Tuesday, 8 March 2022

TUESDAY, 8 MARCH 2022

TUESDAY, 8 MARCH 2022

The Speaker took the Chair at 2 p.m.

karakia/prayers

karakia/prayers

Hon JACQUI DEAN (Assistant Speaker) (remote): Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the Queen and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom, justice, mercy, and humility for the welfare and peace of New Zealand. Amen.

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

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

SPEAKER: A petition has been delivered to the Clerk for presentation.

CLERK: Petition of Zorawar Mann, requesting that the House urge the Government to give lifetime visas to parents over 60 of all immigrant citizens, providing them with medical benefits but not living costs.

SPEAKER: That petition stands referred to the Petitions Committee.

I present the annual report of the Parliamentary Service commission for the year ended 30 June 2021. That paper is published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Report of the Economic Development, Science and Innovation Committee on the Retail Payment System Bill

report of the Governance and Administration Committee on the Paige Harris Birth Registration Bill

report of the Māori Affairs Committee on the Te Pire mō te Hararei Tūmatanui o te Kāhui o Matariki Te Kāhui o Matariki Public Holiday Bill

report of the Regulations Review Committee on the examination of COVID-19 orders presented between 30 November and 3 December 2021.

SPEAKER: The bills are set down for second reading; the COVID-19 orders are set down for consideration. The Clerk has been informed of the introduction of a bill.

CLERK: COVID-19 Response (Courts Safety) Legislation Bill, introduction.

SPEAKER: That bill is set down for first reading.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. CHRISTOPHER LUXON (Leader of the Opposition) (remote) to the Prime Minister: Does she stand by her response when asked if New Zealand has a cost of living crisis that “I wouldn’t describe it that way”, and is she considering adjusting income tax brackets to help Kiwis struggling with rising prices?

Rt Hon JACINDA ARDERN (Prime Minister): I stand by the entirety of the interview, where I stated that—

Chris Bishop: Ha!

SPEAKER: Order! The member’s going across the top of their own leader.

Chris Bishop: What? No I’m not. She’s answering the question.

Rt Hon JACINDA ARDERN: —where I—

SPEAKER: Order! The Prime Minister will resume her seat. I will remind members of the comments that I made last week, and that is that we are in a more sensitive time as far as members who are participating remotely, and excess noise is something which interferes with their ability to hear the answer. I will ask members to control themselves and especially Mr Bishop not to argue from his seat.

Rt Hon JACINDA ARDERN: I stand by the entirety of the interview, where I stated, “There is an impact that people are feeling undeniably.” The debate is not whether inflation has increased and is impacting people. The debate is what we should do about it. The Opposition has proposed cuts to the top tax rate and getting rid of policies to help first-home buyers. We, on the other hand, have worked consistently to increase focused support for low and middle income earners. That’s why we’ve overseen a $5 increase in the minimum wage, benefiting around 300,000 workers. We’ve increased Working for Families changes that will lead to 346,000 people better off by an average of $20 each a week. We created the winter energy payment, starting again from 1 May, benefiting over a million New Zealanders during the winter months. We made the largest across the board increases in benefit incomes since the 1940s, and we’ve increased the pay of new police officers by 19 percent since 2017, 16 percent for primary teachers, and 21 percent for new nurses. The Government’s plan is providing targeted support to New Zealand families to deal with the costs of living, whilst also investing in critical services and, importantly, keeping a lid on debt.

Christopher Luxon: Why won’t she admit that New Zealand has a cost of living crisis when rent is up $140 a week and food prices are up more than 13 percent under Labour?

Rt Hon JACINDA ARDERN: This side of the House absolutely acknowledges the increases that families across New Zealand are currently experiencing—as many other countries are—as we see the COVID recovery mean that demand is often outstripping supply. We also have the issue, of course, of the pressure on fuel prices, which have gone up over 500 percent since April 2020 in terms of a barrel of crude oil. That is having an impact. But what I would contend is that the National Party’s proposal, for instance, to take away essentially $26 per week from someone earning under $40,000—because they voted against our increases to the family tax credit—and instead replace it with $2.15 is simply not the way to support families who need it most.

Christopher Luxon: Does she accept that with petrol now above $3 a litre in some places, Kiwis are having to pay as much as $60 more to fill up than when she took office, and if so, why won’t she admit we have a cost of living crisis?

Rt Hon JACINDA ARDERN: I again will bring the member back to where we are having the debate currently, which is that the member is proposing to, for instance, cut policies that will make it easier for first-home buyers to get into the market, and to get rid of the top tax bracket, instead of focusing on support for low and middle income New Zealanders. Now, again, I would also point out that the member, at the same time as he is raising what is essentially the impacts of international fuel prices and the fact that we have now a conflict in energy-rich countries with Russia invading Ukraine—yes, it’s having an impact at the pump. But the member is well short on his proposals, because he essentially is not answering the question of how he would pay for some of the things that he is proposing. There are two options: he’s cutting health, he’s cutting education, or he’s increasing debt.

Christopher Luxon: Mr Speaker—

SPEAKER: Before the member goes on, I think I’m just going to do a reminder, and that is that when using the remote system, members are, after a couple of supplementaries to their primary question, still required to call. I think the member received some training—I hope the member received some training—on that. If he hasn’t, I’ll just run through until he’s finished, except if someone else goes to it. But a reminder to all members who are participating remotely: if they have a question, they automatically get two supplementaries, and then we go to other members or we finish, unless they indicate through the chat function that they want the call.

Christopher Luxon: Does she accept she could provide tax relief to more than 3.2 million Kiwis by simply adjusting the tax brackets for inflation, and the $4.3 billion she had left for new spending would still be the single biggest increase in new spending in New Zealand’s history?

Rt Hon JACINDA ARDERN: The member is proposing a change in policy that would essentially see someone, for instance, as I’ve said, who would be on a wage of $45,000 receiving $2.15 per week. At the same time, he has rejected and voted against the family tax credit increases that we proposed that would mean that they were more than $20 a week better off. He does not support increases in the minimum wage. He wants to get rid of the top tax bracket that we have introduced. He’s proposing $3 billion worth of cuts to health, education, and all of the services that New Zealanders value; either that or he wants to increase debt. We stand by our policies. They are focused on low and middle income earners, whereas his will give $2.15 instead, where people could be better off by over $20.

Christopher Luxon: Is it fair that someone on the minimum wage who works 44 hours a week is set to face a marginal tax rate of 30c on the dollar, or that someone on the average wage is now in the 33 percent tax bracket?

Rt Hon JACINDA ARDERN: Or is it fair that that member asks that question whilst not supporting any increase to the minimum wage? Again, here I come back to the wider point: consistently, since 2017, as a Government we have been focused on lifting the incomes of New Zealanders. And here is the impact of those policies: a minimum wage worker working 40 hours a week in 2017, compared to now, is receiving an extra $218 per week. A new police officer graduate is receiving $12,292 more overall per annum. An experienced nurse—$16,431. The average pay for a secondary teacher—a $12,905 difference between now and 2017. That is a marked increase as a result of the focus we’ve had on lifting the wages of low and middle income New Zealanders, and we stand by that.

Christopher Luxon: What does she say to the mother of five, Krystine Nation, who told the AM Show, “This is something that is so embarrassing to say but I cannot afford to go to work … It’s cheaper for me to stay at home and not pay the extra petrol, not pay the huge daycare costs, and the extra food for lunches.”; and how does she think struggling Kiwi families feel when they hear her refusing to even admit we have a cost of living crisis?

Rt Hon JACINDA ARDERN: We have always been very careful to ensure that we’ve done things like increase the minimum family tax credit, that we have the in-work tax credit, and that we make sure that those keep pace to ensure that families are always better off in work, and that’s where increases in the family tax credit also make a difference. But, sadly, the member who asked the question has often not supported any of those increases.

Christopher Luxon: How can she say with a straight face that Kiwis paying an extra $5,000 a year for basics like food, power, petrol, and rent doesn’t count as a cost of living crisis?

Rt Hon JACINDA ARDERN: Again, the member is not hearing anything that I’m saying in acknowledging that, right now, yes, there are increases that are impacting on New Zealand families. As I said, it’s undeniable. But the debate here is whether or not the member’s solutions or the Government’s are the ones that will benefit New Zealanders the most. Now, we haven’t even got to the fact that what the member is proposing is highly inflationary. So it wouldn’t take much for that $2 that the member is proposing to be absorbed. I come back to the point: consistently, since 2017, we have focused on putting hundreds of millions of dollars back into the pockets of Kiwis, and it stands true—

Nicola Willis: Defensive, much?

SPEAKER: Order! Second warning, Nicola Willis.

Rt Hon JACINDA ARDERN: —that they’ve seen an increase in incomes that has outstripped the increases in the cost of living. Right now, though, there is an impact, and the whole world is seeing it, and that’s why we will continue to take measures like those I’ve already spoken to today.

Hon Chris Hipkins: Given concerns that have been raised about the cost of food, has she seen any reports of increased support for the Government’s free and healthy school lunches programme?

Rt Hon JACINDA ARDERN: I would expect all members in this House to support a programme that has seen tens of thousands of children now receive free lunches in schools, and we made that a universal policy for those schools that are in the programme to ensure that all families receive the benefit of having one less thing to worry about. When it comes to the increase in the cost of food, I have seen one other report: the Leader of the Opposition complaining about a potential increase to the cost of his coffee as a result of the increase in the minimum wage. That is where that member’s priorities lie.

Christopher Luxon: Does that mean it’s her view that, if the Government spends an extra $6 billion, it won’t be inflationary, but giving Kiwis less than a third of that in tax relief would be?

Rt Hon JACINDA ARDERN: Of course, the Treasury has consistently given advice over what has inflationary impacts, and if you increase demand in the economy, then yes, that would have inflationary impacts, but that doesn’t stop, of course, the Government continuing to look to ways to support those who feel disproportionately the impact in the cost of living, which is exactly why we have created targeted spending—$270 million worth—into families by increasing the family tax credit.

Christopher Luxon: Is the reason she won’t admit New Zealand has a cost of living crisis simply because that would mean admitting she has a responsibility to do something about it, but she’d rather increase spending than give more than three million some much needed, inflation-adjusted tax relief at the Budget?

Rt Hon JACINDA ARDERN: Actually, the opposite—actually, the opposite. The point that I have been making throughout my entire time in office is that we’ve been working to ease the cost of living and increase wages from the time we took office, not just right now, and that’s why, when you look back, for instance, overall, at the increase in incomes for families that we’ve worked on since 2017, if you take a newly trained secondary school teacher, not only have their wages increased, they’ve also had an increase in the family tax credit; they’ve continued to receive the in-work tax credit. If they have a newborn in their family, they’d receive the Best Start payment. Their weekly in total, before wages are taxed, would have increased by $224. A sole parent working 30 hours at the minimum wage, again, would have received an increase in their wages, accommodation supplement, family tax credit, minimum family tax credit—in all, an extra $336. The point I’m making is that the member opposite may only have started talking about the importance of increasing wages against the cost of living now; we’ve been talking about it since 2017.

Question No. 2—Finance

2. BARBARA EDMONDS (Labour—Mana) to the Minister of Finance: What recent reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): The Crown’s accounts, released last week, continue to reflect the resilience of the economy and the Government’s balanced financial management. For the seven months to the end of January, the operating balance before gains and losses deficit was $8 billion, $3.7 billion below the forecast in December’s Half Year Economic and Fiscal Update. Net core Crown debt stood at 34.5 percent of GDP—$600 million less than had been predicted, and significantly below the countries with which we compare ourselves. New Zealand is in a strong fiscal position as we deal with the impacts of the Omicron outbreak and other challenges, and it is this that gives us the ability to particularly support low and middle income earners at this time.

Barbara Edmonds: What is the impact of the economy on the country’s tax take?

Hon GRANT ROBERTSON: The economy’s strength is shown in tax revenue being $1.4 billion above forecast, at $59.7 billion. This is largely due to better than expected corporate profits and a strong jobs market, with more people in work. This better than expected result reflects the resilience of the economy, despite the volatility and uncertainty surrounding the ongoing pandemic. We will continue to take a balanced approach to this response and invest in the longstanding challenges that we have, while carefully managing our resources for the long term.

Barbara Edmonds: What other reports has he seen on the economy?

Hon GRANT ROBERTSON: The strength of the jobs market is continuing to support New Zealand’s economy. Stats New Zealand reported last week that filled jobs in January rose at a faster pace of 0.5 percent or 10,630 jobs on December to reach a new high of $2.3 million. This marks 14 months of continuous job gains, despite the effects of the pandemic. The robust jobs market shows the Government’s actions in response to COVID-19 since the start of the pandemic to protect lives and livelihoods has proved to be the best economic approach. The way for us to support New Zealanders and get more money in their pockets is to have people in work with decent wages, and that is what we are working on.

Question No. 3—Prime Minister

3. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does she stand by her statement, “I wouldn’t describe it that way” when asked if there was a cost of living crisis; if so, why?

Rt Hon JACINDA ARDERN (Prime Minister): As I’ve already told the House, I stand by the full interview where I acknowledged the impact high inflation driven by significant increases in global energy prices and supply chain issues is having on New Zealand families. My full quote also set out some of the changes this Government has made to increase the incomes of New Zealand families—changes I note he also opposed. There is no doubt that globally we are seeing the impact of increased demand and supply constraints as a result of the global COVID-19 recovery but I stand by our response to this and our COVID-19 plan itself. I note the member disagrees, having published a newsletter on 7 March stating, “Were the lives saved from COVID-19 worth shutting down the country? … Had we known all of this from the start would we have made different choices?”. I for one would have not.

David Seymour: Does she agree with the statement “unemployment, housing, cost of living add up to people [losing] faith in [Government].”?

Rt Hon JACINDA ARDERN: As I’ve said in some of my previous answers, the fact is that we have been focused through the entirety of our time in office in ensuring that people are in jobs—jobs that are paying them dignified wages, that allow them to put food on the table—that we have worked hard to address the housing crisis, which we know continues to require our absolute focus, and in lifting wages because of course that is how we ensure that we have a productive economy and of course, as I say, people able to lead meaningful lives. I stand by all our efforts in those areas.

David Seymour: Did the Prime Minister just have difficulty addressing that question directly because that statement was made by one Jacinda Ardern in 2013?

Rt Hon JACINDA ARDERN: I absolutely addressed the question and acknowledged the importance of all of those things and as I’ve said in answer to the other Leader of the Opposition’s answers—[Interruption]

SPEAKER: Order! Mr Bennett—last warning.

Rt Hon JACINDA ARDERN: And as I said in my answers to the other Leader of the Opposition, I stand by all of our efforts to address the cost of living and increase wages, and the facts speak for themselves.

David Seymour: Does her Government have any solutions to make life more affordable for New Zealanders that don’t include handing out money taxed from others; and, if not, why won’t she cut the middle-income tax rate of 30c down to 17.5c so that average worker keeps $2,000 more of their own money?

Rt Hon JACINDA ARDERN: And as I’ve already addressed in my previous answers, we have focused on increasing the wages of New Zealanders at the middle and low income wages through various means. Whether it’s the increase in the minimum wage or whether or not it’s through initiatives like addressing the inadequate incomes of many of our public servants—all of it has made a difference across our nurses, our teachers, our police. I note that those same workers would probably also want us to invest in health, in education, in making sure we have more police, more doctors, more nurses, and more teachers, and we have done that as well. The member’s proposals would see the opposite: cuts in each of those areas.

David Seymour: Does the Prime Minister stand by her answer to the primary question; and if she really believes that saving a life is worth any cost, why does her Government have a Pharmac review that doesn’t even consider funding?

Rt Hon JACINDA ARDERN: When it comes to Pharmac, I stand by the fact that we have increased considerably the Pharmac budget since we have been in office. But to come back to the member’s actual answer, I almost cannot believe in this House that we are now having a debate over whether or not our COVID response was worth the lives it saved—absolutely—and it will be up to that member to justify outside of this House why he believes that we can emerge from this crisis with one of the lowest rates of unemployment that we’ve seen, growth, solid export earnings for our exporters, and a COVID recovery economically that is solid and saved thousands of lives—and yet he would rather have seen death.

David Seymour: So COVID’s worth it but certain cancer and other patients pleading for essential drugs from Pharmac aren’t?

Rt Hon JACINDA ARDERN: The argument I am making is that we achieved in New Zealand both. We have managed to save lives and have an economic recovery that has outstripped almost any other OECD nation.

Hon Chris Hipkins: Would cancer patients in our hospitals have received better or worse healthcare if our health system had been overrun with COVID cases for the last two years?

Rt Hon JACINDA ARDERN: You only need to look at those countries where they did have an exponential increase in cases and increase in hospitalisations to hear the stories of people who missed out on cancer care as a result. It is a remarkable testament to our health workforce that even Middlemore managed to continue on with planned care for a long period of time, even during this outbreak. I almost cannot believe what the member is proposing.

David Seymour: Does the Prime Minister agree with Grant Robertson’s comments that tax cuts are inflationary; and, if so, can she explain to New Zealanders how her Government spending their money is not inflationary, but letting them keep it and spend it themselves is inflationary?

Rt Hon JACINDA ARDERN: Of course, the member has left out the context in which the Minister of Finance was making those comments which is that, right now—and he is not alone in making those statements—economists would make the same statements, as would the Treasury around the impacts right now being inflationary.

Question No. 4—Women

CHRIS BISHOP (National): Point of order, Mr Speaker. Thank you, Mr Speaker. Just in relation to question No. 4 before you call it, I think a few of us were slightly surprised to see the wording of question No. 4 today, because it starts with “In light of today being International Women’s Day,”. I’d draw the Speaker’s attention to Speakers’ ruling 174/6, which says, “(1) Questions must not be prefaced with a statement; or (2) with assertions or assumptions, such as ‘given’ or ‘in the light’.”—most recently, from 2017—

SPEAKER: Right. No, I accept I made an error in accepting the question. I will take the member’s advice and be much stricter in accepting questions from now on.

CHRIS BISHOP (National): Well, no—point of order, Mr Speaker. The point I was going to make before you stood up, sir, was that if there is going to be a slight liberalisation in relation to the rule that, particularly, primary questions have to start with a question word, I don’t think there would be much disagreement in relation to that if there was to be some slightly loose liberalisation, if that is indeed where we’re going.

SPEAKER: No. I want to make it clear: this was not a deliberate decision on my part. It was an error and I will be looking very carefully at all primary questions—more carefully than I have been—to make sure that they’re fully within the rules, and I’ll warn the whips and others who put them in of that now.

4. ARENA WILLIAMS (Labour—Manurewa) (remote) to the Minister for Women: In light of today being International Women’s Day, what work is she progressing to break biases towards women?

Hon JAN TINETTI (Minister for Women) (remote): Happy International Women’s Day. The theme of International Women’s Day today is “Break the Bias”. Today, I’m calling on all of us to reflect that research shows around 80 percent of the gender pay gap is caused by factors such as conscious and unconscious bias. That means we all have a role to play in breaking the bias and being responsible for our own thoughts and actions. Under Labour we’ve made good progress in closing the gender pay gap in the Public Service. It’s at the lowest it’s ever been at 8.6 percent, down from 9.6 last year. The Government’s eliminating the gender pay gap, and the Public Service action plan is implementing actions and milestones towards eliminating the gender pay gap in the Public Service. I’m also progressing work to see those gains in the private sector pay gap with Māori, Pacific, disabled, and ethnic women.

Arena Williams: How else is the Government leading by example to break the biases women face?

Hon JAN TINETTI: The Government appoints people to over 430 State sector governance boards and committees. The Government has met its target of 50 percent women’s participation on public sector boards with 50.9 percent of appointed members being women as of December 2020, the highest ever proportion achieved. Equal representation of women in governance, leadership, and parliamentary roles breaks biases, inequality, and discrimination.

Arena Williams: What work is under way to reduce barriers for women in the labour market?

Hon JAN TINETTI: As a Government, we are committed to ensuring our economic plan is a plan that works for women and, in particular, includes the most vulnerable groups of women. I’ve been working with Cabinet colleagues on a cross-Government approach that addresses the intermediate impacts of the COVID-19 pandemic on women as part of the Government’s wider COVID-19 economic recovery programme. This has culminated in the development of New Zealand’s first ever Women’s Employment Action Plan, a dedicated plan to embed medium- and long-term changes. When the employment action plan is completed, it will be about more than simply jobs. It’s also about reducing barriers, increasing access to childcare, and providing training and support for women in business and entrepreneurship. We can create a future free from gender pay discrimination.

Question No. 5—Finance

5. Hon SIMON BRIDGES (National—Tauranga) (remote) to the Minister of Finance: Does he agree that New Zealand has a cost of living crisis; if not, why?

Hon GRANT ROBERTSON (Minister of Finance): I acknowledge that there is considerable pressure on household budgets at the moment from inflation caused largely by global factors. I don’t agree with the member’s characterisation. What the world is experiencing, what forecasters are telling us, is a spike in headline inflation primarily driven by global issues like supply chain disruptions as ports are closed due to COVID-19 and from global oil prices, which has now been exacerbated by the Russian invasion of Ukraine. It’s worth noting that quarterly inflation was lower in the December quarter compared to September at 1.4 percent compared to 2.2 percent and is projected by the Reserve Bank to continue trending downwards. This sees annual Consumers Price Index (CPI) inflation peaking in the March quarter and then falling across 2022 and 2023.

Hon Simon Bridges: Does he agree with the Prime Minister, as reported by Newshub, on the cost of living that “While things are bad now, they are expected to improve soon.”?

Hon GRANT ROBERTSON: As I just said to the member, the forecasts from the Reserve Bank and others are that inflation will peak in the March quarter and then fall across 2022 and 2023. That does not in any way undermine the fact that for many households, it is tough when there are rising prices. That’s why this side of the House has supported those on low and middle incomes, with things such as increases to benefits and the minimum wage—opposed by the National Party.

Hon Simon Bridges: On what basis does he expect New Zealand’s cost of living crisis to improve soon?

Hon GRANT ROBERTSON: On the basis of a number of forecasts that indicate that while inflation will spike up and is spiking up, there will be a reduction in that over the course of 2022 and 2023.

Hon Simon Bridges: With banks predicting inflation may go to 7 percent or higher and the Reserve Bank signalling consistent interest rate hikes over the next couple of years, isn’t the chance of New Zealand’s cost of living crisis improving soon very low?

Hon GRANT ROBERTSON: As I’ve said now three times in my answers, the forecasts that we have from the Reserve Bank and the Treasury are to see that the CPI inflation will begin falling across 2022 and 2023. No one is underestimating that this is a challenging period for many households and indeed for New Zealand when we are faced with the global supply chain constraints that we are and the rising cost of oil. What a Government can do in the face of this is look after the most vulnerable, our low and middle income earners. That is what the Government is doing. Also, a Government that has overseen wage increases outstripping inflation in the period leading up to this time. This Government stands by our record in that regard.

Hon Simon Bridges: Given rents are up $140, food prices more than 13 percent, petrol is hitting $3 a litre, the real wages are now going backwards under his Government’s watch, don’t New Zealanders need meaningful tax relief at Budget 2022?

Hon GRANT ROBERTSON: What New Zealanders need is a Government that has the consistency to look after them, to make sure that we invest in supporting those on low and middle incomes, to make sure we see jobs created so that the way that people have money in their pockets is through wages and higher wages. The kind of proposals that the member is supporting not only will be inflationary right now but they also will mean that we underinvest again in health and education, as he did the last time he was in office.

Hon Simon Bridges: In light of the upcoming Budget’s historic $6 billion in new spending, why can’t a portion of it go on tax relief to hurting New Zealanders as the cost of living crisis continues to worsen?

Hon GRANT ROBERTSON: The problem that the member has is that his proposal’s not just about this Budget, because his leader said on the weekend that this approach that they want to take to taxation will now continue into future Budgets, which means it has to be priced in there, which means there will be further cuts in public services or higher debt. The member is falling into the same trap of his predecessors. He can’t have all three things happening at once—taxes going down, debt going down, and spending staying the same or going up. And I would note, the member has spent several weeks telling me that I shouldn’t have a $6 billion one-off operating allowance in Budget 2022. And now he wants to spend all of it. He should try to be a bit more consistent.

Question No. 6—Tourism

6. RACHEL BROOKING (Labour) (remote) to the Minister of Tourism: What announcements has he made about supporting communities to develop local tourism facilities?

Hon STUART NASH (Minister of Tourism): Last week, Associate Minister Henare and I announced a further $16.5 million funding round through the Tourism Infrastructure Fund. As we prepare for the return of international tourists and increasing numbers of Kiwis coming home, we are aware of the pressure many communities faced with visitor numbers prior to the global COVID-19 pandemic. The Tourism Infrastructure Fund supports local councils, especially those with small ratepayer bases, to develop much-needed tourism infrastructure. These sorts of tourism assets and facilities are vital if we want to protect and enhance our “100% Pure” brand and our reputation for offering quality experiences.

Rachel Brooking: Why is the Government investing in councils’ tourism infrastructure?

Hon STUART NASH: Tourism is hugely important to the economy. We need quality infrastructure and facilities so all can enjoy our wonderful country. Our investments are proof of our commitment to stand beside local communities to co-fund important tourism infrastructure that many small towns and districts cannot afford by themselves. To date, the Tourism Infrastructure Fund has helped to fund more than 200 projects, from boat ramps to scenic coastal walkways, essential waste-water plants, wharves, and more. The last funding round had a particular focus on the five South Island regions most affected by the absence of international tourists: Queenstown, Wānaka, Fiordland, Aoraki / Mount Cook, Mackenzie district, Kaikōura, and the West Coast and its glacier region.

Rachel Brooking: How will this funding round help New Zealanders celebrate Matariki?

Hon STUART NASH: This year’s funding round will have a special emphasis on physical infrastructure to support our unique new mid-winter public holiday marking Matariki. Matariki will be our first public holiday that recognises Te Ao Māori and will be an occasion that is uniquely ours, starting this year on 22 June. Now is the time to start planning to promote Matariki to the world. Councils are encouraged to put real thought into infrastructure they want as part of a growing focus on the significance of Matariki, celebrating our newest public holiday.

Question No. 7—Housing

7. NICOLA WILLIS (Deputy Leader—National) to the Minister of Housing: Does she have confidence in the leadership of Kāinga Ora; if so, who, if anyone, has been held accountable for its decision to use taxpayer funds to publish an election-year advertisement featuring a soon-to-be-announced Labour Party candidate?

Hon Dr MEGAN WOODS (Minister of Housing) (remote): In answer to the first part of the question, yes. In regard to the OneRoof article, I made it clear to Kāinga Ora that it did not meet my expectations of Public Service neutrality, and that’s why I communicated to them on 3 August to convey that the conduct did not meet those expectations for how Kāinga Ora should operate. It’s also why I asked the Public Service Commissioner to investigate on 11 November, when I became aware of another example of minimisation within Kāinga Ora in relation to this matter. On that same day, I made it crystal clear to both the chair and the chief executive of Kāinga Ora that the organisation was not meeting my expectations about how seriously it needs to take its duty on public sector neutrality.

In answer to the second part of the question, as is appropriate, I am holding the board accountable to ensure that nothing like this happens again. I note that in his report, the Public Service Commissioner found that Kāinga Ora now fully accepts that its response should have been handled better, has provided evidence of improvements in its training and processes, and has acknowledged that there is further work to be done. I expect Kāinga Ora to improve the culture of understanding of how it is part of the broader Public Service and what that means for staff employed within the organisation. And I will be receiving regular reporting of this work. The chair has indicated to me that he and the board are fully committed to meeting this expectation.

Nicola Willis: Well, does she think it’s acceptable that, despite her communication in August that it hadn’t met her expectations, when these issues hit the media in November, a senior general manager at Kāinga Ora said in an email to his colleagues—that I’ve obtained, and I quote—“I don’t like the implication of apology from us when we did no wrong.”?

Hon Dr MEGAN WOODS: As I have been clear throughout, I was not satisfied with the way that Kāinga Ora handled this situation—it is why, as soon as I saw a series of emails, I asked the Public Service Commissioner to investigate this matter.

Nicola Willis: Does she continue to have confidence in the chief executive of Kāinga Ora when even after she has made her expectations crystal clear he wrote to the senior communications adviser at the heart of this matter stating—and I quote from his email—“As I am sure you will have been told, the judgment call you made was fine, […] I am happy to stand behind you on it. This little maelstrom will pass quickly, I just hope it doesn’t make you too risk averse!”?

Hon Dr MEGAN WOODS: Yes, I do have confidence in the chief executive. I also have confidence in the report produced from the Public Service Commissioner, who said, in paragraph 45—and I noted this—“We considered that late last year Kāinga Ora was still maintaining a position that minimised the issues and contained some errors about key facts, demonstrated a misunderstanding of the principle of political neutrality at all levels within the organisation, and how it should have operated in this context. That is no longer the case. Kāinga Ora now fully accepts that its response should have been handled better, has provided evidence of improvement in training and processes, and has acknowledged there is further work to be done, which it is committed to following through.” I asked for this to be investigated, and I take the conclusions of that investigation seriously.

Nicola Willis: Was the chief executive of Kāinga Ora correct to say in an email of 11 November that “The key issue for the Minister is the comments in your emails rather than the decision per se.”?

Hon Dr MEGAN WOODS: What the chief executive was conveying to a staff member, I expect, was that I took issue with some of the language that was used in emails that I saw as a result of an Official Information Act (OIA) request that came across my desk. As soon as I saw that Official Information Act request, I contacted Kāinga Ora and let them know that it was well below my expectations, and that it simply was impossible to un-know something once it was known. I do note, however, that that member sat on that OIA for several weeks before she did anything about it.

SPEAKER: Does the member want a supplementary?

Nicola Willis: Yes, thank you.

SPEAKER: Well, the member might ask her colleagues to be quiet.

Nicola Willis: Why does Andrew McKenzie remain the chief executive of Kāinga Ora when he has failed to ensure his organisation understood basic standards of Public Service neutrality, and when, despite explicit warnings from her as Minister and the chairman of Kāinga Ora, he continued to stand by such obviously wrong decisions by his senior staff?

Hon Dr MEGAN WOODS: As I have indicated in an answer to a previous question, I have confidence in the chief executive of Kāinga Ora, and I have further confidence reinforced from the report that I asked the Public Service Commissioner to carry out, who notes that there is clear evidence that there has been an improvement in processes. He notes that the chief executive and the management team have owned that this was not handled properly and—importantly for me—that they are focused on fixing this.

Nicola Willis: Why did Helen O’Sullivan resign from the Kāinga Ora board in November, shortly after these issues became public and just nine months into the job, and does the Minister share my concern that O’Sullivan left because she no longer wanted to be associated with this failing organisation?

Hon Dr MEGAN WOODS: In answer to the second part of the question, I utterly reject the assertion that the member has made. I don’t have to make assumptions, because I was told by Helen O’Sullivan herself and communicated also through the chair that she’d accepted another board appointment that was in conflict with her role on the Kāinga Ora board.

Question No. 8—Workplace Relations and Safety

8. JAN LOGIE (Green) to the Minister for Workplace Relations and Safety: Will he introduce a comprehensive pay transparency model to help eliminate pay discrimination before the end of this parliamentary term; if not, why not?

Hon MICHAEL WOOD (Minister for Workplace Relations and Safety): I thank the member for her question. The Government is committed to eliminating pay discrimination in Aotearoa New Zealand and making it easier for women to achieve pay equity. We’ve already made good progress towards these aims. We’ve passed the equal pay Act in 2020 to make it easier for women in female-dominated occupations to be paid fairly for the work they do, and we’re making good progress on settlements. We’ve championed the first ever Women’s Employment Action Plan, which has been taken forward by my colleague the Hon Jan Tinetti. I’m pleased to also confirm that we’ll be shortly introducing fair pay agreements, which will help women who are especially marginalised in the labour market to increase their wages. As the member will be aware, the Education and Workforce Committee will shortly be reporting the findings of its briefing into pay transparency back to the House. Following this, the Government will consider its response to the committee’s findings and assess the next steps for progressing this important work.

Jan Logie: Does the Minister think it is equitable that in 2021, wāhine Māori were paid almost 25 percent less and Pasifika women 27 percent less than Pākehā men; if not, what new actions will he take to close this gap?

Hon MICHAEL WOOD: I don’t think that any reasonable person would consider that to be an equitable or a fair outcome. That’s why, in line with the comments in my primary question, I’ve outlined the fact that the Government has a broad-based programme to address these issues—the work we’re doing on fair pay agreements; the work we’re doing to lift the minimum wage, which will disproportionately benefit those in low-income occupations—and I will confirm, again, that the Government will be looking with great interest at the report of the select committee to consider what the next steps can be to make sure that we have genuine pay equity for all New Zealand workers.

Jan Logie: Does the Minister agree that women, Māori and Pasifika, and disabled peoples will benefit from greater transparency, as studies have shown pay transparency decreases wage gaps on lower and middle incomes and helps career progression?

Hon MICHAEL WOOD: Yes, I’d broadly agree with the assessment that greater pay transparency does assist with pay equity, but I note that it’s not all that simple. There are countries that do have pay transparency arrangements where the gender pay gap is, in fact, wider than New Zealand’s is at the moment. One of the things that appears to be important from the research that I have seen on this matter is how a pay transparency regime is designed, and there are important questions to consider such as whether reporting and transparency is sufficient or whether there should be additional measures within the system to drive outcomes. Those are the sorts of questions that we’ll be considering in light of the select committee’s report.

Jan Logie: Will his Government commit to ensuring all similarly sized organisations join those on New Zealand’s first pay gap registry, launched today?

Hon MICHAEL WOOD: I do take note of the pay gap registry that has been set up by Mind the Gap and announced today, and I think there’s something important for the House to note here, which is that while it is important for there to be leadership from the Government, there is also a very important role for private sector leaders—who employ most New Zealanders—to stand up and start taking action on this issue. I think the establishment of the registry is a good step. I would encourage organisations who want to deal better with pay equity issues to engage with it, and I again confirm my comments from earlier that the Government will be looking at the recommendations and views of the select committee to establish what further steps we can take.

Jan Logie: Does the Minister expect to see legislation introduced this term in the wake of the select committee’s report, knowing that the Government committed to progressing pay transparency this term in July 2020?

Hon MICHAEL WOOD: As I have outlined, the Government is committed to this issue and is taking real steps to deal with this issue and make sure that we make progress on pay equity, and I note that we have made progress over our term of Government. The gender pay gap has dropped from around 12 percent in 2016, to 9.1 percent as of 2021. That’s not good enough. There is more work to be done, but what I would say to the member is that with an issue like this, we do want to do it properly. So there’s a strong level of commitment. We want to examine the evidence, we’ll examine the select committee’s report, and then we’ll make considered decisions that make sure that we advance towards the goal that we all agree with, which is pay equity and fairness for all New Zealand workers.

Jan Logie: I seek leave to table a letter from the Hon Iain Lees-Galloway and Julie Anne Genter from July 2020, committing to progressing pay transparency as a Government.

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

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

Question No. 7 to Minister

NICOLA WILLIS (National): Point of order, Mr Speaker. I seek leave to table a document. It is an email from a general manager at Kāinga Ora to a senior staff member, including the quote “I don’t like the conclusion”—

SPEAKER: Order! The member doesn’t need to quote it. The member needs to give the source of it. Is it an Official Information Act (OIA)—

NICOLA WILLIS: I obtained this document under the Official Information Act.

SPEAKER: So it’s been previously made public?

NICOLA WILLIS: It’s not publicly available. I’ve obtained it under the Official Information Act.

SPEAKER: Normally, when these things are made available under the Official Information Act these days, they are actually made generally available. If the member assures me that is hasn’t, I will put that to the House.

NICOLA WILLIS: I’m certainly not aware it’s been made publicly available.

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

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

NICOLA WILLIS: Can I seek leave to table another document?

SPEAKER: Yes, of course the member can.

NICOLA WILLIS: It’s a very big OIA, and these emails—

SPEAKER: Order! The member has had her chance.

NICOLA WILLIS: Point of order, Mr Speaker. I seek leave to table a document.

SPEAKER: The member has just acted in a disorderly manner. She will apologise to the House.

NICOLA WILLIS: I apologise, Mr Speaker.

SPEAKER: A point of order—Nicola Willis.

NICOLA WILLIS: I seek your guidance, Mr Speaker. I have two—

SPEAKER: I’m giving you a chance to seek leave without giving a running commentary.

NICOLA WILLIS: OK. I seek leave to table a document. The document is an email from the chief executive of Kāinga Ora to senior staff at Kāinga Ora, and includes a quotation in which he says, “The judgment call you made was fine.”

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

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

NICOLA WILLIS: Point of order, Mr Speaker. One more document.

SPEAKER: A further point of order—I will give the member advice now. She could very easily have asked for leave to table the three documents, the quotations of which she referred to earlier. That would have been the orderly way of doing it. The member doesn’t need to quote from it—just the date, and from whom to whom.

NICOLA WILLIS: The final document is an email from the chief executive of Kāinga Ora to senior staff relating to his conversation with the Minister of Housing.

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

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

Question No. 9—Immigration

9. ERICA STANFORD (National—East Coast Bays) (remote) to the Minister of Immigration: Does he stand by his statement that a humanitarian visa for Ukrainians with family members living in New Zealand is “not necessary”; if so, can he explain which visa those Ukrainian family members can apply for?

Hon KRIS FAAFOI (Minister of Immigration) (remote): Yes, in the context in which it was given. Partners and dependents of Ukrainian nationals who are citizens or residents are able to apply for visas to travel to New Zealand to be with their families. As I have previously said, Immigration New Zealand have been giving priority processing of visas for Ukrainian nationals. And, furthermore, the Government today announced a fast-track border exemption that will enable Ukrainian nationals with a New Zealand visa the ability to travel here. For those Ukrainians in New Zealand on temporary visas that are set to expire this year, Cabinet has also agreed to an automatic extension to those visas for 12 months, given the dangerous situation for them at home. We also recognise that there are other family members of Ukrainian New Zealanders who may need to travel to New Zealand, and the Government is working through options that that could take. It is a distressing time for Ukrainians around the world and it is important to note that advice that we are receiving from international partners is clear that displaced Ukrainians want this conflict to end so they can return home.

Erica Stanford: Point of order, Mr Speaker. The primary question was very clear and asked specifically for—can he explain which visa the Ukrainian family members can apply for, and he did not address that part of the question.

SPEAKER: Well, I think, actually, he referred to three separate areas in which they could make an application and said that he was working on others as well.

Erica Stanford: When wider family members like parents can only use the compassionate entry exceptions criteria of a critical purpose visitor visa, how can their applications be approved when those instructions were changed late last year to require the humanitarian crisis or family trauma to be occurring in New Zealand and explicitly not offshore?

Hon KRIS FAAFOI: That is just one potential path that Ukrainian nationals can take. As I have said in the response to my primary answer, the Government is working through further options that it may take in order to assist further family members who are in Ukraine to come to New Zealand. We hope to come to a decision on that soon. There are other measures that people could take that the member is well aware of, that, in a humanitarian sense, some people can take at the moment.

Erica Stanford: Why has he not been able to urgently create a simple, easy-to-use humanitarian visa for wider family members in the Ukraine instead of relying on an unfit-for-purpose existing visa that desperate Ukrainians can’t even find online let alone understand?

Hon KRIS FAAFOI: What New Zealand wants is a Government that is compassionate, a Government that acts, and a Government that before it commits to something it does the work to make sure that it can deliver. We are acting around the decisions that we have announced already today, around the border exemption and the extension of visas to those Ukrainians here in New Zealand. And, as I say, the Government is working through more options and stands ready to act to make sure we can assist in the humanitarian effort to respond to what is happening in Ukraine at the moment.

Ricardo Menéndez March (remote): Will the Minister grant Ukraine visa waiver status, as Canada has done, to enable the prompt reunification of families and give safe passage for Ukrainians fleeing war?

Hon KRIS FAAFOI: As I’ve mentioned in the primary answer and in the response to supplementaries, the Government is working through options to see what more it can do to respond to the Ukrainian situation. We want to make sure that we are responding in a way that is compassionate but also in a way that we know we’ve worked through the likes of eligibility and implications of any decision we make.

Erica Stanford: What does the Minister say to Maria and Alex who appeared on TV1 Breakfast today, who are trying to get Maria’s elderly mother out of the Ukraine but could not find any application forms online and were unable to reach Immigration New Zealand on the phone because of long delays; and does he think he should be doing more to get wider family members to New Zealand urgently?

Hon KRIS FAAFOI: To the last part of the member’s question, as I’ve said a number of times this afternoon, the Government is currently considering further options about what it can do to assist families who are affected by this situation in Ukraine.

Erica Stanford: Why is it that other countries around the world are able to instigate humanitarian visas urgently to get desperate Ukrainian family members out of Ukraine when he is sitting on his hands, looking for more—

SPEAKER: Order! The member knows that’s out of order. Does the member want a further supplementary? Erica Stanford.

Erica Stanford: How can the Minister have said earlier in answer to my question that he knows very well I know of visa options for family members like parents when he then later stated in another question that he’s still working on those visas for wider family members?

Hon KRIS FAAFOI: The member knows in the most extreme of humanitarian situations that the likes of members of Parliament can apply for visas for individuals in those situations, and I will reiterate, as the member has in her question, the Government is working on further options as we do stand ready to ensure that we can respond to the humanitarian issues coming out of Ukraine.

Hon Chris Hipkins: Point of order. In granting leave for Nicola Willis to table some documents, some emails, just a few moments ago, the House received an assurance that those documents were not publicly available.

SPEAKER: No, the House didn’t receive that. The member gave an assurance that to the best of her knowledge they weren’t. The fact that she’s wrong—if the member’s suggesting she’s wrong, then I think we shouldn’t take it any further. Members are quite often wrong in this House, and every time they’re wrong they shouldn’t be subject to a point of order.

Hon Chris Hipkins: Speaking further to the point of order, it took me two minutes to discover that the member was wrong. If a member’s going to seek leave for a course of action, surely there is an obligation on them to make sure that they’re on solid ground before they seek leave and before they indicate to the House that they want to take particular course of action that requires the unanimous consent of the House in order for that to happen.

SPEAKER: I think what the member knows is absolutely right, and what this member may learn, or other members should learn from this, is that if they want members to accept them tabling documents in the future, they should make sure that they do not mislead the House, as the member did albeit through ignorance and not deliberately.

David Seymour: Point of order. Mr Speaker, you’ve just said the Minister has misled the House through ignorance. Have you checked the facts that those documents are publicly available before making that assertion?

SPEAKER: No, I haven’t. I rely on the word of the Leader of the House, something which I find I can do, unlike some other members.

David Seymour: Point of order. Was what you just said an insinuation that you can’t rely on my word, and if so, can you give an example of that?

SPEAKER: No, it wasn’t, but if the member feels guilty he might want to.

David Seymour: Point of order. Mr Speaker, I just want to make it clear I don’t feel guilty at all but you often go well beyond your brief with those kinds of insinuations and that’s why—

SPEAKER: Order!

David Seymour:—it needs to be called out.

SPEAKER: The member will leave the House.

David Seymour withdrew from the Chamber.

Chris Bishop: Point of order. It’s a well-established principle of this Parliament since the establishment of the Parliament that all members are honourable and the words they say in this House are to be taken with the degree of honour that the words are appropriate for, for members who are in this House. Is it now your position that you can rely more on the words of the Leader of the House than other members, and if so, why is that and would you like to explicate for the House who those members that you can’t rely on are?

SPEAKER: The member tempts me.

Question No. 10—Commerce and Consumer Affairs

10. NAISI CHEN (Labour) (remote) to the Minister of Commerce and Consumer Affairs: What recent reports has he seen regarding competition in the retail grocery sector?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Today, the Commerce Commission released its market study into supermarkets. The report is clear: competition in the retail grocery sector is not working. Consumers could get better prices, range, and quality if competition was better. The commission found that there are a number of factors making it difficult for new entrants, including a lack of suitable sites for store developments and difficulties for retailers in obtaining competitively priced wholesale goods. The report also found that profitability is high. Even in its most conservative scenario, the report shows supermarkets deriving excess profits of $1 million each day across New Zealand. From today, we will immediately progress work to address the commission’s findings.

Naisi Chen: What recommendations does the Commerce Commission make to ensure New Zealanders benefit from a more competitive grocery market?

Hon Dr DAVID CLARK: The commission makes a number of recommendations, which include exploring how a code of conduct between major retailers and suppliers could be developed, and looking at the establishment of a grocery regulator. The commission’s findings also indicate that restrictive covenants over land are a major barrier to rival supermarkets accessing new sites, so I want to ban these covenants from being used to stop competition. Given the importance of achieving healthy levels of competition in our retail grocery sector, I have not ruled out some of the other options that the Commerce Commission tabled while developing its report if consumer benefit is not achieved from the changes recommended in the report.

Naisi Chen: What reaction has he seen in response to the market study?

Hon Dr DAVID CLARK: John Duffy of Consumer New Zealand said that many of their 10 big fixes to the grocery sector—such as a mandatory code of conduct, a supermarket commissioner, a ban on restrictive land covenants, and mandatory unit pricing—are reflected in the final report. I’ve also seen reaction from Katherine Rich of the Food and Grocery Council, who said the report accurately reflects the reality faced by suppliers from the imbalance of power in negotiations. She also states that the supermarkets have already made concessions not on the table prior to the market study. I do acknowledge there have also been reports that say the Commerce Commission could have gone further. That’s why I’ve left all options on the table so we’re doing all we can to ensure New Zealanders are getting a fair price at the checkout.

Question No. 11—Housing (Public Housing)

11. BROOKE VAN VELDEN (Deputy Leader—ACT) to the Associate Minister of Housing (Public Housing): Does she stand by all her Government’s statements and actions related to the rental market, and does she believe renters are better off now compared to 2017?

Hon Dr MEGAN WOODS (Minister of Housing) (remote) on behalf of the Associate Minister of Housing (Public Housing): On behalf of the Associate Minister of Housing, in answer to the first part, yes, in the context in which they were made. In answer to the second part of the question, we know that the rental market is under pressure right now and that some people are doing it tough, but there are a number of ways in which renters are better off since 2017. Firstly, the Government has introduced measures to improve household incomes, including increasing Working for Families tax credits and raising both the minimum wage and benefit rates; indexing benefits annually to increases in wages; and increasing the accommodation supplement from 1 April 2018. Secondly, the Government has taken steps to improve life for renters, and this includes implementing the healthy homes standard, limiting rent increases to one per year, prohibiting landlords from seeking rental bids, banning letting fees, improving security of tenure by abolishing no-cause terminations—and these are in addition to the measures the Government is taking to actually address the underlying causes of the housing crisis previous Governments shied away from. We know that the rental market is under pressure due to long-run under-investment in both public and affordable housing by previous Governments, and that’s why we are working to bring on new housing supply, which is the best way to get rents under control. This is evidenced by the slowing rents increases in Auckland, where there has been a higher concentration of new supply, to see that our strategy is starting to take effect.

Brooke van Velden: What impact, if any, does the Minister believe limiting interest deductibility will have upon tenants and their cost of living, when the average landlord’s tax bill is expected to go up $4,000?

Hon Dr MEGAN WOODS: The first point I’d like to make is that there is no evidence to show that any of the rules around interest deductibility have in any way driven rents increases. And I think we can just look at history to see that. So if we take the period from October 2017 to December 2021, we saw that rents rose 16.4 percent. I’d like to compare that from the period August 2013 to October 2017 under a National-ACT Government, where we also saw a rent increase of 16.4 percent. So I caution the member with conflating correlation and causation.

Brooke van Velden: Does the Minister believe that continuing with interest deductibility limitations, which Inland Revenue stated in September last year would “put upward pressure on rents”, can be justified now when inflation is at its highest level in 30 years?

Hon Dr MEGAN WOODS: On behalf of the Minister, I point the member to my previous answer—that there is simply no evidence that that is having upward pressure on rents, given that you can compare a period where there wasn’t such a regulation in place, where there was the exact same increase in rental prices in that period. We certainly are not going to take away measures that are about making it easier for first-home buyers; that has been an absolute priority for our Government, and one that we are committed to. I also point the member to the fact that, actually, what we have said to investors is “Please come and help us solve the housing crisis” by the fact that we have exempted new builds from this regime. What we want to see is more houses, because that is the quickest way to contain rental increases.

Brooke van Velden: Point of order, Mr Speaker. I don’t believe the Minister actually addressed the question, because it was about the future going forward and continuing with interest deductibility and inflation going forwards.

SPEAKER: I think she did address the question. Further supplementary.

Brooke van Velden: Does the Minister agree that there is a shortage of rental accommodation, and, if so, is she not concerned that Inland Revenue’s advice stated that interest deductibility limitations may “Reduce the supply of new housing developments in the longer term”, which would make it harder for tenants and push up rents?

Hon Dr MEGAN WOODS: On behalf of the Minister, what I do agree with is actually that we have had an undersupply of housing in New Zealand and that is why our Government has had a comprehensive suite of policies to address this very long-run problem. We can point to markets where we are seeing increased supply of housing coming on stream, seeing lower rates of rental increase. So if we look at January of this year, January 2022, the national Stats rents price increase increased by 0.7 from the previous month; in Auckland, it fell by 0.6 from the previous month. What we see across New Zealand is an annual 5.5 percent rent increase, but when we look at Auckland on its own, it is 3 percent. This is a market where the Government’s policies around increasing housing supply are really starting to come to fruition.

Brooke van Velden: Can the Minister accept that interest deductibility limitations for rentals will further increase the cost of renting at a time when new leases are over 5 percent higher on average than last year and inflation’s at a 30-year high; and, if not, what does she say to economists and renters who know it will?

Hon Dr MEGAN WOODS: On behalf of the Minister, I point the member again to the evidence of what we are seeing. We are seeing rent increases which are in line with previous periods in the not too distant past, which saw exactly the same rates of rents increases. So if we look at the evidence, that is not what we are seeing coming through. But we will continue to monitor what is happening there. I think that we have to make sure that we have a Government that is committed to building houses, whether that be rental accommodation, whether that be for owner occupation, and that also needs to include public housing, which this Government is fully committed to.

Brooke van Velden: A point of order, Mr Speaker. Thank you. I don’t have any further supplementaries, but I was hoping to seek your guidance on the transfer of questions. This question originally was sent to the Prime Minister for question, which was then transferred to the Minister of Housing, which was then transferred to the Associate Minister of Housing (Public Housing). Given the Minister of Housing is answering the question, I was hoping I could seek your guidance on transferring questions and passing the buck.

SPEAKER: Sure, sure. The ability to transfer questions is something which is set out very well in Speakers’ rulings, and I suggest that the member have a look at it: the right of the Government to find the appropriate Minister to answer a question. That often goes to a matter of delegation and which Minister’s responsible under the delegations, which are tabled in the House. The Government finds a Minister. If that Minister is not available, then another Minister can answer on their behalf just as they can in normal times when members are absent from Wellington. So I understand it is a slightly convoluted system, but the ability to transfer, unless there is an exceptional reason not to, is one which is absolutely up to the Government.

Question No. 12—Health

12. SARAH PALLETT (Labour—Ilam) (remote) to the Associate Minister of Health: What recent announcements has she made about improving abortion services?

Hon Dr AYESHA VERRALL (Associate Minister of Health): Everyone should be able to access abortion information and care when they need it. To make that easier, last month I was pleased to announce the roll-out of a new national abortion telehealth service called Decide. This service will connect people to abortion information, advice, and counselling over the phone from health practitioners anywhere in the country.

Sarah Pallett: Why do we need a national abortion telehealth service?

Hon Dr AYESHA VERRALL: In-person care will always be offered for abortion, but it’s important that other options are available as well, where suitable. Telehealth makes it easier for people to reach the services and support that already exist, particularly those who find it difficult to visit a doctor or clinic. Currently, abortion telehealth services are offered by some district health boards, but not all. Expanding the service nationally is a huge step in improving access to abortion services.

Sarah Pallett: How will this new service be rolled out?

Hon Dr AYESHA VERRALL: Decide will be rolled out in phases. Referrals and information about abortion services will be available from 26 April; follow-up care and abortion-related counselling from 1 July. The final phase set for November this year includes telemedicine, which means providing clinical consultations for an early medical abortion over the phone, and couriering medicines. As part of the telemedicine service, people will be able to immediately talk to a practitioner willing to provide abortion services, removing a key barrier for some people. All patients of this service will be part of active follow-up processes, and services will be available for free via the dedicated number 0800 DECIDE.

Business of the House

Business of the House

CHRIS BISHOP (National): Thank you, Mr Speaker. I seek leave for—

Hon Chris Hipkins: There is objection!

SPEAKER: Well, I think we’d—

CHRIS BISHOP: We haven’t even heard it!

SPEAKER: Order! Given the history of the day, the member might understand why the member is saying that, but I think, to be reasonable rather than have a general objection to anything the Opposition seeks leave for, it might be appropriate, even if slightly unpleasant, for the member to refer to the number of the notice of motion to which he may be referring.

CHRIS BISHOP: I could have been moving something the Government wanted to support. You never know! I’m not. I seek leave for members’ notice of motion No. 1 to be debated and voted on forthwith.

Hon Chris Hipkins: There is objection.

SPEAKER: There is objection.

Bills

Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill

Second Reading

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs) on behalf of the Minister of Revenue: I present a legislative statement on the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill.

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

Hon Dr DAVID CLARK: I move, That the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill be now read a second time.

The bill covers a wide territory. Half of it is focused on ensuring the tax system can continue to function efficiently. To that end, the bill contains a number of remedial items. In addition, the proposals introduced by Supplementary Order Paper (SOP) 64 address the issue of interest deductions as a business expense for residential investment properties, and I will come back to that proposed amendment later on.

Remedial work is important to ensure that the tax rules remain fit for purpose. The bill also contains measures designed to ensure that the tax system keeps pace with business practice and minimises compliance costs. As a sign of the times, the bill therefore contains proposals relating to e-invoicing and the GST treatment of cryptoassets, amongst other things.

The Finance and Expenditure Committee has made welcome recommendations on the bill, and I do want to briefly outline those changes and thank the committee for its work. Now, these changes include a recommendation on the proposal to extend the relief of use of money interest, which is charged for late payment of taxes for those affected by COVID-19. The committee has recommended extending it to the 2021/2022 year.

The bill also proposes to introduce measures to modernise GST information requirements. One objective of this is to reduce the compliance costs, but where businesses might face costs for some proposals, the committee has recommended that the application date be deferred to 1 April 2023, to give businesses time to adapt. The bill proposes a new pooled alternative rate option for calculating fringe benefit tax on attributed benefits to support changes resulting from the new top personal tax rate. The committee has suggested a simplified threshold of $160,000 salary and $13,400 attributed benefits to make it easier for employers to work out whether employees should be on the highest or second-highest fringe benefit tax rate. Another recommendation from the committee relates to the local authorities measures in the bill. The committee recommends extending the dividend exemption to partly owned council-controlled organisations (CCOs) and holding company CCOs with 100 percent public ownership.

I’d like to thank the committee for their work on this bill. Their recommendations have added value. As part of their consideration of the bill, the committee also considered measures that originated from Supplementary Order Paper 64, which I would like to outline for the benefit of members. The SOP is a significant one as it contains measures to curb residential property investors’ appetite for existing residential stock. It’s the Government’s goal to level the playing field for existing homes in order for first-home buyers and those moving into a new home to have a level playing field compared to those investing in residential property. Investors can generally outbid first-home buyers, so we want to make residential properties less attractive for investors, while stimulating investment in new housing. The proposals introduced by Supplementary Order Paper 64 will help to achieve that goal.

We’re proposing the removal of interest deductions as a business expense for residential investment properties, but allowing deductions for property developers or people purchasing a newly built residential investment property. The proposal will not affect the main home. That proposal has attracted a fair bit of attention from media and commentators. Yes, it is a principle of our tax system that expenses incurred in earning income by a business should be tax deductible. However, investing in property to reap a capital gain doesn’t seem like the way to grow the economy, and it means people trying to purchase a home to live in have a harder time buying. Tax is not the cause of the problem, but it does contribute.

It seems that massive residential property investment in New Zealand has been fuelled in part by the tax treatment of residential investment property, which frequently involves no taxation of gains on sale. That, in combination with full deductibility for interest on what is often high levels of debt, makes residential property investment a very attractive investment option currently. That demand drives prices up, making it difficult for first-home buyers to compete with investors. That’s why, last year, we extended the brightline test to ensure that more of the gains on sale are taxed. Now we are addressing the interest expense deductions. Deductions for interest expenses on residential properties will be restricted from 1 October 2021. I’m interested to see that commentators are predicting an end to the housing boom in New Zealand. They point to mortgage affordability as a prime reason. I believe the interest deductibility policy plays a part in that. The policy will be phased in so that interest deductions on a mortgage on a residential investment property acquired before 27 March 2021 will be progressively reduced between 1 October 2021 and 31 March 2025. Interest incurred in relation to a property purchased after 27 March ceases to be deductible from 1 October 2021.

The proposals in this bill aim to dampen investor demand for existing residential properties but also minimise obstacles to supply. To that end, the bill contains some exclusions which will allow deductions to continue to be available for some taxpayers. By allowing interest deductibility for property developers but removing it from other investors, we will continue to encourage supply.

We’re also proposing some key exemptions to support the supply of new housing. We’re proposing that property development and new builds will not be subject to the new rule. This should help boost supply by channelling investment towards expanding the housing stock and away from direct competition with first-home buyers and owner-occupiers for existing housing stock. In addition, new builds would be subject to a five-year brightline test rather than the 10-year test.

Non-residential properties, for example, commercial or industrial properties, would not be subject to the new rules. Also excluded are employee accommodation; farm land; care facilities such as hospitals, convalescent homes, nursing homes, and hospices; commercial accommodation, such as motels, hotels, and boarding establishments; retirement villages; and rest homes. The main home would not be affected by the new rules.

Interest related to any income earning use of an owner-occupier’s main home, such as a flatting situation, would continue to be deductible. Community housing providers will not be affected by the interest limitation rules if they are charities or otherwise tax exempt. We also propose to exempt Kāinga Ora and its wholly owned subsidiaries from the interest limitation rules.

As I mentioned before, these proposals have been considered by the Finance and Expenditure Committee, and I thank them for their work. They have made some valuable improvements to the bill, particularly in the exemptions area. For instance, the committee’s recommendations align with the Government’s intention of adding to housing stock and include ensuring that new-build land should include certain dwellings on the earthquake-prone building register, or former leaky buildings that are at least 75 percent re-clad, also clarifying that commercial-to-residential conversions can qualify as a new build. In addition, the committee has recommended that the main home exclusion from the brightline test should apply to a new main home while it is being constructed, unless the time taken is unreasonable. It clarifies that if part of a property is sold, the brightline period only resets for that part, not the whole property.

The housing issue is a serious problem that has been decades in the making, but it is not just a problem for first-home buyers but for the wider economy. The International Monetary Fund has warned that New Zealand’s ballooning housing market could trigger a pronounced correction. Acting on this now helps to protect our economy. I commend this bill to the House.

ANDREW BAYLY (National—Port Waikato): Thanks, Madam Speaker. It’s a pleasure to be talking on the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. Of course, we will be opposing this bill, because the first thing it does is it entrenches the high tax rates that this Labour Government has imposed over the last four years. Secondly, it brings in, through a Supplementary Order Paper (SOP)—which is rather strangely done, under procedure of introducing these new rules around the brightline, through an SOP introduced by Mr Parker, the Hon David Parker, rather than being embedded in the bill.

So, first of all, I’d just like to say there are some elements of this bill that are good and we supported. I think the Minister, in reading out his speech just before, actually adequately catered for and dealt with the issue of the contribution of the Finance and Expenditure Committee’s work on it, which—I acknowledge all my colleagues. But I think there were some good things. The first thing was the issue around cryptocurrency—dealing with the GST element on that, and ensuring that cryptocurrencies weren’t subject to GST rules. Also, allowing for GST on the domestic leg of a parcel, as an example, that has come from internationally—say, from Australia—when it gets delivered to the home address in New Zealand. This bill, when it’s enacted, will mean that the GST component of the domestic component is not payable on that transaction.

I think there’s also things like penalties around sales suppression software, and this is software that deals with issues where electronic records are falsified at the time of point of sale, and that’s very appropriate. The last issue that the Minister mentioned in his speech around the seismic-engineering provisions—you know, here we are in Wellington, and seismic issues are very paramount. The small changes that were made around seismic issues are a small step in what seems an incredibly long time of this Labour Government wanting to do anything to help people who are in seismically compromised buildings. They’ve hardly done anything in this regard, so this is a small step.

But I think, first of all, this bill comes at a time when we—all New Zealanders—are facing an uncertain time. I think if you’re going to introduce a tax bill, you have to be mindful about what is actually happening. Of course, we’ve got a Government that is just out there spending money something incredible. Mr Robertson has doubled New Zealand’s debt in a mere 22 months. That is some record by any finance Minister’s record around the world. Not many people can claim that they’ve doubled the debt of a country in less than two years. Of course, a lot of that is because he’s done a whole lot of wasteful spending—wasteful spending—and we heard about that earlier. The $500 million they’re going to spend on restructuring the health industry in the middle of a pandemic—what piece of logic ever drives someone to do that? Then, all this stuff around those three waters that so many New Zealanders really don’t like.

But, of course, as we all know in this House—petrol at three bucks, grocery bills going up like crazy. All that Minister who just spoke before—his only response is “We’ve got to regulate it”. Well, of course, a lot of that price increase has come about because of Government policies. We’ve seen house prices—and I heard the Minister talking about this in reference to the brightline. House prices up $400,000 under the Labour Government over the past four years. Rents up $140 dollars a week. Wow, what a record.

When you look at the context of tax, which is what this bill is about, what have we seen over the last four years? Well, we’ve seen that Auckland regional fuel tax imposed on Aucklanders. Gee, there’s a big difference. I got some petrol from Pōkeno the other day, which was at least 20c cheaper than what I was paying just inside the Auckland border. The proposed light rail tax—yes, that tax is coming not too soon, hopefully, because we’ll stop it. Then we’ve got the brightline test, which I’m going to talk about shortly. The removal of interest deductibility—which, of course, is just another tax on people, mums and dads, that own houses and rental accommodation. Then we’ve got the top 39 tax, which this bill enshrines—the 39 percent on anyone earning over $180,000. It’s the mean tax. It’s the tax about imposing it, socking it to the high-earning New Zealanders who work hard. And then—

Hon Scott Simpson: Envy.

ANDREW BAYLY: —envy tax, as my colleague says—worst of all, probably, because of its potential financial consequences, is the proposed latest job tax scheme that I think will be the crowning moment of Mr Robertson before he’s voted out of office, hopefully, because that is such a huge cost not only on employers—but, of course, the Government doesn’t worry about employers. They’re good. They always believe that business owners are good for it. But it also means that every New Zealander who works will end up paying a tax as well. Of course, it’s for protecting those so-called people who are going to lose their job and get a guaranteed payment for six months.

So Christopher Luxon in the weekend said we are going to repeal all these new taxes, and I think that’s a pretty good start, because what that shows is that National is different from the Labour Government. Of course, what the Government has done is it has imposed a whole lot of tax impositions on New Zealanders. When Christopher Luxon talked about removing these taxes, everyone said, “Oh, it’s about tax cuts.” Well, it’s not. It’s about taking away all those tax increases that have been imposed by the Labour Government over the last few years. That’s what it’s about. It’s not about a tax cut. It’s about stopping all those increases being imposed by the Labour Government.

Now, let’s talk about the brightline. The brightline is being imposed on anyone keeping a property up to 10 years, and what it will mean is that many New Zealanders will now be caught under these brightline rules. There’s been some change in the legislation that we’re talking about today which means that if you’re building a house or renovating a house, if it takes longer than 12 months, then that will count towards the 12 months and you won’t be penalised. But the bill makes no provision for those New Zealanders who are posted overseas as, perhaps, part of New Zealand’s foreign affairs grouping or ambassadors or even staff in our consulates around the world. It does nothing for our military people who are posted overseas on military assignments on behalf of the New Zealand Government. It does nothing for people who move into retirement villages and want to keep their house for a certain period of time and find they keep it longer than 12 months. Because those people, many of them might not be in such a position—they might have health issues—or are not aware or just simply don’t have the ability to do that in time. It does nothing for those who go into hospital and who don’t know how long they’re going to stay for, or may not even be in a situation where they can respond to this issue. If they are out of their house for longer than 12 months, then they will end up paying this capital gains tax.

This capital gains tax is pernicious, and we will change this rule. Most people change their houses within five to seven years, and this bill does not anticipate the life events that many New Zealanders have. Many people, unfortunately, divorce. Over 50 percent of people divorce in New Zealand. It is unfortunate, but it’s a fact of life. Many people have health events. It changes their circumstances. It changes their jobs. It may mean that people get relocated to other areas and, therefore, they may be captured under these rules. That’s why if you’re going to apply these rules, they need to be very careful.

The last thing is around the interest deductibility, and I know my colleagues are going to talk about it, but there are about 258,000 Kiwi mums and dads who own rental properties, who earn less than $30,000 on them. That means they only own one rental house. This bill is all about socking it to them because they’re regarded as investors. They’re not. They’re just ordinary Kiwis trying to save for their retirement.

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

Dr DEBORAH RUSSELL (Labour—New Lynn) (remote): Thank you, Madam Speaker. I am delighted to take a call on this Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. It is an excellent tax bill, and an excellent bill. As with all tax bills, it does address a number of issues, and I’m delighted to see that the Opposition agrees that these issues need to be managed, such as the role of GST with respect to cryptoassets, such as modernising GST information requirements, such as trying to reduce compliance costs, and so on. There’s a change to the way that fringe benefit tax can be calculated and paid for some employees. Again, this change doesn’t change the actual amount of tax that is being paid, but it does reduce the compliance costs involved for employers.

These are all good measures, and they support our employers, they support our business people, and they reduce compliance costs. In amongst the changes in the bill are some measures that protect our tax base, such as the rules around disallowing sales suppression software. And, as ever, the Finance and Expenditure Committee has done an excellent job in considering this bill. But it seems that there are some issues with which the Opposition disagrees on this bill, and I was listening carefully to Mr Bayly and, of course, thinking about what the Opposition has been saying in recent days. There are three issues that they have problems with in this bill. The first one is around interest deductibility, the second one is around tax rates, and the third one is around the brightline test. I’ll see how I go in addressing them.

There is a significant change in interest deductibility in this bill, introduced by way of a Supplementary Order Paper (SOP), and the change is significant because it really does show a change from previous practice. I wish to direct the attention of the House towards section DA 1 of the Income Tax Act. It is the “General permission”. And what it says is that a person is allowed a deduction for an amount of expenditure—so you can get a deduction for your interest expenditure—to the extent to which the expenditure is incurred in deriving assessable income. Or, if you’re doing it through a business, it’s incurred in the course of carrying on a business, creating assessable income. Here’s the thing when it comes to interest costs on housing: a great part of what is earned through housing, through owning houses, is not assessable income; it’s a capital gain. And, in the tax law in New Zealand, capital gains, for the large part, are simply not assessed. They’re not regarded as assessable income. It’s a tax-free capital gain. Why, then, should you get an interest deduction for income which is not part of the tax base? It’s not incurred in deriving assessable income. Why get the interest deduction?

Now, as it turns out, that happens to be a matter of what has happened in previous, well, decades, I suppose. For a long time, it has been very difficult to sort out what portion of an interest expense is related to earning assessable income like rents and so on, and what portion of it is traceable to earning the untaxed capital gain. So, as a matter of convenience as much as anything, people who have borrowed money in order to buy a rental property have been able to deduct the entire amount of interest. But, in doing so, they’ve had an over-deduction. They have deducted, been given, almost as a courtesy, the right to deduct more interest than really ought to have been deducted. So what this bill does is it reverses that. From now on, people who are deriving an untaxed capital gain from rental properties will not be able to get the interest deduction. It’s that straightforward about what is going on.

And, even then, there are some concessions around this. When it comes to the brightline test, if the brightline test is applied and your capital gain on selling a house is assessable, because you’ve sold it within five or 10 years of acquiring it, depending, you’ll get the interest deduction. So, if you do have an assessable, taxable capital gain, as happens under the brightline test, you will get the interest deduction. But, if your capital gain is not assessable, you will not get the interest deduction. It’s a very significant change, and it’s about housing; it’s about addressing some of the housing needs in our community. We know that there is a crying need for more affordable housing. We know that house prices have been sky-rocketing upwards. We know that this problem is created by all sorts of things, from the lack of housing supply in recent years to some of the restrictive zoning rules there have been in some cities, and so on. We know that there is no one, simple solution to the housing crisis, but we know that part of the problem, at least, has been caused by the fact that investors have been able to deduct interest charges, and, so, to leverage up their investment in land, they’ve been able to force up house prices this way. We know that, at least in some part, we will help to constrain house prices by removing interest deductibility.

It is a complex and difficult matter, and it is one that the select committee addressed during its examination of this SOP. I wish to draw the attention of the House to the section of the select committee’s report—it’s on page 7 of the report—looking at inflation rates and interest deductions. It’s very interesting because—I’m sorry; I didn’t quite mean that pun! It is fascinating because, typically, what goes on with interest rates is that some portion of the interest rate is a real rate; some portion of it is a nominal rate related to inflation. And, reading through the select committee’s report, it seems that, because of the effect of inflation on interest rates and the interaction of inflation and interest rates, in the last quarter, the December 2021 quarter, landlords who were claiming the full interest deduction at the nominal rate were claiming something, an expense, for what wasn’t a real expense at all, because of the effect of inflation. Look, the interaction of interest rates and inflation and tax deductibility is a complex issue and is not addressed in this particular bill, but it is something that we ought to be looking at over the time. In the meantime, what we are trying to do here is introduce a measure that will help—that will help—with the housing crisis.

I wish to address briefly the brightline test, which Mr Andrew Bayly referred to, and the new brightline test rules, which are 10 years—10 years. So, from now on, if you buy and sell a house within 10 years, unless it is your main home, you will be subject to the brightline test. Mr Bayly was concerned about people who might go into hospital, people who might go overseas, people who might go into a retirement village, and, in a sense, these are good concerns, but that ignores the detail of this change to the brightline test. Under the new rules, what a person does first of all is consider whether a dwelling has been their main home, and if they have owned it for less than 10 years but it has been their main home, the brightline test doesn’t apply. If they’ve owned the property for, say, eight years, it’s been their main home for, say, seven years, and then they’ve moved to a different home, sold it after eight years, gotten a capital gain on it—and remember, that’s actually a good thing, because you end up better off—a proportional amount of that capital gain will be subject to taxation. In fact, in the case where you’ve owned the house for eight years, it’s been the main home for seven years, just one-eighth of the capital gain would be subject to taxation. And, remember, you’re only paying that tax because a good thing has happened: you’ve made a capital gain. So, on the whole, you’re better off. So there are protections in this new brightline test for people.

Finally, I wish to address the issue of tax rates. This is an annual rates bill, and in the annual rates bill, as a constitutional necessity—it’s in section BB 1 of the Income Tax Act—we must set the annual tax rates in an annual tax bill. So the House addresses, every year, the issue of what level taxes should be set at, and the Opposition is opposing this bill, has opposed other bills, because they think there should be tax cuts. It’s a mantra of theirs: that individuals know better than the Government how to spend money, and therefore there should be tax cuts. I want to put that mantra a different way. I want to put it a different way because it ignores a fundamental agreement we have in New Zealand—a fundamental agreement that there are some things that we have chosen to do together. We have chosen to provide health together. We have chosen to provide education together. We have chosen to provide welfare together—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Unfortunately, the member’s time is up.

SIMON WATTS (National—North Shore): Madam Speaker, a very good afternoon and I rise on behalf of National and as the member of Parliament for North Shore. I tell you what—I wasn’t going to comment on the previous speaker but then she just made a statement in that speech which I think sums up the reality of this Government and where they stand around taxation. She just stated in that speech that the Government knows how to spend money better than Kiwis and individuals. That is exactly what she just said in this House and that is absolutely the opposite position of where we stand in this House and I think any Kiwis out there when they hear that Government knows how to spend their money better than they do should have significant concerns around this Labour Government and the future of it.

This bill, the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill second reading, National oppose this bill. As we’ve heard from prior speakers, there are components in regard to the GST elements in the main that National do think are sensible but that’s pretty much where it ends. I do acknowledge the chair of the Finance and Expenditure Committee, Duncan Webb, across the row there who I think did an excellent job in terms of facilitating the conversation around the table, acknowledging we have different positions on this, but, in terms of his chairing of that conversation, it was fair and reasonable and I acknowledge that and I acknowledge the other members around the House on that Finance and Expenditure Committee. I’m lucky to be a member of that with my colleagues.

But National have been very clear around the elements of this legislation that we do not support and I’ll work our way through those three components because I think it is important to provide a little bit of context in terms of, one, why we do have the position we have around opposing those changes and why we believe that that is not in the best interests of Kiwis around this country in terms of their ability to get ahead and be successful and live successful and prosperous lives.

The ideology that we are seeing in this bill really comes down to a Labour Government that is focused on tax, tax, tax. The elements that are embedded within this bill, while an annual rates change, are all in the main increases of taxation and go right against the principle, or the element that I’ve referred to right at the start, around the fact that hard-working Kiwis out there in our communities—communities of the North Shore, communities of the Coromandel, communities of the Bay of Plenty that are working hard out there in terms of, you know, whether they are tradies, or they are primary industries, or working in whatever aspect around our sector—the money that they earn is earned through difficult and often challenging effort and they deserve to be able to keep as much of that in their back pockets, and right now, with the degree of inflation that we are seeing in this country, those dollars aren’t going as far as what they used to do and that’s impacting on households around this country.

But the opportunity here for this Government is actually to provide some degree of relief, some degree of support, to our local communities and local individuals and taxpayers across this country and they could have used this opportunity to do that. They could have used this opportunity to actually reflect on where we are, with the fact that our tax rates have not kept up with inflation over the number of years, and they could have used that opportunity to make those adjustments to make our tax system more fair. But they haven’t. They’ve done the complete opposite of that and they’ve done that in areas which are going to hit home on some of our most vulnerable communities.

The element around limiting interest deductibility for residential investment properties is, in and of itself, quite a complex statement, but if I put it into simple language: if you earn $100 of income, normally under the old model before this legislation coming through from Government, you would be able to offset that $100 of income with some expenses and the interest expenses that are incurred through the borrowings on that—earning that income—would be deductible. So, therefore, if you had $100 of income, say if the expenses were $10, then you would be taxed on $90. But the implication of this legislation, in effect, is that individuals are going to be taxed on the entire $100 in the main and that is going to impact the back pockets of hard-working Kiwis. They are stopping what is, in effect, a legitimate business expense. Nowhere else in our tax legislation are they making this exemption, and they are saying it’s because of the issues around our housing market etc., etc.

New Zealand does have a housing crisis. We do have significant issues around the affordability of housing, the increasing rent for individuals that have the inability to afford to buy a house, and this is one of the single biggest issues in this country and it is not something that, on this side of the House, we’ve got our head in the sand on. But I think the other side of the House, in terms of the Government, have, because what they are, in effect, trying to do is not going to solve or help that problem. Actually, the IRD has stated that this initiative specifically will reduce housing supply and push up rents—the complete opposite of what is required by hard-working Kiwis across this country from this Government, and they are not using the opportunity to resolve that; they’re actually going to be making it worse.

I also want to talk about the brightline test. National—we’re part of that and we acknowledged when that was brought on that that was a sensible piece of legislation with a period of two years. That makes sense, that is sensible, that deals with the problem. But then that’s been increased to five and now, under this, increasing to 10.

Hon Member: What’s that called, Simon?

SIMON WATTS: Well, that’s flipping or dubbing—

Hon Member: A capital gains tax.

SIMON WATTS: —or a capital gains tax, at its lowest level. When a person sells a house within 10 years after purchasing it, then they are going to be taxed on the sale proceeds of that home. And that is not acceptable. That increase, increasing to 10 years, is going to bring in a large number of taxpayers into that net. It is unnecessary and even with the adjustments that have been made through the select committee process, through clause 48, proposing new section CB 16A(6)(d)(ii)—just for those at home who are looking up the Income Tax Act, and I know there will be a few, no doubt, that aspect will go some way but it is not going to deal with the underlying issues.

The test around “reasonable efforts” is a broad statement, and I think the reality is that that’s going to have to go through a period of assessment through tax advice, etc., compliance costs that are to be brought into that, and, again, a lack of certainty. As speakers before me have said, it is going to exclude particular groups that we’ve discussed already: those who are undertaking military service overseas. I have the Devonport naval base in my community. A huge number of individuals who proudly provide service to our country in terms of our defence forces—those are the individuals that will be potentially impacted by this type of legislation change. Parents that are assisting their children to buy a home when they’re going to university across this country will be potentially negatively impacted by this.

But what is important about the brightline test and the interest deducibility aspect is National will repeal both of these points when we come into Government in 2023. And we have been categorical over the weekend with our leader, Christopher Luxon, instead putting a very clear statement in the ground. Where does National stand around these increases in taxes? National will repeal those two aspects of that legislation.

I, finally, want to finish with the aspect around the 39 percent tax rate increase—income over $180,000. It was actually initially discussed that this would only impact a small number of Kiwis. Well, it turns out, through the IRD Official Information Act request, that this will impact—114,000 Kiwis across this country will be impacted by this increase in taxation. Another example of just blatantly doing the Robin Hood model that this Labour Government are so good at: take the money off those individuals who are successful; take the money off those individuals who are prosperous and that are working significantly hard for this country; take that money off those individuals who are taking risks to try and grow and develop this country; and tax, tax, tax at any cost.

And you know what? What sort of message does that send to the young people in this country who are looking for ambition, who are wanting to be successful? It is saying to them that under a Labour Government, we will tax, tax, tax you, and that is going to be the reality. The National Party overall oppose this legislation. We do not believe that it addresses the underlying issues that face this country. It will not help us in terms of moving forward, and we do not commend this bill to the House.

Dr DUNCAN WEBB (Labour—Christchurch Central): Kia ora e te Mana Whakawā. I’m really pleased to rise to speak to this excellent and progressive Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. Before I get much further, I must say I find the suggestion from the Opposition that you have to earn over $180,000 a year to be a hard-working New Zealander to be pretty repugnant. I know many, many people out there who are earning far less than that, and I will come to that soon.

The importance of this bill is hard to overstate. Setting the rates of tax is something we should constantly be turning our minds to, as Dr Russell mentioned earlier. It’s a constitutional principle that we must come to this House annually to strike the rate of tax in New Zealand. New Zealand’s taxation regime, as confirmed by this bill, is frequently referred to as a low-rate, broad-based system. That is to say that, by and large, the tax rates are modest, and I include the 39 percent rate in that for those earning over $180,000. Australia’s top tax rate is 47 percent; Canada, 53; the UK, 45; and the US, 43. So we have a low tax rate system.

Hon Michael Woodhouse: How many people pay it?

Dr DUNCAN WEBB: Have a look at the OECD website. Have a look; it will tell you as a multiplier of the average wage what it is, and ours is a high threshold. So our system’s also progressive. In terms of that $180,000 rate—the top 2 percent—what the other side are saying is that they want tax breaks for the top 2 percent, and I won’t buy it. Our system is progressive. That is to say, the less you earn, the lower rate you have; the higher you earn, the higher rate you have. That seems fair to me and I’m very happy to confirm it.

So we have a low rate at the lowest level. If you went up to $40,000, 10.5. It goes to 17.5 at $48,000, 30 percent at $70,000, 33 percent up to $180,000, and 39 over that. Not everyone agrees with these tax rates and we have heard again and again that the 39 percent rate should go. The ACT Party in the select committee report said it simply punishes people who work hard—as if other people don’t work hard. And we’ve recently heard the National Party saying much the same, and they talk about fiscal drag. We’ve recently heard over the weekend that the National Party would reduce tax and do away with this rate. That’s just a retread of just about every single National Party leader that has gone through this House—and, goodness knows, there’s been a few!

Let’s talk about hard-working New Zealanders. I want to talk to you about an actual hard-working New Zealander: Chloe—not the one over there but another one I know. She’s a single mum. She’s got a pre-schooler and she’s got an intermediate school kid. She works three days a week as a support worker, one day a week for a not-for-profit. So she’s got two jobs. She’s looking after two kids, and she earns $48,000 a year, or thereabouts. What would the tax cuts give her? They’d give her $112 a year. What would the tax cuts give someone who earned $288,000 a year—which just so happens to be what the Leader of the Opposition gets paid? They’d get $7,522. If you earn $288,000, you get that much. If you’re a hard-working New Zealander with two jobs and two kids, you get $112. That is not a New Zealand I want to live in, and that is why there won’t be any tax cuts of that ilk from this side of the House. It’s $112 for Chloe, and $7,000 for Chris, thus exacerbating the very inequality that this party is committed to addressing. So that’s why the majority of the select committee did not agree with the ACT Party and did not agree with the National Party, and agreed to confirm the reasonable and progressive tax system we have.

Let’s turn to housing. We’re working on addressing the inequalities which have exacerbated the housing problem, and we’re making progress. One of the things we want to do is address the issue of interest deductibility. In a high-inflation environment, that is even more important. I want to try to step aside to something a little more technical. We asked advisers what the impact of inflation is on interest deductibility and we were told very clearly that the whole tax system works on nominal interest rates. That’s kind of the headline interest rate, not real interest rates, and they can differ significantly. The real interest rate in simple terms is the nominal interest rate—the number—minus inflation. So when inflation is high, interest rates can be low, and effective tax rates are even lower. So advisers noted in December that the interest rate on a floating loan was 4.9 percent, and inflation was 5.9 percent. What’s the real interest rate, then? Negative 1 percent.

David Seymour: Oh!

Dr DUNCAN WEBB: I know; it’s math. It’s called mathematics. What is more, to be able to deduct the nominal interest as an expense, when you’re actually, in real terms, paying a negative interest rate, is deducting for something which isn’t an expense at all, and that’s just one of the reasons why it’s entirely inappropriate to have interest deductibility in this framework. So that’s going to come in progressively from 1 October, but, at the same time, I want to make it clear that we wanted to encourage new home building. So new home builds are exempt. Commercial boarding houses—we explored that, and we moved to exempt those, and also significant repairs on dwellings which would not otherwise be habitable. That includes earthquake-prone buildings and leaky buildings, or buildings that have been subject to a weathertight homes notice.

But looking further, there are a whole lot of other remedials, as we say, in there, and I just want to touch briefly on cryptocurrencies, recognising here in the tax legislation that there are financial assets that shouldn’t be subject to GST and financial arrangement rules, but also just around the definition of a cryptoasset. Anyone who’s looked at it—and the Finance and Expenditure Committee was looking at this—recognises the distinction between cryptocurrencies or cryptoassets and these non-fungible tokens—assets which people see as having intrinsic value and which they sometimes pay large sums of money for. We wanted to make a distinction between the two, so we defined what a non-fungible token is, and said a cryptoasset isn’t that. A non-fungible token was defined as a cryptoasset that contains unique distinguishing identification codes and metadata. We were assured by advisers that that’s quite distinct from simply registration numbers that you might see on a bank note, and we know that things like bitcoin and ethereum do have identifiers but they aren’t unique codes.

So it’s actually an important point to make sure that that works and to make sure that the parliamentary intent is well known as crypto becomes more widely used. And, of course, there are a whole lot of other remedials as well, including local body income, making sure that tax from council-controlled organisations is exempt from tax and also GST invoicing. It was, in some ways, news to me that when I purchased something worth hundreds of dollars at the hardware store, I was supposed to give my identifying details, my name and address. We looked at that and said it’s not how the real world works. At the committee, we suggested that there be $1,000 a day de minimis threshold to make sure that it’s workable for everyday hard-working New Zealanders and to make sure that, really, it wasn’t an onerous burden.

Setting the tax rates every year is important. The suggestion from the National Party, the same old tax cuts, isn’t going to work. Hard-working New Zealanders like Chloe need a decent tax system and good infrastructure, a good health system, and good education. That’s why this tax bill is part of the system that does it. I commend it to the House.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. It was fascinating to hear a speaker from the National Party just before talking about all of these university students whose parents are buying houses for them. It really was an insight into the world or social hierarchies within which the National Party are rubbing shoulders, and it’s definitely not representative of the 1.4 million New Zealanders who rent in this country. But I digress.

My content of this speech today will focus primarily on the large Supplementary Order Paper 64—which many have already addressed—on tax deductibility and brightline changes, because there is a housing affordability crisis in this country, but it is not one that is being felt equally. We know that because we know from Statistics New Zealand data that it is the case that those who rent spend a higher proportion of their income on housing, and, of course, also on other essentials. Those, on the other hand, who have speculated on housing like they are playing a game of Monopoly have profited handsomely, particularly over the last two years, while New Zealanders on the other end of the spectrum are, frankly, being screwed. They’re not being screwed in a vacuum, though. They are being so by intentional decisions by that Economics 101, rational man who exploits the system.

Those who have land banks, those who have speculated and sat on inflating assets without breaking a sweat—they have been let off the hook. That hook is the social contract. It is recognising that capital gains don’t come about by virtue of one individual’s genius, but, in fact, as a result of the investment that all of us, as ratepayers and taxpayers and New Zealanders, make in our communities and our neighbourhoods and in our country, in the infrastructure of the transport projects, in the water, internet, and energy infrastructure, in schools and in hospitals, and in walking school buses, māra kai, and community gardens.

Some people say to me, “Don’t hate the player; hate the game.” Well, unfortunately, the legislation that we are passing through its second reading this afternoon continues to leave largely unaffected those rules which entrench exactly that game. According to CoreLogic, since March 2021, when the Government announced these policies of removing interest deductibility and extending the brightline test, the average house price in Aotearoa has increased by 22.5 percent—over $190,000. Those gains alone are over three times the median income before tax, and we know that most of those massive capital gains will not, in fact, be taxed.

Those on the right—my literal right and the right of Parliament—would like to argue that we shouldn’t tax wealth like work, because it hasn’t been realised. But then they’ll turn around and say that even when it is realised, we also shouldn’t tax it then—surprise, surprise—which is why it’s worth pointing out that the Income Tax Act 2007 was actually always supposed to enable taxes to be paid on income, regardless of where that income came from, which is why it was the case that originally, the National Party, when in Government, made amendments, as others have alluded to, in 2015, to introduce that brightline test to simplify and ensure IRD’s rightful collection of tax on capital gains income. But, of course, it did not go far enough, and neither will the changes in this bill with the extension of this brightline test as proposed, because, at this point, this advance into this crisis, we are not addressing the fundamental problem. The fundamental problem is one of a feudalistic wealth divide supercharged by political decisions and intentional neglect by virtue of an over-reliance on, particularly, unconventional monetary policy over the last two years.

In the early 2000s, some reckoned that house prices were radically increasing or escalating because some people were engaged in what we called then “flipping properties”—that is, buying them quickly, doing some minor improvements, and selling them on. But the crisis we have today is far worse. No one is really even pretending to improve properties that they’re sitting on any more, or too much. The crisis now is one more so of affording—that is, the hoarding of wealth and more capital gains in the hands of a few while more and more New Zealanders, those 1.4 million New Zealanders, who rent struggle to pay that rent, let alone get into a first home.

Since the Government ruled out a capital gains tax in April 2019, CoreLogic shows that the average price of housing has increased by over 50 percent—by almost $350,000. This recent surge shows that merely tilting the balance, as, indeed, these changes were heralded as doing, does not take us far enough. It shows that an over-reliance on economic policies intended to steady the ship in the midst of a global pandemic, instead of directing support to those who are disproportionately exposed, resulted in exactly the disproportional impact—that is, inequality—as predicted by the Reserve Bank of New Zealand and Treasury back in early 2020.

A recent Newshub - Reid Research poll showed the highest public support yet for the Government revisiting a capital gains tax, with almost 55 percent of New Zealanders agreeing and only a third disagreeing. It’s no secret in this Chamber that the Greens have long called for a comprehensive capital gains tax and, of course, wealth taxes. We know that tax is not a silver bullet, and we know that we need to also have more public housing, rent controls, and a rental warrant of fitness to ensure everybody in this country, regardless of whether they own or they rent, has a warm, safe, dry, secure home. But tinkering simply will not cut it, because even if house prices were to fall by 10 percent this year, as some economists are indeed predicting, we would still be only back to where we were about six months ago.

The Greens know that we must learn lessons from the past, because a house price crash could, in fact, lead to a credit crunch and higher unemployment, with people losing their houses and, over time, wealth concentrating even more so at the top end of town. This cannot go on, but we cannot let these potential issues scare us into ignoring the problem and potentially making that risk far worse were it to just happen to us. The Government must act and intervene to protect people as we take the heat out of this housing market.

Despite hearing a lot from members of the National Party about how they are opposing this bill today, they have no real ideas for addressing this housing crisis. In fact, they actually propose those which would continue to exacerbate it. “More supply,” they keep saying, “but, no, not State houses—not that supply.” “We need less regulation.”, they say, “Unshackle the market.” Well, look where that free market has got us. With their ideas and their track record back when they were in Government, the rich just got richer.

We, in fact, heard very similar noises from former National and, I might add, Labour Governments back in the 1980s and 1990s, responding to inflation concerns at the time. The devastation of that historical deregulation, the funding cuts, and the tax cuts are scars that are still evident in our country today. You’d think that all of us would want to learn from that history, but a recent snatch from the Leader of the Opposition demonstrated that he can’t quite distinguish between capitalism or socialism.

Business as usual simply will not cut it. This bill is not too bad and it’s not too good. The sky won’t fall in—as members of the Opposition are screeching about—but, unfortunately, it is not quite the Goldilocks zone either, because this is not just right.

I am, and the Greens are, really hoping that the work programme under way with the Minister of Revenue, the Hon David Parker, on fair tax gives us a little more than just another Government report to gather dust, but, in fact, we hope it leads us to far greater action to not just tinker or tilt to rebalance the scales but to properly engage and support all in the team of 5 million. Thank you, Mr Speaker.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. I rise on behalf of ACT in opposition to this Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. As the title suggests, this is a piece of legislation that sets the tax rates and makes some technical changes to the way GST is collected and makes some technical changes to the tax system. As anyone who’s had the misfortune of spending some time on tax policy knows—or having to pay it, more to the point—it is fiendishly complex, and every year the Government has to introduce a bill to Parliament to fix up the things they got wrong last year. But the most important thing is setting the rates, so we’ll talk a bit about that.

And then, the next most important thing is that it’s also got a Supplementary Order Paper, a late addition to the bill, that would add some extra changes. It’s going to add a mortgage interest deductibility change, so you can’t deduct your mortgage interest from taxation if you’re a landlord. And it’s going to extend the brightline test to 10 years. We’ll talk a bit about that too.

But let’s start with those tax rates. The most significant change is that the tax rates stay the same as last year, except one. There’s a new tax rate of 39c only on income over $180,000. And what’s wrong with that? Some people would say “You know what? Stuff them. There’s not many of them. They’re earning lots of money. Let’s just take it.” Well, actually, there’s everything wrong with that. We tell people—especially young people in this country—that working hard and getting good qualifications and succeeding and saving their money and investing carefully is the right thing to do. And we tell them that it’s wrong to pick on people and take their stuff, especially if there’s only a few of them—that it’s wrong to pick on minorities. Then, this Labour Government comes along and says, “Well, there’s a small group of people with some money and we’re going to take a bit more of it because we just can.” Well, I think that is absolutely morally and ethically wrong and we should say no to it. We should get rid of that 39c rate that’s being introduced here. And that’s one of the things that I’m campaigning for.

And then they’ll say, “Oh, but we get so much money. We need it for health and education.” Oh, really? Well, in the last year, the Government’s income—from income tax and GST and excise tax on petrol that keeps going up with the oil price—well, that’s gone up $14 billion. How much do they think they’ll get from this new 39c tax on income over $180,000? Well, the estimates are about $400 million. So $14 billion—that’s just the extra in the last year—versus $400 million. It’s not about paying for things; it’s about punishing people, and it’s wrong. The ACT Party stands against punitive taxes that pick on people just because we can take their money. That is the opposite of what we tell young New Zealanders, and it’s the opposite of the values that should be in our tax code. It’s the opposite of the values that will make this country a prosperous and joyful place to live. It’s picking on people because you can.

Then, there’s the GST change. Well, look, no major truck there. It’s mostly, kind of, I guess, technical stuff, and that’s needed to be done from time to time. You know, technically, if you buy something for a few hundred bucks at Bunnings, you’re required to give your name and address for GST purposes. No one does that, and the idea that that requirement’s being removed to fit with actual reality is a good thing.

But then, you come to this brightline test, the idea that if you buy and sell the same house within 10 years, you have to pay income tax at your marginal rate on any capital gain you make. Now, this is a very good lesson in tax policy, and, frankly, it’s a good lesson for the National Party, because the National Party is jumping up and down, saying “Oh my god, the brightline test is now 10 years.” Well, I remember someone saying in 2015, when the National Party introduced the brightline test, that this tax is the acorn of a capital gains tax. It’s a measure that will grow from two years to five to 10 to 15 years. You watch, it will eventually apply to a wider range of homes. It’s the acorn the National Party has planted that will grow into a full-grown capital gains tax. That was me in 2015. And guess what! Now it’s a 10-year brightline test; we’re halfway there already after just a few years.

And my message to anybody, including the National Party, is: if you don’t want a new tax, don’t introduce a new tax, because, you see, taxes are like acorns; they grow. You know, King Dick Seddon, the rather portly man who has a statue out the front, in 1891 he stood in a house, not literally this one but one like this, and he said, “We’re going to have a 5 percent income tax.” Well, who could be opposed to a 5 percent income tax? The ACT Party would love a 5 percent income tax now. But taxes are like acorns; they grow. From 1891, 5 percent; 2022, 39 percent; and at some points in our history, 66 percent. If you introduce a tax, it grows, and the right thing to do with the brightline test is get rid of it, because, at the end of the day, there is no way that putting taxes on housing is going to make them more affordable. There’s no way that putting a capital gains tax on housing has solved a housing affordability crisis anywhere in the world. It hasn’t worked in LA or Vancouver or Sydney or London.

And it’s pretty easy to understand why: house prices go up when there’s too much demand and not enough supply. A capital gains tax just means that the Government gets to be a silent partner, taking some of the capital gain for itself. It doesn’t change the prices; it just changes where the capital gain goes. And if you think the Government’s better at spending it than people, then you haven’t spent enough time in Government, understanding how this place works. So we should just get rid of the brightline test, not as the National Party just said, “Oh, it’s OK if it’s two years, not if it’s 10.” If you introduce it at two, you get 10, and we’ve seen that.

But the worst part of this new bill is the mortgage interest deductibility. It’s such a good lesson in how tax and policy works with this Government. You know, we’ve got a new phrase coming out. It’s called “Jacindanomics”. Jacinda Ardern, the Prime Minister, said, when this idea was introduced, we are going to “tilt the market towards first-home buyers”. And what she meant is: if landlords can’t deduct their mortgage interest, then maybe it’ll be cheaper for someone to live in their own house than own it and rent it out. So you can understand what she’s thinking.

But here’s the problem: first of all, a lot of very poor people can’t afford a house. They need a landlord; they need a house to rent. So we forgot about them in this equation. But here’s the other problem: the main effect of this policy is that we’re going to take more money out of housing and put it into the Government’s coffers through the Inland Revenue Department. And, on average, a landlord is going to pay another $4,000 a year in tax because they won’t be able to claim back a deduction for their mortgage interest.

Now, the average New Zealander is much smarter than the Labour Government. They can sit there and ask the simple question: if the tax department takes $4,000, or $80 a week, off my landlord, what might happen to my rent? And we heard Brooke van Velden, ACT’s housing spokesperson, question Megan Woods, the housing Minister, and Megan Woods did everything she could to avoid the basic conclusion any tenant in this country can work out: well, if the Government takes four grand off my landlord, my rent’s going to go up—and that’s what’s happening.

And here’s the real kicker and the problem with “Jacindanomics”: you see, most first-home buyers will, by definition, if they haven’t bought a home yet, then they’re first-home buyers, and if they’re first-home buyers, they don’t own a home, and if they don’t own a home, they’re either homeless or they’re renting. And I hope they’re not homeless. So if they’re renting, what does it mean to have a policy that taxes landlords and puts rents up? It’s going to take money away from landlords, who are going to pass it on to tenants who are first-home buyers. So when this Government tries to tilt the market towards first-home buyers, it taxes first-home buyers and makes them worse off. And the problem is: this Government doesn’t know how to solve any problem other than putting up tax and taking more money away.

There is a better way for our country and it starts with values. It starts with something I said in my maiden statement to this House. The simple question is: do you believe wealth is a zero-sum game, or do you believe that in the right conditions people can grow wealth, make everybody better off, by trading value for value and getting stronger together? If we stopped regulating and taxing and punishing groups of people, from this Government in this House, I think we would find that many more flowers would bloom. We would find it’s possible with good infrastructure funding and planning to build a lot more homes and solve that problem. We could be a much better and more prosperous country, but not with this punitive tax legislation. Thank you, Mr Speaker.

BARBARA EDMONDS (Labour—Mana): Thank you, Mr Speaker. Well, it’s really fortunate that we do have the Infrastructure Acceleration Fund in order to build more houses, so I will now take a call on this tax bill, in particular, the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. As noted in the commentary, as reported back by the Finance and Expenditure Committee, the bill has three main purposes: (1) improve the current tax settings by ensuring that the current tax rules are working as intended; (2) to modernise the tax administration settings; and (3) set the annual tax rates for the 2021-22 tax year, as this is required by an Act of Parliament. I will speak to some of these purposes, paying particular attention to the areas where the Finance and Expenditure Committee have recommended changes, or where there are diverse views.

The annual rates bill is always important as it sets the annual tax rates for the tax year. By a majority, the committee recommends that clause 3 of the bill remain unchanged. Why the majority and this side of the House recommends that clause 3 remain unchanged is that what is proposed by the Opposition—tax cuts and the removal of the top tax rate—is not what the country needs at this time. Maintaining the tax system helps maintain the revenue base, which is necessary to fund the services and functions that so many New Zealanders depend upon. It also provides clarity and certainty at a time when there is so much uncertainty. Providing a tax cut would disproportionately benefit high-income earners over lower-income earners, and that has been well explained by the deputy chair of the committee, Dr Duncan Webb.

I don’t need to add any impetus to a point well made out by Dr Webb, other than to support what was said by the Prime Minister earlier in question time today, and that, to address inflationary pressures—which as the Opposition mentioned in their minority view to the revised tracked version of the bill—this side of the House would look to transfers, both through the welfare and the tax system, to support lower and middle income earners. That’s why we’ve overseen a $5 increase in the minimum wage, benefiting around 300,000 workers; increased Working for Families changes, that will lead to 346,000 people better off by an average of $20 each week; and the winter energy payment, which will start again from 1 May. The Government’s plan is providing targeted support to New Zealand families to deal with the cost of living, while also investing in critical infrastructure—importantly, keeping a lid on debt. That’s why this side of the House has not recommended any changes to clause 3.

Modernising the tax administration settings, which is the second primary purpose of this bill, is grounded in the principle that, although New Zealand has relatively strong tax settings, it is important to maintain the tax system and ensure that it continues to be fit for purpose. It also means that the tax system adapts to changes in business practices so that clients’ costs are kept at a minimum. The tax changes to the tax treatment of cryptoassets contained in the bill are an example of modernising the tax system. Easy Crypto last week released the results of a survey that showed around 18.4 percent of adult Kiwis reported investing in cryptocurrency, compared to 17.7 percent who reported having investment property. The bill will exclude cryptoassets from the GST and financial arrangement rules to ensure that those rules do not impose barriers on cryptoassets as a method of innovation, investment, or capital raising.

One recommendation the committee has put forward is to the definition of “cryptoasset”. Some submitters suggested that the definition as contained in the bill could be problematic. With over 15,000 different types of crytoassets, the definition needs to be wide enough to cover those assets. The committee recommends removing the fungibility requirement from the cryptoasset definition. We agreed, on the committee, that the fungibility requirement could be ambiguous, as the intention was actually to exclude non-fungible tokens, and the changes in the revised track version of the bill reflect this intent better.

We also recommended some changes to the exempting of cryptoasset brokerage services from GST, and clarified that derivatives over cryptoassets should receive the same tax treatment as derivatives over shares. We also clarified in new clause 79(2) that an option to acquire or dispose of cryptocurrency is an accepted financial arrangement.

I’d also like to point out an issue that was raised by a number of submitters, including the Chartered Accountants Australia and New Zealand, that there should be a simplified method of returning taxable income for holders of cryptoassets, designed so that holders of these assets would not have to keep track of all trades in order for the profit or loss on each one to be calculated and included in a person’s annual return. Officials’ response to this submission was that, while a simplified method would be desirable, more work would need to be done as part of the tax policy work programme, as opposed to an insertion in this bill. I raise that here in the House as I agree with our independent adviser Therese Turner—and we also thank her for the work that she did on this bill—that officials should look at this as part of the work programme—hopefully, in the near future, given the increasing investment in cryptoassets by Kiwis, and to help taxpayers comply with their tax obligations for these classes of assets more easily.

Lastly, I’d like to speak briefly to the change of the interest deductibility rules, which has already been canvassed pretty widely today. I only need to speak briefly, as Dr Deborah Russell has brilliantly summarised the policy underlining these changes. The principle of our tax system is that expenses incurred in earning income by revenue, by a business, should be tax deductible. Therefore, as a capital gain from the disposition of real property isn’t taxed, then the expense of the interest shouldn’t be deducted. It’s the Government’s goal to level the playing field for existing homes in favour of first-home buyers and those moving to a new home, compared to those investing in residential property. Investors can generally outbid first-home buyers, so we want to make residential properties less attractive for investors, while stimulating investment in new housing. So, by removing interest deductions as a business expense for residential investment properties but allowing reductions for property developers or people purchasing a newly built residential investment property, we look to help balance that.

By allowing interest deductibility of property developers and purchasers of new builds but removing it from other investors, we will continue to encourage supply. This should help boost supply by channelling investment towards expanding the housing stock and away from direct competition with first-home buyers and owner-occupiers for existing housing stock. That’s why the previous comments by the leader of the ACT Party around “you should have an infrastructure fund” I addressed very quickly in my first note, which was that’s why we have an Infrastructure Acceleration Fund—is to help with the supply.

The last thing that I would like to be able to just briefly touch upon was something that was raised by Dr Duncan Webb in his speech around high inflation rates affecting interest deductions, and that’s covered under page 7 of the commentary. The members from the Labour Party thought it was quite important that we have this, which is why it’s part of the majority report. Given the changes to the interest deductibility rules, we asked advisers about the relationship between inflation and taxation. We were interested in how high inflation rates would affect deductibility of interest costs as an expense. We were told again, as reported in the commentary, that the tax system works on nominal rather than real interest rates, and that these rates can differ significantly.

The real interest rate, in simple terms, is the nominal interest rates minus the inflation rate. This means that when inflation is high, the effective tax rate is lowered. For example, as mentioned by Dr Webb, advisers noted that the interest rate in December 2021 was 4.9 percent, and inflation was 5.9 percent. Therefore, the real interest rate was negative 1 percent. We note, in respect of the December 2021 quarter, landlords who claim interest as an expense deduction at the nominal rate will be claiming a tax deduction for something which was, in real terms, not an expense at all.

So, Mr Speaker, I’d like to thank you for the opportunity to be able to take a call on this. I know we’re going to have a really vigorous debate in the committee of the whole House. I can sense it from over here, but I’d like to be able to thank the officials for all the work that they’ve done on this bill, for their assistance during the select committee stage and, in particular, again, we’d like to thank the submitters, as well as Therese Turner for her independent advice and on helping the committee. I commend this bill to the House.

ASSISTANT SPEAKER (Ian McKelvie): I call the Hon David Bennett—five minutes.

Hon DAVID BENNETT (National): Thank you, Mr Speaker. That member Barbara Edmonds just tried to rationalise this bill by saying that because you can’t tax the capital gains, the interest deductibility should not be claimable. That was her rationale for this bill and to have that. That is just bizarre tax planning, because, actually—[Interruption] No, it’s not, because the income that anybody earns on that house is taxable. The rent that the landlord gets is taxable income to that landlord. They can claim, in the past, an interest deductibility but they are taxed on their income, and that is where that was quite a deceitful speech from that member, trying to make a rationale for something that is not correct. If she’s a tax lawyer, God help us! She’s got no idea. There is tax on revenue. We are talking about revenue. We are not talking about capital. There’s a huge difference in tax between revenue and capital.

Ingrid Leary: Point of order. I believe that member referred to my colleague as deceitful. That’s against the Standing Orders.

Hon Michael Woodhouse: Point of order. I’m sure I don’t need to point it out, but the question of the accusation that Ms Leary has levelled at Mr Bennett requires intent, and David Bennett never said that it was her intent to deceive. He mentioned that the speech had an element that could be considered that. There was no question of intent.

ASSISTANT SPEAKER (Ian McKelvie): Thank you.

Hon DAVID BENNETT: Now, if we look at this bill, what does it do? It puts up tax rates for those that actually get out there and earn some income. It takes away the ability to take an interest deductibility for those people in the business of providing rental homes. All of this will create a dumbing down of New Zealand society. There is no incentive to go out there and earn more. There is no incentive to buy an asset that provides a service for other people. If anybody has to follow these rules, then that will lead to, as the ACT Party said, an increase in rentals for those seeking accommodation. That will directly hurt the very people that the Labour Party always campaigns on saying they’re looking after.

This will hurt middle to low income New Zealanders more than anybody else because there’s no incentive for the best and brightest in New Zealand to stay here. They might as well go to Australia on the next plane. There’s no incentive for somebody to have a rental house and to own that as a business, because they can’t get any interest deductibility on that business against the income of that business, which is the rent they receive. As David Seymour rightly said, that will force those people, then, to put up the rents. So, on one hand, the people that are on low or middle incomes in New Zealand won’t have the job opportunities, because those on higher incomes won’t want to invest in this country, and at the same time, their costs are going to go up in their rentals.

This is great economic policy from the Labour Party. It actually hurts middle and low income New Zealanders, the very people they purport to represent. Where’s the answer from the Labour Party? They’re quiet. They’re sheep. They had all this great economic analysis five minutes ago. Where’s your answer? There is none. They are hurting the very people that hurt the most under an inflationary environment. That is the effect of this legislation. It is dumb legislation. It is at the wrong time for New Zealand, where you have inflation. It will create an environment where employers that want to have the best people will have to increase their wages, which means more inflation going to that part of the market. It means that those that have rental accommodation will increase the rents, putting more inflation in that kind of the market. The net effect of both of those is to increase inflation overall.

It’s going to hurt middle and low income New Zealanders. It is dumb policy. It’s not going to earn the Government a terrible lot, considering what they’re going to have to pay to keep up with that inflationary environment. Are they going to increase the benefits, increase payments, increase accommodation supplements to match that? Is that the great plan? And that increases inflation again, and then the Government has to do the same thing again. It is the stupidity of the Labour Party that caused this, and it is the stupidity of their policies that will create even more friction in New Zealand.

Nobody voted for the Labour Party and these policies. They were only put into place by Winston in a moment of rage. But the effect of them will be to hurt New Zealanders, and this policy is detrimental to the very people that we should be looking after now. The low and middle income New Zealanders will pay the price for these dumb rules. They will be the ones that lose their jobs, they will be the ones paying higher rents, and they will be the ones that lose out of this legislation.

ANNA LORCK (Labour—Tukituki) (remote): Thank you, Mr Speaker. I’m beaming into the House today on International Women’s Day from Hastings, in our sunny region of Hawke’s Bay, where we’ve been experiencing a new housing building boom right across the region, which includes seeing new homes for the private residential rental market.

As a member of the Finance and Expenditure Committee, speaking in favour of the Government’s Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, the new legislation sends a very strong message: if you are planning to invest in housing for the rental market, build new. Build new and contribute to the housing supply, because the more we build, the more affordable housing becomes for more people. Even if you are a mum or dad investor who has a rental property that you’ve been renting out and may well have had it for well over a decade, here is a real opportunity to take advantage of interest deductibility and only a five-year brightline test by building new and investing in new housing. Be part of fixing the housing crisis by selling your existing rental and having a new, modern investment by investing in a new build for the rental market.

Now, we know that large investors can generally outbid first-home buyers. So in this legislation we want to make sure that residential properties are less attractive for investors, whilst stimulating investment in new housing by removing the interest deductions as a business expense for residential investment property but allowing deductions for property developers or people purchasing a newly built residential investment property. By allowing interest deductibility for property developers and purchasers of new builds but removing it for other investors, we will continue to encourage supply. And this should help boost our housing stock by channelling investment towards expanding new builds and away from the rent competition with first-home buyers and owner-occupiers for existing housing stock.

Now, as well as this, we’ve said that new builds would be subject to a five-year brightline test, rather than a 10-year test. So this legislation is already working. And I can give local examples that show that the work we’re doing in select committee in signalling this legislation and hearing submissions is working. I’ve spoken to a small investor who is using the equity in her existing properties to look at building two new, warm, affordable rental properties, and, once they’re built, she’s going to sell up her existing rental stock. She’s excited about the opportunity of adding houses and supporting the rental property market. At Camberley, I recently visited a new property development of 10 three-bedroom, warm, dry rentals—all interest as a deductible for this investment. Now, as well as this, the houses can be sold after five years and will not be subject to a capital gain brightline test because they’re built new.

Affordable rentals are very important to helping deal with the housing crisis. This Government recognises that new rentals play an important part so that families wishing to rent can. These are positive things that are happening and the message I have is: build new—build new.

INGRID LEARY (Labour—Taieri): Like my colleague Anna Lorck, I would like to acknowledge International Women’s Day. It’s a day when we can reflect on the gender pay gap, when we can break the bias, and we can remember that our Prime Minister is not “some girl in a skirt on a power trip”, as described by one of the protesters at Parliament, but rather a respected leader on the global stage who has saved thousands of lives, who has kept our economy on a strong footing throughout this pandemic, and, in the words of David Seymour just now, who is tilting the market to first-home buyers.

I’d like to just address the rather shouty comments from Andrew Bayly and David Seymour on tax. They’re repeating the speech from Chris Luxon over the weekend, which was about reducing the top tax rate or eliminating it altogether. That was, basically, a 3,650 word speech about tax cuts for rich people. Now, this was a week when the world order was changed by an aggressive foreign invasion of a democratic neighbouring State, when New Zealanders experienced dramatic scenes like we haven’t seen before outside Parliament, when other New Zealanders have continued to hunker down, bracing for Omicron. So it’s a brave new world, and what did the Leader of the Opposition have to say about that? Tax cuts. And, by the way, in all of those 3,650 words, not a single mention of Māori. So no thought of how Māori feature in the economy, either as tangata whenua or as citizens of New Zealand. I may be showing my age here, but Mr Luxon’s suggestions have come straight out of the John Key playbook. In fact, they’re no different than any of the other several leaders that we’ve had lately, whether that’s Collins, Muller, Bridges—the list goes on. An election bribe is just that.

I am getting to it, Mr Speaker, but I’m responding to the tax cuts question, because the tax cuts that are mentioned by the Opposition will actually be worse for most New Zealanders. I refer now to my colleague Dr Duncan Webb, who talked about the suggestion that they made that if they were passing this bill, they would take away the top tax rate. Now, that would leave a person on $25,000 a year $100 or so richer, and a person on $250,000 a year about $7,000 richer. So there’s a massive difference in benefit there. As Twitter has put it, doing those kind of tax breaks is really about giving better service to those who are already flying in first class. It’s refusing to clean up any other section of the plane, and it’s refusing to actually refuel the plane.

If I turn now to Supplementary Order Paper (SOP) 64, which deals with interest deductibility in the brightline test, this Government believes every New Zealander should live in a warm, dry, safe, secure house, whether that is through owning a home or through rent. There is no quick fix to the housing crisis, as other speakers here have said. The Prime Minister said today at question time that we are absolutely focused on fixing this.

Now, our policies are on track to do this, and what we’ve heard from the Opposition today is that when it comes to interest deductibility, even though they will admit that there is a housing crisis, they would do absolutely nothing. National would rather sit on their hands and do nothing. So let’s be clear: this SOP 64 doesn’t impact renters, it doesn’t impact first-home buyers, and it doesn’t impact owner-occupiers. It impacts not those who invest in new builds, and those new builds increase housing supply. So it affects highly leveraged speculators who own two, three, four, five, or 25 houses.

Now, why do some people in this country own 25 houses when others can’t even afford to get a roof over their head? Well, that’s because those groups of investors are one of the only groups in this country who have never had to contribute anything from the profit of their investment. The inaction of doing nothing for that group is actually not only worse for first-home buyers; it makes inequality worse. So National cannot, in all honesty, say they’re interested in closing the inequality gap, when these tax cuts that they propose, and what they don’t want to support in terms of interest deductibility, is about feathering the nests of their rich friends and trying to buy their way into Government with promises of tax cuts.

We’ve heard from the Minister that the IMF is warning that doing nothing about the ballooning housing market could end up in a slump. Now, that has knock-on effects for the economy. We have to tackle this head-on, and it’s incredible to me that the National Party, the ones who say that they’re a safe pair of hands, would rather do nothing and be so wilfully blind to this risk. I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): Well, I credit Ingrid Leary for her deeply socialist roots being so clearly on display there, because what she’s, basically, said is that she hates rich people—she cannot stand success and innovation and people getting ahead; she thinks it’s something that happens by accident. And that’s the sort of theme that we’ve had permeating this debate all the way through.

But I want to start with something that hasn’t yet been said, about the Supplementary Order Paper (SOP) that has been implemented into this bill, and that is about a broken promise, because, by any measure, a 10-year brightline test is nothing more or less than a capital gains tax on every property but the family home. And what did we hear from the Prime Minister in the previous Parliament? That she would resign before a capital gains tax was implemented. Well, I’ve got a suggestion for her: she can do just that, because that is exactly what this bill is. It is the implementation of a capital gains tax.

Now, we’ve had some—and it’s customary, actually, with Dr Deborah Russell, and today with Barbara Edmonds—really interesting philosophical discussion about tax jurisprudence, if you like. One of the things that neither of them said about this whole idea that tax is made on income account is the question of intent. And I think we got a good description from Barbara Edmonds about that, and the case for a capital gains tax on capital account as opposed to income account—that’s true—but, in order to have an income account, one needs intent; one needs to sell a good for a profit, with the intention of making a profit and paying a tax on that profit. And, for so long, the question of housing and profit and intent has gone to the intent on purchase, and that’s generally the same with any capital good. We already have a tax on that capital gain if the intention was to sell it for a profit. Developers know this. People who do up and sell houses know this. People who claim that, when they purchase a rental property, that was their goal—they weren’t, up until the brightline test, having to pay tax.

A two-year brightline test—and I go to the point that David Seymour made in criticism of the previous National Government. A two-year brightline test was our “flipping” rule. You were deemed to have purchased it with the intention of selling it for a profit if you sold it within two years, and that actually caught quite a bit of the activity that was going on there. Five years, and then 10 years, is a capital gain tax because the average length of time a person holds a property is about seven years. So there’s a huge net being cast here. And, despite Ingrid Leary’s criticisms of the so-called landlords that own 25 or 30 properties, that is not the picture of the rental market in this country—90 percent of those properties are owned by mum and dad investors, nurses, police officers, teachers, Labour voters, or at least they were till this came in this year. Because what they tended to do was keep rental as low as they could; they knew there would be some upside on capital gain, and there was interest deductibility.

And if—well, I did this analysis about a year ago; so it’s probably completely out the window now. An average priced house in Auckland with the average mortgage, charging the average rental, would, if interest was deducted, probably generate no income—no taxable income, that is—and be cash neutral. Now, because the interest deductibility is removed, that mum and dad investor, that teacher, that police officer, that nurse has to find about $7,000 in order to pay a tax bill they didn’t previously have. Now, that, by coincidence, happens to be the increase in rental in Auckland—$7,000 in the last year—and so this idea that, I think, one of the speakers said, that this wasn’t going to affect renters, is nonsense. Rents have gone up already because of this bill, and it hasn’t even been passed yet. That’s outrageous.

Now, the Minister, on behalf of the Minister of Revenue, talked about the benefits to existing housing supply, and I’ve already rejected and refuted that, but he then went on to talk about the exemption on new housing supply being a benefit in terms of how many houses are going to be built. Well, were that the case, I would applaud it. Even if it is on this policy, the Minister of Commerce and Consumer Affairs has, through the Credit Contracts and Consumer Finance Act legislation, made it so hard now for people to actually get finance to buy new houses that he’s actually offsetting any benefit that might have accrued from that. I had a call from a developer in Dunedin, in that Minister’s home city, who is trying to build a 24-apartment block—the only new properties in the city that will qualify for the housing supports threshold—and he can’t get anybody to sign up, because new-home buyers, first-home buyers are having so much difficulty in obtaining mortgage finance. And there’s nothing here in benefit if that Minister doesn’t get off his butt and fix the problem he created last year through the punitive regulations that were designed to stop loan sharks but that have actually slowed down sensible lending to first-home buyers.

Now, let’s talk about the tax thresholds, because we’ve had “Oh, fat cats!” and “Other countries have got 47 percent and 53 percent.” My question to Dr Duncan Webb in that regard is: who’s actually paying it? How many people are paying it? Because, the moment you get that differential, tax planning kicks in. It kicked in under the Clark Government, when we last had a 39c top tax rate. It’s kicking in now, and, so, very little revenue will be generated by this. It is an envy tax, and it needs to go. I note Barbara Edmonds, in referring to page 7 of the select committee report, described the Finance and Expenditure Committee’s concern at high inflation rates and their effect on interest deductions. It’s a pity the committee didn’t talk about high inflation rates and the impact on people’s taxation thresholds. In the first reading on this bill, I talked about a senior nurse at Middlemore Hospital; 10 years ago, his or her salary would have been 10 percent below the 33 percent tax threshold. Now it’s 10 percent above the 33 percent tax threshold, and that nurse is paying $2,000 a year more in tax not because his or her salary has gone up but because that’s how much more tax to pay on the equal number of dollars.

That’s the cost of bracket creep, and we know that minimum wage workers on 44 hours a week are now going to have a marginal tax rate of 30 percent. And this Government doesn’t think that matters. In fact, Dr Russell told us what we all know: that the Government thinks they can spend the taxpayers’ money better than the taxpayer can. And the Prime Minister, in question time today, tried to dance on the head of a pin to say it’s not inflationary when we do it, but it would be inflationary when the individual does it. What a load of nonsense. The reality is that this is punitive. The only beneficiary of inflation at the levels that we’re seeing now is Grant Robertson, and the coffers are filling and he’s spending like a drunken sailor—only that’s an insult to drunken sailors, because at least they spend their own money. He is spending the taxpayers’. And the reaction that we’ve heard from the socialists at the very suggestion that modest increases in taxation thresholds is somehow favouring the rich is crazy, crazy socialist economics.

We will be introducing a number of amendments to this bill because we believe that the public know better how to spend, save, and keep their own money than Grant Robertson and this socialist Labour Government do. They will be defeated, but we will make it very clear that we back New Zealand taxpayers to spend their money better than these guys.

HELEN WHITE (Labour) (remote): Thank you, Madam Speaker. I rise to take a call in support of this bill, having been on the Finance and Expenditure Committee, and I’d first like to thank the advisers for the help they gave, particularly Therese Turner, who was extremely informative and robust about what she said about this bill and helped us all.

I wanted to talk, first, about what Michael Woodhouse has just talked about, which is the issue about first-home buyers, because you would have thought that he was on the side of those buyers. Actually, the levers that have been pulled in this legislation are going to make a big difference to first-home buyers. When I first bought a house, a lot of my friends were investing in houses, and they were doing it because they went to seminars where they were told a couple of things. They were told, “You won’t have any of the money that you gain on these houses taxed. No profit will be taxed.” And they were also told, “And there’s this clever thing you can do: you can get the interest back on your mortgage. So mortgage yourself to the hilt, and then, when you’ve got one property and that actually goes up in value, buy another and another and another.” I have friends in that category who have made a fortune out of housing, and those houses have not been particularly warm and dry. Let’s face it. They have been rented out to people as the law has allowed, and so there have been a lot of people lose out in that situation. Actually, one of the groups that’s really missed out until now are first-home buyers, because they compete with that group of people.

The National Party and the ACT Party can talk about mum and dad investors all they like, but, actually, the majority of that problem is the actual psychology of investing in housing without thinking of it as being a home. So what this law does—its change in the amount on the brightline test for 10 years and the interest deductibility changes, which are phased in—is it puts people on notice that, as Anna Lorck said, you need to buy new. If you want to be an investor in housing, by all means. If that’s where you’ve got your skill base, by all means. But do it right. Do it right by your society and actually invest in new builds, so that you’re doing something productive.

You know, Elizabeth Warren, who ran for candidacy in the Democratic Party in America, talked about this as one of our major issues in modern society: that everyone is investing in houses, and all the money gets caught up in houses when it could be going in some other things. It could be going into productive aspects of our society. I think we need to start to think about homes, not houses, and that’s a very important change in our society.

Now, people do need homes in this country because of years and years and decades of neglect, and what Labour is doing with regard to that is it’s actually building the infrastructure which makes it possible for all those new builds to be built. So if you’re thinking about switching into new builds, then you’ll find that the Government’s helped you out, because it’s built a lot of the infrastructure without it being burdened on councils, and it’s actually made it possible for those to take place.

I wanted to talk for a minute about one of the things that David Bennett said, because David Bennett talked about how there was a double-dip here: that you had to pay interest on the rent but you also had to pay the tax that was now going to be due on the mortgage. I think it’s worth reminding David Bennett that there was a paper in 2020 that was published in Stuff, and it said that 37 percent of those investors were maximising the losses in their places of rental so that they didn’t pay any tax at all. That mentality is not great; it’s actually a problem, and we need to actually look at ourselves and think, “Is that a fair society?”

So, finally, I want to come to the main part of this bill, which is actually about the tax rates coming up. The tax rates are going to 39 percent for people over $180,000, and it’s graduated. So it’s only on money above that. It’s not a lot to pay for a society, and, as Duncan Webb put it, it means for Chloe, who was the caregiver under the proposed counter-proposal—that she’d be paying $112, because she had that much in a tax rate change. Whereas, actually, Mr Luxon would get something like $7,500, even with his current job—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Can I invite the member to come back to the bill. This is a second reading. Thank you.

HELEN WHITE: So the actual issue here is: who should be paying that tax? Actually, I absolutely reject the statements of the ACT leader, which suggest that hard work is somehow linked to your income so strongly. The people that I’ve noticed working really hard, who need the tax system to work for them, are actually those people like Chloe. They are our health workers. They are our nurses. They are our bus drivers. They are our essential workers in supermarkets. Those are the people we need to put first; not people on $180,000 a year. Those people are doing OK. They are actually doing fine.

So we need to focus on people who are actually facing a serious challenge to their ability to make ends meet, and this bill does that, and I’m proud of it for doing it. I am pleased to be the final speaker in this bill, because I get to say these things at the end of what actually has been—some of it—quite frankly, claptrap. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.

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

Ayes 67

New Zealand Labour 65; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Amendments agreed to.

A party vote was called for on the question, That the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill be now read a second time.

Ayes 67

New Zealand Labour 65; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

Bill read a second time.

Bills

Land Transport (Drug Driving) Amendment Bill

Third Reading

Debate resumed from 1 March.

SHANAN HALBERT (Labour—Northcote) (remote): Thank you, Madam Speaker. It’s always good to join the House, albeit virtually, from Auckland this afternoon. Greetings to all of my colleagues and people watching this very, very important bill, the Land Transport (Drug Driving) Amendment Bill. As a member of the Transport and Infrastructure Committee, I’ve followed this closely and at times cautiously, because this particular bill provides the police with new powers to use oral fluid testing devices to test drivers anywhere, any time to see if they have consumed impairing drugs before driving. We know, obviously, it’s important to ensure that our New Zealand police officers are supported to do the job that they need to, but also what I’ll speak to towards the end of my speech is the importance of education as a part of this particular piece of work.

When we look at the particular problem that we’re trying to solve here, other than alcohol, cannabis is the most commonly detected psychoactive substance in blood samples from drivers that are killed in our road crashes—23 times more likely to be involved in a fatal crash, if you’re affected by alcohol, drugs, or prescription medicines when driving. And drugs and alcohol are a contributing factor to almost 50 percent of fatal crashes in Aotearoa New Zealand. Thirty percent of deaths are a result of drivers who are under the influence of drugs other than alcohol in this instance. While drug-drivers already face serious criminal penalties if they are caught, the current law makes it hard for police to carry out more tests that could deter drug-driving. Recent studies have shown that randomised roadside testing would in fact improve road safety.

As a member of the select committee, we heard a number of oral submissions, and what I was particularly interested in was an Auckland, or Tāmaki-makau-rau, lens. When I broke down some of those statistics, when we face this particular bill, we know that Auckland is facing particular challenges in this area. In fact, last year, 64 people died and 749 others were seriously injured due to road trauma, and after loss of control and speed, driving under the influence of drugs is the third highest contributor to vehicle crashes that result in death.

Now, these particular stats are very sobering and it’s important—and, as I understand, listening to the previous speeches, last week it was, there’s a general consensus that this bill is very, very important to address the particular problem that we need to, a fact that’s taken some time, but it’s under this particular Government that we’ve been able to move forward on this. While drug-drivers currently face serious criminal penalties if they’re caught, they are often not. So this bill enables oral fluid tests, which will make it easier for our New Zealand Police to screen more drivers, and this will create a deterrent for those who might choose to drive while under the influence of drugs.

When we canvassed with submitters and with officials the nature of testing, the oral fluid devices will initially be able to test for six particular drugs. Of course, we’re familiar with THC. We hear more and more about methamphetamine in use, particularly in Auckland and our surrounding suburbs. Benzodiazepines is also another one. MDMA—which is ecstasy—opiates, and cocaine. So what we need to do is to ensure that we are able to test adequately and ensure that the right tests and the right approach by New Zealand police is in place in this particular area.

I want to turn to one of the submissions that we heard which was from Community Action on Youth and Drugs (CAYAD), which you may be familiar with. One of their statements that stood out for me was around the importance of deterring dangerous drug-driving as a vital step in decreasing our road harm, as well as reducing drug-related harms in our community. But they also acknowledged the importance of ensuring that the right support is in place, that we have compulsory referrals for assessment, and that part of that referral process is into further education, and drug education in particular, or the need for rehabilitation where relevant. In my sense, this is an and/and discussion that, yes, we do need to put forward this particular bill to save lives, to keep people safe, but also, obviously, we need to ensure that we continue to educate those that may get in behind the wheel when they are under the influence of alcohol or, in this instance, of drugs. We know that this type of prevention works and we want to ensure that we put our best foot forward in that as well. So I can’t promote the educational lens enough; that’s my takeaway in particular, from hearing these oral submissions.

But, without further ado, it is important that this particular piece of legislation, the Land Transport (Drug Driving) Amendment Bill, moves forward, that it does progress under this Government, because we’re doing a lot of work to progress transport in New Zealand. Finally, can I acknowledge both Minister Wood and Minister Williams and the work that they’ve done to progress this particular bill, and also all members of our select committee for transport and infrastructure, well chaired by a good gentleman with a lot of experience in this area, Greg O’Connor. So, without further ado, I would like to commend this bill to the House. Tēnā koe.

ASSISTANT SPEAKER (Hon Jacqui Dean): Barbara Kuriger—five minutes.

BARBARA KURIGER (National—Taranaki - King Country): Thank you, Madam Speaker. I heard the last speaker, Shanan Halbert, mention that he would like to commend Minister Wood for progressing this bill. One of the most frustrating things that happen in Parliament is the length of time that some pieces of legislation take to get passed. And yes, while Minister Wood hasn’t been in the chair the whole length of time of this piece of legislation, it’s really quite disturbing to our team how long this has actually taken.

It’s a good bill. It establishes a new random roadside oral fluid testing regime, because, actually, back in 2014, 18 people were killed in crashes where the driver had consumed drugs other than alcohol before driving. By 2018, the number of people killed in crashes where the driver had consumed drugs other than alcohol before driving had risen to 95—a substantial rise.

Simeon Brown: What did the Government do?

BARBARA KURIGER: We are now in 2022, and instead of the Government progressing this bill—Mr Brown rightly pointing out, as the National Party we’re actually wanting this bill to progress—what the Government did instead—and reminder we’re now in 2022. What this Government did in 2020 was they decided that they were going to push through a referendum at the election. Let’s push through a referendum. Let’s talk about cannabis. Let’s have a conversation about drugs before we’ve actually solved the problem of drug-driving. If that’s driving in reverse, I think they should own up to it.

Simeon Brown: What were they smoking?

BARBARA KURIGER: Oh, look, I absolutely wonder, Mr Brown. To be honest, this is a Government who are not making much progress in a lot of things. They seem to rush through really, really bad legislation, and then they seem to take their time running legislation through the House where, actually, it’s got support. I think it’s largely got support. We’re certainly supporting it.

Simeon Brown: Except for the Greens.

BARBARA KURIGER: Yeah, well, we wonder about that. There might be another abstention before we get to the end of the afternoon, who knows. But certainly the National Party’s supporting this piece of legislation because it’s very important.

At this point in time, I would like to make mention of a family from south Taranaki who in 2018 lost a number of members and friends, and that is the Porteous family. Some of you will remember that there was an extremely bad accident and this was caused under these circumstances by a driver where that family and their friends were taken out, and it was a terrible tragedy. It was a real tragedy because there were actually children of the driver in that accident who were also killed. So it was a really, really sad time for people, not only in that family but right across with all their friends and family. So I think it’s really appalling that that was in 2018 and now it’s 2022, and going through everything we’ve been through and the Government’s finally decided to bring this out at this point in time and push it forward

We’re really pleased to support it, because road safety’s really important to us. While we’re on the subject of road safety, Minister Wood, while you’re here, we don’t see much progressing in the realms of road safety. So while we’ve got this drug-driving and we’ve still got the problem in some cases of alcohol, we now have our rural roads where it’s suggested that they’re going to be slowed down to 80 kilometres an hour, and I just believe it’s just a vague excuse for not fixing the roads, a terrible excuse for not fixing the roads. I don’t know if the Minister’s taken time to look at the productivity figure of the businesses and the trucks that use that road to get our goods and services across the country, to get our products to market—all the good people that are keeping this country going. Twenty kilometres an hour on that road is a disgraceful effort to keeping the productivity of this country up and running, and it’s something that the National Party is absolutely appalled about in terms of slowing the road speed down. It’s just the last thing we should be doing, and it’s just an excuse.

So really when it comes to transport, the Government’s done nothing, isn’t really contemplating on doing anything, not even cycle lanes over harbour bridges. It seems to have completely slowed down, but we do commend this bill to the House. This is one good thing in a wide portfolio. Thank you.

ASSISTANT SPEAKER (Hon Jacqui Dean): I call Arena Williams to make a remote contribution—five minutes.

ARENA WILLIAMS (Labour—Manurewa) (remote): Tēnā koe, Madam Speaker, and thank you for the opportunity to speak on this bill briefly. I thank the previous member, Barbara Kuriger, for her support for this bill, but wish to make the quick point that the National Party had nine years to introduce legislation which dealt with drug-driving offence.

But I am glad that in this House it is a Labour Government that has brought this legislation, because the National Party would have had the priorities all wrong. The National Party’s member’s bill on this dealt with only three drugs and those were MDMA, THC, and meth, and that is the wrong approach to an otherwise—what is under a Labour Government—evidence-based approach to the harm minimisation of drugs on our roads. This bill does take that harm minimisation approach, which is in line with the police approach to roadside testing of alcohol already. Alcohol is what is doing the damage on our roads. Predominantly our roadside testing of alcohol reflects that and this is an extension of that harm minimisation approach.

This bill, unlike National’s proposal, doesn’t simply list drugs that people think do harm; it takes into account the Independent Expert Panel on Drug Driving’s recommendations and lists a number of substances with a specific high risk blood concentration level. Things like lorazepam, which is a benzodiazepine, that treats anxiety; things like tramadol, codeine, and morphine, which are commonly used pain medications, which do have a known effect on drivers’ ability to respond to threats; and zopiclone, which treats difficulty in sleeping. These are all commonly used drugs. They do have an effect on drivers, and this approach in this bill shows that we are taking a harm minimisation approach to all drugs, which doesn’t just single out those drugs that people think do harm; it really takes into account the drugs that are doing harm on our roads.

This also shows that the Labour Government is committed to road safety with the recent launch of our approach to the Road to Zero campaign, which sees billions of dollars invested in road safety around the country and the majority of that’s been spent on the police’s approach to be able to enforce these rules. I have complete faith that this Government is the one to be addressing not only roadside testing of drugs but all road safety measures that we need to get right this term. Thank you.

TERISA NGOBI (Labour—Ōtaki) (remote): Thank you, Madam Speaker, for the opportunity, as the member of the Ōtaki electorate, to take a call today in the House, albeit virtually in this hybrid Parliament, of which this is my first time doing this. I was able to be on precinct last week, so this is the first time I’m doing a virtual call, so please bear with me, colleagues and Madam Speaker.

I am also privileged to be part of the Transport and Infrastructure Committee, of which we heard submissions on this, the Land Transport (Drug Driving) Amendment Bill. I think we can safely say that the majority of those submitters all agreed that the safety of people on our New Zealand roads is critical. Also, I think we can all agree that the majority of the submitters all agreed that driving impaired, under the influence of drugs, is not what we want on our roads.

This bill gives our police, our awesome and hard-working police officers, access to a tool, the oral fluid testing tool, which means that that will quite quickly identify anyone who is impaired or under the influence of drugs while driving. With this tool, that means that our police officers are able to quickly administrate the test when they suspect someone may be impaired or under the influence, and quite quickly get the result back of what that looks like. Now, if that driver is negative, then quite quickly that driver also, provided that everything else is fine, can go on about their day quite quickly. It gets through the screening and the testing process really, really quickly for our police officers, who we all know have got many, many important works to do, including this, in making sure our roads are safe. However, if that driver is under the influence, then the police can continue to process that driver accordingly.

But ultimately, this new tool for our police officers makes sure that the police’s time is used efficiently, and also it makes sure that we are quite quickly taking anyone who is impaired and under the influence of drugs off our roads and making sure that we keep our roads as safe as we can. This oral test also picks up, like my colleague Arena Williams said, around six, actually, of the prevalent drugs here in Aotearoa, and so that in itself is a good thing. We don’t want, again, people who are impaired driving on our roads under those impairing drugs.

Again, as Arena also mentioned, this bill is a piece of the wider mahi that this Government is doing around the Road to Zero. Again, I think everyone, even those across the House, regardless of when you think we should have done this bill in comparison to the nine long years that the Opposition had to do this bill—I think we can all agree that at least something is happening now. This Government is making sure that they’re putting the safety of all New Zealanders and, actually, everyone who travels on our roads first. This Government is making sure that they’re giving our public servants, the police, the tools to properly do their job. This Government is making sure that they are protecting our people as we said we would, and for that I commend this bill to the House.

Hon DAVID BENNETT (National): Thank you, Madam Speaker. In true autocratic socialist form, the Opposition is trying to rewrite history and put a different version of what actually happened. Well, I was Associate Minister at the time, and we actually looked at doing this nine years ago and we couldn’t, because the technology wasn’t there. So that is the simple truth of it. Australia actually brought it in about a year before we looked at it, and they struggled with the technology and to actually make it appropriate. And the do-gooders in this House from the left of the Parliament basically wouldn’t have anything like that happen in New Zealand, because it had to be all perfect for all the druggies out there so they’d be fine.

So that’s, essentially, the history of what happened in this bill, and finally we’ve got to the stage it’s going through Parliament. As we’ve said, you know, Labour’s had a couple of hiccups on the way with a little bit of a reason to hold it off while they’re doing other things in the drug enforcement area, or un-enforcement—

Barbara Kuriger: It wasn’t enforcement; it was un-enforcement.

Hon DAVID BENNETT: —yeah, the un-enforcement area. But, essentially, this is a bill that all parties should support. Maybe the Greens will abstain like they did on taxation—no real point being in Parliament if you’re going to abstain on a tax bill.

But the reality is that this is a part of the evolution of road enforcement, and alcohol testing has been there for many years. Drug testing is much more recent, with technology being a bit more difficult, because some drugs stay in the system longer than the actual impact they will have on the driving ability. Also you have difficulty in actually testing regimes; without basically doing a blood test, it’s very difficult to show at an early stage.

So all those things complicate it, but this technology has got to the stage where the New Zealand Parliament can do it. All parties, I would imagine, will be supporting it. It needs to happen. It’s in the best interests of New Zealand road users, so we support the bill to the House.

HELEN WHITE (Labour) (remote): Thank you, Madam Speaker. I’m going to do the unthinkable and agree with David Bennett, because the technology that has evolved around saliva testing has really changed over time. What we now have is we have technology that means you don’t have to be so invasive with people and that’s reliable about something that’s actually really helpful, which is recent use of a drug. So the problem with some of the testing in this area, and particularly urine testing, is that you don’t actually know from the test whether the person is impaired, and you don’t actually know if they’ve recently used it.

We had quite a few submissions from people who were worried about their historic use of marijuana, and they’re worried about that because marijuana stays in the fat cells. When it does that, you can’t actually tell if the person’s smoked a joint quite a while ago or they’re actually impaired when they’re driving. Now, we have pretty good, robust saliva tests, and they’ll show you that there has been recent use of a suite of drugs. That isn’t made on a moral ground or a legal ground; it’s made on the basis of its impairment. So it’s like, basically, this is the rule, people: don’t take drugs and drive. They impair you. It puts drugs into the same situation that we have had alcohol for a while, where that message actually needs to get out to the community.

We did actually hear from some submitters who tried to persuade us it was fine that they were taking drugs and it was fine that they were driving, because that’s the sort of mixed message that is out there at the moment. This sends a really clear one: don’t do it. Recent use of drugs, anything that impairs you, is not a good idea on our roads, because we also heard submissions from really heartbroken people who had lost their friends and their relatives because of this particularly culturally inappropriate part of our world. We need to stop doing that and we need to change the culture, and it needs to be not OK to drive if you are on alcohol, and it needs to be not OK if you are drugged, regardless of whether that drug is legal, and it needs to be not OK to drive if you are fatigued, because this can hurt people too. We just need to take more care.

So what the panel has suggested is that this is a robust test, and that test is for a suite of drugs. What will happen is that there will be a random roadside test, and so you will be stopped randomly. Then you will be either taken on what’s called a CIT, which is a general impairment test, where you do a number of things to try that, or the traffic officer or the policeman will elect to put you into another stream to do a saliva test, and that will be done twice to make sure it is actually a good result, an accurate result. You will have an option for a blood test if you would prefer to do that. But if you do, you could go down a criminal type of level, because, actually, that will be proof of something that is itself a problem. So if you don’t and you get two positive tests, there will be an infringement notice.

Importantly, you’ll have to hand over your keys and you’ll be banned from driving for the next 12 hours, so you won’t be going home in that state. Then, at that time, you’ll walk home and think about what you’ve done, hopefully. If this happens twice, you’re—or three times—going to have an alcohol assessment and drug assessment. So you’re going to have some assistance, but you’ll also be given a notice with your infringement notice suggesting you look at whether this is an issue in your life. So that’s what this bill will do, and I’m hoping that what it does is it changes our culture. So I hope it sends a message to people that this is not appropriate behaviour and that we have a real problem in New Zealand with road safety, and a lot of people get hurt because we would prefer to be convenient rather than be conscientious about what we do on the roads.

So this to me seems a really good balance. In addition to it, there is a review. That was an accepted Supplementary Order Paper. That review will happen in a few years, and it will actually be really helpful for the rest of the world, because there’s very little evidence about what goes on in this space, so we’ll be contributing there. That review will be a timely reminder that we all just need to look at this area and see whether we’ve actually had some progress in it. I suspect we will have. So thank you. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to. Just for the House, the Green Party will voting remotely.

Motion agreed to.

Bill read a third time.

A party vote was subsequently held to correct the vote on the bill with the result Ayes 108, Noes 12.

Bills

Statutes Amendment Bill

First Reading

Hon AUPITO WILLIAM SIO (Minister for Courts): I present a legislative statement on the Statutes Amendment Bill.

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

Debate interrupted.

Speaker’s Rulings

Remote Participation—Calling for a Party Vote

ASSISTANT SPEAKER (Hon Jacqui Dean): With apologies to the Minister, but I just need to clear a procedural matter up now. To say to the Green Party that in calling for a party vote, the Green Party had a lot of time to do that, but the vote was already in progress. I didn’t have time to see the message from the Green Party. So, please, all members, if they wish to make a remote contribution, the sooner you let the Chair know, the sooner it appears in the message function, and we can go about our business in an orderly manner. With apologies to Aupito William Sio.

Bills

Statutes Amendment Bill

First Reading

Debate resumed.

Hon AUPITO WILLIAM SIO (Minister for Courts): I move, That the Statutes Amendment Bill be now read a first time. I nominate the Governance and Administration Committee to consider the bill.

It is important our legislation continues to remain accurate, fit for purpose, and reflective of the policy intent. We all have a responsibility to be stewards of our systems and legislation. Regularly progressing these types of bills is one way we can ensure we continue to prioritise and maintain the quality of our legislation. Statutes amendment bills make small, technical, and non-controversial amendments to several Acts. This allows amendments to be made that would not usually be given sufficient priority. Amendments have progressed through the support of all parties in Parliament, and I acknowledge everyone for their participation.

This bill comprises of 62 proposals that will amend 42 Acts, administered by 11 different Government agencies. Many of the amendments in this bill correct drafting errors, such as an incorrect wording of references. For example, the proposed amendment of the Maritime Transport Act 1994 will replace the outdated term “doctor’s surgery” with the correct term “medical centre”, or replacing the reference to “Customs and Excise Act 1996” with “Customs and Excise Act 2018” in the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

Other changes make technical amendments to provide, clarify, or better reflect the intention of the legislation. For example, a proposed amendment to the Retirement Villages Act 2003 will clarify that it is the operator’s role to ensure incoming residents receive standard information, such as the code setting out their rights as residents.

Some amendments make non-controversial and supported improvements to how the legislation works in practice. For example, one of the proposed amendments to the Fire and Emergency New Zealand Act 2017 will better explain the necessary powers for an officer of an industry brigade, such as the practical steps to extinguish a fire or stabilise hazardous substances. Another example is the proposed amendment to the Biosecurity Act 1993, which will enable certain secondary legislation made by the same maker to be consolidated.

Even though I’ve only covered a few amendments from this bill, these examples demonstrate the value of statutes amendment bills as a way of advancing minor but important changes. While all the parties in Parliament have indicated their support for the amendments proposed in this bill, I look forward to hearing the committee’s views on these matters, as well as any views of the public. I commend this bill to the House.

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

Debate interrupted.

Voting

Correction—Land Transport (Drug Driving) Amendment Bill

JAN LOGIE (Musterer—Green): Point of order, Madam Speaker. Sorry, Madam Speaker. I just seek to correct the previous vote, in that our member who’s on House duty did put in the chat that we wished to vote.

ASSISTANT SPEAKER (Hon Jacqui Dean): Thank you for that. Leave has been put to correct the vote. Is there any objection? There is none.

A party vote was called for on the question, That the Land Transport (Drug Driving) Amendment Bill be now read a third time.

Ayes 108

New Zealand Labour 65; New Zealand National 33; ACT New Zealand 10.

Noes 12

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

Motion agreed to.

Bill read a third time.

Bills

Statutes Amendment Bill

First Reading

Debate resumed.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Speaker. The Statutes Amendment Bill is probably about as exciting as it sounds. The Minister’s explained already, I think, pretty well, the general nature of these kinds of pieces of legislation.

It’s a pretty nondescript title: statutes amendment. “Why?”, I hear you ask, “Why do we not have a better description, something more detailed, something indicating what statutes are being amended?” Well, the answer, I think, is in the Minister’s speech: some 42 bits of legislation that are being amended. I counted 41, actually, incidentally. I did that, Madam Speaker—and I know you’ll be interested in this—initially by going through and counting the number of pieces of legislation; each one has its own part. By the time I got to about Part 5, I realised that if I looked to the end and saw that there were 41 parts and each one was a different piece of legislation, then I could probably guess that there would be 41 pieces of legislation. Forty-one is a lot to count to, and I’m now more than that number of years on this earth, so I won’t reflect any more deeply on—

Barbara Kuriger: A diligent MP.

CHRIS PENK: —the size of that! I’m a “diligent MP”—there we go!—says my colleague and friend Barbara Kuriger.

Anyway, as the Minister also said, bipartisan in nature—I mean, that’s my word; I think he said “non-controversial”. And, in case those watching are wondering whether there is something of a risk that the House takes in bringing forward legislation—or the Government introducing legislation that the Parliament might or might not find controversial—there is a process that goes into these things in advance, generally, whereby we have the opportunity to consider whether we think that a change is, basically, policy-free, so to speak, it’s really in the nature of making something clearer, tidier, maybe updating, cross-referencing, and so forth. So it is introduced to the House with some confidence by the Minister, knowing that it will enjoy the support of the House as a whole and that a number of different items on our statute book will be updated and tidied up accordingly.

I thought some of these were actually quite interesting. I know I haven’t really sold it well so far—

Todd Muller: No, not really.

CHRIS PENK: “Not really” says Mr Muller, he of the sunscreen. It was interesting, actually, last week, I think, we had some quite extraordinary scenes outside on the lawn of Parliament, and, actually, you know, some quite, well, I’m going to say “tragic” scenes—I don’t resile from that word because, from a point of a view of a democracy as well as some individual harm that took place, it was certainly tragic and, indeed, extraordinary. But on that day, Mr Muller’s member’s bill in the realm of sunscreen labelling passed. So it was good to have some good news on that occasion, Mr Muller. He’s well placed to comment on that, which is exciting having brought that bill to the House—genuinely helpful contribution.

But anyway, on this one we have some equally exciting material. Another thing that I noticed when I started going through these is that they are alphabetically arranged, and I thought, “Gosh, they all start with ‘A’”. But, actually, that’s the word “amendment”—they’ve all got “amendment”—funny that, Statutes Amendment Bill—but, bear with me, amendment to Agricultural Compounds and Veterinary Medicines Act 1997—so that one starts with “A”, so too does the Animal Products Act, and so on. There’s sort of almost a Sesame Street vibe so far. We’ve got my counting of the number of statutes and we’ve got the letters that they all start with. So I’ve obviously spent too much time in lockdown, in isolation with a preschooler.

Anyway, so talking about, then—and let’s, you know, for the sake of something and giggles, with six minutes to go until the dinner break, I’m going to go through a couple of these, as I think they’re important and interesting; whether or not anyone else does is their affair, not mine.

So agricultural compounds and veterinary medicines: this talks about consolidating certain secondary legislation or published instruments. “Consolidating” in this sense actually means consolidating, and not as used by the Government in the sense of consolidating rapid antigen tests that have been ordered by the private sector just trying to take responsibility for keeping their workers safe. “Consolidating” in that sense being something of a cross between the dictionary and the Communist Manifesto, as meaning something other than what we would call “consolidating” on this side of the House. But in this case, actually there is a genuine consolidation going on, and that’s revoking a couple of different pieces of secondary legislation, and putting them together in a way that’s more sensible in terms of being able to have those different pieces of content of the law be found in the one place. So that’s all I can say, really, on the Agricultural Compounds and Veterinary Medicines Act.

So the Animal Products Act, then—and you can see we’re proceeding slowly through the alphabet, so it won’t be a longer call than it needs to be. We’re halfway in terms of my time, if not the 26 letters; we’re still on “A”; there’s actually a lot of “A” to go! So, anyway, we’ve got at the moment the Animal Products Act in front of us and there’s also the Animal Welfare Act, not to be confused. We’ve got a Minister for Food Safety and director-general (DG), that being the chief executive of the Ministry for Primary Industries, I understand. “Director-general” is a phrase that we’ve heard often in the last couple of years, of course; the Director-General of Health is one particular DG, but, of course, we’ve got other such officers across the machinery of Government. So he or she in this case—

Barbara Kuriger: He.

CHRIS PENK: —he in this case, I’m reliably informed by Barbara Kuriger, who knows about all things agriculture—has the ability to make certain instruments and publish those, and so these are able to be consolidated.

In the Animal Welfare Act, there is a similar kind of thing there. There is a power referred to in relation to the Minister of Conservation—not to be confused with the “Minister for Conversation”, which is, of course, the Prime Minister, who’s told us in question time today, proudly, that her side of the House, as opposed to this side of the House, cares so much about a particular issue; I forget what it was now, probably cost of living. That’s a key performance indicator for me, by the way; every time I mention cost of living, I get a tick in the box. Anyway, I think she was talking about cost of living, and to demonstrate how much she cared, she said that “we’ve been talking about it for years.”, which I thought was really interesting, the “Minister for Conversation” making her mark again. Anyway, that’s enough on the Animal Welfare Act.

Moving now to the Anti-Money Laundering and Countering Financing of Terrorism (AMLCFT) Act. This is the dreaded AMLCFT regulations. But lest anyone should get too excited that some of the more onerous and anomalous requirements in that space are about to be done away with, sadly I am bound to disappoint. The amendments in this space are more prosaic and I’d say less helpful—maybe that’s unfair; they’re probably helpful as far as that goes. But it’s a sharing of information between different bodies NZLS—being the New Zealand Law Society—Society of Conveyancers, and so on. So, again, as I said, pretty exciting stuff.

Skipping entirely past “B”—we’ve done the “As” and we’re skipping past the “Bs”—and I see various members clutching—

Todd Muller: To “B” or not to “B”? It’s not to be.

CHRIS PENK: —“It’s not to be.”, says Mr Muller, and I do enjoy that. Yes, yes, a very sweet reference there. We’ve got Shakespeare in the House.

Actually, talking of Shakespeare, I’m going to—because Mr Muller has brought in the bard—go straight ahead to what I think is interesting about the Care of Children Act 2004 within this one. And we’ve got, actually—I mean, obviously very serious topic in itself; “tragic”, indeed, to use that phrase again—the difference between domestic violence and family violence. This was a subject that was traversed in the House a little while ago when legislation was going through to make some substantive updates to that legislation. But it also made a change in the terminology, so that the shift that the Parliament thought fit to make was to change from talking about domestic violence, and instead talking about family violence. The difference between it was said that the connotations with domestic violence was that it might be said that violence of that nature was merely a “domestic”, in ordinary parlance—you know, an argument between, for example, a married couple or those in a similar relationship, civil union, whatever—and that would be inappropriate if we were to minimise the harm that was being contemplated. So a serious point there. So, in the context of the Statutes Amendment Bill, it’s updating that language and making a change that’s really consequential on that previous change that had been made by the Parliament.

My reference to Shakespeare is, of course, that classic line from Romeo and Juliet that a rose by any other name would smell as sweet. Yet balance that up against probably more of an Orwellian concept of the power of language from a cognitive linguistics point of view, that the language shapes a thought, and the thing that one can say, one can contemplate, and that which is not spoken of cannot be thought of. So we’ve got a sort of tension there, Orwell vs Shakespeare—sort of a cage fight of great literary figures, if you will. But, anyway, that’s the Care of Children Act 2004. I’ve probably taken us as far away as I could probably get away with that one.

Oh, I’m just getting started, but with only a few seconds to go—

Todd Muller: Extension!

CHRIS PENK: —not only in my contribution but in terms of the dinner break. I’m hearing a request for an extension of time; I think I’ll spare us all that, except to say that it’s a good bill, it’s worthy work of Government, and I commend them for bringing it to the House. We will be supporting the bill accordingly.

ASSISTANT SPEAKER (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 this evening.

Sitting suspended from 5.55 p.m. to 7 p.m.

ASSISTANT SPEAKER (Hon Jenny Salesa): Good evening, members. Before we went to dinner we were debating the Statutes Amendment Bill. The next call is a Labour Party call.

Dr DEBORAH RUSSELL (Labour—New Lynn) (remote): Good evening, and thank you, Madam Speaker. The Statutes Amendment Bill is a housekeeping bill. It’s a regular tidy up, a freshen, a repairing of small things, and I think it has a very important task for us to do. I want to take you through just a few of the amendments in this bill and talk about why they’re so important. I turn first of all to Part 12, where we’re fixing a squeaky door. The excise and excise equivalent duties table had the wrong rate of duty for a particular item of alcohol, and in order to get that fixed we couldn’t do it by Order in Council; it had to be done by legislation—a squeaky door now being fixed up with a little drop of oil.

Part 15 is a job which actually we don’t need to do any more. It concerns the Evidence Act. When that Act first came into being, there was a periodic review of the operation of the Act that was allowed for. That review has been done periodically, and it was found that the principal Act is doing well. So, actually, that’s a job that just doesn’t need to be done any more. And I ask: does anyone actually iron sheets any more?

Part 19 of the bill has amendments to the Government roading powers. Instead of referring to the Chief Surveyor, we are now going to refer to the Surveyor-General. Yes, that’s the right way around. The words do actually matter. It’s a little bit like getting around to finally hanging up that new calendar in February when perhaps it should have gone up on 1 January.

Part 30 of the bill has a whole series of changes to the Privacy Act—so, not just one small change but a number of changes. It’s a bit of a—well, not exactly a spring clean, because that would be an entire overhaul of the Act, but a deep clean, making sure that we get various items tidied up.

Part 35 is to do with retirement villages, and it’s making sure that operators of retirement villages have to make sure that they actually get a particular piece of information to intending residents before signing any agreements. It’s about doing things in the right order, a bit like dusting before you vacuum.

I know I’ve pushed this analogy of housekeeping quite a long way. I’m sure that Mr Chris Penk will be enjoying it. But it’s actually quite important. This is a job that we do every year. There was a Statutes Amendment Bill last year. There will be one next year. We will do it year after year after year. It is a bit of a Sisyphean task, a bit like housekeeping is, but in this case it is a job that is well worth doing, keeping our legislation tidy, keeping it up to date. I commend this bill to the House.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Speaker. It’s a real pleasure to take a call on this housekeeping piece of legislation and I just want to thank the member beaming in via Zoom, Deborah Russell, for that great inspirational speech: vacuum cleaning, sweeping, dusting—all of those great analogies. It sounds very exciting but something which I’m not too keen to look forward to, those particular tasks.

But, look, it’s great to be able to discuss this piece of legislation. It’s an omnibus bill, as my colleague has referred to. It changes a number of pieces of legislation and I think, as my colleague Chris Penk said, these are pieces of legislation which need changing and where there is generally unanimous agreement across the House around the fact that there is a need for the change in this legislation. So we work together across the House to get to this point and then, of course, we look forward to the select committee and the submissions to ensure that there’s no particular unintended consequences of any of these particular changes. I think there’s been certain lessons which I hope are learnt recently regarding unintended consequences—the Credit Contracts and Consumer Finance Act, in particular, is a piece of legislation which I think is on the minds of many New Zealanders at the moment as a piece of legislation which may have good intent, but has very severe unintended consequences and has made a huge impact on many New Zealanders’ ability to get a mortgage, buy a car, and do many other bits and pieces which they need to be able to do.

So there’s not a lot that I’d like to touch on in particular in this piece of legislation but of interest to my portfolio of transport there are some amendments to the Railways Act, the Government Roading Powers Act, the Land Transport Act, and one particular amendment that is being changed is the fact that particular things will no longer need to be sent by registered post. I imagine that means that the registered post was when the letters were sent and it was noted down as to when they reached particular post boxes along the way of their journey, which is, of course, a service that I don’t believe New Zealand Post continues to serve New Zealanders with. Hence with that service no longer being available, very clearly the legislation needs to not allow or not require something which cannot actually be offered.

There’s lots of other pieces of legislation being changed. I’m sure the good people on the committee which will be considering this piece of legislation will be looking forward to, I’m sure, many hundreds of submissions from interested New Zealanders up and down this country who will have an interest in many of these particular areas and will be looking at that and very diligently taking that all into account before this bill continues to progress through the House. The National Party supports the Statutes Amendment Bill.

RACHEL BOYACK (Labour—Nelson) (remote): Thank you, Madam Speaker. It is a real pleasure to take a call, the second call I’ve taken from the spare bedroom in my house as I participate in the virtual House. This is an important bill, the Statutes Amendment Bill. As Minister Sio said earlier before the dinner break, this bill has 62 proposals that amend 42 different Acts. I’m delighted that it will be coming to the Governance and Administration Committee, a small but hard-working committee. I’m sure we will look across every part of this bill with the level of detail needed to ensure that it comes out the other side ready to be passed into law.

There’s one particular piece I wanted to point out, which was Part 22, amending the Legislation Act of 2019. I noted here that we will be amending the definitions to ensure they’re correct with reference to the North Island and the South Island. As a proud South Islander, I just want to note how important it is to me that we correctly reference the South Island in our legislation. And so this bill will ensure that we are correct in our definitions.

This is an omnibus bill. It tidies up technical corrections and drafting errors within other pieces of legislation. I’m looking forward to hearing from thousands of New Zealanders across the motu who will submit on this bill, and on that note I commend this bill to the House.

Dr ELIZABETH KEREKERE (Green): Tēnā koe. I rise on behalf of my colleague Jan Logie to support these amendments to 41 different Acts. Many thanks to everybody who was involved in this epic piece of work. Along with all the other parties in the House, we were consulted on this. There were two areas, though, where amendments were made that had flow-on consequences that we were not aware of.

The first related to the Privacy Act, where this bill reinstates the Human Rights Review Tribunal’s power to make and review interim orders under sections 95 and 96 of the Human Rights Act. We have been reassured on that point. And the second relates to amendments to the Returning Offenders (Management and Information) Act of 2015. We have confirmed that the intent to—and I quote—“specifically provide for a determination to be revoked where there is a change in the relevant circumstances of a returning offender, such as overseas conviction being quashed or pardoned”. So that remains the same.

And, finally, we had originally opposed the repeal of section 202 to the Evidence Act, which provides for periodic reviews of the legislation. We’ve since resolved that with the Minister. So, all of that being said, this is a technical bill with which all agree. I commend this bill to the House. Kia ora.

TONI SEVERIN (ACT): Thank you, Madam Speaker. I stand on behalf of the ACT Party to support this Statutes Amendment Bill. This, as everyone said, is a house cleaning bill. I wish someone would come and do my ironing and dusting; it would be very good if I could have someone doing that. But, as my learned colleagues over here said, it is an omnibus bill that makes small changes across a number of different Acts. In this bill, there are a total of 41 Acts that have small to a little bit larger changes.

ACT supports bills that have a problem to be solved, and legislation that makes it clearer for those New Zealanders who are affected by these Acts. It’s interesting, when reviewing the bill, how old some of these Acts are, and how new others are. One amendment to this is the Oaths and Declarations Act 1957. So for all those lovely people that have got a birthday this year—they’re turning 65—there’s an Act in here that we’re changing; Part 26 of this bill that makes changes to section 9 of the Oaths and Declarations Act 1957. Section 9 lists the persons before whom a declaration may be made in New Zealand. The amendment adds to the list a Registrar or Deputy Registrar of the Māori Land Court who, by a notice issued in the Gazette on 25 June 1992, at page 2181 under section 9, are authorised to take a declaration.

As you can see, some of this is quite technical and can be quite confusing for the average person. But we do hope that those that these amendments affect definitely make their submissions to our select committee to make sure that we’re not changing things and making it more confusing to them.

I also found, in amongst some of these Acts, a very recent one that already has to have some word changing, and that’s the COVID-19 Recovery (Fast-track Consenting) Act 2020. The COVID-19 Recovery (Fast-track Consenting) Act 2020, Schedule 6 amendment: new clause 25(2), set out in clause 24, replaces “requesting” with “requested to provide”. So slight wording differences can make things very confusing and also not quite legible for people to quite understand what is supposed to be going on in these bills.

Then, also, over this side, there’s quite a few of the bills in this omnibus bill that are required to remove registered posting, and, I mean, most of the kids these days would not know what registered posting is. It’s even getting more difficult for us oldies here to recognise a lot of these things that we would have called inventions that are now called old ways.

There’s also amendments to the Care of Children Act 2004, which Chris Penk spoke about, changing wording from the “domestic violence” to “family violence”. There’s just minor word changes that make a huge difference within a lot of these Acts.

So, really, as Deborah Russell, said, yes, it’s a house cleaning bill. I commend this bill to the House, and hope for a lot of select committee reviews to come through to make sure we’ve done it right.

TANGI UTIKERE (Labour—Palmerston North): Mālō e lelei, Madam Speaker, thank you. It’s a pleasure to take a brief call on the Statutes Amendment Bill this evening. I understand that this is unlikely to be contentious given the unanimous support, it seems, from members around the House.

This will, effectively, give effect to a number of amendments across a number of Acts through many different Government agencies. Many this evening have cherry-picked particular parts, so in that vein I will do the same. I will refer to Part 17 in the bill, which will seek to amend the Fire and Emergency New Zealand Act 2017. There are eight changes within that Act, but one of them actually relates to section 42(2)(c), which relates to an emergency situation where a person can take or send equipment or machines into, through, or upon any land, buildings, or structures, but not over any building, lands, or structures. So things like helicopters, drones, and the like—this will be an opportunity to allow Fire and Emergency New Zealand to go about their business in an emergency by that particular way.

So that’s just one example; there are many others. It will go to select committee and the community can have their say. I’m delighted to commend this bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call. But before I call the next speaker, can I just remind those who are participating remotely that if you want to take a call, please type in “call” on the chat. I call Simon O’Connor.

SIMON O’CONNOR (National—Tāmaki): Thank you very much—a split call but not necessarily a split personality. I thought that, look, the Labour Party’s doing a wonderful job tonight of symbolically expressing the nature of a statutes amendment bill: short, pithy, nothing overly controversial, nothing of particular depth. So, thank you. Thank you very much to the Labour Party. They’re doing a fantastic job. I’m a bit more verbose, so I’m going to try and fill my five minutes, but we’ll see—we’ll see.

I think probably, look, the first thing is, even though in this debate tonight there’s been a little bit of mirth, this is actually an important part of our parliamentary structure. Some people may be asking at home why we worry about statutes amendment bills. Why are they that important? But look, fundamentally the reason is that law relies on accuracy, and no matter how hard every member of Parliament works in this Parliament, errors come through. It’s just inevitable. Well, errors are one element of why we have statutes amendment bills. The other is that things change, and we had some references tonight to the Customs and Excise Act, for example, or even nomenclature around the use of “police constable” versus a “police employee”.

Things change, and therefore we have to update the laws. For those at home who are wondering, “Well, why through this mechanism?”, and it’s possibly been explained by others, but, look, fundamentally, it’s easier to bring one piece of legislation—I think there’s about 41 changes to legislation—to pass it through the House in one go, rather than actually trying to have 41 amendment bills. So it’s really important to understand that you’re not going to easily find a statutes amendment bill with a list of everything that’s ever been done, per se. What we pass tonight flows on to other pieces of legislation. It updates them.

I think it’s important for people at home to understand as well: this is, by and large, pre-agreed across the Parliament. Anything that’s deemed particularly controversial is often pushed back—not in every case. But it’s actually a courtesy of this Parliament and perhaps an expression to people as well that the Parliament often operates on a non-partisan or a collegial basis. So we get a heads-up from whoever the Government of the day is—always looking forward to the Government of tomorrow. But the Government of today gives us a bit of a hint of what they want to change across portfolios, and people like myself or Chris Penk, Gerry Brownlee, and others will go through and we’ll have a look and go, “OK. That’s fine.” And again, courtesy to Government: if there are areas that are of particular concern, those conversations are had.

As I say, there’s about 41. I haven’t counted them all, I must confess. In fact, we’ve been provided a lovely summary list, which is excellent, although it would be lovely to have one more column that numbers them. But it’s a list of laws which are being changed. I thought I’d just touch on a couple of them, because amongst many claims to work here, I look after the customs portfolio. There’s actually a few. It’s quite exciting. There’s customs and excise changes. But the excitement pretty much ends with the words “customs and excise”. It’s all pretty basic, and a lot of it is to do with anti - money laundering and the countering of financing and terrorism.

Unfortunately, for the people who are going to their bank at the moment and spending most of their life trying to explain why they donate to churches or might buy a chocolate bar on the weekend to their bank, it’s not going to change any of those requirements, unfortunately. It’s a little bit more simple, and it’s just one, as I say, of nomenclature. Importantly, for those who enjoy a drink, if you’d been drinking undenatured ethanol under 80 percent, for some bizarre reason—I would not recommend this at all, at any time, but if you’re that type of alcoholic who’s drinking that type of ethanol—we’re now going to hit you with the correct excise tax. As I say, I want to be very clear: don’t touch the stuff. It’s bad. But that’s one of the changes that we are having here. [Bell rung] I suspect that’s the one-minute bell. We’re doing OK towards the five minutes. How tremendous!

Oaths and declarations. For monarchists out there, the change is not to Her Majesty. We remain loyal to Her Majesty the Queen on this, her 70th jubilee, and we wish her well. As the corrections spokesperson, I’m happy to say that the changes to prisoners’ and victims’ claims is pretty basic, which is pretty good, because under this Government, they’ve let most of the prisoners out. And finally, again, back to those who enjoy a little bit of a tipple, there is a further change to the Sale and Supply of Alcohol Act. Unfortunately, it’s not making it any easier to get hold of, for those who are desirous of it; it’s just around some financial reporting.

And that, with about 12 seconds to go, I believe not only allows me to have spoken to this amendment bill but to have fulfilled my duty to my party and to my whips.

Dr DUNCAN WEBB (Labour—Christchurch Central): Well, there you go: a speech just about as dull as this bill. It’s not a particularly exciting bill, but, listen, it is an important bill—

Hon Gerry Brownlee: This is going to put us all to sleep.

Dr DUNCAN WEBB: —and I can just—Gerry, we’ve been trying to put you to sleep for quite some time, but we’ll get there eventually.

This is a bill which touches on some important points. I mean, the amendments that apply to the Canterbury Earthquakes Insurance Tribunal is as good an example as any, making it clear what the rules around limitation are. I mean, you could call it a technical amendment, but if you’re in front of that tribunal and whether you win or lose depends on whether limitation applies or not, it’s absolutely critical and life-changing. So this is a bill full of changes of that nature, making sure that the statute book is consistent and that it hasn’t got any lose ends.

I thank the Opposition for coming through and agreeing that these are tidy-ups that are appropriate for a statutes amendment bill. I entirely commend this bill to the House.

ANGELA ROBERTS (Labour) (remote): Thank you, Madam Speaker. I would like to challenge some of our previous speakers this evening who say that this bill is dull as dishwater. For those of us who are social scientists, we can see some little pieces of history being recognised tonight. We’ve already heard about the removal of some concepts that are beyond their use, such as registered post, but something that has happened is to establish and recognise some of modern living. There is the enabling of body corporate meetings to be attended via audiovisual link or by audio link, because, as we know, as we’re experiencing right now, things have changed because of COVID. So everyone has said it’s a tidy-up bill, but I’d like to think that actually there’s an opportunity for historians, as they go through as check these statutes over the years, to recognise Governments who pay attention, take note, and help to ensure that we’ve got a coherent set of legislation that is fit for purpose, especially in 2022. I am pleased to commend this bill to the House.

GLEN BENNETT (Labour—New Plymouth): Kia ora, Madam Speaker. Thank you for letting me take a call in this hybrid Parliament. I just want to, basically, sum up everything that’s gone on this afternoon and this evening for the Statutes Amendment Bill. It’s short, it’s about stuff that’s technical, and it’s non-controversial.

Now, when we say “short” in this Parliament, sometimes I’m not sure if we quite get that, but it’s—several paragraphs isn’t short. Getting to the point, keeping it simple and short is something that we need to learn. So that’s one of them.

Secondly, around it being technical: so in terms of it being technical, if you’re making massive changes or you’re messing with a principle of the Act, it’s probably a little bit—you know, it affects it.

And finally, non-controversial: so if someone’s maybe tried and failed to pass an amendment in the past then that’s probably controversial. So it’s something, as we can across the House, we can reach across the aisle and support this. So very simple: the Statutes Amendment Bill first reading is around short changes, it’s technical, and it’s non-controversial. For that fact, I commend this bill to the House.

Motion agreed to.

Bill read a first time.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is, That the Statutes Amendment Bill be considered by the Governance and Administration Committee.

Motion agreed to.

Bill referred to the Governance and Administration Committee.

HOUSE IN COMMITTEE

HOUSE IN COMMITTEE

CHAIRPERSON (Hon Jacqui Dean): Members, the House is in committee on the Commerce Amendment Bill, Protected Disclosures (Protection of Whistleblowers) Bill, Incorporated Societies Bill, and the Maori Commercial Aquaculture Claims Settlement Amendment Bill. I will remind members that they are able to participate remotely. So if you’re on Zoom and you want to put a call in, please do so by calling “call” into the chat function. You should also use the chat if you want to raise a point of order. If we receive new tabled amendments, I will advise members so that they can refresh the House papers page to see the new amendment. And finally, it would be very helpful for members to ask multiple questions, if they have them, of the member in charge during their call.

Bills

Commerce Amendment Bill

In Committee

Debate resumed from 17 November 2021.

Part 1 Amendments to principal Act (continued)

CHAIRPERSON (Hon Jacqui Dean): So we start with the interrupted debate on the Commerce Amendment Bill. When we were last considering this bill, Part 1 was being debated and the Minister, Dr David Clark, had the call. He may resume his contribution if we wishes. The question is that Part 1 stand part.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. No doubt the Minister will be pleased to engage in discussion on this, as is the spirit of committee stage, and we look forward to that. And no doubt colleagues of mine on this side of the House, who quite probably know more about the bill than I do, will look forward to engaging with him likewise.

I was curious to know, first of all, looking at the commentary that has been provided by the Economic Development, Science and Innovation Committee, the Minister’s view of a number of the recommendations that have been made, one of them being the new maximum penalty to be created under new section 83, set out in clause 28. I wonder if the Minister can explain his response to the recommendation that the select committee made around the timing of which that penalty would come into play. For those who haven’t followed the bill closely before or perhaps are even very new to it, a position which I have some sympathy with, being pretty new to it myself, they may not be aware that section 83 contains a penalty for anti-competitive acquisitions and mergers. So, obviously, the name of the game is to allow competition. We have a fundamental view—I think, when I say we, it’s probably shared across the House, and I know that the relatively orthodox position of the Labour Party in this would presumably support the idea—that more competition is good. Indeed, I should acknowledge there’s been a review into supermarkets’ pricing and competition and so on.

So, obviously, it can be understood that, while the parties do sometimes have a different view about the way that competition should be encouraged and how interventionist the Government might be in relation to creating that, or allowing that competition, nevertheless we do share that basic view in this, essentially, market-led democracy and economy whereby we want to encourage competition. So the penalty for anti-competitive behaviour is no small thing, and the suggestion of the select committee, members might recall, was that the penalty shouldn’t be delayed from coming into force some 12 months after the bill came into effect, or after the Royal assent, because they point out that, with such a long lead time as a year, it would mean that it wouldn’t have its effect. And believing it to have a useful effect, of course, is the whole purpose of it being in there in the first place. So the recommendation from the select committee was that only one month, rather than 12, be the period of time before that would come into force. And, as I say, through you, Madam Chair, I would be grateful for the Minister’s response to that and how he thought that maybe the original time frame was justified or perhaps that he thought it would be appropriate to reduce that time frame, as the select committee has recommended.

ANDREW BAYLY (National—Port Waikato): Oh, good—I was hoping Minister Clark was going to get to his feet, but, obviously, the Minister’s saving himself for things to come up.

I wanted to talk to Supplementary Order Paper (SOP) 93 in the name of the Hon Todd McClay. This relates to clause 14, which is in Part 1. In it, he proposes a new section 36 after subsection (2), which states “(3) Nothing in this section applies to any conduct carried out by a person where that person can demonstrate … (a) it engaged in the conduct for the dominant purpose of protecting a legitimate business interest; and (b) the conduct was reasonably necessary to protect that legitimate business interest.” There is a further addition to this, in clause 14, new section 36A, after subsection (5), which is: “Nothing in this section applies to any conduct carried out by a person where that person can demonstrate that: (a) it engaged in the conduct for the dominant purpose of protecting legitimate business interest; and (b) the conduct was reasonably necessary to protect that legitimate business interest.” So there were two definitions: “reasonably necessary” and for the conduct.

So this clause, as Madam Chair will be aware, relates to intellectual property (IP). Now, intellectual property is a crucial part of any commercial activity. In fact, one of the interesting things, if you look at the Government’s balance sheet, is intellectual property is only worth $3 billion. In my view, it’s highly understated. But, for most companies, people are the most important thing, but the next most important thing is intellectual property. In some instances, companies will want to protect that and they’ll go through a patent application process. They might go to the next stage down, which is a licensing arrangement, or they may choose, because the difficulty in around—protecting the commercial IP is very, very difficult.

What this bill does is that it is going to do away with the right for businesses to protect their IP, and it’s a reference to what’s called intellectual safe havens. It’s interesting, under this bill—I’m just trying to find supporting [Looks through papers]—I had a number of people write, saying they did not believe that under the current proposal in this bill the intellectual property safe harbours should be done away with. My question, really, to the Minister is: what is the commercial justification for this?

Because even where companies have a significant market share, none the less they will want to create intellectual property and they will want at times to share that property. The trouble with dealing away with the safe harbour rules is that it becomes difficult. In our view—and I think this is what the Hon Todd McClay’s SOP is about, is making sure that we do not disincentivise people to, first of all, create IP, but, secondly, to adequately use it and share it. The big issue is that companies do want to share their IP, but the removal of the protections under the safe harbour provisions, in this bill, will mean that businesses think twice before doing it. I just would suggest to you, Madam Chair—and I’m hoping the Minister’s going to respond, because, first of all, I’d like him to explain what are the safe harbour IP protections that we’re talking about, and then, secondly, why he’s chosen to remove them in this bill. Because, as I say, I think there are a number of reasons, but let’s hear what the Minister’s going to say, and then we can move on from there.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I’m just taking that mask off which takes a wee bit of time and I appreciate the Minister—I’m looking forward to his contribution to a number of very good questions that have been raised by my colleague Andrew Bayly.

I want to move to clause 32 of Part 1 of the bill, and this is in regards to two new sections that have been implemented or introduced: sections 99AA and 99AB. I refer to the supplementary department disclosure statement under “Privacy issues”, section 2, in which it notes these two new amendments in terms of Part 1 and their impact by adding in the New Zealand Police to an organisation that the Commerce Commission is allowed to share information with. What I’d like from the Minister is to provide a little bit of context and information in terms of how he foresees that engagement with the New Zealand Police and what types of information he believes will be shared through this arrangement. I’m interested particularly around the safeguards around the provision of that information and also, I guess, consideration around unintended consequences and implication in terms of other criminal matters and civil matters as well. So a little bit of clarity and context in regards to clause 32 of the bill by the Minister would be appreciated.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. I’ll deal with the three issues that have been raised so far. First, to acknowledge Chris Penk’s question: indeed, the committee itself recommended one month. That has been adopted, and I thank the committee for its work on that.

In respect of the question from Andrew Bayly, I did cover that in some detail in my introductory comments, but I’m happy to repeat for the member. Basically, the argument that intellectual property rights shouldn’t be subject to scrutiny in a competitive context is an outdated idea, and so we’re essentially repealing that. That is what’s happening. Now, robust intellectual property rights incentivise innovation, as the member well knows, and really, arguably, they’re complementary, rather than—yeah, well, they are complementary to competition law. So we’re removing the safe harbour provisions and making them susceptible to the same scrutiny that we would expect of any other similar thing—

Andrew Bayly: But why—but why?

Hon Dr DAVID CLARK: —because it is outdated thinking that needed to be updated and changed.

In respect of Simon Watts’ point—which was the third one—around the New Zealand Police, there was an error noted after the bill was reported back from select committee. The bill inserts new sections 99AA and 99AB into the Act, as he’s noted, which should provide a legislative basis for the Commerce Commission to exchange information with other regulators and Government agencies when necessary for the performance of statutory functions, and, basically, because the Police are a different kind of organisation, they fell between the cracks here. They’re neither a Public Service agency nor a statutory entity, but, instead, are an instrument of the Crown, and this corrects for that error, which was overseen in the bill at the committee stage.

ANDREW BAYLY (National—Port Waikato): Well, thank you. I’m glad the Minister’s taken his first contribution. With all due respect to the Minister, I don’t think just saying “It’s outdated thinking. That’s why we’re going to remove it.”—that doesn’t really explain why the Government is so keen to do it. And just to add a little bit more colour to what I’m talking about, I thought it might be useful to just quote from a letter that I received from Australia New Zealand Screen Association, Writers Guild, Screen Production and Development Association, Interactive Games and Entertainment Association.

So to put this in context, the games industry in New Zealand, from memory, is worth about $300 million and growing rapidly. Of course, the Minister is also in charge of technology, and I know he loves talking about these things in his other capacity. So now we’re talking about intellectual property, which cuts to the heart of one of his other portfolios, and yet he just says, “It’s outdated thinking and let’s move on.” Well, I’m not so sure about this. As this letter says, “We thoroughly agree with National’s concern that repealing the intellectual property exemptions in the Commerce Act was chilling investment in New Zealand. Given international film studios and investors scan the globe for potential investment and licensing opportunities, this is likely to discourage overseas film studios, discourage international investment in the New Zealand film industry, discourage local film makers and writers.”

Then this letter goes on to say it may discourage international video game companies from licensing their intellectual property to New Zealand, video game distributors and developers, and it may also discourage them from publishing New Zealand made games. So next time I hear the Minister standing in his other capacity, talking about the gaming industry and how it’s a vibrant industry and that technology is going to drive the economy forward, can he please, before he does that—tonight, please—explain to anyone listening and certainly to the Madam Chair why it is necessary to get rid of these provisions when the industry, many parts of the industry, are against it.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): The member is obviously energised about this particular aspect of the bill. I will repeat for him—he has commented that I made only short comments. It’s because I’ve said these things before and I had taken it that the member had engaged with the early material, but I’m happy to repeat for the member my comments and for the record, because I think if that is a thing that’s energising the member, let’s put it on the record.

So this is about the safe harbour provisions for some intellectual property arrangements. Now, the bill would remove the three provisions that prevent scrutiny of certain conduct when it involves intellectual property. The provisions are out of date, as the member has challenged—that on its own is not a sufficient ground. That’s shorthand for the reasons that I will give now. They reflect a legacy of discredited thinking, and if you want to put them in the vernacular, basically they cause confusion and ultimately they prevent scrutiny of conduct, which raises genuine competition concerns.

So I do want to make it totally clear. I recognise the importance of providing business with the confidence to invest in the development of intellectual property and actively make it available to markets. So I just want to make that clear to the member. Robust intellectual property rights incentivise innovation, making them complementary, I would argue, to competition law. Therefore, it’s redundant to have carve-outs for intellectual property. Most intellectual property arrangements are helpful to the competitive process, but it does not mean that they should be immune to scrutiny under competition law. The safe harbours make a universal assumption as they stand now that certain practices will never be anti-competitive just because they relate to intellectual property. So that’s where the current law stands. And it’s a very bold assumption and one that undermines the integrity of our competition law—again, other members believe that without safe harbours the Act will over-penalise and over-deter certain conduct. We can see from the departmental report that officials have made a careful study and that that study challenges any such view. I would argue intellectual property arrangements should be subject to the same scrutiny as any other type of property arrangements. At the very least, I suggest we can be confident this policy will produce far fewer errors than the universal assumption that some conduct is never anti-competitive simply because it involves intellectual property.

So again, I want to stress the importance of the guidelines that the Commerce Commission will update to support intellectual property owners to realistically assess their obligations. I expect these guidelines to be detailed and provide assurance and clarity for the business community as indeed similar guidelines in Australia have done for the community there, and I know from speaking to people that they’ve taken comfort in their particular approach.

I do want to thank submitters who’ve written to me for pointing out the benefit of those guidelines in Australia, because they have come down and taken the concern away from those that initially had it. Now, the member, I’m sure, is going to again repeat arguments in this area. I just want to let the committee know, because I’ve addressed these quite thoroughly a couple of times, that if he raises the same issues again, I’m not going to leap to my feet every time. If there are other areas of the bill he wants to scrutinise, of course, I’m very open to that.

DAMIEN SMITH (ACT): Thank you. Intellectual property (IP) and competition law have historically been uneasy bedfellows. IP looks to reward creativity and innovation and commercialisation and leads to productivity uplift. There’s no doubt about that and there’s enough studies to prove that. Competition law within markets ensures prohibiting monopolistic behaviours and activities. And the impact is likely to mean that IP owners will need to be more careful when looking to commercialise and enforce their IP. In a way, it could effectively discourage investment. So this issue’s sort of never been totally addressed. It’s sort of been buried because the focus has been on the proposed changes to section 36, which is the competition element. So we believe that the safe harbour should be reinstated to give business confidence in investing in their IP and licensing it as well.

So can the Government give that investment confidence? Can it manage the productivity around competition law and enforce IP rights and IP sanctions when it needs to? It’s a big area of work. So in terms of giving business confidence, I would ask tonight that we create some positive outcomes for New Zealand, both businesses and consumers, and nothing should be in the bill that encourages disinvestment. Thank you.

ANDREW BAYLY (National—Port Waikato): Yes, well, first of all, I’d just remind the Minister, the Hon Dr David Clark, because he keeps wanting to remind the rest of the Chamber, because just because he may have spoken about this issue some time ago—and I’m not sure when it was actually in the Chamber last time, but some time ago. That’s not necessarily an excuse to just try and fob off people asking legitimate questions.

So my first question is has the Minister actually spoken to the gaming industry about the intellectual property changes that he’s proposed, given his technology portfolio holding that he has? Because I’d love the Minister to stand up and tell me what the gaming industry does say, given the comments I read out in that letter.

The other issue with this is—I take his point that we don’t want people misusing intellectual property. That is the balance of any bill that needs to pass through this Chamber, so we do end up with an outcome that provides sufficient protections, but at the same time doesn’t stifle economic activity. Where we’ve ended up—and by the way that the Minister characterised it before, which is, “Because everyone else has done it.” This is, effectively, an Armageddon-type clause. This has got rid of the safe harbour clauses, and that is quite a significant issue.

So the lack of nuance, the lack of ability to be able to work through different options to make sure that we do protect intellectual property that is derived and created in New Zealand, can be used and can be disseminated and shared, but at the same time still protects the creator of that intellectual property. I suggest to the Minister that where we’ve ended up with is an Armageddon clause, which means that we’re going to remove it. That’s why I support the Hon Todd McClay’s Supplementary Order Paper.

So the first question: has he discussed it with the gaming industry? I’d love to hear whether he has and what the response was. The second thing—part of this discussion was the transitional period for existing intellectual property agreements. There in the bill, it proposes that all this takes place within a year. We also oppose this because it is—at the moment it’s a three-year period, and we suggested that moving it to one year was too short. I’ve got to say that I’ve had companies that have created intellectual property and applied for patents—very expensive. Incredibly expensive, not only in New Zealand but to seek them around the world to make sure they are binding, and every five years to actually make the application or pay the application fee to renew those patent fees—very, very significant costs. Companies that have created and gone down that expense do want to make sure that if they’re going to do that, they would have entered into commercial arrangements.

I think what I’d say to the Minister—and it’s almost commercially naive that it is assumed that companies can change these agreements easily within a year, rather than the existing three-year period that was proposed. We think it’s, again, a more practical, prudent step to help companies who are going to be caught by these provisions to migrate and change their arrangements over time.

The final thing: the Minister talked about how the Commerce Commission intends to release guidance regarding the repeal of the intellectual property safe harbour. I’ve got to say, I scoffed at that when I heard that, because here is the same Minister that issued these Credit Contracts and Consumer Finance Act (CCCFA) regulations, who took the 2017 CCCFA changes, which basically means impose all these regulations on the finance industry—the 2017 regulations were 63 pages long, from memory. Now, talking to 105, and guess where we are. We’re right in the problem, and he’s having to fix up these regulations because we’ve got a dysfunctional market.

I would suggest to you that the reliance on the Commerce Commission to issue this guidance—and he says the industry is comforted by that. Who has said that to him? Please name them, because I would be loving to hear who is supporting that.

SIMON WATTS (National—North Shore): I’m enjoying this, this evening. It’s good to hear a little bit of good questioning happening from this side, and looking forward to the Minister responding to that.

Look, I’m just going to get back to a couple of questions that I was referring to before, and I appreciate the Minister’s answer around my question around clause 32 and the additions of the new subparts. I was, and I am, somewhat concerned, I guess not surprisingly, that there was a mistake in the original drafting and, subsequently, there’s had to be an amendment and a fix of that. You know, we acknowledge these things happen, but we do see that quite regularly.

I’m interested in regards to that clause 32, what was the view around that from the Office of the Privacy Commissioner, and whether they had any concerns? I note in the document around the departmental disclosure document that it said they didn’t have any specific concerns. But I am interested around—because of the fact that it was, there was an omission or an oversight. I think the language here is an “unintended oversight”. What sort of review was undertaken there?

The other question I’ve got for the Minister is in regards to clause 28. Clause 28 of the bill would amend section 83 of the Act, in regards to increasing the maximum penalty for anti-competitive acquisitions and mergers. So this is a new maximum penalty that’s being introduced under clause 28. And what I’m interested from the Minister, in terms of providing some context, was how did he get comfort that that new maximum penalty amount, which is $500,000 for individuals, was appropriate in order to get the balance between the penalty regime and achieving the intended behaviour, and how that confidence was gained? The other aspect is around the calculation that’s being provided there for businesses as well, when there’s a two-part calculation which takes into account multipliers of revenue. Again, interested in just a little bit of context around why and how we got to that position.

Linked to that and the third question that I’ve got, if I may, is in the departmental disclosure statement, section one, as we’ll all be aware, refers to offences, penalties, and court jurisdictions, and part 1(a) refers to do the proposed amendments create, amend, or remove offences or penalties, including infringement offences or penalties in civil pecuniary penalties. The answer’s no. So I guess what I’ve just articulated in terms of clause 28, changes to section 83, well they are actually changing the penalties regime. They’re introducing a new maximum penalty. Yet in the disclosure statement, in bold text at the top, the answer is “no”, “no”. Maybe it’s just me, but I really want to get context. I guess there’s been an omission already, in terms of a mistake, but is this something that I’m missing or, you know, I’d appreciate a little bit of information from the Minister so I can be more informed. Thank you.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. I do want to just note in respect of one of the issues raised by Simon Watts, the Office of the Privacy Commissioner has made no further comment on inclusion of police in information-sharing provisions.

In respect of the contribution of the member Andrew Bayly, a rather excited contribution, I’m not sure whether he’s had a long and energising dinner or quite what’s brought him to this point of pique. He’s railing against the Commerce Commission, and you know, I do note that the letter that he quoted from around the repeal of intellectual property exemptions does suggest that the end, as a point of resolution, the issuing of guidance in Australia by their commerce commission was the very thing that provided comfort. I don’t know whether the member is confused or whether he hasn’t read the whole letter. This is a point that we have traversed, but it’s certainly got him energised, and I guess that alone is a good thing.

Hon TODD McCLAY (National—Rotorua (remote): Madam Chair, thank you very much. I am pleased to speak in this debate. As my colleague Andrew Bayly said, I do have a Supplementary Order Paper (SOP) and I would ask the Minister to consider—not to brush over lightly, because this isn’t actually a political point. It’s extremely important that we get it right for those businesses in New Zealand that have used or relied upon this safeguard—that does exist in other countries that we compete against—and that will be taken away without good reason.

I would say that, actually, Andrew Bayly is passionate, not as a result of anything that’s happened in the dinner break but because, actually, it’s important we get this right. And when the Minister says, “Look, I’ve answered before, and so I’m not going to keep jumping to my feet.”, he does a great, great disservice to all of those people whose businesses rely upon the Commerce Act, who follow it closely, have used it legally and properly, and now are going to find extra restraint put upon them or restriction as a result of this problem around intellectual property (IP) that the Minister is trying to fix when actually there is a very strong likelihood that a problem doesn’t exist. Look, it could be that the Hon David Clark is trying to make a name for himself as a problem-solver. But, Minister, that will only happen when you solve problems when they exist—a solution to a problem that doesn’t exist. Actually, it’s just regulation, it’s change, it’s cost, and that costs everyday New Zealand businesses.

Now, I did have a look at the letter just then at the bottom that he was mentioning, that Andrew Bayly spoke of from the gaming industry. He didn’t talk about other parts in it where the gaming industry said this is likely to be the consequence of these changes taking away the IP provision or the safeguard. And he spoke about the New Zealand film industry, the industry that the previous Government—when we were in Government the National Party put significant effort into. The reason that The Lord of the Rings remained here and The Hobbit movies were made here was because of changes we made that did include an investment on the part of all New Zealanders.

Actually, what the gaming industry have done—and I take them at their word on this because they’re experts. Their vested interest is they are already doing this work. They are already creating jobs in New Zealand, income for New Zealanders as a result of this, but they’re saying that international film studios and others are less likely to license or make available their software and other IP as a result of these changes because they look around the world, they look at where they have certainty, and New Zealand may no longer have certainty. The United States retains the legislation with a carve-out, a safeguard, for IP. The UK does; so does the European Union.

The Minister is right when he referred to—at the bottom of the letter they were talking about what happened in Australia. Australia did make these changes. There was a lot of controversy. We heard in committee, actually, that Australia stepped back and now looking at that and they have an assessment period put in place to decide whether it was the right move. So it’s not so much that it actually has worked in Australia and everybody’s happy. Their Government put in a provision that said they would come and reassess it. And that reassessment, I understand, is likely to start soon and is not going as well as has been suggested. We heard that during the committee stage.

Also, these changes will have an impact upon existing arrangements in New Zealand; they’re not just forward looking. And when the authors of the letter from the gaming industry said in Australia, in the end, they needed a lot of guidance from their commerce commission, they actually were making the point in the case of the New Zealand Commerce Commission, any guidance has been very, very high level, which doesn’t give them comfort. What that does is it means that there is ongoing uncertainty.

So I have an SOP in there that would mean that New Zealand lines up with the United States, it lines up with the United Kingdom, it lines up with all of the European Union—three areas where a lot of investment comes towards New Zealand for our film industry, an industry the New Zealand taxpayer has supported when we were in Government and continues to support now under this Government because they continue to provide the support of subsidy of the GST back and many, many other things. You remember all the money that Stuart Nash as the Minister promised for the Hobbit series that Amazon was doing? What did Amazon do? Left because of ongoing uncertainty. Where did they go? To a European Union country. So I would ask that this SOP be considered by the Minister and supported.

RICARDO MENÉNDEZ MARCH (Green) (remote): Tēnā koe, Madam Chair, and just wanted to get a bit topical, I guess. I’ve been reflecting on one of the submissions in this bill and their concerns around the supermarket industry, and this is the Food and Grocery Council. I wanted to sort of get a reflection from the Minister on how he envisions this bill having an impact into what some people perceive to be anti-competitive behaviour in the supermarket industry.

ANDREW BAYLY (National—Port Waikato): Thank you. Well, first of all, I’d suggest to Minister: play the game, not the man. I haven’t had dinner. I haven’t had anything to—I think the aspersion was that I was excitable because I might have had something else. I’ve been to the gym actually.

I thought that contribution from Hon Todd McClay was very insightful given he was on the committee when this bill was being put forward, and, as he quite rightly stated, the Supplementary Order Paper proposed by Mr McClay brings the changes back into line with Europe, America, and a number of other jurisdictions—and we heard that Australia’s going through a review. That is why it’s very pertinent right now that the Minister addresses the issues because just to say rather blandly and dismissively that “a lot of other jurisdictions are moving on; it’s old thinking.”, I think the Minister’s actually out of touch, particularly when Australia’s reviewing these provisions.

So I don’t think we’ve actually had a proper view, and I note the Minister’s got some officials there. Maybe I can suggest to him he might seek some advice from them. Now, he did make a rather scathing comment about this letter as if I hadn’t read it. Well, let me just finish what the final paragraph actually says. This is the bit before “Yours sincerely and we welcome the opportunity to meet.” This is actually what it says, Hon Dr David Clark: “Our concerns are particularly acute, given that international investment will be the key to New Zealand’s film industry recovering from the COVID-19 pandemic. Put simply, the Commerce Amendment Bill is looking to make counter-productive legislative changes at the worst possible time.” Now, that’s the end of it. So I wish the Minister actually might have read this letter, because if he had, he might have responded differently, and he still hasn’t answered my question whether in fact he has sat down with the New Zealand gaming industry—particularly in his guise as technology Minister—and actually asked them what they think of this bill. I would really like him to answer this question, particularly as I’ve now asked it three times. The most fascinating thing is who’s signed this letter. I know that before, you know, you’ve got the interactive games, you’ve got screen production, we’ve got the Writers Guild—gee, they’re a really difficult lot, aren’t they?—and the Australia New Zealand Screen Association. They’re all people that, you know, obviously are huge protesters. No they’re not, actually. They’re reasonable, creative people of New Zealand. They’re the type of people that we should be protecting and looking after their interests.

So my second substantive question to the Minister is: given these changes that he’s ramming through in this bill—and of course all Labour’s going to vote for it and probably Greens—what is the commercial assessment of the lost to New Zealand industry of all these different industries, the screen guild, interactive games, the Writers Guild, and the screen association? Have any numbers been calculated—what the financial impact would be? And if he has, by different production, by different areas, where that would be very useful to hear tonight.

CHAIRPERSON (Hon Jenny Salesa): Could I just remind all members that after you give your debate, please put your mask back on. Without naming any names, can one of the members of the ACT Party do so. Thank you.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I didn’t get a response from the Minister in regards to the points that I raised in regards to clause 28, inserting new section 83(3), in terms of the rationale around how we reach those levels of maximum penalties. The reason why I’m asking that is I want to understand. One of the concerns that National has with this bill is the detrimental outcomes, potentially, that could fall on consumers as a result. Obviously, those clauses impact both individuals but also business. So that’s the first question that I asked before that I still have not got a response.

The second question quite simply is: is there an error in the departmental disclosure statement, clause 1 subsection (a), where it states “no” to the fact that there were no proposed amendments to create, amend, or remove penalties and offences based on clause 28, inserting new section 83(3), which actually changes and amends the penalties? Is there an error in the departmental disclosure statement: yes or no?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): No. The supplementary disclosure statement relates to the Government Supplementary Order Paper (SOP) re the technical amendment to the New Zealand Police. The amendment in clause 28 to amend section 83 regarding the penalty was done in committee, not by SOP.

In respect of the member Ricardo Menéndez March and his question, topically, about competition in the grocery sector, what I would say as an overall comment is that it has been very challenging to—well, it has been hard for the Commerce Commission to challenge anti-competitive behaviour, in my view. Since 1986, there have been five cases taken and only two have been successful.

I think this highlights that it has been very, very difficult to take successful cases for anti-competitive conduct, and what we’re doing today in moving this bill through the committee stage—notwithstanding some of the theatre along the way—is that we are bringing our law more into line with what they have in Australia. Whether it’s intentional or not, requiring large, well-resourced businesses to manage their own actions in terms of whether they’re causing harm in the market and harm to competition is entirely appropriate.

Hon TODD McCLAY (National—Rotorua) (remote): Madam Chair, thank you very much. To the Minister, I want to go back to what the soon to be honourable Andrew Bayly said, and that was a direct question to the Minister about that letter that the Minister spoke of that Andrew Bayly read from, and it was a letter that came from the gaming industry. It was also sent to the Minister. Did the Minister read that himself, or did he merely get a briefing for officials on it, or is he not aware of it? I know in previous portfolios before, in the last Parliament, he had to admit that he was speaking to documents he hadn’t fully read. If that’s the case here, it’s acceptable—Ministers get a lot of information; they have officials and others who deal with it—but, actually, did he read that himself and, if not, will he get his officials to get it for him quickly, and consider it before my Supplementary Order Paper comes up for a vote? That’s the first thing.

The second is, he talked about the changes around intention and effect when it comes to market position. I have a particular concern around this. I don’t disagree that, actually, we probably need better rules or clearer rules for the Commerce Commission, because the Minister is right. It’s not that they haven’t won that many cases; they haven’t taken a lot because, of course, if they’re not sure of a prosecution, a conviction, they’re not likely to take a case. The point here, though, Minister, is it’s as much about resource as it is about the law. I’m not arguing there are not changes in the law needed, but it is about resource. His Government has increased the amount of money that has gone to the Commerce Commission, but, actually, it’s gone to the Commerce Commission as a result of an inquiry that his Government directed them to undertake, and they now monitor fuel pricing in New Zealand.

You will remember many, many years ago a very important commerce issue that falls under the jurisdiction of this Act, when the Prime Minister was accused of being the “fleecer-in-chief” because a very large amount of tax that the Government takes from fuel—the large make-up of the component of a litre of fuel that today is over $3 is taxed. They instructed, by way of letter, the Commerce Commission to undertake an inquiry into that. The Commerce Commission’s come forward with its position. The Government said, “Job done; see, bad oil companies”. Well, the price is now higher; the extra money that the Government gave the Commerce Commission largely is to continue to monitor that.

So the point of this is that, actually, yes, there are changes needed to the law but we can’t merely make it easier for the Commerce Commission to take cases and win them in a court, because actually we need certainty on both sides, but it is a resourcing issue. They actually don’t have enough money to do all the things that they need to, and sometimes they don’t take cases because the resource is not there. And, whilst the Government gave them the ability to initiate their own inquiries, they haven’t been able to do so, because every time the Government has a political problem—two years ago, it was petrol prices when Kiwis were being fleeced at the pump because of the amount of tax the Prime Minister Jacinda Ardern collects on the way through. Then it’s the supermarkets, because the price of everything’s going up, and supermarket prices are going up, and a very large part of this is because the Government keeps putting in place rules, regulations, and cost increases that flow through to the cost of our food and supermarkets. Supermarkets have a role to play but they actually are not the only ones.

You know, every time the Government has a problem and they dump it on the Commerce Commission; the Commerce Commission can’t do the things that the Minister is saying this legislation will help them to do. And that comes back to the point of the change of the legislation: rather than intent, its effect. So if somebody intends to break the law and use a dominant position, yes, of course they’re breaking the law—the Commerce Commission can take a case here. If they take an action and, you know, it was not foreseeable that it would have an impact upon a market, but it does have the effect, they can still be prosecuted, and that creates greater uncertainty and hesitancy and cost which, again, flows on to the consumer.

The final point I’d make is an example of where the Government is working with companies in New Zealand and providing taxpayer support around innovation and R & D, which is a good thing. In this case, it’s in the kiwifruit sector where much of the kiwifruit that comes to market and new variants and so on is a collaboration between the sector and growers—Zespri, in this case—and the Government. Each side puts money in, and they produce a lot of this, which is dealt with by way of intellectual property. The challenge we have is that taxpayer funds are put into this, and therefore then the intellectual property is put aside for the use of the other party that’s not the Government, and there are growers and others in New Zealand that might want access to some of this product—or innovation, I suppose—that is not being used and may never be used, but others may want to do so for the betterment of the economy of New Zealand. And there’s an example, for instance, of kiwi berries, but many, many others that are not on the level of production they should be. So I’m asking the Minister whether these changes will have an impact upon that in as far as—

CHAIRPERSON (Hon Jenny Salesa): Order! Order! The member’s time is up.

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 85

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

Noes 33

New Zealand National 33.

Motion agreed to.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 81 be agreed to.

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

Ayes 98

New Zealand Labour 65; New Zealand National 33.

Noes 20

ACT New Zealand 10; Green Party of Aotearoa New Zealand 10.

Amendments agreed to.

The result corrected after originally being announced as Ayes 65, Noes 53.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Hon Todd McClay’s amendments to Part 1 set out on Supplementary Order Paper 92 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 (Hon Jenny Salesa): The question is that the Hon Todd McClay’s amendments to Part 1 set out on Supplementary Order Paper 93 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 (Hon Jenny Salesa): The question is that the Hon Todd McClay’s amendments to Part 1 set out on Supplementary Order Paper 94 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 (Hon Jenny Salesa): The question is that Part 1 as amended stand part.

Part 1 as amended agreed to.

CHAIRPERSON (Hon Jenny Salesa): Members, we now come to Part 2. This is the debate on clauses 35 to 38, and the Schedule—transitional, related, and consequential provisions. The question is that Part 2 stand part.

Part 2 Transitional, related, and consequential amendments

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair, and I appreciate the opportunity to speak in regards to Part 2 of this bill. Actually, it’s somewhat related and linked to the points that I’ve raised earlier this evening, but I’m referring in this contribution to clauses 35 to 37 of Part 2 of the bill, in which there will be what are referred to as “consequential amendments” to the Fair Trading Act 1986, the Takeovers Act 1993, and the Fuel Industry Act 2000, I think—

Hon Member: 2020.

SIMON WATTS: Bit of a typo in page 10 there: it says “the Fuel Industry Act 2000”, so—crikey, I didn’t realise such legislation was so old in this House. But, obviously, another of what we’d refer to as a “slight admission”—it’s another one that we’ve noted there. That’s page 10, just for reference, section 3.5, of the departmental disclosure statement.

So what I’m interested in—the question, really, Minister Clark, is in regards to those changes. This is in regards to, again, the sharing of personal information, which is an important aspect that we should be, you know, conscious of. What are the main considerations that were given there? Also, in terms of consideration for the Privacy Commissioner as well, just in regards to the implications on those three pieces of legislation noted there.

ANDREW BAYLY (National—Port Waikato): I was waiting for the Minister to take a call, but I don’t think he actually heard your questions, Mr Watts. So the first thing: you found another typo. And I’m referring to Mr Simon Watts when I say that. So, in that light, my first question, I suppose, is to the Minister: would he like to amend his Supplementary Order Paper (SOP) 81 and to include a further change? Because, obviously, all these SOP changes relate to typos and final further amendments, and gee, there are a fair few of them. Ha, ha! Wow, this is a Minister who’s very much across his bill! That’s why the Minister’s having to put it up during a committee of the whole House discussion. So there’s another one for you, Minister. I suggest you should listen to Mr Simon Watts, because he was trying to help you, because we do not want bills going forward with typos—it’s not a great thing.

So in the light of what Mr Watts was saying, I thought it was an interesting discussion he was having there. What other consequential amendments to the Fair Trading Act, the Takeovers Act, and the Fuel Industry Act—well, we know what the Fuel Industry Act is, it’s a big blah. That’s not going very far. What’s petrol today? Three dollars. But if you go down to Pōkeno in my electorate, it’s about 20c cheaper, which I found on Saturday night. That’s because it’s in the mighty Waikato, not in Auckland.

Hon Gerry Brownlee: It’s old stock. They can’t move it. There’s no one there.

ANDREW BAYLY: Ha, ha! Mr Gerry Brownlee suggesting something. No, it’s because that Labour Government hasn’t yet put its hands around the Waikato and said, “We’re going to impose another tax on you.” That’s why it’s cheaper and that’s why we want to know what the consequential impact is on the fuel industry.

CHAIRPERSON (Hon Jenny Salesa): I invite the member to come back to the bill.

ANDREW BAYLY: But what I’d really like to know from the Minister is, with all these wonderful changes in the bill—and he still hasn’t answered my question on whether he’s spoken to the gaming industry and what the financial impacts are on the various portfolios or industries that are going to be effected by this—what will it mean when the Commerce Commission comes to assess takeovers, mergers, applications for fair trading? What will be the impact and how will it improve the lives of New Zealanders? Because we know one thing: it won’t improve the situation for those who’ve gone about their business, created intellectual property, paid for it, and dispensed or shared it with many people or businesses around the country, because we know that potentially this bill will have a chilling impact on them. So what is the impact, particularly in relation to takeovers? I am waiting, and hopefully the Minister will answer my question—I’ve asked four times—did he speak to the gaming industry and what is the financial consequences of this bill on those screenwriters, the New Zealand Writers Guild, the gaming industry, and all those different ones?

Part 2 agreed to.

Schedule agreed to.

CHAIRPERSON (Hon Jenny Salesa): Members, we now come to our final debate, which is on clauses 1 to 3, the title and commencement debate.

Clauses 1 to 3

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. A reckless call on my part but, luckily for us all, you’ve accepted it. Just a quick one on the commencement provisions of this bill. I note that there are a number of different time frames for the bill to come into effect, a number of sections, and I’ll do everyone a favour and not read them all out. But within clause 4 are a number of subclauses to commence one month after Royal assent, and the Minister was good enough to engage in a discussion with me earlier about the fact that originally the bill had that at a 12-month mark for one of those. It was in relation to the penalty for anti-competitive behaviour, and he let me know that that was reduced. He agreed, essentially. The Government agreed on the recommendation of the select committee.

But there was another provision, namely clause 38(1), which commences six months after the Royal assent, and the remainder of the Act on the first anniversary—so, that’s obviously 12 months. So I’m just wondering if the Minister can explain, just for the sake of the record and not because I’m doubting particularly the appropriateness of the time frame, but just to, sort of, ventilate for the public record that the purpose of that staggered introduction, including in relation to—I think I’m right in saying there’s some timing that relates to an epidemic notice. So, any guidance the Minister can give on that is much appreciated.

SIMON WATTS (National—North Shore): Very sensible questions from my colleague there, Chris Penk. I want to just go into another related area around the commencement date, which links again to the questions that I raised before around the penalties, which were in new section 83(3), in clause 28 of Part 1. What we’re referring to here is in the commencement of those penalties under clause 2 of the bill, and I’m interested in regards to the timing of those changes coming into effect. Obviously, the maximum penalty now being $500,000 for an individual is significant and there is a period of time, no doubt, that would be needed in order to—a lead-in time in regards to that. I’m interested in the Minister providing context and comfort around why the commencement time line is what it is within that section. Thank you.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 agreed to.

Bill to be reported with amendment.

Bills

Protected Disclosures (Protection of Whistleblowers) Bill

In Committee

Part 1 Preliminary Provisions

CHAIRPERSON (Hon Jacqui Dean): The question is that Part 1 stand part.

Hon CHRIS HIPKINS (Minister for the Public Service): Thank you, Madam Chair. Just some very brief introductions to the committee stage of the Protected Disclosures (Protection of Whistleblowers) Bill, and can I thank parties across the House for the constructive way that they have approached this legislation.

The existing Protected Disclosures Act has served New Zealand well, but I think there is an acknowledgment that it isn’t accessible, it isn’t well understood, and it hasn’t been as widely used as we might have anticipated over the last 20 years. So this bill is designed to, basically, pick up the easy, or the easier, amendments that we can make to that legislation, in order to make it more accessible, in order to make it clearer, in order to have the Act functioning in the way that it was intended by Parliament back in 2000, when it was first put in place.

It does throw up a number of more complex issues, including some big issues around how the private sector should factor into a protection of whistleblowers regime that are not the subject of this bill. Further work, I think, is justified in those areas, and there are some amendments that have been raised by the Green Party, for example, that highlight some wider issues which I do think, in due course, Parliament should give some attention to. But I think that we need to do some fuller policy work around those. We need to do some fuller consultation around those before we as legislators make further decisions on those.

So this set of amendments that’s before the committee now is really about making the legislation more accessible and more usable. In due course, I think that there is an opportunity to go further, but I think that we should do that in the fullness of time, once a proper process has happened around some of those wider changes that could be possible.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. I thank Minister Hipkins for his introductory remarks. I think that to be upfront about the extent of ambition in relation to this bill, and acknowledging that further work that is required and that we should all give thought to, is helpful, actually, at this point. He’s noted the complexity of the private sector environment as being somewhat of a different beast from that of the public sector, and so it’s appropriate that we consider the legislation in that context.

My questions in relation to Part 1 are pretty minimal, but, actually, I think reasonably important definitional questions, and it goes to, of course, the interpretation section. So my question in the first instance is just around that definition of an “international agency”. So we’ve got there the Department of the Prime Minister and Cabinet (DPMC), the Ministry of Foreign Affairs and Trade, the Ministry of Defence, and the New Zealand Defence Force, all of which have got acronyms, which, you know, are very well familiar to those who inhabit this place in this world.

But, in addition to DPMC and so on, I wonder if the Minister could explain whether any thought’s been given to including, for the same purpose, other external-facing Government agencies. And I’m thinking of the Customs Service, potentially the Coast Guard—and in a way, that’s analogous to the New Zealand Defence Force—and also those who are performing functions that are equivalent; I suppose you might call them constabulary functions, as opposed to military functions. So not the Defence Force, therefore, but those exercising powers under the Maritime Powers Act, as it will soon be, for example. In this House—and the Minister will be well aware because he wears a different hat as the Leader of the House, so he’d be well across the different legislation, even outside his own portfolio areas, considerable as they are. So he’ll be aware of the fact that this House is in the process of passing the Maritime Powers Bill, and in that there are a number of enforcement officers who would have functions and executive authority, actually, that’s quite analogous to those of the international relations agencies as listed and as defined within Part 1.

So that was one of only two questions I’ve got in that space. I’ll just pause to see if there’s any indication from the Minister whether he’s minded to answer that, and if there’s none, I’ll proceed to my second question, which is also definitional—excuse me, definitional. It’s been a long night, the life of a whip under Omicron. To paraphrase Blackadder, I feel like a pelican: everywhere I look, there’s a bill in front of me.

But anyway, we’ve got a definition, too, of “officer of Parliament”, and there we’ve got the handful of officers of Parliament as they currently exist in the public sector architecture of this nation. So we’ve got the ombudsman—or ombudsmen, various, I suppose; “an Ombudsman”, not necessarily the ombudsman; obviously various kinds thereof—“the Parliamentary Commissioner for the Environment, or the Controller and Auditor-General”. I wonder if the Minister has given thought to perhaps a definition that would allow any officers of Parliament that may be added in the future. And I know there’s been a proposal—and, again, the Minister wearing other hats will be aware that there might be, for example, an independent commissioner for Parliament, or maybe by another name. And if that person were to be appointed and given the status of an officer of Parliament, then it seems to me that the same extent of application of this legislation should apply to that person as well. I’m conscious of the problems of “Henry VIII” legislation, so I wouldn’t suggest that the legislation, the primary legislation, should say something like “Ombudsmen, Parliamentary Commissioner for the Environment, and other officers who might be appointed from time to time”. But perhaps there could be some legislation or some mechanism that points to the fact that there might be new officers of Parliament added in due course.

Those were my only questions in relation to that. So, at that, I will resume my seat and look forward to any contribution and explanation the Minister may have on those points.

Hon CHRIS HIPKINS (Minister for the Public Service): Very briefly, if the member refers to page 18 of the bill, he’ll see that the reason that we have distinguished between international relations agencies and other agencies is that there are some specific provisions that relate to information—for example, where it might affect New Zealand’s international relations with other countries. So the other agencies that the member referred to are not included within that definition because an agency such as Customs, etc., would be treated under the provisions of the bill as any other agency would. But there are some specific provisions related to those international relations matters, as there is under the Official Information Act, for example, where we do treat some of that information slightly differently.

He’ll also see through the bill that there are some references to security- and intelligence-related information; again, because there can often be good reasons why there’s a need to treat some of that information differently, and hence there are different definitions involved with those.

And, unfortunately, because I was looking that up, I didn’t quite get the last part of the member’s question, which is around the ombudsman and officers of Parliament. But, again, if I’m recalling correctly from my half-listening, those agencies, again—the reason for excluding officers of Parliament, of course, is that there are, again, different processes that are in place around those.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Key concepts and what to do

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to Part 2. This is the debate on clauses 7 to 15: key concepts and what to do. The question is that Part 2 stand part.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Chair. I couldn’t resist taking a short call on the key concepts and what to do section of this piece of legislation. I just thought it was very helpful that in clause 7 the bill even includes a flow chart which helps people to understand how to make—

Hon Chris Hipkins: We’re making legislative history.

SIMEON BROWN: Yeah, well, I’m not sure. It would be interesting if the Minister could take a call and explain what other legislation he’s aware of that has flow charts in it to try and explain how the piece of legislation actually works. But for people who are needing to whistle-blow or make a disclosure under this piece of legislation, it is very helpful to have a very clear way of knowing how the legislation may work, and also to help people understand whether or not the particular issue that they are keen to raise may or may not actually be protected under this piece of legislation. So I just want to acknowledge the Minister for drawing that on his whiteboard and then putting it together in legislation. I’m really pleased that—

Hon Chris Hipkins: All my own work—all my own work.

SIMEON BROWN: All his own work, as he says. I’m sure it was. But I think acknowledgment where it’s due, Minister, for that.

In terms of this particular part, which deals with a number of definitions, clause 10 is probably one of the most significant: the meaning of serious wrongdoing. There have been a couple of changes there, and I do just want to ask the Minister if he could outline why the inclusion of the health and safety of any individual has been included. It would be good to get some further explanation to that. Also, some of the other changes to this particular part have been, I think, relatively minor, but also, just again, they deal with definitional sections around how the particular process goes.

I think that on this side of the House, we in the National Party have, obviously, been through this piece of legislation with the committee. This Supplementary Order Paper and the changes, I think, pretty much respond to the Education and Workforce Committee report and sort of make some good suggested changes. There’s nothing too radical from our perspective, and so, I guess, from my perspective, it’s good to get this piece of legislation progressed as quickly as possible, as it makes this very important reform to the public sector to ensure that people who do whistle-blow have a very clear framework and a very clear process as to how they can do that under the legislation. Thank you, Madam Chair.

JAN LOGIE (Green): Thank you. I rise to take a call in the committee stage and, before I get to questions for the Minister, I just want to preface my comments by acknowledging how important this piece of legislation is. Whistleblowers play an essential role in exposing corruption, fraud, mismanagement, and other wrongdoing that threaten public health and safety, financial integrity, human rights, the environment, and the rule of law.

We heard through the select committee process and we’ve, unfortunately, seen in some rare but public cases where people who have attempted to blow the whistle, or have, have suffered really quite dire consequences. I think, the very origins of the work on this bill started in 2016 in response to the Joanne Harrison fraud case within the Ministry of Transport, where people who had attempted to raise the alarm had been restructured and suffered hurt and humiliation, as was reported. We heard again and again through the select committee just terrible stories of people’s lives being, basically, destroyed and going through the system to get recognition that they were right and then trying to get repair, and that that delay to justice actually failed them.

So this piece of legislation is the first step in trying to get a rigorous system, because what we’ve had to acknowledge is that our existing system is not up to the job. I do acknowledge what the Minister said in his introductory remarks about there being wider issues and more work to be done. I want to register at this stage my frustration that this policy work has been going on for about four years. Consultation on this happened in 2018. So there is some real disappointment for people who are paying attention to our integrity systems that this bill is such a “once over lightly”. And I also want to register my disappointment that, while I will be supporting the Government’s Supplementary Order Paper (SOP) 131, actually quite a few issues that were raised by the Education and Workforce Committee for work to be done on the SOP have not been addressed in it.

I also want to note in this part of the bill, specifically where there has been a change to the definition of “serious wrongdoing”, and this is something we spent a lot of time on in the committee, because, on the existing definition of serious wrongdoing, we were given plenty of evidence that it was treated as a very high threshold, which meant that people actually were not given the protections they needed to be able to follow the process. They weren’t able to access the protected disclosures process because of how high a level people were interpreting a “serious wrongdoing”.

So this SOP makes a very important amendment of adding to explicitly include behaviour that is a serious risk to the health or safety of any individual. We believe that is progress. However, the submission from Michael Macaulay, who is recognised as an international expert in this area, who’s in our very own School of Government, and the PSA—their recommendation was that there were explicit examples to be included in the legislation, because this is an incredibly important part of the process and if we don’t get it right, if people set that threshold too high, then we undermine the entire Act and people aren’t given that pathway to disclose. So we would like to have seen those examples put into legislation to give more of a sense how this can be used in practice. But I do want to say that I very clearly interpret “serious risk to health and safety of any individual” to include instances of sexual harassment and bullying, which was again and again raised and is one of those kind of warnings for much-greater potential for corruption and wrongdoing, and we have to get that stuff right.

There was a suggestion that it be a failure for an organisation to respond appropriately to that so that it didn’t undermine the personal grievance process. But I’m interested in hearing from the Minister about why we haven’t got that process.

Hon CHRIS HIPKINS (Minister for the Public Service): Can I acknowledge much of what the member Jan Logie has just said and say that I have a lot of sympathy for the arguments that she’s put forward. If we rewind back to when this particular process started, we could have taken the attitude of saying “Let’s do everything. Let’s do it all thoroughly.”, but it would have taken longer, and I made the decision to separate that into two parts, recognising that the Act as it stood, and as it stands as of today, was not being used, because those thresholds were too high, and progress some changes that could be done relatively quickly and then have a second stage where we could look at some of those more complex issues.

If I take some of those issues that the member has referred to, there is often an interaction between this legislation and other pieces of legislation, including workplace legislation, including the Crimes Act—you know, various other pieces of legislation—and it takes a bit more time to really kind of get into that and not get it wrong and make sure that it’s done correctly. And I do think we need to take the time to do that.

Now, in an ideal world where we haven’t had such a disruptive 24 months or so, we might be debating the second of the bills, rather than the first one. That’s not the way things have unfolded. This legislation has been pushed down the priority order, the pecking order, because of COVID-19 - related disruption. It is important that we now get this legislation passed, but it is also important that we do continue on the work. And the issues that the member has raised, I think do need further consideration, and, that is, we will have the opportunity to do that as we go through implementing this change and, alongside implementing this change, considering some of those other issues.

Our capacity to do all of that work all at once is not unlimited. We do have to make some trade-offs and choices and I did—you know, I’ll be completely frank—make the decision and make the choice that we should try and progress some of the things that might make the Act more accessible and more usable and more used more quickly and then, of course, continue the work on some of those bigger and more complex challenges.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. On this part, as in the first part, I don’t have very much to contribute—some members might ungenerously say that’s always the case, but I don’t even intend to take very long doing it. For what it’s worth, I just hesitate to interrupt a difference of opinion between Labour and Greens; a bit like State of Origin rugby league, you sort of almost hope that they both lose! But, actually, I do have some sympathy with where the Minister’s landed on that, as compared with the more ambitious approach. And I do understand the point that our Green colleague Jan Logie has made but I think it would be an error to make a perfect enemy of the good, and the legislation is worthwhile as far as it goes. So it would be helpful, I think, for us to pass this piece of law and then it may be that there are lessons to be learnt out of its operation that could be applied to the second of two such bills, applying maybe more broadly and certainly into that private sector realm.

My questions in relation to Part 2 are just to ensure that I understand—for my own sake, truth be told, but also for the sake of the record, I think it might be helpful in future for those wanting to understand the scope of the bill, as the Minister and therefore the Government intends, in relation to the idea of serious wrongdoing. So we’ve got a number of different kinds of behaviour that are characterised as serious wrongdoing, and that’s in clause 10. One is a serious risk to public health or public safety. I just want to test with the Minister the idea that that shouldn’t preclude individual health or safety as being effectively protected, and I understand that that’s covered elsewhere in the bill.

And also just to sort of get into the notion of a right to a fair trial. So the context is that—[Clears throat] ‘scuse me; probably COVID!—serious wrongdoing includes any act or omission that is one or more of the following, and one of those is “a serious risk to the maintenance of law, including … the right to a fair trial”. I just want to put on record that I think it would be helpful for us to understand that the right to a fair hearing at a tribunal would be considered as falling under that definition of a right to a fair trial. Often, at times, we will talk about “trial” in the context of courts, as opposed to tribunals, and specifically in the criminal realm, but, I think, for a person to have the opportunity to seek justice more generally, it would be helpful and perhaps the idea that—my proposal, at least, is that the right to a fair trial not be construed in too narrow a fashion as to preclude those other ways that a person can come in front of a decision maker to seek justice.

The other aspect to my question—I’ll just see if I can fit them in effectively in the same contribution—is about the acknowledgment that is made with the discloser’s entitlement to protection. This is clause 11. This really goes to the heart of the purpose of the legislation. Of course, we’re talking about protecting disclosures and protecting disclosers—those who blow the whistle and also the whole idea of protecting for the sake of the system or the community, more generally—the pointing out of wrongdoing or bad behaviour and so forth. So in subclause (4) of clause 11, we’ve got the note there that the “discloser is entitled to protection even if … they are mistaken and there is no serious wrongdoing”. I just want to highlight that I think it’s important for everyone to understand that a person can blow the whistle, thinking that they are doing the right thing and that they’re pointing out some great flaw that might cost life or limb, and I think I’m right in saying that if they do that with a reasonable or an honest belief that there is serious wrongdoing, notwithstanding that they’re mistaken, then that would protect them from the consequence of otherwise mistakenly blowing the whistle, be that in relation to defamation or a breach of contractual obligation to maintain confidence and so on.

So those were my questions/comments, and any response that the Minister may have, as always, will be gratefully received.

Hon CHRIS HIPKINS (Minister for the Public Service): Very briefly: I think, in terms of the right to a fair trial, I’d expect that that’s interpreted in a broad sense rather than a narrow sense of just the courts.

In terms of the member’s comment about—clause 11(4)(a)—“they are mistaken and there is no serious wrongdoing”, I think this really cuts to the heart of one of the reasons why we’re here, which is that under the current law the threshold is set too high and people believe that if they’ve got good grounds to believe something but they don’t necessarily have complete proof, then they won’t make a protected disclosure, because the threshold for that is too high. So let’s be really clear about this: this definition does lower that threshold, which means that if you think you know it, better to disclose it, and then if it subsequently turns out that you were wrong, then you’d still be protected if you went into that in good faith.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Chair. I’ve just got a quick question about clause 12, which relates to the guidance of what the receiver should do. It says in clause 12(1), “Within 20 working days of receiving a protected disclosure, the receiver of the disclosure should—” and then it talks about the different steps that may be made: acknowledge receipt, consider, check, deal with, and then inform the discloser with reasons. Then, in clause 12(3), it says, “This section is guidance only. It does not confer a legal right (apart from the entitlements under sections 13 and 30) or impose a legal obligation on any person that is enforceable in a court of law.” and my understanding would be, and it’d be good just to get some clarity from the Minister, that this legal—well, in fact, it does not confer a legal right as regarding time frames and also, I would guess, the actual steps that need to be undertaken.

So the question I have is: is this guidance to the body which is receiving the protected disclosure, and if you were someone who had been a whistleblower is this going to be something which is going to be measured at all to sort of try to ensure that there is some degree of consistency around the steps that are being taken in these particular guidances that need to be done? I guess the concern here is that the legislation sets up a relatively good regime with some steps which need to be undertaken by the receiver of the information but, I guess, the concern would be that there may be a lack of consistency. So it would be good to get some sort of information—or it’s probably outside of this piece of legislation, but in terms of what the Minister’s intention would be in terms of ensuring that there is a relative degree of consistency around how this process is undertaken throughout the Public Service.

Hon MARK MITCHELL (National—Whangaparāoa) (remote): Yeah, thank you, Madam Chair. Firstly, can I acknowledge and thank the Minister for the Public Service, who is standing and responding—the Minister in the chair—to the questions; they are important ones.

I’d just like to carry on with the theme that my friend and colleague Chris Penk opened around section 11, and that is—the Minister’s just highlighted in his last contribution that the threshold has been lowered in terms of the protections around whistleblowers, then giving them confidence to come forward. I think that is a very good thing. But I’d just like to ask the Minister, especially in terms of public funds, taxpayers’ money that’s being used by Government departments, appropriations, through a Cabinet and through a Minister, and if there was an employee or someone inside one of those Government departments that found that, felt like, the funds were not being used properly, there was no way of measuring outcomes or where the money was ending, whether it was being used unnecessarily in admin or procurement, and exactly what the new threshold would be, in his view, in terms of an employee in that situation being able to come forward and use the protection of whistleblowers bill legislation?

SIMON WATTS (National—North Shore): I know that the Minister was just actually about to raise, just to come back on Mark Mitchell, so I’ll just add another question just to that. It actually is linked to what member Jan Logie asked before in regards to clause 10 around the definition of “serious wrongdoing”. I guess what I’m interested in from the Minister, and, I guess, potentially wearing his other hat, is that subparagraph 10(b)(i) relates to a serious risk to public health, and, as we’ve just discussed, the period of duration for this bill has been, you know, from, in effect, the last four years to five years. As we know, I guess, that risk matrix around what is defined as serious risk to public health has significantly changed. I think it would be fair to say that the paradigm around assessment of risk in public health has changed. And I’m interested for a perspective—I know the Minister mentioned that, you know, we’ve got to get it right, and I think we were on the same page around that, but what assessment, if any, has been thought about the changing paradigm around what is the threshold for serious risk? And, I guess, my underlying concern is to Mark Mitchell’s point, as well, just before, is around that as a result of how things change, that that risk, I guess, ceiling potentially is increased as a result of what we’ve seen through the impact of COVID-19, and, as a result, we may be potentially, unintentionally, of course, blocking people from utilising this portion of the Act.

Hon CHRIS HIPKINS (Minister for the Public Service): I think, just to pick up the theme of a few of the questions that have just been brought forward, one of the purposes of clarifying the definition of “serious wrongdoing” is to ensure that it is very clear that it extends to private sector use of public funds and authority. Of course, the protected disclosures regimes has predominantly up until this point been focused on private sector entities, Government departments, and agencies. We have to recognise that the trend over the last 30 or 40 years has been to see greater partnership with the private sector, with the non-Government organisation sector, and in some cases they are exercising authority on behalf of the Government and they are spending public funds. So making sure that the protected disclosures regime applies to those activities is really important. So that’s been one of the drivers, actually—one of the drivers, not the only one—behind the definitional changes that this legislation makes.

JAN LOGIE (Green): Thank you. I just, I guess, wanted to seek some more clarification from the Minister in terms of the limitations, and thank him for the acknowledgment of the limitations of the work so far, and whether at this point I might seek some more clarity around what will be included in the next stages. We’re clearly hearing that there is more work to be done looking at the nuance around serious misconduct and, as the select committee pointed out, the interaction with other pieces of legislation. And that did come up as a concern from some submitters, and I think the interaction with the Oranga Tamariki Act was one thing that was noted in the select committee report, because it was raised by submitters.

There’s also the further extension to the private sector, as the Minister has been discussing, and acknowledging, as the Minister is saying, that a huge number of organisations, whether they be building roads unsuccessfully or successfully, or whether they’re community organisations delivering on behalf of Government. There are a lot of organisations that we have a financial as well as a community interest in ensuring the best integrity of their systems, and this piece of legislation is central to that. And local government is also not fully covered, as we would like to see, in terms of this legislation, and that is an area where—like, I guess every area—if we assume that everything is going to be fine, problems arise, because, actually, we’re not doing the work to make sure that nothing goes wrong.

And then there is the independent oversight body that’s been called for. There are the sanctions for organisations that retaliate. And then there is the better access to compensation for people who are retaliated against. Then there’s the extending of the work the public sector has done around modelled standards, which we’ll get to in Part 3. So I’d love to know if all of those things are on the Minister’s schedule for the next stage, and what time frame are we going to expect those?

And, sorry, one other point with that—

CHAIRPERSON (Hon Jacqui Dean): I call Jan Logie.

JAN LOGIE: Thank you, Madam Chair.

CHAIRPERSON (Hon Jacqui Dean): A whole new speech!

JAN LOGIE: I forgot my final clincher! It was the recommendation for a five-year review that the select committee recommended to put a time frame around that next stage. I wanted it as three years, but the committee was recommending five. I was disappointed to see, if there’s that commitment to the next stage, that we haven’t got a time frame around it.

Hon CHRIS HIPKINS (Minister for the Public Service): I have to say, as the Leader of the House and someone who’s been through a number of these debates, I’m not a particular fan of clauses in legislation that require the legislation to be reviewed within a specific time frame. I generally think, instead, if there is extra work that needs to be done, we should get on and do it, and sometimes those clauses, in fact, lead to reviews that aren’t a good use of public time, energy, and resource, when, actually, there can often be other legislative priorities where those resources could be better deployed. So my view is that if the Parliament thinks there is more work to be done, the Parliament should ask for more work to be done, and that’s fine, but those kinds of clauses I’m not a fan of.

In terms of the issues she’s raised, though—yes, I do acknowledge all of those issues, and as I’ve indicated to her, some of those are more complicated and complex than the issues that are contained in this bill. So I think, if we’re going to do them, we need to do them thoroughly. And there are budgetary implications around doing that work, because these things don’t just happen; they require people and time and money to do them. So I can’t give her a specific commitment on time frames around that, other than to say I think it’s important work and it should be done.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

Part 2 as amended agreed to.

Part 3 Protections

CHAIRPERSON (Hon Jacqui Dean): We move now to Part 3, which is the debate on clauses 16 to 22, which are the protections. The question is that Part 3 stand part.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. Just a brief one, again, for me on this part, please. So Part 3 is protections, and one of them is confidentiality. I just think it’s worth at least a brief discussion in terms of the obligation of confidentiality. So, for those who aren’t familiar with the structure of the legislation, it’s probably worth pointing out that a protected disclosure, or an act or practice, that is subject to the whistleblowing legislation might be made and the recipient of that information, defined as the receiver—funnily enough—would have an obligation then to do certain things, but one of them would be to keep confidential the identity of the discloser. Of course, if we think about the context of such a disclosure being made, it might be that the whistleblower—let’s call that person as such—would be exposing themselves to some risk, and, of course, as the Minister has pointed out, that’s kind of the whole point, which is that someone might go out on a limb, so to speak, to bring to light some unsavoury practice, and so forth.

So, where it’s possible, the identity of the discloser is to be kept confidential of that receiver of the information, but there are some exceptions. It’s worth noting, I think, that, of course, the discloser might consent to be identified, and there might be other situations. There might be reasonable grounds to think that it’s needed for the effective investigation of the disclosure, and there’s not much point, of course, of making a disclosure if nothing can be done with it. So it might be that all roads will lead to Rome in terms of understanding who it is that’s blown the whistle, and this is a bit of a quid pro quo, of course, for the fact of protecting the person who’s made the disclosure.

But the one point that I did want the Minister’s guidance on is in new subclause (3A) in clause 16A. It says that “After releasing identifying information for a reason described in subsection (2)(c),”—those are the ones I’ve been describing as best I can, but in summary—“the receiver must inform the discloser.” So my question was really just as to timing, because it seems to me it might actually be helpful for the receiver of the information to advise the discloser before they released that identifying information. At least if there are circumstances where that could be done safely and without jeopardising the investigation, then that might be more helpful than simply telling them after the fact, and if there’s sort of blowback in any kind of legal or real-world way that affects the discloser and perhaps their family, and so forth, then I think it would be good if they were to have advance warning of that, if at all possible. It might not be practicable, of course, in all circumstances, but it seems to me that that would be at least a helpful thing for the law to provide.

I should just acknowledge before resuming my seat that, as indicated by this being an underlined addition, I suspect this was added by the select committee, so it’s not the Minister’s responsibility in that sense. But, of course, if he’s putting his name to the bill, he’ll probably have some view on that timing issue that I’ve raised. If he’s prepared to share it, again, as always, I’d be grateful for that interaction, such as we’ve enjoyed so far this evening.

Hon CHRIS HIPKINS (Minister for the Public Service): Just to be clear around the clauses the member’s referring to, the duty to notify the disclosure that their identity’s going to be released before it’s released applies to circumstances as listed under clause 16(2)(c), where that’s required “(i) for the effective investigation of the disclosure; or … (iii) to comply with the principles of natural justice.” The two other grounds, which it’s not necessarily required for, are where it’s to prevent a serious risk to the public health, public safety, or the health and safety of an individual or the environment. In other words, there’s a sense of urgency required there in order to prevent something that’s about to happen, and so hence it might not be as practical to retrace all of the steps and notify the disclosure at that point. And, of course, where it’s been passed on to a law enforcement agency. That was a change made through the process, to make that very clear and to bring this into line with the Search and Surveillance Act of 2012, in terms of the definitions of what a law enforcement agency is.

JAN LOGIE (Green): Thank you. So, I’d largely like to speak to our Supplementary Order Paper (SOP) 133, even though we’ve had the indication from Minister Hipkins that there won’t be support for it. But before I do that, I’d just flag the question to the Minister: I’m interested in and want to acknowledge the change to clause 16A in his SOP, which changes—and I’ll read it out. So, clause 16A is changed so that there need not be harm shown if information is released that might identify a discloser. Having been through the debates around the harmful digital communications recently, and heard so many stories about the difficulty of proving that harm with actual sharing without consent, in that instance—and in this instance, the interference with the discloser’s privacy is the harm. I was really pleased to see that amendment.

But I am interested in, and will now speak a bit to, my SOP, which adds a clause 18B, which would put a requirement on employers to provide active support to people making a protected disclosure. And I want to acknowledge Professor Michael Macaulay, and Kirsten Windelov at the Public Service Association, who are experts in this area and have informed this SOP. I wish I could claim it was my own brilliance, but it’s not. They know this stuff and they helped me in the drafting of this, because people are really disappointed at the limitations to this bill, recognising that it’s a really baby step. Proportionate to the risk, it just doesn’t feel enough as it is at the moment, whereas this provision of putting protections around people disclosing is shown internationally to be one of the most effective measures that we can take.

So what is in this SOP is if somebody is making a protected disclosure, there’s an onus on the employer to assess a risk: if there is any risk, or what the risks are, to that employee of retaliation or less favourable treatment; to do that risk assessment to that person—not to the organisation, but to that person—and put protections around them to try and protect them from those risks; and then developing a support plan for them that identifies how those risks can be mitigated, providing the employee with access to an independent support person. And we certainly heard, through the Education and Workforce Committee—and if anybody else in the House was there through that committee, some of the stories were just really harrowing. People were just hung out to dry and left by themselves in the wilderness, trying to defend their reputation after attack after attack. But if the organisation has a requirement to protect them and put a support person alongside to help them deal with any attention that may come from it and to process it, then we reduce the harm and the potential of the harm.

Secondly, if a disclosure’s been made, to keep the employee and independent support person informed of any steps taken in relation to the disclosure, and that the employer must actively support the wellbeing of the employee from the time when they become aware of the disclosure or intended disclosure—this is not a resource-heavy thing. It’s actually what’s in the Public Service Commission’s model guidance around speaking up. This is the standard, in our public sector, of what we expect from everyone. It’s a framework to help ensure that every single workplace in this country gets the fact that it’s not about the organisation, at that point—that the focus, to be able to ensure that this process works, needs to be on the protection of the person who makes the disclosure.

So I would really recommend this SOP to all parties in this House. In terms of the thing about this being the next step, I do just want to go back to the point that this process started in 2016. There was consultation in 2018. I think we can do this. These steps are not a step too far, they are just the next obvious step.

SIMON O’CONNOR (National—Tāmaki): Thank you very much; important to stretch one’s legs! Actually, twofold, I’m interested to hear the response to Jan Logie’s part. These things can go too far but I think, actually, the heart of the argument is, ultimately, there’s no point in being a discloser, or someone’s who seeking to do good, if they’re not given the enablement or the protections to do so.

The second part—it’s really very, very simple. It’s do with clause 19(4), “retaliate”—hopefully, a simple question, Minister. This is quite definitional about what it means to retaliate, which is fine, but it doesn’t seem broad enough, potentially. In other words, is it too specific? I’m not going to go through other ways of retaliating, but I’ve often seen in other pieces of legislation there’d be, like, a section 5 which would say other forms of retaliation—in other words, this has become very, very specific. If, in theory’s sake, an employer finds a way to retaliate outside of what’s written here, can he give—that is, the Minister—assurances to the committee that that will be covered? It’s just, to me, the non-legal person here, that normally when we have a “Retaliate means…”, or “Whatever statement means…”, you have A, B, C, D, and E, and, eventually, you have something that says, “and other forms of retaliation.” But this, to me, seems quite specific—yeah, it seems quite specific. Is he sure that we aren’t going to find, in six months’ or a year’s time, a form of retaliation that doesn’t fall within his proposals?

Hon CHRIS HIPKINS (Minister for the Public Service): I’ll comment on that quite briefly. It is quite a detailed definition of “retaliation” that the member’s referring to, which is quite a broad and encompassing definition, so I’m not concerned that it’s not clear.

In terms of the issues that Jan Logie raised, one of the things that I found—as we went through the policy development for this bill—to be one of the more challenging things is: considering how the bill might be applied in the case of quite small entities compared to large Government departments. We often think about protected disclosures in the form of, you know, big Government entities with lots of resources and lots of ability to do things, and if someone makes a disclosure, yep, it’s no problem to provide extra support. But we also have to consider that this legislation includes some quite small NGOs, for example, where they’re not necessarily going to always be able to do the sorts of things that the member has outlined.

So if we were going to put those provisions in law, I think we would have to first make sure that we had a good basis for knowing that they were achievable, and that people could actually comply with them. So I’m not, at this point, saying we wouldn’t do it; I’m just saying that we wouldn’t do it right now. Because, again, as I indicated to the member, I think that there are some issues that we just need to unpack more carefully. Of course, as I indicated before, I’m disappointed it’s taken us this long to get this far. It’s been a pretty bumpy couple of years; a few other things have been going on. I hope that we can make more progress on the next part of this a bit more quickly than the first part.

CHAIRPERSON (Hon Jacqui Dean): The question is that Minister’s amendments to Part 3 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that Jan Logie’s amendments to Part 3 set out on Supplementary Order Paper 133 be agreed to.

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

Ayes 12

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

Noes 108

New Zealand Labour 65; New Zealand National 33; ACT New Zealand 10.

Amendments not agreed to.

Part 3 as amended agreed to.

Debate interrupted.

Voting

Correction—Commerce Amendment Bill

CHAIRPERSON (Hon Jacqui Dean): Members, before we proceed with this bill, I do need to correct the result of a party vote announced earlier this evening where the committee was considering the Commerce Amendment Bill. On the question that the Minister’s amendment to Part 1, set out on Supplementary Order Paper 81 be agreed to, the result was announced as Ayes 65 and Noes 53. The correct result was Ayes 98, Noes 20. The record will be corrected accordingly.

Debate resumed.

Bills

Protected Disclosures (Protection of Whistleblowers) Bill

In Committee

Part 4 Appropriate authorities, special rules for certain organisations, Ombudsmen’s role, etc.

CHAIRPERSON (Hon Jacqui Dean): We move now to Part 4. This is the debate on clauses 23 to 39 and Schedules 2 and 3, appropriate authorities, special rules for certain organisations, and the role of Ombudsman. The question is that Part 4 stand part.

The question is that the Minister’s amendments to Part 4 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

Part 4 as amended agreed to.

Schedule 1 agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Schedule 2 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

Schedule 2, as amended, agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Schedule 3 set out on Supplementary Order Paper 131 be agreed to.

Amendments agreed to.

Schedule 3, as amended, agreed to.

Clauses 1 and 2

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. I was hoping to take a call on all the different parts, but Part 4 would have been rather strange, so I’ll give a strange one instead on the title and commencement.

Really briefly, actually, though, just in terms of the commencement, the version of the bill as it sort of sits in front of us says that the Act comes in force on 1 July 2021. I’ve avoided embarrassing myself by trying to make a meal of that, by seeing that the Government Supplementary Order Paper, in fact, will change that commencement date to 1 July 2022. Missed an opportunity for a Richie Benaud there—22—which, in the week of Shane Warne’s passing, is dear to my heart. Anyway, I see, obviously, the Minister’s changed it so we’re not sort of trying to do something retrospective, but by doing that, rather than use that normal formulation of X number of days, perhaps even one day after the Royal assent, we’ve missed the excellent benefit of this within our statutory framework by some months.

So if the Minister’s got any comment on that, I would be interested to hear it. But failing which, I will not delay further the passage of the bill after this excellent committee of the whole House stage we’ve enjoyed tonight. Thank you.

Clause 1 agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is, That the Minister’s amendment to clause 2 set out on Supplementary Order Paper 131 be agreed to.

Amendment agreed to.

Clause 2, as amended, agreed to.

Bill to be reported with amendment.

Bills

Incorporated Societies Bill

In Committee

Parts 1 to 6, Schedules 1 to 4, and clauses 1 and 2

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to the Incorporated Societies Bill.

Dr DUNCAN WEBB (Junior Whip—Labour): Point of order. Thank you, Madam Chair. I wonder, given the bill is uncontentious, has six parts, and a number of schedules, whether we could take all parts as one question, by leave?

CHAIRPERSON (Hon Jacqui Dean): Is there any objection? There appears to be none. The question is that Parts 1 to 6, Schedules 1 to 4, and clauses 1 and 2 stand part.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Like an individual, an incorporated society is born, and one day, eventually, dies. Its birth is the incorporation process, and its death is the winding up process. This bill will better regulate the birth of societies in Parts 2 and 5 respectively. However, the bill’s main impact will be felt between these two events, while the society is alive and well, and that’s dealt with in Parts 3 and 4 of the bill. The obligations in Part 3 and 4 covered in the bill are comprehensive. They govern the way a society is administered and will set out mechanisms for enforcing these obligations.

In this way, the bill brings the rules governing incorporated societies into the 21st century. We’re updating a law from 1908, and codifying law that’s been developed over the past 114 years, and also filling in the gaps where there isn’t case law or where we haven’t seen practice developed.

I do want to speak just at the outset on a Supplementary Order Paper (SOP) I’m tabling—primarily, it is addressing minor and technical changes. However, there are three changes that warrant mention. Before I do that, I do want to acknowledge the incredibly cooperative spirit in which this bill has been passed. Obviously, it’s been carried by successive Governments over a long period of time—well, there’s been input, should I say, under successive Governments—and the select committee itself that considered this made a number of suggested changes, and those changes were then adopted by the House. So the House is cooperating around this bill, and I do want to acknowledge the constructive way in which members have engaged on this bill so far.

But I want to say at the outset that I just want to speak to the SOP I’m tabling, to describe three of the changes which I think warrant mention beyond the kind of minor and technical changes within the SOP. First, if we consider the scenario where a company or other body corporate wishes to join an incorporated society, clause 72 of the bill, currently, requires that the body corporate’s consent to joining be confirmed by two of its directors. It’s become clear to me that such a requirement, which represents a change from the status quo, would represent, essentially, a disproportionate burden on companies and other bodies corporate, and it doesn’t gel with current practice, I guess you’d say.

The SOP thus proposes to amend clause 72 so that consent can be given on a body corporate’s behalf by a person acting under the body corporate’s express or implied authority. And that provision will align with section 181B of the Companies Act and will make it simpler for a body corporate to join in an incorporated society.

The second change that I want to mention in respect of the SOP is that under the bill, an incorporated society that qualifies as a small society will not, when preparing its financial report each year, have to follow the strict standards set by the External Reporting Board. Clause 96 sets out the conditions a society must meet to qualify as a small society for a given accounting period, and these include that total operating payments and total current assets not exceed a certain level in each of the two preceding accounting periods. That formula raises the question about a new society which doesn’t have two preceding accounting periods, and so, you know, how does it qualify as small, I guess, is the question that’s inevitably raised. In this regard, the SOP proposes amending clause 96 with the effect that for newer societies that do not yet have two accounting periods under their belt, total operating payments and total current assets will be assessed based simply on the current financial year for which they are preparing their accounts—you know, essentially, a simple fix for a pretty simple problem.

The third aspect of the SOP I want to mention is Schedule 3 of the bill. It sets out the process by which the existing 24,000 societies can re-register under the new regime. Under clause 7 of Schedule 3, the registrar will re-register an existing society once the society has sent in a “properly completed application”. The items that must be included in the application to make it complete are set out in clause 5. They include the name of the society, the name and details of the contact person, and the information prescribed by the regulations. Essentially, it’s important to minimise the disruption that existing societies endure when they’re going through that re-registration process. So in that context, given that some societies will inevitably make very small mistakes or omissions in their re-registration applications, the Supplementary Order Paper proposes to provide the registrar with the power to waive minor or technical non-compliance issues with applications, and a power to allow re-registration subject to conditions such as an obligation to provide certain information within a month.

Of course, there’s much, much more in this bill.

Andrew Bayly: Within a month?

Hon Dr DAVID CLARK: No. The member is already interjecting. I’ll repeat for the member, so that the member comes with the argument on this. Supplementary Order Paper 130 proposes to provide the registrar—I mean, it’s laid out in the SOP—with a power to waive minor or technical non-compliance issues with applications, and a power to allow re-registration subject to conditions. So subject to conditions, if it’s not compliant now, give them a month to sort things out. So I hope that will meet with the member’s approval.

The bill itself contains numerous parts and clauses, which we are taking as one. They had been well debated in the House, and, again, as I did at the outset, I do want to acknowledge the way in which the House has engaged on this legislation in order to make it acceptable for all parties. There has been some substantial change to the bill as it’s gone through. I think that’s appropriate. We’re updating it for the first time since 1908. It might be a while till it happens again. I respect the spirit in which people have engaged in making sure that we have legislation that is fit, hopefully, for the next hundred years.

Hon JUDITH COLLINS (National—Papakura (remote): Thank you, Madam Chair. Gosh, that was a very good summation by the Minister, and I thought he could have probably done it in about three minutes but, anyway, it was a good contribution.

This bill goes back a very long way. In fact, I note that the Law Commission first reported to the then Minister for the Law Commission, which would have been probably myself in 2013, on the need for this to be done, and what we’ve seen is that it is a bill that has the full support of the House, but it is also a bill that’s had a tremendous amount of input from those interested in incorporated societies. It’s relatively interesting to hear that there are 124,000 of those. Of those, many of them will be tennis clubs, they may be rugby clubs, or they might be volunteer groups. They are generally run by people who put a lot of effort into their communities, who add a lot of value, and the last thing they want is to be in a situation where they get themselves into trouble when they’re just trying to do the right thing. I think that’s why it’s really important to have their saving revisions in the bill that the Minister has referred to so that people can, in fact, continue with their voluntary work and contribute to their communities without feeling that they’re under the gun.

Of course, as with all societies, organisations, companies, there are going to be disputes, and so it’s very good to see the sort of level of dispute resolution that is being allowed for here. This is a bill that deals with the procedures for dealing with conflicts of interest, which back in 1998 was probably not something that people took that seriously. But obviously now they do, and rightly so. It’s a bill that is going to allow a difference of treatment depending on the size of the society in terms of their assets and also their income. I note that the balance date for each of the two preceding accounting periods—the current assets of a society less than $50,000 will, in fact, enable that society to be treated as a small society and therefore not have such stringent responsibilities. I think that’s a very sensible thing. No doubt a future Parliament will decide that that limit will need to be raised again, as we see it has been over the years where whatever figure that Parliament sets, we tend to end up having to revisit it not very long afterwards.

It’s really good to see that the whole of Parliament has worked so well on this. The select committee has clearly made the changes that the submitters have asked for and, at the same time, recognised that it is important that whenever anyone donates to such organisations, or they are part of them, they have a right to be able to have a say about what happens in the activities in those organisations. As a lawyer, I know I’ve acted for incorporated societies over the years before I came to Parliament. It was certainly, and is still, a very difficult piece of legislation to navigate under the 1998 Act, particularly in today’s world. Things have changed and it’s very good to see this sort of—right, let’s say cross-party agreement on being able to fix some of the things that need fixing.

It may also be—this long passage of the bill—something to do with the fact that it’s not particularly politically sensitive. That’s a shame, but the good thing is no one’s ever going to accuse Parliament of rushing this legislation through and no one’s going to accuse the Government of pushing it through under urgency. I’m very happy to support the bill. Thank you, Madam Chair.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. It’s great that the committee is supporting this bill, but I think it’s actually the “Let’s Re-elect Dr David Clark to Full Cabinet Bill”. Because how many bills has he put forward? This bill has been sitting around for years, and I reckon since he’s taken over this portfolio he’s said to his officials, “Find me any bill that I can get back into the House so that I can be standing up there, seen to be driving through this legislation.” And, Holy Toledo, wasn’t it National that actually brought about this change back in 2015 under the auspices of the Hon Paul Goldsmith? And finally the latest Minister’s bringing this bill forward. So, look, Prime Minister, if you are listening, the Hon Dr David Clark is working hard for you, bringing together these very important bills.

So I suppose there’s a couple of questions about this bill. First of all, why has it taken so long to get to this stage? It was 2015 and we’re now in 2022. Why have you—and I’m talking to the Minister here—why has the Government been so tardy to bring this to the House? Because I think that there is a lot that should have been done over the last four years and hasn’t been progressed. Now, you may be tail-end Charlie, Minister, in terms of bringing it to the House, but it is something that should have come to the House earlier.

The second thing is: one of the key bits is that the 1908 Act is silent on a number of important issues, namely, about the role of the directors and the people running charities, the officials, the governance structures of those charities. And what I’d like to ask is: to what extent does this bill work within the confines of the Companies Act in terms of prudential controls and director controls? Are there any additional obligations or do we merely turn to the Companies Act to see what are the full prudential requirements and obligations of director of charities?

The other aspect I want to draw the committee’s attention to is: why do we have to have a Supplementary Order Paper (SOP), which on the first page and the second page is just full of a whole lot of changes? And I’ve got to say we’ve just not long debated another bill where the Minister put up a whole lot of amendments. It’s like it’s just a lack of—

Hon Member: Organisation.

ANDREW BAYLY: —care and organisation, someone I heard over there say. So it just seems strange that we’ve got these changes. The Minister has talked glowingly of these three changes and, of course, we understand there’s the first one around the financial audit requirements so if you don’t have records over two years, then there should be some rules around that.

But, for instance, “How an infringement notice may be served”. Wow, this is just unbelievable stuff. I’ve never seen it before, I don’t think! It’s like an infringement notice may be served by delivering it to the officer or employee of the society at the society’s head office. Wow, that’s unbelievably cutting edge, sending it to the society by prepaid post! Oh, another cutting edge change: sending it to the electronic address of the society! All these things about how to serve notice. Why in the dickens wasn’t that in the original bill? Why are you introducing this as a SOP?

So I’ve just got some questions here. We’ll obviously talk more about the three changes that you’ve made and the reasons why. I’d like to know why you’ve made those changes. They seem good on the face of it, but why at such a late stage? Why weren’t they introduced when it was going through the select committee before it came back into the House? I’m looking forward to the Minister’s responses.

CHAIRPERSON (Hon Jacqui Dean): Can I just remind the member and encourage him not to bring the Speaker into the debate.

Hon TODD McCLAY (National—Rotorua) (remote): Madam Chair, thank you. I thank the Minister for some of the clarity he’s given. The committee did a lot of work on this as the Minister and others have said—in fact, more work on this than many bills that come before the House. I actually want to recognise and praise the chair, Jamie Strange, for continuing to allow the Opposition to seek answers from officials so we could get it right. We, surprisingly, got a large number of submissions on this bill. Although there are many incorporated societies around New Zealand, most of them are very small and don’t know the legislation is going through. We heard the idea of an incorporated society with only a very few members, with hardly any income at all; and, actually, what was happening with the original legislation as drafted, they were being dragged from a bit of legislation from such a long time ago, kicking and screaming into, actually, something that was fit for very large corporations that had a large income or a large amount of assets. And unfortunately what this would have done is place unreasonable burden through regulation and, therefore, cost upon these small societies—many of them would not have been able to meet; they would have closed. And actually that was wrong.

The committee sought permission to delay consideration of this a number of times, and Jamie Strange had to go to the Minister and explain that we were working to improve it. I’m surprised, actually, that we were able to, because I think the many things that Andrew Bayly said—I agree that the Minister is in a rush to do some of these things, but, actually, I think we struck the right balance. And small incorporated societies now won’t have the same burden they were going to have, and the Minister’s come forward with a Supplementary Order Paper to add a little bit of clarity around a new incorporated society, which makes sense. They still have to be accountable; they still have to report. But it doesn’t make sense for them to report to the standard of a large organisation or incorporated society when, in some cases, they have only a few meetings and their purpose is specific and the cost of meeting those requirements with the audit would be greater in some cases than the income that they had. So those are the changes that we sought. I’ve heard, since we pushed for that, that many incorporated societies now believe they have been listened to by the committee.

I know many of them did make the case to Government and the Minister previously. The officials fought the corner on behalf of the Minister for a very long time as to why we couldn’t do the things we wanted to in the committee. They kept bringing forward reasons. We challenged their logic and turned it around, and I’ve got to say, Minister, I equally praise your officials because, when you said to Jamie Strange, “OK, let’s do this.”, officials came in and made it look like it was their idea—or at least your idea. But the good news here for the incorporated societies is that the committee dug in, we did the work that they asked us to do, and that is the reason this bill has support of all of the House—not because, actually, we just want to cooperate, but because, actually, it was improved to the degree that now it will achieve what it needs to. It will give a clearer set of rules for incorporated societies, but it will not overburden the smaller societies unreasonably, unnecessarily with cost.

This is possibly the first time in the last 4½ years under this Government that they are passing a piece of legislation that doesn’t unnecessarily burden business or incorporated societies—in this case, small incorporated societies—so I praise the Minister for that, albeit it only happened because the Opposition dug in and other members of the committee agreed and actually went to him and sought the changes. So I’m very happy to support that, and the sooner we get this into law, the sooner the incorporated societies can get on and do what we need them to do, which is to run their societies and not worry about this Government, as is the case for so many in the country at the moment. Thank you.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I just want to pick up some of the points raised in the debate so far. I do want to acknowledge the Hon Judith Collins’ gracious speech acknowledging National’s support for the bill and the bipartisan approach taken, and the way in which the Parliament can work together to pass good law for the benefit of incorporated societies—and, actually, for the benefit of the society that they serve.

In terms of the contribution by the member Andrew Bayly, perhaps—obviously the member’s new to the bill and perhaps encountering the Supplementary Order Paper for the first time, certainly, and maybe the bill as well. And I guess he highlights that perhaps I’ve been unnecessarily modest in terms of the bill. It is indeed actually me that brought it to the House. He raises the question, “Why has it taken so long?” Actually, the truth is the prior Government did not seem to progress this at great speed. Now, I don’t wish to introduce partisan debate here, but the actual process of considering what would make the bill better was progressed in the first term of this Government. And then, when I became the Minister—

Andrew Bayly: What happened then—four years ago?

Hon Dr DAVID CLARK:—very quickly it was introduced and it’s going through to law. So I’m only answering the member’s question. I was, in my speech, very careful to say that this was kicked off—the questions were kicked off—under a National Government. But since the member is actually asking, the actual grunt work of getting this done was done by my predecessor, the Hon Kris Faafoi, and through to the bill, which I then picked up and introduced to the Parliament and had brought through the legislative process. So I do want to acknowledge the Hon Kris Faafoi.

I still do also want to acknowledge right back when the Minister of Justice, Simon Power, made a referral in 2010 asking the Law Commission to review incorporated societies law. It slowed down a little after his time, perhaps, but this is perhaps part of why we have got a bipartisan approach in the House. This is something that the whole House is concerned about, and members of Parliament encounter incorporated societies with issues coming into their electorate offices. And it is time to put all of this right.

Todd McClay, also—I do want to acknowledge his contribution. There weren’t, perhaps, questions raised in there but there was an acknowledgement of the chair of the select committee, Jamie Strange, for his work. I want to acknowledge the Hon Todd McClay’s work on that committee. I understand it was a very constructive engagement between members of the Opposition and members of the Government to make that law the best it could be after hearing all the submitters and some of the concerns that were raised.

This is how the Parliament should work at its best—working together to get the very best law that we can together. And as Hon Todd McClay said, the sooner we can get this through, the better for these societies; the sooner we can get this law through the House, the sooner they can get on and be subject to a clearer law that supports them better in their endeavours in wider society.

DAMIEN SMITH (ACT): Thank you, Madam Chair. The Incorporated Societies Bill—I looked at the Cabinet minutes from when the Minister put together the original framework. And it’s taken, obviously, a while to get there, and congratulations to the committee. The amendments seemed extensive and long, and at a practical level inside the societies themselves, it’s caused massive consternation in terms of a period of inertia, really, about what is coming up, what isn’t included, and, hopefully, this will go a long way to deciding that. The differentiation with sports societies, the All Blacks, your local rugby club, it’s going to take a while for this to bed through, and it’s going to take some time to actually be interpreted properly. It’s going to be difficult for a committee to interpret this without any external advisers, and it’ll probably fall on their accountants to take a view on this and to comply with the Companies Office, which I see there’s already a section up there to have them fulfil that and to do the paperwork.

So I just wanted to—it’s not often you go from 1908 to 2022, but that’s what’s happened here. And I think the acid test will be whether this causes more administration or it makes people happy. So I’d like to one day see a survey of that for people who have to use this legislation. But in the meantime, congratulations to the House and we’ll be supporting this bill.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments set out on Supplementary Order Paper 130 be agreed to.

Amendments agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that Parts 1 to 6, Schedules 1 to 4, and clauses 1 and 2 as amended be agreed to.

Parts 1 to 6, Schedules 1 to 4, and clauses 1 and 2 as amended agreed to.

Bill to be reported with amendment.

House resumed.

Report of Committee of the Whole House

Report of Committee of the Whole House

CHAIRPERSON (Hon Jacqui Dean): Madam Speaker, the committee has considered the Commerce Amendment Bill and reports it with amendment, the committee has also considered the Protected Disclosures (Protection of Whistleblowers) Bill and reports it with amendment, the committee has also considered the Incorporated Societies Bill and reports it with amendment, the committee has also considered the Maori Commercial Aquaculture Claims Settlement Amendment Bill and reports no progress. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The House adjourned at 9.57 p.m.