Wednesday, 15 June 2016

WEDNESDAY, 15 JUNE 2016

WEDNESDAY, 15 JUNE 2016

Mr Speaker took the Chair at 2 p.m.

Prayers.

Motions

United Nations Committee on the Rights of Persons with Disabilities—Election of Robert Martin

Hon ANNE TOLLEY (Minister for Social Development): I seek leave to move a motion without notice or debate that this House congratulate Robert Martin on being elected to the United Nations Committee on the Rights of Persons with Disabilities—

Mr SPEAKER: Order! I just need to put the leave first. Leave is sought for that course of action. Is there any objection to that action being followed? There is none.

Hon ANNE TOLLEY: I move, That this House congratulate Robert Martin on his election to the United Nations Committee on the Rights of Persons with Disabilities and acknowledge that Robert has made history as the first person with a learning disability to be elected to a United Nations committee.

Motion agreed to.

Oral Questions

Questions to Ministers

Economic Outlook—Reports

1. CHRIS BISHOP (National) to the Minister of Finance: What reports has he received on the outlook for the New Zealand economy?

Hon PAULA BENNETT (Associate Minister of Finance) on behalf of the Minister of Finance: Yesterday the New Zealand Institute of Economic Research (NZIER) released its consensus forecasts. NZIER reports a lift in growth expectations on the back of a stronger outlook for household spending. Solid investment growth over the next few years is expected, reflecting improved business confidence and increased residential construction. Expectations for employment growth over 4 years have been revised up, and forecast unemployment revised down. Growth is expected to average 2.7 percent over 4 years, broadly in line with recent forecasts from Treasury and the Reserve Bank.

Chris Bishop: What reports has he received that show how solid momentum in the economy in the first half of 2016 is helping to deliver more jobs and higher wages for New Zealand families?

Hon PAULA BENNETT: Treasury recently published its Monthly Economic Indicators report for May, which says: “The economy appears to have maintained solid momentum over the first half of the year. … Robust real wages, along with high migration and tourism inflows, supported retail spending in the March quarter. … On balance, the economy appears to be doing slightly better so far this year than anticipated in the Budget update.” Treasury also reports lifts in business confidence, property expectations, and employment and investment intentions among businesses.

Chris Bishop: How is continuing job growth, in particular the growth in full-time employment combined with low cost of living increases, helping families get ahead?

Hon PAULA BENNETT: Monthly Economic Indicators reports a 1.2 percent increase in employment in the March quarter alone. That is 28,000 additional jobs, and 75 percent of this job growth was in full-time employment. Construction industry employment growth is being increasingly driven by Auckland as the residential component of the Canterbury rebuild levels off and Auckland building activity increases. Better job prospects are encouraging more people to look for work, leading to the labour force expanding a record 1.5 percent in the quarter. Inflation of 0.4 percent is supporting robust real wage growth, meaning higher spending power for households and families.

Chris Bishop: Supplementary question, Mr Speaker.

Hon Members: Again?

Mr SPEAKER: Supplementary question, Chris Bishop.

Chris Bishop: That is right, there is more—there is more. What steps is the Government taking to support growth, investment, and employment?

Hon PAULA BENNETT: The Government does not create jobs, of course; businesses do. What the Government can do is create an environment where businesses have the confidence to invest another dollar and employ another person. The Government has taken many steps to support growth, investment, and jobs, including reducing income taxes to increase incentives to work, reducing ACC levies by around $2 billion since 2012, investing in new public infrastructure, and diversifying our exports by negotiating the Trans-Pacific Partnership alongside agreements with Malaysia, Hong Kong, and Korea.

David Seymour: If cutting taxes has previously been found to increase the incentives for work, savings, and investment, does the Government have any plans to repeat that?

Hon PAULA BENNETT: As the member knows, there were not any in 2016, and he has got a few more sleeps to wait until Budget 2017 to have the answer to that.

Grant Robertson: How is Westpac bank wrong when it describes the Budget as a “Fiscal mirage”, saying that “it’s clear that the improvement in the fiscal outlook has largely come from the economic projections … rather than [any] policy”?

Hon PAULA BENNETT: As I just said in answers to the primary question, when you are seeing growth that is coming out through the New Zealand Institute of Economic Research of 2.7 percent—Treasury forecasting 2.9 percent—on the world stage I think most people would see that as a positive story. That is why we disagree.

Social Housing, Minister—Confidence and Homelessness

2. JAMES SHAW (Co-Leader—Green) to the Prime Minister: Does he have confidence in all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes.

James Shaw: How can he have confidence in his Minister for Social Housing when on her watch the number of severely housing deprived Kiwis has increased 25 percent, meaning at least one in every hundred New Zealanders will go to bed tonight in an overcrowded house, a night shelter, or a car?

Rt Hon JOHN KEY: I take with a grain of salt the member’s numbers, but the reason I have confidence in the Minister for Social Housing is that she has been working hard in this area for a long period of time, including the stocktaking and review that was done in the early part of last year and the work that was announced as part of Budget 2016—the $41 million that will assist people in need of emergency support and the $200 million for social housing. She was also instrumental in getting agreement from the Minister of Finance to ensure that income-related rents would move to social housing providers as well as Housing New Zealand.

James Shaw: I seek leave to table Otago University research from 3 June 2016 that shows that homelessness in New Zealand has grown by 25 percent.

Mr SPEAKER: I will put the leave. Leave is sought to table that particular University of Otago research. Is there any objection to it being tabled? [Interruption] Is that an objection? There is objection.

James Shaw: I raise a point of order, Mr Speaker. I seek your advice in this situation, and several others like it. It is becoming an increasing tactic of the Prime Minister and the Government to answer questions simply by quibbling the numbers in the Opposition’s questions, knowing full well that we are not able to table the data afterwards. I am just wondering whether you think that is an adequate way of responding to questions.

Hon Gerry Brownlee: It is the prerogative of the House to choose. Any member, in fact, can decide that they do not want to support the tabling of information. This particular information is not reliable, we do know about it, and it has, for example, people living with relatives being recorded as homeless.

Mr SPEAKER: I was ever hopeful that it might have been a helpful point of order. Once a member, in putting forward a supplementary question, decides to include some figures, then it is always the option of a Minister or a Prime Minister to then dispute the question, so my advice to the member is to think whether he could tighten questions up. Do not include such statistics unless they are essential to the question, and at least then it does not give the opportunity for a Minister, in responding, to dispute the questions. On the final point raised by Mr Brownlee, he is quite right. I decide whether to put the leave, I put the leave, and it is the prerogative of any member to then decide to decline that leave.

James Shaw: How can he have confidence in his Minister for Social Housing when the number of people sleeping rough within a 3-kilometre radius of the Sky Tower has increased by 135 percent over the course of the last 3 years alone?

Rt Hon JOHN KEY: The Government is aware that when the Auckland City Mission did its annual stocktaking those numbers were higher, and that is why the Government has been having extra work done to try to support those people, including greater work occurring from Ministry of Social Development officials.

James Shaw: When was the last time that the Prime Minister walked down Queen Street or Lambton Quay or Colombo Street and noticed the growing number of people sleeping in shop doorways and thought to himself: “This is the brighter future I promised 8 years ago.”?

Rt Hon JOHN KEY: As I go around New Zealand, what I do see is a country that is a lot more confident in itself. I see high growth around the country and I see a lot of optimism and people benefiting from the National-led Government. I think that is why this Government has enjoyed the kind of electoral support we have. [Interruption]

Mr SPEAKER: Order! If the member wants to continue with his questions, I suggest he do so.

James Shaw: What is the financial cost of homelessness to the taxpayer, and why has the Minister for Social Housing not done any work to quantify this?

Rt Hon JOHN KEY: The member needs to direct that question to the Minister for Social Housing.

James Shaw: When the Prime Minister told me yesterday in question time that his “Government has a comprehensive plan [on] housing, and that plan is working”, was Paula Bennett’s sudden announcement of a $5,000 payment to homeless people to move out of Auckland part of that comprehensive plan, and is it working?

Rt Hon JOHN KEY: The $5,000 payment has not started yet; it starts next week, as I understand it. That would be one very, very small piece in terms of support for social housing, but the anecdotal feedback I have had from the Minister is that there is some encouraging evidence that people might be interested in taking up the $5,000.

James Shaw: Why does he say that his Government’s comprehensive plan on housing is working when the numbers of people who are homeless or who live in constant fear of becoming homeless has risen by 25 percent over the 8 years of his Government?

Rt Hon JOHN KEY: As I said earlier, the research that the member is relying on is quite interesting research in the sense that it lists, amongst other things, someone who is homeless as someone who is living with a relative. I do not think that most New Zealanders would say that that is the definition of “homeless”.

Social Housing, Minister, and Building and Housing, Minister—Confidence

3. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “I expect high standards from my Ministers and I hope they maintain those standards … if they don’t, then obviously I will take action if necessary”?

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

Andrew Little: Does Paula Bennett’s failure to ensure that families have houses to live in meet with his high standards?

Rt Hon JOHN KEY: I reject the proposition.

Andrew Little: Was it in keeping with his standards for Paula Bennett’s office to smear a marae for doing what she has failed to do, namely, helping homeless families?

Rt Hon JOHN KEY: The Government has made it quite clear—the Minister and myself—that we do not condone the actions of the staff member, but we are also aware that the Minister was not aware that the staff member had spoken to a journalist. As soon as she became aware of that, she apologised.

Andrew Little: Was it in keeping with his standards for Paula Bennett to mislead the media by saying the homeless don’t want help?

Rt Hon JOHN KEY: I have not seen that quote, and I would need to see the context in which it was made.

Andrew Little: Does Nick Smith’s failure to do anything to stabilise house prices and arrest the fall in homeownership meet with his high standards?

Rt Hon JOHN KEY: If I contrast the actions of Nick Smith as Minister of Building and Housing with the housing Ministers in the previous Labour Government, then I have great pride in the work he is doing, because at least he is doing things. Although I am a little reluctant to read too much into 1 month’s data, we can see even today that Auckland house prices are going up a little less than the rest of the country.

Andrew Little: Was it in keeping with his standards for Nick Smith to blame the housing crisis on Kiwis for not being educated enough, while protecting foreign speculators that Minister Smith says do “diddly-squat”?

Rt Hon JOHN KEY: The member is just making it up.

Andrew Little: Does anyone in his Government take responsibility for anything anymore, or is it just an endless exercise in passing the buck?

Rt Hon JOHN KEY: Of course the Government takes responsibility. We take responsibility for the fact that the country is growing strongly. We take responsibility for the fact that the books are back in order. We take responsibility for the fact that we are the first Government in decades to raise benefits. We take responsibility for the fact that under this Government the refugee quota will be raised. We take responsibility for the fact that through the worst of times we stood behind the most vulnerable New Zealanders. We take responsibility for the fact that we stood behind the people of Christchurch. We take responsibility for the fact that we have undertaken more elective—

Mr SPEAKER: Order!

Refugees—Quota and Support

4. JONATHAN YOUNG (National—New Plymouth) to the Minister of Immigration: What recent announcements has the Government made to support refugees?

Hon MICHAEL WOODHOUSE (Minister of Immigration): The Government recently announced the first increase in nearly 30 years to the refugee quota, from 750 places to 1,000 places annually from 2018-19. The Government is presently providing 500 places to Syrian refugees over the next 2 years. On top of this, New Zealand provides 300 places under the refugee family support category, and considers and approves nearly 175 asylum cases every year. Combined, these numbers comprise nearly 1,500 places for the world’s most vulnerable people to be settled into New Zealand.

Jonathan Young: What else is the Government doing to support refugees?

Hon MICHAEL WOODHOUSE: This Saturday the Prime Minister will officially open the new facility at the Māngere Refugee Resettlement Centre—a $25 million investment in refugee resettlement. That centre has been the first stop for refugees coming to New Zealand for the last 70 years, and the upgrades to the centre have transformed it into a state-of-the-art facility that will give all future refugees the best possible start in New Zealand. We know it is the people providing support to the refugees who matter, but the building will be a fantastic environment within which to make their home for the first 6 weeks.

Iain Lees-Galloway: Why will he not simply follow the advice of Amnesty International and the Red Cross, and double the quota? When the Prime Minister says that we have got $3 billion for tax cuts and that we have got $20 billion for the Defence Force, why can he not find the resources to double the quota?

Hon MICHAEL WOODHOUSE: I think that is a question that he could ask of his own party when it was in Government for 9 years and did absolutely nothing. I am very proud of the response that this Government makes to refugee—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! A question was asked—it was a relatively political question—and the answer should then be able to be heard by everybody, including myself. I cannot hear it above the barrage I am picking up from my left-hand side. Does the Minister wish to continue?

Refugees—Quota

5. DENISE ROCHE (Green) to the Minister of Immigration: Does he stand by his statement that “we take our international humanitarian obligations and responsibilities seriously”, given that the Government will not make any permanent increase to the refugee quota for another 2 years, at a time when we are facing the biggest refugee crisis since World War Two?

Hon MICHAEL WOODHOUSE (Minister of Immigration): Yes.

Denise Roche: Given that the refugee quota has not increased since 1987, and our population has increased by 43 percent over these three decades, would he agree that we could be more ambitious than being in the 90th place in the world for the number of refugees we accept?

Hon MICHAEL WOODHOUSE: When the member refers to the 90th place, she is moving away from the prefacing statement in her question, which is about quota. This Government has made a significant investment into the quality of the settlement outcomes for the refugees we do take, which, by any measure, are not as good as they could be. But if one was to ask the Syrian refugees, whom we are taking right now, whether they care that they are not called “quota refugees”, they would say they do not; they are just very happy to be welcomed into this country.

Denise Roche: What does he say to New Zealand Red Cross, Amnesty International, the Anglican Church, the Catholic Church, and the tens of thousands of ordinary, fair-minded Kiwis, who say we can and should support 1,500 of the millions of women, men, and children who are fleeing terrible circumstances into a safe haven in New Zealand?

Hon MICHAEL WOODHOUSE: I do not need to answer that question in the hypothetical. I can tell the member that Catholic bishops, Caritas, and Red Cross have all congratulated the Government on the announcement this week. Amnesty International has expressed disappointment in that, and that is completely understandable given that it led the call to double the quota. But I am very satisfied that we do a number of things to fulfil our international obligations, firstly, in the refugee space, but not only that. We have increased our financial aid to countries like Iraq and Syria and the countries around them. We have been building schools in southern Turkey, and our defence force response into Afghanistan through provincial reconstruction and training in Iraq all contribute to stability in the regions, and I am very proud of that.

Mr SPEAKER: Supplementary question, the Rt Hon Winston Peters—the Rt Hon Prime Minister—the Rt Hon Prime Minister.

Rt Hon John Key: I know both of us have been booted out of the House this year, but, anyway, there we go.

Mr SPEAKER: Just ask the question.

Rt Hon John Key: Does the Minister think that if political parties feel amazingly strongly about doubling the quota for refugees, they should have that as an absolute bottom line, and not form a Government with another party that might one day say it is not prepared to do that?

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

Mr SPEAKER: I do not need any assistance from the member. That question is designed for nothing else but to attack another member. [Interruption] Order!

Denise Roche: Why are we risking our reputation as a responsible global citizen and member of the United Nations Security Council by delaying this small increase to the refugee quota until 2018, when even Australia is accepting around three times more than we do, on a per capita basis?

Hon MICHAEL WOODHOUSE: I reject the implication that this country’s reputation is at risk. It is quite the opposite. We are held up for the quality of our settlement outcomes and for the support that we have provided, not only to refugees but also to other parts of the globe.

Social Housing, Minister—Staff Member’s Release of Personal Information

6. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Social Housing: What time and date was she first aware that her staff member had released or was going to release information about a Police investigation into Te Puea Marae Chairman, Hurimoana Dennis?

Hon PAULA BENNETT (Minister for Social Housing): At just before 2 p.m. on Tuesday, 14 June I was stopped on the bridge and asked questions about whether a staff member had leaked information about Mr Dennis to the media. After 2 p.m. I asked my staff to investigate whether there was anything in the allegations. I had two questions in the House and concentrated on them, while leaving my senior staff to investigate. At approximately 3.20 p.m. yesterday one of my staff confirmed to me that they had spoken to a Television New Zealand journalist about it the week before.

Phil Twyford: Why did her staff member want the journalist to know about the police investigation?

Hon PAULA BENNETT: The staff member has informed me that she was talking to the journalist in light of a meeting that I had on Friday morning with Mr Dennis. She informed me that as an aside, at the end, she did discuss those issues with him, as has been canvassed. She assures me that it was not the intention for it to be a smear campaign against Mr Dennis or the marae.

Phil Twyford: Did she talk to her staff about the information that came up in the meeting with Hurimoana Dennis; if so, why?

Hon PAULA BENNETT: I had a full brief with three or four of my political staff members on the meeting that I had with Mr Dennis. Yes, it did come up, about the investigation.

Phil Twyford: Why did she discuss the information about the police investigation with her staff?

Hon PAULA BENNETT: It was just in the context of the whole meeting. I had gone through the meeting from start to finish, and, as a consequence of that, that is why it was raised—in that context.

Phil Twyford: Was the staff member who joined her for the meeting with Hurimoana Dennis at a Mount Eden cafe the same staff member who passed the information about the police investigation to the journalist?

Hon PAULA BENNETT: I am unwilling to confirm or deny whether or not it was the same staff member because I think it might identify them, and I do not think that is fair.

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

Mr SPEAKER: A point of order has been raised, and I need to hear it in silence.

Grant Robertson: The Minister did not invoke a public interest clause there. Mr Twyford is not asking for the name of a person—simply whether or not the person who was in the meeting with Ms Bennett was the same person who spoke to a journalist. I do not see how that could identify a particular person, one way or the other.

Mr SPEAKER: I refer the member to Speaker’s ruling 193/3, which talks about an issue of commercial sensitivity, national security, and privacy. In this case I think that test has been met.

Phil Twyford: Will she take responsibility for the culture in her office that allowed a staff member to think it was OK to leak details of a police investigation to a private citizen?

Hon PAULA BENNETT: There is not a culture. As I have said, it is unacceptable and it should not have happened.

Business Taxation—Religious Exemption

7. DAVID SEYMOUR (Leader—ACT) to the Minister of Revenue: Does he think the tax system for New Zealand businesses is fair and equitable?

Hon MICHAEL WOODHOUSE (Minister of Revenue): Yes, and we are making it even fairer, more equitable, and easier through the Business Transformation project funding and the small business tax package announced in Budget 2016.

David Seymour: Does he think taxpaying New Zealand businesses would be comfortable knowing that neither Sanitarium nor Mission Estate Winery pay company tax due to their advancement of religion being categorised as a charitable purpose, and will the measures he just alluded to address that question?

Hon MICHAEL WOODHOUSE: As the former chief executive of an organisation led by a religious order, and a non-taxpaying entity, I am very aware of the issues that they raise. Many of those organisations distribute profits for charitable work, particularly that proportion that they would otherwise pay in tax. It was reviewed by the previous Government, and it was found that there was no case for changing the status quo.

David Seymour: Does he think it is fair on typical taxpaying New Zealand businesses when we have examples like the failed French company Gameloft, of My Little Pony fame, having its corporate tax rate—which, presumably, was nothing—offset by a $2.9 million Government grant funded by other taxpayers?

Hon MICHAEL WOODHOUSE: I have no knowledge, I am sorry to say, of that issue. But I would be very happy to address it if the member puts it down in writing.

David Seymour: Would it not be fairer and more equitable to simply cut the company tax rate for all New Zealand businesses, rather than have these various transfers, grants, and loopholes?

Hon MICHAEL WOODHOUSE: The Government is committed to a broad based - low rate tax system, and it is being held up as just that. I am satisfied that we have a tax framework that creates the right incentives for growth and profit.

David Seymour: How can the Minister say he is satisfied with our company taxation system when the OECD says we have the fourth-highest effective tax rate on capital in the developed world?

Hon MICHAEL WOODHOUSE: The member refers in his question to capital, and, obviously, that is an issue that is a live one—one that the Tax Working Group looked at in detail in 2009. The Government did make some changes to the way in which the tax framework worked, but we are satisfied with the place that we have got to.

National Certificate of Educational Achievement—2015 Results

8. Dr JIAN YANG (National) to the Minister of Education: What reports has she received on the final NCEA results?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. I was pleased to announce this morning the best-ever results for National Certificate of Educational Achievement (NCEA). Final results for 2015 show roll-based level 1, 2, and 3 NCEA achievement rates rose by between 1.5 and 3.2 percentage points last year to, respectively, 74.4 percent, 76.4 percent, and 62.7 percent. The proportion of students gaining university entrance also increased by 3.1 percentage points.

Dr David Clark: Standards are dropping.

Hon HEKIA PARATA: It is clear that the—actually, standards are going up. It is clear that the hard work of our teachers, principals, and kids is paying dividends. I congratulate them all on their efforts—well, certainly this side of the House congratulates them all on their efforts.

Dr Jian Yang: How does more young people with NCEA benefit New Zealand?

Hon HEKIA PARATA: Achieving NCEA level 2, in particular, is the passport to success. Since this Government took office in 2008 level 2 achievement rates have risen 16.6 percent. That means thousands more kids every year are gaining the skills and qualifications they need to undertake further training, education, or enter the workforce. However, we will not be satisfied until all young people are getting the start they need in life.

Emergency Housing—Demand and Loan Forgiveness

9. CARMEL SEPULONI (Labour—Kelston) to the Minister for Social Development: Does she stand by all her statements?

Hon ANNE TOLLEY (Minister for Social Development): Yes, in the context in which they were made.

Carmel Sepuloni: Why did she claim that Work and Income does not record the housing status of clients, when the Prime Minister was quoted on 16 May 2016 using a Work and Income homeless figure of 428 and her colleague Paula Bennett stated last week that the Government does know how many people are sleeping rough and do not have places to go?

Hon ANNE TOLLEY: That question was asked in the Estimates hearing today and it was adequately explained to the member that there are different categories that Work and Information collect information under. One is homelessness and one is insecure housing. The member was also told that—although it is not my responsibility as a Minister; it is the Minister for Social Housing’s responsibility—the criteria under which we take that information are being reviewed.

Carmel Sepuloni: On what basis did her Government determine the additional $9 million for the special-needs grant for a 7-day subsidy, given that she says she does not have data on the average stay in emergency motel accommodation and does not know how much Work and Income has spent on assistance for this to date?

Hon ANNE TOLLEY: Again, as was discussed at the Estimates hearing this morning, we have done some work to determine the $9 million injection into emergency housing, but we are also making changes to the way we collect data, not the least being that by having a special-needs grant for emergency housing be non-recoverable we will be able to get better information on how much and how many times it is accessed by clients. That will mean we will be in a much better position come Budget 2017 to know exactly whether that $9 million is going to be sufficient, whether it is too much, or whether we need more.

Carmel Sepuloni: I seek leave to table an Official Information Act (OIA) response from the Ministry of Social Development (MSD), which is not publicly available, dated 13 January 2016 that states the average length of stay in emergency motel accommodation using MSD payments is 10 days?

Mr SPEAKER: Leave is sought to table that particular OIA response. Is there any objection to it being tabled? [Interruption] Order! I put the leave; the leave has been denied. That is the end of that matter.

Carmel Sepuloni: Does she disagree with the social housing Minister’s decision to invest $9 million in the special-needs grant for emergency housing, given that she said to the Social Services Committee today she does not recognise an increase in the need for emergency housing?

Hon ANNE TOLLEY: I do not believe that I ever stated that. I do agree with the Minister for Social Housing in having that special-needs grant be non-recoverable.

Carmel Sepuloni: Has she asked Cabinet to forgive debt for emergency accommodation through the special-needs grants, given that she stated at the select committee meeting today that it is unfair that Work and Income clients are forced to pay this back?

Hon ANNE TOLLEY: Again, the member must quote accurately if she is going to try to put words in my mouth. I never said that at any stage.

Carmel Sepuloni: You said it was unfair.

Hon ANNE TOLLEY: No, I will repeat what I said. We have hard-working people in New Zealand who are paying their debt back to Work and Income, and it would be most unfair if we then decided that for a certain group of people we would write off their debt.

Workplace Health and Safety—Asbestos

10. TODD BARCLAY (National—Clutha-Southland) to the Minister for the Environment: What steps is the Government taking to reduce the risk of New Zealanders being exposed to asbestos-containing products?

Hon Dr NICK SMITH (Minister for the Environment): Cabinet has made a decision to ban the importation of asbestos-containing products. This regulation is required because the risk to the health of workers and the environment is not just from raw asbestos, which is currently banned, but also from products containing it. Asbestos is the No. 1 occupational health killer in New Zealand, relating to 170 deaths per year. This measure will reduce that risk in future.

Todd Barclay: What evidential basis did the Government use to make its decision to ban asbestos-containing products?

Hon Dr NICK SMITH: Last year the Royal Society of New Zealand published its report on asbestos risks beyond the workplace and concluded that it would be prudent for New Zealand to ban those products that contain asbestos. The new prohibition will come into effect on 1 October and arises from the inventory that my ministry did, where we are now satisfied that there are alternatives. The regulations will provide a narrow range of exemptions, as is similar in other countries, for areas like vintage aircraft, where there is no alternative and where there are proper safety systems around the asbestos that is provided.

Todd Barclay: What steps is the Government taking to reduce the risk from asbestos products already here, particularly in buildings that may be in the process of being demolished or upgraded?

Hon Dr NICK SMITH: New health and safety in work regulations were put in place by this Government in April this year in respect of asbestos. They specifically require and detail the management of asbestos to ensure that it is disposed of safely. The combination of these regulations that ban the importation of new asbestos-containing products, as well as the new regulations for dealing with the asbestos that is here, will help reduce the appalling toll of 170 deaths per year in future.

Civil Aviation Authority—Charges

11. DENIS O’ROURKE (NZ First) to the Minister of Transport: Will the Civil Aviation Authority reduce its charges to its general aviation customers for the 2016-17 year?

Hon SIMON BRIDGES (Minister of Transport): As the member is aware, the funding changes for the 2016-17 year were set back in 2012. The authority is currently undertaking a review of its cost recovery framework for its regulatory activities. This is being consulted on, and proposals will be considered and decisions made by Cabinet later this year.

Denis O’Rourke: Does he stand by the reported statement made during the 2012-13 review of Civil Aviation Authority (CAA) charges by the then Minister: “For the period for the next funding review, that is 2015-18, the Civil Aviation Authority will look to decrease costs so that fees and charges reflect full cost recovery from 2015-16, and the need for further increases is reduced or removed.”?

Hon SIMON BRIDGES: Well, I cannot say for certain that the Hon Gerry Brownlee said that, just like I cannot say for certain who collects the member’s mail. I just think there are some things we may never know the truth on.

Denis O’Rourke: We certainly will not know the truth of anything that Minister says.

Mr SPEAKER: Order! The member is in danger of me just moving to the next question. Let us just have the supplementary question.

Denis O’Rourke: Is it true that the full cost recovery rate now is $466 per hour, compared with the rate at the time the then Minister made his reported statement of $288—an increase of 62 percent?

Hon SIMON BRIDGES: I do not think that is true, Mr O’Rourke.

Denis O’Rourke: What actions has he taken to ensure that the CAA has taken genuine, robust, and disciplined measures to ensure that the costs passed on to civil aviation customers are driven down and not increased? And try telling the truth again!

Mr SPEAKER: Order! If I hear that sort of interjection again from that member, he will be leaving the Chamber.

Hon SIMON BRIDGES: I think there has been a very full consultation, and there have been, I think, at least two proposals by the Civil Aviation Authority, and two rounds of consultation. As I say, at this stage they are just consultations; decisions have not been made. I suggest the member chills and waits for the Government’s decision.

Denis O’Rourke: Will the Minister assure general aviation customers that CAA charges for next year will either be reduced, or at least be no greater than they were as a result of the 2012-13 review; if not, why not? And let us have a meaningful answer!

Mr SPEAKER: Order! I gave the member full warning. I told him to sit down after asking his supplementary question, and not interject across the House like that. We are moving immediately to question No. 12.

Police—Road Safety Budget and Resourcing

STUART NASH (Labour—Napier): To the Minister of Police—[Interruption]

Mr SPEAKER: Order! I now will give Mr O’Rourke his final warning. If he interjects again through this question time—[Interruption] Order! If he interjects again through this question time I will ask him to leave the Chamber.

12. STUART NASH (Labour—Napier) to the Minister of Police: Does she believe the Police have sufficient resources to deliver on the community’s expectations around law and order?

Hon JUDITH COLLINS (Minister of Police): Yes, and I always back the police to deliver, unlike that member.

Stuart Nash: Does she believe that the road safety budget being cut by 8 percent in real terms since 2010 has anything to do with the increase in deaths on the road; if not, why not?

Mr SPEAKER: Either of those two supplementary questions, the Hon Judith Collins.

Hon JUDITH COLLINS: Clearly, it has not been cut. In fact, it has gone up 6.7 percent in the last 3 years. But I would also say to that member that if he is going to blame the police and the Budget for the road toll, what is he going to say about the fact that no one died on the roads last weekend?

Stuart Nash: Is the increasing road toll to do with the decrease in road police resources, or does she think it is more to do with the Clyde Road maintenance budget?

Hon JUDITH COLLINS: Neither.

Stuart Nash: What are her views on the police research that shows that for every drop in speed of 1 kilometre an hour five lives are saved?

Hon JUDITH COLLINS: I would find that very interesting.

Stuart Nash: In light of her statements last week, could she please clarify exactly how far over the speed limit she believes it is OK to drive?

Hon JUDITH COLLINS: It is entirely dependent on the conditions as well as the speed limit, and I would say to that member, as I have said many times, that just sticking to the speed limit is not always safe, as we have seen with people who drive 100 kilometres an hour around country roads.

Stuart Nash: As the Minister of Police, are there any other laws that she believes it is OK to break?

Hon JUDITH COLLINS: I would say to that member that the unwritten rule about not attacking public servants should be one that he should not breach as he did just last week when he attacked the district commander of police for the eastern district.

Stuart Nash: Does she believe that the falling resolution rates for burglaries had any connection with the fact that her Government has cut the police investigations budget by 15 percent in real terms since 2010?

Hon JUDITH COLLINS: No, any more than I think the fact that this Government putting 600 extra front-line police on the beat actually was something that was very helpful to the resolution rates.

Ron Mark: How can police resourcing in Upper Hutt be adequate when a respected businessman and National Party supporter says parked cars have been vandalised, shoplifting is at levels not experienced before, security guards are being assaulted, and burglaries and robberies—

Mr SPEAKER: Order! Can we bring the question to a conclusion quickly.

Ron Mark: —are on the increase, and police are not responding?

Hon JUDITH COLLINS: If that member would like to provide me with the details, I can assure him that they will be given to police in—absolutely, very quickly, really.

Ron Mark: Why is the police presence shrinking in Dannevirke as Tararua mayor Roly Ellis has been reported as saying by the New Zealand Herald?

Hon JUDITH COLLINS: The matters of where police put their resources is entirely an operational matter, and they tend to put people where they are needed.

Ron Mark: How can police resourcing be adequate when the president of Local Government New Zealand, Mr Lawrence Yule, and the mayors of 18 councils have joined a backlash against police restructuring, saying ratepayers have been left to foot the bill in the wake of a shrinking front-line police resource in their community?

Hon JUDITH COLLINS: I, like that member, am a great supporter of local government. I would also remind him that there is a local government election going on this year, that local government has always worked in partnership with police, that police cannot always be everywhere all the time, and that, actually, local government needs to take some responsibility, and the vast majority of the mayors do.

Ron Mark: Is the Minister aware that criminologists have long recognised burglary as an entry-level crime that eventually leads to assaults, rape, and murder, and that it is on that basis that resolution of burglaries is fundamental to serious crime prevention?

Hon JUDITH COLLINS: The member is quite correct.

Points of Order

Leave for Introduction—Immigration (Refugee Quota) Amendment Bill

DENISE ROCHE (Green): I raise a point of order, Mr Speaker. I seek leave to introduce the Immigration (Refugee Quota) Amendment Bill in my name and for the bill to be set down for the first reading next members’ day.

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

General Debate

General Debate

Hon HEKIA PARATA (Minister of Education): I move, That the House take note of miscellaneous business. I would like to take the opportunity to congratulate the teachers, the principals, and the kids and their families who have contributed to the highest National Certificate of Educational Achievement results we have ever had. Up and down the country we have hard-working Kiwi families who have contributed to the increasing strength in our economy. That, in turn, has allowed this Government, with a very strong investment focus, to put the money that we have prudently husbanded into places where it will make the most difference, both in short-term investments but also in the medium to long term.

Everybody in this House knows that a good education gives more choices. Those choices properly executed will mean that we will see greater strength in our economy and the ability to grow well and to invest in the options that people want that characterise their quality of life, and by that I mean to be able to travel, to be able to purchase the houses they wish to purchase, and to be able to have their children educated in the way they wish to have them educated. Under this Government we have seen growth under very difficult times. This Government has not resiled from that. We have seen more jobs created, we have seen the average income go up, we have seen unemployment go down, and we are seeing skills and qualifications growing through the very targeted investment we are making in education.

For the first time Vote Education is over $11 billion—$11 billion. That is a shipload of money that this Government considers—[Interruption] Oh, a shipload—please. Please, it is a little pun—do not get all upset about it. That is going into education, and we are seeing the results of that. We are seeing more young people participating in early childhood education. We are seeing more do better with national standards. We know how well kids are doing each year. We do not have to wait, as the previous administration did, till they get to year 12 to find that kids are not literate or numerate. Every year under national standards—in fact, every week or every month—teachers are able to see how well kids are doing and to make the next learning step or investment.

This Government, using its social investment approach for the first time in Budget 2016, has said that rather than have a universal operations grant across the education sector, it will target those kids whom it knows from data are most at risk of not achieving. That means that although the overwhelming majority of schools will get some investment, they will get different levels according to the intensity of risk that is in their schools. This approach reflects our Government’s approach to using data and investing taxpayers’ money where it will make the most difference. It reflects our respect for taxpayers, who are the ones who grow the economy, which this Government understands. It is not the Government; we are just the middle people.

Hon Member: You’re saying “taxpayers”?

Hon HEKIA PARATA: I said “taxpayers”—that is right. We respect those people. We want to make sure that the investments we put into education or science—this Budget also provided for a $761 million investment into the space of technology, science, and engineering because we know that that is part of a 21st century modern economy.

Last week I was out in “Technology Valley”, otherwise known to some people as the Hutt Valley. Chris Bishop, the energetic list MP based in the Hutt, ensured that I attended the Technology Valley Awards. There was a celebration from the youngest learners there to the entrepreneurs and the innovators in recognition that knowledge and new knowledge is important for New Zealand’s place in the world. New Zealand understands its role as an international player.

Hon Trevor Mallard: The same day you fired 14 scientists in the Hutt.

Hon HEKIA PARATA: Not only are we concerned to ensure that New Zealand citizens get the best education possible, but we are also prepared to give that opportunity as part of our international role to those who cannot get it elsewhere. That member can shout away over there—

Hon Annette King: You’re shouting. Shh!

Hon HEKIA PARATA: —but the people in the Hutt know he does nothing but shout. I am matching the shouting from your colleague, Mrs King. I am excited about “Technology Valley”. I am excited about the investments made there by the Hutt City Council. I am excited by the energetic Chris Bishop, who is the first time they have seen energy in the Hutt Valley. It is the investing in education—yes, Mr Speaker—that will make the difference for more young New Zealanders. Thank you.

DENIS O’ROURKE (NZ First): The National Government’s mismanagement of housing in New Zealand is now chronic. It is not just a housing bubble in Auckland; it is a housing crisis nationwide. It is causing a firestorm of economic, health, and social issues throughout the country that will drag New Zealand down for decades to come. If you look at the results in Auckland alone you can see the magnitude of the problem. First of all, ordinary people simply cannot find a house within their price range to buy, and too few are being built. We need at least 13,000 houses a year in Auckland alone, but what we find is fewer than half of that are still being built per year in New Zealand. The National Government has known that for years and has done little or nothing about it.

First-home buyers, even if they can find a house to buy, cannot afford to purchase it. They are forced into long-term rentals. That is why the term Generation Rent has been applied to them—applied for the first time in New Zealand. The problem is, of course, that they cannot afford to rent those properties, either, because of the huge rent increases that are actually driven by the increase in house prices. So they have to move down market and down market, trying to find lower and lower rents so that they can afford it, and to make things even worse, immigration at a net 70,000 a year, most of whom actually go to Auckland, greatly exacerbates the problem.

The root cause of this is that successive Governments have failed to plan for housing needs over decades. They have never developed a genuine long-term strategy, they have let the so-called market reign, and most people know that in New Zealand the market will never cope alone. The Government has penny-pinched wherever possible, fobbing off housing issues—especially social housing issues—on to other organisations, most of which cannot cope either. The Government has always failed to integrate housing provision with resource management, immigration, transport, and social security policy.

New Zealand First says that we should be taking a long-term view and that there should be direct Government investment in the housing market; not the zero-investment policy that this Government has taken. That is contrary to the approach that needs to be taken in New Zealand. So New Zealand First calls upon the Government and all parties to support the establishment of a housing commission so that we get a non-political approach to solving New Zealand’s long-term housing problems.

We need to revamp New Zealand’s housing market with a number of objectives, and the first is residential and land homeownership affordability. That is the fundamental problem—also social housing supply, security and affordability; planned Government investment in land development; and low-cost first-home purchase finance, which is also something that is desperately needed in New Zealand at the present time. In addition, sustainable housing objectives including energy sustainability and efficiency are also required, as well as housing quality generally. We also need integration of new housing developments with sustainable transport systems. That is something that really does not happen in New Zealand anywhere and should do so—that is what is happening overseas.

New Zealand First also believes that it is very important that overseas purchasers should not be able to buy residential property in New Zealand. We believe that they should be ineligible and that they should have to apply to the commission of which I spoke for a permit to buy a house in New Zealand. That should be granted only if they can demonstrate a genuine need; that should be difficult to do. We would also reduce immigration to sensible and sustainable levels, which are not what we have got in New Zealand at the present time. Immigration needs to be aimed at meeting genuine skill shortages in New Zealand instead of being the open slather we now have.

Hon MICHAEL WOODHOUSE (Minister of Immigration): You can say one thing about New Zealand First members: they are nothing if not predictable. Yesterday we heard speeches in the motion of support for the people of Orlando in the wake of that tragedy. I want to touch on a couple of them. The first was from Kevin Hague, one of the most compelling interventions I think I have heard in my time here, expressing condemnation at the act and aroha and support for the LGBTI community and for the Muslim community.

Then we heard another speech, without doubt the most vile, spiteful, hateful, and ignorant intervention I have heard in my time in this Parliament, from the leader of the New Zealand First Party, Winston Peters. I reckon it plumbed a new low, even by that member’s standards, by drawing a nexus between a United States citizen born in that country and this country’s immigration policy. Frankly, his call for some kind of Anglo-Saxon values statement to be signed by new migrants absolutely epitomises how ignorant and out of touch that party is.

Today I hosted the annual World Refugee Day function here at Parliament. I challenge Mr Peters to go along to functions like that and listen to the speeches that we heard today from a 16-year-old Syrian and from an 18-year-old Rwandan, or to go to the Māngere Refugee Resettlement Centre and go to a pōwhiri and see the energy and support for the values that we hold dear, the values of freedom and peaceful coexistence, of harmony and diversity, and then stand and tell this House that we need some kind of values statement. Pauline Hanson has got nothing on Winston Peters. I wonder, actually, whether he is Ms Hanson’s older brother, because they certainly sound very much the same.

At the World Refugee Day function was a fellow by the name of Yahya. Yahya has the distinction of being the first Syrian refugee to arrive into New Zealand under the emergency places response this Government put in place a couple of years ago. He spoke at the World Refugee Day event last year and, rather cheekily, put his hand up and said: “I am good at what I do, I have worked in a warehouse in logistics, I speak pretty good English—does anybody have a job for me?”. And, actually, there was an approach that day by a very large organisation in New Zealand that was trying to see if it could help. Sadly, that did not come about, and I met Yahya again today a year later, and he tells me that he is still looking for paid employment. I was very sad to hear that, but not that surprised, because that is a typical story we hear around the country. Oh, were it the case that every refugee we take could tell the same story as the speeches that we heard today. That would be great but, unfortunately, that is not the case.

Despite being held up as one of the world’s best at settling refugees, we still have fewer than 40 percent of those refugees in paid employment 10 years after they arrive. Their children do not do as well at school as ours. Immunisation and other health services are not taken up at the same rate. We need to do better, which is why the New Zealand Refugee Resettlement Strategy was put in place 3½ years ago. It is working. Progress is being made, but it is slow and we need to do more, which is why I am really pleased this week, in addition to the announcement of a significant increase in the quota of one-third—

Dr David Clark: Double the quota.

Hon MICHAEL WOODHOUSE: That member says: “Double the quota.” Well, he can go and ask his colleagues who were in Parliament from 1999 to 2008 why they did nothing—not a thing. Why would they say that? Yes, we have 60 million displaced people in the world. When the Labour Government was in power there were 42 million people displaced, and it did nothing. There was no strategy, no increase in the quota—more lion in Opposition, but pussycats when in Government—no money, and a decaying facility, which the Prime Minister will reopen on Saturday.

So I am very proud of the response and the announcement that was made this week to raise the refugee quota by a third, and we will redouble our efforts to make sure that every single one of those refugees settles well, thrives, and is independent from the State, but, more important, is free of the vile, disgusting rhetoric that we heard from Winston Peters and the New Zealand First Party. It is a speech and rhetoric that we have heard long enough, going to a smaller and smaller cohort of New Zealanders—and I think that is a good thing.

Dr DAVID CLARK (Labour—Dunedin North): I challenge Minister Woodhouse to double the quota of refugees. I was out on the parliamentary forecourt this afternoon where people made the point that that Minister and his Prime Minister have not visited a refugee camp themselves. The last Labour Government took refugees when there was a crisis. When I was a child growing up there were Cambodian refugees taken in by New Zealand. The people want to have these people in the country—the churches and the community groups pledge that they will help. They are doing it in Dunedin; we can do it across New Zealand. New Zealanders are big enough people to do more than we are currently doing, and I think that the Minister knows that.

I want to speak a little bit about the way that the odds are stacked against middle New Zealand under this Government, because we have a Government sitting there opposite that has just put through a Budget that has absolutely nothing in it to solve the housing crisis, an education budget that has frozen the operations grants for schools and is going to see parents fork out more in voluntary donations, and a health budget that does nothing to address the $1.7 billion of underfunding that that Government has brought in over the last 6 years. It is busy working in the interests of the ultra-wealthy and not in the interests of most New Zealanders.

You can see it clearly every time an issue comes up. On the Panama Papers, the Prime Minister’s first response was: “That’s going to be $24 million that the industry misses out on.” A short-term monetary response—not looking at New Zealand’s international reputation and not showing any values that New Zealanders could identify with. We see it with the Skycity deal—done behind closed doors with big corporates. We see it with the housing speculators. This Government has done nothing to curb housing speculation. That is because it is more interested in the interests of the ultra-wealthy than the interests of middle New Zealand. When an issue does arise that hits middle New Zealand in the pocket, the Government runs a mile.

I am going to talk now about the great salary stuff-up, the issue of payroll in New Zealand—the great salary stuff-up. It is not the cock-up that catches out a Government Minister; it is the cover-up. That is what I want to say to the Minister for Economic Development today, because this Government has covered up something that has been going on since 2009, unchecked, in this country. It did a review of the Holidays Act back then, it found that there were some inadequacies in the Act, and it changed the law, and it has only made it worse. Then it buried the issue. Since that time, the Government’s estimate says that up to $2.2 billion in debt—

Hon Member: How much?

Dr DAVID CLARK: —up to $2.2 billion—in debt has accrued to employers because this Government has failed to address this payroll issue.

That is not just a matter of that big figure; this is an issue affecting middle New Zealand. The Government says that up to 763,000 New Zealanders—up to 763,000 New Zealanders—may have been underpaid for the last 6 years. That is one in three working people in New Zealand who may not have been paid correctly. People do not know it yet—people do not know it—because they themselves have not checked whether they have had the right pay cheque. The Minister is not making it easy for them. He is not releasing the list of payroll providers that are carrying people on their books who have not been paid correctly. Most employers do not know that they have done it. Employers, in my experience, act in good faith. They want a clear set of rules and they want to do what is right by their employees. They do not want to short-change them. They are doing what their payroll suggests—they are following the automatic settings. They are doing what they think is right, and this Government has failed in its oversight of payroll in New Zealand and allowed that liability to grow.

The Government has been covering up this issue for the last 6 years and allowing those New Zealanders to be underpaid for all of this time. The Ministry of Business, Innovation and Employment estimates that most people affected are missing out by between $250 and $500 a year. That adds up over time. Over 6 years that means that some people will have been underpaid by $3,000 and they do not know it yet. The Government’s low-end estimate, actually, is that nearly 200,000 people have been underpaid. People out there watching this today will not yet know that they have been underpaid. The Government should release the list of those companies that are carrying people who have been underpaid, and if it is not going to do that, we will release the list on this side of the House in due course, because we cannot let this continue.

This Government’s cover-up is going to cost it. When an issue comes up that affects middle New Zealand, it does not stand up and make sure that middle New Zealand is looked out for. It has not looked to correct this issue; it has put employers in a difficult position—they are underpaying employees in New Zealand, and this is to the tune of billions of dollars. The Minister needs to take some accountability. This issue is going to affect so many New Zealanders. Check your pay cheques out there and watch this space, because there will be a lot more to come on this one.

Hon TODD McCLAY (Minister of Trade): That was the best speech from that member, David Clark, in 50 years. In fact, it was not—it was not even the worst speech in 50 years; it is just another speech that he has been making for 8 years. For 8 years that member and his colleagues have been coming to this House and trying to tell New Zealanders that this is the worst country in the world. New Zealanders get it—they know that is not the case.

Take education, which he passed over very lightly. What a fantastic speech by a passionate Minister of Education. The only people more passionate about education in this country than Hekia Parata are our teachers. This week we can actually turn round and say thank you to our teachers and to the people in our schools who have worked so hard to increase outcomes in all of those schools and in our high schools. They have done it with the absolute support of this Government over 8 years. We are spending more money than ever before in education. They have done it with the absolute support of two hard-working Ministers of Education in this Government over the last 8 years, who have backed teachers and recognised that students can get ahead when teachers have the tools that they require. This year $11 billion has been committed in the Budget to education.

So what did we hear from the Minister for Education? Well, statistics—and they are very important. The highest level of achievement in National Certificate of Educational Achievement (NCEA) levels 1, 2, and 3 than ever before. In NCEA level 2, a 16.6 percent increase in achievement of pass rates over the last 8 years since we came to Government. It is a fantastic outcome. It is actually not about the Government doing a great job; it is about 16.6 percent more young people in New Zealand who sit NCEA level 2 achieving, doing well, and having a brighter future under the support that we are giving them. In NCEA level 1, 74 percent of young people who sit NCEA level 1 are passing. It is an amazing achievement on the part of those young people, with the hard work of our teachers and the great work of our schools, and they know that they are supported by this Minister and by this Government.

I want to take just a moment to recognise Rotorua Boys’ High School in my electorate, which this week received the Prime Minister’s Education Excellence Award for excellence in leading—an amazing school, a great principal, and very hard-working students who are supported by their parents. That school recognised that there were groups of students who were not achieving well enough, and it actually worked extra hard to raise those levels of achievement. That school is as good as any school in this country, with the support of this Government and the hard work of those teachers. I want to thank the teachers of that school and every other school in the Rotorua electorate for the work that they do.

Just briefly, that $11 billion sounds like a lot of money—well, it is. But it is going to go into better school buildings and more school buildings where they are needed, supporting at-risk students, special education, and just driving up achievement and success throughout the education system. Do you know what this means? Hard-working, young New Zealanders have a better education, better outcomes, and they get to go and trade that education for high-paying jobs in a global economy.

This week we have 500 delegates and 500 negotiators from 16 countries representing the ASEAN Regional Comprehensive Economic Partnership (RCEP) agreement, a trade negotiation that New Zealand is at the heart of. This week, as host, we are driving hard to make sure a high-quality outcome can be delivered for the 3 billion citizens of those 16 countries, which represent half the world’s population, are almost 35 percent of the world’s economy, and spend $23 trillion on GDP every year. We want a higher achievement for them so that all New Zealanders and all New Zealand companies can benefit.

I would say to those listening that the Trans-Pacific Partnership (TPP) is a high-quality agreement that will deliver significantly for New Zealand, but RCEP has the opportunity to be significantly larger because these economies are closer to us, they are growing economies, they are developing economies, and we have agreements already in place with 14 of them. One we do not is India, and India will be a big prize. Our negotiators are pushing hard so that New Zealanders can have a very, very good outcome. It will take some time because we will not settle for less than we should—that was the case with the TPP—but those 500 delegates are welcomed to New Zealand, and I am glad that we can play our part to drive for greater liberalisation of trade openness so that those hard-working students, who are achieving so well under Hekia Parata and this Government, can use this great New Zealand education and exchange it for a higher-paying job in a global economy that wants Kiwis to do well for it. Thank you.

DAVID SHEARER (Labour—Mt Albert): There is a housing crisis. There is a housing crisis. There is a housing crisis. I say it three times because this Government says there is no housing crisis, yet it has allocated three Ministers to this housing crisis, and the way it is going it will need to allocate another three, because it is going badly—it is going really badly.

Today we had the really embarrassing spectacle of Paula Bennett having to apologise about a smear campaign out of her office against Hurimoana Dennis in Te Puea Marae, a man who has led the charge on homelessness. Paula Bennett, after 3 weeks of this marae functioning, fled through the other day—fled through, went through, barely stopping to meet anybody. She should be thanking Te Puea Marae, not trying to put those people in their place and smear them. That was a long list of problems.

Yesterday, as well, Paula Bennett got asked about the housing problem and some of the temporary mobile housing that is coming up, the prefabs. She said she knew nothing about it. They said: “But Mr Key just talked about it.” “Oh,” she said, “Oh yes, yes, that is right—they will be ready in April.” This Government is all over the place—all over the place. It is sending people down to the provinces with $5,000 in their pockets because it cannot put them into houses in Auckland. It is putting people in motels and then asking them for the money for it. These are beneficiaries who have done nothing wrong except failed under this Government’s policy, and they are being put in motels and asked to pay that money back. It is a disgrace.

That is only one housing Minister. The second housing Minister is Nick Smith, and do you believe him—do you believe him? Homelessness, he says, is a figment of people’s imaginations. Do you believe this? He tells us about consents, but everybody knows that consents do not keep out the rain. You cannot shelter under a consent—you want a home. He also says that houses are more affordable under National. The average house has gone up by $500,000 under Nick Smith—$500,000—and Auckland is heading towards a million-dollar average. Who can get into a million-dollar house—who can get into a million-dollar house? It has decimated the dream of young New Zealanders wanting to buy a house. It is disgraceful. He is a mistake of a Minister. It is an appalling legacy that this Minister is leaving for the people of New Zealand.

Housing Minister No. 3, Bill English, is the so-called economic guru of New Zealand. His credentials are taking a dive. He is saying that speculators are no problem, yet we know that 46 percent of all houses bought and sold in Auckland are done through speculators. We have now racked up a level of half a trillion—half a trillion—dollars of debt in New Zealand. Half a trillion dollars—that is beyond anything we have ever seen before. Fifty years ago, under Muldoon—my God! That was nothing compared with this. We have got $90 billion of debt under this Government, and we are now being fuelled by credit.

Just to tell you how out of touch this Government is, we have the banks finally saying: “No. We’re not going to lend to foreigners.” This is Labour Party policy, I will have you know. We should not be lending to foreigners. But that Government has never had the intestinal fortitude to even be able to stop foreigners from treating our housing market like they do the New York Stock Exchange. Selling pork bellies on the New York Stock Exchange is exactly what it is doing here in New Zealand with our housing market. It is a disgrace. This Government has had three housing Ministers to do the job, and none of them—none of them—have been able to do anything that can give us any hope.

JONATHAN YOUNG (National—New Plymouth): Under this John Key - led Government, children are starting school better prepared to learn and are leaving school better qualified to earn. We are getting it right. We are seeing the results of young people getting higher levels of attainment and achievement, and we are seeing results that are the best ever achieved by our students. As the Hon Hekia Parata said, congratulations not only to the students but to the teachers, the principals, and the parents. There will be parents right throughout this country, right now, who are absolutely stoked, absolutely thrilled, and absolutely feeling as if this Government is making something work for them and their families.

That is a very, very important thing. This is great for New Zealand. We need an emerging workforce that understands what it is to face challenge, to work hard, to persevere, and to succeed. Passing National Certificate of Educational Achievement (NCEA) level 1, level 2, and level 3 is all of that. It is not just about the content and having a fact file. It is about developing personal tools of discipline and perseverance, personal tools of learning, and being able to become educated and engaged in the bigger world that is outside the doors of the school. The OECD Policy Forum on the Future of Work, which I know members opposite highly revere, says that the world is in flux as a result of digitisation and the development of the digital economy. We all understand that, but the future of work is today—it is today. It is people who today are leaving places of training, needing to find employment.

What we can say, from this side of the House, is that we have been focused on that. We have wanted to build a great foundation for companies to prosper and succeed. We are wanting to have very high-quality international agreements, where we can have greater opportunities for export, and those export companies can flourish and also they can employ more New Zealanders. Two hundred and eighty jobs are being created a day—that is what is happening in our country today. These are graduates from tertiary institutions and from high schools who are leaving their training, going out there, and seeking employment. We want to have a workforce that is highly skilled and earns a good wage. We are seeing this happen here, in this country.

We have got this trend happening. Here in New Zealand we cannot swim against the trend, against the current. We have to continue, as a modern economy, to adapt and change and be adaptable. One of the things that we have done in this last number of years is make sure that we are able to engage digitally, not only across our nation, but across the world, with our ultra-fast broadband. Right now 1.2 million New Zealanders have the opportunity to connect, and many of them are doing studies and transacting business across this amazing network. We have made sure that our schools and hospitals have been online first. It is a great thing to do and a great thing to see.

The proportion of 18-year-olds achieving NCEA level 2 qualifications has increased. Four years ago it was 74 percent; today it is 84 percent. That is a phenomenal increase. That is phenomenal. You would not find anybody in the country saying that that is not a good thing. Even across the House, those members’ muted silence is an agreement that this is a good thing—84 percent—they will not stand up. [Interruption] So you are going to say that is a bad thing—84 percent. Since this Government took office in 2008, level 2 achievement rates have risen, as Todd McClay said, by nearly 17 percent. That is phenomenal.

What we have seen is 200,000 jobs being created, and another 170,000 in the next 3 years. We know that Treasury is forecasting 3.2 percent and 2.8 percent increases in terms of economic growth in this country. This place is in a really good shape.

It is great that in the midst of all of this we are even seeing crime rates come down. Is it not amazing that we are seeing youth crime come down nearly 40 percent? That is a great indication that young people are finding a future that is positive, that is engaging, and that is bringing them into employment, and bringing them into a future. I think that is a marvellous thing.

When you look at this Government, at what we have done, around 100,000 families with children are financially better off, with a real increase in benefit rates for the first time since 1972. That is a great thing.

PEENI HENARE (Labour—Tāmaki Makaurau): Once upon a time the world looked towards New Zealand as a leading light—a shining hope, and a country where prosperity was found everywhere, where kids played and families were able to raise their tamariki and their mokopuna in what was essentially a utopian society. What we can see at the moment in fact is that Rome is burning. I say “Rome is burning” because not only is there a housing bubble but inside that bubble is this Government. It is oblivious to the decisions that it is making and the impact they are having on our reputation around the world.

I say that in light of a very recent topic—250 extra refugees coming to New Zealand. Well, whoopee! That is just not enough. There has been pressure from the international community on all Governments across the world to take this issue seriously. And what does this Government do? It increases the quota by only 250. And now the world is looking at us and saying: “By crikey, maybe New Zealand isn’t the leading light of the world.” Maybe, in fact, this Government is living inside the housing bubble that it has created, oblivious to the fact that the decisions it has made have had a huge impact on our reputation around the world.

I am reminded of one of my favourite songs from the 1990s, by C+C Music Factory, called “Things That Make You Go Hmmmm”—things that make you go hmmmm. The reason for that is that once upon a time Te Puea Marae was doing what the Government failed to do, and all of a sudden the Government came up with a smear campaign—things that make you go hmmmm. We asked questions of the Minister and this Government about exactly what the cause of that was and there was no answer—things that make you go hmmmm. And I can tell you for a fact is that Te Puea marae is doing a fantastic job.

In fact, I want to share some of those numbers, if I can. Over 60 assessments have been completed within 2½ weeks. They have housed, within Te Puea Marae, 91 people—over 10 families and over 50 children. And although this Government talks about these great achievements for education, I can tell the House that of the 50 children inside Te Puea Marae, nearly 30 percent have only now gone to their first day of school this year, in the week just gone. What does that tell you about the ignorance of this Government and the failure of this system to actually take education seriously, and to make sure that the children who are finding themselves, not by choice—because children do not choose to live in cars. Children do not choose in garages. Children do not choose to not go to school. Sadly, what we are seeing at Te Puea Marae is over 30 percent of the kids who have gone into Te Puea Marae have attended school for the first time in the week just gone. That speaks to a failure of this system.

Eight long years of this Government—8 long years. Kids born while this Government has been in power have fallen through the gaps. They have fallen through the gaps. Sadly, what this Government cannot do—it has appointed all of these Ministers to look after these issues, but what it has failed to do, in fact, is actually connect all the dots. What a housing crisis is a part of, what a poor education system is a part of—all of these things speak to poverty. They speak to poverty. This Government is not taking poverty seriously. I challenge any of the members on that side to come to Tāmaki Makaurau. Come along with me and I will take you to Te Puea Marae, but leave your grubby politics out of it. Leave the grubby politics out of it, and let the marae do what it has done in the past 2 weeks, filling the holes found in this Government’s policies. I listened to the Minister over there and I say this: she thinks she forced her staff members to help Te Puea Marae. She is, in fact, wrong. It was I who called those staff to make sure they got to Te Puea Marae. I challenge her to show her phone records—I will show mine—to see who made the phone call first.

So I finish by once again congratulating Te Puea Marae on the great job that it has done in filling the holes found in this Government’s policies moving forward. I want to say to Huri and the board, kia kaha.

Hon MAURICE WILLIAMSON (National—Pakuranga): Can I first of all give a huge thankyou to the whips for allowing me, once again, to speak in Auckland’s drive time. I said to the senior whip that it used to be Auckland’s drive time when he let me speak around 4 or 4.30. In Auckland right now, it does not matter what time in the House you speak, it is Auckland’s peak drive time, where you are stuck in traffic. But I do thank the whip for that.

I want to entitle my speech today—because I think every good speech should have a title—and the title of my speech today is going to be “Peace for Our Time, version 2”. I am reminded of “Peace for Our Time, version 1”, and that was by a man called Neville Chamberlain coming back from Germany, arriving in England. He said: “I have in my hand a piece of paper—just one piece of paper—and this is going to give us an agreement. It is a sort of memorandum of understanding with the other side, where we can work together cooperatively.” I have never ever been more reminded of that than last week, or the week before, when I saw Andrew Little out in the foyer of this building with a piece of paper in his hand saying: “We have got an agreement.”

I have never seen a piece of paper worth less than that piece of paper—including the one Neville Chamberlain had—because it did not say anything. It did not say anything. He said: “We’re going to work together, Labour and the Greens.” I actually thought they had been doing that for a decade or more. They had to put it down on a piece of paper, a memorandum of understanding. They said they would cooperate more and be nice to each other—I thought they already were. I already thought they were. God knows what they were doing beforehand if they needed to get a memorandum of understanding for it.

But when any two organisations merge—and before I came to this place I saw a number of airlines merge. They had to get agreement on what was this part of the service that they would drop and what part would another one pick up, and when they went to the public with their offering, the public knew what they were getting. The public knew exactly what they were getting and said: “This is quite good.” But we do not have a clue what this two-headed—and it has to have more than two heads, we have already been told. Andrew Little told us—he told us. It is not monogamous. It is not monogamous. I know that some members over that side of the House think monogamy is something you make a dining room table out of, but I know what monogamy is, and this arrangement is not monogamous. It is going to require some others in the relationship.

I, first of all, had a think about the colours, because when you are merging two things you should look at the merger. Does anybody know the chromatic scale of what happens when you mix red with green?

Tim Macindoe: Brown.

Hon MAURICE WILLIAMSON: No, wrong. It is not brown.

Tim Macindoe: Dark brown.

Hon MAURICE WILLIAMSON: Well, it is close. It is yellow, if you have a look at the chromatic scale, but it is at the Karitane yellow end of yellow. Any of you who have changed nappies over the years will know what the Karitane yellow end of yellow can look like. That Karitane yellow heads towards the brown scale only if you tip a bit of black in it. And that is what will probably have to be added to it in order for it to be of any value.

When I see the policies that are so divergent between them, I ask the poor old voter of New Zealand to think what it is that they would get. What is it we would get if we voted for this memorandum of understanding? Would we get those who are supportive of free-trade agreements like David Shearer and Phil Goff and that, who think free-trade agreements are great? Or would we get the lunatic end of the Greens who think free-trade agreements are evil and disgraceful and wrong? Which one would we get? Or would we get a free-trade agreement that was for only one year, and then for another year it would not be, and then it would be an on and off agreement so that both parties could get it? How would the voter ever know what they were going to get? I have to say that Neville Chamberlain’s piece of paper had a lot more value to it, for his “Peace for Our Time”, than this memorandum of understanding has.

What I also want to say to Labour is that you cannot come to this House all the time criticising policies like the refugee numbers increase, where we have gone from 750 to 1,000. And yet for—listen to this—12 years in office—

Hon Annette King: You used to. You did for 9 years.

Hon MAURICE WILLIAMSON: Now I have my colleague saying “No, it was only 9.” No, no. They made the change in 1987, so from 1987 to 1990 and then from 1999 to 2008—that is 12 years—they did not change it. I have to say, and the public in New Zealand say, what crocodile tears. What a shipload of rubbish that is to—

Mr SPEAKER: The member’s time—[Interruption] Order! The member’s time has expired.

CATHERINE DELAHUNTY (Green): Tēnā koe, Mr Speaker. Tēnā koutou e Te Whare. The previous speech was that voice of jealousy and fear that comes when something happens that the National Government cannot control and that it knows is welcomed by the country. I am glad that the previous speaker, Maurice Williamson, felt he had to devote his speech to us, but, actually, we are here for other reasons, and we have got things to talk about that are not based on jealousy and fear.

What we want to talk about is clean water. Imagine that a child was born 10 years ago next to a river, and in that child’s life over the last 10 years, that child has never been able to swim in that river. I am talking about the Waikirikiri/Selwyn River, where a child has grown up in a beautiful area with an amazing coastal lake and an incredibly significant river, to find that they can never swim in it. Every summer there is a sign saying that it is temporary, but you cannot swim in this river. That is 10 years of a child’s life, and 8 years of a Government that has completely failed to fix the problem. That is the legacy for that child at the Waikirikiri/Selwyn River.

Imagine being a man in his 60s at the Wairua River in Tai Tokerau who gets up every day, gets into his inflatable boat, and goes up and down the Wairua River taking photographs of the cows destroying the banks and polluting the water. The industry has impacted so heavily on it that he, as a volunteer, has to devote his life to cleaning up that river. All his photographs get sent to the regional council, and yet it is not listening. Neither the regional council nor the Government is listening.

Imagine if you were living in the middle of a city next to a creek that was once full of kayaks and annual swimming events and that the Minister for the Environment says no one wants to swim in, and you belonged to a community group that has been fighting for that creek, and you heard the Government say: “Oh, no one wants to swim in Lucas Creek.” Imagine being a member of those groups that are still fighting because they believe our children have a birthright to swim in those rivers.

Imagine you come from the Waikato and you are a farmer in the lower Waikato, planting, fencing, and desperately trying to clean up water quality while the Government and the regional council refuse to turn the tap off at the top of the catchment. Dairy conversions across the volcanic plateau are pouring diffused nitrogen into your river as you try to fix it. The tap has to be turned off. The Government and the regional council do not have the political will to do so.

Imagine you are the young people from my rohe, a youth group called Te Mātauranga Tira, which is a passionate group of young people who came to me and said “We want one thing for our river.”—this one is the Waihou. “And what is that?”, I said to them. They said: “We want to be able to swim in it. We cannot swim in our river. Our whakapapa tell us this is our river; we cannot swim it.” The Waihou goes into the Hauraki Gulf, Tīkapa Moana, and is full of dairy effluent day after day after day.

Imagine if every time a person got up on their marae to do their pepeha, to talk about their mountain and then their river, their river was the “Black Drain”—Tarawera, the most polluted river in the Bay of Plenty, where the pulp mills have had free reign at putting their contamination into the river. When the mills improved the colour, they added to the toxicity, so although the river looks cleaner, it is just as toxic in recent years as it has been for quite some time. Those of us who fought for the clean-up know what it means to those people whose whakapapa is still the “Black Drain”.

Imagine if you came from Waitara and you stood up against sewage and backflow up the Waitara River, and you were sued by your regional council. I am talking about Rob, Fiona, and Pikikore, who individually are being sued for standing up for clean water. That is the legacy of the last 8 years—a person can be sued for standing up for clean water in Taranaki.

The Manawatū, the Ruamāhanga, the Mataura, and more—we have so many rivers that need to be swimmable, that can be swimmable, and that the Green Party will fight for, alongside community groups. We believe in fresh water. It is not a choice; it is a necessity. We believe in swimmable rivers. The Minister Nick Smith believes that there are too many birds and too much volcanic ash. That is a joke. That is just completely out of touch. We can have swimmable rivers and, with us and our leadership, we will.

Dr PARMJEET PARMAR (National): It is just 5½ months into this year and we can see this National Government is working hard for New Zealand. We are building on the great work that we did in 2015. For example, we made GP visits free for our young people under the age of 13. That was to see that our young people are able to achieve 100 percent, 100 percent of the time.

Look at the National Certificate of Educational Achievement (NCEA) results. Are they not great? Since this National Government came into office in 2008, NCEA level 2 achievement has gone up by 16.6 percent. Here we are talking about thousands of children. So these thousands more children are now able to get into higher education, they are able to enter into the workforce.

We want to see more and more children achieving better results. That is why we are investing in Communities of Learning. I am really delighted to see a number of schools in Mt Roskill are now part of Communities of Learning. We want to see that the system revolves around students, not students revolving around the system. In Mt Roskill I have been working with a number of schools that provide for children with special needs, so I am really delighted to see $15 million for teacher-aides for schools that provide for special needs. I believe disabled students also deserve to have the opportunity to do well in their lives.

For our economy to be more productive we want more and more people contributing to our economy, and that is why we are investing hugely in our social services to meet the needs of our growing population. Our population is growing because our economy is doing so well and, as a result, there are a number of people from all around the world coming to New Zealand. At the same time we are providing direct support to New Zealanders in need. Domestically we are doing really well and at the international level we are doing well, again.

As the Prime Minister and the Minister of Immigration announced, we are increasing the refugee quota from 750 to 1,000 from 2018. This is the first increase since 1987. Yes, the first increase since 1987, and it is this National Government that is increasing the refugee quota. It is not just 750 refugees who come to New Zealand, because there are hundreds of others who come under family reunification, then there are hundreds who come as asylum seekers, and we have already committed to take 500 Syrian refugees over the period of 2 years.

Taking refugees is not a simple process because these people come with some expectations. They are coming to their new home, and we should have resources to meet their expectations. I have been to the Māngere Refugee Resettlement Centre and I have seen the orientation programme and how that is implemented when these refugees come to New Zealand. They are shown a New Zealand way of life, and they also go through a series of health checks, because these refugees go through rough circumstances so we want to make sure that their mental health and physical health is good as well. It is a long-term thing. The number 1,000 is the appropriate number, and I applaud the Minister and the Prime Minister for increasing it to 1,000.

I can go on and on listing the achievements of this National Government, but if I look at the Opposition and I look at the Labour Party, the Labour Party is struggling. If I look at the Green Party, the Green Party is struggling. These parties are struggling because they have no ambition for New Zealand. They have no ambition for New Zealand, and their leaders lack direction and goals for their respective parties. These parties have realised that they are not worthy Opposition parties against this third-term National Government. That is why they have come together. There are three leaders—two co-leaders from the Green Party and one from the Labour Party—with 4.5 percent popularity, against one leader on this side, the Rt Hon John Key. The leader, the Rt Hon John Key, is on the side of New Zealand voters, on the side of New Zealand families and businesses. He is the leader who is working hard for New Zealand.

This National Government is working hard for New Zealand, and the Opposition is busy running its own parties into the ground. There is no direction, there is no stability—just desperate moves. Thank you.

POTO WILLIAMS (Labour—Christchurch East): I want to change the tone of the debate this afternoon. I want to celebrate the men and the women who work in the NGO sector, who work for not-for-profits, who work for community organisations in the third sector—civil society organisations. Many of them are volunteers, but each and every one of them is dedicated to the people and the causes they care about and they support. So I celebrate the work they do. They support people with disabilities to live fulfilling lives, they help parents to parent well, they support individuals and families to live violence-free lives, they teach kids how to play sport, they support mothers to breastfeed, and they house the homeless.

Speaking of people who should be housing the homeless, has the Minister for Social Housing not had a dreadful few weeks? She has had a dreadful few weeks. First, her response to the ever-increasing homelessness issue was to offer people $5,000 to leave Auckland because there are no houses in Auckland.

Hon Annette King: How much to come back?

POTO WILLIAMS: And then, when they get to these places and they find there is no work, she offers them $3,000 to come back. So we have got this amazing homelessness loop of people leaving Auckland, coming back to Auckland, leaving Auckland, coming back to Auckland. What is her next response to homelessness? Well, she is going to pre-book some motels at the princely sum of $190 a night, which the homeless will have to actually repay. But, let us face it, when the Government does not do its job, who picks up the pieces? Who then has to take up the reins? The community sector and the NGOs do. And why does the Government not rate the NGO sector higher—why does it not?

I turned on the news the other day to find out that 750 NGO groups are due to have their contracts cut in 2 weeks—in 2 weeks’ time. Andrea Vance’s report on One News the other night said that 750 NGOs are due to have their contracts expire. The Ministry of Social Development (MSD)—

Hon Anne Tolley: That is rubbish.

POTO WILLIAMS: It is rubbish. It is complete rubbish that you would treat the NGO sector in this way. Smokefree Coalition, Minister—

Hon Anne Tolley: That’s not MSD-funded.

POTO WILLIAMS: I did not say MSD; I said 750 NGOs. Listen, Minister, it might pay you to learn some things. The Ministry of Health and MSD are cutting 750 NGOs. In 2 weeks’ time they will lose their contracts. Smokefree Coalition has worked in the smoke-free area for 20 years and has a strong commitment to New Zealand becoming smoke-free in 2025, which is a Government responsibility. That is 20 years down the drain because the Ministry of Health will not continue to fund it.

Why does this Government disregard the expertise of the sector? Why? Let us look at what happened to the Problem Gambling Foundation. The Problem Gambling Foundation had the audacity to stick its head up and say: “We have the right to advocate on behalf of the people we serve, and the Government policy isn’t matching the needs in the community.” What happened to the Problem Gambling Foundation? It had its contract cut. Let us look at how the Government uses the NGO sector to actually legitimise its own policies. The Minister for Social Housing used the name of the Salvation Army to legitimise the work that the Government was doing. Thank goodness the Salvation Army actually came out and said that it was not true.

I just want to end on one note. I want to send huge congratulations to Te Puea Marae and Manurewa Marae in South Auckland on doing what this Government should do. They are the New Zealanders who care for each other. They are the ones who have the least, who give the most. They are not motivated by profit, but they are motivated by the aroha they have for other New Zealanders, unlike this Government.

The debate having concluded, the motion lapsed.

Bills

Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill

First Reading

Debate resumed from 14 June.

GRANT ROBERTSON (Labour—Wellington Central): When I was rudely interrupted last night we were discussing what had been the best thing to come out of Hamilton and never go back, and the people of Hamilton had voted strongly—

Tim Macindoe: I was listening avidly.

GRANT ROBERTSON: No, it was not Mr Macindoe. That is true. Mr Bennett was the export that Hamilton did not want back, and, unfortunately, I cannot go on any more about that for reasons I am not allowed to refer to.

What I am here today to discuss is the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill, and, again, we have in front of us a taxation bill that is ad hoc at best. I long for the day that a taxation bill will come to this House that gives us an idea of the overall goals the Government has for the tax system—what it is trying to achieve; the balance that it wants between taxing wealth and taxing income; where it sees the future of taxation going; and a plan for that. But no—every single time it is a bill that is ad hoc, and the danger in that is we come back time and time again to correct the ad hoc mistakes or to add a little bit more in, and it becomes a system that is very difficult to understand.

When we had the last bill in the Finance and Expenditure Committee, our expert adviser made this very point: the piecemeal changes the Government keeps making are confusing for the sector that uses them and for the tax accountants who use them, let alone the individual taxpayers, the people whom the Inland Revenue Department (IRD) actually mainly works with and for. They are confused because there is no coherent framework.

So we stand here, once again, with a bill that is, as it is described sometimes by the IRD, about making sure the original intent of tax legislation can be clarified. That is a problem. If we are spending all our time doing that, let us go back and work out what should be in this legislation. But again, it is not. We have a set of ad hoc, remedial, piecemeal measures that are, frankly, mostly useful as far as we can tell but do not constitute an overall picture of where taxation should be going in New Zealand.

One thing we do know for sure is that this bill will set the annual rates for taxation for 2016-17. Again, here would have been an opportunity for the Government to say: “It’s time for some fairness. It’s time to have another look and make sure that we’ve got the rates set in a way that’s fair, instead of just automatically rolling them over.” Prior to the Budget, we heard a lot from the Government about their concerns about what is known as bracket creep, fiscal drag, or whatever you want to call it—the idea that some people are being “captured” by the fact that their incomes have risen but the tax brackets have not changed.

When this bill came out, I thought: “There you go, the Government will be true to its word. They will have addressed that issue. They’re the ones who raised it in the run up to the Budget.” Nothing—not a word. Not a single word. So it is crocodile tears when it comes to the people who might, over time, have seen the fact that their incomes had increased but the tax rates had not changed. Not a word in here—the annual rates have been set for 2016-17, and they go on regardless.

The public of New Zealand might want to reflect on the real commitment of the National Government in addressing that. It is all very well to wave around the idea of tax cuts saying they are going to come in the never-never and that they rely on outrageous forecasts in the Budget, but then Bill English stands up says: “No, there’s no room for tax cuts.” He puts on his best dour Dipton face and he says: “There’s no room for tax cuts.” and then John Key comes along “floating from cloud to cloud”, as Minister English once said, and says: “Oh, no, we can do them—$3.5 billion, I reckon.” That was the phrase. That will go down in history. When he was asked how much would be required for tax cuts: “About $3 billion, I reckon.” That is how they are making tax policy nowadays in the National Government—on John Key’s reckonings. We can do a whole lot better than that. This would have been the opportunity for the Government to do that, when it set the annual rates for 2016-17, and it completely failed to address any of those issues.

The other thing the bill does is a range of measures. The one that I want to focus a bit of time on today is the changes that are being made around look-through companies. The whole issue of the place and role of look-through companies in our tax legislation has been in the spotlight in recent times. They popped up during the Panama Papers in one of the more unfortunate references to New Zealand, which was the desire of Mossack Fonseca to sell what it was calling combo packs to interested investors. So here we were as the McDonald’s of tax havens, with Mossack Fonseca deciding you could get a decent combo pack. It was not fries that came with your foreign trust; it was a look-through company. That was exactly what was being put on the table: that, for particular types of investment, you could find yourself the look-through company vehicle.

The example that was given in the Panama Papers was of a French investor who had previously had his money in a Swiss arrangement, but changed that to a New Zealand look-through company arrangement on the basis that that could be zero-rated for tax purposes. If all of the income was foreign income, the New Zealand look-through company could be zero-rated for tax purposes, and then when the person repatriated their income back into France, they were able to say that they had paid tax. They had paid tax at a rate of zero, so they had not, but they actually were able to tell the French authorities that they had paid tax at that rate. That is what our look-through companies are being used for today. That is what is in the Panama Papers.

So when we come to discuss the changes on look-through companies that are proposed in this legislation, members on this side of the House will be looking very closely to see what is being done. I think, in my first reading speech, I will give this to the IRD officials. They are tightening up a little around how look-through companies are being used.

Chris Bishop: Oh, how generous of you.

GRANT ROBERTSON: Well, I trust them, Mr. Bishop, to do that. I am not so sure about the Government members, but I think the officials who brought this bill to the House are actually looking to try to tighten up around how look-through companies are run.

My colleague Stuart Nash, when he was speaking in the House last night, was running through the ways in which there was, effectively, a free untaxed capital gain that was being realised by New Zealand owners of look-through companies. That is certainly an issue to look at. We also want to look at the treatment and use of look-through companies by foreign investors and those who hold foreign trusts, because, clearly, from our point of view that misuse of a look-through company is significantly damaging for New Zealand.

It needs to be noted, again, in the context of my earlier remarks about the piecemeal nature of these kinds of tax bills, that it was a 2010 piece of legislation put through by this Government that actually enabled the arrangements for look-through companies as we see them today, and the exploitation of them by those with foreign trusts, seeking to shelter income from offshore. It was Chapman Tripp that, in writing about the changes that were made, noted that New Zealand funds were now an attractive alternative to funds resident in Luxembourg, Ireland, or the Caymans. So that is the league that the 2010 changes put us into, and they, quite clearly, have now been used, and we have seen the enormous explosion of foreign trusts as part of the aforementioned combo packs that are being sold around the world.

It is on those issues—the look-through company issues—that we will be focusing most of our attention. The remaining remedial matters, including issues to do with non-resident withholding tax, appear to us to be sensible and are, in part, a response to the Government’s work in relation to the base-erosion and profit-shifting work being done at the OECD. It is, again, a failure to come to this House with a comprehensive package to deal with that. We heard today from the Minister of Revenue at the select committee that his point of view is that New Zealand cannot really do much. We are just going to have to wait and see what the OECD comes up with. He does not think we need a diverted profits tax in New Zealand, like his comrades in Australia and the UK have put in place. He is just prepared to do a few little tiny piecemeal acts in this area. We should be a lot more ambitious than that.

The Labour Party will support this bill, but it is an ad hoc, piecemeal response to a series of issues that require a strategic and coherent plan, which is sadly lacking from this Government.

CHRIS BISHOP (National): Well, that was not a bad effort from Mr Robertson. Mr Robertson’s speeches on tax bills—and I have heard a few of them in the House now since I have been a member of Parliament—generally follow a fairly strict formula. There is the generic abuse of David Bennett in the first 2 minutes of the speech, and actually, to be fair to Mr Robertson, that can be reasonably amusing because David Bennett is a unique character in the Parliament. He is a superb chair of the Finance and Expenditure Committee, which I have the privilege to be on, shows real leadership, and, actually, the defamation that he has to suffer from Mr Robertson is uncalled for. So there are 2 minutes of generic abuse—

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

The ASSISTANT SPEAKER (Hon Trevor Mallard): A point of order, Clayton Cosgrove; I hope it is one.

Hon Clayton Cosgrove: It is. I just wonder whether it would be worth reminding the member speaking about misleading the House.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Mr Cosgrove, I think you are aware of the fact that that is not an appropriate point of order, and, therefore, you will stand, withdraw, and apologise for making it.

Hon Clayton Cosgrove: I withdraw and apologise.

CHRIS BISHOP: So we start with the 2 minutes from Mr Robertson about Mr Bennett, and then we get on to the generic complaints about Government tax policy. The reason that Mr Robertson does this is that the Labour Party does not have a tax policy. So he will spend about 3 minutes of a 10-minute speech with complaints about how there is no plan. It is like 2009 redux all over again when Labour used to say “The Government has no plan.” “Where’s the plan?”, says Mr Robertson. “There’s no comprehensive statement of principle. We don’t know where they are going with tax policy. We need more fairness in things like that.” So there are about 3 minutes of very repetitious behaviour about that. And then we get from Mr Robertson, in the last quarter of his speech, the cursory references to what is actually in the bill. To be fair to him, that was not a bad effort, because he spent about half the speech talking about look-through companies and various other things that the bill does.

Actually, the Government does have a comprehensive tax programme that it is implementing. This is part of it; this is the May tax bill. There are two tax bills per year. This is what is known as the May tax bill, and if Mr Robertson bothered to do his reading he would know that the Inland Revenue Department (IRD) runs a very comprehensive process called the generic tax policy process, which is extremely transparent and extremely consultative. It publishes tax policy discussion documents, it publishes material online, and it consults with the various stakeholders, with the companies, with the various interest groups in the area that are affected by tax law. It is extremely transparent. Actually, the bill that we are debating in the House, which is going to go to the Finance and Expenditure Committee for further consideration, is actually a fair way along a very consultative process to make sure that our tax law is fit for purpose and make sure that it is refined every year, as we need to do.

We have, in New Zealand, a very large body of tax legislation, the bulk of which is contained in the Income Tax Act 2007, of course. But we are far better off than many other countries that have extremely bulky pieces of tax legislation—tax codes. I think if you put the Income Tax Act and the various other pieces of legislation—if you printed them off and stacked them up—they get up to about my height or perhaps to the height of one of my colleagues who is a bit shorter than me. If you did that for the United States, I suspect you would be hitting the top of the New Zealand Parliament here with its high stud ceilings—and perhaps going a bit further. We have a very, very good tax system in New Zealand, and the aim of it is to have a comprehensive system that is broad based and has low rates. That is exactly what this bill does.

I want to make only another couple of points. The first is to just highlight for the House that this bill adds 14 organisations to schedule 32 of the Income Tax Act 2007, which makes these organisations exempt from income tax because they are charities. That is fair enough. It adds things like the Cambodia Trust (Aotearoa-New Zealand), First Steps Himalaya, the Hornsby Pacific Education Trust, and the Siphala Foundation. Fair enough. But you do have to wonder why it is that we have to pass a piece of legislation through Parliament and send it to a select committee in order to add organisations to a schedule to make them exempt from income tax under the Act. Surely this must happen a lot. I seem to recall about a year ago debating a similar piece of legislation—debating the May tax bill a year ago, basically probably around about the same time, soon after the Budget—in which we did various things to the schedule as well. I have got to wonder—surely there is a better way? Surely there is some regulatory process that would take this mechanism outside the legislature and put it in the hands of Ministers acting on behalf of advice or organisations. I think that would be a better process. So we will wait and see. I, for one, am looking forward to exploring why that is the case with officials in the select committee.

There is one organisation that ceased operations, which is Bicycles for Humanity, which, I know, Mr Assistant Speaker, that you will be interested in as a charity. I am also interested in it as well. It ceased operations, sadly. I do not know the organisation, but why is it that we have to turn up in Parliament and pass a piece of legislation to remove them from the schedule, to remove them from the charitable status exemption? It just seems a little bit strange. So I am looking forward to examining that at the select committee.

The second remark that I want to make about the substantive policy of the bill is that this bill does do some of the things that Mr Robertson said it was not doing. It does actually make some useful contributions to the law around trusts and around multinational tax behaviour. This bill brings into place rules designed to stop multinational corporations sidestepping withholding taxes and levies that are imposed on interest paid on borrowings by New Zealand operations. If Mr Robertson had bothered to read the KPMG commentary on the bill, he would have found that out. I expect that KPMG, along with the other organisations in this space, will be submitting to the select committee, and I am looking forward to hearing what they have to say. I am looking forward to hearing further from the IRD about what exactly we are doing in this piece of legislation and how that fits into the Government’s overall tax policy process.

This is a good bill. I think it is going to receive unanimous support in the select committee. I look forward to serving on that redoubtable Finance and Expenditure Committee with my colleagues Mr Cosgrove, Mr Bennett, and others, and examining it in more detail.

JAMES SHAW (Co-Leader—Green): The Green Party will also be supporting this bill’s referral to a select committee, but, as with the Labour Party, we have got a number of reservations, more about what the bill does not contain than what it does contain. The previous speaker, Mr Bishop, referred to some of the things that the bill does do—in particular, in relation to starting the moves towards tightening up around multinational tax avoidance—and, of course, we know from the last 8 weeks or so that multinational tax avoidance is one of two very big, public events in relation to the tax sphere. The other one, of course, is around foreign trusts. This bill is the bill that would have addressed the laxity around New Zealand’s foreign trust regulatory regime and our transparency regime had the Government not, 2 years ago, killed off the Inland Revenue Department’s proposed review into how we regulate foreign trusts in New Zealand.

I just want to take a moment to talk about some of the context that has led up to this bill being introduced into the House and some of the things that we would like to see in the bill as a result of that time line. Back on 15 August 2013—oh dear, he has got his green book out—the department warned the Government about the high risks from New Zealand trusts. Mr Assistant Speaker, I am just going to quote here. It said in that report that our foreign trust rules were being perceived as a tax haven and were damaging to our international reputation. It said that foreign trusts were being used by people to avoid paying tax, not just in New Zealand but, in fact, anywhere in the world. It said that New Zealand’s current regulation was not good enough and that the regulation made it difficult to enforce compliance with the rules, and the department questioned the adequacy of our disclosure and record-keeping requirements and its ability to realistically reform the industry and to make it comply. So there were a number of concerns there.

On 2 December 2014, of that same year, Ken Whitney of the Antipodes Trust Group wrote to Minister McClay on behalf of the foreign trust industry, concerned about the Inland Revenue Department’s view of the industry—

Dr David Clark: Who was that?

JAMES SHAW: That was Ken Whitney of the Antipodes Trust Group, on 2 December 2014. In that email he claimed that he had spoken to the Prime Minister, and that the Prime Minister had assured him that there were no plans to change the status quo but that he should speak to the then Minister of Revenue, Todd McClay. The very next day Minister McClay expressed concern to Inland Revenue Department officials that their report might include removal of the foreign trust regime, and an official from the department responded, saying that they will “bear this in mind in how we write the report.” Then, on 12 December of that same year, the Inland Revenue Department produced another report on foreign trust rules, and it was sticking to its guns, Mr Assistant Speaker. It said that New Zealand’s foreign trust rules—you are looking at me a bit funny, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, you said “Mr Assistant Speaker”, so I was just making sure that you had my very undivided, as opposed to divided, attention.

JAMES SHAW: Feel free to divide your attention, Mr Assistant Speaker.

It said that New Zealand’s foreign trust rules were damaging to New Zealand’s international reputation, so the department had a second report saying that, in fact, its recommendations for reform were even stronger than they had been in the previous August. A few days after that, Todd McClay met with representatives of the foreign trusts industry, unaccompanied by Inland Revenue Department officials, in Auckland at the offices of the Antipodes Trust Group company. That group sought from Minister McClay “a commitment from the Government as soon as possible that it will not conduct a public review of the foreign trust tax laws …”, but that it could keep on with its base erosion and profit shifting work, which has actually made it into this bill. So, in other words, it specifically said “Please don’t proceed with the review of the foreign trust industry, but feel free to continue with your base erosion work.”, which is exactly what the Government has done as a result of that meeting. So in this tax bill it has included some measures around multinational tax avoidance and has started to tighten up that regime and has not included anything around the foreign trust review that it was planning. That group said that its view was it would “severely damage” the industry if that work was to proceed.

Then, on 22 January 2015, there was another letter sent to the Minister proposing another meeting and expressing how pleased the group was that the foreign trust industry was, yet again, meeting with the Minister, who then promptly met with OliverShaw, one of the other companies involved in this. In May 2015 the Minister of Revenue wrote to the foreign trust lobby group that he had been meeting and conversing with, reinforcing the earlier promise that the Government had no plans to review the foreign trust tax rules, and I just want to point out again that that is in stark contrast to both of those reports from the Inland Revenue Department expressing real concern about foreign trust regulation and about how, actually, it ought to be included in the review, and thus some of those reviews would have made it into the tax bill that we are debating tonight. Mr McClay concluded: “I trust that this provides you and your industry with the certainty needed to continue to do business in New Zealand.” Then, on 19 May 2015, the same Inland Revenue Department official informed her staff that there would be no review of foreign trust regulation in New Zealand.

The Panama Papers, which Mr Robertson referred to, have changed all of that, of course. They have started to shine a light into a dark place.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am now going to interrupt the member after the member, I think, worked out that I have been thinking about it for some time. In a first reading members can make passing reference—it is quite a broad debate, but members can make passing reference—to what is not in the bill. I have let the member run for some time because members previously, including the member immediately before him, spent quite a lot of time on what was not in Mr Robertson’s speech rather than focusing on the bill. But I am now going to ask the member to move from making passing reference to the bill to making only passing reference to what is not in the bill.

JAMES SHAW: Certainly, Mr Assistant Speaker. Well, the conclusion of my passing reference to what is not in the bill is that we are 2 years behind on foreign trust law reform, and that ought to be in this bill.

In 2013 the Green Party introduced a piece of non-controversial legislation that would have imposed a more rigorous registration and disclosure regime, and we are hoping that we will be able to introduce that into this bill in later stages of the bill’s passage through the House. Those measures would help to restore international confidence in New Zealand’s international reputation as a well-regulated and transparent place to invest and trade.

So I will explain, given all of the absence of proper reform around foreign trusts, why we are supporting the bill through the House, and certainly to its next stage. It is because it does go some way, as I said earlier, to closing down some of the look-through company abuses that have been occurring and some of the profit sharing from multinationals, which has been recommended by the Inland Revenue Department. It is compromised, of course, because the National Government is not prepared to go as far as the department wanted, nor as fast, but it does move us in the right direction. The Government has, of course, known about multinational tax avoidance for many years but has been dragging its feet, so it is good to see in this bill some progress around that.

Budgets in 2016 in the UK, Canada, the United States, and Australia all saw new measures to close some of the biggest loopholes in multinational tax avoidance around the world, but Budget 2016 in New Zealand saw no new measures at all to deal with that trend in New Zealand, and, in fact, there is a wall of funding—a cliff top—that we are about to go over in a year unless the Government addresses this in terms of the Inland Revenue Department’s ability to investigate and enforce. The Australian Government expects nearly A$4 billion in taxes from multinationals. We could be doing the same thing if this bill was tighter than it is, and we will be looking for ways to tighten it up even further.

The bill is highly complex and it will require thorough scrutiny by the select committee, but it is promoting some changes that we believe will have a positive impact on tax avoidance by multinational companies and tax abuse through look-through companies, as well. So it is a step in the right direction. It does not go as far or as wide as we would like to make a meaningful difference to the billion dollars, or more, of lost tax revenue through multinational tax avoidance in New Zealand, but it is a step in the right direction, and for those reasons the Green Party will be supporting this bill through the House. Thank you.

FLETCHER TABUTEAU (NZ First): I rise on behalf of New Zealand First in support—only at this stage—of this large omnibus bill entitled Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill.

Hon Clayton Cosgrove: What a title.

FLETCHER TABUTEAU: I know—it is a beautiful title, but it does speak to the frustration some of us have on this side of the House when we—

Tim Macindoe: We can understand your frustration.

FLETCHER TABUTEAU: —keep having these remedial bills put in front of us. I say to Mr Macindoe and the New Zealand public that these remedial pieces of legislation should cause the New Zealand public some great concern—some great concern—especially under that National Government. Here the Government will be making, as far as I have had the chance to count—I have had some amazing frustration at the pace this bill has been presented to the Opposition parties and then suddenly it is in the House, frustrating my genuine endeavours to make a thorough and full analysis of the material before us. From what I have been able to count, the Government will be making over 50 changes to amendments across seven pieces of legislation, ranging from the Income Tax Act 2007 to the Stamp and Cheque Duties Act 1971.

I want to add to the words of my colleague from the Labour Party, who spoke quite eloquently about the ad hoc nature of this piece of legislation, and, in fact, I suppose, echo the words of the co-leader of the Green Party James Shaw when we ask where the direction is. Where is the understanding that the New Zealand public is supposed to take from pieces of legislation like this, especially with regard to hugely important issues that are defining the world around us, and certainly defining the nature of the National Government and its lack of action thus far around tax issues and avoidance?

This has come on to the Order Paper, and I just noted that it took just a couple of weeks to get into the House, which is unusual. It sat at the very end. But I do want to acknowledge—although I may not have had the time to do my normal consultation with friends in the accounting field and lawyers—some of the words of Mr Bishop, who gave one of his better contributions of late—

Hon Ruth Dyson: Not a very high bar, though.

FLETCHER TABUTEAU: —no, it is not a high mark—on the generic tax policy process used.

In reading the impact statements, you do get an understanding of the consultation that the officials have undertaken in coming to the House with the legislation as it sits thus far. There was comprehensive consultation. I say that with reservations, because, for example, there is tax legislation in here that relates to councils, but only the Auckland Council was consulted. So you have to wonder how robust the feedback was in terms of what the nature of those changes will mean for council-run State-held entities. It is complicated. I think everyone in the House has acknowledged that.

I do acknowledge that the consultation with the community thus far has been, to a degree, comprehensive. That is why New Zealand First is offering its provisional support—at this stage of the debate, anyway. From here we are able to go to the select committee and have not only officials but also our public and our experts out there come to the select committee and give us feedback. I know, without any doubt whatsoever, there will be a large, large array of issues that will need tidying up. The last piece of tax legislation that came before the House included components of the brightline legislation. New Zealand First opposed that right from the start, because we knew that it was a waste of time marketing spin, but this one, at least in our readings, does move us in the right direction.

So I agree with the Minister of Revenue’s contribution. I do agree with Mr Bishop, which is unusual, that the tax system does need to be defined and made such that it is broadly fair and that the New Zealand public can have a good and transparent understanding of their tax obligations. The Inland Revenue Department (IRD) and the Minister themselves talk about the issues around compliance becoming fewer if members of the public understand what their obligations are, and we fully concur. Unlike the last piece of legislation, which did the exact opposite, we believe at this stage that we are moving in the right direction.

I do not think any amount of fast talking from the Minister on the ICT spend, which in my understanding is from $1.2 billion to $1.6 billion on the IRD upgrade, can justify those numbers just yet. That is an abhorrent number. That is frightening. I do not know why the New Zealand public has not rallied against $1.6 billion—or $1.5 billion, if you concede the Government numbers—on an ICT upgrade. But, you know, we do want a transparent tax system. The Minister will have a lot to answer for, and he will have to answer to the Opposition constantly for that spend, so we will move from there.

You will note the theme from the contributors this afternoon. We managed to dig into some depth on at least one of the over 50 changes. I looked into the double tax agreements and the anti-avoidance rules, which I think Mr Shaw talked to. I think I, unlike Mr Shaw, will acknowledge that the Government is actually looking at the trust structures here and the companies in terms of their avoidance procedures. I think what the Government is acknowledging with this legislation, as I read it thus far, is that the DTAs—the double tax agreements—“do not prevent … anti-avoidance” at this stage. That is a quote from the regulatory impact statement analysis itself.

What I will say is it has taken way too long to get to this point, to have this conversation about legislation around tax avoidance for these large multinational corporates. It has taken way too long for the Government to get here. To be fair, I am not even satisfied at this point that the legislation as it stands will actually solve the problem. At this stage it is a matter of degrees. The double taxation agreement will take precedence. There has been no case law to examine the issues around this at the moment, but I think we may still have some issues as we move forward unless the legislation there has changed.

New Zealand First has said that the tax settings need to be changed, and we look to Canada and Australia, for example, as early adopters or those who act quickly in acknowledging the issues with tax non-compliance with large multinationals. I can see that there is work being done by the OECD, and New Zealand does need to work in parallel with those efforts, but we have examples from around the world of Governments acting unilaterally and not compromising those efforts, holding these big multinationals to account with regard to their tax compliance. That is what is fair and what is reasonable in undertaking business in our jurisdictions.

I do look forward to a comprehensive select committee process. I look forward to the Committee of the whole House. We here in New Zealand First have no doubt there will be much to debate. I just want to say again for the record, so it is clear, that it is only at this stage that we support this piece of legislation, so that we can get it through to the select committee so that we can have meaningful, broad, and robust debate on tax legislation that must—must—go through that process. Thank you.

JAMI-LEE ROSS (National—Botany): I do not intend to talk for as long as Mr Tabuteau did on this bill. I congratulate him on that very well-drawn-out effort on this bill. This bill contains a range of very well-meaning changes to tax law—none that are overly earth-shattering, though. As a number of speakers have pointed out already, it does contain a range of matters that improve the tax legislation in this country, particularly with regard to ensuring that we continue to level the playing field between New Zealand companies and overseas companies.

This bill also contains that wonderful clause—that wonderful “yes” clause—the “Annual rates of income tax for 2016–17 tax year”. Of course, this bill continues with the Government’s approach to taxation, which is to ensure that we maintain important public services and fund those through taxation but not tax people through the teeth like we see other parties in this House have been proposing. I am sure that if we were discussing this bill and Grant Robertson had written this bill—long may that not be the case—we would probably be discussing annual rates that would be far higher than those we are discussing today, with all of the huge, multibillion-dollar promises that Labour has been making so far, and without counting, of course, the Green Party promises that they will have to include once their marriage goes a bit further. The annual rates that we would be looking at in a bill like this would be much scarier.

As members have commented quite collegially already today it is going to be a good opportunity at the select committee to look at the many measures in this bill and hear from tax experts about how we can refine those further. I always find that tax bills like this that go through the Finance and Expenditure Committee attract very high-quality and very technical submissions, which aid the committee well, and the committee always does work very well together in trying to find changes to the bill that improve it and ensure that we are passing good-quality tax legislation. It is a long bill with well-meaning changes, and I am happy to look forward to the select committee process later on.

JAN LOGIE (Green): I am pleased to take a short call for the Green Party on the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill. As has been well covered by previous speakers, this is a very detailed piece of legislation covering a lot of ground. The unifying thread of the legislation is tax, and beyond that it is a little bit hard to make out what the unifying concept is, as so much is covered in this piece of legislation.

I will list the pieces of legislation that are covered by this. It may be slightly painful, but I think that if anybody is listening or reading the transcripts it may be an easy way to work out whether this covers an area that you are concerned with. It will look at the annual rates of income tax for 2016, making changes relating to closely held companies, look-through companies, and qualifying companies; also non-resident withholding tax for “Related party and branch lending”, the Goods and Services Tax, “Related parties debt remission”, “Loss grouping and imputation, “Remission income, insolvency, and bankruptcy”, “Aircraft overhaul reserves”, New Zealand double tax agreements, “Schedule 32 donee status” for charities, “Land tainting and council controlled organisations”, “Loss offsets by mineral miners”, “Working for Families Tax Credits”, information sharing, the application of the time bar to ancillary taxes, and other remedial amendments. For all of those with a very keen interest in our taxation system, I hope that was helpful.

For me, what characterises this legislation, in what I can see in it at this stage, is a sense of lost opportunity, really, more than anything in the detail, as I have not, truth be known, had the chance to go into it in its full depth yet. But we are aware, as my colleague James has spoken to quite significantly already, of the disappointment around the fact that it does not cover or provide any protections for us around foreign trusts, to make sure that New Zealand’s reputation is secured internationally and that we are keeping up with the movements in the world to protect the tax bases of each country to make it as difficult as possible for those with resources to be able to hide their wealth in other countries and avoid supporting the countries that have supported them so well. So this is a lost opportunity on that basis.

I would also suggest that this bill is a lost opportunity in terms of addressing child poverty because, although it is making minor changes to the Working for Families tax credit, whenever we look at the Working for Families tax credit we have the opportunity to make an absolute difference to reduction in child poverty in this country. We know that we have over 305,000 children living in relative poverty in this country and massive material hardship, which means kids who do not have their own bed, who have never had a birthday in their life because their families do not have the money to be able to buy presents or put on a special dinner, and kids who are getting sick and being hospitalised because their families cannot afford to heat their houses. This bill could make those changes to Working for Families of bringing the in-work tax credit in line with the family tax credit, giving those poorest families who are not able to be in the workforce the $72.50 that other families who are able to work that 20 hours get. It would reduce inequality in our country and protect our most vulnerable children.

It would also be an opportunity to reset the abatement rate for Working for Families, which the Government has very sneakily been increasing, clawing back money from not particularly well-off people in this country—people who are still struggling and needing the support of Working for Families; to be able to give it to some of the poorest New Zealanders, rather than taking it from the wealthiest. I hope that we use this bill as an opportunity to promote transparency, to be a good international citizen, and to tackle child poverty. To me, that would make this bill interesting.

PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe, Mr Assistant Speaker. Thank you for this opportunity. I rise to make a short contribution on the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill.

I guess when your normal New Zealander is out there and they look into this House and they look at the pieces of legislation that we are currently debating, they want to see several things. They want to see several things, particularly with regard to taxation and taxes. They want to see that (1) it is transparent—all of the processes are transparent. They want to see that (2) it is robust, (3) that it is fair, and, finally, (4) they want to see it is user-friendly. I can tell you that as I have read through much of the material here I have thought: robust? Yes. Transparent? Hmm, questionable. Fair? I think it is pretty fairly well weighted in favour of the businesses and in favour of the taxpayer. Is it user-friendly? That is a big question I will leave on the floor this evening.

Members across the House have already spoken about how you fall into dangerous territory when you start making a series of rules around taxation without any clear policy framework, a clear policy framework that provides for all of the attributes we look at when we consider taxation law. We find, then, that when you start making these ad hoc rules along the way it often becomes problematic. I have already mentioned how when you have got a clear framework around taxation, when you set the annual rates—as this particular bill will be doing for 2016-17—there is a clear direction with your taxation. There is a clear policy direction that allows for the public out there to have a look at this particular bill and say: “OK, if we’re going to pay these taxes that are set by this particular bill, we expect these types of things to come from them. We expect infrastructure spend, and we expect spend on the essential services to our communities.” I get back to my point about how, if you are making ad hoc changes to taxation law, you fall into a trap of that lack of policy framework and that lack of policy direction.

This particular bill, in setting the annual rates for 2016-17, is supported on this side of the House to make sure that it does get to the Finance and Expenditure Committee. There are far smarter people out there who are able to provide fantastic advice, which I am sure the select committee will look forward to hearing. We support it at this particular point in time. At the select committee you can expect continual challenges from this side of the House to make sure that when large omnibus bills such as this one are passed in this House, the detail is not simply swept under the carpet, and that the transparency for our public can be found in the debate and in the processes this bill will go through from here on out.

I do not want to go on too much further but to say that we will be supporting the bill at this point in time. We send it off to the select committee and we look forward to hearing from the submitters: the experts like the Inland Revenue Department, business owners, tax specialists, and accountants from across the country who will have an opportunity to have their say on this particular bill moving forward. On this side of the House, we will be supporting it. Thank you.

ANDREW BAYLY (National—Hunua): It is pleasure to be talking on the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill. In the Finance and Expenditure Committee—and some of its members are in the House tonight, which is good to see—we have considered a number of different tax matters during the course of the year, all seeking to continue to improve our tax system, to make it simpler, and to maintain its integrity. It is a continual evolution of what we are trying to do with our tax system.

I would have to say that most people around the world look at our tax system and regard us with a sense of envy because we have a very simple, clear tax structure. At a personal tax level, we only have four different tax levels. Company tax is very simple to understand, and partnerships and all those types of arrangements are very, very simple. That has been an ongoing process of this Government to make sure that what we have in place is something that people can understand easily, engage with, and so can pay their due taxes. I would hasten to note that the Inland Revenue Department is undertaking one of its big transformation projects at the moment—a billion-dollar project—and the first roll-out of that will be changes to the GST regime next year, which is going to make it a lot easier for companies, and smaller companies in particular, to meet their commitments around GST. Ultimately, we also want to see smaller businesses paying their taxes as they go. This pay-as-you-go system is moving away from a provisional tax system, and I think it is a very good measure that was introduced in the recent Budget.

This particular bill deals with a few changes. First of all, it mends the Income Tax Act 2007, the Tax Administration Act, the Goods and Services Tax Act, the Stamp and Cheque Duties Act, the Student Loans Scheme Act, the Income Tax Act 2004, and also the Goods and Services Tax (Grants and Subsidies) Order 1992. There are particular things that I just want to focus on. At a high level, the bill is first of all about constraining, reducing, or correcting issues relating to land tainting. Second, it is about ensuring that the Working for Families tax package is maintained; we know how important that is to most New Zealand families and we want to make sure that the package continues to operate in the way that it should, to support our lower-income families. Third, it introduces, allows, or permits 14 new charities. As you are probably aware, charities are reviewed every year. I think, from memory, there are about 2,500 that are reviewed to make sure that they are of a charitable status and meeting their commitments. As a result of that, there are 14 new charities being introduced this year. The bill also seeks to set the income tax levels for the 2016-17 financial year, which, of course, is essential for the Government if it is to continue to remain in business and do all the good things that it is trying to do.

I just want to focus on a couple of little issues. One is that we are changing the rules relating to look-through companies. As many of you are probably aware, they are similar to partnership arrangements. We are making some specific changes around them to make sure that people are taxed at their personal level and the complexity around those look-through companies is reduced. The second thing is that we are specifically targeting where non-residents have provided debt to a New Zealand entity—it might be a branch or some structure here in New Zealand—to make sure that appropriate interest is being paid on that. I am sure that the Opposition will be very pleased to hear about that measure. We want to make sure that non-resident withholding tax is paid for related party debt where it involves non-residents. We are also making changes around deducting GST on capital raising costs. Most companies going out capital raising would normally get professional advice for this. They need to be able to get that advice, and normally it comes at a cost with GST. We are making sure that that is standard and that companies actually have the ability to deduct that GST, because at the moment they cannot deduct the GST portion. We are making some changes and technical amendments around aircraft maintenance. Those are the key aspects of this bill. I look forward to working with the committee and the House as we work through this process.

Hon CLAYTON COSGROVE (Labour): As other colleagues on this side of the House have said, we will be supporting the bill, at least to the select committee. I acknowledge a number of the points that have been made in respect of it. Yes, this bill does make some positive changes to address abuses in the tax system. It is true that it makes changes relating, as the member Andrew Bayly said, to closely held companies, non-resident withholding tax, related parties, branch lending, goods and services tax—and the list goes on and on. But I do make the point that, although there are a number of positive changes in this bill, this is yet another opportunity where the Government could have made a big hit or a big statement in respect of overall tax planning and tax policy. What you do have in this—which as the name reads is like a sort of motion picture—is a mishmash of issues dealt with by yet another sort of clean-up bill where a whole series of issues are thrown into a piece of legislation. We are here, and it will then go to a select committee, and we will, you know, spend a lot of time cleaning it up.

But if you look at some of the big issues—

Alastair Scott: Ha, ha!

Hon CLAYTON COSGROVE: The member laughs, but I have to say that if you look at the cleaning up, that committee has done a lot of wet work in terms of cleaning up National Party tax bills. If you go right back—I am glad he had a bit of a giggle about it—to the brightline test and to the 2-year hold issue, they were an absolute mess when they got to the select committee. I am not talking about the Chair—not you—but the committee; they had to be cleaned up by the Finance and Expenditure Committee, and the member knows it. If you go back a couple of steps, members will recall the tax on car-parks and the tax on computers—an utter mess that went to the Finance and Expenditure Committee. It was trumpeted by the then Minister, Peter Dunne, and it ended up on the cutting room floor. So I do not have a lot of faith in terms of the quality that will come out of this piece of legislation. I do know with a high degree of certainty—having sat on that committee for many years and chaired it once—that this piece of legislation will need a lot of work.

No disrespect, but I do have concerns about how it is when you lose people out of the department like Robin Oliver, who was the former deputy commissioner of the Inland Revenue Department (IRD), and the fact that many of those examples I have given today—particularly the computer and car-park tax debacle—would have never hit the Minister’s desk, would never have been given 5 minutes’ notice, and if they had got that far, they would have been cauterised at that point, and the deficiencies in that legislation that were identified would not have made it into this House. It does worry me—no disrespect to officials—that that degree of knowledge and that degree of lineage within the department are not there, and that we are dealing with these sorts of mishmash bills.

I will pick up on one thing that Mr Bishop said that I think is worth consideration—but, again, I lament the fact that I suspect that the Government will not do anything about it. I think it is quite strange and bizarre, and a waste of time, energy, and money that every time that we want to alter the charitable list—those who are entering the charitable list; there are 14 contained within this bill—we have to convene the Parliament, we have to write up a piece of legislation, and we have to go right through the whole palaver every time this is done. I would have thought the great minds at the IRD, the Minister of Revenue and others, and the great minds on the Government’s side of the select committee could turn their intellectual capacity to coming up with some sort of formula that would allow us to circumvent that process. After all, what you are attempting to do in respect of charities is to ascertain, in effect, whether they are the full quid. Are they genuine, do their aims and objectives in raising money in the variety of ways they do, and the utilisation, and the distribution of that money meet “charitable purpose”, and does it fit within the legislation and the law?

I would have thought you would not need to convene the Parliament, and have a 2-hour debate to deal with that particular issue, if you will. I would have thought that when we talk about tax simplification and we talk about the great benefits to business that the Government trumpets—what about doing something for the charitable sector, and making it more efficient, if we want to promote philanthropic behaviour, charitable giving, charitable purpose, so that it does not have to jump through a whole series of hoops, a whole series, you know, a legislative framework, and the convening of this Parliament to actually get on with what it does best. But that might be a test, or a barrier, or a height bar that is just a wee bit too high for some of the Government members to address.

I also want to address something that Mr Robertson said in his speech. It relates, again, to what could have been put in this bill, apart from a whole lot of tinkering measures, positive though they may be, in terms of dealing with the big issues. It was very instructive this morning at the select committee when Mr Robertson asked the Minister “Is any work being done by the IRD on a land tax?”, and the Minister—to be fair to him he is a new Minister in the role—looked sort of “possum in the headlights”, and asked Mr Robertson to define what he meant by land tax. Well, I am not an accountant, but I would say it is a tax on land. I would have thought so. That is a reasonable definition of what a land tax—

Phil Twyford: A bit of a leap of faith.

Hon CLAYTON COSGROVE: Bit of a leap of faith—a tax on land. Mr Robertson then tried a third go, which was to ask why did he not define it in the same way the Prime Minister defined it—whether that would help the Minister. The Minister’s reply, and I summarise it, was basically “Well, you know, I don’t quite know what the Prime Minister’s definition of it is.” Then we got to the guts of it: the IRD commissioner looked at the Minister, and the Minister looked at the IRD commissioner; both looked rather nervous. We got a sort of answer that he had not had any advice, and the work plan of the IRD had not yet been produced. That was the answer.

I think if you translate all that sort of gobbledegook out, I would say, if I was a betting man, that you could probably put the house on some sort of land tax being worked on or appearing, probably with a different name—bit of camouflage, bit of shellac—in the IRD work programme, whence it comes. But there is an issue, of course: a land tax and international foreign trusts. Those are two big issues of moment, of huge concern to the communities, which have massive economic and fiscal implications for this country, that could have been addressed in this bill.

So, although I say that the Opposition supports the bill, the Opposition is girding its loins for the Finance and Expenditure Committee process under the chairmanship of Mr Bennett, because we know that we will have to take the scrubber to this piece of legislation. There will be some massive holes in it, as there always are when this sort of mishmash is presented to the House. We lament the fact that we are not sitting down trying to grapple with a piece of legislation that deals with the big issues that affect this country.

There are the big issues around New Zealand’s perception as a possible tax haven, the big issues around housing and in respect of tax options around that, and the big issues of moment to those people who tonight will again sleep in cars, under bridges, and under bushes and trees and other places, because they cannot afford the rent for a home, let alone the prospect of ever buying a home. I know that the member Alastair Scott is waving his arms and legs around. You need flags to do semaphore, actually, I am told, not just your hands, but thanks for waving—I do not know whether that was with two fingers or five. Those are the big issues that could have been dealt with in this piece of legislation, not just the shopping list, valid though it is: goods and services tax, related party debt remission, loss grouping and imputation.

The member Mr Bayly said in his speech that people would be hanging on every word; they will understand every aspect of this bill. Well, the man who has become the “Bear Grylls” of the Parliament with his very worthy, I should say, exploits and expeditions should know that, I suspect, most people will not be concentrating on the aspects and minutiae of this bill, or even the headline issues. What they may well be looking for in a tax bill are the big issues—land issues, housing issues—and how they are dealt with. Perhaps they might be looking at how the Government might propose to deal with foreign trusts. They are the sorts of headline issues that they are reading about in the paper and watching on the news every night, and they are the things that the communities are talking about. So I just say to Mr Bayly that he may want to re-engage with his community, have the odd clinic on a Friday or a Monday morning, and maybe ask a few people what their priorities are in terms of tax framework, tax planning, and tax legislation. That being said, we await with bated breath the officials’ report at the select committee.

ALASTAIR SCOTT (National—Wairarapa): I would like to focus on the bill for a minute, specifically to discuss some of the ideas that Stuart Nash was talking about earlier, when he was trying to suggest that this tainted capital gains portion of the bill somehow enabled capital gains that would otherwise be taxable, to be distributed. In fact, the opposite is true. That piece of the bill enables gains of a capital nature to be distributed as capital sums, rather than, as is the case today, as taxable distributions. I just thought I would clear that up for Mr Nash at the outset.

Other members have quite correctly said there is a lot going on in this bill. Jan Logie listed the whole gambit of affected legislation, and I am not planning to do that, but what I will do is help Mr Robertson out when he was confused about what were “The overall goals of the Government regarding taxation”—I think that is what his words were. One of the overall goals is to make sure that taxpayers have more of the money that they earn remain in their pocket. That comes, in relation to this bill, in the rates that are set by way of this legislation. That is important—I have not heard anyone in the Opposition talk about the taxpayer. They are the people who we are taking money from, and spending on their behalf to help those who are most in need.

The philosophy of this side is, as I say, to either keep rates the same or reduce them, and that is only going to happen if we have good public accounts—accounts that are managed prudently and effectively—and by making sure that we hit surpluses. As the House knows, projected surpluses in the foreseeable future are positive, rising to between $6 billion and $7 billion in the next few years. That enables us to think about options, whether it is to pay down debt, or, coming back to the bill, reduce income tax rates. The alternative course, from the Opposition, is to talk about universal basic income (UBI) as being a core policy of the Opposition.

I just thought I would note that there is an article, actually, in the Wall Street Journal of 4 and 5 June this year, which specifically discusses a guaranteed income for all. For the House’s interest, it is written by Charles Murray, who first talked about a UBI in 2006. If you read the article, a UBI is a scary thought, because everyone gets paid a certain amount, no matter what their circumstances are. There is no consideration for those who need it most—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am going to ask the member to come back to the bill.

ALASTAIR SCOTT: What I am saying is the Opposition’s policies in general—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, no—the member will come back to the bill.

ALASTAIR SCOTT: OK, the tax rates that are in this bill would not be the same if it were an Opposition made up of Greens and Labour, because we know that their policies are only about spending taxpayers’ money inefficiently and ineffectively.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I probably should have got to my feet earlier to warn the member. He actually started his speech quite well. He stayed on the bill for about a minute and a half, but since that time he has diverted a long way from it. He has gone through what is not in it, from the Government perspective, and now he is going through what is not in it, from the Opposition’s perspective. Neither of those parts are relevant, as I have made clear to members earlier.

ALASTAIR SCOTT: Thank you, Mr Assistant Speaker. This bill does a number of things. It is going to be an interesting select committee process. There is going to be a lot of discussion. It is a collegial select committee, and I look forward to that debate.

Bill read a first time.

Bill referred to the Finance and Expenditure Committee.

Bills

Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill

First Reading

Hon ANNE TOLLEY (Minister for Social Development): I move, That the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill be now read a first time. I nominate the Social Services Committee to consider the bill. At the appropriate time I intend to move that the bill be reported back to the House by 17 October 2016.

This bill represents the first phase of major and far-reaching changes to the legislative framework for the care, protection, and youth justice systems necessary to make positive changes to the lives of our most vulnerable children and young people. The bill includes a package of amendments to the Children, Young Persons, and Their Families Act 1989—the CYF Act—as well as some consequential amendments to other legislation. Later in the year I expect to introduce a further set of legislative changes to the House. These legislative changes are part of the wider programme to transform the care, protection, and youth justice systems in New Zealand.

We know that children and young people who come into contact with these systems are some of New Zealand’s most vulnerable people, and we know that this can be a complex and challenging system for them to deal with. Children and young people who have been in care are far more likely to die at a young age, leave school with few qualifications, receive a benefit, be convicted for criminal offending, and have children who also need care and protection support. Young people who have had experience in care before the age of 17 are 22 times more likely to have spent time in prison by the age of 21 than young people who have had no contact with Child, Youth and Family.

In April 2016 I released the Government’s response to the final report of the expert panel I appointed to lead a complete overhaul of the system. The report found a number of fundamental issues with the operating model for Child, Youth and Family. The current system does not place children at its centre. It does not meet the needs of vulnerable young people as they move into adulthood. It is fragmented, lacks clear accountability, and is not organised around a common purpose. In order to address these issues, this Government has committed to developing an operating model that is child-centred and responsive to children and young people’s views and needs. This bill is the first step to make this happen.

The bill has three main objectives: first, it extends the statutory age of care and protection to under 18, instead of under 17; second, it provides vulnerable children and young people with the support needed to express their views and have them heard, both at the individual and at the system level; and, third, it enables a broader range of professionals to identify and meet the needs of vulnerable children and young people.

This bill amends the definition of “young person” in the CYF Act to include young people who are 17 years old for care and protection purposes. It also consequentially amends the Vulnerable Children Act 2014, which refers to the definition given in the CYF Act. Including 17-year-olds within the scope of the youth justice system is being investigated. Leaving the care and protection system at the age of 17 can seriously impact a young person’s life. Young people who have spent time in care have spoken of their pronounced sense of vulnerability as they moved into adulthood. For these young people, the transition out of care often comes too early, too abruptly, and with little in the way of a safety net.

International evidence has shown that allowing young people to stay in care for longer has a range of benefits. A study in the United States found that an increased upper age for care and protection meant that young people who had been in care had better educational outcomes, had children later in life, and were less likely to become homeless. Young women who had been in care for longer were less likely to commit crime. Young people have told me that they are rarely given a chance to be involved in the decisions being made about them. We need to do more to ensure that children and young people are able to participate in these decisions.

To support the establishment of independent advocacy services, this bill places a duty on the chief executive to ensure that services are available for children and young people who are subject to an action or are receiving a service under the CYF Act. The services will support them to express their views about matters in relation to those actions or services that affect them, and more generally on improving processes and services delivered under the Act. The duty requires that particular consideration be given to the needs of children and young people in care. The bill also specifies that advocacy services should operate independently from other services provided under the Act. I want to note that work on the design of independent advocacy services is currently being carried out in partnership with the philanthropic sector. Any further changes to the legislation needed to underpin the advocacy services will, therefore, be included as part of the second stage of reforms.

This bill also includes duties to ensure that children and young people are encouraged and assisted to participate in any actions and decisions under the Act that may significantly affect them. These duties specify that any views expressed by the child or young person must be taken into account. The duties include that the child or young person be supported to express their views freely when they face any barriers, such as those relating to age, language, or disability. These duties will fall on the person responsible for the relevant proceeding or process under the Act, to either perform them or ensure another person has performed them.

The bill also includes a new duty on the chief executive to ensure that wherever possible children and young people’s views are considered as part of departmental policies and services. This includes views received through the advocacy services. The future operating model for the department will take a far more multidisciplinary approach to child protection work and decision-making, and will include a number of broadened functions.

The bill amends the CYF Act to vest functions and powers that currently sit with social workers in the chief executive. The chief executive will be able to delegate these functions and powers to employees in the department and elsewhere in the Public Service, and also to persons outside the Public Service with the appropriate Minister’s prior written approval. This amendment will provide the chief executive with a greater ability to delegate core roles to other professionals when they are equally or better placed to perform them. This change helps to ensure that a broader range of professionals are available to identify and meet the needs of children and young people.

I want to acknowledge that social workers will still be the main professionals responsible for carrying out many of the functions specified under the CYF Act. Therefore, when functions or powers are being delegated to anyone other than a social worker, the chief executive must be satisfied the person is appropriately qualified to exercise those powers or functions. The bill includes additional controls to make sure these functions and powers are exercised competently and transparently. These will cover the delegation of any of the chief executive’s existing powers under the Act. First, all delegations must be publicly notified on the department’s website while those delegations are current. Second, if delegating outside the State services, the chief executive must be satisfied that appropriate contractual arrangements are in place.

In summary, this bill represents the first stage of a broad and far-reaching set of changes of how the Government works with our most vulnerable children and young people. These changes will help to ensure our care, protection, and youth justice systems are child-centred and responsive to children and young people’s views and needs. These changes set a foundation for further legislative changes that I expect to introduce later this year. I commend this bill to the House.

JACINDA ARDERN (Labour): I am pleased to rise in support of the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill. As a party, Labour has generally given cautious support to the process that the Minister undertook when she introduced the expert advisory panel that carried out both an interim and final report setting out the reforms that it believed were needed for our child protection and child welfare system in New Zealand. We came into that process with an open mind because we ourselves had pushed for so long that changes were needed in order to improve the outcomes for children.

It was our view, however, that it was never fair to blame social workers for the situation that we had in New Zealand, given that we have not been properly resourcing and supporting those social workers for some time now. In fact, in the select committee today that was confirmed when we questioned the Minister over funding for Child, Youth and Family, and she admitted that over the past few years $52 million has been taken out of Child, Youth and Family in what has been called efficiency savings.

But what do those efficiency savings actually represent? These included the holding of vacancies—when social workers left jobs, they certainly were not replaced—the way that holiday pay was paid out, and whether or not programmes were indeed delivered; $52 million taken out of a department that could not afford it. And what is the proof that it could not afford it? The Minister, this Budget, put $36 million back in, in 1 year alone, because she has acknowledged that that was needed just to tread water. I make those comments because, although this bill is welcomed and we are pleased about it, we do need to acknowledge that in the here and now we do have a department that continues to be under considerable strain. How can we truly say it has failed when we never resource it to do the job properly in the first place?

On the specific provisions in this bill, though, there is one element in particular that I am really pleased to stand up in support of, and that is the raising of the age of care and protection. When we lost the last election, to stay sane as an Opposition member for another 3 years—

Jono Naylor: Stay?

JACINDA ARDERN: —I will defend my sanity—having already served 6 years, I wrote a bucket list. An Opposition bucket list: things that, despite not being in power, I wanted to see happen in my term in Opposition. At the top of the list was an increase in the age of care and protection. It never, ever seemed fair to me, when I first came into Parliament, that once a young person who is under the care of the chief executive—in foster care, in residence, in kinship care—that once they turn 17, once they have their 17th birthday, no one has responsibility for them, not one person. A parent would never do that to their child. A parent would never say on the 17th birthday of their child: “Pack your bags, leave the house, I have no responsibility for you any longer—no financial responsibility, no emotional responsibility, nothing.” Yet that is what we do to our young people who, you could argue, need more support than anyone else.

So we as a Labour Government—when we were in Government we were set to change this. We had a bill on the Order Paper, an amendment to the Children, Young Persons, and Their Families Act to change the age of care and protection, but we lost. So when I came in, I remember, when I was the youth affairs spokesperson, every time a bill came up where I could make an amendment that might lift the age, I did—every time. Not only that, we ran a petition and tried to get public sympathy for this issue as well. ActionStation came on board and the petition grew. It seemed to have got some momentum, but none of it would have happened—and I want to acknowledge the work of Dingwall Trust, which works with these young people every single day. It was one of the first organisations that put a young person in front of me and had them tell me their story. Lifewise, another organisation working with the homeless, sees the other side, the repercussions of this policy. Those are just some of the organisations that did awesome work championing this issue, and, I believe, got it here today.

So I am pleased that we are ticking off an item that just so happens to be on my Opposition bucket list. But it would be remiss of me not to add that, on the flip side of that, unfortunately, we are now going to have a separate age for care and protection than we will for youth justice, and that is a lost opportunity. There is a reason that our care and protection age and our youth justice age are linked. It is because if you have a young person committing crime then you will often find that there are care and protection issues. In fact, this was confirmed by Judge Andrew Becroft, who, in a speech not too long ago, said that of the 1,982 offenders in the Youth Court last year, Child, Youth and Family had prior involvement in 67 percent of cases—in 67 percent of cases.

There is a reason that our Children, Young Persons, and Their Families Act includes the youth justice provisions in it, so why are we raising only one element? It makes sense to have young people in the Youth Court for as long as possible, not only because of our United Nations Convention on the Rights of the Child responsibilities, which we get whacked with every time because we have not raised the age, but because the Youth Court is a highly successful, interventionist, confrontational, personalised process.

I have heard much come from the community of late that the Youth Court does not hold young people to account. I have two challenges to that. I have never seen a process more confrontational than what I have seen, for instance, in the Youth and Rangatahi Courts—the young person is at the centre of the process. They cannot sit back and not take responsibility in the way that you see our adult system work, where they can almost be a bystander to the process. They are at the middle. The Youth Court has tools that enable it to cater the sentence to that young person. It could include a long stint in a residential facility, but it also can include wraparound services for the family that young person has come from and will go back to. It understands that their environment has played a role.

The other important point is that if the case is severe enough, the Youth Court can send it on to the adult court—the provision is there. The Youth Court is a gem in our justice system and we should be sending more young people to it. I really implore the Government, in the work that it is doing to assess whether or not that age should go up, to consider that positively.

I want to come to the two other provisions in this bill around advocacy—the ability of a young person to personally have their views heard and also the establishment of an advocacy service for young people in care. Absolutely. In Australia they have something similar, particularly for children in foster care. We have needed that for some time.

One point of caution though: we must resource that properly. Currently the Children’s Commissioner has that responsibility to be a voice for young people, but he has already said that that is one of the things that he has had to step back from because he has not been properly resourced, and his funding has remained static for the last 8 years. Whatever we do, we have to make sure we support it properly. The involvement of the philanthropic sector in designing this—my only question will be: is that a sustainable way to create what is going to be a piece of core service in legislation? If we design something with the philanthropic sector, are we then reliant on it to make sure it continues to be delivered? No young person should rely on their advocacy being funded out of goodwill. It needs to be more sure than that. Although I welcome the fact that people have an interest in this area and want to contribute, we must give it a stable footing.

The last point—and this is where our most significant reservations sit—is around enabling a wider role of professionals to have core responsibilities in discharging functions under the Children, Young Persons, and Their Families Act. There is a reason that we train our social workers comprehensively. There is a reason we are advocating that social workers must be registered. This is a professionalised sector that performs a very critical role. They make the decision to remove children from their families. It does not get much more serious than that, outside of incarcerating someone. It is a specific role that requires expertise. The delegation that we are talking here—we do not really have specificity around what is going to be delegated to other professionals. But the idea that the chief executive—not this Parliament, but the chief executive—can make that decision simply by putting a notice on a website does not sound like a robust check and balance to me. It does not sound robust enough. We will be questioning that at the select committee.

ALFRED NGARO (National): I rise to take a call in this first reading of the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill. I look forward to this bill coming to the Social Services Committee and the work we will do. I see that this bill is quite critically important for the roles and responsibilities the Government has. In particular, this morning at our select committee we had our Minister for Social Development present, and one of the questions that was asked and responded to by the officials was about the reviews that have taken place. In fact, one of the officials said that since 2000 there have been 14 reviews, and in each review there has been a layer of complexity and also, too, more bureaucracy that has been added on to the department, which make it inefficient in being able to fulfil its role. I think that is quite critically important to this piece of legislation. This piece of legislation is a direct response to some of those critical issues, and I will talk about them in a moment.

The bill has three main objectives. The first objective inside the bill is to extend the statutory age of care and protection to those under 18, which was previously those under 17. As the previous speaker, Jacinda Ardern, spoke about, that is something that has been talked about by this Government. It is something we are actually enacting and initiating very clearly. One of the things I think is important is that I was present when in the 50th Parliament we had a presentation from the Dingwall Trust and a number of young people who were in care. They talked about the importance for them to have the age of entitlement and eligibility extended. A number of them talked about the challenges and the difficulty they had in order to transition at the age of 17, to be able to get into some training or some employment. For them, this is critically important. I hope those young people will hear that this Government is now actually taking on that responsibility and extending the age to 18.

The other thing I want to say, also, to give comfort to others who may be listening, is that although other people say 18 is maybe not enough and it could be higher, up to 19, 20, 21—well, it is clear that there is a provision, and it has always been there, that if the chief executive deems that, actually, there are critical issues of concern and vulnerability, then the chief executive can extend that age. It can even be extended up to the age of 25; that provision is currently there. That has not changed. What has changed and will change under this bill is the extension of that age of statutory care to the age of 18.

The second part that I think is really important inside the bill is around the voice of children being included. In August 2015 we had a report from the Children’s Commissioner that was a pretty damning report, if we want to be honest about it. Part of the statutory role of the Children’s Commissioner is to monitor the roles of responsibility for children, young persons, and their families. This August in the Children’s Commissioner’s report called State of Care 2015: What we learnt from Child, Youth and Family, Dr Russell Wills wrote a number of things. One of the things inside the report that was critical was the lack of ability for the voice of children and young people to be involved in the decision making of the department, in all of the decisions that actually reflect on the children themselves. That was quite clear. In fact, what that said was this: give them a choice in decisions about their care and, crucially, allow those voices to be a part of the implementation, which is quite critically important as well. I think that is quite critically important. The second provision in this bill is to ensure that the voice of children is included inside of that implementation, and I think that is quite critically important.

Also, if one reads inside the expert panel report, it says that on average there are about 60,000 children who are notified to Child, Youth and Family, and 4,900 of those children are actually in State care. What has actually come out of that is that the Minister has, in her wisdom, ensured we have those key stakeholders involved with the expert panel. What I want to read, which goes to the second part of the objectives of the bill, is what a young person wrote to the Minister in a particular letter as part of those key stakeholders. They said this: “Dear Hon Anne Tolley, when you read the final report over Christmas I would most like you to think about the importance of advocacy for children in State care.” It goes on to talk about their own experience, that being one in which they did not have the role of advocacy inside of it. The second part of the bill ensures and provides vulnerable children and young people with the support to express their views, to have them heard both at the individual and system level.

The last and third part of the objectives of this bill is to ensure that we enable a broader range of professionals who will also identify and meet the needs of vulnerable children. The previous speaker talked about the roles of the social worker, but also, too, what did come out of the Children’s Commissioner’s report is the fact that there was an issue around the capacity and capability of social workers, and the roles they play, as well. We are not criticising that. I think there are issues for us to be able to ensure that the burden of responsibility is not just put on the role of the social worker. The third portion of this bill ensures that there may be a broader range of specialists who have an ability to be able to meet some of those needs. That could be in the area of, for instance, mental health areas of need. That could be counselling and other forms of specialist support that could be offered, as well, and that is the third component of the objectives of this bill.

I look forward to this bill coming to our select committee and to the submissions that will be made. This is, again, the initiative of the Government to ensure that, as part of an overhaul, we look at the system to ensure that it does respond. It is fully inclusive of all the key stakeholders, and I think that that is critically important. I think that what we have done in this bill and what the Minister has done is critically important.

The last thing I want to say is around what comes from the expert panel in their consultation, right across, and it is that this part of the recommendations, which have now been factored into the bill, has factored in all of those key stakeholders who are involved. None have been left behind: the voice of families, the voice of children, the voice of young people, and also, too, the professional perspectives that have come from the social workers and counsellors, and also those who are policy makers. I think that the approach the bill is taking is thorough, and I think it is well considered. I look forward to this coming to the committee. I commend this bill to the House.

CARMEL SEPULONI (Labour—Kelston): There are four key changes in this bill. It is extending the age of State care and protection to a young person’s 18th birthday; ensuring the views of children and young people are taken into account as part of decision making at an individual level and in the development of services and policy; supporting the establishment of an independent youth advocacy service; and enabling a broader range of professionals with specialist skills who will widen the expertise within the new model to perform some functions under the Children, Young Persons, and Their Families Act. Social workers will still be the main professionals responsible for carrying out these functions. I want to speak to those four key changes individually.

Firstly, on raising the age of care. We on this side of the House—and I know other political parties as well—have fought long and hard for the age of care to be raised. So it is good that in this bill we will be considering that. Before we left Government we had a bill on the Order Paper that would have seen the age of care increased. That was the Children, Young Persons, and Their Families Amendment Bill (No 6). That was, unfortunately, dumped by the succeeding Government. We are now at that point when we are reconsidering the age, but there was a time, some years back, when the Government could have done the right thing. We have then tried to use bills before Parliament to raise the age. These too have been defeated. Last year we instigated a petition alongside the likes of Lifewise and the Dingwall Trust to raise the age, so we are pleased that the Government has finally acted on these calls—it just took a little bit of time.

Currently, the law sets out that a young person remains under the care of the chief executive only until they turn 17. This creates a significant gap in support services. Young people at this age are ineligible for a Housing New Zealand house, for instance, and accessing a benefit at this age is incredibly difficult. Our disappointment with this bill is that the bill only raises the age for care and protection purposes, which will now mean we have a different age for care and protection than we have for youth justice. Youth justice provisions are set out in the Child, Young Persons, and Their Families Act. It makes sense to keep these ages linked, especially given the likelihood that offending at a young age is often an indication of wider care and protection issues. Of the 1,982 offenders in the Youth Court last year, Child, Youth and Family (CYF) had prior involvement in about 67 percent of all the cases. The UN has repeatedly raised our failure to meet our United Nations Convention on the Rights of the Child obligations because we try 17-year-olds in our adult justice system. This was an opportunity to remedy that. Unfortunately, the Government has not taken that opportunity.

The Youth Court is not a light touch. It has the ability to apply tough parameters around a young person or to escalate a case to the adult system, if need be. It is often a much more confrontational environment for a young person who is placed at the centre of the process and directly held to account—rather than being a bystander, as often the case in the adult justice system. The Government is currently considering a lift in the jurisdiction of the Youth Court to include 18-year-olds; we would support this move. Just on considering the lift from 17 to 18—because there has been much discussion over whether it should be higher—my concern if it is left at 18 is that, actually, year 13 students are often in the middle of their year 13 year when they turn 18. So we still could have that dilemma where we have students who are in the middle of their compulsory schooling, in year 13, who all of a sudden are not eligible for care. We have heard from those who have made submissions, including the young people who came as part of the Dingwall Trust submission, that that just creates so much trauma for them when they are trying to complete their secondary schooling, and all of a sudden they have to find their own accommodation and they are no longer eligible to be considered as part of the care. So we will need to have conversations about that at the select committee.

On to the advocacy service: we support a change in legislation to embed the voice of young people in care into decision making. We support the independent operation of advocacy services, but will explore at the select committee what the responsibilities of the Ministry of Social Development and CYF will be in ensuring that the service is properly resourced. We are concerned that the advocacy and child voice role that the Children’s Commissioner has had, has been weakened in recent years due to a lack of funding. The bill’s introductory notes also state that the design of the independent advocacy service is being undertaken in partnership with the philanthropic sector, and we want to ensure that this is a suitable and sustainable model. If we move to enabling a wider roll of professionals to have core roles in discharging functions under the Department of Child, Youth and Family Services Act, we have some concerns about this section of the bill and will explore them in greater detail in the select committee. This amendment will also create greater flexibility in the delegation to other professionals to play a role in identifying the needs of vulnerable children. We are concerned that this is a significant step, and that Parliament will not retain oversight over how this delegation is managed. The bill sets out that the chief executive can, essentially, make the decision, and the delegation can extend beyond those outside State services, and they will simply need to ensure that there are contractual arrangements in place and that each delegation is notified on an internet site.

Going to the costs pressures within CYF, Labour has concerns regarding the overall ability of CYF to currently operate, even before these changes will be implemented. In 2016-17 CYF is forecasting a deficit of up to $38 million due to demand-driven costs. The new funding of $35 million allocated for CYF next year only barely covers its deficit, which includes the discontinuation of funding from a previous year. The Minister has also not been funding CYF to increase the number of social workers as required to by the Government. In fact, we know there is a shortage of social workers—a shortage of qualified and registered social workers. We see that with CYF, but we also see that in the Social Workers in Schools (SWIS) programme, where we have 183 decile 1 to decile 3 schools that should be—and are, actually—eligible for Social Workers in Schools, but cannot get them for a range of reasons. Mostly, it is the underfunding of the SWIS programme, but also the shortage of qualified and registered social workers.

CYF had a deficit of $7.7 million in 2014-15, underwritten by the Ministry of Social Development, and has an expected deficit for the current year, 2015-16, of $11.2 million, which includes approximately $18.8 million in cost pressures offset by $7.6 million of mostly one-off savings from within CYF budgets. CYF is currently forecasting a deficit in its budget for 2016-17 of between $28 million and $38 million. This is driven by the continuation of funding pressures from previous years, cessation of one-off funding in 2015-16, and additional wage and other cost pressures in 2016-17. The range reflects uncertainty about the offsetting savings that might be achieved both within CYF budgets and the Ministry of Social Development. Overall, the projected deficit of $38 million is driven by current demand pressure from client-related costs, accumulated remuneration pressures, unfunded past agreements to increase social worker resources, and continued costs of the implementation of changes to other pressures. This also currently excludes any estimate of future client-related demand increases or decreases, which are still being considered. So there is a lot there for the Minister to consider.

I will raise something that the Minister for Social Development brought up earlier, and has actually brought up time and time again, that she thinks that children need to be the focus of policy in relation to CYF. I just want to say to the Minister that, actually, children should be at the centre of all policy, including within her jurisdiction, Work and Income. We did raise, today, with the Minister that if she means that, then in the rewrite of the Social Security Act, she should be considering a change to the principles to ensure that we include in there a principle that says children should be at the centre of policy making. She said in the select committee that that will not actually be the case because not all social security legislation is about children, but can I just say that there is a principle in the Social Security Act around work—and not all social security is about work, particularly when we take into consideration superannuation, which makes up half the spend in Vote Social Development. I am hopeful that the Minister will actually take seriously her vow to ensure that children are put at the centre of policy.

MATT DOOCEY (National—Waimakariri): It is an honour and a pleasure to rise in support of the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill. I think that last speaker, Carmel Sepuloni, said it all—9 years in Opposition, and all they have got to say is: “Spend more money.” Spend more money—an Opposition that has got a litany of failed social policies. In 2008, those members’ last year in Government, the Salvation Army came out and said that with all their extra expenditure—they blew the budget—they did not even get social progress to increase by 1 percent. Nine years on the Opposition benches and all they can say is: “Spend more money.” That says it all.

On this side of the House, what we are looking to do is bring in reforms that will support vulnerable children and vulnerable young adults. We know with the feedback from the final report of the expert panel what it identified is that what we should be doing is ensuring all vulnerable children and young people who go through the care system come out with the opportunities that the average New Zealand child has. It is clear by the state of care that we are not providing that, and it is amazing to think that we could be taking vulnerable children and young people into a care system and not knowing whether we are harming them or doing them any better.

What this bill is based on is a very vulnerable cohort of young children and young people. We know from the regulatory impact statement, when you look at the statistics, that roughly 1 percent of young people who spend more than 3 months in Child, Youth and Family (CYF) at the age of 15 or 16—seven out of 10 of these will leave school with no qualifications. Eight in 10 will leave without National Certificate of Educational Achievement level 2 or equivalent; that is two times higher than the general population. Ninety percent will have been on a benefit before the age of 21; that is 2½ times higher than the general population. Four in 10 of the young women are on a benefit with a child by the age of 21; four times higher than the general female population. Six in 10 of the young men have a corrections sentence by the age of 21—5½ times higher than the general male population—and 21 percent have received a custodial sentence, a rate, shockingly, 11½ times higher than the general male population.

It is clear that over decades the care system has let young people down, and that is why this reform is much needed. That is why this Government is taking a social investment approach. It is not only about social funding; it is social investment, it is allocative efficiency—people on the street will know that—and it is how we spend money wisely, how we get it to where it needs to go, and how we get good bang for the buck. What we know is that for these vulnerable young children and young people who have been in care at the age of 15 and 16, future liability, by the age of 35, will be around half a million dollars for the Government. So we know, actually, that if we look at that future liability and we invest upfront then we can support these young children and young people to not only go on and be aspirational but to expect what the average New Zealand Kiwi kid expects in life opportunities. That is what this bill is supporting.

When we look at some of the outcomes of this bill, I am very much looking forward to being part of the Social Services Committee, ably led by the chair, Alfred Ngaro. We are going to kick the bill around, no doubt, with a range of submissions and really think about whether it is going to be fit for purpose for protecting our young children and young adults. We will be raising the age for statutory care and protection up to the 18th birthday. At the moment it is just before the 17th birthday. I have some sympathy with Opposition members who are talking about it needing to be higher. I agree. The next stage of reform will look at that. You could easily imagine some transitional service up to 21, and even, for complex young people, up to 25. What adolescence and being young people is about is transition. It is about moving from being a young person into adulthood, and we should be looking to support them so that they become productive members of New Zealand society. That is why I commend this bill to the House.

JAN LOGIE (Green): There are some bills that are more important than others in this House, and this should be one of those bills. I just want to start by acknowledging that I am sure, and I assume, that everyone in this House cares deeply for the children of this country, and that we all want to end child abuse, and that in the meantime we want to ensure that the children who are in our shared care are safe and have every opportunity in life. The Green Party certainly believes that and wants that for our children.

The Green Party supports, albeit with caveats, three provisions in this bill. But the fourth point, and the Government’s strategy, is of such concern to us that at this point we will be opposing this bill at this reading. We know that there are the numbers for it to go to a select committee, and we look forward to engaging with the community on the bill, but we believe it is important in our vote to reflect the concerns that have been raised with us. I hope that through the select committee process our concerns, and the concerns of people in the community, are abated to the point that we can support the bill.

Let me start by outlining the things that we do support. We do support extending the provisions of statutory care and protection to young people aged 17, at the very least. We advocated for this, along with other parties and many, many people in the community, when this House was considering the Vulnerable Children Bill about 3 years ago now. During that process we heard compelling and, I have to be honest, completely tear-jerking evidence from young people about their experiences of being aged out of care at 16, becoming homeless, ending up in trouble with the police, and having addiction problems that would never have happened if they had had the support of the State until they no longer needed it. We listened to them and wanted to make the change then. It was so sad that the Government chose not to actually acknowledge their needs at that point. However, 3 years on, here is the Government with this provision, and we will support it.

The Green Party also supports calls to have this bill cover youth justice, as well. Very often these are the same young people, so it really is a nonsense to have the age of 18 for care and protection and the age of 17 for justice, when often they are the same young people. Including care and protection with youth justice is important to ensure that our legislation is consistent with the UN Convention on the Rights of the Child. It would be a really good move, I think, ahead of the UN committee examining New Zealand in September, for us to get consistency on this minimal level.

The Green Party also supports the establishment of an independent advocacy service with a particular focus on children. I understand that this idea came from a hui of young people advocates in the philanthropic sector some time ago. It is wonderful, in this instance, to see the Government actually picking up on the innovation that is happening in our community, and putting some legislative support behind that innovation. We do have concerns, as some others have expressed, that although philanthropic funding can often go into seeding and developing ideas, it is often not the best model of funding for the long-term sustainability and assurance of something that is part of a legislative system, so we will be interrogating that aspect of it during the select committee process. This will be an advocacy service and it will be very important for enabling us to hear the voices of young people and for looking at ways that we as a society can include these young people more. However, that advocacy service will not have a monitoring role to ensure the safety of young people, and it is really important that we get that those things are distinct—that that safety monitoring role still fits with the Office of the Children’s Commissioner.

I do want to register, again, our deep, deep disappointment that the Government has failed to increase the funding for the Children’s Commissioner to fulfil that monitoring role when he has clearly told the country and this Parliament that he is unable to fulfil that duty properly because of a lack of resource. Although there are significant changes, as heralded by this Government, coming into force over the next period, that actually increases the risk for those young people. As change happens, people can fall between the cracks, so that monitoring role is actually critical at this very point. The fact that the Government has chosen to not increase the funding to enable the commissioner to fulfil that critical role actually sends a message that its priorities are wrong. Its priorities are not with ensuring the safety of our children as the first priority. That worries me deeply.

We also support the embedding of the views of children and young people at an individual and system level. That was clearly an intent of the 1989 legislation. The paramountcy of the child was there in the Children, Young Persons, and Their Families Act, and through cost pressures and political and ministerial risk aversion we lost it, in practice. It is good to see that that will now be built back into the system.

I would like to flag here, though, as well, that children exist in families. Actually, we heard from members on the other side that they had listened to service providers and social workers and children; we have not once heard a mention of families. The expert advisory group was very clear about telling stories, and every single member in this House will have heard harrowing stories from families who feel as if their children have been taken off them, where they have not been given support, where it was not in the best interests of their children. We hear this particularly from Māori, and we see this reflected in terms of the statistics. Almost 60 percent of children in Child, Youth and Family care and protection are Māori. That, I think, means that this system should be building in advocacy and support for the voice of parents. There are some amazing examples from overseas, actually, of that parental involvement coming in and advocacy sitting alongside the youth involvement, changing the whole system, the reduction in the need for children to come into care a result. The lesson out of that is that if you actually involve the parents, the children are better off, and we get sustained change. Sadly, we have not got that yet.

I do also want to raise some points now to get to our primary concern and what we cannot support in this bill: the single point of accountability being held with the chief executive of the Ministry of Social Development, and the delegated authorities. The reason, to explain this, is that the single point of accountability takes accountability away from the social workers, where it is held at the moment. There is some confusion, and I do get that there are some tensions we need to work out in this, but having the accountability sitting with the social worker means that it is based on their judgment from analysing all of the different variables in every family situation. What we have seen over time with Child, Youth and Family—and nobody, I think, denies this—is that political risk aversion has resulted in really negative impacts on the practice of the social workers within Child, Youth and Family.

If we put the single point of accountability on the chief executive of the Ministry of Social Development, who is directly responsible to the Minister, there is an absolute danger that we are going to increase that result and have very perverse outcomes. When we delegate the responsibilities out into the community, and have other people participating in the system rather than Child, Youth and Family social workers, that delegation and authority and accountability from the chief executive will apply to them. When the Minister talks about Māori being keen on this—if Māori are picking this up, they will still be under the chief executive of the ministry’s delegation. That is not tino rangatiratanga; that is colonisation. That will not represent the needs of Māori in their community and their ability to actually practise in a way that they believe in. It will, in effect, have them under the direction of the Minister, which is of deep concern to us.

RIA BOND (NZ First): I am privileged this evening to rise on behalf of New Zealand First and my colleague Darroch Ball to speak to the first reading of the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill.

The bill’s objective, as stated, is “to help achieve a child-centred system by—extending State responsibility for the care and protection of vulnerable young persons; ensuring that vulnerable children and young persons are able to express their views and have them considered as part of decision making in individual cases, and in the departmental services and policy; enabling enhanced access to appropriate specialist skills and expertise to respond to the needs of vulnerable children and young persons.”

New Zealand First supports the idea of children’s voices being heard—absolutely—but what we are nervous about is how this is going to happen within a framework of philanthropic funding. We support the idea of including other professionals. However, New Zealand First insists that professionals, no matter who they are, are given additional skills to deal with vulnerable children in care and protection. What New Zealand First is worried about is whether this bill is going to open the door to inviting outside—perhaps international—entities to come into New Zealand and provide contractual services to our vulnerable children and young persons. This we will not accept, hence our position to send this bill to a robust select committee process so that those concerns can be alleviated or diminished, such is the risk that this will open a door for the privatisation of our social services for our vulnerable children and young persons.

Just this morning I sat before Minister Tolley in the Social Services Committee. I listened to the justifications and rationale that sit behind where this National Government has spent taxpayer money tackling the poor record of how the State has parented our most vulnerable children. The Minister says that we must have a cultural shift in our thinking throughout society if we are to ever get it right. When we look at which model will best service the needs of our most vulnerable children and young persons, the Minister states that a suite of bills, including this bill and many others to follow, will let the voice of a child come first. To put children at the forefront, to let the child tell us what they need, is for adults and Governments, past and beyond, to understand what our vulnerable children need under State services.

I am going to break this bill down into three main areas: age settings, advocacy, and workplace settings. Regarding age settings, this bill proposes to extend the provisions of the statutory care and protection system to persons aged 17 to 25 years. Currently, it is 17, and then you are out. I have actually seen how detrimental this is to children. Just recently I was privileged to attend the L’Oréal foster care programme workshop and what it did was it gave these children the opportunity to dare to believe—to actually believe—that they can bust out of the stigma that society and people have placed them under. What these children learnt over the course of the weekend was that they can stand up and that they can be given a certain strategy and support to help them achieve and to be the best that they can be in their future.

I was really quite astounded by the concern from some of the children. Once their State service care ended at their age, they were actually quite anxious about what and where they would go to next because still—still—in some cases, their families were not appropriate to go back to, and often these children are left to fend for themselves. So New Zealand First agrees that this extension of care to include the up to 25-year-olds is paramount to helping these individuals journey into society with a more successful platform that includes the security of knowing, as they move from high school to tertiary education and then on to the workforce, that they will receive the real and actual support services needed for them to belong and move within our society, a society that does not take away the aspirations and dreams that every individual in this country deserves to have.

It is a tragedy and a blight on this and previous Governments that at the age of 17, children with such complex needs were simply dumped out on the street. This lack of engagement and understanding right down to key care arrangements has been occurring for over 30 years, and it must stop. We are pleased to note the extension of care from 17 years to 25 years.

With regard to advocacy, the bill proposes to embed “the views of children and young persons at an individual and a systemic level by strengthening obligations in the Children, Young Persons, and Their Families Act 1989 (the CYPF Act) to support the participation of children and young persons:”. This bill supports “the establishment of independent advocacy services, with a particular focus on children and young persons in care, through a new duty imposed on the chief executive of the department administering the Act:”.

The Minister explained today that a chief executive will be put in charge who will set up multi-professional advice services and that that individual chief executive will then choose those service providers. This will include social workers, district health boards, the police, psychiatrists, psychologists, educators, and many more, who will get the chance to design this foolproof system that is meant to last a lifetime and where the voice of children will again be heard.

So, in other words, after today’s select committee discussion, it has been fleshed out that this Government may pour millions of tax dollars into all sorts of pilot programmes and hope like heck that, by some miracle, the various pilot programmes work and it will then roll them out nationally. This is based on blind faith, if I may say so, and if we think that is OK, then that is wrong. How can the Minister effectively ensure that the change made is a change made for good, for the betterment of children and young persons in this country? New Zealand First absolutely supports putting the voice of the child at the forefront of these decisions and, for once, we are grateful for Paula Rebstock for educating the National Government on this very basic premise, which should have always been there.

Finally, with regard to work settings, this bill aims to enable “a broader range of professionals to perform a wider set of functions under the CYPF Act to help identify and meet the needs of vulnerable children and young persons.” From reading the regulatory impact statement, we have been provided with an analysis of options for new workforce settings that enable professionals to perform a broader set of functions within the new operating model. It also considers the related objectives of providing appropriate flexibility for the agency to deliver services via strategic partners and of supporting the chief executive of the children’s agency as the single point of accountability for vulnerable children and young people.

If this Government truly believed in putting the voice of vulnerable children first, then this Government would also recognise the potential of the Children’s Commissioner to play an absolutely vital role working inside the advocacy space. Yet, despite the rhetoric, and despite what we call the lip service this Government has dished out to Dr Russell Wills and his team of two and a half staff at the Office of the Children’s Commissioner, this Government has failed miserably to adequately resource what should have been the jewel in the crown.

It is noted that “The preferred option [by the Ministry of Social Development] is to amend the CYPF Act to vest the functions currently residing with social workers instead in the Chief Executive.” Here is where the legislation becomes unstuck: “that the Chief Executive would only be able to delegate functions to people who have the interpersonal skills, training, and experience to be suitably qualified to perform those functions; that if delegating outside the State sector, the Chief Executive be required by the legislation to have contractual requirements in place to support the appropriate exercise of the delegation and to enable the person with delegated authority to be held to account; that the legislation require those exercising delegated authority to have regard to any guidance issued by the Chief Executive; that the Chief Executive be required to maintain a publicly accessible register of delegations to assure transparency and clarity for the sector and for the public.”

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

RIA BOND: I was actually nearly at my conclusion before the dinner break, so I would like to finish with a summary of the fact that New Zealand First supports this bill to the select committee, where I know my colleague Darroch Ball will work very hard to ensure it is scrutinised in its whole entirety and brought back to the House to carry the voice of children as it is intended to do. New Zealand First will, however, review its position upon the findings of the select committee process. Thank you.

JONO NAYLOR (National): I would like to start my contribution by quoting a piece of work on this topic done by a guy by the name of George Benson, who said “I believe the children are our future. Teach them well and let them lead the way. Show them all the beauty they possess inside. Give them a sense of pride …”, etc. In all seriousness, this piece of legislation is about children. It is fundamentally about them. Before I go any further, I want to just ensure that the wonderful workforce that we have working on the frontlines of Child, Youth and Family across New Zealand, who are doing the best they can day in, day out, trying to do the best they can with the tools that they have got, are recognised. Because when we change legislation it is very easy to poke the borax at individual people and the work that they are doing, but we have got some good people out there who are working hard, and I just want to acknowledge the work that they are doing.

I also want to acknowledge Minister Anne Tolley, who, since taking on this portfolio, has worked tirelessly looking at the outcomes that we are achieving through our care and protection legislation and recognising, as has been outlined by a number of the speakers already, that the statistics and the outcomes for our young people in care, by and large, are simply not acceptable. We are not helping them to achieve what they should be achieving and so we need to take a long hard look. Because of the 14-odd reviews that have been done since the Children, Young Persons, and Their Families Act was first passed in 1989, another review was not going to cut it. So the Minister has taken the bull by the horns and has actually gone to some great lengths to put in place something that will be lasting and, hopefully, something that will actually be enduring and ensure that we get good outcomes.

Can I acknowledge two other groups of people as well: the expert panel that has put together, I think, a really comprehensive report outlining some of the issues that we have in our current care and protection arrangements but also outlining some ways forward that we might be able to do better; also, the panel of young people who helped contribute to what has been going on. I think it has been incredibly brave of them to tell their own stories. Again, as other speakers have said this evening, sitting on the Social Services Committee and hearing from some of those young people from the Dingwall Trust was incredibly moving and, I think, just strengthened our resolve to make sure that we do better for young people who are at risk in New Zealand and those who require the care of the State.

The original 1989 Act did have a clause in it that talked about the paramountcy of the child’s needs, but it appears that somewhere along the line the importance of that has been somewhat lost. We were heralded throughout the world, to be honest, on our Act in 1989. The introduction of youth justice family group conferences had the global social work field really talking about this innovative new way that New Zealanders were working with children and families at risk. But we will need to make sure that we do not sit on our laurels, and, actually, we have discovered now that that system is not necessarily delivering all that it could. So this legislation goes further than simply having a paramountcy principle within the Act but actually ensures that young people will have a voice not just in their own outcomes but in the actual guiding principles, legislation, and policies that will oversee their lives and the types of interventions that will take place.

We have also talked about the importance of shifting the age upwards. Again, I just want to reiterate the importance of us lifting this age. To be a 17-year-old and suddenly be faced with having to renegotiate your own board arrangements or otherwise simply is not good enough. This is a step in the right direction. I think that over time we will be able to explore how those transitions actually occur, as well, when children reach the age of 18, if they have been in care, as to how they transition into adult life. It is what most of us as parents would do for our own children, and I think it is beholden on the State to make sure that we do at least as good a job as regular parents would like to do for their own children.

I am encouraged by the support that this bill is receiving from right around the House. I think we are going to have a really robust time in the select committee looking over the finer points of it. I hope that we will get some good support as we seek to bring this through but that we will actually get some good comment from submitters. There are a lot of people out there who have had interactions with Child, Youth and Family over the years who, perhaps, have not had an ideal experience and who will be able to offer us some further insights into how we can improve.

As I said at the beginning of this contribution, children are our future. Children do need our support, and we need to continue to do everything that we can as the legislators of this country, as those people who provide the rules and the regulations about how we intervene when things are not going well for children, to do the very best that we can. I see this bill as a very positive step forward for those children and for our country. Thank you.

Mr DEPUTY SPEAKER: Marama Davidson—5-minute call.

MARAMA DAVIDSON (Green): Tēnā koutou e Te Whare. Thank you, Mr Deputy Speaker. I rise to take a call on this bill, the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill 2016. My colleague Jan Logie previously mentioned that we are not supporting this bill at this stage, the first reading. She highlighted some reasons.

In my contribution to the House, I want to focus specifically on my role as Māori affairs spokesperson, and mention that Māori children make up 25 percent of our population but are 60 percent of the children in Child, Youth and Family care. That reason alone, surely, should have mandated and demanded robust involvement, consultation, and consideration of Māori voices, Māori experiences, and Māori expertise at all levels of this review, and from the get-go it did not. It was not until some political pressure was placed on the Minister for Social Development that some involvement of a Māori perspective was included in this review. That cannot be acceptable. That cannot be acceptable in the way that we run and govern a country. It cannot be acceptable when we are trying to overhaul a system and a department that is responsible for dealing with so many of our Māori children. The other reason why there is that low level of involvement and engagement in proper partnership with Māori expertise is that this very overhaul is so relevant to the care of whakapapa of Māori whānau, hapū, and iwi.

So we have two things here: we have a department that is fully involved, influences, and holds power over a large proportion of Māori children, and we have a piece of legislation that holds incredible influence over whakapapa, Māori well-being, whānau, hapū, and iwi. I do want to remind this House that from colonisation over generations, we know that one of the biggest impacts on and fallouts of the harm to well-being for Māori families has been the disruption in whakapapa and the disruption of well-being in whakapapa. Here we have a piece of legislation that is fully, fully involved in that.

I also want to make the general point, in this first reading, that this is a bill that deals with the fallout. We need a review of the whole-of-Government systems that actually looks at the structures that contribute to all of our people falling into hardship, falling into poverty, and having it tough in the first place. To be clear: for example, Māori unemployment saw the biggest increase across all of the groups in unemployment. It rose by 2.2 percent recently, and is now up to 12.8 percent. I want to be clear that we have to keep in mind, through all reviews of this and any other legislation that has a huge impact on Māori families, that we cannot do reviews in isolation. We have to be mindful of all the other systems and all the other social, economic, justice, and cultural problems that need looking at as we are reviewing our legislation. That is called responsible and sustainable governance.

Just in closing, I want to again indicate that I cannot support such a low level of Māori expertise in this review of the Children, Young Persons, and Their Families Act. I want to see how we can improve this, but this legislation is only dealing with the fallout, and we need to look at the structures. Thank you.

POTO WILLIAMS (Labour—Christchurch East): Kia orana, and thank you. I want to, in my short contribution, come from the perspective of having been a member of a community panel called the community child protection review panel, which is a panel that is put together from community members who have some expertise in the sector, who look at the notifications that come to Child, Youth and Family where the duty social worker has closed off the case. The panel is the community’s response, in order to ensure that no child gets left behind or that there are no issues that have not been addressed by the social worker in the passage of that notification through the Child, Youth and Family site. In that regard, I want to refer to a public statement that the Minister for Social Development made on 1 June with regard to this particular bill, because I think that that statement and the subsequent notes that I have read have caused me to ask more questions than I have answers to. I think this is the appropriate forum, as this bill goes to a select committee, to put on record those questions that I think need to be addressed.

Firstly, I want to say that the Minister made the statement that it will be “a new child-centred operating model with a single point of accountability [that] will be in place by the end of March 2017, focused on prevention, intensive intervention, care support services, transition support and preventing youth offending and reoffending.” The single point of accountability is the first point I want to ask a question about, because does that not currently occur when a child who is notified to Child, Youth and Family, for example, has a social worker—a social worker who is no doubt part of a team, but who is a single person—charged with the care and protection issues of that particular child? How is this issue of a single point of accountability different from current practice, and what resources, what model, is going to be in place?

The other issue that I am concerned about is the fact that in the Minister’s statement she talked about prevention and care support services in the same sentence as she talked about preventing youth offending and reoffending. We all know that the current model of Child, Youth and Family is under review, and that we have care and protection services and we have youth offending services. Some of the discussion tonight has been about the age of eligibility being raised to 18 for care and protection being out of line with youth offending. It might be a little bit of a stretch, but one of the questions that I want to ask is why youth offending and reoffending are included in the same sentence as care support services. Does this mean that we are looking at a model of service that covers both streams of work? That would seem to be out of line with what is best practice, and it is a question I would like the select committee to examine.

The role of the community child protection review panel, which is a community panel set up of local experts, is one that I am hoping they keep after the overall review of Child, Youth and Family, because its specific role is to ensure that outside experts are brought in to scrutinise the notifications that come through to Child, Youth and Family. I say that because the Minister said in her statement that one of the four main aspects of this particular piece of legislation—one of the key aspects—is enabling a “broader range of professionals with specialist skills who will widen the expertise within the new model to perform some functions under the Act. Social workers would still be the main professionals responsible”, but this legislation is actually looking at bringing other people in. I say again: how is that different to what is currently in place, and what, of the model that is currently in place, will remain? I am really hopeful—and I would want the select committee to examine—that community involvement through these community child protection review panels, which were set up out of an environment where there were children being harmed and also losing their lives while in the care of Child, Youth and Family, remains.

There are aspects of this bill that we are really encouraged to see, including increasing the age of care to 18. As Jacinda Ardern said in her earlier contribution, she has been lobbying for that for a long time. I just want to echo what other members have said about the contribution from the Dingwall Trust: it would be great if we could extend that age to 25 in certain cases where it is warranted. Thank you for the call.

Dr PARMJEET PARMAR (National): Thank you for the opportunity to take this call on the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill in its first reading. I am taking a short call to support this bill. This is a huge step in a positive direction to improve the lives of children and young people who come into State care. It is not acceptable for it to continue the way it is because the outcomes that we are getting for children and young people who come into State care are terrible. We are bringing these children into State care from their families because their families are unable to look after them, but there are some statistics that made my heart sink.

The first is that the average age of children who come into contact with Child, Youth and Family is 7 to 8 years, and by this age some of these children have already gone through a number of placements. I believe that children of that age should just be thinking about studying or playing, not thinking about the next family they will be placed into. There is no certainty for them, there is no stability for them, and there is no family to bond with.

The second statistic is that 64 percent of 61,000 notifications to Child, Youth and Family are repeat notifications. So we are not able to get the results that we want for these children, and that is why they keep coming back to Child, Youth and Family. There was a study done on children born in the 12 months to 1991, and this study was done when they were 21 years old. This study found that 90 percent of these people were on a benefit—we are talking about children who were put into placement care—and out of this, 25 percent of them were on a benefit with a child.

The same study found that almost 80 percent of them did not have a National Certificate of Educational Achievement level 2 qualification, 30 percent of them had a youth justice referral by the age of 18, and 40 percent of them had gone through a community sentence. We are taking these children from their families and into State care, and what we end up doing for them is putting them on a benefit, getting a low education outcome for them, and referring them to the youth justice or the corrections system. So I am really happy to see that the Minister is taking charge of this situation.

This bill will reform the current system so that we can have that long-term view and the kind of support we need for getting the desired outcomes for children who come into State care. There is no quick fix, but we cannot continue the way we are doing it at the moment, because we cannot get better results by just continuing the way we are doing it. I am looking forward to working on this bill in the select committee process. I support and commend this bill. Thank you.

LOUISA WALL (Labour—Manurewa): Kia ora e Te Māngai o Te Whare. Thank you very much for the opportunity to contribute in this, the first reading of the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill 2016. I am not a member of the Social Services Committee but I am Labour’s youth affairs spokesperson, so I take particular interest in this piece of legislation.

I immediately want to focus on one of the main features of the bill, which is about extending the age of State care and protection to a young person’s 18th birthday. There are some questions that I have already. It seems that in increasing the age to 18 there has been a lot of discussion about what that age should be. Some people think it should be 21; some people think it should be 25. I found a piece of research that is associated with ActionStation and its petition, which is currently wanting to increase the age of foster care to 21 years. It is interesting to note that one of the key findings was actually “Why 21?”, because, actually, when we look at young people today, on average, they stay at home until they are 23.

Young people today actually need the continued support of their parents, and so it is one of the rationales from ActionStation and its campaign partners—and I want to list them all: Dingwall Trust, Lifewise, Youthline, Child Poverty Action Group, Wesley Community Action, Christchurch Methodist Mission—for why they are currently engaging in a public process to say that the age should be 21. So I do want to say to the Government that moving the age up to their 18th birthday, which I guess, technically, is when a person stops being a child and becomes an adult, is a step in the right direction. I can understand some of the rationale for that particular age, but, actually, when we look at the specific cohort of young people, I think that we should already seriously start looking at that age. From the perspective of a lot of organisations involved in the care and protection of our children, they think that that age should be 21.

One of the other questions I have in relation to that first point is why the age is increased only in respect of children in care and protection. Why does that particular statutory responsibility on the State not extend to young people in the youth justice sector? It has been really baffling to try to determine why the Government has chosen to do this. The bill states that its purpose is “reforming the system of services for responding to the needs of vulnerable children and young persons,”. So what do you do when you get a purpose like that—actually look at definitions? Well, I do. The definition of “vulnerable” is “People who are in need of special care, support, or protection because of risk of abuse and neglect.”

So you start working through a process about why the Government would have excluded young people in our youth justice system when they are going to be providing for young people in our care and protection system. Then you actually look at the Modernising Child, Youth and Family Expert Panel: Interim Report. Its vision for New Zealand children is “that New Zealand values the wellbeing of our children above all else.” When it states the role of the State in caring for children, it says: “The purpose of the care, protection and youth justice system is to ensure children and young people are in loving families and communities where they can be safe, strong and flourish.” When you look at the principles that drove the Government’s expert panel, they said that the place of the child or young person had to be at the centre of everything they did.

This piece of legislative reform is supposed to meet the needs of the most vulnerable young people who are in our Child, Youth, and Family Services (CYFS) system. They are either in our care and protection system or they are encapsulated within our youth justice system. So it is interesting or baffling as to why children in the youth justice sector are not included—and explicitly—in this piece of legislation. One can only assume that there is some political issue about including young people in the youth justice system that possibly means that the Government is going to be soft on crime. Who knows? But we are hoping that some of that motivation for excluding young people actually comes to the fore, and that we can actually understand what this Government is trying to do. On the face of it, it is contradicting recommendations from its expert panel. For somebody who is incredibly interested in this piece of legislation, I will be trying to determine, like the rest of the country, why that is the case.

The other two points that I want to make are around the Government’s rationale for the bill being to ensure that the views of children and young people are taken into account as part of decision making at an individual level and in the development of services and policies. What I want to note is that, actually, in the Children, Young Persons, and Their Families Act 1989, section 21, it states that it must “give effect to the wishes of the child’s or young person’s family, whānau”. Already engrained in the current Act is a commitment to listening to children and ensuring that the voices of the whānau are incorporated in any care planning, so I find it, again, interesting that we have chosen to ensure that the views of children and young people are taken into account, because they already should have been. The fact they have not been beggars the question about how the new processes and the new systems are going to ensure that not only the young person’s voice is going to be heard and be paramount but also the communities’ voices.

Those communities are actually the communities of interest associated with the child who is in care and protection, and, I contend, in youth justice facilities. Specifically, any formation of advocacy groups or any input has to, at the core of it, ensure that Māori voices are front and centre, because the appalling statistic that we all have to face is that 57 percent of the 3,844 children in care are tangata whenua. That is not a random phenomenon. It has happened because over consecutive years the system has failed to meet the needs of Māori. The intergenerational transmission of children in care is actually something that we should all be—what is the word—committed to addressing. The only way we can address it is if we have Māori around the table—and many Māori, not one Māori. In fact, if we look at the beginning of this process there were no Māori, and so I question the integrity of this whole process, given Māori have not had many more seats around the table when trying to look at the system that has continued to create and generate a situation where Māori children have been encapsulated in our CYFS, youth justice, and care and protection system.

I cannot not mention the wonderful Judge Mick Brown in my contribution. It was Judge Mick Brown through his work as the first Principal Youth Court Judge who actually brought in family group conferences. He ensured that whānau were intimately involved in trying to deal with youth offending. As a second principle, they did make a concerted effort to not charge our youth offenders unless there was a public interest required. I think, if you look at the legacy of Judge Mick Brown, what he tried to introduce was actually about recidivism—to nip it at the bud—so that we could actually assist those whānau to assist the young people and ensure that they got all the services that they required to address the actual context of some of the behaviour from our young people.

I think that is where we have failed, actually. We have failed to give our young people and our families the support that they need to provide them with different opportunities in life, different pathways, different visions, different—I guess—life outcomes. So when we look at this piece of legislation, I will be scrutinising how involved Māori will be in this process, how involved our young people will be, because if we end up, again, like last night, creating a prescriptive system that is going to tell our young people and families what to do, then we already know that that will fail. I hope that, on this side of the House, we will think of some amendments to this particular piece of legislation that will make it work for all of our young people. Kia ora.

MAUREEN PUGH (National): What a pleasure it is to stand and speak in support of the Children, Young Persons, and Their Families (Advocacy, Workforce and Age Settings) Amendment Bill 2016. What a great privilege it is to be a member of the National Party, and to be here to witness this historic and radical change to the way we respond to the needs of our most vulnerable young people and their families.

This bill will amend the Children, Young Persons and Their Families Act 1989, and enables the first step in the overhaul of the current system. The main objective of this bill is to make the system child-centred. It ensures that young people’s views are taken into account when decisions are being made about their care. No longer will State care be done to them; it will be done with them. This Government is absolutely committed to the new operating study. We understand and accept the findings in the report of the expert panel that was appointed to lead this overhaul of the care and protection system, and we welcome the reforms ahead of us. I have great pleasure in commending this bill to the House. Thank you.

A party vote was called for on the question, That the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill be now read a first time.

Ayes 107

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

Noes 14

Green Party 14.

Bill read a first time.

Bill referred to the Social Services Committee.

Hon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Minister for Social Development: I move, That the Children, Young Persons, and Their Families (Advocacy, Workforce, and Age Settings) Amendment Bill be reported to the House on or before 17 October 2016.

Motion agreed to.

Bills

Local Government Act 2002 Amendment Bill (No 2)

First Reading

Hon Peseta SAM LOTU-IIGA (Minister of Local Government): I move, That the Local Government Act 2002 Amendment Bill (No 2) be now read a first time. At the appropriate time, I intend to move that the bill be considered by the Local Government and Environment Committee, with instruction that the committee report to the House on or before 28 October 2016. This timing will allow councils to make submissions on the bill before the break for local body elections. The intention is to pass legislation in time for the newly elected councils and the Local Government Commission to use these improvements early in the new council term.

Local government touches everyone’s lives. Councils help to build our roads, supply our water, and collect our rubbish. They manage our libraries, our community halls, and our swimming pools. They make decisions that affect the lives of all New Zealanders in their local communities every day. Councils provide essential infrastructure and services to support regional growth, jobs, and community development. They have a challenging task, and their world is changing. The costs of providing local services and managing council infrastructure are rising faster than council revenues. Councils need new ways to manage finances, improve efficiencies, and create better value for ratepayers.

There are currently 78 councils and 66 ward authorities across New Zealand. Some regions in New Zealand are facing rapid growth, while others have to deal with declining populations. As a result some councils are struggling to provide services to their communities at optimal levels. This is because, individually, their rating base is small, and they are unable to attract the necessary levels of expertise within their ranks.

The current legislation focuses on amalgamation to gain scale for shared services. Communities in Northland, Hawke’s Bay, and Wellington have told us that they do not want full-scale amalgamation, but this bill provides a middle ground. Communities will retain their elected councils; the councils, in turn, will be able to work more collaboratively to manage infrastructure and services across our regions. This will deliver more joined-up, cost-effective services and better value for our ratepayers.

I have engaged with councils, iwi, and local government sector groups around the country over recent weeks, and have received their feedback on the Better Local Services reform package. This bill as tabled takes on this feedback and implements this package. First, this bill will allow two or more councils across a region to create more effective council-controlled organisations (CCOs). CCOs are a proven way to deliver cost-effective services and infrastructure to communities. The current legislation restricts the kinds of CCOs that can be created. Through multiple-owned CCOs, councils across regions will be better able to achieve cost savings and improved service delivery of water, transport, and other council services. Multiple-owned CCOs can have the size and scale to enable them to have much greater capability and capacity than can be achieved by individual councils. For example, this bill will allow a water CCO owned by multiple councils in the Waikato area. I know that councils are already exploring options for shared services to run a Waikato water network, and I know Mr Macindoe will be happy about that, too. A multiple-owned CCO could own the infrastructure, do the planning, and manage the network for its shareholding councils.

This bill will also remove some of the barriers to possible transport CCOs. Two models for regional transport multiple-owned CCOs will be specifically provided for in the legislation and, if councils prefer, there is provision to create a bespoke model that will require the approval of the Minister of Transport, and I know in the Canterbury region that will be welcomed. The bill also enables region-wide planning, with joint council committees able to prepare combined plans under the Resource Management Act. This would make life easier for communities and developers, as they would have only one set of planning rules to deal with across a region.

The bill also introduces much stronger accountability arrangements for CCOs. Councils can appoint a joint committee to oversee the management of their CCO interests. CCO planning and delivery documents will be closely aligned with council plans, to ensure that ratepayers get the services and the sustainable infrastructure that they need. Secondly, the Local Government Commission will be empowered to work with councils and communities to deliver local solutions. This bill will expand the processes available to the Local Government Commission. Current processes mean the commission is limited to reacting to reorganisation applications that it receives. The bill will enable the commission to be much more proactive in setting its work programme. Ratepayers and residents will see a commission that is much more responsive to local circumstances, working with local communities and councils, as well as with iwi, to find local solutions.

To balance these enhanced powers the bill will also place greater transparency and accountability arrangements on the commission. Any reorganisations will need to protect the integrity of any council - iwi arrangements. The commission and councils will need to consult with their local communities as well as with iwi on any proposed reorganisation. The commission will be required to provide annual statements of intent and agree the commission’s work programme with the Minister of Local Government at that time. The commission will also be subject to the Official Information Act upon the completion of its investigations, dispute resolutions, and determinations of appeals. They will also be subject to the Ombudsmen Act. It is expected that the commission will have an increased workload as it works with communities on shared arrangements. For this reason I am proposing the number of permanent commissioners be increased from three to a maximum of five.

This bill will make a number of changes to the Local Government Act. It will enable council-led reorganisations for the first time. Councils will be able to develop and implement reorganisation proposals in consultation with their communities and their neighbouring councils. The Local Government Commission will have enhanced powers to work with councils and Government to support reorganisation proposals. But, most importantly, these changes will enable more effective delivery of quality local services that will support regional growth, jobs, and local communities. I urge members to support this bill, and I commend this bill to the House.

Mr DEPUTY SPEAKER: The Minister indicated that he intended to nominate a committee, but he has not done that, so he should.

Hon Peseta SAM LOTU-IIGA: I move that the bill be considered by the Local Government and Environment Committee, with an instruction that the committee report to the House—

Hon Michael Woodhouse: He doesn’t have to do that.

Hon Peseta SAM LOTU-IIGA: I can do that at the end of the bill.

Mr DEPUTY SPEAKER: Thank you.

MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti): Tēnā koe, Mr Deputy Speaker. Otirā, e ngā mema o Te Whare nei, tēnā tātou katoa. Labour has serious reservations about this bill, which I will outline in my contribution this evening. But it is important that those reservations and concerns be tested in a very public manner. So it is for that reason, and that reason alone, that Labour will support this bill to the select committee. Our support, however, is not guaranteed beyond that point.

Tonight we will look at the package of amendments that the Minister mentioned. In my contribution I would like to go through the six main amendments methodically and then raise the concerns or reservations that I mentioned in my opening statement. Amendment No. 1 talks about increased powers for the Local Government Commission to unilaterally initiate an investigation into any aspect of local government reform, such as the establishment of multiple-owned council-controlled organisations—commonly known as CCOs—joint governance arrangements, transfer of powers, boundary changes, and amalgamations.

The point labours on around the unelected Local Government Commission and the ability to unilaterally initiate investigations. That is a concern for Labour. It is also important to draw the House’s attention to the Government’s track record when it comes to local government reform. The last time the Government tried this, in 2012, the reforms led to failed amalgamation proposals in Wellington, Northland, and my very own Hawke’s Bay, and the current situation with Auckland Council, and the North Rodney and Waiheke proposals, where those two particular communities want to opt out of the super-city. The Minister of Local Government has not even provided the Local Government Commission with a letter of expectation, nor the public with any assurances around how these increased powers will help councils or improve local democracy. A Government committed to improving the performance and administration of its agencies should be setting out expectations. This can include outlining broader Government policy frameworks and strategic direction, managing risk, and ensuring that the commission acts in accordance with best practice.

Amendment No. 2—the introduction of council-led reorganisations, with the objective of securing the support of all affected local authorities and communities, and endorsement by the commission. No problem with council-led organisation; in fact, this bill should be all about council-led reorganisation. No problem with support of all affected local authorities and communities. The endorsement by the commission, though, begs the question: why?

Amendment No. 3—greater use of CCOs, particularly for water and transport services. That raises three issues for me. One is about accountability. I acknowledge the Minister’s contribution about improving the accountabilities of the Local Government Commission but also accountabilities in relation to the role and expectations of CCOs. We have had examples of what happens when CCOs go unchecked. I have got a very local example of that, called the Hawke’s Bay Regional Investment Co., over the Ruataniwha Dam debacle. When you look at the case of the Hawke’s Bay Regional Investment Co., a CCO that has been allowed to push back the deadline for financial close on the Ruataniwha Dam not once, not twice, not three times, but seven times, and has operated in a secretive manner and with an air of contempt for Hawke’s Bay ratepayers, the perils of vesting too much authority in a CCO are plain to see.

Amendment No. 3—the greater use of CCOs for water and transport services also raises the issue for me around the ownership of assets. Who will own these assets? Will they stay in public ownership or will they be privatised? We hope we can get clarity from the Minister through the select committee process. The third issue I have around CCOs is the elected officials on the board. The Minister, in his briefing to us, mentioned that no elected officials will sit on the CCO boards and gave as one of the reasons managing conflicts of interest. But these will be major, major CCOs. If I just draw the House’s attention to this year’s Auditor-General’s report Governance and accountability of council-controlled organisations, it is mentioned in this report that councils need to be clear about the purposes of CCOs. They need to appoint the right people to govern CCOs and they need to meet the requirements of monitoring the accountability. There is a clause in the bill that talks around having no elected bodies on the CCO board. That is making a decision on behalf of elected councils.

Amendments Nos 4, 5, and 6 all refer to the removal of the ability of local ratepayers to petition their local authorities for a poll on any amalgamation or reorganisation changes. It also mentions the removal of the poll of electors for any council-led proposals on reorganisation and where all affected local authorities agree. It also mentions, in one of its main amendments, restricting the mandatory holding of a poll of electors to Local Government Commission - led amalgamations when a major transfer of water, transport, and/or Resource Management Act functions from one local authority to another is proposed. It is important that the Minister assures ratepayers that this bill does not remove the requirement for a public poll on council-led amalgamations.

We look forward to this bill coming to the select committee to be examined. It is important that I highlight the risk to ratepayers so that we ensure that they are not left carrying the can for changes without them having a say. We also want to make sure that crucial utilities remain in public ownership. The Better Local Services packages must not be used by the Government to force amalgamation and privatise council assets. We have concerns about the additional powers, as I have mentioned, conferred on the Local Government Commission, an unelected body, and how this will benefit local democracy. Enhancing the powers and scope of the unelected Local Government Commission, or LGC, is also risky and at odds with the stated aims of promoting council-led reorganisations.

It is unclear where the justification is for the Local Government Act 2002 Amendment Bill (No 2), or how it will lead to any real community benefits. I have attempted, like I said in my introduction, to identify the reservations I have with this bill, and the concerns I have. I stand by the fact that we will test those concerns and reservations through a public process. On behalf of the Labour Party, we support it to the select committee. We encourage people to have their say so we can help shape this bill to what I think the Minister is trying to do, and allay any fears ratepayers may have with it. Thank you very much.

SCOTT SIMPSON (National—Coromandel): I am rising to take a brief call on this Local Government Act 2002 Amendment Bill (No 2) in the name of my friend and colleague Hon Peseta Sam Lotu-Iiga. I am delighted to hear that the Labour Party will at least support this bill, at its first reading, to the select committee. As chair of the Local Government and Environment Committee I want to assure that member who has just resumed her seat, Meka Whaitiri, that the committee will give this bill very thorough and due consideration, as we do with every piece of legislation that comes before the committee.

This is, on the face of it, a very good piece of legislation, and I want to just spend a minute or two explaining a little bit about why it will have an impact, once it is passed, in an electorate like mine, the Coromandel. In the Coromandel I represent about 60,000 people in the electorate, as do most constituency MPs—about that sort of number. We have in the Coromandel—I have to deal with five district councils and two regional councils for 60,000 people. That is an awful lot of local government for a relatively small percentage of New Zealand’s 4.5 million people.

Across the country we have 78 councils—district and regional—and 66 water authorities. That is surely not, by any measure, the most efficient allocation or distribution of intelligent resource at a local government level. This bill is all about trying to create an environment where local government, the Local Government Commission, local communities, and local interests can ensure better supply of service to ratepayers in a way that gives real, meaningful value to those ratepayers and also to the councils that operate at a local government level.

There are three main objectives of this bill. Firstly, this bill will give more options for councils to create jointly owned council-controlled organisations. The council-controlled organisations that we know today were, essentially, established for the Auckland super-city, and that was what we know as a forced amalgamation. There is nothing in this bill that will in any way provide for further forced amalgamations. That is not a model that this Government wants to pursue. It may be something that the Labour Opposition and its memorandum of understanding partners do want to pursue, but it is not something that this Government wants to pursue.

The second objective of this bill is to give the Local Government Commission greater powers to support councils when they are, in fact, creating those council-controlled organisations, and when councils want to look at options for reorganisation across regions such as mine in the Coromandel.

The third and important objective of this legislation is that the bill will ensure that there is greater and more statutory oversight for the guidance of the Local Government Commission. I was delighted to hear the Minister make the point that he is intending to increase the membership of the commission to a maximum of five members. I think that is a very good move and something that will be welcomed not only by the hard-working current members of the commission but by anyone who has dealings with them.

This is a bill that is about lifting local government performance for all New Zealanders and ensuring that ratepayers get good value for their hard-earned ratepayer dollars. I know that there will be many councils, many individuals, and many stakeholder organisations that want to make submissions to the Local Government and Environment Committee, and I want to assure all of those organisations and individuals that they will get a good hearing from the committee. We are interested in hearing what their thoughts, views, and opinions are. I know that as we work through the select committee process this bill will come out of the legislative process—that is, the way we do things in this Parliament—as a good bill and one that is suitable and fit for purpose. I thoroughly commend it to the House.

Hon DAVID PARKER (Labour): It is my pleasure to take a call in the first reading of the Local Government Act 2002 Amendment Bill (No 2). For me, one of the most significant parts of this legislation relates to the possibility of using council-controlled organisations (CCOs) for shared services across different district or regional councils. I am personally glad that we seem to be passing the point where we are going to force amalgamations of councils down the throats of populations that do not want them. I have always thought that local government should be local, and the more local it can be the better.

Indeed, if I think back to some of the local government reorganisations that we have had over recent decades down in the region that I come from originally, which is Otago, I am not sure that we have actually got the balance right by going for ever-larger geographic conglomerations of formerly small councils into one bigger council. Councils used to be, effectively, organised relative to geographic barriers—hills and ranges—and they were small enough so that the job of running a council was normally taken on by the most capable people, or some of the most capable people from within those societies, who were willing to pay back their debt to the community by doing some civic service, effectively working part-time for close to free as mayors or councillors. Once those jobs became larger because those councils were forced to amalgamate into larger bodies, I think in some ways we actually ended up with a subset of people who were willing to put in that longer period of time because some of those who were willing to do something part-time for civil service were not willing to take on the bigger job, which just about turned into a medium-paid full-time job, but not a particularly well-paid full-time job relative to the skill sets that those people had to bring to bear. So I am quite pleased that we might, as a country, be ending the phase where we bring to an end the amalgamation of councils in large geographic areas.

I think it is a different case when it comes to amalgamation of councils within a conurbation, a larger metropolitan area. I can see why it was wise to bring together the councils of Auckland, which the prior Labour Government started a royal commission on and the current Government finished off, but in respect of rural areas, I do not think we need to have more amalgamations.

Having said that, there are also efficiencies that can be attained sometimes if there is sharing of services between more than one council. That is already starting to happen in some areas. In some areas of the North Island we are already starting to see the sharing of some services, be those waste disposal services or waste collection services. I think at some time in the future other services, like water reticulation and maybe sewage treatment, will maybe have more cooperation between councils. If, in order to facilitate that, we need some changes to the Local Government Act 2002 in order to have councils cooperating across boundaries, I think that is a good thing. So I am interested to support this to the select committee and hear submissions from councils to that effect.

I would say that we need to be careful we do not force councils to use CCOs, because one of the disadvantages of CCOs is that there is less political accountability for their decisions. Given that through local democracy we are voting for councillors to—on behalf of their voting population and their ratepayers—exercise democratic power for the benefit of those areas, I do not think we should be so paternalistic, or maternalistic, as to tell those councils that they must use CCOs, because on occasion they might want to have services delivered by the council itself, rather than by a corporate that is running a purely commercial model that the council may not as directly control because there is a board of directors who sit between the council-controlled organisation and the council. I can see why, if things are not going well, sometimes councillors would want to say: “I’m sick of this. I want to take control of this as the local elected politician.” And, in those situations, if that is what the mayor and councillors decide—that it would be better if it actually, for a while, came back within the council organisation rather than being in a council-controlled corporate organisation a little bit further out from the council—I think councils should be able to do that too.

I will be interested to check in the select committee that, with this legislation, we are not imposing, through a codified approach, the obligation or the ability of a Minister to impose council-controlled organisations by regulation, because, of course, that is what the current Government did in regard to the Auckland Council. It did legislate that some services had to be delivered through CCOs, rather than just that they could be, and I think that was a step too far.

For me, that is the most important issue that is raised by this bill. I look forward to hearing submissions from the many stakeholders, be they councils, be they infrastructure providers, be they ratepayers, be they environmental groups, or be they business groups. I think they will all have valid perspectives that will aid the select committee in its deliberations. I do not think I have much to add to that. I look forward to the progression of this bill through the House.

NUK KORAKO (National): Ā, mauri ora, e Te Mana Whakawā. It gives me pleasure to stand in support of the Local Government Act 2002 Amendment Bill (No 2). Just briefly, just to cover off again, which was done quite admirably by our chair of the Local Government and Environment Committee, this particular bill gives a lot more options for councils to create a better delivery of core services. It also gives the Local Government Commission more support around councils, and it gives the Local Government Commission more oversight and statutory guidance.

One thing that I thought was interesting, particularly, from the Minister who introduced the bill, Hon Peseta Sam Lotu-Iiga, is that there has been quite a lot of consultation already around this new legislation, and particularly with local authorities across New Zealand; iwi, which to me is really important; Local Government New Zealand; the New Zealand Society of Local Government Managers; the New Zealand Council for Infrastructure Development; chambers of commerce; and also Business New Zealand.

This particular piece of legislation is another very, very typical piece of legislation that has been introduced by this Government. It is very common-sense, it is down to earth, it is logical, it is practical, and it is realistic. I commend this bill to the House. Kia ora.

JAN LOGIE (Green): After such a comprehensive contribution from the Government member Nuk Korako, I am not sure how to follow that act. I will do my best to try to live up to it.

I am pleased to be able to take a call on the Local Government Act 2002 Amendment Bill (No 2), which has been presented to this House. The Green Party, at this stage, shares, actually, a lot of the reservations that were raised by the Labour spokesperson on local government, but those reservations or concerns have led us not to be able to support the bill at this stage.

I do recognise the Minister of Local Government is presenting this as empowering legislation to address the funding constraints that, we hear from councils, are ultimately limiting their ability, sometimes, to provide core infrastructure, maintain it, and ensure their systems are resilient. In the discussions, though, with the Minister in the reading of the documents, we are yet to be convinced that the solution is not a funding-based solution rather than an amalgamation-focused solution. There is no doubting that councils are in a very difficult position at the moment in terms of the limitations on their funding base and their ability to be able to secure their infrastructure into the future, but we are concerned that although we are being told this is empowering legislation and it is not about forcing amalgamations, the context of this is that this is the first piece of legislation after the failure of three amalgamation attempts.

We have increasingly been hearing some quite strident comments from this Government in relation to local government. There have been, I would almost go so far as to suggest, threats being made to Auckland Council that if it does not free up more land, then the Government may step in, which I think is clearly the Government trying to distract from its own failure and that. Actually, the housing issues in Auckland are not a result of Auckland Council, but can be clearly sheeted home to this Government. But, actually, that kind of rhetoric of coming in and suggesting that central government will take over—I have heard the same comments being made approaching Wellington City Council in terms of the Wellington community’s resistance to the flyover. So we are in a context in which this Government is not giving local government the respect the Green Party believes it deserves.

For us, appropriate decision-making, which is decision making that is made at the level closest to the people affected by the decisions, is one of our charter principles. It is one of the absolutely fundamental beliefs that guide all of our decision making. We are very concerned, in particular, at the increased powers for the Local Government Commission that are contained within this legislation. The Local Government Commission, with this legislation, will be able to initiate investigations around transfer of functions between local authorities, joint governance arrangements, areas of common shared interest, and greater use of jointly owned council-controlled organisations (CCOs). I think it is worth remembering the Local Government Commission is appointed by central government. This bill will provide for an increase in members on that commission.

Although we are told that to balance the increased powers that are being given to the commission there will be increased checks and balances, some of those checks and balances are that it will be required to produce detailed accountability documents, such as annual plans and reports, and consult the Minister of Local Government when establishing its priorities. That is an accountability that goes back to central government. When our concern is a possibility of increased central government imposition on local government, an accountability back to central government does not allay our concerns.

We are being told that another check and balance is that the commission will be guided by criteria that are being set, again, by central government. Also, there is a concern for us that this is echoed in the CCO models, in the provisions that are being provided in the bill. So CCOs, which are a step away from democratic control, are set up as companies, and the Government’s rationale for promoting and privileging the CCO model over other shared service models is that it is efficient and it will save money. That is not universally true and that needs to be put on the table in the first place.

But even if it was that it saved money, then we still have to acknowledge that there is a removal of local democracy in that model, and that this bill will restrict and prevent any local councillors from sitting on the boards of those CCOs, as is very common practice at the moment. The argument given for that is that it is a potential conflict of interest. But we do have concerns that this is another quite significant step in removing local democracy. This will also provide for the CCOs to be able to comment on long-term local authority plans before a local authority starts the consultation process, so that is actually giving these company structures an additional point of influence in the democratic process. So although removing democratic involvement in their model, it gives them extra control and input into the democratic process.

You know, it has been a longstanding concern about how the public actually communicates with the CCOs and actually makes sure—we have seen examples in Auckland recently with Auckland Transport and the Ports of Auckland clearly getting it wrong in terms of reading the will of the people. This is one of the problems with the model and it is very hard for the council to then turn that round. The Minister has said: “Well, that can be sorted out by giving clear enough directions to the CCOs when you’re setting them up.”, but we are yet to be convinced that that is going to do the trick.

Further, the bill provides that the constitution of a CCO must not preclude the organisation from using any particular form of charging or source of revenue. So that is central government dictating the conditions around the establishment of a CCO. Take the example of charging for water—a deeply, deeply political issue. In the community I was living in when they were talking about putting in water meters, the local response was: “You put them in; we’ll smash them.” It is a very political issue and there needs to be political accountability to it. This legislation says that a council cannot set up a CCO with the provision that it will not charge for water. That is off the table, according to central government.

Further, it provides that shareholders of the CCO may impose additional accountabilities, including the requirement to describe in its statement of intent how the organisation will contribute to the objectives and priorities of the shareholders and the Government. So in the structure of them they will be accountable back to central government, and the Minister has said clearly that he sees that this is about getting the economic agenda of this Government moving more quickly.

Well, I believe that that should happen bottom-up—that the councils and communities negotiate their economic agenda and plans, that they should be making the decisions about what form and structure are best going to be able to deliver on their local aspirations, and that central government should be listening to them and supporting that. The Minister has said that Local Government New Zealand is very supportive. It told us it was told about the changes rather than being involved in any significant way. Again, another concern.

RON MARK (Deputy Leader—NZ First): I rise on behalf of New Zealand First to take a call, and in doing so I need to acknowledge a wonderful contribution from the member across the other side of the House—a man whom Matt Doocey said this evening should be on only half his wages because he was a list MP. So, Nuk Korako, I think you need to talk to your man over there and maybe explain to him that you are just as hard-working as he is.

Speaking of hard-working, the piece of this legislation that annoys some of us more than anything is what I would describe as the “PNS”—something that the National Government seems to suffer from—which is patronising nanny State syndrome. That is all over this bill. If I look at the legislation—let us go to paragraph 2 of the explanatory note: “New Zealand’s local authorities need to adapt their governance arrangements and structures to lift performance and respond to emerging challenges.” Really? Is that true? Where is the evidence of that? It continues: “Councils need more options to co-ordinate and combine networks and scarce resources across regions and towns, especially for large-scale infrastructure.” Really? Is every council—and I have attended quite a few Local Government New Zealand conferences over the years and I do not hear, and I have never heard, Local Government New Zealand—[Interruption] I raise a point of order, Mr Speaker. I think you know what I am referring to. It is just a little distracting.

The ASSISTANT SPEAKER (Lindsay Tisch): Well, I am not sure what you are referring to, but I certainly know what I am. There is too much noise over here, because I cannot hear the speaker. So I would ask members to quieten down. Your point of order, Ron Mark?

RON MARK: That was exactly it, Mr Assistant Speaker. Thank you very much.

I do not recall Local Government New Zealand standing up and chorusing those words. What worries New Zealand First is that this piece of legislation, which supposedly has all been put together for the benefit of local government to enhance local government, has not actually been put together by local government. This is another attempt by the National Government—which simply hates local government. I do not understand why it has this syndrome. It has had MPs like Mark Blumsky here, it has three former mayors sitting in its ranks, but it seems to have this view that Local Government New Zealand forever needs to be told what to do and how to do it. So if we want to talk about council-controlled organisations (CCOs) and providing the capability for councils to come together and work together, maybe this Government should have taken time out itself to read the combined Wairarapa councils’ report and their own proposal for amalgamating the three councils in the Wairarapa—something that the Government and the Local Government Commission rejected.

The funny thing about certain councils around the country is that they are already doing this. Wairarapa—Masterton, South Wairarapa, and Carterton—is still the only region in New Zealand where you have a combined district plan. Do we need new legislation to make it possible to have a combined plan? No. In fact, the Wairarapa district councils—Masterton, Carterton, and South Wairarapa—were given an award for their innovative approach to producing a combined district plan. Do we need new legislation? No, because it has already happened. It has been done.

Do we need to be interfering at central government level on shared services arrangements? Well, actually—and it is interesting that we have got so many National Party MPs sitting here blabbering and chattering away to themselves and not listening; if they listened they might learn something—there are right now a number of shared service contracts in the Wairarapa. If the Government members would care to get off their lazy backsides, drive across the Rimutaka hill, and sit down with Mayor Booth, Mayor Patterson, and Mayor Staples, they would learn that, already, the three councils in the Wairarapa are doing this. One, they do not need to be told, and, two, they do not need to be told they are useless and that they should be doing this sort of thing. They have already done it.

If one listens to Local Government New Zealand carefully—a skill that this National Government seems to have lost; a skill it seems to have abandoned—one will find out that local governments are already working together in shared services. The Watercare Services contract here in Wellington—did it need this legislation? No. Did it manage to put together a joint venture involving all of the councils under the regional councils? Did the regional councils manage to do this without giving away the asset to a CCO that subsequently then denied the ratepayers the opportunity to have a say in how that asset should be managed? No, they did not. So what is this piece of legislation? This piece of legislation appears to New Zealand First to be just another underhand, dirty way of trying to force through the corporatisation of local government. It is about removing the word “local” out of local government, removing local democracy out of local government, taking away decision making from duly elected people who are given a mandate by their ratepayers to get on and do the job, and giving it to a bunch of appointed corporate suits, who then run their asset like a business and, dare I say, if they choose to do so, decide to sell it off.

The thing that stands out as glaringly obvious, and you do not have to look too far—I mean, look at Ports of Auckland and the controversy that arose as a result of its decision to ignore the ratepayers’ wishes in Auckland and set about its plan to change the way in which the Auckland ports are run, the way in which that real estate is managed. If we go back to—when was that? 2015—March 2015? Had we ever seen a situation where corporates, highly respected yachtsmen, sports people, and ordinary ratepayers came together as one to protest about the way that that CCO was managing that asset? No, we had never seen anything like that before.

New Zealand First is highly suspicious of this piece of legislation. We have not seen any sign of sincerity in the Government in the way in which it has handled local government up until now. In fact, we have seen derision and scorn heaped upon local government year after year after year, Minister after Minister. We might accept that there need to be some changes in the way that the Local Government Commission (LGC) operates, because over in the Wairarapa we were frustrated by the fact that the LGC would not listen to our proposal. We have heard countless times how, supposedly, the Auckland super-city model was going to deliver lower rates, reduce rates increases, and better its performance, and thus far none of the evidence suggests that at all.

This piece of legislation worries New Zealand First. We see it as the thin edge in a drive towards the corporatisation of local governance. We see the removal of local democracy, the removal of the ratepayers having a say in how their assets will be held and managed, and we will not be supporting this legislation to the select committee. We know that it will go to a select committee, but at this point we are simply saying to the Government: prove it—prove that this legislation is required, prove that it is going to achieve what you say it is going to achieve, and prove to us that this is not just another underhanded way of “nanny Stating” and taking over and directing local government, which actually should be left as the duly elected people to determine their own future. If there is a need for any more changes to the Local Government Act 2002, they should be the people who should be writing that legislation, because, quite frankly, if we applied the same standards that this Government is applying to local government to this Government itself, this Government would get a fail at every turn.

JOANNE HAYES (National): I stand to take a short call on the Local Government Act 2002 Amendment Bill (No 2) in the name of the Hon Sam Lotu-Iiga, in its first reading. It is common knowledge that councils currently face a number of challenges due to the demographic changes, economic shifts, and the environmental pressures that they face. Technology is changing, and so too must councils. This is what this bill is all about. It is not about building up shared services; it is about the provision and the ability to have a number of council-controlled organisations to help them all.

We have heard from Ron Mark, the member across the way there, about the councils in the Wairarapa and what they are doing, but not all small councils do that, and this bill will help enable them to do that. It will allow them to take responsibility for developing, refining, and consulting on the reorganisation of the council and on the proposals that are coming through that they will receive. It will equip them with a number of tools without them losing sight of the local preferences. This is a good start. It is a good bill. I welcome it to the select committee.

I want to also support the words that were spoken here tonight by the Minister in his opening kōrero, and I also want to support the words that came from the chair of our Local Government and Environment Committee. I think it is a good way forward and I commend it to the House. Thank you.

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

EUGENIE SAGE (Green): Tēnā koe, Mr Assistant Speaker. I am pleased to take a call on the Local Government Act 2002 Amendment Bill (No 2). Local government has got a critical role in ensuring a democratic society. It provides a check and a balance on the power of central government, and the Green Party supports effective democratic processes at that local level and governance arrangements. But we do not think that this Government trusts local government and we see that in this bill. It continues the centralisation of executive power at the expense of local democracy and at the expense of the public having a say in decisions that affect them. Although I would like to be as confident as a previous Labour speaker that we have seen an end to forced amalgamations, the powers that this bill gives the Minister to direct the Local Government Commission are quite significant, and that is one of the reasons that the Green Party is opposing it.

We have got the Local Government Commission, as my colleague Jan Logie noted, being appointed by Ministers, and in clause 16 we have got the commission getting a notice from the Minister that sets out the Minister’s expectations as to how the commission will perform its functions and exercise its powers. The commission then has to take account of the Minister’s expectations in developing its statement of intent and its work programme. It has got to report to the Minister on the extent to which it has met his or her expectations, and the Minister can write to the Local Government Commission and direct that it have regard to any relevant Government policy. It can review the commission—how it is operating and how it is performing—when in our view, it would be better if Parliament did that, and the commission has got to report annually to the Minister.

So what we are getting, with this power now for the Local Government Commission to initiate reorganisation proposals and for the commission to be under the thumb of the Minister, is, effectively, central government promoting its amalgamation agenda and using the Local Government Commission to do that. I think we saw that in Scott Simpson’s speech when he talked about, essentially, New Zealand having too much local government. National obviously wants big, centralised councils where there are fewer people making the decisions. So it is not an end to amalgamation; it is giving the commission significantly more powers to do that through initiating proposals.

One of our other major concerns is the reduction in public participation. The public is not going to have the certainty of there being a poll on reorganisation proposals, because if those proposals are initiated by councils and the councils agree, there is no need for a poll, and the previous provision for 10 percent of electors in a district to be able to request a poll is being removed. So, certainly, polls have to occur if the Local Government Commission is doing the amalgamation or reorganisation, but not if councils are doing it. We agree with the Mayor of Wellington that encouraging councils to do this while circumventing a poll is wrong and is not in the public interest.

The Minister of Local Government is also wrong in claiming that there are checks and balances on the powers of the Local Government Commission. The bill, through removing much of the work of the commission from the Official Information Act, is actually making its work much more opaque. It prevents the Local Government Official Information and Meetings Act from applying to any documents that have been created or received by the commission in the course of an investigation, a resolution of a dispute, the termination of an appeal, or an amalgamation proposal. So that is actually reducing transparency, and reducing a significant check.

The other major area where we have got a lot of concern is around council-controlled organisations (CCOs) and the corporatisation agenda that is potentially behind this bill. The Local Government and Environment Committee recently considered a petition raising significant concerns about the accountability or lack of accountability of CCOs in Auckland, and that is despite the fact that there are more requirements on those CCOs in terms of being accountable and the Auckland Council being able to set additional accountability requirements to those that apply elsewhere in the country. We have major concerns about this bill and we oppose it.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Su’a William Sio—5 minutes.

Su’a WILLIAM SIO (Labour—Māngere): It is a sign of a Government that has become so arrogant and out of touch with our communities when we have a national housing crisis that ought to be fixed and instead what we have got is legislation that I do not believe local government asked for. I would have thought that a Government that had a heart and that cared about the community would spend our energy in this House finding the right solutions to fix the housing problem so that we do not have families sleeping in cars this cold winter.

This Government introduced this legislation arguing the efficiency argument. Whenever it uses that word “efficiency”, and argues efficiency, we are supposed to believe that something better will come of this and that there will be savings. It has used the argument of efficiency to remove trade union workers’ rights and to enable flexibility—actually, it is to shift the balance of power from the people on to a few. Tonight it does the same. It uses the argument of efficiency to take away the balance of power from the general public and shift it into the hands of a few. So my colleague Meka Whaitiri is correct. We have serious concerns about this bill, and although the Minister has said that he has consulted with a range of organisational stakeholders, my belief is that he has simply gone around and said: “This is what I intend to do.” That is it. There has been no request for input and there has been no participation by these groups in how this bill has been written.

When the Government uses the efficiency argument I cannot help but remember that it also did this when it imposed the super-city amalgamation, and it imposed it suggesting that somehow the amalgamation of Auckland would provide some savings. Today there have been no savings. Ratepayers continue to receive increased rates every year. It also used the efficiency argument for the reason why we should develop more council-controlled organisations (CCOs). Auckland has a phrase for CCOs. It is “corporate-captured organisations”, because you are taking away the power of elected representatives of our community and instead appointing certain people, who become no longer accountable to the general public but who are accountable to the masters who appoint those people on those CCOs.

I believe what the member from New Zealand First said. Already many local government bodies share and collaborate. There is no need to impose legislation that forces them to set up a new structure that then imposes additional costs on the ratepayers, because not only do you have to—let us say, for example, Watercare Services. Once upon a time in the former councils of Auckland we used to get a water bill every 6 months. Today we receive a water bill every month. Those costs have gone up. When this Government uses the efficiency argument, we are supposed to think that something better will come of it. People in Auckland know, through the super-city experiment, that big is not going to be cheap.

The argument that my colleagues from the Green Party said about the polls—that is crucial. We have not yet had a proper debate in this country since this Government has come into power about how important the role is that local government bodies play in our communities. They are genuine partners with central government in terms of delivering well-being—social, economic, and cultural well-being—to our communities. Since this Government has come into power, it has been focused squarely on controlling local government, and the amalgamation, I have to say, smells suspicious. This Government has had its chance at Auckland—imposing amalgamation there. It attempted to do it here in Wellington and it failed, and now it is doing it again in a roundabout way. So I will be looking towards our general public to make strong submissions on this bill in the select committee process.

MATT DOOCEY (National—Waimakariri): It is a pleasure to rise and speak in support of the Local Government Act 2002 Amendment Bill (No 2) in its first reading. After those contributions from the Opposition, I would just like to return to planet Earth. I feel like every time we talk about local government, the conspiracy theories come out, the tinfoil hats get put on, and we hear very much about the “Roswell Area 51 Coalition”—hearing about what is happening out there in the wide universe. But back on planet Earth—

Tracey Martin: How much are you paid?

MATT DOOCEY: Thank you, Tracey Martin, for being my main fan club member, and who thinks we are still on Back Benches.

But I would just like to say what a fantastic bill this is, and what a great initiative from our Minister of Local Government this is. As a very hard-working electorate MP—

Tracey Martin: Ha, ha!

MATT DOOCEY: —as Ms Martin will know, one of the biggest issues that comes through the office is that constituents are very concerned, you know? They want to get the economy right from their rates with local councils, and they want to ensure councils are taking every step to improve their efficiency and to get good outcomes with their services. This legislation will give them a vehicle for councils to work smarter, more economically, and more effectively.

Look, in Canterbury there are a range of territorial authorities. I do not think anyone is looking for amalgamation. We are all pretty parochial and proud of our patches. But what we can do around economies of scale—especially in my area, which is quite rural. We look at Hurunui and “Waimak” joining together to deliver better services, and, pretty much, this is what this bill is about.

We have got some great learnings post-earthquake in Greater Christchurch, and we have had some really strange outcomes when we were looking at implementing new roading infrastructure for Greater Christchurch. You have one council investing heavily into a new motorway and then you have another council that is voting down the motorway’s extension into the city, and it is just not good for all the people within those jurisdictions. They expect better from their councils, and that is why these council-controlled organisations will allow more integration, they will allow more economies of scale and, overall, I think they will provide efficiency and effectiveness for ratepayers.

I commend the bill to the House.

PHIL TWYFORD (Labour—Te Atatū): It is a pleasure to speak on this bill and to support the comments by my colleagues Meka Whaitiri and David Parker and Su’a William Sio. Local government is always an issue that we like to talk about in this House, because it is very interesting to think about what a troubled—troubled—relationship this National Government has had with local government in the last 8 years.

I think it is important to consider the backdrop to this bill, which is the very vexed history of policy that this Government has had in regard to local government, starting with the forced amalgamation of Auckland. It took a good idea and made a hash of it, legislating away the right of Aucklanders to have a say, and to exercise their democratic rights that are enshrined in the law for all citizens in regard to local government amalgamations. It was not very long that it had been in office before it basically closed down democracy for Environment Canterbury, for the Canterbury Regional Council, so that its corporate dairy farmer mates could basically pillage the water resources in Canterbury. National was quite happy to shut down democracy in Canterbury and it still has not restored it properly.

The next thing the Government did was it stripped the four well-beings out of the Local Government Act 2002, basically, and narrowed the focus of local government considerably, against the wishes, I think, of most communities around New Zealand. It made it easier for councils to privatise municipal water utilities and then, really over the last 2 or 3 years, we saw this kind of comedy of errors as successive local government Ministers pursued this policy of forced amalgamations. Well, what a resounding success that was! It was given short shrift in Northland, in Wellington, and in Hawke’s Bay. It was a total disaster. So to hear Scott Simpson, the chair of the Local Government and Environment Committee, stand up and say that this Government’s policy is not to have forced amalgamations, he seems completely oblivious to the fact that that has been its policy for the last 3 years.

This bill that comes to the House today aims to facilitate the development of shared council-controlled organisations (CCOs) and shared arrangements between councils, and it makes a few relatively subtle tweaks to the processes and the rules around amalgamations and the powers of the Local Government Commission. This bill and the so-called Better Local Services policy package is a direct response to the abject failure of the National Government’s local government policy, which was all about forced amalgamations and was comprehensively rejected. So it has been a very troubled relationship that National has had with local government.

The other thing that characterises the National Government’s policy has been the persistent scapegoating of local government for every imagined ill. The one that we have heard most about in recent times is the Auckland housing crisis. If you listen to what the National members say about the housing crisis, the main thing that they like to do is blame the Resource Management Act and blame Auckland Council for the failure of their own policy.

The rather pathetic whimper that we were greeted with a couple of weeks ago when they released their national policy statement, which they promised 8 years ago in a campaign manifesto—it has taken them 8 years to deliver on that promise. They came up with a national policy statement that I know Paul Goldsmith, who fancies himself as some kind of libertarian, must be cringingly embarrassed to be associated with. It is a national policy statement that does nothing to improve or fix the restrictive land use rules that are a significant factor in driving up land prices and house prices in Auckland. So that is the rather desperate and parlous state of the National Government’s local government policy.

What it has done with this bill that we are debating tonight in the first reading is bring together a package of measures that are designed to encourage councils—if we are not going to go down the forced amalgamation route, perhaps we can encourage councils to set up some shared assets. So what this bill wants to do is to facilitate and make it easier for the establishment of multiple-owned council-controlled organisations—for example, for setting up a jointly owned transport organisation or a jointly owned water authority. We have direct experience of this already, and, as David Parker pointed out, the National Government imposed on Auckland a legislated transport CCO—it is in the legislation; if Auckland Council wants to bring the transport agency in house, it cannot because it is legislated in the Auckland super-city founding legislation—and it also set up Watercare Services.

I think, on the face of it, you would have to say that there is some logic to the idea of regionally or multiple-owned CCOs for these purposes. There is a proposal circulating that is being discussed in the Waikato. The Council for Infrastructure Development released a report recently that projected that if the Waipā, Waikato, and Hamilton councils created a joint water utility, they could save half a billion dollars over the next 30 years and $107 million over the next decade. Well, if that is true, those are pretty impressive savings.

You would have to look at the experience of Watercare Services in Auckland, and although many Aucklanders will complain that their water rates have not gone down, and in some cases have gone up, the establishment of a publicly owned, non-profit water utility has probably delivered some significant efficiencies in Auckland and allowed the creation of an organisation that has the balance sheet, the professional skills, and specialisation to properly manage the asset management of billions of dollars’ worth of waste water and drinking water infrastructure for one-third of the country’s population.

There is no doubt that many of the smaller and dispersed local authorities around the country have really struggled to meet the clean water standards and to invest in the plant and the technology that is necessary to deliver the environmental protection and the water quality standards that everybody in this country deserves. Probably the textbook case of a small rural council that failed in this duty was the Kaipara District Council, which got into a terrible mess in borrowing a whole lot of money for a water treatment plant at Mangawhai. I think we all do not want to see that sort of stuff continue.

Previous speakers have pointed out that in many areas around the country local councils are already doing a very good job of cooperating. I want to pay tribute to the councils in the Bay of Plenty. The Bay of Plenty Local Government Futures project, which has a track record both through that initiative, and also Smart Growth, which has been going on for the best part of a decade, including Tauranga and Western Bay of Plenty councils and others, are doing some really fantastic work in that area managing land supply, infrastructure, and land for both business and residential. It is a very, very impressive example of regional cooperation by local territorial authorities. So this bill has not invented the idea of shared services and shared assets, but it is something that is worth considering.

I want to spend the rest of my time talking about the proposed proposals to reorganisation procedures and to register our concern that what this bill does is it removes the ability of local ratepayers to petition their local authority for a poll on any amalgamation or reorganisation changes. We do not support that, and we will be arguing very strongly at the select committee and scrutinising those proposals. We do not support the removal of a poll of electors for any so-called council-led proposals on reorganisation, even where all of the affected local authorities agree, because local people and local ratepayers deserve and demand a say in the structures of representation and decision making in their communities. That is fundamental.

We have real concerns that this bill should not be used as a back-door attempt to pursue the same old National agenda of forced amalgamation. We support this bill going to a select committee, but we will be very closely scrutinising it.

PAUL FOSTER-BELL (National): Tēnā koe e Te Mana Whakawā. In taking a brief call on the Local Government Act 2002 Amendment Bill (No 2), a bill in the name of my hard-working and, I think, very pragmatic colleague the Hon Peseta Sam Lotu-Iiga, I just want to say that this is a very sensible measure. It was a bit rich to be lectured by the member Phil Twyford, who has just resumed his seat, in such supercilious tones about scapegoating local government. I do not think we on this side need to be lectured about scapegoating from that particular member.

There are examples of these measures in place. You can look to the Wellington region, where you can see the efficacy of leveraging off region-wide cooperation in utilities—in water, for instance—but you can also see massive room for improvement. For instance, our regional council has a woeful track record on transport within our region. Unfortunately, the leadership of our city council here in Wellington has not been ideal. We have not moved ahead as a city. There is an opportunity to correct that in the local body elections at the end of the year, but this bill also goes a very long way and is very positive. I, for those reasons, commend it to the House.

A party vote was called for on the question, That the Local Government Act 2002 Amendment Bill (No 2) be now read a first time.

Ayes 95

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

Noes 26

Green Party 14; New Zealand First 12.

Bill read a first time.

Bill referred to the Local Government and Environment Committee.

Hon PAUL GOLDSMITH (Minister of Commerce and Consumer Affairs) on behalf of the Minister of Local Government: I move, That the Local Government Act 2002 Amendment Bill (No 2) be reported to the House by 28 October 2016.

Motion agreed to.

Bills

Trade (Anti-dumping and Countervailing Duties) Amendment Bill

First Reading

Hon PAUL GOLDSMITH (Minister of Commerce and Consumer Affairs): I move, That the Trade (Anti-dumping and Countervailing Duties) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. The bill puts in place new arrangements for the Government to consider the wider impact of imposing anti-dumping or countervailing duties.

In 2013 the Government completed the Residential Construction Market Study in response to a Productivity Commission report into the cost of residential construction. The study found that residential building materials were considerably more expensive in New Zealand than in Australia and recommended steps that the Government should take to reduce their cost and help improve housing affordability. One recommendation was to remove tariffs on residential building products, which the Government did by putting in place a tariff concession in 2014. Another was to introduce a public interest test into the dumping and countervailing duties regime. The study highlighted that anti-dumping and countervailing duties can impose costs that are disproportionate to their benefits.

The current system protects New Zealand industry from material injury caused by the dumping and subsidisation of goods from abroad but it does not take into account the wider public interest when duties are imposed. So the point of this bill is that it will allow the Government to have a fuller consideration of the effect of duties through the introduction of a bounded public interest test, also known as a consumer test. The test will consider the benefits that a duty will have for the domestic industry against the cost of that duty on downstream industries and customers. This change modernises the anti-dumping and countervailing duties regime by weighing up those who will pay for the duty through higher prices and those who will benefit.

The test will have a materiality threshold built into it—that is, a presumption in favour of imposing duties. The bill requires that duties are imposed unless the cost to downstream industries and consumers is likely to materially outweigh the benefits to the domestic industry. The materiality threshold is designed to strike a balance between maintaining a regime that provides an appropriate degree of assurance to domestic industries that they have remedies available to them when confronted by dumped or subsidised goods and the wider public interest in determining whether duties should be imposed.

Dumping and countervailing duties are legitimate trade instruments that are part of an international set of rules necessary to facilitate fair and honest trade between World Trade Organization members. The dumping and countervailing duties agreements provide member States with legitimate trade instruments to level the playing field and to provide remedies against dumped or subsidised goods. It is important that New Zealand maintains an effective trade remedies regime so that our domestic industries have confidence in the international trading system.

However, the current Act does not allow the Government to consider the effect that duties can have on consumers and other industries. The bill prescribes specific factors that the public interest test must consider. They relate to competition, prices, alternate supply sources, choice and availability, quality, employment levels, and the financial viability of the domestic industry. The public interest test reflects similar credible trade remedy regimes such as those found in Canada and the European Union, and was developed with consideration of specific features of the New Zealand economy. The test is necessarily bounded within parameters and factors prescribed in the legislation. This ensures that the Government maintains a consistent approach over time. The test will be automatically conducted immediately after investigations or reviews.

The current Act gives specific deadlines before which investigations have to be completed. This bill continues those deadlines and imposes additional time frames within which the public interest test must be completed. The Minister will make a determination on whether or not to impose duties based on officials’ findings that dumped or subsidised goods have caused or threatened to cause material injury to a domestic industry, and whether or not those duties are in the public interest. Officials will collect information from parties that are likely to be affected by the duties being imposed or not imposed. They will also draw on advice from external expert parties, such as the Commerce Commission, and use information gathered in the initial investigation on dumping or subsidisation causing injury.

The bill requires officials to release a draft findings report prior to making the final recommendation. Interested parties will be invited to comment on draft findings. The bill will allow the Government to complete a public interest test on ongoing investigations and on duties that have been determined within 3 months before the date of commencement. The bill also clarifies various processes in the Act that are undertaken in conformance with the World Trade Organization rules. For instance, the bill clarifies the decision-making powers and reviews of existing duties and explicitly allows for the imposition of a separate rate of duty for named exporters and a residual rate of duty for all other exporters, and allows for those rates to be reassessed if circumstances change. I am sure the members are very pleased to hear that.

The Government considered and consulted on an automatic termination period—this is where duties would automatically expire after a set number of years. I spoke extensively to relevant industry representatives and decided that introducing a public interest test but not an automatic termination period would strike the right balance between improving competition and maintaining an effective dumping and countervailing duties regime.

The bill also creates a power for the Government to suspend or terminate current duties, or to defer or not impose new duties on products where the users have been affected by a natural disaster. This power is a stand-alone provision in the bill, so it is not tied to the public interest test, nor any review provision. This provision will strengthen the Government’s ability to respond to natural disasters. The bill ties the natural disaster powers to the Civil Defence Emergency Management Act to ensure a consistent approach to emergency management across legislation.

I do nominate the Commerce Committee to consider this bill, because it will improve competition in the New Zealand economy. Under the current legislation, anti-dumping and countervailing duties can impose costs that are disproportionate to their benefits. This bill takes the necessary steps to modernise the legislation. The new consumer test will help promote competition in New Zealand by requiring the Government to consider the interests of consumers and downstream industries before imposing duties. So I do look forward to progressing the bill through the House. I move that the bill be now referred to the Commerce Committee for consideration. Thank you.

Hon CLAYTON COSGROVE (Labour): Can I state from the outset that the Labour Party will support this bill in its first reading, and can I say that as a basic principle we welcome the Minister of Commerce and Consumer Affairs’ innovative attitude in respect of New Zealand business. What we seek is that in any trade agreement the rules of a trade agreement are enforced on all borders—likewise on our own borders. We understand the anti-dumping regulations, we understand the importance of New Zealand business, and we understand the enforcement of those rules around our domestic borders.

We welcome the public interest test. There has been a lot of conjecture in respect of trade agreements per se. There has been lot of debate, I think, in recent times in respect of the positive nature or otherwise of trade agreements, and what a number of manufacturers have sought over a long period of time despite Governments is that we enforce the rules of the day as our Australian and other counterparts do. So, in essence, we support this legislation. We want to scrutinise it appropriately in terms of its balance between the New Zealand interest and the interests of our economic partners. We welcome the fact that it will go to the Commerce Committee, and, to be fair, I do pay tribute to the chair of the select committee. I am not a member of the Commerce Committee but, in fairness, and to be fair in this great Chamber, Melissa Lee does preside with a balanced approach to select committee hearings and does give all parties a fair go. This has not always been the case, Mr Assistant Chair, as you, as a learned and long-serving member of the Parliament, may acknowledge, in respect of the Commerce Committee.

The public interest test, we think, is imperative. If it is appropriate to enact these provisions, then there needs to be a public interest test. I acknowledge the commerce and consumer affairs Minister, who is grappling with a whole series of issues. Whether they be ports or whether they be patents, there is a whole series of interwoven issues that he is dealing with. What we seek and what we would support is a commerce Minister who would support the public interest. I take the Minister at his word that in introducing this piece of legislation he is determined to support New Zealand industry, to support the New Zealand public interest, and to ensure that we are internationally competitive with our trading partners. It would be a dark day if New Zealand industry was somehow hampered and somehow hobbled behind other industries in foreign competitive markets, and hampered in respect of its export earnings.

In the brief commentary that I wish to give—because I do not think there is major conjecture about this issue and about this legislation—I wish to say that we will support the bill to select committee. We want to ensure that the committee gives the appropriate scrutiny and that the appropriate tests are put in place. It does introduce a public interest test. We know that in terms of construction products, for instance—if we look at those in respect of the housing issue—there is a lot of conjecture in respect of the competitive nature of those products. I am told that you can land a container of Gib, for instance, out of the United States for about two-thirds of the cost for which you can produce it locally. One could make an anti-dumping or dumping argument in respect of that.

Dr David Clark: You are not going to argue that there is a consumer benefit?

Hon CLAYTON COSGROVE: No, I would always argue that there is a consumer benefit. My colleague the trade spokesperson makes an interesting point. But what New Zealanders want to know is that there is a level playing field—that if you are in business, and if you are producing goods and services and you are in the international trading market under World Trade Organization (WTO) rules, there is a level playing field. So I welcome the Minister’s comments. In respect of the select committee I look forward to scrutinising those comments in the legislation, because what we want and what New Zealand manufacturers and producers want is not a free lunch. They want to be competitive and they want to be out there on the international stage. They do not want Government provision; they simply want to compete with their international markets, and they want to compete within the rules of the WTO.

If this legislation’s intent is positive, we want to see the detail, but that being the case, we support the legislation. We want to see it progress, but we want to give it due scrutiny, and we want to also, of course, scrutinise the Minister’s intent. Over patents legislation, ports legislation—all these issues—we acknowledge that the Minister, of course, has New Zealand’s interests at heart. We want to ensure that that is communicated and is legislated through this legislation, so we support this bill to select committee.

MELISSA LEE (National): Thank you for the opportunity to take a short call on this important bill introduced by the commerce and consumer affairs Minister, the Hon Paul Goldsmith. Before I get on, I would like to make the comment that the Hon Mr Goldsmith actually works incredibly hard supporting the commerce and consumer needs of New Zealand, and I would like to take a moment to say thank you to him—he is sitting right next to me so some people might actually make the mistake of thinking that I have to say that because he is sitting next to me.

I would like to commend the speaker who just took his seat, the Hon Clayton Cosgrove. I would like to thank him for his compliments on my chairmanship of the Commerce Committee. I have to say that I have also enjoyed his attendance at the Commerce Committee from time to time on bills that he has specific interest in.

Hon Clayton Cosgrove: How much?

MELISSA LEE: Very much—very much, sir. I look forward to your attendance tomorrow, Mr Cosgrove.

The Trade (Anti-dumping and Countervailing Duties) Amendment Bill seeks to introduce public interest, as the Minister has attested, into the current anti-dumping and countervailing duties regime, which the Minister and the Hon Mr Cosgrove have also just spoken about. Here in New Zealand, goods are considered to have been dumped if the export price into our country is in fact less than the price that the goods are sold for in the domestic market of the exporting country. For example, I mean, New Zealanders love whiteware that has been imported because we can get some brands at a much cheaper price. I might actually quote that sometimes Korean-manufactured products like Samsung fridges and whiteware could potentially come in cheaper. If, in fact, the Korean Government was, for example, providing Samsung—I am not saying that it is—with a subsidy to export to New Zealand at a much, much lower rate, then the manufacturers in New Zealand should be worried that we have a situation where we cannot compete with those products that are actually being dumped or are getting subsidies from those countries. So we want a marketplace that is actually fair, where our manufacturers, exporters, and producers can in fact compete with those overseas manufacturers and exporters.

I think this bill is actually very important. The Government, of course, has been making excellent inroads into the growth of better business and trade, supporting more New Zealand companies to be able to engage in international businesses to buy more goods, cheaper goods, and better-quality goods from different parts of the globe at competitive prices. All of the free-trade agreement negotiations and the agreements that we have signed actually go towards promoting that. We also have the obligations and responsibilities to the World Trade Organisation, where it is reflected that these law changes that we are making are important due to our standing as a good-faith trading partner to so many other countries around the world.

New Zealand, of course, was one of the founding members of the World Trade Organization, and former Prime Minister and ambassador the Rt Hon Mike Moore served as its director-general from 1999 to 2002. Such links are important to New Zealand trade, and to New Zealand consumers, who want assurances that we are giving them the best-possible deal in regulation, and also in consumer awareness, and, I guess, consumer prices—we want cheaper prices, but we want to make sure that whatever is actually coming into the country is not putting our own producers at risk, either. But if, in fact, those products that we may import are in the best interests of the consumers—this bill might actually consider best public interest issues, and I think it will actually deal with those worries.

It is a “customers first” Government, as my colleague Brett Hudson says. National’s plan is to help businesses thrive while protecting consumers, an admirable plan we took into the 2014 election, which we have consistently delivered on—and will continue to deliver on—going into the 2017 year. Small businesses are, in fact, the backbone of our economy, and make up about 97 percent of businesses in New Zealand, and they too are consumers. In this public interest test that we will be implementing, they too are, in fact, the public interest that we should actually consider as well.

I think this is a great bill, and I look forward to the submissions in the Commerce Committee, and having serious discussions with my Opposition members, as well as the Government members. I commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): It is a pleasure to rise to speak to this bill, and, as my colleague Clayton Cosgrove has indicated, the Labour Party will be supporting this bill to the Commerce Committee, where Melissa Lee is the chair. We will very much look forward to the debate around what this bill has to offer and how New Zealanders can benefit from it, and, if necessary, make recommendations for tweaking or amending the bill should it prove, after submissions from interested parties, that it can be improved upon, or if there are fishhooks in it that we have not yet spotted.

On the surface, of course, what it does is it makes the regime more responsive to consumers, and that has got to be a good thing. On this side of the House we recognise the importance of trade for this country. New Zealand is a trading nation, it is the way we make our way in the world, and so the Labour Party has, with the exception of the Trans-Pacific Partnership agreement, with which we have had some challenges, supported trade right since the beginning. In fact, the first Labour Government was the party that made a real impact in Europe by looking for new trade avenues there, long before the National Party was even formed. Before the National Party was even a perverse idea in somebody’s mind, the Labour Party was out there beating the drum on trade. National will, of course, have a difference of opinion on some matters of trade, but generally there has been a bipartisan consensus across this House that trade is an important thing.

We will, of course, continue, notwithstanding this bill, to challenge the Government. It has set itself the test of getting exports up to 40 percent of GDP since it came to office. It has, in fact, gone backwards during its time, and it now sits below 30 percent of GDP. We recognise that if we are going to pay our way in the world as a country, we do need to trade, and we do need to trade increasingly. Unfortunately, this Government seems to be taking us in the opposite direction. But when we see a bill come along that seems a sensible trade measure, that clarifies the rules, and that is in favour of consumer benefit, we want to support that bill. That is our natural instinct on this side of the House.

This bill allows for natural disasters and a different course of action when natural disasters happen, and, essentially, a relaxing of the regime that is in place, because it might be, in fact, to the country’s benefit to take goods in a situation that is different from the ordinary situation, despite it technically being a case of dumping. I have had a chance to flick through some of the background papers gathered under the Official Information Act, and I can see that the ministry itself has provided analysis of a range of options and assessed, in a handy matrix form for the Minister, the range of options and whether they achieve the goals that a country might set out for itself in terms of assessing the change against the status quo. Preserving the good sides of anti-dumping legislation is one of the goals the ministry has set itself, but also providing discretion in situations that are different and giving that discretion so that the public might benefit. It has done it in a simple tick-box form that pretty much anyone could understand.

I encourage people at home who are interested in this kind of thing to apply for such papers under the Official Information Act. It is something I was discussing with a constituent just yesterday, how few people do use the Official Information Act. It is a favourite, of course, of journalists and politicians to get the background information to make sure that the Minister has made the right decisions, is across his or her paperwork, and is acting in the best interests of the country given the advice that they have received. But ordinary members of the public out there, people in middle New Zealand, can, of course, request information under the Official Information Act, too. They will receive, by and large, copies of the paperwork that a Minister will receive in their decision-making process, and they can see how decisions have been made. Often that aids in the process of select committees, but it can aid, generally, in the making of good law and the understanding of how we come to be in the situations we are in as a country.

The first speaker for Labour, the Hon Clayton Cosgrove, touched on the fact that businesses want clear rules. They want a level playing field for trade. They want to be sure that there is not dumping going on that is going to affect domestic industries in a negative way because of unfair behaviours—behaviours that are outside the norms of international trade and the expectations set up by trade rules. That is fair enough, because with clear rules, some certainty, and expectations—that is when businesses prosper. When the rules are clear, when the playing field is laid out, and everyone is playing by the same rules, we back our New Zealand industries to be innovative, to put their best foot forward, and to compete on the international scene.

Of course, on this side of the House, we feel that there is more that could be done. We see some distortions in our economy. We see money going into the speculative sector in the housing market that could be going into the productive sector and supporting businesses. We see a lack of investment available for hard-working New Zealand business people. It is very hard to get the capital that people need, and, of course, one of the consequences of that is that we have seen fewer businesses created per annum under the current Government than we saw under the previous Labour Government. That, in part, is because, I would contend, the members opposite are more interested in big established businesses and less interested in new businesses coming through. They are less interested in the ordinary, middle New Zealander who risks their shirt every day. They are more interested in backing vested interests in the ultra-wealthy. That is something we have seen time and time again in the nature of legislation that is brought to this House.

However, today we are not criticising that. We are supporting this bill, for the fact that it seems like common-sense policy. It is not the big idea that is going to change things and be a game-changer in New Zealand. It is not the big idea that will get us to exports reaching the Government’s goal of 40 percent of GDP rather than going backwards. It is not the big idea that will turn the corner for us and see us earning more per capita. Unfortunately, wages in New Zealand have been static under the Government as expenses have gone up and funding in the health sector has dropped, and so on. Things are getting tougher for New Zealanders. This is not the thing that will change that overnight, but it does seem to be a sensible measure that we would want to support to the select committee to have a full examination, because we do support sensible measures, albeit they are small steps in the right direction.

So just to remind ourselves, what we are talking about here is goods that are dumped. They are considered to be dumped if their export price to New Zealand is less than the price the goods are sold for in the exporting country. So you can see the pattern of behaviour that is being described. Goods that are subsidised by foreign Governments can be considered to be dumped, as well. Where there is a distortion in trade practices, we have legislation in place that stops dumping practices because they are, and can be, injurious to New Zealand industries. Where there is no New Zealand industry present, where it is unlikely that goods coming cheaply into the country are going to be injurious to an existing industry, they may in fact be of benefit to consumers in New Zealand. We would support this change, and that is, in fact, as I read the legislation, what it is designed to achieve.

We only hope that this can get through in a good form. We recognise that with the Commerce (Cartels and Other Matters) Amendment Bill, which Minister Goldsmith brought to the House before, there was some backtracking and a curious path taken. We hope that this one has a safer journey through the select committee. We ourselves will be putting our shoulder to that cause, to make sure that this legislation is debated fully, thoroughly, and comes back to the House, hopefully, in an improved form, because there are always good suggestions that come forward from the public and interested parties. We will bring the bill back to this House and debate it fully and see a better regime as a result. Thank you.

BRETT HUDSON (National): It is a pleasure to rise in support of the Trade (Anti-dumping and Countervailing Duties) Amendment Bill in its first reading, not least of all because it is—any way you care to describe it—a very sound and pragmatic way of dealing with the interests of consumers and the fair and reasonable protection of our own industries. As a small and trading nation, we understand how important it is for us not only to sell to the world, but—as some members opposite in recent times, in other trade discussions, seem to have failed to comprehend—also that it is important that trade is a bilateral thing, and that we are purchasing, we are importing from other nations. It is important that we meet our responsibilities under the World Trade Organization agreements that we are party to.

Actually, in the anti-dumping measures it is very important that we take a broader consideration. Historically, what we have looked at is the protection of local industry: the idea is that we are a small country of 4.5 million people and that larger economies, at a very tactical level, can take measures because of their own oversupply that have little impact on them but that have a great distortionary impact on our local economy. In the short term, if we allow that to happen, what happens in those instances is that those companies are able to dump—to offload—the excess supply they have. It comes at very, very good prices to our consumers, but it is very tactical. It is a short-lived, temporary measure, and once they have finished with their particular wants, our consumers are left—particularly in some cases where they are locked in to certain product supplies that are then only available to them under a different pricing and supply regime. So dumping is about the suppliers; it never has been about the consumers.

The measures that we have had in place are reasonable in the context of protecting not only mainly our own industry but also our own consumers, while living up to our responsibilities under the World Trade Organization agreements. There is always an instance or a regime. We might consider that the anti-dumping rules that we have had in place do not meet the prevailing conditions in New Zealand. The example that I think both sides of the House have used—certainly the Minister did in his speech—was around housing. It has been, and remains, the position of this Government that the issue with the housing challenge is one of supply. It can be dealt with mainly in the primary areas of freeing up land, of reducing time and cost for consents to create new developments, in making sure that we have the skills available to build those houses to deliver the supply, and in ensuring that the materials available for those developments are affordable. One of the things the Government took a decision on in 2014 was to provide some relief against the anti-dumping measures, because it created a means to address some of the housing supply issues by taking away some of the duties that would otherwise be imposed on goods that were considered to have been dumped.

What this bill does is to take that very sound approach and work out how we can pragmatically employ it on an ongoing basis in this country; where we can make sure that we take the right steps to protect our consumer industries, and the right step, in the case of housing, to ensure that we can support the sort of supply that we want to see, but still have the ability to protect our own local interests. That is precisely what this bill will do if it is enacted. It gives us the ability to consider what is in the consumer’s interest, and also what is in the interests of industry. And if we take the balance between those two then we can create an almost perfect storm, particularly in housing, where we are ensuring that the materials are available freely and at a good price, while not destroying our own local industry, and seeking to deliver the objectives we have, which—particularly in housing—is to make sure that we have the right supply to meet the growing demands in New Zealand. This is a very pragmatic and sensible bill and I commend it to the House.

MOJO MATHERS (Green): I rise to take a call on this bill. As it stands, the Green Party is not supporting the bill, and I want to take the opportunity to outline some of our concerns. So, from our perspective, what we see this bill doing is weakening current protection for local New Zealand producers and manufacturers, under the guise of public interest. What we already have is an Act that, as it stands, provides some protection for when goods are imported that are way cheaper than locally produced goods because they are heavily subsidised by Governments overseas in their country of origin, or because they are being dumped here at a price that is well below what they are selling for in their country of origin. Both of these situations do not create a level playing field for New Zealand businesses, and that is recognised as such by the World Trade Organization. It thought that the existing Act and the existing duties that are in place under this Act are compliant with the World Trade Organization rules.

So the question would be why we would want to allow it to be possible for heavily subsidised goods, or for goods to be dumped here in New Zealand. Why would we do that? We know from international experience that the practice of dumping very low-priced goods on to local markets can have far-reaching and highly damaging long-term consequences for local economies, and sometimes they can take time to eventuate. This is because there are very few industries that are able to withstand the impact of dumped products flooding the market. In the long term, it is not in the public or national strategic interest to allow local industries to be undermined in this way. It is actually anti-competitive practice, these kinds of things.

Once we have lost manufacturing expertise in a particular area it can be very difficult to re-establish that at a later date when that particular product that had been dumped is no longer available at rock-bottom prices. So, for example, the Hawke’s Bay Fruitgrowers Association has warned that peach growers in Hawke’s Bay are likely to have to pull out their trees and get out of the business if extremely cheap canned peaches from Greece and Spain are allowed to be here. At the moment there is a duty on them; they cannot be dumped here. But if they are allowed, in the consumer interest of allowing people to have extremely cheap peaches, then what that could mean is that we undermine the peach growing industry in Hawke’s Bay. If they have to pull out their trees, they are very unlikely to reinvest and plant the trees and wait 5 years for them to start producing fruit again, at a cost to the economy.

At the moment the peach industry in the Hawke’s Bay region contributes $15 million to Hawke’s Bay and employs thousands of people. We could put all of that at risk for short-term consumer interest. But, in the long term, when the peach trees are wiped out and gone and then, suddenly, maybe there are no longer rock-bottom priced peaches available all the way from Greece and Spain, we could have a shortage. It is not in our national long-term interest to allow these sorts of situations to happen. Why would we risk sabotaging a viable industry that contributes so much to the region for the sake of short-term consumer interest? We will be looking very carefully in the select committee at what this public interest test is and how this will be implemented, and we will be asking whether there is any question of things like the peach industry being put at risk by changing the Dumping and Countervailing Duties Act in this way.

As we push out these alternative manufacturers and producers, what we end up doing is concentrating all our economic eggs in one basket, more and more into dairying. We already have an economy that dangerously relies on and is vulnerable to the ups and downs of dairying. The last thing we need to do is to undermine other viable industries that are currently viable. We also need to remind ourselves that cheaper is not always better, especially when it comes to building or construction materials. Poor-quality materials can threaten people’s safety and homes. That was all too evident recently when 1,600 tonnes of steel from China was found to be too weak for the bridges in the Huntly bypass project.

It was interesting to see the legal commentary from Chapman Tripp that pointed out there is no reason, in principle, why anti-dumping duties could not continue for as long as injurious dumping or a subsidisation is occurring. If that is occurring overseas, then let us keep the playing field as level as we can. I think it was interesting noting that officers have already acknowledged that adding a new public interest test will make the Act more complicated to enforce, reduce the overall effectiveness of the New Zealand anti-dumping regime, and make things much more uncertain in the long term about how it is going to be and how the process is going to play out. So I actually really want to know exactly what the problem is that this bill is trying to fix.

A couple of speakers have mentioned that the mechanism to justify allowing imported building materials to be dumped in the New Zealand market is a mechanism for somehow making building houses cheaper. But we only have to look at either the Huntly expressway or the leaky building fiasco to see where a race to the bottom can lead us. We do not want that scenario to be repeated. Opening our market to dirt-cheap imported goods is somehow supposed to be a solution to the housing crisis. In our view, it is an inadequate solution that risks creating more problems than it solves and shows a lack of ideas for how to make sure that New Zealanders have a roof over their heads, and is a grasping at other mechanisms. What the Green Party would do—

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

Debate interrupted.

The House adjourned at 10 p.m.