Tuesday, 23 July 2019

TUESDAY, 23 JULY 2019

TUESDAY, 23 JULY 2019

The Speaker took the Chair at 2 p.m.

Prayers.

Motions

Silver Ferns and Black Caps—Netball and Cricket World Cups 2019

Rt Hon JACINDA ARDERN (Prime Minister): I raise a point of order, Mr Speaker. I seek leave to move a motion without notice and with debate, congratulating New Zealand’s netball team and cricket team on their outstanding performances in the Netball World Cup 2019, and ICC Cricket World Cup 2019.

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

Rt Hon JACINDA ARDERN: I move, That the House congratulate all the players, coaches, and support staff of the New Zealand Netball Team—the Silver Ferns—on their victory in the Netball World Cup, as well as the Black Caps, who made the world cup final for their second consecutive time.

On behalf of the Government, I want to first acknowledge the world champion Silver Ferns, who defeated three-time defending champions Australia 52-51 in a thrilling Netball World Cup final in Liverpool on 21 July 2019. New Zealand last won the world cup trophy in 2003 in Jamaica, and the victory completes a massive 11-month turn-round from the ferns under coach Noeline Taurua, and her assistant Deb Fuller. Noeline’s work in galvanising the team to where New Zealand now stands as world champions has been nothing short of spectacular. The team were the fittest at the tournament, and stuck to a game plan and structure that saw them put pressure on opponents throughout the court.

It’s a team game, and there were many notable contributions from the whole team in the final, and across the whole squad throughout the tournament. In particular, I think we’d all like to recognise retiring defensive legend Casey Kopua, who was playing her 112th and final test for New Zealand, along with captain Laura Langman, and Maria Folau, the self-described fossils who provided—that’s their words, I need to reiterate—exceptional leadership.

Their finals success comes just 24 hours after their stirring semi-final win over England, again by one point. The semi and final were battles to the end, and the ebbs and flows—while stressful for us as the viewing public—were absolutely enthralling as well. It was a fantastic final, and we were to find a response every time Australia threatened. The Silver Ferns held their nerve, they fought hard, and they rightly deserve to be crowned world champions. This team is an inspiration to New Zealanders, especially young women, for their skill, their teamwork, and their commitment, and let’s hope it leads to further support from sponsors, and the public, to promote and, of course, fund the team.

The Silver Ferns’ success builds on a successful couple of weeks for our national sporting teams, with the Black Caps reaching the final of the Cricket World Cup 2019 at Lord’s. Their journey to the world cup final on 13 July built on their impressive performance in the 2015 world cup, which culminated in the final against Australia at the MCG. I want to acknowledge the dedication of the Black Caps’ coaching and support staff, and their friends and family, who’ve supported each member of the team in the lead up to the Cricket World Cup.

The final at Lord’s was nothing short of an all-time classic that will not be forgotten by cricket fans worldwide anytime soon. The two teams finished on the same scores after regular play and the subsequent super over, leaving the title to be decided on a countback of boundary hits. I know this result will not seem fair to many. The Black Caps may not have won the trophy, but they’ve won the hearts of cricket fans across the world. I’d also like to recognise the standout performance by Captain Kane Williamson in being named the player of the tournament, with 578 runs and two wickets.

Finally, I’d like to reflect on the dignity of the team. They were and are true sportspeople. We have two tremendous teams, the Silver Ferns and the Black Caps, who have made their country extremely proud—I should add that our shearers have recently also taken out some world championships—and whom I have no doubt, in all of their fields, have inspired people across the country with their dogged determination to fight to the very end, and this House congratulates them.

Hon SIMON BRIDGES (Leader of the Opposition): I also rise to support the notice of motion acknowledging the Silver Ferns and the Black Caps. The Silver Ferns’ story is one of resilience and a comeback like no other. The Silver Ferns came into the tournament having not won a world cup for 16 long years, and they suffered a difficult defeat in the Commonwealth Games. The team has succeeded in a hugely competitive environment, and it’s important that we acknowledge Noeline Taurua—or “Noels”, as she’s called. She is rightly today seen as one of the greatest netball coaches in the world. Noeline came in with 11 months to go and helped build this team to the world champions they now are. To bring a team together in the way that she has is a testament to her character and her skill, and I’d also like to acknowledge Netball New Zealand CEO Jennie Wyllie and also Allison Ferguson for their outstanding leadership.

But we need to acknowledge also, of course, the athletes. They beat Australia by one point, and the way that they worked together on court was simply tremendous. Their win will be huge for Netball New Zealand and the young players that all over our country look up to them. We also know that we must have change for women in New Zealand and globally in sport. The reality is it’s unacceptable in 2019 to have a situation where our world-class female athletes, in a globally significant sport where 20 people play—netball—could be arriving home without prize money. I hope that between the sponsors and the Government, this can be worked out. Our ferns deserve to be recognised.

In regard to the cricket, there are a lot of New Zealanders who stayed up throughout the night to watch what was one of the greatest cricket matches of all time. The reality is the stakes couldn’t have been higher with this final at Lord’s, on England’s home turf, with two teams who have never won the Cricket World Cup before. Both teams played with passion and skill, which was thrilling to watch. We take a moment to acknowledge the effort that it takes the individuals and their families to play at this level. We acknowledge CEO David White, the support staff, and the coaches, who prepared for years for this match. Unfortunately, in a heart-breaking couple of overs, the Black Caps lost to England. We need to recognise and celebrate England for their victory.

What has been acknowledged throughout the world has been the Black Caps’ response. They have shown humility and been so gracious to the English team. We know that at this level the match can come down to a few precious moments that don’t go one’s way. We should be proud of the example that the team has shown to young cricketers and New Zealanders. It’s important and healthy to have a future discussion about the rules in the super-over situation, and it’s good that the International Cricket Council are looking at the rules. Our thoughts are with the Black Caps and Kane “Steady the Ship” Williamson and the New Zealand cricket family as they deal with the loss and prepare for the future. Kia kaha. New Zealand can be proud of their achievements.

MARAMA DAVIDSON (Co-Leader—Green): Thank you, Mr Speaker. I rise on behalf of the Green Party to support the motion that absolutely congratulates our Silver Ferns netball team and our Black Caps cricket team.

Noeline Taurua, you are an absolute hero. You have been absolutely vindicated as a wonderful choice to lead our netball team into incredible victory: the Netball World Cup, which has not been in our grasp for far too long. I loved the little baby of Casey Kōpua in the interview afterwards, trying to lick her mum’s salty skin. I thought that was an absolute example of what our women athletes work with and work for on the international world stage. We’re doing really well in showing that we can do all the things, and I want to support my colleague Simon Bridges’ call for some equity in media and funding in really acknowledging the true worth of these incredible professional athletes on the international stage.

There are a few new fans of cricket. People who have not watched cricket ever before in their lives have suddenly been talking about overs and unders and all sorts of things that never came out of their mouths before, and this is testament to the thrilling game, right to the bitter end, that our cricketers led and it is testament to the dignity and the character and the spirit of that team that was shown around the world.

These successes find their roots in grassroots sports all around the country every weekend. Our schools, our volunteers, our parents, our coaches do this for the love, because we love our sports and because we love what it brings to our community and our children, and this is where these successes are started. I want to congratulate not just our international stars but our grassroots community sports teams and campaigns all around our country. Thank you, Mr Speaker.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. I join with other party leaders to congratulate our sportspeople on their tremendous recent successes. With regard to the Silver Ferns, I have to agree with all the other leaders that the story of the turn-around is absolutely phenomenal. It wasn’t so long ago that we had the Silver Ferns crying on television, having been questioned about whether they were even proud of the black dress. The diametrical turn-around that they have made in only 11 months is absolutely phenomenal. They should all be so proud of themselves, their families should be proud of them, and we as a country which has performed so well in the last couple of weeks against other countries whose populations are anywhere from five to, in the case of India, 200 times greater than ours—if there was ever a country that punched above its weight, it is New Zealand.

I’d love to say that I stayed up all night watching the cricket, but, being so devoted to my constituents, I was early to bed, and it was only when I woke up thinking the game would be over that I tuned in to Scotty Stevenson and the Alternative Community Collective to hear the most extraordinary sporting commentary that certainly I’ve heard in my life. We could dwell on the fact that they were robbed by poor umpiring, but that would be a disservice to the phenomenal leadership and humility that that has been shown by the Black Caps in the wake of that decision and that result. So I’d like to conclude my comments by saying isn’t it wonderful to have a Parliament that is unanimous and united around the fine traditions of sporting excellence in New Zealand. Thank you, Mr Speaker.

Motion agreed to.

Appointments

Assistant Speaker

Hon CHRIS HIPKINS (Leader of the House): Following discussions with the shadow Leader of the House, I seek leave to move a motion without notice appointing a new Assistant Speaker.

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

Hon CHRIS HIPKINS: I move, That Hon Ruth Suzanne Dyson be appointed as Assistant Speaker.

The vacancy that we’re filling today is created by the appointment of the Hon Poto Williams as a Minister, and I’m sure that all members will join me in thanking her for her service to the House as Assistant Speaker since the election and in congratulating her on her new role. Ruth Dyson is one of the most experienced members of the House, having been an MP since 1993. She’s seen the House from all sides and all perspectives as a member of the Government and the Opposition, as a Minister for almost nine years, as a select committee member, as a select committee chairperson, and, most recently, as senior Government whip.

Ruth has as great an understanding of how the House works and of the role and frustrations of being a member of Parliament, as much as any of the rest of us of us do. Nobody who has anything to do with her will be in any doubt that she will be a tenacious defender of the constitutional role of the House or that she will exercise her responsibilities with absolutely fairness and disinterest. On this side of the House, many of us have benefited from her wisdom and compassion; members on all sides will now have the opportunity to appreciate these qualities. I wholeheartedly commend the nomination of the Hon Ruth Dyson to the House for the position of Assistant Speaker.

Motion agreed to.

Tabling of Documents

Youth Parliament 2019—Letter Calling for Declaration of Climate Emergency

CHLÖE SWARBRICK (Green): I seek leave of the House to table an unpublished open letter signed by 79 youth parliamentarians calling for this House to declare a climate emergency.

SPEAKER: Is there any objection to that course of action? There appears to be none. It may be tabled.

Document laid on the Table of the House.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. 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): Following the three-week recess, yes.

Hon Simon Bridges: In light of the median rent increasing by $50 under her watch, does she now agree with the advice of her officials that her Government’s policies, such as higher taxes and regulations on landlords, would drive up rents?

Rt Hon JACINDA ARDERN: No.

Hon Simon Bridges: Why has her Government legislated for 23.5c of petrol tax increases in Auckland and 12c of petrol tax increases across the rest of New Zealand while at the same time stalling, postponing, or cancelling 12 major roading projects?

Rt Hon JACINDA ARDERN: The member will be talking about the unfunded roading projects that he had as a Government, and, of course, our policy on excise was not too dissimilar to the last Government. Excise is what allows us to make record investment into regional roads, road safety initiatives, and public transport to try and deal with the congestion that you’ll see many Aucklanders are complaining about because there’s been a lack of decent infrastructure investment.

Hon Simon Bridges: Does she accept there are more New Zealand families struggling to keep up with the cost of living since she became Prime Minister?

Rt Hon JACINDA ARDERN: Actually, I’ll fall back on what some of the numbers tell us. Under National’s first term, wages rose around 2.1 percent a year; under our first term, wages are projected to rise to 3.2 percent. Also, add to that the increase in the minimum wage that we’ve made, up to $17.70 an hour. Add to that the changes to the family tax credit, the changes with the winter energy payment, the Best Start payment, and paid parental leave that, on average, mean that families are $75 a week better off for over 380,000 families. We absolutely acknowledge cost of living pressure issues, which is why we’ve targeted low and middle income families. We’ve also done things through education to, for instance, remove NCEA fees and school donations for decile 7 and below, and make it cheaper to go to the doctor.

Hon Simon Bridges: In light of her numbers, does she accept the number of hardship grants are up 71 percent since she became Prime Minister?

Rt Hon JACINDA ARDERN: I absolutely acknowledge those numbers. What we won’t do, unlike the last Government, is do anything to try and hide that. In fact, one of the statements we made when we first came in was that we absolutely believed we weren’t seeing the actual need. So we made a very public statement that those in need should come forward, and we made a very clear instruction to Work and Income: meet the need that you see. That is exactly what the numbers are demonstrating.

Hon Simon Bridges: Isn’t the real reason those hardship grants are up 71 percent because under her Government’s policies the costs of living, such as rent and petrol, have increased, and the economy is sharply weakening meaning there are more people without jobs?

Rt Hon JACINDA ARDERN: No.

Hon Simon Bridges: Does she agree with Andrew Little who, in 2017, after a 14 percent rise in hardship grants, said it’s “A sad commentary for the Government’s handling of the economy and how it prioritises the wellbeing of the poorest in New Zealand. Kiwis are doing it tougher and this Government has no plan to help.”?

Rt Hon JACINDA ARDERN: There was no plan to help them.

Hon Simon Bridges: Well, if she agrees, does she think her Government is much more deserving of criticism, given hardship grants haven’t increased 14 percent but 71 percent in just 20 or so months under her watch?

Rt Hon JACINDA ARDERN: No.

Hon Simon Bridges: How many more people are on the dole now compared to this time last year?

Rt Hon JACINDA ARDERN: When you look at the proportion of people on a benefit relative to the working-age population, from memory it’s around 9.7 percent. It was up over 10 percent five years ago, so we’re still lower than we were under the last member being in office.

Hon Paula Bennett: No. How many—

SPEAKER: Order! I’m going to remind the deputy Leader of the Opposition of Speaker’s ruling 174/7 and tell her that she’s not responsible for ensuring proper answers.

Hon Simon Bridges: Why are there 14,000 more people on the dole now than this time last year?

Rt Hon JACINDA ARDERN: I could ask the member why there were more under his Government as well. Again, I can also tell the member that one of the reasons, of course, is we believe that there hasn’t been the investment in case management, the kind of support that supports people into work. We’ve invested in more than 200 case managers to support individual applicants into work. We’ve also, I have to say, acknowledged that the Ministry of Social Development has seen over 17,000 people in that period go into work as well. But in order to make sure we’re comparing apples with apples, it’s always important to measure against the number of people who are available for work, and on that measure, as I’ve already said, there are still fewer people on main benefits than there were five years ago under the National Government.

Question No. 2—Regional Economic Development

2. JENNY MARCROFT (NZ First) to the Minister for Regional Economic Development: What recent Provincial Growth Fund announcements has he made?

Hon SHANE JONES (Minister for Regional Economic Development): Over the past three weeks, from Foveaux Strait to Kaitāia, the first citizen of the provinces has been active. Each region is different. Each requires a particular mix of policy and intervention to boost productivity, but the announcements have covered manufacturing, tourism, forestry, mineral extraction, roading, horticulture, and, for the edification of the Opposition, biogas.

Jenny Marcroft: What are some specific projects that were supported?

Hon SHANE JONES: The Invercargill Airport air cargo—a neglected part of New Zealand over the last nine years—terminal development. We have turned it around so that “terminal” only applies to the physical infrastructure, not the aspirations of that region as they’ve been saddled with over the last nine years; $500,000 to upgrade the first direct-check connection between Auckland and Invercargill; and, one other—just to show that we have our eye on the more forgotten parts of New Zealand—the one billion trees investment of $5 million to address a promise made by the former Treaty Minister to that tribe to deal with the Waiapū catchment challenges, showing that we fly high and we also deal with things on the ground.

Jenny Marcroft: What progress did he observe on some Provincial Growth Fund projects already under way?

SPEAKER: Order! The member will resume his seat. There’s a very fundamental requirement for supplementary questions, and that is that they have to relate to the primary question, and that one didn’t.

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): Yes.

Hon Simon Bridges: Does she agree with the Automobile Association Auckland congestion report that “Action is urgently needed beyond what’s planned in the current project.” and there are “serious question marks around whether the Auckland Transport programme can deliver predicted decongestion outcomes.”?

Rt Hon JACINDA ARDERN: Look, we absolutely acknowledge that we have a congestion issue in Auckland that is due to a significant level of under-investment. It took five years, for instance, for the last Government to decide that the City Rail Link was a necessary piece of infrastructure, which will take tens of thousands of Aucklanders off the road and would represent the equivalent of quite a significant piece of motorway investment. We are having to play catch-up.

Hon Simon Bridges: How can she say that when, in the last small number of weeks, Phil Twyford himself has said that the former National Government “significantly over-invested” in roading around Auckland?

Rt Hon JACINDA ARDERN: I was obviously talking about our transport infrastructure—including public transport, which, obviously, the member didn’t invest in.

Hon Simon Bridges: Why has the Government cancelled investment in Auckland projects such as the East-West Link, Mill Road, and Warkworth to Wellsford?

Hon Phil Twyford: We haven’t.

Rt Hon JACINDA ARDERN: As the Minister of Transport is indicating, that’s not an entirely accurate statement. But, also, we have, of course, applied a decent cost-benefit analysis for some of those projects as well—something that we long encouraged the last Government to do. If we’re going to be talking, though, about transport, I would be very encouraged to hear whether or not any of the member’s plans around transport investment also factor in our obligations under the Paris Agreement that he signed us up to, because he seems quite fixated on roads rather than public transport or, for instance, fuel-efficient vehicles, which I’d be happy to debate with him.

Hon Simon Bridges: Will she, then, be explicit and make clear to this House that the Government’s unstated policy is that roads are bad for climate change?

Rt Hon JACINDA ARDERN: No.

Hon Simon Bridges: What transport projects has her Government started to replace the many roading projects that they cancelled of National’s?

Rt Hon JACINDA ARDERN: I think you use the word “cancelled” loosely; they were ghost roads and they were not funded.

Hon Simon Bridges: What transport projects has her Government started?

Rt Hon JACINDA ARDERN: Of course, we are well under way with the planning around rail to the airport, which is something that member never did.

Hon Simon Bridges: When will construction start on that project?

Rt Hon JACINDA ARDERN: If the member wants specific details for our projects, he may as well ask the Minister of Transport. But, again, if the member is now telling me, though, that with his last 10 years when he was the Minister that he holds no responsibility for those currently sitting in congestion in Auckland, then I find that laughable.

Hon Chris Hipkins: Supplementary question.

SPEAKER: The Hon Chris Hipkins.

Hon Simon Bridges: Oh, here we go.

SPEAKER: Order!

Hon Chris Hipkins: Can the Prime Minister confirm that the supposed cancelled roads that the Leader of the Opposition mentions in his question amounted to $12 billion worth of roading projects, none of which were budgeted for?

Rt Hon JACINDA ARDERN: Absolutely. I also have to say that I don’t know how he would pay for it, given that he stands opposed to excise tax as well. So not only was he promoting ghost roads, he had no plans to fund them. In fact, the Ministry of Transport, if my recollection is clear, said that he would need to introduce an 8c per litre excise tax to pay for his ghost roads.

Hon Simon Bridges: In light of her talk of planning of light rail to the airport, and also benefit-cost ratios, given all the planning on that project, what is the benefit-cost ratio of light rail to the airport?

Rt Hon JACINDA ARDERN: Look, if the member wants to put a question on notice, I would be happy to duel over whether or not we should have light rail to the airport. But I think if you canvassed Aucklanders about whether or not there is enough investment in public transport, the resounding answer would be “No.” If we want an international city, if we want to increase productivity, we need to invest in projects like the City Rail Link, which the member was very slow to come to the party on—

Hon Simon Bridges: Will it go to the airport?

Rt Hon JACINDA ARDERN: —and rail to the airport.

Rt Hon Winston Peters: Could the Prime Minister tell the country how many dollars were set aside by the previous Minister of Transport for the Whangarei to Warkworth—much lauded—superhighway?

Rt Hon JACINDA ARDERN: I don’t believe there was any.

Hon Simon Bridges: Isn’t the reality of that that the Transport Agency had done all the planning required, effectively, for a Whangarei Northport but the transport Minister cancelled that $450 million project at the start of 2018?

Rt Hon JACINDA ARDERN: A plan is very different to actually having funded the road. I note that many National Party members around the country are putting up billboards about ghost roads, which never ever, ever had the funding to deliver.

Hon Simon Bridges: Does she agree with the Road to Zero discussion document Julie Anne Genter launched last week, which states that 87 percent of New Zealand roads have speed limits presently set too high?

Rt Hon JACINDA ARDERN: Actually, if the member takes the time to talk to some of the local councils, he’ll find that there are mayors up and down the country where there are areas of road where they feel that their local populations are not being well served. We’re not going to see large-scale road speed limit reductions, but we are going to listen to people locally who raise issues around particular spots where people have lost their lives.

Hon Julie Anne Genter: Can she confirm that identifying areas where roads need to be engineered up is just as important in identifying where speed limits are inappropriate as it is to identifying places where speeds might drop in some places, and the Government has no plan to drop speed limits on wide swathes of New Zealand’s network, but to make it safer?

SPEAKER: The Prime Minister may answer one of those five questions.

Rt Hon JACINDA ARDERN: I can confirm that, and that is why, of course, as part of our transport investment we are looking at investing $1.4 billion over the next three years in targeted road safety upgrades. By 2021, we plan to upgrade 3,300 kilometres of high-risk highway and, of course, that is through upgrade work rather than speed limit changes.

Hon Simon Bridges: Is the sum total of the Government’s work in transport to date to stop National’s projects, not start any new ones, and slow New Zealand down?

Rt Hon JACINDA ARDERN: No.

Question No. 4—Finance

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

Hon GRANT ROBERTSON (Minister of Finance): Last week’s BNZ-Business New Zealand Performance of Services Index showed that the New Zealand services sector continued to grow and expand in the month of June. While its expansion was slightly slower than in May, it is important to note that our services sector—particularly relating to tourism and trade—is connected to the global economy. The uncertain economic backdrop and slowing global growth will have an impact on this sector. But it is encouraging to see that New Zealand’s expansionary services index of 52.7 for June was higher than in Australia, the UK, China, Japan, and the United States—demonstrating the continued strong performance of the New Zealand economy compared with our peers.

Kiritapu Allan: What reports has he seen on the manufacturing sector?

Hon GRANT ROBERTSON: The recess also saw the release of the BNZ-Business New Zealand Performance of Manufacturing Index (PMI) showing the manufacturing sector expanded faster in June than in May. The June PMI reading of 51.3 was up from 15.4 in May. This stands in contrast to manufacturing sectors in other countries, which contracted in June—that being in Australia, the UK, Japan, China, and the eurozone. And even while the United States expanded at 50.6 percent, it was lower than New Zealand’s reading. This data represents more evidence that the New Zealand economy continues to grow solidly and outperform our international peers.

Kiritapu Allan: What reports has he seen on inflation?

Hon GRANT ROBERTSON: Last week, Stats New Zealand released Consumers Price Index data for the June quarter showing inflation at 0.6 percent in the quarter and 1.7 percent annually in line with Treasury’s forecast. This compares favourably with the latest data, showing hourly wage growth of 3.4 percent in the March quarter, and Treasury’s forecast showing wage growth around this level over the forecast period. This is good news for New Zealand households and workers at a time when the economy is growing solidly compared to the rest of the world and the unemployment is at record lows. The Government is keeping the cost of living under control on this measure.

Question No. 5—Finance

5. Hon PAUL GOLDSMITH (National) to the Minister of Finance: Are the Government’s economic policies delivering a “stable and growing economy which is fair for all New Zealanders”?

Hon GRANT ROBERTSON (Minister of Finance): Yes, after nine years of the Government failing to deliver an economy that is fair for all New Zealanders, over the last 20 months we are making good progress on turning that around.

Hon Paul Goldsmith: Does he think a 70 percent increase in hardship grants under this Government to almost 500,000 is a sign of an economy that is fair to all New Zealanders?

Hon GRANT ROBERTSON: Well, one of the things that the Prime Minister’s already mentioned is that we as a Government over here are not hiding away figures like that. We’ve actually encouraged staff within Work and Income to give people what they’re entitled to while we turn around the economy to deliver the jobs that they so desperately want.

Hon Paul Goldsmith: So is it a sign that things are getting better under this Government or worse?

Hon GRANT ROBERTSON: There are many, many signs that things are getting better under this Government, and I include in that the fact that I’m happy to purchase for the member a pair of cufflinks.

Hon Paul Goldsmith: Has his Cabinet colleague Andrew Little told him that the 70 percent increase in hardship grants is a “damning indictment” on their Government?

Hon GRANT ROBERTSON: I think the Leader of the Opposition must have handed Mr Goldsmith his notes, since he’s now repeating all of his questions. What I would say to that member is that on this side of the House—if we get to the end of Mr Little’s quote, which we heard before—we actually have a plan to make this economy not only stronger but fairer, unlike the last Government.

Hon Paul Goldsmith: He is aware that Mr Little—Andrew Little—thought a 40 percent increase under National was an indictment. Does he now accept that judgment against his Government, now that it’s much, much worse?

Hon GRANT ROBERTSON: No. What I do think is that on this side of the House, we have actually got a plan to build an economy that’s fairer for New Zealand. So when we lift the minimum wage to $17.70 an hour and that party opposes it, does that make it fair? When on this side of the House we index main benefits to the average wage and that side of the House oppose it—we know what’s fair on this side of the House.

Question No. 6—Housing

Hon JUDITH COLLINS (National—Papakura): To the Minister of housing and urban development—

SPEAKER: Just for future reference, the name of the Minister has changed.

6. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing: Is she confident that the implementation of the KiwiBuild Buying off the Plans programme has been consistent with Cabinet decisions?

Hon Dr MEGAN WOODS (Minister of Housing): Yes. I’m advised every Buying off the Plans deal has met the requirements of the business case as assessed by Treasury as per Cabinet requirements. I do note that although the member’s concerns expressed to the Auditor-General have not resulted in a specific inquiry, the Auditor-General has passed the member’s complaint to the appropriate agency, Audit New Zealand, which has been conducting a regular audit of the Ministry of Housing and Urban Development since before the member made her complaint.

Hon Judith Collins: How does the Government define what are “new homes off the plan”?

Hon Dr MEGAN WOODS: Sorry—could the member please repeat the question?

Hon Judith Collins: How does the Government define what are “new homes off the plan”?

Hon Dr MEGAN WOODS: This differs from deal to deal, but the main point of how it is—the primary objective—is to increase the supply of dwellings at affordable price points for entry-level buyers. One of the main objectives strategically is to free up the market so that more developments can proceed.

Hon Judith Collins: How can 10 apartments in Ōtāhuhu be considered to be in a planning stage when they were already built, already had a code of compliance certificate, and had already been unsuccessfully marketed prior to being signed up for a Buying off the Plans initiative?

Hon Dr MEGAN WOODS: Some of the homes were already under construction or built, but what this has done is enabled developers to move on more rapidly to building other homes. For instance, Shane Brealey of New Zealand Living said the outright purchase of homes at Mason Square and the underwrite at 340 Onehunga allowed him to get building at least six months earlier at 340 Onehunga and start his development in Northcote, which he said would have been just a twinkle in his eye without KiwiBuild. I note that in only a few days, 102 apartments, 72 of which will be KiwiBuild, at Northcote will be available. This is the impact that this scheme can have.

Hon Judith Collins: I raise a point of order, Mr Speaker. I asked about apartments in Ōtāhuhu, not about Onehunga or Northcote.

SPEAKER: I’ll let the Minister have another crack at it.

Hon Dr MEGAN WOODS: I think the member must have missed the point in my answer when I said that, actually, the deal that was done in Ōtāhuhu allowed the Onehunga and the Northcote developments to proceed.

Hon Judith Collins: So is she aware that KiwiBuild houses in Canterbury, Huapai, and Ōtāhuhu now do not qualify as new houses under the Government’s HomeStart grant because the code of compliance certificates for these houses were issued by the council more than six months before they were able to be purchased by KiwiBuild buyers?

Hon Dr MEGAN WOODS: In the course of resetting KiwiBuild, there will be a number of very practical and pragmatic issues that I’ll be looking at—that along with the fact that banks give a three-month pre-approval rating to new homebuyers, which makes it very hard for a new homebuyer to buy a new property off the plans. I’m more than happy to look at these kinds of things. We on this side of the House are not afraid to admit that this is difficult. That member should know that her Government made a commitment to deliver 39,000 houses over three years under the special housing area. They delivered 3,157, 100 of which were affordable. We don’t pretend this is easy.

Hon Judith Collins: I seek leave to table some documents. The first is a KiwiBuild pipeline, showing the Ōtāhuhu properties were contracted for KiwiBuild—

SPEAKER: The source of the document?

Hon Judith Collins: This is from an Official Information Act request that I have received some information back on from the Minister’s office.

SPEAKER: Right, we’ll do them one at a time. Is there any objection to that being tabled? There appears to be none.

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

Hon Judith Collins: Thank you, Mr Speaker. I seek leave to table a letter from Auckland Council confirming completion of the Ōtāhuhu properties, dated 6 September 2018.

SPEAKER: Is there any objection to that being tabled? There appears to be none.

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

Hon Judith Collins: I seek leave to table a code of compliance certificate confirming that the Ōtāhuhu properties were consented on 20 September 2017, before the last election.

SPEAKER: And the member’s going to confirm that that is not available on the web.

Hon Judith Collins: Mr Speaker, I couldn’t tell you if it’s available on the web, but it’s certainly been received from Auckland Council.

SPEAKER: Is there any objection to that being tabled? There appears to be none.

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

Question No. 7—Health

7. Dr LIZ CRAIG (Labour) to the Minister of Health: What progress, if any, is being made on the design and development of new front-line mental health and addiction services?

Hon Dr DAVID CLARK (Minister of Health): The Wellbeing Budget included investment of $455 million to create new front-line services for people with mild to moderate mental health and addiction needs. These free services must be easy to access, easy to navigate, and they must work for the people that need them. To make sure that they do just that, we need to listen to those with lived experience and those who work in the sector. We took an important step in that process today, with the first of five Ministry of Health workshops with mental health and addiction leaders, NGOs, and community organisations.

Dr Liz Craig: How will the Government ensure that these new front-line services meet the needs of different communities?

Hon Dr DAVID CLARK: One of the clear messages out of the inquiry into mental health and addiction was the importance of working with communities when developing these services. We can’t assume that a service designed in Wellington will necessarily work in the Far North or rural Canterbury. We need a range of services—kaupapa Māori services, youth services, Pacific peoples services, and programmes for rural communities. The best way to design those services is alongside those communities, and that’s why today’s workshop and the four others around the country are so important.

Dr Liz Craig: So how long will it take to develop these services?

Hon Dr DAVID CLARK: Transforming our approach to mental health and addiction will take time. We know we need more trained mental health workers and peer support people—

Hon Simon Bridges: He can’t even answer a patsy.

Hon Dr DAVID CLARK: —and have invested $80.1 million in workforce development over the next four years. That’s a pretty desperate interjection from the Leader of the Opposition. The new front-line service is being rolled out over five years, but now—

SPEAKER: Order! Order! The member will resume his seat. I’m just going to ask the Minister to focus on his answer and not be diverted by the quality of interjections.

Hon Dr DAVID CLARK: Thank you, Mr Speaker. The new front-line service is being rolled out over five years, but there are already services that are doing good work and can be expanded in relatively short order. I expect to have further announcements about this in coming months.

Question No. 8—Health

8. Hon MICHAEL WOODHOUSE (National) to the Minister of Health: Does he stand by his statement that National Health Targets created “perverse incentives”?

Hon Dr DAVID CLARK (Minister of Health): The previous Government’s narrow set of targets produced perverse incentives and resulted in what were traditionally cheaper surgeries being performed in more expensive environments. I do not want the numbers pumped up by counting Avastin injections and skin lesion removals that could’ve been done in primary care as surgeries only if they’re done in the most expensive environment possible. The answer to the member’s question is yes.

Hon Michael Woodhouse: Could the experience of Winton farmer Blair Vining, who was told he would wait eight weeks with his cancer diagnosis for his first appointment and then spent 13 hours in Christchurch Hospital’s emergency department, be described as “perverse”?

Hon Dr DAVID CLARK: I think the care Mr Vining has received has fallen short, and I have made that clear.

Hon Michael Woodhouse: Is the dramatic drop in childhood immunisation rates to as low as 61 percent for Māori babies an example of a “perverse” outcome?

Hon Dr DAVID CLARK: Our immunisation rates for children have been hovering just above 90 percent for a long time, and it’s proved difficult to reach that last few percent of the population. I know that our clinicians and public health staff understand full well the importance of immunisation and are working hard to ensure that more people benefit from the protection offered by immunisation. Unfortunately, that target set by the previous Government has never been achieved, and it’s incredibly important that people do get immunised and appreciate the importance, not only to protecting themselves from potentially deadly diseases like the measles but also to protect their loved ones, elderly, children, and other vulnerable members of society. So I encourage all who are able and fit to please get immunised.

Hon Michael Woodhouse: Does he expect the final figure for elective surgery, excluding Avastin injections and skin lesion treatments, in 2018-19 to be higher or lower than the previous year?

Hon Dr DAVID CLARK: The important point here is that electives are not the only form of planned care. I would remind the member, again, that we are seeing more acute surgery and more non-admitted procedures completed, which means more people are getting care that they need in the most appropriate, cost-effective, and convenient setting. I have been advised that as at the end of May, district health boards were reported to be at 99.4 percent of planned levels.

Hon Michael Woodhouse: Isn’t it the case, though, that de-emphasising the very targets that are so important to New Zealanders has resulted in those important health outputs going backwards on his watch?

Hon Dr DAVID CLARK: No.

Question No. 9—Social Development

9. Hon LOUISE UPSTON (National—Taupō) to the Minister for Social Development: Why are there 15,507 more people on the jobseeker support benefit than there were in September 2017?

Hon CARMEL SEPULONI (Minister for Social Development): The recent increase is primarily driven by population growth and a reduction in growth for some industries where, historically, Ministry of Social Development (MSD) clients have often gone into. We have very low levels of unemployment, and in a tight labour market, employers want skilled workers. That’s why we’re focused on training and upskilling people on benefit. For those that may need help, MSD is committed to giving them support, both financially and through assistance into appropriate upskilling and employment, so they can achieve the best long-term outcomes for them and their whānau.

Hon Louise Upston: Why has there been a 17 percent increase in people aged 18 to 24 on the jobseeker benefit in the last year?

Hon CARMEL SEPULONI: Putting it into context, there’s also been a reduction of young people coming in on the youth payment. What we need to put in perspective here is that young people are as affected as others. So, therefore, if population growth is a factor, and the softening in some particular industries is a factor, then that, of course, is going to have an impact on their employment rate as well.

Hon Louise Upston: Why are there 710 people in Tauranga who’ve been on a jobseeker benefit for more than 12 months when there are 841 jobs currently advertised on TradeMe?

Hon CARMEL SEPULONI: Many of the jobs being promoted are requiring upskilled people, and that is why we as a Government are focused on upskilling and training. It’s unfortunate that there wasn’t as much of a focus under the previous Government, otherwise we wouldn’t have been in this situation. Programmes like Mana in Mahi that are targeted towards young people, that will support them into employment opportunities that are meaningful for them, will provide them with the opportunities that they need to go into employment.

Hon Louise Upston: Does she agree that there’s a clear link between the increase in jobseeker beneficiaries and the decrease in sanctions her Government has applied for unfulfilled work obligations?

Hon CARMEL SEPULONI: I’ve been advised that there is no link, that the two reasons that I gave at the beginning are the primary reasons, with regards to the fact that population growth is a factor and, also, the softening in some areas where our people would’ve traditionally gone into. We are focused on upskilling and training people who come through the welfare system and making sure that they are matched up with meaningful and sustainable job opportunities for them. We don’t want to see the churn of people going off and then back on benefit that was experienced under the previous Government.

Hon Louise Upston: When is she changing the name of the jobseeker benefit if her Government isn’t requiring people to turn up for interviews?

Hon CARMEL SEPULONI: We are working hard with New Zealanders who come through the welfare system. It is disappointing that under the previous Government, there was a diminishing amount of support for people who were unemployed to be able to take up work opportunities. In fact, at the last Budget, New Zealand would be aware that we invested so that we have 263 more front-line staff focused on work so that we can support New Zealanders into employment. That’s alongside other initiatives like the Oranga Mahi programme, where we’ve injected an additional $26 million to particularly support disabled people into employment. I want to make a note of that, given that we know that 53 percent of those that are in the welfare system either have a health condition or a disability of some sort or are caring for a person with a health condition or disability of some sort. We want to support them into employment, and that’s what this Government’s doing.

Question No. 10—Police

10. GREG O’CONNOR (Labour—Ōhāriu) to the Minister of Police: Will the proposed changes to the Arms Act 1983 improve public safety in New Zealand; if so, how?

Hon STUART NASH (Minister of Police): Our gun laws date from 1983 and are dangerously out of date. Since then, the firearms industry, the market place, and the threat environment have changed considerably. Successive Governments have known, since the Thorp review of 1997, that our gun laws were too weak. Further attempts to change the system in 2005 and 2016 both failed. A firearms register, a tighter licensing system for gun owners, and a new emphasis on safety and personal responsibility is the focus of upcoming legislation that we announced yesterday. In April, we acted to take the most dangerous weapons out of circulation by prohibiting assault rifles and military-style semi-automatics. We are now moving to stop other firearms falling into the wrong hands.

Greg O’Connor: Why will a firearms register help keep New Zealanders safe?

Hon STUART NASH: The majority of firearms licence holders are law-abiding citizens, and we have seen this through the initial stages of the buy-back scheme and amnesty. Based on the experience in some Australian states, we expect the registry will make it more difficult for firearms to fall into the hands of people who intend to use them to cause significant harm. The ability to track possession of a firearm over time will provide police with information to better manage the risks to personal and public safety from firearms. We know that firearms are increasingly being used in the commission of violent offences, and increasing numbers are being seized by police. For example, 950 firearms have been seized since March this year. Police, in their line of duty, also have to face firearms every day, and as the Police Association has stated, “A register will also provide valuable intelligence on the number of firearms registered to an address, and this should help police officers turning up to volatile family harm incidents, which account for a huge percentage of an officer’s daily work.”

Greg O’Connor: What reports has he seen in favour of the Government’s reforms?

Hon STUART NASH: These changes have been decades in the making, and I have seen numerous reports in favour of the changes, but if there is one report I would like to share with the House today, it is a letter I received from an individual in Waipukurau who wrote to me on 15 July about Constable Len Snee, who was fatally shot 10 years ago in Napier: “I am an old school friend of the late Constable Len Snee. We were at Takapau Primary School. With that, I would like to see a gun register of weapons and their owners, as we had back then in our school days. Len might still be here if we had the old register going.” As the Minister of Police, it is my responsibility to ensure that police have the resources to keep our community safe and be able to go home to their families after their shift. We as a House need to work together to make changes to our outdated firearms laws. We owe it to Constable Len Snee, the 51 people in Christchurch, and their families and friends to ensure that we do all that we can to find the right balance.

Question No. 11—Police

11. BRETT HUDSON (National) to the Minister of Police: Does he stand by all the Government’s statements, policies, and actions in relation to firearm law reform?

Hon STUART NASH (Minister of Police): Yes, apart from a mistaken comment when I said you need to be a New Zealand citizen to apply for a firearms licence under the proposed law. You don’t, but I will be interested in hearing public submissions on the topic.

Brett Hudson: What specific changes announced yesterday target illegal firearm use by gangs and violent offenders?

Hon STUART NASH: The aim of this legislation is to make it a lot more difficult for guns to fall into the hands of those who would use them to create harm.

Brett Hudson: Will being gang-affiliated be a warning flag the police take into account to intervene if they have concerns about a licence holder’s behaviour?

Hon STUART NASH: Yes.

Brett Hudson: Why is the Government rushing to impose more costs and red tape on law-abiding firearms owners yet doing more consultation on stopping violent gang members using guns?

Hon STUART NASH: These changes should not come as a surprise. The Arms Act has not seen substantial reform in the last 36 years, and it is no longer fit for purpose. The changes proposed will establish a system that strikes a better balance with the safe use of firearms and the need to manage the risk to personal and public safety. We want to make it harder for firearms to fall into the wrong hands. The changes establish that possessing a firearm is a privilege and not a right, and will better reflect the harm that firearms can cause.

Question No. 12—Police

12. DAVID SEYMOUR (Leader—ACT) to the Minister of Police: Would the proposed changes to gun laws announced yesterday have prevented the Christchurch terror attacks; if so, how?

Hon STUART NASH (Minister of Police): We cannot turn back time, but we can act to lessen the risk of similar events happening again. We have already moved to remove the most dangerous weapons from our communities. We are now moving to lessen the risk of other firearms falling into the wrong hands.

David Seymour: Does the Minister acknowledge that the answer he just gave did not in any way directly answer the primary question?

Hon STUART NASH: As I said, we can’t turn back time. What I will say is the royal commission will examine events leading up to the attack. I will not pre-empt its work, but what I will also say is it’s public knowledge that we are introducing flags around warning behaviour. For example, encouraging or promoting extreme or violent behaviour would be a warning flag, and a register would allow us to track the accumulation of large volumes of weapons and ammunition over a short period of time, as occurred prior to the Christchurch attack.

David Seymour: Does the Minister agree that this legislation—again, with a shortened public consultation—is not about public safety but is about providing a distraction for a Government that is failing in every other area of policy?

SPEAKER: Order! That—

David Seymour: I raise a point of order, Mr Speaker. I asked a question. Normally, they answer.

SPEAKER: Yes, and I didn’t call the Minister to answer it because it was out of order.

David Seymour: Well, I don’t understand why.

SPEAKER: Well, I’m not going to be responsible for the member’s failure to understand.

David Seymour: Well, you could help by explaining, for the public watching, why that question is not in order.

SPEAKER: The member might, in fact, like to look at Speakers’ Rulings and the Standing Orders and understand it for himself so that he doesn’t make errors like that in the future.

Bills

Health (Drinking Water) Amendment Bill

In Committee

Part 1 Amendments to Part 2A of principal Act

Hon Dr DAVID CLARK (Minister of Health): I’m delighted to speak to the Health (Drinking Water) Amendment Bill, which has had support across the House through its readings thus far. It is a sensible bill, born out of a response to the outbreak of acute gastroenteritis in Havelock North in August 2016. This bill, importantly, removes specific periods from consultation as a requirement under the law. It still requires that reasonable consultation take place, but it does no longer specify that that should be over a long period of time, as it has been a barrier to keeping standards up to date. It’s also true that we expect the standards now to be set more frequently.

The water safety plans will continue to be a key element of the framework for assuring the safety of drinking water, and now we will require suppliers to manage and control critical points in their supply. That will now be an explicit requirement rather than, as it was previously, an implicit requirement. Also, this bill will remove the defence of a reasonable—sorry, I must get the legal language right. All practicable steps to prevent the commission of certain offences and, in particular, availability and affordability have been given precedence over the nature and severity of harm in terms of the criteria for whether action was required.

I think the public will agree, as this House seems to be in agreement, that the provision of safe drinking-water is incredibly important for New Zealanders. The Havelock North report estimated that around 100,000 New Zealanders every year are getting sick from preventable illnesses as a result of poor water. Whatever that number actually is, we would all agree that it is too many and that if we can prevent people getting sick, being killed, or, indeed, suffering lifelong disability through ensuring that we have a safe provision of drinking water through bringing this Act up to date, then we should proceed with that, and indeed, that is what this bill does. I recommend it to the House and I look forward to the ongoing support of members.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. In what I hope will be a short call in a short committee stage on this bill, I just want to confirm with the Minister in the chair, Dr David Clark, that there are no amendments to the bill as it was when it passed its second reading and there are no Supplementary Order Papers to consider. I’m getting some shakes from the officials, in which case this should be a fairly perfunctory process, because the Health Committee canvassed in the second reading of this bill the quite sensible changes that had been recommended and passed unanimously, I think, across the House. But I would want to just reconfirm my party’s support for this as the first stage of, indeed, a very comprehensive response to the Havelock North water contamination inquiry, and it’s not for the Minister of Health to be bringing substantive changes to that. It’s, I think, the Minister of Local Government, but we are very interested in knowing what progress is being made in that respect. But, suffice it to say, at least in Part 1, we support and confirm the changes that were made in select committee in this committee.

Dr LIZ CRAIG (Labour): Thank you, Madam Chair. This is an important bill, and what I’d just like to focus on is clauses 5 and 6 within Part 1, because what this does is it allows us to implement some of the changes recommended by the Havelock North inquiry in a more speedy manner. Previously, the Minister of Health was required to consult on any changes to these drinking-water standards, but to take a period of at least three years to do that. So what this does is it retains that requirement that the Minister does consult on these standards, but it removes the requirement that that occurs over a three-year period. I think that’s really important because with advances in technology and other urgent matters, it’s important for us to be able to change these standards in a flexible manner.

For those, though, who were concerned that this may not result in adequate consultation, there are still a number of provisions there. One is that consultation must occur, and the second aspect is that these are still disallowable instruments. So if there are any issues with those regulations by the Regulations Review Committee, they can, potentially, be disallowed by the House. But the other aspect that makes it more speedy is that in terms of clause 6. Where previously the drinking-water standards had to come into force at least two years after the date of publication in the relevant Gazette, what this does is it changes that to 28 days. So, again, it is allowing a much more timely process for that to happen.

The other thing that it does in clause 5 is it updates the notification of any changes. Previously, the Minister had to put notices in the newspapers of some of those cities—for example, Auckland, Christchurch, Wellington, and Dunedin. So for Invercargill, where I live, if there were any changes, there actually wasn’t any requirement that they would be notified in our area. What this does is it allows the Minister to put some notice on the internet so that people are aware of it more broadly, but it also specifies that notices are to be put into the relevant newspapers of the areas affected, and I think that gives you much more flexibility in terms of making sure that everybody is aware of what’s happening.

So just looking at those two particular clauses, what we’re doing is making sure that as changes come through in terms of drinking-water standards, we can do that in a much more flexible and a much more timely manner, which allows for changes in technology and allows us to get on and implement many of the changes that will come down the line as a result of the wider Three Waters Review. Thank you, Madam Chair.

Hon GERRY BROWNLEE (National—Ilam): I have a relatively simple question for the Minister of Health. It relates to clause 6 in Part 1 of the bill, and to new section 69R specifically. We have in Christchurch an extraordinary situation where the city went through 15,000-odd earthquakes, with many of them—many, many of them—over 4.5 on the Richter scale, and in all that time, there were only four days where there were boil notices on the water as there was some uncertainty about whether or not the initial February 2011 earthquakes had caused any intrusion into the water supply that would be unwelcome. In the end, those restrictions were lifted. There were situations where some of the pipework was, effectively, creating little ponds or wells on the street side, and where there were pipes disconnected to the house, officials were saying, “It’s OK to take the clean water out of those holes because it’s in such a great state.” I know this because my street was one of those where that advice was given.

Can I just then ask, given that we have now got a panicky council down there—a group of spooked individuals who have decided that we need to chlorinate our water for the unlikely event that there may be some well head intrusion, even though they’ve got that massive evidence of security on those well heads, and while they are, commendably, doing some extra work to them, the city continues to be mass-dosed with chlorine. So what I’m asking is: given that that mass-dosing approach is very much the mantra of Water New Zealand, does this provision in here mean that at least 28 days after the publication of a notice in the Gazette, places like Christchurch will have to come up to a standard that will mean there must be chemicals added to their natural water supply?

ANGIE WARREN-CLARK (Labour): Thank you, Madam Chair. It’s a great pleasure to rise and take a call on this stage of the Health (Drinking Water) Amendment Bill. I just wanted to remind the committee of how we got here. We are looking specifically at a way to solve the terrible effects of the Havelock North disaster, in which thousands of people were affected and, I believe, a number of people lost their lives. So it’s really important that we look at the infrastructure, and I guess the question is—at the time, I understand, the member Lawrence Yule was the mayor of the community, so he would know, and hence why, across the other side of the Chamber, they are very keen to see this—the effects on that community and what actually happened. So it would be pretty awful for him to have had that experience, but also we’re here fixing it, aren’t we?

I’d like to speak on section 69H, in clause 4A. I’d like to talk about taking “all practicable steps”. So what, essentially, has happened—and I’d like to ask the Minister in the chair, Dr David Clark, whether he’d like to expand upon this, but what I’ll do is read through the legislation as it currently is and then ask the questions. So, essentially, this part is about the person having to take all practical steps “to achieve that result that it is reasonably practicable to take in the circumstances”, but then they need to take into account the following things, and in weighing up. So this is where people have previously said, “Yes, we’re aware that we need to do this but, sorry, it was too expensive.” or “We can’t do it.” So the test becomes the nature and severity of the harm that may be suffered if the result is not achieved.

So what is the effect of not acting—“(b) the current state of knowledge about the likelihood that harm of that nature and severity will be suffered if the result is not achieved;” Now, the reason I say that that particular one is important is that we know of risks that sit in different communities. These local governments are aware, I’m certain, so therefore they need to be taking into account the likelihood of that harm—the nature and the severity. I’m sure, if we reflect on Havelock North, there was a clear discovery upon this system failing, that this is a really severe response, and I’m sure from now on there will not be, I guess, a casual, “Oh, yes, well, we must look into that at some time.” “(c) the current state of knowledge about harm of that nature;”—so these are all added too—“and (d) the current state of knowledge about the means available to achieve the result, and about the likely efficacy of each; and (3) their availability;”—and then the final one—“and (f) their affordability, in light of the person’s financial position.”

And I really like what has happened in this further part, which says, OK, so we look at the test of affordability but we don’t just say that the person can’t afford it, and therefore it doesn’t happen; we actually put in place in this piece of legislation the test around what it is so that if they can’t afford to do this act, then they must provide full and complete records of their financial position and they must, as soon as practicable, not more than 28 days, produce evidence and the step-by-step process they have gone through in order to say that they cannot afford this change. So I would just like it—I’m about to finish my call—if the Minister is able to speak to that and the reason as to why we were very clearly putting this test in place around affordability. Thank you, Madam Chair.

Dr LIZ CRAIG (Labour): Thank you, Madam Chair. I’d just like to echo some of the comments that my colleague Angie Warren-Clark has been making, just sheeting home the importance of some of these clauses in Part 1 of this bill because of what happened under the previous Government in terms of just highlighting the lack of monitoring and the lack of oversight and, I suspect, the undue influence that affordability had when we’re looking at weighing up what’s affordable versus the basic safety concerns for our community. What this inquiry into what happened in Havelock North did was raise some serious concerns about the way that our drinking-water systems had been managed over that last decade. It had a huge impact on the local community there, because with that outbreak of campylobacter, around 5,500 of the town’s 14,000 residents were affected and about 45 were subsequently hospitalised, and it may have contributed to four deaths. So getting this right is crucially, crucially important, and this is a Government that’s really keen to make sure that this happens.

So, when we look at clause 4A, what we’re looking at here is making sure that what we’re doing is—when we’re taking “all practicable steps”, how it should be interpreted. Under the previous Act, what it was saying was that there was a big emphasis on availability and affordability of any steps that could be taken. So that was given a much higher emphasis than all the other factors that needed to be taken into account, and, as my colleague Angie Warren-Clark was saying, what this bill does is actually put a lot of those factors back on a more equal footing, because what it means is that the public health aspects are emphasised as equally.

So what the changes that we’re adding in mean is that in addition to looking at things like affordability and availability, we need to look at the nature and severity of the harm that may be suffered as a result of not doing some steps. It also needs to take into account the current state of knowledge about the likelihood of that harm and the nature and severity that will be suffered as a result of it not being achieved. I think what is absolutely important here is that we, basically, take steps to protect public health. That is crucial in weighing up what we need to be doing in terms of practicable steps.

I think the other thing that is really important in this particular part of the bill is looking at what people can say in terms of—a “get out of jail free” clause, almost—affordability. Previously, they could just say that it wasn’t affordable, and there was not really much further detail around that. But what now is required, with this bill, is that if you’re saying that you can’t take steps because of affordability, then you need to take a full and complete record of that person’s financial position so that you can actually get an assessment of what that position is in terms of affordability, and then, as soon as practicable, not more than 28 days after being required to do so by a drinking-water assessor, produce evidence that the steps are not affordable—including a copy of those records—and justify to the assessor or the officer why it’s not practicable to take those steps.

What that means is you need to have much stronger evidence that that is not affordable, because what we’re talking here is protecting the public health. I think that that’s something that—as we’ve seen as a result of this Havelock North inquiry—was not happening under the previous Government, and it’s something that our Government is very, very keen to address. That’s just also emphasising why the subsequent clauses then talk about making sure that that can happen in a much more timely manner, in terms of some of the other changes, if we want to change those standards.

So I think those aspects are very, very important in terms of making sure that we protect the public health balance in this equation. Thank you, Madam Chair.

Hon Dr DAVID CLARK (Minister of Health): I would like to rise to speak to a number of the issues raised by learned members. The first issue I want to address is that raised by Mr Brownlee, who reflected on Part 1, clause 6 and the notification period. For the benefit of the House—it’s one sentence, I’ll just read it out—the new law would say: “Drinking-water standards (and any amendments to those standards) come into force on a day specified in a notice under section 69Q(1) that is at least 28 days after the date of publication of that notice in the Gazette.” Really, it is quite a simple clause that has no mystery, it has no secret agenda. It is merely specifying a period of notice. In fact, the bill doesn’t change at all what the standards will say, just the notice period. I think that’s probably the point Mr Brownlee is seeking clarification on. He raised a grand conspiracy theory about enforced chlorination and so on.

Hon Gerry Brownlee: No, will the standards—

Hon Dr DAVID CLARK: He may rise to take another call to clarify if I’ve misunderstood him but, then again, he may be satisfied with the brevity and clarity of my answer. The issue here is that we do need to make sure that our standards are updated in a timely fashion, because when we’ve got a public health issue, when we’ve got people getting crook and we can prevent it, that is what we believe, on this side of the House, we should be doing. Indeed, this bill is being supported across the House—and I thank Mr Brownlee as the shadow Leader of the House for his party’s support of the bill. I think it is important that we can react in a timely fashion when there are public health outbreaks, and that we can change standards if evidence comes that suggests we need to do things in a different way.

I just want to give one example, which is around chicken. New Zealanders often, in the past, have gotten sick as a result of eating poorly cooked or prepared chicken, and there’s been some evidence around public health risks of chickens that haven’t been appropriately looked after through the food preparation process. I know that I reflect when I talk with other people—often if they’ve got a tummy bug they think, “Have I eaten something bad? Have I eaten something wrong? Have I inadvertently, at a pot luck dinner or at a late night takeaway, partaken of something that’s made me crook?”

Hon Kris Faafoi: Why was he looking at me?

Hon Dr DAVID CLARK: The first thing, often, that people’s minds go to—no reflection on the member Mr Faafoi when I talk about chicken. The issue is about food safety; this is about safety of the things we are putting in our bodies. I think, as New Zealanders, we are very well aware of the risks of food but, historically, we have been less aware of the risks of water. The Havelock North report brought this very sharply into focus and said, actually—what is clear in Havelock North is that even though, nominally, that water met the existing standard and had passed a recent test, it clearly was not safe. It was not safe water. People got sick, they were unwell, some people potentially lost their lives—there are deaths connected to that outbreak, four deaths. Also, people have suffered from disability as a result. We, no matter who’s in Government, need to address this issue because it is a matter of public safety and public health.

So that is what we’re doing here in terms of changing the consultation period, is making sure that we can put changes in place in a timely way but still with an appropriate consultation period. It was deemed that the previous periods listed in the legislation were unnecessarily long. They were focused from a past era. Indeed, when the legislation was brought into play in its most recent form, under the last Labour Government, it was world-leading. But, of course, time has elapsed since then and we now have these examples of people getting ill.

One of the other things that becomes clear in the Havelock North report, in one of the appendices, is that since the Havelock North outbreak and before the publication of the report, there were dozens and dozens of reports of bad water throughout New Zealand, in our newspapers, in the media, and so on. But, as a country, we don’t seem to be joining those dots; we don’t seem to recognise that this is actually a systemic problem. We have not had the necessary standards in place. We haven’t updated our water systems standards in the way that overseas jurisdictions have. As I say, when the last Labour Government put this legislation in place, it was world-leading. Now we recognise that these standards need updating, because the world has moved on. There are higher water standards in Europe, for example. People face great fines if they don’t implement water standards that ensure the safety of the population.

The other interesting thing in all of this, of course, is that we want this to be true across the country but it needs to be affordably so, because all of us who live in the regions want to be safe no matter where we travel. Those of us who live in cities want to be safe when we drink the water in a small provincial town. Those of us in small provincial towns want safe water when we go to cities. We need standards that are acceptable, that are widely consulted on, and that are put in place in a timely fashion.

I want to address the point raised by Angie Warren-Clark and Dr Liz Craig. Both of them raised the issue of affordability. Under section 69H(3)(b) of the Act at present, a person who wishes to use affordability as a reason for a step not being practicable only needs to tell a drinking-water assessor or designated officer that it is not affordable. That is prioritised over other reasons for upgrading the water that’s provided. The select committee itself recommended replacing that section to require a person who wants to use unaffordability as a reason for not undertaking a step to actually provide evidence showing that the step is not affordable and to justify why it is not practicable to take the step. So there’s a new test proposed.

I haven’t as yet and I do wish to thank the select committee for their work on this, because the bill has come back to the House with some modest but useful changes, including making sure that the priority across those different tests that come into force is taken away so that affordability is no longer a trump card that can be pulled out. People actually have to demonstrate that this is an unreasonable thing to have to do to upgrade the water, because for the simple reason that we want to ensure that our water is of quite high quality. We don’t want to give people a place to hide when it’s not reasonable to continue to deliver poor quality water.

So I think that addresses the two issues that have been raised so far. If it hasn’t, I expect members will raise further concerns or points of clarification. But the important thing to stress in all of this is that this is largely process we’re talking about here. This is about making sure—

Hon Aupito William Sio: I just want to know who created the mess.

Hon Dr DAVID CLARK: —and process is important—I hear the member. Process is important to make sure that we’re doing this in a way that actually involves proper consultation but is not unnecessarily hindered by an arbitrary, slow time frame that would mean people might continue to get ill, when we should be addressing the water standards and updating them so that they get to the world’s best practice and ensure the safety of our citizens.

Hon SHANE JONES (Minister of Forestry): I raise a point of order, Madam Chairperson. I’d like to take a point of order first before I offer my thoughts about section 69H.

CHAIRPERSON (Hon Anne Tolley): So you’re calling for a point of order?

Hon SHANE JONES: Yes. I just want to seek some guidance from you. When I speak on 69H, I’m going to talk about the person being someone associated—enjoying authority, in a council, and I realise that the council that caused many of these problems was led by an Opposition member of Parliament. Can you give me some direction as to when I might end up offending Standing Order 120 by calling into question the failure of the people who landed us in this similar situation—why we’re having to tidy this up—without the person on the other side of the Chamber feeling that I’m violating Standing Order 120.

CHAIRPERSON (Hon Anne Tolley): Well, I think the Standing Orders are clear that all members are honourable, so therefore anything that addresses another member should be respectful, and the Standing Orders are very clear that we’re debating a piece of legislation in front of us. The committee of the whole House is the opportunity to debate the detail of the legislation. There have been a number of speeches made that traverse the context of the legislation and I have allowed those to go. But there comes a time when we stop talking context and we start talking details. So my suggestion to the member is that if he wants to address section 69H—we’ve had a number of speeches addressing that—and he has some new information that he wishes to traverse that is of a personal nature, he is respectful in that and sticks to the point.

Hon SHANE JONES: Thank you, Madam Chair.

CHAIRPERSON (Hon Anne Tolley): I call the Hon Shane Jones.

Hon SHANE JONES: I want to assure the committee that I am not standing to impute anything improper or add to any sense of angst about the people who were associated with enabling or acquiescing with poor decision-making over a long period of time.

Section 69H is a test about practical ability. I want to direct the attention to section 69H(1)(c), (d), and (e) in clause 4A. I don’t want to run the risk of protracting this discussion, but I am very allergic to law being used to enable people to avoid making timely decisions, number one; number two, and to that law being used to expand either the body of information a decision maker feels he or she needs or the relevance of that situation. So I go to the current state of knowledge about harm of that nature.

I thoroughly support—and the party I’m a member of thoroughly supports—the efforts of our Minister of Health in relation to drinking-water improvements. I don’t rely on drinking water supplied by a local government entity where I live. I know, however, many people do—for example, in Kaitāia, and we’ve got some significant challenges there. I just want some reassurance that when we use the term “state of knowledge” in terms of the likelihood of the harm, how exhaustive is that test likely to be? Because other than a filter, I think, sitting somewhere in the spouting of my house, to date none of my guests or my mokopunas have suffered any inordinate illness by drinking the water off the roof of my house. What scope will there be for that classic common-sense approach, which I think is a credible part of engineering that has helped us achieve the infrastructure to date? That’s the first thing.

The second thing is when we use the words the “likely efficacy of each”—I make the point to the Minister that whilst supporting him one day, councils—well, there may actually not be as many water authorities in the future. Who knows, after the next election perhaps a more enlightened group of people will come to lead local government in some parts of New Zealand, but that’s another matter. I think that the notion that we’re going to test the efficacy—we need some reassurance from the Minister that, yes, health trumps all. But a number of our councils are working within an envelope where they don’t have endless amounts of pūtea. They don’t have endless reservoirs of either private capital—because this is provided as a public service. And I want to be assured that the officials advising the Government have taken a very—not a pragmatic—practical approach to how they’re defining “efficacy”.

Then, when we talk about availability, it would be useful to know whether the Minister conceives of “availability” being availability to a given water provider. In my case, I’m from the Tai Tokerau. We have a council called the Far North District Council, and the Far North District Council was previously led by Wayne Brown. He suffered the depredations of the audit department after the new incoming council mayor, Mr Carter—another friend of mine, facing tremendous competition in the upcoming election. But I would point out that for people like ourselves, availability means: what is available, what will pass the test of efficacy in terms of those isolated areas in New Zealand, and what knowledge do the long-term health officials genuinely believe is applicable for a number of these isolated rural councils? Or does the notion of availability and efficacy contemplate, in actual fact, in the future, the current providers of this essential service, i.e., water that won’t make our elderly and our young people ill, can be made available, and that there’s a suitable range of ways to deliver that service?

Hon Dr DAVID CLARK (Minister of Health): If I can just respond in a timely fashion to the questions that the Hon Shane Jones has raised. The first series of questions is related to the application of common sense to standards—if I can characterise them in that way. How will we ensure that when standards are set, the reach of the bureaucracy is not into people’s homes—perhaps with one water tank, an elderly couple on a fixed income? How will we ensure that any future water standards don’t impose unreasonable costs on those when any harm done would be to those people who are supplying their own water?—if I understand the member’s question correctly. I have some disappointing news for the member in that that question is not directly addressed in this legislation. But I have heartening news as well, which is that he’s part of a sensible, common-sense Government that plans carefully for the future and seeks to ensure that New Zealanders are supported with common-sense standards, and that there is not reach into insensible areas. We need to carefully balance affordability and availability, because there would be little point in shutting off a water supply that was keeping people healthy when there was no evidence that it was going to do them harm and it was certainly not going to do anyone else harm. That’s the balance that will be struck as we work our way through, I’m sure, water standards—

Hon Shane Jones: Sensible, Minister.

Hon Dr DAVID CLARK: —over time. I thank the member for his kind words.

But this is the essence of it. This bill itself doesn’t change what the standards themselves can say, but it does affect things like the notice period and the consultation period to make sure that we’re doing the process parts of that correctly, to make sure that people do get to have a say when we are setting the standards. So that goes, in some way, to the member’s question, because if we didn’t have that consultation period, it would be quite likely, I think, that—or maybe not likely; maybe that’s an unfair aspersion to be casting on our fine bureaucrats in Wellington. But it would be possible that with the stroke of a pen, some change could be made that had unwitting consequences further down the track, and that’s why we have wider public consultation periods. It is really important that we actually get the wider view in case there’s something that’s happening out there that hasn’t been taken into account in what might be, theoretically, very, very high and mighty and correct thinking. I’m confident that the processes we’re setting in place with this bill will, indeed, ensure just that—that we do have a process that takes into account the different factors and the different principles but that has a reasonable consultation period for dealing with the questions that are at hand.

In terms of efficacy, the question about whether poorer councils, in particular, might be disadvantaged by any changes in this legislation I think is something that, in my understanding, the Health Committee members have wrestled with carefully, and I’m sure Health Committee members, if they wish to, can speak to that in the debate—balancing those things to make sure that, you know, if somebody wants to claim that they can’t afford a change, they have to demonstrate that that’s true, but then it is a factor that that can be taken into account as standards are implemented. But, of course, the test, as the member says, that health should be the primary driver here to make sure that the drinking water is safe is one that we want to see applied. We do want to see evidence that we have safe water, that people aren’t going to get preventable illnesses when they simply could be prevented through taking action that is affordable to those who are supplying the water, because in New Zealand we regard ourselves as a First World country. We regard ourselves as a country that can afford to keep our citizens safe and healthy through the supply of good water.

I’ve no doubt that in the future, some investment will be required in our infrastructure, and how that’s done is a matter of policy and challenge for the Government, because we have—as the member points out—inherited a situation where the water standards are not up to scratch, where the situation was allowed to occur under the previous Government’s watch. I think all of us realise, without making this a political thing, that there’s a challenge we’ve inherited and a problem we’ve inherited that we’re determined to address to make sure that we have a sensible process in place to address those water standards and ensure New Zealanders have water that is safe to drink. Let’s not be alarmist about it. The water that people are drinking today is the same as they were drinking yesterday. But it is a problem we can fix and we must fix.

ANGIE WARREN-CLARK (Labour): My goodness, that microphone turned on quickly. Thanks, Madam Chair. I just wanted to rise and take another call in relation to some of the conversations that we’ve had across the floor today. I think, for me, as a member of the Health Committee, we looked, absolutely, at the public health issue versus the affordability issue—which the Hon David Clark did mention. What we, essentially, had in our minds at that time is, actually, what a disaster this was—the failure of the drinking-water system, and, as a consequence, affordability. We gave the opportunity, within the amendments, to justify and explain whether they couldn’t afford, but public health was the key there. So there needed to be some very serious consideration as to why they couldn’t afford this financially. So that was the first thing.

I guess, the other aspect that I recalled—it’s been a while, so I did go back and have a read—the 28-day period that we amended this bill from was from a period of three years, and as my Minister has said, that was pretty much unworkable. It was pretty much in a time frame where, essentially, probably, faxes were still around—maybe not even faxes. But the old system was that something would be gazetted, and then, within three years, the wheels would grind and the infrastructure might possibly shift and there would be consultation. Now, what we very clearly saw in Havelock North was that we needed to act quickly. There needed to be a serious and immediate response, and the principal legislation was, very clearly, not cutting it. So we’ve had to come in and fix that up, which we’ve done.

The other matter that I wanted to talk about was, I guess, that it’s a shift in responsibility, although not particularly a shift in responsibility—that probably makes no sense.

Hon Michael Woodhouse: No, it doesn’t.

ANGIE WARREN-CLARK: Ha, ha! Section 69V—so this is in regards to a water safety plan; a person or organisation needs to create a water safety plan depending on who the entity is. Previously, that public safety plan, basically, required the person who created the safety plan to report as to whether they were achieving the standards. So they would write their safety plan and then they’d say, “And yes, we’ve passed, thank you.” So what we’ve done is we’ve moved it from the author and moved it across from the drinking-water supplier—the person who supplies the water—across to the drinking-water assessor. That, essentially, gives an expert person the ability to come in and look at the safety plan and ensure with, I guess, objective eyes, essentially, that this safety plan is appropriate, and that the standards have been met.

So while it’s a relatively minor tweak, it’s actually quite significant in terms of just that extra level of accountability, because what we really didn’t want to see happening is that, you know, a water supplier says, “Oh yeah, we’re pretty good. We’re fine. We’ll be OK.”, and then we have a Havelock North happen. So we were really clear about just making that change to sort of support another fresh set of eyes looking over. And I think what that does is it’s fair but it’s also a safety mechanism being built into the Act just to ensure that in reality, these assessors, who are trained professionals, are getting a good look at the standards. Thank you, Madam Chair.

BARBARA KURIGER (Senior Whip—National): I move, That the question be now put.

Hon SHANE JONES (Minister for Infrastructure): I want to follow up—I want to follow up on the contributions from my Labour colleague here and I’d invite observations from other select committee members.

It seems to me in this—and the Minister may like to take a call—amended section 69V, set out in clause 7A, “Duty to take all practicable steps to comply with drinking-water standards”, what’s possibly alarming is it contemplates that the suppliers are knowingly doing something either illegal or they are showing such a level of negligence that it approaches criminality. I can’t think of a single—because in order for me to agree to that, I would have to cast aspersions on the former mayor of the council who was meant to be doing their job, which is why we’re tidying this up in this House. Now, I don’t want to do that because you broadly outlined the envelope that I should operate within in terms of Standing Order 120.

If it’s not an allegation or the odour of criminality and wrongdoing, then why exactly, why exactly, and what is exactly the problem that this assessor—and I presume the assessor is someone with medical qualifications or, dare I say it, engineering qualifications, or it will be the end of the water supply system of New Zealand, if you’re relying completely on legal qualifications. We need people possessed of common sense who understand the practical application of what exactly the Minister has in mind with the creation of assessors. Is it a statutory position? Is it someone who is accredited to what I think is called the water authority, a bunch of grandees who aggregate together and advise Governments on how we can increase our ability to invest in infrastructure? So a little bit of clarity on that particular point.

Then upon that person, he or she having decided that the water supplier—for example, where my grandmother comes from, a little place called Te Kao. Now, Te Kao unwisely found itself in a situation where a chap from Maunganui was the provider of their water, and I think he didn’t get the easements in the correct fashion—in the correct fashion—and then that led to a collapse in their water supply.

But that aside, so what exactly, after the assessors come in—who’s going to pay the assessor? Is there a legal definition? I can’t see it in here; I’m presuming there is in some other labyrinthine piece of legislation. What level of reassuredness can be offered and what level of qualification and, in the event that they do decide in a place like Te Kao that the water is not quite up to muster, does that necessarily lead to legal action, which may require the supplier to be held accountable legally because their lapse is either of gross negligence or so careless that a simple assessor was able to trip them up? It’d be useful to get some clarification on such matters.

Hon Dr DAVID CLARK (Minister of Health): I thank the member Shane Jones because I think these are very important matters to have clarification on. The Health Act 1956 provides a defence where a water supplier has taken all practicable steps, as the member outlines, to prevent the commission of certain offences. Now, I’m advised that section 69H of the Act provides a definition of “all practicable steps”, and there are six components in the current definition with two—availability and affordability—given precedence over the other four, and the nature and severity of harm is one of the four lower-ranked criteria.

Now, clearly, where we have that ramping and where that is being used as a reason not to upgrade water supply and we have people being harmed—where we have evidence of harm such as we had at Havelock North—there is a situation that needs to be remedied. Now, this sits in balance with the point the member raised earlier around ensuring that common sense is applied here to make sure that we’re not imposing administrative burden or unnecessary tests on councils that can’t afford such tests if they apply—well, sorry, councils might not be the example, but small suppliers are examples of people supplying their own water to their own home, for example, where we know that that might just be a bridge too far. But where it is true that people are supplying a product—exactly as we do with food, where we have food safety standards to the public—we want assurance that the product that is being supplied is not going to make them ill.

So having a test which raises availability and affordability above the tests for the nature and severity of harm can lead to perverse outcomes, I would contest, and that is the reason I think that the select committee wrestled with this and made the recommendation that these things all be put on a level footing so that we actually have a good debate about these things. So we’re not saying that affordability and availability is not something that should be taken into account. Indeed it should, because there would be no point in turning off a water supply that supplied people healthy water and left them parched or unable to have a water supply basic to their health. But equally, when we have a supply that’s supplying a large number of people and is potentially going to cause widespread outbreak of illness, we don’t want that situation ever when there is something that can be done about that through the upgrading of the water to meet contemporary supply standards.

Now, at one level this seems really obvious, but it is incredibly important to get this right because we can see that the standards that we had in place and the situation we had in the lead-up to the Havelock North situation were ineffective. It was a tragedy. And, arguably, it was because the eye had been taken off the ball. When I became the Minister of Health, there were fewer than three people dedicated to water in the Ministry of Health. Now water is our most fundamental, I would argue—one of our most fundamental inputs into our lives. Without it we die. But the eye had been taken off the ball and that becomes obviously evident in the report. I mean, I have a copy here with me.

CHAIRPERSON (Hon Anne Tolley): We’re not debating the report.

Hon Dr DAVID CLARK: It’s a thick report. I was just going to make the point that I’m not going to.

CHAIRPERSON (Hon Anne Tolley): We’re actually debating the legislation. If we could get on to the legislation.

Hon Dr DAVID CLARK: But to come back to the point: that report made absolutely clear the consequences of not having this legislation right. It lays bare the risks that we run by not getting the balance right between availability and severity of harm, and that is the historic situation we’ve inherited. As a Government we are committed to tackling those intergenerational issues, the big problems that we’ve inherited. This is another significant issue we’ve inherited as a Government and we are determined to make sure we get the balance right.

Now, I do want acknowledge that the Health Committee has played a really constructive role in refining this legislation, and I want to thank the members—the chair, Louisa Wall, and the other members of the committee, many of whom have spoken in this debate—for their contributions to ensuring that the wording is right in this legislation so that the test balances those different factors. The defence of all practicable steps needs to be borne out with a weighing up of availability, affordability, and the nature and severity of harm. So I thank the committee members and I hope that clarifies for the member.

Hon AUPITO WILLIAM SIO (Minister for Pacific Peoples): Thank you, Madam Chair. I’d like to follow on in the line of questioning that has been led by the first citizen of the region, the father of the Provincial Growth Fund, and acknowledge the fact that we aren’t talking about health and safety; we are talking about the provision of safe water, which is, as the Minister has said, fundamental—a basic human right. I also note that the Health Committee have identified that this bill is a consequence of the Havelock North drinking-water contamination incident that occurred in August 2016. Now, I’m not a member of that select committee, so I do want to ask the Minister: what was the recommendation, if any, from that inquiry that has informed the amendments in this bill?

I then want to turn the Minister to section 69H, in clause 4A. It says “all practical steps, in relation to the achievement of any particular result by a person,” and then lists off (a), (b), (c), (d), (e), and (f). I am sort of wondering to myself about paragraph (f)—section 69H(1)(f): “their affordability, in light of the person’s financial position.” Affordability and safety appear to me to be contradictory terms, because if somebody who’s supplying the water believes it’s unaffordable, does that not put safety at risk? Is that not the purpose of making the amendments, because the contamination had something to do with people not being able to afford a proper safe drinking-water supply?

Why was it necessary that we have to stipulate (a), (b), (c), (d), (e), and (f), as opposed to the original bill? It seems to me that we’re really drilling down to the nitty-gritty, and that sends alarm bells in my mind because I have not seen the report that refers to the Havelock North contamination, but it appears that by us drilling to the details of those particular sections, something really bad must have occurred. I’m asking myself: who have we held responsible for the contamination?

I also refer the Minister to section 69P, in clause 5, “Minister must consult before issuing, adopting, or amending drinking-water standards”, where they’re replacing “in a daily newspaper in each of the cities of Auckland, Wellington, Christchurch,” with “in accordance with subsection [(b)]” and then makes reference to internet site. I don’t know the area of Havelock North, but I have visited Smedley Station, around the Napier part. In some parts of that Smedley Station—wonderful facility as it is—there is no internet access, and it appears to me that in the countryside there is a reliance on radio communication where they cannot get online. I recognise that the internet site is sort of the way of the world at the moment, but not all parts of New Zealand will have access to the internet, and, in that part of the world, certainly, I thought radio station is a way that most country folks are communicating.

But it does concern me that there is silence on the other side when this is such a serious matter, and the fact that the Minister has been compelled to look in the detail of this. [Interruption] The fact that they’re shouting out is evidence itself that this is such a serious matter that we do need to take it seriously. My view is we need to hold somebody responsible for the contamination, and there’s nothing in this bill that suggests that somebody is being held responsible. If, indeed, it is a member of the Opposition, as has been suggested earlier, then we need to make that known. That’s all I wanted to make.

Hon Dr DAVID CLARK (Minister of Health): Madam Chair Dyson, can I firstly welcome you to what I believe is probably your first official duty as Assistant Speaker in this House. We are thrilled with your appointment. As members—if I can briefly say—we know you to be plain-speaking, clear, and effective in understanding the rules of this House, and we think that this is an absolutely superb appointment. I won’t dwell further. I’m sure you will be plain and tell me where I go wrong over a long period of time that will bear this truth out that I have just spoken. But I do want to thank you for the service that you are going to provide to this House as a respected member for the House.

Hon Michael Woodhouse: She’s not doing leave any more, David. You don’t have to grease!

Hon Dr DAVID CLARK: She’s no longer doing leave, as the former chief whip for the National Party says—we don’t need to curry any favour! I should stop there.

I do want to address some of the points raised by the member Aupito William Sio, the honourable Minister. The report, of course, which led to these process changes made 51 recommendations. It was the stage two report, and it made 51 detailed recommendations to reduce the likelihood of a similar event. That report itself did not focus so much on the events of Havelock North—that was focused on in the first, the stage one, report, which found that sheep faeces had made their way into groundwater that was used untreated to supply drinking water to the people of Havelock North. Despite meeting the tests that were laid down in law, that water was still supplied to citizens, with tragic consequences.

The stage two report looks at the broader system and the changes that need to happen, and this bill arises out of that report. It is a consequence of the realisation that by the time of the report’s release, more than 600,000 New Zealanders had received non-disinfected water. By June 2018, that figure had been reduced to 90,000, so the system as a whole has started to make the changes itself. Mosgiel has changed its water supply. I’m aware that Lower Hutt has made changes. Christchurch has temporarily chlorinated water while they’re waiting to put safety plans in place. Around the country, councils have taken responsibility and stepped up. Auckland and Wellington already, of course, have disinfected water supplies and are not perhaps at risk in the same way that other parts of the country may be.

The changes proposed in this bill get to how we make sure the process is right for setting the standards. I have previously addressed questions around the balance between affordability, availability, and making sure that serious harm is not caused. Those are the kinds of things that we want to lay out in the bill effectively so that at law they can be debated in a way that’s transparent and clear and we get a result that ensures that water continues to be supplied, and so that it’s not punitively applied but that we get safe drinking-water and that the consultation periods in play are reasonable rather than the three-year periods, as the member Angie Warren-Clark pointed out, that have been changed in the bill down now to 28 days for the gazetting. So that’s another part that’s being changed.

Now, these things are being done to make sure that we as parliamentarians are taking seriously our responsibility in responding to the Havelock North findings, recognising that since the events and before the report was released, there are 50—and they’re recorded independent; I just looked it up—public reported events of water contamination all over New Zealand—all over New Zealand—that occurred even in that time between Havelock North and the report being published.

We need to act. We need to make sure that we are doing what needs to be done to make sure that our drinking water is safe, and these changes in the law will facilitate that. Again, I thank the members in the select committee, who have made this possible. Thank you.

Part 1 agreed to.

Part 2 Further amendments to principal Act

Hon Dr DAVID CLARK (Minister of Health): Part 2 is focused on further amendments across—it’s kind of; most of the action happens in Part 1, if we want to put it that way, in a simple way. It follows on from Part 1; we have Part 2. It makes further amendments through the Act. They are important amendments because we want clear law that doesn’t contain those kinds of anomalies that create problems for us, where people can dispute things or hold things up on technicalities.

We want our water to be safe. The principles that are debated and laid out in Part 1—it needs to be ensured that they flow through, if you’ll excuse the pun, and they flow quickly in the water space. Some of them are very wet, and I’m not going to make a splash with them, I can see that. So, for example, if you take, in clause 14, amending the interpretation, the definition of “critical points”—we’ve repealed one paragraph and we changed the definitions of “designated port or airport” and “medical officer of health”. In section 69G, we replaced the definition of a “drinking-water assessor” with “drinking-water assessor means an individual appointed under section 69ZK as a drinking-water assessor.”

These points of clarification make sure nobody can be in any doubt as to what is meant in the bill to make sure that we are clarifying which ports of call are the ones that are being assessed, who’s assessing them—the why, the wherefore, we dealt with in Part 1. So I think these things are important. I think, again, they will enjoy support across the committee. I’m looking across the Chamber to see if there’s any objection to these things; I’m not seeing much engagement, to be honest—there’s a few lights out on the other side of the Chamber today.

But I will stop there because I think it’s important that this is debated by members of the committee. The facts are that this is the clarification stuff that’s needed to make sure that nobody’s in any doubt.

ANGIE WARREN-CLARK (Labour): First of all, Madam Chair, I’d like to also congratulate you on this, your first sit in the hot seat—except when you’re bringing a bill through, I’m sure.

Look, I have a very, very brief matter to raise, and it is, really, just in regards to the drinking-water assessors. Essentially, we have changed the standard. Previously, a body or an entity or an organisation could be a water assessor, and I just stand to make the very simple point that we have now changed that to ensure that the person is now an individual, and that is relevant. We’ve taken away the standards which were particularly listed as very descriptive and created difficulty with people complying with those standards—so, for example, they had to have an international qualification, which wasn’t that relevant to the New Zealand context.

So I rise very briefly, but mainly, also, to congratulate you, Madam Chair, and to just talk about section 69ZX. Thank you.

Hon SHANE JONES (Minister of Forestry): Madam Chair, I want to endorse those remarks, but first say them in our Māori language, acknowledging the ascension which you have experienced.

Nā reira me mihi ahau ki a koe. Mōku i mōhio atu ki a koe hoki ana ngā whakaaro ki te wā i noho ai tātou tahi ki Tapu te Ranga, ki Beach Street i Island Bay i te tau 1987-88. Hari ana au kua eke koe ki tēnei tūranga. He mōhio nōu ki ngā ritenga o tēnei Whare i ngā wā o te māramatanga, i ngā wā o te kōrehurehutanga. Nā reira, tēnā koe.

[Therefore I must congratulate you. I have known you, going back to the time we lived together at Tapu te Ranga, at Beach Street in Island Bay in the year 1987-88. I’m pleased you have been appointed to this position. You understand the inner workings of the House during times of clarity and during times of uncertainty. So congratulations.]

Thank you for indulging me, Madam Chair. I recalled that in 1987-88, I was your neighbour. I lived at 22 Beach Street, you lived at 24 Beach Street, and I recall seeing a very large man in the form of David Lange, from time to time, lug himself up the stairs, and if I’m not mistaken, you had a guard dog, or there was certainly a dog that was around there, because I was continually worried that it might bite my son, who has a tendency to antagonise all things of the natural world—which is why he has been known, from time to time, to gain the baleful glare of the current sitting member of the seat of Northland. However, that’s another matter. [Interruption] I did say the current sitting member.

I want to take us to Part 2, “Further amendments to principal Act”, new section 69ZX. Prior to your arriving and taking the Chair, I raised a couple of questions about some definition for the term “assessor”. Now, if I go to new subsection (1), “The Director-General must maintain a register of individuals who have been appointed as drinking-water assessors.” Now, at the end of the day, it will fall to the High Court in the event someone tests the meaning of these words, and with your forbearance, Madam Chair, I just want to pose a couple of questions to the Minister in the seat.

When the director-general maintains a register, that’s not only a list of professionals; those professionals presumably have to comply with a backdrop of criteria in order for them to gain status on the register. I’m imagining that the term “drinking-water assessors”—and I couldn’t see it in the definition, but I understand it means an individual appointed under a certain section, but it would be useful to know whether there is a statutory definition of the term “drinking-water assessor”.

So in order for the appointment to take place, does this person, he or she, have to actually exhibit professional characteristics, professional qualifications, aptitude, state of mind, in order for them to undertake this incredibly important public health function? Or is it possible that such a statutory person is appointed after an additional set of regulations come into force? Members of the select committee may have made certain assumptions that by tightening up the definition of who can or can’t be an assessor, it’s eminently straightforward. But please let me channel Kaikohe and Kaitāia, for a moment. I think it’s of tremendous interest to those distant places as to who might be an assessor living north of Whangarei. And would that assessor have local knowledge and would that local knowledge be given much emphasis in determining who can go on the register, or will they all come from Opus engineering located somewhere in downtown Auckland? Now, I only raise that because it’d be useful to know what will be the criterion to effect those kinds of appointments.

Hon Dr DAVID CLARK (Minister of Health): Madam Chair, thank you, and I thank the member for his question, because it is a very apposite question. The law that we’re working on here doesn’t actually change the definition of a drinking-water assessor. The definition of a drinking-water assessor, or the person who may be one, in the Health Act, is a suitably qualified and appropriate person. That gives the director-heneral, obviously, some discretion to deem what is suitably qualified and appropriate. But there’s a generally accepted understanding that there is a qualifications framework for drinking-water assessors. They have, in essence, as I understand it, public health training. They are specifically trained in water, and also, I imagine—and this is getting to the realms of the extent of my knowledge on their qualifications, although I know it is over a period of time—in infrastructure, and so on, connected to their duties.

Now, as far as I’m aware, there’s not been a complaint at a system level about the quality of drinking-water assessors. If anything, the issue is that we are probably going to need more of them, because the system as a whole has been under-resourced in the area of ensuring that standards were met. Historically, the Director-General of Health hasn’t really invoked his or her powers in enforcing water standards in the way that I think parliamentarians might have expected, when we’ve gone back and looked at the problems that we have uncovered through the Havelock North inquiry. It seems that those powers simply haven’t been invoked to really put the pressure on those drinking-water suppliers to meet the standards of the day, even.

Beyond that, of course, I think it’s widely accepted around the world that standards have advanced, and that we will want to see standards raised, and, indeed, this bill does make it easier to change water standards by having a reasonable consultation period as an expectation rather than a specified one that seems to be far longer than is deemed reasonable in other areas of consultation across our laws in New Zealand.

So I think the fundamental point comes back to that it is a suitably qualified, appropriate person, and it is widely understood that that is somebody who has the appropriate training and qualifications and is a recognised drinking-water assessor. So I thank the member for his question. It’s not the case that we need to worry too much about that, in my view, at a system level. Though the member’s concerns about whether it’s somebody from Opus or somebody with regional knowledge, on the surface, do have some merit, I am yet to be convinced that those kinds of regional details are not taken into account in the training of drinking-water assessors. But if he has other information on that, I would love to hear it.

Part 2 agreed to.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 agreed to.

Bill to be reported without amendment presently.

Bills

New Zealand Public Health and Disability (Waikato DHB) Elections Bill

In Committee

Part 1 Preliminary provisions

Hon Tim Macindoe: Madam Chair.

Hon Dr David Clark: Madam Chair.

CHAIRPERSON (Ruth Dyson): The Hon David Clark.

Hon Dr DAVID CLARK (Minister of Health): I do look forward to the member’s contribution, and I apologise for interrupting him. This bill is an important bill for ensuring that the people of Waikato can continue to expect high-quality health services delivered in their region. They have a high-quality health service in the Waikato, but their district health board (DHB) has faced a number of challenges over recent years, well-documented in the media: some challenges with seemingly fraudulent behaviour, with some dysfunction at the chief executive level. Also, I’m aware of conflicts that have had to be managed. Another example would be that they’ve never really been able to achieve, under the previous Government’s watch, their emergency target—getting people through and into the hospital in a timely fashion.

Now, I don’t want to detract at all from the care that’s provided there, because, again, I want to be really clear upfront that the clinicians that serve there, the nurses, the doctors, the allied health workers provide a very fine service to the people of the Waikato. What has been the problem that this bill tries to solve is that there has been a level of performance at the board level that I have been dissatisfied with. I have not been happy with the leadership there. I have received worrying reports from many quarters about the inability of that board to plan effectively for the future and to make difficult decisions that involve changing the nature of care provided to bring things into a modern way of doing things. All of this is necessary at a DHB. Those boards—and I thank board members across New Zealand for their public service—have the responsibility of making sure that the moneys they receive from Government, taxpayer money, is spent best in the interests of their local populations. That’s no easy task, because it’s a public role. There are difficult decisions to make, but you also need a highly functional board that is minded to the future in order to make those decisions effectively. My concern there lay with a situation where there were some clinical risks being brought to my attention, and also a financial situation which was deteriorating.

I do want to thank members across the Chamber for their support for this change, which, effectively, postpones elections at the DHB until the next round of local body and DHB elections—skipping over the one that will happen later this year. That was deemed necessary because seven months—at the time of making this decision—ran until the elections would take place, and that’s simply not enough time for a commissioner and a team of commissioners to come in, to assess the situation, and to turn a DHB around. I want to thank Dr Karen Poutasi, who has stepped up as the commissioner—a former Director-General of Health in Wellington, who has taken over the role of commissioner—and acknowledge her team, who will be working very hard on the clinical aspects, as well as the financial aspects of good performance.

I also want to acknowledge the incoming chief executive, Kevin Snee, who will take up the appointment as he moves across from Hawke’s Bay DHB, and acknowledge the challenge that sits ahead of him. I’m told that he is enthusiastic for the task and ready to go.

So I’m mindful of the time—this is an opening statement. I want to acknowledge the task of this bill, which is to make sure that we have a period where those commissioners can lead the DHB, can make the challenging decisions that are needed to put it on a sustainable footing into the future to continue to provide those high-quality services that the doctors, nurses, and allied health workers provide in the Waikato region.

I want to also acknowledge the local MPs for their support for this change. They have been adamant that they put the interests of their local populations ahead of politics on this matter, and I want to acknowledge that. I think this is a thing where the House can do a good thing across the different parties; I want to acknowledge that. I also want to acknowledge the local mayor and others who’ve been all very welcoming of change that supports the needs of their local populations. Thank you, Madam Chair.

Hon TIM MACINDOE (National—Hamilton West): Madam Chair, could I begin by thanking Minister Clark for his kind comments. Could I also join in with others in congratulating you, Madam Chair, on your accession to the role of Assistant Speaker. It is a role that I’m sure you will perform very well. As another former senior Government whip in the House, I have no doubt that you’ve left that particular office with a degree of enthusiasm but reflecting on an experience that was worth having—but probably one you’re happy to move on from.

I’d like to pick up on one of the final comments that the Minister has just made and to say that I was in Hastings yesterday and had the opportunity to meet Dr Kevin Snee. I was very pleased to be able to do that. As the Minister has just said, he is, of course, the current chief executive of the Hawke’s Bay District Health Board (DHB). I can assure the Minister that, yes, Dr Snee did indeed say that he is very much looking forward to the challenge, and a considerable challenge it is that he is undertaking. Naturally, I and, in fact, I would say, everyone in my Waikato region wishes him very well in that challenge. I look forward to welcoming him to Hamilton next month when he arrives to take up his position. I also join the Minister in thanking Dr Karen Poutasi, who is widely respected and extremely experienced, for the role that she is undertaking currently as the commissioner, while we’re without a board.

But I would just like to put a few questions to the Minister, if I may. It’ll be a short call, but given that it was his decision to replace the board with a commissioner, I know that my constituents are looking for a pretty clear indication of how we will get back to normal with a well-functioning board. I appreciate that he’s just made the comment that he was not satisfied overall with the performance of the board, but I’ve got some specific questions I’d like to ask, the first of which is: what exactly was the process that he undertook in reaching that decision? I do want to acknowledge that he paid me the compliment of ringing me shortly before he made his decision, and I appreciated that, but I’d like to know who else he consulted with so that we can all be clear about the process. In particular, what were the specific factors that led him to conclude that it was necessary to take the significant step of dismissing our board—and I do emphasise “our board”—and installing a commissioner, because I am left wondering whether other DHBs around New Zealand should consider themselves to be on notice that they too may face that fate, particularly if budgetary and service delivery shortcomings were the main factors behind his decision?

Apart from the well-publicised and inexcusable actions of the previous chief executive—and the Minister’s just alluded to that—that led to that person’s abrupt resignation, what were the problems our Waikato DHB faced that made their performance markedly different from other DHBs that are also currently struggling with growing deficits and declining outcomes such as lower elective surgery rates, longer waiting times for cancer patients, falling vaccination rates, and so on that we’re seeing under this current Government?

The final question I’d like to put to him is that while the National Party has cautiously supported this bill to this point—and we continue to do so in our shared desire with the Government to restore sound governance and performance to the Waikato District Health Board—I do remind the Minister that we did so on condition that local democracy will be restored as soon as possible, and in the expectation that Waikato citizens will again have the right to elect their DHB representatives at the 2022 local body elections.

So my final question to the Minister in the chair is: will he reassure the House, and my constituents today, that that remains his firm intention, and, in the unlikely event that his Government remains in office this time in three years, what benchmarks will he be putting in place to measure that the improvements that he’s seeking have been achieved, and that that restoration of local democracy can be guaranteed? So I’d just like to finish by echoing the compliments that’ve been paid to Derek Wright, who has done a magnificent job as the interim chief executive, and all his team for holding the fort through very difficult circumstances, and, again, I wish Dr Karen Poutasi and Dr Kevin Snee all the very best in the important work that they are undertaking for our region.

JAMIE STRANGE (Labour): Madam Chair, thank you for the opportunity to take a call on the New Zealand Public Health and Disability (Waikato DHB) Elections Bill. Madam Chair, can I also congratulate you on your appointment—I know you’ll do an absolutely fantastic job.

The reasons for the commissioner being instated in the Waikato District Health Board (DHB) have been fairly well-canvassed, as the Minister in the chair said in the media. I’d just like to make a few comments on that—that the leadership shown by the Minister, in terms of appointing a commissioner, has certainly been very well received in the Waikato region. As a local MP, I’m constantly talking with people, and they highlight the fact that an aspect of stability has been brought to the DHB, and I’d like to ask the Minister: was that one of the key drivers—around the instability—and bringing a sense of stability to the situation?

I’d also like to highlight the fact that the staff at the hospital do an absolutely fantastic job, and this decision by the Minister, as I understand it, was certainly no reflection on the absolutely fantastic work they do. Actually, two of my tamariki were born at the Waikato Hospital, and so I’ve obviously got a very close connection with that institution.

Tim van de Molen: Likewise.

JAMIE STRANGE: Likewise from another member opposite, there. Actually, recently my son had a fishbone stuck in his throat and we had to go to the A & E department and the service we received was absolutely fantastic. We no longer let our son debone the fish; we have a bit more oversight over that now.

Just a couple of questions for the Minister in the chair. The first one was: the decision was made to cancel one election, meaning that there will be an election taking place in 2022—I’d just like the Minister to elaborate on the reason for limiting it to one election. I assume he has an aspect of confidence that the challenges that had been experienced will be able to be fixed within a short period of time, and I’d just like him to elaborate on where that confidence lies—the key reasons for that. The previous CEO, Derek Wright, did an absolutely fantastic job in challenging situations. I personally met with him a number of times. The staff certainly found him very warm to deal with, and really appreciate the leadership that he showed, and it’s important that we do acknowledge the work that he did there. This appointment, as we’ve heard, was a reflection of some of the challenges the board had.

I’ve got another question for the Minister, which is around the board’s view of the commission. I believe that he canvassed the board leading up to this decision, and received some responses from board members around what they felt needed to happen. My understanding is that the board were fairly close to unanimous in terms of expressing to the Minister that a commissioner was required, and I’d be interested in the Minister’s discussions there and the process that led to the appointment of a commissioner.

The aspect of funding of our health system is one that is continually under discussion, whichever Government is in power, and it’s something that affects all of our lives—our DHBs. So I’d like to ask the Minister to elaborate a little bit on the funding aspect around this decision, and how much of that played a role in his decision making. As I understand it, the Waikato’s financial performance continued to deteriorate over a period of time; 2017-18, they reported a deficit of $37.2 million, and they’re forecasting a $56.1 million deficit for the 2018-19 period, with increasing deficits forecast in future years. Now, these figures are quite sobering. They certainly highlight some of the challenges that the DHB has had in terms of their finances, and I’d be certainly very interested in the Minister’s view around how much that financial aspect played a role in this decision that he has made.

I’d also be interested if he could highlight the fact of—under the previous regime, we certainly heard from a number of people who worked in the health industry around, in a way, at times, a lack of support. I was just wondering how the Minister would compare the previous regime and what he is currently doing as Minister of Health and how he sees the way forward to fix some of these deficits—the current deficit and the projected deficit. We’ve had large population growth in the Waikato region, which has put a lot of strain on our health system, put a lot of strain on our education system, and it is a challenging environment, and I’d be interested in how the Minister plans to address some of these financial challenges, and how having a commissioner in place will support that.

I think that probably highlights the key questions that I’ve had there. So the first one was around the period of the election—2022—the views of the board around the commissioner, the engagement he had with the board there, and the aspect of funding, and how he plans to address some of the challenges there. So I look forward to the answers from the Minister. Thank you.

Hon Dr DAVID CLARK (Minister of Health): I suspect there are going to be more questions to answer as we go through, and I’ll look forward to the contributions of other members, but I think it’s timely to address a few of the issues that have been raised to date. The Hon Tim Macindoe asks, really, questions around the consultation that took place leading up to the decision—

Hon Tim Macindoe: And process.

Hon Dr DAVID CLARK: —how the process ran, and I think it’s helpful just to explain some of that.

The concerns had been raised with me over a long period of time. The prior board chair Sally Webb performed incredibly professionally, in my view, in raising her concerns whilst continuing to try to ensure that the board functioned as well as it might to address the challenges that they were facing. You know, I think—without sounding too political here—they’ve been in a very constrained funding environment, and I’ve been certainly critical of the previous Government’s funding of our health system. That coupled with fraud, and other difficulties in their senior team, really left the district health board (DHB) in a very difficult position, and I think we need to acknowledge that.

My dissatisfaction with the board is well known, but it would be churlish not to acknowledge that they inherited a very challenging situation, and that was the situation they were dealing with. I also had concerns expressed to me from senior clinicians at the hospital about the governance and their lack of confidence that the decisions could be made that needed to be made into the future. Of course, as Minister, I had appointed a Crown monitor into the DHB to give me a direct sight into how their financial planning was going and what their future projections were for financial performance.

Whilst the health system has been, in my view, underfunded quite significantly—an independent economic agency estimated a $2.4 billion funding shortfall under the previous Government, and that, certainly, has put a lot of stress and strain on the health workforce—this particular board seemed to be in a position where it was unable to wrestle with that stretched and strained environment in a way that they could project a confident future. Part of the solution certainly lies in ensuring that we are funding the health boards better. In this Budget, we’ve put $2.8 billion in as a Government—a record $2.8 billion—to ensure that health boards are better funded, but, of course, re-funding and developing workforces will take time. Nobody pretends that one or two Budgets will address all of the problems created by a decade of underfunding in our health system.

So those concerns have been raised with me. There was then a consultation process, as is set down under the Health Act, whereby I consulted with the board members themselves on my intention to dissolve the board. Those board members came back to me, nearly universally, offering their resignations, deeming that this was indeed the right step to take, to appoint commissioners to come in to wrestle with these challenges. Two board members chose not to offer their resignations, but they did choose to then send a very similar letter outlining similar concerns and also recognising some of the contributions that had been made during their time on the board, as did the board members who tendered their resignations. So there was a fairly widespread acceptance that this change needed to happen.

The member Jamie Strange raised the issue around whether this is limited to one election. Indeed, it is. By postponing this coming election, that is all we’re doing. We’re taking one election cycle out, and then, thereafter, the situation returns to normal, as it does with the other DHBs every election cycle. There is a law which dictates they must go through an election process. That law kicks in as usual again in 2022 and democracy is restored to the DHB appointment process—of course, albeit that under the current situation, the Minister himself or herself is able to appoint several members to the board to provide leadership on that board as well.

The engagement that was had with those board members revealed to me also—and this goes to a point raised by the member Jamie Strange—their concern that they had not been able to recruit a chief executive. I’m very pleased that the new commissioner has been able to quickly recruit a chief executive, because stability at the senior leadership level is incredibly important in situations where things become a little fragile to give the assurance to the staff that the situation is managed, to compile a plan, to ensure that we are planning into the future for that DHB, that the clinical care is delivered there now, that the high quality of clinical care is delivered into the future, and that necessary change is made over time as new models of care are deemed important to introduce, as new equipment comes in, that the changes in models of care are updated, that those leadership decisions are taken, and that the financial situation is managed.

DHBs: we have put a record investment in as a Government this time around, $2.8 billion into the DHBs in this Budget, and we are putting record amounts into capital—we’ve put $2.45 billion in in our first two Budgets. To give that some context, for capital works into our public health system, that $2.45 billion in our first two Budgets for capital is more than twice as much as the prior Government put in over nine years. It’s more than twice as much as they put in over nine years. We’re serious about fixing up our public health system and making sure we have high-quality buildings for our clinicians to operate in, for our patients to get the care they need in modern healthcare environments. So we’re getting on with that work.

That inability to attract the leadership needed, as that change happens, as new buildings inevitably will come, or changes or improvements on to the Waikato campus—I mean, the mental health facility there is one that’s been there for a long time and does in the future need to be upgraded. I visited it myself. I can see that like many of our mental health units around the country, we need to update them. We need to make sure that they are places where people are going to get well, and I was delighted to be able to announce in Tai Rāwhiti recently that we’re going to do something there.

Now, to come back, though, to the engagement with the board, their indication to me was that they needed that stability at the governance level to recruit the CE. I do also want to put on record—as the members the Hon Tim Macindoe and Jamie Strange have both done—my congratulations to Derek Wright for the work that he did as the interim chief executive, really coming into a very difficult situation and providing confidence to the clinical leaders through that situation, and really giving of himself to ensure that that leadership was sustained there. So I do want to put on record my thanks to him.

Following on from that was, of course, the consultation with the members themselves. They provided the feedback to me and then I finalised my decision, as is dictated under the terms of the Act. In appointing the commissioner, Karen Poutasi, I was delighted that a person of her calibre was willing to take that role on. As a former director-general, she has the mana in the sector and the experience to lead that important work, and she has subsequently herself appointed three deputy commissioners: Dr Andrew Connolly, a surgeon out of Auckland, out of Counties Manukau, very esteemed and well known across the sector for his contributions at a governance level, and a former chair of the Medical Council of New Zealand; Chad Paraone, a data expert, also with Māori and cultural expertise, who will bring his skills to some of the challenges in terms of how models of care are developed and how we measure success over time; and Professor Margaret Wilson, herself with a strong legal background, and, of course, a former parliamentarian from this House and a former Speaker of this House—again, somebody well respected in the Waikato region as a local, who can bring that local representation as well as expertise in health and legal areas, with some experience, too, on the board previously.

So I’m confident that we’re taking the right step here, but no one underestimates the challenge that lies ahead for this group of commissioners. The financial situation and the clinical situation and the challenges they’re facing are worth highlighting. The challenge in working with primary health organisations and primary care arrangements that have been unsatisfactory to many over a long period of time—there are relationships that need to be built. There are clinical models that will need to change over time, but I’m very confident that the actual people providing the care there are incredibly proficient, professional, and will continue to do a professional job, and they can now have the confidence that there’s a structure that sits there to support them to do the job they get up every day to do, to go along and care for the people that come through the emergency door or come in for operations, be they elective, planned care of different types, or be they emergency.

Our acute operations this year are up quite significantly across the public health system. We know more care is being provided in the community as well, and the DHB, of course, has the oversight of all of those interactions—into primary care as well—to ensure that our health system is providing the right care at the right time to the right people. So it’s important we don’t just think of the hospital but we also think of the wider healthcare system: those primary care networks, how they interact with the hospitals, how we make sure that the money is being spent on the taxpayers’ behalf for the best possible outcomes, for the best future for the people of Waikato, who need and deserve as high a quality of care as anyone else in this country.

JENNY MARCROFT (NZ First): Tēnā koe, and thank you very much, Madam Chair. I’d just like to begin my contribution this afternoon, following on from other members, to congratulate you on your new role, and very much looking forward to seeing you in the Chair very often indeed. So thank you for your contribution here in the House.

I’d like to speak on behalf of New Zealand First on this, the committee stage of the New Zealand Public Health and Disability (Waikato DHB) Elections Bill. It’s a very unusual thing to have an entire district health board (DHB) shown the door, which is what happened earlier this year, so just acknowledging that there was a long run of administrative problems and, of course, that disastrous tenure by the head, now disgraced. There has been much media coverage. Much of the mana of the Waikato District Health Board has been trampled, and so for all of those people who work inside the health sector in the Waikato region, really, I would like to begin by acknowledging the fabulous work that those on the ground do. I think it’s worthy to note their contribution to our health and wellbeing, under a cloud that has been cast over them.

I do have some questions for the Minister, and I’d like to start off with, firstly, the new commissioner that has been put in place, Dr Karen Poutasi. She has a fantastic pedigree, is definitely a top public servant, and has a significant background in health administration. She has said that she will be attempting to cut the deficit that the DHB has been running and also, at the same time, will be improving services. So my question to the Minister is: what level of confidence does he have that this appointment of Dr Poutasi will mean that the DHB will live within its means but, at the same time, will be able to improve services for the people of the Waikato?

Basically, because of all that bad publicity that the board had, they did have trouble in finding the new CEO, as has been mentioned already, and I’d like to acknowledge the DHB’s new chief executive, Kevin Snee, saying he was actually attracted to the chance to address the inequities in health while working with public organisations. So to the Minister: does he share the confidence that this is the right chief executive? If he could make further comment on that, I would like to hear that too.

You know, it would be wrong of us just to think that the Waikato DHB is a dysfunctional unit. One thing that we do regularly hear about is what the focus of our DHBs should be. Should it just be a fiscal focus, or is it actually about the people—is it the people that need to come for their healthcare, is it the people who need surgery, and is it the people who have an emergency situation that needs to come and be attended to? So are we just looking at this through a fiscal lens? What can the Minister tell us in terms of the outcomes for the people through this entire process?

My final question is around democracy. I’d just like to make note of my colleague the Hon Ron Mark, who spoke at the second reading about concerns that were raised. During the select committee process there was a concern, and we did have three submissions about whether this removed a democratic process, so I’d just like to hear the Minister’s comments on that.

So, really, those are just a couple of questions to the Minister, and I’m hoping too that when we do have this new board in place in 2022, the changes will have been made, the ship will be turning around, and the focus will be on providing services to the Waikato region that we can all be proud of. Thank you.

Hon Dr DAVID CLARK (Minister of Health): Just to respond to some points the member Jenny Marcroft has raised there. The first, really, was a question around the level of confidence in the ability of the commissioner, Karen Poutasi, to cut deficits and improve services. I am confident that that task can be achieved over time, but I don’t underestimate the scale of the task. I acknowledge the member’s comments around Dr Poutasi’s proud track record as a leader in the public sector and, indeed, as a former Director-General of Health. She is indeed supremely well-qualified for this task, but I know that in the early stages of her work, she’s uncovering quite the extent of the challenges, and I expect we’ll learn more about that as she goes through her task. I do note that there was recently an independent report released that had been commissioned under the previous leadership which does indeed paint a very challenging picture of both the financial and clinical challenges ahead. I think we will learn more through reading and examining that report of just the scale of this task.

So it won’t be an overnight turn-around. I don’t think anybody expects that. This is not about simply slashing budgets, and this is not a Government that wants to do that. We want to make sure that they’re supported. If they need to invest to make change to put them on a sustainable footing, then that is something that I, as Minister, will certainly be looking at. I accept that sometimes you do need to invest to make change and to make sure things are sustainable in the longer term, and, in fact, the concern has been around the failure of the board in the past to make the necessary difficult investment decisions to put the district health board (DHB) on a stable long-term footing.

In terms of the choice of chief executive, certainly, Dr Snee has achieved good results in the Hawke’s Bay. It’s, obviously, the job of the commissioner to appoint the chief executive and not the job of the Minister to comment too much on operational matters, but I know that they are very pleased to have him. As someone very familiar with the health system and someone who is really looking forward to the challenge that will come with the Waikato job, it is a big job. It is a big DHB, serving a big and important population. There are lots of challenges in terms of how that all gets sorted out.

I’ve touched on some of the relationship challenges across primary care, and so on. Of course, there’s also the challenges with interacting with the regional hospitals, like all the three T’s—the three small hospitals in the region—and how those resources are used most effectively to make sure that we are making the most of all the facilities that we have in our health system and the relationships between clinicians are good, and to make sure that we’re serving the public by making services available locally for them in the locations that are convenient for them but are also of the highest quality.

So I have confidence that that team of Dr Poutasi, Dr Andrew Connelly, Chad Paraone, and Professor Margaret Wilson will turn that DHB around, but I don’t pretend that that will happen overnight. These are significant challenges. The step of putting in a commissioner is one that’s not taken lightly by a Minister of Health. It is taken when there are serious challenges to be tackled that will likely take a number of years to address. But my expectation is that we will indeed return to democracy in 2022 and that the public will then, again, be able to take the ownership in that direct way that you get through democracy, through board appointments locally, and that we will have a high-functioning DHB meeting the needs of its community, as it does now. We just need to be sure that it’s got the plan to deliver that into the future. I thank the member.

Dr SHANE RETI (National—Whangarei): Thank you, Madam Chair. I want to take just a very brief call on this part of the debate. There was clearly agreement across the House for what this bill fundamentally does: the disestablishment of the Waikato District Health Board (DHB), the suspension of elections until 2020, and the appointment of a commissioner. I’m already on the public record saying that I support the appointment of the commissioner. Having known and worked with her through a number of roles, I think it’s a good choice. I think she’ll do a good job.

The Minister of Health has highlighted the challenges and the difficulty that the previous board had which brought us to this conclusion, and I just wanted to highlight, indeed, in the past 24 hours, there’s been further information. In fact, the Minister commented on the independent report that Derek Wright and the previous board commissioned in, I believe, April, which came into the public domain yesterday. It does indeed talk about some of the challenges the board has had and the $37 million deficit, and it actually goes on to say that a large part of that responsibility lies with the board. But I’d also point out the document that came out yesterday from the Association of Salaried Medical Specialists, which talks about the significant shortage of specialists at Waikato DHB and how that’s been a problem for them, too. Their headline article was “Waikato DHB survey indicative of national crisis; health minister guilty of dereliction of duty”, so, clearly, they’re putting some responsibility—which I do, as well—with the Minister of Health to make this work.

Certainly, in the community, we’ve heard from MP Tim Macindoe and other Hamilton MPs that they have every will and intention to make this work. That’s why, across the House, we’ll be supporting this bill. But, yes, it’s quite a hardy track to get Waikato DHB back on board, and we wish the Minister every success with that. Thank you.

ANGIE WARREN-CLARK (Labour): Thank you, Madam Chair. Let’s be clear: we’re fixing a mess that has been left by a previous Government. Nevertheless, let us continue on. This is a really simple bill. It does what it says on the cover—New Zealand Public Health and Disability (Waikato DHB) Elections Bill. It has two parts: “Preliminary provisions” and “Cancellation of election”. Essentially, it’s very simple: it’s fixing a mess that has been going on for far too long, and we’ve known that for a long time. Finally we’ve got a Minister who has been prepared to take action, and he has done it in a respectful manner, in a manner according to the appropriate standards. He has worked really carefully and absolutely respectfully with the outgoing board, many of whom resigned. I’d just like to say that, as a select committee, we were all in agreement that something needed to happen and, of course, we did not want to have an election that would have only given this new commissioner a mere number of months. It’s going to take a lot longer to fix the mess that’s been going on for such a long time.

So, look, it’s a very simple bill. It just rolls back the opportunity to have elections in 2022. We had three submissions. It was not highly controversial. We heard from two of those people, and it was really useful. Essentially, the question that I have for the Minister is in relation to the departmental disclosure statement. I’m asking this generally—because I understand Dr Karen Poutasi has resolved this issue—but one of the matters that was raised was whether, in fact, Māori representation was appropriately considered in terms of changing what was happening. I ask this on the basis that, as we understand, Māori and Pacific Islanders—but particularly under the Treaty obligations, Māori—have the worst health outcomes. They have terrible health outcomes, and we need to do something about that. We are working towards those changes, and there is an inquiry in another select committee in regards to that. However, the departmental disclosure statement, basically, looked at whether or not the district health board (DHB) was exempt and would cause a difficulty with Māori representation.

Now, my understanding is that Dr Karen Poutasi has resolved this matter very satisfactorily in not only being able to continue to work with the subcommittees but also in her selection of the membership. So I’d like the Minister, who, I’m very certain, has considered that at the time, to perhaps explore that a little bit further to ensure that, under Te Tiriti o Waitangi, the obligations to ensure that Māori are in partnership with the DHB are in place and how that is operated. But, as I say, the report: four pages; the bill: two clauses—very simple, very practical, but actually fixing a problem that we’ve inherited, that we’re getting on and doing. Essentially, I would like to say to the Minister that he has acted in an appropriate manner, in a respectful manner, and is actually serving the community of Waikato very well by putting in place this commission. Thank you.

CHAIRPERSON (Adrian Rurawhe): I call the Hon Paul Goldsmith.

Tim van de Molen: Michael Woodhouse!

CHAIRPERSON (Adrian Rurawhe): Oh, Michael Woodhouse. I knew I was going to get it wrong one day.

Hon MICHAEL WOODHOUSE (National): That’s all right, Mr Chair. We’re practically twins! I want to add to the questions that the member Angie Warren-Clark has just asked, particularly in the context of the fact that she believes that the Minister is fixing the mess that he inherited. Well, I would just like to point out to the committee, prior to the asking of my questions, that the last full year the National Government was in office, the Waikato District Health Board (DHB) ended that year in surplus, and it took this Minister less than two years to turn that stable financial position and high outputs, according to national health targets, into the complete mess we have now—

Hon Gerry Brownlee: Angie didn’t get the memo!

Hon MICHAEL WOODHOUSE: —clearly didn’t get the memo—where he’s now presided over a DHB that is heading for a financial deficit of somewhere in the region of $56 million. So my question to the Minister is: if this is his idea of fixing the previous mess, might he want to reconsider making the same mess the previous Government made, because it was a heck of a lot better than the one he’s presiding over?

The second question is this: if this is the threshold for implementing a commissioner framework and firing the board, when will he act on the other messes that he’s been presiding over since becoming a Minister—the fact that the Canterbury District Health Board, challenged though they have been, on his watch have doubled their deficits from around $50 million to $103 million and counting. Counties Manukau—actually what previously was an exemplar of good financial performance—is now heading towards $45 million in deficit. Even the smaller DHBs—Taranaki, $16 million; Bay of Plenty, $12 million; Tairāwhiti, $13 million—have very, very significant challenges, all on his watch. So my question to the Minister is this: if he is inheriting such a mess, why have things got so much worse on his watch, and when will he be appointing commissioners to those DHBs?

Hon Dr DAVID CLARK (Minister of Health): I do want to address a couple of those spurious inaccuracies raised by the previous member, the Hon Michael Woodhouse. It is somewhat laughable that he raises the issue of governance and performance at Waikato and suggests that the big problems have emerged in the 20 months that this Government has been here. I think that he would do well to recall that, during the previous Government’s tenure, Dr Nigel Murray was the chief executive there, who was subsequently interviewed and pursued by the Serious Fraud Office. His tenure was from, I am told, July 2014 until October 2017—very much the responsibility of the previous Government and very much, I think history will show, responsible for some inopportune and unwise investments in technology, for some flagrantly inappropriate spending, and for a culture at the district health board (DHB) at senior management level which was distinctly unhappy around that time and following his departure. And, of course, on top of that, the $2.4 billion that that previous Government stripped out of the health system has had a deleterious effect across the whole health system.

In that, I will agree with the member: that, indeed, across the system there are challenges, and that results from that decade of underfunding under the previous Government’s watch. It has meant that our health providers, our doctors, our nurses, and our allied health workers have been stretched and strained for far too long. I want to salute them. I want to thank them for their service under the previous Government’s watch, even though every day they had to turn up to an underfunded, stressed health system to provide care, often by going the extra mile themselves outside of their regular hours. So I do want to put on record my thanks to them.

The member asks around intervention at other DHBs. Certainly, this is a Government not afraid to intervene where there is poor performance. We have put in place Crown monitors, first and foremost, in Counties Manukau and also in the Waikato, and then that led on to the commissioner appointment in the Waikato that we are discussing today. We have also put in place recently a Crown monitor in Canterbury to seek some clarity around their worsening financial position. They certainly have provided excellent clinical care, I want to acknowledge, in response to the terror attacks and also in response to the prior earthquakes. But we do need to get clarity around their situation—how much of it results from those situations and how much is from other matters—so that we have a clear picture into the future.

DHBs under this Government have returned—some of them have returned balanced budgets. We can see that DHBs can return small surpluses, small deficits. I, certainly, as Minister, don’t accept that big deficits are a necessity for operating DHBs, especially when we are funding them this time around in record amounts. We are expecting improved performance from our DHBs, and we will continue to invest. We make no apologies for addressing that decade of underfunding under the previous Government, but nobody believes and nobody expects that we can address a decade of underfunding in one or two Budgets. It’s simply problematic to very quickly address the workforce issues that have been created.

Dr Reti raised the issue of the Association of Salaried Medical Specialists talking about the crisis of senior medical health staff at Waikato. Well, I can assure Dr Reti—and I know that the Hon Michael Woodhouse also knows that senior surgeons are not trained in 20 months, and can’t be trained in the 20 months that I’ve been health Minister; they take more than a decade to train. If there’s anybody who’s responsible for the lack of senior clinical staff in our hospitals, it is the previous Government. So they wear that criticism fair and square—an issue they raised and one that they need to look at themselves in the mirror and come to peace with, because we are certainly a Government committed to investing more.

We will invest more. We are addressing the crisis in mental health. We will continue to invest in our DHBs, because we believe in the public provision of health services on this side of the House. We won’t see our system continue to run down like it did under nine long years of National.

Part 1 agreed to.

Part 2 Cancellation of election

Hon Dr DAVID CLARK (Minister of Health): Part 2 of the bill is the actual active Part in cancelling the election in 2019 for the Waikato District Health Board (DHB). I do want to put on record my thanks for the support offered by the Opposition for this measure, and the responsible approach taken by the health spokesperson, Michael Woodhouse, his colleagues from the Waikato, local body politicians, and others who have recognised the need to take what is actually quite a serious measure.

We are here, effectively, postponing the usual democratic election cycle, recognising that the challenges faced by the DHB are of significance to the extent that they need a commissioner put in place to make sure that we can continue to provide the services that are provided at Waikato for the local population. The population needs to be confident that there are high-quality health services available for their population. That has been provided in the past and we need to be sure that it will be provided through clear, strong governance into the future. So I thank members across the House for their support.

I also thank the Green Party, New Zealand First, and, of course, my Labour colleagues for their support in taking this measure. I know that all of these parties have a deep respect for democracy and are all concerned to see that normal elections will resume in 2022. I share that deep passion for democracy; I wouldn’t be standing here otherwise. I want to see the regular elections returned, but I also want to see a clear plan to ensure that clinical services and financial stability are ensured for the public of the Waikato, because they deserve high-quality health services as much as anyone else anywhere in New Zealand. We need to give them that confidence. I thank the commissioner team who have stepped in already, and will continue their work with the cancellation of this election.

So this Part of the bill is obviously fairly clear, fairly straightforward, in my view. We have clause 7 which cancels the 2019 election and clause 8 which repeals the Act when the next elections come into effect. So that will be sufficient contribution from me at this stage. Again, thanks to all the parties in this House for their support.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. I do have one question and, in fact, I seek a reassurance from the Minister that this is the case in Part 2 of the New Zealand Public Health and Disability (Waikato DHB) Elections Bill. Now, this bill is modelled on the equivalent bill that was actually introduced in late 2015 to suspend the elections of board members for the Southern District Health Board (DHB). Both the Minister and I are very empathetic and familiar with that process and, also, the challenges that suspending democracy brings. I note, in passing, very interestingly, that the two minor parties supporting the Labour Party in this Government, that both stridently opposed the bill to suspend democracy when the Southern DHB was involved, are now, actually, quite supportive of it. So I do note what appears to be a philosophical inconsistency between the minor parties in Government then, when they were in Opposition, and now.

That is not the essence of the question—the question relates to the clause relating to repeal. In the New Zealand Public Health and Disability (Waikato DHB) Elections Bill, it’s clause 8 in Part 2. In the New Zealand Public Health and Disability (Southern DHB) Elections Bill, it’s exactly the same wording but it was in Part 1, clause 3. The wording is this: “This Act is repealed on the day on which elected members of the Waikato DHB come into office after the triennial general election of 2022, in accordance with clause 14 of Schedule 2 of the 2000 Act”. Now, that presumes that the election actually takes place. If you look at the clause 7 of Part 2, effectively, we are suspending the general election for 2019 but we don’t have a specific clause which requires the reinstatement of that in any other clause. Effectively, what we’re doing here is assuming that that election will take place. Now, we’re right in the middle of this process with the Southern District Health Board because, indeed, there is going to be an election in September, October—whenever it is. So the election will take place, and, therefore, what was in clause 3 of the New Zealand Public Health and Disability (Southern DHB) Elections Bill will become effective.

My question is this: does the Minister have the power to suspend, again, the 2022 election without further recourse back to this House? Because it’s not clear to me that it’s an automatic thing that has to happen, the 2022 election; it may well be. If that’s the case, I’d like the Minister to check with his officials and give this House a reassurance that if it’s intended by the Government of the day not to have an election for Waikato board members in 2022, the Minister has to come back and bring primary legislation to this House, because we are concerned, obviously, about the suspension of democracy. It might be a belts and braces question, but I would like the Minister to just put on record his confidence that he cannot further suspend an election without coming back to Parliament and getting a mandate from this Chamber.

Hon Dr DAVID CLARK (Minister of Health): I’m happy to address the member. I don’t need to consult the officials; I’m happy to address his question directly. Firstly, can I thank him for his confidence that I will be the Minister going into the 2022 Waikato DHB (District Health Board) election. That is flattering and kind, and I thank the member for that vote of confidence.

Into the substance of his question—can I note that, in general, the elections for DHBs are laid down in the wider Act. So those provisions are already clear at law—the elections happen as they usually would, except in any specific bill that is put through such as this one which specifically, in Part 2, specifies that the 2019 election is cancelled. So it’s one specific provision cancelling one specific election. Other than that, normal service resumes. That’s the mechanism that we’re using here. The repeal clause, as I see it, is merely a tidy-up to say that this bill falls out of law; it’s no longer needed once we pass that time in history, because the election has not happened. We don’t need it clogging up the law books anymore.

Part 2 agreed to.

Schedule 1 agreed to.

Clause 1 agreed to.

Clause 2 agreed to.

Bill to be reported without amendment presently.

Bills

Residential Tenancies Amendment Bill (No 2)

In Committee

Part 1 Amendments relating to tenant liability and premises unlawful for residential use

Hon KRIS FAAFOI (Associate Minister of Housing (Public Housing)): It’s a pleasure to speak in this Part 1 debate on the Residential Tenancies Amendment Bill (No 2). This is a technical bill and it deals with quite a lot of the minutiae that is between both a tenant and a landlord, especially, in this case, in Part 1 when we’re talking about liability for damage that is done to a rental property. The bill, and Part 1 specifically, aims to clarify that law in respect of tenant liability for damage and, secondly, in Part 1 it also looks to make sure that the Residential Tenancies Act applies to all premises intended for residential use, even if they are for unlawful residential purposes. Part 2, and we’ll get on to that, speaks to contaminants and methamphetamine, but I’m sure we’ll get to that at some stage.

Just speaking again to the tenant liability portion of Part 1, the bill clarifies liability for careless damage to rental properties. I understand that this came about because of a Court of Appeal decision in 2016, which I believe has become known as Osaki, where the Court of Appeal ruled that tenants are immune from a claim by the landlord for damage caused carelessly or negligently by the tenant or a tenant’s guest, under sections 268 and 269 of the Property Law Act, and, as a result of that ruling by the Court of Appeal, landlords are now bearing most of the costs of tenants’ careless damage, including insurance excess payments.

This bill and the liability settings in this bill strike a balance between keeping landlords’ costs neutral as much as possible, under this bill, incentivising tenants to take care of rental properties, and protecting tenants from excessive risks and costs, and the provisions in Part 1 should go to encourage cost-effective insurance arrangements. Under the bill, a tenant is liable for destruction or damage caused by a careless act or an omission of the tenant, or someone that the tenant is responsible for, up to the value of the landlord’s insurance excess, if they have an insurance policy, but not more than four weeks’ rent. Public housing tenants are liable for up to four weeks’ market rent, not the income-related rent subsidy (IRRS) that they pay if they do. Obviously, this is because the IRRS fluctuates depending on the employment of the tenant and the income status of a tenant, which would make it difficult to quantify what the liability around four weeks would be. Tenants will also remain liable and no cap will apply for intentional damage or damage caused by an act or omission that constitutes an imprisonable offence, and I think that goes without saying.

There are also obligations on landlords as a result of Part 1, in terms of the liability around tenancy agreements. Landlords are required to inform tenants in new tenancy agreements if their premises are uninsured and, if the premises are insured, the amount of each relevant excess for each policy that may pertain to the property and a tenant. And they must inform the tenant that a copy of the policy is available to that tenant upon request, unless the landlord has already provided the insurance policy to the tenant. Also, a landlord must provide a tenant who requests it with a copy of the relevant insurance policy. Or, if policies of more than one are relevant to the tenant around damage and liability, obviously they will have to supply that.

In the select committee process, submitters pointed out that tenants do have a right to know the level of their liability for careless damage, and the bill continues the current situation in barring insurance companies from exercising rights of subrogation in relation to a tenant’s liability for careless damage if covered by insurance.

That covers the tenant liability parts of Part 1 of this bill. There are also, as I mentioned earlier in my contribution, some parts around unlawful residential premises, which I think I’ll get to at some stage, but I’m sure there’ll be some contributions in terms of tenant liability that the committee would want to hear.

Hon JUDITH COLLINS (National—Papakura): Thank you for the opportunity to speak in support of this bill. This was a bill that was first introduced under the National Government in May 2017 and had its first reading in Parliament in July of the same year. The select committee submissions closed in August 2017, and it’s taken this long for the matter to come back to Parliament after the second reading in November last year. So it’s probably an indication of the lack of legislation that the Government has been able to cobble together that it’s having to come back with a National Party bill with a few amendment.

Look, apart from that, you know, the Minister in the chair, Kris Faafoi, has correctly read out the notes on it, and the bill itself, I think, is one that does deal with a very difficult situation. I’m very pleased that the Minister referred to the Osaki case, because if ever there is a law of unintended consequences that is it. When we have a court that has decided according to the law—and obviously that was correct, because it would have to be—that a tenant was not at all liable for careless damage or damage caused in a property, I would have to say, “On what planet?” And the planet would be here in New Zealand, on Planet Earth, where, by the way, there are consequences. The consequence is that insurance company premiums go up, and the consequence is that it’s harder to get insurance for tenants of properties. So the consequences are that costs then go up for the tenant, and when we’re looking for some of the reasons why the average rental cost in this country has gone up by $50 a week in the last 18 months, we can look at the fact that Governments, courts, Parliament, and others are always looking to shift the cost on to the landlord. The trouble is that the landlord then has to shift that cost again and it ends up back with the tenant. But, in this case, we’ve got situations where we have very good tenants having to pay more, often because of the behaviour of a few very poor tenants—poor not in economic terms but in terms of their behaviour.

I think there are some very good things in this bill, and that’s why the National Party is continuing to support it, particularly around the issues around sorting out some compromise solution to the Osaki case, but, as with all compromises, there are some people who would think that it maybe didn’t go far enough.

There are some issues that I think are important for tenants to know, about their liabilities under the law. They need to know about what is an obligation—the obligation here that tenants who destroy properties or cause excessive damage could end up paying a maximum four weeks’ rent for each instance of damage caused by carelessness. That does really require a landlord to keep a close eye, or a property manager to keep a close eye, on a property, because four weeks’ rent can be sucked up pretty quickly when it comes to repairing damage. For those, again, who say, “Oh, but they’ll be insured.”, well I’ve just dealt with that issue. All of this costs money. In addition, it is important that tenants do understand what their liability is, because it is only right that for people, if they wish to have wild parties—which I think from memory was the case in the Osaki case—and have properties destroyed, there is actually a consequence, and the consequence should not just be on the owner of the property.

It is tough being a landlord, and it is tough being a landlord because of the fact that there are a lot of costs on landlords and also a lot of liabilities that people don’t always understand. I’m also very aware it’s tough being a tenant, particularly if you can’t keep a rental property because the landlord has decided to sell it because it’s too much of a pain to be a landlord, and it’s also tough if you can’t pay the extra rent that you now need to pay because of many of the changes that have happened in the last 18 months, particularly attacks on landlords. But, in essence, we support the bill and we’re happy to see it go forward.

JAMIE STRANGE (Labour): Mr Chair, thank you for the opportunity to take a call on the Residential Tenancies Amendment Bill (No. 2). I do wonder how much of this bill is associated with meth—and I know that, in Part 2, it is certainly alluded to—and also the aspects around insurance, because the rising use of methamphetamine is a huge challenge in our society. I look forward to—once we, I assume, get to Part 2—a discussion on that. We’ve also heard from the Hon Judith Collins, examples of parties, examples of challenges where tenants haven’t looked after property, and the importance of providing certainty as an aspect of protection around that.

I have been both a landlord and a tenant, so I feel like I’m able to speak from both sides of the spectrum here. As a landlord—my wife and I at one point had a couple of rentals there—it can be challenging at times; often you can, sort of, lay awake at night because you are thinking about that investment. It is important that there are consequences if the tenants don’t look after that building. At the same time, the majority of tenants are law abiding, the majority of tenants look after the buildings; the majority of landlords are law abiding, the majority of landlords treat their tenants in a proper fashion. However, obviously, we need laws where there are disparities. This is a common-sense piece of legislation that deals with that disparity that sometimes happens.

I’ve got a question for the Associate Minister Kris Faafoi, if he wouldn’t mind addressing it. I am interested in how this bill strikes the balance between keeping landlords cost-neutral and incentivising tenants to take care of their properties. If a bill leans one way too far, then we can have unintended consequences. So I am interested in how this bill does strike that balance, because it is quite a delicate balance—

Andrew Bayly: Put some passion into it.

JAMIE STRANGE: —that needs to be struck. Ha, ha! I could increase the volume like the member opposite does.

If we have a look at the insurance aspect here—if there is no insurance, what happens in that case? Who pays if damage is caused to a property if the property isn’t insured? The bill clearly outlines the fact that the landlord must talk to the tenant about their insurance policy so that the tenant is quite clear on that, outlining those terms—and that’s common sense; it’s important for the tenant to understand that, to appreciate that. But what happens if there is no insurance and damage is caused to a property? What happens in that case?

This bill provides an aspect of certainty for landlords, and it also provides an aspect of certainty for tenants, because everybody knows the ballpark that they’re playing in, everyone knows that there’s certainty, there’s clarity. Certainty is absolutely important in our society—to have a strong rule of law, we need certainty.

Hon Member: Are you sure?

JAMIE STRANGE: I was recently over in the UK—and I can give you an example of uncertainty, dare I mention Brexit to the member opposite, who will understand that, I know. Where uncertainty exists, there is a lack of confidence—and so hence the importance of certainty; and this bill provides that certainty. But, if the Minister could just elaborate on how the bill strikes the right balance—the right balance between landlords having the aspect of cost-neutral and incentivising tenants to take care of the property.

Another question I have for the Minister is: how does this bill link in to the wider reforms that the Government’s undertaking around housing? I’m thinking of banning letting fees and progressing reform of the Residential Tenancies Act. So how does this bill link in with that aspect there and that wider reform? The Healthy Homes standards preventing thousands of children from going to hospital—how does this bill link in with the wider reform? Because bills don’t stand in isolation; they’re always linked to a wider suite of policies.

So just a couple of questions there for the Minister, and I look forward to his response. Thank you.

Hon PEENI HENARE (Minister of Civil Defence): Tēnā koe, Mr Chair, and thank you for this opportunity. I stand with conviction on this particular bill, and I want to, in my time on the Governance and Administration Committee, consider some of the submissions that were made to this particular bill. Given we’re on Part 1 right now, if I can bring the Associate Minister Kris Faafoi’s attention to clause 6(2B) of Supplementary Order Paper 254 here, and it talks about “The landlord of premises that are insured may at any time, and must within a reasonable time after receiving a request from the tenant for a copy of the insurance policy, provide to the tenant under a tenancy agreement a copy of each insurance policy that is relevant to the tenant’s liability for destruction of, or damage to, the premises.” It doesn’t take a genius, when they read that, to ask the obvious question that is: “What does a reasonable time look like?” I ask that with respect to, as it goes on further into the bill, it talks about specific areas of damage. I wonder if the Minister, in making this bill more robust, has considered what a reasonable time looks like.

I myself have dealt with insurance companies, and the service hasn’t always been service of a timely fashion. I have also had other cases that have come into my office, as a local MP, talking about insurance issues which have dragged on for years. Now, while that sounds relatively simple that a landlord or an insurance company can simply provide a policy, I wonder whether, with respect to the rest of the bill, that makes it quite clear around some of the time frames of what liability is for—around four weeks—amongst other things, whether or not there is a stronger consideration here on what “reasonable” means in subclause 2B.

Look, that might be something that can be fleshed out as more cases are brought to the attention of the body that will look after this stuff. But I’m just curious, for the purposes of those who are engaged in tenancy agreements with landlords and other things, what a “reasonable time” looks like. Because one of the things we have heard talked about—and this, I think, strikes to why this bill is here—is the power imbalance between landlord and tenant. That was always a big driver and motivation for this particular bill, and the power imbalance often is things like withholding information or, simply, visiting property without the proper kind of notification that’s required by law, which is why I think it would be, dare I say, reasonable to expect that in this particular piece of legislation we are able to be far more definitive with the term “reasonable” here. That’s just the first question I have for the Minister in the chair at the moment.

The other one is around the general principle of responsibility for damage. It says here under clause 49A(1) “Except as provided in section 49B, a tenant has no liability or obligation, and must not be required to—(a) meet the cost of making good any destruction of, or damage to, the premises; or (b) indemnify the landlord against the cost of making good the destruction or damage; or (c) pay damages related to the destruction or damage; or (d) carry out any works to make good the destruction or damage.” There are a number of questions I have on that one—and the reason being is that, while I get the intention of it, there seems to be a case to be made on the part of tenants with regard to damage, damage more broadly speaking and damage more defined. I say that with, in recent times, a case that made it into the paper, where a tenant was responsible for improvements to the house, sought compensation, and it wasn’t acknowledged. They put a shed on—is the example that was in the media recently. They put a shed on, they looked for compensation, and weren’t eligible for any of it.

So now, if we apply that same thinking to the way that damage is measured and qualified in this particular legislation, I have just got some concerns that I think we might be able to flesh out, because I know there are parts later on in the bill that require some more of the specifics. But I just wanted to park that with the Minister, to see if he and their team can give it some thought. But I do want to bring it back to that first case around exactly what is a reasonable time frame.

PAUL EAGLE (Labour—Rongotai): Thank you. Look, it’s certainly an honour to speak to this and I want to acknowledge Minister Faafoi and his elevation to Cabinet, also previous Minister Twyford for shuffling this through and getting this to the Governance and Administration Committee and making sure that we now enact and can deliver on this policy. We’ve heard what the main aims are, and, if we look at Part 1, I just want to endorse the comments made by my previous two colleagues around that tenant liability. It is important to clarify that law with respect to what the liability for tenants is, and I do often get this concern raised in the electorate office. Just spending a bit of time there in the last three weeks, there’s often confusion over “Look, this is the situation. Who pays and what’s our portion of the damage?” or “Who pays, or whose role is it to pay for that, and whose role is it to pay for this?” So I’m personally really happy that we’ve got some clarity there. I’ll be able to communicate that a lot more easily to constituents who raise it, and I’m glad we’ve got that clarity in Part 1.

The Minister talked about Osaki and what there is and also clarified what the situation is for public housing tenants, and when I think about the hundreds of people in our public homes or public housing in my electorate too, this will be a welcome clarification for them. A lot are asking about that income-related rent subsidy and how that then relates to this bill, and it’s interesting when you talk them through it. I’ve used some of the wording from here because I do sit on this select committee and it’s been good to get their feedback and just get some simple comments around, “Look, that’s really clear.” and they understand now what that would mean. So I’m really “stoked”—I guess is the word—that this will clear it up for them.

Also in terms of getting that balance right, for giving landlords some clarity over what they need to then do to inform their tenants and new tenancy agreements, that’s a lot clearer too particularly when those premises are uninsured. There’s some clarity now around excess and making sure that the tenant is kept informed by ensuring that there’s a copy of the policy available to them on request. And I know, from being located next door to a property management company, they’re already encouraging their landlords and tenants to have copies available to them so there’s no secrecy, there’s a free flow of information to allow that clarity to take place.

I know during the select committee process that submitters did point out that tenants have a right to know, and I’m still surprised that there is—I use the term “secrecy” but, I guess, maybe a lack of willingness to share some of the information to ensure that tenants know what their rights are. And I think that’s, I guess, the underpinning of my speech here.

I haven’t got any questions for the Minister, because I think this is clear in terms of Part 1, and I certainly look forward to talking further on this bill.

Hon KRIS FAAFOI (Associate Minister of Housing (Public Housing)): Thank you, Mr Chair. I thought I might take this opportunity to respond to some of the questions from my colleagues and thank my friend and the MP for Rongotai for answering some of them for me.

In terms of the question put to me by the Hon Peeni Henare in terms of what a reasonable time for the production of an insurance policy is, so that the tenants have the ability to know exactly what their level of coverage is, I guess that will come over time through decisions of the Tenancy Tribunal itself. These are new amendments to the Residential Tenancies Act (RTA) and I guess the obligation of the landlords to supply insurance policies that are pertinent to the tenancy of the tenant is new, and I’m sure that we’ll get an instance where there may have been some damage done to a property where a tenant hasn’t been supplied with the appropriate documentation in terms of the insurance policy and will have some beef with the landlord if those policies haven’t been supplied. So I think, over time, the casework or the caseload or the case decisions of the Tenancy Tribunal will come to a point where they will say what is reasonable, and I don’t think I want to pre-empt that by making any judgment on that here in the Chamber.

Jamie Strange asked in terms of balance—in terms of striking the balance on this within Part 1—between both the tenant and the landlord, having been a landlord himself. I think my colleague Paul Eagle’s already mentioned the obligations have been clearly made in terms of what the landlord has to do in terms of supplying details of insurance policies. But, really, I think at the heart of the changes to Part 1 is the rebalancing of the decision of 2016—Osaki—where that Court of Appeal decision, I understand, has put a lot of the onus on landlords to carry the costs of any tenant liability or damage done by a tenant, and now, under Part 1 as it stands, there are some pretty clear obligations from both the tenant and the landlord, and specifically to the tenant will be the amount of the landlord’s excess, which is why, obviously, we should be making moves to ensure that the tenants know exactly what that excess is, or four weeks of the rent of the tenant. I think it’s probably whichever is the largest. But, hopefully, that answers some of the questions in terms of the balance that was trying to be struck here with tenant liability.

I also mentioned earlier that there was another aspect of Part 1 around unlawful residential premises, which Part 1 does address. The problem here was that there was uncertainty about what happens to tenants who have rented premises that are unlawful. I’m going to have trouble saying that word for the rest of this debate I think, but let’s see how I go. I think the most obvious example of that is anyone who has been struggling to find a place to live and has been living in the likes of a converted garage and that wasn’t necessarily the purpose of the building at the outset but it might have been the only ability for a tenant to find somewhere to live. My understanding at the moment is that the Tenancy Tribunal doesn’t have any ability to rule in their situation, and I think another situation that was pertinent to this was after the Kaikōura earthquakes, when it was discovered that, I think, a family was living in a commercial space or an office space just down the road here on Molesworth Street and the ability for them to have any rights under the RTA also wasn’t available to them.

So what this does here I think is, after a couple of High Court decisions known as Anderson and Parbhu, clearly clarify a conflict between two court cases or court rulings there around unlawful residential premises. So I guess, in a big way, seeing as there are only 15 or so seconds to go, Part 1 does go towards clarifying a lot of uncertainties both in the space of tenant liability but also around unlawful residential premises, which—here we go again—I hope this clarifies.

Hon PEENI HENARE (Minister of Civil Defence): Thank you, Mr Chair. Can I thank the Minister Kris Faafoi for his timely response. I do agree that there is space in the future—as is the case that he’s building—for a far better determination to be made, and I respect that in Part 1 we are trying to achieve something rather considerable here.

I’ve got just a couple of points that I want to make quickly, to see if we can get a bit of clarification, at least for my purposes. The Minister in the chair talked briefly about that ability for tenants to terminate residency by giving no less than two days’ notice to the landlord. I recall hearing the submissions on this and why this kind of thing is done—because of the kinds of slums that have been seen in places like South Auckland and, dare I say, in other places around the country. This one is perhaps a little bit more operational and can hope to flesh out: well, how do we look to support both the tenant as well as the property owner?

The reason I say that is because, in the housing shortage, who in their right mind with a family would look to leave a residence? We might accept by law that this residence is unlawful and that these aren’t healthy conditions for a family to live in, but I’m curious as to whether or not support or other mechanisms are considered by the Minister to put in place to make sure that perhaps we can remedy the unlawful aspects of the residency by supporting the tenant in one way, shape, or form—giving some guidance perhaps, not just around the legislation but around how they might be able to bring a place that has minor legal issues to make it a lawful residence for families or for a tenant. So that’s one side.

On the other side is for the tenants about whether or not there is support there, because two days’ notice to shift from one place to another in somewhere like Auckland and other places around the country where it’s difficult because of the shortage in the housing market—where are we going to house these people? What are we going to do with these people and their families when they recognise that this shed, or whatever it might be—this unlawful premises—might not be the right place for them and their family at this point in time? So I’ll park that one there.

The other one—and I’m seeking a bit of guidance from the Minister and perhaps even others in the House, in particular because of the Minister’s work in Christchurch. In section 49C, in clause 7, it talks about the “Landlord, not insurer, to benefit from tenant liability for careless damage”. I get that. I wonder if, in the cases of Christchurch, where there have been issues with insurance and things like that—not just from the earthquake event itself but off the back of it—there are any exceptional circumstances here that might actually give, say, Christchurch, for example, I don’t know, a different look on what insurance might look like for them. I’m not too sure, which is why I leave that one with officials and the Minister.

While I get much of this bill in respect to my electorate of Tāmaki Makaurau, I know there are issues in places like Christchurch around insurance, the relationship around tribunals, and property in general after the tragic event of the earthquake all those years ago. So, look, I’ll just park that one there, and, if the Minister either can at least give some sort of thought or direction that might help my understanding of what that looks like, then I’d find that hugely beneficial.

The other one was just around the support and what that might look like for both tenant as well as landlord in the ability to terminate residence or tenancy in an unlawful property.

Hon KRIS FAAFOI (Associate Minister of Housing (Public Housing)): My colleague Peeni Henare raises a very timely issue in terms of insurance in general. I just wanted to ensure that the House is aware of substantial work that the Government has in the insurance space—whether it be personal insurance, contents insurance, or insurance experiences in the likes of Christchurch, and I’ll get to that.

The Government is currently undertaking a rather large review of insurance contract law in order to give consumers more certainty around what they are covered for and, I guess, more certainty in terms of what they might get in terms of claims—I think that’s one piece of work—but also, after some work by the Reserve Bank and the Financial Markets Authority, looking at both the conduct of the financial sector and the insurance sector.

A separate piece of work is being undertaken—by, I think, Minister Woods, but that may have transferred now to Minister Robertson as the Minister responsible for the Earthquake Commission—around the insurance experience of Christchurch. Having visited Christchurch, I think earlier this year, and initially having gone down to listen to general insurance experiences, it’s clear that the experience of Christchurch residents post the 2011 quakes, in a lot of instances—and I’m not sure if it’s the majority, so I want to caveat that—has been, in the parlance of Treasury, suboptimal. So I think we will learn a lot from that experience and that review about how insurance, especially in those kinds of instances, can be made better for consumers.

I also wanted to make sure I responded to Jamie Strange, who asked how these reforms within the Residential Tenancies Act amendments fit into the wider scope of changes that the Government is making around tenancies. I think one of the harsh realities of the housing crisis is that a lot more New Zealanders are going to be facing being in rental accommodation either for a lot longer than they would hope or for, in some instances, their entire lives. Making sure that we have some clarity both for those tenants and, in many cases, landlords is, essentially, what this bill does, but also there are a lot of other measures that the Government is taking to ensure that those people who are in rental accommodation can do so in an effective manner for them and their families.

One obvious thing that the Government is doing is the healthy homes standards, which will prevent thousands of children from going to hospital. I think that’s a no-brainer. I think most New Zealanders, as taxpayers, would see the benefit of making sure that people who are living in rental accommodation are in healthy, warm, safe homes. We’ve also banned letting fees and we’re progressing this piece of legislation, and we’ve also—as someone who grew up in a State home—stopped the sell-off of Housing New Zealand properties and committed to building, over four years, 6,400 homes. We’ll have a very good update for the public about that very soon.

In the wider context of what’s happening in this space, this is another important piece of the puzzle to ensure that New Zealanders are looked after in rental accommodation. I also want to note that we’re striking that balance between the rights of both tenants and landlords and, again, going back to that Osaki case where that imbalance around the tenant liability and the landlord liability that the previous Government and this Government certainly feels was out of whack.

The question was put that the amendments set out on Supplementary Order Paper 254 in the name of the Hon Kris Faafoi to Part 1 be agreed to.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Amendments relating to methamphetamine and other contaminants

Hon KRIS FAAFOI (Associate Minister of Housing (Public Housing)): This part goes to an issue which reared its ugly head in late 2017 and 2018, in which, as the Minister of Commerce and Consumer Affairs, I also had some oversight over, around the standard around contamination of methamphetamine in residential properties. What we saw by the previous Government was the reliance and, in some cases, the—what’s the word I would like to use?—beating up of that standard to effect, I think it was, 800 Housing New Zealand tenants evicted from their homes. That has had an enormous effect on those families, to the point—

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

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

Hon KRIS FAAFOI: Just before the break for dinner, I was just working myself to a point where I was describing the negative experience that roughly 800 Housing New Zealand tenants had under the previous Government, having been evicted from their properties because of what can only be called dodgy standards around meth contamination. I was working myself into an angry state, potentially because it was just before the dinner break and “hangry Kris” may have been coming into force, but the dinner break has addressed that, so I think I should probably spend the rest of my time addressing some of the substance of the changes in Part 2.

Part 2 establishes a regime for dealing with contaminants such as methamphetamine in rental properties. As a result of the experience under the previous Government and the standard at the time, there was and is a lot of uncertainty among landlords about how to deal with contamination of the likes of methamphetamine. Part 2 of this bill will provide for a more practical regime which is flexible enough to address health risks of not just methamphetamine but any harmful substance in rental properties.

As I mentioned, at the end of 2017 and at the beginning of 2018, this Government asked the then Prime Minister’s Chief Science Adviser, Sir Peter Gluckman, to look into the issue of methamphetamine contamination in rental properties and found that remediation—according to New Zealand standard 8510:2017; whether it was appropriate—was only appropriate for identified former meth labs in properties where heavy meth use had been determined; so not where, potentially, just low-level use was but, certainly, that standard was appropriate only where production and heavy meth use had been determined. Because of the way that the previous regime had worked, there’d been a previously widely held perception that the presence of even low levels of methamphetamine contamination or residue in properties posed serious health risks, and, as a result, remediation to eliminate that kind of contamination has been an extremely costly business for landlords and, in many, many cases—and, unfortunately, far too many in terms of Housing New Zealand tenants—has been an upheaval for tenants who were evicted at short notice.

The bill inserts definitions of “contaminant”, “methamphetamine”, and “contaminated”, and methamphetamine is defined as a contaminant. The bill also inserts new obligations for landlords, and I might just take some time to go through those new obligations, if it’s OK, Mr Chair. First is that landlords have to comply with all requirements in respect of contaminants imposed by regulations; secondly, landlords are not to provide premises to a tenant, if the landlord knows that the premises are contaminated, until they have been decontaminated; and, thirdly, to not continue to provide rental premises to a tenant, if the landlord knows that the premises are contaminated, unless they are being decontaminated. These obligations do not oblige the landlord to repair or provide compensation arising from contamination damage if the contamination was caused by the tenant.

I might leave some room for others to get into the debate, but I think that Part 2 will take care of a lot of the ills around meth contamination.

SIMON O’CONNOR (National—Tāmaki): Thank you, Mr Chair—pleased to take a call at this committee stage. I am a little bit surprised at the number of Ministers in the House, effectively, trying to stretch it out.

Andrew Bayly: Very nice to see them all.

SIMON O’CONNOR: I mean, it is nice to see them all. I think it’s unusual to have a Government filibustering its own bills.

Andrew Bayly: How many have we got? One, two, three, four, five, six—six of them, Mr O’Connor. Seven—seven, Mr O’Connor.

SIMON O’CONNOR: The second thing I need to—OK, we’re up to seven. This feels like Sesame Street as we’re counting things out. The second element is the Minister referred to the 800 people within Housing New Zealand houses that were moved on, claiming that that was a dodgy decision. If it were a dodgy decision to move 800 people out, it’s equally as dodgy to be just compensating all 800 people as if they were all innocent users of meth in houses. One doesn’t need much of a degree in statistics to understand that of those 800 people, a number of those will have been high-level meth users and dealers, and not only have they been, in a sense, exonerated but paid out.

Look, my biggest issue in Part 2 is around the meth contamination. What is problematic about this bill is we’re about to pass, in this primary legislation, powers of regulation making to the Government, to the Minister, without knowing what those regulations are, and when it comes to meth contamination, we do not even have an indication from the Minister what those levels are going to be. Whether that was an acceptable standard—we might be a bit more comfortable here, but what we do know is that there are major challenges when it comes to meth standards. The department of health, the Ministry of Business, Innovation and Employment—in fact, Standards New Zealand had previously set meth standards, in this case at 1.5 micrograms per hundred square metres.

We then have a report from Sir Peter Gluckman around third-hand use—I think that’s an important distinction to make—that now says 15 micrograms is perfectly acceptable. We also have a report by Mark Daglish which the Minister is not allowing to be released to the public, which we on this side of the House begin to wonder—there’s a whole array of views of what should be the right levels. What I think demonstrates the oddity of this entire situation is that there’s a lot of talk, and we’re going to set the new meth standards at 15—or it’s assumed it’s going to be at 15—micrograms per hundred square metres, but, strangely, if someone’s house is found to be over 15, the suggested regulation is that someone has to reduce the meth contamination to under 1.5. Why is that, Minister? Why, if 15 as a meth contamination level is acceptable, if they have to decontaminate the house can they not just bring it back to, say, 14.9, because according to some experts, that is perfectly safe. Instead, what’s been suggested somewhat is we’re going to have to reduce that all the way back down to under 1.5.

So we’ve got inherent contradictions coming through. We’ve got clashes between different respected—I would say—authorities in New Zealand, including Standards New Zealand, and we have not got clear answers around that. So I for one am not particularly happy with this Supplementary Order Paper—not that we’re setting standards; standards must be set, but what we’re doing here is, effectively, giving a blank cheque to the Government to go and write the regulations as they see fit, and that is not a prudent way to step things forward.

So that’s my primary contribution tonight. I really just ask the Minister perhaps to address how he is dealing with the variety of expert approaches on meth standards. How is he engaging with the industry, who have opinions on this? Why is he not releasing some of the information under the Official Information Act that’s been requested, and will he give any surety to the House tonight of what these new standards will be before we give him a blank cheque?

Hon KRIS FAAFOI (Associate Minister of Housing (Public Housing)): I thought I’d spectate for some time, but given that contribution I think it’s only fair that we respond almost instantly. I know the Ministers in the chair are not meant to ask questions of members who are making contributions, but I might, just to ask Mr O’Connor: where was his concern around some of these issues when his party was in Government? If we’re going to talk about whose experts you’re going to trust, then we asked the Prime Minister’s Chief Science Adviser, Sir Peter Gluckman, to look into the issue; not someone that we appointed but someone who is independent and looked at the issue and used science as a basis—funny that—and used evidence as a basis to look into this issue.

What I find ever so slightly galling—that we are being asked questions of the type that Mr O’Connor is asking—is that his party used, even as his own leader has said, “dud advice”. He said it in June 2018. Simon Bridges said that his party had got dud advice from officials around the methamphetamine levels which were safe in these houses to base its entire attitude towards Housing New Zealand tenants and whether they were fit or not to maintain their tenancies. As I say, on the dud advice that the previous Government relied on, they evicted 800 tenants. So even Mr O’Connor’s leader said the dud advice was dud advice, but then again, because we’ve found that the Leader of the Opposition barks at every car going, about three months after he said, “Well, it might have been dud advice, but you shouldn’t be compensating meth cooks.”, when this Government wasn’t. So the previous Government, at every opportunity, has been desperate to try and make sure it can turn around the truth of the fact that they relied on dud advice—and probably ignored solid advice when they were in Government—to turf 800 of the most vulnerable tenants in our country out of their properties.

So we have gone on to a journey to make sure that we can have sound, solid, science-based standards to make sure not just that that level of methamphetamine contamination is known to tenants but that there’s also some certainty for landlords about what is safe and what is not safe. So they can sit over that side of the Chamber and point fingers, and claim that meth cooks are being compensated, when they know that’s a lie—they know that’s a lie—but what we know on this side is that this is another one of the previous Government’s messes that we are being forced to clean up. That is the absolute truth. So they should hang their heads in shame about asking for some accountability when this is a mess that they created, and which we are fixing, and which we’re happy to fix because we need to make sure that landlords and tenants have some certainty in this area.

Mr O’Connor is a member that I very much respect, but I think he has fallen for the old trick of being first into the Chamber, and being first to have to make a contribution from notes that someone has written between 6 and 7.30, because all the points that he made lack credibility—if you only want to go back to the cold, hard fact that the Prime Minister’s science adviser, Sir Peter Gluckman, shot the science out of water that they relied on, and which they used politically to evict 800 tenants out of their homes. I think they should hang their heads in shame for that—for the fact that they now ask for some accountability for the fact that that’s what they relied on.

So what this Part 2 does is it puts in train the journey to make sure we know what the contaminants are, what the levels are, and what the rights of the tenants or the rights of the landlords are. To be perfectly honest, it was a mess that we inherited. So I would love to hear another contribution from the other side of the Chamber to talk about their shameful history in this area. I don’t think I will, but I impress upon the members on that side of the Chamber to relive this beautiful part of the history of the last National Government.

JAMIE STRANGE (Labour): I’m proud to be part of a Government who are taking a lead on this issue around meth. Unfortunately, we do have meth in our society—methamphetamine—around 31,000 people per year, which is 0.8 percent of our population, which is certainly very concerning. The Government passed a bill recently—a customs bill—which aims to stop methamphetamine coming into the country. I’m very pleased with the work that was done there, supported across the House, but the reality is we have methamphetamine in New Zealand. It’s important that we work out how we’re going to deal with this issue, and, particularly tonight, we’re talking about when it relates to housing. There’s certainly been a lot of uncertainty among landlords about how to deal with methamphetamine contamination. I’m pleased that this bill provides a practical regime that’s flexible enough to address some of these health risks.

It is an area that can be fraught at times. I recently had an apartment that I was selling, and the person who was planning to buy it asked for a meth test. The meth test was done. It came back saying there was meth in the bathroom.

Dr Duncan Webb: Explain that, Mr Strange!

JAMIE STRANGE: I don’t know. I’m not passing any comment, but it came back that way. Now, we got a second test done. The second test came back negative. So which company is to be believed? Unfortunately, landlords have been caught up in this aspect, because there are, I believe, a few cowboys in the meth industry. In a way, they’re fleecing the landlords, because they’re doing a test and they’re saying the landlords then have to rip off all of the Gib from the building when, in reality, they may not have to.

So it’s important that there’s some certainty here for landlords, because it’s an asset that the landlords have. I’ve mentioned previously that I’ve been a landlord myself. As landlords, we want to look after that asset. As tenants, tenants deserve to live in a house or an apartment that is healthy and that doesn’t have methamphetamine in there. So it’s important that this bill is before the committee tonight to bring that certainty.

I do have a question for Minister Faafoi which is about the regulation of these meth tests. How do we know which companies are to be trusted and which aren’t, and what’s happening in that space, or what maybe has happened in that space in order to bring about that certainty there? Because there is no doubt that some landlords have been fleeced in this area.

This is a bill that we are taking very seriously. In fact, there are, I believe, six Ministers in the House tonight, and that’s just a sign of—

Andrew Bayly: Seven.

JAMIE STRANGE: Oh, seven Ministers. That’s a sign of how important we’re taking this bill, because methamphetamine is a blight on our society, and we are taking this bill seriously—[Interruption] I do wonder how many former Ministers are present. Any former Ministers? I’m not sure there are any, but we are taking this bill incredibly seriously tonight. And that’s just an example of that.

So the bill inserts definitions of contaminant methamphetamine, which is defined as a contaminant. There are just a couple of aspects there: that the landlord must comply with all requirements in respect of contaminants imposed by regulations. Here’s the key point: to not provide premises to the tenant, if the landlord knows that the premises are contaminated, until they have been decontaminated. For the Minister, just sort of following on from that question before: where is the certainty around and the regulation for landlords to know that the company that they use is a trusted company—that the results are genuine? There might be an example of what happened to me previously, where meth was recorded by one company and not recorded by another. So just adding that aspect to it; I’d just appreciate a comment from the Minister, because that certainly adds to that aspect of certainty, which is really what this bill is all about. I’m very proud that the Government are taking a stance on this issue of meth. Thank you.

The question was put that the amendments set out on Supplementary Order Paper 254 in the name of the Hon Kris Faafoi to Part 2 be agreed to.

Amendments agreed to.

Part 2 as amended agreed to.

Schedule

The question was put that the amendments set out on Supplementary Order Paper 254 in the name of the Hon Kris Faafoi to the Schedule be agreed to.

Amendments agreed to.

Schedule as amended agreed to.

Clause 1 agreed to.

Clause 2

The question was put that the amendment set out on Supplementary Order Paper 254 in the name of the Hon Kris Faafoi to clause 2 be agreed to.

Amendment agreed to.

Clause 2 as amended agreed to.

Clause 3 agreed to.

Bill to be reported with amendment presently.

Bills

Trusts Bill

In Committee

Part 1 General provisions

Hon ANDREW LITTLE (Minister of Justice): It is, indeed, a great honour to be talking to this particular bill at this stage, and I just want to say of this, the Trusts Bill, and the rewrite of our principal trusts legislation, that I think this has been longstanding. It’s been a considerable piece of work. Members of the House have put a lot of time into it, and I think this is very well drafted now, and a very well-considered piece of legislation. So I think that we can be very pleased that this legislation will provide good guidance to trustees, to settlors, to beneficiaries, and to those who have an interest in this particular area; that we now have a cohesive piece of law that will provide good guidance and leave them in good stead.

The first part of the bill really provides an overview. It lays out some very basic principles, and we would expect that although the bill focuses its attention on express trusts, it is clear, also, that it has implications for resulting and constructive trusts, and, indeed, other forms of trust that may evolve through particular circumstances. It has application to charitable trusts and to the full range of trust vehicles that many New Zealanders use and rely upon in their day-to-day life. It makes some changes to the common law but otherwise leaves the inherent jurisdiction of the High Court intact in terms of dealing with the many sometimes totally unpredictable issues that arise in trusts and in trusteeship.

So I don’t want to talk for much longer in this very introductory part of the bill. The meat and gristle of the bill appears in the subsequent parts. But, by way of introduction, I think this, in terms of the layout of the bill generally, does a very good job in Part 1 of providing the overview and, as I say, is drafted in very clear language. Given the range of people who often find themselves as trustees in trusts around New Zealand, I think this provides them with a very accessible means of understanding what the law is, what their responsibilities are, what they should expect to see in a trust deed, how to delegate powers, and how to discharge their duties and obligations as trustees.

So as the debate goes through, I know it would be comprehensive and thoroughgoing. I know there are members like Andrew Bayly for whom this stuff creates a level of excitement from which we could power small cities, so I am looking forward to his contributions. I know there are other members there—Ian McKelvie, who is a settlor and a trustee, and commands great experience in this particular area. So I think the committee can look forward to this, and, indeed, the public of New Zealand can be assured that in this committee of the whole House stage, this bill will be given the thoroughgoing, comprehensive examination that we would expect.

Hon DAVID PARKER (Attorney-General): I would like to ask the Minister in the chair a question about the rule against perpetuities. In my opinion, the rule against perpetuities, and the statutory equivalent of it, is the most important rule relating to trusts. That is the rule that we ought not to be able to for ever control the economic lives of those who come after us. People with big fortunes ought not to be able to create trusts that last for ever in a way that controls the lives of those who follow.

The rule against perpetuities was introduced by the equitable courts in the United Kingdom because there were concerns that people with large fortunes were, effectively, writing rules in trusts which determined the lives of those who followed for years and years and years. The rule against perpetuities used to be that the maximum length of a trust could be a life in being, plus 21 years, I think it was. A life in being was a person who was alive at the date of the creation of the trust. The longest period a trust could last was the life of someone who was alive at the date the trust was completed for the whole of their life, plus 21 years. So you could say the class of people that would determine the length of the trust could be any grandchild alive at the date of the death of settlor, plus 21 years. That was the limit.

Now, my understanding—and I’m sure the Minister will be able to confirm this or not—is that, effectively, we have, with this law, still maintained the rule against perpetuities, because we don’t want people of wealth to be able to let their wealth determine the lives of people for a long time in the future, and that that is the effect of clause 5(5) of the bill, which protects the common law, except to the extent that it’s modified, and that the modification, I think, elsewhere in the bill, says that the statutory equivalent of that these days is to be 125 years. I’d just like the Minister to confirm that because, for me, that is a very, very important rule relating to social justice.

Hon ANDREW LITTLE (Minister of Justice): I’m very happy to answer the question of that curious member, and, although it appears in Part 2 of the bill, I can confirm that clause 16 confirms the maximum duration of a trust: a statutory prescription of 125 years, and, indeed, subclause (5) of clause 16 confirms, and I quote, “The common law rule known as the rule against perpetuities is abolished.” So there is now a statutory code that replaces that old rule. It was always expected that property and assets contained in a trust would succeed in ownership at some point. That was an important part of some of the old law. It has continued under this provision, but I’m happy to answer even more questions about that when we come to Part 2.

The question was put that the amendment set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 1 be agreed to.

Part 1 as amended agreed to.

Part 2 Express trusts

Hon ANDREW LITTLE (Minister of Justice): I’ll take a quick call, because it would be improper for a piece of legislation this important and this fundamental to the daily lives of so many New Zealanders to go uncommented on. I possibly made the principal of the most important comments about this part of the bill in response to my question to the honourable member David Parker in relation to the rule against perpetuities. But it is this provision of the bill which starts to get into the meat and bones of trust law. The meaning of “express trust” is defined. The characteristics of an express trust are defined. There’s provisions in relation to sole beneficiaries, and otherwise dealing with provisions on the distribution of trust property. So this is really what defines a trust and what trusts are about, and I think it is very well drafted and very well-laid-out in this bill.

CHRIS PENK (National—Helensville): Thank you very much, Mr Chair, and to the committee for the opportunity to speak in this, Part 2 of the consideration at this, the committee stage of the Trusts Bill.

Kieran McAnulty: Filibustering.

CHRIS PENK: We have—I’m encouraged to join the Government side in filibustering. In fact, we are joining the Government side to the extent of voting for this piece of legislation, which is worth supporting. I’ll make my contribution reasonably brief for the benefit of all concerned—in particular, Mr McAnulty. I wish him better luck in the debating chamber than he had on the cricket field recently.

I’ll just note, in relation to the express trusts being created, that it’s helpful to have a codification, essentially, setting out the means by which a trust can be created. It’s helpful to have the clarity for something that is actually technically not a matter of law but a matter of equity. That is a thing that has arisen separately to a strict legal construct. So notwithstanding that we have a piece of legislation that actually goes to the trouble of saying what the law is about, that area outside the law, it is none the less a useful thing for the House to turn its attention to.

The maximum duration of trust, as dealt with in clause 16, is said to be 125 years. That’s a pretty generous period of time. Of course, we see also in that clause that “The terms of a trust may specify or imply a shorter duration.” So there’s a limitation rule against perpetuity, I suppose, in the language, whereby we’re actually getting some clarity, again, around that. So just for the purpose of being very transparent, we see expressly stated that the common law rule known as the rule against perpetuities is abolished, and that’s something that has been the bugbear of many law students throughout the ages. Certainly, this idea that you can have a trust only for a certain period of time takes some getting one’s head around. I think in practice, by which I mean in the practice of law, and also as opposed to the theoretical application, the reality is that in a shorter period of time—for example, 80 years, as is often prevailed—simply, a trust would be, effectively, continued by the creation of a new trust along similar lines. So to lengthen that out seems to us a pretty sensible idea, and we’re happy to support that.

Part 2 agreed to.

Part 3 Trustees’ duties and information obligations

Hon ANDREW LITTLE (Minister of Justice): One thing that many trustees struggle with is to understand precisely the nature of their duties and their responsibilities, and we’re very pleased that in the bill as presented to the committee of the whole House, those obligations and those duties are very clearly laid out in Part 3 of the bill. It lays out right at the very beginning, in clause 19A, the guiding principle in performing duties. It is stated there that in performing the mandatory duties, which are set out in the legislation, and except to the extent modified or excluded by the terms of the trust, the default duties are those set out in the legislation, and a trustee must have regard to these in the discharge of their duties and obligations. They are duly laid out there.

It is a duty for trustees to act for the benefit of beneficiaries or to further the permitted purpose of the trust, particularly in relation to charitable trusts and those with an enduring existence. It is important, for example, that trustees meet their duty to exercise their powers for a proper purpose. So all of these are contained in here, and I think they are very well crafted and drafted and laid out, and there will be no confusion or misunderstanding about exactly what is expected of trustees.

I was in a meeting with a group of people just last week, in a building owned by a particular trust, and I was in the boardroom of that building. It was the boardroom where the trustees of the particular trust meet, and I was very impressed to see on a plaque on the wall, in a very prominent position, the list of basic trustee duties and responsibilities laid out. So for that trust, whenever its trustees met, there could be no confusion or misunderstanding about how those trustees, when they were meeting and making their decisions, were to discharge their responsibilities to the beneficiaries in whose interests they were to act. Some trusts in New Zealand do it right and do an excellent job. Many struggle, and I think a law that is as clearly articulated as this one would be of great benefit and assistance to the many trustees and the many trusts in their care when it comes down to this.

I was intrigued to see, in clause 41, a requirement of trustees to have about their person various documents, including the trust deed, including the most recent financial account and any variations, and records of property held by the trust. So they must be on a trustee’s person at the time they’re meeting unless they are or can be confident that another trustee has those records. If that trustee vacates their position, they are required under this legislation to pass on the documents they have about their person to the trustee that replaces them. That is very explicit and very clear, but I think that is a very worthwhile obligation to have.

As somebody who has been a trustee on trusts before, the first place you turn to the minute you become a trustee, and what I always had about me at every meeting, is the trust deed. That is the document from which a trustee’s authority originates, and it’s very important to know what the extent of that authority is, what the powers are, and the proper construction and constitution of the trust board. So all of that is laid out in Part 3 of the bill in a very clear way, and rules for deciding, for example, which presumptions apply and which don’t apply, and how and when they do. So, once again, it’s a great credit to the drafters of the legislation, the members of the select committee who have got it this far, and members of the House who have had their input to create what I think is a very well-written piece of law for trustees in discharging their responsibilities.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Part 4 Trustees’ powers and indemnities

Hon ANDREW LITTLE (Minister of Justice): I appreciate the solid contributions that have been racked up in this debate so far on this impressive legislation, and I just want to perhaps take a moment of the committee’s time just to add my five cents’ worth on this important part, which covers the very essential part of trustees’ powers and indemnities. There are general powers of the trustee, foremost amongst which is the power of trustees or a trustee to invest the trust property. That is important. That’s what a lot of people have a trust for, as a protection for property, but also as a means to invest in property, to generate income, to generate a return which is for the benefit of the beneficiaries.

Clause 55 lays out the matters which a trustee can consider in exercising that power to invest. They are, as you would expect, to look at the objectives of the trust, the nature of existing trust investments, and the desirability of making the particular investments. All along, trustees are expected to exercise the duty of prudence. That is one of the principal constraints, if you like, on a trustee. Trustees must act prudently in relation to trust property, and that also is laid out in the legislation as well.

There are specific provisions for trustees in relation to trusts that have as beneficiaries child beneficiaries, not only for how income is applied in respect of that child beneficiary but whether or not to apply capital in relation to that child beneficiary, and, if applying capital, whether or not conditions could be imposed in relation to the use of that capital for the benefit of that child beneficiary. So, again, all of these are very important powers laid out in the bill.

There is also provision for trustees to appoint others to exercise particular powers or functions, and you would expect that. There is a growing expectation, or, in fact, not just an expectation but a requirement that when professionals are acting as trustees, they conduct themselves in accordance with their professional standards and the expectations around their professional standards, and that also is laid out in the bill as well. It is possible for trustees to delegate their powers by way of power of attorney if they are, for example, prone to moving in and out of the country or are otherwise not being well disposed to exercise their powers, and there is a process for notifying other trustees in relation to any power of attorney that allows that delegation and when any power of attorney is indeed in place or enforced. Again, all those things are laid out, along with the ability to appoint special trust advisers, because you want trusts and trustees to be able to take good advice and to take specialist advice when that is needed, depending on the nature of the trust, and often that entails remuneration as well, which, again, is applied for.

Then there is provision for indemnities for trustees. There are some things that trustees cannot be indemnified for—gross negligence, wilful negligence, and dishonest conduct—but trustees acting in good faith and properly attempting to discharge their responsibilities can be the benefit of appropriate indemnities, and that, again, is also laid out in Part 4 of the bill.

CHRIS PENK (National—Helensville): Thank you, Mr Chair. I’ll pick up, really, where Minister Andrew Little left off, with a brief contribution on the subject of trustees’ indemnities. I’ve picked out this particular provision within the part because it seems a good example of the legislation going to some effort to spell out with clarity exactly the extent of the trustee’s powers, in this case, and the indemnities, indeed, that a trustee can enjoy.

The starting point, I suppose, is to really consider that it is a significant power that a trustee has. Indeed, it’s a fiduciary duty. The relationship of the trustee is one where he or she owes to the beneficiaries of the trust a level of responsibility that’s reflected in the fact that there’s a special duty and a considerable power that a trustee has as one who, of course, by very definition, owns property legally and can dispose of it and do certain things with it, but it’s for the benefit of others. It is held in trust, in that ordinary, natural sense of that word, as well as in the technical, legal sense, as well.

So the starting point under clause 77, then, is appropriate that it be—and I quote—“(1) A trustee is personally liable for an expense or a liability incurred by the trustee when acting as a trustee.” The personal liability being appropriate specifically because it is in the person’s name—the legal person or the natural person, as the case may be—that the property is held for the benefit of the trust. The qualification comes in the next subclause—that is, that the trustee, when acting reasonably, is entitled to certain protections, or certain indemnities, indeed. The Minister has alluded to that, saying that a trustee acting in a way that’s reasonable and in accordance with their powers—particularly as a professional, be it a lawyer, an accountant, or another—is entitled to that protection, and it’s a matter of good policy that we do wish to encourage people to take on these responsibilities for the benefit of their clients and society in general without fear of a penalty that would be unreasonable, provided, as the Minister has said, that such a person is not being dishonest, is not acting in bad faith, and so on.

The standard as expressed is reasonability, or in terms of needing to be reasonable, because the situations might differ. So it’s impossible, or, indeed, certainly imprudent, to try to be more prescriptive in that, and the subjective standard is appropriate because, as often is the case, the law does wish to regard a situation as requiring some sort of ordinary standard that the reasonable person might expect to be applied.

Finally, I’ll just note that in relation to that particular clause which I’m taking by way of example, the section doesn’t limit indemnity available at common law or in equity. So, in other words, the interaction of the statute is such that those protections that a trustee might already enjoy at the common law—that is, the development of the jurisprudence, the understanding, and the rules, so to speak, over the years—will continue to be applied for the benefit of the trustee, and also, as I mentioned, the equity. So the fairness, essentially, rules, the doctrine that allows a person to appeal, essentially, to the notion of acting in good conscience and not being penalised for that. So with that, I will leave my contribution on this particular part, and I look forward to the continuation of the debate by the Minister and perhaps others.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 4 be agreed to.

Amendments agreed to.

Part 4 as amended agreed to.

Part 5 Appointment and discharge of trustees

Hon ANDREW LITTLE (Minister of Justice): Obviously, if there’s going to be a trust, then it follows that there will need to be trustees, and so Part 5 of the bill covers the very important process of the appointment and the discharge or removal of trustees. So clause 86 sets out who may remove a trustee and who can appoint a replacement, and there’s a set of processes around there around as to who can be appointed as a trustee where there is a statutory trustee; who may be a sole trustee, and how that process is embarked upon; and a process for appointing trustees for sole statutory trusts. There is provision for dealing with a trustee retiring; then, on the death of a trustee, what happens in that particular instance; then the act of removal of a trustee and the conditions under which that can happen and how that happens; and then there is the optional removal of a trustee. So all of those are laid out there.

You’d expect those sorts of things to be in the statute. Many of these things would appear in a trust deed, and I expect now, when the bill passes its third reading and achieves the Royal assent, there will be a flurry of activity in law firms around the country as trust deeds are reviewed and updated and modernised. But they need to do no other than refer to the very clear provisions in this bill to provide for the appointment and removal processes for trustees provided within the bill. They are there laid out and they are very clear, and I don’t think trustees or settlors will need any further assistance than what is already provided for in this bill.

Part 5 agreed to.

Part 6 Termination and variation of trusts

Hon ANDREW LITTLE (Minister of Justice): If you can establish a trust, then you must be able to disestablish a trust, and Part 6 deals with what its title of the part describes as the “Termination and variation of trusts”. So it lays out very clearly there the requirements that trustees must meet in order to terminate a trust. It is also true that beneficiaries can terminate a trust through a unanimous decision amongst them.

It is also pretty standard in trust deeds that sometimes powers or provisions in a trust deed need to be varied. Sometimes the trust objects might need to be varied if they are, at least in part, incapable of achievement, and so it’s not unusual that trusts or trust deeds or trust objectives also need to be varied. That also is provided for in this part. It lays out there the beneficiary’s right to a share of trust property and the power of the court to waive the requirement of consent by beneficiaries to the termination, variation, or resettlement of a trust. All those provisions are there and very clear and are just another part of this matrix that makes up this very thorough framework for the operation of trusts in New Zealand.

Part 6 agreed to.

Part 7 Court powers and dispute resolution

Hon ANDREW LITTLE (Minister of Justice): I don’t want to take too much of the House’s time unnecessarily, given the level of interest in this bill, but I know that this was a provision that excited the interest of some members of the Opposition—and I think of Mr Bayly in particular, whom I earlier described as having enough enthusiasm and energy for this area of the law to power a small town. I’ve had to make a downward revision of my metaphor and say that he brings enough enthusiasm to power a small EV. But these provisions deal with what happens when there is a dispute and how that is resolved and, if it goes to the court, how the court is to resolve a dispute. It is, sadly, the case that there are trusts where the trustees do not function particularly well and they have fallings out or they have disagreements—sometimes over trust objectives, sometimes over trustee decisions, for example, on investments—and we’ve seen some very sad cases recently, usually in relation to family trusts, where the decisions or the relationships have become so toxic, so embittered, that matters end up in court.

Well, I’m pleased to say that this part of the bill—Part 7—provides the courts with very good guidance and very good rules and principles for the resolution of those disputes. So the court, if called upon to do so, can look into the actions of trustees—their acts, omissions, any decisions—and can resolve those disputes. The court has a number of powers to vary or extend trustees’ powers in relation to property. A court can relieve a trustee of personal liability for something that has happened or a decision that has been made. A trustee can apply to the court for directions and, in applying for a direction, the trustee may get the protection of the court for actions that it takes following the direction of the court. So there are a number of rights of trustees in relation to disputes to go to court to get disputes resolved. In the end, the court’s principal objective is to preserve the objects of the trust and to make sure the trustees are discharging their responsibilities fully and properly. The court has the power to remove trustees and to appoint its own trustees to provide supervision of a trust.

So all of that is laid out there in Part 7, as with the other provisions of the bill—very clearly laid out—and I think, once again, like so many parts of this bill, it will provide very good guidance and a very good lead to the many trustees who depend on good legal principle and good quality legal precedent to guide them in their decisions and to discharge their responsibilities.

CHRIS PENK (National—Helensville): Thank you, Mr Chair. On this Part 7, looking at different kinds of disputes and how they might be dealt with, I thought I’d just focus briefly on a couple of different provisions within the bill. One is the power of the trustee to refer a matter to alternative dispute resolution. It’s a pretty helpful thing that the bill does, in clarifying the terms on which, or the situations in which, a trust—various key players: trustees and beneficiaries and so forth—might actually go to the court, as is dealt with in a later clause, or perhaps more helpfully, often in many cases, to alternative dispute resolution.

Clause 138, for example, sets out the times at which that particular section would apply: that would be if there isn’t anything set out in very clear detail in the trust deed itself that requires a trustee to refer a matter to an alternative dispute resolution process. So that’s the situation that would arise: that the trustees would turn to the legislation and, indeed, to some manner of alternative dispute resolution, and that would then be able to take place if the trustee with each party to the matter agreed to do it, to refer the matter in that way, and then it goes out to clarify that a beneficiary isn’t a party to an external matter—the “external matter” phrase being a term that’s defined specifically where parties are a trustee and one or more third parties. The meaning of that is pretty clear from the legislation, so I’ll spend no further time on that one.

It did occur to me as being interesting that, in clause 140, it deals with the power of a court to order an ADR—alternative dispute resolution—process for an internal matter. Again, “internal matter” is defined. That is where a party would include a trustee and one or more beneficiaries or multiple trustees. In that situation, it would be possible to go to the court to get an order that an alternative dispute resolution process would then be followed. So sort of two steps forward and one step back, so to speak, but it’s important to have mechanisms that do provide clarity in situations that otherwise aren’t provided for, and the legislation is at pains to do that and, I think, commendably so. The commendation is due to those who have drafted it, those who’ve examined it, and those who across the House are now supporting it.

Lest this be my last contribution on the bill as a whole, I’ll just quickly note that, at a prior reading of the bill, with your indulgence, Mr Mark Patterson was speaking very eloquently on the bill and actually referred to a historical situation where a particular All Black scored a winning try in some test match, I think it was—

Mark Patterson: Peter Jones.

CHRIS PENK: —Peter Jones; there we go—and the interesting thing is that I was actually contacted by a relative of that man who now has a very senior legal position in-house, I think, and she’d been watching the parliamentary debate and had heard her relative’s name mentioned in it and so she was interested, I think, to hear that brought up. In any case, I will seek no further time of the committee and look forward to the continued discussion from the Minister and, again, from anyone who might care to join in, and I suspect Dr Duncan Webb might be one.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 7 be agreed to.

Amendments agreed to.

Part 7 as amended agreed to.

Part 8 Miscellaneous provisions

Hon ANDREW LITTLE (Minister of Justice): It’s been a great pleasure to take a slow canter through this bill this evening with the assistance of Mr Penk, who has provided a great complementary commentary to this. This Part 8 deals with, as it itself describes, miscellaneous provisions. So this deals with a range of things: what happens if trust property has to be left to or handed over to the Crown—how the Crown has to handle it—because there’s no question that the grasping hands of Treasury gladly reach out—

Hon Tracey Martin: Grasping heads?

Hon ANDREW LITTLE: —hands of Treasury—and relish the prospect of any trust that reaches its end without any beneficiaries there to pick up the slack. So there’s a provision here for how that can be managed and dealt with. Some costs, of course, are borne by the trust when the State gets involved, and indeed that is provided for there as well. There is, as you would expect, the ability to make regulations on matters relating to relevant parts of the bill as well. So all that is laid out in appropriate fashion, as you would expect in this part of the bill.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 8 be agreed to.

Amendments agreed to.

Part 8 as amended agreed to.

Part 9 Amendments to other Acts

Hon ANDREW LITTLE (Minister of Justice): This is a very important Part; it lists the other pieces of legislation that are consequentially amended as a consequence of this bill. Now, I’d be happy to go through each and every one of them but I understand that every member of the House has, in fact, read this Part of the bill and is fully conversant with it. It doesn’t require any further explanation except to say that it, once again, underscores, I think, the comprehensive piece of work that has gone into creating this bill which will, I think, be of inordinate assistance to trustees, to settlors, to beneficiaries, and, indeed, to their professional advisers. I think the House can be very thankful for the quality in which this bill has arrived at the House and which, I’m sure, it will enter its third reading.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 9 be agreed to.

Amendments agreed to.

Part 9 as amended agreed to.

Schedule 1

The question was put that the amendment set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Schedule 1 be agreed to.

Amendment agreed to.

Schedule 1 as amended agreed to.

Schedule 2 agreed to.

Schedule 3

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little and the following amendment in his name to Schedule 3 be agreed to:

in Schedule 3, in clause 4(1)(a), replace “section 21(2)” with “section 36A”.

Amendments agreed to.

Schedule 3 as amended agreed to.

Schedule 4

The question was put that the following amendment in the name of the Hon Andrew Little to Schedule 4 be agreed to:

in Schedule 4, in the amendment to Thomas Cawthron Trust Act (1924 No 6)(P), new section 12(1)(e)(iv), replace “Board” with “Board:”.

Amendment agreed to.

Schedule 4 as amended agreed to.

Schedule 5 agreed to.

Clause 1 agreed to.

Clause 2

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to clause 2 be agreed to.

Amendments agreed to.

Clause 2 as amended agreed to.

House resumed.

The Chairperson reported the Health (Drinking Water) Amendment Bill without amendment, the New Zealand Public Health and Disability (Waikato DHB) Elections Bill without amendment, the Residential Tenancies Amendment Bill (No 2) with amendment, and the Trusts Bill with amendment.

Report adopted.

Bills

Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill

First Reading

Hon STUART NASH (Minister of Revenue): I move, That the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

Madam Speaker, let me start by saying congratulations on your elevation to Assistant Speaker. I know you’ll do a fantastic job and it’s great to see you sitting up there.

Kieran McAnulty: Greaser.

Hon STUART NASH: Thank you, Mr McAnulty. This taxation bill aims to improve the tax system by making it simpler and fairer. It also includes support for business. Broadly, the policy proposals in this bill have three main objectives. Firstly, to continue the Government’s simplifying and modernisation of the tax system. Secondly, to further improve the application of our broad-base, low-rate framework. And, thirdly, to further encourage research and development expenditure.

Members familiar with the ongoing tax simplification programme will be aware of the various tax types that are being transitioned to a new technology system in an orderly manner. As each of the tax types moves across, the Government has taken the opportunity to fix a range of issues that have been around for some time, resulting in better customer service for taxpayers. We have previously been unable to implement improvements because inland revenue were hobbled by old technology. Today, this bill asks us to consider a range of measures which would improve the system for KiwiSaver members and student loan borrowers. There are a host of proposed improvements, so we’ll touch on just some of the headline ones.

KiwiSaver—one of the proposals in this bill addresses an issue that has been in the public eye of late: savers being on the wrong prescribed investor rate or PIR. The ongoing modernisation of the tax system means that inland revenue is starting to receive more frequent employment and investment income information. One of the benefits of this more timely collection of income information is that inland revenue is now better able to identify when someone appears to be using an incorrect tax rate. But even armed with that information inland revenue is not currently able to correct the issue, so the investor is overtaxed. The bill, therefore, would allow inland revenue to notify the KiwiSaver scheme or other managed fund providers using an incorrect rate for an investor and alert them to the need for change. Being on the correct prescribed investor rate will help ensure the correct amount of tax is deducted in the future. The issue does, however, require further work. Under the current law—in place since 2007—people on too low a rate are required to pay a shortfall, while those on too high a rate are not entitled to a refund. Clearly, this should be reviewed and I’ve asked my officials to investigate options.

Another issue that has been irksome for savers has been that employers can sometimes be late paying KiwiSaver employer contribution amounts to the employee’s scheme provider. As you can appreciate, this means that the employee is not getting their full entitlement and is missing out on investment returns. We are proposing that inland revenue should be allowed to pay KiwiSaver employer contribution amounts to scheme providers before the contribution amount has actually been received by inland revenue.

Another longstanding issue is addressed by this bill—when KiwiSaver was introduced, inland revenue’s systems could not calculate interest on KiwiSaver contributions from the employee’s pay day, without imposing compliance costs on employers. But the recent introduction of pay-day filing overcomes this obstacle. The bill, therefore, contains proposals to ensure that interest on employer and employee contributions begins to accrue from the employee’s pay day until the contributions are forwarded to the KiwiSaver scheme provider.

Student loans—along with a focus on improvements to the administration of KiwiSaver, the bill also focuses on student loan borrowers. We are aware of borrowers who are based overseas and whose health problems make them unable to meet their repayment obligations. We don’t want to add further to their stress by having a loan hanging over their heads, accruing interest. So we’re proposing that those overseas-based borrowers with serious illnesses or disabilities be treated as New Zealand - based borrowers and, therefore, not be subject to loan interest.

There is also a proposal in the bill, addressing the situation where too much is deducted by a borrower’s employer for their final repayment. This is a systems issue and previously could not be addressed, leaving borrowers out of pocket until it could be repaid. The bill proposes that inland revenue notify employers when their employee’s loan balance is close to zero so they can deduct the correct amount for the final deduction and avoid an over-deduction.

The bill also simplifies the student loan scheme by reducing the number of cases where inland revenue will go back and reassess a borrower’s loan balance prior to 1 April 2013. The only cases where they would go back would be where the borrower has gone overseas and inland revenue didn’t know about it, where the borrower committed fraud, or where the borrower did not file a tax return. The bill also contains the protection for borrowers to ensure that they are not unduly disadvantaged by these proposals.

I said before that this bill will help support businesses. Members will recall that an important part of the Government’s support for encouraging greater business investment in research and development is the R & D tax credit, which passed into law in May. When the tax credit was developed, there was an acknowledgment at the time that the next phase of that scheme would be required. This bill, therefore, introduces the next phase of support and a further incentive for businesses. In most cases a firm will bear the cost of its R & D work before it can reap financial reward from that R & D. This means that very often these firms will be in loss. Under the current rule many businesses in loss will not be able to access their credits until they become profitable further down the line. We want to support more business expenditure on R & D whether these businesses are in profit or loss. So this bill will extend the availability of refundable R & D tax credits to a much greater segment of loss-making businesses.

The refundable tax credits would generally be available up to the amount of payroll tax paid by the business in the same year, but there will be no payroll cap if the business uses an approved research provider like, for example, a university. For example, a pre-profit start-up investing $2 million in eligible R & D would be entitled to get back $300,000 of its investment in cash, provided it met the broader conditions. We have set the ambitious target of raising New Zealand’s R & D expenditure to 2 percent of GDP over 10 years. To meet this goal we need to get behind all of our businesses, including pre-profit firms.

There are other matters related to R & D included in this bill, including a clarification. The R & D tax credit is aimed at providing businesses with additional support and minimising the risk of undertaking R & D, but that credit is not aimed at tax-exempt entities who are outside the tax system and already receiving concessions. The bill therefore clarifies that most tax-exempt entities will not be eligible for the credit.

This bill represents the next wave of the Government’s ongoing simplification and modernisation of the tax system. Already, businesses and individuals are benefiting from simpler, smoother GST processes and automatic refunds, to name just two examples. The proposals in this bill will extend the benefits of a simpler tax system to KiwiSavers and student loan borrowers, and along the way it tackles some longstanding problems and issues. This bill introduces the next phase of support for businesses undertaking R & D. I’m very proud to commit this bill to the House.

ANDREW BAYLY (National—Hunua): Thank you, Madam Speaker. First of all, I’d like to congratulate you, Madam Speaker, on your elevation and promotion, and it’s nice to see you in the Chair.

The other thing is I’d just like to acknowledge the six Ministers in the House tonight. It is lovely to see them all here. You know, after our three-week recess, I’m sure there’s not much to be done up in the Beehive tonight, because obviously they all want to come down and learn a little bit about tax, and I think that should be welcomed—welcomed—because some of these people need to learn how to spend money more wisely, and in some cases how to make it, first of all. It’s easy to spend it unwisely, isn’t it, Mr Nash.

Now, this is a comprehensive taxation bill and I think the Minister covered it adequately, but in my mind it’s got five key aspects. First of all, it changes the KiwiSaver provisions, largely to be ahead of the game when the KiwiSaver—which is the next roll-out of the business transformation programme, which when it will occur next year is looking forward and planning for that. It also makes some changes to the student loan and employees’ share schemes, R & D tax credits, as we heard rather torridly just before, and then a raft of other changes.

I just want to say that the main thing in general is we support most of what’s in this bill, and we will be supporting this bill. But the point I want to make, and I heard the Minister just before, is I think it is outrageous that here is another bill—here is another tax bill—and this is another opportunity where the Government could have dealt with the issue where people who have paid too much tax on their portfolio investment entity income, their investment income, have not been and will not be paid their money back by the IRD. They could have addressed that in this bill—

Dan Bidois: Shameful!

ANDREW BAYLY: —and I think it is shameful. This is a huge bill and it would have been very easy for a Supplementary Order Paper (SOP) on that. Because the Minister doesn’t seem to know how we’re going to go about it, I think we’re going to have to write the SOP and put an addendum to this bill when it comes back into the House, because we need to address this issue where people have paid too much money to the IRD. The IRD should pay it back and the Minister who has just spoken should make sure that happens, because it’s not right.

WILLOW-JEAN PRIME (Labour): Madam Speaker—[Interruption] Sorry, Madam Speaker, just a little bit of confusion there. I do want to start my contribution by congratulating you on your new position. While I will miss you as our whip, I hope that I enjoy you as our Assistant Speaker. I’m sure you will be equally scary sometimes in that role. I am just a little bit intimidated standing here for the first time in front of you to take this call tonight.

Now, if I can start, there are three lots of people that I want to talk about who are particularly affected by the proposed changes in this bill. The first group of people are our KiwiSavers, the second group of people are our student loan borrowers, and the third group of people are Māori authorities. So I want to just take some time to talk about the proposed changes in terms of those three groups of people and to explain them, because they are significant changes which are really aimed at improving the administration of the KiwiSaver scheme, facilitating the faster transfer of funds, approving the administrative efficiency, and to enhance members’ experience with the KiwiSaver scheme.

I think the KiwiSaver scheme is a brilliant scheme, but I have looked at these proposed changes in this bill and I think that all of them would enhance the scheme that is already a good scheme. It would enhance and improve the scheme and people’s experiences with it.

One particular proposed change is to calculate interest on contributions from the employee’s pay day. So as far as they’re concerned, they’re docked on pay day. However, historically it hasn’t been the case that they have actually earned interest from that point in time. The reason for that was because the inland revenue systems at the time could not calculate interest from the employee’s pay day without imposing costs on employers. However, the introduction of pay-day filing is now going to overcome that particular obstacle. So I believe, rightly so, that employees are going to be able to earn interest from the moment it is actually taken from their pay.

Secondly, there is a proposal to reduce the KiwiSaver provisional period and holding period from three months to two months. This is important because historically and previously IRD has not been able to transfer those contributions to scheme providers until the end of the provisional period—and I think that’s a bit unfair on the KiwiSaver. So that reduction from three months to two months is a good one. Also, reducing the time frame for the transfer of members’ information and funds between providers; so currently the time frame between default providers is only 10 days, but for non-default providers it’s 35 days. The bill proposes that it will be consistent whether they are default providers or non-default providers, and it will be 10 days for all providers. I particularly like this proposal, and it is giving employees more ways to be able to change their contributions. Previously, they have only been able to do that by contacting their employers, but now they will be able to do that with these scheme providers and with the inland revenue Department. I think we want to encourage people to use KiwiSaver; we want to make it as easy as possible—I think that, in terms of being able to change the rates of contribution easily, either the employer, IRD, or the scheme provider, just makes sense to me.

Now, the second group of people that are affected by this bill that I want to talk about are those student loan borrowers. The first thing may not be such good news for the student loan borrowers, but language is important. The first proposal is to rename what they call a “repayment holiday” to a “temporary repayment suspension.” I think “holiday” does, in fact, send the wrong message to borrowers. The point of this proposal is to clarify and to better signal to borrowers that this isn’t a holiday but it is, in fact, a suspension and that their repayment obligations will remain at the end of their repayment suspension. So that really is about using better language to better signal what the intent of that provision is: not a holiday, but a suspension.

There are a couple of proposed changes in there in terms of the ability of IRD to write off student loans taken out before the year 2000, in cases of fraud. Currently within the legislation they are unable to do that. So, again, this is a very practical proposal that will give them the ability to write off these loans which are fraudulent, they can’t identify who the correct borrower is, and so it just sits there incorrectly in the system.

Allowing employers to be notified of an employee’s loan balance when their student loan is close to being fully repaid—I think that this is really in favour of the student loan borrower. Because what this proposal will actually do is it will ensure that there isn’t an over-deduction, and for anybody who has had this happen to them, it takes quite a bit of time to get the repayment back to you. So this will allow employers to see that the student loans are close to being paid off and therefore can make the adjustment from their final pay, and it will all be settled there. So I think that’s another good suggestion.

The final proposal that I wanted to talk about, in terms of student loans, is the treating of overseas-based borrowers who have serious illnesses or disabilities as if they were physically based in New Zealand. I think that this is the right thing for us to do. Just to explain that, the reason is that currently if they have a serious illness or a disability and they are based overseas, they are still being charged contributions and they are being charged interest. But what this change would, in fact, do is treat them as a New Zealand-based citizen, and, therefore, their repayments would be determined on their income—and in this case, it would be seriously reduced or none—and also it wouldn’t be subject to interest on their student loans. So I think that this is the right thing to do and I think it makes it a lot fairer for those who are suffering from serious illness or disabilities who are living overseas, who are currently having to pay based on their incomes and are being charged interest.

The final proposal that I wanted to talk about was Māori authority tax credits. I had to read this one a couple of times. I believe that I have got a better understanding of it now, but I do want to read the key point because it is quite technical. There’s been an unintended consequence of legislative change in the rewrite of the rules relating to Māori authority tax credits, which has meant that the current law allows these credits to be attached retrospectively to any distribution from a Māori authority, when, in fact, the policy intent was that these credits can only be attached retrospectively to non-cash distributions occurring under the transfer pricing rules—so “any” versus “non-cash” distributions occurring under the transfer pricing rules. So the bill proposes an amendment to maintain what its treatment was. Just a key point there is that the IRD is not aware of any taxpayer who has retrospectively attached those credits.

Those are the sections of the bill that I wanted to focus on this evening. Thank you very much.

Hon JUDITH COLLINS (National—Papakura): Thank you, Madam Speaker. What a delight—what a delight. It’s so wonderful to see so much interest and excitement about this bill in the House tonight. The National Party will support this bill to select committee, at which we will no doubt want to suggest some very good amendments to make it better. It’s hard to go past the fabulous contribution of our colleague Andrew Bayly, who just gave such a fantastic speech.

Hon Member: Energised.

Hon JUDITH COLLINS: Very energised and actually full of information; he didn’t need everyone else’s notes to do it either—so it was a great contribution.

One of the things that I think it’s good to remember is that when we were in Government—and several of us are here tonight—we actually funded the IRD to be able to bring in the computer systems to be able to bring this new simplified version in for collection of tax. I’d like to put a big shout-out—in the few moments that I will still want to talk about this excellent bill at this stage—to all the employers who every pay day collect tax for Parliament, who collect child support, who collect student loan payments, and who even sort out all sorts of court orders around payments that are due to the courts. Employers do this for free, and we never thank them enough. The inland revenue Department, in my opinion, has never thanked them—and they should do, because for lots of countries, people don’t have employers that do that, there’s not a PAYE system, and people have to go and organise their own tax payments. I think it’s really important that we thank employers for that job that they do for free for Parliament, because it’s Parliament’s money that has to, then, be appropriated.

I think it’s really important to understand that we have technology changes happening within IRD and also in businesses. It’s important that we look forward to making better use of those so that we can increase productivity in business—and I think that’s crucial.

Thank you, Madam Speaker. I think, in the select committee, we’ll have a great time on this bill, looking for all sorts of ways that we can improve it.

ASSISTANT SPEAKER (Ruth Dyson): The Hon Fletcher Tabuteau.

FLETCHER TABUTEAU (Deputy Leader—NZ First): That’s very kind of you, Madam Speaker—very kind of you. I’d just like to acknowledge the shorter than usual contribution from the member opposite, Judith Collins, and acknowledge the positive way that the Opposition is approaching this.

Kieran McAnulty: She’s changed her tune.

FLETCHER TABUTEAU: Yes, she’s changed, mate. Actually, please don’t have me up for this but she would be a much better finance spokesperson for the Opposition. But anyway, that’s just my observation. I promise I will now get to the bill.

This is a matter of some importance—a great deal of importance for not only this coalition Government but New Zealand First. We’ve been working on this—I have been working on these issues—for years and to see them come through in legislation now because of the good work of Ministers Nash and Robertson is a compliment to the coalition Government and the way that we can work together.

There are three main objectives being achieved through this legislation—and you’ll forgive me if I read but it’s important we get this accurate. The first one is around what any good Government is trying to do. And credit to the Opposition. When we were dealing with tax and National was in Government, most of the time—I think 95 percent of the time—New Zealand First would vote in support of what it was they were trying to achieve, because on both sides of the House it is about our efforts to modernise our tax system and not only the mechanisms we use to take the revenue but the methods we use to engage with taxpayers. And it is about the simplification of tax and the transparency of it. So this legislation definitely takes a big step forward in achieving those fundamental goals that a good Government would seek to achieve when they put remedial tax legislation and KiwiSaver legislation in front of the House, and it is absolutely being achieved in this legislation.

What we’re also doing is just contributing to the continuation of what is the broad tax take at a low rate. New Zealand’s tax system is simple. As much as we could debate some of the tax rates in the country right now, we do—comparatively around the world—pay low taxes and we will continue to do so and this seeks to make sure that we can continue to do that.

Another thing that New Zealanders are proud to stand up and support is what has been termed “remedial matters”, but actually it’s quite significant. That is around the research and development tax credit programme. So a fantastic policy; it puts New Zealand businesses on a level playing field. Well, it’s getting us there—New Zealand businesses on a level playing field with the rest of the world and their competitors around the world who have access to these tax breaks. We’re bringing that in again. We’ve learnt lessons from the past around these tax credits, but what this legislation does—and it’s described as remedial but I would suggest it’s quite significant because of what we’re doing here—is just taking an additional step forward.

The R & D tax credit legislation came through the House not so long ago, but we’ve already recognised that there is an opportunity for small business here to take advantage of those tax credits, and how do you do that if you don’t have a positive cash flow or your net revenue’s not in a position where you can actually claim a credit back from that on a tax position.

Hon Member: What do you do?

FLETCHER TABUTEAU: What do you do? Thank you. Good question. Well, what we’re doing now is giving those smaller businesses who aren’t revenue positive access to the same tax credit system mainly through the payroll system—I think up to around $255,000. So this is good fundamental legislation that does the right thing and ticks the right boxes in so many ways.

I spoke about the three main areas. But, you know, New Zealand First has long advocated for this. In fact, I put a member’s bill in the House not so long ago—it might have been last year, but great conversations with Minister Faafoi and Minister Robertson. They acknowledged what the member’s bill was trying to achieve at the time and said, “We can do that through Government legislation and this is a long way towards what it is we’re trying to achieve.”

One of the greatest frustrations for me as a dad at the moment is my oldest daughter has been in the workplace for a few years now, and despite my vehement protestations that she go to her KiwiSaver provider and say “You’ve put me on the wrong tax rate.”—I don’t think she’s done it yet, because there’s no onus on the KiwiSaver provider to come back and have that conversation, have that important fundamental conversation as a good provider should and ask those questions: what’s your income? Is this the right tax rate for you? So she’s still on 28 percent, I think, and believe me—Dad knows—she’s not in the higher-income tax bracket, that’s for sure.

So fundamental questions like that, and engagement time periods—and perhaps I should speak more specifically to that—faster transfers of funds, improve the administration efficiency, and enhance members’ experiences with the scheme. So that is what we’re trying to do: calculating interest on contributions from employers’ pay day, reducing KiwiSaver provisional period and holding periods, reducing the time frame for the transfer of members’ information and funds between providers.

I won’t go in too much detail about some of the frustrations of some of these big KiwiSaver providers and the way that they are making a great deal of money out of New Zealanders’ KiwiSaver funds. But this and these changes are a fundamental step in the right direction in terms of information timeliness and an onus of engagement with those who would seek to maximise their return for their retirement through KiwiSaver programmes. Fundamentally, if we get this right this basically means people have more money for their retirement to look after themselves at that stage in life, and that is fundamental to a good Government and the questions we ask ourselves about why we are here.

Well, this is what we’re doing here and these legislative changes are a part of that—I’m going to wax lyrical and call it a tapestry of life in legislation. You’ll forgive me.

Kieran McAnulty: A mini Jonesy.

FLETCHER TABUTEAU: Yeah—no, it’s not Jonesy.

So the other thing, the other area we are dealing with, is the student loan charges. So the bill proposes five student loan policy changes. These changes seek to improve the administration of the student loan scheme.

I’m sure the Opposition think I have spoken for far too long. This is good. This is great legislation, which I’m very proud to stand up on, on behalf of not only New Zealand First but this coalition Government with support from the Green Party over there. This will make a fundamental difference to people’s lives. It really will do that and therefore I wholly endorse and support this legislation to the House. Thank you very much.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Speaker. I must say I haven’t agreed more with the member who’s just resumed his seat than when he said he had spoken for far too long on the bill, although it is quite a rare feat to get to see such alliteration coming out of what is a revenue bill, a tax bill—talking about tapestries and so forth—so I do commend the member for that.

I will take a short amount of time in support of this bill but I do caveat that by saying there are some concerns that I am confident the Finance and Expenditure Committee will dive deeply into. The last thing one needs is a former revenue Minister to critique the next revenue bill that comes off the factory floor and I would sound like the grumpy uncle at Christmas dinner. But there are a couple of things that I think can be improved and I’m looking forward to the select committee scrutinising them.

Now, the Inland Revenue Department used to have a strap-line. Those of my age or thereabouts will remember they used to say, “It’s our job to be fair.” Now, there was one area in this bill that I don’t think is remedied that is not fair and that is the interest of the overpayment of portfolio investment entity (PIE) tax. And we have heard the Minister of Revenue say that if somebody underpays PIE tax or undersets their PIE rate of tax, they will be required to repay that, pay use of money interest and penalties, and so on. But if by chance that is overpaid, then the same treatment is not regarded to be appropriate. I don’t think that’s fair, and I will encourage members—on this side at least, if not the whole select committee—to actually assess whether or not that is appropriate.

Now, that, I think, distracts from the fact that most of the things here are very, very good improvements made possible because of the significant Business Transformation project that has been going on for quite some period of time. It started with my predecessor, Todd McClay, and was continued by me and then Judith Collins and the Hon Stuart Nash. That has enabled a lot of the sensible things that are going on in this bill to take place.

I would make one comment though. When I was Minister, I thought it ridiculous that it was necessary to change primary legislation in order to give charities from overseas donee status, and I note that that is still necessary—where there are four charities that are, through primary legislation, having to bother this House with what is something that I believe should be appropriately delegated by Order in Council. I would be interested in the committee actually having a look at that. Rather than approving these four, I’m sure, quite noble organisations, actually, what we should be doing is changing the legislation to enable the Minister by Order in Council, with an appropriate consultation process, to do that without troubling the House. That said, I’m very pleased to support the bill.

Hon JAMES SHAW (Minister for Climate Change): Thank you, Madam Speaker. Can I just start by saying what a pleasure it is to rise and be able to have the opportunity to refer to you as Madam Speaker. I think it is a well-deserved role, and I’m looking very much forward to working with you in the Chair over the coming 18 months.

I also just wanted to rise in support of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill. I’m glad that this bill has bipartisan support of the House, and I note that whilst the Opposition has some concerns, it does look like we’re going to be able to move this one through. As I understand from the previous speaker, the Hon Michael Woodhouse, there are actually fairly minor changes that would need to be made to satisfy his concerns about it. They don’t sound all that substantive.

But for the sake of the select committee, and for submitters on the bill, I think it’s worthwhile just kind of getting out of some of the detail for a moment and referring to what the aim of the overall bill is, because, obviously, one of the jobs of the select committee will be to ensure that the detail of the bill meets the purposes of the bill. So I do want to take a moment just to refer to that and get that on the record.

The first purpose, really, is to ensure that we are simplifying and modernising the tax system. Now, obviously, this is an ongoing programme of work. We’ve had recent tax bills, and some that came in the last few years, all of which were moving towards that. But I think that it’s worthwhile for us, as we pass this bill through the House and through its stages through the House, to keep that in mind, because my own sense, especially when I was on the Finance and Expenditure Committee, is that you can get so lost in the detail that, actually, you end up creating more detail and pulling away from the purpose, which is to simplify and modify the tax system. So I want to make sure that that is part of what we’re doing, because I think that serves New Zealanders best, when we maintain that.

The second purpose, of course, is we are very proud in this country of our broad based - low rate framework, and this bill is, again, designed to reinforce that and to improve on the application of that.

The third purpose—or the third aim of the bill—is to further encourage research and development expenditure. That is actually an area where there has been a lot of debate in the last few years about what the best form and structure, essentially, is to use the public purse and the tax system or grants to try and encourage New Zealand businesses to invest more in R & D, because we are lower down the OECD league table of investment in R & D, and that is really important. I’m very supportive of the measures that are outlined in this bill, but, again, just for the sake of the select committee, I want to make sure that we are keeping an eye on that, to say: actually, are we making sure that at every stage of this we are ensuring that R & D expenditure is increasing? Because we do have a goal of getting it up to about 2 percent of GDP, and we’re kind of starting from a reasonably low base there. Having said that, that’s what we’re trying to do, and I know that the new select committee chair will keep her eye very firmly on that.

I want to refer to some of the specific items. One of the first ones is around KiwiSaver. This has been referred to by members on all sides, around people who are investing in portfolio investment entities—or PIEs. This is one of those areas where the design of the system as it is at the moment tends to work against people who are less sophisticated users. So if you’re kind of starting from a bit further behind, the current set-up tends to leave you a bit further behind. That is because people need to notify providers of their appropriate tax rate and people who are generally less sophisticated users of KiwiSaver are not getting around to that. So what that is ending up in is that there are many, many people—perhaps as many as one in five New Zealanders, which is a staggering amount—who actually end up paying more tax than they would otherwise have to if they had notified inland revenue of their appropriate rate.

Like I said, what that means is that people who are more sophisticated users are more aware of what it is that their obligations are for informing their provider of their appropriate rate—not inland revenue but their provider. That means that they’re doing better out of it than people who are kind of starting from a lower base. So the current system actually tends to add to inequality rather than help to close that gap. The proposed law—the changes that we’re going to debate tonight and over the course of the next few months, as this bill passes through the House—allow inland revenue to actually notify the provider themselves. They can say, “Actually, we know what this person’s appropriate tax rate should be. So here it is.” That means that people should be only paying what they are supposed to be paying.

That is one of those ways, if we’re to return to the purpose of making the system simpler and easier to use, where, actually, we can, I guess, use the resource that we’ve got at our disposal to make life easier for ordinary New Zealanders—you know, people who generally don’t engage so much with the detail but who can then get left behind by not engaging with it. So I’m really supportive of that. I think it makes the tax system fairer—and just by changing the way that we administer the bill.

The second area is around student loans. On this one, I have to say—as someone who lived overseas for most of my adult life and the early stages of my career—when I went over with a student loan, which, at that time, attracted a commercial rate of interest on it, all the people who I knew from New Zealand who were over there as well, all of whom had student loans, often found it quite difficult to interact with inland revenue, despite the fact that we actually have a really good system. Actually, people’s personal circumstances would often get in the way of them being able to pay their loans back—or they might miss payments, and so on and so forth. Of course, then you end up in a great deal of trouble, and that would attract penalties, which would also attract interest, and then people would kind of opt out of paying into the system at all and try and hide away, and then the real trouble started.

So one of the things that I particularly like about this bill is that for student loan borrowers who are based overseas and whose health problems make them unable to make repayments, the amendments in this bill will treat those people the same as if they were based here in New Zealand, and they won’t be subject to interest on their loan for that period of time. I think that is a very small change that could make a significant material difference to a significant number of people, because, when you’re travelling, you are at risk and you can find yourself in a position of being unable to pay. We don’t want to penalise those people because they just happen to run into those circumstances.

The third area, of course, has been covered a fair amount today, and that’s about research and development. This is also an area that’s quite close to my heart because for a long time I was involved with a number of small businesses and it does take a while to get to a point of profitability, to get up and running. That has meant that it has been, effectively, impossible for the very businesses that we want to encourage the most, the start-ups, the entrepreneurs, and the innovators, to actually get the support. So the whole scheme for encouraging R & D has tended to be skewed towards larger pre-existing businesses who could actually afford the investment more in the first place.

So the change here in order to make it possible for smaller start-ups who are not yet at that profitable stage to start being able to recoup some of their investment in R & D, I think, is actually focusing the R & D tax credit system on exactly the part of the economy that you most need to pay attention to, because that is the part of the economy where you are going to see the most innovation and the most growth and development in terms of new businesses and research and development. So I think that that is a fantastic innovation. I commend the Ministers involved for having developed that, and I think that will make a huge difference.

The mild concerns of the Opposition aside, I think that this is a fantastic bill. It advantages a number of groups in New Zealand society, and I commend it to the House.

Hon PAUL GOLDSMITH (National): I’m fascinated to hear the full 10-minute speech by the Minister there, James Shaw. This is a Government that has a very short Order Paper and is filibustering on a bill that most New Zealanders will understand is primarily a detailed tax bill with a number of specific provisions is supported on both sides of the House, and we want to get on with the task at hand.

The primary point I would like to make about this bill, of course, it being a tax bill: its main deficiency is that it is not dealing with the matter of inflation eating into the tax bills of all New Zealanders every year by not adjusting for the inflation rate. So the absence of that somewhat drains away from my enthusiasm for this bill, but, nevertheless, there are some other things that we are looking forward to considering at the select committee—can’t say we agree with everything, but we’re happy to have it discussed and submitted upon.

One of the interesting ones is renaming the student loan repayment holiday. That’s a symbolic thing just to not give the impression somehow that stopping contributions to KiwiSaver should be regarded as a holiday which goes on for a long period of time but merely as an opportunity to refer to a student loan temporary repayment suspension, so as not to encourage people to take too long out of their working lives from contributing to KiwiSaver and building up a nest egg to help them in their retirement.

It’s interesting, however, that the Government appreciates the importance of getting the naming right with these sorts of things, but they haven’t quite grasped the fact that the jobseeker benefit, which we had renamed for people who were seeking jobs, is now becoming a little bit out of sync with the way that they’ve gone about that piece of important benefits, because they are no longer requiring people to be seeking the jobs. So I suppose, if they follow the logic that is outlined in this bill to other areas of Parliament, they might be thinking about how they go about naming things.

But, all in all, we’re very much looking forward to looking at the details of this bill in the select committee over the next coming months. Thank you very much.

GREG O’CONNOR (Labour—Ōhāriu): Madam Speaker, let me join the veritable chorus of those congratulating you on your elevation to the position—I think one of only a few positions you haven’t held in the time you’ve been here in the House. So I look forward to speaking before you tonight on this and many other bills.

The contribution by the previous speaker, Paul Goldsmith, really comes to the core of the issue. I’m not sure whether over on that side of the House they decide half of them will speak about the fact that we’re not spending enough money and the other half will whinge and whine about the fact we’re taking too much tax. I think that’s what they call balanced politics. We call it having a chip on both shoulders, but either way it just shows the total lack of logic that is being applied. There’s a chorus of rubbish being yelled across the House—presumably, half of them will be saying “Pay less tax.”; the other half will be saying “Spend more money, Government.”

I think the best example of that was probably around the teachers, when they were demanding that we free up more money, that it was terrible that we weren’t freeing up the millions and billions necessary that were being demanded by the teachers. So I think I’ll look forward to deciphering, perhaps through Hansard, the latest range of screaming across the House.

One of the essences of this bill is that—and I think previous speaker, the Hon James Shaw, hit on it—less sophisticated users of our tax system are often the ones that are disadvantaged, and I think underlying that is a basic faith. Although people do complain about the IRD—I think poor old IRD staff are the ones who are least likely to identify themselves at parties or any social gathering, because people will climb into their ears, but, ultimately, there’s an ultimate, I think, faith in the system, that they will get it right. But, actually, that’s not right—hasn’t been—in that if you didn’t pay attention to what you were paying, particularly around areas like KiwiSaver, student loans, the reality of it is you may be paying too much tax or not be paying the right tax. So I think what this bill does is it draws attention to the fact that people now and with the new capabilities of the IRD—it gives the IRD the opportunity to be more proactive to ensure that they can actually give people the confidence that they can go about their work, particularly those less sophisticated users of the tax system, those less sophisticated taxpayers, that, actually, the system is right, and this goes some way towards that.

If I can just focus on the student loan part of this particularly, I know from personal experience with my own children—we all know when people get student loans, they build these student loans often a little higher and faster than parents would like them to. We try and keep an eye on it; they seem to get out of control, but, of course, the first time they want to go overseas for any length of time is often when they realise some of the consequences of these student loans—which will be, of course, interest-free latterly to date—heading off and suddenly realising that they are six months gone from the country; all of a sudden, not only do they start paying interest but they actually pay back-interest, and there’s quite a considerable bill that they that they start to accrue. So that actually is probably the first time they really understand the consequences of it.

Of course, part of this is that—and that is referred to as a loan repayment holiday, but those health problems that can arise—now, many of our young people head off overseas on sporting endeavours, heading over there maybe to pay the loans. In fact, just having been on a sporting endeavour myself, looking at Mr McKelvie over there—he was on it himself. Not sure if Mr McKelvie needed a break from his student loan on his great endeavours on the cricket pitch—also Mr Patterson, who was here before, was on a recent parliamentary trip. Some of the balls were whistling around our ears over there at about 135 kilometres. That could’ve actually brought about the injuries that may have required some time for a break and the inability to earn money and the necessity for a loan holiday. That’s one of the factors in here that will actually be a very important one and it will, given the number of New Zealanders that like to get over there to actually make some money to pay their student loan for when they come home—that will be a very important factor.

I will be on the select committee considering this. I think it’s a very good bill. I look forward to working it through, and I’m sure when it comes back here it will something on which the bonhomie and agreement we’ve seen will continue. I commend this bill.

IAN McKELVIE (National—Rangitīkei): Thank you, Madam Speaker, and congratulations to you on your new role—the only role, I guess, you haven’t fulfilled in your time in the Parliament. It gives me a great deal of pleasure to follow the previous speaker, the outstanding spin bowler from Ōhāriu. He surprises me somewhat that he’s back here—I thought he would’ve got a contract in England.

This bill is one of many, many tax bills that fulfil the insatiable appetite of this Government to spend more money, but, none the less, it’s a very complex area, taxation, and the number of tax bills that we have going through the select committee never ceases to amaze me.

All that I need to say on this has been said, and I’m a great believer in the fact that if one doesn’t have anything useful to say, then say nothing, so I will commend the bill to the House and wish it all the best as it goes through the select committee process.

DAVID SEYMOUR (Leader—ACT): Madam Speaker, it’s with great pleasure that I rise and join with others that have spoken in congratulating you on your recent ascension to the role of Assistant Speaker, a role I’m sure you’ll discharge with a high level of confidence and aplomb. Having done the requisite greeting, I shall get on to explaining why the ACT Party opposes this bill.

It’s tempting for people to say, “Oh, well, it’s just fixing up a broken system. There’s nothing particularly malign in the bill, so why not support it?” The reason not to support it is that by supporting even useful changes to a malign system of tax policy, you’re endorsing that system of bad policy. We heard from the National Party spokesperson for finance that the bill would be better if only it included a provision to adjust the thresholds at which different tax rates kick in. Well, there’s a theme emanating from that comment, which is that a significant part of the tax changes here are necessary only because we insist in this country on having five different tax rates: four income tax rates and trust and company rate. Much of the business that’s gone through the Finance and Expenditure Committee, and through this Parliament with regard to tax over the years that I’ve been in this Parliament, has been necessary only because the inland revenue is constantly engaged in a game of cat and mouse with the taxpayer, trying to ensure that the correct tax has been levied at the correct tax rate.

This is symptomatic of a wider problem that New Zealand has. Some members, I’m sure, will be familiar with the professor of economics—whose name’s going to escape me, I know him so well—Tim. Who, for a long time, at Auckland—[Interruption] On a first name basis: Tim Hazledine, in fact. Tim Hazledine’s a lefty, but everyone has their uses. I think one of his most useful contributions is to point out that New Zealand’s productivity has been addled by spending far too much time on what he calls “transactional activity” and not enough time on what he calls “transformational activity”—far too much time arranging to do work, organising other people to do it, getting permission to work, and checking that work has been done, and not enough time actually doing work. This tax legislation and so much like it is symptomatic of that exact problem.

Some people might say that it’s defensible because there is so much more revenue raised by having a system with multiple tax rates. Members might be surprised if they asked themselves—and many of them won’t have—how much revenue really is gained from having a system of multiple rates? Well, this Government raises, from a combination of income tax on persons and companies, around about $50 billion a year. Less than 20 percent of that, or $10 billion, is raised from the fact that we have multiple tax rates.

We could dramatically simplify our lives in this Parliament—and on the Finance and Expenditure Committee, I might add—but much more importantly, the lives of so many New Zealanders, if we levied income and company taxes at one rate. If we were to do that, we’d also find that we might not need to have an R & D tax credit scheme, which simply introduces more bureaucracy and more transactional activity for people trying to work out when exactly they should be paying how much tax.

So I oppose this bill. ACT opposes legislation that makes life more complicated for minimal gain. The ACT Party believes we could have the fairest, simplest, and most aspirational tax policy, of one rate, in the world, if only this House rejected bills like this and chose to do so. Thank you, Madam Speaker.

DAN BIDOIS (National—Northcote): Madam Speaker, thank you very much, and may I congratulate you on your ascension to Assistant Speaker. I hope that goes well. I had to clean my ears out because it’s not that often you hear David Seymour quoting a left-wing economist, and particularly one such as Tim Hazledine.

We’re here today to support the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill. A lot has been said on this side of the House, so I’ll keep this call very brief. It is an omnibus bill that is basically trying to simplify the system and also make sure we maintain the overall principle of our system, which is a broad-based - low rate system, and that we encourage and further encourage R & D expenditure in New Zealand, which, I might add, is still very low, both from a public lens but also from a private sector lens as well.

So we support these changes. This bill makes a whole bunch of recommended changes to KiwiSaver, to the student loan scheme, and a whole raft of other changes as well. I do hope that by sending this to the Finance and Expenditure Committee we’re able to iron out some of those details, but also keep in mind some of our foundation principles of our taxation system here in New Zealand. The first is around making sure that people pay their fair share of tax—no more, no less. The second is that we maintain our broad-based and low-rate system. The third is a taxation system that’s easy to administer. The fourth and final principle that I want the select committee to look at and uphold is about borrowing funds. That is, if you borrow funds from the State, that you in fact repay those funds in full.

I know that we’re going to be discussing in select committee a whole bunch of changes to the student loan scheme for those that are overseas, and I was one of those, and duly repaid my loan—must’ve been a couple of years, now. But I think that that’s really important; that if you do take a student loan out, you repay that in full. So it’s a pleasure to support this bill in the House, and I look forward to watching it progress through to select committee.

Dr DEBORAH RUSSELL (Labour—New Lynn): Madam Speaker, congratulations on your elevation to the Speaker’s Chair. It’s a pleasure to see you there, and it is a pleasure to take this last call on this excellent tax bill, the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill. We’ve had a number of interesting comments made by speakers in the House this evening, and I wish to pick up a number of these comments in turn, and reflect on them in the context of this bill.

The first comment I wish to reflect on is the one from my colleague Mr James Shaw, who asks: “Does the detail of the bill meet the purposes of the bill?” A very good question to ask about a tax bill. But a reminder to Mr Shaw that perhaps he might not have all the detail quite covered. There is, in fact, no chair of the Finance and Expenditure Committee right at this moment. There will, hopefully, be one after tomorrow’s meeting. In any case, I am sure that the members of that committee will examine this bill with great care.

Moving on from there, our colleague Mr David Seymour spent a considerable portion of time worrying about the rates of tax which are paid, and arguing that if only we had a flat tax rate, we wouldn’t need much of the detail of this bill. He is wrong, straightforwardly. There is every year, of course, on the first grounds, an annual rates bill, which is an open invitation to discuss the rates of taxation. But something else that goes on with tax is not only the need to set a rate, or rates of taxation, but to think very carefully about the rules by which income is measured, the rules by which we assess income, and, therefore, income tax, and the rules we have for paying and repaying tax. This is what this bill is about. It is about the machinery of taxation. It is about the architecture of the Income Tax Act. It is about the rules of taxation, not about the rates of tax. I invite Mr Seymour to consider that the next time an annual rates bill rolls around, as they do every single year.

The third issue I wish to speak on is something that was raised by the Hon Michael Woodhouse. A particular detail of this bill, and that is to do with our charities law, and the fact that each time we wish to give an entity the status of being a charitable entity, so that then, in that case, tax rebates may be claimed for donations to that entity—that appears in primary legislation, as it does, indeed, in this particular bill. We list a number of entities who are going to be given charitable status. Mr Woodhouse said, “Well, do we really need to do this in primary legislation? Perhaps it could be done in subsidiary legislation.” I think Mr Woodhouse has a point. It would be something that would be worth discussing. But, just to counter that point, it is worth remembering that we are offering a concession to these organisations; that we are offering them something which comes from the pockets of New Zealand taxpayers. So it possibly is worth considering every single one of these entities in turn in primary legislation, and by this House. So I’m not sure which of those arguments would carry more weight, but I do think there are definitely two sides to that particular point.

But the issue I wish to reflect on most of all, and it is an issue that concerns me with this bill, was something that, oddly enough, was raised—somewhat in passing, I suspect, but nevertheless raised—by the Hon Judith Collins, who, in her speech to us, said—she was thanking “employers who collect tax of Parliament”. That actually points to a particular issue in this bill that I am very concerned about, and it arises with respect to the refundability of research and development tax credits. We intend and want—we are working towards encouraging more research and development in this country. To that end, we have put in place a research and development tax credit. But, of course, one of the problems with tax credits is that, in order to claim the tax credit, an entity has to pay tax in the first place. When it comes to firms that are engaged in research and development, often they’re start-up firms.

By the very nature of start-ups, often they don’t make profits for quite some time. So they pay no tax, and, therefore, they can’t claim the credit. In the initial legislation around the research and development tax credit, we put in place a measure by which firms who were not yet in profit could, nevertheless, collect some of that tax credit as a refundable tax credit. It’s a way of encouraging start-up firms. This particular bill contains a further measure to ensure that firms that are in a loss position for tax purposes, and, therefore, paying no tax, can nevertheless at least claim some refundable tax credits. Looking at the regulatory impact statement and some of the information there, we are told that we think that of the firms who are performing research and development, there might be around about between 750 and 1,200 who are in a tax loss position. But under the current rules, only 350 to 650 of those might be able to claim the refundable tax credit.

So half of those firms who are performing R & D, and are eligible for the credit, except for the fact that they don’t actually pay tax, can’t actually get that refundable tax credit. So this bill extends that refundable tax credit. But one of the worries when there is a refundable tax credit is that some firms can exploit it. So there is always a need for a cap on it. The cap on this one is set at the amount of payroll tax that a firm pays, and this is my issue. I think it sits in clause 111, where a new term is introduced into our Income Tax Act, and it’s the idea of a payroll tax-based cap. Now, my understanding is that a payroll tax is normally an amount that is extra, on top of the amount of salary that an employer pays. For example, if an employer has a payroll cost of say, I don’t know, $500,000 and there is a payroll tax of, I don’t know, say 1 percent, well, then that employer would pay $5,000 of payroll tax. It’s extra and over above the basic payroll cost. Some people might characterise our ACC levy as a payroll tax.

But the problem with this payroll tax is the amount is actually the amount of PAYE—that’s pay-as-you-earn—employer superannuation contribution tax (ESCT), and fringe benefit tax that the employer pays. They are not payroll taxes. A firm pays salary and wages and then, as the Hon Judith Collins correctly pointed out, the firm collects a portion of those and pays it over to IRD. The firm will pay its employees in the form of perks, of cars or whatever, or fringe benefits, and then on top of that it has to calculate the proportion of that. It is equivalent to the PAYE. The same thing applies with ESCT, and the point is that those are not the firm’s taxes; they are the employee’s taxes. All the firm is doing is collecting the tax on behalf of the employee and paying it over to IRD. So it is the employee’s tax, not the employer’s tax.

I think that the term “payroll tax” implies that it’s the employer’s tax, and this is quite a conceptual issue, and I think it’s one that I hope that the select committee ought to grapple with, whether that particular term catches the essence of what is being paid. I think it’s the employee’s tax. In fact, we always think of it as based on the employee’s own income, not on the employer’s. I think it’s important to make that distinction, and it’s something I think we need to look at when we get to the select committee process. It’s perhaps a small point, but it is a conceptual point. It’s one I will be talking to officials and to other members of the select committee about, and I hope we can do something to resolve it, because it is a new term in our tax system. I think we need to be careful about it—careful with all the detail of the tax bill, as Mr James Shaw urged us to be. This is an excellent bill and I commend it to the House.

A party vote was called for on the question, That the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill be now read a first time.

Ayes 118

New Zealand National 55; New Zealand Labour 46; New Zealand First 9; Green Party of Aotearoa New Zealand 8.

Noes 1

ACT New Zealand 1.

Bill read a first time.

Bills

Copyright (Marrakesh Treaty Implementation) Amendment Bill

Second Reading

Hon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): I move, That the Copyright (Marrakesh Treaty Implementation) Amendment Bill be now read a second time.

Madam Speaker, before I start thanking others, can I acknowledge you in your new role as Assistant Speaker. I’m sure you’ll use your wisdom and judgment as you did as senior Government whip in your new role in the Chair. I’m more used to you calling on my name not to speak, so it is nice to have the invitation from you to make a contribution tonight. Let’s see how we go.

I do want to thank the Economic Development, Science and Innovation Committee, or EDSI, for their work and consideration of this legislation.

Jonathan Young: You’re welcome.

Hon KRIS FAAFOI: Very hard-working. I also want to thank all of those who took time to submit and provide insight and feedback at the select committee.

This bill amends the Copyright Act to allow New Zealand to accede to the Marrakesh Treaty. A little bit of background to that treaty: it is estimated that only 10 percent of all written material that is published worldwide is published in formats that are accessible to people with a print disability, and this lack of access is a barrier in public life and it also restricts employment and education and also recreational opportunities for people with print disabilities. To address this problem, the World Intellectual Property Organization, or WIPO, concluded the Marrakesh Treaty to provide an international legal framework for an exception to copyright infringement to facilitate the production and international exchange of copyright works in accessible formats. Fifty-five countries are now party to the Marrakesh Treaty, including Australia, Canada, Chile, Singapore, the United States, and the European Union.

The Copyright Act of 1994 already has an exception to copyright infringement that allows prescribed bodies as within this bill to make accessible-format copies without the need to seek the copyright owner’s permission. However, two things: first of all, only a small number of organisations, with limited resources, are providing copies of accessible formats to a small group of persons with a print disability, and, secondly, the current exception does not provide for the import of accessible formats of works, which results in costly and time-consuming duplication in converting works to accessible formats when accessible-format copies of these works may already exist and may already be available from other countries at a much lower cost. To address these issues, the bill proposes to replace section 69 of the Copyright Act with new section 69 and new section 69A through to section 69D.

All submitters expressed support for the aims of the Marrakesh Treaty. However, some submitters expressed differences of opinion on some aspects of this legislation. Groups representing copyright owners and authors generally argued that the conditions imposed on authorised entities by the bill might not be adequate to protect the interests of copyright owners and authors. They submitted that the bill should impose stricter conditions than those that are currently set out in the bill. Many of the concerns raised by those copyright owners and authors are also relevant to other exceptions in the Copyright Act, and I consider that these are better dealt with as part of the review of the Copyright Act currently being carried out by the Ministry of Business, Innovation and Employment.

Many of the other submitters argued that conditions imposed in the bill—in particular, the commercial availability test—were too onerous. They submitted that these conditions may deter authorised entities from making accessible-format copies or may make it difficult for authorised entities to provide timely access to accessible-format copies.

The bill was reported back from select committee with the unanimous recommendation that it be passed with amendments. Most of the amendments are minor and are intended to clarify some aspects of the bill. The most significant amendment is the removal of the commercial availability test. The select committee heard both arguments for and against the commercial availability test and decided that, on balance, a formal requirement for a commercial availability test would disadvantage print-disabled people disproportionately to the benefit gained by copyright holders.

I agree with the recommendations in the select committee report. These recommendations stayed true to the original intent of the bill and provide greater clarity, so can I thank the select committee for its work in that respect. I think it has been made a better bill as a result of the select committee process in allowing both of those sides to have that debate, and I think that the select committee has landed at the right place there. So I commend this bill to the House.

BRETT HUDSON (National): Thank you, Madam Speaker, and likewise allow me to congratulate you on your “ascension”, as it has been termed tonight. It sounds almost like ascending to heaven, your ascension to the role of Assistant Speaker. I am sure that you will conduct yourself in this role in the same even-mannered and, I would say, very respectful way you did as chair of the Government Administration Committee in my first term, in the last Parliament. So congratulations.

It’s a pleasure to stand in support of this bill, which will help to implement the obligations that we have signed up to as part of the Marrakesh Treaty, in order to make print works more accessible to those with print disabilities. As the Minister has said, I’d also like to congratulate the work of the members of the Economic Development, Science and Innovation Committee. I did sub on for this particular item of business. Clearly, it’s a committee that works very constructively on matters such as these.

The one item of contention, really, to be discussed was this issue of the commercial availability test. I think there are, out of about 55 countries that have implemented legislation or have signed up to the Marrakesh Treaty, perhaps only four others that had a commercial availability test, and members of the committee weighed up the pros and cons of retaining versus removing it. It was our view that removing it actually helps to create a good market tension for these sorts of works and accessibility versions—that the publishers or copyright holders have a natural incentive to want to provide print accessible copies, because there is a market for them, and those authorised entities that are seeking to obtain them to provide them to people who need them have a natural incentive to want to see if there are well-priced commercial versions available, because there is a significant—a not insignificant cost—in creating them.

So we looked at that on balance and found that removing the test not only will keep us in step with so many other countries signed up to this treaty but would actually create the right sort of tensions in what is a marketplace that would ensure protection for copyright holders and ease of availability, speed of availability, and lower cost for consumers. I commend this bill to the House.

JO LUXTON (Labour): Thank you for the opportunity to begin my contribution this evening; I don’t know that I’ll get through the whole entire amount, but I am pleased to stand and take a call on this piece of legislation. This piece of legislation, I believe, is about accessibility, and it is better accessibility for people in New Zealand who do face considerable challenges in their everyday life. As the Minister said earlier, less than 10 percent of all written materials published are in an accessible format. That is actually, potentially, affecting an estimated number of up to 168,000 New Zealanders. That is 168,000 New Zealanders where a lack of access is potentially creating a barrier for them to participate fully in work and education. We’re striving for a more inclusive society, one without barriers, where people can actually participate fully and have equitable opportunities by amending the Copyright Act to allow New Zealand to accede to the Marrakesh Treaty. It is one way of working towards that by facilitating the access to published works for people who are blind, visually impaired, or otherwise print disabled.

This bill provides for an international framework for the production and dissemination of copies of books and other literary works in an accessible format, including Braille, large print, and audio books. It requires members to sign up to provide copyright exemptions that allow authorised entities to make accessible format copies without permission of the owner and allows for the ability to import and export accessible copies with other members, which is something that we currently don’t have. It does not allow for that import/export between countries. So, when countries sign up to this treaty—as the Minister said, 55 members actually have signed up, including Australia, Canada, Chile, Singapore, the US, the European Union. They’ve all signed up, and what we also found out during our time on select committee, hearing submissions, listening to evidence, was actually that the majority of these countries did not have the commercial availability test, which is something I will come to a little bit further on in my contribution.

So we had a number of submissions, both oral and written, submissions that came from members of the public—librarians, universities, and actually people who are visually impaired.

Debate interrupted.

The House adjourned at 10 p.m.