Tuesday, 3 August 2021

TUESDAY, 3 AUGUST 2021

TUESDAY, 3 AUGUST 2021

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

TEANAU TUIONO (Green): Kia orāna kotou katoatoa i te aroa ma’ata o te Atua. Taki nei au ia tatou i tetai pure no tatou katoatoa. Te Atua mana, te ‘akameitaki atu nei matou iākoe no te tākinga meitaki ta’au i riringi mai ki runga ia matou. Te ‘akaruke nei matou i to matou tu tangata. Te ‘akamā’ara nei matou i te Ariki Vaine, e te pure nei matou kia arataki koe i ta matou ‘uri’uri’anga manako, kia rave matou i ta matou ‘anga’anga i roto i teia ngutu’are, na roto i te pakari, te tuatua tika, e te ‘ākono’anga meitaki no te ao, e to matou basileia Nūtirēni, na roto i te ingoa o Iesu Mesia, ‘Āmene.

Ministerial Statements

COVID-19—Australian Travel Bubble Pause

Hon CHRIS HIPKINS (Minister for COVID-19 Response): Thank you, Mr Speaker. I wish to make a ministerial statement relating to the New Zealand Government’s decision to suspend quarantine-free travel with Australia.

On 22 July, Cabinet met and agreed that the quarantine-free travel from all Australian states and territories would be suspended, based on the Director-General of Health’s concern around increased transmissibility of the Delta variant and continued movement of positive cases in the community in New South Wales. Quarantine-free travel with Australia commenced on 19 April, on the basis that travellers from both countries did not have, or were very unlikely to have, COVID-19 spreading through communities.

The New Zealand Government adopted a flexible approach of continue and pause with each individual state to give them time to get any COVID-19 infection in their community under control as part of our elimination strategy approach at our border. When we set up the traffic light system for COVID-19, it was based on what we knew at the time about variants that were present and how it was moving through the countries and communities.

In the middle of June, the first case of the Bondi cluster was reported in New South Wales. By the middle of July, not only had New Zealand paused quarantine-free travel with New South Wales, but also with Victoria, and then South Australia, due to the risks of COVID-19 in those communities. The Delta variant has materially changed the risk profile of COVID-19. We’ve seen that contact tracing alone is unable to get ahead of this variant, and that restrictions are absolutely necessary to stamp it out where it emerges.

In the view of our health officials, there is now a greater risk from the Delta variant than there was when we opened quarantine-free travel with Australia. It’s the New Zealand Government’s duty to keep New Zealanders safe from COVID-19. We continue to believe that the strongest health response is also the strongest economic response. So we made the decision to suspend quarantine-free travel, with a grace period of a week, for New Zealand citizens and those ordinarily resident in New Zealand to return from Australia, with the bubble officially closed for green flights from 11.59 p.m. New Zealand time on Friday, 30 July.

Just as we have our alert level settings for managing cases in New Zealand, we also have a framework for managing cases in Australia through the continue, pause, and suspend system. Extra flights have been put on where required—for example, from Brisbane and from Melbourne—and extra capacity was opened up on flights from Perth as people cancelled their existing bookings. Managed return flights will continue as planned from New South Wales, with travellers from that state required to spend 14 days in managed isolation in New Zealand.

More than 1,500 rooms in managed isolation have been made available for the first two phases of managed return from New South Wales, and they have accommodated an estimated 2,100 people, including more than 300 urgent and exceptional cases. Last week, the Government confirmed that an additional 500 rooms will be allocated from contingency between 9 and 22 August for those returning from New South Wales. The registration of interest process has been established for these rooms, using a form on the Unite against COVID-19 travel website, which is being used to prioritise those bookings.

We remain committed to the trans-Tasman bubble, but it is paramount that it operates in a safe manner. Since we set up quarantine-free travel with Australia back in April, more than 200,000 people have flown between our two countries. In the lead-up to reviewing the suspension with Australia, Ministers will need to be certain that the outbreak with New South Wales and within wider Australia is contained, that any remaining cases are generally linked, and that we don’t see a large number of cases in the community.

Our team of 5 million here in New Zealand has worked hard to put us in a strong position, both health-wise and economically, and we do not want to put these hard-won gains at risk. We’ll continue to adapt, improve, and learn in the Government’s response to COVID-19 as we need to, to meet the challenges presented by new variants and to keep New Zealand safe. Globally, we’re seeing the consequences of not doing that.

CHRIS BISHOP (National): Thank you, Mr Speaker. Thank you to the Minister for COVID-19 Response for the statement and the update. It goes without saying that we in the National Party extend our sympathies to New South Wales on the outbreak of Delta in that state—I note another 199 cases today. Also, we note that we are supportive in the National Party of the trans-Tasman bubble generally, obviously. We supported its opening, and we hope that we can return to a situation where there is some quarantine-free travel, but we understand the need for the closure in the circumstances.

I have a few questions for the Minister about what he’s just said. New South Wales is obviously the area of the greatest concern, with quarantine-free travel closed since June. Does the Minister have a number of how many New Zealanders are currently stuck, for want of a better word, in New South Wales and are looking to return?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I do have an idea of the first part of the question but perhaps not so much the second part of the question, which is the number of people who have left New Zealand and gone to New South Wales and have not come back to New Zealand. That sits at around 4,623. In terms of a breakdown of that, about 2,900 of those are New Zealand citizens, about 320 New Zealand residents, about 460 Australian citizens, and about 923 are temporary visa holders. So that doesn’t necessarily give us an indication of whether they’ve gone one way and intend to come back, but it gives us a bit of an idea of who’s there who was here when the bubble first opened.

CHRIS BISHOP (National): Just in relation to the registration of interest process for rooms in managed isolation and quarantine (MIQ), does the Minister have a number as to how many people have registered through that process so far and how many the Government expect to register?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): The registration of interest process itself, I think, has closed in the last few minutes; I think it was closing mid-afternoon or early afternoon today. I know that there had been, I think, from memory, just over a thousand registrations of interest. Some of those have already been filtered out as being not eligible. It’s important to remember, though, that registrations of interest can cover more than one person but then one room can cover more than one person as well; so the correlation between rooms available and registrations of interest is an interesting one. So we do what we can to make sure that we’re accommodating as many people as possible. We’ve accommodated more people than we’ve had rooms available, because, if you get a family, they only require one room, for example.

CHRIS BISHOP (National): Will the announcement of the extra 500 rooms from the contingency get everyone back in the next few weeks who wants to come home, or are there going to be people, potentially, who can’t come back?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I’m optimistic that by the end of August, we can get New Zealanders back who meet the criteria to get those urgent allocations. There will be some who want to come back who won’t meet that criteria for urgent allocations, and so we’ll keep providing extra rooms, but the first priority at this point is to get those people back who have an urgent need to get back.

CHRIS BISHOP (National): Just in relation to the 500 extra contingency rooms, what will happen once they have, essentially, been exhausted on the New South Wales managed return flights? Is the Government intending to put those back into the general stock of managed isolation and quarantine rooms or could they potentially be put to bringing other classes of people back such as—well, bringing the split migrant families to New Zealand, for example?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): We haven’t made any final decisions about that. Part of that decision will depend on how long it’s likely to be before the trans-Tasman bubble can re-open again; so we’ve set an initial eight-week period for the suspension. If it looks like we’re nearing the point where the trans-Tasman bubble is going to re-open, we will want to still keep a contingency for trans-Tasman. If it looks like there’s going to be a period where we can free up those rooms and not have to have them in contingency, then we would look at what the demand profile for MIQ was at the time. We do know that there’s a lot more demand for MIQ now from people who are currently eligible than there are rooms available, so that would certainly be one of the things that we would think about.

CHRIS BISHOP (National): Just a couple of final questions in relation to the threshold for re-opening the bubble. I note the Minister said Ministers will need to be certain the outbreak in New South Wales and wider Australia is contained and also that remaining cases have to be generally linked. What does that mean in reality? Is the threshold for the reopening of the bubble zero cases across the whole of Australia, for example? Or, if it’s not zero, what is a low number of cases? And will the Government approach it on a New Zealand to Australia level—i.e., viewing Australia as a whole entity? Or will it take a state by state approach; reopening, for example, to Queensland—to take Queensland, for example—if they get down to very few cases, even while New South Wales may have a few more?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I think, in answer to the last part of the question, generally we’ve found state by state arrangements can work quite well. One of the concerns that we have around the situation within New South Wales at the moment is it is clear that that is leaking into other states. So one of the things that we would want to see is that if we were going to re-open on a state by state basis, there was a good, clear demarcation between states, where we weren’t concerned that people could travel into those states and thereby travel to New Zealand from those states. So that is something that we would look for.

It doesn’t necessarily mean absolutely no cases in the community or no new cases, but it does mean that we’d be looking to make sure that they don’t have unlinked community transmission, which is what they’re dealing with at the moment. They’re getting cases popping up where they don’t know how that person got it. Once they get back to a point where it’s more predictable, which, through contact tracing, it is possible to get to that point—once you get down to a low number of cases, it’s possible that new cases pop up, but you knew who they were, they were in isolation already, and therefore the risk is low. We’d certainly be wanting to get to at least that point before we’d consider opening up again.

CHRIS BISHOP (National): And, just finally, when is the Government planning on reviewing the settings with Australia; and how often after that point if the first available opportunity looks like it probably won’t be reopened?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): We’ve said, with this suspension, that we’ve set it for eight weeks. We’ll keep it under review during that time, but I think, given what we’re seeing in Australia—particularly in New South Wales—and given what we know from our own experience about how long it takes to turn that curve back down again, I think that eight-week initial benchmark was quite a realistic one. If things aren’t under control in Australia—or aren’t going to get under control in Australia, particularly in New South Wales—before that eight-week period is out, I think we would probably see signs of that with a reasonable period of time before the eight weeks marker comes up; so we’d be able to foreshadow that at the time.

Hon JULIE ANNE GENTER (Green): Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. We reiterate thanks to the Minister. The Green Party are very supportive of the suspension and of the approach that the Government has taken. It’s really a clear reminder as cases are increasing worldwide, including in countries that have more extensive vaccination, that this pandemic is far from over and that the Delta variant and other new variants are a serious threat not only to non-vaccinated populations but even people who have received the vaccination. Of course, we’re aware that this will be a blow to friends and family who want to maintain connections with their whānau in Australia, but it’s really in the best interests of both countries that there is certainty while there is this community spread. Even prior to this outbreak, there were a number of cancelled travel arrangements and people stuck in lockdowns in various states and cities, and so I think that having this certainty of at least eight weeks’ suspension is really a good thing for businesses and family.

I just have one additional question about managed isolation and quarantine (MIQ). It’s a broader issue. It’s related to the difficulties that people are having registering spots in MIQ, be they coming from Australia or other countries, and if the Government is looking at changes or improvements to the MIQ booking system so it can’t be gamed by bots and others and to ensure that people actually are able to book spots that are available in MIQ.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): With regard to the overall booking system, yes, we do keep that under constant review. The MIAS booking system—the managed isolation allocation system—that we have in place at the moment served us very well where supply and demand were relatively evenly matched or where demand was lower than supply. Where we get to a position—which we’re at again now—where there are far more people who want to come in than we have rooms available, it does create some inequities in terms of who’s able to access those rooms. So I am looking at a range of alternatives there to make sure—and that could be anything from a wait list system to a ballot system to a prioritised system. So we’re looking at a range of options for what we might be able to do in that particular space, because I recognise that there are a lot of people that do want to come into New Zealand at the moment. So we’re keeping that under constant review.

In terms of the bots, the feedback that I’ve had is that people cannot secure a booking through a bot, but they have been able to identify when vouchers are being released and alert people to the fact that vouchers are being released, which gives some people, if you like, a head start to be able to access them. That’s quite a difficult thing to be able to stop. So, therefore, one of the things I think that we will look to do, if we continue with the system as it is now, is make sure that we’re foreshadowing when we’re going to be releasing extra vouchers so that everyone gets a fair and equal opportunity at that.

DAVID SEYMOUR (Leader—ACT): Well, thank you, Mr Speaker. On behalf of ACT, I’d like to reiterate what other members have said expressing our concern and condolences to our Anzac cousins across the Ditch and the way that they have had their way of life affected, and even some loss of life, due to this Delta variant. Prime Minister Morrison has described the Delta variant as a game-changer, and it certainly seems to have changed many of the parameters of COVID-19.

It seems that while we are enormously fortunate not to be in the place of the Australian states—or at least many of those states—right now, I think people will want to know what sort of a rethink our Government has had in light of the Delta strain and particularly, in relation to this ministerial statement, what sort of defences the New Zealand Government is putting in place to ensure that we don’t, despite suspending the travel bubble, end up with COVID and the Delta strain of it entering New Zealand. So I wonder if I could just first ask the Minister what sort of advice he received around the risk taken by saying that the situation is grave enough to suspend the travel bubble, but also having a week’s amnesty where people could return from Australia—or at least some parts of Australia—where Delta was circulating, or nearby to their location, with no apparent safeguards once they arrived in New Zealand.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): We did put in place additional safeguards for people returning from Australia. One of the most obvious was that everybody coming back from Australia needed to have a negative COVID-19 test before they were able to come into the country. Some of those states in Australia, when we did that amnesty week, had no active cases in their community. So the risk was low, but the risk was growing. Subsequent events over the last week have demonstrated that that’s the case. We have also put, for Victoria, where there was a slightly elevated risk at that point, a requirement that people need to self-isolate on return and get another negative test once they’ve come back to New Zealand. So I think that there were appropriate risk mitigations in place.

In terms of the questions around the wider Delta variant, and the escalation of risk that comes from the Delta variant, that is undoubtedly true. It has changed the situation around COVID-19. We saw examples last year and early this year where contact tracing was able to contain COVID-19, both here and in Australia, in a way that the Delta variant draws into question whether those systems would be able to operate as effectively in the future if we saw a case making its way into the New Zealand community. So we would certainly draw on the lessons from that, and any future response that we may need to have here in New Zealand.

Our managed isolation facilities are among the tightest in the world. That is not to say that there’s no risk; there is absolutely risk there, and we do everything we can to drive that out and to stay vigilant. The work we have been doing around air ventilation systems, around staff training, around personal protective equipment, around vigorous monitoring, around vaccination of the border workforce—around all of those things—are all contributing to continuing to tighten up that system, but there is no such thing as no risk.

DAVID SEYMOUR (Leader—ACT): In light of our managed isolation system—and the Minister said it’s one of the tightest, although the Delta variant is changing the parameters of the virus—I wonder what advice he’s had about the effects of the Delta variant on the effectiveness of vaccination with respect to infection and transmission. Besides its effect on the usefulness of vaccination, the incubation time—in other words, the amount of time it takes for the Delta variant to incubate and become testable—what sort of advice has the Minister had on whether or not the current managed isolation and quarantine settings of having a wall of vaccination and testing three times in two weeks is adequate given the changed parameters he’s just talked about?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): In terms of the overall effectiveness of vaccines, it’s still early days yet, but what we’re seeing around the world is that vaccination is still very effective against the Delta variant, although it could be slightly less effective than it is against some of the earlier variants of the virus. It still significantly reduces the chances of someone getting COVID-19, spreading COVID-19, and COVID-19 having a serious health effect on them, but it is, as I said, early days yet.

In terms of our managed isolation and quarantine (MIQ) facilities, one of the things we will look at is where we do the testing. So we know Delta does seem to move faster, does seem to spread faster. We already, at the beginning of the year, as a result of some of the new variants we were seeing, introduced a day zero test for everyone coming into the country as a result of the fact that we know new variants are more transmissible and are moving faster. So we have already put that day zero test in. That hasn’t applied to people coming from Australia until recently. We’re looking at that. There’s another question about—day three is still a good time—whether the gap between day three and day 12 is too big a gap, whether there needs to be something in the middle. We will look at that, and that will include looking at whether other testing technologies could be used to increase the frequency of testing for people in MIQ. Haven’t made decisions on those yet, but they’re certainly being actively looked at.

DAVID SEYMOUR (Leader—ACT): How would the Delta variant change the Government’s response to an outbreak, in light of his comments that he’s just made about the possible inadequacy of contact tracing with a faster spreading variant? Does the Government have any new policy changes in respect to how it would respond to an outbreak in light of the Delta variant?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): It would very much depend on the facts of each individual case. In every individual case that we’ve seen regarding COVID-19, since we started this process 18 months ago, every case has been different and every case has required a slightly different response. So I think some of the things that we would look to are: the nature of the contact—was the source of the person contracting the virus known? Those are all things that we’ve always looked at previously, but the answer to some of those questions might dictate a slightly different response.

DAVID SEYMOUR (Leader—ACT): Just finally, Australia, for the first year that we had MIQ, I recall, provided about 40 percent of all isolating passengers inbound. The Australian travel bubble did one thing: it freed up an enormous amount of MIQ space, and, for a short time, it seemed that the demand had been met and that people were relatively content with their ability to get into the country. Over the last two months, MPs have had an avalanche of complaints from people who say that MIQ is often booked as far away as November. And, as the Minister just said, once upon a time, supply and demand would match; now they’re clearly not, hence the problems with bots and so on. With the Australian travel bubble suspended, there is only going to be much greater demand for MIQ spots on top of the fact that it is already booked up for months. Many people find themselves in desperate situations, humanitarian and economic, because they can’t get through the border. Does the Government have any plans that it can tell us about to expand the level of MIQ space available?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I don’t have anything to announce on that today, but I can give the member reassurance that, yes, we are looking at overall MIQ capacity; what the options might be to increase that. Physical buildings are not the only part of that particular jigsaw puzzle; in fact, they are probably the easier part of the puzzle to solve. The workforce continues to be a challenge there. We’ve spread our Defence Force quite thinly across MIQ to help to run that, and we’re reaching the outer limits of what we can do there in terms of calling on the Defence Force to help, given their other commitments that they also have to fulfil. We have stretched our health workforce quite thinly as well, both in terms of the work we are doing around testing MIQ vaccination and asking them to continue to do everything the health system would normally do, whilst still doing those other things; recognising that the COVID-19 response around the rest of the world has often resulted in their health system stopping doing a whole lot of things that our health system continues to do every day. I think we are all grateful that out health system continues to perform, but we have to recognise that it is very, very stretched and that those are the sorts of things that are constraints we have to work through; they are not all insurmountable constraints, but they do take time to work through when we want to expand our MIQ capacity.

DAVID SEYMOUR (Leader—ACT): Does the Minister have a date he can tell the House when he will announce changes to MIQ policy for all those people stuck at the border who are waiting for that kind of information?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I think there are two things to that. One is around capacity. I don’t have a particular date in mind about that. It will take as long as it takes, but I can give the member—and, in fact, all those people who are waiting—assurance that we are working as quickly as we can to get those answers. The other is around the process to allocate those rooms that we do currently have available, and we are working very actively to look at whether there are ways to introduce more fairness into that system. The system works very fairly, as I said, where there is more supply than demand. It does create inequities in the position that we are in at the moment.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): E te Pīka, otirā kia ora tātou e te Whare, tēnā koe e te Minita, whakarāhuingia tō tātou whenua i tēnei rā ki Ahitereiria, engari he pātai kē wāku hāngai tō ki a koe.

[Mr. Speaker, to the House, I acknowledge the Minister who restricted access to our country today from Australia, although I do have some questions that directly relate to you.]

One of the key reasons why there is so much risk from trans-Tasman travel at this time is our low vaccination rates. Can the Minister confirm what the current vaccination rate is for Māori?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): What I can confirm is that around 9 percent of the vaccination doses delivered so far have gone to Māori New Zealanders. In terms of the age cohorts eligible, Māori have uptaken the opportunity to get a vaccine at a higher rate than other, non-Māori, New Zealanders have, and I thank them for that. One of the terrible health statistics that we have in our country is that Māori don’t live as long as non-Māori, and so as we’ve been working our way down through the age cohorts, fewer Māori have been present in those older age bands. That is something that we should not be satisfied about as a country; it’s something that we should be very concerned about. It is unacceptable that Māori don’t live as long as non-Māori New Zealanders. But that has had an impact on our vaccination stats.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): The Government has already admitted that Māori are at most risk, so why haven’t we dealt with the issues before now, to ensure a greater level of protection for Māori?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): We have been working very closely with Māori health providers, also with Pasifika health providers—another community that is at risk. In our sequencing framework, we prioritised those communities most at risk, including South Auckland, because we knew that there were higher concentrations of Māori there who were going to be more at risk should COVID-19 come into the country, and actually were the most likely community to see that kind of incursion in the event that that had happened. So we have prioritised that. As I said, the statistics are encouraging, in that they would show that there isn’t the level of hesitancy in Māori communities that some people have been claiming that there is. I’m very heartened by that, but I have also been making it clear to the DHBs that we expect to see a good focus on equity in the ongoing roll-out of the vaccination.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): Why aren’t we seeing a higher vaccination rate for Māori in those age groups that you have mentioned, or Pasifika peoples, if we are most at risk when unvaccinated; and does the current vaccine protect us from the Delta variant?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): In answer to the last part of the question, in terms of protection from the Delta variant, yes it does protect us from the Delta variant. Vaccination protects us very well from all the variants of the virus. There’s some questions about whether the Delta variant has an impact on the overall level of effectiveness, but it would be at the margins. The vaccines are still proving to be very effective, and particularly the Pfizer vaccines—the mRNA vaccines—are still proving to be very effective against the variants of the virus. In terms of the overall rates of Māori and Pacific vaccination, and why we are seeing them sitting at around that 9 percent mark when the proportion of the population is higher, it is because of the age profile of Māori and Pacific New Zealanders—they’re a younger population. As I’ve said before, I don’t think any of us should feel particularly proud of the fact that Māori and Pacific people don’t live as long as other New Zealanders. That is something that our health system as a whole needs to grapple with.

The other priority groups at the beginning have been our border workforce, people who are living in aged residential care facilities, and so on. Again, we have seen a lower representation of Māori within those groups.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): Finally, was the decision to open up quarantine-free travel with Australia premature; and shouldn’t the Government prioritise keeping our borders closed, given we have already seen so many problems as a result?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I think it’s a fair question. I don’t think it was premature at the time, but what I’ve learnt with COVID-19 over this last year and a half is that the facts change all the time. Things are a bit different now than they were back in April when we opened the trans-Tasman bubble, and the Australians themselves have acknowledged that too. The Delta variant has changed a lot around COVID-19—it’s certainly changed a lot for them. The New South Wales contact tracing system performed remarkably well in the earlier phase of COVID-19, but really struggled with the Delta variant, and what they’re seeing now is partly as a result of that. So I think things have changed, which is why we’ve seen the suspension.

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

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

SPEAKER: Petitions have been delivered to the Clerk for presentation.

CLERK:

Petition of Kirsten Van Newtown requesting that the House ask the Government to urgently act to ensure that all pregnant people, parents, and babies in Aotearoa have the support they need to thrive, by developing a collaborative women’s health strategy

petition of Nurse Practitioners New Zealand requesting that the House amend Section 29 of the Medicines Act 1981 to allow all authorised prescribers to prescribe medicines that Medsafe or Pharmac suggest as alternatives for unavailable approved medicines

petition of Stuart Prossor requesting that the House urge the Government to hold a referendum on changing New Zealand’s name to “Aotearoa New Zealand”.

SPEAKER: Those petitions stand referred to the Petitions Committee.

Ministers have delivered papers.

CLERK:

New Zealand Māori Arts & Crafts Institute Annual Report for the year ended 31 March 2020

Crown Infrastructure Partners Limited Statement of Intent 2020-25 and Statement of Performance Expectations 2021-22

New Zealand Trade and Enterprise Statement of Performance Expectations 2021/22

Tertiary Education Commission Statement of Performance Expectations 2021/22

Commerce Commission Statement of Performance Expectations 2021/22

Ōtākaro Limited Amended Statement of Performance Expectations for Financial Year 2021; Statement of Performance Expectations for financial year 2022; and Statement of Intent for Financial Years 2022-26

New Zealand Qualifications Authority Statement of Performance Expectations 2021/22

New Zealand Growth Capital Partners Statement of Performance Expectations 2021/22

Crown Regional Holdings Limited Statement of Intent 2021-25 and Statement of Performance Expectations 2021-22

Network for Learning Limited Statement of Intent 2021-25 and Statement of Performance Expectations 2021-22

New Zealand Green Investment Finance Statement of Performance Expectations 2021-22.

SPEAKER: I present the report of the cross-party Mental Health and Addiction Wellbeing Group entitled Zero Suicide Aotearoa July 2020, and the report of the Ombudsman entitled Oversight—An investigation into the Ministry of Health’s stewardship of hospital-level secure services for people with an intellectual disability.

Those papers are published under the authority of the House. Just as I call select committee reports, I want to say we have had a three-week recess and it is evident that there’s been a significant number of reports come in from select committees over that period. I will ask member to have some patience while they are reported.

CLERK:

Report of the Economic Development, Science and Innovation Committee on the 2021-22 Estimates for Vote Business, Science and Innovation

reports of the Education and Workforce Committee on the 2021/22 Estimates for:

Vote Education

Vote Education Review Office, and

Vote Tertiary Education;

and the 2021/22 Estimates for Vote Labour Market

reports of the Environment Committee on the 2021/22 Estimates for:

Vote Conservation

Vote Environment, and

Vote Parliamentary Commissioner for the Environment; and

Report of the Parliamentary Commissioner for the Environment: Managing our estuaries

reports of the Finance and Expenditure Committee on:

the 2021/22 Estimates for Vote Finance

Fiscal Strategy Report 2021 and Budget Economic and Fiscal Update 2021

the 2021/22 Estimates for Vote Revenue, and

the petition of Shay Lawrence

reports of the Foreign Affairs, Defence and Trade Committee on the 2021/22 Estimates for:

Vote Customs

Vote Defence and Vote Defence Force, and

Vote Foreign Affairs

reports of the Governance and Administration Committee on the:

2021/22 Estimates for Vote Internal Affairs [Excluding those appropriations that are the responsibility of the Minister for the Community and Voluntary Sector, and the Minister for Diversity, Inclusion and Ethnic Communities]

2021/22 Estimates for:

Vote Ombudsman

Vote Prime Minister and Cabinet, and

Vote Public Service [Excluding Supporting Implementation of a Social Wellbeing Approach Appropriation]

report of the Health Committee on the 2021/22 Estimates for Vote Health and Appropriation within Vote Building and Construction—Isolation and Quarantine Management

reports of the Justice Committee:

on the 2021/22 Estimates for:

Vote Attorney General and Vote Parliamentary Counsel

Vote Corrections

Vote Justice and Vote Courts

Vote Police and Vote Serious Fraud

on the Inquiry into the 2019 Local Elections and Liquor Licensing Trust Elections, and Recent Energy Trust Elections, and

on the International Treaty Examination of the Council of Europe Convention on Cybercrime

reports of the Māori Affairs Committee on the 2021/22 Estimates for Vote Māori Development and the 2021/22 Estimates for Vote Te Arawhiti

reports of the Petitions Committee on:

the petition of Anmar Taufeek

the petition of Claire Bleakley

the petition of Darryl Clarke

the petition of Deborah Turner, and

the petition of Tobias Tahi

reports of the Primary Production Committee on the 2021/22 Estimates for:

Vote Agriculture, Biosecurity, Fisheries and Food Safety

Vote Forestry, and

Vote Lands

report of the Regulations Review Committee on the Examination of COVID-19 orders presented on 29 June 2021

reports of the Social Services and Community Committee on:

the 2021/22 Estimates within Vote Public Service—Supporting Implementation of a Social Wellbeing Approach

the 2021/22 Estimates within Vote Internal Affairs that are the responsibility of the Minister for the Community and Voluntary Sector and the Minister for Diversity, Inclusion and Ethnic Communities

the 2021/22 Estimates for:

Vote Arts, Culture and Heritage

Vote Housing and Urban Development

Vote Oranga Tamariki

Vote Pacific Peoples

Vote Social Development

Vote Sport and Recreation, and

Vote Women

reports of the Transport and Infrastructure Committee on the 2021/22 Estimates for Vote Building and Construction [Excluding Isolation and Quarantine Management appropriation] and the 2021/22 Estimates for Vote Transport.

SPEAKER: The report on the report of the Parliamentary Commissioner for the Environment and the reports on the inquiry, the international treaty examination, and the COVID-19 orders are all set down for consideration. All other reports are available on the parliamentary website, especially for Mr Harman.

The introduction of bills.

CLERK:

Hazardous Substances and New Organisms (Hazardous Substances Assessments) Amendment Bill, introduction.

Subordinate Legislation Confirmation Bill, introduction.

Conversion Practices Prohibition Legislation Bill, introduction.

SPEAKER: Those bills are set down for first reading.

Bills

Appropriation (2021/22 Estimates) Bill

Estimates Debate—Structure

Hon CHRIS HIPKINS (Leader of the House): My apologies, Mr Speaker—I just have to find the right piece of paper to do the bit that I need to do.

SPEAKER: Do you want me to read it to you?

Hon CHRIS HIPKINS: No, no, it’s all right; I can get there—I can get there. I seek leave for the Estimates debate to be structured around portfolios rather than sectors, and for the chairperson or member of the committee that considered the Estimates most closely related to the Minister’s portfolios to lead off each debate, despite Standing Order 348.

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

Oral Questions

Questions to Ministers

Question No. 1—Finance

1. Dr DUNCAN WEBB (Labour—Christchurch Central) to the Minister of Finance: Kia orana, Mr Speaker. What recent reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): I can give you a very recent report on the impact of the Olympics on the New Zealand economy, with Lisa Carrington winning her fourth Olympic medal in the K-1 200m. The economic recovery—

SPEAKER: The member’s getting repetitious already!

Hon GRANT ROBERTSON: Ha, ha! The economic recovery is continuing to be supported by the export sector. Last week, Statistics New Zealand reported that exports recorded their strongest June month on record, rising by 17 percent on a year earlier to $6 billion. This came off the back of record export values for logs and beef, while dairy products and kiwifruit also experienced strong gains. Nevertheless, there are volatile conditions for our exporters and still challenges. The Government continues to fund the airfreight subsidy scheme to ensure that our exporters can get goods to market in a COVID environment. So far, that scheme has underwritten more than 7,000 flights, carrying over 136,000 tonnes of airfreight, worth around $10 billion.

Dr Duncan Webb: What other reports has he seen on the economy?

Hon GRANT ROBERTSON: Well, the economic recovery is also being supported by the manufacturing and services sector. The BNZ-BusinessNZ Performance of Manufacturing Index (PMI) is firmly in expansionary territory, rising by 2.1 points to 60.7 in June. Production and new orders were particularly strong at 64.5 and 63.6 respectively. The BNZ-BusinessNZ Performance of Services Index (PSI) rose 2.3 points to 58.6 in June, driven by expansion in sales and new orders. The BNZ economists noted that combined, the PSI and PMI point to an annual GDP for the June 2021 year of around 4 percent. While our economy is performing strongly, the ongoing COVID-19 pandemic means we cannot be complacent.

Dr Duncan Webb: What other reports has he seen on how business is faring?

Hon GRANT ROBERTSON: The Government’s efforts to secure the recovery have been reflected in the performance of small businesses. Xero’s Small Business Index for June, which was released last week, hit a record monthly high driven by sales and jobs figures. For the fifth successive month, the index remained above 100, rising 17 points to 127, signalling stronger than average small-business activity. Sales across New Zealand jumped 11.7 percent in June, led by retail trade, manufacturing, construction, and hospitality. Jobs growth rose 5 percent, with the strongest regional growth in Northland and the Waikato. Wage growth also continues to increase, rising 3.7 percent year on year in June, its strongest growth rate since January 2020. Xero said, “seeing the … Index reach new heights [was] an encouraging sign that New Zealand’s small business economy [was headed] in the right direction”.

Question No. 2—Health

2. JAN LOGIE (Green) to the Minister of Health: Does he stand by his statement that the employment conditions and pay offer that nurses rejected had been proposed by their own bargaining team; if so, why does he think the nurses’ union has stated this isn’t true?

Hon ANDREW LITTLE (Minister of Health): In response to the first part of the question: yes. In response to the second part of the question: I’m not responsible for the Nurses Organisation’s views.

Jan Logie: What did he hope to achieve by misrepresenting the union’s position—

SPEAKER: Order! Order! Order! The member can’t make allegations as part of a question when they’re unsubstantiated like that.

Jan Logie: What did the Minister hope to achieve by presenting a position that the nurses’ union believes is untrue outside of the bargaining process, including through a press release, a press conference, Twitter, and a Facebook post?

Hon ANDREW LITTLE: I did that because when our health sector is under enormous pressure, when the nursing workforce is under extraordinary pressure with a number of serious issues that need to be addressed, including their pay and the resolution of a longstanding pay equity claim and the working conditions that many are under because of the pressure the service is under, it is a serious matter when nurses choose to go on strike, and, certainly, as a consequence of bargaining breaking down, it is important to keep the public informed of what is happening and the background to it.

Jan Logie: Is he aware that when he spoke of “variable response management” as opposed to the correct term “variance response management”, it undermined nurses’ confidence in his understanding of the safe staffing programme his Government proposes to review?

Hon ANDREW LITTLE: I think the nurses I’ve spoken to fully understand that this Government takes seriously the commitments it entered into in 2018 in relation to the Safe Staffing Accord and the implementation of Care Capacity Demand Management. That scheme has been implemented by 10 DHBs, up to 30 June this year, partially implemented by seven, and three DHBs are way behind on the implementation of it. The DHBs had a deadline of 30 June. It is unsatisfactory and unacceptable that that scheme has not been fully implemented across the system. I’m determined to establish why and to fix it. I sought the agreement of the Nurses Organisation—through the bargaining, at their suggestion—to set up a way to do that. That has been rejected, but I’m going to proceed to establish why that is the case and to fix it anyway.

Jan Logie: Is it true that $10k of the $13,000 increase he said nurses would receive was not actually part of the 2021 multi-employer collective agreement (MECA) offer and will be subject to ratification through a separate pay equity vote outside of MECA bargaining?

Hon ANDREW LITTLE: That is not correct. If I can assist the member to understand the structure of the deal that was developed and that was subsequently voted on but rejected by the nurses most recently—there were two components to it. One was the standard cost of living adjustment that was consistent with the pay guidelines developed by the Public Service Commission earlier this year. There was another element that related to what was, effectively, an advance on pay equity in view of the fact that concluding the pay equity claim had taken much longer than both the DHBs and the Nurses Organisation had anticipated, but it was a way of getting additional income into the nurses’ pockets. In any event, that was rejected.

Jan Logie: Does he support the DHBs taking the Nurses Organisation to the Employment Court over unsafe staffing levels when nurses have been raising the alarm about ongoing unsafe staffing levels for years?

Hon ANDREW LITTLE: I’m not responsible for the decisions that the DHBs as employers take in their industrial relations environment except to say that it has been an issue for some months now that there is uncertainty and a lack of clarity about the commitments that both the DHBs and the Nurses Organisation have signed up to in relation to life-preserving services, which is a commitment that the Nurses Organisation gives to DHBs when industrial action takes place. In view of that uncertainty and that lack of clarity and the inability to reach agreement with the Nurses Organisation prior to the next round of industrial action, the DHBs have decided to get a ruling from the courts on exactly what meeting life-preserving standards means.

Jan Logie: Does he agree that the nurses and midwives and healthcare workers are themselves in the best position to judge whether the offer will address their primary concern—that staffing levels are dangerously low and putting lives and their wellbeing at risk?

Hon ANDREW LITTLE: The workforce that the member refers to is in the best position to determine that. Having determined that, the next step is to find a fix for it, and that is what we’re trying to do.

Question No. 3—Health

3. Dr SHANE RETI (Deputy Leader—National) to the Minister of Health: How many of the 30,000 New Zealanders waiting for overdue hospital procedures could have their procedures done if the $486 million in health restructuring was spent on them?

Hon ANDREW LITTLE (Minister of Health): Thirty thousand New Zealanders are not waiting for overdue hospital procedures; 13,500 people across the whole health system are waiting for treatment—a number which has been exacerbated by the global pandemic. This is why, in 2020, the Government allocated $282.5 million over three years to address the impacts of COVID-19 on waiting lists, and also provided an additional $90 million through Budget 2021. I can assure the member that this funding is achieving results as waiting times continue to reduce, and anyone whose treatment was delayed specifically because of the COVID level 4 lockdown has now been treated. In relation to the $486 million the member refers to, the Government has committed to producing a more equitable health system that better delivers the health services that New Zealanders need. This reform will have a material benefit on waiting lists by producing a more efficient system. There is a cost associated with change, but it is clear that the system must change.

Dr Shane Reti: How many of the more than 30,000 waiting for hospital treatment are waiting for cancer treatment, and have cancer wait times become worse over the last four years under Labour?

Hon ANDREW LITTLE: I again correct the member. There are not 30,000 New Zealanders waiting for treatment; that number is 13,500. A number of those will be for cancer treatments, but what I can also assure the member is that as a result of the investment made in Budget 2020 of $282.5 million and the further investment of $90 million in Budget 2021, those waiting lists are coming down and cancer treatments are improving.

Dr Shane Reti: What does he say to the woman with terminal cancer who was made to wait more than 30 hours in Wellington Regional Hospital’s emergency department for a bed, and how many beds would $486 million fund?

Hon ANDREW LITTLE: It is most regrettable that the person to whom the member refers was left waiting for that length of time, as indeed many New Zealanders are experiencing at hospitals that are under extraordinary pressure. The Capital and Coast District Health Board is a hospital that is under considerable pressure at the moment, and that is why the Ministry of Health has stood up a task force of senior clinicians to work with those hospitals who are experiencing that pressure to assist them to deal with the pressure that they’re under and improve patient flow through their hospital.

Dr Shane Reti: Can he guarantee that his health restructure won’t further increase the number of New Zealanders who are forced to wait for overdue hospital treatment?

Hon ANDREW LITTLE: The way we have approached the health reform process is exactly to fund additional personnel to manage through the change process so that the business-as-usual processes of our hospital system are not affected. Hospitals have been under unusual pressure this year partly because, as a result of COVID last year, the number of infections and winter infections that would ordinarily happen did not happen, and that has led to an unusually high number of infections, particularly respiratory infections and respiratory syncytial virus, that has put extraordinary pressure on our hospitals this year. I’m confident that with the work that the ministry’s doing to support hospitals, their clinical leadership, and their management, they are getting through what has been a very difficult winter.

Hon Chris Hipkins: Can the Minister confirm that the increased emphasis on public and primary healthcare that the health reforms are designed to achieve, among other things, will result in fewer people needing to have more complex care in the future?

Dr Shane Reti: When? A debatable point.

SPEAKER: Was that Dr Reti?

Dr Shane Reti: It was me.

SPEAKER: Are you trying to lose supplementaries for the rest of your team?

Hon ANDREW LITTLE: I can say that that is a primary objective of the healthcare reforms, and, in fact, of the $486 million to fund the transition. A large chunk of that is for commissioning services, including new forms of commissioning primary and community services just so we start to get a lead on improving that front-line healthcare.

Dr Shane Reti: What does he say to the pregnant mother at North Shore Hospital who was already in her theatre gown for a semi-urgent caesarean section but was then told that due to pressures on theatres, she would have to drive herself to Waitakere Hospital and to google how to get there?

Hon ANDREW LITTLE: All I can say to that person is that they have been treated appallingly badly, and that is, again, most regrettable. But it would have probably been assisted a lot more if the previous Government had invested barely $1 billion in nine years of Government, whereas we have invested $5.5 billion in infrastructure because the system has been so badly run down.

Hon Grant Robertson: In light of that answer, can the Minister confirm that this year’s health budget is 45 percent higher than the last year of the health budget when the National Party were in office?

Hon ANDREW LITTLE: I can say that this Government, because Labour Governments are public health system Governments, has invested considerably more in the four years we have been in Government than the previous Government did, not only operational funding but capital funding as well. The previous Government had two years in a row where they invested absolutely nothing in the infrastructure of our health system, and that’s why we’re having to fix it up.

Dr Shane Reti: Can he confirm that the funding for additional support in Vote Health this year is roughly 30 percent than additional support in Vote Health last year?

Hon ANDREW LITTLE: I know that member is obsessed about trying to demonstrate there’s been a cut in health funding, and there hasn’t been. So there has been an increase—yet another increase—in operational health funding for our public health services this year, but the increase this year was not as great as the one last year. But there has been an increase, as this Government does when it is in Government—it significantly increases health spending for the benefit of the people who need it most.

Question No. 4—Housing

4. BARBARA EDMONDS (Labour—Mana) to the Minister of Housing: Meitaki maata, Vaa Tuatua. What recent announcements has she made about funding infrastructure to enable new housing in Porirua?

Hon Dr MEGAN WOODS (Minister of Housing): Kia orana. Last month, I was pleased to announce the Government is investing $136 million into infrastructure in Porirua from the Housing Acceleration Fund, the first drawdown of this fund. This investment will improve sewerage, storm water, and water storage infrastructure and result in capacity for 2,000 additional houses in Porirua. We acknowledge that there is more to do, and this investment is an important milestone in the Government’s housing plans through our large-scale projects. I’m proud that we’re taking action that will enable more houses and improve the surrounding environment.

Barbara Edmonds: Meitaki. How will this result in better housing outcomes?

Hon Dr MEGAN WOODS: Upgrading the waste-water infrastructure in Porirua and increasing the capacity for water storage is needed to get new housing consented. Getting this infrastructure in place quickly is vital to getting more houses built and is exactly why we launched the Housing Acceleration Fund. Funding will be used to address land remediation and development work around Cannons Creek. Together, these investments will provide capacity for an additional 2,000 homes on private- and Government-owned land.

Barbara Edmonds: Meitaki. How will this project help create employment and training opportunities?

Hon Dr MEGAN WOODS: This work will be undertaken by the Te Aranga Alliance, with an important focus on creating employment and training opportunities. The alliance will emphasise hiring and upskilling local workers wherever possible, which will help lead people into sustainable jobs in a booming industry that badly needs more workers. Initial estimates indicate up to 250 jobs could be created alongside opportunities for contractors.

Question No. 5—Finance

5. Hon MICHAEL WOODHOUSE (National) to the Minister of Finance: Is he satisfied that the Government’s investment of taxpayer funds reflects its priorities?

Hon GRANT ROBERTSON (Minister of Finance): Yes, the Government’s policy priorities for the three-year term are continuing to keep New Zealanders safe from COVID19, accelerating the recovery and rebuild from the impacts of COVID-19, and laying the foundations for the future—including addressing key issues such as climate change, housing affordability, and child poverty. The investments we are making are focused on addressing these priorities; at the risk of testing the Speaker’s patience, I’ll run through just a few examples. We’re continuing to keep New Zealanders safe from COVID-19, through the nationwide vaccination programme, with nearly 2 million doses of the Pfizer vaccine being administered to New Zealanders, while our investments in the managed isolation facilities continue to keep New Zealanders safe from the virus and our economy able to operate with fewer restrictions than nearly any other country. We’re accelerating the recovery through our record investments in infrastructure, training record numbers of apprentices—

SPEAKER: Order! Order! The member’s answered the question.

Hon Michael Woodhouse: Is funding $2.75 million for a meth programme run by a Mongrel Mob member a higher priority than giving money to a successful mental health programme?

Hon GRANT ROBERTSON: The member knows that the programme he’s referring to is about getting people off methamphetamine. The most important thing we can do in that space, in this House, is undertake programmes that work. It is not about funding a gang; it is about funding getting people off meth.

Hon Michael Woodhouse: Does he consider spending of up to $15 billion on light rail in Auckland a higher priority than the plethora of New Zealand upgrade roading projects now delayed or cancelled?

Hon GRANT ROBERTSON: I think that light rail in Auckland is a very important investment in making sure that we have transport moving around our city. But the member doesn’t need to see this as a zero-sum game. There’s about $6.8 billion of funding there—

Hon Member: But the people of Mill Road do.

SPEAKER: Order! Order!

Hon GRANT ROBERTSON: —in that programme, plus another $2 billion that have been added. We are able to do both of those things, Mr Woodhouse.

SPEAKER: I just want to say that the member doesn’t have a gentle voice—the Minister answering the question—but the volume of interjection has got too much. I think I’ve told members that I have received in the last sitting block quite a lot of correspondence about noise that’s come from one party in particular that has meant that people who are at home have trouble hearing the response. [Interruption] It’s good to have all the premature pleas of not guilty.

Hon Michael Woodhouse: Is $486 million on a new health bureaucracy a higher priority than spending $486 million on front-line services to clear the waiting list backlog?

Hon GRANT ROBERTSON: I’m pleased to say that the Government’s investing significant resources in both of those things. The first of those is about making sure that we’ve got a health system that is actually fit for purpose. It’s about creating a Māori health authority that will deliver—for the first time, probably, in New Zealand’s health system’s history—outcomes that will be more positive for Māori. It’s about making sure that wherever you live, you get the services that you deserve, and, also, we can deliver on front-line services. The member needs to understand that these are not zero-sum games.

Hon Michael Woodhouse: Do his comments regarding the proposed Northern Pathway this morning indicate he has had a cycleway to Damascus experience and that the priority of that project over other harbour crossings is now being reconsidered?

Hon GRANT ROBERTSON: No. What it means is that this Government is getting on with the job of making sure that the second harbour crossing is under way. Around $50 million is dedicated to that—including completing the business case.

David Seymour: So is the Government backpedalling on the bike bridge?

Hon GRANT ROBERTSON: No.

Question No. 6—Social Development and Employment

6. GLEN BENNETT (Labour—New Plymouth) to the Minister for Social Development and Employment: Meitaki maata, Vaa Tuatua. What reports has she seen on the number of people receiving the main benefit?

Hon CARMEL SEPULONI (Minister for Social Development and Employment): Kia orana, Mr Speaker. The Ministry of Social Development (MSD) recently released the benefit statistics for the June quarter. They show main benefit numbers fell by 11,193. At the end of the June quarter, there were 354,744 people receiving a main benefit, with 110,790 people receiving a job seeker work-ready benefit. This is well below forecasts which showed up to 490,000 people could be in receipt of a main benefit due to the COVID-19 pandemic. We are also seeing encouraging signs that the numbers of main benefit continues to trend down over the month of July.

Glen Bennett: What Government investments have impacted these results?

Hon CARMEL SEPULONI: When we came into Government, we noticed a significant decline had occurred in front-line, work-focused case management, and took action to ensure we made investments to support more employment-focused activity. This includes investing in 263 new front-line staff in Budget 2019 to help people into work, $150 million in Budget 2020, and $99 million in Budget 2021 invested into employment services and products, and a further $86 million in Budget 2021 to sustain the MSD staff needed to deliver income and case management services. This investment has paid off, with around 31,240 people being placed into employment in the last quarter, the second-highest number since records began, since 1996.

Glen Bennett: What other programmes have contributed to these results?

Hon CARMEL SEPULONI: The Government is also working hard to reduce the skills gap between the available jobs and available labour. Flexi-wage has seen 4,782 people placed in employment since it was expanded in February, and Apprenticeship Boost, which now has supported 30,031 people into a trade. I’ve also been encouraged by the results from the Mayors Taskforce for Jobs, which has worked with Government to create 1,326 sustainable full-time jobs across regional New Zealand. It is clear that our plan for recovery is creating jobs and supporting New Zealanders back into upskilling, training, and work.

Question No. 7—Social Development and Employment

7. Hon LOUISE UPSTON (National—Taupō) to the Minister for Social Development and Employment: Does she have confidence the Government is doing all it can to keep young people in emergency housing safe; if so, why?

Hon CARMEL SEPULONI (Minister for Social Development and Employment): When we came into Government, we inherited an emergency housing special needs grants and emergency housing process that virtually had no safeguards in place. During our time, we have moved to ensure all that are receiving an emergency housing special needs grant are in active case management; we have housing brokers to support them into housing that is more sustainable, secure, and stable than emergency accommodation; we have set up navigators to support those in emergency accommodation with wraparound supports; we have set up a complaints process so the Ministry of Social Development (MSD) can receive and respond to any safety or suitability concerns; we have worked with the Ministry of Housing and Urban Development and councils to contract spaces in Rotorua to ensure people are appropriately cohorted, and we are going to roll out this particular model to other parts of New Zealand where there are emergency housing hotspots.

We don’t want to see any New Zealanders requiring emergency accommodation, but we inherited a housing crisis, and whilst we have been building houses as quickly as possible, there are still New Zealanders—including some young New Zealanders—requiring emergency housing support. Is there more to do? Yes, and we are committed always to looking at ways to improve the supports that we have in place.

Hon Louise Upston: How can she have confidence when a young woman staying in an emergency housing motel said on Newshub Nation, “I would feel terrified, because my room that I’m currently in has been broken into so many times, and I had to start putting my table and chair by the sliding and main doors.”?

Hon CARMEL SEPULONI: No one would deem that acceptable, and I saw that particular report myself and, of course, felt absolute empathy for that young woman.

Hon Louise Upston: What did you do about it? What are you doing about it?

SPEAKER: Order! The Hon Louise Upston knows how to address Ministers, and it’s not like that. She’s been here for a very long time and should know better.

Hon CARMEL SEPULONI: This is one of the reasons that we have put a complaints process in place, so that people can come back to MSD if there are safety or suitability concerns of the emergency accommodation that they’re in. In the last 12 weeks, I think we have received about 40 complaints, but I would encourage anyone that experiences that type of scenario to certainly get in touch with MSD. I would also say that where MSD absolutely accepts that they have a responsibility to work with people to ensure that they’re in suitable and safe accommodation, the motelier has a responsibility to ensure that those rooms are secure as well, and our police also have a role to play a part when there is criminal activity that people are experiencing.

Hon Louise Upston: How can she have confidence when a front-line worker said, “We’ve had a lot of rangatahi … get exposed to sexual trauma” and “they haven’t come into emergency housing with an addiction, [but] they often leave with one.”?

Hon CARMEL SEPULONI: Just to clarify, I did see the report. It was a front-line Lifewise worker—and it’s important to clarify—not an MSD case manager, and I absolutely respect the work that Lifewise is doing with our young people, particularly in the housing space. It is not acceptable—that is why we’ve put a complaints process in place, and where we have social services and organisations, like Lifewise, who are working directly with vulnerable young people who have those experiences, we hope that they would feel like the communication is there, that they’re able to contact MSD to actually inform them of these situations as well, so we can work together to keep our young people safe.

Hon Louise Upston: When will the Gang Intelligence Centre information start to keep people in emergency housing safe, given MSD and Police only started working on emergency housing cooperation arrangements in May this year?

Hon CARMEL SEPULONI: I reiterate what I said in the House previously: none of the regional commissioners around the country have indicated that there has been an escalating presence or demand for emergency accommodation grants through MSD in recent months or the time that we have been in place. So the fact that the member keeps bringing this up, I think, unfortunately is more of an attempt to stigmatise those that are in emergency accommodation.

Hon Louise Upston: Why did the Minister say, just last month, that “gangs taking up emergency accommodation is not a huge issue”, when a front-line worker said, “It’s just intimidating for our rangatahi, especially if they’re not connected to any gang. Often they leave; they are then connected to a gang after they leave emergency housing.”?

Hon CARMEL SEPULONI: As I said, I respect the work that Lifewise are doing, and it’s important that we continue to work together to keep those in emergency accommodation safe, and to improve the system where we can.

Question No. 8—Building and Construction

8. SHANAN HALBERT (Labour—Northcote) to the Minister for Building and Construction: Meitaki ‘atupaka, Vaa Tuatua. Tēnā koe, Mr Speaker. What recent reports has she seen regarding building consents?

Hon POTO WILLIAMS (Minister for Building and Construction): Meitaki humaria, Vaa Tuatua. I’ve seen a report from Statistics New Zealand that shows the number of building consents has broken yet another record, with 44,299 new homes having been consented in the year ended June 2021—another all-time high. This is an increase of 18 percent from the June 2020 year, with 4,310 new dwellings consented in June alone. These figures demonstrate just how far we’ve come in the last year since facing the initial disruptions of COVID-19. We’ve responded to the sector uncertainty by investing in the sector to keep the momentum going to deliver the warm, dry, safe houses that New Zealanders need.

Shanan Halbert: What do these figures show for Tāmaki-makau-rau—Auckland?

Hon POTO WILLIAMS: In Auckland, the annual number of new homes consented rose 29 percent in the June 2020-21 year, including a 51 percent rise in multi-unit homes. Higher density and modular offsite manufacturing methods are key to helping New Zealand with healthy, modern, and affordable homes that we need.

Shanan Halbert: How is the Government supporting the building and construction sector to build on this growth in consents?

Hon POTO WILLIAMS: As a Government, we are committed to supporting the sector through the continued investment in trades training and apprenticeships, our building legislative reform programme, and improvement to our planning system by repealing and replacing the Resource Management Act. We’re also ensuring that we have the capacity to meet this increasing demand. Through Construction Skills Action Plan initiatives, more than 9,300 people have taken up education or employment opportunities in the construction sector since 2008.

Question No. 9—Housing

9. NICOLA WILLIS (National) to the Minister of Housing: What is the combined value of properties Government housing agencies have purchased since October 2017 and is she satisfied that, in all cases, these purchases have been good value for money?

Hon Dr MEGAN WOODS (Minister of Housing): For the purposes of this answer, I’ve interpreted “housing agencies” to be the Ministry of Housing and Urban Development and Kāinga Ora. Since October 2017, they have made purchases via the following programmes: $377.44 million worth of land via the Land for Housing Programme, which has contracted or delivered 2,037 new homes, with the potential for 6,000 to 7,000 more; $146.4 million worth of KiwiBuild homes, representing 321 homes, but it is important to note that of that $146.4 million, $144.5 million has already been recycled back in; $771 million associated with purchasing approximately 1,186 State houses—again, it is important to note that this represents just 22 percent of total State houses delivered over the period, which is significantly lower than the 67 percent reached under the previous National Government. For further context, there were around 85,000 homes sold last calendar year in New Zealand, and of those, Kāinga Ora bought 385. That is 0.45 percent of the total houses sold. In the last two financial years, we have also purchased $366.5 million worth of transitional housing, delivering 542 homes. Of course, within our redevelopments of State housing land, we’ve enabled 1,884 market houses to be built. There is also vacant land purchased under the public housing build programme, as well as other agencies who will purchase property from time to time, such as the Temporary Accommodation Service at the Ministry of Business, Innovation and Employment. In answer to the second part of the question, if the member means the Government recognising there’s a crisis, and actually doing something about it and delivering houses, then, yes, I do believe we are getting value for money.

Nicola Willis: How many houses could have been built with the more than a billion dollars that Government housing agencies have spent buying up public and transitional houses from the private market?

Hon Dr MEGAN WOODS: The very comprehensive list I just went through to the member totalled to $1.5 billion that has been spent over that period, which has delivered between 10,086 and 12,970 homes. If the member is asking, “Why don’t you just build more houses instead of buying them?”, that is exactly what we have rebuilt our housing provider, Kāinga Ora, to be able to do. Coming off a period of nine years where they failed to deliver any houses, the agency became a house-selling agency. We had to rebuild the capacity so we’re no longer buying in 67 percent of the houses. In fact, we’ve got that down into the 20 percents, and we intend to do even better, because we know there is a housing crisis in New Zealand.

Nicola Willis: Why did the Government pay almost double the capital value for the Boulevard Motel in Rotorua at a cost of $8.1 million—that is, $270,000 per motel unit?

Hon Dr MEGAN WOODS: The member is taking a very simplistic analysis to this. So the purchase price was $8.17 million including GST. An independent valuation that was provided in June of this year was $8.5 million. The rateable value (RV) was $4.31 million. I would note to the member that residential properties in Rotorua are selling, on average, 25 percent RV, as well as a range of other factors. But I would also note this is in line with previous purchases of motels, such as the Takanini motel that had a statutory rating valuation of $1.3 million but the purchase price was $2.65 million—this was, of course, in December 2016—the Eastland Motel, that had a statutory rating value of $910,000 but the purchase cost was $2.1 million—this was in June 2017—The Clansman Motel, a statutory rating valuation of $900,000 but was purchased for $1.84 million—this was also in June of 2017. Then—

SPEAKER: Order! Order! I think it’s now getting repetitious.

Nicola Willis: How many more motels does the Government plan to buy this year, and will the due diligence for those purchases include a comparative assessment of how many houses could be built with that cash?

Hon Dr MEGAN WOODS: We’re looking at a range of options in Rotorua where they make good housing sense. I think, as I’ve just outlined in the answer to the previous supplementary, the previous Government—of which the member is a member of that party—certainly went on a bit of a spree, as it came up to the 2017 election, of buying motels after no action on delivering transitional housing. Where we are buying motels in Rotorua, it’s where it makes good housing sense, and where there is, indeed, potential for redevelopment of that land for longer-term housing prospects. We’re not prepared to just deny there is a housing crisis and do nothing about it.

Hon Chris Hipkins: Has the Minister seen any other examples of motels being purchased above their rateable values?

Hon Dr MEGAN WOODS: There is indeed a pattern, as I said in 2017, as we came up to the election that year—

SPEAKER: No, no. Order! I think there are some pretty clear Speakers’ rulings about Government members not putting up patsies in order to bash the Opposition.

Nicola Willis: What investigations has she conducted into an allegation by a real estate agent that Kāinga Ora “Have approached our company and said that they are happy to pay up to $200,000 over the asking price if the auction falls through.”, and can the Minister categorically guarantee that Kāinga Ora are not pumping up house prices in this way?

Hon Dr MEGAN WOODS: I heard the same allegation on talkback radio as the member is quoting in the House today. I also invited that caller to get in touch with me and to give me the evidence. I have asked officials if there is any substance to the allegation of the talkback caller. They have said that they can find absolutely no evidence of it, but if that member has any evidence of the talkback caller—just like with the homeless man allegedly checking in to the managed isolation and quarantine facility—I ask the member to bring that evidence to me.

Question No. 10—Prime Minister

10. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: My question is to the Prime Minister, and I wish her well in getting well soon. Does she stand by all her Government’s policies and statements?

Hon GRANT ROBERTSON (Deputy Prime Minister) on behalf of the Prime Minister: I thank the “Leader of the Opposition” for his question. Yes.

David Seymour: How does apologising for immigration policies before she was born help those people separated from their children for over a year by Government policy today?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, the apology that the Prime Minister issued on Sunday was for an egregious use of the State’s power over 40 years ago. I would hope that all members of this House would support that approach to try to deal with some of the trauma that has been experienced by those in the communities who were raided in that way. I don’t accept the comparison the member’s making in his question.

David Seymour: Wouldn’t the apology be more sincere if the Government did undertake to help those having their families torn apart by contemporary immigration policy, such as those who gathered outside Parliament this afternoon and were meeting in Auckland at exactly the time the apology was being made but not one of the Government’s 28 Ministers attended?

Hon GRANT ROBERTSON: The apology made by the Prime Minister on Sunday was sincere.

David Seymour: Does the Government stand by its policy of building a bike bridge across the Waitematā Harbour with a benefit-cost ratio of 0.4, and how will that help solve the very real problem of a shortage of housing?

Hon GRANT ROBERTSON: The Government stands by its policy of ensuring that we have strong linkages between the North Shore and the isthmus of Auckland. That is a multimodal solution. It includes making sure that we build a second harbour crossing with a public transport - centric focus; $50 million has been allocated for the business case of that. It also includes making sure that we can have walking and cycling access between North Shore and the isthmus.

David Seymour: How will debt to income ratios on mortgage lending announced today help young people who already cannot afford skyrocketing house prices?

Hon GRANT ROBERTSON: Those were not announced today; the Governor of the Reserve Bank announced that he was beginning a consultation on that proposal.

David Seymour: How do bans on gay conversion therapy help New Zealanders suffering from people breaking the laws that already exist and the Government doesn’t enforce, with rising crime on the streets up and down New Zealand?

Hon GRANT ROBERTSON: I’m not 100 percent sure I can draw the exact comparison that the member’s doing. I think he’s comparing, sort of, oranges and wombats. He should, I hope, want to be a part of a Parliament where we make sure that young people are not put in a position where conversion practices are put upon them. That I would hope, and I thought I’d previously heard the member support that legislation.

David Seymour: When will her Minister of Finance answer the significant number of unanswered and one-week-overdue written parliamentary questions from me about the Government’s adherence to the Public Finance Act?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, the Minister of Finance informs me those questions have been answered.

David Seymour: Why have the questions not been answered as of 2 o’clock today?

Hon GRANT ROBERTSON: On behalf of the Prime Minister, the Minister of Finance informs me he signed them off at least 24 to 48 hours ago.

Question No. 11—Immigration

11. ANNA LORCK (Labour—Tukituki) to the Minister of Immigration: Kia orana, Mr Speaker. What announcements has the Government made in relation to the RSE scheme for next season’s harvest?

Hon KRIS FAAFOI (Minister of Immigration): Kia orana, Mr Speaker. Yesterday, we announced that the Government will work to open up one-way quarantine-free travel to New Zealand from Samoa, Tonga, and Vanuatu for Recognised Seasonal Employer (RSE) scheme workers without having to use the managed isolation and quarantine system. I meet with the leaders of the hort’ and viticulture sector every fortnight, and I’ve heard directly the difficulties they have faced as a result of the COVID border closures. We are committed to working with them to ensure they get the required RSE workers for the upcoming harvest. I also note that this will have a positive impact on the Pacific nations. This is also important for a New Zealand perspective, given the challenges that COVID has had on many of our Pacific neighbours.

Anna Lorck: How has this announcement on RSE been received?

Hon KRIS FAAFOI: I am aware of reports of growers expressing strong support for the Government’s decision around the one-way quarantine-free travel arrangement. Horticulture New Zealand chief executive, Nadine Tunley, has said that this means a huge amount to our growers. Central Otago mayor, Tim Cadogan, said the announcement was fantastic news for local fruitgrowers, and New Zealand Apples and Pears CEO, Alan Pollard, said he was really delighted that workers were going to be able to have an opportunity to participate back in the workforce here and return those much-needed funds back to their community. I’d like to thank Alan for his text last night, too.

Anna Lorck: How has the Government been working with the sector leaders in the lead-up to the RSE announcement?

Hon KRIS FAAFOI: As I mentioned, Minister O’Connor and I have been meeting with the hort’ and vit’ sector leadership on a fortnightly basis to work through the impacts of the closed border on their sectors. Conversations have been very constructive. In the most recent engagement last week, I discussed our objectives for quarantine-free travel with the Pacific and they’ve taken the news well, as I’ve said. Again, I’d like to thank the hort’ and vit’ sector leaders for their engagement. It has not always been easy, but it has always been respectful.

Erica Stanford: Can the Minister explain why only RSE workers from Samoa, Tonga, and Vanuatu are allowed to skip MIQ, and not other workers from these countries, given this is the tightest labour market in 40 years?

Hon KRIS FAAFOI: As you can imagine, one of the key components of us coming to an arrangement with the Pacific around quarantine-free travel is the health and safety of those Pacific nations. We want to stage the ability of bringing people through quarantine-free travel, and being able to start that with RSE workers is a good way to start. We hope that if we can continue along that path and it is both safe for New Zealand and safe for the Pacific, we will be able to expand the number of people coming from those three countries and beyond the Pacific. I think the member might want to have a look at the experience of Fiji over the last two or three months to make sure that we are taking into consideration the safety of the Pacific nations and the health of the Pacific nations when we are making these decisions. The RSE decision is great for our hort’ and vit’ sector here, but, fundamentally, we want to make sure our Pacific neighbours are safe as well. And I’m sure that members of the Opposition would like to do that too.

Question No. 12—Police

12. SIMEON BROWN (National—Pakuranga) to the Minister of Police: Does she stand by her statement when referring to an interview with Harry Tam about the funding granted to his organisation that “It sounded like a recruitment drive for the gangs”; if so, has she expressed any concern about this to the Prime Minister?

Hon POTO WILLIAMS (Minister of Police): Meitaki maata e Vaa Tuatua. In a rare misstep for that member, he has taken my quote out of context! I was commenting on an interview with Harry Tam where he failed to talk about the harm that’s caused to women and children who try to escape gangs and where he failed to talk about the harm that meth causes to communities. That’s what I have expressed to the Prime Minister and to this House—that we can’t simply arrest our way to success. That’s why this Government will always be tough on crime and tough on the drivers of crime. The programme the member refers to gets to people that other drug rehabilitation services simply don’t reach or can be effective with. This approach isn’t new; it’s based on a programme the National Government developed for the Notorious chapter of the Mongrel Mob.

Simeon Brown: Does she think it is appropriate to grant $2.75 million to an organisation that is run by a Mongrel Mob member that she described as being on a recruitment drive for gang membership when gang membership has increased by over 50 percent under this Government?

Hon POTO WILLIAMS: I’ve been very clear that the lead agency on this programme of—[Interruption]

SPEAKER: Order! Order! The member will resume her seat. Do members on this side want an answer?

Hon Member: Yes.

SPEAKER: Well, if they do, they will be quiet.

Matt Doocey: Point of order, Mr Speaker. A member of the Government interjected while Simeon Brown was asking the primary question, and now you’re pulling us up. How is that fair?

SPEAKER: I had no trouble hearing Simeon Brown, because his mike was on and all of us could hear him. The interjections were going right across the microphones into mine and interfering with the answer.

Hon POTO WILLIAMS: I’ve been really clear that the lead agency on this work is the Ministry of Health and they are funding a programme that fundamentally works. It’s been proven to work. We are not funding the gangs; we are funding a programme.

Simeon Brown: Does she stand by her statement “gangs pedal meth, meth destroys our communities”, and, if so, was the Government wrong to sign off on $2.75 million to an organisation run by a lifetime Mongrel Mob member?

Hon POTO WILLIAMS: I stand by my statement. Meth harms our communities. Gangs pedal meth. The Ministry of Health is the lead agency on a programme that works. We are funding the programme.

Simeon Brown: Does she trust Harry Tam in light of her statement: “I’m sure gangs pedal meth and they do that by recruiting young people”, and, if so, does she agree it is in the interests of gangs to keep people addicted to meth?

Hon POTO WILLIAMS: We are talking about wanting to disrupt the harm that gangs do to our communities. They entice, they encourage young people into gangs, and this Government is working damn hard to ensure that there are exit points for our young people to get out of the gangs.

SPEAKER: Order! Order! The time for oral questions is concluded. I have received a letter from David Seymour seeking to debate under Standing Order 399 the actions and comments of the Minister of Education regarding special-needs education in public schools. This is a particular case of recent occurrence—

Simeon Brown: Point of order.

SPEAKER: The member can’t possibly have a point of order relating to this.

Simeon Brown: I’ve got one more supplementary.

SPEAKER: Sorry?

Simeon Brown: I’ve got one more supplementary.

SPEAKER: Well, I apologise; the member does have one. I probably thought I should have taken one away, but I’ll keep going.

Simeon Brown: Thank you, Mr Speaker. What does she say to Police Association president, Chris Cahill, who likened this funding to money laundering, saying, “Police take $2m of dirty money—as they recently did from the Notorious chapter of the Mongrel Mob—”

SPEAKER: The member’s question’s completed.

Hon POTO WILLIAMS: I have a lot of respect for the work Chris Cahill does for the Police Association, and I agree with him on many topics, including front-line safety improvement programmes which keep our police safe, because they do a really difficult job keeping our communities safe. However, I will reiterate, we spent money on a programme led by the Ministry of Health. This programme supports those people to get out of their addictions to meth. We are funding a programme; we are not funding the gang.

Chris Bishop: Point of order. I just want to query why you cut off my colleague’s question—

SPEAKER: Order! The member will resume his seat. It’s not up to me to educate the member on the Standing Orders at this time.

Urgent Debates Declined

Minister of Education—Special Needs Education

SPEAKER: I have received a letter from David Seymour seeking to debate under Standing Order 399 the actions and comments of the Minister of Education regarding special needs education in public schools. This is a particular case of recent occurrence for which there is ministerial responsibility. Having considered the matters raised by the member in his letter, I’m not convinced that it reached the threshold that warrants setting aside the business of the House, particularly given the fact that we’re about to commence the Estimates debate. The application is therefore declined.

House in Committee

House in Committee

SPEAKER: I declare the House in committee for consideration of the Appropriation (2021/22 Estimates) Bill, the Reserve Bank of New Zealand Bill, and the Family Court (Supporting Children in Court) Legislation Bill.

Estimates Debate

In Committee

CHAIRPERSON (Adrian Rurawhe): Kia orana tatou kātoatoa. Members, the House is in committee for consideration of the Appropriation (2021/22 Estimates) Bill. The Standing Orders provide for 11 hours of debate on the Estimates. The House has given leave to organise the debates by portfolio so there will be no set specific debates. All Votes are available for debate, but only specific Ministers will be available each day to speak to their indicated portfolios only. The Government has indicated that the Minister for the Environment and for Oceans and Fisheries, the Minister of Energy and Resources, and the Minister of Health will be available today. Each debate will be led by a call from the chairperson or member of the committee that considered the Estimates most closely related to the Minister’s portfolios.

This debate expires after 11 hours, at which point questions will be put that the Votes stand part of the schedules and of the provisions of the Appropriation (2021/22 Estimates) Bill

The questions is that the Votes contained in the Estimates of Appropriations for 2021/22 stand part of the schedules.

Environment and Oceans and Fisheries

Hon EUGENIE SAGE (Chairperson of the Environment Committee): Kia orana, Mr Chair. As chair of the Environment Committee, I will take a brief call on the Votes that the committee considered, and that was for the 2021-22 Estimates: Vote Conservation, Vote Environment, and Vote Parliamentary Commissioner for the Environment. The committee was very pleased to welcome back Minister Kiritapu Allan from medical leave, and we also heard from the Acting Minister Verrall.

There is an $800 million allocation for Vote Conservation in 2020-2021. That is a major increase—a doubling on what that vote was in 2017-2018 under the last Government. It’s also an increase for this year on what was allocated last year. The committee was particularly interested in Jobs for Nature, and the $500 million that Te Papa Atawhai is responsible for as part of that $1.3 billion programme. The department is responsible for three major initiatives there: enhancing biodiversity outcomes on public and private land; pest management, including Predator Free Aotearoa; and supporting employment through projects on conservation land.

The Minister highlighted that there were 173 Jobs for Nature projects under way or at various stages of approval. This programme is about both increasing conservation knowledge, people’s connection with conservation, and providing jobs and skills that will long outlast the programme. There are projects that we heard were very diverse, from wilding conifer control in the Craigieburn Range to a big project in South Auckland around urban landscaping. The committee was particularly interested in the accountability measures that the department is using to track progress in spending. I would encourage anyone interested in any of the Votes to have a look at the questions which the committee asked. In Conservation, the committee asked some 358 questions of Te Papa Atawhai, and in Vote Environment, 273 questions of the Ministry for the Environment. The answers to those questions really flesh out a lot of the agencies’ work that’s proposed over the coming year.

Just in Vote Conservation, the committee was also interested in Predator Free New Zealand—the big expansion in that programme in South Westland in the Whataroa area. The director-general highlighted the gains that have been made in predator control, both there and in areas like kōkako in Pureora, where this sustained investment that Government is making in predator control over several years is showing significant improvements in the status of a lot of our threatened species. Going back right to the 1990s, for example, where we only had 830 breeding pairs of kōkako throughout the North Island, now there are some 2,000 breeding pairs. The committee was also interested in a lot of predators like feral cats—the seriousness of the problem of feral cats, both in terms of their direct predation and the impacts of toxoplasmosis. We also heard about the work the department was doing to reduce its climate emissions: a 40 percent reduction in air travel in the last financial year, and a ban on the purchase of internal combustion engines.

I’d like to acknowledge the work of the outgoing Director-General of Conservation, Lou Sanson, who will be standing down in September. He has been the Director-General of Te Papa Atawhai for eight years and been with the department in other roles before that. He’s worked with at least five Ministers and he has led the department with huge enthusiasm and commitment to conservation, and a very deep knowledge of the department’s mahi. He has engaged with people and place and really got the department to be much more outward-looking and much more focused on its Treaty partnership.

In terms of Vote for the Environment, it’s got an appropriation of $1.73 billion. The bulk of this, of course, is due to the allocation of New Zealand emission units and provision for impairment of debt for climate change - related activities. The Ministry for the Environment has an appropriation of $382 million within that, and the committee considered quite a wide range of issues in terms of the ministry and the Minister’s work programme here—$132 million is allocated over several years for reform of the resource management system, with $35 million of that in the current financial year. The Minister highlighted that a lot of this will be used to improve implementation of the reform legislation through the development of a national planning framework, and working in the national policy statements and national environmental standards under that. Waste comes within this area. Of course, the landfill levy has been increased from $10 to $20 a tonne for municipal landfills from 1 July. That will lead to quite a significant increase in funding for allocation to reducing waste to landfill.

Hon SCOTT SIMPSON (National—Coromandel): I’d like to ask the Minister: how much of the special allocation in Vote Environment funding for delivering his new resource management system will be spent on more staff at the Ministry for the Environment?

Hon DAVID PARKER (Minister for the Environment): I can’t give the member an accurate figure on that. If he cares to put down a question in writing, I can give him that information. I am happy, though, to accept that it’s a big piece of work and that it has required the department to engage more personnel in order to land it.

There’s general agreement across society and, I think, across this House that the Resource Management Act (RMA) is past its use-by date. If you chunk it down, it really hasn’t delivered. It takes too long, it costs too much, and it hasn’t protected the environment. In respect of it taking too long and not having good development outcomes, you don’t really need to look much further than some of the problems that we’ve had in housing. Although they’re very complex problems caused by a lack of infrastructure, a lack of trained workforce, and various other contributing factors, it’s also true that in a country that’s got low population densities, we’ve got very high land prices. That’s in part been caused by the way in which the RMA has been implemented, and although there are some fixes on the way to that through the national policy statement under the RMA, the RMA hasn’t delivered the competitive land markets that we’ve needed. So we think, for reasons of housing as well as environmental protection and enabling development like infrastructure, there is a need to start again rather than just make yet another complex amendment to the existing RMA.

Now, given that the RMA is a cornerstone piece of legislation for the way in which we manage both development land use and the protection of the environment, it’s important that that be done properly, and that is a complex task. I’m sure this will come up in further questions, but our proposal is to replace the RMA with the Natural and Built Environments Act, another piece of legislation that will have spatial planning on a regional level called the Strategic Planning Act, and—to a certain extent separate—a piece of legislation that helps us to adapt to the effects of climate change, and no doubt other questions will arise as to some of the details of that.

Hon SCOTT SIMPSON (National—Coromandel): How much of that special funding will be spent on converting existing national environmental standards and national policy statements into his new proposed national planning framework?

Hon DAVID PARKER (Minister for the Environment): I would say a small but important fraction. The new system moves from managing effects to trying to manage for outcomes. One of the problems environmentally under the RMA that there’s a general consensus on is that the “avoid”, “remedy”, and/or “mitigate” language of the RMA in the end, in respect of impacts from land use on things like water, ended up being mainly “mitigate”, and the effect of mitigated increases in intensity and land use cumulatively amounted to very significant degradations in water.

In order to overcome that, we think that there’s a need to manage to bottom lines. In truth, those bottom lines in respect of water are now largely coming through the National Policy Statement for Freshwater Management that was promulgated last year. That will be transitioned into the new system and will be an example of the bottom lines that the system will be managed for. It is complex, because in some instances you’ve got this tension between strictness of bottom lines and the need to sometimes have exceptions. This has been made clear in a mistake that I was partly responsible for in respect of wetland rules in the National Policy Statement for Freshwater Management, where we probably went a bit hard and chose a prohibited status for nixing of any wetlands.

Now, we do need to be very careful that we don’t lose a lot more wetlands in New Zealand, because, you know, we’ve lost more than 90 percent of the wetlands that used to exist, including national parks. Outside of national parks, it’s even worse. But that wetland exception shows that we didn’t get it quite right and we’re in the process of fixing—it shows that there is the need occasionally for an exception from the bottom line. We don’t want to lose more wetlands, but occasionally you have to; for example, for infrastructure or for a quarry expansion.

Now, how we’re going to manage that in the new system through the national planning framework is that we think that there will be national direction and a positive direction in respect of infrastructure developments so that we make explicit that on occasions the national planning framework, which will include the transitioning in of existing national environmental standards and national planning statements—there will be exceptions that are necessary for infrastructure on occasions, and that’ll also be articulated in the national planning framework.

Hon SCOTT SIMPSON (National—Coromandel): Total staff numbers at the Ministry for the Environment have increased from 349, when he first became a Minister, to 492 in the 2020 year. That’s a 41 percent increase in just three years. Why?

Hon DAVID PARKER (Minister for the Environment): Because, sadly, New Zealand’s view of ourselves as being good custodians of environmental outcomes has been found to be wanting and there is a desire amongst New Zealanders to do better in a number of areas. Fresh water is one of those areas. There are more people that are employed in assisting regional councils to halt the decline in the quality of fresh water. When we came to office, sadly, more than half of the monitored sites that people swim in in summer are not safe to swim in and put your head under, according to World Health Organization guidelines. So there was obviously a need to do better in respect of oversight by the ministry of freshwater outcomes.

The Hon Eugenie Sage mentioned in her contribution the work that is being done in respect of waste. New Zealand has, I think—we are one of, if not, the highest per capita contributors to landfills on a kilograms or tonnes of waste per person per annum in the world, in the OECD, and so we also need to make progress on waste. So we are doing a lot of work in that space, including updating the relevant legislative code, as well as bringing forward recycling initiatives so that we have more recycling and move closer to a circular economy and less going to landfill.

Then, of course, within the numbers that the member quotes, although they’re not within my vote, Vote Climate Change has also had an increase in personnel to deal with the zero carbon bill and the very difficult transition that we have as a country—achievable, but quite technically difficult in order to advance towards a low carbon economy.

Hon SCOTT SIMPSON (National—Coromandel): The Minister has often said that his freshwater reforms will be achieved within a generation. How many years does the Minister define as being a generation for the purposes of his timetable?

Hon DAVID PARKER (Minister for the Environment): There are two main parts. Well, actually, there are three main parts to the changes—actually, there are four; I’m going to list the four changes—to our freshwater reforms.

The first was a change to the Resource Management Act to change the way in which water plans are made. That has been legislated. We have a Freshwater Commissioner—currently Peter Skelton, a long-serving judge, Professor of Planning, and one of the commissioners that the National Party appointed to Environment Canterbury, and a very capable man. With his oversight, we are running a new process to help councils put in place good freshwater plans.

The second part was a national environment standard, which has near instant effect, which has some bottom-line rules that everyone has to adhere to and that, effectively, go like regulations directly into plans.

The third part that the member, I think, is mainly referring to there—the fourth part being regulations relating to fencing and things, which I won’t go into in detail—but the third part, which does take some time, is what communities, through their regional councils, want to do in their plans in order to achieve the requirements of the national policy statement on freshwater management. There are various ways that councils can address their issues. It’s for them to decide how they’re going to bring their river health and lake health up to the levels that are prescribed by the legislation, and they do that through plans. And then those plans, once they are in place, give a transition to improve things. We’ve said that we think the improvements back to swimmability and ecological health should take a generation. We actually haven’t defined that; we’ve left that to councils to work out.

Hon Scott Simpson: That’s why I asked the question.

Hon DAVID PARKER: Well, we could have prescribed it, but it will differ. In some areas, they’ve got bigger challenges than others and they might take a little longer. But I think most people think of a generation as 20 or 30 years. From my perspective, the most important thing is to get things on the right trajectory, and then I think we’ll be able to relax a little bit and take the time to get back to the state of rivers that we used to enjoy as a country 20 or 30 years ago.

Hon EUGENIE SAGE (Green): Thank you, Mr Chair. I’d like to turn to oceans and fisheries. The Minister recently released seven Cabinet papers and announced the vision, objectives, and principles for the oceans and fisheries portfolio. I would be interested in how the Government’s vision of ensuring the long-term health and resilience of ocean and coastal ecosystems, including the role of fisheries, is to be implemented, because there doesn’t appear to be any specific funding allocated in the Budget for the Oceans Secretariat. And in terms of the appropriation for fisheries in 2021-2022, it’s still at $72.6 million, which was actually less than was spent last year. So the questions are: what expectations and outcomes does the Minister have for the Oceans Secretariat, what does he expect it and its parent agencies to have produced by the end of the financial year, and how is the vision going to be implemented if there is no specific funding provided? And, if I’m missing something, has some funding been provided?

Hon DAVID PARKER (Minister for Oceans and Fisheries): The objectives that we also announced when we set out the vision that the member has just quoted is to promote an ecosystem-based approach to research, monitoring, and management. Of course, there’s already money in the system to do that if we just take a more ecosystem approach to its allocation. To establish a spatial planning framework that optimises the protection and use of marine space and resources—our most recent example of that was our response to Sea Change, where we’ve protected various parts of the Hauraki Gulf, restricted trawling to trawl corridors, and had various other quite complex changes to fishing rules. And the third objective was to support the development of a high marine economy that provides equitable wellbeing benefits. And there are various principles that underlie that.

In respect of some of the changes that we’re already making in this regard, we of course have the benefit of the report of the Chief Science Advisor that came out earlier this year. We’ve already begun implementing some of the recommendations in that report. I think the three most notable ones that we’ve announced so far this year are cameras on boats—cameras on boats were supported by the prior National Government, following operations Achilles and Hippocamp, which showed high levels of illegal activity in the fishing industry, and also high levels of legal dumping of fish as well. The illegal, unreported dumping of fish was of great concern to the then Minister, Hon Nathan Guy, who said that we needed to use technology to bring transparency to these practices. Unfortunately, neither National nor we were able to, in our first term of Government, fund all cameras in boats, although we did fund some cameras on boats for boats fishing in the areas of the Māui dolphin, but we’ve now funded that for approximately 300 vessels, which I think covers more than 80 percent of the in-shore fishery by volume of catch.

The second thing we’ve done is we’re, essentially, banning, with an exceptions regime, the discarding of fish. So if you catch it, you’ve got to land it as a commercial fisher, with some limited exceptions—the likes of spiny dogfish that ammoniate and damage other fish.

And the third change that we’re making that’s significant is we’re changing the penalties regime as a consequence of that transparency and change to some of those other rules. So those are some examples of progress that we’re already making.

Hon EUGENIE SAGE (Green): So can the Minister confirm that the Department of Conservation, and the Ministry for the Environment, and Fisheries New Zealand will be doing all of this work from their existing baselines and that no new funding has been allocated in Budget 2021 to implement this oceans vision?

Hon DAVID PARKER (Minister for Oceans and Fisheries): Yes. And they already had obligations in that, regardless. There’s a new way of organising them to do that work. But the member is correct that there’s no additional funding for that particular part of the work. The cameras on boats is a $68 million initiative. So that’s a large amount of additional funding going into related enterprises.

TIM VAN DE MOLEN (National—Waikato): Thank you, Mr Chair. Following on from that, in relation to some of the discussion just had around fish stock assessments, I’m really interested to understand a bit more from the Minister around that funding aspect, because I am a bit concerned that the fish stock management is not operating quite as efficiently as it could be. We only evaluated 159 fish stocks; 240 were not assessed at all. Of those 159 scientifically evaluated fish stocks, 28 were deemed to be overfished—that’s just about 20 percent. So it seems that we are saying that nearly one in five of our fish stocks are overfished, and I wonder whether the Minister could give some insight into whether he is comfortable with that figure and, if not, what funding arrangements under this current Budget will be adapted to deal with that.

Hon DAVID PARKER (Minister for Oceans and Fisheries): The quota management system in New Zealand has worked reasonably well—not perfectly—to enforce rules requiring that fishing is limited to a sustainable level of catch. That total allowable catch is then split between commercial, recreational, and, actually, allowances for illegal and other causes of fish mortality. Now, overall, it’s worked well. On some occasions, the research shows that when they do a stock assessment of fish, some of the heavily fished species have dropped below expected levels. The most pressing example of that recently in New Zealand was actually the tarakihi fishery. That is due for reassessment this year. I won’t say much about that in detail because they are decisions that are yet to be taken, but there is, for those that are interested, a recent High Court decision where some of the decisions that were made previously in the tarakihi stock were looked at and criticised.

Where we’re lucky in New Zealand—well, where we’re unlucky—is we’ve got such enormous biodiversity and richness in our fish stocks that, realistically, we can’t assess every one of them. That might change in time with new technologies, but at the moment we can’t. So we regularly assess the fisheries that are subject to the most fishing pressure. Sometimes, we find a problem and then we set a plan to rebuild the stock in accordance with the Fisheries Act. There’s some good news around. The snapper fishery on the East Coast of the North Island has increased in abundance quite significantly in recent years, although there are still some local areas of shortage.

TIM VAN DE MOLEN (National—Waikato): Thank you, Mr Chair. So, following on from that, I’m interested in his view, then, around Snapper 8 on the west coast of the North Island, in which I understand they’re proposing significant increases in the commercial catch there, some 1,500 tonnes of snapper. So what level of confidence does he have in that, given that, as I said, it seems nearly 20 percent of assessed fish stocks are now considered overfished? Is he putting that limit too high? Would a lower limit perhaps be a more appropriate step to transition through that? Did he give any consideration to different levels, or is that 1,500 tonne increase where he’s been from the start with that? Also, then, what level of 28N rights will be satisfied as a result of that increase and change to that particular fish stock?

Whilst we’re on that, because I just wonder whether I will have another opportunity, I’m going to also move into the recreational aspect. We’ve seen more recently a lot of media interest and concern around the pink maomao, a recreationally caught fish stock currently not subject to a daily catch limit. I wonder if the Minister could give an update on any potential prioritisation he’s given to putting a limit in place for fish stocks like pink maomao and whether, indeed, the Minister would consider—and I’ve been fortunate to speak to many recreational fishers, and they’re always very enthusiastic discussions and lots of honest conversations around the size of fish, of course. But the feedback I’ve got from those fishers is that, actually, there’s no reason why we couldn’t just have a blanket limit on all recreationally caught fish stocks currently not subject to a catch limit that would stop this sort of issue happening.

So I guess my question, what I’m asking the Minister, is: will he implement a recreational catch limit on all recreationally caught fish stocks currently not subject to a catch limit, a blanket limit of perhaps 10 or 15? Surely that’s enough, on a daily basis. That will at least address that issue in the interim whilst he’s perhaps coming up with a more refined and more detailed consultation process to determine the accuracy of particular fish stocks, appreciating within that that we can’t assess every fish stock, as he’s noted. But is there any reason why we would need more than 10 or 15 for any daily limit on a recreationally caught species?

Hon DAVID PARKER (Minister for Oceans and Fisheries): I thank the member for those questions. In respect of the decisions in respect of Snapper 8, which is off the west coast of the North Island, in the main, those decisions have yet to be taken and we’re consulting upon them, and so I wouldn’t speculate on the outcome. There are 28N rights to be dealt with as well, as the member obviously knows, and those issues are being worked through. In respect of pink maomao, I mean, I think most New Zealanders were pretty shocked at the fact that the level of greed that was shown in respect of people who were plundering many hundreds of fish was legal because the regulations allow it. So I have sought advice as to whether there needs to be a change to bag limits to incorporate all fish, including pink maomao. Those decisions have not yet been taken, but we’re considering them.

SIMON COURT (ACT): Thank you, Madam Chair. To the Minister: what part of the resource management reforms that the Minister has announced will drive councils to lift restrictions on the availability of land for housing and thereby deliver more affordable housing because, if we look back to 2017, the Speech from the Throne was quite clear there was a commitment from the Labour Government to remove the metropolitan urban limit in Auckland. It was recognised as putting an artificial constraint, a scarcity, on the supply of land for housing. We’ve seen reports that, for an average Auckland house, there is a $50,000 premium applied just because of that one planning restriction. We only have to look at Christchurch, in the wake of the 2011 Christchurch earthquakes, zoning a large amount of suitable land for housing. The average house price in Christchurch is about $550,000, whereas in Auckland $1.14 million is the median house price. So the question that the ACT party has is: how will the Government’s resource management reforms deliver more land for housing and more affordable housing?

Hon DAVID PARKER (Minister for the Environment): I thank the member for the question. I actually largely agree with his proposition that artificial constraints on land supply have driven up land prices and that those increases in land prices have flowed through to the cost of all housing, because it’s the marginal cost of the new that effectively leads the market. Now, the way that we’ve approached that under the Resource Management Act (RMA) is through the only tools that we have under the RMA, which are to issue national direction requiring councils to make room for growth, essentially.

Where I might slightly disagree with the member—and I don’t want to put words in his mouth, and he might actually agree with me on this—is that actually, in terms of building opportunities, it’s important to make them available both within the boundaries and on the boundaries of growing cities, so that we have to allow the intensification that will actually naturally occur if we let people intensify. We also have to allow a release of the pressure on the boundaries of cities by making more land available for new building opportunities.

How we’re going to achieve that under the new system is through a combination of national direction, carrying that forward; some positive national direction in respect of housing, which will go to some of those issues as to land supply; and additionally, signalling to both councils, to central government, and to the private sector where the big chunks of development are likely to come as a city grows. That will be done through the Strategic Planning Act, which will then flow through into Natural and Built Environments Act plans, and I’m happy to answer further questions on that.

SIMON COURT (ACT): Thank you, Madam Chair. So there are many environmental bottom lines outlined in the resource management reforms, and we already have a host of national environmental standards and national policy statements which constrain the use of land and make it quite difficult—if not impossible—to obtain consents for certain types of activities, which you have referred to, such as disturbing wetlands. So a question that the ACT Party has is how will the resource management reforms proposed by the Government make sure that more infrastructure can be built where it’s needed and when it’s needed without having a huge hurdle in terms of resource management consenting that currently means that really good projects—like irrigation and water storage, for example—fail to meet the regulatory test and do not get consent in the Environment Court, like the Ruataniwha dam, for example? So would the Minister care to shine some light on how infrastructure might be delivered better?

Hon DAVID PARKER (Minister for the Environment): The Ruataniwha dam was declined for the reasons set out in the judgment, and that was the correct decision. I think that those decision makers made the right decision. We’ve consented a number of water storage projects already—or at least one; I think there’s another in process—through the fast-track consenting process under the RMA.

More broadly, in respect of infrastructure provision, there will be positive national direction in the national planning framework. There will also be shown future arterial corridors, for example, in a Strategic Planning Act, which will flow through to Natural and Built Environments Act plans, and they may well be then a permitted activity. Once it’s come through those things—and the controlling of the adverse effect is more likely to be done through standards relating to siltation, for example, rather than through bespoke rules and a complex application.

Energy and Resources

CHAIRPERSON (Hon Jenny Salesa): Meitaki maata. We will now move on to the Estimates debate on energy and resources.

JAMIE STRANGE (Chairperson of the Economic Development, Science and Innovation Committee): Madam Chair, thank you for the opportunity to take a call in this debate as the chair of the Economic Development, Science and Innovation Committee. For the benefit of the committee, I’ll give a little bit of an outline in terms of what we heard from the Minister, Megan Woods, at Estimates, and then I’ve got a couple of questions that I will pose to the Minister before, no doubt, others will want to pose their questions.

The main appropriations sought for energy and resources—we heard that there’s money in the Budget to fund energy storage, energy efficiency, and fuel switching projects that reduce carbon emissions from industrial processes. We heard about the work to fund the work of the Electricity Authority, which is a Crown entity responsible for regulating the energy market. We also heard from the Minister around the finance to expand the Warmer Kiwi Homes programme, and I’ll have a question about that soon. We also heard from the Minister about funding for the work of the Energy Efficiency and Conservation Authority. And, finally, we heard about support policy advice in terms of the management of the Crown mineral estate. We also had a discussion about the Commerce Commission’s study into the fuel markets, which aims to ensure New Zealanders get a fairer deal at the petrol pump.

I’d just like to pick up on a couple of those aspects. The first one I’d like to touch on—and I’ll have a question leading out of it—is the funding in Budget 2021 for the extension of the Warmer Kiwi Homes project. Now, as the Minister told us, there are a number of health benefits that are associated with a warm, dry home, and this appropriation in the Budget will allow for 47,000 homes to receive insulation and heating retrofits. Now, just to put a personal lens on this, in 2008 my wife and I—I was actually working in retail at the time—we had two young children and were in a fairly cold house, and we were fortunate enough to receive a grant through a community services card for insulation underneath our house, which was on piles, and also insulation in the roof, which was a scheme similar to this scheme. It certainly made a significant difference to our house, and certainly to our children and our family.

There’s quite often a discussion around health, housing, and education, how the three of those work together, and which is most important. Some would say that education is the most important aspect for our children, to create opportunity in terms of opportunities for them later on in their life; some would say, “No, no, it’s health that’s most important.”; some would say housing. Obviously, the three of them work together, but I have a view that, actually, out of those three, housing is vital to get right, because if you have young people, children, living in warm, dry, healthy homes, you can then work to wrap around those services around the education and the health. So I am very interested to hear a little bit more about this programme, and in particular what sort of health benefits the Minister expects that this will have, particularly for our tamariki. So my question on the housing aspect is: what will this funding be used for specifically, and how will it impact on low-income households, particularly children? So what sort of benefits does the Minister see this investment having for our tamariki?

The second aspect I’d like to touch on before I finish my contribution is the investment in the Energy Efficiency and Conservation Authority’s programme with businesses. I’m curious around what sort of programmes and policies have been successful in encouraging businesses to reduce their carbon emissions. Now, I know the Minister is particularly passionate about ensuring that we meet our Paris targets in terms of decarbonisation, and so the investment obviously links in with that, as we’ve heard from the Minister in the Estimates. I’d be interested to hear from the Minister in terms of, given the success of the first round of funding in the Government investment in Decarbonising Industry fund—and I know there was a lot of interest in that from businesses—what sorts of things does she expect the next round of that funding to support? How does she believe that this funding will support us, as a country, reaching our targets in terms of the decarbonisation and supporting businesses to decarbonise their work? Thank you.

BARBARA KURIGER (National—Taranaki - King Country): In December last year, Cabinet signed off on $100 million for the New Zealand Battery project under the shovel-ready initiatives programme. This money is provided in Budget 2021 under the multi-year appropriation, energy and resources investment in infrastructure projects. This money included $30 million for an evaluation of different options, and $70 million for a more detailed feasibility study. The criteria that Cabinet signed off for this $100 million spend included providing a “pathway to 100 percent renewable electricity”. Since this decision, we have had the Climate Change Commission report, where the commission said that the 100 percent target should be “aspirational” and that the Government should consider replacing the 100 percent target with an aim of achieving 95 to 98 percent renewables. So my question to the Minister is: is the Government going to reconsider the objective of 100 percent renewable electricity for the New Zealand Battery project in light of the Climate Change Commission advice to shift away from this?

In her paper to Cabinet, the Minister said that to ensure the evaluation process was fair and robust and unbiased, she had adopted several mitigation strategies, including setting up a technical reference group. The Ministry of Business, Innovation and Employment now have set up the technical reference group, and while a number of the members have extremely strong CVs, we were surprised to see the appointment of a Greenpeace climate and emergency campaigner and one of the founders of School Strike 4 Climate put on the technical reference group. Is the Minister satisfied that these appointments fulfil her expectations of this group that it provide robust, unbiased, technical advice? The second question on that is: were the appointments to the technical reference group sent to her for approval before they were announced?

Hon Dr MEGAN WOODS (Minister of Energy and Resources): Thank you, Mr Chair. I’ll go through the four questions that I’ve had put to me so far.

The first was around the Warmer Kiwi Homes. I mean, very good to hear very personal stories about how this programme, which is where we bring together our energy and our housing policy, and our health policy as well—how they intersect. So this is a scheme that we brought in in our first Budget when we were in Government. It has been a scheme that has been very successful. In fact, we’ve had to top up Budgets all the way through because we have met or exceeded targets.

One of the things about this scheme that makes it different and marks it out from previous insulation schemes is that it focuses not only on insulating the home but also providing efficient and affordable heat source options for families as well. I very much believe that you can have the best insulated home in the world but if you can’t afford to heat it, it’s still going to be a cold home. So that is why I’m delighted that we have been able to achieve our targets around this, and, in fact, last year, had to bump it up again. The $120 million that was provided in this year’s Budget will see us add another 47,700 homes eligible for both that insulation and heat source scheme.

It’s something that we are looking to combat some of the health challenges that we have in New Zealand that, frankly, we should not be seeing in a First World country. We see it very much connected to some of the programmes that we have operating under Vote Health, in terms of rheumatic fever. And we know that warm, dry homes are absolutely critical if we are going to combat the scourges in our communities, such as rheumatic fever.

In terms of the GIDI programme—the Government Investment in Decarbonising Industry—this is a scheme that is achieving very well for the Government. We’ve allocated $279 million in the first round and that will actually achieve close to 10 percent of all the carbon savings that will be required under our first carbon Budget. In the 16 projects that have been funded to date: five high-temperature heat pumps, two boiler conversion to biomass fuel, two new biomass boilers, two new electrode boilers, four energy-efficiency projects, one biogas boiler, and four other technologies. It is achieving beyond what we thought it could. I mean, in terms of the 16 projects that we funded in the first round, it’s the equivalent of taking 62,500 cars off the road.

So, I think, we can see that for $22 million we are looking forward to round two of that programme being announced soon, and being able to point to some equally good programmes. I probably note that some of the exceptional results that we saw in round one, I’m not sure that we’ll be able to replicate those in every round, but certainly there.

I’ll also address the question that was put to me around the New Zealand Battery project and whether we’ll be revising the target in light of the independent climate commission’s report. Of course, Cabinet has yet to consider the recommendations of the independent climate commission, and so that is something that we are yet to do. But what I also point the member to is: as well as making that recommendation around the 95 to 98 percent, the independent climate commission said that we also had to look at a broader energy target. So, while New Zealand may score very well on the renewable component of its electricity sector, our broader energy system still has a lot of work to do in terms of decarbonisation.

I very much take the view that there’s a dichotomy—that we cannot do either unless we address the issue of the decarbonisation of dry-year storage. At the moment, as we all know—and we are seeing far too much of it this winter—New Zealand stores energy for a dry year in the form of fossil fuel, whether that be gas or whether that be coal. What we are seeing is that gas isn’t performing as the system would expect it to this year, so we are burning increased rates of coal. That is not something that our Government is content with. It is not something that we are willing to leave a system in place where the only option is to burn fossil fuel to counter a dry year. So that is why we have invested in that $100 million battery project.

I’m going to turn to the last question that the member raised—and that was that the singling out of two members of the technical reference group, look, I find somewhat disappointing. Two young women being appointed to a reference group in an industry that is so male dominated, I am disappointed that this is a line of questioning that that member has been pursuing for a period of time. I am going to defend the CVs of those two young women.

So the young woman that the Opposition member writes off as a Greenpeace activist actually has a Master’s in ecological economics. So I could say that is actually someone that is more than capable of sitting on a technical reference group that is appraising whether or not this makes sense both from an environmental and a business point of view. The other young woman that the member has chosen to target with her questioning is Isla Day, who was part of the School Strike 4 Climate. Isla is actually studying physical geography and biomedical science. She is a member of the Wellington City Council Environmental Reference Group.

Actually, I think that member needs to move herself a little bit more into the present and realise that, actually, when we are considering projects that do impact on our future, that are about climate change, it is absolutely imperative that we include the next generation in this. I’m not content to have the usual industry players, which are largely not as diverse as the technical reference group that we have appointed to this. This is too big of a question for New Zealand’s future, and one that I will make sure represents what the future of New Zealand looks like.

Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Chair. Tēnā koutou e te Whare. I thank the Minister Megan Woods for her answers so far, which have been very clear. Obviously, climate change is the single biggest issue facing all of us and there’s going to be a need across all sectors for a considerable transition to a decarbonised economy, a decarbonised electricity system, and energy more broadly. Obviously, our largest area of energy—fossil fuels is the energy we use for transport fuels, which is mainly used in our privately owned light fleet, the cars, utes, and vans that we drive every day. I bring this up because there has been a lot of misinformation out there, I believe—and I wanted to ask the Minister some questions about this—misinformation about the coal imports this year. I’ve seen reports that coal is responsible for the majority of our electricity generation, that the increased coal imports are due to increased demand from electric vehicles. Obviously, all of this is not true, and so I just wondered if the Minister would care to expand a little bit on the reasons why we have increased coal imports this year.

What percentage of our electricity generation this year is from renewable and the increased demand on the grid from electric vehicles? My understanding is there is enough renewable electricity consented to more than cater for increased demand, even if we had a 100 percent electric vehicle fleet, which we are very far from because previous Governments didn’t do anything to actually incentivise electric vehicles.

Then I have a second question, which is around the role that smaller-scale solar generation might play in the transition to a decarbonised electricity system. My understanding is that the Government has actually invested in some pilot projects recently. Community housing schemes and marae might be receiving funding for solar generation. And I was just wondering if the Minister would like to speak to the benefits of that and how much the Government is investing in that area?

STUART SMITH (National—Kaikōura): Thank you, Madam Chair. It’s good to get an opportunity, while the Minister Megan Woods was in her disappointed mode, to ask a question. When she told me in written question No. 26184 that, and I quote, “I find it very disappointing to continue receiving questions around the wide range of perspectives that make up the New Zealand Battery Project Technical Reference Group.”—can she elaborate further on why she as a Minister is disappointed to be receiving written questions?

SIMON COURT (ACT): Thank you, Madam Chair. So we understand the Government is carrying out a $30 million feasibility study into the Onslow pumped hydro project. That is a project intended to provide for dry-year storage to replace what the Minister referred to as “the failure of natural gas to actually support New Zealand’s baseload energy requirements at this time”. Although, the industry would counter that by suggesting it’s not so much a failure of gas—because we have the gas—it’s a failure of Government policy which makes it so hard to get the gas. But coming back to Onslow, that project would be New Zealand’s largest hydro dam, would flood a Unesco-level wetland, and would cost billions and billions of dollars and take decades to consent and construct. It doesn’t sound feasible at first glance.

Now, storing water for a dry-year risk in a hydro dam has merit, but that stored energy needs to be close to where people and businesses need it, and it’s been suggested by many in the energy industry that that is not the right place to store energy, because it’s so far away from the main centres. That water must also be held as reserves for years and years sometimes, between dry years, without producing any electricity or revenue for the dam owner. So the private sector energy generators are now asking the Government and they’re asking their customers why they would invest in new renewables and baseload energy generation when the Government might build an enormous hydro dam, take control of the electricity markets, and tank all of their brand new investments.

What New Zealand families and businesses need right now is affordable and secure electricity and energy. So, Minister, my question is: what plan does the Government have for affordable and secure electricity if the business case for the Onslow dam project shows that it is simply not feasible?

Hon Dr MEGAN WOODS (Minister of Energy and Resources): I will address some of the questions that have been asked. There were questions around our coal usage this year—what’s driving increased demand and to put that into context. The member asked for the proportion: I don’t have that proportion on me, in terms of the electricity sector, but I’m happy to get that to the member at a later time. What we do know is that the provisional data for coal use and electricity generation for the second quarter of 2021 is estimated at 585,000 tonnes, for a total of over 1 million tonnes in the first half of 2021. This suggests that New Zealand is on track to use similar amounts of coal for electricity generation as the dry period 2005-08.

So I think that we can see that, when we have low levels in the hydro system and we don’t have gas contributing to that, this is the way the system is set up to provide energy in New Zealand. As I’ve outlined, this is not something that we as a Government are content to see continue—that we simply must find ways in which we can store energy for a dry year, in a renewable form, which leads me on to some of the questions that have just been asked by the member that’s just taken his seat, Simon Court. He’s been asking why it is that there’s been continued investment in generation when the Government is looking at providing a storage dam. There is a bit of conflation in the contribution that the member just made around generation and storage. Of course, the pumped hydro that we’re looking at is not a hydro dam in terms of it being a generator; it is a place in which we will store energy to use in a dry year. So it’s not in a similar vein to a Manapōuri or a Clyde dam; it is quite different.

I don’t accept the assertion in the member’s question that we’re not seeing investment in new renewable generation. In fact, we’re seeing quite an uptick of investment in new renewable generation. We’ve seen a billion dollars invested by private generators this year alone. They can see that there is a huge growing demand for electricity. As we move away from fossil fuels, we decarbonise our economy and there is that growth pathway for electricity. I think over $1 billion of investment puts pay to that assertion.

What we also know is that—and moving on to another question that was asked around solar—it’s actually dry-year storage that will unlock the real potential of some of our more intermittent renewable sources, such as wind and solar, in New Zealand. The fact that we can have that ability to release from a pumped hydro system will mean that we can see more of an uptake in wind and solar. Wind is a very proven technology in New Zealand. I don’t think we have enough data on solar and the potential in a number of permutations, and that is exactly why we have invested the $28 million into getting data through trials on our Māori housing and our public housing stock. Some of it will be stored in batteries, some of it will go direct to hot water, some of it will be a solar array that generates for a community rather than individual houses, but I do note that we’re still learning a lot about different capacities for solar at different latitudes in New Zealand.

So, for example, I opened the Halfmoon Bay School solar array recently, and that’s performing at 20 percent ahead of the projections for the solar activity you’d get at those latitudes. So we’ve got more data that we need to learn and that we do need to make sure that we’re understanding the full potential, because intermittent renewable sources will definitely be a large part of our decarbonised pathway. But we need to make sure that we have good renewable storage solutions set up there as well.

Hon JULIE ANNE GENTER (Green): I thank the Minister Megan Woods for that contribution again and those answers. Another debate that keeps coming up in this House is around gas and whether the Government’s decision last term to stop issuing new permits for exploration offshore for oil and gas has contributed to the issues with gas production this year. It’s my view that there’s no way these things are related. The Government has, of course, issued new exploration permits for oil and gas onshore. So that really does beg the question of whether the industry and the Opposition members in National and the ACT Party are just going around, you know, trying to draw some relationship where there is no relationship.

From the Greens’ point of view, given that the International Energy Agency—I’m not sure if the members in the National and the ACT parties have ever heard of this agency, but it is the world’s premier energy agency—came out in May 2021 saying point blank that Governments have to stop exploration for new gas, coal, and oil and new developments or extensions to gas, coal, and oil if we are to have any chance of meeting the commitments that all countries made to keep global warming under 1.5 degrees Celsius above pre-industrial levels. In other words, the International Energy Agency is saying that from 2021 Governments should stop development and exploration for not just coal but also oil and gas, because it is not mathematically possible to have a stable climate and increase the supply of fossil fuel production.

Would the Minister care to comment on that and whether or not it is possible to respond to climate change and ensure a healthy, stable climate for our future and to continue oil and gas exploration, not to mention the fact that, indeed, there is no relationship between a decision to discontinue exploration for oil and gas offshore and the current issues with production and gas that are affecting fields here in New Zealand right now?

BARBARA KURIGER (National—Taranaki - King Country): Thank you, Madam Chair. To the Minister: given it is likely to be at least a decade before a pump hydro project is built, if it is built at all, and that New Zealand has experienced in the last 12 months an electricity system that’s lost resilience from reduced gas production, has she received any advice on potential imports of liquefied natural gas (LNG) to New Zealand over the next decade? Following on from that question: has she set aside funding or requested officials to do any work on the potential to import LNG into New Zealand? A third part to that is: has the Minister received any advice on the economic cost and greenhouse gas emissions of importing that, and how would this compare to utilisation of potential gas reserves right off the coast of our own country?

Hon Dr MEGAN WOODS (Minister of Energy and Resources): Thank you, Madam Chair. I do actually now have that data about the percentage of coal in our electricity system: 10 percent of that is there.

In terms of the role of gas going forward, I think the assertions that decisions that we made—the Government under the previous term—to end the issuing of new offshore exploration permits has had any impact on what we’re seeing with production problems off a couple of gasfields, I would remind members that, actually, to bring a field to production takes far more than 24 months. They still would be exploration permits, so they’d be a long way from being production permits. In fact, the Advertising Standards Authority found that to be a false assertion during the election campaign and ruled against some political parties using that as a line.

The assertion that often accompanies that is that there hasn’t been any investment in our current fields and that that’s part of the problem. Well, actually, we’ve had over $1 billion worth of investment since we made that decision, and there is quite a sprightly spring season in terms of bringing rigs planned for this year.

So I think we’ve got an important debate ahead of us as a country, and I just ask all members of this House to base that debate in fact. I think we’ll be far more served as a nation.

Then, we had a series of questions from the National Party energy spokesperson which were talking about the lost resilience of the electricity sector because of the failure of fossil gas to deliver that security of supply that we need in a dry year. What I would point out to the member is that, actually, we’re back now, in terms of our hydro lakes, to 99 percent in the southern system; 99 percent of historical average across—no, actually, 103 percent in the southern system; 99 percent across the whole country.

But we will keep experiencing dry years, and this is just why we’re investing in that feasibility study around pumped hydro. I would have liked to have seen us start that work a decade ago. We would be in a much better position as a country if previous Governments had taken decisions that it was obvious were going to be required under agreements that they’d signed up to around climate change commitments—that we would have had to have looked at ways to decarbonise the storage of energy in this country—but we have done that.

There was a very specific question from the member, too, about whether or not I’m receiving advice on importing liquefied natural gas. No, I’m not. I’m aware that the Gas Industry Co. is currently looking at that, but that’s not something that we’re considering.

Health

CHAIRPERSON (Hon Jenny Salesa): We will now move on to the Estimates debate on health.

Dr LIZ CRAIG (Chairperson of the Health Committee): Thank you, Madam Chair. It’s an absolute pleasure to, as chair of the Health Committee, provide an overview of the health Estimates hearings for this year. Health is an incredibly busy sector. There’s a lot going on, and the total appropriations for Vote Health this year were just under $24.4 billion. Within that, the Minister of Health is responsible for the appropriations of just over $23.5 billion, and also the Minister for COVID-19 Response is responsible for the multi-category appropriation called National Response to COVID-19 across the health sector, of $894 million. So what we did is we had separate hearings this year from the Minister of Health and the Minister for COVID-19 Response, and so today’s debate will focus on the non-COVID appropriations, with the appropriations relating to COVID-19 and managed isolation and quarantine being covered in another debate.

So, basically, we had a whole range of discussions in our Estimates hearings on health, and that included the upcoming health and disability sector reforms, funding and the roll-out of mental health services, quite a bit of discussion around cost and volume pressures for DHBs and primary care. We talked about cyber-security, we talked about improving health outcomes for Pasifika communities, and we also talked about capital and operating expenditure, and how we can fund some of that—you know, our buildings and infrastructure. We also talked about progress on the New Zealand Upgrade Programme. We also focused on some of the new spending that we’re going to be looking at in terms of expanding cancer screening—HPV screening for cervical cancer, for example—extra funding for road and air ambulance services, establishing an Aged Care Commissioner, and also extra funding for Pharmac.

In the time available, I’d like to just go into a bit more detail on a couple of those, starting with the health reforms. As we know, in April this year, in response to the Health and Disability System Review the Government announced reforms of the health sector. This includes disestablishing our 20 DHBs and establishing two new entities: Health New Zealand and the Māori Health Authority. As many are aware, Health New Zealand will assume a lot of the functions of DHBs, taking over their contractual arrangements and their assets, and also assume functions of the Ministry of Health. The Māori Health Authority will lead the commissioning of Māori health services and co-commissioning services which significantly impact on Māori. So we heard that Budget 2021 includes $486 million over four years to implement these reforms, and that not only includes cost of restructuring but also includes the commissioning of some services. When the Minister was talking to us, he was talking about the fact that establishing these structures and looking at the respective governance and decision-making arrangements would need to be rolled out over a four-year period.

Some of the Budget is for the Ministry of Health to establish these new entities—Health New Zealand, Māori Health Authority—and some of the associated functions, but there’s also some other spending: for example, for Health New Zealand, some funding to pilot the local network planning approach that sits and underpins those health reforms, and also funding over four years for the Māori Health Authority. The Minister talked about how Tā Mason Durie is leading the steering group of Māori leaders and having discussions within Māori communities about how the Māori Health Authority might operate. He also gave examples of, for example, screening campaigns for cancers that disproportionately impact Māori as an example of where the Māori Health Authority could advocate for policy that addresses disparity for Māori.

Some of the members that were present asked, given that we’ve got a big piece of work in terms of the health reforms but we’ve also got equally big pieces of work around rolling out the response to COVID-19 and the vaccination programme, whether we could do both together. Certainly what the Minister responded with is that he’d had extensive discussions with the Director-General of Health and with the Ministry of Health, and he believed that we could be doing both simultaneously—particularly given that we’ve got additional resourcing in Budget 2021 to assist with that. We also had a lot of discussions around mental health services, given the increasing demand for mental health services across the country, and discussed the funding of a number of various programmes. There was a range of other issues that I’ve highlighted in the beginning of my speech, but what I will do is leave my colleagues in the Health Committee to ask the Minister further questions in these and other areas. Thank you.

Dr SHANE RETI (Deputy Leader—National): Thank you, Madam Chair. It’s a pleasure to speak to the Estimates, which were held on 9 June 2021, and I’d like to thank the Minister for joining us today. I’m going to pose questions across five domains, a few questions in each. The first will be around health restructuring; the second, older people; third, dental; fourth, a question on Vote Health; and a fifth around Pharmac.

I have three questions in the first area, then, around the health restructuring, which is what we discussed at the Estimates, which I’d like to pursue further. The first is, he’s received at least two papers identifying transition risks in the health restructuring—my question is: what are those risks? What risks have been identified? The second question I have is: what are the indicative staff numbers for the Māori Health Authority, Health NZ, and the Ministry of Health in the restructuring? And my third question in this tranche is the costs in Vote Health were $486 million for the health restructuring, but in a written parliamentary question a few days ago we find another $60 million in the maternity health budget for health restructuring. So my question is: when we add up the total, not just the $486 million line item, but also these tens of millions in other places, what is the total number for the health restructuring? Thank you.

Hon ANDREW LITTLE (Minister of Health): Thank you, Madam Chair, and I thank the member for his questions. Just in relation to what he describes as two papers on transitional risks, with every transition, with every reform, of course, there are risks. That is about making sure that the machinery of Government is geared up to get through the legislation, the policy advice, and then the implementation, and there are always risks around implementation. There’s issues of capacity, capability, and competence, and we need to be alert to do those so that as we embark on the reforms, we are making sure that those factors are taken account of, that we manage the transition process in a practical, pragmatic sort of way.

I’m very satisfied with the progress that has been made, the advice that has come to me for ongoing decisions, and the advice that is being provided to Cabinet as we reach the various milestones. The next major milestone will be the announcement of the governing boards of both Health NZ and the Māori Health Authority, who will then be charged with making sure those organisations are set up. There’s always the risk that extant issues such as the COVID pandemic cause further delay. If there is a further outbreak that requires a further lockdown, then that would have an impact on it as well. But at the moment, there is no factor that is bearing upon the implementation of the reforms.

The second question related to indicative staff numbers, and I know the member has raised this question before, including in written parliamentary questions. We know that when Health NZ is established, because it will be an amalgamation of the current district health boards, plus relevant staff from the Ministry of Health, actually its workforce will be in excess of 77,000. The current DHB workforce is 77,000. So it’ll be that, and then whatever sort of transfers in relation to the ministry. In terms of the Māori Health Authority, it would pick up some people out of the ministry and they will pick up some people out of the DHBs, actually. But I can’t give a particular figure, and until that board is in place, the interim board is in place, and they have an interim chief executive and they start the detailed planning about their organisation and how it wishes to operate and where we will be located, how it will be structured—that will be a matter for them.

They have a budget for the initial phase. Their budget, I might add, also includes some commissioning funding, and that’s roughly $100 million. They will do some initial commissioning as they get kaupapa Māori services expanded and further under way. And then they will be also setting up their co-commissioning arrangements with Health NZ. So I can’t be more specific about that. But we will have a Health NZ and a Māori Health Authority workforce that reflects the needs of a modern health system delivering equitable healthcare for Aotearoa New Zealand, which we don’t have at the moment.

Dr SHANE RETI (Deputy Leader—National): Thank you, Madam Chair. I’ll put two questions together. One, in the domain of older people, the $385 million annual GP check that was cancelled. My question is: are the funds from that retained in the older people domain as a whole? We know the aged-care commissioner, I think, may have about $8 million, so that talks to part of it, but what happens to the rest of those funds? Do we have some sort of commitment that that whole $385 million is retained specifically for older people as it was in the original proposal?

My second question is around dental mobile. The campaign promised that there would be 20 mobile dental caravans this year. They are not in the Budget; they are absent. How do we explain that? What are the consequences of that?

While I’m on my feet, I’ll actually just deal to a few other questions. I’m interested to know if he received a letter from the Director-General of Health in December, talking about cost reductions—or, more specifically, “managing downward cost pressures”—and whether items such as reducing specialists at provincial hospitals were raised, whether reducing the eligibility for aged-care residential and for disability was raised in that letter from the director-general.

And the last question that I’ll ask, which actually covers all of the domains I was looking for, is around Pharmac. I’m looking for a guarantee that children who are currently receiving unfunded cancer medicines from Pharmac, and are receiving those medicines administered in the DHB system, that they will continue to receive their cancer drugs administered in the DHB system; newly diagnosed children with cancer, I’m looking for some reassurance that they will continue to be able to have the medicines that Pharmac will not fund, at least administered in the DHB system. Thank you.

Hon ANDREW LITTLE (Minister of Health): I’ll deal with the last question first because that has been dealt with before and I’ve been very clear that children’s cancer treatments that are currently provided will continue to be provided. Pharmac is undergoing a review, that review is not complete, and they have been very clear that children receiving treatments at the moment will continue to receive whatever treatments they are receiving.

If I go back to the first of his four questions in that slot, in relation to the money for the senior GP check, advice was very clear that that was not a well-targeted or efficacious spend of taxpayer money or health money, and so that particular policy was not proceeded with. We know that one of the major problems we have in our health system at the moment is inequitable access and health outcomes. So we are not going to fund more policies and programmes that just add to the inequity. We’ve committed to an aged-care commissioner. In terms of the additional funding provided to DHBs this year, obviously they are negotiating their contracts with aged residential care, so there is an expectation that more will be spent in that sector as more people take up that form of care and the DHBs pick up a large chunk of that cost. So money is continuing to go into elder care or senior care. That does not change.

In relation to mobile dental clinics, no, we did not fund mobile dental clinics in this Budget, but this is a Parliament of three years. We are the Government; we have two more Budgets to go. So I invite that member to watch this space.

Finally, in relation to any letter from the director-general, I do not recall receiving any letter from the director-general advising on any of the matters that he referred to. I know the member is desperate to demonstrate that a draft of the letter that was provided is important; it wasn’t. I didn’t accept it. I sent it back. There has been no such letter as he indicated from me to the Minister of Finance. In the end, it is not draft letters that matter; it is the one that is actually sent. The one that was actually sent is the one that is reflected in the Budget that we have got.

Dr Shane Reti: Yep, you received it. It’s in your thinking.

Hon ANDREW LITTLE: Well, the member says, “It’s in the Minister’s thinking.” It clearly isn’t, because I sent it back, because it is not part of my thinking. But I understand when you’re Opposition and the polls that you have now, you’re desperate for anything. But the reality is this: when you compare this Government’s funding record on health in the nearly four years it has been in Government to the nine years of the previous Government, what you see of this Government is considerably more investment not only in operational spending but in capital spending as well, because the reality is that we have inherited a public health system that has been so badly run down, so badly served by the previous Government, we’ve got a major catch-up job to do. I’m very pleased with the progress we are making. I wish it were faster, but we are making progress and good things are happening.

Dr TRACEY McLELLAN (Labour—Banks Peninsula): Thank you, Madam Chair. We heard from the Minister of Health about—as my colleague Liz Craig said—the appropriations that weren’t related to COVID-19. The most significant, I think we would all agree, was the reform of the health sector. In April 2021, in April of this year, the Government announced significant reforms to the health sector in response to the Health and Disability System Review. Now, its proposed changes include disestablishing the 20 DHBs, as we’ve heard, from July 2022 and establishing two new health entities, both Health New Zealand and the Māori Health Authority. So when we think of Budget 2021—as my colleague across the House, Shane Reti, said—it included around about $486 million over four years to implement the health sector reforms. So I’m wondering whether the Minister can talk a little bit more, or provide some more detail, about how performance of that appropriation will be assessed; and, specifically, what are some of the kind of key milestones in the implementation plan that’s been agreed by Cabinet. And, I suppose, more grassroots-wise, specifically bringing it home, what can ordinary New Zealanders, everyday New Zealanders, expect to see over the remainder of this term in relation to those appropriations?

Hon ANDREW LITTLE (Minister of Health): I thank the member for her questions. I think, in addition to the $486 million to implement the health reforms, which includes funding for the transition unit and also for the Māori Health Agency and Health New Zealand—when those organisations are set up on an interim basis, the member might also be aware, in addition to that amount of money, there was also $380-odd million appropriated for a significant IT upgrade of the health system. In fact, there has been further funding of about $116 million for another part of the IT system that processes the 90 million payments that get made out of our health system at the moment. So what we’ve also discovered is that, in addition to rundown hospital buildings, a workforce that is stretched, and a workforce that is short of what it is needed, we’ve also discovered IT systems that are simply not up to the mark. So we have to fix all of that.

When we came to the reform process—as a consequence of the Health and Disability System Review report that we published at the end of last year that followed a very thorough analysis of the system; extensive consultation with communities around New Zealand; and a very close, considered study of our health system—it’s very clear that change was warranted. Change is needed. We’re not getting the benefits that we need in our health system when it is disaggregated across 20 different legal entities. And it is no criticism of anybody in that system, at the leadership level or otherwise. In the end, people respond to the structure they’re in and the environment that they are in, but the reality is technology has changed; the population is changing. Our health performance is revealing that we are simply not keeping up with health demand. And where people get health is changing as well. So we have to change the way we make health decisions. That’s what the purpose of this is.

We have the opportunity now to get the best across the various 20 hospital systems that we’ve got. And, for that matter, to ditch the worst. We have the benefit of scale, and that is going to be a real help when it comes to building the workforce and planning long term for the workforce. We will have all that.

In terms of implementation of those reforms, as I’ve said before, considerable work is being done. The next major milestone will be the announcement of the governing boards. That will happen in the next couple of months. Those interim boards—they’ll be interim organisations set up—their first task is to appoint a chief executive, an interim chief executive, whose job then is to start building the team that is needed to provide the leadership for those organisations. There will be engagement with the sector later this year and in the early part of next year as those interim bodies start to lay out what they’re doing, what their plans are. There’ll be an intensity of work, I think, from the beginning of next year in terms of systems, in terms of personnel, in terms of preparing for the cutover.

We’ll be working very closely with existing workforces across the DHBs at all levels to make sure that they are kept clearly informed about what is happening, but also what is expected. Where there are opportunities—because they will arise before the cutover date of 1 July—for people to pick up roles and provide that leadership, that will happen also. Then we’re looking at 1 July as, effectively, the cutover date to the establishment of a permanent Health New Zealand and Māori Health Authority. Of course, in the meantime, there’ll be legislation to pass. I expect that to be introduced to the House again in the next couple of months or so. That will go through the usual process and my expectation is that will be passed by the end of April next year. Then we will have a very clear path to the commencement on 1 July next year for the two organisations and the revamped Ministry of Health.

Of course, that’s not the end of it, because the reality is this is a significant shift for the entire public sector health workforce. So it’ll be two, three, four years of bedding in processes, procedures, workplace culture—which is going to be very important in establishing the leadership of those organisations. I have to say, everywhere I get around, every visit I make to hospitals and healthcare workers, everybody sees—in spite of the pressures that the system is under at the moment, they are truly excited about the opportunity that the reforms offer and they are looking forward to seizing those opportunities and making an even greater difference than they do at the moment.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): Thank you, Madam Chair. Tēnā koe e te Minita. The current mental health system has been deeply rooted in Western science and it continues, like I said in my maiden speech, to keep my people sick. We know that New Zealand’s health system fails Māori. We can see this significantly in the staggering statistics that Māori are overrepresented in. The Ministry of Health figures show there were 31.7 suicides per 100,000 Māori males in 2016, more than twice that of the non-Māori male rate of 14.3 per 100,000. The rate for Māori women was 10.1 per 100,000 in 2016, which was just over double the non-Māori female rate of 4.9 per 100,000 people. Our mental health statistics are getting worse and they’re getting worse because the health system is rooted in Western science and built on identifying the “killer Ds”: disease, dysfunction, deficits, and disorders. Mental health funding is based on volume. The more sick people there are, the more money the Crown health agency rewards itself with, therefore, the “killer Ds” will guarantee your place in the funding banquet to feast on the disease, dysfunction, deficits, and disorders caused by this Westernised science model.

Māori have been conditioned to believe, through the Westernised science model and messaging, that we can’t cope with life and we as Māori cannot fix our own problems. That has led us to believe that we can no longer turn to our whānau, our natural support systems. As a result, we have been colonised into undervaluing our own systems rooted in mātauranga Māori, our power to create our own oranga. This solution is in Māori models of care like Whānau Ora, who received no funding in this latest Budget. This is backed by a massive body of research that supportive relationships and networks, motivation, fostering and building pre-existing skills and resources, focusing on strengths, connecting with whānau, having high hopes and expectations, and being helped with a plan tailored to their needs are the key ingredients necessary for someone to overcome their struggles. These key ingredients are what make up the kaupapa of Whānau Ora. Why? Because it is rooted in mātauranga Māori. From experience, I have witnessed amazing shifts in the confidence of our whānau through focusing on these areas. Therefore, all the Māori mental health funding should be devolved to a by Māori, for Māori approach to Māori kaupapa, like Whānau Ora, to ensure effective, enduring, caring, and inclusive Māori models of care which are rooted in mātauranga Māori. Thank you, Minister.

Hon ANDREW LITTLE (Minister of Health): Madam Chair, thank you. I thank the member for his contribution. And, I think, what I take from that intervention is what we know is that there is a lot in mātauranga Māori when it comes to health that we are not acknowledging, respecting, and putting into practice to the benefit of Māori. That is why the Māori Healthy Authority will not only have an essential role to play in leadership of kaupapa Māori health but also be implementing it as well, having the power to fund new ways, new services alongside the many kaupapa Māori health services that are being funded at the moment.

That is about respecting—I think, what I’ve observed as I’ve got around is those Māori health practitioners who have that amazing skill of fusing. They impart their Western knowledge but with their mātauranga Māori, as well, and create very powerful and very effective solutions for their people. So, I think—not I think, but there will be huge opportunity for that. When I get around and I meet the Māori health leaders, there is amazing talent ready to be harnessed and ready to make their contribution and make their place in our broader health system. That’s just about recognising that when it comes to the human condition and humanity, there is no single way, and for those for whom both a scientific, a medicinal, and a spiritual response is required, then they’ll have the opportunity to have that and have all that woven together for a much stronger response and, in the end, for the benefit of all Aotearoa New Zealand, a much stronger health system, overall.

SIMON WATTS (National—North Shore): Minister, I’ve got two areas of questions that I want to go through: one around workforce and the second aspect around infrastructure. I have three questions in each of those areas.

The first is on workforce. In regards to the conversations we had through the Estimates process, how much in the Budget will specifically go to engage new healthcare workers, given the increase in workforce crisis, and has he been discussing this issue with any other Ministers?

Our second question: has he asked the Minister of Immigration to expedite residency processes for the thousand or so registered doctors and nurses who are currently in limbo in the residency queue, and if not, why not?

Lastly, we covered in Estimates the ambulance operations. What I’m interested in is whether he has received any briefings or correspondence from ambulance emergency service operators about staffing shortages in their sector?

Hon ANDREW LITTLE (Minister of Health): I thank the member for his questions. In relation to how much is in the Budget for new healthcare workers, can I just say this. First of all, in the last three years, this Government has funded an additional 3,000 nurse positions—that’s just nursing—and there is a range of other additional clinical roles that the Government has funded as well. But the reality is, as the member identifies, that there are vacancies, and when it comes to the nursing workforce, we know there’s roughly, across the DHBs, 1,450 nurse vacancies. Those roles are funded, but they’re not filled, and so the challenge is not so much getting additional funding; it’s actually getting on with filling those roles.

There’s a bit of a vicious circle there too, and I suspect—and not just “I suspect”, but some of it will have to do with pay. That’s why the pay equity claim is so important, and getting that into the next phase, which is negotiating it and then getting that concluded and in place, and the conditions. So we know that the hospitals, in particular, have been under extraordinary pressure, partly because of the shortages of workforce, and then the shortages of workforce relate, for some who used to work there, to just how unattractive it became. We’ve got to address all of those things, and we’re going to address those serious workforce issues.

In terms of building that future pipeline of work, we have funded, in terms of the mental health funding, the longer-term work of additional clinical specialists. That work is under way, and we continue to work with the training providers to make sure that we are supporting that future pipeline.

In relation to the immigration issues the member raises, and I have had the discussions with the immigration Minister to make sure that the ability to get healthcare workers and healthcare specialists across the border is as easy as possible. The reality is, with COVID19, it will arrive—it is very difficult. But when you look at the exemptions granted to non-residents and non-citizens, of those coming across our border, 43 percent are healthcare workers, from your senior clinical specialists to a variety of others.

For those who are already here but who are wondering about either renewing their visas or trying to get residency, that is a piece of work under way right now, and, again, I’ve made my representations to the Minister of Immigration. We need to hold on to those that we’ve got, and I have had contact from many in that situation who are waiting patiently, who are doing an amazing job, and who we all understand that we need to make sure we have a very clear pathway for, and I’m confident that we will.

In relation to ambulance operations, the most recent advice I’ve had was actually in relation to the negotiations with the ambulance service and the road ambulance service providers, so that is under way. We’re renewing their agreement for a period at the moment, and then we’ll kind of review generally what is needed. But we continue to support those ambulance service providers, including providing support outside of budgeted appropriations. So in each of the last couple of years, we have provided top-ups to make sure that those services have attracted the people they need to fill the gaps that they’ve got and provide the high-quality service that New Zealanders expect of their road ambulance services.

Dr GAURAV SHARMA (Labour—Hamilton West): Change is never easy, and, especially when it comes to health, it’s quite difficult. I just wanted to say to the Minister in the chair, Andrew Little, that we know that until the legislative changes are passed, the Ministry of Health and the DHBs will retain all existing statutory functions, powers, and accountabilities. How does Budget 2021 help DHBs to maintain and improve performances during this transition period?

Hon ANDREW LITTLE (Minister of Health): Thank you, Madam Chair. I thank the member for his question. The member is right: the existing DHBs continue to be responsible for and accountable for the funding that they get and the services that they provide, and we will continue to ensure that accountability through the usual annual planning and expectation setting process, and that is well in train. The DHBs have their budget allocations for the current financial year. Their annual plans are coming back now—they’re not all in yet, but many of them are—and so they’ll be examined in the weeks to follow and they’ll be finalised and signed off.

We know that the big challenge is reining in the deficits. Pretty much every DHB has a deficit—some are significant and some more manageable. All DHBs are showing a willingness and, indeed, are demonstrating their keenness to rein in deficits for this financial year, because they understand that their legacy as the current governors and stewards of those organisations and their part of the health system is what they leave to Health NZ in terms of a well-functioning, well-operating, efficient, and financially responsible health service.

So that’s where we need it to get to. The Ministry of Health continues to work closely with DHBs, not just on financial performance but on clinical and other organisational performance too, because that remains crucial even as we’re going through this transition and as we head to 1 July next year.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Chair. I have questions regarding mental health, and, in particular, the Government’s response to the mental health crisis that is facing New Zealand. Two years ago, the Government committed an extra $1.9 billion for mental health over a five-year period—$235 million was allocated to building new mental health and addiction facilities—but we know that only five new beds have been delivered. So my question is: how many new mental health and addiction facilities are in the process of being built, and how long will it take for them to be built?

We also know that more funding, or more money being put aside for mental health, doesn’t necessarily guarantee improvements in people’s care. I would like to know, from the Minister, from the extra $1.9 billion that’s been set aside, how much of this is being analysed as to its cost effectiveness? Do we have any details on whether the mental health service wait time has been decreased because $1.9 billion will be set aside? Do we know whether there’ll be increased access to new services because this money has been set aside? Has there been a decrease in suicide attempts because of this money being set aside? What actions will the Government actually take to make sure that we have more accountability and transparency in where this money is going and whether it’s being spent, when we’re being promised that it’s being set aside to help solve our mental health crisis?

My last point I’d make is that the Mental Health and Wellbeing Commission released its first report, Mā Te Rongo Ake, and it looked into the response to He Ara Oranga, which was from the mental health inquiry. It listed that out of 36 of that inquiry’s findings, on a scale of one to six—one being the lowest; six being the highest—that the Government’s response has only got a one or two out of 23 of those recommendations. I would like to know whether that is the transformational mental health delivery that we were promised, or whether it’s a lack of that delivery. Thank you.

Hon ANDREW LITTLE (Minister of Health): I thank the member, again, for her question. Just taking her points seriatim: she talked about the $235 million for facilities, and then says that only five extra beds have been delivered. So let me just disabuse her of one thing, that the $235 million allocated to either completely rebuilding or upgrading five facilities, that work has been commissioned, the planning and design is under way, but no construction has taken place.

So the five additional beds relates to the work that DHBs do from one year to the next to add capacity, or, in some cases, to reduce capacity. So if the member looks at the data over the last few years, she will see that, actually, bed capacity for mental health wards and mental health facilities fluctuates from one year to the next. Where we’re trying to get to with the new facilities is facilities that offer much greater flexibility, because there is fluctuating demand. You want to have facilities where there is enough space to do the kind of projected, business-as-usual demand, but when there are spikes, that there are spaces that are flexible enough to be able to convert into therapeutic spaces where people can be located. But that is where we’re going with those upgrades.

The member raises a very good question about the time it takes for capital works in the health system, and this is a matter of considerable frustration for Ministers, as it is, indeed, for patients, their families, and many others. But this is the system we’ve got at the moment. If you look at the last significant mental health facility that was built, it was commissioned in 2016 and it opened for business last year—no, in fact, I think it was 2015. So it was a five-year period. Myself and the Minister of Finance are driving work with the Ministry of Health at the moment to accelerate the time it takes to get capital projects that have been committed to, to actually get them built. I’m confident we will get there. So we’re working very hard to get those facilities built, because the need is there. Some of the facilities that are being replaced are kind of contrary to good therapeutic principles. So we need to get those changes as quickly as possible.

The member expressed concern about whether there is enough analysis going on to, effectively, the efficacy of the spend. I can say, when you look at what has been spent, of the $1.1 billion that is the Ministry of Health’s responsibility—that includes the $235 million capital spend. When you look at, for example, the money committed for the Access and Choice programme—so that’s the additional services provided for those with mild to moderate mental health issues—we’ve added 520 fulltime-equivalent roles across our health system. In May, they delivered 20,000 sessions to more than 10,000 people. So those are additional services. They were services that were not available and not being delivered before; they are being delivered now.

Without the benefit of a systematic review, what I can say is the feedback from all quarters is those services are making a big difference. There will be a review, because there always is, of effectiveness of spend. That will, no doubt, look at the impact of new services. Whether it’s possible to say that those new services have had an impact on, for example, attempted suicides, I’m certainly not qualified to say that, and that might be a matter that might be reviewed at some point in the future. But in terms of actions for accountability, I would have to say that the $1.9 billion appropriation is probably the most examined and scrutinised appropriation in Health that there has been for a long, long time. So there is a considerable degree of accountability being demonstrated about that. That is good; it ought to be scrutinised. We have had longstanding major problems in our mental health services, and I am very proud to be part of a Government that has really taken the bull by the horns, actually stepped up to really take seriously the need to make significant change to our mental health services. It’s a pity that it couldn’t have been done before, but this Government is doing it now. These things take time, but there are good things happening, and positive changes happening.

PENNY SIMMONDS (National—Invercargill): Thank you, Madam Chair. Minister, I have a small tranche of questions within the disability support area. Within national Disability Support Services funding, does this include any change in the $75 per day respite care payment? And if not, does the Government think it is acceptable for people who provide this respite care to be paid significantly under the minimum wage at just over $3 an hour for a 24-hour period? Is the Minister aware of how constraining that it is for families trying to secure respite care? Finally, in this tranche, are there any specific interventions planned within the disability funding to ensure equitable health outcomes for people with disabilities—given, particularly, the shortened life span of people with disabilities? Thank you.

Hon ANDREW LITTLE (Minister of Health): Thank you, Madam Chair. I thank the member for her questions. What I can say to the member is that Budget 2021 provided an additional $399 million over four years for Disability Support Services. That is just to meet cost pressures. So we know that there is a significant need out there.

I’m not familiar with the arrangements for respite care. There are many different forms of respite care and many services providing respite care for those who need it. What we are determined to do is to make sure that the regime we have in place for disability support is not sort of pigeonholed as a health issue. The message I’ve very clearly heard from the disability community is that they are members of the community. They have a range of needs. One of those needs is health, but they require other social supports and psychosocial supports and what have you as well.

That is why, when we came to consider the Health and Disability System Review report, it didn’t go too far in relation to disability support services. Myself and the Minister for Disability Issues, the Hon Carmel Sepuloni, commissioned a further piece of work, which is looking at the future governance arrangements for disability support to pay respect to the very clear message we’ve heard from the community about their wish for a much better focused and much more representative level of leadership over the Government’s support that is provided to that community. So that work is under way. It’s due to report in a couple of months’ time. I’m looking forward to that, and I think the member can expect that there will be a new generation of leadership support for that critical area of support that the Government gives to that very important community.

SIMON WATTS (National—North Shore): Thank you. I want to ask a couple of questions on infrastructure. First question: is he confident no DHB patients are currently being seen in buildings that have been deemed unsafe to occupy? Second question: North Shore Hospital recently had a significant power outage. It interrupted clinical procedures—official information I’ve collected shows that it was caused primarily by ageing infrastructure—so is he confident that the Budget has enough funding to address critical infrastructure gaps in district health boards? Lastly, what additional hospital bed capacity is included in the Budget to deal with demand in the future, such as when COVID will be managed within our communities?

BARBARA EDMONDS (Associate Whip—Labour): I move, That the committee report progress presently and move to consider the Reserve Bank of New Zealand Bill.

Motion agreed to.

Progress to be reported.

Bills

Reserve Bank of New Zealand Bill

In Committee

Debate resumed from 29 June.

Part 2 Reserve Bank of New Zealand (continued)

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to the Reserve Bank of New Zealand Bill. When we were last in committee on this bill, we were considering Part 2, the debate on clauses 8 to 111, and Schedule 2 and Part 2 of Schedule 3, which provide for the continuation of the Reserve Bank of New Zealand. The question is that Part 2 stand part.

NICOLA WILLIS (National): Thank you, Madam Chair. I’m rising to speak to a Supplementary Order Paper (SOP) in this section of the bill and to commend that SOP to the House. The SOP is in the name of Andrew Bayly; it is SOP 46. What it seeks to do is to reflect the fact that the activities of the Reserve Bank can cause fiscal risk for the Crown—that is, the Crown could have huge amounts of money expended by the Reserve Bank within the current framework that is before the House, as we speak. It’s National’s view that the Minister has a legitimate role in managing those risks and that that can be balanced against the Reserve Bank’s requirement for operational independence.

What Andrew Bayly has put forward in SOP 46 is a quite tidy framework, I think, in that it picks up and mirrors very exactly the framework for foreign reserves management that already exists in the Act. This is a proven mechanism and one that has met the tests for balancing that need for accountability and also that need for operational independence.

What it seeks to do is have the Minister and bank agree on a framework for how capital and financial risk management will occur, including things like, for example, the minimum levels of capital that must be held, the optimum levels of capital that must be held, and the ceiling levels of capital that the bank should maintain. Of course, the reason for this is that we don’t think it’s in the interests of any Minister of Finance to have the Reserve Bank able to put the fiscal position of the Crown at significant risk by incurring huge amounts of expenditure, for example, that were not expected by the Minister. So my question for our Minister of Finance is whether he would give consideration to this SOP, and, if not, why he thinks that the capital and financial risk management framework shouldn’t replicate that found elsewhere in the Act for foreign reserves management.

I’d point out here that this isn’t a completely novel approach. If we look at the United Kingdom, there is a statutory memorandum of understanding between the Treasury and the Bank of England, and that includes a target level for the bank’s loss-absorbing capital as well as principles for determining which monetary policy or financial stability operations should be undertaken on the bank’s balance sheet and which should be indemnified by the Treasury. In the UK, that approach is seen as reinforcing the bank’s independence and resilience and providing greater transparency to the finances, therefore reinforcing the stability of the financial system. I would ask the Minister why such an approach as set out in SOP 46 shouldn’t occur in New Zealand.

Hon GRANT ROBERTSON (Minister of Finance): I thank the member very much for her questions. Essentially, this comes down in many ways to a philosophical position here about the way in which the operational independence of the bank can be protected whilst Parliament and indeed the Government is in a position to be able to, effectively, set a framework. So what the bill now does is give a control for the Minister to set financial boundaries and, within those boundaries, for the bank to continue its operational independence. That gives the Minister a reasonable say, I would say. That happens after we consult with the bank.

That power in the Supplementary Order Paper would weaken the Minister’s power to set those boundaries by requiring us both to agree on those, and then unbalance the independence equation. So I like the clear separation that we’ve achieved through the bill as it stands, where I decide the boundaries as a Minister and the bank operates within them, rather than muddying the waters of that transparency and independence.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair, and thank you to Minister Robertson for responding to that issue. I think I’d just like to take a little bit of issue with that response, which I didn’t find incredibly compelling, but I’m sure that the Minister will warm up in time.

I think there’s two issues at play with regard to setting a financial framework for the bank. The first one relates to how the bank is funded. The second one relates to the nature of expenditure that the bank may get into and undertake. I accept the need for independence around how the bank, if it’s funded adequately, should be empowered to be able to go and do what it does in the best interests of New Zealand. So there is no issue around the bank independently spending what has been allocated to it, but there’s the issue—and this bill strikes at the issue—of what is the appropriate framework for the bank to work within.

I think—as my colleague Nicola Willis quite rightly pointed out—this is not an unusual thing. First of all, the Australian and the Canadian Reserve Bank equivalents have similar arrangements that are a lot more crystal clear in terms of what the bank is able to do and what types of liabilities it is able to accept. Also, the Bank of England is operating under a similar mechanism.

I think the key point, Minister, is the focus of the legislation is only on setting a minimum capital level. The proposition I’ve put to you previously—and, again, I’ve tried to set it out very clearly in the bill—is that there is sophistication around the types of activities that a bank should be able to undertake and that are actually happening even now with current arrangements, with swaps, interest rate arrangements, and—heaven forbid, if we’re trying to do this for 30 years—setting up a bank with a new structure for 30 years, which you’ve previously talked about, and then there are a whole range of sophisticated financial instruments. Simply, this bill does not cater for those adequately.

So my question is: why wouldn’t we be doing what other established reserve bank frameworks in operation around the world are doing? Why are we so special, and why are we so simplistic in our approach? That’s the key difference, I think, we have between this bill and the one that’s been proposed in the Supplementary Order Paper.

Hon GRANT ROBERTSON (Minister of Finance): Again, I come back to my opening statement to Nicola Willis, which is that in many ways, this is a philosophical point. I note the member’s media release from earlier today accusing me, as the Minister of Finance, of variously involving myself too much in the affairs of the bank. This is, in fact, an attempt to make sure that we have a process by which parameters can be set, but that the bank can work within those.

The Supplementary Order Paper (SOP) that the member is proposing potentially could see a framework agreement going into a lot of detail that I am not sure actually is useful for the bank’s operations or for the level of accountability that the member wants to do. For example, are we talking about what kinds of instruments or securities the bank might acquire. Is that the kind of thing that member wants us to be discussing, because if it is, the level of detail required for that, I think, is disproportionate to the value that we would gain from the kind of arrangement that SOP 46 requests. So again, I repeat, it is my view that setting out an ability for the Government or the Minister to be able to have a level of fiscal control but have the operational independence has served us relatively well in this context.

In terms of the member is question around other jurisdictions, there’s a variety of arrangements, and I understand the point the member is making—that the Bank of England has a particular style of this—but we have always had our own arrangements, and they’re the ones that work for us best. We look around the world and we see what works for us, but there are a variety of arrangements for how this is done.

ANDREW BAYLY (National—Port Waikato): So, just to be clear, can the Minister just tell me exactly what are the arrangements or parameters he can place on the bank, because as I understand it, minimum capital is the key requirement. But if there are others, it would be nice for him to highlight those.

Secondly, what are the requirements or imposition he can place on the Reserve Bank if they do get into contingent liabilities, derivatives, etc.? Does he have the ability to place any restriction on those?

Hon GRANT ROBERTSON (Minister of Finance): Within the broad boundaries we can make some decisions about what we feel comfortable with. When it comes to the types of securities or the types of arrangements the bank might make within those boundaries, then, no, those are their decisions.

ANDREW BAYLY (National—Port Waikato): I think the Minister is being pretty unclear, so let me just be very clear: what boundaries can the Minister set under the current bill to manage derivatives and contingent liabilities? They are, in fact—

Hon Grant Robertson: I’ll come back to the member on that question.

ANDREW BAYLY: OK, good.

DAMIEN SMITH (ACT): Thank you, Madam Chair and Minister Robertson and my colleagues. It is interesting that the Green Party hasn’t really got a view on what’s happening here. We talk about a climate change emergency. Well, we consider there is a monetary and fiscal emergency going on as well. Mr Bayly’s point is quite relevant in the sense that, just looking at debt to income restrictions—this morning’s announcement—the UK’s got an example of five times and we’ve got an example of 10 times floated out today, and, let’s be brutally up front here: this is a new regime, right? The original bill from the 1980s—it may be a philosophical argument, but we don’t know whether we’ve got a New Zealand Motor Corporation construct here or a McLaren, and I think the country deserves a McLaren in terms of where and what it should expect from the Reserve Bank bill.

Let’s be pretty clear: Gareth Vaughan was correct in the sense that the Reserve Bank of New Zealand is being moved into the international regulatory system, and yet we don’t actually identify or even admit that there’s other organisations around the world that now shape and form our policy. So the philosophy is extended to the International Monetary Fund, and it’s an oversight for our system not to reflect on where the world is going in those regulations.

One of the concerns that we’ve had is just that this bill isn’t modelled enough and considered enough and hasn’t had enough public scrutiny to satisfy the next 30 years of what we think is an important consensus. In that sense, we didn’t actually get a consensus across the parties, and I think it’s absolutely essential that we reach some common ground in terms of more than just a philosophy but the actual detail and frameworks around the management of this bill.

I mean, as an example, in the old days, you had monetary Government policy which was very much fixated on interest rate control, and it’s sort of raising its head again as being the genie that has now got out of the bottle, and yet where in this bill is inflation linked to interest rate control? Or there is no actual mention of inflation, full stop—I think I’ve got that correct, Minister?—and around the philosophy of price stability, you would argue that that has to be frameworked and included in this bill. Also, we think that the remit has politicised the Reserve Bank and its organisation even closer to Government policy, and we believe that that should be actually reversed.

So the actual wellbeing of New Zealanders is going to be affected by this bill and its framework. Inflation is distorting the economy now, and it’s going to hurt everybody, from elderly people on fixed incomes to young people as well.

But the major concern we have is the slow erosion of the bank’s independence. We don’t believe that it can actually be just simply conceptually based. It has to have a rigorous framework, it has to have a set of understandable rules so that we can make sure that our international parties are sound about investments and risks that they take in this country, and also individuals and citizens are certain, as well, about the risks that it can achieve. We believe that the free market—the sustainability of the entrepreneurship of New Zealand—is at the very core of this bill, and, in that sense, we believe that the Government needs to act more reasonably in its construction of this bill and that it should be taken back and more work done on it.

One final point that we from the ACT Party believe is that a change to the monetary policy and fiscal policy relationship has become something of a political football, and it’s affecting—[Time expired]

Hon GRANT ROBERTSON (Minister of Finance): Thank you, Madam Chair. Just to respond briefly to Damien Smith’s points, and then the specific question that Mr Bayly asked.

In terms of the broad sweep of Damien Smith’s comments: firstly, we covered this somewhat exhaustively in Part 1 of the bill, which is that this is the product of a long period of consultation—the bill, that is—and that it has been through several rounds of that, as well as the select committee process. I agree it would have been preferable to have had consensus on it, but the Government continues to believe that the changes we’re making are important and have had a significant amount of and opportunity for public input.

In terms of the very specific point the member made about not mentioning inflation, just to be aware that section 8 of the Act has never done that. It’s always talked about price stability and so it’s never used the word, particularly. It’s important that that is understood by everybody involved in the way in which the Act works to mean inflation, but we haven’t changed that element of the language in the previous Act or, indeed, in this bill here.

In terms of Mr Bayly’s question, in terms of the clarification I sought for clause 205A—in particular, subclause (2)(c)—the ability to set out the Minister’s expectations as to the bank’s financial risk management would cover the material in the issues that the member is concerned about. So that would be in the hands of the Minister of the day to make that decision, and also we can define capital via subclause (2)(a). So my view is it strikes the right balance. I respect the fact that’s not the member’s view, but we do think it’s got the right balance of us being able to set parameters as a Government and have the bank operate independently.

Hon GERRY BROWNLEE (National): Well, it’s interesting the Minister essentially concedes there that there is a philosophical difference between those of us who are not in favour of this bill and the Government pushing it. The Minister says he reserves the right—the Government reserves the right—to be able to put through legislation that reflects the position that they take. What is at the heart of this bill, though, is the question about how much control the Government should have over the Reserve Bank, and I think one of the things that is interesting, if you look under Part 2, under the bank’s objectives, they’re clearly stated there as the economic objectives, the financial stability objective, and the central bank objective, and each of those has got a clear statement about what the bank should be doing. Of course, we’re going to have a board now that will be sitting over the bank if this bill is passed, making sure that those are the objectives that are covered. However, if you go to subclause (2) of clause 9, it states: “However, if an Order in Council is in force under section 121, the economic objective or objectives that apply under subsection (1)(a) are those that are specified in the order.”

Now, the problem with debating part by part is that we have in the next part, Part 3, provisions that give life or cause question around the bank’s objectives. So if you go—if you will indulge me, Madam Chair—to that in order to make sense of what I’m about to ask the Minister, clause 121 says an “Order providing for different economic objective or objectives”. So on the one hand, we have a bill that sets out in Part 2 very clearly the objectives of the bank, but then in Part 3 it makes it very clear that there could be an Order in Council passed which changes those objectives. Then clause 121 goes on to say that “only 1 of the objectives specified in section 9(1)(a) (instead of both);” could be part of that. It goes on to say, “1 or more new objectives in addition to or instead of either or both of the economic objectives specified in section 9(1)(a)” could be part of that.

So what we’ve got is a situation where it appears, and I’d like the Minister to—he’s smiling away there because he thinks that he’s got a perfectly reasonable explanation. I hope he does, but I hope it’s not just, “Well, we think this is a good idea and we disagree with you.”—not you, Madam Chair, but, in fact, the Opposition. But the question is: why would we have a part in the bill—Part 2, “Bank’s objectives”, under clause 9—clearly stating what those objectives are, but then we’re immediately putting in caveats that say that those objectives may change according to the will of the Minister? If the Minister’s got an explanation for that, I think it would be useful for the House to know it, and I’d also like to know, if it is all perfectly reasonable and quite simple, why does it need to be there? If there is a board and the Governor-General appoints the board on the recommendation of the Minister or Cabinet, then why do we have to have this other provision in there that would turn the bank’s head away from the stated objectives in the front part of the bill, because that’s effectively what it does. I know that we can’t at this stage in the debate talk too much about Part 3—

ASSISTANT SPEAKER (Hon Jacqui Dean): No—no you can’t.

Hon GERRY BROWNLEE: —but it is impossible to ignore the fact that the bill is skilfully written to provide the explanation for clause 9(2) in Part 2 in a part of the bill that is much further down, some 50-odd pages away from where we are currently supposed to be debating.

I think it’s a bit of a problem if we can’t get some clear explanation at the moment as to what would be expected to go into those Orders in Council that might be brought down. The question is: what is it that the Minister foresees that might make it necessary for any Minister to bring down Orders in Council that would change the objectives of the Reserve Bank? That, effectively, is what is stated here. It’s stated very clearly that “the economic objective or objectives that apply under subsection (1)(a) are those that are specified in the order.”—in other words, changed.

Hon GRANT ROBERTSON (Minister of Finance): To answer Mr Brownlee’s question as to how this ended up here he’s going to need to pick up the phone and call David Caygill and Roger Douglas, because these effective clauses have been in the Act from the time it began, with the odd word change here or there over the years, as the way in which, for example, monetary policy set has been changed. This bill isn’t changing that, and the clause that he refers to—and, Madam Chair, given the member did it, I’ll also do it. The clause that then is part of Part 3 that the member refers to has not been used, to my knowledge, in the time that the Act has been in place, but it has always sat there for the possibility that there might be a set of circumstances that arise that the Government of the day considers it needs to do this: a crisis of some description; an issue that needed to be dealt with, be it runaway inflation or whatever it might be. It’s not something I, as a Minister, have proposed; it’s been in the Act in one form or another since 1989.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I just want to go back to that answer the Minister provided before. I think there are three questions. The first thing: is he suggesting that a contingent liability is a capital item?

Hon Grant Robertson: No.

ANDREW BAYLY: Well, I think that’s what he was implying. So is a derivative a capital item?

Hon Grant Robertson: Clause 205A(2)(c): “set out the Minister’s expectations [of] financial risk management.”

ANDREW BAYLY: So I looked at clause 205A(2)(c)—so, if he’s clear that he sees a contingent liability as a—because, you know, that’s what derivatives have. They’re interest rate swaps, and, by the way, you’ve had to appropriate $3 billion to cover the hikes—the expected costs—of all the large-scale asset-purchasing arrangements to cover the interest costs. These are real things, so, if he’s implying or stating that a contingent liability or a derivative is a capital item, then I accept his argument that under clause 205A, it is covered. But I don’t think that’s the definition of a derivative, because a lot of those things—even under tax laws, some might be classified as capital and some might be classified as income. That’s why I think the proposition that the Minister has been putting forward is actually wrong, because, in fact, a lot of those instruments aren’t deemed capital.

So even if I did apply his second response to my question, which is that it could be covered under clause 206, when I look down the list in clause 206 that the Minister referred to under the funding agreement, there is no explicit mention of anything to do with contingent liabilities or derivatives, which is the exact point of what I included in our Supplementary Order Paper, which is the level of direct or contingent liabilities the bank can incur, and other matters relating to instruments or securities that the bank may acquire or hold and which may pose a risk for the Crown’s financial position. So that’s my point. It’s a point of definition, and I want the Minister to be very clear that he thinks a derivative is a capital item, because if he doesn’t and if it isn’t, then his argument falls away and there is a glaring gap here.

Hon GRANT ROBERTSON (Minister of Finance): I don’t accept the member’s point. What I have said from the beginning—and this is now me repeating this for the third time—is that the approach being taken here is the same one that we’ve taken with the bank over many years and in a number of different parts of its operation to set the parameters and then have the bank operate within those parameters. There is scope in clause 205A to be able to both define capital but also set out expectations around the bank’s financial risk management. I accept that the member wants a greater degree of control or involvement in that—I accept that point. What I am saying, as I come back to my very first intervention, is that there is a philosophical difference there.

ANDREW BAYLY (National—Port Waikato): OK. Thank you, and I appreciate the Minister responding. I suppose the issue, if you go back up a level, with the large-scale asset purchase scheme that the Reserve Bank put in place and has just finished last week, does he accept that if the bank hadn’t come to him as the Minister of Finance for an indemnity, could they have done that, and it would be refreshing to know from the Minister how much the bank has actually gone out and spent. I think it’s in the order of about $60 billion, so it’d be interesting to get the response on that.

Hon GRANT ROBERTSON (Minister of Finance): Madam Chair, we’re probably getting a little away from the discussion on the bill, and the member is asking me for my opinion. The reason I smiled at him when he asked that was that was, in the height of COVID, one of the conversations that we had. It was whether or not the bank could carry us.

Andrew Bayly: Why didn’t they put it in under the legislation?

Hon GRANT ROBERTSON: Hang on, yeah—whether the bank could carry us. Ultimately, the discussion we had—and I take advice on indemnity matters from Treasury, as the member would understand. Ultimately, the view was that for the overall financial stability and security of New Zealand, an indemnity was justified in these circumstances. But that, to me, doesn’t—I don’t feel the need, given the way that was resolved, to alter this clause to be able to deal with that.

Again, we’re not going anywhere in this discussion. You either want the parameters set and the independence inside it, or the member wants more control, which is interesting given that his colleague was accusing us of taking more control here. This is a clause that maintains the independence of the bank but gives the Minister the say over the parameters. I believe that’s the right approach.

RACHEL BROOKING (Labour): Thank you, Madam Chair. I move, That the question be now put.

ANDREW BAYLY (National—Port Waikato): Look, I won’t perpetuate this argument, because we’ve got another four Supplementary Order Papers to work our way through, but it’s interesting that the Minister didn’t answer the question. I think, if you go back to the original proposition, Minister Robertson, you said that you wanted to create a lasting piece of legislation that would extend over 30 years. I think the very extent of what we’ve just talked about—COVID actually may occur again in the next foreseeable future, or a different version of it. We’ve had the Asian crisis, we’ve had so many crises over the last 30 years that this is actually something to be expected and should be anticipated in the bill, and if you hadn’t had that agreement, why wouldn’t we put that into a bill, knowing what you’ve just been through? That’s the key, crucial point.

The second point, and I will just say there is a difference between controlling what the bank does—and no one, even from our side, believes that we should be getting into how the bank performs its role. This is about putting in a financial framework, which, as the Minister of Finance, you have overall responsibility for the Government’s balance sheet, and it can have—

CHAIRPERSON (Hon Jacqui Dean): Order! Order! No—don’t bring the—

ANDREW BAYLY: The Minister has overall responsibility for the Government’s balance sheet, and some of these matters, particularly as we’ve seen with large-scale asset purchase, is a considerable impost on that and it can lead to a huge increase. Yet the Minister seems intent on allowing the bank to just be able to do that under any circumstances.

Hon GERRY BROWNLEE (National): I wonder if the Minister of Finance might elaborate a little bit—I’m speaking to Mr Bayly’s Supplementary Order Paper (SOP) and the importance of it—on why he needed to go to a recent appropriation of some $3 billion to cover the sorts of activities that Mr Bayly’s SOP should, at least in some part, prevent. Was the Minister not able to tell us why he sought a $3 billion appropriation?

Hon Grant Robertson: That’s not in the bill.

Hon GERRY BROWNLEE: But it is a matter that relates directly to the SOP that Mr Bayly has got on the Table. Mr Bayly has highlighted in his SOP a potential funding problem for the bank. We know that the Minister has taken that action of seeking a $3 billion appropriation to cover such events that have occurred in the bank, and for the Minister to say, “Well, it’s not part of the bill.” is absolutely correct—the $3 billion is not part of the bill. That’s straight out of the pockets of the New Zealand taxpayer to cover the sorts of events that Mr Bayly is trying to prevent with his SOP and which have occurred in the bank.

It seems odd that we could have a Reserve Bank Act, or a new Act of Parliament coming in to govern the Reserve Bank, that doesn’t cover off the potential for these sorts of losses, which, of course, fall on the New Zealand taxpayer. So perhaps my question was the wrong one. Is there any way that the Minister is able to confidently tell the House that the sorts of issues that are being raised by Mr Bayly will not cost the New Zealand taxpayer in the future?

Hon GRANT ROBERTSON (Minister of Finance): We have now covered this matter extensively over the last few contributions. I’m being clear for Mr Brownlee: what the bill currently does is give the Minister the ability, through clause 205A, to set a minimum level, or direct the bank about a minimum level of capital, and set expectations as to the bank’s financial risk management. The way in which we were able to manage the issue of the large-scale asset purchases was via an indemnity that the Government put in place because we believed it was in the public interest to do so. That is a way of managing the risk.

Mr Bayly wants to manage risk in a different way by setting up a capital and financial risk management framework through a process that we’ve covered in earlier interventions that I don’t actually necessarily think will achieve what he wants it to do. I think that we can have confidence that the arrangements we’ve got in place in the bill can protect us in the situation as Mr Brownlee has raised, and, indeed, we have managed it through a similar process and the indemnity process. So I don’t believe that we are adding great value by the proposal that Mr Bayly has put in place, but I respect and understand it.

I see what Mr Bayly wants to do here. I’d argue, Mr Brownlee, that it’s actually the opposite of what you were saying before. This is actually a greater level of involvement from the Minister in the affairs of the bank, not a lesser one.

CHAIRPERSON (Hon Jacqui Dean): Members, the time has come for me to leave the Chair for the dinner break. The House will resume at 7 o’clock.

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

CHAIRPERSON (Adrian Rurawhe): Ka te rā, tēnā rā tātou katoa. Members, the committee is resumed. Before the dinner break, we were debating the Reserve Bank of New Zealand Bill, and we are on Part 2.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. Nice to have that little break. We’re now back into it, Minister. So this time we might talk about the second of my five Supplementary Order Papers (SOPs), SOP 47—the criteria for board appointments—and it’s very relevant in terms of recent conversations we’ve been having around Air New Zealand, Minister.

My SOP basically says that given that this is New Zealand’s premier financial institution in terms of oversight of the financial sector in New Zealand, it is essential that we get the right skill set on the board, and at the moment, we have this weird process in the bill. It’s incredibly prescriptive about why you can’t be appointed to the board, such as if you have a criminal record or all those sorts of mind-blowing things, so that if you were even thinking of putting your name forward and you actually fell within the trap of one of those, you shouldn’t have been considered anyway.

To be appointed to the Reserve Bank is something that very few people will have the opportunity to do. It is a complex operation that the Reserve Bank runs. It needs to be run independently and it needs the skill sets to do it.

So the SOP, essentially, says that there are four key parts of what the Reserve Bank does, and we need to make sure that amongst the skill sets within the Reserve Bank board, why don’t we be very specific about some of those as opposed to obliquely referring to suitable skills? Namely, the skill sets are financial stability—because, after all, as the Minister just noted before the dinner break, that is the other term of, basically, saying “inflation”, and so it’s having a good understanding of what are the aspects you might run to ensure financial stability. Prudential regulation: this is how banks operate—the framework they operate, the capital adequacy framework, and all that sort of thing. Macro-prudential tools: again, you’ve just announced today, Minister, that you’re going to—and I’m talking about the Minister here. The Minister is going to allow the Reserve Bank to look at debt to income restrictions. There is also crisis management and resolution.

We just think it’s absolutely essential that we be clear on what are the skill sets of board members, and I’d just very much like to understand from the Minister why he is not prepared to be that explicit about the skill set. It doesn’t mean that people can’t go on for other reasons, and we expect that there will be a diversity on the board and all those other good things. But why not be very clear about what the board should have in its skill set, as opposed to saying why you can’t be on the board?

Hon GRANT ROBERTSON (Minister of Finance): I thank the member for his questions and for putting forward his Supplementary Order Paper 47, but I genuinely don’t think it’s needed.

So if we track this through, clause 28—or, actually, it starts at clause 24 with the board’s role, the membership of the board, the method of appointment, the criteria for recommendations, qualifications, etc., etc. The critical clause for the member’s concern that he’s just raised is clause 28(2), which says, “The Minister may only recommend a person who, in the Minister’s opinion, has the appropriate knowledge, skills, and experience to assist the Bank to achieve its objectives and performance functions.” Those functions are, in turn, listed in clause 10(1) of the bill, and those functions are “to act as the central bank for New Zealand, … to act as a prudential regulator and supervisor”, and it goes through all of those things, all the way from paragraph (a) through to paragraph (j).

So all one needs to do is refer from clause 28 back to clause 10 of the bill, and all of the things that the member is concerned about—and, in fact, more than the member is concerned about—are covered. It is a reasonably normal form of drafting to be able to suggest what we want the board members to do, but the functions are outlined because they are functions for the Act and they are, therefore, functions for the bank. So the member need not be concerned about that.

On his concern about what you do when you don’t want someone on the board, again, these are very familiar clauses that are put in place in these kinds of bodies where you are appointing a board and you want to make sure that there are reasons why someone shouldn’t be on it. The reasons why someone should be on it are in clause 10.

ANDREW BAYLY (National—Port Waikato): Thank you. See, this is what I find fascinating, because the Minister says, “Oh, that one little statement—that covers it all.”, but we can have in clause 30 all the reasons why you can’t be on the board: a person who is a member of the monetary policy committee, an employee or a subsidiary of the bank, someone who’s an undischarged bankrupt, someone who is prohibited from being a director or promoter, someone subject to a property order, someone who’s incapacitated, someone who’s involved in a crime of dishonesty, someone who’s been convicted within the past five years. So it just goes on relentlessly on why you can’t. The one thing that’s missing is it should be saying that you can’t be a politician, but that’s not even on it.

So that would be the first part, if you wanted to go down to clause 30, Minister. But the view that you might take as the Minister of Finance may be different from the next Minister of Finance, and why not be absolutely explicitly clear about the minimum requirements of what should be the requirements for someone sitting on that board?

If the current Minister’s interpretation is one that he wishes to place weight on certain aspects, which may be wider diversity or whatever it may be, as opposed to making sure we’ve got a majority of core skills—because this is now an executive board. This is no longer just a governance board. This is an executive board that has to actually deal with really meaty problems and actually think about and understand macro-prudential policy and monetary policy very well, and all the interlocking things that go—maybe the insurance industry. We haven’t even put that in the list here.

Key parts of the functions—how do we know even the weighting that the Minister might even put on these? All we’ve got is one statement, which says, “The Minister may only recommend a person who, in the Minister’s opinion,”—gee, depending on who that is—“has the appropriate knowledge, skills, and experience to assist the Bank to achieve its objectives”. That is such a floater of a statement.

What Supplementary Order Paper 47 suggests and what I suggest is that you should at least set a minimum requirement of the expertise and at least some of the skills that you want on that board, because, potentially, if you lost the plot, Minister, we could end up with a range of people on this board—an executive board of the Reserve Bank—that actually may not be appropriate at all.

NICOLA WILLIS (National): My colleague’s Supplementary Order Paper (SOP) 47 sets out very specifically the skill sets that, in National’s view, a person appointed to the board of the Reserve Bank of New Zealand should have. I first want to refer to the Minister’s comments earlier in which he said, “No, no. There’s no need to specify all of that, because what I’ve done in the Act is I’ve simply required that in the Minister’s opinion, the people appointed should have appropriate knowledge, skills, and experience to carry out the functions of the Act.”, and then he’s referred us to clause 10, which sets out the bank’s functions.

Now, this is very important. I want to put this into the Hansard because I want us as a Parliament to be able to refer back to this in future when one day, potentially, a Minister makes an appointment to the board of someone who does not actually, in the view of many, have the appropriate knowledge or skills or experience to exercise the functions of the Reserve Bank, who hasn’t had a career in which they’ve developed a strong understanding of what financial stability is or how to do prudential regulation, who can’t demonstrate experience in macro-prudential policy, or who hasn’t been involved in crisis management and resolution, because if that happens—if it is the view of many that an appointment has been made that doesn’t meet those skills—what the Minister is encouraging us to do is to read into what the Minister is required to do, back into clause 10, the bank’s functions. This could potentially be an issue that the courts would review.

So my question for the Minister is: is it his view that the courts, in judging whether the Minister has appropriately exercised his power, should therefore treat clause 10 as a checklist of the skills that an appointee to the board should be able to demonstrate? If that is not the case, then it is very broad as to what the Minister’s opinion may or may not be, so I would ask the Minister to clarify that. I think it’s an important matter of interpretation and it is exactly why we have the committee stage—so that if this were ever to be an issue in the future, learned people of the court and lawyers could refer back to the Hansard and get a very clear sense of what the Minister’s expectation was in the drafting of these words.

I do want to point out why this is particularly important in the context of this bill, and that is that this bill replaces the single decision-maker, the Governor of the Reserve Bank, with a governance board, an executive board. That is a significant change that this bill makes. It gives that board responsibility for all financial policy decisions of the Reserve Bank. What that, in effect, means is that this board will be expected to have the sorts of judgment, skills, and experience that we have previously had captured in the person of the Governor of the Reserve Bank. So this board is to have significant power and it is our view, on the National side, that it is very important that the people appointed to these roles are appropriately skilled.

The current criteria for recommendations set out at clause 28, as my learned colleague Andrew Bayly has highlighted, do highlight lots of things that would disqualify someone from the role in huge detail—undischarged bankrupts, dishonesty offences, people who are directors or employees of regulated entities—but are quite vague on what skills they are required to have. It is our view that in exercising the functions of the Reserve Bank, board members will need to have technical competence, not just governance skill.

We have put forward a SOP which would set that out. I don’t think the Minister has anything to fear from it, but I would, as I said earlier, invite him to comment on how he would expect a Minister—who, of course, could in the future be not this Minister, but a much, much better finance Minister from the National side. That Minister could choose to exercise their opinion, and would he expect them to exercise their opinion as to whether appropriate knowledge and skills were held, by reading into clause 10. If he could set that out for the Hansard, it would be very helpful.

KIERAN McANULTY (Chief Whip—Labour): I move, That the question be now put.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Motion agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 44 be agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Amendments agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendment to clause 9 set out on Supplement Order Paper 49 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendment not agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendments to Part 2 set out on Supplementary Order Paper 45 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendments not agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendments to Part 2 set out on Supplementary Order Paper 46 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendments not agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendment to Part 2, inserting new clause 28(2A), set out on Supplementary Order Paper 47 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendment not agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Part 2 as amended agreed to.

Part 3 Central bank functions

CHAIRPERSON (Adrian Rurawhe): Members, we now come to Part 3. This is the debate on clauses 112 to 167 and Part 1 of Schedule 3, which relate to central bank functions. The question is that Part 3 stand part.

MATT DOOCEY (Senior Whip—National): Point of order. Mr Chair, we’re in a bit of position here where the question was put before all the Supplementary Order Papers (SOPs) were discussed and debated. So we have SOP 48 in the name of my colleague Andrew Bayly, which is for Part 2. We’ve now voted on Part 2, and we won’t be able to debate SOP 48. My understanding is that—

CHAIRPERSON (Adrian Rurawhe): Yeah, I’m on my feet. OK, I accepted the closure motion based on my watching the entire debate—[Interruption] Excuse me? Have you got something to say?—and as far as I’m concerned, all members of the committee had ample opportunity to debate every single SOP as well the entirety of Part 2. We are now on Part 3. That part is over.

MATT DOOCEY (Senior Whip—National): Speaking to that point of order, Mr Chair.

CHAIRPERSON (Adrian Rurawhe): Are you taking a point of order? A new one?

MATT DOOCEY: Yeah, just speaking to that point of order—

CHAIRPERSON (Adrian Rurawhe): No, no. I made a ruling.

MATT DOOCEY: Is the ruling now that we won’t speak to SOPs?

CHAIRPERSON (Adrian Rurawhe): Are you taking a new point of order?

MATT DOOCEY: Well, I was speaking to that point of order.

CHAIRPERSON (Adrian Rurawhe)348CHAIRPERSON (Adrian Rurawhe): No, you made a point of order, I have made a ruling, that’s the end of it.

Hon GRANT ROBERTSON (Minister of Finance): Mr Chair, Part 3 of the bill takes us to the core functions of the Reserve Bank—

Hon Gerry Brownlee: Point of order. Mr Chair, what does your most recent ruling mean?

CHAIRPERSON (Adrian Rurawhe): I think the member’s been here long enough that questioning—

Hon Gerry Brownlee: I’m not questioning it.

CHAIRPERSON (Adrian Rurawhe): Can you let me actually make a ruling? You know the rules. I have made a ruling. By rights, you know, a member who is as experienced as yourself who then comments on that ruling is, he knows, out of order.

Hon Gerry Brownlee14Hon Gerry Brownlee: Point of order, Mr Chair. As you know, rulings like that become part of the Standing Orders of the House, so far as order is maintained and a debate is participated in by the members. Now, in most cases, we can go to Speakers’ Rulings or to the Standing Orders and we have, in those, adequate opportunity to consider exactly what those printed and published orders and rulings mean. This will be a ruling that now features in the Speakers’ Rulings 2021, but we don’t get that until the beginning of 2022. It’s not unreasonable for a member to stand up and say, “I accept that you have made a ruling. What does it mean?”

CHAIRPERSON (Adrian Rurawhe): I disagree with the member’s characterisation of what’s just happened. This is not a new situation. I have accepted the closure motion, the vote has been put, that’s the end of the matter.

Hon GRANT ROBERTSON: Part 3 of the bill today takes us to the core central bank functions of the Reserve Bank and outlines those in a way that is largely familiar to the legislation as it currently exists. It runs through the obligations of the Reserve Bank to formulate monetary policy. Obviously, it now does that through the monetary policy committee. That was a change made in the first of the three pieces of legislation that make up the reforms of the Reserve Bank that the Government has been working through this term and last term. It covers off the remit for monetary policy. This was the process that, in the last piece of legislation, replaced the policy targets agreement, which was formerly the way in which the arrangements between the Government and the Reserve Bank on monetary policy were set out. We now have a monetary policy remit for that purpose, and clauses 118 through 120 go through the content of that.

There was some debate on the question around whether or not a monetary policy remit, or amending it, requires an Order in Council. The advice, and the advice that I accepted and that the Government accepted, was that at the moment we have to have advice on the remit every five years, regardless of whether it’s been amended, and, essentially, that the Order in Council process was disproportionate to the substance of the remit, which doesn’t change statutory economic objectives. It also would mean that the remit had a different legal form depending on whether it had been issued by the Governor-General before the previous agreement expired or by the Minister of Finance afterwards. So rather than create a situation where there were two different ways in which a remit could be created, we’ve landed on the side of saying that the Order in Council process is not the best way to do that. There is a number of safeguards already built into the system, such as the requirement for the Minister to consult with the bank before amending a monetary policy remit, and, obviously, regular opportunities for Parliament and the Finance and Expenditure Committee in particular to review the processes of monetary policy. So our view is that that particular set of clauses, 121 through 125, are appropriate there.

The Act, as it has always done, obliges the bank to create a variety of reports on monetary policy. Then, Subparts 3 and 4 and 5 are all the bread and butter, day-to-day work of the bank as the controller of money in our system, and so that covers foreign exchange, currency, and banknote handling machines. And then, finally, Subpart 6 of Part 3 is the obligation that the bank has to produce financial stability reports—that it has always had.

This is a fairly functional part of the Act, one that covers off what I think most people would think of when they think of what the bank does. One or two amendments have been made to it, but, by and large, it covers off the material that we would expect to see in a Reserve Bank Act.

ANDREW BAYLY (National—Port Waikato): In the context of monetary policy, I think it’s very important we talk about the issue of the inclusion or deletion of the word “efficiency” in the remit. I think it’s very important, Minister Robertson, that we recognise that there is a role that was previously set out in the Act that, in promoting the stability of New Zealand’s financial system, it should also promote efficiency in it. That was part of the original remit. Under this new arrangement, “efficiency” is going to be deleted, and as the Minister very clearly knows, this was not widely supported and was certainly opposed by the banking sector, because by removing the word “efficiency” from the monetary policy intent, what that means is that there is no counterbalance towards just making sure that not only do we have a financial system that is stable but we also have no requirement to make sure that it operates efficiently. That’s why the banks in particular were very much opposed to this.

There are real trade-offs in terms—

Hon Grant Robertson: Point of order, Mr Chair. The matter of the question of the inclusion or not of “efficiency” was in Part 2 of the bill. Part 3 simply sets the process around the remit. So we’ve actually already dealt with the matter that the member is raising.

Matt Doocey: Speaking to the point of order, that’s exactly the point I was trying to raise earlier when we had Supplementary Order Papers that hadn’t been debated in the House—

CHAIRPERSON (Adrian Rurawhe): I’ve ruled on it. I have ruled on that matter, as the member well knows. You should sit down. The member needs to link what he has said about Part 2. I’m not going to rule it out, but he should make it relevant to Part 3.

ANDREW BAYLY: Thank you, Mr Speaker. Well, I think the issue of efficiency is paramount, because we are talking about monetary policy statement here and the operation of it, and part of that operation and how it’s applied is at the crux of this issue. Removing the requirement of efficiency from that is actually quite a significant issue, particularly when it wasn’t supported widely by industry.

I think the big differentiation is when you think about the deposit takers bill. What’s going to happen is, by all accounts, this is going to be taken into account in that bill, which we haven’t yet seen, this issue of efficiency, and that is the problem. Because in terms of the efficient operation of the Reserve Bank, we need a bank, in pursuing its objectives, to have regard for both maintaining financial stability and also financial system efficiency, and those, as I was saying before, are real trade-offs. There is no hook now on the Reserve Bank to have regard for, to take into account, how they manage that trade-off, because the bank will simply be no longer required to have regard for efficiency when it comes to implementing these issues that the Minister’s referred to. I think it’s a fundamental issue that should have been debated and needs to be debated as to why or not efficiency is no longer in there. What certainty can the Minister give us that in this subsequent bill, that no one has seen, we’re going to see adequate representation or consideration of that in the bill that’s to come forward into the House?

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. Part 3 is very important. In fact, Part 2 was important as well, and the fact that we seem to gloss over a number of parts in less than an hour for a reformation bill that is 30 years in the making, I think is an interesting approach—[Acting Minister for Emergency Management’s phone beeps] Is that something we need to be aware of? Do we need to evacuate the building? Is that a civil defence notification from the Minister?

Hon Kris Faafoi: You’re OK.

Hon MICHAEL WOODHOUSE: I’m glad to hear that.

I’m not sure I heard the Minister correctly, but it seemed to me, in his introductory comments, that he was sort of downplaying the significance or importance of the monetary policy remit. One of the concerns I have had with the framework of this bill and the degree to which we are moving away from the principles of statutory independence of the Reserve Bank from the Minister is that we seem to be going in two directions that are both sort of counter to that. One is the Minister is having a quiet, step-by-step level of influence over the Reserve Bank that I and my party are uncomfortable with, and yet a distancing of this House from that scrutiny as well.

So my first question, as we discuss the process of the monetary policy remit, and why he doesn’t feel that this place has any role to play—I think Mr Bayly’s Supplementary Order Paper requires it to be a confirmable instrument, which I think is an underused form of scrutiny in our democracy. Does the Minister agree that a monetary policy remit is a significant instrument and does have, potentially, quite far-reaching implications for the bank and for the way our economy runs? And, if so, is it not appropriate for this place to have some oversight, and potentially confirm it in the public interest?

Hon GRANT ROBERTSON (Minister of Finance): To repeat some of the comments I made in my introductory remarks, the issue we’ve got here is the initial and most regular way in which a monetary policy remit will be created—it will be created by the Minister signing that, issuing that, negotiating and discussing it, obviously, with the Reserve Bank at the same time. The issue is that when the monetary policy remit was first created, the issue of how to update it, the decision was made that well, perhaps an Order in Council could be used for that.

As I said in my earlier remarks, you then create two ways in which a monetary policy remit is created. It’s not a question of the oversight of the House per se, because, in fact, in the normal course of events, the way in which a monetary policy remit is created does not have that. It has to be aligned with the rules on how to create and what it contains, but in terms of the oversight of the House per se, it was in fact an anomaly to have the Order in Council process for when, you know, there needed to be an amendment to it.

There is plenty of opportunity for oversight, and the member, both as a Minister but also as a member of the Finance and Expenditure Committee, is well aware of the many opportunities that members have to ask questions about monetary policy. But the truth of the matter is that the monetary policy remit is an agreement between the Government of the day and the Reserve Bank on the way in which the Reserve Bank does its job in terms of monetary policy as outlined in this bill. So I think there’s a confusion about what the concern is here. If the concern here is around the way in which remits are created, actually, the normal course of events is not for the House to be involved.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. I thank the Minister for that response. I should make it very clear: my concern is not that this House has oversight over the Reserve Bank, my concern is that this House has oversight of the executive and the Minister of Finance.

That creeping influence that we are seeing by some of the changes in this bill does give me cause for concern. Not of the individual who holds that warrant right now—mostly, at the moment—but of future Labour Ministers of Finance who may not act in a way that’s consistent with the arm’s length. I want to know, actually, what changed between this bill being introduced—and, actually, I don’t think the recommended changes—if memory serves me, we weren’t able to have submissions on this point because the amendment that we are talking about only came through officials to the committee after the select committee submissions process had been concluded. So my question is: what changed? What was the problem the executive is trying to solve with the amendments that were confirmed in the second reading, but through which we seek to improve through Mr Bayly’s Supplementary Order Paper? Because it’s still not clear to me what problem we are trying to solve and why we are so concerned at the degree of oversight of the executive.

ANDREW BAYLY (National—Port Waikato): Oh, I was waiting for the Minister to stand up and answer that question, but—

Hon Grant Robertson: I’ve already answered it.

ANDREW BAYLY: Hmm. Well, interesting.

So I think my colleague just made a very good point—this was a late addition by the officials to grant the Minister the power to issue a remit without benefit of a consultation process. So therefore, we don’t really know how people in the banking sector, particularly, view this—other than what we’ve heard subsequently, and in an anecdotal sense. But I think the Minister’s response before is conflating two things: one is there is a normal remit process driven by the Reserve Bank to change, if they so wish, on a five-yearly basis. If it wants to change a remit it goes through a proper process that involves extensive consultation before it comes to the Minister. Now, that is set down, laid out, understood, and subject to wide consultation. The process for that is fine and we do not have an issue with that process because it is one that follows a prescribed arrangement or framework.

This Supplementary Order Paper (SOP) 48 in my name is dealing with the occasional use—and the Minister’s used it once, equivalently, under section 68B where the Minister chooses to make a change to the policy remit of the Reserve Bank. It is not subject to any outside consultation. It may be negotiated between the Reserve Bank and the Minister, but it’s not subject to any other outside consultation, and I’m not sure that it actually be subject to any select committee processes either. So what this SOP is saying is if that is the situation—and hopefully it’s used very sparingly—the Minister should still be entitled and able to do that if he or she so wishes. But if they use it in that extreme circumstance, then that change should be debated on the floor of this House. Because it’s extraordinary, it’s unused, and it’s not subject to any other oversight.

Now, the Minister says it will be subject to discussion with the next select committee. It may be, but as the Minister well knows, the select committees are controlled by the party in power and the opportunity to debate this may be actually quite limited. So what this bill has been very clear about is: if you want to do it, that’s fine—as the Minister, that’s fine. But make sure it goes through a parliamentary process. And what we are talking about is confirmable secondary legislation, which means it can be implemented quickly, but it just must be subject to debate on the floor of the House so it’s very transparent and everyone can see that the Minister made the change—because not everyone follows regulations and all that sort of stuff and knows exactly what goes on in Government. It’s explicit. It’s debated here. It’s confirmed and, obviously, the Minister from the party that controls Parliament and it will be passed. But at least people have the opportunity to debate it publicly on the floor of Parliament, which I think is the proper way to do this type of change to our most esteemed and significant financial institution in this land.

NICOLA WILLIS (National): I want to draw the committee’s attention to clause 118 of Part 3, the remit for the monetary policy committee, because it’s important, I think, that the committee understands that this part of the bill changed during the select committee process. As introduced to the House by the Minister, the bill required the Reserve Bank to provide advice to the Minister of Finance before the Minister could issue a remit to the monetary policy committee. As originally presented to the House, the bill required that we deduce—because it was believed that that would allow for a comprehensive consultation process that would ensure a well-informed monetary policy remit. The bill now, as the committee examines it, as reported back by the Finance and Expenditure Committee—on which, of course, there are a majority of Government members—provides for the Minister to issue a remit without first receiving that advice.

So this is a significant change. My colleagues have referred to the implications of this, have constructively provided an alternative mechanism which could be used to fill the gap. But my question for the Minister is: what is the reason for the change from the way he introduced the bill to the way it is now? Why did he see fit to remove that consultation requirement? If he could elucidate on that reasoning I think it would be very helpful, because this is a significant matter. The monetary policy remit, in many ways, is at the heart of what the Reserve Bank does. It has incredibly far reaching implications for the economy; for example, as amended by that Minister, it currently requires the support of the maximum sustainable employment level. There has been much debate about what that means and whether that has encouraged a more expansionary policy from the Reserve Bank, whether it has potentially allowed it to have lower interest rates for longer, and the ramifications of that. So it is a very significant remit. It has significant implications in terms of price stability and inflation levels. The change from requiring consultation to not requiring consultation is significant in that broader context.

I also want to highlight an apparent contradiction, I think, which is that clause 121 of Part 3 is quite specific in that it allows the Governor-General, on advice of the Minister, to direct the monetary policy committee to formulate monetary policy for one or more economic objectives for a particular period of time. So for 12 months, to say “Well here’s a particular thing you’re required to achieve over the next 12 months.”, and it gives the Minister that power. But tellingly in subclause (4), when the Minister exercises that power, he is required to make an Order in Council—the Order in Council is viewed as secondary legislation that is set out explicitly. I think it’s interesting that the Minister thinks that constraint is appropriate for that section, for clause 121, where he’s setting out a short term objective, but is not necessary for clause 118, in departure from how this bill was originally drafted, and I would invite his comments.

Hon GRANT ROBERTSON (Minister of Finance): The member has hit on the very point that I made in my first intervention here, and we discussed this with Mr Brownlee earlier on for the reason why clause 121 is how it is. And, as I said to Mr Brownlee earlier, in one form or another, clause 121 has existed in the Reserve Bank Act since it began, although not utilised. The point being that the appropriateness of the Order in Council process for this is because that is about the amendment of the objectives of the Act. So for a period of time not exceeding 12 months, you can actually, and have always been able to, amend the objectives of the Act. The difference for clause 118 is that is about the remit, which is the operationalisation of the way in which the Government of the day and the Reserve Bank give effect to the monetary policy aspects of the bank’s work.

As I said in one of my earlier interventions, a way of helping explain to members of the committee is that the monetary policy remit is effectively the new generation of the policy targets agreement. Bill English or Michael Cullen or Ministers before then all went about their business of negotiating a policy targets agreement with the bank and publishing it—that’s what they did. That is essentially the same process that happens with the remit. As I have already said in my earlier calls, what you end up then, with having the Order in Council process in addition to the normal remit process, is effectively two remits issued by two different people: the Governor-General or the Minister of Finance. Actually, the best place for the Order in Council process, as is appropriate, is at the objectives level of legislation, not at the monetary policy remit, which is the operationalisation element of it.

In terms of the other interventions that have been made, I’ll simply be repeating myself that there is ample opportunity for oversight of the work of the monetary policy committee through the Finance and Expenditure Committee, who do it every single time.

Andrew Bayly: That’s all.

Hon GRANT ROBERTSON: And, Mr Bayly, I again take you back to the fact that this is not what Bill English did with the policy targets agreement; there wasn’t a parliamentary moment for that. This is an arrangement between the Government of the day and the Reserve Bank Governor for how they are going to express the ability for the bank to go about its monetary policy work. That is how it has been; that is how it now is. There is opportunity for oversight. There is also the advice that the bank must provide on a five-yearly basis, and if the Minister is going to alter the remit, they have to consult with the monetary policy committee before doing so. This is the similar process we’ve had for a very long time. The anomaly was the introduction of the Order in Council process, which we now don’t deem to be necessary.

DAMIEN SMITH (ACT): With regards to efficiency, ACT believes we should be reinserting this concept. Fundamentally, it was based on making the Reserve Bank better. It would be a measure of how well the financial system performs its functions, thereby contributing to what we hope is a sustainable and productive economy. So it doesn’t make sense to me that there isn’t some sort of formulation reflecting efficiency in that sense. ACT believes that it should be an objective in itself, not merely an analytical consideration, and we’d just like to get your thoughts on that, please.

Hon GRANT ROBERTSON (Minister of Finance): This is in Part 2 of the bill. The objectives were covered in clause 9. Part 3 of the bill does not cover those matters. I’ve also explained that to the member in the debate we had not today but the previous time we were debating Part 2.

KIERAN McANULTY (Chief Whip—Labour): I move, That the question be now put.

Hon GERRY BROWNLEE (National): The last explanation from the Minister was good and what we would expect but not necessarily agree with entirely. But I just want to speak to clause 117 and the clause 117A. It talks about the bank’s functions “of implementing, in accordance with the Act, the monetary policy formulated by the [monetary policy committee].” It goes on to then, in 117A, talk about the bank is not required to implement monetary policy that is inconsistent with the financial responsibility duties. The question I’m leading to is: at what point does the Minister consider there might be the use of these almost contradictory arrangements inside the bill? Clearly, it’s a belts and braces - type arrangement. I think it would be good to get some explanation of it.

In clause 118, it says that the—well, firstly, 117A refers to the duty of the bank under clause 45, which, of course, we have debated, but to clarify for people: “The board must ensure that the Bank operates in a financially responsible manner and, for this purpose, that it [prudentially] manages its assets and liabilities.” It goes on with some other requirements that they must do. I’m just a little concerned about what would trigger a circumstance where it was considered that the work of the monetary policy committee was set aside because of some other circumstance that occurred within the bank.

It goes on to talk about clause 205A, which is, you know, one of the problems we have: that in order to understand 117A, we have to go through to 205A, which is a new clause, and it talks about the power of the Minister to direct the bank relating to minimum levels of capital and financial risk management. There are a number of other provisions in here that add to that, and in that direction, the Minister could set out expectations as to the bank’s financial risk management. What would have gone wrong in the system to get to this position? Why is it necessary to have it?

If you think about the way this is being structured, we’re going from a governor who has been pretty much all powerful—notwithstanding the points made by the Minister that there have been various provisions in the law for a long time that would allow some ministerial direction—to a point where we have the exclusive powers of the Reserve Bank Governor being shared, at least shared, by a board of people, and we’ve said who those people can’t be but not who those people can be, and then, of course, separate to that, the monetary policy committee, who are setting out that aspect of the bank’s work. So inside this much broader consideration that this Act is going to allow, what is it that the Minister can see might go wrong that would lead to a setting aside of the functions of 117 in accordance with the newly inserted piece of law or statute—not quite yet, but in the bill, the new proposal in 117A?

Hon GRANT ROBERTSON (Minister of Finance): I thank the member for his question. So this is essentially a clause in the bill that puts in place the operational requirements of having a board, and, obviously, understanding that there were concerns raised by members of the Opposition during the first part of the debate around the question of the role of the board and is it appropriate. But the board now has a series of responsibilities, and this is, I would say at the outset, a highly unlikely set of circumstances, but the advice that we were given was that it was important in order for the board to be confident about the hierarchy of their duties, essentially, that were the monetary policy committee to—and I repeat again. In the highly unlikely event they were to take a decision that would compromise the overall financial responsibilities of the board to run the bank—for instance, a balance sheet - related issue that would make it impossible for the bank to do its job—then this clause 117A then gives them the ability not to implement that decision if that were true. It is, and I want to stress, as the member himself has actually indicated, highly unlikely. It is the belts and braces that he mentioned before. But when one is establishing a board to have the oversight of the operations of the bank, this is a necessary measure.

Hon GERRY BROWNLEE (National): Simple question that arises out of that explanation is: why is it, then, that clause 205A empowers the Minister to do that and not the board itself?

Hon Grant Robertson: What clause, sorry, Mr Brownlee?

Hon GERRY BROWNLEE: Well, here’s our problem, you see. We’re debating Part 2—

Hon Grant Robertson: No, we’re not.

Hon GERRY BROWNLEE: Part 3. We have a very important clause, that I can see. And it might be technical, it might be belts and braces, but none the less it’s there and it should be considered. But the effect of the bank’s duty to comply with a direction given under 205A—so what the Minister has just outlined is that the board of the bank might determine that the monetary policy committee’s approach to things is not 100 percent, and therefore there needs to be a turning away from that. But the turning away from it is power of the Minister to direct the bank.

Hon Grant Robertson: No.

Hon GERRY BROWNLEE: Well, how’s that work? Why is it saying then that the direction is given under 205A if the board is unable, under clause 45, to exercise its duties?

Hon GRANT ROBERTSON (Minister of Finance): No, so—thank you. So I simply didn’t hear the number of the clause; that was the reason I asked the member for clarification. So again, what clause 205A does is allow the Minister power to direct the bank relating to the minimum level of capital and financial risk management. The matter we were debating earlier on with Mr Bayly, that would be a material matter in terms of whether or not the bank was able to meet all of its duties, and it would be theoretically possible that the monetary policy committee could take a decision that would impact upon an already agreed minimum level of capital, for example.

ANDREW BAYLY (National—Port Waikato): Yeah, I want to return to my Supplementary Order Paper (SOP) 48. I just wanted to say that not one member from the Government side has actually stood up and addressed or debated any of the issues of the five SOPs that have been put up. I make that point quite deliberately because in returning to this SOP, which would require the Minister, if he or she put in place a new remit, and it is at their discretion whether they did so, they would be empowered to do so, but it would only be subject to confirmable secondary legislation, which, effectively, means it would have to be debated on the floor of the House.

The Minister made the assertion before—look, in his case he would negotiate with the Reserve Bank board, because it is no longer, probably, with the Government there, it’s probably the board, and then make a determination without any outside consultation. That goes through the House, and, if I understand what he was saying before, that would then have the opportunity to be debated at the Finance and Expenditure Committee.

What assurance can he give—because I’m not sure he can, because there is nothing specified in the legislation or the proposed bill—that actually this would be properly debated, first of all, in the Finance and Expenditure Committee, whether that involved any third parties, particularly if the remit change affected a number of the banking sector, as an example, or perhaps some other organisations? And what is the opportunity in this House other than to ask questions of the Minister? Because, otherwise, we have a substantial change to the direction of the Reserve Bank, premier financial institution, and, basically, under this current arrangement, it all happens and gets done and dusted without any form of debate.

Hon GRANT ROBERTSON (Minister of Finance): I am literally repeating myself, but the monetary policy remit is akin to the policy targets agreement that has been and was in operation in the earlier life of this piece of legislation. That is an agreement between the Government of the day and the Reserve Bank Governor. The opportunity for scrutiny does come through the parliamentary process. The Reserve Bank Governor and the monetary policy committee’s decisions are debated at each and every term by the Finance and Expenditure Committee. The process of putting a remit together is clarified in this legislation. And this is, I think, the third or fourth time I’ve explained that to Mr Bayly that I don’t believe the Order in Council process is commensurate and appropriate with the remit; it is commensurate and appropriate with the objectives, therefore that is why that process is in there, but is not when it comes to the remit. I don’t think the change here is the characterisation that Mr Bayly has given it—it is simply just not correct.

NICOLA WILLIS (National): I want to change tack a little and talk about clause 151, which is about defacing bank notes. This is an interesting part of the Act, which the Minister has chosen not to change in this modernisation. I just want to ask him a little more about that, because I do remember being informed as a young person that it was, in fact, an offence for me to intentionally deface a bank note: to write on it, to rip it, any of that sort of thing. That is, in fact, the case in the bill we are debating here. I note—and for the purposes of all those who may be concerned that they have, in the past, written on a bank note and may now have broken the law and not been aware of that—that that offence does not apply if you have first sought permission from the Reserve Bank. But if you have committed the offence of defacing a bank note, you are liable on conviction to a fine not exceeding $2,000. So you could be fined for drawing on a bank note.

Now, the interesting case in which this could occur, of course, is the artist, who uses the $5 note in all its glory to create a mural or to do some such. The charity auction where someone signs a bank note and uses it for it. The interesting question I have for the Minister is why he thinks that should remain an offence. Because I think we can all understand that offence in the context of subclause (3), which says that if you are defacing or disfiguring the bank note and then intentionally using it to put in circulation or using it to demand payment or using it as a deposit, then that’s not quite right, and I think that’s fine. But did the Minister give any thought to the idea that defacing a bank note—if actually it’s only for your own personal use or it’s actually just for the purposes of raising money for a charity—and not intending for the bank note to be used legal tender in future should continue to be the case—should New Zealanders be very aware that if they write on a bank note tomorrow they are liable to a fine of $2,000?

CHAIRPERSON (Adrian Rurawhe): Does someone want a call?

Dr EMILY HENDERSON (Labour—Whangārei): I move, That the question be now put.

CHAIRPERSON (Adrian Rurawhe): If no one wants a call, I’m going to put the question. The question is that Andrew Bayly’s amendment to Part 3, inserting new clause 118(4) set out on Supplementary Order Paper 48 be agreed to.

Amendment not agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Part 3 agreed to.

The result corrected after originally being announced as Ayes 77, Noes 43 to correct Te Paati Māori’s votes that were originally cast in favour.

Part 4 Operation of Reserve Bank

CHAIRPERSON (Adrian Rurawhe): Members, we now come to—

Hon Eugenie Sage: Mr Chair. I seek—

CHAIRPERSON (Adrian Rurawhe): —taihoa—the debate on Part 4. This debate is on clauses 168 to 199, which relate to the operation of the Reserve Bank. The question is that Part 4 stand part.

Hon EUGENIE SAGE (Green): Point of order, Mr Chair. I seek your leave to correct the vote. It should be two votes against from the Māori Party.

CHAIRPERSON (Adrian Rurawhe): Leave is sought for that purpose. Is there any objection? There is none. The record will be adjusted. So the Ayes are 75, the Noes are 45, and Part 3 still stands part.

Hon GRANT ROBERTSON (Minister of Finance): Thank you very much, Mr Chair. So Part 4 of the bill is around the operations of the bank. Again, much of this is carried over from previous incarnations of the Reserve Bank Act. A very important clause for me is clause 168—the safeguarding of the independence of the bank—that has been consistent throughout the operation of the bank. And I do, on a serious note, want to underscore the fact that I do believe it is a genuinely held view of all members of this House that we do need to protect the independence of the bank. And to take up the offer made to me earlier on by Nicola Willis in terms of the Hansard, that is an important thing for us to reiterate at this time.

Over the years of the bank’s operation, it has evolved. Monetary policy has evolved. The responsibilities of the bank have evolved and increased. But that question of independence is important. The creation of the Reserve Bank Act in 1989 came from things that occurred in New Zealand in the first part of that decade. I think it is important for all members of the committee—and I’m not making a political point there, I’m making an overall point that actually it is important for the committee to reiterate the importance of that.

Otherwise, the part looks at the role of the bank as an employer and indeed being a good employer. Questions around liability, liability for the bank itself, for those within the bank’s operating models—so members of the board, the monetary policy committee, the governor and so on—how that liability is exercised, how the bank deals with third parties in terms of its contracting process. We then have the process for the review of the bank and its operations and reasons why it can release information, and then a set of miscellaneous conditions to allow the board, the governor and other office holders to go about their work.

Hon MICHAEL WOODHOUSE (National): I couldn’t resist a chuckle when the Minister Grant Robertson was describing what Part 4 did in the context of clause 168, where he quoted the section safeguarding the independence of the bank. Because, actually, subclause 168(1) refers to the operational independence as it relates to a particular person or persons—that is, the Minister can’t direct the bank to go after individuals or groups of individuals, which is absolutely right; that’s not the Minister’s role. But it is ironic in the extreme that he tends to reinforce the operational independence of the bank, when the bill as a whole actually undermines that in my view. The simple question that National members have asked themselves in their consideration of their support for this bill was this: does the bill make stronger or weaker the operational independence of the Reserve Bank of New Zealand? And the answer is inevitably “weaker”. In fact, Part 4 then goes on to list a number of ways in which the Minister of State Services and the Minister of Finance may give plenty of directions, instructions, remits, and so on—that is a greater power than in the 1989 Act. So I point that out at Part 4, my mirth at the irony of the introductory remarks the Minister made, which were in fact directed at protecting individuals and groups, not his overall influence.

ANDREW BAYLY (National—Port Waikato): I want to continue that vein of thoughts from the Hon Michael Woodhouse, because we’ve been talking tonight, and the first thing we do agree on is the independence and the importance of the independence of the Reserve Bank. I think there’s a difference around making sure we’ve got the right framework for that and then differentiating that in terms of the independence of the bank to perform its functions. I think it’s that crucial part of independence that it should be free to go out and execute and perform the functions that are set out clearly under the various remits that are provided, and we’ve just been talking about how the Minister can change that quite easily without much transparency or oversight by Parliament.

But with regard to the much wider issue of independence, there are some fundamental changes to this bill that give us a great deal of discomfort, and one is around the appointment process. So, essentially, what we’ve ended up with is moving from a single governor with wide-ranging powers to one where we’ve now got a board that is essentially appointed by the Minister of Finance without any real criteria as to how those people should be appointed and what skill sets. All we know is what they shouldn’t be able to do, like be an undischarged bankrupt. But that’s one level of oversight now by the Minister, and, of course, the board that is appointed by the Minister now has the role of making a recommendation around the governor, which, of course, is subject to oversight by the Minister, and, of course, we’ve got the all-important monetary policy committee, again, with ministerial oversight.

So this whole issue of independence has been cut through and degraded because now there’s a significant amount of oversight with the Reserve Bank, particularly where appointees to the bank board could now be very much ex-politicians and all those unfavourable things that we wouldn’t want to see creeping into the appointment process around the board. So that’s one issue around the lack of independence. If we’re talking about trying to achieve clause 168, I think that’s the first strike of a bow that says that, well, actually, this piece of legislation doesn’t help that.

We’ve talked about the remit process, and I think that is a very significant thing in terms of the way the Minister has oversight in terms of the remit. In the context of the Minister’s opening statement about protecting independence, we agree with that, but I’m not sure that we agree with the approach of it, and that’s why most of the five Supplementary Order Papers that have been put up are dealing with the issue of independence and making sure we are protecting it. What we’re seeing with this second of three—we haven’t yet seen the third piece of legislation coming through—is what other changes will be made that will undermine the independence of the Reserve Bank.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to Part 4 set out on Supplementary Order Paper 44 be agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Amendment agreed to.

A party vote was called for on the question, That Part 4 as amended be agreed to.

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Part 4 as amended agreed to.

Part 5 Financial and accountability matters

CHAIRPERSON (Adrian Rurawhe): Members, we now come to Part 5. This is the debate on clauses 200 to 257, financial and accountability matters. The question is that Part 5 stand part.

Hon GRANT ROBERTSON (Minister of Finance): Mr Chair, thank you very much. So, as you’ve indicated, this is the part that deals with financial and accountability measures. The first part of it is the requirement upon the Minister of Finance to issue a financial policy remit. This is an important part of the bill in terms of matching the monetary policy remit process with the financial policy remit. This is about making sure that there is a remit containing matters that the Minister considers desirable for the bank to have regard to in relation to achieving the financial stability objectives; essentially, looking in particular at the way it furthers the purposes of the prudential legislation and the bank’s prudential functions.

It is important to note that the earlier reference that was made in the debate—and I can refer back to Part 4, just briefly—to the independence clause, Mr Woodhouse’s view that we were talking about a particular person or a particular Act is quite relevant in the case of this financial policy remit, because part of that would be preventing, for example, a Minister of the day wanting to target a particular bank for the way in which they were doing their work. That would not be possible via the financial policy remit, but rather that it would be around how to achieve the financial stability objectives that are contained—and the prudential functions of the bank.

I regard this as a very important step forward in the way this legislation works. We need to mirror the monetary policy remit with a financial policy remit. That’s the evolution of the Reserve Bank Act. Since 1989, more functions have been taken on by the Reserve Bank within the financial stability space, within the prudential supervision and standards space, and it is appropriate to have an agreement between the Minister and the bank around the way in which they go about that work, and the bill provides the process for the contents of the process for its creation.

We also cover under this part of the bill the funding agreement issue, and I know that members have had some discussion about this and the way in which a funding agreement works. The bill provides that process for finalising that agreement, giving the bank a long period in which it has certainty of its funding—five consecutive years, as it’s laid out in clause 206(2) is important. The bank can get on with its job of doing what it should do, without having to unnecessarily move through the process of a funding agreement. But there is, obviously, the ability for that to be understood and reviewed, and those agreements have to be published and presented to this House under clause 208 of the bill. I don’t believe there’s been any change there in terms of the determination of an annual dividend from the bank, which is, again, the Minister determining that on the basis of discussions with the bank. That continues as we are now.

Then there are the various accountability documents that are covered through this part: the statement of intent, in particular, which is familiar to those who’ve been Ministers or who are Ministers now, and that process is laid out somewhat exhaustively through the bill; the statement of performance expectations—again, familiar to all those who deal with Government agencies and Crown entities; an annual report and the provision of that annual report and its provision through to, indeed, this House. I should also mention subpart 4, which was the question around financial risk management and the importance of a statement of that; a statement of prudential policy, which is also provided here as well. So these are all important accountability measures that the bank has always had. They are tweaked and enhanced in this part, as well as the role around financial policy and the accountability for that.

DAMIEN SMITH (ACT): I think it is time, from the ACT Party’s point of view, that we should also be looking at the disadvantaged members of society, the Pasifika community, the Māori community, and actually include, now, in the framework, the Reserve Bank, the credit unions and building societies mutual model. We should give them the same liquidity buffers that the rest of the banks get, because there is a wellbeing issue there and, sort of, they are discriminated against in terms of an equal playing field. So I’d like the Minister’s point of view on that and giving them equal access to any liquidity support that they require.

Hon GRANT ROBERTSON (Minister of Finance): I thank the member for the question. I don’t think that, in terms of the way we write legislation, we would be going into that level of detail. That is not how we write legislation. But I do want to acknowledge the issue that he is raising and the fragility, from time to time, of some of the financial institutions in New Zealand. The member raises the question, for example, of credit unions and the importance of making sure that those whose funding is within those bodies who, as the member points out, can often come from lower-income groups, are protected. I acknowledge that point. Whether the exact answer to that question has the same size liquidity buffers as other institutions is a matter, I believe, that falls within the operational purview of the bank. But I think the member is raising an important issue for New Zealand, and one that can be taken up. But it would not, in my opinion, be appropriate for us to be dealing with that within the legislation. But I do think he is raising an issue of some importance.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Part 5 set out on Supplementary Order Paper 44 be agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Amendments agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendment to Part 5 set out on Supplementary Order Paper 46 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendment not agreed to.

A party vote was called for on the question, That Part 5 as amended be agreed to.

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Part 5 as amended agreed to.

Part 6 Miscellaneous provisions

CHAIRPERSON (Adrian Rurawhe): Members, we now come to Part 6. This is the debate on clauses 258 to 297 and Schedule 4, miscellaneous provisions. The question is that Part 6 stand part.

Hon GRANT ROBERTSON (Minister of Finance): This is the miscellaneous section of the bill which tidies up a number of matters. The only one which I want to draw the House’s attention to is Subpart 4 on the Council of Financial Regulators. This is something that I do believe is important. It is the statutory recognition of, effectively, the importance of coordination amongst those whose job it is to regulate our financial system in New Zealand. We saw in the wake of the royal commission of inquiry into the Australian banking system the importance of the way in which, for example, the Reserve Bank and the Financial Markets Authority (FMA) work together. I believe that there is considerable scope to improve the way in which regulation works in our financial sector to make it clearly understandable to the public to ensure that the interests of consumers are held in the highest regard, that we can do better in those areas in a more coordinated way. So I am particularly pleased that the council is recognised here, its membership with the bank, the FMA, the Treasury, and what is effectively the Ministry of Business, Innovation and Employment but also includes the Commerce Commission. It is important to, I think, all New Zealanders to know that those agencies are working together, and by giving that body statutory recognition, I believe we are enhancing that work. Otherwise, the part represents a number of tidy-up - related matters.

ANDREW BAYLY (National—Port Waikato): I just want to acknowledge what the Minister has said. I think it’s an important element of what is in this part of the bill. It’s an important function that we make sure that we do get proper regulation across the financial sector, involving all the key organisations. So, in terms of this being a part of this bill, it’s a good thing.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Part 6 set out on Supplementary Order Paper 44 be agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Amendments agreed to.

A party vote was called for on the question, That Part 6 as amended be agreed to.

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Part 6 as amended agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 1 set out on Supplementary Order Paper 44 be agreed to.

Amendments agreed to.

CHAIRPERSON (Adrian Rurawhe): Andrew Bayly’s amendment to Schedule 1 set out on Supplementary Order Paper 46 is ruled out of order as being inconsistent with a previous decision of the committee. Therefore, the question is that Schedule 1 as amended stand part.

Schedule 1 as amended agreed to.

Schedule 2 agreed to.

Schedule 3 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendments to Schedule 4 set out on Supplementary Order Paper 44 be agreed to.

Amendments agreed to.

CHAIRPERSON (Adrian Rurawhe): Andrew Bayly’s amendment to Schedule 4 set out on Supplementary Order Paper 45 is ruled out of order as being inconsistent with a previous decision of the committee. Andrew Bayly’s amendment to Schedule 4 set out on Supplementary Order Paper 48 is ruled out of order as being inconsistent with a previous decision of the committee.

Schedule 4 as amended agreed to.

Clauses 1 and 2

CHAIRPERSON (Adrian Rurawhe): Members, we now come to our final debate, clauses 1 and 2. This is the debate on title and commencement.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Clause 1 agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that the Minister’s amendment to clause 2, set out on Supplementary Order Paper 44 be agreed to.

Amendment agreed to.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Clause 2 as amended agreed to.

Bill to be reported with amendment.

Bills

Family Court (Supporting Children in Court) Legislation Bill

In Committee

Part 1 Amendments to Care of Children Act 2004

CHAIRPERSON (Adrian Rurawhe): Members, we now come to the Family Court (Supporting Children in Court) Legislation Bill. We come first to Part 1. This is the debate on clauses 3 to 9, Amendments to Care of Children Act 2004. The question is that Part 1 stand part.

Hon KRIS FAAFOI (Minister of Justice): Thank you very much, Mr Chair. I just wanted to make a few remarks at the outset of the Part 1 debate on the Family Court (Supporting Children in Court) Legislation Bill. The purpose of the bill is, essentially, to make the process for the Family Court, for those going through the Family Court process, and especially Care of Children Act processes, more effective and efficient.

The history of this bill is that there were some changes made by the previous Government in 2014. My predecessor Andrew Little asked an independent panel in 2018 to assess the changes and the impact that those Family Court changes had, in effect, meant for the effectiveness of the process and the impact on the participants. One of the aspects that is discussed in Part 1 is in order to make all the process of Care of Children Act applications much more effective and efficient.

The theory behind the 2014 changes was that if you removed lawyers from the equation and allowed parties to a Care of Children Act application to try and sort out their differences that you would have fewer cases in court and therefore reduce the harm to both parents or caregivers or children. The reality was that we’ve seen the opposite happen because the number of what are called without notice applications for Care of Children Act applications has increased.

I just wanted to make sure that we gave some context to that, because before the changes that were made in 2014 we saw that there were a little under 7,300 without notice applications being filed. What we saw after the changes coming into effect is the number of without notice applications for Care of Children Act applications increasing to 12,182.

Now, obviously that increase, on the face of it, would be a concern to most. But some more investigation has shown that without notice applications actually take 2.1 times more court time than on notice applications. That means that the children involved in those cases and the parents involved in those cases in the increasing number of without notice applications are actually spending a lot more time appearing before the courts and it is taking a lot longer for those disputes to be resolved. Justice tells me that it takes on average 37 days to resolve a case through mediation, while if the issue is going through court it can take close to 270 days.

I actually think, having looked at the minority report from the National Party, that we actually do want the same thing: we want fewer people going through the court process and we want to make sure that that process is a lot more efficient in terms of time, because we’re reducing the harm on children when things aren’t resolved, and the stress and anxiety on parents.

The other aspect of Part 1 that I might speak about more in detail in another subsequent contribution is the ability to give children more of a voice and an obligation again on how we appoint the lawyers for the children and what we might have to prioritise within that, and then again, an obligation from the lawyers to make sure that issues are dealt with as expediently and efficiently and effectively from the point of view of the parties as swiftly as possible.

I do have some difference of opinion on some of the issues that were raised in the minority report about how we would go in affecting that, but we do believe making sure that we can give children a voice in the process and putting more demands on making sure we can make that process more efficient and making changes to the system where we can reduce numbers of without notice applications will be a starter to making sure the Family Court process is a much safer place.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair, and can I start by thanking the Minister in the chair, Kris Faafoi, for the initial exposition that he’s given us in relation to the Family Court (Supporting Children in Court) Legislation Bill, obviously geared towards Part 1. I thank the Minister for acknowledging the fact that likely everyone in this House, and certainly speaking on behalf of National, we on this side of the House, does support the intent that he’s articulated: of course, to reduce the stress, including as to time frames, faced by those in the Family Court, including and especially children. It’s not one of the areas of policy where different sides of the debate, I think, would have different aims that they want to achieve, ultimately, so we’re discussing, really, different ways to achieve that. So that’s a positive start, I think, to tonight’s discussion of Part 1 and beyond.

I did not personally have a hand in writing the minority view on behalf of National, within the select committee report—indeed, I didn’t sit on the select committee that considered the bill. However, I’ve read and understood those points, and I think that the Minister has done a pretty reasonable job of acknowledging those points. Obviously, he’s begging to differ in terms of the emphasis that he, on behalf of the Government, would place on those various points, but I think that they’re worth traversing nonetheless, so that all involved in this area of policy and practice can understand the good-faith intent of the Parliament as a whole to trying to improve the situation of the Family Court.

Looking at some of the particular matters that are being amended within Part 1, the first relates to clause 4, which would amend section 5 of the Care of Children Act 2004. I’d just like to draw the Minister’s attention to the wording of the bill, as it’s now back before the House, and just give him an opportunity to speak to the amendment whereby the Parliament will be saying that “a child must be given reasonable opportunities to participate in any decision affecting them.” I think, as far as it goes, that’s all pretty straightforward and, hopefully, non-controversial, of course the big-picture context being that the decisions should reflect the best interests of the child, not only in terms of their legal representation but, of course, ultimately, the outcome, the substantive matter that’s been brought before the Family Court.

I presume, in saying that, that the reasonable opportunities that are to be given—that that should be seen in the context of the circumstances that apply. Most obviously, the child themselves may or may not be capable of forming a view, or it might be a pretty limited view, reflecting the fact that they might be young or at a particular stage of learning development. If I understand correctly the annotation of the bill, some wording around that, about a child who is capable of forming their own views about a matter, that’s been struck out. So just seeking, in the first instance, some reassurance from the Minister that his policy intent is that the child be given a reasonable opportunity to participate but in a way that’s appropriate to them in the circumstances that he or she—that is, the child—finds himself before the court.

So at that point, I’ll pause and reflect on whether the Minister’s in a position to answer, but I think he’s indicating that I should continue to speak—yeah, OK—and maybe raise a couple of other points that he might care to respond to at the same time.

One of the points that the National Party members of the committee have raised in this differing view is to do with the ability of other players, for want of a better phrase, in the context of a court case, or outside a court case, potentially—and that’s really the point. So talking about overseas jurisdictions using psychologists or social workers and other professionals who are not in the position of being lawyers per se but nevertheless having an understanding of the legal process, but, more importantly, an understanding of what might be happening in a family and what might be happening inside the head of a child who finds themselves—or children, indeed—in the situation of having to navigate this complicated and no doubt often distressing scenario in which they find themselves.

So I’ll be keen to know if the Minister can reassure us that as a matter of policy intent to match what appears to be in front of us within Part 1 of the bill, there’s some thought being given to resourcing the court or, again, the legal system or the dispute resolution system more broadly to have such people able to feed into the system. The point that the Minister makes is noted and understood and to some extent reflected by the profession, that to avoid having lawyers involved might be a worthy aim, but, of course, there are ways to circumvent that. He’s spoken about the without notice applications. That’s all fine as far as it goes, but if we do not replace that expertise and that involvement by non-lawyers, then the fear, of course, is that we simply revert to the situation that in 2014 had needed some amendment, albeit not the kind of amendment that the other side is now approving of.

So I think at that point I’ll see if the Minister will respond to those points, and if he will, then I’ll look forward to those. If not, I’ll continue, but he is indeed.

Hon KRIS FAAFOI (Minister of Justice): Thank you. Can I thank Mr Penk for the issues that he raised. Very simply, in terms of the amendments to clause 4 that he mentioned, yes, it does reflect the policy intent.

He does raise a good point in terms of the subsequent issue that he raised and we have seen fit to amend the commencement date in order to make sure that there is a process to ensure that there is a framework in order to ensure the kinds of questions that he is talking about—about how we engage with young people, etc.—is done in a safe manner.

I acknowledge that while, I think, the close-to-70 submissions that the Justice Committee heard were pretty well balanced towards support or neutral on the bill, there were some issues raised about the safety of children within that process. And, in order to do that, there is a stocktake being done of how we do have frameworks in order to make sure that children can participate in that and that that is done in a safe way to make sure that when children’s needs are taken into account, especially when family violence is involved, we have the right expertise and frameworks in order to deal with that. Again, I want to reflect some of the concerns raised, especially when there was trauma or family violence involved. Some submitters said that involving children in that process can be re-traumatising but that it could be managed. I think that is why undertaking the stocktake and audit to ensure that there is a safe framework for that to happen will ensure that children will still be able to have their views expressed as to what they want to see as a decision, not to make the decision, in order for the process—and, hopefully, not a court process—to determine what is in their best interests.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Chair. Thank you for the opportunity to take a call on the committee stage of this bill. I have a couple of additional questions for the Minister in relation to clause 7, which is in relation to the new provision, which says that “When appointing a lawyer to represent a child, the court or Registrar must, so far as is reasonably practicable, appoint a lawyer who is, by reason of their personality, cultural background, training, and experience, suitably qualified to represent the child.”

Now, a number of submitters submitted on this point and made some submissions around what they felt was a lack of training or a lack of skills of lawyers for children when it comes to these areas. So I guess the question is: it’s all well and good to put a requirement on the court or the registrar to say that they must do their best to try and ensure that the lawyer for the child has all of these things, but the reality is, from a skills perspective—the argument put from submitters was that there’s not necessarily the right skills base actually amongst lawyers to actually be able to adequately fulfil this. So there are two questions to the Minister.

The first one is: is there going to be any additional resourcing or support given to try to actually ensure that there is adequate training for lawyers so they’re able to best provide for children in this way, to actually give effect to this clause? And I guess the second one is whether the Minister considered whether other professionals who do have skills and training, working with children, could actually do that in a better way, to be an advocate for the child rather than necessarily having to be a lawyer as well. So a couple of questions there. I look forward to the Minister’s response to those.

Hon KRIS FAAFOI (Minister of Justice): Thank you, Madam Chair. Very good questions, so thank you for asking them. It does go back to the stocktake process that I just mentioned to Mr Penk. I think, upon reflection, around making sure that we do have a solid framework—I think that was a valid concern raised by, I think, the Law Society during that select committee submissions to say that in some instances, depending on place and time, the ability of someone to have the requisite skills may not necessarily be available. I do think there is time available now, while we do some of the work on the stocktake and while the provisions of the bill will come in, when that stocktake is in place and the resources are ready to be able to do that.

Further to the point that the member has raised, in order to reflect the best interests of the child, of the lawyers acting on behalf of the child, I do think it is important that we do have an obligation in the process for the lawyer to understand all the vagaries that the child may have. And if that means understanding the cultural context of which they are coming from, I think it is also important. I do think, again, with the aim of the bill trying to make sure that the efficiency and effectiveness of the Family Court process is enhanced, that if we are able to do that, we’re able to do that in the context of what is best for the child and what both parties mean. We may be able to either skip the court process—which I think everyone agrees would be the preference—in order to get a quick resolution and understand what is best and have two parties that agree, as opposed to dragging a court process through 270 days, which is happening more often now, and, I think, putting families and children in more vulnerable positions for longer than when these changes were made in 2014.

NICOLE McKEE (ACT): Madam Chair, thank you, and thank you, Minister. The ACT Party does support this bill, but I have one question, and that is also on clause 7. It’s in regard to looking at the appointment of a lawyer whereby the statement reads in clause 7(2): “When appointing a lawyer to represent a child, the court or Registrar must, so far as is reasonably practicable, appoint a lawyer who is, by reason of their personality, cultural background, training, and experience, suitably qualified to represent the child.” When I gave my second reading speech, I made the point that I think it’s important that we get the right person representing the child. But I have concerns when we start legislating about personality and cultural background. I’ve tabled an amendment whereby I request your thoughts upon removing the words “by reason of their personality, cultural background, training, and experience”. So it would actually read: “appoint a lawyer who was suitably qualified to represent the child”. Then that way we ensure that it is the best person for the child, and any judge or appointee would be able to actually make sure that things like personality and cultural background are automatically taken without it having to be legislated.

So I’d just like to leave that in your court there, Minister, because I would like to fully support this, but do have concerns that we do not have the expertise within our courts and, therefore, may not be getting the right person to represent the child. Thank you.

HARETE HIPANGO (National): Kia ora, Madam Chair and Minister. Look, in taking this call this evening, I’m cognisant of the fact that the Minister does not have experience of practising in the Family Court, and, therefore, the answers are in that context. So I’m going to refer to clause 4 of the bill, Minister, where it talks about inserting section 5(g), which says that “a child must be given reasonable opportunities to participate in any decision affecting them.” Minister, I put it to you—mindful that I wasn’t on the Justice Committee and I didn’t hear submissions, mindful that I have been counsel for children, mindful that children being burdened with the responsibility of making decisions as affect them, subject to their age, is detrimental to their welfare and best interests. So, Minister, could you please answer: why is it that it’s considered that a child should be making decisions as affect them when there is proven psychological evidence that that is detrimental to a child for them to be burdened with that responsibility, when it is actually the lawyer’s duty of care and role to be the voice, and it is the judge who makes the decision, not a child participating in that decision making?

Hon KRIS FAAFOI (Minister of Justice): I thank the learned colleague for making that submission. I would, again, ask her to look at the clause. It is not asking or enforcing a decision from a child. It is, in essence, allowing an opportunity for the child to participate in that decision process.

Again, as her colleague pointed out, I think most people would want to ensure that there is an opportunity to understand what is in the best interests of the child in a care of children application, and the purpose of this bill is to give the effective and efficient ability for that to happen. We believe it is important to make sure we can do that quickly. I’ve mentioned the delays in the Family Court process because of the without notice applications.

Making sure that we’re giving that opportunity is, we think, pretty fundamental to making sure that it can happen. It is not the child who makes the decision, but we think it’s important that the child does have a voice in that process.

HARETE HIPANGO (National): Accordingly then, Minister, would it not be better to have included in section 5(g) in clause 4—rather than “a child must be given reasonable opportunities”—that the onus is on the voice or the representative of that child to do so, and not the child presumably?

Hon KRIS FAAFOI (Minister of Justice): I think that goes to the wider context of the changes within the bill. As one of her colleagues mentioned—Mr Brown—the change is where we are looking at a best fit for the appointment of a lawyer to understand the situation of a child to ensure that we can understand and express what the child would like to be taken into consideration during the process and what the child’s best interests and perspective are, and making sure that we have the person to best represent that, as the member may have just outlined.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. I’m just keen to get from the Minister, please, in relation to clause 7, which is, coincidentally, amending section 7 within the Care of Children Act 2004, which is, of course, legislation that’s being amended by this Part 1—I’m just curious to have the Minister’s comments on the record in relation to the appointment of the lawyer. The philosophy seems to be that it should be a person who is suitably qualified to represent the child, and I think that certainly makes sense as far as it goes, and, of course, a number of criteria are outlined for that—personality, cultural background, training, and experience. Our friend from the ACT Party has stated her view on behalf of ACT that there should be a more general qualification or appropriateness standard applied, as opposed to being quite so prescriptive as that.

My own concern is really more to place on record, I think, what certainly I hope we would all agree, which is that the representation of the child is the key factor in all of that, and I make that comment in reference to the select committee discussion where the select committee members turned their mind, I think reasonably, to the question of whether there might be discrimination alleged against the lawyer who wasn’t appointed to represent a child. I was pleased to see that the select committee ultimately decided first of all that that wouldn’t be a breach of the lawyer’s rights, but I would hope more fundamentally as well that the feelings or the professional opportunities of the lawyer involved are much less important than the child receiving the best possible representation that she or he might have, to whatever extent they might have an involvement in that and to whatever degree different qualifications or characteristics might be taken into account. So, really, placing that on record in my own case and inviting the Minister to state that as well, because I feel as though that represents an important philosophical point about the legislation, even if it may or may not make a practical distinction in terms of how it’s interpreted going forward.

Hon KRIS FAAFOI (Minister of Justice): Thank you, Madam Chair. Can I thank Mr Penk for reinforcing the committee’s point. The thinking in and around personality was to ensure that we had someone in a position to represent a child who could build a rapport with that child, and a personality to be able to build a rapport with a specific child, to be able to represent them as effectively as possible. As Ms Hipango has mentioned, I don’t come from a legal background, but personality does go a long way in building a rapport with individuals, especially in situations where they may be under extreme pressure, to make sure that we can reflect their views in the Care of Children Act process.

So I acknowledge the concerns that were raised in the Supplementary Order Paper from Nicole McKee, but in order to make sure we have a full picture of what we’re trying to achieve here, not only just being trained and suitably qualified to represent the lawyer, again, also having an understanding of some of their cultural competencies, their experience, but also that personality and getting the right fit. I think, as we can all imagine, there would be a range of children in different situations and willingness to be able to partake in a Care of Children Act process. Some may be freer to participate in that and give their views. Some may need a little more sensitivity and coaxing to have their views expressed, and I think that’s some of the thinking behind why there is such a broad description within clause 7 as it stands.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. Just a couple more small points from me. I don’t suppose I’ll need too much time to make these additional points in relation to Part 1, but, really, again, just for the sake of the record as much as anything. Remaining on clause 7, amending section 7 of the legislation, in relation to the appointment of a child, I see that’s to be someone who is, by reason of various different factors, suitably qualified to represent the child. And it seems to be, just reading that on the face of it that it’s intended that it will be a person who is appropriate to represent the child in a very broad sense qualified, I suppose we could consider to have a particular meaning about legal qualification, coming as it does in the context of training experience, but my expectation and hope is that that’s a very broad kind of understanding of appropriateness, so I’ll just sort of flag that small point on the way through.

The second is actually not dissimilar, but it’s in clause 8 of the legislation, so that would insert a new section 7AA, and this is headed: “Lawyer appointed to represent child must explain proceedings to child”. There it’s talking about the age and maturity of the child, and the context is that an explanation is to be given in a way that the child is most likely to understand. I think that the word “maturity” really would sort of cover both aspects, because the maturity could go to not only their actual age but their ability to comprehend, maybe taking into account any sort of learning difficulties or developments that the child might have. So if there’s any further comment the Minister can make on that, fine; if not, then happy to sort of let the words take what I would consider their ordinary natural meaning, and therefore sort of pass into the record on that basis.

My third and final point—and I did say that these were relatively small, but potentially important none the less—relates to clause 9, and this is the duties of lawyer when giving advice. If the Chair will indulge me, I’ll just read these words, because I think they’re important: “(2) Before commencing a proceeding under this Act, a lawyer must take any steps that, in the opinion of the lawyer, assist in enabling the issues in dispute to be resolved as safely, fairly, inexpensively, simply, and speedily as is consistent with justice.” The reason I highlight those is that it seems to me these are absolutely consistent with existing legal ethical obligations. I would like to think moral obligations as well would come into the reckoning of any person who calls themselves a lawyer for a child, but, certainly, as a matter of professional standards, these are the kinds of considerations that a lawyer should take into account anyway. So I’m not sure that that adds terribly much by spelling it out, but I also don’t think it does any particular harm. But if there’s anything obvious that I’ve missed in that regard, then I’d invite the Minister to add to that.

Of course, all of this is in the context of that bigger picture question of the lawyer’s role as distinct from the role of others and the centrality of that in the legal process, so that’s a bigger picture question which will only be resolved in time, I suspect. I hope, for the sake of all those who are caught up in the Family Court situation, including and especially children, that it does certainly improve from the situation currently, and, indeed, the situation that was faced in 2014 with delays being obviously quite damaging to many family situations in the development of the poor small persons caught up in the process. So any comments on those specific points we would welcome, otherwise that’s probably about as much as I would seek to contribute under the heading of Part 1.

Hon KRIS FAAFOI (Minister of Justice): Well, I thank Mr Penk for his contributions to Part 1. Quite simply, there’s nothing like a bit of reinforcement in terms of trying to ensure that we do make the system as efficient and effective as possible. I’m not suggesting that the duties of lawyers are the overriding reason as to why there are delays in the court process. Obviously we want to introduce care of children lawyers at the beginning of the process to be able to navigate those early stages quicker, because, as I mentioned earlier, mediation at the beginning can make about 250 days difference in the resolution. I think there’s also a wider issue of the management of cases within the court system that will need addressing at some stage, and a coming together of these issues, I think, will get us to a point where we have a system that is, on behalf of New Zealanders, the most efficient system that takes the best interests of all parties involved and does the least harm. And that’s what clause 9—I think it was that the member was alluding to—goes in some way to reinforcing.

I think there is some general concern in some of these processes, whether by tactics or by direction, hearings can be delayed or put off in the court process. And, again, the duty on the lawyer to ensure that that doesn’t happen, I think, will ensure that especially children in the middle of these processes can have a resolution to a very difficult period in their lives.

NICOLE McKEE (ACT): Thank you, Madam Chair, and thank you, Minister, for answering the question that I put up earlier.

I go back to clause 7, Minister, around the personality and cultural background. You gave a very good explanation there, and I thank you for that. I would’ve thought, though, Minister, that those qualities would already be looked upon by the judge in appointing a counsel for the child. My question to you is: should a person who is not deemed to be culturally appropriate for that child is appointed, and there are concerns later raised about that person not having the personality or the cultural background, could this—or had you thought about whether or not it could incur further delays as a new counsel for the child is appointed, if that indeed ends up being the case, because the appropriate person was deemed not to have been found in that first instance?

Hon KRIS FAAFOI (Minister of Justice): Thank you, Madam Chair. I think, again, a valid question. I think the heart of that lies in some of the earlier language, which is as so far as reasonably practicable. I think most courts would make an effort to make sure that the best fit would be there for a lawyer of the child. As you said in your submission, you would have expected or assumed for that to be happening already. I believe there is no harm in making sure that is explicit and, again, in an effort to make sure that there is care and effectiveness for the child, to take into consideration what is best in terms of personality, cultural background, training, and experience.

I do envisage there will be some situations where that may not be possible—where especially in smaller rural areas or provincial towns where the pool of lawyers that may be available to do the work in a timely manner may not necessarily be available. That, again, the court might see that best fit is made. But I’m confident that making it explicit within the bill that these factors, where it is practicable, are taken into account, and where best efforts are made to make sure that we do have someone appropriate for the child, will be more effective than this situation that we have at the moment.

HARETE HIPANGO (National): Minister, just to labour the point in relation to the appropriate, it appears to be the qualities of the lawyer as opposed to the competencies—could the Minister please explain, when appointing a lawyer to represent a child, that the Family Court has complex issues and a variety of proceedings within the Family Court? Accordingly, would the Minister not consider it appropriate that there is a match of the lawyer’s skills and competence to the specific case requirements, in addition to those factors of personality, cultural background, training, and experience to suitably qualify to represent the child?

I put it to the Minister to consider that further to what is outlined in clause 7, subclause (2) proposed that in the appointment of a lawyer, the court must also consider the match of the lawyer’s skills and/or competence to the specific case requirements, bearing in mind that the Family Court not only deals with domestic violence, it also deals with custody, guardianship, separation, access, contact, care and protection, and welfare—a number of issues—which adds to the complexity and, therefore, ought to reflect upon the skillset and competence of the lawyer being matched to the specific proceedings to represent the child. What is the Minister’s view on that, please?

Hon KRIS FAAFOI (Minister of Justice): It is pretty clear because at the end of the clause, they’re “suitably qualified to represent the child”, and if that person isn’t qualified to represent the child in that specific instance, then I’m pretty sure that the court will adjudicate that that person isn’t the right person to represent the child. I would also reflect that the independent panel recommended the framing of the clause, and I’m also told that the clause reflects the practice note and also aligns with—and I haven’t seen this section—section 159 of the Oranga Tamariki Act in order to make sure there is consistency across pieces of legislation. So, to answer the member’s question, I don’t think the clause and the point that she is making are mutually exclusive. I think, if the person is suitably qualified to represent the child within that scope of practice, then the court will make a decision that they are the suitable person in that instance.

Dr DUNCAN WEBB (Junior Whip—Labour): I move, That the question be now put.

CHAIRPERSON (Hon Jenny Salesa): The question is that the question be now put. The question is that Nicole McKee’s tabled amendment to clause 7 be agreed to.

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

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Amendment not agreed to.

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

Ayes 87

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

Noes 33

New Zealand National 33.

Part 1 agreed to.

The result corrected after originally being announced as Ayes 77, Noes 33.

Part 2 Amendment to Family Dispute Resolution Act 2013

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to Part 2, and Part 2 is the debate on clauses 10 and 11, amendment to the Family Dispute Resolution Act 2013. The question is that Part 2 stand part. My apologies, let me announce the correct count to the last vote. The Ayes are 87, the Noes are 33. The Ayes have it.

Hon KRIS FAAFOI (Minister of Justice): Madam Chair. Part 2 essentially amends the family dispute resolution in order to give children who are subject to dispute resolution process the same opportunities to participate in decisions that affect them. Again, just reflecting some of our key messages from the debate during Part 1.

The panel that looked into the 2014 changes found that the system doesn’t necessarily recognise child participation and it is not widely recognised or valued. The panel also identified that there was limited participation by children in issues that affect them. There is a concern whether their views are obtained or considered when decisions are made. Again, I think, similar to the concerns in Part 1, in order to make this process as effective and efficient in reducing the harm that sometimes the system and delays in the system can have, making sure you have representation early in the system is important. Resolutions outside of the courtroom can mean that significant delays can be prevented. At the end of the day, those delays for the children, I think, can increase massive amounts of anxiety for them. So, again, these changes mirror the care of children process for the family dispute resolution process. Again, we look forward to being able to debate this as part of Part 2.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. Obviously, Part 2 is a pretty small part, and my contribution in discussing it won’t be particularly large, either—just a couple of points regarding that amendment of section 11 within clause 11. What a beautiful alignment of clauses and section numbers tonight, Madam Chair; I sense your excitement almost matches mine.

The phrase that sort of leaps out at me a little bit is the “reasonable opportunities to participate in” decisions affecting a child. I’m quite pleased to see that the Justice Committee—for which I can take no credit; I was not a member—has talked about “reasonable opportunities”, plural. It seems to me that what’s indicated in that is an intent that the opportunities would be regarded as arising on an ongoing basis. So, hopefully, the intent is that the family dispute resolution (FDR) provider does not merely consider at the start of the process, or perhaps in “taking initial instructions”, in quote marks, or in having an initial briefing, but really regards the obligation, actually, to have an ongoing consideration of what the children might be given by way of opportunity or opportunities to participate in decisions. Of course, it’s an ongoing process—a lot of back and forth in these things, often. So that’s my first observation. Again, as in Part 1, I sort of offer it as a comment that Minister Faafoi’s obviously welcome to contradict, but, failing which, I would hope we can take that I’m on the right track and that the record will reflect accordingly that intent from the legislature as a whole.

A couple of other small points within that same section: one is that I see that the select committee has recommended a different form of wording than that which had been introduced into the House, presumably by the Minister, or perhaps a predecessor—I think the name the Hon Andrew Little was mentioned earlier. The select committee has steered away from a wording that talks about facilitating participation “to the extent … that the FDR provider considers appropriate”. I think they’ve made a fair swap with the alternate wording that they’ve provided there. What we’re going to end up with, I think, is a bit of give and a bit of take. So it’s a stronger obligation—instead of the FDR provider having merely to facilitate participation, they have to ensure that the children be given reasonable opportunities—but that’s qualified somewhat because the opportunities are as considered by the FDR provider to be appropriate. So a bit of give and take—I think they’ve landed in a pretty reasonable space there.

Then my final point, I think, in relation to that would be just to ask the Minister to give a bit of an explanation about the way that—I suppose it’s a reflection, really, with some sadness, that we’re talking about a situation where we’ve got the phrase “children who are the subject of the dispute”. There’s no way around it. I mean, that’s exactly what we’re talking about here. But I suppose I just wanted to reflect the fact that in a contested situation, in litigation, it’s a dispute and children are caught up in this. So, hopefully, the Minister would agree that the overall flavour and intent of the legislation would be to minimise the exposure of the children to the dispute and, without wanting to relitigate Part 1, just reflecting that the way that that can be achieved as best as possible, with more or less legal involvement, as the case may be, should be the aim of us all in this committee. So on that philosophical note, I will conclude my contribution on Part 2.

Hon KRIS FAAFOI (Minister of Justice): Again, thank you to the member Chris Penk. My understanding is that child participation in the family dispute resolution (FDR) process, as it stands, is quite ad hoc. So the inclusion of this bill does put somewhat of an obligation on, or encouragement of, their participation, again, in the interests of working in their best interests. I’d also note, as a last point to the member, the stocktake that I mentioned earlier, in terms of care of children processes and making sure that there are safe frameworks in order for that to happen, also applies to the FDR process, as well, to make sure—I think some of the submissions that were made about keeping children safe, especially in traumatic situations, apply in the FDR environment as well.

HARETE HIPANGO (National): Thank you. Minister, further to the answer that you’ve just given around participation in the family dispute resolution (FDR) process, there is no qualification within the bill, and certainly not within the proposed clause 11(ba), the extent of what participation is. And, Minister, you may well, or you may well not, be conversant with the submissions made by the New Zealand Law Society on this point. So could there be further clarification around what participation is? Does it require the child to be physically present? Does it require other elements of participation? If so, please state that, because there will be difficulty not just for—and there is an issue about whether it should be the FDR provider or supplier, but around to what extent is participation and what does that require of the child?

Hon KRIS FAAFOI (Minister of Justice): As the justice Minister, I think everyone can assume that a couple of factors would come into play here. It depends on the individual circumstances of the child and what is in the best interests of a child. We had a bit of discussion earlier about clause 7, in Part 1, about some of the descriptions of what needs to be taken into account when a lawyer for the child is being appointed, and I also outlined that children will have their own different personalities and their own different wants and levels of comfort. So, in some instances, that may be the lawyer making a written submission on behalf of that child because the child may not want to go through a process of having to verbalise something in front of the people that are in front of them. I have relatively high observations—relatively high opinions—of the legal profession to make sure that they can make that judgment as to what is in the best interests of the child. I know the member has suggested that she has represented children in these cases, and I am sure that she has made judgments as to what level of participation is best for her client. And I am sure that those kinds of judgments will continue to be made depending on the situation of the case, the personality of the child, and the comfort and safety level as to which we want to make sure the environment of that these children are in.

HARETE HIPANGO (National): Thank you. With respect, Minister, I didn’t suggest; I made a statement that I have actually represented children. May I just further elaborate on what you have indicated? Look, in relation to participation, I still am of the view, Minister, that it’s not clear, not only to me or to this House but to those who are going to be required to interpret and apply the law. Lawyers for children don’t make judgments; that’s for the judge or the court to do. We are a voice and we articulate either the view of the child or the interests. So my question, again, around participation—I put it to you—would you please provide a level of clarity as to what that requires?

Hon KRIS FAAFOI (Minister of Justice): I don’t think we want in legislation to prescribe precisely how the voice of the child in either care of children or family dispute resolutions should be enacted. So if the member is suggesting that we go to extreme detail about how participation should be prescribed or enforced in some of these extremely sensitive situations, again, the nature of these processes is sensitive. The personalities of the children and the family situations that they are in are extremely sensitive. What might suit one child may not suit another, and there may be multiple children in a care of children situation in one family. One may be confident to take one approach, and another may want to take a different approach. So I think that the courts and the lawyers involved in these situations, and the other professionals involved in these situations, are making judgments as to what is in the best interests of their clients as we speak, and if the member wants to prescribe that in great detail, then I think we force the hands of the people that we’re trying to protect.

HARETE HIPANGO (National): Thank you. Minister, I appreciate the attempts that you are trying to provide with clarity. With respect, the New Zealand Law Society made submissions seeking clarity with the recommendations that have been made, and I am articulating those. And the submissions were for seeking specification around what participation is.

I’ll move on to the next point, if I may, Minister: clause 11(ba), where it talks about what the family dispute resolution (FDR) provider would consider appropriate. Again, Minister, I bring to your and this House’s attention that the New Zealand Law Society’s submission and recommendation—again, a speciality group of lawyers called Family Court lawyers, represented in these submissions by the New Zealand Law Society, made the recommendation, Minister, that clause 11 places the onus on the FDR provider rather than the FDR supplier to facilitate that participation of children in the mediation process. Minister, could you please explain why is it that the New Zealand Law Society, representing the specialist expert body of family lawyers representing children, which this bill has been drafted to address, has completely discounted and discredited that it should be an FDR supplier and not provider?

Hon KRIS FAAFOI (Minister of Justice): I think, in recognition of a point that was made by the member’s colleague Mr Penk earlier in the debate, alluding to a stocktake of the process both with the family dispute resolution (FDR) process and care of children processes, there is work being done by the Ministry of Justice, as we speak, to ensure the processes and framework for both the FDR and the care of children Act processes are fit for purpose and safe. So I think we acknowledge there is work to be done in order to have an environment where we can have a workforce and guidelines as to where the intent of this piece of legislation can be actioned, and that work is under way and yet to be completed. I know the member raises a point that the New Zealand Law Society has raised in terms of the operational functions around FDR providers and suppliers, and I am sure that will be looked at, that particular concern, during the stocktake process.

HARETE HIPANGO (National): Minister, with respect, you’ve identified that there is somewhat of a discrepancy with your answer. On that basis, then, would it therefore not be more responsible to get the law—the bill—right and draft it so that there aren’t problems that occur later? So I put it to you, Minister, that what you’ve just identified is that there is a flaw, that there is an anticipated problem and fault, based on my question around the provider and the supplier, and the New Zealand Law Society identifying and recommending that the better law would be to have this bill amended from provider to supplier so that there are not those problems, as you’ve anticipated, eventuating.

Dr DUNCAN WEBB (Junior Whip—Labour): I move, That the question be now put.

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

Tim van de Molen: Point of order. Thank you, Madam Chair. I just think, in that case—the member moved a motion—the motion does actually need to be put. You’ve moved straight on to the vote.

CHAIRPERSON (Hon Jenny Salesa): The question is that the motion be agreed to.

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

Ayes 87

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

Noes 33

New Zealand National 33.

Motion agreed to.

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

Ayes 87

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

Noes 33

New Zealand National 33.

Part 2 agreed to.

Clauses 1 and 2

CHAIRPERSON (Hon Jenny Salesa): Members, we now come to our final debate, clauses 1 and 2. This is the debate on clauses 1 and 2, which is title and commencement.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. Just a quick question, because we’ve spoken in passing on the subject of commencement, the context was the Minister’s comments about the stocktake that’s to take place, and I see that the select committee had turned its collective mind to that in its consideration of the bill. So I think that’s much of the explanation about why the recommendation has come through from the select committee that instead of the Act coming into force more or less immediately, effectively immediately, which is to say the day after the Royal assent, we’ve got a split option. So “the earlier of … [the] date appointed by the Governor-General by Order in Council”, which is more or less the Minister and his Cabinet colleagues, or “the date that is 2 years after the date on which this Act receives the Royal assent.”, so a bit of time there to allow that flexibility for that work to happen. So that’s, I think, pretty well understood.

I note that where you’ve got a situation that it’s in the hands of a Minister as opposed to Parliament to bring into force a law, it’s important that the Minister isn’t able to simply delay indefinitely and therefore defeat the will of Parliament. But because the mechanism is the earlier of two dates, and one of them is a certain date, being two years after the date of Royal assent, I think we’re pretty safe there.

But I just wonder if the Minister can speak about his philosophy that he’ll apply in relation to the date that he determines that the Act can safely come into effect within that two-year window. So he talked about the stocktake—can you give us a heads-up on, sort of, sign posts along the way or what he’s going to need to have some comfort that the law can be brought into force? Just so that those members in the profession and others affected by it can have a degree of certainty about when this change will take place.

Hon KRIS FAAFOI (Minister of Justice): Thank you, Madam Chair. We expect the stocktake to be completed by the end of the year, and then in order to develop whatever comes out of stocktake will probably take another six to 12 months. I think that puts us pretty much in the area of the two years that are currently within clause 2 as it stands. If we are able to bring online provisions of the bill earlier that won’t be to the detriment of the wider challenges of the bill, I think we’ll certainly look to use the Order in Council process to bring those provisions in. Again, in order to make sure that we are effecting the change within the purpose of the bill, there are some provisions that I think we might be able to progress faster than others. Again, I don’t want to pre-empt the stocktake, but in order to make sure we are bringing the changes in as soon as we can, we’ll either use the Order in Council process or the two-year availability for the window for the stocktake to happen.

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

Ayes 87

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

Noes 33

New Zealand National 33.

Clause 1 agreed to.

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

Ayes 87

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

Noes 33

New Zealand National 33.

Clause 2 agreed to.

Bill to be reported without amendment.

House resumed.

Report of Committee of the Whole House

Report of Committee of the Whole House

CHAIRPERSON (Hon Jenny Salesa): The committee has considered the Appropriation (2021/22 Estimates) Bill and reports progress. The committee has also considered the Reserve Bank of New Zealand Bill and reports it with amendment. The committee has also considered the Family Court (Supporting Children in Court) Legislation Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Fair Trading Amendment Bill

Third Reading

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

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

Hon Dr DAVID CLARK: I move, That the Fair Trading Amendment Bill be now read a third time.

This is an important piece of legislation that will introduce new protections for business and consumers against unfair commercial practices. If someone is operating a fair and honest business, they have absolutely nothing to fear from this legislation. The bill—in passing it, what we’re doing is, firstly, introducing a prohibition against unconscionable conduct in trade. The second thing we are doing in passing this bill is extending protections against unfair contract terms in consumer contracts to small business contracts. And the third thing we’re doing is legally empowering consumers and businesses to tell uninvited sellers to leave a property, including through the use of “do not knock” stickers. These protections are long overdue. Stakeholders have argued for them for a very long time.

I want to cover each of those three things in turn. I’ll start with the unconscionable conduct changes, the prohibition. So that new prohibition has had a lot of talk around it, both in this House and amongst submitters. “What does unconscionable conduct really mean?” has been the question that has been asked, and “Why not prohibit unfair conduct or oppressive conduct, or at least perhaps find a word that’s easier to say?” Unconscionable conduct covers behaviour that’s both unfair and oppressive. We’re talking about serious misconduct here that goes beyond what’s commercially necessary or appropriate, and that might involve a large business taking advantage of a small business’s lack of bargaining power to pressure it into accepting certain contract terms. It could involve unreasonable tactics to pressure someone to buy something they don’t want to and can’t use. That could, in many cases, be a vulnerable person.

Some submitters and other members of the House have asked why we haven’t introduced a definition of unconscionable conduct. I haven’t gone with a definition, because that could limit the circumstances in which the protections could be used. I personally wouldn’t want to predict the types of situations that could be defined as unconscionable conduct, and so I think it’s really important that we don’t define those terms in that way. The bill instead provides a list of factors that a court will consider when deciding whether someone’s actions meet that test, and that includes things like whether an imbalance exists in bargaining power and whether that’s a contributing factor.

Our neighbours across the Ditch have had a similar prohibition, and their courts, I note, have been successful at weeding out processes and practices which are truly unconscionable from those that might simply involve unequal bargaining power but no real misconduct, and I’m confident that the prohibition will have the same effect over here. The bill makes it clear that we’re targeting business practices which involve a high threshold of misconduct, and let me say again, just to be really clear: if people are operating a business in a fair way, they have nothing to fear from this change in the legislation.

The other key change made by this bill is, of course, the extension of the prohibition against unfair contract terms, protecting businesses as well as consumers. As the Minister responsible for commerce and consumer affairs, I hear stories from small businesses opposing unfair contract terms with larger businesses, and I’m sure the Minister for Small Business hears similar stories. Currently, these small businesses can’t really do much about unfair terms unless they want to walk away from that business, from a contract altogether, and, of course, they then lose that opportunity. Once the bill passes, I’ll be able to assure those businesses who have come to me seeking help that they have new protections here in this provision that’s in the bill.

There’s been some concern that the protections go too far and will interfere with large contracts that might be negotiated between parties who are quite capable of doing their own due diligence. I want to emphasise again that the protections only apply to standard form contracts. Those are ones where one party has no real power over the other in the negotiation, and if they don’t like any of the terms, well, they can walk away.

So we’re talking about fairer contract terms overall. They only apply to contracts worth less than $250,000 a year, and that limits the protections to smaller or more vulnerable businesses who don’t have bargaining power and who aren’t negotiating terms in larger, more strategic contracts. So we’re just talking about situations where there isn’t that power imbalance. The third thing which I mentioned in my introduction is the “do not knock” provisions. The bill builds on protections for consumers approached by door-to-door salespeople. Those changes mean that an uninvited seller must leave a residential property if they’re asked to directly, or if those stickers are there, the “do not knock” stickers send a clear message.

The bill itself was considered in the previous parliamentary term by the Economic Development, Science and Innovation Committee, and I want to thank the members of that committee last term for their consideration of the bill, and for the public who submitted their ideas to make this bill better. Unique circumstances meant that that committee didn’t report back to the House, and although therefore the committee didn’t recommend any changes, we had taken into account the views of submitters and made a few changes to improve the bill through a Supplementary Order Paper (SOP). During the committee stage of this bill, the House considered these small amendments through the SOP that I introduced. I have heard some excitable comments from members across the House about how we’d need to fix a vast number of things, gaping holes in the bill and so forth. Actually, the amendments needed to the bill were indeed only minor tweaks, but they’re important tweaks, and we have made them through the committee stages and they’ll carry through in the bill as it’s passed this evening. They will then give businesses more certainty.

I’m confident that the bulk of the framework is sound and that it will work well. The changes, though, introduced through the SOP, the first of them is to slightly adjust the threshold for businesses covered by the unfair contract terms protections to allow more businesses to benefit. The bill prohibits unfair terms in small trade contracts, where the contracts are worth less than $250,000 in a year. Previously, in the bill as it was originally drafted, contracts with related parties were captured, which meant that a firm that had contracts with both a parent and a subsidiary company which added up to $250,000 wouldn’t be covered by the protections. Now, that was changed through the SOP. It had a change so that contracts with related parties don’t count towards the threshold. That means there’ll be more certainty for firms on whether the protections apply; it gives that clarity to everyone involved. It also means that more businesses will benefit from the protections.

There were also some comments from members in the House during the second reading of the bill about uncertainty for insurance contract, and I’m very pleased to be able to inform members that we’ve engaged with the insurance industry to make minor tweaks to the bill and provide them with more certainty and a reduction of costs. That change aligns the bill with the Government’s work on the insurance contract law review. That’ll mean insurers won’t need to review their contracts twice following two sets of law changes. So that’s some more good news about how this bill has progressed and changed—and been made better along the way. So, again, I want to thank the submitters on the bill. As I said before, these are relatively minor tweaks, but ultimately they will reduce costs and increase certainty for businesses, which is no small thing.

So, in closing, this Government’s goal is to create a productive, sustainable, and inclusive economy, where the interests of businesses and consumers are protected. This piece of legislation is one of the many things this Government is doing which contributes towards this aim, by providing better protections for businesses and consumers. I commend this bill to the House.

MELISSA LEE (National): Thank you, Madam Speaker. I would start by indicating that on this side of the House, we oppose this bill. I think, when it comes to commerce and consumer affairs - type legislation in this House, most people would like to think that we’re creating law that makes it easy for people to conduct business, and, from time to time, regulations need to be adjusted to update because some laws are quite old. But in terms of unfair conduct, such as the use of pressure tactics, targeting of vulnerable consumers, or drawing up of overly complicated contracts or one-sided contracts, it is something that we oppose—you know, use of deception and things like that. We do oppose that, but we already have laws in place which actually can prosecute those behaviours to protect the consumers.

In terms of some of the things that the Minister actually said, he began his speech by saying that, you know, he didn’t want to define the unconscionable conduct. That was at the very first beginning sentence of his speech tonight. The issue is that back in 2013, the Fair Trading Amendment Act—actually, I’ll go back. The bill follows the updates of the New Zealand Fair Trading Act and the Consumer Guarantees Act and the Auctioneers Act, which was passed between 2010 and 2015. The Fair Trading Act went through the select committee process, and the select committee at the time opted not to include the unconscionable conduct law, which was similar to that that existed in Australia. The reason why they opted not to include it at the time was because they wanted to wait for a body of case law built up around what unconscionable conduct actually means. Now this Labour Government is actually introducing this law without the body of case law, I believe. I just think it is unfair for people to actually spend more money, because when laws are created, regulations are actually created for businesses. It means, particularly for small businesses, it’s extra burden on them, extra money to figure out what unconscionable conduct actually means. It means money for lawyers. Lawyers can actually, you know, test this in a court of law, but for businesses, it means extra burden, extra costs. I think this Minister is actually putting those costs on businesses that should not have to spend that kind of money. When good laws are created, they shouldn’t have to spend money on legal advice to define what unconscionable conduct means.

I would’ve preferred it if the Minister had decided to define it, to make it very, very clear. I quote some of the concerns that stakeholders—and I actually quoted these in part in the previous iteration of our debate. Consumer New Zealand actually supported this law but recommended tighter drafting. And I quote—it says, “We support the introduction of a ban on unconscionable conduct. We consider New Zealand consumers deserve better protection from unfair business-to-consumer conduct than currently provided. However, we are concerned the new [provision] may not have [the] intended effect”—is one of the things that they actually said. Business New Zealand also—and I quote—“It would be fair to say that addressing this issue has been a lengthy and … repetitive process and we have consistently made the point there must be clear evidence of a significant problem before any of the changes proposed are enacted. At no stage during the process - now lasting around 16 years - have we had any clear evidence yet despite this, issues apparently already dealt with have now resurfaced.”

So what has changed? Nothing, really—nothing has actually changed. There’s no evidence introduced that this unconscionable conduct exists. We can’t even define it in legislation, but the burden is being put on our businesses, increasing the costs of good, working New Zealanders, mums and dads who run small businesses. It is a burden that they will now have to wear and face. I think if it’s good law, we would support it, and in my opinion, this isn’t one of them. I oppose this bill.

JAMIE STRANGE (Labour—Hamilton East): Madam Speaker, thank you for the opportunity to take a call on this excellent piece of legislation. I acknowledge the Minister the Hon Dr David Clark for the work that he has done bringing this to the House—or shepherding this through the House; I think it was the previous Minister who brought it in. I’d also like to acknowledge the select committee and the work that they’ve done. As the chair of the Economic Development, Science and Innovation Committee, I appreciate all of those who have made submissions on this bill. As we heard from the Minister, those submissions have been taken into consideration and changes have been made in the bill. That is our very good democratic process in full operation, which we like to see.

I’m not going to take a long call. The Minister outlined quite clearly the aspects of the bill. He outlined some of the changes that we’ve seen in the bill through this process. As we know, it prohibits unconscionable conduct in trade, extends the Act’s existing protections against unfair contract terms, and strengthens the ability of consumers to require uninvited direct sellers to leave or not enter their property.

I just want to quickly touch on the aspect around the uninvited direct sellers, because a recent survey from Consumer New Zealand of their members showed that 70 percent of people disliked door-to-door salespeople and want them to stop calling. I think I would be one of those 70 percent, because often someone comes to your door, trying to sell you something, and then you’re like, “Well, look, let me have a conversation and get back to you. Give me your card, give me your details.”, and they are like, “No, you have to sign up right now.”, and they pull out the iPad and they want to get your details right there, which is not good practice, in my opinion.

So I think I’ve sort of just raised a couple of points there. I commend this bill to the House.

JOSEPH MOONEY (National—Southland): Thank you, Madam Speaker. I rise on behalf of the National Party and as a member of Parliament for Southland to speak on this bill. Note that National Party opposes this bill. As I noted in the second reading of this legislation, unclear law is bad law. Unnecessary and unneeded regulation only stifles New Zealand’s productive sector. Now, there’s nothing scarier than a Government saying “You’ve got nothing to fear as long as you do the right thing—but we’re not going to tell you what the right thing is.” And that’s essentially what I heard from the Minister. The Minister said “I haven’t gone with a definition because I don’t want to limit the circumstances in which it can be used. So, look, don’t worry. If you’re doing the right thing, you’ll be fine. But we’re not going to tell you what the right thing is.”

We’re talking about small businesses here. And look, if I look at the penalties here—the maximum penalties of $600,000 for a body corporate and $200,000 for individuals—now, if I’m operating a small business, I’m going to be worried. I’m going to want to know what the definition is so that I don’t contravene it. So I don’t become liable as an individual for a $200,000 fine and my business doesn’t become liable for a $600,000 fine. Unfortunately, the Minister has just said “You’ve got nothing to fear, if the business is operating the business in a fair way. But I’m not going to tell you what a fair way is.” The Government has an obligation and a duty to provide certainty in the law that it creates. Certainty is what businesses need, especially right now in a very uncertain environment.

One of the biggest things we’re seeing across our communities, and certainly in my electorate of Southland, is a lack of workers. That leads to my next question, if you don’t have certainty about what these rules are, you’re going to need a workforce to interpret what these rules may or may not mean and how they apply to your business. Now, we have a huge shortage of workforce. We have even a shortage of lawyers. So this is a boon for lawyers, as my colleague said before. But we have a shortage of lawyers. So good luck finding a lawyer. And we saw in this House only a few weeks ago the Auditor-General had a shortage of auditors, so the Government had to extend the time for the Auditor-General to report back to the House by two months. We’re talking about small businesses. Small businesses don’t have the benefit of the Government that it’s going to extend the time that they need to work out what unconscionable conduct may or may not mean and try to find the workforce to interpret that for them and make sure they don’t become liable for a $600,000 fine, or a $200,000 fine for the individual.

This is bad law. It’s uncertain law that creates uncertainty in a difficult trading environment, and it is not well thought out. It is, unfortunately, in my estimation, not responsible for the Government to bring this piece of law in as it stands. After three readings, multiple reports, and a brief survey of Australian case law, we remain none the wiser and have no greater clarity or certainty about how this legislation may be applied. Ordinary small business people cannot have any certainty or clarity by looking at a statute and what the definition of unconscionable conduct would be. I note there are some subjective parts of the way that this may be interpreted in terms of what the court may have regard to in terms of “whether an affected person was able to understand any documents provided by the trader.” Well, good luck to a trader trying to determine whether or not an effective person was able to understand the documents they provided to them. That is a subjective matter for the court to determine and it’s going to be very difficult for businesses to try to work that out.

But I emphasise that we already have laws in place which can be used to hold those to account who try to exploit vulnerable consumers. Even if we take the Minister’s argument at its highest that this bill improves market conditions for consumers, such a proposition fails the sniff test. Again, if we look at Australia—which has a much larger and more complex trading environment—since the unconscionable cultural trading legislation which passed in 2010, 11 years ago, they’ve only had 16 cases that have been brought to their courts. The bottom line: this bill is a solution in search of a problem. The problem has been clearly defined and the definition has not been clearly defined. It fails to provide the certainty that is the responsibility of Government to provide to our business community. So with that, I would say I do not recommend this bill to the House.

ANNA LORCK (Labour—Tukituki): Thank you, Madam Speaker. As a small-business owner for, I think, about 16½ to 17 years, I can speak with a bit of authority to say it’s very, very important that we have bills like this that support fair trade. This is why I believe we must commend this bill to the House. It gives me great pleasure to do so. Congratulations to everybody involved. Thank you, Madam Speaker. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): This debate is interrupted and is set down for resumption next sitting day. The House stands adjourned until 2 p.m. tomorrow.

Debate interrupted.

The House adjourned at 9.58 p.m.