Tuesday, 10 May 2016

TUESDAY, 10 MAY 2016

TUESDAY, 10 MAY 2016

Mr Speaker took the Chair at 2 p.m.

Prayers.

Visitors

Turkey—Delegation, Grand National Assembly

Mr SPEAKER: Honourable members, I have much pleasure in informing the House that a delegation from the Grand National Assembly of Turkey, led by the Speaker, His Excellency Ismail Kahraman, is present in the precincts of the Chamber. I am sure members will wish that he be welcomed and accorded a seat on the left of the Chair and that the delegation in the Speaker’s gallery be welcomed.

Motions

Human Rights—Democratic People’s Republic of Korea

MELISSA LEE (National): I seek leave to move a motion without notice or debate on the human rights record of the Democratic People’s Republic of Korea.

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

MELISSA LEE: I move, That this House condemn the human rights record of the Democratic People’s Republic of Korea, which is detailed in the United Nations 2014 commission of inquiry into both systematic abuse and repression, and that this House call on the Democratic People’s Republic of Korea to give access to human rights bodies and international agencies to improve the lives of the North Korean people.

Motion agreed to.

Oral Questions

Questions to Ministers

Tax System—Overseas Trusts

1. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement, “There’s actually quite legitimate business in New Zealand for servicing foreign trusts”?

Rt Hon JOHN KEY (Prime Minister): Yes. As Michael Cullen said in 2005, when the disclosure rules were being developed: “The government has sought to develop policy that works for all concerned, one that enables New Zealand to co-operate with other tax jurisdictions while not disrupting the legitimate financial transactions of foreign trusts.”

Andrew Little: Are foreigners able to use New Zealand - based trusts to dodge tax overseas?

Rt Hon JOHN KEY: Anyone can use the New Zealand tax rules. There are obviously mismatches around the world, and we see that, potentially, with multinationals and others. But, interestingly enough, when it comes to ensuring that people are paying their tax, including foreign trusts, the House might like to know that of the Panama Papers data release, of the 500,000 times that Mossack Fonseca is linked to either a company, a trust, an individual, or a reference, fewer than 200 are foreign trusts registered in New Zealand. And, by the way, the Inland Revenue Department (IRD) has cross-referenced them, and all of them are disclosed to ensure that they pay their fair share of tax. [Interruption]

Mr SPEAKER: Order! Before I call a further supplementary question, I just want a little less interjection from my left.

Andrew Little: How does he reconcile his claim that his close personal adviser had assured him that he had no links with Mossack Fonseca with today’s revelations that show that Mr Whitney has—[Interruption]

Mr SPEAKER: Order! I sought some further cooperation from my left. I am now asking for the same sort of cooperation—less barracking through the question as it is being delivered—from my right. Would Andrew Little like to start that question again.

Andrew Little: Thank you, Mr Speaker—

Hon Paula Bennett: Sorry, sir, for laughing at his joke.

Andrew Little: Yeah, yeah. You have got plenty to laugh at, Paula—plenty to laugh at on your side. [Interruption]

Mr SPEAKER: Order! If I do not get any assistance from my right-hand side, then I will be looking to ask a member to leave.

Andrew Little: How does he reconcile his claim that his close personal adviser had assured him that he had no links with Mossack Fonseca with today’s revelations that show that Mr Whitney has had dealings with that firm?

Rt Hon JOHN KEY: Firstly, I have got no responsibility for Mr Whitney or any other New Zealander. But I stand by the statements that I have made in relation to Mr Whitney. I think incrimination by insinuation could be a very dangerous game, because I took a moment to just look in the database, and guess who is a beneficiary of one of the trusts? Oh, Greenpeace International. And guess who else is mentioned—

Mr SPEAKER: Order! [Interruption] Order! The Prime Minister will—[Interruption] Order! The Prime Minister might think that he can go on, but when I stand to my feet he certainly cannot go on. [Interruption] Order! If I have to ask—[Interruption] Order! No, the member will resume his seat. If I have to ask either the Prime Minister or the Deputy Prime Minister to leave, I will not hesitate to do so.

Andrew Little: Does he see any issue with the people lobbying the IRD to protect foreign trusts having connections to Mossack Fonseca?

Rt Hon JOHN KEY: Firstly, I reject the last part of it. But I do not see any issue with a lobby group speaking to the Government. In fact, I am sure that the education sector and teachers speak to the education Minister. I am sure those who are interested in health and safety speak to the workplace Minister. I am sure the Council of Trade Unions talks to the Labour Party. Here is breaking news: people who work in an industry might actually want to talk to the Government about it. If you are going to hang them for that, there are going to be a lot of hangings taking place.

Andrew Little: Did he personally push through the zero rating of tax on foreign funds in 2010 over the objection of officials from the Ministry of Economic Development or, put another way, does he recall saying: “I have told Gerry to deliver me a paper that has zero rating of funds”?

Rt Hon JOHN KEY: No.

Andrew Little: I seek leave to table a copy of an article from the New Zealand Herald of 2 December 2010—[Interruption]

Mr SPEAKER: Order! When a point of order is raised, it is to be heard in silence, and that particularly applies to noise coming from my back right-hand side. But if it is a newspaper article, then members can find it if they want. [Interruption] Order! Is Mr Robertson ready?

Andrew Little: Is he satisfied with the Government’s oversight of foreign trusts, when Mossack Fonseca used a bankrupt Elvis impersonator to provide a sham address for a player in an Iraqi bribery scandal, all without his Government noticing?

Rt Hon JOHN KEY: Yes, it is true. There is an Elvis impersonator that is named, but there is also an impersonator for the Leader of the Opposition asking questions about it.

Andrew Little: Does he oppose New Zealanders and multinationals using another country’s tax laws to dodge New Zealand tax, given that he allows foreigners to do the same thing here?

Rt Hon JOHN KEY: I cannot talk for Greenpeace, Amnesty International, and the Red Cross, but what I can say is that every country has a different tax system. There is no global tax system, and there are mismatches around the world—that is true. The Government is working on trying to resolve those issues through the OECD and we have been leading a lot of that work. And I hope we are successful in that, because that will help, actually, robustness around the world. But New Zealand’s tax laws are very well set.

Andrew Little: Why does he say that New Zealand is falling down the Corruption Perceptions Index on his watch?

Rt Hon JOHN KEY: There are a number of factors, but New Zealand is ranked extremely highly—[Interruption] We are third, I think—[Interruption]

Mr SPEAKER: Order! Prime Minister, there is no point in answering a question asked if they do not want to hear the answer.

Tax System—Overseas Trusts

2. JAMES SHAW (Co-Leader—Green) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes, especially the one where I was shocked, actually, to find Greenpeace International on the database.

James Shaw: Does he stand by his statement that New Zealand is not a tax haven, when the Australian Financial Review and the US Congressional Research Service have New Zealand on the map as tax havens?

Rt Hon JOHN KEY: Yes, I stand very much by the view that New Zealand is not a tax haven. In fact, New Zealand has been ranked as the most compliant in the highest category. There are four factors, actually, that would go into a country being a tax haven; the most important, of course, of which is secrecy, and New Zealand does not have that. Even prior to the Panama Papers this Government had been working towards automatic exchange not just to Australia and through the Foreign Account Tax Compliance Act but to 60 international jurisdictions.

James Shaw: Does he stand by his statement that the international media have not reported that New Zealand was a tax haven, when more than 40 different international outlets from around the world including USA Today, the Independent, The Telegraph, The Washington Times, the Australian, the AFP, The Age, the Sydney Morning Herald, and The Guardian have reported on New Zealand’s role in the Panama Papers?

Rt Hon JOHN KEY: Yes, I stand very much by the view. If you look at the international reporting of this, New Zealand has been but a footnote. A single mention of New Zealand is not actually what has been in the news, and in Australia today what they are talking about is not New Zealand, when it comes to the Panama Papers; it is some issue in relation to Chinese money.

James Shaw: If New Zealand is not a tax haven, why would Mossack Fonseca—a company which, by its own admission, has 95 percent of its business in avoiding tax—urge its clients to use New Zealand’s foreign trust and company structures as a way of avoiding tax?

Rt Hon JOHN KEY: Two things. Firstly, there can be quite legitimate reasons why people have a foreign trust, and I suggest the member leave the House and ring Greenpeace, Amnesty International, and Red Cross because they are implicated in the papers. But, more importantly, the member should just turn around and ask his colleague—Mojo Mathers has a foreign trust. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! If it is required of me to ask someone to leave because they consistently interject, I will do so. It is not my wish, but when the barrage continues uninterrupted, particularly by a front bench Labour member, they leave me no choice.

James Shaw: Thank you Mr Speaker. In the conversation when Mr Whitney assured him that he had no links to Mossack Fonseca, did Mr Whitney mention that he was a director of two companies with connections to Mossack Fonseca?

Rt Hon JOHN KEY: I have no responsibility for that, but I stand by the statements I have made, which are that incrimination by insinuation, just because someone is mentioned—if you go into the database, the very first thing you have to do is tick a disclosure form—

James Shaw: I raise a point of order, Mr Speaker. I recognise it is a boisterous question time, Mr Speaker, but it was a fairly specific question about a conversation that he had had with Mr Whitney.

Mr SPEAKER: I allowed the question. I thought about not allowing it, because I do not think there is prime ministerial responsibility. The Prime Minister is certainly addressing the question. It is difficult to hear because of the noise, I do accept, but on this occasion, I cannot help the member unless he has a more specific question. Did the Prime Minister—

Hon David Parker: Point of order.

Mr SPEAKER: Order! I am still on my feet. To the Prime Minister, has he completed his answer to that question?

Hon David Parker: I raise a point of order, Mr Speaker. The Prime Minister, I submit, does have ministerial responsibility. He answered in this House about the reference that he made to the gentleman concerned to go to the Minister of Revenue and to the department. He referenced that conversation, which was within his role as Prime Minister. Clearly he, as Prime Minister in that conversation, came to the view that he should refer him to the Minister of Revenue. I cannot see how he can claim that he has no ministerial responsibility for what was told to him in that conversation, and therefore the question was in order.

Mr SPEAKER: I think on this occasion the member makes a reasonable point. As I said in my point of order, it was a marginal call. I decided to leave the question standing; I certainly did not rule it out. The Prime Minister then addressed it. Mr Shaw asked me whether it had been addressed to his satisfaction. On this occasion, I think it has been addressed—maybe not to the member’s satisfaction, but he can continue with a supplementary question if he wishes.

Hon David Parker: Point of order, Mr Speaker.

Mr SPEAKER: Well, just to be absolutely sure—I have ruled on that matter, so to continue to raise another point of order that is anything to do with the question that has just been asked is in itself disorderly. But if it is a fresh point of order, something dealing with another matter that has not been raised, then I can hear it. If we are just relitigating, that in itself is what is leading to disorder in this House.

Hon David Parker: Thank you, Mr Speaker. I will proceed with my point of order, if I may.

Mr SPEAKER: Yes, the member can.

Hon David Parker: I raise a point of order, Mr Speaker. Your answer did not refer to the fact that the Prime Minister declined to answer the question, saying it was not a matter of prime ministerial responsibility. That is my point of order. In fact, you have conceded that it was a matter of prime ministerial responsibility; therefore, it cannot be addressing the question to deny that it was.

Mr SPEAKER: No, the member is now just going back over old territory. I acknowledge I had some difficulty hearing the detail of the answer, simply because of the noise. I ruled then that the Prime Minister did accept the question. I ruled it in—[Interruption] Order! [Interruption] Order! My patience will not last much longer with Mr Parker.

Hon David Parker: Neither will mine.

Mr SPEAKER: Well, then the member can stand and leave the Chamber. [Interruption] The member can leave the Chamber.

Hon David Parker withdrew from the Chamber.

James Shaw: Will the Prime Minister now take this opportunity to broaden the review of foreign trusts into a full-scale inquiry into tax avoidance?

Rt Hon JOHN KEY: No. There are two elements, if you think about the whole issue for just a moment. One of those is in relation to disclosure and whether disclosure is adequate in New Zealand, and what is happening in relation to that is that I think we have got the finest tax mind in the country to look at that issue, and he will come up with recommendations. If they are good recommendations, the Government will implement them. The second part of it is in relation to tax treatment of trusts, and, again, the Government is working with both the OECD and with our like-minded partners to see whether there is more that we can do, because of the mismatches in the arbitrages that happen around the world. Both of those elements of what we are doing, I believe, address this issue. The third point that I would make is the point I made earlier on, which is that of all the mentions in the database, the 500,000, and the excitement that some people have brought to this issue, there are fewer than 200 trusts registered in New Zealand that have a link to Mossack Fonseca, and of those fewer than 200, in total, all of them that the Inland Revenue Department (IRD) has taken a quick look at have been disclosed—in other words, fully subject to exchange of information, fully subject to making sure that the IRD can see them, and I suspect that a great many of them are likely to be subject to the anti - money-laundering rules, because they are likely to be established by a tier-one firm that is a part of Part 1.

Mojo Mathers: I raise a point of order, Mr Speaker. I would just like to correct the statement by the Prime Minister that I have a foreign trust—I do not.

Mr SPEAKER: Order! That is not, in itself, a point of—[Interruption] Order! Is the member seeking leave to make a personal explanation? [Interruption] Order! I can assist. There are two ways forward: if the member seeks leave to make a personal explanation, I will put the leave and it is over to the House. The alternative way, if the member thinks she has been misrepresented during this question time, is that she has the ability to refer to Standing Order 359.

Hon Gerry Brownlee: Point of order.

Mr SPEAKER: I am just dealing with a point of order.

Mojo Mathers: I would like to make a personal statement, please.

Mr SPEAKER: No, you need to seek leave to make a personal—

Mojo Mathers: I would like to seek leave to make a personal statement.

Mr SPEAKER: Leave is sought to make a personal explanation, presumably—[Interruption] Order! Leave is sought to make a personal explanation in regards to a statement made by the Prime Minister. Leave is sought for that course of action. Is there any objection? There is none.

Mojo Mathers: Thank you. I would like to clarify that I am a beneficiary of a UK-based family trust. It is not a trust that I own, and it is not a foreign trust.

Mr SPEAKER: The member has—[Interruption] Order! [Interruption] Order! Mr Robertson! [Interruption] Order!

Budget 2016—Government Financial Position

3. ALASTAIR SCOTT (National—Wairarapa) to the Minister of Finance: What recent reports has he received on the state of the Crown accounts ahead of Budget 2016?

Hon BILL ENGLISH (Minister of Finance): The accounts for the 9 months to 31 March this year show a surplus of $167 million, around $330 million better than forecast. Crown revenue was higher than forecast, largely due to tax revenue being $700 million higher than forecast by Treasury in December, partially offset by lower Crown interest in dividend income. Sustained and moderate growth in the economy is underpinning Crown accounts, which are in good order ahead of Budget 2016 later this month.

Alastair Scott: How have the Government’s books improved in recent years?

Hon BILL ENGLISH: The largest deficit during the term of this Government was $18.4 billion in 2011, and we are now on track to maintain the surplus that was achieved last year. Over the last seven Budgets the annual cost of new initiatives has averaged around $600 million, compared with the average cost of the seven Budgets of the previous Government of around $3 billion—around five times more new spending each year than under this Government—and under this Government we are achieving better results for public services.

Alastair Scott: What are the Government’s fiscal priorities, now that it has delivered on its election promise and made a surplus in 2014-15?

Hon BILL ENGLISH: The focus is now on reducing debt. The Government has borrowed significant amounts of money over the last 6 or 7 years. We have been able to get on top of debt from tax revenue windfalls in the past. To pay down debt we need to continue with tight management of our spending, and the Government will outline its plans for that in the Budget.

Alastair Scott: How is the Government using a focus on better public services as a way to keep control of Government spending?

Hon BILL ENGLISH: The Government is focused on substantial improvements to public services because that is what the consumers of those services deserve, first of all, and, secondly, it is what taxpayers, who fund the services, deserve. It turns out that spending more and more money on public services does not necessarily mean that they are better. The Government has set out to reduce the demand for public services—that is, reduce benefit dependency, for instance—and results show that there were 7,245 fewer benefit recipients in the past year, because more people are getting into work and gaining independence.

Tax System—Overseas Trusts

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

Rt Hon JOHN KEY (Prime Minister): Yes.

Ron Mark: Does he stand by his statement yesterday that: “We have disclosure regimes and disclose all information.”?

Rt Hon JOHN KEY: Yes.

Ron Mark: If our disclosure regime is seen as having the best practice, can he confirm that the Inland Revenue Department (IRD) has a centralised database on foreign trusts?

Rt Hon JOHN KEY: The member would have to ask the Minister of Revenue that question.

Ron Mark: I seek leave to table a file note from 9.23 a.m. this morning of a conversation between IRD Official Information Act inquiries and New Zealand First’s research unit that confirms there is no—

Mr SPEAKER: Order! [Interruption] Order! On this occasion I will put the leave. It could be informative for members, so I will put the leave, but I just remind the member that it is not about making a political point. But in light of the answer, I will put the leave. Leave is sought to table that particular file note. Is there any objection? There is not. It can be tabled.

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

Ron Mark: Does he believe that New Zealand’s reputation is enhanced by Alberto Youssef, also known as Brazil’s black market central banker, setting up a company here that was later revealed in Brazilian court documents to be a money-laundering front?

Rt Hon JOHN KEY: I have no knowledge of the particular case, and I am not going to comment on it.

Ron Mark: How confident is he that none of the 152 companies on the New Zealand register that are owned in the Caribbean, Central America, and the Indian Ocean are not involved in organised crime, drug running, or terrorism?

Rt Hon JOHN KEY: I cannot answer that question because I simply do not know, but what I do know is that when the IRD gets the full database, it will then be able to go and look through the whole of that. It does not have that. In fact, the people who control it internationally should. But what I do know is that of the fewer than 200 trusts registered in New Zealand with any link to Mossack Fonseca, all of them have been disclosed, on the advice I have had from the IRD.

Ron Mark: I seek the leave of the House to table the New Zealand First research unit analysis of companies owned in the Caribbean, Central America, and the Indian Ocean as of 10 May 2016.

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

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

Ron Mark: How can the Prime Minister maintain that “there’s nothing to see here”, when terrorists, drug runners, and money-launderers are using our lax regimes to their advantage?

Rt Hon JOHN KEY: Firstly, we would have to see that quote in the context that I gave it. I cannot recall actually saying that specifically around this issue, but I would have to see. But as the member is aware, the Government is going through an extensive review around disclosure and has actually been doing a lot of work well and truly prior to this, including the issue in relation to the tax of look-back companies, which is in the House at the moment, that is in relation to the proactive disclosure of information to over 60 regimes. I remind the member that our most recent review by the OECD had New Zealand in the most-compliant category.

Ron Mark: I seek the leave of the House to table a letter from the Rt Hon Winston Peters to the Prime Minister, dated 10 May 2015, calling for a royal commission of inquiry into New Zealand’s tax system.

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

Budget 2016—Emergency Housing

5. ALFRED NGARO (National) to the Minister for Social Housing: What support will Budget 2016 provide for people in need of emergency housing?

Hon PAULA BENNETT (Minister for Social Housing): Yesterday I announced that Budget 2016 will include $41.1 million to fund 3,000 emergency housing places per year for people and families in urgent need of a roof over their heads. This is the first time that any Government has set up direct, ongoing funding for emergency housing. It will mean that there is an essential safety net for people in crisis around New Zealand. As part of our review of the sector, providers told us that accessing funding was difficult and ad hoc, and we have fixed that.

Alfred Ngaro: How will the funding work?

Hon PAULA BENNETT: The new 3,000 places will be for anyone—individuals or families—who has a genuine need for emergency accommodation. They will be provided by a range of organisations around the country. There will also be a new special-needs grant available through Work and Income for people who cannot access one of the contracted places. Unlike the grants available now, people will not have to pay them back. We think that has been unfair, and so we have fixed it.

Alfred Ngaro: Which regions will benefit from the emergency housing funding?

Hon PAULA BENNETT: In the past, funding has been directed mainly at places like Auckland, where there is the biggest need. Although Auckland will still get a decent chunk of these new places, there is need elsewhere and as such they will be available throughout the country. Regions such as the Bay of Plenty, the East Coast, Waikato, and Wellington will get around 240 places each year, and places like Northland, Taranaki, and Nelson will get around 80 a year.

Phil Twyford: How many extra homeless people could the Government be helping now, if it had not sold or demolished 2,676 State houses in the last 5 years?

Hon PAULA BENNETT: Adding to that, of course, is the more than 1,000 places that have been rebuilt, the more than 1,400 that are already in stream to do that, the more than 600 that are now housed with community housing providers, and actually us providing more houses in the right place, of the right size, and not just accepting any old houses anywhere that were not being filled anyway.

District Health Boards—Funding

6. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: What is the total amount of efficiencies since 2011/12 made by the 20 district health boards and how much have they made for the February year to date?

Hon Dr JONATHAN COLEMAN (Minister of Health): The district health boards have received total funding of $55 billion over the past 5 years, and over that time, they have been asked to find efficiencies averaging around 1.2 percent, or $130 million, a year. In the year to February, they have made savings of around $80 million, or 0.7 percent. This is a bit like the automatic efficiency dividend that was required of district health boards between 1999 and 2008.

Hon Annette King: Why did he dispute on The Nation that the district health boards, as of February this year, had made only $80 million in efficiencies when they are expected to make $178 million and he had provided the answer in written question 4628?

Hon Dr JONATHAN COLEMAN: I disputed it because it was quite clear that it was a document that Mrs King had given to the interviewer, and my experience of this thing is that it pays to go and check the facts.

Hon Annette King: I raise a point of order, Mr Speaker. I want to seek your guidance in relation to that answer, and it is regarding information that is already available to members if they choose to look. The Minister, as you have just heard—

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

Hon Annette King: Yes, this is the point of order. The Minister has disputed the figures. I have the figures; he provided them. I wish to table them because he was saying that they were Labour Party figures.

Mr SPEAKER: Order! The figures I think the member is referring to are figures I have in front of me too. They are the result of an answer to a written question. That is available to all members. Question number—[Interruption] Well, the member needs to rise and say.

Hon Annette King: In how many Budgets since 2009-10 has core Crown health expenditure kept up with health demographics and all inflationary cost pressures?

Hon Dr JONATHAN COLEMAN: In every Budget, the total quantum of health funding has increased above the rate of inflation. Inflation has increased by 13 percent over that period; health funding has increased by 30 percent.

Hon Annette King: I raise a point of order, Mr Speaker. I asked “In how many Budgets since 2009-10 has core Crown health expenditure kept up with health demographics and all inflationary pressures?”. The Minister did not answer that question.

Mr SPEAKER: No, he clearly—to my mind, he did. He said that in all Budgets it has kept up with inflation. [Interruption] The question has been addressed.

Hon Annette King: For the 2015-16 financial year, has core Crown health expenditure kept up with all health demographic and inflationary cost pressures, including wage increase cost pressures?

Hon Dr JONATHAN COLEMAN: What I can tell the member is that last year health spending—Vote Health went up by $400 million, which was well above the rate of inflation. The amount of money that we put in went up by 0.6 percent. That was the factor for inflation. At the end of the year inflation was 0.2 percent. So the funding was well ahead of inflation.

Hon Annette King: I raise a point of order, Mr Speaker. It was a very straight question—

Mr SPEAKER: Order! [Interruption] Order! I listened very carefully. It was certainly interrupted a lot by interjections, but in my mind, on this occasion, again, the Minister has addressed your question.

Hon Annette King: Which of his statements on The Nation regarding health funding in real terms is correct: one, “We have fully funded demographics. There’s been a lesser factor for inflation.”; two, “It’s been ahead of inflation.”; three, “We were ahead of inflation over the last year.”; or, “I need to go back and check the figures.”?

Hon Dr JONATHAN COLEMAN: They are all correct, and you always need to check—[Interruption] You always need to check the facts when Mrs King is talking.

Hon Annette King: I seek leave to table the paywalled National Business Review article from 10 May 2016 headed “Health Minister says health spending up but spins on actual figure”.

Mr SPEAKER: Order! The document has been described. On the basis that I am assured it is paywalled, I will put the leave. Leave is sought to table that particular article. Is there any objection? There is none. It can be tabled.

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

Hon Annette King: I seek leave to table the paywalled National Business Review article from the same date, which is the transcript of the interview on The Nation dated—

Mr SPEAKER: No, no. Again, anybody can go back and have a look at that programme if they so want.

Tax System—Overseas Trusts

7. JULIE ANNE GENTER (Green) to the Minister of Revenue: Does he stand by his statement, “these are the facts: there is no tax avoidance or evasion in New Zealand in respect of foreign trusts … There is no wealth hidden in New Zealand with these foreign trusts”?

Hon MICHAEL WOODHOUSE (Minister of Revenue): Yes, in the context in which that statement was provided.

Julie Anne Genter: So would he tell the House today—would he guarantee—that of the 61,000 references to New Zealand in the Mossack Fonseca papers and the 12,000 New Zealand foreign trusts, approximately, that are registered in this country, there is not a single case of tax evasion?

Hon MICHAEL WOODHOUSE: No, but the key words in the statement that informs the primary question are “in New Zealand”. A foreign trust is just that: it has foreign settlors with foreign assets, foreign income, and foreign tax obligations. There is no tax evasion or obligation in New Zealand.

Julie Anne Genter: So is he admitting that people from offshore are using New Zealand foreign trusts, in some cases, for tax evasion?

Hon MICHAEL WOODHOUSE: What I am saying is that people sometimes do exploit differences between their country’s tax laws and ours in order to minimise their tax obligations. This is the heart of the issue: to the degree that tax avoidance and tax evasion is a problem, it is a global problem, which is why we are working with the OECD, in harmony with those other countries, to fix it.

Julie Anne Genter: Given that it is a problem, will he then support my Supplementary Order Paper 173 on his Taxation (Transformation: First Phase Simplification and Other Measures) Bill in the Committee later today, which would require New Zealand foreign trusts to disclose more information on the registration to the Inland Revenue Department?

Hon MICHAEL WOODHOUSE: I note that information includes things like address details and passport numbers, which one commentator has described as “barking mad”. I agree with that commentary, and the answer is no.

Julie Anne Genter: Given that that Supplementary Order Paper does not require the publication—in fact, it explicitly precludes the publication—of that information, how could it possibly hurt for the Inland Revenue Department to have more information on the beneficial owners of New Zealand foreign trusts?

Hon MICHAEL WOODHOUSE: The kindest thing I can say about that question is that it is naive. The whole point about the issues that have been raised is the challenging of the disclosure to other tax jurisdictions of certain important information. I think that Supplementary Order Paper goes too far. I am also confident that the John Shewan inquiry will provide sensible and sage advice to the Government on what disclosure requirement changes may be necessary, and I am going to wait for that.

Broadband, Ultra-fast and Rural—Progress

8. MAUREEN PUGH (National) to the Minister for Communications: What recent announcements has she made on progress of the Government’s Ultra-Fast Broadband programme?

Hon AMY ADAMS (Minister for Communications): Today I announced that as at 31 March more than 900,000 households, businesses, and schools can connect to the ultra-fast broadband network. Uptake has increased to 21.3 percent, with almost 200,000 connections, and the build in 16 regional towns is complete. We are connecting 1.3 properties every minute of every working day, and the project is on budget and ahead of schedule.

Maureen Pugh: How are rural New Zealanders benefiting from the Government’s Rural Broadband Initiative?

Hon AMY ADAMS: Improved connectivity is critical for our rural communities. The Rural Broadband Initiative continues to extend coverage to rural areas across New Zealand, and uptake of these services by both residential and business customers has now reached more than 37 percent. We have 142 new and 338 upgraded rural broadband towers in operation, and in the last 3 months over 2 million individual mobile devices were able to access services from these towers. Combined with 1,200 cabinet upgrades, this means that around 285,000 rural New Zealanders can now access faster broadband as a result of the National-led Government’s Rural Broadband Initiative.

Job Creation and Unemployment—Statistics

9. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by his statement made in Budget 2015 that “the unemployment rate is expected to fall below 5 percent in 2016”?

Hon BILL ENGLISH (Minister of Finance): Yes. The statement was based on Treasury’s forecasts at the time, reflecting its best professional judgment. The member will be pleased to know that 60,000 jobs have been added to the economy since Budget 2015—7,000 more than the 53,000 additional jobs that I stated at the time, on the basis of the forecast by Treasury reflecting its best professional judgment.

Grant Robertson: How many more people are unemployed now than when the National Government took office in 2008 according to the latest household labour force survey?

Hon BILL ENGLISH: I know there are 200,000 more people employed, and it is possible that there are more people unemployed than there were then, because we have had a major recession since then, from which there has been a moderate recovery.

Grant Robertson: Does he consider it a sign of success when the number of young people not in education, employment, or training has increased by 26,000, or 44 percent, after nearly 8 years of a National Government; or are those young people just “pretty damned hopeless”?

Hon BILL ENGLISH: The member insists on making completely irrelevant comparisons between now and the situation just before New Zealand had a major recession. We have just come off—[Interruption] In the last couple of quarters, we have had the lowest number of young people not in education, training, or employment ever. It has bumped up a bit in this last quarter. The Government has a wide range of programmes in place to deal with that issue, and if we persist with them, we will succeed.

Grant Robertson: Does he recall declaring the global financial crisis over in 2012, and how then does he explain the fact that we have a record number of “neets”, which has increased by 44 percent under his watch?

Hon BILL ENGLISH: First of all, I would not accept all of the member’s assertions. I can remember saying that the New Zealand economy was recovering from the global financial crisis, which turned out to be almost as difficult as recovering from the previous Labour Government.

Grant Robertson: Will Budget 2016 commit to unemployment being under 5 percent?

Hon BILL ENGLISH: The member will have to wait and see. But if having low rates of unemployment was merely a matter of the commitment of politicians, then there would be no unemployment whatsoever. I mean, if you could commit to it, why commit to any unemployment? What Budget 2016 will underpin is the extensive efforts that the Government is making, particularly with our young people, across a range of programmes, from Māori and Pacific trade training through to the youth services, which have the most concentrated—and probably the most expensive—youth programmes, all designed to ensure that young people are on a pathway to work, not a pathway to welfare.

Schools—Communities of Learning

10. BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Education: What recent announcements has she made on Communities of Learning?

Hon HEKIA PARATA (Minister of Education): Good afternoon, Mr Speaker—it is New Zealand Sign Language Week this week across New Zealand. I was pleased to announce that a significant milestone has been reached in our Investing in Educational Success initiative, with more than 1,000 schools now participating. Today’s announcement that another 21 Communities of Learning have been formed takes the total number to 117, and more than 320,000 of our young people are now involved. The 21 additional communities approved are in Auckland, Waikato, Bay of Plenty, Waiariki, Taranaki, Wanganui-Manawatū, Wellington, Nelson, Marlborough, West Coast, Canterbury, and Otago-Southland. In Taranaki - King Country there are two new communities, one centred around Waitomo and the other in Stratford. Of the Communities of Learning that have already been established, 19 have had their achievement challenges endorsed, 10 have appointed their Communities of Learning leaders, and, in addition, just over 200 teachers have been appointed to new teaching roles within the Communities of Learning.

Barbara Kuriger: How will these Communities of Learning drive educational success across rural and regional New Zealand?

Hon HEKIA PARATA: Research and the direct experience of parents show that within schools the quality of teaching has the biggest influence on whether students will be successful. Investing in Educational Success promotes best practice by making it easier for teachers and principals to share expertise and resources. This is especially important in rural and regional areas, where distance presents some challenges to collaboration. In Inglewood, for instance, the Community of Learning is making great strides along the whole learning pathway of their schools, and is one of the first in the country to involve early childhood education.

Earthquake Commission—Canterbury Home Repair Programme

11. Dr MEGAN WOODS (Labour—Wigram) to the Minister responsible for the Earthquake Commission: Has EQC’s position that it will reinstate earthquake damage to a condition substantially the same as “when new” been applied to every home repaired in the Canterbury Home Repair Programme; if so, why does the EQC customer guide state that customers’ homes will be returned to a “pre-earthquake state”?

Hon GERRY BROWNLEE (Minister responsible for the Earthquake Commission): Yes, because that is what it means.

Dr Megan Woods: Was finance and insurance expert Dr Michael Naylor wrong when he stated that “It is now generally accepted that the EQC repair process has not been up to the expected standard for approximately 10 to 20,000 homes.”?

Hon GERRY BROWNLEE: Yes, he is.

Dr Megan Woods: If an Earthquake Commission claimant who is not part of the EQC Group Action settlement believes that the repairs to their home have not been to a condition substantially the same as when new, will the Earthquake Commission agree to re-scope the repair work; if not, why not?

Hon GERRY BROWNLEE: I think it is very important that the House hears that the court action brought by that particular group started out as an attempt by a law firm to put together a class action. That was rejected—it failed. It then went to a point where it was going to be a declaratory judgment, and then there was an agreement that, actually, everything the law firm wanted—everything the claimants were trying to achieve—could actually be found on the Earthquake Commission website. There was a statement with the two parties agreeing to that. The member needs to stop encouraging these ambulance chasers, who are unreasonably taking money off people when there is no benefit to them.

Dr Megan Woods: Given the Earthquake Commission’s statement that if repairing an earthquake-damaged part of a house means that work is also required to an undamaged part of the house, the Earthquake Commission will cover the cost of this work, will claimants who have previously paid for the undamaged repairs themselves be eligible for reimbursement?

Hon GERRY BROWNLEE: The question presupposes that every case is the same and that all these matters are simple. In the case, for example, of an asbestos roof that has crashed in, or has had a chimney crash through it, the entire roof needs to be replaced because there is no asbestos material—and it would be irresponsible to use it if there was—for that replacement. But if there is an opportunity taken by a homeowner to effect a change to their property for some damage or some pre-existing condition, then that is a reasonable cost that will be applied to them.

Dr Megan Woods: Has he had any meetings with the Minister of Finance in the lead-up to the Budget regarding a potential fiscal risk to the Crown as a consequence of the Earthquake Commission settlement with EQC Group Action; if not, why not?

Hon GERRY BROWNLEE: The first point is that I regularly have meetings with the Minister of Finance, and I am sure that on 26 May the member will see what a great finance Minister he has been for New Zealand—and continues to be. Also, let me just say, too, that this was not a settlement in the court; it was an agreed statement after what, effectively, was a failed action by an ambulance-chasing group of lawyers.

Dr Megan Woods: Does he agree with the Earthquake Commission that it is time to turn off the tap, and is that why he refuses to do his job and face the facts—that the Government has completely botched the Canterbury Home Repair Programme and exposed taxpayers to massive liabilities?

Hon GERRY BROWNLEE: Working back through that question, the first point is that the Earthquake Commission repair programme is not botched. The Building Research Association of New Zealand report will tell you that the call-back rate on a brand-new home is around about 80 percent. On the repair programme run by the Earthquake Commission, it is about 8 percent. It does not indicate any great problem. Further, there was no settlement, as the member claims, and when it comes to the statement “turn off the tap”, that was an internal document used by some staff looking at the issue in the Earthquake Commission. It is not official Government policy, and it is no less valid than the Labour Party putting up on the screen yesterday at its caucus “We want to win the 2017 election.” Neither is going to be true. [Interruption]

Mr SPEAKER: Order! Question No. 12, Mahesh Bindra—[Interruption] Order!

Hon GERRY BROWNLEE: I raise a point of order, Mr Speaker. Listening to the—

Hon Member: Barrage.

Hon GERRY BROWNLEE: —well, I will not call it a barrage—the interjection from across the House, it is clear that I made a mistake. I meant their website today. However, that was this morning, and I think they will probably revise—

Mr SPEAKER: Order! No, where we are going is not going to help the order of this House at all. [Interruption] Order! I have called Mahesh Bindra.

Corrections Facilities—Safety and Staffing Levels

12. MAHESH BINDRA (NZ First) to the Minister of Corrections: Does she have confidence in the Department of Corrections’ ability to keep both staff and prisoners safe?

Hon CHRISTOPHER FINLAYSON (Acting Minister of Corrections): Yes.

Mahesh Bindra: Is she aware that a vicious prisoner-on-prisoner assault took place just last week at Christchurch Men’s Prison, resulting in the victim nearly dying; if so, does she believe this could just as easily happen to staff?

Hon CHRISTOPHER FINLAYSON: Yes, the Minister is aware of an incident that took place at the Christchurch prison on 4 May. The corrections officer was apparently able to get assistance very quickly by using his personal alarm. I am advised that although one prisoner did receive serious injuries, they are not life-threatening.

Mahesh Bindra: Why has she allowed the staffing levels to drop to the extent where it has become impossible for staff to safely do their job of supervising prisoners and managing violent situations within prisons?

Hon CHRISTOPHER FINLAYSON: I dispute the premise of that question. The current vacancy rate for Christchurch Men’s Prison, for example, at the moment is 2.7 percent, so I do not know where the member is getting his figures from. He is wrong.

Mahesh Bindra: Why have public prisons been left short-staffed while staff from these prisons have been seconded to supervise the Serco-run Mt Eden Corrections Facility?

Hon CHRISTOPHER FINLAYSON: Again, I dispute the underlying premise of that question. There is no issue of short-staffing as the member has represented it in his question.

Bills

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

Third Reading

Debate resumed from 3 May.

MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti): Tēnā koe, Mr Speaker. E ngā mema o Te Whare nei, tēnā tātou katoa. I am pleased to take a call on the third and final reading of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill. Just so that we can recap, the purpose of the bill is to make amendments to the Student Loan Scheme Act 2011, the Income Tax Act 2007, the Goods and Services Tax Act 1985, and the Tax Administration Act 1994.

There are three components of this bill, which I would like to just briefly touch on in my contribution. The first one is student loan information. The bill intends to allow information on student loan borrowers living in Australia to be shared between the Inland Revenue Department (IRD) and the Australian Taxation Office, ensuring defaulters pay their outstanding loan balances. The provisions in the bill, once incorporated into the law of both countries, are intended to give IRD up-to-date contact details to track down defaulters. The provisions also, under this part of the bill, include streamlining the rules applying to borrowers who work overseas but are entitled to interest-free loans because they work for approved charitable organisations, and standardising the treatment of over-deductions from a borrower’s salary or wages.

In the Committee stage, my colleague Stuart Nash made some very good points on this particular part of the bill. Ensuring timeliness of registration is critical for our students who are living overseas. The clock needs to be shortened so we are not paying undue interest when registered charities are being accepted. He made some very good points on that, and I do hope that that has been picked up finally in the bill. The other part he talked about was the level of disclosure, particularly around the charities. I guess the point that my colleague was trying to make, given that “tax avoidance” and “tax havens” are terms that are being bandied around New Zealand, was about ensuring that the level of disclosure for our charities is consistent with other tax laws. I do support him on that point.

Moving to the other part of this bill, I note that it highlights new property investment rule changes. The bill provides for a new withholding tax on sales of residential property by people who live overseas and go on to sell the property within 2 years of purchase. The proposed residential land withholding tax is intended to act as a collection mechanism to the brightline test that applies to gains from the sale of residential property purchased on or after 1 October 2015 and sold within 2 years. This test has been introduced by the Taxation (Bright-line Test for Residential Land) Act 2015.

The tax will apply when the property being sold is located in New Zealand and defined as residential land under the brightline test provision and when the seller acquired the property on or after 1 October 2015 and owned the property for less than 2 years before selling it. The other part is about when the seller is an offshore person. The bill defines what is classified as an offshore person. It is a person or people who are not New Zealand citizens, people who do not hold residence class visas, and New Zealand citizens and residence class visa holders who have been away from New Zealand for a significant period of time—3 years in the case of New Zealand citizens.

We support this bill, but I want to say that, unfortunately, it is a lost opportunity. It is a glass half full. It may not be perfect but it is a start, which is something we seem to hear constantly from that side of the House. We should have addressed those relationships of students who are living in the UK, for example, and, of course, the GST that we did not cover in terms of assisting small businesses. It is a bill that we support but, like much of the legislation that that side of the House brings, it does not address the real heart of helping small businesses. None the less, it is my pleasure to say that we support the bill in its third and final reading. Thank you.

JAMI-LEE ROSS (National—Botany): I take this opportunity to speak briefly on this bill and commend it to the House. As Meka Whaitiri has mentioned, it has a number of measures around GST and online services and also around residential land withholding tax. Those who have been following tax bills for some time will know that the residential land withholding tax changes are the third of three series of changes we have made around tax with regard to property.

The first thing that we required was an IRD number to be provided when property was sold and purchased by an overseas buyer or seller. Second was the brightline test, which required tax to be paid if the property had been bought and sold within 2 years and it was not a main home. The third change here is around residential land withholding tax for those who are offshore people.

It is interesting that we are talking about offshore buyers and sellers at the moment, because those who follow Twitter, as I do, will see that Land Information New Zealand has just released some data around foreign buyers. Of course, the Labour Party has been beating this up for many, many months. Apparently there are tens of thousands of people from overseas buying all our houses, and Labour is claiming—

Hon Dr Nick Smith: 36 percent.

JAMI-LEE ROSS: —as Dr Smith said—that 36 percent of people from overseas are buying our houses and that it is a huge number and it is a huge problem and something that we should all be crying about in our beds at night. The information from Land Information New Zealand that has just been released, which is now online, shows what number? What percentage of people who are overseas foreigners are buying houses? It is 3 percent.

Scott Simpson: How many?

JAMI-LEE ROSS: It is 3 percent. So the number of people buying houses in this country, that this bill actually targets, quite rightly, is nowhere near as high as what the Labour Party claims it is. It has been beating this up for months, probably years, in fact. In fact, it is opposing the Trans-Pacific Partnership (TPP) because of foreign buyers. Three percent of our houses in this country are being sold to foreigners. In Auckland, where we have got all the problems, apparently, it is 4 percent. So Labour is opposing the TPP because of 4 percent of houses being bought by foreigners. It has been claiming for months that foreigners are wrecking New Zealand in its anti-foreigner attacks. Labour is absolutely wrong. The data does not back it up. But, quite rightly, where people are buying and selling houses within 2 years and they are foreigners, we should be taxing them appropriately, and that is what this bill targets today.

Hon CLAYTON COSGROVE (Labour): As other members have said, the Labour Party will be supporting this piece of legislation. There is a maxim when it comes to taxation legislation: it should be transparent, it should be simple for people to understand, and it should have integrity.

If you go through the legislation, although there are, to be fair, the beginnings of some good work, which we support, it is noteworthy to look at some of its aspects. For instance, we looked at National dragging its feet in respect of applying GST to products bought from overseas, and we saw that after a lot of political hot air, the previous Minister of Revenue—I think it was either Mr McClay or Mr Dunne, I cannot recall which—said with a big hiss and a roar that he would go after online services in respect of GST. What did we come out with? Well, we came out with iTunes and Netflix. It is not a bad start, I have to say, but I would ask the Minister for Small Business, who I see is here, how many New Zealand businesses will be affected in a positive way because GST is charged on those particular online services. I doubt whether there will be many in the small business space. I recall, I think, the Retailers Association, which was pretty vehement and robust in its view that if you are going to do this you ought to do it correctly. There are a heck of a lot of other online services, of course, that will not attract GST under this bill, anyway.

What the Government has done is pick a bit of low-hanging fruit and trumpeted this as though it is some great taxation reform. To be fair, it is a good start, not a bad start. But if you are actually trying to get traction and assist small businesses in this country, I would have thought that a lot more thought and policy work would have gone into this, going well beyond iTunes and Netflix. I do not see too many small businesses down Lambton Quay—and I see a few members down the back of the National Party nodding—in the competitive space of iTunes and Netflix, jumping up and down and rejoicing today as we have the third reading of this bill because it is going to assist them with millions of dollars flowing into their bank accounts. I do not think so. I doubt whether there are many small businesses down Lambton Quay or Queen Street or in Porirua or anywhere else that will be rejoicing because, somehow, their revenue base is secured because the Government decided to have a crack at Netflix and iTunes in respect of GST.

There are other areas of online services and online purchases where the Government could have a major impact in levelling the playing field for domestic small businesses. Small businesses in New Zealand do not want a subsidy; they do not want something out of the box or some preferential treatment. What they are seeking here is a level playing field and a fair go, and it will be interesting to see how long it takes the Government, in its next tranche of tax legislation, to advance those particular issues.

I note that the last speaker, Jami-Lee Ross, was wont to go through the raft of changes the Inland Revenue Department (IRD) has made in respect of land purchases. He talked about the requirement for an IRD number—not exactly earth-shattering stuff—and the requirement for a brightline test of 2 years, where tax is accrued if you sell a second property, other than your family home, within 2 years. A number of us made the point in the Finance and Expenditure Committee, and we make the point again here today, that if you are getting 20 to 24 points per annum of capital gain on a property in Auckland, most property owners will not flip that property inside 2 years, because they are making such huge capital gains. In fact, one could argue that the best investment in New Zealand, in respect of capital gains returns, is a property owned in Auckland.

What that 2-year provision and the third provision around residential withholding tax may do is have some minor impact on the fringes of property speculation. But in terms of those people who are buying properties for investment, who are making—and there are a few business people across the aisle, like the Minister for Small Business; could he tell me, perhaps, of a better investment, with a better return than 20 to 24 points per annum? I do not know if there is such a thing. I see he is busy there, in a culinary sense, and may not be able to answer, but I cannot see an investment greater than that in this country. That 2-year hold—when Treasury, of course, recommended 5-plus years—is, again, a bit of window dressing by this Government in respect of trying to be seen to be doing something about what it now is coming to terms with and acknowledging, behind closed doors, as a housing crisis.

The last speaker talked about the Land Information office releasing figures, and about foreign-ownership figures of 3 percent—nationwide, I assume—and 4 percent in Auckland. What he forgot to say, of course, is that that is from the time that Land Information started collecting those figures, which is, what, 3 or 4 months ago? I am not sure of the exact time frame. In the last 3 or 4 months—even Nick Smith over there looks, in his own gregarious way, like he cannot argue with that one. If you actually go back, had we had those figures, as we demanded and requested for years in Opposition, saying that there should be a land register and a data collection system and that it should happen immediately when the Government came in, when everybody else admitted there was a housing crisis, apart from Nick Smith, in his own benign way in that fantasy world he lives in—in his world, in his environment, in his ecosystem, those sorts of crises do not exist.

Had we had that database—they do not call it a database; they do not even call it a register, because that would be conceding that they lost the political battle on that—over the last 6 years, we would have a robust set of figures. Feet put to the fire, they conceded and got Land Information and the IRD starting to collect that information over the last 3 or 4 months, and somehow, for the first tranche of the information to come out, Nick Smith gets up and trumpets it, as did the previous speaker, as some sort of deep, authoritative series of information. Well, if you know anything about statistics—and even Nick Smith might know something about—

Brett Hudson: Feel the burn, Clayton.

Hon CLAYTON COSGROVE: It is Hudson and Halls down the back, chirping away.

If you know anything about statistics, you look at a trend. You do not look at a one-off snapshot, and you do not look at and see as authoritative and with integrity one snapshot from a new set of data the first time you take it.

Brett Hudson: The facts are getting in the way, aren’t they, Clayton?

Hon CLAYTON COSGROVE: I cannot quite hear through the verbal garbage going on down the back of the House, but you do not take, in an authoritative way—if you know anything about statistics—the first snapshot in a new series of data. No, you look at a trend. Had we had that series of data 6 years ago, when members of this political party and others in the housing sector called for it so that we could measure these things, we would have a trend and we would have predicable information that we could do some analysis with. In the next 6 years, now that we have got this so-called register, I am sure that we will be able to build on this. But to come to the House today and say that the first snapshot that we have taken now gives us a sort of global reach in terms of projecting out what will happen in New Zealand in respect of overseas property purchases is a bit rich.

I say that we will support this piece of legislation, but I do hope that the new Minister of Revenue—I think the third that we have had in, what, 6 months or so—will have enough time in the chair to actually progress the online taxation issues, progress in a meaningful way those GST issues around internet charging, and go far further than the couple of bits of low-hanging, half-rotting fruit, in a taxation sense, that have been plucked and pulled and heaved off the tree so that the Government members can stand up and say “Hey, we’re on the side of small business. We are addressing and levelling the playing field for small business.”, when we all know that there ain’t too many small and medium sized businesses competing with Netflix and iTunes. It is not a bad start. We hope to see far more integrated and authoritative tax legislation as we progress in this financial year.

SCOTT SIMPSON (National—Coromandel): It is a pleasure to stand and rise as the last speaker in the debate on this bill. I will be commending the bill to the House because I think it is a very good piece of pragmatic legislation. I am delighted to hear that the Labour Opposition is supporting it. The bill has four main proposals in it, and perhaps the most important of them is the introduction of a residential land withholding tax, about which there has been an awful lot said in recent days, weeks, and months.

The statistics by Land Information New Zealand that have come out this afternoon put to bed, once and for all, the mischief-making that the Labour Party has been harping on about for months, in terms of people with Asian-sounding names. Those statistics are damning and they are a sad indictment on the current position of the Labour Party and its thinking on these matters. This is a good bill. It is a pragmatic piece of legislation, it covers off a number of areas, and I 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 third 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 third time.

Bills

Social Security Legislation Rewrite Bill

First Reading

Hon ANNE TOLLEY (Minister for Social Development): I move, That the Social Security Legislation Rewrite Bill be now read a first time. I nominate the Social Services Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 15 September 2016.

This bill rewrites the Social Security Act 1964. After more than 50 years the Social Security Act is long overdue for a rewrite. When it was first passed it had 135 sections. It has since grown to 523 sections and, of those, only four remain unchanged, 214 sections have been repealed, and most sections have been amended multiple times—in one case, 286 times. Altogether, that makes for a very disjointed and confusing Act, and there have been many calls for it to be completely rewritten. For example, in May 2007 the Rt Hon Sir Peter Blanchard, who recently retired from the Supreme Court, warned that the Act was in need of a rewrite. He said: “Departments get themselves into an awful bind when they don’t keep their statutes up to date and when they don’t regularly review them and re-enact them completely, rather than just adding bits and pieces.” That same year, members of the Law Commission were asked to identify their favourite worst statute. Sir Geoffrey Palmer and Professor John Burrows immediately and in unison responded: “Social Security Act.”

A second Act, the Social Welfare (Reciprocity Agreements, and New Zealand Artificial Limb Service) Act 1990, is also repealed and replaced by this bill. Provisions on social security agreements with other countries are currently split between that Act and the Social Security Act. They are brought together in this bill. Provisions on the New Zealand Artificial Limb Service are also split between the two Acts and are brought together in this bill. I intend that the bill will be split into three bills at the end of the Committee of the whole House stage. The three pieces of legislation to be created are the Social Security Act, the Artificial Limb Service Act, and the Residential Care and Disability Support Services Act.

The bill sets out main benefit entitlements, obligations, and associated sanctions; assessment processes; and appeal rights. These important social security measures will continue to be set out in primary legislation. New regulation-making powers in the bill allow for more of the detail about matters such as supplementary assistance and administration to be moved into regulations. That will achieve greater consistency with the approach taken in other Acts to what belongs in secondary legislation.

The bill is largely a rewrite of existing policy in a more logical structure and in language that is much easier for users to follow and understand. The bill makes it clear when provisions continue existing policy. It also identifies the corresponding section in the 1964 Act in each case to help people compare the two versions. In addition, clause 9 of the bill makes it clear that if there is any doubt about the meaning of the new wording, the old law—that is, the law as set out in the current legislation—must be used to determine the correct meaning. The existing policies re-enacted in the bill have already been debated and passed through the House. I will not waste the time of the House by outlining what they do. If this bill was a revision bill that was simply re-enacting existing policy, we would not be debating the provisions in the bill at all in this stage.

The Attorney-General’s report on this bill identifies a group of provisions that favour people who are totally blind and finds that it is inconsistent with the New Zealand Bill of Rights Act. These provisions are some of the most longstanding social security measures in New Zealand, dating back to 1924. They help a small group of disadvantaged people: those who are totally blind. These longstanding measures are re-enacted unchanged in the bill as part of the policy-neutral approach. They will remain lawful under the Act. However, a small number of policy changes have been included in the bill that aim to improve administrative efficiency and support modern service delivery.

In the bill, the emergency benefit is renamed the exceptional circumstances benefit, and policy for this benefit is clarified. The new name better describes what the benefit is for. It provides a level of income to people who do not qualify for one of the other main benefits but who would be in hardship without that assistance. The bill makes it clear that the exceptional circumstances benefit is to be paid at the rate of a main benefit.

Rates of New Zealand superannuation are higher than main benefit levels and are linked to average wage levels. People have to live here for only 10 years to qualify at the age of 65. It was never intended that a person who does not qualify for New Zealand superannuation would get a benefit paid at the same rate as people who have qualified for it, and this bill makes that clear.

The bill also provides discretion to case managers to set work obligations and, if necessary, to apply sanctions to people receiving the exceptional circumstances benefit so that they are treated in the same way as a person in similar circumstances receiving a main benefit. The bill also removes the provision that allows case managers to require a person to undergo medical or other treatment as a condition of grant of the emergency benefit. That provision has never been used and it would breach section 11 of the New Zealand Bill of Rights Act.

The bill combines the orphans benefit and the unsupported child’s benefit into one benefit. The combined benefit is the supported child’s payment, which is a much more positive and meaningful name. The bill introduces a new single rate of sole parent support for people receiving the supported child’s payment, so single caregivers who need a main benefit will be able to receive the sole parent support without having to give up the supported child’s payment. It will mean that the age of the child will automatically be taken into account when the caregiver’s work obligations are set. They will be treated in the same way as other people who are receiving a benefit and who have dependent children.

When a couple separates and each parent is the main carer for at least one child from their relationship, both parents are sole parents, but currently only one of them can claim the sole parent support. If the other parent needs a benefit, the case manager grants an emergency benefit to give them the same assistance they would receive through the sole parent support. The changes set out in the bill mean that both parents will be treated the same. However, nothing changes for parents in shared-care situations who each care for the same child or children for some of the time.

Finally, the 1964 references to posted communications in a paper-based world are brought up to date. The bill allows for a variety of different methods of communication that are available in today’s world and gives greater scope for modern service delivery, taking into account future advances in technology.

It is fitting that after more than 50 years this historic piece of legislation is refreshed. This bill provides users with a clearer, understandable version of an old Act that has become almost incomprehensible. The new structure helpfully groups together information in logical ways, and there is ample guidance to assist new readers to find provisions that are relevant to them. My thanks go to the officials who have worked hard to achieve this result. I commend this bill to the House.

CARMEL SEPULONI (Labour—Kelston): I need to say from the outset that, fundamentally, on this side of the House, we do support, and have supported, a rewrite of the social security legislation, as we support the idea that there needs to be some clarity and some consistency. Since 1964 the Social Security Act has had amendments made to it continually, so it is very difficult to navigate and it is disjointed, and the Law Commission and others have all stated that that is the case.

We support the Social Security Act being more accessible and cohesive. We think that is very important, but what we are concerned about is that the policy-neutral rewrite that we were promised by the National Government is at risk here when we look at what we have finally been presented with. The Minister for Social Development herself has said that, yes, the Government has gone through and tried to modernise it and tried to look for places where it could make it more cohesive and more consistent, but she has also said that this is being used as an opportunity to actually insert some policy changes. I think that is where we have concerns, and I think they are very valid concerns.

This is not a straightforward rewrite. There are changes that have been made to policy, and we believe that some of those changes should be put through a different avenue and not in a rewrite of social security legislation. There are two different things going on here and they should be kept very separate.

I have had conversations with a number of social agencies that are very keen to make submissions on this bill. Those agencies that I have spoken to have either said that they are concerned but they are supportive of this bill going to a select committee and having it nutted out there, or they have said that they will not be taking a position on whether or not this bill’s referral to a select committee should be supported in the first instance. So I think that already highlights that there are concerns held out there by the experts—by the people who are operating with this legislation on a daily basis—and we take on board their advice.

So I can say from the outset as I get into this that we will support this going to a select committee, but we want there to be a robust analysis of what we have in front of us and we do have concerns, which I will talk about shortly. Given that those social services do want the bill to have that robust attention paid to it and they want to have the time needed to pull together robust submissions on the bill, I am a little bit disappointed to hear that the Minister is asking that this bill be reported back 2 months earlier than actually required. She is saying to us that she wants it reported back by 15 September. If this is going to be done properly, and we should all be committed to making sure it is done properly, then why would she reduce the time period in which we can give this bill the attention that it deserves? That was one of the concerns that was raised by one of the organisations I spoke to this morning. All it wanted was for it to be given the time that it deserves. So I am disappointed already to hear that the Minister is saying it will be 4 months, rather than 6 months, before it is reported back to the House.

I have to say that is actually probably indicative of an underlying agenda that we should all be a little bit concerned about here, and that the social sector should be concerned about. This is not an honest and upfront rewrite that is policy-neutral, like we had been told by the National Government that it would be. I am going to talk about some of the examples where we do have a few concerns. We know now, with the rewrite that the Minister has written into the principles—the investment approach. Our concern, and many other providers outside Parliament have concerns, is that actually there is a lot of critique that needs to be put into the National Government’s social investment approach. From just reading some academic articles on this recently, I have got even more cause for concern.

The social investment approach that that Government has presented us with is all about forward liability—the cost to the State. But there is no cost-benefit analysis going on in that if we make this investment into these people and we provide them with this level of support and resource, what will be the benefits down the track and how much money will that actually save for us as a country? It is all short-term gains—all about how much money the Government is paying out in any financial year to benefits. It is all about its issues with long-term welfare dependency, but nothing about real investment. Real social investment, as far as we on this side of the House are concerned, is about investment in people and making sure that if they actually do have to have an interaction with the social welfare system, we support them so that an investment is made, so that when they leave the benefit they are better placed to go into secure work, they are better placed to increase their earning capacity, and they are better placed to support their families.

But none of that focus is part of what that social investment approach from the National Government has given us. When the Government amended, here in the rewrite, the principles of the social security legislation, I would have actually liked to see an amendment to the principles. But the amendment I would have liked to see to the principles would be the inclusion of a principle that every person who goes to Work and Income or who requires assistance is given their full entitlements and given the absolute commitment that they are not being denied anything that they and their family may be eligible to access. I would have liked to see something like that put in the principles. I would have also liked to see something about how people would be given full access to their rights, in terms of how to make a complaint. These are real issues.

Actually, we saw it recently with the impact workshops that were undertaken by Auckland Action Against Poverty, alongside Work and Income. I think it ran that workshop for 3 days. Something like 700 people went through those workshops, wanting to know whether or not they were accessing their full entitlements, and wanting to know whether or not there was any other support they could access. Auckland Action Against Poverty was inundated with requests for support. That support should actually be provided by the Government agency that has been put in place to provide it. We should not need unfunded charitable organisations or voluntary organisations like Auckland Action Against Poverty to step in to make sure that people are getting their full entitlements. You know, it is mean of the Government to constantly find ways of denying people access to things that they actually are entitled to.

The stress and anxiety that it causes these people is huge. I think all of us who are electorate MPs see this on a daily basis with the people who are coming through our offices. I know, having had, at last count, 310 constituents come through my electorate office in Kelston over a period of a year, that it is a big issue for people out there—63 percent of the 310 constituents who came through my office in a year had Work and Income and, in many cases, housing as well, as their primary issue for coming for support.

That is just one area. That is just the principles that we have concerns about. But also there is a mismatch between the operation of the welfare system and the proposed principle of ensuring the best possible outcome for beneficiaries. So by writing that into the principles—but then, on the other hand, with the Minister not committing the ministry to tracking employment outcomes, how can the Government possibly say that the principle is to achieve the best possible outcome for the actual client? All we see, on this side of the House, is that that Government sees the desirable outcome as being only about going off benefit, not about going on to something better. So that is a concern.

There are some changes in here that are not about a rewrite. They are completely different policy areas, including the shift from an emergency unemployment benefit to an exceptional circumstances benefit. It is not just changing the title of that benefit’s name; it is changing the expectations too, in terms of imposing work obligations on to those people who go to access that type of benefit. So it is not a straight switch of title. There are actually obligations that come with that change in name, and with that new benefit.

So we are really disappointed, on this side of the House, that this is not the straightforward, policy-neutral social security legislation rewrite that we were promised. I am disappointed, and I am sure there are others in the House who are disappointed, that all we can see is another sneaky move by the National Government to try to make changes under the guise of something that we on this side of the House had all supported, but now have to question. We are questioning the motives of the Minister and the motives of the National Government in terms of what they are proposing here. As I said from the get-go, we will support this only because we do support having a rewrite of the legislation to bring it into line, to make it consistent, to make it transparent, and to tidy it up. We will support its referral to the select committee, but we will not support the National Government’s hidden agenda around this. We will want the time necessary to make sure we can analyse this—

Mr DEPUTY SPEAKER: I am sorry to interrupt the member, but her time has expired.

Hon CHRISTOPHER FINLAYSON (Attorney-General): On a day when we should all be rejoicing, what a negative and mealy-mouthed contribution from Carmel Sepuloni. I was expecting much better from her than nothing more than pettifogging criticisms of what is, in the words of David Clark, the most significant rewrite in 50 years. It is timely that we have this rewrite, because the Social Security Act 1964 is a shambles. It is unintelligible. It requires legions of lawyers in the Ministry of Social Development to go like soothsayers through the legislation and its amendments to try to discern its meaning. The public do not know what it means, in a critically important area of law, and that is why we are doing it. It is something that has been commended to this House by retired Supreme Court judges, by the Law Commission, and by academics on many occasions.

It is a tribute to this excellent Minister for Social Development and her wonderful team of lawyers at the ministry, and the great team at the Parliamentary Counsel Office, that we have reached this stage. So instead of mindless criticism from Carmel Sepuloni, we in this House should be rejoicing. We should be supporting the rewrite of legislation, across all fields, that is out of date, because it is the fundamental right of the citizen to know what his or her obligations or rights are in legislation.

We can do revisions under the Legislation Act 2012, and I will shortly be bringing to the House a very interesting revision. But this is not a simple revision. This is, if you like, a revision-plus. There are a couple of matters that were required to be included to bring the legislation up to date, and this bill is an example of the kind of work this House should be undertaking.

Lest anyone think that the rewriting of legislation is some kind of cold, arid exercise, it actually goes to the heart of a parliamentary democracy. A senior English judge once analysed the rule of law in eight sub-rules. One of his sub-rules was that the law must be accessible and, so far as possible, intelligible, clear, and predictable. A very wise person who served this House for many, many years, the former Chief Parliamentary Counsel, the late George Tanner QC, once said: “A state in which people cannot plainly understand the laws might as well be a lawless state.” So here we are.

It is a great day for Parliament that we are dealing with this legislation to introduce what could be called a plain English approach to complex and often convoluted legislation. Too much of our legislation is wordy and hard to understand. Mind you, it is going to take a lot to beat this real shocker from the United Kingdom, contained in the Banking Act 1979 Appeals Procedure (England and Wales) Regulations 1979, which says: “Any reference in these regulations to a regulation is a reference to a regulation contained in these regulations.” I mean, that is exactly the sort of rubbish that all too often is put in the statute book. It means nothing, and therefore one has to employ lawyers to interpret that kind of garbage and, although I am very much in favour of lawyers getting a fair share of the fees, I think that that kind of reference is simply nonsense.

So my congratulations go to Mrs Tolley, an outstanding Minister for Social Development, who has done such a wonderful job of pushing this legislation reform through. There are no votes in it, but it is extremely important to maintain the structure of our legislation and, if necessary, undertake a leviathan rewrite. Mrs Tolley has done what many, many Ministers in the past have failed to do. She has grasped the nettle, and I am so very, very proud of her.

The second matter I want to just refer to is my section 7 report. Mrs Tolley did say, and it was a fair enough point, that the provisions relating to blind people—the totally blind—have been included in the legislation from time immemorial, but when we did the rewrite it was an opportunity to go through the legislation, even though it is a rewrite, and say: “Well, let’s just kick the tyres, in Bill of Rights terms, to see that nothing breaches the Bill of Rights.” There was this issue that arose, and I hope the select committee will take a look at it and perhaps give the House an opinion.

Clause 33 deals with the supported living payment on the grounds of restricted work capacity or total blindness, and sets out the requirements. I also refer honourable members to schedule 4 on the rate of benefits and, particularly, to Part 3 of that schedule, which deals with the supported living payment. Clause 1(e) of that part sets out the payments to a beneficiary, but, further on, clause 1 says: “in computing the income of any beneficiary receiving a supported living payment under section 33 for the purpose of this schedule, MSD must—(a) disregard that part of the beneficiary’s income (not exceeding $20 a week) earned by the beneficiary’s own efforts; and (b) disregard all of the income of a totally blind beneficiary earned by the beneficiary’s own efforts.”

So on the face of it there would appear to be an issue that engages the New Zealand Bill of Rights Act substantively. It may be understandable, but in New Zealand Bill of Rights Act terms there does appear to be a discrimination between various classes of groups suffering from a disability. Individuals who are totally blind are eligible for certain entitlements that people with other disabilities are not entitled to, so that is why I reached the conclusion that the distinction materially disadvantages people with disabilities other than total blindness. So that is the reason why the section 7 report was produced, although it was produced in the knowledge that the provisions have been in the social security legislation for quite some time.

I hope that there will be other examples of rewrites in the months and years to come. Both parties have done it in Government. In the Labour Government, Mrs King, when she was the Minister of Justice, kicked off the reform of the Limitation Act. That was a piece of legislation that was so lousy that the Court of Appeal was saying: “We can’t do anything with this legislation. It’s beyond repair so far as the judges are concerned. There needs to be work done.” That is why Mrs King, when she was the Minister of Justice, got on with reforming it and got the Law Commission to look at it, and the result is we have a Limitation Act that is now fit for purpose. So these things do matter.

Keeping our legislation up to date should not be the cause of that biting negativism - type speech that we heard from Carmel Sepuloni. We as parliamentarians should be very pleased this sort of thing has happened. As I said, law commissioners have told us to do it, judges have told us to do it, and now we are actually doing it—the first rewrite of social security legislation in 50 years. I have no doubt at all, given the gruesome smile by the Green MP sitting down the back, that we are about to endure another negative speech on the subject. But I say to her, as I say to all in the House, in the immortal words of Mrs Thatcher: “Rejoice, rejoice. This is indeed a great day.”

PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe, Mr Deputy Speaker. I rise to take a call on the Social Security Legislation Rewrite Bill in its first reading. The member who has just resumed his chair, Christopher Finlayson, likes to quote leaders from around the world. I want to bring one right back here into Aotearoa. Meri Ngāroto is famed for having said “He aha te mea nui o tēnei ao, māku e kī atu he tangata, he tangata, he tangata!”.

[What is the most important thing in this world? I say it is people, people, and people indeed!]

I have already mentioned in this House that at one point in time, in a former life, I was a case manager. In fact, I was a case manager at Work and Income as it went through a rebranding process, and the rebranding process plastered Meri Ngāroto’s phrase all across the walls, right across the country. The intent of that was to put people at the forefront of what we did, to put people at the forefront of the services we provided to them as they came in off the street or as they came in out of their homes to seek much-needed assistance, because, let us be very clear: people actually do not want to come into Work and Income if they do not have to. We know that it is a safety net.

In 1964 a bit of a groundbreaking piece of legislation, really, was passed to make sure that those who do need that assistance are able to get it. If I can cast the minds of this House back to 1964—just very briefly, for somebody like myself who was not even born in the 1960s, but this will be familiar to many of the members on the other side of the House. In June 1964 the Beatles arrived in New Zealand—something a little bit interesting. On 30 May 1964 the Marsden Point oil refinery plant was opened after several years of construction. There were so many things that happened in those times—exciting times—but we do acknowledge and we support the fact that a rewrite is required in modern times, a rewrite that will allow more accessibility and a clearer understanding for those who are affected by this particular piece of legislation. We want to see that that information is available to them so that they are able to understand exactly what they are eligible for. But, more important—I have mentioned those who need to receive the services. Just as important, I want to remember, are those case managers who are there and have to carry out the new policy directions—despite the assertions of this Government—in some of the rewrite that is in front of us today.

We do have some concerns on this side of the House. We are supporting this bill. Let me be clear—I will say that again—we are supporting the Social Security Legislation Rewrite Bill, but we do have some serious concerns. My colleague here, Carmel Sepuloni, mentioned—despite the assertions of this Government that it is a policy-neutral piece of legislation—that this is about modernising what is, essentially, old legislation. We on this side, after having read through many of the proposed changes—and there are many—would argue that, in fact, some of the changes go a little bit too far. They are not as neutral as the Government is asserting. We would argue, on this side of the House, that in following true democratic process we will be here to make sure that we hold this Government to account. We are here to read through these things to make sure that (1), yes, people are put at the forefront of all policy decision-making around social welfare and that (2) things are clearly accessible, coherent, and easily understood by those who are (1) affected by the piece of legislation and (2) those who are asked to carry out this piece of legislation. Also, we will be here to challenge any part where we think there is a bit of a hidden agenda.

One of those parts I want to talk to is the introduction of a new power to make regulations specifying groups of beneficiaries whose benefit instalments can be redirected without their consent. Redirected without their consent—I wonder how that might impact on the individual’s rights. We know, as MPs in Tāmaki-makau-rau—my colleagues here on this side of the House—that for many of those Work and Income clients who do come into our offices, quite often it is admitted by Work and Income that “Sorry, it was an administration error.” or “We are really sorry about that. We were under the impression that we could redirect these.” Although that is something that can be sorted with the case manager, one of the fears I have is that if you take $20 out of a person’s benefit, where does that leave them? In even more hardship. It takes kai off the table. It takes away some of the things that we would like to think our families can provide for our tamariki and for our mokopuna.

Redirecting $5 is a huge difference, and I would argue in this House that redirecting $2 is a huge difference. To just simply redirect money without the consent of a client or those most vulnerable in our community is going to make a huge impact—I say that again: a huge impact—because the assertions by this Government are that it is policy-neutral, that there is not going to be significant impact, and that, if anything, it is going to make things a lot easier. I would argue that it will not. That particular case is a very clear example of how things will not get easier for those families who are affected by decisions like this, decisions that simply redirect their money to other places. What does that do? I reiterate, it takes money away from the families who need it.

We support this bill. We are always keen on seeing sensible legislation pass through this House—sensible legislation that makes things easier. I wonder, though—speaking from experience of the SWIFTT benefit payment system. SWIFTT is an acronym for Social Welfare Information for Tomorrow Today, which was groundbreaking stuff back in the 1980s and 1990s when they introduced it. However, because of that piece of technology and the assertions by this Government that it will make things easy in terms of the technology, I would argue that that is actually not the case, because the benefit payment system—and I have worked with this benefit payment system. I have spoken to many of the case managers who are currently working at the front line today, and they say that the benefit payment system is so hard-wired that any flexibility is stripped from it. I understand why it has to be that way, because you are dealing with billions of dollars. You are dealing with payments to beneficiaries, to—

Carmel Sepuloni: Superannuitants.

PEENI HENARE: —superannuitants, and to those who need these services. The Government is telling us that it is going to make things easier in the technological space, and I am going to argue that it will not, simply because the benefit payment system does not allow that.

What, then, should we be doing to make things easier? We have already mentioned some of those things: do not redirect payment without people’s consent, and make things clearly understood by the clients and those who go in to receive those services. Although we acknowledge that this rewrite will do some of that, we still maintain that there is another policy agenda here, and we are going to be making sure that as this bill passes through its first reading in the House—with our support today—we will be holding this Government to account. We will be making sure that all of those who are impacted on by these types of omnibus bills, as I like to say—even though this is a big piece of work, we have seen it time and time again in this House that omnibus bills come in and the devil is in the detail. We know that, yet time frames are being circumvented—time frames are being circumvented—so that we can push these things through. It does not allow the public and those who are affected by these types of legislative changes to come in and make sure that they clearly understand what is being proposed here and that they have a say on what is going to affect them. We on this side of the House will be sure to make sure that this Government is held to account as this bill progresses.

In conclusion, I started with the proverb from Meri Ngāroto—“he tangata, he tangata, he tangata!”—and I want to return that way. I want to make sure that it is people at the forefront of these decisions. Although I am all for making legislation such as this—in particular, large pieces of legislation like this one, the social security legislation—easier, more understandable, and more accessible, we will be here to make sure that it serves the people it says it will. He tangata, he tangata, he tangata. Kia ora.

ALFRED NGARO (National): I rise to take a call on the Social Security Legislation Rewrite Bill in its first reading, and firstly I do want to commend the Minister for Social Development. As has been mentioned by the Hon Chris Finlayson, for over 50 years this legislation has been in existence, and over that period of time I imagine there have been a number of opportunities for there to be a rewrite to address the inconsistencies and the lack of clarity that are in the legislation, and yet people have passed this by. Possibly it has been a bridge too far, in the too-hard basket, or maybe too difficult or too complex, and yet this Minister has taken the courage of her convictions to believe that it is an important piece of legislation that does need to be rewritten.

It is important that this be taken on board in the context of not just a rewrite in other areas, such as the Children, Young Persons, and Their Families Act, but also an overhaul of the system. Many people have talked about the system, of its need and of its concern, but, at the same time, talk is cheap but action actually is what counts. That is what our communities look for. This piece of legislation is a piece of action, not just talk, although there have been a number of conversations that have been taken part in. This bill is an important part. It is “a technical revision or consolidation of existing legislation” and improves clarity and, especially, the ability for others to be able to navigate the legislation, whether they be in the legal fraternity or others who are there as advocates. It is important that there is clarity and the ability to be able to work through the system, as well. But most of all the bill as a whole, in its majority—there are parts that do, as has been mentioned by the previous speaker, Peeni Henare—“does not change the effect of [the] existing law.” I think that is important to point out.

I just want to talk about a few things. I may not talk about the Beatles, because, like the previous member, I was not even a twinkle in the eye at the time of 1964, but the intent of the legislation as it was written at that time was clearly to provide for those in need. It is one aspect of our law that I am sure that all New Zealanders would say that they are proud of. Why? Because it makes provision for those who are in need. For those in undue circumstances, they need the support of the State to provide a form of protection and provision for them at that time.

In some particular areas I want to give some examples of reasons for that rewrite, in particular of the Social Security Act. If we talk about income assessment, Work and Income case managers carry out close to 1 million transactions relating to income in a year. Nearly half of those relate to income received in the previous pay period. Changing the rules around how income is recorded and assessed could save huge time, and also resources, for beneficiaries and also staff. Another example is calculating the stand downs. Complicated income calculations are required to assess whether a beneficiary will have a 1- or 2- week stand-down period before getting a benefit payment. Onerous processes are required for every application when only 3 percent of beneficiaries will actually have a 2-week stand-down applied to them.

The last example I would like to give is the use of letters. More than 6 million letters were sent out in the past year to beneficiaries and superannuitants at a cost of more than $3 million. The Electronic Transactions Act 2002 already enables information that is required by statute to be provided in writing to be delivered electronically, ensuring the Act is permissive across a full range of communication methods. These are just three examples of how this bill will reform and modernise what we believe is the Social Security Act 1964.

We have heard of different examples of those in the sector. I know that there has been other commentary about wider consultation. The fact is that there have been a number of consultations with the sector and with key stakeholders. I think it is quite critically important when we go into this to hear from those commentators. I would like to quote from one organisation in particular that has been quoted. It is not commonly an organisation that we on the other side here would quote from, but this is from Auckland Action Against Poverty, which did make a statement on 4 November 2015. This is taken from the statement that it made: “Government is due to introduce a rewrite of the Social Security Act into Parliament next month …“MSD should focus on supporting unemployed people into decent work rather than cutting the benefits of sole parents …”, and “This is a golden opportunity for National to reconsider the entire thrust of its”—in Auckland Action Against Poverty’s words—“punitive and pointless welfare strategy.” But even in that form, there is obviously unanimous agreement that there is a need for the rewrite.

I also want to quote from an article written by Kate Newton, “Major welfare changes not planned”. She quotes from the law lecturer Māmari Stephens, who said that an overhaul of social security is long overdue: “Ms Stephens said the current legislation was messy, but that should not be used as a chance to reform social welfare by stealth. ‘I know how difficult it is to understand and I can see how difficult it is to navigate … so part of me thinks it’s a fantastic opportunity to come up with a piece of legislation that works a lot better than the current one does’ ”—in her own words. So I think that is quite important as well.

We have heard from Minister Tolley herself, who actually said that—I mean, previously, in 1964, in June, there were 135 sections to that legislation. There are now 491 sections, 187 have been repealed, and only four remain unchanged. That is a huge amount of change in this piece of legislation, and that goes to the heart of proving why this legislation is important.

I want to conclude my remarks just on a couple of remarks that have been made by Mr Peeni Henare, especially in regard to, I suppose, the aspect of redirecting from those who are clients who come into the system and the question of whether this is a just cause and action that should be taken. I would like to just remind the member that this is actually what currently happens at the moment anyway, in certain circumstances, for that. So the bill makes it clear that the exceptional circumstances benefit is to be paid at the rate of a main benefit. Rates of New Zealand superannuation are higher than the main benefit levels, and are linked to average wage levels. People have to live here for only 10 years to qualify at the age of 65. It was never intended that a person who does not qualify for the New Zealand superannuation would get a benefit paid at the same rate as people who qualify for it. The bill makes that clear.

So what we are talking about are minor changes. They are not changes that we would say would constitute—and I am sure that that would raise the interest of the Attorney-General—a breach of any form of human rights at all. I know that the concerns that have been raised have talked about this, but we believe that this not only complies with current human rights, but it is also appropriate as well.

As the chairperson of the Social Services Committee, I look forward to the bill coming to our select committee. I look forward to opening the committee up for submissions and to hearing a further expression of both concerns and issues but also to opportunities for this bill to truly make a difference to the lives of the families whom we serve—and especially through the department as well—for which this legislation has been intended. I commend this bill, in its first reading, to the House.

JAN LOGIE (Green): The Green Party will not be able to support this bill. We absolutely supported the need for a rewrite, and we may have been able to support a completely policy-neutral rewrite of this legislation.

When we were considering previous welfare reforms passed through this House, I remembered the submission from the Legislation Advisory Committee complaining about the state of the legislation, noting that since it had been introduced in 1964 it had been amended—this was in 2012—131 times, that there had been 54 new sections added, and that the Act as it existed included over 50 points of discretion. Nobody would argue—and I have not heard anybody arguing in this House—that there was not a need for a simplification to make sure that the legislation that applies to some of the poorest people in this country and protects their ability to put food on the table on a good day should be simple and easy to follow. Nobody is arguing against that.

What we are upset about with this legislation, though, is that the Government has taken this shared concern and used it as an opportunity to entrench its world view and its policies and attitudes towards welfare—which were not in legislation—and has them put into the legislation, and it has gone even further and applied some of its sanction regimes to people who were not covered by them previously. That, to us, is actually a bit of an abuse of the process, and it is a shame because people in New Zealand deserve better than that.

I do want to put on the record that we oppose the entrenching of the current practice for several reasons. One is we believe it is punitive, and the second core reason is that it is not working. Actually, unemployment is not going down at the rate that labour force participation is going up by. Under previous legislation, without sanctions and without this punitive approach, unemployment went down at a much faster rate as labour force participation went up. So the approach is just not working, and people are suffering.

We had the news last week about 161,000 people who have potentially been sanctioned since these new regimes were introduced. That is probably over 100,000 children living in households that had their already below-poverty-line incomes cut, with a result of not actually changing the unemployment figures to the extent that we would have expected to happen naturally. So this is an approach that is not working, and the Government has taken the opportunity to extend that failed approach under the auspices of simplifying the Act, which was something that we absolutely supported.

I want to speak to some of the specifics in this because I am aware that this is actually quite a large piece of legislation and I do want people who are affected by this legislation, or might have a need for this legislation in the future, to be able to have an input on it. So far, I have not heard all of the provisions in it mentioned by anyone yet, so I would like to outline some of our concerns, to give people a point to consider for themselves and, hopefully, submit on the bill. I would also say that we will be supporting the amendment to extend the consideration period, rather than having the 2-month, shortened period that Minister Tolley has offered, to support people doing that and participating in this process.

One of the things we oppose is that this will entrench in legislation—where it does not exist in legislation at the moment—the investment approach, changing the purpose statement of the bill. The regulatory impact statement noted that a point for doing this is to avoid accusations of discrimination—to head off any legal challenge on the basis of discrimination is the justification for putting this in the purpose of the Act. Sadly, in this House I have become quite familiar with the Government justifying discrimination and saying: “Well, you know, it’ll have a short-term pay-off for us in terms of our welfare payments. We think it’s justified.” The Green Party is never going to support that view, and we do not support putting an investment approach into the purpose of this Act when its reason is to head off any legal challenge on the basis of discrimination.

We also want to point out that this investment approach is, at the moment, highly critiqued and people are not exactly sure what it means. There are some concerns that what it means is that the Government can provide services to a group of people whom it thinks will get off the benefit quicker, whereas those services will not be available to people who will not be in a position to go into a paid workforce. The Government is really denying some people services on the basis that they may not be able to enter the workforce.

Then we have this situation, with this legislation in front of the House at the moment, of punitive services being provided as an investment in one group of people, as well. That has a real potential to actually heighten stigma and entrench discrimination as it exists at the moment. This kind of provision has the opportunity to actually give more support for those kinds of policies, and that is definitely not something that we would want to see. I note a kind of, I think, very measured concern in relation to the investment approach from Bill Rosenberg from the Council of Trade Unions. Critiquing the investment approach, he said: “It is better viewed as a one-dimensional performance indicator rather than a systemic approach to policy and evaluation.” So this is a highly debated approach that the Government has, and we are not ready to see it in legislation.

I also want to raise the point that has been raised already that the bill formalises a new power to make regulations for benefit redirections without the beneficiary’s consent. Currently, 80 to 85 percent of beneficiaries who are tenanted in Housing New Zealand properties have a benefit redirection in place, and community housing providers have had this ability since 2014, but case managers use their discretion to decide whether to do a redirection or not. A mandatory redirection can leave families without enough to meet essential expenses and no individual discretion to meet those challenges. Given that benefits are often not enough to survive on as it is, this will make things harder for those who are struggling.

There will be changes to the emergency benefit, which will be renamed the exceptional circumstances benefit and will require work testing and open people up to sanctions. That is not appropriate, and that is a significant change in policy and an extension of the Government’s work-test regime.

There is also another policy in here that will require people accessing the unsupported child’s benefit to use it for the benefit of the child, and that will be put into legislation. In the regulatory impact statement that is justified by saying it is to empower Work and Income staff to discuss with carers issues that fall below the threshold for Child, Youth and Family involvement. It is trying to make Work and Income staff—who are already underpaid and under-resourced—social workers. They are not social workers and they should never be empowered to be taking a social work role, particularly when it is in relation to people being able to get their money and being able to feed themselves.

The bill will also enable both parents, when they are in a split-custody situation, to be able to get the sole parent’s allowance. There is something potentially positive about that. That is when parents have one child each, and that has been decided through the courts, potentially, or separately. But there is also the potential for this to be a perverse incentive for parents, when breaking up, to split the children into each parent’s care so that both parents can get a certain amount of money. I doubt anyone in this House would want to see that eventuate. When people are living below the poverty line you could not blame them for that, but that is not at all going to be for the benefit of those kids.

The bill will also remove the requirement for notices to be sent by letter. Although we totally support the reduction of paper use, we need to ensure that people get these notices because it can affect their ability to feed themselves. We cannot support this bill.

DARROCH BALL (NZ First): It is a pleasure to rise on behalf of New Zealand First to speak on the Social Security Legislation Rewrite Bill. Before I do, I would just like to take a second to acknowledge the life and work of the pioneer of modern social work in New Zealand and former Palmerston North City Council councillor, Merv Hancock, who passed away on Saturday. He was the first president of the New Zealand Association of Social Workers, and he was appointed to run the first New Zealand undergraduate degree in social work. He truly made and will make a difference across many generations and future generations.

New Zealand First will be supporting this bill’s referral through to the select committee, but we do have some reservations. We do support the fact that, as the Minister for Social Development and other members mentioned, the legislation has been full of amendments for 50 years. There is an intent to clarify the legislation for ease of reading, which New Zealand First supports, and, obviously, there is an aim to improve the administration of the legislation. I would like to actually mention I agreed with Carmel Sepuloni when she said this was a promised rewrite, not policy changes, and that is exactly what has happened here. Although the Minister has said they are somewhat small changes, they will have effects. New Zealand First, although we do agree with most of the small changes the Minister spoke about, would like to see, through the select committee process, submissions and evidence to go with it.

We do have one large concern, and it has been mentioned by both Labour and the Greens also. All you need to really do is look into the regulatory impact statement to see how it actually stands out in regards to the writing of the policy proposals in this bill. Under the policy proposals—there are five of them. If you take four of them, you are looking at the removal of an unused provision, and it states there are no changes provided; another one is about the enabling of redirections to be applied to certain groups, where, again there are no changes to the support; merging the orphans and unsupported child’s benefit, where we are talking about a name change; and renaming the emergency benefit as the exceptional circumstances benefit. Those are four of them. Then the other one you have got is including support for an investment approach in the actual purpose of the legislation.

Those are two very distinct and different things. You are talking about small, practical changes that the Minister was talking about—small changes. But that is versus the inclusion of the investment approach in the purpose of the legislation, which is, actually, the overarching National philosophy in the umbrella—that is the purpose. What that means is that every piece of legislation in the social security legislation and every decision, every deduction, and every inference has to be tied back to the investment approach. The question is what the investment approach is. When it boils down to it, it is, first and foremost, National mantra and philosophy and modus operandi. But it is also about data collection, predictive modelling, and targeting of people who are at high risk of becoming a liability to the State. That is about the financial liability to the State. That is what National wants to put into the overarching purpose of this legislation.

What that states is that it is all about the financial approach, and it is about numbers and not about need. In theory, really, it works quite well in business, but not when you are dealing with people. This is a country; not a business. We are dealing with people; we are not dealing with stock and we are not dealing with money. But, given that is the National stance and pathway into the social services legislation rewrite, you would assume—hopefully, quite rightly—that if it is being put into the purpose that National would know that it will work. But it is actually the contrary to that. Not only do we have evidence that it does not work, which the Government itself comes up with, but we actually have international evidence that the investment approach does not work.

Going back to the regulatory impact statement, I would like to highlight the fact that the investment approach is actually not a small change. Putting it into the purpose of the Act is not a small change. The Supreme Court has said “Even if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross checked against purpose in order to observe the dual requirements …”. That is not the minor change that the Minister spoke about. In fact, I would like it highlighted that the Minister did not even talk about the investment approach being included in the purpose of the Act in her entire first speech. The regulatory impact statement also goes on to state, in the very first sentence of its definition in supporting the investment approach, that it “applies a long-term liability perspective to the cost of the benefit system.” It talks about client outcomes and overall liability. Again, as I mentioned, it is about the financial liability to the State, and it is a new approach to welfare that is not well-supported in the current wording of the bill. It is not supported in the current wording of the bill because this is new and it is a social experiment that National wants to put into legislation.

The regulatory impact statement talks about the key building blocks. A few of them, which I will mention, talk about the actuarial evaluation, which, I must mention, has not been done yet, especially in regards to the Child, Youth and Family overhaul, and identifying “clients who we should focus on based on how long they might stay on a benefit …”. It is based on how long they might stay on a benefit. That is written in the regulatory impact statement. Why is it not based on the need of the individual? Why is it based on how long they may stay on the benefit? It talks about the fact that it is actually trialling new approaches and seeing what works best. National is still trialling new approaches to see what works best. It does not know whether the investment approach actually works or not.

Then it starts talking about the goals and how it measures them. It goes back to talk about the Better Public Services target that this Government implemented in 2012 and has not yet evaluated. It has not had an independent review or evaluation of the Better Public Services targets since their inception. The Government made the target, it reviewed the target itself, it changed the target itself, and then Government members come out to the House and to the public and say how well they are doing. The Government tests it, itself. Obviously, that is not a good position to be in.

It was highlighted not too long ago by the Salvation Army, actually, when it talked about moving targets—Moving Targets was the actual title of its annual report. It said the title is: “an allusion to the way in which some government agencies appear to be using targets and the numbers behind them in a less than straightforward and reliable manner. … While the targets may not change with such practices, the meaning behind them can.” It is not actually “mindless criticism”, like the Hon Christopher Finlayson said, but there are very reputable organisations that have evidence that it is not working. When it boils down to it, this is a social experiment currently being run by the National Government.

Let us look at some of the international research and what the Government says itself in regard to data collection, because if we are talking about the investment approach, we are talking about what the targets have been measured with and we are talking about the data that needs to be collected to maintain those targets. Statistics New Zealand, on the Government’s website itself, says that “Some of the methods used are exploratory, so results are indicative only, and not accurate estimates or forecasts of the outcomes and costs that will be incurred in the future.” This is from the Government’s own website.

Statistics New Zealand is talking about Social Investment Insights. “The scope of the data is limited by the information collected in agencies’ administrative systems, … data provides only a partial picture of childhood adversity, service use, and service costs.” This is information that the Government has available to it, and it is still making the decision to put this in the entire purpose of the Act so that every piece of law that has been implemented in regard to social services has to rely on that purpose, but the Government does not even know whether it works in the first place.

I would just like to finish by quoting some international research on the investment approach and data collection. Stanford Social Innovation Review says: “Beyond the infrastructural impediments that social sector users of big data face, data itself can be a problem. Oftentimes, data are missing and incomplete, or stored in silos or in forms that are inaccessible to automated processing.” What it is saying is that even though the investment approach is based on data, the data is limited in itself—the data is limited in itself. You run the chance of focusing on the data that you have and ignoring the data that you do not have. You would be focusing on the victims and not on the situation that they are in and what caused them to be victims in the first place.

We will be supporting this bill through the first reading to the select committee, but we have massive reservations. Hopefully, those questions can be answered and the concerns can be mitigated later on through the process. Thank you.

JONO NAYLOR (National): I too just want to pause at the beginning of my contribution on this bill to acknowledge Merv Hancock QSO. Merv, as has been said, was a city councillor in Palmerston North, but is most widely known across New Zealand as the pioneer of modern social work. He was instrumental in setting up the Bachelor of Social Work degree at Massey University in 1975, and beyond that throughout the community of Palmerston North he was also instrumental in establishing Methodist Social Services, Birthright, Marriage Guidance, Parents Centres, the National Society on Alcohol and Drug Dependence, and many, many others.

There was, I think, something about the man, who was incredibly humble and incredibly approachable. I know he was always prepared to give me some wise advice from time to time, but his humility was incredible, and, in fact, when the community house was named after him in Palmerston North, I remember taking a considerable amount of time to actually have to talk him into it. He was a great man who will be well remembered for many years to come. Ā, ki tōku hoa, haere, haere, haere atu rā!

[And so, to my friend, depart, farewell, and journey on.]

This Social Security Legislation Rewrite Bill is a pretty substantial kind of a document, considering all 700 pages of it are sitting in front of me. I have not had the chance to read all of it just yet. Is it 700 pages? Oh, it is 446 pages, sorry. I have not had the chance to read it all yet. I am looking forward to it, as we go through it. If this is the simplified version, you can only be quite grateful that we are simplifying it down from what we did have before. We have had a number of speakers talk about the gazillion different versions there have been, and amendments over time, so it is important for us to do. A rewrite was clearly needed and on the cards, and so that is what has been done.

In my brief contribution, I just want to pick up on a couple of the provisions that have been highlighted, at least in the Bills Digest, if not from me being able to digest the whole bill, as such, yet. In particular, I want to focus, firstly, on the renaming of the emergency benefit to the exceptional circumstances benefit. Although people ask what is in words, I think there is something incredibly important about that, because if you find yourself in exceptional circumstances and you start to become accustomed, unfortunately, to those exceptional circumstances, you may not see it as an emergency. I think it is really important that for those people who are desperately—sorry, Mr Assistant Speaker, I do not mean to refer to you. If people were to find themselves in exceptional circumstances, we want to make sure that we can break down some of those barriers for them to be able to access the things they are entitled to. I think this is a really good initiative. Just that little tweak of a word is, I think, clearly really, really important.

I do want to touch on how the last couple of speakers have been very critical of the investment approach, which is, again, one of the underlying principles that is going into this rewrite of the social security legislation. I find it quite bizarre there has been this opposition to an investment approach, because if you look at the fact that 18 and 19-year-olds—what we know is that when somebody under the age of 20 is going on a benefit in New Zealand, the average time, at the moment, that they can expect to be on that benefit is 13 years. I do not know about you, but I reckon it is worth investing in some of those young people, and not just simply so the taxpayers can save some money over time by not paying them benefits for 13 years. Let us actually invest in them to ensure that they get the best possible outcomes.

We have seen that with the young person’s benefit, the young parents payment that is being paid, the work that is being done with the Youth Service, and investing in those young people—we are going to see some really good results over time. If we do not actually take that investment approach, we are clearly just going to say: “We’re just prepared to sit back and see what happens.”

These are some good principles that are involved in this bill. I am quite convinced we are going to see more positive things happen for people in New Zealand. It was overdue to get the Social Security Act rewritten, clearly. That is what has been done. I am looking forward to the bill coming to the select committee so we can discuss some of these things in greater detail, but at the first reading I am, clearly, happy to support it. I think we will see some great results in years to come. Thank you.

MARAMA DAVIDSON (Green): This is a rewrite of social security law. Māori are 35 percent of benefit recipients. Māori saw the biggest rise in unemployment across the whole country—a 2.2 percent increase in Māori unemployment, from 10.6 percent to 12.8 percent. I am standing as the spokesperson for Māori development in light of what this legislation means and how this impacts directly on Māori.

There is clear agreement from all of us in this House, I think, that the current law is an unwieldy mess and needs to be tightened up. It needs to be straightforward and clear—we absolutely agree. That should not at all be the excuse, therefore, to put through sneaky reforms, especially when it is going to impact mostly, and disproportionately, on Māori families and Māori babies. That is why I stand for the Green Party today very gladly and thankfully to say we are outright opposing this bill from the get-go.

I want to again highlight agency and the loss of it in this rewrite, with the redirection of benefits without consent. Immediately, I remember, actually, from 6 months ago, when I was not on an MP’s salary, what redirection does to a family. I know that personally. My redirection was not of a benefit, but it was because when you are struggling and making trade-offs between buying food, paying for the heaters to be able to be put on and for your hot water to stay on, and paying the rent, there is not a whole lot of choice there. If you do not have a say in trying to manage something in a really difficult situation, gosh, the stress is incredible. It happened to me. I know firsthand that this is not a good and sustainable way to manage and care for our people.

When that happens, when we are causing those most vulnerable to face even harsher situations, it has a cumulative impact. It makes things worse and worse and worse, and, as a country, that ends up falling upon all of us and particularly on our children. This law is far too important to sneak anything through that is driven by an agenda. Why should we not be clear that there is honesty in what the agendas are in rewriting this bill? That has not been proven to us by the National Government so far.

So, again, I have some really clear concerns, especially about the investment approach. It absolutely is narrow. The investment approach will unfairly profile those whom the Government thinks are liable and a risk. Why have none of the Government members bothered to mention the word “risk” when they are trying to celebrate the investment approach? Who is it going to impact on?

Sixty percent of children in care are Māori. Even just the fact that you have been in contact with Child, Youth and Family automatically gives you a bad mark against your name and assigns risk to you. This is going to unfairly impact on young Māori people, and of course I oppose that. This is actually profiling in action. This is totally profiling, and it does not take into account any of the wider indicators that need to be considered, at all. So I absolutely agree with my colleague Darroch Ball in raising clear concerns, not mindless opposition, about these very damaging approaches.

Again, we say the punitive approach—Māori unemployment has risen 2.2 percent—is not what we need here. We need a whole-of-system review that addresses the real problems with the law, but also this is a distraction. We do need good, clear law, but I do not want it to be used as a distraction from the underlying issues. It would be better to aim to not have to use this law at all in the future. I do not want this work programme to be taken as the work programme to address the wider social issues. That is what I am also concerned about in this rewrite.

Māori children—have I gone over time? Oh, I did not get a bell. Sorry, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Just to make it clear to the member, generally in a 5-minute call the bell does not ring. I did wave my finger at the member to give her a 1-minute warning.

JENNY SALESA (Labour—Manukau East): Thank you for this brief call on the Social Security Legislation Rewrite Bill. New Zealand has a proud history where we are usually forward-thinking about the social security of our citizens. New Zealand has led the world in instituting measures to ensure that there is a safety net, that every New Zealand family has a house or a home to call their own, that no one should starve or be forced into poverty, and that our children are healthy and well educated.

In practice, however, we are nowadays falling far behind other developed countries and our child poverty numbers continue to rise. This Government is failing some of our most vulnerable families and some of our most vulnerable children. This Government is ignoring the big and very real issues that everyday New Zealanders are facing each day—for instance, the housing crisis, particularly in Auckland and Christchurch; the ever-increasing rents; health cuts; a lack of jobs; low wages; and growing education costs, particularly for our parents. Safe, warm, dry homes are becoming scarce in parts of our community, including in South Auckland, where I am a member of Parliament. We are seeing people who are living in severely overcrowded conditions. They are living in garages, tents, and caravans.

Most of the time, as electorate MPs, we sit in our offices—in my case in Ōtara—and families walk through the door telling us that they are homeless, or that they are living in cars. They come in their minivans, sometimes. But last week I drove past a house on one of the roads in Ōtara, and I saw this tent pitched at the front. I stopped and I went and knocked on the door. But before I got to knocking on the door, as I walked past the tent I looked over and I could actually clearly see that there were four, or possibly five, beds set up in this tent. When I knocked on the door the mother answered the door, and I said: “I’m the local MP and I can see that you’re living in an overcrowded kind of condition. Can you just tell me how many people live in this household of yours?”. This mother said to me “17 people”—17.

People lived in the tent at the front. People lived in the garage. She had a caravan out the back, as well. People lived in the caravan. She said: “Look into this house. You will see that there are beds in the hallway.” Some of her children were even sleeping in the hallway. People are living in severely overcrowded conditions and living in—this is an example of just one house, where you saw all of these issues in the one household.

Our social security legislation, which we are discussing in this bill, has itself been admirable, but the Social Security Act of 1964, like many other Acts, is pretty old. It has been kept going and been subjected to patches and amendments. Until now it has been just limping along in a fragmented and confusing way. It is indeed time that this particular legislation was consolidated into a clear and accessible piece of legislation. We owe that to New Zealand.

But may I just talk about another example. Down the road from me in Māngere, a few weeks ago, they had what was called the Auckland Action Against Poverty beneficiary impact day in Māngere, which was an eye-opener. They had over a hundred benefit advocates who were there on hand to help struggling families get their benefits—get their full entitlements. Organisers reported that they were stunned by the size and the desperation of the crowd waiting for help. On the final day of this action, they had hundreds and hundreds of people lined up. Many of them had been lined up since before 7 a.m. that morning, but there were so many people that, unfortunately, they had to turn some of these families away.

Can I just end by saying that Labour supports this bill. However, we have major reservations. One of the things that we have reservations about is that we can see that the principles need to be altered. However, when we are looking at a bill like this one, where many families are actually looking at it—ultimately, they rely on this kind of help for the necessities of life—we as legislators must approach changing this kind of legislation with a lot of caution. Thank you very much.

Dr PARMJEET PARMAR (National): Thank you for the opportunity to speak on the first reading of the Social Security Legislation Rewrite Bill. The purpose of this bill is to rewrite the Social Security Act 1964, as implied by the name of this bill. This is intended to rewrite the legislation, which means to tidy it up, reorganise it, and make it simpler and clearer to understand. Why is this required? This is required because when the original Act was passed there were 135 sections in it, and now, bit by bit, it has grown to 491 sections. Most of the original sections have been amended, and some of those sections have been amended several times. With those changes and additions, the Act is very difficult to understand and very difficult to follow. It is a very important Act for the country, and if people are finding it difficult to understand, if people are finding it disjointed, it definitely needs attention. It needs fixing, and that is why we are rewriting this Act.

The main social security measures—that is, the main benefits and things related to the main benefits, which are the entitlement obligations and sanctions, assessment, and the right to appeal—will continue to be part of the primary legislation. A number of small policy changes are being included in this bill, and these changes are only to support modern service delivery and improve administrative efficiencies. The member from the Greens, Marama Davidson, used the words “sneaky reform”. This bill is not intended to reform the welfare system; it is just intended to rewrite the Social Security Act for the reasons that I have already spoken about. Yes, this is a rewrite, not a reform of the Act. It is rewriting the existing policy to make it clearer and easier to understand.

One thing I have noticed is that when people get used to one kind of document, any change will be confusing for them and it will take longer for them to understand the document. This bill is really good for new users, but for existing users it is, again, very good because it makes it clear when provisions continue existing policy. It also identifies the corresponding sections in the 1964 Act in each case, so that people can compare it, see where the changes are, and see what that section was in the original Act. Also, clause 9 is about any confusion that can come up about the meaning of a word, and for that this bill makes it clear that the old law—that is, the law as set out in the existing legislation—should be used to determine the meaning of that word. So this bill is good for new users, as it will make it simpler and clearer, and it is also good for existing users.

I look forward to working on this bill in the select committee process. I support this bill and commend this bill to the House. Thank you.

PHIL TWYFORD (Labour—Te Atatū): I am happy to be able to take a call in New Zealand Sign Language. [In New Zealand Sign Language.] It is my pleasure to take a call in this debate and to begin that call using one of New Zealand’s official languages, New Zealand Sign Language, in recognition that this week is the official week for New Zealand Sign Language.

It is also, I think, particularly appropriate in this debate to acknowledge the passing of Dr Merv Hancock, who, as colleagues earlier in this debate have noted, was a pioneer of the development of the social work profession in New Zealand. He founded the school of social work at Massey University in Palmerston North—he actually taught my wife when she did her social work degree at Massey—and he really did more, I think, than anybody else to develop the practice of family therapy in New Zealand. But what the previous speakers did not say is that Merv Hancock was a lifelong member of the Labour Party and, in fact, he stood as a Labour candidate in the 1972 election that swept Norman Kirk’s Labour Party to office in New Zealand. Merv missed the Horowhenua electorate by only 200 votes, so there we go. I want to pay tribute to Merv Hancock, and give my condolences on behalf of the Labour Party to the Hancock family.

There have been some interesting contributions in this debate so far, and those following it will know that Labour is supporting this bill, the Social Security Legislation Rewrite Bill, with reservations. I want to stress that we are supporting its referral to a select committee, but we do have reservations and we are somewhat disturbed by the attempt by the Government to push this bill through with a truncated period for review by the select committee. This is a big bill. It is a big and complex bill rewriting the principal Act for our social security system. It is not good enough for the Minister to come here today and propose that the bill should get only 4 months at the select committee when 6 months is the norm.

It is a large and complex bill, and I note that Government members have tried to argue that it is—I think the term that has been used is “policy-neutral”. Well, there have been enough contributions already in this debate, I think, to put to rest that notion. There is plenty of contention about the provisions of this bill, and we strongly believe that it needs the normal, 6-month period at the select committee so that it can have proper scrutiny by members of the committee and the officials, and, of course, public submissions.

It is a bit of a no-brainer that an Act that has been in place since 1964 and has had numerous amendments and changes over the years as the social security system has evolved and developed—I think it is a reasonable argument that the Act needs some streamlining and to be brought into the 21st century. We have got no problems with a rewrite exercise that is designed to bring clarity and consistency to the legislation. The principles of accessibility and cohesiveness that are included in the bill are great, but you do not have to get very far into this exercise to realise that there are significant substantive changes that are worthy of debate and detailed scrutiny.

The bill writes into the legislation the so-called social investment approach. On the face of it, Labour, and, I think, most people, would not have any problem with the professed intention of the social investment approach. Do we want to spend taxpayer dollars more wisely? Of course we do. Do we want to help the people who need it most—do we want to prioritise the provision of services and the spending of money? Of course we do. But what we observe about Bill English’s investment approach is that it is a little bit more about investment and a little bit less about the social side, and we would feel a lot more comfortable if it truly put people at the centre.

I think the inconsistency of this Government’s approach in relation to social investment can be seen in its stewardship of State housing, where it is proceeding to sell off billions of dollars’ worth of land and housing that is there for the purpose of putting a decent roof over people’s heads. It justifies it with the rhetoric of social investment, but actually the practice is something totally different, and what we witness is a running down of the State housing system and a selling-off of the resources, and the consequences of that are predictable: an explosion in visible homelessness all around the country. So forgive us for being sceptical about the intent in this bill to write into the legislation the so-called social investment approach, because, in fact, what we see is typical National small government and a winding back of the social development mandate of the Government, in the interests of actually just cutting spending.

Some other points that I wanted to make are that we currently see a real mismatch between the way that the welfare system currently operates and the principle in the bill about so-called best possible outcomes for beneficiaries. The problem here is that adequate data is simply not being collected on what the outcomes are. So the Government is out there in a very punitive and controlling way, chucking people off the benefit and incentivising staff to throw people off the benefit, but it is actually not tracking the employment outcomes. It is one thing to actually try to reduce welfare numbers by pushing people off the welfare rolls, but who knows what kind of life situation they are going to end up in? So unless the Government is actually serious about tracking employment outcomes, how are we in this House to take seriously the idea that the Act should be about best possible outcomes?

We support having a much stronger focus on promoting the welfare of children, but the failure in this bill of any serious attempt to assess the likely impact on children of the various changes that are made in this bill to benefits and payments to do with child policy really begs the question of whether this is just a rewrite—whether it is just a streamlining and just about modernising the legislation.

An additional concern we have is that this bill extends the ability of the Government to amend the regulations. It puts more extensive powers with the Government of the day to write regulations to put into practice the mandate of this bill. That raises real concerns about the potential lack of accountability and transparency in relation to this. It reduces the Government’s exposure to public feedback and scrutiny, and it is yet another thing that undermines our confidence that this is a policy-neutral rewrite simply designed to modernise the legislation.

We are worried about the changes to the emergency benefit. It is renamed the exceptional circumstances benefit through this bill, but on top of the name change there are actually some substantive changes as well that would allow the department to impose work obligations on people receiving the newly named exceptional circumstances benefit. There is a lot of good data that shows that fewer than 10 percent of the people who currently receive the emergency benefit are able to meet work obligations and, given the track record that this Government has of taking a punitive and controlling approach to the administration of the system of social development, that rings alarm bells for us.

We recognise the need to update this legislation. We are supporting this bill, with reservations, to go to the select committee. We are going to be voting for and supporting the amendment that Carmel Sepuloni has put on the table, which would extend the time that this bill is at the select committee by 2 months, on top of the regulation 6 months. It is indefensible that the Minister is proposing that a bill as large and complex and important as this is pushed through with a truncated time frame at the select committee.

MAUREEN PUGH (National): It is my pleasure to rise and speak in support of this, the Social Security Legislation Rewrite Bill. One of the four key priorities this Government has set is to deliver better public services. In order to deliver better public services, the legislation needs to be clear and easy to interpret and easy to deliver on. In its current confusing and patched state, the legislation is a long way from being fit for purpose. After more than 50 years of tinkering, amending, and repealing, the Social Security Act 1964 needs a significant tidy-up.

Why, some may ask—why? The Act as it currently stands contains 491 sections, which has grown from the original 135 sections when first passed. Only four of those sections remain unchanged. Over time, 187 sections of the Act have been amended. Some have been amended multiple times and, as we have heard today, one of them nearly 300 times. The Act also needs to recognise the modern living environment and the working environment and allow for different methods of communication, not just paper-based methods as it does now. The changes proposed by this bill mean that it will be more comprehensive and easier for everyone to understand.

This Government has rolled up its sleeves and is facing this rewrite head-on, after it being in the too-hard basket for far too long. I congratulate Minister Anne Tolley on not shying away from hard work and rolling her sleeves up and getting on with the work.

Minor changes will see some similar benefits merging under one heading, such as the orphan’s benefit combining with the unsupported child’s benefit to be called the supported child’s payment. Some benefits will have a change of title, and other Acts will be repealed and replaced by this bill, such as the Social Welfare (Reciprocity Agreements, and New Zealand Artificial Limb Service) Act 1990. Another change will allow for both parents to apply for sole parent support in cases of split care. When a couple separates and each parent is the main carer for at least one child from that relationship, both parents are sole parents, but, currently, only one of them can claim sole parent support. The changes set out in the bill mean that both parents will be treated the same.

There is no doubt that this is a huge piece of work, but it is one that we are keen to undertake. I am confused, however, about some of the comments today that consider some of the aspects of this bill as being sneaky, when every word is to be dissected, debated, and consulted on in a public forum. This Government is committed to openness and transparency and to investing in those who find themselves in need of social support. As a member of the Social Services Committee, I look forward to taking this bill through the select committee stage.

This is what I liken to good housekeeping. All of us know what it is like when you work at your desk for a long period of time. You accumulate papers and you accumulate files, books, business cards, notices, and maybe even the odd apple core, banana skin, and lolly wrapper. It is not until you have tidied your desk that you are able to work more efficiently. This rewrite will do exactly that, and I commend this bill to the House.

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

Ayes 107

New Zealand National 59; New Zealand Labour 32; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 14

Green Party 14.

Bill read a first time.

Bill referred to the Social Services Committee.

Hon ANNE TOLLEY (Minister for Social Development): I move, That the Social Security Legislation Rewrite Bill be reported to the House by 15 September 2016.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Before I put that motion, I will make it clear to the House that I have an amendment that has been proposed by Carmel Sepuloni, to replace “15 September 2016” with “10 November 2016”. I will refer the member to—and the best reference I can find is McGee, third edition, page 217, where it says “an amendment must not be a direct negative of the motion before the House. The proper course of action for a member directly opposed to a motion is to vote against it, not to try to amend it,”. Therefore, I will rule that amendment out of order.

A party vote was called for on the question, That the Social Security Legislation Rewrite Bill be reported to the House by 15 September 2016.

Ayes 61

New Zealand National 59; ACT New Zealand 1; United Future 1.

Noes 60

New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2.

Motion agreed to.

Bills

Building (Earthquake-prone Buildings) Amendment Bill

Third Reading

Debate resumed from 12 April.

Hon Dr NICK SMITH (Minister for Building and Housing): I do want to note that in the third reading speech, when I was interrupted, I noted the huge gains in seismic resistance of our building stock in the intervening 80 years between the Napier earthquake and the Christchurch earthquake, which amount to a 95 percent improvement in survivability.

I would conclude by saying that this bill is about improving that safety margin again so that fewer families face the loss of a loved one, while also being realistic about the costs and the impacts on heritage. The very substantive change in this bill is that for 85 years our regulation around earthquake-prone buildings has been focused on the standard of new buildings, whereas this bill provides for national regulation around buildings that are older—and obviously there are substantive changes that go with the profession of engineering in being able to upgrade those. This bill is going to be challenging to implement, but I think that if every member of this House reflected on the tragedies associated with the Christchurch earthquake, they would know that this Parliament needs to do everything it can to manage the seismic risks that are so significant for our country. On that basis, I thank all those who have been involved in the development of this bill. It is a sensible approach that strikes the balance in an appropriate place, and I commend it to the House.

PHIL TWYFORD (Labour—Te Atatū): Labour is supporting the Building (Earthquake-prone Buildings) Amendment Bill. We have supported it all the way through the House, and we are supporting it in this third reading.

I want it read into Hansard that I am not always ferociously critical of the work of the Hon Dr Nick Smith. I do not often get the opportunity to stand in the House and praise the Hon Dr Nick Smith for his work—but in this case I will. When this bill was brought to the House by Nick Smith’s predecessor, the Hon Maurice Williamson, on, I think, 7 August 2013, the Labour spokesperson at the time, our former colleague Raymond Huo, made a number of comments that I thought were on the mark. He said that it was very important that there was not a one-size-fits-all approach taken with the legislation and that we needed to take into account the importance of protecting heritage buildings, and he urged a bit of a rethink of the policy that Maurice Williamson proposed.

Where we need to give credit to the Hon Dr Nick Smith is that he did listen to the concerns that were being raised by members of this House and at the Local Government and Environment Committee. I think that the select committee came to the view, pretty quickly, that if the bill had progressed in the form in which it was introduced by Maurice Williamson, there would have been some pretty calamitous consequences for the economy, and for towns and cities around New Zealand that had a stock of old heritage buildings; and there would have been huge, unnecessary costs and impositions on building owners around New Zealand. So the select committee came to that view, and, I think, sensed that the approach in the bill was not appropriate and that it needed a pretty fundamental rethink. Shortly after that, Dr Nick Smith made an announcement—at, I think, the National Party conference—that there would be a comprehensive rewrite. He was true to his word, and the bill that we see now is largely a result of that rewrite.

There are number of key changes that I want to refer to. The first is that, basically, a graded system is applied across the country, based on estimates of seismic risk. So under the bill the country is split into zones according to their risk of having a large earthquake, and both the time frames for assessment and the degree of strengthening required are varied according to the level of seismic risk in each zone. That is the fundamental change that was made. It forms the basis of the new bill and it is something that we wholeheartedly support.

So, as a result of that, affected buildings in low-risk areas such as Auckland, Northland, and Dunedin will now need to be identified and assessed within 15 years and strengthened within a further 35 years. Under this legislation, owners of heritage buildings can apply for an additional 10 years’ extension. What that means is that a heritage building in the northern part of the country or in Dunedin may not be strengthened for 60 years. That is at one extreme of the spectrum, but that does show that the graded, risk-based approach that is embodied in the bill actually does give building owners a pretty reasonable time frame within which to address the need to strengthen those buildings. So if you look at an area like Hamilton and Tauranga, the time frame will be between 10 years and 25 years—that is a medium-risk area. The high-risk areas like Wellington and Christchurch keep their existing time frame in the bill of 25 years.

One of the other improvements in the bill was that there is a new category of priority buildings, and that will cover those buildings with unreinforced masonry features like a parapet or a verandah where there is a risk that those things could fall into the public road or a footpath, or some other thoroughfare. A number of colleagues in the course of the various debates we have had have paid tribute to Ann Brower, the citizen in Christchurch who, I think, was the sole survivor of a bus crash in the February 2011 quake when her bus was crushed by falling masonry. Ann Brower spoke up and she lobbied very effectively for the need to address, particularly, this issue of falling masonry and parapets, and so on. So I think that was a major improvement to the bill. The priority buildings will constitute, I think, about 2,000 buildings across the country, and the times for both the assessment and the upgrade requirements are halved for that special category. So, for example, a building in Auckland would need to be identified and assessed within 7½ years and strengthened within a further 17 years if it is classified as one of those priority buildings.

My late father used to refer affectionately to New Zealand as the Shaky Isles. We live with the constant presence and the constant risk of earthquakes—here in Wellington, we do. It is a little less of a factor in Auckland—but then Auckland has volcanoes. So it is appropriate and timely that our legislation appropriately takes into account the risks faced by buildings, and what happened in Christchurch, where out of a population of 370,000 people there were 255 fatalities. That was a huge price to pay, and what we know is that the consequences of those quakes in Canterbury showed us that buildings that are properly built and constructed to the modern building standards actually do really well. When buildings are not constructed to the modern standard, they do not do nearly so well, and the consequence when a major quake happens is that there is considerable loss of life and risk to property.

So we support this bill. I think it is a really good example of the House—including the select committee process—working really well. I think the fact that the bill as it was initially introduced by Maurice Williamson was so far off the mark and had such significant flaws should be a cautionary tale, actually to us all in the legislative process here. It should make us pause whenever the Government proposes that bills should be pushed through under urgency, without taking the time that is available at a select committee to give the kind of proper scrutiny and consideration that important or complex bills deserve. It should give us pause to reflect that none of us has a monopoly on wisdom, and what seems like a good idea—or the best idea at the time—might actually be significantly improved through public debate, through debate in this House, and through expert advice and public scrutiny at the select committee stage. Thank you.

SCOTT SIMPSON (National—Coromandel): It has been just over 5 years since the very tragic earthquakes in Canterbury. We have learnt an awful lot as a nation and as a Parliament in those 5 years. I guess one of the great learnings to have come out of the tragedy that took place in Canterbury 5 years ago is a recognition that so many other parts of New Zealand are, in fact, vulnerable to earthquakes and so many of our older buildings around the country are at risk—not only the buildings but the people who live, work, and spend time in those buildings are at risk as well. This piece of legislation goes to the root of what it is to try to ensure that at some stage in the future, if we, as a nation, are to be hit again by a tragic earthquake, our buildings and work spaces are in a better state than some of those were in Christchurch 5 years ago.

The bill as originally introduced back in December 2013 has been significantly and radically changed. The bill that we are considering here today, in its third reading, is a much-changed piece of legislation. I guess that reflects that this is a very complex policy area. It is a policy area that is fraught with difficulty because it involves land, property rights, buildings, money, heritage buildings, and a whole range of other risks. Overlaid across those components are the relative seismic risks from different parts of the country: the geographic seismic risk varies from part to part, around our nation.

This bill now, very importantly, removes the one-size-fits-all approach that was present in the original legislation. The bill now provides a proportionate response to the risks that I have been talking about. It minimises the cost to property owners, it spreads out the time frames involved for remediating properties, and it seeks to retain as many of New Zealand’s heritage buildings as possible. This varying of time frames and measuring against that seismic risk is very important. The time frames now for the identification of buildings will be 5, 10, and 15 years, depending on the seismic risk; and then the time frames for the actual strengthening of the buildings will be 15, 25, and 35 years. This is a complete change from what was originally introduced in the bill.

Another major change has been that the bill now prioritises and gives special status to educational buildings and emergency buildings, such as schools, universities, and hospitals. Those buildings in high seismic risk areas will need to be identified and upgraded within half the time frames for other buildings. I think that is a very pragmatic and sensible approach to be taken for buildings that house people at greatest risk.

The Local Government and Environment Committee was impressed, as previous speakers have said, by the compelling submission from Ann Brower. She was the only survivor of the bus tragedy in Christchurch. She highlighted the very real and important extra risks associated with unreinforced masonry on buildings—things like parapets, facades, verandahs, and the like. The committee, on the basis of her compelling submission, changed a piece of the legislation to include unreinforced masonry. I think that, if nothing else, that highlights the importance and the value of a good, rational, well-made submission at a select committee and how important that process is to our legislative processes of Parliament.

The provisions of the bill relating to structures such as farm sheds, retaining walls, fences, monuments, wharves, bridges, tunnels, and storage tanks have been removed. They have been removed on the basis that those structures are all required to comply with other codes, which means that it would not be necessary for this bill to be partly focused on those sorts of structures.

This is a very pragmatic, sensible piece of legislation now. It is radically changed from the bill that was originally introduced, and I am very pleased that it has been changed. This is because the select committee and Parliament have, I think, given it due consideration in a way that has produced what will now be a good piece of legislation that gives certainty and a time frame that building owners and property owners can work to. I commend it to the House.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a call on this bill as it ends its life and goes through this House to become law. I think it is law that many of us are very happy to see put in place. I would like to acknowledge the speaker who has just resumed his seat, Scott Simpson, the chair of the Local Government and Environment Committee, who chaired the select committee process. This is because it was in the select committee process where the heavy lifting on this bill was done.

Back in March 2012 some terms of reference for a review into our earthquake-prone buildings in New Zealand were released. Out of that we saw a piece of legislation that was tabled in this House in 2013. That was not really a bill that was fit for purpose, and other speakers have traversed some of the reasons why that bill was not fit for purpose. Then we fast-forward a period of time, and the new Minister for Building and Housing, Nick Smith, announced at a National Party regional conference that there was going to be a thorough review of that piece of legislation and that we would go back to the drawing board. There was a lot of work done at the select committee. I think that this bill really was an example of what happens when this place works well—when submitters are listened to, and when select committees work in a constructive way to come up with the best piece of legislation that is possible. Although a lot of work had been done on changing the bill that went back to the select committee, we still had eleventh-hour changes to this bill.

Speakers have referred to the unremitting lobbying by Ann Brower and her dedication to seeing this bill through and making sure that it was a constructive piece of legislation. It really did cause some eleventh-hour amendments to be made to this bill. I think the Minister, back in September last year when these changes were brought about, said they were going to be known as the “Brower amendments”. I would like to acknowledge Ann—she is not here yet, but I know she is winging her way to Wellington to see the passage of the bill tonight because it is that important to her. I guess none of us can underestimate what being the sole survivor of something like being on that bus in Christchurch, when we saw buildings fail—the impact that that would have on your life, and your dedication to make sure that this never happens again.

Mr Simpson, the chair of the committee, talked about when this bill first saw the light of day. There was a lot of expert evidence from scientists who said that, averaged across the country, the threat of earthquake risk was not that alarming. But, of course, what we know about seismic activity is that we do not average it across the country. It tends to follow geological patterns and does not equitably share itself amongst the centres of this country—it has its favoured places. Some of those favoured places are ones that we do not actually expect: as Cantabrians we never thought that Christchurch would be the city that copped “the big one” in this generation—we thought it would be Wellington. So we really do have to follow the expert evidence and the very good science that we have around seismic activity and seismic risk in this country.

The suggestion that came forward was that we do the sensible thing and divide the country up according to the risk profiles. If you live in Wellington or Napier or Christchurch, you are now deemed to be in a much riskier seismic place than if you live in Auckland or Dunedin. In the case of Auckland, we will not talk about the volcanoes—there are other risks there. But in terms of seismic risk, the time frame, what you needed to do, and how quickly you needed to put your house in order were determined by risk. This was the very sensible and pragmatic approach that the select committee took. It was from listening to those experts, listening to the scientists from GNS Science, listening to engineers, listening to economists, listening to local councils, listening to geologists, and listening to earthquake survivors like Ann Brower that we were able to make this a better bill. So I think this very much is about evidence-based lawmaking, and I think that is something that we do need to celebrate.

Not only did we have the terms of reference that the review in 2012 put in place to review the Acts, which the previous Minister Maurice Williamson worked off, we also had the Royal Commission of Inquiry into Building Failure Caused by the Canterbury Earthquakes—and what had happened with buildings during that sequence of events, but particularly the February 2011 events. What we knew from that study is that 40 to 42 people died needlessly—and that very simple changes could have been made to buildings. Of the 185 people who lost their lives in the Canterbury earthquakes, most of them were in the main building collapses—of the Pyne Gould Guinness Building, the CTV Building—those very high-profile buildings where we all know the tragedies occurred. But I think it is now reasonably well known that a number of the losses of life—and, in fact, around 40 to 42, it is calculated—were caused by building failure around verandahs and parapets, and what we know to be the particularly vulnerable parts of older buildings, and what happens when these fail.

It was this very point that Ann Brower brought to the attention of the select committee when she said “There’s a really sensible way you can do this. There’s some quite low-hanging fruit.” She pointed us to overseas jurisdictions and other quite earthquake-prone jurisdictions—such as California, which has learnt a thing or two about how to deal with buildings in a seismically active area—and showed that you do not have to lose the whole heritage fabric of a building. As a historian myself, I can say that that is reasonably important to me. There are much lighter materials that can be used for the parapets; there are much lighter materials that can be used for many of the embellishments that give our local streets and town centres in suburbs and in the centres of cities the character that we all want to preserve. There is a way of doing this without putting people’s lives at risk. It was the failure of those parapets, of those verandahs, and of those adornments that did prove to be fatal.

When we came to consider this, I know for myself that what would have once been quite a dry risk-assessment exercise of weighing up and looking up the expert evidence, really, was tempered by recent, real experience of what does happen when buildings fail and the need for Governments to properly regulate and provide protection for people around these buildings. I do not think any of us want to see anyone lose their life unnecessarily when there are very simple measures that we need to take. Of course there will be costs associated with this. Of course there is going to be some hardship on some building owners who now need to bring their buildings up to code. We have to, as a Parliament, make sure that we are putting in place the proper protections in order to keep people safe. We need to know, as a legislature, that we are making the right changes that need to be made to protect people’s lives. It is in this legislation that we have the opportunity to do this—not just to say “Oh, this is just a piece of dry regulation”—and to know from recent past experience that what we can and will make a difference to some people somewhere, but I hope not any time soon.

This is important work, and I think it is important that this bill has got the support across the House that it needed. I think that it shows the people out there who might be a little bit cynical about politics and politicians from time to time that, actually, when it comes to some of the important issues, we can work together and that we can work based on the evidence to come up with the best law possible. I think that is what many of us come to this House to do, actually: to make things better.

So it is my absolute pleasure to commend this legislation to the House, to really acknowledge the people who have made this law possible, and to acknowledge Ann Brower—and I know she will be getting embarrassed by all the acknowledgment, but to acknowledge her once again for making her experiences and her harrowing experiences count—for making sure that what she went through will not be something that others need to go through needlessly again. It is our pleasure to be supporting this piece of legislation.

SARAH DOWIE (National—Invercargill): I rise to take a short call in support of this bill, the Building (Earthquake-prone Buildings) Amendment Bill, in this third reading. Although I am a very new member to the Local Government and Environment Committee, I note from the contributions of this side of the House and the opposite side of the House that obviously this was a very good select committee process, and that this was a process taken seriously, which has resulted in a bill that is very well-received and based on good science. It is putting in place a very pragmatic system to strike a balance between protecting people from harm in earthquakes in respect of earthquake-prone buildings, but also being pragmatic about managing the costs of strengthening or demolishing buildings. So I would like to extend my congratulations to the select committee for this piece of work, and to the Hon Nick Smith for shepherding this through the House.

As we are aware, this bill came out of the result of recommendations of the Royal Commission of Inquiry into Building Failure Caused by the Canterbury Earthquakes in 2012—those awful events in Canterbury where there was a significant cost to life, first and foremost, and then, of course, a significant cost to property. I guess, as has been mentioned throughout this House, New Zealand really was not prepared. We did not realise that our buildings were in such a state that when such a significant event as the Christchurch earthquakes hit, such devastation could occur. Therefore, we set out to look at putting in place a pragmatic system to manage this: to protect life, to manage the harm, and to manage the costs of strengthening and demolishing any buildings that could pose risk to human life.

So it is a stepped system—one, again, that is based on good science, looking to stratify the seismic risk profiles of New Zealand by stratifying them into low-, medium-, and high seismic risk zones. As such, as part of that, it is looking at time frames—stepped time frames, again—of 5, 10, and 15 years, to look at strengthening buildings across those time frames. Obviously, the bill prioritises the identification of strengthening earthquake-prone buildings that do pose quite a significant risk to people, such as education buildings, and of strengthening emergency buildings that house people not only in civil defence situations but in normal everyday life. To prioritise, so that if those buildings are located in medium- to high-risk zones they too need to be upgraded in a timely manner.

This is a very pragmatic bill. The stepped system works well. It is supported on both sides of the House. Again, I congratulate the select committee, under the able chairmanship of Mr Scott Simpson, and therefore I commend this bill to the House.

EUGENIE SAGE (Green): I am very pleased to take a call on the Building (Earthquake-prone Buildings) Amendment Bill. The Green Party is very pleased to now be able to support the bill. When it was first introduced we opposed it because there were far too generous exemptions for building owners from meeting fire and disability access requirements when they were undertaking earthquake strengthening, and I pay tribute to submitters and my colleague Mojo Mathers, who highlighted this and helped get these changes. When the bill was introduced with those exemptions, again, it was saying that cost was too great a factor in making the changes to enable all people to have easy access to buildings, and it just reinforced the perceptions that the needs of older people and people with a disability did not count for as much as the needs of others. As is often the case, the costs were overstated and the benefits of ensuring that buildings are accessible were understated. Accessible buildings have major benefits, not just for people in wheelchairs but, of course, for older people and parents and families with pushchairs. So it is with great pleasure that because those changes have now been made, we can support this bill.

Earthquakes are, of course, a major natural hazard in New Zealand. There have been seven fatal earthquakes since 1840, with 473 people losing their lives and, of course, 185 of those in Christchurch. So this bill is very important in improving public safety and reducing the risk of serious injury and death from earthquakes. We are seeing that, not just in Christchurch, obviously, but in Nepal, where more than 7,000 people were killed in the recent earthquakes there. Even though the Minister for Building and Housing has noted that people are “100 times more likely to die in a car accident” and “50 times more likely to drown”, the challenge is to improve the safety of our buildings to reduce the risks to life and to reduce the risks of serious injury. I think it is very important that there is support across the House, because the costs of strengthening buildings will be considerable. There are thousands of building owners who are affected by this legislation, so the fact that there is cross-party support means that there will be certainty and an enduring regime, rather than one that changes as Governments are changed.

We are very pleased to have been a part of the consideration of the major changes to this bill, which have ensured that it does get cross-party support, and very pleased with the process that both the current Minister, Dr Nick Smith, and the former Minister, Maurice Williamson, and the Local Government and Environment Committee undertook to respond to public submissions and to make the major changes in this bill that have resulted in the change from the one-size-fits-all approach that was in the bill as introduced to one that recognises that seismic risk differs across the country. Like others, I commend the enormous work and the very constructive submissions from earthquake engineers, councils, property owners, seismic experts, scientists, local councils, and Dr Ann Brower, the survivor of the building collapse on the Sumner bus in Christchurch. I think, as Dr Brower has said, that this bill has been democracy in action, with the select committee and the Government recognising that these non-structural features in unreinforced masonry buildings like verandahs, like parapets, and like the facades can be strengthened much more easily and cheaply than whole buildings, that they are the low-hanging fruit that exist on about 2000 buildings across New Zealand, and that if we strengthen those, if we get rid of some of those parapets, then we significantly reduce the risk of injury and the risk to life.

The bill provides a process where councils will consult their communities on which unreinforced masonry buildings on major thoroughfares, major roads, and the like should be classified as priority buildings and as a priority for strengthening. That has been quite a significant change, which I do not think would have occurred if it had not been for Dr Brower’s submissions and the submissions and advocacy, also, of the Mayor of Christchurch the Hon Lianne Dalziel. This whole process with this bill, and the release by the Local Government and Environment Committee of an interim report, and the call for a second round of submissions on the departmental report and the changes that the committee was proposing to make, is an example of very good lawmaking by this Parliament, and a good process. We would encourage the Minister to adopt a similar process with other controversial legislation like the Resource Legislation Amendment Bill, because it counts when people hear that their submissions and their suggestions of law changes are actually being picked up by Parliament. This then becomes the people’s House in reality, and we are making the people’s law and responding to the concerns that are raised through that submission process.

I think the change in the bill with the three seismic risk zones, high, medium, and low, depending on the frequency of earthquakes that are likely to cause fatalities—the much more targeted approach that this embodies is a good one. The change, too, to having priority buildings, like emergency response buildings, education facilities where there are more than 20 people, and hospitals—requiring those to be identified and strengthened in half the standard time is also good.

A couple of the current gaps, though, are in regulations. There was, of course, very limited information in the bill—and it is not appropriate that it be in primary legislation—about the methodology that is to be used to identify, assess, and remediate earthquake-prone buildings. That level of technical information is more appropriately put in regulations, but because some councils, like Wellington City Council, are getting on and identifying earthquake-prone buildings and are working out how they are going to assess those, the regulations need to be developed sooner rather than later. The Ministry of Business, Innovation and Employment has said that it is going to consult with stakeholders, and we would like to see that work given priority so that there is consistency across New Zealand in the methods that councils and building owners use to assess buildings and identify them.

The other area is in regard to taxation. There is a problem in our tax law in relation to building strengthening that needs to be fixed. The Minister has said that he thought it was premature to address tax reforms while the bill was at select committee. He said that he is acutely aware of the potential fiscal impacts on building owners, but this needs to be fixed because under the current law, as I understand it, building owners cannot claim tax deductibility or depreciation for assessments of earthquake proneness or for the remedial work that they undertake to ensure that a building complies with the law. Yet they can claim tax deductibility if a building collapses and if it kills or injures people, potentially. That does not make sense, when they can claim deductibility for the worst of those issues and not for the strengthening. The Green Party believes that we need this issue to be looked at by a taxation working party and that there should be some incentives for building owners, such as tax deductibility for the cost of strengthening.

We also need a look at the issue around depreciation for work on heritage buildings, because in Wellington, for example, there are over 700 earthquake-prone buildings and 183 of these are listed heritage buildings. Although the council can offer rates relief, there is no tax relief available to building owners for their upgrading work. If we make some changes to tax law here, it would better recognise the quite substantial contribution that these heritage buildings make to our sense of place in towns and cities around New Zealand and to the character that they provide. It would recognise the community benefit from retaining these buildings. The Minister said he would look at these tax law changes once the legislation is passed. We hope that that is sooner rather than later, but we do commend this bill and the changes it makes. The Green Party is pleased to support it.

RON MARK (Deputy Leader—NZ First): I rise on behalf of New Zealand First to take what will be a short call to just confirm that we are supporting this bill through. I think pretty much every comment that could be made about this bill has already been made; I am not going to rotary hoe the same paddock a second time. Suffice it to say that I would like to continue from where the last speaker, Eugenie Sage, finished off on the taxation issue. I have got to say, Dr Smith and I have had some differences of views and opinions in the past about differing pieces of legislation, particularly around the super-city legislation and the amalgamation, but on this one you have got to take your hat off to Dr Smith. We in New Zealand First think that what has, essentially, been a rewrite of the original legislation, and the process that the Local Government and Environment Committee, which was ably chaired by Scott Simpson, agreed with to allow a second set of submissions to be heard, have really enhanced this legislation quite some.

I guess the only disappointment New Zealand First has is that our Supplementary Order Paper 160 did not get the support of the Government. That Supplementary Order Paper would have allowed for the remediation work carried out in the strengthening of buildings to be treated as repairs and maintenance by the Inland Revenue Department (IRD), and would have made those costs tax deductible. I get a sense, from having kept my ear to the ground, that a large number of people who traditionally support the National Party are probably a little bit disappointed that the Government did not move on that. Property Council New Zealand, which, quite clearly, is not known for getting in behind New Zealand First in large droves, has been to see us and has itself said that that is something that it would like to advance with the Government, going forward, as a later amendment to this legislation. Whether that would be able to be picked up in a Statutes Amendment Bill or whether it could be picked up in an overall look, as Eugenie Sage from the Greens has just said needs to happen, in terms of tax reform around buildings, earthquake strengthening, and everything associated with this legislation—if that was picked up by the Government, it would get our support.

We struggle to understand the IRD’s ruling. To us, if a building is not repaired because the costs are too high for that individual owner—something that is going to happen in rural provincial New Zealand a lot—then there are probably only going to be a couple of outcomes: (1) the building will sit there vacant, and deteriorate and eventually get bulldozed; or (2) it will probably just get onsold to somebody else who has got the ability to do it and who may or may not keep the building in its current state. Why is that important in rural provincial New Zealand? Because many of the buildings that we are talking about have a particular character and history that connects those rural towns to their past.

I have been quite happy—well, I was very pleased with the statements made by Councillor Brent Goodwin of the Masterton District Council, who himself owns commercial buildings in Masterton. When he was interviewed by the Wairarapa Times-Age editor, he confirmed the view that New Zealand First has that there are a lot of buildings in rural provincial New Zealand that are not classified as heritage buildings but are buildings of significant note to those communities—they are buildings that hold a character appeal and aesthetic value.

There is something that we can do to alleviate their plight, and quite legitimately so: by simply reinforcing or clarifying to the IRD that this work is remedial work; it is not capital. If one strengthens a shop in the middle of Masterton, one does not increase the square metreage that it has, one does not increase the height of it, and one does not enhance or change the characteristics of that building such that it has improved capacity or increased capability; it is the same building. Therefore, how could it possibly be considered by the IRD to be capital improvement or capital expenditure or capital works? We would ask that the Government thinks about that. If there is another opportunity to introduce that Supplementary Order Paper into another piece of legislation—taxation legislation—we most certainly are going to do so. But it would be really cool, it would be really great, and it would be really nice if, given the high level of agreement within the House, the Government would pick that up and do it itself, and give the IRD, if not an instruction, then a piece of legislation that makes it very clear that its interpretation is not what the House wants.

I want to extend our thanks to the Green Party, which immediately upon seeing our Supplementary Order Paper said that it supported it; to the Labour Party, which said it was keen to see the numbers crunched down but in principle also supported it; and to the Māori Party, which said that it needed the time to have a discussion around it and was not going to support it because of its confidence and supply agreement with the Government and its “no surprises” agreement with the Government—we understand that. But the Māori Party has intimated that it would relook at such a Supplementary Order Paper and an amendment to the taxation laws that would allow this work to be considered repairs and maintenance and thereby tax deductible.

In conclusion, I simply say: excellent work from the Local Government and Environment Committee. I thoroughly enjoyed working through this legislation. I do not know, actually, if some of the members realise just how much concern and angst there was in the community when this piece of legislation first hit the ground. We could almost see landlords and commercial property owners in rural provincial New Zealand sweating blood at the thought of what the costs were going to be to them. This is a victory for common sense. This is a victory for rationality. This is a victory for parties that can find common ground and work together. It is, in fact, a victory for Parliament. Thank you.

PAUL FOSTER-BELL (National): Can I thank the member who has just resumed his seat, Major Ron Mark, for his contribution and his gracious comments on this bill, the Building (Earthquake-prone Buildings) Amendment Bill. Can I also congratulate the chair of the Local Government and Environment Committee, Scott Simpson from the Coromandel, who stewarded it through the committee process, as well as the Minister, the Hon Dr Nick Smith.

This is a very important bill for us here in the capital. One of the figures that has stuck in my head, which we heard during the course of submissions on this bill, was the Ministry of Business, Innovation and Employment estimate of 240 fatalities over a 100-year period, just for Wellington—240 earthquake-related fatalities. So it does mean that it is very important that we advance this legislation, particularly in light of the Christchurch earthquakes and the Canterbury earthquakes.

There are some challenges. It will be a stretch for some people to meet the requirements that are provided for under this legislation. Buildings that are not identified as being on strategic routes—those in high-risk areas such as Wellington—will have 5 years to be identified and a further 15 years to be strengthened. I hope to see, in the regulations, provision made and, actually, policy direction to the Ministry of Business, Innovation and Employment so that good advice and good advocacy can be provided for people who are going through those strengthening exercises. This is a very necessary measure, and I welcome the cross-party cooperation that has broken out in the House this afternoon. I commend this bill to the House.

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

MOJO MATHERS (Green): I wish to start, as others have done, by acknowledging that it is more than 5 years since the traumatic Canterbury earthquake that was so destructive and caused such great loss of life and serious injuries to so many people. Earlier this year the larger than usual aftershocks were both an unwanted reminder of the trauma of the original earthquake and a timely prompt that we need to get on with fixing our earthquake-prone buildings.

The Green Party is now pleased to be voting in support of this bill. In our view, this bill is a testament to the value of good process, genuine collaboration, and cross-party cooperation. I commend the chair of the Local Government and Environment Committee, Scott Simpson, for his constructive leadership on this. The first round of submissions and hearings highlighted significant flaws in the bill. As a result it was redrafted so extensively that the select committee decided to put it out for a second round of consultation among the original submitters. I am very glad that we did so, because although the second version was a huge improvement on the first, it still contained a number of outstanding issues, which were worked through in the next round. I now believe that we have a bill that strikes the right balance between making our buildings safer and other factors.

Critically, the bill now specifies that unreinforced masonry parts of buildings, such as parapets and gables, need to be prioritised for fixing. This bill also makes it absolutely clear that any exemption from fire or disability upgrades can be granted only on a case by case basis, and then only where owners can demonstrate that full compliance would be unduly onerous. Even if an exemption is granted, building owners must still comply as much as possible with the usual requirements for fire and disability access. As the select committee report noted, it is not intended to allow financially capable building owners to circumnavigate the requirements for providing and upgrading fire and disability access.

The fact that this bill now actually includes unreinforced masonry as a priority is a testament to the perseverance of both the Christchurch City Council and Ann Brower, who made compelling, repeated submissions pleading for the small stuff to be fixed quickly in a faster time frame so as to save lives. As they pointed out, these features are not only the cheapest to fix, they are the first to fall and the deadliest when they do so. I would like to quote Ann Brower here: “It is incomprehensible that a health-conscious, safety-conscious Parliament would not address the low-hanging fruit first.” We agree, and that is why we are so pleased to see it in this bill and finally addressed.

Of course, the other major flaw that was in the original bill was the removal of the requirement for buildings to upgrade disability and fire access when undergoing earthquake re-strengthening. The Green Party was strongly opposed to the removal or dilution of access provisions, and this is because we see access to the built environment as a human right, not as an optional extra or a nice-to-have. With an ageing population, failing to upgrade disability access requirements represents a missed opportunity to futureproof our buildings. When they are undergone at the same time as earthquake strengthening work, it saves owners money and is cheaper in the long run.

I want to acknowledge that at the same time as this bill was going through the Local Government and Environment Committee we also received two petitions from the public that highlighted just how important and critical access to the built environment is. One was from Gary Williams of the Earthquake Disability Leadership Group and one was from the late Felicity Emmett, supported by thousands of others. It is really good to be able to acknowledge that their input has informed the select committee and highlights the importance of access to public buildings.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Poto Williams—5 minutes.

POTO WILLIAMS (Labour—Christchurch East): I am pleased to use sign to talk. [In New Zealand Sign Language] We would not have known, had it not been for the Canterbury earthquake sequence, whether we would actually be debating this piece of legislation, here in its third reading. So, in some perverse way, it is fortuitous that, as a result of what happened over the last 5 years, we have come to the conclusion that we need to do something about ensuring that we do not put our people at risk further. It is a sad lesson, but it is a lesson that has been learnt from Canterbury. We will do everything we can to protect the loss of life, and I must acknowledge the 185 people who lost their lives, but also the thousands of people who lost their homes, the communities that were disrupted, and the significant amount of change and work that has happened in the Canterbury region over the last few years.

If we look to the recent quake that happened on 14 February, which resulted in further claims to Earthquake Canterbury—I think within the first few days there were something like 1,700 claims—it did actually provide us with some measure of comfort, I guess, in that immediately after that quake I, along with the deputy chair of our community board and some of the local community patrols, actually got out on the streets. We went to the areas where we knew there would be some particularly prone buildings or some areas where there might be some issues, only to hear that people were saying the technology that was used to rebuild the residential properties, in many cases, had done exactly what it was designed to do.

The RibRaft that was used extensively through the Parklands area, for example, which is very much prone to liquefaction and is one of the sensitive areas moving forward—many people said the technology, the RibRaft that was used there, did what it was designed to do: it moved gently with the earthquakes. It gave the community some comfort that, in terms of our technology, in terms of our learnings, we had done something right. However, that was not always the case, and, as I stated before, there were claims that were made after Valentine’s Day. So we have still got much work to do.

I was part of some of the previous readings on this bill and the committee stages, when there was some very robust discussion about what the impacts of this bill would be on other parts of the country—other areas where they felt there were unduly harsh provisions that their councils and territorial authorities would have to undertake to ensure a standard of building, which was felt during those debates to be unreasonable. I am pleased that the volume and the quality of those debates got us to the point where further work was done, further consultation happened, and we now have a piece of legislation that is broadly supported across the House.

I do want to make just a couple of points about how this legislation makes it very clear—it gives some consistency of standards to councils, and it makes it very clear about time frames and about what needs to be done. I think the exercise in developing those risk ratings, prioritising those key buildings such as emergency services and educational facilities, and looking at those structures such as verandahs and parapets and at the methods that can be used to strengthen those, has been really useful. Mr Assistant Speaker, I will not continue my contribution. I want to thank you for the opportunity, also, to use a little bit of sign in this Sign Language Week. Thank you.

JOANNE HAYES (National): I stand to take a brief call on this bill, the Building (Earthquake-prone Buildings) Amendment Bill, in its third reading. Yes, as I have said in previous contributions that I have made in this House, New Zealand sits on the Ring of Fire, and we are prone to earthquakes. I think that the earthquake in 2011 really did shake us, besides literally, in the way that we think about the way our buildings are constructed and about our heritage buildings and how we look after those into the future. I think that the work within the Local Government and Environment Committee that has gone on in preparing this bill to this point has been, for me, a very rewarding process. I think that a lot of that has been the ability for all parties across the House to be able to input into this bill and for the people who put the submissions forward, for their voices to be heard.

I also want to pay tribute to those who lost their lives in Christchurch—the 185 of them. It is a sad time for those families, and that will happen and continue to happen every year forthwith. I want to thank our chair of the Local Government and Environment Committee, Scott Simpson, because with his wise counsel and leadership he got us through. I am very pleased to support this bill and I commend it to the House. Thank you.

Hon CLAYTON COSGROVE (Labour): Like others I will not labour the point. Suffice it to say, this has been a good exercise in terms of cross-party cooperation, which in itself respects those people who died and those people who were injured and who live with those injuries, both psychological and physical, every day. This is a bill that I think will meet the mark. It is supported by the House. I share the compliment to the chair of the Local Government and Environment Committee, Scott Simpson, as being part of the process. I commend the bill to the House.

NUK KORAKO (National): E mihi atu ki a koe e Te Mana Whakawā, ā, huri noa i te Whare nei. He mihi nui ki a koutou katoa. It is indeed an honour for me to be able to be the last speaker on this bill, the Building (Earthquake-prone Buildings) Amendment Bill. As someone who comes from Canterbury, comes from Ōtautahi, comes from Christchurch mana whenua, I also join my other colleagues from both sides of the House to acknowledge a lot of the fine work that has gone into this bill. It is work that has been done cross-party. The bill has been very pragmatic, and there has also been incredible and positive input made by submitters to this bill.

When looking at the bill there are three main areas that I think are important to highlight as the final speaker. The first part is around the time and consistency—

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

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

NUK KORAKO: Mauri ora e Te Mana Whakawā. Just to reiterate a couple of points, it is indeed a great pleasure for me to be able to stand here and be the final speaker on this Building (Earthquake-prone Buildings) Amendment Bill.

There are three main parts of it, and I think the three important points are that the Government is ensuring, in this bill, that earthquake-prone buildings are dealt with in a timely manner and by way of a nationally consistent system. The next part of it is that it does strike a good balance between protecting people in an earthquake and managing costs of strengthening or demolishing those buildings. The other part is the availability of information, and what this bill ensures is that the information data system about earthquake-prone buildings is made available to the public.

On that note, again, in another reiteration of the great cross-party support that this bill has had, I congratulate the Minister of Building and Housing, the Hon Dr Nick Smith, the Local Government and Environment Committee, well chaired by Scott Simpson, and also those people—those building practitioners, those from the public, and those who were affected by the devastation in Christchurch during the February earthquake, but particularly as an aftermath of all those incredible thousands of aftershocks as well. They came to the select committee, they Skyped in, and they were very, very clear on the factors they believed should be in this bill. The committee heard them and now we have this bill.

The other thing, I suppose, at the end of this speech of mine is to say āpiti hono, tātai hono, ko rātou te hunga mate ki a rātou, āpiti hono, tātai hono, ko tātou te hunga ora ki a tātou—let the dead be the dead and the living be the living; particularly thinking of those victims from the Christchurch earthquake and those who are left behind, who have actually been able to have input and to also develop such important things like this legislation. May it also be part of that situation where a phoenix, indeed, has risen from the rubble of Christchurch. I would like to commend this bill to the House. Kia ora.

A party vote was called for on the question, That the Building (Earthquake-prone Buildings) Amendment Bill be now read a third time.

Ayes 120

New Zealand National 59; New Zealand Labour 32; Green Party 14; New Zealand First 12; Māori Party 2; United Future 1.

Noes 1

ACT New Zealand 1.

Bill read a third time.

Bills

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

In Committee

JAMI-LEE ROSS (Junior Whip—National): I seek leave for the New Zealand Public Health and Disability (Southern DHB) Elections Bill—all questions to be debated as one question.

The CHAIRPERSON (Hon Chester Borrows): Leave is sought for that purpose. Is there any objection? There appears to be none.

Clauses 1 to 7

Hon ANNETTE KING (Deputy Leader—Labour): Labour supports the New Zealand Public Health and Disability (Southern DHB) Elections Bill. We supported the bill at the first reading and we supported the bill at the select committee. We supported the bill in the second reading last week. We supported the bill because we recognised there was a problem at the Southern District Health Board that needed to be rectified. We supported it because it was a longstanding problem that went back to the time the two district health boards were amalgamated without the necessary work being done to see the financial impact on that district health board. We know that over time there had been huge pressure on that district health board—its deficits were growing, there was a lack of confidence in the board itself, and, finally, there was a lack of confidence by the Minister of Health in the board’s performance—so there needed to be some action taken.

We supported the Minister when he put in a commissioner. In fact, I had suggested that the Minister put in a commissioner some time earlier—the Minister might not remember that, but I actually did suggest it several months before you put in a commissioner. We supported delaying the 2016 election. We did it because the commissioner and deputy commissioners would have been in place since only 15 June 2015—so 11 months—and 5 months later we would be going into an election for the October triennial election. They will not have implemented their recommendations and they would not have implemented their plan. I agree that they need time to do that. We need time so that when they do present their plan, the Minister needs to be held accountable for the implementation of that plan. It comes very much back to him then—not to a board but to the Minister, because they are his commissioners.

We are concerned—and, in fact, both New Zealand First and the Greens, who have voted against this bill, have been concerned—about the loss of democracy. We had something like eight submissions to the Health Committee. The two from Māori submitters were not opposed to the delay in the election so much as about what representation they could have for Māori on the Southern District Health Board. The other submitters were opposed to the loss of democracy. I wish we did not have to delay the election, because I strongly do believe that we ought to have democracy in district health boards. In fact, I was the Minister who brought back democracy to district health boards. It had been got rid of in the 1990s, under the zealots who were in Government at that time—

Hon Ruth Dyson: That was National.

Hon ANNETTE KING: —National at that time; think Ruth Richardson. National had got rid of democracy—it was getting rid of area health boards and putting in place a whole lot of things with funny names like “CHEs”, Crown health enterprises, and “RHAs”, regional health authorities, and “HFA”, the Health Funding Authority, and so on. When we became the Government, under the New Zealand Public Health and Disability Act we brought back democracy within district health boards. So we strongly support the ability for local people to have a say on their district health boards.

We are also concerned, Minister, that the track record of this Government, since it has been in power, relating to Environment Canterbury has meant that when a promise was made—and a promise was made—to have an election for Environment Canterbury, when it came to the time to have that election it was delayed, and the commissioners’ times were stretched out, and the election was delayed again until the people of Canterbury lost faith in the Government’s promise that there would be an election held for them. We have some grave fears that this will not be a delay of just one election.

So I have come to the Committee with a suggestion for the Minister. Of course the Minister would have to be a big man to take it, but it is a serious suggestion that, in fact, he replaces the word “cancellation” and puts in place “postponement” of the 2016 election of the Southern District Health Board, and that it be postponed until a date set by Order in Council. What that would mean, Minister, is that when the commissioners have presented you with the report and they have implemented the requirements that you have put upon them, it is no longer necessary to delay an election in the Southern District Health Board—that there is the ability for you by Order of Council to be able to then hold an election. It might be only a year from now. No time frame has been given to us as to when the work of the commissioners would be completed. It might be a year—it could be 18 months. But why delay it if there is an ability, having then got the recommendations, having put in place what was required, for the Minister to then be able to call an election by Order in Council?

I think that my amendment satisfies a number of issues. It gives commissioners time to do the work that the Minister wants. It does not cancel an election if one could be held earlier. There are no extra costs, because if it is cancelled the $300,000 that was the cost for the last election would be used for one when it was called by the Minister, and when the next election came round it would be straight back into the same timetable. It would also meet the demands of southern New Zealanders to have a say in the health board.

If the Minister was not prepared to accept this approach, then is he prepared to follow the lead of the previous Minister of Health, who, in December 2008, when he became the Minister, turned the commissioner at the Hawke’s Bay District Health Board, Sir John Anderson, into the chair of a board and then appointed the previously elected board members to a governance board until 2010? That was the way that he had managed a board that had been dismissed: turning the commissioner into the chair and making the former elected members into a board of governors, a governance board. Would the Minister consider this approach, if he would not consider calling an election earlier, if everything that he has asked for has been undertaken?

I do accept and support the Minister wanting to have a board that is financially strong, has the confidence of the people of the southern district, is able to provide the services that are so needed, and is able to do the rebuild of that hospital. Where I do not agree with the Minister is that the southern people have to find the money to be able to help build their hospital. Most hospitals around New Zealand have had funding from the State, but one of the requirements is that southern people show how they are going to be able to help rebuild their own hospital.

But, Minister, when they have achieved all those things that you require, why would you then delay when you could have the opportunity to say: “Right, you’ve performed what we want. You’ve done what is needed. I’m confident that what’s been put in place works. I will therefore, by Order in Council, call an election for the people there.” We will continue to support this bill, Minister, but we put up a suggestion for you, and I would like to hear your arguments as to why you would not accept an earlier election. You do not have to wait until 2019 for an election if what was required was done earlier.

I would be interested in the Minister’s response to that and also in whether the Minister will give an assurance that there is not a delay in an election for beyond 2019—that there is an absolute cast-iron guarantee from him that this is for one period only. I have to tell you that there are a lot of nervous people, and I have gone through many of the press clippings from out of the southern area, written by people within the community, from doctors, from Grey Power, from nurses, and from others who are very worried that this democracy has been removed from them and that it may be some time before they get it back.

So it is a serious issue but, having said that, I also know how serious it is to ensure that we get a board back into financial shape. It may mean, Minister, that the review that you have done on the population-based funding formula needs to take another look at the rural factor for the southern district, because it does not make sense to me that South Canterbury has a higher per head of population funding than they have in the southern district.

Dr DAVID CLARK (Labour—Dunedin North): Thank you for the opportunity to speak at this Committee stage. I, of course, will be speaking in support of the bill—as my colleagues have done—and in support of the amendment put forward by the Hon Annette King, which does give an opportunity to the Government to step up to the plate to restore democracy earlier if there is sufficient progress made by the commissioners on those issues, which have really been concerning people in the South and across New Zealand, I think, in respect of the Southern District Health Board as a resource with ongoing financial difficulties and ongoing issues of capacity. I think it is helpful for the Committee to remember, of course, that part of the loss of capacity was due to people leaving when there was a great deal of uncertainty about Health Benefits Ltd and what it would achieve and about the centralisation of financial structures across New Zealand in what turned out to be a failed project. We know that people left Dunedin to be a part of that failed project, so the Southern District Health Board actually bled capacity. It bled planning capacity and financial capacity around that time because of a failed experiment by this Government.

We know that the Government had a Crown monitor on the board before the commissioners were put in place. We know that for 6 years it had that Crown monitor, who acted as a Government watchdog, effectively, on what was going on—a direct line, if you will, to the Minister to ensure that a board is performing its duties effectively and doing what is asked of it. Of course, the Minister also chooses the chairman in a normally run board and five of the 12 board members. So the Minister and his predecessors have to take responsibility for the situation that the Southern District Health Board found itself in. Of course, the Minister then stepped in, and we have supported this, and said: “We will appoint a commissioner. We are not happy with the progress, and of course we must own the lack of progress in the Southern District Health Board in meeting its financial targets and also in meeting the expectations of New Zealanders for delivery of health care. The buildings have become run down. We are familiar with the fact that there is a major asbestos issue in the buildings in Dunedin, and we have become aware, of course, of lower staffing levels and of various attempts to work with limited finances.”

The Hon Annette King also referred to the funding model and the review that the Minister undertook. We, on this side of the Chamber, are not convinced that that funding review was sufficiently broad and sufficiently deep to really assess whether the district health boards are being funded fairly. And there is the very example that the Hon Annette King just used of the rural adjustor and the fact that South Canterbury actually receives more funding per capita for a rural population despite having a far smaller geographic area than the Southern District Health Board, which covers a geographic area the size of Belgium. It just does not seem right. There are questions around whether the tertiary funding area is adequately compensated in terms of training, and so on, and those questions were not probed in sufficient depth in that review.

In speaking to the amendment put forward by the Hon Annette King, I want to say that if the Minister does take up that challenge, I will be impressed. I will put that on record in advance. It is a way that the Minister can show he is committed to the restoration of democracy there, which, rightly, has been raised as a concern because of the Government’s track record with Environment Canterbury and elsewhere, and because of the sense that the Government seems increasingly out of touch with middle New Zealand—the sense that it is not genuinely concerned about democracy and about what middle New Zealand thinks about issues and would like to see happening in the country. If that is going to be the case, I think we want to see a number of areas of progress before the intention of that amendment is realised through an Order-in-Council.

The kinds of things that we would like to see, of course, are things like the finances coming under control for the district health board and either that consistent deficit disappearing immediately or a clear plan as to how that is going to be diminished. We would like to see some clear and measurable signs that that structure and capacity are there to deliver the health care in Otago that all New Zealanders would, could, and should expect of their district health board. We would like to see that that capacity is there at a planning level, as we see the new hospital being planned for Dunedin, and also at a governance level—that there is, within the management structure, the ability to report to governance effectively and also some confidence about the people the Government intends to appoint for its appointments in that process.

I guess the other key indicator in that area would be a credible plan for the rebuild, because that is something that southerners have been crying out for for some time—capital on the table and a date on which construction will begin. I actually have a petition running in the South that seeks a commitment by the Government to begin construction on a hospital rebuild by 2017. The previous Minister expected, while he was still Minister, for there to be a business case to Cabinet for that rebuild. All we have seen since then is duck-shoving. The time lines have been pushed out—they have been pushed out further and further and further. It is like this Government is simply not committed to that hospital rebuild. It is like it wants to push it on to some future Government and pretend the issue is not there. Well, actually, it is incredibly important for New Zealanders, and particularly New Zealanders in the South Island who access those services, that we have money committed—that we have capital committed—to that project and, with it, a start date for that physical rebuild, because that is what really shows true commitment.

Also, we would seek from the Minister an assurance that the same tertiary level of hospital will be retained so that services will not be lost to people in the South. Health care needs will change. Ways of delivering services will change. Let us have a mature debate about this, but we seek an assurance that the same tertiary level of hospital will be maintained by the Minister, because we should not see falling levels of health care in New Zealand. In the meantime, we want to see—and it was expressed in the select committee process—a commitment to increased reporting. There have been some moves made by the commissioners since that select committee debate to have more transparency in their discussions—to invite people to some of the sessions that the commissioners are running, and have some more open discussion, more like what there was when the board was in place. Locally, I have certainly had feedback from people concerned that Labour has not just outright opposed this. We have taken a response that we believe is the right response: to support the Minister’s desire to get stuck in and make a difference here, and to have commissioners who sort out the financial difficulties, the planning difficulties, and the capacity difficulties at the hospital—commissioners who will commit to the nature of the rebuild and the time frames—and we want to see the Government committed to that.

That means the Minister has even closer responsibility than he used to. Let us acknowledge that he used to appoint the board members, he used to appoint the chair, and he had a Crown monitor on there. He now has his own commissioners reporting to him. We want to see the Minister commit to those time lines, to commit to the financial health of the district health board being restored, and to commit to funding it adequately. These are the commitments we seek from the Minister. If he does not achieve these things, he will have failed. He is directly tied to the appointment of those commissioners, he has skin in the game, and the southerners want to see this Government delivering. It is Dunedin’s turn. Dunedin Hospital is the last major metropolitan hospital in the country to have a rebuild, and it is simply unacceptable that the time frames for that rebuild continue to get pushed out, and that southerners get lesser health care than people elsewhere in the country, and less than any New Zealander should expect. Most New Zealanders are pretty reasonable. Most New Zealanders simply want an adequate level of health care. They want to know that the hospital will be there in their time of need and that the Government will be funding it adequately rather than a $1.7 billion shortfall that we have seen under this Government.

As I said at the outset, we will be supporting this bill. We do think that the Minister has the responsibility to step up, with this support, to deliver on the promises of the Government—to adequately fund health care and to drive forward the hospital rebuild and governance and management arrangements at the Southern District Health Board.

KEVIN HAGUE (Green): The Green Party is going to continue its opposition to the New Zealand Public Health and Disability (Southern DHB) Elections Bill this evening. We opposed it at first reading; we opposed it at second reading. In the Health Committee, we explored ways to improve some of the less satisfactory aspects of the bill, in particular around the Treaty of Waitangi and the effective suspension of the Crown’s responsibilities under the Treaty, which the commissioners being in place amounts to. Unfortunately, those improvements were ruled to be out of scope for what the committee could do.

We supported the appointment of commissioners in the first place, and we did so probably for somewhat different reasons to those that the Minister of Health had for appointing them. We supported the appointment of those commissioners because in our view, based on the evidence that we had gathered from the southern region, the board of the Southern District Health Board had lost the confidence of the people of that region. It had not stood up to the underfunding of services. It had not pursued the recovery of the debt from Southland Health when clearly it ought to have done if it were doing its duty properly. It did make the decision to bring in those awful hospital meals from Compass Group.

So the board, in our view, had lost the confidence of the people of that district and, in our view, that is its job. Its job is to represent the people of the district. It is an interesting tension—is it not—in the law, under the statute, whether a board is more accountable to the Minister of Health or to those whom it represents on the ground, the population of that district. My view has always been that in a situation where we support elected boards—or, at least, partly elected boards—there is a very clear accountability to the population being served. There is a notion of the district health board as being the purchasing agent of the population it serves, and that can work only if the board is accountable to that population. That is an important question because the hurdle for suspending democracy is an extremely high one—or we believe it ought to be an extremely high one.

The question now is, with commissioners in place, is there something that is inherent in elected board members that would be an obstacle to the commissioner achieving the goals for that commission? The Green Party’s position is that there is not an inherent problem with elected members, and, that being the case, our view is that we ought to be returning to the democratic process that enables the people of the southern district to appoint, or to elect, their representatives once again, forthwith, with no further delay.

If there is something that is inherent in elected board members getting in the way of achieving the purposes of a district health board, then why would we have elections at all? Why would we even bother with elected positions? If there is not, then the Green Party’s position is that we can have the best of both worlds, and we should. As Dr John Chambers indicated in his submission to the Health Committee, in fact the majority of the members of a district health board are appointed by the Minister. If it is so important that the people who are occupying the commissioner and deputy commissioner roles right now are able to have continuity in the work they have begun, well, why does the Minister not appoint those individuals to some of the roles that he can appoint to on that board? Why does he not make Kathy Grant the chair of the Southern District Health Board and appoint Richard Thomson? That would allow the people of the southern district to also elect their representatives.

It is possible to have both, and I would certainly be very keen to hear from the Minister in the chair, Jonathan Coleman, what objection he might possibly have to that suggestion, what objection he might have to having the best of both worlds. I am also keen to hear from the Minister in the chair as to whether, in fact, he believes elected board members are an inherent obstacle to the achievement of a district health board’s aims.

Annette King has spoken about an amendment that would provide for elections to be held sooner if certain conditions are met so this denial of democracy would become a postponement rather than a cancellation. Certainly, the Green Party will support that amendment.

One of the other issues that was raised by submitters to the select committee was the issue of democracy and transparency of process. They indicated that since the commissioners had taken up their roles there had been a loss of that transparency. David Clark, indeed, has spoken about that in his contribution this evening. We certainly welcome the statements made by the commissioners that they will do what they can to improve that transparency and to lift their game when it comes to consultation of the people of the southern district.

I want to take up with the Minister his comment in the second reading debate when he noted that increased transparency would be provided by the Southern District Health Board through the mechanism of advisory committees being open to the public to attend. Of course we welcome advisory committees being open to the public to attend; that is actually how they ought to normally operate. If they have not been doing that at the Southern District Health Board, that, I guess, indicates yet another problem in that district health board. I think that when the people of the southern district come to this Chamber and say they are concerned about a loss of transparency, they do not just mean at advisory committees; they mean at the highest level within that district health board where governance decisions are being made.

I would welcome the Minister’s contribution as to why the discussion and deliberation by the commissioner and her assistants is not also subject to that same requirement of transparency, because I am sure that is what is required, and desired, by the people of the southern district. It is what is available to all of the other citizens of New Zealand. They are able to attend the meetings of their district health boards. Certainly, some matters might be taken behind closed doors because of commercial sensitivity, for example, or because of privacy concerns. But successive Ministers have been clear that their expectation is—and the law provides that it ought to be—that district health board meetings are held primarily in public. And so it ought to be for the deliberations of the current governance arrangements at the Southern District Health Board.

I would welcome the Minister’s contribution on that matter, and in the event I am granted a further call later on, I want to talk about Treaty of Waitangi issues.

RIA BOND (NZ First): I would like to remind those people who are listening or watching tonight what the intent of this particular bill is. The purpose of this bill is “to cancel the 2016 triennial general election of the Southern DHB in order to provide, until the repeal date, for the continuation of the term of office of a commissioner for the Southern DHB.” I would also like to point out that this bill would extend the term of office of a commissioner until the day that elected members of the Southern District Health Board come into office, after the triennial general election in 2019. I want to point out that just this afternoon in question time I tabled an amendment that I and New Zealand First absolutely believe will help find a solution to the position that we are currently finding ourselves in. But I will get to that shortly.

It has been no secret that New Zealand First has not supported this bill. We have absolutely opposed this bill in the first and second readings. There were some amendments made through the select committee process that were good amendments and that we felt, out of those eight submitters, were good amendments.

I want to bring back the statement that the Ministry of Health made, which was recorded at the select committee, in March 2016. The ministry was quoted as saying: “While the impacts on local democracy are noted, we consider that this is balanced by the need to provide time for the Commissioner to drive the necessary improvements, which will benefit the district in the medium to longer term.” In other words, what this Government is saying, really, is that it is prepared to sacrifice the democratic rights of southerners under the guise of being fiscally responsible.

New Zealand First does not support this position, and we continue to not support this position. We refute the need to strip back democracy while alternative solutions exist. This is when I will come to my amendment that I tabled today. For those people who are listening and watching tonight, my amendment proposes, in clause 4, to replace the word “cancel” with the words “integrate a commissioner within the bounds of the 2016 triennial general election of the Southern DHB in order to provide, until the repeal date, for the continuation of guidance of a commissioner for the Southern DHB.”

Another change that my amendment is proposing is to clause 7, “Cancellation of 2016 election of Southern DHB”. I have proposed that we remove clause 7(1) and replace it with a new clause 7(1): “The following provisions of the 2000 Act shall apply to the Southern DHB in relation to the triennial general election of 2016, explicitly (a) Clause 16(1) of Schedule 2 (which provides for the Minister to appoint persons to hold positions on the board of that DHB that would otherwise be held by elected members); and (b) Clause 16(3) of Schedule 2 of the 2000 Act does not apply to the Southern DHB triennial general election of 2016.”

In the explanatory note that I have put with that amendment, it says that “The purpose of the SOP is to preserve democratic process in the triennial general election for the Southern DHB, while simultaneously promoting a reasonable time frame for the commissioner appointed in 2015 to continue the scope of work. This SOP recognises the need for both elected members, and an appointed commissioner to best address the complexity of issues facing the Southern DHB without stripping the right to democratic elections of [our board representatives].”

I believe that, once again, New Zealand First has come to the House offering an olive branch, a solution, given the very fact that the Minister himself supported this in his original intent when he sacked the board, and that was reported in the paper. So I am calling on the Minister and that National-led Government to stick to what the original proposal was and do not strip the people of Invercargill, Otago, or Southland of their right to vote. I see my amendment as being a win-win situation, not only for the Minister and also for the commissioner and her sub-commissioners but also for the people of Southland and Otago, who deserve their right to vote for their elected health board members in the 2016 election.

I have had many constituents come to me since the first and second readings and they were rather happy that the two elected MPs for the National Party in the Invercargill electorate and the Clutha-Southland electorate made a short call in the second reading. What I got, overall—

Hon Ruth Dyson: Do you mean they knew who they were?

RIA BOND: They did—they did. They took their time to look. The constituents in Invercargill truly believe that they do not want to see their democratic rights stripped away under this National-led Government. History tells us, unfortunately, that it is quite quick to actually get in there and fire a board and make promises, like it did with Environment Canterbury. I mean, we were told that the people of Canterbury were going to be given back their right to vote, and in the House just recently we have been told that that must be delayed again, and that was really disappointing. That is what we in Southland do not want to see.

We do not want to see that we are being given a promise and it actually turns out that it is not fulfilled by the Minister, and that is a huge concern for us not just in Southland but also in Otago. When people have come up to me in the street and said “Good on you for fighting for our right to vote.”, I do not think that we should downplay the importance of what it means to Kiwis to have their right to vote. My amendment, and I thank the Labour Party and I thank the Green Party for agreeing to support my amendment, supports the right—and we do recognise that there have been some deficit issues on the Southern District Health Board. We would be allowing everybody to win with my amendment, which is actually to the betterment of not just the Minister and not just the commissioner or the board but actually, ultimately, of our community.

We have been taught that in order to work together, we should not work alone—that we should join together as a group. I am listening to the constituents in Invercargill and I am listening to the people of Otago when they have supported me in ensuring that I would be the voice to stand up for their rights and have the guts to say: “Do not take the rights of Southlanders or Otago people away by implementing and supporting this bill. Take note of my amendment and recognise that we can actually all work together for a better outcome and make sure that we do not lose the voice of our right to vote.” I think that is something that is really important and should never be downplayed—never—in this House. Thank you.

TODD BARCLAY (National—Clutha-Southland): It is a privilege to speak on the New Zealand Public Health and Disability (Southern DHB) Elections Bill in the Committee of the whole House stage. Before I start, I just want to acknowledge the Minister of Health, the Hon Dr Jonathan Coleman; the Health Committee chair, Simon O’Connor; and the commissioners, Kathy Grant, Richard Thomson, and Graham Crombie.

I do not think for one minute that we can underestimate the level of public service that these people have undertaken in their role as high commissioners and deputy commissioners, and the high level of public scrutiny they are under. I think what they have done is actually a service to Southland and to Otago. The task they have taken on board is, basically, to turn round a systemically dysfunctional $852 million organisation supporting a couple of hundred thousand people across a land mass the size of Belgium, as Mr Clark has pointed out. It is no easy task, and I want to acknowledge the support they give to us as local members of Parliament—and I suspect they provide the same level of support to Opposition MPs—and to the members of the community, who have basically vested a lot of support and hope in the ability of these three people to turn round an organisation we all rely so much on.

At the heart of this bill, it extends the term of office of those commissioners. I think by appointing those people to undertake this task, we would be doing them and our region an incredible disservice if, after about only a year or 18 months in the role, we were to say: “Right, that’s it. Time’s up. You now have to come to us with your proposals.” This is an incredibly complex area. I have participated in a number of public meetings where the commissioners, the chief executive, and members of the district health board themselves have fronted up in full force to listen to the concerns of members of the public, the concerns of professionals working in the health sector in the district, and the concerns of other stakeholders and key interest groups in order to really get a handle on what the issues are and to start forming some views around how we can improve the health care service in our area.

I just want to reiterate that I think this is clearly a long-term piece of work, with a long-term goal of financial stability and sustainability. We have got an organisation that had a $42 million deficit, which has now been revised down this financial year to $35 million, and that has been agreed to with the Ministry of Health. I do not think that we can take those figures lightly for a sector whose overall deficit is at the level of only about $60 million. If two-thirds of that value is taken up by one district health board, it really demonstrates the need to reform and to focus on how we can improve the health care service in this area.

The Opposition has said that the health sector, and particularly the Southern District Health Board, is underfunded. I would have to disagree with that. Over the last 6 years the Southern District Health Board’s funding has increased by $136 million. We have got more staff. We have got 66 more doctors and 195 more nurses compared with 2008. This is not a case of having an underfunded district health board; it is a case of systemic financial mismanagement. I think one of the things I want to acknowledge the commissioners and their team for is their level of public transparency and willingness to front up to the public on these issues.

This is a phase of recalibration and stocktaking. There is not much to tell at this point in time. These guys are going around listening to people and trying to find what the issues are and where things need to change for the better. Health care needs in our district have changed. We have got an increased ageing population, we have got increased ethnic diversity, and we have got an increase in young families in certain parts of our electorates. We have got parts of my electorate where there is a highly ageing population—Gore, Winton, Lawrence, Balclutha—and then we have got other parts of the electorate such as Queenstown, which has got an influx of young families and ethnically diverse people coming into the area. The district health board has to grapple with all those challenges, and I want to acknowledge, again, the support that the commissioners are putting into this area in this space.

For the Opposition to say there is a lack of transparency and a lack of accountability to the public—I have to disagree. Although the commissioners might be legally accountable to the Minister of Health, they are ethically, morally, and practically accountable to the public. Kathy, Richard, and Graham and their families all live and work in the Southern District Health Board catchment area. Just because their nine-to-five job as a commissioner means they focus and report to the Minister, it does not mean to say when they go out to get their groceries and when they go out to dinner or go out for a coffee with a friend, they are not accountable to members of the public all the time, every single day. I think the settings are right, with the legal accountability to be placed with the Government. It shows, from my perspective and from my constituents’ perspective, that the Government is taking a strong interest in getting some better outcomes for the Southern District Health Board.

I want to acknowledge the interest that the Minister is taking in this area. Since becoming the Minister, he has been down to the area probably four or five times and he has met with most of our hospitals down there, which shows a genuine desire to put things right and to recalibrate the health system for the better for Otago and Southland. This is not an inherent problem with the elected members—to touch on a point that Mr Hague has talked about. I do not think for one minute that we are suggesting there is an inherent issue with elected representatives on the district health boards or on any other public organisations for that matter. I think it is a case of a systemic problem with a complex institution.

I do not claim for one minute to be an expert in the health area or the health governance area. I know that Mr Hague has had experience working in that area himself. But what I can say is the views I have had from my constituents are that they are pleased with the approach the Government has taken by putting in commissioners, they are pleased with the level of public engagement, they are hungry for that engagement, and they are appreciative of the ongoing engagement they have with the commissioners and their team.

I think as a Parliament, instead of criticising the work of the commissioners and underplaying the level of complexity of the role we have asked them to undertake, we could actually get behind them and support them—support an extension of their duration in that role and get right behind them to ensure we get the best results for the people of Otago and Southland. Thank you.

POTO WILLIAMS (Labour—Christchurch East): There is nothing quite like issues around health to get to the public’s emotions and get the public stirred up. In this country we have an expectation of a level of health care. There is no doubt that over the last few years there have been some systemic failures within the Southern District Health Board. But they have not necessarily been the fault of the board. The board has had to deal with some pretty big, gnarly issues. The amalgamation of a couple of boards is certainly not going to be an easy task to manage, to cope with, considering we have already heard tonight that there are issues around differences in funding bases for one area, as opposed to another area. But health is at the heart of what we see as a good democracy—good access, easy access, to decent health-care. It is no wonder that there are a range of views across the Chamber about how that should be achieved.

When I sat in on some of the submissions—there were half a dozen, or a few more—there were a couple of submissions that talked about our absolute commitment to ensure that there are good outcomes for Māori. One of the submissions was made by Te Rūnanga o Ngāi Tahu. Their concern was that they did not believe that under the provisions of the Treaty of Waitangi their ability to have full access to good health-care and well-being was fully acknowledged under the role of the imposed commissioner. They were seeking some redress around this. We talked about it throughout the select committee, and even the report that came back to the House talked about the discussion we had had. It was fairly clear that that is not within the scope of the bill, but it was an important aspect that we felt needed to have some acknowledgment. This is why I raise it today.

One of the suggestions that came up in the select committee was with regard to the ability to appoint deputy commissioners, and whether it would be an opportunity to consider appointing a deputy commissioner to cover off the concerns of Ngāi Tahu around significant involvement for the rūnanga in the work of the commissioner, as they were working through these particular issues. I know that in our report back to the House we said that that is not within the scope. But it is certainly something that I think we should consider, given that there were significant concerns raised by Ngāi Tahu about our obligations under the Treaty of Waitangi.

The other concern that came through loud and clear from the submitters was about transparency. In most of the submissions what people were concerned about was their ability to not only participate and contribute to the discussion but actually to hear about the decisions and the decision-making process that were happening with the commission and the deputy commissioners. It is very clear that the people of the region are wanting a say in how the review and the work of the commissioners occurs because they are in such a serious state—because we are in the position of having to disband the board and appoint commissioners.

It has raised the level of concern within the community, and obviously it has raised the expectation of the community, that they will be able to participate fully within that environment. Rather than being dismissive of that, it would be a useful thing if the Minister could talk about opportunities to ensure that those voices are heard, and that there is a significant opportunity for the people of the Southland catchment area for the district health board to feel that they are able to take some comfort in the process.

The last point I want to make is something that my colleague Dr David Clark touched on, and that was about the ability to ensure that the considerable capital works programme goes on. There is no doubt that the hospital in Dunedin is seriously overdue for its rebuild. There has been a long period of time when maintenance has not been undertaken to the standard, and the building may not actually be fit for purpose any longer. I am hopeful, and perhaps the Minister can answer this question, that that may become part of the work that the commissioner does to ensure that that work is scoped properly, and that the considerable works programme that needs to occur is fully considered.

Just on a final note, I agree that the amendment that has been put up by the Hon Annette King actually makes a lot of sense. It does make a lot of sense to ensure that we give the appointed commissioners the time to do their work. However, when the work is done we should not be beholden to the fact that the elections have been cancelled, as opposed to postponed, to ensure that we get back to full democracy as quickly as possible. It would be an important point to consider—changing the word from “cancellation” to “postponement”. It is a simple amendment. But it makes a lot of sense in terms of the ability to ensure that timeliness, in terms of democracy, is returned to the people of Southland.

RINO TIRIKATENE (Labour—Te Tai Tonga): Kia ora, Mr Chair. I am very pleased to make a contribution in the Committee stage of this bill, the New Zealand Public Health and Disability (Southern DHB) Elections Bill. The Southern District Health Board is one of seven district health boards that I have in my electorate, but it is a favourite of mine because it actually does a very good job, despite the troubles that beset it at the moment, through the appointment of the commissioners.

I would just like to pick up on my colleague Poto Williams’ comments. Yes, there are concerns from Te Rūnanga o Ngāi Tahu at being denied by the Minister’s appointments to have Māori representation on a normally constituted board. Those concerns are very valid, but in the face of all of the change that has engulfed the Southern District Health Board, I am very pleased—and I have met with the individuals concerned—that there is a very strong Māori health directorate in the Southern District Health Board. It is well led by Pania Coote, a local from down there, in Bluff. It does a very good job because, in spite of all the difficulties, it has still managed to have iwi governance and the management advisory groups, and has been able to put comprehensive Māori health plans together for the southern region.

I do commend the Māori health directorate for the work that it is doing in such challenging and difficult times within the Southern District Health Board. We are talking about a geographically massive health board district. It is a very large size. People have said it is the size of Belgium; that is a reasonably sized European country. You could throw in a few more countries, for the South Island. It is a very large and diverse area. Those are the issues, I believe, in terms of the funding model.

What we are doing with this legislation—seven elected and four appointed board members have been replaced by three commissioners. Hopefully, the financial expertise that they will bring to bear will surpass the collective, normally constituted board that was governing the Southern District Health Board. We have these three commissioners, and they have to try to rectify and steady the ship. They have to try to close the gap on the shortfalls of funding. But, again, we are dealing with a very diverse area. It is very hard to get senior doctors all the way down in Invercargill and Southland. Trying to attract senior doctors is hard and it costs money. Those are the challenges that the Southern District Health Board faces.

Just yesterday I learnt that if you require a physio from the Invercargill hospital, there is no physiotherapist down there. You would have to wait a year for some physiotherapy attention down in Invercargill—maybe not that long, but it is certainly long because there is no physiotherapist actually employed down in the Invercargill hospital. This was at the health summit convened by the Hon Annette King. There was actually a very enlightening and very wise group of health sector heads there. Yes, they were very concerned—very concerned.

But returning to the bill, it is very important that we get—we want to get the fully elected district health board back in place. This bill sets 2019 as the year of the automatic transition back to the elected district health board. Let us hope that happens, because, as we have seen with the example of Environment Canterbury’s appointment of commissioners, these time frames are not necessarily fixed. Who knows? We may be back in this Chamber in a few years’ time extending this time out further if the job is not done. I just certainly hope that the commissioners who are appointed are getting on with their job and that they will be able to.

Mr Bridges mentioned that this is an exercise in recalibration for the district health board. I would venture to say that we need more than recalibration; we need a resurgence of funding to go into the Southern District Health Board to make sure that it is actually able to do its job more effectively, so that we can all—[Bell rung] I just want to carry on just a little bit further. I do want to make sure that there is a resurgence of some fair funding, taking into account the geographical size and the large population of the 300,000-plus Kiwis in that southern district—all of those factors, to make sure that we do get back to a top-performing Southern District Health Board.

Those are just the main remarks I wanted to make. I do want to give another shout-out to the Māori directorate within the Southern District Health Board, which is doing an excellent job in improving the health outcomes for Māori across that district. Kia ora tātou.

SIMON O’CONNOR (National—Tāmaki): Having been given the call, I actually feel bad for Kevin Hague all of a sudden now, but anyway. I am very pleased to take what will be, I think, a relatively short call, but I might be found to be wrong on that. There are a couple of things I just want to draw the Committee’s attention to, as we take this Committee stage on the New Zealand Public Health and Disability (Southern DHB) Elections Bill.

The first point, and I raised it in the second reading debate, is that this is a very narrow bill. Its scope is incredibly narrow. Its singular purpose is to stop the elections this year for the Southern District Health Board, for the very proper and right reason that the commissioner needs to continue her work, we believe and, I think—when we were listening to the likes of Todd Barclay, an MP from down there, actually—for the good of the community through to 2019. Why I want to stress that very narrow scope is that a lot of the other stuff that has been raised, understandably, at one level, is not really all that relevant to this discussion, be it from food to the nature of the hospitals and so forth. That is not the direct element of this bill. Those are consequential aspects, and I think what is really important is that all those elements—from the state of the hospitals to how the funding is allocated, physiotherapists and the like; issues that are raised by members, list or otherwise down there—are actually being addressed by the commissioner and her team. And that, I think and assume, has been an important reason as to why the Minister of Health put her in there.

The issues around Māori representation I think people have rightly noted. The Health Committee took the right and proper step to put that into its report. As I say, it is not in the actual bill and amendments because that is out of scope. It is not the bill’s purpose in this Committee stage or otherwise to dictate how the commissioner operates; it is more to say—actually it is, primarily, if not, singularly, to say—that there will not be an election. We certainly encourage transparency, and we have heard some really good reports of late of how the commissioner is being more transparent to the public in the Southland District Health Board. But, again, this does not fit the bill as something to be amended or changed.

I do want to draw your attention to a couple of thoughts on the amendments that have been put down. Both of them I do not think we should support. Primarily, for the purpose, the simplicity of this bill is not served well by these amendments. I can understand the intentions of them, but both actually complicate. They also touch on to that whole dynamic that somehow democracy is best served by being democratic alone. I have touched on this before. Democracy is served because it brings about a particular purpose.

Hon Ruth Dyson: Think of a better excuse than that.

SIMON O’CONNOR: Oh, look, I could but it would get incredibly complicated for the member. So I am going to try to keep it simple.

The whole point of democracy is not simply to vote for the sake of voting; it is to bring about good governance. And although I understand the good intentions of Ria Bond, and can I commend her for her work on the select committee, actually asking the Minister to appoint normally elected people really is just, I think, an overly complicated way of actually doing what the commissioner already does. So I do not think that is overly helpful. As an Auckland MP, I cannot speak to those on the Southern District Health Board, but I suspect that they would not see any difference. If the Minister was simply just to appoint all members of the board and say everything is tickety-boo, to use the technical term, I do not think they would quite believe in that.

I took a bit more time looking at the Hon Annette King’s very recently tabled amendment. I can understand the intention of wanting to get the district health board back in place as quickly as possible. The analogy I think of is actually Selwyn College in my electorate, around an education commissioner. Again, I think that in dynamics like this, communities are best served by a simple mechanism—in this case the board being taken out and a commissioner put in—but a dynamic that is quickly and easily understood. So in this case saying that a Minister may be able to reappoint at some time a board by Order in Council I think actually just complicates matters. I think it is simpler to say it is going to go through to 2019.

I would be interested to hear from the Minister in the chair—who I just have to note is not actually my future brother-in-law, Simon Bridges; I do believe it is Jonathan Coleman.

Hon Dr Jonathan Coleman: Todd Barclay.

SIMON O’CONNOR: Oh, it was Todd Barclay. Oh, right. Well that is jolly good. I was getting all very confused about who was and was not in the Chamber. I would not mind hearing from the Minister in the chair as to the legal ramifications of this postponement. Is it actually possible, legally speaking, for these appointments to be—[Bell rung] Oh, look! That is great. Now I am warming up; I am right into things. I would be interested to hear from the Minister as to whether or not, actually, there is an opportunity, legally or otherwise, for these appointments to be made. My sense is that it is probably not possible. So I would like to hear on that.

The points made by most colleagues are quite right. This is a good bill. That is the reason that the select committee returned it to this Committee without amendment. I do note now that some members are not supporting the bill at this stage, but I do still want to acknowledge the work and the important voice that they brought to this, particularly in the area of Māori representation and transparency. I do thank Labour, in particular, for its support of this. I think it is important that we do our best to serve these local communities.

So, again, it is a simple bill. There are no amendments from the select committee because we understand that its primary, singular purpose is to push out that date to 2019. I think that is what keeps it simple. It keeps it, if you will, an elegant bill and a solution, and I look forward to the continuing excellent work of the commissioner and her team there. I thank them for all that they are doing and, if I might, to the patients and the public down there I say that I think they should know that through the work of the Minister, the commissioner, and others, the community is in good hands with this little piece of legislation.

KEVIN HAGUE (Green): I could certainly listen to Simon O’Connor make that speech several times over. I am pleased he made that contribution again. I would like to urge the National Party to use Simon O’Connor in the election campaign, because I think that message that democracy is not necessarily well-served by voting will be one that really resonates with the New Zealand public.

This bill is fundamentally about the suspension of rights, in this case civil and political rights. In this contribution I want to talk about another sort of rights, and that is the rights of Māori guaranteed under the Treaty of Waitangi. Section 4 of the New Zealand Public Health and Disability Act provides that district health boards must “recognise and respect the principles of the Treaty” with a view to improving Māori health outcomes, and it specifies the functions of contributing to decision making and delivery of health services. That talk of principles—there are various interpretations of what those principles are. There is the “three Ps” idea—partnership, participation, and protection—or there is Justice Somers’ construction that actually says that the principles must not only include all of what is included in the articles of the Treaty but go beyond that to the central ideas that underpin those articles as well.

But, actually, regardless of which of those we choose, the inevitable conclusion must be that the Treaty demands, under article 2, that Māori are present and contributing to joint decision-making at the top table of an entity like a district health board. That is actually what the statute says. I notice that the Minister of Health is yet to answer any of the questions that have been asked, although possibly Todd Barclay was representing him in his contribution.

In his second reading speech, the Minister indicated that the Treaty issues that had been raised—concerns about the effect of suspension of section 4 of the Act, in this case—would be met by the commissioner providing for Māori participation at advisory committee level. Like the concerns I raised in my earlier contribution about that being an inadequate mechanism for meeting the transparency requirement that the people of the southern district had expressed, representation at the advisory committee level is not an adequate way for the responsibility of the Crown through the Southern District Health Board to be met. The Crown will be failing its statutory and ethical responsibility to honour the Treaty, whether we are talking about articles or principles.

What is required here is for the Minister of Health, instead, to act. I do not believe that the Minister’s right to instruct district health boards has been in any way changed by his appointment of commissioners; he may still instruct. So whether he includes a proper Treaty provision in the bill before the Committee of the whole House right now or he commits now to using his power to instruct to require that the Southern District Health Board will, in fact, step up to the mark and incorporate iwi representation, mana whenua representation at that top level amongst that group of commissioners—either way is satisfactory, but to do neither is unsatisfactory. It fails the statutory test. I will leave it there, Mr Chair, and thank you very much for the opportunity to make another contribution.

JENNY SALESA (Labour—Manukau East): I would like to discuss clauses 3, 4, and 7. Clause 4 sets out the purpose of the bill, including the cancellation of the 2016 triennial general election of the Southern District Health Board, in order for the continuation of the office of the commissioner. This is not a bill that we should pass in this Committee without rigorous scrutiny, because it suspends a community’s democratic rights for electoral term, therefore barring the ordinary members of the public from making decisions that affect their own lives and their own health services.

It is also notable that the usual rules around openness and transparency relating to the decisions of the Southern District Health Board, or any district health board, do not apply to a commissioner. Clause 3 provides that this bill, if passed, would be repealed on the day elected members of the Southern District Health Board take office after the triennial general election 2019, which would be on the 58th day after the polling day.

The issue of democratic rights is crucial, and it is one that is very important to the Labour Party. However, on balance, considering that the commissioner at the Southern District Health Board has had only just over a year or so to overhaul the financial mess that the Southern District Health Board has undergone, Labour supports this bill because it is important to give adequate time to the commissioner and the assistants to be able to put things in order. However, one extension of the term should be more than enough for the changes to achieve a new financial stability.

It is crucial that there are no further rollovers for the commissioner’s term, and that the democratic elections return to take place in 2019. I ask the honourable Minister of Health, the Hon Jonathan Coleman, to consider taking a transitional approach before the 2019 elections, as circumstances warrant. So I strongly support the Hon Annette King’s amendment. Clause 7 of this bill cancels the 2016 general election for the Southern District Health Board, and in relation to that triennial general election, clause 7 disapplies certain provisions of the New Zealand Public Health and Disability Act 2000 and the Local Electoral Act 2001 for the period that the bill is in force.

The Health Committee when it was hearing submissions on this bill heard a lot of comments from members of the public saying that they were concerned about the way that the commissioner and her assistants were making decisions behind closed doors. However, making directions to the commissioner in the context of this bill is not desirable, for a number of reasons. The Southern District Health Board runs a public service for the benefit of its local communities. The operations of the commissioner and her assistant commissioners must therefore be as open and as transparent as possible.

Labour has pushed to ensure that there is more transparency at the Southern District Health Board, and I am pleased to say that the commissioner has made moves in this direction. There are now more sessions that the public can attend. We have also pushed for more frequent reporting, and it is heartening to hear that this is also beginning to happen. Labour supports this bill. Thank you.

Hon Dr JONATHAN COLEMAN (Minister of Health): I have listened to this debate with interest, and I must say that it is great to have this outbreak of bipartisanship between Labour and National on this, so I thank the Labour Party for its support of the bill. It would have been good to have universal support across the Committee. I am not quite sure why New Zealand First is not supporting it. The Greens, through their spokesperson Kevin Hague, seem to think this bill is about the removal of democracy. Well, it is not, actually. It is about the big picture here.

The reason for this bill is actually that we have got to restore the sort of financial governance that is required in order to deliver the health services that the people of Otago and Southland absolutely deserve. So you have to keep in mind that big picture. No Minister of Health removes a district health board lightly. I see there are a couple of former Ministers of Health here, and they know exactly what I am talking about. We took this decision after all options had been tried over many, many years. There were longstanding problems around the financial governance in the Southern District Health Board. We had a Crown monitor there. We had had it under intensive monitoring. There had been many, many discussions, so it was with a great deal of reluctance that we finally took that step last June to remove the board and put a commissioner in place.

I want to pay tribute to the doctors, the nurses, the physios, all the clinical people, all the people who work right throughout the Southern District Health Board area in clinical and non-clinical roles, because they actually do a fantastic job delivering for the people of the southern region. Working in health care is never an easy job, and the primary aim in everything that we are doing in the health sector has to be to make sure that we are getting more and more access to more and more services for more and more of the public, all the time. So that is why we need this extra time for the commissioner to do her work.

I would just like to commend Kathy Grant for the fantastic job that she is doing down there. It is a very difficult role and she is ably supported by three really great commissioners: Graham Crombie, Richard Thomson, and—some people have actually forgotten that we have got a third deputy commissioner—Angela Pitchford. So you have got a very well-balanced team there. Actually, it is a non-political team, in the sense that we have picked the best people to get the job done, regardless of where their political sympathies lie, and that is what I think is the real strength of that commissioning team that we have got in there right now.

Mrs King has raised this amendment—she wants to know whether we could actually reinstate the elected board once the commissioners’ work has been done. Well, we thought very carefully about all of the options with regard to the duration of the commissioner and the deputy commissioners in these positions. In the end, the consensus is that it is going to take until 2019 to get the job done. It is a big job. You have got to turn around the financial situation, you have got to lay the foundations for the excellent clinical services that we have got to deliver down there, and, ultimately, of course—and we are totally committed to this—we have got to rebuild Dunedin Hospital.

The idea of having a change to this bill, in the form of an amendment, actually presents a legal issue, because there is no mechanism under the Local Electoral Act to hold an election outside the triennial general election without further amendment. So it would be quite a complex process. I think that goes to the chair of the Health Committee’s point. There also would actually be the loss of economies of scale, holding an election outside of the cycle, even if we were to go through that very complex process, and you would end up with two district health board elections in close proximity. So we are not going to be doing that.

Then Ria Bond had her point. She wants to reinstate, as I understand it, elected members on to the board. What she is asking for, actually—the use of clause 16(1) of Schedule 2 of the New Zealand Public Health and Disability Act—actually only applies in the situation of newly created district health boards. So it would not be legally possible under existing legislation, in this case.

So, look, in summary, it is a very necessary piece of legislation. I am really grateful that the Labour Party has seen the bigger picture. This is absolutely vital, and we will be having an election for this district health board in 2019. Thank you.

Hon ANNETTE KING (Deputy Leader—Labour): I thank Minister Jonathan Coleman for his comments in reply. The Minister of Health has said that he does not believe that the amendment that I have put forward for a postponement instead of cancellation of the 2016 election would be possible, that there is no legal ability to do that. I presume that was the advice that he was receiving from officials just a few moments ago. It would be interesting to see exactly what that advice is based on—because the suggestion was that you put in place an Order in Council—and why that would not be a mechanism that could be used. It would be interesting—I do not know whether we will have time, Minister, tonight, but you might be able to reply to me in writing.

If the Minister is not prepared to accept an amendment, is he prepared to use the “Tony Ryall mechanism”, which I outlined in my contribution? The “Tony Ryall mechanism” was used at Hawke’s Bay District Health Board, where he turned the commissioner into the chair of the board and then appointed the former elected members as a governance board. Would the Minister consider that, because if there is no legal mechanism, as the Minister said, for my amendment, there was obviously no need to have a legal mechanism for the Tony Ryall approach? It was possible for the Minister to make that decision and to appoint whomever he liked to the board in place of an elected board, and he chose to reappoint former elected members. Would the Minister consider that as another mechanism?

But before that, Minister, could you set out your expectations of the commissioners. You said it could take up to the 3 years—in fact, it is more like 3½ years—before they actually would have finished their work. There must be a work plan that the Ministry of Health and the Minister are working to—a work plan of what, exactly, your expectations are for the commissioners, and what is needed to be achieved before there would be satisfaction for there to be an election in 2019. The Minister said that he thought that it would take right up to 2019 to achieve it, so there must be a plan.

There must be expectations, and I ask the Minister—he cannot do it tonight, obviously—whether he would be prepared to provide the Health Committee, which took the New Zealand Public Health and Disability (Southern DHB) Elections Bill very seriously and listened to the advice that we received and worked very well on the bill, with his expectations and the time frame that he has put on the commissioners, so that we can actually measure that progress. I think that would give a lot of comfort to those who were worried—that actually there is a plan going forward, there are expectations, and that the Minister himself will be monitoring what these commissioners do along the way. If the Minister was able to do that, I think that would be progress indeed.

There is just one other issue that I would like to mention, and that is the issue of transparency. One of the changes we did try to get—we talked about it at the select committee; we suggested a change that wrote it into the bill—was greater transparency. Under advice, and looking at it, we decided that it probably was not possible, because already, under the New Zealand Public Health and Disability Act, the commissioners are required to establish statutory advisory committees; they have to make meetings, agendas, reports, and minutes publicly available; and they must publicly notify meetings, and the opportunity be given to the public to attend.

I think what worried the select committee was that at the time that we were hearing the submissions, the commissioners had made no attempt for that to happen, even though they were commissioners and they are required under the Act for that to happen. It did not occur until after it was raised at the select committee. On 28 April the commissioners announced that they were now going to hold these statutory committees in public. Minister, we would be keen to ensure—and I am sure that I could say the select committee would be keen to ensure—that that transparency and openness continues, because that is the way that the commissioners will build trust and faith with the people of the southern district. If there is openness and honesty, and they have the ability to see what is being done on their behalf—and I have to say there is a high level of suspicion that has built up down there—and if the Minister could keep his foot on the commissioners to be as open as possible in the sharing of information, that, I think, would be a great help in alleviating some of the concerns that were raised at the select committee.

A party vote was called for on the question, That clause 1 be agreed to.

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.

Clause 1 agreed to.

A party vote was called for on the question, That clause 2 be agreed to.

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.

Clause 2 agreed to.

A party vote was called for on the question, That clause 3 be agreed to.

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.

Clause 3 agreed to.

The question was put that the following amendment in the name of Ria Bond to clause 4 be agreed to:

replace clause 4 with:

4 Purpose

The purpose of this Act is to integrate a commissioner within the bounds of the 2016 triennial general election of the Southern DHB in order to provide, until the repeal date, for the continuation of guidance of a commissioner for the Southern DHB.

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

Ayes 58

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

Noes 63

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

Amendment not agreed to.

A party vote was called for on the question, That clause 4 be agreed to.

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.

Clause 4 agreed to.

A party vote was called for on the question, That clause 5 be agreed to.

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.

Clause 5 agreed to.

A party vote was called for on the question, That clause 6 be agreed to.

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.

Clause 6 agreed to.

The question was put that the following amendment in the name of Ria Bond to clause 7 be agreed to:

in the heading to clause 7, replace “cancellation” with “Postponement”.

replace clause 7(1) with:

The following provisions of the 2000 Act shall apply to the Southern DHB in relation to the triennial general election of 2016, explicitly:

(a) Clause 16(1) of Schedule 2 (which provides for the Minister to appoint persons to hold positions on the board of that DHB that would otherwise be held by elected members); and

(b) Clause 16(3) of Schedule 2 of the 2000 Act does not apply to the Southern DHB triennial general election of 2016.

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

Ayes 58

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

Noes 63

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

Amendment not agreed to.

The question was put that the following amendments in the name of the Hon Annette King to clause 7 be agreed to:

in the heading to clause 7, replace “Cancellation” with “Postponement”.

7 Postponement of 2016 election of Southern DHB

The triennial general election for the Southern DHB in 2016 is postponed until a date set by Order in Council.

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

Ayes 58

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

Noes 63

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

Amendments not agreed to.

A party vote was called for on the question, That clause 7 be agreed to.

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.

Clause 7 agreed to.

Bill to be reported without amendment presently.

Bills

Taxation (Transformation: First Phase Simplification and Other Measures) Bill

In Committee

Part 1 Amendments to Income Tax Act 2007

STUART NASH (Labour—Napier): This is an interesting bill and it is one we support. It is the Taxation (Transformation: First Phase Simplification and Other Measures) Bill. It is one of those bills where you would think that with everything going on in the tax world at the moment, there would be a much broader agenda that the Government would be concentrating on, instead of little nuances. But this is important in terms of the integrity of the tax system and in terms of bringing it into the 21st century—of that there is no doubt—as a lot of our other tax law should be brought into the 21st century around overseas trusts and all that sort of carry-on. We all know about that. I am assuming that my colleague Grant Robertson is going to talk a little bit more about that at a certain point in time.

As mentioned, this bill—or part of it; Part 1 certainly—is about bringing the tax law into the 21st century. Let me give you just one brief example. What we talk about in this bill are things like—in the past the legislation has talked about “in writing”. In the past what a taxpayer has had to do if they required anything from the Inland Revenue Department (IRD) or the Commissioner of Inland Revenue was they had to put it in writing. It was not counted as valid, I suppose—for want of a better term—unless it has been in writing, and therefore, if it is not, then, I suppose, it is challengeable.

Let me just give you just one brief example, or maybe a couple of examples. Clause 23 relates to section EI 1 of the Income Tax Act 2007, and it is just an example of the sort of thing I am talking about. Section EI 1 (1), “Spreading backward of income from timber”, says: “A person who wants to make an allocation under subsection (2) must apply in writing to the Commissioner no later than 1 year after the end of the income year in which they derive the income.” What this section of the Income Tax Act will change to is “A person who wants to make an allocation under subsection (2) must apply to the Commissioner no later …”. What we have done is we have taken out the term “in writing”.

There are a whole number of pieces of legislation that are being amended—the Income Tax Act, the Tax Administration Act, and a whole lot of other Acts—that are covered by this bill. There is one interesting thing, though, that I would like to talk about, which I think is in the context of where we are in this day and age and is an interesting example. It did not come up at the Finance and Expenditure Committee, and I consider myself slightly remiss because I did not pick it up, to be honest. But this is clause 47 in Part 1 of the bill we are talking about, and this is talking about repealing sections LZ 9 to LZ 12 of the Income Tax Act. These sections are being repealed.

Let me tell you what sections LZ 9 to LZ 12 relate to. They are about credits for savings in special homeownership accounts. This provision is being deleted, so now there is no such thing as a tax credit for a homeownership account. What that actually did was it meant that if a taxpayer put money into a special homeownership account as set up by the bank, then they got a credit of 4.5 percent. It was a very simple formula, but what it actually did was it provided another vehicle for New Zealanders to save for their first home. We have heard many times in this House how hard it is for New Zealanders to get into that home. What section LZ 10 did was it gave a maximum amount for a special homeownership account for 1 year. It is quite insightful, because what section LZ 10 actually says is: “For the purpose of calculating the amount of a credit under section LZ 9, the maximum amount of a single increase in savings for a special home ownership account for a tax year is”—wait for it—“$3,000.”

Section LZ 11 talks about the maximum amount that you can have to get this credit, which is $10,250. This is the 2007 Income Tax Act, so it is only 9 years ago, and 9 years ago we thought—when I say “we” I am talking about Parliament—that having $10,250 in a homeownership account was actually a lot of money. In fact, we made that the maximum amount you could have in an account in order to get the tax credit. Now we look at homeownership, and if you have got $10,000 in an account you do not even get a meeting with the bank manager—in fact, the bank manager will not even open your email. In fact, I suspect that the reason why we are repealing this section of the legislation as opposed to amending the amount of money that you can have is (a) because homeownership accounts do not exist and (b) because if we did think they were a good idea, we would amend that amount from $10,250 to $100,000, because $100,000 is the sort of money you do need in a homeownership account to have any chance whatsoever, certainly in Auckland, of getting a foot in the door. So we have repealed this section.

We have repealed section LZ12, “Meaning of increase in savings”, but it is just one of those anomalies, I suppose. It is interesting to look at from a historical perspective, because only in 2007 we thought this was important for New Zealanders to be able to save for their home. Now we have decided there are other vehicles, or we have probably decided—what is the point of having $10,000 in an account? It is just not worth it.

Back to what we are doing—the proactive side of this legislation. What we have actually said, as mentioned, is that we have taken out, by and large—when I say “we”, I am talking about the select committee and, I suppose, Parliament as a whole—the sort of archaic term where you have got to apply “in writing”. Let me give you quite a salient example of this. Just this evening I had dinner with a couple of tax experts, and I said to them: “Your office is based in Lower Hutt, isn’t it?”. They said: “No, no, we are in Featherston Street.” I said: “But your PO Box is in Lower Hutt.” They said: “Oh, yes, no it is. It is down there.” I said: “How do you collect your mail?”. They said: “Literally, we collect it once every 3 months because no one writes us letters any more. We have had three letters in about 3 months.” One of the letters was a card from me, another of them was a cheque—

Peeni Henare: Bit old school.

STUART NASH: —yes—from the IRD. I am not too sure how much it was. The third letter was a bill. This reflects the 21st century. No one does anything in writing anymore. What we have done is replace the words “in writing” with words like “ask”, “request”, “reply”, or “notify”. These verbs have been defined to allow a freer interpretation of actions and how people work in the 21st century. What this has done is it has put emails on the same footing as paper letters delivered by post.

There was some concern—well, no, there was not a concern. There was a query in the Finance and Expenditure Committee about how we would actually determine whether someone had received one of these emails, but in a way, if you think about it, it is the same as if a letter was posted. How do you actually know whether a person has received that letter? It is actually, I would argue—and I think we argued—easier to determine whether a taxpayer has received an email as opposed to whether a taxpayer has received a letter.

This just improves the integrity, in a way, of the tax system. What it also does is it is part of the IRD’s Business Transformation process, which we hope is going to make things a lot more efficient and make it easier for taxpayers to engage with the IRD but also make it easier for the IRD to engage with taxpayers, because what we certainly require is for taxpayers to work with the IRD. If they can do that through electronic means, it is by far the easiest way to do it. It would be interesting to know—and I do not know this; I doubt the Minister in the chair knows—how many transactions or how many interactions have been deemed null and void because what happened was done through an email conversation and then someone said: “Ah, but you are not allowed to do this via email. It is got to be done via writing, via the Act.” I am assuming that what the IRD has done when it has communicated via email is it has taken the pragmatic approach and said: “Well, technically—technically—by legislation you have got to deliver something to us in writing. You have got to notify the commissioner in writing, but because it is an email and we have received it, it is all good.”

So, as mentioned, probably all we are doing with Part 1 of this bill is actually just legislating a practice that has gone on ever since email has been in common usage, I suspect. But what this does do is it is a simplification process, I suppose. We always like to make tax law simplified. I know that sounds a little bit of an oxymoron—tax law and simplification—

Dr David Clark: The Government likes a bit of complexity.

STUART NASH: —we do like a bit of complexity, Dr Clark—but what this part is about is it aims to provide a greater use of digital channels for increased convenience and reduction in compliance costs. Would that not be great? There is a reduction in compliance costs as well. I suspect that one of the major reductions in compliance costs will not necessarily benefit the taxpayer; it will benefit the IRD. I think it was one of the largest customers of New Zealand Post until recently because, of course, everything had to go out in writing and it complied with the law, so there was a lot of money spent on stamps. What has sending a letter gone up to these days? I think it costs $1 to send out a letter, and they deliver only 3 days a week. So this is sort of a pragmatic perspective from that—there is no doubt about that.

Because we are going to make this very simple, these terms are going to be relevant, are going to be part of law, and are going to be part of common practice from the day this legislation receives Royal assent. We are not going to wait until the end of the fiscal year just so the Government can get every last little bit out of it. As mentioned, it is part of the pragmatic process.

JULIE ANNE GENTER (Green): In rising to speak on the bill this evening, I would like to comment first on the Supplementary Order Paper that I have put forward, which is Supplementary Order Paper 173. This would amend the Taxation (Transformation: First Phase Simplification and Other Measures) Bill, which fundamentally amends the Income Tax Act.

The purpose of my Supplementary Order Paper 173 is to improve the disclosure around New Zealand foreign trusts. We did not consider this issue at length in the Finance and Expenditure Committee. Of course, the reason for that is that the Inland Revenue Department never did continue its review that it intended to undertake back in 2014 around the disclosure regime for New Zealand foreign trusts. It had intended to undertake a review because we were attracting criticism because there was the possibility that people offshore were using New Zealand foreign trusts as a way to avoid paying tax in their home country, and for perhaps more nefarious purposes. But, of course, as we have come to know in recent weeks, the National Government was lobbied directly by people who are very active in the New Zealand foreign trust industry, some of whom were very close to the Prime Minister, and some of whom are directors of an astonishing number of companies.

We have here the Cone Marshall directors of around a thousand companies—look-through companies—and of course they lobbied the National Government, which then decided to give that message to the Inland Revenue Department that we should not continue the review of the New Zealand foreign trusts regime. So we are left here with a situation, because the Mossack Fonseca leak has pointed to the role of tax evasion and avoidance globally, and the terrible problem that it is playing in increasing wealth inequality around the globe. Of course, tax havens serve no useful economic purpose. They do not further the goal of achieving a more prosperous and fairer economy for all people, and that is something the Green Party holds very, very dear. We want to have a fair and prosperous economy and we do not want New Zealand to be playing the role that it has been playing.

Simply—very simply—we think that it is a perfectly reasonable and sensible idea to have the Inland Revenue Department collect information on the people who are setting up New Zealand foreign trusts so that they cannot be used for tax evasion, avoidance, or any other nefarious purpose. We just want full disclosure. I think that is something that the National Government—really, I cannot understand why it would not want full disclosure. It does not cost anything. It simply means that our New Zealand foreign trust regime cannot be abused by people who are seeking to break the law or do things that are wrong.

Although the Prime Minister started talking about this issue when it first broke, saying that New Zealand already had full disclosure in respect of New Zealand foreign trusts, of course it turned out that that was not true, and many tax experts and academics pointed this out. I have a paper here from Michael Littlewood from the University of Auckland. Anyone can go and look it up online. He is a tax expert—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the member. I have looked at this closely, I say to the member, and this is actually outside the scope of the bill. Because we are in the Committee stage here, we must focus on Part 1 of the bill. I have sought advice, and if we look at Speaker’s ruling 132/1 it is covered there that amendments that are outside of the scope of the bill do not widen the scope of the debate of the bill. So, unfortunately, I am going to have to rule it out. If the member wants to continue, I am not going to cut your time off, but in terms of the Supplementary Order Paper specifically that you are actually referring to and the foreign trusts part of that, then that is out of the scope of the bill. The member can continue, but keep it within the bill, as Part 1 actually identifies.

JULIE ANNE GENTER: I raise a point of order, Mr Chairperson. I am just seeking your clarification because my understanding is that the Supplementary Order Paper was accepted and it was not ruled out of scope. So I am unclear how it is that you are able to now rule it out of scope.

The CHAIRPERSON (Lindsay Tisch): I am just going to seek some advice on this, because although a Supplementary Order Paper can be tabled and then it becomes evident whether it is in or outside the scope of the bill, my understanding is—and I am seeking advice—that if it is outside the scope, it cannot be ruled out until it is tabled. That is why it has been tabled. You have got a Supplementary Order Paper number on it. I am seeking advice now, but I am advised that because it is outside the scope of the bill, you cannot actually refer to it in the context that you are. You can refer to Part 1, of course—that is the part that we are on—but in terms specifically of your Supplementary Order Paper on foreign trusts, that is what is out of the scope and out of order. I say to the member that I have sought advice, and the ruling that I have made stands. Although you have tabled the amendment—and that is fine to table the Supplementary Order Paper that you have—until you actually start speaking to it, one does not know what you are actually going to be saying. It was not until your speech had started—I did seek advice before I intervened. The ruling is a ruling of the Chair that it is outside the scope and it is out of order, so, from the member’s point of view, if you wish to continue you still have time available. You need to come back on to the scope of the bill, which is Part 1.

Grant Robertson: I raise a point of order, Mr Chairperson. I just want to ask a couple of questions about your ruling, because I would have thought it was normal practice when the decision is made to rule out an amendment that either it is at the point at which a person attempts to table—this is not a handwritten amendment. This is an amendment that has been tabled. It has a number. It has been accepted. So the first hurdle is that, it has to be accepted and that has occurred. It is then, in my understanding, normal practice that when we come to the vote on the amendment, that would be the stage at which you may or may not decide that it remains relevant to the bill, rather than you making a ruling actually in the middle of someone’s speech, when it is being debated. I mean, I had intended to give a speech, and I would have thought you might hear some calls and that would be what would help you decide, when we came to a vote, as to whether or not it was in order.

The CHAIRPERSON (Lindsay Tisch): I thank the member for those comments. They are helpful. Although a Supplementary Order Paper can be tabled, and the Clerk’s Office has allowed it to be tabled, until a debate on it actually happens one does not know what the points of debate are going to be. It is only once the debate has started—and that is why I did allow it to carry on longer. In reference to what you are saying, I did allow it to happen to see what the content of the debate was going to be. On that basis, once the member got into the discussion of the substantive part of what the debate was about and referred to the Supplementary Order Paper and the foreign trusts, it was at that stage that I intervened and said it was out of scope of the bill and now out of order.

Stuart Nash: I raise a point of order, Mr Chairperson. I am just seeking your guidance on when we will actually be able to debate the Supplementary Order Paper. There are some clauses in the bill that do talk about foreign investment funds. So there could be some relation to that, or there are parts in the bill that talk about listing on the Australian Stock Exchange. I suppose my question is, at any point in time during the Committee stage, will we be allowed to debate Julie Anne Genter’s Supplementary Order Paper at all?

The CHAIRPERSON (Lindsay Tisch): It is the Chairperson at the time who makes that deliberation. I have ruled that this Supplementary Order Paper is out of order and out of context. If the member wishes in the course of the debate to talk about the points that you have mentioned, the presiding officer at the time will make that determination. I have said that this Supplementary Order Paper is out of order because it is out of scope, and that is the end of the matter. Now I am inviting Julie Anne Genter to continue with the time available, if she wishes to continue on Part 1.

JULIE ANNE GENTER: Thank you, Mr Chair. The purpose of this bill is to simplify and improve the administration of the tax system, and so it makes a number of minor amendments to a variety of Acts, including the Income Tax Act 2007. I take it that I am allowed to at least say what my Supplementary Order Paper would have done, which was amend section 59B of the Income Tax Act, which currently requires only the name or, potentially, just the date of settlement on the trust that relates to a foreign trust, which is clearly not full disclosure. I am sorry to say that the National Government will not even allow us to debate this in the Committee, even though it would have been a perfectly relevant and simple amendment to the Income Tax Act that would have simplified, greatly, our tax system and provided a whole lot more disclosure on an issue that is of great importance to New Zealanders and, indeed, people all over the world.

GRANT ROBERTSON (Labour—Wellington Central): Part 1 of the bill, as other speakers have noted, consists of a series of amendments to the Income Tax Act, and, as Julie Anne Genter has just said, the vast bulk of them are actually about amending terms to give them clarity of meaning. When we were in the Finance and Expenditure Committee, it really did become a little like an English language class in that we had a number of discussions about the difference between “ask” and “apply”, and between “request” and “apply”. As Stuart Nash has already said, we deleted the word “written” in a number of places because, of course, people are not, strictly speaking, writing things today as they have done in the past.

Quite clearly, taxation law needs to be modern. It needs to keep up with the way in which terms are used in the modern world, and that is why I had hoped that we would be able to debate other changes that also modernise terminology and process in the Income Tax Act, because, surely, that should be what Parliament does. These tax bills come to us on a regular basis from the Government. We come in hope each time that the word “transformation” will actually mean something—that a bill will actually change, in a significant way, the way the tax system operates—and disappointment greets us on every occasion on which we come to this House. This would have been the opportunity to make a change like the one that Julie Anne Genter suggested in her Supplementary Order Paper 173, because Part 1 of the bill is about amending the terminology that is used in the Income Tax Act so that everybody using the tax system understands it.

Right now, today, there is a section covered by this—section 59, as Julie Anne Genter said—that is not at all clear about what it actually is there to do. There is a heading in the Act, “Foreign trusts”, but, actually, when it comes to what is required of people when they read that section—they come to the Act, they read the Act, and they say “What is a foreign trust?”—at the moment, it is bizarre. What it actually says is that unless you are in Australia, we are not actually interested in who the foreign trustees are or where they are coming from. So that kind of terminology is actually important to the operation of the Income Tax Act.

Being able to understand when someone fills out a form—and the process here is that there is the section of the Act, section 59, which was sought to be amended here, which then in turn creates an obligation under the Act that is fulfilled by filling out something called an IR607 form, which is the form that you fill out if you want to have a foreign trust. What the Supplementary Order Paper that Julie Anne Genter put up sought to do—

The CHAIRPERSON (Lindsay Tisch): That is out of order.

GRANT ROBERTSON: I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): No, wait until I have ruled. We cannot talk about foreign trusts because that is not in the bill. Foreign funds are a different matter. Foreign trusts are out of order because it does not appear in the bill. That is what I ruled on earlier on, and that is why I want the member to come back and focus on. It was all right up until he started talking about foreign trusts.

GRANT ROBERTSON: I raise a point of order, Mr Chairperson. I want to be clear here that the ruling that you made just recently was that you were judging on the debate as to whether something was relevant or not. With great respect to my colleague Julie Anne Genter, a debate actually involves more than one person, and I believe what I have been trying to do in my call is explain why Part 1 is important, why terminology in the Act is important, and why—

The CHAIRPERSON (Lindsay Tisch): That is fair enough.

GRANT ROBERTSON: Yes, and that is what I have been trying to do. I do not want to relitigate your ruling, but I am doing what I think is the appropriate thing, which will help the Chair in a decision about whether or not a Supplementary Order Paper is actually within scope, by having a debate about it. So I will keep speaking and you will probably sit me down.

The CHAIRPERSON (Lindsay Tisch): I thank the member. I say to the member Julie Anne Genter that I think you have raised a very important issue here that is going to need further, much closer examination. I have made a ruling—and I know that you are probably not happy with that ruling—on the basis of advice, but I am sure you have raised something that we will need to consider more fully in time. But as it stands at the moment, I have made the ruling, and we are staying with that. I say to Grant Robertson, in respect of the points that you are making, to tread very carefully, but up until the foreign trusts part you were within the scope, in my view.

GRANT ROBERTSON: Thank you, Mr Chair. The point that I was making—the first of a couple of points I want to make about Part 1—was that the issues that are covered in Part 1 are around terminology, essentially, and that those things are important and that they are in constant need of updating because the meaning of words and the way words are interpreted does change.

For instance, there was a discussion on clause 31, which amends section EK 16, about what is the difference between “informed” and “notified”. The idea was that being “notified” came back in the definitions that we discussed as being a very formal concept—a concept that would be one that would have to be in writing, for instance. We discussed the importance of how those terms changed their meaning over time, and the same applies, I think, to matters throughout the Income Tax Act, including definitions of terms like “foreign fund”, “foreign trust”—whatever you want to choose. I think that it is a valid discussion to be able to say: “Let’s get the terminology right and let’s be consistent with what happens in the rest of the world.”

One of the criticisms that has been taking place in recent times over aspects of our tax legislation is that we are out of step with the rest of the world and that we are creating the mismatches that the Prime Minister talked about, and the Minister in the chair, Michael Woodhouse, talked about, in the House earlier today. The concern that there is a mismatch between our tax regime and that of another country is what creates difficulty. It creates what they call arbitrage opportunities for people if there is a difference between one country’s tax system and another. Therefore, the terminology that we use needs to be consistent internationally, and I think that is precisely what Julie Anne Genter was attempting to get across in her Supplementary Order Paper 173—the way in which we govern particular aspects of our tax regime is not consistent with the rest of the world.

The terminology we use and the underlying meanings of the forms that we ask people to fill in are not the same. That can be exploited by people who want to hide their wealth and people who do not want to pay their fair share, and we should not stand for that as a country. That is why in Part 1 of this bill the changes to terminology are important, because New Zealand should have a tax system that is consistent and that is well regarded around the world, and that is at risk as we stand here today.

I do want to move on in the remainder of my call to another matter in Part 1, which is the question of employee share schemes. Just to make sure we are all happy that this in scope, it is covered precisely by clause 52 and onwards from there. Essentially, the issue that the select committee was asked to debate when this came up was, effectively, changes that allowed employees to choose to withhold tax using the PAYE rules on any employment income that an employee received under a share scheme. There was a balancing requirement put into the legislation that there be a requirement on employers to disclose the tax value of any benefits under a share scheme done using a monthly schedule for employers. Largely, people supported the first part of that, which is that there should be more flexibility around the way that tax on employee share schemes is imposed, but people were not so keen on the requirement on the other side to be able to actually report on that. So the officials and our expert adviser worked on this.

Employee share schemes are a good thing. They are an important part of many people’s contracts and working lives now, and they are well regarded by a lot of employees. It helps people feel a sense of ownership of the organisation that they work for. But, obviously, when it comes to taxation, they create some level of complication and the possibility that people will not be as transparent as they were.

The select committee, when we considered this, adopted a series of changes that, essentially, allow the—there was a general acceptance that employees could choose to use withholding tax to deal with this, but, in terms of their reporting obligations, a number of changes were made, essentially, allowing large employers to have additional time to compile the necessary information for making the returns that were needed. Essentially, this has been done by deeming share scheme income to arise in the next repayment return period for a large company. That is understandable, because it gives them the benefit of having a little bit of additional time to be able to do this while still disclosing the information that would be required in a normal monthly schedule.

We in the select committee were happy to accept that recommendation to allow companies to do this, but our expert adviser was at pains to point out to the select committee that this was the kind of clause we would probably have to return to and review at some point to ensure that the obligations were actually being met and that they were not themselves too onerous when they were met. It is important because, as I say, on this side of the Chamber we support the idea of employee share schemes being part of contracts, because they are, in many ways, part of the new way of doing business.

I know my colleagues on the other side of the Chamber are fascinated by the Labour Party’s Future of Work project, and one of the things that has arisen during that—

Brett Hudson: Oh, I was wondering when you’re going to do some.

GRANT ROBERTSON: Brett Hudson, I know, spends all day poring over the Labour Party’s Future of Work documents. If he did, he would see that one of the issues that has arisen during that discussion is different forms of organisation of work, be they cooperatives, be they people working on their own and self-employed—or examples like share schemes and the growing use of those in the future of work.

On this side of the Chamber, we are happy to support the clauses about this because they allow us to support a new way of people being recompensed and keeping the Inland Revenue Department happy at the same time. That level of flexibility that has now been included for those employers with employee share schemes to be able to choose how they pay their tax and to have a little bit of scope in terms of when they disclose that, needs to be handled carefully.

Dr DAVID CLARK (Labour—Dunedin North): In speaking about transformation in respect of this bill, what is, I guess, interesting—and unfortunate, in my view—is that the bill is incremental. It is actually not about fundamentally transforming the tax system, although the bill uses explicitly in its title the word “Transformation:”. What we do need in our tax system—and this will be agreed, I think, across the Committee—is transparency. We need rules that are simple and straightforward so that they can be understood, so that they do not provide opportunity for abuse of the tax system.

The Transparency International organisation, in its Corruption Perceptions Index, has viewed New Zealand as being less transparent over time. We were first in the world in 2012 and now we are rated as fourth in 2015, and that drop down the international rankings in terms of corruption perception is damaging to New Zealand internationally. So I want to commend the Government for the changes—the incremental changes—that are made in this bill to make the system clearer and more straightforward.

If we refer to the information provided by the Inland Revenue Department (IRD) in the commentary, it refers to the communications framework, and clauses 60 through to 66 of the bill clarify—and we have heard some of the examples used already. The word “ask” is changed to “apply to”, and so on. These changes seem trivial, and in some ways they are, but where they are clarifying things and making it more difficult for people to misinterpret them or skew them for purposes that are less than honest, that has got to be a good step forward. A good deal of the communications changes, we are told by the IRD, relate to making sure that we have a system that can cope with electronic communications, because that is the world we are living in today, where we no longer necessarily send a written statement to the IRD ending an agreement or giving notification of change, and so on, but we do it by email. That is reflected in the changes that are being made in these clauses and, specifically, in clause 61. There is the opportunity to “notify the Commissioner” as opposed to doing it “in writing”, as a limited example of what notification might mean.

I note also that in the Supplementary Order Paper that is being discussed, there is an attempt in there, in the definition of “foreign trust” that is put forward, to put it forward in an electronic form. So I do bring that to the Committee’s attention because there seems to be something in concert there with what the bill is trying to achieve. It is trying to make it easier for people to comply, and to provide less ambiguity in the law, because precisely when things are difficult and ambiguous is when we run into problems. I think the principles we could agree on across this Committee are that the tax system should be simple and it should be broad. We will have different definitions of that. The Government’s definition of “broad” is certainly not one that I share. The tax system seems, from my perspective, stacked in the interests of the mega-wealthy, and most New Zealanders will feel hard-done-by when they look at tax legislation closely, not only because they are being forced to look at tax legislation closely but because when they actually do that, they will see that it is often written in the interests—and, particularly, some of the changes this Government has brought in—of those who are very well off indeed, and that it is not in the interests of most New Zealanders.

So I would commend this Supplementary Order Paper 173 of Julie Anne Genter because it has made an attempt to say that we can make this more straightforward. We can make sure that people are able to supply information in a way that is transparent, that is straightforward, and that attempts to ensure that as a country we are not perceived as having a tax system that is designed deliberately to be complex and to favour those who have wealthy and clever tax lawyers, but, rather, as having a system that is easy to comply with for all New Zealanders—one that makes sure that we are perceived internationally as a fair place to do business. I come back to the point I made right at the start, which is that concern about New Zealand slipping down the rankings in the corruption perception index, because this is a very real thing.

I have had the opportunity—and I consider myself very fortunate—to travel abroad recently, and that opportunity—

Hon Member: Who with?

Dr DAVID CLARK: On the Speaker’s tour. My goodness, I am not going to talk about that at length. But, very seriously, one of the opportunities that that provides is the opportunity to go and visit other parliaments and to see how they do their business, and see just what they are wrestling with in their domestic affairs. Many countries that we visit as parliamentarians, when we have that opportunity, want to know how New Zealand has attained this reputation for being a fair place to do business. It is an incredibly important part of New Zealand’s story. It is what the rest of the world would like to be like. So they are concerned, as we are concerned, when we see New Zealand’s reputation dropping, when we see a perception of corruption rising in New Zealand, and when that reputation that we have fought for for so long to attain as being a place that is transparent and fair to do business is undermined.

So I would say that any amendment to this bill, and any Supplementary Order Paper that seeks to make the tax system fairer, more transparent, and easier to comply with, and that makes it possible to comply with the tax system without having fancy tax lawyers well-versed in international tax avoidance, is a good thing. We should be affirming it here in this House. We should be supporting the changes that make our tax system fairer and avoid the perception of corruption. It is a simple point—it is a simple point. We know that there is work going on in the OECD. The Minister of Revenue, I am sure, will regale us shortly with progress on the base erosion and profit shifting programme that the OECD is undertaking to try to make sure that there is transparent tax treatment around the world. From my point of view, the Supplementary Order Paper put forward that would seek to define foreign trusts and require—

The CHAIRPERSON (Lindsay Tisch): No, no. That is out of scope.

Dr DAVID CLARK: I will come back to the point.

The CHAIRPERSON (Lindsay Tisch): Just concentrate on the provisions in the bill. I have already ruled about the foreign trusts, so let us concentrate on Part 1.

Dr DAVID CLARK: The simple point is that anything that seeks to make the tax system more simple and transparent should be viewed as a good thing. Any defensiveness on the part of Government members will reflect on them—it will reflect on them. I look forward to hearing their viewpoints on this material, because they ought to be in favour of the measures that are in the bill that do make it more modern, that make it clearer, and that make it simpler. But, by gum, it is not transformative.

Grant Robertson: By gum?

Dr DAVID CLARK: By gum, it is not transformative, and it needs to be—it needs to be.

I am sure the member David Bennett opposite, who is a lightning rod for thinking in this sphere, will have a constructive contribution to make, which we will all want to hear, about how the tax system can be made simpler and how the perceptions, which are growing, of New Zealand as a more corrupt country can be challenged so that we can once again seek to be viewed as the most transparent and fair place in the world to do business. That is something that I truly believe is worth striving for. New Zealand’s contribution on the world stage is something that we ought to be proud of, and to those of us on this side of the House, who see our ranking slipping over the years as other countries perceive us to be less transparent and more corrupt than we used to be, it is of concern. It is of concern to us, and I believe it should be of concern to this whole House.

STUART NASH (Labour—Napier): I have got a contribution to make around clause 59. It is quite interesting that there are three members of the National Government who are members of the Finance and Expenditure Committee and that they are quite happy to yell across the floor. I would love it if the chair of the committee, at least, would stand up and give a contribution. I am sure he has a lot to offer. He certainly does when he is sitting down. I think he should make that official.

We have talked about the fact that we are simplifying, mainly, away from writing. Let me just give you an idea of—I will not say how “far-reaching” this is, but how many amendments we have had to go through. So for words like “apply”, there are 39 changes to different Acts; “ask”, there are 11 changes; “inform”, two changes; “notice”, 28 changes; “notify”, 14 changes; and “request”, nine changes. This is in the schedule, and this is where we insert these defined terms at the bottom of each clause so that if a taxpayer has any concern or any doubt about what, for example, “apply” might mean or “ask” might mean, they can go to the interpretation section in the Act and they will find out exactly what it does mean.

One thing I would like to talk about is a change to clause 59, and I think this is actually a very good thing. This is the Income Tax Act, and what clause 59 basically says is “Section RM 5 amended (Overpayment on income statements)”. This is overpayment on income statements. If we look at section RM 5 of the Income Tax Act, it says: “This section applies when an income statement has been provided to a person and the result is that an amount of tax must be refunded to the person. For the purposes of this section, the amount of tax must be more than $200.”

What clause 59 proposes is to move this threshold from $200 to $600. So how it works at the moment is that when a salary and wage earner—not a business taxpayer, but a salary and wage earner—needs an end-of-year assessment, they can apply for or get issued what is called a personal tax summary. The result is that if the refund at that moment is less than $200 and they do not confirm their personal tax summary—so they do not put it in, but it is less than $200—then what will happen is that the IRD—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to report progress.

Progress to be reported presently.

House resumed.

The Chairperson reported the New Zealand Public Health and Disability (Southern DHB) Elections Bill without amendment, and progress on the Taxation (Transformation: First Phase Simplification and Other Measures) Bill.

Report adopted.

The House adjourned at 9.55 p.m.