Thursday, 2 May 2019

THURSDAY, 2 MAY 2019

THURSDAY, 2 MAY 2019

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 10-hour annual review debate will begin. Other legislation to be considered will include further stages of the Education Amendment Bill (No 2), the first reading of the Ombudsmen (Protection of Name) Amendment Bill, and the committee stage of the Canterbury Earthquakes Insurance Tribunal Bill.

Hon GERRY BROWNLEE (National—Ilam): Thank you, Mr Speaker. I don’t want to sound like a broken record, but given the recent debacles with Spark’s broadcasting of various sports events, does the Government intend elevating the member’s bill in the name of Clayton Cosgrove—sorry, not Clayton Cosgrove—

Hon Member: “Clayton the Other One”.

Hon GERRY BROWNLEE: —that’s right, because I’ve got to say Mr Mitchell’s a lot less forgettable—to being a Government bill, so that New Zealanders will be able to watch the Rugby World Cup free to air?

Hon IAIN LEES-GALLOWAY (Deputy Leader of the House): To avoid sounding like a broken record, I will simply refer the member to all the answers to every other time he’s asked that question.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. Hon PAULA BENNETT (Deputy Leader—National) to the Prime Minister: Does she stand by all her Government’s statements, policies, and actions?

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

Hon Paula Bennett: Does she agree with the submissions heard at select committee yesterday that the Misuse of Drugs Amendment Bill decriminalises personal possession and use of drugs?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, what we are doing is cracking down on the suppliers and dealers of synthetic drugs by classifying the two main—

Hon Gerry Brownlee: Not the question.

Rt Hon WINSTON PETERS: —I’ll send you a picture of it, because some people are a bit slower than others in this House—synthetic drugs as class A, giving the police stronger search and seizure powers.

Hon Gerry Brownlee: What about the answer?

SPEAKER: No—Paula Bennett.

Hon Paula Bennett: Does she agree with the submissions heard at select committee yesterday that the Misuse of Drugs Amendment Bill, on top of what the acting Prime Minister has just said, also decriminalises personal possession and use of all drugs?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, no, I do not agree with the import of that question. What’s going to happen is a closer focus on the misuse of drugs and those that supply them. That’s why we’re giving the police the discretion to act, which hitherto hasn’t been the case.

Hon Paula Bennett: Does she agree with the Police Association, then, who believe compulsory discretion to not prosecute should not be put into law as this bill does?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, I’m having one hell of a job understanding the import of that question.

Hon Paula Bennett: Does she think it’s exceptional, then, that this bill codifies police discretion, given there are very few bills that codify such discretion into law, and is this simply a sop to the Greens’ incessant desire to decriminalise drugs?

Rt Hon WINSTON PETERS: Well, first of all, that exception or that allowance of the police to have discretion can be found in a great number of our laws. It is nothing new and we don’t want to dispute with a bunch of Philadelphia lawyers on the other side.

Hon Gerry Brownlee: Name one other.

Rt Hon WINSTON PETERS: One other? There are countless others—probably 10 others.

Hon Gerry Brownlee: Name one.

Rt Hon WINSTON PETERS: Well, ask the question, then. [Interruption] No, not by way of interjection, Mr Brownlee. For the first time, do some work, come down prepared, and you’ll get an answer.

SPEAKER: And—

Hon Gerry Brownlee: The member should follow his own advice.

SPEAKER: The member doesn’t help himself. I am going to remind the acting Prime Minister that he is answering for the Prime Minister.

Rt Hon WINSTON PETERS: Sorry, but I’m not here as a clone. I’m answering it on behalf of the Prime Minister because she’s not here.

SPEAKER: If the member wants to stand up and make that point, he may.

Rt Hon WINSTON PETERS: I want to make it very, very clear that what the Speaker—I’m not disputing your ruling; I’m just trying to understand it. How the Speaker expects me to get up and duplicate how the Prime Minister might behave might be a very admirable aspiration on his part, but it’s not possible.

Hon Grant Robertson: That’s right.

Rt Hon WINSTON PETERS: That’s obvious, right? And that’s why we’re such a successful operation—because we’ve got so many characteristics.

SPEAKER: Enough of that. I accept that it’s not possible, but I also require the Minister acting for the Prime Minister to make an attempt.

Hon Paula Bennett: Could the Prime Minister, then, give us an example of a bill that has codified discretion into law?

Rt Hon WINSTON PETERS: Could I just say the anti-smacking legislation? That’s one, all right? But let’s get back to the real issue. This is not decriminalisation of use, as recommended by the mental health and addiction inquiry and many of our medical associations—we will respond to the inquiry next year. I want to say that illicit drugs, including synthetics and P, will remain illegal and there is still the ability within the legislation for an individual to be prosecuted for personal use and personal possession.

Hon Paula Bennett: Well, does she share the concerns of the Police Association that this bill is “decriminalising all drugs for personal use and tasking front-line police officers with enacting that”?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, no.

Hon Paula Bennett: So if there is compulsory discretion not to prosecute for possession of drugs, as the bill legislates, how does this differ to decriminalising personal possession of drugs?

Rt Hon WINSTON PETERS: Can I ask the member, what on earth does she mean by “compulsory discretion”? Because the second word suggests that the first word can’t be correct.

SPEAKER: That might have been a good English lesson, but the member can’t ask the Opposition a question.

Rt Hon WINSTON PETERS: I raise a point of order, Mr Speaker. That question has been phrased twice that way, and, on behalf of the Prime Minister—of course, being a nice person—I allowed the first mistake to be made, but when it’s duplicated, I think we, and the public out there who are listening and watching on TV, are entitled to some clarity from their members of Parliament.

SPEAKER: And I think there’s at least some implicit criticism of me in that. I probably should have ruled it out.

Hon Paula Bennett: Well, does she believe someone repeatedly caught using methamphetamine should not be prosecuted?

Rt Hon WINSTON PETERS: Could I just say, amongst other things, it’s only under 56 grams that the import of her question is even relevant in the first place.

Hon Paula Bennett: So does she believe someone repeatedly caught using heroin should not be prosecuted?

Rt Hon WINSTON PETERS: First of all, that is not what the law says, but what this visionary Government intends to do is rather than just take a punitive approach, it seeks to turn the lives of those people around, and their families as well. I know it sounds difficult to do, but being a modern visionary Government, we just are not interested in sending people to prison; we want to save people’s lives as soon as we possibly can.

Hon Paula Bennett: On that note, then, does he agree with New Zealand Drug Foundation executive director Ross Bell, who said yesterday, “It’s kind of pointless in making claims around wanting to treat drugs as a health issue, and doing some tinkering around a drug law, without backing that up with resources, intervention, education, and treatment.”?

Rt Hon WINSTON PETERS: On behalf of the Prime Minister, I want to say that I agree with that comment. On behalf of the Prime Minister, I want to record that that gentleman was very supportive of the bill. On behalf of the Prime Minister, I want to say that there’s a whole range of things we are doing, from getting 1,800 extra front line police to enforce the law, and then to put the treatment and remedial actions in after we have arrested these people.

Question No. 2—Māori Education

2. KIRITAPU ALLAN (Labour) to the Associate Minister of Education (Māori Education): What recent announcements has he made about growing and strengthening an education workforce that can integrate Te Reo Māori into the learning of all ākonga in Aotearoa New Zealand?

Hon KELVIN DAVIS (Associate Minister of Education (Māori Education)): The Government has begun delivering on its plan to integrate Te Reo Māori across the education system with the launch of Te Ahu o Te Reo Māori, which will support the workforce to use Te Reo Māori correctly every day in every classroom. Te Ahu o Te Reo Māori is designed to improve all levels of Māori language ability across the education workforce. Staff can participate in a Kura Reo - style learning programme with support from a group of experts, some of which will be delivered through wānanga and online learning support. This Government has made it clear that by 2025, Te Reo Māori will be an integral part of all students’ education. With the launch of Te Ahu o Te Reo Māori, we have begun delivering on that commitment.

Kiritapu Allan: Has he received any reports on the education workforce’s reaction to the new initiative?

Hon KELVIN DAVIS: We know there is increasing demand from students and whānau—Māori and non-Māori—to provide more Te Reo Māori in learning environments. Since the launch of Te Ahu o Te Reo, 304 registrations of interest have been received—95 in Waikato, 79 in Te Waipounamu, 92 in Taranaki and Whanganui, and 40 in Kapiti-Horowhenua—and 71 percent of registrants identify as non-Māori, with 29 percent coming from those who identify as Māori.

Question No. 3—Finance

3. Hon AMY ADAMS (National—Selwyn) to the Minister of Finance: Is a strong employment market an important part of ensuring the well-being of New Zealanders; if so, can he confirm that job growth was negative in the first three months of this year?

Hon GRANT ROBERTSON (Minister of Finance): A strong employment market is an important part of ensuring the well-being of New Zealanders. In that light, I welcome today the announcement from the Prime Minister and the Prime Minister’s Business Advisory Council of the Aotearoa New Zealand skills pledge, which commits signatories to doubling investment in reskilling and training hours by 2025. In terms of the second part of the question, the member knows that there are a number of ways that job growth is reported. Of the main ones used in yesterday’s household labour force survey (HLFS) and quarterly employment survey, some are up and some are down for the first three months of this year. But as I was told regularly by the member’s predecessor, one shouldn’t focus so much on quarterly movements. So I’m pleased to remind the House that the HLFS shows annual employment growth of 38,000 from the March 2018 quarter.

Hon Amy Adams: Well, if he’s so adamant that the employment data that came out yesterday was positive, then why, according to the Financial Times, did the New Zealand dollar drop so sharply, following negative job growth, in the first three months of the year?

Hon GRANT ROBERTSON: I’ve learnt over a long period of time not to speculate on movements in the New Zealand dollar and the reasons for them. What I do know is that in yesterday’s announcements, we saw the unemployment rate fall to 4.2 percent, wages grow 3.4 percent over the year, the underutilisation rate fall to 11.3 percent, and the NEET rate fall. So there’s plenty of good news in there if the member chose to focus on that.

Hon Amy Adams: Does he seriously think the labour market is strong, when ASB said that yesterday’s data showed “weak employment” readings, Westpac said “job growth has slowed”, and ANZ said “momentum in the labour market appears to have slowed, consistent with softer GDP”?

Hon GRANT ROBERTSON: We can have a battle of the banks if we like. I can quote a bit of Westpac to the member, but I’ll quote ANZ, who said—and I could have used this as an answer to the first part of the primary question—“The labour market is currently in good shape.” I encourage the member to accentuate the positive.

Hon Amy Adams: Well, if, as he said, he’s not interested in using quarterly data, will he take any responsibility for the fact that over the period he has been the Minister of Finance, New Zealand’s working-age population has outgrown the number of new jobs by 44,000 jobs, meaning there are now fewer jobs for more people?

Hon GRANT ROBERTSON: The member is now moving around various parts of the data set, which makes the very point I was making in my first answer to her question, which is that there are 38,000 more people in work according to the HLFS seasonally adjusted definition—that being a growth of 1.5 percent since March 2018.

Rt Hon Winston Peters: Can I ask the Minister of Finance if he has seen any forecasts suggesting that in the longer term from 2019, the growth rate for New Zealand will be superior to that of any other OECD country?

Hon GRANT ROBERTSON: I have in fact seen forecasts of that—in fact, from the IMF and the World Bank just last week, where they said that New Zealand’s growth, while it will be slower than it has been in the past, will still be in excess of advanced economies and many of our trading partners.

Hon Amy Adams: Is he aware that under the last two years of the previous Government, there were 57,000 more jobs created than working-age population growth, but under this Government the economy is consistently failing to create enough jobs to keep up with population growth?

Hon GRANT ROBERTSON: I note the graph the member was holding—if she just flicked it up the other way, that would be the polls.

Hon Amy Adams: I raise a point of order, Mr Speaker. Which part of that was in answer to, or even an address of, the question?

SPEAKER: I think probably none of it.

Hon GRANT ROBERTSON: I don’t have that data in front of me, but if the member wants to put that down as a question, I’ll happily answer it for her.

Hon Amy Adams: Will he accept that the HLFS data shows that the economy he inherited was creating significantly more jobs and population growth, but his legacy is becoming fewer jobs for more people?

Hon GRANT ROBERTSON: No, I don’t accept the premise of that member’s question. We’ve got 38,000 more people in work since March 2018. What the member is doing is trying to say that no conditions in the economy ever change. We’ve just had the question from the Deputy Prime Minister, where we’ve heard that New Zealand’s economy is forecast to grow faster than other economies but overall the global economy is slowing. So for the member to compare those two periods isn’t accurate. What I do know is that in the last year, 38,000 more people are in work, and that is a good thing.

Question No. 4—Trade and Export Growth

4. JO LUXTON (Labour) to the Minister for Trade and Export Growth: What progress, if any, is the Government making on increasing trade and export growth?

Hon DAVID PARKER (Minister for Trade and Export Growth): The coalition Government is making good progress on growing exports. From 2008 to 2016, exports decreased from 30 percent of GDP to 26.6 percent of GDP against the then target of an increase of 14 percent of GDP. In contrast, exports have since grown from 26.6 percent to 28.8 percent of GDP in 2018. In 2019, exports are continuing to grow—the March month saw the highest monthly growth in goods exports, an increase of 19 percent on the prior March. We’re on the volume-to-value journey, and it’s pleasing to see contributions from high-technology, high-value food and beverage, as well as the traditional high-quality primary produce. Monthly figures can bounce around, but it’s very pleasing that we’re making substantial progress.

Jo Luxton: What export market has seen the strongest growth for New Zealand?

Hon DAVID PARKER: The most improved market in March was China, with goods exports increasing by 52 percent, to $1.5 billion for the month—a new record. I note this came at a time when some in the House were incorrectly claiming that New Zealand’s trading relationship with China was on the rocks. This Government continues to build New Zealand’s trade relationship with China. Following the Prime Minister’s visit to Beijing to meet President Xi last week, I took a business delegation to China. We had representatives of some of New Zealand’s biggest exports as well as our start-ups. The visit was highly successful. There were productive engagements at both a ministerial and business level, and I thank the business leaders for helping make this mission a success.

Jo Luxton: What were some of the highlights of the trade mission to China?

Hon DAVID PARKER: I had a fruitful and productive bilateral meeting with the Chinese commerce Minister, Zhong Shan, in Beijing. Following on from the agreement between the Prime Minister and President Xi, China and New Zealand are advancing towards a mutually beneficial upgrade of the China free-trade agreement (FTA) as soon as possible. I also met with the environment Minister, and we discussed achieving economic growth within environmental limits. Although we’re living in turbulent times in the world for trade, it’s pleasing that we’re making progress and that the next round of the FTA negotiations are occurring just this month.

Jo Luxton: How has the Comprehensive and Progressive Trans-Pacific Partnership helped support exports to Japan, Canada, and Mexico—three G20 countries that we previously did not have any bilateral trade agreement with?

Hon DAVID PARKER: There’s good news there too. Under the Comprehensive and Progressive Trans-Pacific Partnership agreement, the exports to Canada have increased in the quarter by an average of 8.4 percent; exports to Mexico have gone up by a similar amount, 5.9 percent; and the standout increase has actually been to Japan, where meat exports overall are up 25 percent compared with a year ago, and beef exports are 40 percent higher.

Jo Luxton: What role is the New Zealand Government taking in trying to find a solution to the issues with the World Trade Organization (WTO) Appellate Body?

Hon DAVID PARKER: The Appellate Body is very important to our trade, our ability to export. We raised these issues in discussions with our Chinese counterparts, but in addition to that, it’s noteworthy that the Government’s senior representative to Geneva, Mr David Walker, has been appointed by the General Council to the World Trade Organization to try and see if a way through can be found between the different views held by different members of the WTO Appellate Body. If that is not resolved by the end of the year, the Appellate Body ceases to function.

Question No. 5—Police

5. CHRIS BISHOP (National—Hutt South) to the Minister of Police: When was he first advised by Police that there had been an alleged unauthorised disclosure of Police information to a media outlet, and when was he first advised that the Police Commissioner had directed an investigation be commenced into that disclosure?

Hon Stuart Nash: Mr Speaker—

SPEAKER: The Hon Stuart Nash, with the caveat that, once again, this is likely to be longer than normal.

Hon STUART NASH (Minister of Police): Thank you, Mr Speaker. I first became aware of the allegations when I read them in the newspaper on Sunday the 28th. I subsequently spoke to the Commissioner of Police and asked him to get to the bottom of this, including whether an investigation needed to be conducted. On the morning of Monday the 29th, the commissioner briefed me in my office and assured me that no top-secret information had been released. I reiterated my expectation for an investigation into any breach of operational protocols, and I informed the House of this expectation on Tuesday. On the morning of Tuesday the 30th, my office was informed of police’s intention to conduct an investigation but that details had not been finalised, and it would have been inappropriate for me to make any public comments in case it compromised police’s next steps. I updated the House about the commencement of an investigation the next day.

Chris Bishop: Why did he refuse to confirm to Parliament on Tuesday that an investigation was under way, when I asked him a specific question about that?

Hon STUART NASH: I will reiterate that on the morning of Tuesday the 30th, my office was informed of police’s intention to conduct an investigation but that details had not been finalised, and it would have been inappropriate for me to make any public comment in case it compromised police’s next steps. I updated the House about the commencement of an investigation the next day.

Chris Bishop: Why, on Tuesday afternoon, did he not repeat the words that the Police Commissioner used the next morning that the unauthorised release of this material was of significant concern and very serious?

SPEAKER: I’m going to ask the member to rephrase the question, given what happened earlier.

Chris Bishop: Why, on Tuesday in question time, did he not use the same language the Police Commissioner used the next morning when announcing the investigation that the alleged unauthorised disclosure of material was very significant and very serious?

Hon STUART NASH: I have always made it clear that both the Commissioner of Police and myself take any breaches of police protocol very seriously. On Tuesday, during question time, I reiterated my expectation that if such a breach had occurred, I would expect an investigation to be undertaken. These expectations have subsequently been met.

Greg O’Connor: What are the consequences of the unauthorised release of information?

Hon STUART NASH: My primary objective on Tuesday was to assure the House and the public that no top-secret information had been leaked. The unauthorised release of top-secret information not only has the potential to harm lives; it has the potential for our international partners to stop cooperating with us on matters of international security and intelligence. That’s why the penalty for unauthorised disclosure of classified information is up to five years in jail under the Crimes Act. If an MP wants to attack police, he better gets his facts straight. The member claimed, Mr Speaker—

Hon Gerry Brownlee: Don’t come in here threatening like that. That’s an outrageous response to this House.

Hon STUART NASH: —that top-secret information had been released. It had not. He needs—

Hon Gerry Brownlee: You’re the one under scrutiny, fella.

SPEAKER: Order! Who made that comment?

Hon Gerry Brownlee: I did. Think about what he just said; that’s outrageous what he just said.

SPEAKER: The member will stand, withdraw, and apologise.

Hon Gerry Brownlee: I withdraw and apologise. I raise a point of order, Mr Speaker. Mr Speaker, you cannot sit there and allow a Minister to make an unveiled threat, like the Minister has just done. That is completely unacceptable in this House.

SPEAKER: Well, I was listening very carefully. I heard no threat; I heard a reference to me. There was a factual statement made by the Minister as to what occurred earlier in the House and the problems with it.

Hon STUART NASH: That member claimed that top-secret information had been released. It had not. That member needs to be careful with his words; I am careful with mine when national and international security and police operations are at stake.

Chris Bishop: Why, on Tuesday in question time, did the Minister take issue with the particular designation given by the media to the information—not by me—thereby, giving the impression a leak had not taken place when one clearly has?

Hon STUART NASH: I would like to reiterate that the question that I was asked on Tuesday, and the allegation in the media, was that top-secret information had been leaked. It was my responsibility to assure this House and members of the public that top-secret information had not been leaked.

Rt Hon Winston Peters: When the Minister was asked that question on Tuesday, was there a differentiation between the Minister’s phrasing of the question and the media’s phrasing of it, in terms of the words “top secret”?

SPEAKER: Order! You mean the member’s, not the Minister’s.

Rt Hon Winston Peters: No, no, I mean the member’s and the media’s. He’s hiding behind the media now, when he used the words on Tuesday.

SPEAKER: I’m going to ask the Deputy Prime Minister to ask the supplementary again.

Rt Hon Winston Peters: When the Minister heard the question on Tuesday, did he realise that there was a distinction between what the member was saying, in terms of “top secret”, and what the media has written as “top secret”, or did he think that the member had distinguished that that wasn’t his view, just the media’s view that it was top secret?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. It’s very hard to see how the Minister has any responsibility for deciding how anybody else might’ve interpreted the media reports.

Rt Hon Winston Peters: On Tuesday, I distinctly heard Mr Bishop use the words “top secret”, and he did not distinguish it as being the words of the media. He made it his words.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Those words are, of course, part of the confirmation process before the question can even be asked in the House. So to say that they belong to Mr Bishop is quite unreasonable, given that the question is approved for asking in the House. [Interruption] Yes, I know you’re trying to stay awake—I know. Keep waving the hand.

SPEAKER: Order! Order! When I stand up, the member sits down and the acting Prime Minister is quiet. My memory is, and we are relying on my memory, that those words were not within a quote and, therefore, must be owned by the member, and, if that is the case—and if I’m wrong, I’ll expect Mr Bishop to correct me—they are the words of the member.

Hon STUART NASH: As the Deputy Prime Minister has said a number of times, words matter. It was my primary objective on Tuesday to assure the House and the public that no top-secret information had been leaked.

Chris Bishop: In light of the Minister’s commitment to transparency and what he just said, why did he not at least admit to the House on Tuesday that albeit that top-secret security material had not been released to media, some confidential, serious information had somehow found its way from the police into the media’s hands?

Hon STUART NASH: I’ll reiterate: that was not the question I was asked, and I will also reiterate that my primary objective on Tuesday was to assure the House and the public that no top-secret information had been leaked.

Question No. 6—Health

6. MATT DOOCEY (National—Waimakariri) to the Minister of Health: What is his best estimate of the cost of increasing access to mental health and addiction services from the current target of 3 percent to 20 percent of the population, which was identified as an indicative target in the Report of the Government Inquiry into Mental Health and Addiction?

Hon Dr DAVID CLARK (Minister of Health): None of the recommendations of the inquiry refer to a 20 percent access target, indicative or otherwise. It is this Government’s task to respond to the report’s 40 recommendations. I presume the member is referring to a passage on page 110 of the report, which states, when referring to an indicative target, “We recognise that further work will be required to identify a specific coverage target”. The actual recommendation of the inquiry is to “significantly increase access to publicly funded mental health and addiction services”. The member will have to wait until the Budget to learn more.

Matt Doocey: I raise a point of order, Mr Speaker. This question was a primary on notice. I take the Minister’s point; it was not in the primary recommendation of the inquiry for increasing access. The indicative target is referenced at several points through the inquiry report and is the rationale for underpinning the recommendation of increasing access. The inquiry panel refers several times—

SPEAKER: Order! Order! No, no—has the member got a point of order, as opposed to not liking the answer?

Matt Doocey: Well, he didn’t address the question, Mr Speaker.

SPEAKER: Well, I think he did. You know, the Minister is in some danger if that figure is through the report as an indicative target, but the Minister’s assuring me it’s not, and we’ll go to another supplementary.

Matt Doocey: I raise a point of order, Mr Speaker. Can I just point out that in the primary question, I do not reference the indicative target as a recommendation; I reference it from the report.

SPEAKER: And I have had an indication from the—well, I have it verbally rather than by head nods and shakes.

Hon Dr DAVID CLARK: Speaking to the point of order, Mr Speaker, would you like me to read the passage from the paper, because I think the context is important? The figure 20 percent is in there. It says “may be” and it also says “We recognise that further work will [need to be done] in order to identify a specific coverage target”—so it’s saying that that is not the specific coverage target that it thinks will be required—“(since not everyone will need or want to access a service),”. And it also recognises that further work will need to be done on definitions of services and access, how access might be expanded over time, and a cost-effective way to achieve whatever the objective is. So it’s a very general reference, and—

SPEAKER: The member can resume his seat. I think it would have been more helpful—I don’t normally encourage Ministers to have longer answers, but that could in this particular circumstance have been useful.

Matt Doocey: So is the Minister saying a Government-initiated inquiry that was initiated in April 2018, reported back in December, delayed in March, and delayed in April—the main recommendation of the inquiry was to increase access, with an indicative target of up to—

SPEAKER: Order! Order! If the member has a further supplementary, he may ask it. A question, not a speech—a question.

Matt Doocey: Is the Minister telling the House that for a Government initiated inquiry with an indicative target for the main recommendation, there’s been no costings for that indicative target?

Hon Dr DAVID CLARK: I accept that a key recommendation of the inquiry is increased access to mental health services for people in distress, and that is a recommendation this Government is looking to address. But, of course, I’m not about to make any Budget announcements today. What I can assure the House is that it won’t take this Government nine years to belatedly realise mental health is an issue, only to come up with an unallocated contingency of just $100 million spread over four years.

Matt Doocey: Would he expect the extra annual funding for mental health services, based on the current formula of $1.35 billion for the current target of 3 percent, to be less or more than $6 billion across four years if you chose to reach the 20 percent target?

SPEAKER: Well, I won’t make any choice, but answer the question anyway.

Hon Dr DAVID CLARK: I don’t think it’s useful for the member to be cute with numbers. I think what he will accept is that the 3 percent for whom the services are currently focused are those with the greatest need for mental health support—those at the most difficult end of the mental health spectrum. Those who the inquiry recommends ought to be able to access services more broadly are those with mild to moderate conditions, and this Government is focused on the recommendations of the report.

Matt Doocey: If the current cost of mental health provision in New Zealand for a target of 3 percent of the population is $1.35 billion annually, what would he expect that amount to be for 20 percent of the population?

Hon Dr DAVID CLARK: More than the current funding.

Matt Doocey: What does the Minister say to the 2,000 people who turned up to 26 locations for public meetings, the 5,200 people—

SPEAKER: Order! Get to the question.

Matt Doocey: —that made a submission, when he has done no costings for the indicative target for the main recommendation of the mental health inquiry that the Government initiated?

Hon Dr DAVID CLARK: Firstly, I have already rejected the premise of that member’s question, based on that being the main recommendation of the report. It’s just not true. Secondly, I would say thank you to those people who turned up, that made submissions, and that did present in public. This is an incredibly important inquiry, and I would point out that it is something that every party in this coalition and confidence and supply Government campaigned on, because we thought it was time to have a good hard look at the delivery of mental health services. Unfortunately, the then Government didn’t support an inquiry, and that is shame on them.

Question No. 7—Building and Construction

7. PAUL EAGLE (Labour—Rongotai) to the Minister for Building and Construction: What recent announcements has she made about the building and construction industry in New Zealand?

Hon JENNY SALESA (Minister for Building and Construction): Mr Speaker, thank you. A few weeks ago, the Prime Minister and I, alongside fellow Ministers and industry leaders, announced the launch of the Construction Sector Accord. This accord is a shared commitment between Government and industry to transform the construction sector. It is a joint response to the challenges facing this sector, which include skills and labour shortages, poor risk management, unclear regulations and pipeline, and a lack of coordinated leadership. As regulator and a major client, the Government has an important role to play in supporting the construction sector. This accord is a new way for Government and industry to work together to create lasting positive behavioural change in the sector.

Paul Eagle: What commitments have been made through the Construction Sector Accord?

Hon JENNY SALESA: This is a comprehensive agreement that sets out the commitment for Government and industry in nine areas of work, and this is the first time that a Government in this country has done this. The Government commitments are to have better procurement practices, an improved pipeline management of work from Government, and to improve the building regulatory system and consenting processes. The shared Government and industry commitments are to grow the workforce capability and capacity, have better risk management and fairer risk allocation, more houses and better durability, and to improve health and have better safety at work. The industry commitments are to have enhanced industry leadership and collaboration, improve culture and reputation, and to have better business performance.

Paul Eagle: What feedback has the Minister seen following the launch of the Construction Sector Accord?

Hon JENNY SALESA: There have been very positive responses from the construction industry. A number of key industry leaders have already signed up and made a pledge under this accord, and there have been many more in the sector who are wanting to get involved. Most people are actually aware that things need to improve in the building and construction sector. Both Government and industry agree that we cannot change the sector on our own. The Construction Sector Accord is the platform for change and for transforming the sector. Phase two of this work is finalising an implementation plan, which will include key performance indicators, and we’ve made a pledge to hold each other accountable to this accord and to challenge contrary behaviour.

Andrew Bayly: Thank you. After 18 months in office, when is she going to announce concrete and specific measures to improve the building and construction sector, rather than just announcing yet another working group?

Hon JENNY SALESA: This Construction Sector Accord is concrete action. We have made nine commitments. This is not an announcement of a working group; this is an accord with actual commitments, nine areas of work. The member was in a Government for nine years that should’ve tackled this issue. We are addressing this because the last Government did not.

SPEAKER: Order! [Interruption] Order! That’s probably enough, because he has never been in Government.

Question No. 8—Employment

8. Hon PAULA BENNETT (Deputy Leader—National) to the Minister of Employment: Does he stand by his approach to Mana in Mahi, and how many Māori participants are involved in the Mana in Mahi programme?

Hon WILLIE JACKSON (Minister of Employment): To answer the first part of the question, yes, I stand by the approach that this Government has taken, which is to deliver Mana in Mahi in a phased approach. To answer the second part of the question, a total of 143 clients have been placed in Mana in Mahi so far. Of these participants, 75 have identified as Māori—52 percent.

Hon Paula Bennett: Well, how does he determine whether the Māori in the Mana in Mahi programme are Māori enough to be counted?

Hon WILLIE JACKSON: Well, that’s easy—that’s easy. It’s a well-known fact in this country that if you acknowledge your whakapapa Māori, you can be part of the setup. It’s a little bit unlike when the National Party used to measure Māori by half-castes and by how much of a percentage you had. We brought in this rule that if you whakapapa to Māori, like the good member does over there, then you’re Māori.

Hon Paula Bennett: Does he respect Māori participating in Mana in Mahi regardless of their background or skin colour, or, as he ascertained yesterday in this House, whether or not he thinks they’re Māori on that day or not?

Hon WILLIE JACKSON: I think the member might be talking about herself. The reality is that I have total respect for Māori, whether they speak the language, whether they were brought up in a Pākehā environment, Asian environment. If they choose to whakapapa to Māori, like the good member, I respect her and any other Māori.

Rt Hon Winston Peters: Can I ask the Minister what happens when your discovery of whakapapa Māori is rather like Columbus’ discovery of America—purely by accident?

SPEAKER: Order!

Hon Paula Bennett: Do the Māori in the Mana in Mahi programme need a Māori-sounding surname to participate, or will he be telling people with names like the name Bidois that they should go back to Italy?

Hon WILLIE JACKSON: I mean, these types of silly questions are not necessary. The reality is, and the member should know, that a general debate is a general debate, so get over it.

Hon Paula Bennett: Does he expect, then, men in the Mana in Mahi programme to tell women, like he did yesterday, that they are useless while they’re working?

Hon WILLIE JACKSON: I take offence at that. I just said that some of the Māori MPs in National were useless, like that member.

Kieran McAnulty: Why has the Minister taken a phased approach to Mana in Mahi?

Hon WILLIE JACKSON: Thank you very much. What a great question. A phased approach has been taken to allow the initiative to be trialled and tested in order for us to be confident that we can provide a service that best supports our young people so that they can obtain the skills they need to have a secure long-term employment pathway. We’re so pleased with this, that we’re able to invest in this programme. Young people who never had a chance under the previous Government, who would have left them unemployed for ever—

SPEAKER: Order! That’s enough.

Fletcher Tabuteau: Can the Minister confirm for the House: is the name Bidois French or Italian?

SPEAKER: Order! We can stretch things a long way, but that’s not something he has responsibility for, neither does he have responsibility for the questions asked by the deputy leader of the National Party.

Question No. 9—Housing and Urban Development

9. MARAMA DAVIDSON (Co-Leader—Green) to the Minister of Housing and Urban Development: When can renters expect to see legislation introduced to reform the Residential Tenancies Act and protect their right to a secure home?

Hon PHIL TWYFORD (Minister of Housing and Urban Development): The Government is committed to improving the balance between providing renters with security of tenure and allowing them to make their house a home while protecting the rights and interests of landlords. Officials received over 4,500 submissions on the policy proposals. We’re currently working on the policy and, with Cabinet’s agreement, we’re aiming to introduce legislation this calendar year.

Marama Davidson: Does he continue to support ending no-cause tenancy terminations?

Hon PHIL TWYFORD: Well, we’re committed to improving the security of tenure for renters and striking the right balance between a tenant’s right to make a house a home and ensuring that landlords can still get rid of rogue tenants. Cabinet will be making policy decisions in due course on this, but we consulted on removing no-cause terminations because we want renters to be able to put down roots in their communities.

Marama Davidson: Has he instructed officials to consider how to prohibit rental bidding so that property managers are no longer able to run rental tenders like the one Cutlers recently advertised in Dunedin?

Hon PHIL TWYFORD: Well, it was disappointing to see that property management company treating the renting out of properties to students as some kind of contest or a game. Having a home is a basic necessity, and making students compete against each other for a flat is distasteful. Officials are currently looking at considering the options on banning rental bidding.

Marama Davidson: Does he agree that our law needs more protections against frequent and significant rent increases?

Hon PHIL TWYFORD: Well, as the Reserve Bank says, rents are set primarily by supply and demand, which is why so many of our policies are designed to increase the supply of housing. We consulted on limiting rent increases to one per year, because in a rising market, as we’ve seen over the last decade in so many parts of New Zealand, frequent and large rent increases can have a punishing effect on renters.

Angie Warren-Clark: What other changes has the Government made to make life better for renters?

Hon PHIL TWYFORD: Well, the healthy homes standards will set minimum standards for insulation, heating, ventilation, moisture, and draft control so that rental homes are warm and dry. They are part of the Government’s plan to improve the health and well-being of children. Ministry of Health data shows that at least 6,000 children are admitted each year for what they call housing-sensitive hospitalisations, and Otago University recently found that homes that are damp or mouldy cause more than 35,000 nights in hospital.

Question No. 10—Education

10. NICOLA WILLIS (National) to the Associate Minister of Education: Does she accept responsibility for waiting times for early intervention support climbing from an average of 74 days in May 2018 to an average of 106 days now, and by what date will she deliver a reduction in waiting times to fewer than 74 days?

Hon TRACEY MARTIN (Associate Minister of Education): In answer to the first part of the question, considering that less than $1.3 million was directly invested in early intervention specialist service providers between 2009 and Budget 2017, I will take responsibility for ensuring that the $21.5 million that this Government has invested in early intervention services, combined with the roll-out of the learning support delivery model and the $217 million over four years for the first tranche of learning support coordinators, will, over the four-year period, as pledged, lower the wait times. In answer to the second part of the question, I answered that yesterday.

Nicola Willis: I raise a point of order, Mr Speaker. The Minister was asked to address the question. I am not aware that referring to an answer yesterday when the question was put on notice is acceptable. I would like to know the answer—

SPEAKER: Order! Order! The member will resume her seat. The fact that the member is not aware of it is not a point of order.

Nicola Willis: Will she confirm that the average waiting time for early intervention support had been trending down, from 97 days in 2013-14 to 71 days in 2016-17, under National, and is it just a coincidence that waiting times have skyrocketed under her watch?

Hon TRACEY MARTIN: I would need to go and check the member’s figures for the first part of her question, but what I can tell her for the second part of the question is that between 2013 and 2017, we had a 21 percent increase in behavioural needs; between 2013 and 2017, we had a 15 percent increase in communication service needs; and between 2013 and 2017, we had a 15 percent increase in early intervention services. Unfortunately, the workforce planning required to address the percentage increases and the specialists that we needed was not done during that same period of time. We have hired another 120 specialists in this area, and we will continue to work on those times.

Nicola Willis: Why did the Prime Minister make a promise in May 2018 to halve waiting lists for early intervention support if, in fact, it’s all too hard and nothing will be delivered for another four years?

SPEAKER: Well, let’s assume that the Minister has responsibility, shall we?

Hon TRACEY MARTIN: I’m assuming that the member is referring to the Prime Minister’s speech in May 2018. If she goes and has a look at the speech—the Prime Minister did not put a date on the moment that the timing would be halved, but she did address the question that the funding was over a four-year period. I would assume that a logical, reasonable person would make a connection between four years’ worth of funding and the period of time that funding would take effect.

Nicola Willis: So do we take it that the Prime Minister’s target is just aspirational; and, if so, can the Minister explain how that aspiration without a target will make any difference to a family of a three- or four-year-old child who is stuck on a waiting list today and hungry for help?

Hon TRACEY MARTIN: One, I find the tone of the questioning, considering that this has been a problem created over a nine-year period, somewhat disappointing—the fact that 120 more specialists have been employed since this Government has been in place; the fact that in some areas, the waiting times have gone down, in other areas they have gone up; the fact that it takes between five and seven years to train a workforce, where there was no workforce planning done when we came into the seat. So we are constantly aspirational for the well-being of children, which is more than can be said for that member and that party.

Nicola Willis: Will she recalibrate the Prime Minister’s target to halve waiting lists; and, if so, will she consider taking advice from her ministerial colleague Phil Twyford on how to go about this?

SPEAKER: No. The member knows that’s out of order. She’s been around the building for a long time.

Nicola Willis: By what date will the Government deliver any meaningful improvement for parents and children in Wellington who today are waiting an average of 178 days for early intervention support?

Hon TRACEY MARTIN: In the last 10 months, the average waiting time in Wellington has lowered by 22 days. What I can say to the member is that one needs to take account—and this is complicated, so I’ll go slowly—of the fact that, if you take a case in Wellington where there were 432 days, approximately, for this particular family, at the request of the parent the application for assistance was placed on pause. However, the Ministry of Education does not stop the clock when the parent asks us to pause on that application. When the Ministry of Education went back to the parent at the end of that time period, they said that the service was no longer required. I am aware that the member has put in 30 written questions around this particular topic. She might like to wait until she gets the answers before she asks more oral questions.

Question No. 11—Employment

11. JAMIE STRANGE (Labour) to the Minister of Employment: What recent reports has he seen on the labour market?

Hon WILLIE JACKSON (Minister of Employment): Yesterday, like the Minister of Finance said, the household labour force survey was released and we were very pleased to see a drop in the unemployment rate to—[Interruption]

SPEAKER: Order! Order! The member will resume his seat. Mr Bennett, can you just try and control yourself. I had meetings with primates recently who made more intelligent noises.

Hon WILLIE JACKSON: I just wanted to support much of what the Minister of Finance said—that we both saw the household labour force survey that was released and we’re very pleased to see the drop in the unemployment rate to 4.2 percent, the second-lowest in 10 years, and that wages grew 3.4 percent over the year to 31 March, which shows the Government’s approach to supporting employment is working remarkably well.

Jamie Strange: What did the household labour force survey release indicate for Māori?

Hon WILLIE JACKSON: I was encouraged to see that Māori employment has continued to head in the right direction—5,100 more Māori were employed and the underutilisation rates for Māori fell 1.7 percentage points to a low of 19.1 percent. Māori unemployment fell a whole percentage point to 8.6 percent, I believe the lowest ever in the history of the survey. These figures represent real people, real whānau, and real communities who are seeing a difference in their lives, and we should all celebrate that this Government is doing such a fantastic job at the moment.

Jamie Strange: What did the household labour force survey say for those young people who are not engaged in earning or learning?

Hon WILLIE JACKSON: The survey released yesterday was positive, with the rate for those not engaged in education, training, or employment falling to 13.2 percent. Obviously we still need to reduce this number further, which is why the delivery of our training and employment programmes such as Mana in Mahi, He Poutama Rangatahi, Pae Aronui, and first year fees-free tertiary education are vital to the long-term success of our rangatahi—our young people.

Question No. 12—Statistics

12. Dr JIAN YANG (National) to the Minister of Statistics: Does he stand by his statement regarding Census 2018 that “the input was sub-optimal, but the output is optimal”?

Hon JAMES SHAW (Minister of Statistics): Yes.

Dr Jian Yang: Is he aware that Statistics New Zealand changed the definition of non-response for Census 2018, and that if the past definition were applied to Census 2018, the response rate of the census would actually drop from 90 percent to 85 percent?

Hon JAMES SHAW: It’s obvious that over the course of the last 12 months since the census, a great deal of work has gone on to make sure that the output of the census is optimal—as I was explaining—and that that has involved a great deal of work that would have been normally scheduled for the 2023 census, and has, effectively, been brought forward.

Dr Jian Yang: Will the results from Census 2018 be able to specify the address on census night of the 10 percent of New Zealanders who were not included in any 2018 census form?

Hon JAMES SHAW: Well, I would have to check with Statistics New Zealand on that because I think that’s an operational matter. But if I could hazard a guess, I would say that one of the most important functions of a census is, actually, that people’s personal data is protected, and that, actually, people’s personal addresses and so on are not available as a result of the publication of census data.

Dr Jian Yang: How can secondary data sources capture the specific address of New Zealanders on census night when data provided to Government organisations like hospitals may have been provided months or years before census night?

Hon JAMES SHAW: Statistics New Zealand have said that they have compiled what they consider to be the most accurate population count file, according to the business plan that was signed off by the last Government in 2015, which specifically called for the use of administrative data over the coming censuses. So what they have done is exactly what the previous Government called for them to do in the next census, and they’ve simply brought that work programme forward. The population count file is the most accurate that it has ever been, and that is because of the work that they have done over the course of the last 12 months. Now, the methodology that Statistics New Zealand have used to compile this population file has been independently reviewed, and the methodology that they used to compile both the population-level sets and then all of the other data sets that go out—those methodologies are also published alongside the data when it’s released. That is available for academics and anybody else to critique at the time. That’s standard practice and has happened at every other census in recent times.

Dr Jian Yang: How can the public have confidence in election boundary information for the next election when a high proportion of people may have moved between the time secondary data was captured and census night?

Hon JAMES SHAW: Well, as I said, Statistics New Zealand have said that they have the most accurate population file ever, and that the—

Hon Gerry Brownlee: Of course they’re going to say that.

Hon JAMES SHAW: Minister Brownlee is asking questions again. So should I respond to Mr Brownlee or Mr Yang?

SPEAKER: I’ve generally found that pointless.

Hon JAMES SHAW: As they have said, the most important uses of the census are electorates, electorate boundaries, population-based funding—for example, district health board funding—and school deciles. This census looks to be more accurate than the output of the 2013 census. In response to Mr Brownlee’s specific point: if he’s worried about why it is that the public is losing confidence in New Zealand’s system of national statistics, it would help if Mr Brownlee and his colleagues stopped trying to undermine public confidence in our system of national statistics. Otherwise, the next time they get into Government, they won’t be able to rely on a single statistic and will not have the trust of the public to make any decision at all. Otherwise, he’s just going to have to make up every single decision based on gut instinct alone.

Dr Jian Yang: Do I have more questions?

SPEAKER: Oh, go for it. Everyone thinks we’re making a lot of progress here!

Dr Jian Yang: If the data on who is Māori is sub-optimal, will he consider simply asking his ministerial colleague Willie Jackson to tell us all who is and isn’t a real Māori?

Hon JAMES SHAW: I think we’re in dangerous territory there. Māori ethnicity and Māori descent is more accurate in this population file than it has ever been before. The gap is in iwi affiliation data. In other words, when somebody in our administrative data has identified as Māori, either by ethnicity or by descent, the next question that we need to ask is “And which iwi do you affiliate to?” And Statistics New Zealand are now working with both iwi and other Government agencies to ensure that we start to collect that data to make sure that in future, we’ve got a more accurate file. As I said in response to questions yesterday and before, Government agencies have, in fact, never been terribly good at gathering iwi affiliation data. The fact that there is a weakness in our national data set does indicate that we’ve got more work to do there. But when it comes to Māori ethnicity and descent, this population file is more accurate than it has ever been before.

Dr Jian Yang: Can I have one more?

SPEAKER: Oh, at least!

Dr Jian Yang: Is the Minister concerned that Census 2018 will not be able to accurately report the religious affiliation of New Zealanders?

Hon JAMES SHAW: Sorry, I couldn’t hear part of his question over his colleagues’ comments.

Dr Jian Yang: Is the Minister concerned that Census 2018 will not be able to accurately report the religious affiliation of New Zealanders?

Hon JAMES SHAW: I’d have to take advice on that specific point from Statistics New Zealand. As the Government Statistician said on Monday, there are some gaps in the data below the level of the general population count, and they will be publishing those later on in the year. So I don’t have a list of all of the areas. Religion will be one of the ones I can ask about on his behalf.

Dr Jian Yang: I seek leave to table a report titled Census 2018: A Multifold Debacle to assist the Minister in understanding the census.

SPEAKER: Whose report is it?

Dr Jian Yang: My report.

SPEAKER: Your report? I’m going to give the member a chance to apologise for that. If he was a more senior member, he would be leaving the House. That is a gross breach of the procedures of the House.

Dr Jian Yang: I apologise.

Hon James Shaw: I raise a point of order, Mr Speaker.

SPEAKER: I’m putting the member on warning that it better be a proper point of order.

Hon James Shaw: Well, I mean, I actually would be very curious to read the member’s report. I would ask leave of the House that it is actually tabled so that we can read it.

SPEAKER: Well, the member can’t.

Offices of Parliament

Address to Governor-General

Hon IAIN LEES-GALLOWAY (Deputy Leader of the House): I move, That a respectful Address be presented to Her Excellency the Governor-General commending to Her Excellency the alterations to the appropriations and capital for the 2018/19 financial year in respect of Vote Audit and Vote Ombudsmen, and the estimates of expenses and capital injection for the 2019/20 financial year in respect of Vote Audit, Vote Ombudsmen, and Vote Parliamentary Commissioner for the Environment.

The passing of this motion is an annual event that is part of the Budget process. It is important that the three Officers of Parliament—namely the Auditor-General, the Ombudsman, and the Parliamentary Commissioner for the Environment—are independent of the executive. For this reason, the estimates for the Offices of Parliament stand apart from the process that applies to all other votes and are put forward by the House by means of the Address to the Governor-General. The recommendations contained in the Address are determined by the Officers of Parliament Committee, chaired by the Speaker, and the committee has done its work thoroughly and fairly. The committee heard evidence from all three Officers of Parliament and received advice from Treasury. Its findings are outlined in its reports on the draft budgets and alterations to the 2018/19 appropriations for the three offices.

For a decade, the Offices of Parliament have managed increasing workloads without a matching increase in funding. The report notes that there has been no significant increase in resources in Vote Audit since the 2009 Budget. These proposals begin to redress the situation. The proposed appropriations for the Office of the Ombudsman include provision for the employment of an additional 35 investigators over three years to reflect the expanding role of the ombudsmen into areas such as Department of Corrections court facilities and privately run aged care facilities. The Auditor-General has sought funding for three initiatives that among other things will improve the coverage and timeliness of performance audits, and enable it to provide new good practice guidance.

The Offices of Parliament have all established themselves as vital contributors to New Zealand’s parliamentary democracy, supporting the House in keeping the executive to account. The appropriations proposed in the Address to the Governor-General will allow them to maintain and develop their roles in order to meet new challenges. I commend the motion to the House.

BARBARA KURIGER (Senior Whip—National): It’s a pleasure to agree to the motion, on behalf of the National caucus. I was part of the meeting and I would comment that all three parties came in and made a very professional presentation to us. The things that really stood out for me—Minister Lees-Galloway has covered off a number of points in his speech—particularly around the Auditor-General’s presentation, was asking for the ability for better use of data to generate insight and to get ahead of some issues. I think that’s an extremely important issue in this day and age where we have the ability through electronics to collect a lot more data, and it’s much more helpful in people making their decisions. Therefore, it’s really important for the Office of the Auditor-General to be able to have an increased ability to represent that data in their own work. So that was really important to me in terms of the increase in funding there, amongst the other initiatives.

Secondly, it’s already been mentioned in the first speech, but the Ombudsman’s office does have a responsibility for 227 privately run aged-care facilities, as well as 58 court locations. We support the ability for them to hire extra investigators to help them in their work, because that’s quite a huge undertaking over and above all of the other investigations and things that the Ombudsman’s office is asked to take care of on a regular basis in their general line of business.

One thing I would comment on is that when we looked at the Parliamentary Commissioner for the Environment, that office has a huge amount of work and a huge amount of responsibility in the reporting that their office does. In the current environment, with all of the things that they undertake, it’s a role that is increasingly coming under pressure, and I want to commend their efforts and their ability to do the work without asking for copious more amounts of money. So it is my pleasure, on behalf of our caucus and as part of the committee, to commend this to the House.

Hon EUGENIE SAGE (Minister of Conservation): The Green Party is very pleased to support this motion. The three Offices of Parliament serve our public, our democracy, extremely well, and as Mr Iain Lees-Galloway has noted, this is a major increase in the appropriation to invest significantly in the work of the Office of the Auditor-General and also to invest in the Office of the Ombudsman.

I noticed in the report that the work that the Office of the Auditor-General is doing, they noted that performance audits, including of some quite significant organisations—some of those hadn’t occurred for five years. So some of this additional $5.5 million will be used to undertake those performance audits and also to increase the timeliness of that work from the current period of about 10 to 11 months to undertake one of these quite comprehensive audits, and reduce that to about nine months. It will be used to also develop new good practice guidance, because the most recent guidance that the office had issued was in 2012—that will improve public engagement and the understanding of the agencies—and to invest in technology, recognising that the current database for audits’ status that the office uses is at least 10 years old.

Similarly, with the Office of the Ombudsman, there’s quite a significant $6 million increase in the appropriation. One of those key roles is in relation to human rights, protecting human rights, particularly through the Ombudsman’s role in monitoring places of detention, whether that be prisons, Department of Corrections vans, or private, locked aged-care facilities. The Ombudsman’s responsibility for that work was initiated in 2018, so it has been a significant increase, and I think 17 new investigators will be appointed in the 2019-20 year, and then another 18 in the subsequent two years. That role is really important. I noticed on the Ombudsman’s website a media release reporting on the investigation at Hawke’s Bay prison. The Ombudsman was noting that there had been significant progress as a result of that investigation in improving prisoners’ safety, but there’s more work to do in relation to improving the conditions for remand and at-risk prisoners.

Also, of course, the work of the Ombudsman’s office in relation to the operation of the Official Information Act—one of the linchpins of our democracy, one of the linchpins of good and democratic Government and ensuring that people are able to participate in decision making, have good information about what decisions Government is making, and, therefore, have respect for our democratic institutions. The role of the Ombudsman here in investigating declines by agencies and Ministers to release information and ensuring that our Government is responsive, is efficient, is effective, and is accountable is a very important one. I think this increase in resource will go a significant way to improving the capability of the office there, given that it has overcome the backlog that the Chief Ombudsman, Mr Boshier, inherited, and he is now working with a target of ensuring that 70 percent of complaints are dealt with within three months.

In terms of the Parliamentary Commissioner for the Environment, we have had three very good Parliamentary Commissioners for the Environment, and a fourth good one now in the Hon Simon Upton. It’s the smallest of the Offices of Parliament. It has the smallest budget, but it has been responsible for some very significant reports. The Department of Conservation is about to embark on the largest ever predator control operation—over nearly a million hectares of conservation land, 12 percent of the conservation estate—targeting rats and stoats and possums. It was a landmark report by the former Parliamentary Commissioner for the Environment in 2011 which evaluated the use of 1080 and found that it was an effective and really critical tool, and the former parliamentary commissioner called for greater use of that.

Recently, Mr Upton, the parliamentary commissioner, has done a very useful report on biodegradable and compostable packaging, and, again, that highlights the invaluable role that the office provides in improving our system of environmental management, providing independent advice to this Parliament, and ensuring that our environment is in a better state. So I commend the work of all three of the offices and support the appropriation motion. Thank you.

Motion agreed to, and Address adopted.

Bills

Taxation (Research and Development Tax Credits) Bill

Third Reading

Hon Dr MEGAN WOODS (Minister of Research, Science and Innovation): I move, That the Taxation (Research and Development Tax Credits) Bill be now read a third time.

This bill creates a new research and development—R & D—tax incentive for New Zealand. This is a Government that is committed to building a productive, sustainable, and inclusive economy. R & D is a critical driver of new knowledge and technological change. Research and development performed by businesses is recognised as a key indicator of innovation, which enhances businesses’ ability to be successful in changing markets.

Total spending on R & D in New Zealand has increased to $3.9 billion, or 1.37 percent of GDP in New Zealand in 2018, but New Zealand still lags behind many of our counterparts on the world stage. The Government has therefore set an ambitious target to increase R & D expenditure to 2 percent of GDP by 2027, to help ensure that New Zealand moves closer to our international counterparts. To realise this ambition requires the private sector to raise their levels of R & D expenditure alongside that of the public sector.

Across the OECD, R & D tax credits are a common mechanism for incentivising greater amounts of business R & D activity. Strong evidence from a number of studies show that tax credits are an effective way of raising levels of research and development investment by business, and that R & D investment leads to new knowledge and innovations that significantly benefit wider society.

After extensive research and consultation on a fit for purpose solution to encourage greater investment and innovation, we have designed an R & D tax incentive that will have a broad reach across our economy. Using the tax system to implement the R & D tax incentive will open up wider support to all sectors and to different business types. This incentive aims to support genuine R & D that intends to resolve scientific and technological uncertainty. Resolving scientific and technological uncertainty is what will bring the greatest benefits to the New Zealand economy, and to us as a country as a whole.

Increased levels of research and development provide for the diversification of the economy by encouraging new industries and companies, new jobs, and new ways of doing business. This incentive, administered through the tax system, will provide certainty and predictability through a rules-based system. The key features of this incentive include a credit rate of 15 percent for eligible expenditure up to $120 million and a minimum threshold expenditure of $50,000 per year. It requires the majority of eligible R & D activity to take place in New Zealand, which ensures that the benefits of the incentive are realised here. We believe, in this Government, that this strikes a balance between accessibility and ensuring that the scheme is targeting substantive R & D activities.

I want to take this opportunity to acknowledge the contribution to this bill from submitters, including industry groups who have appeared before the select committee on behalf of their members. I also want to thank the members of the Finance and Expenditure Committee for their diligent work on the bill, which has led to a number of improvements to the proposed legislation. I wish to comment on a few of the Finance and Expenditure Committee’s recommendations, which I think significantly enhance the policy intent of the bill to support businesses to increase their investment in R & D through a scheme that is accessible, transparent, and sustainable.

The bill now ensures that joint ventures undertaking R & D are eligible for the tax credit. The bill does not reduce a principal’s claim by 20 percent to account for the contractor’s profit margin; this change addresses the concern that it might incentivise businesses to conduct their R & D in-house when it would be more effective to outsource it. The bill now raises the internal software development cap for eligible expenditure from $3 million to $25 million. This addresses the issue of software as a service and better reflects the distinction between internal software service development and external software product development. It also makes it clear that internal software development undertaken for the purpose of internal administration is excluded from receiving an R & D tax credit.

The R & D tax incentive will be a significant addition to New Zealand’s research, science, and innovation ecosystem, as part of a system of wider Government support for the commercialisation of New Zealand’s excellent science and research base. This will help us to develop a more innovative, diverse, and sustainable economy. This third reading of the Taxation (Research and Development Tax Credits) Bill will bring us one step closer to achieving this Government’s vision of building a better New Zealand for all of our people. I commend this bill to the House.

Dr PARMJEET PARMAR (National): Thank you, Madam Deputy Speaker, for the opportunity. We supported this bill in the first reading, and we supported this bill in the first reading because we really wanted to work with the Government to ensure that this policy was actually a good policy. We thought that we would get that opportunity in the select committee process, but I have to say that the select committee process—I am personally, and members on this side are all, really disappointed because the select committee process was all about time management. If 45 minutes were allocated for this item on the agenda, as soon as 45 minutes finished we moved on to the next agenda. No consideration was given if members still had some questions or clarifications that they needed to have addressed. So no consideration was given; it was all about pushing the process through the select committee process. And here we are; we are debating the third reading.

Towards the end of the select committee process, we realised that, yes, we cannot support this legislation going forward. When it came to putting a minority view in there, Government members voted against that too. The line which came during that process was “Take this line out from the minority view, otherwise we are not going to include your minority view in the report back to the House.” That was because they didn’t like one line in that minority view, and that was about the number of companies that are receiving growth grants that will be able to access R & D tax credits. The line said it was only a small number of companies—we know it’s only one third that will qualify to get R & D tax credits. So they didn’t like that line; it was all about their politics, and they decided not to include the minority view—that is, our view—in that report back to the House. I have never seen this happen before. I fully understand that the committee can vote it down, but I’ve never seen this happen before. So that was a very, very disappointing process.

During the Minister’s speech, it was really interesting that the Minister didn’t mention that this bill also abolishes growth grants. She didn’t mention this because she knows that growth grants were working really well. This is all about politics, not about supporting businesses to increase their spending on research and development. Why it’s all about politics—I’m happy to explain that, because we know that in 2007 the previous Labour Government introduced this policy, the R & D tax credits policy, and when National came in, by that time, we knew that this was not a good policy. There were several holes in that policy.

So we decided to get rid of that policy and we started Callaghan Innovation. So it was National that started Callaghan Innovation, and then, through Callaghan Innovation, along with other grants, we started administering growth grants. I would say to the Minister Megan Woods and Government members that they should take a couple of minutes out of their time to read Callaghan Innovation’s annual report—not just this year’s report; last year’s report and 2016’s report. What they will find in the 2017 report—and even if it was during their annual review before the Economic Development, Science and Innovation Committee, they would have noted that—according to their 2017 report, they said that there was a 46 percent increase in R & D spending by Callaghan Innovation customers with grants from 2014 to 2016.

Then, looking at the 2018 report, it said, “14 percent growth in business expenditure on R & D in 2017”. They said, “Our grant customers account for $1.07 billion of R & D spend”—

Andrew Bayly: Billion?

Dr PARMJEET PARMAR: A billion—$1.07 billion—and if we look at the Statistics New Zealand report, it clearly says that total research and development expenditure increased 17 percent from 2014; this is the 2016 survey. That is a substantial increase. Increased R & D expenditure was largely from businesses increasing their R & D expenditure, up 29 percent from 2014. Higher education and Government spending increased 7 percent and 5 percent respectively.

So that is a very positive report, but what we see from this Government is that, instead of building on their success, instead of building on something that was really working and was established properly, they’ve decided to abolish that scheme to bring their politics in and to bring their policy from 2007 back. That’s what I mean by saying this bill is all about politics. This bill is not about supporting business spending on research and development in a real sense. We had the Business Growth Agenda—yep, in that we had our target to increase research and development spending—but this Government decided to get rid of that Business Growth Agenda that we had put in place.

It was really interesting to see that the Minister said that this bill is going to provide an increase in research and development in a sustainable manner. How do we know? We don’t know that, because no one can tell us how many companies are going to benefit from this policy. Through growth grants, we know so far around 300 companies benefited, because that was put in place only in 2014; so it is just four years that we can measure for. But, for this policy, from the start, we have seen that the Minister or the Government have not been able to tell us exactly how many companies are going to benefit through this scheme. I asked a question to the Minister on 16 August 2018, and the answer that I got from the Minister was that she said it would be around 3,000 companies. But when the final draft came, I read the report; it said it will be around 2,000. So numbers fluctuated between 1,500 to 2,000 later on, and when I asked that question again in the House, the oral answer that I got from the Minister was that she’s always said it’s between 2,000 and 3,000. When we had Callaghan Innovation’s annual review, I asked them how many companies were going to benefit from the scheme. They couldn’t give me a number. They said they had no idea how many companies were going to apply for the R & D tax credit.

So this is a policy where we have no idea how many companies are going to benefit, but here the Minister is saying it’s going to be sustainable. When the Minister doesn’t even know what the demand is going to be, how can the Minister stand up and say it’s going to be sustainable? We know there is an evaluation provision in this. It’s after five years of implementation of this legislation—actually, it’s already come into effect from 1 April. We should be mindful of that, and we’re debating the third reading of this bill here. So, in that evaluation, we don’t have a clear idea of what this policy is going to be evaluated against. If the Minister or the Government is not able to list those points, is not able to tell us what the criteria will be for that evaluation, how do we have confidence in this policy?

In this policy, there is a refundability provision for companies that do not have enough tax liable income, and that is where we, on this side, have the biggest concern, because these companies need cash early on, before they start spending on research and development. They want that assurance, because cash is really important for them, not after they have incurred that expense, and this Government has completely failed to address that issue. They have put a temporary measure in there—a refundability provision—which is going to be reviewed as part of their review, which they have already said they are going to do, which will include a policy that was put in place by the previous National Government, the R & D loss tax credit policy. And what has that done? That has created a lot of uncertainty amongst those businesses and investors of those businesses, because what businesses need is certainty from Government, and this Government has failed to do that.

So we are really disappointed that this Government has put forward a half-cooked approach, because, from the start, we can see they have been so unorganised. We knew when the draft was going to come out, but the draft didn’t come out in that month; it was delayed by a few weeks. Then we were told in a certain month that the bill would be introduced. It didn’t get introduced in that month; it got delayed by a few weeks, and now the policy has already come into effect from 1 April this year, and today is 2 May and we are debating the third reading of this bill. That is how disorganised they have been towards this policy.

We feel that the Government should have taken time to develop this policy properly, as officials also said that they didn’t get enough time to develop this policy properly. The Government should have listened to them, should have allowed enough time so that this policy was developed properly so that we could have worked with the Government to support something that is needed to incentivise research and development. We on this side fully understand that we need to support research and development, and that is why we started Callaghan Innovation, and that is why we had other things like, as I mentioned, the Business Growth Agenda and other targets that we had set to improve business spending on research and development. We understand that research and development is important to support our economy. So we are really disappointed, and this side is opposing this bill. Thank you, Madam Deputy Speaker.

Hon STUART NASH (Minister of Revenue): Thank you very much, Madam Deputy Speaker. I am so confused about what that member, Parmjeet Parmar, was talking about. I think that member’s confused. First of all, she raged that this is politics—“This is the wrong thing to do. This is politics.”—and then she said we should have taken more time to develop it because the Opposition would have supported it. Then she said her Government got rid of it. Well, I’ll tell you what happened: the last Labour Government did bring this in and the National Government did get rid of it, against Treasury advice.

Treasury said you should keep it, but the Government got rid of it. And what happened? What happened to New Zealand’s R & D spend? We have one of the lowest R & D spends in the OECD. It is why this Government, in research and development, under Dr Megan Woods, has said we need to do something different. We need to do it differently if we want to increase our R & D and be as good as we possibly can be.

What we’ve also said is we’re not going to pick winners. It’s not about picking winners. What we want is we want companies to take control of their own future, and we’re going to give them the ability to do this. I think the innovative way that Megan Woods has approached this is absolutely fantastic, and it is going to make a difference.

When the member talked about 2,000 or 3,000 companies—heaven forbid! Imagine 2,000 or 3,000 companies undertaking research and development. I would have thought that would be a really good thing. A billion dollars we’re putting into this—a billion dollars. This is not about politics; this is about driving productivity, driving research and development, and growing our economy in a way that the previous Government never allowed the economy to grow. I’m very proud of this.

This bill provides the kind of support that businesses have been asking for—that businesses have been asking for. We want businesses to feel supported, to take more risks, and to think a little bit more radically, and this scheme will be a valuable one for New Zealand and for our economy. This is less about the Government picking winners and more about enabling companies to take control of their own destinies. There’s no doubt about this.

The R & D tax credit scheme this bill introduces will be a real asset for New Zealand as long as—and I reiterate this: as long as—the scheme remains sustainable. That’s why we are building in safeguards. We are ensuring there is rigour to the rules to protect the benefits that this regime will bring about, to ensure that the scheme can continue to provide support to progressive thinking and help build a dynamic economy.

We are ever mindful of the need—

DEPUTY SPEAKER: I do hope the Minister isn’t reading his speech.

Hon STUART NASH: Not at all. I’ve got notes here that I’m referring to, but I’m not reading it in any way, shape, or form.

DEPUTY SPEAKER: That’s good.

Hon Member: He can’t read; he hasn’t got his glasses on.

Hon STUART NASH: That’s the problem—I’m going blind. Ha, ha!

We are mindful of the need for fiscal prudence. As the Minister of Revenue, I think it is important that I make some key points so they’re understood—hence the reason why I have a few notes here that will just prompt me around the tax implications of this piece of legislation.

For the benefit of members, I will give a quick rundown of the safeguards and the integrity measures of the bill. Firstly, the bill proposes that claimants must satisfy certain criteria to be eligible for these R & D tax credits. It’s a fundamental requirement, but the bill goes deeper. It also contains criteria that we provide support for R & D—

DEPUTY SPEAKER: It looks very much like the member is reading those notes. I hope the member is being honest—all members in this House are honest, and the rules are very clear—but I’ve asked the member not to read his speech.

Hon STUART NASH: OK. Well, what I will say about this is that inland revenue—are you requesting to me, Madam Deputy Speaker, that I look at you the whole time I speak?

DEPUTY SPEAKER: No. Not at all.

Hon STUART NASH: Can I look down, or—

Kieran McAnulty: Give it here. I’ll hold the notes up!

Hon STUART NASH: I can’t read these on the page!

All I want to say is that this is a very robust piece of legislation. It’s a very robust scheme. We’ve had officials from inland revenue and the Ministry of Business, Innovation and Employment (MBIE) travel to jurisdictions that have an R & D regime in place and learn what has worked but also learn from their mistakes. They’ve travelled to the UK. They’ve been to Scandinavia. We’ve looked at the Israeli model. They’ve met with Australian tax officials, and they’ve asked them what we should do. The Australians have given us the benefit of their insight and their wisdom and said, “If we were setting this scheme up again, this is exactly what we would do.” We’ve taken the British model, and what we’ve said is “You know what we’re going to do?”—I’m going to put those notes away; blank pages—“What we’re going to do is we’re going to review the scheme after five years. We’re going to review the scheme after five years, just to make sure it works.”

The other thing we’re going to do to ensure that companies don’t embark on what they believe is an R & D journey, get to the end of it, and then be told “Goodness me! That’s just business as usual.” is have a pre-approval scheme, which I think is really valuable. So companies can go to the officials and say, “This is what we are proposing. This is what we want to do.” And officials have given assurance that in very quick time they will actually approve the spend or the scheme that is part of the businesses R & D plan so businesses can progress with confidence. It is the right thing to do.

The other thing we’ve said is that the majority of this R & D must be undertaken in New Zealand. There is no point in having an R & D tax scheme for the vast majority of it to occur overseas. So I think we’re allowing 10 percent to occur overseas, but the vast majority must take place in this country, which is the right thing to do. There’s no doubt about that.

There are a lot of safeguards in this bill. We’ve got the best inland revenue officials working really closely on this. They’ve developed a scheme, but I do want to come back to that important point: because research and development is dynamic, because it is changing, because the definitions can change, and because there’s a whole lot of stuff that is going on—it’s a bit of a cliché; you don’t know what will happen tomorrow today—we have said we are going to review this in five years, just to make sure it is meeting the objectives of the Government and is actually increasing the R & D spend in this country.

The key thing for me—and the reason why I really like the scheme—is it is not about the Government picking winners. In the past, I think we had a little bit too much of that, where, if a company has been very good at filling in forms and they’ve engaged in a way which has been meaningful—and I will acknowledge Callaghan Innovation has done a great job, a very good job—

Andrew Bayly: Well, keep it.

Hon STUART NASH: We are. Callaghan Innovation are reinventing themselves, and they were going to work with IRD to make sure this works. But instead of the Government saying “You’re worthy.”, what we’re actually doing is letting businesses take control of their own destiny—letting them be innovative and say, “Hey, you know, we’ve got a really good idea. We think we can make this happen.” All they have to do to be eligible for the R & D tax credit is meet the criteria. There is no list ticking, there is no panel it has to go through, and there’s no assessment around whether this fits or it doesn’t etc.; it is just about meeting a key set of criteria, which the business will understand before they even put their application in or before they even seek approval.

So I think this is a great way forward. We did need to do things differently, because our R & D spend in this country is one of the lowest in the OECD. I’m very proud of the work that IRD has done in conjunction with MBIE to come up with a scheme that I think is really going to drive growth and productivity and make a difference in this country. Thank you very much.

ANDREW BAYLY (National—Hunua): Well, thank you, Madam Deputy Speaker. Nice to see the member Stuart Nash just talking a moment ago, speaking freely without having to refer to other matter to help him. A comment he made which I found just somewhat troubling—I think I heard him say this, and I just wondered whether it’s true—was that, under National, we didn’t grow the economy—

Kieran McAnulty: That’s not what he said. He didn’t say that.

ANDREW BAYLY: I thought he did. Well, maybe that was the implication. Or maybe the implication is that Labour - New Zealand First is growing the economy more quickly. I don’t think he actually meant that, but what I’d say to that—[Interruption] What I’d say to that member is that, under National, for the last three years, this economy grew at 3.3 percent on average across the three years. Since this Labour - New Zealand First Government’s been in power, it is now growing at 2.3 percent, which is, basically, a third of what was achieved under our Government. The implication for that is a $3 billion decrease in GDP and a billion wiped off the value of the revenue to the Government’s accounts, which would’ve paid for this in one year if they’d just been able to manage a proper economy.

Now, I just want to return back to the bill.

DEPUTY SPEAKER: That would be nice.

ANDREW BAYLY: National is absolutely committed to seeing creative businesses grow, and we’ve had so many of these dynamic companies come to the market, come and produce new products, new services, whether IT or whatever, and they are so important to the fabric of the New Zealand economy. I think that when you look around at all the new trends that are going on around robotics, IT, all that smart technology around it, it is just so exciting.

I think the one thing that we did have going with the Callaghan process was that we were in a process where we had professionals involved in managing R & D. We were working with those companies that we thought had the best opportunity of growing the New Zealand economy and making sure that they had the support around them to achieve the outcomes that we want. What has happened with those companies is that they’ve actually driven R & D, and there have been some remarkable experiences. In fact, I remember the Prime Minister going to the Methven factory, a New Zealand company, opening one of the new products that they had developed, which, of course, had come around from the Callaghan institute funding. I say this is very important.

The thing about where we’re going with this proposal—whilst we absolutely support any efforts to grow the R & D pie in New Zealand, the issue about this is actually twofold. The first one is how do you prioritise the expenditure—how do you prioritise the expenditure—because it’s fine saying you’ve got a billion-dollar fund, but who are the companies that are going to get access to it? Is it just on a “first come, first served” basis? If you are still working on your proposal and you don’t get there before the billion is spent, then you’re not going to get the money. So that gives rise to one of two things. Either you miss out, which is bad for “New Zealand Inc.” because we put our money into those companies that are not delivering the highest value for New Zealand, or their budget for this is going to blow out, as it did in Australia. When they put in a similar R & D scheme, they costed it at $1.8 billion. By the time the scheme had finished, it was $3 billion. This is something that we’ve been asking the Minister about repeatedly. How is she going to make sure that we get the best value for money?

The other issue with this is around pre-profit companies, and this is where it’s just silent—just silent. That is just as important in terms of a focus for the New Zealand Government, in terms of growing those newer companies who are in pre-profit stage, because they’re probably just as dynamic as the bigger ones. At least we put in things like black hole expenditure deductions and cash out, where you could offset the tax that you would’ve saved and get cash ability to fund those pre-profit companies. We actually put in place some real, tangible benefits for those types of companies. This bill is silent on it, and this is the thing about this bill that really worries me, because I think it’s actually a bit of a feel-good bill. This is good to be able to say, “Tick the box. We put a billion dollars into R & D—doesn’t really matter who we give it to, as long as we get it out and we can say we’ve done it.” If you’re going to put in good policy, make sure you put in good policy. It’s interesting, even using the facts from the advisers—they said 85 percent of this $1 billion fund is going to end up in the hands of 330 to 350 businesses. That’s not too distant a future from what Callaghan is actually achieving now.

So I think there are some real concerns with it. Of course we support R & D—of course we do—but the question is: is this the right mechanism? I think there are some serious doubts about it.

MARK PATTERSON (NZ First): It’s an absolute pleasure to get up on behalf of New Zealand First in support of this R & D tax policy. This is a key policy plank in the coalition agreement. It has been a longstanding New Zealand First policy to drive our R & D to GDP ratio to 2 percent. Why is this important? It’s because there’s almost an exact correlation in the OECD between investment in R & D and GDP. Those countries that are at the top of that scale have all got one thing in common: they invest much, much more in R & D than we do. Our aims are high at 2 percent, but if you look at the average in the OECD, it’s only 2.5 percent. If you look at economies like Denmark, they’re up at about 4 percent. So we’ve got a way to go, but we are making a start, and we’ve already started, obviously, with this kicking in already.

We need to grow the pie. That’s the key here. We’re going to be here in a few weeks listening to the Budget, and there is so much call on the Government’s resources, but that can only be done if we are generating income through taxation and through businesses growing and investing. That’s why we need to back our businesses to increase their R & D spend. We talk about it all the time: we have to transform to value from volume. I keep going back to those logs that sit on the wharf outside as I look out my office in Bowen House. That is a 20th century business model that will not support a 21st century expectation of the services and the economy that we would want to have in New Zealand. We need to diversify our economy.

I go back to an example, actually. Mr McAnulty and I had the privilege of going on a trip to Taiwan. We were taken out to a business park that, through one of these schemes, was incentivised. It was 500 hectares. The income generated from the businesses in that park was US$50 billion. Now, I’m proud of our primary industries, and we’re seeing a great increase at the moment in our export revenues—up 11 percent, I believe, in the last 12 months—but we, through all that, through seven million - odd hectares, managed to generate about NZ$46 billion. So, in 500 hectares, they were generating more than what we were generating off seven and a half million. So it shows you how important innovation is in the transition to a 21st century economy.

We know we’re at about 1.37 percent. That has grown under our watch—up by $750 million already, and, encouragingly, business is leading the way in that. When you go back to those OECD averages, actually, Government expenditure on R & D is not too far away from the average; where it’s been lagging is business investment. So we do need to put some incentives in the way, and this piece of legislation does just that.

A little bit of history: of course, we did have this, as Mr Nash pointed out in his contribution. The last Labour Government brought this in just before they left office, and it was taken out by the National Party. Now, I’m a little perplexed by this—this is the National Party. I’m a recovering Nat, so I kind of know a little bit about how they work. The only real philosophy they’ve got is tax cuts. We know that they’ll have a range of policies at the next election, but the only one that anyone will show any interest in is the size of the tax cut they are going to offer the electorate. It’s all they really have. So imagine my surprise when I’m hearing from the other side of the Chamber that this, which is essentially a tax cut for business, is being railed against by the National Party. The National Party are in this House tonight railing against a tax cut. I feel like when I was a child and I learnt that Santa wasn’t real.

So what they’re arguing, of course, on that side, is that we should have, as they did in the Callaghan initiative—which is a successful initiative, and we do support it and we will carry on, because we are a Government that can walk and chew gum. But they are saying that we need to have a targeted—where the Government and bureaucracy decide which businesses get the tax incentives or the Government support, and which don’t. That is socialism. I am hearing socialism from the National Party tonight. I’m sitting here in a Labour - New Zealand First coalition talking about a tax cut and tax incentive for business, and I’m proud to be here doing that, and I think the National Party needs to reassess their philosophy because their only one real principle has been flushed down the toilet tonight.

This, of course, is a wider strategy and a wider package that we’re bringing. Of course, the Provincial Growth Fund that we’re so proud of in New Zealand First and on this side of the House—that, too, is investing. I had the pleasure the other day to stand—

DEPUTY SPEAKER: Does that have anything to do with the bill?

MARK PATTERSON: Yes, it does. In terms of R & D, Madam Deputy Speaker—

DEPUTY SPEAKER: Good. Bring it in.

MARK PATTERSON: —and the ways in which this R & D tax credit complements the other initiatives that we’re making, like the Provincial Growth Fund and the investment we made the other day in the Cawthron Institute in Nelson—algae development—of $6 million. It was absolutely fascinating to go through that facility and look at what they’re doing. I’m under secrecy as to what the value of that stuff was, but we are talking eye-watering amounts per gram for the output that is coming out of that institute, compared to the tonnes and tonnes of unprocessed logs that we’re relying on to run our economy at the moment, and the frozen legs of lamb—still not a business model that far removed from when the Dunedin sailed out of Port Chalmers in 1887.

So this is a transitional move for our economy. These R & D tax credits will incentivise R & D spending by our businesses. We have had a number eight wire mentality in this country. We are innovative, and we are going to back Kiwi businesses to make their own decisions about R & D. We’re not going to make them fill out forms and go through a bureaucracy like the National Party wanted; we are going to back them. They know what’s best, they know where the opportunities are, and we are going to incentivise them to do it.

So I will commend Minister Woods on bringing this through. I will commend the people involved in the coalition negotiations that put this at such a high priority, because we know how important it is to get R & D spending up if we are going to rise up those OECD rankings and have an economy that’s able to deliver the services that we need it to do. I would commend the Finance and Expenditure Committee. I do understand that they did shape the bill. There were some issues—it can have some complexity—and they did help with that, and the officials, obviously, helped in that as well. So I take absolute pleasure—this is a key fundamental building block in building a 21st century economy for New Zealand, and New Zealand First absolutely supports this measure and commends it to the House. Thank you.

Hon PAUL GOLDSMITH (National): Now, it was interesting that the previous speaker, Mark Patterson, talked about the fact that it’s important to have growth in the economy, because what we’ve heard most about in just about every speech and every announcement of this Government has been about spending money—the Government spending money on all manner of things and spreading wealth across the community—and there’s been very little spoken of in this Government about creating wealth and growing the economy. There’s been very little in the way of a clear economic development strategy. I do remember asking the economic development Minister, David Parker, in this House what the economic development strategy was, and he did nominate three things: this, the R & D tax credit; secondly, the Provincial Growth Fund, which I would argue is reasonably discredited in many ways in the way that it’s been handled by Shane Jones; and the third one was changing the tax settings.

Of course, subsequently, that has been dropped, so when we look at the Government’s economic development strategy, there’s only two legs left to it, with one being the Provincial Growth Fund. We’ve been having a bit of a debate about that with Shane Jones as to whether it’s generated 54 jobs so far and 118 bureaucrats or not, and he has not come up with any robust figures to challenge that, and so it has been a very thin output indeed so far for the money spent. I’m fascinated with the idea of how you can spend half a billion dollars promoting the planting of trees, about 60 percent of which are supposed to be native trees, and how you convert land which is currently producing sheep and beef and employing people and sustaining an industry and converting that to native forestry—how that’s generating wealth or jobs. It’s destroying wealth and jobs.

But, anyway, that’s one plank, and the other plank that is left in terms of their economic development strategy is this R & D tax policy. So it’s a fairly thin economic growth strategy, because, essentially, what it’s doing is shifting the focus away from the grants-based policy that we had, whereby a certain amount of money was set aside in order for grants to be handed out through Callaghan Innovation. No particular way of doing this is perfect, because whichever way you do it has benefits and negatives.

The problem with the R & D tax credit way of doing it, of course, is that you’ve got no idea how much it’s going to cost. It’s brilliant for accountants and, rest assured, the accountants are slathering at the prospect of this bill because they will get very fat commissions working with big companies in order to make sure that everything fits the description of R & D in order to get the tax relief. So it’s great for accountants, but it’s hopeless for small start-up businesses that don’t have big incomes and justifying taxes for that in order for that to be built. If you’re investing in a company that is not going to be profitable for 10 years, for example—which is quite common; it may be 10 years before you have a profit and pay any tax—then an R & D tax credit is not much use to you. So the cash-flow support that you’d get from the grants-based system is more useful.

Now, there are negatives for a grants-based system as well. So you can have an argument for ever about which way of doing it is better, and it would be interesting. There is sort of an implication there from previous speakers that they’re going to spend the billions of dollars on the R & D tax credit and continue to do all the grants as well. I’d be very surprised if that’s the case, but we may learn that that’s the case, and if they’re doing that, well, I’d be very interested to see that. But what we are seeing is a change between those two ways of doing it.

So that’s all right. You can have an argument about it. We don’t support it. We think the downsides are more substantial in the sense that it is great for accountants and not so good for start-up companies, but the broader point I’d make is that that is just a change in the way that we go about supporting R & D in this country and the mechanism with which we deliver it. But that on its own is about the only thing that this Government is talking about in terms of economic development, and that, ultimately, is part of the reason why we’ve had business confidence at all-time lows. The growth in GDP has dropped from nearly 4 percent to nearly 2 percent—

ASSISTANT SPEAKER (Poto Williams): Order! Order! This is a third reading debate and it is really about what the committee of the whole House has returned to the House.

Hon PAUL GOLDSMITH: Thank you very much, Madam Assistant Speaker. Well, on that basis, I will finish my speech.

Dr DUNCAN WEBB (Labour—Christchurch Central): This is one of the best pieces of legislation that has been reported back to the House from committee in a long time, and the reason for that is because it shifts entirely the focus. We’ve got to recognise that this is a key piece of driving future growth in a sustainable way, because, as Mr Patterson noted quite rightly, the old model doesn’t work. We need sustainable growth, and also growth that is based on innovation, and innovation which doesn’t give us those negative externalities such as the emissions and climate change impacts.

The great thing about this is that the people who are best placed to make investment decisions make them. Goodness gracious! It almost sounds like a National Party line—that is, the people who are going to be spending their own money and putting their own time and effort into these enterprises. It’s not for the Government, and it’s been well shown that the Government can’t pick winners. It can’t predict the future.

Here, what we have is the fact that anyone can apply for these tax credits, and one of the great things is the lower threshold. At a mere $50,000 of research investment, anyone can apply for these, but it goes all the way up to $120 million, and whilst it may be that projections show that, say, 300 companies will be the main recipients in terms of value, there will be huge amounts of smaller companies who might be investing $50,000, $100,000, or $150,000 in research and having great start-up innovations. They are not having to go through some onerous application process for a Callaghan Innovation grant, but they are simply having to qualify—qualify by showing that it’s genuine research and that it’s solving a real problem.

The rate itself, at 15 percent—and this is another change in the legislation—is generous. It is a real and substantial reduction in the effective cost of research, and the generosity just keeps going. It was good to sit on the Finance and Expenditure Committee and work through the fact that there are a whole lot of companies out there in enterprises of all kinds that we need to encourage, and not be picky, if you like. So, with multinational subsidiaries who are operating within New Zealand, the fact may be that the ultimate shareholders are overseas, but they are doing research in New Zealand. That’s good for New Zealand. That is enhancing our economy, and so they will qualify.

Joint ventures—now, not necessarily a model that’s used universally or even a lot in this area, but sometimes when you need equity and you’ve got real skills, a joint venture is the perfect corporate vehicle for these kinds of enterprises; so they’re included as well.

It was really useful to work through the software definition, including internal software—software that is innovative but might be, indeed, used internally. So there’s a $25 million cap on that. That’s a huge amount of money, and I think a real recognition that software, whilst it’s going to be tricky pragmatically to determine exactly where the line is drawn between innovation and business as usual, is, nevertheless, a really important part of innovation.

But, most importantly, this is fair. It’s not a bureaucrat deciding who gets a grant and who doesn’t—anyone can qualify. This excludes no one. Anyone who thinks they’ve got a good idea and is willing to put their own money and their own time up can get this tax credit and benefit from it. So we are playing catch up here. We need to absolutely catch up with the rest of the OECD. It’s true—one of the earlier speakers from the other side said that there has been an improvement. But it’s not enough—it’s not fast enough. We’re currently at 1.37 percent of GDP. Even if we get to 2 percent, that’s still below the OECD average, but it will be a vast improvement.

So that’s what we’re aiming for. This is about creating a vibrant, innovative, sustainable economy. This is just another building block in the fantastic economy that this Government is building for New Zealand. Thank you.

JONATHAN YOUNG (National—New Plymouth): Look, we support research and development, without any shadow of a doubt, and because of that, we were prepared to put our support behind this bill. However, we have seen considerable lags. I think one of the areas that I want to highlight here in this third reading speech is the lack of certainty around the complexity of the pre-profit situation that many true R & D companies face. We have an example in my electorate of New Plymouth: a company that actually has received funding in the past from Callaghan Innovation and also has received funding from the United States Department of Energy—such was the quality of their research—but they are a company that, essentially in the development of their product, which is a wave energy device, have invested considerably of their finance, and an R & D tax credit is not going to be of great assistance to them. They actually need a grant format.

I raise this issue because we know that this Government has said that we are facing a transition, in terms of the energy mix in New Zealand, and here is a company—that, even with the former Government, received some support through Callaghan Innovation—that is at a critical stage. The Azura wave device by EHL, based in New Zealand—Egmont Hydraulics Ltd—has received support from overseas, support from this Government, yet in a tax credit regime will find it very difficult to continue. What they can do, which I think would be tragic, is that they can sell up equity in order to raise the cash flow needed to take it to the next step, but what happens when they do that is they lose control of their intellectual property. They lose control of the opportunity for Taranaki industry and engineering, and the know-how that’s in New Zealand, to actually develop this technology and this opportunity that could be marketed worldwide.

If we are truly in a transition where we want to ensure that the technology and the smart people behind it can progress into new energies and new innovation, then we must have an R & D regime that will support that. For example, if a company spends $50,000 on R & D and can qualify for a 15 percent rebate, that’s $7,500. We need substantially more funding available that’s going to bring that real sea change, that’s going to bring the real ability to do some strong innovation in this country.

I also want to, in my closing remarks, just say something in terms of that 1.35 percent to 2 percent increase in R & D spending that the Opposition speak about. Back in 2016, recorded by Business New Zealand, the expenditure in innovation grew from around about—the percentage that existed there, over that period of time, the increase in those two years was around about 17 percent. So to say that we have inadequate funding or an inadequate growth for investment in R & D is not substantiated by the record. Look, we support R & D investment if we can get more money into our industries. The concern has been in the past—and I know the bill seeks to address this—that companies may shift their designation of expenditure to R & D in order to qualify, and there needs to be, obviously, a huge amount of investment to monitor this, which, essentially, becomes money that becomes lost to the system.

Look, in closing, can I just say that I was disappointed that the minority view was denied by the committee as well. I think that that is really not in the good faith in which our select committees operate. As I chair my select committee, we have never once ever denied a minority view, because we believe that this Parliament needs to operate where all views are heard. Can I say that all that indicates is that the Government was very sensitive about this issue and didn’t want the public to hear what the Opposition had to say.

Thank you very much for the opportunity to speak on the third reading of this bill. Some elements we obviously support, but we are greatly disappointed that this is not going to take the country forward in the way that we believe it should.

ASSISTANT SPEAKER (Poto Williams): I understand this is a split-call. Michael Wood—five minutes.

MICHAEL WOOD (Labour—Mt Roskill): I’m very pleased to be able to take a quick call on the Taxation (Research and Development Tax Credits) Bill. It’s a bill I feel very strongly and very passionately about. One of the great challenges that New Zealand faces is that, over the last 40 years, our relative economic performance in respect of productivity and the living standards that can therefore be supported has continued to decline against OECD partners, against countries with whom we compare ourselves. That has affected our ability to deliver the living standards and all of the good things that we want for our people.

This is one of the areas that make a difference. We have become an economy that is overly reliant on lower-value commodities and the service sector. Now, as important as those sectors are, we need to be developing those sectors of the economy which are higher value, higher wage, and drive the higher export receipts that bring wealth into our country. We absolutely know, from all of the international evidence, that one of the strongest things that we can do to be bridging that gap is to increase our spending on R & D. This is the kind of far-sighted economic policy that we have been lacking for so long.

This bill is not a silver bullet, but it is an important piece of the puzzle: 30 out of 35 OECD countries have a research and development tax credit of this kind because they recognise the value of embedding within our systems the value of research and development. Tax credits of this kind are, by their nature, less haphazard and less subjective than the grants processes that we have at the moment. It, effectively, means that if you are a business who is investing in bona fide R & D, which has huge spillover economic benefits, then you will be eligible. There’s no favouritism. There’s no subjectivity. There’s no picking the fashionable sectors of the day in terms of what will be funded. If you meet the criteria, then your R & D expenditure will be recognised and a tax credit will be within your reach as a business. So it’s a very good measure that will help to lift our private sector R & D spend up to that 2 percent figure that we are aiming for.

There was a good select committee process that considered this bill, which made quite a large number of changes—most of which were canvassed at the second reading and committee stage hearings of this bill—but I think, basically, we’ve been able to make a good bill better than it was. It’s one that I do strongly support.

I do need to address some of the comments made by my colleague Jonathan Young in his previous speech. It is correct that there is no minority view from the National Opposition that came from select committee to this House at the committee stage. I want to be very clear about this as the chair of the select committee: the Finance and Expenditure Committee has a very strong record of collegial relationships across the table of minority views being able to come through that express the views of the Opposition when bills come back to this House. In this particular case, there was an attempt in that minority view to put words in the mouths of officials, and that is what members on this side viewed to be unacceptable and in bad faith. Members on this side attempted to resolve that situation by making some simple suggestions to resolve that problem.

I believe that in this Chamber and in this House, when we are debating legislation, it is absolutely proper for members to disagree and for members to put forward different views. That is how our democracy works, but there has to be a degree of fairness in terms of the way that we treat the officials who, in an impartial and fair way, advise us as we attempt to create good legislation. So, in my view, that was an act of bad faith, and, in fact, members of the National Party tried to assist their colleague in this regard, and that particular colleague did not see an intelligent and appropriate way through that. So it was regrettable that that happened, but I do note that that person was not a permanent member of the Finance and Expenditure Committee and was not perhaps familiar with the ways in which we do try to work together to resolve these matters.

But coming back to the core issue: this is a good bill. It will help to drive a more productive economy that can drive the living standards that we want in New Zealand. It is based on the international evidence that lifting R & D through a tax credit system can help you to do that. It has been worked through well by the select committee. On the issue of refundability, which has been raised in some of the speeches previously, these are for businesses who are in the pre-profit stage and, therefore, don’t have a profit against which to claim a tax credit. There is a limited refundability provision of up to $255,000 for the first year that is specifically designed to be supporting those smaller start-ups who might be in pre-profit. A lot of further work is going on into developing an enduring scheme to deal with that issue, and I’m quite confident that that will be sorted out by next year. I commend this bill to the House, and I’ll be very happy to see its passage later on today. Thank you, Madam Assistant Speaker.

MELISSA LEE (National): Thank you, Madam Assistant Speaker. It’s a great opportunity for me to actually stand to speak on this, the Taxation (Research and Development Tax Credits) Bill. I will start by addressing the concerns that the previous member who just took his seat, Michael Wood, raised in terms of the minority view, and, I guess, to actually say I wasn’t part of the Finance and Expenditure Committee—

Kiritapu Allan: Ask your colleague right behind you—Ian McKelvie.

ASSISTANT SPEAKER (Poto Williams): Order! That is enough. Do not bring me into the debate.

MELISSA LEE: —and I’m not a permanent member. Having said that, I have actually been in this House longer than the member who just took his seat. Some advice: in fact, if there are minority views—

Kiritapu Allan: Tell that to your—

ASSISTANT SPEAKER (Poto Williams): Order!

MELISSA LEE: —and it comes from the National Party or the Green Party or the New Zealand First Party—let’s say—or the Labour Party, it is the responsibility of that party and they are responsible. It is not up to—

Kiritapu Allan: Absolutely, and say that to the colleague of your own team.

ASSISTANT SPEAKER (Poto Williams): Order! Can I just ask the member to resume her seat. Ms Allan, I’ve asked you to come to order three times now. As Government whip, I expect a much, much higher standard from you.

Kiritapu Allan: I raise a point of order, Madam Speaker.

ASSISTANT SPEAKER (Poto Williams): This must be a point of order, not just an observation.

Kiritapu Allan: In respect of the matters that have been discussed in the House this afternoon: as a member sitting on this side of the House, to hear matters that have been dealt with in select committee rehashed and reinterpreted in a way that undermines the integrity of those processes—

ASSISTANT SPEAKER (Poto Williams): Order! You will resume your seat. You’re calling into order the integrity of the select committee process. I will not allow that—[Kiritapu Allan stands] No—I will not allow that to happen. This is a third reading debate. It is the debate on how the bill has been returned to the House after the committee of the whole House. Now, there was discussion about this at that process. It has been the subject of previous debate calls within this third reading, which have not been ruled out of order in terms of being able to be discussed. I will permit the member to continue her contribution.

MELISSA LEE: Thank you, Madam Assistant Speaker. As I was saying, for someone who has actually been part of select committees, and having actually been a chair of one, I think the opinion of another party who happened to be in Opposition and their right to write a minority view is something that should be respected by the Government members and not tried to be altered. The responsibility of whether that report is correct or has inaccuracies is the responsibility of that party or the person who is actually writing the report; it is not the responsibility of the Government members to say whether it is right or wrong.

Having said that, I move on to the actual bill. Talking about the R & D tax credit, I think everyone in this House agrees that the R & D tax credit has a purpose and it is actually a good thing and it can be very supportive for businesses who are trying to grow their business, and I think growing business and growing the economy is very important. But there is just something that I heard that an Australia-based academic has said, and I’d like to actually quote that for you. His name is Professor Göran Roos. He’s an Australia-based Swedish academic, and he says, “None of the top performing R&D countries in the world have R&D tax credits.” And he goes on to say—and I quote—“Most companies actually see the way it works and look at it as a free money. [Then] they reclassify overheads and other things to call it R&D and then they get some free money. It is very common practice. What happens when they do [this]…, of course they report more R&D [but not] do more R&D.”

I am quite concerned about this Government and this particular bill, because, for example, for start-ups, for much smaller companies—and the New Zealand economy is actually made up of a lot of small companies who are hoping to actually grow their business—when they restrict the R & D below $50,000, it could be a problem.

I’ll give you a reason why. When I was running a television production company, I could not afford the big production cost of things like dolly tracks, which big budget movies would use, so instead I mounted a camera on top of a skateboard to emulate the pictures of a big dolly track. Another thing I needed to create was a sort of a desert scene. I couldn’t afford a big wind fan to create this wind to move the sand around, so I used a much smaller scale—I put sand on top of glass and used a hairdryer. So the whole number eight wire mentality in New Zealand actually helps create new things. Perhaps I could have used that less than $50,000 budget help that we could have possibly got to create a new wind machine or a dolly track that doesn’t cost that big budget money, and that could be something that we could have actually exported to another country, for example.

This particular bill does not help people who want to budget under $50,000, and to me that’s a problem. The very fact that a minority view from the National Party was not allowed just tells me that this Government is very, very arrogant indeed. I oppose this bill.

MARAMA DAVIDSON (Green): Thank you, very much, Madam Assistant Speaker. The Green Party is pleased to support the Taxation (Research and Development Tax Credits) Bill. We have long realised—and the evidence, as the Minister reiterated, does indeed show—that improving research and development is the key to unlocking, actually, how we address the biggest crises we are facing in the world today, which include climate change and inequality. We’ve always been clear about that in our policy. I applaud this bill coming into the House and going through the path of our House.

What we’ve got at the moment are living standards where not everyone is having a decent go. What we’ve got is worrying environmental degradation and biodiversity failure, actually—habitats and living systems are being ruined around the world, which is threatening the life of native and indigenous species; rivers and oceans are being polluted and continually damaged; and we’ve got a problem with waste. We have got a real problem with how we deal with waste, and the fact is that there is no such magic away place that any country can afford to take for granted any more, and certainly not our one. We also have an issue today of not all families having good jobs and working conditions and quality living standards of life.

Research and development is a core part of—not on its own—transforming the way that we relate to each other and our planet. So this particular bill will provide a 15 percent credit rate for eligible expenditure on research and development, up to $120 million and a minimum threshold of $50,000. This is an essential step, in my understanding, in moving it away from the grant approach, providing a little bit more equity across diverse enterprises and organisations and businesses, rather than just a cherry-picking approach.

I wanted to talk about how, earlier this year, I think, or last year, a Māori woman came to me, we met, and she gifted me this exquisite piece of fabric made solely from harakeke. Now, she had to go offshore, to the UK in fact, to a research and development centre, to actually be able to work—oh, harakeke, there’s an English word: “flax”, I’m sorry—to be able to work flax through to a state of being, I would describe it, like the most high-quality linen fabric that you’ve ever felt, that you’ve ever touched. She had this one precious piece of fabric that pulled on her indigenous knowledge and combined it with research and development to finally, after years, coming up with fabric, that I have to say as I spoke to kuia—elderly aunties—around the country, they said they didn’t think it was possible, and said it was such an incredible plant to try and work with to try and get it into a fabric state. This young woman, who wanted to innovate not only around a sustainable species use of our own but also as a community-building enterprise—a collective, cooperative enterprise—had to go offshore to get an offshore research and development agency to assist her. I want to hope that this bill is part of how we will fix that problem.

We are a smart country. We have got potential here to be doing things on site, here, without having to go offshore. Adding value is not just about not shipping off raw logs; it’s about our own people as our value, our own mātauranga—our traditional knowledge—and our unique New Zealand Aotearoa scientific knowledge working together and collaborating. That is the stuff that actually is going to solve and address the big issues before us. That is the stuff. We need new ways not just of operating: new ways of thinking about our relationship and sustainability for how we use our resources and our living systems, new ways of working with each other and making sure that we are pulling on the gifts and the talents from people in our communities to be able to have these cooperative enterprises, these new ways, these new ideas.

This piece of fabric blew me out of the water, and I’ve got it sitting at home, covering my dresser. It’s world-leading stuff. We are world leaders—we have been that for quite some time, our nation—but our thinking at our grassroots and in our communities needs a hand. It needs a hand to get to this incredible place.

So, yes, the Greens support this. I wasn’t supposed to be this long; I got a little bit carried away. So, yes, the Greens support these steps in the right direction for research and development. Of course, like most pieces of legislation, it doesn’t stand on its own; it’s got to work alongside other funds, like the Green Investment Fund, like the Provincial Growth Fund—other funds and other projects, actually—to make sure that we can also allow equity across, empowering social innovators. I know that that’s the intent of this piece of legislation. It’s actually so that it’s not just favouring already established players, and that’s one of the most important things for me. The bill wants to commit to allowing for new innovators, for new businesses to come through, and that, for me, is really, really core.

Just to say that I’m really pleased to stand up, actually, and have an opportunity to have a kōrero on this bill. More of it, more of the thinking, more of allowing New Zealand’s unique talents and our living systems—oh, another example was the nannies on the coast. On the East Coast, where I come from, where I whakapapa to, they are long-frustrated and hōhā with raw logs being sent off that have been plucked out of their ngahere and their whenua, but they see the potential in mānuka products and having our young rangatahi on the East Coast actually working and drilling down into the science and finding out that it is East Coast mānuka in particular which has some of the highest-potency properties in the world. That’s also allowing our young people to become the researchers and the innovators and is training and building capacity in those skills.

So we’ve got it here. We’ve got it all here. We can absolutely continue to be world leaders, and I look forward to seeing how this bill helps us on that step. Kia ora.

IAN McKELVIE (National—Rangitīkei): Thank you, Madam Assistant Speaker. It’s a pleasure to take a short call on the Taxation (Research and Development Tax Credits) Bill. Clearly, I think, across the House, however we implement these sorts of initiatives, the House is in favour of this type of initiative; it’s just the method we use to get the end result that I think is of interest. Duncan Webb said this is one of the best pieces of legislation he’s seen come through the House. Well, as my colleague next to me, Brett Hudson, said, you’re in trouble if that’s the best you can do. None the less, I shouldn’t carry on in that vein.

The bill came back for its third reading, and there were a few things that I think are still an issue, and one of them was the issue that Duncan Webb raised, actually. He went to the extent of using “the generosity continues”, but, actually, I’m not so sure that generosity does continue, because, whilst we’ve had a lot of information on how the take-up of this might work and how much it may be taken up, I think the cost of compliance and the difficulty of application will preclude many of the firms that it’s aimed at from ever making an application. They may make an application, but they may not get there.

I think that one of the challenges that this bill has got is how it’s implemented in the future, and I think it’s been estimated that there could be in excess of 2,000 businesses that will make applications for this. Of course, those businesses have got to make applications before their applications are granted. The other challenge of this—and it will be a challenge for those awarding the opportunity to claim these R & D tax credits—will be how they decide what is just a transfer of other costs to an R & D tax credit and what is genuinely a new initiative, I guess, to spend money on R & D. I think that will be challenging, because some of the companies involved in this will be very large borrowers. So that’s one of the challenges, and the challenge of making judgments on this will be quite significant as well, I think. So the approval process, I think, will be difficult.

There’s a number of other issues that I think will be challenging, but I do think that it’ll be interesting to see the result of this in a couple or three years’ time and just how much money has actually been spent promoting the R & D tax credit system.

Finally, I just want to say a very brief word about the minority view. I want to agree with our chair of the Finance and Expenditure Committee. I too feel sorry for the officers, but for a different reason: they were only implementing Government policy, at the end of the day. Thank you, Madam Assistant Speaker.

Dr DEBORAH RUSSELL (Labour—New Lynn): I’m delighted to take the final call on this excellent bill which is before the House now, the Taxation (Research and Development Tax Credits) Bill. I want to address a small number of the issues that have been raised by the Opposition as concerns—which I think actually have been addressed—just to reassure those who are watching.

There have been some issues as to what happens for a business that is in loss as to whether or not they can get the benefit of a tax credit—because, necessarily, to get a tax credit, you must pay some tax in the first place. It’s interesting to note that the bill does include some refundability in year one for a start-up. For taxpaying firms that are in loss and nevertheless have R & D expenditure, they will be able to cash out their tax credit. So there is a way for them to get some cash in hand even though they aren’t in a taxpaying situation.

So this is a serious attempt to develop a way of addressing tax losses and still allowing R & D tax credits—that’s because we do want to support firms that are in start-ups. The Opposition have raised concerns about the re-characterisation of expenditure, about whether some expenditure that is business as usual will suddenly be re-characterised as R & D expenditure in order to get the tax credit. Again, the bill does address this: there is a set of criteria to ensure that business as usual does not suddenly get called R & D. It is one of the areas that have been addressed in depth in the bill, and IRD will be looking at it.

The speaker immediately before me, Mr Ian McKelvie, raised some issues about the approval process. I think this goes to a little bit of the difference between a grants process and a tax credits process. When you go through a grants process you must meet a set of approvals, but then it’s still not clear that you will get the grant. You may not get it because someone else might just be slightly better, or there may not be enough grants to go around. A tax credit operates slightly differently; if you meet the criteria, then you do get the credit. There is no further approval. The approval process that Mr McKelvie was talking about was one where firms can apply to inland revenue in advance to get some certainty around whether their expenditure will fit the criteria for the research and development tax credit. Then, if it fits, they get the credit. It’s not about a yes or no, go-no-go decision; it’s not about whether one firm is better than another. It’s simply about giving certainty to taxpayers. As such, it’s an excellent addition to the tax credit process.

Now, finally, we had one of the speakers from the Opposition worrying about whether her skateboard and her hair dryer she was using in the production company would have, in fact, been eligible for the tax credit, and was this going to be an issue. Well, the skateboard, I think, would have cost about $80 and the hairdryer maybe about $40—that’s $120. Actually, in order to be eligible for the tax credit, you need to spend at least $50,000 on R & D. There’s a good reason for that; that’s to make sure that it is serious research and development. It’s not just the backyard stuff; it’s actually genuinely serious research and development activity. Fifty thousand dollars is a lot for a small firm, but, actually, when someone is engaged in research and development, you’ll go through that fairly quickly; so it’s a pretty sensible criteria, a pretty sensible lower threshold.

Finally, in terms of issues raised by the Opposition, I want to just have a final word on that minority view. I would note that two of the people who’ve spoken about it this afternoon were not in the room—were not in the room—and did not see the members’ own colleagues pleading with the member to change one sentence so that the member was not implying that officials had said things that officials were not comfortable with—the implication that they’d said them. That was it; one sentence, a few words. That was it. It was a real shame that that happened, and it was very interesting to see that the members of the Opposition who were in that room have not actually particularly spoken to that minority view issue.

This bill addresses a fundamental problem in our economy: that we do not spend enough on research and development. The question is whether it is best to address that through grants or through a tax credit. If we look at our actual total expenditure on research and development, it’s low and it continued to be low while the Callaghan grants scheme was in place. The grants were not working well enough; that is why we are moving to a tax credit. The great thing about a credit, as opposed to a grant, is that anyone who meets the criteria gets it—anyone. As long as you meet the criteria, the person who meets those criteria will get the tax credit. There is no picking and choosing, there is no grace and favour, there is no sense that anyone is sitting in judgment. All it is is if a firm meets the criteria, then they will get the tax credit. On this side of the House, we believe that that change from a grants scheme to a tax credit scheme will spur investment in research and development, and will make a difference in our economy. That is why we are promoting this bill. That is why we are supporting it. That is why this bill is an excellent bill. I commend this bill to the House.

A party vote was called for on the question, That the Taxation (Research and Development Tax Credits) Amendment Bill be now read a third time.

Ayes 63

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

Noes 57

New Zealand National 55; ACT New Zealand 1; Ross.

Bill read a third time.

Bills

Fire and Emergency New Zealand (Levy) Amendment Bill

Third Reading

Hon TRACEY MARTIN (Minister of Internal Affairs): I move, That the Fire and Emergency New Zealand (Levy) Amendment Bill be now read a third time.

This is a short but important bill. It will ensure that Fire and Emergency New Zealand (FENZ) will have certainty in its funding arrangements over the next several years. It also gives effect to Cabinet decisions around the levy that museums, archives, and the New Zealand Defence Force should pay. The bill amends the Fire and Emergency New Zealand Act 2017—the FENZ Act. The FENZ Act brought together rural and urban brigades, and paid and volunteer firefighters to form a fit for purpose, 21st century fire service.

The benefits of this organisation can be seen in the responses provided to the recent Tasman fires and the flooding in the West Coast. Responses like these are vital in keeping our communities safe, especially in the face of increasing extreme weather events. FENZ also provided support in response to the Christchurch terror attack on 15 March, 2019. While we are now realising the benefits of FENZ operating as a unified organisation, we need to make sure that the way they are funded is appropriate.

Funding FENZ through a levy on contracts of insurance is a carry-over from FENZ’s predecessors. However, there are weaknesses in this funding system. These include: people being able to freeload by choosing not to insure their property, and, therefore, paying no levy but still benefiting from FENZ’s service; increased insurance costs and reduced incentives for people to properly insure their properties; and levy collection is complex to administer for insurers, and FENZ’s levy income may become uncertain as the commercial insurance market evolves.

We are looking to see if there is a better way to fund such an important organisation. We want to provide a stable, simple funding system that is fair to individuals and businesses. Now is the ideal time to take a fresh look at different options for funding FENZ, as we have good information and understanding of the costs involved with running the new organisation. This bill provides time for us to explore the best way to fund FENZ so that they can continue to do the outstanding work that they do. The bill does this by delaying the commencement of a new levy regime until 2024. An Order in Council can bring this date forward as needed to implement a new funding regime. Importantly, the bill ensures that FENZ will remain funded for the duration of the review of the funding system.

This bill also exempts items being held by cultural heritage bodies from being liable for levy payments. This will ensure that institutions that hold extremely valuable items for the public benefit are not unfairly charged a high rate of levy. Some of these items will be virtually priceless. We want to make sure that institutions preserving and exhibiting such items for our communities are not penalised in the form of high fire levies that don’t relate to their potential call on FENZ’s services. This bill also clarifies that the New Zealand Defence Force is exempt from the levy. This clarifies a long-held position that the New Zealand Defence Force provides New Zealand with significant firefighting capability and benefits to the community. I think the Defence Force’s contribution to fighting the Tasman wildfires illustrates this well.

I would like to thank the Governance and Administration Committee, chaired by Mr Brett Hudson, for their careful consideration of this bill. I would like to thank those who submitted on the bill, and those parties that have supported this bill. I would also like to take a moment to, once again, thank and pay tribute to the women and men of FENZ for their hard work, their commitment, and the incredibly important work that they do. This bill is an important step in the journey towards our ultimate vision of FENZ, so I’m pleased to commend this bill to the House a final time.

KANWALJIT SINGH BAKSHI (National): Thank you, Madam Assistant Speaker. It’s my pleasure to stand in the third reading of the Fire and Emergency New Zealand (Levy) Amendment Bill and in support of it. I would like to acknowledge the Minister Tracey Martin for her offer yesterday to collaborate to work on this bill, and I accept that, and I assure her that we will be working positively to ensure that Fire and Emergency New Zealand (FENZ) is properly funded.

This is a real opportunity for us to fix this problem, as the Minister has just mentioned in her speech that we know how much money is required. Yesterday, during the committee stage, a few times I asked the Minister about the surpluses right now that the FENZ levy is creating—where that money is being spent—but, unfortunately, I could not get the answer. But definitely, that is one thing which I would like the Minister to consider. Right now, the income of FENZ is more than the expenditure they are doing, and—because this bill extends the process until 2024, and every year there is surplus available—where is that money going? It will be a better option that the people who are paying the levy should get the discount, because there are excess funds available in FENZ, and that is one thing which I would like to request the Minister consider in the days to come.

The second point which I would like to say is that while considering different options on how to fund FENZ, as I know that there is an option for general taxation, the funding can be taken from there, or properties—the local government can collect the funding from rates—and other options are also available. So I request the Minister to consider that in our neighbouring country, in Australia, there are different states which have got different provisions as to how they are funding their fire services. The one which is very close to my heart—I have gone through Queensland’s provision, where they have got a system. They have got five different areas, categories, where they are funding according to use. If there is a fire station which has got around-the-clock services available and paid firemen and women are available, they are charged more. In a rural area where there is a voluntary service, that area is a levied at a lower rate.

That means that the requirement determines how much levy the people should pay, and that will be a fair way to go. For example, in New Zealand, we see that in some of the rural parts where there are more paid workers, they are paying very high levels of levy in comparison with what volunteers are, to the extent of about $127 to $21—something like that. So I would like to request the Minister to consider these things, and, obviously, as she has offered. I am happy to collaborate and discuss this in detail when the time comes.

Before I conclude, I would also like to acknowledge that the women and men, the volunteers and the paid workers of FENZ, do a fantastic job. We know that the number of call-outs for the fire services is reducing, and call-outs for other purposes, like floods, car accidents, other accidents, are growing. These people are really the front-line people who come and rescue the people from time to time. So I would like to thank the whole Fire and Emergency New Zealand team for the excellent job they do, and I commend this bill to the House.

Hon STUART NASH (Minister of Police): Thank you, Madam Assistant Speaker. Look, I’m just going to take a short call on this bill to say that it is a short bill, as the Minister of Internal Affairs alluded to, but it’s a pragmatic solution to a situation that Fire and Emergency New Zealand (FENZ) found themselves in where we needed to actually do things well.

So there are two options that FENZ had. When the creation of Fire and Emergency New Zealand happened in 2017, they set a two-year time limit to get the new levy regime in place. But setting new regimes is difficult, it’s timely, and it involves a lot of complexity, not only for FENZ themselves but also for those who have to implement this levy, and they found that, in fact, there just wasn’t enough time to do it.

As mentioned, it’s a pragmatic bill that says, “OK, let’s push this out to 2021. Let’s get this right.” We could have rushed it through, and what ends up when you rush these sorts of things through is no one wins. You get a levy system which doesn’t work well, you get a whole lot of systems that have errors in them, and you get a general population that is more than grumpy. It just doesn’t work. So what we did was we said, “Hey, let’s push this out to 2021.” It could be brought back to 2020 by Order in Council, but it’s just about fixing the problem.

I congratulate the Minister on her pragmatic approach—

Hon Tracey Martin: 2024.

Hon STUART NASH: —sorry, 2024—and I also congratulate the Minister on her willingness to engage in a really proactive way with those who are responsible for ensuring that this happens. And, with that, I’m going to sit down.

BRETT HUDSON (National): Thank you, Madam Assistant Speaker. It’s a pleasure to rise in support of this Fire and Emergency New Zealand (Levy) Amendment Bill. Now, I actually had the privilege of sitting on the select committee that scrutinised the original Fire and Emergency New Zealand (FENZ) bill, the Act that has created this new consolidated and combined organisation. I just want to acknowledge that through that committee process, we actually heard from members of the insurance industry and the Insurance Council of New Zealand. Their belief was that the bill wasn’t going to give sufficient time for the new levy to be constructed and put in place. They held that it was far more complicated than the Government and the officials thought it might be, and the fact that this amendment bill was brought to the House actually illustrates that they were correct. So they were right all along, and it was appropriate that the Minister introduced this amendment bill to give more time so that that levy could have been properly worked through and set. We certainly had no problem at all supporting that.

I also acknowledge—because now, of course, we’ve incorporated the Minister’s Supplementary Order Paper 205 into this bill in the committee of the whole House stage—that it is the Government’s right to seek to review the funding arrangements for FENZ. I would note that, in essence, that is what the previous Government had already done, but we certainly are not going to seek to stand in the way or oppose the Government undertaking that review, and this amendment bill, should it pass in a few minutes’ time, will certainly permit that.

But I would caution that because it potentially takes a new levy date out to 2024, that is actually a period of uncertainty for FENZ, for insurers, and for the public. No one is going to be quite sure into the future what the funding arrangement might be, how it might be met, and what risks it might introduce. They are, fundamentally, a choice between imperfect options. We had the levy model that was proposed and passed in the FENZ Act and that was going to be extended when this bill was first introduced on a levy on property insurance. Other options include general taxation, and, put very simply, if we’re going to use general taxation, the two options there are you either raise taxes to generate that extra revenue for funding or you take spending away from somewhere else. One can’t do that any other way. Either taxes go up to get the extra revenue or other things are not done so that the revenue can be reprioritised elsewhere.

I recall, because I looked through, as this bill was first introduced, New Zealand First members’ contributions on the first reading of the original FENZ bill. They noted in that—and I have pointed this out to some members of the insurance industry—that they had a strong preference for a compulsory motor vehicle third-party insurance and a levy to be raised on that compulsory insurance to help to part fund FENZ. I would say, taking this opportunity, to the insurance industry: be careful what you wish for; you might not like what you get. I can say, having spoken to these members of this industry, that they certainly do not support the idea of compulsory insurance, in any form.

None the less, we do support the Government’s right to undertake a review. They wish to undertake a thorough review. We are going to support them to do that. I note Mr Bakshi, my colleague, has said that the Minister has extended an invitation to include him, as our spokesperson, in that discussion. I think that’s an exceptionally gracious and generous thing of the Minister to offer, and I’m sure Mr Bakshi and our caucus would love to take them up on that. We will support this bill at third reading.

Hon AUPITO WILLIAM SIO (Minister for Pacific Peoples): I just want to raise four points. The first one is that I want to acknowledge the leadership of the Minister of Internal Affairs in leading this work—fantastic leadership, which is so devoid from that other side.

The second thing is that this is an issue that is left to us again by the previous lot. They were supposed to have fixed this in 2018, and it got pushed back to 2019 because they did not anticipate the transition and the work and effort that was required to put a new system together—to bring together the 40 different bodies into one unified body. They didn’t anticipate the cost and the effort. So we now have a Minister that is grabbing the bull by both hands and is working and driving this forward.

The third point—[Interruption] Hush. The third point is that I want to acknowledge the Minister, because since she’s taken over the reins of this particular portfolio, I’m now seeing more Māori and Pacific young people volunteers participating in this workforce. One in particular was in Māngere, a young man there who they brought in. That is so important, to have a diversified workforce, and we as a country need to recognise the strength of that.

And the fourth and final point—

ASSISTANT SPEAKER (Poto Williams): I hope that this relates to the bill itself.

Hon AUPITO WILLIAM SIO: I was just talking to—

ASSISTANT SPEAKER (Poto Williams): OK, thank you. I’d really appreciate that, if you could.

Hon AUPITO WILLIAM SIO: All right, thank you very much. That’s really what I wanted to say. It’s not a long bill; there are only two amendments there. But after talking to Mr David Bennett, I now officially, formally withdraw my support for the Leader of the Opposition.

Hon JACQUI DEAN (National—Waitaki): Thank you, Madam Assistant Speaker. Right, OK—awesome speech from that member who just resumed his seat, Aupito William Sio. National, of course, support this bill in its third reading, the Fire and Emergency New Zealand (Levy) Amendment Bill, and congratulate the Minister for her collegial approach to what has been a pretty long-running piece of work across several Governments. It is to Ms Martin’s credit that she continues to be willing to work collegially, because this is not a political issue, despite what you might’ve thought from the last speaker. This isn’t a political issue. Fire and Emergency New Zealand is an organisation which traverses all of New Zealand.

In fact, this Saturday, I’m looking forward to going to Cromwell to watch the Cromwell fire brigade do their thing. I saw them a couple of Sundays ago, also in Cromwell, at a community event, which tells you a lot about the Cromwell fire brigade, along with all the other fire brigades in New Zealand, that the volunteers are always prepared to get out and support community events. So this Saturday—I think it’s 10 o’clock in the morning—I’ll be in Cromwell applauding them, and that is what we get across New Zealand. Every time a member gets up in this House to speak about Fire and Emergency New Zealand, they consistently thank and say the same thing about Fire and Emergency New Zealand.

The only point I want to make, because we are in the third reading and we are supporting this bill, is that in pushing out the levy calculation to 2024, it does give rise to a period of uncertainty. Maybe that uncertainty doesn’t get to the community fire brigades, but it certainly gives rise to a bit of concern, perhaps, amongst other parliamentarians and those who watch policy being developed about just how that levy will be raised. As the local government spokesperson, I will be very interested to see whether the Minister follows on from the indication she gave at the committee stage that a levy on ratepayers could be considered. I would urge the Minister to be cautious and collegial over that point, but having said that, congratulations to the Minister, and National supports this bill at third reading.

Hon EUGENIE SAGE (Green): Thank you, Mr Assistant Speaker. I don’t have very much to say on the Fire and Emergency New Zealand (Levy) Amendment Bill. The Green Party is supporting it; a lot of what has needed to be said has been said in previous readings. It does extend the time that the levy system regime goes—it extends the date at which the levy becomes instrumental, and that is in order to allow the insurers and others to take proper account and amend their system. So, once more, we are seeing a very sensible bill being proposed by the Minister, who is fully on top of her portfolio, who wants to ensure that the basic changes that this bill makes are to enable Fire and Emergency New Zealand to be properly funded, and for there to be some certainty over what will happen in the next few years while a review of the way in which Fire and Emergency New Zealand is funded for the longer term occurs, because we want that system and its funding model to be stable, to be universal, to be equitable, to be practical, and to be predictable. Under this Minister, I am very confident that that will happen.

So this small bill, which has got wide support across the House, is a sensible and practical measure, and the change in that deadline is critical because otherwise it does create a lot of uncertainty for everybody about what the levy rate will be and what the obligations will be. So this is a small bill, it’s a significant one, and it’s in very good hands under the Minister, the Hon Tracey Martin. Thank you.

Dr JIAN YANG (National): I speak very briefly on this particular bill. The bill’s amendments all relate to the levy-based system to fund Fire and Emergency New Zealand (FENZ). We all know that FENZ was formed on 1 July 2017. It was under the National Government that we proposed this and then we enacted this. The main reason was that we would like to have a modernised emergency system to better meet the needs of New Zealanders. As we can see in the recent Nelson-Tasman fire, FENZ reacted very efficiently and did a very, very good job. This is a modernised organisation, and for that reason we need to have a modernised levy system. This particular bill will extend the levy until 1 July 2024, basically to make sure that we have enough time for all the parties to sort out the particular problems in terms of following up with the modernised levy.

Now, this particular bill—as I said, National had a particular goal at that time that was to provide a better service to all New Zealanders. This was part of the broad National policy that was to provide Better Public Services. For that reason, I will support this particular bill.

ASSISTANT SPEAKER (Adrian Rurawhe): This is a split call—five minutes. I call Paul Eagle.

PAUL EAGLE (Labour—Rongotai): Thank you, Mr Assistant Speaker—

Jamie Strange: This’ll be great.

PAUL EAGLE: Thank you, colleague. Look, can I just acknowledge the Minister here, the Hon Tracey Martin. Thank you for championing this and leading it through the various stages in what we’ve already heard is a really sensible, pragmatic piece of work, and the extension there to 1 July 2024 gives us that time to sort things out. Great work from the Governance and Administration Committee—I happen to be on that, of course, but a kūmara does not talk of its own sweetness, as we know.

I certainly also want to just say that in terms of this side of the House, we have a wee plan, and part of that is to make New Zealanders proud. One of those actions—and a member on that side has talked about the International Firefighters’ Day. That’s on Saturday. I’m popping out to the two in my electorate tomorrow.

The material that came with it talked about just some at-a-glance figures, and one of the figures that really stood out for me—and I’m sure it comes as no surprise—is that it’s the number one trusted public service agency in the country. I know that they do a great job. Bills like this will help. I commend this to the House.

ASSISTANT SPEAKER (Adrian Rurawhe): Lawrence Yule—five minutes.

LAWRENCE YULE (National—Tukituki): This is the second time I’ve spoken on this bill, and we do support it. I acknowledge the Hon Tracey Martin for the way in which she listened to what I said at the committee of the whole House stage, because I have been involved in this process over a number of years to get to this point where we have a unified fire service in New Zealand. In my previous role in local government, it wasn’t necessarily the easiest thing to do, but I do want to acknowledge all those that were involved in making that happen. The Hon Ron Mark and Paul Eagle will understand that that was quite an interesting concept at the start. But we’re here now, and I think it’s for the right reasons, and I think, based in my own electorate, I don’t hear any major dramas. I think it’s working really well, and I agree with what Paul Eagle has just said—that the fire service is one of the most trusted organisations in New Zealand.

The Supplementary Order Paper that we talked about yesterday—I reaffirm and I support the fact that more time is being given, but we should not kid ourselves; that won’t necessarily be an easy conversation. There’ll be vested interest groups, whether they’re in the insurance industry, whether they’re in local government, or whether there are actually other interested groups that will have to be seriously consulted and worked through. I reiterate previous comments I made also to the Minister particularly, to have a serious look at the defence model that’s being proposed, for no other reason than to satisfy ourselves that that is the correct thing to do.

So it’s come to the third reading. This side of the House is supporting it. Personally, I think this is the right thing to do. We’ll have to work through the next stages. I commend it to the House. Thank you.

GREG O’CONNOR (Labour—Ōhāriu): Like all previous speakers, I am commending this bill to the House. We all in our communities have a local fire station, whether it be volunteers, whether it be semi-professional or full professionals, and I think it behoves the public to know just what is going on in those stations, because this is a restructure, and everyone who’s been through a restructure knows what an effect that can have. The restructure in this case is simply around the funding and bringing together the urban fire authorities with the rural fire authorities. I just want to compliment—certainly in my Ōhāriu electorate, where I have three fire services, in Johnsonville, Newlands, and Tawa, all of whom are affected in some way by this—the professionalism of those groups in absorbing these changes. They give not only the great work that they do when they are called out—in the case of the volunteers, giving up their own time—but also understanding what this actually means. Of course, it’s around the funding.

One of the important parts of this too—a central part of this—is that there were three places that were left out: museums, art galleries, and defence establishments, which were actually to be exempted from the levy. Of course, under the original dates, that would only have occurred in 2019. Now it’s necessary for this amendment to extend that time out as well, and that’s a very sensible decision also—again, where the value of those buildings compared to the value of what is inside them means that, of course, the levies they are likely to be liable for are way out of kilter with what they can afford or the incomes they generate. So there’s a lot that’s sensible about this bill, but also the most sensible thing is ensuring that we have the necessary funding regime in place, hence the extension.

So, like those who have come before me, I say this is a very pragmatic piece of legislation which takes cognisance of the necessary changes to ensure that this absolutely essential part of all our lives—if we’re going to make these changes, we’ve got to make sure we get them right. It’s just too vital for us to ignore, so I take great pleasure in commending this to the House.

SIMEON BROWN (National—Pakuranga): Thank you, Mr Assistant Speaker, and thank you for the opportunity to take a short call on the Fire and Emergency New Zealand (Levy) Amendment Bill at its third reading. I’d like to start, as other speakers have, by acknowledging the excellent work that the fire and emergency service do in our local communities. In particular, I’d like to acknowledge the hard-working staff at the Howick fire brigade and the volunteers who operate there. I’m looking forward to joining with them on Saturday for International Firefighters’ Day, and I really appreciate the opportunity to go along and thank them personally for all the work that they do in the community.

As a number of speakers on this side have said, National will be supporting this bill to third reading, but that does not discount from the complex conversation which will be required around how a new funding model review will take place. I do look forward to being part of that process and understanding how that does take place. Whatever way we decide to fund our fire and emergency services will be complex, will have its challenges. There will be people who have a very strong view in whatever way that is done. What we do know, and what we do agree on, is that they do need to be funded, and they need to be funded well. So I’ll be keeping a very close eye on how that does progress. I’m sure the Minister Tracey Martin will be taking a very pragmatic approach to this very complicated issue and making sure that all parties are well consulted as we go through that process. So I commend this bill to the House for its third reading and its passage into law. Thank you.

JAMIE STRANGE (Labour): It’s an honour to be the final speaker on this bill this evening. I’d like to acknowledge the Minister Tracey Martin for the excellent work that she’s done in this area. We have heard from a number of speakers around the important work that Fire and Emergency New Zealand do, and I’d just like to highlight some of the statistics. We have 1,700 career firefighters within Fire and Emergency, and 11,600 volunteers. That’s a significant number—11,600. My family and I live across the road from a fire station in Hamilton—Chartwell fire station—and we are—

Hon Member: Oh, that’s handy.

JAMIE STRANGE: Yeah, we often see the work that the people do over there, and we certainly really appreciate it. One of my family members I’d just like to acknowledge: Garth Strange, who’s commonly called “Gorse” because of his beard, has been a volunteer firefighter for decades. I don’t want to guess, but it must be near-on 40 years, and he’s just an example of one of the many volunteers who devote time in this area.

I’d just like to touch on one point in my brief contribution, and that’s the aspect that public museums, public art galleries, and whare taonga will be exempt from the levy, and that’s a way of supporting the arts industry here in New Zealand. Public museums and galleries usually operate on restricted budgets, and this bill acknowledges that and shows that support.

This bill fits into Labour’s commitment to ensuring a strong cultural and creative sector. We believe that this sector is vital to our national identity and economic development, and deserves support and certainty from Government to maintain its sustainability.

So, in closing, I’d like to acknowledge the pragmatism and organisation of the Minister of Internal Affairs, Tracey Martin. I commend this bill to the House.

Bill read a third time.

Bills

Local Government (Community Well-being) Amendment Bill

Third Reading

Hon WILLIE JACKSON (Minister of Employment) on behalf of the Minister of Local Government: I move, That the Local Government (Community Well-being) Amendment Bill be now read a third time.

This bill is a key part of an all-of-Government shift towards taking a more inclusive, holistic approach to measuring our success as a country. It’s no longer enough that we define and measure the health and progress of our communities in a narrow fiscal sense. Local government is able to take a practical approach to enhancing the well-being of our local communities, focused on achieving positive outcomes. Decisions made by local government have an immediate and important impact on New Zealand’s quality of life. Those decisions affect the natural environment and neighbourhoods in which we live and work, and impact on our health and safety. This bill restores community well-being to the purpose of the Local Government Act 2002. The bill acknowledges the valuable role local leadership has in promoting the social, economic, environmental, and cultural well-being of citizens and communities.

Community well-being is a cornerstone of our system of local government. Restoring it to the purpose of local government brings the Local Government Act back into alignment with other legislation that touches on local government. This change will increase the coherence and consistency of the local government framework. The bill recognises the role of local authorities as custodians for the well-being of their communities, rather than as entities to be controlled by central government.

Intergenerational well-being is a kaupapa Māori concept. The bringing together of intergenerational aspirations held by local government and iwi Māori will drive inclusive economic growth and lift well-being in our communities.

Local authorities are responsible for creating the places and shaping the communities that their citizens want to live in. Restoring well-being to the purpose of local government will encourage local authorities to take a holistic approach to addressing the needs of their communities. Fears that local authorities will use this bill as an excuse to begin spending irresponsibly are unfounded. There is no reason to believe that, and no evidence to support it. In fact, evidence shows that councils spent responsibly prior to the 2012 and 2014 amendments to the Local Government Act.

Councils’ job is to balance the needs and wants of their communities with the financial burden on these communities. The removal of community well-being in 2012 created confusion about the role of local government. Councils had told us that they want this changed. They have asked us to return clarity about their purpose.

The bill also restores local authorities’ powers to collect development contributions for a range of public amenities and reserves. Public infrastructure such as libraries and swimming pools is vital for building a sense of community well-being and for raising the next generation of engaged citizens. Councils told us that the 2014 restrictions on development contributions put a strain on ratepayers to pay for the infrastructure that growing communities needed. This amendment supports local authorities by returning a key source of funding for infrastructure to support rapidly growing communities while also keeping council rates and debt levels under control.

Decisions about funding for community infrastructure will need to be made transparently. Councils will still need to consult with their communities on their proposals, and will be required to list each asset for which they plan to use additional development contributions.

The third and final objective of this bill is to resolve a technical issue that prevents local authorities from being able to access funding from the Housing Infrastructure Fund. The bill clarifies that advances from the New Zealand Transport Agency are correctly classed as borrowing. This will remove a barrier for local authorities when building infrastructure in new development areas.

This bill demonstrates this Government’s approach to partnering with the local government sector. We see the relationship between central government and local government as a partnership that is supportive rather than prescriptive. Together, we can improve the well-being of our communities.

Finally, I would like to again acknowledge the member for Rongotai, Paul Eagle—well done, Paul—who proposed the restoration of community well-being in a member’s bill and allowed it to be taken up by this Government bill. So well done to our member Paul Eagle, who is a vital member of the Government and Māori caucus, might I add. On that note, I would commend the Local Government (Community Well-being) Amendment Bill to the House.

Hon JACQUI DEAN (National—Waitaki): Thank you, Mr Assistant Speaker. National does not support the Local Government (Community Well-being) Amendment Bill at its third reading, nor, indeed, did it at any of its previous readings as it went through the House. The reason is very simple: this was merely an exercise in panic on behalf of a new Government without a plan, who hadn’t done any work in Opposition, who suddenly found themselves unexpectedly in the position of having to bring legislation to the House. They went on an exercise around caucus saying, “Quick, quick, quick. I need some quick wins. I need some quick wins”, and up stepped Paul Eagle to the rescue to suggest, “I know, I know. Here’s a quick win—here’s a quick win, Minister: let’s put the four well-beings back into the Local Government Act 2002.” “Oh, thank you—that’s awesome. Let’s do that.” And so here we have the Local Government (Community Well-being) Amendment Bill coming through the House. The policy development and the policy behind this bill are so thin that they are non-existent, and that is why, amongst several reasons, National will not support this bill. It is merely a tit for tat.

In 2012, the National Government took the four well-beings out of the purpose section of the Local Government Act—just out of the purpose section of the Act. There was a reason for that, and that was to focus local government expenditure on good quality infrastructure, together with its community. It was to focus local authorities on good value spending—spending for good value. I suspect that Labour, New Zealand First, and the Greens disregard the fact that it is people who pay rates. I think there is a collective view over that side of the House that rates are to be gathered from those rich people, also known as developers, because the development contributions regime has now been changed so that a developer who develops land—a subdivision, and it might just be the land, or it might be a land and housing package—can again be levied on activities that are unrelated directly to that development.

One of the members who spoke earlier in this third reading—in fact, I think it was the first member, Willie Jackson, who gave the Minister’s address—noted that changing the development levy regime would make rates cheaper for other people. Yes, but at whose expense? And doesn’t that just make the price of housing and sections more expensive? You increased costs on the development of a subdivision or a section being developed by taking development contributions not directly related to that subdivision. Where are those extra costs going to go? Those extra costs are going to go into the price of a section or the price of a house and land package. What happens then? The cost of housing increases. So, in the view of the National Party Opposition, this is an own goal of epic proportions, and just serves to highlight the paucity of policy development thinking and the lack of rigour and joined-up policy plans of this Government. National does not support this bill.

PAUL EAGLE (Labour—Rongotai): Thank you, Mr Assistant Speaker. Look, it’s a real privilege to have the opportunity to speak on the Local Government (Community Well-being) Amendment Bill in its third reading, and I do want to acknowledge the Minister of Local Government, the Hon Nanaia Mahuta, and also the Minister of Employment, the Hon Willie Jackson, for being here and seeing it on a safe journey through its third reading.

I know that this had been close to the Minister of Local Government’s heart long before we resumed, on this side of the House, the Government benches. The Minister had been vocal around saying that the drumbeats of local government, from the top to the bottom of Aotearoa New Zealand, had been calling out loud and clearly to say, “We need those four well-beings reintroduced.” And the Minister acted quickly. I worked with the Minister to ensure, during the busy programme that this Government was putting together and delivering when it first came in, that this was not forgotten, and I’m very thankful that she took up this package to ensure that the views of our fellow elected members right across local government were heard, and not only heard but actioned and delivered, because that’s what we’re about on this side of the House.

Can I say that restoring those four well-beings shifted the focus to “Should we do this?” from “Are we allowed to do this?”. I want to reflect for a minute just on that, because the example that I can use that’s so vivid is the Wellington City Council and the living wage. The entity at the time, which I was an elected member of—our citizens told us that to live a decent life in a metropolitan city like Wellington, those most vulnerable, those most in need, they needed to be paid a living wage—a wage that reflected their ability to live, to work for 40 hours like everyone else, and to get paid decently for that. Can I say that the entity was confronted with all sorts of legal action saying, “No, this goes against the Act”, and certainly that was, I guess, a test case for the Local Government Act, where, instead of focusing on, as I said, whether we could do this, we just got on with it.

I’m really proud that we withstood any threats of a legal challenge at that time, and at least paid those council employees and those employees from some council-controlled organisations the living wage. I think it was a heroic move to say, “Despite what the Act says,” and I think that many, many, many other councils across Aotearoa New Zealand were keen to do that, because no council is there solely for the economic well-being. They are there for social, cultural, and environmental well-being, as well. They had been used to that, too, in terms of reporting against such a mechanism.

I’m proud that this Government will introduce its first well-being Budget, and I think local government was ahead of the game where, certainly, projects and issues were measured against a quadruple bottom line or a four well-beings approach. So with them being reintroduced—I can see the cheers from the top of New Zealand to the bottom once this is through. To put it really simplistically, it simply reflects the role that they are already doing, and this just reaffirms that.

In addition to this, the Minister spoke of the use of development contributions for community facilities. That needed to be back in there, and I’m proud that that’s made its way back in there too, in addition to a wee technical fix around the Housing Infrastructure Fund. So whilst it looks innocent and small, this impacts every single part of Aotearoa New Zealand. I know that councils will unleash a range of things that will enhance the well-being, as they see fit. As I said, every single council is waiting for this to happen. They don’t want to spend their ratepayers’ dollars on legal action. They want to get on and deliver the projects that their communities have said “That’s what we want.”, because they reflect the cities or districts or regions where they live. I proudly commend this to the House.

BRETT HUDSON (National): Thank you, Mr Assistant Speaker. I rise in opposition to this, the Local Government (Community Well-being) Amendment Bill in its third reading. We have opposed it all the way through.

A real, fundamental point of difference between the two sides of the House here: National has always believed, and undertook reforms when we were in Government, to ensure fiscal discipline within local government. We have a fundamental view that, like central government, local government should be required to deliver high-quality services to New Zealanders, and ratepayers have a right to know and should be able to see whether or not their councils are spending money wisely and on services that matter to them.

The implication of putting back and codifying these well-being items into law for local governments will simply have the effect of permitting very broad justifications for any manner of spending that local bodies might care to do. That tight fiscal discipline that was demanded of them will be relaxed. Now, that’s not surprising for this Government. We’ve seen it in a number of instances. We’ve seen it in Auckland with a cost blowout on a central rail loop because the Minister of Transport, Phil Twyford, took his eye off the ball and didn’t keep the reins of control over what the contractors and managers of that programme were doing.

We’ve seen other decisions that this Government has made which are raising costs of living for New Zealanders—and more so for beneficiaries than for the well off. We’re seeing increased fuel excise charges and a regional fuel tax, which increase the cost of living again—a regressive form of taxation which hurts the lower-income New Zealanders far more than the well off. This bill is going to be no different. It enables councils to have a far greater remit to spend on anything they might like, with the most flimsy of justifications against some community well-beings. It will undo the good work that National put in place to demand and require fiscal discipline and the spending on necessary services so that the costs to ratepayers, both residential and commercial, can be kept at appropriate levels and that increases, when they do happen, are as small as they can be.

Without question, one of the impacts, if this passes into law, is that rates are going to rise for residents and for businesses across the country. Already here in Wellington, we were facing residential rates rises of 7 percent for the latest one-year plan of council. Fortunately, some of our councillors—sensible people—are rebelling. I have great faith that councillor Diane Calvert, councillor Simon Woolf, and a couple of others will make sure that those heinous levels of increases are not seen within Wellington.

We had the regional council—they were going to increase rates to an average, for Wellington City dwellers, of 16 percent in the upcoming year. Again, it was a rebellion not only of ratepayers but, again, our city councillors. Local city councillors came to the fore and helped to argue that for us, to get it back down there. My contention is that this bill will make it easier for councils and councillors to do that in the future. Businesses and our local residential ratepayers will end up paying for that: simply increasing their cost of living, making life tougher, making it harder for them to make ends meet. We should, instead, be going the other way. We should be making sure that the fiscal disciplines that we have put in place are going to remain and be well monitored.

On top of that, this bill also makes changes to development contributions. It not only allows for other things which aren’t inherently related to that development to be charged within the development contributions, such as swimming pools and libraries, but also it permits the development contributions to be levied on commercial enterprises that have no connection at all to the facilities that those contributions will then be used to pay for. So it will happen. And what happens when businesses have their costs increased—whether by local government or central government—what happens?

Kanwaljit Singh Bakshi: Passed on.

BRETT HUDSON: That’s right. The costs of their services or goods will rise and, ultimately, it will be New Zealand ratepayers, New Zealand households that wear those costs. That is what this bill will deliver. On the face, it talks about niceties and well-beings but, at the heart of it, what it delivers is higher costs for New Zealand households in an environment where the economy’s already softening, where job growth has all but stalled, where the cost of living is rising—and, as I’ve said, is rising faster for beneficiaries than for the well off—and where people are already getting hit with higher tax increases which, again, disadvantage lower-income New Zealanders. This is a bad idea, and we do not support the bill.

Hon RON MARK (NZ First): Thank you, Mr Assistant Speaker. It’s really interesting listening to this debate, and I welcome the third reading of the Local Government (Community Well-being) Amendment Bill. Please forgive me if I’m a bit difficult to understand; I’ve got a bug. I wasn’t actually going to take a long call because of my voice, but I really cannot sit here and listen to that last speech and let it go unanswered. It’s a speech given by someone who’s clearly held no real level of responsibility in local government, and has no real understanding of the Local Government Act and how it is actually enacted by those charged with responsibility.

It also reminds me of a very arrogant, belittling, demeaning, and stigmatising speech given by the Hon Nick Smith when he introduced a local government amendment bill into the House, I think, on—tell me if I’m wrong—27 November 2012. It rings a bell with me because I was the Mayor of Carterton at that time. I actually responded by sending an email to the Prime Minister and the soon-to-be Prime Minister—as it turned out, he became Prime Minister when I came back to the House, the Hon Bill English—thanking them for, in one fell swoop, giving every National Party member who was a councillor, a deputy mayor, and a mayor in New Zealand, a reason not to support their party in the next coming election.

The comments that have just been made by the honourable member, talking about how reintroducing the well-beings—something which the National Party removed in November 2012—would actually unleash a new wave of fiscal irresponsibility, tells me that that member knows nothing about the work that Ian McKelvie did when he was the mayor, nothing about the work that Jono Johnson did when he was a mayor and a former National Party MP, and knows nothing whatsoever about the work that Lawrence Yule, the National Party MP, did when he was the president of Local Government New Zealand. It tells me that the party across that side should really spend their time in Opposition reflecting on the way in which they demeaned, stigmatised, belittled, and denigrated their own members of the National Party, who are very responsible citizens of this country, who’d been elected into those offices out of respect of their constituencies.

ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member needs to come to the bill.

Hon RON MARK: I will come to the bill, Mr Assistant Speaker. The bill seeks to redress the anomalies in the views held by the previous Government. This bill reinstates the well-beings which were removed by arguments such as that councils would increase rates and that ratepayers would have no control over how the councils would increase their rates—which is just an absolute mistruth. Councils will be required under this Act, which we are improving by amending it back to what it used to say, to consult with their ratepayers. Councils are required to deliver something that this Parliament, central government never does: produce a 35-year plan. They’re required to produce a 10-year plan, they’re required to consult with their ratepayers on their annual budgets, and to produce a fiscally neutral, zero budget—that’s what the Act does.

The biggest problem that that past Government should have addressed, and fails to really recognise now, is that the mechanisms by which councils raise money are outdated—it’s outdated; it doesn’t work. They’re limited in how they can raise revenue. They are dictated to, in how they can raise revenue, by this House. And the argument that councillors charge off on their own merry way and spend money hand over fist on projects of their own desire is not true. The only one I can think of is a former National Party mayor who had a V8 car race in Hamilton and lost a lot of money—and what was the irony about that? It was that it got picked up by the National Government and moved into Auckland and subsidised by the National Party, when they were sitting on this side of the House, who said, on one side of their mouth, that councils shouldn’t get involved in subsidising business and events, and then he turned around and subsidised the V8 races in Hamilton. Actually, I like the V8 races, and I can understand the economic advantage of having an event of that nature in one city—pity that Carterton wasn’t big enough; we would have asked to have it there.

Members on that side of the House are very good at picking on things in councils’ budgets that they don’t like: like funding community advisory—or what do they call budget advisory groups—and putting in swings in a park. Instead, they are telling the councils that social well-being should be removed because parks weren’t their business, that swings and slides for children weren’t their business, roads and rubbish were, and then underfunding the councils’ funding for rural roads and cutting it, then introducing the one road network and introducing roads of national significance, and cutting councils’ funding backwards.

Those are the issues that this bill is going to redress, because we’re introducing the ability for councils to look at the social and economic well-beings of their communities. The irony is that if a council steps up to give money to its local chamber of commerce to promote an event that’s going to bring economic advantage like Toast Wairarapa, like the balloon festival, like the harvest festival, no National Party person objects, because it’s economic subsidy and corporate welfarism that they approve of. What they don’t like is the building of an event centre for arts and culture and for the community groups to come along, and for the school groups to run a kapa haka festival in. That’s what Mr Hudson hates. He doesn’t like Carterton having an event centre so that all the schools from all over the Wairarapa can come and have the biggest kapa haka festival they have ever had. What he wants is Federated Farmers to get a subsidy for the young farmers’ awards—that’s what he wants. So he’ll stand up here and talk about fiscal purity out of the one side of his mouth, while advocating and applauding corporate beneficaryism on the other side of his mouth.

There is a word that they would use out on the street, which can’t be used here, but it fits appropriately, Mr Hudson. I want Mr Hudson to reflect on his speech, which I will post on my Facebook page for local government to see—for every National Party mayor. Alex Walker, Mayor of Central Hawke’s Bay District, is going to love that speech, because Mr Hudson thinks that she’s wasteful, that she throws money around, that she has no fiscal responsibility at all, that any money she puts into—you know, look at what we’re facing in Central Hawke’s Bay right now. It’s part of the Wairarapa electorate, although Alastair Scott wouldn’t know that—he wouldn’t know it at all. When I visited there last—

Jamie Strange: Where does he live?

Hon RON MARK: He lives somewhere in Wellington. But when I visited up there recently, we met in the office with a local police sergeant. I was meant to meet the police sergeant separately, but we met together because that police sergeant had been out to attend to a suicide. At that point in time, they’d had one fatality from vehicle accidents and eight by suicide. I say that because it gives an indication of the social stress that mayors, deputy mayors, and councillors have to deal with on a day-to-day basis.

So, Mr Hudson, if they’re focused on the emotional well-being of their community, good on them. If they’re focused on the spiritual well-being of their communities, good on them. If they’re focused on the heart of their community and supporting local farmers who are stressed, good on them. If they subsidise a festival that promotes economic activity, good on them. If they subsidise a racing event and their ratepayers say no and vote them out of office, good on them. But, Mr Hudson, they don’t need that member’s paternalism. They don’t need that member’s condescending attitude, and they don’t need to be told. The Mayor of Central Hawke’s Bay district, Alex Walker—a strong National Party supporter—will probably be very disappointed in that speech right now, as will John Booth from Carterton, as will other mayors and councillors all over New Zealand.

KANWALJIT SINGH BAKSHI (National): Thank you, Mr Assistant Speaker, for the opportunity to participate in this third reading of this bill, the Local Government (Community Well-being) Amendment Bill, and in opposition to this bill. It has been a coincidence that every time I have stood in the debates on this bill, I have followed the defence Minister and the Minister for Veterans speaking before me, the Hon Ron Mark. I would like to acknowledge the passion he has for local government. In every contribution, I have always reminded him that he will be a very good Mayor of Carterton again if he stands in the coming local body elections, because of his knowledge and his passion. It will be a good opportunity for him, again, to serve his people in Carterton.

This is the bill which the National Party is opposing because of the reasons which have been expressed by the previous speakers from this side. As we know, this bill is going to affect the people, because we know that the development contribution, which is going to be imposed after the passing of this bill, will increase the housing prices. It will increase. That side, the Government, is trying to say that they want to build houses which are affordable, but this bill is doing the opposite to that. This is a very badly-thought-through bill, which is going to affect the people, particularly the first-home buyers, because the new subdivisions will have to pay extra money for the contribution.

Similarly, on the commercial side, if we look, the new developments—the commercial buildings—will have to pay extra levies for the development of the property, and I think this is not a good idea. This shows what they are trying to say but doing the opposite of, which is really unfortunate for the people. I hope that this Government will realise one day that the steps they have taken were the wrong ones.

Lastly, I would like to say the effect that gives the councils to create the branch-off things—they will be able to implement new levies for the ratepayers, and that is going to affect the back pocket of the people. With these words, I won’t be supporting this bill, and National won’t be supporting this bill.

CHLÖE SWARBRICK (Green): E Te Māngai, tēnā koe. Tēnā koutou e Te Whare. It is a pleasure to rise and stand on behalf of the Green Party in support of the Local Government (Community Well-being) Amendment Bill. Just briefly, in this final reading, to summarise what this bill does—obviously, the most contentious point is around restoring the four well-beings that were removed in 2012 by the former National Government. It also restores the full range of community infrastructure for which development contributions can be collected. Just to correct the record on that, because the National Opposition are attempting to insinuate that all of a sudden there’s going to be all of these increases in rates as a result of this charging of community infrastructure. That’s not the case; what this simply does is provide local communities and local councils with the autonomy to make that decision themselves. So if the National Party would like to decide what local governments do with that then, perhaps, they should back some candidates for local government. The third thing this bill does is a technical change, which allows councils access to the Housing Infrastructure Fund.

So just to address some of the points that were raised in the debate—Brett Hudson spoke to the fact that there are two different sides of this House. He said that there is one that believes there is a right to know and see what local governments are spending money on, and that the other doesn’t believe that. I don’t think that there is any, at all, kind of criteria around transparency or accountability that is being imposed at all in this legislation. Instead, what we’re actually seeking to do is to get out of the way of local governments, as was, I think, quite eloquently articulated by my colleague in the Labour Party Paul Eagle, who, I’d note, is a former local councillor for the city of Wellington.

What we’re doing here is getting out of the way of local governments and the decisions that they choose to make on behalf of their communities. There are—actually, if we’re to characterise this debate fully and properly—absolutely two sides of the House. I mean, at a base level there’s one side that’s in Government and another that’s in Opposition. But if you’re to drill down into it deeper, with regard to the purpose of this legislation, there is one that believes in the autonomy of local governments, and there’s one that doesn’t. There’s one that seeks to dictate, and I quote Brett Hudson from his contribution prior—“the National Party wants to demand and require fiscal discipline from our local governments.” I think that is—as was mentioned by the Hon Ron Mark—quite a belittling position to take, especially given that there are a number of former local government members sitting among the ranks of the National Party who, surely, when they occupied their positions in local government, took that responsibility seriously and didn’t need to be dictated to by central Government to do their job properly. We believe in the autonomy and freedom of choice for local communities and that localism.

I also want to speak to the contribution made by the Hon Jacqui Dean, who spoke, I think, actually, in quite an inflammatory way in her caricature of ratepayers as those rich people who pay rates, who apparently this Government is seeking to target somehow through the restoration of autonomy to our local governments. I heckled—or offered my contribution—at that point in time that we all pay rates. I had quite a back and forth with another member of the National Party, David Bennett, who told me that we don’t all pay rates, because renters don’t pay rates and it’s homeowners and landlords who pay rates. I said, in response, that it’s actually renters who contribute to the money that their landlords use to pay those rates. In response, David Bennett says that this is the economics of the left. So what I really want to do is offer just a nice wee quote to David Bennett and say—this is from John Maynard Keynes—and I quote—

Hon David Bennett: Oh, now don’t read from Marx. I don’t want to hear from Marx.

CHLÖE SWARBRICK: —this is not Marx, mate; this is John Maynard Keynes—and I quote, “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist”. If I can clarify, the inherent purpose of this legislation is to restore community well-being and welfare to the central purpose of local governments in this country and allow them the autonomy to discern what that means in practice.

If we’re to talk about the economy, just briefly—which, obviously, us in central government, but also in local government, we all as decision makers have the ability to impact—the economy, by definition, is simply about the allocation of resources, Mr Bennett and members of the Opposition. What this Government has decided to do, both through this piece of legislation but also in the upcoming well-being Budget, is say that there are more meaningful determinants of success than the increase of GDP. GDP is simply about the sale and the purchasing of goods and services in our community. In the 1930s, when it was introduced to the US Congress, Simon Kuznets, the man who introduced it, said that this should not be used as a measure of the welfare of our society. Somehow we became slaves to that very measure that the inventor told us we shouldn’t become slaves to.

So, fundamentally, I also want to ask the National Party exactly what they thought happened before 2012, before they decided to rip out these four well-beings as a guiding principle for the decision making of local governments. Was it somehow the case that we were spiralling to the depths of hell in terms of fiscal blowouts and otherwise?

Hon Members: No.

CHLÖE SWARBRICK: No, we weren’t, and I appreciate the backup of my colleagues from the Government side of the benches. We weren’t. It was the case that local governments had the autonomy that we are seeking to restore today.

I would also like to touch on the point of accountability, as was raised by a number of National Party speakers; that accountability comes in the form of elections. There’s an election in October, and given how many points that the National Party has to raise for the agenda of local government, I may say that they could find it very, well, beneficial for their futures as politicians to, perhaps, run in those elections themselves, if it is the case that they would like to decide how local governments are spending their money and using ratepayers’ rates.

Hon Ron Mark: Read the Budget.

CHLÖE SWARBRICK: Finally, I would also like to say, on the point raised by the Hon Ron Mark, that what I’ve actually heard from the National Party, who have been saying that it’s important that rates are used responsibly, and that good solid infrastructure is built at a local government level, is that they seem to be relatively on board with the diversification of income and revenue streams for local government. So I look forward to working constructively with them on that as this progress develops in the hugely ambitious work programme that the Minister, the Hon Nanaia Mahuta, has in the local government space, and, once again, I would like to encourage all those who are listening to this impassioned and jovial debate in Parliament this evening to make sure that they are enrolled for local government elections coming up in October. If anything, what we do know is that we need higher rates of participation, because all of us here—all citizens of this country, whether they are paying rent or whether they are paying rates directly—are active and engaged in local government.

The Green Party is incredibly proud to be supporting the restoration of the four well-beings, to be moving away from a paradigm that is dictated solely by fiscal responsibility—such a narrow mindset that is—and to be supporting this here Local Government (Community Well-being) Amendment Bill, a fine piece of legislation.

Dr JIAN YANG (National): I speak against this bill, the Local Government (Community Well-being) Amendment Bill. Why? Because this bill encourages poorly targeted spending. Look at the purpose: number one, the bill restores the purpose of local government “to promote the social, economic, environmental, and cultural well-being of their communities.” This is extremely broad. It covers, basically, everything. So with this kind of purpose, how can you really define your spending? How can you really find the target? So this is a way to spend money wastefully. That’s why we are against it. Now, the consequence of this would be the rates will go up, because the councils will spend—

ASSISTANT SPEAKER (Adrian Rurawhe): I’m sorry to interrupt the member. Members, this debate is interrupted and is set down for resumption next sitting day. The House stands adjourned until 2 p.m. on Tuesday, 7 May 2019. Ka kite anō.

Debate interrupted.

The House adjourned at 6 p.m.