Tuesday, 16 March 2021

TUESDAY, 16 MARCH 2021

TUESDAY, 16 MARCH 2021

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

DEPUTY SPEAKER: E te Atua kaha rawa, ka tuku whakamoemiti atu mātou, mō ngā karakia kua waihotia mai ki runga i a mātou. Ka waiho i ō mātou pānga whaiaro katoa ki te taha. Ka mihi mātou ki te Kuīni, me te inoi atu mō te ārahitanga i roto i ō mātou whakaaroarohanga, kia mōhio ai, kia whakaiti ai tā mātou whakahaere i ngā take o te Whare nei, mō te oranga, te maungārongo, me te aroha o Aotearoa. Amene.

[Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the Queen, and pray for guidance in our deliberations, that we may conduct the affairs of this House with wisdom and humility, for the welfare, peace and compassion of New Zealand. Amen.]

Motions

Attacks on Christchurch Masjidain—Second Anniversary

IBRAHIM OMER (Labour): Point of order, Mr Speaker. I seek leave to move a motion without notice and without debate to recognise the second anniversary of the attacks on the Christchurch masjidain.

SPEAKER: Is there any objection to this course of action being followed? There appears to be none.

IBRAHIM OMER: Thank you, Mr Speaker. I move, That this House mark the second anniversary of the terror attacks that targeted Christchurch masjidain on 15 March 2019, that we remember the 51 people whose lives were taken in the most tragic and horrific way and the more than 40 people who were injured, shattering Muslim families and communities forever.

Motion agreed to.

Petitions, Papers, Select Committee Reports, and Introduction of Bills

Petitions, Papers, Select Committee Reports, and Introduction of Bills

SPEAKER: No petitions have been presented. No bills have been introduced, but Ministers have delivered papers.

CLERK:

Annual reports for 2019/20 from the Teaching Council of Aotearoa New Zealand and Peke Waihanga - Artificial Limb Service, and

report on Unappropriated Expenses and Capital Expenditure for the financial year ended 30 June 2020, and

report on the Government Superannuation Fund Actuarial Valuation as at 30 June 2020.

SPEAKER: Those papers are published under the authority of the House.

Select committee reports have been delivered for presentation.

CLERK:

Report of the Foreign Affairs, Defence and Trade Committee on the international treaty examination of the Regional Comprehensive Economic Partnership Agreement, and

reports of the Health Committee on the petitions of Emma Richardson and of Evangelia Henderson.

SPEAKER: The international treaty is set down for consideration.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. Dr SHANE RETI (Deputy Leader—National) to the Prime Minister: Does she stand by all her Government’s statements and actions?

Hon GRANT ROBERTSON (Deputy Prime Minister) on behalf of the Prime Minister: Yes, including the Government’s $136.5 million investment in supporting the hosting of the 36th America’s Cup, in particular the development of the Cup Village, which is a legacy for the people of Auckland for generations to come. And, on behalf of the Prime Minister, I want to wish Peter Burling and the team all the very best for today and, if the wind does not behave, for tomorrow as well.

Dr Shane Reti: What does she say to the people of South Auckland, who last week heard that Counties Manukau District Health Board is 150 nurses short, and when can they expect a trans-Tasman bubble to be opened up to free up 40 percent of MIQ spaces that could be available for more nurses?

Hon GRANT ROBERTSON: In answer to the first part of the question, what I say to the people on behalf of the Prime Minister, what I say to the people of South Auckland, is it is a pity that there wasn’t a Labour-led Government for the nine years when National consistently underfunded the Counties Manukau DHB.

Dr Shane Reti: Would bringing more healthcare workers into the country help to speed up our vaccine roll-out; and, if so, why is she refusing to immediately open the trans-Tasman bubble to free up 40 percent of MIQ spaces?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, no.

Dr Shane Reti: Are there any benefits to healthcare workers to opening up a trans-Tasman bubble?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I find that question difficult to answer. The benefits to healthcare workers of opening up the bubble would be similar benefits to those in a number of other industries. I don’t particularly think it is special to the healthcare workers.

Dr Shane Reti: Does she agree that having stressed and overworked nurses in our MIQ facility increases the risk of another border failure, and that freeing up MIQ capacity to bring more healthcare workers into the country could make the border safer?

Hon GRANT ROBERTSON: We are acutely aware of the hard work that has been done on behalf of all New Zealanders by healthcare workers, and we’re in constant communication with them, and with those who employ them, to ensure that their wellbeing is maintained.

Dr Shane Reti: How many life-saving surgeries in New Zealand public hospitals have been affected by the absence of a trans-Tasman bubble that has prevented highly skilled Australian specialists working in our DHBs?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I would question the premise of the member’s question. What I would say is that we have put significant extra resources in to make up for delays that were caused by the original COVID lockdown, to ensure that New Zealanders are getting the surgery and services they need.

Dr Shane Reti: Would opening a trans-Tasman bubble improve the number of healthcare workers in New Zealand that would further improve our coronavirus response?

Hon GRANT ROBERTSON: The situation we have in New Zealand at the moment is a hard-working health workforce that is doing their job well. It is not the goal of a safe travel zone with Australia in particular to improve the number of health workers that we have. We are doing the job on behalf of New Zealanders to plan for this but, more importantly than that, those health workers are doing their job on behalf of New Zealand, and we should be very grateful to them for that.

Question No. 2—Education

2. ANGELA ROBERTS (Labour) to the Minister of Education: What response has he seen to Government initiatives to support training and apprenticeships?

Hon CHRIS HIPKINS (Minister of Education): Good news—I’m pleased to report that New Zealanders are flocking to the trades, with more than 100,000 learners supported in free vocational training and apprenticeships under the Targeted Training and Apprenticeship Fund, or TTAP. The latest enrolment data shows 106,600 people have taken advantage of free trades training since we introduced it in July last year, including more than 58,000 apprentices. The Government introduced TTAP in July last year, and it makes a range of qualifications in targeted areas and all apprenticeships free until December 2022.

Angela Roberts: What industries are these students and apprentices working in?

Hon CHRIS HIPKINS: Good news—one-third of TTAP learners are in the building and construction industry, with the next most popular areas primary industries and then community support. Once qualified, these workers will help support New Zealand’s effort to recover from COVID-19 and develop our economy in the years to come.

Angela Roberts: Are Māori, Pacific people, and older workers well represented in the programme?

Hon Chris Hipkins: Very good question. Yes. It’s good to see very strong interest from across the community. Nineteen percent are Māori, 9 percent Pacific, and 13 percent Asian. Also, in terms of age cohorts, this isn’t just designed for school-leavers but for people in a wide range of circumstances throughout their lives. People have taken that on board; nearly a quarter are over the age of 40, and about two-thirds overall are over the age of 25.

Angela Roberts: What reports has he seen about other Government initiatives to support training and apprenticeships?

Hon CHRIS HIPKINS: More good news—as well as the free training for learners, we’re backing employers to keep their apprentices in work through their training through the Apprenticeship Boost scheme. Apprenticeship Boost provides a subsidy for employers of $1,000 a month for the first year of an apprentice’s work and $500 a month in the second year. Since the Apprenticeship Boost was rolled out in August last year, over 10,000 employers have signed up and received almost $97 million worth of subsidies for 21,000 apprentices. In the second half of last year, it roughly doubled the number of apprentice new starts signed up compared to the year before.

Question No. 3—ACC

3. JAN LOGIE (Green) to the Minister for ACC: Will she direct ACC to ensure all survivors, including families and witnesses, of the tragic terrorist attack on 15 March 2019 can access ACC support?

Hon CARMEL SEPULONI (Minister for ACC): As a Government, we continue to provide support to survivors of the 15 March mosque attacks and their whānau through a range of mechanisms, depending on need and circumstance. The Ministry of Social Development (MSD) established a bespoke welfare programme for those affected by the mosque attacks; we invested into mental health support services at the Canterbury DHB; have made changes to visa programmes to allow greater access to domestic support for survivors; and, of course, ACC continues to cover those who are entitled to the scheme. To ensure people are able to navigate that support, MSD has also been providing an intensive case-management service, Kaiwhakaoranga. This ensures survivors, witnesses, and their whānau have a single point of contact for accessing support across Government and in their communities. While we continue to assess the situation for ways we can better understand and address the needs of survivors across Government, I have no immediate plans to direct ACC in the way the member suggests.

Jan Logie: Does she agree that mental injury and trauma as a result of experiencing a deadly terrorist attack may have as significant an impact as a physical injury and also require a higher level of compensation for inability to work and ongoing support?

Hon CARMEL SEPULONI: I don’t think any of us can underestimate the mental trauma that those who were witnesses to the mosque attack have experienced. The decision was made to put additional support into place through the DHB with regards to mental health, also the single point of contact and the wraparound support via MSD. We continue to monitor the situation to see how we can continue to support those who have been impacted by the mosque attacks.

Jan Logie: What is the Minister’s response to those victims who have clearly said that the support from the health and welfare systems has not been adequate?

Hon CARMEL SEPULONI: We have an ongoing programme to ensure that we are looking at ways that we can support those who have been impacted by the mosque attacks. That work involves a range of Ministers, including Minister Radhakrishnan, Minister Little, myself as the Minister for ACC, and others also. So we want to continue to assess the situation and ensure that the supports that are in place are working. If the member comes across families or individuals who she feels are not getting access to the supports that we’ve put in place or that they are not adequate, then I would encourage the member to send those cases through to us.

Jan Logie: Does she agree that ACC can provide a greater level of ongoing support and healthcare than is otherwise available?

Hon CARMEL SEPULONI: I am often approached—and I think every ACC Minister would have been across the course of time that this scheme has been in place—to look at expansion and ways to expand. That is not just with regards to the mosque attacks and the mental trauma that people have experienced here. Moving forward, we need to continue to look at the scheme and see that it’s fit for purpose. With regards to the suggested directive that the member has asked that I make today, there is no consideration being given to that type of directive.

Jan Logie: Is she unwilling to extend ACC to cover mental injury to all victims of the attack alone because the cost of compensation for inability to work is considered too high?

Hon CARMEL SEPULONI: I think it would be unfair to put the reason for not utilising ACC, or looking to expand it in this circumstance, down to any kind of fiscal constraint. We need to keep in mind that there are numerous situations where ACC have an expectation placed on them that they would look to expand the provisions of ACC. To the member, I will say that I’m comfortable with regards to where we settled in ensuring that we had adequate wraparound support across the agencies that I spoke about, with the two ministries leading that work being the Ministry of Social Development and the Ministry of Health.

Jan Logie: Could a decision to extend just for these additional victims of the terrorist attack force wider reform if Cabinet didn’t support that?

Hon CARMEL SEPULONI: If I am interpreting the member’s question correctly, I think that it would be fair to say that if there was any expansion of the ACC scheme to cover the area that the member has spoken about, then there would be expectations from a broader range of New Zealand to also revisit other decisions. So we do need to make sure that we are looking at the entire landscape and picture with regards to the support that ACC offers and taking into consideration the expectations of New Zealanders in a range of different circumstances.

Question No. 4—Finance

4. ANDREW BAYLY (National—Port Waikato) to the Minister of Finance: Has he asked Treasury for advice on the economic cost to New Zealand of not opening a trans-Tasman travel bubble; if so, what is the estimated cost per day?

Hon GRANT ROBERTSON (Minister of Finance): The Government continues to do the work required to open a safe travel zone with Australia so that it is in the best interests of New Zealanders, and where the appropriate protocols and safeguards are in place. Not being of a negative mind-set, I have not asked for advice about not opening the trans-Tasman bubble. I have previously asked for advice about the economic impact of trans-Tasman travel settings as both countries take measures to protect their citizens from the global COVID-19 pandemic. The member can read about this himself in the 26 June 2020 weekly economic update that has been published on Treasury’s website. In answer to the second part of the question, that information does not give a per-day cost or benefit, which is understandable given the significant uncertainties about what the scale of travel between the two countries would be in the current environment.

Andrew Bayly: Why is his Government dragging its heels on the trans-Tasman bubble, at great cost to the New Zealand economy, when public health expert Michael Baker has said Australians pose incredibly low COVID-19 risk?

SPEAKER: Oh—

Hon GRANT ROBERTSON: In answer to the first part—oh, sorry.

SPEAKER: I mean, I will let the member answer it, but I am being quite generous, because it does not relate to the primary question.

Hon GRANT ROBERTSON: With respect to the first part of the question, I completely disagree with the member’s premise. What we’re doing on this side of the House is acting in the interests of New Zealanders to make sure that arrangements we make have the proper protocols and safeguards in place.

Andrew Bayly: How many jobs would be saved by opening the trans-Tasman bubble immediately in places like Rotorua, Taupō, Queenstown, and the West Coast?

Hon GRANT ROBERTSON: In order to be able to answer that very, very specific question, we would need to know a lot about the behaviour of Australians, and I would note, for the member’s benefit, that for an Australian to travel to New Zealand right now, they require an exit visa, and so what we would have to know is just how many Australians would be prepared to go through the rigmarole of that; in return, in terms of the net benefit to New Zealand, how many New Zealanders would go to Australia. These are matters that are very difficult to quantify. Our premise is a principled one: that we will do this in the interests of New Zealanders and making sure that we have the right safeguards in place.

Andrew Bayly: What is his response to businesses who are desperate for workers right now and are calling for the freeing up of the 40 percent of the managed isolation and quarantine (MIQ) spaces currently taken up by people arriving from Australia? [Interruption]

SPEAKER: Well, it’s about as related as two back, so I’ll let it go.

Hon GRANT ROBERTSON: The member needs to think carefully through what he’s saying there, and, in fact, if he wants to quote Michael Baker, as he did earlier, he could look at one of Michael Baker’s statements earlier today, which is that when those spaces are freed up in MIQ, when we do get ourselves to a safe travel zone, we will have higher-risk travellers who will be in New Zealand at that point, and Mr Baker is actually concerned about the availability of space at that point.

Andrew Bayly: What regions are expected to suffer the highest economic cost due to the lack of a trans-Tasman bubble?

Hon GRANT ROBERTSON: We’re well aware, on this side of the House, that there are certain regions of New Zealand who have been affected more in terms of the loss of international tourism, and the member will be well aware of which regions those are—the likes of Queenstown, and Westland, and elsewhere. We are working actively with those regions on plans to support them, on top of the $400 million that has gone into support the tourism sector, the $1.8 billion of wage subsidy funding that went into support the tourism sector—amounts of money, I might say, that are significantly larger than what I heard being offered by the other side of the House during the election.

David Seymour: Will the higher-risk travellers the Minister just referred to include Nala and Simba?

Hon GRANT ROBERTSON: I’m pleased that the member has spent his time learning the names of the characters of the Lion King. What I would say to the member is that throughout the period of COVID-19, we have prioritised the return of New Zealanders to their home country; where possible, we have made available spaces for those who are playing significant roles in the economy; and we’ve made space for cultural and sporting events, because that is part of making sure that New Zealanders have actually been able to enjoy some time over the last few months.

Hon Chris Hipkins: Could the tourism regions of New Zealand end up worse off if restrictions preventing New Zealanders travelling to Australia are removed whilst Australia continues to maintain the requirement for Australians travelling to New Zealand to have exit visas?

Hon GRANT ROBERTSON: That’s absolutely a good point and comes back to my primary answer to the member: this is a two-way street, and if Australians still require an exit visa, we could end up with a net loss to New Zealand.

Question No. 5—Social Development and Employment

5. TERISA NGOBI (Labour—Ōtaki) to the Minister for Social Development and Employment: What announcements has she made about the social work profession?

Hon CARMEL SEPULONI (Minister for Social Development and Employment): Today, on World Social Work Day, I announced that New Zealand has now reached a milestone of 10,300 registered social workers—an increase of 3,600 over the last four years. This milestone follows the introduction on 27 February 2019 of mandatory registration legislation—a measure that has been long sought by the sector. Today we celebrate the progress that has been made in future-proofing the profession, as well as acknowledging the 10,300 registered social workers who continue to serve on the front line, supporting some of New Zealand’s most vulnerable tamariki, whānau, and communities.

Terisa Ngobi: Why is mandatory registration important for the social work profession?

Hon CARMEL SEPULONI: Our social workers are at the front line, providing assistance to those who most need it. Mandatory registration is a step forward, recognising the professional nature of the workforce. It offers reassurance to the public that social workers are qualified, adhere to a code of ethics, are annually updating their practising certificate, and are continually engaged in professional development. This gives New Zealanders confidence in the care, advice, and support they need from the social work profession.

Terisa Ngobi: What actions has the Government taken to support and increase mandatory registration in the profession?

Hon CARMEL SEPULONI: The Government invested just over $2 million in Budget 2019 to support the Social Workers Registration Board’s implementation of mandatory registration over two years. In another step forward, I’ve asked the Social Workers Registration Board to act as the lead agency on workforce planning, in a move to strengthen the profession. They are also looking into a scope of practice which will provide a high level description of social work practice. These actions are aimed to encourage more social workers into the profession and underlines the Government’s plan to support healthier, safer, and more connected communities.

Question No. 6—Prime Minister

6. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does she stand by all her Government’s statements and actions in relation to the land at Ihumātao?

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

David Seymour: Does she stand by the statement of Grant Robertson on 17 December about the Ihumātao deal: “Let’s be very clear - this is not part of the treaty settlement process”?

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

David Seymour: Did the Ministry of Housing and Urban Development—the Government agency that paid Fletcher Building $29.9 million for the land—ever advise that the payment might be part of a Treaty settlement process?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, on a very specific question like that the member will understand I would need to be able to go back and check. My recollection is that there was a range of views discussed throughout the period of well over a year about how a settlement could be reached at Ihumātao that would not breach the Treaty settlement process, and the Government is very confident that we have reached that settlement.

David Seymour: Could the redacted parts of this Cabinet paper refer to the deal being part of a Treaty settlement process?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I recently got new glasses but I can’t quite read that Cabinet paper from here.

SPEAKER: Order! Order! I’m actually going to ask David Seymour to ask the question again, and I’m going to ask the Prime Minister to answer it.

David Seymour: Could the redacted part of this Cabinet paper possibly refer to the deal at Ihumātao being part of a Treaty settlement process?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, I would need to see that Cabinet paper. What I do know is that the Government is confident that we have reached an arrangement at Ihumātao that upholds and protects the Treaty settlement process.

Nicola Willis: Why are we in a situation where KiwiBuild money meant to be spent on building houses has been spent instead on stopping houses being built?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, we are not.

David Seymour: Why, then, does the redacted parts of this Cabinet paper, when cut and paste out of the PDF, put into Word, say that Crown Law and Te Arawhiti have been working through the Treaty implications of a purpose due to the fact the land is being purchased by an agency whose land is not generally available for use in Treaty settlements for a specific purpose—e.g., housing right there?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, if the member considers what he just said, he said that these issues were being worked through, which is exactly what I said in a previous answer to this question. We worked through a process with a range of agencies to ensure that we had a resolution at Ihumātao that upholds the Treaty settlement process, and we achieved that.

David Seymour: Did the Government receive advice saying that the deal as conceived would be part of a Treaty settlement process, or not?

Hon GRANT ROBERTSON: As I’ve already answered in the previous questions, we worked through whether or not the settlement would do that—that’s exactly what the member has just said—and the outcome of which is that we have a deal that does not undermine the Treaty settlement process.

David Seymour: What does she think New Zealanders in general, and iwi in particular, should think about a Government that told them the Ihumātao deal was not part of a Treaty settlement process, and then, dastardly and failedly, tried to hide those details?

SPEAKER: No, no, no. I mean, I’m reluctant to ask the member to ask it again, but there are certainly some words in there which he knows add no value and characterise something in a way which is inappropriate. I’m going to ask the Prime Minister to ignore those words and just answer the question.

Hon GRANT ROBERTSON: On behalf of the Prime Minister, what New Zealanders, in general, are seeing is a situation where there was a significant stand-off, there was an inability for Fletcher Building who own the land to be able to pursue a development, and what they have seen is a Government that actually wants to bring New Zealanders together for a settlement that will build houses and also build a much stronger and more cohesive society.

Rawiri Waititi: Does the Prime Minister accept that the land was stolen from Māori and, regardless of the mechanism, the land had to be given back?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, they are not the terms under which this agreement has been made. The terms under which this agreement has been made is that we have an opportunity now to see a development at Ihumātao that is supported by mana whenua, that is supported by the wider people of Auckland and New Zealand, and that the Government can help with. This is a win-win-win argument and I’m very pleased the Government has got to this point alongside, I might say, the tremendous efforts of the kīngitanga who need to be recognised for the work that they did to bring together all of the mana whenua.

Question No. 7—COVID-19 Response

7. CHRIS BISHOP (National) to the Minister for COVID-19 Response: Is New Zealand still negotiating a joint decision-making framework with Australia regarding the proposed trans-Tasman safe travel zone; if so, what remaining issues, if any, are being discussed in the negotiations?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): In answer to the first part of the question, no. As I told the member last week, we have moved from discussing a joint decision-making framework with Australia to discussing more of a unilateral approach to decision making, and those discussions continue. Issues that we’re working through include understanding the circumstances that could lead to a suspension of green zone travel on either side of the Tasman; what we would do with those whose travel is disrupted by the suspension of a green zone; testing requirements that may be put in place on either side; Australia’s current exit visa restriction, that prevents Australians travelling to New Zealand without a visa; the state-by-state differences in decision making in Australia; decision making around expansion to other countries outside of the safe travel zone and who would make those, and whether New Zealand would have any input into that process; and contact tracing system interoperability, in the event that we needed to do contact tracing for people who had been in one country, and were then identified as being more at risk after they had travelled to another country.

Chris Bishop: Thank you for that answer. Has Cabinet ruled out unilaterally declaring that people from Australia can come to New Zealand without undertaking isolation and quarantine; and if not, why not?

Hon CHRIS HIPKINS: No, we have not ruled that out, and the reason we haven’t ruled it out is because that’s actually where we’re most likely to end up.

Chris Bishop: Oh, very good. Good!

Hon CHRIS HIPKINS: Well, the member clearly didn’t listen to my answers last week—I actually told him that last week. We have moved from the notion of a joint decision-making framework to having a unilateral decision-making framework—

SPEAKER: Mr Brown—zip it.

Hon CHRIS HIPKINS: —where each country reserves its ability to make its own decisions about the suspension and opening up of the green travel zone.

Chris Bishop: When was the issue of stranded travellers being potentially stuck in Australia first identified by the officials?

Hon CHRIS HIPKINS: That’s been one of the items that’s been ongoing through the discussions right the way through—including when we were discussing a joint decision-making framework. One of the goals for having a joint decision-making framework was so that we could avoid people being stranded. We have already seen examples of people’s travel being disrupted and people being stranded as a result of Australia’s suspension of the green zone. We’ve had flights on the tarmac at Auckland about to take off that have had to turn back when Australia, at very short notice, has suspended green zone travel. I do want to note that, at the moment, only Victoria and New South Wales are allowing people to arrive in those countries without mandatory quarantine, or mandatory isolation, but they are still requiring those travelling from Auckland to self-isolate for 72 hours, and return a negative COVID-19 test upon arrival.

Chris Bishop: When was the last time COVID-19 was detected in managed isolation and quarantine in an arrival from Australia who had come direct from Australia and had not transited via Australia from another country?

Hon CHRIS HIPKINS: There’s been one case this year; I think, overall, about two dozen cases in total since we’ve had the border restrictions in place—I don’t have the exact dates of those off the top of my head. It is a relatively small number, but that’s in the context of a relatively small number of people coming into the country in total. It’s worth remembering that, at the moment, we deal with probably several hundred arrivals to New Zealand per day, in total. We would be talking about a return to trans-Tasman travel, pre - COVID-19 levels, of between 8,000 and 12,000 people travelling across the Tasman every single day.

Chris Bishop: Why does the Government say that Australians being required to have an exit visa to leave Australia is an impediment to the trans-Tasman safe travel zone, when the Prime Minister of Australia has made it very clear he’s happy for Australians to holiday in New Zealand?

Hon CHRIS HIPKINS: If so, I look forward to his removal of the requirement of Australians travelling to New Zealand to have an exit visa in order to do so.

Question No. 8—Government’s Response to the Royal Commission’s Report into the Terrorist Attack on the Christchurch Mosques

8. IBRAHIM OMER (Labour) to the Lead Coordination Minister for the Government’s Response to the Royal Commission’s Report into the Terrorist Attack on the Christchurch Mosques: What recent announcements has he made regarding ongoing work with survivors of the 15 March 2019 mosque attacks?

Hon ANDREW LITTLE (Lead Coordination Minister for the Government’s Response to the Royal Commission’s Report into the Terrorist Attack on the Christchurch Mosques): Al salam alaikum, Mr Speaker. Monday marked two years since the horrific attack on New Zealanders gathered in peaceful worship in Christchurch. It was an attack on all of us, but it was particularly an attack on the Muslim community. In response to the recommendations of the royal commission of inquiry, and following engagement with faith and ethnic communities, the Government last week announced the following: an Implementation Oversight Advisory Group, to ensure a timely, effective, and accountable implementation of the Government’s response to the royal commission’s report. Next, a Collective Impact Board, that will enable affected whānau of the 15 March victims to guide and advise on services to support their long-term recovery needs. Next, a boosted Safer Communities Fund, with $3.255 million available, to provide a broader range of communities with funding to upgrade and implement security measures. Next, the Ethnic and Faith Community Engagement Response Fund, to help minority ethnic and faith communities engage with the Government to inform it on its response to the royal commission’s report. And finally, the Ethnic Communities Graduate Programme, which will create employment opportunities for graduates and build the diversity of knowledge and experience within the public sector.

Ibrahim Omer: What other commitments has the Government made to respond to the royal commission’s recommendations?

Hon ANDREW LITTLE: The Government has a number of other new and ongoing initiatives under way that focus on three key areas: supporting our diverse communities, tackling harmful behaviour and discrimination, and keeping New Zealand safe. As part of its response, the Government will establish a Ministry of Ethnic Communities; establish a national centre of excellence for independent research into violent extremism; implement a trial to support young children to improve their self-regulation, resilience, and social skills; establish the New Zealand Police programme, Te Raranga, a data collection process for hate crime; increase the capacity of the Human Rights Commission; change hate speech legislation; strengthen New Zealand’s counter-terrorism laws; establish a new Crown entity for strategic intelligence and security leadership; and accede to the Budapest Convention on Cybercrime.

Ibrahim Omer: What are the next steps in the process going forward to implement the royal commission’s recommendations?

Hon ANDREW LITTLE: We will be phasing the work programme, prioritising safety of communities and social inclusion. One of our key priorities at the moment is setting up the Implementation Oversight Advisory Group. That group will provide independent advice to me as the lead coordination Minister for the Government’s response, and the group’s work will include advice on work programme priorities. We’re also currently focused on establishing the Collective Impact Board for the Canterbury region. That board will enable affected communities of the 15 March terrorist attack to shape ongoing support services for their long-term recovery needs.

Question No. 9—Tourism

9. Hon TODD McCLAY (National—Rotorua) to the Minister of Tourism: What advice, if any, has he received on the forecast benefit of a trans-Tasman travel bubble on tourism businesses in New Zealand, and by what date does he expect a trans-Tasman bubble to be in place?

Hon STUART NASH (Minister of Tourism): For the first part of the question, I have received advice on trans-Tasman travel. For example, the Treasury has provided advice that Australians contributed about $2.6 billion to the New Zealand economy, but then New Zealanders also spent $2.3 billion in Australia. I’ve also received advice that there has been a surge in domestic tourism, and for the month of January 2021, the last month that we have the data, domestic tourism spend was up by 24 percent from January 2020, with a monthly spend of about $1.16 billion, but in some areas like Queenstown, for example, the domestic spend was up by 71 percent to $60 million, compared to January the previous year. I’ve also received advice that the Government’s provided a $400 million tourism recovery package, and an estimated $1.8 billion in wage subsidy payments to support jobs and businesses in the tourism industry. To the second part of the question, we’ve always maintained that we would commence a safe travel bubble with Australia when it is safe to do so. Opening the trans-Tasman bubble involves balancing the opportunities with the risks of an outbreak.

Hon Simon Bridges: You said next year!

SPEAKER: Order! Mr Bridges, I won’t require you to apologise, but please keep me out of the debate.

Hon Todd McClay: Why did he say to a West Coast community meeting, as quoted in the media, “Until we get 70 percent herd immunity with the vaccine, then the borders are not going to open at all, not even with Australia, and this wouldn’t happen until January of next year if you’re lucky”?

Hon STUART NASH: I did not say that at all. In fact, you can ask my colleague the Hon Damien O’Connor, who was there. I have always been very, very clear that in terms of opening our borders to international tourists, we are probably not going to see them in our country until next year. However—and I’ve always been very clear about this—the Government is working incredibly hard on a trans-Tasman bubble.

Hon Todd McClay: What is his response to Auckland Airport’s CEO Adrian Littlewood, who said, in regard to a travel bubble between Australia and Singapore, that there was, and I quote, “Real risk that we as a country will be left behind while the rest of the world gets on.” in respect of tourism?

Hon STUART NASH: That’s Mr Littlewood’s opinion.

Hon Paul Goldsmith: What about Max Bradford?

SPEAKER: Order! Order! That’s not kind to either of them.

Hon Todd McClay: What is his response to Queenstown mayor, Jim Boult, in respect of a trans-Tasman bubble, who said yesterday, and I quote, “Right now businesses are looking down a black hole. There’s no light at the end of it. If they know a date in which they are likely to get going again, they can talk to their bank, they can talk to their lawyers, and find a way to scrape through”?

Hon STUART NASH: I’m aware there are a number of businesses that are doing it really tough in Queenstown—I’ve always acknowledged that. I also acknowledge that Queenstown, at this point in time, is a bit of a two-speed economy. You’ve got some areas, like infrastructure, like construction, that are doing quite well. You’ve got about 3.9 percent unemployment in Queenstown. But I’m also aware, and I’ve also acknowledged, that a number of businesses that have really struggled to morph from a pure focus on international to more the domestic market are struggling. But, as mentioned, domestic spend in Queenstown, for January, was up by over 70 percent.

Hon Todd McClay: Has he asked for advice on the number of tourism business closures and job losses that would occur if New Zealand was to stay closed to Australian visitors until January of next year, as he stated in a public meeting, and in particular—

SPEAKER: Order! Order! I just want to make absolutely clear: we’ve had an assurance from a Minister that he did not make a statement. I’m just making clear that this is a different statement and not the same statement? You’ve had a clear assurance from a Minister on the subject.

Hon TODD McCLAY: You stopped me, Mr Speaker, before I said as reported in the media.

SPEAKER: Well, I think—all right, continue.

Hon TODD McCLAY: —as reported in the media—and in particular that domestic tourism spend would have to increase by 72 percent just to draw even with the loss of international spending?

Hon STUART NASH: One thing I would say is I am always very clear, when I talk about tourism going forward, that we will not see tour buses with British, German, Chinese, and Japanese tourists up and down our motorways this year. However, I am always very clear to say the Government is working incredibly hard to open up a trans-Tasman bubble with Australia, and I stand by that. If, in fact, that was what was said in the media, I was absolutely misquoted and I refute that.

Hon Grant Robertson: Which approach does the member think would be better overall for the tourism industry: one where a Government sticks to a plan of an elimination strategy that’s seen domestic tourism able to operate at almost normal—and even above—levels, or an approach that would have seen flip-flops on whether the border should be open or closed depending on who the leader of the Opposition was?

SPEAKER: Order! Question No. 10—Shanan Halbert.

Chris Bishop: I raise a point of order, Mr Speaker. I just want to know why you removed two supplementary questions from National’s allocation during that last question.

SPEAKER: No, I took one from the National Party allocation, and the reason was there was an interjection while a member was asking a supplementary question.

Chris Bishop: What was the interjection?

SPEAKER: I think it could be described as a guffaw that came from the direction of the member.

Chris Bishop: Well, Mr Speaker, in the process of Mr McClay asking that question, a loud voice from the back bench of the Labour Party yelled out something very unparliamentary, and there was absolutely no consequence for that.

SPEAKER: Well, actually, there was. The member’s team got an extra question. Is the member finished now?

Question No. 10—Transport

10. SHANAN HALBERT (Labour—Northcote) to the Minister of Transport: What recent announcement has he made about investment in Auckland transport?

Hon MICHAEL WOOD (Minister of Transport): On Friday, myself and Auckland Mayor, Phil Goff, announced the Auckland Transport Alignment Project (ATAP) 2021-2031 package, which invests $31 billion into critical transport infrastructure and services across Auckland. For the first time ever, we’re turning around the average transport emissions of Aucklanders. The ATAP 2021-2031 package alone will result in a 13 percent decrease in the emissions per capita of Aucklanders using the transport system when compared to the previous package, and it’s projected to increase public transport trips by 91 percent over the forecast period. There is, of course, much more to do to decarbonise our transport system. Importantly, ATAP is also projected to reduce the Auckland road toll by 65 percent by 2031, or around 1,700 fewer deaths and serious injuries over the decade.

Shanan Halbert: What projects does the package include?

Hon MICHAEL WOOD: There are a number of projects already under way, which are helping with our economic recovery and which will reduce congestion, like the Glen Inness to Tāmaki Drive shared path, the third main rail line, upgrades to State Highway 20B, and the Northern Busway extension. It’s important to note that Auckland is paying its fair share with the regional fuel tax, which has meant that projects in ATAP like the Eastern Busway, Puhinui Station, and the downtown ferry terminal redevelopment could get under way. I’m also looking forward to seeing work start on the north-west bus improvements, and the City Rail Link (CRL) day one improvements, like removing level crossings, and new trains, to make sure that we get the full benefits of the CRL as soon as it’s finished.

Shanan Halbert: What ATAP initiatives will help those on lower incomes get around?

Hon MICHAEL WOOD: I was extremely pleased on Friday to be able to announce the Community Connect concession card pilot, which will reduce public transport fares by 50 percent for holders of a community service card in Auckland. This will mean around 2.7 million more public transport trips around Auckland in its first year, reducing congestion, reducing emissions, and reducing transport poverty in our biggest city. Officials have advised that this project will be ready to roll out around about mid-2022, and I’ll be working hard to see it implemented as quickly as possible and, depending on its success, to consider rolling it out further across the country.

Hon Julie Anne Genter: Is he concerned that the ATAP package is forecast to increase total carbon emissions from transport through to 2031, when we need to substantially reduce total carbon emissions in order to meet our climate obligations?

Hon MICHAEL WOOD: I agree with the member on the overriding importance of meeting the targets set by the independent climate commission to reduce our emissions over that period. As I’ve identified, the interventions and infrastructure made by ATAP lead to a 13 percent decrease per capita in Auckland. Auckland’s sustained significant population growth does mean that we face that prospect as outlined by the member. That’s why it’s important that we don’t look at ATAP alone; we look at the other interventions and policies that we can roll out to reduce emissions. I note that the Government has already this year committed to a clean car standard to make new cars coming into our fleet 40 percent cleaner than they are now, the decarbonisation of public buses, and the roll-out of a biofuels mandate. These measures taken together with the measures in ATAP would get Auckland to the point of a gross emissions reduction, but we acknowledge that there is much more to do, and I’ll be working on that with officials over the remainder of this year as we produce a transport emissions action plan in response to the independent climate commission’s recommendations.

Hon Julie Anne Genter: What additional steps will he take to update ATAP in the future to ensure that that $31 billion of investment is doing the maximum it can to reduce total overall carbon emissions over the next decade?

Hon MICHAEL WOOD: I’ll be working closely with Auckland Council to make sure that we move towards our shared ambitions to be decarbonising the transport system, and I think the direction of travel is clear. It’s about providing Aucklanders and, indeed, people around New Zealand with real transport choices so that people have got the opportunity to access high-quality, frequent public transport and mass transit, and safe, appropriate walking and cycling options. I’ll be continuing to work with my officials and local government partners to see those opportunities are given to New Zealanders to help us reduce our emissions.

Question No. 11—Immigration

11. ERICA STANFORD (National—East Coast Bays) to the Minister of Immigration: Does he stand by his statement, “many members in this House will know just how much demand there is on managed isolation”; if so, what advice, if any, has he received that improving utilisation of managed isolation and quarantine capacity could support the reunification of split migrant families?

Hon KRIS FAAFOI (Minister of Immigration): To the first part of the question, yes; to the second, I’m regularly advised by the Minister for COVID-19 Response that demand for managed isolation continues to be high, and it is expected to be at full capacity well into this year. Utilisation rates of available spaces in managed isolation are currently already very high, but we are always looking for ways to improve and refine our processes to give us more options. It’s important for the House to note that New Zealanders trust the Government to maintain the system as our first and best defence against COVID while the vaccine is being rolled out.

Erica Stanford: Why, then, have 126 members of the Lion King production been allowed into New Zealand, while nurses who arrived to meet our critical healthcare needs have been separated from their partners and children for a year?

Hon KRIS FAAFOI: The application that the member speaks of is under the “other exceptions” tranche of visas that were introduced as of June last year. Since that time, 6,500 exceptions in the “other” category have been approved; 1,800 for research and development; 1,300 for primary industries; and 335 for manufacturing. While the member might want to focus on a small number of entertainers, I’d also note that the hotels, the bars, and the restaurants that will benefit from that particular production happening are desperately calling out for this kind of business.

Erica Stanford: Can he explain how a migrant nurse who left New Zealand last month is now returning as a critical healthcare worker with her family, taking up two managed isolation and quarantine (MIQ) rooms which would have only been one room had he allowed her family to travel here without her?

Hon KRIS FAAFOI: As has already been mentioned, I think, last week, there is an anomaly within the system which we are currently looking at, and we also thank the 4,500 critical health workers that we have brought into the country since the borders closed.

Erica Stanford: Point of order, Mr Speaker. I don’t think that he addressed the specific question that I asked. The anomaly has got nothing to do with the question.

SPEAKER: I’ll get the member to ask it again. I thought he came very close; if he didn’t—but ask the question again and I can check the answer.

Erica Stanford: Can he explain how a migrant nurse who left New Zealand last month is now returning as a critical healthcare worker with her family, taking up two MIQ rooms—

SPEAKER: Order! I’m going to stop the member now. I’m going back to what the Minister said, and he did address the question. All he had to do is say yes, and he had.

Erica Stanford: Has he received advice that a trans-Tasman bubble would allow him to reunite migrant nurses with their families without those nurses having to leave New Zealand and their jobs in a sector that is critically short-staffed?

Hon KRIS FAAFOI: As I said in the answer to the primary question, we continually and regularly get advice from the Minister for COVID-19 Response about the utilisation of managed isolation spaces and if we can do better in some of those processes and what we might be able to do for many people who would like to come into New Zealand but cannot at the moment because of the very limited amount of managed isolation spaces available.

Question No. 12—Conservation

12. RACHEL BROOKING (Labour) to the Minister of Conservation: What recent announcements has she made regarding Jobs for Nature projects in South Westland?

Hon KIRITAPU ALLAN (Minister of Conservation): Last week, I was in Franz Josef to announce the launch of an ambitious Jobs for Nature - backed project that will restore nature and sustain jobs in COVID-hit South Westland. Predator Free South Westland represents the biggest step yet on mainland Aotearoa towards the predator-free 2050 goal, and, over five years, the $45 million project aims to eliminate possums, rats, and stoats from 100,000 hectares between the Whataroa and Waiau rivers, the crest of the Southern Alps, and the shores of the Tasman Sea, including the townships of Franz Josef, Whataroa, and Ōkārito.

Rachel Brooking: How will this project support the local community in South Westland?

Hon KIRITAPU ALLAN: Can I first acknowledge that the community is one of the worst affected economically by COVID, and that while this project is not a silver bullet, it will provide real opportunities. Over the length of the project, up to 50 people are expected to be employed, with 18 locals already on board, including some who have been working in the tourism industry. Over the longer term, it is anticipated that the project will provide career pathways for locals and young people to maintain predator-free zones and expand them into new areas.

Rachel Brooking: What outcomes for nature is this project expected to deliver, and how will they be achieved?

Hon KIRITAPU ALLAN: Eliminating pests in this area will protect New Zealand’s rarest kiwi, the rowi, along with many other rare and threatened species, including kōtuku, kea, and the recently rediscovered Ōkārito geko. The project will deploy boots-on-the-ground labour and innovative remote reporting detection devices, high-tech traps and bait stations, with the mountains, rivers, and lakes that surround the area being used as a natural barrier—so, no fences—against predator reinvasions. Can I thank the community partners that are involved, including Zero Invasive Predators, Osprey, the NEXT Foundation, and the Rūnanga O Makaawhio for their hard work and dedication towards this ambitious and exciting project.

Hon Member: Go the Warriors.

Hon KIRITAPU ALLAN: Go the Warriors.

SPEAKER: I can’t quite tell the relationship, but that concludes oral questions.

Bills

Appropriation (2019/20 Confirmation and Validation) Bill

First Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2019/20 Confirmation and Validation) Bill be now read a first time.

SPEAKER: The question is that the motion be agreed to.

A party vote was called for on the question, That the Appropriation (2019/20 Confirmation and Validation) Bill be now read a first time.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bill read a first time.

Bills

Financial Market Infrastructures Bill

Second Reading

Hon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the Financial Market Infrastructures Bill.

SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon GRANT ROBERTSON: I move, That the Financial Market Infrastructures Bill be now read a second time.

I want to thank the Finance and Expenditure Committee for the hard work that they did in ensuring that this bill has come back with a unanimous recommendation, including some amendments, which I will speak about shortly, that have been agreed to. It is the hard work of select committees on bills like this—that don’t, necessarily, draw massive attention or get great headlines—that underpins what this Parliament is all about.

When we think about financial market infrastructures (FMIs), it’s a little easy to let those words glaze over. They have been called—

Hon Chris Hipkins: Ah!

Hon GRANT ROBERTSON: —I know colleagues will find that hard to believe—the plumbing of the financial system, and this is what makes sure that the money and the transactions that happen in our financial system continue to flow around unimpeded by blockages—

Hon Chris Hipkins: This isn’t helping.

Hon GRANT ROBERTSON: Mr Hipkins, I thought you’d enjoy that metaphor. I might have to move on from it. It is important that in any system the plumbing works well to ensure that there is an easy flow, in this case, of money. Mr Speaker, I know, and I am moving on from the metaphor, you’ll be pleased—Madam Speaker. Sorry, a change there. Madam Speaker, you’ll be pleased to know I’m moving on from that metaphor. But FMIs are the systems that, essentially, enable the electronic payments that we have to be made.

They also facilitate the transactions of buying and selling of financial products. That includes payment systems—things that people would perhaps be a little bit more familiar with—but it also includes the settlement systems, which are a critical element of the way that our financial system works. This is the arrangements both between banks, and between banks and the Reserve Bank as well: central security depositaries, trade repositories—all of the things that enable financial transactions to take place. What we’re doing in this piece of legislation is establishing a new framework for the regulation of these financial market infrastructures in New Zealand and actually closing a gap within our regulatory system and broader economy.

It would be fair to say, Mr Speaker, that the international agencies who—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

Hon GRANT ROBERTSON: —Madam Speaker. I’ll just keep looking at you, Madam Speaker. So the international agencies who comment on these issues, and in particular the IMF, have raised concerns as far back as, I believe—I’ll just check it—the Financial Sector Assessment Program review that was done by the IMF in 2017 about whether or not New Zealand’s regulatory environment for financial market infrastructures was appropriate. It’s currently regulated under two different Acts in our legislative framework: the Reserve Bank Act, Parts 5B and 5C, and also the work of the Financial Markets Authority. Essentially, what the International Monetary Fund told us was that those parts of the legislative framework were no longer fit for purpose, or sufficient, anyway. In particular, they didn’t cover some of the types of FMIs that are now in regular use, particularly for central counterparties, and they lack the full range of regulatory and supervisory tools that you would expect, and that the public would now expect, in terms of the way those systems work. So, in order to close that gap, we have put this bill forward into Parliament and it has now gone to the select committee.

The select committee, as I say, did an excellent piece of work. What they did was look at—and I’m looking forward to hearing from members of the select committee shortly in some detail around the work that they did, because I know they took it very seriously indeed. But among the issues they have now put forward amendments that have been unanimously agreed on are broadening the circumstances where regulators may agree that one of them acts as the sole regulator; simplifying the thresholds for when Ministers can grant approval or consent to decisions being made by a regulator; clarifying the relationship between the general purposes of the bill and principles of the bill and the purposes and principles that relate to crisis management powers; removing the requirement of ministerial consent before the regulators can issue a notice requiring a rule change; and removing the requirement for the ministerial consent to a new operator scheme. So those amendments, if I am interpreting them correctly from the select committee, are, essentially, to ensure that the scheme operates even more smoothly than it has in the past. Ministerial consent alongside regulator consent is not always required. The regulators act independently, they know what they’re doing, and they need to be able to do that in a timely manner.

The amendment around crisis management powers: I am particularly pleased with the work that the committee did in this area. This is an ongoing issue when it comes to the operation of our regulators. We don’t want there to be the need to use crisis management powers when it comes to the way that our banks or financial institutions run, but being absolutely clear about how they will work is critical. In New Zealand, we only need to look back to the period around the global financial crisis and the collapse of some of the finance companies in New Zealand to know that, unfortunately, there will be times when crisis management powers are required, and being very explicit about what the role of a regulator is when that situation comes to pass is important. It is no different when it comes to these financial market infrastructures—so that we are very clear about that. So, again, I thank the select committee for their hard work and reporting back unanimously those changes.

From time to time in this House, we will have bills of this nature come forward. They are technical; they are about the way that our regulators work. We put a great deal of faith and trust in both those regulators and also the officials who advise us on them, because it is not, in all seriousness, in the day-to-day work of members of Parliament as to exactly how these work. So I want to thank all of the officials who have been part of making sure that we have this bill here. It has had a reasonably long gestation period, interrupted by COVID, but I do believe we are passing, or moving forward in the legislative process, a piece of law that actually is going to serve New Zealanders well, to give them confidence in the systems where their money flows through but also that the regulators involved have the tools that they need to make sure that they can intervene where it is necessary. So, with that, I commend the bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.

ANDREW BAYLY (National—Port Waikato): It’s a pleasure to be talking on the Financial Market Infrastructures Bill. I just want to acknowledge the Minister of Finance for nearly doing six minutes on the Financial Market Infrastructures Bill. I thought he did a great job of trying to understand the plumbing of the financial infrastructure of New Zealand. That was obviously well rehearsed and well written by his advisers, so I do compliment him.

Before I talk about this bill and get into the details of it, hopefully for not too long, I thought it would be just useful for people to understand what this bill is about. Unfortunately, when you read the commentary it doesn’t actually talk about what we’re dealing with, and essentially what we’re dealing with is the issue of derivatives and how financial markets work. So we have things like people wanting to borrow money from a bank and they want to borrow it in Australian dollars and they want to borrow it on a fixed interest rate. However, they mightn’t be able to do that directly, so what they do is they use different types of instruments to do it. They could use a derivative that deals with the transfers, the fixed interest rate to a variable floating rate, or they might use foreign currency. It’s quite common to swap one currency for another. So you can use different types of derivatives to actually make change.

What this bill is about—and I can see my learned colleague here beside me—

Hon Michael Woodhouse: I’m hanging on every word.

ANDREW BAYLY: —hanging on every word, OK. So what this bill is about is there are two types of trades that go on in the market, and the first one is the exchange trade. Probably the best analogy of that, or example of that, is, actually, if you were to buy shares on the market through the New Zealand Stock Exchange, that is an exchange traded transaction. What this is about, or what the second element is about, is principally around over the counter. That means it doesn’t go through an established jurisdiction, or an established organisation. In fact, the Reserve Bank operates two of them. It has what’s called the Exchange Settlement Account System payment system, and it has NZClear, which is another trading system.

What the International Monetary Fund was concerned about was, actually back in about 2006, and more recently in 2016, the fact that we had a relatively unregulated, over-the-counter market in New Zealand. So what they strongly advocated was that we should be tightening up the arrangements around that, and, of course, this has now led to this bill. Of course, it was initiated by the National Government and obviously carried on under the current Government, and, of course, today we’re at the second reading. It’s taken a long time to get to this point.

But it is important because there’s substantial trades every day on these different exchanges in over-the-counter. We’re talking about billions of dollars’ worth of derivatives, essentially, traded every day. So what this bill is about is putting in place better rules and regulations as to how that trading can take place. As, I think, the Minister just spoke about before, it is complicated and there are different entities involved. I think the biggest thing is this all came about through the GFC, because as many of you will recall, a lot of the financial meltdown, if I can use that word, actually was sourced back to the trading of derivatives. People had not quantified their liabilities sufficiently and when the crunch came, many organisations found that they were insolvent because they were literally overwhelmed by the outstanding liabilities they had around their derivatives trading. And there are many investment banks that were caught in that situation. So that was the prime driver for it.

We’ve, obviously, been through the COVID crisis over the last year and it is heartening to see that in the main the New Zealand market’s held up pretty well. Although, what was offsetting about that, and actually contributing to supporting the market, was many of the traders were actually permitted to go to work. But this shows that there is robustness to the New Zealand situation, but many people were very worried about derivatives because they are, basically, a synthetic or arbitrary created instrument.

So this bill looks at enhancing some of the rules and regulations around it. The Minister sort of highlighted the key causes around it, or aspects of it, but, basically, the one is to allow the Reserve Bank—and in the Financial Markets Authority there is a combined role, but the Reserve Bank is the principal—to be able to set standards around the issues around how financial market infrastructures, or derivatives, are set. The legal standards behind them clarify the ownership structure and all those different aspects. So there’s more clarity around what instruments we’re dealing with. It also enables the regulator to monitor what’s going on much more closely so we don’t get into a situation like the GFC, and for the regulator to have an oversight of what’s going on in the market.

These are all good things. Obviously, this is a highly technical bill. Luckily, we had some people from the Reserve Bank that helped us through the process. We are supporting this bill, across the House, which is good. It’s one of those rare moments when we all come together for the common good of New Zealand. I think that’s probably enough because we’re going to go into committee of the whole House, and I am just waiting for the contribution from the Hon Gerry Brownlee because I know he is an expert in this matter and I’m sure he’ll be able to illuminate a lot more to my colleagues across the way, some of them, of course, who are new to the committee and may be struggling with the concepts. But I know my learned friend here will be ready to pick up any points if they don’t actually understand all the detailed aspects of this bill. Thank you very much, Madam Speaker.

Dr DUNCAN WEBB (Labour—Christchurch Central): Kia ora e te Mana Whakawā. I can assure Mr Bayly that there are some members that are new to the committee on this side of the House, but they are not struggling with this bill in the slightest, they are some of the most talented people we will ever see in this Parliament and I am very excited to hear their contributions. Whilst it was an excellent select committee—well led as well—that looked at this bill, we will no doubt see some further insightful contributions coming from this side of the House at least. We know that Mr Bayly dealt in the murky world of merchant banking in a former life, as I understand it anyway, and he actually did make some very good contributions in select committee here, about this Financial Market Infrastructure Bill. But it is important to just recognise that this bill actually touches on everyday lives, because every time we go down to buy something at the supermarket with our Visa card or our EFTPOS card, we are using part of our financial infrastructure, and that payments and clearance system which underpins this, underpins those simple payments, is absolutely integral to the financial stability of New Zealand.

So that is what this bill is about. Whether it be a clearing system for payments of that nature, or whether it be the stock exchange or over-the-counter derivatives, or any of the numerous other financial transactions that go on here in New Zealand, underpinning this are these systems—largely run, it must be noted, or the services are provided by, private companies. This is not Government infrastructure, this is private infrastructure, so it’s really, really important that it’s stable, because if one of these pieces of infrastructure were to fail, the knock-on effects could be quite catastrophic.

I guess there’s really just two points I want to make about this bill, one is about the purpose clause, because we can sometimes get lost in the details—and I love to get lost in the details of bills of this nature—but in fact the purpose is really important and the committee did examine that. It’s important because it’s on the basis of purpose that regulators can intervene. Every time a decision is made about whether to intervene in an entity, the regulator should be looking at the purpose and saying, “Has the trigger been reached? Is the purpose of this legislation met by this intervention?” The select committee noted that the purpose clause talked about a sound and efficient financial system, and of course those are both good things, “sound and efficient”.

Hon Michael Woodhouse: Good, they’re vital.

Dr DUNCAN WEBB: Well, they’re still there, so that’s why we left them there. We didn’t take those ones out, Mr Woodhouse, but we added in stability, a stable system, and public confidence in a system. That’s another important thing, that if a system loses public confidence then, again, the infrastructure can fail—whether it be a run on the bank, or people choosing not to use the stock exchange, and we’ve seen the stock exchange come, quite rightly, under scrutiny recently, about whether its systems are robust and stable enough to do the work that it’s expected to do. So adding in the purpose of “stability and confidence” was an important point.

The other thing I wanted to—

Hon Gerry Brownlee: Repetition.

Dr DUNCAN WEBB: Ha, ha! The other thing I want to talk about is the approach to the regulation-making powers, because we got advice from the Regulations Review Committee—another fantastic committee, a very good committee in the last Parliament, it will be hard for this Parliament to keep up with that, the firepower on that former committee—we actually looked here at the question of whether it was appropriate for the instruments made under this Act to be disallowable, particularly an instrument which gave things like exemptions to particular organisations. The question there really was about whether that was having widespread legislative effect, or whether it was simply a one-off kind of carve-out that only affected one entity. Now, the Regulations Review Committee, you’d never take the advice lightly, but the committee looked at that question and said, “No, in that situation it’s really not a legislative instrument. It doesn’t have legislative effect, it needn’t be disallowable because of its narrow application.”

In the same vein, and throughout the report—which I know we’ll have all read, avidly—it notes a shift away from ministerial regulation-making to regulation making by officials, and that’s unusual, it’s very unusual in fact. For example, the appointment of a statutory manager is a very, very significant step. It really does take away a huge amount of autonomy and freezes the entity itself, but a lot of the stuff that goes on there, it’s not a broad policy decision—it’s operational. The other thing to note—and I think this is critical—is in these situations, dealing with financial infrastructure: hours and minutes count because these settlements must be made on time, absolutely. It’s a kind of drop dead situation that, if a payment—and these can be payments in billions and billions of dollars, if they’re not made on time, then a series of defaults can occur which could be catastrophic. So we need the ability, where those decisions are made, for them to be made extremely rapidly. They’re decisions which are highly technical, and largely operational. So it was entirely appropriate for those really important decisions to be pushed down the chain to where the technical expertise lay, rather than leave them in ministerial hands. But I just do want to reassure the House that that was very, very, carefully considered.

Of course, the other really important point there is the designation of financial infrastructure entities. Not every financial infrastructure entity is kind of essential to the integrity of the system of the whole, there are some smaller operators who have less widespread systems; smaller stock exchanges would be a really good example, where, whilst there might be benefits for them to be subject to this Act for various reasons—they get various protections and indemnities for example—it’s not essential to Government, to the integrity of our overall system, that they be included in this piece of legislation. So we looked at the opt-in, opt-out provisions there, so where an entity is absolutely essential to the integrity of the system, they will be compelled to be part of this regulatory framework, but when they’re not, they may opt in to the framework so that they get the benefits of it—but they needn’t if they don’t want to.

I guess the other point in there is really some of the questions around the confidentiality of information here, because we know how sensitive the information can be here, and it’s important that when notices are issued here, it’s absolutely confidential—and, as well, the securities is another really important aspect, that if an administrator is appointed, a statutory manager is appointed, then the rights of secured creditors are not diluted. In fact, that was not immediately apparent, that wasn’t abundantly clear on the first draft, and we wanted to make it absolutely clear that if someone had a call on financial assets as a secured party, if an administrator was appointed, they would be preserved. Again, essential to the financial system that we have—and that goes to confidence, doesn’t it, because if secured parties can’t have confidence that their interests are protected even when the Government steps in to administer a piece of financial infrastructure, then that’s undermining of the financial system as a whole.

So look, it is absolutely a technical bill and. as Mr Bayly said, it’s one which the National Party kicked off, because, incidentally, I think it was the IMF who indicated that it was a gap in our regulatory framework—perhaps a distance risk, but a risk nevertheless, and one that this Government was very happy to pick up, very happy to make sure that the work was done. Of course, this is a piece of governing that people will never notice, this is the kind of work that good Government does, isn’t it? Because we’re making sure the systems are in place, the systems are working, they’re robust, they’re strong, and people will be sleeping in bed at night knowing that tomorrow when they wake up, their EFTPOS card will still work. I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Speaker. It’s not unusual for colleagues to find themselves having to speak on a bill at second and subsequent readings when they themselves have not been part of the select committee process—or, indeed, at the first reading. I actually think most people in this House do a pretty good job of boning up on the subject matter of the bill and coming and making an intelligent contribution to the debate. That ain’t going to happen now.

I’ve looked at this bill and I have tried and tried and tried and I cannot make head nor tail of it. So all I can say—and I didn’t think I was going to say this—is: thank goodness for Andrew Bayly and Dr Webb because they were on the committee in the 52nd Parliament—is that right? How many are we up to?—the last Parliament, and they, obviously, had to wade through the very technical detail of that.

But I have to rebuke Dr Webb, somewhat, for his assessment that perhaps the current Finance and Expenditure Committee doesn’t have the same intellectual firepower as the previous Parliament’s.

Dr Duncan Webb: No, that’s Regs Review.

Hon MICHAEL WOODHOUSE: Now, I think that’s somewhat—oh, Regs Review, I withdraw that then. That may have been a save on Dr Webb’s part, because, I think, there are some very talented people on this Parliament’s finance committee. Dr Webb talked about the new MPs and his confidence that they will be able to speak intelligently on this bill. He’s not looking from where I am; I can see the terror in their eyes. So all I will say to the new MPs that are in the Finance and Expenditure Committee is: their careers will not be judged by their interventions on the second reading of the Financial Market Infrastructures Bill. Perhaps Ms Edmonds will surprise us all; I know she is a very diligent MP—as they all are.

I think what we really needed in this bill were technical experts. Clearly, Dr Webb with his legal background and his analytical background—but also Mr Bayly, having lived this as a merchant banker for many, many years—obviously was able to speak the language and understand the amendments that we were embarking on. I will commit to having a much greater knowledge of this by the time we come to the committee of the whole House—I may even have a Supplementary Order Paper to lodge, you never know! That would be a great day.

With that, it simply leaves it for me to join the Minister in thanking, firstly, that committee, the submitters—there weren’t that many of them, which highlights how complex this is—the Reserve Bank, and the others officials who supported the committee. I look forward to a robust debate in the committee of the whole House.

DAVID SEYMOUR (Leader—ACT): Thank you very much, Madam Speaker, and thank you very much to Barbara Edmonds for letting me take this call. I’ve got quite a lot on this afternoon, and you’ve saved me 20 minutes. So thank you very much.

I rise on behalf of ACT in support of the Financial Market Infrastructures Bill. I will just make a couple of preliminary comments about some of the debate that’s gone before. It’s certainly true that this is a very technical bill. It deals in matters that most people will never encounter. I certainly have not encountered these sorts of matters outside of my role on the Finance and Expenditure Committee in the previous Parliament when we dealt with this bill. But I also say I think it’s a little bit unfortunate that in various comments, including from the Minister and Dr Webb, there’s been an expression that maybe the financial markets are a little bit murky or that the people that work in them are a little bit sinister. I think that’s really unfortunate, because, actually, they’re a valuable part, a vital part in fact, of the New Zealand economy.

While I don’t claim any great expertise, I think we can actually do a bit better in talking about what this legislation does and why it is necessary and broadly a good idea. There are a few trends in the financial sector that are important. One that’s been going on for several decades is that computerisation and then the internet have meant that we have a much higher velocity of transactions, a lot more participants with a lot more financial products. What we’ve just seen with GameStop, what we’re seeing with retail investors, are just some high-profile examples of those trends. And that means that there are a lot more possibilities for different people coming together, and when they come together in financial markets, they often require a clearing house or some sort of meeting place where they can transact. We have quite a number of those. They’ve traditionally been regulated by the Reserve Bank of New Zealand Act 1989, but, clearly, the possibilities of market failures have grown, and the need for certainty and clarity and, potentially, crisis management has grown. So giving the Reserve Bank and the Financial Markets Authority (FMA) jointly and separately, depending on whether they agree to regulate a particular financial market infrastructure together or apart, is actually a very good idea.

Just to give one example of something that has cropped up in recent times, we now have a lot of potential for New Zealand to grow its weightless economy through fintech companies. I’ve had a few of them in the Epsom electorate raised in this House over the years—some of the travails that Harmoney, for instance, have had attempting to do business under our current financial regulations. I could also raise NZFintech, and part of the challenge that they’ve had is that they haven’t been able to access clearing houses or payment systems so that they could be part of the wider New Zealand financial sector. I would hope that this bill will allow the FMA and the Reserve Bank to step in and regulate infrastructure for some of these emerging markets made possible by new technology so that we can have new entrants. Gerry Brownlee’s looking because NZFintech are based in Christchurch and they’re very good people. He’s nodding, and he’s right.

So I think it’s really quite valuable in terms of the opportunity that it creates for more entrepreneurship in New Zealand, but you do need to have clear rules of the game, because as the Reserve Bank identified in their initial briefing to us at the Finance and Expenditure Committee, one of the dangers is that if you’ve got a group of financial firms who own a particular clearing house, there’s the possibility that they will actually use that market power to the exclusion of new entrants, and that is bad for everybody in the long term. It’s particularly wrong when, actually, it’s only the Reserve Bank’s licensing that put them in a position to own that payment system in the first place.

So I think this is something that we can say is welcome. We, obviously, I think, have a responsibility in this House to watch how the legislation that we make is used in the future. I hope that this will lead to more stability, better crisis management—heaven forbid it be needed—and an environment that is more welcoming to new entrants and more innovation in our financial sector, because we need to create those high-paying, globally connected jobs right here in New Zealand and Fintech’s a great opportunity for that.

I don’t have a huge amount further to say except that I thank again the member for letting me have this early call in the debate and letting me get to my 3.30 meeting—it’s very collegial of you. On behalf of ACT, I commend this bill to the House.

BARBARA EDMONDS (Labour—Mana): It’s always great to be collegial across the House, so you’re welcome. I take lollies at any time during the House for snacks.

The reason why I missed my call is I was so speechless. My breath was taken away by one of the previous Ministers and his challenge to me about making sense of this particular bill, particularly as I wasn’t a member in the previous select committee. But what you learn as a policy official—which is part of my past life—is that the fundamentals of policy come back to three very basic questions: what is the problem you are trying to fix, what are the options to fix that problem that you are trying to fix, and what are the next steps? It was really clear through the discussion today, through other members of the House, that there was a problem that was identified by the IMF. It had come through the National Government. It had gone through the Labour Government. Now we’re here today on this bill.

So I would like to echo the points made by the Minister of Finance, that there are areas of technical policy that are not at the forefront of the public’s mind but which are intended to make sure that our systems, such as plumbing, run smoothly. And again, having come from a policy background, we see this often in remedial and omnibus bills. Other examples on the Order Paper include the Regulatory Systems (Transport) Amendment Bill and the Secondary Legislation Bill. But I come back to the point that it’s important to stress that although some of these bills are technical in nature and they’re not attractive enough to have big media bells and whistles, they are extremely important for our everyday lives—such as EFTPOS, such as credit cards, such as the financial system that underpins that. So I acknowledge the select committee for your work in the previous term, officials from the Reserve Bank, and the 10 submitters who took their time to submit on the bill.

So more specifically to the bill—because, yes, this is a new bill for me, being a new member in this Parliament. So what I did is I actually looked at the purpose clause, and then what I did is try to relate the elements in the bill back to the purpose clause so I could understand what this bill is intending to do. So if I look at the purpose clause, which is clause 3 of the bill, subclause 1(a), it says to “promote the maintenance of a sound and efficient financial system”. I understand by the commentary by the select committee that they included the new words of “(including by responding to threats to the stability of, or confidence in, the whole or a significant part of the financial system);”. Now, I understand that the reason why the select committee put that particular element in the bill is because those particular words have been threaded throughout the bill but hadn’t linked back to the purpose. So I congratulate the select committee for picking up on that point and bringing it back into the bill.

If you look at clause 3(1)(b), the second part, the purpose of the bill is to “avoid significant damage to the financial system that could result from problems with an FMI”—a financial markets instrument—“an operator of an FMI, or a participant of an FMI”. So what part of the bill helps to make that purpose clause come to life? It’s Part 2. That is the information-gathering powers and investigative powers, all for the ongoing oversight and monetary of the FMI sector, and examples in the bill include clause 15. So you look to clause 15. Part 2 is the “Regulator’s powers to require information, reviews, and independent reports”. Clause 15 then enforces that through offences. So clause 15 is an “Offence for failure to give information”. Then look at clause 17. That is an “Offence for failure to obtain review”. Again, that links back to that second part of the purpose of the bill, to avoid significant damage to the financial system by including offences and an offences regime.

I turn to the third purpose of the bill. The third purpose of the bill, in clause 3(1)(c), is to “promote the confident and informed participation of businesses, investors, and consumers in the financial markets;”. So where does that relate back to in the bill? What I found was not only in Part 2, the information-gathering powers in the regimes, which shows enforcement, but if I could also point to clause 37, whereby “Operators must publish copy of rules of designated FMI”—why is that important? So for transparency’s sake, you want the public or a consumer to be able to go to a particular place to be able to look at what those rules are. Clause 37 says that it must be “maintained … on behalf of the operator … is publicly available free of charge”, and the really key part here is “on an Internet site”. So it puts the onus back on the operators to ensure that it’s transparent and it’s there for the public to be able to review and to see.

But then you also look at clause 40, which is that an “Operator of designated FMI may apply for [a] rule change”. They can’t just change these rules willy-nilly. They can’t just change their internet sites and therefore change the game on consumers. What they have to do is go back to the regulator and provide “(a) a copy of the proposed rule change; and (b) a description of the rule change and the reasons for the change; and (c) the time at which the operator would like the change to come into effect.”—so, again, another sort of backstop or safety net for our consumers.

So then I go back to the purpose clause again. I look at the fourth purpose part, in clause 3(1)(d), which is to “promote and facilitate the development of fair, efficient, and transparent financial markets.” Again, it’s those policy analysis details coming back in. So where does this link to in the bill? I look to clause 40, and that was, again—which is in Part 3, which I’ve just discussed, where you need to go back to the regulator for those rule changes. Then, if you look deeper into the bill, in clause 89, “Making FMI operator subject to statutory management”—now, that’s really important. If for any reason an operator comes under the statutory manager, the Governor-General may, by Order in Council—under clause 89—on the advice of the Minister given in accordance with a recommendation of the regulator, declare that they’re subject to a statutory manager, appoint one or more persons as a statutory manager of that operator, and the order must specify the date on which it comes into force and also appoint two or more statutory managers. The key thing to that is that it is through an Order in Council. An Order in Council is gazetted weekly. So again, there are layers of transparency that come through this bill which, again, fall back to the initial problem that the IMF recognised.

So I think I’ve given a well enough contribution to prove to one of the previous Ministers of Revenue that there is definitely competence on this side of the House to be able to pick up a bill that they’re not necessarily on a select committee of, fall back on to the policy analysis of “What is the problem we are trying to fix? What are the options to fixing that problem? And what are the next steps?” So the next steps in this bill are that we see this through the committee of the whole House, and I look forward to any potential Supplementary Order Papers that the Opposition, on the other side of the House, might lay down. I recommend this bill to the House.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. I don’t intend to trace the House through the legislation as has just been so competently done by my colleague Barbara Edmonds, who is also a new colleague on the Finance and Expenditure Committee. It’s already been well traversed, was seen and passed through the select committee stage by the former membership in the last Parliament of the Finance and Expenditure Committee. There were a number of amendments made as a result of those rather technical submissions at that select committee stage. Perhaps most importantly is that addition to the “Purposes” clause, as was just stated by Barbara Edmonds. But if I may repeat it, the inclusion at clause 3(1)(a) whereby it says “promote the maintenance of a sound and efficient financial system”, and then the inclusion in brackets of “(including by responding to threats to the stability of, or confidence in, the whole or a significant part of the financial system)”.

Now, there’s been a lot of contributions that have spoken to exactly how, in granular detail, this legislation attempts to, through a number of different levers, produce and create protection and maintenance of a sound and fair financial system by facilitating development of fair, efficient, and transparent FMIs, or financial market infrastructures. I want to acknowledge, actually, the complete transparency of my colleague across the Chamber, the Hon Michael Woodhouse, in his complete honesty and integrity in the submission that he could not wrap his head around this because, to be perfectly honest with you, having engaged with a number of not just financial products but new products on to the market on the internet over the past few months, I’ve been trying to wrap my head around not just the likes of these FMIs but also something that some in this Chamber may know of as NFTs, otherwise known as non-fungible tokens, which are digital tokens which have a unique identity and ownership verified on Blockchain. They are not mutually interchangeable files but are often uploaded through the likes of Instagram or Twitter and then can be sold on, but still are able to be effectively screenshotted and passed along to other consumers—I would have guessed, but I can’t wrap my head around that.

It seems to be the case that often, when it comes to parliaments, we are at the very end of the process after these tools have been developed and these new products come on to the market. This actually—there’s a great example over the past several years with Uber coming into the marketplace in Aotearoa New Zealand, and, I believe, about two parliaments ago, the Transport and Infrastructure Committee at that point in time requesting an inquiry or review or information from officials about how this damn-fangled new thing—this app—operated inside of our market, after the genie had already been unleashed out of that bottle.

So, too, I want to acknowledge the contributions of my colleague David Seymour—we’re acknowledging everyone today. So, yes—looking forward to Te Paati Māori if they are to speak to this bill, because I’d love to hear their perspective. But it is the case that we are so often, as mentioned by David Seymour, looking to situations—like, for example, what occurred with GameStop—as to whether there should be forms of Government intervention or, in fact, this was exactly what was intended by those initial regulations or lack thereof. I also just want to mention the point that has been raised by other speakers in the Chamber so far, which is on the point of the rapid development of financial products, and the context is created by virtue of the increasing kind of technological development. Thereby, we have the opportunity for quicker, more innovative, and more rapid products coming to the fore, and it is the kind of recognition of the increasing possibility of those failures and the need for regulation to protect, particularly, consumers, because if we think back not all too far ago, it was, in fact, new products like those bundled up subprime loans that led to the global financial crisis in the first place.

So, just to put on record a few of the other things that we should be paying attention to as they seem to develop and, as you know, we need to have an eye on in order to protect citizens and consumers. I think one of the things that we’re only just beginning to grapple with as the Finance and Expenditure Committee in this term of Parliament is the likes of cryptocurrencies. So I’m really interested to see where that discussion goes, as well. But for the reasons put forward today in this contribution and those of my colleagues across the Chamber, the Greens join with everybody else in supporting this bill in its passage in the second reading.

INGRID LEARY (Labour—Taieri): Apologies, Madam Speaker, I was waiting to see if ACT were going to speak. But I must apologise for my enthusiasm for this bill. With the fervour of a new MP and a new member of the Finance and Expenditure Committee, I have read the bill and independent commentary—quite a lot of it—and while it is technical, it does make perfect sense to me because, really, it speaks to three things: first, risk management; secondly, proportionality; and, thirdly, integrity and coherence of our financial systems. So it is of course a Financial Market Infrastructures Bill (FMIs) I’m referring to, although we could possibly call them FMIs: fairly mundane instruments. But I’m aware as I listen to the debate that there are probably two audiences to speak to. The first of those who really don’t have much to do with the financial markets, and then there are probably some people who are very involved with this legislation who have made submissions and who may be listening for some of the minutiae or the more granular things that have happened. So I would like to speak to both those audiences in turn.

At the risk of revisiting the finance Minister’s analogy about plumbing, this bill really is a bit like upgrading the plumbing. There are in points for the money to go in, there are out points for the money to come out. And what we really want to see are pipes that are clear with no blocks and no leaks. Now, that’s not the sort of thing that you would talk about in a dinner conversation and, in the same way, it’s not the sort of legislation that normally gets bandied around in the media or is the subject of intense discussion. But it certainly does get attention when it doesn’t work, and, if it was a dinner conversation, you wouldn’t be eating dinner any more, you’d be running across the road and out of the house. So the financial plumbing system has not changed, actually, since the Reserve Bank of New Zealand Act of 1989, yet now we have more pipes, we have different sized pipes, we need different tools to fix them, and we do need proportionality. In other words, you don’t want to be opening up a small pipe with a sledgehammer. So this bill does recognise that, it upgrades the plumbing and it makes it fit for purpose in a digital world. And, as one of the previous speakers has quite rightly said, it involves derivatives and it looks, particularly, at over-the-counter transactions.

But I turn now to those who might be seeking some more technical contribution just to mention specifically the contribution that the Finance and Expenditure Committee made around changes, and they fall into three categories. The first was around decision-making processes, the second was really around the new arrangements for transitioning designated settlement systems under Part 5C across to the new designation regime in the bill, and then the third one was the really, really, really technical stuff. Depending on how much time I have left, we might get to that third bit.

But if I go to the decision-making processes. To summarise, really, the contribution that the select committee made—and this was going through it with a fine-tooth comb, listening to the excellent submissions as I understand them to be from the small number of people and organisations who submitted. They broadly came up with these changes. First, they broadened the circumstances to where the regulators may agree that one of them can act as the sole regulator in a particular case. They also simplified the thresholds for when Ministers must grant approval or consent to decisions made by the regulator, and that has got to be really around transparency and clarity for operators. They also clarified the relationship between the general purposes and principles of the bill and the specific purposes and principles relating to crisis management powers. We have heard a little bit about crisis management today and, certainly, after the financial market crash, that was less hypothetical. I think that COVID has made us all realise how perilous all our systems are at any given time and how important it is to have integrity in the underlying systems that enable our society and our economies to continue to work. There’s also the removing the requirement for ministerial consent, which has already been discussed, and removing the requirement for ministerial consent to a new operator scheme.

The second group of changes, as I mentioned, were about transitioning. This, again, has got to be about clarity and certainty for those operating in the system to make sure that, as we transition from a less regulated system to a more regulated one, that it is a smooth transition, that it is fair, and that it keeps the integrity of the system.

Then finally, there are the really more technical amendments. Again, just wanting to thank those who submitted to the select committee as, no doubt, many of these very technical points would’ve come from those submitters. So what they did do is they wanted to clarify how the concept of stability and confidence referred to at various points in the bill interrelated with the bill’s purposes. We’ve just heard very clearly from my colleague Barbara Edmonds about how that was able to be brought to bear. They were also looking to bring into force certain additional provisions of the bill at the day after the Royal assent. They wanted to adjust the circumstances where derivatives counterparties can exercise certain close-out rights against an FMI operator in statutory management, and, again, that is for protection of those working in the markets to make sure that there is an equal weighting and balance of power so that we don’t have a change where some of those working in the system are able to be exploited. They also wanted to clarify that security interests in the assets of an FMI operator in statutory management continue in existence if those assets are transferred to a new operator under a new operating scheme. They wanted to provide a Crown indemnity for the statutory manager of an FMI operator. Again, that’s around providing confidence to the market more generally. They wanted to enhance the rules around confidentiality notices issued by the regulator, and my colleague Duncan Webb has spoken to that. They also wanted to adjust the rules around the confidentiality of information held by the regulator so that the relevant confidentiality rules in the Financial Markets Authority Act 2011 apply to the Financial Markets Authority (FMA)—that’s obviously about consistency of legislation—and to make a technical amendment to the Financial Markets Authority Act 2011 to ensure that the FMA can also make use of its powers under that Act in respect of FMIs.

So you can see why I may refer to these FMIs as fairly mundane instruments, but to summarise: it is really important. We’ve heard across-the-House support for this bill, which really brings more cohesion to a rapidly changing market, one that is operating in the digital space, one that has been lightly regulated. It brings it into line with best practice overseas and, in that way, adds coherence and integrity to our financial systems. We’ve heard about the proportionality that it brings in terms of making sure that we are not requiring ministerial intervention when, in fact, what is required is a technical response from technicians with specialised knowledge—and again, my colleague has very clearly pointed out that that was clearly debated so that we could make sure that we didn’t overstep the mark when it came to democratic principles. But probably most importantly, this is about risk management. So we’ve heard about the risks that can happen, that did happen after the financial market crash. We have seen the risks to the financial system and, in fact, very good responses through COVID. But what we did see a lot of was a lot of transactions happening, going through different pipes than they normally would. What we have chosen to do across the House is to recognise that that plumbing system needs to be fit for purpose, needs a bit of upgrading and a bit of tinkering to ensure that, should we go through another situation like that or even if there are just more calls on certain parts of the system, that we have plumbing that is fit for purpose, that we can sit around at the dinner table or, indeed, in this House, talk about matters that perhaps seem a bit sexier or more interesting knowing that the plumbing is not going to break down and we are not going to have to run out in the middle of dinner or in the middle of the debate because the system doesn’t work. So on that note, I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): This is a split call, five minutes. I call Nicola Willis.

NICOLA WILLIS (National): It would be easy for those watching or listening or reading this debate to think that this is a very dry matter but, as other members have stated, financial market instruments are crucial to the very functioning of the economy. They support the non-cash payment and financial settlement system that underpins almost all of the ways that we conduct commerce in New Zealand today. There aren’t that many cash payments happening, and the importance of this financial infrastructure cannot be overstated. So what this bill does is it creates an improved and properly regulated framework in which those transactions can occur.

Now, I didn’t sit on the Finance and Expenditure Committee while it was considering this bill, but I understand that some of the matters that were considered were about ensuring that a regime of this sort is both appropriate in terms of the regulatory nature of it, the surety it can give those transacting within these systems, but also flexible enough to allow for the fact that, as we have seen, the way these transactions occur has evolved rapidly in response to different technologies and in response to different ways to do things. National supports the view of the committee that the bill has struck the right balance there.

The second area that was of crucial consideration is this issue of how we make sure that the financial market infrastructures are resilient and crisis-proof. That is that when something goes wrong, it doesn’t bring the whole New Zealand financial system down with it. I think that underscores why it is prudent and appropriate that the Government regulate in this area, because if these financial settlements are put at risk or aren’t occurring, we need to have some sort of backup. We need to have contingency plans for not only dealing with operational mechanical failures but also dealing with financial failures. So this bill requires entities to have those provisions in place.

I do just want to acknowledge the concerns from some who pointed out that even though this bill does provide regulation in terms of crisis powers, there is still the question of what happens if Visa or MasterCard go down, because increasingly they are core to our consumer payment system, and yet they aren’t covered in the same way by this bill—and I think it’s worth noting that in the Hansard and noting the concerns that have been raised by some about that; although we fully acknowledge that those are independent market architectures that stand separately for good reason.

In conclusion, this bill brings New Zealand into line with our offshore counterparts in terms of the regulation of financial market infrastructure. It strikes a balance between flexibility and prevention of crises in the future. It’s a good bill and I commend it to the House.

Hon MICHAEL WOOD (Minister of Transport): Thank you, Madam Speaker, and at the outset of my contribution can I acknowledge others who have participated in the debate today. I think there was a little bit of doubt expressed in the early days of this debate as to whether members participating would be able to engage in a fully informed way. But I’ve actually found the debate to be a useful, informative—I wouldn’t quite go so far as to say interesting—one, but I think we all walk away with a little bit more knowledge about why this bill is important and why the issues that we’re considering are actually quite significant. Can I acknowledge the select committee who obviously have worked hard to get their heads around this bill. The suite of alterations made to the bill that was sent to the select committee are actually reasonably significant, and that’s a sign of a select committee that was getting down to its work, that was working closely with officials, and doing what it’s there to do, which is to improve legislation which is sent to it. If I can acknowledge the nine submitters, I think four of whom were heard in this process as well. I did have a little bit of a look at the submissions as I was sent here, and it was pleasing to see that across those submitters there did seem to be, generally speaking, support for this bill and for its intent. There were a range of useful suggestions and improvements, some of which have been picked up, but it would appear that, for those people who are most involved in these systems, there is a widespread recognition that this is an overdue piece of legislation.

I also want to, as Barbara Edmonds did, just start my substantive comments with the purpose statement of the bill, which is always a good place to begin. The key point that I want to make here is that I think the change which has been recommended by the select committee is an extremely important one. So if we turn to clause 3, “Purposes”, the purposes of this Act are “(a) promote the maintenance of a sound and efficient financial system.” Now the change that’s been made by the select committee adds on the words, “including by responding to threats to the stability of, or confidence in, the whole or a significant part of the financial system”. The reason I want to just rest on this point briefly is because, to me, this is where we get the link between what seems like a highly technical, somewhat arcane piece of legislation and how it actually affects things in the real world, how real people are actually affected by good legislation and regulatory oversight, or lack thereof, because we don’t have to go that far back in time—it’s only to 2007-2008 and the GFC—when inadequate regulatory regimes in a number of countries, most particularly the United States but others as well, allowed for significant issues to occur in the financial markets that were not just contained to the financial markets.

The fallout of those regulatory failures was a crisis across the world economy, millions of people losing their jobs, having their livelihoods significantly impacted, and recessionary conditions that persisted for a number of years across the international community. That is the real world outcome of not having appropriate regulatory oversight through pieces of legislation like this one. That is why that purpose statement and that additional wording that has been brought in by the Finance and Expenditure Committee is so important, that focus on the stability of, and confidence in, the financial system, because, ultimately, what unfolded in that period of 2007 when the GFC was getting under way, was a result of, frankly, unethical behaviour, greed writ large across the financial markets, then having a systemic impact leading to a total loss of confidence in those markets, with impacts on the real world economy. That’s why this bill is so important.

One of the key things that this bill does is to set up designated financial market infrastructure entities, and these are entities which will be determined by the Minister to be more significant within the system. That determination will be made given their size, given their interconnectivity, given how they fit into the system, and the risk that would be created if they were to collapse. The creation of that designated category will allow, in the event of some kind of crisis or event, for greater steps to be taken by the regulator or regulators, being the Financial Markets Authority or the Reserve Bank, to step in and stop that kind of contagion and, ultimately, flow on to the real world economy with all the damage that that can do.

I’m disappointed I only have five minutes for this particular call. There is so much good stuff in this bill, but other colleagues, I’m sure, will pick up things from here and round this debate off in style. This is an important bill, Madam Speaker, and I do commend it to the House. Thank you.

GREG O’CONNOR (Labour—Ōhāriu): Thank you, Madam Speaker. In a previous life I was a detective, and when I was assigned to the fraud squad, it was with much trepidation that here was I, a country lad from the West Coast; what did I know about fraud? However, the advice I got from my detective sergeant was that, actually, my job was to make things easier and clarify them so the jury can understand them. To a certain extent, that’s what we’re actually doing with this bill. Yes, it is a bill that is pertaining to some very complicated financial issues; however, like many of these things, it’s only once it is removed that we suddenly realise how important it is.

A very good example of that was, of course, the GFC. Now, the financial market infrastructures (FMIs), which many of the previous speakers have discussed, defined—no FMIs actually failed during the GFC. But you will have heard one of the previous speakers, Andrew Bayly, talking about derivatives, which are a type of FMI. It’s the derivatives market that did fail. Just to simplify that somewhat so that people understand why you do need some regulation around that—again, one of the previous speakers, Mr Seymour, said, “Well, don’t think that the people who are involved in the financial market are a dodgy lot.” Well, they’re not necessarily a dodgy lot; they’re an entrepreneurial lot and they’re a very clever lot, and they’ll also push the limits. Their job is to find new products that everyone can make some money out of. The world is awash with them.

One of those derivative products was, essentially, to take a large number of mortgages and put them into one package. They were called “derivatives”. In those large number of packages, as you might imagine, there were some good mortgages; there were some bad mortgages. The theory being that if there were some failures of mortgages, the good mortgages would cover. So someone who wanted an exposure to the American mortgage market could buy one of these derivatives, buy one of these packages with maybe up to 10,000 or 100,000 mortgages in it, secure that they had a good exposure to the American market. Well, of course, that worked fine until those derivative products got filled up with bad mortgages, mortgages belonging to people called NINJAs—no jobs, no income—and were bound to fail. Now, that would have been fine if only maybe 10 percent of them had been that. But, as it turned out, in the end, a large number of those mortgages were that. So once this became known—there’s a very good movie called The Big Short. I’m limited with my time here, but if anyone would like to know a little bit more about that, well, the movie The Big Short actually outlines it.

The result of that, they themselves didn’t nearly bring the system down; it was the fact that each of the banks, each of the financial institutions, had exposure to these things, and they knew the exposure they had. So if they knew that we’ve got exposure to these things, then the guy or the other bank we’re dealing with clearly will have the same exposure so we better not expose ourselves to them. And what stopped happening was money stopped moving, and it was the cessation of money moving around which actually nearly brought down the financial system. That was why we saw the intervention, why the banks had to be given the money, the guarantees, to keep going.

So that will just give some idea of why you need some pretty good regulation safeguards around products that many of us don’t know about, that actually have more exposure to than we know, because many of us do have exposure to managed funds through our superannuation, through different ways. So it’s, again, only when these things fail that we start to understand why it is absolutely necessary. If you wanted to get technical—and some of the previous speakers have got technical—what are the key FMIs in New Zealand, these things that we seek to protect? The real-time, high-value, inter-bank payment system that is the key to money and capital markets—well, that’s exactly as I’ve described it. So if money stops moving—today there’ll be people who’ll be settling on their mortgages. That will require one financial institution to move money to another financial institution. Well, if that stops, for any reason there is some doubt of the stability of either of those orders, it won’t happen. So, of course, that’s very much part of this. The FMI that’s not exactly an FMI in itself, but in a broader issue it is.

The global, high-value, inter-bank payment system for the New Zealand foreign exchange market—again, of course, a little bit broader, this is the money that overnight were moving in their millions, those money traders who wake up at 3 o’clock in the morning to check their phones, to check everything else, to see how things are moving. But, most importantly, is that it does keep moving. Everyone has faith. This, again, was exposed to New Zealand to a certain extent. We heard from the submitters that people started to look at New Zealand and say, “Well, actually, you actually don’t have the necessary safeguards here. We’re going to be sending billions, millions, of dollars to New Zealand.” And the New Zealand currency, I think at one stage, was the 10th most traded currency in the world. While we might be a small country, I do remember being in New York looking at The New York Times thinking—oh, sorry, it was The Wall Street Journal, thinking there won’t be much mention of New Zealand in here. And here it was, a picture of the New Zealand dollar, talking about it, because, again, the New Zealand dollar came out to a large number of trusts set up in New Zealand, money was moving through here. So we actually do need to ensure that we have that for that international exchange.

The retail payment system where New Zealand consumers and businesses conduct their financial transactions—again, similar, big organisations, moving money around; absolute faith that I’m going to send you many millions of dollars. We need to have that faith. This is the system that enables that. They then become the FMIs, bearing in mind what I’m talking about here, the key FMIs being identified.

The security settlement system for fixed interest in equities securities market—equities, obviously shares, again, moving around. Finally, the securities settlement system and securities depository for exchange markets—now, I’m not 100 percent certain of that last one. Even I, with my massive skill from my years on the fraud squad, struggle with that one to actually understand. But the others I think make plenty of sense, and why we actually do need that.

I was fortunate enough to be on the Financial and Expenditure Committee. We actually heard many of our submissions via Zoom during the lockdown, which was actually quite a good time when we didn’t have many other distractions and were actually able to sit and read and get a bit of an understanding of this. Some of the submitters we had—there weren’t a great number. We only received nine submissions, and four of them were from operators of these FMIs. So it was a good opportunity to actually get that understanding, knowing that one day I was going to have to stand in this House and explain it to those people at home. Although Mr Woodhouse was here before, he talked about believing that probably no one beyond the first two speakers would understand too much about this. I think he’d be very impressed with my colleague Barbara Edmonds’ unique and in-depth understanding of this.

We also heard from an industry association, New Zealand Financial Markets Association. It would be very surprising, for something this important, if we didn’t hear from them, and they made some interesting recommendations; a couple of law firms, Russell McVeagh and an individual lawyer as well. In fact, the fact we didn’t have a lot of submitters did actually give us the opportunity to actually put some time and question—perhaps, again, being on Zoom and without, perhaps, the time constraints we normally have—and to actually go into these. Again, there was a considerable number of—there were several changes made to the bill, and we will be speaking about them when it comes to the committee of the whole House.

But, essentially, what I would say is that for those—again, many of my colleagues here have gone into the more technical aspects of it. But as I said at the start, what people really need to understand is, when they either as a small part player paying a mortgage or whether there are large sums going around the world, as part of our exposure, we need to have a system that everybody can trust so that the money doesn’t stop flowing, because when money stopped flowing, that’s when we had the GFC and that was when we required the regulators to print large amounts of money—or not print it, but actually get money moving, so that, actually, the—

Jamie Strange: Quantitative easing.

GREG O’CONNOR: —quantitative easing—thank you, my colleague there. The word did escape me for that moment. That was what was required just to keep the money moving.

I have no hesitation in commending this to the House, because this is one way of giving us in New Zealand the confidence, but, importantly, our international trading partners the confidence that we will be able to keep money moving. I commend this bill to the House.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Speaker. A previous contributor noticed that the debate had been so far mostly informative, but perhaps not going so far as to say it was interesting. I don’t know if I can lift the latter category, of interest, and, hopefully, I don’t fall too much further behind in terms of the informative nature of a contribution either.

So it does appear that the legislation is going to get the seal of approval of the House as it continues its passage through this place. I think we should talk in terms of “declined” or “approved”, in the nature of financial transactions—maybe, more than “Ayes” and “Noes”. But that voting will take place soon, as we’re nearly at the end of the second reading debate on it, of course.

I did want to touch on a couple of different areas in relation to the bill. My understanding has been informed somewhat by listening to other speeches but, of course, also looking at the bill itself and leaning on the excellent report of the Finance and Expenditure Committee of the previous Parliament. I didn’t have any role in that. I just genuinely think that it appears, certainly from the product that they’ve provided to us, a pretty robust examination of a technical but none the less highly important area of the law.

So I did want to talk a little bit about the history of the bill, how it’s come to us at this stage that we’re at now, and also its purpose, examining that from a couple of different angles, talking about the regulations aspect so the fact that, obviously, this bill will become an Act, which in turn will allow regulations to be made under that—and then touching on a couple of the particular amendments that the select committee had recommended, which I understand are going to be adopted and form part of the law flowing from this.

So in terms of the history, a couple of others have mentioned, so I won’t do so in great depth, but the background to the legislation, I understand, hearkens back to 2015-2016, before my time in this House, and that was with some policy proposals released by the Reserve Bank at the time—effectively, recommending an update to the regulatory regime of financial market infrastructures (FMIs). That was endorsed by the Cabinet at the time—a National Government as it then was. It’s been a framework being proposed out of that. That’s continued forward. The current Government, in its second term—or second term of some slightly different version from the last Parliament. But nevertheless, we’ve had, more or less, a continuation of a work programme that I think’s received bipartisan support not only in terms of its overall intent but very much in terms of the way that the system will operate, the regulatory regime. I’ve got a feeling that’s maybe a bit of a tautology. I sense those are possibly from the same derivation.

But actually, if you’ll indulge me, I’m quite touched that yesterday I was at a university, and I introduced myself by my first name and they could see that I was connected with the National Party, and they said, “Finlayson?” In fact, that’s not my surname or indeed anywhere near my level of expertise. And if I were Christopher Finlayson QC—I’m going to claim it, by the way, if I’m going to assume that identity—then I would know the Latin derivation of “regulatory” and “regime” and I would know if it were a tautology or not. But I’m ashamed to say that I don’t for sure. So I was probably silly to have mentioned it in the first place.

Nevertheless, the purpose of the bill—I will pass to that and move on from the history. I think it’s worth actually reflecting on the purpose of the purpose—tautologies, I genuinely didn’t mean that one, but a number of purposes in the Act. Actually, these are really important, because they not only are going to set out, sort of, the rationale, of course, of why we have this legislation in the first place but can be meaningful for people wanting to navigate the bill and understand what it’s looking to achieve, provide a starting point; also they will produce a yardstick against which the policy aims can be measured later. It does also have a significance, in the sense that the purpose of a piece of legislation is, again, a yardstick against which the regulations that flow from it can be measured. So that’s one of the things that can be considered later on: the secondary legislation that flows from it—is that legitimate or not? Well, there are a number of different grounds on which we can consider that, and one of them is whether it’s consistent with the purpose of the bill.

Others have mentioned the fact that the purpose has been added to through the select committee process. So it seems, I suppose, something of a “motherhood and apple pie” statement that the purpose of the Act should include such things as promoting the maintenance of a sound and efficient financial system, avoiding significant damage, promoting confident and informed participation, and so on. But actually, it is quite significant, or potentially significant, that the legislation now has a mandate, essentially, to respond to threats to the stability of, or confidence in, the financial system. So that allows, it authorises, actions to be taken subsequently if we were to have such extreme circumstances as that, and such action would be legitimate because the purpose of the bill includes that. So that’s pretty helpful, I think. Again, I think that the process of the bill, as well as the substance of it, has been pretty constructive, and I think we’re going to get a pretty good result at the end of it for that.

A couple of other notes, if I may, just in relation to the work of the select committee. One aspect of their consideration seemed to be that it was important to them that the regime be sufficiently flexible to manage different types of FMIs. Again, that might sound really obvious, but that means inserting an extra provision in there that would recognise that there are different sizes and shapes of FMIs, if I can put it like that, and that these should be taken into account when a regulator is exercising their power.

Regulator, speaking of which: the Reserve Bank and/or the Financial Markets Authority. So I understand the original intent was to have joint regulators, but within the bill now, as amended or proposed to be amended by the select committee, is the ability for one or the other to be essentially ceded all that power by the other in an expanded set of circumstances.

My final note—there’s no need, particularly, for me to use all my time, I don’t think—is just giving a highlight to the stability and confidence provision. Again, I’ve mentioned that in relation to the purpose of the bill, and it probably goes without saying how reliant we all are, in our modern society and economy and the way those two fit together, for all the reasons that others have given—and by way of example, whether that’s purchasing a home or something much more modest. But of course, it is so important that we have a stable system, that we have the confidence, for example, in the finality of settlements, and so forth.

So it seems to me really good work. I’ve had nothing to do with it, but I do commend those who have, and I look forward to the continuation of its passage throughout the House in due course.

HELEN WHITE (Labour): Again, this is a very interesting process to enter at a late stage because one of the advantages we do have as new MPs is looking at the whole and actually admiring it. It’s a very, very good piece of legislation which is going to fill a vacuum that should have really been filled quite some time ago. We have here a separate piece of legislation that’s focused on regulation of an area where there is great vulnerability. We’ve been given an example of something like EFTPOS, which is just a nuts and bolts thing we all take for granted, and if it actually breaks, we are in real trouble. Here we are actually fixing it by a piece of very thoughtful legislation that is quite nuanced and quite directive in terms of where it focuses.

So I want to actually have a look at the object section and focus on something other than what is a very important part of it, which is this introduction of the focus on stability and public confidence, because there are some other parts of those objectives that I think are well worth mentioning. This legislation will promote and facilitate the development of fair, efficient, transparent financial markets, and that’s something that we really did need to see before the GFC. That kind of transparency is so important to actually informing our consumers, it’s just absolutely vital in an area where many of us are struggling to even understand a derivative. So it’s extremely important that we have put in place a regime that starts to see those things as what they are, and actually the vulnerabilities people have, and regulate accordingly.

So the Act actually goes on in its object section to say one of the purposes will “be achieved by establishing a system for designating systemically important FMIs,” and that’s the matter that is really about the nuance, not focusing on the FMIs that won’t be that important, but focusing on the ones that would actually impact on our stability and our public confidence if they were in collapse. Those ones get a great deal more treatment than they ever have, and they come into a system which used to be one where people would opt in, or entities would opt in. Now it’s going to become one where there is a proactive identification of those kinds of bodies that might affect us. And so it really is a very powerful thing, to start to look and actually not be the ambulance at the bottom of a cliff when things collapse, but insist that those organisations join a system which actually regulates them in an appropriate way. What it will do is it will make sure that the rules in place in those organisations are robust, and it will actually make sure that the information provided is tested.

So one of the things that the Act does is it allows that information to be challenged if it’s wrong. It has a penalty system, in fact, if there is misleading going on. It is a system which has a very interesting feature of a joint ministry overseeing it, and so we have both the Minister of Finance and the Minister of Commerce and Consumer Affairs involved. That’s a really interesting development, to have two entities—which really have such an interesting relationship—talking to each other and jointly being involved in administering this. There is this relationship carried on at the regulatory level where we’ve got the Reserve Bank of New Zealand and the Financial Markets Authority (FMA) having a relationship and, albeit that one might make that decision, there is a cooperativeness which I think is really important, because if you have a silo on such things, you might well get a different result from the kind of communication and the experience of both. So this is a really interesting feature of the legislation.

I take the point that this is really about identifying risk and it’s about making sure that we’re focusing on the things that could really go wrong. There’s a very interesting explanation of what is systemically important, what FMIs really do need to be watched and managed more carefully, at clause 28. It talks about those systemically important FMIs being the ones where the “disruption to activities under the FMI could [actually] cause problems” for others and it could “threaten the stability of, or confidence in, the whole or a significant part of the financial system.” So it’s very much focusing on things that could hurt everyday New Zealanders.

Finally, I wanted to talk a little bit about the contingency plans that appear in clause 48 of this Act, because they are very interesting. They’re really about, again, proactivity. They’re about FMIs actually coming up with their own contingency plan in the first instance, and being expected to assert what to do when things go wrong. So there is this layer of actually building in a maturity in those systems, which means that those involved in them are really thinking ahead and thinking about how to manage those crises in the first instance. If all else fails, the State isn’t walking away from its responsibility, because it’s also recognising that these things are a big deal for New Zealanders, and they’re big enough that we might move away from our usual roles in this situation and go to statutory management if we need to. So there’s a real safety net in this legislation too, which I admire.

I think the last thing that I would like to talk about is the sanctions in this Act, and that really is an interesting part of the Act, because the sanctions are very real. There are quite large amounts of money that will be passed into the State if, in fact, people are not complying with their obligations under this Act. One of the things that will go on is that there will be a check on misleading information—so those information powers will have teeth—and another is that the regulations do allow even for directors to be responsible, where that is appropriate. So directors who should know better and have had the information in front of them will be held accountable, which is something that we’re starting to see more and more of happen, and is a really good check and balance in our system.

I commend this bill to the House.

Motion agreed to.

Bill read a second time.

Bills

Commerce Amendment Bill

First Reading

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Commerce Amendment Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon Dr DAVID CLARK: I move, That the Commerce Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill.

The Commerce Act sets out the ground rules that enable businesses to compete on their merits. In so doing, it ensures both that consumers benefit from competitive markets—as undoubtedly they do if a market is appropriately designed and appropriate to the circumstances—but also sets out the parameters within which businesses operate and are able to maximise the returns to their shareholders. It is critical that laws are up to date, are functional, and are fit for purpose. The Government has introduced changes to the Act around competition law, and that’s what I am speaking to today.

The changes that are contained in the bill can be roughly summarised under four headings. The first of these is a strengthening of the provisions around the misuse of market power. So, currently, market power can be prosecuted by the Commerce Commission (ComCom) on the basis of developing a hypothetical model. That has proven very difficult in practice, and what we are doing here with the bill today, the Commerce Amendment Bill, is bringing our law into line with what they do in Australia, and that introduces a different kind of test for the abuse of market power by a dominant player in the market. So that bill reforms the provision to prohibit firms with substantial market power from engaging in conduct that has the purpose, effect, or likely effect of substantially lessening competition.

The second thing which the bill does is it empowers the Commerce Commission to authorise any activities which may contravene this prohibition but which are, indeed, in the public interest, and they will develop guidelines to that effect. But this bill empowers them to do that. Next, the bill repeals the exemption in the Act for some intellectual property (IP) - related conduct. That really brings things up to date, because it was thought previously that intellectual property law and competition law were essentially anathema and that intellectual property law should be protected from competition law. That is old thinking. It is now the view that is widely held that intellectual property law should also be subject to competition law where appropriate. Both of them are actually complementary, because they encourage innovation and they encourage investment, and those things, of course, are critical for business. Interestingly, the existing provisions really have not been tested at law and are probably narrower in their scope than most people realise—in fact, probably narrower in scope than most professionals realise. It may be the case that this change is not really tested at law either, but it does bring it up to date with current thinking around intellectual property law.

The next thing the bill does, and the final really significant thing, is to make some changes to improve the functioning of the Act. Those are actually more minor changes. They are things that I certainly won’t speak at length to, but, of course, it’s good hygiene when you’re tidying things up with a bill, when you’re making the changes like we’re making with section 36, to look at what else needs to be done, could benefit from being done, to make the bill a better bill and the Act a better Act for the purposes that are laid out in it.

Now, I’m particularly delighted to see this bill progressing, because I have a little bit of history with this. When I was the Opposition economic development spokesperson—quite some time ago—I did become concerned about section 36 issues as I sat on the Commerce Committee and heard stories about market power and, certainly, became concerned across different industries that market power was at times being used and was very difficult to address. At the time, I went and spoke to some intellectual property lawyers and competition experts in large firms and came to a view myself that the Australian law was more fit for purpose than ours.

Now, this was quite some time ago. I ended up putting some of those people in touch with the Hon Clayton Cosgrove, who I think at the time might have been our commerce spokesperson, and he developed a member’s bill along these lines, to change section 36 of the Act to bring it into line with the Australian law. Now, as it happens, I don’t think that was ever drawn from the biscuit tin. History will tell me, or somebody in this House will tell me, if I’m wrong, but it certainly didn’t become law. Now here I am, as the Minister of Commerce and Consumer Affairs, passing a law that does bring us into line with the Australian law, setting that test in a way that will actually, I think, be more effective at ensuring that we do have a competitive market that will make sure that we get the benefits of that in terms of both the clarity for business, so they can maximise their opportunity, but also the benefits for consumers that accrue from having good competition in the market place.

I do want to put on record my thanks to the previous commerce and consumer affairs Minister, the Hon Kris Faafoi, who has done the real heavy lifting here. He oversaw the review of the Commerce Act, and that review has produced the main policy changes which we are considering here today in the House. That review included consultation in 2019 with business, industry organisations, competition and intellectual property specialists, law firms, and other bodies like the Commerce Commission and Consumer New Zealand. So I do want to acknowledge the hard-working Hon Kris Faafoi here in the House today.

Now, some concerns have been raised around the change in the IP provisions, a fear that there might be some chill on competition and investment that could result in false positives. I have looked at this, and I think these concerns, personally, are overstated. The reform prohibition should not suppress any innovations in business practices in concentrated markets that ultimately pose no threat to the competitive process. I want to acknowledge, however, those concerns, acknowledge that probably the law as it was was much narrower than most people realise, and, again, as I said earlier, I find it quite likely that we won’t even test these provisions, because, actually, the two are often in harmony. Historically, this hasn’t become an area of debate at law. I’m also satisfied that the benefits of the change to economic performance and consumer welfare will outweigh any risks to incumbent firms.

The other thing to say in that regard is that there will be an implementation period of 12 months, and there will be ComCom guidance around that. So firms will be able to adjust any arrangements they do have as the law comes into effect.

Ultimately, I think people generally, fair-thinking New Zealanders, will be very pleased with the bill’s passage. As I said at the outset, the purpose of it is to ensure that businesses can compete on their merits. We want the kind of competition that enables firms to thrive, that have the most innovative practices and products, that do run their businesses well and do things that are in the interests of consumers. Having clearly spelt-out law describes the playing field in which they operate, and, ultimately, those benefits from competition do accrue to consumers, and that’s about fairness—both fairness for the businesses in understanding the environment, knowing where they’ve got to put their efforts, but also fairness, of course, for consumers themselves, who deserve to have products available that are at the best price and the best quality across the board.

So I will end my contribution there, other than to say how delighted I am to be taking this section 36 change through, which is the main part of the bill; to note the IP changes; and also to note, again, the ability of the Commerce Commission, where they have any concerns about section 36, to authorise any activities that may contravene the prohibition on the use of market power that might be deemed to be in the public interest, and there will be guidance developed around that as well. Thank you very much for the opportunity to speak to this bill, and I commend it to the House.

Hon TODD McCLAY (National—Rotorua): Madam Speaker, thank you very much. This is quite a detailed bill in parts, so it is important that real scrutiny is applied to it, because, of course, competition law is extremely important. Much of what we do in New Zealand for businesses to grow and thrive is dependent upon that. There have been gains as far as competition and how that helps consumers and a market function adequately and properly over time—that has been good for New Zealand. But in itself, rule change in this area doesn’t necessarily mean that there will be benefits in as far as the market or companies are concerned—large or small—or consumers. National supports sensible, transparent, and straightforward regulation, and indeed we kicked off some of this work some period of time ago. However, when it comes to the misuse of market power, we need to make sure that we get it absolutely right.

The Minister said that we have good competition rules and laws and that the benefit accrues to consumers. That often can be the case, but what also happens to consumers when there is extra bureaucracy or red tape or burden placed upon a market, as a result of a desire to make it better where it may not make it better or there isn’t a significant gain, is those consumers don’t necessarily benefit or accrue a benefit; there is cost placed upon them. So in everything that this House does when it comes to the business community, we need to weigh up the outcome and benefit of what we’re trying to achieve against the actual cost there would be to business. When you place a cost upon a business, it must find a way to meet that cost—and they either do it from their bottom line or often through putting prices up. It is not often that it would be the case that they get to make a change without there being an additional cost, and where that cost is passed on in any environment or any situation, then, ultimately, consumers are not better off; they’re worse off.

Actually, the Commerce Commission has a number of tools already that I’m not sure they use to their full extent or as adequately as they do. So when the Minister talked a little bit around, you know, how hard it is, in the briefing notes in his speech, for the Commerce Commission to get the outcome they want in the court sometimes, taking away an intention test and changing that to make it easier for the Commerce Commission to get prosecutions in itself is not always the right thing, actually, to do. So what we need to do is decide whether there is a real problem here or if it’s just something that the ministry and the Commerce Commission and the Minister have seen overseas that they think would be a better idea. Is there a problem we’re trying to fix here, and is it demonstrable? Actually, where are the real examples of where the Commerce Commission hasn’t been able to meet an intention test but the practice has been anti-competitive, or where they didn’t use other tools—they didn’t have them—to make a change, in the case of the market power provisions that they have, or where the company concerned didn’t make a change?

Take an example of Air New Zealand. There is a lot of talk and a lot of complaint about that at the moment. Well, actually, what would happen, ultimately, in this case and as far as Air New Zealand is concerned, if they have no intent but they are a large player and want what inevitably is a very, very small market—and we need to be careful that in looking for ways to have greater competition, we don’t find that consumers end up being worse off, also, sometimes through choice.

So there is a lot of detail here. I notice that when we were in Government, when we announced to start looking to do some work here, The New Zealand Initiative had some very, very strong views on this. I don’t know whether they’ve had an opportunity to speak further since the consultations took place and the draft legislation was published. Now that it’s been brought forward to the House, it will be very interesting to see their views.

As far as the safe harbour of intellectual property is concerned, this too is quite important. We do need to find a way to get the balance right. I think the documentation has said that, you know, some of the provisions that were not put in place around competition at the time is because it was felt to be quite new. But if there is a chance that that innovation will be stifled as a result of this, it deserves a full and frank hearing. The Minister has said that he thinks that they are overstated, but I think we’ve got to be a little bit careful not just to look at what happens overseas where markets are much larger than ours—and others have a greater comparative advantage to us, particularly new entrants to the markets—but also it is not just what our officials tell us. I am not sure that it is overstated, the concerns from the sector. This is a sector that has the opportunity to provide a huge amount to New Zealand.

If we take the America’s Cup at the moment and a company that has a lot of innovation around intellectual property, which is Southern Spars—would not exist without the America’s Cup having been here. One of the larger players in the world is certainly much more dominant than any other player in New Zealand—well, I’d like to hear from them to see whether they think that, number one, this is a challenge or a problem; number two, whether they think there is or there isn’t adequate protection; and, finally, whether this weakens their ability to attract investment to grow their part of the market in New Zealand. When it comes to a lot of things around intellectual property, we don’t start with a level playing field compared to Australia—I mean, there aren’t many other countries. We can be innovators if we want. We can do all sorts of things and talk about how wonderful New Zealand is, but, ultimately, it is the business environment that attracts investment, and if it makes it harder, it must be considered.

Finally, I want to talk a little bit about what the Government can do itself rather than looking only at competition rules and law. The reason for that is, actually, when it comes to competitive or anti-competitive practices and market powers and if we are talking directly to cost and to price upon a consumer or a competitor, then the Government has a very large role to play in this. It’s not in this part of legislation—this Minister is not responsible—but, actually, in a cross-Government approach to how we make it easier for businesses and better for consumers so that they have more choice and, at the same time, actually, costs are not put up. So if they can afford more comes to all the things that a Government does. The Government has a raft of other legislation it is bringing in through the House in other areas that are going to have an impact upon businesses large and small, those who have a competitive advantage, those that may have a degree of market power, that in the end will be passed on to consumers, nothing to do with this at all.

So I would say to the Minister that, actually, we will be supporting this in first reading so that we can hear from those that are likely to be most affected, large companies and small, and then we’ll make a decision as to whether we can support it further, because if the intention is just to be like other countries around the world because they’re doing it, well, actually, that is not a necessity for New Zealand business. If it is that there is an actual problem there that needs to be fixed and that can be demonstrated and this will go some way to fix it, then, actually, the House would consider it. But if it is merely that the Commerce Commission find it hard to find prosecutions when it comes to market power of a dominant player in the market, because we are small, then we shouldn’t just be changing the rules to make it easier for them; they should do their job better, because they have so very many tools at their disposal. The outcome will be one that isn’t good for consumers—even though the Minister has said that when it comes to competition, the benefits accrue to consumers. Actually, more regulation and greater rules and more court cases and more investigations, when there is not necessarily a need for that, will just put cost upon those businesses. Guess what! Businesses pass those on to consumers. This bill should only go forward if it is good for consumers, and the Minister in his introduction has not made that case yet. Thank you.

JAMIE STRANGE (Labour—Hamilton East): Madam Speaker, thank you for the opportunity to take a call on the Commerce Amendment Bill. I’d like to acknowledge the Minister, the Hon David Clark, for bringing this bill to the House and also acknowledge the aspect that he has been working on this for quite a while. I also acknowledge the previous Minister, the Hon Kris Faafoi.

I’d also like to mention, as the chair of the Economic Development, Science and Innovation Committee, the recommendation from the Minister that this bill does come to that committee. On behalf of the committee, we certainly welcome that bill and look forward to the many submissions that I’m sure will follow on this bill.

The previous speaker, the Hon Todd McClay, made some good points around supporting businesses and consumers in terms of ensuring that we get the legislation right for our market economy, and I’m confident that the legislation that the Minister has brought to the House does strike the right balance. And at the same time, we look forward to hearing from a range of submitters in terms of their views around this piece of legislation. I will talk briefly around what the bill does, and then I’ll talk a little bit about how it links into New Zealand’s free market economy and the importance of strong competition within our economy.

The Commerce Amendment Bill amends the Commerce Act 1986 to improve the reach and functioning of competition law, and that’s the key point—the aspect around competition—with the Act’s purpose of promoting competition in markets for the long-term benefit of consumers in New Zealand. There are four key ways that the bill does this. The first one is by strengthening the Act’s section 36, the prohibition against the misuse of market power. And as I’ve said, we do have a market economy in New Zealand, and an incredibly successful market economy, and it’s important that we continue to support our market economy to do what it has been doing well for a number of years. Also, even through the challenges of COVID, our market economy has held up relatively well.

The second thing the bill does is empower the Commerce Commission to authorise conduct that may contravene the section 36 prohibition but is also in the public interest. The third one is repealing safe harbours in the Act for intellectual property, and I’ll touch on that later in my speech. And the fourth one makes a number of technical changes.

As I’ve said, New Zealand has a free market economy, and competition plays a key role in prices and in terms of consumer behaviour. Five of the key features in terms of New Zealand’s economy are economic freedom, voluntary and willing exchange of goods and services, private property rights, the profit motive, and the fifth aspect, which specifically relates to this bill, is the aspect around competition.

Those watching this speech at home might be asking: why is competition so important to an economy, and why would the Minister bring a bill to the House to ensure that there is a good, strong amount of competition within an economy? Why is that important? I’d like to speak to the House for those people watching at home in terms of just highlighting a few aspects around why competition is important, and hence why this bill is important.

The first point is that competition is clearly good for consumers in terms of prices. If you don’t have competition, then the prices tend to balloon up. If we have good, strong competition within a market economy, then the prices stay relatively low, which is good for consumers. It means that money freely flows throughout the economy as consumers make purchases, and, ideally, the more purchases that consumers make is obviously better for the free flow of money.

The second reason why competition is important and why this bill is important is because it encourages businesses to produce and boost the economy. So if a business has a monopoly within an economy, then there is no incentive particularly for them to actually work to boost the economy, to grow the economy, because they’ve got their share, and there’s no incentive for them to look forward—which causes growth in the economy.

The third reason why competition is important is because it encourages businesses to improve the quality of goods and services that they sell, and I’m sure all members in this House would agree that our very diverse economy produces a number of good-quality and high-value goods and services. The high-value goods and services that we produce certainly adds to our standard of living. So competition is important in terms of those services.

Another reason why competition is important is around innovation. When there is competition, businesses are forced to innovate. The reality is that over many years, we have had a number of Kiwi businesses, that I’m sure we’re all very proud of, who have innovated very well and increased the quality of their products and increased our standard of living. Actually, from a personal point of view, both my uncles and my grandfather were dairy farmers down in the South Island, and my grandfather in particular was constantly innovating as a business owner. He was constantly looking for new tools and new products to help his business innovate. There is a local company in the Hamilton region—and I acknowledge my colleague the Hon David Bennett; I’m sure he would agree with me—the Gallagher Group, who are world-leading in terms of innovation and last year turned over $300 million.

Hon David Bennett: Why didn’t you guys help out Pacific Aerospace?

JAMIE STRANGE: What?

Hon David Bennett: Why didn’t you help out Pacific Aerospace?

JAMIE STRANGE: We are supporting all businesses, on this side of the House, and this is one of the ways we are supporting businesses, I say to the Hon David Bennett. We are supporting businesses by bringing about competition in the market, encouraging those businesses to innovate, and also supporting them with R & D tax credits, but that’s for another time. I will return to the bill.

This aspect around competition is policed by the Commerce Commission. I’d like to acknowledge the work that the Commerce Commission does across New Zealand. This bill provides further support for the Commerce Commission. The Commerce Commission ensures that consumers are protected and ensures that clear and accurate information is provided to them so that there’s a level playing field for competitors, the rules are known, they are monitored, and market power is not taken advantage of and used for anti-competitive purposes.

The previous speaker mentioned the Commerce Commission and talked about how they are well resourced, and I acknowledge that they are, but at times it falls on us as members of Parliament to ensure that the legislation is fit and right so that the Commerce Commission can do their job. One of the key roles of the Commerce Commission is to ensure that there is a strong level of competition within our free market economy, and this piece of legislation does further work to empower the Commerce Commission to do their work.

Back in 2016, there was an example of anti-competitive behaviour in Australia. I know that that example, which I’ll elaborate on soon, has featured into the thinking on this bill. In Australia, there is a piece of legislation very similar to the piece of legislation that the Minister is bringing into the House today. What happened over in Australia was there was a company called Cement Australia Ltd, and they effectively had a monopoly on a product called fly ash. Fly ash is a product that’s used towards making cement products. So this company had control over all of the fly ash in the Queensland area. So it meant that other companies weren’t able to compete with this product, and the Federal Court of Australia actually ordered penalties totalling $18.6 million against Cement Australia because of their anti-competitive behaviour in terms of this fly ash. Justice Greenwood over in Australia found that the conduct had the purpose and effect of preventing a competitor from entering the market by preventing them from obtaining direct access to the source of fly ash. That is exactly an example of what we don’t want to happen here in New Zealand in terms of anti-competitive behaviour. I know that that example certainly formed part of the work that has been done around this legislation.

I will just summarise by saying that we have an absolutely fantastic free market economy here in New Zealand, and, as a Government, we are working hard to continue to support our economy, and one of the ways we are doing that is through encouraging competitive behaviour. I look forward to calls from the other side of the House, and I commend this bill to the House.

Hon PAUL GOLDSMITH (National): Thank you, Madam Speaker. Of course, there’s one particularly strong piece of competition going on at the moment, as we speak, in the Hauraki Gulf, in Auckland. Two yachts are racing against each other and, of course, as we know, one of the great drivers of innovation—probably the great driver of innovation—across the economy and in sport and in every element of life is competition. It’s a good thing, and so it’s important that we need to maintain—there is a role for Government to ensure that competitive spirit is alive and well across the economy, and so the Commerce Amendment Bill, and the Commerce Act itself, is focused on trying to deal with abuse of market power, which occurs, obviously, in certain parts of the economy and all around the world.

If we focus on this question of section 36, taking advantage of that power as a test, Australia and New Zealand had that similar piece of law. The Australians have changed that law to focus in more on the purpose or the effect or the likely effect of decisions made by a company to lessen competition. So there is a good argument for us getting in line with Australia, although it’s not necessarily a slam-dunk case, and so National, of course, is going to support this bill at its first reading, but we’re not guaranteeing that further on. It will depend on what we hear in the select committee process. Just because it makes sense in other, larger economies around the world, it doesn’t necessarily mean that, in the context of New Zealand’s economy, with its very large preponderance of small businesses, it automatically makes the same sense here in New Zealand. But we all are very focused on the need to ensure that there is active competition throughout the New Zealand economy, and it comes fundamentally back to the cost of living and the prices that we pay.

We all know, as New Zealanders, that there are some things—many things—for which we pay a lot, in the international context, and I was struck by this powerfully when in Germany a couple of years ago and going to a local supermarket, an Aldi supermarket or Lidl supermarket—I can’t remember which one—in Germany and being blown away by the prices available there. Large economies obviously have more scope for competition and more scope for efficiencies of scale, and New Zealand, with its small economy, suffers from a lack of efficiency of scale, and it has flowed on to the impact, in many areas of our economy, that two or three large players dominate. So these issues of competition are important. It always occurred to me that the most important thing you can do to advance competition—and you can pass all the laws that you like here, and this is worth considering, and we’ll look at this in detail—the most important thing for Government policy, it seems to me, in competition is to focus on removing barriers to new entrants coming into any industry that you’re talking about.

Quite often, the barriers to new entrants coming in and competing are regulatory barriers, put up with the best of intentions, and sometimes they’re quite unrelated to the industry that you’re talking about. It may well be, for supermarkets, that the Resource Management Act and the sheer difficulty of getting land and getting into business and being competitive creates such a barrier that new entrants from overseas don’t get involved. So that, I think, is the most important thing we can do in competition, and I’d encourage the new Minister, the Hon David Clark, to look closely at that broad issue and be assured that he would have support from across the House if he was rigorously focusing on removing barriers to new entrants coming in, competing, so that New Zealanders have—

Hon Dr David Clark: The threat of market power is a pretty big barrier for many.

Hon PAUL GOLDSMITH: Yes, and ensuring that we have access to the best prices.

In terms of the debate, this has been a long-held debate between specialists in the competition law zone, as to the effectiveness of section 36 and whether we should adopt the Australian approach; there are good arguments for both sides, but I’m very much looking forward, and we on this side are looking forward, to the select committee discussion, because, just bear in mind, in these areas of legislation in the competition field but also in many financial areas, it quite often turns out that the effect—and we’re talking about the effects of decisions in this piece of legislation—it often turns out that the effects of legislation passed in this House are the exact opposite of what was intended by the parliamentarians when they passed the law, because life is much more complex, much more complicated, and things aren’t easily predicted. So that requires a little bit of modesty on the part of lawmakers and a real commitment to listen in the select committee processes to the considered views of a wide range of actors in this space. And so, with those comments, I’ll finish. Thank you, Madam Speaker.

NAISI CHEN (Labour): Thank you, Madam Speaker. I wanted to start my contribution to this bill today by looking at the end to which I see this bill as a means to achieving. I think we can all safely say that we came to this House in hopes that we would help New Zealand maintain a really, really strong market, in being a free market, and that competition would freely flow through that market, and always that we would offer the best products, the best services, and we would have the best businesses running inside of that market, so that our consumers would get the best in the whole entire world.

So with that vision in mind, I really want to commend this bill, because this bill is fixing some of the loopholes that we’ve discovered since its enactment in—and I remember this because it’s way before my birthday—1986. This is quite an old bill, and I think today we’re patching up some of those loopholes that we’ve since discovered, one of them being the section that primarily this amendment is speaking to—section 36, which is to do with competition. In this competition space, I think it’s really important that we look at how fair our rules are right now for the players in our market. Right now we can see that incumbent, dominating players are given an advantage to keep new players out of market, and I think that is absolutely unfair.

Also, I just wanted the House to note the decisions made by the two Justices, Justices Blanchard and Tipping—this reminds me of my law school days—in their statement saying that “Anyone asserting a breach of s 36 must establish there has been the necessary actual use (taking advantage) of market power. To do so it must be shown, on the balance of probabilities”—and we all know that that’s actually quite a hard test; it’s very subjective to the judges that are presiding over that case, and also the lawyers that are arguing it—“that the firm in question would not have acted as it did in a workably competitive market; that is, if it had not been dominant.” So there’s a lot of presumption, there’s a lot of room for argument, and we know that this case in particular—the Commerce Commission v Telecom in 2010, in the New Zealand Supreme Court—failed because it was really hard to argue up to that standard. This is, I think, a waste of taxpayers’ money in terms of having to go through the Supreme Court, which is a really lengthy legal process, to hire lawyers and to argue this, when what we’re trying to achieve is just better competition in our markets.

So I thought this amendment to this bill would be really, really good to see more effectiveness and more efficiency come through our system, especially through our Commerce Commission and through helping consumer affairs in New Zealand to be better. I thought this is really, really amazing in terms of actually making the whole process more simple. This is giving more assurance to the players in the market, to all of our firms and businesses who are participants in the market, that they are absolutely sure that what they will do will, or will not, get them into trouble with the law. So this is giving really good clarity so that they know what they’re doing won’t harm the market, because we all know that once we go through the court system and once they get a result from the court, it’s already too late: the harm has already been done, and the inefficiency and the ineffectiveness has already happened. So that’s almost like the ambulance at the bottom of the cliff, and what this is doing is making sure that that anti-competitive behaviour isn’t happening in the first place. So this is, I think, a really, really good place for us to start fixing this loophole.

I also wanted to note that, while I just mentioned at the beginning this Act was enacted in 1986, there has been a recent history from both sides of the House of comments and commitment to make changes and to look into possible changes of this Act, starting in 2014, and I recognise that there was a different Government then, and also in a statement made by the Hon Jacqui Dean in terms of her commitment to re-examine this Act. She states in her media statement that “These proposals would include empowering the Commerce Commission to undertake market studies and improve its enforcement actions without having to go to court”, and I think that also speaks to what I just mentioned in terms of making the legal process a lot easier and giving the Commerce Commission a lot more power to make policing the market a lot clearer.

I just wanted to really tautoko what my colleague Jamie Strange spoke about just before me, saying that competition brings innovation. I want to recognise my work with him recently on the Economic Development, Science and Innovation Committee. I love how Parliament has put these three different subject groups, if you like, or titles, together into one select committee, because it is about that. It’s almost in one area that we recognise that there’s flow-on effects and synergy and harmony in that. So there’s economic development, science, and innovation, and to bring about innovation I think it’s really, really important that if we have a really good, innovative, competitive local market here in New Zealand, it actually helps our firms to put out better products on to the international market as well, and so that our firms, our products from Aotearoa New Zealand, become much more attractive on the international market. I think that helps, as well, to make sure that our consumers here in New Zealand get the best first, and we also export and show the world that we have the best businesses and the best firms as well.

I would also like to turn your attention to intellectual property (IP). I thought that was really important, as well, that we address that intellectual property should be seen as a normal property right. Just because a firm has IP over a particular idea or particular technology, that doesn’t automatically give them market right. We see that with a lot of the drug buyers, the pharmaceutical companies, when we see IP and they have IP and it gives them an unfair advantage in the market. We see that creates a lot of problems. This bill and this change, of removing intellectual property as being a safe haven from being prosecuted for anti-competitive behaviour, gives our market a really good chance—like Jamie Strange has just mentioned—to bring about more competition so that we have better incentives to encourage our firms to innovate. I think that’s really important because, in New Zealand, as a small country, not only do we start on the back leg in terms of our size, our quantity in our economy, we have to be smart about the way that we place ourselves in the global market, as well as setting up our domestic market. So fresh, new ideas that really would be high value are really important, and innovation, I really think, is the key road in terms of achieving greater economic success for our country, and achieving greater welfare for all of us who live in Aotearoa New Zealand.

I also just wanted to recognise the Hon David Clark, the Hon Kris Faafoi, and—like I said before—the Hon Jacqui Dean for having contributed in different ways to this bill, so that we finally have it here in this House today. I do really look forward to hearing all the submissions on it through the select committee process. And could I just thank, as well, the Ministry of Business, Innovation and Employment and the Commerce Commission for all the work that they’ve done throughout the years. I think we’ve commissioned a lot of reports from them in order to give us the insight that we have today, as I stand here in this House, looking at all of the market research they have done to really show us what we can do to make New Zealand a better market for all of our competitors, for all of our firms. But, like how I started this speech, ultimately it’s to be a better market for all New Zealanders living here. So, on that note, I commend this bill to the House. Thank you, Mr Speaker.

RICARDO MENÉNDEZ MARCH (Green): Kia ora, Mr Speaker. Before I begin my contributions on the Commerce Amendment Bill, I want to make it clear that I yearn for a world where we’re not relying on competition so that people can access basic commodities such as food. And while we work towards that, it’s important, though, that we do emphasise the importance of fair competition between the big players and the small players in the market, because, as our member here on the right pointed out when he mentioned supermarkets, we do have a system here where we have a few big players dominating competition, creating barriers for consumers to access fair prices. So we do welcome the move towards amending section 36 of the Commerce Act as well as looking into empowering the Commerce Commission.

We do want to highlight, though, some issues that have been raised, particularly when it comes to empowering the Commerce Commission, that were brought by the Privacy Commissioner, particularly around notifying people when sharing information. And we do know that if we were to follow those recommendations, we may have to look at broader reforms as to not, sort of, single out the Commerce Commission when it comes to how it handles private information. But we do think that as we head on to select committee, we should be listening to these concerns and issues brought by the Privacy Commissioner.

I also want to acknowledge the move towards changing intellectual property rights and removing the safe havens. That’s quite important, as intellectual property rights actually are one of the most aggressive tools by capitalism to prevent people from accessing goods and services. And, actually, in many ways, it can stifle innovation. So I do look forward to a really robust conversation on how we can make competition a lot fairer as we amend intellectual property rights. One of the other things that I wanted to mention was ensuring that as we discuss this bill, we are taking into account Māori intellectual property rights and land rights as well, because if we are to look at addressing anti-competitive behaviour, we need to make sure that we’re also ensuring that we’re meeting our Te Tiriti obligations. So that is one of the things that the Green Party is wanting to ensure is looked into at the select committee stages and that makes us comfortable providing our provisional support of this bill.

The Green Party does make really clear that we do support a regulatory framework in our economy that ensures fair competition, but we’re also very clear that access to essential goods and services is a basic right that should not be reliant upon our market. So I do want to make sure that we do not lose scope of the fact that innovation and competition alone won’t bring us to a world where people are not being deprived of these basic services. So once again, the Green Party is really keen to provide that provisional support to make sure that we look at the information-sharing safeguards as well as meeting our Te Tiriti obligations regarding Māori intellectual property and land rights. Kia ora.

DAVID SEYMOUR (Leader—ACT): Well, thank you, Mr Speaker. I rise on behalf of ACT in support of the first reading of this Commerce Amendment Bill, and I say “first reading” because the ACT Party’s view is that these issues by their nature are very technical and they deserve to go to a select committee for examination. People who participate in the market and who are potentially regulated under this legislation—they’re certainly regulated under the current legislation—deserve to be able to come to select committee and have their say on it. So that’s the reason for supporting this legislation to first reading. However, we’d also say that on the face of it, it doesn’t sound like a particularly good idea.

Let me start by putting this into the context of recent politics and the legislation of, I guess, competition regulation and the Commerce Commission in this House. We have had for years the Commerce Commission going along to whoever is the Minister of Commerce and saying, “Set us free. Let us do market studies and poke around in any market we want.”, with incredible powers to request information—more than the police would have—and try to set the world to rights, try to tell people how a particular market should be structured. For years and years, my good friend and constituent the Hon Paul Goldsmith, as commerce Minister, would tell them exactly where to go with that proposition. But, of course, the Civil Service are relentless and they are often here for 40 years. We mere functionaries are elected for only three, and eventually they get their way. They find a weaker Minister, and they got a bill that allowed them to be able to go off and do their own market studies, self-initiated inquiries into markets.

So, of course, the first one we had was into the market for fuel, and what did it find? Well, basically, not much. They really discovered that, actually, it’s not obvious what the price of fuel or the market structure should be for a mountainous country 1,500 kilometres long, and they couldn’t really tell us much of use at all. Happily for the Government, having seen that study be done, a combination of the oil price and the New Zealand dollar had changed so that fuel prices were no longer a political concern. It turned out that that market study had achieved absolutely nothing. But no doubt the Government will now set a market study on another industry that’s politically hot.

I just give that Cook’s tour of recent activism by the Commerce Commission and recent accession to it by this House under certain Ministers that have politicised, in quite a futile way, the market and the regulation of competition in New Zealand. What we see in this legislation again, or, well, if we listen to the members who have just spoken, they were saying that, somehow, giving the Commerce Commission more power is automatically good and that removing the requirement to actually show that a particular firm is wilfully exploiting its market power—to remove that requirement is somehow automatically good, that it will make it simpler. Well, actually, if you read the early commentary on this particular move—and I want to commend Buddle Findlay for producing a very good commentary so far, and I’m sure there’ll be more in select committee. What Buddle Findlay have said is, actually, if you look at the proposal for the new section 36(1) in clause 14: “A person that has a substantial degree of power in a market must not engage in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition in—(a) that market; or (b) any other market in which the person, or an interconnected person,—(i) supplies or acquires, or is likely to supply or acquire goods or services;”, what you have is that if you innovate and your market share grows and there’s a lot less competition, well, potentially, what you’ve done is squeezed out competitors by doing a job well and you could be liable under the Commerce Act for an investigation by an activist Commerce Commission. That doesn’t sound very helpful.

By the way, if the objective here is to reduce transaction costs to increase certainty, well, it’s going to take several years for the courts and the sector and the commission itself to work out how these new rules actually work. So we’re moving to what is probably a less certain paradigm and we have the uncertainty of the transition. So the idea that this is automatically good and is going to get us a more competitive market doesn’t stand up to a great deal of scrutiny prima facie. Buddle Findlay also identify the possibility that if there was to be a purchaser of goods, perhaps a State sector purchaser, and they don’t spread around their purchasing in a sufficient way, then they might actually be liable for distorting the market. Now, they’re not willingly exploiting their power, but what they are doing is having the effect, or doing something that’s likely to have the effect, and are liable under this legislation. So what it’s going to do is it’s going to mean people are going to have to watch their back all the time to make sure they’re not too successful or occupying too much of a market, because they could become liable. Despite having good intentions, just trying to do their job, people could become liable under this legislation.

Then you move on to the intellectual property (IP) safe harbours. Well, the legislative statement the Minister presented said that it’s now an outdated view that intellectual property can’t be subject to competition law. Well, this, again, is going to lead to an enormous amount of jostling in the transition to this new paradigm, and possibly the new paradigm won’t actually be any better than what we have now because the Commerce Commission is going to have to determine whether somebody holds too much intellectual property to allow competition. I would argue that the Commerce Commission, as often is the case—as was the case with the market study into the fuel market—simply does not have sufficient knowledge to know whether or not it’s making the market more or less competitive. By the time it figures it out, particularly in the world of IP, chances are the answer will have changed anyway. So it seems very unlikely that the Commerce Commission is going to be able to improve matters in intellectual property, simply due to a lack of knowledge and the sector that it’s trying to regulate likely moving faster than it is.

If you want another example of that, we had the Commerce Commission’s blocking of the StuffMe merger. The knowledge that the commission assumed—it assumed it knew whether or not either of the existing entities would survive or whether the merged entity could survive; nobody knew that. Nobody envisaged the developments that have subsequently taken place. If you’d bought into NZME around the end of the lockdown last year, you would have made a lot of money because, actually, NZME have done very well, but I couldn’t have predicted that. I wish I had—I might be richer not standing here. But the point is that when you look at interventions the commission’s made, often it’s intervened in markets where things change very rapidly, they don’t have a lot of power to anticipate what developments will happen in the future, and, therefore, the assumptions behind their findings often turn out to be false before they are delivered or before their reports are delivered, and their ability to actually improve competition or improve overall welfare is much more modest than those in the commission who lobby the Ministers to bring legislation to this House to get more power will concede.

So those are all the reasons why we’re very sceptical about this legislation. But as I said at the beginning of the speech, I also feel that when there’s highly technical matters such as this, then the people who have real, practical day-to-day expertise should be the ones that come before the committee and are able to actually give their perspective so that members of this House, and particularly those on the select committee, are able to understand what is going on and, hopefully, do their job as a select committee and improve the legislation. So I look forward to that happening.

My colleague, Damien Smith from ACT, who is a lot more experienced than I am in these kinds of commercial matters, will be on the committee examining it, I understand. And I look forward to his and other MPs’ feedback on how that committee examination went when we return to debate the second reading of this Commerce Amendment Bill in this House. In the meantime, ACT will be voting for it to go to select committee. Thank you, Mr Speaker.

GLEN BENNETT (Labour—New Plymouth): Thank you, Mr Speaker. I rise with enthusiasm to speak on this piece of legislation. I think my fourth form economics teacher will be very excited that I’m in this place talking with such wisdom today. Well, I was so hopeful as I heard David Seymour get up and speak and the ACT Party in full support, and, of course, then the scepticism came in. But that’s OK, because we in this House are able to explore ideas, legislation, and bills, and I’m really looking forward to going to select committee and being part of the Economic Development, Science and Innovation Committee. I look forward to unpacking and learning more about the views of people within our nation, be that companies, be that economic development agencies, whether it be individuals, and hearing what they have to say about the Commerce Amendment Bill.

I look forward to us exploring more how we do our economic development here with commerce better and how we ensure—actually, I’ve got three things that come to mind. I thank the Hon David Clark for bringing this bill to the House and bringing a few of these concepts earlier in his speech. What I heard from that was that this bill is around fairness. I’ll go into that a bit more a little bit later on. Also, it’s speaking against ensuring that there isn’t the misuse of market power that comes into place, which we need to address in this House and as a nation. I also thought about—this isn’t overly exciting but it’s really important—good functioning legislation and good functioning Acts that create and provide tools that are fit for purpose so groups like the Commerce Commission can do their job and do it well.

Fairness—well, I live in a small place called Taranaki. We’re a powerhouse in this economy, but we are small, and us as a nation of Aotearoa are small fish in a big pond. We’re remote, but we want our economy to be fit for purpose, ensuring that companies and businesses do the right thing. We want to ensure that consumers and businesses have a fair go and that it’s a fair playing field for all.

The other thing that Minister Clark talked about was strengthening the Commerce Act’s prohibition against the misuse of market power. Now, the challenges of the market and how power doesn’t crush others in the market is very important for myself. Again, living in a small community where we have many, many businesses, whether it be mum and dad operators or whether it be large construction companies, but we don’t have as many jobs as other parts of the country. We don’t have as many as other parts of the world. So how do we ensure that those who are there don’t misuse their market power?

The other thing this legislation does—it’s not the sexiest part—is it makes minor changes to improve the functioning of the Commerce Act. Now, I know that the Commerce Commission, under the current law, finds it difficult for them to enforce in this space. I know the main difference in this bill is amending section 36, which will prevent businesses from harming their competitors in ways that also harm consumers. Now, that must be a good thing: ensuring and preventing businesses from harming their competitors in ways that also harm consumers. We need to protect all people, businesses and consumers. This makes it clearer, makes it function better, and will help deter anti-competitive conduct. So I support this because it makes it fairer. It ensures it deals with market power and it’s just a good, functioning piece of legislation.

Now, the previous Minister, who we want to acknowledge, the Hon Kris Faafoi, obviously got the ball rolling in terms of seeing the review back in 2019. In this review, they produced some main policy changes that they want to implement on this bill. The review that they undertook included consultation with businesses, with industry organisations, with competition and intellectual property - focused law firms and other bodies, including Consumer New Zealand and the Commerce Commission. So the fact that the legwork, that consultation, has already taken place before we even get to the first reading I think shows that this piece of legislation, this bill, will stack up when it comes to select committee and then to the second reading.

As I said at the start, I look forward to being on that select committee and hearing the submissions and understanding where things fit in terms of ensuring that New Zealand is fair, that market power ensures that all people have a chance, and that there is good, functioning legislation.

In closing, I guess I just want to refer back to the purpose: strengthening the Act. As my colleague to my left, Naisi Chen, said, this was legislation that was before she was born, and that makes—I thought I was quite young. But, obviously—I was 11 years old, but let’s not talk about that.

Rachel Brooking: It’s been a long time coming.

GLEN BENNETT: It’s been a long time coming. I don’t remember, as an 11-year-old, this piece of legislation particularly, but now it’s about strengthening the Act’s section 36, it’s about empowering the Commerce Commission, it’s around repealing safe harbours in the Act for intellectual property, and, of course, it’s making a number of technical changes.

So I support and look forward to the many submissions, the many emails, the many nights of reading people’s ideas, opinions, hopefully not too many theses on this piece of legislation. But it’s my pleasure to stand here and my pleasure to go to select committee in supporting this bill to the House. Kia ora.

DEPUTY SPEAKER: This is a split call.

NICOLA WILLIS (National): I rise to speak on the Commerce Amendment Bill. I want to begin by just setting out some context for why this bill is so important, particularly for New Zealand, and that is that in New Zealand we have a small market. Now, here on this side of the House, we believe strongly in the principles of competition, of private enterprise, of the benefits that are gained from firms, entities, and individuals competing against each other to innovate, to create new products, to bring products more cheaply to consumers and to market.

But we’re also conscious that while we ultimately want a free market to operate as efficiently and effectively as possible, there are potentially behaviours in a small market that can limit the effectiveness of that market. That is particularly the case in New Zealand, where we can have cases where duopolies emerge, where cartels can emerge, and where, due to the small nature of the consumer base, you can have a consolidation of market power. It is for that reason that National, in principle, supports what this bill is trying to do, which is looking at how we change the current prohibitions on misuse of market power to more closely align them with recent changes in Australia—specifically, looking at considering the effect of the conduct, rather than just the purpose.

Of course, this is important because what we’re talking about here is firms of great size, who are dominant in a market, behaving in a way that can actually distort the way that market operates for consumers and for those wishing to purchase products. Of course, this goes across all parts of our economy. When we look at the way we regulate firms and their market power, it includes everything from people supplying building products, through to supermarkets, through to those selling petrol. So it’s very important that our law is up to best practice in terms of aligning with what other jurisdictions have found to be useful and providing the Commerce Commission with the tools it needs and the scope it needs to properly explore these matters.

However, having said all of that, National is also acutely conscious that if we get this sort of drafting in the law wrong and we make these provisions too broad, in fact, they can impose a considerable compliance cost and an imposition on firms in a way that doesn’t actually further the interests of competition or consumer interests but simply creates an uncertain operating environment for firms in which they may feel that they are subject to undue witch hunts. So we will be working very hard in the select committee process to hear from experts on all sides of this debate to hear about how they think these amendments will operate in practice and to understand what additional compliance burdens they might bring, and, equally, what benefits they may bring to competition in the market.

The Commerce Act is a piece of legislation that must evolve and adapt in response to what is happening in our competitive market. This is work that National has long supported. I note that there are other provisions in this bill around safe harbours for certain intellectual property rights and other measures around the taking advantage test. All of these matters are matters that National believes are worthy of exploration, and we look forward to further submissions on the bill. I commend this bill to the House.

TANGI UTIKERE (Labour—Palmerston North): Tēnā koe, Mr Speaker. It’s my pleasure to take a split call on the Commerce Amendment Bill and to follow the member Nicola Willis, who has just resumed her seat. It was great to hear that the start of her contribution was very positive, but then, of course, we get the “however”, or if it’s not the “however” it’s the “but”. But I hope that that perhaps won’t be the case moving forward.

Colleagues before me have already spoken as to why the Government believes that this is a good piece of legislation and they said that it is timely, perhaps setting aside the length of time that it’s taken since the first enactment of this piece of parent legislation. But I would like to acknowledge the Hon Kris Faafoi, the former Minister who did a lot of work in this space, and, obviously, the Minister of Commerce and Consumer Affairs currently, the Hon David Clark, who is shepherding this amendment bill through the House in its current form. I agree with the Minister’s initial comment in that this is about the responsibility for setting the groundwork, setting the parameters, setting the boundaries by which businesses in our country are able to compete. We all know that commerce is a really important part of the way in which our society and our community is able to function on a day-to-day basis. So it’s really important, then—actually, it’s very important that there is the element of fairness when it comes to setting those boundaries, the groundwork, and the parameters as well, and the Commerce Commission have a key role in undertaking this work.

Just on the Commerce Commission, when I look at the elements of the bill in front of us, often perhaps there is a tendency to dismiss just technical changes to legislation, but they are really important, and one in particular is around aligning the maximum pecuniary penalties that could be imposed for anti-competitive behaviour. That word “pecuniary” sort of tweaks my mind, because in the ballot I have a member’s bill that I have taken over from my colleague the Hon Priyanca Radhakrishnan, around the Local Government (Pecuniary Interests Register) Amendment Bill. So the alignment there is really important that we have an open and transparent opportunity, whether it’s in the local government sector—and, in this sense, the way in which those penalties might be set. It’s good and pleasing to see that that is a technical component to this proposed legislation, but it is an important one none the less.

The other technical change is around the flexibility for the commission and its full suite of commissioners. My own background prior to entry to Parliament was as a Criminal Cases Review Commissioner. Commissioners up and down the country undertake really important work and, in this commerce sense, what I like about this bill is that it provides the flexibility for the Commerce Commission to actually look at its workload and to modify its appointment process to accommodate that, so that’s really important.

We’ve heard, in terms of what’s opposite as well, that there is a need to support consumers, and absolutely there is a need to support consumers. This piece of legislation fundamentally is good for consumers, because it is the very people for whom this legislation will actually protect and the mechanisms that will allow that protection to flow through. So I hope that as part of the select committee process, the select committee does actually hear from consumers and that it hears from other key players—but, in particular, consumers, I would like to think.

Just upon my entry to the House earlier this afternoon, I heard members of the Opposition indicate about, “Well, where are the real examples of failure?” I think perhaps that line of argument is missing the point. This piece of legislation is looking to prevent failure. The very protection that this legislation provides will actually mean that we don’t have to cite real examples, because the bill will be doing its job; it will be doing justice in that sense. So while the bill is fairly limited and narrow in scope in that most of it focuses on realigning the section 36 components along with those technical changes, I think that this piece of legislation is on a good path through to select committee, and when the select committee hears from those that wish to submit on it, then I’m hopeful that that will come back to the House and we can move things to the next step. But for the time being, I am very happy to commend this proposed bill to the House.

MELISSA LEE (National): Mr Speaker—oh.

Anna Lorck: You go.

DEPUTY SPEAKER: It’s actually a Labour call, but, Melissa Lee.

MELISSA LEE: It is a Labour call, Mr Speaker, so I was waiting for a speaker on the other side to actually take a call. But nobody—

DEPUTY SPEAKER: It is their call, but they missed out, so Melissa Lee.

MELISSA LEE: As long as people don’t recognise me as a Labour member, I think I’m OK.

It is a pleasure to rise to speak on the Commerce Amendment Bill. I have taken note of what Mr Tangi Utikere has said, and he was actually rather surprised that we were positive in our support to select committee, but he was a little bit despondent about the way that we raised some issues with the bill. I would have thought that a member would support that action—that we move very carefully when we’re dealing with legislation. Earlier, one of my colleagues said—and I take his word very carefully; it was Hon Paul Goldsmith—that in this House, we pass legislation sometimes with the effect of the legislation which is often opposite to the intent. This bill is actually dealing with those issues of whether a business had actually intended, or did the effect of their actions have different effects, and this bill changes the margins. This bill will replace the taking advantage test with an explicit provision on the firms with a substantial degree of market power from engaging in conduct that has the purpose of effect. So it goes from intention: did it actually have the intention to actually be a major force and change the effect? Or they may have had the intention but didn’t have the effect, so you can’t actually prove that they actually had the intention. Now we’re actually changing the margins to only looking at the effects. It doesn’t matter whether they actually had the intent or not. If it has an effect, then it actually becomes something that is against the rules, apparently.

I think sometimes when you’re looking at commerce bills, it is rather dry. Often, people don’t quite understand how it’s going to impact them, and what Mr Tangi Utikere said was that consumers need to be considered, and I agree completely. But under the changes in this bill, it is when businesses have to consult lawyers, for example, or the very fact that every time they want to change prices, which doesn’t necessary mean that they’re actually acting against the bill in the guidelines of the bill, they are becoming more—for example, if they’re presenting competition by setting a new price on their particular item or business, they may have to consult a lawyer to see if, in fact, they are breaching the rules of section 36 in this new amendment bill. If that is the case, that is an additional cost to the business, and what happens to additional costs to a business? Businesses never want to own those costs. They always pass it on to the customers. So, effectively, what it means is that the fee that the businesses have to pay will be passed to the consumers. So this bill has, potentially, the end result or the effect of the changes in the bill being more cost for the consumers, and I think that’s one of the reasons why on this side of the bill we are moving a little bit cautiously.

Competition law is very important. We need to make sure that in our market, particularly in a very small country like ours, we don’t have a situation of monopoly or duopoly that controls prices, which are actually very high for consumers. We believe in having sensible and transparent regulation—straightforward regulation—that people actually understand. We provide the settings where businesses can compete fairly, and we don’t want the market forces to create a conglomerate or a big monopoly that controls and sets prices for consumers that are actually prohibitive. We want to make sure that it is effective competition, and I think we all agree with that.

But, as I said, rule changes in this House setting regulations or legislation—any rule changes aren’t always right or often needed. The reason, I guess, why I’m cautious in my view of this bill and why I look forward to the submission process in the select committee—and I saw earlier that my colleagues in Labour, Mr Strange and Ms Chen and Mr Bennett, have spoken on this bill, and we all agree. We look forward to the discussions that we will have in select committee, because often select committee is where the true effect of the bill can be highlighted. Because we are not in those businesses, we as members of Parliament are able to hear their submissions to see how much of an impact this will have on people’s businesses and potentially the consumers as well.

When we change rules in regulation or legislation, we don’t want to create an inadvertent effect on people, on businesses, and on consumers. I hope that members in Labour, in Government, and in other parties will also share with me the concerns that I’m raising. Just because we cannot prove that the intent in this existing bill, which we are now amending—we can’t prove it and we can’t take it to court. And there is a higher bar that the Commerce Commission can’t actually prosecute. We’re changing the bar so that we have a different set of rules. Instead of looking at the intent to prevent competition, we are now looking at the effect, and I’m not so sure if that is always the right way to go.

But, as I said, I support this bill, with my colleagues on this side of the House, to take it to select committee for a robust examination of the bill and the submission process. I look forward to that and I commend the bill to the House.

ANNA LORCK (Labour—Tukituki): I rise to speak on the Commerce Amendment Bill, and as I do so, I’d like to talk as a business owner. We’ve talked a lot today about the impact on business and how business will respond to competition, but I can speak from the heart. I can speak as a business owner for over 25 years, and I can tell the people of this House that competition is the best thing we can do to grow business. Without competition, we don’t keep being innovative, we don’t enable ourselves to grow, and we don’t include the number eight wire thinking that comes with being good Kiwis in business. But I do agree with a member of the other side of the House: because we are a small country, we can see the creation of duopolies, cartels emerging and the consolidation of market power, and we have firms of great size and how they behave and the purchasing of those products.

But it does go across all of the community and across the economy, and we must make sure that when we do look at this bill that we don’t get caught up in what the other side of the House seem to think we will do. But I can assure you, as a business owner with this in mind, I don’t think we’ll see that bogged down in legislation. This is about free markets. This is about growing a greater way of doing business.

Now, the people that spoke before me talked at length about many of the things that are going to change under section 36. When I looked at what I could talk about at this late stage in the debate, in the first reading, I thought about talking about some of the things that were technical and small, things that talked about loopholes, because as we know, people will find loopholes if we leave them there. So I looked at one that talks about closing a loophole that was inadvertently created in 2017, by extending the prohibition against cartels, which deprive consumers of fair deals, to covenants that create or implement a cartel, as well as contracts that do so. So I started to look through quite a bit of the information that was given to me on what I could speak about here, and when it came to the cartels and what covenants are, I thought I’d give people a little bit more information about it as a couple of examples.

Now, the Act defines covenants as relating to land. A covenant on land generally restricts the way in which the land can be used. For example, as we are looking for examples, a supermarket may place a covenant on land of its surplus land to prevent the land from being used for a competing supermarket. Now I can tell you, in Napier, we have two Countdown supermarkets side by side. Why are they side by side? Because it breeds competition and—

Hon David Bennett: No, it’s the council rules around where you can build them.

ANNA LORCK: No, it breeds competition, Mr Bennett. How about you come and shop in Napier and check out the two Countdowns? Then, not far away from that Countdown is also another supermarket, a Pak ’N Save supermarket, and we start to see how competition builds competition and business and growth. So what happens when we go into another area of business and we look at where the central business district is? Businesses go together, because it breeds business. It’s because I’m in business that I can actually talk about this type of stuff, Mr Bennett.

Now I would like to talk about another part of this, clause 24. In 2017, when the Act’s price-fixing prohibitions were repealed and replaced with new cartel prohibitions, covenants were inadvertently excluded from the new prohibitions. This was an oversight rather than any change in policy position. So it’s good that we’re coming back and we’re working through these minor, minor details. But loopholes—people find them and people use them to their advantage. We’re going to get through those by doing really good submissions through select committee. We’re going to encourage as many people as possible to make submissions, because this is how we create better laws and better bills. I believe that it’s because of this side of the House, and how we conduct our business, that this is how we will get better bills happening.

Now, I just wanted to refer to a couple of things about the very reason for this bill: effective competition between firms tends to stimulate productivity, innovation, better-quality goods and services for consumers, and better prices. We’ve talked a lot about consumers, our customers. We are all customers of different businesses. We want to do business with those businesses who do play fair. But let’s not confuse fairness with competition and driving hard to be better at what we do, ensuring that we do keep growing and innovating with that number eight wire thinking—that’s what makes Kiwis good at what we do.

On the whole, the Act does this effectively and is well regarded internationally. However, the scope of some such prohibitions is unclear, difficult to enforce, or insufficient to deter certain anti-competitive conduct. The bill seeks to address this and takes other opportunities to improve the functioning of the Commerce Act.

Now, it is so important when we are creating these bills, especially for business—and I can understand some of the struggles that businesses have with compliance. I can understand those things. That’s why we need to make sure that bills and law are fit for purpose. We have to have a seamless way of working through things.

Now, I’d also just like to talk about why it’s so important that we ensure the communication of how we do these bills works through the system. That’s why I’m really calling on businesses to make submissions and be part of this. We need to be able to adapt and respond to our competitive market. We need to make sure we do introduce bills that are beneficial to growing business, and we need to make sure, as well, that we do protect and are a safe harbour for those matters.

Now, this is also really important when we talk about how good we can be, and I am confident—I am more confident than any of those members on the other side of the House—about how good we will do this bill. I know that it’s in my heart, and it’s in business owners’ hearts, and it’s in the right hearts of consumers to do what’s right for business. Business does better when there is competition in the market. Let’s not stifle competition. Let’s make sure we have the best competitive open market we can in this country and lead by example. That’s what I hope we do through the entire process of this bill, and I would like to commend it to the House.

Dr GAURAV SHARMA (Labour—Hamilton West): I rise today in the House to take a call on the Commerce Amendment Bill. As the member of Parliament for Hamilton West, I want to acknowledge MP Jamie Strange, who spoke just a few minutes ago. I was also looking forward to a discussion from my other colleague on the other side of the House, David Bennett—

Hon David Bennett: Well, why did you let Pacific Aerospace go under?

Dr GAURAV SHARMA: —who I thought was speaking today but apparently isn’t. What’s good? What I’m excited to see here today is that the three of us on this side of the House—at least Jamie Strange, myself, and MP Nanaia Mahuta—all agree that the bill should go ahead to the select committee. It would have been nice to know what David Bennett thinks about it, but I gather—

DEPUTY SPEAKER: Sorry to interrupt, Dr Sharma. The microphone that you’re at is not working and is therefore not coming through the—is not being broadcast, and probably not being recorded, either. So sorry to interrupt you, but if you could move, that would be great.

Dr GAURAV SHARMA: Would you like me to start again? Oh, that sounds better, doesn’t it?

DEPUTY SPEAKER: That’s much better.

Dr GAURAV SHARMA: All right. Well—déjà vu—I stand here once again in the House to take a call on the Commerce Amendment Bill. As the member of Parliament for Hamilton West, I just want to acknowledge Jamie Strange from Hamilton East, who spoke about this, and I was looking forward to my colleague on the other side of the House, MP David Bennett, who I thought was going to speak on the list, but has changed the speaking order. On our side of the House, the three of us, MP Nanaia Mahuta, Jamie Strange, and I, are in support of this bill and look forward for the bill to go to the select committee. From what I gather from the other side, they’re also interested in the bill going to the first reading, but I’m not sure if they want to support it all the way through.

Now, it’s an interesting bill. The proposed Commerce Amendment Bill amends the Commerce Act of 1986. The bill aims to strengthen the prohibition against the misuse of market power, which is in section 36, and make other changes to improve the function of the Act. The original Commerce Act came in 1986. I know some of the other members have mentioned their ages, and, in the public interest, I’ll say that it came in a year before I was born—just to let it out there.

According to section 1A of the Commerce Act of 1986, the purpose of the bill was to promote competition in markets for the long-term benefit of consumers within New Zealand. In May 2014, the Productivity Commission published a report called Boosting Productivity in the Services Sector at the request of the then National Government. The Government asked the Productivity Commission to undertake an inquiry into the services sector and to identify any opportunities to improve its productivity. I’m a bit surprised that it’s taken so long—between 1986 and 2014—for this to happen, but in its report the Productivity Commission concluded, amongst other things, that section 36 of the Act should be reviewed.

I want to acknowledge the then Minister of Commerce and Consumer Affairs, the Hon Jacqui Dean, from the other side of the House, who in 2017 in a press release said, “While the consultation process demonstrated that section 36 does not work, it is not yet clear what the alternative would look like.” And in that regard, I do want to thank you, Minister Kris Faafoi, as well as Minister David Clark, who have found that alternative for us, which we are talking about today.

Now, new section 36 in this bill provides that a person that has a substantial degree of power in a market must not engage in conduct that has the purpose, or is likely to have the effect, of substantially lessening competition in the market. Section 36 of the Act prohibits persons with a substantial market from taking advantage of that power for any anti-competitive purpose. This is New Zealand’s anti-monopolisation prohibition. It is not unlawful in New Zealand to be a sole supplier or acquirer in a market for goods or services or to hold substantial market power. Rather, persons that hold a substantial market power must not use that power for anti-competitive purposes. Effectively, this prohibition seeks to prevent firms with market power from having the competitive process by maintaining or extending their market power in a way that limits the ability of other firms to compete and in turn reduces the benefits to consumers and the economy associated with competition. Examples of conduct that may be covered by this prohibition include exclusive dealing, refusal to supply or predatory pricing. When this conduct is carried out by a firm with market power, it can lead to higher prices, lower-quality goods and services, and weak incentives for investment and innovation.

The bill is informed by a review that identified three main problems with the operation of this provision in the following ways. Firstly, it has the potential to fail to deter or penalise some forms of anti-competitive conduct; secondly, it is costly and complex to enforce, which reduces the incentives for businesses to comply with the law; and, thirdly, it creates some unpredictability as to its application to business conduct. To address these concerns, the bill amends section 36 to make explicit that conduct by persons with substantial market power that has the purpose, effect, or likely effect of substantial market power to effect monopolisation be changed.

Now, one of the things that people have often worried about is the intellectual transfer—

DEPUTY SPEAKER: Sorry to interrupt the member, but it’s come time for me to leave the Chair for the dinner break. The House will resume at 7 p.m.

Sitting suspended from 6 p.m. to 7 p.m.

ASSISTANT SPEAKER (Hon Jenny Salesa): Dr Gaurav Sharma, you have four minutes and 15 seconds left.

Dr GAURAV SHARMA: I just want to continue from where I left before we all went for dinner. A lot of us had a good kai at the DairyNZ event, so thank you for hosting us.

So we were talking about the Commerce Amendment Bill, and the point I was making was that one of the concerns people might have had was around intellectual property. Now, the Act contains three provisions that, effectively, provide safe harbours for certain intellectual property rights from specified provision in the Act. These provisions, which are unclear in scope and untested in the courts, are repealed in the bill. This amendment reflects the increasing acceptance that intellectual property rights and competition law are generally complementary, with both seeking to encourage innovation and providing long-term benefits for consumers, and this is quite important.

In my previous life, I used to have a medical device company and the intellectual property was a core part of it. So I’m quite glad that the bill, as initially championed by Minister Kris Faafoi, and then by Minister David Clark, does address that while also closing the loopholes around the anti-competitive behaviour that we’ve had since the Act came in, in 1986—and I just want to remind the House again—a year before I was born.

So in closing, the bill has my full support and I look forward to it going through the select committee process, and am hoping that they will also get more of the National Party members on board in supporting this great bill. Thank you.

Motion agreed to.

Bill read a first time.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is, That the Commerce Amendment Bill will be considered by the Economic Development, Science and Innovation Committee.

Motion agreed to.

Bill referred to the Economic Development, Science and Innovation Committee.

Bills

Local Government (Rating of Whenua Māori) Amendment Bill

Second Reading

Debate resumed from 11 March.

ASSISTANT SPEAKER (Hon Jenny Salesa): I call on Simon Court, who has three minutes and 41 seconds remaining.

SIMON COURT (ACT): Thank you, Madam Speaker. The ACT Party supports the development of Māori land and we support the development of housing on Māori land, and the modernisation of rating legislation which affects Māori land—but this bill does not deliver this, and for that reason the ACT Party opposes this bill.

ACT believes in natural rights and private property rights and that they should be protected from undue interference by governments—that includes local government—undue interference from being able to build on your own land, because that is what every New Zealander, whether they are a leaseholder or a freeholder or have a shared interest in that, is seeking: to be able to build on their own land without interference.

ACT believes that all property should be treated equally under the law and that the rates that fund the local council and infrastructure apply to everybody, and that everybody who receives the benefits of the infrastructure and those services should pay their fair share. This bill would establish a rates remission regime favouring a group which has other means and mechanisms in order to seek rates relief.

It is important to turn unproductive land, or land with potential, into productive land. But it is not up to the Government to provide those favourable tax treatments. It is for that reason that ACT opposes this bill. Thank you, Madam Speaker.

PAUL EAGLE (Labour—Rongotai): Thank you, Madam Speaker, and it’s a pleasure, always, to talk in the House. Just can I acknowledge our Minister of Local Government, the Hon Nanaia Mahuta, for bringing this to the House and getting traction, because this isn’t about a race-based philosophy. What this is about is reducing barriers. I know when I see Māori land around Aotearoa New Zealand—1.4 million hectares, much of it unused, undeveloped—and owners who have aspirations for the use of it being unable to develop this land, facing an array of challenges, unique at that—but the worst thing is that they are subject to rates and they go into arrears because these things just have not got the use and the potential of it for them, at ease, to make the land profitable or usable in whatever way that they feel fit. So these legislative changes are part of a wider programme to support Māori land owners, trustees, and their whānau to realise their aspirations.

The pinnacle of this, or the essence, is that it will eliminate the problem of rates arrears accumulating on land that really derives, as I said, no benefit, and, at the most, no economic benefit. I’m hopeful, and the bill sets this out, that it will enable owners of Māori land to discuss development opportunities with their council—and, you know, local government at the moment, mm-mm—without fear that they will be asked to pay rates first. This isn’t about having your conversation with your local authority about paying the pūtea first; this is about having a conversation about what can your land—and if you were a local authority with some decency and dignity, regardless of any use of land, you would see potential for your community of that and think, “What can we use this land for? How can we help landowners realise potential?” Because what’s good for them ultimately should be good for the district, city, or region where that land is, I feel. I think that this bill does that.

Look, I travel around parts of my electorate where there is land that fits this, and it is riddled with issues. I am hoping that this piece of legislation goes some way to supporting the conversation not to be about how much you owe us—people are sick of local government having those conversations—but about what your land can do for your whānau, your community, your city or district. Being on local government myself, I have seen land all over the place, wondering what the potential of that land could be. Often I don’t know who owns it, what the ownership structures look like, but for Māori-owned land, here is a solution, legislatively, that will make it possible.

I sit on the Māori Affairs Committee. It’s a warm and welcoming select committee to all views, but I know that despite a few barriers in other parts of the kaupapa of that select committee—with Māori wards, for example—this has got, hopefully, full support from—I can see the MP for Bay of Plenty nodding his head, looking at me, saying, “Yes, yes, and yes.”

Todd Muller: No, I’m not nodding. I’m “hmm”-ing.

PAUL EAGLE: Oh, OK. Sometimes you get confused without your glasses on, but I’ll put them back on. This is a good piece of work. It’s well overdue. Others will traverse the history of this and how it has impacted whānau, iwi, hapū over the years—in fact, over the last century. This brings this process to a halt. It pulls the conversation into realising potential, rather than having a conversation about moni and pūtea, and I’m hopeful that in the years to come we will see that aspiration is realised. I commend this bill to the House.

MAUREEN PUGH (National): Thank you, Madam Speaker. I stand also to speak to the Local Government (Rating of Whenua Māori) Amendment Bill tonight in its second reading. The National Party is opposing this bill strongly. I take the point that the member who’s just resumed his seat, Paul Eagle, has brought up in this debate tonight, around 1.4 million hectares of land that is available for development that is Māori-owned land, and I have to compare that with the amount of land that is in private ownership by other ethnic communities, or other ethnic people, including Pākehā, and I have to wonder why this particular bill targets one ethnicity over another. I know we all want our land to be productive, but why is this particular bill targeting Māori-owned land and not all land? If we were truly looking at the potential of land across this country, we would be promoting the same outcome for all land that is undeveloped. I’ve got some in my backyard that, if the Department of Conservation estate would stop seeding it with gorse seed, we would be able to keep it developed. But do we have a rates remission proposal for that? Absolutely not. And I have to ask why. Why, on the other side of the House, do you not support all undeveloped land, and why is it particularly targeted at one group?

In the bill—the purpose of the bill—it states it’s to support the development of Māori land, but it’s exclusive. And when we think about some of the other legislation that has been going through this House recently—the elimination of the democratic process around the establishment of Māori wards—and then we turn our minds to the three waters proposal that is happening, where we’re talking about waste water, storm water, and drinking water, and then we think about some of the other controls that we have around significant natural areas that are happening on private land, you start to see an accumulation of legislation that looks exactly like State control by stealth. So we are heading into this regime where, actually, private property rights are being degraded, and I think we’re heading into very dangerous territory.

The amazing thing about this piece of legislation is that it’s not actually required, and the reason it’s not required is that councils already have the ability to remit rates, and they do that through their own rates remission policy. So where is the need for legislation? Councils write off rates every year. But the unintended consequence—or maybe it is the intended consequence of this piece of legislation—and I’ll take you back to how the pie is broken up in local government. A council has to look at its intended costs for a year, and all of the projects, maintenance, the new assets they’re developing, and then they put a cost on that. They work backwards from the cost of the expenses for the coming year, and they set their rates based on that. So the less ratepayers that you have that are contributing to those public assets, the more that is landed on the people who actually do pay their rates, and so what we’ve got here is a bit of a cost transfer into those people who are the multiple owners of Māori land. If we think about 1.4 million hectares of land that is available, then there is a huge amount of equity tied up in that land, and surely the cost of rates is not the barrier to development; it is probably more a willingness, or an unwillingness, to take on financial risk and do that work on that land.

Councils already have a huge rate burden, and all we are doing is diluting the amount of people that are available to pay for those public assets, we are increasing the financial burden on those people, and I contend that this is grossly unfair. Everyone in this country has the God-given right to pay their fair share, and this bill does nothing to support that.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): Thank you, Madam Speaker. We know that the introduction of rating whenua Māori—policies relating to the rating of Māori land for over more than a century—were one of the primary tools of the colonial State stealing land from tangata whenua. The Native Lands Rating Act in 1882 introduced rates on Māori land, much higher rates than a similar European-owned land—up to 300 percent higher. These rates could be difficult to pay, not just because they were high but because it was difficult for those living on the whenua to collect rates from those living elsewhere. When rates were not paid, the land could be seized by local bodies. Setting higher rates that Māori couldn’t afford to pay led to the huge amounts of land in Aotearoa being stolen from its tangata whenua owners and confiscated by the colonial State. In other instances, lands were being valued low so that European settlers would find it easier to buy them.

Up until 1978, local councils could still steal whenua Māori for rating offences. We often talk about the history of Aotearoa being recent history, but this really proves it: councils were stealing Māori land until the 1970s. As a result of these insidious colonial policies and continued breaches of Te Tiriti o Waitangi, less than 5 percent of Māori land is still in Māori ownership.

This bill is a positive step forward, put forward and championed by Te Uroroa Flavell and Te Paati Māori as part of te ture whenua reforms. We are pleased that despite wider te ture whenua reforms yet to be realised, Minister Mahuta has progressed this important and widely supported part of the reforms.

The key changes in the legislation are: local authority chief executives will have the power to write off unrecovered rates arrears of any land, including rate debts inherited by deceased owners of Māori land; most unused Māori land will be non-rateable—this will remove rates arrears debt on unused Māori land—Ngā Whenua Rāhui kawenata, Māori land that has been set aside for conservation purposes, will be non-rateable; a statutory rates remission process will be available for Māori land under development, offering rates relief and encouraging development. These measures are long overdue and have had Te Paati Māori’s wholehearted support for many years.

Ko te pae tawhiti, while the changes in this legislation represent a huge step forward and will benefit many Māori land owners, we must not stop here. Te Paati Māori’s vision is for the reassertion of our mana motuhake, our tino rangatiratanga over our own affairs, our own people, and our own lands. Te Paati Māori commend this bill to the House. Kia ora.

SHANAN HALBERT (Labour—Northcote): Tēnā koe, Madam Speaker. I open this evening with a whakataukī from Te Whiti o Rongomai from Parihaka: He puāwai au nō runga i te tikanga. He rau rengarenga nō roto i te raukura. Ko taku raukura he manawanui ki te ao.

[I am a descendant from the righteous endeavours, a healing herb from within the sacred emblem. A sacred emblem is a symbol of my unwavering dedication of prosperity, good health, and wellbeing.]

This whakataukī speaks to our support for the Local Government (Rating of Whenua Māori) Amendment Bill that we are discussing this evening, because this bill will eliminate the problem of rate arrears accumulating on land that the owners derive no economic benefit from. This will enable owners of Māori land to discuss development opportunities with their council without the fear that they will first be asked to pay their rates arrears. It is a barrier to the progression of where we’re at as a country. Quite often, I speak about our nationhood, about being on the right side of the law at this point of our pathway as a country, and what we saw in the Māori wards debate is opposition to the progression of who we are as Aotearoa New Zealand. And now is the time for us to progress Māori interests, to enable Māori land and the Māori economy, and to support those to progress the things that we want to, not to create barriers.

This evening, I want to speak to Te Kaunihera o Tāmaki Makaurau. I know that this has been through the Māori Affairs Committee last year, before my time, and the select committee made amendments to the bill at that particular time. Those amendments that they recommended were the rating of multiple blocks, clarifying the origin of Māori land blocks, establishing when a local authority may be satisfied, preventing the sale of Māori land that was converted into general land under the Maori Affairs Amendment Act 1967, the power of a chief executive to write off rates, separate rating areas on Māori land, and the registration in the emissions trading scheme is not a use of the land itself.

I took the time to read the submission from Te Kaunihera o Tāmaki Makaurau, our Auckland Council, and it’s my job as an Auckland-based electorate MP in Northcote to share their thoughts in their submission, the things that they achieved. Across the House and across our Labour team, it’s important that we understand what our councils are doing and what their vision is for laws such as this. And in fact, they’re doing quite a lot. They’re doing the mahi of what we’re asking them to do. And this is a step towards a fairer system that enables Māori, and particularly enables Māori, iwi Māori, to engage with council in a meaningful way.

The Māori land in Auckland has 265 properties in Māori freehold land title, covering 8,600 hectares of land. This represents less than 0.1 percent of the Auckland rating base. That’s not much but it’s an opportunity for Māori to engage meaningfully with our local council to talk about solutions and opportunities of how they can get involved and they can start to develop their whenua. “Auckland Council supports the proposed amendments set out in the Local Government (Rating of Whenua Māori) Amendment Bill (the Bill). The proposals align with the council’s current policies regarding Māori land rates. The Bill also provides council with new powers that will enable us to address long standing issues”—they say—“with rating Māori land. In particular, Auckland Council supports the proposed amendments to: expand the categories of non-rateable Māori land, [to] empower local authorities to write off arrears”—yes, that’s right, to empower our local authorities—“[to] treat rating units of Māori freehold land used as a single economic unit as a single unit for rating purposes to reduce the number of fixed charges that apply, [that we] enable Māori freehold land to be apportioned on request into separate rating areas so that separate occupiers of the land can be rated directly only for the portion of … land [that] they use”. For Tāmaki-makau-rau, this is an opportunity to work with Māori, and we’ve seen steps. We’ve seen their aspirations in Auckland for Māori wards. They celebrate the work that this Government has done. So thank you very much. I commend this bill to the House.

TODD MULLER (National—Bay of Plenty): Thank you, Madam Speaker. I rise to take a short call on the Local Government (Rating of Whenua Māori) Amendment Bill, second reading. Before I get into the substance of the bill, can I acknowledge my opposite, the Hon Damien O’Connor, who has just come with me from the DairyNZ function. He spoke first, David Parker was continuing to speak, and whilst I do find David Parker at times laboriously boring when he gives his speeches around essential fresh water, I do want to put on the table that this idea that we’ve got to finish our little dinner break at 7 o’clock and come back here—we need to sort this, I think, Damien. I don’t know about what I think, but a one-hour dinner break when we’ve got stakeholders out there spending a huge amount of money to come and connect with Parliament—I know this is the Speaker’s call and it’s a Business Committee conversation, but, frankly, I think it’s wrong. And I see the Hon David Parker arriving to his seat. I’m lamenting, Minister, that I never had the opportunity to hear you speak because the dinner break got called. A minor point, it’s not this bill, and I know I’ll be told shortly to get back to it, but, actually, there is a serious point in the observation that part of this role of Parliament is to be accessible to the people and having one hour feels to me that we’re short-changing them.

I will now move on to the substantive issue at hand. I don’t disagree with the broad conversation around Māori aspiration in terms of their land, ensuring it becomes more productive, and the opportunity to partner with local government to help facilitate that conversation. I acknowledge Rawiri Waititi’s very fulsome outline of the issues of history of this country, and it’s an important part of context for this debate. But what is constantly overlooked in this conversation is that the ability for councils to sit with local Māori and work together around how they can make the whenua more productive for the local Māori is not constrained today. Those conversations can happen, those conversations do happen, and if, as part of those conversations, it is identified by the local council that there is a rationale and a reason to remit historical rates arrears, that can happen today. So there is no constraint. So framing up this bill through the lens of freeing up Māori capability, freeing up Māori land productivity, and partnering with local government and that somehow the current state fundamentally precludes that, from the National Party perspective, that is an error.

The specific issue that I’d like to talk on today, clause 50 amends Schedule 1, provides that rating unit of Māori freehold land that is entirely unused is non-rateable. First point: that can happen today. Second point: that Maureen Pugh, I think, very lucidly outlined, is that it brings to a sharp focus the fact that a particular group who has land that is non-productive should have an automatic right of it not being rated, but other groups are still, essentially, open to council individual perspective. We think that is wrong and, as Maureen Pugh well says, what that does is, essentially, puts greater onus on those who are paying rates to pick up the slack.

But the real issue that I want to put on the table this evening is that this is playing around with the edges, because the real opportunity to unleash the productive capacity of Māori land was captured in Te Ture Whenua Māori Bill. And rather than dealing with that complex, challenging, but, ultimately, enabling bill to deal with the core problem, the Māori Affairs Committee of the previous Parliament—two Parliaments back—decided it was too hard and it couldn’t get progressed. So rather than picking up that challenge, despite being in Government, despite having a large Māori caucus, the previous Government said, “No, we’re not going to progress te ture whenua, despite it being the key legislative instrument that would unlock the productive capacity of Māori land. Instead of focusing on doing the real heavy lifting, we are going to play around the edges and put in a specific piece of legislation to formalise what is already happening in local government around the country.” And it is very typical of this Government to speak high rhetoric but actually not deliver fundamental change that will enable unproductive land, in particular in a Māori context, to be enabled and to be released into the true capacity that it has. Because that is the harder issue. That requires deep thinking. That requires building a broad stakeholder and community support.

So instead of promoting and pushing that as an option, we return back to a piece of legislation which, from our perspective, is ill-directed, largely facilitates what’s already happening, establishes a precedent which we do not think is helpful, giving a complete free pass for one group in society but not the other, and is, ultimately, not going to deliver on the core challenge that sits in front of this country and, in particular, our Māori communities around New Zealand, which is: how do we create the conditions for their whenua to become as productive as the owners of the whenua wish it to be? Thank you, Madam Speaker.

Hon MEKA WHAITIRI (Minister of Customs): E te Māngai o te Whare, tēnā koe, otirā, e ngā mema katoa, tēnā tātou katoa. I’m pleased to take a call in support of Te Pire Whakatikatika Kāwanatanga ā-Rohe (Rētitanga o te Whenua Māori), or, in our reo tuarua, the Local Government (Rating of Whenua Māori) Amendment Bill. Can I first acknowledge the Minister of Local Government, the Hon Nanaia Mahuta, for bringing this bill to the House.

I guess I want to, in my contribution, contextualise this bill in the wider suite of Māori land reforms that this Government has put in place under her leadership, and the previous Government, in terms of the amendment to Te Ture Whenua Maori Act, in so far as Māori land owners wanted—i.e., a quicker succession process in the Māori Land Court, the establishment of a facilitation service, things that Māori land owners wanted; not what the Opposition wanted but what Māori land owners wanted. So that’s what this side has done. We’ve made those amendments to Te Ture Whenua Maori Act.

We’ve also established the $100 million Whenua Māori Fund. This is where we start putting, on this side, practical resourcing around Māori land owners. I’m responding to some ill-informed comments made from that side of the House, in so far as Te Ture Whenua Māori Bill is concerned. We are supporting this bill, but it must be seen in the wider context. Members from that side of this House have come and said, “Here’s the answer to Māori woes when it comes to Māori land—Te Ture Whenua.” As you can see, it is a well-conversed bill that several Parliaments ago, I sat and challenged the Government of the House on.

I want to correct some statements around the Māori Affairs Committee in not passing this bill. That’s not correct. This House stopped that bill because the member, the Minister that sat in that seat, the Hon Te Ururoa Flavell, ran out of time. We put an absolute challenge to him that if we’re going to pass something that Māori land owners feared, and there is plenty research both in the submissions to the select committee, but what people said publicly—so all I want to do, because I’ve got a short call on it, is correct the record.

Māori know what they want to do with their land. They absolutely know what they want to do with their land, and what Minister Nanaia Mahuta’s bill is doing is amending the back arrears so Māori land owners can develop. Does that mean that once they develop, they won’t pay rates? No, it doesn’t. It doesn’t. It means that those that have been alienated, or underutilised land, have now the opportunity, by removing an absolute impediment, which is rates.

Now, I want to turn to the committee’s—because I was on the Māori Affairs Committee, I want to thank all the councils that came before the Māori Affairs Committee and those that submitted that look forward to the passage of this bill, councils that submitted. When you look at the minority view that the Opposition put in this bill, there were four reasons that they gave that they weren’t supporting it. One: a lack of time. So that was one of their reasons. There was a lack of time in that, and I was waiting to hear from the members. One was around—this is the solution to multi-ownership of Māori land; no understanding about the tikanga and whakapapa that we have to whenua. So multi-ownership is not a reason why you actually change the law around Māori land, but that’s what they gave. They also said this disadvantages councils who are already doing it. Well, that’s not what councils said when they came before the select committee.

So, look, I just have to respond because there are people that are making some comments. They think that Te Ture Whenua is the way forward for Māoridom. I want to stand in this House and say it’s absolutely not. It’s the programme or reforms that this side of the Government has, honestly, put through, which are those amendments I have mentioned. It is the $100 million Whenua Māori Fund, which will help unlock potential around Māori land. But this bill also enables the building of much-needed whare on Māori land. So it’s with all those reasons that I support this bill to the House. Kia ora tātou.

A party vote was called for on the question, That the Local Government (Rating of Whenua Māori) Amendment Bill be now read a second time.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bill read a second time.

House in Committee

House in Committee

DEPUTY SPEAKER: I declare the House in committee for consideration of the Child Support Amendment Bill and the Secondary Legislation Bill.

Bills

Child Support Amendment Bill

In Committee

Part 1 Amendments to sections of principal Act

CHAIRPERSON (Hon Jenny Salesa): The House is in committee on the Child Support Amendment Bill and the Secondary Legislation Bill. Members, we turn first to the Child Support Amendment Bill. The question is that Part 1 stand part.

ANGIE WARREN-CLARK (Labour): Thank you, Madam Chair—oh! Yes. Madam Chair. Just checking—I can’t quite see as far. I want to take a brief call. One of the things that we discussed at some length in the select committee process was around the removal of the incremental fees. We discussed that on the basis that some of our submitters were quite keen to see those incremental fees stay. So I would be interested in the Minister in the chair, David Parker, please, explaining to us why he believes that the removal of those incremental fees will, in fact, support liable parents actually engaging in the process. One of the reasons that I am quite interested in this is that there was a little bit of pushback, and I think it was some interesting pushback, in regards to what we know about liable parents. Our understanding was, indeed, that the liable parent, at certain points, disengages with the process when fees and penalties are too high. So I would be interested to know from the Minister, please, if he could talk to us about incremental fees and how this change in the legislation really supports our parents to pay their fees in time.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. It’s good to be talking on this bill during the committee of the whole House. The issue I want to talk about is actually my Supplementary Order Paper 22. We clearly flagged—and when I say “we” I mean the New Zealand National Party—included as a minority view in the commentary on the bill, that there were two issues that we were raising and had concerns about. The first one was the issue of penalty payments and who should get the benefit of the penalty payments.

Just to put this in context, at the moment there’s probably about an estimated $2.2 billion of outstanding child support payments at this point in time, which is an extraordinarily high amount of money. However, the core part of the debt, the core overdue amount, is roughly about $500 million. The balance of that is made up of penalties. There’s a lot of good stuff in the bill about reducing the penalties, and we’re very supportive of that in terms of giving more time for parents to work out their new arrangements so that the child is at the centre of any payments.

But what I wanted to ask the Minister in the chair, David Parker, about is the issue around my Supplementary Order Paper, which I have flagged in the committee and I have flagged when we submitted our minority view. We would like to see the penalty payments that accrue as a result of one parent not paying their fair share on time, go to the other parent, who would normally be the caregiver, and in many cases that is often the wife of the former partnership. Obviously, it’s very much harder on women who are in that situation. So can I just ask the Minister: why has he not taken the opportunity? I’ve clearly flagged it in the select committee. We included it in the minority view. Why hasn’t there been any further work done on this? Of course, we’re looking for support.

Just on that note, I find it rather strange that members of the committee can read the report—we were the only ones to put a minority view in the commentary to the bill. No other party did. Yet, with some surprise, I note that there’s other members from ACT and the Greens who have basically tried to replicate what I’ve put in the minority view. I just find that a weird—why don’t you become original and come up with something different? I hope to see some more stuff coming from you guys tonight. I’ll be watching and listening very carefully, because if you want to just come up with stuff that we talked about in the committee, we’re not going to do the scrutiny which we’re required to do on this bill, which we’re required to do in this House of Parliament, to scrutinise the Government. So I would just say that to you.

My question still remains for the Minister: why hasn’t he taken the opportunity, and is he open to the concept of making sure any penalty payment, if it’s collected by the IRD, is subsequently passed on to the caregiver? It may not be able to be done in this bill, but certainly I would like to understand whether the Minister finds favour with that argument or not.

Hon DAVID PARKER (Minister of Revenue): If I may refer to the first two contributions that have been made, the background to this bill, of course, is that the last Government, the National-led Government, realised that there was more flexibility able to be introduced into the child support payment system as a consequence of the upgrade to the computer system, which was started under the last Government and is just about finished now. So they commenced some policy work as to whether the settings were right, and one of the viewpoints that was expressed, and known, I think, to political parties across here, is that the penalty regime has been so harsh that people give up because the penalties become such a substantial part of the debt. Andrew Bayly’s reference to that is acknowledged. There is some truth in that—that the penalties regime was so harsh that people gave up, and therefore there were lower rates of compliance, because the penalties were too harsh.

Now that we’ve got a flexible software system, we can actually, if Parliament wants to, change those settings relatively easily, because it’s a much smaller task to change the administration of the child support payment now that we’ve got a decent computer system—and I’m sure, if officials think I’ve got any of this wrong, they’ll hand me a note. In respect of what the bill does as it comes out of select committee—because there does need to be an incentive for compliance, which is created by a penalty regime for people who don’t comply; it’s just that the penalties regime was too harsh. So there’s an immediately penalty on day one now of 2 percent of the sum if people don’t pay it on time, but then there’s a period allowed for the department to contact the liable parent and enter into a payment reduction plan. That period is 28 days. If within that 28-day period there hasn’t been a payment plan put in place, there is an additional penalty of 8 percent, which means that the effective penalty overall for a liable parent who doesn’t meet their obligations and then doesn’t come to a repayment plan is 10 percent.

The bill as it came back from select committee had incremental monthly penalties of 2 percent per month, and 1 percent per month thereafter. We’ve reflected on that. We’ve looked at the financial effects for the Crown, because there is a cost to the Crown of this, and, through a Government Supplementary Order Paper in my name, we will be proposing to remove the subsequent penalties—the 2 percent per month and the 1 percent per month in out-years. So I think that answers the first member’s questions. In respect of the second member’s question as to whether we would be backing that Supplementary Order Paper, and any other Supplementary Order Paper that hasn’t been filed within the requisite period and that has financial consequences for the Crown, it will, as I understand it, be out of order, so won’t be voted upon.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. Madam Speaker, I’m rising to speak to Supplementary Order Paper 21 in my name, and also to respond to some of the points made by Andrew Bayly. I am incredibly surprised to learn that he believes that his Supplementary Order Paper (SOP), or my SOP, replicates parts of the other, particularly because the very purpose of our SOP is to address the inconsistencies in approach that is taken in delivering child support payments to beneficiary households.

So I’m not sure if it will be visible to those on the screen—oh yeah, I can see it is, slightly—but this is a small diagram that I have drawn to inform members of the committee but also to ask the Minister if he would be interested in supporting this, because, of course, he mentioned just now that the very reason that these changes are being brought before the House, in this Child Support Amendment Bill, is to actually rectify some places where the law at present is too harsh, which, I think, by any other name is an effect of attempting to give a tangible sense to the kindness that this Government prides itself on. So when it comes to the SOP in my name, it speaks to changes—particularly to clause 141—around payment to receiving carers. Here it would require, and I quote, “All money received by the Commissioner by way of child support in respect of a qualifying child … shall be paid to the receiving carer in accordance with this Part.”

Importantly, and I emphasised this during the second reading of this bill, what presently happens if you are a custodial parent in a beneficiary household receiving some form of benefit or welfare support from the Government is that you are not allowed to be in a direct relationship, when it comes to child support, with the non-custodial parent. It is the IRD that sits in the middle of that relationship, takes those child support payments from the non-custodial parent and will take away that amount which your benefit amounts to, and only give you that small amount on top. This is the diagram that I’ve attempted to draw for my colleagues across the Chamber. It is the case right now that if you are receiving those child support payments, the IRD is receiving those child support payments, it is only that small amount which exists above the benefits as received from the Crown that will be passed on to that whānau, to that household—ultimately compounding disadvantage.

I believe that the Minister knows this because the Government commissioned this advice as the Welfare Expert Advisory Group’s recommendation 27 that says to not enable this kind of practice to continue. On top of that, the Social Services and Community Committee heard from the Children’s Commissioner, which asked for this very change as well. So I ask the Minister if he has considered supporting an SOP like this, if it was considered in the drafting of this law, and if it is considered moving forward—should he not choose to support it today—to ensure that Government policy and legislation moving forward aligns with the Government’s own commission advice from the Welfare Expert Advisory Group to reduce child poverty in line with the Government’s stated aims.

Hon DAVID PARKER (Minister of Revenue): If I could just, first of all, correct my earlier intervention, the amendment to the legislation post introduction and first reading, stripping out the subsequent penalties of 2 percent per month and 1 percent a month occurred at select committee, so it’s already in the revision-tracked version of the bill before us, and it’s not in the Supplementary Order Paper. I apologise to members to getting that wrong.

In respect of Chlöe Swarbrick’s point, I understand it; indeed it has been Labour Party policy that we address and make more direct the pass through of liable parent contributions to beneficiary families. We’re not doing it in this bill for Budget constraint reasons. So far, in respect of the prioritisation of different ways in which we assist beneficiary families, we’ve chosen to do that universally through increases to benefit levels in respect of low-income families; through increases to the minimum wage; the Best Start payment, of course, for families with younger children; and increases to the accommodation supplement. Although we would like to be able to devote the money to pass through child support payments against those other priorities, we have not as yet and we haven’t committed to doing so.

ANAHILA KANONGATA’A-SUISUIKI (Labour): Kia ora e te Mana Whakawā. Thank you for the opportunity to make a contribution. I have been a receiving parent, and I have had so many dissatisfactions with the liable parent in terms of non-paying child support, to the point that I just gave up and didn’t bother that line and just carried on with my life. So my question really, Minister Parker, is about the new section 129A in clause 41 for automatic deductions for newly liable parents. My question is around the privacy of the liable parent with employers: the employer’s ability to process the automatic deductions for the liable parent, and also the privacy of the liable parent if they do not want to have their employer know their business—that they are actually a liable parent.

It will be good to hear the Minister respond to that question, because although in my experience—and I know a lot of people have come through it—of the non-paying liable parent making that contribution to the point that it’s stressful, at the same time we do have concerns around the compliance burden for employers and also the privacy of the liable parent in their workplace. If the Minister can answer that, I’ll be really interested in hearing his response. Thank you.

Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Chair. I want to start by saying thank you to the Minister for outlining the fact that it was quite a substantial discussion document by the previous Government that led to some of this work, and I just respond to a comment by the member that spoke for the Green Party, Chlöe Swarbrick, by reminding the member that this is a Minister of Revenue, and a Minister of Revenue wouldn’t normally treat anything with kindness. He is the man who is responsible for filling the Government’s coffers, so good request, but I’m not sure—or I’m not that optimistic—that he’s going to take that invitation too seriously.

But I do want to come back and just ask a couple of questions around my colleague’s Supplementary Order Paper (SOP). Because this is an exact situation where the penalties that are being collected go straight into the Government’s coffers, and why can’t that go in to support the children that are affected by this? The member from the Labour Party that spoke before me talked about the challenges of being a receiving parent and not getting funds from the liable parent and giving up on it, which is absolutely the last thing that we’d want to see a parent do, so obviously some of the changes that have been made will be helpful for that. But my question is: why has the Minister just completely out of hand discounted the SOP that my colleague has put forward, given that it is only a penalty, and is the Government that worried about collecting more taxation that it requires the penalties that are coming in from liable parents? I will have other questions, but I shall leave it at that one just for now.

KAREN CHHOUR (ACT): I’d just like to stand up and speak to my Supplementary Order Paper 20—not 22; so I got in there a little bit earlier than the National Party, even though you are saying that I got in after you. I’d like to just say that my Supplementary Order Paper is just to require that penalty fees—instead of being paid to the Crown—go to the carer that is taking care of the child.

At the moment, as the Child Support Act stands, Part 9 requires that all money collected by the Crown under the Act be put into a trust account and be paid out to the people who received the child support. All I’m wanting to do is take away the exception of the penalty provision from this, and make sure that instead of going into a general Crown account, this would just remove that exception so that the penalty payments go into the same place as any other money collected and then go into the account set up for the transfer to the relevant carer. There is not much of a change and I cannot understand why it is so hard.

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Chair. In respect to the privacy issue that was raised by a speaker two speakers ago, there is a discretion for the Inland Revenue to, at the request of someone who has privacy concerns, accept another payment method rather than payment via the employer. So it’s the default method if there’s no other action taken, but if someone does have concerns, they can raise them with Inland Revenue and on a case-by-case basis and Inland Revenue can determine whether that’s acceptable. I would envisage that, if the person who’s offered the alternative payment method would normally be believed then they would accept the offer of alternative payment methods rather than via the employer. But then, of course, if the person defaulted on their obligations and it was just a ruse to avoid liability, they would probably return to requiring deduction from wages via employers.

In respect of the penalties point: of course the cost of administration of this falls to the Inland Revenue Department. I suspect that, in respect of the vast majority of penalties, the costs that the department incurs in recovering those penalties is actually higher than the penalties, but, in any event, we’re not supporting that particular Supplementary Order Paper, which I understand is also out of order because it has fiscal effects and wasn’t submitted to the House in time to meet the deadline.

RICARDO MENÉNDEZ MARCH (Green): Kia ora, Madam Chair. I wanted to rise and speak to the issue that has been addressed by previous speakers, which is that a punitive approach has not been shown to increase compliance. The previous administration admitted this when they removed sanctions on sole parents, acknowledging that a punitive approach did not increase compliance within the welfare system, especially when naming fathers and them providing child support as a result, which is why we are welcoming a step toward reducing some of the subsequent penalties under this Act.

But I did want to speak firstly in support of the ACT Party’s Supplementary Order Paper, mostly because it does follow within the principle of at least putting some more money into people’s pockets. While we do not support penalties in general as an approach towards increasing compliance, we acknowledge that, within the welfare system and income support system that we have, we have a duty to ensure that people have as much money as possible to make ends meet.

This leads me to my question, which is around the response for my colleague Chlöe Swarbrick’s Supplementary Order Paper which would’ve advanced the Government’s goal of making the Welfare Expert Advisory Group report a blueprint for this Government, and this is an opportunity to continue making a blueprint for this Government’s welfare reforms. When the Minister says that this Supplementary Order Paper by Chlöe Swarbrick wouldn’t be introduced because of budgetary constraints, I’m interested to know: how much does he advise it would cost, and, more broadly, how much does he believe that making this change would actually help towards reducing child poverty in Aotearoa, and, additionally, how much would it reduce costs elsewhere in the welfare system by nature of low-income families requiring hardship grants in order to make ends meet?

Dr EMILY HENDERSON (Labour—Whangārei): I rise very briefly to ask about the definition of income, because as a Family Court lawyer and as a friend of separated parents, I have heard time and again the angst that is created by the feeling that the ex-partner is concealing sources of income. While it is, I think, going to be welcomed that interest and dividends are now included, I would like to hear from the Minister as to why the definition of income is not being extended further to ensure child support is based on parents’ real income. It is something that causes a great deal of angst for separated parents, and it is something on which I would like to hear from the Minister.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I just want to pick up on this issue around penalty payments being passed on to the parent who is caring for the child but hasn’t received their full entitlement to support their child in care. I can accept the Minister’s argument, to some extent, that the IRD has an administration cost around it in terms of collecting, and that therefore—I think the argument was—because there’s a higher administration cost, all that penalty amount should pass on to the IRD. However, I think there’s two things that have changed. The first one is—and the Minister referred to this—that we’ve got a new START system coming into play on the IRD Business Transformation Programme. There are big computer roll-outs that have been taking place for the last four years. So the costs around administering this stuff is now largely going to be done electronically. Secondly, a lot of that money in terms of the collection of it and administration is now being imposed on business, which is a separate point.

So that’s one side of it. The other argument, I would suggest, is that the whole intent of what we’re doing in this bill is to streamline it, make it simpler, and actually try and get around the issue of penalty payments occurring. So those people who are very tardy under this system, under what this bill will bring in, will be people who are quite deliberate, because they would have gone through the 28 days that the Minister referred to and would’ve still been non-compliant.

So I heard what the Minister’s said, but I just don’t think the arguments are persuasive that we need to have a system where all the penalties need to go to the IRD to cover their costs, given the fact it’s now largely electronic and we’re trying to minimise penalties. At the end of the day, I suggest to the Minister that he’s actually not looking at the purpose and intent of this bill. The purpose and intent of this bill is to look after those children in broken homes, who are in difficult family arrangements, where one parent may not even be providing any care at all, or very limited care, and the recompense in monetary form is not taking place. I think that’s what we should bear in mind in this bill.

I didn’t even hear from the Minister whether, in fact, he might contemplate having a further look at this issue. I can understand why he mightn’t want to do it tonight, even though we’d flagged it well in advance during the select committee process—but I ask him whether he is prepared to contemplate this as a course of investigation, so when we do the next round of upgrading this Child Support Bill, and whether it might be something that might be on the agenda at that point.

Hon DAVID PARKER (Minister of Revenue): Referring to recent contributions, in respect of the definition of “income”, it is being amended and the purpose of that amendment is to better reflect the liable parents’ financial capability to support. This does incorporate investment income now, including interests and dividends, for parents who are salary and wage earners; it already did in respect of non - salary and wage earners. In addition, there is no longer going to be the ability for the paying parent to offset losses carried forward from earlier years.

In respect of a person who thinks that another parent is hiding income, the Act allows that person to apply to Inland Revenue for an assessment of the liable parent to check that they are paying what they ought to.

In respect of the penalties point, I’ve already said—in respect of the wider issue which actually doesn’t go to penalties; it goes to the underlying payment—that we have sympathy for that position, but, as I said, we have to balance that against other priorities. Whilst it is a policy of the Labour Party that we will endeavour to improve the pass-through of parent contributions in terms of the Budget priorities that we’ve assessed that against until now, including benefit increases, you know, the accommodation supplement changes, the likes of the Best Start payment, and contributions to health and education spending, we’ve found that those other priorities have, to date, prevailed.

MAUREEN PUGH (National): Thank you very much, Madam Chair. I just want to raise another couple of issues that came up during the select committee process. These relate to some very strong submissions from submitters around the 50:50 shared care, so where the receiving parent and the liable parent share 50:50 care for their children. The strong submissions that were made relate to why there is a liable parent at all when the parents share the custody arrangements and the care arrangements and the costs for the children of that relationship. I just wonder if that is seen as a fair distribution of where the costs actually lay, because if they are shared equally between the two parents, then why is there a need at all for a liable parent contribution.

The second point that I would make around that—and it was raised in the select committee submissions as well—is about the unintended consequence of that shared care arrangement where the liable parent takes up a new relationship and they have a new family and that new family is actually inadvertently placed in a position of severe hardship. We had some quite impassioned submissions around this—that what we’ve ended up doing, in terms of those liable parent contributions, is left the second family in a state of severe hardship, and I wonder if in doing that, the Government is actually not placing the needs of the child as the paramount consideration in terms of those two families. I just wonder if you could comment on that.

Hon DAVID PARKER (Minister of Revenue): In respect of the first issue, I think that’s relatively easily dealt with. It’s true that both parents might be sharing the cost of raising a child through shared custody that could be 50:50, but the means of the parents might be quite different, and it’s possible to envisage a situation, I think quite easily, where one of the parents has got virtually no income, or has very low income relative to the other one, and it’s fair that the financial contribution between the parent of higher income to the lower income parent is necessary for that other parent to help care for the child.

In respect of the second issue, these issues are very difficult at the margin. I don’t think we’ll ever get the rules to the point where everyone’s completely satisfied. Parents do have responsibility for the children from their earlier relationships, and the rules that we try to devise in society try to get that right. I think, overall, we’re not perfect, but we improve with each iteration.

CHLÖE SWARBRICK (Green—Auckland Central): Thank you, Madam Chair. I appreciate the Minister’s response to the questions that I put before, particularly in outlining specifically that actually what is in this Supplementary Order Paper (SOP) in my name is Labour Party policy. It’s kind of gutting that it’s therefore not going to be voted on in favour and support by, obviously, the Labour majority in this House. But to that point, I assume—in speaking to the fact that this is too expensive, based on other priorities that are presently being weighed up by this Government—that the Minister can give us specifics when it comes to exactly what cost we would be looking at to implement a change like this, particularly because said that it was weighed up, and that it is Labour Party policy, and that there is the opportunity, obviously, as a Government to implement it.

The other point that I just want to make with regard to the changes as proposed in this SOP, is that I think it needs to be really, really clearly again re-emphasised that in the present state of play, when you have a custodial household which is also a beneficiary household, the IRD collects the money from the non-custodial parent intended for child support, and keeps that which offsets the cost of the benefit. On that kind of point, it seems rather next level beyond the pale to me, and in fact to the Green Party of Aotearoa New Zealand, that in fact the calculations that are being made here is that the IRD intends to keep and take and calculate and account for receiving child support. The IRD is intending to receive child support which is supposed to go to children, in turn being aware of the fact that it is compounding disadvantage in an incredibly unequal Aotearoa New Zealand, which was reflected in the Government’s own commission reports.

So, again, I ask the Minister particularly—what is the cost? Because he’s stated that there have been weighing-up decisions made. What is the cost of ensuring that child support, which is intended to support the child, is actually passed on to that child if the IRD’s not deciding to interfere and keep some of that money? What is the cost? And, secondly, what’s holding the Minister back? If this is Labour Party policy, and we have an overwhelming majority of Labour Party seats in this House and they’re the driving force in this Government, what is holding the Minister back?

Hon DAVID PARKER (Minister of Revenue): As to the last point, I think I’ve addressed that on a number of occasions already. In respect of the cost, I don’t have that figure here. I know that, as a party, we costed that before we put it into our policy. Those estimates may already be on the web. I’ve seen other estimates which I don’t have to hand. If the member wants to contact me some other I’m happy to provide her with them.

KAREN CHHOUR (ACT): I just find it a bit funny that we are talking about a Child Support Amendment Bill—it is about supporting the child, not the Crown. My Supplementary Order Paper 20 will ensure that the late fees go to impacted children and prevent the money from being absorbed into the Government’s accounts. The amount you need now is a lot less than what you needed before with these upgrades. We’ve got new computer systems in place. We’re now having employers taking on the responsibility of collecting the money. So how can you justify saying that it is too expensive to just allow these children to have that money that was meant for them in the first place? This will also mean that parents are more likely to want to pay their late fees, as they know the money is going towards their child, not the Crown coffers, and will be going directly to some of our most vulnerable children, who Labour says they want to help.

Hon DAVID PARKER (Minister of Revenue): There is no way the Government’s ahead in any of these transactions.

Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Chair. I want to just ask some questions of the Minister that pick up on one of the comments that the speaker before me, Karen Chhour, raised, and that is the fact that this is a child support piece of legislation. We had a number of submitters who asked us why the best interests of the child weren’t at the heart of this legislation. Given the Prime Minister’s commitment to children, I wondered if, in drafting these changes, there had been consideration for what was in the best interests of the child; and, if not, why was that not considered as the kind of fundamental driver for these changes. I accept, and National accepts, that some of the changes we agree with, but I wonder, and I’m interested in the Minister’s comments, whether or not this is actually, in fact, a missed opportunity to better support children in need.

Hon DAVID PARKER (Minister of Revenue): Children will be better supported after the package that is in bill than they are now. This is a good bill, and it does advance children, and it is in their best interests.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Now, I want to talk about two other matters that we raised—one during the select committee process and one in our minority view; we are consistent. The first one deals with the definition of “income”, and this is an area that we traversed quite significantly during the select committee stage, Minister, and, hopefully, you were aware of what was going on. But we certainly agree with including interest and dividends in the calculation of income which should be used for the assessment of what payment should be made.

One of the issues that we raised repeatedly was around the issue of advances from companies as a way of some people trying to get around disclosing income that would normally be paid either by way of dividend, interest, or salary, or even drawings. So we raised this quite often in the select committee and, obviously, the officials tried to help us on that matter. But what we heard at the end of the day was that they hadn’t had time to consider that. I was surprised about that, particularly with the background of the Minister—why he hadn’t had regard for the issue of shareholder advances being used as a way for people to supplement their income but without being assessed as income for the purposes of determining what payment should be made. So I am interested in what his view is on that and why he didn’t include that form of payment that should be taken into account, into the definition of “income”.

The second thing that we raised, in the minority view, is this ongoing issue of businesses being required to collect and make payments to people in respect of child support payments. So there is this ongoing desire by the IRD, particularly, to impose the cost of collection in the form of businesses doing that, and the HR departments within those businesses taking the money out of the accounts of people that they employ and making those payments. Those deductions all come with time costs for the businesses and, actually, a physical cost in terms of running those departments and making sure their IT systems are all up to speed and making sure that it is correct. So we are concerned that this is a trend that just keeps on going and there’s always the assumption around businesses having to do this.

I note that the Minister said that penalties need to go back to the IRD to reimburse the IRD for its costs—what about for the costs of businesses administering these schemes on behalf of the IRD? There does not seem to be any recompense or even recognition that businesses undertake this function, and will increasingly have to undertake it under this new bill that is going through, and yet there is silence from the Government as to supporting our businesses in doing that and making those payments on behalf, effectively, of the IRD.

Hon DAVID PARKER (Minister of Revenue): Thanks, Madam Chair. The Inland Revenue don’t think the universal rule in respect of shareholder advances would be fair. Therefore, they think that the circumstances of the individual have to be taken into account. How that occurs in practice is if someone thinks that their former partner or the parent of their child is avoiding obligations by constructing their affairs in the way that understates their real income, they can apply to the Inland Revenue for them to do an assessment, which could look through sham transactions. Similarly, the Inland Revenue Department can initiate those things of their own volition if they think it is necessary. And that is why they chose not to adopt a rule.

Andrew Bayly: And second point?

Hon DAVID PARKER: I forget your second point.

ANDREW BAYLY (National—Port Waikato): Thank you. Just to remind the Minister, the second point was the cost that’s being imposed on businesses. You talked about making sure that the IRD could get access to the penalties to recover their costs, but there’s no issue around cost-sharing or even acknowledging the role that businesses play in terms of capturing that money.

Can I just take the Minister up on his point about sham transactions. These are not sham transactions; these happen every day through companies. There are many ways of remunerating directors and shareholders, and this is but one of the mechanisms, and it’s a pretty obvious mechanism.

Hon DAVID PARKER (Minister of Revenue): If I could quickly deal with the latter point first again: sometimes a shareholder advance will be advanced by a company that’s making no money and there is no income, and a shareholder advance shouldn’t be taken into account for parent contribution purposes. On other occasions, that won’t be the case, so I don’t think a universal rule would be practical. In respect of the value that employers bring to this, yes, we do value that. I don’t think the bill takes any different stance to that which was proposed by the then National Government when they started this work, which envisaged that liable parent contributions would be collected from people’s wages and salaries. The impost of that on employers in practice is actually lower than it was in yesteryear, because these things are so much easier to do via software that enables it.

GLEN BENNETT (Labour—New Plymouth): Kia ora, Madam Chair. I rise and acknowledge my colleagues from across the floor on our select committee who have been through this process, and, as Maureen Pugh was saying earlier, we got to hear some harrowing submissions, some challenging submissions, and, obviously, ideas of how we should change and make this fit for purpose for all people. I guess a lot of it was around liable parents and how do they front up and do their thing. I guess I also want to acknowledge, obviously, the Hon David Parker here for having this piece of legislation. Also I see the under-secretary, Deborah Russell, is in the House as well tonight, who was part of crafting this bill. I want to talk about the four-year time bar. I guess, when I was listening to Maureen Pugh and she was talking—

Hon Member: Name dropping.

GLEN BENNETT: Yeah, we go way back. It was around the liable parent contribution. And I guess, talking to the people in my electorate and knowing what people expect of us, it’s often around feelings of loss, of separation obviously, but then it comes to the space around justice, around fairness, and, I guess, who does this bill serve? So I rise to ask that question around this four-year time bar in terms of where it fits in this bill tonight, and, I guess, why the four-year time bar? And I guess, in thinking about the submissions that we heard, there were parents who obviously were struggling with not only potentially being a sole parent or being a sole parent in a different relationship now, but it was really around that re-litigation and that challenge, I think of a previous spouse or a partner challenging the decisions that had been made. So I guess my question is around the time bar and will it be an unfair limit on a person’s right to be assessed on the correct grounds? That’s my question.

Hon DAVID PARKER (Minister of Revenue): Thank you. The four-year time bar is intended to set out a reasonable period that you can go back, and if it was longer than four years it seemed, on balance, that that was unreasonable and that, therefore, the reassessment period should only be able to go back for four years from the end of the relevant child support year. And I’m advised by officials that 98 percent of reassessments occur within a four-year period. So the 2 percent of reassessments don’t have to be balanced against the cost and the complexity and the uncertainty that’s created if you can go back further. There are some exceptions to the legislated time bar to address equity concerns. For example, if a person is subsequently found not to be the parent of the child, then that four-year period wouldn’t apply. Or if information is provided that’s found to be fraudulent, so there’s intentional criminal activity, then that time bar would not apply either.

CHAIRPERSON (Hon Jenny Salesa): The Minister has advised that Supplementary Order Papers 20, 21, and 22 may have an impact on the Government’s fiscal aggregates. They are ruled out of order as they were not lodged with 24 hours’ notice.

Part 1 agreed to.

Part 2 Amendments to Schedules of principal Act

CHAIRPERSON (Hon Jenny Salesa): The question is that Part 2 stand part.

Part 2 agreed to.

Schedules 1 and 2

CHAIRPERSON (Hon Jenny Salesa): The question is that Schedule 1 stand part.

Schedule 1 agreed to.

CHAIRPERSON (Hon Jenny Salesa): The question is that Schedule 2 stand part.

Schedule 2 agreed to.

Clause 1 Title

CHAIRPERSON (Hon Jenny Salesa): The question is that clause 1 stand part.

Clause 1 agreed to.

Clause 2 Commencement

CHAIRPERSON (Hon Jenny Salesa): The question is that clause 2 stand part.

Clause 2 agreed to.

Clause 3 Principal Act

CHAIRPERSON (Hon Jenny Salesa): The question is that clause 3 stand part.

Clause 3 agreed to.

CHAIRPERSON (Hon Jenny Salesa): I will report this bill without amendment presently.

Bills

Secondary Legislation Bill

In Committee

Clause 1 Title

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to the Secondary Legislation Bill. Members should note that the Business Committee has extended the powers of the committee to permit consideration of the proposed out-of-scope amendments set out on Supplementary Order Paper 13.

Members, we come first to the debate on clause 1. This is the debate on the title clause. The question is that clause 1 stand part.

Clause 1 agreed to.

Clause 2 Commencement

CHAIRPERSON (Hon Jenny Salesa): We come now to the debate on clause 2. This is the debate on the commencement clause. The question is that clause 2 stand part.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. I think it’s been well canvassed at previous stages of this bill being considered by the House that it’s widely supported. I can at least speak for National, and, of course, the Government putting forward the bill will continue to support it, no doubt.

So a couple of contributions as we go through the committee stage, really, for the purpose of placing on record a couple of points about the way that it will operate. Obviously, it’s pretty technical, and I don’t propose to do that in a way that is anything other than helpful for the public record in terms of the way that the mechanics of this will all work out. So in terms of the commencement date, which Madam Chair has invited us to consider as a committee of this, the whole House, I wonder if the Attorney-General can speak to the way that that’s intended to roll out. Obviously, we’ve got a mechanism where different dates can be set by Order in Council, and it seems to me that that might be quite fragmented in the way that we get this coherent regime quite slowly over a long period of time. So I wonder if there’s any advice that the Attorney-General can give us in that regard.

I see that he’s consulting with officials, so I’ll just continue speaking for a couple more moments, I think. [Interruption] Ha, ha! I’m encouraged not to be helpful by the devil on my shoulder, but the angel on my shoulder says to continue on. I wonder, then, in that case, if I can also add in a question whereby the Attorney-General might advise how it is as a House that we are dealing with the fact that we’ve got a piece of legislation that was contemplated and, indeed, drafted some time ago. I see that, you know, originally it would’ve come into effect in 2019, but we’ve had quite a lot of time having been passed since then and quite a few laws as well. I presume that his answer will involve the very considerable Supplementary Order Paper that’s almost as big as the Act itself—quite a feat, and I congratulate all those involved in putting it together.

But if the Minister is now ready to provide an answer in relation to the timings, the way it will all be brought forward, that would be much appreciated.

Hon DAVID PARKER (Attorney-General): Thank you for those questions. There are essentially three categories of change that are implemented through this bill. The first is the long list of statutes that are made consistent with the new arrangements, and that is, as we all know, a huge list that goes right across the statute book. An Order in Council is envisaged to bring those changes into effect for all of those different pieces of legislation on the same date, which is set by Order in Council but is expected to be around October this year.

In respect of another class of instruments, those are the much smaller list of empowering statutes that have regulation-making powers or that are being exempted from some of these provisions. Again, they are being grouped so that those exemptions will come into effect on the same date, not necessarily the October date but it might be. So it might be the same date, but it doesn’t have to be.

Then the third different commencement date, which is less certain, is the date on which there is centralised publication required of future instruments, and that’s dependent in part on technology, and therefore it’s less certain, and I don’t know the date for that yet.

RACHEL BROOKING (Labour): Thank you, Mr Chair. As the member Chris Penk just noted, it is a very large Supplementary Order Paper that we have in front of us, and, as you note, a lot of it is repeating the various statutes that are amended. I note, I guess with some irony, that in the commencement provision one of the changes is that “An Order in Council under this section is secondary legislation”—as per the legislation there for publication requirements. And it is, really, that “publication requirements”. You just touched on it and mentioned the technology, but have you got any further time frames on that or any discussion of what some of the difficulties might be with that?

Hon DAVID PARKER (Attorney-General): We’re actually not envisaging difficulties in choosing a date to trigger all of these processes across the statute book to line up and become more consistent across the many arms of Government; nor are we envisaging difficulties in choosing the date when we regularise the exceptions, or exemptions—I’m not sure which we’re calling them. In respect of how we bring into effect the better publication requirements, we’re less certain of that, because we haven’t yet finished the technological changes that are necessary to enable it. I’m sure officials will tell me if I’m simplifying that.

RACHEL BROOKING (Labour): Thank you, Mr Chair. Also on the Supplementary Order Paper, in your commentary on it, in the explanatory note, at page 6, you refer to the correction of some of the “empowering provisions that inadvertently catch as secondary legislation instruments that do not have legislative effect”—so that difference between the secondary and something that is not secondary. So I was wondering if you had any examples that you could give us of that.

Hon DAVID PARKER (Attorney-General): In a minute. Well, look, what I can say in respect of that—I’m asking for officials to give me a particular instance, but I understand it’s some of the rules that are made by organisations that are bound by statute, aren’t of statutory effect. I might have this wrong, but you could tell me—from memory, it could have been some of the provisions under the Racing Act, where sometimes clubs have rules which really aren’t, we think, of sufficient import to be treated like regulations and therefore go through that route. So there has been a cataloguing across the statute book of things that are important enough to be seen to be of statutory effect, or regulatory effect, that should be within this regularised regime. There have been some things that, really, are lower-level rules that we don’t think meet that threshold, and, therefore, those latter ones are being excluded. I think there has been some discussion at the Regulations Review Committee about those issues. I wasn’t there for those discussions, and I’m sorry I can’t remember the individual instances.

VANUSHI WALTERS (Labour—Upper Harbour): Thank you, Mr Chair. It’s a pleasure to be able to stand and make a brief contribution to what I understand is affectionately known as the “SLAB” of a bill, and that it is. I want to first acknowledge on that point the extraordinary amount of work that the Parliamentary Counsel Office and other staff actually across several Government agencies that administer primary legislation have put into this bill.

Now, there might not be many people whose eyes light up when it’s time to talk about secondary legislation. However, despite the hour—and we’re getting a bit late now—I see several colleagues from the Regulations Review Committee are looking bright-eyed and excited as we consider this bill at committee stage, as they should be. Because there are important rules set out in secondary legislation, as in this bill and the Supplementary Order Paper, that govern much in the day-to-day lives of New Zealanders.

Of course, it’s the role of the Regulations Review Committee to at various points review—

CHAIRPERSON (Adrian Rurawhe): I’m sorry to interrupt the member, but this is quite a narrow debate. It’s clause 2, not the whole bill.

VANUSHI WALTERS: Of course.

CHAIRPERSON (Adrian Rurawhe): So you need to relate your comments to the commencement in clause 2.

VANUSHI WALTERS: Can I refer to page 6 of the Supplementary Order Paper, where the Minister makes some points about various sections that needed to be reviewed. I just ask the Minister if he could speak to the second-to-bottom point relating to the correcting of amendments to ensure that empowering provisions and related procedural provisions will integrate correctly with the Legislation Act 2019. Are you able to provide us with further information on that?

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to clause 2 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Clause 2 as amended agreed to.

Clause 3 Amendments to Acts as set out by administering agency in Schedules 1 to 32

CHAIRPERSON (Adrian Rurawhe): Members, we now come to the debate on clause 3, including Schedules 1 to 32. This is the debate on the amendments to Acts.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Mr Chair. I was wondering if the Attorney-General could give us some guidance about where the line is drawn in terms of regulations that set a fee or levy. I understand that the general principle is that those tend to have legislative effect such that they should be regarded as secondary legislation, but that’s not always the case. So if any guidance can be given in that regard, that would be very helpful indeed.

Hon DAVID PARKER (Attorney-General): I look forward to the more precise guidance that will come from the Regulations Review Committee.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much. I wonder, in that case, if there is an answer that can be given from the chair—other than to simply go away and find out myself, wearing a different hat—if he can comment on the process of deciding what has significant legislative effect, such as, it was included in the many schedules, some 30 or so, and is he confident that most, if not all, such instruments have been picked up in that big process that would have been undertaken by many civil servants, including—and especially, I suppose—the Parliamentary Counsel Office (PCO), as colleagues have already acknowledged.

Hon DAVID PARKER (Attorney-General): Yes, I am. There has been an enormous amount of work that has been done by PCO in particular, over a number of years now. It is tedious work, I would venture to suggest, but they have had to go through the regulation-making powers of every Act that empowers regulations to be made, and determined whether they meet the threshold for inclusion in this bill. The vast majority do; there are a small number that don’t. I’ve already addressed that issue in terms of some subsidiary rules that don’t meet that test of legal importance.

In respect of some of the other changes that were made, Vanushi Walters just asked me about a provision relating to the correction to correct amendments to ensure that the empowering provisions and related procedural provisions will integrate correctly with the Legislation Act 2019. That is necessary because the prior version of the bill, the bill that went to the select committee, was drafted before the Legislation Act 2019 was passed, and, therefore, some of these things had to be updated in order to meet the changes that were made by that Act.

Look, I’ve got great confidence that this will be 99.9 percent right. It is possible that there is still some regulation-making power that sits in a piece of legislation that has been missed inadvertently; if it has been, then that needs to be updated. I’m sure there are processes through this Parliament that we can tidy up. You know, I don’t know how many regulation-making powers changed here, but I would say, overall, from the range of Acts, that there are many hundreds, if not thousands.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Mr Chair. Perhaps my final contribution to this clause within the bill. I wonder if the Minister can guide us in relation to the process—well, if anything, the education, and I’m struggling for a word that is appropriate—but the understanding of the civil service going forward in terms of the change of regime, whereby we’ve got a much clearer and coherent set of, well, rules, regulations, I might say in sort of a pretty general way, using ordinary meaning of the words that will be brought under this regime. Do you anticipate that it will be widely known and, indeed, celebrated out there in Wellington, effectively, what we are doing here tonight in going forward so that we don’t have to play catch-up in the future and, you know, correct language, whether it is notices or orders or other things that might properly, following the passage of this into an Act, be simply called “secondary legislation”?

Hon DAVID PARKER (Attorney-General): I think there will be rejoicing in the street that we no longer have DINLIs—for people who sit on the Regulations Review Committee, and I can’t even remember the full name of what that stands for now. I was on the select committee when we started this process, when this actually started from an inquiry into disallowable instruments that the committee ran. We then spoke with the then Attorney-General, Chris Finlayson, who agreed it was an appropriate piece of work to kick off, and I thank him for that.

In respect of your earlier question around fees, officials have provided me with a note that is helpful. Legislation that sets fees in just about all cases falls within the definition of the sort of secondary legislation that is caught by this bill. The only exception is where the payment of the fee is voluntary because it is a voluntary organisation for which the fee is set. So if it is compulsory, then it is caught.

RACHEL BROOKING (Labour): Thank you, Mr Chair. My question relates to Schedule 9 linked into clause 3. This is to do with the Ministry for the Environment schedules, and I’m wondering if you considered during the process—whether there was consideration of regulations of the sort that are made by district councils and plans and also in the local government provisions by-laws, if there’s the justification for them not being included as secondary legislation; if you’d be able to talk to that.

Hon DAVID PARKER (Attorney-General): My memory from that is old, and officials will tell me if I’ve got this wrong, but my memory is, you had to have a cut-off somewhere. It was already an onerous task doing it across all of Government. Picking up all of the by-laws that are passed by district councils or regional councils was thought to be an additional task. It was at that stage a step too far. But that said, given that the outcome of this will eventually be better access to the law for people, it would be nice to see one day the country embark upon that task and get those instruments in a form that can be more readily accessed by the people who are bound by them.

STEPH LEWIS (Labour—Whanganui): Thank you, Mr Chair. I, being a little bit of a law nerd, really applaud anything that makes the law more accessible to the New Zealand public. I was actually at, opened, the central North Island secondary schools debating competition in my electorate on the weekend and was reflecting about the first time I ever got up and participated in a debate myself. At that point I had to go to the local bookshop and buy the Act that formed part of our debate, the Animal Welfare Act. So, you know, we’ve come very far, obviously, in terms of our accessibility to the law and legislation in New Zealand. My question, Minister Parker, is whether thought was given to taking this a step further and making it more widely available in the same way that our Acts are available, so there’s a sort of central repository for regulations; and if not, why not?

Hon DAVID PARKER (Attorney-General): Ultimately, we do want all of the secondary legislation, whether it’s passed by Government agencies or some other body that’s authorised to pass legislation, to be accessible on an information platform. That requires new IT systems and processes not just in Parliamentary Counsel Office but also for other agencies that draft secondary legislation. So we’re on the way there, but we haven’t yet arrived, and some of the impediments to getting there are fiscal.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to clause 3, set out on Supplementary Order Paper 12, be agreed to.

Amendments agreed to.

Clause 3 as amended agreed to.

Clause 4 Amendments to Legislation Act 2019

CHAIRPERSON (Adrian Rurawhe): Members, we now come to the debate on clause 4, including schedules 33 to 35. This is the debate on the amendments to the Legislation Act 2019. The question is that clause 4 stand part.

RACHEL BROOKING (Labour): Thank you, Mr Chair. So one question on Schedule 33—sorry, this is at page 339 of the Supplementary Order Paper (SOP) 12. There’s a new subclause (3) inserted in clause 14 of Schedule 1 of the principal Act. It says “Nothing in this clause limits the information that the PCO”—the Parliamentary Counsel Office—“may record and publish in relation to an Act in relation to an empowering provision (for example, as an aid to assist users to understand how this Act applies to secondary legislation).” That’s an inclusion in the SOP, and I was wondering why it needed to be included and what benefit it will have.

Hon DAVID PARKER (Attorney-General): Again, officials can correct me if I’ve got this wrong, but my understanding is that’s to empower the Parliamentary Counsel Office to put explanations in legislation in these redrafted provisions that are being amended through this Act, so as to make it easier for people who look at them to actually work out what it’s saying and how it’s to be applied.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Mr Chair. I wonder if I can ask the Minister, in respect of parliamentary scrutiny and, in particular, presentation of instruments to the House—and I’m particularly interested in the role of the Attorney-General—

Hon Scott Simpson: Why isn’t this man in the Cabinet?

Dr DUNCAN WEBB: —in that parliamentary counsel will be presenting to the House a report on exemptions from presentation. So, instruments—

Hon Scott Simpson: He’d be better than Kelvin, this one.

Dr DUNCAN WEBB: —which would usually be presented but, for one reason or another, the legislation said it need not be presented—

Hon Scott Simpson: Make this man a Minister.

Dr DUNCAN WEBB: —or presented in such and such a way. I’m just wondering if the Minister could comment on what kind of reasons might be there—

Hon Scott Simpson: Carmel Sepuloni will be shuddering in her feet.

Dr DUNCAN WEBB: —and whether this report and the role of the Attorney-General will bolster parliamentary scrutiny?

Hon Scott Simpson: So will Megan Woods.

CHAIRPERSON (Adrian Rurawhe): Before I give the call, the Hon Scott Simpson, even in your interjections, please get the titles correct, thank you.

Hon DAVID PARKER (Attorney-General): The most likely examples are matters relating to national security, where the Government has done something that is of legislative effect that would normally—or does—fall within the category of secondary legislation, but for reasons of national security, the normal public processes that surround that would not apply. That’s a carry-forward of existing processes in the new regime that’s necessary. The other example would be sometimes where there are issues of commercial sensitivity, and I can imagine that sometimes applying in respect of exemptions that are given in respect of proposed takeovers and the like.

Clause 4 agreed to.

Clause 5 Deferred amendments to Legislation Act 2019 (for publication commencement date)

CHAIRPERSON (Adrian Rurawhe): Members, we now come to the debate on clause 5, including Schedule 36. This is the debate on the deferred amendments to the Legislation Act 2019. The question is that clause 5 stand part.

Clause 5 agreed to.

Clause 6 Amendments to Legislation (Repeals and Amendments) Act 2019

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to clause 6 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Clause 6 as amended agreed to.

Schedules 1 to 36

CHAIRPERSON (Adrian Rurawhe): Members, we now come to the votes on the schedules. The question is that the Minister’s amendments to Schedule 1 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 1 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 2 be agreed to.

Schedule 2 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 3 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 3 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Schedule 4 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 4 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 5 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 5 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 6 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 6 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Schedule 7 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 7 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 8 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 8 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 9 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 9 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 10 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 10 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 11 be agreed to.

Schedule 11 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 12 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 12 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 13 be agreed to.

Schedule 13 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 14 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 14 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 15 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 15 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 16 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 16 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): Half way! The question is that the Minister’s amendments to Schedule 17 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 17 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 18 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 18 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 19 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 19 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Schedule 20 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 20 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 21 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 21 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 22 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 22 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Schedule 23 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 23 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 24 be agreed to.

Schedule 24 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment inserting new Schedule 24A set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 25 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 26 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 26 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 27 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 27 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment deleting Schedule 28 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 29 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Schedule 30 set out on Supplementary Order Paper 12 be agreed to.

Amendment agreed to.

Schedule 30 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 31 be agreed to.

Schedule 31 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 32 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 32 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Supplementary Order Paper 12 set out on Supplementary Order Paper 13 be agreed to.

Amendments agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 33 set out on Supplementary Order Paper 12 as amended be agreed to.

Amendments agreed to.

Schedule 33 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Schedule 34 be agreed to.

Schedule 34 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 35 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 35 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 36 set out on Supplementary Order Paper 12 be agreed to.

Amendments agreed to.

Schedule 36 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): I will report this bill with amendment and joy!

House resumed.

Report of Committee of the Whole House

Report of Committee of the Whole House

CHAIRPERSON (Adrian Rurawhe): Madam Speaker, the committee has considered the Child Support Amendment Bill and reports it without amendment. The committee has also considered the Secondary Legislation Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill

Second Reading

Hon POTO WILLIAMS (Minister for Building and Construction): I present a legislative statement on the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon POTO WILLIAMS: I move, That the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill be now read a second time.

Lifting quality in our sector is at the heart of my agenda as the Minister for Building and Construction. This is a challenging time for everyone, and we’re facing disruption and uncertainty. On top of COVID-19 impacts, we have a sector continuing to face systemic challenges that are holding us back from meeting the needs of New Zealand and New Zealanders. The building and construction sector is New Zealand’s fourth-largest employer, accounting for 10 percent of New Zealand’s workforce, and our fourth-largest industry by GDP. We are responsible for delivering much-needed housing infrastructure and commercial buildings, the places where New Zealanders live, work, and play.

I want to thank the Environment Committee for their work and consideration of this bill. I also want to thank those who took time to submit and to provide their feedback. This bill seeks to address some longstanding challenges in the building and construction sector. Through the Building System Legislative Reform Programme, I am progressing major changes to New Zealand’s building laws, the biggest since the Building Act was introduced in 2004. These reforms will see a more efficient building system, a lift in the quality of building work.

This bill amends the Building Act 2004 in multiple ways. First, the bill introduces building product information requirements to better support and make more informed decision-making to help builders and designers choose the right products and install them in a way intended to support faster consenting. Secondly, it introduces a new voluntary scheme for modular component manufacturers to provide a faster, more consistent building consent approach. Third, it introduces new registration requirements for product certification bodies and provides the Ministry of Business, Innovation and Employment with greater oversight over the CodeMark products certification scheme to improve confidence that building products and methods will comply with the building code.

The bill introduces new offences, higher maximum penalties, a longer period to file a charge to provide greater protection for users, and other amendments to widen the scope of the building levy and enable public notifications to be carried out online.

Phase two of the Government’s reform programme will progress reforms of occupational regulation focused on ensuring people have confidence in the engineers and the regulated building practitioners and their work. I look forward to presenting these reforms to the House in due course.

During the course of the consideration by the Environment Committee, the bill underwent a number of changes to address issues raised by both submitters and the committee itself. The first modification is to change the commencement date from 12 to 15 months after the date of Royal assent. This will ensure sufficient time for the development of the regulations required to implement the changes to be developed and consulted on. A number of changes were made to the sections relating to the modular component manufacturer scheme. These changes will improve integration with building consent processes and clarify how the scheme aligns with consumer rights and the remedies under the Building Act.

The select committee process has been invaluable in improving the bill. A building system that inspires trust and confidence and can deliver safe, durable, and affordable buildings is a necessity for New Zealand.

Before I commend the bill to the House I’d like to thank the officials for all the work that they have done on this and other pieces of legislation that will help us to reform the building and construction sector. I look forward to progressing this further. I commend this bill to the House.

DEPUTY SPEAKER: The question is that the motion be agreed to.

TIM VAN DE MOLEN (National—Waikato): Thank you, Mr Speaker. It’s lovely to be able to take a call on this bill. It’s a critical industry, the building and construction sector. I’m proud to be a spokesperson for it for National, and I do commend the Minister for Building and Construction for the work that’s been done in this space. It is an area that offers huge potential, and I’ve been quite excited, actually, as I’ve been learning more through this portfolio. I met with PrefabNZ, and their enthusiasm in particular for the modular construction space was really interesting.

I think what this bill is doing is a great step towards helping to reflect the changes, the modernisation, the new technology, the different building practices that have come into our system here in New Zealand over time. It’s appropriate to now be setting up the modular component manufacturer certification scheme for them to better reflect, I guess, the ability to turn out consistent products in a safe and efficient manner that can then give confidence to those building consenting authorities—the BCAs—to be able to sign those off in a fast-tracked process, I suppose.

One of the things I hear consistently when I talk to people in the industry, or those who are just wanting to build a house or any number of construction projects, is the time it takes to consent. That is a sticking point consistently around the country. The ability to shorten it in instances down to 10 days is fantastic, so having that within this bill is good.

I do just want to highlight one of the concerns that was raised by I think it was PrefabNZ, actually, during their submission, around how you ensure where the liability sits within that process. Of course, the construction of a particular modular component versus the installation may be done by a person who is not necessarily adhering to how the manufacturer anticipated that module would be assembled or installed into whatever site it is, and so, yeah, there’s just a question mark over that. But the process itself, I think, is good.

We’re supporting this—I will say that. So, you know, there’s been some good—

Hon Member: Hooray!

TIM VAN DE MOLEN: —work done on it and—thank you. Thank you. Well done to all the officials and the select committee for their work on it, as well, throughout this process.

As I said, this sector has huge potential, and the Minister touched on this being part of phase one. I am excited to see the progression of that, and I look forward to seeing phase two as well, the next steps. There’s always more that can be done around some of that regulation, because what I hear, as well, when I’m out there talking with participants in the industry, is that we have seen a significant increase in the level of compliance and the time it takes to get things done, but, actually, we’re still seeing issues slipping through as well. So the additional compliance hasn’t solved all of those concerns we’re having around some of the standards and ensuring that we’re delivering safe products and that our consumers can have confidence in that. So I look forward to seeing phase two, which, hopefully, will address some of those aspects and give a bit more certainty and take out some of those areas where we are still, unfortunately, seeing issues coming through the sector, not just in this particular modular construction space, of course, but more broadly across the industry.

So in terms of this bill, the product certification scheme was one area that I thought was really good to see work done alongside the minimum requirements for information. Right, so this was all about trying to speed up the ability to get the process signed off and also to give confidence to those people using whatever products or methods they are using that they comply and adhere to the standards necessary. So those aspects were great.

The other one that I really wanted to touch on in my contribution here was around the broadening of the scope of the levy. That’s an area that, again, has come up in numerous discussions I’ve had around the ability to utilise I think it’s about $60 million - odd worth of surplus levy at the moment to make some proactive changes, or improvements, in different areas, rather than just having that levy there and maybe offsetting it and reducing the levy over time until it dwindles down. But broadening the scope, as proposed here, enables some practical changes to be brought forward, in my view, and I’m really excited by that particular aspect, to give a bit more flexibility to, I think, tick some of those boxes that we’re hearing from industry need to be explored in more detail and, obviously, funded alongside that.

Lastly, the other aspect I wanted to touch on was around the penalties and offences and some of the changes made there, obviously, around the levels of fines but, more specifically, around the extension from six months to 12 months to investigate a potential offence. Again, this comes back to giving confidence and certainty to those participants in the industry that standards are being met. So that additional six months, I think, gives a good balance between, of course, wanting to proceed and to have an appropriately compact investigative time frame and also ensuring that any necessary process can be gone through to cover off—well, firstly, to take up and explore the potential of an offence but also to look at whether multiple offences have occurred and to gather appropriate evidence. So that extension of a further six months I think provides a nice window to enable that to occur without it being an unduly long time to work through that process.

All in all, there’s some really good stuff in this. I’d like to acknowledge all the submissions that came in—96, I think it was—from a whole range of different sectors, so I thank them for their contribution as well. I’m excited to see this progressing through, and I’m very keen to see the next phase as well, Minister. I look forward to seeing that in due course, but I commend this bill to the House. Thank you, Mr Speaker.

RACHEL BROOKING (Labour): Thank you, Mr Speaker. Like Tim van de Molen, the member that’s just been speaking, I’m also very excited to be talking on and about the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill.

Hon Member: Long name.

RACHEL BROOKING: It is a long name, and I’m going to talk a little bit about some of the acronyms that are used in the Act and some of the processes around the prefabrication, which I think is so important. But, first, I really want to start by saying one of the reasons why I’m so excited is that in my previous life I worked in a law firm that did a lot of work for local government, in particular. So, of course, when the then Minister, the Hon Jenny Salesa—who was just in the Chair but has vacated now—was the Minister, she really had that wide-ranging process for people to submit on how to improve our building legislation. Now this has come from part of that, so it’s great to be involved, and I’m involved in my role on the select committee. Unfortunately, I wasn’t on the Environment Committee last term when they heard all the submissions, but I understand that they were very in-depth and well considered by the select committee. So I thank the select committee members of this current Environment Committee and of previous select committees, and I know there’s a number of members across the rows.

What I really want to talk about tonight is the prefabrication and off-site manufacturing that’s called the non-traditional building methods that this bill is really trying to help encourage. So it’s doing that by producing this voluntary scheme for modular component manufacturers and for faster building consents, and that is a good thing. There’s a lot of prefab builders—or you can’t call them builders, really. Manufacturers of prefabrication have been held up by the Building Act as it currently stands because they’re making these components off site, so the normal checks that the Building Act currently provides for don’t fit neatly with that prefabrication. Prefabrication is going to help us as a country deal with our housing crisis and that supply side. You know, we heard today that we need to build more houses. In the House we heard, as well, that the Government’s doing a lot to support investment in the trades and training and apprentices. We heard Minister Hipkins say at question time today that many, many new training spots are in that construction industry. This is a good thing. The future Resource Management Act reforms, they’ll be a help as well, although they’re longer off than this particular help.

So the Building Act has needed a hand to get on with the prefabrication, and we’re doing that here now. The bill establishes a new regime in new Subpart 7A in clause 7. This is to deal with the prefabrication that the previous speaker and I have just been talking about. But we don’t call it prefabrication; we call it modular component manufacturing, and so there’s quite a detailed scheme in the bill that I’ll talk a little bit about.

Subpart 7A and the other parts and other clauses of the Act are relevant as well to make the current Building Act line up with these provisions, but, basically, the new scheme is all in this new Subpart 7A. So there’ll be a modular component manufacturer certification accreditation body—that is a lot of words, so in the bill this is referred to as the MCMC accreditation body. Now, the MCMC accreditation body can accredit and audit a person as a modular component manufacturer certification body, so that is an MCMCB. So that’s two steps, and we’re going to get to some more acronyms involving MCs. But the point here is that the MCMC accreditation body has some powers over the MCMC certification body.

Angie Warren-Clark: That’s right—say that again.

RACHEL BROOKING: Thank you. I’m going to come up with some more MCs, I promise.

Hon Member: Is it MC Hammer?

RACHEL BROOKING: Yeah, no, I’m not MC Hammer—thank you, though, for the reference.

So the accreditation body, they can suspend the certification body, and there’s a process established in this Subpart 7A for that and it can involve the chief executive. Then, the MCMCB can certify a person as a modular component manufacturer, so that’s an MCM. How this goes about is that if the components can comply with the building code and other requirements, if there are any prescribed by legislation, then they can become a modular component manufacturer. So, again, this part of the bill establishes provisions for audit, for suspension, and for revocation of that certification.

Then, the next step in this hierarchy of MCs is that the certified MCM—so that’s the modular component manufacturer—can become registered. Now, in its certification of that registration, it’s limited as to what they can do. Once again, this new subpart introduces provisions for audit of that MCM, suspension if they’re not complying with matters, and revocation of that certification. Then, that registered MCM—and I’ll remind you that the MCM in this case is the modular component manufacturer, so it’s the person building the prefab—can issue a certificate relating to compliance with the building code, and that’s the trick that’s going to help us get more prefab buildings around our country.

The MCM scheme rules can be found at new section 272ZG. They can be made by the chief executive, including how to evaluate MCMs and rules that supplement regulations. So there’s a process here to establish the rules, and that includes public notice submissions and then those submissions being considered and some justification for those rules.

Now, if we go to new section 272ZG, “MCM scheme rules”, in clause 71, there’s a nice little definition that I thought—well, a nice clause that helps with all these MCMCs. So this section is talking about scheme rules and how they can be made, and I’ve just gone over that very briefly, but then at subsection (3) it says, “In this section, ‘scheme party’ means any of the following:”—this is useful—“(a) the MCMC accreditation body: (b)”—[Bell rung]—“an accredited MCMCB:”—

Hon Scott Simpson: Thank goodness!

RACHEL BROOKING: —“(c) a registered MCMCB: (d) a certified MCM: (e) a registered MCM.” I think that’s very helpful too, because this language is complicated and repetitious in terms of the use of the word “building”, and we’ve got definitions of “building product” and “building method”, and the members across will be pleased that I won’t go through those in detail.

But it’s very important that we understand this language, because it’s powerful. This is really going to help the building of houses more quickly in New Zealand by enabling this prefabrication. Although the legislation has a lot of acronyms, we can get through it, and it’s all totally logical, as, hopefully, I’ve outlined today. So, with that, I’m very happy to commend this bill to the House.

Hon SCOTT SIMPSON (National—Coromandel): Hallelujah! Thank goodness that the MC-ing has been completed for the evening. That was an awful lot of MC-ing, and Rachel Brooking, the Labour MP who has just resumed her seat, is a new MP. She has yet to behold the delights of Resource Management Act reform, and there will be plenty more opportunity for her to give speeches along those lines as we progress through that pathway over the next 10 years or so, although she probably won’t be in Parliament by that stage.

But I want to try and move from the MC-ing and the theory of this bill to the practicalities of it and why we’re supporting it, and what it means in practical terms, because, yes, it’s got some quite complicated features about it, this piece of legislation. But the intent is good, and I think that it will have a positive effect on the speeding up of construction of, particularly, modular homes in the years ahead when the bill is eventually enacted and put into place.

One of the things that did take place at the Environment Committee was that the committee recommended, and the Government have agreed, to extend the commencement date. Because of the fine detail in the legislation, the select committee heard from submitters who were concerned about the need to bring up to speed, particularly in terms of regulations and rules, and that it would take a bit longer than was being given in the original bill that was presented to the House and considered by the select committee. So, initially, the plan was to have this legislation take effect 12 months after the Royal assent. The committee has recommended that that be extended to a 15-month period after Royal assent, and I think that’s sensible. I’m pleased that the Government have agreed to accept the select committee’s proposal in that regard.

But I too want to talk a little bit about the prefabrication provisions because that’s the area that I think will have the greatest impact. Rather than go into the sort of the detailed analysis of it, I would like to relay to the House the situation that I well remember when meeting with a business owner who owns and operates a building construction business in my electorate in the Coromandel, in Thames. This is a business that builds holiday homes—baches—and they are largely of the same design. There are, I think, seven or eight designs that this builder builds and, essentially, you can have design No. 1, design No. 2, design No. 3, or design No. 4, and so forth, but that’s pretty much it. Really, the only thing that changes in the design of each of those homes is you can maybe, as a purchaser, choose a different coloured paint on the exterior, or different types of taps on the sinks, taps on the bath, or taps in the laundry, but, essentially, the floor layout, the design, the construction, and the plan is exactly the same. So if you buy plan No. 1, you’re going to get plan No. 1, and that building will be constructed in a way that is identical to every other one, as I say, with only cosmetic changes.

I remember going to visit this builder, and in the Coromandel, we have several district councils. The Thames-Coromandel District Council is one, the Hauraki District Council is another, and in those days, the electorate boundaries included a big part of the Matamata-Piako District Council. This builder was at pains to show me, and he said, “Scott, here is the planning consent work for my building No. 1 from the Thames-Coromandel District Council.”—and you’ll forgive me a little latitude, Mr Speaker, because I can’t remember which was which. But there was a relatively small pile of paper and that was the planning consent work that was required for building No. 1. Then he said, “But building No. 2, if I take it to the Matamata-Piako District Council, they require this much paperwork, and if I take it to the Hauraki District Council, it’s actually this much paperwork.”, and yet the buildings were exactly the same. In fact, the only thing that really differed between each of those buildings that were going to be built in different district council areas was, in fact, the piece of land that they were being built on. The actual dwelling was exactly the same.

Although this builder was not prefabricating, the design for all was exactly the same, and he couldn’t understand why it was that he needed to go through three different consenting processes for three separate district councils for what was, essentially, the same building. I, at the time, was sort of flummoxed and thought, well, he made a lot of sense, and of course the whole essence of this piece of legislation is to try and streamline that process.

If you look, as people sometimes do, at what happens in other parts of the world, you would go to North America, go to Canada, and see some of the work that is done there in terms of prefabricated houses that are built in huge, big warehouses using all the modern, efficient tools that come with, essentially, almost a production line—in fact, well, it is a production line—of housing. The houses are designed to a plan, to a template, a bit in the same way that a car may be built. You get to choose the colour, you get to choose the interior layout, and maybe the carpet and the curtaining and what have you, but the basic plan and design is identical and is the same. Then, those prefabricated homes are built efficiently, and priced effectively as well. They are put on large trucks, and they are then delivered to the building site in a way that we don’t see much of at all in New Zealand. Part of the reason that we don’t see much of it in New Zealand is because it’s been difficult to get consent, it’s been difficult to get the regulatory approval, and it’s been difficult to get through the red tape.

This piece of legislation, I think—I hope—will cut through much of that red tape in a way that will have a meaningful benefit to homeowners, to first-time buyers, and even to people who are looking to maybe downsize in the older age group. Maybe they’re empty nesters and they’re looking forward to building a beautiful home in the lovely Coromandel electorate, where the quality of parliamentary representation is infamously good, and they will find that they can build a prefabricated home in a less expensive, more efficient, more effective way, and then free up what was maybe their old family home for another family. So this is all part of, I think, a good piece of legislation that when put into effect, notwithstanding all the MCs and all the technical terminology—I think if we cut through what the primary objective of the legislation is and think about what the practical benefits will be, I think that it won’t be too long after the bill receives the Royal assent, and 15 months into it, we’ll start to see reasonably quickly the benefits in a tangible way of this piece of legislation.

I’d like to thank the submitters. There were quite a few, and I did have the opportunity and the privilege of sitting on this committee in the last Parliament. So there were 93 submissions, and over the course of that time we heard from 28 submitters. I think that that was a useful process, it was an example of the select committee system working, I think, exceptionally well in quite a complicated area, but with a good positive outcome.

I will look forward, once this legislation eventually does pass through into law, to being able to take a copy of it back to that builder in Thames and saying, “Well, actually, hopefully, this will sort out your problem and your three piles of paper with differing consent requirements and differing district councils will no longer be required.” So we’re looking forward to supporting this bill. We’ll participate in the discussion of the committee of the whole House, and then look forward to its third reading in due course.

TANGI UTIKERE (Labour—Palmerston North): Tēnā koe, Mr Speaker. It is a pleasure to take a call on the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill. It is even more particularly, I guess, desirable to follow that member, because I know there are a number of new faces around the Chamber, but colleagues on this side asked me who that was. Well, the quality—oh, and there we get the bow of acknowledgment from Mr Simpson, the person who, in his own words, has the quality of parliamentary representation in the Coromandel. It is so good that people do not know who he is on this side of the House. The message for the Opposition, quite simply, is that my colleague Rachel Brooking will be here in 10 years’ time. It’s a little bit questionable for those on the other side of the House, and perhaps we could refer to him later as the former member for the Coromandel, in the future, at some stage. I think he is thinking it is coming sooner than he may hope.

It is a pleasure tonight to speak in support of the bill. In particular, can I acknowledge the Minister, the Hon Poto Williams, for her work in this space. But, in particular, it is an absolute delight to listen to the Minister’s agenda in relation to this piece of legislation, because we on this side of the House, in Government, do want to lift the quality in the sector. We are passionate and determined in lifting the quality, and this bill does exactly that. What this bill does is it seeks to amend the Building Act 2004 by playing its role in a wider suite of reforms that we intend to put to work moving forward so that the quality in that sector will do exactly what we want it do, and that is to improve and increase.

Can I acknowledge the work of colleagues on the Environment Committee. It was a pleasure for the committee that I sit on to progress some of this. I note that its first reading back in mid-May of last year has meant that it has perhaps been some time since it has come back before us. But the work that the Environment Committee has done in that space is none the less commendable.

The rationale behind supporting this bill is, as the Minister has said, to provide an increased level of quality alongside the fact that we actually want a building sector, industry, and structure that inspires confidence, that inspires trust, but, actually, that also inspires more than an ounce of integrity as well.

Dr Duncan Webb: Knowledgeable.

TANGI UTIKERE: Knowledgeable—thank you, Mr Webb. That’s right, knowledgeable—that’s what we want, indeed. This will be the first form of reform to the Building Act in around about 17 years. It is an Act that was put into place in 2004, and so it is pleasing that its time has come.

What this will do is it will not just provide that confidence but, actually, provide certainty, as well. When people are going about the conversation and the journey when it comes to construction and building their own homes, for example, what we want to make sure is that they are in the best position possible and that they are able to make well-informed decisions—not just any decisions, but well-informed ones. This particular bill goes quite some way in seeking to address that. Why? Well, simply because it introduces some specific product information requirements so that we end up with more informed decision-making as part of that process, and, actually, that the selection and choice will be correct, accurate, and fundamentally right. We shouldn’t just cursorily look at that and sweep that to one side, as well—but not just the selection or the choice of the products but the installation that will follow that, as well.

We’ve heard already some contributions that align to faster consenting. Now, my days in local government—and I know I’m not the only one that comes from that particular sector or has an interest. Actually, all members in this House will have an interest in the local government sector because it is about local communities, at its heart. But we all know that councils could do better when it comes to consenting. What this proposed legislation is doing is it is giving them another tool in the tool kit to deliver and do exactly that.

One of the interesting things that a member opposite has alluded to is that this bill will introduce new offences but also, along with that, the potential for higher penalties that will serve as a disincentive for those that wish to perhaps flout the rules and not follow what is expected. So those opportunities that came through the select committee process will mean that that is a good change, and it is proof that the select committee process is doing what it is intended to do.

In terms of consenting, I just could not resist but have a look at my own electorate. Consenting numbers just generally are on the up, and we all know about that, but this will go some way to increasing consenting opportunities in my own electorate of Palmerston North, where if we look at the figures—[Interruption]—a fantastic place; it’s a fantastic place, thank you—in the year to December 2020, building consents in my city were approved for 524 new houses, which was 18 percent up on those stats in the previous year. With these changes, we are expecting and anticipating that we would see improvements in the sector and therefore that would flow on to those stats, as well.

Building and construction is, obviously, a really important sector to Palmerston North, and, actually, not just Palmerston North but to the wider Manawatū and Whanganui region, as well. So these changes will be well placed for regions such as mine to deal with the demand that undoubtedly comes our way, and continues to come our way, as well.

In terms of other proposed changes that have come through the select committee process, previous speakers have referred to modifying the commencement date. Now, it may seem that, actually, pushing 12 months out to 15 months is not a lot of time, but the feedback that the select committee received was that that would just be the sweet spot in terms of allowing those regulations to be developed—they are important regulations—as instruments and so that it is fair to everyone.

It also extends the filing time frame for a charging document where local council, for example, might want to go down the path or the particular route around investigating a potential breach. It means that it gives councils and inspectorates time to gather the information that they need to not be forced into making a quick decision on whether or not they should proceed with filing a charging document, and so it is well placed and another good addition to the piece of legislation coming back to the House, as well.

So, having considered all of those factors, I’m of the view that this is a fantastic piece of legislation. It is complimentary to the Government’s programme of reform in this space and is yet another example of this Government delivering for our community, delivering for local councils and local government, and that is something that all members of this House should be very proud to support. On that basis, I commend the bill to the House.

Hon MARAMA DAVIDSON (Minister for the Prevention of Family and Sexual Violence): Tēnā koe e te Māngai o te Whare. Tēnā tātou, ōku hoa kaimahi.

[Greetings, Mr Speaker. Greetings to us all, my work colleagues.]

Tēnā koe, Mr Speaker. We are pleased and excited to support the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill. I realise that what we are trying to do here is set some certainty and some clear expectations on standards, not just giving the sector some certainty but actually our overall programme of modernising and increasing and scaling up the way we build, how we build, and what we build with. So we’re really pleased to support this bill in the second reading for that reason. But also, as others have noted, this bill will, hopefully, encourage and stimulate where we go in the whole entire construction industry, while also understanding that off-site construction, and prefab off-site construction in particular, offers a regional economic development thread which many around the regions have been calling for support for for quite some time.

So the introduction of legislation and regulatory frameworks such as this bill will all go towards encouraging that it’s not just about building; it’s about a broader vision for Aotearoa. It’s about broader economic development, including in the regions. I know, as my colleague Mr Utikere has pointed out, that speeches are always an opportunity to nail one’s flag to their region and their rohe, and certainly in Tai Tokerau, places like Kaikohe have been calling for some time for the sorts of opportunities that this bill will, hopefully, encourage.

I wanted to pick up on what some of the proposed amendments will be. I’ve also got a particular concern from our actual spokesperson on this bill, the Hon Julie Anne Genter, that I’ll also touch on. I wanted to mention that I got given only a moment’s notice that I would be speaking on this bill, so it’s been a good, quick bit of learning, which is not new to people in this House. But I was genuinely pleased to see in the proposed amendments how they will, as I said, provide that explicit, clear understanding regulating building products and methods. We know and have heard from the industry, actually, for well over a decade—probably decades—how that has been a systemic issue and how that has provided poor quality and a lack of consistency. That is another part of what the proposed amendments are going to try to address to ensure that the regulatory regime in itself is fit for purpose and for the way that the world, actually, is heading in terms of how we build and off-site construction.

I wanted to also add in here—and, as I said, it’s only been a moment’s notice, so I haven’t done the google yet—that my understanding a few years ago was that, currently, our off-site construction percentage across our whole construction industry was down around not more than 10 percent or maybe a bit more than 5 percent, while other parts of the world actually have off-site construction well up above 80 percent or sometimes often 90 percent of their overall construction method. I think that the off-site construction method, and the prefab in particular, is where we need to be heading in our enduring solutions to addressing the housing crisis, especially noting that other parts of the world are well ahead in utilising those particular methods. So fixing all the regulations up, fixing the frameworks up, and also drilling down a little bit into product quality as well, are vitally important to the enduring solutions.

I see that we’re also wanting to pull in and give some clarity on the investigatory powers of the Ministry of Business, Innovation and Employment (MBIE), and we’re looking at increasing penalties for misleading statements about products and methods used. My goodness, have we heard that from the sector loud and clear about the sort of cowboy element that has been ruining it for all, in fact, across the sector. My goodness, have we heard that, and I was really pleased—well, first it was a bit of a shock to find out that, actually, the building levies that we have been charging have been more than recovering the costs. Therefore, we are reducing the building levy because we’ve been recovering more than what was actually needed for that purpose in the first place.

All these things are good things. All these things the Green Party are proud to support. It’s really, really important that there has been strong support from stakeholders across the sector as well, and other members in the House who have had the privilege of hearing that directly on the select committee have commented on that—really important. They are the absolute experts, with the insight and experience into making sure this bill is as good as it can be.

I notice that the first change lifts the burden off, leaving it to individual councils to have to regulate and to pick up that gap in our framework for building regulation, and we were leaving a lot of that to councils, which also then led to inconsistent standards and requirements around the country. Goodness knows what is wanted in one place and then in another place. So that was really important that we fixed that up as well.

There’s also a bit of duplication and, I guess, regulatory crowding where you’ve got several bits of regulation that mean the same thing in different words across different parts of legislation and in different parts of the country, so we’re tightening that up a lot, and also there is the potential threat to safety, depending on how materials are used in different situations. It’s quite boggling that this has been this way for quite some time. It’s really good that we are fixing this up in this particular bill at this time.

The framework of certification of modular building is one of the other major changes. We’re wanting to allow off-site inspection of components with deemed compliance of the building, and it’s if the components are assembled in accordance with approved methods. I noticed in the select committee report that that was quite a topic of conversation, as it should be. I think one of the other final changes that I wanted to highlight was where it talks about MBIE requiring information about building products and methods so that they can carry out their work and so that their regulatory functions are more effective.

I wasn’t—oh, how did I use all of that time up? I said I wasn’t going to speak for long, but OK.

It’s important that I raise one particular concern from our spokesperson on building and construction, the Hon Julie Anne Genter. I looked through the select committee report, and it didn’t seem to canvass it, but others who were actually on the select committee—you may not have written it in the report, but you may have discussed it. Please correct me if you have. She’s concerned about whether the Government will require mandatory, rather than voluntary, third-party testing for product certification for, for example, things like tapware, where there is some evidence to suggest that there is some cheap tapware that is flooding into the market and that that cheap tapware can also lead to leeching into drinking water. There is no safe level of lead exposure in drinking water. So if that was discussed, I look forward to others correcting me.

Apart from that, we absolutely celebrate the direction of this legislation and encouraging the certainty for the industry around off-site construction and prefab building methods. Thank you, Mr Speaker.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Mr Speaker. I rise on behalf of the ACT Party in support of the second reading of the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill. I want to acknowledge all of the New Zealanders who work hard to provide homes for us in New Zealand: the builders, plumbers, drainlayers, electricians, architects, carpenters, tilers, bricklayers, project managers, suppliers, developers, and those who take on the risk and years of stress to see a project to completion. It’s all of their hard work that provides us homes for our families in this country.

A number of people from these industries took the time to make a submission on this bill, and I thank them sincerely for taking that time. Our democracy works best when we hear from New Zealanders who work in industries that would be affected by a change in law. It provides a “boots on the ground” perspective that lawmakers in Wellington need.

This bill seeks to amend the Building Act to support the building sector to shift to new, more effective and efficient building work and construction. It seeks to do this by strengthening the existing product certification system CodeMark to ensure products sold in New Zealand comply with the building code. It also establishes a new manufacturers’ certification scheme for non-traditional methods of construction, such as modular components and off-site manufacturing.

The ACT Party supports this reform of regulations around building products and methods for building homes. We think it’s an important part in addressing the housing deficit in New Zealand. Recent reports show not only that housing in New Zealand is unaffordable by international standards and getting worse but also the reason why: we are simply not building enough homes. This bill is a small but practical step towards addressing that shortage.

Because of submissions during select committee, the ACT Party still has a concern regarding the certification of a modular component manufacturer. Our concern is that a designer would not appear to have a role in certifying whether products manufactured in accordance with their design do, in fact, comply with the design intent. We will be putting forward an amendment in the committee of the whole House to address this issue and our concern.

This is an important bill that has the ACT Party’s support. Thank you.

DEPUTY SPEAKER: Members, we’ve gone past 9.54. Therefore, this debate is interrupted and is set down for resumption next sitting day. The House will adjourn until 2 p.m. tomorrow.

Debate interrupted.

The House adjourned at 9.57 p.m.