Thursday, 29 November 2018

THURSDAY, 29 NOVEMBER 2018

THURSDAY, 29 NOVEMBER 2018

The Speaker took the Chair at 2 p.m.

Karakia.

Business Statement

Business Statement

Hon IAIN LEES-GALLOWAY (Deputy Leader of the House): Thank you, Mr Speaker. Next week, the House will further consider the Employment Relations Amendment Bill, the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, and the Misuse of Drugs (Medicinal Cannabis) Amendment Bill. On Thursday, 6 December, the Ngā Rohe Moana o Ngā Hapu o Ngāti Porou Bill (No 2) will receive its second reading. As previously notified to the Business Committee, there will be an extended sitting on Thursday morning.

Hon GERRY BROWNLEE (National—Ilam): Noting that the Government expects to make progress with the Misuse of Drugs (Medicinal Cannabis) Amendment Bill next week, has there been further consideration of the proposals from Dr Shane Reti for the inclusion of a licensing regime in the bill to make it workable so we avoid the ridiculous situation of it being legal for people who have a terminal illness to possess and use cannabis, but illegal for people to supply it to them?

Hon IAIN LEES-GALLOWAY (Deputy Leader of the House): I suggest the member consult with the Minister in charge of the bill.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. Hon PAULA BENNETT (Deputy Leader—National) to the Prime Minister: Does she have confidence in all of her Ministers?

Rt Hon WINSTON PETERS (Deputy Prime Minister) on behalf of the Prime Minister: Yes.

Hon Paula Bennett: Does she have full confidence in the Minister of Immigration’s handling of every aspect of the Karel Sroubek case?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, Mr Lees-Galloway inherited a defective, flawed, inadequate, and insufficient system of scrutiny for such applications. Ultimately, he himself became a victim of that inadequate system, admits that openly, and is committed to fixing it, and we have confidence in him doing so.

Hon Paula Bennett: Was the original decision to cancel Mr Sroubek’s deportation liability and grant him residency the right one to make?

Rt Hon WINSTON PETERS: With the evidence that Mr Lees-Galloway had at the time, and in the absence of the critical information he needed to know and which was never presented to him—that Mr Sroubek had gone back to the Czech Republic on more than one occasion—Mr Lees-Galloway can be forgiven for making that decision.

Hon Paula Bennett: Why didn’t the Hon Iain Lees-Galloway ask officials about the travel that was so clearly set out in the report and whether or not that travel included a visit back to the Czech Republic?

Rt Hon WINSTON PETERS: It would be axiomatic that if there was a proper, complete system in place, the officials would have presented all that information to Mr Lees-Galloway. He admits, and we know, that this system which we inherited is flawed, and we are intending to fix it up. This is the same system that allowed this following group of people to come to this country and stay: an Afghan convicted of sex crimes on Kiwi children, a grandfather-killer, and a woman who killed her husband, just to name but a few under the previous administration.

Hon Paula Bennett: Does she agree with Winston Peters, who said, and I quote, “I have got a full paper in front of me that tells me the details, and I am confident the Minister has made the right decision.”?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, most definitely so, given that Mr Peters himself was a victim of not having the information that should’ve been provided to him, such as that Mr Sroubek had falsely put in a claim with respect to his life being endangered should he have to go back to the Czech Republic, and he’d already gone back to the Czech Republic.

Hon Paula Bennett: Does she believe her Minister should have given any weight to Mr Sroubek’s claim that the Czech Republic, a European Union member, would “kill him while making it look like an accident.”, and if he did give it weight, what implications would that have on foreign affairs?

Rt Hon WINSTON PETERS: Well, first of all, Mr Sroubek did not narrow it down to just one agency that may be threatening his life. But the reality is that the critical piece of information that Mr Lees-Galloway needed to have to override his humanitarian concern for his fear of Mr Sroubek losing his life was that he had gone back, contrary to his application, to the Czech Republic. That’s what Mr Lees-Galloway—indeed, the Government—needed to know, and we were not afforded that information.

Hon Paula Bennett: Did the Minister of Immigration, the Prime Minister herself, and also her Deputy Prime Minister, having read the file, think it was justified to cancel the deportation liability on the information they had in front of them, which said that he was a fraudulent, lying, criminal drug dealer currently in jail?

Rt Hon WINSTON PETERS: There was information that was provided by his wife, for example, who I understand is the National Party’s informant on this matter. [Interruption] Don’t deny it—that’s a fact. His wife was backing him to the hilt. She was then but isn’t now, but the one piece—

Hon Gerry Brownlee: What’s the problem with that?

Rt Hon WINSTON PETERS: Well, the problem with that is that the member’s informant has changed her tune now. She asserted one thing when the process was in place—again, falsely—and said something else today. What’s wrong with that is we were entitled to know that the very grounds on which a humanitarian decision was going to be made were, indeed, not extant. That’s the fact of the matter. We didn’t know that—and it’s not in the file, by the way.

Hon Paula Bennett: What does she say to the over 600 families who have been denied residence in New Zealand in the past year in favour of giving a fraudulent, lying, drug-dealing criminal residency?

Rt Hon WINSTON PETERS: The reality is that to make that statement is to pursue the most cheap line in politics, horrifying as it is—to follow cheap, nasty politics. These people have not been chosen as against Mr Sroubek’s case; they’re all examined independently.

Hon Paula Bennett: Based on the line that the Prime Minister is taking today of the concerns around Karel Sroubek’s safety if he had gone back to the Czech Republic, were they putting the safety of him ahead of the public safety of New Zealanders?

Rt Hon WINSTON PETERS: Well, at the point in time, a whole lot of evidence existed that he was not a danger to New Zealand society—quite the contrary. But the real decision that the Minister had to make was going to be dependent upon whether or not his life was, in fact, endangered should he go back to the Czech Republic. Now, here comes the rub: he should never have made it to New Zealand in the first place, because he lied on his original application to get access to New Zealand, way back in 2003.

Hon Mark Mitchell: Yeah, but Labour gave him residency—Labour gave him residency.

SPEAKER: Order!

Hon Paula Bennett: Is the Prime Minister claiming that someone that has imported 5 kilograms of Ecstasy into New Zealand, pleaded not guilty, then appealed that decision, and was denied parole, is not a danger to the safety of New Zealanders?

Rt Hon WINSTON PETERS: Well, that member’s going to have to understand a bit more about the basis of the law in this country, because he appealed successfully—remember? He was not convicted—as that member said—on two occasions.

Hon Paula Bennett: Could she have saved the taxpayer hundreds of thousands of dollars, maintained actual confidence in the immigration system, and not put New Zealanders at risk by simply ensuring her Minister of Immigration made the right decision in the first place?

Rt Hon WINSTON PETERS: The National Party and the member can make all sorts of claims, but the reality is that over a hundred people came in under the defunct, deficient, flawed system that the National Party, for nine years, left to my colleague, and he is setting out—having made only one mistake in a year—to fix it up.

Question No. 2—Finance

2. KIRITAPU ALLAN (Labour) to the Minister of Finance: What recent reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): The Reserve Bank’s financial stability report released this week says that the country’s financial system, which is deeply integrated into the New Zealand economy, is sound and that the risks to it have abated a little. Talking more broadly about New Zealand’s economic structure, Standard & Poor’s, in a report this week, said that the economic structure of New Zealand benefits from being an open, prosperous, flexible, and resilient economy. Based on this, Standard & Poor’s is expecting economic growth to be “robust”, at 2.8 percent a year—

Hon Dr David Clark: Oh, serious momentum.

Hon GRANT ROBERTSON: —between 2018 and 2020, which is in the range of other forecasts and—yes, Dr Clark—represents serious momentum, as the Leader of the Opposition has said. These reports provide further confirmation that this coalition Government’s plan to build a productive, sustainable, and inclusive economy is working.

Kiritapu Allan: Why is a resilient economy important for the Government’s economic strategy?

Hon GRANT ROBERTSON: It’s important because resilience and strong underlying fundamentals are essential to improving the well-being of New Zealanders and their families. If we continued to base our economic growth on selling houses to one another and on population growth, we will end up—as we have—with infrastructure deficits, services struggling to keep up, and rising inequality. We need to change the quality of economic growth so that it is productive, providing more higher-wage jobs; sustainable, and not running down our natural resources; and inclusive, providing opportunities for everyone. We need to transition the economy to make sure that every New Zealander has the possibility to succeed.

Kiritapu Allan: What is the next step in the Government’s plan for economic transformation?

Hon GRANT ROBERTSON: In our next month’s Budget Policy Statement, we’ll guide the way to the 2019 Wellbeing Budget. It will show how the Government will produce Budgets that include a wider range of factors of success—not just our fiscal success but also how we’re ensuring that our people, our environment, and our communities are strengthened. Additionally, while continuing to meet our Budget responsibility rules, the 2019 Wellbeing Budget will deliver policies to support continued productive, sustainable, and inclusive economic growth. Economic growth is not an end in itself, but an important means by which we improve the living standards and well-being of all New Zealanders.

Question No. 3—Immigration

3. Hon MICHAEL WOODHOUSE (National) to the Minister of Immigration: Does he stand by all his statements and actions in respect of the deportation liability of Mr Karel Sroubek, also known as Jan Antolik?

Hon IAIN LEES-GALLOWAY (Minister of Immigration): Yes, based on the information and advice available to me at the time.

Hon Michael Woodhouse: When he said today, “We are not a country that sends people to their death.”, why was Karel Sroubek’s fears that Czech authorities would “kill him and make it look like an accident” a key factor in his initial decision to cancel deportation but not a factor in his new decision to order deportation?

Hon IAIN LEES-GALLOWAY: Because in the second—when I considered the matter for a second time, I had information that Mr Sroubek had been back to the Czech Republic. That significantly undermined his claims.

Hon Michael Woodhouse: Is he, therefore, telling the House that he made his original decision with the belief that Mr Sroubek’s life would be in jeopardy if he returned?

Hon IAIN LEES-GALLOWAY: I assessed the claims made by Mr Sroubek, and I ultimately determined—in the context of a judge previously having determined that returning him to the Czech Republic would pose a significant threat to his personal safety—that there was a risk that I had to consider.

Hon Michael Woodhouse: When he read in September—[Interruption]

SPEAKER: Order!

Hon Michael Woodhouse: When he read in September that Mr Sroubek had been convicted and sentenced for grievously injuring two police officers, did it not cross his mind that Sroubek’s stated fear of Czech police had more to do with his own actions than those of police and that he simply didn’t want to be sent home to serve a jail term?

Hon IAIN LEES-GALLOWAY: I certainly considered it.

Hon Michael Woodhouse: If, as he states, “some of that information was not available to me when I made the original decision that included new information”, how does he reconcile that statement with Deputy Chief Executive of Immigration New Zealand Greg Patchell, who said this morning that this new information “was in the original file”?

Hon IAIN LEES-GALLOWAY: No, there was—Mr Patchell and I are both being very clear on this: that there was information regarding that conviction in the original file but that in the second file there was considerably more information that Immigration New Zealand had secured from Interpol.

Hon Michael Woodhouse: Which of the following of his statements is true: the statement to Radio New Zealand, “I wasn’t totally convinced that returning to the Czech Republic [was] a risk to [public] safety.”, or his comments to Newstalk ZB “We’re a country that believes that people shouldn’t be sent to a situation where their personal safety is at risk.”?

Hon IAIN LEES-GALLOWAY: Both of them.

Hon Michael Woodhouse: Why does he think the safety of a Czech national is more important than the public safety of New Zealanders?

Hon IAIN LEES-GALLOWAY: I don’t. And as I’ve said a number of times, in weighing up the safety of the New Zealand public, I took into consideration the official documents that stated (1) that he posed a very low risk of reoffending, (2) that he had no violent history in New Zealand, and (3) that he had no gang associations.

Hon Michael Woodhouse: If grievously injuring three police officers and a taxi driver, disorderly conduct, damaging property, false declarations, identity theft, passport fraud, and drug smuggling are not sufficient grounds for deportation, what on earth is?

Hon IAIN LEES-GALLOWAY: Depends on the circumstances of each case.

Hon Michael Woodhouse: Why doesn’t the Minister just admit what the whole country knew a month ago—that his judgment falls well below that required of a Minister—and resign?

Hon IAIN LEES-GALLOWAY: Because I disagree with the member’s assessment.

Hon Paula Bennett: Does he agree with the Prime Minister’s answer in question No. 1 that he actually did make a mistake in his original ruling?

Hon IAIN LEES-GALLOWAY: I certainly believe that had I had the information that I had in making the second ruling, I would’ve reached a different decision the first time around.

Question No. 4—Social Development

4. PRIYANCA RADHAKRISHNAN (Labour) to the Minister for Social Development: What recognition has the Ministry of Social Development recently received for its communication with clients?

Hon CARMEL SEPULONI (Minister for Social Development): The Ministry of Social Development (MSD) Better Letters project team won this year’s award for Plain English Champion in the Best Plain English Sentence Transformation at the Plain English Awards. Winning these awards reflects the hard work of the Better Letters team, who have navigated a complex range of technology, systems, complexity, policy, and legal considerations to create letters that are more accessible and empathetic for MSD clients, and shows this Government’s commitment to improving the experience of clients who interact with Work and Income.

Priyanca Radhakrishnan: Why is the Better Letters project important?

Hon CARMEL SEPULONI: Clients and staff at MSD said that previous MSD letters had been difficult to understand and the tone wasn’t reflective of how staff wanted to engage with clients. As part of improving culture at Work and Income, an important starting point was making sure that communication is clear and accessible. Each letter is also an opportunity to show that we care about our clients. Making our letters clearer and more compassionate reflects the Ministry of Social Development’s commitment to mana manaaki, a positive experience every time, reflecting that MSD will be warm, welcoming, fair, and compassionate to all New Zealanders.

Priyanca Radhakrishnan: What are the next steps for the Better Letters project?

Hon CARMEL SEPULONI: The Better Letters team has also been working on improving and simplifying the wording on main benefit application obligations forms. These will be rolled out in service centres from 10 December onwards. These changes will make it easier for our clients to understand how we will work together, what they need to do to ensure we are supporting them in the right way, and what is required of them while they are receiving financial assistance. Once these new forms are rolled out, we will continue to evaluate and refine them based on client feedback to ensure they are concise, clear, and accessible.

SPEAKER: I’m sure there’ll be some staff that can be seconded to the Minister’s office to help draft answers to questions.

Question No. 5—Finance

5. Hon AMY ADAMS (National—Selwyn) to the Minister of Finance: Does he consider it part of his role as Minister of Finance to ensure that the collection and use of tax revenue is undertaken carefully and in the best interests of all New Zealanders?

Hon GRANT ROBERTSON (Minister of Finance): Yes, which is why we cancelled the previous Government’s tax cuts, which would have disproportionately benefited the wealthiest New Zealanders, and instead brought in a Families Package, which is boosting the incomes of hundreds of thousands of middle- and low-income families.

Hon Amy Adams: Well, speaking of low-income families, is he aware that—

SPEAKER: Order! Order! Now, the member will start her question with a question word rather than a statement.

Hon Amy Adams: Certainly, Mr Speaker. Is he aware that if the $325 million in extra tax the Government is set to collect from landlords over the next three years is passed on to tenants, it would mean an extra $500 in rent for the average renting household?

Hon GRANT ROBERTSON: I don’t have those figures in front of me. What I do know is that what the member has heard several times this week from a number of Ministers—that the biggest determinant in rents and rents going up, which they do most years in New Zealand—is the supply of rental housing, which that Government failed to do anything to contribute to.

Hon Amy Adams: Has he seen the Stuff story today which quotes property manager Matthew McMillan confirming that rents are already going up to cover the Government’s decision to ban letting fees and saying that the idea that this ban won’t result in higher rents “just doesn’t hold water.”; and, if so, does he stand by his answer yesterday that he’s not convinced that imposing more costs on landlords will see rents rise?

Hon GRANT ROBERTSON: I haven’t seen that Stuff story, but I have seen another Stuff story from this week describing that member’s tax policy as meaningless, unworkable, or irresponsible.

Hon Amy Adams: Very childish. How can he justify to New Zealand families, who now face paying hundreds of dollars a year more on petrol and rents thanks to this Government, that the Government has just bought and then mulched $160,000 worth of seedlings?

Hon GRANT ROBERTSON: What I know that those members of the public see from this Government is a Government that’s committed to making sure that we have a fair and balanced tax system, one where people pay their fair share. That’s why we set up the Tax Working Group and we await its outcomes.

Hon Amy Adams: How can he justify to New Zealand families who pay those taxes and who face higher costs of living because of the taxes imposed by this Government that the Government has spent $107,000 of taxpayer money to pay out the proposed Chief Technology Officer for a job that this Government designed, advertised, interviewed for, and then abandoned?

Hon GRANT ROBERTSON: What I know is that on this side of the House we take seriously our responsibility to deliver for all New Zealanders. Each Government will have to justify the decisions it makes just like the previous Government might like to justify the $11 million it spent on a sheep farm in the Saudi desert.

Hon Amy Adams: How much taxpayers’ money has the Government spent on having to review Iain Lees-Galloway’s decision to grant residency to Karel Sroubek?

Hon GRANT ROBERTSON: I’m not aware of any cost beyond baselines regarding that matter.

Question No. 6—Housing and Urban Development

6. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban Development: Is he confident that KiwiBuild will meet its targets?

Hon PHIL TWYFORD (Minister of Housing and Urban Development): The KiwiBuild unit is working incredibly hard to build homes. We’ve had to start from scratch and build development capacity within the Government to, in turn, build homes. So far, we’ve contracted more than 3,800 KiwiBuild homes and announced nearly 10,000 KiwiBuild homes in our large-scale developments including at Unitec, Māngere, Porirua, and Mount Roskill. There is still more to do but I’m hopeful we will meet our targets.

Andrew Bayly: Has the Minister seen estimates utilised by the Reserve Bank for the November 2018 Monetary Policy Statement that assumed KiwiBuild will deliver only 7,000 to 14,000 additional homes by July 2022, between a quarter and a half of the number of houses he is targeting?

Hon PHIL TWYFORD: I don’t accept those estimates.

Hon Judith Collins: Is he aware that the Reserve Bank November forecast remains consistent with the forecast from Treasury that he criticised, in May this year, as being done “by kids in Treasury completely disconnected from reality”?

Hon PHIL TWYFORD: I’m far more interested in how many young Kiwi families we get into homes rather than the level of residential investment that is modelled by those agencies.

Hon Judith Collins: Does he stand by his statement, in May this year, that “I agree with the Prime Minister and the Minister of Finance that Treasury’s forecast is wrong.”, and does he now also view the Reserve Bank numbers as wrong?

Hon PHIL TWYFORD: It’s always wise to agree with both the Prime Minister and the Minister of Finance.

Hon Judith Collins: Does he still believe that Treasury “is disconnected from reality” when its views on KiwiBuild targets have now been echoed by the Reserve Bank?

Hon PHIL TWYFORD: Well, I sometimes find myself agreeing with Treasury, but much of the time I don’t.

Hon Judith Collins: When he confirmed his KiwiBuild targets, did he consider how he would increase the capacity in the construction industry rather than simply displacing the private sector, as the Reserve Bank believes he has done?

Hon PHIL TWYFORD: Well, we’ve always acknowledged the scale of the challenges that we inherited. We are 71,000 homes short. We’ve inherited a building and construction industry that is locked in low productivity and already at capacity. There’s a shortage of skilled tradespeople because of a failure to invest in our workforce. We have a planning system that restricts development instead of encouraging it, and a broken system for financing infrastructure. In order to deliver our KiwiBuild targets, we are tackling all of those obstacles that we inherited.

Hon Judith Collins: I raise a point of order, Mr Speaker. I note that that was quite a long answer, but my question was, “When the Minister confirmed the KiwiBuild targets, did he consider that he would need to increase the capacity in the building industry?” I don’t believe he’s addressed that.

SPEAKER: And the member, I think, also talked about displacement, didn’t she? And he certainly addressed that part of the question, and that’s all he has to do.

Question No. 7—Health

7. Dr LIZ CRAIG (Labour) to the Minister of Health: When will the Government formally respond to the report of the mental health and addiction inquiry?

Hon Dr DAVID CLARK (Minister of Health): Yesterday, I received the report of the inquiry into mental health and addition. The report is 200 pages long and contains 40 recommendations. It’s a substantial and considered piece of work, and I want to thank inquiry chair Paterson and the panel for their hard work and for honouring the voices of all those who made submissions to the inquiry. It will take some time to fully digest the report. The Government intends to formally respond to the inquiry report in March next year.

Dr Liz Craig: What advice will he take when considering the response to the inquiry report?

Hon Dr DAVID CLARK: I have no doubt there will be plenty of advice for the Government, both official and unofficial. The Government is committed to working with people with lived experience. Their voices are critical as we respond to the inquiry. Obviously, official advice from the Ministry of Health will also be key, and I expect officials to talk with the health sector and the community. I am aware of some disquiet around the make-up of a previously established mental health and addiction health sector leadership group. I am advised that the group has recognised that it needs a more diverse membership and is seeking more members with lived experience. And, finally, I would add that it will be the Government that responds to this inquiry, not the ministry.

Dr Liz Craig: When will the report be released?

Hon Dr DAVID CLARK: I appreciate there is considerable public interest in this report, which will shape our approach to mental health and addiction for years to come. It is best practice to have an inquiry report reviewed for legal, technical, and privacy considerations before it is released. That is standard practice for all inquiries. I am advised that that work is progressing well, and I intend to release the report as soon as I am able to.

Question No. 8—Health

8. Dr SHANE RETI (National—Whangarei) to the Minister of Health: Does he stand by his actions and policies around meningococcal disease and the meningitis outbreak in Northland?

Hon Dr DAVID CLARK (Minister of Health): Yes, and the good news is that I have had confirmation that the first 10,000 doses of the vaccine arrived in New Zealand on Tuesday already.

Matt King: Have at least two Northland children died of meningococcal W between May this year and his announcement of a vaccine programme this week?

Hon Dr DAVID CLARK: People have died of meningococcal disease across New Zealand, sadly. That happens. When an outbreak is triggered, it is imperative that we move swiftly to respond. An outbreak was declared on 8 November, and we have moved very swiftly.

Dr Shane Reti: Did the ministry know there was a meningococcal disease outbreak as far back as May this year?

Hon Dr DAVID CLARK: There was not.

Dr Shane Reti: Why, then, does the ministry’s own immunisation update from May this year have a whole section titled “Outbreaks—Meningococcal Disease”?

Hon Dr DAVID CLARK: Look, if that language has been used in a casual form, then that may be so. I would like the member to understand that I am briefed frequently by the ministry on cases of meningococcal disease—it’s something we take very seriously. For the member’s benefit, I will demonstrate with this chart. Meningococcal disease notifications are monitored closely. If you look in 1989, there was a significant rise in cases through the 1990s. It came down in the early 2000s dramatically. Meningococcal disease remained flat in recent years. There has been a slight rise in meningococcal disease recently, and we are monitoring that very closely because we do not want to see the spike that we saw through the 90s. We are a proactive Government that will make sure that we respond as soon as an outbreak is declared, as it was on 8 November. [Interruption]

SPEAKER: Order! Before the member calls out again, I have had in recent days a number of complaints from members of the public about not being able to hear answers to questions as a result of the noise in the Chamber. This is a very important area. It is a matter of life and death, and I think it ill behoves the House to shout the Minister down when he is replying.

Dr Shane Reti: If the ministry’s own immunisation update is describing a meningococcal outbreak as far back as May this year, will he now submit all his actions on this matter for further scrutiny?

Hon Dr DAVID CLARK: There will be ongoing scrutiny of the Minister of Health—that’s the job of this House—and my Cabinet colleagues hold me to account, too. I’m happy to be held to account, and I’m delighted—because this is a very serious matter—that the Ministry of Health and Pharmac moved very quickly to secure a vaccine to address an outbreak after it was declared on 8 November. I would warn the member, too, to be very careful about fearmongering. He is a clinician; he knows better than that.

Question No. 9—Police

9. CHRIS BISHOP (National—Hutt South) to the Minister of Police: Does he stand by all his statements?

Hon STUART NASH (Minister of Police): Yes.

Chris Bishop: Does he stand by his statement that “men going through a sort of mid-life crisis” should possibly pass “a certain sort of test to legally ride powerful motorcycles”; and, if so, what steps will he be taking to take this idea forward?

Hon STUART NASH: I was commenting on the fact that in 1986, ninety people under the age of 24 died in motorcycle accidents and about six over the age of 40 did, whereas in 2016, six people under the age of 24 died in motorcycle accidents and about 38 over the age of 50 did. This was actually backed up by a number of riders who said, “Yeah, this is what’s happening. A whole lot of old guys are riding motorbikes and they don’t know how to control them.”

SPEAKER: Order! As long as the member’s not suggesting someone over 50 is old.

Chris Bishop: Why did he say in October that his promise of 1,800 additional new police was on track when only 329 new police were added between 1 November 2017 and 1 November 2018?

Hon STUART NASH: That member uses statistics like a drunk man uses a lamp post: for support and not illumination.

Chris Bishop: No answer; just abuse. Why did he say that he would count the extra 1,800 new police from the date the Labour-led Government took office and then try and claim last week that he would actually count them from June 2017, during the former Government’s time in office?

Hon STUART NASH: I have always been very clear about this. The 1,800 new officers promised by the Labour - New Zealand First Government—and I thank New Zealand First for helping us to get this across the line—was always about taking the national 880 over four years, being a hell of a lot more aspirational, adding 920 and going to 1,800. Of those we’ve graduated, in that cohort they have all graduated since we’ve been in Government—and I’ve been to every single graduation except one—but the funding for that started in the July 2017 period. I’ve always been very clear about that.

Ginny Andersen: Does the Minister stand by his statements that the standard of police recruits will remain high under this Government?

Hon STUART NASH: Yes, there is a significant drive to get quality and diverse men and women into the New Zealand police service. For example, the latest police recruit video has reached in excess of 4.3 million people. Of the applicants received since this video screened, 62 percent have either been female, Māori, Asian, or Pasifika, and overall, we have had 2,770 people start the application process to become a police officer in the New Zealand police service.

Chris Bishop: Why did he recently claim that the $300 million appropriated to Vote Police in the 2018 Budget provided for 1,800 extra front-line police, when the official police advice to him is that $515 million over four years is required to achieve that—i.e., a gap of $250 million?

Hon STUART NASH: We are on course to deliver 1,800 more police over three years. And the thing I don’t quite get is, of the recruits that we have already put out there, 122 have gone into the Wellington region alone. I would have thought that member would be backing the New Zealand police, like we do on this side of the House.

Question No. 10—Police

10. GREG O’CONNOR (Labour—Ōhāriu) to the Minister of Police: What support is the Government providing to help the police improve their digital connections with the public?

Hon STUART NASH (Minister of Police): Off the back of the single biggest investment in our police service through Budget 2018, this week I was pleased to open the new police digital services and communication centre in Kāpiti. The specialist service made possible by this new facility signals a transformation in the way police connect with the public. For example, the centre will receive the majority of the over one million non-urgent calls made to police stations around the country. It will employ 200 people, once the training process is complete. I would like to acknowledge the work of the local MP, the Hon Kris Faafoi, and the local Porirua and Kāpiti councils for their commitment to helping us build safer and more connected communities.

Greg O’Connor: What other capital investment projects has the Government funded to support safer and more connected communities?

Hon STUART NASH: Under the previous Government, 150 front counters were closed due to health and safety concerns, the staff, or because of difficulties with public access. I am pleased to report that 82 of those sites, including Kawakawa in the Far North and Mosgiel in the deep South, have now been refurbished, upgraded, and reopened. Work is under way for the remaining 68 sites, including the Lower Hutt station and two sites in Tauranga to be completed by early 2019.

Greg O’Connor: How is this improved police presence reflected in our provinces and regions and in smaller centres?

Hon STUART NASH: This Government is a champion of the regions in so many ways. For example, members are already aware that Northland will see a 25 percent increase in the number of constables we allocate out of the extra 1,800 police. In that district alone, new capital investment has allowed for upgrades to police sites in Dargaville, Kawakawa, Kaikohe, Kamo, Paihia, and Mangonui. Work is also under way on other Northland sites in Kaitāia, Ruakākā, Kerikeri, Russell, and Onerahi. This Government is committed to investing in healthier, safer, and more connected communities.

SPEAKER: Even with a Minister who defines himself as elderly, apparently.

Question No. 11—Social Development

11. Hon LOUISE UPSTON (National—Taupō) to the Minister for Social Development: Has she been advised of the date that the member for Dunedin South or her office delivered Labour Party pamphlets to Ministry of Social Development sites in Dunedin South and Mosgiel; if so, what is that date?

Hon CARMEL SEPULONI (Minister for Social Development): I have been advised that staff from the office of the local member of Parliament for Dunedin South left 20 copies of a parliamentary-crested booklet titled A Guide to Services in our Community, which contained the Labour Party logo, to the Dunedin South Work and Income site around a month ago for their approval to be put on display. Due to a miscommunication in the South Dunedin Work and Income office, these booklets were put on display, not by the MP for Dunedin South staff, and transported to the Mosgiel site without the approval of the service centre manager. On 20 November, the matter was raised with the Ministry of Social Development (MSD), and the following day, when the southern regional staff were advised, they checked their offices and immediately removed the materials.

Hon Louise Upston: How long were the pamphlets left in the offices before workers at the site were made available and removed them?

Hon CARMEL SEPULONI: As mentioned in the response to the primary question, the materials were left at the Work and Income office around a month ago, and on 20 November, when MSD were informed, they acted quickly, and on 21 November they were removed.

Hon Louise Upston: In her answer to the primary question, is the Minister now saying that it was entirely appropriate, as long as permission was granted by MSD, to have Labour Party - branded material in a Work and Income site?

Hon CARMEL SEPULONI: No.

Hon Louise Upston: Has she advised the Hon Clare Curran and other Labour MPs about the inappropriateness of their actions; if not, why not?

Hon CARMEL SEPULONI: When the question and the issue came to my attention, what I did was try to ascertain how the situation came about. It is great we’re having this conversation in the House. Everyone now knows that even if it is parliamentary-crested information, if it has a political logo on it, it is not appropriate to leave it in a Government agency.

Hon Louise Upston: Does she expect better from a former Minister of the Crown?

SPEAKER: Order! No responsibility.

Hon Louise Upston: I seek leave to table a document in the House. It is entitled A Guide to Services in your Community, which is clearly printed with a Labour Party—

SPEAKER: Order! Order! [Interruption] Order! The member has described it. Is there any objection to that being tabled? There is none; it may be tabled.

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

Hon Louise Upston: I seek leave to table a document which has not yet been published. It is a response to a written question from the Minister of State Services that says material that promotes a political party—

SPEAKER: Order! Order!

Hon Louise Upston: —must not be displayed.

SPEAKER: Order! When I call order, the member stops. The member seeks to table a response to a written question from the Minister of State Services not yet published. Is there any objection? There appears to be none.

Hon CARMEL SEPULONI: Objection—it hasn’t been published. It hasn’t been published, so I object to—

SPEAKER: Well, no, the House can grant leave.

Hon Dr David Clark: We objected.

SPEAKER: Sorry? There is objection—I apologise. Please do it more quickly in future.

Question No. 8 to Minister

Hon GRANT ROBERTSON (Minister of Finance): Mr Speaker, I seek your guidance. I want to seek leave to table a document that is available on the internet. It relates to the question around the meningococcal outbreak that we were discussing before. The reason I seek your guidance about this is because you yourself indicated in a ruling during the question that this is a very serious, life-or-death matter. The May Ministry of Health immunisation update that Mr Reti used as one part of his question—well, frankly, he’s misrepresented it, and I seek leave to table it in the House now.

SPEAKER: Well, that’s a very serious allegation. We have an experienced member in Dr Reti, someone who is right across the area, and to suggest—I know the member didn’t quite suggest that he deliberately misrepresented something, but to suggest that he—oh, I can’t get a word to get the proper description—is something which I am concerned about. Having said that, because of the serious nature of this, I am prepared to put the leave, which of course any member can reject. Leave is sought for the tabling of the document, which is, I presume, a printout from a website. Is there any objection to that? There appears to be none.

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

Question No. 12—Internal Affairs

12. MARK PATTERSON (NZ First) to the Minister of Internal Affairs: What recent announcements has she made about community benefit from the America’s Cup?

Hon TRACEY MARTIN (Minister of Internal Affairs): Thank you. A special time-limited lottery fund has been created to help maximise the benefit across New Zealand from hosting the 2021 America’s Cup. Twenty million dollars of funding generated from lotteries has been allocated for community groups across New Zealand. So while the America’s Cup will be held in Auckland, we want to ensure that this fund can spread the gains to communities across the whole of the country.

Mark Patterson: What can the funds be used for?

Hon TRACEY MARTIN: The fund is for capital projects and items that relate to the hosting of the 2021 America’s Cup or that connect New Zealanders to the America’s Cup, in particular for projects that, one, will benefit the community in the lead-up to, during, and after the 2021 event; show they are the right size and scale for their community; provide opportunities for a diverse group of people to actively participate, interact, or connect; and have community support. For example, a yacht club might apply for a grant for an accessible yacht to teach sailing in their community to those who might otherwise not have this opportunity, due to, perhaps—or they could be members of a disability community for example. And that has lots of positive benefits that last a lot longer after the America’s Cup.

Mark Patterson: Why are you making this announcement now?

SPEAKER: No—why is the Minister making the announcement now. I could have made it earlier, but the Minister could make it now.

Hon TRACEY MARTIN: I want to publicise the fund so that community groups can apply. The committee members have just been appointed and will meet for the first time in December. The fund will be open until the end of 2020, so there’s plenty of time for community groups to apply for this funding, but it is time limited, so I want to make sure that they know it’s available to them.

Bills

Misuse of Drugs (Medicinal Cannabis) Amendment Bill

Second Reading

Hon Dr DAVID CLARK (Minister of Health): I move, That the Misuse of Drugs (Medicinal Cannabis) Amendment Bill be now read a second time.

This bill amends the Misuse of Drugs Act 1975. With the indulgence of the House, I intend to read the speech into the parliamentary record, as it deals with a number of technical matters. I want to thank everyone who made a submission on this bill, including those who came to speak to the Health Committee in person. I also want to thank the members of the Health Committee for the thorough consideration of the bill. In particular, I want to specifically thank Jenny Marcroft, health spokesperson for New Zealand First—thank you to Jenny Marcroft—and Chlöe Swarbrick, spokesperson on drug law reform for the Green Party of Aotearoa New Zealand, for their constructive dialogue and willingness to work with me and the New Zealand Labour Party to find a common way forward for this Government on our approach to medicinal cannabis.

DEPUTY SPEAKER: Could we just have a bit of respect for the Minister trying to speak as people leave.

Hon Dr DAVID CLARK: Thank you, Madam Deputy Speaker.

Currently, there is a legal pathway for people to obtain medicinal cannabis products on prescription from a medical practitioner. However, access to affordable medicinal cannabis products remains problematic for many New Zealanders. To address this issue, the Government agreed late last year to introduce a medicinal cannabis scheme and to amend the Misuse of Drugs Act. As a result, I introduced the bill, which introduces an exception and a statutory defence for terminally ill people with less than 12 months to live to possess and use illicit cannabis and to possess a cannabis utensil. The bill as introduced also provides a regulation-making power to enable the setting of standards that products manufactured, imported, or supplied under licence must meet. The bill as introduced de-schedules cannabidiol, also referred to as CBD, so it is no longer a controlled drug.

The scheme overseen by an agency will result in medicinal cannabis products being able to be commercially produced in New Zealand and, when the bill is passed, ensure that all medicinal cannabis products meet quality standards. All stages of cultivation, production, and supply of medicinal cannabis will be licenced.

There was overwhelming support from submitters for allowing individuals to use cannabis for medicinal purposes and for improving access to affordable, quality medicinal cannabis products. There was clear support from submitters who commented on the provision to set quality standards for medicinal cannabis products available under the Government’s medicinal cannabis scheme. The development of quality standards is a key component of the scheme and will be informed by robust analysis of existing international standards and public consultation.

There was also strong support from submitters for improving access to CBD: a substance found in cannabis that has potential therapeutic value and little or no psychoactive properties. The bill will make it easier to access CBD as it removes the controlled drug classification of CBD, making it a prescription-only medicine. Many submitters commented that the exception and statutory defence should be expanded to include not only people who are terminally ill but also those with other medical conditions. Submitters highlighted that individuals with a range of conditions could benefit from easier access to medicinal cannabis products.

I propose amending the bill via a Supplementary Order Paper at the committee of the whole House stage to increase the number of people eligible to use elicit cannabis under the exception and statutory defence provisions. This change would remove the 12 month restriction and the term “terminally ill” from the provisions. It is not possible to predict with complete accuracy the progression of life-threatening conditions. In addition, terminally ill is no longer commonly used in palliative care and can be confronting for some patients. Jenny Marcroft and New Zealand First caucus was instrumental in identifying the need to widen this definition and, as such, the Government proposes replacing the term “terminal illness” in the exception and statutory defence provisions with the term “palliation”.

Palliation is an approach that aims to alleviate pain and suffering for a person with an advanced, progressive, life-limiting condition who is nearing end of life. I consider this a better description of the group of patients the compassionate provisions were designed for. I expect this change to increase the number of people covered by the exception and statutory defence provisions. Approximately 25,000 New Zealanders could benefit from palliative care. I expect this group of patients would be covered by the definition of palliation, but it is not known how many would choose to use illicit cannabis.

Submitters recommended that the statutory defence be extended to caregivers, friends, and whānau who sought cannabis for the terminally ill. They considered that the terminally ill are likely to rely on caregivers, whānau, and friends to source illicit cannabis for them. Some submitters also recommended that people who grow cannabis to supply the terminally ill have a statutory defence. The Government does not propose extending the statutory defence to cover the range of people who could supply cannabis to terminally ill people. Supply is a more serious offence under the Misuse of Drugs Act than possession or use. Extending the statutory defence to include supply would greatly widen the scope of these provisions.

I intend to address supply through the development of a medicinal cannabis scheme which, once established, will allow more quality products to be readily available. The bill allows quality requirements to be set in regulations for products produced under the scheme. Pathways under the scheme will allow us to ensure that products meet these standards. I propose the Supplementary Order Paper amend the bill to include a requirement that these regulations are made no later than a year after the bill comes into effect. This change was the result of extensive negotiations between the three parties and provides assurance for the public and stakeholders that the development of the scheme is a priority for this Government.

Through Chlöe Swarbrick’s advocacy, we propose an amendment to address the use of cannabis varieties, including seeds that are already established in New Zealand. This change would mean that a person would not be prevented from getting a licence under the scheme solely because the variety of cannabis they want to use is already in New Zealand. The scheme will require all stages of cultivation and production to be licenced. There is no obvious reason to preclude varieties of cannabis that are established in New Zealand from being used.

This bill will improve access to quality medicinal cannabis products. The vast majority of submitters on the bill supported improving access to medicinal cannabis. The misuse of drugs legislation already provides a framework for licencing the production of medicinal cannabis products. The scheme makes use of the existing framework and does not add unnecessary compliance costs. I expect that the scheme will take a risk-proportionate approach. The full details of this scheme will be consulted on publicly by the Ministry of Health.

Again, I want to acknowledge the outstanding contributions made to and by the Health Committee during the health select committee stage. As a result of these contributions and the hard work and collaboration with my colleagues within New Zealand First and the Green Party of Aotearoa New Zealand, we intend to make a number of changes to improve the bill through a Supplementary Order Paper. I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): When the National Party supported this bill at first reading, it did so with several caveats but some optimism that the bill, as introduced, could be materially improved with the bipartisan support of both sides of the House, and for good reason. There is evidence of benefit for medicinal cannabis products, and there aren’t enough of them. We have Sativex, which is approved for use in New Zealand, but it is unfunded and it is very expensive. As a consequence of that, those people who believe that cannabis—or THC, the derivative in cannabis—can help them with their chronic or terminal conditions do turn to illicit substances in the belief that it would help them.

Now, the evidence is equivocal. In fact, the jury is probably back, and there is clear evidence that illicit substances are not beneficial or efficacious. Australian research recently published of a longitudinal study of about 1,700 chronic and terminally ill Australians who used loose-leaf cannabis for pain found that their use of alternative analgesics and opioids went up, not down, and that their levels of anxiety went up, not down. So there is a definite question, in my mind at least, about whether or not illicit substances actually have the effect that it is claimed to have. There may be a placebo effect, or there may be a nice hit when you have the so-called medicinal THC or medicinal cannabis, but there is no real benefit.

That was actually the reason that the National Party supported this bill: we need better THC-based alternatives for chronic pain and terminal sufferers that have dose control, that have good manufacturing practice, that isn’t smoked—for goodness sake, we’re wanting to go to 2025 and be smoke-free. So we supported it, but we had three main concerns. One—and this is the main one—was that good intentions don’t make for good policy. This was a very poor bill. It had no detail about what the scheme would look like; it basically said to the officials, “Off you go—devise a scheme.”, and, frankly, that wasn’t good enough.

We were concerned, and remain concerned, with the exemption from prosecution for terminal sufferers, and we now know that that’s going to be extended—I’ll elaborate on that in a minute—and we were concerned that this House, once the framework is developed, should have the ability to provide further scrutiny. We didn’t want to trade away or delegate out to officials what this scheme would look like. Now, that wasn’t to say that officials weren’t trusted. Medsafe and so on do have some experience in this, although we believed that we were breaking new ground.

We heard some great submissions, and I want to congratulate and thank all of the submitters for the work that they did in presenting to the committee the very good suggestions for what that framework would look like, and in good faith. National Party members, through Louisa Wall, asked the Government to consider the sensible things that we were coming up with and that the submitters were coming up with to make this bill better, and at successive occasions the answers were a deafening silence or a no. I think it speaks volumes about that Minister that he doesn’t have the simple good grace to acknowledge the National Party at all in this conversation, even to criticise them—to pretend that the work that the National caucus have done on this matter didn’t exist.

Now, I say “the National caucus”, and Mr Bishop and I have been credited with a great deal more credit than we deserve, I hasten to say, because the real driving force behind the excellent improvements that this party came up with is almost entirely the work of the MP for Whangarei, Dr Shane Reti. I think this framework—regardless of how it gets in there—is going to be better off for his work, because I bet the ministry and Medsafe are having a look at that work and going “Yep, that’s a good idea. We’ll have that.” But he came up with several—I think, in the end, it was 10—bottom lines. He will elaborate on the technical side of this; I will focus on the politics, because there’s plenty. They were really good ideas. We went to the chair and we went to the Minister and we went to the other parties, and we said, “We can make this bill better. We can make it more collaborative.”, and the answer was no.

So, in the end, the National Party caucus had no choice but to not recommend that this bill proceed as it had been written, and it determined that the only way to get a good scheme in place was to do it itself. So Dr Reti took himself off to the United States—to California, to Colorado, to New York—to speak to some of the world’s best experts in this area. He won’t pat himself on the back, but I will: it was a fantastic effort, and we came back with excellent, excellent suggestions for improvement that, because the Minister was being cloth-eared over it, had to go into a member’s bill.

You don’t need to take my word for it: the independent analysis and observations on that bill were compelling. There were people saying from a social and commercial basis that it was damn near perfect—that was what the National Business Review said. There were many others. I’ll leave Dr Reti or maybe Mr Bishop or Mr Brownlee to elaborate on that. But we now have, I think, really good bones of what this regime could look like, and we could have parliamentary scrutiny on it. Do you know what? While I’m disappointed that the olive branch of offers of support and collaboration have not yet been taken up, I am actually an optimist in this area, and I think that can still happen.

But I must say there is an even larger caveat now, because the Minister has just indicated that by Supplementary Order Paper (SOP), he is going to extend the terminal exemption from prosecution for illicit substance use to a palliation framework, and we’ve had a big discussion about what the definition of palliation is. Palliation is medicine that is not designed to cure, but that doesn’t mean that only people who are terminally ill are receiving palliation. I have chronic arthritis, somebody with diabetes, Parkinson’s—the medicines that those patients take are palliation, and if they are in pain as a consequence of that, what Dr Clark has just announced is that this will be extended to those chronic conditions, and I suggest that there is a significant risk that that becomes a stalking horse for the decriminalising of cannabis.

Now, it is likely—almost certain—that we are going to have that conversation as a country, as a group of MPs, in the not too distant future, but our position is that they are two conversations, not one, and it’s very important that by this bill, we don’t conflate the two. The goal of this legislation is to create a framework for a medicinal cannabis market with good manufacturing practice and with safety and efficacy and dose control to be in, but not to let people off the hook who, for obvious reasons, think they are going to be better off by smoking cannabis.

Now, in saying that, let’s remind ourselves what Mr Richard Chambers—Assistant Commissioner Chambers of the New Zealand Police—said to us.

Hon Nathan Guy: What did he say?

Hon MICHAEL WOODHOUSE: He said that the New Zealand Police are not out there hunting down, arresting, and jailing terminally ill patients because they have a spliff for their pain. It just ain’t happening, and I would argue that that terminal exemption is not necessary. But if it was time-bound—and we’re still not sure whether the Minister’s intention is to remove that terminal exemption once the regulations are in place, and he’s given himself a 12-month time frame to do that—then it may well be that that’s not a show-stopper. But an open-ended terminal exemption for loose-leaf smoked cannabis will be, because that’s the next conversation we’re going to have.

Now, with all of those caveats, the National Party will support this bill at second reading, but they do come with conditions. They come with conditions that the SOPs in Dr Reti’s name—that far better describe the framework than anybody else could—are accepted and that that loose-leaf exemption is controlled. I won’t say any further now, because of the Minister’s announcement, what that control might look like, but we have to keep our eye on the ball. This goal is to achieve an effective medicinal cannabis regime. I hope we can still do that. I hope we can get bipartisan support.

Dr LIZ CRAIG (Labour): Thank you, Madam Deputy Speaker. It was an absolute privilege to sit on the Health Committee and listen to the submissions on this bill as they came in, and I will address some of the comments that Mr Woodhouse has made as I go through my speech today.

But just coming back to some of the submissions that we heard, I think for me the greatest impact it had on me was the stories that people were telling me—telling the committee—just about their own experiences with incredible chronic conditions. This was not just people with terminal illness. This was people with things like intractable epilepsy and severe arthritis, and they were just talking about the limitations of our current medications and the side effects and the impacts they were having on people’s lives—so opiates, and the side effects there. But for people who then had moved over and had tried cannabis, for some of them, there was a huge impact it had on their quality of life without those side effects. Other people also talked about the fact that they were really struggling, but they didn’t want to cross over and access cannabis illegally, and so for them the hope was that while they weren’t using it themselves, it would provide a solution moving forward.

But the problem I also had was listening to some of those stories but then going back to some of the research evidence which, for things like chronic pain, actually was quite mixed. But some of the caveats there around that research were that because in many jurisdictions medicinal cannabis wasn’t readily available, there weren’t a lot of studies one way or other, and I think we need further research in that area. But I was also impacted by what one of the clinicians came in and was talking about, and he was saying that for many of his patients, for some, medicinal cannabis was transformational, for others it actually did nothing at all, and for the majority it was somewhere in between. And so I suspect that while cannabis may be beneficial for some, it may not be that miracle drug for all, and so I think it’s about—as evidence grows we’ll get that sense of where the reality sits.

But the other thing a lot of submitters were talking about, and this was particularly those who were accessing cannabis products on prescription, was the cost. Some families were spending over $1,000 a month, and they were spending that because of the impact that these products had on their children, on their families, and on their loved ones’ lives. And so the problem we’ve got at the moment is that there’s a large number of people feeling like they could benefit from medicinal cannabis, but we’ve got mixed evidence and we’ve also got a lot of problems with access.

One of the other themes that came through was that a lot of people were saying that we needed to extend the scope of the exemption beyond just terminal illness and beyond just those that were deemed to have 12 months to live, because there were a lot more people they felt could benefit. But there was also quite a bit of blurring of understanding of what the bill was trying to do, because some, I think, got the sense that because we were restricting the exemption to those with terminal illness, once the scheme was up and running we would be narrowing it down so that only people with terminal illness could actually access medicinal cannabis.

But, actually, at the moment doctors can prescribe medical cannabis for a whole range of conditions. So previously, in addition to terminal illness, they’re prescribing it for things like spasms associated with cerebral palsy, multiple sclerosis, some for chronic pain, and some for intractable seizures. So there’s a whole range of things you can prescribe it for, it’s just that complexity arrives when you’re trying to actually access that medication.

This is where I struggle to understand what the system was, as many of us did, and I think it would be very difficult for people wanting to access it because we’ve got a whole range of different qualities available at the moment. So you’ve got some of those pharmaceutical-grade products like Sativex—or near pharmaceutical grade—where they have been through the clinical trials as research evidence, and you can prescribe them for quite narrow conditions, but you also need to do that with extra Ministry of Health approval. Others are unconsented products that doctors can prescribe. But, again, you’ve got to have extra ministry approval for those, and then you’ve got CBD products which until recently had to have ministry approval, but now you can just prescribe them directly as long as they meet certain criteria, like having less than 2 percent contaminants within that product. And so there’s a whole range of different ways of prescribing them but also not a lot of access to quality products.

And so thinking through what this bill will do, the first thing is that it’s going to be able to underpin that framework where we’re going to be setting up a medical cannabis scheme where we can set standards that oversee the quality of the production of a domestic supply of medicinal cannabis products, and, also, for products that are imported or produced locally, those same standards would apply. And so this is the legislation that will enable us to create regulations that will oversee that. That’s the key part of it, which will, over time, transform a number of people’s access to medicinal cannabis products. But that’s going to take a little bit of time, and I think the urgency coming through from some of those submitters we’ve taken into account, and that’s why the Minister of Health announced that in his Supplementary Order Paper he’s going to be adding the requirement that those regulations, in terms of those standards, get put in place within a year of this bill passing into law so that we can just get on with it.

The problem, though, is that once those standards are in place, it’ll take a little while to ramp up that manufacture, and so this is, again, where this defence for possessing cannabis in the meantime will apply. And, again, a lot of the feedback was saying that there’s a whole range of people that would benefit from medicinal cannabis, and so the sense in that Supplementary Order Paper will be that the Minister will be expanding the definition. This is where Mr Woodhouse was indicating that that might go very, very broad. But the wording that I think will be used is “those with advanced, progressive, life-limiting conditions, who are nearing the ends of their lives”. So while it will be broader than that terminal illness with a 12-month time frame and it will expand that to a number of other people, it still won’t be so broad that it will basically be everybody being able to access it as a defence. So that was just in response to the feedback that we received. The other thing that the bill, as we know, will do is it will basically mean that CBD products are taken from the schedule of controlled drugs if they meet certain purity levels.

So just summing up, this bill will take it a lot further forward in terms of people’s ability to access medicinal cannabis products. We’re going to set clear standards so that manufacturers have certainty that if they make the investment in terms of research and development, they’ll be able to market some viable products, and it will also mean that patients can then access higher quality products and that when medical practitioners are prescribing, they have that confidence that the product they’re prescribing is up to a standard. It also broadens that statutory defence to people with progressive, life-limiting conditions, so that makes it much broader so that people can access or use cannabis in the meantime without fear of a criminal prosecution.

I therefore commend this bill to the House.

Dr SHANE RETI (National—Whangarei): Thank you, Madam Deputy Speaker. It truly is a pleasure to be speaking to this bill today, the second reading of the Misuse of Drugs (Medicinal Cannabis) Amendment Bill, also known as the medicinal cannabis bill. The second reading is an important opportunity to review the select committee process and to weave together the advice of petitioners, the experience we bring to the table as MPs, and the mandate of the people we represent, and to take a position. Today, our position is this: the National Party will be supporting the medicinal cannabis bill through the second reading today and into the next stage, at which point we will require the smoking of loose-leaf cannabis to be replaced and the incorporation of some of the legislation that we have crafted to be included as part of a framework. This will allow all parties and New Zealanders to see, debate, and agree on the main features of a medicinal cannabis scheme. On these terms, then, we commit our collaboration and timeliness and I would like to thank my colleagues Chris Bishop, Mike Woodhouse, the National Party caucus, and the whole Health Committee for their work to this point.

As many have pointed out, support for the first reading was a big step for the National Party and be in no doubt this is another big step. But we have been moved by petitioners. We have been moved by the New Zealand public and we now seek to work with others to add another tool to the tool box so that clinicians can ease the suffering of vulnerable New Zealanders. I want to deeply thank the 1,786 written submitters and the 158 oral submitters. Every submission was heard with respect and consideration. Thank you for making yourself vulnerable to the select committee process so that we could better understand your need. On many submissions we were moved as I was moved. It is the unexplainable lottery in life that people of all ages can be afflicted with conditions that we seek to aid here today. It is for you that we lend our support to this bill.

The committee returned this bill back to the House unamended. I need to address this and put to sleep the myth that we did not collaborate in committee. On this matter, the chair of the select committee, Louisa Wall, as chair and I as deputy chair are in complete agreement. The main issue that caused the committee to stumble was this: we believe on an issue as sensitive and important as medicinal cannabis that at least a basic framework needs to be visible to all parties across the House so that we can all debate and agree on the key points to a scheme that will then stand the test of time and political cycles. This would not seem unreasonable. On child poverty we have collaborated and have a framework that we can all see and debate. On climate change we are collaborating and working on a framework that we will all see and debate. On medicinal cannabis the canvas was bare. We were told to leave it to unnamed officials who over the following years would figure it out.

No. The National Party will not leave the details of a medicinal cannabis scheme to unnamed officials with no further parliamentary oversight. We raised this with our Labour Party colleagues on the select committee as a very important point for us. They said no. We sent officials away to find out how we could develop a medicinal cannabis scheme and then bring it back to the House for parliamentary oversight. We were told that the committee could collaborate and then add a parliamentary tool called an affirmative instrument. This would ensure that all parties could then debate and agree on the nature of the medicinal cannabis scheme. We were excited and ready to roll up our sleeves and add the work that we had been doing. Labour said no.

There is no question and no debate about this issue. We wanted parliamentary oversight, and Labour did not—a not unreasonable request. There was some foreshadowing of this outcome. We sensed the reply would be no, and so, still believing in the need for medicinal cannabis, we had been doing background work on the sort of detail we think Parliament and New Zealanders want to see. As history will show, we then announced a comprehensive medicinal cannabis scheme that we put out for public scrutiny. We developed the scheme in consultation with overseas best practice and, informed by the submissions that we had heard, we were prepared to put our work out for comment.

In our hands, medicinal cannabis is just another medicine that requires much the same safety and testing that other medicines require. In our hands, we address safety and quality by requiring pharmaceutical-standard cultivation, processing, and manufacture. We require licence holders and employees to be fit and proper persons. We address access and affordability by utilising Medsafe’s existing section 23 provisional registration mechanisms so that medicinal cannabis products can be fast tracked through the Medsafe system without compromising safety and quality. We require GPs and nurse practitioners to certify a 12-month medicinal cannabis card so that dispensers, police, and other services are reassured. A carer card is also described for those who are too frail to travel. We legislate pharmacists to dispense medicinal cannabis as a pharmacy-only medicine—again, improving access and affordability.

A very important issue, then, is the matter of eligibility. We don’t think politicians should make this decision. In our hands, an advisory board of specialists will weigh up the scientific evidence and therapeutic benefit across a range of conditions. The Health Committee heard from a number of petitioners submitting around chronic pain. I would note that officials advised against chronic pain in the terminal exception for four reasons—and this is all available in the departmental report. Point (1) the ministry considers that any other groups of patients, such as those with chronic pain, should continue to be able to access quality medicinal cannabis products on prescription; (2) it is appropriate that people with other conditions, including chronic pain, receive medical advice about the use of medicinal cannabis products, including potential interactions with other medications and medical conditions; (3) extending the provision to other conditions may also risk undermining the intent of the scheme, which is to improve access to quality medicinal cannabis products on prescription; and (4) the ministry does not recommend extending the exception and statutory defence provision to include people who are diagnosed with other conditions.

We’re hearing today some of the changes to the original bill to be enacted through Supplementary Order Papers: the replacement of the definition of “terminality” with “palliation”, which one presumes is a derivation of “palliative care”. In the context of my previous discussion on chronic pain, I would like to come back to what I’ve stated previously: that whether chronic pain is in or out should not be a decision for politicians to make. This should be a decision for specialists to make and we will stand behind that position.

We are also hearing today support for domestic strains. We are likely to support that once we have seen the detail supporting a local industry. We believe that there may be four to five strains of domestic cannabis that may be suitable for commercial production. What is missing in this discussion today is the amnesty period that every other jurisdiction that has introduced local domestic strains has required. Any strain of cannabis in New Zealand is currently here under illegal means, therefore an amnesty period is usually required and it’s a short period: a couple of weeks so that people can’t, in that time frame, bring across the border illegal strains. The cork’s out of that bottle today. We urgently need to know what the Minister’s intentions are.

The National Party remains ready and willing to collaborate on a medicinal cannabis scheme that will ease the suffering of New Zealanders. Our support today at this second reading is a clear signal of that support. However, further support is contingent on two things: the replacement of smoked loose-leaf cannabis and parliamentary oversight of a medicinal cannabis scheme framework that includes the well-researched work that we wish to share. We are ready. We want to collaborate and I believe that together across this House we can develop a high-fidelity medicinal cannabis scheme. Thank you.

JENNY MARCROFT (NZ First): Thank you, Madam Deputy Speaker. It’s a pleasure to rise and speak on the second reading of the Misuse of Drugs (Medicinal Cannabis) Amendment Bill. I’d like to begin my contribution this afternoon just by really thanking the Health Committee for the diligent way they have worked through this process. Whatever way you look at it, medicinal cannabis is an emotive topic. People are either emphatically for it or vehemently against it, so finding the pathway through this together is something to be commended. I would like to note the intention signalled by the previous speaker, Dr Shane Reti, that there is consideration to continue their support, so I would like to thank the member for announcing that this afternoon.

I am a brand new member of the Health Committee. I’ve had two meetings there so far, and I am really pleased to join that committee. I am disappointed, though, that this particular bill has gone through its committee stage; it would have been great to have been part of that process. I look forward to continuing work with a great team of members from both sides of the House—well chaired, great deputy chair, and I look forward to getting to know those members in greater depth.

I’d like to thank all the many, many submitters on this bill, of which there were more than a thousand—1,786 written submissions on this bill, and 158 oral submissions were heard. So that was a considerable amount of emotion, of detail, of consideration for the committee through that period of time, and for those submitters, too, in having to bring their stories to be heard. To the Minister, the Hon Dr David Clark, I thank him for his ability to collaborate and to consider the New Zealand First contribution, and it has been a great process to work with him.

I don’t bring a medical background to the Health Committee and to this particular bill, but what I do bring is real life experience of what it’s like to be with some people when they die—when they die from a horrible cancer, and the slow and painful way that that happens. I referenced this in my first reading speech, about my mother. I was a teenager when she was first diagnosed with breast cancer and then the slow, painful demise of her over quite a number of years.

I don’t really want to go into the long and painful, slow process of her death, but I do want to make note of one particular story around this. We had a car in the 1970s; it was a lime green Datsun 120Y. It was quite a machine. However, even though it was a new car, which was something really flash for us, she had to travel from Rotorua, over the Mamakus, to Waikato Hospital for her treatment. Now that, in those days, was a very long and winding road to get there, and it was quite bumpy. So it was a very painful journey for her to make, to go over for her treatment and then to come back again. That particular journey and her discomfort because of the pain she was in really brought home to me that those sorts of things are exacerbated in terms of people’s pain levels and their thresholds to the pain.

So this is where the consideration that New Zealand First has, in terms of extending the terminology of being in a terminal condition to one of palliation—because you can be terminal but you don’t necessarily know how long that will be for. When you are in palliation, it could be a lot longer a period of time than 12 months. So that was really—along with many of the submissions that were heard through the select committee process of extending that period from terminal.

I would just like to mention a couple of the submissions that have come through to the committee relating to that. We heard from a submitter, Natalie Clark, that, in the end, this bill should be about compassion: “Please make an ethical, conscious, and compassionate choice when thinking about this Bill. Think of how the decisions made are going to impact the lives of thousands of New Zealanders, not to mention their friends, families, and loved ones.” Another submitter, Jack Meng, said, “Pass the bill in question. Consider further amendments in relation to medical cannabis on the basis of compassion”. And it’s that: it is on the basis of compassion that I make my contribution today.

Terminal illness—the requirement for a medical professional to diagnose this condition was also raised, and that’s why we’ve extended out into palliation. Terminal illness is hard to define, and a person may, in fact, live longer than a year after the diagnosis of a terminal illness. I’d just like to reference the Minister, in his contribution today, that this change—extending it out from the terminal into palliative care—would remove the 12-month restriction and the term “terminally ill” from the provisions. It’s not possible to predict with complete accuracy the progression of life-threatening conditions. In addition, terminally ill is no longer commonly used in palliative care and can be confronting for some patients.

The World Health Organization has a definition of what palliative care is. “[It’s] an approach that improves the quality of life,”—and I’m quoting now—“of patients and their families facing the problem associated with life-threatening illness, through the prevention and relief of suffering by means of early identification and impeccable assessment and treatment of pain and other problems … [It] provides relief from pain and other distressing symptoms, [it] affirms life and regards dying as a normal process; [it] intends neither to hasten or postpone death; … [it] offers a support system to help patients live as actively as possible until death; [and it] offers a support system to help the family cope during the patients illness and [also] in their own bereavement;”.

On that note, I would like to conclude my contribution this afternoon and thank all the members who are making contributions on what is an important bill this afternoon. Thank you, Madam Deputy Speaker.

CHRIS BISHOP (National—Hutt South): Thank you very much, Madam Deputy Speaker. The member who just resumed her seat, Jenny Marcroft, is absolutely right: this is a very important issue and a very important bill. I have not been given the honour of serving on the Health Committee, but I’m very interested in this issue and have worked with Dr Shane Reti and Michael Woodhouse and some colleagues on this—although, as Mr Woodhouse has pointed out, the vast, overwhelming amount of the work on this issue has been done by Shane Reti, bringing his years of clinical expertise, governance, and policy making to the issue, and he has done a superb job. I thank my colleagues on this side of the House for their indulgence to speak in the debate on the second reading.

The bill that has come back from the select committee is deficient in a number of different respects. You only had to look at the response from the public and the stakeholders—groups like the Drug Foundation, and Shane Le Brun from Medicinal Cannabis Awareness New Zealand—when the bill was reported back some months ago to gauge the level of disappointment at what had come back from the select committee. Submitters who turned up in good faith and who asked for greater access, who asked for a comprehensive regime to be developed, felt like they were not listened to, and they were right because the bill that has come back is as deficient as it was when it went into the select committee in the first place.

I think it is fair to describe it as a “Clayton’s Medicinal Cannabis Bill”. It was a 100-day promise of the Government that they said during the election campaign they would do. In the sense that it provides a statutory defence for those who have a terminal illness, in the loosest way possible I suppose it liberalises the law around medicinal cannabis so the Prime Minister could say, “I’ve taken action on medicinal cannabis.” Except that it doesn’t make the supply legal. It means any hospice worker or any hospital or any family member or a husband or a wife who happens to have marijuana, who then happens to give it to someone with a terminal illness, is committing a crime, is acting illegally. The possession and the supply are illegal. It only means that a very few number of people are able to rely on the statutory defence.

In the National Party’s view, it allows for loose-leaf cannabis, which we do not believe should be permitted, because we believe it will be a backdoor way to decriminalisation or legalisation. In a funny sort of way, it actually significantly limits access—or, at least, there’s far less access to medicinal cannabis than people who submitted on the committee actually want.

And, of course, the biggest problem with the bill is that, despite saying it sets up a medicinal cannabis regime, it does not do that—it just does not. It subcontracts out to officials policy questions that should be the preserve of Parliament: where can you grow medicinal cannabis, how will it be manufactured, what standard will it be manufactured to, how will people who are eligible for medicinal cannabis get it, who will determine the eligibility, what age do they have to be, where will they buy it, and how will it be procured? These are fundamental questions that can’t just be left to officials and subcontracted off to the never-never—to 2021, 2022, and beyond.

Chlöe Swarbrick: 2019 now.

CHRIS BISHOP: Well, we’ll see. So the bill that went into the select committee was flawed. The bill that’s come back is flawed as well.

What are we seeking to do in the National Party, led by Dr Reti? We are seeking to fill the gaps in the legislative regime. We are seeking to, in good faith, provide the ballast—provide the substance—that’s just not there. We’ve gone away and done the work, led by Shane, and he’s informed by international best practice. He’s been around the world and has talked to international experts.

DEPUTY SPEAKER: Use his full name.

CHRIS BISHOP: Dr Reti has been around the world and has talked to international experts. He’s met with people in various regimes where medicinal cannabis has been well entrenched and understood for a number of years. We have done the work, it’s been through the Parliamentary Counsel Office, and we are offering up our Supplementary Order Papers (SOPs) to the Government parties—the Greens, New Zealand First, and the Labour Party—in good faith, and we hope that we will make some progress.

I just want to touch briefly on the advance notice of the Government SOPs that may come later. This extension to palliation doesn’t deal with one of the fundamental problems with the terminal illness exemption, which is, as I mentioned before, that it doesn’t do anything about the problem of hospice members and hospital workers and family members still committing criminal acts. Russell Brown has already pointed this out on Twitter: it doesn’t deal with that fundamental problem at the heart of the bill. So that’s the first thing.

The second thing is “palliation” is an interesting word, but I don’t know what it means. We’re yet to see what the definition is. We’re yet to see exactly how it will be defined. New Zealand First has put out a press release congratulating itself on achieving a change to the bill, but we don’t actually know if it’s a good idea or not. The definition of “palliation” wasn’t considered by the select committee. I strongly suspect it wouldn’t be backed by the official evidence if health officials were asked about it, and so we’re not really sure about that particular extension, and, of course, we’ve still got that loose-leaf problem. So I’m not really sure that the Government SOPs improve the bill very much.

But, look, the fundamental problem with this is the lack of the regime that it puts in place. I want to end my speech with a genuine, good-faith plea to the Greens in particular, New Zealand First, and Labour. The National Party has moved quite a long way on the issue of medicinal cannabis. It’s well known in our history that in Government a bill was not advanced. We did take some action around cannabidiols and other non-legislative mechanisms. But we came into Opposition, as my good friend Dr Reti said, we heard the voices of patients—all of us in the National Party have had people in our offices talking about the benefits that medicinal cannabis can provide for them or their loved ones. Our colleagues sat on the Health Committee and heard the submitters turn up and talk about how New Zealand needed to bring itself into line with lots of other countries which recognise that, in specific circumstances, for specific illnesses or ailments, medicinal cannabis can have some effect.

We listened. We listened and we did the work, and we went away and we came up with a regime. Now, we’re in Opposition; if we were in Government, we would put it into law. We would pass it through and we’d be proud of ourselves, and we’d pat ourselves on the back and say, “We did that.” But we’re not—we’re not in Government; we’re in Opposition. But I’m not one who believes that Opposition should just be about saying “no” all the time. We vote “no” on lots of different bills in this House, and we’ll keep doing that. I’m not one who got into politics to just say “no” all the time. I got into Parliament and got into politics to do stuff: to make New Zealand a better place, to reform the laws that need reforming, to put in place things that will make New Zealand a better place. And I fervently believe that the regime that we have developed in Opposition will improve the bill and it will make New Zealand a better place. And so my plea to the Government parties is: talk to us, talk to Dr Reti, talk to me, and talk to our health team about trying to get what we’ve proposed into the existing Government bill.

We originally drafted a member’s bill in Dr Shane Reti’s name. We have condensed that down into three specific SOPs that, essentially, replicate the bill. They are designed and ready to go, to be inserted into the Government legislation. It fills the gaps. Dr Reti has outlined what it does. It talks about where you can grow, who can grow it, the criteria you have to fulfil to be a licensed operator, how you will get access, how eligibility will be determined, and how pharmacists will dispense the rules that pharmacists will have to follow. It fills in the gaps on the Government legislation.

As I’ve said, we think the Government legislation is deficient in a number of respects. We think our proposals significantly improve it. They are comprehensive, they are informed by best practice, and most crucially—and if I can finish on this point—it will mean greater access, faster. That’s the other thing that submitters and the public want: they want this in place. They really do. And, frankly, they look at the Parliament and wonder why it’s taken so long. Well, there’s lots of different reasons for that, but I’m telling you now: a regime where the regulations only come out in 2021 or 2022 will be laughed at by the public. We need to act now. We offer up our SOPs in good faith. I hope the Government will take them seriously and look at them. Thank you.

CHLÖE SWARBRICK (Green): E Te Māngai, tēnā koe, tēnā koutou e Te Whare. It is a pleasure, or may I say, for the sake of my colleague Erica Stanford, I am stoked to be standing in support today of the Misuse of Drugs (Medicinal Cannabis) Amendment Bill, because at the end of January earlier this year, when my medicinal cannabis member’s bill was before this House, there were a number of patients that were affected by medicinal cannabis, or, rather, the lack of current access and affordability of it. I met with a young woman called Grace Yeats and her mother, Tracy. Grace, at 10 years old, was diagnosed with a rare brain illness that left her unable to walk, to talk, to sit, to eat, or to speak. She was prescribed with medicinal cannabis Sativex, which seemed, at the very least, to cure the worst of these symptoms.

It is for people like Grace, today, and for incredibly strong advocates like Helen Kelly that I am proud that we as a House are coming together in consensus to progress this piece of legislation, because, indeed, people have been suffering for far, far too long. I want to also reach out and make the point—as was raised by the National Party, the Opposition—that they’re seeking to see collaboration here. I would like to note that I have met with members of the National Party, as I’ve met with, I believe, all interested members in this House on this issue, because I think collaboration and consensus is incredibly important, not just for improving this bill but also for the signal that it sends to patients and to their whānau around the country.

I also just want to point out for those who have been saying that we have to be quite careful about how we progress these regulations and that we want to ensure that we’re not providing access to the wrong people that the cat is out of the bag at the moment. Unfortunately, the most recent statistics that we have on consumption of cannabis in this country are from the 2012-13 Ministry of Health survey. They show that 400,000 New Zealanders are using cannabis on an annual basis, and 42 percent of those report using it for medicinal purposes. The best thing that we as a House can do is put some regulation around that access and ensure quality and standards around the product. When my medicinal cannabis member’s bill failed, I said that we had lost the battle but that we would win the war eventually, and that is what it looks like today with the consensus that it appears that we have reached, at the very least, with the substantive content and moving towards a prescriptive medicinal cannabis scheme.

On the point raised by Dr Liz Craig earlier around evidence, I recognise that the evidence is still developing, as is the research, and this was stymied somewhat over the past 40 years as a result of the war on drugs. But there is an incredibly thorough and reputable meta-analysis from 2017 which is titled The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research—

Simon O’Connor: What journal? What journal?

CHLÖE SWARBRICK: —which found that there was conclusive and substantive evidence that cannabis and cannabinoids are effective for the treatment of chronic pain—for example, in adults—

Simeon Brown: Which journal?

CHLÖE SWARBRICK: —and are effective treatment for chemotherapy-induced nausea and vomiting and for improving patient-reported multiple sclerosis spasticity symptoms.

And I’d just note to the members of the House who appear to be heckling me that it’s kind of unfortunate to be doing so in the middle of an issue that is quite important and that we’re seeking to build cross-party collaboration on.

I also want to speak to the distinction, which I think is quite critical to make, between the issue of medicinal cannabis and that of adult recreational consumption, because I think somewhere along the line, at the very least in public commentary, the issues have become conflated. What we are dealing with here is medicinal cannabis, which, ultimately, will end up in a scheme that is licensed and manufactured and controlled locally and prescribed in the same way that any other form of medicine would be, by medical health professionals. What we are looking at, on the other hand, is something which is contained within the Green - Labour confidence and supply agreement negotiated to help form this Government, that being the referendum on adult recreational use. That is indeed quite a separate matter, so I just want to clarify that for the listeners today.

I also want to speak to the improvements that have been made and signalled by the Minister Dr David Clark with regard to this piece of legislation, and those which I’ve been very happy to work on with my Government colleagues, particularly the movement away from the quite narrow definition of terminal illness for that criminal defence. Terminal illness, as has been illustrated by a number of speakers before me, is quite a difficult definition. It’s quite a difficult thing to define. We, as the Green Party, had advocated for—and I’m quite happy to put this on the record—extension to medical necessity for a criminal defence. Unfortunately, also as a result of definition issues, that did not get across the line. It is the case that in order to bring this before the House today, we did have to draw that line somewhere. So we are happy with where we’ve got to with the extension to those in palliative care, which, I’ll note, extends this criminal defence to a possible 25,000 New Zealanders.

I would also state that I absolutely agree with the points that have been made with regard to the issue of supply and how the bill is currently silent on the issue of supply around the criminal defence. That issue was canvassed thoroughly inside the select committee process, and I’d state to members of the National Party who raised this issue that we had the ability to solve that with my member’s bill earlier this year, had both of those progressed before the Health Committee, where we could indeed develop those regulations around a prescription-based model. Unfortunately, that opportunity has slipped through our fingers, so I continue.

I also want to state that the time limit has become more constrained as a result of our advocacy, and this is a really important one. It was Chris Bishop who, just before I got up to speak, was stating that we had no idea when these regulations are going to come into effect, but as a result of the Government Supplementary Order Paper, which will be tabled in the committee of the whole House stage, there will be regulations by the end of next year. There will be a thorough licensing, manufacturing—

DEPUTY SPEAKER: But this is a second reading, and we don’t have that.

CHLÖE SWARBRICK: Accepted, Madam Deputy Speaker.

DEPUTY SPEAKER: Right, and we are discussing the bill in front of the House.

CHLÖE SWARBRICK: Accepted, Madam Deputy Speaker. I’m debating the points that have been raised thus far.

So too in these discussions, and as has been raised, actually, in the select committee process too by a number of the submitters and stakeholders mentioned by other members in this House, we have kind of a perverse situation when it comes to native strains in this country and the potential for their inclusion in schemes, in that, basically, all cannabis in this country is technically here illegally. So we have to—as was raised by Dr Shane Reti—provide a situation where there is a form of amnesty so that we can have those local strains come into a regulated legal scheme here in Aotearoa New Zealand. I would also note that that is a massive opportunity for New Zealand’s producers and innovators to take part in a massive billion-dollar export market internationally that is developing and, indeed, actually exploding.

I would also like to point, just finally, to what was raised around collaboration. As I’ve noted, my understanding is that I have met with all members in this House who are deeply interested in the issue. It was only earlier this week that myself and Dr Shane Reti stood alongside Shane Le Brun from Medicinal Cannabis Awareness New Zealand and accepted a booklet of different forms of regulations that exist in different jurisdictions. What is currently proposed within these regulations is indeed still a little bit too ambiguous, which is why we need to tidy it up, and it’s why we need to ensure that there is, in particular, that time limit of development so that we can provide certainty of access and affordability for patients.

I also want to state that in the process of this bill and in my involvement in the issue of medicinal cannabis and in sitting in on a number of the submissions made by members of the public on the issue of medicinal cannabis, I believe, in my 12 months in Parliament, I’ve kind of seen both the best and perhaps some of the most difficult sides of our parliamentary process, and, indeed, at times I’ve been deeply gutted by the politics. We have now had the discussion of three medicinal cannabis bills in this House in the past 12 months, and we have an opportunity now to move forward and to progress the best outcome for the people of New Zealand. The best shot and opportunity that we have at creating a regulatory scheme that works in Aotearoa New Zealand is presented in this legislation, and I am very happy that members across all sides of this House will be supporting it today. Kia ora.

SIMON O’CONNOR (National—Tāmaki): Unfortunately, a lot of what we’re hearing in this space is a lot of smoke and mirrors, and elements of what we’ve just heard from the last speaker, Chlöe Swarbrick, is part of it. She mistook heckling for members on this side, myself included, asking her for the journal that she quoted some research from. We actually asked her how many citations there were, and that was not forthcoming. People like me are very keen on things medical and things scientific, and I think very much that’s where the National Party is wanting to go through this second reading.

As colleagues prior to me have said, the National Party will be supporting this bill at second reading, but on the proviso that the committee of the whole House actually begins to look seriously at the Supplementary Order Papers (SOPs) put forward, obviously by every member in this House, and I’ll be interested in those, but particularly the SOPs of Dr Shane Reti, which is actually putting forward the regulatory approach that this House rightly needs and demands, because part of the smoke and mirrors, including from the last speaker, is talking about a regulatory approach in a bill that does not exist. There are no regulations prescribed in this bill. There are great wishes and intentions—smoke and mirrors. All that this side of the House is asking is that, actually, the regulations—and, actually, Christopher Bishop spoke to it very well—line up who can produce, the ages, the medical qualities—all those conditions. Let’s lay those out in this Parliament and discuss them.

The other side, and those who are supporting the current bill, which, of note, has come back unchanged, therefore with all its initial faults, are, effectively, just asking us to trust and believe in an area that is actually and remains controversial. I’ve said it many times in this House: simply putting the word “medicinal” in front of an illicit, or even licit, drug does not make it a medicine. If something is a medicine—if something is a medicine—then, in many ways, we can ask, and this House should ask: why doesn’t the sort of wunderdroge—the wonder drug—of cannabis fit under our existing medicinal laws?

Chlöe Swarbrick: The war on drugs.

SIMON O’CONNOR: Chlöe Swarbrick says the war on drugs, because that’s always the great go to. Had she spoken to her big pharma friends and the likes of Rothmans and that, who are going to be very keen to actually get into your big dope system of business that you talked about—

DEPUTY SPEAKER: I hope it’s not my big dope.

SIMON O’CONNOR: Sorry, Madam Deputy Speaker. I’m sure you won’t. But Chlöe Swarbrick seems really keen on this new business opportunity, which I’m sure again—because, of course, if she’s been reading the literature, she knows that the big tobacco companies are investing in this already—for medicinal reasons, I’m sure, Chlöe Swarbrick.

But, actually, this bill does not address those matters, and that’s a problem. I say it again: if something is medical, then why not put a proper medical structure around it. In fact, put it through Medsafe. Let’s have that discussion. Let’s also use proper medical terms. Terminal illness is actually relatively straightforward. Whether something is 6, 12, or 18 months terminal becomes less clear. Why, I suppose, the Ministry of Health was not willing to recommend chronic illness as a proper medical definition is because it’s incredibly hard to define. It does raise suspicions, in my mind and in many people’s minds, that, really, this is just using the medical cloak to provide a legitimacy to wider use of cannabis.

Then, all of a sudden, we have words like “advanced progressive conditions”. The doctors in this House will know that that is incredibly ambiguous language. “Advanced” is not medical. “Progressive” is not medical. “Condition” probably is, but, actually, I can think of thousands of conditions. This language is incredibly, incredibly ambiguous. And then, all around it is the continued desire to have loose-leaf cannabis—so one could smoke their way to health, which, of course, raises the other contradiction of how the Government side is going to, out of one side of its mouth, support Smoke-free Aotearoa 2025 and then, out of the other side, say that smoking of loose-leaf cannabis is perfectly legitimate. I suspect they’ll say it just doesn’t count. So there’s an inherent range of contradictions here.

All I’m asking this House to do—and it’s the reason I’m still happy to support this bill at second reading—is to give the well-thought-out, researched approach, particularly of Dr Shane Reti, a chance. Let this House put the appropriate regulations in place so that, actually, cannabis, where it has an appropriate medical use, can, if you will, flourish.

I’ve had the good fortune of being in hospices and working, if you will, alongside palliative care physicians, who do an amazing job and have often asked for access to cannabis. And, yes, I think there’s a great opportunity here. But, as I’ve said before, to try and take this bill to misuse it—to misuse the terminal or chronic health of others—to legitimise, effectively, dope smoking is a step far too far.

At the end of the day—and I’m sorry to have to repeat it again, Madam Deputy Speaker—it’s all well and good for those university students studying Nordic literature to want to smoke dope on the ability of a chronic illness. The effects of this drug can be terrible on our communities, and I’ve had the misfortune of having to work with those people as well to try and repair things. Where things keep medical, we’re in great support. Where things medical get misused to simply allow some people to smoke dope, we will not support it, and I will not support it. But I commend this to the House to the second reading.

DEPUTY SPEAKER: I call Anahila Kanongata’a-Suisuiki. It’s a five minute call.

ANAHILA KANONGATA’A-SUISUIKI (Labour): It’s an absolute honour to stand here to speak on the second reading of the Misuse of Drugs (Medicinal Cannabis) Amendment Bill. I want to take this opportunity to thank all the submitters—all 1,786—who shared their views and opinions with the select committee. It has been a privilege to be part of the select committee who were honoured to listen to the stories shared by the submitters.

I want to take this opportunity to acknowledge the leadership of those involved in the pathway of this bill into this House: the chair of the Health Committee, Louisa Wall; the deputy chair, Dr Shane Reti; and the Minister of Health for his leadership in bringing this into the House. As a first-time member of Parliament, this will always be the bill that will have a lasting effect on how I experience lawmaking in this House. As we have heard from the Hon Dr David Clark, all parties have been involved in discussions to get this bill into this House.

As we heard from the Hon David Clark, the problem we are trying to solve—I just want to get to that point because I don’t think the last speaker, Simon O’Connor, had read the bill or read a lot of the information that’s been provided about this bill. What I want to remind the House is that in the bill, the problem that the Hon David Clark is trying to solve here is to improve access to quality and affordable medicinal cannabis products. The bill will provide interim relief for all who are suffering in pain and lay the foundations for a scheme that will result in a greater supply of quality, affordable, medicinal products. That is what this bill is trying to achieve.

Like many New Zealanders, I wasn’t aware of the extent—I wasn’t aware that doctors could prescribe medicinal cannabis. In the advice of the ministry to the committee, what they said to us, on 14 May, was that currently cannabis can be prescribed for any condition if there is a clinical judgment by the doctor that a patient has the potential to benefit. Ministry approval is required for unconsented cannabis products. We asked the ministry what is the scope of conditions for which medicinal cannabis is prescribed and for what volume of prescriptions. The things that came back from the ministry were that currently 26 conditions can be prescribed for cannabis, and for what? It is for severe pain, neurotic pain, severe seizures, nausea—“severe”, “chronic”, most of those words are coming up in terms of “severe”, “chronic spasm”, and “chronic”. It comes throughout all these conditions that the ministry prescribes.

Then we asked them: what is the volume? In the last three years, how many people have actually been prescribed medicinal cannabis? They told us that in 2015 only 46 had; they told us in 2016 only 60 had; in 2017, 93 had. Less than 200 people have been prescribed this medicine, who—according to the 1,786 submitters—told us that it is a pain relief, that it has relieved the pain that their families or they personally themselves had suffered. So, I think, in terms of what we are trying to do and in terms of what the Minister had said to us, this will enable access to quality and affordable medicinal cannabis by more New Zealanders. In terms of the 1,786 submitters, I think more New Zealanders do deserve to have this interim process in place until we have the scheme in place, as said by the Minister, 12 months after this bill is passed.

SIMEON BROWN (National—Pakuranga): Thank you, Mr Assistant Speaker, for an opportunity to take a call on the Misuse of Drugs (Medicinal Cannabis) Amendment Bill. National, as we have said, is supporting this bill through to second reading, not because we support this bill, not because we think this is a piece of good legislation or because it is something which actually will make a positive difference to New Zealanders, but because we want the opportunity at the committee of the whole House stage to be able to fix this bill and actually make it into a bill which will help New Zealanders and which will actually provide proper medical cannabis products and medicines to those who actually need it.

National and I understand the need in our community for medicinal cannabis products to be made available to help to relieve the pain of New Zealanders and to relieve the suffering of those who wish to have these products and to be able to use these for their benefit, but we don’t believe in providing an unregulated market, a system which has no regulation—a piece of legislation which, essentially, will leave it completely open to the bureaucracy to then put that in place. In this piece of legislation that we have in front of Parliament today, we don’t know who can grow cannabis, we don’t know where this can be grown, we don’t know how these products will get approved, we don’t know who will prescribe these products, we don’t know where they’re going to be dispensed, and we don’t know the categories or the criteria for those who’ll be entitled to have them. This piece of legislation leaves all of this to the bureaucracy to be able to then put in place regulations further down the track, with no parliamentary scrutiny of these.

This is a shoddy piece of legislation which was rushed together in the Government’s first 100 days, when they wanted to go out there and say, “We have provided a solution.” Well, I’ve got news for New Zealanders who have been calling for reform in this area: it’s over one year since this Government came into office, and they still haven’t got an answer. Their simple answer is: “Well, we’re going to pass a piece of legislation which will then put in place the ability for the bureaucracy to put in place regulations which might come into place at the end of 2019, which might then come into force in a couple years after that.” That is not delivering on 100-day promises. That is not even delivering within a year. That is potentially delivering something in a number of years.

The second point that I’d like to make is that this bill is the back door to allowing for cannabis and loose-leaf cannabis to be legalised. This is the back door to decriminalisation. I know that in some parts of this House that’s what they want, but let’s have an open and transparent conversation about that. Let’s have a debate about the decriminalisation of cannabis. And yes, there will be a debate coming up with a referendum, but that is the place to be having a debate over the decriminalisation of cannabis, not by opening up the law so that it allows for anybody and everybody to be able to, essentially, say that they’ve got some sort of condition whereby they can then access medicinal cannabis, grow it, and then be able to consume it.

I want to remind the House that cannabis is a dangerous drug; that it is something which we must tread very carefully with. It is a class C, regulated drug. It is dangerous and it does cause an enormous amount of harm in our community. Just this week, on Sunday, I released some statistics that I received from the Ministry of Health which showed the number of cannabis hospitalisations in New Zealand coded by mental and behavioural disorders and by poisoning for cannabis. What is true is that over the last year we had 432 hospitalisations where cannabis was the primary diagnosis in our hospitals, four of which were children aged under 14. We have also had 79 hospitalisations where poisoning by cannabis was the primary diagnosis—

Chlöe Swarbrick: I raise a point of order, Mr Assistant Speaker. I’m just seeking your guidance on this as a new member. My understanding is that—

ASSISTANT SPEAKER (Adrian Rurawhe): No, no. That’s not the point—can you sit down? The purpose of points of order is not for you to make clarifications about what’s going on. That’s out of order.

SIMEON BROWN: Thank you, Mr Assistant Speaker. Last year 79 were hospitalised with a primary diagnosis of poisoning by cannabis, nine of which were children.

So over the last five years, 73 children have been hospitalised by marijuana. This is a dangerous drug. We must tread carefully when we’re talking about decriminalising a class C drug in New Zealand. It does have an enormous amount of harm in this community. So, Mr Speaker, we support this bill to second reading, but we have very, very strong objections to what is in it. We have Supplementary Order Papers that we would like to be supported, and if they’re not, we will oppose in future.

I seek leave to table a response to my Official Information Act request which includes hospitalisations both by psychoactive substances and by cannabis, as I referred to in my speech.

ASSISTANT SPEAKER (Adrian Rurawhe): Leave is sought for that purpose. Is there any objection? There appears to be not. It may be tabled.

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

Before I call the next speaker—can members be very careful with their interjections. I know that it’s a bill that everyone has strong opinions about, but that doesn’t give licence for members to make interjections which are unnecessary. Also, the content of the speeches—this is a very wide debate, so members can bring up anything that was brought up by submitters, and I have read a few of them and a lot of things were brought up. So just calm down.

ANGIE WARREN-CLARK (Labour): Thank you, Mr Assistant Speaker. I would just like to very quickly address the members Simeon Brown and Simon O’Connor and ask them to please have a look at the bill. The bill actually refers to “cannabinoids”. Now, cannabinoids generally have less than 2 percent THC, which is the psychoactive substance. So that’s the first point I would like to make. The second point is that we are making reference here specifically to people with a terminal illness. So when we talk about smoking, etc., of loose leaf, I take the point that has been made. However, these are terminally ill people who have a right to make the decision about their last time of their lives.

Now, to the speech: the Misuse of Drugs (Medicinal Cannabis) Amendment Bill was intended specifically to improve access to quality medicinal cannabis products, and it did this in three ways—and, until the Supplementary Order Paper (SOP) is tabled, continues to do so. The bill proposed to do three things: to introduce a statutory defence for the use of cannabis and the use of utensils in imbibing, I guess, for those people with less than 12 months to live; to provide a regulation-making power to set standards for products manufactured, imported, or supplied—in short, a licensing system. The regulations were to come subsequently. We take your point; the members opposite are concerned about this. However, regulations are generally made after the bill comes into law.

Finally, which hasn’t really been mentioned today, the bill proposed to de-schedule—that’s the word—cannabidiol or CBD, and I think I’ll say “CBD” from now on, so that it is not a controlled drug. This is the non-psychoactive aspect of what we understand is in cannabis—so THC, CBD—and I just wanted to make that point. This is what we’re often referring to when we talk about this bill, and I think that point has been lost a little on some of the members opposite.

Predominantly, I want to speak and talk about the submitters, and I really want to do this because, like the member who spoke previously, essentially, this was the first time that I had heard submitters in the select committee process, and it was harrowing. It was difficult at times. We had people there in tears. We had people there telling us their heartfelt stories of the changes that the use of marijuana, cannabis, had made to their lives, and I stand here and say quite frankly: who am I to disbelieve these people, and who are we to disbelieve these people? That is their lived experience, and it is important to acknowledge that we heard them.

There were 1,700-odd people—submitters. That sounds wrong, “odd submitters”. There were 158 oral submitters who came to speak to us, and because there were so many, we split. We had the honourable Shane Reti as our chairperson, and I want to acknowledge your compassion during those days. I want to acknowledge particularly Damon, who hitchhiked from Hamilton to tell us his story. He had five minutes. He talked about his seizures, and he said this: “Do what you have to do to make sure that if the people you love get sick, that there’s a non poisonous solution.” It was incredible. He then turned around and hitchhiked back to Hamilton, and it was raining. My heart went out to that man, who has suffered from a diagnosis of temporal lobe epilepsy—an extreme illness.

I also want to acknowledge the family desperately trying to access their KiwiSaver under their hardship criteria to help their non-verbal son access Sativex. I mean, this is wrong, surely, that we have people giving up their life savings just to help their son. They showed us pictures of the difference that Sativex had made. It cost $40 a day for them, which is about $1,200, and what a difference, the picture that we could see. So I think that we as a Government have done our very, very best to try and listen to these stories and to do what is right, and I am absolutely delighted that the Opposition are talking the same language, because we were all there and we all heard that, and we can’t unhear it, and it’s important that we walk forward with this.

I am delighted that there will be an SOP tabled, and I am delighted that palliation—palliative care—is the definition that we’ll be looking at, and I look forward to exploring that. I imagine that is the definition used from the WHO—the World Health Organization—which is a world standard, so therefore we don’t need to be too concerned about that. However, that is what the next stage of this bill is about.

There is much more to discuss and my time is short—it’s very short—so I want to thank New Zealand First for their positive contributions to this SOP that’s coming up, and particularly the member Jenny Marcroft, who is a new member on our Health Committee but who has constructively added to our membership, absolutely, with the widening of this definition, and the member Chlöe Swarbricks, who is not—Swarbrick—a member of the select committee, but who has absolutely helped and supported us in our knowledge and our journey towards a change. I’m delighted to commend this bill to the House.

Hon GERRY BROWNLEE (National—Ilam): I just want to reiterate, first, the position that the National Party is taking with regards to this bill, and that is that we will support the second reading, as we supported the first reading, because it is our policy that people who can benefit from the medical application of the marijuana product should be able to do so with the minimum amount of fuss.

But what I want to acknowledge is that while I did not sit on the Health Committee and didn’t hear the cases that Angie Warren-Clark has just informed the House about, I have over a number of years had people come to my electorate office with similar situations, and I have had a strong degree of sympathy—a strong degree of sympathy—for their plight for quite some time. But I would point out that in the cases that the member recited to the House, and in the many cases that I’ve seen in my office over the years, the qualifications for access to, or for the defence for accessing, marijuana that’s provided in this bill would not qualify, because a medical practitioner may well be treating someone for a debilitative illness, but not necessarily be prepared to describe that person as being in a terminal situation.

I think the other point that I’d make is that we have a bill here that, essentially, says that you cannot be prosecuted for possession and use of marijuana if you have got the medical practitioner’s certification that you are in a terminal state and it’s useful in preventing some of the pain that you might otherwise experience. It still leaves the product as illegal, and it also makes it illegal—it remains illegal—for someone to supply it. Now, what we’ve heard is that the police have said, “Well, we’re unlikely to prosecute anybody.” The reality is that they’re unlikely to prosecute anyone in possession of marijuana once this bill passes, because the back steps will be relatively straightforward, and it will be easy to have that statutory defence.

So I think for the integrity of the bill, we need to turn to the part that talks under the new section 14(1A) of the Misuse of Drugs Act and consider exactly how that licensing regime might be put in place. Now, while there are members on the other side of the House saying that “It’s all fine. Just leave it to the bureaucrats to come up with a licensing regime, for the Minister to take that regime through Cabinet, and for Cabinet to tick it off so the Governor-General can give it assent.”, that is a slow and cumbersome process, and it would seem also that if we are to go down a track that is liberalising something that has been considered a menace in society for such a long period of time, it might be appropriate for Parliament itself to express its views on a licensing regime. That’s been our position for quite some time, and I want to commend the work of Dr Shane Reti, who has put together some Supplementary Order Papers (SOPs) that would allow the Parliament itself to at least discuss what a licensing regime might look like.

I think it was pleasing to hear so many of the previous speakers saying that they want this to become part of the tool kit, if you like, or the array of medicines that are available to practitioners to prescribe in various circumstances. While we’re now sort of dancing on a pin about the idea of taking a palliative approach to things, and with the new term “palliation”—which is new to me, I must say—being somewhat undescribed at the present time, I think what it’s really saying is that there are a range of conditions beyond terminal illness where people may benefit from the use of medical marijuana. In that sense, we are looking to pass a bill here that is far more liberal than that intent, and I think that while Chlöe Swarbrick has said she looks forward to collaboration, I’d have to say that collaboration doesn’t mean that we just do whatever the other party says we have to.

We’re in a very unique position here, where the whole Parliament, every party in Parliament, has a policy that is, broadly, the same, so Parliament itself having a say about the regime that is going to be put in place to put some sort of a definition around this so it’s not a wild west out there—so that suddenly, with the statutory defence out there, the availability of the product is going to be more widely used and, therefore, you know, there will be elements who want to take advantage of that situation. We’re far better, I think, to know right from the word go how that regime is likely to be put in place.

I was encouraged at the Business Committee that the Leader of the House said that he would talk to the Minister of Health to see what they had considered around the SOPs of Dr Shane Reti. The unfortunate thing is that with the way the bill is written, there is some suggestion—although the Speaker has said that he would want to see those SOPs discussed in the House—that they are out of the scope. Well, I would argue strongly that with a bill that actually talks about a licensing regime and an ability for people to access a product in accordance with the licence issued under this Act, then discussing the licensing regime itself inside the bill as an SOP is quite in order.

So I would simply want to say that we are very interested to get to the committee stage on this bill. We know that there’ll be a lot of people out there who have family members, people themselves, who are suffering who would like to be in a better position just to try this. And I’m not going to make any comments about its efficacy or otherwise; that’s for other people, and most definitely it would be for the medical profession. And while the bill talks about medical professionals, effectively, having to give a certificate to enable people the statutory defence, it’s all the other bits that are missing. It’s the problem that the product is still illegal. It’s the problem that it’s illegal to supply. It’s the problem that it’s illegal to grow.

And so I would expect that when we get to the committee of the whole House next week, the House does give fair and reasonable consideration to the SOPs that will be put on the Table by Dr Shane Reti. That way, this House could go off for the Christmas break with a bill complete in every aspect, enabling the use of medical marijuana and protecting the use of medical marijuana and the quality of the product through the licensing regime that could be placed inside the bill. So on that basis, the National Party is supporting the bill today to go through that further stage. We then will make decisions as the committee of the whole House progresses toward a third reading.

GINNY ANDERSEN (Labour): Thank you, Mr Assistant Speaker. It’s a great day. It’s a great day to hear the National Party members asking for more detail about cannabis. It’s a great day to hear National Party members saying they want to table four further Supplementary Order Papers (SOPs) that will provide greater detail on cannabis, because it reminds me, and I think it reminds this House, just how far we’ve come. It’s a good thing that we are having this discussion here today, and it reminds me of the journey that has taken place to get to a point where we have all parties in this House having a good, reasonable discussion about how we make those in pain and those suffering have greater and better access to cannabis products in order to make their lives better. So I’m heartened. Yes, there is discussion and debate around the regulations and the detail. Yes, there is disagreement about how those details will work on the ground, but that is good. That is good to have agreement across this House about an issue that has taken an incredibly long time to reach this point.

This bill, while it might not be perfect in the eyes of some, goes further than any other bill has gone with respect to medicinal cannabis, and I would like us to stop and think about those who are affected the most and to think about those in New Zealand who are in pain and who currently can’t access legal medicinal cannabis. I would like to stop and also remember Helen Kelly and the amazing work that she did to get us to this point in time. And for the greatest gains made under the last Government, I would like to acknowledge that it was Helen Kelly that drove those changes. It was Helen Kelly’s continual advocacy and fighting for what she believed was a right for people that got the changes that happened under Peter Dunne in the previous Government, and those changes will continue under this Government.

It’s important that we acknowledge that this bill is about improving access to the high quality medicinal cannabis products. It will make medicinal cannabis more readily available to those suffering terminal illnesses or being in pain. No one wants to see someone in their family suffer. No one wants to see those who are in pain, and this gives a clear opportunity for effective pain relief to people when they need it. We are taking a compassionate approach to this legislation. The bill introduces an exception and statutory defence for people who are nearing the ends of their lives to possess and use illicit cannabis.

We realise that the scheme proposed in this bill will take time to develop and to go on, and some people can’t wait that long. In the meantime, there are people suffering from terminal illnesses who find pain relief by using illicit cannabis. And there are some people who are suffering who do not want to access something and break the law, and, therefore, they aren’t accessing what would make their lives better.

This bill therefore would give those people a defence for using and possessing cannabis or a cannabis utensil, and that means that they would not be criminalised. This is the compassionate thing to do while this scheme is being established. The Minister of Health today has already stated that he will be introducing a Supplementary Order Paper at the committee of the whole House stage that will increase the number of people who would be covered by the exception of the statutory defence provisions. This change would remove the 12-month restriction and the terminally ill provisions.

The terminally ill provision is one that is not widely used. So the change in terminology, which has already been discussed, is that of palliation, which is a more accurate and more appropriate description of patients who have ongoing debilitative issues which require pain relief. This is a welcome change, and I acknowledge the work from my colleagues in New Zealand First who have brought us to this point and are agreeing thus far.

I remember attending a panel in the Lower Hutt War Memorial Library where I was asked along to speak on this issue. It was attended by a range of people in the community with a range of views. And it was at that panel that I heard from particular people who wished to access cannabis in one form or another, who knew they could get it through green fairies—there’s a few of those in the Hutt—but they didn’t want to do that. They didn’t want to do that, because they didn’t want to break the law, and they were good people, who didn’t want to take that risk. And I know today we’ve heard quotes from members opposite that police won’t bust people—so-called—or pursue those that are using cannabis for medicinal purposes, but that’s not a given. There is still police discretion in that area, and that is not acceptable for people who are in ongoing pain.

This is a clear fear for those who want to access cannabis but are afraid of breaking the law and having a criminal record. I also note that increasing the group of patients covered by the exception in the statutory defence provisions was a strong theme from submissions on the bill. Many of the submitters shared their experiences with chronic pain, and I am pleased the bill will now give more people the choice to access medicinal cannabis by expanding the exception and statutory defence provisions, and that number is estimated to be 25,000 New Zealanders further than the initial definition who might find them some benefit in using medicinal cannabis products.

The regulation-making power set out to improve the quality and the standards of those who are accessing medicinal cannabis—New Zealanders are already able to access medicinal cannabis and it’s important to note that. But the products that are able to be prescribed by a GP, Sativex—the reality is that there are few high quality products and that they cost an alarming amount so that many people who would like to access them cannot afford to do so. So this bill would enable the regulation-making power to set quality standards for medicinal cannabis products.

Health practitioners are right to be cautious about prescribing some of these products. Medsafe, our medicines regulator, has also expressed concerns about the quality and efficacy of some of these products. It’s clear that there is a need to set quality standards, and we need to do this so all medicinal cannabis products being used by those know that they are safe and that they are doing what they are intended to do. The medicinal cannabis scheme will assist us to alleviate safety concerns by requiring manufacturers to show the composition of their products on the labels are true and that they are free from contaminants. That is important to give people utilising those the security and the confidence to know they are using appropriate products. This will give us trustworthy, high quality standards in New Zealand around medicinal cannabis for the first time in New Zealand history.

Also removing cannabidiols (CBDs) from the Misuse of Drugs Act is also what this legislation does. This bill does not make any changes in the area of recreational drug use, as has already being noted by other members. That is a separate issue; that is subject to a referendum later on down the line. The bill would make CBDs a prescription medicine rather than a controlled drug. It removes them from under the Misuse of Drugs Act and those terminally ill people who are using cannabis for relief of these symptoms would no longer be criminalised for doing so.

In conclusion, this legislation, as I’ve stated, already takes us further than Parliament has gone with respect to medicinal cannabis. We realise that it does not please everybody. Nevertheless, it represents a real step forward. We’ve a strong bill that all Government support partners are pleased to sign up to and that in itself is progress.

I want to acknowledge and thank the members of the Health Committee for all their hard work on the bill and all of the submissions that they have gone through and listened to. I would like to thank all those submitters in New Zealand that are so keen on watching how this issue develops for the time they have taken to write their views to members of Parliament and to submit to the select committee on this issue. Please, keep up the good work.

I also want to acknowledge New Zealand First spokesperson, Jenny Marcroft, and Chlöe Swarbrick, spokesperson on drug law reform for the Green Party, for their hard work, dedication, and endless commitment to keeping this issue alive and going and being discussed right across this House, no matter what party people are from. We now have a common way forward on this Government’s approach to medicinal cannabis, and that makes me pleased. I commend this bill to the House.

Bill read a second time.

Bills

Reserve Bank of New Zealand (Monetary Policy) Amendment Bill

Second Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill be now read a second time.

At the outset, I would like to thank the Finance and Expenditure Committee for its consideration of this important bill and acknowledge the contribution of all members of that committee on the bill, especially the wise leadership of my colleague Michael Wood in fostering the bill and the consensus that built around the bill in shepherding it through the House. I’m very grateful for the work of the select committee.

The select committee have suggested some minor changes, which I am happy to endorse, in particular the changing of the commencement date, which will allow the main provisions of the bill, the commencement, to occur by the earlier date of 1 April 2018 or by an Order in Council. This is done so that the first official cash rate decision made by the monetary policy committee that will be established under this bill will coincide with a Monetary Policy Statement, which will make the process a lot more efficient and effective.

The second change that the select committee has agreed upon is to recommend that the Reserve Bank be required to undertake public consultation on key issues relating to a replacement charter alongside the consultation on its remit. Those are two new terms for the Act, the remit being the replacement for what used to be called the policy targets agreement—essentially, the agreement between the Reserve Bank and the Minister of Finance around what the focus of the bank will be; the charter is the document that governs matters relating to the monetary policy committee in terms of their accountability and decision-making procedures and transparency.

I agree with the select committee that it is indeed a subject that members of the public may well have some interest in—certainly in other jurisdictions where the monetary policy committees exist. The rules around how members of that committee will behave, how much we as members of the public will know about what happens inside the monetary policy committee, and the way the decisions are made are topics that I recognise are of interest to members of the public—perhaps not all members of the public, but those who are interested in monetary policy and so therefore—

Hon Phil Twyford: Who’s not?

Hon GRANT ROBERTSON: Well, that’s right. Phil Twyford’s been a late convert in life to the importance of monetary policy, and I’m sure he may well have some views on the charter. But certainly—

Hon Amy Adams: Treasury are his best mates.

Hon GRANT ROBERTSON: That’s right. He’s got a lot of views on what they say about monetary policy. That’s correct, Amy Adams. So we look forward to those amendments from the committee being taken forward in the further stages of this bill.

To recap, in terms of why the Government has undertaken this piece of legislation, it is important that we maintain the independence of our Reserve Bank in making monetary policy decisions. We don’t need to go that far back in New Zealand’s history to find Ministers of Finance who may have had more of an interventionist streak when it came to that kind of activity. That period of time, through the early 1980s, was one that drove a lot of change in New Zealand, and one of those changes was the Reserve Bank of New Zealand Act. That level of strategy independence is important.

What we are trying to do with this legislation, however, is say that monetary policy itself is extremely significant in the operation of the overall economy. And while we all want a focus on price stability, on making sure that inflation is kept under control, we also have to recognise the role that monetary policy decisions have in the other parts of the economy. That’s what has led this Government to propose a dual mandate that includes the phrase “maximum sustainable employment”, because, in the end, that is a proxy for the productive part of the economy. That is a proxy for saying “We want to make sure that when decisions are being made about monetary policy, we take into account the impact of that on employment—on the productive part of the economy.”

Now, this is not new in the world. Both Australia and the United States have mandates that are beyond just price stability, and I would note some of the concerns that have been raised in the committee process that this would somehow make decision making difficult or that it would muddy the waters. The opposite is true. It will, in fact, create a fuller picture of the impact of the decision around monetary policy and, in particular, the official cash rate. So we are standing by this. There has been some criticism of it by some of the submitters to the committee, but we believe very strongly that the dual mandate will work for New Zealand over the long term.

In regard to that, it’s very important to note that people have asked the question “Well, how would this affect a particular decision about interest rates today?” That’s not why we’re making the policy. It’s not about a specific moment in history right now. It’s about having the most robust and fulsome set of considerations around where monetary policy should end up and where the official cash rate should end up. It is being made for the long term, not for the immediate term.

The other critical change that is important is that we are changing the purpose of the Act to reflect the fact that monetary policy has a wider role, in particular in promoting the prosperity and well-being of the people of New Zealand and contributing to a sustainable and a productive economy. That now exists as section 1A of the Act and makes clear that monetary policy’s role is beyond the scope that some may have seen in the past.

In addition, the other significant change, as members will be aware, is the establishment of a monetary policy committee, moving us away from the single decision maker model through the Reserve Bank Governor. We were, in 1989, one of the first countries out of the blocks for the more independent style of monetary policy making, and we put in place a single decision maker. The rest of the world has, effectively, moved beyond that now to the notion of a committee—a committee that not only includes members of the Reserve Bank staff but also brings in external perspectives. Right around the world the evidence is that better decision-making occurs when more voices are at the table, representative of the wider New Zealand economy.

I want to be absolutely clear that what the bill does is establish a monetary policy committee with the majority of members from inside the bank. So, to that extent, the decision-making majority power continues to rest with the bank. It is my intention that I appoint three external members, which means, once this legislation passes, there will be four internal members.

Now, again, there was some criticism at the committee that we are employing what is called the “double veto” provision when it comes to the appointment of those members of the committee. What that means is that I must act on a recommendation of the board of the Reserve Bank for who those members are. However, in the case of the internal members, the legislation states that the governor and the deputy governor will be members, and that two other members will come from the staff of the bank. Those then get proposed through the board and to me. The same process applies with the external members. They still have independence in the decisions that they make, but when it comes to appointing a committee, we want to make sure that everybody is appointed on the same basis. It can only be done by, effectively, mutual agreement between the Minister of Finance and the board of the Reserve Bank, and that process, I think, is a robust one, and I’m sure it will mean that we get good quality people who are coming on board.

This will also make for, I believe, a more transparent decision-making process. As I mentioned before, we have the charter. That charter, we hope, will include—and we’ve already stated it will include—items such as the fact that minutes of the monetary policy committee will be published. This is the same as is done in other jurisdictions—for instance, the Bank of England—and it provides more confidence for, particularly, the business community about understanding where the committee’s coming from, looking for trends and issues that the committee is interested in.

To be absolutely clear, the Governor of the Reserve Bank will be the chair of the monetary policy committee and the sole spokesperson for the decisions of the committee. That is important so that there is only one voice speaking on the decision, but, as I say, minutes will be published that will enable people to be able to see where they’re coming from.

The other issue around the membership of that monetary policy committee that raised some attention is the proposal to include a Treasury observer—not a full member of the committee but somebody from Treasury who is present during the deliberations of the committee. Again, this is a model familiar to the Bank of England and other jurisdictions as well. It enables monetary policy and the fiscal policy of the Government to be closer together so that where there are questions or issues about fiscal policy there’s somebody in the room who can contribute that, as well as being able to provide the advice that Treasury can around their own macroeconomic forecasting. The Reserve Bank has already been trialling working with Treasury in this way, and I understand that both parties believe that this is a positive addition to the process.

The only other issue that I want to deal with that was raised at the committee is the question of the remit—this is the new instrument that will replace the policy targets agreement. Again, this is the subject of a negotiation between the Minister of Finance and the Reserve Bank monetary policy committee. We’ve had to tweak the process because it’s now a committee, not just an individual in the Governor and the Minister of Finance, but it is still a very similar process where we agree on the goals but the actual decision making remains the independent prerogative of the Reserve Bank.

So I am very proud to commend this legislation to the House. It represents a significant shift in ensuring that monetary policy contributes to the overall economic and well-being outcomes of our country. It is part of the framework that is our economy, and therefore having it have a mandate not just for price stability but also for maximum sustainable employment is exactly in line, I believe, with what makes up the well-being of our people: the fact that they can do good and dignified work.

Hon AMY ADAMS (National—Selwyn): Thank you, Mr Assistant Speaker. Obviously, I’m coming down to take a call in this second reading of the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, and I want to start by, of course, just getting on the record what a critical economic foundation stone the Reserve Bank is in our policy and our economic framework. It is because it is such a critical piece of our infrastructure and our legislative framing that it’s certainly the view of this side of the House that changes to what has been an incredibly successful structure for the bank over many, many years need to be approached very cautiously and, I would argue, ideally with bipartisan support.

The Reserve Bank, like many of our institutions, needs to have a framework that is enduring, that is long serving, and that has broad buy-in and support. And when we are passing changes to the legislative framework of that organisation, certainly without bipartisan support across the major parties in this Parliament, certainly against the views of many of the submitters who submitted to the Finance and Expenditure Committee, and, I would argue, without any clear evidence of a problem that we’re trying to solve, then you’ve got to ask why we’re doing it. That is why the National Party is opposing the second reading of this legislation.

Now, we’ve heard from the Minister of Finance, fundamentally, what the changes are in this piece of legislation, and some of them, as I indicated in my first reading speech, the National Party finds no real issue with, and we have tried to be as constructive on the select committee around those as we can. But there are two areas where we have real concern, where I don’t think that the Government has set out its case at all, where I don’t think the Government has taken on board the very strong views of submitters, and where, certainly, we continue to have quite some concern.

The first of those is around this dual mandate. For a long time, the Reserve Bank has functioned very clearly under the understanding that its primary goal is in maintaining price stability. Not to bore the House, but any economic text will go through and talk very clearly about the importance of price stability and the role of monetary policy in maintaining the stability of our economy and, through that, the wealth, prosperity, and well-being of our citizens.

Interestingly, there have been three reviews of our monetary policy system and settings since 2000, and every one of those reviews has actually found that the current structure, the one the Minister wants to amend, is world leading. Well, it’s certainly world’s best practice; I’m not going to say we’re better than everyone else, but we’re certainly demonstrating best practice, so I would argue that the bar is incredibly high to justify now why we want to change it.

Now, everyone in front of the select committee, from the officials to the Reserve Bank themselves, has said that the bank already considers a much wider range of economic considerations than just price stability. Everybody agrees that; I don’t think the Government disputes it. So it’s simply not right to say that the bank should be considering other economic criteria. They already do. But what you’ve heard from the Minister is simply him saying “Well, we know there’s a range of people who disagree with the change, but we believe in it.” Well, I’m sorry, Mr Robertson, but that is not making a case, simply saying that others are wrong and we think we’re right. When you have a world best-practice framework, when you have a system that has delivered a very solid and stable economy over many years and across many Governments—this is not a red-blue discussion—and when you have a system that already takes into consideration a wide range of economic criteria, why are we changing it?

Submitters to the committee have made it very clear that this is a solution looking for a problem. Time and again we asked at select committee “What is the problem we’re trying to address? What is the situation where the officials don’t think—or the Government doesn’t think—that wider economic conditions have properly been considered?”, and no one has been able to identify one.

I want to indicate something else that is concerning to me about this dual mandate. The Minister has made a change in the purpose section of the Act which, actually, we support. It talks about the role of monetary policy in creating economic prosperity and stability and lifting the outcomes for New Zealanders, and I think that’s a good statement—it captures that full picture of what it’s all about. But then in the economic objectives, which is where the rubber hits the road, he has forgone all of that wider basket of considerations and said, “It’s just about price stability and maximum sustainable employment.”

Even if you look at the Minister’s own expert advisory group, they recommended that the Minister not do this, that they not be on level footing, that, actually, price stability should still be the primary consideration, while making allowance for, and giving effect to, maximum sustainable employment. So, certainly, we can put wording in there which suggests that you must turn your mind to that, and we would have no issue with that, but they haven’t done that. They’ve said one is just as important as the other.

What’s worse is that officials made it very clear to the select committee that the Minister—because we were asking “What happens if they’re in conflict? You’ve got two different objectives. They’re on level footing, legally. What happens if they were to pull a governor in different directions?” The officials made it clear that the Minister, through the remit, could now, effectively, set the priority between those two things. So we could have a situation where price stability becomes a secondary consideration, which would fly in the face of all sensible, conventional wisdom.

I just want to turn a little bit to what submitters have said around this. The New Zealand Initiative have made it very clear that the Government has failed to do anything to make the case that monetary policy implementation, as it currently exists, has failed to properly take into account employment and output. You’ve got Business New Zealand saying the bill is largely a solution looking for a problem and that this dual mandate muddies the water. You’ve got the ASB Bank recommending again, as we do, that price stability objectives should be given precedence over employment. From the regulatory impact statement itself, a majority of stakeholder feedback received through the Treasury process was of the view that the current legislative framework for monetary policy was working well.

So in the face of all of this, I say again to the Government: what is the problem you’re trying to solve? It’s not a case of a harmless change that may or may not be needed. You are messing with a core foundation of our system and you’re doing it at a time when we know the system has served us very, very well. In fact, there is a real risk. There is a real risk that you get a situation where a governor or a Reserve Bank could absolutely be motivated to have the economy running hotter than would otherwise be the case to ensure that there is a continued stimulation or expansionary set of conditions to maximise employment. That is a risk because we know that if you allow the economy to run hotter than it otherwise should, over the long term that is much worse for the economy you’re dealing with. So we are setting up this perverse incentive where a governor could allow inflation to run on more than he otherwise might—“he”, of course, as it has been.

Even in the last Monetary Policy Statement, it’s interesting to see that we’ve got a Reserve Bank Governor who himself is signalling in his forecasts that he sees inflation being above the 2 percent mid-range point, and yet not moving the official cash rate. So you do start to wonder what sort of influence that dual mandate is having.

The second issue that I want to raise, because it’s equally of concern to this side of the House, is the question of what does look, I’m sorry to say, like an increasing politicisation of the Reserve Bank. We have now a serious threat to the independence of a crucial institution.

Hon Andrew Little: What rubbish!

Hon AMY ADAMS: Members across the House may well want to scoff—they may well want to scoff—because it suits their objective, but let’s be clear. We’ve got the Reserve Bank Governor just in the last few days himself saying that independence is critical to the Reserve Bank, saying that operational independence is critical for a central bank and anything that feels like it might threaten that will be strongly defended.

What we have in this bill is a monetary policy committee that I feel won’t give us true diversity of thought and the advantages of group decision-making, because they’re all apples from the same tree. They will all be appointed by the Minister of Finance, and the governor will be appointed by the Minister of Finance, and the board will be appointed by the Minister of Finance, and they’ll act in accordance with the remit set by the Minister of Finance. We have a very real risk that we will get thought capture coming from a Minister of Finance who can put in place a framework which will last five years and ensure that their views are maintained.

A final point that I want to make in my last few seconds: this issue of a Treasury observer sitting on the Reserve Bank monetary policy committee is deeply worrying. There is no evidence that there is currently a problem of information flowing between No. 1 and No. 2; Treasury officials admitted that. There is no evidence that, somehow, the Reserve Bank don’t know what the Government is doing, and we will now have a senior—in fact, the most senior—Treasury official, who is bound to uphold and advance Government policy, in the room, participating in the discussions, and, I have no doubt, seeking to influence to ensure that the Reserve Bank, instead of being an official independent monitor of what’s going on, toes the Government line. I think that is deeply worrying. There is no case for this legislation. There is no problem to solve and this weakens our structures.

MICHAEL WOOD (Labour—Mt Roskill): Just before I open in my comments on the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, I just want to briefly note and pay tribute to Harry Leslie Smith, the veteran British activist who is beloved of many on this side of the House and who has been a fighter for many years for the rights of working people and particularly for people to have the right to full and dignified employment, who died last night.

Can I begin my remarks by thanking my fellow members of the Finance and Expenditure Committee for their work on this bill during the select committee stage—it was a thorough and well-contested process—to acknowledge the Minister of Finance for his initiative in putting forward this bill, and also to thank officials who worked with the committee on the bill and all of those people and institutions who submitted to us. In preparing for my remarks today I read back in the Hansard the debate around the original Reserve Bank of New Zealand Bill, as it was in 1989. The Minister who introduced that bill was the Hon David Caygill. Some things don’t change in the Parliament. In that debate, one very frequent interjector was Trevor Mallard. But there was a quote from David Caygill which stuck out for me which I think sums things up quite nicely. He said, “Now to come to the central point made by the Opposition.”—which at that time was led by the Hon Ruth Richardson—“It wants price stability in a wider policy environment that will secure jobs and growth.” That is the overarching objective of the Government in seeking these changes to the Reserve Bank of New Zealand Act.

I do need, at this point, to take issue with some of the comments of the Hon Amy Adams and other Opposition members in respect of this debate, who seem to argue that you have to wait for there to be a problem before you look at improving a policy framework. On this side of the House, we believe that that is fundamentally flawed, and what we do in progressive Government is look at the legislation, look at the frameworks that we have, and ensure that it is meeting the objectives of New Zealanders looking forward, looking at the international evidence, and always saying, “How can we make things better?” And that is very much the context in which the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill has been put forward, and I believe it will progress.

The overarching objective of this bill, in my view, is to increase the transparency of the Reserve Bank and its operations in respect of key policy issues. The Reserve Bank, as the Hon Amy Adams and the Hon Grant Robertson have noted, is a key part of New Zealand’s economic infrastructure. It makes decisions that have a real effect on the real economy and real people’s lives. And it is only appropriate, in my view, that it takes into account a proper range of factors and that its operations are also transparent, and that is reflected in the key changes that are put forward in this bill.

The first change that I think is significant is the change to the purpose statement. It was heartening to hear that there does seem to be broad support for that. It’s worth just reading this out, because it speaks to, I think, the overarching well-being objectives that underlie this Government’s agenda and underlie our objectives in this bill. The amended purpose will say “The purpose of this Act is to promote the prosperity and well-being of New Zealanders, and contribute to a sustainable and productive economy, by providing for the Reserve Bank of New Zealand, as the central bank, to be responsible for—”—then we list the objectives, which I’ll come to shortly. I think if you accept at the outset that that is the purpose, it then follows that the Reserve Bank should be taking into account real-world factors in the way that it comes to its decision.

And that leads us to the point of broadening the remit somewhat. What we do in that area is in addition to the remit of price stability. Add the important consideration of supporting maximum sustainable employment. There are two things you can say here. The first is that this is an important change—and certainly for us on this side of the House, we believe that it is incredibly important, in all of the key policy decisions that are made, that we have in mind maintaining maximum sustainable employment. Unemployment is one of the great social ills when it reaches levels that are unhealthy in an economy, and I believe that all of our decisions should be focused on maintaining maximum sustainable employment.

Of course, what we also know when we examine the operations of the Reserve Bank since it was set up in 1989, is that increasingly the Reserve Bank has been evolving in this direction anyway. If one reads the monetary policy statements issued on a quarterly basis by the Reserve Bank, there is significant analysis about the state of the real economy and significant analysis about the impact on employment levels that flow from decisions that are made from the Reserve Bank.

Of course, one thing that has been missed in the contributions from the Hon Amy Adams is that we already have a policy targets agreement that adheres to the operations of the bank. In that current policy targets agreement, the bank is required to take this into account in the decisions that it makes anyway. So if the members opposite want to construct the argument that widening the remit to include a consideration of maximum sustainable employment will somehow throw the Reserve Bank into chaos, will somehow lead to runaway inflation, then they need to say why that hasn’t happened over the last four cycles that the current Reserve Bank has overseen, because that is already in the policy targets agreement and already has to be taken into account by the Reserve Bank.

There were two key changes that were recommended by the Finance and Expenditure Committee, having heard advice from officials and considered submissions. The first simply related to the implementation date, and this will ensure a smooth transition to ensure that we align the implementation date with the issuance of Monetary Policy Statements in early- to mid-2019. The second will ensure that the charter—the charter is the document which will provide more information and guidance about the operation of the monetary policy committee and open it up and make it more transparent—will ensure that the public is consulted on the charter when the charter comes up for renewal, and I think that’s very positive.

It’s important to note the charter will give greater transparency, so it will do things like outline how the Reserve Bank monetary policy committee might publish its minutes. It will outline things like the extent of information that will be given on how the decision was made—so, for example, was it a unanimous decision to alter the official cash rate or was it a split decision? I think that provision of information to New Zealanders and to markets will actually be incredibly useful. I don’t see why we wouldn’t be supportive of that increased transparency in what is a very, very important public policy decision.

I want to finish my remarks by saying that I think it is perfectly reasonable for political parties in this House to have different positions on this bill, but I have to say that the Opposition has really jumped the shark on this one. The suggestion that, somehow, these evolutionary changes are going to lead to 1970s-style hyperinflation, which I’ve heard, and that the operational independence of the bank will somehow be compromised are completely false and completely refuted. If I can refer to submissions made by well-known radicals such as the New Zealand Bankers’ Association, they say, “[The New Zealand Bankers Association] supports the purpose of the Bill and the intent of increasing transparency of monetary policy decisions”.

This is an evolutionary piece of legislation, and it actually brings us more closely in line with many of our major trading partners who have already gone down this route. This is a point which is well made by Michael Reddell, well-known New Zealand economist and someone with significant experience in the Reserve Bank.

Andrew Bayly: Oh, yes—oh, is that the only one you can quote? Who else can you quote—who else can you quote?

ASSISTANT SPEAKER (Poto Williams): Order! [Interruption] Order! Mr Bayly, don’t refer to the Speaker, please.

MICHAEL WOOD: Many, many, and what I can point out to Mr Bayly, who’s setting off over there, is that, in fact, the majority of submitters supported the objectives of this bill and supported the creation of a monetary policy committee. Some of them had different ideas about how it could be done or suggestions for change but the majority supported the broad direction of the bill, because it is a pretty moderate, pretty sensible piece of legislation. Actually, for those members opposite who have paid attention to Monetary Policy Statements over the past couple of cycles, they will actually see that many of the things in this bill are directions which the Reserve Bank has been heading in anyway. Isn’t it actually better to have those transparently set out in legislation that is set by this Parliament?

The other area which I think the Opposition just needs to think about in respect of this bill is that, you know, sometimes the Opposition can disagree with the direction that the Government is taking and offer useful contributions, but really setting off in this direction doesn’t actually do the Opposition any credit.

This bill is a moderate bill. It is a bill which increases transparency. It is a bill which is perfectly in line with international best practice. It is a bill which will ensure that the important objective of maintaining maximum sustainable employment will be considered by the bank, and I think that is something that most New Zealanders would welcome. I commend this bill for further passage through the House. Thank you, Madam Assistant Speaker.

Hon JUDITH COLLINS (National—Papakura): Thank you, Madam Assistant Speaker. The National Party opposes this bill. We don’t see quite what the need for it is, because we are all very pro-employment. In fact, the Government inherited a situation where the economy was going very, very well. Unemployment was at historic lows, interest rates were at historic lows, and, in fact, they had a wealth of taxpayer money that they have chosen to squander in such a way that one can only wonder what their plans are for next year. They have squandered money, and they have, at the same time, now indicated that they want more control on the Reserve Bank.

What we have seen from this Government is a tendency to interfere in issues that should always be independent. When we look at the Reserve Bank, one of the reasons that the economy has been left in such a very good position is that despite all the issues that the National-led Government inherited in 2008, including the global financial crisis that we took over with, a year before the full extent of the crisis hit New Zealand, what we did was we left the Reserve Bank to do its job. That meant that when inflation came to the fore, we did not have to be concerned, and nor did the public, that the inflation rate was going to go through the roof.

What concerns us is having a dual purpose for the Reserve Bank—so employment on the one hand and then inflation on the other. Nobody from the Government has been able to yet explain in a satisfactory manner who wins in this, where employment, for instance, could end up going down. What happens there? If employment goes down, unemployment goes up, what happens then to the inflation rate and the inflation target? How is that balance kept? They’ve simply said that there are two—two—criteria and targets that the bank now needs to meet. What about when they are in conflict? What will happen then?

Then we have the chilling effect of a senior Treasury official now being sent to oversee the meetings of the monetary policy committee and, no doubt, to report back. What’s the next step? Are we going to make the Reserve Bank a Government body? Are we going to make it, in fact, a Government agency where, in fact, not only are all the members of the board appointed by the Minister, which this does, but, actually, what it says has to go through the Minister?

We’ve already seen today in the House the Minister of Housing and Urban Development dismiss the comments of the Reserve Bank around the targets for KiwiBuild. They’ve been absolutely dismissed; he doesn’t agree with them. What happens next time the Reserve Bank says something that this Government doesn’t like? Are they then going to say, “We’ll put another purpose in their mandate.”? If we could see that there was a problem to solve, then we would support a solution to that problem, but all we have seen is a need to tinker.

One might well think back to those great disputes that the Rt Hon Winston Peters used to have with the then Governor of the Reserve Bank Don Brash, back in the 1990s. He had to be appointed, apparently, as a Treasurer—I’m not quite sure what that meant. He was appointed Treasurer, and he wanted to reform the Reserve Bank of New Zealand Act and bring in all these other requirements that the bank had to adhere to. Nobody gave in to that under a National-led Government. Nobody gave in to it when Helen Clark was the Prime Minister either. Nobody gave in to it when Michael Cullen was the Minister of Finance. We come into this Government, and, all of a sudden, they’re giving in, and they’re giving in not because anyone in this House is concerned about there being too few people employed—in fact, we would like to see everybody gainfully employed in an occupation. What this is is interfering with something that affects inflation, affects employment, and affects the whole financial basis of our economy by interfering in the target setting for the Reserve Bank.

I’ve heard today from Mr Wood, who spoke very sincerely for the Government—well, he would, wouldn’t he; he wants to be a Minister, and he’s wondering why he’s not. He’s looking around at Iain Lees-Galloway and saying, well, actually, he actually probably could do a better job.

ASSISTANT SPEAKER (Poto Williams): Order!

Hon JUDITH COLLINS: Yes; thank you, Madam Assistant Speaker. He talked about the fact that other countries have done this too—other countries have done this too. Well, I’ve heard that before. Lots of countries do lots of silly things, particularly when they have a Government that doesn’t like the independence of the independent body and wants to make them far more dependent in their independency.

We are, broadly, comfortable with the introduction of a monetary policy committee (MPC). We already have the Reserve Bank making decisions informally via its governing committee, and under the proposed MPC the Reserve Bank still has a majority. Then what’s the point of it all? Is it simply that it’s nothing more than window dressing? I think it is very foolish to think from the Government side in their arguments that the Reserve Bank is all sitting in their own little offices only talking to other people in the Reserve Bank. They are watching what’s happening in the world. They are talking to other agencies. They are consulting. Ultimately, when you have two different masters that they’re being asked to serve—both the employment rate and the inflation rate—it is going to come to a situation in the future where they’re going to have to choose.

And how do they choose that? We’ve already seen some of those inflationary measures starting to have a bit of an impact. We’re already starting to see prices moving up. I think we need to consider that. We have, in the real world outside of Parliament, people who pay their own petrol who are paying more. We are seeing inflation happening through the prices for food, for goods, and for services, and people are sheeting a lot of that back home to the petrol prices. But we are seeing extra prices, extra costs, going on. So what’s to happen when the Reserve Bank says “Well, we’re going to actually have to make some decisions based on the inflation rate” and, instead, that might mean that unemployment may in fact rise?

I think this is dual purpose and a dual tenet that will bring about some difficulties for the Reserve Bank. It should be a chilling effect, I think, for those who are on the board of the Reserve Bank to find that they are now going to not only be overviewed by Treasury but are going to be now measured on something over which they have very little control, which is employment. The Reserve Bank doesn’t employ a lot of people in the country. They’re employing their own staff—that’s it. What they have to do is they have to help to bring a certainty to people so that they know that if they buy something today at a certain price, it’s still going to be that price when they come to pay for it.

There is not this rampant inflation that we had during the times of the 1970s, that probably led to the end of the third Labour Government—as they were then—or that we saw in the 1980s under the Labour Government; what we saw all the way through that.

I noticed that the comment today was about the Hon David Caygill and the brilliance that he had in helping to bring this about. David Caygill was, of course, also the person who did not open up the books. The requirements for fiscal responsibility brought in by the Hon Ruth Richardson—

Hon Andrew Little: Let it go. It was a long time ago.

Hon JUDITH COLLINS: —that was absolutely—well, Andrew Little says, “Let it go.” Well, of course, what worries me is this lack of independence in a body like the Reserve Bank. Any attempts to influence the bank in its deliberations and its decisions would be seen as something that would take us back past a time in the 1980s that National got rid of when it brought through the Fiscal Responsibility Act. Since then, there has had to be an opening of the books before the election.

What really concerns me here—and thus the National Party—is, just imagine if a National Party was bringing through this bill to the House. Can one imagine what the Labour Party would be saying? They’d be saying we’re trying to influence the Reserve Bank. I say to them here: look in the mirror. You are trying to influence the Reserve Bank. That is not what the people of New Zealand expect.

MARK PATTERSON (NZ First): Thank you, Madam Assistant Speaker. I’m actually still trying to get over the irony of the Hon Judith Collins accusing Michael Wood of coveting another job. I think there could be a pot and kettle in there. In fact, I’ve actually inherited a job myself, at the moment. I’m stepping in today for our fine finance spokesman, Fletcher Tabuteau—“The Professor”, I believe he’s called by many for his economics background. He certainly calls himself that; I’m not sure if anyone else does.

But the purpose of this bill, as we know, is to modernise New Zealand’s monetary policy and its framework. New Zealand First has been a really strong advocate for this over time. The Rt Hon Winston Peters—as was referenced in the previous contribution—has been a strong advocate of this over decades now, and we have been, actually, admirers of the Singapore model that also would take into account elements like the exchange rate, that is so important, especially to our exporters in our regions. We would like to see that incorporated within that model. But, of course, this is a coalition Government, and time and again we bring our ideas to the table, we panel beat them out, and we come out with a compromise solution. And I think here we’ve made just one of those policy positions, and I think it’s a very sound first step, anyway, at least from our perspective, but we’re quite comfortable where it’s ended up.

Of course, there’s a dual mandate now, which means we have to take on board not only price stability and inflation, but we have to take on board the effects of employment. That is important because this Government has shown time and again with its policy framework that we are about people. We are about actually helping people. I would argue that the current model that has been championed, I guess, across the House as being somehow not broken—that’s not totally true, because there have been instances in the past. And I recall when Dr Brash was the Governor of the Reserve Bank, at one stage in the early 2000s he did tighten too quickly, and he did force a downturn in the economy as such, and that had to be reversed quite quickly. So there have been instances where the governor possibly could have looked through some short-term spikes to more moderately take into account a wider view, rather than just that narrow view of inflation.

Of course, inflation has not been the issue that it once was. The previous contribution, going back to the 1980s—economies now are vastly different. Technological change has in fact changed fundamentally how economies work, and productivity. We’ve been absolute witness to that. After the global financial crisis and to this day, there have been vast quantities of money printed—quantitative easing—and that has not resulted in inflation anywhere around the world. Economies are fundamentally different these days. So I think we can afford—very safely, actually—to bring in employment as a factor that mandatorily has to be looked at by the Reserve Bank.

As a farmer—just going back to my farming days, and I think this would go for a lot of farmers—we took a lot of interest in this sort of thing. I was actually stunned to hear the Hon Grant Robertson say that not all people are into monetary policy—surely they are.

Hon Member: He was just joking.

MARK PATTERSON: He must have been just joking, because I can assure you that farmers take this stuff very seriously. Of course, it’s a high debt, low margin business, so retail interest rates—which of course are driven by the official cash rate—are hugely important to our profitability at the end of the year. Of course, their effect on exchange rates, which I referred to earlier, is where New Zealand First would like to see exchange rates, as well. Farmers, if you’re buying in, for example, store cattle or store lambs, you’re actually not just farming that stock; you’re actually playing the currency markets as well—such is the effect of the interest rates and the wider macroeconomic policy. And those are real-world examples of why this stuff is really important.

Of course, New Zealand is a highly indebted country. While this Government has got the books in pretty good shape, and we’ve got that debt as a proportion of GDP down to under 20 percent—we’re about four years early, I think, meeting that target—private sector debt is still incredibly high in this country. I think housing debt is somewhere up around $260 or $270 billion—over a quarter of a trillion dollars, and farm debt—as we heard yesterday when the governor presented to the select committee that I had the privilege of sitting in on for a while—is about $60 billion too. So there’s a lot of risk there in our indebtedness as a wider economy. So what happens with monetary policy is incredibly important.

New Zealand First is pretty comfortable with the moves to a monetary policy committee. I think having the current set-up where the governor essentially has the sole responsibility—that’s a massive responsibility given the effect of those decisions on the wider economy, as we’ve just been talking about. So having one person solely mandated for that—although, I think what we’re doing is probably just formalising what’s actually already happening. You’d be taking advice from a wider array of experts, both within and outside of the Reserve Bank. So we’re essentially just formalising that, and I think Grant Robertson, in his contribution, did a good job of explaining how that process would work. It looks to be pretty fair and robust to us at New Zealand First. So we have no problem with that policy coming in as it has.

There’s also a lot of transparency and, actually, just going back to that contribution to the select committee from the governor yesterday and the booklet that he put out, it was absolutely outstanding just to be able to read it so easily. It really summarised the state of the economy and the risks that we face.

In conclusion, New Zealand First is very pleased to support this bill through the second reading. As I say, we would probably like to bring the exchange rate in as a factor at some point in the future, but we are very comfortable with our coalition agreement around this. It was part of that agreement. We’re pretty satisfied with where that’s landed up, and we think it will be a superior model. Of course, as outlined earlier, it is the international norm now. You’ve got the Federal Reserve, the Reserve Bank of Australia, the Bank of England, etc.—this is just standard international practice, so I don’t see the scaremongering that’s coming from across the other side of the aisle as being in any way relevant at all. So with that, I have much pleasure in commending this bill further to the House. Thank you.

Hon PAUL GOLDSMITH (National): Thank you, Madam Assistant Speaker. It’s nice to hear a New Zealand First MP speaking so well of the Reserve Bank and what an important institution it is and how much they support it. I do recall that member or one of his colleagues—I can’t remember which one it was—referring to the Reserve Bank of New Zealand as the “foreign-owned bank” at one point when they were on their usual anti-bank diatribe. But what we’re talking about here is the proposal to meddle with or change the arrangements around the independent Reserve Bank of New Zealand, which has served us well over time.

Now, previous Government members are right to say that the world will not come to an end with the passing of this legislation. There are other countries in the world that have variations of the dual mandate that is being proposed here—so not just looking at inflation but looking at maximum sustainable growth—but we don’t think it is justified as a change. That is primarily because the Reserve Bank institutions in New Zealand, which have focused primarily on price stability—that is, doing away with inflation—have served this country very well.

Just go back to the 1970s and 1980s in New Zealand, and the fundamentals of the economy haven’t changed, contrary to what a previous speaker said. There is a law of supply and demand, and if there is too much money in the system, you get inflation. We had big inflation in the 1970s and 1980s, and it was used as a political tool by a series of Ministers of Finance to ramp up inflation prior to an election in order to give the impression of growth in the short term, and the country suffered as a result in the year after an election. This happened time and time again, and that led to New Zealand being one of the first in the world to have an independent Reserve Bank focused solely on inflation.

Since that period in the late 1980s, there was a painful transition away from hugely high interest rates. Younger people tuning into this debate will find it hard to believe that people were paying interest rates on their loans of around 20 percent at the peak of that inflationary period, and yes, houses were cheaper, but you had to pay colossal interest rates and service those loans somehow. That made it very difficult, particularly for that older generation of savers who had their savings, say, locked up in post office savings accounts for 30 years at 3 percent. Their savings were eaten away—stolen, really—by rapid inflation during that period. So since then, we’ve had a long period of price stability—relative price stability. There was a bit of a spike in inflation at the end of the last Labour Government, when Michael Cullen let rip with Government spending in an unsustainable manner. Putting that to one side, the economy has been pretty strong—

Mark Patterson: Nine surpluses in a row.

Hon PAUL GOLDSMITH: Eight, actually. The last year wasn’t a surplus, and they bequeathed a long list of deficits that we had to turn around.

Anyway, what we’re talking about here then is: what is the benefit of adding another mandate to the Reserve Bank so as to say, “Not only do you look at inflation but you have to have equal weight to maximum sustainable employment.”? You might say, “Oh, this all sounds very good—why not? What’s wrong with that?” But the complication is, of course, that there are times when you can have high inflation and low employment, and then the bank has to decide which of the two is most important. People can work their way through it, but I think it is a perfect example of the biggest problem that this Government faces—that is, it seems to think that saying that you want something is all you need to do. So the Prime Minister stands up and says she wants maximum sustainable employment and that this law codifies it, she wants to do away with child poverty, she wants to reduce the numbers of young people not in education or employment—she wants to do all these sorts of things, but it’s what you do that counts, not what you say or what you put into legislation that says you want to do things. It’s what you do that counts.

There is clear evidence that monetary policy—which is what the bank deals with, the levers that it has to pull in terms of the interest rates that it sets—can definitely influence inflation, but, in terms of employment, there is little evidence that it can have a major impact on employment over the long term. You can have a short-term little fiddle with it by jigging things around, but over the long term it has no clear impact. The thing that does impact maximum sustainable employment is all the other areas of microeconomic policy, which is around how the economy is run. So during the previous period of Government, we had the view that the thing to do was to provide stable, predictable, and financially sustainable Government so that everybody knew where they were. They had confidence to invest, and it was that investment that led to jobs and new opportunities.

People only get employment opportunities if somebody somewhere takes a risk and puts their money into starting a new business, buying a new plant, or hiring a new person—taking a risk. They’re more likely to do that if they feel confident, and they’re more likely to feel confident if they have a clear sense of where the Government’s going and they can predict where it’s heading. That’s why there is such an absence of business confidence at the moment, even though the economy’s basic fundamentals remain sound. That is because so many people are looking at this Government and are not quite sure what’s going on: are they going to have to pay a capital gains tax next year? It’s a big deal, but they don’t know. Is their business going to be part of the next industry that the Prime Minister decides that she needs to give a speech somewhere and is going to chop it off at the knees like she did with oil and gas? Are they involved in mining on the West Coast where the Greens want to stop all mining on 85 percent of the West Coast? All that uncertainty adds up to a lack of investment, and that flows through to fewer jobs.

The basic policies that lead to maximum sustainable employment are not things that the Reserve Bank has control over; it’s about whether you have policies that welcome foreign investment coming into the country, for example. I’ve talked about the importance of investment. If we rely purely on domestic savings, well, that’s fine, but we’ll grow quite slowly because there isn’t much in the way of domestic savings. So if we want to grow faster, we need to import capital, like we have done for the whole 180 years of our history. But this Government’s put the sign up saying “Clear off if you’re a foreigner, because we don’t want you buying anything”—more or less—“involving any land.”

Dr Duncan Webb: Oh, that’s not true. You were there in select committee.

Hon PAUL GOLDSMITH: Well, it’s basically the case, and so that’s slowing down investment. Then we want to be opening export markets. Well, that requires actually travelling overseas and making a bit of an effort. None of the Ministers have been very keen on that, and when they have managed to rouse themselves to go overseas, David Parker can’t even get a meeting with the—

ASSISTANT SPEAKER (Poto Williams): Order! Order! We are just kind of traversing a little far from the brief.

Hon PAUL GOLDSMITH: Well, apologies, Madam Assistant Speaker, but I was trying to give the context of the things that do actually influence maximum sustainable employment, which is increasing investment. It’s building access to export markets, it’s focusing on skills and not wasting all your money on free fees. It’s about investing in quality infrastructure, which makes sense, and not sort of ideologically driven stuff like slow trams to the airport. It’s about actually using the natural resources that we have as a country, not saying that you can’t do anything anywhere, and it’s about having a good, clear innovation policy.

So if a Government’s undermining many of those things—I’m not saying that everything this Government is doing is wrong. It’s not. I’m sure there are some good things it’s doing, but it’s not enough to say that we’re just going to pass a law saying that the Reserve Bank is going to be focused on maximum sustainable employment, and then all the other policies that they’re actually carrying out themselves are putting that at threat because they’re ill-considered and ill-thought-through. That doesn’t lead to an overall piece of legislation that we’re thrilled about. So, for that reason, we oppose this legislation.

GARETH HUGHES (Green): Kia ora, Madam Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. I guess the one term that came into my mind while hearing the National Party speakers was something that the honourable member Michael Wood mentioned, which is “jumping the shark”. It’s absolutely ridiculous how they’re talking about the 1970s—you know, the high inflation rates of 20 percent. They’re railing against the idea that a Treasury official will be a non-voting member, witnessing the board meetings. The issue of the dual mandate, they’ve spoken as though it’s going to be the worst thing ever—the end of the world, almost, is the sort of picture they’re painting—and then, at the same time, they’re saying “Why on earth would you do it when it’s not going to do anything at all?”, and there’s no intellectual coherence in their arguments. So I’m baffled that they still have some sort of record for economic credibility when we see speeches like that.

But what this legislation does—if I could wrap it up in four words, it’s more modernising the Reserve Bank legislation, it’s bringing in international best practice, it’s bringing more transparency, and then offering more flexibility for the real-world economic conditions the Reserve Bank, the Government, businesses, and Kiwis have to deal with. So it brings in these two changes. The first is introducing the dual mandate. Now, price stability is important, but what the Government is doing is that by coupling that, by making that over the medium term, and introducing the concept of maximum sustainable employment—this is critical, because what we do know is that across the business cycle there are fluctuating periods where things don’t move entirely in tandem entirely at the same time, and when you’ve stuck to a simple band approach, we have seen the consequences.

Now, in this respect, I’d like to acknowledge my former Green Party co-leader Russel Norman, who in, I believe, 2013-14—at a time when we saw our Government refusing to act on house prices and bringing this inflationary pressure into the New Zealand economy, the Government refused to act. So the Reserve Bank Governor—who, of course, under the previous legislation, was the sole decision-maker and had ultimate authority—was, essentially, forced to increase the official cash rate because the Government had refused to act, which pushed up the New Zealand dollar, which hurt the real-world New Zealand economy.

This is, I guess, our main point, and in this respect I’d like to acknowledge the work over many years of New Zealand First. The key thing is the real economy and the real impact on New Zealanders and their jobs, not just an arbitrary measure which can have counter-productive measures. So look, the Green Party absolutely supports this. I think the challenge is going to be that the maximum sustainable employment rates based on the non-accelerating inflation rate of unemployment—how that is going to be communicated to the public, because it is a concept which not many people, including myself, are familiar with.

So when it comes to making a committee-based decision, the Green Party wholeheartedly supports it. It’s something we’ve been pushing for for a long time. We were unique—unique—in the developed world, in the OECD, for having a single individual being responsible. This was an example where, once upon a time, we were out in front of equivalent countries by setting up the Reserve Bank legislation, but it wasn’t modernised. It wasn’t fit for the time, because other countries have built it from being a single individual to more people.

So I’d like to support this legislation. It is a modernisation. The transparency initiative—that the decision-making group is going to be providing summaries on the internet site—is an incredibly positive step forward, because what we have seen previously is that decisions have been made in private, the minutes haven’t been released, and the public, the economy, and the financial sector are none the wiser. We have to sort of read the entrails to try and reach what the discussions could have been. It’s an incredibly positive step that we’re going to see a degree of transparency as a result of this legislation. So here’s a change the Green Party’s previously proposed, and it’s wonderful to see.

Two other changes we have proposed in the past which I think need to be next on the agenda when it comes to discussing our monetary policy are deposit insurance and also how we deal with climate-related disclosure risks—

ASSISTANT SPEAKER (Poto Williams): Order!

GARETH HUGHES: —to our monetary policy.

ASSISTANT SPEAKER (Poto Williams): Stick to the bill, thanks.

GARETH HUGHES: This is tranche one of the Government’s reform of monetary policy—

ASSISTANT SPEAKER (Poto Williams): Yes, we are reporting back the bill as it’s come from the select committee.

GARETH HUGHES: That’s right. Well, I’d like to thank the submitters and everyone involved in the Finance and Expenditure Committee. They’ve done some good work. This is good legislation. It’s a good example of modernising and bringing transparency. There are other changes that need to happen, and they’ll happen in due course. Kia ora koutou.

ANDREW BAYLY (National—Hunua): Thank you, Madam Assistant Speaker. It is, I think, good to be speaking on this bill, the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill, although, I’ve got to say, I do not support it for a moment. And I was just wondering who in this House has heard the loud chorus of those people saying “The Reserve Bank is failing. We need to reform it. Armageddon is happening in New Zealand because the Reserve Bank is not doing its job.” Have we heard that loud chorus? I’m afraid it is the case that we have heard nothing. And that is the issue.

We’ve got this bill that the Labour - New Zealand First coalition wants to ram through this House because, for some reason, our new Minister of Finance thinks it’s a good idea. And I think this is in the context where people around the world look at the Reserve Bank of New Zealand and say, “That is an excellent institution.” In fact, it is at the forefront of Reserve Bank operational frameworks that most central banks around the world look at and go “I like that model. I like that model. New Zealand did a good thing.” And here we’ve got this new Minister who goes, “We need to make these substantial changes.” And I think that our new Minister of Finance is rather green—green on the issue of this and, actually, a soft touch.

I think the only one who actually wanted this—and we’ve known this for many, many years—is actually Treasury. We know the Reserve Bank didn’t want these changes. They didn’t ask for them. They never asked for them. It was only the Treasury that’s pushed it. And guess what? They found a Minister, after all those years of waiting to be able to push through these reforms, and they found the right Minister, the soft Minister, who’s prepared to pick that up. And this is the second example of this that I’ve seen with this Labour - New Zealand First Government. The last one was the Commerce Commission, granting those wider powers, and, of course, the new Minister of Commerce and Consumer Affairs picked that up after years of waiting to get their hands on it.

So the thing about this that the people—when they look around and look at New Zealand—like about the Reserve Bank is, first of all, it has a very clear mandate. It is explicitly clear. The second thing is it is very professionally managed and run. And the third thing is it lacks politicisation, or, in other terms, it is totally independent—totally independent. And that for a central bank is probably the greatest thing, the greatest aspect or attribute that you want to see in a central bank. And the trouble with these changes is that it cuts to the core of these issues.

The first issue that I want to talk about is the mandate. At present, as I said, the mandate is to maintain and achieve price stability over the medium term. And, of course, we know this target is 1 to 3 percent. This bill obviously introduces the second aspect, which is namely to require consideration of maximum sustainable employment. As the Government members have noted, the Reserve Bank already takes into account employment issues when it decides on its monetary policy settings. It already takes them into account—in fact, it’s part of the holistic approach towards working out what are the aspects you’d need to have regard for when you set the official cash rate (OCR).

During times of recession—this is where I don’t think this has been thought through—if you’ve got a dual mandate, which becomes the priority? And, actually, it becomes quite difficult for Governments because, during periods of recession, sometimes you have high inflation and you have high unemployment and you want to reduce the unemployment rate because during recessionary times that is the focus, to get people back into work. But under this new mandate, the Minister of Finance, whoever he or she is, can actually directly influence the prioritisation of that through this new remit and charter system. They can sit there in their office up in the Beehive and write out and dictate to the Reserve Bank which should be given priority. That is a loss of independence and a politicisation of the process of the Reserve Bank, and that cuts to the core of why these reforms are not needed and shouldn’t take place.

And the other thing is, why ask the bank to look at a matter, their issue of employment, when it has no direct influence on it? It can influence price inflation through the setting of the OCR but it cannot, in the long term, change employment rates. And so we’ve asked the Reserve Bank to have a mandate that it’s got no direct levers to be able to influence.

The next thing is around the appointment of the members of the board and the monetary policy committee. Now, just to be clear, the new Minister now has the right to determine who sits on the board of the Reserve Bank. In his divine right he has the ability to determine who sits on that board. That board then has the obligation to recommend to the Minister who should sit on the MPC, or the monetary policy committee. So the same people that the Minister has appointed then recommend who sits on the monetary policy committee. The Minister then appoints the people to the monetary policy committee. That is undue political interference.

The best analogy is the issue around the appointment of the last person to the bench of the Supreme Court in the US. We had that big scrape between President Obama and President Trump in terms of the political parties who had that right. And the thing about this is the members of the monetary policy committee have terms of four to five years. I am not saying that the Minister will appoint a whole lot of old Labour hacks, but the issue is the Minister could potentially appoint a whole lot of Labour hacks to that board and ultimately to the monetary policy committee.

Hon Andrew Little: Pathetic—pathetic.

ANDREW BAYLY: Now, I am only just saying that, but that is the issue, and perception, perception, perception is the issue. That is the perception. And what we have done, Mr Little, is create an environment that has cut to the core of that independence, just by that process alone.

Hon Andrew Little: The member’s wrong.

ANDREW BAYLY: No, I’m not wrong. And so I believe that independence is absolutely the worst thing.

The third thing that I have an issue with is the issue around transparency. We asked what is going to happen, because one of the nice fluffies that came out of the process was that how the monetary policy committee that sets the OCR is going to operate is yet to be determined. But what was discussed was that this group, its decision-making process and how its votes are recorded—and the previous member just talked about this—how it’s published, how it’s made transparent is up for grabs. And the thought that we should move away from a situation where we have one governor who makes the pronouncements in a controlled environment to one potentially where you might have multiple members of the monetary policy committee standing up and making pronouncements in the public domain is absurd.

Also the question of whether, in fact, their decision—whether it’s unanimous, majority, or whatever—might be made transparent is, again, totally absurd, because you may have had a situation where it is likely the OCR is going to drop. That will directly impact on interest rates and it will directly impact on currency movements. And if you were to have one situation where it was unanimous that there would be no change and the next time you have a majority decision—to the market commentators and, particularly, the foreign exchange markets, they will watch that like a hawk and they will anticipate what’s going to happen. All you’ve done is signalled what future Reserve Bank policy will be, and it will be through signalling whether the decisions are unanimous or majority control. And that, again, just shows a Minister who does not understand how foreign currency markets—

ASSISTANT SPEAKER (Poto Williams): I apologise to the member. Your time has expired. I understand this is a split call—Kiritapu Allan.

KIRITAPU ALLAN (Labour): Well, it’s that time of day on a Thursday afternoon and it’s good to have some invigorated speech from across the House. Thank you, to the member Andrew Bayly. However—

Dr Deborah Russell: I thought you meant Paul Goldsmith.

KIRITAPU ALLAN: Oh, well, Paul—sure, yeah. However, it’s just quite interesting, you know, to hear speech after speech after speech from the Opposition lamenting on about how any changes to this Act—which was, of course, crafted and drafted and thought up at a time where I think I was barely born; some of their members weren’t even born—because we are looked at with broad support across the world, must result in doom and gloom. And I was having a think, sitting here going, you know, I think that’s what a lot of New Zealanders got pretty tired with at the last election with these guys—that they just think that the status quo is OK and that that’s enough, and that’s as aspirational as the vision gets for our country. Well, I’m sitting at the moment behind the Hon Minister Little, who is making some radical transformations in the justice sector—

ASSISTANT SPEAKER (Poto Williams): Order! Order! Come back to the bill please.

Alastair Scott: She doesn’t know what the bill is about.

KIRITAPU ALLAN: Yes, we do. We debated this for—

Alastair Scott: Come on, start talking about the bill.

KIRITAPU ALLAN: Thank you. No, I actually really enjoyed debating this bill with your colleagues, many of whom are in this House, and we had some exceptional submissions over the course of time and we received great information. But what I do want to note, though, is that I think it’s important to look at the amendments that are being made in this bill in the context of what this Government is doing across the board, and that is really focusing on some—

ASSISTANT SPEAKER (Poto Williams): We will report back what was said at select committee. We will not traverse outside of that bound. The second reading speech is about reporting back—

KIRITAPU ALLAN: Thank you, Madam Assistant Speaker.

ASSISTANT SPEAKER (Poto Williams): —so thank you. Could you put that within that context, thank you.

KIRITAPU ALLAN: Thank you, Madam Assistant Speaker. I appreciate the direction. What is happening here—look, and you’ll know from, yes, the discussions that we had in select committee and much of the debate that’s come out this afternoon—is there are two key amendments that we are changing in this bill. There’s first, of course, the dual mandate, and we’ve heard immense discussion about that from across the House, and, of course, the second is establishing the monetary policy committee.

But I’d be remiss if I didn’t refer to the remarks that have come consistently from the Opposition that these changes that the Hon Grant Robertson is proposing to make to the Reserve Bank monetary policy are in some way devoid of any thought or aspiration. The dual mandate is nothing new. Globally, it’s nothing new. I don’t know why members opposite are struggling so hard to grapple with the fact that you have got an exceptionally competent group of people at the Reserve Bank and exceptionally competent people that will be appointed to the monetary policy committee that can actually make these determinations, keeping in consideration both maximum sustainable employment and price stability. This isn’t rocket science, and this is stuff that happens all the time. What we’re doing is providing regulatory amendments that expressly state what, in some ways, is already occurring. I’m struggling with the rationale from across the House this afternoon.

We’ve heard a whole range of debate, too, about the role that a non-voting Treasury member will have when they sit in on the monetary policy committee discussions. Well, that just seems to be pragmatic and to ensure that there’s consistency between the Reserve Bank and Treasury, making sure that they’re getting the best information at the right time to be able to provide that to the relevant ministries. I don’t understand why you would want to prohibit or encourage silo thinking. It seems redundant. It seems of the last century, which was when this Act was developed.

So, I don’t have a lot to contribute to this debate. Minister Robertson has set out the key amendments, and my colleague Michael Wood spoke to some of the nuance, but I would just encourage those opposite to just get a little bit more chirpy. The stuff that we’re doing over here has been pretty well received.

Hon SCOTT SIMPSON (National—Coromandel): Thank you, Madam Assistant Speaker. It’s always good on a Thursday afternoon—

ASSISTANT SPEAKER (Poto Williams): Prime-time viewing!

Hon SCOTT SIMPSON: —prime-time viewing—to be speaking in the House on a bill such as this: the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill.

I didn’t have the privilege of sitting on the Finance and Expenditure Committee to hear submissions, but I have been listening very carefully to the debate this afternoon, and I particularly listened to the contributions of my colleagues the Hon Amy Adams, Judith Collins, Paul Goldsmith, and Andrew Bayly, who, I think, have made a very cogent case for this House needing to be cautious and concerned about change for change’s sake, which is unnecessary and, potentially, very scary for middle New Zealanders, who have become very used to the benefits that come from certainty and stability in our economic model, based almost entirely on the independence and world best-practice infrastructure that we have around our Reserve Bank.

I’ve heard from a number of contributors to this debate this afternoon who are much younger than I am, and I can well recall buying my first house when I was recently married, back in the mid-1980s, at a time then when my wife and I were both working—we didn’t have children at that stage. I well remember having a first mortgage that was about 19 percent interest rate, we had a second mortgage that was getting on for 19.75 percent, from memory, and then we had a third mortgage, which was a solicitors’ mortgage, which had 20-something in front of it. I can well remember that during that period of rampant, out-of-control inflation, that was just the way it was—that was just the way it was.

Then, of course, we had the changes that occurred in the mid-1980s, which, I think, now we look back on as being fundamental to the success that our economy has had since then. One of the primary principal foundation stones of that economic change was the independence and certainty that was created by our Reserve Bank. Every New Zealander since that time has benefited from it, and no New Zealander who lived through that period of time of rampant high inflation, of house prices that were even more extraordinary in terms of relative incomes and in terms of mortgage rates than today’s low - interest rate environment that we’ve become so used to, would want to go back to that. So to fiddle with something that is considered internationally with such credit and is so highly regarded, being accepted by other countries as being world’s best practice, I would say “Why would we want to do that?”.

I notice that a number of stakeholders presented at the Finance and Expenditure Committee, including folks from the New Zealand Initiative and from Business New Zealand. I’m drawn to one of the compelling arguments that was presented by Business New Zealand at select committee when they said, “The bill can largely be seen as a solution looking for a problem.” I think therein lies the nub of the issue with this bill.

So the dual mandate is obviously of concern. I think the Hon Paul Goldsmith highlighted that in his contribution admirably. The conflict that exists when you have a dual mandate is going to lead to confusion, it’s going to lead to a conflict, and we won’t have the certainty and the continuity that New Zealanders have become used to in terms of our day-to-day economic lives and the certainty that business needs, that New Zealanders need, that investors need, and that individuals need. So I’m naturally concerned about that, as I’m sure there are other members in the House that are.

Now, Federated Farmers also presented at select committee and made a submission, and they shared similar concerns. Their key concerns lay in the area of the dual mandate, and they were very worried about the issues of price stability and that price stability would be compromised if a dual mandate was imposed, as this bill seeks to do.

So we have now a new, inexperienced Minister of Finance determined to fiddle and tweak as much as this Government is doing in a whole range of other areas—just look at industrial relations, for instance. What they want to do is put at risk a financial institution that has stood New Zealand in good stead since the 1980s, and I think we fiddle with it at our peril.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Assistant Speaker. It’s a little disappointing to see the alarmism from over the other side, because what we do know and what we heard in the Finance and Expenditure Committee is that, in fact, the Reserve Bank now takes into account multiple factors when setting monetary policy. So we know already that much of what we’ve got in this bill is doing no more than making transparent Reserve Bank practice, including, when interest rates are considered, taking into account the impact they will have on employment. We know for a fact that no responsible Reserve Bank Governor would simply adjust interest rates willy-nilly, without regard for the consequential impacts on the economy.

Of course, it’s correct to say that in the long run, interest rates will not affect employment, but we also know that in the short run they have a direct, immediate, and significant impact. So when there are changes and sometimes shocks in the economy, because we have a small economy that is subject to shocks, those shocks can be evened out very effectively by monetary policy which takes into account employment issues. So it is entirely appropriate that in this bill there is a dual mandate which says “Yes, we want price stability, and we want maximum sustainable employment at the same time.” What is even more appropriate is the fact that the balance of those targets is set by the Minister of Finance and given as a task to the Reserve Bank Governor and the team around the Governor.

The division in the House on this bill, in fact, illustrates a deeper divide, because the other side of the House would have us wash our hands of this and say “Let’s just create the Reserve Bank and set it on its course.”, as if by some magic it will perfectly manage the economy.

The Reserve Bank is part of Government. Its role is to make New Zealand a better place so that New Zealanders can lead better lives. To do that, it needs to be an appropriate part of the system of governance as well, and the appropriate place for that governance to come from is, in fact, the Minister of Finance. So it’s quite appropriate that the Minister of Finance can set remits for the monetary policy committee. It’s appropriate because that is exactly the function of Government, to talk about stability, to talk about full employment, and the Minister of Finance can appropriately give direction as to the balance to be struck. What is more, it must be said that it’s disappointing that the minority views also thought that it was inappropriate.

Debate interrupted.

The House adjourned at 6 p.m.