Tuesday, 1 May 2018

TUESDAY, 1 MAY 2018

TUESDAY, 1 MAY 2018

The Speaker took the Chair at 2 p.m.

Prayers.

Obituaries

Haddon Donald DSO, MC, ED

SPEAKER: I regret to inform the house of the death on 23 April 2018 of Haddon Donald DSO, MC, ED, who represented the electorate of Wairarapa from 1963 to 1969. I desire, on behalf of this House, to express our sense of the loss we have sustained and our sympathy with the relatives of the late former member. I now ask members to stand with me and observe a period of silence as a mark of respect for his memory.

Members stood as a mark of respect.

Visitors

Papua New Guinea—Parliament, Delegation

SPEAKER: I’m sure that members would wish to welcome the Hon Richard Maru, Minister for National Planning and Monitoring, and the Hon Benny Allen, Minister for Agriculture and Livestock, and their delegation from the Parliament of Papua New Guinea, who are present in the gallery.

Motions

Congratulatory Message—Birth of His Royal Highness Prince Louis of Cambridge

Rt Hon JACINDA ARDERN (Prime Minister): I seek leave to move a motion without notice on behalf of the Government on the birth of His Royal Highness Prince Louis of Cambridge.

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

Rt Hon JACINDA ARDERN: I move, That the House congratulate Prince William, the Duke of Cambridge, and Catherine, Duchess of Cambridge, on the birth of His Royal Highness Prince Louis of Cambridge.

Along with many people around the globe, New Zealanders have witnessed and celebrated the joy that the Duke and Duchess of Cambridge have clearly found with their children Prince George and Princess Charlotte. I’m very pleased to lead the House’s congratulations on the birth of a third child to this close-knit family. I’m sure that the duke and duchess are cherishing this special time with their new son, and no doubt Prince George and Princess Charlotte are enjoying getting to know their new little brother.

New Zealand’s official gift to the royal couple is a handcrafted baby blanket, made from the natural wool of Corriedale sheep, and a selection of New Zealand children’s books. The blanket has been specially created for the prince and features a design of mānuka flowers and seed pods. Mānuka is a very special indigenous plant, both beautiful and useful for its healing properties. The books have been selected for their outstanding—[Interruption] People enjoy that extra information, Minister of Finance. The books have been selected for their outstanding writing and illustrations and the special insights that they give to a child’s perspective of New Zealand. We, of course, hope that the royal family will enjoy these gifts that are uniquely representative of New Zealand, and I already know that Hairy Maclary from Donaldson’s Dairy is a favourite amongst the royal household.

On behalf of the people of New Zealand, I am pleased to be able to put on the record of this House our congratulations to the Duke and Duchess of Cambridge and to Prince George and Princess Charlotte. I’m sure we’ll also join in congratulating Her Majesty the Queen on the birth of her sixth great-grandchild.

Hon SIMON BRIDGES (Leader of the Opposition): On behalf of the members on this side of the House, can I, with heartfelt joy, join the Prime Minister in also congratulating the Duke and Duchess of Cambridge, Prince William and Catherine, on the birth of their beautiful bonny boy, Prince Louis. Can I say to Catherine, it is quite an extraordinary feat, really, to appear publicly only hours after the birth looking so radiant. And I’m sure that she, her husband, and the older siblings, George and Charlotte, have real, as I say, joy at the birth of their little one. As the father of three myself—and a newborn as well—I am sure they know, like me, of the challenges involved, but I’m absolutely sure they will see little Louis as the blessing that he is, and they can know, very much, that on this side of the House, through this Parliament, and in New Zealand, we are all with them as they raise their beautiful young boy.

MARAMA DAVIDSON (Co-Leader—Green): The Green Party is proud to congratulate Prince William, the Duke of Cambridge, and Catherine, the Duchess of Cambridge, on the birth of His Royal Highness Prince Louis of Cambridge, their third son, who arrived at 8 pound, 7 ounces I’m told—which is good, which is well done.

I did want to extend the celebration but also my personal sympathy to Catherine, mum of the baby, in having to bear the public scrutiny at such an early stage after giving birth to a child. Whatever circumstances you are born into or give birth under, it will never ever eradicate the complete turmoil and exhaustion that birthing a baby is for any mother, so I hope that Catherine finds some downtime to simply just be whatever shape she needs to be in to be able to care for a new baby.

Rt Hon Jacinda Ardern: Hear, hear!

MARAMA DAVIDSON: I did want—ha, ha! The Prime Minister appears to agree with this sentiment. I did want to share that I wish all children were celebrated in the House of Parliament in this fantastic way and every single child was a notice of motion. But if we don’t do that, we can do that in the agenda that we run in this House of Representatives instead: rather than a notice of motion for every baby, we stand and rule as if every baby is a notice of motion.

Lastly, here’s a little waiata. I didn’t buy a gift, but I wrote a song for my own babies, and if the prince and duke and duchess would like to learn it and sing it to their baby, they’re more than welcome to.

Pekepeke tamariki, menemene mai

Korikori tinana, katakata mai

Ka haere te wā, kua pau te hau

Haere ki te moenga, moe moe e.

[Jumpy jumpy children smiling at me

Full of energy, laughing with me

Time flies by, we’ve run out of steam

Off to bed now, have sweet dreams.]

Kia ora.

DAVID SEYMOUR (Leader—ACT): On behalf of the ACT Party, I’d like to join with other leaders in congratulating the happy royal couple. I’d like to commend the Prime Minister on her appropriate and very Kiwi gifts that she’s given on behalf of New Zealand—well done. And to young Louis, we wish all the best that life has to offer. Thank you.

Motion agreed to.

Commonwealth Games 2018—Success of New Zealand Team

Hon GRANT ROBERTSON (Minister for Sport and Recreation): I seek leave to move a motion without notice to congratulate the New Zealand Commonwealth Games team in their best ever away result.

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

Hon GRANT ROBERTSON: I move, That this House congratulate the members of the New Zealand Commonwealth team on their best ever away result.

On behalf of the Government, I want to acknowledge the 251 athletes who were members of this team and congratulate them collectively on their achievement. They delivered an outstanding performance, achieving 15 golds, 16 silvers, and 15 bronze medals. Those 46 medals make it our most successful ever result at a Commonwealth Games held overseas.

I want to particularly acknowledge Chef de Mission Rob Waddell and his team, who created a superb team spirit. It is also fitting that we acknowledge and celebrate the coaches, support staff, and families, who play such an important role in these triumphs, and also the hard work and dedication of staff at High Performance Sport New Zealand, who have supported many of these athletes.

It is hard to single out any one athlete, but I do want to mention a few: our flag bearer Sophie Pascoe, who won two gold medals in the pool; Sam Webster and Joelle King, who both won individual and team goals in cycling and squash respectively; and I don’t think anyone who saw the finals of either the women’s sevens or the women’s hockey will forget those games in a hurry—an incredible set of performances by dedicated teams.

The exceptional sporting spirit of weightlifting gold medallist David Liti was a particular highlight. Epitomising the values of respect and integrity, David was awarded the overall games sportsmanship award at the closing ceremony after his kind gestures to an injured rival. These games were made even more special by the fact that all our athletes were able to compete alongside each other, with an impressive group competing in para events and equal medal opportunities for men and women at the games. These were a games of inclusivity and diversity, with our athletes serving as an inspiration to all New Zealanders. Once again, on behalf of the Government, I offer our congratulations to all the members of the 2018 Commonwealth Games team, who have made us extremely proud.

Hon NIKKI KAYE (National—Auckland Central): I am pleased to speak in support of this motion on behalf of the National Party. The party joins with the rest of New Zealand in congratulating our team on achieving their best ever away result this year. I would like to acknowledge all of the athletes who have shown their tenacity and endurance through the participation in this event. As the Minister for Sport and Recreation has already mentioned, the fact that for the first time we have more than 250 athletes competing, plus 11 para-athletes, is a huge achievement.

Our athletes collected an impressive 46 medals, which is something to be proud of. It was also great to see so many New Zealanders there at the games. I was proud to be in the stands to watch, as the Minister’s already said, the Black Sticks win their first ever gold medal. What an amazing moment that was. But also, it is difficult when you try and single out particular individuals, but to see Sophie Pascoe as a flag bearer for New Zealand was an incredibly inspirational moment for many New Zealanders and then to see her haul in the two medals as well. Also, I want to acknowledge the iconic New Zealand sportswoman Dame Valerie Adams. It was a great moment to see her get a personal best but also to bring home a silver.

I do want to take a moment as well to acknowledge Australia. It is sometimes a very competitive relationship that we have with them, but they did a hugely amazing job in hosting this event, and the organisation and facilities were world class. I want to extend our congratulations to the Commonwealth Games Federation, Commonwealth Games Australia, and the New Zealand Olympic Committee. I want to also acknowledge that while we are very proud as a country of the medals that have been won, the Commonwealth Games are more than that. They are actually about national pride. It is a fact that the diversity of people that come together, the nations that have some shared values, and the fact that all of this contributes to national identity—that is so special.

So, finally, it is important that New Zealand and the Parliament comes together to be proud of our team and the example that it sets for many young New Zealanders who aspire to compete in the future.

CLAYTON MITCHELL (NZ First): On behalf of New Zealand First and part of the Government, I’d like to stand to congratulate our New Zealand team in the recent Commonwealth Games and support this motion moving forward. Particularly, I’d like to acknowledge Stacey Michelsen, the captain for the Black Sticks, who is a very highly regarded person from Whananaki, another place close to one of our member’s homes.

Look, we’ve had an exceptional Commonwealth Games this year—our best result ever. There are so many golds to mention it’s hard to go through them all, but we’ve done exceptionally well in a number of sports, particularly in our boxing. We’ve got some great results for our sevens. We’ve had some fantastic results with the hammer throw, which is something that we haven’t particularly seen a lot from in the past, so well done to all those athletes.

We’re fifth overall out of all the Commonwealth countries—I think we’ve done exceptionally well—and equal to Canada. When you look at a per capita basis we’re certainly batting well and truly outside of our weight class internationally. One thing that people do seem to talk about is the fact that New Zealand does bat per capita outside of its weight class, but they do tend to forget Norfolk Island, who did get a bronze medal and per capita outstripped the entire globe, I think—with a population of around 3,000 people—in picking up a bronze medal. So congratulations to Norfolk Island.

Just a final note also that it was great to see that these games were broadcast live and free to air. Some of the commentary in the media was that this was not going to happen or it wasn’t possible, and to Mike Hosking I say, “Well, let’s see more of that.” And I’m sure we’re going to. But again, to all of our team members, our team captains, and our families who support the Commonwealth Games and play a big part of our New Zealand Kiwi culture, congratulations and thank you very much for doing so well.

MARAMA DAVIDSON (Co-Leader—Green): The Greens too congratulate the members of the Commonwealth Games team on their best ever result, at the 2018 Gold Coast Australia games. There were 251 athletes: 130 men and 121 women, across 17 sports. That goes right back to the beginnings of their achievements in our communities; in our grassroots family and community member volunteer work, which is always the starting point for our amazing athletes, our amazing sports teams, and the incredible achievements and the big hitting that we do for our wee country. And I want to acknowledge all of our community volunteers who do it purely for the love and passion of seeing our people achieve in the area of sports.

I notice we got our first medal ever in beach volleyball, and we got our first gold medal in hockey. There were a few particular moments—so many—that stood out. I, of course, add my congratulations to the particular teams and moments that people have already mentioned, but I couldn’t help but watch and court the incredible story of David Liti, the New Zealand weightlifter, on his gold medal win. And watching—hey, 403 kilograms, everybody. What did you all do today? He lifted that. First he gets it up to his chest, and then I just thought, “I’m going to go into a heart attack.”, and then he had to lift it again the rest of the way, and lift that 403 kilograms up into the air. And so it just made me think, “What are we doing right now?”

Anyway, congratulations to the whole entire team, right from the opening flag bearer, Sophie Pascoe, to the closing flag bearer Stacey Michelsen, on the way that you did us proud and the way you conducted yourselves. Well done. Kia ora.

DAVID SEYMOUR (Leader—ACT): On behalf of the ACT Party, I’d like to join with other leaders in congratulating our Commonwealth Games team on their record-breaking performance. Can I say, having recently gained a more acute appreciation for the challenge of athletic and related pursuits, I can say that what those men and women have achieved for New Zealand is truly an inspiration for us all. They have worked incredibly hard. Can I make a prediction that this Commonwealth Games performance is a precursor to a record-breaking performance by our Olympians in two years’ time. Thank you, Mr Speaker.

Hon Damien O’Connor: I raise a point of order, Mr Speaker.

SPEAKER: Well, Mr O’Connor, am I allowed to put the motion?

Hon Damien O’Connor: Certainly, Mr Speaker.

Motion agreed to.

Amended Answers to Oral Questions

Question No. 7 to Minister, 11 April

Hon DAMIEN O’CONNOR (Minister of Agriculture): I seek leave to make a personal statement to the House.

SPEAKER: No, the member has got to say in relation to what, and then there’s a question of leave.

Hon DAMIEN O’CONNOR: In relation to an answer given to the House on 11 April.

SPEAKER: In order to correct an answer—is that what the member means?

Hon DAMIEN O’CONNOR: In order to correct the record.

SPEAKER: OK. Is there any objection to that? There is objection. [Interruption] No? Well—

: Hon DAMIEN O’CONNORHon Damien O’Connor: Just kidding—just kidding.

SPEAKER: The Hon Damien O’Connor.

Hon DAMIEN O’CONNOR: Thank you, Mr Speaker. I wrote to you on 12 April noting an error in a statement I made to the House on 11 April. Because I was travelling on 12 April, and in the intervening recess, this is my first opportunity to correct my statement in person.

On 11 April, in answer to a question from the Hon Nathan Guy, I said that Crown Irrigation Investments Ltd (CIIL) had not requested meetings with me as Minister regarding decisions about the Government’s funding for irrigation schemes. I also said that officials had dealt with Crown Irrigation Investments Ltd, which is correct. Officials have informed me that CIIL wrote to my office specifically requesting a meeting on two occasions in mid-December. Officials handled that correspondence as per the instructions in an earlier letter to CIIL dated on 7 December from shareholding Ministers telling CIIL to consult with officials from the Ministry for Primary Industries and Treasury.

Prior to that, on my starting as Minister in late October 2017, CIIL wrote a general introductory letter to my office. However, I want to correct my initial statement to acknowledge that my office did receive meeting requests from CIIL. My previous statement was a case of human error on my part. Thank you, Mr Speaker.

SPEAKER: We now go to business—[Interruption] Mr Guy, would you like to keep your fingers down and to settle, please. Thank you.

Speaker’s Rulings

Parliamentary Privilege—Application

SPEAKER: I now have a ruling which I indicated that I would consider at the end of the last session. In the last sitting period and during the adjournment, members raised with me the application of parliamentary privilege to a range of activities outside of proceedings of the House. Privilege belongs to the whole House and is asserted by the House and interpreted by the courts. The Speaker does not define the extent of parliamentary privilege. However, it may be useful for me to comment on its application when members raise matters of privilege under Standing Order 402.

A significant aspect of privilege is members’ freedom of speech, as encapsulated by article 9 of the Bill of Rights 1688, which states that “The freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place outside of Parliament.”

Another element of parliamentary privilege is the House’s right to regulate its own proceedings. What constitutes proceedings has been the subject of significant dialogue between the House and the courts. In 2014, the Parliamentary Privilege Act was passed by this House to confirm that parliamentary proceedings are “all words spoken and acts done in the course of, or for purposes of or incidental to, the transacting of the business of the House or of a committee” (section 10(1)).

Parliamentary privilege confers certain rights, responsibilities, and immunities on members in connection with proceedings of the House and its committees. Privilege does not extend to all the duties and activities of members of Parliament. For example, statements made in public, party business, and constituency business would not usually be covered by privilege unless they intersected in some way with proceedings of the House or its committees. Members may wish to refer to McGee, chapter 44, or Erskine May, chapter 15.

Clearly, parliamentary privilege does not apply to every activity that a member may undertake. When I consider matters of privilege, members will need to show that the matter they raise is one that relates to the proceedings of the House or its committees.

I will circulate this ruling and I have asked the Clerk to offer parties or individual members training on parliamentary privilege, if they so desire.

Oral Questions

Questions to Ministers

Prime Minister—Doctors’ Fees, Bail Legislation, Irrigation, and Partnership Schools

1. Hon SIMON BRIDGES (Leader of the Opposition) to the Prime Minister: Does she stand by all of her Government’s policies?

Rt Hon JACINDA ARDERN (Prime Minister): Yes.

Hon Simon Bridges: From 1 July will it be $10 cheaper for New Zealanders to visit their GP?

Rt Hon JACINDA ARDERN: I can confirm that we will be making GP visits cheaper over the course of our term, particularly given that under—[Interruption]

SPEAKER: Order!

Rt Hon JACINDA ARDERN: —that under the last Government—[Interruption]

SPEAKER: Order!

Rt Hon JACINDA ARDERN: —that under the last Government GP costs increased by 44—[Interruption]

SPEAKER: No. I’m going to interrupt. I’m going to give the Prime Minister a chance to answer that in silence, after David Bennett has apologised for interjecting straight after I called for order.

Hon David Bennett: I apologise.

SPEAKER: I do want to remind members that to interject after a call for order is in itself disorderly and will be treated as such.

Rt Hon JACINDA ARDERN: As I said, the reason that we’re addressing the cost of GP visits is because they went up under the last Government by 44 percent.

Hon Simon Bridges: When will there be a $10 decrease in the cost of visiting GPs for New Zealand families?

Rt Hon JACINDA ARDERN: You’ll, of course, have to wait for our announcements on Budget day to see what we’re doing to make sure that primary healthcare is more accessible than it was under that Government. What I can guarantee is that New Zealanders will be better off not only for their doctors visits under this Government but in general with the health system, which was run down by National.

Hon Ruth Dyson: I raise a point of order, Mr Speaker. Sorry to interrupt the flow of questions, but during that last answer the Hon Nick Smith made a remark that is unparliamentary, and I ask you to ask him to withdraw and apologise.

SPEAKER: Did the Hon Dr Nick Smith make an unparliamentary comment?

Hon Dr Nick Smith: I certainly referred to the broken promise of the Labour Party.

SPEAKER: And I am seeking from the Hon Dr Nick Smith—and I will listen to the tapes, as I do in these cases—an assurance that he did not make an unparliamentary remark.

Hon Dr Nick Smith: I’m happy to withdraw and apologise so the House can get on with its business.

SPEAKER: Order! The member will resume his seat. He will stand, withdraw, and apologise for making an unparliamentary comment and add nothing to it.

Hon Dr Nick Smith: I withdraw and apologise.

Hon Simon Bridges: Is one of the reasons for the doubt about the $10 reduction because the Government has chosen to prioritise a whole host of other things, including $2.8 billion in students’ free fees that don’t deliver any more students?

Rt Hon JACINDA ARDERN: No. What we have had to do is make sure that we can address the fact that district health boards (DHBs) have had a sixfold increase in their deficit from September to date—over $190 million deficit. We’ve got hospitals that are not fit for purpose, and we’ve got health workers working in unsafe environments. This is a Government that has a plan to address all of it, and we’re committed to doing that over three years.

Hon Simon Bridges: Can the Prime Minister confirm that in the last couple of months Government coffers are half a billion up, and why doesn’t she use that to do the $10 cheaper fees reduction?

Rt Hon JACINDA ARDERN: As I just outlined, we’ve had a sixfold increase in the DHBs’ deficit. Creative accounting from the National Party has demonstrated that while things were bad when we came in, we didn’t realise they would be as bad as what we have found. Middlemore was just the tip of the iceberg.

Hon Simon Bridges: Will serious crime, which under present law would warrant a prison sentence, reduce if bail laws were to be loosened?

Rt Hon JACINDA ARDERN: What we’re trying to address at the moment is the last Government’s solution to what was a static crime rate—a static crime rate—which was to build prisons every three to five years. No one in New Zealand thinks that’s a good answer.

Hon Simon Bridges: Does she believe substantial irrigation can be undertaken in an environmentally sustainable manner?

Rt Hon JACINDA ARDERN: If they’re environmentally sustainable and stand on their own commercial two feet, then they can find their own way to be implemented.

Hon Simon Bridges: Why does her Government consider public-private partnership - type funding acceptable for some Crown investments but not all of them?

Rt Hon JACINDA ARDERN: For the ones that we have ruled out, there have been blatant examples of failure. Do I need to mention Serco and Mt Eden?

Rt Hon Winston Peters: Can the Prime Minister tell us how much extra she needed to find for the four-lane highway promised between Pūhoi and Whangarei by the previous Government?

Rt Hon JACINDA ARDERN: I could speak to many such examples, but, obviously, that last Government was not interested in funding the investment required for transport, because the Leader of the Opposition’s first significant speech was all about what he wouldn’t do and not what he would do to solve New Zealand’s problems.

David Seymour: Why is the Government honouring existing irrigation contracts?

Rt Hon JACINDA ARDERN: Because it was in the agreement and they’re contracts.

David Seymour: Why is that different with partnership schools?

Rt Hon JACINDA ARDERN: We’ve given partnership schools an option, and the majority of them look to be taking it up.

Hon Simon Bridges: Is this her kind of Government that breaks promises to New Zealand families in relation to doctors’ fees?

Rt Hon JACINDA ARDERN: The member is yet to see what we’re actually doing for doctors’ fees yet, and will see what we’ve got planned on 17 May. But I can also add that New Zealanders already know, based on our mini-Budget, that 380,000 families will be $75 a week better off from 1 July. That’s more than they saw from that Government in their entire nine years combined.

Question No. 12 to Minister

Hon GERRY BROWNLEE (National—Ilam): I raise a point of order, Mr Speaker. I’m raising this now because the point I want to make relates to question No. 12, which today you were considering may not be suitable for consideration in the House because it mentions a figure that had—according to the assessment of those who advise you—been calculated in a way that didn’t give it a degree of accuracy. I’d ask you to consider all of the answers the Prime Minister gave today and to ask the question whether or not those met the same test that you are applying to us.

SPEAKER: I can’t tell whether the member is deliberately having me on, or what the story is. The member knows that when a figure is provided as part of a question, there has to be authentication. We worked through authentication to a point where there is a figure which I found acceptable—and I make it clear that that was my decision—and the member’s been here long enough to know the difference between a question and an answer.

Budget 2018—Priorities

2. WILLOW-JEAN PRIME (Labour) to the Minister of Finance: What are the Government’s priorities for Budget 2018?

Hon GRANT ROBERTSON (Minister of Finance): When we announce the Budget on 17 May, New Zealanders will see that we have a different set of priorities to the previous Government. Budget 2018 will focus on rebuilding critical public services and futureproofing the New Zealand economy. This starts with long-overdue boosts to health, education, housing, and policies that make our communities safer. The Budget represents a major step towards restoring public services—[Chamber lights flicker]—like lights in Parliament—to the standard that New Zealanders expect and deserve. We are also making the investments necessary to ensure that our economy is fit for purpose for the 21st century—an economy that delivers a better quality of life for New Zealanders in the years and decades ahead.

Willow-Jean Prime: Why is it important to focus on these priorities?

Hon GRANT ROBERTSON: It’s important to focus on these priorities because they are the priorities of New Zealanders—critical public services that allow them to lead safe, healthy, and fulfilling lives—and we only need to look at recent evidence to see why. Radio New Zealand reported yesterday that many emergency department staff have been stretched beyond their limits by unprecedented demand. Radio New Zealand have also reported early childhood centres are struggling to hire qualified staff. Newshub is reporting parents are being urged to be vigilant as winter approaches—

SPEAKER: OK, OK.

Hon GRANT ROBERTSON: —because of reports showing that children have been hospitalised with asthma at nearly double the rate since 2002. There are huge challenges left behind by the previous Government, but we have a plan to deal with them.

Willow-Jean Prime: What choices has the Government made in investing in these priorities?

Hon GRANT ROBERTSON: Oh, we’re taking the responsible approach of balancing the investment needed in our critical public services with our Budget responsibility rules. That means we will deliver a surplus in Budget 2018 and we will reduce net core Crown debt to 20 percent of GDP within five years of taking office. We have the resources to make the critical investments necessary to rebuild our services because we do have a slower debt repayment track than the last Government, we are increasing revenue, and we have reprioritised unfocused and poorly targeted expenditure from the previous Government. It will take more than one Budget to undo nine years of neglect, but we have the plan to do that.

Hon Chris Hipkins: Where’s Amy?

Hon Paul Goldsmith: How many extra students have enrolled this year—

SPEAKER: Order! Sorry, I’m just going to ask who made that interjection.

Hon Chris Hipkins: I withdraw and apologise.

SPEAKER: Thank you.

Hon Paul Goldsmith: How many extra students have enrolled this year in response to the $2.8 billion tertiary education policy, and why does that spending take priority over keeping an election promise to reduce the cost of GP visits this year?

Hon GRANT ROBERTSON: I don’t have the information on the exact numbers here, but what I do know is of the 80,000 people who would be eligible to benefit from that, 50,000 of them will be in trade training, workplace training, and apprenticeships—an area that that party neglected consistently during their time in office.

Offshore Oil and Gas Exploration—Consultation and Impact

3. Hon SIMON BRIDGES (Leader of the Opposition) to the Prime Minister: Does she stand by all of her Government’s policies and actions?

Rt Hon JACINDA ARDERN (Prime Minister): Yes and yes.

Hon Simon Bridges: Does she accept there was no formal consultation, including no process for the submission of views, on the Government’s recent oil and gas announcement?

Rt Hon JACINDA ARDERN: There was engagement with those who work in the sector, and there certainly could not have been any question over our intent, given how public we were over the fact that there is an end point to fossil fuels in New Zealand and that we needed to transition. It was a point I made quite clear in my campaign speech, in fact.

Hon Simon Bridges: Does she then accept that there was no cost-benefit analysis prior to the same oil and gas decision?

Rt Hon JACINDA ARDERN: Of course, that would require an ungettable knowledge of both what is likely to be tendered—and we know from the last time there was a block offer there was one successful bid—and then it would also require knowledge of the likelihood of that block offer coming on stream. It is a very difficult area to make predictions over, but what we do know is the cost to New Zealand and the environment of not making a transition over a 30-year period.

SPEAKER: Before I call the next supplementary, I just want to say to the Leader of the Opposition that with his position, and when he is asking supplementaries himself, there is a requirement to let the Prime Minister be heard. His constant interjection makes me think that he doesn’t actually want to continue asking supplementaries.

Hon Paula Bennett: I raise a point of order, Mr Speaker.

SPEAKER: I hope the member’s not going to argue with me, because if she is she will lose some supplementaries.

Hon Paula Bennett: I just wanted to make a point, Mr Speaker, and ask your—

SPEAKER: If it relates to that ruling that I’ve just made—

Hon Paula Bennett: Well, you’re often talking to us about there being order in this House, and sometimes it is the length of answers that do sometimes lead to some of that disorder, as you know.

SPEAKER: I think that was really marginal. Does the Leader of the Opposition have a further supplementary?

Hon Simon Bridges: Yes, thank you, Mr Speaker. Is it true that Government oil and gas officials only learnt of the decision the day before it was announced, and that the same is true for oil and gas sector heads, who learnt that evening before the announcement?

Rt Hon JACINDA ARDERN: When it comes to the officials, I can say no.

Hon Simon Bridges: Was the announcement on oil and gas, without formal consultation and cost-benefit analysis, rushed through because of the Prime Minister’s trip to Europe the day after the announcement was made, and her desire to make an impression there on the student leaders and the world’s leaders?

Rt Hon JACINDA ARDERN: Absolutely not. The urgency was the fact that the Minister of Energy and Resources had a requirement to make a decision around the 2018 block offer. She followed the requirements of the Crown Minerals Act, which the member will be familiar with, in order to make that decision. And, secondly, the urgency is called climate change. It’s already here, and you should visit Kiribati and Tuvalu to see the urgency of it.

Rt Hon Winston Peters: Has the Prime Minister read of any other reports of political leaders suggesting that we’re going to have to come to grips with this matter, belatedly so, just over the last weekend?

SPEAKER: I want to make it very clear that if the Prime Minister’s going to answer that question, it is to be an official report.

Rt Hon JACINDA ARDERN: Do you consider media reports official?

SPEAKER: No.

Hon Simon Bridges: Does the Prime Minister accept this decision will do absolutely nothing to lower domestic or international consumption of hydrocarbons, and, in fact, may see emissions rise?

Rt Hon JACINDA ARDERN: I accept reports, like the likes of Westpac, that says that there are in fact benefits to be had to New Zealand of making an early transition decision. This decision will not affect the industry today or tomorrow, but it will in 30 years’ time. The reason it won’t is because we are honouring every one of those 50-plus permits that are already out there, but we will not pretend that we do not have urgency over this issue, unlike the Opposition, who seems to have absolutely no plan at all.

Hon Simon Bridges: Has she seen any official estimates on what emissions reductions there’ll be from her decision.

Rt Hon JACINDA ARDERN: The plan here is to ensure that we are transitioning away from fossil fuels. It seems to be an issue that the member has not quite got his head around—that even if we use every single fossil fuel currently available, we still do not meet our climate targets. But, again, I would expect that shallow analysis from someone who has no plans.

Hon Grant Robertson: I raise a point of order, Mr Speaker. I invite you to consider a ruling based around how you treat the asking of questions in Parliament, which you’ve been very, very clear about in terms of the silence that requires, versus the noise that we’ve just witnessed over two questions to the Prime Minister that began seconds after she started answering. Now, I know there can’t be complete silence, and I’m not asking for that, but it does create quite a large imbalance in terms of the way the questions and answers are treated.

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

SPEAKER: Before that happens, the person who interjected during the point of order will stand, withdraw, and apologise. There was a member in that quarter who interjected loudly at the beginning of Mr Robertson’s point of order. Who was it?

Todd Muller: I withdraw and apologise.

Hon Gerry Brownlee: Speaking to the point raised by Mr Robertson, it would help if the answerer of a question answered the question rather than going into some really quite uninteresting political statement, saying that effectively there was no analysis, and that it was just an idea that we had. [Interruption]

SPEAKER: I’m on my feet, Mr Robertson. You will now stand, withdraw, and apologise.

Hon Grant Robertson: I withdraw and apologise.

SPEAKER: Can I make it clear, I was getting concerned with the noise levels but I am aware that for people outside the House, the way that the microphones work, they have no trouble hearing. I am also aware of the fact that people within the gallery are generally not impressed with the sort of behaviour that we were seeing from my left, earlier on. I made the judgment that as I could hear the answer, I would let it run.

Hon Simon Bridges: How on earth can the Prime Minister criticise so-called shallow analysis from the Opposition when her Government asked for precisely no official advice on emissions, on costs of living—actually on anything?

Rt Hon JACINDA ARDERN: Firstly, I refute that. Secondly, as we’ve repeatedly said, there are over 50 permits currently in operation that will continue. The size of the North Island currently has permits over it. Oil and gas exploration will continue for at least 30 years in New Zealand. What we’ve established is that consumers will not have low-cost options and alternatives to fossil fuels until we start taking responsibility and indicating that we have to transition. That’s the bold decision this Government made. Now I’m asking the Opposition: show us your plan. [Interruption]

SPEAKER: Order! Before I take supplementaries off the National Party for the interjections, which I won’t do now because I was holding the Leader of the Opposition up, Mr Simpson and Mr Bennett will not interject for the balance of this question time. Is that understood? I just want a slight nod. Thank you.

Hon Simon Bridges: In light of this oil and gas decision, does the Government have similar plans regarding stopping coal exploration production?

Rt Hon JACINDA ARDERN: This was something that related to oil and gas exploration. We’ve said that we will not continue mining on conservation land, and when it comes to coal we’ve only spoken around coal-generated energy use. So the answer, outside of that, is no.

Hon Simon Bridges: How can that be a good answer, given her concern on climate change and given that coal has doubled the emissions of gas, and climate Minister James Shaw has signed an international pact to phase out coal for power generation by 2030?

Rt Hon JACINDA ARDERN: I just acknowledged the fact that we’d signed up to that pact. But the point is that, actually, the industry and users of coal have already faced up to the fact. That’s why Fonterra, for instance, and other major industry players are already transitioning away from it. That’s why my message to the Opposition is: catch up.

Auckland Transport Alignment Project—Funding Gap

4. PRIYANCA RADHAKRISHNAN (Labour) to the Minister of Transport: What advice did he receive about the funding gap in the Auckland Transport Alignment Project prior to the new version he announced last week with Mayor Phil Goff?

Hon PHIL TWYFORD (Minister of Transport): Officials informed me that the August 2017 Auckland Transport Alignment Project was short $9.7 billion to deliver on the promises that had been made. This is larger than the $5.9 billion shortfall that the previous transport Minister admitted to when he published the Auckland Transport Alignment Project. Auckland needs these new projects, and projects cost money. Without action, the $9.7 billion hole that I inherited would have meant that vital projects such as Mill Road and Penlink would not have been built.

Priyanca Radhakrishnan: How did he close the funding gap in the Auckland Transport Alignment Project announcement he made with Mayor Goff?

Hon PHIL TWYFORD: We made hard choices, we prioritised projects, we didn’t put in anything that wasn’t funded, and we raised more revenue so that we can make a record amount of investment. The regional fuel tax means that without taking more than its fair share of the national transport budget, Auckland will get $4.3 billion more of investment for projects like Mill Road and Penlink. Anyone who opposes the regional fuel tax needs to explain what $4.3 billion of projects they would cut.

Priyanca Radhakrishnan: What did closing the funding gap allow the Government and council to deliver?

Hon PHIL TWYFORD: Closing the $9.7 billion funding gap that we inherited allowed us to give Aucklanders confidence and certainty with a fully funded 10-year $28 billion programme of transport investments that will unlock the city’s growth and prosperity after years of neglect. At long last, we can start to get ahead of the growth.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Rest assured, I’m not having you on, and we are still perturbed about the interpretation you put on a number that is used in question 12—notwithstanding that you’ve said you agreed with that number. In this question, there was, in a primary question, an assertion that there was a funding gap. What was the verification provided to the Clerk’s office to establish a non-specified funding gap?

SPEAKER: A document was provided to the Clerk’s office and accepted, showing a set of assumptions which led to me accepting the question on the basis that there was a funding gap.

Hon Gerry Brownlee: Speaking to the point of order.

SPEAKER: Further point of order—the Hon Gerry Brownlee.

Hon Gerry Brownlee: Well, no, it’s the same one, because we need clarification from you so we don’t make the same mistake in lodging questions in the future. So if a verification was there that was able to establish a funding gap, and therefore the term “funding gap” could be used, does that mean that if we are able to establish that there are deficiencies in some of the Government’s numbers, we can use equally expressive terms in primary questions?

SPEAKER: It’s something that I’ll consider carefully on a case by case basis.

Health Services—Doctors’ Fees

5. Hon MICHAEL WOODHOUSE (National) to the Minister of Health: Is it his intention to reduce GP fees for all New Zealanders by $10 per visit by 1 July 2018?

Hon Dr DAVID CLARK (Minister of Health): Last year, more than half a million New Zealanders couldn’t afford to visit the GP to get the care they needed. I’m not about to announce Budget details today, but what I can say is that the Government is committed to increasing the number of people that can afford to visit the doctor in the upcoming Budget.

Hon Michael Woodhouse: I raise a point of order, Mr Speaker. Largely thanks to the curtailment of the question, it was very specific—it specified a reduction and a date—and I don’t think the question was addressed.

SPEAKER: And the question was addressed.

Hon Michael Woodhouse: Does he stand by his comments that Labour having to prioritise coalition commitments with the New Zealand First and Green parties is the reason the policy cannot be implemented from 1 July?

Hon Dr DAVID CLARK: Coalition priorities will be delivered, and I’m not going to comment further on what will be announced on Budget day.

Hon Michael Woodhouse: Why, then, did he answer an oral question seeking assurance on Labour’s GP fees policy on 16 November, nearly a month after coalition agreements were signed, “That member refers to specific aspects of our policy as announced, and we intend to deliver on it.”?

Hon Dr DAVID CLARK: We do intend to deliver more affordable care at the level of GP visits. Under the last Government, GP visits went up 44 percent and there was underfunding in the health sector. We are determined to make access to primary care more affordable.

Hon Michael Woodhouse: When he told Morning Report, yesterday, that the Government “needed to prioritise the things that had been promised.”, was he telling New Zealanders the Government saw free tertiary fees for rich families and winter heating payments for retired millionaires as a higher priority than reducing the financial burden of GP visits on low-income households?

Hon Dr DAVID CLARK: No.

Hon Michael Woodhouse: Well, then, in that case, isn’t the Minister really telling New Zealanders that despite the strong and improving economy the Government inherited, he overpromised, can’t count, and therefore can’t deliver on the pledges he made in Opposition.

Hon Dr DAVID CLARK: No.

Transport, Minister—Regional Fuel Tax Increase

6. JAMI-LEE ROSS (National—Botany) to the Minister of Transport: Does he stand by all his statements and actions on fuel taxes?

Hon PHIL TWYFORD (Minister of Transport): Yes, when described and reported accurately.

Jami-Lee Ross: Will he rule out any increase to the rate of regional fuel taxes beyond 10c a litre, or will he be supporting Phil Goff’s call for more when he said this morning that the regional fuel tax was “not as good as he wants.”?

Hon PHIL TWYFORD: The law as contained in the legislation that’s currently before the Parliament allows only for a 10c a litre increase.

Jami-Lee Ross: Does he stand by that answer, given that in the regional fuel tax legislation is a power for the Governor-General, by Order in Council, to increase the rate of regional fuel taxes beyond 10c a litre?

Hon PHIL TWYFORD: The member’s statement is correct, but this Government has no plans to increase the rate of the fuel tax.

Jami-Lee Ross: If this Government has no plans to increase the rate of regional fuel tax past 10c a litre, why has he put a piece of legislation to the House that grants a power to increase the rate of regional fuel taxes?

Hon PHIL TWYFORD: Because the way the National Party is chopping and changing its policies at the moment, it may well be that a future National Government—in, say, 20 years’ time—may want to increase the rate.

Jami-Lee Ross: If the Government has no plans to increase the rate of regional fuel tax past 10c a litre, will he agree to have that section of the bill removed?

Hon PHIL TWYFORD: No, I certainly won’t.

Rt Hon Winston Peters: Can I ask the Minister, with respect to fuel tax, has he heard of the user-pays principle so often touted by a certain political party?

Hon PHIL TWYFORD: I have heard of the user-pays principle so often touted by the members on the other side of the House. I also would point out that the former National Government increased the fuel tax—the fuel excise—by six times in nine years to a total of 17c a litre.

Health Services—Budget 2018 Funding

7. Dr LIZ CRAIG (Labour) to the Minister of Health: How will Budget 2018 help DHBs to respond better to their capital needs?

Hon Dr DAVID CLARK (Minister of Health): Treasury advice to me shows that there is approximately $14 billion worth of capital investment needed in health over the next 10 years. Spending on health capital will be a priority for Budget 2018 and will be the first step in addressing nine years of neglect and underfunding of health by the previous Government.

Dr Liz Craig: So why is this capital investment needed?

Hon Dr DAVID CLARK: Capital investment is required because funding has been inadequate to date. The last Budget only set aside $37.5 million for new capital spending per year, and spread over four years it represents only 1 percent of the investment required over the next 10 years.

Dr Liz Craig: So how will this investment in health benefit patients?

Hon Dr DAVID CLARK: Patients who turn up for treatment at health facilities shouldn’t have to worry about the health of the facilities they are treated in. New Zealanders can be assured that providing a world-class public health service is a top priority for our Government. Budget announcements will be made in due course, but what I can tell the House is that we will begin, in this Budget, to turn around nine years of neglect and underinvestment in health by the previous National Government.

Regional Economic Development, Minister—Statements

8. Hon PAUL GOLDSMITH (National) to the Minister for Regional Economic Development: Does he stand by all his statements and actions?

Hon SHANE JONES (Minister for Regional Economic Development): Yes.

Hon Paul Goldsmith: Who are the “phantom bureaucrats” he was referring to in this Radio New Zealand interview on 26 April?

Hon SHANE JONES: The poor souls that were politicised by the last regime.

Hon Paul Goldsmith: Will he allow his public officials to properly and rigorously analyse the applications for the provincial growth fund?

Hon SHANE JONES: The process for any allocation out of the provincial fund of capital into the provinces will be adhered to, and I refer the member to the Cabinet paper, and I’ve got every confidence the level of responsiveness amongst the bureaucracy has increased in the last five days.

Hon Paul Goldsmith: Then why is he publicly criticising his officials when they are just doing their job?

Hon SHANE JONES: The writ of being the provincial champion requires from time to time to isolate the importance of pace, the necessary qualities of responsiveness, and to ensure that the State sector is not dogged by the failures of the last nine years but is into a new MMP environment.

Hon Paul Goldsmith: Why does he believe he should be able to hand out $1 billion a year with minimal restraint?

Hon SHANE JONES: Such a narrow and negative construction put upon that question. There is no hint whatsoever that Ministers Robertson, Twyford, Parker, or myself are doing as he alleges. We are adhering to the tenets in the Cabinet paper, and I accept there are some challenges, given the last regime, I recall, were willing to spend $11 million. We’re up for $1 billion.

Energy and Resources, Minister—Statements on Offshore Exploration

9. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and Resources: Does she stand by all of her statements and actions regarding the Government’s decision to ban further offshore oil and gas exploration?

Hon ANDREW LITTLE (Minister of Justice) on behalf of the Minister of Energy and Resources: Yes, and in particular I stand by my statement: “I don’t want to see an abrupt transition that leaves industries stagnant, communities without a future and individuals without hope. What I want to see is a clear, transparent and well managed pathway to a new economy.” That is what this Government is doing.

Jonathan Young: When you were asked on Q+A “Did you—

SPEAKER: Order!

Jonathan Young: Sorry. When the Minister was asked on Q+A “Did she talk to them”—referring to Methanex“—beforehand?”, and she said, “Yes, and we talked to the industry.”—so when was her actual dialogue with Methanex about no more offshore block offers?

Hon ANDREW LITTLE: I have spoken to the industry and individual members of the industry, including Methanex, on multiple occasions between November last year and the end of March this year, and spoke to Methanex specifically before the announcement was made on Thursday, 12 April.

Jonathan Young: When she was asked on Q+A whether Methanex knew that this was coming and she replied “Absolutely … They were at the petroleum conference when I went and gave a speech.”, what part of her most direct comment on block offers that “the Government is actively considering this issue and we’ll have an announcement in the coming weeks” would enable them to absolutely know there will be no more offshore block offers?

Hon ANDREW LITTLE: I spoke extensively in my speech at the oil and gas industry conference, including announcing that there would be no announcement on Block Offer 2018 and giving an extensive treatise on the Government proposed transition as a response to not announcing the 2018 block offer.

Jonathan Young: What is her response to Methanex’s comment that they were disappointed over the Government’s decision to end offshore block offers and the lack of consultation with industry that has gone into making this decision?

Hon ANDREW LITTLE: The announcement that the Government made on Thursday, 12 April was a significant announcement and there is no question that many of those in the industry felt disappointed because they were going to have to, and are going to have to, think about how they transition their industry over the next 30, 40, or 50 years, which will be the duration of ongoing exploration under the existing permits. But what we are not going to do is take the stance that the leader of his party takes on environmental matters and follow the St Augustine principle of “Lord, make me chaste, but not quite right now.”

Jonathan Young: What does the Minister say when it was reported in a public meeting yesterday that the Hon Andrew Little has said to a petroleum professional in New Plymouth that the decision to end new offshore exploration has not yet been made.

Hon ANDREW LITTLE: I would say that the person who said that at the meeting hosted by the Leader of the Opposition and the various Taranaki MPs who are members of the National Party—that that person did not listen to what the Hon Andrew Little was saying.

Electoral (Integrity) Amendment Bill—Submissions

10. Hon Dr NICK SMITH (National—Nelson) to the Minister of Justice: Does he stand by his statement regarding his Electoral (Integrity) Amendment Bill, “I am stunned at the number of times professors, legal experts, constitutional experts have actually got their analysis about the bill wrong”, and has he considered the possibility that he is wrong?

Hon ANDREW LITTLE (Minister of Justice): In response to the first part of the question, yes. In response to the second part of question, I can assure the member that I have given considered and lengthy consideration to the very issues that he raised and the issues surrounding the bill. I’ve thought long and hard, and I’ve come to the conclusion, by an overwhelming margin, that I have been right all along.

Hon Dr Nick Smith: Has the Minister considered yesterday’s strong submission against the bill from the Human Rights Commission saying it breaches the International Covenant on Civil and Political Rights and that it will damage New Zealand’s reputation in respect of both human rights and the quality of our parliamentary democracy, or is he seriously saying that the Human Rights Commission is also wrong?

Hon ANDREW LITTLE: I have heard what the Chief Human Rights Commissioner has said. I disagree with him. We have had this legislation in force in this country before and it did not have the effects described.

Hon Dr Nick Smith: Does he agree with the statement from the New Zealand Law Society, opposing his bill, saying it hinders the constitutional rights of MPs and will have a chilling effect on their free speech, or is he now arguing that not only are more than 20 constitutional experts and the Human Commission wrong but that, actually, the Law Society, representing 12,000 lawyers, is also wrong?

Hon ANDREW LITTLE: Yes. I declare a conflict of interest today in that I am an associate member of said Law Society. However, let me answer the question this way: I have read the Law Society’s submission and in about paragraph 2 or 3 it proceeds on a fundamentally failed assumption, which is that the legislation currently being considered by the Justice Committee provides for the leader to remove a member of Parliament—and it does not do that. As I explained to the House on a previous occasion, there are a number of steps to go through, and the leader’s role in the process is simply one of a cipher, because the decision is not the leader’s alone.

Rt Hon Winston Peters: Could the Minister tell the country how many of these professors, legal experts, and constitutional experts raised objections to the identical precursor legislation of 2001?

Hon ANDREW LITTLE: I wasn’t a member of the House on that occasion. Although I consider myself a student of previous Parliaments, I do not know how many academics took objection to the previous legislation, which worked very successfully in the time that it was enforced.

Hon Dr Nick Smith: How can the Minister claim that that legislation—[Interruption]

SPEAKER: Order! Sorry, Mr Finlayson; I can tell the member’s agitated. I’ll ask Dr Smith to start his question again.

Hon Dr Nick Smith: How can the Minister claim that the legislation was a success in improving the integrity of Parliament when we had the nonsense of the leader of the Alliance, Mr Jim Anderton, pretending in this House that he was continuing to be the leader of the Alliance while outside the Parliament he established the new Progressive political party; and is it the truth that that eroded trust in this institution?

SPEAKER: Order! No, I think the member knows that this Minister has no responsibility for the actions of Mr Anderton a number of years ago.

Hon Dr Nick Smith: I raise a point of order, Mr Speaker. In the previous answer to the question, the member had asserted that the previous legislation of the same had worked. My question was: how can he argue that when these were the events that occurred under the previous legislation? There is no question of the Minister having responsibility for Mr Jim Anderton. What he does have responsibility for is his answers in which he asserted the previous legislation worked well.

SPEAKER: OK. I’ll let the Minister answer it. I was probably slack in letting him go on last time.

Hon ANDREW LITTLE: I think that the very example that that member points out is a very good illustration of the realities of the legislation and, if you like, realpolitik—that political judgments will continue to be made—just as the ACT Party will be very glad of the previous legislation, because it got rid of a recalcitrant member who had no useful contribution to make and who distorted Parliament. On another occasion, a set of political judgments were made that did not lead to a member leaving this House.

GST—Collection from Offshore Suppliers

11. Dr DEBORAH RUSSELL (Labour—New Lynn) to the Minister of Revenue: What recent announcements has he made about the collection of GST from offshore suppliers?

Hon STUART NASH (Minister of Revenue): Today, the Hon Meka Whaitiri and I announced the release of a discussion document that removes a current loophole for offshore suppliers who are not required to collect GST from low-value goods sold to New Zealand consumers. I actually think the issue we are addressing is best summed up in a quote from Greg Harford, Retail New Zealand’s general manager, when he said, and I quote, “For many years, New Zealand retailers have been disadvantaged by the fact that they have to pay GST on sales in New Zealand while foreign websites in direct competition with Kiwi firms do not. This systematic competitive disadvantage has been caused entirely by Government tax policy, and it is fantastic news that the new Government is moving to level the playing field.”

Dr Deborah Russell: Is this a new tax?

Hon STUART NASH: Absolutely not. GST has always applied to imported goods since 1986, but we’ve never been able to collect it as the cost of collection at the border outweighed the revenue collected. The proposals in the document build on the GST on online services, or the Netflix tax, that National brought in in October 2016, as well as the work of previous Ministers. I do acknowledge the Rt Hon John Key, Bill English, Steven Joyce, Judith Collins, Nicky Wagner, Tim Macindoe—in fact, the whole of the last National Cabinet who signed off on this in July 2017.

Dr Deborah Russell: What do other countries do?

SPEAKER: Order! The member will resume his seat. That’s just far too broad; it’s not—[Interruption] No, no.

Research and Development—Tax Credit

Dr PARMJEET PARMAR (National): Thank you, Mr Speaker. My question is to the Minister of Research, Science and Innovation: why is her Government proposing to replace the—

SPEAKER: Order! The National Party just lost a supplementary for Mr Bishop’s interjection.

12. Dr PARMJEET PARMAR (National to the Minister of Research, Science and Innovation: Why is her Government proposing to replace the Callaghan Innovation growth grants worth $232 million in 2016/17 with a research and development tax credit that would have been worth $219 million in the same financial year, if there had been no behavioural or allocation change?

Hon STUART NASH (Minister of Police) on behalf of the Minister of Research, Science and Innovation: On behalf of the Minister, I reject the premise of that question. The figure raised in the question is based on the 2016 R & D survey, which suggests total business sector spending on R & D was $1.602 billion. The Opposition have extrapolated this figure using a 14.5 percent growth grant equivalent tax rate to suggest growth grants were worth $232 million in 2016-17. In fact, growth grants were worth much less than this. Annual estimates show that growth grants cost the National Government $144.2 million in the 2016-17 financial year.

Dr Parmjeet Parmar: So what will be the cost of tax credits for the same year?

Hon STUART NASH: There was no tax credit in the same year, so it’s hypothetical.

Dr Parmjeet Parmar: Why is the Government pushing the financial risk of doing research and development on to business by not being willing to continue its support at the same level as is currently in place?

Hon STUART NASH: That’s an interesting way to spin this. We’re not putting the financial risk on business at all. In fact, what we are doing is empowering New Zealand businesses to actually undertake R & D in a way that hasn’t happened for a long time. I don’t think we’ve been successful at all. I think we’re at about 1.23 percent of GDP, when the OECD average is 2.38. Labour and New Zealand First know that we need to increase the R & D spend, and that is why this is a very important part of our coalition agreement.

Dr Parmjeet Parmar: Supplementary.

SPEAKER: No, the Opposition’s run out of questions.

Annual Review Debate

In Committee

Debate resumed from 11 April on the Appropriation (2016/17 Confirmation and Validation) Bill.

Primary Sector (continued)

KIRITAPU ALLAN (Labour): It’s an absolute delight to take a call with regard to the annual review on the primary sector, ma’am, and particularly being from the mighty East Coast, as we both are, I’m sure we’ve both got a lot to say on this on this particular matter.

Before I commence my remarks, I want to acknowledge, first and foremost, the many hard-working women and men throughout New Zealand that grind and toil away in a wide range of the primary industries within our regions. Right now, there are so many women, men, and families that are being impacted across a broad range of fronts with regards to insurmountable—it may seem for many folk—biosecurity threats and risk to our core industries. So, I guess, as I was reflecting on the remarks I wanted to make with regard to this annual review, my thoughts went to those that are enduring extensive cattle culls, those that are suffering from Mycoplasma bovis throughout New Zealand right now. So, first, I did want to acknowledge them.

When we look back at the work of the previous Government and we look at the way in which they prioritised the primary industry, for me it wasn’t so much what they did but actually what they didn’t do that I wish to focus my emphasis on—for example, in the dairy industry. We all know that the dairy industry is the largest economic contributor to our export market. It’s absolutely critical to our regions’ growth and survival. However, when it comes to the previous Government having to make critical decisions for our dairy industry, for our largest exporter, those decisions were consistently and repeatedly delayed.

There’s no better example than the Dairy Industry Restructuring Amendment Act (DIRA). As you’ll be well aware, in 2015 the Minister was required to undertake a statutory review. The outcome of that, from the Commerce Commission, was that the DIRA provisions, the competitive provisions within that—[Madam Chair signals for member to return to bill] It all comes back exactly to the annual review, Madam Chair. There was a consequential series of decisions—a failure to bring in critical decisions across key components of our dairy industry. So, for example—I’m straying too far, aren’t I? It’s referenced in there. I’ll pull it up. Look, yeah, for me, it was what the previous Government didn’t do, and it didn’t introduce fundamental legislation to protect our dairy industry. It had it up on the Order Paper for an immeasurable amount of time, but this new Government under the leadership of Minister O’Connor had to tackle, straight off the bat, fundamental legislation because the DIRA provisions were about to expire in May 2018—this year. So we had to introduce, under expediency, the dairy industry—and what was frustrating was listening to the Opposition wax lyrical and, I guess, scaremonger our rural communities, saying that we were trying to introduce things that just absolutely weren’t right, because of their failure to act and bring in fundamental legislation.

I want to turn to—well, that’s actually almost my time, so I’d better not get too much into it. But another failure on that dairy front is the National Animal Identification Tracing scheme.

CHAIRPERSON (Hon Anne Tolley): I’d ask the member to talk about the appropriations if she could—

KIRITAPU ALLAN: Yeah, the appropriations and the fact that those things weren’t done.

CHAIRPERSON (Hon Anne Tolley): —just for a little bit.

KIRITAPU ALLAN: Yeah, thank you, Madam Chair. The fact that there was insufficient funding provided to measures such as the National Animal Identification and Tracing scheme, has, as we have seen, led to—well, potentially lead to—the flow of Mycoplasma bovis throughout our country right now, which is a critical issue that this Government is having to tackle.

Hon NATHAN GUY (National—Ōtaki): Madam Chair, thank you very much for allowing me to take a call on the appropriations review of the Ministry for Primary Industries (MPI) 2016-17. It’s a great time to reflect on MPI and also the new Minister’s performance, Damien O’Connor—

Hon Chris Hipkins: No, it’s not—no, it’s not.

Hon NATHAN GUY: —over the last six months. Yes, it is. It’s been fascinating to see what has occurred, because, as Minister Hipkins knows, this appropriations review is right up to the present day. And if he bothers to have a read of the report he will see a whole lot of things that I’m going to canvass that are very topical for rural communities right now. In particular, I’ll be talking about Mycoplasma bovis, which is a cattle disease that is certainly impacting on a large amount of rural communities and farmers up and down the country. I’m sure that urban MP would be very keen to hear from this side of the House about the financial strain that it is impacting on those farmers up and down the country.

What we feel, on this side of the House, is that while they have gone cap in hand to industry and got some money, we feel that the compensation is still too slow. It seems to be a bureaucratic nightmare for farmers to have to work their way through this process. I stood up in the Parliament about five or six weeks ago when Minister O’Connor had a ministerial statement and I challenged the Minister and said that compensation should be fair and fast. We aren’t seeing that now. What we are hearing in my office and in other rural electorates throughout the country is that farmers are still waiting, and it’s just not good enough. These are farming families that have made the right decision to support MPI and get on to cull and, hopefully, eradicate M. bovis for ever. But we are still waiting to see whether the Government will fully fund in Budget 2018 enough money to compensate these farmers. Let’s wait and see. We only have a couple of weeks to know the answer to that.

What’s also interesting, and it’s referred to in the report from the Primary Production Committee, is that the Minister when he came in to his new role—he decided, and he campaigned on it, that he wanted to smash apart the Ministry for Primary Industries and create stand alone entities. Well, there was huge pushback from officials. They said, “It’s a nonsense; we will lose our competent authority in international markets to do with food safety and biosecurity.” So what happened there is that the officials wore down the Minister and the Minister got to a point—he was almost on his knees and had to save face, and they came up with this rebranding exercise. So right now we’re seeing four business entities rolled out from MPI, costing $17 million. This money is coming from the Primary Growth Partnership fund.

This is research and development money that’s being raided from the front line of the primary sector—lifting value in our export markets, innovation, and technology—so that there can be a sticker on the door that says “BioSecurity New Zealand” or “Fisheries New Zealand” or “Forestry New Zealand”. [Interruption] I can’t see—and we wait, “Matua Jones”, for your little launch of your forestry thing; you’ll probably get a hat with a pine tree on the top of it, or maybe a mānuka seedling. We’ll wait and see whether you can deliver on your aspirational goals, and I’m unsure whether you will be able to do that or not.

What’s also been really interesting of late is to do with irrigation. This afternoon we saw that, for the second time in just the last couple of weeks, the Minister had to stand up and correct an answer. So he has misled Parliament now, just on this one particular topic, twice. The first one, he stood up in an answer to me in the House and said, “Yes, I have met Crown Irrigation officials.” Then he went back to his office and they scurried through the paperwork, and he realised that he had met Crown Irrigation officials in Opposition—probably when they came to the Primary Production Committee—so he had to come into the House and correct that one. Then I peppered him with some more questions and asked him, “Has Crown Irrigation requested a meeting with you?” He stood up in the House and said no. Well what we heard today was, I think—and I’ve just got to clarify this—on three, if not four, occasions Crown Irrigation had written to the Minister, requesting a meeting. The Minister didn’t have the balls to get those officials in his office and say “I’m sorry; I’m going to raid $100 million from this fund.” when farmers and growers rely on it.

Particularly when we think about climate change, this is all about mitigation and drought protection and food production, security for rural communities, actually supplying water through to some of our cities and towns. I heard on the weekend that Central Plains Water Ltd has kept two Lake Taupōs of water in the ground—isn’t that a fantastic thing? That water then flows into Lake Ellesmere—Te Waihora. These are the benefits of water storage, but we’ve had a raid on the primary sector, on the irrigation fund—$100 million has been siphoned out of it because they can’t make their numbers match up for Budget 2018.

Also, what’s been really interesting is the Primary Sector Council has just been launched. Some great names in there, great people—I know most of them—but, when you look through those names, there is not one dairy industry processing person. You would think for the size of the New Zealand dairy industry that you would have an industry representative—not you, Madam Chair, but you would think the Minister would choose to have a dairy industry representative—in that council. Well, no; he has turned his back on the New Zealand dairy industry, and I’ll tell you why: it’s because there’s a review of the Dairy Industry Restructuring Act. We still don’t know terms of reference. We know it’s going to take about 12 months, and I’ll bet your bottom dollar that’s going to be about dealing to dairy farmers in New Zealand. It’s going to be outside of contestability and competition in the New Zealand dairy industry, which was how the Act was set up.

So the review is going to go from here, out to here. It’s going to talk about things like land use, a cow cap, stocking rate, emissions, water quality, and compaction. All of these things are well beyond the scope and the way the legislation was set up in this Parliament. That’s why there is no dairy industry processor representative in the Primary Sector Council. That’s why I don’t think they are going to achieve a lot, and I’m disappointed by that, but I do wish them well.

You would have thought that, with nine years in Opposition, the Minister wouldn’t need a council to tell him what to do in his new role as Minister. What would have been really interesting is if the council had been brought in in the early times of the formation of the coalition. What would they have advised on irrigation? They would have said, “Keep it. It’s really important. It’s improving the environment. We should have more of it.” Six regions were declared in drought this summer. You would have thought the Government would want to help regional New Zealand and farmers and growers, but no.

What would the Primary Industries Council have recommended on an emissions trading scheme (ETS) charge and bringing in biological emissions—that’s livestock—into the ETS? The Minister’s already indicated at the East Coast Field Days a couple of weeks ago that farmers are going to be taxed to the tune of $5,000. This is ahead of the Climate Change Commission doing their investigation and their report. So we already know that that’s happening. So once again that’s why there’s no dairy representative. So, in summary, it’s been a pretty pathetic start for the Minister of Agriculture in his role.

IAN McKELVIE (National—Rangitīkei): Thank you, Madam Chair. I just wanted to follow on on a couple of the topics raised by the previous speaker, the Hon Nathan Guy. One of the things I’m particularly concerned about, I think as a result of where we’ve got to in the last few months, and obviously Crown Irrigation reported to the select committee of which I was the chair at the time, and I think that—

Hon Nathan Guy: A very good chair.

IAN McKELVIE: Absolutely. Thank you, Mr Guy. But I think the challenge I find with the irrigation situation is that there’s a gap in any irrigation scheme proposal, and the gap is the community input into that scheme and the benefit that the environment will get as a result of that. I think it’s a pretty far call to expect the commercial operations to fund that up front, and that was the reason for the irrigation fund largely—it funded the piece that the community couldn’t fund to get those schemes off the ground, because the environmental benefits of those schemes are significant. Whilst I accept that the users of those schemes, in due course, should pay the costs—I have no problem with that—it’s getting those schemes off the ground initially that was the challenge, and that’s the real loss I think we’ve suffered as a result of that. So that’s my little bit on irrigation.

I want to talk a little bit about one or two other issues that came up in the course of those discussions, and I wanted to specifically focus on forestry. We currently have around 50 million trees per annum planted as replacements for the trees that are cut down, so that’s around about 50,000 hectares—if we put it in rough figures—of trees milled every year, exported every year, or used in the industry every year. So 50 million trees take that up. We need another 50 million trees to reach the Government’s target, and I guess the challenge I see in that is that if we start to use land that I consider—and I guess I’m talking about class IV land and better. If we started to use that for planting trees, it’d be one of the great tragedies of New Zealand history, because that land has much more value in other areas than trees. So the reason I raise this is if you think about the potential to put whole farm blocks into trees, then you straight away run the risk of capturing a whole lot of very good quality land in that proposal. That would be a tragedy for New Zealand’s future.

I just want to point out one or two of the challenges we’ve had with policies like that in the past where Governments have, I guess, initiated measures that at the time they thought were logical, and I guess if you go back to the time of supplementary minimum prices, they were the thing that created most of the challenge we’ve got with erosion in the hill country now. At the time, the Government of the day thought that was a sound policy, but history has proved it to be significantly flawed. I also think there are some elements of the Dairy Industry Restructuring Act, which is another topic that is very topical at the Primary Production Committee and in the primary sector—some of that is flawed as well, when you think about it. It caused perverse behaviour to occur in the industry because it forced Fonterra, effectively, to pick up milk wherever it was viable to grow it from a farmer perspective—it didn’t always create the right decisions.

So Governments interfering in natural processes have got to be very careful how they do that, and I think that’s quite dangerous for our futures.

Greg O’Connor: Does that include subsidising irrigation, Mr McKelvie?

IAN McKELVIE: I’m not talking—you didn’t listen, clearly. You should listen more carefully when you’re sitting in the Chamber, because I talked about exactly the piece of the irrigation scheme that was necessary to be initially subsidised to get it off the ground. It’s got nothing to do with the commercial operation of irrigation.

I also want to talk briefly about some other areas that I think are really important to us, and that’s both the funding of biosecurity and the control and operation of our fishing industries. They are really important things to fund, but it’s very important that we also retain the knowledge and expertise of people in those areas, because it is a significant piece of New Zealand’s history and it’s also a significant piece of our income. The fishing industry returns about $2 billion in export earnings a year to New Zealand, and we need to manage—and I think we do manage it very well. But we need to ensure that it continues to be managed in an extremely positive manner and to enable both recreational and commercial fisheries to operate in tandem and to do it very well. I hope that the Government continues to do that.

Finally, the one thing I just wanted to very briefly talk about is the honey industry, because I think that’s a significant concern to New Zealand’s future. The Primary Production Committee, over the years, have had numerous inquiries and views on this, and it’s very important that this industry gets its challenges resolved and that it continues in the future. Thank you, Madam Chairperson.

ALASTAIR SCOTT (National—Wairarapa): Thank you, Madam Chairperson. It gives me pleasure to speak on the appropriations for a few minutes, and at the outset I’d like to highlight a couple of changes that it seems this Government has made to the regime that was in place only six months ago. We’re going to have fewer irrigation projects. This is a real concern. The Government has decided to not support irrigation projects, and I have two of them, potentially, in my electorate of the Wairarapa.

This is a real shame, because irrigation projects can do so many good things for so many people in provincial New Zealand. We’re talking about primary production but we’re also talking about social and environmental good. We’re also talking about security of supply of water to the towns—to the urban people in those smaller provincial towns that we have around the country. So it’s very disappointing to hear, though, that we have a Green Party who is concerned about climate change and we have a New Zealand First Party that talks about provincial support, yet we have a Government that has eliminated, wiped out, and is no longer going to support decent-sized irrigation projects that support rural communities.

We’ve also got a fuel tax. Now, that is going to hit rural New Zealand harder than your urban commuter, who is going to jump on a train or walk or use public transport. In provincial New Zealand, there is far less public transport. People use their cars and drive further. That funding, that tax on fuel to support Auckland’s roads, is a blight on provincial New Zealand. Then, we’ve got the dairy sector. That is going to be in the emissions trading scheme (ETS), Mr Parker has said. The animals in the dairy sector will be in the ETS—therefore making New Zealand’s dairy sector less competitive on the global market. That is a real shame. That demonstrates that this Government does not support the primary sector. It does not support regional New Zealand.

The Primary Growth Partnership—other speakers before me have spoken of this. Clearly, that money that was targeted at research and development to support the future of our primary sector is being stripped away and is being grabbed for the benefit of Mr Shane Jones’—what does he call it?—Provincial Growth Fund. He calls it a provincial growth fund. It is not a provincial growth fund. It is a lolly scramble. It is an ability for him to gift money to his favourite projects. It is a slush fund that has little criteria, little oversight, and little accountability. Just so people know, that is where the Provincial Growth Fund money is coming from. It is coming from the Primary Growth Partnership money, and it is coming from the Crown irrigation fund money.

Hon Shane Jones: New money, new money.

ALASTAIR SCOTT: That man—that Minister—is going to spray it around to his mates without any accountability, without any thought about investment, and without any thought of whether it’s debt or equity, and I’ve mentioned that to him before.

We’ve also got the issue—I’d just like to come back to the fact that research and development is important in this sector. We had a question in the House earlier talking about tax credits versus Callaghan Innovation, and we can argue about the amount. But, nevertheless, we know that that is the way forward to address some of the climate change issues that we’ve just talked about—emissions from animals—and it also is the way forward to increase productivity on farm.

It’s really important that that fund is continued. Not every project is going to win, and not every project is going to have positive results, but it is that investment—and I focus on the word “investment”—that is so important to develop research and development for those primary sector industries, rather than having it given to a propagation outfit for a few trees or a roundabout or a set of lights or a netball court that might be called a Provincial Growth Fund activity. So the provinces are disappointed in what this Government is doing.

Hon Shane Jones: News of the World.

ALASTAIR SCOTT: He talks about supporting the provinces, but we know—well, the analogy for me is three sheep chasing their tails in a yard.

HAMISH WALKER (National—Clutha-Southland): Thank you, Madam Chair. I just want to reflect on a few areas that popped up during the review of the Primary Production Committee on a number of occasions. The recent policy announcements from the Ardern-Peters coalition Government are going to have a severe and negative impact on rural communities like Clutha-Southland. It’s official: rural New Zealand is under attack. Whether it’s the extra tax farmers in Gore or Mossburn will be paying at the pump for Auckland’s trams, the $3 billion alcohol allowance paid to students to go and drink their first year of studies away, last week’s announcement to end offshore oil and gas exploration—an industry which will be destroyed, which employs over 8,000 in high-paying jobs and contributes over $2.5 billion to our economy—or just a couple of weeks ago, when the Rural Health Alliance was declined a mere $600,000, or $1 to every rural person in New Zealand. They provide a great service to our rural communities, especially in areas like mental health. And last week’s announcement of an interim climate change commission is worrying to the extreme. It seems likely that agriculture will be forced into the emissions trading scheme. The list goes on and on.

I was disappointed to hear funding for vital irrigation projects that support not only dairy but horticultural industries will be axed. This was announced around the same time hard-working and honest farmers in Otago and Southland were going through the worst drought in decades. I want to acknowledge the Otago and Southland farmers, who have put up with so much hardship over the past several months. It’s been a very challenging time on many fronts. First, there was the drought. Speaking with so many farmers who have been in the district for many, many decades, they often told me this summer was the worst, the driest, and the hottest they have ever experienced. As I drove round the electorate looking at the land, usually green and lush at this time of year, it was brown and dry, looking more like a desert in the middle of Africa. Many farmers had struggled over summer to grow crops for winter. Once winter hits, in a couple of months, some will really start to feel the pinch.

CHAIRPERSON (Hon Anne Tolley): Could the member sort of come to the appropriations debate?

HAMISH WALKER: Sorry, Madam Chair. This was all related in the Ministry for Primary Industries (MPI) review.

CHAIRPERSON (Hon Anne Tolley): Well, you need to relate it in your speech.

HAMISH WALKER: That’s right. In December last time, around the same time the drought was kicking in, along came Mycoplasma bovis, which has been widespread in Southland. M. bovis is a cattle disease, a bacterial infection that can cause a range of conditions in cattle. This disease affects animal welfare and production, and, for the record, humans cannot catch this. The biggest risk is animal movement. If M. bovis spreads throughout New Zealand, we’ll see a small decline in output. It won’t bring the industry to its knees, but as a country we will feel it. I want to acknowledge that rural support trusts across the country have been working incredibly hard assisting rural people, from owners to managers, staff, and contractors, in these tough times.

I want to take this opportunity to thank the hard-working MPI staff on the ground, who have worked long days and nights in the effort to eradicate this terrible disease. Speaking to some of the field staff, it’s clear how committed they are. However, some admitted to me the fear that they have for their jobs due to the restructure currently under way, commissioned by the Minister of Agriculture. It simply isn’t fair to put these hard-working staff under more pressure. I don’t agree with the Minister’s decision to waste $17 million to rebrand MPI just to put a few new stickers on the doors. During the MPI review, I did ask the head of MPI how staff are feeling and how they would respond to another disease outbreak after they’d been broken up into four departments. He couldn’t answer.

I want to just give one bit of credit to the Minister of Agriculture. He’s got a knack of doing this: whenever he declares a drought, within 48 hours, the rain starts to appear. So I do commend the Minister on that one thing.

KIRITAPU ALLAN (Assistant Whip—Labour): I raise a point of order, Madam Chairperson. I didn’t want to interrupt the last member, Hamish Walker, during his fantastic contribution, but I did just want to get some clarification as to whether or not the committee is still enabling newer members to read directly, verbatim, their speeches. We have had some direction in respect—

CHAIRPERSON (Hon Anne Tolley): That’s enough—that’s OK. That’s fine. Newer members I do give a bit of licence to, but the member makes a good point. We are in debate—we’re in committee—and it should be off the cuff. Are there no more speakers on the primary sector? OK.

Reports relevant to the Primary Sector noted.

Social Development and Housing Sector

GARETH HUGHES (Chairperson of the Social Services and Community Committee): Kia ora, ngā mihi nui ki a koutou, kia ora. I rise to speak in the annual review debate on the Social Development and Housing Sector. As the chairperson of the Social Services and Community Committee, it was a privilege to work with members across three other parties and the entities reviewed to conduct the annual review hearings. We conducted hearings and tabled reports from the Ministry of Social Development, the Ministry for Vulnerable Children, Oranga Tamariki, Housing New Zealand Corporation, the Office of the Children’s Commissioner, the Ministry for Pacific Peoples, Sport New Zealand, the Artificial Limb Service, the Ministry for Culture and Heritage, Tāmaki Redevelopment Company, the Ministry for Women, and the Museum of New Zealand Te Papa Tongarewa board. We also conducted annual reviews of Drug Free Sport New Zealand, Heritage New Zealand, the Arts Council of New Zealand Toi Aotearoa, the Families Commission, the New Zealand Film Commission, the New Zealand Lotteries Commission, the Office of Film and Literature Classification, and the Social Workers Registration Board, and had no matters to bring to the attention of the committee from these entities.

I want to quickly run through each of these entities and give a quick highlight from what the committee heard. Looking at the Ministry of Social Development, they play a critical role in our society, providing social welfare benefits, superannuation, benefits, emergency housing, and care and protection of children and young people. The committee asked questions around measuring child poverty, and over the next few months the committee will hear submissions on the Government’s Child Poverty Reduction Bill. Housing New Zealand manages around 63,000 homes, housing 180,000 Kiwis, and we heard about their work for affordable Auckland KiwiBuild and new State houses. On a related note, we heard from the Tāmaki Redevelopment Company, a company with joint Crown and Auckland Council shareholding to transform Tāmaki over the next 25 years. Key issues canvassed by the committee were the speed of housing development, procuring a large-scale partner, and home affordability and the KiwiBuild programme.

The Ministry for Vulnerable Children, Oranga Tamariki was created in April of last year, and was renamed Oranga Tamariki—Ministry for Children in January this year. The ministry works in a child-centred system with high aspirations for Māori children, investing in tamariki, amongst others, and the committee heard there are currently 5,700 children in State care. They told the committee their priority areas are for quality social work practice, increasing the number of safe and loving places for children, and creating stronger partnerships with iwi and NGOs to commission stronger services for children. We also heard from the Children’s Commissioner on his work advocating for children and New Zealanders aged under 18. We discussed setting targets to reduce child poverty, developing a national strategy to promote the well-being of children and 17-year-olds in the youth justice system.

We heard from the Ministry for Women on their work for pay equity, increasing women’s opportunities in education and public honours. An area they’ve also been conducting research into is the gender pay gap. The Ministry for Pacific Peoples told us about their work on the Pacific Employment Support Services, developing a language strategy, connecting with Pacific regions, and promoting Pasifika people in the public sector. With Sport New Zealand we discussed the declining levels of participation in sport amongst young people, adults, and volunteers. The committee was concerned about declining levels, and noted in the Community Sport Strategy 2015-2020 the need to measure effectiveness of investing in community sport.

We acknowledged the 20th anniversary of Te Papa in their review, and discussed their plan to open a new museum in Manukau, South Auckland; opportunities for growth; and the ability to meet demand. And lastly we heard from the New Zealand Artificial Limb Service, and they told us of their work supporting the 4,354 amputees in New Zealand. We discussed property issues with their limb centre, arising from historic peppercorn rental leases. We heard that the buildings face significant issues involving deterioration, leaks, and earthquake rating, needing repairs and investments. They told us these issues were close to resolution, and they were in the process of negotiating new contracts with district health boards and ACC to provide more funding.

As a new member on this committee this term, it was a privilege to learn more about the work of these Crown entities and their dedicated public servants. I’d like to thank committee members, the staff, and public servants, who all played a role in this important aspect of scrutinising public investment in these entities. Kia ora koutou.

Hon PHIL TWYFORD (Minister of Housing and Urban Development): Thank you, Madam Chair. I haven’t taken a call for a while, so it’s nice to be back in the House and in this annual review debate. I want to acknowledge Miette Wooller-Harris, who is a year 13 student at Rutherford College, in my electorate. Miette is interning in Parliament this week and is in the gallery for this debate.

I want to talk about housing. It’s appropriate that housing is grouped together with social development, because the housing crisis that the former National Government allowed to spin—

Hon Dr Nick Smith: How many houses, Phil?

Hon PHIL TWYFORD: —out of control so badly, when the Hon Dr Nick Smith was the housing Minister, is responsible for most, if not all, of the poverty and inequality that we’ve seen over the last decade in New Zealand. The housing crisis has exacted a terrible price on the people of this country. This Government inherited a shortfall of 71,000 houses that built up entirely on the former National Government’s watch, including during the period that we’re debating—71,000 houses short across New Zealand and 45,000 in Auckland alone.

Homeownership has fallen to a 66-year low. Homeownership hasn’t been lower in 66 years, and what did the former National Government do about it during its time in office? They made an artform of tinkering, of minimalist incrementalism, and of making excuses for doing nothing. That former Minister across the House, Nick Smith, was the arch practitioner of this whole policy of doing as little as possible while the housing market was allowed to burn.

What did they do with State housing? The institution of Housing New Zealand, which has been there for decade after decade as an expression of New Zealanders’ compassion and belief that every child growing up in this country should have a decent roof over their heads, no matter how life might be a struggle for mum and dad, and for people who would otherwise really struggle to get a decent roof—

CHAIRPERSON (Hon Anne Tolley): I hate to interrupt the Minister, but, again, could he relate it back to the appropriations. Just relate it back—we’re halfway through.

Hon PHIL TWYFORD: I’m going to talk about the appropriations—

CHAIRPERSON (Hon Anne Tolley): Good. I look forward to it.

Hon PHIL TWYFORD: —because I’m talking about State housing—State housing that was sold off during the period of this annual review by the former National Government. In the middle of the worst housing crisis in living memory, what did they do? They sold off State housing. They are so desperate to wash their hands of the fundamental responsibility to put a decent roof over the heads of people who need it.

When we came into Government, we asked the officials, “What’s going on with the State house sell-off?” In Christchurch, 2,500 houses—including the State house that John Key lived in as a child—were in the process of being hocked off. They had been doing trade shows in Australia—trade shows in Australia—to try and sell off the State housing. There were another 700 houses in Invercargill that they were selling off, and it was really only the utter embarrassment of two winters of record homelessness that embarrassed them into any kind of action at all.

I want to mention the other real casualty of the housing crisis, and that is the 40,000-odd kids who, every year, get bundled off to hospital with respiratory and infectious diseases, and the 1,600 mostly older New Zealanders who die premature deaths every winter in this country because the state of the housing that they’re living in is so poor. The best after nine years in office, and during the period that we’re debating in this annual review—the very best that Dr Nick Smith could summon up—was to require smoke alarms and a very, very weak, inadequate insulation standard. It’s been left to this Government to come in and take some serious measures to actually require not only an inadequate insulation standard and smoke alarms—which in themselves might be OK, but in the circumstances are woefully short of what’s needed—but a serious, modern set of standards that would require landlords to ensure that rental properties are warm and dry. Why shouldn’t they be required to do that?

It’s a scandal that half a million Kiwis are living in rental properties, some of which are in an appalling condition and are a risk to their health. Our healthy homes guarantee will require that rental properties are dry and are heat-able and that they will address drainage, address draught-stopping, and address moisture control—none of the things that the legislation passed during this annual review period, under the sponsorship of Nick Smith, addressed. Our healthy homes guarantee will finish the job that was started under that Government but was left uncompleted.

So there are, I think, four key factors underlying the housing crisis—four drivers of the housing crisis—that are responsible for the misery that we saw, year after year after year, under the former National Government. They are, I believe, infrastructure financing, which is the biggest roadblock to the ability of our towns and cities to grow up and out; the planning system, which is a highly restrictive planning system that chokes off the supply of available land, drives land prices up, and triggers speculation and land banking, and is one of the main factors that’s responsible for the absurdly expensive urban land prices that we have; a low-productivity construction industry that has very high build costs at very low productivity and that is rife with anti-competitive practices; and, fourth, tax settings that encourage an economy of land banking and property speculation. Those are the four big drivers of the problem we have. In nine years, including in the period that we’re debating in this annual review, the former National Government did next to nothing about each of those four factors—next to nothing—and that, I believe, is an absolute scandal.

I want to talk, in relation to those problems that I’ve raised, about what this coalition Government led by Labour, supported in coalition by New Zealand First, and in confidence and supply by the Greens—I want to talk about what we’ve done in six months. In six months, we stopped the State house sell-off—one of the first things we did—and we’ve commenced a massive State house building programme. We’ve set up a KiwiBuild unit—

Hon Dr Nick Smith: 18.

Hon PHIL TWYFORD: You mark my words, Dr Smith, you’re going to see a lot more KiwiBuild houses coming down the track. You just mark my words. We’ve set up a KiwiBuild unit in the Ministry of Business, Innovation and Employment, which is overseeing the development of large, complex urban development projects, and a mass Government procurement programme to build affordable homes for first-home buyers.

There are 155 new State houses in the regions—the biggest and only significant building programme of State housing in the regions in more than two decades. That former National Government sold off State houses in the regions. They did not build any; they sold them off, and regional New Zealand won’t forget that.

We are in the process of banning foreign buyers, so that only permanent residents and citizens of New Zealand can buy the existing housing stock. We want foreign investment in the building of new homes and in new developments, but we will not allow offshore speculators to bid up the price of the existing housing stock.

We have work under way on reforming infrastructure financing and freeing up the planning system.

Hon Dr Nick Smith: What about the RMA? Where’s your RMA changes?

Hon PHIL TWYFORD: We will reform the Resource Management Act (RMA), but not in the tinkering way that Nick Smith did that made the RMA more complex, more expensive, and more burdensome.

CHAIRPERSON (Hon Anne Tolley): Can I just ask the Minister, please, in the last 30-odd seconds, could he actually talk about the appropriations for the period 2016-17.

Hon PHIL TWYFORD: Madam Chair, it’s perfectly admissible within an annual review debate to talk about the period right up to the present. Members on that side of the House—

CHAIRPERSON (Hon Anne Tolley): I would appreciate it if the member would relate that to the appropriations. This is not a policy discussion.

Hon PHIL TWYFORD: The first KiwiBuild homes, at McLennan, were unveiled the other day—18 of them—and they will benefit from a $2 billion appropriation that will kick-start the KiwiBuild programme. There are going to be many more coming. We are rolling out the emergency housing around the country that that former Government never did.

Hon Dr NICK SMITH (National—Nelson): Madam Chair, I’m not at all surprised that the Minister coughed and spluttered his way through those 10 minutes, given the embarrassment that he is to his party and to himself over the debate for these estimates.

I sought a piece of information from the library, and it was this: how many times did that member and that party promise 10,000 homes a year—10,000 homes a year? The answer is—I’ve found 167 news clips in which they promised 10,000 homes per year. The extraordinary part, about which every member opposite should be hiding their heads in shame, is the press release from the member last week that said that by the end of the next financial year, which is 20 months into this Government, they will have built a thousand—20 months, and they’ve achieved a thousand? Look, I was just gobsmacked at the audacity of the Minister to promise so much and to deliver so little.

At the core of the housing issue is getting more houses built. Let’s look at the financial year under review: 31,200 homes built. That’s more homes that have been built in this country than for 30 years. Every year, in fact, for the last five years, we’ve seen an annual growth of between 15 and 20 percent, or between an additional 2,000 and 3,000 houses each year—that is, five years ago we were building 14,000 houses a year; we then went to 17,000; 20,000; 23,000; 24,000; 27,000; and, when we left Government, 31,000 homes a year were being built. Members opposite, for all their rhetoric, the best that they have said to this House is that they’re going to build a thousand houses over a year and three-quarters, and I say that is truly pathetic.

I then want to come to the issue of the quality of our housing. Let’s compare the record: if we include this financial year for review, under National we’ve insulated 320,000 homes—320,000 homes, including every single State house. Well, how does that compare with Labour’s previous record? During Labour’s last nine years in Government, they did a total of 30,000—that is less than 10 percent. For me to take lectures from members opposite about understanding the importance of the quality and insulation of homes, I say give me a break.

Here’s the real challenge: in the Budget, we will be watching very closely to what degree they lift that pace of home insulation. We passed a bill that requires every house that is rented to be insulated by July next year—every single house. Here’s my worry: these guys are sitting on their hands doing nothing, and I’ve got my doubts. For all their criticism that they made of that target, they have done absolutely zero—absolutely zero—in six months to ensure that that timetable is met, and that deadline. I’ll make a bet to members opposite: for all your grizzling that my timetable of having every rented home insulated by 1 July next year—I’ll make a bet right now, for the best bottle of Nelson wine, that the Government opposite will not meet that target. If you go out and talk to the real world of people that do this work, you know the number of homes that are being insulated is slowing under this Government, not growing. It is slowing, and that is where this Government has been deficient.

The last point I’d make is this: Mr Twyford has said, on numerous occasions—and he’s right, and we agree—that the issue of urban boundaries is critical to housing affordability. That’s why, right now, there isn’t a housing affordability issue in Christchurch. Rents are dropping.

Jo Hayes: That’s right.

Hon Dr NICK SMITH: There are ample affordable houses, as my colleague from Christchurch, Jo Hayes, says. Why is it, for all his promise of removing the urban rural boundary, that that member has not produced a single bill on housing in his six months?

Hon KRIS FAAFOI (Minister of Civil Defence): Thank you very much, Madam Chair. It’s slightly ironic that Dr Nick Smith began his speech with a joke about coughing and spluttering, when he was the housing Minister responsible for a hell of a lot of coughing and spluttering within the Housing New Zealand homes that he was responsible for during his tenure in housing. The period that we are debating here was a lot of the election period, and during that election period, one of the houses that I visited in Linden, in my electorate, which was a State house, had a roof that I put my finger through because of the moisture and the rain that was working its way through the roof and into the ceiling, therefore meaning that the family that lived in the house was, in fact, coughing and spluttering, causing issues for that family that were well beyond just the house, in the school, and then taking them to the doctor’s and the hospital. So I find it slightly ironic that the member who just resumed his seat would make a joke about coughing and spluttering when he was responsible for the degradation of the Housing New Zealand system, which has caused a hell of a lot of coughing and spluttering.

Also, I’d like to talk about some of the campaigning that we did in our electorate around a piece of land in the Castor Loop. The Housing New Zealand houses were demolished on that piece of land back in 2010 and 2011, but we spent a lot of time pressuring Housing New Zealand, pressuring the previous Government, to build some houses on that land. Nothing was done for six years, and in the seventh year, we were pushing very hard to make sure that something was done. During an interjection during another speech, the Hon Tim Macindoe said that some of these houses were demolished because they weren’t in the right places and weren’t appropriate. I would suggest that the land that I’m talking about is well placed for Housing New Zealand homes, because there were homes there. What happened as a result of the removal of the homes is that the likes of local families had to move further afield, the local school saw its numbers drop, and it caused angst among the community because what looked like a park was, in fact, an empty hole in the community, where Housing New Zealand homes should have been.

So we pressured the Government, after six years of inaction, in that final year of their tenure in power, to do something about this. Despite the attempts of myself, as a local MP, and of the local Catholic Church to get a march to highlight the need for more social housing in our area, during that period that we’re debating, there was still nothing from the previous Government to put homes on that site—a travesty and a tragedy for that community in Porirua East. What I am proud to say is that, in the first six months of this Government, we have taken action to put 53 new State homes on that land, which has lain bare since 2010-11. If people around the country, and certainly in my electorate, want to see the stark difference between the previous Government and our Government, it’s that plot of land—it’s that plot of land, which used to have homes on it that may have not been appropriate, and which sat idle for six or seven years, with the previous Government doing diddly squat about it, and not providing homes in an area where there was certainly a demand for more social housing. I am proud to say that, in this very short period of time since we’ve taken power, that project to get those 53 homes built will start very soon.

I thank the current Minister of Housing and Urban Development for making sure that there’s some actual action on the empty plot of land that Mr Smith was responsible for in his time and that sat on his hands for years and did absolutely nothing. When we were looking for leadership from the previous Government during the period that we are debating: still nothing. So what I can say is that I’m proud we were able to campaign on issues that really matter to New Zealanders, and that is housing. Mr Smith said, “Let’s take a look into the real world.” Well, Mr Smith, come into the real world. Come into that house in Linden where I was able to put my hand through a ceiling because the moisture there was so bad that it was causing issues for that family under his watch—under their watch—and they did absolutely nothing about it. So I’m proud to sit on this side of the House and talk about the six months that we’ve been in charge over here, because we’ve done something that the previous Government didn’t.

CHAIRPERSON (Hon Anne Tolley): Just before I call the next speaker, I have tried to remind members that we are discussing the appropriations. Whilst it’s very interesting to give examples of policies from either side, they must be related to the appropriations. That’s the debate we’re having.

Hon TIM MACINDOE (National—Hamilton West): I must admit, I am very partial to a fine drop of sauvignon blanc from the Hon Dr Nick Smith’s Nelson-Marlborough area, and I’ve been spending the last few minutes trying to work out how I can work into the appropriations debate a bet that Dr Smith will take with me that he’s bound to lose, where I will cash in on one of those trials. But, anyway, I will move on.

For those who are listening outside the House, they may not be aware of the fact that this isn’t just a debate about housing; it is the social development and housing theme that was looked at by the Social Services and Community Committee. So I think, having had a good run now on housing, it’s probably appropriate if we turn our attention to aspects of the social development portfolio.

Unfortunately, I didn’t hear the appropriations review for that particular committee, because I’m no longer on it—I was in my early years as an MP. I have to say it’s an area that is particularly dear to my heart. I want to focus on the fact that the current Government—and the Minister for Social Development, Carmel Sepuloni, is in the chair at the moment—has signalled major changes to our welfare system, particularly in the area of obligations and sanctions. I would like just to focus on where we’ve been and where we’re going and highlight just how important that is.

I think something we can all agree on is that the hallmark of a civilised society is how well we look after the most vulnerable members of it, because there’s no question that the welfare system—which is, surely, relevant in this appropriations debate—of which you, Madam Chair, are a very fine former member—

CHAIRPERSON (Hon Anne Tolley): Don’t bring the Chair into it.

Hon TIM MACINDOE: I do beg your pardon, Madam Chair. I’m desperately trying to show that I’m going—bring you into the debate. As I say, the welfare system needs to be able to cater for a very large group of people who, in many instances through no fault of their own, have fallen on hard times. They may have suffered a significant setback or there may have been a major downturn in industry in their area—for whatever reason, they need the welfare system.

And yet the quid pro quo of that must be, for it to be as generous and compassionate as we all want it to be for those who desperately need it, that nobody is abusing the system. So when we hear the current Minister, as she did on The Nation on Saturday, in an interview in which she said very little and went all around the tracks—

CHAIRPERSON (Hon Anne Tolley): Look, it’s really interesting, but will the member come to the appropriations and talk about the previous six months but not policy that’s going on into the future.

Hon TIM MACINDOE: Right, I’m sorry. The reason I mention this—OK, we’ll go back—is that in the previous six months we have seen the success of the previous Government’s policies: we have seen that unemployment has come down substantially, we have seen that we have a record number of New Zealanders now in employment, and, most importantly, we have seen the success of the social investment policy that was followed, and was still in operation up until the change of Government, initiated by the former finance Minister and latterly Prime Minister, the Rt Hon Bill English, for which I believe he will be very warmly remembered in New Zealand’s history.

Throughout the last decade, New Zealanders have seen some of the toughest times imaginable. Mr English’s driving philosophy was to say, “We will be there for those who need that support, but we need everybody who’s running a programme to show us how it works, we need them to be accountable for every dollar of taxpayer funding that they are spending”—because, after all, social development is one of the big Budget areas for any Government—“and we need to be able to see that it is making a real difference.” It’s not about bean counting; it’s about showing what a difference can be made in people’s lives to get them out of dependency and into the best form of social security that is possible—and that is paid employment: the ability to become self-reliant, for people to be able to look after themselves and their dependants through meaningful work that is paid, rather than for long-term dependency to be the norm.

For far too long, we have seen the trap of intergenerational welfare dependency seeing too many New Zealanders cast aside. I really worry that with the change of policy that is being signalled from the approach that had been taken, we’re going to go back down that track. So it is worth noting just how significant the previous policies have been. I commend the previous Government for that, and I urge the new Minister not to set it aside.

Hon CARMEL SEPULONI (Minister for Social Development): I thought this was the time to respond, given that the Hon Tim Macindoe had brought it back to social development. I want to start by referring to Tim Macindoe’s reflection on the previous Government in inferring that they were successful. I want to reflect on some of the figures in the appropriations that really demonstrate lack of success.

I want to start with the hardship assistance figures. In the December 2017 quarter, we had 290,070 hardship assistance payments compared to 252,000 in the previous December quarter. That’s an increase of nearly 40,000 hardship assistance payments. The main reason that people were seeking those hardship assistance payments was food—was food, the Hon Tim Macindoe. Then, after that, it was housing. Food and housing—a massive increase in the number of New Zealanders needing support from Work and Income, from the Ministry of Social Development (MSD), for the basics.

That doesn’t sound like the mark of success to me—or to this Government. So, when reflecting on that, we need to think about what’s been said already in this debate, and that has been the issues around housing that have been touched on by many of the previous speakers and the impact that that has had on people’s ability to do the basics—put a roof over their head and food on the table. And it’s real—that housing shortage is real. We have seen the demand for emergency housing and hardship assistance grants at MSD be driven up because of the fact that people are struggling to pay the money they need to have a roof over their and their families heads. That, for me, is not a mark of success.

We saw under the previous Government that the complete focus was on their Better Public Services target of reducing welfare dependency, with no real regard for whether or not people were going into work, whether or not people and their families were better off—just the mark of success being if they weren’t on benefit then, therefore, that was a good result for a Government. Well, quite frankly, that wasn’t good enough. There were no checks in place to make sure that those families actually were better off, and then, when you reflect on the fact that the hardship assistance was going up, well that actually shows that there were a whole lot of people that were worse off under the previous National Government—worse off despite the fact that they still tried to sing from the rooftops that success was about pushing people off benefits.

I do want to reflect on that, because it’s really important to touch on it. I also want to talk about the fact that Mr Tim Macindoe touched on welfare reform and the overhaul that we have planned moving forward, because it’s important to contextualise, when looking at the appropriation of the year gone by, why we need to do that. The reason we need to do that is because we need to have a focus in our welfare system that is absolutely around the fact that it has to be about people being better off—about individuals’ well-being—a different approach to the National Government whereby, with their social investment approach, it was about making sure that people were not fiscal liabilities to the State. Instead, from this Government, making sure that we do everything that we can to maximise the potential of all New Zealanders—a very different focus from this Government compared to the previous one, but I have no doubt that we’ll gain much better results, because a deficit approach never works, and that’s what we see undertaken by the previous Government.

We see other things that are of concern with respect to the previous Government. One of them that came up in the appropriations was the massive increase in sanctions that were imposed on people that were going through the welfare system—a 30.1 percent increase in the December 2017 quarter compared to the year before; a 30.1 percent increase in the number of sanctions that were imposed on New Zealanders. Did that help New Zealanders be better off? Well, no, it didn’t, because we still see New Zealanders suffering from food insecurity and the inability to access appropriate housing. So how did imposing a 30.1 percent increase in sanctions improve the lives of New Zealanders accessing the support of MSD?

All of this is really important to reflect on, and I think, actually, it shows very clearly that the assertion made by Tim Macindoe that his Government was a success is absolutely incorrect.

MARAMA DAVIDSON (Co-Leader—Green): Firstly, for clarity, Madam Chair, I’d like to ask if I am able to traverse both the social development part and the housing part in one debate? [Madam Chair nods] Thank you, Madam Chair. My goodness, because there’s a lot to traverse, to be honest, and they’re all connected, and this is the thing.

So in the appropriations in the annual review for the previous year, what we saw—what we saw—from this previous National Government was a running of our services to the ground. That came through in the appropriations in terms of putting surplus before services, putting a reach for a Budget surplus before ensuring we have got sound, strong, adequate services to make sure our people are well, to make sure they can live in an affordable, safe home that’s not going to make them sick, and to make sure that people have a enough to live decent lives, if they are going to a Work and Income office to try and get the support they need. In the appropriations, we actually saw the previous National Government, in the way that they distributed investments in resources, upholding the degradation of people. That’s what came through in the appropriations.

So I want to pick up that in the previous year—in fact, early this year, and from the last year—we saw an example of how those appropriations played out with a report from the Manukau Auckland University of Technology: a professor who let us know that the transience—the situation of people having to move and move and move and move is appalling and disgusting for this country. For instance, women in particular are impacted on. Women with children are impacted on. Māori and Pacific women were moving up to seven times in three years from home to home because the previous appropriations have not made a difference in terms of making sure that people can stay put, and that the supply—that investing in enough State housing, especially while we’re in the middle of a homelessness crisis, and making sure that we are building enough homes to meet the demand of what is happening. None of that had happened, and for a long time it hadn’t happened, and, in actual fact, I want to stipulate again, this previous National Government left a shortfall of 71,000 houses nationwide and 45,000 short in Auckland.

But here’s the thing, here’s the rub: that shortfall grew from nearly zero from nearly 10 years ago. So that shortfall continued in the previous appropriations, and the annual review did not make a meaningful impact on that. And what did that look like on the ground—what did that look like on the ground? It looked like people lining up outside of Work and Income in my community, in Manurewa, and elsewhere around the country, and, in Auckland, a young mum with her newborn baby who got into that line at 7 a.m. in the morning in the middle of winter purely to try and get extra for what she needed because of high housing costs that the annual appropriations did not sort out.

What must it take? Can any of us in here relate to what it must take for a young mum with a newborn baby to get up and line up at 7 a.m. in the morning to try and get some help for what she needs? That’s well beyond what—I think it was—Mr Tim Macindoe referred to as “dependency”; that’s us gone wrong, that’s what that is. We didn’t sort that out, and, certainly, the previous annual appropriations did not sort that out at all. So, we’re going to change all of that, because, first and foremost, this is a Government that understands that it is the well-being of our people that will create a strong economy, and those are the appropriations that we are putting in place.

Also, I’m pleased to say, I’m proud to lead, with Minister Phil Twyford, one of the areas where we can improve homeownership, which is with having a rent-to-own or progressive homeownership scheme, which is part of the Greens’ agreement with Labour. I’m proud to say that those are the sorts of appropriations that should be being made. That’s the agenda that we need to see in these annual reviews, and with this Government, it is understanding what is important to get our economy, our societies, and our environment right, and that we put those at the centre rather than surplus at all costs, which is what we saw in the nine years, but especially in the previous annual review of appropriations.

So, I’m proud to stand here today, and, again, lay that commitment in the ground—that this Government is turning the degradation on its head and we will be committed to putting in place the real appropriations that will make that work. Thank you, Madam Chair.

SIMON O’CONNOR (National—Tāmaki): I’m quite pleased actually to bring this discussion back to the appropriations and discuss what’s actually happened, but I can’t resist perhaps giving that member—granted, a list member—some advice on electoral approach, and particularly to do with the Ministry of Social Development (MSD). I would have suggested to that mother, having worked in MSD, actually, to not start queuing at seven in the morning, seeing as the doors probably don’t open until nine—

Marama Davidson: Yeah, that’s how long they had to queue for. My goodness. Come and visit. You’re welcome to come to my community and visit. Come.

SIMON O’CONNOR: —and also to get on the phone, actually, and book an appointment so that she could actually go in. So we’re hearing yelling, of course, from that member because she’s never worked a day in her life in MSD or knows how the processes work but just likes to take someone’s story.

And I completely agree with Tim Macindoe about the culture of dependency which is created, and that’s why the Government, in its appropriations, delivered and discussed in this House, absolutely showed a commitment that hasn’t been discussed here today—actually the millions and millions of dollars that the Government had set aside to increase the incomes of New Zealanders, particularly those reliant on social development funding. That sits, of course, in the background of this being a National Government; the first Government in 42 years to raise benefits. And it’s funny because we always get, from the left and those now in Government, how much they care, but it’s funny that when they are out of power they talk a big game, but when they’re in power nothing really happens. It was a National Government, I remind this House, that was the first in 42 years to raise benefits well beyond the Consumers Price Index.

But, in terms of these appropriations, again we’re hearing from the other side that nothing happened. The family tax package was something that was appropriated—an increase in Working for Families, an increase in the accommodation supplement, an increase in Working for Families—and, really importantly too, an appropriation in the last cycle around emergency housing.

There was lots of, well, sort of waxing lyrical up to the election about homelessness and the terrible crisis. Why I mention that is for two reasons. First and foremost, it was funny how, the day after the election and after many in the media’s leftist mates got in, that all of a sudden the crisis seemed to disappear. Secondly, of course, they’ve all forgotten, actually, the millions and millions of dollars that was appropriated to put in to emergency housing. It was actually the National Government, and in the social development context, that was supporting emergency housing.

I think also important in this area, and I say this as now the associate spokesperson for housing, particularly in social housing, the National Government was a Government that was looking, in its appropriations, to work with the sector to fully support people. See, housing is not simply about a roof to put over one’s head; it’s actually about trying to put in those wraparound supports—one can look at what Barnados, what the Salvation Army, and certainly what the likes of VisionWest Community Trust are doing. So it’s not only supporting them to provide a house to become a home but also the support that is necessary. And we’ve heard, from the other side, that’s it’s once again the simple leftist progressive approach: just throw some money; give people whatever they want without question or consequence. Actually, our appropriations, as we worked them through, were there to support people: to help them around budgeting if they needed further social support and services, to teach them financial literacy, and to help guide there.

We heard from the Hon Nick Smith again about the work that was done around insulation and smoke alarms. Those were elements appropriated as well in 2017-18. I repeat these in the House to refute the allegations that keep being yelled across at us that nothing was done; that the National Government, in the 2017-18 appropriations, did not consider anything. One only needs to look at the insulation increases to all State houses and to smoke alarms to see that.

There’s also been all the talk about the selling of State houses. Personally, I’ve got absolutely no problem with that, and I say that as the member of Parliament for the proud seat of Tāmaki. I look to the areas of Glen Innes and Panmure. In fact, it was a Labour Party decision many years ago, and picked up more recently by National, of transforming that community. For us as a community there in Tāmaki to build these warm, new, dry houses, which the community are loving, we actually have to sell some State houses. You can’t build new houses if you haven’t sold off some of the old ones. So it’s an easy rhetorical flourish from the other side to say it’s terrible to have sold them but, actually, in selling some State houses it has provided us, including through these appropriations, the opportunity to build those amazing new, warm, dry homes. I encourage—I’ll say “most of”—the members on the other side to come to Tāmaki to check out these amazing new homes. I say only “most of” because I suspect some who may be speaking after this will already be well experienced in the amazing work of the Tāmaki Redevelopment Company.

Hon JENNY SALESA (Minister for Building and Construction): Madam Chair, thank you for this opportunity to speak on the annual review of Housing New Zealand, and I’ll also cover social development as well, but I’ll begin with Housing New Zealand.

Housing New Zealand Corporation in 2016-2017 recorded a surplus of $65 million, and in the year prior to that, in 2015-2016, it was $134 million. But when you look at this appropriations report a little bit later, what they cover is payment of dividend. Now, one of the things that the previous Government did, and I quote, “Under the Housing Corporation Act the corporation is required to pay its annual surplus to the Crown unless”—and I must emphasise that word: unless—“the responsible Ministers authorise otherwise.”

Now, we know that over the last nine years when the previous National Government was in Government for most of those years, Housing New Zealand Corporation was required to find a surplus, and this surplus was paid back into the Government’s coffers. We know that for a whole lot of our State houses, utilising some of that money—as Housing New Zealand Corporation is right now—to ensure that the houses are well maintained and that they are warm dry and healthy, was not done. I’m happy to say, though, that that is what is currently being done now under this current Government.

I have to reflect on both the previous speaker and the former Minister of housing, Nick Smith, who spoke about how he was proud of the previous National Government’s record on housing. Can I say that when you have record homelessness, when we know that Aotearoa New Zealand has the worst rate of homelessness now, and when we are No. 1 for homelessness when compared to the other OECD countries, I would not be proud of that particular record. That is a record that none of us should be proud of: the fact that we are short by 71,000 houses across all of New Zealand; the fact that in Auckland, our largest city, we are short by 45,000 houses; and the fact that we know there are still so many of our families that do not have a roof over their heads.

Can I go back and reflect on 2016-2017. One of the things that I as a local member of Parliament and many other colleagues from this side of the House tried to ensure that the Government at that time was aware of was the fact that we actually had a housing crisis. This was something that we acknowledged when we were in Opposition, and it is something that we still know today as a fact, which is one of the reasons why we’re saying that we will do this KiwiBuild. One of the things that the former housing Minister was talking about was the fact that we would only be building several thousand homes. The Hon Nick Smith didn’t then say that the thousand homes that the housing Minister is talking about is 1,000 KiwiBuild homes. That is not counting the houses that Housing New Zealand Corporation is building. That is not counting the houses that private developers are building right now, only the KiwiBuild homes, and the year after that it’ll be 5,000 KiwiBuild affordable homes, and in the third year 10,000 KiwiBuild affordable homes.

But can I go back to the fact that we have a housing issue that we are addressing. After nine years of the previous Government, we have been landed with so many issues. Housing is one of them; homelessness and the fact that we are having to—one of the points that my honourable colleague who has given a speech also mentioned was the fact that we are now no longer selling off State houses and that we should look at Glen Innes, and Glen Innes is a good example. The same time that the previous Government was selling off the State houses was the time that they were also investing in motels.

Now, when we look at the social development part of this annual review we see that the demand, in terms of social housing, exceeds supply in many communities. We also see, covered in there, transitional housing. Now, the fact that in 2016-2017 we had to invest in so many emergency houses and transitional houses was because we were not catering for the numbers of houses that our people need, because the previous Government was selling off State houses.

Hon TRACEY MARTIN (Minister for Children): Kia ora, Madam Chair. Thank you very much. It’s an honour to speak in the annual review debate. I’d just like to actually speak about Vote Vulnerable Children, Oranga Tamariki. I want to acknowledge the Hon Anne Tolley. I want to acknowledge the Budget bid that she obviously put in and managed to fight for inside the Cabinet that she sat in at the time that she created Oranga Tamariki, which we all know has just celebrated its first birthday.

Around about $50-something million was set aside for Oranga Tamariki and its creation in the last financial year. We need to acknowledge the fact that the expert advisory panel said that for the creation of this new department to truly deliver what is needed to be delivered, the change that needs to take place, the transition that needs to take place, the extension of the age that was passed in legislation during the same financial year so that all young people under the age of 18 would still be part of Oranga Tamariki’s care and observation that was with the lifting of the youth justice age—this organisation would need $500-plus million to do what it needed to do. It has to be acknowledged: I have no doubt the Hon Anne Tolley went inside that caucus and fought for the money that the expert advisory panel said was going to be needed to be delivered to change the operations that actually deny some of our children in most need, which was $500 million, but she was able to get secure 50—I think $54 million.

So, that’s $54 million. Well done her. It was obviously a hard fight. But it was woefully short of what was needed. And this was the previous Government in the previous Estimates saying that they were doing so much to protect these children. The vision was a good vision. The pillars that were set into place under Anne Tolley were good pillars. Unfortunately, the funding was not there to deliver on the operating model that needs to be placed around this organisation. The funding was never secure. There was no contingency. There was no forward planning. There was no decision made when this idea, when this vision, was put down on paper about how it would be funded by the previous administration. So that’s unfortunate.

But what Oranga Tamariki has done in the year that it’s been in existence with the money that was secured under the previous financial year is that they have begun that transition. This Government will have to take many major decisions over the next six-month period. We will have to find the money that the previous Government did not set aside so that we can ensure that New Zealand becomes a place where when the State has to support families, when the State has to uplift and take care of children, that we are able to provide both those children and their families with the best possible outcomes for them and their circumstances.

We also need to make sure that those that are caring for these children are well supported, and that has been failing in previous administrations. We need to make sure that our youth justice facilities are trying different things so that we don’t have a churn through our youth justice facilities as we had before. The money that was set aside in this last financial year, unfortunately, went no way towards making sure that we could make those changes that we needed.

But again, just in closing, I want to acknowledge that Anne Tolley, in my view, obviously went into her Cabinet and fought as hard as she could to get the money that she could in the previous financial year. There were some hard decisions made. She made them. She started to make that circuit breaker that we needed, and with the small amount of money that she had and that the organisation had, they have moved forward. There are some things that we need to be proud of, but going forward, there will need to be certainly a lot more focus around the finances and the resourcing that will be needed for these children. Kia ora.

JO HAYES (National): I just want to say to the previous speaker, Tracey Martin, that we’re pleased that the Government is carrying on with Oranga Tamariki. It’s an amazing project. It’s an amazing policy, and so many things over the last 12 months have had to happen to actually set Oranga Tamariki up in a way that it could move forward. So I say thank you to that Minister.

I want to talk a little bit around the social development side. On this side, we view welfare and benefits as something that should be able to help people when they are in times of need. That’s what this side of the House sees. We don’t see it as something that should be of a right, but we see it as something that should help people when they are in need, to actually help them to get to the next place, to get them back on their feet again and to move forward in their lives. This side of the House isn’t about telling people what they want. It’s about listening to people on their needs, and many of the things that we have done in 2016-2017 have been about that.

Social development is a huge portfolio. It deals with everyday people’s lives—people that really desperately need that help. One of my whanaunga who was an ex-Minister of this House, the Hon Sir Apirana Ngata, once said that when welfare was being discussed in the House in those times, he didn’t really support it. He felt that welfare would be the ruination of our Māori people, and maybe in some aspects it has been. But, in saying that, I just want to say that we understand on this side that there are times and places where people need help, and that’s what this side of the House was about when it came to social development.

Just some key facts around the 2016-17 period: unemployment to the September quarter was 4.6 percent. That was the lowest unemployment rate since the global financial crisis in December 2008. That’s amazing considering all of the issues that New Zealand faced from 2008—made of other people’s makings, but we had to actually bear it. So to get the unemployment figure down to 4.6 percent was an amazing feat of this side of the House as we led Government. Some of the things around hardship: the number of kids in material hardship had fallen to nearly 40 percent since the global financial crisis, to 135,000 in 2016. The Ministry of Social Development reports no evidence of any rise or fall of household income inequality over those last two decades.

Welfare: nearly 60,000 fewer people were on job seeker benefits than in 2010, over the period—

Hon Scott Simpson: How many?

JO HAYES: Sixty thousand fewer people on job seeker benefits than in 2010. The number of people on sole parent benefits: the lowest data collected was 27 percent lower than 2008.

Hon Scott Simpson: Hugely impressive.

JO HAYES: It was, because a number—and I met a number of those sole parents that had come off the benefit and were making their way in the working world. It’s not easy when you have to move off something that has been regular in your life, and I get that. I get how hard it is for sole parents. I was a sole parent, so I know how hard it is to actually cut loose and make it on your own and go out and get work and do all of those things while still bringing up a child. So I get it, and I got what those young women were telling me.

There were 57 percent fewer teen parents on a benefit than in 2009. That’s really good, because to be a teen parent is very difficult in today’s society. It’s difficult anyway, but in the pressures that young people face today, teen parenting isn’t exactly where they should be at. They should be in education; they should be moving towards getting their career sorted and not having to worry about having to raise a child when they are a child themselves.

So the number of benefit recipients per thousand population has been the lowest since 1988, and this side of the House is very proud of all of those particular statistics. I could go on and on and on, but I won’t.

Hon PEENI HENARE (Associate Minister for Social Development): Tēnā koe, Madam Chair, and thank you for the opportunity. The member who just resumed her seat, Joanne Hayes, spoke of one of the famed fathers of the House here, Sir Apirana Ngata, and, actually, what he meant in his deliberation around the dependency of our people was actually an attempt to address the inequities that Māori people were suffering at the time. One only need read the book called The Price of Citizenship to see that, actually, while they didn’t want Māori to fall into dependency, all they wanted was for them to get what they deserve—simply, addressing the social inequities that plagued Māori people in his time and, in the annual reviews, continue to plague Māori people today.

I want to touch on some of the points that that speaker raised, in particular around unemployment. I want to highlight that in the time of the former Government, in the past year, Māori unemployment has sat stubbornly at double digits. In fact, the last time it was in single digits was under the stewardship of the great Parekura Horomia, who we remembered just not too long ago, and the Labour Government under the Clark regime. It saw Māori unemployment in single digits. Under the last regime, and in particular in the last year, Māori unemployment has sat stubbornly at double digits. In fact, it sits around 11.8 percent.

But I also want to highlight, as the Minister for Youth—I want to acknowledge that also in the category of unemployment are, of course, “neets”. I hate using that term, because, as we travel in and around the country, they don’t want to be called “neets”. They’re young people who have unlimited potential and aspirations for themselves, and the label “neets” really is a bureaucratic term that I hope that outside of this House we don’t use too often.

But let’s rattle through some of those numbers. The talk was about making sure that we bring unemployment numbers down and benefit dependency down, but let’s face it: more young Māori and Pacific peoples have been affected. In fact, Māori are 19.5 percent unemployed “neets”, Pacific peoples a close 17 percent, Asian 10.4 percent, European 10.2 percent, and the average is 12.1 percent. Over the past year, despite the rhetoric and the claims to have addressed the issue of youth unemployment, or “neets”—those who aren’t in employment, education, or training—nothing has been done. In fact, the number of “neets” increased over the past year by approximately 4,000—4,000.

So while the previous Government might talk about how we’ve reduced benefit numbers by thousands and we’ve seen people walking out the doors with their pride and aspirations to go on and live meaningful lives, the fact remains that there has been an increase over the past year of 4,000 “neets”—4,000. That’s a heck of a lot of young people who aren’t in employment, education, or training and continue to receive assistance from the Government. So despite the claims from the other side of the House of how well they’ve done, there is still a significant issue there.

But just to bring it into today’s context, I am excited to be a part of a Government that are going to address these. We’ve got some policies coming up, and I’m looking forward to seeing them roll out across the country.

Just in the brief time I have left, housing is of course one of those big issues. We know that for social prosperity, for economic prosperity, for educational prosperity, and for prosperity in general for families, it all centres around a rock, and that rock is, of course, a family home. My colleague the Hon Jenny Salesa talked about the great dividend that was achieved by Housing New Zealand in the discretion of the Minister about what happens with that particular money. Well, what’s clear in the annual reviews is, of course, that money was spent on hotels and motels—hotels and motels to house our people, the most vulnerable, who, in trying to address the issues that they face, we’re saying a house is one of those crucial steps to make sure that you can achieve your aspirations.

So what’s happened in the past year? The Government purchased motels and hotels. That’s a shame, because if we are true about trying to meet the aspirations for our families, for our young people who are just looking for opportunities out there, putting them in hotels and motels isn’t the answer. It says here that 12 weeks is the average stay of a family in a hotel or motel. Well, that’s 12 weeks far too long. In fact, I know of many cases that have been well over 12 weeks—in fact, rolling into six months and even longer—and that’s not good enough. But don’t worry; this Government has a plan.

GREG O’CONNOR (Labour—Ōhāriu): Thank you, Madam Chair.

CHAIRPERSON (Poto Williams): Excuse me—sorry to interrupt the member. Just before I ask you to resume, you are going to speak on this particular sector? I’m just wanting to make that clear.

GREG O’CONNOR: Yes, Madam Chair. I’ll be careful to make sure that my words are directed there.

CHAIRPERSON (Poto Williams): Thank you.

GREG O’CONNOR: In fact, I just talked about, as a new member going through the first year of all the milestones, that it was actually a great pleasure to sit through these and examine the Government departments, the various very hard-working public servants that came through. As I did so and heard people who were essentially answering questions—and I’m reminded of what I’ve heard today here in the House from my colleagues—I sort of almost thought I’m living in somewhat of a parallel existence. You know, the people over there, they’re good people and I hang on their every word. I’m sure they believe everything they have said today, and if you sat there to listen, you would think we do live in paradise, that we do live in a rock star economy. So my previous training just makes me think perhaps we should look a little through that.

The reason they do believe that is that there was only one goal from that previous Government. The rock star economy—unfortunately, it’s fine to have a concert where the rock star’s paying, but if no one can afford a ticket to the concert or no one is welcome, then it’s going to be a pretty small, sad, elite concert. And I think that’s what has actually happened—goals where we talked about things like Better Public Services (BPS). Well, my experience of Better Public Services was simply cheaper public services, and while we did speak to the chief executives, while we did speak to the various public servants that came through, one of the questions that very much came through from those on the other side of the table was to ask about Better Public Services, about targets.

The general theme of the questioning was that nothing will happen without these very strict stipulated targets—the whole world would stop. As we sort of asked those questions of the various public servants that came through, there was something of a look that came on their faces—a look of “Are we allowed to tell the truth here?” When we did dig down further, clearly there was a belief that those Better Public Services, by breaking down everything that the Public Service does into something measurable—something we can feed back, something we can all feel good about, something we can believe where we’ve achieved that little target and therefore the world is a wonderful place—it was quite clear that the achieving of those Better Public Services targets became the end in itself.

As I sat there listening to those fine members on the other side, they do believe that by looking at what the targets achieve, then it must be all good; we must be in the state of nirvana. Unfortunately, I then sit and look at the figures that have come through. I won’t go through them all, because they’ve been spoken about several times today. But can they believe that we’re not short of houses, that we aren’t 71,000 short? Well, we are 71,000 short. The Hon Nick Smith talked about how wonderful the figures were. Well, again, if you sat back and listened to those figures, you’d say, “What am I worried about? I might as well go and have an early tea now because things are fine. We’ll leave it to the Opposition to run this because we don’t need a change of Government.”

However, it became apparent, as the various departments came through—and I talk about housing; I talk about those who came through from the Ministry of Social Development, the Ministry for Vulnerable Children, Oranga Tamariki—as we questioned further down and saw a release from the strict BPS targets, that there was the realisation that this Government is going to require outcomes. It’s not going to be, as a friend of mine who started a business believed, that if he just worked really hard it wouldn’t matter; the hard work in itself would result in success. Well, it didn’t. You have to be clever about what you’re doing, and BPS weren’t clever.

I know, in my own department that I was working in before I came here, that by what they did, by focusing on things that the Minister wanted and ignoring the important things, then we have a result. For example, in police, the methamphetamine and gang problem is a direct result today of not actually allowing those who knew what they were doing to actually do what needed doing but to give them fine and specific targets. So, again, as I sat listening as part of the whole appropriations, I am confident that next year you’ll see a range of public servants coming through empowered and confident that it’s the result that matters.

PAUL EAGLE (Labour—Rongotai): Madam Chair, thank you very much for the opportunity to take a call on this, the appropriation for social development and housing. What a year 2016-17 was. I was leading the housing portfolio for the Wellington City Council, which included social development also, so can I say it’s a wonderful opportunity to reflect on the experience on behalf of ratepayers, taxpayers, and everyone else that these guys, the Opposition, served on the New Zealand public, from a Wellington perspective at least.

I want to focus on the Better Public Services targets. It’s been talked about. It was result area No. 8, and it talked about better access to social housing. I guess this was the start of where things went horribly wrong. If you look at what was the previous Government, they didn’t have a housing Minister for a long time. Instead, it was split over three portfolios, and that sort of reflected on their narrow, just dismissive approach to housing in general. Can I say, having to deal with the then Government from the other side as a key stakeholder in the process, it was tough stuff. We, then the Wellington City Council, wanted to have a housing conversation about the full continuum: housing supply, and I’m going to focus on that today; homelessness; social housing; cold, damp homes; and homeownership. When we tried to have such conversations we were regularly referred to the Better Public Services document. But, as I said, it only talked about better access to social housing.

To cut through all the waffle in that document, as a lot of it was, the reality really for social housing was to set up—and we heard a member of the Opposition talk about it—to transfer or to give away, really, the stock to other people. We saw then how the Salvation Army, the then Salvation Army, said, “No thanks, not us. Don’t quote us in the media. We’re not interested.” So there was this sort of quasi - Crown council operation set up, the Tāmaki Redevelopment Company, but really it was just a halfway house for transferring most of the social housing in that part of Auckland to an entity that would undermine, in fact, the Housing New Zealand Corporation, the Government’s own property company, because it had become that. I say that, as a property company, because they had taken the people focus out of that business and transferred it to the Ministry of Social Development. What a mess. I mean, I’d never been confronted with such a messy, dismissive, and just an unappreciated part of a core Government business, and that is the provision of housing.

Look, the stats are there around housing supply, and they talk about the need for 71,000 houses. Interestingly enough, nine to 10 years ago, the need for houses was sitting at nil, but what do you know? Ten years on, and from a Wellington perspective, it sat at about 6,000 homes; 4,500 of those being social housing, a portion of that being for temporary and emergency housing. But, none the less, the only mechanism during 2016-17 that could be brought fought for consideration was the HASHA Act, the Housing Accords and Special Housing Areas legislation that was meant to bring more supply. It was developed for Auckland and really imposed on local government throughout New Zealand, because if you didn’t pick it up and you didn’t take it on board, you were given the cold shoulder. That’s how it felt when we had to retrospectively approve a housing accord that had no percentages in for affordable housing. When you actually unpick what the special housing area legislation is all about, you’ll find that very few houses were actually built.

I could speak for hours on this, but I won’t. What I will say is that I’m really glad that we’ve got a whole raft of new home building happening across Aotearoa, New Zealand. Thank you, Madam Chair.

Reports relevant to the Social Development and Housing Sector noted.

Clauses 1 to 9 and Schedules 1 to 5 agreed to.

House resumed.

Bill reported without amendment.

Report adopted.

Bills

Appropriation (2016/17 Confirmation and Validation) Bill

Third Reading

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

Bill read a third time.

Bills

Brokering (Weapons and Related Items) Controls Bill

Second Reading

Rt Hon WINSTON PETERS (Minister of Foreign Affairs): I move, That the Brokering (Weapons and Related Items) Controls Bill be now read a second time.

Now, thanks go to the Foreign Affairs, Defence and Trade Committee for its careful consideration of the bill. The committee has recommended that the bill proceed with a number of amendments. The fact that it has come through the select committee probably is pure serendipity, despite the talent of the chairman.

Could I just say, the bill establishes a regime to regulate the brokering of arms and military equipment from one foreign country to another by New Zealanders and New Zealand - based entities. Brokering involves negotiating, arranging, or facilitating the international transfer of arms. Establishing appropriate oversight of brokering transactions will prevent New Zealanders and New Zealand entities from brokering arms and military equipment where there is a risk that these items will end up in the wrong hands or in undesirable locations, such as conflict zones or countries subject to United Nations arms embargoes.

This bill supports New Zealand’s commitments under the Arms Trade Treaty, which regulates the international trade in conventional arms. Under the treaty, New Zealand is required to regulate the brokering of conventional arms that takes place within our jurisdiction. The bill will also support implementation of New Zealand’s commitments under the four international export control regimes in which New Zealand participates, which recognise brokering controls as a valuable counter-proliferation tool.

New Zealand currently has a voluntary registration scheme for New Zealand - based brokers. This bill will put in place comprehensive legislative controls on brokering. The bill requires New Zealanders, New Zealand ordinary residents, and New Zealand - based entities wishing to broker international transfer of arms, military equipment, or civilian goods that may have a military end use to, first, register with the Secretary of Foreign Affairs and Trade, and, second, obtain a permit for each brokering activity. The secretary may grant permits if satisfied that the brokering activity is consistent with New Zealand’s international obligations and would not prejudice the security, defence, or international relations of New Zealand. The bill enables appropriate conditions to be placed on a broker’s registration or permit.

Given the cross-border nature of brokering, the regime will have extra territorial effect and apply to New Zealanders and New Zealand entities operating abroad. The bill creates offences for breaching the requirements under the bill, including carrying out brokering activity without being registered as a broker and having a permit, breaching the conditions of the registration or permit, failing to keep or produce records or answer questions, and providing false or misleading information in connection with their registration or permit.

Given the extra-territorial nature of the brokering regime, the Attorney-General’s consent is required for any prosecution under the bill. This requirement provides a safeguard to ensure that only appropriate cases proceed to prosecution. The bill also enables civil penalties such as formal warnings, enforceable undertakings, and injunctions to be imposed in appropriate cases by the Attorney-General.

Turning now to the committee’s work, the committee received nine submissions on the bill. Most submitters supported the bill but recommended that a number of amendments be made—in particular, to provide greater clarity on the jurisdictional scope of the bill and the operation of the offence provisions. The committee has recommended a number of changes to the bill which, we consider, appropriately respond to submitters’ concerns. The majority of amendments are intended to provide greater clarity on the operation of relevant provisions and are technical in nature. A few amendments enhance the enforcement measures in the bill.

Now to highlight the main amendments proposed: first, the committee has proposed a new clause to outline the jurisdictional scope of the regime in response to submitters’ concern that the bill does not expressly specify who is subject to the regime, given the cross-border nature of brokering and the extraterritorial application of the bill. A new clause would make it more clear that the regime applies to brokering activity that is carried out in New Zealand and also by New Zealand citizens, people ordinarily resident in New Zealand, and entities incorporated or registered under New Zealand law regardless of their location. Second, the committee has recommended that the Secretary of Foreign Affairs and Trade publish the Gazette notice specifying the parts of the New Zealand strategic goods list that are relevant to the brokering regime on to the Ministry of Foreign Affairs and Trade website.

Third, changes are recommended to further clarify that the offence for carrying out brokering activity without being registered or having a permit does not reverse the usual burden of proof to a defendant and does not require a defendant to disprove an element of the offence. The structural and drafting changes recommended by the committee help to make the elements of the offence more clear and the statutory exceptions more easily identifiable as exceptions to the general requirement to register and hold a permit for the brokering activity.

Fourth, changes are recommended to some of the exceptions to the requirement to register and hold a permit for the brokering activity. These include clarifying that before a person can rely on the exception for brokering dual-use goods that person must take reasonable steps to ensure that the end use of those goods is not for a prohibited use as defined in the bill. Prohibited use for dual-use goods is use towards a weapons of mass destruction programme or any other “military end-use”—narrowing the exception for employees who conduct brokering on behalf of their employer to situations where an employee has reasonable grounds to believe that their employer is already complying with the brokering legislation in New Zealand or an equivalent overseas regime. This change strikes the right balance between protecting an innocent employee where they are acting in good faith and providing for accountability in the appropriate circumstances.

Fifth, the committee recommends a new requirement for registered brokers to submit an annual report detailing brokerage-transacted activities to the Secretary of Foreign Affairs and Trade as a standard condition of their registration. This will enhance enforcement of the brokering regime while appropriately balancing the privacy and commercial interests of registered brokers.

Sixth, the period for which brokers are required to keep prescribed records of their brokering activities has been increased from five to seven years after the end of the calendar year to which the records relate. This will be consistent with requirements concerning tax records, and it will enhance the enforcement of the regime.

Last, the committee recommends removing the application of the bill “to a person who has been found in New Zealand and has not been extradited.” This bill does not require foreign nationals with no physical presence in or link to New Zealand to be registered under the New Zealand brokering regime. This amendment clarifies that such individuals who carry out brokering activity elsewhere and subsequently come to New Zealand would not be liable for conducting brokering activities without previously being registered with the New Zealand Government or having a New Zealand permit.

And last, but not least—

Hon Scott Simpson: Hallelujah!

Rt Hon WINSTON PETERS: Hallelujah is right. I apologise to my colleagues for this rather boring delivery of a very important matter. It’s not really our want to have to read out a thing like this, but seeing as it is about a very serious issue in which fundamental human rights and legal rights are affected, it’s rather important that we get the record straight at least once.

In conclusion, this bill will put in place appropriate controls to prevent any New Zealanders and New Zealand - based entities from being involved in illicit arms brokering and will deter any illicit arms brokers from shifting their activities to New Zealand. We’ve seen the devastating and destabilising effect weapons and technology can have when they end up in the wrong hands. These impact individual security and freedom, inhibit development, and affect national, regional, and international security. New Zealand is a strong supporter of the Arms Trade Treaty and other disarmament, arms-control, and counter-proliferation efforts. This bill enables New Zealand to play its part in the international framework to address those concerns.

Could I just say again, thank you very much to the committee for their very responsible work and for fixing up some of the defects, which were pointed out by my colleague Ron Mark in the first reading.

The Brokering (Weapons and Related Items) Controls Bill is, thereby and therefore, commended to the House. Thank you very much.

Debate interrupted.

Amended Answers to Oral Questions

Question No. 9 to Minister

Hon ANDREW LITTLE (Minister of Justice): I seek leave to make a personal explanation to correct an answer I gave on behalf of the Minister of Energy and Resources to question No. 9 earlier today.

ASSISTANT SPEAKER (Poto Williams): Leave is sought for that purpose. Is there any objection? There appears to be none.

Hon ANDREW LITTLE: Thank you, Madam Assistant Speaker. On behalf of the Minister of Energy and Resources earlier today, I said that I spoke to Methanex before the announcement on Thursday, 12 April 2018. In fact, I should have said that officials spoke to Methanex on my behalf before the announcement. My first meeting—that is to say, as Minister of Energy and Resources—with Methanex was on Monday, 23 April 2018, although I do note that my colleague the Hon Andrew Little met with Methanex at his meeting in New Plymouth on the evening of Thursday, 12 April 2018.

ASSISTANT SPEAKER (Poto Williams): Thank you.

Bills

Brokering (Weapons and Related Items) Controls Bill

Second Reading

Debate resumed.

SIMON O’CONNOR (National—Tāmaki): Thank you, Madam Assistant Speaker. Very pleased to take a call as chair of the Foreign Affairs, Defence and Trade Committee on this Brokering (Weapons and Related Items) Controls Bill and to thank the Minister of Foreign Affairs for his contribution. As he rightly noted, these are elements which need to be put on the record to make it very clear to, obviously, the courts and others about what is critical here.

I want to thank all of those who have worked incredibly hard to bring this bill to the House and I want to acknowledge previous Ministers, as well. This was actually brought in at first reading before the dissolution of the previous Parliament. In noting that too, actually, I believe it was a New Zealand First intention to introduce this within the Customs and Excise Act, so I thank the Minister for delaying that and taking up this National Party - initiated bill.

My thanks also go to all the officials and advisers who helped the committee. While never taking away from the work that the MPs do on these committees, I think all of us in the House here would acknowledge the tremendous work of those officials, advisers, and the public too that come in to give us their thoughts—well, a massive contribution.

This bill is very particular. It is around the brokering of weapons. So, simply put and in a New Zealand context, it’s a New Zealander, be it a person or a company, that is, effectively, buying and selling weapons—brokering and trading in them. So they are not the manufacturers of these weapons. They’re the sort of person—just for the want of a very simple analogy—who will be, I don’t know, buying weapons from Russia and then selling those on, or brokering, to the likes of Syria, or it could be from Britain and into Germany or whatever. That’s what we’re talking about here. Why I mention that is a number of people were raising questions in the committee around, effectively, arms trading. That is separate to the brokering of weapons or the brokering of arms. This is about New Zealanders or New Zealand companies which are buying off an external entity and brokering—moving—those goods to another.

As the House might anticipate, the brokering of weapons is one of the more clever, if not disingenuous, ways that weapons are making their way into war zones. I had the good fortune, in fact, with Andrew Little and Ron Mark, at the start of this year to go to Iraq and Afghanistan to see our troops there, and as we took the various briefings from officers and commanders from most of the Allied countries, it was very clear that a lot of the weapons that had been used against those troops in Iraq and Afghanistan are brokered. But I’d better be very, very clear to the House that these are not weapons brokered by New Zealanders, as far as I’m aware. It’s just highlighting that this is a dangerous and problematic activity.

Again, it is not the sale of arms. There is legislation already on New Zealand’s books which allows that, so if a New Zealander is trying to buy—sorry. Well, to buy weapons—that certainly comes under some legislation. If a New Zealander, for some reason, is making and trying to sell weapons, that’s already covered by existing legislation. This, very simply, is around the brokering of arms. It’s also the domestic legislation required to bring about the Arms Trade Treaty, which New Zealand signed in 2014.

The select committee worked relatively hard on this. It was one of those bills that when it came before us, it looked, in a sense, relatively simple, but thanks to those who submitted to the committee, it became relatively clear that there were items that needed to be tidied up. The biggest one was just being very, very clear that this applies to New Zealanders, either those who are resident in the country or New Zealanders who are ordinarily resident but might be overseas. In other words, if a New Zealander brokering weapons decides to jump over to Australia or zip over to Italy and broker weapons there for a week, they would still be captured by this legislation. It also applies to entities and corporations, corporates, and so forth.

Importantly—and the Minister touched on this near the end—it does not apply to foreign nationals. That was something which we fleshed out and debated for a while. So if a foreign national is brokering weapons from New Zealand, that is a problem, but this bill itself doesn’t address it. Again—really importantly—New Zealand already has domestic legislation which will deal with instances like that. One amongst many is to extradite said person and send them back to their own country, where their brokering weapons legislation will kick in.

We also thought, as a select committee, that it was quite important that people have a really clear understanding of what is and isn’t to be brokered. It’s probably not a surprise to most people in this House, but the Ministry of Foreign Affairs and Trade has a rather exhaustive list of items which are deemed to be military and those which are dual use. A really simple explanation of that, of course, is if you are making semi-automatic weapons, they will be down as military-grade items and they are not allowed to be sent, sold, or brokered to countries such as—Syria comes to mind. However, there are dual uses, so guidance chips—well, actually, guidance chips for missiles probably only fit into that military-grade side.

A dual use might actually be Kevlar gear. You may actually be able to use it for military purposes, but the use of Kevlar in material may also be used in other, non-military purposes. So that’s what we’re talking about there. We thought as a select committee it was rather important that the ministry, through gazetting and then through to its website, list what items are, effectively, banned, what can and cannot be sold, what are known as strategic goods, and those which are dual use and which, ultimately, are military end uses.

We also wanted to make really clear a question around the burden of proof. The context of this is if someone in New Zealand wants to be involved in brokering—and, again, I suspect it’s probably important for the House to know and understand that we don’t have a large number of people brokering weapons in New Zealand, to our relief—but with this legislation a person is required to make themselves known to the Ministry of Foreign Affairs and Trade if they wish to be involved in brokering. Of course, if they’re not—if they don’t make themselves known—an offence is created. The way that the bill was originally drafted made proving that they didn’t know rather difficult. I’m no lawyer—there are much smarter legal minds than mine, of course—but it’s very difficult to prove a negative. You can’t prove you didn’t know. A person can prove that they knew something, but to prove that they didn’t know gets rather complicated, and I want to thank particularly the Office of the Clerk for initially noting this concern and allowing us, along with our advisers, to move through to a resolution. And I think the committee’s landed in a rather good spot there.

We’ve also, as a consequence of that, narrowed what the expectations are around employees. Again, the context of this: the employer—the person who, effectively, is doing the brokering—should know, should register, but there could be a question at times that an employee of that business did not know, for whatever reason, so we’ve tried to put a little bit of latitude in there. Again, we would expect the employer, the business, to be letting all their employees know, and so we’re not going to allow employers to get off scot-free by any means, but we’re just narrowing the exceptions there.

We also looked around annual reporting. It was one of the things we thought was relatively important—that if a person is going to register as a weapons broker, there should be a report annually to talk about what they have done. In many ways it’s just to marry up what they are saying they’re going to do with what they have actually done. That report’s to be furnished to the Ministry of Foreign Affairs and Trade, and we’ve left it up to the ministry to come up with, basically, what they want to do there.

Look, that’s pretty much the long and the short of it. I think the Minister used the word “dry”; it is one of those sorts of dry bits of legislation in and of itself, but actually it’s an incredibly important part, too. First and foremost, we don’t want to see New Zealanders involved in illegitimate brokering of weapons, but really importantly, too, I think we want to be seen as, well, an important and moral player in international affairs. So when we sign up to treaties like this, New Zealand needs to be proactive in getting them into our domestic legislation and supporting good humanitarian and legal approaches. So with that I commend the bill to the House.

Hon DAVID PARKER (Minister for Economic Development): I rise to speak in favour of this bill progressing at the second stage. Can I thank the members of the Foreign Affairs, Defence and Trade Committee, who have provided the report to the House.

The Deputy Prime Minister, the Rt Hon Winston Peters, has well described the effect of this proposed regulatory regime for the brokering of weapons and military equipment by New Zealanders. It’s unusual for legislation to regulate offshore activity, and this is one of those rare instances where New Zealand seeks to regulate the behaviour of New Zealanders when they’re out of the country, rather than having those New Zealanders just being, effectively, subject to the legislative code of overseas countries.

This bill applies to New Zealanders when they’re at home and when they or their entities are operating offshore, and it requires New Zealand citizens, New Zealand ordinary residents, and New Zealand entities wishing to engage in brokering to register with the Secretary of Foreign Affairs and Trade and obtain a permit for their brokering activity. As other speakers have probably already said, the secretary can only grant permits if he or she is satisfied that the activity is consistent with New Zealand’s international obligations, and, additionally, it doesn’t prejudice the security, defence, or international relations of New Zealand.

It’s a piece of legislation that is necessary to bring us into line with the multilateral trade agreement the Arms Trade Treaty—which New Zealand ratified in 2014—to regulate the international trade in conventional arms. As the select committee report notes, this flows from that international agreement.

This is one of those many pieces of legislation which enjoy broad support in the House. It’s seen by me as being almost—well, I was going to call it a housekeeping bill, but it’s not, really. It goes further than seeing to a tidy-up of existing legislation, but takes the New Zealand regulatory regime further and imposes obligations on those who want to broker weapons in either New Zealand or overseas jurisdictions.

A “weapon or related item” is a good that’s specified in a “strategic goods list”, which is defined in the bill as being on a list which is provided for under the Customs and Excise Act, and “brokering activity” is defined as people would ordinarily understand it to be. It’s, effectively, being an intermediary for the arrangement, facilitation, or negotiation of a transaction that involves the international transfer of weapons or related items—as I’ve already described—from a place outside New Zealand to another place outside New Zealand.

This is a sensible piece of legislation. The Foreign Affairs, Defence and Trade Committee were provided with advice from the Ministry of Foreign Affairs and Trade. They’re a very capable ministry, and very careful in the advice they proffer to the select committee.

There is a change recommended by the select committee in respect of offences committed outside New Zealand. There’s a deletion proposed to clause 33(1)(a)(iii) of the bill “so that the bill will not apply to a person who has been found in New Zealand and has not been extradited.” The select committee say that they didn’t think that this provision was fit for purpose within the context of the bill because “It would have treated an offence as one attracting universal jurisdiction.”, whereas “The offence in clause 10 relates to carrying out brokering activity without the requisite registration or permit in New Zealand, rather than prohibiting engaging in brokering activity per se.” So it notes that the committee understands that “foreign nationals with no physical presence in or link to New Zealand would not be registered under New Zealand’s brokering regime.” Therefore, they recommend deletion of clause 33(1)(a)(iii) of the bill.

There’s a record-keeping obligation that’s imposed. Obviously, in order to police these things, you have to require those people who are involved in this activity to keep records, and the committee recommends extending the obligation to keep records from five years to seven years, which seems a sensible recommendation.

That said, I will just simply recount that the application of this legislation in practice will be through the Secretary of Foreign Affairs and Trade. The secretary will probably delegate that function to others within the organisation at times.

The bill has been around for a little while. It was introduced on 27 June 2017. The committee reported back to the House on 29 March and has recommended unanimously, with the support of all parties in Parliament who sit on the Foreign Affairs, Defence and Trade Committee, which includes members from the Greens, as well as the Labour Party, New Zealand First, and National. Accordingly, I’ve got great confidence that this legislation that’s proposed for second reading should be passed.

Hon Scott Simpson: Only three minutes to go.

Hon DAVID PARKER: No, I don’t feel the need to waste the time of the House filibustering in the way that the National Party used to do, so I’ll sit down now.

Hon TODD McCLAY (National—Rotorua): Thank you, Madam Assistant Speaker. I thank the Minister for ceding the floor so that I can speak so early in this debate. Can I say, in looking at this, here’s another piece of legislation that a hard-working coalition of three parties is saying they are doing because they’re hard-working, but, if we look a little big deeper, it was presented to the House on 27 June 2017, long before the election, and on 15 August it was sent off to the Foreign Affairs, Defence and Trade Committee, a month before the election. So it’s great to see they continue the work of the last Government, which was very hard-working, in focusing on issues that were important.

While this may not be of great importance to everybody in New Zealand, we do need to do our fair share. We need to line up with other nations, and we do need to make sure that our rules, our regulations, actually meet the requirements of commitments New Zealand has made internationally. We certainly must take our foreign affairs extremely seriously. That’s why it concerns me so much that New Zealand First must be voting against this bill. I think that’s just appalling. But the good news for the Government is that National will be supporting it, so they do have the numbers to get it through.

Now, why do I think New Zealand First is voting against it? The reason for that is on 18 August, before the election last year, in Opposition, Ron Mark who was not “honourable” then—he was not “honourable” back then—got up and put out a press release that said “New Zealand Customs proves ‘War Dogs’ Bill unnecessary.” He called this legislation the “War Dogs Bill”. We go a little bit further. He said in his press release, “[The] National-led Government took us down a rabbit hole to regulate non-existent Kiwis trading non-existent arms in some Sub-Saharan fantasy.” He went on, and he must have been speaking about Willie Jackson when he said this, and I quote, “The peaceniks in the other parties love the opportunity to dance around the maypole, sing Kumbaya and bag a bouquet defence industry but not us.”

Hon Member: Who said that?

Hon TODD McCLAY: The reason we know Ron Mark said it back then was because he wasn’t “honourable” back then. He hadn’t got the title, so we could hear him. If he said it today, it would be hard to hear over the din of the helicopters flying in and out of the Wairarapa. But New Zealand First must be voting against it because a Cabinet Minister—actually ranked second amongst Cabinet, from that party—said that it was a waste of time and that the Government was looking at taking us down a rabbit hole. Well, I would say to Mr Mark that he wasn’t “honourable” back then; if he has changed his mind, he could well be honourable now—but that’s really up to him.

We do support this bill because it is important. The trade in illegal arms around the world is devastating and it can be devastating. We heard firsthand in the committee of the significant harm that is done. There is no suggestion that there are New Zealanders who are involved in this type of illegal trade, but there is also no suggestion that we shouldn’t have appropriate rules and regulations in place to be able to make sure that when we say that, we can back it up and it’s correct.

The final point I would make in the debate is that the committee did take quite some time questioning officials to make sure that we weren’t overburdening law-abiding citizens who trade in weapons for recreational use in New Zealand. We received assurances from them that, actually, the legitimate trade in firearms—there are many New Zealanders who use firearms for legitimate recreational purposes, with appropriate licences and so on—won’t be impacted upon by this at all. It was important that the committee got that assurance, because it’s not everyday Kiwis that this bill focuses on; it is those who could, or may in the future, be acting illegally. Thank you.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Assistant Speaker. It is more in sadness than in anger that I saw Todd McClay there rise and sort of try to bag this bill, because, I must say, he’s such a decent fellow at the Foreign Affairs, Defence and Trade Committee. It was a really good select committee, and we made, I think, some excellent progress here. It was well-chaired by Mr O’Connor almost all of the time, as well.

You can refer to peaceniks and what have you, but this really is an important part of the network of steps that are being taken to make sure that the illicit trade in arms is stopped. As the member would know, this is, in fact, part of our international obligations under the Arms Trade Treaty, which was ratified in 2014—a United Nations treaty which comes straight out of the United Nations Office for Disarmament Affairs. If we look at that, the purpose of it goes right to the heart of what the United Nations is about: the maintenance of peace and security. That, really, is what we’re seeking to achieve here: to make sure that New Zealand does not, by accident, become a place from where arms brokering occurs.

We were very reliably informed by the Ministry of Foreign Affairs and Trade that arms brokering is a very small activity in New Zealand indeed. There’re perhaps one or two people who are in fact genuine arms brokers. Having said that, we need to take these steps to ensure that we have the same kind of robust regulatory frameworks around arms brokering to make sure that New Zealand doesn’t, indeed, become that. There’s no great sophisticated industry. This isn’t some “Gunrunners” or “War Dogs” bill. In fact, it may well be that there are some items which are quite legitimately traded. One of the things this bill does is it balances that.

As the United Nations treaty does, this bill also recognises the ability of sovereign nation States to ensure their own security within the realm of conventional weapons. Also, the other thing it does, which in fact goes beyond the treaty, is recognise the fact that there are dual-use goods—a whole list, an enormous list of items, which have perfectly legitimate civilian uses. In fact, many of the high-tech items have very, very important civilian uses, but, put to the wrong use, they can also have military applications. There’s a balance to be struck there between ensuring that people aren’t accidentally caught by this legislation and at the same time making sure that we don’t have an industry in New Zealand identifying these high-tech goods and then arranging purchases and sales in overseas countries. Arms brokering, as the Hon Mr Parker said, is not about sales from New Zealand; it’s about arranging transactions overseas between two overseas parties.

The object of this bill—and the object of the treaty—which flows from the treaty, is to prevent and eradicate the illicit trade in arms. We know that’s important, because we know that a lot of strife and armed conflict in the world today would not be possible but for the fact of the porous nature of the arms trade. So what we’re trying to do is have a solid wall of defence, a multilateral—this is a Government that wants to act multilaterally. It has a multilateral approach to the restrictions in the arms trade, whether that be actual arms dealing—which is one thing—or arms brokering, which is what we are concerned with here today.

So that’s the very, very important thing that we’re doing here today. I must say the select committee did work well. The bill as it came to us—I think we would all agree, around that committee table, that there was some room for improvement. As the Minister the Hon Winston Peters said, the improvements are mainly technical. They don’t go to the heart of the bill, but they are important. They were important because they went to things like burden of proof. They went to the outline of the offences. Another matter that they went to was, in fact, extraterritoriality.

This is a bill that, by its very nature, because it concerns transactions which occur overseas, has an extraterritorial element. It is quite extraordinary for a nation, a sovereign State like New Zealand, to say we are going to create a regulatory regime and criminal offences which have reach overseas. So we’ve always got to be very cautious about that.

As the bill was initially drafted, it had an extraordinary element and that was that it appeared to achieve universal jurisdiction. That is to say that if an offence occurred overseas, whoever did it, wherever they did it, whenever they did it, New Zealand could in fact go and enforce its law against the citizen of another State. That’s an extraordinary power. It does exist in some small areas—crimes of piracy and slavery are the classic examples—but it was not considered that this was appropriate, because this is, essentially, a regulatory offence. It’s an offence about engaging in an illicit commercial activity, not entirely dissimilar to drug brokering or something of that ilk. So when we think about the justification for universal jurisdiction, it wasn’t there. When we looked at clause 33 of the bill, we noted that to have an ability to arrest, detain, and charge someone who wasn’t a New Zealand citizen for activities that occurred in a foreign nation—it wasn’t appropriate, it wasn’t fit for purpose, and it’s good to see that that suggestion has been adopted.

The other thing about this bill is its scope is broad in terms of the arms and items it covers. The Strategic Goods List—I invite those who suffer from a lack of sleep to go and read it, because it is 300 pages of different items. Whilst the first 30-odd pages are guns and tanks and what have you, the other hundred-and-whatever pages are all kinds of items of high technology, whether it be avionics, whether it be the Kevlar vests, navigation systems, chemicals and toxins, and so on and so forth. It just goes on and on.

Importantly, people who trade in those goods without realising that they are, in fact, restricted goods won’t be liable to prosecution as long as they believe they’re going to be put to legitimate civilian uses. There are a number of situations where you won’t require registration under this legislation—one won’t require registration. That is one of them: where the goods are dual-use goods, but you have a reasonable and honest belief that they’re being put to civilian uses. Obviously, for things like avionics, there is a very good trade—and New Zealand has a very good trade, in fact, in its own avionics—and we don’t want to suppress those kinds of industries.

There are other areas, as well, that we were a little concerned about. Another one is where employees are acting believing, quite reasonably, that their employers have taken care, that they are complying with this regime, and that there’s no wrongdoing involved. Obviously, the trade in arms between sovereign States is an entirely legitimate function—we all recognise that—and if an employee’s undertaking that in the belief that the registration has been undertaken, there’s absolutely no reason to intervene there.

A couple of other things which were important were not only the registration process—which, it must be said, is relatively light-handed; there’s a fit and proper person test, but there’s no great and onerous testing regime to make sure only people of the utmost integrity, like the lawyers’ application process—but the other thing is annual reporting of activities. Anyone who is engaging in brokering activities in New Zealand is required—and this was an innovation at select committee as well—to report those activities. So not only do we require registration of the brokers themselves, but we also require reporting of exactly what brokering transactions were undertaken. That’s important as well because it gives us a knowledge, a visibility, about the size of this industry in New Zealand so that we can trace and track what’s going on.

So we’ve got a whole lot of defences in there. We’ve got some jurisdictional improvements, and we’ve got an approach which is entirely consistent—and, in fact, it’s something we can be quite proud of. It goes beyond what the United Nations Arms Trade Treaty requires. It extends it beyond guns and tanks to dual-use goods to make sure that not only are we not supporting an illicit arms trade but we’re not supporting an industry for the manufacture of illicit arms as well. So, with that, I commend this bill to the House.

Hon MARK MITCHELL (National—Rodney): Thank you, Madam Assistant Speaker. It’s a pleasure to take a call on this, the Brokering (Weapons and Related Items) Controls Bill. Although I sat for a short time on the Foreign Affairs, Defence and Trade Committee, I didn’t actually get to do any work on this bill, but I’m very pleased—I’m very pleased—to take a call on it.

This is actually a really important issue and one that I’m really pleased that we, as a country, have decided to address. I want to acknowledge the Hon Gerry Brownlee, because it was him as Foreign Minister that introduced this bill to the House and, of course, to the select committee process.

The reason why I think it’s very important is if we look at the history over the last 20 or 30 years globally—if we just go back 30 years—we see the amount of conflict around the world, and the real issue that communities face with the illegal trade of weapons and arms across what have been pretty porous borders. Actually, if we’re really honest about it, the international community probably hasn’t been as good as it could be in terms of policing that. It’s very good to see that in the last decade, especially with the serious implementation of end-user certificates, countries now are really starting to tighten up and police who’s actually trading and brokering arms, where those arms are ending up, and whether they’re being used for a legitimate purpose. So I welcome the bill. It’s a very good bill, and as a country we’re sending a very positive signal that we’re going to regulate our own industry.

There was a comment made by the Hon Todd McClay referring to a statement by the Hon Ron Mark, referring to us as peaceniks and the fact that we like to dance around the maypole and sing “Kumbaya”. But, actually, this is a pretty serious bill, and I would hazard a guess that as his leader, the Rt Hon Winston Peters, is our Foreign Minister, who stood in this House and delivered a serious speech for 15 minutes outlining for us very clearly the importance of this bill to us as a country, I would assume that the Hon Ron Mark will now change his position and he will be voting for it.

I’m only going to take a short call. I stood to support the bill. It is a very good bill. Just very quickly, in terms of our defence industry, it is small but it is growing, and I can say with confidence that, actually, the brokering of arms is not something that really is—it’s not an area that our defence industry participates in at the moment. They’re more involved in the development of very specific components or fuel farms or support services for our defence forces. That relationship between our New Zealand Defence Force and our defence industry has got much closer. It’s healthy, it’s strong, and they’ll be welcoming the passage of this bill as well. Thank you, Madam Assistant Speaker.

GOLRIZ GHAHRAMAN (Green): It is an honour for me to stand in support of this bill, and it was an honour for me to sit on the Foreign Affairs, Defence and Trade Committee as we worked on this bill. I’d like to thank my colleagues and especially thank all the expert officials that assisted us. We asked them back week after week as we tweaked every detail in this bill. I’ve heard, as a result of that, a few of my colleagues mention that this is a technical bill and maybe it’s a little bit boring, but I wanted us to come back to the core context of this bill, because it is actually exciting and it’s necessary. It’s even historic in the context of the treaty that this bill seeks to implement.

I’ve seen war. I know what it sounds like and what it feels like, certainly as a child, and now the part of the world where I emanate from, the Middle East, is living under perpetual war it seems, as a result of just this kind of activity—the kind of activity that this bill seeks to regulate and stop: the brokering of regular arms. This kind of activity—and it’s not limited to the Middle East; the people of much of Africa are suffering under this. The Democratic Republic of Congo is living under perpetual war. The youngest nation in this world, South Sudan, pushed hard for this treaty because they are experiencing the same. The kind of war that I lived under—it turned out the brokers were the likes of Ronald Reagan and George Bush Sr, and they did have to appear before some kind of Senate committee, but we want more than that. We want this kind of activity criminalised and regulated.

I want us also to come back to the context that the UN representatives were working in when they were negotiating this treaty. I looked into it, and South Sudan stood up and talked about how the world had high expectations of this conference, begging for the treaty to be agreed to. Peru stood up and said, “Arms cannot continue [to be] commercialized without regulations. The present situation does not allow us to avoid diversion [of this] illicit market, or to the criminal and terrorist organizations which destabilize our societies.”

So the delegates at that conference felt the weight of that responsibility and the world’s eyes upon them. They came up with this treaty. They agreed to it against all odds. States like Iran opposed this agreement, but we reached it and New Zealand became a signatory. It came into force in 2014, and, now, this Parliament gets to move closer to implementing it, to making New Zealand the kind of nation that contributes to the rule of law internationally, and to the remedy for violence that we’re seeing all over the world, which creates not only war but also displaced persons—refugees. The UN calls the refugee crisis right now in the Middle East the greatest humanitarian crisis that the world has seen since World War II, and it’s perpetuated by this kind of activity.

So I am very proud to stand in support of this. We now have, I think, a robust regulative regime for this kind of activity. We will require persons or companies, New Zealanders, or those based in New Zealand to report and to keep records for seven years. We have a defined, detailed jurisdiction for New Zealand. This is something that’s rare in New Zealand, but it has happened. A shell company registered in New Zealand has actually been used to broker weapons to Iran and North Korea. So it is important. It is important that we require companies and we require brokers to keep records and to make themselves known, for us to have an oversight body that looks into this, and that we know what kinds of employees and what kinds of situations are going to be held liable and where the limits of that lie. I think that I, certainly, will sleep more soundly, as should other New Zealanders and people around the world, knowing that New Zealand is now contributing to this. So it is a great honour for me to commend this bill to the House. Thank you.

Hon TIM MACINDOE (National—Hamilton West): Kia orana, Madam Assistant Speaker. Tēnā koutou e Te Whare. I only joined the Foreign Affairs, Defence and Trade Committee a few weeks ago, so I didn’t have an opportunity to hear the submissions on this bill, and I want to acknowledge those who were previously on the committee who did the detailed work. I had the impression, when I joined the committee, that it was a bill that enjoyed unanimous support, and I was certainly impressed by the way that the whole process had been chaired by Simon O’Connor.

What struck me about it as I listened to it was what reasonable, law-abiding, self-respecting New Zealander wouldn’t support a bill whose overarching purpose is to regulate the brokering of arms and military equipment to help prevent arms ending up in the wrong hands. Of course, that is what it’s about, and it’s about New Zealand meeting our international obligations in an ever-changing security environment. So it’s a serious topic, and I do commend all the members of the committee for the work they did.

However, it was only then that I discovered that the description I’ve just given of New Zealanders may not include the current Minister of Defence, because what he had to say about the bill in Opposition, just eight months ago, was poles apart from the view—

Hon Scott Simpson: Who is the current Minister?

Hon TIM MACINDOE: The Hon Ron Mark. And the views that he was expressing then are poles apart from the views that have been expressed in this House by all members of the Government before. But, of course, that is because now it’s a Labour – New Zealand First - Greens bill, overlooking the fact that yet again here we are debating a bill that was actually a National bill, introduced by the Hon Gerry Brownlee as Foreign Minister, and he did a very fine job.

This afternoon I did something I’ve tried to do in the past and always failed, and that was to listen very carefully to the Foreign Minister and to try to discern some serious intent and something of real weight and content to take from his speech. Again, I was left fairly disappointed, but he did say at one stage that this was a very serious issue in which fundamental human rights were at stake—well, that’s certainly true—and he also made the point that New Zealand is a strong supporter of the international Arms Trade Treaty, as a result of which he had no hesitation in commending this bill to the House. Well, those are two very good things.

I had hoped that the Hon David Parker, who was the next Minister to speak, might be a little bit more enlightening, but I have to say his speech reminded me of one of the finer contributions that our former colleague Steffan Browning used to deliver here, and I very much doubt that his oratory—or his Hansard transcript—will ever feature in one of the records of the great parliamentary speeches of the 21st century.

But, nevertheless, it is, as I say, a serious issue, so it’s worth putting on the record that the party that is now promoting this bill said just eight months ago that—New Zealand First says a new Act to regulate arms brokering isn’t necessary. Well, if it wasn’t necessary eight months ago, why is it now something that this Parliament is debating in the very first year of the new Government’s term of office? It’s not something that they pushed down the Order Paper, thinking, “Oh well, we’ll get to it if there’s a rainy day and we get a bit late.” Here they are in their first term of office and they’re already putting it up. The real story here, he said, was that New Zealanders have had enough of National ducking the real matters of importance. Well, apparently we were ducking the—

ASSISTANT SPEAKER (Poto Williams): Order! [Interruption] Order! I’d just like to say to the member that this is the third speaker who has referred to what a member of this House has said. I just want to refer you back to the bill. This is the second reading speech, and the expectation is that it is a review of what the select committee found in their deliberations. So if I could bring you back to that process, thank you.

Hon TIM MACINDOE: You’re quite right, Madam Assistant Speaker. I will simply, in responding to that point, make the point that, clearly, the Minister of Foreign Affairs has now decided, as a result of the select committee’s work, as a result of the submissions, that something that he previously said was of no national significance whatsoever is so important that we should be debating it right now. For that reason, I support him—and let’s get on with it.

ASSISTANT SPEAKER (Poto Williams): I understand this is a split call. The Hon Willie Jackson—five minutes.

Hon WILLIE JACKSON (Minister of Employment): Kia ora, Madam Assistant Speaker. Tuatahi, e tika ana ki te mihi ki tō tātou kuia, Auntie Lou Cook, kātahi anō kua hinga; nō Ngāti Porou tēnei kuia, te teina ki taku kuia me te tino hoa ki a Ron Mark. Nō reira Auntie maumahara tō mahi ataahua i roto i te rohe Masterton, i roto i tō hapori. Kāore mātou e wareware. Kāore mātou e wareware hoki i tō aroha ki tō mātou whānau, taku pāpā Bob, Matua Kēkē Brown, me Monica hoki. Nō reira, Auntie, moe mai, moe mai, moe mai ra. Ka nui tēnā.

[Firstly, I take the opportunity to make special mention of our elder stateswoman Auntie Lou Cook, who has just passed away; this lady is from Ngāti Porou, she is a close relation of my grandmother, and a cherished friend of Ron Mark. Therefore Auntie, your wonderful work will always be remembered in the Masterton area, within your own community. We will never forget. Neither will we forget your kindness to our family, to my father Bob, to Uncle Brown, and to Monica as well. Therefore Auntie, rest, rest, rest in peace. Let us leave it there.]

I did a farewell speech there, Madam Assistant Speaker, to one of our kuia who died in Masterton. She was a Labour supporter—a very, very close friend to Ronnie Mark. So tomorrow I go with Ronnie Mark to her tangi. She was my grandmother’s sister, Auntie Lou Cook, and someone who played a pivotal part in the Hon Ronnie Mark’s life. So I just wanted to honour her here tonight as we come down to dinner. She was a very special person in a lot of our lives.

I just want to say of the nonsense from the other side: we’ve got to move on sometimes—gotta move on. We can’t carry grudges. This bill has gone through despite the constant attacks from Gerry Brownlee and others and the weak chairmanship from the other side, but we’ve tried to help him along—Mr Simon O’Connor. We’ve tried to help him through.

Hon Tim Macindoe: That’s an appalling comment.

Hon WILLIE JACKSON: No. I’m just trying to be honest, like yourself. It’s been a slow and tough process for our committee, but we’ve got there through the hard work of the Labour Party and Green Party colleagues in the Foreign Affairs, Defence and Trade Committee.

But it is an important bill, and despite this waffle about what was said from Ronnie Mark a year back—times have moved on and things change in politics, as the National Party, who are now part of the losing fraternity on the other side, know. The key points, I think, to discuss, with regards to this bill—well, there are many, but I do say that in terms of the regulatory regime for the brokering of weapons and military equipment by New Zealanders this bill clearly establishes that and also the requirement that all New Zealand citizens, New Zealand ordinary residents, and New Zealand entities wishing to engage in brokering to register with the Secretary of Foreign Affairs and Trade obtain a permit for each brokering activity—very important that we go down that track.

I think the key thing to note with the bill is that it requires ordinary New Zealanders, residents, and New Zealand - based entities wishing to broker the international—

ASSISTANT SPEAKER (Poto Williams): I apologise to the member; the time has come for me to leave the Chair for the dinner break.

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

Hon WILLIE JACKSON: Thank you, Madam Deputy Speaker. The key thing to note, I think, with the bill, is that it requires New Zealanders, ordinary residents, and New Zealand - based entities wishing to broker the international transfer of arms, military equipment, or civilian goods that they may have a military end use too, to first register with the Secretary of Foreign Affairs and Trade, and second, to obtain a permit for each brokering activity.

This has been well traversed over the last hour or so but as previous speakers have said—

Hon Member: Sure?

Hon WILLIE JACKSON: No, no, absolutely sure. They’ve covered most of the key points of the bill, but I’d add that with this bill it helps New Zealand play its part in the international framework by ensuring that there are appropriate controls in place that will prevent Kiwis and New Zealand - based entities from being involved in illicit arms brokering and deter any illicit arms brokers from shifting their activities to New Zealand.

Weapons that are capable of having a devastating impact on a people or nation if they are traded into the wrong hands should be of major concern to us. We’ve all seen from the relative safety of Aotearoa some of the effects weapons have had abroad, from attacks that have taken the lives of the innocent to those that have helped change the landscape of many a nation. So it’s important to us as a people that proudly declared all those years ago that we would stand alone and ban nuclear energy from our shores that we continue to rally against illegal trading in weapons and military equipment.

Hon Member: What’s Wikipedia say?

Hon WILLIE JACKSON: What Wikipedia says is that the Labour Party saved this bill and despite the very, very incompetent chairmanship from the National Party chair, we were able to get to this position today. Thank you, Madam Deputy Speaker.

CHRIS PENK (National—Helensville): Thank you, Madam Deputy Speaker. It’s a pleasure to rise to take the second half of a split call on the Brokering (Weapons and Related Items) Controls Bill. If I were to add a footnote to the title of the bill, it would be that it’s a hand to head off a body of arms, which I might say is about half a dozen corporal metaphors if I were to go out on a limb.

We support this bill, on this side of the House. Indeed, we introduced it into the House in the previous Parliament, and as the speaker prior to me has noted, with whom I am sharing this split call, it does allow us to fulfil international obligations, specifically the Arms Trade Treaty, which we joined in 2014.

Kieran McAnulty: Great speech.

CHRIS PENK: So for that reason alone, but others as well as we shall see—which Mr McAnulty’s very anxious to hear—it is indeed a good bill.

It seems to me a well-structured bill because it goes to the entity and also the activity of those who would broker arms, and, indeed, the activity itself. So, respectively, it calls upon a person, which is either a natural person or, of course, a company or other legal entity that would broker arms, for the registration of that entity to do these things but also the doing of the things themselves, the activity, is also regulated—well, in fact, it is legislated for, but is to be controlled by the mechanism of a permitting and consenting regime.

In order to ensure compliance with the law, the bill creates various offences, both in the criminal and civil domains, according to whether mere technical breaches are undertaken or more serious breaches of the particular offences in the bill. So without going through those exhaustively, I might note that engaging in brokering without being registered is in itself an offence, as is the breach of conditions that are set in a permit that might have been quite rightly obtained but not adhered to subsequent to the fact of it being obtained. Similarly, failing to produce records—keep records or produce records, I should add—or providing false or misleading information in relation to the activities of that entity are also offences. So it seems to me appropriate that we have mechanisms in the bill to ensure that it is well policed.

The elements of the offence, considering those carefully, was an aspect of the select committee’s consideration. I was pleased to be a very small part of that. That’s been discussed at some length by previous speakers, so I shan’t take any more of the House’s time in saying that I join my colleagues on this side of the House—and, indeed, it seems the other—in commending the bill to the House.

WILLOW-JEAN PRIME (Labour): Madam Deputy Speaker, thank you for the opportunity to speak tonight on the second reading of this bill. I was not a member of the committee that has considered this bill, the Foreign Affairs, Defence and Trade Committee, but I want to thank them for the work that they have done. I also want to thank the nine submitters that made submissions on this bill, and the officials who have worked through those submissions through the select committee process and have made recommendations for amendment. I believe that the recommendations that have been made by the select committee for the amendment of this bill provide better clarification about the intent and purpose of the bill, and, also, higher accountability.

So I first want to start off by acknowledging that committee. As I wasn’t part of the select committee I wasn’t aware whether this was a significant issue for New Zealand. So upon doing some research it was very interesting to note that there actually has been an example involving New Zealand and, thus, justifying this development of a law for ourselves but also in joining with the others across the globe, in an effort to address the issues.

The example I will talk about, in New Zealand, was back in 2006, so this shows that this issue has been around for a long time and significant steps have been taken, and this is yet another step in addressing the issue and implementing the steps that we have taken. So in 2006 a large shipment of conventional arms from North Korea was destined for Iran, in breach of the UN arms embargo, and was intercepted in Thailand. Subsequently it was discovered that it was a New Zealand - registered company that had leased the plane that was transporting the arms. Because New Zealand had no controls on brokering by New Zealanders, no action was able to be taken by the New Zealand Government. As a result of that, our reputation was negatively impacted by this.

There are multiple armed conflicts around the globe, and there has been a global effort to reduce harm caused by the illicit arms trade. New Zealand is internationally recognised, as was mentioned by one of the previous speakers, for our role in promoting disarmament, including nuclear disarmament. We are proud to also be playing a similar role in addressing the trade in conventional arms. New Zealand was amongst the first 50 countries to sign up to the treaty which we have spoken about tonight, the Arms Trade Treaty. That was a landmark treaty—a world first, in fact, in terms of regulating the trade in conventional arms.

We have export controls—so a regime that regulates the movement of arms and weapons and military equipment from New Zealand—and we have import controls, a regime which regulates the movement of arms into New Zealand, but there is a gap, and that’s what this bill, the Brokering (Weapons and Related Items) Controls Bill, seeks to address. The gap that we currently have is where there are no controls in place on persons in New Zealand or New Zealand citizens operating abroad who negotiate, arrange, or facilitate the international movement of arms or military equipment, an activity which is known as brokering.

In terms of the significant changes that have been made to the bill as a result of the committee process, there were changes, particularly in clause 3A, around the jurisdictional scope of the brokering regime. I just want to read that one out because it’s an important one. The assumption is that we can only make laws that apply to ourselves here domestically, but on the strength of the submissions and the discussion that they obviously had at the select committee, they inserted clause 3A to ensure that the jurisdiction that this applies was absolutely clear.

So clause 3A is a new clause which has been inserted into the bill: “This Act applies to any brokering activity that is carried out—(a) in any place (including any brokering activity that is carried out wholly or partially outside New Zealand) and by a person—(i) who is in New Zealand; or (ii) who is a New Zealand citizen or ordinarily resident in New Zealand; or (iii) that is an entity incorporated or registered under the law of New Zealand; or (b) wholly or partially on board a ship or an aircraft described in section 33(1)(b).”

There were other changes that have also been recommended by the committee in terms of Gazette notices to be published on the website. Those recommendations have been put forward by the committee for us to consider here tonight and I certainly support them: providing clarity about the burden of proof—there was a very interesting discussion in the select committee report and from the officials on the mens rea or the actual intent and thinking behind the action; the elements of the offence and the narrowing of the exception for employees—a very interesting discussion there, and ensuring that the right people are being captured through this legislation; annual reporting as a condition of registration; the period for which brokers are required to keep the records—they recommend that that be increased from five years to seven years; and also some recommendations around offences committed outside of New Zealand.

Earlier, the Hon David Parker spoke about how it’s unusual to make laws that apply outside of New Zealand, but I think that we have agreement, certainly amongst many of us here in the House tonight, that it is important that we implement our undertaking in the Arms Trade Treaty, which we signed up to. We’re required, in that treaty, to implement domestic legislation to give effect to that, and this is us doing that, and I want to again commend the committee that has worked on this. Since we signed up to that treaty in 2013—ratified in 2014—this bill has been developed, it’s been introduced, it’s gone through now to its second reading, and that is us upholding our responsibilities under that treaty to introduce measures to regulate the brokering taking place within our jurisdiction and so by that we will be meeting those minimum standards by the treaty that we have been party to.

So with that, finally I want to thank all those that have been involved in this important piece of legislation. Thank you, and I commend the bill to the House.

Dr SHANE RETI (National—Whangarei): Thank you, Madam Deputy Speaker. It’s a pleasure to speak and take a short call on the Brokering (Weapons and Related Items) Controls Bill, a bill that, as we’ve heard, is anchored and underpinned by the Arms Trade Treaty 2014, which arose as a US-led development against the background of the Syrian conflict. As we’ve heard also, we are, and have, ratified this treaty, but it’s also interesting to look at those countries that haven’t ratified the treaty: Rwanda, Uganda, Congo, Angola, Namibia, Philippines—none of them has ratified the Arms Trade Treaty. If we look at some of their histories, which are relevant as you discuss and look at those parties that may indeed be brokering weapons, we can look at Rwanda, which has a very sad history unfortunately. In the three years from October 1990, Rwanda, one of the poorest countries in the world, became the third-largest importer of weapons in Africa—estimated spending of US$112 million. Weapons came from Egypt, France, and South Africa.

Uganda also has troubles. In 1991, they first came to international attention in the arms trade brokering environment when they had a plane with illegal arms grounded in Yugoslavia. I’ve mentioned Congo—they were actually under a UN arms embargo from 2003 to 2008 for exactly the sort of things this bill is looking to address. Their brokering relationships came from Malaysia and also from Bulgaria. Angola: “Angolagate”, it was called, was a scandal in 1999 that rocked the French political world and, effectively, involved a very large sum of money—US$790 million—with brokers around the world. Again, the risk that we put ourselves at without this sort of bill: France, Russia, Slovakia, and Bulgaria. I could go through some of the others: Namibia also has a chequered history, and the Philippines. I’ll come back to those countries in just a moment.

We’ve heard of the nine submissions that were made to the Foreign Affairs, Defence and Trade Committee. They were very thoughtful submitters, including the New Zealand Law Society, the Public Health Association, Privacy Commissioner, Amnesty International, and the New Zealand Nurses Organisation. Their concerns were wide ranging: that the bill should adopt more stringent standards and that maybe the scope was too narrow—so some saying it needed to be widened and some saying it needed to be narrowed, and that there was a need for greater consistency with export, import, and domestic weapons legislation.

I want to conclude and just come back to those countries that I mentioned: Rwanda, Uganda, Congo, Angola, Namibia, and Philippines—I’ve heard those names before. I’ve heard them before in this House quite recently. Oh, that’s right; they’ve all got waka jumping legislation. Could it possibly be—could it possibly be—that if you have waka jumping legislation that maybe your Government is undemocratic, that maybe your Government is unstable and more inclined to be brokering illegal weapons, like this bill is trying to counter? I just wanted to seed that thought. We’ll be supporting this bill. Thank you, Madam Deputy Speaker.

LOUISA WALL (Labour—Manurewa): Tēnā koe e Te Māngai o Te Whare. That was a really interesting way to end your speech, Mr Reti. Can I just say that I am a member of the Foreign Affairs, Defence and Trade Committee, and I just want to provide a bit more history, because I’m a bit of a history buff. I like to know where things began and how we’ve ended up where we are today, and I just want to quote that the Arms Trade Treaty was part of a global effort which began in 1997 by Costa Rican President and 1987 Nobel Peace Prize laureate, Oscar Arias Sánchez, and it was actually about the concept of human security. There was a general recognition at the United Nations and in some countries that we needed to regulate an unregulated activity. So that was the reality of the beginnings of the Arms Trade Treaty that, as some of my colleagues have already noted, we signed in 2013, we ratified in 2014, and we will accede to it through the progression of this legislation through the House, and join 94 other countries.

The question of why we would do that is incredibly important, and this is where I do want to pick up on what my colleague Dr Shane Reti said. This is all about stopping military weapons and arms getting to areas such as Afghanistan, Iraq, Syria, Ukraine, Yemen, the Democratic Republic of the Congo, Mexico, and the Central African Republic. I mention those territories in the world because that is where armed conflict is happening today. The whole intention of this bill is actually really simple: it’s to create a registration process in a regime that ensures that—when these types of weapons are being distributed, exported, and imported around the world—to do so in New Zealand you now have to register.

Currently, it’s voluntary registration. So, through the implementation of this piece of legislation, (a) you will have to register, and in that registration process you will be given a permit if your activity or if the activity you or your business wants to engage in is consistent with New Zealand’s obligations under this Arms Trade Treaty. There could be conditions on those permits, so it’s not an open slather of once you get your permit you can do what you like. The reality of what we’re trying to do is to ensure that the world is a secure place. Underlying this is security for us as a country. Obviously, it has to reinforce our defence commitments, but it’s also, critically, about our international relations, and, actually, everything we do on the Foreign Affairs, Defence and Trade Committee critically looks at our international relations. So the whole intention of the bill is to build peace, it’s to reduce human suffering, it’s to promote cooperation and transparency, and also to hold countries accountable for their actions, and the consequences of those actions on other countries.

My colleague Willow-Jean Prime highlighted some really good discussions and debates in the select committee, which actually did happen. I do want to take the opportunity to comment about Duncan Webb, Golriz Ghahraman, and Chris Penk—all lawyers. They had really interesting discussions about issues of jurisdiction. As you’ll see—and I note that in introducing the debate tonight, the Hon Winston Peters actually highlighted the seven changes that the select committee recommended. And they weren’t random changes. Actually, on a lot of occasions, we had quite intense discussion about the jurisdictional scope and having to limit it and be really clear about who this piece of legislation applies to.

So I too want to add my thanks to the officials who had to listen to those discussions and translate those discussions into this coherent piece of legislation that we have before us tonight. I see my colleague Simon O’Connor, who is the chair of our select committee, nodding his head, because in some instances, I was a passive observer as these three people had these dynamic conversations. So it really was a lesson in a select committee wanting to work together for the best interests of our country and also to produce a piece of legislation that, actually, we could hold up as world leading, world class. So I’m quite proud of the amendments that we made and, obviously, will be accepted by the House tonight if we all agree at the conclusion of my speech.

I do want to highlight one of the issues that I think was really good about the submission of annual reports. So we are regulating the trade and weapons, and we’re wanting transparency, and I think our request for those who are granted permits to then submit an annual report, again, speaks to our wanting to be as transparent as possible. So we want to know what weapons have been brokered. Where are we sending them to? We need to hold ourselves accountable to the intention—as I said before—of the Arms Trade Treaty, and to ensure that things that happen in our country actually don’t contribute to exacerbating those conflicts that I’ve mentioned earlier, because fundamental to us doing this, and ensuring transparency, actually, at the end of the day is to deter the people that do want to contribute to war, that are profiting from war, that are distributing these weapons in these areas that, fundamentally, lead to the loss of hundreds of thousands of lives. So, from our perspective, I think what we’ve tried to do is actually embody the spirit of the Arms Trade Treaty throughout the whole of this piece of legislation.

It was also really interesting—no one’s really talked about why we’ve increased the period for which brokers are required to keep records from five to seven years. Actually, for us it was about aligning it to requirements concerning tax records and Fire and Emergency New Zealand contracts and levy payments. So within the piece of legislation, we also had some principles about it aligning to other pieces of legislation so that there was some symmetry, and that there was a rationale, and there was also, again, an ability to hold those companies accountable going forward.

I really don’t have much more to say, other than I like how select committees work sometimes—you know, really constructive engagement. We do listen to one another. We have quite dynamic discussions, and end up making changes to bills that make them better. I’m presuming—even though the other side’s been trying to beat up the fact that Ron Mark, in a previous life, did not support this bill at first reading when it was entered into the House by the Hon Gerry Brownlee, who then was the Minister of Foreign Affairs—actually, as a Parliament, we should celebrate the nights and the days when we have pieces of legislation that we all agree on, and that there is consensus. Kia ora mai tātou.

Bill read a second time.

Bills

Commerce Amendment Bill

First Reading

Debate resumed from 12 April.

BRETT HUDSON (National): Thank you, Madam Deputy Speaker. It’s a pleasure to rise again and continue this contribution. Now, when we last left off, I was talking about the concerns we had about the proposed market studies power, particularly the self-initiation provisions for the Commerce Commission, where their structure, where the effective decision-making, and where normally in a business or other Crown entity we might think of as the decisions of the executive are made, in practice, in the commission by the same group of people who fulfil the governance-type role that we might see in other entities as a board.

So with self-initiation, there simply is not the check and balance that would exist in a business or entity structure that had a separation of the executive and an independent board. We think that’s really quite important in this environment, because the market studies provisions, while they are unquestionably a good idea to help ensure competitiveness in our markets and protection, particularly for our consumers—they are very, very powerful powers that they confer. They have the very real ability to be, quite frankly, very burdensome and expensive and to place a great deal of pressure on businesses across any number of industries. We feel it is appropriate, given the power that is vested in the commission, that there should be some check or balance to the exercise of that market studies power. Now, in the absence of having an independent board, that would best vest with the responsible Minister and Cabinet.

That was in the original provisions that the previous Government had agreed to. They were going to be ministerial initiated inquiries. They could have been made at the request of the commissioners but initiated by the Minister, and, indeed, even if, semantically, there were to be provisions about self-initiation, they should have that check and balance of being approved by the Minister, which means, of course, with Cabinet’s endorsement also. We feel quite strongly about this. We cannot support the bill with the provisions as they are. It’s a very deliberate change by Minister Faafoi. We’ve seen the paper he took to Cabinet. He was aware of the state of the bill under the previous Government, and he made a very deliberate move to change that. We do not support that.

The other element of the bill is around additional regulation-making provisions for the regulation of airports. Ordinarily, one could look at this and suggest that—in the hypothetical that the officials have given, you could build a case for saying, well, if a problem were to arise, this would enable it to be addressed somewhat easier and more rapidly. But I think it’s incorrect to presume, as officials have done, that it wasn’t the intention of Parliament for it to be the way it is, and that is that should it be determined that the information disclosure regime were not sufficient, then it would have to be through a legislative change that additional powers of regulation-making authority were granted to the commission. I don’t think there is any clear evidence to suggest, as some officials have, that it was a drafting error that led it to be the way it was.

But even more importantly is that in the regulatory impact statements, the officials note a couple of very key points. The first point they note is that there is evidence that the current regime of information disclosure is working well. So they’re saying that there is no problem that exists with the current regulation. The second point they make is about the wider stakeholders, which includes customers—you know, purchasers, consumers—and that is that the impact, should there be a problem, would not be significant. They make the point that the competitiveness between airlines has a far greater impact on the pricing consumers pay than landing fees and airport charges. So, quite frankly, the officials have put out there supporting evidence that suggests that their recommendation is not warranted. Our view is that regulation and regulation-making powers should be appropriate and only there to the extent that they’re needed. They should address a very specific and real problem. That problem should be reinforced with evidence and the officials own arguments do not actually support doing that. So we cannot in this instance support the additional regulation-making authority.

A lyricist once said “two out of three ain’t bad”, but one out of three is poor, and we do not support this bill.

MICHAEL WOOD (Labour—Mt Roskill): Madam Deputy Speaker, I’m very pleased to take a call on the Commerce Amendment Bill—particularly pleased because this bill, of course, is being put forward to the House by the Hon Kris Faafoi. Some people value his presence in this Chamber because of his good looks, his witty repartee, and his sharp wit. All of those things which are—

Matt Doocey: Name one person who said that.

MICHAEL WOOD: —all of those things which Mr Doocey aspires to achieve one day—but, actually, I don’t think that’s his chief contribution to this Chamber. His chief contribution is that he is a Minister, in his portfolio as the Minister of Commerce and Consumer Affairs, who’s actually really picked up the mantle and is an active Minister who is getting stuck in with a legislative agenda that is about making sure that we have modern, fit for purpose regulation and laws to make sure that Kiwi consumers and Kiwi businesses are treated fairly. That, ultimately, is what the regulatory framework in the Commerce Act is all about. So I want to commend Minister Faafoi for that.

Why is this bill important, and why, in fact, is the whole rubric of legislation that we have in this area important? Well, there are three things I think we can point to. One is about providing appropriate protections for consumers, because we are dealing, in the space that this bill deals with, with large commercial institutions who have a great deal of market power. And the risk, as we know, is that if you don’t have appropriate regulation and you have organisations with a lot of market power, they tend to abuse it. So if you don’t have good regulation in place, the people who cop that are the consumers at the far end of the process. They end up paying higher prices than they should do in a competitive marketplace.

The second reason, and I think this is often overlooked, is that often in these sectors we have companies that want to do the right thing, that actually want to behave in an ethical way, that want to operate in a competitive market, and that want to do the right thing by the consumer, but unless everyone else is playing by the rules they actually get undermined and their business model doesn’t work. So it’s important that we have good regulation to support the good businesses in the sector as well.

The final thing is a whole-of-economy question, and that is the value of having efficient, competitive, workable markets. If we don’t have them, if we have a small number of market players taking advantage of lax regulation, they make supernormal profits. It’s actually inefficient across our economy. We lose productivity. Those businesses aren’t driven to improve their service to consumers and to the broader economy. So this sort of regulation is extremely important.

There are three major areas that this bill addresses, and most of them are actually pretty long-signalled by a series of reviews that began under the previous Government. The first thing that the bill does is introduce a new power to the Commerce Commission to initiate market studies and to produce market reports. This is extremely important and it will be the main topic of my comments later on. I think this is an incredibly important new power, and I’ll get to some of the reasons for that.

The second area that it does address is a bit of an overhaul of the regulatory regime around our airports, which, of course, in their catchments, tend to be natural monopolies. There are always tensions around the way that they operate and the way that they price, so it is appropriate that we have a robust regime there, and there are some improvements that are made through this legislation.

The third area relates to the enforcement mechanisms that the Commerce Commission has and—quite sensibly I think, arising out of a process of reviews—it looks to repeal the current cease and desist regime and replace that with some more workable and useful mechanisms for enforcement.

Before getting on to those, I want to talk about a study which emerged last year, which I think points to the very good reasons for having an enhanced market studies and market reporting regime to sit with the Commerce Commission. It was a report that was released last year into the operation of our retail petrol market, and I think most members of the House will recall this. It came out in about July of last year. It was overseen by the Hon Judith Collins, at that time the energy and resources Minister. What I want to draw to the attention of the House is the incredibly strong language in the way that these things are done that is actually used in that report to talk about this incredibly important sector.

So let me quote here. This is from a National Business Review (NBR) article which was summarising the findings of the report: “The study’s primary conclusion is that ‘we cannot definitely say that fuel prices in New Zealand are reasonable, and we have reason to believe that they might not be’”. This study was carried out by three independent economic consultancies working with the Ministry for Business, Innovation and Employment (MBIE). It went on to say, “We can indeed identify features of the New Zealand fuel industry possibly giving cause for concern that consumers are not as well served as they should be.” Further, it says, “Furthermore, the market studies powers”—so this is from the Minister herself, Judith Collins. She took note of these concerns and said, “Furthermore, the market studies powers announced recently by the Minister of Commerce and Consumer Affairs will give the government the option to direct the Commerce Commission to undertake a further competition-specific fuel market study”. So she was picking up on these concerns that came out in the report and pointing to the need for the Commerce Commission to have increased powers.

The final comment that I want to draw the House’s attention to—let me just find it here in the NBR report. Here we go. The MBIE report said that there was “some suggestion that the major companies subsidise the cost of fuel in competitive places in the North Island through fatter margins in Wellington and the South Island, but there was a lack of available information to determine that conclusively.” What was the reason that there was a lack of available information? Well, it was because the major players—and let’s name them in the House here: Z Energy, BP, Mobil, Caltex, and Gull—did not provide comparable financial data and some did not provide sufficient information within the timeframes for the study’s authors to report. In other words, under the mechanism that we have in place at the moment, the big boys in this incredibly important industry simply refused to cooperate. They simply refused to front up with the information that this Government-initiated inquiry into their practices required to draw any firm conclusions. That is utterly unacceptable in a sector that is as important as the fuel sector is to the New Zealand consumer and New Zealand economy. So it’s incredibly important, as Minister Judith Collins said there, that we actually give the Commerce Commission the appropriate powers that it needs. So what do we get through the implementation of an ability to implement market studies and market reports? Well, it actually means that we get a regime whereby the Commerce Commission can actually properly look into these areas, and can actually require that evidence is produced.

I want to address one of the concerns that the previous speaker, Mr Hudson, raised. This is one of the changes that the Government has made. The previous Government said that only a Minister should be able to initiate such an inquiry. Minister Faafoi in this bill has been very clear that we should actually, as well as giving Ministers the power to initiate such an inquiry, give the Commerce Commission that ability as well. I simply can’t understand any good arguments for not giving that independent body—which has the oversight, which has the institutional knowledge, which has expertise—the ability to initiate an inquiry off its own bat. Now, this is an active Government that doesn’t stand for big companies ripping off Kiwi consumers, but imagine if, at some stage in the future, we had a laissez-faire Government that was more relaxed about these things. I think that Kiwi consumers would want to know that we had an independent Government agency that had the ability to pick up the cudgels itself and go into bat for them.

Just to deal with Mr Hudson’s suggestion that this would, sort of, be done with no oversight, no controls whatsoever, the bill is very, very clear that if the Commerce Commission does go down this track, they have to provide full justification for it, they’ll be consulting with other Government agencies, they’ll have to produce a draft report, and they’ll then have to allow the market players an ability to comment on that and provide a response before there is a final report, which, of course, can actually only offer recommendations to Cabinet and to Government agencies. So any report that is produced by the Commerce Commission, any market report as a result of a market study, won’t on its own actually be able to require a change of behaviour. There will still have to be a step where, at the political level, that is put into action. So I simply don’t think that those concerns raised by Mr Hudson are adequate to oppose this measure, which is an incredibly important measure to ensure that Kiwi consumers aren’t being ripped off by the big boys at the top end of town. I hope that the Opposition does have a bit of a rethink about that issue.

The other two areas that the bill addresses are a bit of an overhaul of the regulatory framework around our airports—particularly the three major regulated airports, being Auckland, Wellington, and Christchurch. These airports are natural monopolies. Mr Hudson is correct to say that competition between airlines is more likely to have an effect on the ticket price that the consumer pays, but that doesn’t mean that we shouldn’t have an eye on the other issues around whether they are engaging in fair pricing behaviour. All that this legislation does is, effectively, provide a bit of a regulatory backstop if that isn’t happening.

This is a good bill, it’s about making sure that Kiwi consumers and good Kiwi businesses are protected from predatory monopolistic practices, and I commend it to the House. Thank you.

ANDREW BAYLY (National—Hunua): Thank you, Madam Deputy Speaker. It’s a pleasure to be talking on the Commerce Amendment Bill, first reading.

As we’ve heard, this bill has got three parts to it, and I’m principally going to talk about the first two parts. The first one is around competition studies, and I think, first of all, I should preface this with the fact that everyone in this House wants to make sure that we have good, strong competition in New Zealand and that players are acting appropriately and robustly so that we do, as consumers, pay the lowest amount that we should for goods and services. So I don’t think there’s anything to debate about that point. The role of the Commerce Commission itself is really at the stake of what this is about.

I just want to pick up on those points that the last speaker just raised. It’s about the degree of balance and who should have the authority to go and undertake what is the most significant of any of the activities that a commission such as the Commerce Commission in New Zealand would undertake—that is, undertaking a market investigation. I’ve got to say, I think the nuance that people are missing is that New Zealand’s structure is slightly different than many other competition-type organisations around the world. For instance, I went to see the Competition and Markets Authority in London in December last year, and it was interesting looking at their structure, where the executive have a very important role to play in terms of looking at the way competition is undertaken in the market and undertaking market studies. But the difference between New Zealand and the UK, as just one example, is that there is another body sitting in between the executive and the ultimate decision of that Competition and Markets Authority—namely, an independent board. That’s the difference. There’s an independent step before the commission would go off and do what is the most significant of actions that it ever takes. And bear in mind that if the commission gets it wrong, that may, in some cases, be absolutely detrimental to the business concerned.

So the reason why we’re opposed to this bill is the fact that we believe that when it comes to these really, really important decisions around undertaking a market study, those decisions should be taken by a Minister, subject to a Cabinet process, so that they are given a heightened level of scrutiny before they are undertaken. That’s not to say that they should not be undertaken, but what it makes very clear is that there is a high threshold, because, as I said before, if they get it wrong and there are aspersions around a market study that’s undertaken and found in time to be incorrect or unproven, then that can be very detrimental to the business concerned.

I just want to pick up on airports, which is really around Part 4 of the principal Act. As we all know, the Commerce Commission has a very important role in terms of overseeing terminal charges and landing fees, which basically make up the difference or the return that an airport will achieve in New Zealand. Those two are the key drivers, and, of course, the commission has a role in terms of setting an appropriate return on investment or weighted average cost of capital for the three airports—Auckland, Wellington, and Christchurch. This piece of legislation provides, by regulation, an ability for the commission to require more information, and, as a former member of the Regulations Review Committee, I’m sure many will appreciate that it’s much more important that those types of powers should be embedded in the primary legislation and not through the back door—i.e., in the form of regulation-making power—and that is why we have a problem with this piece of legislation.

So the third element, of course, we are supportive of, but I think those two points that I’ve spoken about earlier are vital, significant, and important. I think people need to think very, very clearly about them, but certainly, from my perspective, I wouldn’t be supporting this bill.

MARK PATTERSON (NZ First): Madam Deputy Speaker, it’s with great pleasure I rise on behalf of New Zealand First to speak in support of the amended 1986 Commerce Act. I’d actually also like to join in Michael Wood’s comments around Minister Faafoi, and I note some media comments along the same line. He’s been an excellent Minister in his civil defence and commerce portfolios—so good, in fact, that we think he might actually be good enough to be a New Zealand First Minister if he carries on this trajectory.

Of course, we know there are three parts to this bill. It amends the airports regime, Part 4 of the Commerce Act; it encourages competition with the market studies regime; and it makes changes to the alternative enforcement laws—all very important distinctions. The airports—and, of course, New Zealand First has been in the media a little bit: my colleague Shane Jones standing up for the regions and the air connectivity, and part of that, of course, is making sure that we get a fair go for the regional airports and making sure that they are competitive, providing a good service, and not just the big monopolies in Auckland, Wellington, and Christchurch.

There have been some studies done into this—the Ministry of Business, Innovation and Employment 2014-16 study. This started to show that Auckland Airport, the profits that they were making were probably adding over and above. I think it shows that they were making a 7.6 percent return as opposed to 6.4, which was considered the benchmark, and that was close to a dollar a head per passenger. So that is maybe a small increment, but that was $47 million when it was added up over a five-year period. And, of course, Auckland Airport is looking at getting a second runway, so there is a chance with those monopolistic powers to potentially do a bit of price gouging, and the amendment to this Act allows the Commerce Commission to reach into that particular company and, in this example, have a look to make sure that the pricing that is being charged is fair, it’s benchmarked, and it is fair to the consumer.

Of course, we’ve had some other recent examples outside of the airport industry—the BP situation recently, which I’ll allude to shortly—but the introduction of the market studies amendment is the bit that I would like to concentrate on, because I think New Zealand is of a scale where monopolies, duopolies are almost a necessary evil at times. We haven’t got the population, outside the behemoth that is Auckland. We have quite a large land mass and fairly small population, and for businesses to get economies of scale, you know, there’s not that much competition there to compete for.

So when we see the supermarket duopolies, for example, we can look back maybe 10 years ago, when The Warehouse tried to get into groceries. Now, there wouldn’t be a more well-known retailer with an existing footprint and with an existing clientele. They lasted probably less than a year in groceries because the duopoly was able to squeeze them out. Essentially, that showed just how hard it is to break some of these established duopolies and get other competition coming in. We’ve also had the recent example, as I said, of BP.

Monopolies aren’t necessarily a bad thing. They’re not necessarily evil. New Zealand’s best primary industry, the kiwifruit industry, has a single-desk seller—a total monopoly on selling and exporting kiwifruit. Zespri has been incredibly successful. It has been supported time and again by the growers. When they get to vote, they want to keep that economy of scale, that market presence, and that marketing clout.

So monopolies aren’t necessarily evil, but there’s horses for courses. In New Zealand, as I said, because of our unique circumstances—a rather large land mass and relatively small population outside of Auckland—sometimes they’re just the way it is. We need to make sure that the consumers are protected and that this market studies provision that allows the Minister or the Commerce Commission to reach inside that industry and have a look—it needs to be used judiciously. There is a cost to business. We don’t want this to be something that’s done willy-nilly. There has to be some justification, and that would be the case. There are appropriate safeguards in place within this bill and full justifications have to be made. There’s terms of reference, and we have to set out the scope. So New Zealand First is comfortable that this is appropriate.

The other monopoly, of course, that is an absolute testament to central planning, if you want to go down that, is the New Zealand Rugby Union and the All Blacks—totally centrally planned. We dominate the world—the most successful sporting team in international sports history is centrally planned. So, you know, these things aren’t necessarily evil. There are horses for courses.

There is also the alternative enforcement mechanisms, and, as has been mentioned, the cease and desist provisions have not been utilised for the reason that they’ve been a bit clunky. Only once in the last 15 years has that particular provision been used, so court injunctions have been more efficient. They’ve been seen to get the job done faster. The commission can enforce standards and it does have the same powers as the court in some circumstances, so I think this is an ability to streamline and speed up some of those provisions. So that’s got to be good, and that’ll take cost out.

So, without further ado, New Zealand First does support this through to the next reading. We will, obviously, look to the select committee—as we should—for ways that we can streamline this, as I’m sure businesses will come forward. There are some powerful forces out there against this, potentially, so we have to make sure that even those voices are heard, and that’s what this Parliament is here to do.

So, without further ado, I would like to commend this bill to the select committee. I commend the Minister and this Government, again, for bringing forward sensible, pragmatic legislation that is looking to make life better for average New Zealanders. With that, I commend this bill to the House.

MELISSA LEE (National): Madam Deputy Speaker, thank you for the opportunity to take a call on the Commerce Amendment Bill. National believes in a competitive market and we believe in ensuring consumers get the best choices and best value for money. This bill would give the Commerce Commission an unconstrained power that we simply cannot agree with. It would allow them to undertake market studies and improve enforcement actions without effective ministerial oversight, which I don’t think the original bill was ever actually intended to do. Only the Minister of Commerce and Consumer Affairs—the person with the direct accountability to the people of this country—should have this power. It is far too damaging to commercial interests to give an unchecked authority such as this to the Commerce Commission—and the Minister laughs.

Checks and balances are, in fact, needed, particularly for a Government that is actually claiming to be the most open and transparent in New Zealand’s history, and to allow this variance in the legislation would open up unneeded bureaucratic authority that was never actually intended by the former National Government when this bill was originally drafted. We believe in proactive legislation for the commerce sector, and for the Minister to carefully determine areas where a wrong may need to be righted; not reactive areas where unelected public servants and officials could, effectively, make an expensive, unnecessary, and potentially harmful determination.

This is actually not a criticism of the Commerce Commission. I think they are a thoroughly professional group of people and they do an amazing job. They are very good at what they do. My colleague Brett Hudson, the spokesperson for commerce, has actually spoken about this particular bill and the reasons why National is opposed to this bill. National’s record with the commerce sector is incredible. Through important steps such as improved financial reporting requirements, tightened financial advice regimes, and better relationships across the Tasman with our mutual regulatory agencies, National worked to deliver more for this sector and Kiwi businesses. Earlier, my colleague Andrew Bayly spoke about the particular section in the bill that actually deals with the changes to the airport regulations. I will not actually go into that because I don’t really understand it, so I won’t actually speak about it.

But when National has worked with the New Zealand Commerce Commission, it was work to provide protection that does not stifle business, but promotes better buying, better investment, and better businesses. I do not believe that this bill actually does that, and because of that, I cannot support it.

KIRITAPU ALLAN (Labour): It’s an absolute delight to speak on the Commerce Amendment Bill. I came down, toddled down, from my wee office in Bowen House as I was making the trek over, and I was quite excited tonight because I thought I was going to be giving a cheerful speech about this whole House being in support of common-sense amendments for our Commerce Act. When I went through, and I’d prepared this great little summary about how it’s not often that we can all agree on striking a pretty finely nuanced—there’s a nuanced line between, I guess, enabling a competitive market to get the best from our economy, and, as we all know, competition is a core underpinning of our economic model.

But, in turn, the purpose of the Commerce Act, the principal Act—already given my speech and everything—is to promote competition in markets for the long-term benefits of consumers. So I was heartened when I was reading the remarks of the former National Minister Jacqui Dean, particularly with regard to undertaking market studies. This is the bit I couldn’t understand—what is the Opposition saying? That’s why I came down here to give this jubilant kind of commendation to the whole House, because she said, in June 2017, that “These proposals”—speaking in regard to the market studies—“would include empowering the Commerce Commission to undertake market studies and improve its enforcement actions without having to go to court.” It said that it would allow the Government to be proactive rather than reactive.

But it seems that the Opposition has decided to go against what the Hon Jacqui Dean was recommending when she was at the helm for that Opposition party, and they’ve decided to react to common-sense legislation for the betterment of our economy. Now, that doesn’t make any sense to me, because, look, whilst I’m not a member on the commerce committee, I am indeed a consumer. I want to commend the Hon Kris Faafoi, because what he has been required to do in a very short amount of time is strike the balance between enabling competition law and getting the right balance to enable our economy. That isn’t easy, but there is plenty of work that has been undertaken—that was undertaken, indeed, under the last Minister, which is why it’s absolutely bamboozling on this side of the House to understand why that side of the House is not supporting common-sense legislation.

But, look, I’ll turn to the substantive matters in terms of what this amendment bill actually does. It does three parts. I’m not going to spend too much time waxing lyrical in regard to the airport regulation component, but I do want to touch on the market studies, and I do want to touch on the alternative enforcement provisions. Again, it was just this week—I’m going to quote the honourable—where is it? Oh, goodness me, my notes are all over the show. Anyway, I want to quote the Hon Jonathan Young, who this week said in regard to—

Brett Hudson: The “Hon”? He’s got a promotion.

KIRITAPU ALLAN: Wasn’t he? I thought he was “Hon”.

Hon Member: Of course he’s honourable.

KIRITAPU ALLAN: Well, anyway, that fine gentleman from New Plymouth—and he’s honourable in character, because I absolutely agreed with his remarks from this week. He said, in regard to this bill that’s going through this House with the great gusto and support of the former Government—he said, in regard to what happened with BP this week—now, we all saw that there was a whole range of what looks to be anti-competitive behaviour. That was shown through a series of correspondence which we’ve had a little insight into over the course of the last week. But what that honourable member from the Opposition said was that that’s why the Commerce Commission—he spoke in favour of these amendments. “That was why giving the Commerce Commission more power to study petrol market pricing was so important, he said. The Commerce Amendment Bill”—the one that this Government is currently passing—“introduced to Parliament”—this is a quote, apparently—“on March 28 will give the Commerce Commission the power to study the structure and behaviour of markets, and compel organisations and businesses to provide information to them.”

Now, that was the position just this week of the Opposition in regard to these issues, so I don’t understand—and, you know, look, many of us sit and we work pragmatically together, but I just don’t understand why you’re flip-flopping on such fundamental issues that benefit all New Zealand, striking the balance between ensuring that consumers get the best in the long run and maintaining healthy competition. You know that, we know that, but some of us—that side of the House—decide to play politics with an issue that just should not be a ball to kick around, right?

Anyway, with regard to the market studies, let’s just take, for example, if this week or prior to now there had been the ability, when there was some suspicion that there might have been some fiddling going around and some strong-arming in some industries or some markets—for example, petrol and its price fixing—if the Commerce Commission had on reasonable grounds determined that in the public interest it was important to conduct its own inquiry and its own market study, it could have requested information. It could have requested reports or financials to make sure that every single consumer in New Zealand is benefiting, as it was intended to do under the original Commerce Act, to make sure that all consumers were in the long run getting the best from our industry. So I absolutely want to commend—I came down here ready to commend the National Party and our side, but anyway, I can’t do that any more. I want to commend the work of the Hon Kris Faafoi.

This is a nuanced, this is a technical, this is a complicated area of law. Some people know that, and some people spend a lot of their time on it. I took the opportunity earlier this afternoon to go through a broad range of submissions that were made on the original inquiry, and I think there was a gentleman that I must turn my mind to and make commendation of some of his remarks. I’ll start with his conclusion on the report that he gave. He was an ex—oh, God, my notes are all over the show. There we go—there we go. His name was Donal Curtin, and he was a former member of the Commerce Commission earlier on in the early 2000s, straight after the introduction. [Interruption] He’s probably one of your best mates. But one of the things that I found interesting from his perspective is he said, look, “I start from a reasonably pro-business standpoint. I am sympathetic to arguments that businesses with market power must be allowed (even required) to compete vigorously, and that the law and jurisprudence must be clear enough (as much as it can be in this difficult context) to avoid dynamic or other ‘chilling’ inefficiencies.” So, effectively, he’s going to what the Opposition has been saying. But he said, “But even from where I stand,”—even from where I stand on the pro-business side of things—“I think it’s reasonably clear that the status quo has failed.”

Again, I cannot understand why the Opposition is playing politics with such a significant area of law to benefit all of our communities. Both sides of the House know this. I have no idea what you fullas are up to, but anyway, “even from where I stand, I think it is reasonably clear that the status quo has failed. The test for anti-competitive behaviour is too weak: its design allows anti-competitive behaviour to slip through. It … risks misidentifying potentially pro-consumer behaviour.”, and so on and so forth.

Hon Member: Whose speech is this you’re reading?

KIRITAPU ALLAN: This submission is a great speech, and he’s probably from your quarters. His name’s Donal Curtin. He submits on pretty much everything—a former member of the Commerce Commission—and I think that your side of the House might benefit from sitting with somebody—

DEPUTY SPEAKER: Order! Would the member please stop bringing me into the debate.

KIRITAPU ALLAN: My sincere apologies, Madam Deputy Speaker. Now, look, we can’t wax lyrical. I’m still bamboozled as to what the Opposition’s up to. But what we do know is that this side of the House is taking pragmatic and prudent measures to ensure the long-term viability and security of consumers. That was the original intention of the Commerce Act, and that is what this Minister of Commerce and Consumer Affairs has done—effectively, agreed with what your former Minister of Commerce and Consumer Affairs said, agreed with what our good friend Jonathan Young has said just this week—to ensure that issues like BP and everything that we’ve seen in that correspondence don’t have a long-term detrimental effect on consumers. Thank you, Madam Deputy Speaker.

Hon DAVID BENNETT (National—Hamilton East): Thank you, Madam Deputy Speaker. It was an interesting speech from the last speaker, Kiritapu Allan, who took the Green call, but I’d just like to acknowledge Kris Faafoi, the Minister of Commerce and Consumer Affairs, who’s a very good Minister, but in this case has been led astray by his officials and by the Labour Party. In this case, we do not need to give the Commerce Commission any more power than they already have. If there’s one body in New Zealand that does not need any more power, it’s the Commerce Commission. It’s had a history of making mistakes over 30 or 40 years in regard to mergers and acquisitions. It should not have any more power than it does at the moment, and to even curtail its powers would be a good move—not to give it more power, as this Government is intending to do.

If ever you want an example of how bad the Commerce Commission can be in its decision making, look at the dairy industry, for example. The dairy reforms, supplemented by the Commerce Commission’s role in undertaking that role—they have no idea what they’re talking about when they do a dairy reform. They have people there that do not understand the industry. They make judgments around the industry that are completely incomprehensible to those in the industry, and yet we want to give them more power, and yet we want to give them the ability to make their own decisions about what they want to investigate and do market reports on.

If anything, we should be limiting their ability to make reports and to investigate. They do not know what they’re doing, often, and they have stopped so many mergers and acquisitions in this country’s history that would have actually been good for our economy. To give them more powers at this time is something that would be difficult to see that it should be taken on board.

There was good legislation in this area that was going to be promoted by the previous Government. The current Government has taken it much wider and given a lot more power to the Commerce Commission, an organisation that should really look at itself, go back and reflect on its poor judgment over many years, and actually look at having better judgment going forward; not give them more powers and not give them the ability to make more and more market reports, which I’m sure will not be in the best interests of New Zealand. Thank you, Madam Deputy Speaker.

GARETH HUGHES (Green): What a farce. I can’t believe the speech that I just heard from the member David Bennett. Probably the most damning thing I could do is table the Hansard in this Parliament in response to that speech. Here’s a member who said that the one institute in this country we should not give more power to is the Commerce Commission. The member said he couldn’t point to a single thing it had done in 30 to 40 years that was beneficial. The member said this was a place we should not give extra power to. I can’t believe that that member is siding with the duopolies, the monopolies, the price-gougers—all the scourges we’ve seen of consumers in New Zealand, and there have been many, many abuses over those 30 to 40 years. The National Party, despite the genesis for this exact legislation being in the National Government, is railing against it. The only word I could think about was “farce”.

I’m happy tonight to be saying in this House that consumers will be better off as a result, but it’s disappointing that the National Party is not being part of this, because, really, this should be an entirely non-partisan, common-sense, reasonable issue. Supporting New Zealand consumers to get a fair go surely is something every member in this House could agree with, but apparently not, and apparently not with David Bennett.

This is good, simple, common-sense legislation. What we’re simply talking about is giving the Minister of Commerce and Consumer Affairs and the Commerce Commission the ability to do a market study into an industry. Just this very week we’ve seen on the front pages of our newspapers, in the headlines on the news, what happens when markets aren’t working, when information isn’t being provided transparently to the public, where we see apparent unfair pricing, ripping consumers off. The very week this is hitting our news. National was saying we shouldn’t be giving the power to look into these markets. I acknowledge the work of the former Minister, Judith Collins, for doing the energy market review that the current Government is following up on. But it’s simply staggering that National members, in their speeches, aren’t supporting this.

This is something that not just the Government and many players in the New Zealand economy are calling for; it’s what the Productivity Commission is calling for. It’s what the OECD is calling for. It’s what various dozens of other countries in the developed world have: the ability to conduct market studies. Ultimately, what this is about is protecting New Zealand consumers. We’ve seen throughout our history—being a small country, an isolated island nation—where some market players have had outsized influence, and who’s been the worst off as a result? It’s been Kiwi consumers, be it in the telecommunications market, in the past, or energy. Just look at the state of our housing and building industry and the inflated costs we pay versus other countries.

The second area that this legislation addresses is it makes it easier for the Commerce Commission to recommend to apply further regulations to airports. We see quite a strong debate in this country between the airlines and the airports, because the airports are regulated under the Commerce Act and have a guaranteed price income, based on their regulated asset base. Quite rightfully, we have that tension because, essentially, if you have a monopoly that’s regulated, such as this, you do have a licence to print money. There is the incentive to overinvest in infrastructure and their assets, to increase their revenue base going forward.

While the documents—I note, prepared under reviews by the former National Government—pointed out it’s working relatively well, it was important to have this secondary, reverse protection lying in reserve in case it was needed. Ultimately, what we’re seeing tonight is the Government standing on the side of consumers, making sure they’re not paying inflated costs, be it at airports, be it in various markets such as energy, the petrol industry, or the supermarket duopoly. Yet we see National standing on the side of those who would not give greater information to consumers; the National Party standing on the side of those market manipulators who would charge consumers more; the National Party actually going against their original work when they were in Government; the National Party going against common-sense reasonableness; the National Party going against the advice of the Productivity Commission and the OECD—it’s simply staggering what we’re seeing tonight. But I’m proud to say that this side of the House is standing up for Kiwi consumers, to make sure they get a fair go. Kia ora.

DEPUTY SPEAKER: The next call is a split call—a five-minute call.

Dr PARMJEET PARMAR (National): Thank you, Madam Deputy Speaker. I’m taking a short call to oppose the Commerce Amendment Bill. It was really interesting to hear the speakers who contributed before, from the Government side. One thing that came out from the previous speech was that the member Gareth Hughes was really surprised to see that we are not supporting this bill. We also heard that it should be common sense to support this bill, and that is only because the member was unable to differentiate between what is common sense and what is not making sense in this bill. So let me get into that.

As we heard before, this bill is to amend the Commerce Act 1986. There are three main components in this bill. To bring that common sense in terms of why we are opposing this bill, I would like to touch on two components of this bill. The first component is that this bill will enable not only the Minister in charge—that is, the Minister of Commerce and Consumer Affairs—but also the Commerce Commission to carry out competition studies. This is purely to prepare competition reports, to get insight into the market, and this is not to see any breaches of the Act. We fully understand the competition studies, and we support healthy competition. We want to see competitive markets in New Zealand. We want to see that consumers are getting value for their dollar.

But what we don’t want is that power to be extended to the Commerce Commission. When National was in Government, we did work on this review. We reviewed the Act, and at that time we recommended that this power should be given only to the Minister. Ministerial oversight is important in carrying out competition studies. But, yes, Labour has picked up the work that was done by the previous National Government, which is great. But what they have done is they have extended that ability to the Commerce Commission as well, which we do not support.

The second point I want to touch on very quickly is that the bill will actually strengthen the regulatory regime under Part 4 of the Act, and that is about the airports. This Part 4 regulates three international airports—Auckland, Wellington, and Christchurch. So, yes—three airports. These three international airports are subject to Part 4 of the Commerce Act 1986. What we have seen is that the current information disclosure regulation is working fine. So the main interest is to see that the consumers are looked after, that their interests are taken care of. Even the review by the Ministry of Business, Innovation and Employment says that the current information disclosure regulation is working fine in taking care of long-term customer interests.

So why do we need to bring another layer of regulation here? We don’t see any evidence that the current information disclosure regulation is not working, so we feel that this is totally unnecessary. For these reasons, we do not support this bill. Thank you.

PAUL EAGLE (Labour—Rongotai): Thank you, Madam Assistant Speaker. It’s a pleasure to be taking a call on this bill. I think my colleague Michael Wood was trying to explain to us that the Minister of Commerce and Consumer Affairs, the Hon Kris Faafoi, is probably the most handsome Minister in the House—I think that’s what you were trying to say—and the only MP who doesn’t want or need to go on Dancing with the Stars. So I’m certainly supportive and privileged to be talking this evening.

We heard a rather miserable speech. There’s been quite a lot of misery. I came here to the House quite excited, but I hear misery. The member from Hamilton East, David Bennett, who’s now departed—I mean, Waikato is a happy part of New Zealand; I can’t believe things are so miserable up there—talked about stopping this and stopping that and not wanting to give more power here, and there, and I thought, “Poor David, this must be a miserable life in Hamilton—

ASSISTANT SPEAKER (Poto Williams): Order! Please refer to members by their full names. Thank you.

PAUL EAGLE: Absolutely—sorry, Madam Assistant Speaker. But look, what we’ve heard tonight is that this is a common-sense bill, and there should be a bipartisan approach, because, after all, what we want to start doing, and what we are doing, is protecting New Zealand consumers. I’m really happy to see and happy to support the Minister’s commitment to supporting a more competitive, confident, and productive business environment that will really deliver a lot more positive outcomes for New Zealanders.

When you look at the bill itself—something that’s been missing from lots of speeches; we’ve talked about lots of hoo-ha, but not really the bill itself—there are three parts there.

Andrew Bayly: That’s right. Let’s hear it from you.

PAUL EAGLE: There are—well, someone has to bring common sense, and let’s just carefully consider things here. There are three parts. One is to make amendments to the airports regulatory regime in Part 4 of the Commerce Act. I am the member for the electorate where we have Wellington Airport. I actually have two airports—not many other electorates could boast that: a small international airport on the Chatham Islands, as the honourable—

Hon Christopher Finlayson: Which needs to be properly funded.

PAUL EAGLE: That needs to be properly funded—thank you, the Hon Christopher Finlayson.

Hon Christopher Finlayson: I got them the wharf; you get them the airport.

PAUL EAGLE: We’ll get you the airport—the “Finlayson Memorial Airport”, maybe. Secondly, introduce a—

Hon Christopher Finlayson: I like you, Paul.

PAUL EAGLE: Ha, ha!—competition studies, market studies regime; and, number three, make changes to the alternative enforcement mechanisms available to the Commerce Commission, that great institution—as the member for Hamilton East would attest to.

So in this package, there’ll be a range of amendments introduced that signal the Government is committed to a competition system and that the commission itself, the Commerce Commission, has the tools it needs to, as I said, get good tools to protect New Zealand consumers.

If I look at the airports regulation in the time that I have left, a short time—look, these were carried out by a review by the Ministry of Business, Innovation, and Employment officials some three years ago now, if not four years ago, between 2014 and 2016. It looked at the effectiveness of the information disclosure regime. And, look, it was largely working. The officials came back and said there was no compelling case to move the airports to something that was more heavily regulated, so no need—sorry, there wasn’t a compelling case for a more heavy-handed negotiate, arbitrate regime. However, one thing the report did say is that the officials were concerned that there was no credible threat of further regulation in the Act. If the current regime is no longer effective it could strain the market power of the regulated airports.

I commend this bill, to the House and I hope—

Andrew Bayly: What about the detail?

PAUL EAGLE: They say the devil is in the detail, but the devil actually sits opposite me instead. So I commend the bill to the House. Thank you.

ANDREW FALLOON (National—Rangitata): Thank you, Madam Assistant Speaker. It’s a pleasure to take a brief call tonight on the first reading of the Commerce Amendment Bill. I want to congratulate Minister Faafoi on bringing to the House what is a very good piece of work that was brought over from the previous National Government, but, of course, we will be opposing the bill for the very good reasons that my colleague Brett Hudson has already pointed out.

The key aspect of the bill is allowing for the Commerce Commission to undertake market studies. That is a laudable goal, and I think if the bill stuck to that, that is something we could all agree with. Where we differ, though, is that our belief is that those market studies should be initiated by Government, not by the Commerce Commission alone. That would allow for democratic oversight of those decisions rather than having them with the Commerce Commission and giving them an unfettered right to undertake those studies.

There are two other aspects to the bill which I want to briefly touch on, and I enjoyed Mr Eagle’s comment just now about how he’s got two airports in his electorate. I’ve actually been to the Chatham Islands and it’s a wonderful place, Paul, but I’ve actually got three airports in my electorate. I’ve got the wonderful Timaru Airport; Ashburton Airport, which is also very well-used; and the wonderful Rangitata Island Aerodrome. None of those airports are large enough, unfortunately, to be included in this bill, but there are three airports that are large enough to be included in the scope of this legislation, and they, of course, are Auckland, Wellington, and Christchurch.

The bill’s explanatory note states that it makes a change “to enable negotiate/arbitrate regulation, default/customised price-quality regulation, or individual price-quality regulation to be imposed on specific airport services by Order in Council.” Now, if members opposite understood that, they’re probably doing better than I can, but what I can say, or what I have to ask, is why? There’s actually been a study into Part 4 of the Commerce Act by the Ministry of Business, Innovation and Employment, and that review found that the legislation now is working and is effective. In fact, it was shown to be working so well that two airports of the three have actually lowered their fees as a result.

Finally, there’s the third aspect of the bill, and that is around alternative enforcement. That’s also an aspect that we support. It’s a sensible addition to the Commerce Commission’s, I guess, basket of goods that they can use. We do support it. I do look forward to the bill, if it does pass, going to the Economic Development, Science and Innovation Committee. It’s a very hard-working committee, led admirably by my friend and colleague Jonathan Young. If the bill does come to our select committee, I look forward to working on that bill and making it better, and perhaps putting it into a position where we can vote for the bill beyond first reading. Thank you.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Assistant Speaker. The intention of any commerce bill is to improve competition. That’s really about ensuring that any goods and services are provided to the public at the lowest-possible price whilst ensuring that industry makes reasonable and fair profit margins, and that’s exactly what this does. This is about this Government picking up some work which, admittedly, was done by the former Government but also improving it to make sure that we’re constantly vigilant.

I think one thing we’ve got to remember when we’re looking at competition law matters is that the market will always move. Regulation must change to keep up with the fact that industries move very rapidly indeed. Whilst one of the focal points here is airport pricing, a lot of what’s going on in this bill—competition studies and enforceable undertakings—will apply across the board, and one of the real challenges that this bill addresses is highly complex industries. They are industries like internet connectivity broadband services, where there are a number of providers providing extremely complex, technical services, which, to be fair, ordinary folk like us on this side of the House would perhaps struggle to comprehend, and we leave it to people more gifted in the department to explain.

But, nevertheless, what we absolutely need is to ensure that we have that expertise on hand so that we can embark upon a study which will tell us whether those industries are pricing fairly, so that the consumers at home, whether it be at the petrol pump, whether it be on the internet, or whether it be landing at the airport, are paying a fair and reasonable price, and that really is what the competition studies aspect of this legislation does. What we have there is an information failure, and anyone who knows a little bit about economics would know that information failure is one of those situations where the so-called invisible hand withers away, because if people don’t know the value and cost of what they’re buying and selling, then they can’t make an informed decision about what a reasonable price is. We know that a seller of a product has no incentive whatsoever to explain exactly what the input costs of that product are and what their profit margin might be—quite the opposite. What they want to let you think—as has been happening in the petrol industry recently—is that they’re making miserly profits and that, in fact, they’re doing their very best and all of the costs are being thrust on them from elsewhere. Well, that may well not be the case.

So what we have here is not just an ability to embark upon a market study, but rather an ability to embark upon a market study and—critically—to insist that information be provided and that there is compulsory disclosure of information. That information—it’s not evil to want to hold on to it, but it is a natural human trait to not want to disclose things when it’s not to one’s advantage, and that’s what competition studies and market studies are about. It is very clear in New Zealand today that there are a number of industries where market studies will be very useful, and the power to insist on that information will be very well used as well.

Equally, airport pricing—again, at the moment, we have a disclosure regime. The problem with airport pricing, again, is a problem of competition. But it’s not an information failure; it’s a monopoly problem. Like bridges and like ports and airports, it’s a natural monopoly—if someone wants to land in Auckland, there’s only one way to do it. So the problem we have is that a company like Auckland Airport—or any other airport, to be fair—can be a price maker, not a price taker. Now whilst it’s clear under the Commerce Act that a business cannot take advantage of market power, the fact of the matter is that we don’t know whether that’s happening or not unless we have full disclosure. So, once again, we have a disclosure regime, but it’s a disclosure regime which has been shown to not be working. What we need with airport pricing is something more—something lying behind that. So we need, essentially, a shadow of regulation.

It’s really important to point out that in this legislation, there’s no actual regulation of airport pricing, but if we don’t make it clear that, if needed, regulation will be imposed, then airports can run amok. So we need to regulate and, in particular, regulate those major hub airports where they are the only feasible way to travel to and from that destination. What we have is an excellent innovation—the fact that regulations can be made quickly, not through the somewhat more ponderous process of this House, but through an executive process whereby if there is misbehaviour there, that intervention will occur—and that will simply bring discipline. I hope and predict that regulation will never occur, because the mere suggestion that it might—as indeed has happened, with landing charges falling recently—will impose market discipline.

Of course, the third and very important aspect of this bill lies around the enforcement. We’ve got these rather arcane and archaic cease and desist orders under legislation at the moment. They have been used once, I understand. They were used, I think, in respect of Northport, which is the Marsden Point refinery port. They are used, actually, by consent, but are not really a workable, nimble kind of piece of regulation. So, rather than continue with that—and the costs, including having standing commissioners—we’re going to replace that with enforceable undertakings. It is a framework in which the commission—usually by negotiation, to be fair—will discuss the breach or the difficulties with the party and will frame an appropriate behavioural undertaking, and that will become part of the record. Importantly, with enforceable undertakings, they’re not just a bare promise.

The enforceable part is important. If, indeed, there is a breach of that undertaking, it acts as if it was a court order. So, in doing that it, it actually will be able to be taken on the basis that this was a court order, it has been breached, and punitive sanctions will flow.

So enforceable undertakings, again, give teeth. And let’s be fair when we’re in this kind of sphere, when we’re dealing with businesses of this size—airlines, airports, petrol companies, and so on—we absolutely need to have a very strong enforcement framework because they simply will price the risk. So we’ve got to have a framework where the risk of breach is far outweighed by any benefits that might otherwise be obtained.

So, looking at this, this is an excellent piece of legislation. I’m very surprised at the objections from the other side of the House because, in fact, this is a piece of legislation which seeks to give market discipline, and I would have thought that’s what the other side of the House was about. This side of the House supports it very much, not only for that but also because it looks to ensure that products, goods, and services are delivered to the consumer at the lowest reasonable and feasible price and that the economy proceeds on the basis not of profiteering but of fair pricing.

I think that’s something we need to think about a bit more, because we seem to have lost that. We seem to think that profiteering and super-profits are OK. Well, they’re not. Whilst any entrepreneur is allowed to take a profit for their risk, what we need to make sure is that there’s free information, full information, and fair information, and also that where the market power does exist, there are disciplines around that. That is exactly what this piece of legislation does.

So, back to the purpose of this bill. It’s about protecting consumers. It’s about ensuring that market failures are addressed and ensuring that prices are appropriate where and when they’re paid and about giving the Commerce Commission the powers that are necessary to achieve that not only in respect of airports and not only in respect of petrol pumps but across the board, whether that be by market studies, by enforceable undertakings, or elsewhere by regulation. I’m hopeful that regulation won’t be necessary in respect of airports. I don’t think, after will it will because I think we’ve got the tools here.

Minister Faafoi has done an excellent job in improving this bill and bringing it to the House. I commend it to the House.

A party vote was called for on the question, That the Commerce Amendment Bill be now read a first time.

Ayes 63

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

Noes 56

New Zealand National 55; ACT New Zealand 1.

Bill read a first time.

Bill referred to the Transport and Infrastructure Committee.

Bills

Crown Minerals Amendment Bill

First Reading

Hon CHRIS HIPKINS (Leader of the House) on behalf of the Minister of Energy and Resources: I move, That the Crown Minerals Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill.

This will be one of the less controversial things that this Parliament deals with when it comes to Crown minerals over the coming months. It is a largely technical bill that makes amendments to ensure that the existing Crown minerals arrangements operate effectively. The bill will amend the Crown Minerals Act 1991. The Crown Minerals Act itself provides for the efficient allocation of rights to prospect for, explore for, and mine Crown minerals and the effective management and regulation of those rights. It also provides for carrying out of activities in respect of those rights and a fair financial return to the Crown in exchange for the minerals.

The amendments to the Act will clarify and update statutory provisions and address gaps, inconsistencies, and errors within the Act to give effect to the Act’s purpose that I have just mentioned. This Government is committed to ensuring that the regulatory system that manages New Zealand’s Crown minerals and permitting regime and that underpins those sectors is fit and robust. The changes to the bill will ensure that the regulatory gaps that currently have been identified are closed. It will ensure that there’s clarity for regulators and for the industry around permitting, and inconsistencies in the Crown Minerals Act will be addressed.

The bill makes these changes so that the permitting regime for New Zealand Crown - owned minerals can remain up to date, effective, and efficient, and there are three main measures that this bill puts in place: first, closing the gaps; providing clarity; and addressing inconsistencies. I’ll talk through each of those three in turn.

The first is to close the gaps in the legislation that currently mean the Act would be used in a way that is not currently intended. The nature of the petroleum industry is changing and as such the pressures on this part of the Act are also changing. There’s been an increasing amount of acquisition and divestment activity in the sector. These transactions reflect a global trend of consolidation and rationalisation by large companies. Smaller, more agile companies are buying up mature, older oil and gas fields from larger companies with the intention of extending the life of the fields using specialist expertise. It’s important to utilise the life of current infrastructure to maximise the production of existing reserves. As the Prime Minister has said, there are existing permits that stretch decades into the future and it’s important that we make the best possible use of these.

It’s also important that the Crown retains appropriate oversight of the acquisition and divestment activity in the petroleum sector. This is important in order to manage the risk that changes within the sector may bring. Under the Act, any change of permit operator requires the consent of the Minister of Energy and Resources or a delegated authority. A change of permit operator occurs when the day-to-day management of a permit changes from one permit operator to another. Unlike a change of permit operator a change to the control of the permit operator does not require ministerial consent. The change of control of permit operator occurs when the majority of voting rights for a corporate body are transferred. This is not in line with the intent of the Crown Minerals Act as it allows companies to transfer operator responsibilities with reduced Crown oversight. The bill closes a gap in the legislation which would otherwise allow for a change in the control of a permit operator to take place without requiring the consent of the appropriate Minister. The amendment ensures that the Minister of Energy and Resources has oversight of appropriate transactions in the sector. It also ensures that the Minister must be satisfied that a change of control of operator will not affect the permit holder’s ability to comply with an agreed work programme.

The second area which the bill addresses is around clarity. The bill provides clarity around the clauses in the Act which could be interpreted in multiple different ways or where the meaning of the clause is currently unclear. In order for regulators to effectively regulate the activities of permit holders and for industry to work within the regulatory system that is set out the regulatory system has to be clear and easy to follow. Legislation that is unclear may lead to confusion and unnecessary administrative burden for those regulating petroleum and mineral sectors and for the sectors themselves. For example, the bill clarifies that a permit holder must have an access arrangement to undertake minimum impact activities on schedule 4 land. Clarification such as this will ensure New Zealand’s regulatory system works effectively for both regulators and for the industry. A clear regulatory system will also provide a stable base for Government and industry to work together in a cohesive manner.

Finally, the bill deals with issues around inconsistencies. Where the wording of a clause is inconsistent with another Act or where it is inconsistent with the purpose of the clause, inconsistencies can create unnecessary administrative burden for those reliant on the regulatory framework and decrease the efficiency of the system.

The bill will ensure the regulatory regime that governs our Crown minerals is fit for purpose. The bill will close gaps, clarify unclear provisions, and address inconsistencies currently in the Crown minerals regime. This’ll ensure we have a regulatory system that remains effective and efficient while at the same time providing clear and transparent expectations to industry. Our goal is to have mineral and petroleum industries that are responsibly delivering value to New Zealand, and the amendments in this bill will help us to achieve that. I commend the bill to the House.

JONATHAN YOUNG (National—New Plymouth): Well, that sounds like the old Labour Party, wanting to see a good and robust oil and gas industry.

I’m very pleased to stand and speak in support of this bill. Recommendations of these amendments came through the previous Cabinet and, obviously, are supported by the current Government. I notice that in the debate notes that were supplied to members who speak on this bill, from the Parliamentary Library service, that they say, “There will only be minor, localised impact on businesses.” It sounds like the same advice that they received when it came to no more offshore exploration. Oh! That’s right; they didn’t receive any advice.

I’d like to just address, and I think in a practical sense because I do support many of the statements that the previous speaker said regarding a robust regime—

Hon Chris Hipkins: Which ones don’t you support?

JONATHAN YOUNG: Not all. Obviously he’s been well prepped. The issue is that when one company, through share purchase, is able to purchase another company, particularly around a petroleum asset, the concern that the Government, any Government of the day, has is that the new purchaser must have the financial wherewithal and ability to be able to follow through with the decommissioning of that asset.

When fields come to end of life, as Mr Hipkins has said, often what can happen is that a company that has developed and extracted from that field, often a large international company with very high overheads, will sell that asset to, as the previous speaker said, a more nimble company that has specialist skills, in order to be able to extend the life of that field. Often the owner of the field will sell that asset and that field and avoid considerable decommissioning costs in the long run. A field that is decommissioned, especially an offshore field, will often be in the realm of $100 million. So we are very concerned, this side of the House and obviously that side of the House, that companies that pick up those fields, because they have those skills to bring extended life and extended resource from those fields, have the capability when that field is finally exhausted to do a thorough and proper decommissioning.

So this is why this bill is saying that if there is the lack of consultation or the lack of information given to the Minister there is a penalty regime that will act as a deterrent. The maximum penalty for not notifying a change of control of a tier 1 permit operator is $200,000. If that new purchaser, new owner, absolutely obtains control of a tier 1 permit without ministerial consent, the maximum penalty is $800,000. So those are quite significant deterrents for not fulfilling those requirements.

Then, as the bill states, the Minister must not just be notified but the Minister must also give prior consent. So what will happen, of course, is that New Zealand Petroleum and Minerals, in this particular case, will go through and do a thorough assessment to understand and validate the capability of the purchasing company to be able to fulfil those requirements and obligations. Otherwise those costs will fall on the taxpayer. Let me tell you that the people I talk to in the industry never want that to happen. They have a fine reputation to maintain and a fine commitment to our environment and to serve the people of New Zealand.

So I’m very happy to support this bill to the select committee. Thank you to the select committee, and thank you to the former speaker, that he is sending it to the Economic Development, Science and Innovation Committee. We do hope that we won’t have any sudden Supplementary Order Papers land in the committee stage as well. Thank you.

Dr DEBORAH RUSSELL (Labour—New Lynn): I rise to commend this bill to the House. It’s a tidying-up bill. It’s a tidying-up bill in two senses. I do want to talk about both those senses in which it’s a tidying-up bill tonight.

As has been—eloquently?—described by Mr Young, this bill deals with what happens at the end of life, in some respects, of oilfields. This is the first aspect of tidying-up in this Crown Minerals Amendment Bill. What goes on when an oilfield or a mineral deposit gets to the end of its life is that the original firm that perhaps discovered, developed, and then used the oilfield or the mineral deposit or whatever—they pull out. They’ve gotten their share out of it, and they’ve reached the point where, from their point of view, continuing to work the field would just engage them in costs that they don’t want to spend—in fact, it’s reached the end of its profitable life from their point of view.

The original company or the business that has developed and used the field says that, actually, it’s time to move on. Look, this is a really common pattern in any sort of business or in many activities. In many activities it’s very easy to, say, get the first 50 percent of the profits—or, you know, from my old profession as a university lecturer, it’s dead easy for students to get the first 50 percent of the marks—but often it’s a lot harder to get say the next 20 percent of the profits. So you’re up to 70 percent overall; then, it’s even harder to get the next 10 percent of the profits. It gets harder and harder and harder to make a decent profit out of an oilfield. At that stage, what happens is that the company, the business that was exploiting the oilfield in the first place, stops and they hand it over to a specialist firm, a specialist firm that has real skills and expertise in, say, getting the last 20 percent of the oil, the gas, or the mineral out of the field. They’re clean-up companies. If we were being perhaps a little rude we might call them scavengers, but that would be unfair. What they are are firms with specialist skills in cleaning up at the end of a field.

It is in that sense that this bill is about tidying-up. It’s about tidying-up the end of an oilfield. As has been described, there are some real risks with this, because, typically, when the Crown allows a company to exploit an oilfield or a mineral deposit or whatever, one of the things that it is very concerned about is ensuring that that field is reinstated, that it’s tidied up properly, that any environmental ills are put right, that wells are properly capped off, and that when the last of the minerals, the oils, are taken out of that field, it is all tidied up. The big concern there is that the tidy-up firm will not have the resources to do it. That’s why we have a system of permitting in place: so that the firms are contractually obliged to tidy up at the end so that we can assess them as to whether or not they really will have the resources to follow through on that obligation. That’s why, when the permit to exploit a field is changed from one operation to another, we actually get some ministerial involvement. The Minister has to be notified and has to certify that it can all happen. So it’s ministerial approval. Now, that’s quite a high level of engagement from Government in a field.

But there’s a little bit of a loophole in the current legislation, and I want to make it very clear by means of an example. At the moment, when there is a change of a permit operator, then that requires the consent of the Minister. But what say the permit is held by a company which was set up for the purpose of just holding the permit? Imagine a firm, which we might call something like—I don’t know—Deep Drill Ltd. They hold the permit. They’ve got to the end of the life, and they decide that they’re going to transfer the permit, sell the permit on, to another firm—I’m going to call this firm something like Wring the Last Drop Out Ltd. When it is just transferred from Deep Drill Ltd to Wring the Last Drop Out Ltd, you sell the permit, then you get ministerial approval—you get the Minister involved. But there’s a way to avoid that. Instead of selling that permit, what could happen is that the company Deep Drill, which holds the permit, could be sold—all right? So the control of the company could be sold.

So Wring the Last Drop Out Ltd, instead of buying the permit, would, in fact, buy the company. So you change who controlled the operation of that permit, and at present that change of control doesn’t need ministerial approval. In other words, there’s a loophole there which needs to be tidied up and closed up, because, in actual fact, that is a change in who is operating that oilfield or that mineral deposit, but because it is the company ownership that changes rather than the ownership of the permit itself, the Minister doesn’t get involved. Yet the reality on the ground is actually exactly the same as if it would have been a straight board sale of the permit. So we’re going to get the Minister involved and make sure that when the control of the company that holds the permit is changed, then the Minister gets involved too. That’s one of the tidying-up aspects of this particular bill. It is seeking to tidy up that particular little loophole that was existing there.

The work that does all of this is sitting in clause 8 of the bill, and you’ll see that there are a whole set of rules there that in actual fact mean that when there is a change in control that means that the Minister must be notified and go through exactly the same sorts of processes as there would have been if the permit was sold directly. So that’s a very clear piece of tidying-up in this legislation around the tidying-up of the oilfields and mineral deposits. That’s the first obvious reason why it’s a tidying-up bill.

I do want to draw your attention and the attention of my colleagues to another aspect of this bill in the sense in which it’s also a tidying-up bill, and I invite my colleagues to turn to the actual bit itself in the general policy statement—that’s the first part of the explanatory note. There’s a particular word that is used again and again and again in this explanatory note. You see, the bill, the Crown Minerals Amendment Bill, clarifies that an extension of the duration of a permit cannot be denied. It clarifies time frames for notifying the ratification of permits. It clarifies processes in relation to changes of control. It clarifies that an access arrangement is needed. It clarifies which Ministers enter into access arrangements. It clarifies the applicable royalty of calculations. Clarifies, clarifies, clarifies, clarifies, clarifies—repeated again and again and again in the explanatory note of this bill. That’s actually really important.

A lot of the aspects that this bill addresses were kind of there in the legislation but just weren’t as clear as they might have been—in particular, they weren’t necessarily as clear as they might have been for changing commercial realities. So part of what this bill does is clarifies the regulatory framework for Crown Minerals Act. That’s really important. Businesses hate uncertainty. Regulators hate uncertainty. Government hates uncertainty. Business can operate pretty well in adverse conditions, business can operate well in good conditions, but talk to business operators and what they don’t like is uncertainty.

We are a Government that provides certainty. Our oil and mineral companies know with certainty how long they’ll be able to get exploration permits for. They know how long they’ll be able to continue to operate for. We have developed great certainty around this. This bill adds to the certainty of the regime around oil exploitation, around mineral exploitation, and around the exploitation of Crown minerals in New Zealand. That is why that word “clarification” is terribly important in this bill. It’s another aspect of the tidying-up that this bill does. So there are two sets of tidying-up: one for the oilfields that are being tidied up and one tidying-up the actual legislation to create certainty for business.

ANDREW FALLOON (National—Rangitata): Thank you, Madam Assistant Speaker, for the opportunity to speak tonight on the first reading of the Crown Minerals Amendment Bill. As my colleague Jonathan Young has pointed out earlier this evening, we will be supporting this bill. It makes a number of common-sense changes, as the previous member, Deborah Russell, spoke about, clarifying some of the processes around the Crown Minerals Act.

I am a bit worried, though, because, as all members can see, it is quite a skinny bill. So I’m a bit worried about what might happen to it in select committee and as the bill winds its way through the House. So I went through the principal Act this afternoon, which is the Crown Minerals Act, and it has in its introduction that “The purpose of this Act is to promote prospecting for, exploration for, and mining of Crown owned minerals for the benefit of New Zealand.” That intrigued me, because I thought to myself, well, this isn’t really a Government that’s promoting the prospecting for, exploration for, or mining of things in the Crown estates. So I’m a bit concerned about what the bill might look like after it does proceed through this House.

We’ve just seen, just recently, what this Government wants to do when it comes to the oil and gas sector. Right before the Prime Minister Jacinda Ardern jetted off to London to speak to a very important gathering of students in London, she announced, essentially, the shutting down of the oil and gas industry in Taranaki. So I’m very concerned about that particular paragraph in the Crown Minerals Act and what the Government might do to it through this bill if they choose to amend it, because it is so contrary—that paragraph—to what this Government thinks about the oil and gas sector. Mr Jones, “Matua Jones”, I know that he agrees with me, and that’s why he had his head in his hands at the announcement shutting down the oil and gas industry in Taranaki. What we’ve found out this afternoon from my colleague Jonathan Young, in questioning Andrew Little on behalf of the Minister of Energy and Resources, who came down to this House and said that they had consulted with the industry. He had to come back later on that afternoon and admit they hadn’t. He admitted they hadn’t. They hadn’t talked to Methanex; they hadn’t talked to the industry.

That brings me back to this Crown Minerals Amendment Bill. It’s about to go off to the excellent Economic Development, Science and Innovation Committee, where the Government does not have a majority on the committee. So I think there’s a valid concern about what this Government might do to this bill when it comes to the committee of the whole House in putting forward Supplementary Order Papers to change the purpose of the Crown Minerals Act and, once again, not give the oil and gas sector any opportunity to engage or consult on those changes.

We’ve already seen the devastating effect that that sort of announcement can have on the oil and gas industry. Literally the day that that announcement was made, the largest engineering company in Taranaki announced a halt on all new employment. Those are the regions and those are the people that these sorts of changes are going to impact on, and all the billion-dollar funds that Shane Jones has will not create those sorts of industries and employ those sorts of people in regional New Zealand. Thank you very much.

Hon RUTH DYSON (Labour—Port Hills): It’s an absolute delight for me to be able to contribute in this debate, but can I first of all say how disappointed I have been this evening with the lack of contribution from the National Party. This is an area where, I think, the industries need a clear message from this Parliament about the regulatory regime under which they should operate. And all I’ve had from the National Party is some quite petty point-scoring. I think this Parliament should—not on all occasions, sometimes there’s valid political points to be made, but on occasions like this, it would be appropriate for us to focus on the facts, focus on the bill, and get a good, strong, united voice from this Parliament.

I want to commend my Canterbury friend and colleague, the Hon Megan Woods, for this bit of work. She’s put in a huge amount of effort over very broad-ranging portfolios since we became part of the Government just six months ago. It’s certainly to her credit that she’s able to get on top of so many issues, including ones with quite complex challenges facing them. This Crown minerals legislation, I hope, is one of many in this space that we debate over the coming term of this Parliament. I imagine that this particular bill will be the least contentious. I think we’ll have far more robust debates in the future, as we have in the past, over Crown minerals, because we know that this is at the cutting edge of the difference between that side of the House and this side of the House and how we regard our responsibility to protect certain parts of our country.

But that’s for future legislation; this legislation is quite narrow. It’s quite technical, and as my colleague Deborah Russell noted earlier, this is really a lot about clarification rather than big policy issues. That is not to say that they’re not important. Clarity in regulation, clarity in legislation, is vital if we want to expect industries to make investments into our future, and, obviously, we do want to do that.

The member who just resumed his seat, Andrew Falloon, was rather cynical, I suppose, in his commentary about “Matua Shane Jones”, and I want to just rebuff that and say that I have known Shane for many years and he has never been short of a strong contribution to make. As the Minister who is charged with supporting and encouraging regional development, he has really put a huge amount of thought and effort and passion into it, and I would have thought that the National Party, who have members of Parliament elected to represent many of those provincial areas, many of the electorates within our provinces—I would have thought that they would have been working alongside “Matua Shane Jones” to say, “How can we get this done together for the betterment of the people in those regions?” And, actually, they badly need it. They badly need that support.

The other point in this legislation, as well as the clarification that provides the certainty that I mentioned—you know, clarity in many parts of this legislation—is to ensure that regulatory gaps are closed. It’s a bit like tax legislation: sometimes you don’t really realise there’s a problem until someone pushes the boundary and then you realise that, either for the purpose of avoidance or evasion or because there is a genuine loophole that has never been recognised before, there is a problem, and I think it’s the latter of those cases. This legislation has never been used in the same way as, perhaps, it has been used by people looking for tax evasion opportunities, but it’s clear that there are regulatory gaps, and this legislation closes them. So that is ensuring for both the regulators and the industry around permitting. There is no doubt at all about what the legislation intends. So the inconsistencies that were previously in the Crown Minerals Act that were actually drawn to the attention of the previous Government, who ignored it, who sat on its hands and did nothing, are now being closed by this legislation.

The first measure is to close gaps in the legislation that currently mean that the Act could be used in a way for which it was not intended. Now, I don’t think it matters which side of the House you’re on or which party are from, I think everybody would agree that legislation should only be used for the purpose for which it was intended. As we’ve heard a lot in the last few weeks, the nature of the petroleum industry is changing. There’s been an increasing amount of acquisition and divestment activity within that sector and these transactions reflect a global trend of consolidation and rationalisation by large companies. This is not something that we should ignore, and this Parliament should always ensure that our legislation keeps pace with those sorts of changes within the industry. So that means, increasingly, we are seeing smaller companies purchasing late-life fields with the aim of extending their life and increasing production beyond the standard time frames. There’s a lot of positives from those changes. Greater production helps us with energy supply as well as extending the life cycle of assets: good for employment, good for investment.

But it’s important that the transfer of those assets be subject to proper oversight, and right now one of the loopholes that I described earlier in the law means that that is not always able to be partaken of correctly. So, for an example, any change of permit operator requires the prior consent of the Minister of Energy and Resources—in our case, of course, the Hon Dr Megan Woods or a delegated authority. A change of permit occurs when the day-to-day management of a permit changes from one permit participant to another. So, unlike a change of permit operator, a change of control of the permit doesn’t require prior ministerial consent. A change of that control occurs when the majority voting rights for a corporate body are transferred. That is quite a different situation than the earlier one I outlined. So that is not in line with the intent of the Crown Minerals Act, because it allows companies to transfer operational responsibilities with reduced Crown oversight. So that’s just an example of one of the many loopholes that are closed—loopholes that have allowed this legislation to be used for unintended consequences and which I will be very happy to see not only clarification around but also the gaps that I mentioned closed.

The other provision that I’ll just briefly mention where clarification has been brought into the Act, because this section could have been interpreted in multiple ways, is where regulators, in order to effectively regulate the activities of permit holders and for the industry to work within the regulatory system that is set out—that system must be clear and easy to follow. This is another example where it isn’t. The bill permits that a permit holder must have an access arrangement to undertake minimum impact activities on schedule 4 land. We’ve had a lot of debate in this House, and on the streets of our cities actually, about the abuse of schedule 4 land, which was proposed by the previous National-led Government. The public won that debate, and I was delighted to be part of the opposition to the proposals, so this is quite a different proposal. This is not proposing to mine on schedule 4 land, which is what the National-led Government does; this is saying that a permit holder must have access arrangements to undertake minimum impact activities on that schedule 4 land.

So we’ll have a clear regulatory system as a result of the changes in this bill. We will have loopholes closed that have allowed the legislation to be used for intentions other than what it was originally designed to deliver, and it will address inconsistencies that are in the Crown Minerals Act. Even though it’s a small bill and quite technical, I think these are really important measures for this House to be considering. I’m delighted to have made a contribution. I’m very proud of my ministerial colleague the Hon Dr Megan Woods, and I commend the progress of this bill to the House.

MELISSA LEE (National): Thank you, Madam Assistant Speaker. I’d like to commend the member who just took her seat, the Hon Ruth Dyson. Doing 10 minutes on a very small and minor technical bill is actually a feat indeed. I’m obviously not going to take 10 minutes to filibuster, because all parties are actually in agreement I think.

I was sitting outside in the lobby, just waiting and doing some other work, and I actually heard Deborah Russell speaking earlier. I just want to respond to her before I actually get on with this bill. I think she said—she said quite a few things, but I think there was one thing that she said that actually pricked my ears up. She was talking about how businesses don’t like uncertainty. I think she actually said that, “Businesses don’t like uncertainty”. I think on this side there were a few chuckles, and we have to actually agree that businesses don’t like uncertainty. I definitely agree with that.

The thing is that the oil and gas exploration industry, in Taranaki, got the message of certainty from this Government that they don’t back the industry, they don’t back the region, and they don’t care about regional economic growth or development. The Government doesn’t actually care about the 11,000 jobs that it literally killed off with its announcement to decimate the economic future of Taranaki and the oil and gas exploration. [Interruption] I know, I’m a little bit emotional, because I thought, “Hang on a minute. She makes sense. She’s talking about businesses needing certainty.” That’s right; they do. But the kind of message that this Government sends is the wrong certainty that they’re delivering for a region that they apparently care about.

Back to the bill. I know I get a little bit excited. I got this synopsis from the library. It’s a debate pack. This Crown Minerals Amendment Bill 2018 makes minor and technical clarification to the Crown Minerals Act of 1991. We should always do that. We need to update our legislation every so often. In terms of the kind of information that it gives me: it changes things like the duration of the permit, the time frames of notifying the revocation of the permit, the process relating to changes of control of permit, participants, permit classification. It just seems like they’re talking about permits, permits, permits.

But the thing that really, sort of, pricked my ear again was this whole issue of when the changes are not notified to the Minister, that it actually has a monetary impact on the company. Up to $800,000 when a Minister of Energy and Resources is actually not notified—I think that has to be a big deterrent for the companies to not break the rule.

I know I’m speaking slightly longer than I was meant to, and it actually reminded me of a recent event that happened in my birth country. On 27 April, the two Koreas actually came together in a big summit—the first time the North Korean leader actually crossed the border and they came together. This particular segment actually reminded me: is there a way that we could put a monetary penalty on any of those two countries, whether North Korea or South Korea, if they break the spirit in which they came together in the peace process? And I wish Korea the best of luck.

I commend the Minister. As the parties involved, we are all in support, so I commend the bill to the House and look forward to the submissions and the select committee.

GARETH HUGHES (Green): Kia ora, Madam Assistant Speaker. Ngā mihi nui ki a koutou, kia ora. The last member, Melissa Lee, asked for certainty. This Government will act on climate change—you can have that certainty. This Government is not going to keep throwing tens of millions of dollars of taxpayer subsidies at the oil industry—you have that certainty. This Government isn’t going to open coalmines on the conservation estate—you can have that certainty. This Government isn’t going to mine schedule 4 land—you can have that certainty. This Government acts on the most pressing issue, which our Prime Minister says is our nuclear-free moment, the greatest issue of our generation—you have that certainty, Melissa Lee.

It’s important to act, because the issue we’re talking about is our kids, their kids, and threatened species. But it is not just that; it’s literally countries like Tuvalu, Kiribati, the Seychelles, and Mauritius that climate change is affecting right now. That’s why when we talk about certainty, let’s talk about the important things, which are cultural extinction, our neighbours and whānau in the Pacific, our planet, our home. So, look, while we’re debating this legislation let’s also not forget the certainty of the last Government, which was a Government which would throw between $46 million and $80 million a year in tax breaks for the oil industry. I remember when Phil Heatley, the Minister of Energy and Resources, blew 240,000 bucks on a weekend hosting just 10—just 10—oil executives from offshore.

ASSISTANT SPEAKER (Poto Williams): Order! Can we come back to the bill, please.

GARETH HUGHES: My point, Madam Assistant Speaker, is that the previous Government threw all the support at the industry, but what did we see? We saw Shell surrender their permits. Anadarko’s left, Petrobras has left, and Apache’s left. In fact, over the last five years more permits have been surrendered—twice as many—than granted. And this is the issue, because what we are seeing is oil companies flee New Zealand under National, despite National support, and now we have to deal with this loophole, which was their Crown Minerals Act problem. Now, the issue, of course, that this legislation deals with, the loophole, is that approval’s needed for a change of permit operator, but if someone changes the company by buying it out you don’t need that approval. It’s a good, technical common-sense change, which I’m glad to see all parties support in this Parliament.

This bill increases the penalties from $200,000 to $800,000. Now, that reminds me: when we saw our greatest maritime environmental disaster, the Rena, we saw 300 tonnes of oil wash up on our beaches, and hundreds of millions of dollars of environmental damages, and the maximum penalty under National’s Resource Management Act at the time was $150,000. So this legislation overnight is increasing the penalties for those who don’t inform the Government and the appropriate agencies for a change of permit operator to more than the entire costs that were recovered under the Resource Management Act for our greatest ever environmental disaster. That disaster trashed that beach, and it broke my heart seeing those oil blobs wash up on those beaches and those dead birds in those baskets. At the same time, National was doing everything they could to attract those oil companies down to New Zealand, but they’ve fled, and now we have to fix this loophole.

I do want a respond to some of the comment on this debate. I heard the member, National’s spokesperson for the oil industry, Jonathan Young, who said we need to preserve the reputation of this industry. What reputation? I’ve seen the groundwater contamination under the Kapuni wells. I’ve been in Taranaki backyards where the night turns into day because of the constant flaring. I’ve talked to the landowners affected, with the sham access agreements that were signed. I’ve been in those small rural valleys where National voters, with tears in their eyes, came to tell me how cowboys in the oil industry had ripped their rural community apart because there weren’t guidelines. I’ve seen the fracking without consents in Taranaki. I’ve seen the oil spills from the industry off the Taranaki Bight. So don’t come here and talk about our reputation when there’s unfixable groundwater pollution in Taranaki. Don’t come talking about that when I have come to this House with photographs showing cows literally wading in oil and gas fracking waste, because it was easier to get a consent to drill a water bore than it was to frack for oil and gas.

So when we’re talking about protecting the reputation of an industry, let’s have facts. What we’ve seen over decades in this country is an industry that only acts when it’s pushed, and an industry that hasn’t acted and hasn’t garnered that social licence.

ASSISTANT SPEAKER (Poto Williams): Order! Back to the bill, please.

GARETH HUGHES: It’s important to fix our regulatory regime, so while we’re amending the Crown Minerals Act tonight with a small technical amendment, we also need to keep our eye on the bigger picture, which is the purpose of the underlying legislation, the Crown Minerals Act, which is—as we’ve heard in the debate tonight—to promote oil drilling and extractive industries in New Zealand. Now, I would rather have—and I’m urging the Government to adopt—a regime where the purpose is actually the safe and sustainable resource extraction by making sure we have a world-leading regulatory regime, not just an agency which is promoting drilling, mining, and fracking.

I’ve heard members of the Opposition say that they’re scared of potential, hypothetical, maybe, amendments that might come at some future point. It’s entirely hypothetical. What I do remember, though, is the urgency they put this Parliament in to pass the egregious Anadarko amendment, where their agency for oil promotion was charging activists. That was a Government that came under urgency to pass it, and a Government that was so incredibly hopeless that it had to introduce a Crown minerals amendment bill to fix the mistakes they saw.

So I’m proud to be standing with all parties in Parliament tonight and voting for this legislation, but let’s keep our eye on the big issue, which is the issue of climate change and the issue of making sure we’ve got a robust regime and sustainable industries in New Zealand. But let’s keep our eye on the issue and actually look at the facts and make sure that we do protect those farmers and the school which is within 500 metres of an oil and gas facility right now, today, in Taranaki—which wouldn’t be allowed across the Ditch, in New South Wales. Let’s keep our eye on those big issues as we debate this small, technical amendment, which is albeit a step forward. Kia ora.

BRETT HUDSON (National): Thank you, Madam Assistant Speaker. I also rise to support this Crown Minerals Amendment Bill. Quite remarkable, really, as my colleague Mr Falloon said earlier, that the purpose of this Act is to promote the prospecting for, and extraction of, Crown-owned minerals for the good of New Zealand, when just a couple of weeks ago, the Government that is now introducing this bill took steps to completely destroy the oil and gas industries in New Zealand and the 11,500 jobs that are reliant, either directly or indirectly, on those industries—those industries undertaking the purpose that this Act is all about.

Then, this evening, the speaker who immediately preceded me, Gareth Hughes, was talking about providing certainty in the nuclear-free moment of climate change, and what have they actually done? Well, that announcement to have no more exploration for oil and gas will make not one difference to one emission in the world at all, because all that will happen is that instead of that oil or gas being extracted in New Zealand, it will be extracted elsewhere. It’s not going to reduce emissions at all. In fact, there’s a real chance that it may increase emissions in New Zealand itself, because, of course, companies like Fonterra—which is a great example—which had announced a conversion programme on its dryers in the South Island from dirty coal to gas, is now no longer really able to go through with that investment, one would argue. So they talk about what they’re doing for climate change, they talk about a “nuclear-free moment,” and—

ASSISTANT SPEAKER (Poto Williams): Order! I am encouraging the member to come back to the bill.

BRETT HUDSON: What they actually do is seek to undercut that and then introduce into the House this bill, which is about supporting the activities that are still able to go on in Crown minerals extraction—a bill which has as its overarching purpose the prospecting and extraction of Crown-owned minerals for the good of New Zealand. Do one thing with one hand, take with the other—this is a Government which is not only mired in crisis and doubt but quite inconsistent.

The bill itself is non-controversial and just a series of technical changes. It is worthy of support in this House, but it’s worthy of more than that. It’s actually worthy that the Government reflect on what this bill does and realise that what this bill does is worthwhile, and it’s worthwhile for the future of New Zealand, not just a short duration under these changes. They should look to step back from the announcement they made a couple of weeks ago and to support the oil and gas industry, along with the rest of the Crown minerals industries in New Zealand, not only now but in the years to come. I commend this bill to the House.

ASSISTANT SPEAKER (Poto Williams): I call Parmjeet Parmar. I understand this is a split call; you have five minutes.

Dr PARMJEET PARMAR (National): Thank you, Madam Assistant Speaker. I’m taking this call to support this bill. So it’s a pleasure to take this call to support the Crown Minerals Amendment Bill in its first reading. But I have to say that the pleasure is just this much—really small—and I’ll get into that a bit later. But I would like to first respond to a couple of comments that came from members from the Government side. We heard about certainty, and we also heard that this Government likes to act, and, yes, we have seen that they like to act to get rid of jobs. We also got lectured by a member on the other side that our contributions are shorter. What we are worried about is the Government not being able to bring any proper legislation before the House. So what we have seen is in the first six months they were just bringing previous Government—that is, National Government—legislation before the House, and now we have this legislation, which is just tidying up bits and pieces in the Crown Minerals Act.

Yes, this tidying-up is required, and that’s why we are supporting this bill, because with the changing commercial realities we have to make sure that this legislation is effective and is efficient and that permit regulation is maintained in an effective manner, and that’s why we heard that this bill actually clarifies various things. This bill clarifies permit classification; this bill clarifies the extension of duration—how the process is looked at. This bill also clarifies the process of revocation. This bill also clarifies access to schedule 4 land. So, yes, there are a lot of clarifications, and these clarifications are required to reflect current commercial realities, and that’s why we are supporting this bill.

And yes—more ministerial oversight; we support that too, but what I have to say is that it’s really important that the Government keeps in mind that the stakeholder consultation is important, as this bill will be going through the select committee process, and I really hope that they will take into consideration the feedback that will be received from stakeholders during the select committee process. So I support this bill. Thank you.

ANGIE WARREN-CLARK (Labour): Thank you, Madam Assistant Speaker. I’m pleased to take a call on the Crown Minerals Amendment Bill. This bill amends the principal Act, the Crown Minerals Act of 1991. I applaud the Minister of Energy and Resources, the Hon Megan Woods—Dr Megan Woods; apologies—for introducing this bill to the House and for the careful consideration and speech by Minister Hipkins. This bill, essentially, sets out to maintain the effectiveness and efficiency of the permitting regime established by the principal Act. The Crown Minerals Act, broadly speaking, has a purpose to provide for “(a) the efficient allocation of rights to prospect for, explore for, and mine Crown owned minerals; and (b) the effective management and regulation of [these] rights;”.

It is fair to say that this is not an earth-shattering bill. That’s my one and only pun—sorry! We will be closing loopholes. Essentially, this is a fix-it bill in the true sense of the word. The amendments create and allow for the legislation to operate as was intended. It is fair to say that this bill is a systematic clean-up of unintended flow-on consequences. However, I thought I would give those in the House and those listening at home a few interesting facts about the principal Act to give some local context to the Crown Minerals Amendment Bill. For example, petroleum, gold, silver, and uranium existing—

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

Debate interrupted.

The House adjourned at 10 p.m.