Thursday, 26 May 2016

THURSDAY, 26 MAY 2016

THURSDAY, 26 MAY 2016

Mr Speaker took the Chair at 2 p.m.

Prayers.

Bills

Appropriation (2015/16 Supplementary Estimates) Bill

Procedure

Hon BILL ENGLISH (Minister of Finance): I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2016 (B.7).

Mr SPEAKER: That paper is published under the authority of the House.

Bills

Appropriation (2016/17 Estimates) Bill

Procedure

Hon BILL ENGLISH (Minister of Finance): I hereby present the 2016 Budget Speech, the Budget at a Glance, the Fiscal Strategy Report (B.2), the Budget Economic and Fiscal Update (B.3), the Summary of Budget Initiatives (B.19), and the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2017 (B.5 Volumes 1-10).

Mr SPEAKER: Those papers are published under the authority of the House.

First Reading

Hon BILL ENGLISH (Minister of Finance): I move, That the Appropriation (2016/17 Estimates) Bill be now read a first time.

Bill read a first time.

Budget Statement

Budget Debate

Budget Debate

Hon BILL ENGLISH (Minister of Finance): I move, That the Appropriation (2016/17 Estimates) Bill be now read a second time.

Mr Speaker,

It’s a privilege to present the eighth Budget of this National-led Government.

I recall our first Budget, delivered in difficult times, with Treasury forecasting never-ending deficits and ever-rising debt.

Today, however, I can present a healthy set of public accounts.

The Crown’s books show rising surpluses and falling debt.

This is on the back of an economy forecast to grow at around 3 per cent on average over the next few years, supporting more jobs and higher incomes.

Budgets are not just an accounting exercise.

They are about achieving better results for New Zealanders and their families from almost $80 billion a year of existing spending.

And they are about ensuring that any new spending is directed to where it will make a real difference.

The Government has done that, in areas ranging from schools to child health to reducing crime and to supporting new jobs.

Budget 2016 builds on these achievements and identifies new opportunities.

Mr Speaker,

This Government is ambitious for New Zealand.

We can realise that ambition with a strong economy and continued prudent management of the public finances.

Budget 2016 invests in a growing economy. In particular, it supports four significant measures.

The first is the Innovative New Zealand package – a $761 million investment that focuses on growing our science system, producing the skills New Zealand needs, and encouraging innovation and investment in regional New Zealand.

The second is a $2.1 billion infrastructure programme that focuses on transport, schools, and the investment needed to deliver a modern, flexible tax system.

The third is a Social Investment package providing $652 million more to support vulnerable New Zealanders and help them live better lives.

And the fourth measure I want to highlight is a significant investment in the health sector. This will receive an additional $2.2 billion over four years to ensure New Zealanders continue to have access to high-quality healthcare.

The Budget delivers these measures, and more, because we have retained tight fiscal discipline and demanded better results from public services.

We owe that to New Zealanders who go out to work every day and pay their taxes.

Budget 2016 is possible because of the constructive working relationships National has with the ACT, United Future and Māori parties.

I want to acknowledge their continuing support and contribution to stable government.

Economic outlook

Mr Speaker,

New Zealand’s economic outlook is positive.

Treasury is forecasting real GDP growth of around 2.9 per cent over the coming year, and 2.8 per cent on average over the five years to June 2020.

Over 200,000 more people are in work now than three years ago, and another 170,000 new jobs are expected by 2020.

Over that period, the unemployment rate is expected to drop to 4.6 per cent and the average wage is forecast to rise to $63,000 a year.

Only a handful of developed economies enjoy such a positive outlook.

Strong population growth is both an indicator of New Zealand’s economic performance and a contributor to it.

For the first time in a generation, we have a net annual movement of people into New Zealand from Australia – rather than an exodus of Kiwis across the Tasman.

Consumer spending and services exports are two other key factors driving economic growth.

Further impetus is apparent in a large pipeline of construction projects, and low interest rates should continue to stimulate investment.

Certainly, times are challenging for our dairy farmers, who are finishing another season facing depressed prices.

But elsewhere, New Zealand is reaping the benefits of an increasingly diversified economy.

Total exports increased by almost $2 billion last year.

Tourism, the beef sector, ICT, wine and much of the manufacturing sector are all performing well.

Overall, nominal GDP is expected to be $17 billion higher over the five years to June 2020, compared to the Half-Year Update, and this flows into higher-than-expected tax revenue.

Responsibly managing the Government’s finances

Mr Speaker,

Responsible fiscal management has been the hallmark of this Government’s previous seven Budgets.

It is also a feature of Budget 2016.

The surplus target helped us turn the Government’s books around. Now our focus is shifting more to debt repayment.

Reducing debt to more prudent levels will give the Government more room to support New Zealanders, and the economy, should we face another economic shock or natural disaster.

The Government’s fiscal priorities over the next few years are:

Maintaining rising operating surpluses.

Reducing net debt to around 20 per cent of GDP in 2020.

If economic and fiscal conditions allow, beginning to reduce income taxes.

And using any further fiscal headroom to reduce debt faster.

Budget 2016 forecasts confirm the Government is on track and its books are in good shape.

We’re continuing to manage our spending carefully. This means government expenditure falls to 29.7 per cent of GDP this year and stays under 30 per cent thereafter.

Modest OBEGAL surpluses are forecast for this year and the next, before rising strongly from 2017/18.

Cash surpluses are forecast from 2018/19, which means the Government will start paying down debt in dollar terms.

Net debt is expected to peak at 25.6 per cent of GDP next year and to fall to 19.3 per cent of GDP in 2020/21.

As a result, New Zealand Superannuation Fund contributions are expected to resume in 2020/21, two years earlier than forecast in the Half-Year Update.

Mr Speaker,

Spending pressures have changed since the last Budget – in part because higher-than-expected population growth has increased demand for public services.

As a result, $600 million a year of new spending previously earmarked for Budget 2017 has been brought forward.

This takes new operating spending in Budget 2016 to $1.6 billion a year on average.

This allowance remains much smaller than those of the previous government, whose eighth and ninth Budgets, for example, contained an average of $4.3 billion a year of new operating initiatives.

As I have mentioned, reducing debt is one of the Government’s key priorities.

Therefore, a further $400 million a year previously earmarked for Budget 2017 has been used to reduce debt.

Extra capital spending to fund investment in infrastructure and other public assets is set at $1.4 billion in Budget 2016, slightly lower than previously anticipated.

However, in addition, significant capital spending will be funded from reprioritising within the Crown’s balance sheet, taking the total new capital spend in Budget 2016 to $2.6 billion.

In total, these changes reduce Budget allowances for new spending by around $1.2 billion over the next five years, helping to further reduce debt while still investing in public services.

Building a productive and competitive economy

Mr Speaker,

A priority for this Government is to build a more productive and competitive economy that supports jobs and higher incomes.

New Zealand has a proud history of innovation.

Our national prosperity hinges on businesses, large and small, investing in new products and markets.

We are already seeing that happening.

Business investment has increased from $31 billion in 2010 to $40 billion last year, and is expected to grow to $50 billion by 2020.

Our export sectors are taking advantage of free trade agreements, and selling more New Zealand products to growing markets around the world.

The economy is diversifying, with the ICT sector, for example, more than doubling its exports over the past eight years.

This Budget looks to the future, and includes measures to further support business and regional innovation.

The largest is the $761 million Innovative New Zealand package to encourage entrepreneurship, skills and economic growth.

This package will support more jobs, higher wages and a stronger, more diversified economy.

The package has three parts.

First, investment in science and innovation will increase by $411 million over the next four years.

A number of different science and research funding streams have been boosted, including those that have a strong potential impact on New Zealand’s economy, environment and society.

The Marsden Fund – which supports excellence in research – will be expanded, as will funding for the Health Research Council.

In total, increased funding will take cross-government investment in science and innovation to $1.6 billion a year by 2019/20.

Second, to support skills and employment, we are investing $257 million in more tertiary education and apprenticeship programmes, particularly in the areas of science, engineering and agriculture.

Tuition subsidies will be increased in a number of subject areas and the Government will fund 5,500 more apprentices by 2020.

Funding will be provided to help second-chance learners gain basic skills and to strengthen workplace literacy and numeracy programmes.

Finally, to support regional economic development, we are introducing a series of initiatives worth $94 million that will unlock business opportunities and benefit regional communities.

Additional funding will be provided for the Government’s Regional Growth Programme and to develop more regional research institutes across New Zealand.

As a package, Innovative New Zealand provides significant and targeted support to help New Zealanders and businesses across the country meet the demands of a changing modern economy.

Mr Speaker,

Further support for businesses – particularly small enterprises – comes through a $187 million SME-friendly tax package, which the Prime Minister announced last month.

This provides a better balance of incentives to encourage taxpayers to pay the right amount of tax.

Provisional tax will be reformed, with a new pay-as-you-go option allowing small businesses to pay tax as they earn income.

Use-of-money interest will be eliminated or reduced for the vast majority of taxpayers.

Contractors will be able to choose a withholding tax rate that suits their own circumstances.

And the ongoing 1 per cent monthly late-payment penalty will be scrapped from 1 April 2017 for new debt – although immediate penalties and interest charges will continue.

Mr Speaker,

The Government remains committed to ensuring that everyone pays their share of tax according to the rules.

We have a strong tax system in New Zealand and we are making further changes targeted at multi-national companies.

New Zealand recently signed an international agreement that will make it harder for multi-nationals to artificially lower their tax liabilities.

We will soon introduce legislation to increase the amount of tax compliance information shared between our treaty partners.

We have commissioned an independent review of the disclosure requirements for foreign trusts, which is due by 30 June.

And we will continue to work with the OECD to address tax avoidance.

These changes will help ensure that our tax base and disclosure rules remain robust into the future.

Mr Speaker,

The tax changes previously announced are part of a wider business transformation programme that embraces new technology to make it easier and less complicated to pay tax.

The Budget includes $857 million for Inland Revenue’s new tax administration system, replacing one that is a quarter of a century old.

This funding is just one part of a significant Budget infrastructure investment package totalling $2.1 billion.

The package provides $115 million for roading projects in Gisborne, Marlborough and Taranaki, under the Government’s previously announced Accelerated Regional Roading Programme.

KiwiRail will receive $190 million for the operation of the national rail network. The Government has a strong expectation that KiwiRail will continue to improve its performance to reduce the level of Crown support required in the future.

Nine new schools and 480 new classrooms are included in a package of schooling investments that total $883 million.

The package provides for growth in student numbers as well as for the Christchurch schools rebuild programme.

Tourism infrastructure is also being upgraded.

Mr Speaker,

As well as investing in infrastructure, the Budget also includes funding to free up more land and increase housing supply in Auckland.

Housing development on surplus Crown land in Auckland receives a $100 million boost in capital funding.

This follows the $52 million set aside in Budget 2015 that has so far resulted in agreements for 20 parcels of land.

The Government’s longstanding view is that obstacles to the supply of land and housing are the main issues facing the housing market.

It is essential these obstacles are removed.

As well as our work on reforming the Resource Management Act, the Government will soon issue a National Policy Statement on Urban Development.

This will direct councils to allow more housing development where necessary and to measure the impact of their decisions on house prices.

Mr Speaker,

The Budget includes significant extra funding to ensure more people in need have access to social housing.

$200 million is provided over four years for at least 750 more places for those with the most pressing housing needs, and to meet the rising cost of social housing rents.

Another $41 million will support around 3,000 emergency housing places a year and establish a new emergency housing Special Needs Grant.

This is part of the Government’s wide-ranging reforms focused on ensuring that New Zealanders in need have access to appropriate housing.

Mr Speaker,

The tourism sector is experiencing rapid growth and Budget 2016 provides a $45 million package of support over four years.

This includes a new $12 million fund to help communities with smaller-scale infrastructure projects, like restrooms and carparks, to deal with growing numbers of tourists.

Tourism New Zealand will receive $8 million to target key growth markets and increase the record number of tourists arriving here.

$25 million is being provided to upgrade and extend the New Zealand Cycle Trail and ensure it continues to offer a world-class visitor experience.

And we are also starting a two-year trial to streamline border processing for low-risk travellers to make it easier for them to visit New Zealand.

Mr Speaker,

The Government is committed to protecting our natural environment and to playing our part in addressing global climate change.

The Government will phase out a subsidy in the Emissions Trading Scheme that was introduced as a temporary measure during the global financial crisis.

This has allowed some businesses to pay one emissions unit for every two tonnes of pollution they emit.

We believe it is time businesses move towards paying the market price for their emissions.

Removing the subsidy will positively impact the operating balance by $356 million over the next four years, based on a New Zealand Unit price of $12.

The Budget also establishes a $100 million fund to help clean up New Zealand’s rivers, lakes and aquifers over the next decade.

The Freshwater Improvement Fund will contribute to projects that help communities improve water quality. Priority will be given to projects involving the private sector or philanthropic funds.

An additional $16 million is being provided to control wilding pines in the highest priority areas.

And the Battle for Our Birds programme – New Zealand’s largest pest control operation – will receive $21 million this year. This will help fight an expected pest population boom caused by a heavy forest seeding.

$70 million over four years is being provided to tackle bovine tuberculosis.

This new funding will help achieve our goals of eradicating TB from cattle and deer by 2026, and from infected wildlife by 2055.

Delivering better public services

Mr Speaker,

The Government is committed to delivering better public services.

Four years ago, the Prime Minister gave the public service a set of challenging targets covering welfare, education, crime and health.

Since then, significant progress has been made.

For example:

More than 40,000 fewer children now live in a benefit-dependent household.

The proportion of 18-year olds achieving an NCEA Level 2 qualification has increased from 74 per cent to over 84 per cent.

Total crime has dropped by 16 per cent, with youth crime down by almost 40 per cent.

And rheumatic fever rates have fallen by 45 per cent.

Child abuse in New Zealand, however, remains too high.

Mr Speaker,

The Government is investing in new ways of supporting more New Zealanders off benefits and into work, so they can lead better lives.

As a result, the number of people on a benefit is the lowest for eight years, and the lifetime cost of the welfare system has fallen by $12 billion since 2011.

This is an example of our Social Investment approach, which uses data-driven investment techniques to determine when and how to intervene to change lives for the better.

Budget 2016 includes a comprehensive and wide-ranging Social Investment package, with extra funding of $652 million over four years.

There are a number of parts to this package.

The Government recently announced major state care reforms and a complete overhaul of Child, Youth and Family to improve the long-term life outcomes for New Zealand’s most vulnerable population. A new system will be in place by the end of March 2017.

The Budget provides funding of $200 million for these reforms over the next four years.

This includes developing an independent youth advocacy service, raising the age of care and protection, caregiver recruitment and training, workforce training and development, and better access to support for caregivers.

This is the Social Investment part of new Budget funding for the care and protection of children. In addition, a further $145 million will meet increased demand from more children and young people in care.

Mr Speaker,

Another part of the Social Investment package provides $61 million to extend the Youth Service to 19-year old parents, and to 18 and 19-year old job seekers at risk of long-term welfare dependency.

If we do not take action, the average 19-year old sole parent will spend 18 years on a benefit.

It is our responsibility, both to families and to taxpayers, to do more to help these sole parents gain independence.

The Social Investment package also includes $50 million to reduce barriers to employment, including for people with complex health conditions who would otherwise spend significant time on a benefit.

The package includes an extra $43 million for schools to increase support for around 150,000 students most at risk of educational failure.

The Whānau Ora programme, which focuses on self-determination, receives another $40 million to support around 2,500 more whānau and families in areas such as managing health and disability issues, improving financial literacy and reducing household debt.

I acknowledge the advocacy and support of the Māori Party for this new approach.

Another $20 million from the Social Investment package is to support offenders at a particularly vulnerable time when they leave the controlled routine of prison and return to the community.

The package also provides $36 million to ensure more New Zealand families live in warmer, drier and healthier homes.

Half of this funding is targeted at insulating around 20,000 rental homes occupied by low-income families through the Warm Up New Zealand programme. This will take the total number of newly-insulated homes since 2009 to well over 300,000.

The other $18 million – delivered through the health system – focuses on reducing preventable illnesses among young children who are living in cold, damp and unhealthy homes.

By addressing the drivers of demand for public services, and helping people become more independent, Social Investment also reduces the long-term costs of providing public services.

As I’ve said many times, what works for communities also works for the Government’s books.

Mr Speaker,

Budget 2016 contains a significant increase in funding for core public services that New Zealanders rely on every day.

This extra investment comes with a clear expectation that public agencies must strengthen their focus on delivering better results.

The health sector is a particular priority and the Government will invest over $16 billion in health in the coming year.

Over the next four years, $2.2 billion of additional funding will be provided for new health initiatives and to meet demand.

Pharmac, for example, will receive an additional $124 million over four years to provide more New Zealanders with access to new medicines.

As Pharmac has announced, it proposes using this funding to provide new treatments in a range of areas, including for melanoma and hepatitis C.

The Budget also provides $39 million for a national bowel screening programme which, when fully implemented, is expected to screen over 700,000 people every two years.

As well as that, a further $96 million over four years will increase the number of elective operations.

This is part of a continued effort to increase elective operations. Around 50,000 more surgeries are now performed each year than in 2008.

Budget 2016 provides $169 million more for disability support services and a further $73 million for primary healthcare. This includes extra support for the free doctors’ visits and prescriptions for under 13s that we announced in Budget 2014.

District Health Boards will receive $1.6 billion over four years to invest in services, meet population growth and deliver better results.

Mr Speaker,

Increasing the price of tobacco is the single most powerful tool to reduce smoking.

The Budget confirms that tobacco excise duty will rise by 10 per cent on 1 January each year for the next four years.

I want to thank the Māori Party for continuing its advocacy for this effective approach to reducing smoking.

Mr Speaker,

This Government measures success by the results achieved for New Zealanders, rather than the amount of money spent.

Since 2008, the proportion of children in early childhood education has increased to almost 97 per cent.

As I’ve mentioned, the proportion of 18-year olds with NCEA Level 2 qualifications has also grown considerably.

Children are starting school better prepared to learn, and leaving school better equipped to succeed.

The Budget continues this focus on results.

The Government will invest a total of $11 billion in early childhood, primary and secondary education in 2016/17. Together, these sectors will receive an extra $1.4 billion over this year and the next four years.

$397 million of this will meet growing demand for early childhood education and provide places for a further 14,000 children.

Additional funding is directed at students most in need of assistance.

Instead of an across-the-board increase in operations grants, schools will receive $43 million over four years to target students most at risk of under-achieving.

In addition, $42 million will be provided for students with high and special educational needs.

As I mentioned previously, the Budget provides $883 million for new school property.

It also includes funding for around seven new Partnership Schools in 2018 and 2019.

I want to acknowledge David Seymour for his advocacy for this initiative.

Mr Speaker,

This Government is providing considerable support for initiatives to improve the education and skills of Māori and Pasifika New Zealanders.

We have provided almost $10 million more over four years for Māori and Pasifika Trades Training. This will increase the number of training places to 3,400 next year – up from just 1,200 in 2014.

In addition, the Budget allocates $6 million over four years for other Pacific peoples initiatives, such as helping Pacific youth in Auckland find work, education or training opportunities.

Mr Speaker,

The Justice sector faces a number of challenges, including the rising prison population, preventing crime and prisoner rehabilitation.

Overall, this sector receives $837 million over the next four years, plus $56 million in 2015/16.

Police receives $299 million, including $49 million from Budget 2015, which will primarily be used to meet wage increases.

Funding of $208 million supports a number of justice sector initiatives, including addressing family violence, increasing access to legal aid and ensuring the justice system better caters for victims of crime.

Corrections receives $356 million to protect the safety of the public, reduce reoffending and accommodate higher numbers of prisoners.

This includes funding to manage offenders returning from overseas and to continue 24-hour GPS electronic monitoring for the highest risk offenders.

Mr Speaker,

$303 million is provided over four years to combine urban and rural fire services into one organisation from the middle of next year.

As announced previously, this will come from a proposed increase in the fire levy from 2017/18, as well as government funding.

I want to thank Peter Dunne for overseeing these changes.

In addition, the Ministry of Civil Defence and Emergency Management will receive an extra $6 million over four years to ensure New Zealand is well prepared for future natural disasters.

Mr Speaker,

A fundamental responsibility of the Government is to protect the safety of New Zealanders.

The Budget provides $301 million of new funding over four years for the New Zealand Defence Force to concurrently undertake domestic, regional and international security tasks.

The New Zealand intelligence community will receive new funding of $179 million over four years.

This will ensure it can provide essential intelligence and security services and remain effective in a rapidly-evolving environment.

As announced previously, the Government is investing $20 million over four years on a new Computer Emergency Response Team to combat cyber-attacks and cyber-crime.

Mr Speaker,

Recognising the importance of the arts, the Budget provides an additional $12 million over four years for the New Zealand Symphony Orchestra, Royal New Zealand Ballet and Te Matatini Kapa Haka Aotearoa.

Budget 2016 also provides $16 million over four years for High Performance Sport to support athletes and enhance our medal prospects at the Tokyo Olympics in 2020.

A further $4 million over four years will go to Drug Free Sport New Zealand.

Mr Speaker,

The Government supports the SuperGold card scheme and is providing $41 million of additional funding to provide certainty for more than 670,000 cardholders across New Zealand.

Christchurch regeneration

Mr Speaker,

Since the first Christchurch earthquake in September 2010, the Government has backed Cantabrians in the initial response, and now in the recovery and regeneration of the region.

I want to acknowledge the leadership of my colleague Gerry Brownlee.

Taxpayers’ financial commitment to the Christchurch regeneration now stands at more than $17 billion – around $700 million more than signalled in the last Budget.

Nearly six years after the first earthquake, the Canterbury community can take real pride in what has been achieved.

Almost 100,000 cash settlements have been made by EQC, which has also resolved more than 60,000 land claims. Around 68,000 homes have been repaired in the Canterbury Home Repair Programme.

In Christchurch’s central business district, 97 per cent of the horizontal infrastructure repairs have been completed.

Overall, $3.9 billion of public sector projects are completed or are under construction, with almost $800 million more forecast to begin in the next six months.

Three anchor projects have been completed in Christchurch – the Hagley Park cricket oval, the bus interchange and the Margaret Mahy family playground.

Work is progressing on the Metro Sports Facility and the Convention Centre.

The recovery phase in Christchurch formally came to an end last month, with the expiry of the Canterbury Earthquake Recovery Act.

The Government will now progressively step back from its leadership role in Christchurch.

Local organisations have been set up to deliver on the Government’s ongoing commitment to the city and the wider region.

This new regeneration phase is not just about rebuilding Christchurch, but also fulfilling the long-held potential of New Zealand’s second largest city.

Conclusion

Mr Speaker,

New Zealanders rightly place a premium on stable government.

Under John Key’s strong leadership, the National-led Government is providing that stability.

New Zealand has made significant progress over the past eight years.

As a country, we are more confident and our economy is growing.

Businesses are creating thousands of new jobs and incomes are rising.

We are getting to grips with our toughest social problems.

And the books are back in the black.

This all means so much more is possible over the next eight years and beyond.

The Government takes a long-term view of its stewardship.

We are shaping policy around a 20 to 30-year view of how we can improve the lives of New Zealanders.

Budget 2016 does that by making positive long-term choices that will further strengthen our economy and our communities into the future.

Mr Speaker,

I commend this Budget to the House.

ANDREW LITTLE (Leader of the Opposition): I hesitated for a moment. I was waiting for Paula Bennett to deliver her budget, but we are not going to have that today. I move, That all the words after “That” be omitted and the following substituted: “this House has no confidence in a government that has lost touch after eight years in office, is too often focused on the few at the very top, and which is forgetting about middle New Zealanders who are trying to get ahead.”

They said, you know, make sure you start your Budget speech with a joke, but I have had the wind taken out of my sails by Bill English. He started by saying: “I am presenting the Budget today.” That was not a Budget. That was not a Budget for New Zealand in 2016. That was scratched-out, patchwork, hotchpotch half measures designed to look like an economic strategy, and it is not. It does not go anywhere near it. You know, you would think, 8 years on—8 years those members have been in charge of the nation’s purse strings, 8 years to make their mark on history, 8 years to add to the legacy bequeathed to them by the many Governments that have gone before them, 8 years to make their contribution to building this great nation—and what we have had served up to us today is no answer to the real problems being faced by all New Zealanders all across the land. Eight years they have had to help Kiwis get ahead, 8 years to help middle New Zealand, and, once again, in this Budget—Bill English’s eighth—they have failed.

This is a Budget that demonstrates, yet again, that they have lost touch, they do not know what is going on, and they have no answers to the problems that New Zealanders are most concerned about—the people who, as the Minister of Finance says, go out each day to work to pay their taxes. They are not helped by this Budget. There are new burdens placed upon them. You just look at how out of touch this Government has become. John Key, who says there is no housing crisis—just go and ask Work and Income. Paula Bennett says that there is a housing crisis, but she has decided that there is a housing crisis for 150 families who are already tenants of Housing New Zealand and that they need the help. Never mind the homeless living in garages and cars—they get no help. Oh, hold on, no—there was a second announcement, was there not? They might get some help. Those members’ response to one of the biggest social crises facing New Zealand is just an absolute shambles, and this Budget does nothing for it.

Then there is the Minister of Health, Dr Coleman, or, as they call him in the health sector, “Dr No”, and it is not helped by this Budget. It is not helped by this Budget. Then we have the Minister of Finance himself, who, when he talks about the young unemployed, 18 to 24-year-olds—whose number has grown by 26,000 under that Government—says: “They’re pretty damned hopeless.” And there is nothing in this Budget for them, either. We deserve better.

Let us have a look at what those members have done on housing. Nothing in the Budget today will make hardly a difference to the real problems in our housing sector. This Government is still in denial about the real problems faced by thousands and thousands of New Zealanders. There is $100 million for new land. Let us put that in perspective. Last year’s Budget provided $52 million for new land, and one of the three housing Ministers—they need so many because, you know, they are really on top of this problem. So last year’s Budget got 13 hectares—13 hectares—and a few hundred houses in 2 years’ time. This Budget allocation will get 25 hectares, and then who knows how many houses? So after 2 years we will have 37 hectares and just a few hundred houses to fix a problem that is tens of thousands of houses behind schedule. That is the real magnitude of the problem, and this Budget does nothing. On social housing, the Government says there is $200 million for social housing. This is a Government that has sold 2,700 State houses and has not replaced a single one, and those members wonder why we now have people living in garages and cars in Auckland and around the countryside. They have failed, and they cannot see their failure and they will not face up to it. That is a disgrace.

None of the measures in this Budget will lift homeownership rates in New Zealand. Those struggling people in Auckland who, no matter how hard they work and how hard they save, cannot get that deposit and will not get that first home—this Budget does not help. It will not solve the crisis. Then, in health, the reality is that even with the extra money, it still does not keep up. And it gets worse, because in the subsequent years after the financial year that this Budget covers, the money goes down. It is as if the New Zealand population is going to shrink. All the elderly who are going to be retiring—suddenly, there is somehow going to be fewer of them. This is not a plan for the future. This is not a plan for a good health system in New Zealand in the future. More New Zealanders will wind up in greater pain for a lot longer because of this Budget and this Government’s failure and this Minister of Health’s failure.

Let us face up to the stark reality of education in this Budget. Operational funding is frozen. There is not extra money for every school. There is no money to keep up with the rising costs of running a school, and we know what that means. Parents, whose costs of contributing to education are already rising 10 times faster than the rate of inflation, will pay more. Their costs will go up because this Government does not see that it has to support a high-quality public education system. It is happy to put the money into charter schools, but every child in the country attending every other public school—they get nothing extra. This is not a Budget for success for our children.

And then the police, when so many New Zealanders are concerned about safety and security in their communities, in their towns and cities—what do we get in the Police budget? Nothing extra. The Government is going to pay the police to negotiate a pay increase—no extra police, and all those police stations that have been closed or understaffed by Judith Collins will remain closed and understaffed.

You see, here is the thing: the Government is not just out of touch; it just does not care. It does not care about middle New Zealand. It has given up. If you look at the Budget projections, if you look at unemployment, the Government says it is concerned about people out of work. By 2020 the unemployment rate for New Zealand, under the Government’s economic stewardship, will still be higher than what it was in 2008. This is not a Budget for the future—this is not a Budget for the future. We need a Government that is going to stop running our economy like it is a school gala day, with candyfloss here and a few trinkets there. We cannot have Budget day turned into the quick-fire raffle, where there is a lot of spin, a few little prizes handed out here and there, but you get home and you find that it has passed its use-by date. That is the way the Government is running it—that is the way it is running it, and it is time to get past the spin.

You see, what we have had under this Government is 8 years of the economic gains that have been made—a much, much greater share going to those at the very top, and those who work for a wage or salary are getting much, much less. Middle New Zealand has been missing out for 8 years, and now, with the eighth Budget under the Government’s belt, there is more of the same. We have had 8 years of skyrocketing house prices, and there is nothing in this Budget for that. We have had a struggling health system, and there is nothing in this Budget for it. Our schools are going backwards. Here is the real injustice: more and more of the cost of our public education system is going on parents and families, but our school performance is declining.

New Zealanders will be asking after today: what on earth is in this for us? What they will be asking is: where on earth did we go wrong? But they should not blame themselves. Even though the Minister of Finance has announced a new constitutional principle—which is that, as the Minister of Finance, he is not responsible for every last dollar—actually New Zealanders will see it a different way. I have got news for the Minister of Finance: he is responsible. He is responsible for every last dollar, and he is going to be held to account for it.

Let us have a look at what is happening in the New Zealand economy. Unemployment is rising—144,000 today. That is 40,000 more than when that Government took office. Forty-three percent of wage and salary earners in the last 12 months did not, or could not, get a pay rise, and yet the Government talks about economic growth. We have had 2 to 3 percent economic growth, and people are working hard and people are trying to get ahead, but nearly half the workforce cannot even get a pay rise. That is not fair. More and more of the share of the economy is going to those who are doing very well, and less and less to those doing the hard work. That is not right. And we know that that slice of the economy, which only a few years ago workers shared in—the effect of that Government’s economic management means that now, on average, the average New Zealand household this year is $50 a week worse off. That is the Government’s economic management. That is the difference. And we still have poverty, with 300,000 kids living below the poverty line.

I have talked about young people—the 18 and 19-year-olds not in education, employment, or training. There are 26,000 more than when that Government took office. That is not a path to the future. That is not a path to success. And in housing—where do you start? Here is the stunning thing. In March this year, as the country was basking in summertime temperatures in what should otherwise have been autumn, contemplating their futures, houses in Auckland, which were sitting there doing nothing, were rising in price by $2,200 a day—not a week, not a month; a day—$2,200. That is not a property market; it is a bubble that is dangerous and unstable and is no good in a properly managed economy. That explains why we have the lowest level of homeownership in 65 years, and it is why we have people in Auckland and in other parts of the country who can no longer afford to even rent something reasonable. That is why they are living in shocking conditions, and this Government has got nothing to say to them about it.

I want to say this: the gap between the increase in the value of wages and the increase in property prices in New Zealand is now getting out of control. We are the second in the world for the worst ratio between personal incomes and property prices. We are beaten by one country: Qatar. I am saying to our Qatari brothers and sisters: “Don’t get too cocky. Don’t underestimate how focused Nick Smith and that Government are on making it even worse for New Zealand.” The housing policy is a shambles. Nick Smith cannot do anything. He promised thousands and thousands of houses on 500 hectares. Two years on, we will have 37 hectares and a few houses. Paula Bennett is running around trying to rescue the 150 who have a roof over their heads already. There are 4,500 families around the country waiting to get a State house, and she thinks that the crisis lies with those already in one. It is just ridiculous—it is just ridiculous. The Government is simply not serious; it has given up.

Then, on education, we know how important education is, but housing is very important because you have got to get people in a stable house so that when the kids go to school, they get to go to that school month after month, year after year. This is not what is happening in a lot of schools around the country, where schools are reporting a turnover of 25 percent of children because their parents cannot hold on to the same house. They have been tossed out of house after house, kids are moved from pillar to post, cannot get a stable education, and that is damaging them too. The Government does not care about that. You see, it does not see it in those terms. It just does not care. The Government fudges and mudges, it fiddles and faddles, and it faffs about because it does not have an answer. That is the way the Government approaches it.

Education is just as important. Education is the great leveller. It is the way you lift yourself up. You get skills, you find out what is going on, and you get to the end of your education and you are equipped and prepared for the world. That is what we used to boast in New Zealand. We used to boast a world-class education system. We do not any more. We are slipping down the ranks internationally. We used to be fifth in reading in the world, and now we are 13th. We used to be seventh in science under the last Labour Government; now we are 18th. We were 11th in maths in the world, under the last Labour Government; today we are 23rd. Standards are falling, and the Government has got no answer in its Budget today. It freezes funding for primary and secondary schools. It is out of touch and does not care. That is who the Government is. Its priorities are all wrong, and the parents are paying more for it.

In health, we know what the impact is of 6 years of routine underfunding of health, which is now $1.7 billion behind. The Government has added another $600-odd million. It will not be enough to keep up, and, worse, its projection is that it will start winding back the funding in subsequent years. It is just plain crazy, and it is out of touch. The impact on real people’s lives is that they cannot get the treatment they need. There are 160,000 people in the last 5 years who cannot get to see a specialist, or when they do get to see one, they get specialists saying: “I’d like to treat you but there is no money. We cannot treat you.” So people are now living in debilitating pain, spending their days on the sofa or on the bed because they cannot move, desperate to get their surgery. They are so desperate in many cases that they now have to raid their retirement savings—that little nest egg that keeps them secure for the rest of their lives. They have to raid that to get surgery that 5 years ago under a Labour Government they would have got. National will not face up to these problems—National will not face up to these problems. National will not stand up for middle New Zealand.

But the Labour Party will—the Labour Party will. Everything that the Labour Party will do in Government will be about getting all New Zealanders a chance to get ahead. We will diversify the economy—we will diversify the economy. It will be helped, of course, by the Our Work Our Future Bill, which, symbolically, was drawn today. If ever there was some sort of, you know, fatalistic symbol that New Zealanders do really want things to be going in the right direction, it is that piece of legislation, which harnesses the power of procurement of the Government and actually focuses on adding jobs in New Zealand, not overseas. Do they have an answer to that? No, they do not care about it. They do not care about it.

We will introduce research and development tax credits. We will not have the kind of Steven Joyce sit-on-high system and toss out a little bit of funding here and a little bit there. That is not the way you get economic development going. Research and development tax credits, Government procurement that is going to create jobs in New Zealand—we will invest in long-overdue infrastructure spending, not the repeated announcements from previous Budgets that we have seen in this Budget. Taranaki is still waiting for that upgrade of State Highway 3—still waiting for their upgrade of State Highway 3.

We will invest in more skills and training. Labour’s ideas will kick-start the economy, and it will be fair for everyone. We will deliver our fair share for middle New Zealand. And in housing, we operate by one principle: we will build more houses. And we will do whatever it takes to build them. There will be new houses, and they will be sold to those people struggling to save their deposit to get them. They will be affordable. For those who need a State house or a social house, there will be more housing for them too. We will embark on that programme, it will be realistic and practical, and it will solve the problem. Those who are suffering at the sharp end of the crisis right now—they will have their problems fixed. Nothing less will do.

In education, we will make sure that more and more of the cost that has been foisted on families and parents right now will not continue, and we will have a world-class education system, with teachers who are focused on teaching and spending time with the children and on getting the best out of them and helping them to succeed. That is what we need. Because we, at least, understand that the future of work and the need for skills is changing and is getting more elaborate and sophisticated. We will fund 3 years’ post-school education and training. People will get that for free because that is what a modern economy will demand, and it will be way better than what this Government is doing, which, right now, is precisely nothing. We will have a health system again that will be the envy of the world, where people who need treatment, need elective surgery, and need operations can get them. It will be done over a sensible period of time, but it will restore the routing that this Government has inflicted on our health system, and people will be better off for it. We will have a Pharmac that can provide new, lifesaving medications, even if it is initially on a short-term basis, so New Zealanders can live with a sense of security once again.

This Budget has failed to deliver for middle New Zealand. Today will be a day of deep disappointment for most New Zealanders. They will not get their fair share. This Budget will not reduce child poverty, it will not lift employment, it will not fix Auckland’s housing crisis, it will not help our kids to learn better, and it will not undo the savage health cuts that this National Government has inflicted on our health system. Here is my message: this Government is not delivering for you, but Labour will. We are the party for all New Zealanders to get ahead, to have a chance, to build opportunity, and to have a sense of hope and security for their future. That is what this Budget called for today. It has totally and utterly failed. Labour is ready to serve.

Rt Hon JOHN KEY (Prime Minister): That was poor old Andrew Little, was it not, who has achieved only one thing in 2016, and that is to make David Cunliffe look popular and confident. That is it for 2016. They do not call him “Angry Andrew” for nothing—but not without good reason, because half of his caucus wants to leave and the other half of the caucus wants him to leave.

You cannot say that he does not have a vision, like all of the great left-wing leaders around the world. I mean, just take a look at it: Bernie Sanders wants to rid the world of poverty. Jeremy Corbyn: he wants to rid the world of conflict. And Andrew Little: he wants to rid the phonebook of Chinese-sounding surnames. He has got a vision for all of those Chinese and Indian chefs. He wants them to be called Bruce or Trevor—that is his idea of a Chinese chef.

Yet again it was another great Budget from Bill English. The man is a maestro. Budget 2016 paints a picture of positivity and success for New Zealand and our economy. Let us take just a bit of a look at some of those numbers, because they are sparkling: 3 percent growth for the next 5 years, stronger than almost any of our counterpart countries. A hundred and seventy thousand new jobs over the next 3 to 4 years on top of the 200,000 we created in the last 3 years. Under this Government, average wages have gone up $11,000—$11,000 a year; that is $211 per week for the average New Zealander. They are going to go up another $5,000 over this Budget period, which will mean that the average New Zealander is earning $307 per week in their pocket under a National-led Government.

We do know that Labour knows how to tax and it knows how to spend. A National-led Government knows how to get expenses under control. They were 34 percent of GDP; they are now under 30 percent of GDP, and debt is on track to be 20 percent of GDP by 2020. Go and have a look around the world. Japan: Government debt is at 220 percent of GDP; the United States: the better part of 90 percent; the United Kingdom: 80 or 90 percent; and there is Australia with deficits as far as the eye can see. Bill English has got this country on the right track and under control, and debt under control as well.

Let us look at the facts. This is an economy that is attracting more people, attracting more investment, attracting more international students, and attracting more visitors. This is a place where interest rates are low and where inflation is low. When it comes to older New Zealanders, this is a Government that cares and delivers. How do I know that?

Rt Hon Winston Peters: Oh, really?

Rt Hon JOHN KEY: How do I know that, Mr Peters? Well, under the National Government, the New Zealand Superannuation Fund has gone up by 34 percent in the time we have been here—34 percent. The average married couple are $250 a fortnight better off under a National-led Government.

I sometimes listen to Mr Little, and I accept that I made a comment to Gerry Brownlee before about Andrew Little’s speech. He said: “You, mate, are the only one who’s listening.” But I listened to it, and I hear this doe-eyed kind of history lesson that is so out of touch with reality. Here is what happened when National came into Government: deficits as far as the eye could see. It was not a health system that was delivering for New Zealand; it was a disgrace. Cancer sufferers in this country did not get help; they got a boarding pass to Australia. That is what happened under a Labour Government.

Before we came into office, 35,000 New Zealanders a year said: “I’ve got a good idea: it’s called living in Australia.” The education system under those people did not even bother to tell parents whether their kids could read or write. It was a country where core interest rates were four times faster. Wages were going up all right—so was inflation. Real wages were going backwards, and in the last 5 years Labour increased Government spending by 15 percent. Our economy was hopelessly ill-equipped to cope.

Let us have a look at the position today. Eight years on—what is the situation across our economy? Well, it is prosperous and productive. This is where expansion is taking place: horticulture, viticulture, ICT, export education, tourism, beef, lamb, honey, manufacturing, and high-tech industries. Here is a clue about how the New Zealand economy is going: there are now more Australians coming to live in New Zealand than New Zealanders going to Australia, and the No. 1 selling white wine in Australia is a Kiwi sauvignon blanc. It is a takeover—it is a takeover.

I want to take a moment to reflect on the strong and stable Government we have provided for the last 8 years, with our partners. Can I thank the ACT Party, United Future, and the Māori Party for their strong and sensible support of the Government, their input, their ideas, and for ensuring that the New Zealand public knows each day that this country is going to run well and efficiently.

Let us go and have a look at some of the specifics in this Budget, because there are some real gems here. There is a whopping $2.2 billion for health. Let us just take a step down memory lane. This Government, this National-led Government—one of the very first things we did was say we were standing behind the women of New Zealand. We have funded Herceptin, and as a result of that, 1,704 women have been granted Herceptin. It is no surprise that in Budget 2016 there is $124 million more for Pharmac. There is funding for drugs for melanoma, like Opdivo. There is a hepatitis C drug that will help 50,000 sufferers of hepatitis C, with a 90 to 100 percent success rate. But, most of all, there is a $39 million investment in a national bowel-screening programme, where 700,000 New Zealanders will, every 2 years, get early detection. That is what a strong economy delivers. It saves lives for New Zealanders, on issues that really matter.

This is a Government that has delivered more elective surgery, each and every year. We know it is not just about spending more money. It is about doing things better and more wisely. In this Budget, there is another $96 million for more hip and knee operations. I remember when I came into Parliament in 2002. Half of the people who came to my electorate office could not even get on a waiting list for a hip or knee operation. Now they get that treatment. And for those who are disabled in our society, there is $169 million.

Let us talk about the plight of the less well-off New Zealand children, what is happening to them, and the support they are getting. I heard all that nonsense about Housing New Zealand before, from Andrew Little. Here are the facts: when we took over, the Housing New Zealand stock was dilapidated and it was run down. This Government has spent $2.2 billion on fixing it up and building more homes. Before those members get a bit too doe-eyed about what they did in respect of Housing New Zealand, in the single-biggest year under the last Labour Government, Labour spent $550 million on building or fixing State houses. Budget 2016 will see a billion dollars spent in Housing New Zealand.

Andrew Little has woken up—maybe people need to live in dry, insulated homes. Well, hello and welcome to the 21st century. Under this National-led Government, already 290,000 homes have been insulated, and 30,000 Housing New Zealand homes. Budget 2016 sees that a further 20,000 rental properties, for the lowest-income New Zealanders, will be insulated. Our Residential Tenancies Amendment Bill will see a further 180,000 homes insulated. If you add all of that up—520,000 homes insulated under this National-led Government. And what did the doe-eyed boys over there deliver? It was 50,000—actually, fewer than 50,000. There is 10 times more insulation under a National-led Government.

It is right that the Government should support the most vulnerable in our community, but it is this National-led Government, in the worst of times, when people were standing up and saying to cut benefits and cut entitlements, that said no. We stood behind the most vulnerable New Zealanders. We maintained Working for Families. We maintained entitlements. We maintained benefits. And guess what? This year, for the first time in 43 years, a National-led Government raised benefits for New Zealanders. There is $652 million worth of social investment—$200 million for Child, Youth and Family for the most at-risk youngsters, tens of millions of dollars to support young parents and young families, drug and alcohol programmes for young pregnant mums, and $41 million for emergency housing. More money is being spent in these areas than ever before.

Let us turn to housing, just for a moment. Once again, what we heard from Andrew Little was some sort of dream-world. OK, under a Labour Government this is how many houses a day were built in Auckland: 10—10. Apparently, Labour is going to house everyone, but its track record is 10 houses. Well, we deliver 40 houses a day, and two every hour in Auckland if the builders work 24 hours around the clock.

The metropolitan urban limit choked off demand, so 154 special housing areas were announced, allowing 56,000 extra houses to be developed. What happened when National announced that? Phil Twyford got out there. He thought he was in an election campaign and put up a whole lot of billboards saying “What a terrible thing”, and then 2 weeks ago it was: “Oh, I’m sorry about that. I’ve changed my mind. I got that one wrong.” It was the same thing when it comes to surplus Crown land. It stayed surplus under Labour, but under National there is more money in this Budget.

Very soon the Government will release the national policy statement on urban development. As New Zealand grows faster, one thing that maybe we can agree on is that there is an emerging consensus that land supply issues have not kept up with all of the demand and must be addressed. So let me make this crystal clear, because this is what the national policy statement will do when it is released over the next few years. It will ensure that councils must make available sufficient land to accommodate growth in the communities. It is no longer a matter of choice or debate for those councils. Land will be zoned residential and developed in quantities sufficient to meet demand—period. That is the same when it comes to industrial land. Let us see who stands up and votes for that if it requires legislation, ultimately, in the House.

In order to live like a First World economy, one needs to earn like a First World economy. That is why, under Bill English and Steven Joyce, you are now seeing this massive investment in a smarter, more high-tech economy. There is $761 million to allow us to compete and be more productive. This is a Government that has put science at the heart of its thinking and has put science at the heart of the economy. We want to make sure that we move away from those commodity markets. But if we want to address the big issues—climate change, the environment, the protection of our native species—all of these things require more money. In science and innovation, Budget 2016 has hundreds of millions of dollars dedicated to this area, and in tertiary education, in more apprenticeships and in a range of different research projects. This will make New Zealand a smarter, better-equipped economy to compete in the First World.

This Budget will also make it easier for our smaller businesses, our small to medium sized enterprises, which at the moment have to pay their provisional tax off a, basically, very antiquated system, which is one of guesswork, which they can never hope to get right. As a result of the $187 million investment, tens of thousands of small businesses will no longer have to worry about that aspect. They will just have to get out there and make their businesses successful.

Tourism is going better than ever—better than ever, I say. There was a time when the Labour Party used to mock the cycleways—mock them. Mind you, there was a time when they used to mock The Hobbit, and then they went off to the premiere and they liked the movie. But there was a time when they used to mock the cycleways. In 2015—here is a number that is worth remembering—a million people went on the cycleways, so there is $25 million more there.

Education is at the heart of a decent society. That is why we have got national standards, that is why we have wired up every school for ultra-fast broadband, and that is why we have the higher expectations for kids getting National Certificate of Educational Standards level 2 or above and for having every child in early childhood education. There is $883 million in this Budget for nine new schools, 480 classrooms, and more help for the most vulnerable. You see, when we get up and say “Those poor kids actually deserve a bit more support.”, Labour does not like it. So its members get up the whole time and say “Give money to poor families”, and the National-led Government delivers just that—more money for poor families—and they do not like it. Where are their priorities?

We are going to continue to invest in keeping our communities safe, because it is the expectation of every New Zealander that they will be safe, and it is the responsibility of the Government to do that. There is more money for our intelligence services, better tools for cyber-security, more money for those brave men and women in the New Zealand police force, and better programmes for drugs and alcohol and all the different things that we are doing. We are investing in the latest GPS for high-risk investors—I mean offenders, not investors, but we are willing to invest in those as well.

The number eight is lucky in Chinese, is it not? The number eight is lucky. Bill English’s eighth Budget will be successful for our country, but not because of the number eight and not because of luck, but because of good management and good choices. While the Opposition is lost in a fog of negativity, Bill English shines a light on prosperity and opportunity. While the Opposition seeks to close off new markets and to ban those who were not born here from investing or immigrating to our country, Bill English seeks to make it easier for New Zealand companies, large and small, to compete and win on the world stage. While the Opposition demonstrates a complete lack of faith in New Zealanders and their abilities and drive to want to succeed and to get ahead without the support of the Government, it is Bill English who empowers them to make the most of their lives, to back themselves and their families, and to understand the most basic principle in life: that there is no substitute for hard work and determination. This country, New Zealand, has a brighter future, and in very large part we have the maestro Bill English to thank for that.

JAMES SHAW (Co-Leader—Green): E Te Māngai o Te Whare, tēnā koe, ki a koutou huri noa i Te Whare, ngā mihi o te wā ki a koutou katoa.

[Greetings to you, Mr Speaker, and to you collectively throughout the House, acknowledgments of the moment to you all.]

I do not often agree with the Minister of Finance, but when he said that this Budget was going to be boring—well, Bill, I am right there with you. We have all been waiting for the big idea, the deep raid into Opposition territory, and the headline-grabbing idea that was going to grab the headlines for the next few days. Well, where is it?

When New Zealanders needed homes, this Government has given us toilets. The extent of this Government’s vision for New Zealand is $40 million worth of toilets for tourists and, presumably, for those New Zealanders who are sleeping in cars. Budget 2016 has shown, yet again, that in response to the great challenges facing our nation, all this Government is willing to do is plaster over the cracks when it could have been building houses. For 8 years now, we have had a Government that has put together its Budgets on the basis of what polls well rather than on what will fix the problems that we face. This eighth and, with any luck, second-to-last Budget shows just how much this Government’s first and only true commitment is to stay in power; its only vision for New Zealand is that it continues to be governed by the National Party.

Today the Government could have used its considerable powers to solve the great challenges facing New Zealand—to leave a legacy, not just a length of tenure. But it has chosen not to. This Government has done as little as possible rather than everything it can. Budget 2016, as with every other Budget for the last 8 years, tries to make it look as if the Government is changing things for the better when all it is doing is preserving the status quo. This Government is the political equivalent of Milli Vanilli: lip-syncing when it should have been leading. This Budget does not solve the housing crisis, but it does pretend to. It does not create the sustainable clean jobs that New Zealand needs—the ones that will pay enough for families to thrive—but it pretends to. It does not protect our rivers or our wildlife, but it pretends to.

So what will be John Key’s legacy? What will be remembered about this National Government and how it used the enormous powers that New Zealand gave it to create lasting and meaningful change? Well, what have previous Prime Ministers left us? Michael Joseph Savage was the architect of the welfare State. Peter Fraser created a world-class education system. Keith Holyoake abolished capital punishment, not because it was the popular thing to do at the time—and it was not—but because it was the right thing to do. David Lange—nuclear-free New Zealand. Helen Clark gave us KiwiSaver, Working for Families, and the Superannuation Fund. And John Key’s Government? It will be remembered for this: for record numbers of homeless people, for children suffering from Third World diseases because of the condition of their homes, for the biggest decline in homeownership ever, for two-thirds of our rivers being so polluted that they are not safe to swim in, for the highest ever rate of greenhouse gas emissions, for native wildlife inching closer to extinction, and for the conservation estate crumbling.

After 8 years and eight Budgets, the National Government has squandered the opportunities to create a meaningful legacy, one that leaves New Zealand in better shape than it inherited. National has chosen to do as little as possible rather than all it can.

The Green Party had three big hopes for Budget 2016. First, that it would fix New Zealand’s housing crisis, give first-home buyers a look-in, and get homeless families out of cars and into houses. Second, that it would herald the start of a transition to a low-carbon economy, with jobs that pay enough for families to thrive. Finally, that it would save our endangered wildlife, clean up our rivers, and cut our greenhouse gas emissions. Let me take a look at how Budget 2016 stacks up against these three concerns—these three transformational shifts that the country and the economy need to take.

On our first measure, that this Budget would fix the housing crisis in New Zealand, this Budget is a fail. I cannot see a single new State house in this Budget or any meaningful steps to enable young families to move into their first home. There is not one new initiative to make homes more affordable for those who do not already own one, or two, or 11. When more homes need insulating to keep kids healthy and safe, Budget 2016 has the smallest allocation for home insulation in years.

The other day the Minister for Social Housing, Paula Bennett, said that there was a housing crisis “for some people”. Well, she is right. It is a crisis for people who do not already own their first home, it is a crisis for people who are not millionaires, it is a crisis for people who are not the children of millionaires, it is a crisis for the governors of the Reserve Bank, who point to our present housing bubble as the single greatest threat that our economy currently faces, and it is a crisis for families who are living in cars and garages. Over the last few weeks we have all been affected by the daily stories of families, many living with parents and working minimum-wage jobs, who are locked out not just of the housing market—they are locked out of a house. These are families like that of mother-of-three Rhiannon, who joined us last week at the launch of the Green Party’s policy to free up Housing New Zealand to respond to the emergency that is facing us.

Ms Bennett says that the homeless have always been with us. Well, that may be true, but only once before in our history have so many New Zealand families been forced on to the street. It was during the Great Depression, and guess what happened next? New Zealand elected the first Labour Government and a Prime Minister, Michael Joseph Savage, who built thousands and thousands of State houses. It was a heroic effort to make sure that every New Zealander had, at the very least, a roof over their heads. They made no excuses about how the homeless have always been with us. They were not interested in plastering over the cracks to make it look like they were addressing the problems whilst at the same time doing everything that they could to appease the property investors’ lobbyists. They actually wanted to solve the problem—that was their vision. That was their commitment. It was not a commitment just to staying in power for its own sake but to using Government to transform the country for the better.

But this Government will not do that, and that means that while one set of Kiwis is growing wealthier at a staggering pace, the homeless families who are victims of this crisis are now in debt to the very Government agency that is supposed to be helping them out. More than any others, Māori suffer disproportionately from the failure to fix the housing crisis. Their challenges will not be solved by Treaty settlements alone; good social policy is also needed.

National pretends that there is nothing we can do other than to build more houses on farmland on the edges of Auckland, but there are much more effective decisions that it could make. National could have taken the simple step of restricting foreign buyers from speculating in our small housing market and pushing up housing prices. National could have started addressing the supply side of our housing crisis simply by building more houses—affordable energy-efficient houses.

If we want to fix the broken housing market, it is time to change the Government. It is time to put families first, to ensure that every New Zealander has a warm, safe house to call their own. As Mickey Savage knew, the Government has the power and money to ensure that every New Zealander lives in a warm, dry, safe home. National just lacks the will.

On the second measure, that Budget 2016 would hail the start of a transformation to a low-carbon economy, this Budget contains one baby step forward and several very large steps backwards. Budget 2016 mentions climate change just once, which, to be fair, is once more than all seven of the previous Budget speeches put together. A long-awaited investment in research and development is a win for those who, like the Greens, have been pointing to New Zealand’s under-investment in innovation as a real barrier to our ability to make the transition. The end of the one-for-two emissions trading scheme subsidy is long overdue, because it has contributed enormously to the 19 percent growth in New Zealand’s net greenhouse gas emissions since this Government came to power 8 years ago.

On the downside, the Government is actually reducing the amount that it is spending on climate research, at the exact time that it is most needed. After 8 years it is pretty obvious that this National Government just does not get climate change. It is the single greatest threat to our long-term prosperity and collective security, and National does not want to even talk about it let alone fight it. In December it signed the climate agreement in Paris, and then immediately—the next day—started undermining the pledges that it made on our behalf. What has it done since signing up to the Paris Agreement? It has committed to keeping the Huntly coal-burning power plant open, spewing millions of tonnes of greenhouse gas emissions into the air. It has invited more oil companies to prospect in our seas, reopening and extending the bloc offer. There are a total of 1,200 electric vehicles on our roads, and nothing that Simon Bridges has announced will make the transition any faster than it was already going to be. Eight years on and not a single Crown car is electric, even though the fleet has been replaced twice in that time.

David Bennett: What’s your car?

JAMES SHAW: I walk. And it has repeatedly refused to include our most polluting sectors in the emissions trading scheme. It is no wonder that New Zealand’s greenhouse gas emissions last year were the highest ever on record. Looking across the House today, I cannot see a single person on the right who is strong enough to break the mind-set of a Cabinet that is dead set on protecting vested interests over the national interest. If New Zealand wants a clean economy, it is time to change the Government.

The third hope that we had for Budget 2016 was that it would protect New Zealand’s natural heritage. The Green Party has been campaigning for years and years and years to pay attention to the polluted state that our rivers have been falling into. National will crow about the $100 million clean rivers fund, its Battle for our Birds, and its wilding pine funds, but it will pay for it with swingeing cuts to the Department of Conservation (DOC) estate and other areas. As the DOC estate crumbles and our wildlife inches closer to extinction, funding DOC’s natural heritage protection has gone down in this Budget by 14 percent. It is robbing the Pīwakawaka to pay for the penguin. National’s spending on conservation has been, on average, $56 million less per year than the last Labour Government’s. That is $336 million that DOC has missed out on since John Key moved into the Beehive. We have the know-how and we have the resources to clean up our rivers, to reduce climate pollution, and to protect the wildlife that we love so much in this country. We say: let us make it happen.

This Budget shows that John Key and his Ministers honestly have no interest in leaving a transformational legacy for New Zealand, and that denies all of us the opportunity of a better country. Today we can rightly ask: where is the equivalent of a Kiwibank in Budget 2016? Oh, that is right, the Government is selling it off to itself for half price so that it can sell it back to itself for full price later. Where is the vision and the compassion that drove Mickey Savage when he kicked off the great State-house build? Where is the bravery that was shown by David Lange when he stood up to the superpowers and banned nuclear ships from our waters? Where is the moral authority that led Keith Holyoake to abolish the death penalty in New Zealand? The sad truth—the sad truth—is that National has no vision for a legacy other than another term in Government.

We need more than a few toilet blocks and more than the plaster through which the cracks are becoming so painfully obvious. National’s legacy will be poisoned rivers, more extinct wildlife, and a nation divided between those who seek to own their home and those who own several. National has chosen to do as little as possible rather than all we can. The Green Party has a vision for a cleaner, a fairer, and a stronger economy; this National Government does not. It is time to change the Government, and change is coming. Nō reira, tēnā koutou, tēnā koutou, tēnā tātou katoa.

Rt Hon WINSTON PETERS (Leader—NZ First): There is only one phrase to describe this document from National: this is a “Get stuffed” Budget. To those wanting a home that they can both buy and afford; to those in pain, desperately seeking an operation, this Budget says: “Get stuffed.” To those wanting a job with First World wages and security; to those wanting First World, affordable education that is paid for by the State, this Budget says: “Get stuffed.” To those wanting law and order in this country and burglars apprehended, with the police numbers to catch them; to those wanting serious infrastructure spending to go to the regions and not just to Auckland, this Budget says: “Get stuffed.” To those retired and living on stretched incomes even though today’s boast from the Prime Minister is the result of our 66 percent law; to those young families who are worried about their family’s future, the answer is: “Get stuffed.”

National thinks these people are invisible. This Government is simply not listening. I spend more time in the provinces and at public meetings than any Government member. I have more public meetings, free to the public—and not a jack-up, tired audience—than any Government politician. We know what they are saying out there. That is why, on a workday down in Gore, I heard all about Mr Barclay, the boy MP. The place was packed out. We know how they feel about the jobs and the lives that they want.

Hon Gerry Brownlee: There aren’t that many phone boxes in New Zealand.

Rt Hon WINSTON PETERS: Tonight, around this country, young parents will lie awake—no, Gerry, you have never had a public meeting that anybody remembers. Just incompetent. Cannot campaign, cannot speak—all bluff and bumf. Tonight, around this country, young parents will lie awake wondering about the future that they can provide their kids. Grandparents will worry about the future that they once had not being their grandchildren’s legacy. Students will lie awake wondering whether they can ever pay off their student loan and get a good job when they finish. Farmers will lie awake worrying about the bank manager’s call and whether they will ever be able to hang on and pass on their farm to the next generation. Many elderly will go to bed cold, without enough to eat, and sit there worrying about the power bill on the table, confused because the retirement that they have worked all their lives for has gone sour. The Prime Minister might sleep like a baby, but hundreds of thousands of New Zealanders do not, and they cannot. Out in the regions, in the provinces, they all wonder why they, the economic powerhouse of this country, have been sacrificed on a cross of Auckland gold in this Budget.

This is not the New Zealand that we once knew. Our opponents like to talk and laugh about old people. They do not remember a time in this country when, if you worked hard and played by the rules, you could make a good life for you and your country. You could find a decent job, buy a decent house, put food on the table, and, every once in a while, take the family for a holiday on a favourite beach, lake, or river. That was not a New Zealand dream; that was once a New Zealand vision, which great leadership made a New Zealand reality. We all know about the growing gap between the rich and the poor, and the problem is not that some have grown so rich; it is how so many have grown so rich. It is a bit like that man from Merrill Lynch boasting that he is a self-made man. He has never been a businessman; he has been a money trader, speculating against whom—his country’s currency.

We have seen three decades of economic experiment. We have seen the majority of people promised that their lives were to be improved, and it did not happen. We were sold deregulation and globalism. We had to make sacrifices to become more competitive, and we had to accept the much lower living standards of other nations. We were told that if we took this globalism aboard, then a rising tide of economic prosperity would lift all boats—it would improve the lives of all New Zealanders. But accompanying this globalism, there have been tax cuts for the rich and growing inequality for the rest. This is a chart, by income decile, of 10 decile numbers of New Zealand homeownership.

Hon Members: It’s upside down. It’s round the wrong way.

Rt Hon WINSTON PETERS: I am not showing it the wrong way. You are precisely right: what should be up is down, and what is down should be up. It is upside down, and Mr Bennett, when we take power, we are going to turn it the right way up and get rid of you first. You are so right—thanks for helping out. That is the chart. Nine deciles all down; the top 10 percent way up. Thank you, Mr Bennett. I knew that, even in a Freudian way, one day you might make some sense in this House. This is a “Get stuffed” Budget. Every commentator should look at this Budget and say “It contains spending details adjustments, but are they adjusted upwards for the population growth?”, because if they are not, the numbers are bogus and propaganda. It is a “Get stuffed” Budget.

Perhaps the best backdrop to this Budget was the announcement yesterday by Paula Bennett. This was a sign of utter desperation—proof that the emperor from Merrill Lynch has no clothes. It was a policy written on the back of an envelope, thought up in the back of a ministerial car, on the way to the airport. She announced that if people would leave Auckland, she would give them $5,000 to go. Just last week Mr Key said: “Go to the WINZ office.” Yesterday Paula Bennett said: “Here’s $5,000; now get lost”—“Here’s $5,000; get lost.” In short, no matter how many generations you have been living in Auckland, she wants you to get out of there so she can make way for an immigrant, and that is what the Māori Party supports.

Hon Members: Oh!

Rt Hon WINSTON PETERS: Yes, that is what it supports. Oh, yes it does. Look, Mr Ganesh Nana is an immigrant. Mr Ganesh Nana was on Radio New Zealand this morning and he said this—this is what he said, because he is an honest man: “Underlining everything is the rapid population growth.” Not my words—he said it. He said that immigration plays out in all areas right across the board, and, Madam, if you have not got the guts to say it, I have. I am standing up for New Zealanders who know whom this country used to belong to. They spend decades—dare I say it, a hundred years—to build this country, and we will not have some soft-in-the-heart and soft-in-the-head person waving out to me from the gallery like that. On immigration, this man, who is an immigrant, said this: “Underlining everything is the rapid population growth.” His words—not mine. To say that it is a matter of racism shows just how unpatriotic and un - New Zealand some people are.

You know, every year now the population of New Plymouth—or 68,000 net—is coming to New Zealand. Every year now the population of Wanganui—or 34,000—is going straight to Auckland, and, pray tell me, who is housing them? Where is the transport? Where are the railway lines? Where are the jobs? Where are the schools and where are the hospitals? Answer that, and then you can wave your hand. Every other party has welcomed that development; but one party has not. It has said for years that this is a looming disaster, and here we have a Budget that is totally focusing on trying to fix up what? Mass immigration problems. We have got the courage to say it, and out there, hundreds of thousands of New Zealanders are beginning to understand—you watch these polls go—and thank God they are.

We are not going to have the sell-out merchants acting for foreign banks and foreign corporates running this country any more. There were all the gestures, but the real message to all those with legitimate concerns in Invercargill and Kaitaia was “Get stuffed.” Where are the 10 bridges? Where is the super-fast broadband up north? Where is the first metre of the superhighway from Pūhoi to Warkworth, let alone Wellsford? Where is the cell tower coverage? It is just absolute bulldust. This is typical of every Bill English Budget—it is just spin. It is a package of suggestions designed to create the illusion that some serious thinking went into the Budget, but the real message from this Budget to all those areas—whether for Pharmac, mental health, or apprenticeships—is way short of demand. They could all be doubled and still be far short of what is needed. We built more houses in 1973 when our population was 3 million people than this Government is building with 4.6 million people, and you tell me why we will bring in 68,000 more people who need houses as well. That is lunatic stuff. No other country in the world voluntarily takes that level of immigration, and nor should we. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! If Mr Bennett cannot control himself—I do not mind a reasonable amount of interjection; it is a heated debate. But when it gets to this level and it is continuous, if the member does it again, I will ask him to leave. Sorry to interrupt the member.

Rt Hon WINSTON PETERS: This Budget has no integrity. There is an elephant in the room that is so big no one else can get in. Adding 68,000 people per year is inflicting enormous cost on New Zealand. Massive immigration is impacting on every Government service: health, education, welfare, transport, infrastructure. Record immigration is adding all these things into this Budget, and the rest of New Zealand is missing out. It is nearly all going to Auckland. Government Ministers and their cronies may not be suffering the erosion of the quality of life, but New Zealanders know what is happening to them from what they see and feel every day, and one party in this Parliament intends to respond to their concerns.

We have to build new hospitals now because of it. We have to build schools, houses, and public transport—and hire people to keep running them—just to maintain current standards, and some people think it is good. My challenge to the Government is this: why do we not double it and make it twice as good, because lunatic logic works like that. That is what it works like, and that is what we are seeing right now. The consequence of doing what we are doing is seeing a decline in services across this country for most people.

Rural health is capped—no funding at all. Lousy figures like $10 million over 4 years—calling that progress. Lengthening hospital lists—you know, today, there are waiting lists to get on the real waiting list. You have got waiting lists in our health system to get on the real waiting list. As for the police, they are grossly underfunded, grossly undermanned and underwomanned. Here is the point: only one out of 10 burglaries gets investigated. Nine out of 10 do not get any attention. Crime pays under National. If you are a victim, National’s message to you is “Get stuffed.”

Conservation—there is the Prime Minister gloating about the numbers. The Department of Conservation is stretched out like a shanghai and cannot do the job. How many will come here if this country is flattened with tyre tracks and has rubbish strewn everywhere? And so much of this country’s tourism is done by people wishing to visit New Zealand on $20 a day. How dumb can you be? So much of this country’s tourism has been brought here by foreign airlines, with people staying at foreign-owned hotels, and it is creating far fewer jobs and less wealth than the Government boasts. Look at provincial and regional New Zealand where they go, and tell me it ain’t so. Our natural estate is at risk, the department is massively underfunded, and as for the cutting of carbon emissions, well, this has been done by a Minister for Climate Change Issues whose credibility on this issue—self-confessed—is zero.

As for public finances, this is not prudent fiscal management. Engineering a surplus when you cut core services—this is not a surplus. The manipulation of the public finances is now so gross and shameless as to render any claims to balancing the books or reaching a surplus as hollow. The real truth is that the quality and quantity of New Zealand life and Government services is in decline. The Budget is silent on what really matters to New Zealanders, yet the Prime Minister is already touting tax cuts of $3 billion in next year’s Budget. We need to be on guard. The Prime Minister will not come clean. What he will not spell out is what his tax cuts actually mean in terms of reduced quality of life for New Zealanders.

This is a Government that ignores foreign corporates sucking this country dry, earning over $600 million a year in this country and paying 0.38 percent—like Tegel chicken. Is that a fair policy—0.38 percent? Facebook, right? What does it pay?

Hon Gerry Brownlee: Come on, Pita, wake up.

Rt Hon WINSTON PETERS: It paid less than Gerry—it paid $42,000 last year. This massive, multinational corporation in New Zealand paid $42,000 of tax, and the National Party backbench laugh. The laugh is on the other foot, sunshine. They are going to come for you, and very soon. The New Zealand voters will not put up with this any more. They will not take this shilly-shally. They will not take this “fast on the lip, slow on the hip” type of behaviour from you any more. They want you to get up in Parliament and say something and do something, and actually put your people first and put your province first. Be a voice for the regions. Do not come here as a bunch of Tea Party clones being told what to do, aping what the Prime Minister says and getting your head patted like an ACT Party member and thinking that that is worthy account for your pay.

As for the Auckland regional policy, in this country today we have got two economies: one is Auckland, and the other is the rest of us.

Hon Gerry Brownlee: Someone ring the bell.

Rt Hon WINSTON PETERS: A total failure—[Bell rung] Yes, will someone ring a bell so that Gerry can have an idea. Thank you, Mr Speaker, for ringing that bell. Gerry needs an idea; he cannot get there by himself. The total failure to apply common sense in policy—let me say what we are going to do. We are going to provide the infrastructure investment for roading, rail, and strategic assets to support regional growth. We will bring royalties into the regions, where what you earn there from your extraction—no less than 25 percent will stay where it came from. In Southland, on the East Coast, and up north, we are going to have new initiatives to disperse Government agencies, not just to Wellington and Auckland but right around New Zealand. Why should they not be? We have got computerisation. Why are Auckland and Wellington getting them all? And we are going to change the Reserve Bank Act so that the currency reflects that we are an export-dependent nation. To all those students graduating, prepare to go to the critical shortages in our regions. We are going to say: “You go there for 5 years and we will get rid of your student loan.” Make no bones about it; we have got a policy. Our policy is about economic growth.

Today’s Budget had nothing about economic growth and no plans at all; just steady as you don’t go nowhere. Bill English said the economy had had 3 percent growth. Where is that in the Budget? It is 2.8 percent, and that is wrong. Nowhere in that Budget document is the term “3 percent” used. Worse still, this is a country where the economy is financed on foreign money, and the outcome for that is always this: ask Ireland—ask Ireland. It had three decades of magnificent growth, and then utter collapse. Mr Bennett can laugh, because that is probably the smartest thing he ever does. As for housing in Auckland, what a gaping hole. Housing in Auckland? No answer whatsoever. Here is a message to the Prime Minister: Mr Key, people do not choose to live in cars or garages or tents. They do not choose to live under bridges or to live out in the cold. Foreign speculation has come in here and bought one person sometimes 50 or 60 houses. Housing affordability has collapsed, as that chart shows.

I want to close by saying this. The global outlook is not good for this country. It is very uncertain, and this country needs just one or two things to go wrong and we are going to be in serious shock. Even now, Australian forecasters are saying that we are not going to make 2 percent growth—more likely 1.7 percent. What is Mr Bennett going to say about that then? I want to close by saying this: there is one party that for a long time has forecast what would happen to New Zealand if we went down that path. It is still here. It is growing faster than any other political party. We have a Facebook page right now that gets 60,000 strikes, and rising. Yesterday’s debate, when the Prime Minister made a fool of himself, has got 171,000 strikes in less than 24 hours. You can laugh, chaps, but I know it is a nervous laugh because, very soon, the message that New Zealanders will want to hear is “Are you back, New Zealand First?”, and the answer is most certainly—

David Bennett: “Get stuffed.”

Rt Hon WINSTON PETERS: —we will tell you—we will not tell you to get stuffed; we will tell you to get enrolled, get out and vote, and when you do, the possibilities for this country are magnificent.

Hon TE URUROA FLAVELL (Co-Leader—Māori Party): Kia ora tātou katoa. One year ago, when I stood to respond to the Minister of Finance’s Budget speech, I stood in absolute humility. I was humble. I did not want to talk the Māori Party up, but I just kept it very low key. I did not want to sort of show off in any way, shape, or form. I did not want to show any sort of arrogance in any way. Well, that is over—that is over. It is time to break out because the Māori Party, unlike others, is here to deliver—not to just talk about it but to deliver it. Budget 2016 has delivered because I heard in that Budget speech “the Māori Party” more than the names of most other political parties in this House, and that is why we are here—to get some gain.

Budget 2016 for the Māori Party absolutely builds on the gains that we have made by way of whānau, whare, whenua, and whakapapa. All of those themes over the last 8 years have been what we have brought to the Budget and, indeed, we are sitting next to the National Government as a support party. This year, in particular, I am really pleased about, and we are really proud of, the gains that we have been able to make. Whānau Ora is getting an extra $50 million—

Marama Fox: $50 million?

Hon TE URUROA FLAVELL: —only $50 million—over 4 years. It is now getting up to $72 million every year. Why? Because we make a difference. That is what happens—we make a difference. In terms of building cultural wealth, Te Reo Māori investment—$34.6 million to Te Reo Māori. There is additional support to emergency housing, and, for goodness’ sake, we definitely want support in that area—$41.1 million in that area. That is what the Māori Party brings to this Budget.

But wait, there is more. There is more. The great thing about some of the gains that we have made in this Budget is that they come on the back of the legislation that we have put in front of this House, and it is sad that some of the parties in this House do not support Te Ture Whenua Māori Bill. Why? Because we have actually got the money to make it happen. We have also got some more money going into Te Reo Māori. That is where the change will happen.

Ever since we have been around, what the Māori Party has brought has actually been about bringing innovation and innovative solutions to the table, like Whānau Ora. Unlike National and unlike Labour, our focus is not middle New Zealand. Our focus, unashamedly, in Government is to break down the intergenerational disparities between Māori and non-Māori. No other political party on its own has had the courage to face that or to focus on it. The Māori Party has. That mind shift benefits this Government and it benefits the country as a whole. Just consider if the Māori Party had not pushed the whole issue of smoking cessation by way of lifting our taxes by increments, by plain packaging, getting rid of the advertising of cigarettes in garages, and so on. That is the innovation that the Māori Party brings to this Government and, indeed, to this country.

We have worked in good faith with the National Government to introduce initiatives like insulating low-income houses since 2009. In 2010 Whānau Ora came to town, and now, just this year, the once-in-a-generation reform of Māori land law. That is, again, what we bring to this table. We bring the courage, we bring the fortitude, and we bring the innovative solutions to the table.

The wonderful thing, I think, about the Māori Party presentation to this Budget is that we have shown faith in our whānau and communities to find the right solutions, and we have worked really hard—really hard—to secure the initial resources they need to make a difference. One of the key themes in the Māori Party policies is one called mana motuhake—self-determination—helping Māori and other communities to determine their own destiny with a hand up from the State, not a handout. That is our approach in Māori development, it is our approach in Whānau Ora, and it is our approach in economic development.

We, a party of two, have secured more gains—more gains—for Māori than any other political party in the 8 years we have been a support party. Is that right?

Marama Fox: That’s right.

Hon TE URUROA FLAVELL: That is right. Just imagine what the Government Budget would have been like without the Māori Party needling it on issues around social development and poverty. Let us put another fact out there: since joining the Government benches, the budget for Māori affairs cum Māori development has actually increased by 50 percent. That is right—only 50 percent! It is a shocking total, but it is pretty good. I like it—it is pretty good. I like it.

Since becoming a support party in Government, we have secured and influenced more than $2 billion worth of Budget gains. If some media person had asked me that question before we came in, we could have put it out there, but I am helping the media today to understand that the Māori Party is bringing something special, unique, and Māori to this House, not just by our presence but in real, substantive gains for our people. Whānau Ora, since 2010—it had a budget of $45 million, but this year it is up to $72 million. I know—$72 million. It is up there. Base benefit increase—$790 million in 2015. It is the first time in 40 years that either side of the House has moved. Why? Because of the Māori Party presence. Free GP visits from age 6 to under 13—why? Because of the Māori Party presence. Warm Up New Zealand, rheumatic fever—$20 million in 2014. These are the gains that we bring. We do not talk about it, like some; we make it happen—two people make it happen for the best interests of New Zealand.

In fact, we would have liked a hell of a lot more. We would have liked, for example, benefit levels to be indexed against the median wage, but that might have cost a little bit extra, like—

Marama Fox: $7.9 billion.

Hon TE URUROA FLAVELL: Yes, $7.9 billion—a little bit big. A little bit big, but that is all right—we will get there.

Meka Whaitiri: What about the 12.8 percent Māori unemployment rate?

Hon TE URUROA FLAVELL: Oh, this is what I was waiting for. I was waiting for the bait. I threw it out there, and I knew I would get the hook. Tell me—somebody here, please tell me what the Labour Party has delivered for Māori over the last 8 years. Just give me a number. [Interruption] Give me a number. Oh, it is a big zero. A big kore, kāre, kau, zero, nothing, zilch, zip—all of the above. Nothing—that is what those members bring. We do not change the whole wide world, but I tell you what, we do better than that side over there—absolutely.

So let us just go back to those four things I talked about leading off: whānau, whenua, whakapapa, and whare. Those are the four pou that we bring to this House. In Budget 2016, I say again, we have delivered more than any Labour Party initiative in 8 years. Why? Because Labour is not at the table. It is not in power. Actually, I was frightened by the word Mr Peters gave. He said “When we’re in power …”—it is all about power. Actually, it is not about the people; it is all about power. That is the problem.

This is what we do—we think about the people. That is important for us, and that is why we focus on Whānau Ora, because Whānau Ora is making a difference for our people. It gets into Māori communities, it is delivering the goodies, and the wonderful work done up and down the country by Whānau Ora navigators is something we have got to support. We have got to support the Whānau Ora commissioning agencies that are doing the great work.

Housing—the Māori housing network is linked to achieving the best outcomes for health and homeownership. Again, there is $12.6 million earmarked for the Māori housing network over the next 4 years. That is more than—actually, $1 would be more than the Labour Party has delivered in the last 8 years. Just $1, but it cannot even get to that.

Te Reo Māori revitalisation—no one will talk to this one because we have delivered the goodies: $12 million over 4 years for Te Mātāwai. Somebody said that there was not going to be any money for Te Mātāwai. Well, I am sorry, we delivered—I am sorry, we delivered. Twelve million dollars over 4 years—$12 million for Māori Television, $12 million to support Māori language strategies—all of it, all adding up.

Just before I close, for the Māori Land Service, on the back of Te Ture Whenua Māori Bill, there is $14.6 million over the next 4 years to design that service. It is all backed up. We set the plan, and now we are going to make it happen. That is what the Māori Party brings to this Parliament, brings to the National Government, and, most importantly, brings to this country. Tihei mauri ora! Kia ora tātou.

DAVID SEYMOUR (Leader—ACT): I proudly rise on behalf of the ACT Party in support of this Budget because I want to keep Bill English as the Minister of Finance. Why? It is because Bill English is pretty good, but also because the alternative is terrible and the people I represent are terrified of the idea that Grant Robertson would become the Minister of Finance and introduce $2.7 billion of new expenditure and a 45 percent tax rate from $70,000 and up. That means that on your marginal dollar you are spending 45 percent on income tax. If you spend any of that, then on anything that is left you pay GST. If you work for a company or buy from a company there is a company tax component to that. Under a Labour-led Government, people would be spending more than half of their marginal income on taxes. Well, that is a very good reason to keep Bill English and the National-led Government on this side of the House and those guys on that side of the House.

It gets worse, because New Zealand has a “Donald Trump movement”. It consists of the Labour Party, of New Zealand First, and of the Green Party, because have you noticed that whenever any issue involving foreigners—particularly wealthy and successful ones—enters the public arena for a debate, they all do their bananas. Their positions on anything to do with any foreigner are absolutely interchangeable, whether it is the Green Party, which used to stand up for the environment; whether it is Labour, which used to have a proud, liberal, free-trading tradition; or whether it is New Zealand First, for which there has never really been any hope with international matters to start with. So it is important to keep the Opposition members out of Government because they would raise taxes and because they are congenitally xenophobic.

But it is also important because they are out of touch. I have listened to the speeches from the Opposition members tonight and their speeches appear to be about another country, not about one of the top five fastest-growing economies in the OECD, not about a country where more people think the country is going in the right direction than in any of our Anglosphere peers, and not about a country that has record-breaking employment and record-breaking industrial records in just about every sector of the economy. The Opposition members would love it if New Zealand was as bad as they say it is, but the problem for them is that it is not. They are like many Oppositions: when they hear some bad news about the country, they say: “Christ, it was even worse than we hoped for.” The problem for them is that it very seldom is that bad in New Zealand. They are out of touch.

There is more good news in this Budget. Partnership schools kura hourua—there is funding for another seven of these schools, which are transforming kids’ lives for the better. The Opposition would like to tell you there is no demand for these schools. Well, just this year we had 26 organisations apply through a rigorous process to run more partnership schools kura hourua. While I am at it, I would like to thank our coalition partner the Māori Party for its staunch support of this policy, because of what it is doing for Māori. I would like to thank my colleagues in the National Government for their support of this policy. We are seeing 100 percent pass rates for university entrance for 100 percent Māori cohorts.

This is a policy that is a success. You just have to ask yourself whether the Opposition is really so worried that a small number of students, for now, at a small number of schools, for now, are going to fail, or is it terrified that this policy is going to grow and grow and eventually become the leading type of school in New Zealand and transform many more kids’ lives for the better. The Opposition is not scared of this policy failing; it is worried it is going to succeed, because I think that partnership schools are going to go from strength to strength and transform more and more Kiwi kids’ lives for the better. I just want to salute the principals, the sponsors, the students, and the parents who have bravely gone into this new model of education, despite all of the criticism they cop from some of the most negative people in New Zealand, to actually make a difference in the way that education is done in this country.

Those are the good things in this Budget. The bad things are mostly things that were not in it. The most important thing that was not in this Budget is tax relief. Who would have thought that we voted out Helen Clark and Michael Cullen, the spendthrift Labour Government of 9 years that had this country going into recession before the rest of the world—at least Labour helped New Zealand lead the world on something—only to elect a National-led Government that taxes you like a Labour Government? Eight Budgets in a row with no tax relief, but for 1 year. We have had no tax relief since 2010 and the best the Government can say to us is āpōpō, āpōpō, āpōpō, as they say in Māori—tomorrow, tomorrow, tomorrow. It shows the priorities of this Government that there is always extra money for Steven Joyce’s corporate welfare—$700 million to flutter around the country and get lots of new photo ops for the Government—but when it comes to the people who get up in the morning, get to work, work hard, earn the money, and actually pay the bills, it is āpōpō, āpōpō, āpōpō. Tax cuts are always tomorrow.

Well, the ACT Party says that tax relief for the people who actually do the work and pay the bills should be the priority of a centre-right Government, otherwise what is the point in voting out Labour just to get a National Government that taxes you just as hard? This Budget could have very easily raised the top tax bracket, in which you pay the top income tax rate, from $70,000 to $100,000, because the Prime Minister has admitted that very soon half of taxpayers will be in the top tax bracket. To borrow a phrase from Michael Cullen, these are not “rich pricks”; these are middle New Zealanders who are working hard and getting pushed by inflation into the top tax bracket in greater and greater numbers every year. That is the biggest problem with this Budget: there is no tax relief even on the horizon for the people who earn the money and pay the bills. And it shows this Government’s priorities—that it is more interested in increasing spending on corporate welfare than it is in actually cutting taxes for the people who earn the money in the first place.

One thing that is in the Budget that I think is very regrettable is the tobacco tax increase. If I thought that increasing tobacco taxes was going to improve the welfare of the poorest New Zealanders, then I would be here wholeheartedly supporting it, but the reality is the average smoker is very poor, highly likely to be Māori, smokes 10.6 cigarettes a day, and pays $2,600 in taxes on those cigarettes. Today’s Budget announcement is that that is going to rise to $3,800 a year. Increasing taxes has not successfully reduced smoking rates. In the past 5 years we have doubled smoking taxes and we have reduced the rate of smoking from 16.3 percent to 15 percent. That is simply not good enough. What we could have done is legalise electronic cigarettes, tax-free, and what that would have achieved would mean that people who choose to smoke at the moment could have got a $2,600—soon to be a $3,800—tax cut in some of the poorest households in New Zealand. It is a great shame that we did not do that.

The biggest thing that is not in the Budget is a sensible discussion about the sustainability of national superannuation. My generation knows there is no way we are going to get national superannuation at 65, as far off as that may be. However, what really grates is that under the current Government—and the Opposition, which, frankly, has been gutless on this issue—we are not even allowed to have a discussion about how that adjustment is going to happen as we go from five taxpayers per superannuitant down to only two taxpayers per superannuitant. All we ask for is a conversation about how that transition will occur so that younger generations can actually plan and see what their retirement will look like. At the moment the Government has its head in the sand.

So it is a good Budget, a competent Budget, and a very good Budget when you compare it with the alternative. It is a fabulous announcement that we will have more revolutionary partnership schools kura hourua, but it is sad that we will not have tax cuts, that we are actually going to tax some of the poorest households in New Zealand harder through tobacco taxes, and that we cannot have a grown-up conversation about the sustainability of national superannuation.

With all of that, I support this Budget and I commend it to the House. Thank you.

Hon PETER DUNNE (Leader—United Future): At first glance this is a pretty boring Budget, but only a fool would dismiss it as faddle and only a racist would dismiss it as being all caused by rising immigration. The reality of this Budget is not so much in the baubles it delivers in the short term but in the transformation it sets in place for the longer term. How often have we heard various Governments lament genuinely, I think, the plight of the vulnerable—the fact that we have this huge problem with family violence in New Zealand, with at-risk children, with families who are dysfunctional? We pour more money in year after year and the statistics get worse.

What this Budget and the social investment strategy that it heralds are all about is saying that we want to target our interventions much more directly and clearly to those who are genuinely at risk. The work that is being done by the Minister for Social Development to bring together a replacement for Child, Youth and Family, which has clearly failed, and to bring together a coordinated approach to family dysfunction, which this Budget helps fund, is, I think, one of the most laudable achievements of any Government of recent times.

How often have we all said in this House that we want a better deal for the families and the children of New Zealand? I have heard members opposite talk about putting children at the centre of policy making. This Budget and these changes do that. I guess the sad thing is that the consequences will not be immediate—these are generational shifts we are ushering in—but it is important to be making the stand now. It is important to be ensuring that the statements we have uttered over the years about kids getting the best start in life do actually come to mean something and we can turn round the horrific statistics that some of us were protesting about in the weekend with regard to family violence, for example.

It is important that we can deal with dysfunction at its earliest stage with good parenting skills and with support for families who are vulnerable and need help, and by ensuring our services are not tailored to suit the requirements of the bureaucracies but are to be wrapped around the families they are designed to be servicing. That is, I think, one of the most important constructs contained in this Budget. Although it might sound pretty boring on the face of it because it is long term, it is actually fundamental. The way we get good economic growth, a stable society, and productive individuals for the future is to lay the foundations properly right at the beginning, and I believe that is what this Budget is all about.

Unfortunately, I do not think it goes far enough in the area of housing. We are making a number of moves that are around the fringes—important individually, peripheral certainly, but not linked in to an overarching national strategy. I believe that the idea I floated earlier in the week of having a national housing summit is relevant because it would bring together the Government, local government, the construction industry, the banking industry, and the social service providers to not just nut out a strategy but, more important, agree on a plan for its consistent implementation.

There is something wrong, in my view, with watching on television night after night various building companies advertising “We will build you the home of our dreams” or “of your dreams”—probably “our dreams” is more correct—while at the same time we have people who are homeless and who are struggling to get accommodation, and while at the same time we have a generation of people rising who say: “Homeownership will never be for me, because I will not be able to afford it.” We have the resources; we have the capability. What we need is the leadership to bring it together into a coordinated national strategy that will see a significant impact on the housing problem in New Zealand.

While I am at it, let us not get waylaid by the canard that this is all the fault of mass immigration. Immigration flows go up and go down. If one looks at the international literature, and if one looks at New Zealand’s long-term trend line, the old story of what goes up will come down will be borne out. So the short-term blame game of “It’s all the fault of immigrants.” will be pretty quickly exposed for the very vicious and nasty fallacy that it is, and those who promote it will be similarly exposed as frauds, as bigots, and as unacceptable in the context of our society.

One of the things I do want to talk about—because, again, I think it goes to the heart of where New Zealand stands—is good quality services. Good quality social services and community services were mentioned by the Minister of Finance in the Budget statement, and I want to say a word or two about the changes for which I am responsible as the Minister of Internal Affairs relating to the reorganisation of the Fire Service. I will be bringing legislation to this House in the next couple of months to provide for what will be the biggest single change to our fire services in around 70 years—the establishment of a unified national Fire Service with appropriate regional representation and good support for our paid staff, for our volunteers, and for our rural fire fighters, all brought together into a single agency for the first time.

At the moment we have 60-something different rural brigades and we have hundreds of volunteer fire brigades around the country, and we also have a national Fire Service, two pieces of legislation, and a very confused and archaic system. It is going to change, and it needs to change, because, actually, what the modern Fire Service does is very little about putting out fires. It is a lot about vehicle extractions, medical assists, and, as we saw so valiantly in the case of the Christchurch earthquake, profound work in the urban search and rescue area. But here is the rub: technically, the Fire Service today has no mandate in law for all of the other activities that it covers. So we are going to make that change, give our communities greater confidence about their security, and ensure that that emergency service is resourced to meet the needs of the modern time.

I want to say a word about one small area in the Budget that does give me some concern. There is an entry in the Budget of approximately $179 million for intelligence and security services. It is not explained, and I want to draw the House’s attention to comments by the Inspector-General of Intelligence and Security just 2 days ago that are very relevant here. Inspector-General Gwyn observed that the security services in New Zealand are still less transparent in their operations than the security services in our “Five Eyes” partners. It strikes me as a little unusual that we are getting an increase in its funding that is substantial, with very little explanation, at the same time as the Inspector-General of Intelligence and Security is pointing out that it is still not as transparent as it could be and still not as transparent as those in the comparable nations with which we work. So I say that the funding comes with a price tag, and the price tag has to be greater transparency, the price tag has to be greater accountability, and the price tag has to be greater cooperation and, if you like, revelation in terms of exactly what is going on.

It has been a privilege over the last number of years to work with my colleagues in the ACT Party and the Māori Party alongside the National Government to achieve a series of policy changes. We have not always agreed, nor should we, but we have always worked constructively and respectfully with each other. I think the gains that various parties can claim from this Budget demonstrate that point very well. There was a statement contained late in the Minister of Finance’s speech about how New Zealanders value and deserve stable government. That is right. One needs only look at the situation in Europe at the moment to see the consequences of political uncertainty and political instability. Let us make sure they do not come to this country.

This Budget will not set the world on fire, but that is not important because that is not its mission. It lays a solid framework for future achievement when the surpluses start to build up, when the Government then faces the more vexing problem of managing surpluses. If it thought managing deficits was difficult, managing surpluses will be even more difficult because it will be much harder for Ministers of Finance to say no when there is more money. But that is the aim we need to be working towards to ensure that we get this country back on to a sustainable, prosperous, certain course, and to give the assurance that within that, structurally, we can cope with the next natural disaster or the next major global economic crisis and we will not be plunged into the depths of depression, as we have been in the past as a consequence of those activities. This is fundamentally a good Budget, even if it lacks a little on the excitement front.

Hon GERRY BROWNLEE (Leader of the House): I move, That this debate be now adjourned.

A party vote was called for on the question, That this debate be now adjourned.

Ayes 63

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

Noes 58

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

Motion agreed to.

Urgency

Urgency

Hon GERRY BROWNLEE (Leader of the House): I move, That urgency be accorded the introduction and passing of the Climate Change Response (Removal of Transitional Measure) Amendment Bill, and the introduction and passing of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. These are two bills that arise out of Budget decisions announced in the Budget statement read by the Minister of Finance earlier today. They deserve the urgent attention of the House because they have lead-in times that mean that those who are most affected will have plenty of warning about the provisions they are going to need to make, whether that is providing for some costs that might arise out of the one-for-two decision or budgeting to facilitate a higher price for their tobacco products in their weekly budget. We hope that over this time it may, in fact, send a signal to many of those smokers that cessation would be a good idea, so giving as long a period as possible before the next 10 percent increase is a good idea, we think. Those are bills that the Government considers deserve the urgent attention of the House, as I have moved.

A party vote was called for on the question, That urgency be accorded.

Ayes 63

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

Noes 58

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

Motion agreed to.

Hon PETER DUNNE (Minister of Internal Affairs): I raise a point of order, Mr Speaker. I note that during the taking of that vote—so before the vote was completed and declared—the Parliament Today site was actually tweeting that urgency had already been granted for the passage of those particular pieces of legislation. I know this issue about the use of social media has been raised beforehand, but it seems to me to be quite inappropriate for a website with some association with Parliament to be tweeting in advance about the outcome of a vote. I wonder whether your office could look into what happened and perhaps give some advice to the House in due course.

Mr SPEAKER: I accept the point that the member has made. It is a very valid point, and will look into the matter as I soon as I leave the Chair.

Bills

Climate Change Response (Removal of Transitional Measure) Amendment Bill

First Reading

Hon PAULA BENNETT (Minister for Climate Change Issues): I move, That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a first time. This bill phases out one of the temporary measures we introduced in 2009 to manage the initial impacts of the emissions trading scheme (ETS) on businesses and the wider economy. The one-for-two surrender measure means that non-forestry ETS participants have had to submit just one emissions unit for every 2 tonnes of carbon dioxide or equivalent greenhouse gas that they emit. That was extended in 2012 while New Zealand continued to recover from the global financial crisis. As I have been subtly signalling for some time—

Chris Hipkins: Ha!

Hon PAULA BENNETT: —yes, I know; I do not do subtle—it is now time to start removing this measure.

The Paris climate agreement marks a new era when all countries are expected to take action on climate change. New Zealand has announced an ambitious target to reduce emissions by 30 percent below 2005 levels by 2030. As a result, our ETS must send a strong signal that we need to reduce our emissions and transition to a low-carbon economy. Businesses recognise this. Three-quarters of submitters to the first phase of the ETS review supported removing the measure. However, the strongest message I received from business was that they wanted certainty from the Government about what was happening with the ETS so that they could plan and make investment decisions.

By taking this bill through all stages under urgency, we are giving the market certainty about how, and over what period, the one-for-two surrender measure will be removed. From 1 January next year the one-for-two surrender measure will start to be phased out evenly across all relevant sectors over 3 years. The current 50 percent surrender obligation will increase to 67 percent from 1 January 2017 and to 83 percent from 1 January 2018, and by 1 January 2019 all sectors in the ETS will be at 100 percent—in other words, they will be expected to pay the full surrender obligation.

The current price ceiling of $25 per unit will remain. This will ensure businesses have certainty that the price of carbon cannot be more than $25.

The free allocation of units given to emissions-intensive and trade-exposed industries will remain. These will be increased proportionately with the phase out to protect our competitiveness. For example, if a company receives 90 percent of free allocation now, it will still get 90 percent once the one-for-two surrender measure is removed. It is important for this free allocation to remain in place. To put too much financial pressure on some businesses could mean that they close their doors. Alongside the obvious loss of jobs and the hit to the economy, it would make no sense for the products they are making to simply be made in another country with no ETS. That would make them less efficient and it may actually risk contributing more to global emissions in the end, and that just would not make sense.

Why is removing the one-for-two surrender measure important? Removing the one-for-two measure sends a strong signal to businesses that they need to invest in low-emission technologies and in forestry. It encourages the planting of more forests by increasing the demand for emissions units, which will be worth more. It takes 5 to 7 years for trees to start absorbing a decent amount of carbon, so we need that tree planting to start now. It will also reduce the potential fiscal risk that the Government may have to purchase international units at unknown, and possibly higher, carbon prices over 2021 to 2030. That will happen if the ETS and our other initiatives do not deliver enough domestic emissions reductions, removals, and international units for us to meet our target. It will also ensure that there are sufficient New Zealand emissions units available so that the markets function properly.

The phased approach, I think, is fair. It strikes the right balance between moving too fast and too slowly. It incrementally increases costs across the whole economy and supports a stable market. Removing the one-for-two measure will have a broad impact directly affecting the waste, transport, energy, electricity, and industry sectors. Households may see a small increase in costs as those energy prices and petrol prices are passed to them. Modelling has shown that for low-income families it could be around $30 for a year, and for median households it could be around $40 to $45, but everyone thinks that is actually on the high side and it is likely to be less.

The fiscal impact that is in the Budget of $360 million of positive fiscal impact over the next 4 years is based on having a unit price of $12. The unit price right now—I was just looking—is $14.48, so already, actually, there will be more in the Government’s coffers than it budgeted for, which is what we locked in a couple of months ago, when that was the price it was at. So where we are looking at is—we think it is a minimal cost to households at the moment.

With the rise in benefits that this Government has done, being the first one, there is perhaps a little bit there so that sectors can actually accept that. We actually think there is enough competition in the energy market so that, hopefully, they will not pass the whole cost on. We think we are being fair to the farmers and to businesses that do emit by giving them plenty of time so that they can phase out. Farmers will have an increased cost to them, not because we are bringing agriculture into the ETS, of course, but because they are high users of electricity and transport, and, actually, Fonterra is one of the biggest emitters. So as a consequence of that we could see there being some cost to farmers. That 3-year phase-in for us was making sure that we were being fair and keeping that as low as possible at a time when they are doing it pretty hard.

So it is with pleasure that I introduce and commend this bill to the House.

Dr MEGAN WOODS (Labour—Wigram): I am happy to take a call on what I am sure will be one of many calls over the course of the next couple of hours on this bill. This is to signal that Labour will be supporting this legislation and that we think this is a positive, tentative baby step in the right direction. In fact, we feel quite honoured to see this Government stand up and take its first steps in front of us in terms of doing something about addressing climate change. I only wish we had a polaroid camera here so we could have captured it for posterity.

What this bill does is a positive thing, but it cannot be seen in isolation. The message we want to give to the Government is that this cannot be a cherry-picked idea from the emissions trading scheme (ETS) review that exists in isolation. What we fear is that the Government sees the ETS as a strategy and not as the tool that it is in terms of managing our emissions. The Minister for Climate Change Issues outlined the job that New Zealand has ahead of itself in terms of meeting its international emissions reduction targets. It is a large job that New Zealand has ahead of itself in order to do this. The Minister seems to realise that we simply cannot trade our way out of this in the way that the previous Minister thought we could, and that we do actually have to do something.

Getting rid of the one-for-two subsidy within the emissions trading scheme cannot exist in isolation. If we truly want to address New Zealand’s emissions, there are some other thorny issues that we must grasp. We must grasp the issue in agriculture and the fact it is still remaining outside our emissions trading scheme. When we have an emissions profile that 50 percent of our emissions come from a sector, and we fail to include it in the tool that is charged with moderating our emissions in our economy and reducing our emissions in our economy, we are not going to have an effective tool.

I also note the price cap that is remaining there at $25 a tonne means this great free-market Government is not prepared to put a price floor of where a price cannot fall below, but it is willing to put a cap of where it cannot go. I note this figure of $25 is out of kilter with what business and industry have been saying. The BusinessNZ Energy Council put together a very good report around energy consumption in our future, modelling in 2050 on a price somewhere between $60 and $115 a tonne for carbon.

We cannot have a Government that continues to put in place these kinds of ceilings on the price of carbon because, quite simply, it is this kind of thinking—this kind of 20th century thinking from this Government when it comes to climate change—that is going to fail to see us transform our economy in the way we need to. It fails to see the opportunities that a low-carbon economy puts in front of us, the kinds of opportunities it provides for jobs, if planned correctly. The failure to put together a comprehensive range of changes to the ETS illustrates this very clearly. What we see here, also, is the ceiling of $25 a tonne. I would ask the Minister to think about putting in place an amendment, when we get to the Committee stage of this bill, to also put in place a price floor.

Let us face the elephant in the room around the hot air credits this Government let in around the same time it decided to put in place this one-for-two. It let dodgy, fraudulent credits into our emissions trading scheme, which crashed the price of carbon in this country, and made it absolutely ineffective in reducing our emissions, made it absolutely ineffective in terms of doing the things it needed to do as an effective means of being a lever in our economy to make those changes. I know we are putting this legislation through under urgency, but I really do ask that the Minister think about an amendment she could put up at the Committee stage that would see that we will never return to that place. The Minister has said that it is wrong and can never happen again, but I would like to see a commitment—a legislative commitment—that that will never happen again.

This is a Government that knew exactly what it was doing when it let fraudulent hot air credits into our emissions trading scheme. It is a Government that sat back and let it happen, and crashed the very thing we could be doing to reduce our emissions trading. One of the implications of allowing those fraudulent credits into our system is that we now have a backlog and we have a lot of banked Kyoto credits within our emissions trading scheme. These have to be used before the Paris Agreement comes into force in 2020.

This is make-up on what this Government knows it has done wrong. It cannot simply enter into the post-2020 world—when the world must show a commitment and New Zealand has to lift its game with the number of banked credits it has sitting there. The Government has to remove around 250 million tonnes of carbon dioxide between 2021 and 2030 under the Paris Agreement, and will, at best, get 50 million tonnes of that removal out of new plantings. The Government knows the emissions trading scheme. The ability to trade is something it absolutely has to have in place, and it has to be in there.

One of the things, when we are talking about the price of New Zealand Units and we are talking about the $25 cap—which, of course, the Government now speaks of with great pride, saying that you cannot buy the dodgy, fraudulent hot air credits that it previously let into our system. This was not because the Government changed its mind and decided it was wrong and we should stop the trade in this kind of dodgy credit, it is simply because New Zealand did not enter into Kyoto II, the second protocol. But in a post-Paris world, what we will see happening is that New Zealand will once again start trading on the international market in terms of carbon credits.

New Zealand had a highly conditional target when it agreed in Paris what was going to happen. One of those conditions around our agreement was the transparency work that needed to be put in place to ensure that international credits both were environmentally sound and would reduce carbon within the atmosphere somewhere in the world, which is what the dodgy credits we were buying in simply did not do. For New Zealand, the Minister has gone to New York and she has signed the Paris Agreement, and she is now saying that we can ratify that treaty. But we have to be absolutely sure that transparency work is done if we are going to have a functioning and effective ETS.

For Labour, climate change and addressing climate change offer real opportunities. If we do this right and do not put in place false mechanisms, we have an opportunity to transform parts of our country, to create industries, and to create jobs. And, most importantly, if we start doing the planning now, and we do that planning right, we have the opportunity to put in place the skills training that is going to be required for a low-carbon economy. A free-market approach that just waits to see what happens, which we are seeing from this Government in regard to climate change, is going to leave ordinary people high and dry. What we are committed to is a just transition when it comes to climate change to make sure we seize the opportunities, and that not one person gets left behind.

We need to do more on climate change. New Zealand must reach its targets. This is a positive first step, but it is in no way enough. It needs to be accompanied by far more action on climate change, and I look forward to the contributions from speakers coming up to tell me what other parts of the ETS review they will be putting in place. Why not a carbon floor as well as a carbon ceiling? What are the things we are going to do around agriculture to finally address the issue that will see a real reduction in New Zealand’s greenhouse gases? These are the hard questions New Zealand must face, and these are the hard questions Labour is willing to face.

SCOTT SIMPSON (National—Coromandel): Buried in amongst that bluff and bluster and hot air from the Labour member Dr Megan Woods, who has just resumed her seat, was an endorsement of this bill. I am delighted that the Labour Opposition has seen fit to support this legislation. It is important legislation. This afternoon we have had Bill English deliver his eighth Budget. It was pragmatic, it was sensible, and it was good for New Zealand. This too, this transitional bill that we will put through the House under urgency, is a phased, pragmatic, practical approach that is so much the hallmark of this administration.

I listened very carefully to the introductory speech, the first reading speech made by the Minister, the Hon Paula Bennett and I thought that she made excellent points about how it came to be that this transitional arrangement was put into effect in the first place. It is worth just reminding the House about why it is that we are here today changing out of the situation that was put in place in 2009. Back then, of course, we were right in the very deepest, darkest phase of the global financial crisis, and it was a troublesome and very concerning period of time, not only for New Zealanders and New Zealand business people, but indeed for the whole global economy. At that stage this Government took some very pragmatic and sensible steps, many of which we have seen the rewards reaped today, in the reading of Bill English’s eighth Budget. This was one of them.

This was a measure that was taken back in 2009 to ensure that businesses that were struggling to ensure that they kept people employed, that they kept the economy ticking over, and that it kept going, were not put in an unreasonable position of being pressured so that jobs would be at risk. The time now has come when the economy is ticking along very nicely. We have heard from the Minister of Finance, Bill English, today that we have got growth at 2.8 percent and it is projected to be 3 percent for the next several years. That is a time when this transitional phase can properly and sensibly be removed.

This is a Government that takes its obligation to our environment and our obligation to world affairs, in terms of commitments that we make to climate change, very seriously. We also take very seriously our role in ensuring that we get the balance right between ensuring that our business people can create jobs and build an environment where people can prosper, grow, and thrive—so it is about being pragmatic, about being balanced, and about having an approach that is right for the times. From tourism through to agriculture and horticulture, our natural environment supports almost all of the things that we do. So protecting the environment and protecting jobs is part of what this Government sees as very important.

I want to go back, just for a minute or two, and reiterate what the primary purpose of the original creation of this situation was. The current 50 percent unit cost was established to ensure that businesses were not going to be unduly put at risk. So now, from 1 January next year, the current 50 percent unit cost will increase to 67 percent, then to 83 percent from 1 January 2018, and then all sectors in the emissions trading scheme will pay the full cost from 1 January 2019.

It is fair to note that the Government had options in terms of how it would approach this transition. Many of those options were considered before this piece of legislation was brought to the House. One of the options was just simply to go from the current situation back to a full cost situation, in one big leap. But we are, as I have said, a pragmatic, sensible Government and we think this phased approach will be good for business, good for the economy, and good for our environment.

The Minister made, I thought, a very good point in noting that currently the unit cost for units is $14.48. The expectation is that the Government’s books will benefit by about $356 million over the next 4 years. That is a figure that is based on a unit price of just $12. The expectation is that that current price of $14.48 will probably get to somewhere in the region of $16 to $18. It is at that point that there will be an absolutely terrific incentive for our foresters to start planting trees—to start creating forests and growing trees. That is really what all of this is about. It is about making sure that we get the balance right, that the pragmatic approach is right, that it is sensible, and that it is practical.

Last year the Government undertook a submissions process. A series of meetings and consultations were held around the country, and 75 percent of the submitters who were involved in that consultation process said that the one-for-two model should be ditched. Those meetings of course included iwi, business people, and the full gamut and range of New Zealand enterprises. Most of them said that the price was too low. Part of the reason that we want to change this is that the current price is too low. The Minister has made it very clear, right from the first day of her appointment to her new ministerial role, that this phase-out would occur. It was really just a question of how the phase-out would occur, what the nature of it would be, what the structure of it would be, and now, in this legislation, we have that ready to go.

This is a good piece of legislation. I am looking forward to listening to other speakers. I will be interested to see how other parties in the House decide to jump on this legislation, to see where they want to put their support, or not. I will be listening carefully to other speeches. I commend the bill, at its first reading, to the House.

Dr DAVID CLARK (Labour—Dunedin North): This bill warrants the Government a tiny pair of flip-flops. It is a U-turn, but with a small “u”. It is a tentative first step. As my colleague Dr Megan Woods noted, it is like the first steps of a child, and it is a shame we do not have a polaroid camera here to catch the moment when that first tentative step is taken. We support the idea that a tiny pair of flip-flops for that tiny first step should be issued from this side of the House.

It is a way for the Government to signal that maybe, one day—one day maybe, but let us not rush—it may develop a plan to transition to a low-carbon economy. It may signal a tentative—a tentative—tiny, incremental signal that it wishes to increase the value of New Zealand’s economy over time by stepping into the high-value space and away from what we have always done. Hopefully—hopefully, in the future—the Government is thinking there is another way, but it is not really signalling in any strong or assertive way that it is going in that direction.

Let us not forget that the emissions trading scheme, when it was introduced, was the first “all gases, all sectors” emissions trading scheme in the whole world. New Zealand once had ambition. New Zealand once wanted to lead the transition to a high-value economy that was low carbon. We wanted to lead. But now we have a Government that has stepped away from that. It has said: “No, let’s sit with the status quo. Let’s look after the entrenched interests. Let’s not let the costs lie where they fall. Let’s subsidise polluters.”

Well, here we have a small step, saying: “We’re not going to step away from the $25 cap. We’re not actually going to have a real market. We’re not going to step away from intensive-style agriculture. We’re not going to have a real cap-and-trade scheme. We’re not going to put a cap on it, for goodness’ sake. Let’s have a cap-and-trade scheme without a track. We don’t really believe in the market, because then we wouldn’t be able to support existing interests.” This is a Government that is taking a tentative first step. It is making a tentative signal that is saying: “One day we might send some stronger signals that we really believe this stuff.”

But we will be supporting it, because it is important to support those first steps. It is important to get behind them. They may be a precursor to something more significant. We know, of course, on this side of the House that the way to get to that more significant step is to change the Government. That is the plain and simple way. These few tiny, tentative steps are certainly not a big sprint in the right direction.

This Government no longer seems to be ambitious for New Zealand. It seems to have lost touch with the aspirations of middle New Zealand. The Government seems to have focused only on the interests of the wealthiest few. We have seen that, of course, in the Panama Papers. We have seen a Budget that does very little to address the increasing gap between the cost of schooling and the money that comes in from taxpayers to support it. We have seen in this Budget a cap on the operations grant. We know that the real effect of that is that parents will be paying more “donations”—voluntary donations—to keep schools afloat. That is what this Budget means. That is what this Budget means for middle New Zealand. It means more costs for schooling.

Of course, we know that this Budget also means fewer operations. We have seen a health spend that is below the increase in health costs. Here we have, in the space of carbon emissions, again, something that really does not go the whole way. It is not even addressing the current issue in a serious fashion.

The interesting thing, if you look through the regulatory impact statement on the bill, looking at the analysis that the Government has done on this, is that it signals that the cost of this is 0.1 percent of GDP in 2020. That is the level of ambition—0.1 percent of GDP in 2020. Eight hours’ worth of GDP will be sacrificed—8 hours’ worth of GDP. That is the signal we are sending as a country. We are prepared to sacrifice 8 hours of GDP to move our country in the right direction. But, in fact, it really is not a sacrifice at all because, of course, we know that as we shift away from that old economy and into the new economy, there are some real advantages that could be taken advantage of. There are some real opportunities, I should say, that can be taken advantage of.

But this Government just does not seem to get that. It does not seem to see the opportunities. It seems much more comfortable with managing decline. Of course, in the last year we have seen what has happened to wages in New Zealand. Per person, wages in New Zealand were absolutely flat last year—absolutely flat. As costs rise, there was no wage increase for 43 percent of New Zealanders last year. Across the board, per person, we have seen absolutely no increase in wages. The only thing that is pushing our economy along right now is immigration—it is the only thing that is pushing our economy along. That is not a plan. That is simply not a plan.

Here we have from the Government little timid steps; this is not a Government that will push us in the right direction. As my colleague Grant Robertson has said, this Budget is like applying a sticking plaster to a compound fracture—that is what this Budget is. I do not think that he is understating it. In this area, it is much the same. We have got a serious issue where we need to transition New Zealand’s economy to the high-value future that is on offer. Instead, we are getting further and further and further behind our Western competitors, who are out there in front, developing the intellectual property, rewarding their innovators, and seeing the opportunity and grasping it.

They are not stuck in the past like New Zealand seems to be, under this Government. They are not protecting vested interests and they are not protecting those who are already mega-rich. They are out looking for the brighter future, looking to reward those who innovate, and looking to make sure the incentives are right for those who innovate. They are looking to take their economies forward so that they can afford the kind of health care they would want, so that they can afford the type of education they would want, and so that they can afford a secure society with a good rule of law—all of those things that taxes pay for.

But is this Government doing that? No. It seems content to manage decline, and that is out of line with the aspirations of middle New Zealand who actually want to see themselves better off. We know, for example, that of the proportion of wages that middle New Zealand received under the last Labour Government as the economy grew—which it actually did in real terms by 25 percent under the last Labour Government—more than 50 percent of the gains went to working people. Under this Government it is down to 37 percent—just 37 percent of the returns from the limited gains are going to working people. The gap between rich and poor is growing. This Government seems, in the emissions trading space, determined to protect entrenched interests. It seems completely unwilling to help shift to the new economy and to the opportunity that is out there for new technologies.

Labour will support this first step, but we cannot say that it fixes the emissions trading scheme, which the Government broke. Let us remember that as soon as it got into Government it got rid of the renewable preference for new generation because it was not comfortable with the thought that fossil fuel plants might not be added to our energy-generation mix. It got rid of the minimum obligation target for biofuels, which was not going to cost the country any more but was going to secure a future for the biofuels industry. Then, of course, it diluted the emissions trading scheme. Here we have a small step towards reinstating a small part of it.

This is a Government that is failing to invigorate the economy. We have seen also today, of course, in terms of invigorating the economy, another Byzantine grant scheme from Steven Joyce that will be about him selecting who gets what for his photo opportunities. The Government simply does not have the gumption to put in place a research and development tax credit scheme like the rest of the world recommends—like the literature recommends. It does not want real innovation; it wants to control where the money goes. Is that not the story of this Government? It wants to control where the money goes, and it certainly is not going to middle New Zealand.

Most New Zealanders will not find themselves better off as a result of this Budget. Most New Zealanders in the future will not have the opportunities that they could have if this Budget and this bill actually moved us towards an innovative new economy, if it gave the right signals about shifting away from our old dependency on carbon, and if it rewarded those in the agricultural sectors, rewarded those in the forestry sector, rewarded those in the technology sector, and rewarded anybody who wants to innovate and look toward the new world. Instead, it seems intent on preserving existing interests: the interests of the wealthiest few. That is the story of this Government.

We will, as I said, be supporting this, but on the basis that it is a tiny, tentative first step. It is 0.1 percent of GDP in 2020 that is up for grabs here. The opportunity, of course, is much bigger if we were to send a stronger signal than this Government is prepared to send. The majority of our emissions are in agriculture. This measure here is a tiny first step. Although we will be supporting it, we could be doing so much more, as a country, that would provide great opportunity for New Zealanders in the future.

SARAH DOWIE (National—Invercargill): I rise to take a short call on this Climate Change Response (Removal of Transitional Measure) Amendment Bill. I would like to follow on from my colleague Mr Scott Simpson, who is the chairman of the Local Government and Environment Committee, when he referred to this piece of legislation and this wonderful Budget recently delivered by the Hon Bill English as “pragmatic”. I would like to add a word to that, that word being “balanced”. I think that this is a very balanced piece of legislation. It is a balanced way to move the emissions trading scheme (ETS) forward and to meet our international obligations without shirking our duties to our own people.

What I want to say is that the members opposite seem to fail to remember that this scheme was brought into play—the one-for-two scheme—because of the global financial crisis. The reason that we brought it in was we wanted to support our people and we wanted to make sure that they had jobs during that time and could generate money for their families to support them. So this was a very pragmatic approach. It was a very balanced approach to allow businesses to move to meeting their obligations in respect of the ETS, but not to be militant in a scheme that would mean that people would lose their jobs. At the end of the day this is now a balanced way of phasing out the one-for-two scheme that allows businesses to move themselves forward to meet their obligations over that 3-year period. I think that that is a positive way forward because this is about protecting the environment, acknowledging climate change, and moving us forward in respect of our international obligations, given that we are an Island nation with a very large coastline, but we do need to remember our people.

If you look across what this Government is doing, we are being balanced. We are a Government that cares about people. We care about our people having jobs, being productive members of society, and having money to spend on their families. If you were to be militant with an ETS, jobs would just not be on the table. We would not be providing all of these jobs for our people out there in our sectors with the growth in tourism, with the growth in manufacturing, and with the growth in agriculture. We simply would not have that. Look, this is a pragmatic approach to phasing the one-for-two scheme out, but businesses have time to adjust. I think that is a balanced way forward and I support this bill.

JAMES SHAW (Co-Leader—Green): I am always fascinated to listen to Government members speak about their balanced and sensible approach. This is the approach where they are just weighing up expanding the economy and jobs versus destroying the planet, and coming down somewhere in the middle, so that they have a sensible balance between half the jobs and burning half the planet. This somehow gets the balance right, as if those two things were somehow isolated things that were not in same biosphere.

Let me give Government members just a quick insight into how this works: jobs happen on the planet, right? So when you have an enormous drought like the one that we had in 2013—the worst drought that we have had in 60 years, which wiped $1.5 billion off our economy—jobs were lost. That is the cost of climate change. When the worst storm in 70 years happened—in the same year that that drought happened—30,000 houses in Wellington lost power and 6,000 of those houses lost power for a week and there were small businesses going under because they did not have electricity. That is jobs that are lost. There was $31 million worth of insurance claims as a result of that storm.

Last year Whanganui and Dunedin South were under water—huge floods. Every single year there are increasing numbers of droughts and storms and fires and floods. All of those come at an enormous cost to the economy and to these jobs that the Government says it is protecting, while taking this somehow balanced approach to destroying the atmosphere.

Let us just be really clear: we have an emissions trading scheme, and the purpose of an emissions trading scheme is to reduce emissions. In the time that we have had the emissions trading scheme, which coincides with the time that this Government has been in office, New Zealand’s net greenhouse gas emissions have increased 19 percent. They have increased faster than most other parts of the planet in one of the few countries that has an emissions trading scheme designed to do the precise opposite. It is a massive and total failure of public policy.

It would have been more honest, Mr Simpson, if you had come to office and simply canned the scheme completely, and said: “We don’t believe in it. It’s obviously garbage and we’d much rather jobs than a biosphere that we can continue to live on.” You hide behind this idea that you are somehow pragmatic and sensible.

Let us just get clear what this bill would do. In removing the two-for-one subsidy the New Zealand Institute of Economic Research, the Government’s own research, says that this will lead to a reduction in emissions of 0.7 percent in the year 2020. That is against a business-as-usual scenario, which the Ministry for the Environment projects will see our emissions increase by 96 percent above 1990 levels by the year 2030. Let me just restate that: our emissions—gosh the Government benches have gone very quiet—are projected to increase 96 percent above 1990 levels by the year 2030, and what this bill does is it seeks to reduce them by 0.7 percent. So this bill will make an infinitesimal difference to an extraordinary expansion in our greenhouse gas emissions, because nothing else is going to change. This bill does nothing, except remove the two-for-one deal. So it is not even a half measure; it is a 0.7 percent measure. It does not get us halfway. It is not even a half measure.

If you actually wanted to reduce emissions, here are some things that you could do. You could have not made the decision to allow the Huntly coal-fired power station—I beg your pardon, Mr Speaker; here are some things that the Government could have done if it actually wanted to reduce emissions. Since the Government made the decision to allow the Huntly coal-fired power plant to continue until after the year 2020, it has been burning coal every single day. And every day that Huntly burns coal it makes up 5 percent of our emissions profile.

So what this bill will do is that in the year 2020—4 years from now—it will reduce our emissions by 0.7 percent, at the same time as the Huntly power station adds 5 percent to our emissions on a daily basis. This is a pathetic measure. It is not even close to the scale of what needs to happen if New Zealand is actually going to reduce its greenhouse gas emissions.

The Government wants to reduce our greenhouse gas emissions by 11 percent below 1990 levels by the year 2030. The Government’s own agency says that our emissions are going to continue to increase to the point where they are 96 percent above 1990 levels by the year 2030. This bill—all it will do is reduce them a tiny, tiny amount. So it is an absolutely pathetic measure.

Last year, when we were trying to work out—the Government did its faux consultation exercise around the nationally determined target, which led to the 11 percent target of reducing our emissions below 1990 levels by the year 2030. In that exercise the Government looked at only the cost of doing something about climate change. It did not look at the benefit, at all, and it did not look at the cost of doing nothing. Those costs, which I have already outlined: $1.5 billion wiped off our economy from that drought, and millions and millions—tens of millions—of dollars’ worth of insurance claims from floods and storms. And that is just up until now. You accumulate those costs over the course of the coming decades. It is a massive risk to our economy.

Furthermore the economy carries a risk of something like $3.5 billion to $7.5 billion if we fail to meet our emissions reduction target. We will have a fiscal cost to Treasury—they are all looking down at their knees now—of $3.5 billion to $7.5 billion of risk if we fail to hit our targets.

Scott Simpson: What were the numbers?

JAMES SHAW: They are in the regulatory impact statement. There is a $3.5 billion to $7.5 billion economic risk if we fail to hit our targets, and—get this; I am going to say it again—a 96 percent increase in our emissions above 1990 levels. So there is a colossal risk to the New Zealand economy that is not being addressed by this bill.

If you actually wanted to reduce greenhouse gas emissions, you would close the Huntly coal-fired power station. If you actually wanted to reduce emissions, you would do something about the way that we make decisions about land use and forestry and agriculture in New Zealand. The Minister, in introducing this bill, did talk about spreading the cost across all sectors, but it, still, subsidises and excludes the single most polluting sector from the emissions trading scheme. So there is still an enormous subsidy going towards agriculture and other polluting industries, and that is putting all of the cost on to the other productive sectors of the economy. There is a huge cross-subsidisation going on, and a massive skew in investment as a result of that subsidy to that portion of the economy.

If you actually wanted to reduce emissions, you would not have a cap of $25; you would have a floor price of $25. The maximum amount should not be $25 per tonne; it should be the minimum amount. I note that France is just putting in place a NZ$50 per tonne price on carbon. So France is actually leading the way, and, once again, New Zealand is trailing around in the background, going: “Oh, isn’t it so hard. We can’t possibly do anything. We’re just so small.” It is really quite pathetic.

If you actually wanted to reduce emissions, you would have good policy. We should have an independent, non-political climate commission, as was set up in the United Kingdom, so that good public policy is decided, or guided, by the hand of good science, not by politicians who are out protecting vested interests from the sectors that they represent. And the third thing you would do is you would deliberately lead on investment, innovation, and research and development in the green economy. You would be doing, again, what other countries have done—what the United Kingdom and Australia have done—in setting up green investment banks, which have seen a huge inflow of private and public investment into the green economy, which is of massive benefit to those countries.

The Green Party will, of course, be supporting this bill. We do hope that the Government listens to some of the arguments that we have outlined, and actually does something serious about climate change in the very, very near future.

DENIS O’ROURKE (NZ First): New Zealand First will also support this bill, because it is acceptable as far as it goes, and, in fact, it does not go very far. I accept what James Shaw has just said and the figures that he gave. In particular, the less than 1 percent contribution that it will make by 2020 to New Zealand’s emissions profile is very sobering. The reality is that the bill simply brings to an end a transitional provision that has come to the end of its useful life and should probably never have been there in the first place. So this is hardly the leap forward that some members opposite me here tonight have said it is.

Today’s Budget actually is overall best described, I think, as a “band-aid Budget”—a boring band-aid Budget, at that. It is a boring band-aid Budget. The protests from the other side of the House are not appropriate, because that is how the people of New Zealand will see this: a boring band-aid Budget. This bill is the smallest band-aid in the package that is put forward in this pathetic Budget. In fact, this particular measure could hardly be smaller and could hardly be more minor. New Zealand First actually has little faith altogether in the effectiveness of the emissions trading scheme (ETS) as a means of genuinely addressing New Zealand’s climate change obligation, now committed to as a result of the Paris accord. We know that as a result of that accord what we need to do now is urgent and what we need to do now must be comprehensive. That is the obligation we have, and that is what many people expect from the Government, but so far it is just this very minor, pathetic little band-aid measure.

If the ETS is to have any chance at all in making any contribution to the Paris obligations, then, of course, this bill is necessary as an extremely minor, less-than-one step forward to phase out the unfortunate, transitional, one-for-two surrender obligation measure of 2009 from the emissions trading scheme, so that realistic pricing can ultimately be achieved. That is what the original measure did; it actually put a block on that. This will help to free that situation up so that at least we will get a move towards realistic pricing.

The reason, however, why this bill is just one of the minor bandages in this band-aid Budget—a very minor step forward—is that it is actually hugely outweighed by several very large steps backwards that this Government is currently involved in. These include, first of all, a failure to act at all in any genuine way towards taking real steps to carry out our Paris obligations. The target, as the Minister said, is 30 percent below 2005 emissions by 2030. That is a fairly big bite for New Zealand to take, and I am glad that we are making that attempt, but if we are going to get there we actually have to do something about it, and all we hear from the Government is that it is planning to plan for it—planning to plan for it. That is pathetic. The Minister gave no indication of any real steps to be taken at all, while at the same time there is a failure to act to reduce dependence on fossil fuels in New Zealand, apart from a rather pathetic package announced by Simon Bridges recently to encourage the take-up of electric cars that was universally regarded as pathetic and inadequate.

In addition to that, there is no encouragement for New Zealand freight to move from clogged roads towards an underutilised and under-maintained New Zealand railway system. That is pathetic as well. In fact, all we have got in this Budget is a very minor $190 million tranche of funding for rail in the near future. That is an absolute drop in the bucket compared with the huge programme of reinvestment that is needed to reinvigorate New Zealand rail and to make it competitive with the road transport industry. So those are the steps backward. That is the neglect that this Government is guilty of at the same time as it takes this extremely minor band-aid step forward.

New Zealand First’s climate change policy seeks a much more comprehensive strategy than that. Planting trees can help, and we would certainly encourage that, but it will never be enough. We think that transport is the first major area that New Zealand needs to be taking as a step towards achieving its Paris obligations, but we are getting nothing from the Government about that—nothing other than a pathetic $190 million provision for New Zealand rail in the current Budget.

We all know—every party and every person in this country—that agriculture is the emissions area that must be addressed early and comprehensively by New Zealand if we are to have any hope at all of meeting our targets. For that, we need a strategy-based approach based on good research. People—farmers and others involved—will need to know the actions they can actually take, as a result of Government leadership and Government investment and research, so that real and effective measures can be taken as far as agricultural emissions are concerned. This is New Zealand’s most critical and urgent matter as far as the need for action on climate change is concerned, but we are getting nothing at all from this Government other than this pathetic measure.

New Zealand First wants a much more strategic approach, with clear targets backed by a comprehensive raft of regulation, so that we get a level playing field and so that we get a science-based approach that will be effective for New Zealand business and New Zealand agriculture. That has to be done in consultation with them. That has not happened either, as a result of Government inaction, and it does need to happen.

New Zealand First will support this pathetic little bill, which is necessary, but what we wanted to see and what New Zealanders want to see from the Government is much, much better leadership and real and effective actions—real and effective actions—and genuine plans, strategies, and targets towards achieving New Zealand’s Paris obligations for climate change. I hope that in the future we will see that, and I hope that we will hear from Government members opposite something better than we have heard so far in their speeches, something that will indicate some genuine commitment and some real actions, rather than just a pathetic little bill like this.

PAUL FOSTER-BELL (National): E Te Mana Whakawā Tuarua, tēnā koe. Tēnā koutou katoa e ngā mema o Te Whare. It is a pleasure to follow on from Denis O’Rourke, who has just resumed his seat. I was surprised that he brought such a level of modernity to the debate given that he generally adheres to Victorian views on most of the subjects he intervenes on in this House.

This Climate Change Response (Removal of Transitional Measure) Amendment Bill is a very good one, and I would like to congratulate my colleague the Hon Paula Bennett, the Minister for Climate Change Issues, who has introduced this piece of, I think, positive legislation.

We take the environment and our commitment to it very seriously on this side of the House. It is a blue-green approach and it represents, I think, a very sensible balancing act in that we are not immediately launching with the full force taking effect; we are, in fact, phasing in a reduction in the two-for-the-price-of-one that currently exists for carbon units in certain industries. We are phasing that in over a 3-year period at a rate of 67 percent next year, 83 percent in 2018, and 100 percent in 3 years’ time.

I would point out that agriculture is still not included in the emissions trading scheme, but there will be a few costs from this measure for those who are participating in our vital agricultural economy. For instance, although dairy farmers will not be paying for emissions from their animals, Fonterra does have some emissions related to the coal-fired drying units, for instance, the electricity consumed in its plants for producing the dairy products—which are such valuable export commodities—and also for transport and trucking. So we have some estimates here for the costs that might be imposed of around $265 a year in 2017 for sheep and beef farmers, going out to $795, and perhaps a little more for dairy farmers, with $690 in 2017. But I think this is a relatively small price to pay for something that will cement New Zealand’s clean and green reputation on the world stage and allow us to continue to be a powerhouse in tourism to attract those high-value tourists who really do value a clean and green environment, which is what we have to offer here.

I welcome the support from parties opposite who will be supporting this bill through, and I commend it fully to the House.

The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Dr Kennedy Graham—5 minutes.

Dr KENNEDY GRAHAM (Green): The stated purpose of this bill is to amend the Climate Change Response Act 2002. The stated purpose of the Climate Change Response Act 2002 is to enable New Zealand to meet its international obligations under the UN Framework Convention on Climate Change. The stated purpose of the UN Framework Convention on Climate Change is to stabilise carbon concentrations in the atmosphere within a time frame that will prevent dangerous climate change. It is demonstrably clear that the logical flow of those stated purposes will not be met by this puny bill before us on climate change.

The Government members across the floor, in receipt of their notes, which were handed out just before the speech, have used the following phrases designed to capture the hearts and minds of the voting public: “get the balance right”, “pragmatic, sensible Government”, “balanced measures”, and “policies right for the times”. The balance is not right, it is not pragmatic, and it is not sensible. It is imbalanced, when it comes to climate policy, and it, surely, is not right for the times that a quarter of a century after the UN framework convention we have these baby steps, as Megan Woods put it—baby steps removing a one-for-two obligation set up “as a transitional measure”, to quote the bill, to get businesses through tough times from the global financial crisis in 2008 and 2009 and then it was continued in 2011.

If the purpose of this Government’s climate policy is to calibrate policy in a way that businesses, particularly, do not feel any obligation to move in reducing carbon, whether it is the global financial crisis or the new crisis in 2 or 3 or 4 years’ time, it will, by definition, not succeed. It is not pragmatic. Let me assure members that your policies, colleagues, will lose jobs, will hurt businesses, and will hit the families—the three objects that you state the Government’s policies are designed not to do.

The global emissions in that period of time have increased from 32 billion tonnes to 50 billion tonnes a year. New Zealand’s emissions over that time have increased from 67 million tonnes to 83 million tonnes, or so. Since this Government took over, they have increased by 19 percent. Why have they increased by 19 percent? It is because of those transitional measures taken in 2009; because of the switch from a one-for-one obligation to a one-for-two obligation in 2009; because of an insistence on continuing with free allocations subsequent to 2009, resulting in 65 million units being freely allocated; and, above all, because of the insistence, this blind devotion, against all logic—as was pointed out to Ministers through question time for 6 years—to insist on allowing the hot air coming into New Zealand by way of credits, emission reduction units, from Ukraine, Estonia, and Russia, which reduced the international price from $20 to 45c.

Yesterday—and I will finish on this, if I may—we were assured by the Minister that only 26 percent of the credits surrendered were of those and that the rest “had environmental integrity”. So we are at the moment, under the Government, only 26 percent corrupt in our policies.

CHRIS HIPKINS (Labour—Rimutaka): As I sat there listening to the Government’s Budget speech this afternoon, all I could think was: “Is that it? Really, is that it?”. Here we are, under urgency, debating two bills, and now I am thinking: “Is that it?”. Is that all that those members can really come up with when we have a housing crisis—no, we are not debating the housing crisis. We have got critical funding shortages in health and education—no, we are not doing anything about any of those. We are here talking about increasing the price of cigarettes—which we will get to later on—and this bill, the Climate Change Response (Removal of Transitional Measures)—or “Measure”—

Grant Robertson: Only one.

CHRIS HIPKINS: —Amendment Bill. That is it. It was one measure, and that is it. That is the total extent of the Government’s urgent agenda following this year’s Budget. There is nothing—nothing—about those critical issues that matter to New Zealanders. The “compilation Budget”—it is like a compilation album. That retro album, with the same old tunes you have heard time and again—that is what this Government’s Budget was. Of course, compilation albums normally come out before the band folds, because it has run out of new material, and it is about to—

Grant Robertson: Out of ideas.

CHRIS HIPKINS: It is out of ideas and it is about to pack up shop. The one surprising thing about this is that the Government is doing anything about climate change at all, because, of course, we know that there is still a bunch of flat-earth believers over there who fail to accept that climate change is a reality. Of course, they are propped up by the ACT Party, which makes it its central thesis that climate change is not a reality. It has voted against most of the measures in this House that would actually do meaningful things to address the challenge of climate change. I know that personally, because the first member’s bill I introduced into the House would have stopped new electricity generation in New Zealand coming from non-renewable fossil fuels. And what did the National members do? They voted against it. A bill that would have had a meaningful impact on New Zealand’s emissions because it would have reduced the prospect of new emissions coming from electricity generation—they voted against it.

Every significant piece of legislation that has been proposed by Labour or by the Green Party or by any other party, National has opposed it. The emissions trading scheme—the first thing it did when it became the Government was to water it down. It watered down the emissions trading scheme in its very first year in office. That says everything about its commitment to dealing with the challenge of climate change. This is a Government that still fundamentally does not believe in climate change. It does not accept the realities of climate change. So although it is welcome that it is doing this one small thing, which will make a difference but not a very big one, there is still nothing in this year’s Budget that will address the really big issues around climate change.

But then National does not have anything in this year’s Budget that addresses the really big issues around just about anything else, so why should we be surprised by that? There is very little in this Budget. There are no surprises and no substance, actually, in the Budget of any great note. It is just those members continuing on, ignoring all of the major problems and major challenges facing New Zealand, burying their heads in the sand for as long as they possibly can, and hoping that someone else will fix up the problems. Well, actually, someone else will. It will be the next Labour Government, and that will happen in 2017 after the next election.

JOANNE HAYES (National): I just want to disagree with that member’s point that this Government does not believe in climate change. Of course we do—that is why we are in here today. We are taking a pragmatic, a sensible, and a responsible approach to climate change. It is a balanced view. I know that there are people in this House who do not like those four words. They do not understand that if we went out and put in a very harsh process to the phasing out of and eliminating the one-to-two obligation, then we would wipe out a lot of businesses, and it would not be very good for the economy, would it? No, it would not be.

When we start looking at the dairy farmers, if we went in and took a hard approach to them, they would be paying and paying and paying. So far, we have not heard from anyone on the Opposition benches about the value that the dairy industry adds to the economy of this country. As we start going through, if we look at the phased approach, in the first year we are looking at 67 percent by 1 January 2017, and then 83 percent by 1 January 2018, with all sectors paying full price for the emissions trading scheme by 1 January 2019.

As I say—and I am going to keep driving this home—this policy, our view to climate change response, is a pragmatic, sensible, responsible, and balanced approach, and I have no problems in commending the bill to the House.

Su’a WILLIAM SIO (Labour—Māngere): I was expecting to debate some of the crises that we have had, and I was expecting a substantial contribution from that particular member, Joanne Hayes, and so I was surprised when there was not anything about that, and then she sat down. On this side of the House we were expecting that we would spend tonight and tomorrow debating urgency legislation that was going to fix the housing crisis and that was going to ensure that everyone who needed an operation in our hospitals would get one, and that people who were living in garages or cars would at least have some hope that they would be moved into a decent house. Instead, what we are hearing is that they are getting moved out of Auckland and instead of being homeless in Auckland they will be homeless somewhere else.

I come to this bill, and, as my colleague Dr Megan Woods has said, we are supporting it. We are supporting it on the basis that those members have finally recognised the error of their ways because—let us be straight up—this Government introduced this scheme of a one-for-two subsidy in 2009. What does that mean? It means that a business can pollute all it wants, and instead of paying the full cost it will pay half of the cost. That is what this scheme means—businesses can pollute and, instead of paying the full cost, they pay half of the cost. That does not show that this Government is serious about climate change—it certainly does not.

If this Government was serious, instead of phasing out the scheme as they are doing, it would take the issue seriously and address it right now. Instead, it is not doing anything about it today, it will not do anything about it this year, and it will do something about it next year. It does not get phased out completely until 2019. It is a signal, again—in the same way that those members have treated the housing crisis as if it was made up—that they do not recognise how serious the error of their ways is, and how serious climate change is.

I do want to acknowledge the fact that the Minister for Climate Change issues has, at least, taken this baby step. But if the Minister were to take it seriously, she would need to consider the fact that a whole suite of other activities need to take place. We have got to take seriously the reduction of our own emissions—of transitioning this workforce into a workforce of green, clean climate-changed jobs. That is what this Government has got to do.

In recognising that she has taken this baby step, I would ask the Minister to go further and work on the fact that we have also got to repair our reputation. Once upon a time, we could be proud of talking overseas about a “clean, green” New Zealand; we cannot do that anymore. At the Paris meeting last year, delegates from the Pacific said that they were disappointed that when New Zealand Government officials turned up they were not supportive of what the Pacific was advocating for. In fact, it was only because Obama and some of the other countries’ delegates dragged their feet that the New Zealand delegation then agreed to the 1.5 goal.

I say to the Minister: take this seriously. If she had heard the reports from the Parliamentary Commissioner for the Environment, she would have seen that the environment commissioner has recognised and has put up evidence to show that, already, our coastal regions are under erosion because of climate change. We cannot ignore that—that is serious stuff.

Two months ago I had the opportunity of visiting Kiribati and Tuvalu. Those islands are under serious threat. In the international arena, their representatives have spoken passionately, saying that they are the canary in the tunnel, a warning to every other country in the world, that what is happening to them is going to happen to us. The United Nations Development Programme report of 2010 identifies that among the most low-lying atolls of the Pacific—which include Tokelau, which include Tuvalu, which include Kiribati, and which include the Marshall Islands—many of those countries will be underwater by 2050.

The ASSISTANT SPEAKER (Lindsay Tisch): Come back to the bill.

Su’a WILLIAM SIO: I am making the point that if this Government were to take seriously the issue of climate change, then this step is not enough. It must go further. This issue is so serious that I would not even mind if those members stole Labour Party policy. I would not mind if they were to establish an independent climate commission that would establish a carbon budgeting process. I would not mind if they stole those policies because those policies are sensible and they take the issue of climate change seriously.

I heard the member who spoke before talk about business and the value of business. We certainly do value business, and, I tell you, if businesses themselves do not start planning and taking into consideration the effects of climate change on this country, they are going to have issues with where they grow their crops. They are going to have issues with transitioning the types of energy facilities that they have now into more renewable and cleaner energy sources. They need the plan, but this Government does not seem to take it seriously. It is more than just giving them the legal right to pollute; it has to be much more serious with a whole suite of other activities.

I go back to the issue I tried to raise, which I think is the key to this: the Pacific is facing this on a day-to-day basis. Here is why it is important for us. I was asked by a young person in Kiribati what New Zealand would do if Tuvalu or Kiribati were hit by Cyclone Winston, which hit Fiji. What would we do with those islands—remembering, of course, that a report was released last month showing that five islands of the Solomon Islands are now underwater? What will we do with those?

The ASSISTANT SPEAKER (Lindsay Tisch): Come back. Come back—

Su’a WILLIAM SIO: But this is the point, Mr Assistant Speaker.

Grant Robertson: I raise a point of order, Mr Speaker. I apologise to my colleague for interrupting in the middle of his speech, but that is the second time that you have asked him to narrow his contribution down to the bill. It is a well-understood convention in this House that when a piece of legislation is dumped on the table by the Government with no notice there is some latitude, certainly in the early readings of the bill. The member is speaking about climate change—

The ASSISTANT SPEAKER (Lindsay Tisch): I thank the member for his comments. To talk about the Solomon Islands and Kiribati with water levels rising is a far stretch from talking about the emissions trading scheme (ETS) and this. I did give the member some warning earlier on. I will ask him to come back to the bill.

Chris Hipkins: I raise a point of order, Mr Speaker. This is a bill that deals with climate change. The emissions trading scheme is the Government’s response to climate change.

The ASSISTANT SPEAKER (Lindsay Tisch): Exactly—thank you.

Chris Hipkins: This is a—

The ASSISTANT SPEAKER (Lindsay Tisch): The member will sit. Exactly—and this is about the ETS and what is in the bill. It is all very well—and I have allowed the member to talk about the other islands; I understand those issues, just as he does—but I have asked to come back. And now I am asking him to come back to what is in the bill.

Su’a WILLIAM SIO: I will continue to raise that particular point because this is important and it does refer to what this Government is doing based on this legislation. It is not enough—that is the whole point—and if we do not take climate change seriously, what is happening in the Pacific will also affect this country of ours. So far this is baby stuff; this is small stuff. This issue will affect New Zealand in a significant way. I am glad that the Minister has taken this step, but I ask the Minister now to look more broadly than she is doing here and take into consideration that we need more than just what she has put in this piece of legislation.

But here is the point: we have waited with bated breath all of this time for this particular Budget, thinking—and we were all thinking—that they were going to take seriously some of the crises that this country is facing. Climate change is certainly a future crisis, but it is coming. It is coming, and it is here if you listen to the reports of the environment commissioner. Our coastal regions are being affected and local councils are trying to figure out how they pay for the roading restructuring that we need to deal with. This Government does not seem to really care about what will happen because it thinks that it will pass those costs on to somebody else.

So, again, here is the thing: giving business the right to pollute but pay only half the cost was wrong at the outset when this Government introduced it in 2009. It is wrong now to focus on this only, when it needs to take a broader approach in addressing this problem. But I tell you that the Pacific is relevant to what this country does, because if those islands are underwater I would ask those Ministers and that Government there to show me where the tent city where they are going to house 110,000 people from Kiribati should be. Show me where they want to put up the tent city where they need to house 10,000 Tuvaluans. If we approach climate change with these baby steps we are never going to get anywhere, we are not going to address the issue, and it will continue to harm not only our physical infrastructure but also our reputation.

MATT DOOCEY (National—Waimakariri): It is an honour and a pleasure to rise in support of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. Can I first just acknowledge my colleagues on this side of the House for their debate contributions so far. I think it has been a very balanced debate. I think they have taken small steps, and if I had been able to bring in a polaroid camera, I would have photographed them.

Can I just pick up on some comments from my Green Party colleagues, who said we were repeating lines to appease our voters. I think what is more important is when their colleagues, their friends over in the UK, the Green Party of England and Wales, decided that our lamb had a bigger carbon footprint than UK lamb, so it spread out its propaganda and said our lamb did not have a smaller contribution—

James Shaw: I raise a point of order, Mr Speaker. I think that if one member is not allowed to refer to islands in the Pacific, another cannot refer to an island in the North Atlantic.

The ASSISTANT SPEAKER (Lindsay Tisch): I thank the member for his comments. The point I made earlier was that there was quite a long dialogue on the Pacific Islands, and I did bring the member back to that, and we have dealt with that matter. Now I am listening closely to what this member is saying, and if he goes on and spends all his time on that, I will be on my feet again. To mention a country in passing is fine. Other than that, I will move on it.

MATT DOOCEY: I commend this bill to the House. [Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are going to have a vote, and it will be done in silence.

Bill read a first time.

Second Reading

Hon PAULA BENNETT (Minister for Climate Change Issues): I move, That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a second time. I think we covered quite a lot in that first reading as far as being quite clear about how the transition is happening and why we are kind of phasing it in goes.

We looked at a whole lot options, to be fair, on that. In some respect we looked at the price of fuel at the moment and the fact some of those costs might be passed on and we felt at that time that, actually, households were in a situation where they might take that bit of a lift. Would we look at 100 percent? But we then looked at businesses, and certainly read those submissions we got, and equally, I think, most importantly, we looked at farmers. The additional cost that potentially goes to our farmers from the emissions that Fonterra itself emits and then, of course, its increased costs with the amount of fuel and electricity it uses—we did not want to be putting an undue burden on farmers at a time when they could probably least afford it with prices at the moment.

So what we got from businesses the most was that what they wanted was certainty and the opportunity to do their outward projections, obviously, and take this into account. There were things like local government, where they had already looked at what their spend would be. This has an effect on them, particularly in their waste, and so, actually, they would not have the money to pay for the additional cost if we actually rushed it in too quickly when they had already done their accounts and things, as you can imagine. We needed to bring it in over time.

I think when it comes to climate change, for me, I reckon—well, for anyone who doubts it—I just do not think there can be any doubt at all. With all respect, you do just need to look at some of our Pacific neighbours and it is pretty stark. You can see what is happening there. Equally, I think this response through the emissions trading scheme (ETS) and us reducing can play a big part. It plays a part in respect of upping the price, obviously, for those businesses that are exposed to the ETS and, as a consequence, cost does affect behaviour. Our main reason for actually removing the one-for-two measure is that we believe it will actually affect businesses and how they are looking at their own emissions and the cost of them, and we want to be encouraging them to work towards that lower-emission economy. It makes a big difference to us.

The other aspect of it is that in putting in this cost and imposing it more back at business we wanted to do it in a way that did not affect jobs. I heard in the first reading people sort of talking about how we should have never brought it in. Well, actually, those were also people who were saying that jobs at that time were most important, and there was a real risk back in 2009 that if we were having imposed costs that were beyond what people could actually cope with, then they would be laying more staff off. That is certainly why it was introduced, but we are at a very different—if you just look at the Budget today. What a fantastic Budget. If you look at the forward economy and what is happening, if you can see the 3 percent growth coming our way, if you can see another 170,000 jobs coming in—

Grant Robertson: What about the bill?

Dr Megan Woods: The bill.

Hon PAULA BENNETT: Well, that is exactly the point—the 170,000 jobs coming in mean businesses can actually afford now to pick up a bigger share of their costs of what they are doing, and I reckon that is equally important in why we are looking at this measure.

To say it is good for the Government’s books is pretty obvious. We are budgeting $356 million that is positive for the Government’s books over the next 4 years. But, as I say, that was based on $12 a unit, which is what it was when we set this in place a few months ago. Well, we are already at nearly $15 a unit today, and everyone you speak to says it will not go back.

The other point I am not sure has been made, and another reason for removing the one-for-two measure, is the fact that you have got 140 million New Zealand Units (NZUs) that are currently stockpiled. To be quite blunt with you, I want to see some of them spent, and this will mean some of those businesses that are stockpiling NZUs will actually spend them to pay for their share of the cost, and that sort of thing. As a consequence, that will have, I think, a positive effect on some of that behavioural change and put some challenges to us.

I just want to say that on climate change, as I sort of said, my opinion, if anyone is kind of doubting whether there are effects and if they are doubting that this will make a difference, is that it will. But, equally, I reckon this is about our identity. Our identity, actually, is set in our land. It is set in our mountains, in our beaches, and in who we are. It does not matter if you are Māori or non-Māori. Actually, that is, for me, what my identity as a New Zealander is quite encompassed of. So we need to look after this land. We can argue that our contributions globally are at, you know, 0.15 percent, but, actually, this is about our economy. It is about who we are as a country, and we have to be putting things in place further than what we already have. I really note the Minister of Transport and the difference he is making with electric vehicles and introducing other transport ways.

This ETS removal of the one-for-two measure is one step, and I do not say it is the answer, but it is an important step in really letting businesses and the public know that change is coming and that we want to see that continuing as it does. I commend this second reading to the House, and thank you very much.

Dr MEGAN WOODS (Labour—Wigram): It is so soon to be taking a second call on this bill. It is comforting to hear from the Minister for Climate Change Issues that the measure may be joined by another measure to address climate change. Although we are supporting this single measure, it simply is not going to be enough. The Minister told us that our identity is bound up in our natural landscapes, in our mountains, in our rivers. It is those mountains and those rivers and those glaciers that are being put under threat by the risk we are posing to our planet by climate change. Until the Government can join up its thinking on that, we are going to get nowhere. I would like to put it to the Minister that, actually, this Government’s action on climate change is slower than the glacial retreat in this country. Glaciers are retreating in this country, in our own country, at a faster rate—on islands here, at a much faster rate.

The Minister talked about the great difference that this piece of legislation is going to make. Well, the regulatory impact statement for this legislation tells us it is going to make a 0.7 percent reduction of net emissions in New Zealand in 2020 at each price. In terms of the efforts that New Zealand has to make to meet its post-Paris and its pre-Paris commitments around emissions reductions, this is a tiny drop in the bucket. This is simply not enough. If this is all the Government has got, we are in trouble. A 0.7 percent reduction in our emissions is simply tiny. This Government took to Paris and put on the table a 30 percent reduction on 2005 levels of emissions—an 11 percent reduction on 1990 levels. More action—

The ASSISTANT SPEAKER (Lindsay Tisch): 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.

Dr MEGAN WOODS: I am happy to take another short call on this piece of legislation. Before the dinner break we were talking about the very small contribution to our overall target that this piece of legislation will make in terms of the emissions trading scheme and the wider options in terms of the ways in which we can reach our pre-2020 targets and also our post-2020 targets. Remember, this Government has signed up to a 50 percent reduction in our emissions by 2050, and we are simply not on a pathway to meet that in any way, shape, or form.

So when members of the Government get up and they talk about their pragmatic, sensible, balanced view on climate change, they treat it like it is something that they can choose to do or not. Rather than just reading the pap notes that they have been given, they could have even flicked through the regulatory impact statement that sat alongside this bill, where paragraph 6 on page 43—you might want to flick through now and have a little look—tells you that “Current NZ ETS policy settings do not put the New Zealand economy and Government in a good position to meet climate change targets and international obligations in the future.” The stark reality is that we are not doing what we need to do in order to protect our planet or to protect our economy into the future. So when the Minister says that they are having to balance jobs, I say that by not acting on climate change this Government is putting our economy and the security of jobs at risk.

Last year 232 people lost their jobs in my electorate, in Wigram. They lost their jobs shelling mussels, and they lost their jobs because the water in Northland was too warm for the mussel spat to grow and that plant was shut down. The research and development needed to do the breeding under new conditions simply had not kicked in. The response of the Minister, Gerry Brownlee—in this case, that Minister—was “Ah, there’s plenty of work in Christchurch in the rebuild.” To go from shucking mussels to picking up a paint brush requires something in the middle, and that is the role of Government. It is called skills training, and it is about transition pathways, and we are not seeing this.

So when the Minister says that there are other measures coming to join this Climate Change Response (Removal of Transitional Measure) Amendment Bill, we would like to see some other measures that do put us on a good, clear pathway where we can protect our economy, where we can futureproof it, and where we can ensure that the security for workers in the 21st century is there and that their jobs are not going to move from under them. Avoiding any kind of shock in an economy requires careful planning, and this Government simply is not doing that.

The Government speakers, when they are talking about their pragmatic, sensible, and balanced view on climate change, might actually want to address what this bill does not do. They might want to address what the official advice says is the current state of our emissions reduction pathway. They may want to consider that there is going to be a 0.07 percent reduction in New Zealand’s net emissions through the piece of legislation that is being passed tonight. It is a tiny drop in the bucket, and much more needs to be done. Labour supports this bill, but it would like to see other measures join this measure. Thank you.

SCOTT SIMPSON (National—Coromandel): It is a pleasure to take a quick call in the second reading debate of the bill, which is designed to phase out in a very pragmatic, very balanced, very measured, sensible, and reasoned way the one-for-two transitional arrangements that were set up back in 2009 in the very depths of the global financial crisis. That was a policy that was set about quite deliberately—very carefully, with a lot of considered thought—to ensure that businesses and jobs were protected.

I know that it upsets Opposition members to talk about being pragmatic and being sensible and being balanced, but that is the nature of good governance and good government, and that is something that we have seen today expressed in Bill English’s eighth Budget. He has done it very, very well, in my view—pragmatic, balanced, and sending the right kinds of signals.

The phasing out of the one-for-two emissions trading scheme (ETS) structure is actually really important. What is more, it comes with the support of a very wide range of businesses. Last year there were some nationwide submissions, consultative meetings that took place around the countryside. They included iwi and a whole wide range of interested parties, and at those meetings 75 percent of submitters were in favour of phasing out the one-for-two.

Paul Foster-Bell: How many?

SCOTT SIMPSON: Seventy-five percent of submitters were in favour of phasing it out. So the Government did have options in terms of how that transition might take place. It would have, perhaps, been possible to simply start from where we were in 2009 and literally go cold turkey, but we are not a Government that wants to do that. We are very keen to ensure that businesses and others have time to make the adjustments that are required, and that is what this bill is about. Gradual phasing-out of the one-for-two is a really significant step in meeting our target to reduce emissions. I know Opposition members do not like to hear that, but the simple reality is that that is so. Our target is to reduce emissions by 30 percent below 2005 levels by 2030.

Earlier this year we were very pleased to sign up to the historic Paris Agreement, and at the time parties from around Parliament thought that was a very good idea. That was because the Paris Agreement really does amount to what is the first global agreement on climate change. New Zealand was actually one of the very first countries outside Europe to set up an emissions trading scheme, and this bill is about reviewing it, about changing it—transitioning it to make it stronger, to make it more effective—and about strengthening our ETS. If we can, as a result of this legislation, make the ETS more robust and help reduce emissions even further, then that is a good thing, and it does assist us to get to where we want to be in 2030. But in this space we have got to be smarter than other countries. We have to be more nimble and more clever, and the reason for that is that already 80 percent of our electricity comes from renewables, for instance. So our emissions profile is quite different to that of most other countries in the world; 80 percent of electricity coming from renewables is very, very impressive. We would like to get it to 90 percent, and I am confident that we will get it to 90 percent. We are committed to getting it to 90 percent, but in Europe only about 12 percent is generated from renewables—only about 12 percent; only about 12 percent.

So our emissions profile is completely different from that of most other developed countries. Ours is made up of agriculture, for instance, at about 49 percent, as good as 50 percent; other energy at about 40 percent—non-transport at 23 percent, transport at 17 percent—industrial processes at 6 percent; and waste at 5 percent. So our make-up is a different sort of model and style to other countries. That is why we do have to be more nimble, more flexible, and more smart, actually, in how we meet that target for 2030.

This is a good and practical, pragmatic, reasonable, balanced bill. I know that Opposition parties do not like that. They are going to be heartily sick of us talking about these things, because we are a sensible, reasonable, pragmatic Government. I commend this bill to the House.

GRANT ROBERTSON (Labour—Wellington Central): We will thank Scott Simpson for his version of Fox News that he just gave us there—reasonable and balanced. At this point in the proceedings I would like to spend a little bit of time reflecting on the select committee submissions that we had on this piece of legislation.

Dr David Clark: I didn’t see those.

GRANT ROBERTSON: Oh, that is right—there were none, because the Government has decided to put this bill through under urgency tonight. The Government knows that it has widespread support across the House for this measure, so here would have been an opportunity. Do a first reading, by all means; you have announced it in the Budget. Good on you! Then send the bill to a select committee, so that New Zealanders can actually have a say about what is happening with one of the most significant issues facing the planet.

Paul Foster-Bell: Already had a say—already had a say.

GRANT ROBERTSON: Paul Foster-Bell says that they have already had a say. It is not good enough, Mr Foster-Bell. It is a piece of legislation. It has got clauses in it. It has got things in it that might not be quite right. It would not surprise me if we were back in the House sometime in the next few months, correcting this piece of legislation, because there will be a mistake. That is what happens when we move in haste—we make mistakes. So that is what could well be happening.

Right now, I should be standing here, saying: “Well, I would like to thank Generation Zero for their excellent contribution to the select committee process. I would like to thank the business organisations right around the country that have come in and said: ‘This is a really interesting change. We can see why the Government is doing it, but we want to see more to help create sustainable jobs.’ ”. I could be talking about all of those select committee submissions right now, today, and I cannot because the Government has decided that it had better do something important on Budget day; it had better look busy.

It is very important to look busy on Budget day if you are the Government, even if your Budget does not actually do anything to make the economy more sustainable, to allow us to transition to a low-carbon economy, and to allow us to help find the path to sustainable jobs right around New Zealand. That would be a fantastic thing to be debating today, in the Budget, but it is absent. It is not in the Budget. The Budget does not deliver a pathway forward to adjust the transition away from fossil fuels to a low-carbon economy. We all know we have got to do it. I even think members on the other side know that they have got to do it but there is no plan in the Budget for this.

Is it not interesting that this bill is entitled the Climate Change Response (Removal of Transitional Measure) Amendment Bill? That really sums it up—just the one; just the one measure. It would be good to have seen something about measures perhaps, but no, just the one measure.

As I have said, everybody in this House, certainly in the first reading, supported this bill. I am sure that will continue to be the case as we go through. The one-for-two subsidy has had its day. It is quite clear that we need polluters to take more responsibility for what they do, for the emissions that they have, and this is one small step in that regard.

I do note that in the Budget documents this will net the Crown about $356 million—not an insignificant sum of money, you might say. Would it be good to see some of that money translated into some of the other initiatives that might actually promote a more sustainable New Zealand, that might actually allow us to meet our climate change goals and targets? That would be a good thing. Sadly lacking in that regard.

I see the Warm Up New Zealand funding is now $18 million over the next 2 years, in comparison to the $100 million over 4 years that came before. I heard Simon Bridges say that the Warm Up New Zealand subsidies are now more targeted. Well, that is an interesting idea because we are only about one-third of the way through retrofitting New Zealand homes for insulation, so I do not think we are quite up to the targeting stage. I think we probably have a bit more work to do in New Zealand to get our housing stock up to the state of being both healthy and energy efficient.

It would have been good to see some of the $356 million that the Government pockets today, as a result of this change that we are passing in this legislation, actually go on to being used to help create a more sustainable New Zealand, but again there is no plan for that whatsoever in this piece of legislation.

On this side of the House, and I think this actually goes for all of the Opposition parties, we have been calling on the Government for some time now to step up with a real plan on climate change—a plan that actually acknowledges what is happening in New Zealand today and what is happening in the world today. Members of the Government might care to take a trip down to my old home town where I grew up, down in south Dunedin, and check out what is now effectively a flood plain that has been created in south Dunedin.

Large insurance companies are going to stop insuring the residents of south Dunedin within the next 10 years, possibly even shorter. This is also going to be replicated in parts of Christchurch, as Mr O’Rourke knows, and in other parts of New Zealand as well. This is happening now. One single measure in a bill today is not enough. It is not even close to enough. It is a tiny, little, baby step.

Our responsibility is to meet the targets that we have said are not being met. New Zealand’s emissions per capita are the fifth-highest out of 40 developed nations in 2012, and we have got a 19 percent increase in emissions since 2008, since National came in. They are not doing the job, and they are selling out New Zealanders by not doing the job. Not only are those residents of south Dunedin—incidentally, it is important to know that the community of south Dunedin is low-income and elderly. The most vulnerable people in New Zealand are living in one of the most vulnerable areas in New Zealand. This is what is happening with climate change. This is what is happening with sea-level rise, and the Government just sits there and says: “Well, we will put up one measure. We will do one measure today. We will try to do just enough to be seen to be doing something.”

Just enough is not good enough. It is not good enough. We have got to be doing better than that. On this side of the House what we are seeking is a just transition to the change to a low-carbon economy, one where we support communities through the change. We are not seeing enough action from the Government to deal with those industries that are changing, and deal with those communities when things are changing. We have seen Huntly having a small extension. I think the Government should be in a community like Huntly right now, today, saying: “What are we doing to train and retrain people to give them new skills, and to give them opportunities to generate wealth themselves?”. Those polluting industries are gone now; we know that.

It is important for New Zealand as a country, in terms of our image in the world and how we sell our products in the world, that we lead the way on this. John Key has gone from being a fast follower, or whatever it was he said he wanted to be, to being a bewildered bystander. He has got no idea what to do when it comes to climate change. But he found this one. I am sure he found this measure because it earns him $356 million in a year where he needs to prop his surplus up a little bit. I am sure that is what he did here.

We welcome the fact that the Government has taken this tiny, little, baby step, but it needs to get into its big-kid clothes, get out there, and start taking proper steps towards a sustainable future for New Zealand, and one where we take climate change seriously.

The Labour Party would have liked today to see the Government with a clear pathway forward—not just a working group or a review or anything like that, but an independent climate commission that actually starts setting proper carbon-budgeting goals, that starts setting proper pathways forward for New Zealand, and that puts out there, in front of New Zealanders, every single day what it is that we need to do to make this transition.

This is not all doom and gloom. There are massive opportunities for New Zealand in transitioning to a low-carbon economy to build up our regions, to create wealth for small businesses, and to create wealth from innovation, but this Government comes to us with one small, simple, tiny measure. Well, under such urgent circumstances we commend and support this bill.

SARAH DOWIE (National—Invercargill): As a balanced, pragmatic, sensible, and reasonable MP, and one who represents Invercargill and parts of Southland, I am very pleased to take this call in support of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. I say again that this is a balanced, pragmatic bill, which looks to phase out, in a staged way, the one-to-two subsidy. The bill phases out the subsidy in the emissions trading scheme that allows some businesses to pay one emission unit for every two tonnes of pollution they emit, and that is over a 3-year period.

If I come back to Southland and what Southlanders believe, we are a primary industry - driven economy and we are an export-driven economy. We have a lot of manufacturing in our region. Our region is one that is doing well: it is holding its own and it is one that is creating jobs for our people. In fact, we have one of the lowest unemployment rates in New Zealand.

My businesses in Southland are going to be very pleased about the staged process of redaction of the one-to-two scheme in this bill, in the way that it is set out. It is a measured bill. It is a measured process of reducing this measure, to make it sustainable for businesses to build that into their processes so that the money spent is not too onerous. As such, I again say that this is a balanced and pragmatic bill, and I commend this bill to the House.

The ASSISTANT SPEAKER (Hon Trevor Mallard): James Shaw—I am hoping he has a different set of notes.

JAMES SHAW (Co-Leader—Green): Mr Speaker—

The ASSISTANT SPEAKER (Hon Trevor Mallard): I hope the speaker has a different set of notes.

JAMES SHAW: Balanced, pragmatic, reasonable, and robotic! Southland businesses, I am sure, will be delighted about this bill, because it does not do anything. One of the previous speakers, I think it was Mr Scott Simpson, said that this is a really significant step in our challenge of meeting our global emissions reduction target. It is a 0.7 percent—0.7 percent—reduction in emissions. Is it significant? Give me a break. This is against a business-as-usual scenario. I thank Grant Robertson for pointing out again that all of the other measures are staying in place—all of the other measures—which means that the business-as-usual scenario of a 96 percent increase in our emissions above 1990 levels by the year 2030 is on track. This measure, this single measure, will reduce emissions by 0.7 percent from a 96 percent increase, and that is against a target of reducing emissions by 11 percent. I mean, it is absurd to think that this bill does anything to get us anywhere close to our, actually, frankly pathetic target of reducing emissions by 11 percent. I mean, it is a pathetic measure against a pathetic target, and business as usual is going to carry on.

There are so many more things that we need to do if we actually want to do something about climate change, but clearly this Government is far more interested in looking as if it is doing something about climate change. It has pulled one of the most acceptable measures from the current emissions trading scheme (ETS) review in order to get it into the Budget, in order to be able to talk about it as if it was committed to doing something about climate change.

I think it has occurred to the Government that after seven other Budgets it has not actually mentioned climate change, and it is still a thing. It has been hiding away from it, pretending that it is not happening, business as usual is carrying on, and let us just hope that if we do not mention it, then, you know, no one will call peek-a-boo and say that it is actually happening. Well, I think that after seven Budgets, Government members have finally got to the point where it is like: “Oh, actually, no, we do need to mention it; we do need to do something. What is the weakest-tea approach that we can take that enables us to talk about it during a Budget?”. And they have pulled out the two-for-one subsidy.

It is great, because this is, of course, the party of business—that pragmatic, free-market party that likes to crow about how good it is for business—busy subsidising business under the cause of the emissions trading scheme, with subsidies that apply to certain sectors over other sectors and subsidies in the form of the two-for-one deal. So the two-for-one deal is about to die a very deserved death, even though by itself removing it is not going to fix New Zealand’s challenge of reaching our commitments on climate change, right? It is not going to get us there, but it does allow the Government to talk about how good it is, and how much it is doing to fix climate change.

The other thing that Grant Robertson said that I wanted to pick up on, of course, is that many, many, many years ago the Prime Minister said that we did not really want to be a leader on climate change; we wanted to be a fast follower. I think it would be great if we followed, actually. I think that following would be a massive improvement on where we are now, which is walking in the opposite direction from where the rest of the planet is going.

If you look at what France is doing right now, it is putting in place a NZ$50 minimum price per tonne on emissions, and we are maintaining a price cap, a maximum price, of $25. In other words, we can have a market in emissions, as long as the price does not get above $25, which is about the minimum level that most economists think it would need to be for people to start making decisions about how they allocate land use, what to invest in, whether to get into the green economy or stay in the existing polluting economy, and so on. In other words, everything else that the Government is doing is going to make sure that our emissions continue to rise inexorably over the course of the next 15 years.

The decision to keep the Huntly coal-fired power station open until 2022 means that there are millions of tonnes of carbon dioxide being poured into the atmosphere. It completely wipes out any gain that this bill will be making. The decision to continue to leave out agriculture and other subsidised polluting industries from the ETS means that you continue, as Westpac economists have said, to see a skew in the economy of investment towards those sectors that are being subsidised. That is what happens when you subsidise industries—investment flows subsequently. So we are incentivising people to move their money away from the high-value, clean-tech, green economy, and into polluting industries that we subsidise under the existing and remaining measures of the emissions trading scheme. So, as I said, it would be nice if we actually did follow. Following would be good. It would be even better if we started following fast, because the world is definitely moving in this direction.

One of the other previous speakers said that this was about strengthening our emissions trading scheme. It would be amazing if our emissions trading scheme developed a spine of any description, actually. It is a jellyfish. The purpose of an emissions trading scheme is to reduce emissions. Why would you introduce an emissions trading scheme if you did not want to reduce emissions? There is no point in having it. And yet, in the time that our emissions trading scheme has been in place, our emissions have gone up 19 percent. It is actually having the reverse effect that it is supposed to have because we continue to subsidise industries. We actually create an emissions trading scheme in which we pay people to pollute, and we are taking money away from those industries that are cleaner and greener. It is a busted mechanism, and it needs to be replaced forthwith.

One of the other speakers previously said that, you know, New Zealand has a unique emissions profile. Well, guess what? So does every country. Every country has a unique set of conditions that mean that its emissions profile is different from every single other country. Our emissions profile happens to be weighted towards agriculture. There are several other countries in the world that also have agriculture, and they also have to deal with the same problem that we do.

The United States is saying: “A majority of our energy comes from coal-fired power stations, so it’s incredibly hard for us, it’s so difficult for us, to get out of coal-fired energy and into cleaner forms of energy. You know, the United States is somehow unique.” It is an absurd statement to make. Every country has a unique profile. Every country needs to do what it can to reduce its emissions.

One of the other things that people say about New Zealand’s emissions profile is that we are so small that we cannot make a difference. I was very encouraged at the beginning of this reading to hear Paula Bennett, the Minister for Climate Change Issues, put the point, which people have argued in this country, that we should not really do anything because we are such a small country. I am pleased to see that the Minister acknowledges that that is an absurd assertion. Actually, over 40 percent of all global emissions come from countries that each, individually, emit less than 1 percent of global emissions. So to say that we are too small to make a difference is actually to let off all of those other countries in the world that, like us, emit less than 1 percent of global emissions, or about 1 percent of global emissions. That means that you would have 40 percent of total global emissions going nowhere—well, continuing to increase. So every single country needs to do its part, based on an allocation of what is the total global carbon budget and how we derive from there, on a per capita and development basis, what our responsibility is.

As Grant Robertson said before, we are the fifth-highest per capita emitter of greenhouse gas emissions in the world. That is a staggering statistic. What we would need to do to even get to close to our share is well north of our target of an 11 percent reduction by the year 2030, which is the Government’s target. This bill is just—I mean it barely scratches the surface in terms of getting us there.

Having said all of that, as I have said before, the Green Party will be supporting this bill. We will be introducing some amendments at the Committee stage in order to strengthen the bill, and, with any luck, increase the percentage by which this bill will help to reduce New Zealand’s greenhouse gas emissions and get us even just a tiny bit closer to the target that the Government has set for itself. I commend the bill to the House.

DENIS O’ROURKE (NZ First): Here in this bill is one small step for “Kiwi-kind” but one massive trip-up for climate change targets as far as New Zealand is concerned. Here is one small step, in a complete absence of any genuine plan or strategy for New Zealand to achieve or even make any significant progress towards achieving its Paris commitments to climate change and the reduction of emissions. That is the truth of the matter there.

I recently attended a forum in Christchurch on climate change. Chatham House Rules applied, so I cannot quote anybody who was there, but I can say that there were business people there. I was encouraged by the positive attitude that they had to taking some real steps towards the reduction in emissions for climate change purposes in New Zealand. It was very good to see that, because they were enthusiastic and wanted to get things done. They had a pretty good understanding of what would be expected of them, and they actually saw it as an opportunity for many of them to get a competitive advantage over other businesses that were not taking the actions that would be required.

Other people present were from local government. They were calling out for central government leadership on these issues. In fact, local government was champing at the bit. They wanted to hear from central government what its plans were, so that local government could do its bit towards tackling climate change, through the reduction in carbon dioxide emissions in particular. All we get in response from the Government is not only no leadership but no genuine action at all, or vague commitments that actually amount to nothing much more than planning to plan for the future. All these months after the Paris commitments were given, that is as far as we have got, and now there is this minor, insignificant step forward.

I heard today from Government speakers about consultation and how wonderful it had been that 75 percent of those consulted would support this measure. But the truth is that there has actually been no consultation at all on the much more important question about what specific steps New Zealand will take to achieve its climate change commitments. There has been no talk about that, no consultation at all, and yet these people are waiting, ready and waiting, to be talked to, to make a contribution, to find out what is expected of them, and then to take those actions that are expected of them.

Business, agriculture, and local government are looking for Government leadership because they want to act. They need to know how they should act. Business people in particular need to know that there will be a level playing field that has to be achieved by a comprehensive raft of regulation. There is no other way of doing it. They want to see that in place, so that they can take the actions they want to take. They need the benefit of research, factual material, that can be put in front of them by the Government so that they can back up the actions they are taking and get confidence that they are doing the right thing.

But we are not seeing any of this from this Government. It is a complete void. There is a complete lack of consultation, a complete lack of communication, and, actually, a virtually complete lack of action, other than this pathetic little measure we are seeing in this bill. In fact, you could accurately call it nothing more than window dressing, because that is all it is. It is such a minute contribution that it will actually make little or no progress at all towards a reduction in carbon dioxide emissions in New Zealand.

I want to mention now some of the things I have read in Paula Bennett’s news release today. The first thing she says is: “The subsidy will be phased out over three years to give businesses time to plan and adjust, to support a more stable market.” She then says: “The current 50 per cent unit cost will increase to 67 per cent from 1 January, then 83 per cent from 1 January 2018, with all sectors in the ETS paying the full market price from 1 January 2019.” The third thing she says is: “The current price ceiling which caps units at $25 will remain.” And then, for some strange reason, she says: “This is a significant step in helping New Zealand meet its ambitious target of reducing emissions to 30 per cent below 2005 levels by 2030.”

We are expected to believe that these measures are a significant step when in fact they are going to take 3 years to implement. As I said, business people, including those in the agricultural sector and in local government, across the board, in New Zealand are desperate for much more significant measures than these. They are willing to play their part, but the Government is not telling them what to do. Instead, it is telling them that as far as the emissions trading scheme is concerned, it will take 3 years to get there. That is absolutely pathetic. The measure itself is pathetic enough, but to actually take 3 years to get there is even more pathetic.

Furthermore, the current price ceiling that caps units at $25 will remain. So what that means is that we are going to have to wait for a very long time before we get a genuine market for the price of units in New Zealand. Without that actually being allowed to happen—because it will take 3 years for this measure alone to be implemented, and, even then, there will be a price ceiling of $25—we are not actually going to see a genuine market in New Zealand emerge for a very long time. That time frame is totally unacceptable. It makes this measure, as I have said, nothing more than window dressing.

The people of New Zealand, especially the business people of New Zealand, the people in the agricultural sector of New Zealand, the people in local government, and the public generally all deserve much stronger leadership from that Minister and this Government than a pathetic measure like this that will take 3 years to implement, and in the absence of any genuine plan or strategy for the achievement of New Zealand’s climate change target, as committed to in Paris all those months ago. Frankly, if this is as good as this Government can deliver, then it really deserves to be voted out of office at the next election. Let us hope that happens.

PAUL FOSTER-BELL (National): That was a very tiring contribution from that member, Denis O’Rourke, who seems to have only two settings in any debate. Every bill that is put up before this House, according to that member, either is pathetic and window dressing or is the end of the world as we know it. It is just a great tragedy that he is not capable of taking a more sophisticated and nuanced approach to what I think is very balanced, reasonable, and pragmatic legislation that has been put up by this—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. I think we have now reached the point of relevance and repetition. I have warned members before that reading out the same set of notes is not allowed in the House, and the member is, I think, the fourth person to do that.

PAUL FOSTER-BELL: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): You are not going to argue with me, Mr Foster-Bell, are you?

PAUL FOSTER-BELL: I am not going to argue with you, Mr Assistant Speaker, but I just wanted to point out, I suppose, that I was engaging in a response to points raised by the previous speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Well, I was pointing out to the member—and I think he is aware—that he was repeating the words that had been used by three other people in this debate and, in fact, I think he was actually reading them as well, if he—[Interruption] Well, maybe he has got them memorised.

PAUL FOSTER-BELL: Thank you, Mr Assistant Speaker. I am not actually reading from my notes at all; I have them here for convenient reference.

But, in any case, this is a Government that is focused on protecting the environment—something that the previous Labour Government seemed to give very, very little interest to. We have an excellent Minister for Climate Change Issues. This measure will cost New Zealand households—low to moderate income households—around about $30 to $40 per year. If the member wants more sweeping measures that are not window dressing, in his words, what sort of cost is he wanting to impose on New Zealand households? Would $300 or $400 a year, or $3,000 or $4,000 a year—in Mr O’Rourke’s world—be sufficient to implement the sweeping and significant measures that he seems to want, as opposed to what I think are utterly timely and very appropriate measures from this Government, which has put considerable effort into retaining a position that is well-balanced?

I commend the bill to the House.

Dr KENNEDY GRAHAM (Green): Reflecting on the comments made in the second reading, as opposed to the first reading, and starting with the remarks by the Minister for Climate Change Issues commencing the second reading, let me take the opportunity to pay tribute to the Minister. I think that her tenure in office is offering a whole new positive approach to climate policy in New Zealand, and I think that we can all be hopeful that we can build more of a national consensus, the kind with scope for respectful disagreement that exists in Europe. I am very hopeful that we can develop that as the months go by.

The Minister, from my recall, in commencing the second reading, made two fundamental points. I want to just comment and critique them. The first was—and it is there in the explanatory note—that the reason for the switch to the one-for-two measure back in 2009 was essentially in response to the global financial crisis (GFC) and a protective maternal concern for business in New Zealand, which we all share; then, again, it was essentially extenuated in 2011 because things had not quite recovered sufficiently. In response, I suggest that that was a missed opportunity on the part of the Government to seize the moment for a real, conscious, and cohesive national effort at a transformational pathway to a low-carbon economy. That was missed because the protective action of calibrating that surrender obligation, in a way that the business people made it clear they felt comfortable with, by definition meant that they were not going to change. You might have wished to have modified it a little bit, but you did need to keep it in store such that the business community would move along the transition that Grant Robertson and James Shaw and others have mentioned.

I do not hear the words much: “transformational pathway”; I do not hear the words “just transition” coming from National colleagues. I invite them, seriously, to start using those words so that we can start sharing in the framing of a future national climate policy. I would love to see a cross-party dialogue, informally, in advance of the implementation, no doubt, of the treaty examination of the Paris agreement, that allows for both a just and effective transition in the next few years.

Her second point was, as she put it, about identity. It was about identity of New Zealand and the way in which, as individuals, we Ministers and MPs and citizens identify with the land. Of course we all share that—no question about that. But I would toss it back and say that, in caring about our land, we are going to just have to recognise the magnitude and urgency of the climate crisis. If we go back to 1992 it was regarded as a major problem coming down the track, but not a crisis. Well, that was a quarter of a century ago when the framework convention established that. The principal Act of 2002 is already 14 years old. The Paris agreement reflects a qualitative change in the nature of the crisis. It is now upon us; it is a global crisis. New Zealand is not immune from it.

We have to identify—and I will be putting forward a Supplementary Order Paper that tries to link the traditional framework convention obligations that inspires, in the explanatory note, the removal of the one-for-two and links it to the 2002 principal Act, and links the 1992 framework convention to Paris, and basically modernises it. Let us do that on a cross-party basis as well.

To reiterate, my final point is that I still am not sure that our colleagues across the aisle here recognise the magnitude of the problem. The current pledges guarantee 2.7 to 3 degrees. That is teetering between dangerous and catastrophic climate change. If the best we can do tonight is take these pragmatic, principled baby steps to catastrophic climate change, then we can flag it away. But I do not think that is in the intent of the Minister or her Government or her colleagues, and so I put out the challenge to our National colleagues to work with Opposition members—Labour, Green, and New Zealand First—on a cross-party basis to develop a consensus in the future.

Dr DAVID CLARK (Labour—Dunedin North): I want to share the sentiment that Dr Kennedy Graham has brought to this conversation. We know this measure is nothing but window dressing on behalf of the Government, and we would push them to go a little further. We are supporting the bill—

Ian McKelvie: Stop reading your notes.

Dr DAVID CLARK: —because we think that—thank you for your advice. We support the bill because we support some baby steps towards a future where emissions reductions are a real part of it, and where we can shift our economy towards a low-carbon economy that has real opportunity for New Zealanders.

The regulatory impact statement, which, sadly, is about all we have got in terms of submissions because we have skipped the stages that we would normally have in the debate, tell us the direct cost is worth about 8 hours of GDP. That is pathetic as a signal. The opportunity on the other side of this is what is being lost. There is an opportunity. Grant Robertson raised the issue of re-educating those in Huntly to give them the opportunity of new skills development. That is what we would like to see on this side of the House.

We believe that there is a real upside to the climate change downside where, if New Zealand gets involved in developing new intellectual property and is on the upside of the technology, we can seize an opportunity and raise living standards for New Zealanders, instead of managing decline in a world that is facing catastrophic climate change.

MATT DOOCEY (National—Waimakariri): Can I start where that last speaker, Dr David Clark, left off. I would like to congratulate all the parties in the House on getting behind this bill. At the end of the day we are aiming to move forward, to get a target of reducing emissions to 30 percent under the 2005 level by 2030. If there is going to be a Minister who will do that in this House, it is the Hon Paula Bennett, who is driving this agenda forward.

Picking up the themes around working in a globalised world, I think we need to think about that and the role that we play in a globalised world. New Zealand has a significant part to play. I think we take our obligations about reducing climate change very seriously. We know that the Government has done a lot of work. This is just one tool in that work, about uncoupling emissions to GDP growth. We know that since 1990 the GDP emission unit has reduced by 34 percent. So we have done some work—hey, nothing is perfect—but we are moving forward. I commend this bill to the House.

Su’a WILLIAM SIO (Labour—Māngere): It used to be that this country of ours used to look forward to Budget day. Both business and the workforce would look forward to it in the hopes that Budget day would somehow give them hope to achieve some of their own individual goals. But today was not such a day. I think the last day that people sort of had hope on Budget day was when the words were uttered in this House of the promise made by Mr Key—

Scott Simpson: A decade of deficits.

Su’a WILLIAM SIO: No—of a brighter future. The words were uttered about 8 years ago that New Zealanders would have a brighter future. We have fallen away from the track of that brighter future—so far away that it is just not laughable any more. I agree with some of my colleagues who have spoken that it is time for New Zealanders to start thinking about changing this Government; that things will only get better if there is a change of Government.

You know, it also used to be that on nights such as this, the Government would be producing legislation under urgency that would implement something significant in that particular Budget. But tonight we have got only two pieces of legislation. There is this one here, the Climate Change Response (Removal of Transitional Measure) Amendment Bill, and this one does not take effect until 2017. I do not know why we have not had the benefit of forwarding this piece of legislation to our select committee process—a select committee process that is admired worldwide.

Climate change is an international issue. It is a global crisis in which I do not believe that the information, the intelligence, or the knowledge that is required for us to find the right solution for us to move forward on this is found in this House, least of all in that bunch over there. And so I would have thought that this Government would take the opportunity to send this piece of legislation to a select committee after the first reading, and ensure that New Zealand, as widely as possible, had the opportunity to make submissions on it. But alas that is not the case. I do not know why we prolong this particular debate. It simply reduces—

Paul Foster-Bell: Well, don’t then.

Su’a WILLIAM SIO: Well, we are going to try to drag this out for as long as we can to punish that group there for not taking seriously the issues that New Zealand wanted to hear them fix tonight. That is not what happened tonight.

I do want to come back and acknowledge the Minister for Climate Change Issues, because as baby a step as this is, it is an important step, and the Labour Party is supporting it. And, in fact, by acknowledging the mistake that they made in 2009, it also puts in a bad light Mr Key, the Hon Simon Bridges, and that other fulla who is no longer a member of Parliament, who went to the Paris meeting last year. They went to that meeting with all of our hopes and aspirations, and we were thinking that they were going to come back and make a real commitment—real commitment—to the Paris agreement. This is all we get—this baby step.

I want to challenge the Minister: this is your time. This is your time to take over the reins from Mr Key. This is your time to present a comprehensive plan about how we take seriously the issue of climate change. We are not immune from what is happening. She said earlier in her first reading speech that the Government introduced the temporary measure in 2009 because it did not want to see farmers hurt. Nobody wants to see farmers hurt. But she needs to take seriously that the issue here is about reducing significantly the fossil fuel emissions that we emit, and sending a signal to the rest of the world that we are serious.

The fact of the matter is this baby step suggests that she is going to do as little as possible, with regard to our commitments to the Paris agreement, because she knows that none of that matters until 2020. She knows that it is on a voluntary basis. She knows that as long as the Government kowtows to business and to the fossil fuel industry it will continue to receive the support that it has so far received, in being elected for the past 8 years. But it does not resolve the issue that if we want to be able to position New Zealand in a far better position and reclaim our brand of a clean, greener New Zealand, then we have got to come up with much more than simply this.

We have got to come up with a comprehensive plan—a plan that is going to reduce our fossil fuel emissions significantly, a plan that is going to encourage innovation and encourage investment in cleaner fuel, and a plan that is going to transition business into the kind of workforce that we need to ensure that we meet our international obligations. It is much more than just doing the right thing for the rest of the world. We have also got to do the right thing for our own country.

Twice now this House has been presented with reports by the Parliamentary Commissioner for the Environment. In those last two reports this House should take note of how seriously she points out that we are now under threat from coastal erosion, and that local governments around the coast of New Zealand are in fear of the kinds of costs that they are going to have to bear. This little action here actually increases that. It increases the threat that we have to face. It increases the threat that businesses have to face. It increases the threat that our workforce has to face. And so far, we just seem to be thinking that this is going to be all right. It is not all right. It is not all right.

The Minister might laugh when I say that it is her time. But I genuinely believe that. I genuinely believe that this is her time, provided that she is genuine about going further than what is presented tonight. We are here to pass this legislation under urgency—and I agree with Grant Robertson that it almost appears as if we are trying to fool the rest of the country by appearing to be busy, by appearing to do something, because the Budget was lacklustre and did not address any of the significant crises that this country of ours faces. So I would encourage the Minister: look, if you have taken this baby step, go further. Take a giant leap. Take a giant leap and do the right thing. Come up with a comprehensive plan, a plan where we encourage all of the great minds of this country to participate in formulating a plan that shows that we take seriously climate change, we take seriously the impact of coastal erosions on our own country, we take seriously also our obligation to stand in solidarity with the Pacific.

The Pacific countries have said time and time again in the international arena that they are the canary in the tunnel. They are forewarning us of what is coming. What is happening to them is going to happen to us, and so far we just seem to think that that is so far off. Islands are now underwater—as stated in the report that was released from Australia a couple of weeks back. Islands are underwater. More and more of those people living in the outer islands in the Pacific are moving into the main islands, putting pressure on already pressured resources. Similarly, we are going to have to decide what we do, what our role is, when those main islands come under threat. What do we do? Surely, this Government can begin to think long term and come up with a comprehensive plan that realises how important this issue is for us and for the rest of the world.

NUK KORAKO (National): Kia ora, e Te Mana Whakawā, e mihi atu ana ki a koe. It is my pleasure to be the final speaker on this bill. I have two very important points to finish off on. The first thing is that the bill does reflect the Government’s commitment to a low-carbon economy. The other one is that this also is a piece of legislation that is very grounded and, if I dare say, very pragmatic, that shows the Government will not sacrifice our economy, it will not sacrifice our businesses, it will not sacrifice our people and economy on the altar of environmentalism. So, on that note, I would dearly commend this bill to the House. Kia ora.

Bill read a second time.

In Committee

JAMI-LEE ROSS (Junior Whip—National): I seek leave for all questions in this debate to be taken as one debate and voted on separately.

The CHAIRPERSON (Hon Trevor Mallard): Is there any objection to that process? There appears to be none.

Parts 1 and 2, schedule, and clauses 1 to 3

Dr MEGAN WOODS (Labour—Wigram): As is the custom when we are under urgency, the Committee stage is an important part of the legislative process in which to ask some of the questions that may have otherwise been asked in the select committee stage. I would like to put on the record that although Labour is supporting this legislation, it is committed to cross-party approaches to climate change to produce enduring political solutions. I think all of us in this House understand that our response to climate change is going to outlast any Government. These are plans that we have to put in place that will take decades, and I do think it would be preferable that we could do this kind of legislation in a way other than under urgency, which is without a proper way for us to have good cross-party discussions about what good plans and good legislation would look like. That is something that we do hold dearly—to put in play our commitment to those enduring cross-party solutions.

Some of the questions that I have for the Minister in the chair, Paula Bennett, and which I would appreciate some answers to, are around the $25 cap that has been signalled with this legislation. The $25 price ceiling that was in the principal legislation is going to remain under this legislation. I would ask the Minister whether there is a time frame around that cap, whether there is a time frame around lifting that cap, and whether you have a plan in play for that to rise, because we know that industry and business are planning for a far greater and higher price on carbon than that. We know Business New Zealand’s energy report that came out showed that it was modelling on a $60 to $115 price of carbon per tonne by 2050. So this is certainly not what industry is banking on—a $25 cap. I would be interested to hear from the Minister the kind of time frame that she has around that.

I would also be interested to hear from the Minister whether or not there was any consideration of a price floor to be put in place to sit alongside the price ceiling, because if we want to avoid a situation such as we got into with the hot air credits—with the dodgy credits that made their way into our emissions trading scheme (ETS) in an earlier part of our history, which could have been avoided—a further protection we could put in place is by enacting a price floor. I would like to know whether the Minister received any advice on that and whether that was a consideration that she took on board.

I would also like to now turn my attention to clause 7 of this legislation, which is repealing the temporary suspension of allocation entitlement for eligible agricultural activities. I ask the Minister what the time line is for the anomalies that exist within the ETS. Forty-nine percent of the emissions in New Zealand come from agriculture, and yet clause 7 is entrenching the idea that we have eligible and ineligible agricultural activities. If New Zealand wants to address its greenhouse gases, then we have to address nitrous oxide and we have to address methane. There is very, very sophisticated work going on around the world about how it is that we might account for different gases. Under the Kyoto Protocol it was one gas, one price, but we know that there is significant scientific work happening around the world about how the short-run and the long-run gases behave and how we may account for those differently.

I would like to know the advice and the thinking from the Minister around when we are finally going to grasp the nettle of agriculture in our ETS, because this legislation entrenches the giant subsidy that industry is handing out to agriculture. We are continuing to subsidise agriculture through our other productive industrial sectors in New Zealand. That is not something that can continue if New Zealand is ever going to meet its emissions reduction targets. To claim that we have a unique profile is not a “get out of jail free” card. Our unique profile means that we must act quickly. Waiting for the silver bullet of science and technology to develop some way where when you put carbohydrate through a ruminant, it is not going to somehow produce methane or nitrous oxide, is sheer folly. The science is not going to solve this—we simply have to put in place some other measures—and clause 7 is a further entrenchment of that. Those are some of my initial questions for the Minister in the chair.

The CHAIRPERSON (Hon Trevor Mallard): Before I call the next member, I think it is probably appropriate to inform the Committee that it is my intention to rule out one of James Shaw’s amendments, and that is the one to insert a new clause 4AA. It is—and I think the member is probably aware of this fact—outside the scope of the bill. All other amendments so far received are, in fact, within scope.

JAMES SHAW (Co-Leader—Green): I raise a point of order, Mr Chairperson. Recognising that it may be unusual, the original 2002 Act does not actually state in its purpose that we need to reduce our emissions in line with commitments, because it predates our commitments. So the purpose of this amendment would be to amend the original Act because, otherwise, it would not give any effect to this bill. The purpose of this bill, as stated in the preamble to this bill, is to give effect to our commitment, but the 2002 Act gives no effect to our commitment, so we actually need to change the 2002 Act in order to give effect to this bill, which is why we have put this amendment into place. I recognise that is kind of circular, but the problem is that the current bill before the Committee would not actually have any force because the original 2002 Act is for a business-as-usual scenario, not a reduction in our emissions by 11 percent, below 1990 levels, by the year 2030, which is the Government’s commitment. Is that clear?

The CHAIRPERSON (Hon Trevor Mallard): I can hear what the Minister said. I am told by someone beside me that she would like to say something.

Hon PAULA BENNETT (Minister for Climate Change Issues): If I am reading the amendment correctly, then what the member is proposing is that it actually align with New Zealand’s nationally determined contribution. As the member would know, we took an intended nationally determined contribution to Paris, and that is still an intended nationally determined contribution until that is ratified, and it has not been ratified, and, as a consequence of that, we do not actually have a nationally determined contribution as per the Paris agreement yet.

The CHAIRPERSON (Hon Trevor Mallard): What I am going to do is reiterate my ruling. If the Government becomes convinced that the scope of the bill needs to be widened by the inclusion of a clause such as this, I am sure the Government will bring it back and seek the leave of the House to extend the scope of the bill, or, if it is possible, for it to amend it. I have ruled it out on the basis of the advice that I have received from my right and left—although, of course, it is my decision—and if that, as the member says, renders the bill ineffectual, then that is a problem that the Minister will have to sort out.

Dr MEGAN WOODS (Labour—Wigram): I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Hon Trevor Mallard): A new point of order, Megan Woods?

Dr MEGAN WOODS: It is seeking your clarification, Mr Chairperson. Regarding the point the Minister made around that, she is quite correct when she says that New Zealand does not have a nationally determined contribution at this stage, until the Paris agreement is ratified by New Zealand. If that amendment was changed to an intended nationally determined contribution, would that make a difference?

The CHAIRPERSON (Hon Trevor Mallard): I thank the member for her contribution, and I will go back to my original point, and that is that it is not the responsibility of the Chair to sort out the scope of a bill—to extend the scope of the bill—to make it effective. This amendment, even with its circular explanation, is outside the scope of the bill, and if the Government wants to sort it out, that is something that it will have to do, and we cannot do it by moving an out-of-scope amendment from the floor.

Dr KENNEDY GRAHAM (Green): I take it, Mr Chair, that we are now all accepting your ruling that James Shaw’s amendment on the purpose—his particular amendment on the purpose—is out of scope?

The CHAIRPERSON (Hon Trevor Mallard): Yes.

Dr KENNEDY GRAHAM: So it is on the basis of that discerning understanding on my part that I had thought it was probably worthwhile to put forward a separate amendment, which does not seek to amend the purpose of the principal Act. What it does is seek to elaborate upon clause 3, or amend clause 3, to ensure that it is more explicitly clear—because what I have done here is look to the explanatory note, and the explanation in the explanatory note. The specific purpose is removing the one-for-two obligation, but the broader purpose of doing that is to improve New Zealand’s ability to fulfil its international obligations, and then with a view—and so what I did was I took the thrust of the explanatory note and entered it into clause 3. The original wording is: “This Act amends the Climate Change Response Act 2002 (the principal Act).” So this—

Grant Robertson: Yep, keep going.

Dr KENNEDY GRAHAM: Well, I am just craving the attention of the—I am insecure enough to crave the attention of the Chair and the Minister, but I am confident that I can keep going. To improve the ability of—

The CHAIRPERSON (Hon Trevor Mallard): I just want to make it clear to the member that we were having a discussion as to whether your particular amendment is in scope—

Dr KENNEDY GRAHAM: Yes.

The CHAIRPERSON (Hon Trevor Mallard): —and I have ruled that it is.

Dr KENNEDY GRAHAM: Oh, good—thank you. Then that saves me 30 minutes of elaboration as to why I think it is in scope. So the purpose now is to amend “(the principal Act) to improve the ability of the … ETS to fulfil its statutory purpose of helping New Zealand meet its international obligations under the … Framework Convention … (1992) in light of the Paris Agreement signed by New Zealand on 23 April …”. The point of doing that is to make it more explicitly clear what the purpose of removing the one-for-two obligation is—namely, to improve our ability to meet our obligations under the 1992 framework convention, but in light of the updated conditions that are reflected in the Paris Agreement of only 6 months ago. So I put it to the Minister—through you, Mr Chair—and to colleagues that this is well worth doing because even if it were to just stand by itself, independent of Mr James Shaw’s other proposed amendments, which have some substance, it would still none the less register the point that the one-for-two obligation is one aspect designed to improve our ability to meet the 1992 obligations updated in 2015. I think that stands by itself as being self-evident and worthy of doing.

My interpretation would then be—and this now becomes a personal challenge—that the one-for-two obligation is inadequate by itself and that there is a range of other measures that will be needed for us to do that stated purpose, but I do recognise that if the Government is determined this evening to confine it to just the one-for-one obligation, we would support that. We have said we would support it, and I would accept that as well, but in doing so I would make the point that in our view it needs to be more than just the one-for-one obligation. As we develop more of a dialogue in the course of this year, leading up to Marrakesh and the implementing legislation—the treaty examination of the Paris Agreement—we will be making that point in respectful dialogue with the Government. So on the strength of that, I just recommend this amendment to the Committee.

Dr DAVID CLARK (Labour—Dunedin North): I rise to speak to the amendment that has been put forward by Dr Kennedy Graham. I think it is a thoroughly sensible amendment and it brings the legislation into line with the need to start a process of carbon budgeting—of actually working towards our climate change goals. It specifies very clearly that that is where we intend to move, and currently the Government does not have that explicit link in its own legislation. So this seems like a very sensible way forward, and I want to thank Dr Graham for proposing the amendment. I think it is very helpful, Dr Graham. It is very helpful to this Committee.

Of course, we on this side of the Chamber have long advocated for an independent climate commission that would establish such a carbon budgeting process, which would shift us on to a path to achieving significant emissions reductions, which is what we all agree needs to happen. The rhetoric on that side of the Chamber is about achieving emissions reduction targets, but there is no plan. There is no way to get there. There is no intention expressed in the legislation to have a budgeting process, or to actually align the spoken intention with any action whatsoever. So that is why I think Dr Graham has done us all a service in putting that down in very simple terms that the Government, I hope, can agree with, because if the Government really is wanting to prove that it is true to its word, then it will have no objection to this amendment. I cannot see how it could object to this amendment that Dr Kennedy Graham has put forward if it is true to its word.

Dr Megan Woods: If they mean to meet it.

Dr DAVID CLARK: If it means to meet the targets, it will sign up to this amendment. So I am very interested to see whether the Minister for Climate Change Issues rises to her feet, seizing the moment of opportunity to speak in favour of this simple amendment, because then she would be saying that what the Government has said is credible and it understands that this is a way of getting there, and, of course, the amendment leaves it the discretion to set out the carbon budgets and the targets itself. It leaves the Government the freedom, of course, to do that in the way it sees as being most meaningful, but it says: “Actually, we intend to back our words with some actions.” So that is why I wish to speak in favour of Dr Graham’s amendment.

Su’a WILLIAM SIO (Labour—Māngere): I do not intend to take a long call. I just have a couple of questions that I would like to ask Minister Bennett, and I hope that she can answer them. Clause 6 makes reference to “an eligible industrial activity”. I am just asking what the definition is for that term, because in the principal Act there is not one. What is the meaning of “an eligible industrial activity”? My concern there is whether it is anything to do with burning coal or anything to do with diesel-generated activities. That is the first question.

The second question relates to the regulatory impact statement. It makes reference to a number of organisations that the department consulted, but it does not name those organisations individually. It just lumps them all together. I am interested to know whether the Minister would be prepared to reveal who the market intermediaries would be, and who the individuals are in the non-governmental organisations and community groups concerned.

I want to get a sense as to who was consulted by the organisation. Like I said, there are no individual names from the organisation, and because we have not been able to forward this to a select committee, I am interested in whether the Minister would be able to make that information available. If she cannot tonight, then she might like to table it before the final reading.

Dr DAVID CLARK (Labour—Dunedin North): On a not completely dissimilar note—and I shall be very short in my contribution; I can see my colleagues looking at me, wanting to make sure that I am indeed adding something substantive to the debate—as my colleague Su’a William Sio has pointed out, there has not been a select committee process. I am interested in knowing—clauses 4, 5, 6, and 7 all refer to the date of 1 January 2019. That date is, I suspect, something that has been consulted on in the emissions trading scheme review. I am wanting to know what business has said about that date and the particular transition that is on offer. Obviously, we have not had a full select committee process so we have not had feedback from business on the concrete proposal at the end, as best I know, but Minister Paula Bennett may have consulted in some capacity or may have had a separate process previously. I am interested to know the process and what the feedback was as to how this measure, this timing, was received by business as compared with other timings on offer—which could have been anything—and other transitional measures. We have got only one in this bill, and that point has been made many times, but how was this transitional measure and this timing received as opposed to others?

Hon PAULA BENNETT (Minister for Climate Change Issues): This is just a response to a couple of things. One, in response to the member David Clark, is that, certainly, 75 percent of submitters supported the one-for-two measure going. In general, what we got from business was that they wanted certainty. That was the most important thing, and, most definitely, their ideal was that it was phased out over time—over 3 years and beyond, to be quite honest. From their perspectives, it gave them time to budget, it meant that they could really look longer term, and for a lot of them—we did look at all the options, to be quite frank. I think I had three that I looked at very carefully: one was just all over in one shot, to 100 percent; another was phasing out over 2 years; and then there was the 3-year option. Businesses were certainly interested in the 3-year option, and the biggest reason that we went with what we did was in line with dairy, to be quite honest. Dairy farmers do take a percentage of cost because of their transport and electricity usage, and also because of Fonterra. Fonterra has still got a couple of coal-fired drying units, in the South Island in particular, that really do make it one of the biggest business emitters. It would pass that cost, I am sure, on to farmers, and so we wanted to be considerate of that. At this time, when we can see so many under so much financial pressure, we did not want to be putting undue pressure on them in addition to that.

The other thing is in response to the member Dr Megan Woods, who earlier asked a couple of questions around the price caps and the price floor. Certainly, the advice I have had on the price floor was that it is highly, highly unlikely that the price will go down again, and that is because of the markets, how many are out there, and the different prices that are going on. To the kinds of questions that the member had on when we will look at the cap again and when we will look at a whole lot of other measures: to be quite frank, a lot of that is about when the world starts coming a bit more on board. At the moment, as members know, we have got only a few countries that have got an emissions trading scheme (ETS), and some different states in America.

What I will say is that when I was in New York for the signing of the Paris Agreement there was a lot of talk about emissions trading schemes, what they meant, and the lessons that they learned from ours. Members in this House, and in this debate, have raised the point that ours ain’t perfect, and there have certainly been times when the price has been so low that it has actually made no difference, to be quite fair. So we have learnt some lessons—we have learnt lessons in what we will accept as units. We have learnt some lessons, and we will take a hit for that, I suppose, in this debate, but, at the end of the day, (a) we will not make them again and (b) I hope that we can pass on some of those learnings to other countries that are now seriously looking at introducing an ETS. But, while you have businesses that are seriously trade exposed—I must admit, before I started learning about this, I was in one boat about how you wear the cost of what you do, and you make decisions like that. Some of our businesses may not be perfect but, actually, the way they produce some of their goods is more efficient and less emission-polluting than some of their counterparts overseas, and putting so much cost on them that they close down here would not mean that we would not have those goods still manufactured, but that they would be manufactured in a less healthy way, if you like—or a more polluting way—overseas, and actually do more damage to our planet.

I want to encourage other countries to look at an ETS. I want them to learn from some of the things that have happened as we have progressed it. It started under Labour and I am sure the architect, who is not here right now, would have a look and say there are things you would do differently. But we need to encourage other countries to equally take this really important step.

JAMES SHAW (Co-Leader—Green): I want to respond to a few points of the Minister Paula Bennett’s just then. She said that only a few countries have an emissions trading scheme. This is correct, but one of them is China, which—as we all know—is a pretty big market and should be able to sustain any kind of interaction with it that we want. There are more countries that have got carbon taxes in place than have emissions trading schemes in place, and one of the things that we have argued for some time is that a straightforward carbon tax, where you recycle all of the revenue in the form of tax cuts to people and to businesses, would actually be a far more transparent and predictable model. It does not necessarily exclude countries from working cross-border with each other to try to work out ways to reduce their emissions.

There is a growing number of countries that have either carbon taxes or emissions trading schemes in place. This is moving at extreme speed, so if we wanted to introduce this, we would ask why we have to take 3 years to do this, because in 3 years’ time the world will be a much, much more different place than it is now in reference to these kinds of mechanisms. I mean, it is a very different place now than it was 3 years ago—3 years ago, China did not have an emissions trading scheme or any carbon taxes in place, and it does now.

I also want to just mention, in reference to the question about a floor price, that, yes, the advice is that it is unlikely to drop below where it is now. If that is the case, why not put a floor price in place to be sure and to absolutely secure it—to remove that likelihood completely? You would only not put one in place if you felt that, actually, there was a chance it would drop below the current price. Of course, the current price—I think it is trading at about $14—is not yet enough for farmers, foresters, and other businesses to be making investment decisions about putting their money into lower-carbon, and therefore cheaper, forms of industry, so the price has to rise if it is going to have any real effect. I cannot remember the study, but there was one in the last 6 months that said that the price would need to be about $50 a tonne before people started really making major choices about where they directed their investment in the economy. I just want to note, again, that France last week put in place a NZ$50-a-tonne price for 2017, which is just next year. They are moving very, very quickly, so it is disappointing that we are not.

I do accept the difficulty of trade-exposed industries and, of course, New Zealand Steel is a really obvious one. It is a major employer in South Auckland. It has got 1,000 people working there, and, I think, an extended community running into several thousands of people, and it is in very difficult times, with or without a price on carbon. But one of the options that the Minister could explore is to remove the subsidy and bring trade-exposed industries into the emissions trading scheme, and then put a border adjustment in place so that imported steel—in this case—was subject to the same carbon price as domestically produced steel, and that would mean that they could compete on an even basis. It would mean that the consumer of that steel actually has to carry that price and the consumer is therefore making decisions about whether they can get more efficient with their use of steel or could they be looking at other lower-carbon goods, for example, laminated wood beams, which are as good as steel in some circumstances.

So we would argue that there are ways of managing those kinds of considerations, which would actually move us in the direction of a lower-carbon economy, whereas continuing to leave those sectors out of the emissions trading scheme and continuing that subsidy actually continues to fuel growth in emissions, and it does not move those industries towards actually doing anything to reduce their emissions.

JULIE ANNE GENTER (Green): I thought one of the interesting admissions from the National Government today in reference to the Climate Change Response (Removing of Transitional Measure) Amendment Bill was when the Minister of Finance, Bill English, admitted in his speech that closing this loophole in the emissions trading scheme is going to have an impact on the Crown’s operating surplus to the tune of about $300 million over 4 years. Effectively, what we are learning from this is that any deferral of payment that we grant to industries that are polluting—whatever they are—so that they do not have to pay the full price, means that taxpayers are picking up their tab.

So now taxpayers are going to benefit from the closing of this loophole, which is great. I thank the Minister for Climate Change Issues for bringing this small change to the House today—we absolutely support it—but we need to go further than that, and we need to be honest about the fact that there is a cost involved in this pollution and that if the polluters themselves are not facing that cost, there will be more pollution than there would optimally be. It is taxpayers, but not just taxpayers here in New Zealand; it is actually all of us as inhabitants of planet Earth who are paying this cost, particularly future generations.

What I notice in the regulatory impact statement work on this bill, which we have not had much time to look at—I regret that this legislation is having a shortened process, because it would have been interesting to see whether in going through a more full select committee process we could have made additional improvements to this bill—what I see in here is this fundamental tension that I think the National Government is facing, which is how to make the emissions trading scheme work when it is supposed to put a price on pollution, and how to make it work without making polluters face the cost of their pollution. That seems to be embedded—the risk and cost associated with actually putting a price on pollution. That has been the fundamental problem with the whole approach.

If we want to truly take action on climate change and if we want to reduce carbon pollution and transition to an economy that is not reliant on increasing carbon pollution, polluters are going to have to face the cost, and that is what is going to drive the innovation. Yes, the Government can supplement that with investment in low-carbon infrastructure that gives businesses and households more choices and ability to avoid paying the cost—which, unfortunately, I do not think this Government is doing enough of. Yes, the Government can help smooth the transition, but we should have started sooner. We have to be more ambitious now because we are running out of time for this transition to take place, and the longer we put it off, the more expensive and difficult it is going to be.

It is wonderful that we have this tiny move in the right direction by closing the subsidy. I personally think phasing it in over 3 years is too long. It is too slow and it is too much of a concession to polluting industries, which have fought paying the true cost of their activities for over a decade now. They will continue to do so, and they will continue to say they are going to be disadvantaged, but just because they are disadvantaged does not mean the economy is disadvantaged, because there will be new jobs created in clean industries, and that is what every piece of environmental regulation and legislation that has been put into place has shown. Everybody screams bloody murder and says that there are going to be job losses left and right, that it is going to be the end of the world as we know it, and that it is going to be the end of the economy.

No. What happens? People in business adapt and they innovate. If we really backed New Zealanders to innovate, then we would not be deferring a price on pollution for industries that are polluting. We would be putting it there and saying: “How are we going to now fix this problem and reduce our pollution and provide real options to consumers?”. That is the real world—that is how it works. That is entirely in line with economic theory, but it does not work, I think, for this National Government because, ultimately, it is defending the status quo and it does not believe in change and transition enough. It does not back New Zealand enough to say: “We will rise to the challenge of climate change and come up with better solutions.”

As my colleague James Shaw said earlier, a better way to deal with trade-exposed industries is border tariff adjustments, but another thing to do is to be leading in our international trading negotiations and making a fair price for carbon pollution a priority in any international trade negotiations, because the fate of the world rests in our hands. If we are sitting around talking about the future of trade, the future of the economy, and negotiating deals like the Trans-Pacific Partnership agreement and other trade agreements, the Government needs to be responding to climate change first.

Dr KENNEDY GRAHAM (Green): I just want to pick up, perhaps, where Julie Anne Genter has left off and just draw the attention of the Committee to the regulatory impact statement in a little bit further detail. We have not had much time, as has been pointed out, to explore it. But the Minister for Climate Change Issues has said—and probably only she could say it with the grace that she did—that the Government is no doubt about to take a few hits here and there along the way to restoring the one-for-one. That is all good fun in the Chamber here, but I do not think she needs to look to Opposition members, necessarily, for those hits. She has got it right there in the regulatory impact statement, I suggest.

The Ministry for the Environment has not spared the Government much in its own analysis of things. The ministry’s regulatory impact statement does recall, in paragraph 10, what we all ourselves recall, which is that the transitional phase and the changes to the original emissions trading scheme back in 2009 did a number of things. It introduced the one-for-two, it deferred agriculture—the primary ones—and it continued free allocation. Those were probably the three, and then the fourth, which was not changed, but should have been, was that it allowed the continuation of these semi-fraudulent credits, which lack environmental integrity, to come in, allowing this country’s policies to become one-quarter corrupt.

I think that is, arguably, in terms of our own integrity, the single biggest mistake in our policy over the last 7 or 8 years. That has got us into the strife that we are in, but if we then turn to page 43 and look at the heading that the ministry has identified here, “NZ ETS design and operation is inefficient in light of changed circumstances”, that, to me, is the single most significant point made in the regulatory impact statement.

What it is saying is that whatever the merits of those transitional phase changes we did to the original Labour emissions trading scheme back in 2009—whatever they were, whatever the merits—they are obsolete now in light of the changed circumstances and, especially, with what is encapsulated in the Paris Agreement. And if you look at paragraph 7, the ministry is, essentially, scolding the Government: “In the absence of clear aims for the carbon market established by the Government, this means unit supply for the NZ ETS over the long term is unclear. This does not allow participants to form expectations about the future emissions price path and factor this into investment decisions.”

In paragraph 8 it talks about “the NZ ETS being over-supplied by 150 million units over the period 2021-2030. On the demand side, one-for-two undermines the principle that one unit should equal one tonne of emissions. Its presence is a barrier to aligning the NZ ETS level of ambition with the national target, which is on a one for one basis.” We could probably get a common denominator across the parties here and just conclude that the benign interpretation is that things have changed so fundamentally that those 2009 transitions are now immediately rendered archaic and obsolete.

I sense that the Government, and especially the Minister, is recognising some fundamental things have to happen. OK—restoring one-for-one tonight is a very good first step and we are going to vote for it, but it is a baby step, and there is a need—hence my amendment. But, beyond my amendment, I would just implore the Government, through the Minister, when the time comes for the Paris Agreement to come down the track and into this House, to recognise that that is the ultimate and, arguably, the most critical opportunity for this House, cross-party, to get its act together as a country, and to move forward.

I am sure I speak for the Green Party when I say that we will be very much prepared to bring a constructive and positive approach to a cross-party dialogue pertaining to the Paris Agreement, including the implementing legislation. Let us not shy away from that challenge. Let us do it altogether, and let us take a constructive approach to it. Thank you very much.

JAMES SHAW (Co-Leader—Green): Just following on from what my colleague Dr Kennedy Graham was suggesting, I would like to introduce two further amendments in my name. One of these is to amend the title of the bill so that the title clause would read: “This Act is the Climate Change Response (Removal of one Transitional Measure) Amendment Act 2016.” It has been noted on a number of occasions during the debate that there are in place a number of transitional measures that are not being removed as a result of this bill. What we are suggesting is that a more accurate title for the bill would be that this is the removal of one transitional measure, rather than all of them or rather than several measures. If the Government is not comfortable with that, I would be happy to have that changed to “Removal of a Transitional Measure”. The point is that it is a single measure rather than a plurality of measures, and, of course, that it is a specific single measure, which is to remove the one-for-two subsidy transitional measure under the emissions trading scheme.

Related to that, I have a further amendment, which is to change clauses 4, 5, and 8. What that would do—if we were to do it as read, and I am happy to read it out—is instead of phasing in the removal of the two-for-one subsidy, it would, essentially, bring it back to its original starting point, which is that it would simply happen immediately. So the two-for-one deal would be removed immediately, rather than get phased out over the course of 3 years. I know that there has been a number of very similar speeches tonight about how it is pragmatic and reasonable and responsible—and some other adjectives—to phase it in, because of the woeful burden, apparently, that business will have to suffer as a result of removing the two-for-one deal. But, of course, what we know is that the removal of the two-for-one deal will carry a total cost to the economy of 0.1 percent of GDP. I think it was said that it is essentially 8 hours of productivity. In other words, we can all take a day off for climate change.

If we were to remove it immediately, that would mean that those 8 hours of productivity—we would carry that cost immediately rather than a third of that each year, which is, I guess, just under 2½ hours per year. It is a minor cost, and the reason I am suggesting it is the urgency with which we need to act on climate change, because we have done nothing about it for 2½ decades. It has been 24 years since the introduction of the United Nations Framework Convention on Climate Change. We have been negotiating globally for more than half my entire life about what to do about climate change, and we came up with the Paris Agreement last year as a result. Earlier today somebody asked why it was that we needed to introduce this bill under urgency, and I wanted to say that it was urgent 24 years ago when the world created the framework convention. It was urgent 2 decades ago when National Government Minister for the Environment Simon Upton proposed to his Cabinet that there be a price on carbon and his Cabinet voted that proposal down. It was also urgent when Bill English, in Opposition, drove a tractor up the steps of Parliament to protest the introduction of a—

Hon Members: Shane Ardern.

JAMES SHAW: —sorry—Shane Ardern drove a tractor up the steps of Parliament to protest the introduction of a levy that would have paid for research into how to reduce agricultural greenhouse gas emissions. It was urgent last December when we signed up to the Paris Agreement, and so it is urgent tonight.

The Chinese have a saying, which is: “The best time to plant a tree is 20 years ago, but the second-best time is today.” We did not take action over the past 2½ decades. New Zealand’s emissions and our contribution to climate change have grown inexorably over the course of those 2½ decades, and so we would suggest strongly that this amendment to the bill, because it is such a minor contribution to what we need to do, should be introduced immediately rather than phased in over 3 years. Thank you.

Dr DAVID CLARK (Labour—Dunedin North): I do want to speak briefly to the title and the amendment put forward by Mr James Shaw. The suggestion that we call it the “Climate Change Response (Removal of one Transitional Measure) Amendment Bill” is entirely accurate and emphasises the point that this is a timid first step by the Government on a journey to address climate change. As we have seen, there seems to have been universal agreement breaking out around the Committee about the need to take some measures. We have got a strong disagreement about how much should be done, and on this side of the Chamber, of course, we would like to see real and genuine progress, but the suggestion that we change the name of the bill to be “Climate Change Response (Removal of one Transitional Measure) Amendment Bill” is something that we could support. We could insert words like “Merely” or “Not More Than” or a number of other phrases to emphasise the point, but that would certainly be a more accurate way of stating it. So in that vein, I would like to support that very sensible suggestion put forward by Mr Shaw. Thank you.

Hon Members: Mr Chair.

The CHAIRPERSON (Hon Chester Borrows): Oh, here we go! I call Denis O’Rourke.

DENIS O’ROURKE (NZ First): Mr Chairman, thank you—good choice. I rise to take just a brief call to comment on the three amendments that I have before me from the Green Party. The first one is the simplest one, which just refers to the change of title. It is a very good suggestion that it should refer to the “Removal of one Transitional Measure”, simply because that is actually what it is, so I expect that everybody in the Committee would want to vote for that. New Zealand First would certainly support it.

I wanted particularly, though, to speak in support of James Shaw’s amendment that effectively would abolish the phase-in period. I spoke to that in my second reading speech, in which I said that I saw no reason for such a very long phase-in period, or indeed any phase-in period at all. I also said, and I say again now, that many businesses, local government, and the people of New Zealand generally want to see strong leadership on this. They will not understand or accept or wish to support a 3-year phase-in period for any of the reasons that were given by the Minister for Climate Change Issues when she spoke about this a few minutes ago. There is, in fact, no justification that I can see for such a very long delay in implementing this actually very simple measure.

The reason for that is quite simply that businesses have known for a long time now that the current arrangements were transitional, so if they have not seen the writing that is on the wall, then the fault is theirs. But I think they are ready for it. I said that I have been recently to a forum in Christchurch, in which I was pleased to hear businesses talk about their readiness to take actions that they can to assist in the achievement of New Zealand’s objectives in reducing greenhouse gas emissions, to avoid sea-level rise and all the other adverse effects, and to achieve the obligations that this country has signed up to in the Paris Agreement. So the upshot of all that is that, actually, no time is really needed. All it does is show the Government’s weakness when it comes to the implementation of even this very minor, very straightforward, and obviously needed measure to end those transitional arrangements. No more time is needed, and, in fact, a little bit of a shock to the business community would not do any harm, because it would galvanise it into action. I do not accept that there would really be any significant harm to those businesses or to New Zealand’s trading position as a result of doing that. So for those reasons New Zealand First would have no hesitation in supporting this amendment to abolish the phase-in period.

The other amendment, which we would also support, is Kennedy Graham’s one relating to clause 3. The alternative words that are used there, “to improve the ability of the NZ ETS to fulfil its statutory purpose of helping New Zealand meet its international obligations under the United Nations Framework Convention on Climate Change (1992) in light of the Paris Agreement signed by New Zealand on 23 April 2016.”, are a good and proper statement of the purpose for this measure and point to the way things need to go in the future. So I will end it there, but New Zealand First, for those reasons, will have no hesitation in supporting all three of those amendments, and I hope and expect the Government will see the light and do so as well.

EUGENIE SAGE (Green): Tēnā koe, Mr Chair, thank you. It is bizarre that we are debating this bill under urgency when it does not come into force until 1 January 2017, and Part 2 does not come into force until 1 January 2019. Why are we debating it under urgency? Is that because the Government was too scared to call for submissions and have a public debate on the lack of any decent progress towards tackling our emissions to reduce climate pollution? Because one of the most inspiring Government-organised meetings I have been to about climate change was the Government’s consultation meeting last year on New Zealand’s emission targets before we went to Paris. It was not inspiring for the video that the Ministry for the Environment showed, which was incredibly defeatist about the obstacles to a low-carbon future, but it was inspiring because hundreds of people came and hundreds of people there were still wanting to speak at the end of the 2-hour meeting. They had plenty to say about what we could be doing to reduce climate pollution in New Zealand.

That is where the Government totally fails to get it. As James Shaw said, it does not get climate change. It also does not get the desire of New Zealanders all around this country of ours to do something definite—to have a plan about reducing our emissions. People want a stable climate. They want to protect our future and the future of their children and their children’s children. They want to protect the basis of our economy. People want a plan. This Government, with this damp squib of a bill, is failing to provide that leadership. People all around New Zealand are getting loud on the climate. We have seen that with the break-free actions to move away from fossil fuels that we have seen over recent weeks. Yet this bill will reduce our emissions by only 0.7 percent. That is not good enough when we have got a target of reducing emissions by 11 percent.

It was really interesting to have a look at the regulatory impact statement. One of the reasons for this delay in implementation is because of what has been described as the risk of increased cost to the dairy sector. Because agriculture is totally exempt from the emissions trading scheme, those costs, of course, are to the processers—Fonterra and the milk processing companies—because they use coal to dry the milk. Those costs are passed on a wee bit to the suppliers. The regulatory impact statement estimates that there will be an increase of costs between $1,500 and $5,000 a year for the average dairy farmer. Because of the losses that dairy farmers are expected to make in the current season, this is seen as one of the factors in delaying the implementation of the bill. But that sums up what is wrong about the Government’s whole approach to climate pollution. It is not giving the incentives to change.

There was a very good presentation in Parliament last night—or, in the building, outside the Chamber—from Apiculture New Zealand. Its plan is to actually plant mānuka over large areas to increase our bee industry, to increase the income we get from honey exports, and make that a billion-dollar industry. Yet this bill and the Government’s failure to lead on climate mean that we are not getting that encouragement for a change in land use—to move away from climate pollution - land uses such as agriculture and dairying, with the major methane and nitrous oxide emissions that we get from cows. Bees do not produce nitrous oxide or methane. If we had a decent climate plan, we would get a shift in land use away from dairying to much more sustainable land uses across Aotearoa New Zealand, but by failing to lead the Government is stifling innovation. It is leaving us stuck with climate-polluting activities like intensive dairying. That is why this bill really fails.

We are supporting the bill in the Green Party because it is a baby step, but it is completely timid and it fails to listen to New Zealanders around the country who want leadership on climate change in the same way that we have led in terms of being nuclear-free and have led in terms of women getting the right to vote. This bill fails to lead.

JULIE ANNE GENTER (Green): I wanted to stand up and take another call to just reframe this a little bit for the Government, perhaps, in a way that National would understand better, because I think it is very easy—[Interruption]—I am sorry, I am not saying that—

The CHAIRPERSON (Hon Chester Borrows): Yes, you are.

JULIE ANNE GENTER: No, I am not. I am not trying to be condescending. I am really not—nobody believes me!

In the Green Party it is natural for us to say that we want to protect the planet and we care about future generations. We really care about that. That is a core value. I know that is an ancillary value for some National Party people, like the Bluegreens, but core values for the National Party, I think, are doing well, competition, and being successful in business. If I could just put it this way: climate change is the biggest economic opportunity of the 21st century—responding to it, that is. It is also potentially the greatest economic threat to human civilisation—the entire history of it. You can look at it as a threat or you can look at it as an opportunity, but either way, if humans are going to continue to thrive in the future, we are going to have to change the way that we do things.

The economy is not something that we serve; the economy just describes how we spend our time and how we allocate resources. Right? We cannot continue to allocate resources and spend our time in ways that continue to put carbon emissions into the atmosphere. It is just not possible. The scientists have told us that. If we went to a doctor—you go to the doctor and the doctor tells you that you have got to change your lifestyle, because you have got diabetes and you are at risk of a heart attack and you are at risk of dying. You might like to continue doing the things you are doing—that might be more comfortable in the short term—but if you want to save your life, you are going to have to do some things that in the short term are a little bit difficult but in the long term are going to enrich your life and give you a better quality of life. They are things like changing your diet or your exercise regime, or whatever it is the doctor is telling you. Basically, it is exactly the same thing right now. Scientists are telling us that we cannot continue to put carbon emissions and greenhouse gases into the atmosphere.

It is a false dichotomy to say we cannot afford to do what we need to do to reduce emissions. We cannot afford not to. We needed to start 20 years ago, but we still can start today. Maybe if you consider it as an economic opportunity—the sooner New Zealand moves, the better off we are going to be because we are going to seize this transition to a low-carbon economy. We are going to seize that opportunity because we know we have to do it. We know we have to do it. So why do we not start now? It is not the industries who are going to you, saying: “We cannot afford to pay this yet. We are trade exposed. We cannot do this. We cannot do that.”—they are not the ones who are going to lead us into the economically successful future.

The CHAIRPERSON (Hon Chester Borrows): We are in the Committee stage. It sounds like a third reading speech.

JULIE ANNE GENTER: Completely understood, Mr Chair.

The CHAIRPERSON (Hon Chester Borrows): A number of us wish it was.

JULIE ANNE GENTER: Completely understood. I just think that within the regulatory impact statement for this bill, it demonstrates the kind of to and fro that the Government is having with the business community. The reality is that this bill is not going to reduce emissions more than 0.7 percent, which is not enough for us to meet the Government’s weak target, let alone the target we need to meet to avoid dangerous climate change. We have got a choice here as a country about how we confront climate change, and this bill is leading us down the path of doing nothing meaningful and waiting too long, and ultimately we are going to pay the cost for that.

Dr KENNEDY GRAHAM (Green): I just want to, if I may, conclude my remarks in support of my typescript amendment with the following comment. At the end of the typescript amendment, I do make the point of explicitly saying “in light of the Paris Agreement signed by New Zealand”, and I think that is the critical point I want to bring to the attention of the Committee. The Paris Agreement, dated December 2015, is the one that is directly relevant to how we, as a global community and a national community, now plan our transformational pathway to a low-carbon economy over the next 15 years and the next half century.

But the Paris Agreement makes one other thing very, very clear, and that is that the current intended nationally determined contributions are insufficient. I do not have it in front of me, but the wording is pretty close to “current intended nationally determined contributions fall well short of what is required for a 2 degree pathway”—well short of what is required for 2 degrees. The agreement also says that global emissions need to get down to neutrality sometime in the second half of the 21st century. The experts tell us that that really means—because it was fudged a bit by the governments at Paris—that we are really taking about 2060 to 2080, and the general agreement consensus is that it is the 2070s. So we are talking about global neutrality by 2070.

The Paris agreement also says that, notwithstanding the universality dimension of Paris, which was the major and qualitative step forward, “developed countries must continue to take the lead”. Most, almost all, experts recognise that that means that developed countries have to get close to carbon zero around about 2050-60 so that the developing countries can follow. I have heard one breath-taking theory that New Zealand could allow itself carbon neutrality around 2090, and still be consistent with the 2 degree pathway—it is true—thereby implying, if that were the case for all developed countries, that the other 160-odd States parties would all fall into line brilliantly in the 10 years 2090 to 2100.

But set that aside for the moment. The general consensus is that the developed countries have to aim for carbon neutrality—and some are formally stating that now—by the middle of the 21st century, and then the developing countries in the latter part of the 21st century. If you take that, we have to then recognise, in all humility, and I will share the humility with the Government, that a 50 percent target for New Zealand in 2050 is demonstrably inadequate.

For what it is worth, I will conclude on this: the Green Party did make it clear last year that we believe that a 40 percent cut by 2030 is entirely possible. That rests on research that we have commissioned from experts around the country that makes it clear that if you adopted a set of benign assumptions, if you assumed the best of all worlds in New Zealand—policy optimality, political consensus, private-public collaboration, linear improvements in technology, best practices in the farms, the firms and the households; just an optimal, benign scenario for New Zealand—you could get way beyond that. “So what would be the theoretical maximum potential mitigation in that situation?”, the experts say, and then you bring all those figures together, and you can go way beyond 40 percent. You can, perhaps, get as far as 60 or 70 percent.

In the real world, we are all realistic enough to know that that may not happen, but it is worth exploring the theoretical potential in the best of all worlds, and then challenge ourselves—every political party, every individual MP, the Government, every individual Cabinet Minister, and every individual New Zealand citizen—to aspire to that. Let us start the dialogue. Thank you.

The CHAIRPERSON (Hon Chester Borrows): Members, James Shaw’s tabled amendment inserting new clause 4AA is out of order, as it is outside the scope of the bill.

The question was put that the following amendments in the name of James Shaw to clauses 4, 5, and 8 be agreed to:

replace clause 4 with:

(4) Section 63A repealed (Modification of liability to surrender units to cover certain emissions);

repeal section 63A;

replace clause 5 with:

(5) Section 64A repealed (Modification of entitlement to receive New Zealand units for removal activities);

repeal section 64A;

replace clause 8 with:

(8) Section 84A repealed (Temporary suspension of allocation entitlement for eligible industrial activities) and

repeal section 84A.

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.

The question was put that the following amendment in the name of James Shaw to clause 1 be agreed to:

Replace clause 1 with:

(1) Title

This Act is the Climate Change Response (Removal of One Transitional Measure) Amendment Act 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 amendment in the name of Dr Kennedy Graham to clause 3 be agreed to:

Replace clause 3 with:

(3) Principle Act

This Act amends the Climate Change Response Act 2002 (the principal Act) to improve the ability of the NZ ETS to fulfil its statutory purpose of helping New Zealand meet it international obligations under the United Nations Framework Convention on Climate Change (1992) in light of the Paris Agreement signed by New Zealand on 23 April 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.

Parts 1 and 2, schedule, and clauses 1 to 3 agreed to.

House resumed.

Bill reported without amendment.

Report adopted.

Third Reading

Hon PAULA BENNETT (Minister for Climate Change Issues): I move, That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a third time. First of all, I want to thank the Government support parties—ACT, United Future, and the Māori Party—for their support of this bill. But I also want to recognise the rest of the House, Labour, New Zealand First, and the Greens—that they are supporting this bill through the House and the removal of the one-for-two model.

It is important that we pass this bill through all stages tonight so that there is business certainty and so that they can get on with it. There was some concern as to what it might do with the markets, but actually I think that has all been fine.

I want to just say that I do not think this is the answer to, certainly, climate change. I do not think this is the one thing that is going to make the biggest difference, if you like. I think there are certainly more steps that we have got to take. We have got to be careful that we do them in a concerted way that is in the best interests of New Zealanders and New Zealand, and that, I think, looks really longer term. Like most members of this House I care about the country that I will leave for my grandchildren’s children. I think quite a lot about the differences that we can be making now that will actually make a huge difference to them. Thank you to the House. Thank you to those businesses out there, to the individuals who make a difference, and to all of those who see the work that we do in protecting this planet as being important.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a short call on the third reading of this bill. It was comforting to hear the Minister say that this is one thing that the Government is going to do to combat climate change. Although Labour is supporting this legislation, we do look forward to a suite of measures that are going to meaningfully address New Zealand’s emission reductions and how it is that we are going to meet the targets that we have set ourselves, especially when we consider that we are going to have to get more ambitious.

One of the features of the Paris Agreement is that ambition is built into it, and the ability to ratchet up each country’s contribution will increase—each meeting on meeting. At the moment New Zealand’s rather timid contribution of 11 percent on 1990 level reductions from 2021 onwards is something that we are going to have to get more ambitious about. We are going to have to front up to the international community and we are, importantly, going to have to show that we are meeting our targets. We are currently not meeting our targets. We are not on the kind of transition pathway to a low-carbon economy where we can or will meet our targets.

This piece of legislation—although it is something we welcome, let us bear in mind the 0.07 percent reduction in our greenhouse gas emissions from this piece of legislation. That is what the Ministry for the Environment has calculated. So let us get real about what this legislation does and does not do. It is a good thing. It needed to happen. But make no mistake: this is not a plan to limit climate change. So when the Minister says that this is over one thing, we look forward, in the coming days and weeks, to hearing the Minister roll out her comprehensive plan for how New Zealand is going to reduce its emissions. We would welcome seeing a real commitment to carbon budgeting, but the fact that the National Government voted against aligning our targets and our emissions trading scheme, just here tonight in the House, does not give me great faith.

But most other countries set carbon budgets. If we think about it as a household—if we want to save money, what do most people do? They set a budget. They write it down. They make a commitment. That is how they meet it. New Zealand does not do that and, guess what? It fails to meet its targets too. It is no great surprise. It is just something that we do have to address, and we have to address it fast.

In the Committee stage of this debate, I thought the Minister, in one of her responses, made a very telling contribution and it is within the regulatory impact statement. The reason for the long phase-in period of this, through to 2019, is to protect dairy. It is to protect dairy—its industrial gases, not its agricultural gases. Dairy is still being protected in terms of agricultural emissions, but in terms of its industrial usage, what we cannot do is address our greenhouse gas emissions while we continue to favour one sector, and subsidise that through other productive areas of our economy. Our economy is out of kilter because this Government has not used the levers that the emissions trading scheme gave it to transform our economy, to diversify our economy, to add more value, and to move to the kind of 21st century economy that New Zealand is going to need to survive in the world. It is a trick that has been missed, and it is a trick that this Government is continuing to miss.

Listening to the Government speakers through the course of this debate tonight just shows how out of step they are when it comes to the issue of climate change. In other countries, politicians are realising the opportunity that transitioning to low-carbon economies gives us. There are the opportunities for us to create higher-value economies, with better-paying and more secure jobs. That is the kind of vision that we, in Labour, have for New Zealand, and climate offers that opportunity.

At the Paris climate talks, one of the standout side events that happened was the international business community getting together and saying that Governments were not doing enough. Business was pushing Governments to do more. So we have here the business community in New Zealand realising that more needs to be done. But the Government is out of step with business. Businesses realise the threat that inaction on climate change poses to New Zealand. It poses the fiscal risk of New Zealand thinking it can just buy its way out by buying credits for evermore. I know that that is not something that Grant Robertson is looking forward to. Business also recognises the real reputational risk of New Zealand failing to meet its climate change targets. New Zealand simply cannot continue to trade on some kind of clean, green image and turn up to climate conference after climate conference and earn itself Fossil of the Day awards, which, make no mistake, New Zealand excelled in in Paris.

This is not the kind of image that we want for New Zealand on the global stage. We want New Zealand to be seen as somewhere where we are doing the right thing and that we are not an international laggard. The legislation we have today, and tonight, in front of us is an important start, but it cannot be a cherry-picked part of the emissions trading scheme (ETS) review. The Minister, when she was in the chair, admitted that the ETS was broken, that the ETS was so broken that it allowed something like the hot air credits to come into play. We are not putting the ultimate legislative protection around that in terms of a price floor to sit alongside a price ceiling, but we have to have a commitment to an ETS to be a mechanism that puts a real, meaningful price on carbon that will work as a lever in our economy to move us on to a low-carbon transitional pathway, because we do not have that at the moment.

We cannot simply continue with business as usual, and we have to see the opportunities that are contained in that transition for us. Labour supports this bill and we would equally support more measures from the Government to finally start addressing New Zealand’s rising greenhouse gas emissions.

SCOTT SIMPSON (National—Coromandel): It is a pleasure to take a brief call in this third reading of this bill before the House, to transition the emissions trading scheme (ETS) from the one-for-two model that we have had since 2009 to a phased change and through to a new and more sustainable objective for us as a nation and for our ETS system.

This has been a really interesting debate. It has been very useful to hear opinions from across the House and to hear members expressing their views. Although I think it is fair to say that as a House we probably differ about the size of the step, we all agree that this is a step in the right direction. On that basis, I commend the bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): I was heartened to hear Minister Bennett speak of the failures of the system in an honest way in the Committee stage, and heartened also to hear her speak about the certainty that an emissions trading scheme should provide for business. That was something that the Minister spoke about and it showed an understanding of what needs to happen next. As my colleague Megan Woods has already said, we on this side of the House want to see more action and we want to see it soon. We want to see more than this timid step, which is a U-turn on a policy that National put in place some years ago when it came into Government and gutted the previous emissions trading scheme, which did already give certainty to business. To hear that it is back on that track is heartening, but with my colleague Megan Woods I want to reiterate the concern that things are sped up, and that the action and the plan is put in place.

For a long time we have called for the removal of this one-for-two provision. For years the Labour Party has called for this action that is happening in the House tonight, and now it is happening. We support it—we support it—but we want to see more. We have called for other things that would be sensible steps, like putting in place an independent climate commission to set up a carbon budgeting process so that we can actually achieve significant emissions reductions targets—so that we can have targets and then have a plan to meet those targets. It is not rocket science; it is the logical thing to do if the Government believes the things it is saying in this House. It needs to put a plan of action in place, because we know that New Zealand has per capita emissions that were the fifth-highest of 40 developed nations when they were measured in 2012.

If New Zealand cannot do this, who on earth can? Our electricity sector has the potential to be completely renewable. The last Labour Government put in place a ban on new generation coming from fossil fuels, because we knew that that was quite possible to do. The last Labour Government put in place a biofuels sales obligation, because we knew that it would cost nothing extra but it would give an emerging biofuels industry certainty. And we put in place the first “all sectors, all gases” emissions trading scheme in the world, because we knew that that would be good for New Zealand business long term. We knew that the small extra cost, the few cents extra on a block of butter, would be well worth it in marketing that butter as a premium product from a world-leading country that actually cares about its environment.

Instead, we have had 8 lost years—8 lost years. It has been 8 lost years, until the Government finally agreed that giving business some kind of pathway and certainty is the answer and that actually having some meaningful action in this space is a good idea. Yet it is not really certain yet. We have heard the Minister tonight say that there needs to be more—with no plan, no indication of what that is. How can business plan in an environment where things change from year to year? It claims to be a business-friendly Government, but it changes its plans all the time. It is very hard for any sensible business to plan in that kind of environment. What business can go off—and, unfortunately, what it has been going off—is the kind of tacit nudge that the Government is not really that serious about it. We are reaping the consequences of that as our emissions rise and rise year after year, as foresters choose not to plant because there are disincentives in place, and as people choose to burn fossil fuels because there is a guarantee that there will be no cost above $25 per unit.

This situation that we find ourselves in is one of the Government’s making. We commend it for taking a small step in the right direction, but the problem that we find in front of us is one that the Government could have addressed long ago. It could have outlined a more bold plan. It could have outlined a plan that was in line with the aspirations of ordinary middle New Zealand. Those people out there battling every day, who would like to see a little increase in their take-home pay, who would like to see their education be of a world standard instead of dropping, who would like to get to hospital and know that they do not have to pull out a chequebook—all of those things, of course, we have seen deteriorate in this Budget.

We have seen a Government that does not have priorities aligned with middle New Zealand, and that is, unfortunately, where this Government sits. It seems content to manage New Zealand’s decline. We have heard it talking about paying off debt—it is a Government that has borrowed more than Muldoon. Here in the space of climate change, we know that it is borrowing from future generations. It is a pattern under this Government: borrow and hope, borrow and hope. It has done it with our money. It has borrowed more than Muldoon. Here it is doing it with our future, by borrowing emissions that do not allow for such a gentle transition in the future.

This is getting more and more urgent, and there is no excuse for it. The facts are clear. The latest Intergovernmental Panel on Climate Change report says that without additional mitigation, we are now facing average global temperature rises of 3.7 to 4.9 degrees Celsius—that is, compared with pre-industrial levels—by the end of this century. We know what the issue is. We must have targets that are more ambitious, at least in line with the EU and its overall target of a 40 percent reduction in carbon dioxide emissions by 2030.

We know there is space for ambition. We know there is space to expand New Zealand’s brand as a clean, green country if we just do the right thing. It is not hard. If we just do the right thing, it will be good for our businesses, as they spy the opportunity in becoming high-tech, clean, and future-oriented. If we make polluters pay, rather than every other citizen bearing the costs—if we do what is right, it leads to a more prosperous future for our country. We hope that the Government, after taking this first, tepid step forward, will look more closely at this picture. I take some hope out of what the Minister said, that she intends to do that. I only hope that those words will be followed with action.

SARAH DOWIE (National—Invercargill): We are a Government that is committed to transitioning to a low-carbon economy, and, as such, we are phasing out the 2009 transitional scheme. That was a transitional scheme—we are keeping true to our word on that. As such, I commend this bill to the House.

JAMES SHAW (Co-Leader—Green): It is my pleasure to rise in this third and final reading of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. The Green Party is, of course, supporting this bill because it does move us one tiny, timid step closer towards reducing our emissions. When I say “tiny” and “timid”, I am, of course, referring to the Government’s own analysis that this will reduce our emissions by 0.7 percent in the year 2020, 3 years from now. That is against a rise, over the course of the next 15 years, of 96 percent in our emissions over 1990 levels. So it is going to shave a tiny amount off the enormous growth that is projected in our emissions over the course of the coming decade and a half. It really does not slow down the supertanker of New Zealand’s emissions as we head towards, frankly, global catastrophe.

To give you some context, our emissions are projected to increase 96 percent above 1990 levels by the year 2030. They have already risen 24 percent above 1990 levels, and since this Government came to office they have risen 19 percent above 1990 levels. They are now at the highest level that they have been since 1990, which is when we actually started counting. It is also the period of time that the emissions trading scheme has been in place for.

I just want to reiterate the point that the purpose of an emissions trading scheme is to reduce emissions. What has happened has been the precise opposite. Our emissions have increased by 19 percent in the time that we have had the emissions trading scheme, and that is because when this Government came into office it gutted the emissions trading scheme, it changed the settings, and it crashed the price.

One of the things that Government members have said several times tonight is that the reason why they are phasing in this tiny measure over the course of 3 years is the cost to business. Well, they thought nothing of the cost to business when the Government changed the settings on the emissions trading scheme and crashed the price of units. Hundreds of millions of dollars were wiped off the value in the forestry sector overnight by this Government. There were stranded assets up and down the country—hundreds of millions of dollars. The cost to the Māori economy alone was half a billion dollars. You had iwi businesses up and down the country that lost half a billion dollars because this Government changed the settings on the emissions trading scheme and crashed the price.

So when Government members get up and say “Oh well, it is going to take us 3 years to phase in the removal of the two-for-one subsidy because of the cost to business.”, they have got no idea of the catastrophic damage that they caused to the forestry sector and to iwi businesses around New Zealand when they introduced that policy. They say that they are friendly to business, but the cost to business of this bill will go nowhere near the cost to business that they created when they crashed the price in the first place 8 years ago.

During the course of the debate tonight there have been a number of speeches from the Government benches that have not just talked about the cost of implementing this bill but have shown that Government members have no comprehension of the cost of not implementing the bill, no comprehension of the cost of doing nothing, as we have done nothing over the course of the past two and a half decades to arrest climate change.

When you look at the costs to our businesses that are mounting up already, they are staggering. It is millions upon millions of dollars in costs that are already occurring. We have always thought, I think, about climate change as this thing that happens in the future to somebody else—to polar bears in the Arctic, in the future. In fact, the costs are being felt now, by us, here in this country and in our closest Pacific neighbours, where people are already having to relocate to higher ground because rising seas are swallowing up their homes. We will see the same kind of thing in New Zealand—in South Dunedin and in Napier and in Tauranga and on the Kāpiti Coast, and in many, many other low-lying areas around the country.

The idea that trying to do something to reduce our emissions carries with it some kind of unacceptable cost is not stacked up on a business case basis against what is already starting to happen and the costs that are being imposed as our infrastructure gets flooded, as roads go underwater, and as we have extended, longer, deeper and more frequent droughts. The cost to our agricultural sector of that—

Mr DEPUTY SPEAKER: I am sorry to interrupt the member, but the time has come for me to leave the Chair. The House will resume tomorrow morning at 9 a.m. Nō reira, good night and good luck.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)

THURSDAY, 26 MAY 2016

(continued on Friday, 27 May 2016)

Bills

Climate Change Response (Removal of Transitional Measure) Amendment Bill

Third Reading

Debate resumed.

JAMES SHAW (Co-Leader—Green): In conclusion, one of the advantages of being cut off at the 10 p.m. bell and then resuming at the 9 a.m. one is that you have the opportunity to reflect overnight. It occurred to me, overnight, that the way that we were talking about this—about climate change—was in terms where people do not really get the gravity. We can talk about a 96 percent increase in our projected emissions over the coming 15 years. We can talk about a 0.7 reduction in those emissions from this bill. We can talk about the fact that our emissions have risen 19 percent. But that is meaningless to the vast majority of people, and so let me just reframe it slightly.

When you think about the increasing frequency and depth and severity of the droughts, talk to farmers about the 2013 drought that wiped $1.5 billion off our economy. When you talk about the increasing floods around the country, talk to the people of Whanganui and South Dunedin whose houses went under water last year. When we talk about the increasing storms and the severity of those storms, talk to the people of Island Bay, whose whole sea wall was destroyed. They had to make a decision about whether to have a managed retreat of the Island Bay foreshore and sacrifice the road along that stretch of waterfront. Talk to the people of Hutt City who lost power for a week, and the small businesses there that went under because they did not get electricity. Those are the impacts—that is what happens in our failure to address climate change.

The Minister for Climate Change Issues, Paula Bennett, has said more encouraging words over the last 6 months than her predecessor did in 8 years. And I want to say this: if those are not just words, if they are not just there to mollify and soothe us into submission, if she actually wants to deliver on this, if she actually wants to do what is necessary for New Zealand to deliver on its commitment to do our part in facing the global climate crisis, then, I say to the Minister, let us know what we can do to help, because that is our primary commitment.

This is too big a task for petty partisanship. It is too important for petty politics. It is the single greatest challenge facing our society, our economy, and our civilisation today, so we are committed to doing all we can to ensure that New Zealand plays its part. I say this to the Minister: we will do everything that we can to support her, if she is truly committed to making a difference—“Girl, you know it’s true.”

In that, we will be supporting this bill, as we have said a number of times during the course of this debate. It is an incredibly small step, but it is a first step, and we hope to see more from the Minister in the very near future, because this is a crisis that has been growing over the course of 25 years. We are way behind the eight ball on this. It is time for New Zealand to step up and do what is necessary. We commend this bill to the House.

DENIS O’ROURKE (NZ First): I want to make two preliminary comments, and the first is to acknowledge Minister Bennett’s admission that this measure is only one small step—important in itself, but one small step—and that much more is needed. We totally agree, and that is the approach that all of the other parties in the House are taking, of course. In that light, I would also like to endorse Megan Woods’s call for a cross-party approach to the development of a strategy for some real actions on climate change. And I think James Shaw has just echoed that sentiment in his speech.

We all want to move as fast as we possibly can to tackle this most serious of all problems facing humankind, but my endorsement of that approach is subject to a caveat, and that caveat is simply that we all need to listen to each other. So Labour and the Greens need to listen to the other parties that may not necessarily agree with every aspect of their argument. We need to listen to each other so that we can gain some degree of consensus so that those real actions that we want to see actually happen.

Following on from that, I want to make this perfectly clear: New Zealand First does want a more cautious approach to agricultural emissions than the Labour Party and the Green Party have taken. Although agricultural emissions are very significant for New Zealand and must not be left out of any future strategy to reduce our emissions profile overall, we cannot move too far ahead of competing agricultural exporting countries, simply because we would be likely to become uncompetitive, and that would be a problem. The damage to our farming community and exports simply could not bear some of the measures that some are wanting to take very quickly.

So I would ask Labour and the Greens to acknowledge that, and to also acknowledge that, as a matter of fact, the European Union, which is the world’s largest agricultural producer by far, has no primary food production commitment so far as emissions are concerned—at all. Think about that. And neither, by the way, has another huge producer, the United States of America. The truth is that New Zealand farmers are already the most carbon efficient on earth—already some way ahead.

Bearing that in mind, although we do want progress as far as agricultural emissions are concerned, we cannot push that envelope too far without doing too much damage. As a matter of fact, until the European Union and the United States of America start to move, we should not stick our neck out too far. I note, in that context, that James Shaw was content to follow. He said that in one of the speeches: as long as we do something, as long as we make progress, we should be content to follow. So that is the approach I think we should be taking as far as agricultural emissions are concerned.

I would like to point out too that the Observer published an article only last Sunday, on the front page, and the headline was “Eat New Zealand lamb and save the world”. That shows that they understand that New Zealand agriculture, as far as carbon is concerned and as far as emissions are concerned, leads the world. That reinforces what I have been saying. Yes, we do need to make progress with agricultural emissions, and, yes, it does have to be a major part of the strategy that we are calling for, and, yes, we do need to try to develop a consensus amongst the parties to take actions as part of that strategy.

The other parties, Labour and the Greens, need to listen to us and, I think, to National, which seems to be saying roughly the same thing—that as far as agricultural emissions are concerned we actually need to be a little bit realistic. It does not mean a lack of commitment; it just means a degree of realism.

In any event, if we follow New Zealand First’s prescription we do not really need to move too fast on agriculture, because it would form part of what we want to see as the first area where we would take action, and that would be the whole area of transport. We want to see transport targeted early and actively and effectively. We want to see electric cars encouraged. We want to see electric buses and trucks, which are now under development, being incentivised. We want to see the main trunk railway in New Zealand completely electrified. We want to see light rail introduced, with Government assistance, in the main centres. In fact, we want to encourage all public transport. We want to see the New Zealand railway system completely redeveloped so that it would become a modern, efficient, and effective system and would thereby make a major contribution to reducing our dependence in this country on fossil fuels.

That is the priority for us, but, as I have said, we do need to develop a consensus. That means all parties listening to each other and listening to, I hope, what I have been saying. We will certainly be listening to what others are saying, as well, with the possible exception of David Seymour, who is unlikely to make any contribution whatsoever. However, having said that, we will nevertheless try to work with other parties. We do want to see a comprehensive strategy developed. This is one very minor first step, not enough in itself, and I agree with the Minister that a lot more needs to be done. So let us get on with it.

PAUL FOSTER-BELL (National): This is yet another example of very pragmatic, sensible, and balanced legislation from a Government that is committed to ensuring that New Zealand businesses and households have an opportunity to adapt to the measures put in place to respond to the issue of climate change and climate disruption. Paula Bennett, the Minister sponsoring this legislation, should be commended for it. I commend it to the House.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Dr—[Interruption] Order! I am calling Dr Kennedy Graham—5 minutes.

Dr KENNEDY GRAHAM (Green): I presume that our National colleagues are free to select their own pronouns between the adjectives and the nouns that they are given.

I want to just mention three points in this third reading debate. The first point is that this debate, yesterday and today, marks, essentially, what I think is a new start—hopefully, it certainly does. We are lost if it does not. But let us assume that this marks the start of a new phase. Taking from the Paris Agreement, which reflects a new global approach to climate policy, the focus has now switched from the universality established in Paris in December to domestic action. The challenge now for all 196 State parties is the domestic action. Let us regard this Budget and the bill that is in front of us as the beginning of that domestic action to implement the new universality that comes out of Paris. The work starts now.

I pick up on Denis O’Rourke’s point—we have been making it, James Shaw and I and Labour colleagues—of the need for a consensus. We are genuine about that. We will dialogue and we will listen, but we will make our points. On our part—the Green Party—where we differ is, as I think Mr Simpson said, in the sense of urgency. I promise you that we will convey the reasons for the greatest sense of urgency, on our part, in that dialogue, but let the dialogue begin. Quickly, in response to Mr O’Rourke about agricultural competitiveness and the need to go carefully, of course we take the point. I just respond with the fact that competitiveness works both ways. With the opportunity cost, the omission of the counterfactual that was there in the lead-up to New Zealand’s Intended Nationally Determined Contributions, it is the same with agriculture. If we do not move, including on agriculture, we lose our competiveness in the medium term, if not the short term. So we have got to move on agriculture as well.

Maybe New Zealand First is aware of the 2013 Food and Agriculture Organization of the United Nations report that said Oceania can reduce agricultural emissions—livestock emissions—by 14 to 17 percent. Maybe New Zealand First is aware of last week’s global report, which says global agricultural emissions can drop from 5 gigatonnes to 4 gigatonnes by 2030—but let us find out. We will have a dialogue and see whether it is aware of the double side of the competitiveness argument.

Paris is the real test. We now move to domestic action. What does that mean for us? It means institutional change. It means that we do need to emulate the British: we need an independent climate commission that can talk independently of politics and independently of the politicians’ and party views, composed of experts and well-recognised authorities who can speak with authority to the Government and to Parliament. Let us establish that. Let us establish a forum—not unlike the Land and Water Forum, but taking into account the lessons learnt from that—and involve business and civil society, that, again, is independent of Parliament. Let us have those two institutions set up now and moving fast. Let us think about reforming even our own parliamentary structure on climate change. Climate change is an orphan because it is cross-sectoral—sectoral—

Hon Members: Ha, ha!

Dr KENNEDY GRAHAM: —and it does not sit nicely—I need another minute, Mr Assistant Speaker, as a result of that—in the select committee structure, so we need to look at that. The transformational pathway that we need to focus on will begin with a new recognition of our national responsibility level, dividing the global carbon budget up according to the principles of equity in order to find out what we are actually responsible for, as opposed to the second point, which is what we are capable of in terms of domestic mitigation. They are blurred, those two concepts, and quite often deliberately so, by Governments. We need to be at least intellectually honest and politically honest, and recognise the distinction between those two concepts. That then takes us, once we know what our national responsibility level is and what our domestic mitigation potential is, to a point where we move to what the effective policies are—and let that discussion begin.

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

DAVID SEYMOUR (Leader—ACT): On behalf of the ACT Party, I rise in support of this bill. I am here to say all the things that the National caucus has been thinking but has not been able to say.

Hon Member: That we want to go home?

DAVID SEYMOUR: Ha, ha! A former member, Richard Prebble, once told me that in a parliamentary debate one should seek to respond to the earlier contributors, but, having just listened to the last three speeches, there is very little scope for that. So let me just say a few other things.

This emissions trading scheme is a piece of Swiss cheese public policy. It is so filled with holes, and deliberately so, that it never quite achieves its objective, and yet it also gives the impression that the Government is trying to do something. We saw that in Minister Bennett’s speech last night, when she first moved this bill. She said “Well, it’s going to do quite a bit.”, and then, each time she said that, she pulled back and said: “But it won’t actually have any binding, biting effects on real activity.”

The fact that there was a two-for-one discount on carbon credits in the first place tells you everything you need to know about the seriousness of the emissions trading scheme. Throughout the scheme’s history, there has been a whole host of adjustments: what sorts of credits you can redeem within New Zealand; what sorts of activities are included, and when they are going to be included. The truth is that it is designed to give the impression of doing something without actually binding any sector to change its behaviour, and at the same time providing vast amounts of room for political horse-trading and manoeuvring.

The emissions trading scheme is and has always been an utter joke. Today we find ourselves debating, under urgency, as part of a Budget measure, the removal of the two-for-one discount, which should never have been needed in a serious piece of public policy designed to reduce emissions in the first place.

What might we have been debating if we were serious about this problem? Of course, the reality is—sadly, for our colleagues in the Green Party—that the overwhelming majority of the population is not serious about it. We could have been debating the introduction of a simple, transparent, uniform carbon tax. If New Zealand was serious, if the people of New Zealand really wanted to reduce their carbon emissions and were prepared to make a commitment to doing so, then what we might have done is come here to debate the introduction of a carbon tax. We have not, because its simplicity and its transparency and its effectiveness are all the reasons why it does not fulfil the role that the emissions trading scheme has fulfilled in New Zealand politics. It bites evenly on everybody who emits greenhouse gases, and it actually does not have any room for any political manoeuvring or horse-trading. That would be a sensible policy, committed to reducing greenhouse gas emissions in New Zealand. The emissions trading scheme is not, and this urgent debate about the two-for-one discount is just another manifestation of its long history of political horse-trading.

I none the less am in support of this bill. It is a public policy abomination, but on balance I would much rather keep these people over here in Government, because, believe it or not, in spite of everything that I have said about the emissions trading scheme in the bill we are debating today, those people on the other side of the House are far, far worse. These people occasionally make a public policy mistake, but if you look over there you think: “Oh, my God! Thank God their mistakes are so minor compared with what those parties often threaten the New Zealand public with.”

So this is not a particularly desirable piece of legislation, and it is not a particularly desirable situation to be here debating, under urgency, the removal of this discount. None the less it is all the best for New Zealand that I support it and keep these people over here and those people over there.

NUK KORAKO (National): Mōrena, e Te Mana Whakawā. This bill reflects that the Government is truly committed to a low-carbon economy, and I have no hesitation in commending this bill to the House.

Su’a WILLIAM SIO (Labour—Māngere): Good morning. Talofa lava. Maleifua maia lau afioga i le Fofoga Fetalai. Good morning, Mr Assistant Speaker. I want to follow on from Dr Kennedy Graham, and from others from New Zealand First, in saying to this Parliament that there is a real need for us to take this issue seriously, lay aside the politics, and take on board the call that Dr Megan Woods has made that we come together cross-party to come up with solutions that will not only address our international obligations relating to climate change but also do the right thing for this country and its future generations. I have got four points, and I hope that you will not intervene when I mention the Pacific in this debate, Mr Assistant Speaker.

The first point that I want to make is that people would have noticed a report that the New Zealand Herald made yesterday, with reference to an event organised by community workers called Park up for homes Māngere—park up your cars for homes in Māngere. I bring that to the attention of this House because I have been asked to invite the Government Ministers to participate in this event.

Hon Gerry Brownlee: That’s about as wide of the wicket as you can get. We’re debating climate change.

Su’a WILLIAM SIO: I will get to the point, Gerry—I will get to the point. Climate change, contrary to the views on the other side, is not just about rising sea water levels. It is also about the fact that our climate is changing. It is getting colder; it is getting hotter. Last February was one of the hottest summers in our history, and people here are fearful that this winter is going to be the coldest winter in our history.

So in light of what this Government said at the beginning of this Budget, that there is no support for people sleeping in cars, this is an event to give the opportunity to Government members to come and park their cars and sleep from 6 p.m. to 6 a.m. on 16 June so that they can experience for themselves the kind of cold environment that the public of New Zealand are going to experience this particular winter. So that is the first point. Gerry Brownlee might want to attend, but I am particularly inviting the Ministers who live in Auckland. Come join us. Bring your car, and experience for yourselves what it is like to sleep in a car during this cold winter.

The second point I want to make—[Interruption] I would not want to sleep with him either. The second point I want to make is that I am pleased that Minister Bennett has taken this step. She has also acknowledged that it is not enough, and we say to her, continue the work and look broader. In addition to what we have got to do here in New Zealand, we have also got to repair our damaged reputation.

I will give some points, which were raised earlier by some of the other speakers. At the Paris meeting, on the very first day, we received a Fossil of the Day award. The Fossil of the Day is awarded by a global international network of climate change activists, which includes some of the scientists who are working with the United Nations to provide the evidence for countries to use to combat climate change. That award was awarded to us because the Prime Minister made the point at that event that his Government was abolishing the subsidies on fossil fuels, but the global international network of activists knows that that is not true and that since his election in 2008 the fossil fuel subsidies have actually increased by 700 percent. So we do need to do more to repair our damaged reputation.

Hon Gerry Brownlee: That’s an outright lie.

Su’a WILLIAM SIO: That is not a lie. That is not a lie. In fact, I quote the report that was made—the Prime Minister was hypocritical in his statement—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The word “lies” is unparliamentary, and we will not use it again, and to say the Government is hypocritical—that is out too.

Su’a WILLIAM SIO: That was the second point. We got a fossil fuel award because of the failure of this Government to abolish fossil fuel subsidies. It has gone up 700 percent since the Prime Minister came into power.

The third point is that a report was released in February of this year by Gareth Morgan, saying that our Government is a climate change cheat. That report revealed that the emissions trading scheme has meant that we have been emitting emissions by purchasing credits from other countries or other companies that are reducing their emissions. This report highlighted the fact that we have been buying credit from countries whose credit schemes are deemed fraudulent. Ukraine is one, and Russia is one that this report revealed. This Government knows that they are fraudulent, but it continues to use these credits to show the international community, as if we are meeting our international obligations.

We got a second fossil fuel award because we are at the bottom of the 20 percent of countries with the lowest emissions targets. We got a second fossil fuel award because we are saying to the international community that we have reduced our emissions of carbon by continuing to emit and to buy credit that is fraudulent. Despite the fact that we know that these credits are fraudulent, we are holding them up to show that we are doing our part, and that is simply not true. The point I am making is that the Minister needs to do more.

The Government needs to repair our reputation and the harm and damage that her colleagues have caused in damaging the clean, green climate image we had once upon a time. The previous Labour Government did a lot of work, and once upon a time we were seen by the international community as a credible voice on climate change. The Pacific Governments tell me this, but now they tell me that this Government has got a reputation that they cannot trust. They cannot trust this Government when it comes to climate change because at that Paris meeting this Government blocked off the call for compensation for the most vulnerable countries affected by climate change. This is the country that led that charge. This is the country that goes out and says to the Pacific community: “We are your friend. We are going to support you.” So on the one hand it says that, and on the other hand it does these other things, like blocking what those countries are saying.

In that report, in the fossil fuel award that the country received, the global climate change activists did use that word that you have asked me not to use, Mr Assistant Speaker: the “h” word. They used that word to describe the action of this Prime Minister, and that is not anything that we can be proud of. Those awards are not awards to be proud of; they are rebukes by the international community. They are awards that should make us hang our heads in shame.

I want to say that I wrote a members’ notice of motion, and I do not know whether that Government took notice of it, but I want to repeat it for the Government’s sake. On Tuesday, I moved “That this House acknowledge and take note that newly released scientific evidence confirms that climate change with sea level rise, erosion and coastal flooding is a significant threat to the safety and security of the people in the Pacific, with evidence published in the Environmental Research Letters revealing that five reef islands, of the Solomon Islands group, that once supported dense tropical vegetation which was at least 300 years old had disappeared, while a further six had severe shoreline recession, further evidence of the urgent need to tackle climate change, and further note that New Zealand should prepare for the emergency of people in the Pacific who are or will be displaced from their homes and land, through no fault of their own, but as a result of climate change.”

The point made is that this Government has used this Budget and has used this legislation to appear as if it is doing something when it is a baby step, as my colleagues have called it. I am glad that the Minister has acknowledged that more needs to be done, but a great deal more needs to be done, with some sense of urgency. I know that she is probably surrounded by people on her side who do not believe that climate change is real, but I am glad that she acknowledges that.

I ask this Government to take on the challenge. Treat it as real. Come out on 16 June to Māngere with your car. Sleep in the car and experience for yourself the cold climates that the people of New Zealand are experiencing right now.

MATT DOOCEY (National—Waimakariri): Wow! How do I follow that? What absolute negativity. What absolute pessimism. It is very clear why that party now has fewer members than the Green Party. What negativity.

On this side of the House, we are a lot more positive. This country has done a lot of great work around the emissions trading scheme. Since 1990 we have decoupled emissions from economic growth by 34 percent. We are phasing back now over the next 3 years. I commend this bill to the House.

Bill read a third time.

Bills

Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill

First Reading

Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a first time. Each day in New Zealand, 12 people die prematurely from smoking-related illnesses—12 people. Each year smoking kills between 4,500 and 5,000 people prematurely; that is the population of a town like Foxton wiped out, off the map, gone prematurely every year. They die from lung cancer, from heart disease, and from strokes. They die from emphysema, from chronic bronchitis, and from cancers of the mouth, pharynx, and oesophagus. This relentless killer takes too many of our loved ones too soon. So the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill is about saving lives. It is as simple as that. Our family, our friends, and our whānau are dying from a habit that we can do something about in this House today. This bill raises the tobacco excise duty by 10 percent each year for 4 consecutive years from 1 January 2017. Raising the excise duty on tobacco is one of the most effective measures that Governments can take to reduce the harm caused by smoking. This bill will save lives and protect our future generations. It will help New Zealand become smoke-free by 2025.

The bill technically amends the Customs and Excise Act and also amends or affects the Children, Young Persons, and Their Families Act, the Education Act 1989, the Income Tax Act, the New Zealand Superannuation and Retirement Income Act, the Social Security Act, and the Veterans’ Support Act. The amendments contained in the bill amend the Customs and Excise Act by continuing increases in excise and excise-equivalent duty on tobacco products. This Government has already raised the tax on tobacco for 6 successive years, and, when passed, this bill will lead to a decade of 10 percent increases in tax.

So what has that meant for price? Well, 6 years ago a packet of 20 cigarettes was around $10. Today it is around $23, and by 2020 it will be around $32. What, you may ask, is the impact of that price increase? For example, what has been the effect on the consumption of cigarettes? We know that in the last 5 years consumption has declined 25 percent. Critically, it has meant our daily smoking rates have declined consistently over time, to where it now stands at 15 percent of adults, or about 550,000 people. For every 1 percent decrease in smoking rates, we see over 35,000 smokers stop smoking. That is good for the lives of those New Zealanders, it is good for their families, and it is good for our communities who live with this burden. I am particularly pleased that the price increases have had a huge effect on the uptake of smoking by children. The smoking rate for the 15- to 19-year-old age group is now under 9 percent, and for year 10 students, that smoking rate is now well under 3 percent. The increases in price have had a dramatic effect on those young people taking up smoking. So the cost to individuals and families is huge.

I spoke to a friend recently who spoke about the death of her father due to lung cancer after a lifetime of smoking. It was a slow death over 3 years, and watching him turn from a rugged South Island farmer to someone who was, basically, having the air sucked out of him by lung cancer was disturbing for this friend of mine. And those are the sorts of social impacts that smoking has, not just on the person who smokes but certainly on family members and the wider community. Over half of all long-term smokers will die of a smoking-related illness, and those who die will lose, on average, at least 12 years of their life. Those who die in middle age will lose, on average, 23 years of their lives. The benefits of quitting smoking are quite clear. For example, if you quit before the age of 40, the risk of dying of a smoke-related disease is reduced by 90 percent—90 percent. The personal cost to every individual smoker, if you smoke a pack per day, is approximately $7,300 in one year.

But the tangible costs of smoking to our country are also huge. The costs include lost workforce production and absenteeism. It costs our country about $2.5 billion just because of smoking alone. This is small in comparison with the intangible costs, which can be up to $11 billion and include lost years of life, loss of quality of life, and the effect on those relationships that I spoke about.

I want to remind New Zealanders that smoking remains the country’s single biggest health issue. It is the biggest cause of premature deaths in this country every year, and we here, as lawmakers in the House of Representatives, can make a difference to the lives of New Zealanders. This bill goes a long way to addressing this chronic health issue. Price increases through tax remains the most effective tool to address the chronic, social, and economic costs of smoking tobacco. I urge all members of this House to do the right thing for New Zealanders today and support this bill.

Dr DAVID CLARK (Labour—Dunedin North): I stand in support of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill, as will my Labour colleagues. But the first thing we want to ask the Associate Minister of Health for, and what we want him to put on record, is a cast-iron guarantee to New Zealanders that this is not just another tax grab. We want to know that the money from this bill—the $425 million over 4 years—will be put into public health. That is what we on this side of the House want to be assured of—that it is not just another convenient way for the National Government to achieve a constructed surplus so that it can hang tax cuts out as a carrot at the next election, that it actually cares about this issue, and that it wants to achieve this smoke-free target.

The Associate Minister has put some words forward around achieving that target. He has talked about the progress made so far, and we do want to support the Associate Minister in that. We want to support the progress that has been made, and we do support this measure to further reduce smoking, which kills so many New Zealanders unnecessarily. But we want a guarantee—a cast-iron guarantee today—that this money will not go into the consolidated account as just another source of revenue. We want to know where this $425 million is going. We want to see it help Kiwis face up to the challenge of smoking. We want to see it support Kiwis in public health and in the areas of smoking, obesity, diabetes, mental health, addictions, and so forth—those things that would make such a difference over time to New Zealand society.

This money must not go into the consolidated account; it must address public health issues, and we seek that assurance from the Associate Minister. We will seek, in his future speeches in the House, a reassurance that that is the case. When it goes into the consolidated account, we know that it disappears on pet projects. There will be some, what Mr Seymour likes to call, “corporate welfare”, where money gets dished out to the Government’s favourite causes. It might be charter schools—one of the prime forces in the area of corporate welfare in this country—where the Government’s mates are handed out some extra money to do a job that would otherwise be done in a public system, where kids would get educated if we funded them properly. But, no, the Government funds them at a higher rate, because that is one of the pet projects of that member across there, because he is in to corporate welfare like no other in this House.

He would probably see the money go into the Skycity deal, an over-the-top deal of money going out hand-over-fist. He does not even approve of this measure, he said in his press release last night, but he will be supporting it in the House. There is a member, you do not quite know where he stands on most things—well, he stands in several places, he tells us. But corporate welfare is one thing he seems determined to support. And this is another measure that it appears he is willing to support in order to get the money out that he wants for his mates. He will have also, no doubt, support for the flag referendum, for the Saudi sheep scandal, and for various other deals the Government has done that it uses money from the consolidated account for; to fund those kinds of things that are not public health measures. But here we have some more money going into the coffers. It will probably go on similar projects—things that middle New Zealand does not like but that are this Government’s pet projects.

So we will seek that assurance from the Associate Minister as this bill goes through the House—that this money really will go towards those causes: addressing smoking, addressing obesity, addressing diabetes, addressing mental health and addictions; those public health issues that would make such a difference to New Zealand’s long-term future. We will seek assurance that it will not be dangled in front of Kiwis later on as a tax-cut bribe from a Government that is more concerned with dishing out money to a very few privileged people at the top and defending the interests of those named in the Panama Papers than the interests of most New Zealanders—most New Zealanders.

So Labour will remain concerned too about the overall health picture. This is one part of it. In the Budget, we heard that the Government has continued to fund Health at below the rate of inflation and cost increases—$50 million short this year. We already know that it was $1.7 billion—$1.7 billion—short in funding over the last 6 years. That means ordinary Kiwis, middle New Zealanders, are missing out on surgeries they need; and middle New Zealand is missing out on the health services that we all ought to enjoy regardless of whether we are super-wealthy or not. This is a Government that is seeking to undermine middle New Zealand, and here we have an example where it is doing a good thing, but we wonder where the money is going—we wonder where the money is going—and we hope that the Associate Minister will be able to assure us that it will actually go into achieving the targets that the Government has set itself.

In primary health care, in this area, $14 million has been funded by the Government over the next 4 years. Here we have an example, right? It is taking over $400 million away; it is putting $14 million back into the area, we have been told. That is well short of the $20 million to $26 million that General Practice New Zealand said was necessary in order to address Government underfunding associated with inflation in this Budget. The Government is simply not allocating adequate resource in this area. The science is very clear that that would make a huge difference to the overall burden of health cost for our country. It would be the kind of investment that would see middle New Zealand benefit, not those very privileged few at the top that this Government seems so intent on supporting these days.

An excise tax is the best means of stopping smoking, and that is why we will be supporting this bill. But we do need a comprehensive plan to get to a smoke-free Aotearoa by 2025, and the experts say that we are not on track to do that, and that should be of concern to every member of this House—every member of this House. Seventeen percent of adults in 2014-15 smoked at least monthly, and 15 percent of adults in New Zealand smoked daily in 2014-15. We are not on track to achieve that smoke-free target by 2025. That is what the experts say. Government members, no doubt, will say something different in their speeches, but that is what the experts say, and we on this side of the House, we like to listen to what the people in their field—the experts—say. We do not think we know better; we actually understand that public health is a genuine issue and needs to be tackled genuinely, not just with kind words.

We want the assurances, as I said at the outset, that this money will be invested in anti-smoking programmes, obesity programmes, and programmes that improve New Zealanders’ overall health. Unfortunately, with that cut across the sector of $1.7 billion, we know that some of these services have been stopped. In my area, mental health funding has been squeezed. We know that all the NGO providers in Dunedin, for example, have been asked to take a 5 percent cut in the last year—regardless of performance, regardless of whether they are doing a good job or not. The NGO providers have all been asked to take a cut. That is what this Government is doing to the health system; it is squeezing it until there is nothing left.

What we also know is that smoking rates among Māori in particular are too high, at 38 percent, and among Pasifika, it is at 25 percent. Those are Ministry of Health statistics. Adults living in the most deprived areas in New Zealand are three times as likely to have a smoking addiction as those in the least deprived areas. This affects people across New Zealand’s spectrum. But, of course, this price hike will not affect those at the very top. They know this; they know that, for them, it can be a luxury good. But middle New Zealand is the group that will continue to suffer, because this Government does not have a real plan to achieve that smoke-free target by 2025.

We are still waiting for other measures from this Government—for example, to ban non-plain packaging—but this Government just does not seem to have the courage to move forward the bill that it has put before the House on plain packaging. It does not seem really ready to do anything about this issue. It is all window dressing; it is a measure, as far as we know, to get $425 million into the coffers to construct a surplus that it can use for its corporate welfare bribes, to try to get members of Parliament who do not even agree with the bill onside and to try to get them to vote for it, because those members know they will get something out at the other end.

David Seymour: He ran out of ideas 5 minutes ago—5 minutes ago. He ran out of time.

Dr DAVID CLARK: Mr Seymour knows this is true. He will get up and speak shortly. I look forward to his tortured denial on this issue, but I also look forward more to the Associate Minister giving us an assurance that this money will genuinely be used for the public health good of New Zealanders. This Government needs to front up to the fact that it is not on track to achieve that goal that it should be achieving, of making New Zealand smoke-free by 2025.

Of course, the cuts that we have seen in this Budget will cost Kiwis’ lives. We know that in the health area. The medical practitioners tell us that. Across the medical sector, we know that this Government has made cuts that will cost lives. Pharmac, for example, got less than the $103 million that was needed. Health needed $635 million in this Budget just to keep up with population and inflation costs. [Interruption] Those members do not like it; they do not like it when the truth is spoken in this House—they do not like it at all. They are uncomfortable with the fact that they have been cutting and squeezing across the public health sector, and they cannot give an assurance that this money will actually go to public health and the public good in the long term. I look forward to hearing some kind of response from the Government on this issue.

Hon GERRY BROWNLEE (Minister supporting Greater Christchurch Regeneration): The previous speaker, David Clark, has either no capacity himself or no research support with a capacity to read a Budget and understand what is in it. Those claims about health cuts are utter rubbish and completely wrong. This year the Budget provided an extra $1.6 billion—$1,600 million extra—for district health boards.

To suggest that this proposal is all about taking extra tax for all the things that the Labour Party does not like is completely disingenuous. The reality is that the member himself agreed that price is one of the best ways to deter people from smoking cigarettes. That is why this Government, unlike any other before, has been prepared to go out and put up the price of tobacco repeatedly, year after year after year. The Māori Party is to be commended for the way in which it has held the Government to that over that period of time. It gets our full support in doing that.

This proposal will see the price of cigarettes rise not to $30, as TV ONE reported last night, but to almost $37 over the next couple of years. That will be a serious, serious deterrent. To suggest that, somehow, the Labour Party is going to vote for this bill only if it gets an iron-clad guarantee that all the tax that comes off that will be used on these various programmes put together by their friends, the lefty experts who think they are so important in all this stuff, is utter rubbish. This Budget has, over 4 years, more than $2 billion additional funding going to health. Public health is a big winner in that. I would also point out that those experts will have no job when we reach the target of total cessation, or near enough, by 2025. So one thing I would say to the Labour Party is: be very careful about the vested interests you listen to.

My final comment is that that particular group of people has one lobby group, Action on Smoking and Health, whose staff I have found, in my time in Parliament, to be the most rude people who have ever come into my office—and they never will again. But it has not changed my view that we should end smoking as a habit in this country. I support this bill.

STUART NASH (Labour—Napier): Before I start, what I would like to say is a big hello to my son, Charlie Nash, who is in hospital at the moment recovering. I will see you this evening, my son.

Mr Brownlee said that this Government is the only Government to increase tobacco tax. Sam, you want bold? You want bold—in 1958 Nordmeyer increased the excise tax on tobacco by 100 percent. Now, that is bold. Mind you, it did not end too well for him, but it was certainly bold.

Let us get to the facts. First and foremost, we are debating a bill under urgency to increase tax on 1 January. It has been the tradition in this House when we are going to increase the excise tax on something like tobacco, to announce it at about 2 p.m. and then get it straight through the House that evening so there is no ability to go out and hoard. Here, we are signalling 3 years in advance what is going to happen to the price of tobacco.

The other thing that was interesting was when Mr Brownlee said how much the price of tobacco is going to increase. What that is predicated on is, in fact, that the tobacco companies are going to pass that price increase on. That is not necessarily the case. In one of the University of Otago’s major studies on this, it said: “If you do it in this way”—if you announce excise tax increases in the way we have—“then what it does allow tobacco companies to do is plan.” What it also says it allows them to do is to absorb some of that cost, because these tobacco companies make a significant amount of money. What the University of Otago said—and let us take an evidence-based approach on this—is that a 10 percent increase will not end up creating a smoke-free New Zealand by 2025. What it recommended was a 20 percent increase—or a sort of ambush 40 percent increase—so people just do not have the ability to plan, to hoard, or to engage in other sorts of behaviours that will negate some of these bills. But do not get me wrong; I support this. I would be a mug not to support this.

But let us get the facts: 550,000 Kiwis smoke, and, as has been alluded to, smoking accounts for 10 percent of all health deaths in this country. This is wrong, and we need to do something about it. I would echo Dr Clark’s comments and also, again, the recommendations from the University of Otago. What it has recommended is, in fact, that these taxes become hypothecated taxes. For those who do not know what that means, what we do is we take the $425 million this will raise and we actually earmark it for research in areas that would affect smoking. So what we do is we say: “OK, of this money—it is going to go into the health budget. Some will go to Quitline, some will go to research that looks at lung cancer, and some will go into research that looks at how to mitigate the risks or the impacts of health-related diseases.” I just think that is the best way to do things, because it is an evidence-based approach; it is saying: “Hey, we understand we have a major issue here. This is a major health issue, so let’s deal with the money we raise from this and put it directly into something that we know will be good for this.”

Let me say one thing: I am 90 percent for this—I am 90 percent for this bill. I am 10 percent concerned, and that is because smoking is addictive. We know this is a fact. It is more addictive, I understand, than heroin. What we absolutely need to do—what we absolutely need to do—is ensure that when we increase the price of tobacco, we put programmes in place that are fully funded and are proactive, so people who want to break their addiction to nicotine actually have the ability and the support to do so. These programmes must be free. They must be free, because breaking the addiction to nicotine is hellishly hard, and so we must ensure we put programmes in place for that.

The other thing, also—like I said, I am 10 percent concerned—90 percent is enough for me to absolutely support it. We are all in this House, we are raging against the negative impacts of tobacco, we are raging against the negative health impacts of tobacco, and yet, we in this House all enjoy alcohol. We will all go home tonight and we will probably have a glass of wine or a beer with our mates over the weekend while watching rugby. We will also drink alcohol. And what we also must take into account is that this weekend there will be a number of deaths, there will be a number of domestic violence incidents, and there will be a number of pub brawls as a result of alcohol. So let us not kid ourselves and say that smoking is the only legal drug that causes harm to our society, because it is not. It is not. Let us recognise, also, the harm caused by that other legal drug in our society: alcohol.

As alluded to, and as all the speakers in the Labour Party will allude to, we will support this bill wholeheartedly, but we must recognise—and I will reiterate this because I cannot do so enough—we must recognise that we must put programmes in place. We must ramp up the programmes that allow people to come off their addiction to nicotine.

I would just like to finish by outlining the four recommendations that were actually put forward by researchers from the University of Otago in its drive to see a smoke-free New Zealand by 2025. I think, when we are looking at polices—certainly this sort of policy—it is very wise to take an evidence-based approach and certainly to listen to the research undertaken by those who are experts in the field.

Its first recommendation was that the increase in excise tax needs to be larger than 10 percent. What it said is it actually has to be 20 percent or more, because it thinks that this would mitigate the cross-subsidisation between brands that tobacco companies engage in.

Its second recommendation was that there should be a one-off surprise increase of around about 40 percent. What this would do, it said, was ambush tobacco companies. It would mean that they could not plan, and it would have the desired effect.

The third recommendation—and I have already alluded to this—was the hypothecation of taxes collected, because it believes this would greatly expand the cessation support currently available.

The fourth one—and this is quite important—is that additional policy measures could limit tobacco companies’ ability to circumvent tax increases. We know tobacco companies make a lot of money on cigarettes. It is a fact. So, by signalling this so far out, what they might do is they might scale back the margin they make, knowing they still will make a significant profit, and not pass on the increases to the consumer—certainly if it gets to the point when they see demand falling faster than supply. So we just need to be aware of this.

The one last point I will make is that I do note that in the bill this piece of legislation removes tobacco price increases from the Consumers Price Index (CPI). I think that is cherry-picking. It is like we have removed the capital increase in house prices. The Government cannot continue to remove a key product from the CPI in an effort to keep inflation down, because I would argue that is artificially impacting on inflation figures. If we put house prices in there, which we know are a major spend, and if we put tobacco in there, which we know is a significant spend, then at least we get a fair and reasonable indication of what inflation is like. We cannot cherry-pick.

Having said that, I do support this legislation, but let us make sure that we put in place the services required for people to break that nicotine addiction. Thank you very much.

MARAMA FOX (Co-Leader—Māori Party): Tēnā koe, e Te Mana Whakawā. Ā, tēnā koutou e Te Whare. I ngā pō rā i te māuiui kaha nei tēnei nā, koinei te take kua whango kaha rawa nei (katia ō koutou waha), ā, hoi anō rā, kai te tū ake au ki te tuku whakaaro e pā ana ki tēnei nā te excise tax.

[Acknowledgments to you, the House. I have been quite ill these past nights and this is the reason why I am really hoarse (shut your mouths), but despite that I rise to express an opinion on this excise tax.]

I am proud to support this bill. We know we need to do things to reduce the number of people in this country who are dying from tobacco-related illnesses. I can point to at least five members of my immediate family who have lost their lives early to smoking-related illnesses. It is not something we ever want to see. We do not want to leave children without parents. We do not want to leave grandchildren without grandparents. Smoking-related illnesses are killing our people in hugely disproportionate numbers compared with non-Māori, so of course we are going to support this.

It is something that we have championed as the Māori Party—to reach the 2025 goal of a smoke-free Aotearoa. But does it go far enough? Many would say it absolutely does not. In fact, I was lambasted last night—is that the word? I am not even sure—on Twitter because this seems like a tax on the poor. Again, the people who are smoking come largely from one socio-economic area of our society, and they seem to be ingrained in poverty, so people are saying that this is a tax, again, on the poor. Well, you know what? If it is going to save lives and keep families together, then I do not have an issue with that, as long as we put in place a number of other things to ensure that we support them.

When I ask the members of my community—and wherever I go on hui Māori and I go outside and ask, why are you guys still smoking?—they say one thing: “It is stress.” If I ask “why are you going back to smoking—you gave up years ago?”, they say the same thing: “It is stress.” If we are not doing anything to support people while they go through giving up cigarette smoking, through the cessation programmes or in a holistic way to address the underlying issues of why they smoke in the first place, then we are not going to achieve our goal. We need to put in a suite of supports so that these people can have a better outlook on life—not just because they give up smoking, but because they alleviate the underlying causes.

What else would we do? This is just one measure. We would like to see plain packaging, and we are waiting for the legislation to come. When is that going to happen? We would like to see smoke-free cars for children. Lots of people say: “Oh my goodness, now you are going to fine mothers and fathers who already don’t have enough money?”. Well, actually, if you are locked in a car with no choice and no way to get out from somebody else’s smoking, then you are sucking in somebody else’s blinking poisonous air that they are emitting into the car. Actually, a child has no choice in that situation, so we would like to see that initiative come into place. We would like to see support for voluntary smoke-free communities—that would be a good thing.

We had a whole lot of people last night on Twitter saying: “Marama, why are you giving in to these statistics rolled out by Pākehā?”. And I was thinking: “Seriously? Does it actually matter who brought the statistics up?”. Well, apparently, in this country it does.

Here is the thing: I have a community group from Wainuiōmata coming to see me, called the Hashtags—young Māori at high school—who are saying: “We do not want this in our future. We would like to support our community to become a smoke-free community. We would like to have smoke-free cars. We want every school in our little community to commit, and all the parents to commit, to being smoke-free. We want to get rid of those shops that are selling single cigarettes illegally. We want to get rid of the sale of tobacco in our entire community.” Those are young Māori rangatahi. How do you turn round to them and say: “No. Please, smoke some more.” That is just ridiculous, and so we need to support them.

Who else comes to us? The Northland community who brought its petition for smoke-free cars for children does. Is that a Pākehā community that dreamt up this “white man’s magic”—these statistics? Of course it is not. That is a ridiculous statement.

David Seymour: To be fair, they invented Twitter.

MARAMA FOX: Well, actually, to be fair, they invented Twitter. But, in Northland, this Māori community got a petition together that involved just about their entire town—5,000 people.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am just going to interrupt the member. She started the debate quite well because she was referring to the bill and what is in it. There is an opportunity for making passing reference to alternatives to the bill, and as much as I like her reference to the rangatahi of my community, the debate cannot be based around the alternatives.

MARAMA FOX: Thank you, Mr Assistant Speaker. I will bring it back to the excise tax. If we cannot talk about all the alternatives we would like to see, here is a start—here is a start. [Interruption] I am pretty sure that there were a few alternatives being voiced over there on the Labour benches, but we will let that go.

We come back to the excise tax because the No. 1 incentive for giving up cigarette smoking, apparently, is the cost at point of sale—and thank you very much to the lovely Mr Seymour for the water. Excise tax is a start. We would have liked to see it higher. In fact, we were lobbied to take it to 40 percent because it is like the frog in the pot—when you put it up $1 a year, $1 a year, $1 a year, everyone is going “I can do one more dollar, one more dollar.” But if you automatically put up 40 percent and have to jump $10, people start to think. By 2030, the cost will go to approximately $30 for a pack of 20 cigarettes. If that is going to be what it takes to make people think again before they put a stick of poison between their lips and potentially lessen their lifetime with their own children, their own family, and their own grandchildren, then we are happy to do it. So, despite all the alternatives we would like, I commend this bill to the House.

KEVIN HAGUE (Green): The Green Party will be supporting this bill, as we have supported the Government’s other measures it has taken towards smoke-free Aotearoa—though they are few in number. I do want to begin this contribution by particularly praising the contribution of the Māori Party, because the Māori Party has consistently now, for a considerable period of time, provided leadership in this area of progress towards smoke-free Aotearoa. That inquiry of the Māori Affairs Committee, which produced a suite of recommendations, including increases in excise taxes such as this one, was a very substantial step forward, and its goal—the goal set out in the report of that inquiry into a smoke-free Aotearoa by 2025—has been an important and galvanising goal for this Parliament and for the community seeking that end. However, we are on track to achieve a smoke-free Aotearoa goal for middle-class Pākehā New Zealanders; we are not on track to achieve that goal for Māori, for Pasifika, for low socio-economic status Pākehā New Zealanders, and for others, and it seems to me that unequal achievement of that goal would be an unacceptable outcome.

What we know about what actually changes health behaviour is that giving people information is not enough. There is the model of “Homo economicus”, where people are rational decision-makers, and so if you just give them the information about the pros and cons of differing possible courses of action, that will be sufficient. They will weigh those up, they will make the rational choice, and their behaviour will change. Very clearly, that is not the case with smoking. Very clearly, it is not the case in many other areas of life. What we know actually works is changing the public policy that creates the environment around those groups. We know that what actually works is empowering the communities who are most affected by an issue. Environment and empowerment—that is the idea of health promotion.

One of the factors that can be used as a tool in changing the environment is the price of a product. This is basic microeconomic theory: if one raises the price of a product, demand for it will fall. It would be great, would it not, if the Government understood this in other areas, and not just in the area of tobacco and alcohol. So a tax on sugar-sweetened beverages, for example, would be something that we could consider—in another debate, because it does not relate to the excise tax on tobacco.

The Green Party supports this bill. We ask, as Marama Fox has just asked, why this tax increase is not larger. As Stuart Nash indicated earlier, there is considerable research to the effect that a larger tax increase—a bigger jolt in the excise tax—would achieve a disproportionately greater effect. If that is the case, and there is no evidence to contest that, why would we not do it? We would support a more ambitious bill.

The issue of hypothecation has also been raised, and I was concerned to hear on the television news last night speculation that the revenue that the Government received from this increase in the excise tax over the next several years would form part of the war chest that it would later use for tax cuts and the lolly-scramble Budget that I am sure we all anticipate for 2017. That is not the way to proceed. The evidence is strong, in fact, that the effect of this excise tax increase will be felt mostly by the poorest New Zealanders. That effect is of two sorts. It is the effect of increasing the price of a product on an already strained budget, and so is an impact, potentially, on the affordability of other products, and we are all concerned about that. But there is also a disproportionate benefit achieved by those New Zealanders. They stand to gain the most. They are also the most price-sensitive consumers of tobacco products. So these excise tax increases will produce disproportionate gain, as well as an impact on affordability of other products.

The way to actually assuage the problem of increased cost impacting on the affordability of other costs like food or housing is, indeed, to ensure that the revenue from this excise tax is recycled into further programmes to assist those New Zealanders to quit—more quit programmes, more health promotion activities. That means social marketing campaigns that might be driven from Māori and Pasifika communities, for example. It means empowerment programmes for those communities that are most affected. That is how we should be using the $425 million. That is how we should be using it, not recycling it into Government coffers. With that comment, I will bring this contribution to a close. I will add some more comments in the second reading, but, indeed, the Green Party will be supporting this bill.

FLETCHER TABUTEAU (NZ First): I do not think that anyone in this House will dispute the evils of smoking and the effect that it has on the lives of people—[Interruption]—and on families around—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

FLETCHER TABUTEAU: It is an insidious problem that affects all of New Zealand society and, in fact, societies around the world. As I said, it is hard on our families, and I have personally been affected by it. That is what makes the contributions from the rest of the House seem so callous and empty and disingenuous. A tax—especially this tax at this rate—will, debatably, prevent people from taking up smoking at a tiny, tiny, tiny rate. [Interruption] The decrease in smoking will be tiny—absolutely tiny—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I ask the member to resume his seat. Can I ask the two members to respect the ruling that was made yesterday. It is OK to interject back and forth on the person who is speaking, but to have a third- and fourth-party conversation across the House is something that is not appropriate. I think there was actually a pretty severe warning made by one of my colleagues about this yesterday. I just want to say to Mr Seymour that he is testing me.

FLETCHER TABUTEAU: I actually just want to comment that I think it was the New Zealand Herald or the Newshub group that went out to New Zealanders last night and this morning and asked: “What do you think of this new tax?”. And actually more than two-thirds of New Zealanders said that it was a cynical tax grab by this Government that will have no effect on the rates of smoking by New Zealanders. I would like to spend the next few minutes of this contribution outlining why I completely agree with the majority of New Zealanders in this case.

I want to empathise with the member from the Māori Party, and I acknowledge the contribution from the Minister. In fact, the Māori Party member could not speak much to this bill because I think, in her heart of hearts, she knew that it would not achieve what she hoped it would. So she actually spent the majority of her contribution saying what else we could do and what else we should be doing. And so I have huge empathy with her, because I agree.

But this excise tax on smokers will not work. The Minister talked about the 12 people lost to us each day, and I agree that that is terribly wrong. But “What is this Government doing about it?” is the actual question. It is not spending a dollar more on cessation programmes. There is not a dollar more specifically assigned in this Budget to help people to stop. No, the solution from this Government is a tax, and not only that, it has been acknowledged by everybody who has spoken before, a tax that will affect mainly the poorest New Zealanders in our society.

The only Budget strategy that this Government has is to tax the poor. It makes the Minister’s words and supposed passion and concern empty and farcical, in my opinion. He puts the decrease in smoking rates down to price increases over the last few years. I call that stance misleading. I suggest that many would say it was naive. There were huge mass media campaigns, cessation programmes, and fully funded Quitline programmes, for example. Not only are the Minister’s price increases not the most effective tool but also I put it to this House that, actually, the efficacy of these excise taxes have passed their use-by date and will achieve nothing. So I put it to the Government: you have increased taxes, and that is all you will achieve—an increase in taxes. Those who are addicted to smoking will continue to smoke and will continue to feed their addiction, at the cost of the essentials of life.

Let us face reality: it is still a legal product. The Government is not willing to go that far, and yet it is being more nanny State than Labour could ever dream of being. Food kills people. Sugar kills people. Obesity is the biggest killer in modern society. Let us take the logic that this Government is using in the House today and apply it to those items. That is not unreasonable. It makes perfect, logical sense, given the negative externalities of consumption of any and all of those goods, to say: “Let’s disincentivise it, let’s internalise the cost of it, and put a tax on its consumption.” [Interruption] Sorry, “Let’s tax it, and it will stop people consuming it.” For example, obesity—let us put a tax on it. Given basic theory, obesity rates will decrease and we will have less obesity and fewer costs in our hospitals. That is the logic that this Government is using.

We know that this measure will affect 15 percent of the New Zealand population but, unfortunately, the rate increase will affect 35 percent of the Māori population and 22 percent of the Pacific population, and approximately 550,000 New Zealanders in total. So although I think the Māori Party’s intentions are good, I think this excise tax is misguided and will achieve the exact opposite that it hopes for, because, disproportionately, poor people will pay.

Here are some statistics: because of the difference in smoking prevalence, people from the bottom third in household incomes spend nearly 20 times more on cigarettes as a proportion of their income than those from the top third. As many commentators noted yesterday, this was one of the more contentious parts of the Budget contribution. They came out and blatantly said that this will take food from the tables of children, because those who are addicted will not stop because of a tax hike; they will simply compromise what little money they have and what they can do for their families. We say that this legislation will make it harder for the poorest, for Māori, for Pasifika, and for New Zealand children, and that is unacceptable.

Let us just rephrase what the Government has been saying. It is saying that a cigarette tax will get people to stop smoking and will increase public revenue. Minister Lotu-Iiga said that a tobacco tax is the most powerful tool to bring down the rates of smoking. I would actually, I suggest, agree with him mainly, but not now. In the past we saw the statistics, and we saw that, yes, price did have the impact that we hoped it would have. But what we are seeing now from economists around the world is that recent price hikes are not actually having the impact that we assume they will have on the consumption of cigarettes. They suggest that the majority of people who would give up smoking because of price have actually already done so. But still the Government persists in using ill-considered increases in the level of taxes, generating even more revenue from the poor.

So let us also put this into perspective, because it will be revenue from the poor: of those who earn over $100,000, it is suggested that only one in 10 are smokers, and of those who earn under $35,000, though, the number rises incredibly to one in three. Continuing to raise taxes on poor smokers who are unwilling or unable to quit will be ineffective and unjust. This nanny State must be reminded that tobacco is still a legal product. This tax will have no effect. The desired effect that the Government is seeking to implement will not come about because of this tax rate. Thank you.

SIMON O’CONNOR (National—Tāmaki): I am very pleased in this matter of urgency to discuss the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. This is an excellent bill. In fact, I think, listening to all the contributions that have been occurring in the House, that that is, ultimately, the theme. There are a whole lot of distractions, conspiracies, and otherwise to try to take away from that, but this is actually an incredibly good bill. I want to acknowledge Minister Sam Lotu-Iiga along with Marama Fox from the Māori Party for their work on this bill, but particularly Sam, who has shown, I think, very strong leadership in this space as we, as a New Zealand Parliament and the New Zealand public, move towards New Zealand being smoke-free by 2025.

I have been disappointed by, effectively, the bluster and conspiracy from the other side, particularly in two areas, which I want to debunk. The first is this whole element of “Well, smoking is legal, therefore it is right.”—that is a very false point of thinking.

Stuart Nash: No one said that at all.

SIMON O’CONNOR: No, actually, we just heard that from the last speaker, Fletcher Tabuteau, who was saying: “Look, this is legal; it is nanny Statism.” We have actually heard it, and we are going to hear it, I suspect, from our more libertarian friend afterwards. Just because something is legal does not make it right, and, therefore, I think it is quite appropriate for the Government to actually—

Iain Lees-Galloway: Tax dodging.

SIMON O’CONNOR: Tax dodging? Once again we see the absolute lack of thinking and rigour from the other side. There is never an idea that they have been able to comprehend that they could not sort of try to comprehend.

David Seymour: The Labour Party is legal, but it’s not right.

SIMON O’CONNOR: So look—that is right. Absolutely. Actually, the best example has just been given: the Labour Party is legal, but it does not make it right. That is actually the second element that comes up.

Tim Macindoe: Nor was the pledge card.

SIMON O’CONNOR: That is right. So, first and foremost, just because something is legal, it does not make it right. Coming out of that then was the suggestion that this is a tax that, therefore, the poor will pay. First, I do not think there is much, or direct, evidence of that. Second, the whole point of this excise tax is to encourage people to not smoke, OK? So if people stop smoking through measures such as this, they cannot, ipso facto, be paying the tax—sorry, I was just throwing a bit of Latin in there.

The next element, of course—and we have been hearing it from, I think, Stuart Nash in particular—is about all these other harms in society. He was talking about sugar, and, in fact, we have heard about it from others. I should not pick on just Stuart Nash, but he was saying that alcohol is harmful. He did not actually quite get to coffee being harmful, but we heard that sugar is harmful. I think members who go down that line—particularly in this context of us putting an excise tax on tobacco—forget that tobacco is, by its very nature, harmful, OK? Sugar is not harmful by its nature. Coffee is not harmful by its nature. Alcohol, in fact, by its nature, is not harmful, there can be harm associated with it; but we are talking about something fundamentally different here when it comes to tobacco. [Interruption] I hear chortling from members on the other side, but then again they do not understand science. It is actually very interesting.

So this is, actually, in context an incredibly good bill: to put a tax on, a compounding tax, starting from January this year to encourage people to not smoke. I think what is going to be quite interesting, and I am conscious that we go through all parts today, is that we will be able to raise some other elements, particularly what the Government is doing in the health space. I think I will address that in other readings, around how this tax will be actually targeted to health, and I will also be able to raise more points around what the Government is doing, quite rightly, beyond the excise tax to support the cessation of smoking. So I commend this bill in its first reading.

DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in support of this bill although, I have to say, somewhat regrettably. If there was a bit more talent on the other side of the House, I would probably cross the floor and join them, but, sadly, that is not the case right now.

I am voting for this bill because it is a Budget measure. But let us be very clear that it is another public policy abomination. If you want to analyse a policy, here are three questions that you might ask: what is the intent of the policy—what is it supposed to do; will it be effective and what evidence do we have that it might be effective; and what might be the unintended consequences of the policy?

Well, the intention of the policy is to stop other people smoking. It is not a case of alleviating the harm done by one citizen to another, because smoking, by and large, harms only the person affected—the person who does it. This policy is about trying to stop other people doing something that they would like to do, because we do not like it.

The objective is to reduce the number of people smoking. We might ask ourselves whether it will be effective. Well, if we pick up the regulatory impact statement, the evidence is, supposedly, that every 10 percent increase in the price of cigarettes will lead to a 2.5 percent decrease in the number of people who smoke. One might just ask oneself how effective this policy has been for the last 5 years, because we have actually raised the tax on tobacco by 10 percent in every one of the last 5 years. So did we get a 2.5 percent reduction in smoking for every one of the last 5 years? No, we did not. Five years ago the rate was 16.3 percent; it is now 15 percent. If we had had a 2.5 percent reduction in smoking for every 10 percent increase, it would now be around about 14 percent. So it has not worked, even by the standards that the regulatory impact statement sets out.

So it will not be effective in achieving its goal, but what about the third question? What about the side effects? The biggest side effect is that we now take an additional half a billion dollars a year in excise tax, and I can understand why the Minister of Finance does not mind this policy so much. We take it, overwhelmingly, from the poorest people in New Zealand. You are 3.38 times more likely to be from the poorest decile than the highest decile of income amongst New Zealanders if you are a smoker. We are taking half a billion dollars, or 2,600 bucks from the average smoker who smokes 10.6 cigarettes a day. That is one of the unintended consequences of the tax to date.

When we pass this bill, when it becomes law, the tax will go up another $1,200. That is $3,800 out of some of the poorest households in New Zealand, to achieve a piddling reduction in smoking rates that is lower than the regulatory impact statement accompanying the bill predicted. What a disaster.

What about some of the other unintended consequences? A brick of 10 packets of cigarettes will now be worth over $300 at the end of this policy, and how much—how much—more worthwhile is it going to be for people to steal, perhaps in an aggravated fashion, a brick of cigarettes worth $300? Go and tell the petrol station owners; go and tell the dairy owners that every one of those bricks is worth $300. There are going to be people getting hurt, because, inevitably, when you drive something underground, you create a black market. If you doubt that, go and ask the people in central Canada; go and ask the people in Australia. That is what you do when you have an excessive excise tax; you create a black market.

In summary, this is a public policy with no justification and with a shonky regulatory impact statement. It is a policy that has not achieved what it is supposed to achieve, demonstrably over the last 5 years. This is a policy that will have unintended consequences, such as impoverishing the people in New Zealand, who need help the most, by an additional $1,200 a year by 2020.

The Associate Minister of Health sits there. He knows it is a joke. He cannot justify his policy, but he has had to do it for a coalition deal, which is much the same reason why I am voting for it, and the only one, I can assure you.

BARBARA KURIGER (National—Taranaki - King Country): It is a pleasure to take a short call on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. What I really want to say today is that the previous speaker, David Seymour, said, in talking about the intent of this bill, that we are doing this because people are doing something we do not like. It is actually not about not liking it; it is a matter of doing it because smoking kills people. It is a life and death situation. It has actually been a long-time proven that it kills people.

This excise tax is a powerful tool, as we have seen in the past. I know that as we get harder and harder into the people who have been smoking for a long time, it gets a bit harder to make an impact, but this is one of the tools—and one of the effective tools—that we can use to make a difference. It is only one tool, and this is why we have had a question today about where the money will be spent, and whether it is a tax take. Actually, this has been debated by the Health Committee, because this is about the health of people. This excise tax is only one in a number of tools. We have adopted the Better Help for Smokers to Quit programme. Actually, 95 percent of people who now visit a hospital have a conversation with their doctor or with their health professional about smoking. Over 470,000 people of about 550,000 people who smoke have received at least some minimum advice from their health professional. So this is all part of the programme.

The other thing that this Government has done is it has increased the fines from $2,000 maximum to $5,000 maximum for those people who are selling cigarettes to minors. That was an extremely good move as well, because the last thing we want is for people to start this habit young. We all know it is addictive, and if they start young, the potential for them to smoke for a very long time is huge, so the sooner we can cut that out, the better. As the Associate Minister of Health, the Hon Peseta Sam Lotu-Iiga, said before—and I want to give credit to the Minister and also to the Māori Party for bringing this piece of legislation forward—12 people a day are dying a premature death from smoking. This really is a health issue, and if this is one tool in our tool box that we can use to help smoking cessation, then we should be looking at doing that.

The other thing that this National Government has done is ban smoking in prisons. There are a whole lot of moves as part of this tool box that we are actually doing. Over half of all long-term smokers will die of a smoking-related illness. It kills people. But quitting smoking by the age of 40 actually reduces the risk of dying from smoking-related diseases by about 90 percent, so it is my pleasure today to support this piece of legislation and commend it to the House. Thank you.

LOUISA WALL (Labour—Manurewa): Talofa lava. It is my pleasure to speak on this, the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill.

I actually want to start with a quote. It is from a submission from the Cancer Society Social and Behavioural Research Unit at the University of Otago to the Finance and Expenditure Committee on the Budget Policy Statement 2016. I read: “Evidence for the effectiveness of tobacco excise tax and price policies is overwhelming; increased costs of tobacco to consumers are strongly associated with declining smoking prevalence and reduced tobacco consumption. Young people tend to be more price sensitive compared with adults,”. It goes on to say: “Lower socioeconomic groups and Māori have disproportionately higher smoking rates in NZ, and have shown less rapid declines in smoking prevalence than other population groups. There is strong evidence that low-income groups within high-income countries show greater price sensitivity. Recent evidence suggests that smokers from Māori and Pacific Island communities are more responsive to tax increases than smokers of other ethnicities. This suggests that further tobacco excise tax increases could continue to reduce health inequalities in NZ.” The reason I read that out is that actually that is why this legislation is being proposed today.

I would also like to highlight the relevance to young people, and particularly to young Māori and young Māori women. I have the Māori Smoking and Tobacco Use 2011 summary from the Ministry of Health, and in the 15- to 19-year-old age group, there is a 14.4 percent rate of smoking for non-Māori males; for Māori males it is 29.2 percent. For non-Māori females, the rate is 13.1 percent; for Māori females it is 47.1 percent. In the 20- to 24-year-old age group, the rate for non-Māori males is 24.7 percent; for Māori males it is 57.3 percent. For non-Māori females it is 24.5 percent, but for Māori females the smoking rate is 60.8 percent. So the relevance of this particular legislation to our Māori communities is incredible.

I also want to highlight that Māori women—this is from the report that the Māori Affairs Committee prepared, Inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use for Māori—“suffer significantly from smoking, as is evidenced by their having one of the highest mortality rates for lung cancer in the world, and distressingly high levels of other diseases associated with smoking such as diabetes complications, cardiovascular disease, breast cancer, and cervical cancer. We are even more concerned about this demographic because of the significant impact of smoking on unborn and young children. While it is not the only cause, we were told that up to 46 percent of Sudden Unexplained Death in Infancy is attributable to smoking,”. In New Zealand 40 babies die every year. So 46 percent of those babies are Māori babies. For our communities out there who question why this piece of legislation is going through the House, that is why—the statistics, the evidence, speaks for itself.

I would like to highlight, however, that there are other implications for Māori of the proposed legislation. It was really interesting to read the Minister’s press release because what he does articulate is that 15 percent of New Zealanders smoke. That is 550,000 people. But for Māori and Pacific people, those rates are a lot higher: 35 percent of Māori smoke and 22.4 percent of Pacific people smoke. If you break that down even more, of the 550,000 people who smoke, that is 155,000 Māori who smoke and 55,000 Pacific people who smoke. I think the relevance to our communities, for me, is also in the amount of tax that will be collected through this proposed legislation. We are anticipating that $425 million will result from this increased tax over this 4-year period. So my proposition to the Minister and to the House is that if that is the case, $119 million of that tax intake should be used explicitly on Māori programmes, and $42.5 million should be used on Pacific programmes.

I think it is relevant, again, to bring up the Māori Affairs Committee report, because recommendation No. 26 of that report was really clear, and I will read it: “that the Wai 844 claim lodged with the Waitangi Tribunal, which asks for ‘funding for Māori health initiatives to eliminate or reduce smoking among Māori’ be progressed as soon as practicable.” I have actually written to the Waitangi Tribunal and asked it for the status of that Wai claim, because in the Government’s response, this Wai claim has not been referred to the Government, and it cannot be referred to the Government until the Waitangi Tribunal actually goes through the process of hearing submissions. But it is my contention that if Māori are so detrimentally affected, that if we are really clear about our rates of smoking and the anticipated amount of money coming out of our communities—we know that it is going to be $425 million—then I restate again: $119 million of that tax revenue should be used to fulfil the recommendation by the Māori Affairs Committee.

I would also like to highlight another issue from that inquiry by the Māori Affairs Committee, and it is about plain packaging. The relevance of plain packaging speaks to our commitment to reducing the smoking rates of young people, because I have looked at the evidence for plain packaging, and it was actually overwhelming. Cancer Council Australia provided the most succinct evidence, because, as we all know, Australia remains the only country in the world that has plain packaging legislation and that has implemented that legislation. This is why it did that: because plain packaging provides an important role in discouraging young people from trying cigarettes in the first place.

What a lot of people do not know is that 66 percent of young people in New Zealand try tobacco—and I put my hand up; I have smoked once in my life, and it was through peer pressure—66 percent of young New Zealanders try tobacco. So anything that will reduce the numbers even attempting tobacco use needs to be promoted, because what we do know is that 50 percent of those young people who try tobacco or smoke will smoke for 40 years. They become addicted to it almost immediately. In our Māori communities, I think that more like 100 percent of us try, which is why, for Māori women, our rates of smoking are over 50 percent. We are the perfect statistical example of that phenomenon.

The other reason plain packaging needs to be brought in is that throughout the evidence young people said themselves that plain packaging creates negative perceptions and feelings about smoking. They actually want to hide those packets and they smoke less around others, and it increases their ability to think about quitting; that was in 50 percent of the participants. For Māori, that would be incredibly relevant, because if 100 percent of us try and 50 percent of us then smoke, but if plain packaging can then reduce our consumption by another 25 percent, then I think that it is worth the Government looking at plain packaging as another part of this progressive piece of legislation that actually does want to meet the 2025 target, which is to ensure that, right across the board, our different groups of New Zealanders—Pākehā, Māori, Pacific, Asian—less than 5 percent of our population smokes. I think that is the challenge as we move into the future, but this is a fantastic start.

I commend the Minister, I commend Action on Smoking and Health, and I commend all those groups out there that are advocating for us to address this issue, because it cannot be tolerated any more. Five thousand of us dying is unacceptable, and it is preventable. Thank you.

Dr SHANE RETI (National—Whangarei): It is a pleasure to take the last call on this bill, and I want to lead with the statement that tobacco tax increases are the most effective way to reduce tobacco consumption.

I think, if we briefly look back through history as to how we have come to this excise tax discussion today, we can see that the tobacco control programmes initiated by Government first started in 1984. The 1986 Budget was the first to raise taxes, and between 1990 and 1998 the tobacco tax was adjusted for inflation. In 2003 New Zealand signed the Framework Convention on Tobacco Control (FCTC) and the World Health Organization (WHO) convention, which was ratified in 2004 by New Zealand and came into force in 2005. In April 2010 the Excise and Excise-Equivalent Duties Table (Tobacco Products) Amendment Act enacted a 10 percent increase in tobacco tax annually—2010, 2011, 2012—very much like what we are doing here.

In November 2010 the Māori Affairs Committee reported back to the House on the inquiry into the tobacco industry in Aotearoa and the consequences of tobacco use by Māori. This was a very important piece of work. It was chaired by Tau Henare, and current members in the House who were there at that time include Simon Bridges, Kelvin Davis, Metiria Turei, and Iain Lees-Galloway.

The select committee heard 96 oral submissions, and their recommendations unanimously included, firstly, a smoke-free New Zealand by 2025 and, secondly, tax increases: “We commend the Government on the enactment of the excise and excise Act, which has increased the tax on all tobacco products by 10 percent. We recommend that the Government legislate for further incremental tax increases over and above the rate of inflation.”

In 2011 the Government then adopted the 2025 smoke-free recommendation, and in 2012 we got back to saying: “Well, what does the increase look like from here?”. I think the regulatory impact statement for the 2012 increase is really telling because it outlines the rationale for a tobacco tax, and it is underpinned by three arguments. The first is social policy objectives, the second is revenue generation, and the third is correcting negative financial externalities—that is, the cost of smoking to Government and society should be borne by those who cause the harm, especially health care costs. But I just want to reflect for a moment: we are all focusing on health care costs; let us not forget the costs of fire, and let us not forget loss of productivity—labour productivity—due to smoking, as well.

I think it has been commented on that this is a revenue-generating mechanism—yes, it is. That is one of the consequences. I turn our attention to the guiding principles of article 6 of the WHO FCTC, which clearly says: “Effective tobacco taxes are an important source of revenue.” The framework that we have ratified, and that we are a part of, clearly says yes—that that is part of an excise tax. The three objectives for raising tobacco taxes, which were included in the 2012 regulatory impact statement, still hold today: social policy objectives, correcting negative financial externalities, and revenue generation. With that, I commend this bill to the House.

A party vote was called for on the question, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a first time.

Ayes 109

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

Noes 12

New Zealand First 12.

Bill read a first time.

Second Reading

Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a second time. In the first reading I spoke about why this legislation is good for all New Zealanders. I talked about the costs of smoking and I presented some evidence to suggest why this is important to New Zealanders—why it is important to the health of New Zealanders—and why a tax is part of an overall package to bring down the costs of smoking, to save lives, and, overall, to improve the well-being of New Zealanders.

Some points have been mentioned from across the Chamber around applying these tax revenues to the public health spend. It is true that there will be $425 million raised over the next 4 years, but, as Minister Coleman said in his comments yesterday after the Budget speech, that will go towards more hip and knee replacements. That will go towards disability support services for those in need. It will also go towards the bowel cancer screening programmes that will be delivered in the next 4 years. Those are the types of health programmes that are good for New Zealanders, and I do not think New Zealanders out there would argue that this money would not be well spent on health services delivered to New Zealanders over the next 4 years.

Members opposite said that it was just a revenue grab, but, you know, increasing tobacco excise—we know, and it is internationally recognised, that it reduces harm and that it reduces the cost to society. Members opposite also referred to the impact on lower socio-economic groups, but only one member opposite actually understood and looked at the evidence. I thank Ms Wall for actually doing the research and understanding the impacts of this legislation, and I want to quote from the experts whom Mr Clark mentioned. In the study by Wilson, Thomson, Tobias, and Blakely, they raised two conclusions. The first is that “The estimated harm to life expectancy from tobacco taxation … is orders of magnitude smaller than the harm from smoking.”, and, secondly—and this is important for us as lawmakers in this debating chamber—“Policy makers should be reassured that tobacco taxation is likely to be achieving far more benefit than harm in the general population and in socioeconomically deprived populations.” That is the evidence that has been presented. Ms Wall understands that. I suggest she talk to her colleagues just to bring them up to speed with some of the latest evidence.

What was also mentioned—and the Māori Party referred to it—was that this measure, in and of itself, is beneficial to the health of New Zealanders, but, in and of itself, it requires support. So there is a comprehensive tobacco control programme in this country. It is world-renowned and it is delivered with serious health outcomes in mind. The effectiveness of these programmes has been measured and they do, through the various smoking cessation tools and programmes, face-to-face smoking cessation interventions, as well as Quitline and the stop-smoking medicines—there are a number of these programmes out in the community that are being used to reduce the incidence of smoking.

Some programmes are more effective than others and, I reiterate, our Government is committed to ensuring that the programmes that are working well should be funded and those that do not work so well should be cut. It is as simple as that. We want more effective programmes because we know that if you invest a dollar of taxpayers’ money, you want to see a return on that investment where it costs—Treasury estimates that the valuation of stopping a person smoking is about $38,000. The valuation of preventing someone from smoking is approximately $13,000.

Other members in this House have also referred to a black market supposedly being ramped up. Well, there is no evidence—no evidence whatsoever—of this market being in place. The officials have looked at the size of the illicit tobacco market in New Zealand. It is estimated to be about 2.8 percent, which is far lower than it is for some of our trading partners overseas. It is far lower than those whose health systems we compare ourselves with. So there is no evidence of that. But the authorities—the Customs Service and the police, as well as health officials—are keeping a watching brief on this particular area.

So I want to just summarise by saying that smoking is responsible for close to 10 percent of health loss from all causes, and it includes 4,500 to 5,000 premature deaths a year. That is why we are passing this bill. It is a useful bill. It is something that I think most parties around this Chamber are supporting. It is helping us on our way to our smoke-free goal by 2025, and again, in this second reading, I urge members opposite, members around this Chamber, to support this piece of legislation.

Dr DAVID CLARK (Labour—Dunedin North): I want to take a few minutes at the start to respond to a couple of the speeches that have happened so far in this debate. Mr Lotu-Iiga, right now, has failed to give the assurance we sought that the money from this bill would be put back into public health.

Hon Peseta Sam Lotu-Iiga: More surgeries.

Dr DAVID CLARK: He has talked about meeting inflation pressures. He just said “More surgeries.”, as though that was public health—as though that was addressing those drivers of cost in the sector, which we all know about, that have such significant consequences. The member clearly does not really understand the issue, and that is frightening because this is the Minister responsible for introducing this bill. He does not seem to know what he is doing on this topic. He was not able to give the assurance, but he thinks he has, which is the frightening, frightening thing when we are in this House and he is the Minister responsible for this legislation.

We have heard from Mr Brownlee various conspiracy theories, including that the scientists and academics who speak out on this topic have a vested interest and that the scientists and academics who speak out on it somehow will not have a job because the Government has been so successful in this regard and, therefore, they are against the Government because of the Government’s success. I suspect he has probably got another theory about the man on the moon and a few other things, but, frankly, this claim just does not stack up. I do not think anyone in this House believes there is a great conspiracy amongst the lethal left-wing academics out there to try to criticise the Government because it is so successful. The claim is ludicrous. It was an entertaining speech from Mr Brownlee, but that is not really why we are here.

We are here to actually put through a measure that will make a real difference, and we will be supporting this measure because putting an excise tax in place does make a real difference—we know that—in terms of smoking cessation. But we also know that what the academics say is right, which is that the 2025 target is a pipedream without other measures. If that money is not put into smoking cessation programmes and if it is not put into Quitline and so on, the devices that help people quit, the 2025 target will simply not be achieved.

Another interesting thing that I have learnt in my research recently is that the behaviour of tobacco companies, when they are given a lead-in time like they are being given in this legislation, is to push the cost on to premium products rather than gateway products. I seek an assurance from the Minister that he will be looking to ensure that this tax is covering all tobacco products in an even way across the market. I look across the House and hope that the Minister is able to give that assurance in his next address. Otherwise, what we are doing is simply putting a whole lot of excise tax on to the luxury cigars that are bought by people for whom money is no object, and not on to the gateway products—those cheap cigarettes that first-time smokers use. So I would like an assurance from the Minister. He may be able to give this assurance that it will be applied evenly across all products.

Why we need such a lead-in time is not clear to me. If it is so that tobacco companies can reorganise their affairs so that they will be minimally affected by this, I will be disgusted, and I think every other member in this House would also be disgusted to learn that. I want the Minister to consider this again—perhaps have a look at what public health actually is and see whether he can give an assurance that this money will actually go into those things that would help us to achieve the 2025 target for quitting.

I did not hear Mr Seymour’s contribution. I was called away on urgent public business and was very disappointed to miss his response, because I was looking forward to the tortured explanation that he was going to give about why he does not support this measure at all but is going to vote for it in the debate, in support of the Government. I think, from colleagues who were in the House who have briefed me, the basic logic was that it was a failed measure that will not work but he will support it because it is a Budget measure. That equates to he will support it because it means he will get a quid pro quo. He will get some corporate welfare out of it. He will get to put in another charter school that is funded at five times the rate of our public schools. I think that is why that member is supporting the bill in this House. He speaks about nothing but corporate welfare, that man—the man from ACT. He has this stance that the Government should spend less money, but when it comes to his mates, the Government should spend more money. It is unfathomable that he can stand up and say that, and do it without breaking down into some kind of—I do not know—self-immolation or something. It is unfathomable that something strange does not happen in that kind of circumstance. It is a very, very tortured logic, but something, though, he seems to be perfecting.

But I will look forward. No doubt he will speak further in the debate and we will hear more about the tortured logic as to why he should support the bill, even though he opposes the whole idea—that is what we have got here in this House. Actually, this Government has very few principles. We can see that in what it is doing. It is treating this as a revenue grab. It is a good measure, and we will support it for that reason, but the Government is not putting the money back into the public health-care that this country needs. The Minister is not prepared to give a cast-iron guarantee that this money will not go into flag projects—let us have another flag referendum!

The Government is not able to give a cast-iron guarantee that it will not do another deal like the Skycity deal, which again was another form of corporate welfare, where it handed out money, hand over fist, because it did a bad deal behind closed doors, which the Auditor-General criticised. The Government cannot give a cast-iron guarantee it is not going to do another Saudi sheep deal, where it is giving money to Saudi businessmen and providing documentation and advice out of New Zealand Government agencies that will not even be released to the New Zealand public.

The Government will be bailing out someone else—MediaWorks; who knows what—next. That the Government does, and it will not give a guarantee that this money will not go to those kinds of deals. That is what the Government does, sadly. We want to see, of course, that money go into public health. We are concerned, of course, across the Budget, as we have seen this health care underfunding issue continue. There is $1.7 billion in underfunding, using Treasury’s figures and analysis from Infometrics—independent analysis that shows that with rising inflation and cost pressures you need to put more money into health each year.

The Government has underfunded over the last 6 years by $1.7 billion. It is no wonder that New Zealanders are missing out on the services that they require. We have seen in the latest round that there are 15 district health boards (DHBs) that will not receive enough money to meet the funding pressures. The real losers in this round are Canterbury District Health Board, which will be $33 million underfunded, Waitematā District Health Board at $27 million underfunded, and Counties Manukau District Health Board at $18 million underfunded. But there are 15 DHBs that, again, are not funded for cost pressures in the Budget. Of course, it is a bit more than the Government has put in, in previous Budgets.

The Government wants the DHBs to get closer to their targets this year, because election year is coming. There are no surprises there. The Government is putting a bit of lipstick on for election year. It wants the DHBs to have smaller deficits. It wants one or two even to reach surplus. The Government is dressing it up for election year. This is the year that the Government has decided to put a little bit more into health, but it will not be enough to meet all those cuts that have already been made—we know that; we know that.

Mr DEPUTY SPEAKER: Back to this.

Dr DAVID CLARK: Back to the issue at hand, in terms of whether this measure is bringing in money for the general pot, to be spent on flag referendums, and so on, or Skycity deals, or whether it is being spent on public health, as it should be. Unfortunately the Minister has been able to give us absolutely no assurances whatsoever in that regard.

When tobacco companies get that lead-in time, as I mentioned earlier, they adjust the range of their products on the market. I do look forward to the Minister’s assurance that the excise tax will be spread across all products, not just across different providers in the market, but across individual products. Therefore, providers cannot rearrange their ranges to maximise their profits—keep the gateway products cheaper, so that they can apply the tax to the luxury products at the top of their market. We know that is their behaviour.

The Government has two former tobacco lobbyists, and they will certainly know the answers if the Minister does not have that answer at the top of his head. I wonder why the Government has not taken stronger measures on smoking cessation. Perhaps the answer does lie in the fact that the Government has two former tobacco lobbyists amongst its numbers. They will certainly be defending the interests of the industry, as they understand it. This Government has failed to deliver on health for New Zealanders. Middle New Zealand is missing out. The Government seems much more interested in the interests of a very wealthy few at the top. When it comes to this measure, it seems to be money coming in—

Mr DEPUTY SPEAKER: Get back to the bill.

Dr DAVID CLARK: As I said, it is money coming in so that the Government can dangle tax cuts next year, money coming in that it cannot assure us is going to be spent on public health measures. We will support the bill because it is one of the most effective things that can be done to help smoking cessation. But the Government is not on track to meet its 2025 target. That is what the specialists say. The Government needs to put more in play if it is really serious about achieving that goal.

KEVIN HAGUE (Green): I want to pick up on one of the points made by David Clark in his recent contribution. It certainly is a pleasure to see Chris Bishop and Todd Barclay voting for the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. I want to recall Budgets of years gone by. I remember sitting next to the radio, listening to finance Ministers from the past reading out the Budget. Very often there was a measure to increase an excise tax on tobacco or alcohol that would typically take effect pretty much immediately. The House would move immediately to debate a bill that would take immediate effect. For bills of that nature of course there was a reason for urgency.

I am wondering what the reason is for taking urgency for this bill. This bill actually does not take effect until the beginning of next year. It seems to me that there would have been an opportunity to hear submissions from the public, and submissions from the experts who could tell us whether or not this was an adequate measure. They could perhaps assess this measure against the progress that New Zealand is making towards the goal of smoke-free Aotearoa by 2025 that the Government says it has. I was reminded—this is the second reading—that in 2012, when the Government introduced its last round of excise tax increases on tobacco products, in fact we did have a select committee process. The Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill did go to a select committee and we heard some fascinating submissions.

I want to refer to some of those submissions because they relate directly to the issues that are the topic of this bill also. In the debate that we have had so far today we have heard one or two speakers, in particular David Seymour from the ACT Party in his extraordinary contribution, suggesting that there was no evidence of effectiveness. Well, experts at that select committee brought forward incontrovertible evidence of the effectiveness of these kinds of measures.

Just as one example—there was the evidence of increased calls to Quitline that were associated with successive excise tax increases on tobacco. We know that calls to Quitline are associated with quit attempts, and the more quit attempts people make the more likely it is that they will stop smoking. It is very clear indeed that these excise tax increases will increase quit attempts and that will result in more people stopping smoking and, additionally, we know that excise tax increases that put up the price are a very effective way of stopping people from starting to smoke. Younger people will tend not to become smokers because of the higher price.

One of the other pieces of evidence that submitters to the Finance and Expenditure Committee raised in relation to that bill, which, as this one does, proposed successive 10 percent increases, was that a jolt in the first year would actually produce a much more effective bill. I have no doubt that that would be the case in this case also. If one takes, for example, that effect of discouraging younger people from starting smoking, then actually, a 40 percent increase in the excise tax, which is what the public health community and the research experts were telling the select committee we ought to do, would have a disproportionately beneficial effect. That evidence seems to me to be also appropriate to this bill. None of the Government speakers have commented on why the Government is not choosing to introduce a jolt—a much bigger disproportionate increase in year one, for example.

The other evidence that we heard in that select committee was from very many Māori and Pasifika organisations. They came to the select committee specifically because some people had been saying “Look, this bill is going to have a detrimental effect on the poorest New Zealanders—on Māori, on Pasifika, on low socio-economic status Pākehā—and therefore we should not do it.” Earlier in this debate, Louisa Wall actually detailed some of the research that makes the very clear point that the disproportionate gains to those very New Zealanders outweigh the disproportionate cost. That is what those groups were saying to the select committee.

I want to go on to comment on the other thing that those groups said, as a bit of a qualifier to their support for the bill. They said: “Yes, the disproportionate gains outweigh the disproportionate costs, and so we definitely support it, but we want to ensure that the revenue that the Government takes in from this increase in excise tax is then channelled towards ameliorating the negative effects on our community.” Ameliorating the cost, supporting increased quitting services, and supporting health promotion services around tobacco for our communities—unfortunately, that is not what Minister Lotu-Iiga has actually said that the revenue is going to be used for. He has talked about the bowel-screening programme; he has talked about increased elective surgery.

Well, actually, what that really means is that the revenue from this excise tax is going to be channelled into the consolidated account, and will substitute revenue from that account that would otherwise be used for ordinary health services. That is not what submitters supported in relation to the 2002 Act. That is not what we support. We believe that this bill should be used entirely for the purpose of getting us towards that goal of a smoke-free Aotearoa by 2025, and achieving that goal for all groups, not only middle-class Pākehā who are already on track for it but also Māori, Pasifika, and low socio-economic status people.

So the Green Party continues to support the bill, but encourages the Government to actually do the responsible thing, which is to use the revenue not for the consolidated account but for enhancing the smoke-free programmes. Thank you.

FLETCHER TABUTEAU (NZ First): I just want to take a minute to reply to some of the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga’s statements because they bear mentioning again. In justifying this tax, which I think everyone in the House agrees is a tax on the poor, he listed a litany of underfunding in our public health system. He told us where this money would be used to plug gaps. He told us that this Government has not allocated enough in this Budget to keep up with immigration flows, and that the Government has not allocated enough to keep up with inflation. So there is still this huge gap in the provision of health to New Zealanders. He got up and proudly told the House that the $425 million of extra revenue from New Zealand’s poorest will be used to plug the gaps in New Zealand’s health system. That is just completely unacceptable.

He spoke of reducing harm—he spoke of reducing harm. I have to agree that the intent of the bill is to reduce harm from smoking—I could not agree more; that is what we need to achieve—but, as I said in the first reading, this 10 percent tax rate will not achieve that.

Why will it not achieve that? It is exactly the rate that will put revenue up for the Government—$425 million—but it is exactly the rate that will see no substantive response from those addicted to smoking. So they will not react to it. How do I know that? We had people come to speak to the Finance and Expenditure Committee, which I had the pleasure of sitting on a few months ago. What the anti-smoking lobbyists told the committee was that a tax of 10 percent would not actually achieve anything. It would not make substantive or effective changes to get people to actually stop due to the supposed financial pressures. What they actually told the committee was “what you need right now is 40 percent to 50 percent increases and then 20 percent increases from there on out.” In fact, not only did they put forward these higher numbers, but they said to the committee and to this Government that a 10 percent rate will not achieve what is hoped for in this bill, and more than 10 percent was needed.

If the Government believed the health professionals that a tax would lead to a decrease in smoking, why did it not accept the numbers that the professionals and experts put forward? This tax will take $425 million out of the pockets of the poorest, those addicted, and those who are most struggling; it will take it out of the Māori community and the Pasifika community: the poor, disproportionately more than any other group. And it will not make a difference to smoking rates, which is the justification for this tax.

Also noted was that the tax affects the poor at a far higher rate—more than any other group. Consider now that we have a system where internalising the cost of smoking—and what I mean by that is putting the tax on smokes and making those who suffer from an addiction pay for their addiction—actually covers far in excess of the cost that the health system needs to service the health problems of smokers. We have more than recouped the negative externalities to society here. That is, it is suggested that smokers pay more than three times the cost of the burden they are to society.

I acknowledged at the start of this debate that in the past these tobacco excise taxes made a difference to consumption. But I put it to the House, yet again, that they will not achieve their stated objective and that the Government has gone too far today. This tax will not stop smoking and I put it to the Government that it is just arrogance, it is just apathy, and it is just indifference. The Government has been told that this bill will hurt the poor more than any other group in society—but that is fine, because the Minister says it will be used to plug gaps in the health system.

Reducing the occurrence of smoking is vital—there is no debate; New Zealand First agrees. Let us lower the occurrence of smoking, let us help people stop. But let us realise the reality of this: Treasury itself has said that tobacco taxes were very efficient for raising revenue because the addictive nature of nicotine meant that smokers were not highly sensitive to price increases. Did they hear that? The people who they presume are going to stop smoking because of price increases will not. Treasury has told them this before. They are addicted to this substance—they will not stop smoking, and they are not sensitive to these increases. I put it to the House that this is actually just a cynical move that will achieve nothing except the further, crushing pressure that those addicted to smoking already experience now. The poor will continue to smoke at the expense of other essentials. Families and children will miss out in order to feed an addiction.

Consider further that Massey University tax expert Dr Deborah Russell said reducing smoking “was an excellent public health goal”—I could not agree more. But it could have unintended consequences. She went on to say: “Higher prices could create a black market in tobacco. This could undermine any public health benefits”. What we have to realise, then—and this is quite recent—if we look at reports just from across the Ditch there, we see a huge upswing in Australian organised crime in response to the same strategies used by the Australian Government in supposedly suppressing the occurrence of smoking by individuals within their own society. They see it as the same problem as we do. But what we see from our neighbours is that, actually, this will achieve nothing, and, in fact, will exacerbate a problem outside smoking in and of itself—it will lead to a black market. We have seen examples from Australia around organised crime, and that is, without a doubt, what will happen in New Zealand—without a doubt—if cigarettes go up into this price range.

The other irony of this Government policy—and we saw it in some of the interviews last night and this morning—is that the implementation of this higher and higher tax rate feeds the move for individuals to grow their own tobacco; it makes sense for them. They cannot sell it, but they will grow it themselves. What is the irony in this situation? The irony in this situation is that, by increasing tax rates on smoking, the tax take will actually decrease, because you are incentivising people to grow their own and bypass the legitimate market. Where is the tax take going to come from to help the people who need our health system? It will not be from smokers, because they will be growing their own and bypassing that system entirely. The incidence of criminal activity will rise.

Let us help people to quit smoking, but this is not, and I repeat, this is absolutely not the way to do it. Thank you.

STUART NASH (Labour—Napier): I often agree with much of what Mr Tabuteau says, but on this point I am going to have to disagree with him. But I will say that I do believe this is not enough. The University of Otago and a number of other studies have concluded that it needs to be at least 20 percent or a one-off shock of 40 percent. But that is no reason, in my view, not to vote for this bill, because anything that increases the price of tobacco is a step in the right direction, and let us address the other issues as we go forward.

Mr Tabuteau raised an interesting point, and it was that all we are doing is taking the money out of the pockets of poor people who smoke, and as a consequence of that they will miss out on the necessities of life. But can I quote, and it is about a 30-second quote, from an academic study that dispels Mr Tabuteau’s concerns around that: “Another issue related to increasing taxation is its financial impact on existing smokers, many of whom are welfare beneficiaries or on low incomes. It has been noted that increasing the price of tobacco (which due to addiction is experienced as a necessity commodity) may threaten smokers’ ability to ‘purchase the essentials of a healthy lifestyle’.” The study here is Giskes et al. 2007. “Indeed, tobacco companies have cited the link between poverty and ill health as a strategy to argue against significant price increases.” That study is Clifford et al. 2014. “However, this ignores the fact that tobacco is responsible for about half the mortality difference between the highest and the lowest income groups,”—reference Marmot 2010—“so the health gains from making tobacco unaffordable will be much greater than the health risks posed by the (temporary) additional financial strain this will entail.”

This is an important point, and it was raised in the select committee because a number of us did question the impact, or the burden, on the poorest in our society who do smoke. It was acknowledged as a risk, but the academics presented three or four papers that actually showed the benefit to society was greater than the risk posed by the financial impact on the poorest in our society, and it is the reason why I am supporting this.

Tax has two purposes: the first is to raise money, and the second is to influence behaviour. The main purpose of this is no doubt to influence behaviour. We want people in this country to stop smoking, and we need to send a very, very clear signal that smoking is no longer cool. I think this message is getting across the developed world, in fact. So when John Travolta lights up on television, that is no longer cool; that is exceptionally uncool. We need to send that signal around the image, as well.

But there are a number of academic studies that show that this is the right thing to do, i.e. increase excise tax. Professor Beaglehole and Professor Wilson had a very interesting paper that showed that the increases in excise tax are actually having a diminishing impact, because what we are left with at the moment is that those who were going to give up smoking, with the 2010 and 2012 increases, actually did. We are now left with the real hard-doers—those in society whose addiction is incredibly real, and is very powerful. This is why I would like to see this tax hypothecated, and by that I mean the money raised from this tax, the $425 million raised from this tax, go directly to the health budget. Certainly, what a number of the papers say is that with the money raised it is imperative that it actually goes towards smoking cessation programmes, to really help those who need help.

As mentioned in my first speech, this is a very powerful addiction. I have read that an addiction to nicotine is actually more powerful than an addiction to heroin. So let us not kid ourselves that, just because the price goes up, people will go cold turkey the next day. They will not. They need help, and we must provide them with that help.

Another large international study on the effectiveness of tax and price policies for tobacco control was undertaken by the International Agency for Research on Cancer to evaluate the strength of available evidence across 18 countries on the effects of tax and price policies to prevent and reduce tobacco use. The actual name of the study was Effectiveness of Tax and Price Policies for Tobacco Control. The conclusion was based on extensive evidence reviewed. The recommendation was that “To improve public health by reducing tobacco use, governments should adopt relatively simple tobacco excise tax structures that emphasize specific taxes and that include regular tax increases that outpace growth in general price levels and incomes.” But what it also, again, reiterated was that Governments should use tax revenues “to fund comprehensive tobacco control programs and other health promotion activities”, given that such programmes lead to further reductions in tobacco use.

So it was with slight concern that I did hear the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga stand up and say that the money raised from this would go towards hip operations and knee operations. There is no doubt that we need further spending in the health sector, and Ms King has highlighted this a number of times. But what I would have really liked Mr Lotu-Iiga to do, and to work with Dr Coleman, is to say: “Hey, we’re going to raise $425 million. Let’s put aside $100 million or $50 million, or let’s do some studies to really address this problem. We need to put aside a certain amount of money, and go out to the public and say that we understand the pain that a number of people are going to go through. As a consequence of that, I’m now putting aside $50 million that will increase the size of the Quitline programme or increase funding for a number of smoking cessation programmes by 100 percent, or 200 percent, or 300 percent.”

There are a number of researchers in this country who understand this and understand the magnitude of the problem, but who also understand what needs to be done to address this problem and help those who are suffering from a nicotine addiction. I think if the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga worked very closely with the Minister of Health they could come up with a really innovative programme to drive the country towards the 2025 target of being smoke-free.

A 1997 study showed that as costs increase, smoking becomes less attainable and less attractive to a potential new generation. Louisa Wall actually talked about this. The number of young people who have smoked is horrendous. So not only do we need to target education programmes or help to those who are trying to quit smoking, I believe we also need to undertake a new, radical, and hard-hitting education programme to those in schools. We have got to start with the young people, and say: “Hey, you know what? This is what smoking can do to you.” Let us get not just at those who are buying the packets with the ugly pictures on the back; let us go to the really young ones and say to them: “You know what? You want to be a cool rugby player? You want to be a star netballer? You want to do well at school? You want to live a good, healthy life? This is what smoking does to you—it kills you.”

That sounds pretty melodramatic, I must admit, but the evidence is absolutely overwhelming: smoking kills. We need to get that message out there, not only to those who are engaging in the habit at this point in time, but also to young people so they are not even tempted to start. The interesting thing is, with all due respect to Louisa Wall, she said she tried a cigarette due to peer pressure. We have got to change that whole model round so peer pressure is now about how it is incredibly uncool to smoke—do not start. That is the message we need to send out there. We are supporting this bill. We do think the excise tax needs to be substantially higher, as indicated by a number of researchers in this country, but it is a start. Thank you very much.

LOUISA WALL (Labour—Manurewa): Kia ora. I am actually really pleased to follow my colleague Stuart Nash in taking a call, because he and I are 100 percent on the same page in regard to this, the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill, and its implications, particularly for young New Zealanders.

I have a submission to the Budget Policy Statement that was presented by Warren Lindberg, who is the chief executive officer of the Public Health Association, with regard to the tobacco excise and what the tax take should be spent on. I just want to outline the initiatives he thought should be prioritised, given our focus on making New Zealand smoke-free by 2025. The initiatives are: targeted health promotion and cessation services for young people; targeted health promotion and cessation services for Māori, particularly young Māori women; targeted health promotion and cessation services for pregnant women and their families/whānau; funding post-birth cessation services support for up to 2 years following, so that mothers and those around them can sustain cessation, which would provide the maximum health gains for the parents and for all New Zealand babies; and research into effective cessation and effective tobacco policy for New Zealand, including targeted surveys of tobacco use among vulnerable communities and populations.

One of the references in that submission was to the Action on Smoking and Health (ASH) Year 10 Snapshot Study. The overall philosophy or principal position that this particular survey articulates in its results is this: quitting is hard and protecting children from the addiction of smoking in the first place is best. I think that makes sense to all of us but, as I outlined earlier, within the context of 66 percent of our young people trying smoking and, of those, 50 percent of them then smoking for 40 years and dying premature deaths—and we have talked about some of the consequences—I absolutely agree with Stuart Nash that we should be doing everything we can to stop our kids smoking in the first place.

One of the biggest challenges we have with that, and this is where it gets really interesting, is that when children grow up in a family where one parent smokes, they are actually 25 percent—the research is really interesting. It says if you are a young person and you grow up in a family where both of your parents smoke, if one of them gives up smoking there is a 25 percent reduction in the likelihood of you smoking. If both parents give up, there is a 39 percent reduction in the likelihood of you smoking. Basically, if you grow up in a family where people smoke or if you see it, then, actually, the statistics are against your ability to be resilient enough to not smoke. That is where it is kind of a chicken-and-egg problem. We want to focus on the kids, but, actually, to focus on the kids and prevent them smoking in the first place, we have to help their parents and we have to stop the parents from smoking in the first place. What we know is that on average it takes seven attempts for someone who smokes to give up. It is an incredibly hard thing to do because of the addiction.

I know this because I grew up in a household in which my father smoked two packets of cigarettes every day—Winfield Reds. He chain-smoked, and that has had a devastating consequence on my family. He died when he was 63. He had a heart attack. He had cardiovascular disease, which is one of the outcomes of smoking for over 30 years. I think it was lucky he did not quite make—oh, he was 63 and started in his 20s, so he was the 40-year smoker.

The other thing I find really interesting is who supplies young people. Actually, the people who supply young people are their parents—40 percent of young people who smoke are supplied by their parents and their immediate family. Another 40 percent are supplied by their peer group and those who are engaged in a peer group with older people, who can go into the dairies and buy those cigarettes themselves. But, actually, 18 percent of them get away with buying cigarettes themselves, so we actually have a problem with the enforcement of the legislation that says that if you are under 18, we cannot sell to you, and if someone does, they will now be fined $5,000. Actually, that fine is good, because there should now be more of an incentive for anyone who sells cigarettes to be super vigilant in making sure young people do not have access to tobacco.

I did a little bit of maths—this is for Minister Lotu-Iiga, because we know he will be almost successful in reaching the under 5 percent target for Māori women—based on the statistics that I have managed to find in this 2014 ASH Year 10 Snapshot Survey. What it says is that for 14- and 15-year-old Māori girls, who are three times more likely to smoke daily, the statistics between 2013 and 2014 saw a 30 percent reduction in the daily smoking rate and a 7.6 percent reduction in the regular smoking rate. If I apply the 4 years of this piece of legislation, then at the end of 2020, I think, when we will realise the fruition of this legislation, the daily smoking rate for Māori girls aged between 14 and 15 will go from 8.8 percent to 5.05 percent, so we will nearly get there. The regular rate for that age cohort will go from 16.76 percent to 12.22 percent.

I think therein lie some of the suggestions from the researchers—that 10 percent is a good step, but it is too passive. It should be 20 percent, if we want to accelerate the reduction. But I think that after this legislation has been fully realised there will be an ability for the House to then renegotiate whether it should continue, and at what rate, because we will then be seriously getting down to the hard-to-reach communities where, actually, the ability for our health system to engage with those people—and I want to pick up on what my colleague Fletcher Tabuteau said. He is right: the people who are most affected are the most impoverished. They are the ones who come from communities where the access to public health services is not as it should be. So how do we get to those families? How do we help those people? How do we ensure that they can be smoke-free? I think that will be the challenge as we look at how effective this piece of legislation is, in the future. It is only one part of the solution.

I think that if we were genuinely wanting New Zealand to be smoke-free, we would care about the people who are most affected by cigarettes and actually ensure that they have all the services they need, all the tools they need, and all the support they need over whatever period of time it takes them to finally realise that smoke-free aspiration—to be supported. For my father, in the end, it was going to a hypnotist. It worked for him. It took him a long time and it took him many attempts, but, eventually, he found a tool that worked and he was able to be smoke-free. Unfortunately, it did not erase the 25 years of his smoking beforehand, and that is what I regret the most. But through pieces of legislation like this, we will start to actually impact on the mortality rates and how long it is anticipated some of us will live for. I commend this bill to the House, and I again just want to say congratulations to the Minister, but there is so much more to be done. Thank you.

A party vote was called for on the question, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a second 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 second time.

In Committee

JAMI-LEE ROSS (Junior Whip—National): I seek leave for all questions in this debate to be taken as one debate and voted on separately.

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

Parts 1 and 2, and clauses 1 to 3

Hon ANNETTE KING (Deputy Leader—Labour): I am very disappointed that I have been unable to participate in the first and second readings of this bill because urgent public business took me elsewhere, but I have followed it as much as I could and have been impressed by the calibre of the debate on this bill from the Opposition members. This is the point where we now have the opportunity to ask—and the opportunity for the Minister to answer—some very direct questions. I am sure that the Associate Minister of Health the Hon Peseta Sam Lotu-Iiga will be very willing to answer such questions because he is getting wide support for this bill today. And because it does not go to a select committee and there is no opportunity for scrutiny by the public, therefore, I think, this is the chance to ask those questions and for the Minister to answer.

I am interested in the Minister informing the Committee how much of the revenue of the $425 million that will be gathered over 4 years will go into public health—that is public health. I am not talking about elective surgery or a bowel-screening programme; I am talking about how much will go into public health. I know the Minister is not responsible for all of the Budget, but he is a powerful Minister in terms of his advocacy for his part of the health portfolio—or, he ought to be—and he covers what is public health.

One thing we have seen in the eight Budgets of this Government is the reduction in money going into public health and public health programmes. Of course, everybody likes to say that prevention is better than waiting until somebody gets sick. It is a mantra—we ought to prevent things, prevention is so important, early intervention—but if you do not have an emphasis on it and you do not put the money in to help make it happen, then it is just hot air and words.

So I would like the Minister to tell us how much will go into anti-smoking assistance and programmes to help people stop smoking. How much is going to go into health-related issues that are often associated with smoking—mental health, for example? How much will be put into the mental health budget to help those who smoke stop smoking? How much will be going into other areas—for example, obesity? There is a link between smoking and obesity. These are very important public health questions. There is over $100 million a year in revenue that will be gathered and that needs to be spent. Imagine, if you put that money into public health in New Zealand, what a difference you could make.

My fear, I have to say, is that it is going to be used in the consolidated account. Maybe some will go into health, but we are looking at a Prime Minister who wants to have some big fat tax cuts for a few people next year, and it would be wrong—morally wrong—to take money off those who smoke and put it into a tax cut for those who need it the least. This money needs to be health-related. I think any levy ought to be related to the product or the activity, so that if you are taking money off alcohol in terms of excise duty or levies, or if you are taking money off gambling, then it ought to go alongside the public health programmes that are put in place. So, Minister, this is a serious question that, perhaps, you have not yet worked out, or have not yet managed to twist the Minister of Health’s arm on, but I would look for your advocacy in this area.

I also want to know what has actually happened to your separate tobacco control plan. It is all very well using one lever—one lever—in the whole fight against tobacco consumption and prevalence, but if it is only one lever, it is not going to be enough to reach a smoke-free New Zealand by 2025. You told me in September that the Government had announced developing a separate tobacco control plan, and then in February, when I asked again, it was still developing a tobacco control plan. Am I to expect, as each month goes by, that I will be told that the Government is developing a separate tobacco control plan? Where is the plan? What is in the plan? Will it include, for example, stopping smoking in cars when children are in them? Minister, you replied to me and said that you are opposed to smoking in cars. You are also considering banning smoking in cars as part of, I presume, a tobacco control plan. So it was very interesting to those of us on the select committee to learn that the Ministry of Health is not proposing a ban on smoking in cars because the Government is not interested in it. So there is a disconnect between what this Associate Minister wants and what the Minister of Health is saying.

If we are going to have a separate tobacco control plan, Minister, it needs to have a number of elements in it. One of them has already been mentioned—plain packaging—and you will know that I have asked you many questions on this and on when you are going to bring forward the bill that sits on the Order Paper. You said that the Government has got a very busy programme this year. Well, I know that, but how important is trying to help prevent people smoking? Is it of lower importance than some of the fiddly little bills we have had in this place that have taken up a lot of time? Is not the health and wealth of New Zealand and the well-being of New Zealanders far more important than some of the legislation—the dross—that goes through here on a daily basis?

I am wondering whether you have got the punch that is needed to give what you want in this area of health. You are an Associate Minister—I understand that you have a Minister over you and obviously his interest is not as great as yours—but I am looking to this Associate Minister to be able to bring forward a separate tobacco control plan that looks out to ensure that we are smoke-free in 2025. That is what we want in this House. That is what most New Zealanders want. But without a plan—and a forward-looking plan—to do it all we are doing is tinkering around the edges.

I also want to know what has happened to the public consultation on the Protocol to Eliminate Illicit Trade in Tobacco Products because you did tell me that it was going to be tabled in this Parliament in 2016. We are nearly in June—when will it be tabled? I have listened to the comments from the speaker from New Zealand First talking about what might happen with illicit trade in tobacco, the growing of tobacco, the black market in tobacco. One of the things that took place last year was public consultation on a protocol and it was going to be used to produce a national interest analysis to assess the pros and cons of New Zealand becoming a party to the protocol. So I want to know, Minister, what is happening in this. Are we going to sign up to a protocol? When will it be available? Is it 2016 or is it also—like many of the other measures—being put on the back-burner?

This is one measure. We are supporting it. We do know that price is a major driver, in terms of stopping people smoking. It is not about punishing New Zealanders because they smoke. You see, I have always had this theory: why should we allow tobacco companies to kill poor people? Why should we allow it? That is what they do. They target their tobacco prices at those on the lowest incomes to keep them hooked. They target our kids to keep them hooked. I do not believe we should allow that. And we should take every measure we can to help New Zealanders stop smoking, to give them the tools to assist them—because there are good tools out there, tools that can assist. We ought to be putting our investment into that area because we know that the biggest cancer killer in New Zealand is still smoking.

Minister, I am urging you to take this opportunity to answer those questions because the public cannot ask them of you—there is no opportunity, and there is no opportunity for select committee submissions. This is your moment, Minister, to stand and tell the people of New Zealand what you intend to do with the revenue that is raised—that it is not just a revenue grab but that it is going to be used to help New Zealanders give up a habit that is leading to their disease or death. That is a very serious issue.

We have made good progress over many years, right back to the first legislation in 1989, when Helen Clark passed the very first tobacco control legislation. I have to say, that you, Minister, are one of the first who have actually supported it, putting aside Tariana Turia. National opposed every tobacco measure until Tariana became the Minister of Health. When I was Minister, she was my Associate Minister, and she was pushing it then. So this is the opportunity for this Minister to stand out as a Minister interested in tobacco control.

RIA BOND (NZ First): I am proud to rise on behalf of New Zealand First and take this short call in the Committee of the whole House on the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. New Zealand First recognises that smoking is harmful. We do not encourage, nor do we support, smoking. What we do support is for members of the public to have access to programmes that inform the public of the health risks associated with smoking. We have seen, over the years, on cigarette packaging the graphic details and warnings. In fact, there are about 14 of those graphic warnings that have come on to the cigarette packets.

There is overwhelming evidence to support the notion that what stops people from smoking is the right information, the correct education, and the time and support of not only their family but also members of the community. In Invercargill we have a great programme that helps smokers who choose to quit, and we have a really good wraparound service throughout the agencies that, in fact, does help those who really do want to quit, quit—not for financial reasons, but for the reason that it does not look quite so good in their family and on account of the pressures that are being put on parents.

This tobacco tax is the most efficient way that this Government can gather revenue, and that revenue is coming from a legal activity that targets law-abiding citizens, and I question, along with other members in this Committee today, where the $425 million would go to. New Zealand First wants assurances from the Minister of Health that the $425 million revenue grab will, in fact, go towards what New Zealand people need, and that is smoking cessation programmes. What we do not want to see—and I think the Minister stood up earlier and directly avoided the request from this side of the Chamber for assurances about this. We wanted the assurance that the money that is gained—the $425 million—would, in fact, go back into these programmes, and not go back into the coffers to prop up a failing population-based funding formula in this country.

We here in the Committee should remember that there are many harmful things out there in our communities, like vehicle exhaust emissions; food that leads to obesity, diabetes, and tooth decay; and alcohol, which in my opinion leads to instant deaths on our roads, and that is a damn tragedy. Alcohol is more dangerous than cigarettes because alcohol has far more social harm associated with it, and we know this. The question is why alcohol has not been factored into the equation and taxed like cigarettes have been. We see daily on the TV that we have alcohol rehab advertising saying: “If alcohol affects your life, please come to us.” I would like to see alcohol not simply being looked over as being a problem to our society. In fact, it does weigh heavily within our health system.

It is high time that this Government gets a grip, because smoking is legal. It is a darn well legal activity. All tobacco products are legal, yet, time after time, smokers in New Zealand continue to be heavily penalised for the freedom to choose whether they want to smoke or not. This is a ruthless tax target that targets the activity of a large number of New Zealanders who are already on minimum wages and low incomes. This is a ruthless tax on our poor.

Smokers should not be classed as second-class citizens, and we have seen how this has occurred. There is no smoking in pubs any more, there is no smoking in public any more, and, in fact, we have just heard that there had been a proposed ban for smoking in vehicles that you own as a New Zealander. Smokers are forced to hide behind the back of buildings, like they are some kind of dirty, second-class citizens. We need to remember that these are law-abiding people who choose to smoke and self-fund their addiction. That addiction is nicotine. We have also heard in the House in the first and second readings’ calls that smokers fund their health issues by three and a half times the health cost to that individual.

This tobacco tax will have unintended consequences like smash-and-grabs from our dairies, black market tobacco sales, grow-your-own-at-home tobacco incentives, and making people choose between a bottle of milk or a packet of cigarettes. The actual price of this tobacco tax will be the price on our community’s safety and our health and our well-being. When I looked at this bill I thought about how this would affect my area, Invercargill, and I thought about deprivation. I want to inform the Committee how this tax would affect my area in Invercargill—18.2 percent of Invercargill’s population over the age of 15 smokes, compared with a national level of only 13.7 percent.

POTO WILLIAMS (Labour—Christchurch East): I am keen to talk about the Pacific aspect of this bill, with specific reference to new section 79AD, which will be inserted into the primary legislation. It gives effect to the 10 percent increase in excise that will be collected on tobacco and, in the years subsequent to that, the 10 percent increase each year over a period of 4 years, which will then provide to the Government, we hear, somewhere in the region of $425 million in revenue.

There has been a bit of discussion already in the Committee about the purpose and the use of that revenue, but I want to talk specifically about the collection of $42.5 million that will come directly out of the pockets of Pacific smokers—people from the Pacific who smoke. What should happen to that money?

In 2004 the Quit Group, which does such things as manage Quitline, did a study into smoking amongst Pacific people. It is not a new study, but one of the interesting facts that it found was that in the preceding decade one of the things that caused it to look at the rates of smoking amongst Pacific people was that it was becoming increasingly socially acceptable for Pacific women to smoke. Whereas smoking had been culturally unacceptable in the past, it was becoming more acceptable socially for Pacific women to smoke, and, in particular, for young Pacific women. Whether that is the influence of being a New Zealand - born Pacific person, the study does not extrapolate. However, what it was saying very clearly was that the rates for Pacific young women were going up.

As far as I can tell from the information that it provided, it would be good to have some or most of that $42.5 million that we will collect from Pacific smokers directed into the cause of ensuring that young Pacific women are educated about smoking and have some really good information so that they can make choices for their own health. Public health information works—we know it works—but it takes time and we need to start as soon as we can on that.

This bill is going through the House under urgency, so we will not have the opportunity at the select committee to hear submissions. This morning when I was at the Child Poverty Action Group post-Budget breakfast, I took the opportunity to speak to a few people whom I met there. One woman in particular, who works with children with asthma and respiratory conditions, said to me when I asked her about her view on this legislation that, yes, if she had been given the opportunity to submit, she certainly would have. She would have been in favour of the measures that the Government is taking on board.

However—and it is a big “however”—she asked what is happening with our plain packaging legislation. The effectiveness of these measures is enhanced immeasurably when you take a suite of approaches and when you look at the various other tools. She knows that we have the legislation sitting on the Order Paper just awaiting the work programme of the Government to actually pass it. We know the impact that it is having in Australia. The Health Committee actually met with some members of the Australian health select committee, and we have heard from them directly that it is making an impact. So I am urging this Government to get that piece of legislation pushed up the Order Paper, because it will make a difference.

The other thing that this young woman said to me was that she is also influenced by the work that is being done currently on smoking in cars. That will have a direct impact on children and babies in cars who are inhaling second-hand smoke. My colleague Louisa Wall made the important point about influencing adults to influence their children. I do just want to reiterate that here is one measure that we can take very quickly. It will take some time to bed in, but it is an important factor and we need to ensure that we do that.

This bill is a good step, but it does not go far enough. I do commend Minister Lotu-Iiga on taking this measure. I wish he was bolder for Pacific people and Pacific smokers, but we do commend the bill to the Committee.

Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): It is an honour to take a call in this, the Committee stage. I want to take a quick call and answer some of the questions that have been put to me as the Minister responsible for this piece of legislation.

Many across the Chamber have talked about giving a cast-iron guarantee around public health spending, and yet everyone in this Committee knows that the taxation from this bill, the tax that is derived from increasing tax on tobacco, is going into the consolidated account. Everyone also knows that this Government is increasing health spending by $2.2 billion over the next 4 years, and we know that it is going towards more elective surgeries because we have heard questions in the House almost day after day around elective surgeries. And when we put it into elective surgeries—that is $96 million worth of elective surgeries over 4 years—

Hon Annette King: Over 4 years.

Hon Peseta SAM LOTU-IIGA: Yes, over 4 years. Yes, she is on to it. It includes $169 million for disability support services, which I am responsible for, and I am quite proud of the fact that we are increasing that. It is going towards increased spending on Pharmac. We know that the people of New Zealand asked for that, and that is what Minister Coleman and the Prime Minister have put more money into—as a Cabinet and a Government we are putting more money into Pharmac. So we know that that money is being well spent in the next few years, catering for the needs, the expectations, and the aspirations of all New Zealanders. That is the end of the matter.

I was also asked about whether this tax is going to have any impact. In fact, some across this Chamber have suggested, despite the evidence that has been produced by experts not just here in New Zealand but around the world, that it will not have any impact. I suggest to members that they read some of the documents on the Table. The regulatory impact statement refers to the increase being expected to result in a 2.3 percent decrease in smoking rates—that is, from 15 percent to 12.7 percent in the daily smoking rates over the next 4 years. That is not just the effect of the taxation. It is also the effect of all the smoking cessation programmes, including the face-to-face programmes, Quitline, nicotine replacement therapy—all those types of interventions that make a difference in the lives of people who smoke. So we are getting a 2.3 percent decrease just from this taxation alone in the next 4 years. I have also been asked about the effect on the Consumers Price Index.

Fletcher Tabuteau: Have you?

Hon Peseta SAM LOTU-IIGA: Yes. I think Mr Clark asked about that about an hour and a half ago. I think those members misunderstand how this piece of legislation works, because what is actually happening is that the price increases are excluded from the social assistance programmes. That is what is in the bill. I suggest to members that they read the bill. My first reading speech talked about the statutes that are being amended by this bill, so I suggest that they read those provisions.

I have also been asked about standardised packaging. I am getting away from the tax aspect of this bill, because although we are focused on increasing tax, we know that tax is not the only measure and that standardised packaging legislation is on target. It is in the House. It has been before the select committee, and it is progressing in a way that—[Interruption] We know that it will go through the House this year. The Prime Minister has gone out and said it. I have said it. It is progressing through the House.

I just want to say that I do thank the members opposite. We have had a rigorous debate in this Chamber. I think most parties in here will agree that this increase in taxation, at 10 percent for 4 years, is going to make a difference to New Zealanders’ lives.

CLAYTON MITCHELL (NZ First): I rise on behalf of New Zealand First to take a call in the Committee of the whole House on this piece of legislation that we are going through under urgency. That would be my first question to the Minister: why are we sitting in the Chamber under urgency debating a bill that is coming in on 1 January? We have got 6 months in which we could actually have a select committee stage and hear from submitters, and, anecdotally, we have heard evidence that two-thirds of the country thinks that this is nothing more than a kick in the guts. It is a “get stuffed”, do-nothing, “stuff it” approach whereby we are going to force people into giving up smoking.

There is no evidence that suggests that that is actually going to take place by increasing the tax by 10 percent per annum. In fact, it is more than 10 percent per annum—it is actually 10 percent plus the Consumers Price Index. So, Minister Lotu-Iiga, can you please answer the question for the people back home and those millions of people who are interested: why are we in urgency discussing this today when we have got 6 months in which we could actually run through a due process and hear submitters speak to the bill?

I have a second question for you, Minister. I have got some sort of clarification requirement when it comes to understanding, or trying to understand, the Order in Council provision that you have got. New section 79(3B)(a), in clause 4, says that it requires “every new rate of excise duty or excise-equivalent duty that the Order in Council imposes on a tobacco product is to be calculated by adding 10% of the existing rate …”. My understanding of that would be that by Order in Council, you—the Minister—can make a decision to actually increase that excise at a later stage. Can you please clarify that for us? There is certainly some ambiguity in relation to that.

There have been very few times in the House over the last 18 months when I could actually agree with the ideology, if you like, and theory of David Seymour. But I have to say that he is making sense in saying, along with New Zealand First, that this bill really is looking–

Dr David Clark: Don’t go too far.

CLAYTON MITCHELL: —I am pushing it, I know; I am pushing the barrow right out here—like it is potentially going to increase the number of robberies and aggravated robberies by people who are in a very impoverished position as they try to support their habit. That is going to cause some serious concern.

If the Government thinks that raising a tax on cigarettes is the answer and will stop people from smoking, then, like my colleague Fletcher Tabuteau has already said, why is it not doing that with other things that are causing harm in society: fats in foods, sugars, alcohol, and all these other things? This is nothing more than revenue collecting by this Government. It is trying to balance the books as we go into the 2017 general election so it can actually hand out a lolly scramble of tax cuts next year and say: “This is what we are here to achieve.”

I have to say that if the ideology behind that increase in tax—that huge gouge into the working-class New Zealander and the middle-class New Zealander—is going to benefit them, then surely we have to, as a Government, look at what it would do in reverse. If you are talking about taxing things that are bad for us, what about taking tax off things that are good for us? What about taking GST—at 15 percent—off food? The actual cost of living has gone through the roof in this society because vulnerable people, poor people, and everyday New Zealanders are being taxed to live. If we are taxing cigarettes by 10 percent, surely we should be taking GST of 15 percent off food. That would balance out the Government’s argument of why it is actually putting a tax on in the first place. How it cannot look at that is beyond us.

New Zealand First has been advocating for that for some time now, and every time we suggest it we hear the Government’s rhetoric: “We can’t afford to take it off. How are we going to afford it?”. I say to this Government: how can you afford not to take GST off food—15 percent—when you can sit here plain-faced in this Committee and say: “We are going tax smokers 10 percent, because it is good for our health and the well-being of the future of our Government.”?

Hon Maggie Barry: That’s the logic you have when your leader’s a smoker.

CLAYTON MITCHELL: Maggie Barry, you are not making any sense. I would just zip it right here.

Hon Members: Oh!

CLAYTON MITCHELL: She does not, often.

I have to say we will not be supporting this bill. This is nothing more than revenue collection of $425 million by this Government, and it is not taking GST off food to balance out this ridiculous equation that is going to do more good than harm. Thank you.

STUART NASH (Labour—Napier): It would have been good if Clayton Mitchell had actually come to the Finance and Expenditure Committee when we were debating this, then he may have understood that the evidence says that this is actually a good thing in terms of stopping people smoking. In a way, we did hear submissions on this in the Budget Policy Statement. We had about 20 submissions submitted. They were of a very high quality, and a lot of them were academic submissions, so they were very worthwhile.

I just have a very quick question for Minister Lotu-Iiga, and that is this: if we are taking an evidence-based approach to this, did he actually look at any evidence at all that suggested the tax increase should not be 10 percent but should be 20 percent, as recommended by a number of the researchers? In fact, there are a whole lot of credible national and international studies that said 10 percent is just not enough; it has got to be 20 percent. A number of other studies actually said you should do a one-off hit of about 40 percent. These are not the people who are subjective; this is very objective research. So my question is whether the Minister looked at bringing in an excise duty that was higher than the 10 percent in this bill. Thank you very much.

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

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.

Part 1 agreed to.

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

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.

Part 2 agreed to.

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

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.

Clause 1 agreed to.

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

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.

Clause 2 agreed to.

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

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.

Clause 3 agreed to.

House resumed.

Bill reported without amendment.

Report adopted.

Third Reading

Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): I move, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill be now read a third time. It has been a pleasure to be in this House leading the debate on this particular bill, and I do welcome the support from across the Chamber. I think most members here agree that this bill will have a positive impact on our people—particularly, I want to say, our Māori people and our Pacific people, whose smoking rates continue to be high. Another at-risk group, of course, is pregnant women. This bill is but one measure, one step along the way towards the ultimate goal of a smoke-free New Zealand.

I want to particularly thank the Māori Party. I want to acknowledge the previous Associate Minister of Health Tariana Turia, who I think many would acknowledge has led the charge in this area, and not only around the increases in taxation: 10 percent year on year on year for the last 6 years. I also want to acknowledge Marama Fox and Te Ururoa Flavell and their acknowledgment that this must continue, not just here today but into the future.

I also want to acknowledge members opposite, and the Labour deputy leader, as well as Louisa Wall, whom I have had many interactions with on tobacco control. I acknowledge the passion, certainly, and the vigour that they have brought to this debate. I think this is one of those bills where we can agree, despite some of the rhetoric that has gone on in the House this morning, that it will make a difference to all New Zealanders.

I want to say that it is about tax increases, and there is part of me that, ideologically, looks at a bill that increases taxes and thinks “Well, I believe in less government; lower taxes.”, but I know that when it comes to smoking and tobacco control, taxation makes a difference, along with a whole range of other measures. We know the damage that tobacco does in this country—the 4,500 to 5,000 people who die prematurely in this country—and I want to reiterate what I said in my first reading speech: this is still the biggest health problem in this country.

Darroch Ball: Is it?

Hon Peseta SAM LOTU-IIGA: It is. It is. That is why this measure, along with other measures that this Government has done, I might add, to promote smoking cessation in this country—we have got to be particularly grateful for them.

I also want to acknowledge the officials who have assisted with this as well as with other tobacco control measures. I want to acknowledge our Government and the leadership of John Key in promoting this as, I think, a sensible measure. It will be one of the legacy policies that this Government will leave behind. We know that the costs of smoking are immense—the personal cost to the person who smokes but also the whānau cost, the community cost, of people who become sick and die, and also the relationships that are affected by tobacco and the like.

I just want to say that I welcome the support around this House. I believe that we are doing the right thing here today by New Zealanders. I know that this will make a difference to the health of New Zealanders, and that is why I commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): I rise to support this bill. Labour has been clear from the beginning that we will be supporting this measure because it is an effective measure to help curb smoking. It helps, I think, to remind all of us that smoking is still a net drain on the health system in New Zealand. Smoking is still a cost that we all bear, both socially and economically, and the excise that is collected by the Government does not yet offset the harm caused to our communities. It does not add up that it is something that is just taking money and not giving back, but our concern remains that the money must get back to those people who are paying the excise. Those people who are struggling with an addiction to smoking must be supported in their efforts to give up. Public health, generally, must be supported. This is $425 million across 4 years, and the Government, in this debate, has not committed to putting that back into public health, to supporting those who would wish to give up, and to supporting people with public health issues like obesity, like diabetes, like smoking, like drug and alcohol issues, and so on. It will not commit to that.

The Associate Minister of Health Peseta Sam Lotu-Iiga seems to think—and he said this, pretty much—that money taken from smokers and put back into hip replacements will somehow help people stop smoking. When asked what the public health benefit was from this money being taken, he said it will go into hip replacements. That does not stop smoking, and we need to stress that, lest people cotton on to that and somehow try to understand that contorted logic. It is not worth going there. It just does not work that way. We do not think the money should go into the consolidated account to fund the Government’s pet projects, be it charter schools, which are funded at five times the rate of public schools, or whatever its other corporate welfare priorities are at the moment: Saudi sheep or Skycity deals—whatever it is it is trying to dish money out to people for. We do not think this money should go back into that pot; we think it should be there to help smoking cessation and other public health programmes that are for the well-being of all New Zealanders.

In the debate the Minister has failed to address my question about giving tobacco companies time to adjust to this. What behaviour in the past tells us is that tobacco companies put the additional costs on to their high-value products—their high-margin products, like luxury cigars—and they try to keep their gateway products, the cheap products, as cheap as possible. The Minister has given no assurance that there will be any looking at the range of products available and making sure that this excise tax is applied in a way that actually reduces smoking in the most effective way possible. The Minister has simply not addressed that question in the Committee stage of this debate. He also talked about the progress of plain packaging legislation through Parliament, and as my colleague the Hon Annette King said, it has been sitting on the Order Paper since 2014, in the middle of the year. It is unbelievable that the Minister thinks that is progressing because it is written on a piece of paper that we pick up every day. It is not racing through this Parliament. So we look forward to the progress of that bill, because we want to take seriously your sentiment that you believe this is a measure that is going to help New Zealanders and that it is not just a tax grab.

We need to do more, and we need to do more soon, because people are dying while this Government fails to put money into public health. People are dying from the consequences of smoking. We will support this bill. It is one of the most effective means of stopping smoking, through increasing the price of cigarettes, but we need, also, a comprehensive plan to get us smoke-free by 2025. That is the Government’s stated goal, but health experts say that we are not on track, as 15 percent of adults in New Zealand smoke daily. The Government does not have us in a position, with a convincing plan, to make sure that we are smoke-free by 2025. It can do better, it must do better, and it needs to stop treating this $425 million as a revenue grab. It needs to put the money into programmes that are for the public health of New Zealanders, for anti-smoking programmes, obesity programmes, and other programmes that will improve the health of New Zealanders overall. It continues a pattern in the health sector of underfunding, generally. We are supporting this measure because it is a good step in the right direction, but there is so much more to be done. We wish this Government was ambitious for New Zealand. We wish it cared for middle New Zealand and not just for the few at the top.

KEVIN HAGUE (Green): It was indeed good to hear Minister Peseta Sam Lotu-Iiga, in his contribution to the Committee stage, indicate that the Government was committed to passing the plain packaging legislation in the second half of this year. That will be very welcome because although tax increases on tobacco products are the most effective measure of reducing death and illness from the most preventable cause of death and illness, they are not enough alone; they need to be part of a comprehensive suite of measures. One of those is plain packaging, and the Green Party certainly wishes that the Government was also open to the issue of smoking in cars and smoking in parks, and open to the kinds of restrictions on retail supply such as a register of retailers, as has been recommended. We look forward to further discussions with the Government on that.

I note that the Government intends to review its progress against the Smokefree Aotearoa goal in 2018. At that point, it may well be that New Zealand continues not to be on track for achieving Smokefree Aotearoa by 2025, as we are not now. We are not currently on track. We are for middle-class Pākehā New Zealanders, but not for Māori, not for Pasifika, and not for low-income Pākehā people. If we continue not to be on track in 2018, then I call on the Government to indicate that it is open to reviewing these taxation measures, because at that point we will have demonstrated that they are inadequate. With that, I close this contribution and indicate that the Green Party will continue to support this measure.

FLETCHER TABUTEAU (NZ First): I just want to conclude the debate today by sympathising with and acknowledging those who have spoken in the House on just what is wrong with smoking. There is no debate from New Zealand First that smoking is a problem that kills New Zealanders—there is no debate on that. In fact, whom I sympathise with even more is one of the members of the Māori Party, who talked about all the programmes and initiatives we need to make cessation a success. But that is not what we are talking about here today. What we are talking about here today is a taxation measure put on—and everyone agrees—the poorest members of New Zealand’s society. They will suffer the burden of this more than anyone else will. That member over there, Marama Fox, shrugs her shoulders and shakes her head, but it will affect Māori disproportionately and it will affect Pacific Islanders disproportionately. So let us put that into the perspective of the debate we are undertaking today.

This is the measure of the sincerity of this Government: rob from the most needy. Yes, they should stop, but they cannot, and this 10 percent rate is exactly the wrong amount, remembering what the health professionals told us in the select committee. This will not achieve anything in terms of helping to reduce the uptake of cigarette smoking, because people will continue to do so, and, in fact, we will get more revenue, to the sum of $425 million, from those most at risk. What we see—and Mr Lotu-Iiga said it himself—is that this is a stopgap measure where we take from those who can least afford it in order to fill in gaps from the health budget, which is underfunded in the first place. So we have to ask the question—and why is it that I find the cynicism of the Government so unacceptable? It is because it is saying “Let’s tax the poor.”, but what has this Budget done in terms of funding quit programmes? Nothing. Not only has it done nothing but also the funding for those types of programmes has decreased. Where is the logic in that?

Every member in this House has spoken of the need for support programmes and wraparound services, and yet in this Budget the funding for those very programmes is going backwards. Couple that with a rate that does the exact opposite of the intent that it was purported to the House to have and not only will you achieve nothing but also you will achieve the exact opposite of the stated proposition of this piece of legislation. It will go backwards, and it will do far more harm than good. So show me the money? No. Let us actually help people, stop persecuting them, support them, and lift them out of their addiction.

What does this Budget tell us about this Government’s true attitude to the people of New Zealand? “Get stuffed.” More money for cessation programmes? “Get stuffed.” More money actually directed to smoking costs in the health budget? “Get stuffed.” Cannot quit? “Get stuffed.” Not only is the Government not adding more money to the Budget to help people to stop smoking but also it is decreasing it. I say, yet again, to the members of this House that not only will this bill not achieve its stated intent but also it will do the exact opposite. Thank you.

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

MARAMA FOX (Co-Leader—Māori Party): The Hon Dame Tariana Turia, in 6 years as Associate Minister of Health, made remarkable contributions to reducing smoking in New Zealand. She introduced no fewer than four pieces of legislation, including the annual increases to tobacco excise rates that began in 2010, which will now run to 2020. She was also responsible for banning retail displays of tobacco products, reducing duty-free allowances, and introducing the plain packaging bill to Parliament. As a result, adult smoking rates fell from 21 percent in 2006 to a record low of 15 percent in 2013. Her tireless and relentless focus in the face of constant criticism and challenge is testament to her leadership. There is no doubt that she achieved more in terms of reducing the smoking burden carried by Māori than any other politician ever.

Some 15 percent of adult New Zealanders, or 550,000 people, smoke daily. This is a record low, but it does not tell the whole story. You see, the problem is that the smoking rates are still 35 percent for Māori and 22.4 percent for Pasifika peoples. That is hundreds of our whānau dying needlessly every year, so we must carry on and do more. We can all bemoan the increases to cigarette prices, but the greatest price we all pay is seeing too many of our whānau go to their graves early through the harmful effects of smoking.

In fact, I cannot remember a time when I have been to a funeral of one of our old people or young people where the death was from natural causes. In 27 years—because that is how old I am—of going to funerals of my whānau over and over and over again, not once can I remember someone dying of natural causes. The majority of them died from smoking-related illnesses, and for the rest of those who smoke, half of them will die—half of all people who smoke will die from smoking-related illnesses—and the rest will be sick.

We must do something to halt the decline, because this is about whakapapa. This is about retaining our whakapapa for our future, for our tamariki, our mokopuna. We are losing our people far too early. The disparity for Māori in the death rate is 8 to 10 years. They die 8 to 10 years earlier than non-Māori. My entire family of in-laws died before the age of 70, and half of them died before the age of 60. It is not good enough. For most of them, it was all from smoking-related illnesses. We must look after ourselves and each other. We must do all we can to support whānau to thrive, and having our urupā overflowing with whānau who have died from smoking-related illnesses is wrong.

This is not about having a crack at the smokers. The Māori Party kaupapa is manaakitanga, and it extends to smokers, too. Tariana’s focus was as much about having compassion for smokers as it was about preventing rangatahi from starting to smoke. We have no option but to carry on the legacy. It is a legacy piece of legislation—four pieces of legislation. I look forward to the day that we put the nail into the plain packaging legislation and get that back into the House and see it through. I commend this bill to the House. It is a start, but we must do more.

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

DAVID SEYMOUR (Leader—ACT): I rise on behalf of the ACT Party in favour and support of this bill, even though I regard it as a regrettable piece of public policy, because—as I have said in earlier stages—of the wider context of a need to support this Budget and to keep these people over here and keep those people over there, except for Phil Goff, who will soon be joining us in Auckland on a more permanent basis.

I just have a question for the Minister and for the proponents of this bill, and it is this: what do they say to the 15 percent of New Zealanders and the 35.5 percent of Māori who now pay $2,800 in tobacco excise tax every single year and, under this bill, will soon pay $3,800 of excise tax every year because they smoke? I presume what the Minister and his supporters would say is: “Well, they should quit.” There is one small problem with that, and it is that they have not. The regulatory impact statement for this bill vastly overestimates how many people will quit for the amount of tax taken from the poorest households in this country.

I saw one such example of this not so long ago in a Countdown supermarket in Auckland. I saw a mother with a very young girl. The mother was buying a tin of milk and a packet of Winfield 25s—three-quarters of the cost of which was tax. I cannot presume to know all of their circumstances, but, by the look of it, from the way they were dressed and from the expression on their faces, the little girl was fixated on those cigarettes as if to say: “That could have been dinner.” A 7-year-old girl could work out what this policy is doing. It is having minimal effect on smoking cessation, but it is literally taking food out of the mouths of some the poorest children in this country.

I would say to my colleague from the Māori Party that Dame Tariana Turia is a woman deserving of the greatest of respect and the intentions are extremely noble, but policies must not be measured by intentions. They must be measured by outcomes. This policy will take the tobacco tax on the average smoker from 2,800 bucks per year up to 3,800 bucks. That is not an enlightened policy. It is a highly regressive tax, and the costs imposed in terms of poverty and deprivation on the people most in need far outweigh any possible benefits that we have been able to observe from the first 5 years of this policy.

With that, I support this bill because it is part of a broader Budget that I think is good. But, make no mistake, it is a highly regrettable policy that will do far more harm than it does good. We have to support it, in spite of the fact that it is not good policy whatsoever.

STUART NASH (Labour—Napier): Let me just sum up the contributions to this bill from the different parties. We have had David Seymour ignoring all the evidence that actually shows that an increase in the tobacco price stops people from smoking. So when he says that every single person who smokes is going to be hit with $2,000 a year, that is actually wrong. The academic, peer-reviewed evidence shows that an increase in the price will stop a number of those people from spending significantly more money on tobacco than they are at the moment.

The other thing about the ACT member is that he stands up here and calls this bill an abomination and a disgrace, says how terrible it is, and then he votes for it. Mr Seymour should actually stand for something. He should actually stand for something. I know that the Prime Minister has given him a mandate to vote against a bill that he does not agree with, so Mr Seymour does have the mandate to vote against this bill. He despises this bill, but he is voting for it. In Labour, when we do not agree with a piece of legislation we vote against it.

We have had the Associate Minister of Health Peseta Sam Lotu-Iiga ignoring our calls to get it right, and turn this into a real success and a piece of legislation that will work—a piece of legislation that can be backed by academic, peer-reviewed research, as well as by community groups that are dealing with this issue every single day. What I would say to the Minister is that I disagree with his last speech. Do not take our Yes vote as unqualified support for this bill, because we have a number of concerns about the money that is being collected, the $425 million that is being collected, on this—that it will just go into the consolidated account. There will not be more cessation programmes. There will be less help for people who want to quit.

What we would really like to see, as Louisa Wall and I have talked about numerous times, is more programmes targeted at those in the early education programme, so that it is absolutely uncool, at any stage, to smoke. We have got to turn that peer review round, from “OK, my peers are smoking. Hell, I’d better be cool.” to “It is very uncool to smoke.” We need a decent chunk of this $425 million to go into education and smoking cessation programmes. I think the Minister could have got a lot of political capital if he had come out and said that this policy is going to be backed by good public policy in terms of cessation programmes and education programmes.

We have had New Zealand First members stand up, ignore the evidence, and say “Get stuffed.” to any measure that will reduce the harm caused by smoking. I am a little bit surprised, actually. I thought that New Zealand First members were on the right track, took an evidence-based approach, and really drove outcomes. To stand up and say “Get stuffed.” to—10 percent of all deaths in our health system are from smoking. Ten percent, and they are saying to any measure that addresses that: “Get stuffed.” I think that is the wrong message.

Then you have Labour. Labour has tried to take a balanced, evidence-based approach to this. We would have liked to see a greater increase in the excise tax, to 20 percent, as recommended by University of Otago researchers. We would have liked to see a whole lot of this money—not all of it, but a lot of it—put into programmes that help people to break that nicotine addiction, which is an incredibly powerful addiction. We would have liked to see a chunk of this money stuck into education programmes that actually stop people smoking before they start.

We all agree that a smoke-free New Zealand by 2025 is an admirable target. We all want to get there because it is right. It is right for this country and it is right for the people who live here. But what we do not agree on at this point in time are the measures put forward by this Budget. They could have been better. They should have been stronger. We will support this legislation, but we just think it could have been a lot more powerful and sent a much stronger message. Thank you very much.

LOUISA WALL (Labour—Manurewa): I know that everyone wants to go home—I do too—but I do want to say a few things just in terms of the kaupapa that we have debated now all morning. Actually, I want to say to Minister Lotu-Iiga that I think there are many of us across this House who want to work with you on a strategy that makes New Zealand smoke-free by 2025. So I am asking you to allow those of us who are passionate about this kaupapa to work with you to get some of the other initiatives that need to be prioritised to complement this specific initiative that is, as we have all identified today, one of the most effective initiatives in reducing the numbers of smokers.

For those people who may not have seen some of the earlier debate, I just want to highlight that we are talking about 550,000 New Zealanders who smoke. Of these, 155,000 of them are Māori; 55,000 are Pacific people. We have 5,000 deaths a year, we have 350 people a year die from second-hand smoking, and 70 of our babies die from sudden unexpected death in infancy, so this is an incredibly important kaupapa. I know that many of us have been affected. I had a father who passed away from over 20 years of chain-smoking two packs a day. It means a lot to many people, and so hopefully there is an opportunity for us to come together and work collectively. It actually could be something that everyone across the House could collaborate on, so that is what I am saying to the Minister.

Just before I conclude, I would like to say that next week it is World Smokefree Day, on 31 May. World Smokefree Day is about raising awareness and contributing to the achievement of New Zealand becoming smoke-free by 2025. So, Minister, you have got something to be very proud of next week, and to stand up and talk about. The theme for this year is “It’s about whānau”. What we want to do is encourage more people to seek help if they want to give up smoking. What we have realised through the research is that people cannot give up by themselves; they actually need the tools to support that. They need whānau around them who support it, they need the patches, they need the gum—whatever tools they need to realise that aspiration of being smoke-free. All that we have tried to highlight on this side is that access to tobacco is one thing, but, actually, if you really want to address the addiction, then we have got to invest a whole lot more in the tools that are going to be effective.

Finally, I too would like to honour Dame Tariana Turia. This is her legacy. I would also like to acknowledge Hone Harawira because he was a then member of the Māori Affairs Committee that pushed the inquiry through, and the Māori Affairs Committee itself, which spent a lot of time and actually produced a really good report that gave us, I think, a lot of hope about Māori willingness to become smoke-free. It provided a lot of recommendations to the Government, and I know that the Government has responded to that particular inquiry. Many people have been incredibly passionate about this kaupapa, and will continue to be. Kia ora.

A party vote was called for on the question, That the Customs and Excise (Tobacco Products—Budget Measures) Amendment 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.

The House adjourned at 12.50 p.m. (Friday)