Tuesday, 30 July 2019

TUESDAY, 30 JULY 2019

TUESDAY, 30 JULY 2019

The Speaker took the Chair at 2 p.m.

Karakia.

Oral Questions

Questions to Ministers

Question No. 1—Health

1. Dr LIZ CRAIG (Labour) to the Minister of Health: What recent announcements has he made about dialysis and cardiac facilities at Middlemore Hospital?

Hon Dr DAVID CLARK (Minister of Health): Earlier this month, I visited Middlemore Hospital to announce that the Government has approved the upgrade and expansion of its high-dependency dialysis unit and cardiac catheter laboratory. Counties Manukau District Health Board (DHB) has high health needs, particularly among Māori and Pacific communities, and the clinicians I spoke with during my visit told me of the significant pressure these services have been under and the effect that has had on their patients. They welcomed confirmation that the DHB’s self-funded $14.6 million project will now go ahead and increase capacity for both of these vital services.

Dr Liz Craig: How much extra capacity will be added due to this development?

Hon Dr DAVID CLARK: Last year, Counties Manukau DHB’s high-dependency dialysis service, which currently has 20 beds, treated up to 92 patients a week. This upgrade and expansion will deliver an extra six beds, which means an additional 24 patients can be treated each week. The investment also means a second cardiac catheter laboratory will be built at Middlemore, providing more specialist procedures for people with acute and long-term cardiac conditions. This long overdue expansion of services will make a huge difference to people in Counties Manukau.

Dr Liz Craig: How important are these sorts of capital investments in our hospitals?

Hon Dr DAVID CLARK: Modern, fit-for-purpose health facilities play a key role in ensuring that New Zealanders get the care they need to improve their health and wellbeing. As a Government, we are committed to improving the standards of our hospitals and health facilities, which have been neglected for far too long. The Wellbeing Budget included investment of $1.7 billion for capital works in health—more than the previous Government invested over all its nine Budgets in just our first Budget of this nature.

Question No. 2—Prime Minister

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

Hon Grant Robertson: He?

SPEAKER: The Hon Grant Robertson—and that is exactly right.

Hon GRANT ROBERTSON (Minister of Finance) on behalf of the Prime Minister: Yes.

Hon Simon Bridges: Is it his Government’s policy to uphold private property rights in relation to Ihumātao?

Hon GRANT ROBERTSON: As the member, I’m sure, will be well aware, the situation at Ihumātao is complex. We certainly are committed to ensuring that we support mana whenua, the relationships that they have built with, for example, Fletcher’s, but also to make sure that we come forward as a Government to play the role that a responsible Government does in helping to broker a solution.

Hon Simon Bridges: Is the Government considering buying land off Fletcher’s?

Hon GRANT ROBERTSON: No such decision has been made.

Hon Simon Bridges: Does he agree with then Acting Prime Minister Winston Peters, who said this morning that many of the protesters at Ihumātao are “imposters”?

Hon GRANT ROBERTSON: The views of the Acting Prime Minister, Mr Peters, are his. What he was saying is that there are many people who are at Ihumātao who are not mana whenua. Equally, there are people at Ihumātao who are mana whenua. On this side of the House, we take our responsibilities as a Government seriously. That’s why the Prime Minister, on Friday, asked for a pause so that there could be discussions to find a way through. That’s what a constructive Government does.

Hon Simon Bridges: Does he agree with his confidence and supply partner Marama Davidson, who said “colonisation is actually continuing with this land confiscation” in relation to Ihumātao?

Hon GRANT ROBERTSON: Marama Davidson is perfectly entitled to her view. What the Government is doing is playing a responsible and constructive role in making sure that, in part, we clean up the mess Nick Smith left us.

Hon Phil Twyford: Why has she undertaken a visit to—

SPEAKER: Order! Order! The member should listen to the earlier questions. The Acting Prime Minister is Mr Davis—certainly not a she.

Hon Phil Twyford: Why has the Prime Minister undertaken a visit to Tokelau?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, the Prime Minister believes that all New Zealanders deserve to see their Prime Minister once in a while. Unlike the previous Government, we’re not going to ignore the people of Tokelau, nor are we going to behave in such a disrespectful way as the Leader of the Opposition has by suggesting that Tokelauans are not everyday New Zealanders—what did you mean by that, Mr Bridges?

SPEAKER: Order! The member will resume his seat. Mr Robertson knew that that last comment was out of order. He will withdraw and apologise.

Hon Grant Robertson: I withdraw and apologise.

Hon Simon Bridges: When is the Prime Minister going to visit, say, the suburb of Te Atatū, or Mātua in Tauranga, where she hasn’t been, I think, as Prime Minister, and is she disrespecting them too as everyday New Zealanders?

Hon GRANT ROBERTSON: The Prime Minister, as I think that member will know, is extremely busy and visits many parts of New Zealand. But one thing I can guarantee that she would never ever do is seek to divide New Zealanders against each other by suggesting that some people are everyday New Zealanders and other people are not everyday New Zealanders.

Hon Chris Hipkins: Does the Prime Minister agree with the reported comments of the Leader of the Opposition that she shouldn’t be visiting the other Pacific Islands either?

Hon GRANT ROBERTSON: No. The Prime Minister believes that we have a responsibility to the Pacific region but a particular one to the Realm countries of New Zealand: Niue, the Cook Islands, and Tokelau. Just because the previous National Government couldn’t be bothered going to Tokelau, doesn’t mean we’ll give up on our responsibilities.

Hon Simon Bridges: Why didn’t the Prime Minister go to Tokelau during the one-, two-, three-week recess we just had?

SPEAKER: Order! Order! The member will resume his seat. The Leader of the Opposition will ask that question in order. He doesn’t need to count in that way and he knows that.

Hon Simon Bridges: Why didn’t the Prime Minister go to Tokelau during the three-week recess?

Hon GRANT ROBERTSON: The Prime Minister was busy through the three-week recess working—

Hon Simon Bridges: On holiday!

Hon GRANT ROBERTSON: Well, the member can’t have it both ways. The Prime Minister was visiting Christchurch and Hamilton. She was in Melbourne meeting Scott—

Hon Gerry Brownlee: Photo shoot.

SPEAKER: Order! The member will resume his seat. Mr Brownlee, turn the volume down.

Hon GRANT ROBERTSON: The Prime Minister was busy in the recess. She was visiting Christchurch and Hamilton, she was in Australia meeting with Scott Morrison, and, yes, she took a one-week break, I think, not unlike the Opposition leader did. Every Prime Minister in New Zealand’s history has been a full-time Prime Minister. All Prime Ministers work hard. The Leader of the Opposition is showing himself to be both desperate and disrespectful.

Hon Simon Bridges: Does he agree with the former Treaty negotiations Minister Chris Finlayson, who said Ihumātao was fully and finally settled in 2014; if so, what effect does Jacinda Ardern’s intervention have on that settlement?

Hon GRANT ROBERTSON: There are a number of cross-cutting claims in this particular area. Yes, there were settled Treaty settlements that covered this particular area as well, but, on this side of the House, we don’t wash our hands of relationships between Māori and the Crown the moment that a Treaty settlement is signed. We are doing the right thing here to try to broker a deal.

David Seymour: What exactly is the Government’s strategy to uphold the legitimate property rights of those who have settlements over Ihumātao?

Hon GRANT ROBERTSON: Along with the mana whenua, Fletcher’s was involved in meetings on Friday that led to the conclusion that there should be a pause. This is about dialogue. This is about taking a constructive approach, one which Fletcher’s are part of.

David Seymour: How does it help and how is it constructive to reward those who have illegally occupied the land with a seat at the table?

Hon GRANT ROBERTSON: I reject the premise of that question.

Hon Simon Bridges: Whose voice is more important in relation to Ihumātao: the private property owners or the Labour Māori caucus?

Hon GRANT ROBERTSON: That kind of question betrays the divisive, disrespectful, and desperate way that the Opposition leader is approaching this. What Mr Bridges needs to do is apologise to the Prime Minister.

Hon Simon Bridges: Is he going to adopt a different approach to discussing Ihumātao openly with the media than Jacinda Ardern, who, according to Newshub, “personally [prevented] media from asking about the Ihumātao dispute while on a charm offensive in the Pacific.”?

SPEAKER: Order! Order! The member will ask the question again, in a straight way, without unnecessary comment.

Hon Simon Bridges: Is he going to adopt a different approach to discussing Ihumātao openly with media than Jacinda Ardern, who, according to Newshub, “personally [prevented] media” from asking about the Ihumātao dispute while in the Pacific?

Hon GRANT ROBERTSON: I’m finding it difficult to follow the Opposition’s line here. Do they want the Government to be involved at Ihumātao, or don’t they want the Government to be involved at Ihumātao? He’s taken both positions today. What I can say is that we continue to be involved in constructive dialogue, because that’s what leadership looks like. The member might want to learn something from that.

Question No. 3—Health

3. Hon MICHAEL WOODHOUSE (National) to the Minister of Health: Does the Interim Cancer Action Plan he is finalising, include the establishment of a national cancer agency; if not, why not?

Hon Dr DAVID CLARK (Minister of Health): It is great to see the National Party adopting Labour policy from 2017. As Minister of Health, I am committed to fixing the legacy—

Hon Dr Nick Smith: Because you’ve broken your promise.

SPEAKER: Dr Nick Smith: stand, withdraw, and apologise.

Hon Dr Nick Smith: I withdraw and apologise—what the hell for, I’m not sure.

SPEAKER: Start the answer again.

Hon Dr DAVID CLARK: It is great to see the National Party adopting Labour policy from 2017. [Interruption] As Minister of Health, I’m committed to fixing the legacy of underfunding we inherited—

SPEAKER: Order! Order! I’m now going to require the Minister to be less provocative, but for the answer to be heard in silence.

Hon Dr DAVID CLARK: As Minister of Health, I’m committed to fixing the legacy of underfunding we inherited. We’re determined to ensure the same high quality of cancer care across New Zealand no matter who you are, no matter where you live. It is important to remember the history; that in 2015, Cancer Control New Zealand was scrapped, which was the one agency at the time with the mandate to provide strong central leadership on cancer control, and I do welcome the National Party’s announcement that it’s had a change of heart. The Interim Cancer Action Plan is currently being finalised, and I don’t intend to make announcements about it today.

SPEAKER: Can I just say to the Minister, if his entire answer was the last sentence, there’d be a lot less disorder in the House.

Hon Michael Woodhouse: Does he stand by his statement, “One of the downsides of looking at an agency is having a separate organisation that’s not as well connected to Central Government and not able to be as directed.”, and wasn’t the whole idea of an independent agency so they could guide and direct the sector, and not the other way around?

Hon Dr DAVID CLARK: There were a number of criticisms in 2017 of the policy that the then Labour Party had. One was, and I quote, “This is a bureaucracy that is proposed that will not actually achieve anything, just chew up more money that could be spent on patients.” That’s a quote, of course, from the former finance Minister Steven Joyce. The strengths and weaknesses of different agency models are something that one has the privilege of working through in Government to ensure that, together with the sector’s input, we develop the best possible response to cancer control, acknowledging the nine years of neglect that we’ve inherited and the uneven provision of services that we’ve inherited. As Minister, I’m determined to own those problems and get on and fix them.

Hon Michael Woodhouse: Well, does he agree with Labour MP David Clark, who said in July 2017 that a new agency was needed and that it “seems to be the international best practice”?

Hon Dr DAVID CLARK: I am glad that the member and his party have caught up to where Labour were in 2017. Since that time, I’ve taken the time to build further relationships with those who deliver the care in the sector, and I look forward to the member’s support when he catches up to where we are in 2019.

Hon Michael Woodhouse: Did the Ministry of Health provide advice to him that led to his determination that an agency could not be directed?

Hon Dr DAVID CLARK: I reject the member’s phrasing of that question, and I am not about to make announcements today on the nature of the framework that will support our Interim Cancer Action Plan. We are determined to deliver a higher quality of cancer care to all New Zealanders, to ensure that that high standard of care is in place across the country. Strong central direction; that’s the principle we’re working to, and that’s what we’ll deliver.

Hon Michael Woodhouse: What is the definition of “interim”?

Hon Dr DAVID CLARK: I think, if the member looks in the dictionary, he’ll find something along the lines of “until it’s been finalised by the sector”. [Interruption] So it’s a plan that is being consulted with the sector on. The interim plan, because it—the member smirks, but he may not realise that it’s actually doctors and nurses and others that provide the care, and it’s important that, when we put an interim plan out, they have a say before it is finalised as the final action plan. We’re a Government that consults and works with others to deliver cancer care, not one that makes up arbitrary decisions on the hoof for political gain.

Hon Michael Woodhouse: Well, can we take it that “until it has been finalised” could be construed as what has happened with the mental health and addiction plan, which took two years to frame and is now back on the road so the Government can be advised what they should be doing?

Hon Dr DAVID CLARK: The member mischaracterises that deliberately. We are getting on in the mental health area—

SPEAKER: Order! Order! Start again.

Hon Dr DAVID CLARK: I don’t wish to provoke the member, so let me rephrase that. The member does mischaracterise that, in my view. The fact is that, with the mental health and addiction plan, we’re getting on and delivering services now. We’ll be supporting services that are already working, but we take the feedback from He Ara Oranga, the inquiry into mental health and addiction, which said that those that are missing out need to be a part of designing services so that we actually have full provision of services for the people that have been missing out under his Government’s watch, because we know that the majority of New Zealanders have not been able to access the services they need in the mental health and addiction area. This is the first Government to take mental health seriously. We don’t apologise for that. We’re doing it once. We’re getting it right.

Question No. 4—Social Development

4. ANAHILA KANONGATA’A-SUISUIKI (Labour) to the Minister for Social Development: What recent initiatives has she announced about supporting young people towards employment?

Hon CARMEL SEPULONI (Minister for Social Development): On Friday, I announced an initiative led by the Ministry of Social Development (MSD) to help young people in Auckland to gain their driver’s licence. The partners in this scheme include the Ministry of Justice, New Zealand Police, the Auckland Business Chamber, Vehicle Testing New Zealand, and low-decile secondary schools across the Auckland region. This initiative is a three-year commitment and over the next financial year will help more than 3,000 people gain their driver’s licence. We know that not having a licence can be a major barrier to finding a job. Removing this barrier will increase the employment opportunities available to young people.

Anahila Kanongata’a-Suisuiki: What other initiatives from MSD will help support people to get their driver’s licence?

Hon CARMEL SEPULONI: In June, we launched a national scheme for youth involving a partnership between MSD, Oranga Tamariki, and the New Zealand Transport Agency. Over the next two years, the youth scheme is expected to support up to 2,500 people in the Youth Service or Oranga Tamariki care to get their driver’s licence. On top of that, across New Zealand, MSD clients can also get help with getting or renewing a licence. In the six months to March 2019, MSD helped 5,500 people from all over the country to get a driver’s licence.

Anahila Kanongata’a-Suisuiki: Why are these initiatives important?

Hon CARMEL SEPULONI: We recognise how important it is for people to have a driver’s licence. Job seekers have an advantage if they have a licence, and in some cases it can be the deciding factor on whether or not they get the job. We’re committed to investing in people in Auckland and across the country to help them gain this important qualification and reduce this potential barrier to meaningful and sustainable employment. Supporting young people to get a driver’s licence will make the roads safer for everyone and will enable them to access more opportunities for work and training.

Question No. 5—Prime Minister

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

Hon GRANT ROBERTSON (Minister of Finance) on behalf of the Prime Minister: Yes.

Hon Paula Bennett: Is it appropriate that, under the Referendums Framework Bill, due to be read on Thursday, the only people able to consider the question of a referendum will be Cabinet, side-stepping the important democratic process of the whole of Parliament being able to scrutinise the question?

Hon GRANT ROBERTSON: Ultimately, in our system, Cabinet takes responsibility for decisions such as this. Cabinet will, no doubt, as it always does, listen carefully to advice.

Hon Paula Bennett: When previously has Cabinet alone decided the question of a referendum when it hasn’t gone to Parliament?

Hon GRANT ROBERTSON: I don’t have that information with me, but if the member would like to put a question down on notice, I’m sure I can answer it for her. [Interruption]

SPEAKER: Order! Order! Members have been warned previously that, when non-specific questions are placed, that sort of response is absolutely appropriate. The two Speakers who preceded me made that very clear, and I’m not going to have disorder occurring when such a response happens.

Hon Amy Adams: Oh, we’re still allowed to interject.

Hon Paula Bennett: Supplementary. Is—

SPEAKER: Order! The member will resume her seat. Amy Adams, you are a senior member and a retiring member and one who generally behaves very well. Having commentaries on my rulings from you is not helpful.

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

SPEAKER: A Paula Bennett—sorry, a point of order. [Interruption] That’s a mistake I shouldn’t have made.

Hon Gerry Brownlee: It’s going to be pretty hard for me to get over too, I’ve got to say. But my point of order is this: in his answer to that question, the acting Prime Minister said that Cabinet had always taken responsibility for the questions that were asked in referendums, and then was asked the question, “Well, when has it happened before?” and said, “I don’t know.” Well, how could the first answer stand if the second one is correct? The reality is it’s never happened before.

SPEAKER: Well, the member is now disputing an answer to a question, and he does know that that is not in order.

Hon Gerry Brownlee: No; no, sir. I’m concerned that you made a statement that it was unreasonable to ask the question that was asked when, in fact, the question that was asked by the Hon Paula Bennett was a follow-up to the answer given by the acting Prime Minister.

SPEAKER: Well, I—[Interruption] No, the member will resume his seat. I’ll apologise for my lack of clarity. I wasn’t indicating that the question was inappropriate but that the very noisy response to the answer was inappropriate.

Hon Paula Bennett: Is a referendum question being considered by Cabinet, and not the Parliament, in line with the self-proclaimed most open and transparent Government ever?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, yes.

Hon Paula Bennett: Does he believe it is acceptable for Government websites to instruct the public on how to take synthetic drugs, given that up to an estimated 80 people have died from these drugs in the last two years?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I simply don’t know what specific instances the member is referring to. Obviously, if she has examples of that, she probably is about to raise them, and we will look into them at that time.

Hon Paula Bennett: Would she be concerned, then, to learn that the Wellington Regional Public Health website gives clear instructions on how people should take synthetic substances, and what messages does she think this sends?

Hon GRANT ROBERTSON: I’m sure the member will be well aware that the Government does not control the many websites of public health authorities or even DHBs. Clearly, we can take a look at that. The approach taken by those public health authorities will no doubt be based on their best clinical judgment.

Chlöe Swarbrick: Can the Prime Minister confirm whether or not the Opposition’s drug law reform spokesperson, the Hon Paula Bennett, has yet accepted the invitation of a Minister of this Government to be involved in a cross-party group on the cannabis referendum?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I’m not aware that that invitation has been accepted. If the Opposition was more interested in being constructive than playing politics on this issue, that would be helpful for all New Zealanders.

Question No. 6—Finance

6. Hon PAUL GOLDSMITH (National) to the Minister of Finance: Does he accept that Government spending decisions involve trade-offs; if so, does he stand by his statement “these things are not trade-offs against one another”, in relation to the Government spending $7 million on Artists in Schools and not reinstating $6.5 million for cochlear implants?

Hon GRANT ROBERTSON (Minister of Finance): In the broadest possible sense, in Government spending, as in life, there are decisions that need to be taken to take one action or another—so in that sense, yes. In response to the second part of the question, yes, in the context of the full statement I gave.

Hon Paul Goldsmith: So why in Budget 2019 did the Government allocate $1 billion to the Provincial Growth Fund and just an extra $10 million a year to Pharmac to buy lifesaving drugs?

Hon GRANT ROBERTSON: The $1 billion was granted in accordance with the coalition agreement between the Labour Party and New Zealand First. In response to the second part of the question, the amount of money that goes into Pharmac varies from Budget to Budget. An extra $114 million went in in Budget 2018, $10 million went in in this Budget, and I note, I think it was between the years 2014 and 2015, absolutely no new money went into the Budget for Pharmac.

Hon Paul Goldsmith: Does he accept there’s a trade-off between giving a baby bonus to high-income families and putting more money into cancer drugs?

Hon GRANT ROBERTSON: We put together a Families Package that will leave 380,000 families $75 a week better off. That is a very important investment. When it comes to our investment in Pharmac, that is part of a health budget that has increased, I believe, in this latest Budget by around 11.5 percent. We are taking the time now to rebuild a health sector completely undermined by the under-investment of the previous Government.

Hon Paul Goldsmith: So does he accept that there’s a trade-off between providing free fees at university and tertiary to students from high-income families and putting more money into cancer drugs?

Hon GRANT ROBERTSON: Once again, the member, as with previous finance spokespeople on the Opposition side, has mischaracterised that policy. I think it’s an interesting insight into the mind of the member that he doesn’t think that policy is actually for apprenticeships and industry training and people who are already in the workforce who haven’t studied beyond school. It is a policy that is about investing in the future skills of a range of New Zealanders.

Hon Paul Goldsmith: Why is the Government indexing benefit rates to inflation but not indexing tax brackets to inflation, and what message does that send?

Hon GRANT ROBERTSON: We were responding, in the case of the indexation to, in part, the Welfare Expert Advisory Group’s call, and, actually, to undo a massive injustice done to those on benefits, dating all the way back to the “mother of all Budgets.”

Question No. 7—Revenue

7. Dr DEBORAH RUSSELL (Labour—New Lynn) to the Minister of Revenue: What advice has he seen in relation to the auto-calculation of tax refunds for individuals?

Hon STUART NASH (Minister of Revenue): Since the end of May, Inland Revenue has automatically refunded $572,223,260 in cold hard cash.

Hon Members: Wow!

Hon STUART NASH: It’s a good amount.

SPEAKER: And 91c.

Hon STUART NASH: Yes, sorry. This has landed in the bank accounts of over 1.3 million hard-working Kiwis. It’s $188 million more than was refunded last year, at an average of $430 per taxpayer. Taxpayers are now getting refunds faster and direct to their accounts, without the need to pay a middleman or woman. This Government is committed to ensuring that taxpayers pay their fair share of tax—nothing more, nothing less. That’s why we are delivering on our promises for a fairer tax system, and we are making progress.

Dr Deborah Russell: How many taxpayers will have a bill to pay as a result of the auto-calculation, and how will the changes to secondary tax codes help mitigate this in future?

Hon STUART NASH: Inland revenue has completed or initiated almost 2.9 million tax assessments. Of these assessments, 271,000 people will have a bill to pay, averaging around $353. But these are not due until 7 February 2020. The good news, though, is that the changes this Government made to pay-day reporting, in removing unnecessary secondary tax codes, means that Inland Revenue will have better information throughout the year to actively contact taxpayers to ensure they don’t end up with a huge tax bill at the end of the year.

Dr Deborah Russell: How will the auto-calculation of assessments and pay-day reporting help families with children?

Hon STUART NASH: Almost 330,000 families, with 400,000 children, will now receive more accurate Working for Families payments during the year. This means that families will get the money they are entitled to to help with everyday living costs and reduce the risk of finding themselves with a debt at the end of the year.

Hon Members: Well done.

Hon STUART NASH: Thank you. These refunds and more accurate payments are only possible because of the Government legislation we have passed in the last 18 months. Gone are the bad old days when one had to go cap in hand and apply for a refund, and one could cherry-pick the years to pay the tax bill, but those with families could not. Somewhat surprisingly, the National Party stood in the way of hard-working Kiwis and families and voted—

SPEAKER: Order! Order! The member knows that he is not allowed to use a Government supplementary—well, maybe he doesn’t know. But I’m telling him now: he’s not allowed to use a Government supplementary in order to attack the Opposition. It’s a longstanding rule; the member’s been round here for a long time, and it wouldn’t do much harm for him to listen every now and again to a ruling.

Question No. 8—Housing

8. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing: Is this Government acting with urgency to address housing issues; if so, is she aware today is the six-month anniversary of the announcement of a KiwiBuild recalibration that would take a few weeks?

Hon Dr MEGAN WOODS (Minister of Housing): In answer to the first part of the question, yes. Since taking office, this Government has announced a wide range of practical ways to tackle the housing crisis and help more New Zealanders into homes. We’ve stopped National’s sell-off of State houses, and we’ve started adding more public housing places. In the 12 months to June, we’ve added 1,600 new public houses. We’ve banned non-resident speculators, we’re tackling homelessness by allocating around $500 million in the Wellbeing Budget, we’ve banned letting fees, and we’re modernising residential tenancy laws to make life better for renters. We’ve passed a healthy homes guarantee for warm, dry, healthy homes, we’re providing insulation and heating grants to low-income homeowners, and, just last week, Minister Parker announced the process for amending the Resource Management Act (RMA). In answer to the second part of the question, yes, but, as I already explained, we do not consider that the KiwiBuild element of our housing policy has been delivering the way we wanted. We are currently resetting the policy, and, as I told the member in the House last week, I’ll be taking a paper through the Cabinet process later next month.

Hon Judith Collins: Why has this Government gone more than halfway through its term without having finalised its housing policy?

Hon Dr MEGAN WOODS: We are determined to get this right. This is too important. What I would like to point out to that member opposite is that she should know that. She was a member of a Government that promised 39,000 houses through the special housing areas, but delivered only 3,157 houses—100 of which were affordable. On 21 August 2007, John Key announced an affordability crisis. It took until September 2014—

Hon Grant Robertson: Seven years.

Hon Dr MEGAN WOODS: —for that party in Government to do anything; seven long years. So I stand by the 642 days since we took office, stacked up against the 2,130 days it took for that party in Government to do anything about housing.

Hon Judith Collins: When she says that the previous Government did nothing for first-home buyers, does she realise that, under the previous Government, first-home buyers as a percentage of the market increased from 18 percent in 2014 to 22 percent just before the last election?

Hon Dr MEGAN WOODS: What I would remind that member of is the fact that we still do have a shortage of houses in this country. That party did not solve it. We are not pretending that we have solved it. We know there is more work to be done, and there are too many people that are shut out of the housing market. That member might be satisfied that their intervention with the special housing areas not only delivered 10 percent of the properties they said they would but only 100 of them were classed as affordable. We don’t think that is good enough and we are determined to do better.

Hon Judith Collins: If this Government’s done so much and the previous so little, then why are more people homeless this winter than they were two winters ago?

Hon Dr MEGAN WOODS: I think that member should look behind her, at the colleague she has sitting there. We had nine years of inaction, and a Government that took five years to get the first houses under way and allowed a housing crisis to develop. We have inherited an issue where we have a shortage of houses, and we are determined to address that. I think that party should admit they didn’t do well. We are willing to admit that we didn’t get the KiwiBuild element of our policy right in our first few months and we’re willing to address that, but the difference is we’re determined to keep trying on behalf of New Zealanders.

Hon Judith Collins: Is the Government acting with urgency on housing when, after 20 months—and now an acknowledgment that planning and the RMA need to be overhauled—the only action so far has been to announce a review?

Hon Dr MEGAN WOODS: I’d like to remind that member of the answer to my primary question—of all the urgent action we have taken on housing and the suite of policies that we have introduced, from stopping the sell-off of State housing under that Government, through to the fact that, actually, we have got an RMA process under way. That is something I would note that that member’s party, when they were in Government, failed to get over the line in the nine years they were in Government and, in fact, their leader Simon Bridges has said it’s one of the things they failed on.

Question No. 9—Economic Development

9. Hon TODD McCLAY (National—Rotorua) to the Minister for Economic Development: Does he believe that job creation is an important indicator of the Government’s economic development performance; if so, did the latest household labour force survey show an increase or decrease in the number of jobs?

Hon PHIL TWYFORD (Minister for Economic Development): Yes. The household labour force survey doesn’t show the number of jobs in the economy. The March 2019 survey showed that the number of employed persons increased by 70,000 compared to when the Government came to office, and for a small exporting nation facing global headwinds, I note that New Zealand’s employment rate is higher than the UK and Australia.

Hon Todd McClay: Well, how does he explain job growth declining from 10,000 per month on average across 2015 to 2017 under the National Government to minus 1,300 per month in the first quarter of this year?

Hon PHIL TWYFORD: Well, those numbers that he cited under the previous Government also coincided with a Government that allowed unemployment to rise to 6.7 percent at its peak. This Government’s dealing with a very different time in the economic cycle. We have full employment under this Government, and firms are dealing with skills shortages and the legacy of the failure of that party’s Government to invest in the workforce and the skills that our businesses so desperately need now.

Hon Todd McClay: Well, what Government policies does he believe are most responsible for the reduction in job growth from 10,000 jobs per month under National to minus 1,300 jobs per month under this Government?

Hon PHIL TWYFORD: The policies that were pursued up until the election at the end of 2017.

Hon Todd McClay: Does that, therefore, include policies like the oil and gas ban, greater powers for unions—

SPEAKER: Order! Order! Not a long list—one example.

Hon Todd McClay: I raise a point of order, Mr Speaker. He said “policies”, and it’s not for me to choose one. It is not a long list.

SPEAKER: We’ve had a discussion last week about lists as precursors. Members have been warned. He can give a couple but not a long list.

Hon Todd McClay: Thank you, Mr Speaker. Isn’t it actually Government policies like the oil and gas ban, greater powers for unions, and industrial law reform that are the reasons businesses have lost confidence to create new jobs?

SPEAKER: I’m not sure the member’s counting skills don’t need a bit of improvement. He was probably at school when I was the Minister of Education, so I’ll take some responsibility.

Hon PHIL TWYFORD: I reject the premise of that question. This Government has inherited a failure to invest in the workforce, but we are working with industry to improve productivity, to reorient the economy away from a dependency on housing speculation and immigration, and we’ve got a suite of policies that are in place to create a much stronger platform for New Zealand businesses to grow: Industry Transformation Plans. We are reforming the skills and vocational training sector that that Government allowed to fall into disarray; R & D tax credits; the manufacturing industry Skills Shift project—the list goes on.

Hon Todd McClay: Well, isn’t it Government policies that increase costs, like higher fuel taxes or increased workforce levies, or threatened new taxes, like on cars and capital gains, that are responsible for businesses losing confidence to create new jobs?

Hon PHIL TWYFORD: Well, the member raised the question of fuel taxes. The fuel tax increase that we made in 2018 was exactly the percentage increase made by the National Government in 2013. The percentage increase this year is exactly the same percentage increase that the National Government made in 2014, and the percentage increase next year is exactly the same as the National Government made in 2015. The way that we pay for our roads and our transport system hasn’t changed since the 1920s. Every single Government, including this Government and the former Government, has done it.

Hon Grant Robertson: In light of that answer, would the Minister be surprised to learn that the Opposition have ruled out having any future fuel tax increases, and how on earth does he think they would pay for their roads?

SPEAKER: Order! Order! The member might have started off close to being in order; he finished way outside, and I’m going to rule the question out.

Question No. 10—Building and Construction

10. GARETH HUGHES (Green) to the Minister for Building and Construction: Does she think there is a role for innovative, sustainable housing options such as tiny houses to address the housing shortage in New Zealand and promote better use of available land?

Hon JENNY SALESA (Minister for Building and Construction): Yes, I agree that there is a role for innovative, sustainable housing options such as tiny houses in addressing the supply of housing in Aotearoa New Zealand.

Gareth Hughes: Does she think that in a housing crisis local authorities should be supporting tiny houses instead of punishing people who live in them and threatening to demolish their home?

Hon JENNY SALESA: Local authorities are required to interpret the building code and whether or not buildings comply with the code. I acknowledge that there can be some differences in interpretation of the code between local authorities, which is why the Ministry of Business, Innovation and Employment (MBIE) is able to settle disputes by way of determination under the Building Act of 2004.

Gareth Hughes: Is it within the scope of the next building code system consultation, which begins on 5 August, to create standards for tiny houses and small apartments?

Hon JENNY SALESA: I’m open to considering all options regarding the kinds of buildings that the member has described. I agree that the Government should investigate all options for innovative solutions to the housing crisis. Since 2018, I’ve instructed MBIE to look at the building code twice a year. These updates provide a clear, repeatable pathway to ensuring that the building code is updated on a regular rather than an ad hoc basis.

Gareth Hughes: Will the Minister commit to investigating a New Zealand standard for small living spaces, including tiny houses and apartments, to provide the guidance local authorities and the building industry need to deliver this innovative sustainable type of housing?

Hon JENNY SALESA: I’m happy to look into it further. I’m currently working on a significant legislative reform programme to the Building Act 2004 to ensure that we futureproof New Zealand’s building regulatory system. I’m seeking further advice on this from MBIE and we are also in the process of analysing this Building Act 2004. I welcome the member’s involvement in that.

Question No. 11—Social Development

11. Hon LOUISE UPSTON (National—Taupō) to the Minister for Social Development: Does she agree that there has been a 155 percent increase in the number of Emergency Housing Special Needs Grants as a direct result of her Government’s policies?

Hon CARMEL SEPULONI (Minister for Social Development): No, it comes as a direct result of a Government who, for nine years, denied there was a housing crisis and were guilty of underinvesting in housing and infrastructure. The housing need existed well before we got into Government—

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. You’ve been very clear today that there shouldn’t be any extraneous material placed in the questions that are asked in the House. The mirror of the Standing Orders would make the same apply to answers. We’ve had various answers from Mr Nash, for example, and also from Mr Clark that relied heavily on extraneous material, and now we’ve got more, following on from Dr Woods, from Carmel Sepuloni. Now, at what point do you start to separate out the fairness in the way in which questions and answers are asked and then replied to in the House?

SPEAKER: I think the member, if he reflects carefully, will remember that I did interrupt the Hon Dr David Clark in his answer because I thought that he was putting extraneous material into it. In fact, it might have happened twice. I stopped the Hon Stuart Nash when he started attacking the Opposition off the basis of a patsy Government question. In this particular case, the Minister was asked a pretty direct question about her views on the responsibility for, or what caused, a particular set of circumstances, and she was giving, I think, a robust but in order reply. Had the Minister finished when she was interrupted?

Hon Louise Upston: Is she satisfied with the fact that there were 23,754 emergency housing special needs grants in the year to June 2019 compared to 9,245 in the year to June 2017?

Hon CARMEL SEPULONI: Can the member repeat the question please?

Hon Louise Upston: Is she satisfied with the fact that there were 23,754 emergency housing special needs grants in the year to June 2019 compared to 9,245 in the year to June 2017?

Hon CARMEL SEPULONI: I don’t think any Government should be satisfied with the idea that we even need an emergency special needs grant for housing. But we need to reflect back and remember that this particular special needs grant was introduced in 2016, under the previous Government. It was unfortunate, at the time, that it came on the back of Jenny Salesa taking media out to South Auckland and shining a light on the homelessness problem that we were experiencing as a country.

Hon Louise Upston: Does she agree with Statistics New Zealand that beneficiary households were the most affected by rising rent prices in the June 2019 quarter; and, if yes, what is she doing about it?

Hon CARMEL SEPULONI: I am not the housing Minister. However, we’re very aware of the fact that housing puts pressure on the overall budget of households where there are beneficiaries. That is why I’m very relieved that this Government is finally responding to the needs of beneficiaries in low-income households by investing in things like public housing—we’ve seen 2,300-plus additional public housing spaces—the investment in things like transitional housing, and the investment in Housing First. Thank goodness this side of the House is doing something, because nothing was done for nine years, which led us to this point.

Hon Louise Upston: How much of the 808 percent increase in emergency housing special needs grants in Rotorua—257 to 2,334—is a direct result of her Government’s assault on the cost of living?

Hon CARMEL SEPULONI: That member is being disingenuous. We came in at a time when there was a housing crisis—a housing crisis that had been denied by the previous Government—and we’re responding, but it’s taking us a while to fix up the damage that was done under that Government, but we’re committed to doing so. That’s why we’ve invested in public housing, that’s why we’ve invested in transitional housing, that’s why we’ve invested in Housing First, and that’s why we put $5.5 billion into the pockets of people that needed it through the Families Package. This side of the House is doing something, and we’re not going to apologise for giving help to people that need it through the welfare system.

Hon Louise Upston: How many of the 23,754 emergency housing special needs grants are repayable?

Hon CARMEL SEPULONI: What we’ve seen under this side of the House is a reduction with regards to the amount of the special needs grants that is actually recoverable. Under the previous Government, with emergency housing special needs grants, 11 percent was recoverable; under our side, it’s 4 percent. We don’t want to throw families who are already on low incomes or already suffering from financial hardship into further debt, and so this side of the House is making sure that that doesn’t happen, unlike the other.

Question No. 12—Corrections

12. Hon DAVID BENNETT (National—Hamilton East) to the Minister of Corrections: What is the current prison population, and how does that compare to July 2017?

Hon STUART NASH (Minister of Police) on behalf of the Minister of Corrections: The current prison population is 10,034. In July 2017, it was 10,335, and that number continued to increase steadily, peaking in March 2018, at 10,820. This Government has safely reduced the prison population and will continue to work—

SPEAKER: Order! The Minister has answered the question.

Hon David Bennett: Can he confirm that under his watch there has been over a 100 percent increase in the electronically monitored bail approvals, from 614 approvals in the first six months of 2017 to 1,235 in 2019, resulting in a lower than forecasted prison population?

Hon STUART NASH: I can’t confirm those figures off the top of my head, but what I can say is we’re looking for innovative solutions to make sure that prisoners are rehabilitated.

Hon David Bennett: Can he confirm that under his watch there has been an increase in 474 prisoners on home detention in the last year due to the High Impact Innovation Project (HIIP), resulting in a lower than forecasted prison population?

Hon STUART NASH: Again, I can’t confirm those questions, but, also, I would never criticise the judiciary for the sentences that they hand out.

Hon David Bennett: How can the Minister guarantee public safety when 30 percent of home detention approvals and 36 percent of electronically monitored approvals under the HIIP scheme result in reimprisonment within a year of release, when the average is 6.6 percent for normal home detention?

Hon STUART NASH: Increasing the police force by 1,800—I think that’s a great start towards helping community safety.

Hon David Bennett: Is it correct that there is a reduced prison population due to a lower than expected 1 percent increase in prosecutions for category 3 offences, despite a forecast increase of 4.5 percent, as a result of what the Ministry of Justice called a “system response to the current Government signalling that significant reform of the criminal justice system is a key priority for them.”?

Hon STUART NASH: I will reiterate: I’m not going to criticise the judiciary and the sentences they hand out.

SPEAKER: Order! That I don’t think even addressed the question. Will the member read the question again?

Hon David Bennett: Is it correct that there is a reduced prison population due to a lower than expected 1 percent increase in prosecutions for category 3 offences, despite a forecast increase of 4.5 percent, as a result of what the Ministry of Justice called a “system response to the current Government signalling that significant reform of the criminal justice system is a key priority for them.”?

SPEAKER: The Minister will answer the question, which doesn’t relate to judicial decisions.

Hon STUART NASH: The prison system, the judicial system, and the justice system do need reform. It’s why the Minister of Justice, the Minister of Police, and the Minister of Corrections are working very closely to reform the system in a way that meets the 21st century expectations of New Zealanders.

Hon David Bennett: I raise a point of order, Mr Speaker. I’d just like to thank you for your help earlier to get the Minister to answer the first part of the question, which I think you clarified for him. Is it correct that there has been a reduced prison population because of—

SPEAKER: No, no. I think, when a member does a supplementary question with more than one leg, he has no right to have more than one answered—and, actually, it was answered this time, as opposed to ignored.

Hon Chris Hipkins: Does the Minister agree with the statement that the rate of incarceration in New Zealand prisons is a moral and fiscal failure, as asserted by the Rt Hon Bill English?

Hon STUART NASH: I do, and it was such a shame to see that the former Prime Minister didn’t act on that and reduce the prison population in a way that this Government is.

Bills

Misuse of Drugs Amendment Bill

Second Reading

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

I want to thank everybody who has made a submission on this bill, including those who came to speak to the Health Committee in person. I also want to thank the members of the Health Committee for their thorough consideration of the bill. The Health Committee has recommended that the bill progress with two changes.

I want to start with an overview of the bill. It will do three important things. The first is that it will classify AMB-FUBINACA and 5F-ADB as class A drugs. The second is that it will reaffirm the existing police discretion for personal possession and use drug offences, and the third is that it will enable temporary class drug orders to be issued to better control emerging and potentially harmful substances. These changes are being introduced to address the harm caused by drug use. They align with the Government’s intent to treat drug use as a health issue. The changes will be supported by an increase in health and social services for users and will allow the police to focus enforcement efforts on suppliers and manufacturers of these harmful and dangerous drugs.

I want to now acknowledge some comments from submitters on the bill across those three areas that I mentioned at the outset. So, firstly, on the classification of AMB-FUBINACA and 5F-ADB, why are we doing this? The use of synthetic drugs is a major public health problem. Since June 2017, there have been a total of 50 to 55 deaths provisionally linked to the use of these two dangerous synthetic drugs: 5F-ADB and AMB-FUBINACA.

The bill will classify these two drugs as class A drugs to reflect the high risk of harm from these drugs, and that was aligned with the recommendation of the Expert Advisory Committee on Drugs. This classification will give the police and customs the search and seizure powers that they will need to be able to better disrupt supply and reduce the availability of these drugs to the people who use them. I want to encourage the police to use those powers to go after those who are manufacturing and supplying these drugs.

Most submitters who commented on this provision supported the classification. There were a number of submitters, though, who were concerned about the impact of this change on users. Some were concerned that users would be put at risk of a criminal prosecution, and that, historically, a classification has not reduced use or harm. I do acknowledge the submitters’ concerns. However, these drugs have a high risk of harm. The new classification will provide police with greater powers to target the suppliers, while the discretion will allow the police to consider whether a health approach is appropriate for users or not, and they need to weigh these things up carefully.

The second issue that I want to move on to is the reaffirmation of the existing police discretion and the submissions made to the committee that relate to that. The bill specifies that when considering whether a prosecution is required in the public interest for drug use and possession, consideration should be given to whether a therapeutic approach would be more beneficial. Now, police already use this discretion on a daily basis across a range of matters, including when deciding whether to prosecute for personal possession and use drug offences. The bill affirms the current police approach, which is consistent with the current operational policy and, indeed, is supported by the police. The bill also makes specific reference to considering whether a health approach is beneficial, strengthening the Government’s health-based approach.

Many submitters recommended that extra resources be made available to the police to implement the change, including for police treatment, for treatment facilities, and for health services to deal with any consequent referrals. I agree that a health-based approach must have sufficient services and supports in place to implement these changes, and that’s why, of course, the Government invested $1.9 billion in its Budget in mental health and addictions, of which—

Angie Warren-Clark: How much?

Hon Dr DAVID CLARK: $1.9 billion in mental health and addictions. That includes an investment of $200 million focused on new mental health and addiction facilities across the country, recognising the need to create therapeutic environments; $213 million in this Budget for operational expenses directed at the district health boards to ensure that the specialist services delivered to mental health and addiction, to folks wrestling with those challenges, are better resourced; and, specifically, beyond that, $44 million over four years to strengthen specialist drug addiction services.

Now, police are working with health officials to develop a referral pathway, and the Police Commissioner will issue tailored guidance to front-line officers on how they apply their discretion for these offences. That’ll help police officers to assess when it is in the public interest to prosecute and when it is not in the public interest to prosecute on a matter of drug use, and whether it is, indeed, where someone has crossed the line. If a decision is made not to prosecute, the guidance will indicate other options, such as pre-charge warnings and connections to health services for assessment, triage, and referral. Now, some submitters were concerned that the police would use this discretion in an unequal way, and particularly for Māori. Now, what I would say is that police have been taking steps towards addressing inequities, with a focus on unbiased decision-making. For example, police are rolling out a programme to directly address unconscious bias for all levels of the organisations.

The third area I wanted to talk about submissions on was on the temporary class drug orders. The bill itself enables temporary class drug orders to be issued by the Minister for emerging and potentially harmful substances—to control them very promptly, recognising that the formulation of these drugs can change over time. Now, when these are put in place, it means that those temporary class drugs are treated in the same way as class C controlled drugs would be, giving police the powers that they need for search and seizure in order to investigate and to focus their efforts on cracking down on those who manufacture and supply these dangerous drugs, and that class C effective classification is in place for a period of 12 months when a temporary class drug order is issued.

The synthetics drug market is rapidly evolving, with new drugs constantly emerging, and allowing these temporary drug class orders to be issued means we can move swiftly and appropriately to curb potentially harmful new synthetic drugs. Most submitter feedback focused on how manufacturers could change recipes, and the need, indeed, to be fleet-footed in issuing these temporary drug orders so that we stop the cycle where those manufacturers and suppliers had been getting away with reformulating to try and avoid the law.

I do acknowledge the concerns, and I would also say we’ve got in place the drug early warning system. We’re progressing that to ensure that information on drug supply networks is shared to reduce harm, so that agencies can more quickly respond when new drug formulations are entering the market place, and that enforcement responses can also be moved more quickly. Substances can then be classified more quickly, allowing them to be treated as a class C substance.

Following these submissions, the Health Committee has recommended that the bill progress with two minor changes.

Hon Michael Woodhouse: No, it hasn’t.

Hon Dr DAVID CLARK: The first is to remove “product name” as a term used to describe a substance. I think the House will accept the select committee recommended this, although the member opposite says it didn’t. They did recommend that the removal of “product name” happen, as a term used to describe a substance in the temporary class drug order provision. The term was used when temporary drug class notices were previously introduced and reflects the fact that there were legal products on the market. Now, since the Psychoactive Substances Act 2013 came into force, there are no longer legal products marketed under a product name.

The second change was an amendment to better align the bill with the policy intent. The discretion to prosecute in the bill, as drafted, applies to all offences in section 7, including supply and administration. The intent of the bill is for the discretion to only apply to possession and use offences, and the amendment will mean the discretion only applies to possession and use.

So, again, I want to thank the submitters and the members of the Health Committee for their thorough consideration. I consider these changes improve the bill, and I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): We have heard many examples of where this Minister has been completely not over his portfolio—very superficial in nature. That speech is another excellent example of it, because twice in that speech supporting the motion, he said that the Health Committee recommended that the bill proceed. Now, I think he used the word “proceed” in the first case and “progress” in the second—that’s not correct. While the select committee agreed that there should be some amendments set out, the third sentence of its report then says, “We were unable to agree that the bill proceed.” That’s where things lie.

I’m going to go through why the select committee was unable to agree, because it’s a very, very important policy and constitutional issue. The reality is that while the National Party supports clauses 1 to 5 and clause 8 of this bill as not only sensible changes but changes that my colleague Simeon Brown introduced a member’s bill to do, effectively, the same thing, only to have Labour and the Greens rail against that action—including the Minister of Justice, who spent a long time in this House saying what a terrible bill it was and how it should not proceed. Next thing we know, they’re doing very much the same thing. So I think that’s a great thing to do. We certainly approve of that progress.

The National Party’s concern has been with the direction, for police, not to prosecute for possession offences. Now, that’s not just for cannabis; that’s for every single unlawful substance—right up to heroin, methamphetamine, ecstasy, LSD; we can name anyone we like—this bill says they should not prosecute. Now, I have been very troubled—

Hon Dr David Clark: They don’t back the police any more. They don’t back the police like they used to.

Hon MICHAEL WOODHOUSE: Well, what we do back is constitutional conventions. I’m going to go through why, even since the select committee has reported back, I’m becoming more and more troubled, not only by this bill but by a propensity for this Government to overreach in its constitutional powers.

Now, I want to quote from a very—

Hon Dr David Clark: Police back this, and the member knows the police back this. The member knows it.

Hon MICHAEL WOODHOUSE: The member would be better off listening than yelling.

DEPUTY SPEAKER: Can I just remind the Minister: he did have 10 minutes.

Hon MICHAEL WOODHOUSE: He did. Justice Gleeson, who was the Chief Justice of the High Court of Australia, wrote a very good article on this very point at the start of the year. Now, we all know that there are constitutional conventions that apply to the legislature, the executive, and the judiciary. The constabulary is actually a subset of the executive, but the important tension is that police don’t overextend their powers—as delegated to them by this Chamber. By the same token, this Chamber should not overly extend its powers into constabulary discretion. If it doesn’t like a piece of legislation, if it doesn’t like a part of an Act, it should change that part of the Act. I see Ms Swarbrick looking very confused. Perhaps she could go back to constitutional school.

He said this: “Less obvious but equally important is the need to guard against vesting in the police discretionary powers which, for practical purposes, may amount to powers to make law, or to dispense with compliance with the law … it is not the function of the police to make the law, or to decide by whom, and to what extent, the law is obeyed.” Now, we have sentencing guidelines—

Darroch Ball: They already do.

Hon MICHAEL WOODHOUSE: We have sentencing guidelines. Pause, Mr Ball, and I’ll explain. Those sentencing guidelines don’t go to the heart of this bill. They talk about things like: can they identify the perpetrator? What is the seriousness of the offence? Does it involve significant violence? Where there is a history of recidivism—it goes on. The Cabinet minute that approved this bill basically said, “Those things could apply, or there is a therapeutic approach that would be more beneficial.” It doesn’t add this to the prosecution guidelines. It doesn’t add to the prosecution guidelines; it adds to the law. There it says, “Where a therapeutic approach would be more beneficial … there is no public interest in proceeding with a prosecution.”—they should not prosecute. Now, the Minister articulates that as they would allow the police to consider whether a therapeutic approach would be more beneficial. They have no consideration powers. The law is now going to tell them they should not prosecute.

Two really important submissions that the committee heard were, firstly, from Ross Bell from the New Zealand Drug Foundation, when I asked him whether or not he could conceive of any perpetrator of a possession or use offence who would not benefit from a health-centred or therapeutic approach, and his answer was “Of course not.”, in which case absolutely everybody would be immune from prosecution. Indeed, if police tried, the defence counsel would drive a bus through that. Herein lies the question that I have for the members on the other side, because this is a definite case, in a policy sense, of where the left hand does not know where the far-left hand is going. The Minister said, “This just codifies police discretion.”; whereas Chlöe Swarbrick says, “This is the biggest change to drug policy in 40 years.” Both of them cannot be correct.

Chlöe Swarbrick: Yes, they can.

Hon MICHAEL WOODHOUSE: Well, we’ll test that. If we are merely codifying police discretion, then the words “should not prosecute” are unnecessary. Indeed, frankly, the whole clause is unnecessary. So I’m going to test that, because in the committee of the whole House, the National Party will introduce an amendment to clause 6 which will remove those words “should not prosecute” and confirm the words the Minister in his second reading speech has just said, and that is “we allow the police to consider”. They will use their discretion. They will not be directed by this House about how they behave on a day to day basis, because there is no doubt—

Hon Shane Jones: Scaremongering—alarmism.

Hon MICHAEL WOODHOUSE: Well, that member says it’s alarmism, but he knows that his own caucus are not happy with this. The de facto decriminalisation of drug possession is not core New Zealand First whakapapa—he doesn’t like it. He said he doesn’t like it, but they’ve gone very quiet. I’m not going to even consider what, quid pro quo, they’ve got for holding their Noes and supporting this bill, but I bet it’s something. We’ll test that. If they’re right—if this is no change to current police practice—then it won’t hurt to put in a better clause which reflects, more closely, current police practice. Then we’ll know; the outcome of that vote will decide whether the left hand, or the far-left hand prevails in this matter, because I think Chlöe Swarbrick is closer to the truth.

She knows—and Crown Law have confirmed it in their advice on what the Cabinet minutes said—that it doesn’t matter what the prosecution guidelines say, it doesn’t matter the seriousness of the offending, it doesn’t matter the recidivism, or even the refusal—the reluctance by the offender—to even consider a therapeutic approach. That’s not what the law says. The law simply says, “Would they benefit from a health-centred or therapeutic approach?” If that’s the case, police should not prosecute. That is the very definition of this House interfering in police behaviour. It is the very definition of de facto decriminalising. So I look forward to debating those clauses in the committee of the whole. We would like to support this bill. We support clauses 1 to 5, and clause 8, but we cannot support the decriminalisation by stealth that this Government wants to put through.

Dr LIZ CRAIG (Labour): Thank you, Madam Speaker. Synthetic drugs are having a huge impact in our community, and this is a Government that is taking this issue extremely seriously. As the Hon Michael Woodhouse said, we agreed on two key parts of this bill, but, within select committee, we disagreed on a third. What I want to do is just talk briefly about why this bill is so important, why we need it: because the current approaches are not working, and this results in some real change. But then I want to talk through the parts that we did agree on, because they are important and significant in the context of the large number of deaths from synthetics that we’re having in our community. Then I want to move on, and actually talk about the points where we did disagree, and, basically, challenge some of those things that the Hon Michael Woodhouse was saying.

So, basically, why is this issue important? I think, when we get some issue raised by the Chief Coroner, we know that it’s incredibly serious. This is when, back in 2017, the Chief Coroner alerted us to a surge in the number of deaths that we were having as a result of synthetics. How she knew about that was because she was, in turn, alerted by an Auckland-based coroner, who had seen a number of deaths in the previous week relating to those that were using synthetic drugs. Then, on subsequent inquiry, they went back and found that there had still been a number of deaths in the weeks preceding that. So this was something that was incredibly out of the ordinary, and it resulted in her issuing a number of alerts.

The other thing that had happened is the St John medical director had also contacted Coronial Services, and they were talking about the concerns they were seeing in terms of the number of people they were bringing in for treatment. So something was happening. Since then, it’s been estimated that up to 55 deaths have happened that have been linked to synthetic drugs since June 2017. Since the first reading of this bill, it’s also been suggested that there may be more deaths linked to synthetic drugs, with up to another 20 possible extra cases not being directly listed as the cause of death, but being thought to have been a contributing factor in terms of deaths in that same period as well. So this is an incredibly significant issue, and something that we think is really important.

So what this bill does is two main things. On the one hand, it makes sure that penalties and enforcement is directed to those that can import, manufacture, or supply synthetic drugs. But it also takes a health-based approach for those that are found to be in possession of, or using, drugs. That does not just apply to synthetics, but also all drugs in terms of possession. So the Health Committee received 95 written submissions, and it heard 24 oral submissions. I was saying before that we agreed as a committee on two of those key parts that this legislation does, and we disagreed on a third. So the things that we did agree on: the first one is the reclassification of the two major synthetics that have been associated with all of these deaths—so 5F-ADB, and AMB-FUBINACA, and it’s basically rescheduling these as class A drugs under the Misuse of Drugs Act.

What that ensures is that police and customs have much stronger search and seizure powers, and so what they can do is intercept the drugs before they reach our communities, and that’s incredibly important. It also means much tougher penalties for those supplying and manufacturing these drugs, and that can, actually, include up to life imprisonment. So basically, making sure that those that are putting these drugs into our community—we’re able to enforce strict penalties, and search and seize these drugs before they reach our community. But the other thing that this bill does is it creates a new temporary drug classification. So this is incredibly important in the context where we are seeing a surge in these drug-related deaths, as was happening and we were alerted to back in 2017. So what it does is it creates a new class C1 drug, and that means that what it does is it gives the police the same search and seizure tools as any other class C drug.

What happens is that the Minister of Health can, basically, classify one of these drugs if he’s beginning to see—or if she’s beginning to see—that concerns are being raised in the community. So what the Minister needs to do is publish an order in the Gazette, which specifies that temporary drug order, and then that can be in place for up to a year until that drug is subsequently classified, and it could be classified as A, B, or C, or the classification could be revoked. It also allows for one extra year if the Minister feels they need more time to be able to figure out which class this drug really should be.

So both of those we agreed on as a select committee. The part where we came to differing opinions was on the health-based approach, and reaffirming that discretion that exists currently for police to decide whether or not to prosecute when they find somebody in possession of synthetics or other drugs. This is crucially important, and it was something that was raised also in the inquiry into mental health and addiction, because what it was seen as—if we take quite a punitive approach in the context of possession and use of drugs—was a barrier for many people accessing the services they need, and many of these drugs are incredibly, incredibly addictive. We’ve seen the stories in the media and elsewhere about the impact that can have on people’s lives once they get hooked on these drugs. So being able to take a health-based approach is incredibly important for making sure that people can become free of these drugs and move on with their lives.

So, contrary to what the National Party is saying, this isn’t decriminalisation by stealth. All it’s doing is reaffirming the police’s current discretion when they’re considering whether or not to prosecute. I think I’ll just read the actual words that are in the bill. It says “To avoid doubt, it is affirmed that there is a discretion to prosecute for an offence against subsection (1)(a), and a prosecution should not be brought unless it is required in the public interest.”, and then “When considering whether a prosecution is required in the public interest, in addition to any other relevant matters, consideration should be given to whether a health-centred or therapeutic approach would be more beneficial.”

As a committee, when we were hearing that this might be decriminalisation by stealth, and those arguments, etc., we actually put that question to the Ministry of Health. We wrote in the question: “What is the current process for prosecution”—so for possession charges, whether they are prosecuted or given diversion—“and how would this change under that bill?” The advice that we got back in writing from the ministry was that the current process of assessing whether a possession charge is prosecuted or not is guided by the Solicitor-General’s prosecution guidelines. In there, there were two main things that needed to be taken into account: whether there was sufficient evidence to be providing a reasonable prospect of a prosecution; and, secondly, whether that prosecution was required in the public interest. When we looked at the public interest test, this was actually already in the guidelines, and it talked about the number of factors that can be considered, and that included aggravating factors, such as seriousness of the offence or level of harm, and mitigating factors. Basically, what the evidence we got in writing from the ministry suggested was that the consideration of whether a health-centred or therapeutic approach would be beneficial forms part of a broader range of public interest considerations. The advice we got was that this process would not change under the bill. So, basically, what they were saying is it would reaffirm just what was already currently happening under those guidelines.

The second thing that was raised in the Health Committee was concerns about if the police started to refer a huge number of people for health-based approaches in terms of addiction, what referral pathways would they have, and whether there would be enough services. So, again, we asked the ministry what was proposed in this space, and what they got back to us and said is that police and the Ministry of Health are working together to develop a referral mechanism. What they were talking about was making sure that police had clear guidance around the criteria for referral but also a single point where that referral would happen so that police could refer in and then those referrals would go out and you’d have a consistent approach across the community. So that work is already ongoing to make sure that this is happening.

Then the third thing was the concern about the resources in the existing services. This is where the Government has also announced, in Budget 2019, that it’s going to be putting a huge amount of extra investment into mental health more broadly, but also very specifically into alcohol and drug services, and also making sure that we’ve got the buildings and the infrastructure there to support that. I can read out a couple of the examples, but we haven’t got time to go into it in the full detail, which would take quite a while. Basically, Budget 2019 provides an extra $44 million over four years to improve existing drug addiction services, with a focus on residential care, detoxification services, and ongoing support—also, upgrading current facilities and adding capacity by building new facilities, and that’s why we’ve got a whole lot of ring-fenced funding for district health boards to be able to do that. There’s a whole lot of extra resourcing going into corrections as well for those in the corrections system requiring alcohol and drug support and services.

So this is a really good bill. It takes a much stronger approach in terms of those supplying, importing, and distributing drugs, but a health-based approach for users and those in possession. I therefore commend it to the House.

Hon MARK MITCHELL (National—Rodney): Thank you, Madam Speaker. It’s a pleasure to take a call on this, the Misuse of Drugs Amendment Bill, second reading. I’m not on the Health Committee, so I have not been part of the deliberations or the select committee process. I did ask to take a call on this because it’s something that I feel very strongly about. There’s a debate in the House today happening around whether or not this is decriminalisation by stealth. I’ve got some questions that I’d like to put. I hope the debate is done in a respectful way, and I have got some questions to put to the Government benches.

The first one is I think that it is very good that we’re toughening up around dealers and suppliers. I wish that my colleague and friend Simeon Brown’s bill had been picked up by the Government, because he put a lot of work into that, and it would’ve been a very effective bill that probably already would’ve been passed and there would’ve already been legislation in place to deal with suppliers and dealers. But the practical reality of the suppliers and dealers, generally speaking, is that they won’t be dealt with by the front-line staff, by the cops that are turning up at the beginning of a shift and going out in an I car, a two-man car, a Q car, a one-person car. They won’t be dealing with the dealers and the suppliers. Generally speaking, it’ll be the specialist squads. It’ll be the drug squads and the crime control units that are gathering intelligence, that are running operations, that are gathering evidence, and that will target and execute warrants. They’re the people that will be dealing with the dealers. Occasionally, a front-line police officer may stop a car and they may randomly have a good hit where they actually find a dealer in transit with drugs that meet the threshold—and that’s good police work, but that happens rarely; it’s normally left to those specialist squads.

So I think that’s a very good piece of the legislation in terms of toughening up the laws around dealing with the scourge of dealers and suppliers in our communities, but the bit that I am disappointed in, the bit that I want to raise—and every speaker so far in the House has got up and made it very clear that they’re reaffirming the discretion that our police officers currently have in the front line every night when they’re out there dealing with the public, in terms of their discretion around how they deal with people that are found with drugs for personal use. That discretion has been around for a long time. It’s an important discretion. We should reaffirm that. And the police, generally speaking, have used that discretion in a very sensible way. So why, if we accept the fact that they already have that discretion, are we now layering a new test for them? Why are we now telling them that they have a new test and a new hurdle to get past, because that is what is happening, right?

Chlöe Swarbrick: Transparency.

Hon MARK MITCHELL: So transparency—if the argument is transparency, is the Government saying that the police right now are not transparent in the way that they use their powers of discretion? That seems to be the argument that is now being put up. That’s a very different argument around transparency in the decision making. So if it is a point of transparency, then someone from the Government benches please stand up in the next call—and I know that we’ve got a very experienced ex - police officer that’s going to take a call here—and tell us how you are now making those powers of discretion, those decisions that are being made by police officers, more transparent and, actually, easier for them to make. The reality is this: a young police officer on the front line who finds someone that is under the influence of drugs, that has only got drugs that fit within the quantity for personal use, then has to apply their discretion. They may look at the person’s demeanour. It may be body language. It could be a whole raft of factors where they have to call on their own practical common-sense ability to be able to make a decision in the public’s interest in terms of what happens to that person.

A health and therapeutic approach should be a given. That should always be applied. That’s nothing new. We’re not suddenly going, as a Parliament, “Oh, now we’re going to apply a health and therapeutic approach.” We always have—we always have. It’s always sat alongside the enforcement approach, and that’s the way it should be. Just to give the House a clear example of why National believes so strongly in that, you only have to look at our drug and alcohol courts, something that has proved extremely successful. I’d encourage the present Government to roll that out, because we would be—we’d be expanding that; it’s been so successful.

But the reality is this: you’re not reaffirming front-line police officers’ ability to use their discretion. You are sending a very clear signal, as a Government, that they now have to apply more tests to that. [Interruption] Yes. I’m sorry, that’s exactly what’s happening. If the New Zealand First member would take a call, then explain to us clearly, if you’re not applying new tests, if you’re not applying new considerations for our front-line police officers to use their discretion, why it’s in the bill, because the last speaker was very clear about it.

Angie Warren-Clark: We just codified it.

Hon MARK MITCHELL: They said that—that’s right, you are codifying it. You are codifying it.

DEPUTY SPEAKER: I’m not—I’m not.

Hon MARK MITCHELL: Sorry, Madam Speaker. You’re absolutely right. You are supporting the point that the Hon Michael Woodhouse made.

Hon Member: Recidivist.

Hon MARK MITCHELL: You are codifying—

DEPUTY SPEAKER: Speaking of recidivism.

Hon MARK MITCHELL: —the decision-making process—sorry, you know that I am a recidivist offender around this. I do apologise, Madam Speaker.

The Government is codifying something that, actually, if you trust our police, if you accept the fact that they have used their discretion responsibly and lawfully for decades—very effectively, always with the test being the public interest—why are you adding a new consideration and hurdle for the police? Why is the Government adding a new test that is going to make it harder in a practical sense? Trust me; it’s going to make it much tougher in a practical sense, at a common-sense application, to front-line police officers to continue to use their discretion to make those decisions. I’m just telling you, from experience and from the feedback that I get—and let me put on record—I am disappointed—

Greg O’Connor: Dog handlers never had any discretion.

Hon MARK MITCHELL: No, no, dog handlers did occasionally deal with this; don’t you worry. Look, I’ll be the first to admit that when I dealt with someone that had used cannabis—bearing in mind that I spent the bulk of my career in Gisborne on the East Coast, right?—at that time, they were some of the biggest, heaviest growers and suppliers of cannabis in the country, without a doubt. It created massive social problems for us—make no mistake about that. I did use my discretion, and if I found someone that had been smoking dope and had a couple of tinnies on them, you know what? Actually, if I felt that they were OK—

Darroch Ball: You let them go.

Hon MARK MITCHELL: —it would go down a drain; I’d give them a warning, and let them go. I didn’t always get it right. I didn’t get it right. There was the odd time where later on I’d be called to deal with that person again. But that’s the discretion.

Hon Member: You didn’t know how to do an arrest file.

Chlöe Swarbrick: Wait. Listen to yourself.

Hon MARK MITCHELL: That’s an interesting point, but no. I am listening to myself. I hope that you’re listening—

DEPUTY SPEAKER: I’m listening.

Hon MARK MITCHELL: —because I’m trying—thank you, Madam Speaker. The reality of this bill is that you are applying a new test to a front-line police officer. The Government is applying a new test—

DEPUTY SPEAKER: Can I just remind members that this is a second reading. We’ve got a lot of interjection and we’ve got a lot of questions, actually, being asked of members who don’t have the floor. It is a speech that the member is giving, and I just ask the members over here who have either had their turn or will have their turn that they make their points then.

Hon MARK MITCHELL: And I’m hoping, Madam Speaker, that that’s what happens. I’m hoping that I’m being clear enough to say that if the Government is standing there saying that they completely reaffirm the discretion that a front-line police officer can use in terms of how they deal with people that they find with a quantity for personal use, or who are under the influence of drugs—I want just a very clear answer. If someone from the Government can stand up and say why you feel you need more transparency around those decisions, why you feel you need to codify it, and explain to me how the front-line police officer is now not going to feel like they’ve been sent a very clear signal from this Government that they now have got a new test that they have to overcome before they can actually use that discretion and take action in what is the best interest of public safety—thank you very much.

DARROCH BALL (NZ First): Thank you, Madam Speaker. I don’t often like bringing facts to the debate in this Chamber, but it seems like I have to, listening to Mark Mitchell and Michael Woodhouse. Mark Mitchell just sat down and he literally, in his last sentence, I believe, said that this doesn’t change anything that the police are already doing. It’s codifying it, but now they have to do something else. How could it be codifying what already occurs, and then they have to do something else? It doesn’t make sense. I mean, I know that that member can go back and have a look at his speech, because I think he needs to, so then he can correct himself during the committee stage and in the third reading.

There’s one thing that the Hon Michael Woodhouse said as well, which was—and we’re going to hear it ad nauseam from the National Party—about this being de facto decriminalisation. They’re going to make a big deal about that because that sort of gets the emotive heartstrings going with people and it gets the hooks in and it tries—

Hon Maggie Barry: And it’s the truth.

DARROCH BALL: Well, there we go—we got it from the Hon Maggie Barry. So one of the things that the Hon Michael Woodhouse said was not only does this new provision, which is the health-based approach for possession and users, deal with the psychoactive substances but it’s going to deal with all of the other illegal drugs as well. That’s true, but he listed off a few of the scaremongering drugs that he wanted to, which was all of the class A drugs. He said that we’re talking about LSD and we’re talking about heroin, cocaine, etc. It’s going to apply for all of them as well. Well, here are a few facts for Mr Woodhouse and Mr Mitchell and for the rest of the National Party members who are going to stand up. For all of the class A drugs, for the 2017-18 year—so that’s when they were in Government, too—how many people went to prison for possession of that?

Hon Mark Mitchell: How many?

DARROCH BALL: Zero. How many for cannabis possession and use? Seven.

Hon Mark Mitchell: Seven?

DARROCH BALL: Yes, seven. How many for all of the other class B and class C? Four. So when Government parties stand up and start talking about the fact that this is intended to codify what is already existing practice, what already existed under the National Party, with evidence that it existed under the National Party and successive Governments as well, bear in mind—so I think it was since 1994, the stats were at least 20 or 30 years ago, the number of prosecutions for those who were using or had possession of marijuana dropped by about 7 percent, from the last 20 or 30 years. This is a provision that is intended to only codify what is already in police practice.

Hon Mark Mitchell: That’s not true. That’s absolutely not true.

DARROCH BALL: See, it’s not true—I haven’t finished with my facts, Mr Mitchell. What surprised me was that the National Party are not listening to the Police Association. This is what surprised me. I’m going to quote it out, and then we can hear what Mr Mitchell is going to say.

Hon Mark Mitchell: The Police Association—they agree.

DARROCH BALL: Well, riddle me this, then, Mr Mitchell. If they agree—so the National Party have said that one of the clauses they want to get rid of is clause 6(6). So that says, “When considering whether a prosecution is required in the public interest, in addition to any other relevant matters, consideration should be given to whether a health-centred or therapeutic approach would be more beneficial.”

What the Police Association said in their submission: “The Association supports this section, which reconfirms the public interest test and adds, as a relevant matter, consideration as to whether a health-centred or therapeutic approach will be more beneficial than a prosecution for the individual concerned.”

I think that’s very important for not only Mark Mitchell but for the rest of the National Party to understand, and, more importantly, for everyone who is listening to understand. So in respect of one of the clauses that the National Party wants to take out, the Police Association support that clause. They said it “reconfirms the public interest test and adds, as a relevant matter, consideration as to whether a health-centred or therapeutic approach will be more beneficial than a prosecution for the individual concerned.”

So Mr Mitchell had a number of questions for this side of the House; here’s one for Mr Mitchell and that side of the House: is it now the case that the National Party is not listening to the Police Association?

Hon Mark Mitchell: The Police Association says, “There is a concern about some aspects”—

DARROCH BALL: I just quoted them, Mr Mitchell. You need to stand up or pass your notes on to someone else and answer that question.

I’ll move on to what I believe is—well, it’s one of things that New Zealand First absolutely pushed for in this bill, and we’re happy that it got there, and it was that reclassification of those two poisons that were killing a number of people in our streets—and, in fact, since June 2017, there have been up to 55 deaths, and that’s the main reason why we brought this in. New Zealand First pushed very, very hard to ensure that those two drugs themselves, specifically, were put into class A. And it’s not just about the increase of the penalties for—[Interruption]

DEPUTY SPEAKER: Order! Order! Mr Mitchell. There’s a barrage.

DARROCH BALL: It’s not only the importance of the increase in the ability for the judge to sentence the dealers and manufacturers and peddlers of the synthetic drug, or poison, to life in prison—which, let’s get one thing straight, is eminently more powerful, with harsher penalties, than what Simeon Brown’s bill was. Simeon Brown’s bill, that concentrated on these two substances, only wanted to move the maximum sentence from two years to eight years, originally—that’s what his bill said—and this is moving that into class A, which is inclusive of up to life in prison, which I believe that Mr Simeon Brown appreciates.

Simeon Brown: How long’s it taken?

DARROCH BALL: Well, what I would like to say to that member is that that’s not only what bringing it into the Misuse of Drugs Act does. Most importantly, it gives the police the ability and the powers of search and surveillance, which the Psychoactive Substances Act does not. It doesn’t do it. So what’s important about that is that the police can search this out and stop the drug getting on to the streets, down to the users in the first place. It’s vitally important that that side of the House understands that.

And not only that but this bill also gives a new classification of C1, for any new dangerous psychoactive substance that has not been approved, which goes directly into being an equivalent of class C—which, by the way, is exactly the same maximum penalty for dealers and suppliers that Simeon Brown’s bill was doing. So it’s vitally important to understand why New Zealand First pushed for this aspect of that bill, and what that provision brings, in addition to what Simeon Brown’s bill does.

What’s most important for New Zealand First with this bill is that this bill, with the clause that’s being debated at the moment, is just reaffirming what the police already do and what the police practice already is. It’s most important for New Zealand First that this is just reaffirming current police procedure and, most importantly, that it doesn’t affect the police operationally on the ground. That’s the most important aspect of why New Zealand First is supporting this bill.

I’d like to thank the Minister for bringing this bill to the House. I’d also like to thank the Minister for the discussions with New Zealand First around some of the issues or questions that were brought up during the select committee process, and for the future meetings that we will be having with the Minister between now and the next stage of this bill. New Zealand First will be supporting this bill at this stage.

Dr SHANE RETI (National—Whangarei): Thank you, Madam Speaker. It’s a pleasure to speak to this, the Misuse of Drugs Amendment Bill, its having now come through the select committee process and here for the second reading.

I’d like to start, first of all, by refuting some of the comments that the member who has just taken his chair, Darroch Ball, has made, particularly as he claims to represent a mandated view of the Police Association—and, indeed, he raised that allegation with my colleague the Hon Mark Mitchell. Can I just read from some commentary here from Chris Cahill, the association president, with respect to this bill, and I quote: “It has an air of drug reform on the fly, rather than a more considered debate and informed legislation. I am worried that by codifying Police discretion the government is potentially asking officers to be the spearhead of decriminalisation. If decriminalisation is what parliament wants, then that’s what the law should say”, Mr Cahill reports. I’d just like to have that on record as a riposte to the previous speaker.

This bill does three things. The first thing it does is to classify the two class A drugs, AMB-FUBINACA and 5F-ADB; the second part, which I’ll spend some more time on, is the prosecution in the public interest of a therapeutic approach as a default; and third is the temporary drug orders. Now, to the first: we’re all in agreement with reclassifying as class A these two synthetic cannabinoids. Certainly, AMB-FUBINACA came out in around about 2015-16. There was the large event in New York City—I think there were 30-plus people who were wandering around zombie-like because it depresses the central nervous system—and then the following year, in 2017, we had at least 20 to 30 deaths with a synthetic that’s 85 times stronger than cannabis. And I’d like to support Simeon Brown and his bill that did not make it any further, but we thought this made substantial progress on what we’re wanting to achieve here as well.

To the Health Committee: the select committee had 95 submissions. There were 59 individuals, 36 organisations, and we heard 13 oral submissions. And I think, really, the contentious part with this bill is whether the prosecution in the public interest warrants a health-centred approach—whether it would be beneficial, and just to clarify: this is for possession and use, and not for supply.

Now, several points to make: we’ve already heard that discretion is already currently in practice. So why would we want to legislate exactly that? Well, I think that’s clear in the departmental report, where it says exactly why they want to legislate for it. And I read here: “The first argument is made to increase public awareness of the Government health-based approach”—this is a marketing campaign; that’s why you want to put it into legislation: to market the Government’s current philosophy. Maybe it should go through publicity and get a publicity approval, if that’s really what it is.

It also says, “The purpose of putting this clause into legislation is to reinforce the police focus on those who would profit from drug dealing and not those who use illicit drugs.” So very clearly there—no police focus on the users.

There was certainly some Māori representation—Ngāti Whātua presented to us. They had huge concerns that there’s already unequal distribution of justice, in their view, for Māori and others, and that if police have discretion that same unequal distribution of justice might apply through this bill—no clear solutions from the ministry as to how they’re going to do that, or how they’re going to approach that. There was a statement as to a Māori advisory council that exists—that’s well and good—but what is the operational imperative to make sure that what we’re all understanding is improper behaviour does not carry through this bill?

We all have concerns, certainly I do, for police and health resources—the ability for police to fine-tune and really carry the intent of what’s being proposed here through that discretion, and then it’s all going to be passed to health resources. Goodness me—we’re already struggling with health resources; where is this magical therapeutic approach that we’re talking about? We raised the question with the ministry officials—well, particularly with the police officials—of is there any instance, and I think this really cuts to the nub of things, when a health-centred approach would not be appropriate? He said no. So we’ve made the argument, de facto decriminalisation—although, actually, the criminal offences still exists, so technically that’s not correct, but it certainly is a de facto non-prosecution.

So here’s my view and my summary of the view: I think addiction problems can, clearly, have health problems but to say addiction is a health problem, not a drug problem, is wrong. I make three observations to support that. The first is drug addiction is a drug problem with health impacts, is how I would frame it. Now, health problems can be acquired or they can be congenital; you can bring them upon yourself somewhat or you can be born with them. Drug problems are acquired; very few people are actually born with a drug addiction. Some do with foetal alcohol syndrome etc., but it’s actually quite rare. Most of it is acquired; it’s an acquired health problem as a consequence of personal choice, albeit, I accept, sometimes in challenging circumstances. On one level, then, a concern I have is that this bill is normalising illegal behaviour. The question asked of police, as I said, was: was there any instance when there wouldn’t be a health benefit? The answer was no. Is there any offender, then, who would not benefit from a health approach? Is there any criminal who does not suffer from a health problem, particularly lack of empathy for the victim, who would not benefit from a health approach? How many murderers have severe personality disorders? A great number. How many violent offenders have hearing, vision, and cognitive deficiencies? A great number. Where, then, is the line drawn between self-serving, illegal activities and harm to innocent others?

The line is being drawn at this bill, at the possession and use of illegal drugs. My concern remains that it normalises illegal behaviour under the guise of a health approach. I would be more enthusiastic for funding towards improving drug prevention programmes, increasing addiction and mental health services, increasing border security, and increasing detection and monitoring. Amidst those range of things, we simply cannot support this bill. Thank you, Madam Speaker.

CHLÖE SWARBRICK (Green): E Te Māngai, tēnā koe, tēnā koutou e Te Whare. I stand today in strong support of the second reading of the Misuse of Drugs Amendment Bill, on behalf of the Green Party of Aotearoa New Zealand. I want to thank all of the 1,995-odd submitters who submitted to the Health Committee for what I understand was a deeply robust debate which unfortunately led to the Opposition kind of throwing their toys out of the cot, for reasons which I will get to, further down the track.

Hon Member: That’s very good of you.

CHLÖE SWARBRICK: I believe it’s somewhat inconsistent with their track record, including the track record of that member who is now heckling me.

I think when we talk about the issues that were the catalyst for this bill—that being the more than 50 deaths of New Zealanders—we frequently forget that we’re actually talking about people’s lives. We’re not just talking about mere numbers, and that is why it is crucially important that we actually do take a balanced approach to this issue.

The premise of this bill is simple: we are seeking to address the causes of drug use and abuse, instead of simply falling down the track that we have for the past 40 years of locking people up and throwing away the key—out of sight and out of mind. I’d like to ask members of the Opposition who seem to be calling for the continued criminalisation of people who use and abuse substances whether they genuinely think that a good use of public resources is locking those users up for $110,000 a year. Is that a better use of public resources than it is to provide somebody with mental health and addiction treatment? What we know from the research, including the most recent He Ara Oranga, the mental health and addiction inquiry report, is that the major drivers of mental health and addiction problems are isolation and trauma. Our current systemic response to issues of drug use and abuse further isolates and traumatises people. We know this through the likes of the recidivism rates that have been raised by Mark Mitchell, a member of the Opposition.

I want to turn now to a few of the critiques that have been raised by the Opposition, because, frankly, they just don’t make sense. If we’re to talk about common sense, we have the likes of the Hon Michael Woodhouse and Mark Mitchell saying that, somehow, the position of the Labour Party, the Green Party, and New Zealand First are mutually exclusive here. Michael Woodhouse in his—I suppose it was an attemptedly witty remark about the left and the far left, on the one hand, codifying police discretion, and, on the other, posing the biggest change to drug law reform in over 40 years. Both of those things are not mutually exclusive. We had Mark Mitchell saying that, on the one hand, there’s nothing new that’s been added here with the formalising of police discretion, but also there are new things in here and that’s a problem, because by adding these new things in we don’t trust police, but also there’s nothing new. I don’t know if Mark Mitchell was listening to himself speaking because, ultimately, what we are seeing here is the biggest change to drug law reform in over 40 years, because it is the codification of that police discretion for the first time. There will be transparency and accountability and data on how police use their discretion, which is currently used on an ad hoc basis. We even had the member Mark Mitchell saying that he, as an officer, had used his discretion and that he sometimes had got it wrong, but the problem is we have no data. It was used on an ad hoc basis; there was absolutely no transparency on the criteria that he applied to use that discretion as an individual officer.

The point here is a systemic change. The point here is transparency and accountability. The point here is to actually address the fundamental issues that drive drug use and abuse, which are echoed in report after report that have been presented to this House and to members in this House—as early back as the Law Commission 2011 report on the fundamental flaws of the Misuse of Drugs Act, recommending that we move towards decriminalisation of use, through to the mental health and addiction inquiry of last year, which showcased the reasons why people do engage in drug use and, ultimately, go down a path of drug abuse—those being, and I can’t reiterate it enough, the issues of isolation and trauma, which our current systematic response of criminalising people only serves to reinforce and make worse.

I also want to raise the issue which has been pointed out by a number of Opposition members, that being that we didn’t support the National Party member’s bill in the name of Simeon Brown, which they say was, ultimately, doing kind of the same thing as this bill. It’s kind of doing the same thing somehow, but, also, this bill is massively different and they’re not supporting this bill—meanwhile, they supported Simeon Brown’s bill. The major difference between the member’s bill as put forward by the National Party member Simeon Brown and this bill is that we’re actually talking about what we’re going to do with the people who are affected by the issues of substance use and abuse. What was absent, completely absent from the National Party’s member’s bill were users and abusers, and the people whose deaths led to this bill in the first place. We are actually codifying how we are going to respond to those problems. On that point, I want to refer to an article by National Party member Simeon Brown, who wrote, in October 2018, a response to a piece that I wrote for the publication The Spinoff, where he said that the National Party was proposing a middle ground on drug law reform. He said, “Swarbrick frequently refers to Portugal as an exemplary model of decriminalisation. Yet she fails to note that manufacturing, distribution, and supply are still criminal offences and highly penalised in Portugal.”

The member goes on and then concludes, “As a society we have to acknowledge that more needs to be done to support those suffering from addiction.” If the Opposition are proposing somehow that they have a middle ground here but all they are calling for is increased criminalisation and penalisation of people in response to drug crises, they are far removed from reality, because it is anything but. What this bill proposes is exactly what the National Party member Simeon Brown and what many Opposition members said in their calls when speaking on his bill: they don’t want to criminalise users.

I’d just like to actually refer explicitly to what is put in this legislation—clause 6, which says, “To avoid doubt, it is affirmed that there is a discretion to prosecute for an offence against subsection (1)(a), and a prosecution should not be brought unless it is in the public interest.”, and, “When considering whether a prosecution is required in the public interest, in addition to any other relevant matters, consideration should be given to whether a health-centred or therapeutic approach would be more beneficial.” That which I’ve just quoted is supposedly the new, not new clause, per Mark Mitchell’s contribution to this debate.

I also want to refer to the point raised by the Hon Michael Woodhouse, who said that I needed to go back to constitutional school—an interesting point from a member, raising with one who has been to law school with another who hasn’t. But the palpable patronisation that has been involved in this debate thus far—if all you can come back with when evidence confronts you is some ad hominem attacks, I think there’s one of us who needs to go back to school and, quite frankly, I’d hesitate to suggest that at this point it wouldn’t seem to be me.

This has been a highly publicised change—a highly publicised change. We have had the deputy leader of the Opposition going out in front of TV cameras on the tiles in Parliament and talking about how this is decriminalisation by stealth. All of the National Party members have their talking points and will continue to hammer this home. That is far from anything but stealthy, when we are enabling such a long-winded debate on it, let alone the entire select committee process, which was not rushed through under urgency but heard from 90-odd submitters.

I also just want to, in closing, point to what has been raised many times before, including in the opinion editorial by the National Party member Simeon Brown, and that is the case of Portugal. It’s quite funny to me—it’s interesting, which is a loaded political term. It’s interesting to me that the National Party consistently refers to Portugal, consistently refers to evidence, but wasn’t willing to engage with João Goulão, the architect of Portugal’s change, in front of the cross-party group, which we invited him to.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Speaker, for the opportunity to take a call on the Misuse of Drugs Amendment Bill. Look, I’d like to make a few comments, and I just want to say thank you to the previous member, Chlöe Swarbrick, for explaining how this bill has not been done and dealt with under any urgency by this Parliament. I’d like to remind this House that it was on 30 July last year that the Acting Prime Minister, Winston Peters, said at the post-Cabinet press conference, after the news came out that 25 people had lost their lives from synthetic drugs, that his Government, this Government, would deal with this issue with “unction and urgency”. Well, it’s one year further on from that. We now know there has been upwards of up to 80 people who have lost their lives from these dangerous drugs, and the Government has only just got a bill to the second reading in this House. We still have the committee stage of the House. We still have the third reading. The Government has still not addressed this issue, and people have continued to die from these insidious drugs. People are still making money from people’s misery, from selling these drugs. The law as it currently stands still says that a person will only get a maximum sentence of two years’ imprisonment if they are found guilty of supplying synthetic drugs.

Hon Tim Macindoe: Shameful.

SIMEON BROWN: That is something which—yes, Mr Macindoe—is incredibly shameful and which this Government should reflect upon, because their words have not stacked up with their action. Their action has been poorly lacking and incredibly slow, one year on since the Deputy Prime Minister said that this would be done with urgency—unction and urgency.

The Green Party has also come out, and Labour Party members, while my bill was going through the parliamentary process, consistently opposed to increasing penalties for the suppliers of synthetic drugs. I do applaud them for seeing the sense and the need to increase the penalties for those supplying those dangerous synthetic drugs and classifying them as class A under this bill. But those changes could have been done by Order in Council a year ago. Those two substances, AMB-FUBINACA and 5F-ADB, could have been listed as class A substances a year ago by the Minister of Health. This Government has sat on its hands on an issue while 80 people have died. Chlöe Swarbrick said we need to think about those who are addicted to drugs. Well, 80 people have died from addictions to these drugs—80 people have died from addictions to these drugs—and we need to tackle the suppliers who continue to make money from those addictions.

While we support the clauses in this bill which will, finally, ensure that those two substances become class A drugs and do provide temporary drug class orders to be issued for emerging and potentially harmful drugs, the National Party cannot support the decriminalisation of all drugs, which is included in this bill and which is a new power, because if you read clause 6, which has two parts to it, the first part affirms the police discretion, and the second part includes a new element which the police must take into account. The evidence before the select committee said there would be no instances where the police would prosecute under this piece of legislation. There does need to be a health-based approach, but there also needs to be a criminal element to our drug legislation to actually say that these drugs are dangerous. We think about the drugs which this impacts: meth, heroin, MDMA—serious drugs, all being decriminalised under this piece of legislation. The law should be making it very clear: they are illegal. The message that Parliament should be sending is that they are dangerous and we should not be decriminalising in this way. Thank you, Madam Speaker.

ASSISTANT SPEAKER (Hon Ruth Dyson): A split call—I call Priyanca Radhakrishnan.

PRIYANCA RADHAKRISHNAN (Labour): Thank you, Madam Speaker, and just before I begin on the bill, since this is the first time you’ve been in the Chair when I’ve taken a call, can I just congratulate you on becoming the Assistant Speaker.

ASSISTANT SPEAKER (Hon Ruth Dyson): Thank you.

PRIYANCA RADHAKRISHNAN: It is, though, with honour that I rise to take a call at the second reading of this bill, the Misuse of Drugs Amendment Bill. I say it’s an honour, because I wasn’t part of the select committee that considered this bill, but it is one that is incredibly important and, as the member Chlöe Swarbrick said, one that has been publicised—

Chlöe Swarbrick: Extensively.

PRIYANCA RADHAKRISHNAN: —extensively; that’s right—and a lot of misinformation, as well, has been spread; a lot of scaremongering.

I want to just take us back to the heart of this bill, where it’s originated from. It has been a long time coming, because there is increasing evidence, there is increasing acceptance, internationally that the war on drugs has failed and that doing the same thing again and again, though politically expedient, is not actually getting us to the outcome that we want. The outcome that we want, I believe, is actually the same on both sides of the House. We all acknowledge the harm that comes from drug use—the deaths. We may, you know, use different figures or whatever, but at the end of the day, the deaths we’ve seen as a result of synthetics on our streets—it’s too high. All of us want to minimise that drug harm and protect people from it. Where we disagree, though, is the avenue or the paths that we take to actually reach that outcome, and that’s why I’m incredibly proud of the Minister and all those, including Chlöe Swarbrick, who have worked on this legislation, because this is the pathway that will get us there. It is not about throwing more people into jail—you know, locking them up, throwing away the key—because if there was evidence that that was working, we wouldn’t have the problem that we’re seeing on the streets now. The fact is that it hasn’t worked.

And as I was listening to the arguments that members opposite were making and I was trying to unpick the strands of the different arguments, it was really difficult because it was such a jumbled mess right from the start, when Simon Bridges came out and said that if his party were ever to become the Government, they would sign this country up to Trump’s war on drugs, which hasn’t worked. And I remember reading an article that said that his deputy was less sure about that.

Secondly, Simeon Brown, who just spoke before me, made a point that this should have been considered under urgency, we’ve taken too long—whereas other members have talked about a rushed process, so make up your minds.

Thirdly, members have said, “Ah, there’s nothing new in this bill.” But it does, apparently, what Simeon Brown’s bill would have done, which the Government rejected because it was more of the same; it was more punitive, with nothing else.

And, finally, on a health-based approach, we had the Hon Mark Mitchell, who said, “That’s nothing new. That’s nothing new in this bill. You know we’ve always supported a health-based approach.” And then the member Shane Reti mentions a struggling health sector—the fact that apparently there’s no money for this—and asks where these magical therapeutic services will come from. So I fail to actually understand what the overriding argument is from the Opposition.

But getting back to the bill, though, a health-based approach is absolutely needed; and what this bill will do is a few things. It classifies the two main synthetics that have been linked to a number of deaths as class A drugs, in recognition of the fact that these are high-risk drugs. It reaffirms the existing police discretion for personal use and allows them to actually redirect people who have been caught using to therapeutic services, which are not so magical—they exist, but, of course, submitters have raised the issue that we need more of them. They need to be more accessible services, and the Minister has already taken that into consideration. It enables temporary class drug orders to be issued to better control these substances that keep emerging and that are potentially harmful.

So these are changes that are being introduced to disrupt the supply and availability, and target suppliers, but also to ensure that we don’t just keep doing the same thing again—that we actually address the fact that people who are using need support and need help to get out of the trauma and the isolation that would otherwise have just sent them down the same street all over again. I commend this bill to the House.

Hon MAGGIE BARRY (National—North Shore): Thank you, Madam Speaker. I rise to talk at the second reading of the Misuse of Drugs Amendment Bill, which, as attentive members will gather, the National Party does not support. On this side of the House, we acknowledge that there is a need to do better, but we also need to combine additional funding and revenue into drug—and alcohol, for that matter as well—rehabilitation services and increase the level of treatment that we provide, including in prisons, which that side of the House and the Government have already diminished the funding for. We think that’s a retrogressive step. And we also think that we need to take a much firmer line and give a clear message to the public about what this Parliament would like New Zealanders to do around drug and alcohol reform—I know this is about drugs, but I tend to combine the two of them.

Many people have said, on our side of the argument, that this is decriminalisation by stealth.

Greg O’Connor: National ignored the alcohol recommendations.

Hon MAGGIE BARRY: A couple of people are barracking already, including one who was involved with the New Zealand Police Association and the New Zealand Drug Foundation, who presented at our select committee and agreed that the provisions in the bill amount to de facto decriminalisation of drug use—

Greg O’Connor: Ignored the alcohol recommendations.

Hon MAGGIE BARRY: —the former association that that member who’s bellowing from across the House, Mr Greg O’Connor, was a part of. So the stalling tactic by the Government while they figure out exactly what they’re to do—is there a working party on this somewhere that’s due to report back in a year or two? How much longer can we delay what needs to happen? That’s why we’re annoyed that the Simeon Brown bill wasn’t picked up, because 80 lives have been lost while the people on the other side of the House continue to delay.

So this is a Government that could immediately move to classify those two strains of synthetics as class A drugs through, for example, an Order in Council. It could be done immediately. It doesn’t need to traipse through the process in the House and further delay so that other New Zealanders will die—and they certainly will—while this House and that Government procrastinate instead of really moving hard and quickly on these extremely harmful substances.

We’ve heard from former policemen, including my colleague the Hon Mark Mitchell, that the police have already had discretion around these sorts of things. They haven’t needed to have the law changed in the way that it is, apparently, going to be under sections 5 and 6. So if police follow clear Crown Law guidelines to determine whether a prosecution is appropriate and whether it is in the public interest, that’s fine. But this bill goes that step further by explicitly stating that the police should not pursue prosecution. Judgments and compassion are qualities that police can bring to the fore when they are dealing with individual cases, as Mark Mitchell outlined from his time in the force, but the National Party cannot support the intention of clauses 1 to 5, and clause 8 of this bill—we do support those, I should say; we believe that clauses 6 and 7 are really the ones that are problematic and the ones that other colleagues and myself want to just draw attention to at this second reading.

I think that when the law shifts from a presumption of prosecution to one of non-prosecution, that is a seismic shift in the message that we are sending to New Zealanders. And when we act responsibly and try to think of raising awareness of the perils of drugs, I don’t think that we need to look to Portugal, which has not been an altogether successful model, and I don’t think it’s one that New Zealand members of the public, and society at large, would want to embrace. It’s been cited repeatedly as the panacea for this country. Many of us on the side do not believe that that would occur. The nephs on the couch aren’t going to be getting off the couch if there is full decriminalisation. This is a fear that is shared, I think, by members across this House. We need to do something. This bill is not the way to do it. It’s taking too long, it doesn’t actually deliver on what it should, and in our view it is moving far too far in the wrong direction. So that is why members on this side of the House cannot commend this bill to this House. Thank you.

GREG O’CONNOR (Labour—Ōhāriu): I come to this House after 40 years in law enforcement. I acknowledge my colleague across the House Matt King, who was a very effective detective in the North. But I’ll challenge him, I’ll challenge Mr Mitchell, I’ll challenge any police officer anywhere in the world to say that anything we have done has done anything to control, to curtail, to reduce the amount of drug damage in our world.

Actually, something did happen. We’re talking here about changing a law. In the 1970s, speeches were made exactly the same as Simeon Brown made here when he talked about “If we just increase the penalties.” Well, that was done with heroin. In the 1970s, New Zealand—Wellington here, where I was a young police officer—was awash with heroin. The sentence was changed to take it to life imprisonment and it made not one iota of difference. The only difference that was ever made was when the Mr Asia syndicate, which was responsible for bringing virtually all the heroin into New Zealand, collapsed—as many business conglomerates do in the United Kingdom—and the supply of heroin into New Zealand stopped overnight. As a result, New Zealanders either gave up heroin, they went to Australia, and some went into homebake. So that wasn’t any law change that changed anything.

Mr King, again—I’ll look at Northland because Northland is actually a very, very good example, because Northland has become one of the worst places in New Zealand for drug use, for gangs, for drug manufacture. Now, Mr King knows full well that he worked very hard and his colleagues worked very hard, but, actually, it did nothing and the whole thing deteriorated, and what this determines is that we simply must have a new look at the way we do things.

I’ve been privileged enough in my previous role to travel around the world and spend time with police officers in places like Philadelphia, places like Baltimore, places like Los Angeles, and places like Miami, and each of those towns has an area where it is rife with drugs. You’ll see a lot of it on television. It’s been dramatised, but, when you actually go into those areas, they are virtually no-go areas. Drugs are rife, and nothing from Ronald Reagan’s war on drugs made one iota of difference. It has simply got worse and worse as time has gone on.

All the tough talk—and I hear two of the colleagues on your right, Mr King, saying, “Soft on drugs. Soft on drugs.” Mr Hudson, while people are still making those stupid comments, nothing will be done. What we’ve got to do is understand that we have to now take a look at what we are doing.

Portugal is a very good example. I was actually, again, fortunate enough to spend time in Portugal. What happened in Portugal was that they were hit with a drug problem. A little bit of history is important, because each country is slightly different. They were a country that was very cut out from the rest of the world. They had, basically, missed the 1960s and 1970s—all the whole heroin liberalisation, or that whole heroin wave, had missed Portugal. However, it hit them all of a sudden, and they were getting massive deaths from heroin.

They could have gone two ways. They could have gone the way the rest of Europe had gone and tried to hammer down, the way of the sort of talk we’re hearing this afternoon from the Opposition benches, but they didn’t. Again, I’ll go back to Mr Simeon Brown talking about the deaths. They were getting huge deaths from heroin overdose. What did they do? They actually went down, and the doctor João—I forget his surname—came out here, and I was actually able to spend time with him in Portugal. They actually took another approach, and do you know what? The number of heroin deaths actually almost disappeared. It was almost an accidental approach. This guy was running something down in South Portugal, and they said, “It seems to be working down there. Bring it, and let’s run it nationally.”

Look, it hasn’t solved everything. They do have heroin problems. A good example, for those who go to Europe: you can always tell a country that’s got a heroin problem, because you go to the local railway stations and there’s always a lot of people running around and they seemed to have really baggy backsides in their jeans, because that’s a symptom of drug problems. A symptom of people with a lot of heroin issues is they stop eating. That’s the first thing that happens. So just go and have a look. Actually, when you know what you’re looking for, you can see where we have a drug problem.

In New Zealand, we have a major problem with methamphetamine. We have a major problem with synthetic drugs. Nothing we have done—for methamphetamine, we’ve made it life imprisonment; we’ve upped all the sentences with methamphetamine. Mr King, look at the seizure that you got in the North on the Ninety Mile Beach. It was a massive seizure. It was half a ton of methamphetamine. Do you know what effect that had on the price and availability of methamphetamine in New Zealand—the seizure of half a ton of methamphetamine? Absolutely and utterly none.

So here you have colleagues sitting on your right saying, “Soft on drugs. Soft on drugs. Soft on drugs.” Well, you know that the police in Northland were not soft on drugs. You know that the police in New Zealand were not soft on drugs. And yet it made no difference. So can I just say—and I’ll implore those members on the opposite side—can you actually sit back and think what you could do. I would like to think that we all came to this House to do one thing: to make for a better country. Sitting and talking, saying “Soft on drugs. Soft on drugs.” like some little thing in a circus—it just simply doesn’t work.

Can we just get together on this one, please, and let’s take it out of politics, because if we politicise it—and, look, Oppositions, and Labour Oppositions, have been guilty of this in the past; go around the world, police associations have been guilty in the past. Anyone who has been looking for a bit of air time on this, they will say the same thing: “Hard on drugs. Hard on crime.” Well, actually, it doesn’t work. So can we please agree that there has to be a better way.

I look at this legislation. Look, in about 2012-2013, we had a major problem with synthetic drugs. Actually, do you know why it was able to be fixed—not completely fixed, but, actually, the situation was improved considerably? At that time, the suppliers of synthetic drugs were mostly legal. Remember back—you used to be able to go down to your dairy and buy it. The first time I saw it, my son had it. He had bought it, and he told me, showed it to me, that he had bought this legally, this stuff. That was the first time I understood. I was getting youth aid officers around the country ringing me, saying, “We’ve got to do something about that.” Actually, the legislation that went through at the time—because it banned legitimate dealers, legitimate suppliers, from dealing in the drug—in the short term had a very good effect. Actually, generally, synthetic drugs—while they didn’t disappear—they were diminished considerably in the market.

But then what happened? Actually, do you know what did happen? The Christchurch earthquake happened. And do you know what happened in the Christchurch earthquake? Drug testing. A lot of the workers that came from overseas realised that with synthetic drugs—cannabis would show up, other drugs would show up, but these synthetic drugs wouldn’t show up. And, actually, that’s one of the big problems we have. That’s why people who know the risks are prepared to use it: because they know it will actually pass your drug test. What I’ll say: the one that won’t, two weeks later, is cannabis. So you can take this extremely dangerous substance that will kill some of its users, that does kill some of its users, but, actually, you can still climb up a building, you can still climb up on the scaffolding, and use this stuff.

So this is how integrated it is, and this is how stupid it is for people to sit and say, “Soft on drugs. Soft on drugs. Soft on drugs.” It’s a stupid thing to say, and I would ask the Opposition to stop saying it, because it is going to be the one thing that is going to prevent a decent, joined-up approach to doing something about this problem.

For a member to stand up and talk about that, yeah, 85 or however many, 80-odd, people have died, and to think that passing one little bill that was going to increase the sentencing to eight years was going to make an iota of difference, well, I’m sorry, there’s too many other things at play—the things that I’ve talked about, notably the drug-testing regime. Nothing will work in isolation. To sit there and say “Soft on drugs. Soft or drugs.” is just the most stupid, damaging thing to do. I will request those opposite to stop doing it, because the real victims will be those who will die, because if we end up so polarised on this that we end up doing nothing about it, then, actually, the situation will continue to deteriorate. And the situation that Matt King and Mark Mitchell and myself worked on for years, and now have to admit has not really made an iota of difference, will continue. And we, the whole of this House, will have missed an opportunity to actually try to do something that is not only going to reduce deaths but is actually going to reduce harm. Let’s all agree that it would be better if fewer drugs of any type—illicit or otherwise—are used.

I could talk about OxyContin—a legal drug that is now highly illegal that actually caused more deaths than this in the United States, and caused more problems than that. That was a legal drug, and that, again, caused—for another time perhaps. I commend this bill to the House.

BRETT HUDSON (National): Thank you, Madam Speaker. Well, that was interesting, and it just goes to reinforce the fact that this Government has gone soft on drugs—soft on drugs; soft on crime. Just a brief note: even their firearms reforms—more responsibility and cost on law-abiding Kiwis; nothing at all on gangs and genuine criminal activity. Here we have a complete approach of going soft.

To listen to Mr O’Connor speak, what you could take from the extension of the logical argument is do nothing. I heard him say half a tonne of meth is not worth stopping, and possession is not worth worrying about. This bill, which is under the cloak—and it is a mere cloak; a disingenuous cloak—of trying to treat matters of addiction and problems as health issues, is simply an attempt to decriminalise the use of all illegal drugs while nominally still claiming that they are illegal.

There is simply no way—there is simply no way, and this is in the words of the police representatives themselves—if this passes, that police officers are going to be focused on even attending to these sorts of matters. Give me one example—one example—where it will be able to be argued that a therapeutic approach is not more beneficial to the offender than other measures.

Chlöe Swarbrick: That’s the point.

BRETT HUDSON: It’s never going to be argued—never going to be argued. So, Ms Swarbrick, that is why it is decriminalisation of all drugs by stealth. It will never be the case that a legal action against someone caught in possession of illegal drugs will ever actually go down a prosecution path.

I’ll tell you another difference with Portugal, which Mr O’Connor claims to have visited but perhaps didn’t study, is the reason Portugal’s approach is quite different to this one is it has a sliding scale of actions on being caught in possession. If the offenders don’t follow those, then they end up with the same sort, actually, of criminal convictions as used to be the case, potentially—although they do have the opportunity on several occasions to mend their ways, shall we say.

But this is simply an excuse by the Green Party, that has long wanted to legalise all drugs in this country, that by stealth are simply going to decriminalise this. They’re not going to make the problems go away. Not dealing with the problem is not going to make it go away. Taking a soft approach is not a corollary. If Mr O’Connor is to be taken at face value when he says that everything we’ve done to date doesn’t work, and it isn’t a proven case, then, that by doing the opposite it’s going to get any better. In fact, if you remove the barriers to demand, the only thing we should expect out of this is that usage will increase. And it won’t go through the roof: this is not an argument that we are going to have streets full of addicted and intoxicated people, but it will reduce a barrier to demand, and we can anticipate that there will be more of it. We oppose this bill. We certainly will not be commending it to the House.

ANGIE WARREN-CLARK (Labour): Thank you, Madam Assistant Speaker. I thought that I would commence my contribution today by reading—as the member Chlöe Swarbrick did—the part of the bill that has caused so many problems. This is perhaps for the benefit of the Opposition, who do not appear to have read the bill. So I’m going to refer to clause 6, “Section 7 amended (Possession and use of controlled drugs)”: “(5) To avoid doubt, it is affirmed that there is a discretion to prosecute for an offence against subsection (1)(a), and a prosecution should not be brought unless it is required in the public interest. (6) When considering whether a prosecution is required in the public interest, in addition to any other relevant matters, consideration should be given to whether a health-centred or therapeutic approach would be more beneficial.”

I have read that out for the benefit of the Opposition, and now I will turn to the decision-making tool that occurs when a police member is looking whether to prosecute. So “Is it in the public interest to prosecute? The relevant public interest considerations, which can be properly taken into account”—and the police offered this to us—“by decision-makers, will vary from case to case. As per the Solicitor-General’s Prosecution Guidelines, examples of considerations of matters that may be relevant include”—so, this is in favour of prosecution. I am making this very clear: in favour of prosecution—“The offending was of a serious nature, taking into account the gravity of the maximum sentence. There are grounds for believing that the offence is likely to be continued or repeated. The defendant has relevant previous convictions, diversions or cautions”—i.e., they haven’t taken the message of a health-based approach—“The offence was an incident of organised crime”—so that speaks to all of the issues that the Opposition have spoken to in concern about this matter, and—“The offender has created a serious risk of harm.” So those are the matters that are in opposition to what has been said across the Chamber.

So for the “Public interest considerations against prosecution”: “Proper alternatives to prosecution are available—for example, a health-based or therapeutic approach would be more beneficial than prosecution. The defendant has no previous convictions. The offence is not on any test of a serious nature, and is unlikely to be repeated. The harm can be described as minor and was the result of a single incident. The defendant is a youth.”

So I would like to just look across the Chamber and talk to the members and say that we really considered this. We looked at this discretion that the police currently use, and I have read out the current guidelines. The reality is that this is what the police do. They are currently doing this to fix and solve problems that they see. My colleague here, Greg O’Connor, was very clear: the 40-plus years that he spent in the business of policing, and the war on drugs has failed.

When we came to discuss this bill, we were very clear that, actually, we needed to look clearly and consistently at what needed to change. The effect of that has been, quite simply, three things. First of all, we have—and I’m not going to say the names of these two synthetics, because they have quite long names and long letters—

Chlöe Swarbrick: AMB-FUBINACA.

ANGIE WARREN-CLARK: No, I’m not going to do it. These drugs have been moved from class C into class A, so that means they’re a serious drug. But the important second part of this bill, which the Opposition also agreed to, and which I feel we haven’t really sort of talked about at this point very much, is the new temporary classification for new and emerging drugs. We heard from the Opposition—quite clearly, they talked about us not moving with urgency, and then we were moving too slow; all sorts of things—but, actually, this is the piece of legislation that enables the Minister of Health to quickly gazette and record these drugs while they’re still under testing, to identify where there is risk and harm, and to get these drugs put into a special category. That gives better search and seizure opportunities for the police, and that actually is about being very clear that we want to fix the harm.

The third part is about what I have just spoken about: very simply, the opportunity to offer a therapeutic response to people’s drug addictions. Very simply, that’s all it does. It’s a discretion that is applied, and it is applied constantly by the police on an everyday basis. If we look at the 95 submissions that occurred, and the 59 submitters who came and spoke with us in person, it was, in fact, really clear that the thing that a lot of the submitters were concerned about was more about that there wouldn’t be bias applied, as opposed to the fact that a discretion was being applied. And so we had a good conversation about it. There are guidelines and further work the police are doing. Also, make no mistake: the police who were advising us in the select committee were very clear that this would not affect anything in their day-to-day operations, nor would it do anything that was going to cause them undue difficulty, harm, problems, or operational issues. This was business as usual and they appreciated it being codified for them.

Now, I have another quote. We were quite concerned about whether in fact we were getting it right, so we got an opinion from Crown Law. Crown Law very clearly identified for us this prosecution standard. This is what they have said to us: “While there is probably little real difference between a direction to prosecute and a discretion not to prosecute, the guidelines refer to the discretion to prosecute in order to make it clear that there is no presumption either in favour of, or against, a prosecution in any particular case.”

So, therefore, quite clearly, the concerns of the Opposition have been, at the advice of the Solicitor-General, quite clearly refuted. I have moved off the Health Committee, and I have enjoyed my time with the Health Committee, and it is a real shame to me that the Opposition are being so bull-headed around this particular clause.

I believe that they are taking a decision which is not founded in the law. It’s not founded in the opinions that we’ve been given. It’s not founded in the discussions we had, and I’m really sorry that I am leaving the select committee, because we’ve worked very collegially, generally, and it has been very interesting. We’ve had some very interesting debates and conversations, and generally work very closely together, but in this instance I’m quite saddened that this is probably the last time I’ll speak on a piece of health legislation and I’m having to stand up and explain what the Opposition so very, very clearly knows we discussed. They have refused to accept the way that this bill has been written, and the fact that a therapeutic response to drug taking is important and is useful, yet we will still be hard on these people who are dealing in this misery. It is very important, and that is in the legislation too. I commend this bill to the House.

A party vote was called for on the question, That the Misuse of Drugs Amendment Bill be now read a second time.

Ayes 63

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

Noes 57

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

Bill read a second time.

Bills

National Animal Identification and Tracing Amendment Bill (No 2)

First Reading

Hon DAMIEN O’CONNOR (Minister for Biosecurity): I move, That the National Animal Identification and Tracing Amendment Bill (No 2) be now read a first time. I nominate the Primary Production Committee to consider the bill. At the appropriate time, I intend to move that the bill will be reported to the House by 4 November 2019, and I will outline my reasons for that time frame. I consider that this period provides an appropriate balance between ensuring the committee and the public have sufficient opportunity to review the legislation package and implementing the changes as soon as possible.

Today, I present the National Animal Identification and Tracing—we’ll call it NAIT—Amendment Bill (No 2) and a regulatory change package to the House. I say “package” because the associated regulations are included with the amendment bill. I’m being absolutely transparent about the totality of the changes being made to the scheme’s framework. This way the select committee will be able to examine the proposed regulations as well as the statute changes, and the regulation amendments will be made at the same time as the bill is enacted.

This bill package marks an important milestone in dealing with the problems identified with the NAIT scheme. NAIT information underpins New Zealand’s ability to trace animals and respond to disease incursions. The changes address the recommendations made by the two-year Operational Solutions for Primary Industries New Zealand (OSPRI) - led NAIT review and the issues identified during the biosecurity response to Mycoplasma bovis. The package demonstrates that the Government’s commitment to ensuring the legislative framework for NAIT is fit for the future. It shows our dedication to continuous improvement of a system that underpins our biosecurity responses.

The process to make good legislation takes some time, but this Government has moved as soon as possible to get the needed changes in place. I acknowledge the support from other members in the House to ensure that these amendments can be made speedily—and I’m hoping so from the other side of the House—in the interests of all farmers and New Zealand as a whole. The House is well aware of the impact that the Mycoplasma bovis cattle disease has had and is still having on the farming sector, on the wider industry, and, of course, on the economy generally, as well as the commitment from taxpayers to a large bill.

The Government and our bovis partners, DairyNZ and Beef and Lamb, will spend an estimated $890 million to eradicate Mycoplasma bovis. This is a major commitment. To back it up, we need to make the legislative changes to support the eradication programme. The NAIT scheme needs to be improved to incentivise good behaviour by farmers and to strengthen traceability. Mycoplasma bovis was the first actual test of the scheme. It showed where those improvements should and need to be made.

The package makes amendments to improve the scheme on several fronts. All the amendments work together to improve the tracing of animals. Some of the amendments to improve traceability are required to allow the operational changes NAIT Ltd needs to make—for example, making sure each NAIT number relates to a specified land parcel. There are also changes to address the tracing issues found during the Mycoplasma bovis response. The legislation makes it clear that when farmers shift premises, they can no longer take old NAIT tags with them to use at another location. Note that there will be a transition period to allow farmers to use up their existing stock of tags.

Everyone should now know what is expected in terms of using the NAIT scheme, and stronger action is needed to incentivise compliance. We want to make the tools available so that if warnings don’t get heeded, there are real consequences for wilful failures to do the right thing. Several amendments will help drive better compliance with the scheme, such as increasing the penalty limits and infringement fees for offences to the same level as those for offences under the Biosecurity Act and the Animal Products Act.

The $150 fine for offences relating to failure to tag animals is too low to be a deterrent. This fee will go up to $400. The infringement fee for offences related to failures to register is changing from $300 to $800. Also, when a very serious offender is prosecuted in court, the sentencing judge will now be able to choose the most appropriate fine from a wider range. The individual $10,000 maximum penalty increases to $100,000, and the corporate fine goes from $20,000 to a maximum of $200,000. Higher penalties that line up with those given for similar offending across the biosecurity system will reinforce the importance of people complying with their NAIT requirements.

Tracing relies on having all animals tagged and registered. Unfortunately, there has been some misuse of the original “impracticable to tag” exemption. This exemption was meant to be a short-term thing used to manage some unruly and large animals that were in the system at the inception of the scheme seven years ago. However, it is being used by some people who consider tagging the animals as simply inconvenient. That behaviour has to change. The amendments will tighten up this area so that the only reason for an animal not to be retagged will be the safety of the person who is in charge of it—and that is a reality for some large animals who may have lost their tags.

Since 2012, animals are meant to have been tagged at birth, when they are small. By now, farmers should have the equipment and processes in place to deal with the very few large or unruly animals that lose their tags. Therefore, in five years’ time from when this legislation is passed, the ability to get this exemption will expire, but we will be able to have exemptions, of course, for safety. The long lead-in period gives people plenty of time to update their methods for managing and tagging all their stock.

The amendments will strengthen the monitoring of the NAIT organisation by filling identified gaps in the performance and reporting provisions. The changes will make sure a Minister can intervene in NAIT operations in a graduated manner if necessary. We need to make sure there is no repeat of the problems in the existing NAIT organisation that came to light last year. NAIT data needs to be useful to as many people as possible. The more useful it is, the more incentive there is for farmers to comply with their recording obligations. It will be a win-win situation for the wider sector.

The amendments to it ensure that the Ministry for Primary Industries (MPI)—who is the largest user of data—can get streamlined access to the information. The director-general of primary industries will be able to grant MPI staff access to the data in the NAIT system for the purposes of the Act. In urgent situations, such as when wandering stock are creating a road hazard, MPI will also be able to facilitate the use of NAIT data by other agencies such as local councils or the police or fire services. This change will help these services swiftly identify who is responsible for the individual animals. The data can only be used for the purposes set out in the NAIT Act. There are very clear provisions on this. Unlike most similar laws, a person who misuses NAIT data can be prosecuted.

The NAIT bill also allows extra conditions to be set on the use of particular NAIT data that someone has applied for. These are very strong, practical safeguards. I want to ensure that NAIT information is protected for the future and that the sector will always have access to it, no matter who the NAIT organisation is. The draft law therefore confirms that NAIT data becomes the property of the Crown, to be held on behalf of the people supplying it, other farmers, wider industry, and the public interest. A NAIT organisation will also have to ensure continuity of access to the information system if, in the future, another agency is designated as a NAIT organisation.

Taken together, the amendments will improve the system as a whole. The package also takes the opportunity to make some technical amendments and enhancements to ensure the law is as clear as possible, and to correct minor drafting errors. This legislation package is a further step in this Government’s ongoing programme to improve our animal tracing scheme. We need a system that supports and makes it easier for people to comply and encourages them to play their part so that New Zealand’s biosecurity continues to be world class. It gives me great pleasure today to speak on this very important piece of legislation. I trust the House will support it.

Before I finish, I’d like to acknowledge the speaker who’s about to rise, the Hon Nathan Guy. He has served this country well as the previous Minister of Agriculture. While we’ve disagreed on a number of issues, and perhaps the implementation of NAIT, I hope that he shares my view that we’ve got to pass this as quickly as possible. But I do acknowledge his service to New Zealand and wish him well for the future. Now, I commend this bill package to the House.

ASSISTANT SPEAKER (Hon Ruth Dyson): Just before we take the Hon Nathan Guy, could the Minister just confirm that the bill he’s moved is called the National Animal Identification and Tracing Amendment Bill (No 2)?

Hon Damien O’Connor: Correct—No 2. Thank you, Madam Speaker.

ASSISTANT SPEAKER (Hon Ruth Dyson): Excellent. Thank you.

Hon NATHAN GUY (National—Ōtaki): First of all, can I acknowledge the previous speaker, Damien O’Connor, and thank him for his very kind words. Also, it was great to catch up earlier on with Shane Jones. For those that—

ASSISTANT SPEAKER (Hon Ruth Dyson): Sorry, I should have said, the question is that the motion be agreed to.

Hon NATHAN GUY: Thank you, Madam Speaker. As I was just saying, it was good to catch up with Shane Jones earlier in the day. As I was just alluding to, for those that are listening that don’t know, I have made an announcement today that I’m not standing for re-election in 2020. It’s quite a big decision for me to make, but I’ve been in this House for 15 years, achieved an awful lot, I believe, and will continue to serve the people of Kāpiti and Horowhenua for the next 12 or 15 months leading up to the election. I look forward to doing other things outside of Parliament. It’s been an absolute blast, and a privilege, and an honour.

Second of all, can I now make a contribution about this bill, the National Animal Identification and Tracing Amendment Bill (No 2). We had the No. 1 bill—it came through the Parliament under urgency about 12 or 14 months ago. We didn’t agree with the process. Finally, we agreed with the changes, but that should have gone to a select committee. I’m pleased to hear the Minister say that this one is going to have due process and scrutiny around it.

I just want to acknowledge the Minister and say thank you for allowing your officials to come across to meet the National Party agriculture caucus members last week. We had a very good discussion with them, and it gave us confidence today to support the bill. We do have some issues that we want to further flesh out in the select committee.

We, unfortunately, aren’t going to agree—or maybe fortunately, depending on which way you look at it—with the Minister’s second motion that he’s going to move later on this evening, and that is a truncated select committee period, because we don’t believe that we need that. I think it should be up to the select committee to get on and do the job and bring it back into the House, without having the pressure of saying it needs to be brought into here by 4 November. That’s all a decision that really is a political decision. The Minister will say, “No, no. It’s down to the fact that we need to get on to it.”, but it’s because the Government is going to run out of bills in the House at the end of the year. That’s what it’s all about. The Primary Production Committee have the capability to get on and do this bill, and give it justice, and hear from those submitters. We will get some submitters.

We’ll get submissions from, particularly, the Road Transport Forum New Zealand—their members, no doubt, will submit and say that they are concerned about having the liability sit on them if they put an animal that isn’t tagged on to a truck. We want to hear from them about their concerns. I know that a lot of modern trucking companies are now putting Halos on the back of their truck that do record animals as they go up the ramp on to the truck. Some also use wands, but we’ve also got to think about the practicalities. A lot of these animals are loaded out at 10 o’clock at night or 2 o’clock in the morning, and we just need to understand what that means for truckies, who want to do the right thing, that may occasionally, for whatever reason, not realise that an animal doesn’t have a tag. We know that the system has been tested. We know it came in under 2012. It was reviewed under the National Government in 2016. We support these changes.

The other important changes are about the PICA, which is the person in charge—ensuring that their location links back to the animal’s birthplace. We think that’s fair. Also, it lifts the penalties, as the Minister has talked about, from $10,000 to $100,000 for individuals and from $20,000 to $200,000 for companies. We think that’s fair and reasonable. We do have a concern, that we will no doubt flesh out and talk to the Minister’s officials in the select committee process, about their access to National Animal Identification and Tracing (NAIT) data, and who owns that data and when it’s available and to whom. They are signalling that it will be available to public sector organisations. We probably think that’s fair and reasonable, but we would hate to think that the ENGOs had access to this data. Also, we understand the implications of an animal being found on the weekend and ending up at a local pound, and potentially those council staff wanting to know where that animal has come from. So as I understand it, they will have the ability to ring the Ministry for Primary Industries’ (MPI’s) 0800 number and get that information a lot quicker than possible now.

We know, out in the rural heartland, that farmers have had some concerns about NAIT, particularly in recent times, with the slowness in the response of the 0800 number. We’re pleased to hear that MPI officials have gone across to Operational Solutions for Primary Industries New Zealand (OSPRI) to help get that issue sorted out. We also know that there are some glitches in the software. We know that it’s not that user-friendly. It’s good to hear from officials that OSPRI are on to that and there is going to be a system upgrade so it’s more user-friendly to farmers.

So with those introductory remarks, the National Party does support this bill. We don’t support a truncated select committee process, because it’s really up to the select committee to do the work. Indeed, it could come back earlier than what the Minister wants, but we don’t think it’s fair to have that shackle placed on the select committee. Thank you, Madam Speaker.

KIRITAPU ALLAN (Labour): Madam Speaker, first of all, I know it’s a little late, but I want to acknowledge your ascension to the bench, as this is the first time I have had the privilege and delight to appear before you, if I will, so tēnā koe.

Secondly, just before I turn to the substantive matter at hand, I too want to reiterate the Minister’s comments and commend the service and contribution that the honourable member for Ōtaki, Nathan Guy, has made to rural and provincial communities for the duration of his time in this House, but also, I know, for the immeasurable amount of energy and effort and confidence that was provided by yourself whilst you were at the helm of the ministry. So thank you for your service and your time.

Turning to the National Animal Identification and Tracing Amendment Bill (No 2) that is for consideration before this House, I guess while this bill is so important for our considerations, it has been highlighted by the biosecurity outbreak of Mycoplasma bovis. M. bovis has had incredibly detrimental impacts for provincial and regional communities widestanding. If anything, though, we can take away from the outbreak that it’s an opportunity to reflect on areas where we can—and, indeed, must—do better, and National Animal Identification and Tracing (NAIT) was and has been the subject of a number of reviews. During the process of those reviews, many shortcomings were highlighted, which this bill here seeks to amend.

So I think that one thing that we can be assured of on both sides of the House is that we are in agreement that the farming industry and the farming sector—they provide the backbone for many of our provincial economies. Now, when you get an outbreak like M. bovis in a small community, it has incredibly detrimental impacts on the wellbeing of the entire community. Now, NAIT had been in place since 2012, and I think it’s useful, probably, just to look back on where NAIT, in its inception, came from.

I think it was the Hon Jim Anderton—if I’m correct, Minister O’Connor—that was really forceful in pushing through the original proposal for NAIT. I think even under the fifth Labour Government, in about 2008, there was a proposal to try and put $10 million into establishing the NAIT scheme, but, unfortunately, we couldn’t get support from the other side of the House at that time. They weren’t into it, and there was strong opposition from a number of groups that I’m proud to say now are very supportive—from the commentary I’ve seen, at least—of what we’re trying to do now. So I want to acknowledge the journey that we’ve been on with groups like Federated Farmers and the like to ensure that the method by which we can trace livestock is one that is secure, and it will stand the test of time.

So like I said, we’ve had an opportunity now to reflect on some of the shortcomings, and we’ve had a number of reports that highlighted some of those, and Operational Solutions for Primary Industries New Zealand (OSPRI) and the like have been the subject of a number of critiques and reviews. I think if we look to the objectives of that National Animal Identification and Tracing Act 2012, the question which was before the Minister was whether or not the NAIT system that we had now, under the 2012 Act, could deliver on the objectives as set out in section 3. A couple of those: “rapid and accurate tracing of individual, or groups of, … animals from birth to death or live export”. Well, the review showed that that actually was really tricky.

“Provides information on the current location and movement history of individual, or groups of, NAIT animals”. Well, what we were seeing, and what the reviews highlighted, is that there actually had been a really low uptake. In one of the most recent reports I read, around about only 30 to 40 percent of livestock in 2017 had, in fact, complied with the provisions of the NAIT Act. So the voluntary system—or the lack of regulation, sorry, is a better way of saying—and the lack of investment into the system to ensure that where there were breaches, that those were actually picked up and that they were prosecuted and followed all the way through—that was an area of the system that hadn’t been working well. When the Act was introduced in 2012, we wanted biosecurity management to be improved. Well, arguably, that has been improved to an extent, but it could be a lot better.

I just want to flick back to the non-compliance of the Act. For livestock, farm-to-farm, I think that there was around about 30 to 40 percent compliance rate, and a lot less for sales, from farm-to-farm, of calves. I recall having the Ministry for Primary Industries (MPI) come before us when we were undertaking the OSPRI review, and one of the things that they spoke to was just the lack of information, access to data, and the ability to act quickly when things were showing that they were broken down. Actually, we were right in the middle of a—the campaign was just gearing up. It was in July 2017 when we had that first notification down there in South Canterbury. I think it was only about a week or two later, the second.

Now, our Government is pursuing complete eradication, and there has been a vast amount of investment that has been spent on targeting. To date, $250 million has gone into fighting Mycoplasma bovis, and, alongside Dairy New Zealand and Beef and Lamb New Zealand, it is estimated that amongst these three parties, to eradicate Mycoplasma bovis, it’s going to cost around $890 million. This is a large investment. It’s a large investment for both the communities, for the industry, for the sector, and for this Government. Now, had we had the ability to ensure that the NAIT scheme was operating as it could have been, and as it should have been, perhaps we might have been able to tackle the cause, and identify and locate the cause of that outbreak sooner, quicker. That is the hope, amongst many others, that the reforms in this bill seek to achieve.

So the primary focus of the amendments—and these, again, were alluded to in both the MPI report and the OSPRI review—is to improve the traceability of the animals. We’ve heard a little bit about that today, and we’ve just heard from the Minister of Agriculture, there. Ensuring that each NAIT number relates to a specific land parcel improves our ability to track from where to where.

I think my remarks touched on this earlier: it’s OK having a rule, but if you can’t enforce that rule, it makes things challenging. So what we’re doing, or the intention behind the fee regime—there’s a number of fee increases here, and that’s to insist, to incentivise, to drive compliance with the purposes of this bill. So for a relatively minor breach, something like a failure to tag, the fee increase is going from $150 to $400. However, for things that are really serious, where there’s a serious infringement, the consequences are set to increase, and increase significantly.

For an individual who undertakes or commits a serious infringement, the fee that we propose is to go from a $10,000 maximum infringement penalty, to a $100,000 maximum infringement penalty. For a corporation that breaches their obligations, for a serious infringement, the bill will take it from $20,000 to $200,000. Now, those sums may sound a lot, but what they do do is it brings into alignment with the rest of the biosecurity laws that we have. So this is an interesting first phase, and I’m pleased to speak in favour at this first reading and am looking forward to working alongside my colleagues as this bill progresses through select committee. Tēnā koe.

Hon DAVID BENNETT (National—Hamilton East): Thank you, Mr Speaker. I just want to start by acknowledging my good friend and colleague Nathan Guy. We came into Parliament together. Fifteen years is a long time, and I wish him all the very best in his future endeavours. Nathan has served this country very well, and for all those newer members over the other side of here and to our newer members—and there’s some even older members here—15 years is a long contribution out of your life. It is a big service to this country, and his family as well have had to make sacrifices to enable that to happen. Personally, he would’ve had to make sacrifices as well for the benefit of his people and his electorate and of this country and especially of the National Party. So we acknowledge that and we thank you for your service, because everyone in this room is here to serve, and we all serve with many commitments as well. So thank you, Nathan, for all you’ve done and for being a good friend and being a good supporter of the agriculture and horticultural industries in New Zealand.

We will support this bill, but I have reservations about it. The essence of the bill is actually not—nobody’s really going to have a problem with that. You know, like, everybody knows that we need to have a stricter regime around animal recording and animal transport. That is something that started in recent years and needs continuous improvement. I don’t think anybody could argue against that in any way, form, or in manner. The outbreak of Mycoplasma bovis showed deficiencies in the system and showed things that needed to change. But it didn’t show that the Government needed to own the data around every stock, every animal, that every farmer owns, and that’s what this bill does. It transfers ownership of data to the Government. Now, that is not necessary. Data is a really important part, going forward, in any agriculture or horticultural business. Anything in this country, any business in 10 or 20 years’ time is talking about data now. Data is crucial for any business, and we have to, under this bill, hand it over to the Government.

Now, I’ve got no problem in that being handed over to the Government in the time of an incursion or in the time that there’s a national emergency, like we had with Mycoplasma bovis. There could be a clause in this bill which says, in that point of time, the relevant organisations that hold that data have to give free and easy access to the Government—no problem with that at all—and that would solve the problem that the Minister’s looking for. But that’s not what he’s doing here. What the Minister is actually doing here is taking all that data ownership now, and I’m not quite sure of the reason why he’s doing that, but it’ll come out in the next few months, and we’ll find out why he’s trying to do that. But there is no particular reason why that needs to happen. We can safeguard New Zealand’s agricultural base and we can safeguard our export industries by having the right mechanism in there.

A wholesale ownership of data by the Government is never a good idea. It’s never worked in the past. If we just have a look at some of the issues with Government having ownership of data, first of all, if there’s any problem, then it’s the Government’s fault and the Minister will be responsible for any issues of data loss now. So in this case of Mycoplasma bovis, the Minister’s not responsible; the farmers and the industry are responsible, but this will actually mean that the Minister now, as the holder of that data, will be responsible through the Ministry for Primary Industries for any failings.

Secondly, Governments have shown themselves over many, many years to be not the most efficient holders of data. Often, we find that Governments and Government departments don’t have the necessary investment in that data recording and use that the private sector would have. They’re not necessarily the most up to date with holding that data, and their records can get out of date. So just say we have the Government hold this data, and in 10 years’ time we have an incursion again. We’ve got on one side the data that the Government holds, which might be out of date and in a slow manner, and we have data held by various business and industry organisations that’s much more reflective of what’s out there. Which one are we going to rely on for that incursion?

Now, there will be a number of other problems that will come out with having data. I’m just philosophically opposed to the Government holding data, first of all. That’s as a good—

Hon Damien O’Connor: IRD too? IRD?

Hon DAVID BENNETT: Well, exactly the IRD, but the IRD has very special rules around it, and this will not have those very special rules around it. The Minister raises that point—that’s fine. The IRD has all your financial data, but no other Government department has access to that. No individuals have access to that. No competitive companies have access to that data. In fact, the highest, most stringent rules around that data are in the Government’s hands, and a breach of those is seen as one of the biggest breaches Government can have. This won’t be in that category. The Minister won’t have this data in that category. The Minister will have this in a lower category. What happens if this data is sold off to a competitor, sold off to an overseas company? What’s to stop that happening? What’s to stop this data being lost? You have many issues in social welfare and Work and Income New Zealand where data is shared in a way that it shouldn’t have been shared—

Kieran McAnulty: By your deputy leader.

Hon DAVID BENNETT: Yeah, well, and it happens, OK, and this could happen here. Mr McAnulty, that will very much happen. That’s the issue you bring when Government has data ownership. So you’re opening yourself up for that issue.

So that is one of the big issues in this bill, and if we give that ownership of data to the Government, I think it creates a whole set of problems that you don’t need. Now, we can still give Government access to that data in times of need, and that’s a completely different situation. I would understand, if there was a situation that arose, that that Minister should be able to invoke a power to get access to that data immediately. That should be the way it’s done, rather than ownership to the Government as it stands now.

So we look forward to seeing how that’s going to progress through the select committee, but I think there are some really big holes around data ownership, and I hope the New Zealand First Party sees light in that, as they often talk about wanting to protect personal property rights. At the same time, they’re now voting as a Government coalition partner to take away those personal property rights from individual farmers.

MARK PATTERSON (NZ First): Thank you, Mr Speaker. I rise on behalf of New Zealand First to support this first reading of the National Animal Identification and Tracing Amendment Bill (No 2), or the NAIT Bill (No 2). I would just like to commence by joining the chorus of commendation for the service of the Hon Nathan Guy to this Parliament, to agriculture. Whilst we are on different sides of the House and we won’t always agree, I think the rural members of the House, particularly the farming members of the House, do tend to work pretty collegially. We do look out for the greater good of agriculture, and I think losing that institutional knowledge that you have is going to be a loss to the Parliament. I note you are sitting next to the Rt Hon David Carter—you’ll be another one that’s missed, Mr Carter. I think that’s something, hopefully, the National Party in their selection process considers when they are bringing people through, because it is very important.

In terms of the world-class tracing scheme that we would demand as an agricultural sector—given that I think the sectors that rely on this NAIT tracing system probably account for, just off the top of my head, some $20 billion worth of revenue, we do expect a world-class system. We thought we had one. We found out, road-tested in real time in the Mycoplasma bovis situation, that we did not have a fit-for-purpose system, and this bill, under the Minister, looks to address those issues. After a two-year review, some of the findings have been adopted in regulation, but this bill looks to enshrine in legislation some important tenets.

Of course, why is this important? We’ve had to address, as has been mentioned, the Mycoplasma bovis situation—$890 million to farmers through levies and taxpayers. It has been widely acknowledged that the inability to trace animals efficiently has greatly added to the complexity of that response and it has added greatly to the stress that is put on those farming families that, through no fault of their own, have found themselves in this situation. So it is absolutely imperative that we sort this system out.

There are a number of provisions, the number being specific to the land parcel, which I think is thoroughly sensible. There is the impractical tagging provision, which I think may have been flouted a little bit, people that just could not be bothered, because a number of these tags fall out; that’s the reality of it. You tag them when they’re three or four months old or six weeks old, and by the time you sell them at two years old, if you’re a beef farmer, many of them have fallen out. So it does take a bit of complying, but it is something that you absolutely need to do, and we need to enforce that. There is an exemption for dangerous cattle. We know that for bulls or wild cattle there may be some genuine exemptions there that are able to be applied, but as a general rule of thumb, that should not be the case.

We’ve just heard from the previous speaker, Mr Bennett, about the ownership information. I think it’s a fair point to raise and I think that’s what the select committee process is there for. We can prosecute that argument. I personally don’t have too much problem with it. I think if you compare it to the IRD, you are looking at very sensitive information. In this case, you’re looking at, essentially, stock numbers, which I don’t think are particularly sensitive. Maybe I’ve underestimated the information or how that information could be used for other purposes, but on face value it doesn’t seem like there’s information there that’s overly sensitive, and I think it’s the risk reward. I mean, the reward of having this information at our fingertips, or at the authority’s fingertips, when it’s needed I think overrides that. That’s my sense, and that would be New Zealand First’s sense, but we’ll look at that through the select committee process.

There is the provision to apply to look back to the point of origin for stock, which I think is a good one. It’s actually a good one from a management perspective too. I might have bought some cattle from Mr McAnulty. They might be a little bit scruffy, but if I applied through him to look back to where they came from they may have come from Kiritapu Allan’s farm and I’ll know that they were well-bred and had some potential. So I think that’s a good provision, but it does allow you to look at maybe if it’s come from a TB area or something like that originally.

I note there has been quite a lot of commentary around this, the likes of Beef and Lamb, Federated Farmers, Dairy New Zealand, as you’d expect. Most of it’s been exceedingly supportive. There are those issues around the data that they have highlighted, and, as I said, we’ll go through those in the select committee.

The Minister assumes powers to set out the Government priorities and expectations to the NAIT board, and set a direction. So I think that’s a power that will probably be mainly used in an emergency situation potentially, but, once again, we’ll look at that through the select committee process.

But the lessons of NAIT and the failure of NAIT have been well documented. I think in the review it said that less than half of the animal movements were being recorded, which is just appalling, and I think the data up to about 2017 showed there had been one $150 fine. That was the level of enforcement. It was essentially an open door and the new enforcement measures up to $100,000 for an individual farm for flouting the law, $200,000 for corporate, and down to maybe $400 for missing tags or the like. So there is some genuine teeth, and I note that when the 2012 bill went through, New Zealand First’s contribution to that reading highlighted the need for enforcement, and the fact that it wasn’t done is an indictment. We have paid the price for that and this iteration of this bill sets to sort that out and to sort that out strongly, and I commend the Minister for doing this.

We have learnt the lessons the hard way. We are now responding, and it has been quite a long and thorough process started under the last Government, it’s fair to say and acknowledge, but I would commend Minister O’Connor for having gone through this process and landed in the House. It is, I think, a good bill. It’s an important bill. It’s on the back of some work coming from biosecurity, another really important work that Minister O’Connor is doing in this space to protect our primary industries, our $46 billion worth of revenue that we are so reliant on in this country to do the sort of things that we want to do and that support a First World economy.

So, without further ado, I have absolute pleasure in endorsing New Zealand First’s support for this NAIT (No 2) bill. Thank you.

Hon AMY ADAMS (National—Selwyn): Thank you, Mr Speaker. Look, I do want to take a short call on this National Animal Identification and Tracing Amendment Bill (No 2), but before I turn to the bill, if you’d indulge me, Mr Speaker, I just want to begin by acknowledging the announcement today from my colleague the Hon Nathan Guy, who not only was the Minister who kicked off the review of NAIT—and so it’s quite apposite where I’m mentioning it in this bill debate—but was obviously the Minister of the primary sector and primary industries for a number of years in the last Government, has been a spokesperson, as a farmer himself, and has been a superb colleague, Minister, and spokesperson. To Nathan and his family, I wish them all the best. He’s certainly going to be missed here, although I’ll be joining him in the exiting as well. I know my colleagues who remain will certainly miss his very valuable contribution.

National does support the bill. You’ve already heard that from colleagues who have spoken before me. It is very clear that the M. bovis outbreak has shown up some particular deficiencies in the NAIT system and it’s only right that they be addressed through this House, and National certainly wants to work pragmatically and practically with the Government on that.

The bill has got some very good components to it, certainly, and I do want to thank the Minister for making his officials available to us—that we could go through the bill and understand it. I think that’s a very useful and sensible way of approaching legislation like this, which should be fundamentally bipartisan.

We do have some concerns around particular aspects of the bill, but the select committee is the right place to tease those out. But, certainly, in terms of making sure our biosecurity system is absolutely fit for purpose and supports what remains New Zealand’s core industry that supports our economy, and at a time where our economy is facing significant challenges for a number of reasons including the incumbent Government, it is important that this industry supports it, and for that reason we commend the bill to the House.

GARETH HUGHES (Green): Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to support this legislation and acknowledge the Minister. I’d also like to echo the comments made in the House about the Hon Nathan Guy and his resignation. We haven’t agreed on much, but I’d like to acknowledge the contribution and the public service the member has made. In one area where we did see eye to eye, and I’d really like to acknowledge it as part of his legacy, is the work on banning shark finning in New Zealand. We were one of the top 15 shark catchers in the world, a pretty bad practice, and I’m glad that stopped under his tenure. I’d like to acknowledge his work there.

Now, the Green Party supports this legislation. We think it’s a great step forward. The legislation fixes, amends, and modernises the National Animal Identification and Tracing scheme. It tightens the rules, improves the use of data, aligns penalties with the Biosecurity Act, brings in a new offence for transporting untagged animals, and changes the performance framework. I mean, obviously that comes in the context of the Mycoplasma bovis absolute cost. I understand the latest figure to date is 107,000 animals have been culled as a response, a cost over 10 years of nearly $900 million to try and eradicate this disease. And what we saw, dealing with it, was that NAIT—the National Animal Identification and Tracing regime—just wasn’t up to snuff. It wasn’t up to scratch. I think the best thing you can say about it is thank God it wasn’t foot-and-mouth we were dealing with; it was Mycoplasma bovis instead.

So as the result of the Operational Solutions for Primary Industries New Zealand review, which was over 2016 to 2018, you see the recommendations that have come out. The two areas I think that are going to make such a significant difference is increasing the penalties, because when you look at the previous data, and I think this is to July this year, in the two years since M. bovis was found, there’s been 382 infringement notices, but the existing penalties regime says it’s only a $150 fine for tagging offences and a $300 fine for registration breaches. I’d point out there’s been actually no prosecutions at all, and I think a $150 fine is similar to being slapped on the wrist with a wet bus ticket. So it’s important we’re increasing those penalties, important that the transport requirements are being brought in.

Now, I’d note that there’s been a big debate around the data, and this is part of how modern society’s debates around data are such a key feature. One issue I would take umbrage with is Nathan Guy’s comments around “What if ENGOs get their hands on the data?” I think it shouldn’t be an “us and them” sort of response; ENGOs have a valuable role to play. And, actually, it’s working in partnership where we’ve seen farmers actually improve their sustainability initiatives. So data will be a key question that I know the Primary Production Committee will pick up. It’s a key issue that we’ll be paying attention to, and it’s a key aspect for how we improve the sustainability of our land use and our waterways—so a really important point.

I guess I’d like to finish by making the point that technology will play part of the solution. I know the concerns that farmers have had. We talked about problems with the 0800 number. We’ve heard problems with software glitches. I know farmers quite legitimately have pointed out, “If only we had better internet connectivity, we could have actually filled out this information.” But I’d like to champion those farmers that are embracing technology. I was reading, just before, an article by grazier James Reeves—who, I think, is in the Waikato—who was talking about how the use of hand-held scanners has improved his farm’s productivity. He’s using it for weighing the cattle as well, and he’s encouraging other farmers to use RFID chips.

So technology is going to be a key role in dealing with these solutions, a key role in increasing productivity, and a key role to increase sustainability. That’s why the Green Party is really wanting to see an uptake of technology on our farms. But we’re supporting this legislation. Kia ora koutou.

HAMISH WALKER (National—Clutha-Southland): Mr Speaker, can I start by acknowledging the departing MP who announced his retirement today, the MP for Ōtaki, Nathan Guy. Nathan Guy’s not leaving until the election but he’s been a great help to me since coming into Parliament, over the last two years. I didn’t actually realise how popular Nathan was. He’s been down to Southland four or five times in the last two years, and the last time, I worked him to the bone. I took him round three public meetings—in Winton, Gore, and Balclutha. There was a discussion with the public on the National Party primary sector discussion document, and we got around 80 to 100 people per meeting. So, Nathan, sorry to work you so hard that day. I think you left home about 4.30 to catch that flight, and you would’ve got home well after 10 o’clock. Nathan’s been a great Minister for Primary Industries. He’s also led our policy discussion document over the past 12 months, and Nathan was actually the Minister when the National Animal Identification and Tracing reviews started back in 2012.

The bill is simple. At the moment, what happens with Mycoplasma bovis for the hard-working Ministry for Primary Industries officials and staff—and can I acknowledge them; they’re working extremely hard on the ground with the outbreak of the disease. It’s a bit like dropping a puzzle into a thousand pieces on a table and then trying to piece it all together to try and figure out where the source actually came from, which is a bit like finding a needle in a haystack and then trying to piece together, basically, the tracing and the traceability, which has been incredibly tough. This bill is reasonably simple. If you did drop that 1000-piece puzzle on the table, it would all be numbered; so you’d be able to identify the source straight away and you’d save a lot of time, because there has been some frustration out there in rural New Zealand over last year around the lack of communication. A lot of this is the fact that it’s really hard to trace this horrible disease.

Can I finish by acknowledging the current Minister of Agriculture, Damien O’Connor, for his assistance over the last 12 months. Thank you for briefing us on this report a week or two ago and being so open with your office around cases of affected farmers, and also everyone out there that’s been affected by this horrible disease. With that, I commend this bill to the House.

ASSISTANT SPEAKER (Adrian Rurawhe): This is a split call. I call the Hon Clare Curran—five minutes.

Hon CLARE CURRAN (Labour—Dunedin South): Thanks very much, Mr Speaker. Before I begin, can I also acknowledge the Hon Nathan Guy.

Kieran McAnulty: Oh, this is getting silly.

Hon CLARE CURRAN: Well, it’s a mark of respect and acknowledgment. I had a bit to do with him in his role with civil defence. I always saw him as a pretty straight-up chap. So good luck with whatever you do next.

I’m really pleased to be speaking, albeit briefly, on this bill, because it’s a real example of the Government’s commitment to transparency, to practicality, and to a much-needed upgrade of what started off as a good idea but turned into a flawed system. That became very apparent during one of New Zealand’s most serious biosecurity incidents and issues in recent times. I know that everybody agrees that the Mycoplasma bovis issue is very serious but, unfortunately, the system that was put in place to underpin the knowledge of tracking stock movements was very flawed and was not fit for purpose. Thankfully, the Government acted swiftly and made some very clear decisions that were big decisions for our nation, because they had at risk a whole sector of our economy and exports. And that was with the very large package of, I think, $886 million to eradicate Mycoplasma bovis over 10 years, I think it is, but then to introduce the National Animal Identification and Tracing Amendment Bill—the bill No. 1—to put in place the technical amendments that were needed to be able to get things moving, and then we’ve now got the No. 2 bill before us today, the National Animal Identification and Tracing Amendment Bill (No 2), which will be taken through a proper process and which is absolutely essential to have a system in place that is fit for purpose for our country, to underpin our primary sector, to underpin one of our most critical industries, to underpin and protect our export industries, and to ensure that the sector is accountable.

If you look at the state of the system around the time that we were facing this major biosecurity crisis, the enforcement of the flawed system that was introduced in 2012 was extremely lax. As at December 2017, only one infringement of $150 had been issued for failing to declare a movement of an animal. At the time of the 2017 election, which was when that review was taking place, NAIT compliance in some areas was as low as 30 percent—30 percent.

Marja Lubeck: It’s shocking

Hon CLARE CURRAN: It is shocking. I haven’t been in the House for all of the discussion today, but I acknowledge the issues around the technology. I acknowledge the fact that there are external issues, but actually I did some reading of the Hansard today around when the bill was introduced in 2012. As I understand it, it was the idea that came from the former Labour Government and it was eventually and grudgingly introduced by the previous National Government. It wasn’t properly put in place. It didn’t have buy-in from the farming community, and therefore it was lax. We’re fixing it. We’re getting on with it. We’ve made some really big decisions that go alongside that, about eradicating Mycoplasma bovis. I want to really pay tribute to the Minister, who is doing an incredible job in this space. I hope that the primary sector does buy in this time and that we do protect that really important primary sector and make sure that we never put at risk that part of our economy again.

TIM VAN DE MOLEN (National—Waikato): Thank you, Mr Speaker. I also bestowed upon Mr Guy for his significant contribution. It has been a privilege to have worked with you and to learn from you, as well, over this period of time. All the best for the future. I would also like to acknowledge our incoming agricultural spokesperson, Todd Muller, who’s done a magnificent job in the climate change portfolio. I have every confidence he will be just as successful in agriculture—all the best to him as he works through that.

Now, this particular bill is the second suite of changes, as we’ve heard. The initial ones, well, there was some debate around the success of that process—which we might come to a bit later. But with this, it’s looking to make some additional changes which will see, in some instances, potentially, some extra costs on farmers to comply, to adhere with the system. I appreciate the actions of the Government have demonstrated they don’t have particular regard to additional costs, not just for farmers but for the wider public. However, that’s something that we will be looking at. The select committee is, of course, the appropriate place to thrash that out, so I’m looking forward to a number of considerations being brought up there. Biosecurity, of course, is critical for us and I expect it will be well canvassed at that point.

I do just want to acknowledge the Minister as well, and thank him for the effort he’s put into this and making some changes. We have been collaborative, we’ll continue to be on this bill, and I look forward to seeing it in select committee.

RINO TIRIKATENE (Labour—Te Tai Tonga): Thank you, Mr Speaker. Before I add my remarks on this bill, I too want to acknowledge the Hon Nathan Guy for his significant contribution and service to our country, his leadership in the primary sector when he was Minister, and, in particular, the support he gave to the Māori economy and our interests in the primary sector as well. So I wish him all the best.

I, obviously, support this bill. I want to firstly acknowledge Minister Damien O’Connor, who has acted very swiftly and decisively in bringing this bill to the House—not just the bill; the complete suite of packages. It’s an entire package of the bill, plus the detailed regulations which will work hand in hand with the empowering legislation. So it’s all out there in the open. I’m looking forward, as a member of the Primary Production Committee, to hearing from relevant stakeholders their views on this full package, but it is a necessity that we put this bill through the House. I do support the time frame that the Minister has laid down for this piece of legislation, because the costs are great for non-compliance. I think we’ve just heard around the cost to farmers in terms of adhering to the National Animal Identification and Tracing (NAIT) scheme, but we must also consider the costs for biosecurity incursions, such as Mycoplasma bovis and the impact that that has not only on the primary sector but on our country as a whole. It’s so important that we have a strong, world-class biosecurity system, and part of that system has to be a strong NAIT system which will deal with the tagging and the registration and the tracking of animal movements. So if an incursion were to occur, and we certainly hope it doesn’t, we can act swiftly through those systems to identify it and to take immediate remedial action.

So this is a really important piece of legislation. I want to acknowledge the National Opposition for supporting this bill at its first reading. We know that this is important. We know that we want to encourage and ensure that we get full farmer uptake of the system. It’s for their benefit; it’s for the sector’s benefit as a whole, and our country. So we just want to ensure that we make the tweaks that were identified in the review that was undertaken by Operational Solutions for Primary Industries New Zealand, and also the further changes that we need to make in light of the Mycoplasma bovis incursion.

I commend this legislation and the measures that we are enacting in here. They are not too drastic. The system has been in place for seven years—that has been a good opportunity for the farming sector to embrace the system, to use the system, and to ensure that now we have an opportunity to make those improvements so we can actually make it better and stronger. As I said, our country as a whole, our export industries, and our primary sector really depends on a world-class biosecurity system. As I call it: that is our pā defences that we need to keep out all of those nasty incursions that may occur. We need to ensure that it is world-class, that it is strong and robust, and that’s what this bill achieves. So can I, once again, just acknowledge the Minister for bringing this bill through to the House. It’s really important that we act thoroughly and we listen to all of the views. I know there are concerns around ownership of data. I think we can tease out those issues, but from my reading of the bill it’s very prescribed in terms of how the data will be used. But whether it’s ownership or access to data, the main thing is that we get good data. The main thing is that we get farmers applying and following the NAIT system, tagging their animals, registering them, following their movements, and having all that information in the system so that it is there when it is desperately needed, but we certainly hope that those instances don’t occur. With that, I support this bill at its first reading.

LAWRENCE YULE (National—Tukituki): It’s a pleasure to rise and take a very short call on this bill. But as is appropriate, I do want to acknowledge the contribution to this House of the Hon Nathan Guy, as he has announced his retirement at the election next year. I do so on the basis that I’ve never seen commodity prices at the level they are, for nearly 20 years across the board. In my view, that is significantly due to the likes of the Hon Tim Groser and the Hon Nathan Guy and others, who forged export markets. I acknowledge that that’s a cross-party thing that’s been done by this Government as well, but credit where credit’s due. Our farmers are enjoying some of the best trading conditions that they’ve seen in decades, and a lot of that is due to the efforts of Nathan and his thinking and wisdom, and his time in Cabinet. So, Nathan, you’ll be a big loss to this House and I thank you for your efforts.

Just on this National Animal Identification and Tracing Amendment Bill (No 2), we are supporting it. Minister, can I thank you for sending your officials across last week; that was very helpful. I would signal that I have raised some concerns, and I will through the process, about the implications of keeping transport operators in the mix and their need to, effectively, become another form of police along the way. A number of transport operators expressed concern to me and, Minister, I’m just saying—in this House—that I think that is something that should be resolved in a select committee. As has already been said, we don’t support the truncated select committee, because these are exactly the type of things that should be resolved properly, with due process and due information. It’s my pleasure to speak and commend this bill to the House.

KIERAN McANULTY (Labour): Thank you very much, Mr Speaker. I may as well start like everybody else that’s so far spoken on this bill and acknowledge the contribution of the Hon Nathan Guy. There have been many, many resignations or indications of resignations from the National Party, but I don’t think that any of the previous have spurred us on, on this side of the House, to acknowledge their contribution—and they are sincere. What I have noticed about Nathan Guy—even though some of the contributions today, I feel, have been somewhat overegged. What I have appreciated with him is that he’s a good rural bloke that treats politics like a game of rugby. When you’re on the field, you play hard, and when the game’s over, you treat people with respect and work collaboratively. I think that’s a measure of the bloke, so well done. I would also like to join the choruses from Hamilton and encourage David Bennett to take Nathan Guy’s lead.

This bill is very, very important.

Mark Patterson: Don’t go, Benno!

KIERAN McANULTY: “Don’t go, Benno!” is the sarcastic call from this side of the House, from Mark Patterson. Actually, I may as well, now that Mark Patterson has mentioned David Bennett, address some of the things that he said in his contribution. Scaremongering—they just can’t help themselves can they, the National Party? They’ve found themselves a bill in front of them which is desperately needed, and they have acknowledged that, but they can’t just stand up and say, “Good on this Government for doing what needs to be done.”; they have to pick holes in it to some extent. Actually, in fairness, some of the things that have been said will be discussed at select committee, and I think they’ve raised some valid points. But then David Bennett came along—David Bennett scaremongering about the ownership of data, of the Government owning data, in the true neo-liberal tradition of big Government is bad and small Government is good, despite the fact that it is the Government, this Government, that’s taken the lead on trying to eradicate Mycoplasma bovis, along with Beef and Lamb and DairyNZ. It is this Government that is taking a commitment to biosecurity, which is the essence of this particular bill.

What I put to this House is: what is the alternative to the Government taking a lead on ensuring that the National Animal Identification and Tracing (NAIT) system works and taking a hold of that data to secure it for the benefit of those farmers that are trying to contribute to the economy like the rest of it, trying to contribute through our primary industries to make this country and its economy grow? Their data has to be protected, and what I heard from David Bennett—this call that the Government shouldn’t be involved in protecting data—is that the organisation that looks after NAIT could, in a future Government, perhaps a National Government, potentially be sold, in true neo-liberal fashion, and the data going along with it. What this bill does is protect the data from any actions that might come in the future. It is absolutely guaranteed to be secure and it is guaranteed to be there for the benefit of the farmers. If that is the best thing that the Opposition can come up with in critiquing this bill, then I think the Minister of Agriculture, the Hon Damien O’Connor, has done a pretty good job of getting the balance right.

The importance of biosecurity was drilled into me at a very early age. My father has been working in TB testing and dairy-shed inspection and has been on call, essentially, for 40 years, in the group that if foot-and-mouth was ever to come to this country, then he would be part of the response team. I remember him talking to me when I was a young boy about the importance of a strong biosecurity system in this country because of the importance of ensuring that something like that never comes to this shore. We cannot be complacent, and the Mycoplasma bovis incursion in this country has taught us that. Thank God it was Mycoplasma bovis that hit this country and identified the issues of the NAIT system and the need to try and fix it, the need to be compliant, and the need for all of us to play our part, because if it was foot-and-mouth, we’d be having a completely different discussion. We wouldn’t be talking about record commodity prices, as Lawrence Yule did just previously; we’d be talking about how we can bring our primary industries up from the ashes.

So thank God it wasn’t foot-and-mouth, and I am grateful for—if we are to search for positives in what is a terrible, terrible thing in Mycoplasma bovis hitting this country, at least it has given us the fire underneath ourselves that we needed, actually, as a country and as an industry, to be compliant and not be complacent. What this bill does is it actually delivers the tools for NAIT to be able to ensure that everyone can have confidence—those within the industry, and those that are producers, and those of us here in Parliament, and the rest around the country, but also those that buy our products—that we can trace animal movement around this country so that if there is ever another incursion, we are better placed to be able to deal with it.

This Government has taken on a task that no other country has been able to do, and that is to set a goal in eradicating Mycoplasma bovis. Every time that the Ministry for Primary Industries (MPI) reports to the Primary Production Committee, they report that all is on track. This is in an instance that is unprecedented. There were always going to be teething problems. It is very difficult to establish a system when there is no other system to replicate or test against. But, week by week, MPI are improving the way in which they deal with things. There are still hiccups, particularly around compensation, but it is improving, and I, like others, want to acknowledge the work that officials have put into the programme for eradication and also those that are dealing with farmers on a day-to-day basis—and I’d like to say, in a very shameless plug, that includes my mother. The point is that there are thousands of people around this country trying to deal with an issue that, if this bill achieves what it intends to achieve, we should never have to deal with again. Animal tracing is vitally important, and I think as a nation we have received that message, so good on the Minister for leading this.

I fully endorse the move to have a slightly condensed select committee process, because there is a balance here needed between ensuring that those that wish to submit and wish to be consulted as part of the select committee process can do so—but there is an element of urgency here. We have to be quick and get it in place, because the efforts to eradicate Mycoplasma bovis are ongoing, and we, as I said earlier, cannot be complacent. So I think the three months is fair. It hits that balance.

I do acknowledge the other side of the House for getting in behind this, despite their little grizzles. I think, once again—and I hope the media do pick up on this, because it’s not reported enough—that when it comes to primary industries, this House actually works more collaboratively than it works in opposition, and I think that needs to be acknowledged. I fully commend this bill to the House.

Bill read a first time.

Bill referred to the Primary Production Committee.

Hon DAMIEN O’CONNOR (Minister for Biosecurity): I move, That the National Animal Identification and Tracing Amendment Bill (No 2) be reported to the House by 4 November 2019.

I do so for the following reasons: the Mycoplasma bovis outbreaks demand that we continue to improve the National Animal Identification and Tracing (NAIT) system as quickly as possible; the changes need to be enacted so that they sit alongside the work NAIT Ltd is carrying out to fix the system—that includes a multimillion-dollar investment to improve the system’s operability; a well-functioning animal tracing system enforces our trade reputation for food safety; the changes have been well signalled to industry and stakeholders, and there is general agreement on the need to improve NAIT; and, lastly, a proper-functioning NAIT is vital to prevent bad outcomes should other diseases arrive here.

TIM VAN DE MOLEN (National—Waikato): This is another example of an arrogant Government rushing through legislation without giving the public the opportunity to engage in the proper process. We’re seeing this time and again from this Government, and it’s simply not good enough. The Minister here is pushing through, on behalf of the Government, a condensed time frame on this select committee process simply because the Government’s Order Paper is far too light—there’s nothing in here for them to be debating—and that is not an appropriate reason to truncate a select committee process. You would think, with the 280 working groups that cost $300 million, that they’d be able to fill up their legislative pipeline by now, and yet it’s very empty, and this process is an unacceptable way to try and fill that up.

If we wind back to last year and the first effort at this bill, it was an absolute debacle: pushed through under urgency, no select committee process whatsoever, no opportunity for the public to engage on what we’ve just heard, throughout the course of this previous debate, is a very important topic. Biosecurity is an important topic. Why were the public not given the right to engage on that? Well, I suppose we should commend the Government. They’ve gone one better. At least they are having a select committee process on the second version of this bill—much more than they did first time around, but it’s still truncated.

There’s no reason to be doing this. Farmers should have the opportunity to submit on this. They should have the right to think it through in detail, to conduct the full process, and to not have an arrogant Government pretending they know best, truncating that process yet again, and slamming something through just so they have something to debate pre-Christmas.

There’s no consistency from this Government at all when it comes to these sorts of things. How can the public have confidence they know—or is it perhaps actually that the Minister doesn’t have confidence in the Government members on the select committee, which is why he’s wanting to truncate it and maintain more control over this particular process? On this side of the House, we stand by proper process. There’s always an odd exemption where it is appropriate to speed up that legislative process—

Hon Nathan Guy: Yeah, Christchurch earthquakes is an example.

TIM VAN DE MOLEN: The Christchurch earthquakes is a great example of that. This is not one. This is an example of where the public should be given the full and proper opportunity to consult, to engage, and to give their feedback. There will be implications for them as a result of this. Part of that will be additional costs. They need time to consider what that might mean for their business. Goodness knows farmers have seen plenty of additional costs under this Government already. They need to see how this will impact on them. Then you’ve got the trucking firms as well—what are the implications for them under these rule changes? We need to ensure that everyone can engage in this. This is a busy time of year on farms, and for trucking firms as well. They need to have plenty of opportunity to canvass widely, to consult their industry bodies, to engage with the select committee process, and to give some thoughts on that.

So on this side of the House, we do not support such a truncated process. We are constantly advocating—

ASSISTANT SPEAKER (Adrian Rurawhe): 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.

A party vote was called for on the question, That the National Animal Identification and Tracing Amendment Bill (No 2) be reported to the House by 4 November 2019.

Ayes 63

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

Noes 56

New Zealand National 55, Ross.

Motion agreed to.

Bills

Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill

Second Reading

Hon DAMIEN O’CONNOR (Minister of Agriculture) on behalf of the Minister of Commerce and Consumer Affairs: I move, That the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill be now read a second time.

This bill reforms the regulation of our financial markets by bringing aspects of our law into line with international best practice. The key objective of the bill is to ensure that New Zealand’s financial institutions can continue to fully participate in international markets, particularly through the use of derivatives and financial benchmarks. This in turn will reduce risk in our financial system and costs for New Zealand consumers and businesses.

The bill has been reported back by the Finance and Expenditure Committee with a unanimous recommendation that it be passed with amendments. I’d like to thank the members of the committee for their careful consideration of this complex bill. The committee considered more than a dozen often highly technical submissions covering a range of matters. The majority of those submissions strongly supported the policy intent of the bill but the committee also recommended some important changes to ensure that the bill achieves its objectives.

To recap briefly what this bill is all about, Part 1 of the bill brings New Zealand into line with new rules around the trading of derivatives. Derivatives are used by a number of larger institutions such as banks when investing in raising money. While complex instruments, they are critical tools for managing risks. For example, banks use them to manage the risk that movements in the exchange rate will make it more expensive to repay money they have borrowed from offshore. Following the global financial crisis, the G20 brought in new rules relating to derivatives to reduce risks in international derivatives markets. These include requirements to post collateral which protects one party to a derivative from losses if the other party to the derivative defaults. These new rules have now flowed on to New Zealand and require us to change our laws to ensure our institutions can comply with the rules and continue to participate in international markets.

However, I think it is important to see this bill and what it does in its wider context. While on the surface it appears to be a highly technical piece of legislation about derivatives, the ultimate beneficiaries of the bill are, in fact, the New Zealand consumers and businesses that interact with, or borrow from, the banks. Without the changes in the bill, interest rates could increase potentially significantly and there could be negative impacts on the overall stability of our financial system. It is therefore critically important that we progress the changes in the bill to improve the resilience of our financial system and ensure our financial markets remain connected internationally.

Part 2 of the bill responds to a different but similar set of international reforms. The European Union recently introduced new regulations designed to improve the integrity of financial benchmark administration. Financial benchmarks are important tools used to determine the price or value of various financial instruments including derivatives. The EU regulations are part of a broader international effort to improve the stability of financial benchmarks and make them more resilient to manipulation. This comes in the wake of issues around manipulation of benchmarks by the likes of the UK banks in the London Inter-bank Offered Rate scandal.

The bill achieves these objectives by introducing a voluntary licensing regime for administrators of financial benchmarks in New Zealand, supervised and enforced by the Financial Markets Authority. This regime is both flexible and robust and will bring benchmark administration in New Zealand into line with best practice internationally, aligning with EU regulations. It will also be able to be adapted to future international developments.

Changes made by the select committee were: firstly, the Finance and Expenditure Committee has recommended some key changes to make sure the bill achieves its objectives and works from a practical perspective for industry. For example, the committee recommended that the transitional provisions of the bill be amended so that Part 1 applies to derivatives entered into before the bill comes into force as well as after. This change was necessary to address a practical issue related to how derivative users manage and exchange the collateral required by the G20 rules. The bill was also amended to require collateral to be in the possession or control of the enforcing party before they can enforce their rights to the collateral. This change will avoid confusion that may arise if there is an overlapping claim on the same collateral by other third-party creditors.

The committee also worked through the bill in detail to make a number of other technical changes that, while small in size, were significant in effect, particularly for a complex piece of legislation like this where the devil is in the detail. I commend the bill to the House.

BRETT HUDSON (National): Thank you, Madam Speaker. I’d like to congratulate the Minister the Hon Damien O’Connor on that speech. It does great justice to this bill—both as arid as the Sahara. The Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill is indeed an incredibly important piece of legislation in front of this House. It almost goes without saying that we as a nation of property owners and a nation of small businesses could not possibly hope to survive, let alone thrive, if our banks found themselves cut off or constrained in their ability to generate or get capital from around the world. So with changing requirements from trading partners and blocs such as the EU, it is important that we take the steps necessary to allow those banks and institutions to continue to access capital markets, but indeed enable New Zealand to continue trading with the likes of the European Union.

I actually sat on the Finance and Expenditure Committee for most of the business of this bill and it was—I would have to note that my colleague Andrew Bayly found the subject fascinating. And while we were all very studious and alert and participating, he truly understood to quite a degree all of the workings of the financial instruments that we were looking to regulate through this bill.

I would note one other point, Madam Speaker. Your most recent presiding officer colleague in her previous capacity also spent a small amount of time on the committee on this bill. We couldn’t help but chuckle across the table at each other when officials admitted that one item—which was an amendment to the bill, by the way—that was in the original bill, the outright transfers of collateral, or clause 18, wasn’t actually intended to be in the bill as it was originally conceived. What they had discovered was a small piece—well, small, but it actually proved to be quite challenging—of reform or tidying-up that they had wanted to do for some time found itself presented with a passing train that was this legislation. So they hooked that particular carriage to this bill, only to discover that it was a much more complicated task than they’d imagined. Ms Dyson and I looked across the table and had recollections of the last Parliament of officials doing exactly the same thing with a statutes amendment bill. Like this clause, that case was also quickly unhitched and sent down a siding so that we could continue with the substance of that bill then and this bill now. But it was a lighter moment in the passage of time in what proved to be an interesting yet dry subject.

We need this. These changes are important to ensure that Kiwis can continue to get their loans for things such as their houses that they need and that businesses can get loans to help them grow their businesses and to employ more people, because that is fundamentally what the economy is: it is the creation of jobs and incomes and prospects for New Zealanders. That is why we say our bottom line is you—it is New Zealanders. So we have no hesitation at all in commending this bill to the House.

Dr DEBORAH RUSSELL (Labour—New Lynn): As the new chair of the Finance and Expenditure Committee, I would like to commend the former chair of the Finance and Expenditure Committee, Mr Michael Wood, for the way that he shepherded this particular bill through the committee. It is a very, very technical bill. It is actually hard to understand the detail of the amendments and also the financial instruments that the bill deals with. They’re complicated, and it takes a bit of time and effort to get to grips with them. Mr Wood ensured that we got that time—that we did spend time with the officials—to really get to grips with the bill.

As the previous speaker, Brett Hudson, has done, I would also like to recognise Mr Andrew Bayly for his contributions to this bill. He was like a terrier going after each little wrinkle in the bill.

Hon Member: A loud terrier.

Dr DEBORAH RUSSELL: A loud terrier but very effective. It was one of those bills where the committee did work together to get the bill right, so a genuine piece of cross-party legislation here, which is wonderful to see. I also commend the other members of the committee for the work we put in.

But I am going to take issue with one thing that the immediately previous speaker said, when he said that this bill was “as arid as the Sahara.” Does he have no imagination? This bill is actually critically important. Perhaps it is full of dry detail, but the intent of the bill is very important, and to call it dry is to, I guess, isolate New Zealand from the reality of the international financial markets that we need to deal in.

So I just want to perhaps explain a little of what the bill is about for people who are listening tonight before I move to some of the submissions on the bill. It deals with two particular issues that arose, really, in the wake of the 2008 global financial crisis. One is to do with the very complex financial instruments that were being traded and re-traded and re - re-traded and cycling around the world in a frenzy of activity in the years before the financial crisis. These were very complex instruments—instruments like futures and swaps.

Now, most people don’t understand what a swap is. The idea with a swap is that there are two parties: party A and party B. Party A perhaps has a fluctuating interest rate, and party A wants to stabilise that interest rate. So party A swaps their chain of interest payments with party B, who offers them a stable interest rate. That’s why it’s called a swap. Party B takes on the risk of the fluctuation. Party A might pay a little more in interest, but they stabilise the interest cost so they’re much more predictable. That’s a swap—the essence of a swap. Each party swaps their future chain of interest payments. They are hard to grasp, hard to describe in just words, and hard to value.

During the global financial crisis, instruments even more complicated than those were being dealt around the world into a real pile of transactions. They were, in theory, based on solid quality lending—the lending on mortgages—but even that was dubious, as an individual mortgage on a house, perhaps issued by a bank, was then sold on to another lender, and to another lender. Perhaps a mortgage, or at least the income flows from it, might be sliced up and spread across several lenders, packaged into deals, and then onsold, and then derivatives built on top of that. The transactions that were in progress were so complex that even those who were trading them—even the incredibly smart people, financiers, the people who specialise in finance and valuations—possibly didn’t even quite understand what was going on.

Following the global financial crisis, the world said we need to do better with regulating our financial markets. Part of the regulation that has been put in place is that each party to one of these deals has to be able to secure the flows of income from it—has to provide some collateral to make sure that if the deal falls over, not all is lost. Those are the types of rules that are now being brought in by the G20. If we as a nation wish to participate in those global financial markets, we too have to meet the standard set by the G20 in terms of financial institutions and how we deal in those markets. That is part of what this deal does. It sets the rules for how we do margins on derivatives, and it brings us in line with those major traders on the world scene. That’s part of what the bill does.

Another part of what it does is look at the benchmark rates that are used for valuing some transactions, in the wake of the LIBOR scandal. Now, LIBOR stands for the London Inter-bank Offered Rate, and, as it turns out, there was, well, shall we call it “very sharp practice”—so sharp that a lot of people got cut by it—that was going on around how that rate was set. Again, eventually rules have been put in place to determine how those rates are set, and this legislation brings us into alignment with those rules.

It was a very technical piece of legislation, and we did receive a number of submissions on it. I wish to read out the entirety of one submission. I won’t identify the person who wrote it, because the submission has two words. It says “Banking industry”, and that’s it. What it points to, though, is the concern that ordinary people feel with respect to what has gone on with banking worldwide and what has gone on with these financial markets—that ordinary people do feel that something beyond their control is happening and it destabilises their world. Of course, many people have many concerns with the banking industry. This person chose this particular bill to put in a submission on it, and it did have just those two words, but it does speak to a real concern that people have.

But the other submissions came from entities, from law firms like Buddle Findlay and Bell Gully and Chapman Tripp, who raised some concerns around how securities were discussed in the bill. They broadly supported the bill, but they wanted some changes to it. Another submission came from the New Zealand Bankers’ Association, again, dealing with some of the very, very technical aspects of the bill. The Restructuring, Insolvency, & Turnaround Association of New Zealand put in a submission, as did the New Zealand Financial Markets Association and the ISDA, the International Swaps and Derivatives Association. Some very highly accomplished and very highly educated people spent time and effort getting to grips with this bill and then coming and talking to the select committee about it to make sure that we understood as we best could exactly what was going on with the bill and how it needed to be changed in order to meet its policy objectives. So we thank those people for putting their time and effort into this bill.

Before I conclude the speech there is one other group of people that I wish to thank for their time and effort on this bill, and it is the expert officials who were advising us. They were—I hope they don’t take this as an insult because I mean it in the best possible way—wonks or nerds, people who really understood their material, really got to grips with it. I think they were quite pleased to spend some time discussing it with us, because often this sort of material is not widely discussed. As some of you may know, I used to work for IRD and when I said I worked for IRD, I knew about tax, it was an absolute—well, it certainly killed the social conversations. I suspect that the officials who worked on this bill, when they say they work on financial derivatives and financial markets, people go “OK.” and move straight on. It was a real pleasure to listen to their expertise and I thank them for their guidance as we worked our way through this bill. I commend this bill to the House.

IAN McKELVIE (National—Rangitīkei): Thank you. Well, you can be sure my contribution will be as agrarian as the last one was academic.

There’s an issue that I came on to the select committee very late in the piece with this bill. The other thing that intrigued me was I’ve followed Minister Damien O’Connor many times around this House but I’ve never followed him on a bill as technical as this. His understanding of it might be slightly better than mine but it is a very complex issue, this.

I think if you go back to my younger days in the finance industry and one or two of those things, I always thought this was some form of gambling. I guess the very fact that this has turned up as a bill and is of international concern really means it probably was a form of gambling, actually, just a very expensive one and a very complex one. I think that what we knew as hedging, once upon a time, I suppose has evolved into the use of derivatives and all sorts of other things. Of course, derivatives are really used to hedge a position, basically. The original design of them was, of course, to make a position much more secure. In fact, we saw many companies over the years make money out of hedging. Equally, many companies lost money in the same manner or by the use of derivatives.

So this bill is a bill that we support. It is a very technical bill. Most New Zealanders will never come across most of the terminology used in this bill and most of the facts. I thank Dr Deborah Russell for—this is the second time I’ve heard her give a great explanation of a very complex issue in this House. I’m very pleased that when she was spending her time lecturing at Massey University she taught those kids what to do and how to do it properly; hopefully they’ll know. Maybe some of those wonks she talked about were some she’d taught.

But it is a complex bill, and it’s a bill that we support. I think there will always be some doubt when you’re dealing with issues as technical as this as to whether you’ve got them exactly right. There’s no doubt, I think, that this will come back both internationally and locally in the future, because there will be some changes that will be required to just secure the position of this bill.

It does shore up, I suppose, our financial community—gives them the opportunity to compete in the world market on equal footing with everyone else, which is most important. It also gives them some protection in that market. So with those few words, I commend the bill to the House and look forward to the very complex committee stage in the House. Thank you.

MARK PATTERSON (NZ First): I take pleasure in rising on behalf of New Zealand First to speak to the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill. Like Mr McKelvie, who’s just gone before, it does stretch my brain, a lot of this stuff. I’m not surprised actually, that Mr McKelvie doesn’t understand it. I expect he just pays cash for everything. He doesn’t need access to derivatives to make his purchases.

But it is, essentially, a very important part of our banking system, as we’ve heard. It brings our financial markets—it standardises them to the international standards in the new international standard that’s coming.

When I was looking at this, actually, I was reminded of—remember John Key was going to turn us into the Switzerland of the south when he sort of rode back here as the international banker from Merrill Lynch. I’m not quite sure that we ever quite attained that status. Although I do recall that we turned ourselves into a tax haven at one point and we had to do a bit of backtracking around some of those rules.

So it is important that we have a sound financial system. Derivatives are an important part of that, we’ve heard, for our banks but also for the likes of our fund managers, ACC and the New Zealand Superannuation Fund. So for all those retirement savings, our investment managers are using these instruments to leverage their investments. As we’ve heard, there’s a lot of risk, of course, that comes with some of these things. Deborah Russell suggested that maybe even the people that use some of those instruments don’t fully understand them. I don’t think that’s the case at all. I think a lot of those people understood them only too well and were leveraging them for all that they were worth.

Those of us that wouldn’t have understood them quite as well were vulnerable. We look at the LIBOR financial benchmark, the London Inter-bank Offered Rate—as I was wondering what the “o” was; I got the first four. But we know that that was manipulated in London, in the UK, and rigged. So this also protects us as ordinary individuals, with our money maybe in a KiwiSaver fund, from being exposed to those sorts of frauds. It puts us on a level playing field. I note the EU—we’re bringing ourselves into line with the EU, the G20; there are these regulations that are coming in on 1 January 2020. This will standardise us and bring us up to date with international best practice. We actually have to have them for our companies to be able to qualify to trade in those markets.

Of course derivatives are used, I guess, for leverage. The quantum of money you’re putting up is not necessarily the full rate, like Mr McKelvie might with his big wad of cash. So it does allow you to leverage up, but also there is a margin on that. The risk is taken by a margin, and if one of the parties default then that margin grows across and this is taken by the other parties. So that is covered within this bill—the amendments around margins and the rules around that standardising those rates a little bit.

So it does speak to the core of our financial system. With our banking we have got massive amounts of debt in this country. I think we’re over quarter of a trillion dollars, actually, of housing debt. We know we’ve got $63 billion of agricultural debt; add in Government debt, credit card debt, and we have close to half a trillion dollars’ worth of debt. So that financial system relies on these instruments that—whilst we might not fully understand them—are an integral part, and it’s important that we have the rules, and that regulations and legislation are absolutely fit for purpose to make sure that our financial institutions can operate efficiently.

One of the things that were raised within the select committee process was that if we didn’t have this it could raise interest rates, and, with that level of debt in this economy, any rise in interest rates is a material cost on this economy and this society.

So I’ll probably leave my second reading call at that. I think it’s been reasonably well traversed, particularly by Deborah Russell and others. But it is important that we have these standardised rules. This will allow that to happen. This is important. The committee the whole House may look to throw it round a little bit with the likes of Andrew Bayly and Deborah Russell, who do truly understand this stuff and can make sure that this is fit for purpose; as I’m sure the select committee, the Finance and Expenditure Committee, did a pretty robust job on this, because it is highly technical stuff. So I commend Michael Wood in his swan song on that committee for bringing this through, all the officials that have been mentioned before—we are really well served by officials and particularly in these types of bills where we’re really needing to be guided for the main part. So with that I will commend this bill to the House on behalf of New Zealand First. Thank you, Madam Deputy Speaker.

Rt Hon DAVID CARTER (National): Can I first of all take the opportunity of congratulating the new chair of the Finance and Expenditure Committee, Dr Deborah Russell, and I want to particularly congratulate her for doing a nine minute and 30-second speech on this particular legislation. That’s not easy.

But I want to start by saying that this particular legislation is unique in the Government’s agenda, because finally we’re seeing some legislation that’s about making it easier for business to do business. So I congratulate the Government for doing that. There is just too much red tape and hindrance to business that’s occurring under this particular Government. So finally we’ve got them recognising international requirements that are difficult to comply with under our current old laws, and this legislation will certainly make it significantly better for banks and financial services to cooperate.

It’s about globalisation. This legislation actually recognises that we’re completely interconnected around the world. Whilst we currently have a batch of leaders around the world like Mr Trump and Mr Putin, and the UK with their ridiculous Brexit situation, trying to become more isolationist and more protectionist, the world is interconnected and we cannot undo globalisation, in my opinion. Nowhere is that more important than in the financial sector. Within this legislation, New Zealand is but a small player. So what you’ve seen over the last few years is that, led by the G20 and ably supported by the European Parliament, there have been discussions about making the financial sector more interconnected. That has led to a raft of legislation in the larger economies of the world, and, quite simply, as the legislation came before the select committee, we heard from the banks and we heard from the other financial services sector in New Zealand that current legislation in New Zealand does not comply with international legislation.

So the bill has two significant parts. The first part, Part 1, allows the banks and the big financial institutions of New Zealand—ACC, the New Zealand Superannuation Fund—to hedge risk. If you’re in that sector and understand that sector, it is absolutely critical that you have the opportunity to take a particular position on a risk if you want to. You can then get certainty from taking that position. It does come at a cost, but as significant investment managers, that may be an important aspect as they identify an investment strategy. That’s important to the likes of the super fund and ACC.

Then, Part 2 is all about the licensing regime. What this does is sets up a licensing regime that will be monitored by the Financial Markets Authority so that they can make sure banks particularly comply, and that’s been an issue of significant discussion recently, particularly around the current—let’s say—discussions between the Reserve Bank of New Zealand and the banking sector.

Can I say we received some good submissions. They were all, on the whole, very supportive for this legislation, and I just take this opportunity of commending the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill to the House. I congratulate the select committee and the work it did, and the sooner we get it passed the better for the financial sector of New Zealand.

WILLOW-JEAN PRIME (Labour): Thank you, Madam Speaker. I had contemplated giving this speech in Te Reo. However, it’s that difficult to understand the technical language in te reo Pākehā, trying to find the language to explain it in Te Reo Māori, I think, would’ve stretched my Te Reo capabilities tonight. So I will be delivering this speech in te reo Pākehā, but it remains a challenge for me to actually be able to explain it in Te Reo Māori, because that would show that I truly have a good grasp of what in fact these things are that we call derivatives.

It’s a pleasure to take a short call on the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill in this second reading. I am a member of the Finance and Expenditure Committee, and there was kind of a little bit of joking that went on every time it came up on the agenda, but I was quite surprised when the Hon Ruth Dyson, who is not a permanent member of our committee, actually opted to come on to this committee and participate in this part of the select committee process.

Kieran McAnulty: Hard-working member.

WILLOW-JEAN PRIME: A hard-working member—somebody who is truly passionate about the issue. So I want to thank Ruth for her contributions. As we heard earlier in the speeches, there actually was an important point that was picked up by having her on the committee, and between the two members that was ironed out.

We received 13 submissions. You heard from the member Deborah Russell that one of them was very short—one of the submissions was very short. But we did receive 13 submissions, and most of those submissions were really technical in nature—many of them coming from the law firms who specialise in these areas of derivatives. We heard four oral submissions, and—a little bit unique to our committee, because this doesn’t always happen—we reported the bill back unanimously to the House. So it was a cross-party, collaborative effort to try and make this legislation the best that we could make it to perform the task that it needs to for New Zealand and for our economy.

This is an omnibus bill, so it will amend a number of Acts as a result of this bill going through. There are two primary objectives in the bill. One is to ensure that New Zealand’s financial market participants can continue to participate in international financial markets, particularly by using derivatives to hedge risk. The key point there is “can continue”, and I think that’s not necessarily well understood by everybody, because we are currently very used to the system and there are no issues. However, we were told that come September, if this has not passed, we would start to feel the impact of our law not being aligned with international changes and reforms that are happening, and then we would start to feel the impact of that—and everyday New Zealanders, not just the tax experts and the specialists and legal specialists in derivatives.

The second part is to bring New Zealand law in line with recent financial market reforms in the European Union and G20 States—which we are not part of, but we trade with them. Actually, I heard the figures being bandied around earlier, and they are figures that really stretch the brain and the mind. I’ve got a quote here that our exposure is estimated to total $1.1 trillion, either directly or through their clients, to derivatives contracts affected by the recent international reforms. That’s just our contracts with the European Union, and those are only our four large banks in New Zealand—$1.1 trillion.

I do just want to briefly, and on a light note, mention that the Hon Judith Collins made a comment that this was so dry, so boring, and so not sexy that it was unlikely to get any media coverage, and that if it did, she would bake for us. Well, guess what? We can thank the New Zealand Herald, Nikki Mandow, for in fact writing a really good piece on this legislation. As a result of that, Judith made the most outstanding Louise cake for our select committee, and I thank her. Tēnā koe.

LAWRENCE YULE (National—Tukituki): It might sound dry and technical, and it is, but it is a very important part of the financial markets of the globe. It is time that the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill actually got through this House. We do need to make sure this omnibus bill passes, because otherwise the New Zealand financial markets will be unable to participate in international financial markets—particularly those that use derivatives.

Now, Deborah Russell, who’s the new chair of the Financial and Expenditure Committee, spoke of all the things: derivatives, swaps, swaptions, hedging—there’s all names for it, but, basically, they’re about somebody taking a risk on the value of something and hedging it against something else. If we don’t have rules around this, there are two things that can happen. The first is the people that take these out don’t understand the full consequences of what could happen if it doesn’t quite work out. In the global financial crisis, people lost their shirts—many of them.

Secondly, the other thing that also happens is there are always two sides of an equation. There is a winner and there is a loser. So if you make money in one of these financial instruments, generally it will mean that somebody on the other side is losing money. So you absolutely have to have your wits about you—particularly if you are not offsetting.

Now, most people in New Zealand will understand hedging—more commonly used in markets around electricity and fuel. So the likes of Air New Zealand would hedge against the price of fuel. That gives them some certainty today of the price of fuel into the future. If the price of fuel goes up, they will correspondingly make the same amount of money on the other side. So the net result is the price of fuel will remain static—very similar. But it is a risky business. I think Mr McKelvie said previously that it’s a gamble, and it is.

In my former life, when I was farming, I was persuaded to go into a swap by a banking entity.

Dr Duncan Webb: Oh no! The ANZ?

LAWRENCE YULE: It was actually the ANZ at the time. To be honest, I didn’t know a lot about it, but we were persuaded. We took advice and we did it. We secured that against the mortgage and we borrowed internationally. It worked out very well. The net result, at the end of it, was that I think we netted something like $50,000 over that period for doing nothing. That same year we lost about $50,000 worth of land in a big storm. So it was sort of meant to be.

But as I stand here in the House, there are hundreds of people signed up to these type of arrangements, and all care was given for us to understand, but I pretty much guarantee that most people at that level in the market have very little understanding of the risks they particularly face or the debt they can get into.

So we support this bill. We think this brings us in line with the G20 countries, what’s happening in the European Union, and it makes common sense. Sometimes we have to go through difficult circumstances or see something that doesn’t work for parliaments to respond, and I think it is our duty and obligation to pass this bill as soon as we can. I commend it to the House.

DEPUTY SPEAKER: So this is a split call. I call the Hon James Shaw.

Hon JAMES SHAW (Associate Minister of Finance): Thank you, Madam Speaker. It’s a pleasure to rise in support of the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill on this, the second reading. I also just wanted to join some of my colleagues in commending the work of the Finance and Expenditure Committee in working their way through what has previously been described as an extremely dry and, some would say, boring piece of legislation. But it’s very technical nature, I think, requires a higher standard of us as parliamentarians to be able to engage with it. When it gets to this level of kind of nitty-gritty detail to do with derivatives and similar financial instruments—which is not something that most people are familiar with—it actually does call for a pretty high level of engagement. I also just want to thank the officials who were engaged in this for supporting the committee through the House as well.

I just wanted to pick up on some of the comments of some of the previous speakers in this—I won’t go quite so far as to call it a debate, because it does appear that the House is completely united on this issue, and that is a good thing when we’re dealing with financial services regulation. But the previous speaker, Lawrence Yule, referred to some of the issues around the global financial crisis (GFC) of the late 2000s. It was a pretty colossal event. It wiped about 2 percent off global gross domestic product. Hundreds of thousands of people were out of work. It affected New Zealand’s economy for a decade, and gave us a pretty tight operating environment to work within. We had, here in New Zealand, probably one of the better-insulated economies from the GFC. The reason as to its cause was because of poorly regulated financial services and financial products. This bill directly derives from that in some ways, in terms of some of the regulation.

The issue is that when it comes to financial services, regulation always follows innovation. That is where you run into trouble, because, of course, the incentives for banks and other large financial institutions is to constantly innovate in order to drive up their own profit margins. It’s very difficult for regulators in an, essentially, globalised finance market to be able to respond appropriately with regulation that matches the innovation that’s coming through. So the provisions in this particular bill are, essentially, following G20 and European Union regulations that are attempting to catch up with some of the innovations that are occurring in the derivatives market.

I think it’s really important for the House to engage with that, because what we need to understand is that once we have gotten through this bill, it’s probably about time to start looking at the next tranche, because things will have moved on, such is the speed and the pace of innovation in financial services. That really speaks to the other purpose of this bill, which is that this kind of regulation ends up being, effectively, global in nature, because we are dealing with global capital markets. Therefore, the regulatory environment that we have here in New Zealand has to match the regulatory environment of other countries as well.

So I think—for all the people who’ve said that it is kind of dry and turgid and so on—that it is actually really important for us as parliamentarians to engage with this, and to make sure that the quality of the regulation is high, and that we really understand what it is that we’re doing when we pass this bill. To that, I just wanted to say that I think the changes that the select committee has come back with are very sound. They’re not huge. There are about four of them, but they all—to my reading; not having been involved with the select committee directly myself, but having looked at the papers that have come out of it—seem to make a great deal of sense. So I would say that we have to support those through as well.

As I said at the start, I commend the work of the select committee, of the officials, and I commend this bill to the House.

SARAH DOWIE (National—Invercargill): Oh look, thank you, Madam Speaker. I too rise in support of this Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill in its second reading. I actually want to take the time to thank colleagues from both sides of the House for explaining this bill in plain, simple English, despite it being quite technical in nature. But I would have to add to that that any bill that looks to improve efficiencies, to create a more sound regime, and to cut red tape needs to have attention, and needs to be passed forthwith so that our lending institutions can obtain capital in derivatives, so that they too can on-lend to New Zealanders.

It’s this side of the House that supports an expansive economy, despite the Government’s best efforts to slow it down through its various reforms. But we are the supporters of business, businesspeople who take risks, businesspeople who look at their trading or their provision of goods and services. If there is a chance for expansion, and the need for them to obtain capital to do that, then we want to make things easier for them to obtain that capital, and to expand their business, because, ultimately, that means that they will take on extra people. There will be extra employment opportunities available, and that of course puts food on the table for that person, so that they can achieve their hopes and dreams. So any legislation that reforms our banking sector, that means that our banks can obtain capital in line with international regulations, is a good thing, and we certainly support that.

I just want to end with congratulating Deborah Russell on her appointment to the chair of the Finance and Expenditure Committee. We had the privilege of having her chair the Environment Committee. She was extremely apt. She is a very fair and collegial chair, and I’m sure she will bring the same aptitude to the Finance and Expenditure Committee, and I do wish her all the very best as she takes on that role. So with that, with a very short call, I support this bill.

KIRITAPU ALLAN (Labour): It’s a delight to be able to make a contribution to this discussion this evening on the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill. Now, I’m not sure if this was a common practice across the House, but what I did to get myself familiar with derivatives and their origins—I did what all millennials do, and I turned to Netflix, and, in particular, the movie The Big Short.

Dr Duncan Webb: Oh, it’s awesome.

KIRITAPU ALLAN: It’s a fantastic movie, but, I mean, basically, if anything can be said about the global financial crisis (GFC) and its origins, it does come back to the way that trading began to be operated on this faux—well, it’s not faux. Now, it’s an important monetary asset and policy—but, around the origins of derivatives and their role that they play in a modern economy. Now, in 2008, we saw what happened when you had, effectively, an unregulated market where the most common example of a derivative then was a mortgage-backed security. The lack of regulation around these derivatives, and these types of loans, we saw had the impact of mortgages falling 31 or so percent. I think it drove us into the worst financial time of our generation—well, in my particular lifetime, but since the Great Depression.

So in response to the GFC in 2008, many people knocked heads to work out how they could bring more security to this particular area of finance. It’s been brought to the attention of this House, from a number of contributors this evening, the role that the G20 have played, and the determinations that they have made. Now, we aren’t one of those G20 nations, but we are, indeed, very much interrelated, and our trade is very much interrelated, and our economic positioning in the globe is very much interrelated on those trading relationships with those nations in the G20.

As well, Madam Speaker, you’ll be very familiar—this House is very familiar with the determinations that the EU have made to bring regulation to the way that their derivatives and their markets operate. Now, those rules, they come to a head, or they will be enforced in the EU from the start of next year. So this piece of legislation, under the stewardship of Minister Faafoi, introduced into this House in February, went through a relatively robust and technical process in terms of ensuring that this piece of legislation was fit for purpose for our domestic response. Whilst we weren’t inundated with submissions, we were, as one of my colleagues rightfully said prior, privy to some very technical, well-thought-through, and, indeed, very useful submissions—13 in total, and I must commend the levels of expertise from those that presented before the Finance and Expenditure Committee.

Now, the bill that is before us this evening for this reading does come to this House with a number of amendments, and they are amendments that we have heard, and I sincerely hope that the submitters feel we have adequately responded to those submissions that we heard. In particular, there was some consternation amongst the submitters around the transition times in the provisions of the bill, and, in particular, at what point—when you break the bill up—Part 1 would come into effect and how that would come into effect.

So one of the amendments that we have made is to ensure that Part 1 applies to derivatives entered into before the bill comes into force, as well as after. Now, this amendment was, essentially, necessary just to address the practical issues that related to derivatives users, and how they managed and exchanged the collateral required by those G20 rules. Another amendment that has been brought through into this bill—we’ve proposed the amendment to require collateral to be in the possession or the control of the enforcing party before they can actually enforce their rights to the collateral or obtain those special protections, I guess you could say. This change, essentially, will avoid confusion that may arise if there are overlapping claims to that same collateral, or by other third party creditors.

Another amendment that we proposed, in response to some of the submissions that we received, is, essentially, a whole range of relatively small but technical amendments that, when read in the totality, I think, will probably give our submitters—and, indeed, the financial sector that rely on trading upon these derivatives—the security that they require.

In addition, this bill also establishes a licensing regime for the administrators of other financial benchmarks under the Financial Markets Conduct Act. Now, this has been introduced, of course, in response to the new regulations that have been developed by the EU, and I spoke about how those are coming into force relatively soon. Now, these regulations do have an effect outside of the EU and upon us, effectively, as a foreign jurisdiction that wants to trade. So the benchmark administrators in those jurisdictions must meet a whole range of particular requirements in their new regulations in order for the benchmarks that they administer to be used as an important financial instrument with the parties that are located in the EU.

We heard from a range of large banks and large private and public sector organisations, all of which rely on entering into various derivative instruments with EU counterparties and, of course, G20 counterparties. I think it’s been widely canvassed in this House just how significant those derivatives are for hedging investments, capital-raising purposes, and the like.

So, I mean, there have been a few laughs this evening about the fact that this is a relatively dry piece of legislation or it lacks in flair. I refer to the comments of my colleague Willow-Jean Prime from Northland. She mentioned that the Hon Judith Collins made the papers for her comments around how lacking in interest this type of legislation is. But it isn’t. This is sexy legislation—there you go, I’ll go on Hansard and say that—you know, for the wellbeing of our ability to trade with our larger counterparties, the EU and the likes. We saw the harm that can occur when the derivative market remains unregulated. Whilst it’s a little late in the piece—probably about 11 or so years on—New Zealand’s doing our part to make sure that the derivative market we rely on does have safe benchmarks in place. I commend this bill to the House.

Dr DUNCAN WEBB (Labour—Christchurch Central): Oh, Madam Speaker, thanks very much for that. I’m not sure I can add a huge amount after that comprehensive speech by Kiritapu Allan, but I was sitting here listening to Mr Yule mash through his exchanges with the ANZ bank, and I thought to myself, well, how can we understand derivatives and explain them in a way that even a boy from Havelock North can understand? So I thought to myself, well, let’s put it into a currency that the boys from Havelock North will understand and imagine we’re buying ourselves a Holden Commodore, because Mr Yule may well want a Holden Commodore and he may not be able to pay for it now; perhaps he’s going to buy it next year. He might rightly be concerned that the price of his Holden Commodore will go up, and so he might want to deal with that risk in some way and come to me, a derivatives broker, and say, “Duncan, I’m concerned about this.” I would say to him, “Mr Yule, if you pay me a hundred dollars, I will guarantee you the same price next year.” There we have it. I have derived value from that transaction—a transaction which is yet to occur. I’ve got my hundred dollars; Mr Yule has certainty that he can get his Holden Commodore next year.

Of course, he may be getting that Holden Commodore from Australia, and he may say “But Duncan, I’m also concerned that my New Zealand dollars won’t be worth tomorrow or next year what they are today.”, and I’ll happily take another hundred dollars off Mr Yule and say “Mr Yule, I will guarantee you the exchange rate as well.”, and there we have a derivative related to foreign exchange. Of course, he may in fact be borrowing the money and say, “Well, Duncan, I’m actually going to have to borrow the money, but I can only afford 10 percent interest and the bank will only give me a floating rate.” So, once again, I will take a hundred dollars off Mr Yule and guarantee him an interest rate—another derivative.

Or perhaps Mr Yule simply wants to be absolutely sure that there will be a Holden Commodore to buy in a year’s time, and I will take another hundred dollars off Mr Yule and guarantee him that there will be a Holden Commodore—we have a futures contract. There we have, in pretty much a nutshell, how to explain derivatives to someone from Havelock North and how for me to make 500 bucks very quickly from Mr Yule. So—

Jan Tinetti: Who lives in Napier.

Dr DUNCAN WEBB: Oh, well, it’s pretty close—it’s pretty close.

In any event, that’s what derivatives really are; they’re laying off risk, and they’re called derivatives because they derive their value not from assets in themselves but from transactions related to those assets, whether those assets be gold or shares or currency or some other asset like a Holden Commodore or pig bellies or whatever you like. But the thing about these transactions is because they are derived—because they actually depend in their value on movements and markets—they’re extremely volatile, and so large sums of money can be lost or made very, very quickly. That is why it’s only the very largest institutions that enter into these transactions, because only they have the financial assets to do so.

What it also means is that when there is a default, that default can be catastrophic and also cascading, because one of the problems with these transactions is they build on each other. We can have derivatives on derivatives on derivatives, and as Kiritapu Allan rightly observed, in the movie The Big Short in the global financial crisis, one of the problems was this domino effect of one financial institution having to meet its derivatives demands, which then led to another financial institution and so on and so on and so on. That’s why this bill is so important, because it strengthens the derivatives markets. One of the key things it does is it makes sure that a person who is on the receiving end of the derivative—the person who is, essentially, the guarantor—can access collateral for guarantee, because these transactions are so huge that guarantees of millions and billions of dollars are put up on the international markets, often in cash reserves or other highly liquid assets. In our domestic framework, we have an entirely different securities regime where if a company goes into liquidation, there is a careful, ordered, and extremely slow process for unwinding these transactions. On the international financial market, that’s not good enough, because if you have to wait six months for $5 billion, that will simply lead to a catastrophic financial collapse.

So one of the key things that this bill does is it makes sure that parties can access collateral pretty much instantly—that is, within a matter of a day or two. So even if a large company, one of our trading banks—God forbid—is put into statutory management, under statutory management, under our law, every asset of the company is frozen. This is an extraordinary exception to that, which says no, except for the margins they’ve put up for their derivatives transactions. In that case, the international parties will be able to access that, because that’s how derivatives work. I must say, when I saw that, when those excellent policy wonks came in and explained that to us, I raised an eyebrow. I must say, when you’re in the world of derivatives, raising an eyebrow is tantamount to thumping the table. It’s a pretty crazy world. It seemed odd to me that all of the mum and dad creditors out there would have to wait under statutory management for their money but, you know, JP Morgan or whomever out there could immediately access their margin.

Now, I must say, the officials were very good and did very carefully take us through exactly how that would work and how, in fact, it was only a small amount of the assets that would be available, and also that the international financial system was very dependent on this kind of access being available. It wasn’t only statutory management, but also the Companies Act itself, essentially, is set aside for—it gives super-priority to these derivatives margins, and also the Personal Property Securities Act. In many ways, these transactions are personal property securities, because personal property, asset, is given at the disposal of another person if you default on your interests, but it’s entirely inappropriate for that domestic piece of legislation, which is really aimed at things like car transactions and financing farm machinery, to be part of the international derivatives framework. So that was really important to get those rules right.

It’s really important, though, to remember that this isn’t just for any Joe or Josephine Bloggs down the street. This is only for banks, the Superannuation Fund, and ACC, and if anyone else is in that league they can apply to come within this framework. Also, my colleague mentioned financial benchmarking licencing—that’s really important too, because many of these derivatives will be triggered when certain events happen. A classic one would be when the exchange rate falls below a certain level, or where the interbank interest rate rises to a certain level.

Now, we know from the London Inter-bank Offered Rate scandal that if you leave the market to itself, there will be manipulation. In that situation, the threshold was the rate at which banks would offer money to each other—a weighted average of them. Now, there was a cartel of banks which manipulated that so that they could make money on derivatives over there—manipulating interest rates here on a particular time of the day so that they would trigger derivatives events over there. That’s fraud. That’s utterly unacceptable. And it’s because they weren’t carefully regulated. So what we have here is buying into a regime of financial benchmark licensing to make sure the systems used to reach those benchmarks are defensible and transparent. What that means is that our systems will be recognised internationally, we will be able to trade internationally, and we will meet those European standards that we’ve heard about already.

There’s one other thing I want to note which is quite interesting, and that’s the commencement date. It might seem very boring, but it turns out that if we had a black-and-white commencement date here and we said this applies to everything in the future, we would run into huge problems, the difficulty being that many of these derivatives transactions are kind of portfolio transactions, so it’s a shifting pool of assets which doesn’t have a clear beginning and a clear end. To unwind them and say the commencement date applies to this transaction but not that one would be a hopeless mess. So it was decided that, in fact, it would apply retrospectively in those situations.

So, an excellent, fascinating piece of legislation. Thank you to the officials: an excellent job. I commend this bill to the House.

MICHAEL WOOD (Labour—Mt Roskill): I’m very surprised to be able have the opportunity to speak on this bill in the House this evening—surprised that the Opposition hasn’t taken the opportunity to elucidate on the benefits of this bill, which they do support. Members across the House on the select committee actually work quite hard—on the Finance and Expenditure Committee. While it’s been pointed out that this is a relatively uncontroversial bill, that doesn’t mean that it was a bill that members of the House have not had to engage in. Members of that committee actually spent quite some time taking a range of submissions, many of which were very technical in nature, from the financial services sector and other interested parties, and engaging with officials on the detail of this bill to ensure that it was fit for purpose.

But, none the less, like a hungry hound with the scent of some very tasty meat in its nostrils, here I am with the opportunity to say a few words on this bill. I want to commend my colleague Duncan Webb for his speech just now. It was a bit derivative though, I thought, of some of the other speeches—but it was by some margin better than others as well.

This is a very important bill, and it actually speaks to some of the Government’s core priorities. This is the Government that believes in a strong economy. This is the Government which believes in getting on with the job of ensuring that we have a stable financial and economic system so that Kiwi businesses can prosper. And while I know that at first blush, when people look at pieces of legislation like this, they can go a little bit cross-eyed, the ability of our financial institutions and others within our system to access debt on world financial markets, ultimately, is important for our economy to continue as we would wish it to and for businesses further downstream, ultimately, to get access to the credit that they need to be able to function.

This bill does two important things, which are actually quite discreet. They’re tucked into the same bill, but they come from different international requirements. And it’s worth pointing out at this point that the bill is absolutely crucial. These, effectively, are requirements, if we want our financial institutions to continue to be able to access debt on international markets.

The first requirements really come out of the G20, and this is around the requirement to provide margin or real collateral in the event—well, to cover for the possibility of default securing when the derivatives are traded. This really goes back to that very difficult period in the international economy in 2007-2008 when our international financial system virtually collapsed. It virtually collapsed, and the consequences of that were dire. Now, many of us felt, quite frankly, a lack of sympathy for many of those institutions, because of the way that they behaved and the absolute greed and recklessness with which they conducted themselves at that point.

But the point of the matter is that however one might feel about the impact on those institutions at the time, the downstream effects on the real economy were absolutely horrific. The entire world entered into a period of significant recession—as significant as the recession that we saw after the 1929 stock market crash. And that meant real impact on the lives of people around the world and here in New Zealand. We saw unemployment—which, I’m happy to say, under the previous Labour Government had reached a record low of just 3.4 percent—roughly double as a result of that global financial crisis (GFC). We saw businesses fold. I remember at that time, in the aftermath of the global financial crisis, driving around my community in Auckland and there were just empty shops, empty factories, empty businesses everywhere. That wasn’t the fault of the people in those businesses, but it was a direct consequence of what happened in that global financial crisis, where some of the wide boys in these big institutions were playing fast and loose, were lining their own pockets, were behaving recklessly, but it had an effect on the real people.

That is why these changes are important: because they are, fundamentally, about the response that certain international institutions have had to ensure that we build a more robust international financial system. That doesn’t eliminate the risk of that occurring again—because, quite frankly, that is impossible—but does at least significantly mitigate against the risk of that happening again.

So those first sets of requirements have come through from the G20. New Zealand is, obviously, not part of the G20; our close neighbours Australia are. But that’s been a very important forum for developed economies to come together to look at how we strengthen the global financial system to mitigate against these risks as much as we can. In essence, what we see in Part 1 is the requirement that people who are engaged in derivatives trading do provide that margin, that kind of real collateral, putting some real skin or some real asset in the game so that in the event that a derivatives trade goes wrong, there’s actually something real to fall back on. What we had in the in the period of the GFC was a contagion effect, where a whole lot of things went wrong in that global financial system in one or two major institutions, and because they were also linked up because of these trades in the derivatives market, it spread like a disease would spread through the body. But in this case it spread through the global financial system and rippled through. We had major trading banks all around the world, starting in the US and in the United Kingdom, going under. And that’s where the damage was done.

Now, the challenge in this case is that some of our domestic laws already put obligations on parties who might be engaging in these trades in terms of where any collateral might need to go. And actually, what we need to do in terms of the regulations the G20 has put in place is make sure that that collateral is available to the parties in the event that something goes wrong. As my good colleague Dr Duncan Webb pointed out, one of the important features of this is that there’s quick access to it. That, again, is about dealing with that contagion factor. If you go for days and days and days and these contracts are, effectively, unwinding, you get mass panic, mass loss of confidence, and that’s when things really spread and get very, very ugly indeed in the international financial system. So that’s why that first change, which is captured in Part 1 and comes out of G20 regulations, is so very important.

The changes in Part 2 come from our good friends in the European Union. This is part of being part of a globally connected economy. The EU is one of those places that we do often look to for being a place of public-good regulation. The EU has often been a bulwark, in my view, against the excesses of corporations in the global economic system who simply want things their own way, who don’t particularly think about the public good. They simply think about maximising private profit. It’s often EU regulations—and we can think, for example, about some of the significant work they’ve done in the space of social media regulation recently; and New Zealand’s played its part there with the Christchurch Call as well. But in this area it’s the EU who’s actually looking really closely at regulating these international financial markets to mitigate against the risk. And let’s not forget that, if that risk becomes real and if those big losses occur in the international financial sector, there’s an impact on the real economy.

But who carries the can? Who carries the can? It’s not actually the big boys in the glass towers, in the international financial institutions; they’ll generally find some nice little bolthole to go into. It’s generally the public purse, and across the globe at the time of the global financial crisis it was Governments who had to bail out these companies and often had to buy up the banks. Here in New Zealand, we had our own version of that when we had to buy up a number of the second-tier lenders who had been greedy and reckless in that period—South Canterbury Finance is a prime example. So we need these strong regulations in place so that we don’t have the situation of extreme private profiteering, effectively underwritten by the public purse and, ultimately, the taxpayers.

In respect of Part 2, what we’re talking about here in particular is the manipulation of financial benchmarks, and these are the benchmarks—these are the indices—which have a very significant effect in terms of setting interest rates. We had the LIBOR scandal in the United Kingdom some years ago, where it was found that financial institutions—and, while they were called “rogue traders”, I think it was actually more systematic than that—were manipulating those rates to maximise the profits that their institutions could make by making quick trades on the basis of small differences in those margins. A similar scandal emerged in Australia some years ago as well. So the regulations which come out of the EU, basically, put in place much stricter regulation of those interbank rates, and that’s incredibly important.

It’s an important piece of legislation. I’m pleased that, surprisingly, I’ve had the opportunity to speak on this. I again say that I’m surprised that the Opposition, who generally consider themselves to be very financially literate and across these kinds of things, haven’t taken the opportunity. This is the Government that’s getting on with the business, building a strong economy, and putting in place the legislation that our economy needs to thrive. I’m so very pleased to finish this debate by commending it to the House. Thank you, Madam Speaker.

Bill read a second time.

Bills

Copyright (Marrakesh Treaty Implementation) Amendment Bill

Second Reading

Debate resumed from 25 July.

Hon POTO WILLIAMS (Minister for the Community and Voluntary Sector): Thank you, Madam Speaker. When I was a very new MP, one of the first community visits I ever made was to the Blind Foundation, and one of the first discussions I ever had at that meeting was about where New Zealand’s position was with regards to the Marrakesh Treaty. As a new MP, I had no idea of what the Marrakesh Treaty was. Well, they proceeded to tell me exactly what that was and what they needed to happen.

So the Marrakesh Treaty, as I understand, at that stage required a certain number of nations to sign up to it before it was triggered, and once it was triggered, as the nations signed up to the treaty, as a nation we were then required to make the necessary changes to our legislation—in this case, our copyright legislation—to ensure provision of material for people with a visual impairment, so that they could use that material for whatever reason, whether it was for recreational purposes or whether it was for educational purposes or the like. So it was quite fortuitous that I happened to then become a member of the Economic Development, Science and Innovation Committee, who were able to hear the submissions on this particular legislation—the Copyright (Marrakesh Treaty Implementation) Amendment Bill.

There were three to four main groups of submitters to this particular legislation. There were providers of support to people with visual impairments or disability groups like the Blind Foundation. There were publishers and authors, and then there were academic institutions. I’ll go through each of those groups and just do a highlight, I guess, of the key concerns that they raised.

The Blind Foundation and other provider organisations were keen to ensure that the members of these organisations and the people who used their services could get access to the materials that they needed—and, generally speaking, this would be books, texts primarily—and allow for the conversion of that material into Braille. Sometimes that material was already available; it had already been developed either by another entity or by the author and publishers themselves. Sometimes it was not available. So what organisations like the Blind Foundation, for example, would do was they would create that material themselves. They would convert these texts into Braille for the use of their members.

The discussion that we had with regards to publishers and authors was quite different, and their concern—authors, in particular—was about their ability to retain an income and a livelihood from the material that they themselves produced. It was quite an interesting discussion that we had with regards to ensuring that we could ensure that they could still have the opportunity to have an income and we could find a mechanism that would allow for the development of that material into the appropriate format for end-users. Publishers, likewise, had a concern that they would be, potentially, having to incur quite huge costs to convert material into Braille.

Then the last group of submitters—the academic institutions—was actually, for the select committee, the one that provided the most compelling evidence to us. The academic institutions spoke about how they would have somebody sign up to a course or a degree programme and then have to wait for a significant period of time for that material to then be converted into a format that they could use in their study. In fact, their studies had often commenced or were quite well advanced before that material was available. So it led us to consider what would be a useful way to ensure that institutions had the appropriate material that they needed for their students in a timely way that didn’t compromise their study.

The committee examined what was called an “authorised entity”. Now, that could be the Blind Foundation providing material for its members, or it could be an academic institution which was also providing material for its students. The ability of those authorised entities to find material in a timely way was probably the topic of the most discussion that we had on this particular matter. What we looked at was some countries, and the legislation as it came to us in select committee had within it the provision for the commercial availability test.

Now, what this legislation required was for the entity—the academic institution primarily—to ask publishers and authors or examine across the globe whether there was already a commercially available text that they could then use. What we found, and what some of the academic institutions told us, was that their engagement with publishers and with authors sometimes meant that those copies weren’t accessed easily, because they weren’t engaging fully with academic institutions. So somebody from the university might write to the publisher, for example, and say, “We are looking for a commercially available copy of this particular text. Do you have it?”

Often, the publishers would not respond, so they found themselves in the situation of having to develop that resource themselves. So at committee what we thought was what I think was quite an elegant solution to that—it’s something that the member Brett Hudson spoke about in his contribution. What we decided to do was to take out the commercial availability test, because what we felt that would do was two things. It would actually provide an incentive to publishers to provide the material already in a format that was accessible for people with visual impairments, and it would also create a market for that material for others to access. We thought that that was quite an elegant solution. As a result of that there was quite significant rework of section 69, looking at the authorised entity types and also the accessible formats and how they were then going to be available. What that provided was an opportunity for us also to discuss a couple of things. Unfortunately, this is not reflected in the report as it came back to the House, but it was certainly an issue that was raised by the committee, and that was having a register of sorts of commercially available copies. What was also out of scope, but an issue that we did raise at committee, was looking at how we might service other disability communities—particularly people who might have a hearing disability, for example. We also looked at the development of guidelines, because there are no provisions under section 79 of the Copyright Act 1994 where an authorised entity may breach the conditions experienced under section 69. So we did have a look at that.

It was a fascinating discussion. I’m pleased that the committee made the changes that it did, and I think they were sensible, lively discussions. I think there was broad consensus across the committee on the changes that needed to be made. Just one final point about the commercial availability test: of the 55 or so countries that have signed up to the Marrakesh Treaty, only four have this test. So we were not out of line with the rest of the world on this matter. I am the final speaker on this, and it is my duty to commend this bill to the House. Thank you, Madam Speaker.

Bill read a second time.

International Treaty Examinations

War Crimes Amendments to the Rome Statute of the International Criminal Court—Report of the Foreign Affairs, Defence and Trade Committee

Simon O’Connor (Chairperson of the Foreign Affairs, Defence and Trade Committee): I move, That the House take note of the report of the Foreign Affairs, Defence and Trade Committee on the International Treaty Examination of The War Crimes Amendments to the Rome Statute of the International Criminal Court.

Madam Speaker, firstly, to acknowledge you—first time I’ve been able to address this House with you in the chair. Congratulations. But on to more interesting topics, shall we say. Look, this is a fairly—

Hon Member: An insult.

SIMON O’CONNOR: I was trying to think—we don’t wish to insult the Speaker, but nor what’s in here; very delicate. The Foreign Affairs, Defence and Trade Committee has taken on board these, effectively, two sets of amendments to the Rome Statute of the International Criminal Court. It goes without saying that this House supports the International Criminal Court and we support the two sets of recommendations, which I’ll touch on in a moment, coming through this House. The intention of this treaty is obviously, first and foremost, for New Zealand to agree to it and then to anticipate, if you will, domestic legislation coming into this House. The committee report is light; however, that should not be mistaken as a report without substance. I hope as I go through the changes it’ll become very clear to the House—members themselves will know why, but for those in the House they’ll begin to understand why it’s a fairly simple report. First and foremost, the changes put forward at two conferences are simple. Secondly, there was unanimity on the committee, and three, we don’t see any problems of moving through the House. As I say, we anticipate domestic legislation, first and foremost—as I often repeat ad nauseam—is required of New Zealand law to bring any international treaties into force. The second is that we operate with the principle of complementarity when it comes to the International Criminal Court—that is, New Zealand should, where it can, prosecute war crimes itself.

So what does this do? Long and the short, it expands slightly those actions, or, in particular, the use of certain substances or weapons systems, that are deemed to be criminal on the international and, importantly, the non-international stage. So in 2010, in Kampala, various States and parties got together to say that the court should have expanded jurisdiction in, I would stress, non-international conflicts—so we’re probably thinking the likes of Syria, not exclusively—but that poisonous or poisonous weapons can be within the jurisdiction of the court, as can asphyxiating, poisonous, or other gases, and analogous liquids, materials, or devices, and also expanding bullets. So, relatively simple and straightforward. I want to stress that in Kampala that was to do with non-international jurisdictions.

In 2017, there was a further meeting of State parties; this will apply to international and non-international activities. That’s where there’s going to be criminality brought to the use of biological weapons or munitions that are designed to injure with fragments, particularly those that can escape the detection by X-rays—just ponder that one for a moment—and laser weapons that can be deployed to cause blindness.

So long and the short, relatively simple, relatively straightforward—that’s why the committee was very happy to bring this forward and has reported on it very, very quickly. One small interesting note—it’s somewhat timely with activities that are going on at the moment—this does not apply to Tokelau, according to the National Interest Analysis. Actually, the ratification does not actually extend to the Realm, which is confusing to me, I must admit. It doesn’t extend to Tokelau and so no formal consultation was required. So, actually, these changes as they currently stand do not apply to Tokelau. So I encourage the Prime Minister while she is over there [Interruption]—you knew what was coming. I encourage the Prime Minister to have a chat—she’s there for three days—to see what can be worked out. But I’m very happy to commend this report to the House.

PRIYANCA RADHAKRISHNAN (Labour): Thank you, Madam Speaker. It is a pleasure to rise and contribute to the debate in the House on the International Treaty Examination of The War Crimes Amendments to the Rome Statute of the International Criminal Court—which is quite a mouthful. As the previous speaker who resumed his seat, the chair of our Foreign Affairs, Defence and Trade Committee, Simon O’Connor, mentioned, the amendments per se are actually two and they are reasonably straightforward. There wasn’t a huge amount of controversy within the select committee either. But I do want to situate them, I guess, in the context of the Rome Statute itself, because it has been brought to my attention that not a lot of people actually understand what the Rome Statute is. I, for one, at the select committee asked a few questions of officials just around what this was and what the relevance of it is to us in New Zealand.

So the Rome Statute of the International Criminal Court was actually the treaty that established the International Criminal Court. It was adopted at a diplomatic conference in Rome; hence the name of the statute, but the court itself is the international tribunal that has the jurisdiction. It sits in The Hague, just to mention that as well, in the Netherlands. It has the responsibility to prosecute individuals for various international crimes, and they include things like genocides. Articles 7 and 8, for example, outline what crimes against humanity are and war crimes.

I looked into that a little bit, just to get a sense of what this court that sits in the Netherlands has jurisdiction over, and one point that I want to make that I found really interesting, actually, was the fact that in article 7, which outlines what crimes against humanity constitutes, rape is included as a crime against humanity. That includes, also, various violations of sexual and reproductive rights, for example forced pregnancy and enforced sterilisation as well. I was actually really pleased to note that it was included, because we all know that rape is used as a crime within war scenarios. I actually then read this really interesting article that talked about why that is so, but I think most of us understand that that’s because women and girls are an easy target during wars.

So going back to the Rome Statute, per se, article 7 also includes murder, enslavement, and torture. War crimes includes, amongst a whole host of things, the rights of or the treatment of prisoners of war, and certain ways in which their rights can be impinged as well. So that’s basically what the International Criminal Court (ICC) is there for.

Now, to date, the ICC has opened investigations in about 11 situations, indicted 44 people, completed proceedings against 22, and convicted six people. There are about 139 States, of which New Zealand is one, that are party to the Rome Statute, and 122 of us have incorporated this particular statute into domestic law. In New Zealand, that is done through the International Crimes and International Criminal Court Act 2000.

Now getting to the two specific war crimes amendments, which is at the heart of what was examined at the Foreign Affairs, Defence and Trade Committee, basically they were done in two tranches. One was in 2010—the 2010 amendments that came about as a result of a conference in Uganda. The Assembly of States Parties at that particular conference resolved to criminalise and bring within the jurisdiction of the ICC a few different things, specifically, that were used in a non-international context, and that is poison or poisonous weapons, various asphyxiating and poisonous gases that may be used in specific contexts, and also expanding bullets. Then in 2017 came the second tranche of amendments that were specifically added to criminalise, I guess, different war crimes in both international and non-international conflicts, so it is an expansion of article 8 of the Rome Statute, and this includes biological weapons and weapons that are also designed to injure with fragments that escape detection by X-ray. So it gets quite specific in the expansion of the types of war crimes that are now criminalised. The final one is laser weapons that are specifically designed to cause blindness.

The other thing that I found really interesting about the Rome Statute is the fact that it’s based on the principle of complementarity. What that really means is that it works alongside domestic legislation and it doesn’t supersede it, so that’s then why New Zealand chose to enact our domestic legislation in the form of the two Acts that I mentioned previously, the International Crimes and International Criminal Court Act 2000—sorry, that was one Act. Anyway, just going back to that principle of complementarity, it means that the ICC will only exercise its jurisdiction if a State party, in this case New Zealand, cannot or will not prosecute war crimes domestically. So in order to ratify the war crimes amendments, we don’t actually have to pass new domestic legislation that then includes the expanded list of war crimes; however, our position is that the ICC should actually only be a court of last resort.

What that means is that if we actually—and I probably should have looked into whether we’ve had any such prosecutions, and none spring to mind, but, you know, if there is a scenario where we can or we should prosecute war crimes domestically, then our position as a country is that we should do that first, and we only go to the ICC if it’s absolutely necessary. So to be able to do that, we then have to legislate for the expansion, as well, to include those two war crimes amendments that I’ve just outlined, and that is the legislation that the select committee chair, Mr Simon O’Connor, was referring to as well, saying that we were anticipating some legislation that might be introduced to the House specifically to incorporate the amendments to the war crimes. That would be amending that International Crimes and International Criminal Court Act, and also the Crimes Act 1961.

So this was a treaty examination that I found really interesting, actually, at select committee. We worked really collaboratively because there were some more senior members of the select committee who had a bit more knowledge of what this treaty was and why we had ratified it and actually created domestic legislation as well. But can I just thank those who submitted. We didn’t have a huge amount of submitters, but I think it was at least a couple, at least two—

Jamie Strange: Yeah, four.

PRIYANCA RADHAKRISHNAN: My colleague Jamie Strange here has a much better memory; he says that it was about four people who submitted. We definitely heard in person from one person. I want to thank them for taking the time to submit to something that’s reasonably obscure to many people. I also want to thank the officials from the Ministry of Foreign Affairs and Trade who took us through both the amendments, answered questions, and were very patient with the questions that many of us asked of them.

So this is, as the chair has already mentioned, one that is not terribly controversial. It is important in the larger scheme of things because it deals with issues that perhaps we may not have seen a huge amount of domestically in New Zealand but that are issues that plague many other States that are party to this as well, and so we do our bit here. So I’d like to commend this to the House.

RAYMOND HUO (Labour): Thank you, Madam Speaker. I’d like to acknowledge the Foreign Affairs, Defence and Trade Committee. The committee conducted the International Treaty Examination of the War Crimes Amendments to the Rome Statute of the International Criminal Court. I am not a member of the select committee and did not participate in the process, so pardon me if some of the issues I raise here have already been covered at the select committee.

The war crimes amendments are two separate sets of amendments to the Rome Statute. We support these amendments. For New Zealand to legislate for specific offences corresponding to those set out in the war crimes amendments, two pieces of legislation will need to be amended, namely the International Crimes and International Criminal Court Act 2000 and the Crimes Act 1961.

The Rome Statute of the International Criminal Court was the treaty that established the ICC, or the International Criminal Court. At present, 139 States are signatories to the Rome Statute and 122 States have incorporated it into their respective domestic law. New Zealand signed the Rome Statute in 1998 and incorporated it into domestic law through the International Crimes and International Criminal Court Act 2000. The Rome Statute is based on the principle of complementarity, meaning it exists alongside domestic law rather than above it.

In order to ratify the war crimes amendments, State parties do not need to pass new domestic legislation to include the expanded list of war crimes. New Zealand will need to introduce amending legislation to extend the current definition of “war crimes” in the Schedule of the International Crimes and International Criminal Court Act and the Crimes Act, which is what we are doing. I do have questions to ask, but given the nature of such calls, I’d like to ask only one, which is around the definition in the advice attached to the select committee commentary in terms of expanding bullets.

Under the amendments, the State parties resolved to criminalise and bring within the jurisdiction of the court the use of a number of weapons as well as expanding bullets. According to the additional information or advice prepared by the Ministry of Foreign Affairs and Trade, which is attached to the select committee commentary, I read out, “Expanding bullets are commonly used in law enforcement situations … This type of bullet expands or flattens on impact and therefore does not penetrate the target. For this reason”—the advice concludes that—“expanding bullets are used by police or armed forces in certain contexts to avoid incidental civilian injury or damage.” That’s on page 4 of the additional information or advice which was attached to the select committee commentary.

The statement was obviously correct, but I feel it only spelt out one aspect of the statement without explaining clearly the other half of the story. This piece of advice appears to be incomplete and definitely contrary to the impression we would otherwise have. It is particularly so after the recent terror attack in Christchurch, where the local mayor called for a ban on expanding bullets, which are designed to do great damage. Expanding bullets are designed to, well, expand and make a bigger wound channel and kill quickly. They create wounds that are almost impossible to fix. The nearly 100 victims shot in the 15 March terror attack in Christchurch were struck by a type of expanding bullet designed to do maximum damage inside a body, and that’s the reason why local mayor Lianne Dalziel called on the Government to go further with banning such expanding bullets.

Following the tone of the advice, the only way expanding bullets are used to avoid incidental civilian injury or damage is that the bullets would expand upon impact and therefore can be used to avoid over-penetration. In other words, expanding bullets are designed to not travel through the intended target. For hunters, it is a kind of a humane way for them to kill animals without causing too much pain, by killing the animals instantly and quickly.

However, without explaining that part clearly, it is difficult to understand why the amendments we are dealing with would ban such bullets along with a number of other weapons and why the committee would hope that the amendments would discourage the use of inhumane weaponry.

Hon RON MARK (Minister of Defence): Thank you, Madam Chair. Well, I rise take a short call just to indicate that New Zealand First, of course, will be supporting the passage of this and supporting the report back by the Foreign Affairs, Defence and Trade Committee. I want to, firstly, congratulate the select committee, again ably led by Simon O’Connor from the National Party team, who always seems to do a sterling job in this area. I recognise the other members of the team who worked alongside him to produce the report that we have—very short, very brief, and simply recommends that the War Crimes Amendment to the Rome Statute of the International Criminal Court proceed.

I know that in the speeches that are going to be heard this evening on this very short report back there is going to be a little bit of repetition. I think it’s probably with that in mind, acknowledging that the detail of the bill has already been well explored and it’s going to be rotary-hoed even further, I ask us to just remind ourselves where this has come from.

I think we often hear of cases of atrocities that are being committed in different parts of the world in conflicts and we sometimes forget where treaties such as this had their genesis. I think it’s worth mentioning that the establishment of an international tribunal to judge political leaders accused of international crimes was first actually proposed at the Paris Peace Conference in 1919, following the First World War. It’s interesting that this matter was addressed further by the League of Nations, the forerunner to the United Nations, in 1937.

There were long periods of discussion and debate around the need for the establishment of a permanent international court to try acts of international terrorism and what we call today crimes against humanity, and that went on for quite some time. It’s interesting that there was, actually, at that time a convention signed by 13 States—only 13—but none ratified it and the convention never entered into force. Into the Second World War and then post the Second World War, it was the Allied powers who established two different, ad hoc tribunals, and one was to prosecute the Nazis for war crimes—what we, again, would call crimes against humanity. Then I think there was the International Military Tribunal, which sat at Nuremberg. Then there was the International Military Tribunal for the Far East, which sat in Tokyo and prosecuted Japanese leaders for war crimes committed in the Pacific.

In 1948, the United Nations General Assembly finally recognised the need for a permanent international court to deal with atrocities of this nature. I think at the request to the General Assembly, we had the International Law Commission draft two statutes by the early 1950s, and these were shelved during the Cold War for obvious reasons when the world could not get agreement on much at that time. The international environment for such a treaty or such a decision was just simply politically unrealistic and unable to find agreement. There was still clearly a lot more debate after that and there were a couple of proponents who continued to fight the fight for a feasible International Criminal Court, and that finally went through in 1970.

I think in 1971 we saw the foundation for the establishment of an International Criminal Court—and that led us to 1989. Again—interesting—it was promoted by the Prime Minister of Trinidad and Tobago on the back of what they were struggling to deal with through the illegal drug trade. The rest of it’s pretty much history, and if you go forward from there to almost our most recent past, we can see the International Criminal Tribunal for the former Yugoslavia, which was created in 1993 in response to those just—well, those large-scale atrocities that were committed in the Yugoslav wars. Then, of course, we had the crimes that were committed in Rwanda as well, in 1994, in what was described as the Rwandan genocide.

The need for the Rome Statute and the need for New Zealand to ratify the international treaty examination on war crimes is pretty clear. We’ve talked about some of the matters that it’s going to specifically deal with—use of poison or poisonous weapons. Sadly, we continue to see in conflicts, in places such as Syria, the continued use of these weapons. It deals specifically with asphyxiating, poisonous, or other gases. Again, we are seeing the use of these horrific weapons against humanity, and very often we see, unfortunately, that the innocent—women and children—are very often those who fall victim to these atrocities.

The conversation around expanding bullets is quite interesting, because anyone who knows anything about firearms knows that whilst the military is prohibited from using expanding bullets, the police are not. Expanding bullets, for those who don’t know them—they’re often referred to as dumdums—they’re used to cause the maximum harm possible. So a limb wound—which might, using a copper-coated, steel-jacketed round, cause a penetration and a large exit wound—with a dumdum produces quite horrific wounds and can, through the shock in a limb, actually cause death. These were considered inhumane and contravene the Geneva Convention in so far as our military is concerned, but there are technical reasons as to why police forces all over the world, including our own, are not prohibited from using them.

It’s interesting—there’s a lot of conversation right now about military-style semi-automatics and a lot of conversation about who should have them and use them. I do sometimes ponder the Bushmaster 556, which the police use. It doesn’t use a hollow point; it doesn’t use an expanding-headed bullet round; it doesn’t use a dumdum. But the fact that it can punch through a person and through the next wall and through the next wall after that and potentially hit, kill, maim, or injure someone else is something that military people are very aware of, cognisant of, and we often hold our breath when we see these weapons being used in urban areas by police forces.

The advantage of an expanding round is that it will punch and stop. It does not have the ability, because of what happens to the head of the round, to continue and to penetrate walls beyond. There are a specific type of expanding round that counter-terrorist units and air marshals will use in aircraft, in the hope that it doesn’t penetrate the fuselage. So there are reasons why police forces around the world continue to use these rounds and why it’s accepted that they won’t be covered by this, but it does beg the question: if it’s inhumane for the military to use, why are the police using them? There are technical reasons as to why they shouldn’t, but that doesn’t detract from the fact that these rounds produce horrific wounds, and people should know that. Thank you.

JAMIE STRANGE (Labour): Thank you for the opportunity to take a call. I’d like to begin where the honourable member left off, giving us a very interesting history around the International Criminal Court. I was surprised by the Hon Ron Mark’s comments that it wasn’t until the 1970s that movements were made to begin to set up an international court. It shows that the world is becoming more connected. We’ve had thousands of years of human civilisation. For basically all that time, humans have tried to kill each other off. It’s something that we don’t generally see in the animal world, where one species will try and kill itself, but, unfortunately, humans, for whatever reason, do try to kill other humans, and it’s continuing.

We, obviously, strive for peace across the globe, and we continue to strive for that. The reality is wars continue to take place, and this treaty is acknowledging that while those wars take place, there must be an aspect of humanity, as much as possible, within those conflicts. This treaty, obviously, as we’ve heard tonight, seeks to outlaw inhumane practices.

As a former member of the Foreign Affairs, Defence and Trade Committee—I was a member while this treaty passed through the committee—I would like to acknowledge Simon O’Connor for his excellent work as chair—

Hon Member: Really?

JAMIE STRANGE: Nah, he is. He’s a very fair chair. He does a very good job.

Priyanca Radhakrishnan: Fair chair.

JAMIE STRANGE: Fair chair—yeah. The submitters—I believe there were four submitters. There was only a small number of submitters, but we’d like to thank those submitters.

Look, this work, as we’ve heard from Priyanca Radhakrishnan—the Rome Statute, International Criminal Court—New Zealand signed off in 1998. So it does go back quite a way. The international court is a relatively new phenomenon in terms of the history of mankind, but it’s absolutely important that we do have it. I’m hopeful that the continued work that the court does means that we do have a reduction in crime, that we don’t have another world war like we had earlier last century.

Many of us have family members who have served in those conflicts. I have, myself. If you look around the room here, we’ve got those battles before us. We’ve got the Somme, Gallipoli, Passchendaele—First World War. We’ve got Second World War: North Africa; we’ve got Malaya, which is where my father-in-law fought—Malaya—and Borneo. He also fought in the Vietnam War as well. So the reality is, as I’ve said, wars continue to take place, unfortunately.

I’d like to pick up on another point that we have heard from a speaker, and that’s the fact that the International Criminal Court has opened investigations in 11 situations, publicly indicted 44 people, and convicted six. Arrest warrants are issued for 36 individuals and summonses to eight others. There are 22 completed proceedings and 22 are ongoing. There are still 15 defendants at large. So there are still 15 people who have been accused of war crimes who are being searched for.

The unfortunate thing, and something that really saddens me, is that most of these cases relate to crimes committed in the African continent, particularly Sudan, Kenya, Uganda, and the Congo. As someone who travelled through the absolutely beautiful, wonderful continent of Africa—would’ve been about 15 years ago now, but I travelled from Kenya right down to South Africa—it certainly saddens me that that continent with such beautiful, wonderful people has unfortunately been the victim of war crimes, of people who generally rise to power, take on absolute power, and then commit the most unspeakable atrocities, and that’s why we have this international court.

Now, the bill specifically relates to some amendments that have come before us, amendments in 2010 and then further amendments in 2017. Those amendments have been spoken about tonight. I’m pleased that we have agreement right across the House around supporting these amendments.

We have heard about the expanding bullets. The reason that has been raised by two speakers is because it’s something that we do need to discuss, because our police do use expanding bullets and that’s something that will be worked through over the coming months around that. The aspect of expanding bullets that hasn’t been touched on is that if in a police situation you’re faced with a criminal and there are innocent bystanders around, an expanding bullet will lodge within the criminal and won’t go through and potentially affect innocent bystanders. So that’s another point. So there are clear reasons why expanding bullets are used, but discussions will obviously take place around that because expanding bullets are outlawed in this amendment.

The International Criminal Court should be a court of last resort. So as we’ve heard, it works alongside domestic law. Ideally, domestic law will deal with people who are committing atrocities, but when domestic law doesn’t address that, then the International Criminal Court then has that mandate to come into action around that.

There’s another point that I haven’t heard raised tonight and I’d just like to raise it briefly, which is that some countries that New Zealand forces, the armed forces, train and operate with on joint deployments have not yet ratified the amendment—for example, the United States are likely not to ratify this amendment at all. So it does create a little bit of a challenge, potentially, as our forces work alongside others who haven’t ratified this amendment. As a sovereign country we make our decision; other sovereign countries make their decisions. But certainly we do find agreement with other countries on the general belief around stopping, around limiting, atrocities and around caring for people. So we might not agree on all of the amendments but we certainly continue to work together on that.

Look, this is about technology. As technology grows, and it will continue to grow within humankind, we will see more weapons emerge, more advanced weapons, weapons that at this point in time, in 2019, we couldn’t even dream of or imagine. More weapons will continue to be thrust upon us, so it’s important that we continue to have these amendments come through as these weapons come forth.

I was recently in the United Kingdom and I visited the Science Museum in London. It was interesting to see what one of the V2 rockets, which was used in World War II, as many people know, towards the end of World War II. The technology from the V2 rockets was incredibly advanced at that time, for the mid-1940s, and that technology on the V2 rockets, which were used by Adolf Hitler to terrorise people in the UK, was then used for good, to catapult people into space and on to the moon in the NASA program.

So that’s my final point, that technology can be used for good, can be used for bad. It’s important that we have jurisdictions like the international court to monitor the aspect of weaponry as it develops. So thank you for the opportunity to share tonight.

Dr DUNCAN WEBB (Labour—Christchurch Central): Madam Assistant Speaker, it’s a real pleasure, I must say. It’s the first time I’ve stood up since your appointment. I think one member said “Elevation to the bench.”, which I’m not quite sure is proper usage, but it’s great to be under your beneficent gaze for this short speech on this important piece of legislation.

This is important, though. To move away from that levity, it is an important piece of legislation which touches on—I mean, war crimes are a very serious matter. Firstly, as Mr Strange said, it’s bizarre to understand that people enter into conflicts of such horror, and yet on the other side of the ledger, it is also strange to think that we place rules around how nation States are permitted to exert violence against each other. But, nevertheless, we know from the horrors of the First World War and later that there has been an increasing move to understand what is a legitimate and appropriate use of force and what, in some strange way, is a permitted use of force, including force which, of course, causes death and very serious and horrific injury.

I guess the important thing here is the real importance of multilateralism—that we absolutely need an international framework where parties agree what’s permitted and what isn’t. This is certainly an international treaty and series of treaties which does have, in a large part, that. It’s disappointing to see that there are a number of outlier States that haven’t voted in favour of it. Indeed, outliers at the moment include China, Iraq, Israel, Libya, Qatar, USA, and Yemen. They voted against it in 1998, and I must say, when you see those nations put together, they’re certainly strange bedfellows. If you dig a little bit deeper, you’ll see the various reasons why. For example, one of the reasons it was voted against was the provision that says it’s a war crime to move people into occupied territories, and that wasn’t acceptable to some of those parties.

But the other interesting thing here is that, increasingly, conflicts cannot be categorised in terms of wars between States. One of the things that these amendments from Kampala and from the UN in New York set out is the rules applicable to non-international conflicts, and we see this in many, many places around the world—Syria is one tragic example of that. We know that inappropriate means are used in conflicts like that, perhaps more often than those between nation States, where there is a much longer term and much better ability to negotiate the terms of war. So it’s really good to see that there’s protection of people where their status as combatants or their status as citizens of one State or another is unclear or contested—that any people can be protected, regardless of the kind of legal niceties around international humanitarian law and the law of war.

I don’t want to dwell on it any more, other than to say that I’m proud of us being part of a multilateral grouping which recognises the humanitarian side of conflict and is abiding by it. Thank you.

Motion agreed to.

Bills

Privacy Bill

Second Reading

Debate resumed from 18 June.

Dr DUNCAN WEBB (Labour—Christchurch Central): What a joy—twice in quick succession, a flood of favours! This is a massive rewrite of one of the most important pieces of legislation in our domestic law, and it was, I must say, in the Justice Committee, which I’ve sadly had to put to one side, looked at in great detail. I must say the officials were extremely patient as we worked through—

ASSISTANT SPEAKER (Hon Ruth Dyson): Sorry, I wonder if members could just keep the level of private conversation down a little bit. This is a very interesting contribution.

Dr DUNCAN WEBB: Thank you, Madam Speaker, I think. One of the really fraught issues, which I think is well worth discussing, is what officials essentially called the right to anonymity—that is to say the right to go online and on to a website and to not enter your personal details. There is—principle one, I think it is—a principle that says that an organisation is entitled and it’s appropriate to gather information for legitimate purposes. Now, quite obviously, if you are looking to subscribe to the Herald, they’ll want to know your name. They may well want to know your address for billing purposes, and probably they’ll want your credit card number. However, if you go to Stuff and all you want to do is read their free material, then the question is: is a website like that entitled to ask for details?

Of course, we know the big concern is that organisations of that nature acquire this information and may inappropriately use it for other means: to target you for advertising, to—God forbid—sell that information elsewhere. Now, we know that this would be a breach of privacy—to use it for a purpose for which it was not gathered—that in itself is inappropriate. But the really interesting conversation was whether there should be a stand-alone right to remain anonymous—a right not to give your details. Now, at the end of the day, it was hard to clearly articulate that right.

I guess, as a lawyer, I’m always concerned that something that you can’t say clearly, you can’t really say at all. In fact, if we can’t express that right appropriately then it’s not a right that can really exist. So the compromise was to look at principle one and to, essentially, tack on to it this right of anonymity. The fact is that in situations of that nature, there is no legitimate reason to inquire into those additional features.

This is important because it’s, essentially, building on the European framework. The Europeans, in fact, have a very clear right along those lines, but one which comes from an entirely different academic and scholastic framework—one where, in fact, the rights which people have are those given to them, rather than the common law approach, which we’re all very familiar with, I’m sure, which is that you have all of the rights unless they’re actually taken away. So what we have is a great move which took a lot of negotiation.

The other really important thing in the bill is making sure this is EU-compatible. One of the very interesting things is the fact that privacy law is now very much cross-border. The fact is that the websites we use and the information we give moves seamlessly across borders, and many of the internet service providers we use and the websites we visit are based elsewhere. Now, an important step taken here is to recognise overseas providers that meet EU standards—so buying, essentially, in to this EU framework. What that means is that rather than having to ascertain whether overseas providers are compliant with New Zealand privacy law, we can make an assumption that that’s case. Of course, that cuts both ways. So what that means is that because we are upgrading our privacy law to meet EU standards, our providers and our internet-based businesses won’t have to go through any rigorous vetting process. They are assumed, because they met our privacy laws, that they will, of course, meet European privacy laws.

So look, this was an excellent piece of legislation.

Angie Warren-Clark: It’s a big piece.

Dr DUNCAN WEBB: It is a big piece of legislation there. Look, this is a substantial rewrite. May I say that it’s really important that we do this. This was a bill which was first drafted, I believe, in 1991. So it’s great to see that we went right through that and put it in much more accessible language. The Parliamentary Counsel Office did a great job in addressing that, in going through it, and in actually making it much, much more readable. So this is an excellent piece of legislation. I was pleased to be on the Justice Committee to see it through. It collaborated well, and I commend this bill to the House.

Hon TIM MACINDOE (National—Hamilton West): Thank you, Madam Speaker. I’m intrigued that both the Clerk and the member for Christchurch Central have indicated that we are talking about the Privacy Bill, because I recall, as a very young MP, probably about 10 years ago, speaking on a similar matter, and remembering that as a child my parents could never agree on the pronunciation of the word. My mother always used to correct Dad, because Dad would always say “pri-vacy” and Mum would correct him to say “priv-acy”. Well, sadly, Dad’s been dead for nearly 14 years, but Mum’s still hale and hearty, and she’s probably watching this debate—unless Coronation Street is on at the moment. I don’t think it’s on on a Tuesday night. So I’m going to curry favour and probably stick mainly with “priv-acy”, but I might lapse back into “pri-vacy” occasionally, in case Dad is looking down disapprovingly.

I do want to acknowledge that Dr Webb has recently left the Justice Committee, and that he was one of the members of the select committee who’ve worked hard on this bill. I’m a very new member of the committee. In fact, I attended my first meeting last week, and, therefore, I haven’t had the opportunity to work on the bill, but I have, nevertheless, been studying the work that the committee did, and, for the benefit of those who are watching, it’s a pretty weighty tome—there it is, the Privacy Bill—and I am genuinely impressed, as I read the report, at the obvious work that was undertaken by the committee members, and particularly pleased that there’s pretty broad consensus.

Well, one of the reasons the consensus is so apparent on this side of the House is that yet again, this is, effectively, a National Party bill. I want to acknowledge my very dear friend the retiring member for Selwyn and former Minister of Justice in the last Government, the Hon Amy Adams, because it was Amy Adams who did much of the work that has been picked up—and I’m very pleased has been picked up—by the current Government, and it’s good to see that it is now at the stage where it’s completed its work through the select committee. We’re into the second reading, and, presumably, it’s well on the way to being enacted, because, as Dr Webb has just said, this is an important measure, and, as I say, it contains some very significant provisions.

It’s certainly not possible in the time I’ve got available tonight to do justice to all aspects of it, so I am going to cherry-pick some of its key features and try to convey some of the issues that the Justice Committee encountered, and how both they, as a committee, and this bill responded to an environment, or are responding to an environment, that is rapidly changing. It’s quite hilarious, really, to reflect on the fact that the last measure of this type was about a quarter of a century ago, and, at that stage, the internet was very much in its infancy. None of us had smartphones. Very few of us would have had personal computers. I don’t think I had access to the internet back in the early 1990s. I’m not quite sure if you remember, Madam Speaker, the first time you did. It certainly was something that emerged through the 1990s. But the point is, clearly, the environment has changed considerably, and the implications for people’s personal privacy—I’m just thinking of Dad, now—are significant, and do, obviously, need to be tightened up in the bill that is now before us.

So some of the key provisions that are included in the bill, in recognition of the new technologies that have rapidly increased—the type, the quality, the quantity of personal data available to Governments and businesses, obviously, need to be dealt with. It’s important that we have better protection for personal information that is sent overseas. I think Dr Webb just covered that pretty well. It retains the complaints system, because, obviously, the ability to complain about breaches is vitally important, and the bill introduces new ways to enforce privacy principles, giving the Privacy Commissioner some new powers to make binding decisions on complaints about access to information. It also requires agencies to notify the Privacy Commissioner of unauthorised access or disclosure of personal information. We’re all aware of the fact that in recent times, there have been some high-profile breaches of people’s personal information, sometimes by Government agencies, that have caused widespread consternation. This bill is attempting to ensure that those sorts of things are, if they can’t be prevented, at least adequately dealt with under the law.

Well, as I say, in the time that’s available, I’m simply going to cherry-pick. But I do want to make clear that while the National Party supports the bill in principle, we do have residual concerns over two areas of this bill. The first is to do with the threshold for agencies to notify the commissioner as soon as practicable after the agency has become aware of a notifiable privacy breach. The amended bill, as we’ve got it before us now, would raise the threshold for agencies to report, but we in the National Party consider that there is still a risk of over-notification. By that what I mean is that our concern is that over-notification runs the risk of trivialising those very significant, genuine concerns and also will have the effect of causing considerable compliance costs, sometimes, maybe, for small businesses or entities that would be ill-placed to be able to cope with those. So we are a little bit concerned about the balance.

The second thing—we are aware that the Privacy Commissioner recommended quite substantial changes to the bill, and some of them went well beyond the scope of the bill as it was introduced and did cause us some concern. For example, it was the Privacy Commissioner’s view that there should be a right to erasure, also known as the right to be forgotten. Well, we’re pleased that the amended bill doesn’t pick up that particular suggestion, and we’re actually pretty sceptical that such a measure would be required in New Zealand.

Considerable consultation was undertaken. Just to name some of the organisations that the Law Commission, which did much of the work in 2011 to review the bill and led to this stage, undertook: they consulted with the Bankers’ Association, the Law Society, Business New Zealand, Google, TradeMe, Facebook, NetSafe, Telecom, Vodafone, InternetNZ, Consumer New Zealand, and the New Zealand Medical Association to—

ASSISTANT SPEAKER (Hon Ruth Dyson): I’m terribly sorry to interrupt the member—

Hon Tim Macindoe: I’m heartbroken, Madam Speaker.

ASSISTANT SPEAKER (Hon Ruth Dyson): —but the time has come for me to leave the Chair. This debate is interrupted. It is set down for resumption next sitting day. The House stands adjourned until 2 p.m. tomorrow.

Debate interrupted.

The House adjourned at 10 p.m.