. But when it comes to the vote that actually means something, not just a third-term vanity project, suddenly these elections are a nuisance that interrupt the process.

It has been touted out there that this non - holding of the election will be at a cost saving to the Southern District Health Board of $300,000. I ask this Minister: are you serious? Maybe the Minister knows that Southlanders are totally fed up with how slow and secret these changes have been. I am sure that the Government members sitting there across from me have read all the many articles about the uproar opposing this bill.

I would like to read a little bit from the Southland Times, from what a former board member has actually said. This is what it says: “The move has left former SDHB member Kaye Crowther mortified. She said the axing of next year’s SDHB board election had taken away the opportunity for Otago and Southland residents to have a voice in their health care. The commissioner’s team has achieved little and its reduction of the deficit after six months was ‘peanuts in the grand scheme of things’. The government’s move to axe elections so a commissioner could take control signalled the future for other DHBs, she believed. ‘I think it’s the beginning of a process that will change the beginning of the DHB structure.’ Another former SDHB member, [Mr] Cook, said the Government’s move showed the problems faced by the sacked board were never a quick fix. ‘It wasn’t a whole lot of bad board decisions, it was an underlying problem with amalgamation [of the Southland DHB and Otago DHB] which you can’t fix overnight’ … With Southland board members out of the way and no Southlanders on the commissioner’s team, this could now happen, [Mr] Cook said.” We could see the move away from Southland Hospital, giving its lead surgery to Dunedin Hospital.

It was also reported in the Otago Daily Times: “SDHB: Was there any choice? Many may view last week’s announcement to extend the term of the commissioner appointed to oversee the Southern District Health Board by three years (bypassing the 2016 local body elections until those in 2019) with shock and outrage.”

My second point is the competency of current commissioners. We are told to trust the Government and that the commissioner and her team are doing a stellar job. Well, if the commissioner and her team are doing such a wonderful job, why can they not run in the election and stand on their own merits? Maybe because we do not know what material changes the commissioners have made to achieve the deficit projection of $35.9 million. For all we know, this could just be some creative accounting. We are told the projected deficit was $42 million and now it is $35.9 million, but projections are prone to fluctuations. What has the commissioner actually achieved in the past 5 months except rack up $1,400 a day, which capped her at 3 maximum working days per week? Let us not forget the temporary head of finance for the Southern District Health Board, who was being paid more than $10,000 in July and August.

These are the types of decisions that Southlanders have a right to consider when appointing their district health board representatives. We hold elections for the district health boards, just like we do for Parliament, as a referendum on job performance. Are the current commissioners doing a good job?

Todd Barclay: Yes.

RIA BOND: That should be up to the Southland and Otago residents to decide—and Mr Barclay, you would not know.

I am from Southland and I am yet to see or hear anything that would warrant giving the current commissioner and her deputies a generous salary for another 3 years without any review. The Government’s funding of district health boards is the real culprit as to why the district health board and so many others are struggling to stay fiscally sound. If the current system was actually adequately funded, the Southern District Health Board would not be in the mess it is today. In fact, neither would the other health boards spread across this country.

Maybe that is the vote that we need to be having in this House: how are we going to fund district health boards in this country? The population-based funding formula does not support regional health care. Does the Minister have any idea whether the funding of our district health boards is sufficient, or whether district health boards are just not managing their budgets appropriately, when New Zealanders are being refused medical treatments for conditions that severely impact on their ability to work and live life productively? It is high time we looked at this funding formula; it is high time for a review. New Zealand First would also like to know from the Minister what the deficit is for the Northland District Health Board in the 2015 financial year, because we cannot seem to find it.

In conclusion, this bill is bad for democracy, it is bad for southerners wanting to make sure their health board is working well and working hard, and it is bad for the country because it does not address the root problem affecting all district health boards in this country—the funding model. Southland and Otago residents have the right to choose who represents them on their district health boards. The Government may think it knows better, but, really, it is not up to the Government to decide. That Minister and that Government are not God almighty—may they remember that.

I question why this Government chooses to pay ridiculous amounts of money to a temporary commissioner and his subcommissioners, instead of employing an effective chief executive officer who could work to ensure the district health board serves the region for the long-term success—that is what Southland and Otago people deserve. New Zealand First opposes this bill. It is anti-democratic—

Todd Barclay: Put New Zealand first.

RIA BOND: —and we would like to put the people of Southland and Otago first. Mr Barclay, you might want to try to do that in your office.

JACQUI DEAN (National—Waitaki): I regret that the Opposition has chosen once again to oppose a piece of legislation that has the interests of the people of Otago and Southland at its heart. I regret that because I think that in its so doing it completely misses the point of this bill and it completely misses the point of the process around appointing commissioners in order to address the many issues surrounding the Southern District Health Board.

I have had many conversations with the chief executive officer and with members of the board, I have met with the commissioners, and I have met with the boards and management of the smaller hospitals around the region, and they are focused on what is important. They are focused on doing the best for their people. That is something that has been missing in today’s debate. There have been conflicting arguments from the New Zealand First member about it taking too long, or it not taking long enough, and there has been a mix of arguments from Labour—well, it used to be the major Opposition party—about just what its position is, but I very seldom heard the expression of what is good for the people and what is good for the patients who use the services of the Southern District Health Board.

In my communities, the people spoke long and loud about the proposed 10 percent cut to their funding, and rightly so. There were public meetings, and there were rallies. I went to as many of them as I could because I too share their concern at the potential loss of 10 percent funding. The placing of the commissioners into the Southern District Health Board is going to address those issues. They are listening to our concerns, they are listening to the concerns of the smaller hospitals, and it is not a job that can be done in the next 12 months. Why the Opposition refuses to acknowledge that is beyond me. Who does it care about? Does it care about the patients? I do not think it does.

JAN LOGIE (Green): I rise to take a short call as the second speaker for the Green Party on the New Zealand Public Health and Disability (Southern DHB) Elections Bill. We have just heard from Jacqui Dean, the previous speaker on behalf of the Government, about the need to focus on the needs of the community and on what is good for patients, and I think this is where we seem to have a disagreement in perception with this Government. The Government seems to be telling us that it understands, from Wellington, the needs of communities and patients better than locally elected representatives could.

That is the view that we have heard again and again from this Government in relation to Environment Canterbury where, just as surprisingly, the Government’s needs represents its vision of an irrigation-heavy economy, as opposed to the identified needs of the local community. We have heard it again from this Government in terms of the Auckland transitional authority plans, where the Government thinks it can appoint the commissioners and that it would be more appropriate to do so than have the Auckland Council do that, and we are seeing this again here.

The Green Party supported the initial appointment of commissioners in the Southern District Health Board. As has already been pointed out, my colleague Kevin Hague had been raising concerns for over a year before the Government took action around some of the financial challenges that were being experienced by that district health board. However, I have not heard any argument from the Government about either why mid-term elections would not be possible, or—as has already been pointed out, as signalled by the Minister initially—why that commissioner could not continue the job alongside locally elected board members. I would like to hear an argument against that.

I am from Invercargill. I still have family down south and I have worked at Otago University, at the medical school. The people whom I know are absolutely capable of providing fantastic leadership and accountability and representing their community. Although the commissioner may be doing a good job, the people I know would also do a fabulous job. It seems to me that this Government, again and again, underestimates the knowledge and the ability of people in our local communities. That is not the Green Party vision. We do not believe that Wellington and people in this House have a better idea of the needs of local communities than the local communities themselves. If this bill does pass we will be putting up an amendment for there to be interim, mid-term elections, and we certainly will be listening very carefully to find the arguments about why a commission alongside a locally elected board is not possible.

I would also just like to echo some of the other concerns that have been raised in the House regarding the population-based funding model and its impact, particularly on Southland, Otago, and Dunedin, where we have remoter populations. That model does not seem to be working so well. Otago, and Dunedin in particular, separately from the remote needs, has one of our most prestigious medical schools, and the fact that Dunedin Hospital has lost accreditation for training in several areas is a real problem for us as a country. That medical school is critically important for us as a country, and we need to ensure that that knowledge that is based in Otago and that the local oversight are there to be able to do credit to the importance of that institution and the health needs of those communities. So it is unfortunate that the Green Party is not able to support this bill.

JENNY SALESA (Labour—Manukau East): Thank you for the opportunity to speak on the New Zealand Public Health and Disability (Southern DHB) Elections Bill. This bill will exempt the Southern District Health Board from the 2016 triennial district health board elections and it will enable the elected commissioners who are currently there to stay in place after December of that year, so that they continue to govern the district health board for another 3 years. As far as I know, this is the very first time that such a 3-year extension has been applied to the health sector.

The Labour Party supports this bill to the next stage, but we have some concerns. One of those concerns is that there is a lack of transparency around the district health board’s actual situation right now. Earlier this year, in April, the Minister rejected rumours that a commissioner would be brought in to sort out the Southern District Health Board financial mess. However, the struggling board members were fired just 2 months later, in June. Public meetings were also scrapped in the same month.

Communication with staff and the public has since that time also been questionable. In June the Minister stated that the 2016 election for the Southern District Health Board would go ahead and that new members of the board were expected to take up their roles after the next local body elections in September and October of next year, but a spokesperson for Dr Coleman, the Minister of Health, said that a return to an elected board next year had not actually been promised, as stated in the Otago Daily Times. And here we are in December debating the law change needed to delay democratic elections in the usual cycle and leave the appointed commissioners in place for several more years. In a statement last week Dr Coleman said that the commissioner and her deputies were starting to turn the deficit challenge round. Apparently, an improved deficit position of $35.9 million for 2015-16 for the Southern District Health Board has been agreed, which shows that progress is being made. Staff, on the other hand, report no discernible difference.

The district health board runs crucial public health services vital to the lives of many, many people in the south. The funding model for health is, indeed, broken. The Government continues to under-resource health services, and that is one of the main issues here. The Government has underfunded health by $1.7 billion in real terms since 2010. Refusing to carry out a full review of the funding model is having adverse effects across the country, for the Southern District Health Board and many other district health boards—nine, the last time we counted.

The Southern District Health Board area is the largest geographically here in New Zealand. The problems that it is today facing partly flow from the merger of the Otago and Southland district health boards 5 years ago. At that time very little thought was given as to how the merger would impact on the region. Figures released earlier this year seem to show that the Southern District Health Board had actually been starved of the necessary funds that it needs. The Government should ensure that adequate funding of the region’s health needs is not put at risk. The Government must develop a plan. It should have a map. It should have genuine deliverables and ensure adequate resourcing with a plan that is robust, and it should actually make these plans available to the public.

The Minister cannot keep pushing the responsibility for sorting this financial mess out on to the commissioner behind closed doors. If indeed, as the Minister states, the situation is showing improvement, why not return to democracy and public accountability at the very first available opportunity—at the next local board elections? It is very unclear why, or even whether, a 3-year extension is suddenly required.

I look forward to the debate and clearer information as this bill progresses through the select committee. Thank you.

TODD BARCLAY (National—Clutha-Southland): It is an honour to speak in support of this bill as one of the few members who has spoken today who actually understands what is going on there—one of the few members who has spoken who has actually met the commissioner, Kathy Grant, and her deputies, who has actually met the chief executive, who follows the updates in the media, who knows what is going on, and who is in touch with their constituency.

After going around and talking to my local health boards and small community groups, I can say they are in support of these changes. There has been such a mess for so long that it is about time that something is happening to rectify the situation. People want confidence in their health system. The Greens are so out of touch. They clearly have not spoken to any of the constituents in Otago or Southland, nor have New Zealand First members. Finally, for a change, there is certainty and there is direction moving forward in health, and we can start to see that through the commissioner’s updates.

To touch on David Clark’s questions around the progress around the upgrade, it is part of a six-stage process. They are already in the strategic assessment stage, to be followed by four design stages. It is going to take some time, obviously, because it is a significant capital upgrade and it needs to go through Treasury’s Better Business Cases for Capital Proposals model. Following on from the strategic assessment stage there will be a concept stage, a preliminary design stage, a developed design stage, a detailed design stage, and then construction. It just goes to show how much the future Mayor of Dunedin Clare Curran pays attention to these sorts of processes, because she clearly is wrong once again.

With regard to the Government’s contribution to the Southern District Health Board over the last 7 years, we have increased funding by over $134 million, to a record $852 million. This organisation is almost a billion-dollar organisation. The commissioners need time, they need space and they need fresh air—without these democratic elections coming up next year, which will interfere in the work they have already done—to start making some changes. We do not want to slash and burn; we want a medium to long term work programme that will see a systemic change in health in that area, which will benefit patients and will benefit our communities.

It is an honour to speak on this bill, and I would like to congratulate the Minister of Health and the commissioner, Kathy Grant, and her team on all the hard work that they are doing.

PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe e Te Māngai o Te Whare, tēnā tātou katoa. If indeed the member who just resumed his seat, Todd Barclay, has talked about time and space, it is clear that according to his assertions he has given a lot of time to going around and meeting these people. Now he is suggesting that he give them a bit of space—space to fix the wrongdoing that has happened under the watch of his Government.

I doubt very much that, in fact, the member Todd Barclay has actually toured the entire region of the Southern District Health Board. I guess that he has probably kept within his own little patch. But just for the advice of the House, the estimated resident population of the Southern District Health Board area is just over 300,000 people. It is a land area of just over 60,000 square kilometres, and it is considered the largest of the district health board regions in New Zealand. I doubt very much whether the member who just resumed his seat has covered all of that area and canvassed all of those people whom the Southern District Health Board is there to serve.

It has already been mentioned in this House, not just in relation to the Southern District Health Board, that health is a big issue across our country. I pick up the point of the member Clare Curran, who has already pointed out that all of the people who come into her electorate offices have already mentioned that health is the biggest issue. For most of those who come through, it is either health or housing: “h” and “h”—health and housing. One of the sad things with a bill like this is that it will remove the community’s voice in appointing the people to best represent them, in appointing a district health board that reflects the people who live within the catchment area of the Southern District Health Board.

It has already been mentioned, and I want to echo the point, that it does seem to be a suspended state of democracy. This is not something new, given that in recent times this particular Government has put the country through this state several times in my time here in this House. Just recently we have pushed through under urgency a series of legislation that I am sure the wider population, the people of New Zealand, would relish the opportunity to be able to provide submissions on to a select committee. They would relish the opportunity to have their voice heard on the issues that are affecting them. This legislation is another case of that voice being taken away.

But I say to the people who fall into the catchment of the Southern District Health Board, do not fear. Although this bill may take away their rights to an election of the district health board, there is another important election coming up in 2017, and I hope that their voice is heard. That one will tell this Government that what it has done in its time while managing the Southern District Health Board has failed. It will send a clear signal to this Government that we cannot tolerate the demise of and the reduction in services—in particular, health services—in our regions.

My colleagues have already talked about the hospital. They have talked about how the people of Dunedin and the people of Otago deserve a hospital that is state of the art. They deserve a hospital that provides to them the services that they need to be healthy, to be wealthy, and to be wise. They deserve a hospital that will see them when they need to be seen. They deserve a hospital where, when they walk in, they do not fear any secondary illnesses that may come because of the poor state of the hospital.

They deserve all of these things, and it is sad that the state of the Southern District Health Board has fallen this way. It is sad, and it is also sad that this Government has ignored this problem for some time now. It has been raised with the Government by many members—not only on this side of the House but, I am sure, by a few on that side—but, sadly, their cries, their pleas, their kōrero, and their statements have been ignored. Now we are left here to deal with a serious problem, a problem that has seen the deficit blow out to over nearly $40 million, and a problem that has seen millions and millions of dollars poured into this particular health board to make sure that it falls under the $40 million deficit mark. That cannot be tolerated. We want to see that money go to the places where it needs to go. It needs to go to the places where our people are able to receive the services that they deserve and the services that they require.

What does this erosion of the democratic process do? What it does is it erodes the trust that people have in the institutions of this land. In this particular case, it is the Southern District Health Board. In other cases it also falls down to this august institution, and that is a concern. It is a concern because, as we see, there are low levels of participation across the country when voting, whether it is in a silly flag referendum or whether it is in the actual general election. We are seeing a drop in numbers. I ask myself why it is like this. Clearly, from what I hear when I am out talking to the people in the good constituency of Tāmaki Makaurau, it is because they do not have faith in the system that is here to serve them. We are going to see a repeat of this here, on this particular bill, by removing the democratic rights of the people who fall within the catchment of the Southern District Health Board. They will be taken away, stripped away, until 2019.

How many people, I ask, will suffer between now and then? How many further services will see a drop in funding, or potentially be cut, between now and then? Although we are talking about some of the major centres within the Southern District Health Board, I wonder what it means for the more remote regions within this particular catchment area of the Southern District Health Board.

All of these questions—I wonder, can they be solved by one person? Can they be solved by one person who, if we give more power to that person, can make sure that the people within this area will receive the services they require? I question whether or not that person, in this particular time frame, will be able to tidy up what has happened. We have already come through 8 years of this particular Government, and the problem has got worse.

There still remain many questions from this side of the House. All of this said, we do support the bill, which will go forward to the select committee. We hope that more and more people from the Southern District Health Board catchment area will make submissions. I note, too, that in the departmental disclosure statement it talks about the cost savings that will happen when you do not have to have an election. It says it costs approximately $300,000 to run an election for membership on the district health board. I wonder whether, at the time that was supposed to be given to elections—the one that is being proposed to be taken away—this Government will say: “Well done. We’ve saved $300,000.” The Government will have saved $300,000 by taking away democratic rights.

In conclusion, I want to just repeat what I said earlier: do not fear, because there is another important vote coming up before 2019. It is in 2017. I hope the people who fall within the Southern District Health Board catchment area make their voices heard, make their voices known, and stand up for the rights that they deserve from a responsible and caring health sector that makes sure their health requirements are met. Kia ora.

Dr SHANE RETI (National—Whangarei): It is a pleasure to take a short call on this bill. Over a period of time, I had the privilege of three consecutive appointments to a district health board. They are complex entities, they can be slow to change, and they take time to have real effect. You push on one side of a district health board and it bulges on another side that you did not quite expect. It is not as if you are breaking linkages; you are breaking people if you get it wrong, so you really need to take great care when you are changing things.

We have heard from Opposition members about funding. They have bandied around the term population-based funding formula, or “PBFF”. Well, that rolled easily off the tongue—especially for the member from New Zealand First! She really needs to know what she is talking about, because she has made the claim that the population-based funding formula does not cover funding for the regions. Yes, it does. There is a whole major arm called adjusters, and under adjusters, some of the components are rurality and unmet need. You need to be very careful using these terms, which raises this point. My observation with newly elected members to boards is that it can take 3 to 6 months, sometimes, to pick up some of the really complex funding terms of the district health board—diagnostic-related groups, inter-district flow, or even population-based funding formula.

It is a really hard area to work in, and it is hard when the district health board is doing well. No one disagrees that the Southern District Health Board has got a challenging environment. In that environment, I think it would be particularly unfair and inappropriate to ask newly elected members to step in and have an impact. On that basis, I totally support and commend this bill to the House.

A party vote was called for on the question, That the New Zealand Public Health and Disability (Southern DHB) Elections Bill be read a first time.

Ayes 95

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

Noes 26

Green Party 14; New Zealand First 12.

Bill read a first time.

Bill referred to the Health Committee.

Hon Dr NICK SMITH (Minister for the Environment) on behalf of the Minister of Health: I move, That the New Zealand Public Health and Disability (Southern DHB) Elections Bill be reported back to the House by 11 April 2016.

Motion agreed to.

Bills

Residential Tenancies Amendment Bill

First Reading

Hon Dr NICK SMITH (Minister for Building and Housing): I move, That the Residential Tenancies Amendment Bill be now read a first time. I nominate the Social Services Committee to consider this bill. This bill is part of this Government’s practical programme to improve the safety and well-being of Kiwi families, particularly those who are the most vulnerable. It builds on our work this year of increasing base benefits for the first time in 30 years, and the extension of free doctors visits for under-13-year-olds. It contains well-targeted measures that will deliver warmer, drier, and safer homes.

We all know the connection between the quality of housing and how this impacts on the social, educational, and health outcomes for our families. The goal of this bill is to maximise the gains in housing quality while minimising the costs we impose on the sector that will ultimately be passed on in increased rents.

The first big change in this bill is around home insulation. It addresses the problem that not until 1978 did we require, nationally, new homes to be insulated. We set out in 2008 with an ambitious programme to warm up these homes. We first needed to get our own house in order, and launched a programme to insulate every State house that could be insulated, completing 40,000 by 2014. We also invested $500 million in grants for retrofitting insulation in private homes, and, to date, we have done 280,000 homes.

The measures in this bill are the next logical step. They will require all tenanted homes to be insulated by 1 July 2019. Those homes receiving the very high Government income-related rent subsidy will be required to comply by 1 July next year. The bill also introduces a new disclosure regime, where landlords will be required, in new tenancy agreements from 1 July next year, to state whether the home has underfloor, ceiling, and wall insulation, and to what level. This is designed to better inform the rental market of the insulation standard of homes—something that is not easy to do via pre-rental inspections—and to help lead the sector in providing warm, healthier homes by the deadline of winter 2019.

We estimate these new requirements will see 180,000 tenanted homes insulated over the next 3 years, on top of the 320,000 we have done to date through our other programmes. This contrasts with just 19,000 done during the 9 years of the last Government, and makes a mockery of Labour’s current claims that the Government’s efforts are insufficient. A lasting, positive legacy of this John Key - Government will be 500,000 insulated homes, providing 1.3 million New Zealanders now and into the future with warmer, drier, and healthier accommodation.

It is important these insulation measures are kept practical. For these reasons, they are constrained to underfloor and ceiling insulation, where the gains are greatest, and because it is not economic to retrofit wall insulation. We are also allowing exceptions in the draft regulations to those homes with raked ceilings or minimum floor clearances.

There are also exceptions for where a property is to be demolished in the next 12 months, and in those situations where it is tenanted by the previous owner for short periods. We welcome feedback on the associated regulations to this bill so we achieve our goal of not requiring insulation where it is not practical, but, equally, not allowing an easy “get out of jail free” card for those landlords just trying to avoid costs.

The second significant measure in this bill is the requirement for smoke alarms in all tenanted properties from 1 July next year. It is estimated that 120,000 rental properties currently do not have a working smoke alarm. We see tragedy after tragedy of home fires and the loss of life because of a lack of this most basic and inexpensive protection. The requirement we are proposing with this bill and the regulations is a minimum of one smoke alarm in the hallway within 3 metres of each bedroom, each self-contained sleep out or caravan, and on each floor of a home. We want to shift to the newer 10-year long-life smoke alarms and so we are requiring that all new and replacement alarms are either this sort or the hardwired type. These new smoke alarm requirements are expected to prevent three fatalities per year and, for every dollar spent, to save over $15.

This bill has been developed in the context of a wider debate about whether we need a broader warrant of fitness regime for housing, like we have for motor vehicles. I came to this debate open minded and have carefully considered the issue over the past 2 years. It is true that we do have tenanted properties that are dives and unfit to be lived in. But, on investigation, apart from these issues of insulation and smoke alarms, I found the problem over the quality of these rentals was one of enforcement. The existing housing regulations already require homes to be free of dampness, to be secure, to not leak, to have safe wiring, and to have proper sanitation. The answer lies not in more regulation, but in strengthening compliance.

This bill makes three important changes in this regard. The first is it would enable my ministry to take enforcement cases to the Tenancy Tribunal. This acknowledges that there are some vulnerable tenants—people with disabilities—who will not realistically take a dodgy landlord on. They either put up with unsafe or unhealthy homes or leave the property for another vulnerable tenant. There is a public interest in the ministry being able to take these cases on, get the houses upgraded, and ensure a better overall standard of housing in New Zealand.

The second change is beefing up the enforcement of work orders from the Tenancy Tribunal to fix a substandard property. The bill removes a landlord’s defence of forgetfulness over an order and ensures that a monetary payment cannot be used as a substitute for getting a home repaired. We also want to strengthen the protection for tenants who take cases to the tribunal over these housing standards issues. A tenant will be able to apply for a retaliatory eviction notice to be quashed up to 28 days after it is given, and the landlord will be able to be fined up to $2,000 for an unlawful retaliatory notice.

The reason we believe these measures are the best way to improve rental housing standards is that they are targeted at those homes that are the real problem. Requiring every one of New Zealand’s 450,000 rental properties to be annually inspected with a warrant of fitness would cost over $100 million a year. This is just the administrative cost and does not physically improve a single home. This cost would inevitably be passed on to tenants and put rents up by over $200 a year, an increase that would squeeze many household budgets.

I am also doubtful of the practicality of some of the draft warrant of fitness proposals I have seen. Requiring staircases to have certain widths and step depths is justifiable for new buildings, but would impose enormous costs on older rentals. I noticed my own home and Beehive office break some of the proposed rules for visibility strips on full-height windows and sliding doors, which are way too nanny State for this Government. The approach taken in this bill of nailing the practical issues like insulation and smoke alarms and strengthening enforcement of the existing regulations is a more effective way forward.

The final change I want to note in this bill is about property abandonment. When this happens landlords lose rent, but the community also loses by a property being left vacant while people are desperate for housing. This bill contains sensible, faster mechanisms for dealing with those situations.

I thank the many organisations, tenant advocates, insulation experts, fire-prevention proponents, and the New Zealand Property Investors Federation for the input into this bill. It will make tens of thousands of homes warmer, drier, and safer, and deserves the support of this House. I commend the bill.

PHIL TWYFORD (Labour—Te Atatū): Labour is voting for the Residential Tenancies Amendment Bill. It is better than nothing, and deals with such an important issue as making New Zealand homes warm and dry, which I will argue is one of the biggest public health challenges that this country faces. We welcome this bill coming to the House—it is a small, incremental initiative—but, sadly, it falls a long way short of the kinds of policies that this Government would be advocating if it was serious about dealing with this problem.

The bill has four big defects, which I will speak about in more detail. The first is that it does not propose any standard for heating of rental properties. It has an excessively long 4-year phase-in period for landlords. There is no provision, thirdly, for setting standards for mould or ventilation. Finally, there is a massive loophole in the proposed regulations that will flow from this bill that will allow houses that are currently insulated with the 1978 standard for insulation to retain that standard. They will not be required, under this bill as it is currently drafted, to meet the 2008—the current Building Act—standards for insulation. So there are four big weaknesses, which I will return to.

This issue is incredibly important. I think that in recent years New Zealanders have come to the view that it is high time we fixed up our rental housing. Around half the children who are growing up below the poverty line in New Zealand are living in private rental housing, which is currently more or less unregulated. Many of them are living in substandard, cold, damp, and mouldy housing that is a threat to their health. In this country we hospitalise about 40,000 children every year from poverty-related diseases—asthma, gastroenteritis, bronchiolitis. It is a blood-curdling list of poverty-related diseases that we simply should not have in significant numbers in this country, but we do. The problem is the toxic cocktail of poverty, overcrowding, and poor quality, cold, damp houses.

The polls show—public opinion tell us—that New Zealanders want this problem fixed. People believe that every child growing up in this country deserves to grow up in a warm, dry home. One of the reasons is that very credible public health research done in this country shows that every dollar you invest in the retrofitting of houses through insulation and heating can save up to $5 in public health expenditure. It is a no-brainer. We should be doing it. The public want to see it done. But this bill that Nick Smith has brought to the House is a classic “Nick Smith special”. It is another—yet another—grudging half measure by a Minister who has been dragged by public opinion, kicking and screaming, to do something about a problem, but who insists yet again on doing the bare minimum to try to convey the impression that the Government is actually doing something about the problem.

I want to quote Professor Philippa Howden-Chapman of Otago University’s Wellington campus, who won the Prime Minister’s Science Prize earlier this year for the work that she and her colleagues have done documenting the public health effects of poor quality housing. She said that houses “get damp and cold and mouldy, but it also damages the people living in them, particularly babies, children and older people. It damages their lungs. If they have heart problems, it’s harder for their circulatory system to work. And so people who live in cold houses, it’s likely to aggravate their heart conditions, but for children, we get this terrible, terrible battery of respiratory infections and close contact infections because people have to crowd together in one room. So it’s pretty shocking in a country that is as wealthy as we are; we can’t make our houses warm enough for people to keep healthy in.” That is a very important part of the New Zealand housing story.

If the National Party members opposite had voted for my Healthy Homes Guarantee Bill in April this year, which would have regulated minimum standards for both heating and insulation, then we would not be here wasting time with this excuse, this half measure of a bill. But the good news is that this House will get the chance to debate and vote on Andrew Little’s Healthy Homes Guarantee Bill (No 2), which will achieve the same effect. It will legislate both for modern, efficient fixed heating sources in a house and for insulation standards, because we need homes that are both warm and dry.

The huge gap in Nick Smith’s bill today is that it imposes only insulation standards; it does not impose heating standards. Under Nick Smith’s bill, we will see landlords around the country implementing an insulation standard, but they will insulate cold, damp homes. They will still be cold, damp homes, and children will still be getting sick. This Minister, Nick Smith, is pandering to slum landlords—pandering to the bottom of the market—because he will not do the decent thing and legislate standards for both heating and insulation.

One of the big defects that I mentioned in this bill is that in Nick Smith falling over himself so as not to offend slum landlords, he has designed into this bill a massive loophole that will allow houses that were insulated with the standard that has been required since 1978, which is 70 millimetres of insulation fibre—70 millimetres. This here is the thickness of insulation that is required under the 1978 standard, and, under Nick Smith’s legislation, if a house has this level of insulation in the walls and the roof, that is OK—it can continue. But since 2008 new houses in this country have been required to instead have this thickness of insulation. It is much, much thicker, and more effective. That is why houses that have been insulated with this standard are warmer and drier, because they have this thickness. But Nick Smith, falling over himself to pander to the slum landlords at the bottom of the market, is going to require them to have only this thinner thickness of legislation, if they have already got it in the house.

That is a massive loophole. It is a flaw right at the heart of this bill. Nick Smith is happy for them to have this 70-millimetre insulation, but if houses have been insulated since 2008, they have got this much thicker insulation fibre. Well, I am sorry, Dr Smith, but you are letting down hundreds of thousands of New Zealand kids who are growing up and getting sick in cold, damp houses, because you are not willing to do the right thing and require private landlords to do this. Not only are you not requiring them to have an efficient heating source—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

PHIL TWYFORD: Not you, Mr Assistant Speaker—Dr Smith, you are not willing to require this from tens of thousands of private landlords whose properties are already insulated with a patently inadequate level of insulation, set from the 1978 standards. This bill is not going to require them to upgrade their standards.

The question is: why will Nick Smith not do the decent thing? Why does he always bring weak, grudging half measures to this House, no matter what the policy issue is? In this case we are talking about cold, damp homes. The first reason, I submit, is that he is pandering to slum landlords. Most of the good landlords in this country have already insulated their homes. Most of their properties already have this thicker insulation. The Property Investors Federation has been publicly advocating for heating standards and legislation, but Nick Smith has brought a bill to this House that falls short of what the federation has been arguing for. He is pandering to the bottom end of the market, and he will not do the decent thing. The good landlords and the professional landlords in this country are tired of being undercut by the bottom end of the market, which is trying to make a profit at the expense of providing decent, healthy accommodation. Those landlords are willing to put their tenants’ lives and the lives of their children at risk because they will not provide decent standards.

The other reason is that Nick Smith cannot bring himself—he cannot find it in himself—to regulate properly, to make markets work better for ordinary Kiwis, because that is not in the DNA of the National Party. Its members will not do the decent thing. They are pandering to slum landlords. This bill falls a long way short of what it could do.

ALFRED NGARO (National): I rise to take a call on the Residential Tenancies Amendment Bill. I want to make a couple of remarks. This is a debate, and so I will rebut some of the remarks that have been made by previous speakers. In the closing comments of the previous speaker, Phil Twyford, there was a remark made about pandering to slum landlords. I just need to remind that member that in the 9 years of a Labour Government there were at least 40,000—[Interruption] Let us get some figures, because history does hurt—I know it does. Let us talk about what pandering to the slum landlords did under a Labour Government. In 9 years 19,000 State homes were insulated—19,000. That is an average of 2,000 houses per year. Under the National Government—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I regret having to interrupt the member, but I will remind members that although it is a robust debate, that does not mean that the standards as to what they call members are changed, Carmel Sepuloni.

ALFRED NGARO: Thank you, Mr Assistant Speaker. Let us then remind those members. Under a Labour Government, in 9 years there were only 19,000 houses insulated. Under a National Government so far, in its 7th year, we have insulated 40,000 State houses and 280,000 houses under the Warm Up New Zealand: Healthy Homes programme. That is an average of 50,000 houses per year. In other words, by the time we have completed 9 years—yes, it will be 9 long years for the Opposition; here are the figures, which will hurt—there will be nearly half a million homes that have been insulated to make them warmer, drier, and safer. That is a statistic that you cannot get away from. I know the history hurts, but it is the reality.

We believe that under this Government and under this Minister, the Hon Nick Smith, we are heading towards what we believe is important—a balance towards engaging those who we know are important in the sector. So those who are important and are key include groups of property landlords. The New Zealand Property Investors Federation has been engaged and has been consulted. For tenants there is the Tenants Protection Association. Together they have said that the process and the balance that this bill is taking is appropriate and right.

The other comments, and we are talking about the thickness of the legislation—or the thickness of insulation, which I think is what the member was trying to get to; he made a bit of a Freudian slip there—were that in actual fact we believe that this bill strikes the right balance towards a warrant of fitness. We believe that it will amend the Act to require smoke alarms and insulation for residential properties. It will provide greater enforcement powers in respect of unsafe and unhealthy rental homes. Thirdly, it will reform the law in regard to abandoned residential properties.

The previous speaker talked about what should be enforced, but what the member does not always take into account is who will pay. Where will the costs come from? For this bill there has been consultation with those in the sector who have given us their views about what is right, what is a balance, and what is appropriate for us to step forward. We believe that we are focused on the right area. Those figures again: under this Government half a million homes are being insulated. They are warmer and drier. In 9 years under Labour only 19,000 State houses were insulated. This is a Government that acts. This is a Government that works closely with the sector to consult. This is a Government that wants to have warmer, drier, safer homes for New Zealanders.

I look forward, as chair of the Social Services Committee, to receiving this bill, working with our communities, hearing submissions, and working towards this bill returning to the House. I commend this bill to the House.

CARMEL SEPULONI (Labour—Kelston): I just want to point out that the reason that Government has no problems with pandering to slum landlords is that it is a slum landlord. The Government has been a slum landlord with our Housing New Zealand houses. I want to remind Mr Alfred Ngaro, because I am sure he knows this, that just about every single case that comes through our electorate offices in west Auckland now is a housing case. Four years ago I was a list MP for Waitakere. We never had this number of housing issues like we do now. Just about every single one of them is about people who cannot find a house or they are in homes that are making them sick.

Iain Lees-Galloway: Thank you, Nick Smith.

CARMEL SEPULONI: Thank you, Nick Smith, for being responsible for all of those people who are coming to us with letters from their GPs, letters from their hospitals, pointing out the fact that they must be provided with healthy housing because their children are getting sick.

I just want to point out to that slum landlord over there that actually I think it is disgusting, following on from the Emma-Lita Bourne case, that that Government is still not keeping a record of the number of people who are putting in for transfers to Housing New Zealand houses because of the fact that their children have health issues due to the conditions that they are living in. We asked how many transfers have been put in for that reason. The Government said, following on from the Emma-Lita Bourne case, that it is not collecting that information. Well, it should be collecting that information.

Today we are talking about private rentals, but looking at this, it really is a reflection of what we have been provided with by the Government. Recently I had a mother contact me whose 4-year-old was in hospital with respiratory problems. She was going to be released because of the fact that at Waitakere Hospital there were too many people in there and the hospital could not provide everyone with a bed. The hospital said: “Look, we would like to keep her in, but we can’t. She is going to have to go home.” That mother was so scared because she knew that as soon as she got her daughter home to their house, which had dampness problems and black mould all over it, her child would get sick again and she would be back in hospital. She went home on the Thursday; she was back in hospital on the Saturday.

I am going to point out to Mr Smith that actually this bill does not go far enough. This is typical of the National Government, as my colleague Phil Twyford has pointed out. The Government does just enough to look like it is doing something, it forces us to have to vote for it, but it is not enough, and it does not address the problem that we are facing in this country.

I have had tenants come to me who are living in leaky buildings. They are living in leaky buildings in west Auckland that have been bought by landlords—bought for cheap because no one wants to buy them. But the landlords buy them, knowing that they can still rent them out for market rentals. It is disgusting. These people living in these houses—I have seen cases of rheumatic fever. I have seen numerous cases of children who had never had asthma or respiratory problems until they were living in these homes. These are the types of landlords whom that Minister should be trying to legislate against. That Minister should be doing something in relation to that, but he is not.

A landlord or a person can purchase a leaky building and rent it out for a market rent because we have such a demand for housing. People are desperate and they will take whatever they can get. Do you know who ends up in these houses? It is our poorest families—our families that are not first in line to be able to get the healthier homes, the nicer homes, the nicer rental homes, Mr Smith. They are the ones who end up in these unhealthy homes. So that Minister and that Government should be ashamed of themselves.

My colleague Phil Twyford, who is working in west Auckland as the Te Atatū MP, like me has seen so many cases come through the door where we have landlords who are not acting in an ethical way and who do need to be held to account by responsible legislation. I am going to share another example of an irresponsible landlord. This one has three houses on the same street and is renting out rooms to people who are on parole and also people who have mental health conditions who find it difficult to get housing elsewhere. But the housing that they are in is not only unhealthy but is causing problems in terms of the number of people who are being squeezed into those homes. It is causing problems for that whole street, that whole neighbourhood, and I wish—I wish—that the National Government had the courage to do something, to go a little bit further than it has gone here.

Sadly, this policy is the kind of grudging half measure that has become the trademark of National’s housing policy, and not just the National party’s housing policy but also its social development policy and its education policy. In relation to its social development policy, I can refer to the so-called Support for Children in Hardship Bill, which really did very little to address the issue we have with 305,000 children living in poverty. Instead, it was an attempt to make it look like the Government was doing something. As I said, this Government has no courage to make bold decisions. National simply has no real commitment to housing reform and standards.

The Government actually should have voted for Phil Twyford’s Healthy Homes Guarantee Bill earlier this year but it did not. Instead of the bill we are debating today, which is a weak half measure, Government members should actually vote for Andrew Little’s Healthy Homes Guarantee Bill (No 2), which will be debated in early 2016. That is Labour’s bill that will see standards for both insulation and heating. I do not know how National Government MPs live with themselves on a daily basis, particularly those ones who are electorate MPs, or even list MPs based in poorer areas, knowing the very real reality that our poorer families especially are facing out there and the implications that that is having for their children.

I want to point out that at the moment we are talking predominantly about the health issues in relation to children but actually there is a growing number of New Zealanders not in their own homes. A growing number of New Zealanders are being forced to rent—in particular, I am looking at our senior citizens who are going into retirement without owning homes. This is a very real issue for them too. Respiratory problems amongst our senior citizens are a huge issue. Unless the Government can lift the standards required in private rentals, then we are going to see not only children as the direct victims of these types of housing environments and low living standards but also our senior citizens, who are going to be increasingly visiting our hospitals with respiratory problems because they are living in substandard rental accommodation.

There is a massive need to make rental properties warm and dry. The Building Research Association of New Zealand says that only 22 percent of rental properties are in good condition and 44 percent are in poor condition. Nick Smith justifies his pandering to slum landlords by saying that setting standards for heating and insulation would cost too much and push rents up. But a heat pump and insulation for a three-bedroom home would cost around $5,000 and last 15 years. Over that time a home would bring in more than a quarter of a million dollars in rental income. It really is a small investment in an asset that generates a lot of revenue.

Listening to Mr Smith talking earlier about Labour’s measure, which was a full warrant of fitness for private rentals, he said it could not be considered because it was not considered to be the most cost-effective mechanism for achieving the outcomes required. How can that not be considered cost-effective when every day this low standard of private rentals is costing us lives, is costing us admissions into hospitals, and is costing us the health of New Zealanders—not just our children but also our senior citizens and a whole lot of people who are living in mouldy, damp homes? So actually, Mr Smith, perhaps there should be a conversation that goes on with our Minister of Health because I am sure if they are able to reconcile what is happening in health and what is happening in housing, then they will work out that the most cost-effective thing to do would be to implement a full warrant of fitness for private rentals, like Labour has suggested for a long time and will continue to do so. Thank you.

MATT DOOCEY (National—Waimakariri): It is an honour and a pleasure to rise in support of the Residential Tenancies Amendment Bill in its first reading. I would like to just acknowledge the hard-working Minister for Building and Housing, Nick Smith, and also the Social Services Committee chair, Alfred Ngaro. I am looking forward to this bill passing through the first reading and into the select committee and I just acknowledge the pragmatic response we are getting from across the whole House at the moment.

There are two key areas of minimum standards around here. One is around insulating these houses and, as we have heard from the Opposition members today, I think 19,000 houses in 7 years were insulated, and when you look at this Government’s record of insulating over 300,000 houses, it is well on its way to insulating over half a million. I had members of the Community Energy Action volunteer group in my electorate office just recently, and they were outlining a very clear correlation in Canterbury District Health Board data of people presenting at the accident and emergency department with respiratory illnesses—bronchitis and asthma—and how going into these houses and insulating them can have such a positive effect on these tenants and avoid people accessing hospitals and accident and emergency departments. So I acknowledge the work of the Government in this space, supporting vulnerable New Zealanders.

I had a brief count-up this morning of 118 first readings passed by this Government this year, and when you look at the theme running through all those first readings it is around supporting hard-working New Zealanders. This year, that is what this Government is standing up for: hard-working New Zealanders.

In respect of putting in smoke alarms, I was at the Kaiapoi Volunteer Fire Brigade service awards in my electorate recently and they raised this issue around putting fire alarms in rental accommodation. These are guys who are volunteering. We have still got the alarm out in Rangiora where I live. When it goes off, they all drop what they are doing and head out to face a fire, so it is great that we are putting practices in place that will support them. We have got to realise that over 90 percent of fatalities are in rental accommodation, so it is right that we are putting a minimum standard of a smoke alarm in these rental properties. I commend this bill to the House. Thank you.

METIRIA TUREI (Co-Leader—Green): The Green Party will be supporting this legislation to the select committee on its first reading. This is not because we think that it does a good job—there are some things in it that are better than other things—but because it is at least a confession and an admission by Government that rental housing in this country is in a state that is unacceptable and that there needs to be some kind of minimum standard. For many years now the Green Party has been arguing very strongly for insulation, improved insulation standards, improved weathertightness—all of those things.

For many years the Government has simply refused to accept that there is a serious problem. Government members have argued that it is an issue that is between the tenants and the landlords and is borne out in the price of the accommodation, that people who own rental properties are just ordinary people trying to make a little bit of a buck, not professionals engaged in a business and so, therefore, should not have any additional burdens. They have argued that the reason why children are hospitalised for health issues and respiratory illness related to cold, damp homes is really an issue for those families and for the poverty that those families face rather than an issue of housing. On and on, excuse after excuse after excuse.

Finally, we have, after years of campaigning, a very successful home insulation scheme that was developed by the Green Party, which we worked on and proposed, together with Labour, and it was then actually implemented alongside National. It was a very successful Green Party initiative to have 300,000 New Zealand homes insulated. Two-thirds of the funding for that scheme was then taken away by National, so the scheme has not been able to deliver as it should have since then. But after years of being aware of the research that shows that a comprehensive home insulation scheme works both to provide significant benefit to the Government’s coffers and to health of New Zealanders, and in view of the fact that for many years now there has been significant research on the poor quality of New Zealand housing and its impact on health, we finally—finally—have some kind of admission from the Government that something needs to be done.

It is with extreme disappointment, though, that I read the bill, which, essentially, does as little as possible. This is the barest minimum standard for insulation that you can put in place beyond having no standard at all. To have legislation in the House that puts in place, as the minimum standard for rental housing, the 1978 standard for home insulation—having all of the information and research about the poor quality of New Zealand housing and knowing the need to do something real because if we do not, lives are lost, this Government can only bring itself to put in place a 1978 standard.

This is a miserable bill. It means that the 1 million adults who rent in this country and the 400,000 children who live in rental properties in this country are yet again being undermined by a National Government that really is not here for them at all. Those people who rent those properties have no face when it comes to National. National members cannot see them. They do not know their lives. They have no interest in the impact that the National Party decisions are having on their lives and the well-being of their kids.

We have heard some of the statistics already. Each year 40,000 children are hospitalised for respiratory illnesses related to cold, damp housing. There are 1,600 deaths in the winter in New Zealand that are directly related to cold, damp housing. We know the names of some of those people who died. Emma-Lita Bourne, remember—just last year? Emma-Lita died because the house she was living in was so mouldy and cold and damp. Te Ao Marama Wensor’s kids are continually getting sick because she still lives in a cold, damp, and mouldy home.

These names, these people, are real. Their lives are valuable, and we should have a Government that puts their lives and the lives of thousands and thousands of New Zealanders just like them at the forefront of their policy decision-making. If National did that—if it put Emma-Lita Bourne at the forefront of its decision making, if it put Te Ao Marama’s children at the forefront of its decision making—it would mean we would have a bill to discuss today that had a comprehensive warrant of fitness for rental properties, which would demonstrably save lives. If it had been in place then, it would have saved Emma-Lita Bourne’s life. If it had been in place then, it would have protected Te Ao Marama’s children from the hospitalisations and the illnesses they suffered. But we do not have a Government that puts children first. We have a Government that puts industry first, puts making money first, and puts anything and everything else it can think of first and above the needs of our kids. As a result, our children will continue, even if this bill is passed in its current form, to die from entirely preventable illnesses because they live in cold, damp rental homes.

We have looked at this legislation in some detail in the time that we have had. We agree with the smoke alarm proposal in the bill—it is a very practical proposal. But the failure to address seriously the insulation issue means that lives are still at risk, and it is very hard to understand why the Government would spend all this time and this money putting forward legislation that simply does not have any evidence that it will be effective.

The opposite side of that, of course, is that effective legislation is advantageous not only in that lives will be saved—children who might otherwise die will not die, and older New Zealanders who might otherwise die in the winter will not die; that in itself is a good thing and is one of the reasons we are here, to help prevent these kinds of preventable deaths—but also in that there is huge economic value in taking the best route, not the worst.

There is some great information provided in papers by the Child Poverty Action Group, where it sets out some of the economic benefits of taking real action to improve the quality of rental housing. It talks about, over a 20-year period—sort of over the lifetime of a reasonable house—$450 million being able to be saved through safety benefits; that is, the reduction of hazards that lead to injury and death, which are a huge cost to both the health system and to ACC. A comprehensive warrant of fitness for rental properties would save New Zealand—the taxpayer—$450 million in safety benefits. That is nearly half a billion dollars.

A comprehensive warrant of fitness for rental properties would save some $420 million in health benefits for New Zealanders. Health benefits mean reduced costs on a health system that is already creaking under the weight—because we would not have the 40,000 hospitalisations for children and we would not have families continually having to bear the cost of taking their kids to the hospital and to the doctor, and there would not be all the subsequent economic costs that those families have to bear. The sum of $420 million could be saved for the New Zealand taxpayer if we had a comprehensive warrant of fitness, and that is just in health benefits. Just those two elements alone—the safety benefits and the health benefits—mean that New Zealand could save a billion dollars over that 20-year period and countless lives.

I have appreciated the passion and fury around some of the debate that has been had this afternoon, but my own feelings are just of deep, deep disappointment in this Government because of its failure to take the lives of children and New Zealanders seriously. Thank you.

DENIS O’ROURKE (NZ First): New Zealand First will support the Residential Tenancies Amendment Bill even though it makes only a very few improvements in the face of a situation that cries out for much, much more improvement than we see here. But even a little is worth something, so let us hope that more will come in the future. On reading Shamubeel Eaqub’s book Generation Rent earlier this year, I was impressed by the differences it described between New Zealand’s rental market and legislation and those of other countries with much better developed rental markets and much better legislation. There were at least three differences that were pointed out. One was fair rents. It is obvious that New Zealand does not actually have a fair rents regime at all when you compare it with what you see in other countries. Secondly, New Zealand does not have secure tenancies in comparison with what you see in other countries. New Zealand’s tenancies tend to be short term, and tenants have very little protection against eviction. Thirdly, there is the question of quality of rentals, which this bill does something, but not enough, to address. There are far too many old dumps being let in New Zealand to people who cannot afford to buy their own homes and have to rely on the rental market. That is the truth of the situation. So this bill makes a couple of very minor improvements, which are welcome but not nearly enough. Much more needs to be done, and it needs to be done in all three of those areas I mentioned.

The message I want to give to the Government is this: many people are now finding that homeownership is utterly out of reach for them, and that is a result of the lacklustre performance of this Government over 7 years as far as housing is concerned. Just about everybody knows and acknowledges that. The result is that many, many more people now have to accept that they will never own a home of their own and they will need to rely on what is actually an inadequate rental market. There are too few rental properties to rent and too few of them are in anything like adequate condition. So the Government needs to move, firstly, on regulating rentals, especially where landlords have been profiteering, and especially in those situations, for example, in Auckland because of the housing crisis there and also in Christchurch because of the effects of the earthquakes there. In both those situations, the market failed, rents exploded, people were hurt, and the Government did nothing.

The second area in which it has to move is security of tenures. It is too easy to get rid of tenants in this country so that they do not have another home to go to. And more and more long-term tenancies are going to be needed because people will not be able to afford to buy their own home. The Government needs to do a lot more to encourage that, but, again, nothing is being done.

And, thirdly, the bill needs to move much more to improve the quality of rental properties, so that people have a genuine alternative to owning their own home. And we are not seeing that. We are not seeing improvements on heating standards; we are not seeing improvements as far as leakproofing is concerned; and we are not even seeing improvements as far as minimum standards for earthquake resistance, size of accommodation—and the list goes on and on.

Not nearly enough is being done in any of those areas. Not nearly enough is being done in any of those areas. Most of all, the number of quality rentals available is far too little, and this Government’s response to that seems to be: “Let’s sell thousands of State houses—that’s a good idea. Or let’s shove off responsibility for social housing to community organisations—that’s a good idea.” None of that is a good idea. What is a good idea is that this Government needs to invest much, much more in social housing in New Zealand. I have listened to some of the figures being bandied about by the Minister for Building and Housing and others; it is still not nearly enough because the problem is huge and it needs a much greater response from the Government.

This bill does do a couple of good things. It does require smoke alarms and insulation—great. And the cost-benefit ratio of that is excellent—great. And there will be fewer deaths per year resulting from fires—great. And it also improves enforcement powers—powers to regulate on the technical needs for smoke alarms and insulation. It empowers the chief executive to take cases direct to the Tenancy Tribunal for persistent breaches of the legislation, it empowers the chief executive to authorise a search, where needed, to get evidence of a breach, and it empowers the chief executive to require landlords to provide relevant information. All those are good steps forward, but they are very minor compared with the size of the problem. The bill also streamlines the processes for the recovery of possession by landlord where there has been a tenancy that has been abandoned—great. All those things are, again, good, but not enough.

Overall, New Zealand First does support the bill, but we simply say this: we say that a whole lot more is needed if this country is going to provide homes for people, first, by making them more affordable, which is not what this bill is about; and, second, by creating a tenancy market that provides a genuine, good-quality alternative for people who will never be able to afford their own home. We in New Zealand First do not think that a warrant of fitness approach is the right way to go; we think that has got some problems. But we do think that there is a lot more that can be done in all three of those areas that I have already mentioned. Regulating rentals will make a big difference in ensuring that there are better ways as to how rentals should be fixed and ensuring that rentals are fair so that people can afford them, with or without Government assistance. Secondly, security of tenures also needs attention. The Government simply does not seem to have thought about that at all. In fact, that is a very important issue. What New Zealand does need is a situation where people, as an option, choose long-term tenancies—tenancies in which they can feel secure and homes that they feel are permanent for them, even though they are renting them or leasing them. That is a situation that you see in other countries, especially Germany and other European countries, and in the United States, where there is a huge dependence on that end of the market. But in New Zealand we are not seeing enough of that, because the legislative and regulative regime does not support it. So the Government should move on that.

This bill moves only on the quality of tenancies, and only in two very tiny ways. They are good ways, but they are not nearly enough. The result is that there are far too many substandard tenancies, as I have said—old dumps that people are letting instead of a quality service. Those people tend to be amateur landlords just buying a house to let as a way to improve their retirement prospects. But that is not good enough. We need to encourage professional letters of long-term rental properties so that we get a better option for people who will depend on it. There are countries overseas with much more sophisticated rental markets and much better legislation, which this Government could take notice of and do a whole lot more than it is to ensure a better quality rental market for people who will need that in the future. Finally, although we are supporting this bill—we say “Great, we’ll vote for it.”—we do want to see a whole lot more done by this Government, and it has not done much over 7 years. Let us face it. It needs to do a whole lot more in the future to improve New Zealand’s housing market, and especially the rental market in this country. What it is doing to date is actually retrograde and is not improving anything at all. So let us see a bigger effort by the National Government. Let us see some really good ideas. Let it have a look at what happens overseas, borrow some ideas, and do a lot more than we are seeing in this bill.

TODD MULLER (National—Bay of Plenty): It is great to take a short call to stand and support the Residential Tenancies Amendment Bill. What a great bill this is, building on a proud record of investment and activity in the housing portfolio. If I can start by saying that I am not going to stand here and be lectured by the Labour Party—particularly by Phil Twyford and Carmel Sepuloni—a party that invested in 20,000 homes that were insulated over its 9 years. We are on the path to 500,000—20,000 it did in 9 years, and if you listen to it, it decries every one of the half a million we have been doing for New Zealand, and it is a disgrace.

I am not going to stand here and be lectured by a party that insulated 200 homes a month in Auckland, because we are doing 800 now. I am not going to be lectured by a Labour Party that pulled $1 billion out of the maintenance of the Housing New Zealand budget when it was there and directed it to new housing builds because, in the words of the then Labour Minister, “There’s no photo-ops in front of well-maintained houses. Where’s the photo opportunity in that?”. I am not going to be lectured by a Labour Party that has high rhetoric and no action in the housing space. Instead, I take pride in standing and supporting a Government that has a record of achievement and that puts a bill in front of this House that says: “We prioritise warm homes, drier homes, and safer homes, and we will have a bill in this House that will enable it.”

So it is with great pride that I stand and support this bill, which will make all rentals have fire alarms next year; which will, of course, make rentals insulated—the Housing New Zealand ones next year and all rentals by 2019; and which will have greater protection for tenants. Again, this is a party that delivers action as opposed to the hollow rhetoric that continues to come from the other side. I look forward to hearing the various submissions on this bill, and I very much commend it to the House. Thank you.

MARAMA DAVIDSON (Green): Kia ora, tēnā koe, Mr Assistant Speaker. I rise to take a call on the Residential Tenancies Amendment Bill 2015 in this first reading. The Green Party will be supporting this bill through the first reading, especially because I am really keen to hear from submitters and for them to come and tell their stories. As the member Carmel Sepuloni has already outlined, the stories are, actually, quite grim, and the absolute reason why this bill does not go far enough—and, in contrast to what the previous member, Todd Muller, said when he said that the Government has prioritised warm, dry, and safe homes, that is not at all what this bill does. This bill seeks to get away with the minimum standards, as my colleague Metiria Turei has also already highlighted. I would like to raise again the point that $420 million could be saved with a comprehensive warrant of fitness; that alone would be a smart economic decision, would be a smart moral decision, and would be a smart governance decision.

I would like to take a little bit of time, as fearful as I am, to talk about the rental that I am living in at the moment. I have been quite public about my own rental story, and I always have to say for safety that I love my house and I would like to stay in it. However, searching for this house for my family and me to live in at the beginning of this year brought me absolutely face to face with the issues that we are facing when it comes to renters’ rights and the very reasons why this bill does not go nearly far enough to sort this issue out. I ask: where is our Government’s aspiration for our country to put our children first, to put our families first, and to put our community strength first, as opposed to shoving something up that will mainly keep landlords happy while looking the part and while trying to appease renters that our country is not in a housing chaos?

I mentioned in my maiden speech that I looked at, I think, 30-something houses, applied for 20-something houses, and finally got the house where no one else was lining up. As the ACT member has already pointed out, our supply for renters and our regulations that are missing from the housing market are another area where this Government has failed to look after renters. Also, I stand here as the spokesperson for our Māori affairs portfolio. I think it is very relevant that Māori particularly have high rates of renting. This bill may improve some of the situation for Māori renters but will likely not make a difference for far too many of the homes.

I am thinking right now of a family that I visited in Clendon in Manurewa, South Auckland, earlier this year. They are absolutely one of the hard-working families that the National Party likes to say that it is sticking up for. But the Government is certainly not sticking up for this family who are faced with being unable to have any success on the private market. They are currently in an income-related rental, but they are absolutely shut out of the private market. They are hard-working New Zealanders for whom this bill does not go nearly far enough.

Again, I enforce that the Government could have adopted Metiria’s member’s bill which would have made a real difference and ensured proper standards for all rental properties. I agree with the ACT member who mentioned that we have solutions around the world that we could be looking to: not the 1978 standard contained in this bill but a proper standard of rentals for the 21st century that will keep our babies and our whānau healthy and safe. Thank you.

JENNY SALESA (Labour—Manukau East): Thank you for the opportunity to take a short call on the Residential Tenancies Amendment Bill. Labour supports this bill. This is a bill that, while making some improvements for many of the tenants, unfortunately for us does not go far enough. Minimum insulation standards and smoke alarms for private rental properties are a step in the right direction, and that is why the Labour Party is supporting this bill. However, the Government could and the Government should do much more.

When you insulate a cold house without requiring modern efficient heating it would still leave the tenants cold, freezing, and at risk of suffering respiratory diseases. Emma-Lita Bourne was a toddler from my electorate, from Ōtara in South Auckland. The coroner earlier this year found, in his report, that one of the contributing factors to the reason why this toddler died was basically the appalling state and the condition of the State house that she lived in. It was cold, it was freezing, it was damp, it was leaking, and it was full of mould. The coroner said that these conditions were one of the main reasons why she suffered. She went to hospital and, unfortunately, passed away.

One of the primary schools in my area in Ōtara—just a few streets down the road from Pearl Baker Drive where Emma-Lita Bourne grew up and lived—took it upon themselves. These are 6 to 11-year-old primary school children in Ōtara, and they took it upon themselves because they cared enough. They wanted to find out why is it that there is mould in houses. They wanted to find out whether or not they themselves were living in houses that were full of mould. These young primary school kids partnered with Landcare Research scientists, and in their research findings that were released a few weeks ago they found out that in their homes—in 18 out of the 22 homes in Ōtara, from this research—they found mould. Not just one type of mould; they found 14 different types of mould in their homes. They also found three types of yeasts, and some of these yeasts were tied to the superbug.

What the Landcare Research scientist Stanley Bellgard told Radio New Zealand when they were releasing their study is that moulds affect healthy people. However, it creates a downward spiral for those who are predisposed to disease, those who are stressed, and those who are malnourished. Unfortunately, he was describing many of the folks who are living in Ōtara and South Auckland.

Labour is supporting this bill because, as I said earlier on, it is a step in the right direction. However, there are many thousands of New Zealanders who are lacking warm, dry homes. This bill unfortunately is a step, but the Government in our opinion should do so much more. Thousands and thousands of New Zealanders do not live in warm, dry homes. This is an issue that is facing far too many New Zealanders. We believe that this particular bill is a policy that is indeed a half measure—an issue that this Government is becoming professional at, in terms of introducing a trademark half measure towards addressing the housing issue that we are facing in Auckland.

This initiative was announced, we believe, because of public opinion, and it will only tinker around the edges. The Government has no courage to take the bold decisions that it should be taking. Ensuring that rental properties are up to scratch is indeed the right thing to do. It is an economic no-brainer that if we spend $1 on retrofitting, then the country will save $5 on public health expenditure. We support this bill to the next stage but we believe that the Government should be doing so much more than this half measure. Thank you.

Dr PARMJEET PARMAR (National): I am taking a very short call to support the Residential Tenancies Amendment Bill. This National Government holds a great record in providing for drier and warmer houses, as we have insulated every State house that can be insulated. As the Minister said, this bill is the next step in that direction. This bill aims to provide for warmer, drier, and also safer residential rental properties. This bill will require all social houses to fulfil the requirement for insulation from 1 July 2016, and other residential rental properties from 1 July 2019. Along with insulation, this will also require residential rental properties to be fitted with smoke alarms, and the protection for tenants—those who raise matters related to unfit properties with the Tenancy Tribunal—will also be strengthened through this bill. Finally, this bill will also help landlords to re-tenant their properties once they know that a property has been abandoned and they know that the tenant is not going to come back. This process will be fast-tracked as per this bill. It is a great bill. I support this bill and commend it to the House. Thank you.

POTO WILLIAMS (Labour—Christchurch East): I want to say that the speed with which the National Government is actually tackling the catastrophe of housing could be called glacial, much like the temperature in many of the State houses that many of our people occupy. When we look at some of the missed opportunities that this Government has not taken—the special housing areas, which have netted us only hundreds, not the many thousands, of homes that we need; the 700 new builds for Housing New Zealand in Christchurch, which were supposed to have been finished by December of this year and we are not even halfway through. It has taken it 2 years to build not even 350 homes. So the National Government is not on top of its game when it comes to looking at housing.

But we have got to be grateful for the little that the Government is doing. As electorate MPs, we all know the stories: the mouldy houses, the condensation, the poor insulation, and how costly it is to heat—and that is with the State houses. Private landlords have not until this point been required to meet any standards whatsoever—very poor standards—so we know that we are starting from a really low base here. When we think about the Minister saying how well the Housing New Zealand stock, for example, has been repaired, we know that in Christchurch, in Canterbury, the earthquake repairs have only just been completed. It has taken it 5 years—5 years where people have lived in damaged, cold homes. That is how speedy this Government has been around its repair programme.

I want to give you a scenario: a constituent of mine in the suburb of Richmond, who called me out to view her home. She has three small children, mould on the curtains, mould on the wallpaper, and mould on the windowsills and the ceilings. There was only one room that had a heater in it, a heat pump in the lounge. That is where the family gathered. We stood in the kitchen and had a conversation and the condensation was coming out of our mouths, and that was at lunchtime on a sunny afternoon, when it was actually colder inside the house than it was outside the house. If that is the kind of temperature you get inside a house, a Government-owned house, on a sunny afternoon, what is it like in the evenings and at night-time for those small children being put to bed with no heating—with no heating? How can a small child retain its body heat and retain its health and be expected to thrive in conditions like that?

That story is repeated not hundreds of times but thousands of times across the country. We know that, because the health statistics for our children living in rental accommodation are so poor. They are so poor, where we know that decent homes could save this country, in health costs alone, an enormous amount. So why is the Government doing this now? Well, I think public opinion has really forced its hand. It knows the public opinion is against it; it knows that these measures are small but that it needs to start on this journey. It certainly does not go far enough.

We have got, on 1 June 2016, the requirement for State-owned homes and community providers to have underfloor and ceiling insulation, where that is possible, and smoke alarms, but we have got no standards of heating that are also required. Having insulation solves only half of the problem; we have to actually have adequate heating and cost-effective heating as well to heat homes, particularly through the middle of the North Island and the South Island, where it gets extraordinarily cold. We also know that private landlords will not be required to meet these standards until 2019. So the bulk of the homes—if we are talking about people renting, there are 450,000 households that rent and currently only 64,000 Housing New Zealand homes—will not be required to meet any standard for 4 years. This Government should have been signalling to landlords from the start of its term, if it was so concerned about the state of the rental market, that this is what it wanted to do; that it was so concerned about tenants in this country that it wanted to ensure that there were some standards for insulation. But that has not been the case.

So we are going to require smoke alarms to be installed. I have not seen any information, and I am sure that during the course of this bill’s passage through the select committee process people will be asking questions about what types of smoke alarms we are going to install. Having a smoke alarm installed is no good if there are no batteries in it, if it is not tested, or if it is not functioning. It would be really interesting to know how many fires have occurred in New Zealand where there was a smoke alarm but the fact that it was not functioning meant it was just a piece of decoration on the ceiling.

Community Housing Aotearoa’s Scott Figenshow said that insulation is half the answer, but how do we heat the home? It is a very, very important question. The cost of some heat pumps, for example: if we are talking about private landlords, the cost to install good quality heat pumps is somewhere in the region of about $5,000. That is not a huge amount of money when we think about how much rental income a property can actually generate over the life of its use as a rental property. Technically, it should be a small investment for the landlord, but we know that some homeowners are not even considering putting properties into the rental pool because they are making so much money just through house price inflation. In some cases, where properties are selling in less than 30 days, why would you even consider having tenants in your home when you can turn over properties that quickly and make quite a tidy sum? So how are we going to incentivise these landlords to meet these standards when, actually, they are not going to? They are going to look at the bare minimum, as they do currently already, despite the fact that there are queues of families desperate for homes.

If we look at the assessment process that has been implemented through the Ministry of Social Development, where the actual assessment of tenancies for State and community housing has been taken out of the hands of Housing New Zealand Corporation—the people who actually knew housing, and who had relationships with tenants—can we say that that assessment process has actually made it easier for families to get into decent quality homes? Well, the case that happened on the weekend where the mother was in the cockroach-infested caravan park cabin obviously shows that, no, that is not the case, because prior to that story hitting the newspaper and hitting the media she was not assessed as being high priority. As soon as that case hit the media her reassessment was done and, lo and behold, she went to the top of the list. So there is something wrong with this process.

I just want to comment on what has become a dreadful phenomenon in the Canterbury region, and those are the “as is, where is” homes, where people have taken their cash settlement and decided not to repair their home. They have buggered off and bought a home somewhere else, and they have left that house to become a rental—a damaged house left to become a rental. It is well-known, particularly in my electorate, that people are living in homes that are structurally unsound because the homeowners have taken the cash and fled. I can see Matt Doocey thinking very carefully over there. You know of some examples, I am sure, Mr Doocey, in your electorate.

There are some major problems with this bill and I just want to, in conclusion, go over those. There is no standard being set for heating. There is a 4-year transition period for the bulk of the homes, which are privately owned by private landlords, and we know that in that time there will be many children who will continue to be hospitalised due to the poor quality of these homes. There is no provision of standards for mould or ventilation in this bill, and then there is this massive loophole that sees insulation standards for 1978 being the standard to be met, when we know that the current standard from the 2004 Building Act is far more appropriate. Thank you.

STUART SMITH (National—Kaikōura): I think we could all be forgiven for thinking that this is a very recent problem that has just arisen, given some of the speeches that have gone before. But the first Housing New Zealand house was built in 1937, not that far from here, in Miramar, and it took decades after that before the first Housing New Zealand houses were insulated. So this is not a new issue that has arisen. Those houses were cold and likely damp from 1937 on, and they were until recently, when all the houses in Housing New Zealand’s stock that could be were insulated. We are well on track to insulate 26 times more houses than Labour did in its 9 years in Government, and I think that is a phenomenal achievement. It is really putting our money and our actions where our mouth is, actually, to do a good job for those people in that disadvantaged position.

There has been quite a bit of talk about something like a warrant of fitness for housing stock, but that would add $100 million a year just to do the inspections, or $225 per home. That amount of money is far better going into insulation and into smoke alarms, which will make a real difference to those people. The significant issues such as excessive dampness, faulty wiring, and those sorts of things are, in fact, covered under current legislation, so what is needed is not more rules; it is actually enforcement. That is coming in under this bill, where we are strengthening the legal provisions to allow for that very enforcement that is needed.

So I think this is a fantastic bill. It actually comes from the party that looks after the people at the bottom of the heap and makes their lives better, and that is backed up by lots of legislation put forward by this party. I commend this bill to the House.

Bill read a first time.

Bill referred to the Social Services Committee.

Bills

Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill

First Reading

Hon NICKY WAGNER (Minister of Customs) on behalf of the Minister of Revenue: I move, That the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. This omnibus tax bill proposes some wide-ranging reforms to the tax system, all aimed at improving the integrity of the tax system and making it fairer. The bill proposes a new withholding tax: the residential land withholding tax, or the RLWT. The objective of the residential land withholding tax is to act as a collection mechanism for the new brightline test, which requires income tax to be paid on any gains from the disposal of residential land that is acquired and disposed of within 2 years, subject to some exceptions. The residential land withholding tax is aimed at the sale by offshore persons of New Zealand’s residential land, and this is because it can be difficult to collect tax from the proceeds of such sales from foreign owners with no or limited presence in New Zealand. When a property has been bought and sold with the intention of making a gain, those gains have always been taxable.

The new brightline test helps to supplement this rule by creating an easy-to-enforce, objective test. The objective of the measure in this bill is to help ensure that the tax that should be paid is collected. New Zealand already imposes withholding tax on payments where the recipient is likely to have a tax liability and where there are also collection concerns. With the introduction of the brightline test, it makes sense to do the same where foreign owners of residential properties sell within 2 years. It is proposed that the residential land withholding tax be imposed at the point where New Zealand land is sold by an offshore seller, so as to improve the collection of the annual income tax liability for brightline residential land income the offshore person might have. The residential land withholding tax is intended to be collected from the offshore seller by the residential land withholding tax agent of that seller. This person is usually the seller’s conveyancer. The agent would be responsible only for collection, but would not themselves be liable for the residential land withholding tax. It is proposed that the residential land withholding tax would be payable from 1 July 2016. There will be exemption for disposals of inherited land, as well as relief for property transfers as part of a relationship agreement. The residential land withholding tax will support the effectiveness of the brightline test—[Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I am sorry to interrupt the honourable Minister. Interjections are about the person speaking, across the benches, not other discussions and comments being made. I would ask you to confine those.

Hon NICKY WAGNER: The residential land withholding tax would support the effectiveness of the brightline test and contribute to the integrity of the tax system. This is a good measure because it helps ensure that a lawful amount of tax that should be paid is collected.

Another measure in this bill is also aimed at collecting tax due where currently the full amount is not collected. The strength of our GST rules is that the tax is applied equally and with very few exemptions. This helps ensure that the tax is fair, efficient, and simple. However, currently GST is not collected on most cross-border services and intangibles, including internet downloads and online services. The growth and uptake among New Zealanders of services on which no GST is currently collected, such as online entertainment, have significant implications for the tax base. In addition, there are concerns about the impact that this uneven GST treatment may have on the competitiveness of domestic providers. The amendments in this bill address the non-taxation of cross-border remote services and intangibles in order to maintain the broad base of New Zealand’s GST system and to help level the playing field for domestic and offshore suppliers. The bill proposes that GST be applied to cross-border remote services and intangibles supplied by offshore suppliers—this includes e-books, music, videos, and software purchased from offshore websites—to New Zealand resident consumers, by requiring the offshore supplier to register and return GST on these supplies. Non-resident suppliers will be required to register and return GST when their supplies of remote services to New Zealand exceed NZ$60,000 in a 12-month period. This is, of course, not an issue faced only by New Zealand. The Organization for Economic Cooperation and Development, the OECD, has developed guidelines to establish an international set of principles for determining when countries should have the right to tax these supplies. This is expected to minimise the potential for double taxation or double non-taxation. The amendments proposed in this bill are consistent with these guidelines.

The bill also contains a proposal to help improve student loan repayment compliance of New Zealand borrowers living in Australia. Most student loan borrowers do the right thing and repay their student loans, but borrowers living overseas have a lower rate of compliance than those living in New Zealand. The majority of student loan borrowers living overseas are believed to be in Australia. The proposal in this bill, therefore, is to allow certain information on student loan borrowers living in Australia to be shared between the Inland Revenue Department and the Australian Taxation Office. Having current contact details is important for encouraging borrowers to meet their obligations, so the proposal in this bill will allow the Inland Revenue Department to stay in contact with borrowers living in Australia. This will help the Inland Revenue Department to keep borrowers engaged with their obligations to improve the collection of outstanding payments.

Another measure in the bill also focuses on student loan borrowers. Borrowers who work overseas for approved charitable organisations in approved aid activities, as volunteers or for token payment, are entitled to be treated as if they were physically present in New Zealand. This means that they are not charged interest on their student loans while they are volunteering overseas, for up to a maximum period of 24 months. However, Cabinet’s approval is currently required for a charitable organisation to be listed in the Student Loans Scheme (Charitable Organisations) Regulations 2011, and this can take time, which means that some borrowers are denied the full benefit of this provision. The bill therefore proposes to revoke these regulations and delegate the authority for approval of charitable organisations, for this purpose, to the Commissioner of Inland Revenue.

These are the main features of this omnibus bill. Together, these measures will help improve the integrity of our tax system by strengthening it and making it fairer for taxpayers more generally. It now gives me great pleasure to commend this bill to the House.

STUART NASH (Labour—Napier): I must admit that the first sentence that the Minister, Nicky Wagner, made on the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill was wrong, and it is a real shame. The Minister said that this was a wide-ranging bill. Unfortunately, it is not. It should be, it could be, and it actually needs to be, but it is not. This is a bill that attempts to address three really important issues. However, it just does not do particularly well—in a way that addresses the real issues, or provides solutions to identified problems—and it could have. It just shows that the Government has sort of lost its track when it comes to tax.

Let us start at the beginning. There are three issues this bill attempts to address, as is pretty evident in the title. The first one is resident withholding tax. This is the third bill in a series of three bills that attempts to bring property speculators into the tax net. The problem with the bill, as the Inland Revenue Department (IRD) itself has outlined, is that the cost of implementing this system is $5 million, and the amount of revenue that the IRD forecasts it will get out it is $5 million. It does not even come close to addressing the situation.

Let me give you just a very small example of the scale of the problem we are dealing with. Last year alone the IRD captured about $65 million from taxpayers it believed were rorting the system through property speculation. That is just the IRD going after people when there is not even a brightline test in. The IRD knows, we know, and the Government knows that there is a real problem with property speculators not paying their fair share, and the three bills that have come before the House—this is the last; the third bill—really just do not address the issue at all. It is a real shame, because there was an opportunity—it is gone now—for the Government to really grab the bull by the horns in this sphere and show some real leadership in a way that, I think, the country is after. Certainly, those in Auckland know the scale of the problem. But there has been a complete lack of leadership, which is a real shame.

In fact, I sort of wonder—when Michael Woodhouse was told that he was going to be revenue Minister, he was given a bit of a hospital pass, actually, because there has been a lazy Minister who has done very little in this space. I suspect that Michael will be a little bit better, but I am certainly not holding my breath. But what Michael does have to contend with is an IRD system that is worth about $1.2 billion—do not worry about the $10 billion in the policing system.

Dr David Clark: Opening up a can of worm farms.

STUART NASH: Yeah, absolutely, mate—there are a number of worm farms there, Dr Clark. The second issue is GST on online services. Let me give you a quote from the Minister of Revenue himself—the Minister for the next 5 days: “GST should apply to all consumption that occurs in New Zealand. This is what makes our GST system fair, efficient, and simple.” You know what? He is dead right. It should apply to everything, but this legislation does not address the problem. The problem we have got at the moment is that if anyone buys something from a shop—from bricks and mortar—like a pair of jeans, or a CD, or anything like that, there is 15 percent GST on that. That is fair. If you buy one of these items offshore, there is no GST.

It is our belief that what the Government should be trying to do at the least is just level that playing field—not give any sort of competitive advantage to those based offshore; just level the playing field. We are not saying that New Zealanders should not buy stuff online. It is their absolute right to. In fact, it is what 21st century shopping is becoming more and more about. But what we should not have in this country is a system that actually penalises people who are setting up shop, employing people, paying rates, and paying their taxes.

All this legislation does is target offshore suppliers of things like music, e-books, etc. We are talking about companies like Apple, Netflix, and Microsoft, but this is not where the real issue is. We are supporting this bill, and we do think that if you are buying e-books and music and software online, you should be paying GST. But the real issue is to do with buying things like you get in the retail sector, because at the moment an offshore supplier has a 15 percent advantage from the get-go.

This legislation applies only to companies that have $60,000 per annum sales to New Zealand customers. That equates to around about $7,800 in GST. It will bring in money—there is no doubt about that—but we think it should go a lot further. This has been an issue that has been on the table for a long time. We are still waiting for another discussion document, but it has been 7 long years, and the retail sector has signalled this to the Government, and the Minister, for a long, long time.

The third issue is the student loans one. I think everyone would agree that if a student borrows money interest free, then they have entered into a form of social contract with the Government and they should pay that money back. We have no problem with that, but this is not just about doing an agreement with Australia, which is what this bill ratifies—a double agreement between Australia and New Zealand, where New Zealanders who have taken out student loans and who are now living in Australia but are not paying back their student loans in any way, shape, or form will be brought into the net. The agreement is vice versa, as well, so when there are Australian students who have taken out student loans—and they have a similar system to ours—if they are living in New Zealand and they are not paying back their student loans, then they will be forced to as well.

But the problem is actually worldwide. We should be doing these sorts of agreements with the British Isles or the United States, for example. What we should actually do is capture students who have taken advantage of the opportunities that we have provided them through education with the interest-free student loans, and bring them all back into the net, but as it stands we are just going after those in Australia.

In conclusion, this is a bill that could have been bold. It is a bill that addresses three issues that are widely known within this Parliament and certainly within society. The first is bringing speculators into the tax net. We think it could have gone a lot further, and it has not. The second issue is GST on online goods and services, and we believe it should have captured the retail sector. It could have brought in a lot more and it could have levelled the playing field, but it has not. The third issue is student loans. The bill goes part of the way, but it does not address the real issue.

There are three issues here that the Government could have gone hard on, could have shown real leadership on, and you know what? We would have supported it on those. We would have supported it. We are supporting this bill. We look forward to it going to the select committee and to having the experts come in and tell us how things really, really should be, in terms of building robust legislation. But, unfortunately, we are left with a missed opportunity. We will support this bill but I just want to reiterate that it is a missed opportunity. Thank you very much.

DAVID BENNETT (National—Hamilton East): What an interesting speech from the Labour Party. I wish that Mr Stuart Nash actually listened to his leader, who has said that they will not be having a capital gains tax. That member, in his speech, said that this bill does not go far enough, that the brightline test, which is going to mean that those who buy or sell property within 2 years have to pay capital gains—that is the true Labour Party. They want to go back to their capital gains tax. Mr Little is just taking away that policy for expediency, trying to rebuild his party. The true spokesperson on revenue in the Labour Party wants a capital gains tax. He said that in his speech today. Listen, all New Zealanders: Labour does not believe—

Stuart Nash: I raise a point of order, Mr Speaker. I think it actually should be recorded that I never once said that I want a capital gains tax. I would not like that to appear in the Hansard at all.

The ASSISTANT SPEAKER (Lindsay Tisch): It is a matter of interpretation—

Hon Clayton Cosgrove: It’s misleading the House.

The ASSISTANT SPEAKER (Lindsay Tisch): No, it is not misleading the House; this is a debating point. But I would ask the member to come back, because I had been listening very closely to what the previous speaker, Stuart Nash, said. I would ask the member to focus on what is in the bill.

DAVID BENNETT: The bill brings in a residential land withholding tax, and a withholding tax, basically, is for those who may be offshore purchasers and who sell that property within 2 years. They would have to pay tax at 33 percent on the profit, or 10 percent of the sale price. That is, effectively, charging them on their capital gains, which is what that last speaker said, when he said, “we should be, could be,” and, “I think that it should be further than what it is.”—those were his exact words, and that member wants a full-blown capital gains tax, as we all know.

The other part of this bill was in regard to online services. Nobody has any problem in that area, because it is a difficult area that is a new area of sales that is going on in the market, and the world is looking at ways of dealing with that issue. This is part of the process of providing a taxation solution for that area that will enable New Zealanders to compete in the retail sector with international sellers through the online process. That is expected to raise about $40 million a year, which is important for the New Zealand tax take.

The third element of the bill is the student loan amendment, which, effectively, enables the New Zealand tax system to get further information from the Australian system around New Zealand taxpayers who may have student loans. This is a good bill that deals with those three issues, which are important tax issues.

We note that the Labour Party is supporting this bill, which is good to see. We note, also, that Labour members wish this bill to go further, and that means that they want that capital gains tax, as they want higher income taxes, as they will tell you. We have yet to hear from New Zealand First members, but I am sure they will be voting against this bill, even though they promised to be against international holders of assets in New Zealand—yet they vote against bills that would tax those international people. This is a good bill, and we look forward to the Opposition—

Kris Faafoi: Inspirational!

DAVID BENNETT: —actually supporting it, and supporting it properly.

Hon CLAYTON COSGROVE (Labour): I think Kris Faafoi, my colleague, said it all—that that was an inspirational delivery by that member, David Bennett. That member, who purports to be a guru on tax bills, is the chair of the Finance and Expenditure Committee, whose first utterance was to provide us with a complete series of irrelevant information and a capital gains tax. What he did not say, though, in his sort of obsession with online services, as he wants them to be, was that when we look at the GST on online services, this was going to be, you recall, the big hit for the Minister of Revenue. The Minister of Revenue came out with a discussion document, and he was going to get tough with those people in respect of putting GST on online services. He was going to “level the playing field”, I think the words were, for the retailers of New Zealand—level the playing field.

The Retailers Association and others stood up and applauded him and said this was a wonderful thing, and then he delivered this bit of piffle in here, which, effectively—and I challenge those members to go and ask. They may have been visited by the Retailers Association—I have; other colleagues have—to discuss this and other issues. The Retailers Association is on record as, basically, describing this bill as piffle. Because what it does—it is not the big hit; it does not level the playing field for all retailers—is it selects the low-hanging fruit in respect of e-books, music, internet movies and videos, and that sort of stuff.

If you are competing with Apple iTunes, you are probably not going to be the local music seller from down the road, on the corner, with one staff member. No, you are going to be the big end of town—The Warehouse and those big retail providers. This bill does not deal with any of the things like, for instance, purchasing clothing overseas. It does not deal with any of those imported purchases that the vast majority of small to medium sized businesses are competing with, because it does not touch on or impose GST on any of those areas.

So the Minister Todd McClay came out with a big hiss and a roar and a discussion document saying that he was going to level the playing field, and what did he do? He picked out e-music, e-books, and one or two others and said: “Isn’t this wonderful?”. Well, it will be very interesting to see the Retailers Association and its submission to the select committee when this goes through, because I know there is gross disappointment amongst retailers that the Minister did not keep his promise and did not go far enough.

Yet again, the modus operandi of this Government is that when a problem comes up and it is politically difficult, it holds off and holds off and holds off until it reads the opinion polls and works out: “Hang on”—a bit like the property issue in here—“the people have had a gutsful of this. We’d better be seen, as a Government, to actually be doing something practical.” So what it does is take a minimalist approach—we will get to the brightline test in a minute—to do just enough to be seen to be doing something, or anything, and then it tells the people: “It’s all a done deal.” Well, people are not silly, and those new members over there, who have been elected, ought to realise that.

We come to the brightline test—the resident withholding tax issue. Again, it is worth reminding these members in Government that the 2-year withholding tax—I think the figures are that 15 percent of property in Auckland is sold within 2 years. Most property is held for longer than that. Those who have studied a bit of economics over there, Mr Bayly and co., will know that if you are making 24 percent per annum on an investment—he is awake. I would argue that Auckland property, unless Mr Bayly has got another investment hidden away somewhere in that great portfolio of his that is making more than 24 percent—I reckon that he would agree with me that that is the best game in town. A 24 percent annual return is the best investment you are going to get in New Zealand, bar none, and possibly bar none, in many respects, in a global sense.

Most people, of course, are going to hold for 2 years. Why would you not hold if you are making 24 points a year? So, as we said about the last pieces of legislation that went through around this area, it is not going to work. People will hold for 2 years and 1 day. The professional property investors, of course, will simply change their modus operandi, hold for 2 years and 1 day and then flick, and they will take 24 percent per annum, or 48 percent or 50 percent over the 2-year period. They will take it and they will bank it. This measure will not work.

As evidence of that, it is worth recalling the Treasury advice that was provided to the Minister—and possibly to Mr Bayly, and certainly to Mr Bennett, being the chair of the Finance and Expenditure Committee and a guru on these matters—where Treasury said: “No. If you are going to actually do this, you should put in a 5-year period.” Likewise, with regard to the resident withholding tax put on those domiciled overseas who flick the property within 2 years, the Treasury advice is the same: the Government should be imposing a 5-year period, and that in itself may have some sort of effect in changing people’s behaviour.

But, oh no. Again, what these folks in Government wanted to do after their feet were put to the fire on Auckland house prices, after people—young people especially, and certainly, maybe, a number of young people listening to this debate, and maybe the odd one in the precincts of this House, may one day wish to take part in the Kiwi dream and actually own their own home. Well, when those people started jumping up and down and saying “This is not on.”, the Government again read the Crosby/Textor polls and, after denying there was any housing crisis over the last 7 years—there was no crisis, no problem, and people should be grateful to the Government, it said, for what it had done for them in respect of housing, which was zero—it thought: “Hang on, people are up in arms. We’d better be seen to be doing something.” So what did the Government do? It picked out this little doozy—the previous legislation and this bill—and said: “OK, we’ll say to folks that you’ve got to hang on to your property for 2 years, or if you’re domiciled offshore, you’ve got to hang on to it for 2 years. Otherwise we’ll hit you with a marginal rate of tax.”

The interesting thing is that there has not been an outcry all over the parish. Why? Because most people have said: “Well, we’re going to hold for 2 years, and that’s what we would have done anyway. And”—as I have said—“if we’re getting 24 points per annum in capital gain, why wouldn’t we hold on for 2 years? We’ll just hold and flick.” The professionals, as I have said, will just simply modify their behaviour and hold and flick after 2 years and 1 day.

Hon Nicky Wagner: They’re professionals. They have to pay tax anyway.

Hon CLAYTON COSGROVE: Ms Wagner is sort of nodding or shaking her head or gesticulating, or something. Obviously, to be fair to her, she is not the Minister of Revenue. He, presumably, is planning his inaugural trade mission to parts unknown, rather than taking a call in this debate. But the point is that this is another mechanism—the third bill—that we, I suspect, will be back in 18 months or 2 years to amend.

The other aspect of this bill is in respect of student loans. I do not think people would argue with that to any great extent. It is a fact. I have had a student loan. I got my first degree under the old system, when I think it cost about 300 bucks a year and you got about—

Kris Faafoi: Jeez, what does that make you?

Hon CLAYTON COSGROVE: —not that old—$1,500 a year under the old bursary, which generally, I am sure, Mr Assistant Speaker and a few others over there will recall, kept you going at the student bar occasionally over the academic year. My second degree was under the student loan system.

It is right that if we incur those debts to the taxpayer and we get the benefit of a tertiary education, we pay those back. There are always equity arguments around the fringes as to the extent and the process and the burden that is visited on those young people if they cannot get decent-paying jobs in New Zealand, but it is appropriate that they do pay that money back, and it is appropriate that we look at the process of information sharing between the IRD and the revenue service of Australia.

The only qualification I would put on that is there have been a number of occasions when the IRD has not got its act together in terms of information sharing within the family of Crown agencies, and one could argue that it should ensure that it gets its act together within that sphere of intra-Crown agencies before it advances off, outside the Crown jurisdiction, to Australia. But, as a first principle, it is appropriate that if a student loan is incurred, people should be meeting their commitments there.

So I say we will support the bill’s referral to a select committee. I know there are other aspects to this bill. There will be some very interesting submissions. No doubt the Retailers Association will come and say “Hey, we had high hopes for a level playing field for our members and we were sadly disappointed.”, but it will be very interesting to see the explanations coming from the Minister and his successor as to why they did not meet their so-called commitment.

JAMI-LEE ROSS (National—Botany): I always enjoy listening to the Hon Clayton Cosgrove. He is one of the more entertaining members of the Finance and Expenditure Committee, after Mr Peters, of course. After the recent reshuffle, I was a bit concerned that we would be losing him, but the gods have shined upon us and he is still on the committee. We are currently considering, actually, the highlight of his legislative career: the Keep Kiwibank Bill.

Hon Clayton Cosgrove: Not mine any more—not mine any more.

JAMI-LEE ROSS: Not his—he has ditched it already. He has ditched it already. OK, the first reading of the Keep Kiwibank Bill was the highlight of his legislative career. He has now given up on it. But a much better bill that the committee will be considering is this taxation bill. I think actually it could be called the “Taxation (Increasing Compliance) Bill”, because the three main matters that are considered in this bill are about increasing compliance with tax obligations. The change to the residential withholding tax is, I think, going to be good and going to add to the additional tools we have already brought in through recent bills like the requirement for an IRD number to be provided during property transactions and the brightline test that has recently come in. This will complement those two bills.

I have to say to the Labour members opposite who are pooh-poohing this idea and, as they usually do on these types of issues, whinging and moaning about the changes we have made, that if they want to come to Auckland and talk to some of the lawyers and talk to some of the real estate agents who deal with this every day, they will be told that already the changes the Government has made are having an impact. They are slowing things down. This is on top of the fact we are building a whole lot more houses and we are seeing more houses being consented at an unprecedented rate. These are all starting to have an impact.

This bill will also bring about an additional measure that will help in a big way. I do not want to speak for very long. I want to save the Labour members opposite who are probably a bit concerned about what we are saying and all the good things that are happening through this bill. The fact of the matter around GST is that we are able to bring the changes to GST with online services relatively easily through this bill, but I want to allay their fears. There is a consultation document that the Minister of Customs is working on that is going to be going out next year. That will be the opportunity for New Zealanders to be consulted on the potential GST options with actual goods coming across the border. I think that will be a golden opportunity for New Zealanders to contribute their views on what could change.

With regard to student loans, this is a very simple change through this bill that will lead to greater compliance from those who are living in Australia. The greater information that we are going to be sharing between our two countries will lead to greater compliance with student loan repayments, and that is a good thing for the country. I commend the bill to the House.

GARETH HUGHES (Green): Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to support this bill. The Green Party supports it going to a select committee. It is, in one sense, a non-controversial bill, but there are some concerning aspects within it. Really, what we are debating tonight should be three separate pieces of legislation, not this omnibus bill, because it deals with incredibly different parts. The first is the new Netflix tax, the second is new information and contact detail disclosure from the Australian Government to the New Zealand Government when it comes to student loans, and the third is the brightline test—the capital gains tax when you do not want a thing called a capital gains tax.

We will be supporting this bill. We want to hear the discussion around the select committee. We want to hear from the diverse group of experts and people involved in these three different areas. When it comes to the new Netflix tax, I remember John Key’s promise at the last election of no new taxes. I guess you could make an argument that this is a new tax. I guess you could make an argument that it is extending an existing tax into an area that is not currently being taxed.

David Seymour: Well, which one is it?

GARETH HUGHES: There is David Seymour, I guess voting for increased taxes tonight, I am sure. There is a legitimate debate here because New Zealand retailers do feel like they are not on a level playing field. The Inland Revenue Department reports that it is missing out on around $180 million of revenue per annum. So the question is why the Government is going after only this part, which is $40 million of that $180 million of revenue.

The Green Party supports our domestic retailers—we have called for this in the past—but we would also note some questions around the compliance cost. Obviously, the reason this has not been enforced by previous Governments was that the $400 de minimis threshold, which is not being looked at in this legislation, was always seen as a challenge. Sure, the Government would love that extra revenue from the GST receipts on those products, but what is the point if you are actually spending more getting that revenue? So I guess the Government thought it had found a bit of a workaround with having the onus on the provider of goods and services—I am thinking of Netflix, of Amazon.

The question here is whether we are simply going to drive these providers of services to New Zealanders—who obviously they want, because they are subscribing, for example, to Netflix. I am a Netflix subscriber myself. Will we in fact see a perverse effect that these companies, because they feel they are not on a level playing field to other, maybe smaller competitors under that $60,000 GST threshold, will in fact leave our market? What we could in fact see is our New Zealand customers and consumers poorer as a result.

A second concern is whether we have got that $60,000 threshold right. Should it be lowered? I have seen suggestions of $10,000. I think it is an interesting debate to be had around the select committee table.

Thirdly—and I think this is quite an incredibly worrying clause—is around the misrepresentation of receipt of remote services. It has quite an innocuous title, but what we see here—in fact, in the commentary on the bill the officials give the example of Luke. Luke is using a virtual private network to mask his IP address. Tens of thousands of New Zealanders use virtual private networks every day. In this House and in parties opposite me it is no doubt being used. It is quite a common and legitimate form. It is concerning when you see penalties in the order of $25,000 to $50,000 and commentary in public around concerns of whether using a virtual private network itself, without trying to use it to circumvent these new GST requirements, will in fact be illegal. Those questions have been raised; I have not seen them answered. It would be deeply concerning, because there are many legitimate uses for masking an IP address.

On the student loan front, we have seen the Government previously pass laws in this House to arrest you at the border if you are in default. Now we see it about being able to go to your door when the Australian Government passes on your contact details. We do have concerns around this. But, if I may offer a suggestion to the Government, if it wanted to support student loan borrowers overseas—there is $3.2 billion outstanding—and it actually wanted to see that income come in, what it would be doing is negotiating with the Australian Government for those tens of thousands of Kiwis overseas, particularly in Aussie, to pay off their student loans via their income tax in Australia.

I can understand why it is good for our Government—maybe there are transactional costs for the Australian Government. But if we were serious about getting some of that $3.2 billion outstanding, the most convenient way is to make sure those Kiwis working and paying tax overseas in Australia could be putting compulsory repayments into their student loan. It has been ignored by successive Governments, hands have been thrown up in the air saying that it is too hard, but this would be the single most effective thing the Government could do.

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

Mr DEPUTY SPEAKER: Tēnā koe e Te Whare, ā, tēnā koutou te whānau o Te Whare Pāremata, tēnā koutou, tēnā koutou, tēnā koutou katoa. Members, when we broke for the dinner suspension we were debating the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill. We are expecting our next speaker from New Zealand First.

Fletcher Tabuteau: That is one way to phrase it, Mr Deputy Speaker. Thank you.

Mr DEPUTY SPEAKER: Oh, are you seeking a call?

FLETCHER TABUTEAU (NZ First): I am. It is my pleasure to stand up and take this call on the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill. I just want to start off with the fact that New Zealand firms have been forced to play on an uneven playing field for the last few years. We are talking about businesses that are having to operate in a tax environment that gives advantages to overseas firms. Instead of this Government creating a level playing field, actually the reality is—for whatever reason, whatever decision-making process goes on over on the other side of the House there—that this Government has taken years to come to this stage. It has had to acknowledge the fact that small to medium enterprises in New Zealand have been struggling with a very real issue around competing with overseas firms that have not had to pay the GST on goods and services.

What that has meant is that our local firms here in New Zealand are complying with what is essentially an unfair law that has put them on the back foot. New Zealand First has seen it firsthand. We have spoken to small businesses, we have heard from them, and they have told us that not only has it compromised profits but also it has actually made it very hard to undertake a business in, say, Rotorua, for example. A bookstore in Rotorua is having to compete with online bookstores, but from the outset an overseas firm such as Amazon has a competitive advantage in terms of size, and then it gets 15 percent in terms of the GST on top of that.

It has been unfair, and the Government is addressing it only now. But what we are seeing is a kind of a half attempt and it is even more frustrating. What we are seeing is, for example, that if you buy an e-book on Amazon after this legislation has passed, Amazon will be required to take the GST and pay that, but if you buy the same book in the hardcopy version, there is no GST on that. It just is completely illogical, makes no sense whatsoever, and is completely frustrating not only for New Zealand First but also for the small to medium enterprise businesses in New Zealand that are having to cope with the realities of this Government’s apathy. It is just taking too long, the Government is not serious about a very real issue, and it is compromising New Zealand business. What we are saying is that this tax component is an effort to level the playing field but that it does not go far enough. This Government needs to step up, and it needs to step up very fast. As I pointed out, it is not just small businesses struggling to cope with unfair tax; it is compromising not only their profitability but also the livelihoods of men and women who are working hard in their small businesses, so that needs to be addressed.

One of the other parts that has been raised earlier this evening was the actual revenue collected from the GST. It is not really that big a deal. You are talking about $40 million. [Interruption] I am glad I am entertaining Mr Seymour. He seems to be entertained by just about anything at the moment. But the reality is that if the Government had actually implemented the tax for not just the intangible but also the tangible goods, you would have been talking about some real revenue take. The reality is that that is not the issue at the moment—the fact that we are getting only $40 million from the intangibles’ GST tax take.

David Seymour: What is the issue?

FLETCHER TABUTEAU: The issue is the levelling of the playing field. The issue is that small to medium New Zealand businesses will then be able to compete with international competition on a reasonably level playing field.

New Zealand First was glad to note the threshold for overseas companies in terms of registering for GST is set at $60,000 per year in income, although we noted that there was a $10,000 threshold proposed earlier in the piece, and we probably would have supported that level as well. I think one of the problems we will find in this particular aspect is actually assessing and getting meaningful information from overseas businesses about what their incomes are and whether they meet the threshold or not.

Speaking to the student loans part of the legislation, you are talking about 110,000 New Zealanders living overseas with student loans, with approximately $3.2 billion still being owed. In this instance, New Zealand First says that good New Zealanders here in New Zealand are obliged to make their contribution. They are being held to account, and so, actually, it is fair and reasonable to expect those students overseas to do the same. It was pleasing to note the streamlining effect of the rules applying to Kiwis living overseas—for example, there was a fix-up of some of the exemptions around Kiwis living overseas who are working for charitable organisations. Their exemption will continue, and they will be able to do good work, as it were, without worrying about their student loan in the meantime.

New Zealand First is concerned about the proposed changes in order to facilitate better and more comprehensive information sharing between New Zealand’s Inland Revenue Department and the Australian Taxation Office. Fair is fair: if New Zealanders at home are repaying, then those abroad should do the same. What we are concerned about, however, is that this Government has refused to put pressure on the Australian Government around its treatment of New Zealanders in Australia and, essentially, making them second-class citizens. The point is that if the rules were applied evenly and fairly and if we were treating New Zealanders in Australia who have been living there for 40 years, for example, the same as an Australian-born citizen, then you could say: “Well, yes, let us get in there and apply this. Let us be vigorous about it, make sure that they are not escaping the net.” The reality is, though, that New Zealanders are living there as second-class citizens, and so I challenge some of those backbenchers over in the Government’s party to actually go and have meaningful discussions first about how to treat New Zealanders fairly in Australia instead of prioritising the collection of student loan debt. There are so many bigger issues to be dealt with in the first place.

New Zealand First opposed the brightline bill because of our own analysis—

David Seymour: The brightline bill?

FLETCHER TABUTEAU: —the analysis of Mr Seymour, the analysis of every single expert who submitted. Not just one or two of them but every single expert who submitted on the brightline test told us, and saw very quickly, that this piece of legislation would achieve none of the stated objectives that it set out to achieve. In fact, it would add even greater levels of complexity to the situation.

David Seymour: Can the member tell us why?

FLETCHER TABUTEAU: I will not go into detail, because I do not have the time, but Mr Seymour could do some reading perhaps this evening and get a little bit of the detail.

Because the bell has already rung, I had better jump to my conclusion—[Interruption]—and please my audience. Thank you—thank you. We actually cannot support this bill. Our opposition to the theatrics and empty platitudes from this National Government regarding the brightline legislation are just too strong. Voting for this and supporting this legislation would simply give tacit endorsement of that waste of time, piece of empty puffery—and, no, I am not talking about Mr Seymour. The reality is that there are three distinct parts in this legislation. I genuinely implore the Minister of Revenue to break up this legislation. I ask him to present it as independent pieces of legislation so that New Zealand First could support the good stuff—the common-sense pieces on student loans and taxation—but as to the rest of it, we have got issues, and, therefore, we cannot support the bill as presented to the House this evening. Thank you.

ANDREW BAYLY (National—Hunua): It is a pleasure to be talking on this bill. I have got to say that the previous speaker, Fletcher Tabuteau, talked about apathy. I can tell you that the only apathy I had was listening to that speech. Where was the enthusiasm, the vigour? It was gone, but this is a Government certainly with lots of energy.

This bill is a great bill because it deals with three very important issues. In fact, the first part of this bill is about how we deal with housing. Of course, we have already introduced two bills into the House about that: one dealing with the brightline test and also the one that required foreign buyers to get a bank account and an IRD number. So this bill tonight deals with the third leg of the treble, which is about non-resident people paying their fair share of tax on capital gains or the gains that they derive from buying and selling houses within 2 years. This is money that should be paid to the Government and this is a way of going about and doing that in a legitimate fashion.

What this bill does is it requires offshore persons to pay tax if they buy and sell a house within 2 years. The definition of “offshore person” has four categories: first, all non - New Zealand residents; second, non-permanent residents; thirdly, New Zealanders living overseas who have lived there for more than 3 years; and, fourthly, New Zealanders who have got a resident class visa but have not visited New Zealand in the past 12 months.

What we are doing here is still applying the same exemptions that we applied in the brightline test, which is that income tax is not due if you buy and sell a house for all the appropriate reasons, but what the bill does do is say that if you buy and sell a house and make a capital gain, then you have to pay the lower of the 10 percent of the sale value or 33 percent of the tax on that gain. These provisions come in on 1 July 2016, and they are the third leg of a treble that is seeing the house prices in Auckland starting to flatten off, if not starting to decrease. That is why they are so important and that is why I am so supportive of them.

The second element of this speech is just dealing very briefly with GST. Again, I have heard members of the Opposition talking about the issue of us not listening to people. Well, that is not correct and, in fact, this part of the bill addresses specifically that issue about making sure that our retailers are not disadvantaged from a competitive position where people can buy goods offshore for more than $400 and not pay GST on them. This is a very good provision around that and I commend the bill to the House.

MOJO MATHERS (Green): The Green Party will support this bill to a select committee. There are elements of the bill that we strongly support, but there are also elements that we have concern about and we hope that the details of these will thrashed out at the select committee. But, first, just to comment on the overall bill we do feel that it packages three very distinct elements that would be best separated out into three different bills to allow parties to vote accordingly on the different bills.

The point that I really want to focus on today is the GST on online goods and services. As an overall principle, yes, we strongly support it. As said earlier, it is absolutely growing by 10 percent every year. More and more people are doing their shopping online and many are looking to do their shopping from overseas shops and use overseas services as well. However, one of the unintended consequences of this bill could be that some services overseas will decide that it is not worth the hassle and place geo-blocking on to their services.

That is fine if there is a genuine comparable service in New Zealand, but for some services there is not that comparability of access. One really obvious example is the provision of online television and movies. The big four providers in New Zealand—Sky TV, Television New Zealand, MediaWorks, and Spark—none of them provide accessible online services. None of them provide captioning services, none of them provide audio description. On the other hand, Netflix, a big overseas provider, does provide captioning services and all its movies are captioned. So, of course, for the deaf community we like to use Netflix; there is just no choice in that matter. That is the only service that we can actually use. So it is very good that Netflix has said it will continue to provide that service in New Zealand even after this bill has passed, even after GST is charged, but the reality is that is for Netflix New Zealand services, which has quite a limited range of movies. If you go to Netflix US there is a far greater range of movies provided. So what do we want to do if we want to watch a movie with captions? We use the domain name system (DNS) and get around DNS blocking and try to access these movies online, because that is the only way that we are going to be able to watch these movies with captions.

This is not to try to avoid paying GST; this is to try to have access to a service on the same basis as every other New Zealander. So I really hope that when the bill goes to the select committee we will kind of unpick some of these unintended consequences. Although we want to support New Zealand businesses, although we want to ensure that there is a level playing field, the reality is that some of the services and goods that are provided in New Zealand just do not meet the standard for accessibility and this is a really important thing.

We will be looking at what the experience overseas has been with introducing bills in the EU, Norway, South Africa, and so on, to see how they managed to ensure accessible services. Some of these countries have accessible services in their own country when it comes to movies and online TV, but here in New Zealand we do not because we do not regulate that. The really important thing is to try to ensure that where New Zealanders have legitimate reasons for getting around geo-blocking they are not being unfairly penalised and it is not automatically assumed that they are trying to get round geo-blocking to avoid paying GST. That is not the case. Anyway, we look forward to that discussion at the select committee. Thank you.

Mr DEPUTY SPEAKER: I call David Seymour—a 5-minute call.

DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in support of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill. This is a bill that takes in a number of very interesting matters of taxation policy and when I think about them—

Grant Robertson: Tell us about them.

DAVID SEYMOUR: Well, for the honourable member, I was thinking of doing just that—and I thought about what Adam Smith once said about an income tax. He said that it would be an intolerable intrusion into the affairs of men and women to impose an income tax, and 300 years later is not this bill a demonstration of Smith’s prophecy? In order to have a brightline test on gains made from sales of housing within 2 years—it all sounds very noble to begin with, that we are going to suppress the price of housing, when, in reality, the real problem with housing is not on the demand side but the supply side. In reality, due to a failure of local government, we have built 40,000 houses in the last decade and 50,000 in the decade preceding it.

It all sounds very noble, but it is not going to work to have a brightline test and an effective capital gains tax on housing. But then we get to the implications of taking that sort of policy approach, misguided as it was to begin with. One of them is that if the State wants to tax people for property transactions, then it must come to Parliament and ask for the power to withhold the proceeds of a sale—either 10 percent of the sale value or 33 percent of the projected capital gain—in order to enforce that tax. Otherwise, in the case of foreign residents, this tax would be unenforceable and impractical, and is it not a reminder that every time we come to the House with noble ideas about collecting revenue on behalf of the State to achieve various social outcomes, it always results in having to extend the power of the State and intrude further into the affairs of people?

I regretfully vote for this measure. I think we are going completely in the wrong direction. But it is a Budget measure, and voting for Budget measures helps me to keep Grant Robertson over there, where he belongs, and these fine people over here, where they belong, and that is very, very important. If I ever have any doubt that that might be very, very important, then all I have to do is listen to the economics of Fletcher Tabuteau. I have to say, I wish I had had the dinner break with Fletcher Tabuteau because it must have been quite the dinner break. I thought that his economics were a little bit unorthodox before, but after that speech I can see that he is three sheets to the wind.

GST on online services is a challenge, or at least reflects a challenge that all nation States face in a globalising world. There are transaction costs to collecting taxes. There always have been and there always will be. That is why Adam Smith said that it is an intolerable intrusion into the affairs of man to collect an income tax. As the world globalises, as people start to consume music from internet-based virtual multinationals, as people begin to order T-shirts from the other side of the world—some of them even big enough for Grant Robertson—people find that it is harder and harder to collect taxes. Yet there is a way that we can pursue broad-based, low-rate taxes in New Zealand, and that is to identify large-scale, high-volume, low-number holders of monopoly powers—in so far as internet providers such as iTunes, for instance, or Netflix—where it is very easy to target the provider for taxes.

I had hoped to inform Mr Robertson about my beliefs with regard to the student loan section of this bill. Alas, I am somewhat out of time, but what I would say is that the rationale for taxpayers to fund education is that it is a public good. Education is not a public good when the person with that human capital leaves the country. So anything that this Government can do to ensure that the returns on that capital are captured back to the New Zealand taxpayer has got to be a good thing. So, on balance, despite the rather intrusive residential land withholding tax aspects of this bill, I commend it to the House. Thank you.

ALASTAIR SCOTT (National—Wairarapa): I rise in support of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill. The three parts of this bill are very sensible and very practical, and I am not quite sure why Mr Tabuteau would not agree with any of them. The first part is about student loan information-sharing. That seems a very obvious, very sensible, very practical way of understanding the New Zealanders who have taken out loans and travelled to Australia. That is Part 1—very sensible and very practical. The second part imposes a residential land withholding tax on the gains made by those offshore people who have sold property within 2 years. It is the third part of a trifecta of legislation, and this is just the last piece of it. Again, it enables the Government to ensure that people who live offshore pay their fair share of tax. It is very sensible and very practical. The third part of the bill deals with GST online and deals with the goods and services that are sold over the internet, and it requires people to register for, and pay, GST on services and products that they provide online. That is very sensible and very practical, and that is why I commend this bill to the House.

GRANT ROBERTSON (Labour—Wellington Central): That contribution from Alastair Scott, who has just resumed his seat, will go down in the annals of parliamentary history for its enthusiasm—perhaps brightened only by Mr Scott’s tie, which I am a great admirer of. As he is a constituent in my electorate, I fully approve of his purchasing goods such as that inside the boundary of Wellington Central.

The Labour Party is supporting the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill on its first reading and referral to the select committee. As has been noted by a number of other speakers before me, it essentially covers three areas, and I am going to work my way through those now. The one I want to focus on for the first part of my contribution is indeed the idea of the imposition of GST on what are called intangibles—remote services sold over the internet. Mr Deputy Speaker, I am sure that you, along with many other New Zealanders have got a Kindle and that you download those books to read over the summer break—those murder mysteries, things that you think about in the dead of night and that you might want to do to your colleagues; that kind of thing, Mr Deputy Speaker. Downloading those books on to your Kindle is the type of purchase that the Government tonight in this House is proposing that GST be put on. It is proposing that it be put on an e-tailer who sells into New Zealand more than $60,000 worth of product a year.

That is a reasonable suggestion—one that has been a long time coming. It has been suggested for some time. I know that people like Spark will be very pleased with that. They have been looking for a more level playing field in their competition with Netflix and other providers of that ilk. So they will be happy. Those who are not so happy include the retailers and the booksellers, and, in fact, Booksellers New Zealand’s chief executive officer Lincoln Gould said that there was nothing for small business and its communities in this bill. He has been joined by Retail New Zealand and its criticism of the bill, which, as it says, does nothing to deal with supporting the small businesses, the main street retailers, who currently work on an unfair playing field when it comes to this. Mr Tabuteau has already given the example of a book that if you did download it to your Kindle would attract GST, but if you then ordered the book in hard copy from Amazon and had it mailed across the world to you, it does not attract GST. So the Government has set up this unfair playing field, because it has done the thing it always does. It has gone after the very, very easiest thing—the thing that does not take too much effort, and it has left alone the issue that New Zealanders, and in particular small businesses and retailers across New Zealand, wanted solved.

The Government has done worse than that. It has told the booksellers, the retailers, of New Zealand that it would be on to sorting this out. That is what it told them at the election last year. The retailers were told in November that there would be a discussion document available on this very issue of how to deal with goods that cross the border, not just the intangibles. What happened when Todd McClay made the announcement of this piece of legislation? He announced that the discussion document scheduled to come out in November of this year will now come out in April of next year—another delay of 5 or 6 months while the Government kicks the can down the road, as it does on so many issues. Any issue that might require a little bit of challenge, a little bit of confronting themselves, it kicks the can down the road. A discussion document in April—I will wager with you, Mr Deputy Speaker, that that will not come out in April. It will be later next year. The can will get kicked further down the road, because this Government never faces up to the tough issues. If the Government is serious about creating a level playing field for New Zealand businesses, especially small businesses, it needs to have the courage of its convictions and put up a regime that actually creates that level playing field and not tinker around at the edges.

The second part of the piece of legislation in front of us today is around the question of the residential land withholding tax. This is, as some other speakers have noted, part 3 in a horrendous trilogy from the Government of stuff-ups in taxation legislation. If it is a trifecta, Mr Scott, it is paying very, very poorly. What we learnt at the Finance and Expenditure Committee last week during the Inland Revenue Department’s hearings is that the brightline test, which we have already been told is going to bring in $5 million—a pathetic sum of money relative to the trading of houses in New Zealand—costs $5 million to implement. So $5 million comes in and it is actually going to cost the Inland Revenue Department $5 million to implement it. It is cost-neutral—genius taxation policy! It is cost-neutral and it fails to actually get to the root of the problem of property speculation.

It will be interesting to see, once again, all of the tax experts come to the select committee, as they did for the first version of the brightline test, to say to the Government: “Your policy doesn’t make sense. It’s got no coherence.” One of the senior partners in the largest accounting firm in New Zealand came to the select committee and said he was “professionally confused” by the Government’s approach in this area. And they will be back. They will be back again to say: “Here you go, confusing the picture even more.” So this really is throwing potentially good legislation after bad. There is very little in the Government’s approach of trying to look like it is dealing to speculation that has been good. This particular piece of legislation deals with those offshore who will be making purchases. It appears to set up a tax that makes some sense in that context, but it follows on from very, very poor legislation. And, once again, it is an example of taxation legislation that is simply inadequate for the problem that it seeks to address. It kicks the can down the road of a difficult issue. It gives the appearance of doing something. If it were not for some of my colleagues, I would call this “Clayton’s legislation”, but that may give the Government the wrong idea about what kind of legislation it is. But it is the kind of legislation that you do when you are not really doing legislation to address the problem.

The third part of the legislation that is in front of us today is that dealing with student loans. To give Mr Seymour his dues, he was about to launch into his views on the funding of tertiary education, which he one day hopes to undertake, I understand. And he actually said something that I agreed with. So we are going to need to mark this down: 8 p.m. on 8 December 2015, Mr Seymour said something I agree with, which is that when the interest-free student loan policy was set up, it was set up to be interest free when you were in New Zealand. It was never set up to be interest free if you went overseas. One of the reasons for doing this—

Mr DEPUTY SPEAKER: Point of order, David Seymour. Let us hope it is, in fact, a point of order.

David Seymour: I raise a point of order, Mr Deputy Speaker. I said no such thing, and the member knows it.

Mr DEPUTY SPEAKER: That is not a point of order; that is a matter for debate, and you have had your debate.

: Yes, it was not that good, either.GRANT ROBERTSON So the interest-free student loan scheme was designed so that it was interest free in New Zealand. If you went overseas, interest began accruing. There was some allowance for the kind of OE that New Zealanders undertake, or if you were working for a voluntary organisation or for the New Zealand Government. That is part of this legislation, to tidy up the way in which charitable organisations are defined—those where you do not attract interest when you are working for them overseas, and it is good to see that being tidied up. More discretion is going to be given to the Commissioner of Inland Revenue.

David Seymour: Mercy!

GRANT ROBERTSON: Read the bill, Mr Seymour. It is in there. More flexibility is going to be available to the Commissioner of Inland Revenue to decide whether people are working for a charitable organisation.

But the Labour Party supports following up that debt. We, through the interest-free loan scheme, made that scheme fairer and made that scheme more of an enabler for people to get into tertiary education, but we respect the fact that it is a loan scheme and that the loan does need to be paid back, and the relationship between the Inland Revenue Department in New Zealand and the Australian authorities is close enough to be able to share that information, so that those who do default on their loans can be followed up. This was a loan scheme that the now leader of the National Party said that he would oppose with every bone in his body. When it came in, he said he would oppose it with every bone in his body—well, that has failed. The National Party has continued on with it, it has tinkered around at the edges, it has managed to make the interest-free loan scheme more unfair and more difficult, and it has taken away a number of the student allowance provisions—but on this particular piece of legislation, involving student loans, the Labour Party can support it.

So we will be supporting this bill to the select committee. It is a bill that could have done so much more when it comes to cracking down on speculation in the housing market. But, as is typical of this Government’s approach, it has tinkered at the edges, it has dipped its toe in the water, and run away scared, when it could have actually been doing something to give New Zealanders a chance to buy their own home and be part of the Kiwi dream. Maybe one day, when we get a Labour Government, we can get that to happen.

SCOTT SIMPSON (National—Coromandel): As the last speaker in this first reading debate, it falls to me to round off the debate. I have listened carefully to the contributions from members across the House, and some have been better than others. Really, I just wanted to acknowledge the very fine contribution from the ACT member, Mr David Seymour, who really did get to the essence and the nub of this bill. There are three primary purposes to this bill: firstly, the student loan information aspect; secondly, the property investment rule changes; and, thirdly, the GST on online services. I know that the select committee is going to do a very thorough job of scrutinising this piece of legislation. I thoroughly commend it to the House.

A party vote was called for on the question, That the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill be now read a first time.

Ayes 109

New Zealand National 59; New Zealand Labour 32; Green Party 14; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 12

New Zealand First 12.

Bill read a first time.

Bill referred to the Finance and Expenditure Committee.

Bills

Education Legislation Bill

First Reading

Hon HEKIA PARATA (Minister of Education): I move, That the Education Legislation Bill be now read a first time. I nominate the Education and Science Committee to consider the bill. This year I had the privilege of showcasing to our international counterparts how great our education system is in New Zealand and, I hope, reflect that back to us as New Zealanders. We have so much to be proud of.

We have increased the proportion of 18-year-olds who achieve our National Certificate of Educational Achievement (NCEA) level 2 or higher from 68 percent in 2008 to 88.3 percent in 2014. I am particularly proud of the lifts for Pacific students, from 44.6 percent in 2008 to 67.7 percent, and for Māori students, from just over 51 percent in 2008 to 75 percent in 2014. Those are extraordinary lifts in achievement, and they owe that achievement to the students themselves, to their parents and whānau, and, of course, to the teachers and principals who have worked to make that possible.

Since 2010 the rate of children starting school having previously participated in early childhood education has also increased by 1.7 percentage points, to 96.1 percent. For Māori and Pasifika, this has increased at an even faster rate—up to 93.8 percent for Māori and up to 91 percent for Pasifika. In 15 of the 16 regions, primary school achievement in writing and mathematics has increased since 2011. I am particularly pleased by the progress in areas such as the West Coast, Gisborne, and Northland, where the percentage of 18-year-olds with NCEA level 2 or an equivalent qualification has risen by between 11.7 and 18.4 percentage points. Teachers and principals deserve a great deal of credit for taking up this Government’s achievement challenge.

Ninety-six communities of learning, involving 793 schools and more than a quarter of a million pupils, are working together to systematically raise student achievement through communities of learning. That means a year into the 4-year roll-out of the programme, about a third of all our students are in line to benefit from the additional funding that enables schools to set their own achievement challenges and share expertise and resources.

When the brand new trades academy opens in Southland next year, we will have a trades academy in every region in New Zealand. Trades academies deliver overwhelmingly positive results for our children—not just any of our kids, but those who are risk of not achieving in education. We opened our first trades academy in 2009 with 600 places and since then we have increased this tenfold, whereby next year over 6,000 will be participating in trades academies. Provisional 2014 results indicate that 85 percent of 18-year-olds who have participated in trades academies achieved at least NCEA level 2, compared with 77 percent for a comparison group of 18-year-olds who did not participate in trades academies.

We have also established nine partnership schools kura hourua, and my colleague David Seymour, the Parliamentary Under-Secretary to the Minister of Education, has invited applications for a third round to open in 2017. These schools are a little bit of innovation in our system. They are designed to give kids a shot at education and brighter prospects than they otherwise would not have had, and they respect the fact that parents make the choice of the school that their children go to. The choice and diversity in the New Zealand education system has resulted, however, in complex legislation spread across multiple Acts.

Chris Hipkins: Ah! She’s finally getting to the bill.

Hon HEKIA PARATA: The Education Legislation Bill—just providing a little context to inform our consideration—is an omnibus bill amending eight Acts, which will improve administrative and governance arrangements for educational entities and funding organisations.

One of the eight statutes being amended is the Education Act 1989. That Act is also the subject of a separate, targeted update that will set the strategic direction for the education system. The Government is currently consulting on the update of that Act.

This bill contains amendments implementing a number of policies. They are principals managing more than one school, minimum school opening hours, tertiary education institutions sponsoring partnership schools, enabling licensed home-based education and care services to simultaneously provide early childhood education in out-of-school care services, tertiary education policies modernising antiquated Acts, and miscellaneous amendments.

We know that quality teaching and leadership makes a significant difference to student achievement. However, many schools face ongoing challenges to recruit and retain suitable principals, particularly in our rural areas. The Government has introduced a range of measures through our Investing in Educational Success initiative to improve schools’ access to effective principals. An example is the principal recruitment allowance. This allowance enables certain schools to offer a more competitive salary in order to recruit an experienced principal.

To complement these measures, schools should also have the option of being able to share a principal. However, under the current legislation this option is available only where there is a combined board of trustees. This bill addresses this anomaly by giving all school boards, irrespective of their governance arrangements, the option of appointing a principal to manage more than one school. It also gives our very good principals more challenge and a more interesting career path.

Schools are increasingly seeking more flexibility in their timetables to cater to the particular needs of their school and their students. This bill provides school boards with the opportunity to vary their opening hours. This kind of innovation and responsiveness to what works for students must be encouraged. But we know that this must be balanced with the needs of the community, and so the bill mandates that boards must consult with their parents, staff, the local community, and anyone else they consider to be affected. The longstanding requirement for schools to be open for instruction for a minimum of 4 hours a day will not be changed. A requirement to consult and to ensure that students do not spend less time in school than students in comparable and other local schools acts as a constraint on any arbitrary exercise of the boards’ new discretion.

This bill amends the Education Act 1989 to allow tertiary education institutions to become sponsors of partnership schools. The parliamentary under-secretary and I, through partnership schools, have been focused on providing parents with greater choice. This change reflects the Government’s continued backing of partnership schools and its belief that tertiary education institutions’ strong links with secondary education and industry’s understanding of the latest educational research and proven track record as capable managers of significant budgets will strengthen the network of partnership school sponsors.

The bill will enable licensed home-based early childhood education providers to also simultaneously provide early childhood education and out-of-school care services, subject to constraints. The amendments will allow for increased parental choice, and will better support workforce participation by parents of their children.

On behalf of my colleague the Hon Steven Joyce, the tertiary education aspects of the bill will clarify that tertiary education institutions are not required to seek the Minister of Finance’s approval before investing in related entities, but will require parent-level reporting and a power for the Minister responsible for tertiary education institutions to require information. It will also make a minor change to the process for setting conditions on fees that tertiary education providers can charge domestic students.

Other amendments include proposals for the national student number, which will support the increasing use of online educational services, enabling the State Services Commissioner to approve generic or specific terms in conditions of employment, remove unnecessary operational specifications relating to the provision of payroll services, and update aspects of the Ngarimu VC and 28th (Maori) Battalion Memorial Scholarship Fund Act 1945 and the Pacific Islands Polynesian Education Foundation Act 1972.

The ability of the education sector to effectively and efficiently meet its statutory obligations, including delivering financial assistance to students, is being hampered by overly complex legislation. The Education Legislation Bill will address this situation. Broadly, the proposals in this bill will continue to support this Government’s unswerving focus on lifting aspiration and raising the educational achievement of New Zealanders. I now commend the bill to the House.

CHRIS HIPKINS (Labour—Rimutaka): There is absolutely no doubt that the education legislation in New Zealand does need to be modernised, it does need to be streamlined, and it does need to be simplified. It needs to be less prescriptive, and, certainly, the education legislation needs to be consolidated.

Of course, this legislation—the bill being brought before the House by the Minister of Education—does none of those things. It does not actually deliver on that. We will end up with no fewer Acts governing the education sector at the end of this than we have now. It is a missed opportunity.

We do need to streamline and simplify the Education Act and we need to remove a lot of the red tape and restriction that currently wraps up our education system. This bill, far from doing that, actually adds more. It makes the law more prescriptive, it puts more constraints around what schools can and cannot do, and I think that this is an opportunity that is being completely missed.

I do want to deal with some of the smaller provisions in the bill before I get on to what I think are some of the more substantial ones. The Minister mentioned school hours. School hours are one of those topics that I think people look at and think “In theory, yes, it’s a good idea. Give schools more flexibility.”, but, actually, think through the practical implications of this, and you do start to uncover some difficulty.

Parents who have kids at multiple schools and at multiple ages actually may find it quite difficult to have those kids starting and finishing school at different times of the day. So although it may sound nice and easy and simple in theory, in practice this could have significant implications for parents that have not necessarily been thought through. I think that is the first thing.

Principals running multiple schools—in theory you would think, particularly in the case of very small schools, would it make it sense to have one principal overseeing the management of more than one school? You would think “OK, in theory, yes, maybe there is some merit to that.”, but where they are reporting to multiple boards of trustees where does the ultimate accountability lie? Who can sack that principal if a principal is reporting to multiple different employers? What happens if one of the employers has a difficulty with them, but the others quite like them? It, potentially, sets up a whole heap of conflicts for the boards and for the principals, and, potentially, undermines the entire model that we have.

There are certainly issues with the legislative model that we have around how schools are governed and run in New Zealand. It does not adequately promote cooperation amongst schools and collaboration amongst schools, and we do need to deal with that. But I am not sure that giving principals, in isolation, the power to run more than one school without dealing with many of the other issues that hinder collaboration is necessarily going to deal with that particular problem.

In terms of the expansion of home-based early childhood education services to allow them to provide out-of-school care, I think the first question that we have got to ask is how satisfied can we be, as taxpayers and the parents of the kids who are attending those services, that they are getting a quality outcome as a result of sending their kids to home-based early childhood education? The reality is they cannot be, because there is not any research. No research has been done to assess the quality of home-based early childhood education, and it is one of the fastest-growing parts of the early childhood education system. No research has been done to assess the quality of the outcomes from home-based compared with centre-based early childhood education.

I have visited home-based services; there is no doubt that there are some really innovative and interesting things happening within the home-based sector, but there are also some cowboy, cut-price operators who are not doing a good job of educating kids in home-based services. I think, until we get that particular issue sorted out, why massively expand the remit of the home-based sector? So we will be looking at that very closely.

Then I want to turn to the amendments around charter schools, because this bill massively expands the potential number of operators of charter schools in a way that, again, confuses the accountability mechanism. We already know that charter schools are less accountable than State schools. They have less scrutiny applied to them than State schools because they are not covered by the Official Information Act.

So let us deal with the first change. The first change is that the Government wants to allow tertiary education institutions to set up and operate charter schools. But, of course, those tertiary education institutions would no longer be covered by the Official Information Act and the Ombudsman in so far as the operations of charter schools go.

So, potentially, here we have a State institution—a State institution—setting up a charter school that would then have less scrutiny applied to it than the institution itself or the comparable school down the road. Despite the fact that it is a 100 percent owned, operated, and funded taxpayer operation, there would be no scrutiny over that charter school under the Official Information Act or through the Ombudsmen Act, and that, of course, is wrong.

If the Government is so comfortable with the way charter schools are operating, why is it being so secretive about it? Why will it not release all the information? Why will it not have—

Hon Hekia Parata: They are more transparent than every other kind of school.

CHRIS HIPKINS: —them covered by the Official Information Act and the Ombudsmen Act?

Hekia Parata screeches that they are more accountable. That is absolute nonsense. If that is true, why is it that after nearly 2 years of operation, she is still sitting on massive amounts of information that she will not release about the operation of charter schools, and the complaints that there have been from parents about the operation of those charter schools?

There have been multiple complaints from parents about the operation of the charter schools, and the Government simply sits on that information and chooses to ignore it. Of course, the tertiary education system is not without fault itself. The Government is going to allow tertiary education institutions, some of which have been enrolling their own staff in their tertiary education courses in order to boost their numbers—the Government’s response to that is to say: “Well, let’s let them operate some charter schools as well.”

The tertiary education system is full of rorts, and the Government wants to expand—expand—the potential for more rorts in the education system by allowing it to operate charter schools as well, and that is simply wrong. It is no wonder that the Government does not want them to be covered by the Official Information Act when it is opening up massive loopholes—massive loopholes—that will allow for more and more rorting of the system.

And let us deal with another aspect of the charter school system. If charter schools are so successful, why is it that in this legislation the Government is proposing that it would allow charter schools to contract out of the very education provision that they are set up to provide? Let us be clear what this bill does. This bill allows a charter school to go to a State school and pay the State school to provide the education that the charter school was supposed to provide in the first place.

So what on earth is the point of the middle man? Why pay for a charter school to deliver education that it then contracts out to the State school? Why not give the money directly to the State school instead of having for-profit—for-profit—charter schools creaming the money off the top, which is what this very bill allows them to do. It is an extension of the powers that charter schools have to opt out of the education provision that they are being contracted by the Government to provide.

If the Government thinks that charter schools are doing so well, why is it that it wants to allow them to opt out of the responsibilities they have to provide education? Why is it that it does not want them to be scrutinised under the Official Information Act? Why is it that it wants to hide their activities from the jurisdiction of the Ombudsman—not that I have a lot of faith in that particular organisation after the events of today. Why is it that it is so secretive about the operation of charter schools?

There really is not a lot of justification for this extension. The only justification the Government has is that it could not get enough people—and it says so in the regulatory impact statement—who wanted to operate charter schools. So in its desperation to get more of them set up, it is now going to go to tertiary education providers and say: “Please, please, set up charter schools, because it is turning into such a disaster for the Government.” It has had problem after problem.

And, of course, what was the ideology behind charter schools? Well, if they fail, the Government will close them down. That is what John Key said. The Government has had a massive failure of a charter school, with drug use, absenteeism, high staff turnover, student failure, students dropping out—and what did it do? It said: “Oh, we’d better give them a bit more time.”

Well, how many more kids have to have their futures ruined by that charter school before Hekia Parata will step in and live up to the promise that John Key made that failing charter schools will be closed down? How many more kids? Because there have already been plenty of kids who have had their futures ruined by that school, and there should not be more. So the Government members can stand over there with their crocodile tears about it, but these are real kids, and they are ruining their futures by allowing them to attend that school, which is absolutely failing.

If the Government was sincere in what it is saying it would close that school down—which is what John Key said the Government going to do, and that is what the Ministry of Education recommended to Hekia Parata. It said that the case was already there for the Government to close that school down because it was failing, and, for whatever reason, Hekia Parata decided to do her own thing, ignore that advice, and leave that school open.

So charter schools are not more accountable. There is no justification for expanding charter schools. This is a bad piece of legislation. Although there are good aspects to it, the negatives outweigh the positives, and we will be voting against it.

Dr JIAN YANG (National): Partnership schools are providing parents with greater choice and are also showing signs of improved outcomes for high-priority students. Education has been a top priority for this National-led Government. This Government is committed to ensuring that every young New Zealander has the skills and the qualifications required to successfully participate in the modern economy. I would like to congratulate our Minister of Education, the Hon Hekia Parata, on her excellent work in the past few years. We have seen the Minister constantly visiting schools and talking to teachers, staff, the management team, and communities, so under her leadership we have achieved a lot.

We have a long list of achievements, of course, but here are just a couple of examples. The proportion of 18-year-olds who achieve National Certificate of Educational Achievement level 2 or more has increased by over 20 percent, up from 68 percent in 2008 to 88.3 percent in 2014. There are also the increased percentages for Pasifika and Māori students, which are even higher. We have also had substantially increased collaboration among our schools, which is another very important achievement. As Minister Hekia Parata has just mentioned, 793 schools are now working together to systematically raise student achievement through a community of learning.

National’s unrelenting focus is on raising achievement for all of our students. This Government will never stop working, and it will work even harder in the coming years. We want to further improve our education system. Now, of course, we are facing some challenges, particularly because of overly complex legal requirements, and it has become increasingly difficult for the officials and for the sector to effectively meet statutory obligations and provide particular services. That is why we are introducing this bill.

This bill will amend eight statutes to improve administrative and governance arrangements for educational entities and funding organisations across the education sector. Changes include allowing schools to change their opening hours, with the agreement of their communities. This change will give schools the opportunity for more flexibility in their timetables, to cater for the particular needs of their schools and students. This bill will also enable a principal to be employed to manage more than one school. This bill will help ensure that we will have a modern education system that reflects New Zealand now and into the future. I commend the bill to the House. Thank you.

JENNY SALESA (Labour—Manukau East): Thank you, Mr Deputy Speaker, for the opportunity to speak on this omnibus Education Legislation Bill. This bill is proposed because it will apparently improve, as we heard from the previous speaker, Jian Yang, the administration and the governance arrangements for educational entities as well as funding organisations. I note that this is the first omnibus bill of its kind for education in over a quarter of a century. If passed, it would amend eight different pieces of legislation to ensure that they align with the Government’s policy objectives.

According to the general policy statement, the bill will make operational and administrative changes to early childhood education and to compulsory schooling, as well as to the tertiary education sector. The proposed changes span the breadth of our education system, allowing tertiary institutions to sponsor charter schools, creating the role of a “super-principal”, allowing the State Services Commissioner to approve generic or specific terms and conditions of employment, adjusting school opening hours, and modernising the Pacific Islands Polynesian Education Foundation Act 1972, amongst many other things. These are very wide-ranging changes to the education system. These are a myriad of issues, and the changes that this bill proposes are way, way too wide. I have time to touch on only one, possibly two, of those matters.

Firstly, I turn to the measures allowing principals to run multiple schools. Labour is certainly very open to discussion about how best to encourage collaboration between schools as well as to reduce the negative impacts of the competitive model of schooling. But taking a successful principal and, first, diluting their positive impact on their own school, and then, second, stretching them thinly across other schools and hoping for beneficial effects on par with the current successes that they are actually enjoying in their school is, I believe, taking a huge gamble with our children’s future.

Are the successful principals in our community keen to do this? In my electorate of Manukau East there is an excellently performing school, which some of you may have heard of: McAuley High School, an integrated Catholic school. I am very, very proud of the achievements of girls and students at McAuley High School. The principal of this school is someone whom I really admire. She is hard working, she is passionate, she is very intelligent, and she is one of the best—one of the best—principals whom I know. She is aspirational for her students. She helps each and every one of her 800 students. She and her teachers help their girls to believe that they can achieve and that the sky is the limit. She helps them believe that they can succeed in life regardless of their home, their socio-economic status, or, indeed, even their race.

The principal has informed me that it has taken her several years of dedicated effort, with the support of a good governance board as well as the support of her teachers, support of the parents, and support of her students, to get the results that they enjoy now at McAuley High School. Even the Education Review Office has decided that McAuley High School does not need to be reviewed in the next 3 years. It will not be reviewed again by the Education Review Office for another 5 years. McAuley High School outperforms other schools like it in the country. It even outperforms other schools that are decile 9 and 10. It is made up mainly of Pacific—

David Seymour: Fabulous.

JENNY SALESA: Maybe if you listen, Mr Seymour, you might learn a thing or two. It is made up mainly of female Pacific students. This is a community where the median income ranges from $19,700 for those from the Māngere-Ōtāhuhu Local Board area, up to $21,000 for those from the Ōtara-Papatoetoe Local Board area. Last year the McAuley High School pass rate for university entrance was 74 percent. The national average was 69 percent, and many other schools like McAuley High School—because it is a decile 1b school—sit at around 40 percent. For National Certificate of Educational Achievement level 1 at McAuley High School it was 90 and 95 percent—

Hon Hekia Parata: What’s this got to do with the bill?

JENNY SALESA: The national pass rate was 81 percent. For level 2 it was 91 percent and for level 3 at McAuley High School it was 91 percent, compared with the national average of 78 percent.

These academic results are astonishing. McAuley High School results are transformational for the students. They are transformational for their families and for our local communities. You would think—this is where it relates to this bill—that the principal of this school would be the very sort of principal who should be asked to manage a super-school pursuant to this bill, but she does not want a bar of this. She is strongly dedicated to making a difference for her students, for the girls in her school. She does not want to put any of that at risk. Similarly, she says that she cannot imagine another principal coming in from the outside, not knowing what things are like for her teachers and for her students, and deciding how things should be done differently in her school.

Hon Hekia Parata: Read the bill.

JENNY SALESA: I have read the bill. According to this principal, the success that is elsewhere, perhaps, based on theory and success that others have met in other schools would not necessarily be successful for her school. Our children—our students—must be at the centre. The changes we propose in this House must be about what works for our children. Putting principals in charge of multiple schools is gambling with our children’s education and their future. Further, looking at the details a bit more, having a principal reporting to multiple boards of trustees is fraught with risk. This could create significant accountability issues that would need to be carefully worked through.

I would like to turn now to the provisions relating to charter schools. This Education Legislation Bill allows for the expansion of the charter schools model to many other schools. I am most familiar with the charter schools model in the United States, particularly charter schools in the state of Michigan, where my husband and I lived for 10 years. The state of Michigan introduced an unlimited number of charter schools. The model was brought in from other states because it was touted as a silver bullet—as the solution, especially, for educational failure rates of African-American, Latino, and other ethnic minority students. There are over 10 million people who live in the state of Michigan. In the city of Detroit charter schools were opened left, right, and centre. Educational success for these students was supposed to improve. Detroit was supposed to save millions. Instead, the educational success rate either remained static or, as in most of the schools, went downhill, and, worse, the city of Detroit became bankrupt.

Charter schools are a very expensive experiment here in New Zealand. The few charter schools that we have here right now have been and continue to be plagued with problems. Only a few streets away from the school that I spoke about earlier on, McAuley High School, we have a charter school that has been opened—a Pacific charter school, to be exact. It is apparently supposed to deal with the issues of Pacific students. It is supposed to fix the issues for our community. That is just disgraceful when you already have a school with over 90 percent Pacific female students who are already doing very well. McAuley High School is achieving way better than many other schools across the country here in New Zealand.

We do not support this bill. Thank you.

PAUL FOSTER-BELL (National): E Te Mana Whakawā Tuarua, tēnā koe. Tēnā koutou katoa. As much as I like and respect the member Jenny Salesa, I pity her for having to recite and parrot such absolute ideological bilge in this House. This is a Government that cares very much about the education of New Zealand’s children, our future generations. I want to congratulate the Minister of Education, the Hon Hekia Parata, who has an unrelenting focus on achievement in our education system.

In supporting this Education Legislation Bill in its first reading, I want to point out, I think, just two of its advantages. It allows principals to manage multiple schools and, as much as the Opposition may wish to characterise that as some sort of gamble, this is hardly an exciting or novel concept. It is, in fact, something that we share in common with 15 other countries that have a shared head of State. If it works well at that level, I think we can expect it to work well where we have high-performing principals managing multiple schools. Secondly, it allows much more flexibility in school opening hours. This is common in the workplace. If you look at Government departments, they have flexible hours. You can see the advantage of allowing, perhaps, education to take place in the morning and then trades training in the afternoon in some institutions.

This bill simply brings schools up to working in the modern world in which we live. It is a very fine bill, put forward by an outstanding Minister, and I commend it to the House.

CATHERINE DELAHUNTY (Green): Mr Deputy Speaker, tēnā koe. Tēnā koutou e Te Whare Pāremata ko tēnei pō. I am very pleased to make a first reading speech. There is quite a lot in the bill, which I have read, and there are a few things in the bill that we are very comfortable with—for example, the modernisation of the scholarships for the Pacific Islands Polynesian Education Foundation and the Ngārimu VC and 28th (Māori) Battalion Memorial Scholarships. Obviously, those things are useful. But in the main this bill is a continuation of the privatisation, myth-of-flexibility meme that is dominating the education system.

It is interesting, because parallel to the bill there is a process going on at the moment that is about consultation on the purpose of education. What I would love to see in this bill—which is not addressing the purpose; it is just a whole lot of fairly conflicting and, in some ways, confusing amendments—is the purpose of education defined, myself. I would love it to be—and so would the Greens—that the purpose of education is not the myth of choice. It is equity, human development, and mutual liberation, but that is a foreign country, where children come first. It is not about measuring, not about targets, and not about managing a business.

To get down to the specifics of the bill, of which there are quite a few, there are some parts of this on which I am looking forward to their scrutiny at the select committee. The joint principals clauses are not necessarily the worst. I would say that the worst clauses are those around home care, after-school care, and early childhood education, which I will talk about in a minute. The joint principal of a number of schools is an idea that might sound very logical, in a “franchise-y”, spin-it-around, “let’s get flexible and see about managing” kind of manner—because this is all about managing, not about children. But having spent last year, in particular, visiting decile 1 schools and talking to principals, the principals of decile 1 schools told me that they were passionate to stay there, in that specific community, with that specific school, to support those communities that are suffering from major inequality, and they were needed to be there every single day. They did not want to spread themselves around; they wanted to stay there for that community and be there every single day because the principal is where the buck stops when things melt down, when communities are suffering from poverty, transience, and social stress. That is why a principal needs to be there with their school.

There might be situations, for example, in rural areas where there are very small schools, where you might argue that so long as you have got an excellent teacher or two, you can share the principalship, but that needs to have safeguards and it needs to be spelt out. If there were safeguards and it was spelt out properly, we might consider it, but right now, no. We would be interested in that debate taking place at the select committee. The Minister of Education talked about moving these principals, these very high-performing—it sounds a bit like a type of sport—people, into interesting career paths. I think that for those at the front line of where education is critical—which is every school, and particularly schools where communities are in distress—it is interesting enough. What they actually need is the ability to focus on their community and to be accountable to that community.

But the issue in the bill that most concerns us is the changes to the home-care and after-school care provisions, because home care was already a concern. Home care was a concern because there was a review into the quality of it that got dropped. As earlier speakers have said, some home carers are extremely successful—I am thinking about some of the Pacific models in Porirua working with the Wellington kindergartens—but there are also others where we are very concerned about what is happening. This bill will make it worse, because now the home-care industry, if you like, can actually include after-school care for children, and those people are allowed to have up to six of those children, excluding children of the person themselves. So if that person has up to four to five children themselves, they can have another six in their home, with one adult, who may or may not be trained, and that will be sufficient to give them the right to be called a service and to have a licensed home-based service.

There is not enough protection in this bill to make sure that expanding from early childhood education to including after-school care in one service is actually going to be protecting the ratios, which is so critical. At the moment you are not supposed to exceed more than four children per home, but in clause 31, inserting new section 317A, it says that while children are receiving the service the total number of children aged 13 or younger in the home—because now it is about older children as well—other than the children of the educator must not exceed six. So we have got these children of the educator not being counted—they do not matter. We can have a number of those, plus another six children.

That is why I call it a business bill, because this is about facilitating the opening up of the early childhood home-care industry to after-school care without putting the kids first, without saying that there has to be quality, and without putting in ratios that would normally be expected across the early childhood education service. It is all about making money; it is not about children. It is objectionable to do that when we know that early childhood education—much of it—is not meeting the standards required for actually supporting children’s development. The Ministry of Education said that, not me. There is a lot of work to be done, and we will be opposing this bill primarily because we believe that this is creating a lack of safety and creating risk. It is very, very serious. That is the serious point.

We would like to see some discussion at the select committee about the student number and its efficacy. Some people—and I am not saying that the Greens agree with them—want us to have a look into this one because of how student numbers are used in early childhood education to actually try to dob in beneficiaries and force their children into sometimes inappropriate care. But we do not think this is necessarily going to be a problem with this.

The school hours flexibility does currently exist, so why do we need to change this? There is a little clue as to why this is being put in the bill. That clue is that—

David Seymour: Is the member for or against school hour flexibility?

CATHERINE DELAHUNTY: —parents can work longer hours, with kids in schools. The Green Party is not romantically for flexibility or romantically against it, Mr Seymour. It is not ideological. It is about what will work best for kids. What is important is whether we do need a legal change here. Is it necessary to change the law? What about school transport? What about parents with kids going to different schools? Flexibility is a universe that people do not actually live in—it is a universe of theory that everything is just wide open out there. Flexibility already does exist in some schools, and we support what is happening already, so we do not think it needs to go further at this point in time.

When it comes to charter schools, these enabling clauses do concern us. We are not here to enable a continuation of charter schools. Interestingly, I just read the PhD work of a Crawford School of Public Policy study in Australia that looks at the charter schools so far. You would have to say that you would not want to enable more, because the conclusions of this research were very interesting. It kind of said: “Charter schools? Hmm, New Zealand, hmm. Not necessarily better, not necessarily worse, not necessarily anything, really—just kind of like State schools.” The most interesting part, then, is the well-being study of the children. At the beginning of their term in a new charter school 84 percent of the children themselves said their life was good, and by term 3, 59 percent said the same. It had dropped that much. You see, if you look at the figures and if you look at the statistics on the literacy achievements, that the schools, at best, keep up with the State schools or, at worst, drop. It shows you that when independent people from other countries start researching our models that exist so far, they find that there is a problem.

There are these issues with the tertiary institutions being able to be expanded to run charter schools as well. It really concerns me that we would assume that private training education institutes know more about teaching than schoolteachers and that we need to allow these people whose pedagogy is focused on older people, focused on the older end of the education system—we assume that they are going to be the people to really make a difference. We assume that without accountability, without the Official Information Act, without Ombudsmen, these people who are not focused on the pedagy of how children learn—

David Seymour: “Pedagy”?

CATHERINE DELAHUNTY: —pedagogy—will be able to do that. Having just been part of the inquiry on special needs, I just wonder, because they are falling through the cracks now, what is going to happen if there is more of a training focus and less of a whole-child focus in education? It is really concerning that we would allow that to happen. It might be great from a business point of view—yes, make more money if you want to—but actually—

Hon Hekia Parata: What about Te Wānanga o Aotearoa, famous for looking after Māori communities?

CATHERINE DELAHUNTY: It is completely not typical. Te Wānanga o Aotearoa is not typical of other training organisations.

I oppose this bill because I do not believe it is correct. We will be having a lot more discussion about this. Thank you very much. Tēnā koutou.

TRACEY MARTIN (NZ First): Kia ora, Mr Assistant Speaker. New Zealand First believes that there needs to be a review of the Education Act 1989. Absolutely, it has been in our manifesto since 2011, but not like this—not like this.

Hon Hekia Parata: No, that’s happening separately.

TRACEY MARTIN: Actually, no, Minister. Where did this come from, because there was no call from parents, actually, for this bill and these pieces of legislation—there is no parent voice here, there is no student voice here, there is actually no school voice here, and there is no board of trustees voice here. The Minister will stand up and say—I think she has already done it once at question time, actually—that this bill has been developed after 2 years of work and consultation.

She is referring to the report of the Taskforce on Regulations Affecting School Performance—[Interruption] Yes, 26 individuals were spoken to by that task force, and this is a quote from the report: “During the consultation phase, the Taskforce met with 26 individuals or groups from education sector representative groups and a small selection of schools. Generally consultation respondents were pleased to have the opportunity to engage with the Taskforce. They put forward a wide range of views and provided significant input into the thinking of the Taskforce. Some respondents commented that the limited time period was not ideal and that the Taskforce would have benefited from a wider consultation.” Twenty-six individuals or groups—there is no parent voice in there, there is no student voice in there. None of them were consulted around this.

We have got this bill going through the House that actually makes substantial changes to the Education Act 1989—not small legislative corrections; it makes substantial changes to the Education Act 1989. The Minister is happy to ask parents how they feel about 5-year-olds enrolling in cohorts into school—something that schools can already do by choice—but she does not think it is appropriate to ask parents and students whether they want their school’s principal to be able to take on more than one school at a time. We are going to ask parents—and, actually, we are not even asking parents. There have been nine meetings throughout New Zealand from the 2 November date—and submissions close on 14 December—about a piece of legislation running alongside this one. There have been nine meetings in the whole of the country, including one in Auckland—one—to ask parents what they think about it.

It is interesting that this piece of legislation is here now before the House, 2 days before we rise. I will guarantee that Dr Yang and the National Party backbenchers who are on the Education and Science Committee tomorrow will come up with a date for when the submissions need to be closed, and that date will be before school returns in February—I guarantee it. That is because they know that the boards of trustees have had their last meetings for this year. They know that schools have 2 more weeks to go, if that, with prize-givings and final trips. They know that teachers will go away while this House rises and those members go away for 9 weeks’ recess. They have an expectation that teachers will come back and will discuss this legislation and will submit on it. This is what this Government does again and again and again. It is a ploy. It is a farce—the review is a farce. That is why New Zealand First will not support this.

There are other reasons why New Zealand First cannot support this. Here is one: the amendments in clause 18. Clause 18 amends section 158 of the principal Act to enable students of specified schools, with the agreement of the boards or sponsors concerned, to receive tuition from other specified schools. They can do it now. What this is about is that there have been schools that have refused to allow charter schools to use their technology rooms. Charter schools are funded at a much higher level than State schools are, and yet they have—and let us take the Whangarei kura that has banked millions of dollars because it has used an industrial site. It has used an industrial site and decided not to build technology rooms, but it is supposed to deliver the curriculum—it is supposed to deliver the New Zealand Curriculum. But it has not built the technology rooms. So this bill is to break that impasse.

This is about this Government removing powers from schools and making a suggestion—hiding it under different language—to make it look as if they are getting some power that they do not already have. They have it—they do not want charter schools inside their technology rooms. They do not want untrained teachers inside their technology rooms. They do not want schools that are funded higher than they are using the things that they have to pay the maintenance on, that they have to get the property dollar for, and that they then have to monitor. They do not want the discipline issues. If a charter school student should actually interfere with—or attack, or whatever—another student in that school, they do not want it. But they have the power to make that decision now, so this is unnecessary.

Clause 12 amends section 79 to allow grants from public money to be paid to sponsors of partnership schools—charter schools. This is interesting—did you miss that bit? Did the Government miss this bit? Was there some money that charter schools could not get their hands on, so now we have an amendment to section 79? Is there a bucket of money somewhere that they did not get, so now we have to change the law to allow them to do it? Let us have a look at the regulatory impact statement here about why tertiary institutions should actually need to have this capacity: “Since the introduction of partnership schools in 2013, many potential sponsors have been small community organisations.” Gosh, I thought this was about parental choice and local communities, so that they were connected to those communities for these children who needed extra support.

It says: “New Zealand has yet to see the emergence of larger organisations acting as sponsors, as occurs for similar schools in the United States and England.” I just sat here and listened to Mr Seymour and Ms Parata berate Jenny Salesa for actually talking about America, and yet this is the Minister’s—actually, this is not a regulatory impact statement. This is the Cabinet paper—this is the Cabinet paper. Yet I sat here and listened to Mr Seymour and Ms Parata having a go at Ms Salesa, shouting out: “This is about New Zealand—this is about New Zealand.” This is the Cabinet paper, parliamentary under-secretary. Did you not read it—did you not read it? We cannot ask you under the Official Information Act to find out.

In the United States, universities are associated with charter schools, and in England they are associated with free schools and academies. New Zealand First could not possibly support any extension to charter schools. The only reason we have the task force to start with is that the ACT Party demanded it—the ACT Party, which had two members on that task force. It was part of its confidence and supply agreement. Supposedly, it is about removing regulation. It is interesting that one of the other options here actually not only adds more regulation but it adds more cost to New Zealand schools. If you have a look at the regulatory impact statement about principals being able to manage more than one school, and you go and have a look at option 4, you see that enabling principals to manage more than one school would be cost-neutral for the Crown. However, there may be additional costs on the schools that they will need to absorb.

So not only is the Crown going to legislate for this to happen—and again I sit here and I listen to Ms Parata and Mr Seymour talk about schools with 60 students or schools with 40 students that should not have their own principal. In only April 2015 we had the best evidence synthesis around the value of principals in New Zealand schools—April 2015. This is what it said: “They show unequivocally that focused pedagogical leadership is essential—one in which the principal participates as a co-learner with teachers in moving learning and schools forward.”

These changes have nothing to do with educating students; this has to do with money. Everything the ACT Party does has to do with money. It has to do with privatising the education system. It has to do with making sure that big business can get hold of the public purse.

David Seymour: Oh, damn it—you got us!

TRACEY MARTIN: It is about troughing, and Mr Seymour knows it.

MELISSA LEE (National): Mr Assistant Speaker—[Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I want to hear Melissa Lee.

MELISSA LEE: I was a little bit slow in getting up, and I apologise for that. I had not quite realised that Miss Tracey Martin had finished. I understand her passion, and I believe her passion comes from having actually sat on a school board.

Thank you for the opportunity to take a short call in support of this bill. Unlike Miss Tracey Martin, I think it is actually a great bill. I do not understand why Miss Martin thinks we have not consulted or we are not going to be consulting. I thought the whole point about legislation going to a select committee is that it is opened up for the public to make a submission to the committee to see whether they can improve it, show they hate it, or put forward their recommendations for the select committee to consider.

This bill, the Education Legislation Bill, is a key piece of omnibus legislation. Indeed, it is the first of its kind in over 25 years. I am pleased that I can have the opportunity to take a short call on this. This bill is being proposed because this Government is committed to ensuring that every New Zealander can have the same opportunities within our education system as part of our aspirational country. I would like to commend the amazing Minister of Education. I have never seen anybody as passionate as Minister Parata about education and the future of our children. I also commend the parliamentary—actually, the private secretary, Mr Seymour, on this as well.

This bill, when passed, will see a number of changes designed to reinforce and promote the best possible learning approaches for our nation’s children and raise achievement for students wherever they are learning around New Zealand. These changes include the ability for communities and their schools to make schooling hours more flexible for their students, as well as new tools for better support of the partnership and kura hourua schools programme, which we successfully implemented during the last term of this Government.

This bill also will support better online learning through the national student numbers, which will work as an identification code, supporting participation and innovative online learning. My whip was just looking at me, so I think she wants me to wrap it up. This is a great bill, and I commend the bill to the House, because the quicker we get on with it, the quicker we will consider it in the select committee. I look forward to this bill coming to the Education and Science Committee in the new year.

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

GARETH HUGHES (Green): Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. The previous speaker got the formal title for the architect of charter schools, David Seymour, incorrect, but I guess I am not surprised because it is an entirely secretive role, not open to the Official Information Act. So I am not surprised that Government members do not actually know the formal title of their support parties—the parties that are foisting charter schools on the kids of New Zealand. It is not surprising.

There are some parts of the bill that the Green Party supports. We have heard that from our education spokesperson, Catherine Delahunty. But the thing that rang true for me in her speech is what this bill really is—it is the “Business of Education Bill”. It is not the business of educating kids to top-quality highest international standards; it is the business of business educating kids.

There are four parts of the bill I would like to touch on. The first is the deeply damaging potential changes we see with allowing some early childhood centres to be also opening as after-school centres. We heard about the ratios and the concerns there. We could be seeing more kids crammed into private homes that have been turned into after-school centres without trained teachers, with big concerns. Secondly, this bill also allows tertiary education institutes to sponsor charter schools. The thing is we have seen, I believe—I may be wrong—only a single applicant declined from running a charter school. That was, of course, Destiny Church—the only one the Government did not want to see running a charter school. But what we have not seen are long queues of people wanting to set them up. In fact, it has been a dismal failure, the number of people wanting to run charter schools. So now the Government is literally going out, trying to cast its net wider, and trying to get our tertiary education institutes to sponsor and run charter schools.

As the Greens’ tertiary education spokesperson, I want to see those institutes focusing on good tertiary skills training to get those people into employment, to set up the entrepreneurs of the future and new business enterprises, not running charter schools and getting into the business of educating kids for profit. A big concern, of course, when you allow private training establishments—from which we have seen some concerning practices in New Zealand over many years—is whether these are the groups we want to see also running the secretive charter schools. Of course, when these tertiary education institutes become sponsors for charter schools, their employees, who are currently State employees, are removed from the current provisions that apply to State employees—for example, the Official Information Act.

Thirdly, we also see a change to tertiary education institutes when it comes to setting their fees. Currently, consultation is protected in the statute as a 2-month period. Although the term “consultation” is still in this bill, which will be going to a select committee, it entirely removes the 2-month consultation period. I believe in consultation. I think it is important that students get to have a say when their fees are being raised or—it has not happened in an awful long time—lowered. The fact is we should have an appropriate consultation time. Look, I have seen a number of what I would consider sham consultations over the years, and not all from the current Government. These sham consultations are run just simply to get an outcome. If you remove the statutory 2-month requirement, that is a legitimate fear.

Fourthly, and lastly, as a dad with two kids in schools, the idea of a principal running two schools is a little bit concerning. I know it has been happening since 2000, but it is kind of like the captain of a ship. How many ships can a captain be running and managing at the same time? When you look at the idea that a principal can be responsible to two boards, where is the buck going to stop? Is a parent able to go to a school and know where the principal is—which office they will be in that day? I think it is important that, although there is a case—and we have heard the argument of the rural schools—we need to set some common sense. Parents want to know that their kids’ education is going to have someone where the buck is going to stop who is responsible to a board. What we see here is another piece of education legislation focused on the business of education with an emphasis on business.

I think, actually, it is the last night this House will be sitting.

David Seymour: Who made the member’s suit?

GARETH HUGHES: I would not say it is robust debate—in fact, what we have seen is some incredibly rude interjections from this side from the member who, I guess from want of an intellectual argument, would prefer to barrack from the sidelines in lieu of a debate.

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

DAVID SEYMOUR (Leader—ACT): I sometimes have to remind myself that this is actually the best system of Government that humans have so far discovered, but that does not apply to the honourable Minister who introduced that bill. I want to pay a tribute to Hekia Parata, who has worked passionately and diligently to introduce a bill that is fundamentally enabling. “Enabling” is the key point that has been missed by every other member in this debate. So many members on the other side of the House have made the argument that they know a school somewhere that might not want to take advantage of an enablement in this bill. What a non sequitur—to say that because not everybody wants to take advantage of a freedom, the freedom should not be allowed.

This bill enables educators to act more freely in a number of ways. It allows, for instance, principals to operate more than one school. There is ample evidence that the critical factor in the success of a school is the school leader. Are the Opposition members seriously saying that a top-flight, high-quality school leader who has the ability and the desire to lead more than one school, and whose communities both want him or her to lead that school, should not be allowed to? Is that what the Opposition is really saying—that those leaders should not be enabled to do that because of the Opposition’s ideology, even though the school communities and the principal both want that transaction to occur? This is about enablement, a concept the Opposition cannot, or at least will not, understand.

Phil Twyford: “Enablement”?

DAVID SEYMOUR: A similar argument could be made for opening hours and allowing schools to become more flexible. I would like to focus on a particular enablement, and, Mr Twyford, I am not too concerned as to whether it is a word or not, because everybody knows what I mean.

The enablement for partnership schools kura hourua is that their sponsors can be tertiary institutions. I liken this initiative to the concept of a teaching hospital, where a highly competent institution with a great store of knowledge and human capital is allowed to transfer that knowledge to the operation of what it studies. In the case of a teaching hospital it is medical researchers running hospitals so that people get better care at that hospital. In the case of a partnership school sponsored by a tertiary institution that has a deep well of know-how and resource, it will allow students to get better service from the range of schools open to them.

Only the Opposition would say that if the student wants to do it, if the teacher wants to do it, if the tertiary education institution wants to do it, and if the sponsor of the school wants to operate the school, then, oh no, we in this House should stand up, give asinine, content-free speeches, and tell them they shall not pass.

I am proud to be on the side of a Government that says to our communities that we will enable them to do the things that make their lives better. That is what it means to be a liberal. That is what it means to stand on this side of the House. That is what it means to be connected with communities and care about them—

Phil Twyford: They’re not liberals.

DAVID SEYMOUR: —and give them better options for educating themselves. The member interjecting over there knows that his party should be supporting this policy, but his party cannot, and he knows exactly why that is and the letters are P-P-T-A. How pathetic. This bill enables our communities to better educate their children and their mokopuna. I stand proudly here today for the ACT Party in support of this bill. Thank you.

BRETT HUDSON (National): I rise in support of the Education Legislation Bill. I am stunned listening to the Opposition this evening, particularly the Labour members. I recall the words uttered by my colleague and friend Chris Bishop in this House just a couple of months ago when he pointed out that the Labour Party has become a mere shadow of its former self, not just in numbers of members but as a party that fears change and that runs scared of any due progress. That is now a party of ultra-conservatives. The only genuine reforming parties in this House are the National Party and the ACT Party. They are the ones that know and put the achievement of our students in school ahead of fear of change. They are parties that are not scared to make good change in order to make progress in students’ educational attainment.

Labour is now backed up by the Greens, I see, who are so scared of something that has been working since the year 2000—that is, principals being in charge of more than one school—that they now want to stop the practice. So they are catching up to Labour in that sense.

This Government believes in progress. It believes in good education for our children. I commend this bill to the House.

ADRIAN RURAWHE (Labour—Te Tai Hauāuru): Ā, tēnā koe e Te Māngai o Te Whare, otirā, tēnā tātou katoa. Can I just start off by saying that the Education Act 1989 was actually brought in by a Labour Government. This is the Act that we are speaking about, and there are other Acts as well.

Can I start off there because, to be fair, I want to say that the amendments to the Ngarimu VC and 28th (Maori) Battalion Memorial Scholarship Fund Act are necessary. I want to acknowledge what has been put into this part of the bill. The problem that I have, though, is that this is an omnibus bill, and quite frankly there are a number of things that have been widely canvassed that are not good. That is why we cannot support this bill.

From my view of the world what is actually going on with this Education Legislation Bill, the way I see it, is that the National Government has a policy agenda. The policy agenda is around providing a commercial model for our free education system. It is also about partially privatising, or even moving towards fully privatising, some parts of education. That is my view of what this is all about. It is not a policy that the Government has announced; it is a policy that it does by stealth. It brings in certain things in a bill like this that make incremental steps towards where it really wants to take this country, where it really wants to take the education system in our country, and that is to partially privatise education.

Let us talk about charter schools. Schools or other entities can choose to apply to start a charter school. These charter schools are unfair in this respect: each child at those schools get funded up to five times more than a child in other schools. I have a big problem with that. The Minister spoke about how students in those schools are performing much better. Well, I would think so—I would hope so. I would hope that if you were getting five times more funding than other schools—you would expect those schools to be performing better. But the reality of it is that they hardly do better overall than State-funded schools.

So why would the Government do it? I put forward that the argument as to why it is doing it is that it wants to make incremental steps towards a different kind of education system for our country, and we will not agree to that. That is why we are standing up here to say no to this bill. The shame of it is that there are some things in other parts of the bill that are necessary, but I go back to my key point around charter schools: we do not agree with it.

The previous speaker, Mr Seymour, said that the bill was enabling. From my view of the world it enables the application of a commercial model. A case in point—I will go to that part—are the changes to sections 75 and 76 of the Education Act. Some of us, or a number of us actually, on this side of the House, and probably on the other side as well, have had a lot to do with school boards of trustees. Some of us, like myself, did our training in governance in that arena. I can tell that you just making a change and adding in this new section 75A, in clause 9, does not automatically mean that schools are going to have the capacity to be able to unite in a way that that commercial model suggests that it can do. I know that from where I come from all of the rural schools are actually the central points, the hubs, of those communities. It is where those communities go to. I would be very surprised if any of the schools that I know of that are involved in a rural setting would put forward a proposal to have one principal to cover all of those communities. Some of those communities are unique. Some of them have a large Māori population; others are mainly non-Māori. They have different interests. All of these things supposedly are able to be handled by one principal. Well, I would be very surprised if that happened in a rural setting.

I also want to address some of the actually quite mean and nasty comments that have been made in this debate. In particular, I would suggest that the member from ACT, David Seymour, go and have a good think about what he said in the House tonight. In respect of the issue around the Official Information Act, I suspect and would probably go so far as to say that he has probably turned down a ministerial post so that he does not have to be subject to the Official Information Act. If you have a look at it in this bill, issues around charter schools are not subject to the Official Information Act, and if you are about having an open and transparent Government, then I would say that it is a shocking situation that we find ourselves in. If charter schools are so good—if they are so good—then why is it that both charter schools and the Parliamentary Under-Secretary to the Minister of Education are not subject to the Official Information Act? I think that he does a great disservice to this House on the issues that he talked about.

I think also that allowing tertiary education providers to operate charter schools, as my colleague Jenny Salesa pointed out, does raise a number of issues. It raises the question of exactly why there is a need to have tertiary institutes starting up charter schools. Well, I suspect that has got a lot to do with the fact that there are not enough schools showing interest in becoming charter schools. I think that the whole notion around that scares them off—and so it should do, purely and simply on the basis that it is an unfair system that treats some schools a lot better than others. I believe that if that funding was equally distributed amongst all schools, then we would get far better outcomes for our children who attend those schools.

Just on the other matters that are within this bill, it provides a new schedule too for the Pacific Islands Polynesian Education Foundation Act. It is equally a shame that this part of this bill is part of an omnibus bill of which the principal part, fundamentally, we cannot agree with. My contribution tonight is purely and simply on that—that we will not support this bill at its first reading. Thank you.

STUART SMITH (National—Kaikōura): E Te Mana Whakawā Tuarua, tēnā koe. The Education Legislation Bill has clearly identified a philosophical divide across the House. The absolute bottom line on this on this side of the House is that it is actually all about the students—quite a novel concept, with the students being the centre of education! I congratulate the Minister of Education, the Hon Hekia Parata, on being bold enough to actually get in and put a bill forward that is going to make a big difference to education.

I have 54 schools in my electorate. It is really obvious, when you get around a number of schools, that there are some that do a better job than others, and it comes down to the people at the top running the school. To have a principal who is more than capable of running more than one school get out there and actually make a difference in students’ lives, if the community and the students and the parents in that community want that to happen—why would you not want that to happen? I cannot understand that. It is not about the kids, if that is what you are worried about. Actually, having flexibility in opening hours is all about education for the actual situation that you are talking about in that community. It is with that that I commend what is one of the better pieces of legislation I have seen in a long time come to this House. Thank you.

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

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.

Bill read a first time.

Bill referred to the Education and Science Committee.

Bills

Civil Defence Emergency Management Amendment Bill

First Reading

Hon AMY ADAMS (Minister of Justice) on behalf of the Minister of Civil Defence: I move, That the Civil Defence Emergency Management Amendment Bill be now read a first time. I nominate the Government Administration Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by a date that is 6 months from the day the bill receives its first reading. This bill will amend the Civil Defence Emergency Management Act 2002. It will make a significant difference for communities across the country hit by our most frequent emergencies: those of small to moderate size, often created by the impact of floods, storms, and natural hazards. This bill is about helping communities get back on their feet more quickly after an emergency.

When there is an emergency over time the focus switches from response to recovery, and we need to better manage that transition. Historically most attention has been given to preparing for and responding to an event. However, as we have seen in the Manawatū-Whanganui region following the severe storm in June, the clean-up and the recovery phase can involve a huge amount of work. The new legislation will give clarity to those leading this work and help ensure it can be carried out as swiftly and effectively as possible. It will do this by providing the appropriate authority for those directing, coordinating, and managing the recovery. Strengthening the statutory framework for recovery from emergencies is one of the top priorities for the Minister of Civil Defence. By beefing up the legislative framework for recovery we will help communities recover from small to moderate emergencies more quickly and in better shape.

“Recovery” is defined in clause 4 of the bill as “the co-ordinated efforts and processes used to bring about the immediate, medium-term, and long-term holistic regeneration and enhancement of a community following an emergency”. Recovery activities broadly mean those carried out under this legislation or any civil defence emergency management plan after an emergency occurs including the assessment and ongoing monitoring of the needs of the community affected by the emergency and the co-ordination and integration of planning decisions, actions, and resources. This includes measures to support the regeneration, restoration, and enhancement of communities across the four environments, these being the built, natural, social, and economic environments, and the cultural and physical well-being of individuals in their community. This also includes measures to enable community participation in recovery planning and new measures to reduce risks from natural hazards and build resilience.

In October the Minister for Canterbury Earthquake Recovery introduced the Greater Christchurch Regeneration Bill. Whereas that bill needs to target a specific set of circumstances, the Civil Defence Emergency Management Amendment Bill needs to provide a flexible, adaptable, and scalable framework that is applicable to the consequences of any future emergency. Recovery needs to begin on day one of the response to an emergency, but it can be complex. It involves many parties, many resources, and difficult decisions. With the current lack of legislative clout or provisions for recovery we have been running a system that has often relied on goodwill and relationships to get things done.

This bill creates a framework that will better support recovery management to ensure that it is timely, effective, and focused. It provides authority and a stronger mandate for those directing, coordinating, and managing recovery. The bill conforms to the core civil defence emergency management principles of acting locally, coordinating regionally, and supporting nationally, which support local devolution. It also includes better managing the transition once the response is dealt with to move into a greater focus on recovery. It does this while ensuring a principled approach for the use of extraordinary powers. Once the legislation is enacted we will see a legislative mandate for recovery managers, a requirement to plan and prepare for recovery in advance of an emergency, and powers to support the transition into the initial recovery through the transition notice mechanism. The bill also establishes a permanent legislative authority for the Government’s financial assistance to local government for eligible response and recovery costs.

I want to briefly touch on some of the key features of the legislation. The first relates to recovery managers and planning for recovery. The bill establishes the role of national recovery manager and allows the Director of Civil Defence and Emergency Management to delegate certain functions and powers to the national recovery manager. It allows the national recovery manager to provide national and additional support to a civil defence emergency management group if the recovery is beyond the capability and capacity of the group to manage and coordinate. It requires each civil defence emergency management group to appoint a group recovery manager and alternative persons for the role and establishes powers of delegation for group recovery managers. It enables a civil defence emergency management group to appoint a local recovery manager at their discretion, disestablishes the role of recovery coordinator provided for in the Act, and requires that civil defence emergency management groups prepare strategic recovery plans to complement those currently required in group plans.

The next highlight is that the bill enables civil defence emergency management groups to better transition from response to recovery. Currently the response powers available under a state of emergency cease when a state of emergency ends. During the transition phase, after the response ends, diversion of resources to business as usual can threaten the ability to fully recover from an emergency. This is not just an issue of getting things done quickly. It may impair the ability to recover in the longer term or may destabilise what was achieved during the recovery. That transition phase is critical.

The bill creates transition notices, and these will provide a defined subset of emergency powers to support the transition from response into focused recovery. There will be two types of transition notice: local and national. This is consistent with the principle of devolution to local authorities and offers the ability to appropriately and proportionately target the use of powers to a particular event. Just as a national state of emergency is very rare, the issue of a national transition notice is also likely to be very rare. A range of criteria will be taken into account when issuing a transition notice: the area affected by the emergency; whether the focus of activities is moving from response to recovery, including but not limited to whether a state of emergency is about to be terminated; and whether it is reasonable and necessary in the public interest to invoke extraordinary powers to manage, coordinate, and direct immediate recovery activities so as to ensure a timely and effective recovery in the long term.

A local transition notice could also be put in place by a mayor or an elected representative of the local authority, or a person of appropriate authority appointed in advance by the civil defence and emergency management group and chosen group members. The Minister may also put in place a local transition notice where he or she considers one is necessary but the local authority or civil defence and emergency management group has not issued one. The Minister of Civil Defence could also issue a national transition notice. This is consistent with their ability to issue a state of emergency declaration under the Act, but I also want to note that a Minister has never declared a state of local emergency under the Act, so I think it is unlikely that the Minister would ever need to issue a local transition notice.

In some cases emergencies will generate such impacts of sufficient severity that the recovery may be very challenging initially but the safety of public and property is not in immediate danger and so no state of emergency might be declared. In these situations the Minister of Civil Defence’s approval will be required before a local transition notice could be issued. The Minister will need to have regard to whether invoking the powers associated with a transition notice is in the public interest and is necessary or desirable to ensure a timely and effective recovery. These safeguards are in addition to the usual public notification requirements.

A transition notice should exist only as long as it is necessary to carry out vital and immediate recovery activities that could not otherwise be achieved during the transition phase. The maximum duration for the notices would be 28 days for local notices and 90 days for national notices respectively. The suite of powers proposed in the bill that will be available under a transition notice have been adapted from those available during a state of emergency, but, given the different demands of response and recovery, the powers are not as extensive. The powers would be able to be used only for the purpose of supporting recovery activities during the transition and must be proportionate and exercised only to the extent reasonably necessary for the public interest. Examples of situations where these powers would make a material difference to recovery include where recovery managers need to prevent people from entering land that has subsided or that may be at risk, or, for example, to conserve limited fuel resources in an isolated community. The powers would have the ability to impinge on property rights, so they come with a range of proposed safeguards. Protections against the misuse of powers will be provided by the independence of the decision maker, the procedure to be followed, the test set out above, the right of judicial review, and the availability of compensation.

Another key aspect is compensation. The Act’s current compensation sections have been extended in the bill to cover transition notice periods. Finally, the bill extends the Civil Defence Emergency Management Act’s liability sections to provide protection from liability for people who carry out activities in good faith during a transition notice period. Separate to the purely recovery-focused aspects of the bill, the bill also establishes permanent legislative authority for Crown reimbursement to local authorities for certain response and recovery activities. A permanent appropriation better recognises the Crown’s commitment to reimburse eligible response and recovery costs, provided that relevant longstanding criteria that Cabinet has agreed to are met in claims that the local authority submits. The appropriation would provide sufficient flexibility—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry, but the Minister’s time has expired.

CLARE CURRAN (Labour—Dunedin South): Labour will support this bill’s referral to the select committee. In principle, we consider that the objectives of this bill are sound. Nothing is more important than keeping our families and communities safe. Our civil defence services must be ready to respond effectively to any emergency, and we must all be prepared for emergencies before they happen. I do not think anyone would disagree with that.

The four Rs, as they are described—risk reduction, readiness, response, and recovery—are the backbone of our civil defence planning, and with effective coordination and integration, they should provide robust protection and preparation for civil defence emergencies. They look good on paper, but we have to make sure that they work in practice.

Civil defence people do important work and put themselves into some very difficult, and sometimes dangerous, situations after an emergency. We have got to make sure that they have appropriate powers and abilities to do their job correctly. As I said, we will support this bill’s referral to the select committee.

We do have some concerns about the scope of the new powers and as to how robust this bill will be when put into practice. I note that this is the first of two bills signalled by the Minister of Civil Defence, Nikki Kaye, and my remarks relate to some of the notes of caution and the signal that there are areas that do not appear to be covered under this proposed legislation.

This is the first major amendment to the Civil Defence Emergency Management Act 2002. Therefore, it should provide an opportunity to overhaul the 2002 Act using recent case studies of disasters requiring a civil defence response. However, the legislative review from which this bill was born had a mandate to look at emergency recovery only. I referred to the four Rs. Well, this is only one of them, the last one: recovery. Certainly, emergency recovery was an area that needed addressing. However, we feel that taking just one component of this framework runs the risk of undermining the purpose of the original 2002 Act and may make it difficult to implement in practice. Recovery planning and training is vital, but it also has to work alongside the other three components and not in isolation. So a wider review of that current legislation should take place in order to provide holistic and clear legislative support to local government, alongside the other three Rs.

We support the inclusion of the national and local transition periods and the effort to make the move from the response phase to the recovery phase more cohesive. But when the response phase is already hindered, as was the case in Dunedin in June, the implementation of a local or a national transition period will be futile for short-term recovery.

We also support the establishment of a permanent legislative authority in managing Crown financing and reimbursing of civil defence emergencies. The “PLA”, as this is called, we hope will be fair and equitable in the allocation of Crown funding for emergencies. For example, it took 2 days for the Government to announce an initial cash injection of $250,000 for Whanganui in June with a further $2.6 million pledged 2 months later. By contrast, it took 2 weeks for Dunedin to receive a $100,000 cash injection from the Government—the only one that it would receive in the ongoing recovery effort. On the surface, the two events may not be comparable. However, the regional context is very different for both the areas, and the tendency for condensed, low-lying housing in the South Dunedin area has meant that the social cost of those June floods has been absolutely devastating. Those costs have been estimated for insurance purposes to be well over $30 million, but the true social costs will never be known because there is no counting those.

So what happens when current legislation fails, and what will this bill really do to ensure that those failures are remedied? I think those are really important questions for the select committee to answer and to look at some real case studies—I know there are a number of them. As the Minister Amy Adams, who spoke before me, mentioned, core civil defence and emergency management principles are to act locally, coordinate regionally, and support nationally. But what happens when local authorities do not act? What happens when they miscalculate the enormity of a disaster and refuse to declare a local state of emergency?

In the case of the Dunedin floods, the four Rs failed. The risk was not reduced, the city was not ready, the response was woefully inadequate, and the recovery is ongoing and costly. Local government had been provided with multiple warnings of the flood risk in South Dunedin due to a high water table. We have the recent report from the Parliamentary Commissioner for the Environment that provides really solid evidence for that and there certainly was solid evidence available to the public and to local government before that, yet nothing was done to reduce the risk.

So what was the oversight there? The city was not ready. Local civil defence authorities were left floundering for evacuation points and volunteer bases, with notes from the first briefing of the emergency operations centre saying that the question was: “Where do we assemble people in South Dunedin?”. It was left to a local marine search and rescue group to set up a volunteer base at St Kilda, and I personally had to call the Minister of Civil Defence at midnight to put pressure on her to get some kind of response. That was not her fault. That was the issue that was not being addressed for South Dunedin in Dunedin at the time by local authorities and by civil defence.

Most of all, the response effort was woefully inadequate because no state of emergency was declared in Dunedin on 3 June. In response to my request as to why a state of emergency was not called in South Dunedin, Dunedin civil defence responded that at no time did emergency services indicate that the situation was beyond their capabilities. On that day alone, the fire service received 289 calls compared with 20 calls in total the previous Wednesday. It was so stretched that its multiple incident procedure policy had to be activated. That is triggered only when the communications end is not able to cope with the workload and it may necessitate the reduction of fire service responses to incidents. The police, fire, and ambulance services had all units committed at peak time during that flood event. To top it off, Dunedin civil defence closed its operations at 11.30 p.m. despite more than 30 of the most vulnerable citizens residing at a local rest home having to contend with constant sewage leaks and power outages. And on and on it went.

The response from local civil defence authorities fell markedly short, and this set back any meaningful recovery efforts. Had a local state of emergency been declared, the story would have almost certainly been different, but it was not, and South Dunedin is still suffering because of it.

The Dunedin floods story shows that although the four Rs legislative framework might look good on paper, in practice it is another matter, so more effort is needed to ensure that local government is both supported and held to account for its work in emergency management. Although it is good that the recommendations included in the regulatory impact statement have been included in this bill, their effectiveness is significantly reduced if the four Rs model is not working as a whole. It is all very well to have robust recovery measures, but if the local response falls short, then they are in essence meaningless. In considering this bill at the select committee these matters need to be taken into account.

SARAH DOWIE (National—Invercargill): It is my pleasure to take this short call on the Civil Defence Emergency Management Amendment Bill, which is being referred to the Government Administration Committee. I think that as we move towards the adjournment for this year, this bill is another example of the Government streamlining and beefing up a framework of civil defence legislation to solve real problems that are faced in New Zealand and to work towards building more resilient communities.

As the Minister said earlier, this bill is focused on moderate events that usually occur with our extreme weather conditions, such as the Manawatū floods and those floods in Dunedin talked about by the member opposite, Clare Curran. In particular, it is focused on the recovery work—the recovery phase of these emergency events. In particular, what this bill does is it establishes recovery managers and gives them powers, duties, and a role to deal with that transitional phase between first response and recovery, and a mandate to manage and coordinate that recovery, which is often an expensive phase and often takes some time. It gives an ability to work through that recovery phase expediently and efficiently.

As such, transition notices are one such tool, and as part of those transition notices the legislation gives recovery managers the opportunity to prevent people from entering on to land or into areas that may or could be dangerous, in order to, obviously, preserve human life. The second thing that the legislation allows the recovery managers to do is to conserve fuel. Fuel consumption in isolated communities, accessibility and getting to and from that isolated community, is important. Finally, shoring up dangerous structures where those structures could pose a danger to human life or other property is a very important tool in dealing with the recovery phase. As I said before, recovery takes time and it is often expensive, and we need to give our people on the ground the tools to work through the recovery phase as swiftly as possible. These tools allow us to build more resilient communities when these moderate events are faced, to work through them and get through them expediently. With that, I commend this bill to the House.

Hon RUTH DYSON (Labour—Port Hills): I am delighted to take a call on the Civil Defence Emergency Management Amendment Bill at this peak viewing time, in parliamentary terms. I want to begin by commending the Minister for this bill—not only the Minister in whose name it is, the Hon Nikki Kaye, but I actually want to particularly commend the Minister who spoke to this bill. I watched the Hon Amy Adams after the September 2010 quake in Canterbury, and both in her own electorate in our region and in this House she portrayed what had happened in a way that touched people around the country, and that is important to do. Sharing—I do not go on about it because their eyes glaze over, but people did need to know the impact of that.

I watched the Hon Amy Adams lead thinking and recovery in her own electorate, and I often reflected that she would have been an excellent Minister of Civil Defence, had that position not already been taken, to lead the overall recovery. So I want to genuinely commend the Minister for the work that she did at the time. I think she understands what is needed in this legislation from her own experience but also because she is a bit of a thinker on policy and structures. As my colleague Clare Curran said, Labour will be supporting this bill’s referral to the select committee.

Civil defence is one of many areas where I believe we should have a whole-of-Parliament agreement as much as possible. It does not apply to everything. There are some fundamental differences between the values and the aspirations of members in this House. Otherwise we would all be in the same party, and I just cannot imagine that happening. But in the civil defence space, it would be great if the select committee could be as open as possible, hear as many views as possible, and be given the support of the Minister in whose name this bill is to make significant alterations.

I have seen, increasingly, and to my frustration, select committees not having the independence and robust debate and decision-making powers that they have had in the past, but being entirely dominated by the Minister’s decision on which way any particular policy call should go. I think that is a major negative in the progress of this Parliament. When I first started in Parliament, which was some time ago now, select committees had much more ability to make their own decisions and be genuinely independent of a Minister. That is, sadly, not the case now. So I would encourage the Hon Amy Adams to use her powers of persuasion and talk to her colleague the Hon Nikki Kaye to see whether she can get her to give the select committee a bit of independence so that we can come back with the best possible legislation, not something that is entirely driven by bureaucrats and where the decision is made by the Minister.

In my view, this bill should be about the four Rs that are at the heart of civil defence—that is, risk reduction, readiness, response, and recovery—and that is where my first concern lies in this bill. It deals with only one of those four Rs and, frankly, the strength of one of the four is not a quarter. It is much weaker than that because it needs the entire package to make any one of the components work. If you do not have strong risk reduction, strong readiness, and a strong response you will not have a strong recovery, but here this bill is talking about just the final R, which is the recovery. It has missed out what I think are the three most important components.

We saw that in Canterbury. My colleague has described what the response was like in Dunedin to the floods. Other members have had natural disasters occur in their home areas as well. If you do not have a community structure that is resilient, where community members know each other and have the capacity to support each other through natural disasters, then the end product—the one that we are talking about in this bill—will be weaker. But nowhere in this legislation does it go to the heart of those other three components. So that is my first big concern: it is fundamentally flawed because it does not deal with what I consider are the most important things. Without those other Rs you cannot have a satisfactory recovery.

The scope of the new powers caused concern for me. We have watched in Canterbury wartime powers being used in non-wartime situations. Sometimes we wish the Minister for Canterbury Earthquake Recovery had used them to the betterment of good people, but he did not, and other times we wish he had not used them when it suited him, and he did. So any extraordinary powers, or any powers that you would think were outside the normal range of acceptability, we will certainly be looking at with very close scrutiny.

The final point I want to make is that Labour is concerned about how robust this bill will actually be when it is put into practice. This is the first major amendment that we have had to the Civil Defence Emergency Management Act. Three years ago there were some minor amendments to the Act, but this is the first major amendment to the Act. I do not think that it is being done on the basis of looking at the complete picture from start to finish. It feels to me as if our civil defence response is still too Wellington-driven, too bureaucracy-driven, and not enough related to what happens on the ground in our communities, which is the first response starts if those other three Rs that I mentioned are addressed, and they are not in this legislation.

There are a lot of other good things in this legislation, and I am not being critical of the bureaucrats from Wellington who did the actual drafting of it. I just do not think they are as connected with communities that have been through natural disasters, as would give the best possible picture. So they are competent and able, they have done a good job in drafting this, but I think their scope has always been too narrow.

I missed the referral that the Minister mentioned in her contribution to the House, but I understand from the contribution made by Sarah Dowie that this bill is going to be referred to the Government Administration Committee, which I am privileged to chair. We look forward to that. We have had reports from the Ministry of Civil Defence and Emergency Management over the last couple of years and they have been really interesting, but this is the first time we have had the opportunity to actually discuss how its reviews and its reports are to be reflected in legislative change, so I am looking forward to that opportunity.

I hope we get a lot of submitters. I would certainly invite people from around the country—obviously from my own region in Canterbury and from South Dunedin, where they have just been through the floods. I know that another presiding officer, Chester Borrows, has had significant flooding in his electorate. Other members will have as well. So I would ask members to leave this House tomorrow evening, as we finish, with the thought in their mind that they will know good people in the community who could make a contribution to this bill, and to invite them over their summer break to write a submission.

I am sure our committee will be generous in terms of time. We will not want the submissions in the middle of January. Our committee will be respectful of people having the right to have a holiday, but we would like to hear from people who have been through experiences that will help other communities be able to respond to them better and be able to recover in a quicker and stronger way.

Nothing is actually more important in New Zealand than ensuring that our families and our communities are as safe as possible. I have no doubt that every single member of this House shares that view, and that is what we want to do with this legislation. I do believe that the Minister should reflect on whether the scope of the bill could be expanded to make sure that those other three Rs are addressed, because otherwise I think we run the risk yet again of having a top-down imposition in a civil defence emergency situation that undervalues the contribution that the community can make and that, therefore, frustrates it and makes its recovery slower.

Everyone is well aware of Sam Johnson and the Student Volunteer Army and the amazing work they did in our region following the September 2010 and the February 2011 quakes particularly. When Sam and others from the student association went to civil defence and offered to help, they were told on day one: “There’s no place for volunteers in this. This is an emergency.”

Debate interrupted.

The House adjourned at 10 p.m.