Thursday, 15 April 2021
Volume 751
Sitting date: 15 April 2021
THURSDAY, 15 APRIL 2021
THURSDAY, 15 APRIL 2021
The Speaker took the Chair at 2 p.m.
Karakia/Prayers
Karakia/Prayers
ASSISTANT SPEAKER (Hon Jenny Salesa): Ke tau lotu. ‘E ‘Otua Māfimafi, kuo mau taa‘i mālie ‘i ho‘o ‘ofá mo e ngaahi tāpuaki hono kotoa. ‘Oku tuku homau lotó ka mau hū atu ke ke malu‘i ange mu‘a ‘a e Kuiní, mo tataki ange ‘emau fua fatongia ‘i he Fale Aleá ‘aki ‘a e poto Faka-e-‘Otua, ‘ofa pea mo e ‘ulungaanga malū, ko e ‘uhí ko e mo‘ui mo e melino ‘a e fonuá. ‘Oku mau kole atu ‘a e ngaahi me‘á ni hono kotoa ‘i he huafa ho ‘aló pē ‘e taha ko Sīsū Kalaisi ka ko homau fakamo‘uí, ‘Emeni.
Business Statement
Business Statement
Hon CHRIS HIPKINS (Leader of the House): Today, the House will adjourn until Tuesday, 4 May. The start of the annual review debate will be rescheduled for that day. The Immigration (COVID-19 Response) Amendment Bill will complete its remaining stages. Other legislation to be considered will include the first reading of the Counter-Terrorism Legislation Bill and the second readings of the Holidays (Increasing Sick Leave) Amendment Bill and the Fair Trading Amendment Bill.
CHRIS BISHOP (National): Thank you to the Leader of the House for those remarks. Can I ask him whether or not the Government will give some thought in the upcoming recess to the re-establishment of the Epidemic Response Committee?
Hon CHRIS HIPKINS (Leader of the House): The Epidemic Response Committee was established when Parliament was not able to sit, when question time could not happen, when the regular scrutiny of Government activity was not available to members of Parliament. That is no longer the case.
Points of Order
House Dress Code—Branded Apparel
Hon JAMES SHAW (Co-Leader—Green): Point of order. Mr Speaker, when you were earlier this year considering business attire, there were some submissions that were concerned that allowing MPs not to wear ties would be the beginning of a slippery slope towards a very different standard of dress in the Chamber. And I wonder if you might like to reflect on that this afternoon.
SPEAKER: Well, I have been reflective of it and I’ve been warned of it, and I think I only have one comment to make and that’s: whakanuia te tangata. Ringa raupā.
[Exalt the person. Calloused hands.]
Hon EUGENIE SAGE (Green): Point of order. Your guidance, Mr Speaker, then: is business attire to include clothing branded with logos?
SPEAKER: Generally, no, but in this particular case the member has sought advice appropriately as to what she was going to be wearing, and it was certainly my view that on balance, given the very good cause that is involved, I’m prepared to let it pass.
BARBARA KURIGER (National—Taranaki - King Country): Point of order, Mr Speaker. If I may just explain to the House. Thank you, Mr Speaker. The money that was raised through the New Zealand Rural Games Trust is over $6,000 for scholarships for agricultural students—youth. So that’s where the cause is going to. But it’s also been substantially supported by Sir John Kirwan in terms of bringing attention to rural mental health and wellbeing. So two worthy things happening there, and that’s the reason why I’m here today. Thank you.
Petitions, Papers, Select Committee Reports, and Introduction of Bills
Petitions, Papers, Select Committee Reports, and Introduction of Bills
SPEAKER: No petitions have been presented.
A paper has been delivered for presentation.
CLERK: Report of the Minister for the Environment on the operation of the Ozone Layer Protection Act 1996 for the period 1 January 2019 to 31 December 2020.
SPEAKER: That paper is published under the authority of the House.
Select committee reports have been delivered for presentation.
CLERK: Report of the Health Committee on the petition of Helen Morgan.
SPEAKER: The Clerk has been informed of the introduction of bills.
CLERK:
Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill, introduction
Land Transport (Vehicles Responding to Electrical Emergency) Amendment Bill, introduction.
SPEAKER: Those bills are set down for first reading.
Oral Questions
Questions to Ministers
Question No. 1—Finance
1. Dr DUNCAN WEBB (Labour—Christchurch Central) to the Minister of Finance: What recent reports has he seen on the New Zealand economy?
Hon GRANT ROBERTSON (Minister of Finance): According to Statistics New Zealand, electronic card transactions were up in March compared to the previous quarter, showing that New Zealanders are continuing to show confidence in the economy. This was better than expectations, given the increased alert levels in the earlier part of the month. Responding to the Statistics New Zealand report, the ANZ Bank noted that there were several pluses on the retail spending front, including the improved balance sheet position of households, high levels of employment, and low interest rates.
Dr Duncan Webb: What reports has he seen on Government support for the New Zealand economy?
Hon GRANT ROBERTSON: Last month, when Auckland went into alert level 3 for a week, the Government provided a wage subsidy to help affected businesses. I can inform the House today that 52,272 applications were approved for the wage subsidy, and more than $178 million was paid out to those businesses.
Dr Duncan Webb: What other support has been provided to businesses during recent COVID resurgences?
Hon GRANT ROBERTSON: The Government created the Resurgence Support Payment to assist businesses with one-off costs during alert level rises. Taking into account both the increased alert level events this year, 79,384 applications were received, and just over $198 million was paid out, with roughly 75 percent of that going to the Auckland region. While we in New Zealand enjoy a relatively normal way of life compared to our friends overseas, we do know that this can change quickly, and the Government remains ready to support businesses and workers should alert levels have to increase again.
Question No. 2—Prime Minister
2. Dr SHANE RETI (Deputy Leader—National) to the Prime Minister: Does she stand by all of her Government’s statements and actions?
Hon GRANT ROBERTSON (Deputy Prime Minister) on behalf of the Prime Minister: Yes. In particular, I stand by the Government’s response to COVID-19, that has meant a record number of people have moved off a benefit and into employment in the March quarter, with 32,880 people moving into work in the first three months of 2021. I’m sure the Minister for Social Development and Employment will have more to say about this matter.
Dr Shane Reti: Have any DHBs been advised that they will be consolidated as part of her Government’s proposed health sector restructuring, and, if so, which?
Hon GRANT ROBERTSON: As the member knows, a question as detailed as that is best directed towards the Minister of Health. What I can say is, the Government is working through the recommendations of the Health and Disability System Review, and we’ll have more to say about the future of the health system in the coming weeks.
Dr Shane Reti: Has Cabinet and Treasury signed off on the cost for the proposed health sector restructuring, and, if so, what is the estimated cost?
Hon GRANT ROBERTSON: The member will be aware that matters that are pertaining to the Budget are Budget confidential until Budget day. Clearly, the full costs of an overall review of the health system are expensive. But the member will need to wait until Budget day to see some of what the Government plans to do.
Dr Shane Reti: Has she been advised by Dr Ashley Bloomfield about any risks a restructuring of the Ministry of Health may have for our coronavirus response?
Hon GRANT ROBERTSON: On behalf of the Prime Minister, I regularly meet and talk with Dr Bloomfield. My Minister of Health is the person primarily dealing with the restructuring process, but I am not aware of any such concerns.
Dr Shane Reti: Will she delay any health sector restructuring for at least two years, given the health sector is currently focused on rolling out the coronavirus vaccine across the entire country?
Hon GRANT ROBERTSON: On behalf of the Prime Minister, I have a great deal of confidence in our health system to be able to continue New Zealand’s strong response to COVID-19, as well as getting on with the job of making sure we have improved health services right across New Zealand.
Dr Shane Reti: Will she apologise to the managed isolation and quarantine worker she accosted in this House yesterday, given she has since stated the Government is partly to blame?
Hon GRANT ROBERTSON: I utterly reject the word used in that question. The Prime Minister has already spoken today about the fact that the language she used yesterday may have been a little bit blunt. But the facts that lie behind it remain the same.
Question No. 3—Research, Science and Innovation
3. WILLOW-JEAN PRIME (Labour—Northland) to the Minister of Research, Science and Innovation: What recent announcements has she made about strengthening Māori knowledge in science and innovation?
Hon Dr MEGAN WOODS (Minister of Research, Science and Innovation): Last week, I announced the 16 projects receiving a total of $3.9 million in funding from the 2021 round of the Vision Mātauranga Capability Fund, each of which will strengthen Māori knowledge, capabilities, skills, and networks in the science and innovation system. Supporting our Māori researchers is essential for the aspirations of individuals, whānau, Māori communities, Māori organisations, and New Zealand, and this Government is proud to stand in support of these projects.
Willow-Jean Prime: What are some of the successful projects?
Hon Dr MEGAN WOODS: With $250,000 of funding from the fund, Manaaki Whenua will partner with the Ngāi Tahu Māori Rock Art Trust to investigate the ecology of the 14 nationally culturally significant rock art sites around Ōpihi in South Canterbury, to tell us more about tīpuna and our past. Te Ruapekapeka Trust and the Victoria University of Wellington will also receive $250,000 to digitally construct aspects of the Ruapekapeka heritage pā site using virtual reality technology.
Willow-Jean Prime: Why is it important that we support a kaupapa Māori approach to research, science, and innovation?
Hon Dr MEGAN WOODS: A kaupapa Māori approach to research, development, and innovation will see impact and growth within iwi and Māori organisations, as well as strengthening science and innovation for all New Zealanders. Ensuring cultural knowledge is maintained, protected, and still owned by Māori and iwi will also preserve the uniqueness of Aotearoa and the richness of our cultural heritage.
Question No. 4—Social Development and Employment
4. RICARDO MENÉNDEZ MARCH (Green) to the Minister for Social Development and Employment: What new steps, if any, will she take to end hardship in Aotearoa?
Hon CARMEL SEPULONI (Minister for Social Development and Employment): This Government is committed to addressing poverty and hardship in Aotearoa. We are the first Government to measure child poverty and hold ourselves accountable to addressing it. In our first hundred days last term, we invested $5.5 billion into our Families Package to boost the income of low and middle income families. We’ve since lifted main benefits and indexed them to wages, raised abatement thresholds, and invested significantly into supporting people into work. We know we have much more to do. We have a programme of work which we are conducting on the back of the Welfare Expert Advisory Group’s report. New steps will come out of this work, as outlined in our Cabinet paper, and any announcements will be made in due course.
Ricardo Menéndez March: Is she comfortable with the goal of the Social Security Act to “alleviate” hardship, or should we be aiming to eliminate hardship?
Hon CARMEL SEPULONI: I think that all of us in this House would like to see the elimination of poverty and hardship in Aotearoa New Zealand, but what we also understand is that we need to take steps towards addressing it and be focused on reducing it if we’re going to make the progress and the traction that we all want to make. There’s no way of just clicking our fingers and getting to the point where poverty and hardship are eliminated in this country. This Government is committed to making progress and has already taken serious steps and will continue to do so.
Ricardo Menéndez March: Does the Government believe, then, that the Welfare Expert Advisory Group’s recommendations to ensure everyone can live with dignity can be implemented by amending the current Social Security Act, or will the whole Act need rewriting?
Hon CARMEL SEPULONI: The Welfare Expert Advisory Group was very clear about wanting to change the principles of the Social Security Act, and that is one of the recommendations that we keep in mind. But if we are to change the principles to the Social Security Act, then we do need to make sure that the whole Social Security Act aligns with those principles. Until we make some of the other fundamental changes that have been recommended by the Welfare Expert Advisory Group, we are not at that point.
Ricardo Menéndez March: Is she concerned that the increasing number of hardship assistance grants in the Ministry of Social Development (MSD) quarterly report shows that whānau and children don’t have enough food in Aotearoa?
Hon CARMEL SEPULONI: We have already recognised that income adequacy in the welfare system is something that we need to address. It is in the Labour Party manifesto, and we’re taking steps towards addressing it. We also recognise the fact that food security in New Zealand is an issue, which is why we invested last year, I think, $32 million towards our food distribution network. There is food in abundance in this country, but it isn’t necessarily getting to where it needs to go to, so it is about making sure that whānau and communities are fed, whilst at the same time doing something to address the large amount of food that goes into our landfills and is wasted.
Ricardo Menéndez March: Would increasing benefits reduce the need to deliver so many food grants; if not, why not?
Hon CARMEL SEPULONI: As I said, we are committed to continuing to address income adequacy in the welfare system. I will say that part of the reason why food grants have gone up—acknowledging that there are families experiencing hardship, and that’s the first and foremost reason. But secondly is because we have changed the culture of the Ministry of Social Development. We have been focused on making sure that our Work and Income offices, our MSD staff, give New Zealanders the support that they are entitled to when they go into those offices for help.
Ricardo Menéndez March: What is the Government’s time frame, in months and years, to take action on the medium to long term recommendations in the Welfare Expert Advisory Group’s report?
Hon CARMEL SEPULONI: When we talk about medium to long term, generally we’re talking about a three- to five-year programme of work, but we also recognise that change and improvements to the welfare system will need to continue to be ongoing. We’re not going to get to the end of a work programme and look at our welfare system and think it’s perfect. Any Government that’s in place will need to continue to improve the way in which we support some of New Zealand’s most vulnerable people.
Question No. 5—COVID-19 Response
SPEAKER: Before we move to question No. 5, I just want to note that the member asking the question has written to me, in the same vein as he asked as shadow Leader of the House, with regard to a select committee meeting that was held yesterday, at which this particular topic was canvassed. I’ve had a look at the select committee, the times involved, and the ability for the Opposition to answer questions, and have come to the conclusion that what occurred at that select committee yesterday was not in compliance with the spirit of the last Standing Orders report and assurances that have been given as to the ability to ask questions at the Health Committee on the COVID issue. At the time, the Business Committee made a previous decision not to set up the Epidemic Response Committee once again. In light of that, and given the fact that the average number of supplementaries available to members on a Thursday in the Opposition is four, I am going to grant an extra four supplementary questions on this question today. So Mr Bishop has up to eight to use.
5. CHRIS BISHOP (National) to the Minister for COVID-19 Response: How many people working in a managed isolation and quarantine facility who have been required to get a COVID-19 test under the COVID-19 Public Health Response (Required Testing) orders have not been compliant with these orders in getting a test since their inception, and does he stand by his statement on non-compliance that “it does not appear to be a large-scale problem”?
Hon CHRIS HIPKINS (Minister for COVID-19 Response): In the past week, 2,755 staff working in managed isolation facilities and 241 workers in quarantine facilities were tested for COVID-19, compared to the around 4,500 people who are required to be tested on a weekly or a fortnightly basis under the order. That testing data has been reporting a relatively consistent pattern since the order was put in place, demonstrating that the vast majority of the workforce are being tested as required. It hasn’t been possible in the preparation for questions to provide the data the member has requested, back to when the order was first put in place, in the form that the member has asked for it, because that would require significant data-matching across a number of different records and reconciliation of those records. Responsibility for compliance with the testing order rests with individuals and with their employers.
Chris Bishop: For clarity, is he saying that it is not possible for the Government to say, since mandatory testing began, the number of people who have missed at least one of the fortnightly or weekly COVID-19 tests they’re required to undertake?
Hon CHRIS HIPKINS: I think one of the important points to note here is that people may or may not need to be tested in a given fortnight or a given week depending on when they worked. The records for that sit with the employer. The Government does not collect all of that information.
Chris Bishop: Why does the Government not collect all the information that he’s just referred to, so that it would be possible for him to come to the House now, in April 2021, and tell the House how many people in total, since mandatory testing began, have not been compliant with the law?
Hon CHRIS HIPKINS: Because of the diversity of the workforce that we’re talking about. For example, if an electrician is called upon to do an urgent piece of work within a managed isolation facility, the Government would not necessarily record all of that information.
Chris Bishop: How can the diversity of the workforce possibly be an excuse when the Government knows—or, at least, should know—who is working in managed isolation and quarantine facilities on a fortnightly basis and knows, or should know, who is subject to the COVID-19 testing orders?
Hon CHRIS HIPKINS: Up until recently, each managed isolation facility managed a sign-in and sign-out system individual to that facility. Since earlier this year, a “who’s on site” digitised system has been rolled out across all of the managed isolation facilities. That has recorded who’s on site at any given time. However, it would appear that there have been some issues with whether people have all been using that. In the case of case B, for example, it would appear that the person had not always been signing in when they had been at work.
Chris Bishop: Why has the Government not been checking through officials and Government departments to make sure that employers and their employees are getting the required tests that are legally obliged to do?
Hon CHRIS HIPKINS: The managed isolation team have been checking with the employers to make sure that they have been keeping records of when their staff have been tested, as they are required to do under the order, and the feedback that they had from the employer of case B was that those records were in place, that they were recording that case B had been tested. Case B has been, it would appear, supplying incorrect information to their employer about whether or not they had actually been being tested.
Chris Bishop: What has been happening in the last two months in relation to the checking and auditing of employers at the border in relation to the Prime Minister’s remarks from two months ago that the Ministry of Health does have the ability to get an insight into whether or not testing is indeed taking place and to troubleshoot it if it’s not?
Hon CHRIS HIPKINS: I think the member didn’t listen to my first answer, where I set out exactly what testing has been taking place and the data that we have been working with. We do not have ankle bracelets on every person that works in managed isolation to identify when they have been at work and therefore when they are required to be tested. We do check with employers to make sure that they are keeping records of that information. It would appear in this instance that there has not been accurate record-keeping. That is partly because the person has not been supplying correct information.
Chris Bishop: Why following the release of the Simpson/Roche report last September and the February Auckland cluster with the LSG Sky Chefs worker has the Government only just now moved to mandate the use of a centralised register?
Hon CHRIS HIPKINS: We have been looking at the ways that we can improve the systems. One of them was to mandate the use of the register. The other is to extend the testing order to an extra workforce, which we have also been doing. Inside all of that, we’ve also been considering the frequency of the tests. So there’s a variety of issues that have all been reflected and recorded in the latest order. The process of going through that does take some time.
Chris Bishop: Why is a mandatory register at the border only being implemented now, at the end of April 2021, when mandatory testing has been under way at the border since September last year?
Hon CHRIS HIPKINS: Because the law is clear: employers are ones who are responsible for keeping records of their employees’ testing. That is the legal requirement.
Chris Bishop: How is it acceptable that a worker at the front line of our border response can go six months without being tested for COVID-19 and nobody notices or does anything to make sure they get a test?
Hon CHRIS HIPKINS: It isn’t.
Question No. 6—Social Development and Employment
6. ANGIE WARREN-CLARK (Labour) to the Minister for Social Development and Employment: What reports has she seen on the number of people receiving financial assistance from MSD?
Hon CARMEL SEPULONI (Minister for Social Development and Employment): The Ministry of Social Development (MSD) released the March quarter benefit report today, and it shows 32,880 people exited the benefit and moved into work this year. This number is the largest number of people moving into work since electronic records began in 1996. The previous biggest quarter was March 2000. Today’s figures also show a fall of 23,563 from the previous quarter. There are now 365,937 people receiving a main benefit in New Zealand, much lower than most pundits predicted. This Government is committed to getting people into work, and today’s figures show the interventions we have made through the COVID-19 crisis are working.
Angie Warren-Clark: How do these statistics relate to seasonal trends?
Hon CARMEL SEPULONI: The fall is in line with the trend we generally see in the March quarter. However, signs are encouraging, with 10,670 more people moving off benefit than in the same period in 2019. The statistics for the next quarter will provide us with a more complete insight, but indications are positive. This positivity is reflected in the latest Jobs Online data, which shows vacancies increased 73.7 percent compared to a year earlier. Vacancies are up across all industries, with most growth being seen in healthcare, manufacturing, construction, and hospitality.
Angie Warren-Clark: What interventions did the Government make to get people into work?
Hon CARMEL SEPULONI: We know that the longer people remain on a benefit, the more difficult it becomes for them to re-enter the labour market, so early interventions are vital. That’s why the Government invested in the wage subsidy to keep people in work, and invested an additional $150 million to increase MSD’s employment and financial services as part of our COVID-19 recovery package. We’ve continued to invest in employment outcomes along the way, with additional funding for Flexi-wage and bespoke interventions such as Apprenticeship Boost, Mana in Mahi, and He Poutama Rangatahi.
Question No. 7—Education
7. Hon PAUL GOLDSMITH (National) to the Minister of Education: How many schools, if any, had fewer than 20 percent of their students attend regularly in 2020, using the Ministry of Education’s definition of regular attendance?
Hon CHRIS HIPKINS (Minister of Education): I’m advised that, in 2020, 12 primary schools and five secondary schools had fewer than 20 percent of their students attending 90 percent of the time, which is the ministry’s definition of regular attendance.
Hon Paul Goldsmith: How is it possible that 17 schools in this country have fewer than one in five of their students attending regularly?
Hon CHRIS HIPKINS: In preparation for the member’s question I asked for a list of all of the schools that fit that category. In terms of primary schools, by and large those primary schools are all reasonably small primary schools. Therefore, it only takes a small number of students to be away more than 10 percent of the time for them to fall into the category that the member has mentioned. In terms of the secondary schools, I would note that there are fewer secondary schools in that category in 2020 than there were in 2017 when that member was in Government.
Hon Paul Goldsmith: How many attendance officers do we have across the country to deal with the large number of truant children?
Hon CHRIS HIPKINS: About the same number that there were when that member was in Government.
Hon Paul Goldsmith: What does it say about the Government’s priorities in education that it allowed there to be just one attendance officer covering 80 schools in West Auckland in the middle of last year?
Hon CHRIS HIPKINS: I would refer the member back to the reorganisation of the Attendance Service, undertaken by the last Government in 2015, which determined where the attendance resources were located, and under contracts signed by his Government.
Hon Paul Goldsmith: Has he considered changing his first priority in the National Education and Learning Priorities from “Ensure places of learning are safe, inclusive and free from racism, discrimination and bullying” to ensuring the kids are at school?
Hon CHRIS HIPKINS: Of course, the people who ultimately determine whether kids go to school or not are their parents.
Marja Lubeck: What additional support has the Government provided to support student attendance?
Hon CHRIS HIPKINS: Following COVID-19, the Government set aside the Urgent Response Fund to help schools to reengage students with their learning, including to address the attendance challenges that have been evident and growing over some time. The Budget also provided an additional $2.5 million for the Attendance Service—one of the first increases for some time—to ensure that there are more people working with those who are at risk of disengaging or who have become unenrolled.
Question No. 8—Education
8. MARJA LUBECK (Labour) to the Minister of Education: What action is the Government taking to support Auckland schools to provide learning environments for their students that are warm, comfortable, and fit for purpose?
Hon CHRIS HIPKINS (Minister of Education): Three Auckland schools in urgent need of an upgrade are benefiting as part of the Government’s $1.3 billion nationwide school redevelopment programme. May Road School, Onehunga Primary School, and Albany Primary School are getting new classrooms to replace those in poor condition, and they will benefit from investments in projects to support expected increases in student numbers.
Hon Priyanca Radhakrishnan: What assistance is Onehunga Primary School receiving?
Hon CHRIS HIPKINS: A very good question. Onehunga Primary School, in desperate need of further teaching space, is getting a new three-level block with 14 teaching spaces, a library, and an admin space that includes four new roll growth classrooms, at a budget of $14.5 million, with construction getting under way this year.
Hon Michael Wood: What assistance is May Road School receiving?
Hon CHRIS HIPKINS: Another excellent question. May Road School is benefiting from a $9 million investment to build a three-storey, 15-classroom block, including eight roll growth classrooms and seven redeveloped classrooms, new car parks, and a safe drop-off and pick-up area for its years 1 to 4 students. Construction is expected to get under way next year.
Marja Lubeck: What assistance is Albany Primary School receiving?
Hon CHRIS HIPKINS: Albany Primary School in Auckland’s North Shore will receive 20 new classrooms to replace ageing facilities and to cater for growing student numbers—[Interruption] They don’t seem to like the new classrooms, on the other side. Eight of these new classrooms are roll growth classrooms. [Interruption]
SPEAKER: Order! Order!
Hon CHRIS HIPKINS: The project’s in its early planning stages. The time frames for that one are still to be finalised.
SPEAKER: There are a lot of questions coming from there. Does anyone want to stand up and ask one? Apparently not.
Question No. 9—Housing (Homelessness)
9. NICOLA WILLIS (National) to the Associate Minister of Housing (Homelessness): How many written briefings, if any, has she received from officials recommending that the Government focus on exiting Emergency Housing Special Needs Grant accommodation and what concerns, if any, does she have about emergency accommodation?
Hon Dr MEGAN WOODS (Minister of Housing) on behalf of the Associate Minister of Housing (Homelessness): I have received six briefings that reflect the—
Nicola Willis: Why’d you transfer?
SPEAKER: Order! The member will resume her seat. Nicola Willis, you’ve been around this place for a very long time. You do understand how transfers work, and the thing that you’ll really understand is that I don’t do them. Start again, please.
Hon Dr MEGAN WOODS: On behalf of the Associate Minister of Housing (Homelessness), I have received six briefings that reflect the Government priority to reduce motel use as quickly as possible while ensuring that people are safely housed. Of course we have concerns regarding the use of motels as a form of accommodation; however, it is better than people living on the streets, in tents, and in cars. We know there is more to do. People who are experiencing homelessness have a right to shelter, to safety, to dignity, and to support. That is exactly why we have a Homelessness Action Plan and are rolling out the largest public housing build programme in a generation, because the best option is having long-term, stable accommodation options for people. What I’m also concerned about is that it took until 2016 for the previous National Government to finally recognise that people living on the streets and in cars wasn’t acceptable before they introduced the emergency housing special needs grant that the member refers to.
SPEAKER: Order!
Nicola Willis: Has she seen advice from the Ministry of Housing and Urban Development (MHUD), who advise in this document that they are not able to regulate for quality standards in emergency accommodation, and it is, therefore, acceptable that 4,000 families are currently raising their children in these motels?
Hon Dr MEGAN WOODS: On behalf of the Associate Minister of Housing, I can’t see the document waved across the House by the member, but I am familiar with advice that both the Associate Minister and my colleague, the Minister of Housing, have indeed seen, that differentiates very clearly between the transitional housing that is administered by MHUD and the accommodation that is undertaken by people through emergency special needs grants through the Ministry of Social Development (MSD). We currently have a programme of work under way with MSD in areas of the highest use of motels to bring those two pieces together, because we do agree these are not the places to raise children. But I also note that it wasn’t until 2016 that the previous Government took this seriously. I’m proud of the fact that we’ve doubled transitional—
SPEAKER: Order! Order! Order! The member knows that the tail end of both her answers are out of order. Doing it once is careless; doing it twice is getting very close to being in trouble.
Nicola Willis: Is she aware of answers to written questions from Minister Sepuloni that show the Government does not centrally record reported incidents of family harm or criminal activity occurring in emergency housing, and, if so, how does she know these motels are safe places for children to be?
Hon Dr MEGAN WOODS: I suggest that member put the question to the Minister that she’s referring to in the beginning of her question.
Nicola Willis: Does she agree with advice provided to the Minister of Housing by the Ministry of Housing and Urban Development about emergency housing in Rotorua that “The concentration of some lower-end emergency housing motels and the night shelter in the CBD is creating risks to public safety. At the same time, individuals are not getting the support they need.”?
Hon Dr MEGAN WOODS: On behalf of the Associate Minister, yes, I have concerns about the situation in Rotorua. I’m also aware that the Minister of Housing does as well. This was exactly why, in the last couple of weeks, we asked officials to convene in Rotorua along with iwi and along with members of the local body authority in Rotorua to collectively find solutions, and that work is progressing well. We are a Government that is taking action on homelessness.
Nicola Willis: Which specific emergency accommodation providers has she visited since becoming Minister, and can she guarantee to this House that they are safe places for children to be raised?
Hon Dr MEGAN WOODS: On behalf of the Associate Minister, I invite that member to put that in writing, and I will get back to her.
Question No. 10—Building and Construction
10. PAUL EAGLE (Labour—Rongotai) to the Minister for Building and Construction: What recent reports has the Minister seen regarding the Construction Skills Action Plan?
Hon POTO WILLIAMS (Minister for Building and Construction): I’ve seen reports that the Construction Skills Action Plan, which addresses skills and labour shortages in the construction industry, has delivered early and, indeed, more than doubled our target of supporting a further 4,000 people into construction-related education and employment. Since the plan was launched in 2018, more than 9,300 people have taken up education or employment opportunities in the construction sector through various Government initiatives. Our building sector has a big job ahead of it, and the success of the action plan is another example of this Government supporting the sector to deliver for New Zealand.
Paul Eagle: How has the Construction Skills Action Plan surpassed its target?
Hon POTO WILLIAMS: The plan was a three-year programme of work that was expected to deliver by October 2021. However, thanks to a strong performance of programmes within the plan, like Mana in Mahi, which has placed over 2,200 people in the construction sector; skills for industry, supporting another 1,600; and growing careers and credentials, another 5,200, we are exceeding our targets and delivering for the sector.
Paul Eagle: How has the building sector responded to Government initiatives like the Construction Skills Action Plan?
Hon POTO WILLIAMS: We’re already seeing the building and construction sector respond. Statistics New Zealand data has shown strong growth in the sector despite COVID-19. The most recent household labour force survey shows an annual increase of 21,000 employed in the construction industry. It’s also encouraging to note that 5,800 of this increase are women.
Question No. 11—Energy and Resources
11. BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Energy and Resources: What advice has she received in relation to her statement, “I want to know what, if anything, might be done to moderate wholesale prices without increasing the risk of power shortages”, and what advice has she received on the current risk of power shortages in New Zealand?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I’ve received regular and ongoing advice in relation to wholesale electricity prices, as well as the broader security of supply issues in relation to the dry year we are currently facing. I’ve also met with officials from the Electricity Authority (EA) and the Gas Industry Company and directed them to undertake work on the matter, and Transpower is now providing daily updates on its website about security of supply and electricity risk. The Ministry of Business, Innovation and Employment is also standing up an inter-agency response group to monitor the situation and provide advice. But what I would note is that this is not a new issue. We have been here before. The market is behaving as it is expected, as it did in other dry years. For example, in 2008, wholesale prices were at $475 per megawatt hour, while in 2012 they were at $310. We’re currently seeing spikes in excess of $350 per megawatt hour. We are not at the stage of standing up a conservation campaign, which for New Zealanders would be quite similar to what Aucklanders experienced with water restrictions. However, I can assure that member that I am monitoring the situation very closely.
Barbara Kuriger: Did the advice say that New Zealand would be at lower risk of power shortage if we had maintained confidence and investment in the gasfields we have?
Hon Dr MEGAN WOODS: No, it certainly didn’t, because what officials know is that any exploration that would’ve been issued after the 2018 cessation of the issuing of new exploration permits would take around a decade to come on stream. Officials also know that since we made that announcement, there has been over a billion dollars’ worth of investment in existing exploration fields.
Barbara Kuriger: What is her response to Carl Findlater of Findlater Sawmilling, who wrote to her on Monday stating that despite high demand for timber, electricity price increases and a toxic operating environment meant continued operation was untenable?
Hon Dr MEGAN WOODS: What we are seeing this year is an increase in the number of industrial users who are exposed on the hedge market. That’s around 60 percent exposure as compared with a normal year, which would be around 40. Industry analysts think that a large number of industrial users made the decision to wait and see what the ultimate decisions around Rio Tinto and their future at Tīwai Point would be and whether there would be cheaper electricity available in the future. That hasn’t come to pass, and, as the member knows, we are currently experiencing a dry year. That, coupled with some issues around the production of Pohokura gasfield, has led to this, but I can assure that industrial user and all users of energy in New Zealand that this is a situation that the Government is taking seriously; it is monitoring. But I do note to that member that we are not even at the 1 percent risk on the curve yet.
Barbara Kuriger: What is her response to Major Electricity Users’ Group chairman John Harbord, who stated, “The reality is if the prices continue on the pathway they’re on, there will be a number of major industrial operations in the country that simply won’t be in business any more. We’re looking at the loss of thousands of jobs and the hollowing out of New Zealand’s manufacturing capability”?
Hon Dr MEGAN WOODS: My response to all energy users and the Major Electricity Users’ Group is that this is a situation that we are taking seriously. It is a situation that is not unprecedented or even unexpected in New Zealand. Dry-year risk is always something that sits out there in our energy system and is precisely the reason why this Government has invested in exploring what it is that we need to do to address the long-term problem of dry-year risk, particularly around looking at the option of pumped hydro. But I also would remind that member that the EA’s stress testing for major electricity users actually—the stress tests are at unit prices of $400 a megawatt hour for a period over three months and, indeed, eight hours over a winter period at $10,000 a megawatt hour. This is within the parameters of what our electricity system is set up to deliver.
Barbara Kuriger: When she said at the time of the oil and gas ban in 2018, “I don’t want to see an abrupt transition that leaves industry stagnant, communities without a future and individuals without hope.”, does she believe a fourfold increase in electricity prices in just three years is an abrupt transition?
Hon Dr MEGAN WOODS: I would caution that member about repeating lines that were found, during the election campaign when her party tried to run them, to be false. This is a serious discussion, and it is one that, actually, we need to look at. What we have—
SPEAKER: Order! The member will resume her seat. Again, I think she’s tried to dance around it, but my interpretation is that the member, in the statement that she made, made an inappropriate reflection on the member who asked the question. She will withdraw and apologise.
Hon Dr MEGAN WOODS: Sorry—point of order, Mr Speaker. I’m happy to withdraw and apologise, but I do want—as a point of clarification, what I was doing was referencing an Australian Associated Press fact-check finding that occurred during the general election.
SPEAKER: Order! The member will withdraw and apologise.
Hon Dr MEGAN WOODS: I withdraw and apologise.
SPEAKER: Continue with the answer.
Hon Dr MEGAN WOODS: What I would caution that member about is leaping to conclusions that have not been founded in the situation that we are facing. The situation that we are facing today is the product of a dry year coupled with a situation around Pohokura field. All expectations within the industry is that the gas situation will resolve in the coming months. This is a situation that we need to treat with concern, but we also need to assure the public there is no need to panic. I am more than happy to provide that member with a briefing around the facts if she would like it.
COVID-19 Public Health Response Act 2020
Continuation
Hon CHRIS HIPKINS (Minister for COVID-19 Response): I move, That the COVID-19 Public Health Response Act 2020 is continued, and that the relevant period under section 3(2)(b) of that Act is the period ending on 31 December 2021.
The COVID-19 Public Health Response Act passed on 13 May last year was passed at a time when it was very clear that New Zealand’s go hard and go early approach when it comes to COVID-19 was the right one, but that the response was going to have to continue over a sustained period time and that extraordinary powers would be required to ensure that we could continue with the success that we had achieved.
The Act has been extended twice before, on 5 August, and then again on 8 December. This extension, though, is the first time the Act will have been extended under the new scrutiny provisions that Parliament has agreed as part of the review of the Standing Orders. This means that in order for the Act to continue, I, first, as the Minister responsible, have to set down a notice of motion. That notice of motion then goes to a select committee for consideration, and then the committee reports back a recommendation to the House, and then I have to stand up in the House. So there is additional select committee scrutiny of whether or not it is justified for these extraordinary powers to be continued. I am one of the people who believes that these powers should remain in place only as long as they are absolutely essential for our COVID-19 response. These types of extraordinary pieces of legislation have in other countries been the beginning of a demise for democracy. In New Zealand, we like our democracy, we want to keep our democracy, and therefore this Act should only be in place for as long as it is absolutely required.
I want to thank the Health Committee for examining the motion that is now before the House. Their consideration was thorough, and I thank them for the opportunity to appear before the committee and to answer their questions on why the Act is necessary, and any questions that they had on how the Act had been used. Recent community outbreaks of COVID-19 demonstrate that there is an ongoing risk to our community, and therefore we need to continue to have these protections in place. The global challenge of COVID-19 continues, and in many countries the virus continues to spread at an escalating rate. That means that New Zealand remains at risk.
Therefore, I’m asking the House to approve the continuation of the Act through to the end of the year. By that time, we hope to have the vaccine programme completed, or everybody to have had the opportunity to get a vaccine. We’ll be able to assess the situation here in New Zealand and internationally and decide on an appropriate way forward. It may be that the Act needs to be continued further, it may be that a more limited version of the Act is continued into the future, or it may be that we no longer need these extraordinary powers.
The Act does allow for restrictions that are put in place to be rolled back quickly once it becomes evident that they’re no longer necessary. Again, as the Minister responsible, I have been very keen to ensure that where restrictions are no longer justified, they are removed as quickly as possible. I’m keenly aware that the Act does give me as the Minister responsible powers that just one year ago none of us in this House would have believed were necessary or justifiable in the 21st century, but those powers and that ability to move quickly have been essential in our COVID-19 response. And so I am asking the House to allow for that to continue. It is a good legal framework, it allows us to protect our borders and our communities from COVID-19 for the remainder of 2021, at which point we can then consider what we need to do in the future.
CHRIS BISHOP (National): I thank the Minister for the elucidation in relation to the motion around the continuation of the Act. Having opposed the original Act in the first place, the National Opposition will, without too much rancour, not vote for the continuation of the Act, again. But we do want to note, for the House, that, generally, we have been happy with the way in which the Minister has exercised his powers under the Act.
I was on the Health Committee for almost the whole time that we were considering the motion in relation to the continuation—sadly, I’m not on the committee any more. But the Minister is right: we did have a good discussion through the committee, and he was kind enough to come and address us, and we had a good chat.
I just want to make a quick comment around the rationale for the extension of the Act until December 2021. I take on board what the Minister says around the necessity of extending it to that point but not going beyond, if necessary. My experience is that the Leader of the House is someone who is very conscious of the constitutional obligations upon the Government around not taking as much power as is necessary—or only taking as much power, in extraordinary circumstances, as is necessary to give effect to any action that is required pursuant to that emergency. I understand and know that he appreciates that.
I, for one, would like to see a situation towards the end of the year, I hope, where a more tailored and narrowly crafted piece of legislation could be passed, and I suspect a more narrow piece of legislation—I’m looking at my ACT and Te Paati Māori colleagues on this side of the House—could be one that the Opposition parties could support. I think that is really important, in so far as it’s possible to have some degree of unity and partisanship over extraordinary legislation such as this. I give my assurance on behalf of the National Opposition that we will work diligently when the time comes to craft an appropriately tailored piece of legislation that responds to the circumstances as they are at the time but that also doesn’t take too much power for the Government.
So we are where we are. It will extend into December 2021, and I hope, as he says, that we will have a better understanding by then as to what is required. And, in some ways, the situation in December could potentially look quite radically different to where we are today. One of the lessons, I think, that we have learnt over the past year or so is that things can move very quickly, and I just reflect on the various alert level changes that we have all had to grapple with and endure at various points. Time has slowed down for many of us in the Parliament, at various points—you know, time certainly slowed down during the lockdown, to some extent, but time has also sped up. So it’s been a strange old time. But I think by December we should have a better idea, because the vaccination programme, we hope, will be in full swing. In fact, we hope it will largely be over, although the odds of that are not great, I have to say. But we will be able to better craft and tailor a response.
Just a couple of brief remarks around the interrelationship and the interaction between the COVID-19 Public Health Response Act and the Health Act 1956: I think—and we canvassed this briefly during the committee process—that the most recent February outbreak was handled poorly from a legal point of view, and I do want to put that on the record. We had this situation where the legality, or, at least, the legal authority, around the instructions given to people asked to self-isolate and get tested, were, I would say, at best, unclear. And we had, of course, the reasonably unedifying example of the Prime Minister and people who worked at KFC engaged in, essentially, a debate. One person had a pulpit, the other person had a journalist, so it was hardly a fair fight. We had a reasonably unedifying exchange around what people were and weren’t told.
I think one of the root causes of the confusion there actually goes to legality, because Dr Bloomfield, as I understand it, maintains that orders or instructions given by public health officers are done pursuant to the law, and, I think, there is possibly some debate around that, but I think it is beyond doubt that the eventual section 70 order made under the Health Act 1956 was promulgated too late. It wasn’t gazetted, as we now know from the written questions, and it should have been, and it should have been much more widely publicised.
So I do just put on the record that I think—I mean, no one wants to have this situation happen into the future, but in the event that we do have to have a similar incident in the future like the one that was sparked by the LSG Sky Chefs Valentine’s Day cluster in Auckland, or anywhere, actually, we need to be much more expeditious when it comes to the promulgation of not only orders pursuant to the COVID-19 Public Health Response Act but we also need to be cognisant of the promulgation of orders under the Health Act 1956 as well, because that information should be able to be easily found, and that goes to the rule of law. People need to know easily what they’re required to do, and they should be able to find that, and it shouldn’t have to be done orally by the Director-General of Health a week or so after the actual order is made. That issue was canvassed to some extent in the committee; I did just want to put that on the record.
So thank you to the Minister for referring it to the committee. I thank colleagues on the committee at the time for the diligence with which we considered it. We won’t be supporting it, but we recognise the reasonable way it’s been used by the Government up to this point. Thanks.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. The Green Party is supporting this motion. We just want to acknowledge that there were extraordinary powers, and as the Minister said in his comments, it included powers that none of us would have imagined possible or supported before we found ourselves in this situation of a global pandemic. But I think that globally it’s recognised that New Zealand’s done really, really well in our response and that the Government has been very balanced, open, transparent, and measured in its use of these extraordinary powers and has really used them in so far is it was necessary to ensure that our people were safe from COVID-19.
Of course, I, like many other people in this House, have friends and family who live in other countries where the virus has just gone rampant and not been controlled, and there’ve been serious health consequences for the people there. There have been very serious economic consequences, and they haven’t been able to live life as freely as we in New Zealand have been able to during this past year. So the Green Party thinks that these powers were justified. We totally understand the extension of the bill and we think that it is a reasonable amount of time to extend it. That is all we have to say. Thank you.
BROOKE VAN VELDEN (Deputy Leader—ACT): I rise on behalf of ACT in support of continuing the COVID-19 Public Health Response Act. In times of adversity, we want to support our Government. COVID-19 has challenged every country. Every Government has responded in its own way. But the Opposition has a role to play, too. As an Opposition party—and fast-growing one, at that—ACT has adopted a constructive mantra through the COVID period. Our mantra has been to make constructive criticisms when necessary, helpful suggestions where possible, and ask the questions New Zealanders need answered.
When the COVID-19 Public Health Response Bill was passed, ACT supported it, while making suggestions for how it could be improved. When those suggestions were ignored by the Government, we opposed the bill at the third reading. We believe it is important that the law is written down and accessible. It should be transparent. Sending orders to the Regulations Review Committee is the right and proper thing to do. We watch for abuses of Government power. We’ve continued to monitor how the Government makes its orders and gives notices under this Act. We believe, at this time, the Act should be renewed. Since it expires tomorrow, the Minister has left it not a moment too soon.
However, it is clear that the Government is not using the powers as it could. Let me give just three recent examples. Number one: border workers still aren’t vaccinated. One of the most powerful things that the Government could do to save us from the uncertainty, cost, and pain of lockdown is to make sure that those working at our borders are vaccinated. They don’t have to get vaccinated, but they don’t have to work there, endangering the rest of New Zealand, either.
Number two: border workers aren’t being tested. The person at the centre of a recent near-outbreak hadn’t been tested since November. This Parliament gave the Government the power to insist on testing, but it hasn’t been used effectively.
Number three: the Australian opening. All the Government needed to do was put in place the same rules that New South Wales did. Parliament gave them the power to do it. But we stayed shut, for no reason, for six months.
So we think that the law should be written down. We are happy that they are not abusing it. We are happy for the COVID-19 Public Health Response Act to continue. But I say to this Government: if we’re going to give you this power, then, for God’s sake, use it competently. Thank you, Madam Speaker.
RAWIRI WAITITI (Co-Leader—Te Paati Māori): Tēnā tātou e te Whare. Just to make a contribution to this discussion, to this debate, there is a lot within this Act that we are supportive of—the measures that enable public health regulations to deal with COVID—but we are opposing this motion because the Government has not removed the ability to undertake warrantless searches of marae like they said they would. This, to us, was a breach of our mana motuhake.
Māori—and I speak from experience—stepped up and looked after our own communities. Māori put up the roadblocks to ensure the safety of our communities. I can speak of experience within an iwi that have had mass graves, that have had mass tombs, because of past pandemics that have not been favourable to Māori. So I look at this particular legislation, and it disguises marae, in clause 20, to remove the reference to private dwellings or marae and replaces it with the term “specified private premises”, which is defined as “private dwellings or marae”. There is no specific mention in the Act to any other specific building or place of significance where this rule applies—churches, mosques, community centres, Freemason halls, etc., etc.
We haven’t seen a Māori response plan. At 1 o’clock, during the 2020 COVID-19 reports on TV, not once did we hear a Māori response—not once. And so there was an uproar. There was an uproar within te Iwi Māori because of the blatant attack on marae and our mana motuhake to be able to look after ourselves.
I speak from experience as one of those who stood on the borders of an iwi. I speak from experience as one of those who have the keys to their marae, who are there at the beginning of any hui—and especially during COVID—and there at the end. When you have a majority Māori caucus in Government, I expect more, te Iwi Māori expects more. We expect to be protected. We expect the places of our last bastion that holds on to our tikanga and our mana motuhake, and that is places like marae.
So we were fiercely protecting our own. The COVID-19 Public Health Response Act sought to target Māori by permitting unwarranted police access on to our marae, the very places that were at the heart of our Māori COVID health response. That is where we packed foods. That is where we ensured that our pakeke, our elderly, were looked after. We made sure they had firewood. We made sure they had kai. We hunted, we gathered, we fished on our marae. All of those packages were done on our marae.
So we are not supportive of this legislation if it continues to segregate Māori, once again, by the police, who we have been putting pressure on around racial profiling. Once again, this adds to the list of things that this Government is allowing the police to do to our people and, now, innocently, they are allowed at their discretion. Now, if you are racially profiling Māori at your discretion, you can go on to a marae without a warrant. That’s absolutely—I think this is a really disgusting part of this legislation.
So the Māori Party see a trend happening here, and the trend looks very much like what happened in Parihaka in Taranaki when the members of the Constabulary Field Force prepared to advance on Parihaka in 1881. It looks like what happened to the resistance leaders of Te Whiti o Rongomai and Tohu Kākahi. It also looks like the return of the 1916 raids on Maungapōhatu with Rua Kēnana. It also looks like, more recently, under the same Government, the raids in the Ruātoki Valley in 2007, also the raids on Te Whānau-a-Apanui when they stood up against deep-sea oil drilling. They used naval frigates to take the police to arrest our people in their tribal territories. Not only did they target marae; they targeted our people from our cultural right and traditions to also gather food, to fish, to hunt at alert level 4.
So this bill—yes, there are parts of this bill that we support, Hon Chris Hipkins, but there is a strong, strong resistance by the Māori Party, because marae are still being targeted in this piece of legislation—because of that and because of the uproar at that particular time. The only person that stood up for Māori at that time came from National. And so that is why, I think, the Māori Party is here. We are here because of decisions made in the last Government, from 2017 through to 2020, because of the degradation of our people. There is a saying in te Iwi Māori: “Kei runga te kōrero, kei raro te rahurahu.” So while we talk to your face up here, kei te rahurahu kē te ringa i raro nei [the hand is meddling below].
So while we are saying, “We will look after you.”, there are parts of this legislation that absolutely insults our intelligence. It insults our intelligence because you disguise it in other references, like “specified private premises”, which is defined as “private dwellinghouse or marae”. To me, that is racial profiling, and you are allowing the police to have unfettered access to our marae when there are already questions around the racial profiling of Māori. The numbers don’t lie. The figures don’t lie. Māori are highly represented across all of the statistics when it comes to police dealings.
So we do not support this particular bill. We will continue to protect our whakapapa by ensuring that if the Government doesn’t come up with a Māori COVID-19 plan, te Iwi Māori will continue to protect our whakapapa, because we do not want to see mass graves. We do not want to see mass tombs in our cemeteries any more
This is about mana ōrite. Mana ōrite is being able to share the decision making. Māori were not part of this decision making or part of this bill. We need to ensure that the people who are participating in these particular legislative changes or bills are the people that hold the keys to their marae. I challenge any of the Māori in the Labour Government at this time: how many have held the keys to their marae? How many are there at the beginning of a hui and at the end locking it up? Because that would determine whether they would agree with this particular bill or not. That would absolutely determine that.
So, in closing, this is about ensuring that Māori hold their mana motuhake and their tino rangatiratanga on their marae, on their last bastions, because that is what Te Tiriti o Waitangi allowed us to do. And so, in closing, on behalf of te Iwi Māori and on behalf of Te Paati Māori, we will not be supporting this bill. Kia ora tātou.
A party vote was called for on the question, That the COVID-19 Public Health Response Act 2020 is continued, and that the relevant period under section 3(2)(b) of that Act is the period ending on 31 December 2021.
Ayes 85
New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; ACT New Zealand 10.
Noes 35
New Zealand National 33; Te Paati Māori 2.
Motion agreed to.
COVID-19 Orders
Approval
Hon CHRIS HIPKINS (Leader of the House): I move, That this House approve the following orders made under the COVID-19 Public Health Response Act 2020: COVID19 Public Health Response (Maritime Border) Order (No 2) Amendment Order 2021 and COVID-19 Public Health Response (Alert Level Requirements) Order (No 6) 2021.
These are legal requirements to implement our elimination strategy. They confirm orders that I have made under the COVID-19 Public Health Response Act. These orders are revoked unless the House votes to confirm them, which is what I’m asking the House to do today.
There are two orders that I’m asking the House to confirm. The first, the COVID-19 Public Health Response (Alert Level Requirements) Order (No 6) 2021 sets out the nationwide alert level 1 requirements. So it sets out what we are asking of all New Zealanders while New Zealand as a whole stays at alert level 1. Just to put this into context for those who haven’t been following this debate from the beginning, when we move to an alert level escalation for whatever reason, a new order is put in place, whether it’s moving to alert level 2, alert level 3, alert level 4, and so on. That new alert level will specify who the new alert level applies to, bearing in mind that our recent escalations have not applied to the whole country in some instances; they’ve applied to a geographical area. So the new orders that would be issued if we were to do that would apply to a particular area, and it would specify who that was and it would specify what the restrictions were. People largely know what to expect from those orders now, given that our alert level framework—1, 2, 3, and 4—are now reasonably well understood.
The default position at the moment is for New Zealand to be at alert level 1, and the order that we’re talking about here specifies what the requirements at alert level 1 that apply to everybody are. So that’s including things like wearing a face mask on public transport, and the requirement for businesses to display QR codes. Those sorts of requirements come under our alert level one settings, and therefore this order simply confirms those requirements. They remain the baseline of our COVID-19 response. We are still at alert level 1, not alert level zero, recognising that alert level 1 gives us, by and large, many of the freedoms that we would have without any COVID-19 restrictions. There are a few exceptions, including the ones that I have just mentioned, but, generally speaking, we are still one of the freest countries in the world when it comes to COVID19 restrictions at the moment, something I know all New Zealanders are very proud of. All New Zealanders have contributed to that. This alert level order simply formalises those requirements.
The second is the COVID-19 Public Health Response (Maritime Border) Order (No 2) Amendment Order 2021. The amendment to the COVID-19 Public Health Response (Maritime Border) Order (No 2) 2020, which is the order—so this is an amendment order—empowers the Minister for COVID-19 Response to grant exemptions from any provision to the order restricting ships that may arrive in New Zealand by imposing quarantine and isolation requirements for people who arrive in New Zealand by sea. The controls in the maritime order are intended to support our elimination strategy, but recognising, though, that we need to balance this with maintaining international supply chains, movements in maritime labour, and freedom of shipping movements.
These particular orders are largely technical changes, so not as substantial as the ones that I just mentioned in terms of the alert level one order. They continue to refine and improve our orders. At any given time, there are up to about half a dozen orders in place, including things like the testing order and so on. They have previously been confirmed by Parliament. These two need to be confirmed by Parliament or they would otherwise no longer apply, so I am asking Parliament to confirm them today.
CHRIS BISHOP (National): I just only really want to say to the House that we support the scrutiny of these orders and we don’t have any problem with the orders as promulgated by the Minister, and we thank the Regulations Review Committee for their work. If I was less tired and in a more jolly mood, I would make a series of jokes now about the Regulations Review Committee.
Hon Members: Go on!
CHRIS BISHOP: Well, no, they’re just—
Hon Member: It’s Thursday.
CHRIS BISHOP: Well, that is true; it is a Thursday.
Hon Chris Hipkins: The all-powerful Regulations Review Committee!
CHRIS BISHOP: The all-powerful! They’re so powerful! I mean, it’s hard to mock the Regulations Review Committee. I was a member of it for three years with David Cunliffe.
Angie Warren-Clark: Ha, ha! We’re not surprised.
CHRIS BISHOP: Well, David Cunliffe was actually a very good chair of the Regulations Review Committee. I realise he’s a controversial figure—
Matt Doocey: Oh, you are a bit tired!
CHRIS BISHOP: Yeah, I am a bit tired! He was quite a controversial figure at various points in this place, but he was actually a very good chair of the committee. And David Parker sat on the committee too, and Chester Borrows, so it was an all-star cast when I first became an MP, but they do a great job. So there you go, I’ve made a few jokes.
We support these orders and we support the work of the Regulations Review Committee, thanks.
Hon JULIE ANNE GENTER (Green): The Green Party supports these orders.
BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Speaker. The ACT Party joins in supporting the approval of these orders. Last time we approved orders under this act, it was 9 March, and I note that today we’re debating the—they all look the same from here—the COVID-19 Public Health Response (Maritime Border) Order (No 2) Amendment Order 2021 and the COVID-19 Public Health Response (Alert Level Requirements) Order (No 6) 2021, moving Auckland to level 1.
I note that the changes made, that the Minister for COVID-19 Response has already outlined, are quite simple. They’re about face masks, face coverings, QR codes for businesses and public transport, they’re also about exemptions to the orders. I would just leave it, quite simply, and say that our mantra throughout this entire period of COVID19 has always been to make constructive criticism where necessary, helpful suggestions where possible, and ask the questions that New Zealanders need answered. We will continue to monitor how the Government makes its orders and gives notice.
So, in summary, ACT supports this order and we will remain constructive in the critique of the Government when they’re making orders. Thank you.
A party vote was called for on the question, That this House approve the following orders made under the COVID-19 Public Health Response Act 2020: COVID-19 Public Health Response (Maritime Border) Order (No 2) Amendment Order 2021 and COVID19 Public Health Response (Alert Level Requirements) Order (No 6) 2021.
Ayes 118
New Zealand Labour 65; New Zealand National 33; Green Party of Aotearoa New Zealand 10; ACT New Zealand 10.
Noes 2
Te Paati Māori 2.
Motion agreed to.
Orders approved.
Offices of Parliament
Address to Governor-General
Hon CHRIS HIPKINS (Leader of the House): I move, That a respectful Address be presented to Her Excellency the Governor-General commending to Her Excellency the alterations to the appropriations for the 2020-21 financial year in respect of Vote Audit, Vote Ombudsmen, and Vote Parliamentary Commissioner for the Environment, and the estimates of expenses and capital injection for the 2021-22 financial year in respect of Vote Audit, Vote Ombudsmen, and Vote Parliamentary Commissioner for the Environment.
This is an annual event that the Parliament goes through. It concerns the appropriations for our three Officers of Parliament: the Controller and Auditor-General, the Ombudsmen, and the Parliamentary Commissioner for the Environment. It sets out any alterations to their appropriations for the current year. This, for every other Government entity, is done through Supplementary Estimates. Officers of Parliament are subject to a different process—this process, and I’ll talk a little bit more about that in a moment. And it also sets out the main appropriations that will be included in the main Appropriation Bill that the Minister of Finance will introduce on Budget day. The process maintains the independence of the Officers of Parliament. It is not the Government that sets the budget or that agrees to the alterations to that budget for these entities; it is the Parliament as a whole. And that is what this motion is all about: maintaining the independence.
The proposals in the address have been examined by the Officers of Parliament Committee, which has the Speaker as its chairperson. The committee’s report explains the detail and it examines the issues behind the numbers proposed in the Address. It includes the fact that the Auditor-General is needing to retain skilled staff and deal with some remuneration issues there. It increases funding for the Ombudsmen in order to allow for them to inspect managed isolation and quarantine facilities and deal with complaints relating to COVID-19 and deal with security requirements from a significant increase in threatening approaches from aggrieved complainants. And with regard to the Parliamentary Commissioner for the Environment, it addresses their main cost pressure, which is the need to find new premises.
MATT DOOCEY (National—Waimakariri): Thank you very much, Madam Speaker. As the National member of Parliament on the Officers of Parliament Committee, I stand in support of this motion. I just want to challenge one Chris Bishop, who raised the importance of the Regulations Review Committee, which, I must say, compared to the Officers of Parliament Committee, pales in significance.
Hon Chris Hipkins: I’m off—I can’t cope!
MATT DOOCEY: It is Thursday, by the way. As the Minister outlined, to maintain the independence of the Officers of Parliament, the Public Finance Act 1989 provides for funding for the Office of the Controller and Auditor-General, the Office of the Ombudsmen, and the Office of the Parliamentary Commissioner for the Environment, and this is to be determined by Parliament through the Officers of Parliament Committee, which we are debating today.
We received submissions from each office for the proposed alterations to their 2020-21 appropriations and their draft budgets for 2021 and 2022. For the Office of the Controller and Auditor-General it was very clear that COVID had disrupted the Auditor-General’s work programme. The alterations that we are debating today in this motion allow for the transfers to the 2021-22 budget for the Auditor-General to conduct and continue this work.
For the Office of the Ombudsmen, we support the transfer between budgets, 2020-21 to 2021-22 due to the impact of COVID on these officers and their work plan as well. For the Office of the Ombudsmen, I’d also like to acknowledge the work that they are undertaking, have undertaken, and will undertake in the future with these budgets into the 32 managed isolation and quarantine (MIQ) facilities that the Government has set up in response to COVID. The Office of the Ombudsmen goes in and inspects these MIQ facilities. We support their bid for increased funding to continue the great work they do.
Finally, for the Parliamentary Commissioner for the Environment, we support their increased funding to allow the commission to secure suitable permanent accommodation. Thank you very much.
Hon JAMES SHAW (Minister of Climate Change): Thank you, Madam Speaker. The Green Party supports this motion. The Ombudsmen, the Auditor-General, and the Parliamentary Commissioner for the Environment all provide very valuable services, not just to this Parliament but to our democracy and to Aotearoa more broadly. It is obviously clear, looking at these appropriations, that COVID-19 has affected their work programmes, as obviously it’s affected everybody’s work programmes in the country, so I just want to recognise the public servants who work for those officers who have continued to work for New Zealand during this time—and, actually, not just for New Zealand, because they do play a role in the Pacific as well, supporting democracy in our Pacific region. So the Auditor-General is the auditor for the Governments of Niue and Tokelau and the secretary-general of the Pacific Association of Supreme Audit Institutions. The Auditor-General also seconds a staff member to the Solomon Islands. I think, given how disruptive COVID-19 has been to the Pacific as well, that support is important and necessary, and I thank them for continuing to do it.
It is clear, in our view, that actually the Officers of Parliament don’t have the kind of resources that they need to do their job as effectively as they could if they were properly resourced. So, for example, when Governments and their agencies misuse the Official Information Act, the Ombudsman needs the resources to be able to take action on behalf of the public and their right to that information.
The Parliamentary Commissioner for the Environment, under several commissioners over many years, has built a strong, bipartisan support as a champion of the environment. The Parliamentary Commissioners for the Environment (PCEs) never pull their punches—no PCE has—and they’ve provided us with very valuable information and analysis to move environmental policy forward. Their work around pest control really helped to settle the debate around what it is that we need to do there, around fracking, and, of course, they were instrumental in helping lay the groundwork for the zero carbon Act and for the support right across the House for the zero carbon Act. So they have assisted all of us in this House and in previous Parliaments to do our job better. Therefore, as we think about future appropriations I think we need to really interrogate whether they have the resources to do that job as effectively as they might otherwise. Because, I mean, their appropriations in the grand scheme of things are pretty tiny, and I think that we could look at that.
We are building up some pretty good environmental law here in Aotearoa. I would like to say that if we were to fund the Parliamentary Commissioner for the Environment more, I would like to see them be empowered to take stronger action on behalf of the environment. Environmental legal aid is tiny and clearly isn’t enough to support those kinds of actions on behalf of community groups who have to really beg and borrow and hold bake sales to take on huge and well-funded corporate polluters. I would argue that we should consider giving the PCE the power to fight for nature in the courts, so actually to take actions on behalf of the environment themselves, and I think that we need more powerful and more independent voices in our democracy in that sense.
I also want to raise something that is a bit of a hold-over from the last term, which is around whether we should have more Officers of Parliament. You may remember there were some discussions in the last term around creating an independent parliamentary budget office. Many countries have parliamentary budget offices of one form or another to support Parliament to better scrutinise the Government’s fiscal management, which is something that I think is in the interests of the Opposition, but also in terms of improving the performance of the Government itself. I’d like to see that work picked up again and I think that those kind of programmes ought to be debated on their merits. I think one of the issues that we have here is that we get sidetracked into arguments about whether an $11.7 billion fiscal hole may or may not exist when, if you had an institution like an independent parliamentary budget office, they could clear that right up, and I think that would be in, kind of, everybody’s interests. I’m sure I’m not the only one who saw the irony when the National Party first misunderstood the Green Party’s tax policy and then put out statements with incorrect maths. It would be helpful, I think, to the functioning of our democracy to have an independent parliamentary budget office so that we’re all operating off the same balance sheet, so to speak.
So I do hope that we are maybe able to make some progress on that, but I am pleased that this House today will continue to fund the Officers of Parliament that we do already have and I just want to close by again suggesting that we do look at those future appropriations and question whether or not we are funding our democracy to the extent that it deserves.
BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Speaker. I rise on behalf of ACT in support of this motion, which is about the appropriations for the Officers of Parliament. Like Matt Doocey before, I have the privilege of sitting in on and attending the Officers of Parliament Committee, and I think that now more than ever we need transparency for the public’s faith in our democracy. I think that is the strength that the Auditor-General’s and the Ombudsman’s offices have for our democracy. When we see things like the Government’s actions to do with managed isolation and quarantine and the border, that’s where the Auditor-General steps in, and I think we need to see more of that. I think we will be seeing more members of the public raising issues with how the Government has managed the borders, vaccinations, and a whole range of Government actions, and I think the Ombudsman’s office will be highly utilised. Therefore, I rise in support of transparency and for faith in our democracy. Thank you, Madam Speaker.
Motion agreed, and Address agreed to.
Bills
Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill
First Reading
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I seek leave to present a legislative statement on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill.
ASSISTANT SPEAKER (Hon Jenny Salesa): Leave has been sought for that course of that action. Is there any objection? There is none.
Hon Dr DAVID CLARK: I move, That the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House four months and one day after it has had its first reading.
Climate change provides the overall context for the bill that we have before us today. On 2 December 2020, the Government declared a climate emergency, committing New Zealand to urgent action on reducing emissions. By declaring a climate emergency, we joined the over 1,800 jurisdictions in 32 countries to do the same and to commit to reducing emissions to avoid a more than 1.5 degree Celsius rise in global warming.
There are a number of actions the Government has taken in response to that climate emergency, not least amongst them is the setting up of an independent climate commission which will set carbon budgets—we have one in draft, currently. We’ve done things like biofuels sales blend mandating, we have committed money to enable councils to decarbonise the public transport fleet by 2035, we’ve nominated clean-car import standards, and so on and so forth. But this bill today, I am convinced, will be one of the most important things we do in this Parliament.
This bill today is a world first, and I want at the outset to acknowledge the Hon James Shaw for his leadership in the work that we are passing through the Parliament today. I think when he speaks—and I expect he will shortly—he will relate to the House the thinking behind his involvement in the development of this bill. I believe it’s going to make a very real difference, and I believe it’s one, as I’ve said, of the most important things we’ll do, and that goes back also to the leadership of our Prime Minister, the Rt Hon Jacinda Ardern, in labelling climate change this generation’s nuclear-free moment. We are here today to make a real difference, longer term, because it is the right thing to do. Climate change is about intergenerational equity as much as it is about saving the planet.
We know that climate change is real. It presents real risks to our survival as a species, as well as to the ecosystems that surround us. It also presents risks to the financial sector. There are risks currently of stranded assets, as business models change, as we adapt to a world where we need to take action. We are exposed to risks of sea-level rise. We are exposed to physical risks. There are risks, currently, to our supply chains, and our goods and services in the future will have to travel through low-carbon and more resilient routes.
These risks are real. The risks to investors are something that we’re thinking about today, and as we do that—as we think about where capital is invested in future, and send clear signals around reporting—what we’re doing is providing better market information. We know that markets, basically, are about information. They are about making sure that investors know where capital is wisely put and where it is unwisely put. So if that capital is going to assets that are going to make for a better, more climate-friendly future, that is something we want to see more of. If investment is going into assets that could end up stranded as we move away from a polluting culture and from outdated technologies, well, that means we have the inefficient allocation of capital, and that means less effective markets.
So for those of us who are passionate about markets—and I suspect there’ll be a few, but maybe not everybody in this place—we will, I hope, universally extoll the benefits of these measures in this Parliament. While it’s a world first, and we’ve worked closely with the UK on this legislation, it’s also true that other countries are looking very closely. The EU has signalled an interest here; I’m sure the US will start to move soon. We will be the first but we will be one of many that move towards making sure we have better information, more standardised information, from markets so that we have more efficient allocation of capital, for a better future for all citizens in this country and around the world. This is a meaningful thing that we are doing here today.
So, having said that by way of introductory comment, I realise I’m halfway through my speaking time already. I do feel passionately about this bill, but I want to speak to some of the detail.
The main aim is to move to a position where the effects of climate change become routinely considered as a part of business investment decisions. It’ll contribute towards that goal we’ve set of becoming carbon-neutral by 2050. Effectively, it does this by requiring around 200 of the largest and most important businesses participating in the New Zealand financial markets to disclose clear, comparable, and consistent information about the risks and opportunities presented by climate change, some of the stuff I’ve spoken to already: where the assets present risks, where they’re likely to have a future that’s less certain, and so on. That current lack of reliable information about the impact of climate change on business is serious, because it can lead to mispricing in the markets, the mispricing of assets, and the misallocation of capital, and that means that investors, lenders, and other decision makers cannot then make the right decisions. There is risk of corrections in the market which can be abrupt.
We know that climate change doesn’t just present risk; it also presents opportunities. That information, where it’s clearly presented, shows where people can invest wisely in the future. Trillions of dollars will need to be invested globally by 2050 to achieve the Paris Agreement goal of keeping the increase in global temperatures to within 2 degrees Celsius of pre-industrial levels and to pursue efforts to limit the increase to 1.5 degrees.
New Zealand businesses are well placed here to take advantage of those opportunities. It’s really important to remember that, in areas like energy production, food production, and pollution reduction. The disclosure regime will contribute to this, and it will help, I am sure, attract investment more broadly.
I suspect it will also lead to a situation where those who are not currently included in the bill will be considering how they report, because they will be trying to attract investment as well. The standards that the XRB—the External Reporting Board—sets for this financial reporting will be something that other entities will be looking to, as they want to attract capital in the future.
So there’s four main elements to the bill. The first is it introduces mandatory climate-related disclosures for most listed issuers, along with large registered banks, licensed insurers, and registered managers of investment schemes. Secondly, it requires that the disclosures be made in accordance with climate standards that will be issued by the External Reporting Board—known as the XRB to those in financial circles. Thirdly, the Financial Markets Authority—known as the FMA—will be responsible for enforcing compliance, and it will do that under its current existing statutory powers, including monitoring the disclosures. Fourthly, the XRB will be able to issue guidance material on environmental, social, and governance reporting and other wider aspects of non-financial reporting.
So those are the concrete bits of this. As I’ve said, folks around the world are looking at this, and I suspect we’ll see many other regimes look similarly. Late last year, the International Financial Reporting Standards, the foundation that looks at international accounting standards, consulted publicly on a proposal to establish a sustainability standards board with a climate-first mandate. So there you go, the global accounting movement is shuffling in this direction as well.
So I’m mindful of the time, Madam Speaker, but can I say that there is evidence around the world that people are seeing the opportunity here to guide companies to give the opportunity for companies to present clear information to markets so that markets can make the right decisions into the future, and if I can just, in the time remaining, give a couple of examples of recent investments. This is to give a scale of the opportunity. A study has found that, globally, we need $6.3 trillion a year in infrastructure through to 2030—
Angie Warren-Clark: How much?
Hon Dr DAVID CLARK: —$6.9 trillion—and that’s around thinking differently about how we do infrastructure. We’ve had estimates: UBS, the Swiss bank, calculated it would take US$140 trillion to decarbonise the energy supply more broadly. I’ve got a list of statistics. These are the kinds of investments that will be needed to keep climate change below 1.5 degrees Celsius—below pre-industrial levels.
So, in closing, can I acknowledge the leadership of the Rt Hon Jacinda Ardern and the hard work and foresight of the Hon James Shaw in this work. I am committed to successfully implementing these reforms, and I thank those who have worked on them before me.
ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website. The question is that the motion be agreed to.
Hon MICHAEL WOODHOUSE (National): Given Minister Clark’s comments, I think it’s appropriate to acknowledge the millions of people around the world who will be tuning into this highly important and world-leading debate. I think the Minister might find that we’re probably not as far ahead of the rest of the world as he thinks and claims we are, and I’ll go into that in some detail. But I think it’s fair to say that if one picks up a textbook on financial accounting and turns to chapter 1, the definition of financial reports is, in plain English, to provide information useful for decision making, or words to that effect, and we’ve got a very, very mature and robust framework for the provision and reporting of financial information. It’s set out in the Financial Reporting Act and the Financial Markets Conduct Act. As the Minister says, it’s overseen by the External Reporting Board (XRB), and they provide for the accounting standards and financial reporting standards that are consistent with generally accepted accounting principles, and that’s a longstanding convention and law.
When I was studying accounting a million years ago, we were already moving away from financial-only reporting and into things like triple bottom line reporting and elements of meeting organisation’s corporate and social responsibility. The nomenclature may have changed over time, the imperatives may have changed over time, but good companies will provide a range of non-financial performance information as well, in order to inform stakeholders, who are staff, their customers, and, indeed, capital markets.
In terms of the climate reporting, in reading this bill I was prompted to refer to some research from the professor of accounting at the University of Otago, Professor David Lont—my former lecturer, actually—who has done a tremendous amount of work on the links between disclosures of greenhouse gas emissions and company stock prices, and as long ago as 10 years ago, he was reporting the very nimble, almost real-time impact that disclosures of greenhouse gas emissions had on stock price. He analysed Canadian and Standard & Poor’s 500 data that was publicly available of those organisations that voluntarily disclosed this information, and noted that the stock price was affected almost in real time, in the same day that that information was released.
Actually, the really interesting part of that was not only was it the stock price of the firms that did disclose greenhouse gas data, so too was the stock price of those companies in the same markets that did not. So if one thinks of an oil company or a petrol retailer that disclosed—good or bad—their stock market price was affected, but if another competitor had not disclosed, and was not doing the sort of things that that company was doing, they would be negatively affected. So there is a much more mature, I think, element of the link between the information capital markets than perhaps the Minister portrayed. He nods, and I hope that that is in agreement with that.
One of the things that I think we don’t have, though, is a robust taxonomy, or framework for reporting, and I think the Minister used the words that I had already written down, by coincidence—“clear, consistent, and comparable”—because for the information to be the most valuable, it has to have those attributes. It’s actually for that reason and because we are starting from a point where I don’t think there is the level of accepted comparability and consistency and clarity that the XRB, at least, are going to have to take quite a bit of time and consult, I hope, with good people like Professor Lont to be able to come up with an agreed set of standards that that is able to be compared.
I am initially disappointed on that basis, then, that the Government recommends to this House that the report-back date be four months, and for that reason the National Party will be opposing the report-back date. But as it is that the devil is not in the detail of the bill but in the XRB’s work in terms of developing those reporting standards and taxonomies, our rebuke will be much more mild than it otherwise might have been on that point. I do worry. We’ve got a lot to do over the next four months, particularly with an important Budget coming up, but I hope we don’t skinny this up. I’m not sure if the Minister mentioned which select committee this is going to. Is it the commerce select committee?
Hon Dr David Clark: Education—
Hon MICHAEL WOODHOUSE: Education—
Hon Dr David Clark: —sorry, the Economic Development, Science and Innovation Committee.
Hon MICHAEL WOODHOUSE: Economic Development, Science and Innovation Committee. Well, the members of the Finance and Expenditure Committee will be disappointed by that. This is an accountant’s dream—I may even substitute myself on to that committee.
I want to come back to this issue of the scope of those climate-related disclosures because, on page 2 of the general purpose statement in the bill, I was fascinated to read this: “The Bill also provides for the XRB to issue guidance on a wider range of environmental, social, governance … and other non-financial matters that can be applied by entities on a voluntary basis.” Now, the concern is not that we do that. The concern is that one of the things the Finance and Expenditure Committee did yesterday—as recently as yesterday—was hear from Treasury on the Auditor-General’s report into the Government’s accounts for 2019-20, and the critique of the Auditor-General was that the non-financial performance measures across Government entities was low and inconsistent, and that’s been a narrative that I’ve heard for 13 years now.
Treasury came and talked about “We’re good at counting widgets, but we’re not that good at counting outcomes.”, and I don’t say that to criticise anyone in Government, or in the public sector. It’s to illustrate how very difficult this can be, and how important it is that we get it right so we’re not imposing even very large companies with the burden of reporting on matters that are quite esoteric or difficult. So I do want to just express that concern that I think what we do need to have is perhaps a more staged process where we can evolve this over time, as we do with financial reporting standards, starting with the stuff that we can agree that we can do, measure, and report, and then perhaps evolve into some of those broader issues around environmental sustainability.
The last thing I would say about the purpose of the bill was that I think the Government might be a little over its skis on the degree to which the purpose of the bill is actually to influence investment. So it says, “Financial markets globally can play a major part in shifting investment away from emission-intensive activities and towards low-emission, resilient development pathways.”, and that’s true—it can. But I’m not sure that the legislation can do that. The legislation is designed, I hope, to do what chapter 1 of every financial accounting text says—that is, to provide information useful for decision making. We’re not going to change the world of capital markets with this Act when it’s passed, but I think we are going to be able to shine a light on things that are important to all of us, actually.
What worries me a little bit about the language in that purpose is the potential to demonise individual companies when the goal is to take a holistic and global approach to greenhouse gas emissions reduction, because there are going to be a number of sectors and companies that, despite their best efforts, will still have net-positive carbon emissions. Their efforts, however good, will not change that until we wholly transition to a carbon-negative—not a carbon-neutral—economy, and that could take generations. So that concerns me a little bit—that we’ve got to make sure that we have, effectively, neutral reporting measures, not ones that seek to be punitive or punish companies.
Now, that said, if a company is performing badly and that’s reflected in their reports, then fair enough. That should come up in the same way that if a company is performing financially poorly, then the stock market and their investors will react accordingly. But we’ve just got to be a little bit careful not to get too over our skis on that.
The last thing I would say—and I think Mr Bayly is also going to raise this—is there are some concerns around the penalties regime, which the regulatory impact statement did say was well above what was being recommended by officials, because I think what we want to do is encourage good behaviour, rather than punish bad behaviour. But, with that, the National Party will be supporting this bill at first reading. I’m optimistic—not yet confident, but optimistic—we will be able to support it through all stages, and that’s why I’m concerned about the four-month report back. But let’s hear what the submitters have to say, and let’s have a good select committee process.
JAMIE STRANGE (Labour—Hamilton East): Madam Speaker, thank you for the opportunity to take a call on the first reading of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. I’d like to acknowledge the Minister, the Hon Dr David Clark, for bringing this bill to the House, and, as he said, this is world-leading legislation. I’d like to also acknowledge the Hon James Shaw for the work that he has done in this area. I actually first met the member in 2013 in the Coromandel, and he has been consistent with his messaging the whole time that I have known the member the Hon James Shaw, so I’d to acknowledge the work that he has done to, in effect, lead us towards this point.
Climate change is real. Climates have always been changing, but this time there’s one big difference: the changes are principally man-made. The issue has become urgent because the pace of change is accelerating, and in terms of the financial industry, the financial industry has a twofold responsibility. On one hand, it needs to prepare itself for the negative effects that climate change will have on its business and on its customers. On the other hand, the financial industry can play a significant role itself in terms of mitigating the economic risks and entering the low-carbon economy by providing appropriate products and services. It’s that second part that this bill seeks to address here, which is in terms of the financial industry playing an active role in terms of mitigating climate change.
Governments are starting to introduce policies to tackle the causes and combat the effects of greenhouse emissions, and these policies will alter the economics of entire industries. They will effect company share prices, both positively and negatively, and the Minister alluded to that. Climate change policies will have an effect on a number of industry sectors. The most sensitive sectors, as I see it, are either energy-intensive, such as cement, aviation, metals, or energy industries—as I believe my colleague may talk about in his contribution—such as oil, gas, coal, and power utilities. Early action is needed to provide greater certainty for businesses, long-term investment, and technological change.
That leads me on to the bill and the purpose of this bill, which is how the bill introduces a mandatory climate change disclosure regime for specified FMC reporting entities under the Financial Markets Conduct Act. I believe that many businesses are not aware of the impact climate change has on their businesses, strategies, and financial positions.
Andrew Bayly: What an outrageous statement.
JAMIE STRANGE: The member opposite says that that is outrageous. I look forward to his contribution, and I thank the member for the support of his party, as well. I don’t believe it is so outrageous, because while this issue has been around for a long time, it’s really just in the past few years that we have seen businesses, in a way, really open their eyes to this issue and realise that those businesses can play a leading role in this area, as can our country.
I just highlight quickly the four main things the bill does. It requires climate reporting entities to prepare climate-related disclosures, and this will give more information to those businesses around their carbon footprint and the role that they’re playing in terms of their investments. It enables the External Reporting Board (XRB) to prepare and issue climate-related reporting standards. The Financial Markets Authority will be the independent regulator for specified FMC reporting entities, and the fourth thing the bill does is enables the XRB to issue guidance on non-financial reporting.
So I will leave my contribution there, but just acknowledge that as a country we have been world-leading in the past in many areas. I am proud of the work that the Minister has done on this piece of legislation, as we are the first country in the world to bring this legislation to Parliament, and while we may not be the biggest country in the world, we certainly can play a leading role in this area. I commend this bill to the House.
ANDREW BAYLY (National—Port Waikato): Thank you, Mr Speaker. It’s a pleasure to be talking on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill, first reading.
First of all, I just want to check that that member who just sat down, Jamie Strange, actually just said that businesses weren’t aware of their climate change obligations.
Jamie Strange: Some businesses.
ANDREW BAYLY: Some businesses. Well, first of all, I’d like to take issue with that comment, because I think businesses have adopted ESR reporting for years, particularly the type of entities that are included in this bill. In fact, they’ve been leading the Government in many ways around that thinking. It’s been regularly in place, that type of ESR reporting—environmental, social responsibility - type reporting—for probably 15 years, particularly at the level of entities that are captured by this bill.
So what does this bill do? It introduces “mandatory climate-related disclosure requirements for certain [firms] … considered to have a higher level of public accountability, including listed issuers, large banks, large non-bank deposit takers, and large insurers, and large managers in respect of managed investment schemes.” My colleague the Hon Michael Woodhouse noted that we will be supporting this bill. And just before I start talking about the bill in detail, I just want to be clear that National supports the desire and intent to reduce our carbon emissions. After all, the National Party signed up to the Paris accord. So I want to put that on the table. But that does not mean that a bill like this does not have some failings. We will be supporting it to first reading, but there’s some significant issues in this bill.
The first is, I suppose, the paternalistic approach that is taken. The bill says that the primary purpose of this proposed intervention—and I’m referring to the regulatory impact report. The primary purpose of this proposed “intervention”—that’s the word written by Government officials—is to promote the efficient operation of financial markets through greater transparency and more information.
Now, I’d have to say to you, first of all, that businesses do need to understand their obligations and responsibilities, and most directors—certainly, I would say, every single director of any of these organisations—if they haven’t been considering it, they are in serious issue, particularly if you’re a listed company, because there is a requirement under the listing rules to have regard for these types of issues. And so this is an overlay to what’s already in the listing rules, trying to impose this mandatory requirement on directors.
I think we’ve seen a little bit of this coming out of the Government. We’ve seen it yesterday in the debate with Mr Robertson’s letter to Air New Zealand—this sort of thought from this Government that they know best, they know how to control business, and that they should be controlling business. And the thing that worries me about this bill is how this bill requires an absolute mandatory requirement on it.
The second thing—and I just do note that there were a number of submitters on this consultation around this bill, and there were a number of supporters, and I acknowledge those, but there were some detractors, significant organisations, who opposed it on various grounds: Business New Zealand, Chapman Tripp, and the New Zealand Stock Exchange, as I just alluded to. The worrying thing about this is, whilst I understand the intent to disclose, and we’re going to talk about the comply or explain aspect of it, the bit that worries me about this is how it will lead to different decision-making.
Now, at a high level, global level, it’s fine. We want people to not invest in emission generating businesses, or certainly reduce their level of investment in those and migrate to clean energy type investments, particularly into better types of technologies. But I put it to you, the way it’s phrased and the way that it’s going to operate will mean if you take, for instance, a concrete producing company, which, we all know, produces a lot of emissions, and if a pension fund wanted to invest in a new technology that produced an element of green concrete but still produced a lot of emissions, but much lower than the current level of emissions—i.e., we’re getting a better outcome, and because concrete is still a requisite requirement of our construction industry—I would dare say that a pension fund is going to be very, very unlikely to contemplate an investment like that, because of the public notification of that and the possible victimisation as a result of the disclosure around that investment.
I think that means that we’re going to see many of these types of organisations, many of them professional investors, particularly the funds, choosing not to even contemplate investments that would otherwise lead to a better environment for the world, and certainly for New Zealand, by reducing their emissions. I think that’s a real shame. I don’t think the bill foresees that. I think that the proposed bill is rather hard and fast in saying, “Thou shall not invest in those things, because if you have to, you have to disclose it, and then you’ve got to go through the explanation of that.” And I think that’s a very difficult environment for people who want to be seen to be investing in better technologies that reduce emissions over time.
The other aspect of it is this. I don’t understand fully the “complain or explain” option. If you were to take that argument I’ve just put forward, how does that operate? Hopefully, during the select committee process, that will be fully explained. I know there’s some issues in the regulatory impact report on it, but it’s unclear what and how it will operate.
But I just want to also highlight that there are some risks around this bill, and it’s worthwhile just noting them. Again, they’ve been prepared by independent Government officials. The first one is introducing this bill at this particular point in time with the fallout from COVID and whether businesses are likely to be under greater pressure than usual for the next few months or years. I think that’s less of a concern, but it’s certainly a concern. But also, the Financial Markets Authority (FMA) considers that confidence in the new regime will be undermined if it proceeds as currently proposed, because they consider there is an initial impracticality of compliance by managers of registered investment schemes. So, again, my colleagues spoke about the short duration to put this in place. Also, as the current proposals apply to the FMA reported entities and not to private and non-issuer companies, it may be considered an additional barrier for those companies listing on the stock exchange. That is a possible barrier. I don’t think it’s insurmountable, though.
But the other thing is the issue of penalties, which I find quite considerable. They’re covered in new section 461ZC in clause 7. So just to be clear, every director of any of these entities will be perhaps a little bit surprised to know that at a personal level, if they don’t comply with the requirements—and there’s an issue about what the requirements are—it is a five-year jail term or $500,000 fine or at a business level a $2 million fine. So here we are. We’ve got pretty hefty fines for mandatory disclosure on a regime where we don’t yet know what is going to be reported and how it’s going to be reported, because we haven’t had the feedback from the reporting board, and, secondly, we don’t know how auditors are actually going to be able to undertake the role of checking these statements. There’s a need to actually upskill them once we know what the framework is that they need to measure whether a company is actually complying or not.
I think these are all very practical questions. I seriously think the short report-back date is one of the issues, but the implementation date is going to be quite something for even these very large companies to be able to comply quickly, or otherwise face, at a personal level, a fine of $500,000 or imprisonment for a period of five years.
TANGI UTIKERE (Labour—Palmerston North): Tēnā koe, Mr Speaker. It’s a pleasure to take a call on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. I do want to acknowledge the optimism from the benches opposite, although the previous speaker, Andrew Bayly, just seemed to indicate that, actually, investing in businesses that are supportive or promote green practices is a bad thing. Here on this side of the House, we would think that it’s quite opposite.
Can I acknowledge Minister Clark and Minister Shaw for the work that they’ve done in this space in getting the bill to this particular point in time. This is an omnibus bill, and it’s an important one, because it will, effectively, amend three pieces of legislation: the Financial Markets Conduct Act, the Financial Reporting Act, and the Public Audit Act. The implementation of what will be a broad policy across a number of important entities—the focus there is on the non-financial reporting components that this bill does provide. It will, as previous speakers have indicated, assist us as a country in getting to that net zero carbon emissions by 2050 as the starting point moving forward.
Yes, there is a lot around new Part 7A within the bill, and the previous speaker touched on some of the offences. I’d perhaps like to adopt the view that strong offences will serve as a strong deterrent to ensure that there is compliance with what is expected of those in the sector.
I want to just very briefly turn to the purpose of the bill, which has been also touched on. There are, as the documents indicate, a number of specific purposes of the bill. The first is around ensuring that, effectively, there will be a new routine to business as usual when it comes to business, investment lending, and, in the insurance sector, the underwriting decisions that flow from that. Secondly, a purpose is around helping reporting entities better demonstrate responsibility but actually forward thinking and foresight in terms of their consideration of the wider issues around the climate sector. The third one is around that smart approach and a more focused allocation of capital and how we smooth the transition, as well, to a more sustainable low-emissions economy.
I accept Mr Woodhouse’s earlier comments that there are a number of organisations in our community and in this country who are already doing some good work in terms of non-financial disclosures. There is absolutely a desire in the community sector and the not-for-profit sector, and this piece of legislation as a proposal will, effectively, ensure that there is consistency within the business sector as well. Climate change will have a huge impact on businesses moving forward all around the country, and the fact that not-for-profit sectors are already aware of that, and businesses are as well, will provide a helping hand in terms of moving us forward together, which is, obviously, really, really important.
Previous speakers have touched on the requirement that the disclosure materials will need to have the three Cs, being consistent, being comparable, and being clear about the information in that particular climate-related space. But also the information needs to be reliable, and what’s proposed in this bill will seek to deliver exactly that. So it is really, really, important in that particular space.
Getting back to the requirements of the entities which fall within this bill, they will be required to do at least four things, and I don’t intent to go through the list of those entities that would be part and parcel of this. But firstly it would require preparation—preparation of climate statements in accordance with climate standards. That’s the first thing. The second is a requirement to obtain an assurance in situations where greenhouse gas emissions disclosures are made, and there’s a whole separate process that’s outlined in the bill around that. The third is the publication of the statements, which will allow for accountability in the public sector, public sphere, as well. The fourth thing is, and it might come as some surprise to many, actually keeping and retaining those records around the statements and the disclosures.
What I’ve found really interesting is that the information that the Ministry of Business, Innovation and Employment have provided indicates that, actually, the majority of large New Zealand entities provide little to no information on what climate change might mean to them, or they are reporting in inconsistent ways. So I look forward to the select committee process. There seemed to be a little bit of a suggestion as to which select committee this may go to, but part and parcel of this will be hearing from submitters. I commend the bill to the House.
Hon JAMES SHAW (Minister of Climate Change): Thank you, Mr Speaker. I rise most enthusiastically to support the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. This bill has actually been quite a long time coming. Back when I was the modest Opposition climate change spokesperson and was invited by the Hon Tim Groser, the Minister for climate change at the time, to observe at the Paris climate talks, I found myself sitting at the back of a room in which Mark Carney, the Governor of the Bank of England, and Michael Bloomberg, of Bloomberg, were launching their task force on climate-related financial disclosures. Neither of them are given to particularly flowery language—you could describe them as dry in their economic bent; very dry—yet some of the language that they used was actually quite extraordinary in the context that they were describing.
One of things that they said was that they had formed the assessment that there are literally trillions of dollars of unquantified and undisclosed risk sitting on corporate balance sheets around the world, related to climate change—trillions of dollars of unquantified risk sitting on corporate balance sheets—and that that represents a significant risk not just to those companies and not just to their shareholders but actually to the financial system itself. So their recommendation was for countries and businesses to move towards climate-related financial disclosures. Later on, the Green Party made a request of the Hon Steven Joyce who was Minister for economic development at the time, when he was putting together a Productivity Commission round of reports, and we were delighted that he accepted our request for the Productivity Commission to do a report on the transition to a low-carbon economy.
During the course of that process, the Insurance Council made a submission to the Productivity Commission saying that if you looked at current reporting law, the standard fiduciary duty of directors is to disclose material risk to their shareholders, and, of course, the Insurance Council would know that there is significant material risk to businesses from things like sea level rise or increasingly frequent and severe droughts, floods, fires, storms, and so on. Yet even though you could interpret the fiduciary duty as therefore requiring companies to disclose climate-related risks, they weren’t. There were an absolute handful at the time who were making these kinds of disclosures. So their recommendation to the Productivity Commission got carried forward into a Productivity Commission recommendation, and their report, when it came out in 2008, was that the Government move to a mandatory complier-explain disclosure regime.
Now, what kind of risks are we talking about? The Hon David Clark, who I thank for leading on this bill and bringing it to the House, described two forms of risk, one of which is what you would describe as physical risk. That’s, as I mentioned before, things like floods, fires, droughts, storms, sea level rise, and so on, which could threaten the physical assets of a business. And having listened to this debate, one of the things I want to note is that this isn’t just about the emissions that a company produces. You could be a zero-emission business and still be at risk because your assets, your business, are at risk from those physical risks. So you could be an absolutely perfect player in terms of your own pollution that you put into the atmosphere but still be facing material risk. So that’s one form of risk.
The second form of risk is really stranded asset risk, and that is where your emissions are significant. So what we know in kind of broad terms is that we are unable to burn 80 percent of the oil and gas reserves that are known around the world if we are to have any hope of staying within the 1.5 degree threshold for global warming. What that means is that the companies that own those reserves or have rights over those reserves and have valuations listed on stock markets based on the extracted, processed, and sold value of those reserves are facing, potentially, colossal write-downs in the value of their business because everybody knows they’re not actually going to be able to extract and monetise those fossil fuel reserves. So that’s the most obvious case of stranded asset risk, but there are others as well.
So this has wound its way since the Productivity Commission report. Chapman Tripp did a legal opinion which used, in legalese, quite strong language that actually the directors should have a duty to report on climate-related financial risk. Also, Adrian Orr, the Governor of the Reserve Bank, weighed in because he shared the assessment with the Bank of England and other reserve banks around the world that non-disclosed climate-related risk actually could present a significant risk to the financial system itself and the stability of the financial system over which he obviously has some responsibility.
So given all of that, that is why we went and consulted in 2019—about 18 months ago—to say, “Shall we move to a mandatory complier regime system?”, and 79 percent of the respondents to that, the vast majority of which were either individual companies or industry associations, supported a mandatory regime, and 84 percent of them said that the international standard that’s emerging from the task force on climate-related financial disclosures, led by Mark Carney and Michael Bloomberg, was the appropriate system to use for Aotearoa New Zealand. Why was that? I mean, it’s quite astonishing that you would have such massive support from the business sector for a new regulatory reporting regime, and it’s because they know that in order to get the efficient allocation of capital, you need full transparency. You need everybody to be able to see everybody else’s risk, not just your own, and if I as an individual company want to do the right thing and disclose the risks that I’m exposed to but one of my competitors is not reporting, then I’m actually exposing myself to risk by the very act of reporting, whereas if you have a mandatory regime that requires everyone to report, everyone’s cards are on the table and capital can be allocated according to the risk profile of the different businesses.
The second thing is that there is a risk here that you would get competing reporting regimes proprietary to different accounting firms or different NGOs and so on, and so it was felt that just as the generally accepted accounting principles that were raised by the Hon Michael Woodhouse before, you need a set of standards here that apply equally so that we’re comparing apples with apples rather than apples with oranges in all cases—to have, as he said, a taxonomy that everybody has agreed to.
So that’s why the business community was so supportive of a mandatory complier regime scheme, using the Task Force on Climate-related Financial Disclosures as the basis, with the external reporting board, the XRB, as the developer, because, of course, that is their meat and potatoes—to develop reporting standards.
There are a number of companies in Aotearoa New Zealand that have led the way on this. There are probably about a dozen that have produced some form of report in the past. I’ll just draw on one so far, which drew my attention, although I want to acknowledge that there are others as well. Over this last summer, Westpac produced their first climate risk financial disclosure statement, and one of the things that they disclosed in that is that in their view about 2 percent of their mortgage book is exposed to climate risk. And that was new information to them. Now, you might say 2 percent doesn’t sound like much, it’s not a lot, but if you know how the balance sheets of large banks operate, if it gets to about 9 percent exposure, they start to experience access-to-capital problems. So 2 percent is not actually that far away as presenting material risk. So you can see that that information actually then becomes extremely useful for them to start to be able to move forward.
So New Zealand is the first country to introduce legislation, which I’m delighted about, but we’re not the only one, and we’re not alone either. The United Kingdom have said that they are going to be moving fairly rapidly towards a mandatory regime—in fact, they might even get there in legislation faster than we do, apparently; it’s what their goal is. The United States has just announced that they’re considering it, and there are something like 60 other countries around the world as well.
So I’m delighted that we’re able to do this. I want to thank the Hon Dr David Clark for taking this on, and I do appreciate that bipartisan support that has so far been illustrated in the House for this bill.
DAMIEN SMITH (ACT): Thank you. This omnibus bill will amend the Financial Markets Conduct Act, Financial Reporting Act, and the Public Audit Act 2001, but it is a very single, broad policy to broaden non-financial reporting by requiring and supporting climate-related disclosures, and it’s mandatory. This bill will have no impact on reducing emissions or meeting our international climate change commitments but will increase costs to business. In New Zealand, we already have an emissions trading scheme (ETS) and a Climate Change Commission to set up a plan to meet our international climate change obligations. Increasing bureaucracy on companies, the 200 or so organisations, will make no difference. It will not lead to smarter, more efficient capital being deployed, and it won’t help the smooth transition to a more sustainable, low-emissions scheme.
The emissions trading scheme is the most efficient and first way to achieve carbon reductions, and increasing regulation will in fact make meeting our climate change obligations harder. The Minister of Commerce and Consumer Affairs has produced a world-class press release, but this is not world-class law—or it’s not a world-class bill. Minter Ellison, the law firm, also asks: why is this not also applying to Government departments, Crown and local authorities, who should also be legally obliged to follow the new climate-related financial disclosures? Simply an expectation that they disclose in line with the law is not good enough, in their view, given Government departments, Crown and local authority entities may compete with listed entities. It’s very important there’s a level playing field and they have at least strict requirements. Further, many such entities are major emissions producers and polluters, and yet there is no mechanism to address that.
From ACT’s point of view, the bill simply addresses another layer of bureaucracy, imposes costs and all, while the Climate Commission is also coming up with its final recommendations. So how does this all fit together? It won’t reduce climate emissions. It will increase the amount of reporting. Think about all the wasted paper and trees that’s going to occur for a bill that won’t do anything. SkyCity Entertainment, as an example, suggests that to do this high-level report, they’ve had an indicative cost of around $1 million that they believe could be spent on sustainability issues. And, as importantly, it could also affect loans to farmers and horticultural players across the agritech sector because the banks will not lend in the normal fashion to these organisations.
For the reasons that we’ve suggested, there’s no impact on reducing emissions. It brings a layer of bureaucracy and cost and capital distortion to the New Zealand market, and, even though we have global names being mentioned today, we at the ACT Party want to look after New Zealanders. We have the ETS climate set-up to meet these obligations, and we must insist on a trading playing field for Government entities versus listed entities as a non-negotiable aspect. For that reason, the ACT Party will be opposing this bill at introduction.
GLEN BENNETT (Labour—New Plymouth): Thank you, Mr Speaker. Thank you and I’m glad to be taking a call this afternoon on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. Last year in December, this House declared a climate emergency. And with that declaration, we are needing to change, and I’m glad that many individuals, businesses, and communities are changing, but action from this House is required for us to achieve our aims by 2050.
So I’m proud to be standing in support of this piece of legislation, and being one of the first countries in the world, as the Hon James Shaw said, to introduce laws requiring us to disclose the impacts of climate change on businesses—both the risks and also the opportunities. I want to thank the Hon Dr David Clark for his work and, following on from the Hon James Shaw, thank you for your work in this space, and we look forward to taking it to the next stage. I commend this bill to the House.
DEPUTY SPEAKER: This is a split call. I call Nicola Willis—five minutes.
NICOLA WILLIS (National): I welcome the opportunity for Parliament to consider this bill. The reason for that is that I am a big believer that we can bring market mechanisms to bear on the challenge of addressing climate change, and we can, by using market mechanisms, create strong financial incentives for the private sector, for businesses, and for individuals to innovate and to make changes that will mean fewer emissions. This bill, I think, could potentially be a step to ensuring that the market can more properly react to the challenge of climate change and make changes to business practices accordingly.
I can’t help but think that this is the sort of bill that may not have happened if we had a different leader of the Green Party. I want to commend Minister James Shaw for his recognition that climate change will never be an issue that can be solved by the Government acting alone, nor is it an issue where we need pit business against Government; in fact, the best thing we can do is motivate businesses and individuals to see the upside and to innovate in order to address climate change. I think that that is a constructive approach to take.
So in creating further disclosure requirements around climate-related issues, what does that achieve in terms of the market? Well, first of all, if done well, it can ensure that better risk assessment takes place. It can facilitate better capital allocation so that consumers and investors can be more aware of how the activities of a particular financial entity are both contributing to and addressing climate change, but importantly, also, so that investors can understand where the risk for a company may lie if it continues with a current set of activities that will actually further climate change emissions or that will put the financial stability of that entity at risk. These disclosures, done well, can also help with strategic planning.
But, of course, the challenge always with a Government-mandated set of reporting requirements is getting the balance right between the good aims of transparency and consistency, and the flip side of that, which can be that companies face a heavy compliance burden, and where the reporting is not relevant to their activities, or it potentially creates significant costs in its collection that aren’t outweighed by the benefits. So it is important that we get this right.
I am encouraged by the fact that many commercial entities in New Zealand listed on the NZX—banks, insurers—have already started this process of reporting to their stakeholders where they sit in terms of climate change risks, opportunities, and the way they conduct their activities; what they see coming on the horizon. I’m encouraged by the fact that many of those same entities have welcomed a bill of this sort because they know that it would provide consistency across entities and across agencies.
But I think, as I say, that it is very important that we analyse this. I note the recommendation that this bill go to the Economic Development, Science and Innovation Committee. I have to say, Minister Shaw, I’m a bit surprised by that—not Minister Shaw’s responsibility, but I note that in reference to his earlier speech—because, I think, as many members will agree, fundamentally this is an issue about business reporting, financial reporting, and I would have seen a strong case for the Finance and Expenditure Committee to be the select committee that assesses this bill. I also want to register my concern and National’s concern with the shortened report-back period of four months. These are detailed disclosures with far-reaching consequences for the commercial entities involved and a thorough select committee process is warranted.
So National supports this bill and we look forward to a thorough select committee process. It is important we get this right.
KIERAN McANULTY (Labour—Wairarapa): Thank you very much, Mr Speaker. It’s important that every part of the New Zealand economy plays its part in addressing climate change and doing what we need to do as a country and an economy to get to that point. And I think it’s a matter of pride, actually, for this country to be a world leader in this regard. I support this bill. I think it’s a good idea.
I have heard the concerns that have been raised, particularly by the member from the ACT Party, Damien Smith, that this is simply more regulation and won’t lead to achieving our goals. I would say that that is another example of saying, “Yes, we need to do something about climate change.”, and then, when the opportunity arises, opposing it. This will lead to providing the information not only to businesses but also consumers and investors into who’s actually doing their bit and what businesses need to do to do their bit. I mean, we will never get to a net zero carbon future by 2050 if we don’t bring in measures like this.
So on that basis, a very simple point that this is going to create a market that is fully informed. And it will be beneficial to businesses, because I guarantee that this requirement will highlight areas where they can improve and become more efficient that they hadn’t identified themselves. Therefore, I’m very happy to commend this bill to the House.
RACHEL BROOKING (Labour): Thank you, Mr Speaker. Like the former speaker, Kieran McAnulty, I’m very happy to rise in support of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. I’m very pleased to be the third member based in Dunedin to do so today. Perhaps I’m not as passionate about markets as the other two members from Dunedin who spoke before me, but I am very passionate about climate change and very focused on addressing climate change, both the adaptation piece and the mitigation piece, and this bill tries to do a bit of both.
So I also agree with both of my colleagues from the beautiful Dunedin that the standards set by the External Reporting Board (XRB) need to lead to disclosure and reporting that is clear, consistent, and comparable. I hope that at the select committee, there will be some expansion on identifying what the risks and opportunities are that are relevant to setting these standards.
I just want to note one other thing, and that is that under the Financial Reporting Act, the External Reporting Board—that XRB—is a Crown entity. It’s independent, and it states that there’s to be four to nine members with knowledge of things like business, accounting, auditing, finance, economics, or—always very important—law. Now, there’s an addition here to add expertise in sustainable development, and I think that’s a very fine idea.
So there’s been some discussion as well about what select committee this bill will be sent to. I sit on the Environment Committee and am sad that it’s not going to come to us, but I’m sure the select committee will get very thorough and thoughtful submissions on what is a very important and world-leading piece of legislation. So I commend the bill to the House.
STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. It is a pleasure to speak on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. I think there’s been some interesting points made across the House, particularly from the ACT member, about regulation and so on. I take the point—he made quite a few points about the emissions trading scheme. Then we heard the chief whip over there from the Labour Party saying that we won’t get to net zero by 2050 without this bill. I can assure the member that we will, because it really has little to do with that at all.
We do support this bill. We do share some of the concerns that the ACT Party speaker raised about whether this is the most efficient way to report on these things. I would have thought, actually, that it’s in businesses’ interests to report on this and do a damn good job of it, because, actually, their investors are looking for that. People are looking for a lead on these things. They want to know that the companies that they use for goods and services—in this case, banks, insurance companies, and so on—are reflecting their own views. We know that most of New Zealanders, or the vast majority of New Zealanders, want to get to net zero by 2050, and they want to deal with companies that also want to do that. So having a system in place where we can be assured that we’re dealing with companies who actually are doing what they say they are is a good thing. So we don’t dispute that at all. But we have to do that in a way that’s the most efficient manner for the companies as well, because we don’t want to foist more unnecessary costs on them; we want it to be easy to work with. That’s something that will be all teased out through the select committee process.
I do wonder—it does make me scratch my head a bit that it’s going to the Economic Development, Science, and Innovation Committee. All due respect to the members of that committee; however, the Finance and Expenditure Committee would have been a more natural home for a matter such as this to be considered. Like the member from Dunedin—I come from the South as well, but not quite that far south. But Rachel Brooking was saying that she’s on the Environment Committee. So am I, but I don’t think we’re the right committee to have a bill like this—albeit that some people sit on both. But that committee is focused on the environment, and this is, while it’s got an environmental focus, actually a finance bill.
This is about reporting for large companies. We’re talking about large companies here, with assets of a billion dollars or more, or, in the case of insurance companies, with revenue of more than $250 million. They will have very good processes in place already for all of their reporting and recording. What they want, and they’ve already expressed this view, is a standard that is well-known and everybody sticks to it. I think that’s a great thing. As we say, on this side we’re just a little bit concerned, and we’ll find out in the select committee that this is the best way to achieve that goal. So it’s with that in mind that I commend the bill to the House.
Dr DEBORAH RUSSELL (Labour—New Lynn): Thank you, Mr Speaker. I’m delighted to have an opportunity to speak on this revolutionary bill. It’s an exciting piece of legislation, and normally people don’t actually get too excited about accounting standards. I don’t understand that personally, it’s something that I find very interesting, but this is legislation that, for one of the first times in the world, ensures that we will have reporting on climate-related risks, that large entities will be required to understand and to report on the climate-related risks that they are facing.
Information is power. Information helps us to understand the world, to understand our place in it. Information helps us to understand how we may be affected by events. Information helps us to understand what actions we may be required to take. But we need to have that information in the first place. We need to have the information about our investments, about the places where we live, information about how the world may affect matters that are important to us. And this is what this bill does.
I wish to particularly commend the speech by the Hon James Shaw when he talked about the risks of climate and he talked about how that affects investment decisions, when he talked about the issues around understanding risk, understanding climate, and ensuring that we all know what is going on; how it does create risks for companies. It was a very interesting speech, and I think he exactly targeted those particular issues very well indeed.
I wish to add to that analysis that was presented by the Hon James Shaw. In terms of understanding the risk that we face with investments, so that as individual investors we understand it, so that as people dealing with companies and with large entities we understand it, so companies understand each other—I think that’s what’s really important about this bill is it forces companies, it forces large entities, it forces financial institutions, to understand themselves, to understand for themselves what their own exposure is. So it’s having that in-depth understanding.
All too often, companies and large entities have a tendency, perhaps, to avoid thinking about certain issues. They don’t have to. This bill will force them to understand their own risk profile before they can report it onwards, and understanding their own risk profile with respect to the climate will enable them to take action themselves to manage their own affairs too. So it has that double purpose sitting in it. So I think that is part of the risk that we need to understand and that companies need to understand.
I think there are a number of matters in this bill which will need very careful review by the select committee, and they are interesting issues. I first of all want to focus on something that I hope that the select committee will pay due regard to. If we look at new section 461O, inserted by clause 7—it is going into the financial markets legislation, I think—it talks about what a climate reporting entity is. Now, not all entities will be required to do this climate reporting. It says that a climate reporting entity is someone—and this is what I hope the select committee will examine—who is a listed issuer of securities, a registered bank, a licenced insurer, a credit union, a building society. Of course, all these institutions have something in common; they deal with investments and they deal with money, and they deal with it on the part on behalf of retail investors, as well as dealing with it in respect of banks and institutional investors. Are there other entities that should be included in that list of climate reporting entities? That is an issue that I hope that the select committee will give some thought to as it works its way through this bill.
However, it is not all banks, it is not all credit unions, it is not all licensed insurers, and so on, that will be required to report under this; it is only large climate-reporting entities. That is what the bill intends at this stage. So that then becomes a question as to what is a large climate-reporting entity. Now, the suggestion offered in the bill at this stage is that a large entity is an entity that has total assets, in the previous two accounting periods, that exceed a billion dollars. Is that the right threshold? Should it be more? Should it be less? Now, the estimate is that around about 200 entities in New Zealand will be required to report under this bill if it becomes law. Is that threshold set at the right level? I would hope that the select committee will examine that, as well. Perhaps by setting it a little lower, another group of companies could be brought in; there could be a natural sort of place where the line falls. So I hope the select committee will examine that, as well.
There is something else in this that I find very, very interesting, and that is the role that has been set aside for the XRB. Now, the XRB is the External Reporting Board, and as an accountant I find them to be a very interesting entity. What is interesting about this is that in terms of developing these climate-reporting standards, we’ll be relying on a group of professionals, a group of accountants, a group of people involved in the financial markets, a group of people who understand what goes into a set of financial statements, to spend some time thinking about what should be reported and how it should be reported. And there will be a process for doing that; a process of developing a standard and putting an exposure draft out and getting comments back on it.
What it does is it draws on the civil institutions of our society to consider exactly what should be reported in a climate standard and how it should be reported. We are drawing on the expertise of professionals, and I think it is a very important role for professionals in our society. I also, as a former accountant and someone who still in some ways understands the world through, you know, double-entry journal entries—which is a bit sad—I think that accountants have a great deal of value to offer in this space and that their accumulated knowledge of the way that financial statements work will actually be very, very useful in this regard. So the XRB will develop this standard, and then the large climate-reporting entities will be required to comply with it.
But there is another aspect to this reporting that the XRB will be developing standards for, and it is a suggestion which I think—well, it’s in the bill at this stage—the select committee should actually give some serous regard to: that, as well as issuing a standard on financial reporting around climate issues, the XRB is going to be empowered to issue non-binding guidance that relates to non-financial reporting on some matters; so non-financial reporting on other issues that may relevant with respect to climate.
So that is an interesting change. It gives them scope to move beyond just reporting on the financial accounting and on the balance sheet risks and on the numbers, and think about some of the other issues. And I think that is an interesting expansion of the XRB’s path. Now, it is not required to do this, but it may do so; it may issue guidance. So, again, in this regard, we are relying on the External Reporting Board to actually have a really serious think about what could be done in this space and how we could improve our reporting on climate. And we are doing it in order that we may all make better decisions, that we may all understand the risks we face, and that we may all respond to them in an appropriate fashion.
So this is an interesting bill. As a member of the Environment Committee, I would have loved for this to come to the Environment Committee, as well, because I would have thoroughly enjoyed working through it. But I know that whichever committee it is sent to will do a thorough and good job looking at this interesting bill and ensuring that we do the best in terms of developing a way of reporting on climate risks that can lead the world and can develop something that other countries may also be interested in too. So it is a fantastic bill. I commend the Minister for this bill. I look forward to watching its progress through the House.
A party vote was called for on the question, That the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill be now read a first time.
Ayes 110
New Zealand Labour 65; New Zealand National 33; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.
Noes 10
ACT New Zealand 10.
Motion agreed to.
Bill read a first time.
Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill be considered by the Economic Development, Science and Innovation Committee.
A party vote was called for on the question, That the motion be agreed to.
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.
DEPUTY SPEAKER: The question is, That the
Motion agreed to.
Bill referred to the Economic Development, Science and Innovation Committee.
Instruction to the Economic Development, Science and Innovation Committee
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I move, That the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill be reported to the House four months and one day after it had its first reading.
DEPUTY SPEAKER: Members, the House stands adjourned until 2 p.m. on Tuesday, 4 May 2021. Ka kite anō.
The House adjourned at 4.56 p.m.