Tuesday, 18 June 2019

TUESDAY, 18 JUNE 2019

TUESDAY, 18 JUNE 2019

The Speaker took the Chair at 2 p.m.

Prayers.

Oral Questions

Questions to Ministers

Question No. 1—Regional Economic Development

1. CLAYTON MITCHELL (NZ First) to the Minister for Regional Economic Development: What recent Provincial Growth Fund announcements have been made?

Hon SHANE JONES (Minister for Regional Economic Development): Hawke’s Bay has been the region that has most recently felt the fiscal love from the Provincial Growth Fund. My colleague Under-Secretary Fletcher Tabuteau reflected that we believe in water storage. We realise that in order to effect a change in land use patterns, it is important that we futureproof land in areas in Central Hawke’s Bay through water banking. We have provided capital via the regional council, not to breathe life into the failed Ruataniwha double-demon kaupapa of the last Government but to improve the spread of horticulture and get better returns on land in the Hawke’s Bay, because they are screaming out for practical assistance in relation to things which reflect common sense, such as water storage.

Clayton Mitchell: Well said.

SPEAKER: Order! Which of the members—was that the Deputy Prime Minister, was it? The “Well said.”

Clayton Mitchell: No, that was me, sir.

SPEAKER: Well, the member just lost his ability to ask any more than one supplementary question, because he knows that he cannot comment through his open mike in that way.

Clayton Mitchell: What other projects were announced in Hawke’s Bay last week?

Hon SHANE JONES: Early in the life of the Provincial Growth Fund, we responded to the requests from the regional council of Hawke’s Bay and a host of other stakeholders in that region to provide approximately $6.5 million to upgrade the rail track and re-establish rail between Ahuriri-Napier and Wairoa. We also were able to bring all of the leaders together, put them on the train, and they safely made it to Wairoa. I have said that we are open to proposals, subject to due diligence from KiwiRail, up to Gisborne.

Rt Hon Winston Peters: What feedback has he received regarding these announcements?

Hon SHANE JONES: The Hawke’s Bay people, not normally known for being verbose, were totally talkative from the point at which the train left Ahuriri, and three hours later they had still not stopped talking when it got to Wairoa. Let me recount some of the things they were saying. At long last, Hawke’s Bay is seeing fiscal assistance, not just political rhetoric, which has littered their neighbourhood over the last nine years. From the humble areas of the marae, where they’re seeing digital connectivity, land use is changing, and what they saw was the first citizen of the provinces plant the last tree of the million trees, and the Deputy Prime Minister planted the first mānuka tree of the next million trees.

Rt Hon Winston Peters: Could I ask the Minister another question?

SPEAKER: The member can have a crack, yeah.

Rt Hon Winston Peters: I’m asking for your permission. Having regard to that very, very positive set of announcements, what feedback has he received regarding these announcements where it comes to Lake Waikaremoana’s road upgrade package?

Hon SHANE JONES: Lake Waikaremoana, under the last regime, fell into the joint ownership of Tūhoe, a tribe belonging to Te Urewera, formerly identified by Elsdon Best as the “children of the mist”. We are very keen to see that State Highway 38 proceeded with. There are some minor ruffles with the people of Tūhoe, the children of the mist. I have warned them that if they don’t agree, missed will be m-i-s-s-e-d, not mist. Thank you very much.

Question No. 2—Prime Minister

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

Rt Hon JACINDA ARDERN (Prime Minister): Yes.

Hon Simon Bridges: Does she agree with Labour Party finance spokesperson Grant Robertson, who said in September 2017, “There will be no new taxes or levies introduced in our first term of Government.”?

SPEAKER: Sorry, can I ask the member to repeat the question?

Hon Simon Bridges: Does she agree with Labour Party finance spokesperson Grant Robertson, who said in September 2017, “There will be no new taxes or levies introduced in our first term of Government.”?

Rt Hon JACINDA ARDERN: Of course, the member is reflecting the Labour Party tax policy, which, of course, did include reference, however, to those existing and the general praxis of excise increases—increases that apply to, for instance, cigarettes, and excise around fuel. Of course, the member will also be aware that we did campaign on things like a levy at the border in order to be able to, through a tourism levy, fund critical investment in conservation and tourism infrastructure, which had been severely under-resourced under the last Government. Those were all things included in our tax policy.

Hon Simon Bridges: How much additional tax will New Zealanders have to pay as a result of the four new taxes her Government imposed in Budget 2019?

Rt Hon JACINDA ARDERN: Again, I reject the premise of the question.

Hon Simon Bridges: Does she dispute that at the Budget, we saw petrol tax increases, tourist tax, GST on overseas roaming, and WorkSafe levies?

Rt Hon JACINDA ARDERN: Excise is not a new tax. New Zealanders don’t pay the tourism levy. Again, the idea that we just simply remove any equity around roaming—I can’t see that this is necessarily the biggest issue that New Zealanders are facing.

Hon Simon Bridges: How much will the petrol tax increases, tourist tax, GST on overseas roaming, and WorkSafe levies raise?

Rt Hon JACINDA ARDERN: Again, if the member wants to put a question on notice, I can provide that additional detail. Again, though, if the member wishes to now argue that he doesn’t support petrol excise, I can tell him that under his Government, it raised $4.9 billion when he was in office, because they increased excise more often than we have.

Hon Simon Bridges: Doesn’t she think she should know how much extra tax she is imposing on New Zealand families before she does it?

Rt Hon JACINDA ARDERN: The member is wrong; he is quoting, of course, levies that do not apply to New Zealanders.

Hon Simon Bridges: Does $1.7 billion this term in additional petrol taxes and road-user charges not apply to ordinary New Zealanders?

Rt Hon JACINDA ARDERN: If the member was speaking solely about petrol, I have seen some of the numbers that he has raised, and I question some of his estimates around the $1.5 billion or thereabouts as inaccurate. However, again, I would make the point that the member raises issues like road safety. The member, presumably, also wants to invest in alternatives to high-emissions transport and give cheaper, more reliable options in congested Auckland for people to get around their city. If the member chooses not to fund that through excise, which is exactly where excise goes, I would like to hear his alternative, because he left a funding gap in his transport plans.

Hon Simon Bridges: Is she concerned that the performance of manufacturing index last week dropped to its lowest level since 2012, something Hamish Rutherford described yesterday as “stoking concern”—

SPEAKER: Order! The member will ask a question. He doesn’t need a description from an outside commentator or a commentary to ask a question.

Hon Simon Bridges: Is she concerned that the performance of manufacturing index last week dropped to its lowest level since 2012, and what does she think that says about the state of the New Zealand economy?

Rt Hon JACINDA ARDERN: I also acknowledge that, at the same time, exports are up. We’re seeing some record increased figures—for instance, our lamb exporters; 600,000 pallets due to be exported from our kiwifruit producers. So a very different story there. Overall, though, we have to acknowledge that we are operating in an international environment where there is a degree of uncertainty. That’s reflected in some of even Treasury’s forecasts around our GDP projections, and it’s reflected in, for instance, the forecasts for both Australia and China—our partners who we tend to compare ourselves to economically—seeing a slowdown in their growth.

Hon Simon Bridges: Is she aware that even a small drop in GDP relative to Treasury forecasts will mean her Government will miss its debt target unless it cuts spending or raises tax?

Rt Hon JACINDA ARDERN: I thank the member for acknowledging that we are meeting our debt target; it’s taken him a while to get to that place, and we are. I would also acknowledge we just rely on the Treasury forecasts in the same way the last Government did.

Hon Simon Bridges: What are the GDP figures—and I’ll be clear; I mean GDP figures, not Crown account figures—going to say this Thursday?

Rt Hon JACINDA ARDERN: The member well knows we all have to wait for them.

Hon Simon Bridges: Does she understand that more taxes, costs, and debt won’t help turn a weakening economy around?

Rt Hon JACINDA ARDERN: What I understand is that, when you’re facing a downturn, one of the best things that you can do as a Government—counter to what that Government did—is invest. We know that there is stimulus going into our economy—that’s reflected by some of the GDP growth estimates that are being made—because we are investing in our people, we are investing in our building environment, we’re making sure that despite a downturn, we’re keeping the houses being built, we’re putting money back into families’ pockets through the Families Package, and wages as a result are going up. These are all things that make a difference at a time when we’re experiencing global slowdown.

Rt Hon Winston Peters: Can I take it, then, the Prime Minister is against inheriting the Government debt figure and then increasing it by over 800 percent?

SPEAKER: Order! That is not something she has responsibility for or has any indication that it’s part of her planning.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With respect, I am asking the Prime Minister for a fundamental principles statement as the leading administrator—the Prime Minister of this country; the principal Minister of this country—on a question of national debt. There can surely be few things as important as that.

SPEAKER: Is the member seriously suggesting that there is a proposal to increase debt by 800 percent, which would be the responsibility of the Prime Minister?

Rt Hon Winston Peters: Can I, in terms of clarity, say this: well, the Prime Minister can clear that up and let us all know so that we can go on more comfortably assured that fiscal management is in the right hands. That’s all I’m asking.

SPEAKER: I can accept that, but the danger is that if I accept that question, any ridiculous proposition can be put to the House by any member.

Rt Hon Winston Peters: With respect, you might say it’s a ridiculous proposition, but that’s precisely what happened under a previous administration.

SPEAKER: And that’s exactly what I thought we would get to, for which the Prime Minister has no responsibility.

David Seymour: Can the Prime Minister tell the House what portion of all income tax is paid by the top 5 percent of income tax payers?

Rt Hon JACINDA ARDERN: I’d want to make sure I was giving the member a precise figure based on the last tax receipts and income from IRD—if the member wishes to put it on notice. I would, however, acknowledge, of course, the member has recently announced his own tax policy, and, look, whilst it’s good to have a wide-ranging debate on these issues, we’re simply of the perspective that, when it comes to those on the lowest incomes, we do not wish to see them paying more tax.

David Seymour: Does the Prime Minister think it is fair that 5 percent of taxpayers pay a third of all income tax?

Rt Hon JACINDA ARDERN: Of course, that’s proportionate to the income that they receive.

Chris Hipkins: I raise a point of order, Mr Speaker. You’ve previously banned party branding from boxes that sit on the desks in front of us in the Chamber. I think previous Speakers have also banned party branding that is worn in the Chamber. Is that a ruling that you continue to uphold?

SPEAKER: Yes. I’m looking round—

David Seymour: I raise a point of order, Mr Speaker.

SPEAKER: Well, that is not to the point where I think it is—

David Seymour: I would like clarity. Is he referring to this?

SPEAKER: To what?

Hon Grant Robertson: His badge.

SPEAKER: Oh, no. Sit down, Mr Seymour. There’s been a habit over a number of years for people on this side of the House who have had Labour Party life memberships to wear those badges in the House. That’s never been restricted, and something so small that I can’t tell what it is from this distance is not something I’m going to object to.

Question No. 3—Prime Minister

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

Rt Hon JACINDA ARDERN (Prime Minister): Again, I still do, yes.

Hon Simon Bridges: Does she stand by her statement that the Northland meningitis vaccination campaign was “successful” when a seven-month-old baby subsequently contracted meningitis?

Rt Hon JACINDA ARDERN: Yes, I did refer to that case when asked in my stand-up yesterday about Northland and the outbreak there, of course. We simply responded to the clinical advice that was received at the time, which was based on two factors—

Hon Paula Bennett: Were there options?

Rt Hon JACINDA ARDERN: —first, trying to make sure that those who are most vulnerable were protected, and that included vaccinating children.

Hon Paula Bennett: Were there three options?

Rt Hon JACINDA ARDERN: I’ve also referred to the fact that children of a—

SPEAKER: Order! Order! Sorry, I’m just going to interrupt the Prime Minister. A baby has died. The Prime Minister’s answering the question, and I think she should have the politeness of being able to finish the answer without inane interjections.

Rt Hon JACINDA ARDERN: I will just clarify—

Hon Paula Bennett: I raise a point of order, Mr Speaker. I certainly was not inane, and I certainly think it’s fair that the Opposition ask questions. If there’s to be silence in every answer that the Prime Minister is giving, that is a new rule and one that I think would take away from the robustness of the debate in this House.

SPEAKER: I am not proposing such a new rule. What I am proposing is that we have a degree of respect for families where there has been a death of an infant. I don’t think that’s unreasonable.

Hon Paula Bennett: I raise a point of order, Mr Speaker. I take immense offence that you would think I am not giving that degree of respect. It is us that have actually raised this very serious issue, and I have nothing but respect for those families. I think it’s offensive for you to actually infer otherwise.

SPEAKER: Well, I think the member would’ve made her position more obvious if she hadn’t started chipping the Prime Minister partway through her answer.

Rt Hon JACINDA ARDERN: Happy to continue with the answer. One thing I would like to clarify is that I am advised by the Ministry of Health (MOH)—and I know the whole House will be pleased to hear this—that the baby involved was released from hospital and did not pass, but, having said that, that’s not to trivialise a baby contracting the illness in the first place, which of course we all take very seriously. However, the guidance that I’m advised was received is around targeting those infants who are able to be immunised and, again, also targeting those young people who are most likely to spread the disease. We were given advice in November that those are the two target groups that should be focused on with an immunisation campaign. I believe roughly 25,000 forms of the vaccine were able to be accessed. The Ministry of Health worked very quickly to roll that out. Given that school was to break very quickly, they moved as quickly as they could, and I think the outcome does speak for itself in that regard.

Hon Simon Bridges: How can it speak for itself in that regard and be a successful campaign when people still contracted meningitis?

Rt Hon JACINDA ARDERN: As I said, we rely on clinical advice. The clinical advice at the time was to target those aged nine months to four years—I believe that’s because, as with other immunisations, they have to be repeated if it’s a baby of a particular age, but you’re best to ask probably the Minister of Health that particular question—and those aged 13 to 19. There have been outbreaks in other areas, I believe. Other jurisdictions have followed similar guidance.

Hon Simon Bridges: When was the Government made aware there were enough vaccines to vaccinate everyone under the age of 20 in Northland?

Rt Hon JACINDA ARDERN: I’m advised that in May—keeping in mind—

Hon Simon Bridges: November.

Rt Hon JACINDA ARDERN: That was Ministers, in May, or at least the Minister of Health. Keeping in mind the outbreak was in November, and I do want to clarify that my understanding is: I’m advised that Pharmac on 9 November was told that a drug company could potentially provide up to 33,000 doses. However, this was not available for a few weeks, and also there were other jurisdictions seeking the vaccination as well. So I’m not sure it’s fair to characterise that as a guaranteed amount. Again, they were able to secure a total of 20,000 doses; a bit more than that for the Northland campaign.

Hon Simon Bridges: Given that one of the options presented to the Government by the Ministry of Health back in November last year was to fully vaccinate all under-20-year-olds and that her own Minister of Health has said, in relation to back in November, that then he was made aware by the Director-General of Health that additional vaccine was available if a wider vaccination programme was later required or there was an outbreak elsewhere, why didn’t the Government pursue that course of action?

Rt Hon JACINDA ARDERN: Again, I think the member’s actually answered the question himself by reading that quote, “if there was an outbreak that later required it elsewhere”. We had an outbreak in Northland. Actions were taken to secure as much vaccine—then those 20,000 doses to follow that clinical guidance. I haven’t seen the full advice the member’s speaking of, but, of course, if there were an outbreak somewhere else, then you would, of course, require that additional vaccination. Again, it is important to point out, of course, that it wasn’t guaranteed that the additional vaccine that was spoken of was available, let alone available immediately, and the MOH was working very quickly at that point.

Hon Simon Bridges: Wasn’t the vaccine clearly available from November, according to the Ministry of Health, to the drug companies, and to the knowledge of her Minister?

Rt Hon JACINDA ARDERN: Of course, it’s Pharmac that would’ve been involved. I’m advised that the drug company advised Pharmac, as I’ve said, on 9 November that it could potentially provide up to 33,000 doses. However, it was not available for a few weeks, and that, at that time, was not an option. They did need to move quickly; the school year was ending and they needed to roll it out quickly. Again, I would point out that even then, the immunisation campaign wasn’t focused on children under one at that point—I believe also because of clinical advice. So, ultimately, yes, one baby was affected, and of course no one wants to see that, but otherwise that campaign, where targeted, has made a difference.

Hon Simon Bridges: Does she agree with the Director-General of Health, who said the vaccinations were “over twice the price, and, of course, cost is an important element”?

Rt Hon JACINDA ARDERN: Again, as I’ve said, my understanding is the decision was made on clinical advice.

Hon Dr David Clark: Is the Prime Minister aware that the targeted approach that was taken followed suit from similar approaches that were taken when meningococcal W outbreaks happened in Australia and in the UK?

Rt Hon JACINDA ARDERN: Yes, that’s certainly my understanding, that we are not the only ones that have experienced those outbreaks, and they did take a similar approach to New Zealand, or, indeed, we took a similar approach to them.

Hon Simon Bridges: Why didn’t they vaccinate all under-20s if it wasn’t about cost, if it wasn’t about international supply—as she inferred in a letter to Shane Reti in February—and if the drug companies and, indeed, the Minister knew that the drugs were available from November last year?

Rt Hon JACINDA ARDERN: Again, I refute the premise of that question.

Hon Simon Bridges: Why didn’t they, rather than rationing the drug, have blanket coverage to under-20s last year?

Rt Hon JACINDA ARDERN: Again, those who are most at risk of spreading the disease are 13- to 19-year-olds, first of all. Those at most risk if they contract the disease are nine months to four-year-olds. We have a limited capacity to get those groups immunised quickly. If we had a blanket process, we may have then sacrificed those groups being targeted first and quickly, and that was key.

Question No. 4—Finance

4. Dr DEBORAH RUSSELL (Labour—New Lynn) to the Minister of Finance: What reactions has he seen to Budget 2019?

Hon GRANT ROBERTSON (Minister of Finance): I’ve been contacted by many New Zealanders who have expressed support for the approach we have taken with the Wellbeing Budget. They understand that we can’t fix all New Zealand’s problems with one Budget but that Budget 2019 represents a new way of doing things and is an important step in the right direction. For example, one resident from Raglan emailed to say that the Government and all who have contributed to the Budget are to be congratulated. He said that “Although some would have wished for more, the Budget lays the foundation for a sustainable economic future in which the whole of New Zealand will receive a share.”

Dr Deborah Russell: What reactions has he seen to Budget 2019 from the business sector?

Hon GRANT ROBERTSON: I’ve seen warm reactions to the Budget from various business groups. According to Deloitte, “wherever you sit in the conversation of how innovative the … Budget is, there is little doubt that cross-agency allocations for issues like climate change, family violence, homelessness, child wellbeing, reducing Māori offending and addressing mental health are essential.” Deloitte partner David Lovatt said that where the wellbeing approach really shines is “Compelling agencies to work together by funding them in ways that reward collaboration, measuring the impacts they are having, and then ultimately holding them publicly accountable are precursors to being able to achieve progress on these perennial issues.” The New Zealand head of Chartered Accountants Australia and New Zealand, Peter Vial, said that—

SPEAKER: Order! Order! That’s enough.

Dr Deborah Russell: What reactions has he seen from Māori and Pasifika groups to the Wellbeing Budget?

Hon GRANT ROBERTSON: Yesterday, with my colleagues Ministers Sio and Salesa, I met with around 150 leaders from the Pasifika community in Porirua. There was resounding support for the measures being taken to enhance the wellbeing of Pacific peoples—in particular, investing in Pasifika economic opportunities, supporting Pacific languages and communities, and boosting funding for Pacific health. This is a Budget based on evidence, and the evidence suggests that the status quo has not worked for Māori and Pasifika peoples. Through this Budget, we are giving them more scope to lift their own wellbeing and achieve their aspirations.

Question No. 5—Finance

5. Hon AMY ADAMS (National—Selwyn) to the Minister of Finance: Does he stand by all of the Government’s decisions, statements, and actions in relation to his portfolio?

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

Hon Amy Adams: Why, when Budget 2019 allocated $15.2 billion of new operating spending over four years, couldn’t he find enough funding in the Budget to ensure that Pharmac’s funding at least kept pace with inflation?

Hon GRANT ROBERTSON: As has been traversed in the House last week, Pharmac did receive an increase in funding. In this Budget, in the health area, based on the evidence, mental health received a massive injection of funding after being neglected for many, many years. The overall health budget has received a significant increase. On this side of the House—as I said in answer to the last question—we can’t make up for nine years of neglect in one year or even two years, but we’re making a good start.

Hon Amy Adams: How can he say that he’s used “evidence and expert advice to tell us where we could make the greatest difference to the wellbeing of New Zealanders”, when the Government has chosen to pour hundreds of millions of dollars into fees-free tertiary at the expense of giving Pharmac enough money to keep pace with inflation?

Hon GRANT ROBERTSON: The premise of that member’s question is incorrect. Money that supports education, money that supports health, and money that supports housing are all part of the Budget; one is not at the expense of the other. What we’re doing is actually making up for the enormous under-investment of the previous Government.

Hon Amy Adams: How does he think the refusal to even keep Pharmac funding in line with population growth has affected the wellbeing of New Zealanders like 14-year-old Stella Beswick, two-year-old Otis Porter, or Bella Guybay’s four-year-old daughter, who are all waiting desperately for the funding of lifesaving medicines that are funded in almost every other OECD country?

Hon GRANT ROBERTSON: As the member well knows, and as with the time she was in Government, Pharmac make those decisions. We now spend nearly a billion dollars on the Pharmac budget, and we will continue to invest in that. But we will also continue to invest in the areas which the last Government completely ignored—such as mental health—because that is what New Zealanders asked us to do.

Hon Amy Adams: How does he respond, then, to Troy Elliott, whose wife is suffering from serious breast cancer, and has said that New Zealand’s medicines funding is starting to make us look like a Third World country and that “this Government has to wake up; we’re going backwards.”?

Hon GRANT ROBERTSON: I understand that for any family that is going through a situation where they have a family member with cancer, that is traumatic. What we know in this country is that Pharmac makes the decisions about what drugs it invests in. In terms of the latter part of that quote, I respectfully say that New Zealand is actually now going forward positively as a country, to make sure that everybody shares in prosperity.

Hon Amy Adams: Why was spending $7 million on Artists in Schools a higher wellbeing priority than the mere $6.5 million needed to reinstate cochlear implant funding that his Government cut in last year’s Budget?

Hon GRANT ROBERTSON: Again, the member is not reflecting the Budget process that she knows well. These things are not trade-offs against one another. We are creating an environment in which we’re investing in wellbeing across all sectors of the economy. In the health sector, this Government has a record that is far superior to that Government.

Question No. 6—Health

6. Hon MICHAEL WOODHOUSE (National) to the Minister of Health: Does he stand by all of his statements and actions around Vote Health in Budget 2019?

Hon Dr DAVID CLARK (Minister of Health): Yes, and in particular I stand by my statement that with the Wellbeing Budget, this Government is taking mental health seriously and, at the same time, investing $1.7 billion in hospitals and other health facilities.

Hon Michael Woodhouse: Well, isn’t it true that in order to fund his Government’s mental health initiatives, large parts of Vote Health have been neglected, and the best example of that is the effective decrease in Pharmac funding?

Hon Dr DAVID CLARK: No.

Hon Michael Woodhouse: Well, how can he stand by that statement and that a 1.1 percent funding increase for Pharmac is sufficient when the 1.8 percent increase in population in the last 12 months means Pharmac funding has materially dropped on a per capita basis?

Hon Dr DAVID CLARK: The Pharmac model enables more people to have more medicines every year. In the last financial year, 331,000 more patients got access to medicines because of the Pharmac model. There were 13 new drugs approved, and 39 medicine classes had broadened access. This year, there will be more people that get access to more medicines again. We invested $40 million as a part of a health budget that invested $1 billion a year in health to address the neglect of nine long years of health underfunding by that former Government.

Hon Michael Woodhouse: Given that answer, why did he not correct his answer to oral questions on Wednesday last week, when he said “I do stand by the statement that last year over 100,000 New Zealanders gained further access to medicines”, and isn’t the discrepancy just because he’s not very good with numbers?

Hon Dr DAVID CLARK: Because over 100,000 people did get access to medicines. I would like to give the member a short lesson, in that the number 331,000 is more than 100,000.

Hon Simon Bridges: Has he just changed the number from 100,000 to 330,000, and does that show he’s just making it up as he goes along?

SPEAKER: Order! Order! We had that statement in the House last week, and it resulted in someone withdrawing and apologising. The member will withdraw and apologise.

Hon Simon Bridges: I withdraw and apologise.

Hon Michael Woodhouse: Does he agree with his Director-General of Health, who described his own ministry’s and Treasury’s projected district health board (DHB) deficits of $390 million in Budget 2019 as “speculation”, and is that what Budget 2019 has become?

Hon Dr DAVID CLARK: Budget 2019, the Wellbeing Budget, invests $1.9 billion in mental health because that is what New Zealanders are concerned about. That Budget invests heavily across a range of areas in health. It addresses underfunding in the DHB sector that’s gone on for years and years and years, with $2.8 billion going into DHBs this time round. Of course, we can’t address nine years of underfunding in one or two Budgets, but we can make a good start.

Hon Michael Woodhouse: When is he going to make that good start?

Hon Dr DAVID CLARK: We’ve already made it. There’s good news for that member, because, once again, it’s a record Budget. Last year, we put more money in than had been put in for a decade, and this year we topped it—again, more money than in a decade. They neglected health for nine long years—$2.3 billion in underfunding. We are addressing that: 1,300 more nurses, 440 more doctors, and over 300 more allied health workers. We have been growing our public health system, unlike that lot, who were prepared to let it shrivel and die.

Question No. 7—Education

7. JAN TINETTI (Labour) to the Minister of Education: What recent investments has the Government made in school property to meet population growth?

Hon CHRIS HIPKINS (Minister of Education): The Wellbeing Budget makes the largest investment in school property by a New Zealand Government, with a whopping $1.2 billion to fund new schools, kura, specialist schools, and additional classrooms to meet roll growth. The $1.2 billion investment will be delivered in four waves, allowing us to work closely with the construction sector to get the right mix of large, medium, and small projects across the region where growth is occurring. It’ll also allow us to deliver at scale, using local suppliers in the regions, where appropriate.

Jan Tinetti: What planning has the coalition Government done to support this large investment in school property?

Hon CHRIS HIPKINS: The coalition Government will be releasing the national education growth plan shortly. It identifies the number of student spaces required around New Zealand by 2030, as the school-age population continues to grow. The growth plan is a first for New Zealand, representing a step change in the way we plan for and manage growth in the school-age population, school redevelopments, and school builds. Instead of reacting to population issues school by school, we’ll be taking a longer-term view across schools.

Jan Tinetti: How does the Government’s $1.2 billion investment in school property support a longer-term approach to planning and building for school property?

Hon CHRIS HIPKINS: The $1.2 billion is a multi-year commitment to build new schools and classrooms, setting aside funding for the first four waves of a 10-year school property programme. Previously, investment decisions were made annually, which made strategic planning quite difficult. The growth plan and the upfront investment allows officials to plan over a longer time frame, giving schools and communities greater confidence about their projects. The groundbreaking programme will give certainty to schools, to their communities, and, of course, to the construction sector. It’ll streamline the procurement processes and give taxpayers better value for money with less disruption.

Question No. 8—Health

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

SPEAKER: Well, close enough, anyway.

Hon Dr DAVID CLARK (Minister of Health): In particular, I stand by my statements that the targeted meningococcal vaccination programme in Northland followed international practice and has proved successful in its aim of preventing the spread of meningococcal W in Northland, with only one case recorded since the campaign was rolled out, that being of a child who was too young to receive the vaccine. So the answer to the member’s question is yes.

Dr Shane Reti: Did the Minister say yesterday “Around the time Pharmac secured the vaccine for the targeted vaccination programme”—which was in November last year—“I was made aware by the Director-General of Health that an additional vaccine was available”, in direct contrast to what he said to TV ONE on Friday?

Hon Dr DAVID CLARK: The member will probably know that the director-general advised me that he was able to source additional vaccines for the targeted programme. He didn’t specify a number.

Dr Shane Reti: Do the minutes of the expert meeting on 8 November also recommend possibly vaccinating all under-20-year-olds in Northland?

Hon Dr DAVID CLARK: I have gone back and looked at those expert recommendations from medical experts. They recommend, first and foremost, a targeted campaign, but they do list that possibility.

Dr Shane Reti: If the experts met and made their recommendations on 8 November but Pharmac only confirmed the 30,000 extra vaccines on 9 November, was the expert group ever reconvened and told that 30,000 extra vaccines were available?

Hon Dr DAVID CLARK: I am reliant on the expert advice that I receive. The advice I’ve received is that the director-general took the decision to have a targeted campaign because one of the factors involved was making sure that there were sufficient people clinically trained to deliver the vaccinations and that one of the most important things to do was to disrupt the spread. That meant focusing, nearly and squarely, on the teenagers who were the most likely to be the vectors of the disease and then, secondarily, focusing on infants and young children who are most likely to be affected by the disease. By all accounts, to date, it has been a very successful campaign, and I guess that is why it’s important to rely on expert medical advice.

Dr Shane Reti: Isn’t it true that we don’t know if the extra 30,000 Pfizer vaccines would’ve protected the seven-month-old child who caught meningitis a few months ago, but didn’t she at least deserve a chance?

Hon Dr DAVID CLARK: At the time the campaign rolled out, that vaccine, I’m advised, was not approved for vaccination of children of that age. That only happened subsequently.

Dr Shane Reti: See you tomorrow—you’ll correct that.

Hon Dr DAVID CLARK: It’s true.

Dr Shane Reti: No, it’s not. They use it in Australia.

SPEAKER: Question No. 9—the Hon Paula Bennett.

Hon Paula Bennett: My question is to the Minister of State Services. Does he—[Interruption]

SPEAKER: Order! Order! Both members will stand and apologise.

Hon Dr DAVID CLARK: I withdraw and apologise.

Dr Shane Reti: I withdraw and apologise.

Question No. 9—State Services

9. Hon PAULA BENNETT (Deputy Leader—National) to the Minister of State Services: Does he have confidence in the State Services Commission investigation into statements made and actions taken by the Secretary to the Treasury?

Hon CHRIS HIPKINS (Minister of State Services): Yes.

Hon Paula Bennett: Is the Treasury secretary’s leadership and integrity going to be looked into as part of the inquiry?

Hon CHRIS HIPKINS: The terms of reference for the investigation being undertaken by the Deputy State Services Commissioner have been released, as have the terms of reference for the inquiry being undertaken separately to the State Services Commission. It’s very clear what is being investigated. That is a matter of public record.

Hon Paula Bennett: Are the calls and decisions the Treasury secretary made under pressure part of his leadership, and, as such, is it appropriate for the State Services Commissioner to praise his “Strong leadership and … integrity” last week?

Hon CHRIS HIPKINS: The Secretary to the Treasury, Mr Makhlouf, has been in that job for eight years. He has helped Governments to deliver eight Budgets during that time. He’s contributed to the rebuild of Christchurch following the Christchurch earthquake, he was acknowledged for helping the Government to get the books back into surplus—those two latter achievements were under the tenure of the previous National Government. I think it would have been petty and churlish for him not to have been acknowledged for his contributions to the public of New Zealand.

Rt Hon Winston Peters: Petty and ruthless.

Hon Simon Bridges: Oh, he’d know.

Hon Paula Bennett: Does the State Services Commissioner choose his words—

SPEAKER: Order! Order! Look, I know there was a just-in-time interjection which caused the Leader of the Opposition to intervene, but we have two of the most senior members of the House again causing disruption, and it would be good if both of them stopped it.

Hon Paula Bennett: Thank you, Mr Speaker. Does the State Services Commissioner choose his words carefully when his agency is investigating serious issues involving a senior public servant, and, if so, should he have said that Mr Makhlouf has brought strong leadership and a great deal of personal integrity, and that he is authentic and straight up, while in the middle of an inquiry being led by the said commissioner?

Hon CHRIS HIPKINS: The inquiry is not being led by the said commissioner; it’s being led by the Deputy State Services Commissioner, who will report to the commissioner. I think it’s important to reflect on what the State Services Commissioner actually said in his contribution when he made specific reference to the investigation in question, which is to do with a specific set of actions by Mr Makhlouf, not to do with his overall performance in the job, and I think it’s important to recognise that. The only reference the State Services Commissioner made to that matter was to acknowledge that it was a difficult time for Mr Makhlouf and his family and for those who worked for him, and that he had approached the investigation openly, honestly, and professionally.

Question No. 10—Justice

10. GINNY ANDERSEN (Labour) to the Minister of Justice: What recent reports has the Minister received on the family justice system?

Hon ANDREW LITTLE (Minister of Justice): On Sunday, I received and welcomed the release of the independent panel’s review of the 2014 family justice system reforms. From the report, it’s clear that those reforms, championed by Judith Collins, haven’t worked as intended. The report showed there’s been considerable dissatisfaction in the current family justice system. The panel, in putting together its report, attended over 100 meetings held in 15 locations around the country and received over 500 submissions, so their findings are authoritative.

Ginny Andersen: What is the independent panel’s assessment of the changes made in 2014 to the family justice system?

Hon ANDREW LITTLE: The 2014 reforms, championed by Judith Collins, made significant changes to the family justice system, including introducing family dispute resolution and removing lawyers from the early stages of many Family Court proceedings. These changes were meant to make things easier for families at a difficult time in their lives, but they’ve had the opposite effect. Cases are taking longer to resolve, and many family members involved in the court processes say they are not well supported. The 2014 reforms saw an instant increase in without-notice applications, with children now being left to wait for years for their care arrangements to be decided, and the entirety of the family justice system being bogged down.

Hon Damien O’Connor: Typical Tories.

Ginny Andersen: What will happen with the independent panel’s report?

Hon Gerry Brownlee: Who said that?

Hon ANDREW LITTLE: The report makes 70 recommendations—

Hon Gerry Brownlee: How does that get away with it?

Hon ANDREW LITTLE: —which propose wide-ranging changes—

SPEAKER: Order! Order! Sorry, I gather there’s a sitting-down point of order from the Hon Gerry Brownlee. If he stands up and draws my attention to something out of order, I will consider it.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Throughout the afternoon, you’ve been very quick to point to various members on this side for comments they were making. You’ve singled out the Deputy Prime Minister for being “just in time” with a particular comment. None of those comments were particularly offensive, but the comment that you appeared to miss from the other side of the House, in the context it was given, was extremely offensive. The member knows who he was who made it, and he should be made to withdraw and apologise.

SPEAKER: If a member made a comment which might reasonably be considered offensive, that member will stand, withdraw, and apologise.

Hon Damien O’Connor: I stand, withdraw, and apologise.

SPEAKER: Now, I’m actually going to—and I’m not sure if he’s fixed up yet. The member will just withdraw and apologise while he is standing.

Hon Damien O’Connor: I just withdraw and apologise.

SPEAKER: No. No, that—

Hon Damien O’Connor: I withdraw and apologise. Sorry.

SPEAKER: I do, better than the member, understand the current problem.

Hon ANDREW LITTLE: The report makes 70 recommendations, which propose wide-ranging changes to the family justice system. The principal recommendation calls for the development of a joined-up family justice service, Te Korowai Ture a-Whānau. Having taken the time to listen to the people affected by the failed 2014 reforms, the Government will now carefully consider the recommendations, with a view to making family justice services more effective and responsive.

SPEAKER: Right—the trouble I have now is that I have been advised of the comment that the member made, and, frankly, it is a matter which, in the past, might’ve been regarded by one side of the House with pride rather than being an offensive term. I’m not going to let it go any further now, but I will just put on the record, indicating that someone is a Tory is not something which is offensive in this House.

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

SPEAKER: Order! I’m about to take a point of order, and members will be quiet.

Hon Gerry Brownlee: There was no offence taken at the use of the word “Tory”. It was the context in which it was offered that was offensive. There’s never been any attempt by anybody that I know in the previous Government’s ministry to frustrate the processes of the Family Court, and, I think for the member to have interjected the way he did was to make that suggestion. Given the pain that so many families suffer as a result of their various breakdowns and difficulties in resolving those problems, it was a very offensive comment.

Hon David Parker: Can I support you in your finding. The phrase “typical Tory” isn’t offensive. It’s been made often in this House while I’ve been here, and I think it would be setting a new standard for interjections like that to be ruled out of order.

Hon Gerry Brownlee: I agree—totally agree, but context is important. You lefties are too soft.

SPEAKER: Order! Order! I’m now on my feet, I’ve heard that, and I’ve made my point about the interjection and the fact that, you know, it could well have been regarded, until recently at least, as a matter of pride rather than being something which is offensive. I was listening carefully to the Minister when he was making his answer to the supplementary question. I did not find anything offensive in that, and, if I had, I would’ve interrupted, and I’m absolutely certain that the learned member Judith Collins, seeing as she was being referred to, would have herself if, in fact, there was something offensive said.

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

SPEAKER: Oh, the member is not going to be allowed to withdraw his apology.

Hon Damien O’Connor: I did wonder if I could withdraw.

SPEAKER: No—the member just better be careful or he’ll get another smart response from me.

Question No. 11—Education

11. Hon NIKKI KAYE (National—Auckland Central) to the Minister of Education: Is he confident that the Government’s school donations policy is delivering on its commitment to break down financial barriers to participate in education at all levels?

Hon CHRIS HIPKINS (Minister of Education): Absolutely, yes.

Hon Nikki Kaye: How many children does he estimate are living in benefit-dependent households who attend decile eight to 10 schools, and did he adequately consider these children when he made the policy?

Hon CHRIS HIPKINS: With regard to the specific number, I don’t have that number with me, but I’m happy to supply it to the member. With regard to the second part of the question, yes, we did consider that. I looked, for example, at the level of locally raised funds that schools are able to generate, and it shows that decile eight schools raise, on average, per student, $836.10 per student in locally raised funds, moving up to $937.19 being the average locally raised funds amount for decile 10 schools. That’s significantly more than the locally raised funds for lower-decile schools.

Hon Nikki Kaye: What does he say to principal Lorraine Taylor, who has said “The donations policy is devastating news, because it will mean parents will take their kids elsewhere”, and has he adequately considered potential donation flight, and is he considering the principals who are criticising his policy?

SPEAKER: Any one of the three.

Hon CHRIS HIPKINS: I think it will be the first time ever that a high-decile school has complained about parents potentially sending their children to a low-decile school, and, frankly, that would be a nice problem to have, because the evidence clearly suggests that, actually, most of the flight goes the other way.

Hon Tracey Martin: Can the Minister confirm that it was a previous National Party Minister who introduced the decile system, directly to reflect the socioeconomic disadvantage in schools across New Zealand, and so, therefore, it has already been recognised historically that decile 8, 9, and 10 schools are able to better support their students, as opposed to decile 1, 1a, 1b, etc.?

SPEAKER: No, there’s no responsibility for the Minister for that.

Hon Nikki Kaye: What does he say to Whakarongo School, who have said the following about him and the donations policy: “You publicly stated that if you introduced this scheme it would be for all schools; to not honour that intent is disgraceful and another example of yet another electoral broken promise.”?

Hon CHRIS HIPKINS: No, we never made that promise. In fact, we were quite clear that the costings—and I had this discussion with the member at select committee last week. The policy was costed based on decile 1 to 7 schools taking the policy up. I have not ruled out extending it in the future to decile 8, 9, and 10 schools.

Hon Grant Robertson: What does the Minister say to the school board of trustees member who messaged the Government to say that their school, a decile 2 school, had previously been able to generate about $2,000 a year in school donations, and, as a result of the Government’s policy, would be getting $70,000 a year?

Hon CHRIS HIPKINS: That is exactly what the Government is intending to achieve through this policy. We know that higher-decile schools are able to generate significant amounts of funding in their local community—not actually just through parental donations but through the other fundraisers that they do—that lower-decile and mid-decile schools are not. This helps to level the playing field.

Jan Tinetti: What does the school donations scheme mean for a rural school like Katikati Primary School, who only receive around $9,000 a year in donations?

Hon CHRIS HIPKINS: I do happen to have that information in front of me. What it means for Katikati Primary School is that, if they sign up to the scheme, they will receive around $85,000 next year in additional operations funding. It is going to make a huge difference for schools like that, who receive very little in parental donations and who aren’t able to fundraise significant amounts of money, as other schools have been able to.

Hon Nikki Kaye: I seek leave to table submissions from, for instance, Linton Camp School, who are destined—

SPEAKER: Order! Order! Now, what I want the member to do is to properly describe the document, not the contents—and, if it’s a submission, it’s a submission to whom?

Hon Nikki Kaye: I seek leave to table a submission to the Education and Workforce Committee from Linton Camp School, which—

SPEAKER: So it’s a submission that’s gone to a select committee. Is it publicly available yet?

Hon Nikki Kaye: Not at the moment.

SPEAKER: The question is that that document be tabled. Is there any objection to that? There appears to be none.

Document not tabled.

Question No. 12—Conservation

12. GARETH HUGHES (Green) to the Minister of Conservation: Is she satisfied that the proposals for an updated threat management plan will better protect Hector’s and Māui dolphins; if so, why?

Hon EUGENIE SAGE (Minister of Conservation): Yes. The options for Hector’s dolphins include extending the Banks Peninsula marine mammal sanctuary from 4 to 20 nautical miles offshore; expanding the areas closed to set netting by 6,500 square kilometres and the areas closed to trawling by 6,300 square kilometres, to protect Hector’s dolphins from the risk of by-kill in fishing nets; and also doubling the size of the Banks Peninsula marine mammal sanctuary. The options proposed for Māui dolphin include more than doubling the area closed to set netting and trawling, to protect Māui from bycatch in set nets and trawl nets, and extending the West Coast marine mammal sanctuary.

Gareth Hughes: What changes to existing marine mammal sanctuaries are proposed? [Interruption]

SPEAKER: Order! Who interjected from my left?

Jonathan Young: I did.

SPEAKER: Right. Well, because of previous good behaviour, consider himself warned.

Hon EUGENIE SAGE: Five marine mammal sanctuaries are in place to protect both Māui and Hector’s dolphins. The West Coast North Island marine mammal sanctuary was established specifically to protect Māui dolphins. The discussion document proposes to extend it from New Plymouth south to Wellington, and it proposes to extend the Banks Peninsula sanctuary to protect Hector’s dolphins north to Kaikōura, south to Timaru, and from 4 nautical miles out to 20 nautical miles from the coast. It also proposes improved protection against seismic surveys and seabed mining.

SPEAKER: Before we go to that, I should just explain it’s not just because I know and respect the member’s parents that I was soft on him; there was a provocative—just in time—interjection from the Hon Shane Jones which stimulated the inappropriate reply.

Hon Tracey Martin: Can she confirm that the document is merely a discussion document and that no decisions have been made by the Government at this stage, and that the Government looks forward to receiving all submissions?

Hon EUGENIE SAGE: The document is a discussion document. It is informed by the best available science and an international peer review, and I and the Minister of Fisheries look forward to receiving public submissions.

Gareth Hughes: What is the threat posed by seismic surveys?

: Seismic surveys are used by the oil, gas, and mining industry to look for mineral deposits, and by scientific researchers to survey seabed features. The acoustic noise involved in those surveysHon EUGENIE SAGE has the potential to cause hearing damage to dolphins and to disturb their breeding, feeding, and resting behaviours.

Hon Gerry Brownlee: Have a look at Western Australia. They go mad for it.

Hon EUGENIE SAGE: So currently, under the regime we’ve inherited, dolphins have got less protection—

SPEAKER: Order! I am going to interrupt the member and say that there might be some debate around the science of the effect of loud noises on dolphins; there’s not much on me at the moment. It’s getting too loud, and I don’t want to, sort of, require the member to be quiet, because it’s a bit too optimistic, even for me.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Well, I just want to acknowledge that loud noise can annoy a lot of people, and I particularly want to make it clear that I certainly would not want to see a man of your recently acquired age being subjected to the same, would you say, rigours and responsibilities as the dolphin population, which has massively expanded as a result of the seismic work in Western Australia.

Rt Hon Winston Peters: Mr Speaker—

SPEAKER: Well, I will—before calling the member—thank him for the card which I received in the mail.

Rt Hon Winston Peters: Oh, you’re welcome. Can I just say to that, just as a precaution, we in this House might have crossed the divide politically but we’ll always be concerned with noises made by endangered species. I think you’ve been rather harsh there.

SPEAKER: There are times when I regret thanking the member. We’ll go back to Eugenie Sage, who has been probably a bit more loquacious than she needs to be in this answer.

Hon EUGENIE SAGE: Currently, dolphins have got less protection in the sanctuaries from seismic surveys than in the exclusive economic zone, so the options include applying the code of acoustic disturbance in the sanctuaries, to prohibiting seismic surveys within the sanctuaries.

Gareth Hughes: What is the threat to the dolphins posed by seabed mining?

Hon EUGENIE SAGE: Seabed mining’s got the potential to impact on the dolphins through a combination of noise, major changes to their habitat, and sedimentation effects, and that’s why the document proposes options from prohibiting mining within the sanctuaries to an expanded buffer area beside the sanctuaries.

Budget Debate

Bills

Appropriation (2019/20 Estimates) Bill

Debate resumed from 13 June on the .

Hon NANAIA MAHUTA (Minister for Māori Development): I’m pleased to be able to make a contribution in the debate on the Wellbeing Budget 2019. But, more importantly, I am proud of a Prime Minister who is courageous in her leadership to say that we will look beyond GDP as an economic success measure for this country and we will broaden our focus to the wellbeing outcomes for people in their communities, across the regions in New Zealand, that will deliver real, transformative change. That takes courage. We support her leadership, and it will be the first wellbeing Budget in the world that any country can say is about more than economics; it’s about people.

We are taking a number of issues very seriously. As the Minister of Finance has indicated, we are using evidence to underpin the top issues upon which we’re focusing in this Wellbeing Budget, like taking mental health seriously; like ensuring that we’re breaking the cycle of child poverty and domestic violence, with a key focus on child wellbeing, by investing in crucial national infrastructure like our hospitals—remember when the walls were seeping at Middlemore Hospital under the previous administration with I don’t know what—like investing in our schools now and into the future, and like managing our books responsibly and growing the economy to where there are more jobs for more people and they are not limited in their vision and opportunity for themselves. We’re reducing the long-term economic challenges like building a sustainable economy and preparing for jobs in the future, where all New Zealanders have a real chance to get a step up the ladder of opportunity.

This approach is underpinned by good evidence, it’s underpinned by an intergenerational focus, and it is underpinned by an investment strategy that sits across portfolios and says that no longer will we be making investments in isolation of the impact that it can have on people, and it works across other Government agencies in a joined-up way with communities and with providers. I think that’s a change we should all have confidence in.

When we think about mental health, for example, each and every one of us in this House is only one degree away from knowing someone with a mental health illness, knowing someone with drug and alcohol addiction issues, or actually knowing someone who has dealt either directly or indirectly with the issues around suicide. I’m not proud to say that New Zealand has the highest rates of suicide. It is heartbreaking when you hear stories from within your own whānau about the impact of that. But if we broaden the focus of how this Government is dealing with the issues of mental health, we can say that this is an opportunity to really turn the dial up on how we respond within our communities to all sorts of mental health issues. Whether you’re in towns or in the rural sector, many of our people need access to front-line services—people who have the expertise trying to deal with issues at a very preventative, local level, rather than escalating to a level where you need the crisis assessment and treatment team to go out into a community. We will be investing in the front-line services in the mental health space.

We will be ensuring that there are going to be drug and alcohol addiction services and kaupapa Māori services. Indeed, our Minister of Health was in Gisborne just the other week, announcing the support for that community to have access to improved drug and alcohol services, and it is also an opportunity to deliver kaupapa Māori mental health services. It will make a difference, and, importantly, when I think about the challenges and opportunities that we have to respond to young people in this space, again, this investment will signal that we need appropriate services for young people, to address issues around support, especially in the youth suicide space, but, more importantly, just access to online services, to front-line services, to nurses in schools, and the like. I am pleased about this particular announcement because I know in my small, little community, there is a need.

When I think about improving child wellbeing, I want to acknowledge Parliamentary Under-Secretary Jan Logie because we were with her when she made the announcement in this space, and there were all sorts of community providers coming out and saying, “Finally a Government who is serious about addressing the issues underpinning some of the greatest vulnerabilities that exist across many of our communities in New Zealand.” Under her leadership, with the support of many Ministers across many portfolios, front-line services in this area will have access to the resources and the supports that they need to respond to crisis but, more importantly, to the long-term wellbeing outcomes in the areas of sexual violence and family violence. It will make a difference in the lives of the most vulnerable—those children growing up in households having witnessed violence—but, more importantly, long-term outcomes for them. There is an opportunity for us to think about the way in which a wellbeing Budget can impact just at a very local level people within our communities.

Now, I’m preceding the contribution of the member for Hamilton East. Do you know what he said was the deficit of this Budget? “Not enough focus on roads in the Waikato.”—not enough focus on roads in the Waikato. Well, I can test, actually, everything he said about more focus on roads by saying that I’d rather focus on people, but here’s what it means in your community, where the rubber hits the road. Take the winter energy payment. I grew up in Huntly, where fog is a pretty regular occurrence in the winter. There are cold, cold homes in some places, but, more importantly, the winter energy payment has meant that over a 22-week period during those winter months, people are eligible to get up to $450, if they’re single, in a winter energy payment. If they’re couples or people living with dependent children, they’re able to get up to $700 extra for that 22-week winter period. Now, I don’t know about you, but many people have said to me, “This makes a difference. I’m on a fixed income. It makes a real difference in terms of my overall health and wellbeing over that period of time.”

But if there’s anything that I have got feedback on within my electorate, it’s actually from our parents about the school donation. For decile 1 to 7 schools, instead of charging school donations, for each child who agrees to sign into this initiative, they’ll get $150 per student. We’ve got teachers in our team, and they know at the coalface in many low-decile schools how difficult it is to raise school donations from a very low socioeconomic community. But here’s the thing: schools see this as a real opportunity to do some extra things with this new funding that will come into those particular schools, and I know it will make a difference. It takes a lot of pressure off parents. I’ve heard a lot of positive things about that initiative. I want to thank the Minister of Education, but, more importantly, I want to thank him for being able to reach what we hope will be a fruitful agreement with their primary teachers and our secondary teachers.

Now, let me come very quickly back to some of the targeted initiatives in the Budget for Māori. Essentially, the focus on developing regional economies through whānau development and whenua—engaging people with their land—will be a positive thing for many whānau throughout our country. The investment in Whānau Ora and the social outcomes for our whānau under the leadership of the Hon Peeni Henare will, I think, continue to improve the responsiveness for many of our whānau in our communities to lead a more productive lifestyle in a way that they can design and in a way that has long-term beneficial outcomes. I applaud his leadership.

When I think about the cadetships led by the Hon Willie Jackson, this is an incentive to employers to pick up cadets and enable them to learn while they earn. It’s not an apprenticeship, but it’s to incentivise the cadets to be able to get into work and then learn some skills relevant to that workplace, and then be able to be grown by the employer. In the regions, this is an initiative, a critical investment, that has taken people up in Gisborne, transferring them from a life in forestry to actually going into manufacturing, and I’ve seen first-hand what those benefits are—credit to him.

I acknowledge Minister Davis in terms of the work that he’s investing himself in, in terms of trying to change the lives of those who are caught in our prison system. I want to really commend the investment in Māori Pathways so that there is a longer opportunity for lifetime positive outcomes—the reduction of recidivism—through that investment to support those who are in prison. There are many, many other things.

Lastly, big ups around the investment for kōhanga reo. That particular investment in and of itself has meant that a legacy institution contributing to language outcomes for our tamariki but, more importantly, lifetime learning outcomes for our whānau has been received warmly. I want to ensure that we continue to work hard on a wellbeing Budget that works for everybody through broad investments making an intergenerational impact through targeted investments, and lifting up and pushing forward the opportunities—in this case, for Māori—because it’s going to make a big difference. I support it. I support our Prime Minister, Jacinda Ardern, and her courage and conviction—

ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member’s time has expired.

Hon ALFRED NGARO (National): Thank you, Mr Assistant Speaker. I had a circumstance happen just recently where a young person from a local school saw my name—Hon Alfred Ngaro, National list MP—and she said to me, “What does the ‘Hon’ stand for?” I said, “Well, it’s ‘honourable’. It’s when you become a Minister.” But also too, I then said to her, “Actually, under parliamentary rules, all members are honourable, and that’s the reason why we call them ‘honourable members of Parliament’.” The understanding is that the level of trust and the threshold is set high, and that threshold is set because it’s the integrity that we set in regards to what we do and how we do it and what we say.

Part of the role of being in Opposition is to hold the Government to account for the things that it says, and I know on the other side they’ll be saying they’ve heard a very common focus of the debates from this side, which is that the coalition Government are failing to deliver on their promises. Now, it’s very easy to say that, but you’ve got to be able to back it up. So, when I stand here in this House and make this speech, I do so understanding the integrity of having a debate where you’ve got to be able to back up your words. At the same time too, to the Government, they too have to back their words. So when I say the Labour - New Zealand First - led coalition—I notice they don’t say that very much—are failing to deliver on its promises, I want to back that up with evidence that proves the point.

On many occasions, the current Government has been told to be mindful and careful about the way that it’s put together its manifesto—its promises that it’s been making. However, following the election, Labour increased the funding envelope available to them. This was only made possible because of a previously growing economy. They were warned before the election that the promises they were making were too great and their funding too tight, and during that election campaign Labour dismissed these concerns and said all these figures were costed as is—in other words, there was not a problem. So here’s where the crunch comes, because when you come to a Budget—which, I tell most people, probably is the most important time in the life of Parliament over here because it’s where the Government of the day begins to declare its manifesto, the promises that it’s made when it’s been out there, and then people hold them to account.

So when we talk about broken promises, what would they be? These are not only coming from us but they’re also coming from the community. Well, the first broken promise is that they promised no new taxes. We all know they have introduced seven new taxes to date. In fact, during the urgency motion, there were another two more that were introduced during their period of time. Another promise? They promised $10 cheaper doctors visits for all. That’s not in the Budget—another broken promise. Again, when we talk about wellbeing, this is at the heart of wellbeing. Under a National-led Government, we made sure that not only were doctors visits for children under the age of 15 free but also after-hours and also their prescriptions. But no, under this current Government, the promised $10 cheaper doctors visits are not in there—another broken promise. There was a promise for $20 million for access to lifesaving medicines for New Zealanders with rare disorders—that is not in this Budget.

I want to go on the record as saying that I, along with a number of other MPs that are here, was outside Parliament on two occasions when petitions from Metavivor came along. They had declared the fact that they are at stage 4 with breast cancer. They need to ensure that they receive medicine and medication, which is purchased, bought, by Pharmac, to ensure that their lives could not only be prolonged but, in most cases, be saved. This funding here would have helped save lives. They went even further, these Metavivors, who said that not only is it a broken promise but these are lives now that eventually will die.

So I hope the weight of the burden of a promise made, and now a promise broken, is heard and resounds in this hall of Parliament, because a number of us were out there. In fact, a number of them said why was it that $200 million was spent—and now we’ve seen that there was no outcome, no result, out of that investment—on a tertiary fees-free investment, and yet that $200 million would have gone a long way. In fact, all they needed was $20 million to make up the shortfall so that those rare drugs could be purchased. There’s some accounting to be done.

Another broken promise: annual health eye check for seniors. It’s not in the Budget, so now we’ve got our elderly. People often say that a nation’s concern for wellbeing is indicated in regards to how it cares and it looks after its young and its old. So already we are having situations where both our young and old are not being cared for—another broken promise here.

The promised early childhood education funding for 100 percent qualified teachers—not in this Budget, again, for our young people. The promise to increase the age of breast screening to 74—not in this Budget.

The promise that no one would be sleeping in cars last winter—failed, and failing again. We’ve got more people sleeping in cars than there were previously, under a National-led Government. Another broken promise: they committed to not housing people in motels. The amount of angst that came from the Opposition at that time, who are now the Government, who would continue to criticise us for putting people in motels, and yet now we have not only increased the number in there, but the number’s been increased threefold of those who are now in motels.

The promise to build light rail to the airport within four years—no sign of even a business case, and that’s rumoured to be headed for the scrap heap. There’s a growing concern here out in our communities, because on one hand those members are going out there and ringing the jingle bells and saying “Look, we’re here—Father Christmas is here to give out and dish out all the dollars that are out there to help the people.”, but if you don’t have a plan, if you’re not considered, if you don’t know how to measure and monitor that, then there’s a real concern in our community that is growing.

There’s no commitment to build light rail, even to Auckland north-west, ever. I’m in the north-west. I’m actually in Te Atatū, and I can tell you that when people heard there potentially could be light rail and when that Minister, the Hon Phil Twyford, made the promise—and now it’s a promise broken. There’s no date, there’s no plan, there’s no promise, and there’s no funding that goes with it.

I want to touch just briefly on a couple of areas that I think are really important. I want to acknowledge that under my shadow portfolio of the Minister for Children, I want to acknowledge the Hon Tracey Martin, who’s doing an exceptional job and who’s working as hard as she can to address some very complex and very difficult issues in the work she’s doing. I want to acknowledge also too that most of the plan that we’ve negotiated and talked about is some of the plan that’s continued on from the Hon Anne Tolley’s work.

But I have raised this, and I know this is a concern in our communities around improving our outcomes for Māori—in particular, Māori tamariki. In this there was a plan that was submitted to us and there was a Budget allocation of $1.1 billion—which we think is really important—around Oranga Tamariki. But we are now seeing those concerns where a number in the Māori community are actually coming to the fore. They’re coming to the fore because they’re saying that the uplift policy actually is not good enough; in fact, if anything, it’s broken. Us on this side, and even myself, we’ve been very cautious and careful because we know that the role and the task and responsibility for those at the front line is always challenging.

There are two areas that we think are really important that relate to this Budget: policy and practice. So while we said that in this Budget there’s been an allocation, an increase, to ensure that on the front line there is the promise of 900 extra front-line staff—those would be social workers and caregivers that are in there—there is a concern because both the ministry and the Minister have gone on record actually saying that they will work with Māori more intensively. I’ve got in the Hansards that I have here that that’s the same promise that was made nearly 12 months ago, and that was over another incident with Oranga Tamariki. So while I commend the Minister on what she’s doing, and it’s a very complex issue, I have to say that there’s some accountability that needs to be done in this regard, especially for our Māori whānau. I know that actually a number of the Māori MPs—I commend them—have been meeting with the Minister to try and address this critical issue as well.

I want to also then talk about, just briefly, some of the allocation that’s gone to Pasifika. I want to commend the Hon Aupito William Sio, who last year—he will remember. In fact, I saw him on the street, and there was nothing in the Budget. In fact, his expression was like this [Member opens his arms], and I’m pretty sure he said in Samoan, “It was a fa‘a moa Budget for Pacific.”—in other words, there was nothing in there, not even a chicken to take home. But, you know, I want to commend him for the work that he’s done in which he’s now been able to see an increase: $20 million over four years for the Minister for Pacific Peoples, around a language unit. I want to commend the Minister on that, and the ministry. We had previously done some work around setting up the framework to look at languages, and that’s where we’d left it. He’s obviously taken it further on to see how they could do that. The only thing I would say on that would be as to how the progression of that will continue to improve some of the outcomes around education. We look forward to seeing what that will be.

My time is just about up. On this side, I want to continue to say that the current Government is failing to deliver on its promises—they are broken. This is not just from us on this side; many in our communities are reiterating the same comments. So we would say that the current Government should keep its promises to the people of New Zealand.

Hon RON MARK (Minister of Defence): It is an absolute pleasure to rise and take a speaking slot for New Zealand First. Never in the field of New Zealand Government Budgets and appropriations was so much owed by so many to so few. All over the land, New Zealanders concerned about our security, the environment, our fisheries, our resources, human trafficking, transnational crime, drug running, and our reputation as a credible and reliable nation committed to the rules-based order that underpins our ability to trade, to travel, to live, and prosper are rejoicing. All over the world, our strategic partners and friends—and even our only ally, Australia—who value our contributions to the United Nations, to the multinational force and observers, and to coalition peacekeeping operations in the interests of restoring, maintaining, and advancing peace are astonished and amazed.

All over the Pacific, nations who are bearing the brunt of climate change and who live daily with the consequences of more frequent, more destructive, less predictable weather patterns, cyclones, tsunamis, volcanic eruptions, and earthquakes are breathing a collective sigh of relief and are thanking us—this Government—for the Wellbeing Budget and the historic investment by this Government in defence. All over the motu, throughout our homes, our communities, and our nation, people—young and old, men and women, adults and children—are welcoming the historic commitment of this Government to the wellbeing of our veterans and their families and to the wellbeing of our women and men in uniform and their families, and are voicing their approval, their gratitude, for this Government’s historic commitment to our military.

Internationally, there is only one thing, and one thing alone, that matters when it comes to a nation’s foreign policy, a nation’s strategic defence policy, a nation’s defence capability, and its plans for the future, and that is credibility. This Budget from this New Zealand First - Labour coalition Government has put the capital “C” in the country’s credibility in the eyes of the world. Why do I say that? Well, contrary to the predictions of some in the Opposition that this Government would cut defence expenditure, would not meet its commitments internationally, would not fund deployments, and would not meet the challenges of the capability deficit bow wave that had been created by successive Governments in, indeed, may I say it, probably the last 18 years and the last nine years in particular, this Government, contrary to those predictions, has done quite the reverse.

It has announced the largest investment in defence that this nation has seen. In the veterans and defence space, in this Wellbeing Budget, we’ve seen an increase in baseline funding for defence. We’re seeing $185 million additional for defence force operating funding over four years to support the delivery of the Strategic Defence Policy Statement of 2018. We’ve seen investments for navy, army, and air force capability, and for personnel growth, remuneration growth, vital military enablers such as health, security, and ICT, and, in defence, for estate maintenance right across camps and bases.

We’ve made the big decisions and funded them—not just talked about them; funded them. The P-8s: here we’ve made a big decision in defence capability that is a generational change, a decision that has been deferred and deferred and deferred to the point where our P-3s are going to come to the end of their life and the capability will be lost unless the Government steps up and addresses that question. It is with great pride I stand here and say that the $1.704 billion of capital funding for the P-8s has been appropriated.

Brett Hudson: The Greens aren’t happy about those war machines.

Hon RON MARK: A total of $2.4 billion, Mr Hudson. Nine years, Mr Hudson—who is chipping in—of being out there on the streets and telling people at Ōhākea and Linton and Burnham and Waiōuru and Papakura and Whenuapai that that Government cared about defence and our reputation internationally, and nine years went by and no decision.

Brett Hudson: Good to see you’re implementing our white paper.

Hon RON MARK: No decision, Mr Hudson—no decision, not at all. Mr Mark Mitchell has to go down in history, for sure, as the laziest Minister of Defence ever.

I take my hat off to Mr Brownlee. I can look back through the Cabinet papers and see the decisions. Next year, Aotearoa will sail into New Zealand waters—congratulations, Mr Brownlee. A Cabinet paper well thought out, a capability so desperately needed, and it will be delivered. This Government will make sure of that and is making sure of that. That project will be completed. That is the mark of a worker. That is the mark of a Minister of Defence who was actually interested in the portfolio and had some clout at the Cabinet table to get the decision made. Congratulations, Mr Brownlee, and we mean to ensure that that project comes in on time, to spec, and to budget.

Brett Hudson: Good. We’ll be watching.

Hon RON MARK: It does not excuse other Ministers of Defence, Mr Hudson, from ducking and shirking their responsibilities to the security of wellbeing of the people of this nation and the Pacific, but we’ve done it. Better than that, we’ve gone on, Mr Hudson. Those P-8s are necessary to conduct flights over our vast territorial area of responsibility, which makes up 11 percent of the globe, Mr Hudson.

It doesn’t matter where I go: in Shangri-La Dialogue recently, the South Pacific Defence Ministers’ meeting, travelling with the Hon Tim Macindoe, travelling with Simon O’Connor—the plaudits that are coming back to this Government are real, and they speak of nations who are respecting the decisions in the defence space that this Government is taking. This Government is not ducking its responsibilities and not shying away from its responsibility to its men and women in defence; it’s meeting them.

The operational funding for the Ministry of Defence: an extra $8.3 million over four years to take care of that outstanding problem left to us with the Kaikōura earthquake, which saw the destruction of their headquarters building.

Veterans: $4.1 million allocated over the next four years to address deficiencies within Veterans’ Affairs in terms of its staffing and capability for case management. That is commitment to the wellbeing, and this is not just about the veterans; this is about the families of those veterans, who live day to day with these effects of deployments carried by their loved ones, increasingly becoming very obvious and of very great concern. That’s why I applaud this Government’s funding in mental health. The defence force personnel who returned from missions are thanking the Government for that extra focus and attention to mental health, and so too are the loved ones and the families who live with the consequences of deployments, day in and day out. I am thanking the Government from the bottom of my heart, as one who deployed and who has good friends who deployed and who need that help, day in, day out, and, sadly, I am reminded of those who took their own lives because that care was not available to them.

Veterans are very happy with this Budget. The families of the servicemen and women throughout New Zealand are very happy. I thank those members of the Opposition who have worked with me in trying to find a higher level of consensus so that we might collectively, as a Parliament, be able to support our women and men in uniform, going forward, together, without the political nonsense, because that’s how important this part of the Budget is. Thank you, Mr Assistant Speaker.

BRETT HUDSON (National): Thank you, Mr Assistant Speaker. I’d just like to correct the characterisation of this Budget by Ron Mark, the member who’s just resumed his seat. It goes something like this: “Never before in the field of political endeavour has so much been taken from so many for so little.”—that, Mr Mark, explains Budget 2019. The centrepiece of this Budget has been the centrepiece of this Labour-led Government, and that is Labour failing to deliver on its promises—failing to deliver on its promises with its willing accomplices: its coalition partner, New Zealand First, and their side of Greens.

But in actual fact, as they moved into botching up completely the delivery of the Budget, they almost inadvertently, in fact, delivered on one of their promises. You see, when they took office, they claimed that they would be the most open and most transparent Government New Zealand has ever seen. New Zealanders are still waiting to see that, or they were. They’re still waiting to see evidence of that, but almost did. Well, actually, they did. The trouble was it was completely by accident, and the Government didn’t actually want it to happen. When, in the days leading up to the Budget, Treasury published summaries of the Budget documents online, we finally got to see the open and transparent Government that they claimed they would be, but we found out that they absolutely didn’t want that to happen.

The inquiry’s going on, and I’m not going to interrupt the inquiry, but here’s a little bit of technical fact: what happened, at a technical level at least, is the search engine on the Treasury website was configured—that is, set up by humans—specifically to return summary information from documents when searches were made. It is something that can be turned on; it is something that can be turned off. They failed to turn off a feature. It is not a bug; it is a feature. It is meant to be there. They failed to manage their information and, as a result, they published to the public information. Finally—once—for the first time perhaps in 18 months, they have been open and transparent, and we’ve found out they didn’t want to be. We’ve found out they didn’t want to be, so they’re now upset that they kept a promise. Well, we’ll keep it as another broken promise.

They promised when they took office that New Zealand was going to be better off for this Government and that the economy would grow, the jobs would grow, people would get better, but what have we got? What have they delivered? [Interruption] Well, they promised it, but they’ve failed. They have failed to deliver on that promise, too. They inherited an economy growing at around 4 percent, and right now, just 18 months in, it’s barely above 2 percent. Jobs had been growing at an average of 10,000 a month under National.

Hon Tim Macindoe: What are they now?

BRETT HUDSON: Well, last quarter, they went backwards by 4,000—actually backwards—and all of this stems from their inability to have a suite of policies that can actually take New Zealanders and New Zealand businesses with them. Business confidence still remains at record lows because of the things the Government has chosen to do and is continuing to do in this Budget. They are things like showing it’s still not ready to govern, with 250-plus working groups, costing the best part of half a billion dollars; passing union-friendly laws that are going to take business relations, industrial relations, back to the 1970s, and back to the 1970s is where our economy will be as well; and banning an entire industry, in effect, by banning new exploration for oil and gas—particularly off our region that relies so strongly on it, and which delivers some of the highest average wages and salaries in the economy. What did they do? They looked to wipe it out overnight with no consultation.

They compound that, and continue to compound that, by continuing with very poor spending which fails to deliver any tangible and measurable positive benefits, such as the $2.6 billion on the fees-free policy. They had to admit in this Budget that no extra students had taken it up last year, so they had a surplus from that last Budget that they’ve had to reallocate elsewhere. There was the $2 billion for KiwiBuild, which promised 1,000 homes in a year and has only just scraped over 100. I think they’ll have to build about one every 19 minutes now to meet the target by the end of the financial year, and I don’t think we’re going to see that happen. There is the $3 billion slush fund for Shane Jones to dispense all around the country—no doubt seeking to try to get New Zealand First’s hopes of being re-elected to Parliament improved—and there is $900 million for diplomats.

All of that combines to maintain and continue an environment where New Zealand businesses do not feel confident in the actions of the Government, today and into the future, that will encourage them to invest in some more plant, to invest in some more labour, to seek to grow their businesses—and, in doing so, to give more people opportunities to reach their aspirations and to reach their dreams—and to lift incomes across New Zealand. It’s another promise that they have failed to deliver on.

But in no greater area have they shown this failure to deliver than transport. Just before I talk on transport in some detail, I’ll just point out that this was supposed to be a wellbeing Budget. Well, here’s a question—not for them, but for New Zealand—how can it be termed a wellbeing Budget when the first three pieces of legislation under Budget urgency are either increasing taxes, increasing costs on taxpayers, or introducing new taxes? How does that deliver wellbeing?

Hon Tim Macindoe: It doesn’t.

BRETT HUDSON: Well, it doesn’t.

Hon Tim Macindoe: It absolutely doesn’t.

BRETT HUDSON: It absolutely doesn’t. The first of those taxes was—it was actually two tax increases—one on fuel excise.

Here we go. In transport, they promised that they would deliver a balanced transport agenda. What have they delivered? They’ve delivered an additional $1.7 billion of tax impost on motorists and will deliver them almost nothing in return, and I’ll get to the point on that in Wellington in just a moment. You can’t call that balanced—it cannot be called balanced. A Government cannot take all the cash off the motorists, give them nothing in return, and then try to claim that what they are doing is balanced. It is completely distorted. It is completely focused on light rail ideology—ideology that has been studied in this country, and in Wellington, just a few years ago, that study showed that light rail from Wellington Railway Station to Wellington Airport would lose between 90c and 95c in every $1 spent on it—90c to 95c in every $1, down the drain. They try to say they’re balancing this; no, they’ve failed—they’ve failed to deliver that balance.

The greatest recent example of that is this Let’s Get Wellington Moving announcement just a few weeks ago. They failed to deliver on their promise to unlock productivity and to resolve the congestion issues from Ngauranga to the airport in Wellington, because that is what Let’s Get Wellington Moving was set up to deliver and its mandate wasn’t changed. What was changed was the elements of it that they have decided they will part-fund, and I’ll get to the fact about how part-funding is another broken promise.

So what do we see? Well, OK, what are they not doing? We know that they are taking more money off motorists from Wellington and elsewhere through their fuel taxes. We know that they have deliberately structured this programme so that those fuel taxes will only pay for 60 percent of the Let’s Get Wellington Moving programme, which forces—so it is raising new taxes by proxy—local and regional government to put a greater impost on residents to fund the difference: $2.6 billion. So their actions and their way of structuring this place a $2.6 billion greater impost over and above fuel taxes on Wellington region residents, to deliver what? To deliver something that will not benefit those of them that are paying for it, because there is no additional southbound line from Ngauranga to Aotea Quay, there is no second Terrace Tunnel, there is no undergrounding under Te Aro, and we’ve found out—it comes as no surprise, because it was in the Cabinet paper—that “We’ll only do a second Mount Victoria Tunnel”, which they’re promising and talking up, “if it can be shown that more cars won’t use it.” Now, that’s remarkable. Every time I hear the Greens talk about transport, they say “If you build any sort of a road, more cars will use it.” So, basically, they’ve set up a system they know will fail, because they’ll only support a business case for the second Mount Victoria Tunnel if more cars don’t use it.

By pure coincidence, when they do something around the Basin Reserve, motorists will benefit slightly from that, but there’s no way that congestion from Ngauranga through the airport is going to be resolved. There’s no way motorists are getting anything of practical use out of this programme, but they’re paying for the majority of it. They are paying for the majority of it through their increased fuel taxes and through this $2.6 billion regional transport tax, which will be levied in one shape or another, but mostly through increased rates on residents and ratepayers right across the region. That is a failure to deliver on a promise of a balanced transport programme and a balanced economy for New Zealanders.

A Government can’t take all the impost off one group, give them nothing in return, and claim that that is fair. It certainly isn’t good for their wellbeing, and it pretty much sums up this Budget.

ASSISTANT SPEAKER (Adrian Rurawhe): I understand this is a split call. I call Gareth Hughes—five minutes.

GARETH HUGHES (Green): Thank you, Mr Assistant Speaker. Kia ora. Ngā mihi nui ki a koutou. Kia ora. I guess the key takeaway from the speech from the last member, Brett Hudson, was that he’s a bit sad that there weren’t enough roads in the Budget. If we took the advice of the previous member, we would have roads everywhere. Now, the fact is that for the last nine years of the previous Government, there were road-dominated Budgets. The member doesn’t know what the term is, but the academic term is actually “induced demand”: when you build roads, they rapidly fill up with cars. What we saw from the previous Government was they literally borrowed billions and billions of dollars for these high-cost, very low - benefit cost-ratio motorways—the “roads of National Party significance”. On only seven roads, they spent billions and billions of dollars. It didn’t increase productivity, didn’t increase New Zealand up the economic rankings, and actually saw people locked into an only-roads, car-based mobility system.

What this Government is standing for is actually balance. So we’ve had nine years of road Budgets; it didn’t work. Now, we’ve got a balanced system that’s actually investing in rail, investing in public transport, investing in walking and cycling, investing in road safety, and, yes, even investing in new roads.

Now, in previous Budgets we’ve had nine years of roads Budgets. We’ve had “chewing gum Budgets”, black Budgets, and “block of cheese Budgets”. This was the first time New Zealand’s ever had a wellbeing Budget. We’ve seen Budgets that have myopically focused on the surplus or the deficit and Budgets that have focused entirely on tax cuts; this is the first time we’ve seen a Budget that is focused on wellbeing—a Budget that’s actually put wellbeing above gross domestic product.

You know, as a Green MP—the previous member talked about only having a “side of Greens”. Actually, I think you can see Green ideas in the heart of this Budget, because the thing we’ve been talking about for literally decades from the Values Party and now the Green Party in Parliament for decades is actually that we need to value more things than just GDP. What we know, of course, is that a car crash increases GDP, an oil spill increases GDP, and a devastating earthquake increases GDP, but it doesn’t increase wellbeing. That should be the true metric which we measure ourselves against.

Now, I’m glad to see the international attention from around the world on this new approach to Budgets. I remember that while the previous Government were focusing on roads and tax cuts, the only time we got international press was when the previous Prime Minister was on Letterman or we were literally the butt of international jokes on The Colbert Report. We’re finally now getting international media attention for the right reasons, because the country and New Zealand is focusing on wellbeing and actually measuring the outcomes, and not just focusing myopically on GDP.

So the National Party has said “Well, how is this different?” Now, the difference, of course, is that every vote went through a Treasury process that asked the critical question, “How does it increase wellbeing?”—that’s the difference. The previous Government said “How does it build more roads? How does it just increase GDP? How does it support the National Party?”; this one asked the question “How does it increase the wellbeing of New Zealanders?” So that’s why you can see things like the child poverty targets in the heart of this Budget. That’s why you can see the indexing for benefits against average wages really improving the situation.

For the Green Party, this is our first time in Government, and this is a Budget that we can be proud of. If you add up all the Budget bid initiatives in the Green Party confidence and supply agreement, and across the work of our Ministers and other Ministers related, there’s $4.7 billion of spending which you can attribute to the Greens—and we’re glad to be working with our coalition partners, Labour and New Zealand First.

Now, for the Green purview, I think there’s big things to highlight. Jan Logie, in particular, did stellar work leading a work programme, a cross-agency work, to help reduce family and sexual violence. We’ve seen the tourist levy, which is doubling the historical amount of money that the Department of Conservation received in the last Budget. The tourist levy is going to deliver $180 million to the conservation estate, actually aiding the experience that Kiwis and tourists get with the places that we absolutely love. Significant spending in mental health. Significant spending in the environmental space, with $186.5 million improving water quality and support when it comes to the Resource Management Act. The $1 billion we’ve heard about for rail, and it’s absolutely fantastic to see the rail line opening from Napier to Wairoa; we just need to get it up to Gisborne. It’s a great first step.

From here, the Wellbeing Budget can do more to support Kiwis, to lift New Zealanders out of poverty, and to make sure that we’ve got a clean, pristine environment, that we have a tax system that actually benefits the productive economy and not just speculation and that leads the transition away from old, polluting forms of economy to the job-rich, high-quality, high-wage, clean-energy economy. This is my vision going forward. This is just the first step in a series of Wellbeing Budgets that see a richer New Zealand, a cleaner New Zealand, and a fairer New Zealand, one that moves away from neo-liberalism and an unfair economy towards true wellbeing for Aotearoa New Zealand. Kia ora koutou.

ASSISTANT SPEAKER (Adrian Rurawhe): I call Golriz Ghahraman—five minutes.

GOLRIZ GHAHRAMAN (Green): Thank you, Mr Assistant Speaker. The Green Party is the proud heart of this Wellbeing Budget. We are leading progressive policies that are reflected in this Budget, but we’re also helping do Government differently. The way the Government works is reflected in this Budget and every Budget, and this one focuses on measuring our success in delivering the things that actually matter to our people and to nature.

This Budget delivers a massive boost on delivery of the Green Party’s confidence and supply agreement outcomes. So we’ve actually got a Budget for the first time on climate change. The actual work of the Climate Change Commission will set targets that are independently monitored to see New Zealand actually lower its emissions as part of a global move to combat this existential threat. We’re taking climate change seriously because that is central to the wellbeing of this country and the entire globe. We’re taking mental health seriously, with $1.9 billion invested in mental health services, including the line item in our confidence and supply agreement that everyone should have access to high-quality, timely mental health services, including free counselling for all under-25-year-olds. That’s huge. People are suffering. It’s huge and it’s urgent, and now we’re delivering on that. It’s not worth the surplus if our people are suffering.

But I want to focus as well on justice, something close to my heart. There is so much to celebrate in terms of doing justice differently in this Budget. I do want to start by celebrating the Green Parliamentary Under-Secretary for the prevention of domestic and sexual violence in this Government.

Hon Andrew Little: She’s very experienced.

GOLRIZ GHAHRAMAN: She is very experienced, says the Minister of Justice, and I know they work very closely together. But in terms of the record Budget success—the $320 million, for the first time ever, invested in preventing this epidemic in New Zealand—the beauty of this was not just the sum total of the money but that it did bring so many Ministers together across the justice sector, across education, and across health, because we’re admitting that everyone has to work together to prevent this absolute epidemic that’s affecting most New Zealanders. Let’s face it.

So there will be more support for front-line services. We will do justice in the courts differently to support fairness for victims, and that will take a whole-of-Government approach, which is reflected in this Budget win.

We’re providing mental health services to prisoners because we know that a vast majority of the people we lock up in prison actually suffer from serious, lifelong diagnoses of mental health and addiction challenges. So we’re investing $128 million in supporting an extra 2,310 people who are currently in prison without access to appropriate mental health services to finally get the help that they need. We’re finally focusing on rehabilitation and safe reintegration of prisoners back into the community because we know that that’s the only way that we will keep us all safe. That’s the only way that we will bring down the prison population and we will keep our communities safe and we’ll bring down crime. We are basing our work in the justice system on evidence, not on tough-on-crime rhetoric that only ever makes politicians look tough on crime while the rates rise and people suffer.

We are investing in our Human Rights Review Tribunal because, actually, the year and a half wait, at minimum—an 18-month wait—for cases to be heard by that tribunal is access to justice denied. We are investing in community law centres and we’re investing in legal aid, mental health services for our prisoners, and Human Rights Commission and Human Rights Review Tribunal funding. We are saying that access to justice shouldn’t be reserved for just the few; it’s for everyone. Human rights are for everyone. That’s what wellbeing depends on.

But the further work we do need to do in preventing what causes offending, imprisonment, and human rights breaches still remains and will come in further Budgets. It is in addressing the reform of our welfare system. It is in providing more mental health services. It’s in providing homes for everyone and jobs. We do see this as a first step in the Green Party, but we are so proud to be part of a Government that is actually doing Budgets differently. Thank you.

ANDREW FALLOON (National—Rangitata): Thank you, Mr Assistant Speaker. I’m pleased to be able to take a call this afternoon, my first contribution on this Budget debate. We’ve come into this year with very, very high expectations. The Prime Minister herself has said that this will be the year of delivery. She apparently forgets that the Government were in office all of last year, or perhaps it’s just an admission that they didn’t get up to much of substance at all. She said that this will be a transformational Government and that this will be the first wellbeing Budget. Well, let’s check that lofty rhetoric with reality.

Last year, the Government cut $5 billion from the State highway network to put into Auckland cycle and rail projects. The roads of national significance that had been put forward by the previous National Government were cancelled. The new highway north of Auckland up into Northland, which would have been hugely transformational for the Northland economy, was cancelled. The Woodend bypass, which is incredibly important for keeping people north of Christchurch safe, was axed, and in my part of the world, in the Rangitata electorate that I serve, the Christchurch to Ashburton four-lane highway was cancelled.

The existing road between Christchurch and Ashburton is not fit for purpose. Traffic volumes have doubled in the last two decades as more tourists come to experience a beautiful part of the world in the South Island. More people are commuting for work. We have more people coming from Rolleston and Christchurch down to the Ashburton District, where there’s an unemployment rate of just 1.8 percent. On the back of a strong primary sector, more and more trucks are criss-crossing the district to grow our primary sector, ferrying goods, feed, animals, and crops. Growth at PrimePort in Timaru has continued, and with the new inland port at Rolleston, there is more heavy traffic travelling between Timaru and Rolleston.

All of this growth has made the road between Ashburton and Christchurch more dangerous. The road is now the second-most dangerous stretch of highway in the country for fatalities and serious crashes, according to the Government’s own statistics. Just this morning, there was another crash just north of Ashburton. Fortunately, it wasn’t a fatal crash, but the road was shut for more than an hour. So I was hopeful that in this Budget, in this Wellbeing Budget, we’d finally see some action, because what could be more wellbeing than keeping mid-Cantabrians safe on the roads?

Now, the Minister responsible for road safety, Julie Anne Genter, seemed to agree. She said that road safety is one of the highest priorities that this Government has. Well, how do we match that with the reality of this Budget? In this Budget, they’ve cut $10 million from road safety programmes. This Budget does not match the rhetoric. This Budget and this Government have failed to deliver on their promises to New Zealanders.

It’s not like they don’t have the money. In the hours after the Budget, this Government and this Parliament passed two further petrol tax increases to further increase the cost of fuel on all New Zealanders. It’s now heading back towards record prices. All New Zealanders have to pay that—not just those who are motorists but every single person who buys any good that is moved by truck.

In fact, very, very few New Zealanders are even benefiting from these new petrol tax increases, because it isn’t just those important highway projects that have been cancelled. It isn’t just those important highway projects that have been affected by the cuts; it’s also other important regional roads that people in mid-Canterbury and South Canterbury and Southland and Northland and the Taranaki have to drive on every day.

The cuts that this Government have made mean there’s less money for important intersection upgrades like the one at Rangitata, just south of the river. Residents there have witnessed numerous crashes and have literally had to pick up the pieces of the aftermath. The intersection desperately needs widening, and under this Budget and under this Government, it’s less likely to happen because there’s less money available to do it.

As the local MP, I’ve tried to meet with the New Zealand Transport Agency to discuss upgrading the road with them. I met them twice last year, in January and again in June. Early this year, I sought another meeting with them, but it’s been turned down. The Government have prevented me from meeting with the New Zealand Transport Agency. The Minister of Transport, Phil Twyford, says they’re too busy to meet with me. Too busy to meet with me twice a year—how incredibly petty.

There is, of course, more to this Budget than just transport. I do commend the Government for investing more in mental health. As an MP representing a provincial area, I’m keen to ensure that those new resources aren’t just handed out to the major centres and that the money is distributed across the country. Last year, 20 farmers took their own lives; 18 of them were blokes. We have a serious problem in New Zealand—particularly in rural areas—with mental health.

Prior to the last election, Chris Hipkins promised New Zealanders that in the Government’s first Budget they would end the need for school donations. Last year, we searched high and low for that pledge in the Budget, but it wasn’t there. I had schools in South Canterbury who contacted me, very alarmed at the fact that they’d budgeted for the fact that they were going to receive this money. They hadn’t asked for school donations from parents and, therefore, they had a hole in their budget last year because the Government didn’t live up to their pledge. They had holes in their budgets and this Government is responsible. This year, again, the Minister has failed. Only decile 1 to 7 schools will be included, with disadvantaged families at other schools missing out. Despite the promise Chris Hipkins made before the election, there’s nothing in this Budget for schools in Methven, nothing for Mount Somers, nothing for Pleasant Point—nothing for more than a dozen schools across my electorate. This Government, again, are failing to deliver on their promises to New Zealanders.

Not surprisingly, people are upset, and it’s not just teachers—it’s not just those employed in education. Many people feel duped by the promises that the Labour Party made before the last election that are now not being delivered on. My colleagues across this side of the House this afternoon have run through some of those: KiwiBuild, a failure; maintaining a strong economy, now going backwards; and homelessness and child poverty, where the Government have not yet been able to move the dial.

We in this House wonder why politicians are one of the least trusted professions in this country. It’s because of promises made and not delivered. It’s because of people who say one thing before an election and something else after. It’s because of parties who promise the earth before they’re elected to Government and then don’t deliver. We won’t be supporting this Budget from a Government failing to deliver on their promises to New Zealanders.

ASSISTANT SPEAKER (Adrian Rurawhe): I understand this is a split call.

WILLOW-JEAN PRIME (Labour): Tēnā koe. Tēnā koe e Te Māngai o Te Whare. Kua hōmai he rima meneti ki ahau ki te tū ki te kōrero e pā ana ki tō mātou Tahua Pūtea e kīia nei he Tahua Oranga. Āe mārika, e tika ana tērā kōrero, he Tahua oranga tēnei Tahua Pūtea i tēnei tau.

I tū whakahīhī, whakaiti anō hoki ahau i roto i Otangarei i tētahi hui i te marae o Te Puāwaitanga i Otangarei i te wiki i muri mai i te putanga o Te Tahua Pūtea. I rongo ake ahau i tētahi kōrero, tētahi kuia, tētahi māmā, hei ko tāna, “Kahore mātou e hiahia ana kia tapaina he ‘client’.”—“We don’t want to be ‘clients’.”—ko tana kōrero. Tautoko mārika mātou katoa a Te Hon Kelvin Davis me Te Hon Willie Jackson i āna kōrero me te whakahoki ki ōna kōrero. Ko te take, e titiro atawhai ana mātou, e titiro ana mātou i te oranga o te tangata, koirā te tino kaupapa, koira te tino take o tēnei Tahua Pūtea Tahua Oranga.

I whakarārangi ngā kaupapa hei tautoko ake i tērā kōrero.

Tuatahi, ko te piki ake i te moni ka hoatu ki a Whānau Ora. Neke atu i te $80 miriona kia whakapakari ake i taua kaupapa o te Whānau Ora.

Kua tautoko anō hoki te Pūtea i te mahi i roto i ngā whare herehere. I reira ahau i te whakarewatanga o te kaupapa o Te Hon Kelvin Davis i Te Whare Herehere i Ngāwhā. Tata ki te $100 miriona kua hoatu ki te hanga i te whare herehere me ngā hapū me ngā iwi i roto i taua takiwā, ngā takiwā puta noa o Aotearoa, he kaupapa Māori i roto i ngā whare herehere. Hei aha? Nātemea ko tā mātou tino hiahia, e kore e hoki mai ēnā tāngata mauhere ki te whare herehere anō.

Kua hoatu ētahi pūtea hei whakawhanake i te whenua Māori. I tēnei tau ko te $100 miriona i tēnei Tahua Pūtea ka tāpiri atu he $56 miriona anō hoki mō te whakawhanaketanga i te whenua Māori, ā, kua hoatu wētahi moni mō ngā papakāinga Māori me te whakatikatika i ngā whare kei ngā wāhi, kei ngā tuawhenua me kī.

Koia nei ētahi o ngā āhuatanga i roto i te Tahua Pūtea e kīia nei he Tahua Oranga, nā te mea e titiro ana ki ngā tāngata; koirā te mea nui, te mea nui o te ao, he tāngata.

I haere māua ko taku hoa mahi, a Kiritapu Allan, ki te kōrero ki ētahi atu tāngata. Ko ā tātou taitamariki, rangatahi anō hoki i roto i a Whangārei-terenga-paraoa, i roto i Whangārei Youth Talks, ki ngā hapū māmā anō hoki i roto i Kaikohe i te kura o Hiwa i te Rangi. I tino mihi mai rātou mō ngā momo kaupapa pērā i a He Poutama Rangatahi, ka whiwhi rātou i ō rātou raihana taraiwa motukā, mō te whakakoretanga o ngā utu mō te kura, te haere mō te kura, me te NCEA anō hoki, te utu mō ngā whakamātautau NCEA. Hei tā rātou he mea nui tēnā hei whakamāmā ake i tō rātou haere ki te kura whiwhi i ngā pūkenga.

Kua hoatu neke atu i te $75 miriona mō ngā kaupapa pērā i a He Poutama Rangatahi me te Mana in Mahi. E tika ana kia tautoko i ērā nā te mea ko ngā taitamariki puta i te kura, haere ki te rapu i te mātauranga, i ngā pūkenga kia whai mahi. Hei aha? Hei oranga, hei painga mō rātou, me ō rātou whānau anō hoki.

Mō te kotahi meneti e toe ana e hiahia ana au ki te kōrero e pā ana ki te Tahua Pūtea, te Pūtea mō Te Kōhanga Reo.

I tae mai taku whānau ki roto o Pōneke nei mō te whakarewatanga i tērā kaupapa; te whakaputanga o taua kaupapa mō te Kōhanga Reo. I rongo ahau i Te Minitā, Te Hon a Kelvin Davis e mea ana “He tīmatatanga noa iho tēnei $32 miriona hei tiaki, hei manaaki, hei whakakaha ake i tēnei mea Te Kōhanga Reo.” I roto i tana kōrero e mea ana ia, he mana tō Te Kōhanga Reo. I tae atu ahau ki te hui i taku marae, te Mane ā muri ake i tēnā i rongo ahau i te rīpoata mō te Kōhanga Reo, ka whiwhi $20 mō ia hāora ngā kaimahi. He mea nui tēnā ki a rātou, he tīmatanga tērā, ko tēnei he Tahua Oranga e kī ana ahau. Tēnā koe.

[I have been allocated five minutes to stand and to speak about our Budget, which is known as the Wellbeing Budget. Indeed, it is well named, for this year’s Budget certainly is a Budget for wellbeing.

I stood proudly and humbly at a meeting in Otangarei at Te Puāwaitanga Marae, the week following the announcement of the Budget. I heard the following from one elderly lady, a mother, “We don’t want to be ‘clients’.” The Hon Kelvin Davis, the Hon Willie Jackson, and I all agreed wholeheartedly with what she said. The reason for that is we take a compassionate view; we look at the wellbeing of the individual. That is what we are about, that is the main driver of this Wellbeing Budget.

Let me list the reasons that support this claim.

Firstly, there is the increase in the allocation to Whānau Ora. A little more than $80 million has been allocated to develop Whānau Ora imperatives.

The Budget also supports work being done in prisons. I was present at the launching of the Hon Kelvin Davis’ initiative at Ngāwhā prison. Almost $100 million is set aside to develop in the prisons, alongside hapū and iwi of that region and in other regions around New Zealand, a specifically Māori-focused programme. Why? Because it is our fervent hope that recidivism will be positively impacted.

Money has been allocated to develop Māori land. This year there was $100 million and this Budget adds $56 million for the development of Māori land, as well as some money being set aside for Māori settlements and for housing improvements.

These are just some of the highlights of the Budget, or should I say the Wellbeing Budget, because we think about people; that is what the most important thing in the world is, people.

I and my colleague Kiritapu Allan went along to talk to some other groups—to some of our young people, youth in Whangārei-terenga-paraoa at Youth Talks, and to pregnant mums in Kaikohe at the teen parent unit, Hiwa i te Rangi. We were thanked by them for various programmes such as He Poutama Rangatahi, where they are helped to get a driver’s licence; for the removal of general school fees; and for the removal of NCEA examination fees. They were clear that this would make it much easier to go to school to gain qualifications.

Around $75 million is going towards programmes like He Poutama Rangatahi and Mana in Mahi. It is only reasonable to support these initiatives because young people who have left school are looking for other options to gain the skills to get a job. Why? For wellbeing, to better themselves and their families.

For the one minute that remains for me to talk about the Budget, I wish to focus on the Budget as it affects Kōhanga Reo.

My family came here to Wellington when this initiative was launched; the announcement of the Kōhanga Reo package. I heard the Minister, the Hon Kelvin Davis, say, “This $32 million is just the beginning of funding to care for, to nurture, and to strengthen Te Kōhanga Reo.” He acknowledged the importance of Te Kōhanga Reo. I went to a meeting at my marae the following Monday, where I heard the report that Kōhanga Reo workers would receive $20 an hour. This is a big deal for them, it’s a start; in my view this is a Wellbeing Budget. Thank you.]

ASSISTANT SPEAKER (Adrian Rurawhe): I call Paul Eagle—five minutes.

PAUL EAGLE (Labour—Rongotai): Thank you, Mr Assistant Speaker. Can I just acknowledge my colleague Willow-Jean Prime. I feel quite special taking a five-minute slot post her speech, because there are several similarities around talking about our tamariki. But before I do that, I do want to say how proud I am to be part of a team led by Prime Minister Jacinda Ardern and to be involved in putting together and delivering the Wellbeing Budget.

It is different because, as we now know, it broadens its base from just looking at GDP to well beyond that. Coming from local government, I’m used to looking at things with a quadruple bottom line and I’m extra glad that that piece of legislation to reintroduce the four wellbeings means that they too can resume looking at Aotearoa New Zealand with a much broader perspective. My colleague Willow-Jean Prime talked about people, and that’s what this Budget is all about. We are putting the people back into the Budget and that’s reflected through the evidence-based approach, and can I say it’s been very, very, very well received, because we have focused on tackling those long-term challenges by doing things differently.

Look, there’s been lots of coverage of this Budget—particularly the photo—but I want to talk about a photo that I found when reading this. It really focused on taking mental health seriously, and this is when I thought of my colleague Willow-Jean Prime, next to me. It shows a person with a little fella on their shoulders, and I thought, “That’s what this is about.” It’s about all New Zealanders. I see that they’re pointing, and they’re pointing to a future of a dad or a caregiver here—it reminds me of me with my son—and giving him, in this case, the opportunity that we didn’t have in the last nine to 10 years to say, “Look, these are the things that, hopefully, when he grows up, he won’t need.”

We’ve had to put in place quite a substantial amount of resource to ensure that for those under 24 years, we can address some of those issues, and so I was really happy to be part of, really, an announcement that goes to addressing some of those issues that I hear here in Wellington. For example, I was here when Marlon Drake, the president of the Victoria University of Wellington Students’ Association, led a march on to Parliament. It was done during a recess time. There weren’t a lot of members of Parliament around, but I knew that it was so important when he said to me, “Do you know, when my students who I represent go and ask for help, they essentially get told ‘You’ve got to wait two to six months.’ unless you can tell them that it’s urgent, and of course everyone does. There’s just simply not the front-line service there, the resources, or the money.” I’m glad that there will be $455 million there that will give access for 325,000 people by 2023-24, and that new front-line service is something that I hope means the young people of today, and our leaders tomorrow, no longer have to spend their time marching and yelling out at the front of this building to say “Help—we need help.”

Another big part of that, too, is suicide prevention and response. I could speak all day, but I want to focus on this area because I know that the young people—I live close to a point on the southern coast of Wellington where it became known, quietly, as the point where young people jumped and ended their lives so unnecessarily.

I could go on and talk so much more about our plan for a new New Zealand, a different Budget that delivers on New Zealanders’ wellbeing. When I come to the opportunity to be able to speak again, I will continue on from where I’ve left off, but I’m really excited by what’s in this document. If we can deliver on this alone—and I know that we will, because work has already started—we’ll be making a big difference. Kia ora.

NICOLA WILLIS (National): This is a Budget that shows a Government that is failing to deliver—a Government that is failing to deliver on its own promises, the promises it campaigned on, and the commitments it made to New Zealanders. This is a Budget that shows a Government that is failing to deliver a plan for economic growth, a Government that is failing to ensure that businesses make the investments needed to give Kiwis jobs, rising incomes, and certainty about their futures. This is a Budget that shows a Government that is failing to deliver lower living costs for everyday New Zealanders, but a Budget that, instead, as its very first action, has a Government passing an extra petrol tax for every single New Zealander. That shows the priorities of this Government.

We’ve had a lot of talk from the other side of the House about what is in this Budget. I want to talk a little bit about what is not in this Budget, because what is not in this Budget is any dedicated funding for Wellington transport. There is no dedicated funding to get Wellington moving, because what’s happened with the Labour-led Government, with their friends the Greens, is that for 18 months, the Government has sat around talking about what might happen in Wellington’s transport future. We were told to wait—“Wait patiently, something’s coming. Something’s coming.”, but nothing ever came. Instead, what we had was the spectacle of having Minister Twyford outside our railway station saying that some time in the next decade, the Government might like to do something around rapid mass transit—no commitment to whether that would be light rail, no commitment to whether that would be trackless trams. Actually, no decisions had been made.

We had a Minister who, when asked about the project that matters a lot to those of us who have to wait in traffic every weekend and every day in Wellington—when asked “Will you be doing something about the Mount Victoria Tunnel?”, he said, “Oh, sometime this decade, or maybe next. It just depends.” Then, when asked the question by me: “When you do duplicate that tunnel, will cars be able to use it?”, he said he wouldn’t make a commitment to that at this stage. I’ll tell you what, people sitting on Cobham Drive trying to get into the city in the morning for work, and mums and dads from Karori trying to take their kids to sport in Kilbirnie each weekend, have a very clear message for Mr Twyford, and that is to build another lane in the tunnel and let cars use it.

There were no dedicated dollars for Wellington transport in this Budget, nor was there a rescue package for the district health boards in deficit up and down this country. They’ve been told to struggle on. There was no funding beyond inflation adjustment for Pharmac, so the people waiting for cancer drugs will continue to wait and continue to wait. In this Budget, there was no tax relief for everyday New Zealanders. There was no desire from the Government to say, “Actually, you can keep a bit more of what you earn because we recognise you work really hard for it.”

There was nothing in this Budget to relieve pressure on rents, because, I’ll tell you what, here in Wellington we have experienced the absolute brunt of that. On 1 May 2018, under this Government’s watch, the median rent here in Wellington was $455. On 1 May 2019, what was the median rent? It was $510. That’s a $55 increase in rent in a year under this Government, and what is there in this Budget to address that? Absolutely nothing, because we know that the Government is failing to deliver on its central policy, KiwiBuild. “KiwiFail” means that New Zealanders who were promised that this Government would sort out housing for students who live in Wellington and who are looking for accommodation—“Oh, it’s all going to be sorted under Labour.” They have had no delivery. In fact, they’ve watched their rents climb and climb. New Zealanders looking for affordable housing are having ongoing struggles, and this Budget has nothing to deliver on that.

This is a Budget that has no funding for a number of the promises that Labour campaigned on, and I want to take a moment here to talk about the area of early childhood education. New Zealanders know what they heard in the election campaign, and they know what they hear from the Prime Minister and various Ministers. They know the rhetoric. The rhetoric is that this is a Government that cares about children. Well, actually, what we’re seeing is that this is not a Government that cares about early childhood education. We have had confirmed at select committee last week that while the Government forecast spending a certain amount of money on early childhood education in the past year, in fact, it spent $75 million less than that—$75 million less went into early childhood services than the Government forecast it would put in. So then you say to yourself, “OK, well, what would you do with that $75 million for early childhood education if you had that unexpected underspend?” Well, surely, the first thing the Government should have considered is delivering on the promises it made.

I remember Mr Hipkins standing on the steps of Parliament, standing outside the Beehive with a megaphone in his hands, pledging to the New Zealand primary teachers and to the kindergarten teachers that he would ensure there was a new funding rate to provide 100 percent qualified teachers for every early childhood service in the country. He pledged that. He pledged it was a priority. Then he went on to pledge that smaller class sizes in early childhood services and smaller ratios of teachers to students was a priority, and that it was something that Labour would deliver on. Now, were either of those promises delivered in this Budget? Absolutely not—failure to deliver. What makes it worse, of course, is that people actually believed them. People believed that when they went out and made commitments and campaigned, they would prioritise expenditure accordingly—

Hon Tim Macindoe: They feel deceived.

NICOLA WILLIS: —and they feel deceived. I have visited dozens and dozens of early childhood services across this country, and what they tell me is that Labour is not delivering for them.

Actually, Labour had every opportunity to do so in this Budget, because, as I say, there was a $75 million underspend in early childhood education (ECE) that could have been reallocated to priorities. It was not, because Minister Hipkins failed to prioritise ECE. Actually, the rich irony of it is—

Hon Shane Jones: Rich—rich? It’s an equity Budget, not a rich Budget.

NICOLA WILLIS: —that the reason the Government says that it wanted to have more teachers have this additional funding rate is that it wants more qualified teachers in services. Well, under National, in 2016—and you should listen to this, Mr Jones, because some of your colleagues could use a few tips—70 percent of people in early childhood services had qualifications. That number—you’d expect it would have gone up under Labour, given the amount of campaigning that went on, but actually, no, the proportion has reduced. It’s now only 68 percent of people working in early childhood services having qualifications. It’s an absolute failure to deliver.

What’s happened to the number of parents complaining about the quality of early childhood services? Well, that’s increased dramatically too, because more people are concerned about the quality of care that their children are receiving, more people are complaining. Standards, in their eyes, have dropped. So we have an absolute failure to deliver.

The list of failures is huge, but the one that I really want to emphasise, and the one that concerns me most, is the failure to deliver a plan for growth, because New Zealanders are sensible people. They know that the Government doesn’t have a money tree at the bottom of the garden that creates additional funds into the future so that a band-aid can be put on every problem. They know that the only Governments who can continue to deliver increasing services in health, increasing services in education, increased investment in infrastructure, and all the things here that we in the National team want to see for New Zealanders—those things can only be sustained and delivered if you have an economy that is growing. What has actually happened to growth under this Government? Well, it went from 3.7 percent down to 2.3 percent—so it, essentially, went from 4 percent to 2 percent.

That is meaningful, because it means that there is less money coming in that is able to be spent on the things that are a priority for New Zealanders. The problem in this Budget is there is a gaping hole where a plan for growth should be and, in fact, what there is is increasing levels of discontent from business—and, Mr Jones, if you’re going to interject, this would be the time, because a lot of it comes down to you. There are a number—

ASSISTANT SPEAKER (Adrian Rurawhe): Order! Don’t bring me into the debate, thank you.

NICOLA WILLIS: Sorry, not to you. Mr Jones would know, because the businesses have spoken to him and they’ve spoken to the Prime Minister. They’ve said “We don’t feel confident about investing under this Government.”, because one minute it’s employment laws that are being added, the next minute it’s people being told that all the dairy sector does is whine, and the next minute, it’s businesses being told that they’re to blame for every problem. Well, actually, what New Zealanders understand is that the people who employ them, the people who create jobs, and the people who invest and who are able to pay bigger wages are businesses. We need them to be confident and we need them to be operating in an economy that is based on a growth plan, and that is not here under this Government.

So this is a Budget that fails to deliver on the core promises of the Government. It is a Budget that fails to deliver for Wellingtonians here in this city, who are expecting things from this Government. It is, fundamentally, a Budget that fails to deliver a plan for economic growth, and, come 2020, New Zealanders will remember. You’re running out of time.

ASSISTANT SPEAKER (Adrian Rurawhe): And don’t bring me into the debate, thank you very much.

Hon CHRIS HIPKINS (Leader of the House): I move, That this debate be now adjourned.

A party vote was called for on the question, That the motion be agreed to.

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.

Motion agreed to.

Racing Reform Bill

Second Reading

Rt Hon WINSTON PETERS (Minister for Racing): Now for something serious and meaningful.

Hon Shane Jones: In contrast.

Rt Hon WINSTON PETERS: In contrast. I move, That the Racing Reform Bill be now read a second time.

When this bill was introduced, it was acknowledged that racing in New Zealand has a long and proud history. Racing plays an important role in our communities and regions, employing 14,000 people and contributing $1.6 billion to New Zealand’s economy in 2016-17. The submissions on this bill, from a wide-ranging mix of interested parties, confirmed just how important racing continues to be to the economic and social fabric of this country.

However, racing, sad to say in New Zealand, is in decline, and economic and social benefits New Zealanders receive from it are at risk. This was confirmed by an Australian racing expert Mr John Messara in an independent assessment of the New Zealand racing industry. The Messara report, commissioned by the Government, provided recommendations for urgently needed reform. A ministerial advisory committee was subsequently appointed late last year to provide advice and guide the implementation of Messara’s recommendations. This Government would like to thank the committee again for its work to date, and particularly since they started on the fourth day of January, when everybody else was on holiday, to do their task.

As said in the first reading, this bill forms the Government’s first legislative response to the recommendations of the Messara report. It’s a first step in revitalising the industry to a financially viable future state. This bill amends the Racing Act 2003 and the Gaming Duties Act 1971. It reconstitutes the New Zealand Racing Board as the Racing Industry Transition Agency, or RITA, and RITA will manage the transition and day-to-day operations of the industry for a limited period. It also introduces two offshore charges: an information use charge, and a point of consumption charge. This charge, and these changes, ensure that overseas betting operators start to contribute to New Zealand, including to the racing and sports codes from which they benefit.

This bill will allow betting on sports not currently represented by a qualifying domestic national sporting organisation, and will place the formula for calculating payments to racing codes and sporting organisations into regulations. The totalisator duty, which is currently paid to the Crown, will be phased out, and these funds will instead be reinvested with the racing and sport sectors. A proportion of these funds will also be set aside for industry-led gambling harm minimisation initiatives.

The Transport and Infrastructure Committee received submissions from 42 submitters, and the vast majority expressed general support for this bill. The members of that committee, including the chair, Mr Darroch Ball, officials, and submitters, have all helped to strengthen this bill. The committee has unanimously reported the bill back to the House with some proposed amendments, most of which were of a minor nature or a simple drafting change.

All of these recommendations are well considered. For example, this bill, as introduced, allows for regulations to be made that determine the distribution of betting profits to racing and sports. Might I say that that regime was the one we inherited from the previous Government, although it seems to have evoked certain comments from members of the previous Government, which would seem to not understand that they, with respect to those aspects, were the architects of them. So if there were defects in what they drafted, then it’s quite possible we can fix these defects up now as we go to the committee of the whole House.

The committee has recommended including an explicit requirement for the Minister for Racing to consult with the Minister of Sport and Recreation before recommending these regulations. That recommendation is new. In short, the Minister for Racing will be required to consult with the Minister for Sport and Recreation before recommending these regulations. Whilst this consultation would have occurred anyway, making the step explicit reflects the increasing significance of the sport sector as both a stakeholder and contributor to betting in New Zealand.

The intention of the transitional provisions of this bill is that the reform process will be completed within 12 months. However, like any change process, this is subject to a number of risks and uncertainties. To cater for the event that the transition needs to be extended beyond 30 June 2020, the bill provides for an Order in Council to extend the transition period. After consideration, the committee has rightly recommended limiting this extension provision to a date no later than 30 June 2022. This extension provision is merely a contingency. This Government is committed to reforming this industry as quickly as possible. Indeed, that is why this bill needs to be enacted this financial year.

The officials supporting this bill have suggested some further amendments, also minor in nature, that were identified after the departmental report to the select committee. These will be addressed by the Government through a Supplementary Order Paper at the committee of the whole House stage. The main purpose of this Supplementary Order Paper will be to make some minor changes to ensure that betting use information agreements, currently enforced or under negotiation, can smoothly transition into the new offshore charges regime, as is the policy intent of the bill.

The Government intends to introduce a second bill later this year. This will build upon these additional reforms by establishing the future governance structure for New Zealand racing, and implement the other agreed recommendations from the Messara report.

In conclusion, it’s important that we see that this bill is on track to implement these urgently required reforms. This bill is an important stepping stone towards a better future for the racing industry in New Zealand. It will also be the kind of response that was first asked for in a report by Judge Thaddeus McCarthy as long ago as 1967, a period which a member of the Opposition will remember well, he being from a bucolic, equine background, dare I say it, on the outskirts of the Manawatū—no names are given in that respect. But this is a serious piece of legislation which has been definitely needed by a once-great industry which has been faltering of late. We in Parliament need to respond to it, not just for the people engaged in the industry as owners, breeders, and investors but because thousands and thousands of young New Zealanders of all backgrounds desire to be engaged in this industry for their employment. Their energy and drive will take this industry on to great things in the future, not just in respect to the contribution to the GDP to this country, which, if it was in equivalence with Ireland, would be now $3.2 billion. So we’ve got a long way to go, we’ve got short time to make it up, but make it up we will. Then our potential to treble the exports of our bloodstock in other parts of the industry offshore become an enormous possibility as we speak. Accordingly, I commend this bill to the House.

IAN McKELVIE (National—Rangitīkei): Thank you, Mr Assistant Speaker. I’m pleased to take the first call on the second reading of the Racing Reform Bill on behalf of the National Party, and add that we will continue to support the bill.

Needless to say, I was actually on a racing club at the time that Sir Thaddeus McCarthy’s report was considered and I remember the same nervous attention was paid to that as was paid to the report of John Messara. Nothing’s changed in 40-odd years, and that’s, of course, the problem that a lot of our industry has in New Zealand, particularly this one.

The racing and, more importantly, the horse breeding industry has great potential for New Zealand in so many ways. We have heard of some of that during the course of the shortened select committee stage that was held a couple of weeks ago. A healthy racing industry in New Zealand will give the breeding industry the confidence to invest and grow. This is really where the potential for us is, actually. The racing industry itself is just the reason that enables the breeding industry to take off. And, of course, we have the potential in New Zealand, as one of the three best breeding areas in the world, to produce horses of almost unique quality. That’s, I think, one of our great opportunities, and that’s the great opportunity that this bill will create for the New Zealand racing industry—or it will enhance their ability to produce horses, and a product, actually—but I’ll get on to the product in a minute. But it enables us to produce horses that will be marketed to the world.

This industry has potential to bring people and attention to New Zealand—and opportunity, actually—which most other industries don’t readily have. You could compare it to the America’s Cup, for example, because it does bring the same kind of interest to this country if we do it properly. The other area that we’ve got great potential for in the racing industry is to produce a product—in other words, a racing product that is then marketable to the rest of the world. We’ve heard a lot of talk around the challenges of gambling and things like that in New Zealand, but, in fact, this bill will not necessarily increase the gambling that takes place in New Zealand; it will increase the attractiveness of an outstanding product that we can market to the rest of the world. I think that’s the exciting opportunity that we have in the racing industry, and it’s one that I think New Zealand should pick up.

Interestingly, another thing the racing or the breeding industry does for New Zealand is it diversifies our land use. Some of the members of this House will remember the days when every dairy farmer in Taranaki had a couple of horses on them. Those days have long gone. May they come back.

I just want to reflect for a bit on the horse and what an amazing impact it’s had on the human race. Frankly, we wouldn’t be where we are today if it wasn’t for the horse and the use of it. It’s taken us to war. It’s taken us down the road. It took me to school. Couldn’t catch the thing when I got there, but it took me to school. So there’s a whole lot of opportunity that the most extraordinary of all animals, in my view, has created for us. They are an extremely competitive animal—very like humans, actually. I think that one of the really intriguing things about this industry—and about the horse, in fact—is that it’s the most extraordinary thing. For anyone who’s ever happened to have a ride or be part of a good horse, it’s the most exciting thing in the world, and I can assure you that the horse is just as excited as the person on top of it. Hard to believe that, but it’s a fact.

Jonathan Young: How do you know?

IAN McKELVIE: It’s a fact, I know. I’ve been there—all round the world. Interestingly, dogs, which are the other part of the racing industry, are very much the same. They’re very competitive, and the greyhound, of course, is that sector of the dog community that races.

During the select committee process we saw a number of concerns expressed, and we had expressed a number of concerns ourselves during the first reading. Many of these were addressed by submitters and a number of them have been addressed as the bill is reported back to the House. I was pleased to hear the Minister just a minute ago talk about a Supplementary Order Paper (SOP) that will be introduced in the committee stage, which will resolve another challenge that the industry, particularly the racing industry, had with this bill. I’ll explain why that happens, later on.

But I just want to address the Racing Industry Transition Agency (RITA) and the fact that it had no finite end to it. It was able to be enhanced or elongated by an Order in Council. That has been put to rest, and, as the Minister said himself, it has been given a finite time. That’s been done by amending clause 22 to insert new section 68A(1)(ba) in the Racing Act to limit the extension of the transition period to a date no later than 30 June 2022. We’re supportive of that, and I do think that it’s necessary that the next piece of legislation get to the House in a timely manner. That is always a challenge, of course.

There was concern raised about the influence the Minister for Racing had in the distribution of betting profits. We’re pleased to see the bill’s been amended to ensure the Minister for Sport and Recreation is consulted in the process of this. This is achieved by inserting clauses 13 and 22 to insert new sections 17A(3) and 68A(2). That also gives us comfort that at least it seemed to be a reasonable process and a process that I think is very satisfactory from a sports perspective.

We were concerned about the process of appointing the RITA, as it allowed the Minister for Racing to appoint members without any cognisance taken of the sporting sector, which is a significant player and beneficiary in this legislation. We’d have liked to have seen a clause introducing the need for the Minister for Racing to consult on this, but, having said that, that hasn’t happened. But, having said that, we’re comfortable with the members of the ministerial advisory committee, who I think are extremely competent people—talented and diverse as they are—and we assume that they will be appointed to the RITA as that RITA takes place. I hope they are, in fact.

I talked about the SOP the Minister talked about bringing the House. It just will make some alterations which I think are advantageous to the industry and will certainly short-circuit the process of setting the way that those services can be charged for, and will also enable significant cost-saving, because that process is really in place now. The piece of legislation that the National Party, when in Government, brought to the House refers specifically to this part of the legislation, and that’s around the use of information charges, and that is, kind of, the charge for the use of New Zealand racing information or the charge for the use of sporting information and those events that go with them, and that’s where, I assume, that we will see some change. The other part of this, of course, is that there’s a point of consumption charge, which will occur naturally as part of this bill, and that should return a significant amount of money to New Zealand racing, but more particularly to New Zealand’s sporting sector.

Betting on horse racing—it’s estimated that about 10 percent of all New Zealanders have a bet on a horse race, probably the Melbourne Cup, each year. Many more wager on sports events. Interestingly, in Australia, sports betting tends to attract younger people; racing, older people. It’s quite possible that the same trend happens in New Zealand, and I wouldn’t want to think the first two speakers on this were representative of the racing people in New Zealand. But it’s certainly a fast-growing sport—well, a fast-growing form of entertainment, I suppose you’d call it—is gambling on sports betting.

I just want to comment a little bit on gambling, because I think that—obviously, I’m a gambler myself, in a small way, and I’m a very bad gambler. But I think the point about it is that we gamble on horses, on sport, and we do so with the ability to gamble against ourselves, effectively. We’re trying to pick a winner, and we’re watching that thing and we’re making a judgment on either the sports team or the horse or the dog or whatever. You go down to the poker machine down at the local club and you’re making a judgment on nothing. You’re just shoving your money in the thing and poking a button. You don’t even poke the button, actually—now you don’t even have to think that hard. I think that there’s such a difference between these two kinds of gambling that we shouldn’t even compare the two, frankly. This, for those who don’t have a problem with it—and I’ll touch on that very briefly before I finish—is, in my view, great entertainment for a wide range of people. People on a Saturday night will sit at home and they’ll watch whoever’s playing—the Crusaders playing whoever—and they’ll spend all night having the odd flutter on that.

Rt Hon Winston Peters: Or the Blues.

IAN McKELVIE: And I think that—ha, ha! Anyone who gambled on the Blues is certainly in the problem gambling category. I think that, just to touch on that issue, so many people—thousands and thousands, hundreds of thousands, of New Zealanders—gamble with no problem at all. There are, unfortunately, a percentage of people who, like everything else in life, either have addictive personalities or they get to a point where gambling is a challenge for them. Again, I’d like to say I’m sure that the poker machines are much more responsible with that problem than this type of gambling as well. But this bill does allow for further investment in harm reduction to take place, and I think that’s a satisfactory place we’ve got to.

So all in all, I think this bill will be good for the racing industry. It will be good for the sports industry, albeit with some of those concerns we have about it. We in the National Party will support it, and, again, some of those concerns will be expressed by speakers who follow me. So we look forward to the second tranche of legislation the Minister intends to bring to the House, but in the meantime, we do support this bill. Thank you, Madam Deputy Speaker.

Hon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): Thank you very much, Madam Deputy Speaker. It is a pleasure to speak to the second reading of the Racing Reform Bill. Can I begin by acknowledging the leadership of the Deputy Prime Minister to get this bill to a second reading. I would imagine that there are people in the offices of thoroughbred racing, of harness racing, of greyhound racing, and the sports codes around the country who have been waiting for some time for this reform to take place who will be extremely thankful for the fact that this piece of legislation has got to this stage and, hopefully, will be passed soon to give some certainty not just to those boards but also to the many New Zealanders who work in the racing industry. I think for some time there has been quite a degree of uncertainty about the future of betting revenue, the future of small clubs and large clubs and networks of clubs around the country and their ability to survive, and they have been looking for leadership from this Parliament for some time. Through this piece of legislation, they will finally get the mechanisms to try and retain as much of the revenue from sports betting here in New Zealand. They’ll have a national structure, which I think will give them the confidence to make some of the important changes within their codes and within their clubs to make sure that whatever that future looks like, it will be a sustainable one.

Can I acknowledge also the previous speaker, Ian McKelvie, who—we’ve been to a few race meets together, and who, along with the Deputy Prime Minister, understands the fundamentals of the racing industry. The racing industry is one of those industries around the country that, you know, even though they do have racing events, does plug away quietly and does have a significant economic impact, especially in some of our regional areas. So that impact economically, that impact with jobs—I think I heard the Deputy Prime Minister say during one of our debates $1.6 billion, the last time it was counted—should not be sniffed at, and that ability for those local clubs to continue to have race meets, to support their local communities. At the other end of the industry, for some of our best trained and bred horses to be ambassadors for the New Zealand racing industry in other big racing forums is a huge potential for us, but it hasn’t for some time been maximised. I think the beginning of a renaissance of racing could come to fruition—and, hopefully, will come to fruition—by the fact that we’re giving the racing sector and the sporting sector the ability, once and for all, to sort itself out.

One of the big issues has been what the industry has called “leakage”, and that is New Zealand punters who punt on overseas races, on overseas betting forums, usually online. A lot of revenue has been lost out of what would usually have been taken by the TAB and has been placed on bets overseas. A lot of that revenue is lost to our shores and therefore lost to some of the sports codes and the racing codes here in New Zealand, and they have felt that. This bill goes quite a long way to making sure that some of the revenue from those bets that are placed overseas can be retained here in New Zealand. I think that’s a good thing, and that will flow back into New Zealand’s racing sector.

The other thing in terms of online betting is that a lot of those online betting platforms have been using New Zealand - based events or races to offer as a product and, essentially, have been paying nothing for it. So we might have a rugby game here in New Zealand or a horse race or a greyhound race in New Zealand, and an online platform in the likes of the UK can take bets on that, and not one cent of any of that revenue is of benefit to the sporting code or to the club that is holding that race meet here in New Zealand. Again, fundamentally, this piece of legislation will work to make sure that we take action and regulations to get some of that revenue here again, importantly, to pump into the sector.

I think when you look at some of the challenges at the grassroots, some of the clubs around the country really have been struggling to hold as many race meets as they have done in the past, and that is a sign of the times. But in amongst that, it’s the ability to pay good amounts to those winners. Hopefully, by the gathering up of more revenue and giving them the ability to do that—and, I think, some decisions made by race clubs around the country—they can offer a better product. I think the standard of the horses and the races will lift, and then, I guess, also from that, that export market that is extremely important to the racing sector in New Zealand can grow, and therefore we get more revenue from it.

As I say, this has been a long time coming, and I do again want to acknowledge the Rt Hon Winston Peters for his commitment to it, to drive it through at this point in this Government’s term. As I say, I think there will be a lot of people within racing and within the sporting sector extremely happy that we’re taking this piece of legislation and getting it through in a timely manner to give them the options not just to survive but also to expose our racing industry in a better way as an export market too. So with that, I commend this bill to the House.

Hon NIKKI KAYE (National—Auckland Central): I’m very pleased to take a call on this piece of legislation, the Racing Reform Bill. Firstly, can I just acknowledge all of those people that made submissions to the Transport and Infrastructure Committee. We had a total of 42 submissions—a number of submissions from, obviously, the racing industry but also a number of submissions from the sporting codes of New Zealand. And I think that’s the first point that I would make at the outset of my speech. I was very clear when this bill was introduced that this is not just about the racing industry; this bill has huge potential to impact sport and sport funding in New Zealand.

I do want to acknowledge the Minister for Racing for the work that he has done. I’ve had quite a bit of feedback from, obviously, people in the racing industry in terms of this legislation. It is important that we ensure the viability of the racing sector—you’ve got $1.6 billion; you’ve got 18,000 jobs—but, again, as National’s sport and recreation spokesperson, it’s really important that we have balance in this debate. So the purpose of my speech is going to be to talk about what we heard at the select committee level, both for racing but also for sport.

So coming back to that—42 submissions—again some very strong themes came through. I think it is fair to say that there were people from racing and sport who wanted this bill to be passed, and National respects that. We acknowledge that. That is why not only did we vote for it to go to select committee but we’ve continued to vote for it through the House. And I want to make it absolutely clear that National has voted for this bill because we see the benefit for racing and sport, in terms of funding. But we do want to put on record, absolutely, here the appalling process that we have been under for this bill. We had around five days for people to get submissions in. That was over a long weekend, and it was reflected in the departmental report summary, it was reflected in the people that made submissions, that that is unacceptable. The reason that it is unacceptable is that these are huge amounts of money for both sport and racing. We had the betting operators turn up—the Remote Gambling Association—and raise really serious issues about not just the impact domestically but what it means internationally in trying to collect levies over jurisdictions. So I’d put it on record that National had major concerns around the process in terms of this bill.

But, coming to the substantive issues, one of the concerns that we raised during the select committee process was that we absolutely need to have a transition authority—that is called the Racing Industry Transition Agency (RITA)—but what is really important is that we do look at those issues of core representation. This is important, again, because if you look at the wide powers in this legislation given to the Minister for Racing, it matters who is on RITA. Again, I can’t possibly comment as to whether the Minister for Racing has appointed people or shoulder-tapped them before this legislation has gone through, but my plea to the Minister for Racing and also to the Minister for Sport and Recreation—who, I note, is not in the House, but I’m not allowed to say that, so I won’t say that—is that there is real consideration given to the people who are on RITA. It matters. They are making huge decisions around the future of funding of racing and sport, and National has absolutely argued for greater balance.

The second issue that we raised during the select committee process was this issue of certainty of funding for the codes. Now, again, we understand the arguments that have been put up in select committee. In fact, my learned colleague the Hon David Bennett, who did do some work on this—and National previously had a bill that had some provisions that were similar to this legislation—said that, while we understand the need to have flexibility around the formula, which was supported in a number of submissions, there was this idea that we couldn’t actually recognise that there’s been a huge increase in sport betting; that, actually, that was raised by a number of submitters; and that when it comes to the sporting organisations, they are absolutely running that argument. It was acknowledged by the Remote Gambling Association, who actually said, “This bill should be called the ‘Sports Betting Bill’.” Because, if you look at the amount of betting that actually occurs on overseas events, they estimate—they actually disagree with the Messara report—that it could be up to 95 percent of betting that is sports-related betting. So it is absolutely fair and real for the National Party not only to raise these issues of representation on RITA but also to raise these issues of fairness of distribution. We accept that there is a case for flexibility—National has previously proposed that—but we are absolutely interested in ensuring that there is balance between the Minister for Sport and Recreation and the Minister for Racing around that distribution.

We were pleased that, during the select committee process, it was acknowledged that the Minister of sport needs to be part of this. I do want to put on the record, because I’ve asked questions of the Minister of sport, that it is appropriate for Parliament and for New Zealand to understand what advocacy the Minister of sport has made in these areas, and I have questions back to a select committee hearing, where I’ll be grilling the Minister tomorrow, where he’s refusing, basically, to give that information, and I think New Zealanders need to understand where the Minister of sport is in this important debate for the future funding of sport, and we have raised those issues in the select committee process.

The other issue that we raised in the select committee process, which we heard from a range of submitters, was around the totalisator levy. Now, again, this is important because it cuts to the heart of the timing and release of some funding for both sport and racing. What has been argued by the Minister and what we landed on at the select committee—but National has raised the issues that were raised by some submitters—is a progressive repeal. Now, again, this is a large amount of money; this is $13.8 million. National raised the issue that select committee submitters raised, which was, “Why don’t you consider doing it immediately?” Now, again, we heard from officials. It’s not clear whether the Rt Hon Winston Peters actually argued for that in a Budget bid—I’m hoping that I’ll find that out tomorrow in select committee from the Minister of sport—but we heard passionate submissions from people who said, “If you’re really serious about viability issues in sport and racing, then you’ll consider the timing and release of that funding and that funding being earlier.”

So, again, as I’ve said before, National is very clear that we have heard the voices of both the racing industry and the sports sector. We agree that this bill needs to be supported because it can lead to greater funding for both sectors. However, we have major concerns about the lack of balance in this legislation and guarantees for the sporting sector. We have raised that in our minority report, through arguing the real issues of representation around RITA, through arguing this idea that no national sporting organisation could lose from this bill, but also through raising those questions of fairer distribution given the huge increase that is happening in terms of sport betting. We also acknowledge, and I hear this from sporting organisations across New Zealand, this issue of reduced amounts of funding that are coming to the sectors via other funding pools. So it’s very relevant for these sporting organisations.

I do want to take a moment to acknowledge the national sporting organisations—New Zealand Rugby, Netball New Zealand, New Zealand Cricket. All of these sporting organisations have engaged in good faith in the process, but they have been really clear: it is time to give them greater recognition through this legislation, through the enormous amount of sport betting that occurs. They couldn’t have been clearer in their submissions. They have argued, for instance, that whatever is bet in the sport should come back to the sport. National has listened to some of the submissions that they have put up. Again, this is about recognising that, actually, when you look at sport as an industry, we’re talking about billions in revenue for the country. We’re talking about 35,000 jobs. Again, we’re balancing that with $1.6 billion of revenue for the racing industry and 18,000 jobs.

I do acknowledge the conversations that I’ve had with people in the racing industry about the historic investment that they have made in the platform and the infrastructure, and we need to recognise that, but we will be holding the Government to account in terms of balance. We know that the Minister of sport is slightly missing in action, but we have absolutely made it very clear to sporting organisations that we are a party of balance, that it is important that the Minister for Racing considers the millions of dollars that can potentially be lost if he gets the distribution wrong for sport—that’s coaches, that’s sporting organisations, that’s our top athletes, alongside those stable hands, those jockeys. It’s really important to have balance. National supports this bill to the House. We congratulate the Minister for Racing on the work that he’s doing for the viability of the racing industry, but we raise these fundamental issues for sport because we need to have balance in this House.

PAUL EAGLE (Labour—Rongotai): Thank you, Madam Deputy Speaker. I just want to start my speech by saying thanks to my colleagues on the Transport and Infrastructure Committee who heard from the submitters during the recent recess break. Can I acknowledge the Rt Hon Winston Peters, who’s not here but did say to me on his departure that he had to get to a Cabinet committee and wanted to—

DEPUTY SPEAKER: We don’t mention when members are not present.

PAUL EAGLE: Sure. That’s no problem. Look, this is the second reading, and I, last week, was, in fact, at a fisheries meeting on the Chatham Islands, and as the meeting went on and I was looking out the window, I saw the Chatham Island Jockey Club there. Just when I thought I had no affiliation to this sector, I suddenly thought, “Aha! Here we are, right outside my window.” “1873”, the sign says, and I thought, “Wow.” They suddenly all got a little tetchy at me for not listening to them about pāua, but instead I said, “Tell me more about this jockey club.” And they said, “Look, it meets on 27 and 31 December, and then they have a picnic day on the first Saturday in January.” So there are some key dates for those wanting to get down and see, probably, one of the oldest jockey clubs in the country, and the only one, dare I say it, on the Chatham Islands, and therefore in the Rongotai electorate. It was good just to be able to have a chat, and a lot of them said, “Look, once we have this AGM finished, tell us about this Messara report and what’s been happening.” It was good to be able to provide just a quick update from the recent process, in terms of submitters.

We’ve heard that there have been 42 and, yes, I make no apologies for the truncated process. I was looking back through the public consultation angle. That’s been raised around this being too tight—“not enough people”, “last minute”. We’ve heard terms like those, but, actually, in September and October last year, 1,700 submissions were received. That’s pretty good, I think. And, look, I know that there’s been a member’s bill, an amendment bill, there from 2017 too. That was withdrawn. So I think there has been the time put in for people to have their say, and these submitters are passionate. We’ve heard that. We’ve heard how different codes and different parts of the sector were able to give their views—again, to say, “Look this is what we think.” In terms of the industry being—and I had a figure here—$1.6 billion worth in 2016-17, that’s a big sector. And I thought, “People are engaging in this because it does mean significant change.” They did say to me, “Does this mean the end of the Chatham Island Jockey Club?” I said, “No, because the Deputy Prime Minister, the Rt Hon Winston Peters, will be down here over the New Year to ensure that your track stays open. But it does mean change.”

Jamie Strange: The Chatham Islands champion.

PAUL EAGLE: I think we need a champion of the Chatham Islands—there we are. But in terms of my link to the sporting sector, it was good to see Sport New Zealand there, and if you read their—they’ve only got a short submission, but it does say that they support everything. I was going to go through and pull out the lines, but, actually, there was nothing in there—in fact, the point to where the Minister for Racing has an influence on who the membership of the Racing Industry Transition Agency (RITA) Board is, and some of that future work—they were supportive of that. And they are the representative Crown agency who have the linkages with the national sporting organisations, and also there’s a part in there that says that if you are not affiliated to your national sporting organisation, the Sport New Zealand entity will ensure that they have an arrangement with RITA to ensure that that funding process is tight and accountable and is done with integrity. There were other submitters there, but that’s the one I wanted to pull out, because I thought it would be good just to get that clear, around them being supportive, but also to clear up some of that issue around the engagement and the truncated process that went with it.

I’m not going to say too much more, because I think that’s been covered. I commend this bill to the House.

ALASTAIR SCOTT (National—Wairarapa): Thank you, Madam Deputy Speaker, for this opportunity to support this bill. As Nikki Kaye mentioned, and I would agree with her—and we’ll talk about the title at some future date—it’s really about sport as much as about racing. It’s about gathering revenue for the codes, sporting codes and racing codes, from people who should be paying: those people who are offshore and betting on our sport and our people betting on sporting activities. I know there are some—and the Deputy Prime Minister mentioned them—existing agreements that already exist between the New Zealand betting agency and offshore betting agencies. But this legislation will make it compulsory for the information use charge—that is the IP, essentially; the information that we’re providing to other offshore betting agencies—and the consumption charge—that is, offshore people consuming and betting on our material in New Zealand—to pay for it, and that’s fair enough, whether it’s racing or sport, which is a very important point.

The sporting aspect of it is understated, certainly, in the title. It is understated and I don’t think it goes far enough to support the sporting codes as much as it should. I think that you’ll see some Supplementary Order Papers coming forward in that regard. Nikki Kaye’s mentioned representation on the Racing Industry Transition Agency (RITA), the interim agency, as being an issue. There’s also the issue of consultation with the Minister for Sport and Recreation. The Transport and Infrastructure Committee report recommends there be consultation with the Minister of sport—that’s an amendment—but, in our view, it doesn’t go far enough. There should be agreement with the Minister of sport, because it is important to sport and without that agreement there is a risk that the racing codes dominate the calculation of the distribution of funds. That’s why we advocate for stronger representation on RITA at the outset and for stronger representation in giving the Minister of sport a stronger voice by ensuring that there is agreement between those two Ministers, not just simply a consultation process.

I do support the racing industry. I’m very keen on going to the Tauherenīkau Racecourse. The next meeting is on 2 January, and 6 February is also a very, very good event. I’ve also in the past sponsored a couple of races at that event through my business interests. I love to watch the horses race. It is a family activity. It is, quite rightly, and should be, distinct, as Ian McKelvie pointed out, from mindless gambling on the pokies—mindless gambling on the pokies. This is not what we’re talking about. That is distinctly different and has a lot of issues around it. Pokie machines, in my view, are disgusting and should be minimised, and they cause a lot of damage in this country, in our communities. But horse racing and a flutter and a community get-together, using your brain to calculate the odds, whether it’s on sport or on the horse or on a dog, is a good thing and should be encouraged and supported, and that’s what this bill does.

There’s not much more. The only other point was I found it quite interesting that the Transport and Infrastructure Committee was chosen to consider this bill. I guess horses are a mode of transport, but I guess that’s the only reason. I couldn’t really see any other reason why we got it, but I guess there’s an argument for that.

Look, I’m not going to go over the other issues or the other suggestions that we might make to this bill. We’ll get to that in committee stage, but I do look forward to seeing the fine-tuning that the Deputy Prime Minister mentioned around those existing agreements, those existing international agreements, which we did discuss at select committee, and I think we agreed that the existing bill—there was some space for improvement, let’s say. Let’s put it that way.

So, overall, it was good to hear the Deputy Prime Minister suggest that extra time for RITA was not necessary, but, as he rightly pointed out, the select committee recommended a couple of extra years. But it was good to see that he was of the mind that it was only going to be a very short transition period, and that was good to hear. That is all I have to contribute this afternoon. Thank you.

Hon EUGENIE SAGE (Minister of Conservation): Thank you, Madam Deputy Speaker. I am not a member of the Transport and Infrastructure Committee and I don’t have a lot of knowledge of racing, but it was interesting to read the select committee report and some of the concerns that have been raised by Opposition members. One of those concerns was around the process, and, I think, some of the speakers from the Opposition recognise that the industry is at a bit of a tipping point and there is an urgent need for reform because of the significance of its contribution to the economy—$1.6 billion—and also the great deal of enjoyment that a lot of New Zealanders get from participating at racecourses.

But I’d also note, in terms of rebutting some of the comments the Opposition members have made, that there was an awful lot of consultation which preceded this bill. Of course, the bill, in fact, draws on a bill that was introduced under the former Government and was discharged. So there’s been a lot of work in the development of it. There was also a lot of consultation as part of the Messara report. Yes, the select committee process in this Parliament was truncated, but you’ve got to balance that against the need to actually get reform happening. The Green Party endorses the need for some speed there.

One of the other concerns that seems to come up repeatedly is this issue of sporting organisations. Can I point out to the previous speaker, Alastair Scott, and others that it is very clear in clause 11 of the bill, which talks about the membership of the transitional governing body, that “(4) In appointing members, the Minister must have regard to the need for the governing body to have available to it, collectively, from its members,—(a) knowledge of, or experience in, the racing industry and sport administration at a national level;”. Certainly, the title of the bill isn’t as embracing of sport as it could be, but the actual membership of the governing body makes no real distinction between those who have racing expertise and those who’ve got sports administration expertise. They’re on an equal level. So I am confident that the Minister for Racing, in implementing this section and appointing members of the governing body, will ensure that there are people who’ve got that depth of experience, both in governance and in sports administration.

In addition, in terms of the way in which the funds are distributed, there were certainly some submissions from sports organisations that sought that any revenue that was generated from betting on particular sports would be returned to that particular sector, rather than being more widely distributed. I think that process would be very complex, but the work that will be done won’t actually change the fundamental way in which sports funding is done, and the requirement that has come in through the amendment that the select committee has made to require some consultation with the Minister for Sport and Recreation will ensure that that view goes through. So I think the decisions that will be made there will take into account the needs of the different sporting codes. That amendment that’s suggested by the select committee, I think, is part of several improvements to the bill that have come through the select committee process as a result of submissions that will improve the bill.

The Green Party supports the bill. One of the reasons we support it is because of the provision that some of the proceeds from betting will in fact go towards the minimisation of gambling harm—the way in which the bill and the reform of the sector ensures that we’re getting contributions and a charge paid by those remote organisations, offshore organisations, facilitating betting on New Zealand racing, and New Zealand sporting codes actually now being responsible for contributing something for their use of those codes. I think that is good that they are saying—and I think the National Party has picked up the need for more of a transition period there, but I think that is a bit self-serving of the offshore betting organisations. They have avoided contributing on a user-pays basis. The bill is making it clear that they need to. I think they’ll be able to organise their systems so that they are able to pay those charges.

The select committee, under the chairing of Darroch Ball, has improved the bill, and it proceeds in that improved state. Thank you.

TIM VAN DE MOLEN (National—Waikato): Thank you, Mr Speaker. Look, it’s a pleasure to rise now and take a call on the second reading of this bill. It has been an interesting process that we’ve followed. Firstly, I’d like to acknowledge our racing spokesperson, Ian McKelvie, for the great work he’s done on this—a fountain of knowledge on the industry, Mr McKelvie is, and as he mentioned—

Andrew Bayly: A fountain of knowledge on many things.

TIM VAN DE MOLEN: On many things, indeed, yes, but in particular his involvement with the racing sector over a period of several decades now has been very influential in this particular piece of legislation. I would also like to acknowledge Nikki Kaye for her contribution from the sports and recreation aspect, because they are both important elements in the consideration of this Racing Reform Bill.

Now, I did want to, though, mention the process as well, because we’ve had a very truncated process here—the select committee process, in particular. Having only 11 days did not give the public a wide enough window to submit, and we heard that from a number of the 42 or 43 submitters we had who expressed concern around that short window, especially being over a long weekend as well. It’s another example of the Government not following best practice in terms of a process that enables the public to engage with Parliament, to have their say on what for them are important pieces of legislation, depending on their areas of interest and the industries. So that is one area that we were a little disappointed by.

We’ve heard the reasoning for it around the desire to have this legislation passed and in place by the start of the new racing season to enable that totalisator levy to be reduced and those funds to then flow through to the codes. But, actually, as the Minister pointed out, there’s a need for that funding, of course, but, actually, this should have been in place 12 months ago. The previous race fields legislation, the Racing Amendment Bill, that was started under the previous Government had its first reading, went through a select committee process just after the forming of the new Government, and, actually, there was broad consultation. The Minister then withdrew that in order to consider the results of the Messara report and then what that legislation might look like, eventually ending up where we are now. But, actually, there was no reason why that couldn’t have been passed 12 months earlier.

I remember sitting on that select committee, the Primary Production Committee as it was then, that was considering the bill, which is actually a more appropriate committee than the Transport and Infrastructure Committee to consider it. At that stage the Racing Board and the codes within that were making it very clear around their need for these additional funds to be promptly delivered by the passing of that bill, for exactly the same reason as now, 12 months later, or more than 12 months later, we’re saying again that it’s urgent to be implemented. The Government didn’t deliver for the racing industry 12 months ago. They could have had another $15 million to $20 million of revenue over the last 12 months, to this point, that they didn’t get because of the racing Minister’s decision. So that was slightly disappointing, but I certainly appreciate their now increased desire to have it in place for this season.

We do support this bill. There were a number of considerations that we threw back and forward across the select committee, based on what submitters were telling us and what we’d heard and the knowledge we had on this side as well. Really, what we’re trying to get to is a point where no group or code, whether that’s racing or sporting codes—none of them should be worse off as a result of this bill. That’s the outcome that we’re looking for. We want all of them to be better off, to have more revenue to be able to promote their industry, their codes, as a result of this to help reinvigorate, in particular, the racing industry. We’re aware there are issues there. The public knows that. The industries, in particular, know some of the challenges that they’re facing in that space. So it’s important that we do get this across the line for them.

Now, we talked a little through the select committee process as well around some of the uncertainty that this legislation proposes with regards to there being no clear representation on the Racing Industry Transition Agency (RITA) board in terms of the different codes being represented, and that was a concern, but the parties were prepared to act in good faith on the basis that that transition happens over the 12-month period that has been allowed for under this legislation. Also, in the worst-case scenario, there is the ability to then roll that over for up to a further 24 months, if necessary, to enable that process to be completed and to enable the right outcome to be achieved through the subsequent legislation that will be coming before this House.

Actually, at that stage, as we were going through the select committee process, there was no limit on that, and that was a concern for a number of submitters, as it was for us on this side of the House, as well. It’s important to have some structure around this, and just having an open-ended ability to stretch this out with no finite date on it was not acceptable. So we’re glad that submitters supported that, and, actually, the Government has chosen to accept that recommendation as well to put a maximum two-year extension on the RITA process. So that’s got us to a point now where we’re broadly comfortable that we can support this with confidence in that it will provide the right outcome for industries within their different codes on this particular bill.

Now, one other aspect that was mentioned in, I believe, the Minister’s contribution at the start of this second reading, and it was supported by Mr Jones—and, actually, Paul Eagle mentioned it as well—is around the vibrancy in the communities. I have the same in the Waikato electorate. There’s plenty of racing in that electorate, and we are very proud of our racing heritage there. Small communities, in particular, love their race days, and whilst that was an element of the Messara report, which was more controversial in terms of closing a number of those tracks, there are plenty of communities that absolutely love it. They get their annual race day, one or two or three, or however many it may be, and for Mr Eagle, his comments around the Chatham Islands race club, in particular—people love that. It’s a real sense of community for them, and part of that is enjoying the festivities of the occasion, which means having a bit of a flutter on the TAB or, likewise, perhaps enjoying a cool beverage or two throughout that day’s entertainment as well.

So we may well be looking at putting forward a Supplementary Order Paper in relation to enabling that consideration for alcohol consumption at race fields around particular race days, when it comes to the committee of the whole House stage. So that’s something we’ll be considering: whether we do look to bring that into this legislation and this process, as well, or whether we look at a second tranche, potentially, further down the track.

Those are the key points that I really wanted to cover off there, and the last one that I’d note—which is more relevant within the Waikato—is that under the Healthy Rivers plan change, there’s uncertainty around how to consider equine properties in that. They’re not dairy farms and they’re not sheep and beef farms, so how does that sit in terms of the impact it has? So there are a number of ongoing challenges within the broader racing industry as well that we do need to be looking at, and so that’s one that I’m mindful of, too.

I just want to acknowledge, though, that whilst we see these challenges, this is one aspect that we will see support for the racing codes and also the sports codes in terms of additional revenue, which I am confident will help to reinvigorate some of that. We would like to see some increased stakes, and that’s a significant part of what helps to inspire people to get involved in this sector. Some of those potential owners who may choose to get involved in a syndicate, the trainers, the jockeys, the stable hands, the breeders, and everyone involved in this—we all need to see a little more contribution, and this will help to deliver that. So we do support it, and we look forward to this being rolled out and to the racing codes and sporting codes getting an increased share of revenue to enable them to do better as a result. Thank you.

Hon MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti): Thank you, Mr Speaker. I’m pleased to take a call on the Racing Reform Bill. As a member of the Transport and Infrastructure Committee, I want to commend the work of the committee members under, obviously, the chairmanship of Darroch Ball.

It just reminds me, when we grew up—with some of us probably having been around a lot longer than others—of the vision of seeing your local racecourse filled with folk, and the point was made that it was often the hub of communities. I’m talking about small, rural New Zealand, and I’ve got a few racecourses throughout my electorate, but the numbers that you saw were testament to the importance of the racing system and the racing fraternity to not only small-town New Zealand but across the nation. So this Government, under the leadership of the Rt Hon Winston Peters, undertook a review of the New Zealand racing industry—the Messara report—and an independent assessment was done on the industry that showed to this Government that it was really in need of a modernisation, given that those early images that I said, back in the 1930s, 1940s, and 1950s were no longer the case for many of the racecourses around New Zealand.

So this is a bill that is attempting to modernise the industry, because we realise the importance that it has both economically and socially in small towns. Racing contributed $1.6 billion to the New Zealand economy in 2016 and 2017, hence it’s important that we have a fit for purpose racing industry, and this bill is attempting to do exactly that. It does it by, first and foremost—and it’s interesting—two reforms, two pieces of legislation: the Racing Amendment Bill in 2017, and the Gaming Duties Act of 1971.

But going back to the Racing Amendment Bill, what we discussed at select committee was this transitional body, the Racing Industry Transition Agency—or RITA for short—which we wanted to set up, or which the Minister is saying could be the body to then implement the more detailed work that’s around the industry in terms of the courses that are currently open, and whether we’ve got too many and whether we need to make some changes there, and I think the proposal here around the transitional agency is a good one. The submitters that came understood the importance of having a transitional agency. Many of those that submitted are going to be part of that agency to ensure that the next stage in terms of the Gaming Duties Act will be fit for purpose. So I’m very pleased to see that that is being instigated as a result of this independent review.

But the other point that I remember that was raised at select committee was the concern over loss of revenues for many of our sporting codes. The select committee heard and took advice, and hence you will see that the Minister for Racing, as well as the Minister for Sport and Recreation, will now be part of the process that determines the distribution of funds. I think that’s a good measure of showing how we’ve listened to the submitters—particularly the sporting bodies—to give them that guarantee that they will be part and parcel of the distribution of the funds.

But what was also interesting was the point around gambling harm and ensuring that what we are doing here does not put aside or ignore the importance that gambling does have on many people. There were points made by various submitters around whether this bill is going to cut off the financial lifeline of providing much-needed gambling harm support, and this bill does do that—it actually guarantees that in the distribution of funds, those communities charged with eliminating or addressing gambling harm will be made.

We did hear from a number of submitters. I know that people on that side of the House are concerned about the truncated process. The interim transitional agency is really the opportunity to flesh out and make sure that we are doing a fit for purpose response to modernising the racing industry. I support what’s being proposed here in the report back from the select committee and I look forward to the bill’s third and final reading. Kia ora.

SPEAKER: I’ve lost the member’s name.

Tim van de Molen: Andrew Bayly.

SPEAKER: Oh, Andrew Bayly—I’m sorry. I was absolutely prepared for another member to rise, and the member caught me by surprise.

ANDREW BAYLY (National—Hunua): Well, thank you, Mr Speaker, and may I say I will never forget your name. It is a pleasure to be speaking in the second reading of the Racing Reform Bill. I didn’t actually have an opportunity to talk in the first reading, and, of course, racing in my electorate of Hunua—which is South Auckland—is an absolutely essential part of the local community but also business and industry. We’ve all heard the numbers: $1.6 billion of revenue or activity comes out of the racing industry, and 18,000 people are employed. But what people also don’t realise is that the sports horse and other parts of the equine industry, the non-racing component, also generates about $1 billion worth of economic activity around the country. Of course, with my electorate spanning Pukekohe—where we’ve got the wonderful Counties Racing Club and the Auckland Trotting Club, which is now the main centre for trotting in the Auckland region—but also all those areas like Cleveland and Whitford, where we have our sports horses, it is an absolute essential part, and, in fact, I live next door to one of the most famous studs in New Zealand.

So for me, this bill is vitally important to help get the racing industry back into shape. My family have been involved in racing for a long, long time. The big underlying issue for the racing industry is one of making sure that the fees or that what you earn when you race in New Zealand is more of a higher amount, because that underpins the viability of the racing industry in New Zealand. What we’ve got now is that our racing returns are making it very difficult to be able to generate sufficient returns to make it economically viable. Consequently, we’re seeing fewer and fewer owners taking on the risk of buying a horse at the Karaka sales, which are just down the road from where I live, and taking that risk and being part of a very exciting industry.

So what this report seeks to do is another step in terms of trying to resuscitate and make the industry more viable. On that basis, we do agree with the overall intent in the Messara report, of course. Part of it is around not only improving the stakes but also what happens with race courses and reducing those over time. It was interesting—I think only yesterday there was an announcement from Avondale that they are looking at different alternatives in terms of closing that racetrack, which was one that was actually nominated to be closed. So there’s still a lot of water to go under the bridge.

But as a general rule, we very much support the intent of this bill. I’m sure that my friends and people who attend the Counties Racing Club—and I note that on 20 June, only a very short time away, the Lindauer ladies stakes day is going to be held in Pukekohe. Unfortunately, I’m not going to be able to attend it, which makes me most upset, because I’ll be down here doing my hard work in Parliament.

Anyway, we do have concerns about this bill, and I know my colleagues have talked about it—but there are genuine concerns. The first one is the process. It’s absolutely inconceivable that a Minister for Racing who has such good connections, knows the time frames, and knows the importance of this, has wasted so much time to bring this bill to the House; and then when he does, he only gives the industry 11 days to actually look through the proposal and make submissions. Five of those days were public holidays. That is just poor management of a very important industry. I know the Minister for Racing believes he’s the special champion of this industry—but one, that is just simple organisational skills, and that was very poorly done. Here we are, having to rush through this piece of legislation to be able to make this work in time.

The other thing is the protection around how this is going to be managed in the future. I know there’s the Racing Industry Transition Agency being put in place. But even amongst the different racing codes, the trotting codes, the racing industry, the greyhound industry, how the funding is going to be allocated is slightly unclear.

Then at another level—which the Hon Nikki Kaye has been talking about—there is this issue around how money is going to be distributed with other sporting codes. Those issues haven’t had the clarity they require, and I think we’ve got an issue with that. But we will be supporting this bill.

KIERAN McANULTY (Labour): Thank you, Mr Speaker. What a difference a week makes. Only a week ago, we were in this House, listening to the National Party contribute to the first reading of this bill, and we heard two different arguments from the same side. It’s something that we should get used to, but some members were saying they supported it and other members were saying they didn’t support it. But at least today they’ve come together and it seems they now support it. So good on them—good on them for finally realising common sense and supporting this bill which supports the racing industry of this country.

They do have some reservations, which I am absolutely certain in a week’s time they probably will no longer have. They’ve complained about the process, despite the fact that there was a significant consultation period on the Messara report, where the industry had every opportunity to express their concerns about what is facing the industry—which is exactly what this bill addresses, because what this bill does is it sets up the transitional process. That’s it. The other bills that are going to come after this—the second and third tranche, if there is indeed a third tranche. But, certainly, the second tranche that comes up next is going to go through the full committee process, because that will actually be proposing the recommendations that the Government adopts that came through from the Messara report and the consultation period.

So there’s actually no cause for concern here, because what this is, is a first step. What this does is it takes the first step under the leadership of the Rt Hon Winston Peters, a man who wants to preserve the racing industry for generations to come. For those that enjoyed racing when they were young—and they might be old now, they might be turning retirement age soon—and they look back to when racing was in its heyday, I want to ensure that heyday comes back so that when I am facing retirement in 31 years’ time, I can say that we played a part—

SPEAKER: That will be the mid-point of the member’s career.

KIERAN McANULTY: Sorry?

SPEAKER: It will be the mid-point of the member’s career, just like for me. Thank you.

KIERAN McANULTY: That’s right, Mr Speaker. With public speaking like this, I happen to agree with you.

Now, the point here is that we’ve had a bit of scaremongering going on on this bill. We have heard that sports is going to be decimated because of the changes that are not proposed in this bill. Now, that’s a very special type of scaremongering, to say that something’s going to happen because it’s not mentioned. But what the select committee process—now, keep in mind that the National Party have said that the select committee process was inadequate, but despite that, the Transport and Infrastructure Committee have taken on board the concerns and they have included a provision, which the Government supports, to require the Minister for Racing to consult the Minister for sport on any potential consideration around the revenue for sport.

There have also been suggestions that the revenue for sport that is coming in through this bill and what it proposes is not enough and there’s not enough focus on sport, despite the fact that the New Zealand Racing Board has always existed for the preservation of racing in this country. It wasn’t until sports betting was allowed that the sport became an aspect of it.

So what this bill actually does and what it’s proposing is that once the transitional process is complete, sport are going to have a say in the body that replaces the New Zealand Racing Board—something that doesn’t exist now and the National Government had nine years to fix, but now it’s only because it’s this Government’s idea that they are concerned about it. But I know for a fact that organisations like Sport New Zealand are not concerned, because I don’t know if that side has listened to the submissions or read the submissions, but what they said was that what’s proposed in this bill is good for racing and it’s good for sport.

Hon Member: There you go.

KIERAN McANULTY: There you go—there you go. The organisation that that party on the other side of the House is supposed to be expressing concerns about has no concerns. So that’s absolutely fantastic.

The point here is that this bill, simply, introduces the transitional process so that we can move from what currently exists—which, in my view, and the view of my colleagues on this side of the House, is an unsustainable model—towards something that is going to save racing, and make sure that the huge, significant economic impact that racing has on this country, be it in the provinces like where I live in Wairarapa or be it in places like in the Waikato, where my good colleague Jamie Strange lives, where breeding is king—not only the product of racing but exporting the horses as well. And then there are the jockeys and the trainers and the owners. Racing is a significant contributor to our economy. This bill will go a long way to ensuring that it continues to be so in the future.

Hon DAVID BENNETT (National—Hamilton East): Thank you, Mr Speaker. First, I’d just like to acknowledge the Minister that has brought this bill before the House, the Rt Hon Winston Peters. I think he has shown a real dedication to the racing industry over many, many years. I congratulate him on bringing this bill in front of the House. It is something that is very welcomed within the racing industry and, I believe, within the sports as well. So I wish to pay him credit for that. It builds on the work that had been done by previous committees of this House, and it is something that is important for the future of racing and sport in New Zealand.

We have a strong and proud history in racing, and let’s not forget that. It is part of our culture and our traditions, and we all love to embrace when a New Zealand horse wins the Melbourne Cup or another race. It’s part of what we see as our culture, and it’s part of our agricultural heritage, and it can be part of our future income earning potential as well.

There is a future in racing, and it is a strong future, and it may need to change and it may need to develop, but that’s like any other industry, especially any primary industry that works in a new market and with new directions. This is an integral part of giving racing not only the signal that this Parliament supports it but also the confidence to go out and achieve that future. We wish the racing industry the very best in doing that.

Aligned with that, sport has exactly the same opportunity from this bill. In fact, I would say sport earns more money out of this bill than racing will in the future. This actually will cement and create a future in sport that they would not have had a year ago, and I think that is something that they acknowledge. Of course, they’ll be negotiating for the best deal they can, but that’s part of this bill and this process.

If we go back to racing for a minute: if we look at the racing industry, there is huge potential in what we can see in the Asian markets, and, once China develops its racing industry, that will be an opportunity for New Zealand horses, New Zealand jockeys, and New Zealand trainers to actually go out there and take on that market—and particularly New Zealand breeders, because we are one of the very few countries in the world that produce world-class horses. On our borders and in our future there will be a large market for those horses over time. You just have to look at the Singapore and Hong Kong markets and how massive they are now, and, with the opening up of the rest of China, that will be a great opportunity for our region. There is also the Australian opportunity that we see now as well.

But this should not be let go as the opportunity for New Zealand racing. I wish to see the plan from the Minister for Racing for the next step. We know this is the first step of legislation. There’s another step of legislation that is going to come before this House later next year. But there is a step in between, and that is what we do with this money for the racing industry. If we just put that money into the grand pot and let it be evaporated around the racecourses of New Zealand, we will not get the full potential. There needs to be strategic change within the industry. There needs to be some hard choices made around tracks and what kind of races we have. Those choices are not made in this legislation. The Minister is not proposing to make those choices, but what the Minister is proposing is to give a cash injection, which would enable the industry to make those choices. I really encourage the industry to look at this money and then to go out there and look at what we actually need.

We need races that are of value for people to invest in horses and for trainers and jockeys and drivers to be able to get a return on their investment. We need to create that category of racing with this kind of money and not dilute it through the whole industry. We need to make sure that we create that world-class industry where there is that potential, and that will be the secret of what the Minister does next.

I will encourage him to take that on board, because this legislation gives an opportunity. But let us not lose that opportunity, like we have in the past. Let’s make this opportunity one that actually works for the industry going forward, and that can never be in legislation making those choices. Well, it could be, but it’s not actually the best place for it. The best place is for the industry, the Minister, and others to come together in agreement on that.

That brings me to the next big point of this legislation, which is that there is an element of good faith in it. All three codes have come together in good faith. None of those codes have guaranteed representation on the future board. None of the sports organisations have guaranteed representation on a future board. None of those codes have guaranteed distribution percentages coming forward from this, and none of the sports codes have guaranteed distribution percentages. But that is not a problem, because all have argued and agreed to work in good faith, and they’re working in good faith so that nobody is left behind, so that nobody loses out of this bill. But the rewards that this bill gives to racing and to sport are fairly and evenly distributed so that all can gain.

They all see the potential in working together rather than against each other for common goals, and that is the second thing I think the Minister needs to really support and work with. There is an element of trust between the three codes and between sports, and, if the Minister gets that right, he can continue that good-faith element so that the issues around distributions or representation on boards aren’t the major thing. What is the major thing is that there will be that gain there for racing and sport.

You may ask: how much is in it for sport? Well, if you look at the departmental report, they’re talking about $18 million to $33 million per annum for sport. Those are substantial investment numbers that could come into sport. So there is what we had in the past, called the race fields legislation, which had an information charge and a consumption charge, which would enable New Zealand racing and sport to gain from overseas betters on New Zealand races. In addition to that, the Minister has put into this legislation the removal of the levy that sports and racing would pay. That 4c levy now is in addition to the consumption and information charge.

Just on rough back-of-the-envelope numbers, you’re probably getting about $10 million coming out of that for sport. But, if you look at the potential, it could be that $18 million to $33 million. That will be a massive injection into our sports codes. As Kieran McAnulty rightly acknowledged, some sports may wish for more than that. But the reality is the TAB had been set up by New Zealand Racing Board and there is an element that other sports use that particular avenue for looking at how they get their investment.

This bill is an opportunity not only for racing but for sport, and I really encourage all the parties that are involved to continue with that good-faith element. I encourage the Minister to not look at just passing this legislation and then going on to the second legislation. That legislation won’t solve the issues. What will solve the issues are strong financial decisions made by our racing codes and our racing clubs and the racing industry in general. This gives the opportunity for that to happen. So I applaud the bill for this House. I think that it is good legislation that will enable good change to happen, and sports will succeed as a result of this as well. So I congratulate all those that have been involved in it and commend it to the House. Thank you, Mr Speaker.

MARK PATTERSON (NZ First): It’s with great pleasure that I reiterate New Zealand First’s support for this Racing Reform Bill for two reasons, actually: firstly, it’s a really good piece of legislation, as the previous speaker, Mr Bennett, has outlined; and, secondly, for me not to do so would be career-limiting. Actually, I would commend the previous Minister for Racing, David Bennett, on his contribution just finished. I did have in my notes a scathing rebuke of racing being adrift under the last National Government, for which he was a Minister, but since he’s made such a conciliatory speech, and looking to the future, I will lay off.

But this is, of course, a very important industry for this country, with a $1.6 billion contribution to our GDP, but it has been stagnant over a number of years. I think, if we look back 10 years, we would see those same figures, and, of course, over time, costs and the like have risen and it’s becoming harder and harder for people in the racing industry to make ends meet—and, of course, the thousands and thousands of workers that are employed by the industry. If you look at similar sized economies, like Ireland, for example, that has a similar racing culture to our own, their industry has reformed itself and has been much more successful than ours over the last 10 years and is, in fact, thriving. So I think it does show the way that there is hope for the racing industry, for adopting some of the measures. Of course, we know this is just the first part of a two-part reform of the industry on the back of the Messara report. Mr Messara is highly regarded; his reform of Racing New South Wales has been incredibly successful and he has come here with huge mana and produced a report which will be the template for the revival of the racing industry.

I was just actually at the Fieldays last week up in Mystery Creek in Hamilton—of course, Mr van de Molen’s country and Mr Bennett’s country, as well. At the New Zealand First stand there were many people from the racing industry coming in and saying how grateful they were that they had a Minister that was taking the bull by the horns and actually rolling his sleeves up and getting some action going in the industry. It has been stagnant, they had lacked some leadership, and they were very grateful. As has been outlined, it’s that money coming in, and we need it flowing into the stakes, that then flows into the breeders, because there’s a return on investment. What Messara showed us was that if you’re racing a horse in New South Wales you can expect, for every dollar you put in, to get a 49c return. Of course, that might not sound good in terms of putting your money in the bank but this is greater than that. This is the thrill of racing, and the ability to have that once-in-a-lifetime horse. But it’s 49c on the dollar over there. Here, its 22c and it is declining. So we do need these wider reforms, of which this is the first tranche.

Of course, in the Budget we found—in the announcement and, of course, in this as well—the progressive decrease of the levy that the TAB needs to pay back to the Government, which, in three years, will have $13.9 million extra going into both racing and to sport, which will be hugely appreciated and is part of that virtuous cycle that this bill will start. Of course, there are the provisions in the bill to bring in the Racing Industry Transition Authority to oversee the second tranche. The second tranche looks at the structural reform of the industry, the footprint. That will be more controversial. It will have a greater consultation process, and is due that.

We’ve also, within this, looked at the gambling harm and—it’s been referred to by others—that is a serious issue. It’s good to see more resources going into that particular aspect. I commend my colleague Darroch Ball, who oversaw the select committee process. It was truncated but there were 42 submissions and, I believe, nine oral. There were some—as Mr McAnulty outlined in his contribution—small but significant improvements made to the bill through that process.

This is an important industry for New Zealand. It’s a cultural—rugby, racing, and beer. While we are a more diverse multicultural society these days than maybe we were back in the heyday, it’s still a very big part of our culture, going down to the local racetrack. I know I certainly enjoy taking my family down there in the summer on occasion, and to some of the race meetings down south. It is a legacy industry for this country. There is, as overseas examples show, much potential to grow it back towards where it was. We know that, as outlined previously, looking into Asia and the huge growth of the racing over there, the breeding has got significant potential to grow its contribution to our GDP. So, without further ado, I have much pleasure in reconfirming New Zealand First’s support for this bill. Thank you.

Bill read a second time.

Bills

Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill

In Committee

Part 1 Annual rates of income tax

ANDREW BAYLY (National—Hunua): Thank you, Mr Chair. As we all know, this is the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. As we’ve said in the first and second reading, National will be opposing this bill because it enshrines higher than required tax rates, but I’m going to talk about that later.

What I want to talk about in my first speech on this bill that we are debating tonight is this outrageous Supplementary Order Paper 248 (SOP) that the Minister has put on the table—what, two hours ago? Maybe two and a half, let’s be generous. For the people who were listening in on TV, when a bill like this goes through a select committee it is subject to intense scrutiny by all members of the select committee to take the opportunity to make sure that the changes, or what’s proposed in the bill, is going to work appropriately, achieves what the intent is, and has the opportunity for people who are most likely to be affected by elements of that bill to have the opportunity to make a submission. Of course, on this bill, we had many submissions because it’s a wide-ranging bill—that’s why it’s called a remedial matters bill, which means it seeks to clarify and fix up a whole range of issues, which it does.

This bill has been going through the Finance and Expenditure Committee for some time, for several weeks, and to have this put on the table tonight, I just find, as part of the process—as a starting point for the discussion around this taxation bill—is not a good place to be. I’m very disappointed in the Minister who is sitting in the chair. So because we haven’t had the debate around this Supplementary Order Paper, I just want to ask the Minister some fundamental questions, because, simply, we have not had the opportunity to ask them.

This bill is about requiring anyone who sells a house to now have to include a statement that includes their IRD number. So the first thing I want to ask the Minister is: what is actually required in the statement? It’s referred to in the SOP. The issue is before a transfer—

CHAIRPERSON (Adrian Rurawhe): Can I just interrupt the member. The SOP that the member’s speaking about is about parts that we’re yet to come to. We’re on Part 1; the SOP is not about Part 1.

Hon Jacqui Dean: Good context, though.

ANDREW BAYLY: It’s great context for this bill, because this bill, in terms of what it’s trying to achieve, is—I think the most important thing about it is, as I said before, the enshrining of the tax rates and the overarching aspects around that. I think that’s the issue that we have with this bill and that’s why we will continue to oppose it. In terms of some of the elements of the first part of this bill, there is the issue of the rates of tax, and I’ve got an SOP that sets those out which, if the Minister and the Labour - New Zealand First coalition had accepted the National Party’s tax cuts proposed when we were in power, that would have meant that taxpayers in New Zealand would be paying, on average, a thousand dollars less in tax a year. When you put that into the context of what people are paying in increased rents, all those sorts of things—and we know rents have gone up by over $50 a week—this measure alone is very, very significant.

So the current tax rates—where we have a variance is the rate at which the four different personal tax rates cut in. So we still want to see the same four levels, but the thresholds where they cut in are substantially different. I think, particularly, for New Zealanders who—

CHAIRPERSON (Adrian Rurawhe): I’m sorry to interrupt the member, but it’s come time for me to leave the Chair.

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

CHAIRPERSON (Adrian Rurawhe): Members, when we rose for the dinner break, we were debating Part 1 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. Andrew Bayly has the call and has 38 seconds remaining if he so wishes.

ANDREW BAYLY: Thank you, Mr Chair, and I hope you’re going to give me more time than 38 seconds, because I was just starting to get into my stride about Part 1. As you know, this is all about the tax rates that New Zealanders—hard-working New Zealanders—have to pay. This part of the bill, this first part, is about Labour and New Zealand First enshrining higher-than-required tax rates, and this is what I want to talk to you about.

I put a Supplementary Order Paper (SOP) up, No. 250, which is about changing the proposed annual tax rates—[Bell rung] Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Andrew Bayly.

ANDREW BAYLY: Thank you very much. As I was just saying, I have put up an SOP, No. 250, which says that we will change back to what National proposed, which would have given everyone an over $1,000 saving a year in terms of tax cuts. Of course, as I said earlier, rents have gone up by $50 a week—in fact, slightly more—and the imposition of a whole stack of other taxes would actually go to help if this measure in my SOP was to be adopted tonight, and I hope it is, and I’m hoping the Minister of Revenue is looking carefully at these proposals.

Under this arrangement, we propose that the first rate of tax—and this is the current schedule: it goes from zero dollars to $14,000, which incurs the lowest rate of tax, at 10.5 percent. These are the students—many of us have sons and daughters that study—or people going back to study and retrain. These are the people—low-income people—that we want to make sure keep the tax. It’s also a lot of the superannuitants.

We have proposed, under the SOP, increasing that minimum threshold, not from $14,000 but increasing it up to $22,000 at the same rate—10.5 percent. That’s a huge saving—a huge saving. When you think about it, a single superannuitant basically gets $23,000 from the Government to help them when they are in their retirement, and this would basically mean that all superannuitants would remain at the lowest tax rate of 10.5 percent, not the $14,000 threshold that this Government is now wanting to impose.

Then, the next level is 17.5 percent. Of course, under the existing rules, anyone earning between $14,000 and $48,000 incurs a tax rate of 17.5 percent. We propose lifting that from $22,000 to $52,000. Again, when you think about the average wage in New Zealand, probably in the order of about $65,000 or $68,000 now, this is significantly helping those people who are not earning substantial amounts of money. They’re the people we want to make sure keep their tax—that they don’t have to pay tax at source; they keep the money in their pocket—and this is what the SOP is about.

Then, the threshold of $52,000 to $70,000, which is similar to the existing arrangements and no different for those high-income earners—everyone over $70,000 would be taxed at 33 percent. So the whole purpose of the tax cuts was, in fact, all about looking after the most vulnerable, the lowest paid, the lowest income earners in New Zealand and actually really giving them something significant back in their pocket.

I think when you think about this Government, it rakes in about $73 billion a year from tax, half of which broadly comes from taxpayers, of which half of the personal tax—25 percent of total tax—comes from the top 11 percent of all taxpayers. Unfortunately, the Prime Minister didn’t know her facts today when she was asked. But the issue around this is looking after the personal tax take and making sure that we are looking after these people. But this Government wants to impose more taxes on people.

This is one of the elements. There’s a whole range of other taxes—another six taxes that this Government has imposed since coming into power in 2017, just a little over 19 months ago—and I think too much tax has been taken from people’s pockets. We don’t support that, and I really, really worry for how this Government is going around. You know, they talk about increasing the minimum wage and that sort of stuff. We were trying to increase that as well, but there’s no use—[Interruption] We raised it every year: 50c on the dot, same time every year, and everyone knew it. We didn’t come along and say to business, “We now want you to pay the increased minimum wage in hefty blocks.” when they didn’t even have a Budget or know it was coming. That’s called uncertainty. That’s why business confidence is declining in this country. That’s why you’ve written off $3 billion of economic activity—or roughly about $600,000 per person in New Zealand of economic activity has just been wiped because of silly questions and interjections like this. This is a good SOP. I support it, even if it is my own.

IAN McKELVIE (National—Rangitīkei): Thank you, Mr Chair. I want to take a call in support of Mr Bayly’s Supplementary Order Paper (SOP)—a very good SOP it is—but I want to explain, before I do, why I’m interested in taking this call.

The tax system is all about fairness—and I think it probably is all about fairness. I agree it should be fair, and I think that one of the problems we have in this country, in my view, is that our low-income earners pay an excessive amount of tax for the amount of money they earn. Now, the reason I say that is because they’re subject to GST like everyone else, they’re subject to a whole lot of other taxes—fuel taxes and every other tax that comes along—and the one way we can relieve some of that tax is through individual tax rates. That’s the reason I support Andrew Bayly’s SOP—and a very good SOP it is, too.

But I think the issue that we need to investigate a little bit further is the way we develop policy that then enables people at the lower end of the income scale to, I guess, firstly, retain more of their income, and, secondly, aspire to earn more as they move forward. I don’t think for a minute that subsidising people’s way of life is the ideal method of doing it. I think we’re much better to reward them through a tax system that enables people who don’t earn so much money to find themselves much better off, and at least they’ve got the dollars they’ve earned. They can then take them out and spend them, rather than taxing them and then finding a way, through Working for Families or whatever, of putting the money back in their pockets. I don’t think that’s a logical way of dealing with these things at all.

All Governments will come under significant pressure around tax, because, effectively, it affects people’s pockets on a daily basis. But the thing that really intrigues me about the tax system is that the tax system, for most people, is to some extent invisible, in that the money is taken off them through various methods, and particularly PAYE, and they don’t really know it’s gone until they get to the end of the year. Of course, the Inland Revenue Department has now come up with a new scheme of contacting every taxpayer in New Zealand, and, of course, people are going to become much more aware of their tax situations as a result of that. Whether that’s good or bad, I’m not so sure, because if you look at the way rates are dealt with through councils, everyone’s hugely aware of the rates they pay councils and they complain about that endlessly.

I think that the new method of drawing attention to people’s tax rates and the amount of tax they either pay at the end of the year or get sent back to them is going to significantly impact on the attitude people have towards tax. That might not be a bad thing, because if people knew how much money they were paying in tax or were conscious of it—I shouldn’t say “knew”, because many of them will. If they were conscious of how much money they were paying in tax on a monthly basis or a weekly basis or, in fact, a fortnightly basis, they’re going to pay a whole lot more attention to the activities of the Government. Now, that might actually, if you take it to its extreme, engender more interest in politics, which wouldn’t be a bad thing maybe—although some politicians might not like that either, because they would be under a bit more scrutiny than they otherwise would be.

But we have a tax system in New Zealand, which—you can argue whether it’s fair or not. That’s an argument—and both sides of the House will agree or disagree on many parts of that. But I do think that it does penalise our lower-income earners, and it does—as people creep up the income scale, the tax rates have not moved in a manner that was appropriate. That’s the basis of Mr Bayly’s Supplementary Order Paper (SOP), aside from the fact he wants to change the whole structure of the Government’s tax regime, which wouldn’t be a bad thing.

But I think that it’s important that people, as I said a little earlier, retain as much of the income as they can that they earn themselves, rather than having to go out and look for accommodation supplements, or supplements for large families and small families. I think we’ll be much better if they are enabled to keep the money they earn. The other factor in that of course is that if people earn more—and we have seen some in the last seven or eight years in New Zealand; we’ve seen a significant increase in the amount of money people are able to earn—putting a whole lot of people into a tax rate that they weren’t in before, so they consequently pay a lot more tax. We’re seeing that as a consequence in Inland Revenue’s tax take on a weekly or monthly basis. So it’s made quite a significant difference.

So for that reason, Madam Chair—Mr Chair. Sorry, Madam Chair—Mr Chair. That’s the second time you’ve been called that in the last two speakers! I apologise but for that. For that reason, I support Mr Bayly’s SOP, and I don’t support the bill, and this particular part of it.

Hon STUART NASH (Minister of Revenue): Thank you very much, Mr Chair. There were a couple of comments made by the previous speakers that just cannot go unanswered, so let me start. First of all, Mr Bayly’s Supplementary Order Paper (SOP): now, this is about adjusting the tax rates. Now, the cost of this is literally hundreds of millions of dollars. So let’s theoretically assume that Mr Bayly’s SOP was to go through. The question that I would ask the member is where would this money come from? So what would Mr Bayly do? Would he say, “OK, what we’re going to do is we’re not going to invest in 1,800 more police. We’re going to leave the police static.”? Or would he say, “The $1.9 billion we’re going to invest in mental health—no, we’re not going to invest in mental health.”? Or would he perhaps say, “Teachers—the teachers don’t deserve the $1.5 billion tax cut. So we’re not going to give them that.”?

So it’s all very well saying we’re going to give Mr Bayly and Mr McKelvie and myself and Mr Carter and everyone in this House a tax cut. But the question then has to be asked: if you’re going to give money to those who don’t necessarily need it—let’s be honest—where are you going to get that money from? That side is always talking about fiscal prudence. That side has always talked about paying down Government debt, and that is one of the good things about Mr Robertson’s Budget. He kept that debt pay off projection exactly where it should be. The fiscal accountability rules; he stuck to them.

But we have a choice as a Government. Mr Robertson had a choice as the Minister of Finance. He could give Kiwis tax cuts, and let the social infrastructure erode even further, or he could—and the Prime Minister—say, “What we need to do is rebuild the foundations of our community, of our society, pay more teachers, pay teachers more, more nurses, more police”, and this is the decision that this Government has chosen. We would rather invest $1.9 billion in mental health and get that right than give Mr Bayly a tax cut. That is a choice we have made, but I’m really interested to know what choice Mr Bayly would make in terms of where that money would come from.

The other thing I would say is Mr McKelvie talked about the fact that we need more money in the pockets of the most disadvantaged in our community. Well, Mr McKelvie, the OECD came up with a report—it’s called Taxing Wages 2019—and this report found that a family with one worker earning the average income with two children pays almost no net tax in New Zealand once transfers like Working for Families are included. It also showed that on the average tax rate, a single worker without children earning average income is lower in New Zealand than all other OECD countries. So I suppose what I’m saying is we don’t pay an onerous amount of tax here, compared to all the other OECD countries. We don’t have a payroll tax, we don’t have capital gains, we don’t have Medicare levies. In fact, if a taxpayer really wants to know how much tax they are paying, it is very easy to find out. IR’s Business Transformation, release number three—you go in there, you type in your Inland Revenue number, and any taxpayer can find out exactly how much tax they’ve paid.

So it is incredibly transparent, and, in terms of how much money the Government is spending, all you need to do, Mr McKelvie—and I would recommend this; you would find it interesting—is grab a hold of Mr Robertson’s Budget, and take a look and see where the money is going. What you’ll find: the money is going into mental health. The money is going to law and order. The money is going to education The money is going to sexual and family violence. The money is going into Oranga Tamariki. The money is going into Whānau Ora. We can tell you in black and white where this money’s going. In fact, in the last three weeks, every coalition Government member has stood up and has enlightened the Opposition to exactly where the money is going, and that is to building social infrastructure.

So I am very interested in Mr Bayly’s SOP, because I just want to know where the money is coming from—where the money is coming from. I can enlighten the member that from all the polling—this is historical, it’s just within this country—if you ask the taxpayer, “Do you want more money in your back pocket?”, most of them will say, “Yes”. But then you tell them “But if that happens, that means less police, less doctors, less nurses, less social workers”, and the vast majority say, “No. I’d rather pay for social infrastructure.” In fact—

Hon Ruth Dyson: But it’d be “fewer police”, wouldn’t it.

Hon STUART NASH: Well, we want more police.

Hon Ruth Dyson: Yeah, but it would be “fewer police” rather than—

Hon STUART NASH: It would be “fewer police”, not “less police”, you’re dead right. Lucky Trevor’s not here!

Hon Ruth Dyson: That’s right, yeah. Under National, it’d be fewer.

Hon STUART NASH: Ha, ha! So I remember a street corner meeting I had before the election, and a gentleman came out and said, “You know what? There’s a tax cut, but if we look around here, and everyone in the suburb contributed, that would mean one more nurse, one more teacher, and one more police officer for the suburb we live in, and that is where I would rather my tax money was spent.”

Rt Hon DAVID CARTER (National): Thank you, Mr Chairman, and, following the Minister of Revenue, it’s a little like taking candy from a kid. The Minister asked, “Where’s the money coming from?” The money’s coming from the poor, overtaxed taxpayer. The second question the Minister asked is, “What expenditure would you cut?” I’ve only got one that’ll give us $3 billion: take away the Provincial Growth Fund, which is Shane Jones’ slush fund. That’s $3 billion alone. The Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill has some good points in it, but National will oppose it, simply because the tax rates are too high.

Mr Nash has just invited me to look at the Budget recently delivered by the Minister of Finance, and I am going to refer, in some detail, to the Budget Economic and Fiscal Update 2019. I doubt whether the Minister’s got his head around these figures, but, on page 26, core Crown tax revenue—it states that by 2022-23, core Crown tax revenue is expected to reach $105.6 billion. That is $25.4 billion higher than in 2017-18, and that’s the problem with setting the tax rates where the Government’s proposing to do it. Over the next five years, we see a massive increase in tax being taken off New Zealanders, and most of it is coming from what they call source deductions, otherwise known as PAYE, and that’s forecast to grow by $10.8 billion over the forecast period. That, the Hon Stuart Nash, is why these rates need to come down.

There are two solutions that have been offered. One is the excellent Supplementary Order Paper 250 by Andrew Bayly, where he’s suggesting a change to tax rates immediately. If that was to be successfully passed in this House, then National would be happy to support the bill in total. There is another solution, and that was the one advanced by the Hon Simon Bridges earlier this year, which is to stop the bracket creep by linking the threshold to the Consumers Price Index. What Mr Nash’s just talked about is the very generous pay settlement recently to teachers, but what that does is put just every teacher on to the highest tax bracket: at $70,000 the tax rate then is 33c in the dollar—that’s marginally above the average wage in New Zealand—and that, Mr Nash, is just stupid. By all means look at Australia, look at England, and look at other countries where they have a higher tax rate for high earners, but don’t go round arguing that earning $70,000 a year means you’re a high-tax income earner and, therefore, should be on the highest rate. So it is time to look at this huge increase in taxation that’s occurring under this Government’s plan over the next three years or four years because it simply isn’t justified. The only excuse for these extraordinarily high tax revenues over the next five years is that this Government is a tax and spend, borrow and hope Government.

We will have the chance later to be talking about the expenditure of the Government, but a lot of it is shoddy expenditure around things like the Provincial Growth Fund and other measures that are done simply to buy a coalition Government and support from New Zealand First. That’s what it’s all about. But in the meantime, New Zealanders are paying far too much tax. Mr Stuart Nash jumps to his feet, tries to justify it, asking us as Opposition members to name one item we’d take off the agenda to pay for the tax cuts, and I’ve given him the one that I’d suggest. Take away the Shane Jones slush fund, where he travels round the country making announcements, looking for photo opportunities, largesse to every province in New Zealand, but most of it going to Northland where he and the Rt Hon Winston Peters live. And if they think that’ll buy them success at the next election, I tell Mr Nash now: New Zealanders are not that gullible.

ANDREW BAYLY (National—Hunua): Thank you, Mr Chair. I thought I’d take the opportunity to respond because that was a welcome opportunity for the Minister as to where we might find the money to pay or allow lower-paid people to keep more money in their pocket. I think that’s a great suggestion. I just want to correct the Minister because he inferred that people that earn more than $70,000 were going to get a whole lot of money and get welcome breaks. As the Minister, if he looks at my Supplementary Order Paper (SOP) 250, the top two tax rates, in fact all the four tax rates, stay the same; it’s just the threshold at which they change. But the last one: anyone over $70,000 under the current Labour Government arrangements will still have to pay tax at 33 percent. Under my SOP 250 using our National Party tax rate, anyone over $70,000 will still have to pay 33 percent.

So this is not about helping the rich. This is about helping at the lower thresholds those people who don’t earn much money in New Zealand, and that’s what it’s about. If you talk about fairness and equity, Minister, that is exactly what tax should do. That means don’t rip the money out of the pockets of taxpayers, especially when they can’t afford it, and then try and hand it back through increasing the minimum wages, all those other accommodation supplements, and all that sort of stuff. What you’re actually better to do is leave that in their pockets from the start. That means they have more money to spend on the first day—they don’t have to go through a mincing machine which might go through some of the ministries to be able to reimburse them for that money. But that is what it’s about.

Where do you find four billion bucks? Well, as Mr Carter very succinctly described, it is the Shane Jones slush fund that most people, I think, are now getting a bead on and seeing how unproductive and wasteful that expenditure is. If that was driving economic growth, and that means sustainable economic growth with new jobs and investment in businesses that are going to employ a lot of people, we’d all say that’s a great outcome. But unfortunately what we’ve seen is just a whole lot of disparate announcements, money thrown at things, very little job creation, and probably just going to get blown, and unfortunately not create the sustainable businesses that we want. So there’s $3 billion. We’ve got a billion that was given to the Deputy Prime Minister for carpets and curtains in Sweden, ambassadorships, and things like that. Then we just had another billion dollars into rail. So there’s $5 billion.

We like the idea of spending on social policies. We like to see nurses and people employed and paid reasonably; all that sort of stuff. That’s not the cost. This is about more efficient spending. As my colleague just said, this issue is around tax, spend, and borrow, so as he quite rightly pointed out, the tax revenue of this Government, under current settings with no further taxes, will go from roughly $72 billion or $73 billion to just under $100 billion in the next four years. Even in the last 19 months, this Government has imposed new taxes, six of them worth a current value of about $2.6 billion already, although I may be slightly out with my numbers with their recent tax changes rushed through at their Budget, and under urgency, of course.

But the other thing, I think, Mr Carter didn’t refer to is the borrowing. So whilst this Government is going to rake in basically another $18 billion of tax over the next four years, at the same time, the same projections that Mr Carter is looking at, the debt of this country is going to increase by a further $10 billion. So that’s, effectively, $28 billion of additional tax and debt that has been taken off New Zealanders and posed as a liability on New Zealanders; that is not a good thing. That is why this SOP 250 is an appropriate thing.

This is about looking after the most vulnerable New Zealanders. I think that it’s time for the Government to actually recognise that at some point this fiscal creep, which they call fiscal creep, is where people increase through into the next upper bracket of tax payment simply through inflation—is a pernicious thing. It’s one, of course, of the big issues that we’ve announced as a policy already, which is to make sure they’re inflation linked, and this SOP 250 is a way of dealing with that pernicious outcome where people are getting forced into the top taxpaying route.

Hon STUART NASH (Minister of Revenue): I’m just going to take a very short call just to highlight a couple of things that the previous speakers have highlighted. The Rt Hon David Carter suggested that we have a much higher tax bracket for those earning a lot of money. Now, I don’t see that on Mr Bayly’s Supplementary Order Paper (SOP) 250. Is that going to be part of National policy? Are you going to put it at 45 percent at $150,000? The member did say “Look at Australia.”, and Australia, I think, has 45 percent at $175,000 or $150,000. So that mightn’t be a bad suggestion. I look forward to that being in the National Party tax policy heading into the next election. We may be seeing it earlier under an SOP coming in the next hour

The other thing I would say is I challenge both those members to come to Hawke’s Bay and to talk about Mr Jones’ fund as a Northland slush fund. What happened in Hawke’s Bay over the last couple of weeks is the Provincial Growth Fund actually opened up the Napier to Wairoa rail link that was closed in a slip, and the previous Government refused to fund it. There’s a business case from Wairoa to Gisborne, which is going to open up that side of the rail link. I can tell you the companies and the businesses up there that need to send their produce to port can do it on rail to Tauranga—it’s a long way—or on rail to the Port of Napier. It’s a hell of a lot cheaper and we take a whole lot of trucks off the road. That is about economic growth, that is about creating jobs and opportunities in our regions. So I completely refute—completely refute—the suggestion that Mr Jones’ Provincial Growth Fund is not adding value because in Hawke’s Bay it is absolutely adding value.

I can also say as the Minister of Fisheries there’s about seven projects so far, totalling about $10 million, into aquaculture. This is adding substantial value into an industry which has been undercapitalised—it’s been undercapitalised. There’s going to be jobs, there’s going to be growth, and there’s going to be economic development.

I think this is fantastic, and to say what we’re going to do is say no to the regions—no money for the regions because Mr Bayly wants a tax cut—it doesn’t work that way, I’m afraid, Mr Bayly. We believe in the regions. We’re backing the regions because we think that it’s not just open roads that need funding; we think it’s about provincial New Zealand also needing a hand.

The other thing I would say is the way things work in this country, it’s about targeted relief—it’s about targeted relief. So I remember when Working For Families came in; I think the former Prime Minister John Key—did he call it “communism by stealth”? Is that what it was?

Hon Ruth Dyson: That’s right.

Hon STUART NASH: Communism by stealth. And then his Government actually adjusted the thresholds because he saw it was actually working, and it was targeted, and it provided relief to those who really needed it. This is what this Government’s done; it’s not saying, “Tax cut for everyone. Tax cut for the very wealthy as well as the poor.” It’s saying, “To those for whom life is a struggle, we will help you out. We will help you out. We’ll give you the winter warm up, for example—we’ll give you the winter warm up because we know it’s hard work.” It’s about targeted relief for those who really need it. Whereas Mr Bayly—I don’t think Mr Bayly needs a tax cut. I could be wrong—I could be wrong. I don’t think that Mr Carter needs a tax cut or Mr McKelvie needs a tax cut. I don’t think Mr Scott needs a tax cut. Maybe I’m wrong. But there are Kiwis for whom life is a challenge, and it’s this Government’s role to make sure that they have the ability to live with dignity. That is why we have a targeted funding scheme, to help out those people, as opposed to just a carte blanche tax cut for everyone.

Now, Mr Bayly’s SOP is actually out of order, but that’s beside the point. We think we’ve got it about right. We are continuing the tax rates as they’ve been for about the last seven or eight years, as that member’s Government had. As I said, Governments have choices, and we have made the choice to rebuild New Zealand’s social infrastructure and to ensure those for whom life is a challenge have the money to live with dignity. That’s a choice this Government has made. That is why we will not be supporting Mr Bayly’s SOP, that says a tax cut for everyone and no targeting. Thank you.

Rt Hon DAVID CARTER (National): Committee stage is normally a chance for the Opposition to ask questions of the Minister, but when you’ve got a Minister as weak as this, that he’s got—I keep asking questions of the Opposition. Let me take a chance to respond to his questions, answer them for him, before I put six very specific questions to him. First of all, on this side of the House, we’re not advocating to put tax rates up at all. They don’t need to be. What we are saying is stop wasting money. The second question he asked is around Hawke’s Bay and the recent announcements of the slush fund of Shane Jones. Might I point out that in amongst those announcements was money for water, irrigation, infrastructure, water storage. We had a perfectly good scheme which the Labour Government immediately disbanded as soon as they came in, on the basis it was a subsidy to farmers. I don’t think many farmers in the Hawke’s Bay will miss the inconsistency there.

Now, let me get to the very specific questions I want to ask of the Minister, because I see he’s got some beavering, eager officials there to help him with these questions. I want to know how many taxpayers now are in the bracket of $70,000 or more, paying the top tax rate. A simple question to ask: how many are there? I then want to know how many he predicts will be there in 2020—how many more taxpayers will move into the tax bracket between 2019 and 2020, when tax revenue goes from $84.7 billion to $89.2 billion? My third question, then, is how many more are they budgeting will move into the top tax rate in the year 2020 to 2021, when the tax revenue goes from $89.2 billion to $95.1 billion? My fourth question is how many, then, taxpayers move into the top tax bracket of $70,000 between 2021 and 2022? I point out to the Minister, because he won’t be familiar with his own figures, the tax income, core tax revenue, in 2021 is $95.1 billion, going to $102 billion in forecast 2020. My, I think, fifth question then, or sixth, takes us to the next financial year. What is the additional number of taxpayers who move in the 2022/23 year into the top tax bracket of $70,000, when the tax revenue increases from $100.2 billion to $105.6 billion? For the Minister to now start to realise the extent of this bracket creep that’s occurring—when you can look at their own Budget Economic and Fiscal Update figures and see that Crown tax revenue increases by around 25 percent from the 2022/23 year as compared to the 2017/18 years.

So there are some quite specific questions from the Minister that we expect an answer to. This is the opportunity where we as Opposition normally use committee stages to ask questions of a Minister to ascertain the Minister’s proficiency, his capability. He can use it, if he likes, to ask questions of the National Party as to what our tax policy will be when we become Government after election 2020. If he’s that worried, I can give him some hints now, but it certainly won’t be maintaining the tax rates that this Government’s maintaining, because we won’t need the sort of income that this Government needs, because we won’t be wasting money around the regions like Mr Shane Jones is at the moment. So some quite specific questions. I’m looking forward to the answer, the Hon Stuart Nash.

Andrew Bayly: Oh, you’re going to answer the question?

Rt Hon David Carter: Yeah, he’s on his feet.

Andrew Bayly: Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Are you seeking a call?

Andrew Bayly: Yes please.

CHAIRPERSON (Adrian Rurawhe): I call Andrew Bayly.

ANDREW BAYLY (National—Hunua): Oh, thank you, Mr Chair. Sorry, I just wanted to give the Minister an opportunity to answer those very well-formulated and interesting questions, because I’m sure the Minister will know those numbers offhand. I hope that he does, because, as we know, 11 percent of taxpayers pay roughly half of the 48 percent collected in personal tax—

Stuart Smith: What percentage?

ANDREW BAYLY: Half—25 percent of the total.

Stuart Smith: That’s what, 11 percent?

ANDREW BAYLY: Yeah, 11 percent. So it’ll be interesting to see the Minister’s response. But, of course, I’m sure he would know the numbers, because he is the Minister of Revenue. But the whole issue around this—I think my good colleague the Rt Hon David Carter makes a very strong point—is collecting and making sure that people keep the money at source, and I think that’s a very important point. The thing I find most troubling about the Minister’s response is it’s always about how we can hand money back to people. He talked about Working for Families, he talked about benefits. The reality is—and this is what the Supplementary Order Paper (SOP) was about. It was actually saying, look, putting it through a big mincing machine and handing it back to people who need it—there’s an easier solution. That is to let the vulnerable and the people that earn the least amount of money to actually keep that money at source. Don’t tax it from day one. Let them keep it. That’s a way that people can manage their affairs better. They have the money when they need it, when they earn it, not when they get it handed to them a month later or under some constraint that the Government puts it through.

That’s the primary purpose of the SOP, and as I said before, and I want to reiterate, my SOP does not change any of the tax rates. It only changes the first two rates, the thresholds at which the higher rate comes into force. It certainly doesn’t allow wealthier people earning more than $70,000 any advantage at all. They will still have to pay tax at 33 percent, the top tax rate, at $70,000.

But I also just want to turn to my second SOP, which is SOP 251, and this is the one—it relates to clause 2(14), to replace 1 December 2019—

CHAIRPERSON (Adrian Rurawhe): We’re yet to come to that debate.

ANDREW BAYLY: Oh, well, I’m just putting a marker down. I didn’t know whether you were going to take this, because it refers to the first part of the bill, but, obviously, the main section’s in Part 2. So I’m very happy to defer that to Part 2, Mr Chair, but I just wanted to make sure that we had no issue with that.

So, yes, this issue about tax is a very, very, very important thing. As I was alluding to before, you know, this avalanche—and I’ve used this word before—this rapacious Government, who just wants to rip money out of people’s pockets—rapacious.

Ian McKelvie: What does it mean?

Hon Member: Greedy.

ANDREW BAYLY: Well, I couldn’t say that the Government’s greedy for cash, but I find it slightly troubling, because since Labour and New Zealand First and, I presume, with the support of the Greens—we don’t talk about them. But we’ve had three lots of fuel excise taxes imposed under this Government in the last 19 months. We’ve had an Auckland regional fuel tax: 10.5 percent plus GST. We’ve had the brightline extension to five years. We’ve had ring-fencing of losses, and we’re going to be talking about that later. We’ve got GST on mobile roaming. We’ve got WorkSafe levies, and we’ve got tourism tax. What was that $80 million I think we passed, in urgency, immediately following the Budget?

That’s why we’re so fundamentally opposed to enshrining these higher than necessary personal tax rates, because if you’re going to do all those taxes there, six or seven of them, rake in the extra—it must be near $3 billion. Even though they campaigned on the basis they’re not going to put on any new taxes, somehow, miraculously, they’ve now put in all these new taxes. I don’t know why. Maybe the Minister can explain why you say, before an election, you won’t do any new taxes and immediately after—19 months is not long—you impose all these new taxes. So we want to reinforce that we want ordinary New Zealanders to keep their money. Don’t give it to the Government. We don’t need your money. We are earning enough as a Government, and what we do want is a more responsible Government that doesn’t go and borrow $10 billion.

Hon RUTH DYSON (Senior Whip—Labour): I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 63

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

Noes 56

New Zealand National 55; Ross.

Motion agreed to.

CHAIRPERSON (Adrian Rurawhe): The Minister has informed me that Andrew Bayly’s amendment replacing clause 3, set out on Supplementary Order Paper 250, may have an impact on the Government’s fiscal aggregates. As the required 24 hours’ notice was not given, no question will be put on the amendment.

A party vote was called for on the question, That Part 1 be agreed to.

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.

Part 1 agreed to.

Part 2 Amendments to Goods and Services Tax Act 1985

IAN McKELVIE (National—Rangitīkei): Thank you, Mr Chair. It’s a pleasure to take a call on Part 2 of this bill. The bill is a bit of an enigma—a bit like some of the Minister of Revenue’s comments a moment or two ago about opening and shutting the railway lines north of Napier. It bemuses me how they can open the port of Gisborne with a whole lot of money, open the railway line from Wairoa to Gisborne, and open the railway line from Wairoa to Napier. One or the other is going to get the trade; not both.

Anyway, I want to speak about Part 2 of this bill, and the enigma in this bill is that there are some parts of this bill that are clearly very sensible and very well put together and there are some parts of this bill that we cannot agree with. I think that’s a bit of a shame because there are many parts of this bill that are sensible and make good sense for New Zealand. One of those is GST being applied to offshore goods, and that’s a piece of legislation that’s been talked about for some time now and has finally arrived in the House.

I think it’s a very sensible piece of legislation. It’s critical that we get it right. It’s critical that we end up in a position where we are able to tax equitably all of those people supplying into the New Zealand market at that level. I think that will be the challenging thing for the inland revenue to get those people registered and to get the money collected from them, because it is a very complicated business, and it’s not unlike the racing reform legislation that we had through the House this afternoon, where a similar sort of proposition has been put, where we are looking to collect, effectively, a levy on gambling. Here we’re, effectively, looking to collect a levy, or a tax—obviously, it is—on goods that are imported to New Zealand via remote means, I suppose.

It’s been a bugbear for the retail sector in New Zealand for quite some time, because not only have more individuals been able to import goods under $1,000 to New Zealand and pay no GST on them—which, effectively, straight away makes them 15.5 percent cheaper—but there’s also another anomaly in this, and it won’t be fixed by this bill. It has always bemused me a bit that if you import stuff through remote means or through the internet, or however you import it or buy it, you don’t then pay duty where duty is applicable in New Zealand, and on things like clothing in New Zealand, for example, we still have an old-fashioned kind of duty applied on that clothing. We don’t have that, obviously, on goods that are imported by individuals into the country. So straight away that’s another small inequity that our retailers suffer from, and that’s grossly unfair.

If you go back a few years, of course, we used to have massive duty on cars when we were protecting the New Zealand car manufacturing industry. We are now protecting, or still protecting, in effect, a New Zealand clothing manufacturing industry which is very, very small. In fact, it’s not quite non-existent because there are some pretty good clothing manufacturers in New Zealand still, but the vast majority of our clothing goods are made offshore, and, of course, they come into New Zealand from offshore through a legitimate retail sector—and I’m not saying that any other means is not legitimate—and they end up paying an extra duty on it. So not only were those people who were bringing clothing into the country, for example, getting a 15.5 percent discount for no GST; they were also getting a 10 percent discount because they don’t pay duty on it. So there are still some anomalies in that, but this piece of this legislation is a sensible solution to a problem that’s been bugging New Zealand retailers for some years, and I hope that it’s successfully resolved.

A little bit more time has been given to the revenue to get this in place—and I think probably sensibly so—and no doubt my colleagues might talk about one or two other issues that have arisen in the course of that, like the ability to tax pre-ordered goods and one or two of those sorts of things. But it is a very sensible piece of legislation. It will raise a significant amount of money for the inland revenue, and it will, I think, temper to some extent the purchase of offshore goods via the internet because it will make the prices much more relevant to New Zealand prices at the time. So, whilst I said earlier there are parts of this bill we certainly cannot support, this is a part of the bill that the National Party certainly can support, and we’ll look forward to it being implemented successfully as it goes forward from here. Thanks.

Rt Hon DAVID CARTER (National): As I said in my comments on Part 1, we’ll be voting against the legislation, but I mentioned there was one or two bits within the legislation that I’m relatively supportive of, and Part 2—the issue of GST collection on low-value imported goods—I fully support. This work was actually initiated by the Hon Judith Collins, as I recall, as revenue Minister under the previous Government. It was brought about because for some time now, successive Governments have recognised the huge disadvantage that some retail operators are under because of internet shopping. We’re seeing now an increasing trend, particularly amongst younger people, where they could go on to Amazon, eBay, TradeMe, etc., and look at bringing stuff into New Zealand, and at that stage they were able to escape GST, whereas a retailer offering the same or similar products in any part of New Zealand—but particularly I felt for the ones in those smaller rural towns that Mr Nash said he was interested in in his earlier contribution—was completely disadvantaged and had pressure on them. So both National and Labour have worked to find a solution, which is now incorporated in this bill, and it’s a good solution.

The part that I found particularly worrying as we went through submissions was that originally the legislation proposed that the enactment date would be 1 October this year. We had eBay, we had Amazon, and we had TradeMe before us saying “We simply can’t set up systems that quickly. We need an extension.”, and the National members throughout the hearings also said it was unreasonable. We suggested we should delay it until 1 April, and the Government members were absolutely opposed until we went to the final stages of consideration.

I’ve got to say it was some of the poorest chairing of a select committee I’ve seen in my time here, where suddenly we were told, as we were considering the slip, “The date has been changed, not from 1 October but to 1 December.” So there was some gain because of the insistence of Opposition members that it was impractical to try and do it by 1 October, but I would have expected a select committee that worked in a fairly diligent way and tried to bury politics to have at least had the opportunity for a discussion, rather than a simple imposition of this by the Government members, which, of course, hold a significant majority on the select committee—no discussion at all. We raised it and said “That’s not the way to run a select committee.”, and the chair admitted that it wasn’t good form, but that’s the way this select committee is often chaired, to be honest.

I still think that Andrew Bayly’s amendment—which I would certainly support—of moving it to 1 April is actually more sensible. This is a big change of legislation, it is significant, and we’ve got to make sure that those larger companies that do supply goods into New Zealand via internet shopping have the ability to put up systems that work. Otherwise, if they don’t have the systems, they have an easy response and it is—and this is to consumers here in New Zealand—“Sorry, we don’t supply it to New Zealand. It’s simply too difficult.” I still think there’s a risk of that with the inception date moving from 1 October to only 1 December, and therefore I think the committee stage here in the House should give full consideration to the amendment in the name of Andrew Bayly. Move it to 1 April and make sure that suppliers have the opportunity to set their computer systems in place, whereby they can legitimately collect the tax, so that is paid by the importing consumer here in New Zealand, and it is then legitimately remitted back to IRD here in this country, as it’s supposed to be.

But, of course, delaying it from 1 October to 1 December has a fiscal cost. To delay it from 1 December to 1 April would have, obviously, a bigger fiscal cost, and as we were told by Government members sitting around the Finance and Expenditure Committee, the tax revenue is so critical to this Government because of its magnanimous spending projects that they initially weren’t prepared to even consider the movement from 1 October. We managed to have a small win to get it to 1 December, but I still think, practically, the committee of the whole House should think seriously about an amendment being proposed to move it to 1 April.

Hon STUART NASH (Minister of Revenue): Thank you very much, Mr Chair. First of all, we all agree with this. We all agree it’s a good idea and it should be implemented, so the only thing we disagree on is the application date. I’d like to inform both members who have spoken on this part, Ian McKelvie and David Carter, that the fiscal cost of moving it from 1 December to 1 April is about $30 million. It’s about $30 million that, in fact, we wouldn’t collect, but we can collect it if it is 1 December. Now, what I can say, as the Minister of Revenue, is I’m not going to put our revenue at risk, or New Zealanders at risk, by imposing a date on these large companies that I do not think they can meet.

The other thing I would like to say is that I actually would like to defend Michael Wood. I think he does a fantastic job of chairing the Finance and Expenditure Committee. He’s fair, he’s reasoned, he reads all his papers, and I think he does a very good job and he’s a knowledgable member. I don’t like to hear criticism of a person, certainly when he’s not in the Chamber to defend himself.

But that aside, as mentioned, I would not put the revenue streams of this country at unnecessary risk if I didn’t need to. The 1 December date we are absolutely clear we can meet.

The other thing, as well, that’s important is we talked about the high street. We talked about the retailers and how important they are to our communities, whether it’s provincial, rural, or the big city communities. If we can get this implemented by 1 December, and we can—we know we can—then why would we go for another retail season? Why would the National Opposition want our retailers to go through another high season at an economic disadvantage, at a competitive disadvantage, as Kiwis can still buy stuff online 15 percent cheaper than they can on the high street? Why would you want to do that to the retailers of this country when we know that we can do this well by implementing it on 1 December? It just makes no sense to me.

So it’s not about the revenue; for me, it’s about the integrity of the tax system. It’s about making sure we get it right—it’s always been about that—but it’s also about ensuring that we level the playing field. That is incredibly important for me.

Now, I’m not saying that because we’re going to bring in GST on low-value goods, people are going to stop buying things off the internet—of course that’s not going to happen. But what it does mean is that at least the men and women, the Kiwis who own the retail stores—the bricks and mortar—actually are not at a competitive disadvantage to an overseas multinational based wherever, but not here. So 1 December is the date because it can be done and it’s fair, and it’s actually the right thing to do for the tax system but also for our retailers.

ANDREW BAYLY (National—Hunua): Well, that’s a nice segue way into Supplementary Order Paper (SOP) 251 in my name. So for people who are not aware of the SOP, what it seeks to do is to change the commencement date of this GST arrangement from 1 December 2019 to 1 April 2020. It was interesting, just listening to the Minister of Revenue, and the first thing I want to say is that we all, I think, across the House want to support our retailers and we know the importance of having a level playing field. In fact, this piece of legislation, as the Rt Hon David Carter mentioned, actually was initiated by the Hon Judith Collins. So this is now our intent and our piece of legislation. It’s just good to see it coming through to the House under the current Minister, and we acknowledge him for that.

It’s traditionally referred to as what’s called the Amazon tax. We do want to make sure that New Zealand retailers are not disadvantaged by people buying on the internet. When GST came into being, no one sort of had the concept around buying and purchasing goods over the internet, and, of course, we’ve gone through many phases and, as the Minister knows, GST now accounts for 23 percent of all our tax revenue. Traditionally, up to now, we’ve had these rules that any goods up above a $400 threshold would be subject to duty or tax and GST. But what this bill is seeking to change is to make sure that these lower value items—i.e., less than $400—are actually subject to GST, and we have no debate with that.

The issue is there’s been a huge growth in e-commerce as a result of all this. So what this bill does is deal with it, and we are very supportive and receptive, as I’ve said before. The issue we’ve got is that we had lengthy discussions at the Finance and Expenditure Committee. We had many, many submitters. We had a number of the overseas international offshore suppliers, which is the official term for the people that run or operate these trading platforms—people like Alibaba, eBay, and all those sorts, and Amazon is, of course, another one—and those people came and made very strong representations. Like it or not, New Zealand is a very small part of the world economy—I think 0.2 percent, or something, from memory. We are very, very small, and they made a valid point. They have been asked to make changes in Australia and they’re dealing with the IT programs and reprogramming issues that were happening in Australia. Of course, what that was doing—good to see the Associate Minister of Finance David Parker stepping up to the chair—what is happening is they were literally saying, “Look, we cannot meet this time frame.”

When we pushed the officials on it, they were steadfast that it should be brought in on 1 October. In fact, with last-minute intervention, I believe, from the Minister, it was pushed out to 1 December, with no notice to the committee. It was, effectively, a fait accompli, at which point we gave the officials a grilling as to why there was a sudden change of heart. I think it was totally driven by the Minister. I welcome that, if that was indeed his intervention.

But the issue with this, as I said, is we want to look after retailers in New Zealand. We want to make sure there is a level playing field for these low-value items, and, remember, items greater than $400 are subject to GST. But what this does is it puts in a new regime, and the issue is the practicality of getting very large entities, international offshore suppliers, to turn their attention to New Zealand. There is a genuine risk, and this was highlighted, that in fact the time it would take to do a program—and if you’re talking about a trading platform like TradeMe, it is not an insignificant issue to reprogram it. Merely, what this SOP in my name does is give some more time to that and it makes it from 1 April 2020. As the Minister said, a $20 million to $30 million additional loss of revenue in the scale of things of taking in all that amount of money is a very, very small amount of money, but it protects the sovereignty and integrity of the tax system. [Bell rung] Can I carry on?

CHAIRPERSON (Adrian Rurawhe): No.

The question was put that the amendments set out on Supplementary Order Paper 248 in the name of the Hon Stuart Nash to Part 2 be agreed to.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 63

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

Noes 56

New Zealand National 55; Ross.

Amendments agreed to.

A party vote was called for on the question, That Part 2 as amended be agreed to.

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.

Part 2 as amended agreed to.

Part 3 Amendments to other enactments

CHAIRPERSON (Adrian Rurawhe): We now come to the debate on Part 3: clauses 40 to 97 and Schedule 1.

ANDREW BAYLY (National—Hunua): Thank you, Mr Chair. Thank you for calling me back. I missed the opportunity in the last part to make a further contribution, so it’s nice to be able to be talking about this.

I think that this is a part of the bill that we really do have a problem with, because what this part does—one of the principal parts of this bill is about changing the arrangements around how losses on rental properties are treated for tax purposes and how they can be claimed. I think the context for this is that we’ve got a trillion dollars’ worth of housing stock in New Zealand, 40 percent of which is owned by mums and dads, ordinary New Zealanders, who choose, for differing reasons, not to put their money into the stock market because, for many, they do not understand it sufficiently. Some put their money into the bank, but for most people, putting their money into a house—and these are ordinary New Zealanders; these are not wealthy people. A lot of wealthy people don’t invest in residential property because it’s not actually a good investment, but for many people this is a legitimate way of investing their money.

Of course, in virtually all those cases, that 40 percent of the housing stock owned by ordinary New Zealanders, mums and dads, is actually available for rental purposes. Those people do a good service for New Zealand. In the main, most of these people are very diligent and look after their rental properties. It’s a major investment for them, apart from their own house. For them, to make sure that they protect their asset and maintain it in a way that retains its value as a consequence and also as part of that offering, they want to make sure that their tenants are well housed. I’m not saying for a moment that every rental property owned by mums and dads in Zealand is maintained up to absolute best practice, but in the main they are, and it would be wrong to vilify ordinary New Zealanders any other way—most of them are very conscientious towards the people that rent their property, their main investment asset.

So under the current New Zealand tax systems or settings, tax is applied against a person’s net income and deductions that relate to particular activities—

Hon Ruth Dyson: This is really interesting.

ANDREW BAYLY: Sorry?

Kieran McAnulty: She’s being sarcastic—it’s not, really.

ANDREW BAYLY: Thank you. I’m glad the two members on the other side are riveted by this, because in many cases not many people actually understand tax. With the tax system, under the current settings people can deduct losses against their personal income, and in many cases what we’re talking about is people where this is their only other source of income. They might have a KiwiSaver account, but, essentially, the rental income from their main investment is their only source of income.

Previously, what would happen is if you sold a property that you had an investment in, you could offset the losses of that against your personal income, and, of course, depending on your situation, you may have had to pay capital gains tax on that under that current setting, even before the changes were made, because if you were deemed to be a trader of any sort, then the tax requirement was that you would have to pay tax on the gain. So what this bill has done is actually limit the ability to offset those losses against your personal income, and you would have to ensure that that loss could only be used against future investments in rental properties.

Now, for people who continuously buy and sell rental properties, that’s a fair issue in terms of being able to offset those loans or those losses. But the reality is that in many cases people do not have that ability to offset against future profits because in many cases they invest in these houses for the long term. They might only have a few over their lifetime before they retire and then they sell, and what we’re now talking about is stranded losses that they cannot utilise until they continue to reinvest in the property market. That then is, perversely, a really strange thing.

As a result, my Supplementary Order Paper (SOP) 252 seeks to change a number of sections listed in clause 2(12)—sections 41, 46, right through to section 70—and to actually bring into place that these ring-fencing proposals should come into force not on 1 April 2019 but actually stretch for the year to 1 April 2020. The reason for that, first of all, is one of equity.

So normally what we don’t try to do with tax legislation is to retrospectively bring in a bill partway through a financial year and then claw back previous tax arrangements and say that “What you did back there in history is now captured by the new rules and you will now be commercially or financially disadvantaged.” This is what this bill does at the moment. It imposes a retrospective requirement that any tax losses are ring-fenced—basically, limited—to future investment in property by saying that from 1 April 2019, any transactions from that time forward are captured under this rule, and that is not right. That is not right. So we have taken a view, and this is what this SOP is about—it is saying “Look, give people time to understand what the requirements are, for all the arrangements to be put in place.”, because with any tax bill of this nature, normally there’s a whole lot of regulations, and for people listening in, that means that the Minister can go away and, basically, write a whole lot of regulations that support or underpin the bill. That all needs time to be completed.

That’s why we’re suggesting with this SOP in my name that the ring-fencing proposals should come into effect on 1 April 2020, and, of course, there are a lot of people who are very concerned about these provisions altogether. We heard very strong submissions from a whole range of submitters, including the property investors council, that act for a lot of private people who have investments of this nature right through to commercial operators. This is a very, very important thing because for many, this bill cuts to the core of their investment—their central investment that they’ve made, often as a couple—to support New Zealanders and provide these rental properties. That sense of inequity is just wrong, and I think it is poor practice and a poor precedent that we’re increasingly seeing in a number of these bills, where bills are coming in that apply retrospectively. There is no reason why this should be incorporated at this point in time. There is no overarching commercial reason why it should apply from 1 April 2019, rather than 1 April 2020.

The whole thing about this is that using the taxpayer ring-fencing deductions, taxpayers would be able to offset ring-fenced residential property deductions from one year against residential rental income in future years or against income from the sale of any residential land, and the bill proposes to allow the transfer of ring-fencing deductions between companies in the same wholly owned group, but these deductions would remain ring-fenced. So it actually deals not only with the personal situation but where you have the corporate structure or you have some entity that people legitimately put in place.

So it is a real curtailment of the rights of people who have gone about doing this—legitimate investments; something that is appropriate—and yet this bill has come in. I think that this whole issue is one that this Government has continued to slice away at and is increasingly making the rental market in New Zealand a place where New Zealanders do not want to invest.

I know the intention is to allow first-home buyers into the market, and we agree with that. We need to see more first-home buyers coming into the market, but that shouldn’t be at the expense of those who provide rental properties to ordinary New Zealanders, and often the most vulnerable New Zealanders. By driving them out of making investments of this type of nature, all we’re going to do is reduce the housing stock, and we’re increasingly seeing that now. All the anecdotal evidence is that a lot of people are selling their properties, and sometimes they’re being sold at a loss. They won’t be able to access that loss. They are making a real, substantial cut in their future earnings and investment that’s going to support them into the future.

Hon DAVID PARKER (Attorney-General): I want to make three points in response to the member Andrew Bayly, and I thank him for his comments. The first is the underlying policy rationale that lies behind this ring-fencing of losses. [Interruption]

Andrew Bayly: It’s very hard to hear.

CHAIRPERSON (Adrian Rurawhe): Order! Thank you.

Hon DAVID PARKER: Thank you, Mr Chair. The underlying policy rationale is that we want to direct more of the investment that there is in the housing market to new housing, rather than bidding up the price of existing houses. Secondly, we want to encourage investment in asset classes other than rental housing, in that we want more investment to be directed towards the productive economy rather than speculating in housing, which pushes up housing prices. We’re seeing some outcomes of that already in New Zealand. With the combination of this plus the extension to the brightline test plus some incentives to R & D tax credits, we are actually seeing, I think, a movement of investment towards the productive sector, and this is starting to flow through, I think, in exports, and particularly technology exports.

In respect of the issue as to retrospectivity, the main feature of the rules—and they would apply at the start of the 2019-20 income year—was announced and consulted on in an issues paper that was released in March 2018, which was 12 months before the start of the 2019-20 income year with those standard balance dates, and it’s not unusual for tax policy to take effect after the date of a consultation document but prior to the date of the passage of the legislation. In terms of the effect on people, the deadlines for filing income tax returns for the 2019-20 income year will be well after the enactment date. Taxpayers with an earlier or standard balance date will have until 7 July 2020 to file their tax return for the 2019-20 income year, and this is expected to be approximately 12 months after the bill is enacted.

Then, the third point I will make is a process point. Because all three Supplementary Order Papers (SOPs) from Andrew Bayly have significant fiscal implications and they were tabled with less than 24 hours’ notice, they’re out of order under Standing Order 330, and I suspect that the member Andrew Bayly knows that. The cost of these amendments that Andrew Bayly has—

Andrew Bayly: How much?

Hon DAVID PARKER: Well, it’s a significant cost. But Andrew Bayly has provided no estimate at all, which is somewhat surprising, given that he wants the House to pass his amendments, and he hasn’t even put a finger in the air and said whether it’s $1 million, tens of millions, or hundreds of millions. I can advise the member that it’s more than tens of millions of dollars, but the reason that we have Standing Order 330 is to make sure that we don’t have reckless behaviour from members of Parliament tabling very expensive SOPs without even attempting to cost them.

Rt Hon DAVID CARTER (National): Thank you, Madam Chair. There’s just a couple of points I want to make, particularly in relation to that contribution from the Hon David Parker, who’s now standing in for the Minister of Revenue.

The first point is that the ring-fencing of losses may well have an unintended consequence, and I’ll give him an example of that. On the news tonight, where Auckland house prices have come back something like 2 percent, the commentary on that particular article said that they’d come back for two reasons. One was the Government’s move to ban overseas buyers and, secondly, was the loss of confidence of mum and dad investors to provide rentals. Now, the Minister may say it’s a good thing that the prices are coming back in Auckland. The average price now is $900,000, and I remember at one stage, it touched over $1 million. But the point that the Minister may not realise yet is that ma and pa investors are no longer confident to buy and invest in rentals, and what that has is an immediate effect on rent costs.

What we’re seeing is that rent costs are increasing now by about $50 a week simply because there’s not the supply that there was. In other words, the demand for rental housing has now significantly increased in the supply of rental housing, and that’s what happens when people chase people out of a market. So this is a hit at landlords. They’re scared, and they’re pulling out of the market.

I remember a submission from Andrew King—who represents the property investors—at the select committee, and he said that the ability to match your losses on your rental property against your income is important for people as they get into the market. I think the Government believes that people deliberately buy into a rental property with the expectation that they’ll make losses for ever, and Andrew King pointed out that that’s just not rational thinking. People don’t go into a market to make losses for ever. They may take some time, having bought the property, establishing it, getting it into the market, and getting a stable tenancy involved before they make a profit, and the ability to write off those losses for the first three or four years is usually very important to them.

The other point I wanted to make is around the retrospectivity. This ring-fencing situation comes into effect on 1 April this year—2019—and, therefore, the legislation has a definite retrospective effect on ma and pa investors who have purchased with the intention of writing off losses.

The final point I want to make is on the way the Finance and Expenditure Committee, on occasions, works extremely diligently to tidy up legislation, and I’d refer any member who is interested to pick up a copy of the bill on the Table and look at the way clause 49, which covers one, two, three, four, five, six, seven, eight, nine, 10, 11, 12, and 13 pages of the bill, has been completely deleted. What we found at the select committee, by listening to the submissions, was the way this legislation had initially been written was simply too complex. So we worked with Parliamentary Counsel Office to see whether we could find a better way of writing these provisions. It goes to show the value of a constructive select committee process whereby we hear submissions, and Government and Opposition work constructively together to acknowledge the value of those submissions. In this particular case, substantial pages had to be written to get legislation, which inevitably is reasonably complex, but the way it was written initially was more complex than it needed to be. I’m pleased to have been part of a select committee that now has seen it written in a way that’s easier for taxpayers to understand. It’s easier for tax accountants to understand, as they advise their ma and pa investors in rental properties.

But I say to the Government that as rents continue to increase week after week, one of the reasons that is happening is because people who originally were quite happy to invest in a rental property, put it on the market, and provide it to those that want rents are now pulling out of it because they’re scared of the capricious, greedy nature of this Government. They were scared by the proposal around a capital gains tax. They’re scared now by this provision whereby they’ve no longer got the ability to mark off legitimate losses on that property against their income. That is why rents continue to increase.

ALASTAIR SCOTT (National—Wairarapa): Thank you, Madam Chair. I’d like to take a short call and cover two points. The second point will be a little more complex than the first, and that will relate to securitisation of New Zealand Units (NZUs).

But the first point I’d like to address is the ring-fencing. It seems an odd policy, given that one would expect a Labour Government to want to encourage investment in rental properties and rental accommodation, but this only discourages investment in rental properties. As David Carter just mentioned earlier, this is around cash flow. The ring-fencing disables the ability of a new investor to come into the market, to purchase a property, and to negatively gear it so that there is a negative cash flow or a loss on the investment property. You’re not going to see those new investors into the market, because they’re no longer able to offset that loss against their day job, their other income that they might earn elsewhere. Whether it’s personal income or trust income or company income, the property is going to be ring-fenced. So that’s just going to put another layer of cost on to the property investor, which will be reflected in the cost of the rent that the tenant must pay at the end of the day, because there’s no such thing as a free lunch. So it’s unfortunate, because they say they care about tenants, but when they put in policy like this, discouraging investment in exactly the sector that needs to be invested in, it’s disappointing, to say the least.

The second point—and I invite Deborah Russell to contribute to this point—

Lawrence Yule: She’s an expert.

ALASTAIR SCOTT: —because she’s an expert on tax, and I’m legitimate in my request for her to make comment. This involves the clause relating to the sale and compulsory buy-back of pre-1990 NZUs. So the carbon credits—we’re talking about carbon credits. When those units are sold, it’s the intention for them to be non-taxable, but any subsequent sale would be taxable to the vendor. This is a good amendment, from what I can see, because it allows the holders of those NZUs—just imagine them sitting in the bottom drawer and there’s value in them, but no value can be expressed from them because they’re, basically, dormant assets and if they were sold to a third party it would be taxable. So it sort of slows down the whole process.

This new amendment will allow the securitisation of those assets. They allow the owner to bring them out of the bottom drawer, if you like, to gather them together, and to securitise them, and to lend those units into the market place. Lending those units into the market place enables those owners to borrow money in return. So they’re going to be able to utilise those assets to borrow—what are they going to do? They’re going to give their units, they’re going to lend their units, and they’re going to borrow money on the back of it. So it enables them to get funding.

I think that’s a very good piece of legislation because under normal circumstances, prior to this amendment, that could have been seen to be a sale, when, in fact, all we’re doing is lending the units. The units are securitised and lent, and then they come back to the owner. So this is a good piece of legislation because it makes it very clear that that transaction is not a sale and purchase transaction for the purposes of tax. So that’s nice and tidy, isn’t it? Did I explain that nice and tidily?

Matt Doocey: You did indeed.

ALASTAIR SCOTT: I thought that was pretty clear—it’s clear as mud. So that’s why I was very pleased to see Deborah Russell in the Chamber, because she’ll be able to much more eloquently explain the tax implications because she is a tax expert, and we appreciate her genuine expertise in this area. So that’s a question as well—I think I’ve got that right. Dr Russell, if you could clarify that for me, I’d much appreciate that, and I’m sure the committee would benefit from your wisdom and your experience in this matter.

IAN McKELVIE (National—Rangitīkei): You won’t get quite the academic argument from me that you got from Alastair Scott, the last speaker. But, you know, it’s a funny thing in life that small things in life sometimes amuse small minds. In the course of this, I was interested in the title of the bill: Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. When I was considering the ring-fencing of rental properties, I had a great deal of difficulty figuring out whether it entered into the annual rates—obviously, they’ll remit annual rates for rental, and as a result of the annual rates for the tax on this, there’s no doubt going to be a review of the annual rate of the rentals as well, as my colleague the Rt Hon David Carter pointed out—or whether it fitted into the remedial matters part of this bill, where I’m pretty sure that it will appear again next year as the Government realises the error of their ways and withdraws it, because I think that this piece of legislation, from my view, is flawed and it will cause distortions in the market.

It’s not designed to cause distortions in the market, but it will. The reason for that, in my view—and I think, again, it’s been touched on already tonight—is that there’s no question of if, for example, 40-odd percent of the rental properties are owned by what we might term family investors, or mum and dad—I don’t like that term much—investors, then they are going to be put off the market, but before they’re put off the market, they’re going to probably find a way of overcoming the shortfall in their income as a result of not being able to offset the tax, and they will put the rentals up. It’s a big enough block of the market to put the rental up, in my view. So they’ll put the rental up. The ironic thing is that the bigger property investors who follow along behind won’t be concerned about this piece of legislation because, effectively, they run self-contained businesses that can manage themselves, and they will then reap the benefit of those increased rentals. So it’s an anomaly, in my view. It’s an enigma, I suppose you’d call it—

Andrew Bayly: Another one?

IAN McKELVIE: Another one, Mr Bayly—another one. They’re frequent tonight. It’s a word I’ve learnt, along with “rapacious” and “capricious”, which I don’t really know the meaning of, but it could apply to this as well. So I am learning quite a lot of things—

Andrew Bayly: That means the Labour and New Zealand First Government.

IAN McKELVIE: Oh, is that what it means? Thank you—thank you for that bit of information.

I want to comment on a piece of information that Minister Parker gave us when he was in the chair—we’ve cleaned out a couple of Ministers already tonight; we’re up to our third. But he talked about diverting investment from the property market to other markets. This is an issue that I think is very interesting, because it’s a challenge for New Zealand. You see, we’re a small, comparatively well-off country, miles from the world market, with a very small alternative market ourselves. So our sharemarket is very small, and our secondary markets, on the whole, are extremely small, and if you go back to the global financial crisis and you look at the amount of money that New Zealanders—and, usually, I guess, the same type of investor we’re talking about here—had invested in the financial markets, and particularly in the finance companies, we saw the danger of this alternative investment. It chased people straight back to the property market because, frankly, they didn’t trust any other market. We saw it in 1987. I think someone commented the other day that not many of you were here in 1987, but we saw it in 1987 with the sharemarket, and we’ll see it again.

So because we’re such a small market in New Zealand, it’s very difficult for people to find suitable alternatives to invest their money in. That’s why, in my view, we see this unusual trait we have in New Zealand, where a very large percentage of our investors invest in the property market, because they can see it, they can touch it, and they know it’s there and they know it won’t go away unless they do something with it. That is the difference in this country.

The other thing that is intimidating for people in this country is that a large percentage of a balanced portfolio investment approach needs to be held offshore, just because, again, our market is so small in New Zealand and small changes can make a massive difference to people’s capacity to invest and the capacity to get a return on it. So that’s why we have this unusual property situation in New Zealand.

The criticism of this piece of legislation—or my criticism of it—is that it only attacks the people who use their income tax as an offset. In effect, they pay income tax, and they then have the ability to offset that against the piece of property that they buy. That is a massive bonus for people. It enables them to save money and get to their retirement, and they’ll often sell that. Fortunately, they don’t have a capital gains tax on that, because that would have got rid of the rest of the profit they’ve made out of it. So there’s some unusual circumstances in New Zealand which we need to consider differently, and I don’t support this piece of the bill. Thank you.

ANDREW BAYLY (National—Hunua): Thank you, Madam Chair. It’s nice to have the opportunity to talk on this part. It’s interesting. I was talking earlier about my Supplementary Order Paper (SOP) 252, which required the Government to look at delaying the start date for that dreadful provision around ring-fencing of tax losses on residential homes where private investors have made a loss, out to 1 April 2020, because I was arguing that, in fact, it shouldn’t apply from 1 April 2019 because that’s retrospective and poor legislation.

So it is with some interest that I now turn my mind to SOP 248 from the Minister of Revenue. I’ve got to say, I am outraged that we have been through a lengthy process in the Finance and Expenditure Committee—and I acknowledge all the members here tonight in the debating chamber. We have looked at this bill in detail. It has many, many components, some of which we agree with and a couple that we fundamentally disagree with. But, at the end of the day, all those provisions have been through a high level of scrutiny to make sure that what was proposed has been checked. There were a number of submissions that we listened to and, in fact, a number of changes to the bill that we are currently debating tonight.

So it’s with some disappointment that only a matter, I think, of three hours ago—and I may be generous at that—we saw this SOP slapped on the Table by the Minister. It’s already got two key parts about it, and I really want to deal with the substantive issue, which is amendments to the Land Transfer Act.

Just to put this in context, Madam Chair—and I know you’re an expert on this—the issue around when you sell a property, particularly if you’re an overseas purchaser or seller, is you have to provide a certain level of detail to the conveyancing office, and that would be through a lawyer or a property agent. That information is recorded, and quite rightly so, because that was part of making sure that if people from overseas were coming into New Zealand and buying lots of property, we wanted to understand who they were and what they were doing and what sorts of transactions they were doing. That was fine. But this piece of legislation extends that quite significantly. It now virtually requires all—and I’m going to ask a few questions on this—transactions to now have to go through the same rigor as if it’s an overseas transaction or sale of a property to an overseas person or by them, where all that information is recorded: IRD numbers and all that sort of stuff.

That is going to first of all impose a significant imposition on lawyers and conveyancing agents, and, of course, we didn’t have any access. Most would not even be aware of this because, given it came out late this afternoon, many of them would have gone home at the same time that the Minister was releasing this SOP. I think that’s wrong. I think that’s fundamentally wrong. That’s not good business and it’s not equitable, and it’s not something that any Government should be following.

This is part of this Labour - New Zealand First tightening of the screws on the property market. We’ve heard the Rt Hon David Carter talk about all the other changes that have been made that are slowly imposing on people who own property, and this is just going to be another reason why they don’t want to invest in these types of property.

But the first thing SOP 248 does is it says in the explanatory note that “Before a transfer of land can be registered, the seller and the purchaser must lodge a tax statement (except”—and this is the bit I don’t understand—“in some limited circumstances that are not affected by these amendments).” Now, I thought the intent was to do all of this. As I say, if I’m asking rather obvious questions, it is simply because not one person in this committee has had the opportunity to listen to any official, or even to listen to the Minister, explain this. All we’ve had is a press release from him.

Hopefully the Minister in the chair, Peeni Henare, might be able to enlighten us tonight. I know he has an interest in property, so he might be able to afford some time to stand up and take a call on this. So my first question is: what are the exemptions? What are the exemptions in this SOP? It says “some limited circumstances”, but what are they, and, in respect to those exemptions, why are they exempt? That would be the first question I’d have to ask.

The second thing is: what constitutes a tax statement? This is the wording used in the explanatory note of this SOP, and it goes on to say, “The department shares information with other countries for the purpose of preventing tax evasion. Requiring”—and, of course, we’re now talking domestic, residential New Zealanders buying and selling between New Zealanders; nothing to do with overseas people—“the provision of information relevant for … the transfer of a home [to] help ensure that data provided to treaty partners is easily able to be matched to the correct person.” But I am not sure what constitutes a tax statement, and I’ve been looking through this element of it, so what is it? Is it just literally the IRD number, the name, and, presumably, the address of the property? What other elements are in a tax statement that the lawyer, or the property or real estate agent will now have to capture?

Of course, I presume there’s going to be a certification by the purchaser and the vendor, and, again, that would probably be my third question: what is the certification process? My fourth question is: where and how do you file it within Land Information New Zealand (LINZ)? To date, all those foreign transactions I referred to before are all recorded by LINZ, which holds the database. That’s the one that proved that foreigners were buyers in only less than 3 percent of all sales of property in Auckland. So what are the requirements? How long do they have before they have to file that information? What happens if the information is incorrect? Where does the liability lie—does it lie with the property agent, or does the principal responsibility lie with the vendor and the purchaser? Again, this is all clarification we need.

Then it uses a term, Madam Chair—and I can see you showing a lot of interest in this. It uses the term “non-notifiable transfer”. I have to ask you, what does that mean in simple English?

CHAIRPERSON (Hon Anne Tolley): It’s him, not me.

ANDREW BAYLY: A non-transferable—

Hon Tracey Martin: A non-notifiable transfer.

ANDREW BAYLY: —a non-notifiable transfer—very good, Tracey Martin. I’ll tell you what—this I find really fascinating—these double negatives are just not great English, in my view. I’m sure that the Hon Tracey Martin might be able to enlighten me, but, currently, a transfer is not a non-notifiable transfer in relation to a seller or purchaser who is an offshore person, regardless of whether it would otherwise qualify as a non-notifiable transfer.

Hon Tracey Martin: Oh, that’s easy. That’s easy—come on. If they’re overseas, they don’t need to be notified. It’s simple.

ANDREW BAYLY: I’ve got to say to you—look, I may be a little bit slow tonight, but I just find that very difficult. Maybe, Tracey Martin, you’d be the first one from the Government side to stand up on this bill and not seek to close it down, but, actually, tell me what that means. I want to hear from you what that means. I’ll just refer you to it: it’s on page five, and it’s the fourth paragraph. Maybe other members of the Finance and Expenditure Committee from the Government side might be able to enlighten us, because I find that gobbledygook, actually.

My next issue—I think that’s No. 5—and I’m looking at the officials and certainly looking at the Minister, hoping I’m going to get some contribution—

Rt Hon David Carter: He ain’t looking at you.

ANDREW BAYLY: Well, that’s a disappointment for him! Now, the next point, and this is item No. 6 on my wish-list—I’m conscious that I’ve got 28 seconds left. I’m getting worried that I’m going to run out of time. But here we are, the timing: the commencement date is 1 January—you guessed it—2020. Now, why didn’t you do that with the ring-fencing? Why do you have to be retrospective on the ring-fencing? Take it back to 2019. This is the right way to do it, so people have the ability to plan for it and know what’s going to happen.

Rt Hon DAVID CARTER (National): I have only just become aware of this Supplementary Order Paper (SOP) 248 that has been tabled today by the Minister, and I’m going to tell the committee stage, today, that we’ll be back to correct this because it will not work. What proposed new section 79(5) does, I will guarantee, is an attempt a time to tidy up people who are finding a way of avoiding the brightline test, and they’re people who are selling a house and claiming it’s a residence.

I want people to think quite carefully about what this clause does, because I’ll give you an example for the Minister in the chair, Peeni Henare, where he will find he’s caught for tax in his own personal house under the brightline test as it’s worded here. Consider if he bought his own dwelling, his own home, a week before he became a Minister. He then works as a diligent, hard-working Minister, and spends probably three or four nights a week here in Wellington and perhaps one night a week somewhere else in New Zealand. Now, that’d be the typical diary for every hard-working Minister of the current Government. He then gets to the end of his tenure, when they lose the election in 2020, and he decides to sell that house. He has got to be able to say to IRD that he’s lived in that house 50 percent of the time. Now, if he’s a hard-working Minister, he will not be able to do that. He certainly will not be able to honestly do it—

Hon Tracey Martin: His wife and children would have been there.

Rt Hon DAVID CARTER: —and that’s why—the Hon Tracey Martin interjects—legislation like this requires the examination of a select committee. To table it today, I will guarantee it will not work as it’s been described. I’ve given a very clear example, a very practical example, where someone who has a personal dwelling that they use as a personal dwelling—it’s in his name in the example I’m giving, not in his wife’s name—will not be able to fulfil the requirements of this SOP: subclause (5) and the description of what is a “main home transfer”.

Erica Stanford: There’s a lot of people in that position.

Rt Hon DAVID CARTER: As Erica Stanford correctly says, there’s a lot of people in that position. That’s why tax legislation has to be done properly.

I will guarantee that this SOP 248 will not last the test of time and it won’t be long before we’re back correcting it. The Minister ought to stand to his feet and explain how it will work. He’s just got some advice from the officials, so there’ll be some interpretation that I’ve made incorrectly. That’s possible; I doubt it—I doubt it. But the Hon Peeni Henare, with the note that’s been given by his officials, can stand and satisfy me tonight before we vote on this SOP, because the way I read it, it will not work. That’s why I say to the Minister in charge of this SOP, the Hon Stuart Nash, to do it properly. As Minister of Revenue, put your SOPs before a select committee, let them be examined, and let them be teased out. That way we get workable tax legislation.

This is about trying to close a loophole that they’ve found with regards to the imposition of the brightline test. If it’s the way it’s described here and the way I’ve read it, it will not work, and before too much longer this Parliament will be back doing retrospective legislation to change an amendment that should have gone before a select committee, and that doesn’t need to be rushed if a Minister was on top of his portfolio.

Hon TRACEY MARTIN (Minister for Children): Thank you, Madam Chair. I’ll just take a short contribution just to ask for some clarity for the committee from the Minister, if at all possible. I think the Rt Hon David Carter has raised a really interesting point. He’s provided a possible scenario of how the Opposition believes that there may be some unintended consequences of the Minister’s Supplementary Order Paper 248.

I just wonder if the Minister in the chair could perhaps highlight—I’m aware that, for example, in some areas that I do work in which is around citizenship, that there is the possibility to put in front of officials an explanation why an individual perhaps hasn’t met the number of days that they are required to meet due to work obligations, for example. So over a five-year period, there’s a certain number of days that a person needs to be in New Zealand to be able to be considered that they have met the criteria for citizenship, but if they show the Department of Internal Affairs that their work obligations require them to be outside of the country so that they are unable to meet those number of days, then it’s no problem at all, and, generally, that is proven through work records, testimonials from employers, and other things like that.

Obviously, in the scenario provided by the Rt Hon David Carter, I would imagine that there are diary entries that are being proactively released by those Ministers showing where they are around New Zealand on certain days. So I just wonder whether the Minister would be able to clarify that with circumstances such as those, the extreme concerns raised by the Rt Hon David Carter might be able to be addressed.

IAN McKELVIE (National—Rangitīkei): Thank you, Madam Chair. I just want to take a brief call because I said earlier this bill was an enigma. Well, I’ve now discovered an anomaly in it. It wasn’t the previous Minister’s comments on it but, ironically, I can answer the question probably that the Minister could have answered for the Rt Hon David Carter. If you look at Supplementary Order Paper (SOP) 193, it deals with the issues that are raised in SOP 248 because it allows the commissioner to fix the problems that are created in SOP 248. So, effectively, I think there’s a very unusual, by parliamentary standards, piece—

Rt Hon David Carter: It’s quite clear and helpful.

IAN McKELVIE: —exactly—of legislation included in this where it enables the commissioner to make rulings on some legislation, or on bits of legislation that aren’t altogether clear.

It’s quite unusual because it’s, effectively, allowing the Commissioner of Inland Revenue to make very minor changes to legislation that are giving trouble at the time. Having said that, if the commissioner does make those changes, those changes then need to come back to the House for relitigation or legislation within three years. But it is kind of ironic that those issues raised by the Rt Hon David Carter in his contribution are also issues that are covered earlier in the bill, in that unusual situation where we are allowing the commissioner to make some changes or recommend temporary minor changes on how tax legislation applies.

It’s very unusual because I don’t think there’s any other case where this Parliament has ever enabled someone else to make rulings on the collection of cash, effectively. I think it is a pragmatic and sensible solution, oddly, because it does avoid the issue that we see a lot with tax legislation, where there are little bits tacked on, and I guess SOP 248 is one of those. We’ve had to tack bits on to tax legislation because of the vastly, very quickly changing environment we live in.

I want to comment on a couple of other things, one which is not really relevant to what is happening now but what may well happen, and that was the issue that Alastair Scott raised with respect to the carbon credits and the way they’re managed. It seems to me that this is a fraught area for us whatever happens, and I fully support the enabling of them to be used as security. But the problem with that is that if something goes wrong with that deal, then you’ve got a concertina effect, which impacts right the way through back to the landownership. Of course, that is a challenge that we’ve got in New Zealand with this legislation around the forestry—well, not legislation so much around the forestry stuff, but the legislation that has created the environment for forestry to be planted randomly all over the country.

I think the treatment of these carbon units has got to be very carefully managed by both the financial institutions and by those people that own them, because they will inevitably have some unforeseen circumstances. I think it is quite a dangerous situation for us, because you could get a rapidly escalating price for carbon, which then has a very different impact on the market place and on the original treatment of that land to the effect that you want to achieve. You could equally get a very quick drop in price of carbon units, which would have another adverse effect. We’re already seeing in this bill, interestingly, that in the life insurance sector, what was predicted to happen has not happened, and, consequently, some alterations to tax rates had to be made as a result of the lack of inflation in that area.

So these perverse outcomes happen all the time in this type of legislation, and I think it’s a difficult thing to deal with. Giving the commissioner the ability, I suppose, to propose amendments and to make small changes is a sensible one, and it’s sensible on the basis that those changes then come back to the House for ratification later on. But I think there are so many unknowns in this business—and it is a dangerous business—and you can easily see how we could pass legislation that could then be found wanting in six or eight months’ time; in fact, it often is.

I support the Rt Hon David Carter’s view on Supplementary Order Paper 248. It’s also dealing with a piece of legislation that’s probably fraught and, as inflation stops and house prices stop increasing, it will definitely be found to be wanting as well, because the reasons it was brought in are going to be very different when there’s no inflation in house prices. We’ve been in a market like that before. It’s not a nice place to be for house owners and not a nice place to be for financiers, and so you could easily see a time when house prices are static or dropping. Thank you, Madam Chair.

Hon PEENI HENARE (Minister for the Community and Voluntary Sector): Thank you, Madam Chair. There was a flurry of activity from the Opposition with regard to the number of pieces of paper handed to me on the questions being asked, and all the papers say the same thing: we won’t lose the election in 2020. But I digress.

There are a couple of things I do want to touch on, and one of them is the contribution by Mr Scott around a P90 forest. As a former trustee of a P90 forest, the particular change proposed in the bill here is an important one. As a former trustee of a P90 forest, many of those forest trustees felt hamstrung by much of the carbon credits that were allotted to those particular forests, and the ability to securitise them and utilise them to grow and develop the forest is an important thing. So, with my experience as a former trustee of a P90 forest, I think that is an important move. One of the challenges, however, is that many of them, in the previous regime, reacted to a lack of movement in this space, and many had already sold plenty of those shares off, but we’ll deal with those issues as they come to hand. I think that as we look forward to the future of P90 forests and their management of carbon credits, we can look forward to a far more vibrant forestry sector, which is a significant plan of this Government.

There are a couple of questions that were asked, and there are some, I think, reasonable and sound answers here—one from Mr Bayly. The answer to one of his many questions is that buyers and sellers of main homes will be required to provide their IRD number and indicate that the transfer is of a main home. Now, these proposed requirements are relatively minor. For example, there is a box for providing the buyer and seller’s IRD number, and they currently don’t need to fill in this box if the transfer is of a main home. This simply now requires that the IRD number box be completed, and it helps with a heck of a lot of work around enforcing exactly what was the intention in the brightline test.

It’s easy to respond to many of the questions around the housing crisis and simply applying a brightline test, but to actually make sure that we collect the right data so that we can enforce it is an important step of that. So doing it properly is an important one. Supplementary Order Paper 248 doesn’t change the application of the brightline test; it only changes the information that is provided. This is an important step to make sure that we apply the law correctly, and this is evident by the change being made to the Land Transfer Act rather than to the Income Tax Act. I think that’s pretty sensible, to me.

Many of the proposals that are put forward in this particular bill are sensible. They are well in line with the work plan of the Government, and I look forward to the progression of this bill.

The question was put that the amendments set out on Supplementary Order Paper 248 in the name of the Hon Stuart Nash to Part 3 be agreed to.

A party vote was called for on the question, That the amendments be agreed to.

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.

Amendments agreed to.

A party vote was called for on the question, That Part 3 as amended be agreed to.

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.

Part 3 as amended agreed to.

Schedule 1

A party vote was called for on the question, That Schedule 1 be agreed to.

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.

Schedule 1 agreed to.

Clauses 1 and 2

A party vote was called for on the question, That clause 1 stand part.

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.

Clause 1 agreed to.

The question was put that the amendment set out on Supplementary Order Paper 248 in the name of the Hon Stuart Nash to clause 2 be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

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.

Amendment agreed to.

CHAIRPERSON (Hon Anne Tolley): The Minister has informed me that Andrew Bayly’s amendments to clause 2 set out on Supplementary Order Papers 251 and 252 may have an impact on the Government’s fiscal aggregates. As the required 24 hours’ notice was not given, no question will be put on the amendments.

A party vote was called for on the question, That clause 2 as amended stand part.

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.

Clause 2 as amended agreed to.

House resumed.

Bill reported with amendment.

Report adopted.

Bills

Administration of Justice (Reform of Contempt of Court) Bill

Second Reading

Debate resumed from 13 June.

HARETE HIPANGO (National—Whanganui): Thank you, sir, and third time lucky. So, previously, I have been disrupted twice whilst addressing the House on this bill before the court, and the irony of it is that I was addressing the House in relation to disruptive proceedings in the court, on the part of the bill that is presently referred to as the Administration of Justice (Reform of Contempt of Court) Bill. But the recommendation that is before the House, from the Justice Committee, is that this bill be retitled to, simply, the Contempt of Court Bill.

So the objectives of the bill are outlined in clause 3, subclause 2(d), saying that, except in unusual circumstances, court proceedings will be open to the public and the news media. However, an amendment that is proposed is that the new clause reflects that the Family Court and the Youth Court now not be open to the public. So for the years that I did practise as a lawyer in both the Family Court and the Youth Court, the jurisdiction was open to the public. However, it was rare that members of the public, other than the parties to the proceedings, were present during the hearing. The bill as introduced proposes five main provisions. One is publication contempt. Two is disruptive behaviour in the courtroom, which I shall return to, to speak briefly to. Three: juror contempt. Four: enforcement of court orders. Five: allegations or accusations about judges of court.

Now, I turn specifically to clauses 16 and 17 of the bill as proposed, in relation to the wilful disruption of the proceedings of the court. I shared with the House the last time that I spoke that, prior to the District Court Act 2016, I practised as a lawyer where there had been, on numerous occasions, disruption to the court proceedings, but not necessarily in the courtroom, which leads me to the definition of court at clause 4 of the bill. It’s just confined to those proceedings in relation to, as is outlined, the District Court, the High Court, the Court of Appeal, and the Supreme Court. Now, I’m minded to refer to the importance of referring to the definition of a court, or a courtroom, under the Courts Security Act, section 3. That may be a time that I address the House further at the third reading of this bill, because it is pertinent, in relation to the disruption of court proceedings, that it’s not just confined to the courtroom of the courthouse.

There were many an occasion when I appeared as counsel, or a lawyer advocating for people who were before the mental health court in the precinct of the hospital and the mental health detention unit. So the disruption to court proceedings, as such, is not limited just to the building of the courtroom but it is taken out to the premises of where the court hearing itself may be occurring; that can be beside a patient in a hospital bed or, as I said, in a mental health detention unit.

I now also turn, in the limited time that I have left, to just talking about the instances of mentally impaired or mentally disordered persons where proceedings are disrupted. At clause 16 of the bill, it requires that where a judicial officer believes that any person is wilfully disrupting the proceedings of a court, the element of mens rea is a critical aspect in terms of the court, or the judge, or the judicial officer determining whether or not those proceedings have been disrupted wilfully, depending on the demeanour and presentation of the person presenting.

In the limited time that I have here, I turn now to clause 17, subclause 5, which talks about in the event that a judicial officer or a judge deems that there has been a contempt, it must go to a hearing, and that that hearing must be set down for determination within a period of seven days. I’m predicting, based on my experience where there were contempt of court matters arising, that it’s likely to occur as immediately as possible—if not at the time of the incident, certainly prior to the end of the proceedings for the day.

But in referring to clause 17(5), I talk about where previously it was the discretion of the judge as to whether or not a conviction would be entered. This bill is saying that there must not be a conviction. So it’s similar to what was known, for the lawyers practising in the area, as a discharge without conviction under section 106 of the Sentencing Act. So this sets it aside where it’s distinctly requiring that there must not be a conviction but there is the alternative as to whether there is some imposition of a sentence, as such, or some punitive or deterrent element that goes with it.

Should I be permitted the opportunity to address the House at the third reading, where this bill is not opposed by the National Party, I will go further into some of those incidents around the contempt of court proceedings, where as a lawyer, there were lots of things that happened to us, not only the judge, where the proceedings had been disrupted. [Speaker motions for member to conclude speech] I’m wrapping it up now, sir. And with that, I commend this bill to the House.

GREG O’CONNOR (Labour—Ōhāriu): I refer to the title of this bill, the Administration of Justice (Reform of Contempt of Court) Bill. The fact that the select committee has recommended it become simply the “Contempt of Court Bill” really does underlie the discussions taking place and the necessity of this bill.

Just before I go into the detail, the people who appear before courts—so often they have come from disrupted lives. They have come from lives where there is very little order in their lives, where there’s very little else that they can rely on. It’s very important that when they get to court—it’s quite surprising over the years the number of people that appear to have very little control over anything in their lives but still manage to drag themselves along to court at 10 o’clock, get themselves to court, and even in a, often, drug-induced haze will often know when they’re due next. I think it just is a part of their lives where there is actually some order. When they get there, they actually like to think that everything is in order because often they know the system as well as anyone else; they’ve been there as often as anyone else in it. Just calling this the “Contempt of Court Bill”—and as we will go through some of the things that we’re actually going to be rectifying with this bill, or consolidating, I think it’s important, underlying this, that that’s what we’re doing here. We’re making sure that the court remains somewhere where there’s order in their lives, where there’s fairness, and where everybody involved in the system understands the rules. That’s why this is a very good piece of legislation.

Things like limiting publication of trial-related information—that’s incredibly important. For years you’ve seen people hiding behind the fact that it’s now sub judice. That’s often been an excuse for people simply not to discuss things they should have been without anyone really understanding what’s sub judice. In my years I’ve never seen a case thrown out because of a breach of sub judice. Again, it’s something that simply becomes, as I say, a foil, in many cases. So it’s good that this limiting of the publication of trial-related information—it actually becomes defined as it is.

Also, the bill is prohibiting publication of certain criminal trial information. Again, I’ve seen people who are involved in the system become quite outraged at some of the things they’ve seen in the paper, “They can’t do that. They’re not allowed to do that.” So, again, it’s important that everybody understands the rules. Obviously, with the media, there are plenty of outs in here. Often information has been published before someone’s actually been arrested, before the trial process has begun. Sometimes it’s quite unfair. No one expects the media to go and take everything down, but what’s important is they understand, once procedures have started, once we understand that someone is in the system, that they cannot publish information that is going to affect the trial.

As we go into the system, preventing jurors from researching information—again, so important that the jurors are making their decisions on the information that is before them. Otherwise, you start relying on front pages of newspapers. You start relying, particularly, on the internet, where there will be any number and variety of experts who will be opining on the incidents that may have occurred. So it is incredibly important that once the jury are locked into that system—while, of course, they will bring with them their life’s experience; that’s why they’re jurors—they are making the decision based on what they’re seeing there before them. Again, it’s just ensuring that the system is fair for all those involved, and that the same system is preventing jurors from researching information. That’s very much related to the fact that they can’t go home when the court is recessed for the day and start making up their own minds, because if they start doing that, that’s where you will get very clear breaches.

And later on disclosing jury deliberations—I’d hate to see the situation we see in the United States where juries—the books are virtually written by the time the jury decision has been made, and where being on a jury is often a stepping stone into a life of a celebrity. That is something we very much avoid, and that’s why disclosing of the jury deliberations is an offence, and improper disclosure of jury deliberation is prohibited.

So we go on to the last one—the most important one—the publication of false statements against judges or courts. In that case, some of the discussion around select committee was that, well, judges, if they don’t like what’s being said, can actually take a case; they can sue—very highly unlikely. Why it’s become important—it’s not, I don’t believe, that judges should be protected from the same criticisms as everyone else. Anything that is done in respect to that, it’s got to be about making sure the system works properly. This is, again, another one of those provisions that I believe will work towards making sure that everyone involved—the lawyers, the judges, the jurors, and, importantly, those who are the clients of the court—all understand that we have a system. They mightn’t like the result—they may not like the sanctions imposed on them, but at least they walk away with a sense that they were treated fairly. So for that reason, I commend this bill to the House.

Bill read a second time.

Name changed to Contempt of Court Bill.

Bills

Privacy Bill

Second Reading

Hon ANDREW LITTLE (Minister of Justice): I move, That the Privacy Bill be now read a second time.

The Privacy Bill will repeal and replace the Privacy Act 1993. This much-needed reform will modernise our privacy laws to give people confidence that their personal information is secure and will be treated properly in an increasingly digital and data-rich society. I first want to thank the Justice Committee for its diligent consideration of the bill, and those members of the public who made submissions. The committee received 162 submissions. The submitters engaged comprehensively with the bill and have contributed greatly to its development. Almost all submitters supported the bill’s direction, but some had concerns about certain clauses and questioned how the bill’s provisions will operate in practice. I am pleased to see that the committee has taken these considerations on board and made several valuable changes to the bill.

I want to highlight some of the key changes that the committee has made in response to the submissions that it received. The committee has recommended clarifying who the bill applies to and when overseas agencies will be captured. This is important now that New Zealanders routinely submit their personal information directly to online retailers and other businesses based overseas. The committee has recommended a new provision, making it clear that the Privacy Bill will apply to overseas agencies that carry on business in New Zealand. These are agencies that may not have a place of business in New Zealand, but they do systematically and deliberately take opportunities to engage in trade here. If an agency does business in New Zealand, we need to be able to issue meaningful corrections to them if we think they’re not in compliance with our expectations. To ensure it doesn’t overreach, the bill will only apply to actions taken and information collected by the overseas agency in the course of carrying on its business in New Zealand. This change provides certainty about the extent to which the bill applies in a range of situations involving overseas persons, agencies, and information.

Another change concerns mandatory notification of privacy breaches. As introduced, the bill provided that agencies must notify the Privacy Commissioner and affected individuals of privacy breaches if the breach has caused harm or there is a risk it will do so. Many submitters thought that this threshold was too low and would result in a large number of relatively innocuous privacy breaches being mandatorily notified. Submitters worried that this would desensitise people to genuinely harmful privacy breaches and overload the Privacy Commissioner with low-value work. In response, the committee has recommended raising the threshold for what constitutes a notifiable privacy breach. Agencies will now be required to notify the Privacy Commissioner and affected individuals of privacy breaches where it is reasonable to believe the breach has caused or is likely to cause serious harm. This change better aligns the bill with overseas jurisdictions who have comparably high notification thresholds.

The committee has also recommended updating the news media’s exemption in the bill. The purpose of excluding the media is to enable them to perform their role of supporting the free flow of information to the public. It supports their right to protect their sources, which the common law, at least, recognises and accepts.

The committee has recommended clarifying the definition of “news activity” to encompass non-traditional journalistic works, such as books and blogs, but only provided that the author of those works is subject to an appropriate regulatory body. This is to ensure that news media have the freedom to publish news in different formats, including on the internet. The committee also recommended that Television New Zealand and Radio New Zealand be brought within the media exemption so that they can operate on an equal footing with other news media.

One of the strengths of our privacy regime is the adaptable and flexible nature of our principles-based approach to information privacy regulation. Importantly, the committee has recommended a new information privacy principle, which increases the total number of privacy principles from 12 to 13. The new information privacy principle 12 sets out the requirements for the disclosure of personal information outside New Zealand, which were contained within information privacy principle 11 in the bill as introduced. A New Zealand agency may disclose personal information to an overseas agency if that agency is required to protect the information in a way comparable to New Zealand.

There are a number of ways to satisfy this new requirement. The overseas agency may be in a country that is included in a white list of countries to be prescribed in regulation or such safeguards as can be imposed by contract. A person may also authorise their information to be disclosed overseas, but the committee has made it clear, in response to submissions, that the individual must only authorise disclosure after being informed that the overseas jurisdiction may not have comparable safeguards. The new requirement seeks to enable the free flow of data and give people confidence that safeguards will continue to apply to their information when it is shared overseas unless they authorise otherwise.

The committee has also recommended a change to information privacy principle 1 to discourage agencies collecting personal identifiers by default without considering whether it is necessary to do so. A further change to information privacy principle 4 seeks to protect young people, who may be more willing than adults to disclose their information online and who may not be aware of why an agency wants their information. The committee has recommended that agencies take into account the vulnerability of children and young people when collecting personal information from them. I’ll be interested to hear members’ views on the committee’s recommended changes to those information privacy principles.

Equally interesting is what has not been included in the Privacy Bill. As I’ve said, the bill contains important changes which will bring New Zealand law into better alignment with overseas developments, but many submitters wanted the bill to go further. In May last year, the European Union’s new General Data Protection Regulation was introduced. That law contained new rights, such as a right to data portability, a right to be forgotten, and requirements for algorithmic transparency. Many people, including our Privacy Commissioner, submitted that similar rights should be added into this bill. However, the Justice Committee did not recommend those additions, nor did it recommend substantial fines for individuals and organisations who seriously breach their obligations under the Privacy Act. I’m aware that the Privacy Commissioner has been a strong proponent of civil penalties, which the European and Australian regimes have.

These are important areas of privacy law, which would represent substantive changes to the bill and our current policy framework. They require careful consideration, policy development, and consultation, and need to be considered within the wider regulatory scheme to avoid unintended consequences. Adding such reforms into this bill would significantly delay the enactment of the important reforms it already contains and, frankly, are needed now. Instead, these issues can be considered as part of any future work on privacy reform.

I do not anticipate that this future work would form another large review of privacy law, which was carried out last by the Law Commission, but rather I anticipate a need for ongoing review and incremental reform given the rate of technological change and continual evolution of international privacy standards. The changes recommended by the committee will help strengthen and improve the Privacy Bill and better address the challenges of the digital age. On that basis, I commend the bill to the House.

CHRIS BISHOP (National—Hutt South): Thank you very much, Mr Speaker. Can I thank the Minister for his contribution in leading off the second reading of this very important bill. I hesitate to say that we enjoyed ourselves on the Justice Committee, invigilating this bill, but we certainly worked very hard. It is an area of law that is of vital importance and it is an area of law that has been badly in need of an update, as the Minister has made clear.

This bill started life back in 2011, back in the 50th Parliament, and it’s taken until—what are we?—midway through 2019, and it looks like the bill will pass before the end of the year. It started life with a Law Commission report. I think there was an exposure draft as a response to that, and then I think the last Government, the last National Government, actually introduced the bill—I think I’m right in saying that—and the bill was sent to our committee for consideration. As the Minister’s rightly noted, it is a total rewrite of the law. Actually, various things had been kind of shoehorned on to the legislation over the last 25 years or so, and I think it is appropriate that we do have a total rewrite in light of the advances in digital technology. That’s the first point I want to make—that I think that the process has been a long one but it’s going to lead to a good outcome.

We did work really hard on the Justice Committee, on the bill. It’s a highly technical area of law, as I’m about to canvass, and I do just want to, at this point, acknowledge the hard work of the Justice officials who guided some people; some familiar with technology and privacy principles and some—it would be fair to say, on the committee, without disparaging my colleagues from both sides—not quite so familiar, but they led us through in a very good way and were very practically minded and did a really good job.

There are a couple of things I want to highlight in relation to the substance of the bill. The first is around the mandatory reporting of privacy breaches, which is clause 117 of Part 6 of the bill. We spent quite a long time on this in the committee, trying to find the right balance between making Parliament’s expectation clear that agencies would take privacy seriously and that when there were privacy breaches that occurred they would be notified, but also finding the balance between that and making sure that there weren’t so many notifications that it trivialised the value of privacy, and that actually, with so many notifications to people and to the Privacy Commissioner, people would stop taking things seriously.

I think we’ve about got the balance right. A notifiable privacy breach is one “that is reasonable to believe has caused serious harm to an affected individual or individuals or is likely to do so” and in clause 117(a) there’s a series of factors that agencies have to take into consideration. I’ve got residual concerns that we haven’t quite got the balance right, and maybe that’s something we can talk about in the committee of the whole stage, but we worked pretty hard as a committee to get that balance right.

The Minister’s made reference to the other area I wanted to mention, which is the quite serious attempt we have made to bring agencies based outside New Zealand into the law. We’ve recommended an amendment to insert new clause 3A to make it clear that it will apply to agencies outside New Zealand. It will apply to the actions by a New Zealand agency “whether inside or outside New Zealand” and apply to “all personal information collected or held by [a New Zealand agency] … regardless of where the information is collected”, and, as well as that, all agencies outside. We want to make that very clear in the bill.

The other thing I want to make clear is around the news media. Again, we had quite a long debate as a committee about what exactly the role of the news media is in relation to privacy. What’s clear in the bill is that clause 6 exempts news media, and it’s very important that they are able to play that role in a free and democratic society. We have actually widened the definition of what “news media” involves, in the bill. So we have widened, I suppose, the scope of the exemption from privacy, but at the same time we have made it clear that the only exempt media entities will be ones that are subject to independent standards of conduct, which include privacy standards and a complaints procedure.

So the examples of things we’re talking about would be the Broadcasting Standards Authority and the New Zealand Media Council, and we’ve given a residual power in the bill for the Minister, in conjunction with the Privacy Commissioner, to recognise another regime if something comes about in the future.

Debate interrupted.

The House adjourned at 10 p.m.