Tuesday, 27 March 2018

TUESDAY, 27 MARCH 2018

TUESDAY, 27 MARCH 2018

The Speaker took the Chair at 2 p.m.

Prayers.

Sittings of the House

Sittings of the House

Hon CHRIS HIPKINS (Leader of the House): I seek leave for the House to suspend for the dinner break following the valedictory statement of the Hon Steven Joyce later this afternoon.

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

Ministerial Statements

Mycoplasma Bovis Outbreak—Culling of Cattle

Hon DAMIEN O’CONNOR (Minister of Agriculture): I wish to make a ministerial statement on the Mycoplasma bovis outbreak. I want to update the House on significant steps taken in recent days to control the spread of the cattle disease Mycoplasma bovis. The disease, first discovered mid - last year, has an impact on the health of cattle, including high mortality among calves, mastitis, high rates of abortions, and reduced milk production. It is a drag on the incomes of farming households, rural communities, and the national economy. I’ve been working hard with officials, industry leaders, and farmers on the ground to take actions to limit the outbreak’s impact.

Yesterday, I announced that the Ministry for Primary Industries will cull 22,332 cattle on all properties infected with the disease. This is the single biggest cull of cattle in New Zealand’s history. Last Friday, I announced the introduction of a checkpoint at the top of the South Island for trucks carrying cattle north, which will prevent animals moving from infected and restricted properties. These necessary steps are aimed at stopping the spread of the disease, giving farming families certainty about their livelihoods, and protecting our regional and national economies.

The reason we’ve decided to cull cattle now is that milk testing shows that Mycoplasma bovis is not endemic in the national herd. All our finds to date stem from two farming hubs. I note that the industry has backed the Government’s decision and decisive actions in recent days, saying that these steps will allow farmers to plan for the future. These latest actions will be paid for by $85 million that Cabinet and industry groups dedicated to the response earlier this month.

Tracing the disease has been a massive undertaking, owing to the poor use and application of the National Animal Identification and Tracing (NAIT) system. A review of the tracing system found that just 57 percent of those farmers recording their animal movements do so within the 48-hour statutory time frame, and it’s estimated that only 30 percent of farm-to-farm animal movements are recorded. Unrecorded stock movements are a significant reason for the spread of Mycoplasma bovis and have slowed our tracking of the disease. That is simply not good enough. We will work with farmers to fix NAIT’s problems and to protect our economy from future biosecurity threats.

Coming from a proud farming family, I understand how hard it can be for people on the ground dealing with Mycoplasma bovis on a daily basis. In my visits to farms around the country in recent months, I’ve been heartened by the support that farmers and their rural communities have shown to each other. I want to thank farming industry groups, and in particular rural support trusts, for their work to help farming families dealing with restrictions on their farms as a result of the Mycoplasma bovis response efforts.

To those farmers who face the culling of their herds, I understand that this is a difficult time, but the Government, in the actions it is taking, has shown it’s committed to working with you as farmers, and we are prepared to make the difficult decisions. Officials have reassured me that farming families will be walked through the process to cull animals in a caring manner over the coming weeks, and we are boosting compensation teams to help farmers claim for the verifiable losses that they suffer as part of the biosecurity response efforts.

Officials continue to investigate how the disease entered New Zealand. It is a complex task, and we are working hard to find the source of the outbreak. The dairy sector is New Zealand’s largest export earner, at $14.6 billion of export revenue for the year ended June 2017, while the beef sector earned an extra $2.7 billion. This Government is committed to ensuring these industries, which are vital to New Zealand’s economy, are resilient and protected from biosecurity threats.

The Mycoplasma bovis outbreak highlights the impact biosecurity threats pose to our agricultural production systems. As the world becomes a smaller place, these threats are more persistent and harder to keep from our borders. I consider biosecurity is the biggest challenge I face as Minister, and the biggest challenge we face as a country. I’ve committed to upgrading the Biosecurity Act to ensure it is fit for purpose in a world where pests and disease can come on a boat, in a plane’s cargo hold, or carried by a tourist visiting our country.

Over the coming weeks we will continue our tracing of Mycoplasma bovis before making a final decision, which I’ll take to my Cabinet colleagues, about whether eradication is still possible and economically viable. I expect the number of infected properties will increase as that work continues. Eradication is still our focus, but that will come with a price tag and a lot of hard work and cooperation between everyone involved. The Government’s actions over the last few days have shown the importance we place on supporting our farming sector.

SPEAKER: Before I call the next speaker, can I just remind Ministers that they do have—I didn’t interrupt the member when his time was up, because it is a matter of significant importance to New Zealand, but it should be possible to make a ministerial statement within five minutes, and I would like to remind Ministers, when they do it in future, to stay within that time.

Hon NATHAN GUY (National—Ōtaki): Thank you, Mr Speaker. Can I respond to the ministerial statement this afternoon. The National Party acknowledges and supports the decision that the Government has made, but I have some very important questions that are worthy of discussion this afternoon. If we think back to seven herds being culled prior to December—that was the support that this side of the House wanted to see continue, but then the Minister and the Ministry for Primary Industries (MPI) decided, because of new information—and maybe because they ran out of money—to stop the culling at that point, and then, actually, compensation dried up, because the Labour coalition Government didn’t get in a huddle in the Cabinet room quick enough and get the funding confirmed to provide certainty to farming families up and down the country.

I acknowledge now that they have made the decision. Of course, they went to the industry with the begging bowl and generated $11.5 million, which I think actually shows the importance of this cattle disease to not only the dairy and beef cattle industry in New Zealand but the wider New Zealand economy.

This ministerial statement has a very important caveat near the end of it. It says that Cabinet has still to decide if full eradication will take place and if, indeed, it’s economically viable. That is a “get out of jail” card for the coalition Government. Yes, they have made a commitment yesterday to cull 22 herds, but we want to see this continue. I guess they’re waiting to see some further evidence that may pop up when animals are indeed under stress.

My heart goes out to those 22 farming families who will now have their farms depopulated. That is a hell of a thing for these farming families to actually go through. There is quite a period of stand-down where animals—particularly bovine animals—won’t be allowed on these properties. You can imagine the livelihood that these farming families have built up with genetics over time. All of this is now going to be put at risk. So my challenge back to the coalition Government is be fair with your compensation and make it fast, because previously, in the last few months, it’s been too slow. Farmers have been contacting me overnight saying yes, they appreciate the decision, because now they’ve got some certainty, but they want the compensation to happen quickly. They want to get on with it.

The other important factor is providing the emotional support around these farming families, and I acknowledge the Minister this afternoon praising rural support trust, who have done a huge amount of work supporting MPI through this process at the moment, but you can imagine those farming families now that have to deal with the culling of stock that they have brought up over many, many decades to get to this point. That’s why the challenge back to the Government is make sure that compensation is fair and fast.

Also, I’m very keen to see the tracing report that many stakeholders have been waiting for a long period of time for. If I was the Minister, I’d be putting out the tracing report and the National Animal Identification and Tracing review this week so that everyone can have a big discussion about it. What the tracing report will tell farmers and all New Zealanders is that they don’t know how this disease got into New Zealand, it’s inconclusive, and it’s like trying to find a needle in a haystack. Let’s have the debate about the National Animal Identification and Tracing scheme. We should be having that debate, because farmers haven’t been doing well enough, in particular, tracing their stock between farm-to-farm movement. So this is a real wake-up call for industry.

But, importantly, where is the extra funding going to come from? Because this $85 million is just about the start, and we know the constraints that this coalition Government has on their Budget for 2018. So are they going to be supporting farming families in the future? Or is this just a one hit, because the ministerial statement that we heard this afternoon gives me a great deal of caution and some doubt. So, in summary—

SPEAKER: The member’s time has expired.

Rt Hon WINSTON PETERS (Leader—NZ First): For the benefit of those people in the gallery and those watching on television or listening on the radio, that was the speech by the former Minister of Agriculture, who was in charge, in all senses of the word, when this biosecurity breach happened: 170 under his watch. There were 170 biosecurity breaches and he gets up, this man, and gives us his bucolic road to Damascus experience. When did he have that? Then he had the effrontery to start screaming out about funding. For nine years he and his colleagues did nothing about it at all, and he had the effrontery to get up there, perhaps to pose to his backbench members about his proficiency, when he showed what a capital “H” word man he is. That was the worst example I’ve heard of irresponsible behaviour in a long political career.

Can I say, their response was pitiful, woeful, half measures, half-hearted, and they did nothing whatsoever. Well, let me ask that former Minister: when it happened, did he move to shut down transport over the Cook Strait for stock? No.

Hon Nathan Guy: Stupid idea.

Rt Hon WINSTON PETERS: Oh, a stupid idea? So it breaks out in the South Island but you’re going to make sure it could happen in the North Island. That’s a silly idea? Well, that demonstrates, you know, about the old English saying, the malady of the ignorant is being ignorant without knowing it. Secondly, when it came to cattle tracing, what, for nine long years, did he do?

Hon Members: Nothing.

Rt Hon WINSTON PETERS: Doughnuts, and he gets up here in this House and poses and ponces around here as somebody who’s a leader. Now, can I ask this question as well: why weren’t those animals culled immediately to contain the problem? [Interruption] No, don’t look at my colleagues. We inherited the problem. We inherited it from who? You.

SPEAKER: Order!

Rt Hon WINSTON PETERS: No, not you, Mr Speaker.

SPEAKER: No.

Rt Hon WINSTON PETERS: Oh no, you’d have been far more responsible. You would have acted with urgency and unction. No, no, that man’s all talk, all words, all hype, and all propaganda. We had over 170 biosecurity breaches, and on not one occasion did they take responsibility. Did they put the money up for customs control, border security? No, and he gets it. He’s hardly out of Government, he’s hardly got used to the embittered experience of catching an ordinary cab, and now he’s, in a malingering way, blaming the successors, who have picked up this nonsense.

Hon Nathan Guy: You voted against the border clearance levy.

Rt Hon WINSTON PETERS: Oh, give me a—

Hon Nathan Guy: Yes, you did! Yes, you did!

Rt Hon WINSTON PETERS: Ha, ha! You know, Minister, can I just say this. Very shortly—[Interruption]

SPEAKER: Order!

Rt Hon WINSTON PETERS: Yes. Very shortly, my colleagues and the Minister of Agriculture will produce the total response that’s required when it comes to these sorts of breaches, to the discovery of who did it—and, by gee, when we find out who did it, if we do find out, we’re going to throw the book at him. We’re not going to run around and talk about compensation alone. No, we want a bit of responsibility. But I think it’s best evinced by the Federated Farmers’ statement and the farming community statement today in support of the Government on this matter. But let me, please, tell you this. We’ve got the gipsy movement coming very shortly. You know what that is, don’t you? It’s not the National Party backbench. It’s not the National Party front bench. The gipsy day cattle movements are right upon us, so it’s critically important we have this problem solved. And also we have the autumn cattle sales happening as well, and no preparation in the last nine years was made for this whatsoever.

So I want to thank my colleague the Minister of Agriculture for showing—unlike that member—that he understands farming in its full way, in its full capacity. He understands that farming’s in the regions, and we’re the party for the regions—not just when it suits us; all the time. I also want to say that when the Budget comes very shortly, then the people of this country will see, and those listening today to this debate, that there is a Government that does understand its responsibility and they will have given the people who are there as our first line of security the resources for the first time in nine years to do the job.

GARETH HUGHES (Green): Kia ora, Mr Speaker. Ngā mihi nui ki a koutou, kia ora. I rise on behalf of the Green Party to support the Minister’s statement. We acknowledge the steps taken to control the spread of the cattle disease Mycoplasma bovis. This will be the largest cull of cattle in New Zealand’s history, reflecting the importance and the seriousness of this disease to our important dairy and cattle industries. Our thoughts are with the farms affected by this and note that while there will be compensation, many will feel the emotional loss of the animals they’ve raised as well as the investment in time and breeding.

We’re particularly vulnerable in New Zealand to biosecurity incursions and we note the existing challenges of kauri dieback disease and myrtle rust. We are heartened by the announcement of a review into the funding model, a review into the Biosecurity Act, and an improvement to National’s inadequate National Animal Identification and Tracing scheme. I think what many people in our rural communities would rather see from this House today is a focus on solutions, not a focus on scoring political points, particularly when the track record was so incredibly dire after the last nine years. Culling 22,000 animals is an unfortunate but necessary step to protect these animals and our primary industries and, hopefully, eradicate Mycoplasma bovis.

SPEAKER: The Hon Damien O’Connor in reply, and I’ll just say to the member in case he happens to look at the clock, it starts at five and finishes at three, because we don’t have a two-minute bell.

Hon DAMIEN O’CONNOR (Minister of Agriculture): Thank you, Mr Speaker. The outbreak of this disease is devastating for too many farming families around this country. I think the cheap politics in this House today shown by the Opposition is a disgrace at a time when too many families will be under huge pressure, having to destroy the stock that they have bred and loved and nurtured and looked after. This Government is trying to clean up a mess left by the previous National-led Government, which demanded more production from farmers but turned a blind eye to practices that have made this Mycoplasma bovis outbreak worse. The previous Government passed the National Animal Identification and Tracing legislation (NAIT), set up the NAIT system, but did not enforce it, and it turned a blind eye to obvious evidence and information that says that only 30 percent of farmers were recording farm-to-farm movements.

That is not good enough. The Government, by its action to cull cattle and check the movement of cattle and ramp up the Mycoplasma bovis response, is working to tidy up this mess. We must make changes to our animal tracking system, place greater emphasis on farm biosecurity measures, and cast aside the laissez-faire approach promoted so long by the previous Government which endangered farmers’ livelihoods and has endangered our wider economy.

The Opposition can throw stones, but their record here is pitiful. When there was a call for leadership, they showed none, instead choosing to turn a blind eye to the obvious problems of the NAIT system across the farming sector. The National Government was negligent, and the effect of their slackness has put our economy at risk. No doubt the Opposition will complain bitterly about the speed of compensation payments to farmers. It’s a system that has been set up—

SPEAKER: Order! The member’s time has expired. The member will resume his seat.

Oral Questions

Questions to Ministers

Ministers—Integrity and Oversight

1. Hon SIMON BRIDGES (Leader of the Opposition) to the Prime Minister: Does she stand by her statement, “We have a high standard of expectation for our ministers”; and does she believe her Government is adhering to these high standards?

Rt Hon JACINDA ARDERN (Prime Minister): Yes.

Hon Simon Bridges: What specific steps has she taken to prevent the Provincial Growth Fund becoming New Zealand First’s $3 billion political slush fund?

Rt Hon JACINDA ARDERN: I have seen the reports from Mark Mitchell regarding a conversation he’s alleged to have happened between himself and a New Zealand First member of Parliament. Given the statements that were made around the implications that Ministers may have been involved, I sought assurances from each New Zealand First Minister that Ms Marcroft had not acted under their instruction. They gave me those clear assurances, and I take them at their word.

Hon Simon Bridges: Well, in distinction of that, does she stand by her statement to Radio New Zealand this morning that “I find it challenging enough to make sure I keep control and oversight of my party and my own ministers. That’s where my jurisdiction sits.”?

Rt Hon JACINDA ARDERN: I’ll give the context of that comment. The question was whether or not—as I recall, the question was whether or not I would be getting involved with a disciplining of another party’s backbench MP. That would not be appropriate. My jurisdiction does lie over the conduct of Ministers, and that is why I undertook to seek those assurances.

Hon Simon Bridges: So she accepts then, does she, that she is the—

SPEAKER: Order! Order! Order!

Hon Simon Bridges: Is she—

SPEAKER: Well, start right again, all right?

Hon Simon Bridges: Is she the Prime Minister of the entire Cabinet, not just the Labour Ministers?

Rt Hon JACINDA ARDERN: Yes. That is why I sought assurances from those Cabinet Ministers who were referenced in some of the statements that were made by an Opposition MP. I am not for a moment stating that I don’t have responsibility for Ministers. I do, which is why I spoke to them directly.

Hon Simon Bridges: What will happen if those Ministers have not given her the whole truth?

Rt Hon JACINDA ARDERN: As this House does, I have sought those assurances, I have been given those assurances, and I take my Ministers at their word, as that last member did when he was in Government.

Hon Simon Bridges: Is she aware of the commitment the Minister for Regional Economic Development has reportedly made to co-fund the extension of the Clutha Gold cycle trail; and if so, is she satisfied that the appropriate process has been followed before allocating the funding?

Rt Hon JACINDA ARDERN: I don’t have the details of that particular project or where it is in the process. We do have a process, and I would point out that there have been a number of grants that have been made already where it’s clear that the process hasn’t been politicised. Anne Tolley supported the investment in Ōpōtiki Harbour. Former National MPs John Carter and Murray McCully supported the investments in the Far North. There are a number of examples where it’s very clear that this has been a process that has been about the economic benefit to the regions rather than who might be supporting the project, and that is as it should be.

Hon Simon Bridges: Is she also aware that until June 2017, the co-chair of the Clutha Gold cycle trail was none other than Shane Jones’ colleague Mark Patterson; and if so, does she believe that that has had any influence on a decision to award funding to this project?

Rt Hon JACINDA ARDERN: As I say—obviously, he was involved in the National Party. But the point I’m making here—the point I’m making is that there is a process that these projects go through. There are a number of examples where support has come from the other side of the House. That has not led to a decision against the project, because, ultimately, it depends very much on whether it has the support of the region, the community, and will produce jobs.

Rt Hon Winston Peters: Does the Prime Minister mean that when Mark Patterson first supported the Clutha cycle way, he was a National Party functionary and member of that party, or have we heard something here by mistake?

SPEAKER: Order! That’s—it’s way, way beyond the Prime Minister’s responsibility. [Interruption] Mr Brownlee, would you like to let your leader speak.

Hon Simon Bridges: Has she sought an explanation from Clare Curran on what she and Carol Hirschfeld were discussing at their secret meeting; and if so, what was it?

Rt Hon JACINDA ARDERN: First, I would clarify the meeting was held in a public place—for those who are familiar with Wellington, it was the Astoria—and so I don’t believe it’s fair to characterise it as a secret meeting. I did speak to Ms Curran on a number of occasions about this particular issue. She’s assured me that the nature of the conversation was high-level and very much about issues that she has canvassed in the public domain, as well.

Hon Simon Bridges: Well, does she accept that the meeting was clearly more than informal and coincidental?

Rt Hon JACINDA ARDERN: Minister Curran has never claimed it was coincidental. She’s acknowledged that it was in her diary. She did correct an original written question to make sure that it was correctly documented, and so, from her perspective, that has always been the case: it was always scheduled and therefore not coincidental.

Hon Simon Bridges: Well, isn’t it more than informal given that it was clearly pre-arranged, was in their diaries, and RNZ and its future was discussed?

Rt Hon JACINDA ARDERN: She acknowledged, when asked about the meeting, that it occurred. It was in her diary, and she also acknowledged that not including RNZ in the original written question asked by Ms Lee was a mistake, and that’s why she corrected it.

Hon Simon Bridges: As Prime Minister, does she believe it is right for her Ministers to “split hairs” when answering questions to Parliament?

Rt Hon JACINDA ARDERN: No. That is why it is entirely appropriate that she corrected the record and included that meeting in her list of written questions. And I acknowledge that at that time, my understanding is she had roughly 6,000 she was answering, and that was one of them.

Deputy Prime Minister—Actions and Statements

2. Hon PAULA BENNETT (Deputy Leader—National) to the Deputy Prime Minister: Does he stand by all his statements and actions?

Rt Hon WINSTON PETERS (Deputy Prime Minister): Yes, I do, in their context.

Hon Paula Bennett: Does he believe his actions and those of other Ministers have met the bar set in 2.57 of the Cabinet Manual, which states: “Ministers are expected to act lawfully and to behave in a way that upholds, and is seen to uphold, the highest ethical standards.”?

SPEAKER: Order! I’m going to ask the member to rephrase the question to make sure it is entirely within the responsibility of the Deputy Prime Minister. He has no responsibility for any other Ministers.

Hon Paula Bennett: Thank you, sir. Does he believe his actions have met the bar set in 2.57 of the Cabinet Manual, which states: “Ministers are expected to act lawfully and to behave in a way that upholds, and is seen to uphold, the highest ethical standards.”?

Rt Hon WINSTON PETERS: Yes, and compared with that member and her colleagues, my actions are as pure as the driven snow.

Hon Paula Bennett: When he said yesterday in his statement as Deputy Prime Minister, “Mr Mitchell may have misunderstood her underlying point.”, what was the underlying point Mr Mitchell misunderstood?

SPEAKER: Order! Because this is a very finely tuned matter, I’m going to do what I did with Dr Smith last week and seek an assurance that that statement was made by the Deputy Prime Minister and, in the body of the statement, uses that appellation for the Minister.

Hon Paula Bennett: I raise a point of order, Mr Speaker. I expected your question on that. I have a copy of it that’s clearly under the Deputy Prime Minister, and clearly has it written as his statement. I’m happy to—

SPEAKER: Yes, the member tables it and continues with the question.

Hon Paula Bennett: Thank you. Would you like to hear the statement again?

Rt Hon WINSTON PETERS: No, I heard it. We’re not slow learners over here. Can I just say that when I was first made aware of—

Hon Gerry Brownlee: Just answer the question.

Rt Hon WINSTON PETERS: Well, if you keep quiet for five seconds, old man, you’ll hear it. [Interruption] Can I just say that when I first heard of a report of this conversation, I knew that someone had got the wrong end of the stick, and so I thought, seeing as my colleague had allowed another parliamentary colleague to get a mistaken impression, that we should correct it as fast as possible. I thought that was the right thing to do. I mean, there’s nothing big about this, but we’re surely not going to have Mr Mitchell trying to make a mountain out of a molehill?

SPEAKER: Order! Having listened to the reply and looked at the statement, I accept the member’s word, and it is very clear that it is headed “Deputy Prime Minister”. It is, however, clear to me that there is nothing in the statement that is the responsibility of the Deputy Prime Minister.

Hon Paula Bennett: I raise a point of order, Mr Speaker. In all fairness, the statement that has been put out is clearly “Deputy Prime Minister”. It doesn’t even say “Leader of New Zealand First” on it. I double-checked that. So he has made those comments as the Deputy Prime Minister and, as such, he has responsibility for them as the Deputy Prime Minister and should be answering accordingly.

SPEAKER: I think you have to go quite a lot further than mislabelling a statement—[Interruption]; minus three supplementaries—in order to bring something into ministerial responsibility. He might be responsible for mislabelling a statement, but there are areas which he is not responsible for, and the activities of Ministers, as was made very clear by the Prime Minister, as all senior members of the Opposition will know, is a matter for the Prime Minister and not the Deputy Prime Minister.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I think the problem with your ruling is that it ignores the fact that the Rt Hon Winston Peters, putting out a release under the banner of the Deputy Prime Minister, has made an accusation against one of our members that he now, apparently, simply cannot be questioned upon. It is not an unreasonable thing to ask him “What did he mean? What was the other side of the story, which my colleague apparently has not understood?” To say that the House can’t question the Deputy Prime Minister about a statement he makes as the Deputy Prime Minister, I think, begins to—frankly, it just shields him from any of the normal scrutiny that would go on someone who makes, from a ministerial position, such an accusation.

Hon Chris Hipkins: The closest example I can think of where the House has dealt with this matter before was when the then Labour Opposition was trying to question the then Prime Minister, the Rt Hon John Key, about statements that he had made in his capacity as the leader of the National Party, but he had made them at his prime ministerial press conference. The Speaker of the House at the time—I can’t actually recall what the exact issue was, but I remember arguing about it—argued that he had made those statements in his capacity as leader of the National Party even if the venue in which he had made them was his prime ministerial press conference. The question is not where a statement is made or how it is cited or the title that is used in citing; it’s whether the Minister has ministerial responsibility for the matters in question. In this case, the Deputy Prime Minister does not have ministerial responsibility for the issues he’s being questioned about.

Hon Nikki Kaye: I did want to rise to speak because you have taken three Opposition questions as a result of my outburst. I am, frankly, appalled that, in this House, a Minister could put a statement out with the words “Deputy Prime Minister” and then, as Speaker, you could somehow know that he wasn’t acting in his responsibility and he had mislabelled the statement. That’s why you got the outburst. I would ask you to reflect on this. It’s a very serious matter. It’s not possible, in my view, for the Speaker to know what’s inside a Minister’s head. They’ve issued a statement in the capacity as Deputy Prime Minister.

SPEAKER: Can I just make it absolutely clear to Nikki Kaye that I am quite offended by her comments then. I know what the responsibilities of the Deputy Prime Minister are, and that’s what’s important, and I ruled that way.

Hon Gerry Brownlee: There is no comparison between the example given by the Hon Chris Hipkins and the current situation. For a start, if a person is being interviewed by a group of journalists in a stand-up situation, they may well be asked a range of questions and they may answer them without actually specifying “I am now taking this hat off and putting this hat on.” That was, you will recall, established well by the Rt Hon Jonathan Hunt, when he sat in the Chair that you now occupy, some years back. But, in this case, the Deputy Prime Minister, on the Deputy Prime Minister’s letterhead, put out a statement making an accusation against a colleague of mine, suggesting, effectively, that my colleague had got the wrong end of the stick. We’re just now saying, “Well, what was the right end of that stick?” He must know for him to have made that statement. Given that this is not a trivial matter, any suggestion that someone gets in the road of a member of Parliament doing their work—the elected work that they are sent to this place for—is a serious matter. Therefore, for Mr Peters to simply say, “Well, you know, the Hon Mark Mitchell must have got the wrong end of the stick or got the wrong meaning, etc.”, cannot just stand as a statement by the Deputy Prime Minister that says, “Close off; nothing to see here.” Surely, he can be questioned about what he actually meant?

SPEAKER: If, in the body of the statement, which I’m sure the leader of New Zealand First approved, it had said “Deputy Prime Minister”, I would have had more sympathy. But the fact that it has been printed by a press secretary on an inappropriate letterhead does not—[Interruption]; minus another three—bring it within the Deputy Prime Minister’s responsibilities.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Does that mean that a Government press secretary should know the difference between a letterhead that says “Leader of New Zealand First” and that of Deputy Prime Minister? You can only assume that it was done through the offices that are located on the ninth floor, which are Government offices—ministerial offices—not party offices.

SPEAKER: In actual fact, I think, as the member is aware, there are a number of people who are employed in those offices who are dually employed, including in his own leader’s office.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker.

SPEAKER: A further point of order?

Hon Gerry Brownlee: Yes it is, because that implies that there is some level of bad behaviour going on in the Leader of the Opposition’s office—in other words, using taxpayer funds illegitimately, unreasonably—and that is not the case. But it would be worse if that was somehow to be the reason why there would be an excuse for the Deputy Prime Minister to make an accusation on Government letterhead, using Government resources to make that accusation, but then not come under any scrutiny in the House whatsoever.

SPEAKER: I do want to, if I can, draw this to a close as soon as I can, and I want to be very careful about reflecting on mistakes made by staff members—especially a person who has had quite a history around these buildings, working for a number of parties. But it is clear to me that someone made an error in putting it on this letterhead.

Hon Louise Upston: I raise a point of order, Mr Speaker. I’ve got two points of order. The first is around the process of tabling documents and the supplementary question from the Hon Paula Bennett. You, as Speaker, had then asked for the document, and yet there wasn’t a process of tabling it. So my question is: have you made a ruling, as a result of that action, that you have to sight any documents that are made by members of this House in a supplementary question before you allow them to be raised on the floor?

SPEAKER: The answer to that is no, and I let the member ask her question. Carry on—second point.

Hon Louise Upston: Sorry, Mr Speaker, on that first point—

SPEAKER: No, no, the first point’s been dealt with. If the member has a separate point of order, she may raise it, but that point of order has been dealt with. Second point of order?

Hon Louise Upston: The second point of order is the assertion that you’ve made, Mr Speaker, about a staff member making an error. As a member of this House, I’m curious as to what’s led you to that conclusion, given that it is a document that’s on letterhead from the Deputy Prime Minister.

SPEAKER: The member will resume her seat now. If she is curious about my rulings and requires tutelage, I’m happy to explain it to her but not to take up the time of the House. I’ve made an indication to members that if they don’t understand my rulings, if I’ve not been clear enough, then I’m willing to talk to them about it, but points of clarification—or points of curiosity, as this one might be characterised—are not allowed under the Standing Orders. I’m going to warn the member: she’s disputed my ruling once already; if she disputes it again, I will view it very seriously.

Hon Louise Upston: I raise a point of order, Mr Speaker. In terms of the Speaker’s ruling that you have just used, could you please bring that to the attention of the House? I’ve been listening to the comments around me and I just want to know what that ruling is, please.

SPEAKER: Well, I think the member’s now trifling with the Chair.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Thank you, Mr Speaker. My point of order is simply that if we are now to move on from this—get it all nicely resolved; everyone is happy to an extent—is it reasonable that we, effectively, lose six supplementaries because of a mistake made by one of Mr Peters’ staff members?

SPEAKER: No. The six supplementaries have been lost because members on my left breached the Standing Orders.

Fletcher Tabuteau: Is the Deputy Prime Minister aware of any molehills that have been transformed into mountains of late?

SPEAKER: And three of the supplementaries have just been given back because the member knew that that was not a proper question.

Question No. 1 to Minister—Amended Answer

Rt Hon JACINDA ARDERN (Prime Minister): I seek leave to correct an answer.

SPEAKER: Is there any objection to that?

Rt Hon JACINDA ARDERN: I made reference to 6,000 written questions being answered at the time of Clare Curran being questioned in the House. I should be clear that that was the number being managed by the Government at the time, not by any one Minister.

Reserve Bank—Monetary Policy Targets

3. KIRITAPU ALLAN (Labour) to the Minister of Finance: What recent announcements has he made regarding the Reserve Bank?

Hon GRANT ROBERTSON (Minister of Finance): On Monday, I signed a new policy targets agreement with the incoming Reserve Bank Governor, Adrian Orr, which reaffirmed the Reserve Bank’s price stability target and introduced a requirement for employment outcomes to be considered by the Reserve Bank as it makes monetary policy decisions. I also announced Cabinet’s recommendations on phase one of the review of the Reserve Bank of New Zealand Act, which provide a pathway to legislating the new objectives for the bank. It also recommends a committee - decision-making structure for monetary policy, including the involvement of a minority of external members on that committee. These changes will modernise New Zealand’s monetary policy and ensure that it plays its appropriate part in our overall economic strategy.

Kiritapu Allan: How will a change to the objectives affect specific monetary policy decisions?

Hon GRANT ROBERTSON: Well, specific decisions are for the bank to make, reflecting their operational independence. What these changes do is ensure that the focus of monetary policy continues to be price stability and that, at the same time, there is a focus on the contribution to maximum sustainable employment. Such a mandate is common overseas and better reflects the role of monetary policy in the economy.

Kiritapu Allan: How do the recommendations from phase one of the review change the way monetary policy decisions are made?

Hon GRANT ROBERTSON: Committee decision-making for monetary policy will deliver better quality decisions over time by harnessing a broad range of perspectives. Committee decision-making for central banks is common practice internationally and, in fact, has been the practice of the Reserve Bank for some time. We are codifying that and adding in the appointment of a minority of external members. These outside perspectives will be especially important with the widened objectives for the bank. A non-voting Treasury observer will also be able to attend the meetings, which will help support the coordination of monetary and fiscal policy.

Nurses’ Pay—Minister of Finance’s Statements

4. Hon AMY ADAMS (National—Selwyn) to the Minister of Finance: Does he stand by all his statements and actions?

Hon GRANT ROBERTSON (Minister of Finance): Yes, in the context in which they were given and undertaken.

Hon Amy Adams: Does he stand by his statement on Q+A on 11 March when he agreed that nurses’ pay rates are in line for a reasonable bump?

Hon GRANT ROBERTSON: I stand by my full comments there, which were in relation to the fact that working New Zealanders’ share of economic prosperity wasn’t what it should have been over the last nine years.

Hon Amy Adams: Does he consider it prudent for a finance Minister to be stoking pay expectations in this way ahead of a significant scheduled pay round?

Hon GRANT ROBERTSON: I was doing nothing of the sort. I reflected the fact, in those answers, that we, as the Government, were in the middle of a negotiation. It would be fair to say that nurses, teachers, and, indeed, other workers in our economy have been looking back over the last nine years at a Government that consistently underfunded health and now are looking at a Government that actually believes in investing in health and education.

Hon Amy Adams: So has he provided district health boards (DHBs) with a funding signal for the upcoming year so they can conduct negotiations knowing the parameters they’re operating within?

Hon GRANT ROBERTSON: I believe that it’s largely the responsibility of the Minister of Health to provide funding signals to DHBs. What this Government is doing is taking seriously the fact that after nine years and a couple of billion dollars’ worth of underfunding in health, the Government actually needs to step up and do something, and it’s pretty rich for the other side of the House to complain now that we have to clean up their mess.

Hon Amy Adams: So why is he leaving DHBs in the dark on funding ahead of a significant pay round, when his inaction could enhance the chances of a nurses’ strike, leaving New Zealanders missing out on vital surgery that they need?

Hon GRANT ROBERTSON: I reject the premise of that question. What lies behind the issues in the health system is the fact that the previous Government failed to fund health properly.

Provincial Growth Fund—Decision Making

5. Hon PAUL GOLDSMITH (National) to the Minister for Regional Economic Development: What specific criteria is he using to determine which projects will be funded by the Provincial Growth Fund?

Hon SHANE JONES (Minister for Regional Economic Development): The question leaves the impression that I solely am responsible for criteria. I would tell the House that there are four Ministers responsible for the determination when decisions are made. They are the Ministers of Finance and Transport, and the Minister for the Environment.

Hon Paul Goldsmith: Is political advantage to the New Zealand First Party another criterion?

Hon SHANE JONES: I would draw the member’s attention—I won’t spend the House’s time on reading out the criteria—to section 62 in the Cabinet paper, which has been made abundantly available to the media and to the other sides of the House.

Hon Paul Goldsmith: What specifically is he doing to demonstrate the Prime Minister is correct when she says the Provincial Growth Fund is not a political fund?

Hon Paula Bennett: Meetings at the surf club?

Hon SHANE JONES: Taiho, kuikui!

[Patience, old lady!]

I would say that the Prime Minister is absolutely accurate. Not only have I advanced the interests of the provinces, as being a Minister, but I have been scrupulously faithful to the Cabinet Manual and the Cabinet policy process.

Hon Paul Goldsmith: Is he happy with me asking questions on this topic?

SPEAKER: No.

Hon Paul Goldsmith: Did he recently agree in principle to co-fund the extension of the Clutha Gold Trail cycle trail, the same trail his colleague Mark Patterson was the chair of as recently as last year?

Hon SHANE JONES: I enjoyed my time down that part of the country, and I was hosted by the local mayor—Mayor Cadogan, I think, is his name. I most certainly assured them that they have a champion in the provinces, number one—

Hon Simon Bridges: I thought you said it wasn’t just you who decided.

Hon SHANE JONES: Turituri, e tama!

[Be quiet, young man!]

Not only was I handsomely received, I advised that particular cycleway trust that they would not need to wait for five long years; they should work as soon as possible with the local mayor to bring forward a proposal that will be attended to by my hard-working colleagues and my good self. Nothing less should be expected from the provincial champion.

KiwiBuild—Unitec Development

6. PRIYANCA RADHAKRISHNAN (Labour) to the Minister of Housing and Urban Development: What are the main benefits expected from the announcement he made at Unitec earlier this week?

Hon PHIL TWYFORD (Minister of Housing and Urban Development): On Sunday, the Prime Minister and I announced the purchase from Unitec Institute of Technology of 29 hectares of land at their Mount Albert campus. It will be the first major development under the Government’s ambitious KiwiBuild programme, and will help restore the dream of homeownership to a generation of Kiwi families. It will be a new, master planned, medium-density community, combining a mix of open market, KiwiBuild, and State houses in the form of terraced housing, apartments, and townhouses with high-quality urban design. We want to create a place for people to put down roots and to live, work, learn, and play for generations to come.

Priyanca Radhakrishnan: Would these benefits have occurred had it not been for the Government’s KiwiBuild programme?

Hon PHIL TWYFORD: Auckland has a housing deficit of around 45,000 homes that is growing by about 7,000 homes a year. Soon after we came to office, I was advised that Unitec was considering selling this beautiful site to property developers, which would most likely have resulted in rows of high-priced “McMansions” well out of the reach of first-home buyers or, worse, it would’ve fallen prey to speculation at the hands of land bankers. KiwiBuild means the Government can step into the broken housing market in Auckland and by working with iwi, with the private sector, and with Auckland Council deliver quality affordable homes for Kiwi families, a vastly better outcome for Auckland.

Priyanca Radhakrishnan: How has his announcement been received?

Hon PHIL TWYFORD: Well, Unitec chair, Dr Lee Mathias, said that the proposed development was fantastic and would open the space up to others who will make it their home, grow businesses, and create a community. The Auckland mayor applauded the vision and ambition of the project. The New Zealand Herald this morning called it a “good use of a large, underused area of the city that has been ripe for a plan such as this.” Some others have criticised the provision of affordable housing and State houses on the Unitec—primarily, those also responsible for the national housing crisis in the first place.

Defence, Minister—Travel and Statements about Mark Mitchell

7. Hon MARK MITCHELL (National—Rodney) to the Minister of Defence: Does he stand by all of his statements?

Rt Hon WINSTON PETERS (Deputy Prime Minister) on behalf of the Minister of Defence: On behalf of my colleague, the hard-working Minister of Defence, most certainly, when they’re in their context.

Hon Mark Mitchell: When the Minister said on RadioLive Drive, “I will deal with Mr Mitchell.”, what did he mean by this statement?

Rt Hon WINSTON PETERS: I think he meant that Mr Mitchell is one of those people that says, “Do as I say, not as I do.” For example, on 9 June 2017, he took an NH90, which is not positioned in Auckland, from—guess where—Whenuapai to that extensively long place away, Papakura, so he could make a dinner. Now, there are other examples, if that member wants to hear them.

Hon Mark Mitchell: I raise a point of order, Mr Speaker. During my time as Minister of Defence, I never rode in an NH90. [Interruption] Supplementary?

SPEAKER: Supplementary question, the Hon Mark Mitchell.

Hon Mark Mitchell: Following the two dinners the Minister had with Tracey Martin, when she requested a C-130 aircraft, has the Minister discussed with her how he would “deal with Mr Mitchell”?

Rt Hon WINSTON PETERS: First of all, the Minister in question did not have any evidence regarding a C-130—

Hon Members: Oh!

Rt Hon WINSTON PETERS: —and that’s a fact. No, no—bull dust doesn’t work around here. You know, we tell the facts.

SPEAKER: Order! I know that, as has been said in the past, the winds of time are changing, but I don’t think we’ve got quite to that point. I think the Deputy Prime Minister will be a little more restrained in his language. [Interruption] No.

Rt Hon WINSTON PETERS: Can I just say, Mr Speaker, that the allegation made by Mr Mitchell is not correct, both as to the dinner and as to demanding a certain aircraft. The reality is, of course, we were going, with a number of National Party MPs as well, to the Chatham Islands to open a wharf. We are for celebrating regional achievements, not petty picking like that member there.

Hon Mark Mitchell: I raise a point of order, Mr Speaker. I’d like the Deputy Prime Minister just to clarify to me—

SPEAKER: No, no. You can ask another supplementary. That’s how you get someone to clarify something.

Hon Mark Mitchell: Did the Minister discuss with any of his Government ministerial colleagues his plans on how to “deal with Mr Mitchell”?

Rt Hon WINSTON PETERS: I think it would have been very strange if a Minister or an MP, being the subject of false allegations, was not to discuss it with some colleagues, I suspect, but I am not one of them, other than to say this: what he did discuss with me, of course, was on 5 May Mr Mitchell took a jaunt around Auckland on a Seasprite for a media photo op to get stock footage of him playing Top Gun.

Oil and Gas Industry—Gas Exports and Petroleum Exploration

8. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and Resources: Is she committed to playing a part in reducing global carbon emissions?

Hon Dr MEGAN WOODS (Minister of Energy and Resources): Yes.

Jonathan Young: Will she support the exporting of lower-carbon New Zealand gas to nations currently depending on higher-carbon coal for electricity generation, considering that China is currently burning 50 percent of the world’s coal and over 70 percent of India’s electricity comes from—

SPEAKER: Order! [Interruption] Order! The member finished his question in the first phrase.

Hon Dr MEGAN WOODS: Thank you, Mr Speaker. New Zealand currently does not export any of the gas it produces. In fact, to make it transportable in the form of liquefied natural gas (LNG) would require significant infrastructural investment. I point the member to the recent investment in Western Australia by Chevron Oil of $45 billion on the Wheatstone LNG plant in order to produce LNG.

Jonathan Young: Is the Minister aware that 48 percent of New Zealand’s gas is exported as methanol to South-east Asia currently?

Hon Dr MEGAN WOODS: It is not exported as LNG. It has gone through an industrial process that uses gas at the Methanex plants. It is not exported as a gas. The member asks whether we would support it. What this Government has been consistently clear on is that we have a very long-term opportunity here. We have a range of 20- and 30-year horizons for us to do the kind of long-term planning that New Zealanders expect of a responsible Government.

Jonathan Young: After she told the New Zealand Petroleum Conference that existing permits are protected, can she give assurance to those who currently hold exploration permits but not mining permits that should they apply for a petroleum mining permit following successful exploration, this pathway will remain open?

Hon Dr MEGAN WOODS: Both the Prime Minister and I have been crystal clear on that point. We have said that existing permits, both mining and exploration, will be honoured. Of course, anyone with an exploration permit will have to go through the appropriate application processes.

America’s Cup 2021—Venue

9. Dr DEBORAH RUSSELL (Labour—New Lynn) to the Minister for Economic Development: What announcements has the Government made regarding the hosting of the 36th America’s Cup?

Hon DAVID PARKER (Minister for Economic Development): Yesterday, the Government signed an agreement with Auckland Council and Emirates Team New Zealand to host the 36th America’s Cup in Auckland in 2021. This plan will deliver a world-class venue for the event and economic benefits to Auckland and the country. It is a fantastic achievement by the officials involved and testament to the effort this coalition Government has made to reach the best possible outcome.

Dr Deborah Russell: What benefits does this venue design provide over other plans?

Hon DAVID PARKER: The objective of the Prime Minister, Mayor Goff, and I was always to minimise the intrusion into the harbour while delivering a top-class venue at the lowest possible cost. This outcome saves tax- and ratepayers more than $50 million compared with other options. It entails the 6,600 square metre intrusion into the harbour, which is 16,000 square metres less than previously proposed. That 16,000 square metre reduction is equivalent to 40 waterfront sections of 400 square metres each. Property valued, this represents an environmental saving of an additional $50 million, meaning our interventions have helped save $100 million in financial and environmental costs.

Dr Deborah Russell: What reports has he received about the America’s Cup venue?

Hon DAVID PARKER: I have received reports congratulating the Government for utilising land on Wynyard Point, which results in a better outcome, including the legacy of clearing off Stolthaven’s southern tank farm. This is in contrast to another report claiming the new Government was wasting time pushing for Wynyard Point, preferring that we roll over and accept the plan initially presented to us. If we’d listened to that unsolicited advice in December, it would have cost $50 million more and caused significant loss of harbour space and sight lines. Luckily, Simon Bridges could not act on his own advice.

SPEAKER: Order! Order! Ministers have been reminded on a number of occasions not to use patsy questions from the Government in order to attack the Opposition. As a result of that breach, there will be the return of the three remaining questions to the National Party. Can I ask both sides just to have cognisance of the rules.

KiwiBuild—Unitec Development

10. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban Development: When he stated yesterday, regarding the proposed residential development at Unitec, “The reason we have government is to take some of the risk, to share some of the risk to make it easy for the private sector to come in and develop”, what risk was he referring to?

Hon PHIL TWYFORD (Minister of Housing and Urban Development): Developments of this scale and complexity carry sufficient risk that, sometimes, the private sector won’t take them on or is unable to deliver the outcomes—affordable housing and good urban design, for example—that the public should expect. The risks I’m talking about include uncertain access to finance, the cost of infrastructure, and the need to build affordable housing. In a broken housing market, we believe that it’s the appropriate role of the Government to de-risk a project like this so that the private sector can come in and do what it does well, and that is design and build great places for people to live, work, and play.

Hon Judith Collins: How will the Crown be sharing the risk with private developers for the construction of the proposed residential development at Unitec?

Hon PHIL TWYFORD: The primary way that the Crown will share the risk is by undertaking a master planning role that sets the standards, the overall concept for the design; ensures the delivery of network and social infrastructure, and provides opportunities for private developers to then come in and design and build aspects of the overall development, precisely as has been the case at Hobsonville.

Hon Judith Collins: Who will be standing behind the warranty for the houses constructed by private developers on the land at Unitec?

Hon PHIL TWYFORD: Well, there is currently no requirement for mandatory home warranties for new residential construction, although it’s not a bad idea.

Hon Judith Collins: Will the provision for any ongoing liability arising from the Unitec development under the Building Act come out of the $2 billion KiwiBuild envelope?

Hon PHIL TWYFORD: The houses that will be built in the Unitec development will be developed and built and sold by private sector developers, exactly as has been the case at Hobsonville.

Environmental Protection Authority—Associate Minister for the Environment’s Involvement

11. Hon SCOTT SIMPSON (National—Coromandel) to the Associate Minister for the Environment: Does she accept that a Minister should not interfere in the independence of the Environmental Protection Authority, particularly in its employment of its Chief Scientist; if so, why did she instruct her office on 15 December to email a copy of a highly critical article about the Chief Scientist to the Chief Executive with the subject “Great article”?

Hon EUGENIE SAGE (Associate Minister for the Environment): In answer to the first part of the question, yes. In answer to the second part of the question, I simply forwarded an article to my private secretary to pass on to the chief executive for their information. To be clear, I did not write the subject line of that email; it was written by a member of the public who sent the article to me.

Hon Scott Simpson: What was the date of the meeting where matters relating to the employment of the Environmental Protection Authority (EPA) chief scientist were discussed between the Minister and the EPA chief executive that she referred to in answer to oral question No. 7 on 22 March, where she said, “I was told the matter was in hand.”?

Hon EUGENIE SAGE: It was a status meeting, my first meeting with the EPA, and I think it was on 29 November, and there was no substantive discussion of the work of Dr Rowarth.

Hon Scott Simpson: Why did the Minister feel it necessary to involve herself in a series of emails and meetings both seeking and approving a “course of action” around the EPA’s chief scientist, in the emails dated 28 November?

Hon EUGENIE SAGE: The email dated 28 November was from the Secretary for the Environment, setting out a course of action. I simply said that I approved the course of action. There was no substantive discussion. If the member would be aware of the Crown Entities Act, that gives the Minister, in relation to Crown entities, a responsibility to manage the risks on behalf of the Crown. If I may quote from the guidance to Ministers, “Along with being answerable to the House of Representatives, you are also answerable to the public for problems or controversies arising in connection with the entity by responding to questions and participating in debates and reviews.” As I have said repeatedly, the public needs to have confidence in the independence of the EPA; therefore it should be of interest to the chief executive—matters in the media questioning that independence.

Hon James Shaw: What has Dr Rowarth herself said about why she left her post at the Environmental Protection Authority?

Hon EUGENIE SAGE: Dr Rowarth has said publicly that she was not pushed out of her role and that she continues to do contract work for the EPA.

Hon Scott Simpson: So does the Minister stand by her answer to my oral question last week on 22 March that it would be entirely inappropriate for her to be involved in an employment matter?

Hon EUGENIE SAGE: Yes.

Hon Scott Simpson: Isn’t the only obvious conclusion from the emails exchanged on “a course of action” and the discussions and meetings held by the Minister with the EPA chief executive that she wanted the chief scientist gone and that the chief executive then initiated an employment conversation with the chief scientist that led to her going?

Hon EUGENIE SAGE: No.

Electoral (Integrity) Amendment Bill—Commentary and Effect

12. Hon Dr NICK SMITH (National—Nelson) to the Minister of Justice: Does he agree with the statement by Rt Hon Winston Peters on electoral law regarding MPs joining other parties, when he stated, “Members of Parliament have to be free to follow their conscience. They were elected to represent their constituents, not swear an oath of blind allegiance to a political party. If an MP feels that membership in another elected party better serves his or her constituents then that can be put to the test at election time”?

Hon ANDREW LITTLE (Minister of Justice): Twenty-two years after the Rt Hon Winston Peters made that statement, yes. The Deputy Prime Minister and I are in agreement that the protection of the proportionality of parliamentary representation is paramount in the MMP system. The Electoral (Integrity) Amendment Bill will achieve that.

Hon Dr Nick Smith: Does he agree with the statement of the Attorney-General, David Parker, that his electoral bill will have “a chilling effect on an MP’s freedom to express themselves inside and outside the House”?

Hon ANDREW LITTLE: I’m not familiar with Mr Parker’s electoral bill.

Hon Dr Nick Smith: How can the Minister say he’s not familiar with the statement from the eternal general, when it is in the Bill of Rights—

Hon Members: Eternal general!

Hon Dr Nick Smith: —from the Attorney-General, when it’s in the—[Interruption]

Rt Hon Winston Peters: I raise a point of order, Mr Speaker.

SPEAKER: No, no. Order! Both members will resume their seats. I’m going to anticipate the point of order. I think many members have misspoken in this House and I’ll ask Dr Nick Smith to start that question again.

Hon Dr Nick Smith: How can the Minister of Justice say he’s not familiar with the statement from the Attorney-General when that is in the New Zealand Bill of Rights Act report on the bill for which he is responsible?

Hon ANDREW LITTLE: That member’s previous question referred to Mr Parker’s bill. There is no bill in Mr Parker’s name relating to electoral reform.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. The words used by my colleague were “in his bill”, referring to the Minister’s bill. For the Minister to try and twist it around any other way—I’m sure the Hansard record would show us—is a complete nonsense.

SPEAKER: The thing that I can’t be an arbiter of is matters like that which go back to previous questions.

Hon Dr Nick Smith: I shall repeat the question.

Hon Grant Robertson: Point of order, Mr Speaker.

SPEAKER: I have a request from Dr Nick Smith and will get a response from Grant Robertson.

Hon Dr Nick Smith: Does he—

SPEAKER: No, no. Order! The member will resume his seat.

Hon Grant Robertson: I raise a point of order, Mr Speaker. It’s not actually relevant to that, no. It’s a matter that occurred, but you make us raise them as soon as they occur. Is it still out of order in this House to ask a member to tell the truth?

SPEAKER: It does depend very much on context and I do need to hear it.

Hon Grant Robertson: Well, during the answer from the Minister of Justice, David Bennett interjected and asked him to tell the truth. Is that out of order?

SPEAKER: Did Mr Bennett do that? [Interruption] He will withdraw and apologise.

Hon David Bennett: I withdraw and apologise.

SPEAKER: No, the member will stand, withdraw, and apologise.

Hon David Bennett: I withdraw and apologise.

SPEAKER: Thank you. Now I am now going to allow Dr Nick Smith to ask that question again, without penalty.

Hon Dr Nick Smith: Does he agree with the Attorney-General David Parker’s statement that his electoral bill will have, quote, “a chilling effect on an MP’s freedom to express themselves inside and outside the House.”?

Hon ANDREW LITTLE: Assuming that his reference to “his bill” is the bill in my name, the Electoral (Integrity) Amendment Bill, I refer that member to the statement by the Attorney-General under section 7 of the New Zealand Bill of Rights Act that declares that there is no inconsistency between that bill and the New Zealand Bill of Rights Act.

Hon Dr Nick Smith: I’ll ask again. Does he agree with the statement made by the Attorney-General, David Parker, on his electoral bill, that it will have “a chilling effect on an MP’s freedom to express themselves inside and outside the House”?

Hon ANDREW LITTLE: Members of this House are free to express any view, but this House, when it is considering legislation, has to be guided by those with a statutory authority to deal with the constitutional judgments that have to be made, and under the New Zealand Bill of Rights Act the Attorney-General is required to provide a certificate as to whether or not a bill is consistent or inconsistent with the New Zealand Bill of Rights Act. A certificate has been provided in relation to the Electoral (Integrity) Amendment Bill and it declares that there is no inconsistency.

Hon Dr Nick Smith: I raise a point of order, Mr Speaker. [Interruption]

SPEAKER: Mr Bishop will now stand and apologise, and he is very lucky that he hasn’t cut supplementaries from Dr Nick Smith. Dr Nick Smith was on a point of order and Mr Bishop interrupted.

Chris Bishop: I withdraw and apologise.

Hon Dr Nick Smith: My point of order is that three times I have asked the Minister a very important question about freedom of speech of members of Parliament, and on three occasions the Minister has not addressed the question.

SPEAKER: In my view, on the two second occasions he did.

Hon Dr Nick Smith: Does he agree with the statement by the late Rod Donald in respect of the 2001 Act that this is, and I quote, “the most draconian, obnoxious, anti-democratic, insulting piece of legislation ever inflicted on this Parliament.”?

Hon ANDREW LITTLE: No, I don’t, and I refer to the Supreme Court’s decision in Prebble v Huata that upheld that legislation and its principles. I refer that member once again to the underlying principle of MMP, and that is that the party vote is the vote that counts, and the proportionality of party representation in Parliament is absolutely fundamental to our electoral system and is enshrined in the Electoral (Integrity) Amendment Bill.

Hon Dr Nick Smith: Does he agree with former Prime Minister Sir Geoffrey Palmer, one of the lead advocates of MMP, who opposed this legislation previously in saying, and I quote, “MPs should make honourable undertakings not legal undertakings. They may be coerced by argument, by public opinion, but not by stand-over tactics in closed rooms by party leaders.”

Hon ANDREW LITTLE: That question is premised on the erroneous view that that member has continued to hold, and that is that party leaders under the Electoral (Integrity) Amendment Bill can remove members of Parliament. That is incorrect. It is not what the bill says and that member, who is a longstanding member of this Parliament and has been a Minister, actually ought to do a lot better.

Hon Dr Nick Smith: Supplementary, Mr Speaker.

SPEAKER: No, the member’s used his supplementaries.

Rt Hon Winston Peters: Can I ask the Minister as to whether or not this statement, “If an MP feels that membership in another elected party better serves his or her constituents, then that can be put to the test at election time or at a by-election”, which was the case behind the political history of the person who made that quote?

Hon ANDREW LITTLE: Yes, I do agree with that statement—[Interruption]

SPEAKER: Order! We’ll have one Minister answering.

Hon ANDREW LITTLE: The first part of that statement is a direct quote from, indeed, the honourable member himself who just asked the question, and it is absolutely correct that those who wish to chop and change all over the place can go to their electorate, put themselves to the test of the people, and get a mandate. Some members in the history of this Parliament have done that and others haven’t.

Hon Dr Nick Smith: I want to seek leave to table a document, and I seek some indulgence to explain the extent which I had to go to get access to the document. It does not exist anywhere on the net. It does not exist in any—

SPEAKER: That’s all right. Just name the document.

Hon Dr Nick Smith: I seek leave of the House to table the press release by the Hon Winston Peters on 6 March 1996 that took the Parliamentary Library more than two weeks to locate.

SPEAKER: I think we should frame it as well! Is there any objection? There appears to be none. The document will be tabled.

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

Hon Scott Simpson: I seek leave to table a copy of an email released under the Official Information Act, dated 15 December, from the Associate Minister for the Environment to the chief executive of the Environmental Protection Authority including the subject heading “Great article”.

SPEAKER: I’ll just—as I generally do—seek an assurance that it was something that went to the member or his team, not a proactive release, as it is becoming the practice. It is. Is there any objection to that document being tabled? There appears to be none.

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

Bills

Appropriation (2016/17 Confirmation and Validation) Bill

Second Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2016/17 Confirmation and Validation) Bill be now read a second time.

Bill read a second time.

Bills

Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill

Second Reading

Hon ANDREW LITTLE (Minister of Justice): I move, That the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill be now read a second time.

This bill demonstrates the Government’s ongoing commitment to right the wrongs of the past for those who were convicted of historical homosexual offences prior to the Homosexual Law Reform Act of 1986. I’d like to particularly acknowledge the work of my predecessor as Minister of Justice, the Hon Amy Adams, who introduced this bill originally to Parliament and initially shepherded it through the House.

I want to also thank members of the Justice Committee for their consideration of the bill. The committee received 37 submissions and has recommended that the bill proceed with some amendments. Almost every submission expressed clear support for the intent of the bill. The committee heard 10 oral submissions, and I’d like to thank those submitters for sharing their stories. Many submitters commended the bill for introducing a novel scheme and were positive about the change that this bill will bring. The committee has recommended a small number of changes which will ensure that the bill will achieve its intended purpose.

The Homosexual Law Reform Act of 1986 decriminalised sexual conduct between consenting males aged 16 years and over. The right to be free from discrimination on the grounds of sexual orientation was later recognised in the Human Rights Act of 1993. Allowing historical convictions for homosexual offences to remain on a person’s criminal history perpetuates the stigma that those convictions carry, and it should never be beyond this House to recognise that laws passed in earlier generations, when different values and mores applied, can have consequences which it is in the power of this House to provide redress for.

The purpose of this bill is to address the ongoing stigma, prejudice, and other negative effects arising from a conviction for a historical homosexual offence by creating a statutory scheme for a convicted person, or a representative on their behalf if that person is deceased, to apply for the conviction to be expunged. If the application is successful, the conviction will not appear on a criminal history check and the person will not be required to disclose information about the expunged conviction for any purpose, and, indeed, anybody who then discloses that conviction when not authorised to do so commits an offence under the Act.

The scheme applies to Crimes Act 1961 offences that were repealed by the Homosexual Law Reform Act 1986 and their predecessor offences under the Crimes Act 1908. The bill provides for the Secretary of Justice to consider whether applications for expungement meet the statutory test. The test is that the behaviour would no longer constitute an offence under today’s law. That takes account of the possibility that some of those convictions related to genuinely criminal conduct in the nature of predatory offences or assaults that went beyond merely consensual conduct between men.

The committee recommended changes to improve offence provisions to better align with other legislation and to ensure that people are not put under pressure to disclose their expunged convictions. A further change is the inclusion of a provision which makes it explicit that expungement of a conviction doesn’t authorise or require the destruction of criminal records of expunged convictions. Other changes are relatively minor and technical. Some small amendments to wording have been recommended to align the bill with the language used in the Public Records Act 2005.

This bill’s purpose is to provide for an expungement scheme to reduce prejudice, stigma, and other negative effects arising from a conviction for a historical homosexual offence. The bill empowers those convicted and their representatives by providing a simple, low-cost, and effective way to right the wrongs of the past. With the committee’s recommended changes, I’m confident that the bill will more effectively achieve these objectives.

I conclude by addressing one other point that was commonly raised in the submissions, and that is the issue of compensation. The committee necessarily considered that issue of compensation and, in the end, concluded that it was not possible to consider or to recommend a scheme that would provide compensation that would be easy to apply or streamlined and would take account of the variety of different circumstances in which the original offences were committed and that would now be expunged. So the Government, at least, will not be providing, or will not be entertaining a compensation regime as a consequence of this bill. On that basis and with those comments, I commend this bill to the House.

Hon AMY ADAMS (National—Selwyn): I’m very proud to take a call on the second reading of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill, and I say I’m very proud because I do take an enormous sense of pride in that this piece of work came about under my tenure as Minister of Justice and under the National Party’s period of Government. I want to acknowledge the current Minister of Justice, Andrew Little, obviously, for continuing the work with the same degree of commitment and urgency, actually, to get it in place that we certainly had on this side of the House.

There aren’t that many opportunities in this House where you get the chance to do something that just simply feels, at a very innate level, right, and this bill feels like that to me. It’s always felt like that to me, and I also want to put on record that it’s one of those equally rare chances in this House to do something I hope will continue to be collectively—certainly, that’s been the experience to date—but that is absolutely above party politics. Now, those of us who have been members of this House for some time know that there are more occasions than the public probably see where we do work, actually, for what is simply the right thing to do and in the best interests of this country, irrespective of party lines. This piece of legislation has certainly been one of those, and it will certainly stand out in my memory for that reason.

I want to acknowledge the work of the Justice Committee, as the Minister has done. I had the privilege of sitting on that select committee while it was considering this bill in most of its consideration. Again, on that select committee—and I acknowledge the chair, Mr Raymond Huo, who chaired the committee through that process. Again, it is incredibly heartening to see a group of committee members who actually hunted in a bit of a pack vis-à-vis the officials, really. There were the committee members sort of on one side, all lining up with a very similar view of what we wanted to see happen and on occasion running up against, perhaps, some drafters and some officials who hadn’t quite understood exactly how we wanted it to work.

I want to just record in this contribution that, actually, the members of the committee representing members across the House were really clear when this bill talked about being an expungement scheme that we wanted it to be an expungement scheme—i.e., that the conviction was as if it had never happened; not a scheme whereby the convictions still remained on the record but everyone was just directed to disregard it. To us on the committee that was a really important distinction, and we believed that to the submitters and those affected by this legislation that was an incredibly important distinction to make.

This was always to be more than simply the “Clean Slate Act 2.0”. This is the first time this Parliament will have ever created an expungement scheme like this. Now, in one sense, that didn’t help us because there was a lack of simple precedent, but, actually, it reflected the seriousness with which we took this issue and the depth of feeling about the fact that these laws, the laws that these men were convicted under, are now seen as absolutely wrong—fundamentally wrong—and that those men should not have borne the scar of that criminal conviction.

Now, for this Parliament to do what it can do to redress that, it is important that the expungement goes far beyond simply a “You’re not allowed to discriminate on the basis of this conviction.”—sorry, Mr Assistant Speaker, certainly not you—that society is not allowed to discriminate on the basis of these convictions and becomes as close as we can physically and practically get it to a situation where it is as if these convictions had never existed, for the purposes of New Zealand law.

In the first reading of this bill, we didn’t just move the first reading of the bill and send it off to select committee in the way in which we normally do. This House also passed a motion that I moved that this Parliament apologises to those homosexual New Zealanders who were convicted for consensual adult activity and recognises the tremendous hurt and suffering those men and their families have gone through and the continued effects that those convictions have had on them. We put on the record that this House deeply regretted the hurt and stigma suffered by the many hundreds of New Zealand men who were turned into criminals by a law that was profoundly wrong. And for that, this House, this Parliament, put on record that it was sorry. We acknowledged that those men should never have been burdened with conviction and we wanted to recognise the continued effects that the convictions had had on their lives and the lives of their families.

When we, as the Government at that time, decided to move that motion—and it was supported by the parties in the House—and passed that motion, it was a very deliberate decision that it was this Parliament as an institution that would apologise and express in its most sincere form the sense of regret, the understanding of the hurt, and the desire to put it right. Again, that is, in my experience and my understanding, quite unique, and I do hope that this bill, that that apology, and that the action of the House to move—with some pace actually; it might not always seem like it from the outside looking in, but with some pace given all of the other work that’s going on—to put this bill into law does reflect our real desire to bring this awful period to a close as far as we can ever rewrite history. That was certainly a theme in the select committee. We can’t change history, and, actually, nor should we want to, because sometimes remembering the wrongs of the past is incredibly important. So we weren’t trying to rewrite history and blank it from history, but we were absolutely setting out to ensure that the impact of these criminal convictions, the tag of criminality, and the stigma that settled on these men and their families should be removed as far as this House could physically make that possible.

I think the bill now is in a better state than when I introduced it to the House, and I’m certainly happy to acknowledge that. I think we’ve got it far more to the place that we as a Government introducing it in this House had wanted it to be at first reading. I think it does go as far as it practically can to make those acknowledgments and to right those wrongs. It is a bill that I’m incredibly proud of, it is a bill that I do hope and believe will help to heal those wounds, and it is a bill that I’m very pleased to support.

DARROCH BALL (NZ First): Thank you, Mr Assistant Speaker. It’s a pleasure to rise on behalf of New Zealand First in support of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill. As we’ve heard from the Minister and other contributions so far, this bill seeks to reduce the prejudice, stigma, and all other negative affects arising from a conviction for historical homosexual offences. It also entitles the convicted person to declare that they have no such conviction under New Zealand law and that the conviction would no longer appear on a criminal history check.

It’s actually not that often that you get to stand up in the House and speak on a bill that has 100 percent full support from every member of this House. But I think also that the most important part from my perspective is that there is no politics involved with this. I think that we have all recognised as a country and as the representatives here of that country that there were some terrible wrongs that occurred, and we have the responsibility in this House to not only recognise those wrongs but also apologise for our role as a Government and the leaders of that country for that unnecessary hurt on those individuals.

New Zealand First obviously fully supports this piece of legislation and backs the apology and the movement of this legislation through the House. It also supports the recommendation of the Justice Committee for the slight changes—the amendments. This bill actually does highlight a sort of double-edged sword. It highlights somewhat of a stain on our country’s history and the effect that we had on some individuals because of their personal orientation, but also it shows, I think, the other side of the coin where it shows how far we’ve actually come since not so long ago.

Denis O’Rourke took the first call and was involved with the select committee process of this bill. I only took over this, obviously, this year, but one of the things I think everybody out there in the general public understands is that it wasn’t that long ago that we had a law against homosexual orientation. What this bill actually highlighted to me was, in fact, that it was such a short period ago, in 1986—which is in my lifetime—and I find that it’s unimaginable for anybody of the new generation who were born post that time to actually comprehend and to understand. Of course, it’s never too late to apologise and it’s never too late to admit to wrongdoing, so that’s what this legislation allows. Unfortunately, it is too late in some circumstances to avoid the massive damage that was caused to some of those individuals, to innocent people, and we need to acknowledge that.

There are three main issues that this bill seeks to accomplish, and it does, I believe. The first is that it reconfirms the freedom of people to lawfully express their sexuality and be free from any prejudice in doing so. The second is that it avoids the huge disadvantage of suffering such a conviction in regard to having to disclose the conviction in terms of employment and so on. But most importantly, the third one, is that it goes some way, hopefully, to restore some sort of self-esteem to those individual, and helps enhance the mental well-being and self-worth for all of those who suffered convictions.

One of the most important aspects of this piece of legislation going through is that it’s not just a piece a paper—that there were, and are, real-life stories and individuals who were affected by this. I think it is important to not just speak about what is written in the legislation—the bill that’s going through this House—but how the previous law affected specific individuals and their stories. I’d just like to take the next couple of minutes to read two or three of the submissions that I have gone through and that really stand out for me.

One states that, “These convictions destroyed careers, including in the case of our friend, a top honours graduate of Portsea Officer Cadet School, forcing his resignation from his post as the youngest-ever captain to hold a commission in the New Zealand Army. More significantly, they caused substantial trauma and loss of dignity to those affected.” A quote from another individual says, “This conviction still leads, after 53 years, to self-hatred, worthlessness, unjustified guilt, and shame. To relieve the anguish and pain, chronic drinking and self-destruction took control over the next 10 to 15 years, until the realisation that I wasn’t a two-headed monster and there were many others like me throughout the world. I love my country, but live in fear of being found out, of further humiliation, panic attacks when I see a uniformed police officer, and a general feeling of being unworthy to myself—something few others would understand.”

Another one: “I had never been arrested before or been in trouble with the police. I was charged with keeping a place of resort for indecent acts between males. There was the abuse, bashings, and terror that followed from anti-gay bigots. This conviction has affected me personally and financially ever since, hindering my employment prospects and overseas travel. I have been active, doing voluntary work, but have been disadvantaged when background checks have been required for some organisations.”

This one is from a different perspective. It was from a young New Zealander who didn’t live in those times. They say, “I’m a criminal in 76 countries, and I am so thankful that I am not seen as a criminal in my home country. I am the hateful words spoken by the mouths of many—whether it is in high school halls or behind some walls. Hate speech is still prevalent in our society. I am the death sentence in five countries. I’m the noose tightening around their neck or the shock from the electric chair, because they could have been me if I was born in a different place and if I had spoken up then. Some people cannot be a voice. Thirty-one years ago I could have been behind bars for just being who I am.”

Lastly, I think everyone has heard of one of the most notable examples of being convicted for their sexual orientation, and that individual was Alan Turing—not a New Zealander, he was obviously British, but suffered under the same legislation that occurred back then. He was highly influential in the development of theoretical computer science. Turing is widely considered to be the father of theoretical computer science and artificial intelligence. He was responsible for breaking the Nazi Enigma code during World War II. His work gave the Allies the edge they needed to win the war in Europe and led to the creation of the computer. In 1952, he was arrested and charged with indecency, after a brief relationship with another man. Homosexuality was still a crime in Great Britain at that time. Defiant, he did not deny the charges. When he was arrested, the first thing he said was that he thought this should not be against the law. He gave a statement that was unapologetic, that detailed what had happened. Turing took his own life in 1954, two years after being outed as gay. He died from eating an apple laced with cyanide. He was only 41 years old.

I think that those individual cases that we heard from the submitters are just a few of the examples—as well as one of the most famous examples—of the hugely negative effects that a piece of horrid legislation that previously existed prior to 1986 has had on individuals. I’m very proud of this House moving forward as one, and representing New Zealand First as part of that in passing this legislation. Thank you.

Hon MAGGIE BARRY (National—North Shore): Thank you, Mr Assistant Speaker. It is with great pride I rise to speak at the second reading of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill. National, of course, supports this bill because it builds on the work of the former Minister of Justice, Amy Adams, who took an earlier call in this House.

In July last year, when the first reading came through and the apology was given, I feel it was an extremely significant milestone—really, a watershed time in this House, actually. I’m searching for the right words, because this is a House that has lagged behind where it ought to have been on this particular issue. This is a scheme that is long overdue. It is a step towards addressing the stigma, the prejudice, and the pain that many New Zealanders had to live with, unfairly, and it has helped to put right a wrong that has stood for too many years.

Thirty-two years ago, in this place, the Homosexual Law Reform Act decriminalised homosexual conduct between consenting males 16 years of age and older. It then took Parliament a further seven years to amend the law, to allow the right to be free from discrimination on the grounds of homosexual orientation, which was recognised in the Human Rights Act of 1993. It then took another 25 years to pass the Marriage (Definition of Marriage) Amendment Act. In 2013, I was a member of Parliament in this House, and I’m proud to say I voted on all three readings in favour of that piece of legislation allowing same-sex couples to legally marry.

This Parliament has taken its time to address the rights of the past, but we are doing it again today, with this second reading. At the first reading, the then Minister, Amy Adams, who referred to it again in her earlier call, made an apology on behalf of all of Parliament about the hurt and the stigma suffered by men who were made into criminals. When the provisions of this Act come in—and I think it will quite swiftly because it is supported across the House; as others have said, that is a rarity—the main provisions will be that people will be able to, and be eligible to, apply if they were convicted of specific offences under the Crimes Act relating to sexual activity between males 16 years and over. Those were the acts, of course, that were decriminalised under the Homosexual Law Reform Act of 1986.

So there are five main offences. I won’t go through them, the presiding Minister did that a few moments ago, but I think it is very important to recognise that the sexual activity must have been consensual and that both parties were over 16 years of age. I know that there were people who made submissions who felt that the age should not be relevant, but the criminal Act factor still applies, of over the age of 16 now. I know that the select committee at the time, the Justice Committee, of which I am a member currently, really debated that extensively. But I think it is important to acknowledge that.

The process, as well, is a different one for this Parliament. There are many differences about this piece of legislation; I’ll highlight a couple of them. The Secretary for Justice will be the individual responsible for determining applications on a case by case basis. But this will not mean that men will be expected to come forth and give evidence, or appear in person even. The Secretary for Justice will be able to require applicants to provide relevant information on request, if necessary, to make the decision, but the process should be as easy as possible. I think that that is important; these men have suffered enough, and for long enough.

So if an application is approved, their conviction would be expunged and that expungement is noted in official records. But what does that mean in practice? It means that the person formerly with a criminal record would be entitled to declare that they have no conviction, and that their conviction would not appear on any official criminal record. For those of us who are laypeople and don’t understand the minutiae of the law sometimes, in this case, it is important I think to note that the Justice Committee took a lot of time to talk about expungement, which is, as others have mentioned, very rare in New Zealand law.

The significance of it is that if it went to a concealed conviction, which was I think what was initially proposed, then that conviction may still be disclosed in certain situations. A person must be conviction-free for seven years and have never been imprisoned, to be eligible under the Act. An expungement, though, will be available regardless of any subsequent offending and the sentence imposed—I think that is extremely important—and expungement as if it never existed, and nor should it have. We are putting that record straight, and that’s important because of the psychological impact that this legislation—the former laws, really—have had on the victims and the people supposed to have been the perpetrators. The previous speaker, Darroch Ball, gave some very moving examples of people whose lives have been blighted, overshadowed, and shortened—sometimes at their own hand—by that sense of shame.

It is not to be taken lightly. Experiencing discrimination on the basis of sexuality is not something that happens in New Zealand any more, and nor should it. It can have an impact on an individual’s opportunities, not only in their employment—for example, they wouldn’t be able to take on governance roles on committees and so forth because a criminal conviction would not allow them to do that—but they wouldn’t even necessarily be able to travel to places. These are the sorts of ongoing issues for people with criminal convictions that are really important to note because they really do contain people’s lives and restrain people’s lives in a way that is manifestly unfair.

It seems to me that this is a piece of legislation that, really, is tidying up some of the bad practices of the past, and I think that the 10 submissions, I think it was, that the Justice Committee heard outlined the reasons why it was so important to men who are alive, but also those who have passed away. This bill allows people to be able to put their relative’s or their friend’s case forward and to ask for that expungement. I think that when you’re putting right historical wrongs, it’s very important to understand that for those who have passed, it is still important—as it is in war records, actually. When people have been unlawfully or inappropriately found guilty in a wartime situation, their families spend sometimes generations trying to put their military record right and to put their side of the story. I think it is a very important element of this legislation that it does allow that posthumous recognition of innocence—and expungement, I think, is the key note here.

So I think that this bill will proceed. This will go through the House smoothly. I hope it does. It can’t come soon enough, and I would urge all members of this House to continue to make their points, but also to move this piece of legislation through as quickly as possible because it is a wrong that needs to be put right as soon as possible. Thank you, Mr Assistant Speaker.

Hon GRANT ROBERTSON (Minister of Finance): Thank you very much, Mr Assistant Speaker. Thank you for the opportunity to contribute to the second reading of this bill. In the first reading of this bill, I made a speech that really, I hope, set up for myself and for others the premise behind why we need this legislation. It’s been mentioned by a number of other colleagues, and I think it’s important that we don’t lose sight, in what now will become a slightly technical debate about elements of the bill, of what we’re trying to achieve here. What we are doing, as other speakers have said, is trying to right a vastly unjust wrong that existed in our society for so long.

It was interesting to me, when reading the submissions that came in on this legislation to the select committee, just how many of them came from young people—from people whose life and existence is far removed from that of the men who were convicted under this unjust law. I was struck particularly—and my colleague Darroch Ball has already quoted from this person’s submission—by the teenager who submitted to the committee and used this phrase, which I think’s an extraordinary one: “Love used to carry a prison sentence in this very country until 1986.” For a teenager to say that so clearly and starkly to this House is, to me, a validation of a number of things—including our select committee process, actually, but also of the fact that we have a new generation of young LGBTIQ people coming through who have the most extraordinary vision, not only of their own lives but also looking back to the past, and I think we need to acknowledge that that happened in the select committee process.

I want to talk, for the most part, in this second reading—as I think we’re actually meant to do—about the select committee process, and acknowledge the fact that the committee has done some useful things in terms of dealing with the issues that were raised in front of them—the whole question of what an expunged conviction is. The movement from defining a “criminal record” and replacing that with “official record” I think is a step forward because I think that acknowledges that a criminal record could be defined as quite a narrow term. The official record means that we cover a wider set of public records, particularly those in line with the Public Records Act, and it also makes it more similar to the Criminal Records (Clean Slate) Act. I think that will go some way to meeting the concerns of submitters who came to MPs with that.

The other matter that I know a number of submitters were concerned about was the question of whether or not the language in the bill was limiting what we are doing here today to New Zealand, and that it would, in fact, not help people who are working or travelling overseas, and that we were, in fact, writing the bill in such a way as to cause difficulty there. I note that the committee is looking at clarifying clause 9 to remove the word “only” from the phrase “for the purposes only of the laws of New Zealand”. We do, I believe, as a Parliament want this expungement to be recognised in overseas jurisdictions. It is only right that we as a Parliament take some responsibility for that. I do, of course, note that we can’t take full responsibility for the laws of other countries, but what we can do is ensure that our law facilitates and supports people who have been affected by these unjust convictions when travelling overseas.

The other and more far-reaching thing that I think came out from the select committee submissions is the importance of noting that this piece of legislation matters not only for the people who are still alive today who have convictions, not only for the families of people who were convicted, but also for the wider community and the LGBTIQ community. I think that was starkly drawn out by the submissions that came from organisations that represent youth, all the way through to the Law Society and others. We as a Parliament, as we pass this legislation, have to realise that not only does the weight of history land on our shoulders but also the weight of the future. Time and time again, what the submissions here do is call this Parliament to action to continue to make New Zealand a place where people can be who they are—where people are supported to live lives of dignity and hope, free from discrimination.

Those submissions, time and time again, raised the issues that still exist in our community. Some of them are legislative, particularly for the trans community; some of them are attitudinal, for young people expressing, still, the discrimination that they feel in their communities; and some of them are about the way in which we continue to support people, be it the trans community seeking gender surgery, or be it health services and social services that are provided. While this particular bill cannot do much about that, I think we owe it to the people who submitted to the committee to acknowledge and to recognise the fact that we are on a journey here. It’s a journey that this bill takes an important step in, but it is not the end of that journey, and there were several submissions that went down this path.

I do want to make a special reference to someone who is known to me, I should say, Ted Greensmith-West, who in his submission—I think very eloquently—talked about the issues that are in front of us today. I just want to quote briefly from the end of his submission: “Everything that I do in my life is to ensure that those LGBT kids coming through the system today do not have to experience the same struggles that I did growing up in New Zealand. These are exactly the same goals of those brave men who fought for decriminalisation in the 1980s, and of those who suffered in silence for decades … We have a long journey before us in order to achieve true equity and equality for LGBT New Zealanders.” Ted’s writing to the committee here: “I invite each and every member of the select committee to join me and the hundreds of other LGBT New Zealanders in that journey. We need you.”

Parliament needs to hear the call of those in our community who are saying they still need us. This is an important step. This is a useful and important piece of legislation that will mean an enormous amount to the people who carry the shame and the stigma still today of the convictions that they got. We must make sure, as we move through the remaining stages of the bill, that we make the bill as clear as possible—and I believe the select committee changes do that, and that is what we will be doing today for them and for their families—and then, we must redouble our efforts to make sure that, as a Parliament, we do everything we can to support the young people, not only those who submitted but those who are still working their way through their own journey.

I won’t delay the House much longer on this matter other than to say I’m very pleased that the legislation has found its way to this stage. There is an important issue that needs to be acknowledged in my final area, and that is the call for compensation. We need to acknowledge that members of our community have come to the select committee and asked for this. We also need to acknowledge that this is an issue where there are divided opinions about compensation. I hope, as we move through the committee of the whole House stage, members of the committee will talk through the way they came to their decision about this. It is not an easy topic, but it is important that we give honour to those who submitted on this matter and the people that they represent.

I continue to believe there are a number of ways available to the Government and to this Parliament to think about how we honour the men who were so unjustly convicted, the men whose lives were ruined, and the men whose lives were ended by this. There are a number of ways forward for this Parliament and this country. I want that dialogue to continue. I think it’s very important that we do that as part of this bill process.

I want to end my contribution by acknowledging every single person who made a submission to the select committee, the people that they represent, and the committee members themselves. This is our democracy working well; it is also a lesson and a story for us to continue to hear in the years to come.

CHRIS BISHOP (National—Hutt South): Thank you very much, Mr Assistant Speaker. I just want to agree with what Mr Robertson has said in the House so far. This is a profoundly important bill for New Zealand’s Parliament and for our democracy, and it’s fantastic that it will, I believe, receive unanimous support in the Parliament.

Thirty-two years on from homosexual law reform in 1986, and the rancorous, antagonistic—putting it mildly—debate and the tortured passage of that piece of legislation through the Parliament on a personal vote, a conscience issue, members divided morally and politically, some of them engaging in appalling behaviour. Thirty-two years on from that, it’s just a testament, really, to how far we’ve come as a country that we will have a bill before the House that not only affirms homosexual law reform in 1986 but actually seeks to wipe from the record books convictions under the law as it existed prior to 1986, and that that bill will pass Parliament unanimously. And the apology that Parliament has given at the same time, which the Hon Amy Adams delivered when she was the Minister of Justice in the last Parliament, because of the bill passing unanimously—Parliament is every single person, to a man and a women, endorsing that message of reconciliation and of justice, and doing justice, to be more precise.

I do want to echo what Grant Robertson said in his remarks about how we have a long way to go in that strive for equality and tolerance in our society and about creating a New Zealand where every young person, in particular, no matter their sexuality or their gender, can grow up living in a society where they feel they are valued and they feel that they are respected and that they are acknowledged and that their dignity is upheld. We have a long way to go—we have come a long way, but we have a long way to go. And I’m looking forward to being part of that conversation as we move forward into the 21st century.

It was a privilege to work on this bill in the Justice and Electoral Committee, in the last Parliament, and in the renamed Justice Committee in the new Parliament. It’s a shortened committee title, but we seem to have picked up double the work, because the Law and Order Committee has been folded into us—and I see my colleague Raymond Huo smiling, perhaps a bit wryly, because it looks like, from the Order Paper, we’re going to get even more work over the next few months. But that’s OK; we’re a very hard-working committee. I know members from both sides really enjoyed working on this—my new colleagues Greg O’Connor from Ōhāriu, and Ginny Andersen from Labour, and Priyanca Radhakrishnan from Labour as well, really enjoyed working on this really important bill.

I think we’ve made some useful changes, actually. We interrogated the substance of the bill really closely. We did get really down into the weeds of the bill, because the operation of the expungement regime is of vital importance to the purpose of the bill and to giving effect to what the purpose of it is, which is to wipe from the statute book and wipe from the record books the history of that conviction and the conviction itself. Members previously have gone through some of the quite technical changes we’ve made around criminal records, what “official records” means, and amending the definition of “expunged conviction” in clause 9 of the bill, and those are very useful changes.

The only thing left for me to do is to commend the bill to the House. I’m looking forward to its speedy passage through committee of the whole House and also its third reading. Kia ora.

JAN LOGIE (Green): Thank you, Madam Assistant Speaker. It’s also with great pleasure that I rise to speak to this, the second reading of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill. I want to share the views and the sentiment that is being expressed in the House tonight of the importance of this bill and also acknowledge the origins of this and the fact that I think it’s also a victory for the parliamentary process and democracy in itself.

We’ve had quite a few years of members of the LGBTIQ community calling for the expungement of homosexual convictions and that seemed to be falling on unhearing ears. Then a young person, Wiremu Demchick, put together a petition—and got over 2,000 signatures—which was presented to Parliament, asking for an apology for those who were convicted of homosexual crimes, and for this legislation. Through that process, the view of the Government changed to the point that we now have unanimous support in this House for the apology previously and now this legislation to expunge those convictions. And it is a wonderful thing to see that working effectively.

I too just want to echo some of the sentiments that were in the submissions, noting that while the primary purpose of this bill is to seek to reduce prejudice, stigma, and all other negative effects arising from the conviction for a historical homosexual offence—this legislation, which is so significant to those men and their families because lives were ruined and ended early as a result of the prejudice that was created by our laws—the impact has also been wider, and the significance of this legislation is wider. And I would also like to quote from the submission from Ted Greensmith-West, which Grant Robertson previously referenced as well, where he was saying that, as a younger queer man, for him the primary purpose of this bill was that it was an opportunity to recognise and address the wrongs of the past, to remember and recognise the sacrifice of these brave gay and bisexual men, and to pave the path forwards so that, as a society and as a Parliament, we never make the same mistakes again.

For me, there’re a lot of things in that short statement. It’s about recognising the harm and the wrongs and how profound they were but also recognising that journey of sacrifice for those men, many of whom got those convictions from being brave enough to push against that prejudice and try to still express themselves in a way that created a crack that opened up to enable the later homosexual law reform, which enabled people like me and others to stand in this House—stand in our identity proudly. That was an extraordinary sacrifice that so many of us have benefited from. It also speaks to the point that has previously been made: that we still have a long way to go to remove prejudice and discrimination in totality from our law books and from our society. Too many members of the LGBTQIA+ community, particularly trans and intersex people, still suffer very severe discrimination, and their lives, too, all too often end early because of that discrimination. So this piece of legislation is significant. It places our history in front of us to enable us to make choices about how we will move forward, and that is a challenge to us, as well as a moment to celebrate how far we’ve come.

I also want to pick up on some points made in a submission from the Otago University Students’ Association queer support group in Dunedin, where they talk about this legislation telling people that “the illegality of homosexuality was a thing of the past and that some wrongs can be righted, not reversed, but righted.”, and that “Diversity is important and needs to be celebrated and not shunned”. I think that calls us to action still. They also made a point later on in their submission that I think is worth repeating, where they spoke about being young people talking to older gay men that had experienced this legislation and about living in the environment of this legislation. This person had spoken to an older man who talked about when he was stopped by police when he used the public toilets because he was indecently exposing himself to other men in the toilets—when he was only using the bathroom.

I think that story for me speaks to how pervasive the impact of that law was. It was not just the harm that was done to the men who ended up convicted and living lives stigmatised by the conviction and spending time in prison for being who they were, but the environment that was created for many—if not many, many—who had to live in a way that was unnatural to them to be able to try to protect themselves from that prejudiced law. That man had spoken, as well, about how he married a woman at 23, as many of his friends did, because that was what you did. That was what you had to do to hide and protect yourselves, and, obviously, that would have had a profound impact on his life, as well as the lives of the women that these men married and their families. So there is much for us to fix, and it is great to have this legislation in the House to be able to enable the expungement of those deeply wrong convictions.

I would like just to touch on some of the points in the work that was done in the Justice Committee to make sure that it better reflected the intent of this House, to ensure that it would address the issue for people travelling internationally, not just provide that expungement in New Zealand. Also, there was the change from “criminal records” to “official records”, so that it’s similar to the Criminal Records (Clean Slate) Act and affects a wider set of records, and thus is better protection and a more complete—I guess it enables a better implementation of the intent of the legislation.

I also, too, want to finish on the point about the call for compensation, and I hope to see wider discussion of that, either in this House through the debate on this bill or within Government. I know that there were different views presented in select committee, with some men and people saying that was not the point of this. The point was to make it clear that this law was wrong and to expunge those convictions; it wasn’t about money. I would, though, point out that in one of the submissions the example was given of recent international precedent in Germany, where compensation has been provided. Men were expected to receive about NZ$4,760 in compensation for their convictions, plus $2,380 for every year they spent in prison. It’s not huge. It’s doable. We can do this.

MATT KING (National—Northland): It’s a pleasure to speak on this bill, which we all support. Quite frankly, it’s a no-brainer. I’d like to acknowledge the Hon Amy Adams for the large amount of work that she carried out on this important piece of legislation, which was referred to the Justice and Electoral Committee last year. I’d also like to acknowledge the current Government for reinstating this important piece of legislation, and I’d like to acknowledge the current Justice Committee chair, Raymond Huo. He does a fantastic job.

As part of this current Parliament’s Justice Committee, I’ve heard some pretty convincing and emotional submissions from people grossly affected by these outdated laws. Quite frankly, this legislation is well overdue. It allows people who have previously been convicted of specific sexual acts, who in our modern society are now not considered criminals, to stand before us and declare that they are conviction free. This fact is very important for many men we have heard from. In my view, it is pointless having offences such as these removed from the statute book without having this expungement legislation to accompany it.

We have heard some harrowing submissions from members of the public about how this has affected their lives, and I want to recount one particular story which stuck with me. We heard from this poor man, who recounted how, many years ago, at the age of 19, he’d been caught and convicted of a sexual act with another male—an offence which has now been removed from the statute book, but back then was illegal. He’d been employed in a chosen profession, which I won’t disclose for privacy reasons, for over 30 years, very successfully. He decided to take some time away from his profession and return to it a few years later. On returning, he applied for two different jobs, and he would have been successful but for a refusal due to failing to pass the background checks, based on his prior conviction. This background check, by an anomaly, included references to sections covering sexual offences which are not relevant today, due to the removal of the offence from the statute law. Ultimately, he was devastated by this, and it eventually led to suicide attempts and a very low point in his life.

I felt that there was no one in that select committee room that day that did not feel this man’s pain. It’s one of the reasons why I became a politician: to help right the wrongs. Accordingly, we support this very worthwhile and life-changing legislation.

ASSISTANT SPEAKER (Poto Williams): I call Ginny Andersen. This is a split call; you have five minutes.

VIRGINIA ANDERSEN (Labour): This bill is part of a progressive journey—for want of a better word—of change in New Zealand, and I’m proud to see that there is agreement across the House on making positive change that directly affects the lives of many New Zealanders.

I vividly remember, at about seven or eight years old, coming out on the streets of Christchurch after a family meal to stumble into a protest on the streets. I’d never seen anything like it before. I’d never seen people so angry; people calling out obscenities at one end—words that I was never allowed to use at home or even at school—and, on the other side, people calling out, “Out of the closets and into the street!” And I didn’t know what it meant. I remember asking my parents, “What was that about? Why were these guys in the cupboard anyway? And why couldn’t they be out?”, and learning about the types of discrimination that had happened in New Zealand.

So I’m really proud to see this journey come so far—that the Homosexual Law Reform Act in 1986 in some ways has been let to take its full course by this piece of legislation that removes the stigma and the discrimination of those that were wrongfully convicted under that previous legislation. So I’m proud to be part of that.

I’m also proud, as a new MP to this House, for this to be the first piece of legislation that I have spoken on at second reading that I’ve directly heard submissions on from members of the public. As we’ve heard already, some of those submissions were really moving, and it’s great—as a former public servant who only got to write papers and draw diagrams—to be able to directly engage with the public and understand, first hand, about how laws can impact on people’s lives, and to be grateful of the opportunity that we have here to undo those wrongs.

While this legislation can’t undo the hurt that was caused, I hope—and I’m sure others here today do—that this will help to patch up, to help move forward, and to create a better country for people going forwards. While we’re reminded, when we look at how far we’ve come in my lifetime from when I was a child seeing those protests to where we’re at right now, we still have a long way to go—we have a long way to go further. And I believe that that’s our duty: to keep changing attitudes, to keep challenging those who choose to discriminate, in order to keep that journey moving.

There were two submissions that I’ll quickly refer to, and the first has already been mentioned in terms of someone who’s had employment opportunities removed from them as a direct result of having convictions under the previous legislation. So this is important—that we have a practical purpose, that people should not be denied the right to a job because they’re working with children and they’ve failed a background check. That’s unacceptable. That is blatant discrimination, and this legislation is definitely needed in order to put that right.

I also heard from a good friend—who’s already been mentioned tonight—which is Ted Greensmith-West, and he, to me, really represented at select committee a new generation of young people in the LGBT community who aren’t prepared to sit back, who want to take action, who are prepared to be politically active and want their voices heard, and that is encouraging.

So I see this legislation as two-fold: it’s fixing those wrongs but also providing a new environment of hope and of giving young people a country where they can be proud of who they are. And that is so important: that we have those young people prepared to step up and take that.

Finally, I would like to acknowledge the work of Amy Adams who, as deputy chair of that committee, was passionate also about this legislation. As the former Minister of Justice, she had expertise in this area and knew the legislation very well. That facilitated my colleagues here today from the Justice Committee to fully understand the legislation quickly and get to grips with what we had in front of us. So I acknowledge her contribution.

I have no further comments. I’m proud to speak on this bill, and I commend it to the House.

ANDREW FALLOON (National—Rangitata): Thank you, Madam Assistant Speaker. It’s a privilege to be speaking this afternoon on the second reading of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill.

I’d like to commend the current Minister of Justice, Andrew Little, for progressing the bill, but also commend and congratulate the previous Minister of Justice, Amy Adams, for her dedication. There’s been a lot of talk over many years about expunging homosexual offences, and I don’t think it would’ve happened without her hard work over the last few years.

This bill has been a long time coming. In 1974, a National MP by the name of Venn Young, who is the father of Jonathan Young, a friend and colleague of ours, introduced a bill to permit private homosexual acts. That bill was, unfortunately, defeated but was revived in the 1980s by Fran Wilde, and I’d like to join other colleagues in acknowledging her tonight.

The Homosexual Law Reform Act was passed in July 1986, and came into effect in August of that year. The Act decriminalised sexual acts between men aged 16 and over. However, convictions prior to that have remained, providing a permanent scar for those men who carry them.

It was an absolute privilege and honour to sit on the Justice Committee, that considered this bill. My colleague Amy Adams has already commented on the collegial atmosphere of that bill. At times, it was, I think, eight members of the committee versus the officials, rather than Labour versus National MPs. But that’s the way it should be on important legislation such as this. My colleague Matt King has already commented on the very emotional testimony that was given at that committee. Sometimes it was very challenging to sit there and listen to it and hear the stories and the experiences that some of these men have gone through in the past and in more recent years.

I’m conscious that this bill will never make up for the hurt that those men suffered over many decades, and it won’t erase the black stain on this nation’s history. It is, however, the right thing to do, and I hope it brings some sense of closure for those men and their families. Every member of this Parliament should be proud to see this bill’s passage. Thank you.

DAVID SEYMOUR (Leader—ACT): Thank you, Madam Assistant Speaker, and I rise on behalf of the ACT Party to take a very short call in support of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill.

I can only join with other members in saying that this is a wonderful occasion—to see members from five different parties coming together unanimously to say that these historical convictions are wrong, they were hurtful, and they should be gone. Indeed, it’s part of our tradition that we have worked on throughout our history as a nation to gradually expand the sphere of human rights so that people have the right to be who they want to be and act as they wish to act, so long as they are harming nobody else.

The men who were affected by these convictions did not hurt anybody else in what they did, but they were none the less victimised by the State under the laws made by this Parliament. It’s an important time for us to remember as lawmakers here in this House that the power of the State that we are charged with restraining can do real harm to the lives of innocent individuals if we get it wrong. That is why we should always exercise restraint in lawmaking. We should always reserve a special place for the rights of the individual when we make laws, and we should always look up to the very basic principle that my choice is what I choose to do, and if I’m causing no harm, it shouldn’t bother you; your choice is who you choose to be, and if you’re causing no harm, then you’re all right with me.

That is a principle on which to make laws, and I am so proud to stand here with four other parties unanimously supporting this bill through its second reading, because it’s the right thing to do and it signals the continued growth of our modern, sophisticated, liberal, and tolerant nation—New Zealand. Thank you, Madam Assistant Speaker.

PRIYANCA RADHAKRISHNAN (Labour): Thank you, Madam Assistant Speaker. It is an absolute honour to stand and take a call in the second reading of the Criminal Records (Expungement of Convictions for Historical Homosexual Offences) Bill. It was also an incredible privilege, as colleagues of the Justice Committee have said before me today, to be part of the select committee that considered this bill, that heard the submissions to this bill, and that received advice on it as well. Many people I speak to talk about the fact that, at times, things are rather adversarial in this House, and, again, as other members have pointed out, I wish they could have actually seen us in action at the Justice Committee, because that’s absolutely how it should be. It was such a pleasure to work with members from across the House on this bill, in refining this bill.

As has been said already this afternoon, this is a piece of legislation that will introduce a scheme to wipe convictions of historical homosexual offences. It is a progression of change, and it’s one that, as a new MP, I’m incredibly proud to be part of. It follows on from the Homosexual Law Reform Act back in 1986, that was passed by the fourth Labour Government. You know, the previous piece of legislation that actually criminalised homosexual men has ceased to have any meaning; it ceases to have any meaning for us legally today. But, of course, we’ve heard from those who have suffered for many years as a result of those convictions.

It also follows on from the passing of the Marriage (Definition of Marriage) Amendment Act 2013, that allowed same-sex couples to marry legally and, of course, the apology that was given by the former Minister of Justice, the Hon Amy Adams. At this point, I too want to acknowledge the work that she has put into the bill and, of course, also our current justice Minister, the Hon Andrew Little, for carrying on with this piece of work, as well.

So this bill, this piece of legislation, goes to the heart of the hurt and stigma that so many have experienced over the years: young men we’ve heard who have been arrested and convicted for just being who they are; people—men—who have lived in constant fear of law enforcement, the health, including the mental health implications, of this fear, and the convictions, as well, all for just being who they are. And this is really what this piece of legislation does; it celebrates, and it allows us to celebrate, who we are by lifting that stigma and that hurt.

So how does this bill work? We’ve actually heard about the fact that men with convictions for historical homosexual offences can apply for those convictions to be expunged. Basically, what we’re saying here today is that it never should have happened, and, with this piece of legislation, it will be as though it didn’t, for the purposes of applying for a job and from the legal point of view. It won’t completely be deleted from records, because this is a record of something that’s happened, and, really, something that we’re not proud of—a collective shame, in fact.

I’ll touch on one aspect of submissions that were considered by the select committee that members haven’t actually alluded to so far, and that’s the fact that some submitters—and I think the Human Rights Commission was one of them—suggested that it be an automatic expungement. That was considered by the committee but the advice that we received was that that automatic expungement wouldn’t actually capture everyone who was affected by the convictions and that proactive application was a better way to go to ensure that a wider group of people, or more people who were affected by this, could actually apply to have them expunged. We worked incredibly hard to ensure that it went a lot further than the Criminal Records (Clean Slate) Act as well, such that it wasn’t just that it wouldn’t be recorded but that the effect would be that it ceases to exist, in essence, from a legal point of view. As was mentioned before, this does apply to New Zealand law, and—

ASSISTANT SPEAKER (Poto Williams): Order! The member’s time has expired.

TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Assistant Speaker. Look, it’s a privilege to rise as our last speaker on this bill, and I certainly endorse those comments we’ve heard previously today and commend this bill. It is well past time, and it is actually fantastic to see that this is now happening. To be able to expunge these historical convictions, I can just imagine, would be such a weight off the shoulders of those people that have had this hanging over their heads, unfairly, for far too many years. It, I believe, enables us as a country to actually celebrate our diversity so much better, to celebrate the uniqueness that we have as New Zealanders, and to recognise that people are different and something like this should not be considered a criminal act.

Again, I would just like to acknowledge the hard work of the Justice Committee in pushing this through. They’ve done a fantastic job, and hearing some of the stories we’ve heard earlier today just reiterates the need for this piece of legislation. Also, just echoing David Seymour’s comments earlier, it is a nice recognition to see every party speaking in support of this bill and acknowledging that, indeed, it is certainly time to address these concerns and to move forward as a much more open and inclusive society. So, on that behalf, I would like to commend this bill to the House.

RAYMOND HUO (Labour): Thank you, Madam Assistant Speaker. First of all, I’d like to thank the Minister of Justice, the Hon Andrew Little, for making this bill one of the Government’s priorities. The purpose of this bill is to reduce stigma, prejudice, and other negative effects arising from a conviction for a historical homosexual offence. The bill is the first of its type in New Zealand law, which indicates the extraordinary nature of historical homosexual offences. These offences were targeted at a specific group in the community and criminalised sexual activity between homosexual men.

This bill demonstrates the Government’s commitment to right the wrongs of the past for those who were convicted of offences prior to the Homosexual Law Reform Act 1986. As the Hon Grant Robertson stated earlier, it is important to acknowledge that the illegality of homosexuality prior to the 1986 legislation ruined lives. The shame, the stigma, and the hurt caused was unbearable for many.

On that note, I should congratulate the then Minister of Justice, the Hon Amy Adams, for putting up the bill last year, and I acknowledge her contribution at the select committee. We have worked very closely at the Justice Committee, and I enjoyed her knowledge and commitment to help make the bill what it is now.

It is very fitting, in my capacity as the chair of the Justice Committee, to thank the Hon Amy Adams for her contributions at the committee, and to wish her good luck and to enjoy her new role as finance spokesperson for the Opposition. I’d like also to thank Matt King and Andrew Falloon, who have also moved on to take up other roles in other select committees following the leadership change of the National Party and the subsequent reshuffle.

This is the second reading of this bill. I should acknowledge the submitters. We have received submissions from 37 submitters. Those submissions were very helpful, especially concerning the bill’s relationship with other pieces of legislation such as the Vulnerable Children Act, and I’ll come to those issues at the committee of the whole House stage.

It is important to acknowledge that the illegality of homosexuality prior to the 1986 legislation ruined lives. That not only happened in New Zealand; that’s kind of a worldwide issue. Many would remember the gay purge campaign in Canada. The gay purge was a campaign in Canada to remove homosexuals from military and public service, from the 1960s to 1996. This was a systematic Government policy, and a device was developed to detect homosexuality, known as the “fruit machine”. The device was supposed to be able to identify gay men, who were derogatorily referred to as fruits. The Canadian police collected files on over 9,000 suspected gay men, and as a result, a significant number of workers did lose their jobs. Discrimination aside, the test was faulty and had no scientific merits.

Now, I cited the Canadian experience to show it is not easy for us to come to the point where we are now. So I should acknowledge all those people who were involved in making the 1986 New Zealand legislation a possibility. Thanks to that piece of legislation, no longer—no longer—would men having consensual sex with each other be liable to prosecution and to a term of imprisonment. The campaign to reform the law moved beyond the gay community to wider issues of human rights and discrimination.

Back to this bill. The bill provides for a statutory scheme that allows a convicted person, or a representative on behalf of the convicted person if they are deceased, to apply to have a conviction expunged. The Secretary for Justice decides whether the application meets the test for expungement, which is that the conduct would not constitute an offence under today’s law. Clause 8 sets out the test for expungement. The test, again, is that the conduct constituting the offence then would no longer constitute an offence now under the laws of New Zealand. The test was framed in such a way to ensure that any conduct which is considered still to be criminal would not be expunged.

The bill entitles the convicted person to declare that they have no such conviction for any purpose under New Zealand law. The conviction would not appear on a criminal history check or record if the application for expungement is granted.

In terms of the criminal records or checks, there are two types of such kinds of records. One is a case management system. The other one is a criminal and traffic conviction history (CaTCH) report. For the purpose of this bill, what I can say is that for those whose conviction has been successfully expunged, the conviction will not appear on the individual’s CaTCH report.

The bill identifies those who are eligible to have their convictions expunged. To be eligible to apply, a person must have been convicted of one of the specific offences under the Crimes Act 1961 or equivalent offences under the Crimes Act 1908.

The New Zealand Law Society and Rainbow Wellington do not support excluding offences prior to 1908. They claim that not extending the scope of the scheme to offences prior to the Crimes Act 1908 seems to be arbitrary and that there is no clear rationale behind such a kind of policy initiative.

The committee did consider whether the scope of the scheme should be extended to predecessor offences contained in legislation prior to 1908. This would eventually include pieces of legislation from the 1800s and the relevant UK legislation in so far as it was part of the law of New Zealand. In practice, the secretary may receive few applications for offending of this time period because the convicted persons will be deceased and potential representatives of the convicted persons are unlikely to have knowledge of the convictions.

Several submitters raised the lack of compensation as an issue. Some submitters also claim the lack of compensation could be seen as a potential breach of the Yogyakarta principle. Yogyakarta is the name of the city in Indonesia, I believe, where the principle was established. I’ll come to that point at the committee of the whole House stage, but in terms of some issues raised by the Hon Grant Robertson and other speakers who spoke earlier, we do acknowledge the importance of compensation.

However, compensation goes beyond the purpose of this scheme, which is to prevent further negative effects from the stigma of conviction. There is no general principle that a person who is convicted of a repealed offence is entitled to compensation on the repeal of that offence. But I do note the contribution from the previous speakers and I do believe we should keep the conversation open.

I look forward to further debates at the committee of the whole House. Thank you.

Bill read a second time.

Bills

Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill

Third Reading

Hon STUART NASH (Minister of Revenue): I move, That the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill be now read a third time.

For the benefit of members, I’ll provide a quick recap of the objectives and the content of this bill. One thing I will say before I do start that is that I thought that the Hon Steven Joyce, who shepherded this bill through the House in its first reading, might be speaking on this. It would be good to hear what he has to say about this, but I acknowledge that he has a very important speech to give in about an hour anyway.

Firstly, the bill sets out the income tax rates for the 2018 year, leaving them unchanged from the previous year. This is the sort of bill that is introduced every year and normally has support right across the House as it has, I think, for the nine years I was here previously. The centrepiece of the bill, however, as members may recall, is a set of measures designed to make the process of interacting with the tax system as simple as possible. The principle behind the proposals is to make the tax obligations easy to get right. This is actually the fundamental principle behind Inland Revenue’s Business Transformation project. It is not about necessarily just realigning the tax system; it’s a complete change in culture. It’s a customer focus.

The proposals in this bill aim to achieve this by providing Inland Revenue with accurate, more timely information from the payers of employment and investment income. Inland Revenue can use this information to fill in the necessary information in the equivalent of a tax return. Gone are the good old days when you had to sit at the kitchen table with a whole lot of receipts and fill in your return and send it back. This saves the taxpayer from this chore, but they can check the information if they wish. It will also help ensure that people are paying the correct amount of tax by enabling the IRD to ensure that the appropriate tax rate is being used—again, back to this whole customer-centric focus of Inland Revenue. In designing these principles, it has been important to minimise the compliance burden based on employers and on payers of investment income. Accordingly, the bill has been amended since its introduction, with the objective of easing that burden for the payers of such income.

The other major aspect of this bill is its measure to modernise and strengthen the tax rules relating to employee share schemes. These rules have been in place for many years now and it is time to ensure that the rules are sound and align with our objectives for the tax system as a whole. In particular, we want to make sure that there is no tax advantage in receiving remuneration by way of an employee share scheme instead of other forms of remuneration. Basically, it’s about protecting the integrity of the tax system.

The bill also includes business-friendly proposals aimed at easing compliance costs or removing unnecessary obstacles. A proposed amendment will create an exclusion from the dividend rules for certain company demergers, in particular demergers by listed Australian companies. The bill also contains proposals to extend the brightline test from two years to five years. The brightline test currently requires income tax to be paid on any gains from residential property sold within two years of acquisition, subject to some exclusions. The two-year brightline test was put in about three years ago, in 2015, but we did not feel—we just did not feel that two years was enough to stop speculators gaining untapped capital gains. As was talked about at the time, how the Income Tax Act works is it’s based on an intention test, and what that means is when someone buys a rental property or a second or third or fourth property, it is the intent under which they buy that property that will determine whether they pay tax on the capital gain. For example, if they have an intention to buy the property for a capital gain, then they have to pay tax on that capital gain. If they buy the property for the intention of making a rental yield, then they do not have to pay tax on any capital gain made.

The problem with this is it is very, very difficult to prove intent. It was interesting—I remember sitting in a meeting with the then Governor of the Reserve Bank. We had a look at Auckland house price increases—in fact, across the country, but the Auckland ones stood out because they were going through the roof—and we asked the Governor of the Reserve Bank what the rental yield was in these properties and he said it was under 3 percent. So we asked, then, if people were buying these properties for capital gains and he said, “Almost certainly.” He couldn’t say unequivocally, but “Almost certainly.” What we found was that people were buying these properties, flipping these properties, and not paying tax, because all they had to say to the Inland Revenue Department was, “We were buying these for rental yield. Our circumstances have changed, which forced us to make a sale.”

What we found when Inland Revenue did a little bit of analysis around who was complying under the two-year brightline was that, in fact—it was quite a small sample size—only 50 percent of those who should be paying tax on a capital gain actually were complying. I don’t think that many people know that Inland Revenue gets all this information from Land Information New Zealand. So when people think they can get away with avoiding tax, then they are actually wrong because Inland Revenue has the ability to interrogate every little bit of property data that comes through. So I would urge people who will need to pay tax under the two-year brightline—or, once this bill receives Royal assent and they have purchased a property after that, then under the five-year brightline—to please comply. It makes it easier on everyone because Inland Revenue will find you if, in fact, you are not complying.

As far as I was concerned, this measure was about preserving the integrity of the tax system, which is vital. There are some other consequences. You know, it may have a little bit of a dampening on the housing market, which is not a bad thing for first-home buyers and Kiwis who are hoping to get into the market. But by and large, as far as I was concerned as the Minister of Revenue, it was about preserving the integrity of the tax system, because what we were finding is people were making capital gains and not paying tax on that and I just think that was manifestly unfair, which is the reason why we moved it from a two-year brightline to a five-year brightline.

I just do want to outline that none of the terms and conditions or exceptions that existed under the two-year brightline have changed whatsoever, so in this bill the only thing that has changed is the term from two years to five years. I also want to say that the Government considers extending this test is important to ensure, as I’ve sort of alluded to, that property speculators do pay their fair share, and I don’t think there’s any Kiwi watching or in New Zealand who does not think that people should be paying their fair share—not too much, not too little, just their fair share; it’s all we ask. Because speculators can drive house prices beyond the reach of many Kiwis, this pressure will help dampen or may well help dampen the property market.

These are the main features of the bill, and it is a bill which will improve taxpayers’ experience of tax administration and make the tax system fairer. I would like to thank the policy officials and the drafters who worked on the details of the bill, the organisations and the individuals who made submissions on the proposed legislation, and the Finance and Expenditure Committee for its consideration and recommendations to improve the workability and fairness of the provisions. As someone who sat on the Finance and Expenditure Committee for about six years, I know the work that the members put in to ensure that they are well versed and they read the submissions. I know the amazing work that the officials put in to actually answer not only members’ questions but also submitters’ questions and queries, and just generally interact and liaise in a very, very positive way with key stakeholders in the tax system. These tax bills are by their nature quite complex, and that is why I know that the work that goes into them is hugely appreciated. I commend the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill to the House. Thank you.

Hon AMY ADAMS (National—Selwyn): Thank you, Madam Assistant Speaker. I rise, of course, to take a call on the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. I do so with some regret because this is a bill that the National Party led the development of when we were in Government, this is a bill that my colleague Judith Collins introduced to the House, and this is a bill that in the normal course of events we very much would have been supporting in the normal way. But, on this side of the House, we cannot support this bill because of the egregious and, I think in fact, duplicitous way in which a stealth capital gains tax is being imposed on New Zealanders through this piece of legislation.

The now Government when in Opposition, when campaigning to be Government, realised how badly they had got their tax plans wrong and made it clear to the public at that stage that they would not introduce a capital gains tax without taking it to the electors at the next election. They made a big song and dance because they realised what an allergic reaction New Zealanders were having to their tax and spend, tax-grab plans, and so they promised—they promised—the voters, “We will not bring in a capital gains tax unless we take it back to the voters in 2020.” This bill is a stealth capital gains tax by any other name.

You just heard the Minister of Revenue, the Hon Stuart Nash, in that last contribution twice reference the fact people are making capital gains and they are not paying tax on it as his justification for this Supplementary Order Paper (SOP). Now it’s bad enough that they have broken their promise to not take a capital gains tax to the electors at the election—that’s bad enough. But not only that, they didn’t even allow the public the decency, the basic right, of being able to submit on it through a select committee. Why? Well, there was no urgency. There was no urgency because they had been talking about this for some months, but absolutely duplicitously they waited until the day the bill was reported to the House to slip in an SOP, deliberately ensuring that no one could comment on their plans and point out the issues.

Now why would they do that? Well, for two reasons: one, they know how unpopular this will be, and, two, because even their own officials were saying to them two years is a much better period for capturing speculators than five years.

Fletcher Tabuteau: No, they were not.

Hon AMY ADAMS: I refer you, Mr Tabuteau, to the regulatory impact statement by the IRD, which says exactly that. It says the IRD are of the view that a two-year period for the brightline test is a far better period and avoids overreach. Now why is that? We’ve heard a lot from the other side of the House that there’s a two-year brightline test anyway, so why not just make it five? Well, that just smacks to me of a failure to understand the very nature of this test. At two years, there is a body of evidence that suggests the likelihood that people buying and selling within two years are more likely than not to be speculating. After two years, there is a far less likelihood that that is the case and you are capturing—deliberately, it seems—genuine investment behaviour.

Now if the argument is, “Well, they’re making a capital gain so they should just pay tax on it.”, as the Minister said twice in his contribution, be upfront, tell us you’re introducing a capital gains tax, and take it back to the voters as you promised. But they’re not doing that. They claim that this is just about capturing speculators. Well, two things: first of all, speculators are already liable to pay tax under our income tax rules, and we heard the Minister go on a number of times about how good the IRD are at capturing people who are due to pay tax. He said, “They will find you. Don’t think you can’t pay tax. They will get you.”

Speculating and buying a property for the purpose of flicking it on and making a capital gain is already taxable. Now, we introduced the two-year test because we know, as I said, that within that period of time there is far more likelihood than not that that was likely the intention. We stopped it at two years on very good advice—and, by the way, after testing this with the public, after inviting submissions, after announcing it in the Budget, in fact before the Budget, and then taking it to select committee. We in the National Party are not afraid of public discussion. Two years is the period of time where you are most likely to capture that speculation behaviour. When you go beyond that to five years, you are fundamentally changing the nature of this test, and the fact that the Minister of Revenue doesn’t understand that is deeply concerning.

You read the regulatory impact statement of this bill—which I have done, and it’s clear that members opposite haven’t—there are a number of very serious risks raised. The first is this one of overreach. This tax, on the face of it, is not designed to capture capital gains; it’s designed to capture speculators. In fact, the only thing it will do is bring in a de facto capital gains tax, in breach of the promise that the now Labour Government made to the electors and in breach of their basic human decency of allowing those interested and those who’ll actually be paying for this tax to have a say on it.

It also highlights the risk of what’s called lock-in, and that’s creating economic conditions and rules where you don’t see the efficient use of assets in the system. If we want to see New Zealand grow, it’s important that our assets are used in an economically rational way, and, again, the official advice is that this creates the opposite incentive.

Then, the third risk from this extension of the brightline test, all of which the public never got a chance to feed in to, because they were denied that by this arrogant Government, who thinks they know everything and don’t have to let the public have a say, is that it will have—and this is not just my view; this, again, is the view of the officials from the regulatory impact statement—an impact on our rental market. So, much like the foreign investment changes that the Government is pushing through the Finance and Expenditure Committee at the moment, while they talk about helping the property market, it will have the opposite effect, because you will disincentivise New Zealanders from investing in property. You will decrease the incentive for people to want to grow the housing stock and to buy and hold properties for people to rent. Now what does that do? Well, very simply, it pushes up the cost of rentals.

Now, I’ve had a period of time as the Minister for Social Housing and I can tell you the one thing that drives social housing demand—

Jamie Strange: Scaremongering.

Hon AMY ADAMS: —is when the price of rentals in that lower quartile continues to move up and those on housing pressure can’t afford the rental market. They’re forced into State housing. So this is a bill that we know—that isn’t scaremongering. That is what the official advice is telling the Government, that they wanted to sweep under the carpet.

This is a bill that will tax people who shouldn’t be taxed, it will deliberately impose a tax on those who shouldn’t have to pay it, and it will push up the cost of rentals to those who can least afford it. It is an outrage to suggest that this bill will help home affordability. It will have the exact opposite effect, as will the foreign investment changes that this Government is putting through. It is outrageous that they didn’t allow a select committee to have its say on increasing taxes on New Zealanders, and it is outrageous that they’re imposing a capital gains tax after promising the country that they would not do that without taking it to the election.

This bill has become an outrage, it has become an abuse of process, and it has become absolutely what we have come to expect from this Government. On this side of the House, we oppose it.

FLETCHER TABUTEAU (Deputy Leader—NZ First): Thank you, Mr Assistant Speaker. It’s a pleasure to rise on behalf of New Zealand First and this Government, especially in a timely reply to that member Amy Adams’ contribution on this Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. I just want to take the opportunity to address the contribution from the previous speaker. She spoke about it being a stealth capital gains tax. What she failed to ignore in her contribution was that it was that previous party, when they were in Government, that introduced what they then called at the time a brightline—what did they call it?—a brightline test.

Mark Patterson: It wasn’t a tax.

FLETCHER TABUTEAU: It wasn’t a capital gains tax then. No, no, when they introduced it, it was a brightline test, and they vehemently denied any kind of argument that this was a capital gains tax. But no, today, that member, on behalf of her party, spoke about a new capital gains tax, despite the evidence in front of her today—the evidence that has been sitting there for several years. For several years, they brought this legislation through, and this is not new. In fact, the Minister of Revenue was very pointed in reminding the House and the New Zealand public that, actually, it is only the time period that has changed under this legislation.

Let’s be very clear: nothing else in this Supplementary Order Paper (SOP) 13 has changed apart from the time period in this legislation. We are simply extending that period.

Then the Minister—the previous speaker, I should say—seemed to get her facts muddled up, which is a polite way of saying it.

Kieran McAnulty: “Is confused”.

FLETCHER TABUTEAU: Confused. So the idea, when they introduced it—I say “they”; I say that when the members opposite, the National Party, introduced it—they said that this was to address, and they acknowledged it at the time, although there was no housing crisis, the speculation in the market. The National Party spoke about this brightline test addressing speculation in the market, and yet the previous speaker got up and told this House that this will not fix speculation. But that’s why they introduced the brightline test in the first place.

She spoke about the select committee process. Officials, at the time, spoke very clearly and, in their report, outlined why the two-year brightline test would not work. It is in the report at the time. They said it would not work, it would not change behaviour, and, actually, on top of all of that, no extra revenue would be collected by the Government with the introduction of the brightline test.

Let’s continue to call it a brightline test, shall we? Under the new analysis, the officials have told us that in terms of revenue collection, yes, there now will be a revenue collection of approximately $50 million after the first two years, rising over a period of time as about 2,000 transactions are caught up in this SOP, this brightline test. So I’d put it to that member who spoke previously that this will address the negative aspects of speculation.

So when they introduced it, they acknowledged that this wouldn’t affect investment. A good person who wants to invest in property and have a rental property and rent it to New Zealanders is building rental capacity in the market. Now, let’s be very clear today, in front of the people of this House, that this will not change that. Investors will continue to invest in property because they will not be caught up in the speculation and flipping nature of the current speculative property market. So good investors who want to rent properties to Kiwis will not be caught up in this—we need to make that absolutely very clear; in fact, quite the opposite.

What we will discourage will be that flipping—so, you know, to buy a property at a price and then flip it on with extra costs. It won’t stop it. People can still do that, if they wish, and, in fact, some of the confusion in the original submissions in the Finance and Expenditure Committee was around what the tax was attached to. So, just for the purposes of the contribution today, the tax was on the profit made. So if, you know, someone bought a property on the Wednesday, flipped it on the Friday, and made $100,000, they would pay the tax on that $100,000, not on the entirety of the value of the property. I had a whole other contribution prepared, but I couldn’t let, I will class it as misinformation, go by without being addressed, from that previous speaker.

Look, this is more than just the SOP, and so with the short time I have left, I will just make the point that we have—we’re trying to address four main issues here, and I think, for me, one of the biggest issues is around the Inland Revenue Department’s Business Transformation process. The previous Government committed very large sums of money—very large sums of money—to kind of modernise Inland Revenue. Now, this Government has committed to that because we will acknowledge it’s the right thing to do. We need to modernise the whole taxation process. We need to enable the good transacting of information in a timely transparent manner.

That is what the Inland Revenue Department is trying to do with their transformation process, and that is what this House is trying to do with this remedial matters bill. So we’re designing good policy so that the Inland Revenue Department can work on good practice. That is a dual combination that is incredibly important for the people of New Zealand who, when you think about it—it’s a continual struggle in terms of tax and compliance. Yet it needs to be fair. We need to be working in the best interests of New Zealanders, but everyone needs to pay their way. So this transformation process, enabled by this legislation, very much does that. So, in that, it will be a success.

Specifically, we’re talking about reforming the administration of the PAYE system, in particular the provision of employment income information. I was going to touch on that in detail later on, but I just wanted to acknowledge the contribution—the to-ing and fro-ing—in select committee, because there was a good level of debate about that reporting period. I acknowledge the National Opposition members on the committee who were worried about small business and compliance in terms of reporting that PAYE material. There is now flexibility built into this legislation so that small businesses are not caught up and unduly, and perhaps unfairly, penalised for non-compliance in the now. So that was a good, robust part of the debate.

The second part relates to the collection of investment income information. The third part is changes to the taxation of employee share schemes, and I acknowledge the Minister who touched on that. It’s about equity. Essentially, we don’t want businesses to be able to use the share scheme to kind of offset tax obligations in terms of remuneration of employees and use that as a method simply for tax avoidance purposes. So here we are now, balancing the playing field with that.

I’d like to say, actually, that when business made their submissions, everyone understood—whether it was in the previous party’s time in Government or in the recent discussions—the intent there and what we were trying to achieve. Business itself, said, “Yes, slightly more complex and it might put a little bit of pressure on us, but if you do it this way, we’ll be happy to report.” So what do you know, that’s the way we’re doing it.

The fourth part there was, of course, the annual rates 2017-18—nothing’s changed there from the previous year, so not much to be said. The other one was the Supplementary Order Paper, which I have touched on in quite significant amounts.

Unfortunately, I have to conclude but I’ll say that this piece of legislation fits in with this Government’s intent to very much work smarter, not harder; to make the whole process, not only for the Inland Revenue Department but for the people of New Zealand who are obliged to pay their taxes—to make that whole system more streamlined, easier. Let’s avoid mistakes and let’s create a fair and transparent system. Thank you, Mr Assistant Speaker.

Hon JUDITH COLLINS (National—Papakura): Thank you, Mr Assistant Speaker. I’m actually a little bit sad that we won’t be able to support this bill, because this was, actually, an extremely good bill, based on not only, obviously, the tax rates, which are somewhat historical, but really around the fabulous Business Transformation project that the National-led Government approved of, funded, and worked with the Inland Revenue Department on so that the whole collection of tax would become far more modern and in keeping with the way in which most people conduct their businesses, and far more suitable for the 21st century.

I am very concerned that the new Government has taken this excellent bill, that was in my name, and adulterated it with yet another attack on people who happen to own properties. I say that as someone who was once a tax lawyer and is very proud of the fact that we have a very fine tax system in New Zealand, mostly unadulterated by ridiculous political statements and grandstanding. This particular bill has been able to be used as a way of attacking people on the basis that they own property and that they are now going to need to own this properties for five years, otherwise they’ll be labelled with that dreadful label of “speculator”.

So what I’ve found with the current Government is so much of their rhetoric is around calling people names, giving them labels that everyone can hate and despise, and one of those is “speculator”. We’ve heard it around landlords; we’ve heard it around people who buy properties who rent them out—we’ve heard about them. It’s the politics of envy. It’s the politics of attacking people who are not quite the same. It was the same politics around the Chinese-sounding names that the current members of Parliament from the Labour Party and others decided to attack people who were apparently speculators. It is a real shame when that sort of rhetoric comes into a Government or comes into a Government’s policy and they actually use a bill like this, which is actually all around form and process and procedure, to make political points. That is actually what the current Government has done with this excellent bill.

Apart from that appalling attack on people who happen to own properties and rent them out, this bill has been the culmination of a lot of work from a lot of people over a lot of time. It has taken a big chunk of the Government’s budget because we felt that it was a very important piece of work that needed to be done. Nobody is going to vote for a party based on their Business Transformation Inland Revenue project, but, unfortunately, that is the sort of work that needs to be done. It’s like the work that needs to go into a house that’s not necessarily on show. It’s the pipes. It’s the electricity. It’s the things that actually make things work.

So when this bill has been taken and used for the five-year brightline test to apparently ensure that speculators pay tax on gains from property speculation, it begs the question that speculators already have to pay tax on property speculation, because when people buy and sell properties for the purpose of making a profit, they are actually in the business of making a profit and they are therefore already taxable. But what this change to the bill does is it brings in mum and dad investors, the mum and dad investors who will now be caught by this and who are going to have to explain and find some way to get around the fact that, for instance, what if one of them has become sick and they can no longer afford to continue to top up the difference between the interest payments and the rental that they’re receiving? Who’s going to deal with that for them? Well, they’ll have to go off to a lawyer, they’ll incur costs—they’ll do all these other things.

What it does do is it drives small investors out of the market. This will not make a scrap of difference for big investors because big investors are already working and will continue to work their way around the tax system, because big investors can afford to do that. This is actually going after mum and dad investors who come up to the age of 60 or 50 or whenever they decide. They actually want to have some savings for their retirement and they want to be able to get a property, whether it’s a property for their children to rent. It’s these people who will be caught. It’s these people who are going to find that if they have to sell their property for some reason—they die, lose a job, become ill—it’s these people who’ll have to go cap in hand and ask for exemptions and see what they can get round. Actually, it’s going to be very hard for them to get around any of that, and that’s a real shame, because it’s these people who should be in the market as well as the big investors in the rental properties.

The alternative is that the State will actually have to provide all the rental properties. That is no doubt something that the people on the other side of the House will think is a great idea: let’s have the State own everything. While representing an area like Papakura, let me tell you, the State is the worst landlord ever. The State is the worst neighbour ever. One of the things we get a lot of complaints about in my office in Papakura is around the quality of housing provided to Housing New Zealand tenants, so don’t talk to me about “The State will provide.” The State provides not that much really, but it takes an awful lot of money to provide not that much. Let the private sector do what the private sector is very good at, which is providing housing for people, as they always have. Have a look at the suburbs. Have a look at the suburbs that the State has provided. They’ve provided us with Clendon, in Manurewa. It’s provided us with Ōtara—now, finally coming out of the malaise given to it by “the State provides”. Have a look all around New Zealand, and look at the worst housing, and it’s owned by the State. So don’t tell me that the State will provide.

I tell you that the State will take. It will take from people who should be able to get on, to earn a living, to be able to invest in property, to be landlords, to be decent people, to care—to care—to go and fix the spouting on a Saturday or a Sunday, because that’s what you do when you own a place. Those people—the people who don’t put up the rent when they should because they’re worried about the tenant who’s having trouble; the people who mow the lawns. That’s something the State doesn’t do much of. It’s the people who mow the lawns because the tenant either can’t or won’t do it—those people; mum and dad investors. What’s so evil about them? What is it that the Labour Party hates so much?

We know New Zealand First hates them, because they could be Chinese. We know that. But why would the Labour Party do that? Why would the Labour Party do that? Actually, this bill is an indictment, as it’s been adulterated by this Government—I almost said something I shouldn’t say. Ha, ha! The reason it’s an indictment is because—apart from the fact it’s all about envy—this Government said they weren’t going to add any more taxes without waiting for their working group to come back. This is a new tax. It is a tax. It is a tax, and it’s an envy tax. That’s what it is. It’s a tax against mum and dad investors, and it’s an utter disgrace.

MICHAEL WOOD (Labour—Mt Roskill): I’m going to take a novel approach, following on from the previous address from Judith Collins, and focus most of my speech on the contents of the bill that’s before us, and that, of course, is the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. I will at some stage, a bit later on in my address, get to Supplementary Order Paper 13, which addresses the issue of the brightline test. That’s a relevant matter, in the course of this debate. But, of course, it is not the only matter.

This is an important bill. One of the reasons it’s an important bill is that it validates the income tax rates for the previous year and makes the activities of the State, since 1 April 2017, legal. I have to say, on behalf of the Government, we support that. Actually, the National Party, in deciding that they are, at this point of the bill’s passage through the House, not going to support that would, in fact, potentially create not an $11.5 billion fiscal hole in the Government’s accounts but a $30 billion hole in the Government’s accounts over the past year, during which time they were in fact the Government for most of that time.

Moving on from that, I just do actually want to note the very good work of the Finance and Expenditure Committee on working on this bill. I do actually want to note the contribution of the Hon Steven Joyce on his last day in the House. He was the ranking member of the National Party on the select committee as it considered this bill.

It is a bill that is, in fact, rather complex, because in addition to confirming the income tax rates for the year, it did deal with a range of fairly complicated and technical matters relating to investment and employee income, relating to employee share schemes, and relating to a whole range of matters in terms of local government taxation, relating to demergers of Australian-listed companies, and relating to oil exploration taxation matters. And, actually, the select committee, made up of members from around this Chamber, worked together extremely well and extremely constructively with officials—and I acknowledge them here as well—to deal with those complex matters, to respond to the range of very good submissions that came before us around this bill, and to produce a bill that’s come back to this House that I believe is considerably improved on the bill that came into the select committee. So just my acknowledgments to Mr Joyce, but also to all of the other members of the select committee who did that work.

In addition to the setting of the annual rates for the 2017-18 year, the bill, as Mrs Collins mentioned, deals with a range of measures to improve the efficiency and the fairness of the New Zealand taxation system. This is something that is really just in the ordinary business of any competent Government. Because technology is moving so quickly and tax practice is moving so quickly, we consistently need to be reviewing the rules to make sure that our system works efficiently and fairly.

One of the key drivers of that, in this case, is, of course, the Inland Revenue Department’s Business Transformation project—a project that started under the previous Government and continues under this Government, and is an investment of several billion dollars to ensure that we have a modern, fit for purpose, 21st century tax system. It enables us to take advantage of the benefits of technology, to make things easier for those at the coalface—whether they’re employees, whether they’re employers, whether they’re investors—to make sure that they can communicate with the revenue efficiently and in a timely fashion. By getting that information to Government, to the Inland Revenue Department, in a more reliable and a more timely and a more accurate fashion, it enables us to make better decisions—better political decisions, better social policy decisions—with the information that we receive.

Some of the key provisions of the bill relate to pay-day reporting of employee information. One of the main areas of submission that the select committee received just related to how we could make sure that that increased onus on employers to be reporting that information didn’t overreach and didn’t create such a degree of burden on those businesses that that effectively was more significant than the benefits that we received.

So the select committee did quite a lot of work in this area to make sure that those employers, particularly those who didn’t reach the threshold for mandatory electronic reporting, had the ability to continue reporting in a way that was reasonably efficient, without having to consistently be caught in an endless cycle of reporting. So there are a number of quite important changes that were instituted here—for example, around shadow payrolls, where information might come in after an employer has done the previous pay-day reporting. Under the original provisions of the bill, there’d have to be a whole separate reporting occur there. What the select committee said is, “Well, actually, let’s not be over the top. Let’s wait until the next round of reporting, and just make things a little bit simpler.”

But probably the change that I’m most happy about that was made at the select committee stage related to the question of the payroll subsidy. The payroll subsidy has been in place for a number of years, and, effectively, it’s a subsidy which means that employers who are using a payroll intermediary who assists those employers in making sure they are meeting their obligations—it was a little subsidy that just helped to cover the cost of that. And particularly for smaller employers who sometimes do struggle with the complexities of the tax system, that just made things a little bit easier.

The original bill, in my view, on a fairly hard and ideological ground, abolished that payroll subsidy. What the select committee did, by listening to submitters, particularly those submitters who were submitting on behalf of small businesses, was to say, “Let’s retain the payroll subsidy, at least for the next couple of years, as we’re going through this period of significant change with employee reporting, and let’s target it a bit more, so that small employers in particular can have that payroll subsidy to deal with the additional costs that may be created by some of the complexities in this bill.” I think that is a change made through the select committee process that is going to be appreciated by many of the small businesses out there.

I do now want to turn to the Supplementary Order Paper and the question of the extension of the brightline test from two years to five years. We’ve heard a great deal of hyperbole about it in the House today, including this gem from the Hon Judith Collins who talked rather worryingly about the amount of adulterating that might be occurring in this House. I hope there’s not too much of that.

But what Mrs Collins said is that the extension of the brightline test from two years to five years was attacking those who own property. Quite frankly, hearing that coming from a former Government that oversaw the greatest decline in the number of New Zealanders able to own a property is chutzpah in the extreme. What the Government’s reforms in the area of housing and the taxation of investment properties are about is, in fact, unlocking the Kiwi Dream of more people being able to own their own homes. Under the watch of that previous Government, the homeownership rate of Kiwis fell to its lowest level since 1951, and so this Government is not going to stand here and be lectured and told that these changes, which target those who flip properties for significant profit, are somehow going to make it less likely that ordinary Kiwis can own their own homes.

We heard a lot from the Hon Amy Adams using the word “overreach”—pulling out the word “overreach” from the regulatory impact statement. Well, I, in fact, want to comment on the under-reach of that previous National Government in doing anything about the housing crisis that unfolded on their watch. In fact, if we turn to the regulatory impact statement that the Hon Amy Adams referred to, what does it tell us? It weighs up a range of things, but it tells us that the five-year option, as compared to the two-year option, had similar economic fairness and, in fact, overall better administration than the two-year rule.

It goes on to say that, in fact, prospective first-home buyers could benefit from the proposal to extend the brightline test to five years. That is because, in doing so, we reduce the incentives on investors to hold and flip properties in the short term and therefore increase the supply of housing for those people who are legitimately buying housing, as first-home buyers, for their families.

In concluding, this is a bill which is about building a more fair and a more efficient tax system. It does that by confirming the personal tax rates rather than cutting them, plus allowing the Government to invest in the social and physical infrastructure that our country needs. It does so by modernising New Zealand’s tax system by bringing in provisions that allow us to take advantage of the Business Transformation project to make things easier for taxpayers and to get better information to Government to make good decisions.

Through the Supplementary Order Paper, we have a small brick in the wall of this Government’s programme to once again make housing affordable for all New Zealanders. I commend this bill to the House.

ASSISTANT SPEAKER (Adrian Rurawhe): Before I call the next speaker, can I ask for people coming into the gallery to take their seats quickly, and can we reduce the noise level coming from the gallery and inside the Chamber while the members are speaking.

Hon PAUL GOLDSMITH (National): Thank you, Mr Assistant Speaker. It is a great pleasure to speak on this tax bill and to see the great interest there is in the broader community in this legislation and this speech. I once wrote a book on the politics of tax, the history of tax, and I didn’t sell that many copies, which always frustrated me because the title was We Won, You Lost, Eat That!, a quote from a previous Minister of Finance. I thought it was interesting, but it never captured the mood of the public, so it’s great to have this crowd here today.

So what we’ve got here in this legislation before us is the annual rate of tax, and it’s worth just having a little look at the tax rates that we have. As you’ll be aware, on the first $14,000 of income people pay 10.5 percent; up to $48,000 it’s 17 percent; up to $70,000 it’s 30 percent; and 33 percent at the top. What it represents is a massive redistribution of income and wealth on the basis of this country. So we have the top 3 percent of income earners paying a full 25 percent of the entire income tax that’s paid in this country, and the top 9 percent of income earners—those earning more than $100,000—pay a full 41 percent of the total income tax in this country.

So there is massive redistribution going on in this country, and why do we do that? Because we value social cohesion in this country. We do want all New Zealanders to succeed and have the opportunity to succeed, and that is why we take such a large proportion of the income from a relatively small proportion of the population and redistribute that generously, and also invest heavily in public services. It’s quite legitimate for there to be plenty of debate about how much redistribution we do in this country, but nobody could make the argument that we don’t do a lot already. That, as I say, is fundamentally because this is a decent society and one that is very keen to see that all New Zealanders have the opportunity to succeed and thrive in their lives. So we don’t burden poorer families with excessive taxation, but we take much more from wealthier families who can afford to pay.

It’s interesting to note that the tax thresholds that were down for change from a previous finance Minister, the Hon Steven Joyce, who we’re about to hear from soon this evening—those changes to the thresholds, which were modest changes dealing with the inflation that we’ve had over the last few years since they were changed, are not going to be happening because of a change made by this Government. They were firmly of the view that it would be wrong for wealthier families to receive some relief from taxation, but as a perfect example of the incoherent—morally and intellectually incoherent—Government that we have, having taken away those modest tax cuts, the next thing they did was offer free tertiary education to the wealthiest families in this country at the same time. How they saw the coherency of those two positions—not being prepared to allow modest tax cuts, but also making sure that the wealthiest families in this country do have free access to tertiary education—is beyond me. So that’s what we’ve got.

We’re left in the situation here, on the National side, of not supporting this legislation. We don’t do that lightly, because it’s fundamental tax legislation. We usually support these bills on a bipartisan matter, but we’ve decided to oppose it primarily because of the last-minute and highly unusual and irregular introduction of a Supplementary Order Paper (SOP) which changes the brightline test for property speculators. We’re concerned about that primarily because, notwithstanding the many great speeches that have been delivered from the other side in the last few years about not going through detailed select committee processes on substantial legislative changes, that is exactly what they’ve done in this Government. They’ve introduced a major change to the tax legislation extending from two to five years the brightline test, so that if somebody buys a property that’s not their own home and sells it within five years, they are automatically deemed to be trading and will pay income tax on the profit of that house.

I’m just concerned that I seem to be losing the interest of the House, but this is important stuff. [Interruption]

SPEAKER: Order!

Hon PAUL GOLDSMITH: What we’re getting—and I’ve got a couple more minutes to go, and I just wanted to take you through the details here. What we’re seeing is the imposition, at this late stage, in an SOP, of a significant change to the tax legislation, which has not had the scrutiny of the House through the select committee process. Nor has there been opportunity for the many New Zealanders who may be affected by this tax change to raise concerns about the details.

One of the primary concerns, of course, is that if you extend from two years to five years, the net outcome of it may be that we reduce the supply of residential rental properties, which is likely to have an upward pressure on rents. I don’t like to have heckling from former members of the House on my right when I’m trying to deliver this tax speech! And I would call upon the Speaker to impose some discipline on the situation here—heckling from former members of the House when I’m trying to make the point that what we have here is an iniquitous tax bill that we won’t be supporting on the basis that it doesn’t help one jot in terms of dealing with the fundamental issue, which is providing more houses so that more New Zealanders can get access to affordable housing. If that is the thing that we’re focused upon, then bringing tax changes which will, as the Government’s own advisers have said, have the risk of actually reducing the supply of residential rental properties and thereby putting pressure on rents, is to me one more example of the incoherent and irrational basis upon which this Government has conducted its Government in the last couple of years.

Now, I just would make one final point before I come to a conclusion, and that is that the National Party’s leading member in the scrutiny of this bill in the select committee process was the Hon Steven Joyce. He carried out his duties in that context diligently and with great aplomb, and that, I think, is a reflection of the way that he has spent his 10 years in Parliament, and I do want to pay my personal tribute to the wonderful work that he has done. I’m sure he can leave this place confident in the fact that he’s made New Zealand a better place for being here. Thank you very much.

SPEAKER: Notwithstanding the suggestion from my left from the Rt Hon John Key that the member’s time be extended, in accordance with Standing Order 360(3), I call on the Hon Steven Joyce to make his valedictory statement.

Debate interrupted.

Valedictory Statements

Valedictory Statements

Hon STEVEN JOYCE (National): I must say, preparing this valedictory statement is one of the hardest things I’ve done in this Parliament. It’s very hard to sum up the experiences of the last nearly a decade in one 20-minute speech. So what I’ve decided to do instead is table the 1,521 press releases I made as a Minister over that time. So at the end of this speech, I thought I’d just do them one by one during the dinner break. Although perhaps the one that I really should table would be my academic record, given that we’ve had so much good discussion about it over the years.

I nearly didn’t actually end up being in this Parliament. Let me tell you a story. After the excitement that was the 2005 election campaign, which was my first as campaign chair, I decided that was me in politics—I can’t possibly think why—and that I’d go off and do something else; and I was.

Then, John Key—Sir John—became the leader of the National Party, and he rang me up and said, “Do you want to do a bit of sort of advisory work for me?”, and I said, “Yes, absolutely, that would be great. No trouble at all. I can fit that in.” Then he rang me up and said, “Would you like to run the 2008 campaign for me?”, and I said, “Gosh, I’ve got a few things on, but I’ll see if I can shift it around and sort of get three months to run the campaign.” Then at the beginning of 2008, I got a call from him—he says, “Well, look, why don’t you come in and do some real work?”

I thought about it, and I thought, “Gosh, here I am, newly married, young daughter just born, lifestyle block, a few directorships—the ultimate in perfect work-life balance. Do I really want to do this?”

Then Judy Kirk rang. Many of us on this side of the House know what it means to be “Judy-ed”. She fixes you with a stare and says, “Your country needs you to do this, Steven.” And I’d had that before, so I knew about that. So I nearly didn’t do it. I rang Judy back and said, “No, I can’t do it.” Then she rang again, and I said, “No, I can’t do it.” Then my wife noticed that two weeks had passed and I hadn’t rung John. She said, “Well, that tells me that, actually, you probably do want to do this, because you haven’t actually rung the person that asked you and said no.” So she said, “You’d better go and do it.”, and so I did; I came into this House in the 2008 election.

Straight away, I was so privileged—and not many of us have had this privilege—to become a Minister immediately; before I became a parliamentarian, in fact, officially. I was named in the ministry. I was given my office in the Beehive. And then somebody said to me, “Oh, there’s this place called Parliament you have to go to, as well, where they ask you annoying questions and you have to be able to answer them.” I said, “Gosh, that seems a bit inconvenient.”—but nevertheless.

So I got my office, and I went into my office on the fifth floor of the Beehive. Remember, I’d come from the private sector, and there was a sort of magnificently large office on the fifth floor of the Beehive. I was thinking to myself, “This looks extravagant.” I thought, “This smells a bit like the Public Service.” There were these chairs and these couches and this massive boardroom table, and I said to myself, “This is ridiculous. There is absolutely no way one Minister—lowly ranked—needs all this stuff.” Then I had my first officials meeting. They all came in the door—processed in the door. They all came in, and they sat down around the table, others sat in the chairs, and they stood along the walls, and I realised that I’d entered a particularly different world. What I did learn quite quickly, though, is that officials have a meeting after the meeting, when they go outside and discuss what they think the Minister meant. The good thing about learning that is, until they recognise you, you can sneak out through your senior private secretary’s door and contribute to that discussion: “I think he meant this.”—and people would say, “No, no, no, no.”

I was lucky enough to participate in a huge range of portfolios as a Minister. Building roads was something I enjoyed immensely as Minister of Transport. I know the Greens probably thought that I enjoyed the smell of fresh asphalt in the morning. It’s not completely true, but we did build some wonderful roads linking regional New Zealand with the main centres.

I think of one in particular, which was Waterview, which we inherited. I don’t know whether many people know this: that tunnel was only going to be two lanes in each direction. I looked at that and thought, “Well, I’m no transport engineer, but that feels like it’s going to be out of date pretty quickly.” It’s very hard to widen a tunnel. So I said to the officials, “Could you do it three lanes in each direction?”, and they said, “Well, anything’s possible, Minister.” I said, “It also looks too expensive, so is it possible that you could possibly reduce the price of it in the same process”—because three lanes in each direction was $3 billion; two lanes was $2.4 billion. They said, “Well, what do you want, Minister?” I said, “I want about $1 billion off it and I want it a lane wider in each direction.” They reminded me at the opening that that’s exactly what they gave us: $1.4 billion, three lanes in each direction. It was one of my proudest moments as a Minister.

But it was the big projects with the small projects. We did a wonderful one called Matahōrua Gorge, which is on the road between Napier and Gisborne. It’s 214 kilometres long, that road. This is 4.5 kilometres in the middle of it. It was a goat track; it was dangerous. We were asked to widen it and completely rearrange the road. I went along to the sod-turning for it and also to the opening. It was one of the most wonderful experiences, because everybody who knew anything about that road had come out—the people that owned the land by the road, the iwi, and the council. They knew all the stories of all the problems that occurred with it, and they were so thrilled that we fixed that road. All we need is another 10 like that between Napier and Gisborne and we’ll be making real progress. So think about that, matua Shane, with your Provincial Growth Fund.

So I’ve done countless pōwhiri, sod-turnings, and ribbon cuttings. I got a reputation as somebody who prioritised road investment over rail, which my Cabinet colleagues were always amused about because we spent more on rail than any other Government in the last 50 years. They were critical because they thought, well, obviously I wasn’t selling that sufficiently. But, as I used to say at transport conferences, it’s clear that I love rail. I’m so pro-rail that I called my son Thomas!

The other big thing I was involved in, initially, was the ultra-fast broadband network. There have been many favourable comparisons between the New Zealand experience and the Australian experience, including from the current Australian Prime Minister, Malcolm Turnbull, who shadowed Stephen Conroy during the setting up of that under the then Labor Government. Not many people know, though, that it was actually Australia that helped us most in our broadband network. They started a year before us, so soon after I got the job I thought, “Well, I’d better head over to Australia and see what’s going on.” So I went over and met Stephen Conroy in Melbourne as the Minister in charge of their broadband network. I realised quite quickly that he had two problems: he was up against a deadline which he’d set way too early on and he’d, basically, made it that only Telstra could do it. As a result, Telstra just sat there waiting for Stephen Conroy to turn up with a big enough cheque.

So I came back from Australia absolutely determined that ours would be a contest where there were at least two players and we would not have any artificial deadlines. That upset both Bill and the Prime Minister, who wanted to say when this thing was going to be started, and I couldn’t tell them, deliberately. But I tell you what, that one trip across the Tasman saved us billions and billions of dollars as a country. I’m absolutely confident about that. And now we have ultra-fast broadband network fibre to the home to places like Mōkau, Kaitangata, and Naseby. Nobody else in the world has done that—nobody else. Yes, they’ve had fibre to the home, but nobody’s tried to get it to the Nasebys of the world. It’s fantastic.

I’m proud of all the portfolios I’ve been involved with. I’m proud of the science and the tech sector. It’s been one of the biggest thrills of my time in this place—to go around and see some of those amazing tech companies. They’re everywhere. We have hundreds of them, exploiting narrow, deep niches around the world—ADInstruments from Dunedin, and Furnware from Hawke’s Bay, who make an ergonomically designed chair for schoolchildren which is scientifically proven to stop them fidgeting while they learn. They sell that all over the world. But, of course, the guy who has redefined what is able to be done with technology from a New Zealand base is Peter Beck—it’s great to see Peter here this evening—with Rocket Lab. That is truly amazing, and I know just enough about physics to know how difficult it is to do what Rocket Lab is doing—to actually get a projectile like that into space.

I remember meeting Peter for the first time, and I wasn’t 100 percent convinced that he would get there. As politicians, we all know that you meet a lot of people with a lot of big plans, and here’s this guy wandering in the door and he’s going to build rockets and send them into space. I actually think we used to joke about a parliamentarian here who wanted to set up a space industry in New Zealand, and I think possibly John Key replaced him in his electorate. Yet here we were, and I became convinced very quickly, though, that Peter knew what he was doing. Actually, it’s an amazing story, and we haven’t got time to tell it tonight, except that Peter came to see me and said, “Look, we’re nearly finished, Minister. Now we just need a regulatory system, and I need it in about six months.” I thought, “Oh, OK, what’s involved there?” He said, “Well, you’ve got to join two or three space treaties, probably pass a law, do a deal with the Americans.”, and I thought, “Well, hell, we’d better get on with it.”

I want to pay tribute to the Ministry of Business, Innovation and Employment officials, who actually took that thing and absolutely ran with it. We didn’t quite meet Peter’s deadline but, then, neither did he. But we now have a fit for purpose space regulatory system. Again, harking back to the Australians, I understand now they’re trying to work out how New Zealand did it in such a short space of time.

I’m looking forward to finally going to Māhia again. I actually was invited to open the rocket launching site in Māhia. It’s about 100 kilometres off the highway. You get about halfway down and you think you’ve gone in the wrong direction. But, anyway, I got there. There were hundreds of people there that had come from all over the place to be at the launch, and I was asked to open it. The Māori trust that owned the land had a whole lot of people there, and there were a number of kuia sitting across the front. I wandered over to see them before we started, and I asked one of them, “Well, look, how do you feel about all this happening on your land?” She said, “Well, we’ve been thinking about diversifying out of beef and lamb for a while, but I must admit we hadn’t really thought of rockets.”

I’ve also been involved a lot in regional development, which is the new black, as Shane Jones knows. I will tell you this: most of the regions actually don’t want a huge amount from Wellington. They actually also don’t want to be told too often that they’re struggling, by people who never go there. There are a couple that always do it tough, and, actually, the Far North is one of them. There’re some tough kids up there. One of the programmes we set up was a thing called Growing Regional Opportunities through Work (GROW) Kaikohe. Ben Dalton from the Ministry for Primary Industries—who I understand is working for Shane now—went up there to run our regional development programme, and he set up GROW Kaikohe. He came back and told us about the great things that were being done with GROW Kaikohe. It’s basically a collection of about a hundred kids from the hardest part of society—trying to get them into work, and, most importantly, to keep them in work, which is actually the hardest part.

So I went to the graduation with Anne Tolley, but not before Ben had told me about this person called Jo, who was running the show. Jo was going around and, if necessary, pulling these kids out of bed, kicking their bums, doing whatever it took to keep them in work through the year that they were involved in this programme. So I got to go and see this in action at the graduation. I met some of the kids, and there are some tough stories there about families that have been on drugs for a long time, families that were tied up in all the gangs, young mums of 16 and 17 with a couple of kids. I mean, these are the hardest edges of society. And I met the employers who thought they were actually going to take on some people to work but then realised quite early on that this was actually a community service that they were doing. They had to adjust their expectations, because they actually had to help these kids for six months or more before they actually got them into a situation where they could contribute to the company that they were working with.

And I met Jo, and she is the coolest person. She actually goes around and does exactly that. She’s effectively the wrangler, the mentor, the navigator in these kids’ lives, and she fixes all that up. And I said, “Well, where do you work? Where do you come from?” She’s actually been in a number of organisations—the Ministry of Social Development, NGOs—but to me the most important thing was that she was Jo, and that she was prepared to do that. So, actually, we don’t need to come up with hundreds more programmes or for each politician to rebrand what’s being done, whether it’s in the Far North or Gisborne. We just need to find a hundred Jos. And I don’t care where they work; just find a hundred Jos and put them with the kids and let them get on with it.

I was also involved a lot with the tertiary sector—seven years, in fact, as tertiary education Minister; the longest record ever, apparently—and I think we enjoyed each other. The tertiary sector did some amazing things in terms of performance, whether it was in the provider-based area or the work-based area, and the tertiary education system also is involved in a thing called international education, which is hugely important for New Zealand’s future. I’ve had the privilege of going around to various countries and going to alumni functions and meeting some of the kids that have had their New Zealand education—not so young, some of them—and those people are huge ambassadors and advocates for this country. The countries they come from are hugely important for our prosperity for the rest of this century, if not beyond—places like Korea, Japan, China, South-east Asia, Latin America, and continental Europe. And these are the kids that are going to lead that relationship from their end over the next 50 years. I met a guy in Malaysia who was a deputy chief Minister of one of their provinces, who came to Lincoln University in the 1970s on the Colombo Plan and he still prioritises relationships with New Zealand today. So think of this: international education is the Colombo Plan on steroids. It is hugely important for New Zealand.

Of course, there were some non-portfolio things that I did as well—some that I was handed, like Novopay. I don’t propose to spend a huge amount of time on that this evening, but I would encourage you to read the book—the ministerial inquiry into Novopay. Any Minister who’s involved with ICT projects needs to go and read that book. It’s well worth reading, because it’s a lesson. And it’s not a political partisan thing, because it went back over two Governments, but it’s a lesson in what not to do in ICT projects in Government.

Every now and then, of course, I’d get asked to stand in for the Prime Minister when it wasn’t possible for him to be somewhere—or he’d made arrangements, perhaps, to be somewhere else. So it was at Waitangi in 2016. I was asked to lead our team. We had the Iwi Chairs Forum at the Copthorne Hotel. It was a beautiful, sunny, peaceful day, and afterwards I wandered out with the team for what was going to be very quiet and low-key interview. There was nobody around—a couple of police officers, a bit of security; not as much as you’d hope for, in the end. And I was chatting away happily when I felt something hit my face. Whatever it was, it then ricocheted on to the TVNZ reporter’s chest and then ricocheted down to the ground. I still didn’t know what it was, so we all looked down like this together—journalists, Ministers, pretty much everybody, except for Josie Butler. And we looked at it, and I said, “Gosh.” I thought to myself, “Well, what do you say in these situations?” So I said, “Good-oh.”, and then I looked at my colleagues and said, “Well, let’s head off, then.”

As we walked away, I said to Nathan Guy, standing next to me, under my breath, “Well, do you think the cameras picked that up?” He said, “Yeah, I think so. Keep walking.” I have to say, it’s telling that two of my closest colleagues in caucus, Nathan Guy and Louise Upston, both of whom I otherwise admire and enjoy the company of, were flanking me that day, and neither stepped in front of the senior Minister to, as they say, take the bullet. What was left to do, except tweet to John Oliver—to get it over with—and then go and open the new Waitangi museum? Which is very impressive, by the way, but it didn’t make the news.

Can I say I hugely enjoyed working with and for John Key and Bill English. Everybody knows John was the front man, but he also has a very powerful intellect. He had a great capacity to get to the nub of an issue quickly, and a great ability to make the right decision, and I believe history will judge him very well. Bill was the engine room guy for the last eight years. He’s the quintessential compassionate conservative. We worked together in finance for eight years. He got fond of the idea of him loading the bullets and me firing them. He developed almost infinite patience with all his colleagues, including me. He blossomed as leader, and it is one of my greatest regrets that he didn’t get to serve at least a full term as our Prime Minister. He would have been a superb Prime Minister—well, he was; he would have been a superb Prime Minister for longer. They both placed great trust in me, and I hope I successfully repaid that trust.

When John left, I inherited finance. I got the Treasury officials in—we knew each other—and they asked what I wanted to do in the Budget. I said, “Look, it’s very straightforward: big infrastructure package, big public services, and a family incomes package. We’ve got four months, let’s get on with it.” They went, “Aw, Minister.”, and I said, “Well, let’s give it a go.” I actually got to know them all very, very well over that period, and I’m very proud of that Budget. My proudest moment as Minister of Finance was watching the coverage on Budget night, and watching the families on TV talk about what that Budget meant for them. I’m proud that this Government that’s in place now picked up most of that—tweaked it a bit to make it look a bit more like their own, but certainly picked up what we did.

My other job—my weekend job, if you will—was as National Party campaign chair. That happened a bit by accident, too. It started off in 2005, when they quite literally couldn’t find anybody else. So I was the campaign chair, and with Don Brash as leader we went from 22 to 39 percent. It was a massive rollercoaster—red-blue billboards, taxathon ads, the Exclusive Brethren, American bagmen, the first online tax calculator—and, ultimately, it was close but no cigar.

We tried an interesting technique in that campaign: running our own positive and negative campaign, so as not to give Labour a look-in. We would do all the positive side—and then we’d attack ourselves! I think of a particular example—because there were many, and I was trying to work out which one was safe to say. We were in Hawke’s Bay. Don was doing this very impressive piece about our economic story and what we were going to do, and it had been set up for months in advance. Meanwhile, in Tauranga, our candidate, subsequent MP Bob Clarkson, was having some difficulties with the media. So we sent Tony Ryall, experienced MP, back to Tauranga to sit with Bob and help Bob with his interview, which was good, until Bob decided he had to stand up and rearrange himself in front of the camera. He actually declared, “Oh, look, I’ve just got to rearrange myself a bit here.”, and then he went outside, and Tony Ryall put his head in his hands on nationwide television. The media, of course, went to Don for his comments on this, and Don, bless his heart, was a master of the six-second soundbite—just not the one you want. He said, “Eh, I don’t think any of my candidates should be adjusting their testicles on national television.”, and that was that day!

So, weirdly, since 2005 I’ve chaired four more National campaigns. We’ve had “Choosing a brighter future”, “Building a brighter future”, “Working for New Zealand”, and “Delivering for New Zealanders”. We’ve had stop-go signs, rowers, “Laboureens”, teapot tapes, the moment of truth—or strewth—show me the money, Dirty Politics, runners, a few soundtracks, and the H-Fee. Still, we had a reasonable run. The last four party vote results were the highest four party vote percentages that any New Zealand party has had so far in MMP.

I’ve had an amazing campaign team around me for all five elections. I can’t name them all, but I want to name Jo de Joux—unflappable Jo, absolutely crucial in all of them—Wayne Eagleson and Mark Textor; Murray McCully, in the early years, before he became a full-time gin sucker; two presidents, Judy Kirk and then Peter Goodfellow; the party board; the tireless Greg Hamilton; the senior leadership team; the MPs, the candidates, and the volunteers—just an amazing machine. There was never a plan to chair five election campaigns; I just kept being asked back, and today I’m hoping that we fix that, finally. We have a good team, though. I want to acknowledge Simon and Paula; they’ve already hit the ground running. We have a lot of strong campaigners coming through, both in the party and here in the Parliament. I’m confident that this party will acquit itself incredibly well in 2020, and, in my view, you will need to, because your country will need you.

There are a lot more people I would like to thank. I’d like to thank my political advisors over the years—in particular, Sir Kenneth Clark, Andrew Falloon, Chris Bishop, and Jo de Joux—two of them now MPs. I want to thank my media staff: Simon, Charlotte, Serene, Rachel—and Anita, who memorably left me after 3 years, cheerfully telling me as she left that she wanted to get out before it all turned to crap; slightly early, Ferg.

I particularly want to single out Anna Lillis, who has doubled as both senior press secretary and political advisor for so long. Thanks, Anna, for your wise and steadying counsel. I want to thank my senior private secretaries—in particular, Kathleen Lambert. Many people in this building will know Kathleen, who house-trained me over the first six years of my time as a Minister. Kathleen was and is an absolute machine. She is famous for her Tim Tam Tuesdays and her millions, literally millions, of post-it notes.

I could tell you a brief story: when I was offshore with the Prime Minister, John Key, in China, we were doing these big food and beverage dinners which profiled New Zealand food and beverage to Chinese media, Chinese officials, Chinese businesses, and so on, and these were massive meals. I went along to the first one in Shanghai, and they had all this wonderful New Zealand produce. They started with salmon, as they often did, because we have wonderful New Zealand salmon. So we were all looking out and they were bringing out all the salmon, and I was thinking, “Oh, this will be nice.” This person came up to me and said, “Don’t worry about the salmon, Minister. You don’t have to eat it. It’s fine. We’ve got you something else.” I said, “Well, this is a bit weird. I quite like salmon. I don’t often get to eat it. I’d quite like the salmon.” “No, no, Minister, you don’t have salmon.” So I said, “OK. Fine—I think.” They brought me out a menu and a nice fresh green salad, and that was fine.

I thought nothing more of it until we arrived at the next place on the tour, and again it happened. And I said, “No, no, I really want the salmon.” I thought, well, I’ll just give it a bit of a go, and they said, “No, no, Minister, you can’t have the salmon. Everybody else can have the salmon, but you can’t, because you don’t eat salmon.” But I’m saying, “No, I do. I really do. I eat salmon. I’m happy to eat salmon. Give me some salmon.” “No, Minister.” I thought, well, I’d better not make an international incident of it; I’ll just, you know—calmly. Then we get to Beijing and it happened again, and it actually happened from then on. Whenever I went offshore and they were serving New Zealand salmon, for some reason I was always told I couldn’t have the salmon, and I didn’t know why. I asked the officials and nobody knew, but obviously somebody had ticked the box at the Ministry of Foreign Affairs and Trade (MFAT) and said, “This guy, when he goes overseas, whatever you do don’t give him salmon.”

So I was telling the story in my office one day—a little bit later, sitting in my office—and Kathleen Lambert pricked her ears up, and she said, “Oh, I know why that is.” I said, “Why’s that?” She said, “We were having dinner in your office one night and you asked me what the fish of the day was and I said the salmon and you screwed up your nose at it, so I made a note: doesn’t eat salmon.”—and told MFAT accordingly.

I want to acknowledge my bench mate, Gerry Brownlee. We’ve been together, big guy, for six years. He’s a marvellous politician and a marvellous individual, and I’ve enjoyed working with him immensely, including through Christchurch, where he did the most amazing things, and I think history will record that very positively. I want to acknowledge all the officials that I’ve worked with, and I want to acknowledge Mike Hosking and Annette King, my compatriots in radio. We had a wonderful nine years—longest radio show I’ve ever done; notwithstanding I owned the company at one point, not that one. I want to thank the public of New Zealand. I’ve been humbled to have countless people come up to me on the streets since I’ve retired, in pubs and in shops around New Zealand in the last couple of weeks, and thank me for my service. It’s been very humbling. You are the reason I’ve been here and the reason it’s actually quite hard to leave.

I want to thank my family—my parents, Peter and Lorna, who can’t be here because Mum’s just got out of hospital. I want to thank Diane, my brothers Kevin, Rodney, and Brendan, who hopefully will no longer have to put up with being mistaken for me at the pub by people who are determined to tell me what I should be doing now; my wife, Suzanne, for her unfailing support and confidence in me coming here, in being here, and confidence in my decision to leave here, and her willingness to shoulder all the responsibility in our family for so long.

I have two children: Thomas and Amelia. Amelia’s here today. They have known nothing about me except that I’ve been a Minister for their entire lives, which is strange, because I see myself as quite short term in politics. They know me as leaving at 5.20 every Monday morning before they wake up and coming back Thursday night after they’ve gone to sleep, or on Friday or on Saturday. Then on Saturday and Sunday afternoon, they were used to me sequestering myself outside and reading papers for four or five hours each afternoon at the weekend. I have to confess that I’ve often worried about the example that I’ve been setting them. Of course parents travel for work. It’s just the relentless nature of the ministerial job, day in and day out for years on end—and, in my case, nine.

Then there were the particularly arduous times. During one such time, in 2011, my then four-year-old daughter—there were friends around at the house, and she wandered up to the TV and I had a video of the Rena on, and she turned around and said to everybody, “That’s where my daddy lives.” Tommy doesn’t say anything, literally. He’s what they call non-verbally autistic. He is 8 years old, doesn’t have any vocabulary at all, but I know he likes having his dad around. He tells me with his laugh and with his eyes, and now he’s going to have Dad around some more.

We adults know that kids can be great observers and great levellers. When Amelia was four or five, the teachers at her school asked her to tell them what her daddy did. “My daddy works at the Beehive.”, she said confidently. “Fair enough.”, said the teacher. “And what does Daddy do at the Beehive?” Amelia thought about it for a minute, and then said, “He does drawings, he drinks water, and he goes to the toilet.”—which seems like a reasonable summary to me. But not anymore, sweetheart. Not anymore.

Thank you very much, everybody, for being great to work with. Cheers.

[Applause]

Sitting suspended from 6.11 p.m. to 7.30 p.m.

Bills

Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill

Third Reading

Debate resumed.

Dr DUNCAN WEBB (Labour—Christchurch Central): Well, it was Albert Einstein who said that the hardest thing in the world to understand is income tax, and coming from a genius of that stature, we can only begin to think how complex it is. But this bill is a step towards—perhaps a baby step—making income tax easier to understand and easier to comply with, and, if I may say, that’s an important part of what tax should be.

Tax, of course, is the foundation stone upon which this country is built and upon which the Public Service depends. It is, of course, essentially the price we pay for a robust welfare system, and those robust systems that the public depend upon. It’s simply not right to think of tax as an onerous obligation; it’s simply a part of participation. So, in a sense, the other function, of course, that this plays—and that this party is looking at—is the rebalancing of wealth, income, and equality within our society. However, tax poses special challenges, and this bill is no exception to that.

The complexity of tax law for a legislator is a huge challenge. Our Income Tax Act, which I took a moment to look at today, is 3,351 pages long, and that, I must say, is a challenge to anyone. In a sense, complexity of that nature is a tax break for tax lawyers because only tax lawyers can understand it. So we really do have some issues here, and this bill aims at simplifying that by using the tools which are at our disposal—and, in particular, online tools and tools of integrated reporting are part of that. So, in terms of that financial complexity, that legal complexity, and also—what we’re seeing more often—that cross-border complexity, we need to use all of those tools at our disposal.

So good tax law needs to be understandable, accessible, and predictable as well, and that’s one of the important parts of this fine-tuning—fine-tuning which, I must acknowledge, was put in place by the National Party and picked up by Minister Nash. But this is really part of our financial and Treasury infrastructure, and we must keep it up to date. So this, in a sense, is housekeeping.

We’ve got to stay one step ahead of those cunning tax accountants and make sure that where they look for a loophole, we are right behind them, and that’s what’s happened—particularly in respect of employee share schemes—here in this piece of legislation. Those timing questions, the questions of when those shares are valued—the accountants have looked at that and seen essentially a mismatch in there. Like rust, they never sleep. Like rust, they will erode the very structure of what’s going on there if we give them a chance, so we do need to come right up behind them to tidy up those employee share schemes and get the valuation dates right so there’s no mismatch there. You can’t have people essentially gaming the system by choosing when the date upon which the shares that the employees are entitled to occurs.

So, you know, we’ve got to follow up those issues but also make tax law predictable. It is essentially intuitive, so that there’s not any surprising twists and turns and so that a good-faith and honest approach to the tax system will result in the correct amount of tax being paid, and, of course, that is a constant struggle. It’s a struggle between an attempt at simplicity—and, if I may say, an attempt which we need to continue to work on; we do need to simplify our tax law—fairness, and staying ahead of those gamers.

So this is an ongoing struggle, because accountants and lawyers will continually follow the money and look for ways to pay tax legally but minimally. There is no such thing as the spirit of the law when it comes to tax. There’s just “How much I have to pay and how much I don’t.”, and so we’ve really got to get these rules right. So that’s why we have over 3,000 pages of an Income Tax Act, and I must say that this bill, sadly, will add to that somewhat, so there is work to be done. As we know, this Government is continuing to do work around tax and will continue to be vigilant, both in respect of this kind of administrative work—this maintenance work; getting rid of the rust—and also looking at the very structure.

SPEAKER: I’m giving a hint to the member that just saying “We’re considering the bill.” is actually not good enough at the third reading stage. The member should be talking about it—not a general treatise on tax.

Dr DUNCAN WEBB: Well, thank you, and what I was going to say, Mr Speaker, in terms of the tools that are being brought to bear, the movement towards online—in fact, I have mentioned that, as well as the employees’ share evaluation, already. So I am familiar with the bill and, I must say, sitting on the Finance and Expenditure Committee was certainly an education.

But the use of the online filing is an important part of this bill. The idea that we get nearly real-time filing of PAYE returns is an important part of this bill. Of course, one of the things that we need to do—and which the select committee did—was to make sure that whilst those employers who can will file on a pay-day basis, we don’t leave behind those who aren’t yet able to do that, because there is a concerning minority of people who are unable to file online. The select committee process improved the bill in that way by ensuring that those people could still file manually and didn’t have to do it in an unrealistic framework. So that’s important, particularly given the volume of tax returns that are out there. In fact, over 12 million returns were filed last year. This is actually part of the Business Transformation project, and for the IRD that kind of volume of tax returns isn’t manageable in the absence of that kind of work.

Of course, the other thing that’s in there is recognising withholding tax payments for interest. This bill—again, in select committee—was adjusted to make sure that it was achievable and that there was no unexpected rule there in terms of having to declare withholding tax. Whilst withholding tax on interest is, of course, critical—it’s income that needs to be taxed—the fact of the matter is that there are plenty of small arrangements out there. Again, the tax advice received in select committee was extremely valuable in identifying those taxpayers who would be essentially ambushed by the requirements that were being placed on them—particularly those loans and transactions where the interest payments were less than $5,000. So, in that respect, it was a very important improvement on that bill, because unless we do that, we’re going to have people defaulting on their tax obligations in an entirely unreasonable manner.

The other thing, of course, that’s gone on here is the subsidy for payroll agents. Now the fact of the matter is that they do serve an important function, but we must be vigilant about any subsidies out there. So it is quite right that those subsidies will be gone by 2020, but that date was, again, extended so that there was a little more transition time—particularly, again, in respect of the small and medium sized businesses, because, as we know, those businesses don’t have huge amounts of resources to adjust their taxes and they may well be doing their own accounts. To take away that subsidy would be to thrust the burden back on them, and this is about compliance.

So the real theme of this bill is to make compliance easier by a range of tools. But those tools have to be adjusted in themselves to make sure that they’re not placing unduly onerous obligations on taxpayers but, at the same time, are making tax administration as efficient as possible, so that the collection of tax is being done at as low a cost as possible and the opportunity for tax avoidance and evasion is reduced as far as possible.

Of course, the other important thing this bill does is that it affirms existing tax rates. There will be no new taxes in this bill. So look, if you’re paying more tax, yippee! What that means is that you’re making more money, the world’s a better place, and that’s a great thing for you and for us. Thank you, Mr Speaker.

IAN McKELVIE (National—Rangitīkei): Thank you, Mr Speaker. It’s a pleasure to take a call on the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill third reading. I was not privileged to be part of that select committee in the earlier stages of this bill, so I’ll choose to comment on a few issues that have been raised in the course of the debate tonight and one or two other things I think are important.

I found the last speaker, Duncan Webb, really interesting, because I almost agreed with most of what he said, but one thing he did say which I thought was quite extraordinary was that this Government’s aim, really, is to rebalance the wealth income inequality within our society. Well, I can assure him that if taxation’s got anything to do with this, when you rebalance wealth in a society, you just chase it overseas. That’s the first thing that’ll happen if you’re going to start rebalancing our wealth. That’s an unbelievable thing, I think, for any Government to aim to do. I certainly have no problem with equality within a society or with people paying their share of income tax, but I think to make a statement like that is extraordinary.

The next thing I want to address is a couple of statements that Fletcher Tabuteau made. I don’t want to address the statements he made so much as the results of what he talked about. Tax is an interesting beast, really, because if we don’t make it simple, we’re in trouble, and I’ll talk more about that a little later, but you either tax things to incentivise better behaviour or you tax things because you want more money. Frankly, if the brightline test being moved to five years is a tax to incentivise better behaviour, I think it’s very odd. It seems to me it’s just purely a grab for more money, frankly, and the interesting thing about that grab for more money is it doesn’t penalise your normal property investor, because they’re there for life. It doesn’t penalise the people in New Zealand that invest in property to create an income. It penalises the mum and dad investors in this country, who put their little bit of life-savings they’ve got into something that they can touch, go down to on a Saturday morning, make sure it’s still there, and make sure it benefits them in their retirement.

The reason it penalises them is because, often, those people are forced, for one reason or another—sometimes by Government policy, even; sometimes by the need to pay tax—to sell those properties at a time that they’d never planned to sell them at. This sort of tax, really, in my view, penalises those people and doesn’t penalise the people that it’s aimed to get at, at all, and that’s a fact.

If you think about a normal property investor, they’re in property for the life. They are there to rent properties, whether they’re commercial or whatever they are, to the people who occupy rentals or use commercial premises for rental, or whatever. So I think that to put a tax like this on initially—so, a two-year brightline test—is there to incentivise better behaviour. A five-year brightline test is basically there, in my view, to penalise, or is a money-grab to penalise, people who have gone into investment for one reason or another. So I think the family investors, the average person who has a little bit of money invested in property, are the people who are going to suffer the most as a result of this.

I think there are some very good points to this bill. I think it’s necessary to simplify our tax system. I think the simpler our tax system is, the better off people are. One of the real challenges—and I’d agree with the previous speaker, Duncan Webb, on this—we’ve got in New Zealand is actually understanding the tax legislation. A lot of people who get into trouble with taxation, and perhaps not paying it, are people who haven’t fully understood the tax legislation, haven’t understood how it should be applied, and haven’t asked or sought out satisfactory advice on it. I think that anything we do to simplify that tax situation is very positive, and the transformation of our taxation system, which was begun under the National Government of the last era and continued by this one—and full credit to them for continuing it; I think it is very positive for us. But I also think that the less tax we have—not less tax; the less taxes we have in New Zealand—and the less broadly we spread that net, from a different taxation point of view, the better off we are as a country.

As I said earlier, I have no problem with people paying their share of tax. I think we need to be very careful, though, in this country that we don’t continue to penalise those people who make this country go round, and those people are the average workers who go out there every day, pay PAYE, save their little bit of money and invest it on the weekends. If we continue to tax them, continue to increase rates on them, continue to put more costs and, frankly, more compliance on them, there will be a revolution one day. That’s the challenge we’ve got in this country, in my view.

So I’ve got no problem supporting this bill—supporting the bulk of this bill; certainly not supporting the bill through the House, but I do think there’s some very good parts to it, and we’ll see where it gets to. Thank you.

KIRITAPU ALLAN (Labour): Just prior to the break, we had the delight of listening to the closing remarks of the Hon Steven Joyce. We sat back and we got to have a little giggle about some of the trials and tribulations that one faces as a parliamentarian, but it also triggered my interest to see what types of comments and recommendations had been before this House as we were considering this bill, the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill.

Now, by and large, it seems, under the good stewardship of the former Minister and a majority of his senior colleagues—and we’ve listened to their commentary this afternoon. By and large, they seem to support the substantive matters in this bill. We look down and it’s, you know, proposals to reform the administration, the PAYE system—so that’s around simplicity—and accessibility, ensuring that people can access the tax system in a more user-friendly way. We’ve got proposals relating to the collection of investment income information, proposed changes to the taxation of employee share schemes, and the setting of the annual rates of the income tax for the 2017-2018 year. All of these themes seem to be relatively agreed to, but the sticking point, if I listen to the remarks of our colleagues from across the House, seems to be around a wee rule that they introduced in 2015, the brightline test—the brightline test. It was a cracking policy then, and it remains a cracking policy now, and I’m absolutely heartened to see that we’ve finally got a Government that’s taking some of these issues seriously.

Now, just on my way back from the dinner break, I had the misfortune of falling down a blimmin hill on my way back down here and I ripped my pants and had a biker zoom past me, and I realised I needed a band-aid. Then I was reflecting on the policy that they introduced in 2015, when they amended and introduced the brightline test, and I realised it was just an ad hoc band-aid that they had sought to rely on to address this housing “not crisis” crisis and to appease and make some goodwill amongst the populace. Then I was reflecting on, “Well, surely there must be something else to it.” If they really are not going to support this fundamentally important tax bill—and, by and large, it’s an omnibus bill. I stumbled across this fantastic quote, and they said, “Well, what is the difference between the two-year and the five-year rule? You have five years and one day”—[Interruption]

SPEAKER: Order! [Interruption] Order! I’m struggling to hear the member’s colleague, and we have two people sitting in the whips’ seats who are involved in a conversation with Mr King, and it’s to stop.

KIRITAPU ALLAN: Thank you, sir. I stumbled across this fantastic quote, and the quote is “What’s the difference”—in reference to the brightline test—“between a two- and a five-year rule? You have five years and one day—same problem. It’s exactly the same thing.” I want to thank the Hon David Bennett for that contribution in 2015.

And then I was thinking, “You know, well, OK—righty-o.” Here we are, we’ve got a Government that’s recognised that there are some fundamental crises that exist within this country right now—housing’s right at the top of that. When we’re looking at—look, by and large, a majority of this bill is great law that this whole entire House can agree to. But the sticking point is about whether or not we should extend the brightline. There was a failure in the previous administration to recognise that there is an absolute housing crisis, and if some of the members opposite would take a minute just to step outside of their fine dwellings and fine environments, they’d realise that the people that are crying mostly about this bill aren’t your mum and dad investors and so on and so forth, as we’ve heard bleated from across the other side of the House. This particular provision, the Supplementary Order Paper introduced by the Minister, is about taking off the pressure valve on a system, on a housing market, that’s completely overheated.

Brett Hudson: No, it’s not.

KIRITAPU ALLAN: It’s absolutely overheated, and the same submissions that my colleagues from across the House made in 2015 can apply now. I read again: “The heart of this bill is all about introducing greater fairness for all taxpayers, and it’s about introducing greater fairness”—sorry, for all taxpayers. And it’s not about ensuring that those who are speculating on—it’s about those that are speculating on property do pay—

SPEAKER: Order! The member’s time has expired.

BRETT HUDSON (National): Thank you, Mr Speaker. It’s a pleasure to rise on this Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill, a bill of which a great deal could be supported but for one egregious, anti-democratic action by this new Government, which means that in all good principle, we cannot support this bill in its third reading.

Before I get on to the substance of the bill, I just want to remark on a previous speaker’s, Duncan Webb, quote of Einstein. I believe his quote was actually accurate. There is enough evidence or anecdote to suggest that Einstein may well have said that, but I’d just like to remind members: always be careful, and bear in mind that great, sagacious American President, Abraham Lincoln, who noted that 80 percent of the quotes you get off the internet are false. So the bill itself has much to commend it.

Hon Christopher Finlayson: Speaking of Einstein, here’s Tracey Martin.

BRETT HUDSON: Keeping the tax—well, indeed! Who briefed Miss—so the tax rates remain the same. That’s a good measure, but, really, the single thing about the bill which is something we could all commend is the work it does to help smooth the pathway for the Business Transformation programme at the Inland Revenue Department. That programme will enable the tax system in New Zealand to run so much more efficiently for all manner of income earners or for personal income earners, for businesses, for investors, and for Government itself.

So what we can do as a Parliament to help to ease the processes, the information elements and sharing around that, are very important steps to helping to ensure that New Zealanders and New Zealand businesses can operate more effectively and in compliance with their taxation obligations into the future. It is something we can commend. Unfortunately, though, after the bill was returned to the House from the Finance and Expenditure Committee, the Government, I would say—my perception is—very cynically, a day or two later, introduced this idea of a five-year test for the brightline test. It is something that, because they would certainly have already determined that they wanted to do this, could have been introduced in the select committee process either prior to or as a Supplementary Order Paper, and it could have been debated in select committee. New Zealanders, individuals, and businesses from across the country could have had their say—could have had their say—just like officials did.

Well, officials did have their say, and the officials noted that it came with risks of locking people into investments which may prove suboptimal for them. It might also result in fewer house builds, particularly rentals. It may end up having overreach that means it actually ends up taxing people who are not speculators but merely are in circumstances where maintaining or retaining that investment property or properties does not make good sense for them for a full five-year period. Their call was, when they first advised our previous Government, that two years was an arbitrary measure but a good measure where you could have a high level of confidence that you would capture the speculators at that threshold, but shifting the threshold to five years would instead just mean that you’re taxing so many people for whom their motives are as pure as this Government believes itself to be—even though it is not, in our view.

So they’ve introduced the thing which is, quite frankly in my view, anti-democratic, because they could have put it in earlier, they could have allowed the public to have their say, but instead they ran from what they expected, I believe, the response to be and instead waited till that moment when they could introduce it and subvert our democratic processes.

We find ourselves now here, in this third reading, with a bill which was actually the bill that the previous Government introduced, except for that one element, the one element which makes it impossible for us to support the bill and where we are prepared to take this principled stand. It is normally a bill we would support, and support without too much debate, but we will take this principled stand so that New Zealanders know that we stand here, backing hard-working Kiwis who are just looking to succeed and who deserve a Parliament that backs them to be successful, deserve a Parliament that actually has confidence in them and is helping them to get ahead, instead of a Government who treats all success as bad, and they’ve never met a tax they didn’t like, and they just see an opportunity to take more money from hard-working New Zealanders. We oppose this bill.

MARAMA DAVIDSON (Green): Thank you, Mr Speaker. I rise to support the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. I offer a short call mainly to focus on the brightline test—how this proposed legislation will extend the brightline test to five years so that it requires that income tax is paid on any particular capital gains from residential property purchased and sold within five years. Of course, those are properties which are not lived in as the home property.

I’ve heard quite a bit from the Opposition side of the House tonight about how this will detrimentally impact on hard-working Kiwis and their investments. I just want to bring us back to the fact that we also need to support hard-working Kiwis who just want a house to live in, let alone to invest in, who just want a house to be able to be affordable to either own or rent, and that we’ve really got to rebalance. We’ve gone out of whack in the way that we have upheld houses in this country with the lack of regulation and the way that houses in this country have become such a focus of investment in a way that isn’t balanced for our economy and especially for our families. Even in the National Party’s 2009 Tax Working Group, they themselves identified that this inconsistent taxation of capital in New Zealand breached all principles of a solid, good tax system, particularly distorting investment decisions. So we’ve got to pull that back a bit, particularly because speculators in recent years—I was having a look at some of the figures; some of the speculators were able to flip houses on the very same day of settlement for six figure sums—on the same day; on the same day. I’ll just mention very quickly that it’s been no secret that the Greens support a comprehensive capital gains tax. We do support this extending—

David Seymour: On the family home?

MARAMA DAVIDSON: Not on the family home. We do support extending, from two years to five years, the brightline test, but it’s been no secret that we do support a comprehensive capital gains tax.

But I just want to pull us back to setting up, sort of, what the Opposition are calling mum and dad investors in competition with our New Zealanders who also just need the chance to live in affordable rental homes or even have the chance to buy their own first home to live in. That’s why we have to address and use the tools that we can to rebalance the way that houses have been used as businesses in this country rather than just as homes, and that ends up pushing everybody down the homelessness continuum in this country. So that is why the Greens are very clear in our support for this, and we will of course keep pushing our discussions. No piece of legislation in this House sits alone in a vacuum. Of course we will address all the other areas of the housing build, supply, regulation, rent controls, State housing, and social housing that need to go alongside this sort of legislation, but we should get back to a principle of rebalancing investment so that we can make more sound and more diverse investments, instead of relying on houses not just as investments but as massive corporate property development portfolios.

So I totally applaud the work that we have started. This is a start to that rebalancing taxation work and investment rebalancing work that we have to do for our economy and for our communities and that we—the Green Party—will keep pushing for further comprehensive tax regulations and changes and further comprehensive capital gains tax on property. Thank you.

David Seymour: Mr Speaker.

Andrew Bayly: Mr Speaker.

SPEAKER: David Sey—well, unless the member wants a five-minute call. David Seymour.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. I rise on behalf of the ACT Party in opposition to the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill. There are three parts to this bill, and I’ll start with the good, which is that this bill addresses all manner of mischief in our complex taxation system. It’s a great tribute to the officials, to the Ministers from both sides of the House who have worked on this bill over the past year, and, I might say, to the members of the Finance and Expenditure Committee that issues such as the treatment of an offshore insurance market place such as Lloyd’s of London have been accommodated in this bill in such a way that our taxation system is neutral towards activities and raises revenue fairly. So I think it is worth acknowledging the work that so many people have done on deeply technical and difficult matters so that our taxation system maintains integrity.

The second part that I’ll draw your attention to—it’s actually Part 1 of the bill—is setting the annual rates. The tax rates in this bill are completely unchanged for another year, and for another year, families in this country, through no fault of their own, simply because inflation has increased their nominal take-home earnings but not what they can actually afford to buy, they find themselves pushed into higher tax brackets for the same purchasing power. Families in this country on the average wage find themselves paying thousands of dollars more every year in income tax simply because not only the current Government but the one before it for eight long years refused to adjust tax brackets and have pushed more and more people into higher and higher tax rates just through inflation. That is a great shame and this bill tonight should be giving relief to the taxpayers of New Zealand and allowing the people who earn the money to keep more of it.

But the part that’s attracted the most debate tonight is not the technical amendments, it’s not the tax rates, although those are important and should be given more attention; the part that’s attracted the most attention tonight is the extension, somewhat surreptitious as it’s been pointed out, of the brightline test to five years from two. You see, if you sell a house, a house that is not your primary residence—and let’s not go into how the IRD judges whether it’s your primary residence except to quote Adam Smith, who said that an income tax would be an intolerable interference in the affairs of everyday people. But let’s just say that you sell a house within five years, you will now pay tax on any capital gain that you make. Tonight, this Parliament is introducing a de facto capital gains tax to New Zealand housing. Let’s make that absolutely clear.

Let’s not listen to the braying from the National Party who find themselves in this absurd position of arguing that a two-year brightline test is not a capital gains tax but a five-year brightline test somehow is. Amy Adams said that that’s in the regulatory impact statement and I can tell the people sitting at home that the regulatory impact statement says no such thing. The message to the National Party is that if you want to fight socialism, don’t adopt it. If you don’t like oak trees, then don’t plant acorns, because taxes are like acorns: they grow. [Speaker holds up bill] If you plant an acorn and you start a tax, it will inevitably grow, as it is growing in this bill tonight, Mr Speaker. We have a capital gains tax being introduced on houses tonight and it is happening because this Government punishes success, because this Government resents the accumulation of wealth, but also because the previous Government, in introducing a two-year brightline test, enabled a five-year brightline test. Thank you, Mr Speaker.

ANDREW BAYLY (National—Hunua): Thank you, Mr Speaker. It’s a pleasure to be talking on the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill tonight. We seem to be trading quotes, so tax always reminds me of this quote: it’s from Matthew chapter 13. It says, “Whoever has, will be given more and he will have an abundance. Whoever does not have, even what he has will be taken away from him.” I believe that sort of sums up tax to some extent.

I thought, as the previous speaker, David Seymour, noted and, I think, across on the other side, this bill does cover a lot of ground, and a couple of areas that no one’s traversed previously I just thought I would highlight. The first one is around employment share schemes. One of the important things about this bill was to look at modernising and improving the tax treatment around employment share schemes. It particularly affects young innovative companies that don’t have cash often to reward their employees and it’s therefore an important part of the fabric of promoting a vibrant economy in New Zealand.

Of course, what the bill does is actually make sure that the tax treatment on shares given to employees is tax-neutral until the time that they have, effectively, fulfilled the requirements to get the shares issued and to be paying tax at that point in time. The corollary applies with regard to the employer, so to make sure that the employer pays the tax at the right period and therefore matching it up on an equivalent basis. I think this is important because it clarifies the employment share schemes. There’s been a lot of debate about it. We had a lot of debate in the Finance and Expenditure Committee about it but I think we landed in a good position with it.

The other thing I just want to note is that one of the issues is with the demerger of companies and many New Zealanders hold shares in listed companies where they end up by demerging. What I mean by that is—you might take Fletcher Challenge, and if you go back many years ago when they split the operation into a whole lot of subsidiary entities, the shareholders in the head company all ended up with equal allocations in the subsidiary companies.

Now the situation that applies at the moment is where New Zealand shareholders own shares in Australian companies that demerged, Australian shareholders are appropriately treated and are not disadvantaged by tax. But under previous rules or current rules, New Zealand shareholders, if they are issued shares in a demerged entity, that is, effectively, deemed a dividend, and what this bill does is address that situation to make sure we are not disadvantaged.

But I do want to put on record that new section ED 2B inserted by clause 45 of the bill—this deals with Australian companies, and I think one of the outstanding issues relating to this is that we need to put in place equivalent arrangements for companies in New Zealand listed on the stock exchange who demerge, and New Zealand shareholders should also be able to benefit from an equivalent treatment. This has not been treated in the bill and it’s one of those matters that is probably going to be picked up—and I hope it’s going to be picked up—the next time similar taxation legislation comes before the House.

But I just want to turn to the last thing, which I believe is a travesty. This is the issue of Supplementary Order Paper (SOP) 13 which was callously introduced after the committee—after a long, long period of time where this committee worked collaboratively to work through this complicated tax bill. Only after it was completed was an SOP, going to seven pages—we’re not talking about a minor SOP. We’re talking about a significant change, where this SOP was presented to the House after we had completed our report, which meant that it could not be referred back to the committee.

I actually proposed a motion in the House that this SOP should be returned to the committee for a full debate. Unfortunately, the coalition Government voted that down, and so what we now have is this bill that has this significant addition to it, which, as some of the speakers have reported, extends the brightline test from two to five years.

What the issue is is the unintended consequences that I believe that this SOP represents. It represents the fact that with 40 percent of the New Zealand households, or houses owned in New Zealand that are owned by New Zealand mums and dads, from now on, unless they are selling their house as a result of a dissolution of a marriage or as a result of inheriting a property, or if it’s not their home—if any investment property, or whether it’s a property they bought for their children, or if for any other reason they bought a second home, which could be for the most valid of reasons, it will mean that now they are under the rules of this new SOP of five years. So that means that if someone gets into financial trouble for some reason, they are now subject to this five-year brightline test. I think the unintended consequences are significant, and I’m very, very disappointed it’s come through into this bill. Thank you.

Dr DEBORAH RUSSELL (Labour—New Lynn): The Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill has followed a familiar pattern with tax legislation. There are several tax bills that come into the House every year. It’s regular work for this House and it’s regular work for the Finance and Expenditure Committee. As is usual with this particular bill, both sides of the House worked on it together. The Opposition before the election and the Opposition after the election agreed, in large part, with this bill. There were some quibbles, some tidy-ups, some corrections that came through in the select committee process, but, actually, it was pretty much a matter of joint work between all the parties in the House and all the people who worked on it. So it’s an example of fantastic Government across all the branches of Government, from all the people who participate in governing in our democracy, from the officials to professional bodies, to experts, to actors in civil society, and to politicians, working together to get it right. So there’s a lot of agreement on this bill, and when we look at the reasons why we agree on a lot of the measures in this bill, it goes straight back to basic tax principles.

Now, earlier, my colleague Marama Davidson talked about the way that people do try to get around the tax system. So, like motorists are always trying to find a faster route, or a rat-run, through the suburbs, tax accountants and lawyers always will find a way through tax legislation to ensure that their clients are better off, and that results in unfairness. Now at least some of the measures in this bill are to do with evening out the tax Act again.

I think the employee share scheme rules, which both sides of the House agreed on, are an example of this—ensuring that there is fairness between income earned as salary and wages and income earned in the form of employee share schemes. It’s a basic fairness measure. The demergers that my colleague Mr Bayly referred to are an example of fairness—of trying to achieve fairness in the tax system. The petroleum mining decommissioning clauses—again, it’s about achieving fairness in the tax system. I think that’s why there’s been a large amount of agreement on both sides of the House.

Some of the new rules in this tax Act are to do with reducing compliance costs, making it easier for employers to pay tax. I think one example of that is the treatment of advanced payments of holiday pay. That could be a bit tricky for employers to manage, but those advance payments of holiday pay are now covered under the extra pay rules. It’s quite a technical point, but it makes life easier for employers. And, of course, there is a whole lot of work in this bill that is to do with getting the Business Transformation up and running at IRD. Again, that’s a matter of reducing compliance costs, making our tax system run more fairly, and all sides of the House, all parties in the House, agree on these rules.

There is, in fact, only one major difference between the Opposition side of the House and the Government side of the House on this bill, and that’s the reason they’re proposing to vote it down. The point of difference is to do with the brightline test, and I actually struggle to understand why the Opposition is opposing the brightline test. Look, it cannot be the structural mechanism of the brightline test. It cannot be the actual rules around it, because the Opposition, when they were in Government, were the very people who put those rules into place. So it cannot be to do with the way that the rules are structured, and, more to the point, there was a full-scale consultation process about the way those rules were structured when the brightline test was brought in by the then Government, now the Opposition. So it cannot be the structural nature, the structural mechanisms, of the brightline test.

It cannot be the complexity of this change. Now, Mr Bayly has told us that there was a seven-page Supplementary Order Paper, as though this somehow hinted at complexity. But when you read that Supplementary Order Paper 13, you will see that, consistently, all it is doing is changing the number “2” to the number “5”. Now, Mr Bayly may regard that as a complicated measure, but I assure you, it’s quite a simple matter to change a “2” to a “5”. That is not a complex issue. So it cannot be the complexity of the issue that is the reason for their opposition to this bill.

It cannot be the idea of taxing property sales. Property sales have long been taxed in various ways by our Income Tax Act. In fact, the Act has a plethora of rules for taxing property transactions. If you buy with the intention of resale, you are subject to tax on any gain you make. If you buy and sell in the course of business, you are subject to tax on any gains that you make. If you are a property developer and you subdivide a property, you are going to be subject to any gains that you make there. There is no prohibition against taxing the gains on the sale of property in the Income Tax Act; we actually think it’s a good thing to do. It cannot be just the very idea of taxing property sales, so the only thing I can think of that they object to is the change from two years to five years. Somehow, they see there is a huge and massive change in that that was not already in the tax Act.

I think it would help them to understand a little bit about what this brightline test actually does. Now, I’ve just spoken about the rules for taxing property in the Income Tax Act, and they are complicated and difficult. In particular, when it comes to taxing a property that has been bought with the intention of resale, absent the brightline test, you have to be able to understand what the intention was when the property was purchased. Now that’s a hard thing to do—to get into someone’s mind—so what the brightline test does is it is a deeming provision. It simply deems that if you buy a property and then sell it within two years, you are deemed to have bought it with the intention of resale, and therefore, you will be subject to tax on it. All we have done is shifted it from two years to five years. The deeming now occurs for properties that are sold within five years. It’s a simple and straightforward matter.

But what objections have they raised to this? I think one objection—in fact, the major one they’ve really made—is that they think, somehow, it is going to be unfair. They said, “What about people who get sick? What about people whose financial condition changes? What about people who fall on to hard times?”—interesting to hear the National Party caring about that. But, you know, let’s just remember what’s going on here. If you have fallen on hard times and you have to sell your investment property, you will only be taxed on it if you make a gain. Taxing it is a sign that you have actually made a gain. Tax only occurs on income. You have actually made a gain on sale; something good has happened. Far from falling on hard times, you will recover your investment and a bit extra. It’s only the little bit extra that’s going to be taxed like any other form of income.

Then we had the Hon Judith Collins, and she was terribly worried about investors who might have bought a property and fallen on hard times and then they find that the rent they charge didn’t cover the interest expense. Now I’m just confused by that. Because, you see, what sensible investors go in to an investment knowing that the income they get from it will be less than the expenses? That can’t have been an investment; they must have bought it for some reason. They must’ve bought it for the capital gain, because there can be no other reason to enter in to an investment if you’re going to make a loss on it every year. Now, frankly, if you are buying a property in order to get the capital gain then I suggest that that gain needs to be taxed. Frankly, it is generous—it is generous—ensuring that only properties that are sold within five years are subject to that capital gain. And I sincerely hope that our Tax Working Group will sort some of these issues out.

I am very pleased to have the last words—the last words—in this debate, and to say that this brightline test is an example of the fairness and the integrity that the members of the Opposition were touting as signs of a good tax. I urge them instead of continuing their opposition to this Act to see sense, to see reason, to stand up, and vote for this excellent bill.

A party vote was called for on the question, That the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill be now read a third time.

Ayes 63

New Zealand Labour 46; New Zealand First 9; Green Party 8.

Noes 57

New Zealand National 56; ACT New Zealand 1.

Bill read a third time.

Bills

Education (Tertiary Education and Other Matters) Amendment Bill

Third Reading

Debate resumed from 22 March.

SPEAKER: When the House was last considering this bill, Jamie Strange was speaking and, if he wishes, has one minute and 20 seconds to speak.

JAMIE STRANGE (Labour): I certainly do wish to speak on this bill. It’s another excellent bill the Government’s brought in around the area of education, which, as I’ve said before, is certainly something that is very dear to my heart having just finished my masters in educational leadership—graduating next month, so very excited about that.

Hon Dr David Clark: Congratulations.

JAMIE STRANGE: Thank you very much. Now, I believe I’ve probably got about one minute to go so, this is actually my third—I’ve got the full 10 minutes?

SPEAKER: No, less than a minute.

JAMIE STRANGE: Oh, heck. So this is actually the third time I’ve tried to finish this speech. I’ve been cut off twice, so fingers crossed for this time.

There’s just a key focus I’d like to bring out in this bill, and that’s the focus—

Hon David Parker: The name of the bill.

JAMIE STRANGE: The Education (Tertiary Education and Other Matters) Amendment Bill. But the focus is on public education. So if there’s one thing this Government is absolutely committed to, it is funding public education, because it’s about all Kiwi young people, middle-aged, and also seniors having the opportunity to study, because, as we know, education provides opportunity.

SIMEON BROWN (National—Pakuranga): Well, thank you very much, Mr Speaker. It’s a pleasure to take a call on the Education (Tertiary Education and Other Matters) Amendment Bill. Hopefully, I can get through my speech on the first round and don’t have to wait three times as the member opposite Jamie Strange had to. But let me just congratulate him on his upcoming, pending graduation as well. It’s a lot of work and effort that you’ve gone in to doing your Master’s. I hope you have a fantastic celebration.

So I’d just like to make a couple of comments on this bill, another good National Party piece of legislation which we’re progressing through in this Parliament. It’s great to see that the Government is spending a lot of Parliament’s time continuing to progress the agenda which we had progressed through our last three years in our third term in Government.

I would just like to make a couple of comments in relation to the bill. It’s a piece of legislation which improves the accountability for the tertiary sector, improves monitoring, and improves outcomes. We have to remember that this is our fourth-biggest industry in New Zealand, bringing in $4.28 billion into the economy. So it is important that we ensure we are marketing a product to the world which people can know and have trust and faith in.

But I would just like to point out that the Government has made one change to this piece of legislation. And they have not supported the Hon Paul Goldsmith’s Supplementary Order Paper 17, which was to ensure that private and public sector both receive the same funding in the tertiary space. Even the Minister Chris Hipkins has publicly stated that the private sector often can do better. So I don’t see why we have to pass legislation which continues to put in place a situation where the private sector is seen differently.

But we do support this bill. It’s a good piece of legislation, and we will add that to our long list of things that we will do and fix up when we get back in to Government very soon. Thank you very much.

JAN TINETTI (Labour): I am delighted to be the final speaker here in the third reading of the Education (Tertiary Education and Other Matters) Amendment Bill. Like my colleague Jamie Strange, I’ve been waiting a long time to have my chance to speak. I congratulate you finally there, Jamie, and finally getting through on the third time through that speech.

I would like to take the opportunity to thank the select committees in what they’ve done in this bill, and getting it to this stage, getting it to the third reading. Because even though we’ve heard very little from our Opposition benches we’ve heard a lot about it being a Government bill. But actually this bill is so much stronger because we have made this bill so much better. We have made this bill so much better through the select committee process because we’ve removed the original proposal to insert a principle of equal funding treatment of public and private providers into the Education Act. This, today, is a good move for quality public education in this country. It’s a great move because we’re seeing it in the tertiary sector. So we are saying that quality public education goes right from birth, right through a learner’s life, and it’s exciting that we’ve done that. So while we hear that this is a previous Government’s bill, this bill is fantastic. I’m delighted to be here and speaking about it. I’m delighted that we’re having the opportunity to put this bill through in the strongest form that it possibly could be.

I’m really, also, disappointed though that we haven’t heard a lot in the House from the Opposition on this bill. It makes me wonder how much—and I’ve heard this time and time again on any of the education bills that have come up—they actually put in store for education. I would actually argue with them that they are letting their public and their voters down by not having a say in the House on these bills. I have been contacted by a number of people who have been watching these debates, contacted about how they have really appreciated the understanding of what this bill actually entails. One of the areas that they have spoken to me about is the part of this bill that talks about protection of our international students in the secondary schools. This is an incredibly important part of this bill. This shouldn’t be minimised. And the fact that we’ve got people laughing in the House does tell me that those people aren’t putting any value on our education system. This is really, really important—really, really important. What a shame that they could not articulate that so that the people of New Zealand could actually understand it.

This bill allows schools to—[Interruption]

SPEAKER: Order! I’ll just ask the member to resume her seat. I know there’s been a certain amount of celebration going on, but it is getting too noisy now.

JAN TINETTI: Thank you, Mr Speaker. This bill allows schools to more effectively manage our international students. It allows schools to manage the misconduct and to also put a great deal of care and thought into the pastoral care of those students. It is really, really important that schools maintain responsibility for the international students outside of school. We’ve got to ensure that it’s not just about the discipline of those students, though, in the school setting when they get into a situation where they misbehave.

This bill, through its outlining and defining of the enrolment contract, enables schools to remove students from the school setting, even if they haven’t misbehaved when they’ve been at the school. It allows schools to actually deal with them if they have not disclosed issues that they have had before they have enrolled at the school. This is a really good move because it protects schools and it also protects students so that they don’t get into a situation that they can’t handle.

This is really, really important to the schools. It’s those people who have contacted me and said how much they appreciate hearing this debate in the House, because since then they have seen that we are putting a great deal of value on our international students.

Schools have got into trouble, and this is where this bill came into being in the first place. They were using the original code of conduct as their guidance to help them with the discipline of international students. Unfortunately, that was not enough. It was tested through the court processes and put both the schools and the students in a very unsafe position. So this outlining of the enrolment contract now actually helps that situation. We know that for all those schools that have international students this is a much better situation for them to be in. It keeps the schools safe.

It’s also great for the New Zealand economy. It gives surety. It gives surety to those people that are wanting to send their children, their students, to New Zealand to study that their children and the students coming over here will be safe, and so they’ve got more sense that they will put those children into this country, meaning more into our economy.

Also, a really strong part of this bill—there’s lots of different parts to it—was about the offences around the provisions for falsely awarding credits towards a qualification. This was really important to our tertiary sector because it puts trust in the tertiary sector. I’m linking this back to the international education. We even heard earlier this evening, in Mr Joyce’s valedictory speech, about how important the international sector and international education is to our economy. The over $1 billion that that particular sector puts back into our economy is incredibly important.

We’ve had cases in this country where we haven’t always been able to trust the qualifications that have come from some institutions—thankfully, not very many. But this bill actually puts things in place now that will strengthen the provisions in the Act so that our overseas people again will have far greater trust in those qualifications and will appreciate the fact that the New Zealand education system is strong, as I’ve said, right from early childhood through to tertiary and can be completely trusted.

The increase in penalties will be from $10,000 to $50,000, as it will be a strong deterrent towards any institution—public or private—putting these qualifications in and falsifying these qualifications. So I’m really grateful for that part of the bill that we’ve got there, and again I’ve been contacted by a number of institutions around this. Recently I was contacted also by a local wānanga in the Bay of Plenty. They didn’t contact me, actually. They were at a meeting and they just said to me that they were really appreciative of the part of this bill when they’ve been reading it, of allowing a wānanga to apply to use a protected term, such as university. They felt that that was a really good idea. They felt that it again highlights the fact that the overseas people that they’re trying to attract into their wānanga don’t understand that term “wānanga”. Their courses that they are putting in place, if they’re deemed to be equivalent, like a Bachelor’s degree or a postgraduate degree, then they should be able to apply to use the term such as university. I’m very pleased, when we’re reading that part of the bill too, that you can actually see from there that it’s not just a matter of them saying, “I want to use the term university.” They can actually then go to the Minister, and it will go through a whole lot of different tests, to make sure that that’s OK.

In conclusion, I believe that this bill is really important. I believe that the most important part, for me, is around the fact that the international education parts of this bill are really, really strong. But I also believe that this is a great day, that we’re about to pass this bill now, and I believe that this shows that quality public education is incredibly strong in this country. I am very, very proud to commend this bill to the House.

Bill read a third time.

Bills

Land Transport Management (Regional Fuel Tax) Amendment Bill

First Reading

Hon PHIL TWYFORD (Minister of Transport): I move, That the Land Transport Management (Regional Fuel Tax) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

At the appropriate time, I intend to move that the bill be reported to the House by Monday, 21 May 2018 and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there’s been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 191, 193, and 194(1)(b) and (c).

I’m pleased to present this bill to the House this evening. The bill allows regions to apply for a regional fuel tax. The bill is the first step in tackling New Zealand’s infrastructure crisis, and Auckland Council is the first council to apply for a regional fuel tax. Auckland’s congestion crisis is plaguing the city. Auckland is basically grinding to a halt before our eyes. A recent report published last year, and work done by the New Zealand Institute of Economic Research (NZIER), the economics consultancy, estimated that Auckland was losing $1.3 billion a year in lost productivity because of congestion on the roading network. Aucklanders understand that fixing the congestion will cost money. This bill is a down payment on our Government’s commitment to building a modern transport system for our country’s biggest city and backing it with funding.

Congestion is a handbrake on the New Zealand economy. Recently, I was in Kūmeu in the Helensville electorate, at a meeting held by the Kūmeu-Huapai Residents & Ratepayers Association. During the meeting I spoke to a local resident who owns a concrete supply business. He told me that he’s only able to do two deliveries per truck per day in Auckland, due to the congestion on the roads. It’s impossible for him to get across town at any time of the day, and not only does this mean that he incurs ongoing costs, paying staff to sit in traffic, but his company has to keep twice as many trucks on the road as it otherwise would need to do. Congestion is a handbrake on his business.

Stories like this are not new. Logistics companies like Mainfreight, couriers such as PBT Couriers or New Zealand Post, can tell you that the crisis of congestion on Auckland roads costs their business every single day. That’s why the Employers and Manufacturers Association, Auckland International Airport, Infrastructure New Zealand, Ports of Auckland, and the National Road Carriers association commissioned NZIER to carry out the report that I mentioned earlier. It found that if Auckland traffic could move on average between 50 kilometres to 56 kilometres an hour during weekdays, it would benefit the Auckland economy by nearly $3.5 million a day. The city’s real GDP would increase by between $488 million and $842 million. We cannot afford to continue the waste and the drag on the country’s productivity caused by the failure to invest properly in Auckland’s transport system.

The bill enables a council to seek funding for specific transport-related capital projects. The Government has indicated that at this stage only Auckland will be able to apply for the regional fuel tax. Aucklanders know we’ve got a crisis on the roads, they know it’s going to cost money to fix it, and they are up for paying their fair share if we are to tackle this problem. This bill provides the opportunity for this to happen and happen now.

The first aspect of the bill that I want to mention is that the regional fuel tax must be applied for. This is enabling legislation; it creates the opportunity for a council—in this case, Auckland—to apply for the ability to levy the regional fuel tax in its territory. This is important. The regional fuel tax must be used to fund capital projects. It cannot be used to pay for business-as-usual and operating expenditure. It is only to fund projects that will transform an area—in this case, Auckland—and ease congestion.

In 2016, Auckland Council agreed to an indicative package called the Auckland Transport Alignment Project (ATAP), and, to give credit to the former Government, they finally, after five years of going to war with Auckland Council on transport, after five years of Steven Joyce delaying the City Rail Link unnecessarily—finally the National Government sat down and negotiated a 30-year transport plan with Auckland Council. That is ATAP, the Auckland Transport Alignment Project.

However, what was not agreed in that plan, or could not be agreed, was how the indicative package would be funded. The National Government left a $5.9 billion fiscal hole—that’s a real fiscal hole, not one that’s made up for electoral purposes; a real fiscal hole. They talked about having a transport plan for Auckland and left nearly $6 billion unfunded. Auckland Council said, “We can’t plug that gap on our own, it’s not possible.” Auckland Council is already up against its statutory debt limits.

Brett Hudson: They could have reduced their spending. That would have helped.

Hon PHIL TWYFORD: I’ll come to that. They’re already up against their statutory debt limits. They do not have the headroom on their balance sheet to borrow $6 billion to plug the fiscal hole that National left. So that is why our Government comes to this Parliament with a bill to make a first down payment on plugging the funding gap in the Auckland Transport Alignment Project.

Auckland Council will consult on funding the package of the first decade of projects identified by a refresh of the Auckland Transport Alignment Project that’s currently under way, and I hope within a month we’ll be able to brief not only the Parliament but the public on a new set of priorities for the first 10 years of Auckland’s transport plan. It’s anticipated that the funds generated by the regional fuel tax will go to support the 10-year programme of investments under ATAP. The bill enables Auckland Council to levy a regional fuel tax of up to 10c a year. This will provide funding between $150 million and $170 million a year for urgently needed infrastructure. That amounts to a $1.5 billion to $1.7 billion contribution by Aucklanders, through this regional fuel tax, to the modernisation of the Auckland transport system, that is so desperately needed.

The problems of Auckland cannot be entirely solved by Wellington. Auckland needs to step up and actively work with central government to set the priorities and to take ownership, and it’s only fair, if extra revenue sources are going to be generated from Auckland, that Aucklanders have the ability to have a say on the setting of those priorities. This is why the bill does not specify individual projects to be funded. Auckland Council, after consulting with its regional land transport committee, will prepare a proposal that identifies projects to be funded, and then will engage in a public engagement process intended to result in a high-quality proposal that’s been worked through and tested from a range of perspectives. It’s critical, from our point of view, that Auckland Council builds public support and brings the community on board through this process.

The bill enables a tax that will apply to petrol and diesel, but for no more than 10 years. The period of time gives Auckland the funding certainty that it needs to plan and deliver major projects, but it requires the council to go back to its citizens and to Ministers if it wants to go beyond 10 years.

I want to say that there are a number of people, including the National Party’s transport spokesperson, who say that this tax is not needed because Auckland Council should just become more efficient and cut its costs. That is laughable. To think that Auckland Council can cut costs in order to fund a $6 billion fiscal hole left by the former Government is ridiculous.

One of the big challenges that our country faces is helping our high-growth cities, particularly Auckland, to grow. Without much greater investment in transport, we’ll never reduce the crippling costs of congestion. We cannot invest at the level that’s needed if we are to rely on this year’s tax take through the National Land Transport Fund; there just simply isn’t enough money in the fund. We need to lift our level of ambition and invest in transport infrastructure to get ahead of the growth, and to do that we need to find new sources of revenue from Auckland to support this investment. Enabling Auckland Council to levy this regional fuel tax is a down payment on that challenge by this Government. This bill is a vital first step to resolving the transport crisis on Auckland’s roads. Thank you.

BRETT HUDSON (National): Thank you, Madam Assistant Speaker. I rise in opposition to the Land Transport Management (Regional Fuel Tax) Amendment Bill, surprising as it is to the members on the other side. This really nuts down to a very simple philosophy, because, really, if we want Auckland to get ahead and to meet its challenges of infrastructure and well-being—well-being for its citizens—what we really want is Auckland and Aucklanders to thrive, to get ahead. We want business growing, we want people having opportunities and getting ahead. The coalition Government’s answer to what you do to help Aucklanders succeed and get ahead, to help businesses grow and people do better, is you tax them more. That is what this does—it simply imposes a tax on individuals and businesses operating within the Auckland region.

Well, I’ll remind the Minister of some very wise words from Sir Winston Churchill, who remarked, “Trying to tax your way to prosperity is like standing in a bucket and trying to lift yourself up by the handle.”, and that’s exactly what this bill seeks to do. It is an absolute travesty. It is a complete misunderstanding of what generates success, wealth, and prosperity in a nation, and, actually, it’s not required.

But before I get on to the council and how it should be discharging its financial responsibilities better, let’s take a look at the bill. The bill’s going to establish a framework, an ability, for a unitary or regional council to request to levy a fuel tax in its region or area. There are a lot of considerations that need to be made around that, such as its link to the regional transport plan, to the Government policy statement on land transport. It’s certainly not without its rules, but let’s look at what it is and how it is applied.

So, yes, as the Minister pointed out, it applies to petrol and diesel fuel, but not to certain other fuels such as compressed natural gas or liquefied petroleum gas. But here we go: he said it can only last for 10 years. Well, that’s a little disingenuous. It can only last for an initial 10 years, but it’s the council that reviews, before its expiry, as to whether it should be extended longer. It may be required. It may ask all sorts of people and stakeholders what their views are, but that’s a very different prospect from those stakeholders deciding whether or not it gets extended. Just another example of a Government that’s never found a tax it doesn’t like creating a new tax that could actually go on for a long, long time. I suggest, if they ever have the opportunity—and we’ll be working hard to prevent that—it would go on into perpetuity.

But here’s a little thing—I do hope this bill could be defeated at first reading, but, just if it isn’t, here’s a wee thing I noted—that I would hope the select committee will look into with some degree of scrutiny: apparently, the fuel tax will be collected at the distribution level, the point where the fuel is supplied by a distributer to service stations and commercial storage facilities. Here we go: a Government that doesn’t understand the fuel industry, its distribution methods, and, particularly, its retail end.

Really, there are three principal means under which fuel will be retailed to consumers at a station. The first is the station will be company-owned, so it will be the company who’s distributing the fuel who pays the tax when it delivers the fuel to its service station—that’s fine. But the other two will either be a franchisee who pays for the fuel upon delivery and gets a higher commission rate or profit margin for that, or it will be what’s known as an agency model. That’s where the retailer doesn’t actually purchase the fuel at the point of delivery, which is the point when the tax falls due, but instead pays the cost of each litre to the distributor, the fuel company, the day after it’s sold. So think about that. The way I understand this is written up means that that retailer will be obliged to pay the fuel tax when the tanker comes along at night and drops 30,000 litres into their tanks, but it will be some days or even up to a week before it can actually sell that fuel and recover the tax from the consumers and therefore actually cover the costs. And these are small businesses—small businesses. That’s going to kill their cash flow.

The Government doesn’t care. They don’t care at all, because they’re not concerned about that. Their view is that a country can tax its way to prosperity. So they are not concerned about that at all. I would ask, if this goes to select committee, for them to look at, and actually look at changing, this travesty.

But there is a very good reason that New Zealanders could have every right to expect that this bill will not go to select committee. The reason they could have every right to expect this bill will not make it to select committee is because of the integrity of New Zealand First and its MPs. Absolutely it is that, because, for years, New Zealand First, led by the Rt Hon Winston Peters, has railed against taxes on taxes on fuel. For years, he’s been on the public record, time and time again, saying it is an absolute disgrace that the Government levies GST on fuel taxes. He thinks that’s terrible. For years, he’s said that we should remove the GST on the taxes on fuel. But here we go: in this bill, this regional fuel tax is subject to goods and services tax. So we can look forward to—the people of New Zealand can look forward to, later on this evening or maybe the next sitting day—Winston Peters and the New Zealand First MPs—because they are people of integrity, they will stick with the position they have had for years and they will vote this down, because they don’t believe in a tax on a tax, they don’t believe in GST on petrol taxes. So I look forward to them casting their votes there.

But now let’s get to why this bill isn’t actually necessary, or shouldn’t be. The Auckland Council—well, Auckland has challenges; that’s unquestionable. But let’s look at the spending growth in the council over the last four years: $800 million—it’s up $800 million. Now, that’s easily enough to service a $6 billion gap that Mr Twyford talked about. If they would just get their spending under control, they wouldn’t need to tax their citizens, their residents, more.

Andrew Bayly: They can’t help themselves.

BRETT HUDSON: No, they can’t. It should be tightening up its own spending, not simply looking to a Labour Government to get it more money.

But here’s even worse: this allows other councils—other authorities—to also request for regional fuel taxes, so this could be new regional taxes across all of New Zealand. Now, it is true that they can’t put those taxes into effect until 2021, but there is another little piece of disingenuous behaviour by this Government. They went into the election and came into Government pledging no new taxes to be implemented before the next election—they would campaign on them, they said. Well, this bill actually puts in place the mechanism for those taxes and craftily tricks New Zealanders by saying, “Oh, well, it’s not really a new tax because it can’t come into effect until 2021.”—but they are legislating for it right now. They are creating the tax. They’re going to be tricky and make sure it doesn’t come into effect outside of Auckland till after the election, but, make no mistake, this is a new tax. They have backtracked on their pledge already. We’re seven months into a term, and already they’ve backtracked on the pledge of no new taxes and here’s a new tax across all of New Zealand.

It’s a regressive tax. They have always claimed to be the party of the workers of New Zealand, but this tax will hurt working New Zealanders more than anyone else. They like to believe that working New Zealanders don’t have cars. Well, that’s simply not the case. As officials pointed out, lower-income earners are more likely to live further from the destinations they need to reach, whether that’s for work or for their own leisure and family commitments—they will travel more. That means a fuel tax will hit them more, because they travel further and on lower incomes. It is deeply, deeply regressive. It is a disgrace that a Labour Party—that a Labour-led Government—would actually impose a tax which they know will hurt lower-income earners most.

Talk about chardonnay socialists. Sitting in their ivory towers, pontificating what the little people of New Zealand need, and the first thing they do in tax is they come out and they stiff them with a deeply regressive tax that is going to make low-income earners in New Zealand worse off.

It’s a bad bill. It’s a bad bill because it’s unnecessary. It’s a bad bill because it just helps greater wanton spending by our largest unitary council. It’s a bad bill because it creates the framework to deploy that all across New Zealand. And it’s an absolutely disgraceful bill because it stiffs the hard-working New Zealanders who work so hard and who can least afford this. I oppose this bill.

Hon Dr DAVID CLARK (Minister of Health): How quickly that member has settled in so comfortably to the worst aspects of negativity that characterise an Opposition. Listen to him bleat on about the things that he is opposed to, that he doesn’t like, and that he doesn’t want to see. But where’s his vision? Where is the vision of the Opposition? How do they propose to solve the $6 billion hole that they’ve left behind in Auckland transport—unfunded for 10 years; that lack of infrastructure—it’s a disgrace. That negativity.

The member says, well, he just wants Auckland to get ahead. He spent some time waxing on about Auckland getting ahead. This situation currently, as we have it in Auckland, sees Aucklanders sitting in queues in their cars going nowhere—that is not getting ahead; that is the opposite of getting ahead.

The interesting thing is that businesses want it—businesses want it. The other interesting thing, though, is Mr Hudson was right in one respect. He was optimistic on one point, and I found it very telling. He talked quite a bit about the initial duration of 10 years. He said that this was not limited to 10 years—this was his argument—because Auckland could come back in 10 years’ time and ask the Government to renew it; democracy in action. The wonderfully optimistic thing that he has in that assumption is that it will still be a coalition Government on this side of the House in 10 years that will be making that decision. So I want to thank him for his optimism in that respect, because that is the one high point in what was otherwise a very negative speech. He’s anticipating a Government that would honour this in 10 years’ time and want to see it continued if that’s what the people of Auckland wanted.

Let’s not forget that this is about what the people of Auckland want. This process requires the council of Auckland—democratically elected and empowered by new Subpart 3 to be inserted into Part 2 of the Land Transport Management Act 2003. It enables them to have a proposal that sets out a tax rate and come to central government requesting support. The democratically elected council of Auckland requesting support for a proposal that would benefit their citizens. It doesn’t get any better than that in terms of making sure this is about doing what Auckland wants, and Auckland wants to have the infrastructure. Aucklanders are tired of sitting in traffic, and I don’t blame them.

I want to talk about, briefly, when I was a young thing living in Auckland. I grew up in Auckland. It’s a dark secret for the member for Dunedin North to confess that he was born in Auckland and grew up there, but it’s true.

Hon Member: You’ll be kicked out.

Hon Dr DAVID CLARK: I grew up south-east of the city, in a little village called Beachlands. Fine place—it’s still there. It looks very different from when I lived there, I have to say.

Hon Member: A very good place.

Hon Dr DAVID CLARK: There were open drains, there were baches, and people walked to school in bare feet. And when I’ve visited since, I have to say—the honourable member opposite is the local MP, and I’ve seen him about his business there. It’s now quite a wealthy place, it’s fair to say. Its local citizens have nice neat kerbs around the footpaths, and they have quite high incomes, and they have a golf course, and they have a marina, and so on.

But when I was a child of 16 or 17, as I learnt to drive, I would drive into town 20 kilometres through farmland on the open road, and typically drive at around 100 kilometres an hour—I’ll say “around” to preserve my reputation as a cautious and circumspect individual. Then I would enter the motorway at Ōtara, and I would drive into town another 20 kilometres, also at an open road speed, because that was possible not so long ago, when I was a young man. Not very long ago at all, and yet now—now, a few years on—it would be impossible to drive to town in the one hour it used to take me to get into town from Beachlands.

It would take a lot longer than that. I hazard it’d be pretty difficult to do it in an hour and a half. It’d be difficult to do it in an hour and a half these days, and that’s because the motorway is clogged up. It’s because of urban sprawl. It’s because there’s a cost to growth when the appropriate infrastructure is not put in place, and meeting the marginal cost of growth is what this plan is all about. It’s about making sure that the infrastructure is put in place to support the growth of a growing city. And so I’m thrilled that we’re putting this in place. I’m thrilled that we’re putting it in place to solve Auckland’s problems. It is a disgrace, though, that that $6 billion hole was left by the previous Government.

This regional fuel tax won’t apply to natural gas and liquefied petroleum gas. It just applies to petrol and diesel. It will be collected at the distribution level. The funding will be going towards capital expenditure and associated debt repayment. It will have a maximum rate of 10c per litre of fuel and that maximum duration of 10 years that we covered off earlier, and it could be reviewed by the council before expiry if the council wishes to extend it. As we’ve noted earlier, the optimism of the member opposite that it would be a receptive Government to that at review is noted and on record. But the modelling says that this could result in an additional $150 million to $170 million a year to spend on infrastructure. That will make a real difference to a city that has been brought to a standstill by the failure of planning by the previous Government.

I think Aucklanders as a whole will be grateful when they have the option, also, of alternate forms of transport, because there’s nothing more regressive than sitting in a car. If you don’t have a lot of money, you’re sitting there, chewing through the petrol in the tank and going nowhere. New Zealanders, and Aucklanders in particular, want to be going somewhere. They want, as small-business people, to be able to travel around and meet other people. They want, as ordinary citizens, to be able to live a good life in a world-class city, and this bill facilitates Auckland as a world-class, competitive city where businesses can choose to locate. A world-class city requires world-class transport infrastructure, so that citizens at every level can get about the city, can make their contribution, and can enjoy the life of a good, international, competitive city.

If we think about great cities around the world, it is a common feature that they invest in infrastructure. I can remember visiting Germany, visiting Berlin, about a decade ago, and the cranes everywhere as that city expanded. It has become a city that is celebrated for its great infrastructure. I can remember visiting Barcelona when I was a young man, and la Sagrada Familia there being built up. I’ve seen photos since, and it’s gone further—that icon that draws people from around the world, that makes them proud to belong to a city with great infrastructure. Great infrastructure is a feature of truly great cities.

It’s important to note that this bill holds Auckland Council to account, as well. They will be accountable. They can’t just start projects. They’ve got to complete them on time, they’ve got to complete them on budget, they’ve got to come with a plan to joint Ministers, and the bill provides Crown oversight of the revenue raised, to make sure that things are being delivered on as expected and to make sure there are tight controls on the use of revenue. There’s a ministerial review procedure and ongoing public reporting to provide transparency to the public.

It’s a very good bill, and I congratulate the member on bringing it to the House. It’s thorough. It is a bill that lays things out clearly, that provides clear accountabilities so that those who are contributing can see the benefits of the infrastructure they are contributing to and so that they can take pride in helping to build a truly great city. It stands in stark contrast to the previous Government’s failure to invest in infrastructure and to the frustrations that Aucklanders feel today and that those of us that visit the city regularly on business feel.

I know that when I travel to Auckland, I can schedule two, three—maybe four, if I’m lucky—meetings, depending on how far I have to travel across the city. When I’m in Dunedin I can schedule 14 meetings in a day. It’s just a different world, and I don’t think that Aucklanders should have to suffer because of the visionless nature of the previous Government. I think this bill brings us finally into the 21st century, to have a 21st century city that has vision, that has clarity about its future, that knows it can afford the infrastructure it needs, and that can look forward to becoming a greater city still.

I congratulate the member once again on bringing this bill to the House, and I look forward to seeing its progress through the House. I look forward to seeing Aucklanders enjoy the infrastructure they deserve, but were deprived of by the previous Government. This is a great bill, and I recommend it to this House.

JAMI-LEE ROSS (National—Botany): I was sitting there thinking to myself, “How do we know that the country has a Labour Government in charge?”—sorry, a Labour - New Zealand First - Greens Government. The way in which we know that we have a Labour Government in charge is that you have Minister after Minister, and I’m sure more MPs, too, excited about taxing people more. The pure joy in their eyes that they’re going to have to put another tax on Aucklanders, put another tax on New Zealanders, and show the country how they can raise money to do all of these great things that they’re going to do—Phil Twyford is the Messiah. He’s delivering thousands of houses, apparently, in Mount Albert. He’s about to deliver, apparently, light rail into Mount Roskill—I’m sure Michael Wood will be happy. He’s going to deliver us to the promised land, but it’s going to cost us a huge amount more money, and we know that the Labour Government that we have in charge, despite the fact that they went into the election opposed to any tax increases this term, are going to be delivering that.

This is a bill that we are seeing where the Labour Government is putting more tax on Aucklanders. Don’t be ashamed in looking into the detail of this, I say, fellow members, because when you do look into the detail of this bill, what we see is that it’s going to mean more money for Aucklanders to have to pay, over and above what they already do. The council won’t be accountable, I’m sorry, David Clark, because, actually, what message this sends to the council is that they don’t need to tighten up their spending, they don’t need to rein in their costs. The fuel tax will be an additional amount of money that they can spend on transport, and they won’t tighten up their budget further, which is what they should be pushed towards doing.

I say to the Minister of Transport that this tax isn’t actually necessary. The reason why it’s not necessary is that this tax will raise less per annum than the Auckland Council’s costs have been going up year on year. For the past four years, the Auckland Council’s costs have been going up by, on average, $200 million a year. This tax will raise about $150 to $170 million a year. That’s less than the council’s costs are even going up. So if the Government was wanting to send a message to Aucklanders, and send a message to the council about what they should be doing with transport and prioritising their budgets, they’d be saying, “Mr Mayor, you went into the election promising to tighten up the council’s budgets, to get the costs under control. We expect you to deliver those savings for Aucklanders before we’re going to give you another opportunity to tax.” But the first opportunity that they’ve had to pass transport legislation in this House is to reach in for another tax.

Here’s the other big revelation with this bill. This isn’t just about Auckland. I heard David Clark talking about his deep dark past growing up in Beachlands and being an Aucklander. He talked in his speech a lot about Auckland. But, actually, this bill impacts on the rest of the country. The new revelation for New Zealanders out there is a regional fuel tax isn’t just going to be constrained to Auckland. The Labour Government’s coming after your fuel taxes for the rest of the country as well—because, by 2021, this bill shows us very clearly that there are going to be fuel taxes in the future for other parts of the country.

So not only is Auckland being told they can let their budgets go—they’ll have the ability to tax and spend more—other councils are going to be lining up for that too. So I say to ratepayers around the country, you should be afraid of this bill, because it’s going to lead to more taxes on motorists around the country as well.

So the question will be: what’s this regional fuel tax going to be spent on? There’s one area on which there is a bit of detail, and it’s a good thing to see. It’s the fact that there is quite a stringent requirement on councils to outline what the projects are, the costs and benefits, when it’s going to be delivered, and, apparently, according to David Clark, that’s going to cause them to be quite accountable.

But the interesting process we have going on right now is that the Auckland Council is consulting on the fuel tax right now. In their budgets, right now—the consultation closes tomorrow—the Auckland Council is consulting on whether there should be a regional fuel tax. Apparently, 50 percent of people are saying there should be; 40 percent of people are saying there should not. But what the council’s not doing is telling anyone what the regional fuel tax is going to be spent on. They’re asking Aucklanders to fly blind and just blindly sign up to this new tax without even telling people what the regional fuel tax is going to be spent on.

I say that the Minister’s endorsement of that process and the council’s way in which they’re going about it—it is a way in which they are misleading Aucklanders, that they’re going to deliver them to the promised land with the transport projects, but they’re not even telling them what it’s going to be. I want to know, as an Auckland ratepayer, as an Auckland MP, what are Phil Goff and Phil Twyford going to spending this additional money on? They haven’t told us.

JAMI-LEE ROSS: They haven’t fronted up with the details.

Hon Phil Twyford: ATAP—ATAP.

JAMI-LEE ROSS: Well, you haven’t even delivered the Auckland Transport Alignment Project (ATAP) yet. He’s been a Minister for about six months—hasn’t delivered a Government policy statement yet, hasn’t seen any regional land transport projects being delivered, and hasn’t seen ATAP change yet. They’re still operating off the old plans that we put in place.

So I think the Minister should front up with the projects. The Minister should front up and tell Aucklanders what he’s going to be spending on and go out there around the country and tell New Zealanders about how important roading projects that are going to deliver economic development, that are going to deliver time savings and actually keep people safer—go around the country and be honest and tell New Zealanders about the roading projects that he’s cancelling.

Because he’s not only going to tax Aucklanders more; he’s going to tax the rest of the country more in 2021, if he’s still around. He’s going to cancel a huge number of important projects, all to deliver the tram-set down Dominion Road—the tram-set, which, in today’s dollars, is $3 billion. I guarantee you, by the time that’s finished, that’s going to cost you a huge amount more—closer to $5 billion, $6 billion, $7 billion, maybe even $10 billion.

This fuel tax is going to hurt those who can least afford it, as well. Because when we delve into the regulatory impact statement—when we delve into the detail—we also see that the people most impacted by this are those living furthest away from the city centre. Typically, according to the data that we have, the people living furthest away—say, in South Auckland—are the ones that will have to pay the most, and they can afford it the least. They’re also the people that, typically, if they are renters, don’t currently pay the interim transport levy.

So those people are going to be taxed more. They’re the ones that can’t afford it as much as others, and they’re the ones that’ll probably see the least benefit, because, I have to tell you, light rail, a tram-set running down Dominion Road, is going to do nothing for the people living in South Auckland.

So those MPs that are going to be standing up in this House telling us about the great transport levy and tax that’s going to be put in place, that live in South Auckland or live in North Auckland—go and have an honest conversation with your constituents.

ASSISTANT SPEAKER (Poto Williams): Order!

JAMI-LEE ROSS: You can have an honest conversation if you want too, Madam Assistant Speaker. But those MPs should have an honest conversation with their constituents, because they’re putting more taxes on those constituents, all to fund that tram-set down Dominion Road.

I also want to talk about the fact that in new section 65D, inserted by clause 5—and I want to see us delve into this more in the select committee—there are words in there where this regional fuel tax should only come into force if the capital projects “cannot reasonably be fully funded from sources other than a regional fuel tax within the time frame desired by the council.” Those are very interesting words. And I wonder if the Minister’s actually considered the words that he’s used in that particular section. Because what that particular section says is that the regional fuel tax should be the option of last resort. And I actually agree with that. Taxing people more should be an option of last resort.

So if that wording continues in the bill, and the Minister’s going to be sitting there honestly assessing whether the regional fuel tax should be implemented after the people of Auckland have been properly consulted with—because they haven’t been at the moment—is he going to honestly assess whether these projects cannot reasonably be fully funded from other sources other than a regional fuel tax?

Because I submit that councils around the country, including the Auckland Council, have the ability to fund transport without needing this tax. They just need to tighten their budgets. In fact, they already have a transport levy in place. One cannot say that these capital projects cannot reasonably be funded from other sources when there’s already another source in place. So I hope the select committee delves into that properly as well.

I hope the select committee delves into price spreading, because we know from experience in the 1990s that price spreading does happen, and it will happen in this case as well. New Zealanders around the country, probably closest to the borders of Auckland, will be paying more in petrol prices because there’s a fuel tax in Auckland. If you live in Huntly, or live in Waikato, there’s a higher likelihood that you’ll be paying more in fuel as well, because there’ll be price spreading from the companies. We also know that there’ll be avoidance happening as well, and the regulatory impact statement suggests there’s about $20 million lost.

Finally, my final point is that I think this should go to the Transport and Infrastructure Committee. It is a transport matter. I’m sorry that Darroch Ball, the chair of that committee, has no confidence from the Minister. That committee should be looking at this, because it’s a transport issue. It shouldn’t be going to the Finance and Expenditure Committee—

ASSISTANT SPEAKER (Poto Williams): I apologise to the member. Your time has expired.

MARJA LUBECK (Labour): Tēnā koe, Madam Assistant Speaker. I’m delighted to take a call on this Land Transport Management (Regional Fuel Tax) Amendment Bill 2018. A regional fuel tax is the quickest, most efficient way to raise funds to invest in Auckland’s transport. It will provide additional funds to a region to pay for transport projects that would not otherwise be funded, or would be delayed. The previous speaker, the member for Botany, mentioned the joy in our eyes when we talk about tax. We actually have joy in our eyes when we talk about making things better for New Zealanders, and sitting on the road for hours on end definitely does not bring joy to their eyes.

This bill is the first step in tackling Auckland’s congestion crisis. Now, we know the other side of the House doesn’t like fuel taxes. They’ve made it abundantly clear. It’s exactly the same story—like a broken record—as their story in 2009. I’ll come back to that later. Lots of promises were made on funding projects differently, other than putting a fuel tax in—except that they never did.

So there’s lots of rhetoric about wanting businesses and people to thrive. They’re making, you know, promises about making things better for people, except for the fact that they don’t have the funding and they don’t have any answers on how to fix that massive, deep hole.

So we said in 2017, in the election campaign, that we would implement a regional fuel tax in Auckland. So the member for Botany is wrong that we said we wouldn’t; that was part of our election campaign. And we won’t be able to invest as needed otherwise. We can’t rely on the tax through the National Land Transport Programme. This bill sets up a process to establish a regional fuel tax and provides that, until 2021, Auckland will be the only region to have a regional fuel tax.

The Land Transport Management (Regional Fuel Tax) Amendment Bill will enable Auckland Council to raise funds for specific transport-related projects, as investment in infrastructure is well overdue. Auckland’s current infrastructure simply can no longer support the city, and to be a world-class city, as we’ve heard before, Auckland needs world-class transport infrastructure.

Auckland Council understands the frustration of ratepayers who spend so many hours of their lives stuck in traffic, whether it is people just getting to work or school, or businesses struggling with access for their staff, their suppliers, and their customers.

The member Mr Hudson mentioned people not being able to do the things they want to do because they have to pay a fuel tax. We are saying they can’t do the things they want to do because they’re sitting in traffic, and the amount of time spent in traffic is a huge financial toll on people using these roads. So there’s a financial toll and there’s a personal toll. Everyone leads busy lives, and on top of having our busy lives, we now spend time watching the traffic lights, watching the cars in front of us, waiting and waiting for that traffic jam to start moving. There’s a loss of quality time in our lives. When you think about workers quite often doing several shifts in a day, they are actually now stuck at their place of work because they can’t get home to spend a few hours with their families. They are, basically, stuck at the place that they spent the shift in.

So on top of Auckland’s traffic gridlock, we’ve heard from members previously that the gridlock has cost our economy about $1.3 billion per year in lost productivity. There was another quite incredible fact that I learnt reading through the material, and it said that if Auckland traffic were to move a mere 6 kilometres faster during weekdays, 6 kilometres per hour—so from an average of 50.5 kilometres per hour, they move to 56.8 km an hour—that benefits the economy by $3.5 million per day—$3.5 million per day by going 6 kilometres an hour faster. Now, we acknowledge that Auckland is not the only region where there’s a critical and urgent need for transport infrastructure, but, at this time, the focus is on Auckland. We also don’t believe that people will travel out of Auckland to get the fuel, because Auckland has large boundaries, and you wouldn’t sit in a traffic jam for hours just to go somewhere else and save five dollars on filling up your tank. People need access to the things they need, whether it’s jobs, education, or community.

I talked about the businesses and how without access to the market, without access to customers, it’s impossible for existing businesses to thrive. The other side of the House talks about not implementing taxes but wanting businesses to thrive, but how is the other side of the House proposing to get the customers to the businesses and to get the suppliers to deliver the goods to the businesses if they can’t get through the gridlock? And what about new businesses? Why would any new businesses choose to go and locate in an area that has known issues?

I would like to talk about my own electorate of Rodney to give an example of some of the horrendous traffic congestion that makes this bill so necessary. The Whangaparāoa peninsula has huge problems with businesses getting their products to the market. There’s a massive lack of access to get the goods they need to their businesses, and, on top of that, like many other areas in Rodney, the area of Whangaparāoa peninsula, including Millwater, Dairy Flat, and Whanganui, is earmarked for extensive residential as well as business development, and once that’s finished, there will be another 147,000 more people with access to State Highway 1 but solely through the State Highway 1 Silverdale / Hibiscus Coast Highway intersection. It will make that really bad congestion issue even worse, and the traffic is already not coping as it is. It will heavily impact not only on the residents but also on that Silverdale peninsula business community, because of that difficulty of access and delivery firms restricting service.

Now, there’s a project that could potentially be funded by this fuel bill, and I think it’s important to mention, because the member for Botany mentioned the tram-set. This is not just about the tram-set; this is about roads that will get people moving. It is a project that will make a huge difference in the lives of so many people, and, quite frankly, it’s crucial to the economic development of the district.

Simeon Brown: What road? What road?

MARJA LUBECK: The residents of the area of Whangaparāoa peninsula and Silverdale have for a long time advocated for the need to ease congestion on that peninsula. There’s a very important health and safety issue as well, because there’s only one way to get in and out of that peninsula. If the road is blocked, everyone is trapped. The project is called—the member for Pakuranga was asking—Penlink. It’s a 7-kilometre long road to link the Whangaparāoa peninsula to State Highway 1 at Redvale. It would include a bridge across the river. It will provide a second access road. It will help boost the roading capacity of an area with growing employment and a growing population. It would unlock the economic advantages of the area, which currently have no way of flourishing, and I’ll tell you why.

Labour was going to build that Penlink road, with a regional fuel tax—guess what—in 2008, but they were voted out, and what do you think? The National Government in 2008 did not like that fuel tax, so they took over and, nine years later, nothing happened, except that the regional fuel tax was cancelled by the National Government and Penlink was taken off the national roads register—nine long years and nothing happened for the people and the businesses of Whangaparāoa peninsula and Silverdale, who continue to struggle with the congestion that the National Government never did anything about for nine long years.

Then came the election in 2017, and guess what? The then National Government made another election bribe, and it announced it would pick up Penlink in a new funding package, only it hadn’t allocated that funding and it also didn’t have a defined timeline. It sort of makes me think back to the 10 bridges up in Northland. I don’t think any of those bridges were built ever, were they? Not one. Was it also an election promise? That’s right; it was a by-election promise in 2015: “We’ll build you the bridges—except that we never did.”

I just want to read, for context, this press release, headed: “National Party Commits to Penlink”. It says, “The National Party has announced it is committed to building the Weiti River crossing, commonly known as Penlink, within 10 years of becoming government.”—from National shadow Minister for Transport Maurice Williamson. It goes on, “National reiterated the party’s commitment, made during the 2005 election, that the Penlink project is to be completed within 10 years.”—this was 2005. It goes on, “It describes the project as vitally important to [the] economic development of the district.”—except they took the fuel tax away, they had no money to build it, they shelved it, and the people are struggling.

So, anyway, what we are doing with this bill is we are providing the mechanism to establish the fuel tax so regions have the ability to fund these important projects. The bill will ensure Aucklanders will get action in resolving the congestion. The cost of doing nothing has been incurred for far too long. I support this bill and commend it to the House.

MATT KING (National—Northland): Thank you, Madam Assistant Speaker.

Jamie Strange: Oh, here we go!

MATT KING: Here we go: Land Transport Management (Regional Fuel Tax) Amendment Bill. We oppose it—we oppose it. I think that we’re going to be talking a lot about tax this term, aren’t we, while we’ve got a Labour Government. We’re going to be debating tax a lot, I can see it. I can feel it in my bones. So they’re going to apply a petrol and diesel tax, not LPG, collected at distribution level, 10c—the maximum of 10c—a litre, and have it over 10 years. Labour: “Let’s tax this.”

But what are they going to use it for? They’re going to build a tramline from the Auckland CBD through the Prime Minister’s electorate, as they promised in the by-election—over $2 billion worth. The last thing Aucklanders need is a new fuel tax making it more expensive to get to work, school, and around the neighbourhood. Fuel tax—it’s not as necessary that this Government’s just letting Auckland Council off the hook for its runaway costs; current funding shortfalls should be the responsibility of council, maybe with some central government help.

Auckland Council’s spending has increased by $800 million over the last four years. The increase in the wages bill alone over that time is more than this fuel tax can raise in the first year. This Government’s solution is to let Auckland Council tax its way out of this problem. Labour has promoted this policy as an Auckland fuel tax, but this bill opens up the ability for other regions around the country to introduce fuel taxes by 2021.

This legislation will encourage the same tax-and-spend behaviour at the local level as we’re seeing from this Government. Unlike other new taxes Labour is proposing, there is no standard select committee process, not even a working group, given the time line that Phil Twyford is working to. That’s really surprising given the Government’s love of working groups. Parliament is being asked to rush this bill through the House. That’s becoming a common theme of this Government. The Ministry—

Hon Phil Twyford: Too much rushed legislation and too many working groups!

MATT KING: Yes—ha, ha! The Ministry of Transport—you can’t get it right. You cannot get it right. The Ministry of Transport impact report says a cost-benefit analysis has not been done and that fuel companies have not had time to accurately quantify the costs of collection of this regional fuel tax. The consultation process has been a sham. Under a National Government we were able to live within our means while still investing in major projects such as the Waterview tunnel—three lanes each way, not two—rail electrification, and the western ring route. Regional taxes impose significant compliance costs to businesses and road users and would result in much higher fuel prices for motorists in some regions.

I want to quote chief executive of the Road Transport Forum, Ken Shirley. He says, and I quote, “the imposition of a regional fuel tax is a retrograde step that will hinder rather than help the Government’s infrastructure plans. … [They are] a complete nonsense … They are inefficient, full of loopholes and exclusions and therefore the impact on motorists is often inequitable and the revenue gathered underwhelming.” So lower-income—[Interruption] Fairness and equity—fairness and equity—let’s talk about that. Lower-income households will contribute a higher proportion of their income to the tax compared with higher-income households. The New Zealand Automobile Association estimates that the Auckland fuel tax will add an extra annual $135 cost for the average motorist. Darryl Evans from the Māngere Budgeting and Family Support Services, chief executive, said the city’s poorest families will be amongst those hardest hit as the new tax increases petrol prices. [Interruption]

OK, in New Zealand a regional fuel tax framework was put in place in the major urban areas in the early 1990s and was repealed after price spreading occurred between the regions. For some of these reasons I’ve outlined—and I’ve not outlined them all; I’ll leave it for other speakers—we oppose this legislation.

ASSISTANT SPEAKER (Poto Williams): Just before I call the next member, I just want to encourage members in the House—we have been a Parliament this term for six months, and I would encourage all members not to read speeches.

Hon JULIE ANNE GENTER (Associate Minister of Transport): Tēnā koe, Madam Assistant Speaker. Tēnā koutou e Te Whare. I think that the speeches from the Opposition tonight really demonstrate why we’re in the situation we’re in, which is one of a massive infrastructure deficit. The National Party are apparently opposed to investing in infrastructure. You can’t really have it two ways. You can’t really be complaining about Auckland Council increasing its costs and spending. You can’t complain about—

ASSISTANT SPEAKER (Poto Williams): Order!

Hon JULIE ANNE GENTER: One can’t complain about raising a regional fuel tax and then also say that one believes in investing in infrastructure. It’s just not possible. Why? We have to pay for infrastructure, but ironically, strangely, the National Opposition, who are so opposed to a regional fuel tax, were quite happy with raising fuel taxes across the country—successive years when they were in Government—and then spending most of the money on just a few urban highways, mainly on the fringes of Auckland, Hamilton, Christchurch, Wellington, and Tauranga, where they promptly made congestion worse. So they managed to spend billions of dollars, congestion is no better, and people are spending heaps of money owning cars, stuck in traffic, and paying for fuel. What this Government is simply doing is going back to that very sensible proposal that we campaigned for, actually, in 2007, so that we could invest in electrification of Auckland rail network: a regional fuel tax, which enables the Auckland Council to raise revenue to help close the funding gap because—I’m sure no one over there in National who lives in Auckland has noticed this—actually, there’s been massive population growth in Auckland, and we have to invest in infrastructure so that people have a way of getting around the city.

Now, we have to do more than that. We have to invest in housing, and it’s a shame that the National Opposition didn’t find it in their hearts to care so much about low-income people when they were in Government, because if they had they may have done something about the housing crisis in Auckland. They may not have spent so much money on tax cuts for the wealthiest New Zealanders and they may have actually done something about public transport in Auckland, safe walking, and cycling, all of which make it easier for people to get to jobs, to get to school, to get to where they need to go.

The Green Party supported the regional fuel tax when it was initially proposed back in the 2007 Budget, because it was going to be spent on desperately needed public transport improvements for Auckland. Happily, although the National Party got into power and they cancelled the regional fuel tax, they weren’t able to cancel the electrification of the rail line, which they probably would have done if they could have. They ended up delaying it by several years and now we have a situation where we’ve had massive growth in the population, massive growth on the rail network and on public transport, and we’re way behind where we need to be.

So this Government is doing everything we possibly can to catch up, but the reality is these sorts of infrastructure investments take years to plan and fund and get underway, and our rail network is going to be at capacity before the City Rail Link is done, because the National Party failed to invest in the City Rail Link when we knew it was needed several years ago. That project should have been started in 2015, and shame on National for ignoring the evidence and failing to invest in the City Rail Link. It’s going to be a mess for years because of National—their short sightedness.

In fact, it’s not like New Zealanders weren’t paying tax. Oh, they raised fuel taxes all over the country, so people in Southland were paying more fuel tax even though most of the money was going on some urban fringe highways. So that’s how much we can believe the National Opposition when they complain with all their little, you know, speaking points about why this bill is so bad. No, this is good. We need to get on with it. We need to get back on track. I’m extremely proud to be supporting this Government, which is finally going to take a sensible approach to transport investment and invest in the complements to the road network. What we need are better local roads, better-maintained roads, safer roads, and people in our towns and cities need alternatives—

Simeon Brown: Auckland Council’s cutting its maintenance budget.

Hon JULIE ANNE GENTER: —so all those of those short trips that they’re making, like kids going to school, their kids might actually be safe—

Simeon Brown: It doesn’t make them safe. There are more potholes.

Hon JULIE ANNE GENTER: —walking and cycling to school, and then that would take heaps of cars off the road at peak time and free it up for those people who need to drive. I don’t know if the member opposite who’s trying to barrack me very gently has ever noticed, but actually there’s not really that much congestion during school holidays and so if we could actually prioritise safe walking and cycling around schools, we would save tons of money, we would save the time that people are wasting stuck in congestion, we would reduce air pollution, we would reduce carbon emissions, and we would improve the health of our kids. Now that is a sensible policy and it’s just a shame that his party didn’t do anything about it for nine years.

We are finally going to be investing in the rapid transit network that Aucklanders have told us that they want. Yes, that includes rapid transit along Dominion Road from Wynyard Quarter all the way to the airport, actually finally providing rapid transit to some of the South Auckland communities that have been neglected in the past nine years. It’s going to go straight through Māngere and it’s going to provide fantastic transport options all around the city. Of course, we’re going to have a south-east connection to the airport as well. We’re going to have a north-west connection. It’s an absolute travesty that the New Zealand Transport Agency was widening State Highway 16 and didn’t even put a busway on it—didn’t even put a busway. All that work for what? People are still stuck in their cars, stuck in congestion.

I don’t want to talk about these crocodile tears from the National Party about the lowest-income people, who they’ve never really shown any concern for before. But it is worth noting, because I know there have been concerns from people who actually genuinely do care, that perhaps a regional fuel tax is regressive. So let me explain why that is not the case. One might think it’s the case, but actually it turns out that the highest-income households own the most cars, they spend the most time driving, they’re the most likely to drive at peak time. Low-income households own fewer cars, even though the cars are older they tend to be smaller and, in fact, even the older, small, inefficient cars consume less fuel than the top 10 brand-new cars that are being imported right now into this country. So, actually, the people who are going to be paying the most fuel tax are not the lowest-income people.

Now what is regressive is car dependence. Car dependence is when one does not have options. They are not able to access employment, education, or other opportunities without using a car, and that means that households have to own more cars and it ends up costing them a whole lot more money than if they have fast, integrated, affordable public transport as an option, or safe walking and cycling. On top of that, car dependence costs us a lot more in terms of the land that is tied up for storing all the cars, because there are three to four empty carparks everywhere in Auckland right now—everywhere in New Zealand right now—for every one that is being used. That’s all the result of car dependence and it means that we have higher land costs, and that’s part of our problem with affordable land for housing within the Auckland urban area—those regressive parking rules that massively increase the cost of land, housing, and transport because people have to have a car just to get around.

So I am very proud to be supporting this bill, which is just one part of a very comprehensive plan to offer New Zealanders real choice—real choice—and that’s going to be better for them, it’s going to be better for businesses, it’s going to be better for the climate. It is a massive win-win. It’s better for the economy. I know that Ken Shirley has no idea how the economy really works. He just does a show for a couple of trucking companies and is probably just a fan of spending lots of money on a few ridiculous motorways. But even his own members are going to benefit from this policy and that’s why it’s so popular. It’s actually, across the board, doing what people in Auckland have asked for. It’s going to be popular outside of Auckland because people can look around and see that Auckland is actually going to be paying its fair share for its population growth and for its infrastructure. That’s why it’s an excellent policy and I think it’s an absolute shame that the National Party Opposition can’t see this, but someday—someday—you will thank us, because I know you also live in Auckland.

Dr JIAN YANG (National): I rise to speak on the Land Transport (Management (Regional Fuel Tax) Amendment Bill. Now, the previous speaker, the Hon Julie Anne Genter, talked a lot about the importance of infrastructure. We all agree infrastructure is particularly important to the economy. A sound infrastructure is crucial to a sound economy. There’s no dispute. For that reason, the National Government, in the past eight, nine years, when National was in Government, spent heavily on infrastructure. During the last year, the last campaign, we promised a large number of major road projects, but the new Labour and New Zealand First Government cancelled most of them. So this leads to a few questions about this particular bill.

Firstly, what will the money raised be spent on? They are not particularly interested in roads. We do not have the answer at this stage, right, but they do not like roads particularly, so most likely it will be spent—the money—on trams. These trams are very expensive—

Simeon Brown: Very slow.

Dr JIAN YANG: —and also very slow, and also many Aucklanders may not necessarily benefit from this huge investment. So this is a question: what will the money raised from the regional fuel tax be spent on?

The second question is: is this the best way to raise money for infrastructure in Auckland? Well, 10c per litre means more cost for motorists in Auckland, right? More cost means less travelling, less economic activities, which means a less active economy. That in turn means that the economy may well go down. So a better way is to make sure we have a fiscally transparent and fiscally restrained, responsible central government and also local government. In this case in particular, we need to make sure Auckland Council spends their money responsibly. Now, Auckland Council’s spending has increased by around $800 million over the last four years, right? An increase in its wages bill alone over this time is more than the fuel tax would raise in its first year.

Now, I would like to read a few figures here. A report came out on 5 October last year and it says, “One in five staff at Auckland Council is earning more than $100,000 as the wages bill for the Super City blows out for the third year in a row. What’s more, the number of executives earning more than $200,000 has increased by 25 percent in the past year, from 155 to 194 … The council and its six council-controlled organisations … employ 11,893 staff, of whom 2322 earn more than $100,000. [In comparison] Brisbane City Council … employs about 8000 staff, of whom 149 earn more than A$100,000.” This report just says that Auckland senior staff “have always been diligent in budgeting very generous pay increases for themselves”, and “In the past three years, the wages bill at Auckland Council has blown out by tens of millions of dollars each year. Council set a budget of $811 million in the past year and [it] spent $853 million on wages.”

So that is the spending of Auckland’s council, and if we could control the spending of Auckland Council, then we’d have enough money to improve Auckland transport, and that would be much more beneficial to Aucklanders, Auckland, and Auckland motorists. Of course, there are many other issues here, including the fairness issue, because the lower-income households would benefit less from this kind of investment and spend more, largely speaking, because of low income but also because they tend to live further away from the city centre, or CBD, and therefore the fairness issue is another problem with this bill. Therefore, I oppose the bill.

JAMIE STRANGE (Labour): Hallelujah! We have a Government that has ideas, for a change. We have heard no ideas tonight from the Opposition. Yes, they have been opposing the bill. They’ve been talking about tax and they’ve got all their arguments, but we’ve had no fresh ideas. That’s the reason why, in the election last year, the country voted for change: because they want fresh ideas.

I have never lived in Auckland, but from time to time, I do have the pleasure of travelling to Auckland. It used to take around an hour and a half to get from Hamilton to the centre of Auckland. Fairly reliably, you could do it in an hour and a half at pretty much any time of the day. Now, you’ll be lucky to get from Hamilton to the centre of—sorry, Madam Assistant Speaker. My apologies. Now, the average commuter would be lucky to get to the centre of Auckland in three hours. That’s because of the transport issues, and that’s why we’re here tonight debating this bill. I am pleased that we have a Minister who has some fresh ideas—some fresh ideas to fix the transport crisis that’s taking place in Auckland at the moment.

There’s a little bit of a saying in Hamilton that when you travel to Auckland, yes, there’s a nice new motorway to get there, but you get stuck in the “Great Southern Car Park”, which is the Southern Motorway, and, regularly, you just crawl your way into the city. So there’s no doubt that there are issues around transport, and I am proud that we have a Government who have some ideas—some clear ideas about how we’re going to fix this.

Now we’ve heard from the Opposition. We’ve heard from one of the members—it was a quote from Winston Churchill, which was kind of unusual, about being stuck in a bucket, unable to lift yourself up. Well, the reality is the reason why we’re stuck in a bucket is because of the previous Government’s inaction on transport and housing in Auckland. We’ve heard about taxes—we’ve heard about taxes; we have. How many taxes did the previous Government bring in? Eighteen new taxes—18 new taxes. Yes, this is a tax, but it’s a tax that will make a clear difference to Aucklanders. It’s a tax that Auckland businesses in particular want. We are a Government who will work with businesses. We won’t just tell businesses and others what to do; we will actively work with business.

This bill will make a real difference for business. Thomas Goldsby, who’s a professor at Ohio State University—around business, he says, “Transportation is a major contributor to the economy and a competitive force in business. It is the activity that physically connects the business to its supply chain partners, such as suppliers and customers, and is a major influence on the customer’s satisfaction with the company … [It’s] among the more vital [aspects of a business].”—among the more vital aspects of a business.

This bill here will help businesses in the following ways: it will enable access to markets for customers and workers. Every time we have someone stuck in a car, they’re not adding to the economy, and we’ve heard that from both sides of the House, so we must get the traffic moving in Auckland. This bill will do that, and that will help businesses. This bill will give people access to the things they need: jobs, education, and a sense of community. We want to make it easier for businesses to expand to new markets, to take on more workers by providing a world-class transport system that enables workers and customers to get to those businesses and those businesses to get their products to the market.

As we know, businesses don’t just work in silos; we’re connected, and transport is the key aspect that connects businesses to other businesses, that connects businesses to their customers, and that connects businesses to their suppliers. I am proud that this is a Government who will support businesses by providing a world-class transport system in Auckland. This bill will do that. Businesses have told us that we need this bill. We will listen, and we will act, because this Government has fresh ideas that will work. Thank you.

ERICA STANFORD (National—East Coast Bays): Thank you, Madam Assistant Speaker. I stand tonight to oppose the Land Transport Management (Regional Fuel Tax) Amendment Bill. This is, quite simply, poor, rushed legislation. It makes a mockery of the Auckland Council’s current feedback.

The legislation has very interesting timing. On the one hand, we have Auckland Council, who are asking Aucklanders to have their say. They’ve got a fancy website. It’s called “AK Have Your Say”—it’s a great little rhyming website there. They outline their proposed plans for a 10c per litre regional fuel tax over 10 years. They have a little animated video that you can watch, with a snappy little jingle. They also have another video that’s got some little vox pops from people, who say what they’d like to see, and then you’re asked to have your say: do you support it, do you not support it, or something else.

On the other hand, we have this legislation enabling a regional fuel tax for 10c a litre plus GST for 10 years. Ha! Well that sounds very familiar. Isn’t that exactly what Auckland Council are proposing and asking Aucklanders to have their say on? So why are we introducing legislation to give Auckland Council exactly what they’re consulting on with the public right now?

One could deduce from this that this decision between the two Phils has already been made. It sounds like “AK Have Your Say” should have been “AK Our Way or the Highway”. Maybe it’s purely coincidental. Maybe it’s purely coincidental that these two things are happening at the same time, but the most obvious answer is usually the one that is the most obvious. You wouldn’t be dreaming if you think that this bill is predetermining the outcome of council consultation.

So I’m really sorry to all of those people who’ve headed along to “AK Have Your Say” and have watched the snazzy videos and listened to the snazzy jingles, and who took time out of their day to fill in the feedback forms. It may well have been for no reason at all, because if someone opposes this fuel tax on the website—I hate to break it to them—it ain’t looking good. If they thought that the council should be reining in their costs, instead of increasing taxes, and putting in place this regional fuel tax—sorry, mate. This legislation is completely arse about face.

ASSISTANT SPEAKER (Poto Williams): Order!

ERICA STANFORD: That’s been said 130 times in the House. I checked before I wrote it.

ASSISTANT SPEAKER (Poto Williams): It doesn’t matter. I’m still calling you to order.

ERICA STANFORD: Thank you. The most important thing here is that nothing in this legislation shows where the money will be spent. That is the single most concerning thing, or one of the two most concerning things: which projects should be prioritised? Without knowing any of the projects, Aucklanders are being asked to have their say on a regional fuel tax, and we’re here tonight to legislate for that regional fuel tax to fund projects that nobody has any information about.

On this snazzy little vox pop video that Auckland Council have up on their website, people say things like—these are direct quotes from them; they could be actors, but they seem to be real people—“If they use the money to build more cycleways, I can cycle to work.”, “We need trains and trams running 24 hours, more frequent buses and trains.”, and “Have your say.” But the point is we don’t know which projects are going to be funded through this regional tax. We’re being asked to sign a blank cheque that isn’t made out to anyone. The funds collected may very well go to pay for a tram through the Prime Minister’s electorate.

From the perspective of the people in the East Coast Bays that I represent, this is very concerning. The people in my electorate have felt, for a very long time, that they have been neglected by Auckland Transport while work on roads, trains, and other public transport systems are invested in around the city. We have a load of projects that require urgent attention, including the Glenvar Road realignment project, which I’m currently fighting for. You can go to www.GlenvarRoad.co.nz to sign a submission form.

While, on the face of it, a regional fuel tax may sound reasonable, we don’t actually know which projects are going to go ahead and which ones are going to be prioritised. So, for the people in my electorate looking at this and thinking it sounds reasonable, I say to them that you are quite likely signing a blank cheque and may well get nothing out of this.

Marja Lubeck talked about the peninsula in her electorate—another perfect example of my point.

Simeon Brown: It’s not her electorate.

ERICA STANFORD: No, it’s not her electorate—that’s true—but it’s the electorate that she stood in. The point is that Penlink has been talked about for years. It’s not something that accidentally came up under the National Government. For nine years before that, it was talked about under the Labour Government, and they didn’t do anything, either. So it’s very rich.

Another really important—

ASSISTANT SPEAKER (Poto Williams): I apologise to the member. Your time has expired.

MICHAEL WOOD (Labour—Mt Roskill): This bill is about unlocking the growth potential of one of the world’s great cities: Auckland City—a place that I am proud to call home. And yet all we hear from the other side of the House is an anti-growth agenda—a group of members of Parliament who don’t understand the potential of our biggest-growing city, who don’t understand that 59 percent of New Zealand’s growth over the next 30 years is going to happen in Auckland, and who don’t understand that since the amalgamation in 2010 Auckland has grown by 180,000 people and that every single week 900 new people make Auckland their home. And because we’re a great city, because we’re a growing city, we have to take the steps that are required to harness that growth for the benefit of the people of Auckland and New Zealand, and not let that growth smother us.

But all we have from National Party MPs, like the Waldorf and Statler of the East, and “pull up nappies”, Mr Ross and Mr Brown, is an antediluvian 1950s view of what you need to invest in for a growing city. Let me tell those members for free over there what this regional fuel tax will fund. For the first time in decades there was agreement between central and local government about how we will plan for Auckland’s growth and how we will get our city moving.

We will do that by building a world-class, congestion-free network. What that means is finally investing in the high-quality, modern public transport that every single self-respecting First World city in the world is investing in. I would invite those members to just lift their sights a little bit. Maybe take a little bit of travel the next time you have an opportunity and look at what the successful cities of the world are doing. Look over the Tasman to Australia, where Sydney, the Gold Coast, Brisbane, and Canberra are all investing in modern light rail. Look at the great cities of North America. Look at the great cities of Europe. The way they invest in growth is with high-quality public transport that moves thousands of people quickly, cleanly, and efficiently.

We have a challenge in Auckland. We have a problem, a congestion problem, that is costing us $2 billion in lost productivity every single year and that is costing Aucklanders endless frustration and delays, every single day. Today, four crashes on the Auckland motorway network—

ASSISTANT SPEAKER (Poto Williams): I apologise to the member, but the debate is interrupted and is set down for resumption next sitting day.

Debate interrupted.

The House adjourned at 10 p.m.