Thursday, 23 March 2017
Volume 721
Sitting date: 23 March 2017
THURSDAY, 23 MARCH 2017
THURSDAY, 23 MARCH 2017
Mr Speaker took the Chair at 2 p.m.
Prayers.
Motions
London—Westminster Terrorist Attack
Hon PAULA BENNETT (Deputy Prime Minister): I seek leave to move a motion without notice regarding the attack in London on Wednesday, 22 March.
Mr SPEAKER: Is there any objection to that course of action being followed? There is none.
Hon PAULA BENNETT: I move, That this House condemn the terrorist attack in London and extend its condolences to the families and friends of those killed and injured. We were deeply shocked to hear of the events that unfolded in Westminster. An attack that strikes at the heart of democracy in the United Kingdom strikes at democracies everywhere. The Prime Minister has written to the Prime Minister of the United Kingdom this morning to convey his condolences on behalf of the Government and the people of New Zealand. The thoughts of all New Zealanders are with the people of London, particularly those affected by this terrible atrocity. Our hearts go out to those who have lost loved ones, including the family and friends of the Metropolitan Police Service officer killed in the line of duty while protecting the innocent bystanders to this attack.
There is no doubt that the people of London, including the many New Zealanders who call that city home, will come together after this horrendous attack and display the resilience for which they are known. New Zealand stands shoulder to shoulder with the United Kingdom, and attacks like this only strengthen our combined resolve to counter terrorism and violent extremism wherever they may occur.
JACINDA ARDERN (Deputy Leader—Labour): I stand on behalf of the leader of the Labour Party, Andrew Little, and all of the Labour Party to express our condolences to those who have lost loved ones in the terrorist attack at Westminster overnight. Among the lives that have been the lost was a police officer, whose role it was to protect those who work in Parliament, and others who were simply walking through their city. At moments like these, it is hard not to reflect on the very personal relationship this House and many of us will feel as a Westminster democracy with longstanding ties to the United Kingdom.
It is much more personal than that. London is a place where many of us have lived, where we have worked, and where we still have both friends and family. My sister was in the city yesterday. Her first thought, like many Londoners, was to immediately reassure her family abroad that she was safe, and to carry on. And that is what London has always done. It is a city that has long embraced its diversity as strongly as it has rejected attacks on its resolve. In the wake of this recent act of brutality, it once again stands resolute.
Today we stand both in condemnation of the attack and also in solidarity with the people of London, and we acknowledge the words of the mayor, Sadiq Khan, who has reminded us all: “We stand together in the face of those who seek to harm us. We always have. We always will. Londoners will never be cowed by terrorism.”
MARAMA DAVIDSON (Green): I stand on behalf of the Green Party. We are deeply saddened to learn of the attack on the people of London this morning. Our hearts go out to the families of the killed and injured, and to those who witnessed such a horrific attack. Many of us in this Parliament, who are watching, have friends and family who live in London. It is so difficult to watch these events unfolding on the other side of the world and worry for the safety of our loved ones. London has always stood as a beacon of diversity and as a place where people from all around the world live, work, and share in each other’s lives together.
It is this diversity and the shared respect for the values of human rights and democracy that attacks such as these are trying to undermine. We know that this is not the first time that the people of London have taken a hit and that, as always, they will come together to look after one another. Indeed, we saw that in the immediate aftermath, as MPs and emergency services staff alike worked together to save the lives of those injured. We stand with Londoners, who reject the feelings of fear and distrust that these kinds of attacks are designed to create. They will not succeed in dividing us.
RON MARK (Deputy Leader—NZ First): New Zealand First has no hesitation in condemning this attack near the Mother of Parliaments. To the four victims who were murdered and the 40 who have been injured, no words can express this Parliament’s heartfelt sympathy. We must also pay tribute to the selfless emergency workers, who went into harm’s way—again proving that heroism is more than an ideal. In this respect, we wish to praise one of our own—a fellow parliamentarian—Hon Tobias Ellwood, who fought to save the life of PC Keith Palmer. PC Palmer’s murder and that of three other victims shows how this single act of crude terror affects so many families and so many communities.
Then again, Mr Ellwood’s running towards danger and putting service before self is exactly what you would expect from a fellow former soldier who has seen active service. Mr Ellwood showed the spirit that imbues anyone who has served, and is perhaps something this House should reflect upon now more than ever.
Today’s attack is the third Islamic terror attack on a Commonwealth Parliament since 2000. In December 2001, only a few months after 9/11, a suicide squad stormed India’s Parliament, killing seven before it was eliminated. Less than 3 years ago in Ottawa, a lone wolf attacker shot Corporal Nathan Cirillo dead before assailing Canada’s Parliament.
As for the perpetuator of today’s heinous attack, we take comfort from Dante’s Inferno that in the deepest circle of hell, traitors against God, country, and family, and their benefactors, lament their sins in this frigid pit of despair.
Although we give thanks for our openness here, it should not stop us from asking pertinent questions about security here in New Zealand. I would also ask that we contemplate those senior servants of this nation who leave the service of Parliament and return to normality without the protection of office that has been their privilege for the time that they served this nation. It is time that we reflect.
MARAMA FOX (Co-Leader—Māori Party): Ā, tēnā koe e Te Mana Whakawā, e tū ake au ki te mihi atu ki a rātau kua hinga i tēnei rangi, rātau i runga o te whenua o Ingarangi, kai waho i tō rātau Pāremata. E tika ka tū tēnei hei māngai mō Te Pāti Māori, otirā, mō tātau katoa, hai whakakotahi i ō tatau reo whakahē i tēnei o ngā mahi kino ki te tangata. Ā, ka tuku whakaaro ki a rātau kua hinga me ō rātau whānau, ō tātau whānau e noho kei tāwāhi, ā, ko te tūmanako ka korowai nei te kowhai aroha o Te Atua Kai Runga i rātau katoa, ka tika.
[Thank you, Mr Speaker. I rise to pay a tribute to them who have fallen today upon the land of England and outside their Parliament. It is fitting that I stand as spokesperson for the Māori Party but at the same time for us all to unify our opposing voices to this one of the atrocious acts upon mankind. I give a thought to them who fell, their families, and our families living overseas in the hope that the loving cloak of God Above is shrouded over them and quite rightly so.]
DAVID SEYMOUR (Leader—ACT): On behalf of the ACT Party, I would like to join with other leaders in condemning this terrible act and expressing solidarity with the people of London and Great Britain, who we know, through sad experience, have tremendous resilience in these times. To the idiot terrorist who perpetrated this act, you will not win. There are too many of us, and we love freedom far too much.
Hon PETER DUNNE (Leader—United Future): I want, obviously, to join with others in supporting the motion moved by the Deputy Prime Minister. This is a terrible act, it is a sad day for London, and it brings home to all of us the immediacy of the risk that we face in so many different areas. This time last week, I for one was standing on Westminster Bridge. The last thing on my mind at that point would have been the attack that has occurred in the last 24 hours.
There are the inevitable tales of heroism and bravery associated with the activity. Our hearts go out to those people who have lost loved ones, to those who have been wounded, and to those who have had to respond. The British people have, as has been noted, a history of resilience going right back to the first attacks many hundreds of years ago. They will withstand this event and be stronger for it. But to speculate beyond that about the causes, the reasons, to rationalise, is totally inappropriate in these circumstances. Our hearts go out to those who are affected. We have confidence in the British authorities to prosecute the cause of what took place and in their ability to take the steps to ensure that there are no repetitions. I support the motion.
Motion agreed to.
Business Statement
Business Statement
Hon SIMON BRIDGES (Deputy Leader of the House): When the House resumes on Tuesday, 4 April, the Government will look to progress the Family and Whānau Violence Legislation Bill, the Telecommunications (Property Access and Other Matters) Amendment Bill, and a number of other bills on the Order Paper.
Oral Questions
Questions to Ministers
Question No. 1 to Minister, 22 March—Amended Answer
Hon STEVEN JOYCE (Minister of Finance): I seek leave to correct an answer to question No. 1 yesterday.
Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is none.
Hon STEVEN JOYCE: In response to a supplementary question to question No. 1 yesterday, in reference to exports from New Zealand to China, I referred to “more than quintupled” when I should have said “more than quadrupled”.
Oil and Gas Exploration—Policy
1. GARETH HUGHES (Green) to the Minister of Energy and Resources: Does she agree with former Energy and Resources Minister Simon Bridges that “while the world must progressively transition towards a low carbon future it can’t and won’t happen overnight”; if so, when will an end to exploring for oil in New Zealand happen?
Hon JUDITH COLLINS (Minister of Energy and Resources): Yes; it will happen when we no longer require things like eyeglasses, cell phones, aspirin, artificial limbs, asphalt for roads, batteries, fertilisers for agriculture, raincoats, clothing, or deodorants, as well as hundreds of other everyday products that are made with oil and gas.
Gareth Hughes: When scientists warn that we cannot afford to burn 60 to 70 percent of known oil reserves, why is the Government promoting new oil exploration? [Interruption]
Hon JUDITH COLLINS: Could the member repeat his question? I had some difficulty hearing it.
Mr SPEAKER: Order! [Interruption] Order! Without interruption from my left, we will have the question repeated.
Gareth Hughes: When scientists warn we cannot afford to burn 60 to 70 percent of known oil reserves, why is the Government promoting new oil exploration?
Hon JUDITH COLLINS: Well, of course a lot of oil is used in things that are not burnt, such as just some of those items that I have listed.
Gareth Hughes: Does she think her block offer decision opening up the possibility of oil rigs on the shore of Lake Te Ānau is consistent with how the Government promotes the region and the lake in its “100% Pure” campaign?
Hon JUDITH COLLINS: My understanding is that this is a block offer that enables people to consider exploration. It does not actually mean that permits are granted, and it is something where New Zealand needs to at least know what resources we have.
Gareth Hughes: Why is she prepared to risk the last Māui’s dolphins by opening up 35 percent of their sanctuary for oil drilling?
Hon JUDITH COLLINS: Well, of course I am not, and, in fact, in Taranaki and the region conservation efforts and exploration have coexisted since the 1960s—well before that member was even born. More than 20 wells have been drilled in offshore Taranaki, where there have been six petroleum permits and two mineral permits either in or overlapping the sanctuary. In this time there has not been a single incident reported involving Māui’s dolphins.
Gareth Hughes: Has the Government ring-fenced the royalty from oil production to pay the $885 million upwards estimated cost of decommissioning its oil rigs, or is that expected to come out of general Government spending?
Hon JUDITH COLLINS: It would be a bit foolish to ring-fence it, since in just the last 8 years there has been $3.2 billion paid in royalties and levies by the industry, and if we ring-fenced all of that that would be considerably more than the expected $880 million over the next 25 years for decommissioning costs.
Gareth Hughes: Given the oil industry cannot even have a conference without massive protest, oil companies are leaving New Zealand, and around the country Churches, councils, and universities are all divesting from fossil fuels, when is this Government going to get with the times and support clean energy over fossil fuels?
Hon JUDITH COLLINS: I am not allowed to use the word for that question, given that it was the Green Party that caused so much disruption yesterday at the petroleum conference in New Plymouth. If only that member had come on the plane a bit earlier, he would have been there to see it like I did. I can tell him that the protesting and appalling behaviour by some of the people there was not from the delegates but actually was from his friends in the Green Party, led by Russel Norman.
Defence Force—Afghan Civilian Deaths Allegations
2. JACINDA ARDERN (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement regarding the SAS actions in Afghanistan in 2010 and the alleged loss of civilian life that “so far there doesn’t appear to be new material to justify an inquiry”?
Hon PAULA BENNETT (Deputy Prime Minister) on behalf of the Prime Minister: Yes.
Jacinda Ardern: When he stated yesterday that he “had an initial briefing from the New Zealand Defence Force about the incident and the inquiries that had already taken place”, what specific inquiries was he referring to?
Hon PAULA BENNETT: In as much as I can answer that question without knowing exactly what the Prime Minister’s thoughts were when he said it, I would imagine he was referring to the investigations that were undertaken on behalf of the New Zealand Defence Force at the time questions were raised.
Jacinda Ardern: Has he seen the full International Security Assistance Force (ISAF) report that was used by the Defence Force to claim there were no civilian casualties?
Hon PAULA BENNETT: I am sorry; I cannot answer that question as to whether he has read the whole report—I imagine so, but I cannot know exactly what he has read.
Jacinda Ardern: Does he consider the ISAF report to be independent; if so, why?
Hon PAULA BENNETT: As far as he is aware, the report itself was not done by the New Zealand Defence Force but by the Afghani Government as well as other defence forces, and, as such, it is independent.
Jacinda Ardern: If the ISAF report, which the Defence Force is relying upon, was sufficient, why was a similar report in 2013, where the ISAF have claimed that there were no civilian casualties in a drone strike, later debunked by the United Nations; and is this really the kind of evidence the Government wants to base its claims on?
Hon PAULA BENNETT: The Prime Minister is waiting for the Minister of Defence and the Chief of Defence Force to go through those reports. He has not made decisions at this time. It has been 48 hours since we saw the allegations, and he will be making decisions from there.
Jacinda Ardern: Why did Wayne Mapp, who was in Afghanistan during the raid, state that there was “enough supporting evidence” around claims of civilian casualties to make it “a credible claim”, and yet he continues to maintain that the evidence does not exist?
Hon PAULA BENNETT: As I stated, the Prime Minister is still going through the information. At this stage he has not seen enough for there to be an inquiry, but it has been only 48 hours. He will continue to investigate that and will make decisions in due course.
Jacinda Ardern: What evidence does he require to justify an inquiry into the allegations that have been made?
Hon PAULA BENNETT: He will be going through all of it. He will be going through it with the Chief of Defence Force. I cannot actually state exactly what that will be; you do not know what you do not know.
Economy—Commentary and Budget 2017 Priorities
3. ANDREW BAYLY (National—Hunua) to the Minister of Finance: What recent reports has he received on the economy?
Hon STEVEN JOYCE (Minister of Finance): This morning the Reserve Bank released its official cash rate decision. In leaving the rate unchanged at 1.75 percent the bank noted that New Zealand’s growth outlook remained positive, supported by ongoing high levels of household spending and construction activity, strong population growth, and accommodative monetary policy. It noted that house price inflation has moderated and in part reflects loan-to-value ratio restrictions and tighter lending conditions, but it also noted that it was still uncertain as to whether this moderation will be sustained. The bank also noted what it said was an encouraging fall in the trade-weighted exchange rate.
Andrew Bayly: What risks to the economy did the bank identify?
Hon STEVEN JOYCE: The main risks identified by the bank were international ones. Although it noted that indicators in other advanced economies have been more positive over the last 2 months, major challenges remain, with ongoing surplus capacity in other parts of the global economy and extensive geopolitical uncertainties. Responding to that geopolitical uncertainty is a key focus of this Government, and the Prime Minister will speak about New Zealand’s trade policy in the context of that world environment in Auckland tomorrow.
Andrew Bayly: What are the Government’s fiscal priorities to manage the economy’s growth and manage potential risk in Budget 2017?
Hon STEVEN JOYCE: We have four key priorities for Budget 2017: firstly, delivering better public services for a growing country, providing all New Zealanders with the opportunity to lead successful and independent lives; secondly, building the infrastructure we need in a growing and modern economy; and, thirdly, we need to keep paying down debt as a percentage of GDP. We have set a target of reducing net debt to around 20 percent of GDP by 2020, and that is to make sure we can manage any shocks that may come along in the future. Finally, we remain committed to reducing the tax burden, and, in particular, the impact of marginal tax rates on lower and middle income earners, when we have the room to do so. It is very important to remember that the money the Government spends comes from hard-working Kiwi families.
Early Childhood Education—Funding
4. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Why has her Government cut more than $523 million from early childhood education by, among other things, removing the top funding band for services that employ 100 percent qualified teachers?
Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Our Government has not cut funding to early childhood education (ECE). Since we came into Government we have almost doubled funding, to over $1.8 billion.
Chris Hipkins: How does she reconcile that claim with Budget documentation from 8 March 2016 that states: “What we have done: significant savings have been made in the last few years. Over $528 million of savings in ECE have been made since 2009, including by removing the 100 percent qualified teacher funding band.”?
Hon HEKIA PARATA: I easily reconcile that by saying that a Government, in every year, makes a choice about whether it is getting the best for an investment. So overall funding has not been cut, but particular investments within the funding have changed. For instance—
Hon Ruth Dyson: It says savings.
Hon HEKIA PARATA: Yes, you see, that is what a Government does. It has a look at what is working, decides what is more effective, and invests in that. And this Government has decided that one of its key priorities is to increase participation. Another has been to extend 20 hours to Playcentre and to kōhanga reo, because this Government also believes that parents should choose which option they want to send their children to, and that could be teacher-led, centre-based early childhood education, or it could be parent-led and home-based. We support those choices.
Chris Hipkins: Why did the National Government cut funding for services that employ 100 percent qualified teachers, and what analysis, if any, has it done to measure the impact that decision has had on the quality of education and care that children receive?
Hon HEKIA PARATA: This is another area where there is a yawning chasm between our Government and the Opposition. This Government is not so much about goals as the Opposition has espoused. We are committed to increasing qualified teachers, and under our Government they have increased. They have increased from about 61 percent under the previous administration to 75 percent under this Government; something like 97 percent of teacher-led centres are funded for 80 percent - plus qualified teachers. So, in fact, qualified teachers in early childhood education have increased under this Government from way beyond where they were under that administration.
Chris Hipkins: I raise a point of order, Mr Speaker. My question asked why the Government cut funding for services that employ 100 percent qualified teachers, and what analysis had been done on the impact of that decision. The Minister has not addressed that. She has given a lot of background information but she has not addressed the question.
Mr SPEAKER: I will certainly have a look at it later, but on this occasion I am going to make an instant judgment. I think it was addressed. In fact, there were two questions within the supplementary question, and that makes it more difficult because there should be only one leg to a supplementary question, but the member took an opportunity to put two questions there. I think, certainly, one—in fact, probably both of them were addressed.
Chris Hipkins: Why did the National Government cut funding for services that employ 100 percent qualified teachers?
Hon HEKIA PARATA: We made a decision that we would see an increase in qualified teachers by the mix of policy investments we were making, and our decision has been borne out by the fact that we now see an increase to 75 percent, over the 61 percent that was in place under the previous administration.
Chris Hipkins: Does she believe that children who are attending services that previously had 100 percent qualified teachers and have had their funding reduced under the National Government are receiving a better standard of early childhood education as a result?
Hon HEKIA PARATA: New Zealand—apart from Sweden and Australia—leads the world in terms of adult-to-child ratios. We know that we have highly safe and good quality services, because the Education Review Office (ERO), which independently assesses early childhood centres, has found that there has been a significant decrease in those reported to ERO for poor service, from 28.8 percent under the previous administration to just 2.6 percent under our administration.
Chris Hipkins: I raise a point of order, Mr Speaker. I asked specifically about the quality of services that—
Mr SPEAKER: Order! On this occasion, I am going to invite the member to re-ask his question.
Chris Hipkins: Thank you. Does she believe that the children attending services that have 100 percent qualified teachers that have had their funding cut under the National Government are receiving a better or worse standard of care and education as a result of that decision?
Hon HEKIA PARATA: Perhaps if I explain why I chose to answer this question the way I did previously—it is that part of the proxies that are used to determine quality of delivery are adult-to-children ratios, are reports of low-quality performance, are the choices that parents make, so that early childhood education—
Hon Trevor Mallard: And the qualifications of the staff.
Hon HEKIA PARATA: See, early childhood education is a third more affordable now than it was in 2007, and, in the end, it is not actually what I believe—or past-it former members of Parliament—what matters is what parents believe, and parents get to choose what option of early childhood education they wish to be involved with. The fact is more parents are choosing under this Government, because we now have nearly 97 percent of all kids participating in early childhood education. [Interruption] I know it is a lot of information for the member to absorb. [Interruption]
Mr SPEAKER: Order! Mr Mallard.
Chris Hipkins: Why has the National Government not implemented its 2008 campaign pledge to lower the teacher-child ratio for under-2-year-olds from 1:5 to 1:4, or does she think it is OK for five under-2-year-olds to be cared for and educated by a single teacher?
Hon HEKIA PARATA: I will refer the member back to my answer to the primary question. Our Government is continually monitoring what we are doing in education.
Hon Trevor Mallard: Why?
Hon HEKIA PARATA: We have a responsibility to taxpayers—that is why—to make sure that the dollars they pay are being invested wisely and we can see impact for that occurring. So that is what we have done. We have made different choices. But the overriding fact here is that, within those choices, we have increased funding year on year.
Police Resourcing—Numbers and Funding
5. DARROCH BALL (NZ First) to the Minister of Police: Does she stand by all her statements regarding Police numbers and allocation of Police resources?
Hon PAULA BENNETT (Minister of Police): Yes.
Darroch Ball: Does she stand by her statement: “Deployment of police officers is absolutely at the discretion of the police commissioner, and it is not for politicians to be deciding where our police force should be around the country.”?
Hon PAULA BENNETT: Yes.
Darroch Ball: Why, then, did Minister Tolley stand up in the House yesterday and acknowledge that the Police Association needs more youth aid officers in order to do its job, given the pending increase in Youth Court age, saying: “That is what this Government intends to do.”; or was Minister Tolley in no position to make those guarantees?
Hon PAULA BENNETT: It is entirely appropriate to say that we need more youth aid officers if we are putting up the age from 17 to 18. That is not saying where they are going to be deployed, which certainly is not the role, but to say that we need some more officers is completely within her arc.
Darroch Ball: Has the Minister had conversations with the Minister for Social Development promising allocation of personnel to youth aid in order to cope with the increased demands with an increase in the Youth Court age; if not, why not?
Hon PAULA BENNETT: There have been many conversations through the Cabinet process and Cabinet committees, where we were discussing raising the age from 17 to 18 and what that would mean for police resources, justice resources, and everything else, because it will mean a complete change.
Mr SPEAKER: Supplementary question, Ron Mark. [Interruption] Order!
Ron Mark: They love me. Given that the police commissioner told—[Interruption] Shh, shh! Given that the police commissioner told the Law and Order Committee that he presented to you a business case for 880 sworn officers and 245 non-sworn officers, which was subsequently approved, why could you not tell the House last week, when I asked you, how many new police were being deployed into rural New Zealand—or were you not listening?
Hon PAULA BENNETT: Quite clearly, this Government has announced that there will be 1,125 more police staff. Can the member not read?
Ron Mark: I raise a point of order, Mr Speaker. Does that mean she was not listening?
Mr SPEAKER: Order! If the member wishes to—
Ron Mark: Supplementary question.
Mr SPEAKER: That might improve things. I will give him a supplementary question.
Ron Mark: If you received a business case for extra police from the police commissioner, as he said you did, why can you not tell the House how many police you have funded for places like Northland, Horowhenua, and Rangitīkei?
Mr SPEAKER: The Hon Paula Bennett—without bringing me into the question or the answer.
Hon PAULA BENNETT: To the member: it is very clear. Yes, the police commissioner obviously put forward a business case. No, the police commissioner in that business case did not specify what numbers would be going exactly into what districts—which I have said many times. What will happen now is the police commissioner is out talking to those district commanders, doing an analysis of what the needs are in the different areas within their districts, and they will then be deploying them as the need is.
Ron Mark: Given the high amount of interest in this, when you attended your first graduation of police recruits—Wing 303—last week, and police told you that the majority of the wing would be deployed to Auckland and Counties Manukau, why did you not ask how many were going to provincial New Zealand?
Mr SPEAKER: Again, I did not attend a graduation service, but I will allow the Deputy Prime Minister to answer the question.
Hon PAULA BENNETT: I did attend my first graduation last week, and what an impressive 39 recruits they were. They are actually going to be going to all districts, I believe. I asked each of them, actually, where they were going and how much they were looking forward to it, and they were very proud, as were their families.
Ron Mark: When the Minister announced the extra 880 new uniformed and 245 non-sworn staff over the next 4 years, why did the Minister not tell New Zealand that Police are also laying off 200 police staff this year—or does the gagging order applied to them also apply to the Minister?
Hon PAULA BENNETT: I categorically say that 200 police officers will not be laid off this year. The member has his facts completely and utterly wrong, and should be careful who he speaks to.
Homelessness—Housing First Auckland and Government Response
6. Dr PARMJEET PARMAR (National) to the Minister for Social Housing: What recent announcements has she made to reduce homelessness in Auckland?
Hon AMY ADAMS (Minister for Social Housing): This morning, with the Mayor of Auckland, I announced the launch of Housing First Auckland, which aims to house 472 chronically homeless Aucklanders and provide wraparound services to address the underlying causes of their homelessness. The programme is based on a successful international model, which has also been trialled through The People’s Project in Hamilton. The Housing First model recognises that it is easier for people to address issues such as mental health and substance abuse once they are securely housed. The priority is to quickly move people into appropriate housing, then immediately provide wraparound services to support their ongoing success.
Dr Parmjeet Parmar: What does the evidence tell us about the effectiveness of the programme?
Hon AMY ADAMS: Internationally, Housing First has proven to be a very effective model for sustainably addressing homelessness. A US study of 1,800 homeless people with psychiatric disabilities found that 5 years after programme entry, 88 percent of the clients housed by the programme were still housed. Locally, The People’s Project in Hamilton advises that 252 people have been moved from a homeless situation over the past 2 years, and that 94 percent of them have retained their housing.
Phil Twyford: Will she be advising her colleagues that the only long-term sustainable way to reduce homelessness is by fixing the housing crisis, and when will she adopt Labour’s winning policies like banning foreign buyers, building 100,000 affordable homes, and stopping Bill English’s sell-off of State houses?
Hon AMY ADAMS: Well, the causes of homelessness are complex and varied, but what I would tell the member is that, actually, my colleague the Minister for Building and Construction has been in charge of a very comprehensive programme of work to address the complete failure under the Labour Government to see adequate housing built. As a result of the work programme of this Government, we are now seeing one of the most intense periods of construction activity in New Zealand’s history.
Freshwater Management—Commercial Water User Charge
7. Hon DAVID PARKER (Labour) to the Minister for the Environment: Does he stand by his answers to oral questions No. 6 and No. 11 on Tuesday this week?
Hon Dr NICK SMITH (Minister for the Environment): Yes, in the context in which they were given.
Hon David Parker: When someone goes into the supermarket or gas station and buys a bottle of pristine New Zealand mineral water, do they own the water in the bottle or just the bottle?
Hon Dr NICK SMITH: I suspect it is not much different from owning the soft drink or owning the beer or even my home brew.
Hon David Parker: Given his obvious commercial expertise, at what point in the supply chain did the water in the bottle gain a monetary value—was it when it was drawn from the source, when it was bottled, when the distributor bought it from the bottler, when the distributor sold it to the retailer, or when the customer bought it?
Hon Dr NICK SMITH: It is not nearly as complicated as the member would have it. When someone puts water in a pipe—say, a council—it is then able to charge for the services of the storage, for the treatment, and the like. When water has services added to it, such as when it is made into my fine home brew, it adds in value considerably.
Hon David Parker: Why should companies using New Zealand’s precious water as a raw material for what they are bottling not pay a royalty back to the New Zealand public?
Hon Dr NICK SMITH: The Government is happy to have a discussion about charging for water, but we need to do so in an equitable way. When I hear proposals from the likes of Stuart Nash of charging 10c per litre, a price that would devastate our dairy industry—
Hon Steven Joyce: The horticultural industry.
Hon Dr NICK SMITH: —or the horticultural industry, like in his own area—then I just simply say that the Government needs to go about this in a fair way that considers all water users.
Stuart Nash: I raise a point of order, Mr Speaker. This is the second time that the Minister has said that I have made a statement that I have never made, and I would like to see evidence of it.
Mr SPEAKER: I will hear from the Hon Dr Nick Smith before I make a ruling.
Hon Dr NICK SMITH: I would be happy to table the article of the newspaper in which he advocated a 10c a litre charge on all water users.
Mr SPEAKER: Order! The addition by the Hon Dr Nick Smith will not actually help the order of the House. The member needs to look at Standing Order 359. If he feels he has been misrepresented, then there is a process that he can follow. It is not a matter of raising it as a point of order in the House.
Hon David Parker: Is the Minister surprised that New Zealanders can see through his delaying tactics on applying a royalty to commercial water use until after the election in the same way they saw through his low water standard categorising polluted rivers as swimmable?
Hon Dr NICK SMITH: On both fronts I am more than happy to stand on this Government’s track record of water reform, because when that guy was in Government for 9 years Labour did absolutely nothing.
New Zealand Cyber Security Strategy and Action Plan—Annual Report 2016
8. JONATHAN YOUNG (National—New Plymouth) to the Minister for Communications: What reports has he received on the implementation of New Zealand’s Cyber Security Strategy and Action Plan?
Hon SIMON BRIDGES (Minister for Communications): Today I released the first annual report on the implementation of New Zealand’s Cyber Security Strategy and Action Plan, launched in December 2015. The report sets out progress under the four goals of the strategy: achieving cyber resilience, building cyber capability, addressing cybercrime, and enhancing international cooperation. I am really pleased to report that New Zealand is making really good progress to improve its cyber-security, and although there is no room for complacency, this Government is leading an ambitious programme of action to fulfil the vision of a secure, resilient, and prosperous online New Zealand.
Jonathan Young: What are the next steps under the strategy and action plan to improve New Zealand’s cyber-security?
Hon SIMON BRIDGES: The areas of focus this year include supporting the development of New Zealand’s cyber-security industry, working on our cybercrime plan, helping small businesses to protect themselves online, and the launch of a national Computer Emergency Response Team (CERT). CERT NZ will open its doors next month as the central place for New Zealanders, businesses, and Government agencies to report cyber incidents. It will provide trusted advice on preventing cyber threats, responding to incidents, and will work with CERTs in other countries on incidents that have cross-border implications. The establishment of CERT NZ will help to protect critical infrastructure in the digital economy as we play our part in the global effort to improve internet security.
Freshwater Management—Commercial Water Exports and West Coast
9. EUGENIE SAGE (Green) to the Minister for the Environment: Should New Zealanders get a say over whether a private company can extract glacial water flowing out of a national park in the heart of the South West New Zealand Te Wāhipounamu World Heritage area?
Hon Dr NICK SMITH (Minister for the Environment): All New Zealanders get an opportunity to have a say on how water is managed when a council works through its regional plan, as occurred with the West Coast in 2014. Whether they get a say on an individual application is up to the council, depending on the scale of the application, the rules that it has in its plans, and its environmental effects on the application. The Okuru Enterprises proposal in South Westland was originally publicly notified and submitted on when first consented.
Eugenie Sage: Is it acceptable that the West Coast Regional Council repeatedly renewed a 25-year-old consent behind closed doors to allow Okuru Enterprises to sell pristine water from a national park, before it finally lapsed?
Hon Dr NICK SMITH: The West Coast Regional Council went with five authorities that were affected parties: the Department of Conservation, Fish & Game New Zealand, the local iwi, the Westland District Council, and a local landowner. All five of those parties approved of the renewal.
Eugenie Sage: Is he saying that New Zealanders have no right to have a say on water exports, even where the water comes from one of our national parks and where it is being taken in such large quantities that it is not being put in bottles but is being pumped into ships?
Hon Dr NICK SMITH: Every New Zealander had an opportunity, when the West Coast Regional Council publicly notified its water plan, to have a say. Given that this application has been sitting around for about 20 years unused, there was ample opportunity for the member or anybody else to be able to submit to the regional council that there should be limits or some special process around such applications.
Eugenie Sage: When over 16,000 New Zealanders signed a petition opposing giving away our water, how is it OK for the regional council not to tell anyone about this plan to take billions of litres of water from our national park?
Hon Dr NICK SMITH: I remind the member that New Zealand uses only 2 percent of its freshwater resources. I further remind the member that the Government does not support a ban on the export of water, which last year was only 8 million litres—a very, very small fraction of the amount of water that is extracted in New Zealand.
Eugenie Sage: Does he accept that his proposed changes to the Resource Management Act, as our major environmental law, will make it even harder for the public to have a say on projects like this bulk water export being given away for free?
Hon Dr NICK SMITH: Quite the opposite. The resource management law reform bill before Parliament will improve the way our fresh water is managed. It is a very simple area. Most people in this Parliament would welcome stock being fenced from our waterways, and I would invite those parties that are genuinely concerned about water quality to support that bill so that that national requirement can come into place.
Resource Legislation Amendment Bill—Progress and Collaboration with Other Parties
10. DAVID SEYMOUR (Leader—ACT) to the Minister for the Environment: When will the Resource Legislation Amendment Bill be ready for Committee stage?
Hon Dr NICK SMITH (Minister for the Environment): It is ready now. My ambition would be to have the bill passed through next month, but, ultimately, the legislative priorities are determined by the Leader of the House.
David Seymour: How does the Minister think the public will interpret the fact that it has become ready within 2 hours of ACT and United Future challenging the Government to support the amendments and put the bill up after 2 years of wrangling with the Māori Party?
Hon Dr NICK SMITH: I have sought to get the support of all of the Government support parties. The difficulty is that ACT has said the bill does not go far enough; the United Future party has been concerned that the reforms go too far. As a consequence, we have negotiated in good faith with the Māori Party. We have a good bill and the most substantive reforms to the Resource Management Act (RMA) in 25 years, and if, actually, we want more houses built, we want more jobs, and we want better environmental control, then parties will support that bill.
David Seymour: Did the Prime Minister at the time, John Key, not tell the Minister a year ago that the offer made today was on the table, and has been for the entire interceding period?
Hon Dr NICK SMITH: I have been very aware of both the ACT Party and the United Future party’s positions. They have actually been opposite. That is, the United Future party has been concerned that the reform has gone too far; the ACT Party has been concerned that it has not gone far enough. This is a centre-right Government, and I actually think that the reform and the agreement that we have reached with the Māori Party is a good way in which to advance this important reform.
David Seymour: I seek leave to table a letter from the ACT Party and United Future to John Key, Prime Minister at the time, offering a united front last March.
Mr SPEAKER: Order! It does not need further description. I will put the leave. Leave is sought to table that particular letter. Is there any objection to it being tabled? There is not.
Document, by leave, laid on the Table of the House.
David Seymour: How does the Minister believe his backbench colleagues will react to the fact that it has taken 2 years to pass a substantially watered-down Resource Management Act reform bill, which includes Mana Whakahono a Rohe requirements that duplicate requirements already in sections 6 and 7 of the Act?
Hon Dr NICK SMITH: Well, the provisions in sections 6 and 7 are very different from the iwi participation arrangements. I would remind the member that prior to this term of Parliament the Government put out an options paper on the RMA, and the iwi participation agreements were in the Government’s original proposals. They were there before we entered into discussions with the Māori Party, and they are there because the obligations to consult with iwi are already in the law, and it is our view that the iwi participation arrangements will ensure that occurs in a more effective way.
Hon Peter Dunne: Can the Minister recall when he last had discussions with either the ACT Party or the United Future party; was it 2015 or 2016?
Hon Dr NICK SMITH: I can very well recall that my office sought to seek a meeting with that member, and over 5 months the member could not find time—a frustration that was shared by my colleague Amy Adams, the previous Minister for the Environment. As a consequence, the Government entered into an agreement with the Māori Party, and we are a Government that acts in good faith for our parties, and that is why we will continue with our agreement with the Māori Party.
David Seymour: Does the Minister believe that anyone will take seriously his claim that this Resource Management Act amendment is more substantial than any of the previous 17 that have been made over the past 26 years, and, in particular, does he still stand by his statement that: “There’s no question in my mind that we have to break through the stranglehold that the existing legal metropolitan urban limit has on land supply” if we want to make housing more affordable; if so—
Mr SPEAKER: Order! You are now getting to three supplementary questions.
Hon Dr NICK SMITH: When we get to the Committee stage, I am looking forward to pointing out to that member the very specific provision in this bill that introduces an obligation on councils to provide more land for housing and industry.
Disability Care—Disability Support Services Providers and Funding
11. POTO WILLIAMS (Labour—Christchurch East) to the Minister for Disability Issues: Is the withdrawal of services for 1,200 disability support users across the country the “significant culture change” for the disability support system that she announced earlier this month?
Hon NICKY WAGNER (Minister for Disability Issues): No. The significant cultural change is about implementing the Enabling Good Lives principles, which is something that disabled people have been advocating for for many years. It will provide disabled people with more choice, more control in their lives, and more opportunities—something that I am sure the member would support.
Poto Williams: Is she able to guarantee that the 1,200 people that IDEA Services Ltd is saying will have their services cut will be able to access appropriate replacement services?
Hon NICKY WAGNER: Yes. The services have not been cut. IDEA Services Ltd has been reviewing its business to take a strengths-based approach and to focus on the areas that it is especially good at, which are community, residential, and day services.
Poto Williams: Does she accept that IDEA Services Ltd faces limited funding and pressure on its services, requiring it to cut its disability support service business by 5 percent?
Hon NICKY WAGNER: No. In actual fact, IDEA Services Ltd’s funding has increased from $143.5 million last year to $151.9 million this year. This is absolutely in line with the increases that we have had right across the disability sector.
Poto Williams: Has IDEA Services Ltd received sufficient funding from the Government to cover minimum-wage increases over the past 6 years?
Hon NICKY WAGNER: Yes. IDEA Services Ltd has had money for its “between service” appropriation, and it is part of the new service information that is coming forward.
Poto Williams: Which other disability support providers are at risk of being unable to maintain their current service levels due to almost 9 years of inadequate funding to meet even basic inflationary cost pressures?
Hon NICKY WAGNER: That is not true. This Government is absolutely focused on delivering quality disability-services, and every year since we have been in Government, the amount has increased. This year the total amount is $1.166 billion.
Small Businesses—Online Tools and Workplace Policy Builder
12. BRETT HUDSON (National) to the Minister for Small Business: What recent announcements has she made on how the Government is supporting small businesses to save time and effort using online platforms?
Hon JACQUI DEAN (Minister for Small Business): Earlier this week I announced the addition of a new tool on Business.govt.nz, the Government’s one-stop shop for small business. Business owners can now use the workplace policy builder to create policies on flexible work, IT, social media, leave, and holidays. These policy builders are up to date with legislation and regulation, and users can choose to be notified on any changes to ensure they stay up to date. I also announced that more policies will be added to this tool in the future. These tools are aimed at helping small business by making workplace policies quick and easy to develop, allowing small-business people to spend more time doing what they do best, which is running their business.
Brett Hudson: How else can Business.govt.nz support small-business owners?
Hon JACQUI DEAN: Business.govt.nz is part of the Government’s commitment to support small businesses by bringing together advice and guidance from across Government into one place to save businesses time and to help them make their businesses more successful. Business.govt.nz can help small-business owners with business plans, health and safety, tips for hiring, and much more. There were more than 2 million visits to the website in 2016, double that of 2014, showing that small-business owners see the value of the Business.govt.nz website.
Bills
Regulatory Systems (Building and Housing) Amendment Bill
Regulatory Systems (Commercial Matters) Amendment Bill
Regulatory Systems (Workplace Relations) Amendment Bill
Third Readings
Hon SIMON BRIDGES (Minister for Economic Development): I move, That the Regulatory Systems (Building and Housing) Amendment Bill, the Regulatory Systems (Commercial Matters) Amendment Bill, and the Regulatory Systems (Workplace Relations) Amendment Bill be now read a third time. It gives me great satisfaction to support this legislation at the third reading. In 2014 the Productivity Commission’s report found that it can be difficult to find time in the parliamentary calendar for repairs and maintenance of existing legislation. These amendment bills are the vehicles for smaller regulatory fixes, to be progressed in a timely and cost-effective manner in order to deliver the flow-on benefits to business and the wider economy. In line with this Government’s objective of regulatory transparency, the exposure draft of the Regulatory Systems Amendment Bill was released in December 2015.
The exposure draft served its purpose, in that business and relevant organisations provided feedback on the proposed amendments, and their feedback has been reflected in the bills before you today. During the select committee process 25 submissions were received that covered technical and detailed information pertaining to the bills. I would once again like to thank the Local Government and Environment Committee, the Transport and Industrial Relations Committee, the Commerce Committee, and all of the submitters for their work on and contribution to making the bills more effective and ensuring that Parliament’s intent is clear. I would also like to express my appreciation for the support received in the House for this legislation.
The three regulatory systems amendment bills are omnibus bills that contain amendments to 20 Acts administered by the Ministry of Business, Innovation and Employment. These amendment bills will improve the law by clarifying and updating statutory provisions, addressing regulatory duplication gaps and errors, bringing the legislation up to date with relevant public expectations, as well as removing unnecessary compliance costs. The amendment bills will improve laws that affect business, building and housing, energy, communications, commerce, consumer affairs, and workplace relations regulatory systems. These bills reduce the chance of regulatory failure and unintended consequences that harm the well-being and prosperity of New Zealanders. I commend these three bills to the House.
PHIL TWYFORD (Labour—Te Atatū): We are supporting the regulatory systems amendment bills through the House. It is one of the few bits of legislation from this National Government that we can support in all good conscience. This is an impressive collection of minor technical amendments, many of which are going to fix drafting errors and fine-tune a number of small problems in the building and construction space, as well as workplace relations and commerce. I am going to confine my comments to those that apply to the building and construction elements of this legislation.
It probably goes without saying—but I will say it anyway—that we wish that there was a lot more legislation dealing with the many policy defects of the current Government’s approach to building and housing. But we are here to discuss this legislation, so let us do that. There are three things that I want to talk about: first, the changes to the Building Act; secondly, the changes to the Unit Titles Act; and, thirdly, the changes to the Construction Contracts Act.
First, the Building Act. That is probably, of the three elements I am going to talk about, the most minor. There are a number of—half a dozen, I think—very small changes that are really just minor fixes to drafting errors and, in particular, some cross-referencing problems, so we can dispense with that pretty quickly.
The Unit Titles Act has more changes, and more substantive changes, but, again, it is worth noting in this debate that the Unit Titles Act is long overdue for reform. It is a part of the building and construction industry and the accommodation sector in New Zealand that is burgeoning, and the current legislation is simply not fit for purpose. I look forward to seeing the results of the wider review of the Unit Titles Act that the Minister is working on.
In particular, there is a real need for much tougher requirements for bodies corporate around transparency and accountability. There is a need for requirements for funded maintenance plans to avoid owners of multi-unit dwellings getting into all sorts of problems when they get hit with the need for expensive maintenance plans that have not been properly planned for or properly funded. So there is a big need for an overhaul of the governance of bodies corporate. That is not in this legislation, and that is fine, but I hope we see it very seen.
There are a number of things this legislation does to the Unit Titles Act, which I will just mention briefly. It basically clarifies the existing law where an estate or an interest in land in a unit title development is acquired under the Public Works Act. It requires a new unit plan to be developed, or an amendment to the plan, and that to be deposited, and, if the body corporate requests it in writing, for the authority to undertake the public work at its own expense and prepare a new unit plan or amendment to the unit plan.
There is the issue about the assignment of interests. The legislation provides, among other things, for the initial process of assessing and assigning those ownership interests when a unit plan is deposited. Further, there is an issue about the distribution of proceeds. The legislation provides that the proceeds received by a body corporate as the result of any sale or lease or licence over the common property must be distributed to the unit owners on a proportional basis. Finally, in relation to the Unit Titles Act, it tidies up a few things in relation to easements and covenants. So it extends the powers of the body corporate in relation to easements and covenants over the common property. We are perfectly happy to support all these things. They clarify, they tidy up the law, and they certainly make some minor improvements.
Probably the thing that is the most pressing in this legislation, from my perspective anyway, is the changes that are made to the Construction Contracts Act. The legislation does a couple of things that I think are really important. The first is that the legislation provides the obligation for a construction company or a contractor to hold retentions—that is, those moneys that a contractor or the client holds until the job is complete, or until a period has passed until all possible defects have been sorted out, are held in trust. We were very glad to see, and we supported, the passage of the Construction Contracts Bill through the House and, in fact, that very provision that retention moneys should be held in trust so that if a construction company goes bust the retention moneys that, ultimately, should be paid to the contractor or the subcontractor for work done are not lost—because we have seen far too many cases in this country of construction companies going bust and the contractors and the subcontractors down the chain have lost out big time. It is a defect in our construction industry that is long, long overdue for reform.
I want to once again acknowledge the work of my colleague the Hon Clayton Cosgrove, who I think convinced the Local Government and Environment Committee and convinced the Minister, the Hon Dr Nick Smith, of the importance of that provision. So what the legislation does is it clarifies the Construction Contracts Act 2002 to make it clear that contracts entered into prior to 31 March, the end of this month—that the trust provisions do not apply to contracts entered into prior to 31 March. Without that clarification, that was causing a lot of uncertainty and stress for construction companies.
The other kind of minor clarification is that it allows companies that are affected by these retentions provisions to use other financial instruments, not just cash. There were a lot of submissions to the committee and advice that a conservative reading of the provision in the Construction Contracts Act would have allowed, effectively, only cash to be used. It would have actually required the companies affected, probably, to borrow money to put aside the retentions and hold them in cash. It would have added really significant costs to those companies, and by this kind of more expansive definition, it allows insurance products and bonds and other things to be used to be held in trust as retentions.
So those are the main points I want to touch on. We are happy to support all of those, and we appreciated the chance to have a full debate on all of these issues during the Committee stage. In finishing, let me just reiterate our view that there is a lot of work to be done in this area in the building and construction industry. The ongoing work of creating a regulatory framework that allows significant improvements in productivity to occur to get a better balance of the liabilities within the industry—the Minister has been talking for some time about mandatory warranties for residential construction, and still, really, we have not seen any progress on that after 8 years in Government. Maurice Williamson was talking about it when he was the Minister. So although this legislation makes some—
Hon Member: Was he Minister?
PHIL TWYFORD: Maurice Williamson used to be the Minister for Building and Construction. In the last 8 years he was probably the best Minister for Building and Construction we have had.
So there are some minor fixes and the cleaning up of drafting errors. We are happy to support that, but there is so much more to be done in the area of the building and construction regulatory framework, not to mention a long list of things, which I would love to go through, that are needed to fix the housing crisis that has built up under this Government. Thank you.
The ASSISTANT SPEAKER (Lindsay Tisch): Not in these bills.
JONATHAN YOUNG (National—New Plymouth): I do not wish to be ungenerous to my colleague Phil Twyford across the way, in his incredible heaping of praise on Clayton Cosgrove, but I was the chair of the Commerce Committee, which put those recommendations in this legislation through to the Minister. All of that committee and the Minister did a great job regarding this retentions issue, which we all know is incredibly important to the construction industry. I think we have got it right, and we all did it, with the support of people like Clayton Cosgrove. So, on that basis, I am happy to commend this legislation to the House.
CLARE CURRAN (Labour—Dunedin South): I have to say, what a disappointing contribution. I was going to give that member over there, Jonathan Young, some credit for chairing the Commerce Committee around the Construction Contracts Amendment Bill—he did chair the select committee—but can I remind him that when that bill went back to the House from that committee, it did not include the retention scheme in it. It was Clayton Cosgrove who put Supplementary Order Paper (SOP) 439 on the Table at the Committee stage for a retention scheme. It was the Labour Party members who pushed the retention scheme, and put a SOP on the Table. Then we had an election and then the Minister saw the light and actually put in his own SOP to the Committee of the whole House stage, which included a retention scheme.
A history lesson, Mr Young—maybe you were not paying enough attention, because the Labour members were paying attention. It was the Labour members who pushed for a retention scheme. It was Craig Foss who was the Minister of Commerce at the time. He said “Oh, no, no, no, no. We need to do a lot more work on that.” and “Oh yes, we’ll have a think about it.”, and he saw the light and felt the pressure from the construction industry. This is not to mention the fact that Jenny Shipley, who was one of the directors of Mainzeal, which was the construction company that collapsed in 2013, came under huge scrutiny as an industry that was so badly managed—when these lead contract firms could go bust, with $153 million owing, and none of the subcontractors were being paid out. It was an absolute disgrace. Jenny Shipley, the former National Prime Minister, was part of an inquiry into how that collapse happened, and the Minister of Commerce at the time could not even bring himself to include a retention scheme, despite the advice that was coming at him, despite the pleas of the construction industry to protect all those subcontractors down the line.
Anyway, this is the closing—hopefully, this is the closing—of that sorry chapter in our history. It has taken at least 4 years for the legislation to be enacted. And the reason we are passing this legislation today, in the House—we could have waited another month at least—is clause 138 in the Regulatory Systems (Commercial Matters) Amendment Bill, which is one of the three bills that are being put together in this third reading. Section 11A of the Construction Contracts Amendment Act, amended by clause 138, requires this new retention scheme to be enacted from 31 March, which is the end of next week, and that new retention scheme was amended at this select committee, the now Commerce Committee, to include two instruments for the retention of those moneys. One is for the retention money to be held in cash, or in liquid assets that can be easily converted into cash, and the second mechanism is one such as bonds or insurance.
It is quite historic. It is important. We absolutely support it. As you can see, the impetus for this came from this side of the House. Clayton Cosgrove deserves credit for that, for pushing the Minister into actually including retention schemes in the bill in the first place. So it is worthy of note and I congratulate him on that.
These three bills before us today are changes to 20 pieces of legislation, all administered by the Ministry of Business, Innovation and Employment. They are fixing regulatory gaps, errors, compliance issues, and generally updating parts of the law, including the Companies Act, the Commerce Act, the Construction Contracts Act—as I have mentioned—the Financial Markets Conduct Act, the Employment Relations Act, and the Unit Titles Act. There are others but those are the main ones.
I just want to touch on a couple of other issues. One is also in the Regulatory Systems (Commercial Matters) Bill and relates to the financial reporting for small New Zealand branches. The change for small New Zealand branches of large overseas companies—we accept the logic of this change. We accept the arguments that were put to us by officials who took the trouble to go away and come back with a lot more information about why this was necessary and the anomalies that currently existed where you had got a large overseas company and they had got a small branch in New Zealand and yet they had an auditing requirement. You also then had subsidiaries of large overseas companies that did not have an auditing requirement. So there was a concern that it was potentially going to create a chilling effect for large overseas companies to not set up small branches in New Zealand. So I do not think we have got any issue around the fact that this change means that these small branches do not have to fulfil an auditing requirement.
Questions, though, were asked were around what the definition of a large overseas company was. I still have a bit of a niggle around this. It is something that may need to be looked at a bit further down the track, but it is that the definition of a large overseas company is one that has annual revenue of $10 million or more and total assets of $20 million or more, which has been set at one-third of the amounts for defining a large New Zealand company, which is $30 million annual revenue and $60 million in total assets. So what that means is there is a discrepancy in that definition, and I am still not convinced that I understand the rationale for that, and also around the transparency and accountability. If they are not being audited how is transparency being afforded? So there are still a few little niggling questions around that.
I just have a comment with regards to the Regulatory Systems (Building and Housing) Amendment Bill, which we have before us. In the Committee stage of the discussion, a number of things came to light around the changes that were recommended by submitters that were considered to be out of scope by the officials. We were given an explanation in the House by the Minister in the chair at the time, Michael Woodhouse, who said that this was omnibus legislation, it was a step above a statutes amendment bill, and, therefore, did not deal with matters of substance and policy, and that that was why matters were considered to be out of scope.
We know that there is a wider review going on into the Unit Titles Act, but it seemed inconsistent for Minister Woodhouse to be saying that when this legislation does consider matters of policy and it does consider matters of substance in other parts of the legislation. I have a concern around the timing—that some of these changes did seem to be inconsistent. They were accepted on the one hand but not on the other, because they were considered to be out of scope. As to how those matters are going to be dealt with, I would like—and clearly this is not Committee stage, but I am putting it on the table that there are many outstanding matters from these bills that have not been dealt with yet that relate to wider issues of policy. I guess it is just a trademark of this Government that it does stuff around the edges and often does not deal with the really substantive issues that it should be dealing with—the ones that really matter to the people of New Zealand.
We support these pieces of legislation. As you can see, we have had quite a lot of impact and have driven a lot of the changes, particularly around the amendment to the Construction Contracts Act. It is important that it does pass so that this retention scheme can come into effect on 31 March, because this new retention scheme will apply to the contracts entered into or renewed after that date, and that is important for our construction industry.
ANDREW BAYLY (National—Hunua): It is a pleasure to be talking to this regulatory systems legislation. There are three very important parts. I was lucky to be on two select committees as these bills worked their way through. Sometimes in Parliament you have an accord, a concurrence, and even a sense of unity. It is a beautiful thing when everyone comes together and agrees that legislation like this is important and that they are going to support it—I think that is a great thing—and I do too.
BARRY COATES (Green): Tēnā koe e Te Māngai o Te Whare. I am rising to take a call on three bills on regulatory systems, and I want to concentrate on the Regulatory Systems (Commercial Matters) Amendment Bill. This bill is comprised of amendments to 16 Acts, and, as the preface says, one of the reasons to amend these 16 Acts is to fix the mistakes and inconsistencies from previous bills. It does seem to me, as a new member of Parliament, that we spend an inordinate amount of time fixing mistakes from previous bills.
The Green Party broadly supports this bill. We support it because there are elements in the bill that we believe will reduce compliance costs for small business. The Green Party supports smart regulation that reduces compliance costs, especially on small to medium sized enterprises. We support regulation that is relevant and accurate, fit for purpose, and effective in promoting the public interest above all.
In the consideration of this bill I want to focus on a couple of clauses in particular. The first clauses are clauses 93 and 94—that is, the clauses that relate to the Financial Service Providers (Registration and Dispute Resolution) Act of 2008. The Minister for Economic Development has stated that these provisions, these clauses, are about ensuring the integrity of the Financial Service Providers Register. I do not think for a minute that the amendments in this bill will do that. The amendments in the bill will, basically, allow the disqualification of companies that do not have a disputes settlement process.
However, there are far deeper and more pervasive problems with the Financial Service Providers Register. The Financial Markets Authority has received 340 complaints, in the form of misconduct reports emanating from 83 different countries, about companies—financial service providers—that are registered under the New Zealand scheme. The pattern is this: dodgy companies overseas are able to lend credibility to their dodgy operations by saying: “It’s OK. We’re a member of the New Zealand register of financial service providers.” What does registration mean under that provision? Absolutely nothing. What kind of compliance measures are there for companies that would want to continue their membership of this register? Absolutely nothing.
So what we have is companies around the world that are undertaking dodgy practices, using lent credibility from New Zealand’s reputation. We have had far too much of that in our financial sector. We have had the Panama Papers and the widespread perception that New Zealand has been a tax haven. We have had the delay in implementing anti - money-laundering provisions, which are only today likely to come to the House despite calls for that to happen a very long time ago. And, by the way, there is the removal of New Zealand from the EU’s white list of approved countries in terms of financial probity.
So we have a pattern here. We have a pattern that liberalisation of our financial services sector has allowed a credibility to be given to dodgy companies that act in the name of being a New Zealand financial service provider on the New Zealand register. So we think that including just the power to deregister a financial service provider where it is not a member of a disputes settlement panel, as provided under this bill, is grossly inadequate to the task of actually restoring our integrity and our reputation internationally.
It also gets worse. The Ministry of Business, Innovation and Employment (MBIE) has put out a consultation paper on this very issue—belatedly—but, unfortunately, MBIE is not proposing in its consultation paper to put the disclosure requirements and transparency into legislation. It is proposing to have the power of that through regulation, and, from our perspective, that is insufficient. There are deep concerns about the integrity of our financial service provision, and that needs to be enacted in the form of legislation. It will not build confidence, including in the issue of commissions for financial advisers and insurance advisers, in particular, over the sale of insurance.
We do support this bill. We have concerns that the register of financial service providers does not go nearly far enough. However, there are other things that we support in this bill. We broadly support a number of the provisions that will help small companies. We support the flexibility around financial statements and the alignment of small branches of overseas companies with small subsidiaries that have revenues of under NZ$10 million, so that they no longer would require an audit to be undertaken for their New Zealand operations. They will, however, still have to prepare financial statements. We also applaud the flexibility for friendly societies and credit unions. In particular, we support amending the New Zealand Superannuation and Retirement Income Act to provide education to the public about financial decisions, to help build financial capability. We think that is a really important role of the commission. There are also levies under the Commerce Act that will support the work of the Commerce Commission.
So there are a number of these changes that we do support. There is one other that I would like to name in particular, which is the provisions to allow netting, which has to do with keeping up with international best practice—particularly, the reforms of derivative markets.
If I could just conclude with a note on one other important part of this legislation, it is the amendment to the Construction Contracts Amendment Act 2015. We support implementation of the amendment to this Act, which, as previous speakers have said, protects the bonds of subcontractors. We recognise that the implementation of this provision, which the Green Party has supported all the way along, to protect subcontractors from people running off with their bond money—we applaud the fact that there is flexibility in the form in which that bond can be held. We pressed in the Commerce Committee for that to be an absolutely credible form of financial instrument that has integrity and is not subject to high risk, and we are pleased that the bonds can be held in only a narrow class of highly regulated financial instrument, which should provide that integrity while improving the flexibility and also allowing subcontractors recourse to a third party.
So these changes are welcome. We support the overall legislation. We look forward to the Government taking forward many of the provisions that are not in this legislation, particularly those that relate to restoring the integrity of New Zealand’s reputation for financial services and our reputation for being a country that does not tolerate corruption. We have been lucky enough on one measure to be ranked highly in the world in terms of integrity and anti-corruption measures. Looking at the methodology of the study, I am not sure that we deserve it, but we need to not take this lightly and we need to ensure that our reputation is maintained. Thank you.
FLETCHER TABUTEAU (NZ First): It is a pleasure to take a call on this, the Regulatory Systems (Building and Housing) Amendment Bill, the Regulatory Systems (Commercial Matters) Amendment Bill, and the Regulatory Systems (Workplace Relations) Amendment Bill. I do want to start by praising Mr Bayly in particular, although I would like to include Minister Bridges, and I think Mr Young also deserves to be included in the praise. I think, in their case, less is more. Mr Bayly proved that with his 30-second contribution to the House, and I do commend the Minister for taking all of 2 minutes to tell the people of New Zealand what is in this legislation, why it is good for them, and how it will change their lives. It was probably the best contribution I have heard from Minister Bridges in years, or for at least as long as I have been in this House.
So I would like to continue on this positive and collegial motif, if you will, and say that it is genuinely nice to speak in favour of Government legislation when New Zealand First agrees, in the main, with a large proportion of the legislation. I do accept, for once—well, not “for once”, but very rarely do I accept that the intent of the legislation as described by the Government is what will be achieved by the legislation it actually provides to the House. But in this case I have to say the intent is good and, actually, the legislation itself backs it up and does what the Government says it will.
I think there is a reason for that. I think that we have to reflect on the fact that we are talking about legislation that originated from the—I think it was July; no, June—June 2014 Productivity Commission’s report. It made the note, at the time, of how difficult it is to repair and fix up legislation in the House. It takes time and it is quite difficult to get it advanced. We are talking about 20 pieces of legislation here that need—it was described as repairs and maintenance. I think it is fair to say that 2014—it has probably taken a few years too long for this Government to progress this legislation this far. We are talking about businesses and people who have missed out on potential flow-on benefits or who have had to bear a burden of extra or entrenched costs because this legislation had not been changed in a timely fashion.
I have had several conversations with businesses and individuals about this legislation, and, I have to say, what I have heard from them actually reinforced the submissions to the select committee. These amendments will achieve effectiveness and efficiency by clarifying and updating statutory provisions. That is a very rare and privileged thing for me to say in regard to Government legislation. These bills will reduce the chance of regulatory failure and the unintended consequences that can harm the well-being of New Zealanders. The amendment bills will improve the laws that affect business, building and housing, energy, communications, commerce and consumer affairs, and workplace relations regulatory systems. In the main, each of the changes are small, and, again, I agree with the Government that they do not warrant stand-alone legislation. [Interruption] No, no, Mr Ross.
There was an exception to that, and, actually, the Local Government and Environment Committee progressed, I think it was clause 20 of the commerce regulatory amendment bill, which is around unit titles, where the committee said that it was probably out of the mandate and that we should not go there. But, to be fair to the select committee, that was what was done.
It seems to have worked with the tax legislation—this kind of pre-conversation and engagement with the public before the Government actually drafts these bills. These regulatory reform bills are a case in point, where the Government did use—what did it call it—an exposure draft. It was an exposure draft being used, effectively. Actually, although I commend the Government’s legislation on this day, what I think it reflects is engagement with the community before it actually drafted the legislation. It actually listened—well, not to the submitters but to the feedback from shareholders and stakeholders. And then it did not actually attempt to change that feedback too much, because, in the mind of the Government, it was small and inconsequential, as it were.
With not too much time to go—it seems to have been a theme in the House to acknowledge in particular the changes to the Construction Contracts Act. New Zealand First and I acknowledge, along with others—and, actually, I do wish to acknowledge individually—the work of Clayton Cosgrove on the select committee with regard to his efforts to broaden the way that the retention of money for subcontractors is protected.
I do just want to dwell on that part of this legislation, because it is worthy of note. New Zealand First has, for a long time, been making the call for those protections. The amount of engagement we have had—particularly with those subcontractors in Christchurch who have had to deal with, you could say, dodgy business practices, especially the sole-operator business down in Christchurch, and what it has meant to individuals’ lives. If you will permit me, Mr Assistant Speaker, the committee did propose several changes that made it clear to apply for those retention obligations. From the end of this month, I believe, the Construction Contracts Act will require that retention of moneys, which will be held under commercial construction contracts in trust. This ensures that developers and head contractors must protect retention money for the benefit of those subcontractors or payees.
The feedback was fair, though, that it does make it hard on some of those big operators in terms of retention of that money in trust and then their working capital. But then, again to the credit of the select committee, it acknowledged that it would be expensive and difficult for some payers under the Construction Contracts Act requirements, so they were given options, basically. New Zealand First did support the committee’s proposed amendments, which will give two options—the second being an insurance or payment bond as an instrument to provide third-party protection for the retention of said money. The committee did make it clear that any financial instruments obtained must meet strict requirements.
I will just take this brief opportunity to again acknowledge the Government’s efforts here. These actually are good fix-up bills. They are good tidy-up bills. New Zealand First is pleased to, for once, commend legislation to the House. Thank you.
BRETT HUDSON (National): I rise in support of this legislation. On the commercial matters pieces, I am particularly pleased with the work around the Construction Contracts Act—the idea that only new contracts formed after 31 March or contracts renewed after that date will have the retention scheme applied to it, and the flexible and very pragmatic ways of permitting other means for the holding of retention moneys.
It is a great piece of legislation. I commend it to the House.
MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti): E Te Māngai o Te Whare, tēnā koe. Otirā ngā mema o Te Whare nei, tēnā tātou katoa. I am pleased to take a call on this, the third readings of the Regulatory Systems (Building and Housing) Amendment Bill, the Regulatory Systems (Commercial Matters) Amendment Bill, and the Regulatory Systems (Workplace Relations) Amendment Bill, and to say that Labour supports the third and final readings of these bills. Just to remind us, these are three regulatory bills, being amendments to maintain and improve the effectiveness and efficiency of our regulatory systems. That can include policy changes that involve continual improvements to, and repairs and maintenance of, regulatory systems, but not significant policy changes. It also differs from statutes amendment bills—those that are designed for technical, short, and non-controversial amendments.
As a member of the hardest-working select committee, the Local Government and Environment Committee, I am going to focus my contribution on the building and housing bill, and just say that we had a very robust select committee stage. We were allowed not only to debate the bills part by part but to debate every single bill separately from each other.
I do want to note that, particularly regarding the building and housing amendment bill, we had one amendment to the Building Act 2004, which was really about clarifying the role of the territorial authority. But the substantive amendments to this particular bill were in Part 2, “Unit Titles Act 2010”, where we saw 16 amendments. The 16 amendments were related to addressing clarification and improvements in unit plans, body corporate operational rules, reassessment of ownership and utility interests, registration of easements and covenants, leases and licences of common property, and extraordinary general meetings.
But what I want to raise in my contribution are the three particular submitters that I believe raised very important issues through the select committee process but found themselves outside the scope of this particular bill. I do want to note their submissions because I think, as I share what these submitters said, it will become quite clear to members of this House.
The first submission presented was from Property Council New Zealand. Essentially, although it supported the bill, in relation to Part 2, “Unit Titles Act 2010”, it felt we could have gone a bit broader in terms of introducing a dispute resolution regime. It talked extensively about making guidance material available to bodies corporate, the provisions around staged developments—particularly as, clearly, we have a housing shortage in this country, and we want to ensure that if we want to build, we want to remove barriers around staged development—the default body corporate operational rules, and the process that must be followed when a unit title development is split into two or more separate developments.
So here an organisation, Property Council New Zealand, saw an opportunity to submit to the select committee to enhance the regulatory systems around building and housing. Unfortunately, like I said, its submission was found to be out of scope.
The second submitter was Auckland Council. Auckland Council was asking for an extension of a wider review, and I will touch on that later—that there is a currently a broader review of the Unit Titles Act.
The ASSISTANT SPEAKER (Lindsay Tisch): Order! When you are in a third reading speech, anything that has been ruled out of scope in the Committee stage cannot be debated in substance. You can mention it, but you cannot go into detail about it. I will just refer you to Speakers’ ruling 137/1. It says that “(1) Any matter not included in the clauses of the bill; (2) a clause that was ruled out of order [or] (3) the merits of an amendment … ruled out of order in committee;” cannot be debated. So you can mention them, but do not go into substance.
MEKA WHAITIRI: Thank you, Mr Assistant Speaker. So in mentioning Auckland Council around proposing, I guess, an anomaly between the Unit Titles Act and the Resource Management Act, I am seeking clarity around that.
The third one was the Transpower submission, which talked about the New Zealand Electrical Code of Practice for electrical safe distances around houses built under Transpower lines. The reason why I just wanted to draw the House’s attention to that goes to my previous point around the 2016 review of the Unit Titles Act, which talks about having a more comprehensive review of this particular Act. I mentioned it because I thought that was an opportunity to take on board some of the submissions that submitters had put in, to ensure that the review that is currently going on will perhaps factor some of the concerns that people like the Auckland Council, Transpower, and, of course, the Property Council were raising through this particular process.
When I look at the purpose of mending these regulatory systems, it is about improving our systems. So I mention that only because it would have been nice to hear from the Minister at the time—and I did ask—where we were up to with that review and to get some assurances that people who I think were making very useful submissions to this process were getting heard by the Government. I wanted to raise that only because I think we have got an opportunity here in front of us to make sure that our regulatory system in relation to building and housing is at its most fit for purpose for now and as we go into the future. I do want to note that, even though these amendments have been part of an ongoing commitment from the Government—which we support—the review and the timing of the review happening during the third reading of the legislation, for me, threw up a lot of lost opportunities, where we could have lined up the review with the reading of these regulatory systems bills that we have here today.
So, again, I am happy that we are supporting the attempt by the Government to make our regulatory systems fit for purpose. My point was that I think in terms of the housing and building bill, there was potentially a lost opportunity. I do hope that the Minister in charge of the broader Unit Titles Act review does take on board those comments from the submitters, who took the time out to submit. I commend this legislation to the House.
Dr PARMJEET PARMAR (National): I am taking a very, very short call to support the regulatory systems amendment bills in their third reading. As we know, these omnibus bills make changes in a few Acts. All the changes are small but are very important. They are to make regulatory systems effective by removing gaps, errors, and inconsistencies in the various Acts.
Yes, the changes are small, but not making them can lead to various implications like causing frustration and confusion to the people involved. Overall, this is to make sure that our legislation is delivering the intent of the policy, so I support this legislation and commend it to the House. Thank you.
IAIN LEES-GALLOWAY (Labour—Palmerston North): It is my pleasure also to rise and speak in support of the Regulatory Systems (Workplace Relations) Amendment Bill, which is one of the three regulatory systems amendment bills that we are considering this afternoon and that have drawn support from around the House.
Dr David Clark: I hope your contribution will be more substantial than the most recent one.
IAIN LEES-GALLOWAY: I think this contribution, Dr Clark, will be a little bit more substantial—in length, if not in quality—than the previous contribution.
The Regulatory Systems (Workplace Relations) Amendment Bill is the one bill of the three that was considered by the Transport and Industrial Relations Committee, of which I am privileged to be a member. It is actually quite an important piece of legislation, and it has become more important as a result of its visit to the select committee than it was before it arrived there. I say that not to suggest that that is all credit to the excellent work of the members of the committee, although we did try very hard.
Actually, the officials identified areas where we could improve both the Employment Relations Act, which is what Part 1 of this bill does, and the Parental Leave and Employment Protection Act, which is what Part 2 does. We should be very much appreciative of the work of the officials who supported us in considering this legislation. Frankly, working people will be better off as a result of fixing the gaps that the officials identified.
Regulatory systems amendment bills are generally fairly technical in their nature. They do not represent a significant policy shift. They are designed simply to make sure that the principal legislation operates in the fashion that it was supposed to. These are tidying up technical errors in the legislation that mean the legislation does not operate in the fashion that was intended by Parliament when the legislation was originally passed.
I have spoken previously, but I do want to cover one more time the changes that were recommended by the officials at the select committee to the Employment Relations Act. Those changes pertain to the very few opportunities that a working person has to take a personal grievance when they are subject to a 90-day, no-rights-at-work, fire-at-will trial period. These trial periods are an affront to people’s natural justice. You basically have no rights for the first 90 days that you are at work if you are subject to one of these trial periods. Therefore, we need to ensure that anybody who is subject to one of these periods absolutely has their rights—the few rights that they do have—very, very carefully enshrined in law.
When we as a Parliament, rightly, passed the Employment Standards Legislation Bill last year, which got rid of those odious zero-hour contracts, we added three extra provisions to the Employment Relations Act under which an employee could challenge their dismissal under a 90-day trial period. However, unfortunately what we failed to do as a Parliament at that time was to correctly cross-reference the additional provisions to the part of the legislation that deals with 90-day trial periods, to make it clear that a person dismissed under a 90-day trial period was able to seek recourse for a dismissal under any of those purposes.
Not making these amendments in this legislation meant it was possible that it would have been more difficult for an employee to challenge their dismissal under a 90-day period and to lodge a personal grievance under any of those provisions. It is not entirely certain, and in fact we are not applying this retrospectively, because the advice that we received from the officials is that the unjustified dismissal provision is sort of a catch-all, and that any worker who is dismissed for any one of those additional reasons would have been able to take a personal grievance as it was an unjustified dismissal.
It is a sort of belt and braces approach, I suppose, in the legislation, which is important when you are dealing with a situation where people’s ordinary rights have been dismissed—not just diminished, but dismissed—under this legislation. As the Employment Relations Authority has correctly judged in respect of the application of a 90-day trial period and the application of it in the law, we need to adhere, word for word, to the law as it is written and as it was intended by Parliament. These are small but, in this case, incredibly important changes to the legislation.
The original changes to the Employment Relations Act, which continue to be supported by the House, ensure that the responsibility for a breach of the Employment Relations Act falls where it is appropriate. The policy purpose was that officers of a company, or a partnership, or a limited partnership, or a sole trader would be the senior people who have responsibility for the running of the organisation and are the people who are responsible in the event that that entity breaches any part of employment law. It is tidying that up to make sure that that policy is appropriately implemented.
Part 2 of the bill relates to the Parental Leave and Employment Protection Act. Again, an additional change was raised by the officials, and that was to ensure that anybody who comes back to work as part of a keeping-in-touch day—we have added this new idea of keeping-in-touch days, where someone who is on paid parental leave can come back and do a little bit of work, or maybe come back for an important meeting that is occurring at work, so they can keep in touch with their workplace while they are on paid parental leave. They can work up to 40 hours whilst they are on paid parental leave. If they work over 40 hours, then they are deemed to have returned to work and they lose access to their paid parental leave.
Unfortunately, we left the word “paid” out, and, again, there was potential there where someone who came back after the paid parental leave period was finished and worked more than 40 hours would lose access to their unpaid parental leave. Obviously, workers, beyond the paid parental leave that they receive, can then have up to a year of unpaid parental leave. Just the way the legislation was worded, there was some possibility that working more than 40 hours during that unpaid parental leave period would then cause the employee to lose their right to unpaid parental leave. That was never the policy intention, so we have inserted the word “paid”. It is one word, and it makes an awful lot of difference to the implementation of the policy.
Again, the original changes were in relation to when a person receives a payment when they have had a pre-term baby—again, this is a new provision in the legislation, which was also made as part of the employment standards legislation. This was part of the deal done between the ACT Party and the National Government when Sue Moroney’s bill to extend paid parental leave to 26 weeks did actually receive the support of the House but was subjected to a financial veto by the then finance Minister and now Prime Minister, Bill English, against the will of Parliament. Part of the deal there with the ACT Party was that there would be additional provisions for people who had pre-term babies. Again, we did not quite get the wording correct, and this legislation tidies that up.
So there are some small but meaningful amendments to our employment legislation. For those reasons the Labour Opposition is very, very happy to support these bills.
Regulatory Systems (Building and Housing) Amendment Bill read a third time.
Regulatory Systems (Commercial Matters) Amendment Bill read a third time.
Regulatory Systems (Workplace Relations) Amendment Bill read a third time.
Bills
Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill
Third Reading
Debate resumed from 21 March.
BARRY COATES (Green): Tēnā koe e Te Māngai. I rise to speak to the taxation bill. I would say that this is, to some extent, a misleading title. The “Remedial Matters” could instead be called “Late and Inadequate Remedial Matters”. We would like to make three points on this bill. It is difficult, as a minority party, to be in a position of saying that you have serious concerns about a bill yet provide overall support for it, but indeed that is our position on this bill.
The first point we want to make is a positive one. It is one of the reasons that we are supporting the bill. The bill contains a number of measures that will simplify tax matters, particularly for small business. This is important. It will reduce compliance for small business. For the Green Party, this is a really important issue. We want to see improved systems to reduce compliance for small to medium sized enterprises, and this bill contains a number of important innovations. I would like to highlight one of those. The pay-as-you-go option for paying tax will particularly support the cash flow for small business, and having worked in small business, many of you may know that cash flow is absolutely king for small business. This is a way to provide small business with a far more even cash flow requirement and a more predictable cash flow requirement, and to help their business operations. It also allows payment of provisional tax for accounting software such as Xero, and there are 16 measures in all for simplification. We support these measures, and as I said, this is one of the reasons that we provide overall support to this bill.
There is a second issue that this bill is more known for. The bill implements the results of the Shewan review on foreign trusts. I wanted to just refer to the background of this. The Green Party has expressed concern, over many years, over the provisions for foreign trusts and the degree to which they were making New Zealand complicit in aiding and abetting tax havens around the world. New Zealand gained a reputation as being a place where money could be parked in order to avoid tax. Russel Norman, former co-leader of the Green Party, campaigned on this issue from 2011, and of course, the Panama Papers brought this issue into sharp relief. We had a lot of concern expressed over reputational damage to New Zealand, including warnings from the Inland Revenue Department itself from 2012, 2013, and 2014, and all of those warnings were not heeded by the Government. As a result, New Zealand was removed from the European Union’s white list of non-corrupt countries and New Zealand gained a widespread reputation as a tax haven.
We recognise the role of investigative journalists and whistleblowers in releasing the information from Mossack Fonseca’s files, which were revealed as the Panama Papers, and then analysing those papers. We were disappointed to see New Zealand featuring strongly in the Panama Papers. We recall that the Government denied that there was ever a problem. There was furious lobbying around that time, including by the then Prime Minister’s personal lawyer. The Government finally caved in and agreed to the Shewan review. We were encouraged that the Shewan review agreed with a number of Green Party proposals to reform the foreign-trust system.
These amendments that are proposed in this bill are the way that the Shewan trust proposals would be implemented through legislation. They provide a register of information that would be given to the Inland Revenue Department both at the stage of registration and subsequently in annual reports. However, from the Green Party’s perspective, this is not a sufficient mechanism, particularly, I would say, because there is no mechanism for ensuring accountability as to what happens to that information. There is no oversight, no reporting of that information, and no transparency. So we joined with Labour and New Zealand First on a minority report on this issue, highlighting these key issues.
We need transparency with regard to foreign trusts. Sunlight is the antidote to corruption, as we all know. We need a publicly released register of foreign trusts that is searchable. That is the way to be able to ensure that the scourge of tax evasion, tax avoidance, and tax havens is actually eradicated, and certainly eradicated from New Zealand’s facilitation of these tax haven activities.
We would note that there is a register of companies under New Zealand law. There is a register of other trusts under New Zealand law. We question why there is not a register of foreign trusts under New Zealand law. It appears that this is a case of the Government backing off from a provision that would really add integrity back into our rather discredited system of foreign trusts. There may be exceptions to the publication of full details in the rare case that a publication might cause a risk to individuals—for example, from a vindictive regime overseas. However, international experience says that although that is often cited as a reason for the existence of foreign trusts, when it is actually interrogated, it is very, very rare in terms of the rationale for foreign trusts actually being used. Far more frequent is the hiding of money from tax authorities.
We have expressed concern in our minority report over this crucial issue of foreign trusts. We also joined in the minority report with concern over the delay in phase 2 of anti - money-laundering laws. I would say that it is a great pleasure that, finally, the second phase of anti - money-laundering provisions are coming to this House, perhaps even after this debate, because if you look at the data on money-laundering, a lot of the money is actually being laundered through real estate. It is having a major effect on speculation and the ramping up of house prices. We will come to those issues subsequently.
Finally, I would like to note that there has been concern expressed, including by the community of accountants, over when taxpayer information may be shared with credit reporting agencies. We note that the dollar threshold on when this might apply should be lodged in legislation rather than regulations subject to Orders in Council.
These are concerns that we have over this legislation. We do not think the legislation has gone nearly far enough on foreign trusts. We look forward—hopefully soon; maybe even on 23 September this year—to having the opportunity to rectify this lack of transparency on foreign trusts. We would introduce a public and searchable register on foreign trusts that will make sure that New Zealand’s reputation for financial integrity is restored.
FLETCHER TABUTEAU (NZ First): I rise on behalf of New Zealand First to speak to this, the third reading of the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill. Firstly, let me say, for the benefit of my colleagues on the other side of the House, that New Zealand First will be supporting this legislation at this, the third reading. [Interruption] I am grateful for their cries of delight.
I will start off, though, by highlighting and putting to the House that, at its core, our tax system relies heavily and is highly dependent on trust. It was very scary when the Minister in charge of destroying—I mean, growing—the New Zealand racing industry came out to take the first call on this, the third reading. His empty platitudes and generic descriptions of an ideal tax system must have sent shivers up the spine of Chris Bishop and tax experts throughout the country and, in fact, taxpayers themselves. I just want to give a few quotes to the House: “A number of items in the bill are business friendly.”—that was lovely to hear. “We must always aim to uphold the integrity of the tax system”—that was absolutely lovely to hear. “Ensuring that our tax rules work well in practice helps to keep compliance costs to a minimum, which, in turn, helps our economy to grow and prosper.” I tell you, for the 2½ minutes he made his contribution in, it was wonderful to hear. But that was the extent of the Minister’s contribution, and that was the fullest detail we got from the Minister for Racing. It was intriguing, to say the least.
I do know that some—myself included—are concerned that we have less than a week to go before this law needs to come into effect. Indeed, that the Government’s legislative schedule for this bill has accelerated somewhat speedily is, perhaps, an understatement. The reasoning for this is that the Government’s appropriations over the last year will, in fact, be unlawful otherwise. I put it to the House that that does not, in fact, inspire any kind of trust at all in this Government’s legislative capabilities.
In terms of the annual rate, which was a significant part of the legislation—although a small part of the legislation—it has remained unchanged for many years. I think, off the top of my head, it has been 6 years. Even though we have got a week to go, this Government still has an opportunity to be very clear before the election to either make a statement on low-income and middle-income earners or address the fiscal drag issue, for example.
But I would suggest to the members opposite that, firstly, they need to stop talking about their scandalously named “surpluses” and, instead, ask: can they actually get Government services, such as the police, health—education is a great example. Just out there this afternoon, there was the taking and receiving of a submission from those in early childhood education, who outlined in great detail how their services alone have been short-changed by $500 million since this Government came in and changed the laws—nearly half a billion just in early childhood education. That is the indictment on this National Government at the moment. So what I am suggesting is that its scandalously named “surpluses” are ridiculous.
What the Government members need to do instead is talk about getting us back to the point at which they actually took over—get us back to the start and then own up to the problems ahead of us—and then they might be able to have this conversation about the annual rates, although I think they are still in denial. They still need to actually build some homes for the homeless people of New Zealand, which is just an anathema to say in this House. The “homeless people of New Zealand”—I cannot believe I am saying that. They actually need houses, and the Government needs to be part of the solution, but that is not going to happen. This Government will not own up and will not admit that there is a problem.
The annual rates provided us with an opportunity to have a conversation, which did come up in the second reading, about secondary tax rates. In a world where the Government has promoted and advanced the thinking around a mobile and flexible workforce, this Government—that Government—refuses to even talk about changing the secondary tax rate rules. Right now, people who are living pay cheque to pay cheque—and we are talking three or four every week, because they are holding down two or three jobs—are paying exorbitant rates of tax on their second job. It does not matter that it is not enough to support their families. It does not matter that it is not enough to pay the rent. This Government will not admit to the problem or do anything about it.
In the second reading, we noted that the Government’s revenue strategy seeks to ensure that our tax system is broadly fair to encourage voluntary compliance. What the Minister who spoke at the time needs to realise is that not all business believes in that “voluntary” part. Recent revelations, highlighting what we already knew regarding multinational corporates and their zero tax payments, would seem to suggest that “broadly fair” in this Government’s mind might apply only to international big business, whilst our wage and salary earners, our small and medium sized New Zealand - based businesses, must bear an exorbitant share of the tax burden that this Government is putting on them. In fact, I put it to the House that it was only last year that Minister Joyce boasted to us that it was the middle class and the wealthy who were bearing the greatest burden of the tax in New Zealand. He said it like it was a good thing—like the middle class, who are currently struggling just to survive and, in fact, are moving down into the lower class, should be proud that they are paying an unnecessary and high tax burden.
It is an issue that the Government has refused year after year to hold big business to account on, in terms of their tax obligations. Whether we call it evasion or avoidance is beside the point. This Government has, for years, spoken about those kinds of tax practices being smart business. It has suggested that if it enforced the tax rules, those businesses might not want to operate in New Zealand. It even suggested that it was too hard and too complex. Then it said: “Oh, no, no, no, we have to work with the OECD in order to make this unilaterally fair across all borders.” It just does not make sense, and in the meantime, New Zealanders are suffering.
I do want to touch on another point that has been raised and that was in this legislation with regard to the reporting and recording of foreign trusts. New Zealand First was indeed part of a minority report that suggested to this House that although we have taken great steps in the right direction, we still have some transparency issues, and the publication of the list might be one of those issues that we need to deal with.
With little time on the clock, I do want to say that the Government has achieved some good things in this legislation. We think that we will support this bill because, in the main, it actually does what it says it will. Just to end it, I would like to actually have a brief conversation with Mr Bishop—in that I agree with him, which does surprise all in the House today—around the need to use legislation to alter or adjust the charities list. But, bear in mind, Mr Bishop, that currently under this Government’s administration there is far too much power given by Order in Council to Ministers and their discretionary powers—all their obligations to talk to their mates in order to make a consulted and engaged decision with the stakeholders in the community. But, in the main, we congratulate the Government on this legislation and do, in fact, commend it to the House. Thank you.
CHRIS BISHOP (National): Look, can I just put on the record for the House, in my short contribution on this bill, that I am extremely pleased that I have the support of “the Professor”, Mr Tabuteau, in my—I was going to use the word “crusade”, but I think that is probably an overstatement.
Hon Dr Nick Smith: Supporter of the Crusaders.
CHRIS BISHOP: My colleague says I am a supporter of the Crusaders—absolutely not; the Hurricanes are going to take it out again this year. “Crusade” is the wrong word, but my strong desire is to stop Parliament having to turn up every year, through the annual rates pieces of legislation, and add bodies to schedule 32 of the Income Tax Act 2007, which makes those bodies eligible for tax benefits on their donations. It is just simply silly. The Fountain of Peace Children’s Foundation New Zealand, First Steps Himalaya, the Astha Childrens Home (Nepal/New Zealand)—very worthy bodies; I am not at all impugning the very important work that they do. The Siphala Foundation, the Solomon Outreach Society—I am not at all impugning their work. But it is just silly that we have to turn up and add those august bodies to the Act to make them eligible for tax benefits every year. There must be a better way, and I want to thank Fletcher Tabuteau for agreeing with me. I look forward to his future support in a Parliament when we do just that.
Mr DEPUTY SPEAKER: I call Julie Anne Genter—a 5-minute call on behalf of the Green Party.
JULIE ANNE GENTER (Green): As my colleague Barry Coates said, the Green Party is supporting this bill. It is fairly non-controversial, but it will be really important to keep an eye on the impact of these changes, because it is really important that we are constantly monitoring and updating our tax law to ensure that it is achieving the outcomes that we want as a society. Broadly speaking, Part 1 of this bill, which is about the annual rates for 2016-17—it is about the income tax rate; it sets the income tax rates—the Green Party really does not agree with. The reality is that under this National Government our tax system has become more regressive. That is, it is less fair. It asks that those people on lower incomes make a disproportionate sacrifice and those people on very high incomes do not contribute enough to what we need in this society.
It is an unfair system, and I think most New Zealanders want to live in a society that is fair: where we do have access to the critical Government services that we need in order to survive and where we do not have families struggling to make ends meet. But 300,000 children are growing up in poverty and do not have access to the food that they need to learn well at school, or have to live in homes that are cold, damp, and mouldy and make them sick—and we have an increasing rate of homelessness across the country. And as long as we have this National Government, which is entirely focused on keeping tax rates low for those who have plenty and on reducing Government services as a consequence of that and saying we cannot afford the things that really matter to us, then we are not going to turn this around. Things are, slowly but surely, going to get worse unless there is a change of Government.
From a big-picture point of view, I think it is very simple. We are posed often with this kind of trade-off, saying: “Oh well, you’d like to have health services, you’d like to have greater access to primary care, but who’s going to pay for it? We can’t really afford it.” That is just not true. That framing of the problem is not true. We decide together what is important to us as a society. We figure out what policies and services and infrastructure are needed to make that happen, and then we figure out a fair way to raise the revenue to pay for that.
There are many opportunities, because New Zealand probably has one of the more regressive tax systems in the OECD, and that is one of the reasons our country is not rising in terms of incomes. We stay in the middle of the OECD countries. Despite the fact that our GDP growth is supposedly at record highs, people are still struggling. We are not seeing an increase in incomes for people at the bottom. That is something we can change if we have a fair tax system and we actually invest in the things that matter to people, like healthcare, education, and housing—and, of course, protecting our environment, because we cannot afford not to.
Probably the biggest lacuna in this National Government’s approach to taxes has been its failure to implement a comprehensive capital gains tax, and that is, in a large part, why we have the worst house price inflation of any OECD country right now. That makes it more difficult for the average Kiwi to afford a place to live, particularly in Auckland, but it also means that we have not raised the revenue that we need to invest in the infrastructure that is necessary for our cities to function and for people to get around. If we had had a capital gains tax, undoubtedly we would still be seeing house prices rise, because the Government is not building enough houses, and we still have a lot of foreign capital coming in—just as many other countries around the world are experiencing—which is disproportionately going into real estate and leading to housing bubbles. Of course, we have got absolutely shocking protection for renters—virtually no protection for renters.
If the Government simply did those four things, then we might actually solve some of our problems: implement a capital gains tax, which is only fair, as the people who happened to buy a property 10 years ago and are going to make a huge amount of income off the sale of that investment property should pay tax on it, just like teachers, plumbers, and everyone else who pays tax on their income, and it is only fair that you pay tax on the income that you receive as a result of buying a property at a particular time and selling it at a later time; protect renters; build more houses; and ban non-resident buyers.
Mr DEPUTY SPEAKER: Peeni Henare—a 5-minute call for Labour.
PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe e Te Māngai o Te Whare. Look, I thought about speaking on this tax bill in Te Reo Māori just to liven up the debate this afternoon, and certainly spike the interest of members across the House, but in order to allow the translators to, hopefully, get away early this evening, I have got to stick to English.
When we think about a tax regime or a tax system, we want to make sure that it is fair, we want to make sure that it is transparent, and we also want to make sure that it is easy to understand, so that from Māori trusts to small to medium sized enterprise business owners and to the large corporates, they have a system that they are able to navigate and understand, and one that does not cost exorbitant accountancy fees and adviser fees to make sure that they are compliant. So when I think about this particular taxation bill we are debating this afternoon, there are some questions that still remain unanswered. I am familiar with some of the people who are far smarter than me on tax matters. They have contacted me to, once again, express just how concerned they are that throughout this process they were not given ample time or the opportunity to make sure they could go through this particular bill with a fine-tooth comb to make sure that loopholes do not emerge later on and are exploited, and to make sure that this is done so that we are not coming back, time and time again—as we have seen with this Government—into this House to fix things up.
During the course of this bill’s progress, I spoke about the Māori trusts regime and the new, proposed Māori trust regime around grandparenting Māori trusts, etc. I just want to touch on my point that I made during an earlier contribution, around the date of 3 May 2016. I mentioned that there have been significant settlements post - 3 May 2016, and in my discussions with those people they have raised concerns and issues about the high compliance cost to achieve essentially the same thing that was already there before the change. It is that kind of feedback that makes me question exactly why we have done this when we are going to get the same result, yet we are making the burden of compliance go on Māori trusts.
In a discussion with Mr Nash here—we are all for making sure that compliance costs come down and that regulation and compliance costs are not an extreme burden on small businesses, Māori trusts, and large organisations. While adhering to the law, we want to make sure that a lot of their money is not tied up in matters of compliance. I highlighted in a previous contribution that, sadly, that will not be the case for many of the regimes—the Māori trusts—that will be established post-2016. As the Māori economy grows larger, the likes of Ngāti Whātua are coming into large assets and are having to set up more and more companies to work with their assets and they need to make sure that they are financially compliant and also fiscally responsible. They raised their concerns with me.
One of the issues, and it has been raised by numerous contributors throughout this bill’s progress, is around some of the problems we are seeing in the country at the moment around poverty and making sure that the distribution of taxes. For those who have to pay tax—well, all of us have to pay tax, but for those who do pay tax—they want to make sure they are seeing a return on their taxes and that they are seeing reduced numbers in homelessness and all those issues that have already been raised. My colleague Julie Anne Genter mentioned some of them. It made me a little bit concerned when, at the beginning of the third reading of this bill, the Minister did not even mention the tax rate. In fact, all of the contributions from the other side of the House have been very minimal, and that makes me concerned about the process of this bill and, of course, about the process of democracy.
However, having said all of that, we will be supporting this bill, and I do hope that we will not be coming back to fix up some of the loopholes discovered later on. Kia ora.
JAMI-LEE ROSS (National—Botany): I commend the bill to the House.
Hon CLAYTON COSGROVE (Labour): Well, I have got to say, that was an interesting contribution from Jami-Lee Ross, the person who was acting chair of the Finance and Expenditure Committee (FEC) for one meeting and who did a pretty diligent job, I thought, rattling through the business. It is interesting too, and you have got to ask why we have laboured long and hard as a Parliament to the point of almost exhaustion, both mental and physical, I think, over this particular tax bill. I suspect it will not raise too much of a profile in the general communities, apart from any tax practitioners and businesses, but you have got to ask why it is, as the last speaker, Mr Henare, said, that the Government has not shown a bit more vim and vigour and a bit more sort of commitment to its own bill.
That was from the member of the FEC, Jami-Lee Ross, the chief whip, who was—actually, I have got to say, though, that it was an efficient contribution, and it was probably a better contribution than the former chair of the FEC, David Bennett, would have made. It was a far more logical contribution than he made both as chair of FEC and in this House. “I commend the bill to the House.” is a stunning contribution compared with that genius, who has made the outer terrestrial reaches of the outer Cabinet, and I congratulate him on that.
The point that Mr Henare was making, which I am going to enlarge on for a few minutes, is the quality of legislation in respect of tax that has come into this House. Mr Henare made a very pertinent point. He said that the Government does not have a great track record on bringing quality tax legislation, which either the select committee has to revamp and stitch up and sort of meld back—to sort of Humpty Dumpty put it back together again, or this House in the Committee stage has to do that through Supplementary Order Papers.
I recall the brightline test, which was an absolute shambles under Mr Bennett’s stewardship. I chaired FEC many moons ago in my 18 years in Parliament, and I have never seen every accounting firm—every accounting firm—major and minor, coming in and saying that the Government’s tax legislation would not work. It was not just the “big five”; the lot. It was the whole of the profession.
Then, of course, we had the Peter Dunne computer tax/carpark tax, which sort of bounced up, was absolutely pilloried not only by the profession but also by small business and was sort of parked and then thrown out and deep-sixed and buried, and the lid was nailed fairly well firmly down on that proposal. Then, of course, we had the Government’s provisional tax proposals, which, I have got to say, were not bad; we supported them. But they were simply a reaction to a policy that Andrew Little put out. Within a couple of months, after 8 years of doing nothing, the Government came out with this sort of whiz-bang provisional tax policy that was pretty close to ours, except it did not go as far as ours did. So it was a sort of reaction to the politics.
I will just say, and I share Mr Henare’s view, that I hope we are not going to come back, as we have with a number of other pieces of tax legislation, and redo it—get the eraser out, get the pen out, and start rewriting sections of it. There are some basic principles with tax legislation: it has to be transparent, it has to be simply understood, and it has to be fair. If those three basic principles are met—if business folk and individuals can understand it, it is transparent, they get it, they can work with it, and they consider it fair, then, generally, you have a good First World tax system.
On the point of fairness, other speakers have said, and I agree with them, that this was an opportunity for the Government to look at where the burden lies in respect of the tax rates—to look at who is paying most and who is paying least and who is being sort of squeezed in the middle. It could have taken a breath, after nigh on 9 years, to have a look at that, and actually look at that basic principle of fairness.
I know that Mr Bishop—who took a very brief call today and who chairs FEC—took a call in a previous debate on a completely different topic, which I will not go into—
Mr DEPUTY SPEAKER: Good.
Hon CLAYTON COSGROVE: —at all, except to say that he stood up in the House and struggled to articulate a definition of fairness. This was this week—a definition of fairness. As I said then and I say now, I have got to say that the only group of people—the only group of people—in New Zealand who would have to get out the Oxford Dictionary and look up what fairness meant would be Tory MPs.
I say to them: if they want to look at fairness and if they are serious about a tax system that is reflective of our community and that is actually equitable, then this was the day and this was the opportunity to use this bill to have a look at that, but oh no. When the chair of the FEC gets up and struggles to articulate a definition of what he would consider fairness, then you have got to say that the communities out there, with this Government, do not have a lot of hope. After all, never forget that it was this Government that—
Mr DEPUTY SPEAKER: So back to the bill.
Hon CLAYTON COSGROVE: Back to the bill, absolutely, Mr Deputy Speaker. It was this Government that borrowed more money than Rob Muldoon—more money than Rob Muldoon. It was not for capital spending, not to look after the communities, and not for more hospitals and schools and those sorts of things that people would consider a fair go—and people pay their taxes expecting the money to be executed in a positive way. But oh no, it borrowed more money than Sir Robert for a tax cut—to finance a tax cut. Government members peddle this notion, which no one believes, that it was somehow fiscally neutral. Well, it was not. More than that, it was unfair, because those on the bottom got very little and those on the top, like Mr Bennett, got heaps.
Here was an opportunity to actually look at it and, in this bill, look at the annual rates to see whether they are equitable and see whether they are fair. But what we have here is sort of the typical Government approach to tax bills. It did not happen under us. Ours were not ad hoc; ours were well planned, and we listened very carefully to learned officials like the former Deputy Commissioner of Inland Revenue Robin Oliver—a person who is a sort of walking encyclopaedia, and, I think, world class in terms of his knowledge on tax—and we produced good, solid tax bills. The National Party often did not agree with them—I accept that—but they were solid in their logic and their policy, and, by the way, they worked.
We have had so many opportunities to come back and play catch-up, and patch up bits of tax bills that have come apart, because in the select committee process, more often than not, the Government rejects the opinion of the tax industry—those who have to actually administer these bills. So we will support the bill because it is necessary to make the country function. But, you know, if you look at the process and you look at actually what it does, it is an omnibus bill—it is a mishmash of a whole series of things cobbled together in an annual rates bill.
As I conclude my remarks I just come back to this: it was an opportunity for the Government to sit there, even in an election year, crass though that may have been, to look at it and say: “Hang on. Are our tax rates and the positioning of the rates fair for the community? Are people paying what they should be paying? Are we overburdening certain groups in our society to the detriment of others?” But no, it failed to do that. It is a missed opportunity, something I suspect those members may live—in Opposition—to regret.
BARBARA KURIGER (National—Taranaki - King Country): I commend this bill to the House.
Bill read a third time.
Bills
Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill
First Reading
Hon AMY ADAMS (Minister of Justice): I move, That the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be now read a first time. I nominate the Law and Order Committee to consider the bill, and, at the appropriate time, I intend to move that the bill be reported to the House by a date that is 4 months and 1 day from the date the bill receives its first reading.
Money-laundering is the lifeblood of many types of crime. By exploiting unsuspecting businesses and channelling money through different layers of the financial system, money-laundering allows criminals to fund their lifestyle and fuels their criminal ventures. People who finance terrorism use similar methods to channel money to violent causes. We are changing the law to improve our ability to detect and deter money-laundering. This will mean less crime and fewer victims. It will help protect legitimate businesses, and it will help preserve New Zealand’s international reputation as being corruption-free and a good place to do business.
Currently, the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act applies to banks, casinos, and a range of financial services providers. When the Act was being developed, those sectors were considered to be at the highest risk of being targeted by enterprising criminals. However, criminals change their laundering techniques over time, and establishing controls in one sector often increases risks in others where there are fewer checks and balances.
This bill is an important step in protecting our businesses’ and our country’s good reputation. It will extend the regime to lawyers, conveyancers, accountants, real estate agents, racing and sports betting, and some businesses that deal in high-value goods such as jewellery, motor vehicles, arts, and antiquities. Now that more traditional laundering methods are less available, since phase one of the Act came into effect, these phase-two sectors are increasingly at risk of being targeted by criminals seeking new ways to launder proceeds of crime, according to analysis from the Police’s financial intelligence unit.
This Government recognises that law changes in this bill will, however, affect everyday business and law-abiding New Zealanders. Our goal is to make sure the regime is as effective as possible while minimising the impact on businesses and their customers. We need to address the real risks money-laundering and terrorist financing impose while also ensuring compliance costs are as low as possible. This is why we have consulted with affected sectors and have released an exposure draft of the bill to see how the proposals would affect business. We have heard that the incoming sectors broadly support the reform, but they need assistance from the Government to comply. The Government has been listening, and it is committed to investing in support for these new sectors so that they can battle money-laundering and terrorism financing.
The sectors also had concerns about the cost of compliance. Initial estimates had placed business compliance costs at $1.6 billion over 10 years. My officials conducted workshops across New Zealand, gaining a better understanding of the various sectors in order to work with them to reduce compliance costs. This has significantly reduced the estimated business compliance costs. The original estimate of up to $1.6 billion over 10 years has been lowered to now being between $800 million and $1.1 billion over 10 years.
I would like to touch briefly on a number of key proposals that the bill makes. The implementation period will be staggered for the different sectors, initially focusing on those highest at risk of being used by criminals. A phased approach will ensure businesses are well prepared to comply with the regime. The bill will also enable greater flexibility to share information to meet the purposes of the Act, including ways to facilitate information flows between the Government and the private sector. Improving information sharing addresses recommendations made in the recent Government inquiry into foreign trusts by John Shewan.
The Shewan report also highlighted some gaps in the reporting regime. The Act currently requires businesses to report only suspicious transactions. This bill extends the reporting requirements to include when entities notice suspicious activities, even if the customer does not make a transaction. This change will ensure that valuable information for detecting crime is passed on to the Police’s financial intelligence unit.
The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill is also important as it will implement the international standards set by the Financial Action Task Force on Money Laundering, an international Government forum of technical experts on anti - money-laundering and countering financing of terrorism. Our system will be assessed for effectiveness by the financial action task force in 2020, and the results of the assessment are likely to have an impact on New Zealand’s international reputation. I commend this bill to the House.
BARBARA KURIGER (Third Whip—National): I seek leave for the House to adjourn at the conclusion of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, or at 6 p.m., whichever is earlier.
Mr DEPUTY SPEAKER: Leave is put for that purpose. Is there any objection? There appears to be none.
Hon DAVID PARKER (Labour): The Labour Party is supporting this bill to select committee. I want to endorse the Minister of Justice’s comment that, of course, no political party in this House wants to see New Zealand abused as a centre for money-laundering, and to make a couple of more general points before referring to the specifics of this legislation.
The first point to note is that it is pretty clear New Zealand has been used as a place to launder money. I think that was made clear from the Panama Papers, which disclosed that offshore trusts investing money outside New Zealand through trusts that were operated from New Zealand were at times being used to hide money that was being invested through those trusts from the authorities in the home countries from which the beneficiaries of those trusts came. Some of that was legitimate—in that some people did not want their financial affairs disclosed to the authorities back home—and they were not doing anything illegal. Some of it was about tax avoidance, and it is pretty clear that we have got a big problem around the world with some of the “1 percenters” in the world. Notwithstanding the fact that they have had more wealth than everyone else, they seem determined to pay lower rates of tax than middle-class people in most countries. That was bad, and that was being facilitated through those trusts.
Then the third class of transaction, which I am sure was occurring, was the laundering of illegal money—money-laundering—from the proceeds of crime. That money was being invested overseas in a way that was not transparent to law enforcement authorities around the world, because the opaque arrangements in respect of New Zealand - based trusts investing money offshore from New Zealand were not clear enough. At the time, the Government said that there was nothing to look at there. It had a report by John Shewan, and he came back and said that, yes, the criticisms were true and that New Zealand was being used as a destination for those improper transactions. It is to be hoped that we tidy that up and adopt the recommendations that John Shewan recommended.
This legislation is slightly different, in that it is looking at investments that are made in New Zealand, rather than outside New Zealand, using New Zealand - based trust transactions. This Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, as the Minister said, intends to do that by extending the purview of the Act to, amongst others, accountants and lawyers, who are not currently caught by the Act, and then it makes other changes, which the Minister has adverted to.
The Minister said that the 10-year cost of compliance, as originally designed, was $1.6 billion, which was worked out to be $160 million per annum. She said that the revised estimate, given changes that have been made, is between $800 million and $1.1 billion over 10 years, which is between $18 million and $110 million of extra compliance costs for New Zealand businesses per annum. It is not an insignificant sum. If that $100 million per annum was being spent in another part of the economy, well, that could go a long way, whether it was towards alleviating some of the problems that we have got in housing, through to, perhaps, greater support by the Government of those sectors or, indeed, just through people having that extra money in their businesses to spend into the economy, which would go around. We should be careful that when we are imposing new requirements we are actually meeting the purpose without imposing an extreme or higher cost than is warranted.
I want to give two examples where I think that, in the last decade, we have gone too far in respect of regulation of the financial services. The first is in respect of financial advisers. Post the collapse of finance companies and the losses that were suffered by people who were investing in those finance companies, this Parliament chose to look again at the regulation of financial advisers and imposed further regulation upon them. Some further regulation was necessary, but we got to the ridiculous point in this country where we said that some of the people who are, logically, financial advisers through the decades, like lawyers and accountants, could not act as financial advisers to the people who came into their office without going through this great hoopla, which they could not or would not go through.
The net effect of that was brought out when the Government wrongly, in the view of the Labour Party, sold down shares in the major energy companies: Meridian Energy, Mighty River Power, and Genesis Energy. Because so many of the people who were left as qualified financial advisers were conflicted—because they were acting as brokers for the Government or as agents for the brokers who were appointed by the Government—there was virtually no one left in New Zealand who could legally give financial advice to New Zealanders as to whether they should or should not invest in those shares that were being sold by the Government in those energy companies. The people who were conflicted were, virtually, all of the major sharebroking houses in the country, plus all of the banks, which were the other route. It meant that, in practice, the ability of New Zealanders to get sound advice from financial advisers as to whether they should invest or not was prevented because of the over-regulation of who could be a financial adviser in the legislation that was passed by the National Government—actually, led by Simon Power—post the finance company collapses.
The second example I will give is in respect of the over-regulation of ordinary capital raising. Now, there have been some good things done in respect of ordinary capital raising, so I do not want to say that it is all bad. Small capital raising through crowdsourcing of relatively small amounts of money—actually, the appropriate limit for crowdfunding has been allowed through changes to our securities laws in recent years, and that is a good thing. But the over-regulation of the raising of ordinary capital by small to medium sized companies—or, mainly, medium-sized companies that are growing—has meant that very few of those companies are now raising money from the public.
Why has that happened? Well, it is because directors’ duties have been increased. If you are an experienced director, your director’s duties in respect of the money that an investor invests in an ordinary capital-raising—your risks are heightened compared with what they were in yesteryear, and they are now so high that you cannot insure against those risks. You cannot, at a realistic price, get insurance against liability for prospectus risk in New Zealand, and the consequence of this has been that those very companies that we want to have a low cost of capital when they are fund-raising, in order to expand as they exploit some of these global opportunities arising from new technologies, cannot raise money from the public. Instead of regulating and properly describing risk to those people who are proposing to invest in shares, we are actually stopping them doing it, because no one is using that route now because it is over-regulated. That has got to be an absurd policy outcome.
Coming back to this legislation, I am worried, and I think that the select committee should be ascertaining, whether in pursuing the ambition—which I think everyone in this Parliament has—that we should be countering money-laundering and the financing of terrorism, we are not going so far as to impose a silly level of compliance that really does not achieve much more in the pursuit of anti - money-laundering but none the less sucks out of the economy $100 million per annum in compliance costs. I will probably not be on the select committee considering it, but I would hope that the select committee that considers it really drills down into it. Will this achieve its purpose, or will it, as in those other two examples that I have given, over-regulate this space at the cost of the New Zealand economy and make New Zealand a more expensive place for no real gain? With those comments, can I say that the Labour Party supports the ambition of this legislation to clamp down on money-laundering, and can I note that we are supporting this at first reading.
KANWALJIT SINGH BAKSHI (National): It is my privilege to stand in support of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill in its first reading. This bill extends the obligation to some additional business sectors such as lawyers, accountants, real estate agents, sports and racing betting agencies, and high-value dealers to come under this Act. I would not agree with some of the assertions made by David Parker, the previous speaker, that the bill is putting up additional costs or putting additional restrictions on lawyers or anyone else, but I think, during the select committee process, we will be talking about these issues.
With regard to the changing world and the way that things are happening, like yesterday’s incident in London and the terrorism, nobody is immune to that. We need to understand that we have to fix the loopholes that are there in the laws, so that we cannot let these people take advantage of them. With these words, I look forward to working on this bill in the select committee, and I commend this bill to the House.
MICHAEL WOOD (Labour—Mt Roskill): It is a pleasure to take a call on the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. Like my Labour colleagues before me, I am rising to speak in support of the bill, and I will try to make my contribution a little more fulsomely than members opposite have made. We have had some marathon speeches stretching up to nearly a minute from the members opposite, but I actually think the provisions within this bill are important enough that this House reflects upon (a) the reason why we are talking about this issue and (b) the mechanisms within the bill to achieve the objectives that we want to get to.
Let us start off by talking about the raison d’être—that is, to deal with the scourge of money-laundering that has afflicted our country over recent years, and not just our country but many jurisdictions around the world. There are pretty serious international estimates that put this pool of black money that washes around the world in the hundreds of billions of dollars. It is money that is often from the proceeds of crime, fraud, and the drug industry that is looking for bolt-holes—looking for places to go that are not particularly transparent, so that that money can be washed clean and then used for further criminal enterprise. As, of course, the title of the parent Act points to, often that money can land in some pretty dark places, including the funding of terrorism and pretty appalling events in difficult parts of the world.
The problem was brought to our attention pretty starkly last year by the revelations that came out of the Panama Papers, particularly the machinations and the behaviour of Mossack Fonseca. After a lot of delay and a lot of pressure form the media, the public, and the Opposition, the Government did act on that issue, and what is really encouraging for me is that after we finally got legislation to deal with the foreign trust issue, to open it up, and to apply a level of transparency that has some compatibility with what is in this legislation, we actually started to see organisations such as Mossack Fonseca leaving the country. Those have gone now because this House, after delays that went on for too long, finally did act and put some transparency into that foreign trust sector. That was to the benefit of this country, and that is what we are looking to do in this bill.
One of the core issues in this area for New Zealand is our international reputation, as well, because this is a Western democracy that prides itself on the rule of law, prides itself on good relationships with other countries, and prides itself on behaving in essentially a moral way. Yet we cannot stand up and say that we are holding to those things if we leave ourselves open to that wash of dark money coming into this country, potentially being cleansed, and then heading back out into the world to do goodness knows what. So dealing with this area is extremely important.
Hon David Parker: Why don’t they ban foreign buyers?
MICHAEL WOOD: Why do they not ban foreign buyers? Well, there are lots of things we could do, Mr Parker, but this Government is making a start here. It is making a start, and I am sure the next Labour Government will do even more.
The original legislation, which we are amending here, did make a start. It brought certain sectors under the microscope, but it left a lot that did not have any transparency. What John Shewan said when he reviewed the activity and the rules in this area was that we should, as soon as possible, implement phase two of the anti - money-laundering recommendations. The Government promised that that would be done by the end of the last year—that we would bring these other sectors in—because the thing about this area is that as soon as you close off one avenue, the dark money looks for other avenues to go down.
In fact, when we did half of the job last year, there were experts in the sector who sort of said: “Well, what you’re actually doing is just creating a road map. You’re saying to the bad guys ‘You can’t put money here.’, but it pretty obviously can go over there.” So these areas that have been brought in, which are real estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and that whole area of high-value dealing, do need to be covered off if we do not simply want to see the dark money that we started to remove from the trust sector, the banks, and the casinos—although I am sure there is still work to be done on that last one—washing into there.
One of the things that I think we need to examine very closely when we get to a select committee is that we have, in fact, covered off all of the bases. As we stand here today, we can see that list, and they all seem like pretty obvious targets and obvious things to be included within this bill, but we need to check very carefully that there are not other avenues that that money will simply spill over into. What the bill does is set up some core obligations for these areas, including the development of risk assessments, the undertaking of customer due diligence, account monitoring, and then—really importantly—the submission of suspicious transactions to the police and the financial intelligence unit.
Something I want to touch on in this area—and this spills over a little from my colleague David Parker’s comments—is that whenever we are setting up new regulations, we have to be very clear about their intent but we also have to be extremely careful that there are not unforeseen things that happen as a result of the legislation we are putting forward. What I want to draw to the attention of this House, in this respect, is that the original law, the parent Act—which is supported by both sides of the House—has had some of those unforeseen effects.
In my constituency and, I know, in a number of others, there are people from the Somali community and other communities who can no longer send remittances overseas because they have unwittingly been caught up in the provisions of the Anti-Money Laundering and Countering Financing of Terrorism Act. So the quite legitimate purpose of the Act, which was to prevent the sending of money to fund terrorism overseas, has actually caught within it people who are actually doing no wrong—people who simply want to send remittances back to support their families and support their communities, and who have quite peaceably been doing that for many, many years. That is something that, if there is a way, I would like to explore as this process carries on. Whenever we make law, we have to be extremely conscious of that.
The issue of compliance costs—one raised by my colleague David Parker—is one that we should be exploring, as well. There are large institutions in these sectors that can probably pretty comfortably bear those compliance costs, but we have also got to be conscious that it is not just the big boys. There are, potentially, other players in this area, and we do not want to be overburdening them with compliance costs that are not in proportion to what we are actually trying to achieve.
There are some other public comments that have arisen in relation to this bill that I think we want to explore as well, as we go through this process. The Law Society has made some comments about the phase-in period, too. The bill proposes a 6-month phase-in period. I am not prejudging this, but it is actually a pretty quick phase-in period given that there will have to be some pretty rigorous requirements and processes embedded into the practice of the organisations that will now be caught within the net of the Act. The Law Society suggested that maybe that should stretch out to 2 years, rather than the 6 months that has been proposed. I think we owe it to the sector—owe it to the people who will be affected by this regulation—to give that some full consideration.
Before I finish, I do just want to comment about the lack of urgency we have seen on this issue. This is really important. This goes to our reputation. This goes to how New Zealand is seen in the world.
The Government has sat on this issue for a very long time. It took the Minister of Justice, Amy Adams, over 1 year after she was briefed by the police on this issue to commence policy work—over 1 year. At the same time, the media and the Opposition had been raising this issue, along with the police, so it was not that it was not known. When she was asked about it—and I have got the quote here, I think—the Minister said that there were priorities that the Government had to juggle, that that was not her responsibility, and that she was not the Minister at the time, so she could not really speak to it. Well, the Minister, of course, at that time was, I think, Judith Collins, but the responsibility rests on the Government for the fact that we have dragged our feet on this issue, and that really is not good enough when these issues are of such serious import in respect of our reputation.
What I might also say is that with these issues, to me, it also goes to the obligation we have to the law-abiding businesses in our country. They go about their business. They pay their tax. They behave ethically. We should not be leaving the net wide open for the wide boys to come in and to slosh their money around, wash it, and recycle it back into illegal or unethical enterprises.
Having said that, the Labour Party certainly is pleased to support this bill. We do think that there are issues to be explored during the select committee process, and we will look forward to doing that constructively as the bill makes its way forward. Thank you.
The ASSISTANT SPEAKER (Hon Trevor Mallard): Before I call the next member, I would just like to make a suggestion to the Ministers who are in the House. Although Standing Order 40 indicates that there has to be a Minister present in the House, it used to be the convention of the House that the Minister in charge of a bill would stay and be available to organise a response. In fairly recent years, that has become less common, but the convention is that a Minister does sit on the Government benches in order to, at least, give the pretence of taking charge of looking after the legislation. I think it would be polite if that convention continued.
MAUREEN PUGH (National): I stand in support of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill in its first reading today. As we know, money-laundering is the process that criminals use to clean their dirty money. Of course we want to make that as difficult as possible for them to achieve, and for that reason I am in full support of this bill. I commend it to the House.
BARRY COATES (Green): Tēnā koe e Te Māngai. I rise to speak to the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. It is with great anticipation that we welcome this bill to the House. As a previous speaker, Michael Wood, said, it has been too long before this bill has actually arrived here in the House. There has been an extensive delay. As many people may be aware, it has resulted from international pressure as well as from public pressure, as well as from a compliance regime that New Zealand has not fully implemented.
The issue is, I think, really important for New Zealand. Transparency International’s report, which was recently released to great celebration around New Zealand topping the list of non-corrupt countries, has perhaps, I think, added to a certain amount of complacency around New Zealand’s reputation and our role with regard to corruption.
If we look at this particular issue of money-laundering, what we see is that New Zealand’s reputation has suffered. The Financial Action Task Force on Money Laundering is an intergovernmental forum on money-laundering. It comprises international experts, it has the strong backing of Governments, and it includes, as well as money-laundering, countering terrorism financing.
In 2010 the Financial Action Task Force provided a damning report on New Zealand. It highlighted the number of investigations that had taken place over a previous 4-year period and revealed cases of fraud, drugs, theft, blackmail, and burglary that had resulted in criminal funds, which had then been subject to money-laundering. As a result, New Zealand was struck off the prestigious European Union white list of countries that had financial integrity. Being struck off that white list is, I think, a sad indictment of New Zealand’s descent into a kind of economy where money-laundering has become rife, where tax evasion and the facilitation of tax havens has become rife, and where we have been a soft touch for multinationals, which can get away without paying tax on their New Zealand activities.
Subsequent to that Financial Action Task Force report, there were further warnings. It is pleasing to see that there has been a first phase of action—banks, financial intermediaries, and casinos were included in phase one of the regulations in 2009—but there has been considerable resistance to the process of adding those others that have a significant responsibility for potentially facilitating money-laundering. We welcome the fact that this bill will apply to real estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and high-value dealers. The coverage is important.
I would like to highlight, in particular, the coverage of real estate. The New Zealand Police financial intelligence unit has highlighted the use of real estate as an attractive haven for money-laundering. As people may know, what starts off as proceeds of crime goes into the purchase of property, and if there are no checks on the source of those funds, then the money can be counted as a legitimate form of investment. We have seen too much of this. It has been cited by many experts as a major factor in the high property prices that we have seen, not only in Auckland but, increasingly, in other cities across New Zealand.
There was a nice article in North & South magazine by Caroline Courtney, who included an anecdote where she said that an overseas buyer had come in, viewed 50 houses in a day, and bought 40 of them. There were no questions asked as to where the money came from. This is rife potential for money-laundering. We have seen too much evidence of dirty money in New Zealand, of money from all sorts of illegal sources. When the Minister of Revenue has talked about this bill, she has reminded us of the scale. I think it is good that there is anticipated disruption of $1.3 billion, but by all accounts, that is the tip of the iceberg and there is far more money that is being laundered in this country than $1.3 billion. The lesson from countries like the UK is that the legislation needs to be broadened to cover additional areas rather than just taking a check-box approach. An expert doing a PhD on money-laundering, Ron Pol, is very eloquent about the need for Governments to get beyond this check-box approach.
That is what we going to be looking for in this legislation. We are going to be looking for legislation that helps with action on money-laundering, not just adding to compliance costs for no reason through a check-box approach that actually does not achieve the aims that the legislation should be seeking. In particular, in the UK, what we have seen is that they had regulation far more comprehensive than ours in 2007, and the UK has gone on, subsequently, to introduce a number of other measures. We should be anticipating those in this legislation. It established a national crime agency particularly on money-laundering. What it has done recently is to establish a provision so that foreign companies wishing to buy property in the UK will need to join a new public register of beneficial ownership. This is what we do not have, with regard to a property register of foreign owners in this country. Those kinds of mechanisms would be very beneficial, and, further, they also apply that same register to those foreign companies that would provide Government contracts, or bid on Government contracts.
The third thing that the UK is doing is that it is the first of the G20 countries to establish an accessible central register showing domestic companies that control US companies and buy real estate. So what we are seeing is far greater disclosure on who the beneficial owners are amongst the property dealers, but also amongst the beneficial corporate owners. That kind of transparency—that kind of disclosure—is the standard that we should be looking for in this legislation. We do not see it yet in the proposals that we have before us.
Certainly, as the Green Party, we would be looking to significantly extend the disclosure and the transparency around money-laundering, because sunlight is the antidote to corruption, and sunlight is the antidote to money-laundering. We need that transparency if the money-launderers are to be identified and held to account.
We have not had an auspicious start to this legislation. It has been far too long coming to the House. The Government has been tardy in responding to this. It has obviously been heavily lobbied, and we suspect that that would be one of the reasons for the delay, but, further, we are worried about the narrow scope of the legislation.
Thank you for this call. We will engage positively with this legislation. We really want to see it happen, and we want to see it happen quickly, but we want strong legislation that actually makes a difference and cleans up dirty money in New Zealand. Thank you.
FLETCHER TABUTEAU (NZ First): It is a pleasure to take a call on behalf of New Zealand First. I just begin by asking a genuine question of the members opposite: why are they so reluctant to take a call on legislation that, by their own Minister of Justice’s account, will solve the problem of international money-laundering in New Zealand? They should all be proud to stand up in this House and tell the New Zealand public just what it will mean for Brand New Zealand, for example. So it is with great disappointment that I begin my contribution on behalf of New Zealand First.
In beginning it, I would like to acknowledge David Parker and his words to the House. I would like to agree with his statements regarding the financial adviser legislation. As an educator in the tertiary sector, specifically with regard to financial legislation, I spent many years trying to counter the overenthusiasm of the legislation, to combat the dearth of qualified financial advisers in the market who, despite years of experience and despite years of advising clients on financial decision making, could not now advise clients. It created quite a situation in the industry, which still exists. Essentially, it means that New Zealanders are not able to access good and sound advice from those who are best qualified to do it. It was a good example, Mr Parker, of overzealous legislation.
I now turn to the Minister’s contribution. I agreed with her wholeheartedly when she—and I hope I quote specifically—spoke of the “lifeblood” of organised crime. She said that it funds their lifestyle and it funds and enables their illegal practices, and that by allowing this, we ensure that legitimate business suffers. She said that this legislation will extend and protect our good reputation. But, Minister, this is not a new problem. That is the issue that I have and will speak to in the House today. Since 2003, Minister, this has been a problem that has been brought to New Zealand’s attention. In fact, just as examples, we were struck off the UN’s white list of financial integrity not that long ago. We had the Panama Papers, we had the Shewan report, and they all made it very clear that New Zealand has been complicit for decades.
I would like to make reference, firstly, to the Financial Action Task Force on Money Laundering. What it said was that the main priority of this legislation, just by way of background, has been to complete the revision of 40 recommendations, with regard to the international anti - money-laundering (AML) standard. Its publication—and I pick a few more pertinent details—said that the extension of anti - money-laundering to designated non-financial businesses and professions, such as casinos, real estate agents, dealers of precious metal stones, accountants, lawyers, notaries, and independent legal professions, trusts, and company services should be acted upon. It said that in 2003, and New Zealand was a member of that organisation—and still is a member—and the Government of the time said we would act. The task force also said that key institutional measures, notably regarding international cooperation, need to be invigorated, along with the improvement of transparency requirements through adequate and timely information on the beneficial ownership of legal persons, such as companies, arrangements such as trusts. Again, I say for the benefit of the members opposite that this was said and reported to New Zealand in 2003.
Then, in 2009, when this legislation first came up, the Hon Todd McClay said: “This bill will ensure that New Zealand’s laws against money-laundering and its laws to counter the financing of terrorism are up to international standards.” He then proceeded to say: “Well, there is money-laundering in New Zealand [and it] comes from the illegal drug trade [and it] is too much, and we must do much more about this.” It was surprising to note the Minister’s own contributions at the time. Then he concluded, in his contribution to the House, that something must be done and that the National Government would act, and “the sooner those who see New Zealand as a place where they may be able to launder their illegally gained funds will realise that we are taking this issue seriously.” That was in 2009. We were first told about it in 2003, then we created legislation, what, 6 years later and the Hon Todd McClay told us that New Zealand would act on it. Here we are now, still struggling to bring in legislation that would bring New Zealand in line with requirements from that financial authority that was first published in 2003. If you were there and listening to the Minister at the time, you would have thought that something was going to be done and the Government was going to act.
What we have been trying to deal with here in New Zealand is a very real attack on New Zealand’s way of life. This Government has deliberately done nothing for 8 years. Then, in 2015, Roger Wilkins came to New Zealand and said that the audit of Australia should be a wake-up call to New Zealand. He said then, in regard to that Government’s efforts to counter money-laundering, that we would rate worse than Australia. He said that New Zealand should move as quickly as possible and not sit around and do it at the last moment, and yet here we are in 2017. This Government has been letting down the rest of the world. I put it to the Government that it has been letting down Brand New Zealand, as for 9 years that Government has done as little as possible to combat what has been a very real problem.
I quote former Prime Minister Key. He told a post-Cabinet press conference that a remaining chunk of legislation to complete the country’s AML obligations would be hurried through. Then justice Minister Amy Adams said that a second tranche of legislation reform would extend any anti - money-laundering requirements to professions and businesses dealing in high-value goods, such as lawyers, accountants, and real estate agents.
To their credit, here we are now, albeit a couple of years later. I acknowledge that in May 2017 the Government was back on message and we have finally managed to bring this to the House. But I put it to them that they have been aware of this problem for 9 years, and I highlight the issue by using a police report. Research released just last year said unequivocally that the law of the time was allowing lawyers, accountants, and real estate agents to launder as much as $1.6 billion a year. Officials and the Government knew about this issue before the police report. They knew it before the police were forced to put it in a public report.
In my conclusion, I want to assure the Government members that we will support this legislation through to the select committee process, and that is our only commitment at this stage, but, in doing so, we will earnestly endeavour to help in their efforts to combat international money-laundering in New Zealand. Let us, indeed, take this to the select committee and rub this stain that has shadowed New Zealand’s reputation for far too long.
JONATHAN YOUNG (National—New Plymouth): I think it would be remiss not to add to the previous member’s speech, because he did quote a Government in 2003 and he did quote a Government in 2009, and I think people in New Zealand need to know that that is not the same Government. In fact, this Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill is an amendment bill on the 2009 Act, which was enacted by the existing Government, which came into office at the end of 2008.
I agree with what he is saying on many accounts—that this is something that is very important. As we know, when there is a hole in the net, that is where the fish swim through, and it is important for us to have provisions in place that entail having a security mechanism around this issue that is in harmony with other jurisdictions around the world. I commend this bill to the House.
JENNY SALESA (Labour—Manukau East): Thank you for this very brief call on the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. First of all, I would like to acknowledge the incident that happened overnight at Westminster. My heart goes out to all the people who have, unfortunately, passed away, as well as the 40 people who have been injured near the British Parliament, in London. This shocking incident brings home just how vulnerable people can be to terrorist acts in our democracies. In New Zealand, we must take our obligations seriously to stand up for and be counted in international efforts to fight against terrorism as well as corruption and money-laundering.
One of the ways that we can do that is to move swiftly on measures to close the loopholes in our legislation that allow money-laundering and profiteering by criminals, and possibly funders of terrorism, to take place right here in Aotearoa New Zealand. This bill before us, which we are debating, would bring lawyers, accountants, sports and race betting agencies, conveyancers, and real estate agents within the ambit of anti - money-laundering legislation. This is a crucial and much-needed move. Late last year—we know this from the New Zealand Herald, which investigated, as well as police, who researched—they found loopholes in our laws that saw lawyers, accountants, and real estate agents being increasingly used to launder up to $6 billion worth of dirty money. The investigations that they exposed showed the fact that professional services and the real estate sector are closely linked to organised crime and drug offending.
When we look at the numbers of those involved, about half of the cases involved property deals where offenders were ultimately successful in integrating criminal proceeds with the purchasing of real estate. New Zealand should not be seen as a country where criminals or terrorism funders can launder their money easily. Our reputation is, in this regard, at risk, and it is well past time that we take decisive actions to stop this. Labour supports this bill because it is the right thing to do. Thank you.
IAN McKELVIE (National—Rangitīkei): It is a great deal of pleasure to support this bill, and I look forward to it coming to the select committee. Thank you.
PEENI HENARE (Labour—Tāmaki Makaurau): Tēnā koe, Mr Assistant Speaker. Thank you for allowing me this contribution. I want to support a lot of what has already been said in the House. I think about my humble upbringing in a place called Mōtatau in the Far North, and money-laundering was—heck, you could not even spell “money-laundering”. But it surprises me that, all of a sudden, this Government is now saying to itself: “Oh, heck! Actually lawyers and accountants are involved. Oh my gosh! Real estate agents might be involved and other high-value dealers.” Those people who, according to the description in the bill here, deal in a black market of cultural objects and cultural taonga to New Zealand. All of a sudden, we are starting to realise that “Oh, heck! Money-laundering does not just happen down at the local pawnbroker shop in Kawakawa in the Far North; it actually happens from the top of society to the bottom.”, and here we are in the House this evening, making sure that we close some of those loopholes.
It is with that in mind that we support this. We think it is a step in the right direction. We want to make sure that we have got a comprehensive regime that does not make Aotearoa New Zealand look like a safe haven for money-launderers or for criminal activity. We often kid ourselves and tell ourselves that we are the small, tiny nation at the bottom of the Pacific, where it is hard for people to come down here and get away with criminal activity on an international scale. But that, clearly, has not been the reality, and many of the reports that have already been canvassed through the contributions this evening have highlighted that this is not just a New Zealand problem; it is, in fact, an international problem.
So, without going on too much more about it, I do want to support the comments made by the Hon David Parker, in that when this does go to the select committee, we will be looking at it with a microscope. We will be making sure we go through it with a fine-tooth comb so that we close all of those loopholes, so that we do not find ourselves back here after the history lesson given by Mr Young—2003 legislation, 2009 legislation, and here we are again in 2017—and so that we make sure we get it done and we get it done properly. So, with that in mind, I commend the bill to the House.
BARBARA KURIGER (National—Taranaki - King Country): It is a pleasure to commend the first reading of this bill to the House.
Bill read a first time.
Bill referred to the Law and Order Committee.
The ASSISTANT SPEAKER (Hon Trevor Mallard): Is there a Minister who is going to fulfil the intentions of the previous Minister, as announced at the first reading? Is it Mr Bennett who has responsibility? [Interruption] No?
Hon MARK MITCHELL (Associate Minister of Justice): I move, That the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be reported to the House by the date that is 4 months and 1 day after the date that the bill is read a first time.
Motion agreed to.
Hon TREVOR MALLARD (Assistant Speaker—Labour): The Government members are so lucky that the Chair is looking after them.
The House adjourned at 5.39 p.m.