Thursday, 17 March 2022

THURSDAY, 17 MARCH 2022

THURSDAY, 17 MARCH 2022

The Deputy Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

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

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

Business Statement

Business Statement

Hon MICHAEL WOOD (Deputy Leader of the House): Today, the House will adjourn until Tuesday, 29 March. Legislation to be considered in that week will include the first readings of Te Rohe o Rongokako Joint Redress Bill and the Natural Hazards Insurance Bill; the first and second readings of the Appropriation (2020/21 Confirmation and Validation) Bill; and the second reading and committee stage of Te Pire mō te Hararei Tūmatanui o te Kāhui o Matariki Te Kāhui o Matariki Public Holiday Bill. Third readings include the Ngāti Maru (Taranaki) Claims Settlement Bill, the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, and the Protected Disclosures (Protection of Whistleblowers) Bill.

CHRIS BISHOP (National): I thank the Deputy shadow Leader of the House for that update. I was wondering if he could—

Hon Grant Robertson: He’s not the shadow; that’s you.

CHRIS BISHOP: Oh, sorry—Deputy Leader of the House. I was wondering if he could offer the House a view as to whether or not legislation considering the Government’s moves regarding hate speech will be introduced into the Parliament this year, and if we’ll see a first reading this side of Christmas.

Hon MICHAEL WOOD (Deputy Leader of the House): As, I think, the Minister concerned has indicated, there are some important issues to work through on that issue, and I will give advice as soon as we have it to give.

Hon JAMES SHAW (Co-Leader—Green): I just had a question for the Deputy Leader of the House about the House programme as well, which is whether the Organic Products Bill will be brought back to the House at any time in the near future, given that the Primary Production Committee reported back over a year ago?

Hon MICHAEL WOOD (Deputy Leader of the House): A very busy programme for the Government, a lot of important legislation for us to consider, and again we’ll consider that in due course and advise the member.

PETITIONS, PAPERS, SELECT COMMITTEE REPORTS, AND INTRODUCTION OF BILLS

PETITIONS, PAPERS, SELECT COMMITTEE REPORTS, AND INTRODUCTION OF BILLS

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

CLERK: Petition of Sunita Jeram requesting that the House urge the Government to change border entry requirements to allow fully vaccinated and tested overseas spouses of New Zealand citizens to enter the country.

DEPUTY SPEAKER: That petition stands referred to the Petitions Committee. A paper has been delivered for presentation.

CLERK: Report on unappropriated expenses and capital expenditure for the financial year ended 30 June 2021.

DEPUTY SPEAKER: That paper is published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Report of the Education and Workforce Committee on the briefing into pay transparency

report of the Māori Affairs Committee on the 2020-21 annual review of Tupu Tonu–Ngāpuhi Investment Fund Limited

report of the Regulations Review Committee on the examination of COVID-19 orders presented between 21 February and 23 February 2022.

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

CLERK: Appropriation (2020/21 Confirmation and Validation) Bill, introduction.

DEPUTY SPEAKER: That bill is set down for first reading.

Oral Questions

Questions to Ministers

Question No. 1—Environment

1. TĀMATI COFFEY (Labour) (remote) to the Minister for the Environment: What changes has the Government made to urban planning rules in Rotorua?

Hon DAVID PARKER (Minister for the Environment): Thank you, Mr Speaker. This week, the Hon Megan Woods and I announced that Rotorua Lakes Council will join tier 1 major urban centres to be covered by the medium-density residential standards, which are enabled by the upzoning Act that this House passed last year. Rotorua has recently experienced strong population growth but house supply hasn’t kept pace. This change will allow the council to significantly increase supply by properly updating their plan to allow medium-density housing—that is, up to three homes up to three storeys will be able to be built on most residential sites without a resource consent. Site coverage limits of 50 percent and standardised boundary recession planes will apply. This inclusion of these standards in the area was requested by the Rotorua Lakes Council and its partners, Te Arawa Lakes Trust and Te Tatau o Te Arawa, and they’ve welcomed the decision of the Government.

Tāmati Coffey: Why does Rotorua Lakes District need better planning standards?

Hon DAVID PARKER: Among tier 2 authorities in New Zealand, Rotorua has one of the lowest number of housing consents per head of population: 3.8 per thousand people compared with 7.9 in New Plymouth, 23 for Queenstown, and over 28 per thousand in Auckland. Rotorua also has one of the highest numbers of people on emergency housing special needs grants and on the public housing register. It’s almost 1½ times worse than other perhaps comparable provincial cities. Planning restrictions in Rotorua are also currently limiting the ability of Kāinga Ora to deliver public housing. This move will significantly increase the number of public and private houses that can be built in the city.

Tāmati Coffey: What effect will the new planning standards for Rotorua have on future rents?

Hon DAVID PARKER: There’s no doubt that an increase in supply will have a moderating effect on rent increases. It’s interesting that data for rents on new tenancies in the North Island is divided into Auckland, Wellington, and the rest of the North Island, and, notably, Auckland rents increased by 2.7 percent in the year to February this year—a lower increase than for the rest of the North Island, which includes Rotorua. Auckland’s housing supply’s going gangbusters, growing from around 10,000 houses consented in 2017 to over 20,000 per annum now, most of which is medium density.

DEPUTY SPEAKER: I think the Minister’s addressed that question.

Question No. 2—Finance

2. NICOLA WILLIS (National) to the Minister of Finance: Does he agree with ANZ Chief Economist Sharon Zollner’s statement that “Conditions are ripe for a wage price spiral”, and is he confident that in 2022 New Zealanders’ wage growth, as measured by the labour cost index, will exceed inflation, as measured by the CPI?

Hon GRANT ROBERTSON (Minister of Finance): I agree that inflation has spiked significantly due to global factors, including the war in Ukraine and COVID-19 supply-chain disruptions, and that it is important for wages to grow to help New Zealanders with the cost of living. What Ms Zollner points out is that because of the strength of the labour market, low unemployment, and a strong economy, wages will continue to grow to help New Zealanders deal with the cost of living. I don’t agree with the specific characterisation of the situation that the member has chosen to reference. On this side of the House, we believe wage growth is a good thing. With regards to the second part of the question, the Government’s economic forecaster, the Treasury, does not forecast the labour cost index so I am not in a position to express an opinion on that. What I am confident about is that wages will continue to rise in the face of the cost of living. The Treasury’s most recent forecast in the Half Year Economic and Fiscal Update is for average ordinary-time wages to rise by 4.5 percent compared to Consumers Price Index inflation of 3.5 percent in the year to December 2022.

Nicola Willis: Is he concerned that surging inflation means New Zealanders are having to work harder just to maintain the same standard of living?

Hon GRANT ROBERTSON: As I’ve expressed a number of times in this House over the last couple of weeks, I am concerned about the impact of inflation on New Zealand families and households, and that’s precisely why this Government has made sure we’re targeting support to those most affected by that, particularly through initiatives such as the family tax credit increase, increases to the minimum wage, and increases to benefits, all of which have been opposed by the National Party.

Nicola Willis: Why does he think inflation is higher in New Zealand than in many other countries, including Australia, Canada, the United Kingdom, Singapore, and Germany?

Hon GRANT ROBERTSON: There are a wide range of reasons for why inflation is at a particular level in a particular country. If we just pick out two, one of those is the place that New Zealand has in the global supply chain, where we are more greatly affected by increased costs in areas such as shipping, and so on, and the other is the increase in demand that occurred in New Zealand as we emerged from the COVID-19 pandemic.

Nicola Willis: Does he agree with the Prime Minister’s statement in relation to the cost of living, “What we see at this moment is an exception at this period of time.”, and when does he expect the cost of living crisis will end?

Hon GRANT ROBERTSON: I always agree with the Prime Minister, and in answer to the second part of the member’s question, as I said in my answer to the primary question, forecasts are for wages to come back ahead of inflation, just as they have been in the period leading up to this situation and just as they will be in the future.

Nicola Willis: Does he agree with economist Brad Olsen’s statement that “At the moment, households are feeling the economic outlook is worse for them now than even during the depths of the global financial crisis.”, and why in this context is the Minister planning the biggest ever Budget operating allowance in history, a record $6 billion increase to Government spending?

Hon GRANT ROBERTSON: In answer to the first part of the question, yes, I continue to remain concerned about the impact that high inflation is having on households, and that’s why we’re taking the initiatives we are. In answer to the second part of the question, unless something’s changed in the last few days where there’s been a changing of the deck chairs across the way here, the National Party is currently proposing a $6 billion allowance at Budget 2022. That’s exactly what they’re doing, so the member is now arguing against her own policy.

Nicola Willis: Well, then, does he believe that someone earning $60,000 a year, who is not eligible for Working for Families, may find the soaring cost of living tough, and if he does think so, why won’t he adjust tax brackets to give them $800 in tax relief in this year’s Budget?

Hon GRANT ROBERTSON: This matter was covered extensively in the House yesterday. Of course we’re concerned about making sure that everyone in New Zealand has what they need to be able to meet the cost of living. That’s why on this side of the House we’ve continually promoted initiatives that lift wages. At every single turn, the National Party has opposed those measures, and now they come forward with a set of tax cuts that would mean those on the highest incomes in New Zealand benefit the most. On this side of the House, we’re focused on making sure we support low and middle income earners, not only with the wages they get but also with the public services they require, be it the health system, the education system, or anywhere else.

Nicola Willis: Why is the Minister so opposed to tax reduction for everyday Kiwis, and is it because he believes he can spend their money better than they can?

Hon GRANT ROBERTSON: I had high hopes for the member that she would shed the cloak of negativity that her six predecessors have had in that role, but, alas, it is not the case. On this side of the House, we will continue to remain focused on making sure that we support all New Zealanders, not only through how we lift their incomes but also in making sure that the health system and the education system are going well, that we build public housing, and that we invest in research and development. All of these things are needed. Putting a Budget together requires a lot of balancing and a lot of trade-offs, but I’m confident we have the balance right.

Question No. 3—Police

3. GREG O’CONNOR (Labour—Ōhāriu) to the Minister of Police: Sláinte, Mr Speaker, and happy St Patrick’s day. What reports has she seen regarding efforts by Police to disrupt organised crime?

Hon POTO WILLIAMS (Minister of Police): The Government is committed to the crackdown on organised crime and gangs, and that’s why we’re supporting Police to ensure they have the tools to do just that. I’ve seen a report that shows Police are off to a strong start this year in their efforts to disrupt organised crime. In February, Police successfully terminated a major drug importation ring and made a number of arrests; the result of a five-month long operation code-named Operation Trout. Those arrested have been charged with the importation and supply of class A drugs and the unlawful possession of firearms and ammunition. This Government will continue to support Police in their efforts to disrupt and deter organised crime, and I thank them for the fantastic work they do to keep us safe.

Greg O’Connor: What does the report show for efforts to disrupt organised crime here in Wellington?

Hon POTO WILLIAMS: The report shows New Zealand Police are making significant progress in their efforts to tackle organised crime here in the capital. The Wellington drugs and organised crime team led a joint operation with the New Zealand Customs Service which resulted in nine search warrants being executed in the Hutt Valley. As part of their search warrants, more than 30 police officers descended on a number of properties, arresting five people and seizing firearms and associated ammunition. Police will continue to target organised crime and take guns and drugs off the streets, and that’s why this Government has funded the largest police force ever, including an additional 700 with specific focus on targeting organised crime.

Greg O’Connor: What does this operation mean for the illegal importation of drugs into our communities?

Hon POTO WILLIAMS: The operation strikes a major blow at the importation of drugs into New Zealand. The successful multi-agency operation identified and terminated the supply chain of up to 10 kilograms of methamphetamine which was being brought into New Zealand from the United States, China, Canada, and the United Kingdom. The social harm costs of this amount of methamphetamine is estimated to be between $20 million and $45 million, according to the New Zealand harm index. In the last month alone, Police have made significant progress in disrupting the meth trade, taking more than 600 kilograms off the streets, and, yesterday, the team at customs announced a record seizure of 700 kilograms of cocaine that had been imported from South America, with a street value of around $280 million. Our law enforcement agencies continue to strike real blows against organised crime and the supply of illicit drugs in our community, and I’m sure my colleagues across the House will join me in acknowledging the excellent work Police does in this space to keep us safe.

Hon Mark Mitchell: If her plan is working, why was it reported yesterday that a Rotorua woman keeps a baseball bat beside her bed and is afraid to leave her home because of the increase in gang violence in her neighbourhood?

Hon POTO WILLIAMS: There is no doubt that there are distressing experiences that our people in our community experience every day, but I know that the Police are doing a fantastic job in their work to combat gangs and organised crime, as I’ve just said. The Police take a number of actions, and I point to Operation Tauwhiro as being just one such action: a year of success, which has meant we’ve rolled it out for a further six months. I want to say I thank the Police for the work that they have done in taking 1,531 firearms off the street, arresting 1,255 people, and removing 53 kilograms of meth out of circulation.

Hon Mark Mitchell: If her plan is working, why was an innocent member of the public surrounded by violent gang members on a public road and beaten so badly that he still lies in critical care?

Hon POTO WILLIAMS: There’s no doubt that that was a dreadful experience, and, as the Minister of Police, I have no tolerance for what we saw over the weekend in the Waikato. What I can say is Police have launched Operation Rangiriri to investigate and take action against those identified as being responsible for any offending, and Police do take action. An example of that is a gang gathering in Wellington where four arrests were made and two vehicles have been impounded, a gang tangi where there were 50 infringements and two arrests and four vehicles have been impounded, and in Auckland, 16 gang members were arrested and charged and two motorcycles impounded. The charging rate against identified gang members is up 92 percent in the year to date, which has gone up under our watch. In the Waikato case, Police have launched an operation, and they will be taking action against those involved.

Question No. 4—Health

4. JAN LOGIE (Green) to the Minister of Health: Does he believe the DHBs’ approach to the current negotiation with allied, scientific, and technical health workers will improve job satisfaction and retention among the 70-plus groups represented in that negotiation?

Hon ANDREW LITTLE (Minister of Health): I don’t believe that the process of negotiation on its own, which is an activity between employer and union representatives, bears upon job satisfaction and retention for the workers represented. In the end, it is the outcome of negotiations that counts, and I’m satisfied that the DHBs and the union representing allied, scientific, and technical workers—in this case, the Public Service Association—are working to achieve a fair and reasonable result.

Jan Logie: What is his response to Steve, a sterile services technician, who has said, “We’re the most under pressure I have seen in over 10 years in the health sector. My department alone is 66 percent understaffed. On top of that, most of my colleagues don’t earn a living wage, and I have to work a second job to ensure that I can support my family.”?

Hon ANDREW LITTLE: I say to that worker thank you, as I do to all health workers, for the extraordinary work they have done over the last two years and continue to do in these extraordinary circumstances. I would also say to him that this is a Government that since it has been in Government has striven to materially increase the remuneration of health workers, and we continue to do that with all of the health unions with whom we are negotiating. In addition to renewing collective agreements, we have also embarked on a number of pay equity agreement negotiations with unions in the health sector. We have reached agreement in principle with two large sections of the health workforce, and we have more to come, including with the health workers in his group, represented by the union currently representing him, in a pay equity process. But as the court recently determined, the pay equity process must remain separate and distinct from the collective bargaining process for renewal of the collective agreement.

Jan Logie: What does he say to Leighton, a physio who said, “Many of us are burnt out and some cannot even get leave to take a break. We are understaffed and overworked, and we have problems retaining staff.”?

Hon ANDREW LITTLE: There are many parts of the health workforce that are under huge pressure because of years of underfunding the health sector and the workforce that goes with it, including the fact that in the nine years leading up to the formation of this Government, nurses’ remuneration, for example, went backwards in real terms. This is a Government that is determined to fix those problems, but with a workforce of 77,000, represented by many unions, we can’t do everything at once. We are actively engaged with all unions, not only to lift the rates of pay in their collective agreements but also, where it is required, to address longstanding pay inequity under the Equal Pay Act. We have a programme of work in that respect, and that work is well under way.

Jan Logie: Does he consider that the Government’s April 2021 pay guidance, which restricts when and how public servants can receive pay increases, may have hindered the health sector’s ability to reach fair settlements for long-running disputes such as the allied health negotiations?

Hon ANDREW LITTLE: In the end, the conduct of negotiations are a matter for the parties to those negotiations. The workers are represented by a union. It is between the union or unions and the employer or employers who are engaged in those negotiations. And, of course, with a workforce such as with the health workforce, these things don’t happen in a single set of negotiations. Long-term improvements happen over a period of time, and in the public sector, the Government that funds those pay agreements has to manage the pressures on it as well. So it provides appropriate guidance, but, in the end, this is a Government that, in the time it has been in Government, has established a track record of ensuring good and fair pay agreements for workers in the public sector.

Jan Logie: What responsibility will he take for fixing the situation that has led to WorkSafe saying they will take enforcement action against the Ministry of Health if funding issues that compromise worker safety in the health sector are not resolved?

Hon ANDREW LITTLE: Well, for a start, WorkSafe will not be doing that, because it would be outside their statutory mandate and their prosecutorial responsibilities. We do know that in some parts of the health sector, personnel have issued improvement notices in relation to days on which there has been considerable understaffing. But on investigation by WorkSafe of each of those improvement notices, the notices have been withdrawn because the necessary improvements have been made in very quick order.

Question No. 5—Tourism

5. JO LUXTON (Labour—Rangitata) (remote) to the Minister of Tourism: What announcements has the Government recently made about supporting the tourism sector?

Hon STUART NASH (Minister of Tourism): Today, I announced that the South Island tourism regions most impacted by the absence of international tourists are getting support to gear up for the return of visitors through our $49 million kick-start fund. Tourism operators in five key South Island tourism regions have worked extraordinarily hard to stay connected with the visitor economy in the travel, culture, hospitality, and recreation sectors. Yesterday, the Prime Minister and I announced that international tourists will be welcomed back to New Zealand earlier than expected as the Government accelerates the country’s economic recovery. This additional investment to support businesses will help scale up operations for the much-anticipated return of international visitors.

Jo Luxton: Why is the Government supporting the tourism sector?

Hon STUART NASH: Tourism’s highly important to the economy. Throughout the COVID-19 pandemic, we remain committed to ensuring the immediate survival and long-term transformation of the tourism sector. Our announcement today builds on the millions we’ve already invested into the sector, and will help those businesses who are ready to come out of hibernation and scale up operations for the return of international visitors. The kick-start grants could be used to refresh facilities or marketing or training and hiring new staff, or source new stock in readiness for their opening. It will take time and money and is exactly what the Tourism Kick-start Fund is for.

Jo Luxton: What feedback has he received about the announcement?

Hon STUART NASH: Welcoming back tourists is a significant moment for New Zealand and welcome news for the tourism sector. I acknowledge that this has been an incredibly hard two years. Closing our borders was one of the first actions we took to stop COVID-19, but welcoming tourists back will bring much-needed relief to the sector and provide an important boost to our economy. Matt Wong, iFLY Queenstown owner, said, “now … we’ve got some assurance that the market is coming back, we can start building our businesses back up so that they’re in a position where they can accept those customers and deliver that great service.”

Question No. 6—Health

6. Dr SHANE RETI (National) to the Minister of Health: How many of the 300,000 at-risk young people have been vaccinated in the measles catch-up campaign announced in July 2020, and what other non-COVID vaccination efforts are there, if any, to protect New Zealanders this winter?

Hon ANDREW LITTLE (Minister of Health): The July 2020 commitment to a catch-up campaign arose out of a number of preceding incidents. Firstly, a 2014-15 sero survey showed systematically lower measles seropositivity for the birth cohort from 1980 to 1999. Secondly, in May 2017 the New Zealand National Verification Committee for measles and rubella reported there “was a need to ensure that existing significant pockets of susceptible individuals are identified and immunised” in a catch-up campaign. No action was taken by the Government of the day following either of those warnings. After the measles outbreak in 2019, efforts to address the immunisation gap in those young people finally got under way. There was a particular need to prioritise a one-dose catch-up campaign for people born between 1989 and 2004 who had an unknown MMR immunisation status. Since July 2020, 22,764 doses have been given. Because of the pandemic, a decision was made to pause the measles catch-up campaign between March and November 2021 to focus on responding to COVID-19.

To the second part of the member’s question, we have a range of targeted measures to ensure people can access vaccination. This includes funding additional free flu vaccines this year, as well as the usual National Immunisation Schedule series of vaccines that are offered free to babies, children, adolescents, and adults.

Dr Shane Reti: How many people, then, were vaccinated between the start of the campaign in July 2020 and, as he has just told us, when the campaign was concluded or paused in March 2021?

Hon ANDREW LITTLE: The campaign was paused in March last year because by that time a vaccine was available for COVID-19 and it was important for the health system to assemble the significant workforce needed to administer that vaccination campaign, which to date has led to the administration of more than 10.8 million doses of a vaccine for that particular condition. I don’t have the precise figure of what number of doses were administered at that time, but the campaign for the immunisation catch-up resumed in November last year, and doses have been administered since then to the current date.

Dr Shane Reti: What responsibility does he take for having to destroy nearly $4 million of measles, mumps, and rubella vaccines that expired last month, and how many hip operations could that $4 million have paid for?

Hon ANDREW LITTLE: We have had a health system that has had to respond at pace to a worldwide pandemic and had to go from business as usual to administering currently 10.8 million vaccinations to our population to keep them safe from the horrors of COVID-19. That does require trade-offs. The reality is no system, particularly a system of our size, can do absolutely everything asked of it. So when we make trade-offs, we have to trade off assembling the workforce, drawn from the current health workforce, to do the COVID-19 vaccination campaign, and because the borders were closed and the risk of measles infection was way, way lower than hitherto had been the case, it was a trade-off that I was prepared to back.

Hon Willie Jackson: What steps is the Government taking to increase the availability of the free influenza vaccines in order to help protect New Zealanders this winter?

Hon ANDREW LITTLE: Last month we announced that the Government would fund an additional quarter of a million more free flu vaccines for this year’s winter campaign to protect our most vulnerable communities and the health system. We can expect to see more seasonal flu in New Zealand this year as we reopen our borders, and now up to 2 million New Zealanders will be eligible for a free flu vaccination in 2022. This Government has been actively planning and investing for this winter—and, of course, many more to come—because we take health seriously. We know this will save lives, we know this will preserve capacity in the health system, and we know that it will lead to a healthier, better outcome for all New Zealand communities.

Hon Peeni Henare (remote): Can the Minister confirm that despite the challenges of COVID-19 in the year 2020, the Māori flu vaccination rate was the highest it has ever been in history?

Hon ANDREW LITTLE: I can confirm that, because one population that the health system has struggled to provide appropriate immunisations to is Māori, particularly tamariki and rangatahi, but 2020 saw a record number of immunisations administered as the catch-up campaign took off. I’m confident that we will pick up those numbers again as the campaign picks up momentum again this year.

Dr Shane Reti: Does he stand by his answer to written questions that in two weeks’ time another $5 million worth of MMR vaccine will also expire, and how many hip operations could that $5 million have paid for?

Hon ANDREW LITTLE: I stand by all my written questions and indeed all the things that I put into the public arena, unlike that member, who’s had to withdraw the figures and numbers he’s relied upon.

Dr Shane Reti: Was this $9 million failure a factor in Treasury’s latest Investor Confidence Rating assessment of the ministry he leads being graded a D, with especially poor project delivery?

Hon ANDREW LITTLE: We have asked an extraordinary amount of our Ministry of Health in the last two years as they’ve responded to the worldwide pandemic. They’ve had to gear up an extraordinary workforce, not only running and planning the response to COVID-19—making sure the health system is equipped to provide the healthcare that is needed—but also to source, to procure, and then to administer the vaccine in the biggest vaccination campaign this country has seen in its history. We’ve had to press into service people in our health system who have not been pressed into service before—the biggest vaccination workforce we’ve ever had. That has given a lot more people an opportunity to be part of a health system with now ambitions and aspirations, and to play a long-term role in it. This Government will be supporting them to do that.

Question No. 7—Broadcasting and Media

7. NAISI CHEN (Labour) (remote) to the Minister for Broadcasting and Media: What recent announcements has the Government made about strengthening public media?

Hon KRIS FAAFOI (Minister for Broadcasting and Media): The Government recently announced that it will create a new single, independent public media entity. Internationally, traditional media is under pressure as it competes for audience and revenue with multinational content and social media providers. Public media in New Zealand is no different, and that is why the Government is acting to futureproof New Zealand’s public media. The new entity will provide many of the current services of TVNZ and RNZ but be built for the 21st century, so it will be digitally focused and multi-platform. It will have a strong public media focus and more options and greater flexibility to respond to change and to deliver what audiences want. It will ensure that the quality local content that New Zealanders have relied on for decades will continue to be available in the fast-changing media environment.

Naisi Chen: What will the benefits be to New Zealand audiences?

Hon KRIS FAAFOI: New Zealand’s audiences are changing the way they consume their media as younger audiences and some parts of our communities turn increasingly to online platforms and overseas-produced content. The entity will be better shaped to deal with these challenges. It will have greater scale, more flexibility to respond to the change, and be focused on new ways of delivery to reach local audiences and compete for their attention. Importantly, though, it will ensure our culture will be better reflected, our democracy will be better supported, and our public media system will be fairer, with a wider range of New Zealanders, including young people, having access to relevant content that reflects our communities, personalities, and our diversity.

Naisi Chen: What does the establishment of the new public media entity mean for Radio New Zealand and TVNZ?

Hon KRIS FAAFOI: The new public media entity will be set up alongside business-as-usual work for RNZ and TVNZ, and until it is established, TVNZ and RNZ will continue their current roles. However, they will also be closely involved in the establishment and change process and will have a representative on the establishment board, including a representative from staff on the shop floor. The new entity will continue the current platforms used by RNZ and TVNZ and will build on the skills and experience of those staff. Importantly, it will have a strong public media focus but will also have a responsibility to ensure its actions ensure a stronger, wider media environment.

Question No. 8—Immigration

8. ERICA STANFORD (National—East Coast Bays) to the Minister of Immigration: Does he stand by all his statements and actions on immigration?

Hon KRIS FAAFOI (Minister of Immigration): Yes, in particular I stand by the progress this Government is making on the 2021 resident visa. As of yesterday, a little over 78,000 applications had been submitted, representing 151,459 people. Of these, nearly 11,000 have already been granted residence, representing close to 25,000 people becoming New Zealand residents. This gives certainty to those people and their employers, and enables New Zealanders to retain a very important part of our skilled, settled, and scarce workforce. I also stand by the Government’s recent decision to offer shelter to around 4,000 families of Ukrainians in New Zealand, and I stand by the Government’s careful strategy to reconnect with the world, and as we are able to do so we are welcoming more and more people from overseas back to Aotearoa. As we said last month, where it is possible to bring forward the entry dates for different groups of migrants, the Government is working to do that.

Erica Stanford: Does he agree with the Prime Minister’s comment yesterday that the reason the Government isn’t able to prioritise split families is because “The major issue … is not a question of safety… a question of being able to process those new visas in a timely way”?

Hon KRIS FAAFOI: Families will be able to be reunited throughout the phases of the staged and balanced process that the Prime Minister outlined yesterday. From 13 April, Australians will be able to travel to New Zealand, isolation free. And then 2½ weeks later, from 11.59 on 1 May, vaccinated travellers from visa waiver countries with valid visitor visas will also be able to travel. Also, from July the processing of partnership visas for temporary migrants will resume. As the Prime Minister has said, a staged and balanced approach to reconnecting New Zealand is the way we’ve gone about it, because of both public health reasons and our willingness to open the borders as quickly as we can.

Erica Stanford: Can he explain why he put the bulk of split families in the very last border reopening category of October, behind tourists and sports teams, when these families have been separated for three years?

Hon KRIS FAAFOI: As we open to the likes of Australia and visa waiver countries, that change will allow a large number of people who have been split to reconnect with their families. There are also around 570,000 people who still have valid visas who can open in our new phased approach.

Erica Stanford: Why is it that 90 percent of visitor visa applications currently take seven months to complete, and is this the reason he can’t open up to all tourists on 1 May?

Hon KRIS FAAFOI: I think the fact that the border has been closed for two years would have something to do with the focus of where processing for Immigration New Zealand has been. A bulk of the processing capacity has been dealing with the likes of critical purpose visas, to make sure that we’ve got the kind of skills and people that we’ve needed here over the last two years while our borders have been closed.

Erica Stanford: What does he say to the consultant psychiatrist who is the only approved trainer for addiction psychiatry in the Waikato, who has resigned and is moving to Australia because Immigration does not have the capacity to process his father’s residency application even though he fits the income criteria to be approved?

Hon KRIS FAAFOI: I’m only hearing about this one individual case at the moment, but if that person has an issue with the way that that has been processed, I suggest they speak to Immigration New Zealand.

Question No. 9—Māori Development

9. SHANAN HALBERT (Labour—Northcote) (remote) to the Minister for Māori Development: What reports has he seen on cadetships?

Hon WILLIE JACKSON (Minister for Māori Development): I’ve recently received a report that since its inception, cadetships through Te Puni Kōkiri (TPK) have reached over 5,000 cadets. In 2021, TPK supported programmes for 1,287 cadets with 128 employers, more than double the previous year. Eight-six percent of participating employers were Māori owned, and we are seeing the programme reach a wider range of industry sectors than previously, including: healthcare and social assistance, 20 percent; and information, media and telecommunications, 12 percent. Over half of the cadets in 2021 were wāhine Māori, helping to tackle the disproportionate impact on wāhine from the economic shocks of COVID-19.

Shanan Halbert: What benefit is the cadetship programme providing for employers?

Hon WILLIE JACKSON: Cadetship participation has significantly improved Māori staff retention rates at participating employers, reducing their costs and improving productivity. Over 90 percent of cadets were still at their firms after the cadetships had concluded and 88 percent received a pay rise; 58 percent of cadets received a promotion within the organisation, demonstrating the improved capability and productivity of the employees, kaimahi. Programmes are often tikanga based, benefiting both the cadets and the employers and enhancing links to Māori communities.

Shanan Halbert: What have employers said about the programme?

Hon WILLIE JACKSON: Sixty-nine percent of employers said the proportion of Māori employed had increased since participating in the programme, while 94 percent of employers said that participating in the programme has prepared cadets for their careers in the long term. Seventy-four percent said their organisation had benefited as a result of participating in cadetships.

Question No. 10—Broadcasting and Media

10. MELISSA LEE (National) to the Minister for Broadcasting and Media: How much has he been advised the merger of TVNZ and Radio New Zealand will cost, and how much ongoing taxpayer funding, if any, will the new public media entity he is creating receive?

Hon KRIS FAAFOI (Minister for Broadcasting and Media): The Government recently announced that it will create a new single public media entity. This, as I said in my response to question No. 7, is to ensure that our public media is fit for the future challenges of audience change and international content via online platforms. Cabinet’s decision also included funding of $14.6 million to begin establishing the new entity. Any further costs are part of the Budget process. Further funding decisions for the new entity are also a subject of the Budget process, so the member will just have to hold on to the remote for a little bit longer. But I can assure the member the new entity will see more opportunities for New Zealanders to access quality local content. That is in stark contrast to when her party was last in power when public media budgets were flatlined and two TVNZ channels were taken off air.

Melissa Lee: What tangible benefits are the public going to be burdened with if the new public media entity is unable to retain the levels of commercial support upwards of $300 million a year from advertising revenue expected to be retained from TVNZ’s existing customers?

Hon KRIS FAAFOI: I think the question actually shows the National Party’s kind of attitude towards public media where they think it’s a burden on New Zealanders, as opposed to this side of the House who sees the benefit of making sure that quality local content is available to New Zealand audiences that are changing the way they access that and are also finding their revenue—the overseas content being a large challenge to their long-term survival. I thought the Opposition would have realised that over the last five years.

Melissa Lee: Obviously, the Minister hasn’t actually heard about the cost of living.

DEPUTY SPEAKER: Order!

Melissa Lee: Sorry, I was thinking to myself, apologies.

DEPUTY SPEAKER: Yeah, well I was about to give you an extra question but there you go.

Melissa Lee: Thank you, Mr Speaker. Will the Minister commit to shelving the establishment of a new public media entity and his flawed merger of RNZ and TVNZ if the cost of a merger will mean taxpayers spending upwards of $150 million or more every year in additional public media spending?

Hon KRIS FAAFOI: Again, it’s the same old National Party trope when it comes to the public media: they don’t like it so shut it down.

Chris Bishop: Point of order. There was no attempt there to even address the question. That was just a broad political attack on a very reasonable question in relation to public media.

Hon Grant Robertson: Speaking to the point of order, if only what the shadow Leader of the House just said were true. The question contained an assertion, a pejorative statement, and used the word “flawed”, and so therefore I think it probably got as good as it offered. [Interruption]

DEPUTY SPEAKER: No, I don’t need any further—what I am going to do, I will go back to my original thought because I think the previous question wasn’t answered or addressed properly and that was about the amount of advertising revenue. If you want to use an extra opportunity you can do that now.

Melissa Lee: Point of order, Mr Speaker. Did you want me to repeat that question—I have an extra?

DEPUTY SPEAKER: It’s up to you. If you wish to but you can use it to address it again or a new question. It’s up to you.

Melissa Lee: So I have one supplementary left, so I get another one, so I have two.

DEPUTY SPEAKER: Yes.

Melissa Lee: Thank you, Mr Speaker. Does the Minister agree with New Zealand Media and Entertainment CEO, Michael Boggs, who said—and I quote—“Additional government investment into this new entity can only add to the intense competition and cost pressures that are already exist across New Zealand commercial media,”; if so, will he end the merger?

Hon KRIS FAAFOI: I have spoken to Mr Boggs about the Government’s intent and assured him that one of the key factors in establishing it is to make sure that the state of the wider media sector is solid. Given the last couple of years and the challenges that the media environment has faced, I think that would be a good thing. I am also a little bit confused as to why the National Party, who are all about competition, don’t want to make sure that a public media entity can compete with the others.

Melissa Lee: How much, if any, has he been advised it will cost to rebrand TVNZ and Radio New Zealand; and does he believe rebranding two of the most well-known media entities in the country would represent good value for taxpayer money?

Hon KRIS FAAFOI: I think, again, the question shows a misunderstanding of the mission. We need to fundamentally make sure that our public media is fit for the future because of the challenges that audiences face and offshore platforms face. If this is just about a rebranding, that would be shallow and that’s the kind of policy that we’ve seen from the Opposition when it comes to public media.

Melissa Lee: How can the people of New Zealand trust this new public media entity will offer something more and not be yet another cost blowout for taxpayers—the latest in a long line of wasteful spending by a Labour Government that has cost taxpayers billions of dollars?

Hon KRIS FAAFOI: On this side of the House it is patently clear that we actually believe in the importance of public media. If I think what the member is saying is that the National Party policy at the next election is to gut public media, I look forward to the debate.

Question No. 11—Police

11. NICOLE McKEE (ACT) to the Minister of Police: Does she stand by all her statements and policies regarding firearms?

Hon POTO WILLIAMS (Minister of Police): Yes, in the context they were made and undertaken.

Nicole McKee: Is she confident that New Zealand Police can process 80 percent of licence applications within 12 months, considering only 6 percent have been processed as at December 2021?

Hon POTO WILLIAMS: Police remain committed to the completion of the licence applications, in a timely manner, and ensuring only those who are fit and proper are being granted a firearms licence. That’s why the police have created a dedicated team to reducing licencing delays, focusing on the oldest applications first, and that’s why they have brought on more staff.

Nicole McKee: Will she grant an extension for firearms licence application renewals, similar to that done last year, to reflect the delays caused by the Omicron variant, and, if not, why not?

Hon POTO WILLIAMS: We will continue to closely monitor the situation. Should the delays in processing of licence applications occur as a direct result of COVID-19 - related illness, and associated isolations, we will consider a new extension, using the regulation-making power under the Arms Act.

Nicole McKee: Why should New Zealanders have confidence in her to keep communities safe, when gun crime—specifically that associated with gangs—is significantly worse under this Government?

Hon POTO WILLIAMS: I reject the premise of that question. This Government has invested $450 million into the police and increased the police workforce by 15 percent. We have given police the tools that they need to combat organised crime. We have raised the number of police, including 700 dedicated to organised crime, alone. I reject the premise of that member’s question because that is clearly not the case, and I point to Operation Tauwhiro as one such example.

Question No. 12—Housing (Homelessness)

12. RACHEL BOYACK (Labour—Nelson) (remote) to the Associate Minister of Housing (Homelessness): What recent report has she seen on the progress of the Homelessness Action Plan?

Hon MARAMA DAVIDSON (Associate Minister of Housing (Homelessness)): We have recently published the 18-month review into the Aotearoa New Zealand Homelessness Action Plan, and the review shows really good progress against all the 18 immediate initiatives to reduce homelessness. Now, this progress is testament to the mahi of community providers and Government agencies working together, and in the review, the sector experts—our community housing providers—acknowledge there has been a major shift in recognition of the severity and the urgency of homelessness, and that the action plan is providing solutions backed up with investment. Providers also said that people experiencing homelessness have more options for support than they have ever done before.

Rachel Boyack: What are the focus areas that have been identified for addressing homelessness?

Hon MARAMA DAVIDSON: The original Homelessness Action Plan was published back in February 2020, just weeks before our country’s first COVID lockdown. So, of course, things have changed since then, and to recognise the changing situation to today, a lot has changed. So I have brought up newer focus priority areas, including helping rangatahi and young people into tailored, safe, and stable accommodation that uniquely addresses their specific needs, strengthening kaupapa Māori responses, the ongoing delivery of public and transitional housing, and improving access to health, mental health, and addiction support under the action plan to make sure we bolster the wraparound tautoko for vulnerable whānau experiencing homelessness.

Rachel Boyack: What role can community organisations play in implementing the Homelessness Action Plan?

Hon MARAMA DAVIDSON: We know that it is a whole-of-community approach that is essential to addressing homelessness, and the action plan is that Government commitment to agencies and community housing providers and the homelessness sector truly working together. Community organisations are contributing by leading the engagement with providers and whānau with lived experiences, thus strengthening policy and kaupapa Māori approaches, and providers are the absolute lead and an essential component of how we address and reduce homelessness.

Chris Bishop: Can she tell the House how many children are currently living in emergency housing?

Hon MARAMA DAVIDSON: Firstly, making it very clear it is not acceptable for any children or people to be living in emergency housing, and we are moving towards making sure all people have safe, urgent housing. Now, that is a question for the Minister of emergency housing. That is not within the delegation of my portfolio. However, every one is one too many.

Chris Bishop: Point of order. I’ll hope you’ll help me out here a little bit, Mr Speaker. Children in emergency housing fall well within the portfolio responsibilities of the Associate Minister of Housing (Homelessness), and I would encourage you to encourage her to address and answer the question.

Hon Grant Robertson: Well, speaking to that point of order, Mr Speaker, I think if the member chose to take some time to look at the delegations that are available to him on the—

Nicola Willis: Oh!

DEPUTY SPEAKER: Order! [Interruption] No, sit down. This is a point of order. It’s in silence—thank you.

Hon Grant Robertson: Mr Speaker, the delegations for the housing portfolio are available on the Department of the Prime Minister and Cabinet website, and I’m sure if the member looked at that he would see that the member is telling the truth.

DEPUTY SPEAKER: The member did address it, even though it clearly falls outside her portfolio; I probably should have stopped her right there, but I didn’t.

Nicola Willis: Point of order, Mr Speaker.

DEPUTY SPEAKER: A new point of order, or are you going to question my ruling? Think about it.

Nicola Willis: I’ll leave it there—it’s a Thursday.

DEPUTY SPEAKER: I declare the House in committee for consideration of the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill and the Maori Commercial Aquaculture Claims Settlement Amendment Bill.

House in Committee

House in Committee

CHAIRPERSON (Ian McKelvie): Members, the House is in committee for further consideration of the Taxation, (Annual Rates for 2021-22, GST, and Remedial Matters) Bill and the Maori Commercial Aquaculture Claims Settlement Amendment Bill. I remind members who are participating remotely on Zoom that if you want to take a call, please type “call” into the chat. You should also use the chat if you want to raise a point of order. We have received new tabled amendments. I will remind members that they can refresh the House papers page to see the new amendment. Finally, if would be helpful for members to ask multiple questions if they have them of the member in charge during their call.

Bills

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

In Committee

Part 4 Amendments to other enactments (continued)

CHAIRPERSON (Ian McKelvie): When we were last considering the bill, the question was that Part 4 stand part. The Minister had the call, should he wish to resume.

Hon DAVID PARKER (Minister of Revenue): Thank you, Mr Chairman. I was addressing Part 4 of this bill, which has a number of mainly technical amendments. But I did highlight one which I thought might be of interest to members, which is the new offence being created in respect of software products that are used to deliberately misrepresent GST returns by fraudulently recording receipts as being lower than they actually are in order to defraud the Revenue. It’s a new area of fraud that wasn’t known to me before becoming Minister of Revenue. I understand it’s really the importation of computer programmes that are used to that effect overseas, and it’s being made illegal to either use them or possess them for any reason.

SIMON WATTS (National—North Shore): Thank you very much, Mr Chair, and I appreciate the Minister’s providing a little bit more information in regards to that point. I want to refer to Part 4, clause 135B, which is an amendment that was made in regards to “Authorisation to make payments under small business cashflow loan scheme”. What I’m interested in from the Minister in this regard is the context in which that was deemed to be made and the extent to which that aspect—which is on page 137, just for reference—was brought into play.

We appreciate the implications around the impact of COVID and we appreciate that this has brought a number of unique implications to a wide range of business areas in this country, and, obviously, in this case, particularly in regards to the taxation of those businesses. But I think what would be fair to say is—and we saw this across a number of other areas of legislation—that it was the aspect around the fact that a number of these points were done under considerable pace, and it would be fair to say that in some other areas of legislation in regards to COVID we’ve noted that there have been a number of errors made subsequently when we’ve reviewed that.

So I’m looking for more context in terms of this point. I refer in particular to the aspect of the definition around “associated person who receives the benefit of the grant,”—and I quote from clause 135C—and the extent to how broadly that associated person definition is being looked at.

The other aspect that I’m interested in is it talks about “adequate consideration for the supply of goods and services”, and I guess that is a point at which I will no doubt have a range of considerations around what is deemed to be adequate consideration. What I’d be interested for the Minister to address is in terms of where he sees that and how that is going to be determined, I guess, in terms of what is deemed adequate consideration.

So I’ll leave it there, if I may, Minister, and then we’ll come back to a couple of other areas. Thank you.

Hon DAVID PARKER (Minister of Revenue): Payments that are made under the likes of the COVID support payments or under the business cash-flow scheme are made pursuant to applications under which the people that are seeking to receive the money make certain declarations to the Inland Revenue, and if they’re assessed according to the criteria, for which the processing is generally computerised for large numbers of transactions, they then get the payment. There are integrity measures that are used by the Inland Revenue to take samples and check whether things are all as they ought to be. Some of those end up in applications being declined; others are found after the money is disbursed. Where the money is disbursed wrongly, there is a right to get the money back from the person to whom it is paid. If they say they can’t pay it because they’ve given the money to somebody else, the Inland Revenue needs the power to get the money back from the person to whom it’s given, and the associated person test is to find the class of people from whom the money could be sought to be repaid in those circumstances.

The associated person definition is quite a broad definition which already sits in the income tax legislation. That definition is not changed by this legislation. It imports that same definition.

As to the question as to what is or isn’t adequate consideration, I’d presume that that’s an assessment as to whether it was for value. If the money was paid in return for fair value of services, then it probably would be for adequate consideration. If it was gifted or it was somehow used to repay a debt, I think that probably wouldn’t be seen to be for adequate consideration.

SIMON WATTS (National—North Shore): I thank the Minister for that response and context in terms of that, so I appreciate that. I want to move now to clause 169, which is part of Part 4 of the Act, which is in regards to section 183ABAB—amending “Remission of interest for taxpayers affected by COVID-19: general rules”—and that broadens out to clause 169B, which talks about some of the implications around the timing around that remission element. I guess why this is important in this context is—and the Minister will, no doubt, be aware of some of the conversations and ideas that National put up in regards to loss carry-back and the implications on businesses of losses that were incurred as a result of COVID-19; losses that were primarily outside of the control of businesses—they’re just the reality of having to operate under the impact of COVID-19, which for many businesses, and particularly in hospitality and parts of retail and travel, have been absolutely catastrophic.

What I’m interested in really in regards to clause 169 is, in terms of the extent of that remission of interest process, and in terms of the thinking around whether that is as far and as much as we could have gone in regards to providing support for those individuals. We had a number of individuals—I guess a circumstance in which you would have to be paying interest is potentially around the inability to meet your requirements under terminal tax obligations. And I’m in no doubt—due to cash flow issues and the fact that many businesses have actually sucked up all of their working capital as a result of trying to manage under COVID—cash is tight and tax is probably one of those last things. I know there has been some consideration around the deferral of the timing of those tax payments, which I think would have been helpful. At the end of the day, cash is cash, and you’ve got to find it from somewhere. So I’m interested in terms of some of the consideration around that. Will that, and in the view of the Minister, actually make a material impact or a material difference in regards to the benefit or the relief that that will provide on our business community?

Also, in regards to the timing around that, whether there was any consideration around—I won’t go into whether there’s consideration going forward, but in the context that I was referring to before around loss carry-back, looking back on prior periods as well, and potentially in circumstances where individuals have incurred interest on terminal tax in prior periods, and whether there was any consideration around whether benefit could be afforded to certain businesses, potentially in a targeted manner.

Hon DAVID PARKER (Minister of Revenue): Thank you. My understanding is that the Commissioner of Inland Revenue and the people who conduct the affairs of the department on her behalf already have had discretions to waive penalties. They didn’t have the discretion to waive use-of-money interest, and the Government thought that, in the context of COVID, it was appropriate to extend the discretion of the revenue department to waive interest. There does need to be some incentive to pay tax on time—it would be unwise to give everyone a waiver of interest, even if they didn’t need it—so there is an obligation for this to be done on an individual basis by people applying to the department for the exercise of that discretion, which is being widely used at the moment. The department’s not being niggardly about this; they are using their discretion quite frequently to give people time to pay their taxes and waiving interest, in that regard. Indeed, the extension of these powers has actually been recently triggered by another Order in Council, if I remember correctly, which went through Cabinet very recently.

In terms of whether that is applied retrospectively to earlier interest debts, I can check for the member with officials on that. I anticipate that, certainly if it was backdated, it wouldn’t be backdated before COVID, but I’m not sure whether you can only apply prospectively or in respect of a period prior to your date of application. I’ll check with officials on that issue and get back to the House.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Mr Chair. It’s a pleasure to rise on behalf of ACT on this Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill at committee stage.

I just had a specific question for the Minister around clause 168B, and this inserts new section 183ABA. I wondered if the Minister could be a bit more specific about what this particular change for the remission in circumstances of emergency event is. Because if I went back to look at the previous law and how it reads, it appears as though this is for a particular case where, if an emergency event has been declared in an Order in Council, and a person is unable to physically make the payment, it appears that the word “physically” may be quite important. But under this new change, the physical element of being prevented from making a payment has disappeared. I wondered whether that was for a specific reason. Is it because instead of it being an emergency event such as like a landslip or someone physically being unable to make a payment in that way, whether there was any other type of emergency events that this is supposed to capture?

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. I was just waiting for the Minister to respond to that, but in the meantime, I’m just trying to introduce another topic and I’m conscious that there are a few questions that the Minister is responding to.

But I just want to ask about the “use of money” section, clause 153B, that is in this part of the bill. One of the big things is the issue around the current charging of the IRD, and I wondered whether the Minister had a look at the actual rates that are being charged by the IRD. Because, as no doubt he will be aware, and I know, Mr Chair, that you will be aware, if you owe the IRD money at the moment, for instance if you haven’t paid tax on time for some reason, and particularly during COVID period where many companies have been affected by cash flow—the use of money charge currently, I believe, is 8.27 percent. On the other side, if the IRD owe you money, i.e., you’re getting a tax refund, at the moment the interest you get on the amount of money that the IRD hold on your behalf is actually, I think, 1.62 percent. So there’s roughly about a 7 percent differential, which is hugely disadvantageous if you owe the Government—in the form of IRD—money. But if you are owed money by the Government then you don’t get much money on it.

So I was just keen to see whether the Minister had actually looked at this issue about whether the use of money rates that are currently applied are still relevant, practical, and appropriate, because I would put it to the Minister that I think charging someone a rate of 8.27 percent is much, much higher than what you’d have to pay from an overdraft. I know there’s a disincentive that the Government wants to put in place to stop people using the Government, in effect, as a bank, but the rate is several hundred basis points over what even you would be paying currently, particularly when interest rates, up to very recent times, have been as low as 2.5 percent. So that’s my question, and, hopefully, you can provide a bit of a light on that.

Hon DAVID PARKER (Minister of Revenue): Referring firstly to Brooke van Velden, the definition has been broadened by deleting the word “physical”, which didn’t cover some of the circumstances under COVID that prevented people from paying their taxes. The definition has been broadened so as to allow the department to have a discretion in those COVID-related circumstances.

In respect of the use of money interest point that Andrew Bayly has raised, the 1.62 percent is a bit more money than I think I get for some of my money sitting around in the bank, so on the deposit side I don’t know that it’s far out of whack. In respect of the rate that’s charged for use of money, yes, it is higher than a mortgage rate. It’s lower than a credit card rate, of course. The member is right that it is set and reviewed regularly, and it’s intended to be set at a level which doesn’t cause Inland Revenue to be used as a bank because their source of funds would be cheaper than the source of funds that would be able to be accessed by most borrowers.

SIMON WATTS (National—North Shore): Thank you very much, Mr Chair, and, again, I appreciate the Minister’s responses on our questions. If only we could keep an order of the different clauses, but we’re going to move away a little bit around here.

So I want to refer to clause 173, which is Schedule 7, around disclosure rules. It continues on the theme that I’m taking today around some of the changes that have been made in the income tax, the taxation areas around the impact of COVID-19. And this one in particular, clause 173, Part 1, in section 4, is around COVID-19 information-sharing. I think we would all acknowledge, again, that the need and the benefit of sharing information as a result with other Government departments—so this clause, for those that aren’t aware, of clause 173, and there might be a few people out there that haven’t read that clause in their lead up to listening to this debate. But if you haven’t, it’s around ensuring that the Government can assist and share information with other departments around information regarding COVID-19.

I guess the key element that I’m wanting to question—and, again, this was raised during the select committee process—is the fact that the Government has allowed this information-sharing to be undertaken in perpetuity. They haven’t limited the time in which that information-sharing would stop. And you might say, “Well, that’s reasonable. You know, information-sharing is a good thing.” But the keyword that was referenced here was “in relation to COVID-19”. We’ve got the spokesperson for COVID-19 in here still. But that element in itself is hugely—well, it’s difficult to narrow in terms of “What does it mean if it’s in relation to COVID-19?” So, one, we’ve got a change in terms of sharing of information, and large information-sharing is, you know, people’s personal information, and then quite a very broad term in that it’s going to happen for pretty much in perpetuity and when, in relation—I guess, nowadays, you could argue that anything is in relation to COVID-19. Right? I mean, you could say that—actually, to be honest, we hear that a lot, actually, all the problems that we face in this country. I must say, Mr Chair, and I’m trying very hard to stay on clause 173(1), but all the challenges and problems are the fault of COVID-19, and, oh, Ukraine, yeah.

But, anyway, back to the clause, because that’s what we’re here for. So what I’m looking for—the question for the Minister is to clarify, one, why have we decided to just take the opportunity to extend this for perpetuity? Two, how does he see that the detail—and, I guess, my concern is there’s a bit of a weakness in terms of the drafting here around, you know, what is in relation to COVID-19. And, therefore, also, I guess, if there’s no end date, then I guess the question is: what’s the incentive to actually work to close the availability of that power? What incentive is there to actually do that? Because you’ll just say, “Well, it’s in regards to COVID-19, so it’ll continue and continue.” So I’d be interested for a little bit of context in regards to that.

Because I think it is important. I think people’s personal information and the freedoms of their private information have been under a lot of focus here in this Chamber, in a number of areas, and the information with regards to taxation is equally as important.

Hon DAVID PARKER (Minister of Revenue): If I could address the issues that have been raised in recent calls by members of the Opposition. Just before I do so, the figures that Andrew Bayly quoted to me as to use of money interest were 2016 figures. The figures currently are: 7 percent is the use of money charge, and 0 percent is the amount that you’ve paid.

Andrew Bayly: Still a 7 percent differential.

Hon DAVID PARKER: There is still a 7 percent differential, but those numbers do change—it’s an illustration that they do change through time.

In respect of the member Mr Watts’ earlier question as to whether you can have interest remission backdated, the obligation is for the person seeking remission to apply as soon as is practicable. If they have applied as soon as is practicable and the revenue department thinks that that is within that practicable period, it could be backdated a while. But if they’d left it for a couple of years before they applied, they wouldn’t get it backdated that far.

In respect of the change to the information-sharing rights of the revenue department, this, in the main, has been important to enable the sharing of information between the Ministry of Social Development and the revenue department, both of whom have been involved in the schemes that have supported people to try and keep them attached to their jobs and to try and keep businesses operating. The purpose is still limited to COVID, although there’s no end date now, except as they relate to COVID measures. So if there was any further information sharing in the future and it wasn’t related to COVID, it wouldn’t be enabled by that provision. I’m also advised that this was worked through with the Privacy Commissioner, because the member is quite correct that there are proper limitations on the ability of the department to share information, and there should always be those limits.

SIMON COURT (ACT): Thank you, Mr Chair. So my question is to the Minister on the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. Now, I’ve been involved in a few remediations, Minister, but I’m not sure if you’re going to be able to remediate the reputation of this Government in the eyes of the taxpayer because the tax rates and the total tax take that this bill enables are eye-watering. They’ll leave more than just a speck of dust in the eye; they’re likely to be permanently blinding.

Barbara Edmonds: I raise a point of order, Mr Chairperson. My point of order is we’ve debated that in Part 3 of the bill; we’re in Part 4 now.

CHAIRPERSON (Ian McKelvie): Thank you, Ms Edmonds.

SIMON COURT: Mr Chair, I just would like to bring the attention of the Minister to the matters arising from section 81A, a new section under clause 179, that is, amendments of assessments arising for the living circumstances existing at the time of an initial assessment for child support. So what new section 81A appears to describe is that for a liable parent, that is, somebody who is liable to pay child support to another parent or carer of their children, if the circumstances change during the course of this assessment period, the receiving carer can make an application to have the person pay—the liable parent—an additional sum if they believe that they have not paid sufficient based on the assessment. So in these straitened times, when the cost of living has increased for all kinds of household items, including rent, petrol most recently, food—people’s circumstances on a given day means they can pay their bills if they’ve got enough money coming in.

What I understand this section allows for is for the Commissioner of Inland Revenue to make an assessment about somebody’s circumstances in the past where the commissioner believes that they have not paid their entitlement as a liable parent and that they therefore should make up the shortfall. Now, of course, if somebody is liable to pay and the circumstances dictate when assessed accurately that they should pay, well, of course they should pay. But while this section here, 81A(3)(a), states that for the person who’s a liable parent, “the backdating has the effect of increasing the amount of the parent’s child support liability:”, for the receiving carer, if we look at new section 81A(3)(b) there, “the backdating has the effect of decreasing the amount of child support payable in respect of that carer.”

However, there doesn’t appear to be a corresponding allowance for the liable parent actually to receive acknowledgment that their circumstances may have changed during the assessment period, because for liable parents who might lose their job or who were running a small business and found that their incomes were severely constrained—in fact, they might have been making no profit at all; they might have burnt up all of the savings that they had in the bank, just covering the costs of paying the rent on their business premises and paying staff that extra amount that the wage subsidy didn’t cover, paying their staff’s KiwiSaver and covering PAYE. Now, if that person, that small-business owner, was also a liable parent and it turns out actually that they weren’t liable to pay the child support at this time during the assessment period because their financial circumstances have changed, they won’t get any credit. They don’t get any recognition for their straightened circumstances.

Minister, that appears to be unfair so my request of the Minister is to answer this question: is it fair that the liable parent has to pay additional in the event that it turns out they are assessed as being liable to pay, but if it turns out that because of their financial and personal circumstances they weren’t liable, they won’t receive any acknowledgment of that, any reduction in what they’re required to pay—they’ll still have to pay the full amount as if their world was rosy and that nothing had changed?

Hon DAVID PARKER (Minister of Revenue): With respect, I think the member has misread the section, because my reading of new section 81A(3) says that “The Commissioner may also backdate any amendment … to the time of when the assessment begins if the recipient of the assessment—(a) is a liable parent, and the backdating has the effect of increasing the amount of the parent’s child support liability.”—so that’s the change in respect of the liable parent, or—“(b) is a receiving carer, and the backdating has the effect of decreasing the amount of child support payable in respect of that carer.”, so I think it is reciprocal.

PAUL EAGLE (Labour—Rongotai): I move, That the question be now put.

CHRIS PENK (National—Kaipara ki Mahurangi): Oh, thank you very much, Mr Chair. Just a brief contribution from me, if I may, in this Part 4 of the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. I draw the attention of the committee, including the Minister, if he’d so kind, to new section 141EE—Echo Echo—which is within clause 160 of the bill. So this is the penalty for acquiring or possessing electronic sales suppression tools, and I do acknowledge that the Minister previously spoke—I think it was the Minister who previously spoke about this when we were last considering this as a committee, and I don’t wish to rehearse that same ground in general terms about the sale suppression tools. But my query is rather why the offence has been framed in the way that it has. Because what we’ve got here is a penalty for acquiring or possessing the tools, but then we’ve got essentially an exemption that says that it doesn’t apply when the person hasn’t used the suppression tool in the business. And I don’t understand why we wouldn’t simply have an offence that says it’s an offence to knowingly use a—

Hon David Parker: Which clause?

CHRIS PENK: Oh, I beg your pardon. It’s clause 160, in answer to the Minister’s question about where it is that I’m looking at that. I just seek his confirmation he’s been able to find where I’m referring to? Yep? Thank you. So just a question really, and it’s probably reasonably straightforward and he might be able to dispose of it quite easily, but I’m wondering why we’re framing the offence as possession, notwithstanding that possession itself isn’t going to make out the offence. It seems to me that we’re trying to get to a place where we are penalising someone for acquiring one of these tools for the purpose of evading tax, essentially, or reducing the amount that should legitimately be paid, but it seems to me that that would be a much more straightforward matter if we were simply to have an offence of using it and knowingly using it.

And then the other question, which related to the same provision, was about the penalty for an offence under this section, and that’s a penalty of $5,000, and I just wonder where that figure was derived from. Because it seems to me at least theoretically possible, without having done any numbers to support it, that the value of the tax evaded might be higher than $5,000 if there was sufficient revenue for that to be the case. So any guidance that the Minister can provide in that regard would be much appreciated.

Hon DAVID PARKER (Minister of Revenue): My understanding of the intention of new section 141EE, as inserted by clause 160 of the bill, is to cover the circumstance where someone acquires a business, and the business that they acquire had the software but they couldn’t reasonably have known that. Therefore, although they are legally in possession of it, they didn’t know, and therefore they ought not to be caught by the penalty.

In respect of the penalties question, my understanding is that there is a civil penalty of $5,000. The criminal penalty can be up to $50,000, and both of those would be separate from the penalties that would be payable in respect of unpaid tax if, in addition to that, there had been tax fraud which had led to the underpayment of tax, which could lead to tax penalties under the penalties regime, and use of money actually, quite separate from the criminal penalties that would apply to the possession of software. That said, that maximum penalty for the courts, I think when someone was presenting the case on behalf of the accused—the penalties that they were liable for under their tax might be relevant to the issue as to what penalty the courts actually imposed.

SIMON COURT (ACT): Minister, just going back to this clause 179, which inserts new section 81A: I was referring previously—and you did answer, thank you—to my question about new section 81A(3)(a) and new section 81A(3)(b). I need further clarification, because I think there’s a very large gap between what new section 81A(3)(a) allows for—a liable parent would have to pay more if the assessment requires it. In this case, we’re not talking about a private agreement between two parents who have separated amicably and have agreed on childcare arrangements for the children and have agreed on a division of responsibilities and who will be paying for certain things in the children’s life, which would be wonderful, but it doesn’t apply to most people who separate, which is why Inland Revenue compulsorily takes the liable parent contribution. That assessment of what a liable parent is required to pay actually is often determined by an Inland Revenue staff member acting in the role set out here. Their assessment is, essentially, full and final, so the liable parent, I understand, would find it very difficult to challenge or overturn an assessment because that’s not what the system allows for. It’s a very, very blunt tool.

So once a liable parent has been assessed, and the money is being removed from them compulsorily, typically through the PAYE system, it’s then paid by the liable parent to Inland Revenue, who then distributes that money to the recipient, to the receiving carer. I think that’s where the very big gap is between your understanding of what this section allows for and what I understand it to mean. Because you’re absolutely correct that if a receiving carer, if their circumstances change and it turns out that they’re not entitled to receive what they previously were, and there’s a decreased amount of child support payable to them—that’s understandable. But this clause says nothing about the fact that the liable parent must continue to pay at the amount they were previously paying. All it says is that the liable parent, if they are required to pay more, must pay more. The receiving carer will receive less, but it doesn’t say anything. In fact, it’s absolutely silent on what I understand the process to be, that the liable parent continues to have the money taken from them and paid to Inland Revenue, but that Inland Revenue does not, in fact, have to pay it out to the receiving carer if it turns out the receiving carer is not entitled to it.

So, Minister, I’d like you and your officials to respond to that, because this is creating the impression that while the liable parent is required to pay more, the receiving carer gets less—actually, Inland Revenue banks the difference. Now, we’ve heard from other members here who’re concerned about the rate of interest payable on the use of money and that that appears in some way that Inland Revenue is, in fact, earning much more from that interest payable than even trading banks are at the moment on term deposits, for example.

Is this, in fact, another example of where Inland Revenue, through sleight of hand or perhaps through an error or a misunderstanding of the English language, has identified here in new section 81A(3)(a) that a liable parent can keep paying or is required to keep paying—the receiving carer gets less. But what happens to that big chunk of money in the middle that is coming from a liable parent’s PAYE or whatever means Inland Revenue uses to compulsorily take that money? It would be extremely unfortunate if there’s an error here in this bill—either by omission or commission. I mean, this does refer to the commissioner, so we assume it’s by commission—where they intended to carve out this apparent exemption or ability for reassessment, which actually ends up being to the monetary benefit of Inland Revenue. That would be extremely unfortunate. So, Minister, would you care to explain that, please, to the committee?

Hon DAVID PARKER (Minister of Revenue): There’s not much to explain, because I think the member is incorrect. I mean, if a liable parent’s position changes—for example, if they lose their job or are overcome by an illness and can’t make their liable parent contributions—they can at any time apply for a reassessment, and that’s provided for in law. Our liable parent contribution system, which is administered by Inland Revenue, is very unusual in the world and very good compared with the services that are offered by other countries in respect of the payment arrangements for children in the custody of a former partner. Indeed, the new computer system the Inland Revenue has just finished transitioning to, literally in the last couple of months, is a Canadian system which is used by many States around the world and many countries around the world. Until it was updated to accommodate New Zealand’s situation in respect of liable parent contributions, it didn’t have in that international software that capability. It was written into the system to deal with the New Zealand system. On a recent briefing note—because the licence terms that we have for that software give to all of the other countries or States in the world that use the software the benefit of upgrades in any other part of the world—the provisions in respect of liable parent contributions are now available to other countries in the world. I’m advised that that’s stimulated some interest as to whether other countries could improve their settings to reflect ours, which are very good in this regard.

MARK CAMERON (ACT): Thank you, Mr Chair. For the sake of interest, Minister, if you wouldn’t mind—clause 202 in Part 4, where it speaks to the revocation of the Co-Operative Dairy Companies Income Tax Regulations. I’m cognisant of the fact, as I’m sure you are, that Fonterra is going through and probably will see a proposed capital restructuring. What will this part of this piece of legislation ultimately mean for the likes of the dairy industry and its overall certainty?

Hon DAVID PARKER (Minister of Revenue): As I prepared for this debate I actually read that section and the similar sections that revoke the Cooperative Milk Marketing Companies Income Tax Regulations 1960 and the Cooperative Pig Marketing Companies Income Tax Regulations 1964, and I thought, goodness me! It’s very unusual that I find something that was passed in the year of my birth, 1960, that I can comment on the revocation of.

Andrew Bayly: You’re still young, though. You’re still young.

Hon DAVID PARKER: Thank you. I think the effect of these on commercial practice in New Zealand will be nil, because they have long since stopped being used, and that the revocation of them will have absolutely no effect; it’ll just tidy up the statute book.

Hon DAVID BENNETT (National): It’s very obvious that anything from the 1964—

Hon David Parker: Sixty.

Hon DAVID BENNETT: It’s 60! 1960 has lost its effect in the community now, so the poor Minister. I’d just—

Andrew Bayly: That’s pretty tough.

Hon DAVID BENNETT: Oh, I know, it is a bit tough but, you know, it’s a Thursday afternoon. Just clause 153—the 2 percent threshold that’s been brought in in that clause—

Hon David Parker: Sorry, what clause?

Hon DAVID BENNETT: Clause 153, where it brings in, in section 113A(4)(b), a 2 percent threshold for an adjustment, I guess, basically in GST—basically, if you get an error, or there’s a change of over 2 percent, then I assume that then becomes a quantum of interest for the department.

So would the Minister please explain how they came to that point as well, of 2 percent, and also why there isn’t a quantum there—because it could be, actually, 2 percent on quite a big amount of transactions; it could actually be a significant amount of money. And also, is that a hard and fast number? So if somebody’s 3 percent or 4 percent—and it might be on a very small number that there was just a mistake—are they going to then have to be caught by that clause, or is that a number that actually has a little bit of discretion around it? Because you wouldn’t want the department to be in a situation where it’s forced, in having numbers like that which cause them to actually—or thresholds like that—have to unnecessarily make it harder for the taxpayer, or, actually, for themselves, because sometimes it just won’t be worth their work to worry about.

So it would be really helpful, for just some ordinary taxpayers out there that might be doing their GST returns, to have a bit of clarity from the Minister. Is that a hard and fast number, that 2 percent? Also, does it have a quantum, just in case it is on a huge amount of money? I see he’s getting good advice there, so that’s good to see. Also, is there any discretion for a taxpayer that may be just, say, 3 percent or 4 percent, and not actually, you know, the 2 percent may be the hard and fast rule but, actually, in reality, it’s going to be in everyone’s best interests to have a bit more discretion. So if the Minister wants to give some clarity for just general taxpayers, that would be good.

Hon DAVID PARKER (Minister of Revenue): I’m advised that if it be—sorry, Mr Chair, I should have sought the call.

CHAIRPERSON (Ian McKelvie): You’re certainly called.

Hon DAVID PARKER: Thank you. I’m advised that if the error is up to 2 percent, then there’s no need to make a voluntary disclosure. You can just fix it up in your next GST return and you don’t have to bring it to anyone’s attention. If it’s more than 2 percent, you both have to fix it but you also have to raise it to someone’s attention through a voluntary disclosure.

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

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. I’ve got to say I thought my colleague the Hon David Bennett was laser sharp in his questioning. I think it’s showing his background as an accountant. What was it, KPMG? Gee, no one knew that about the Hon David Bennett. But it was a very good question, and I’m looking forward to a more fulsome answer from the Minister.

The question I want to turn to is relating to research and development—clauses 144 and, over the page, 145. As the Minister will know, the country spends about $4.5 billion on R & D in New Zealand, which, interestingly, compares with about $32 billion in Australia. I know it’s a much bigger economy in Australia, but it just shows how we’re just over 10 percent of what’s spent in Australia. It is vitally important that we do spend money on R & D. Of course, that’s why I think the announcement by the Minister responsible for research and development, the Hon Megan Woods, late last year that the Government’s spend on R & D was going to be reshaped to have more regard for the cultural values of Māori was a very interesting announcement late last year that many people missed. Because, of course, R & D is about creating value, and it’s important that we do make sure that certainly the Government’s spend on R & D is very much focused towards creating new markets, etc.

But in relation to clauses 144 and 145, there is a change in the wording, and this is the first bit—it’s really just to try and understand it. From my reading of it, there has been a change which inserts “the income year immediately before”, defined as “the prior year”. I think that’s the only difference of it in terms of when the grant can be applied for. There’s obviously a break between the expenditure up to $2 million, and then clause 144B deals with over $2 million, and we know there’s that differential approach. So one is just to understand it.

The second question which I’m interested in is: what does this apply to in terms of R & D? Obviously, we have the research and development tax incentive, which is the major part of the way the Government funds R & D in New Zealand. As we know, you’ve got to have a minimum expenditure of $50,000. There’s certain classes of expenditure that are deductible, including depreciation and direct costs. But, of course, once you breach the $2 million of annual R & D, obviously you fit into the higher bracket. So does it only apply to the R & D tax incentive? Does it also apply to the Callaghan approach, which in my understanding is a much bigger threshold? So just having an understanding around how this works and, obviously, what it really means for our people that are funding R & D in New Zealand.

MARK CAMERON (ACT): Minister, if I may, for the sake of—I’m not being belligerent; I’m just trying to understand. Going back to clause 202, in Part 4, about cooperative dairy companies’ income tax regulations being revoked, in the actual piece of legislation it speaks to, and I quote, “The regulations also provide for the establishment of powers and procedure of the cooperative dairy companies’ income tax appeal authority, which is to hear and determine objections to any decisions of the commission under the regulations or under section 146 of the Land and Income Tax Act 1954.” Can you kind of try for the sake of the committee and myself—I am quite ignorant of all this—to explain how that doesn’t create further uncertainty. You talked about outdated legislation. Arguably, it seems a protective mechanism to the industry.

Hon DAVID PARKER (Minister of Revenue): In response to Andrew Bayly, I would quote Lewis Caroll who says, “It says what it means and means what it says.” Just means something slightly different to what it used to mean, because it says slightly different things. So if I read from the section, clause 144, I think it’s absolutely clear, because it means what it says and it says what it means. What it used to say was, if I read clause 144(1): in section 68CB(2), replace what it currently says, which is “income year (the first income year) and up to 2 further consecutive income years”, with “income year (the first income year), the income year immediately before (the prior year), and up to 2 income years immediately after)”. It’s very clear.

Hon DAVID BENNETT (National): Thank you, Mr Chair. Thank you, Minister, for responding to that last question I asked of you. The 2 percent—you basically said it was a hard and fast rule. So anything above that you have to redo your return and, basically, adjust it. That seems rather unfair for taxpayers that just—say they had a marginal—they might have had $100 out on a reasonably small return, and that could actually be well over the 2 percent if it was on a small taxpaying amount. Are you telling me that they then have to file an amended return before the next return? So if they’re on a two-monthly taxpaying basis, for example, and so you don’t have to, the official advice, basically—he’s looking like he’s shaking his head, saying you don’t have to. But from what the Minister said, he indicated that they may have to remedy that immediately. And if it is in such a case, then that would be, I think, quite unfair and quite difficult for a lot of small GST payers, if they’ve got to have that kind of regulation on them.

And then, if they don’t do it, what would be the consequences for that? Are they going to be liable for further tax or penalties, or how does that work? And how would that complicate the system? And also, you’re probably looking at your end-of-year balance dates, when there is a bit of a GST wash-up. Is this going to apply to that as well? If there’s a 2 percent rule, is it theoretically on your last return or is it on the full year’s returns? So I guess when you have a hard and fast rule like 2 percent in any tax legislation, it does create a lot of dilemmas around actual practicalities of how it works. And maybe it’s better to have some flexibility in there where you have 2 percent and/or the department can use its discretion just for the sake of the department actually having to waste resources on small GST returns that may be incorrect, and also for the sake of taxpayers so they don’t feel that the IRD’s chasing them up all the time for minor errors, because 2 percent can be quite a minor error for a lot of taxpayers.

Hon DAVID PARKER (Minister of Revenue): I’m advised that there is no change to the underlying rules in that regard and that the existing rule is that if the amount is under $1,000 for a small business, they don’t have to necessarily file a return, they can fix it up in the future. The only change I’m told that is occasioned by clause 153 is to make section 113A(4)(b)(ii) broader in that until this passes, there is an upper maximum that caps the 2 percent at $10,000, which is a small amount for a large business, and this therefore is a taxpayer-friendly change.

DAMIEN SMITH (ACT): Thank you, Mr Chair. One of the amendments to the COVID payment scheme, which business need more than ever now—it’s a question for the Minister, with regards to, would he reactivate it within the tax framework for this year? Is that the tax loss carry-back scheme, where people didn’t use a lot of it, numbers-wise, because of timing, when it was announced—I, nevertheless, thought it was a really great initiative to bring forward. Our research is showing, and that of Deloitte’s, that it’s needed even more than ever this year, and it’s a simple tick on the IRD box to reactivate it. It’s a money-go-round, anyway, but it would really help business to get through this next financial year. So I would like to find out from the Minister whether that’s possible. It already exists in the IRD system and it would be very easy to reinstate it, as opposed to suspend it as it is at the moment.

And the second question I’ve got is, last week on the desks and letterboxes of people who are principled parents, they suddenly found a 7 percent loading—I take that being inflation—on their child assessment maintenance bills. I was wondering, did he realise it was that significant and that everyone’s scrambling because they’re not earning as much this year to reassess expenses and reassess the contributions they need to make to childcare, and it advantages the people who aren’t paying and disadvantages the people that are maintaining and looking after their children?

So those are the two questions I have for the Minister.

Hon DAVID PARKER (Minister of Revenue): Loss carry-back is not in Part 4 nor in any other part of this bill, and neither is the other matter that the member raised addressed by Part 4 of the bill.

BARBARA EDMONDS (Associate Whip—Labour): I move, That the question be now put.

SIMON COURT (ACT): Point of order, Mr Chairperson. I just want to go back to before I had to leave the Chamber briefly. The Minister answered a question and I think he may have made an error. I’d just like him to clarify it before we go to the vote.

CHAIRPERSON (Ian McKelvie): Well, that’s not a point of order. The question is that the question be now put.

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

Ayes 77

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

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

CHAIRPERSON (Ian McKelvie): The question is that the Minister’s amendments to Part 4 set out on Supplementary Order Paper 134 and the Minister’s tabled amendment 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.

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

A party vote was called for on the question, That Schedule 1A 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.

A party vote was called for on the question, That Schedule 1 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.

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

Ayes 77

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

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Amendments agreed to.

CHAIRPERSON (Ian McKelvie): The question is that Part 4 as amended be agreed to.

Part 4 as amended agreed to.

Schedule 1A

CHAIRPERSON (Ian McKelvie): Brooke van Velden’s amendment on Supplementary Order Paper 135 and Andrew Bayly’s amendment on Supplementary Order Paper 137 both delete Schedule 1A and they are out of order as a direct negation of a question. The question is that Schedule 1A be agreed to.

Schedule 1A agreed to.

Schedule 1

CHAIRPERSON (Ian McKelvie): The question is that Schedule 1 be agreed to.

Schedule 1 agreed to.

Clauses 1 and 2

SIMON COURT (ACT): I note that the title of the bill is the “Taxation (Annual Rates for 2021–22, GST,”—which I assume is an acronym for goods and services tax, although I’m aware the accessibility criteria that are described for better public communication suggest that acronyms aren’t helpful for people to understand. People would hear the words “GST”, hear those sounds, “GST”, often; they might not realise that it’s a tax on goods and services.

Then we come to “and Remedial Matters) Bill”. Now, I have undertaken a large number of contaminated site remediations in a previous role, before I came to Parliament. But there is nothing that can remediate this bill, except a change in Government, a complete change in direction—

Barbara Edmonds: Point of order. As you know, we are debating the title clause of this bill. The member is going into policy discussion, which I think is much more wide than the title of the bill.

Andrew Bayly: Point of order, Madam Chair.

CHAIRPERSON (Hon Jenny Salesa): Let me deal with this point of order before I take your point of order.

Andrew Bayly: Mine is related to it.

CHAIRPERSON (Hon Jenny Salesa): Andrew Bayly.

Andrew Bayly: Speaking to the point of order, I just note now that this is the second time the same member has stood and tried to advise the Chair of what should be debated and what shouldn’t be debated. That is not the role of the member, and I just urge the member to stop interrupting the debate and the flow of debate from the honourable member, because it’s disruptive. That’s what I’d suggest.

CHAIRPERSON (Hon Jenny Salesa): I’d like to urge all members that have taken a point of order on this issue that I’m the sole judge when I sit here. I do not need assistance in this regard.

SIMON COURT: Thank you, Madam Chair. Look, we are debating the title of this bill. That’s why it’s important; because the people of New Zealand, who will be watching this evening’s 6 o’clock news and potentially hearing about the passage of this bill, the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill, which is a mouthful—in fact, it’s more than a lungful—will be saying, “Well, does this mean that I’ll have more money in my pocket?” Does the title of this bill, these words, mean that, actually, all the problems with the taxation system—for example, the bracket creep; the fact that most of the tax appears to be paid by a very small number of people; the fact that the taxation system means that people who are earning below a certain threshold would be reluctant to take on more overtime, reluctant to work an extra day, reluctant to take on a second job so they can save money for a deposit for a house—will be remediated by this bill?” This bill doesn’t remediate any of those matters.

So if we’re thinking about whether the title of this bill is appropriate, I would contend, in fact, that the title needs remediation. The title does not actually reflect what is needed from the taxation system in New Zealand, or, in fact, what this bill purports to do.

I just want to go back to the point I made earlier when talking about liable parents, for example. Now, the Minister made a point that, in fact, there is a process to stop the clock if you think that you’ve got a change in circumstances—you’ve lost your job, for example. But what it doesn’t do is allow circumstances from months or a year prior to be taken into account. The backdating that the Minister and I were discussing only actually applies to taking more money from a liable parent.

So, again, if this is going to be a remedial matters bill, what would be helpful is if the bill remediated some of the unfairness with the tax system that unfairly penalises people who accept they need to do their bit by contributing through the taxation system to social services and to things that can’t otherwise be provided by the private sector, which is the only reason that people should be paying tax—to fund things that only the private sector cannot possibly provide. In fact, that’s what needs remediation. What’s set out in this bill—and, in fact, what the title describes—doesn’t remedy the most basic things about our taxation system, such as if you’re a liable parent and your business loses money throughout the year, you still have to keep paying your liable parent contribution until the following financial year. Your circumstances may have changed, but the liable parent doesn’t get to stop the clock on what they’re paying. But a backdated assessment can still ping them for more money.

So it’s all one way in favour of the Government. That’s what needs remediation.

Hon David Parker: The Government doesn’t get the money.

SIMON COURT: And Minister Parker, sitting there in his seat, is commenting about who gets the money—it’s also not clear who gets the money. Because even though a receiving parent may, in fact, not be entitled to the money—and that might be discovered through an assessment—the money has already been paid by the liable parent, so one can only assume that the money sits in Inland Revenue’s bank accounts and it will wash up at the end of the year. It’s handed over to the revenue Minister to distribute to projects that he finds favour with and that his Government actually thinks are more important than New Zealanders having the money in their back pocket to spend on things that are important to their families.

So that’s just one example of where the title of this bill fails to live up to actually what New Zealanders need and even to describe the contents of the bill accurately. It is not a remedial matters bill; it is, essentially, a cover-up for the fact that this Government proposes to take billions more in taxation from New Zealand workers, New Zealand businesses, and spend it on its projects, because it thinks that its projects, whether they be green projects or whether they’re funding possum control, for example, are more important right now. While they might be a priority for the future, more important right now for New Zealanders is having the money in their pocket.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Chair. I’m happy to take a call on the title and commencement clauses of this bill. I would question why it’s been called the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, because it clearly feels like there has been something of importance left out, and that is that a substantive part of this bill is anti-landlord. This is the “Anti-landlord Bill”. This is not just the taxation annual rates, GST, remedial matters, and everything else; this bill is specifically anti-landlord of the Government, and that’s what they should be upfront about, and call it the “Anti-landlord and Anti-renters Bill”.

The changes that are in this bill don’t just go some way to imposing more costs on landlords, who provide rental accommodation up and down New Zealand, but they also hurt the people that the Government says will be helped with this law change, which is directly the renters. I noted that IRD, when they were tasked with advising the Minister on these changes last year, said that these changes will impose up to $4,000 of added cost on landlords per year, and they’ll put upward pressure on rents, and will stifle future growth and development in property.

For that reason, this bill shouldn’t read: the “Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. It should be quite clear that the purpose behind a lot of what this bill was was to scapegoat landlords, blame the housing crisis on them and not the insane amount of regulations that this Government puts through, which doesn’t help building and development in New Zealand.

We should actually be upfront with the problems that we face in New Zealand, and the problems that are caused by this Government, and bad regulation and bad lawmaking, and just say it for what it is: this Government is failing at problem definition. It’s passing laws that don’t make for better public policy or a better New Zealand. It’s passing laws that are divisive and hurt a group of people who are trying to make a nest egg for their own future financial security, and, in the meantime, they’re going to be hurting the renters, they’ll be hurting the first-home buyers, that this Government says it will be tilting the housing market towards, and we should just say what this bill really is: it’s anti-landlord, it’s divisive, and it hurts renters. And that’s what this bill should actually be called.

GREG O’CONNOR (Labour—Ōhāriu): I move, That the question be now put.

MARK CAMERON (ACT): Thank you, Madam Chair. Just for the sake of talking about the bill’s name, the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, I think the member Mr Court alluded to the word “remedial”. He is quite right when he references this, and I go back to, and I will contextualise why I’m going to bring clause 202 in. When it speaks to that regulations provide for the establishment of powers and procedure of the cooperative dairy companies, income tax appeal authority—well, that gives them the right to appeal parts of that legislation, and by the very nature of the word “remedial” it seems that this piece of legislation removes that reality.

SIMON COURT (ACT): Thank you, Madam Chair. Just want to return to the title of the bill, and the false premise that this is a remedial matters bill. And I want to use an example here of a clause relating to research and development—clause 142, which proposes an extension of time for businesses or a person to file a supplementary return for the 2019-20 income year—that it is extended to 31 August 2021.

Now, I thought that must have been a typo. I thought that somebody drafting this bill must have been looking at last year’s calendar. And then I thought, “Crikey! Maybe this is remediating something that a whole of people don’t realise needed remediation but that the Minister’s worked out, if he doesn’t cover this one off, maybe the Government or Inland Revenue will be liable to pay people back.”

So when we’re thinking about remedial matters, if you’re going to be remediating things so that that was going to give taxpayers a chance to put their affairs in order—because the last couple of years have been extremely disruptive for families—for people whose income is taxed through the PAYE system and who get their pay cheque every two weeks and don’t have to worry about filing a tax return, a lot of this stuff doesn’t have too much of an impact on them, although, obviously, they’ll see a lot less money in their bank account as the tax rates go up, but they don’t have to do much about it—it’s just taken from them.

But if you, say, were a business and you wanted to claim research and development tax credit, under new section 33F, in clause 142, it turned out that the extension of time was to 31 August last year; not this year. It doesn’t give people more time to put their affairs in order and remediate matters—as the bill said, remediate matters; remedial matters—that might have got a bit out of order during the period where people were in lockdown.

CHAIRPERSON (Hon Jenny Salesa): Order! I’d like to remind the member that this was the point he made in his first contribution on this title and commencement discussion debate. Please keep it to title and commencement, otherwise we can allow other people to make speeches on this.

SIMON COURT: Thank you, Madam Chair. So, in terms of the title and commencement, it’s very unfortunate that there are many provisions in the commencement part of the bill which actually relate back to backdating. However, once this bill is passed, organisations and individuals won’t be able to take advantage of the backdating because, in fact, the time for using that provision will have passed. So by the time this bill comes into effect and gets the Royal assent, potentially in the next weeks or months, the time that people could have actually gone back and claimed for research and development tax credits will have long passed, potentially six or eight months in the past.

So the reason why this is called a remedial matters bill is still a mystery—it doesn’t seem to remediate anything. And in terms of the timing—the commencement date of the bill—it appears to be at odds with some of the provisions of the bill that allow for backdating and for extensions of time. Thank you very much, Minister; appreciate a response to that question.

INGRID LEARY (Labour—Taieri) (remote): Thank you, Madam Chair. I move, That the question be now put.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Chair. I will keep my contribution specifically to the commencement clauses of the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. It was a huge disappointment for me, when reading through this bill, that there are already commencement clauses in here that have already taken effect, and it does us no good service to be passing laws that have already come into effect.

When the Government announced last year that it was making changes to the brightline test and to interest deductibility limitations—which are specific in this commencement clause, having started last year—we are going against good lawmaking practices which allow people to prepare for the future, to know what the rules of the day actually are so that they can abide by them at any given time. What this does, by putting in place a date that it takes effect on before the law is even changed, is it goes against the rules of making good public policy where, at any given day, you can get up, you can go to the legislation website, you can see the laws of the land that you live in, and you can see what you’re supposed to be doing right, and how you could be going against the laws, at any given time. By putting in place laws that have an effect over a year ago—

Mark Cameron: Retrospective.

BROOKE VAN VELDEN: —a retrospective change—you cannot allow for a person to know, in black and white, what the laws actually are on any given day. There is the ability for the Government to have actually said, “You know what? We don’t want to pass this bill any more, and we don’t want these laws to commence as of taking effect last year.”, and they’d be able to do that. But, in the meantime, you’d have people up and down New Zealand saying, “Well, I don’t really know what the law actually is any more.” You’ve got governing by PR and press releases on the Beehive website telling me that I’m now in breach of the law, but the law doesn’t exist in reality, so what is right? And I don’t think that is right.

I think the Government should change the commencement dates so that they actually take effect after this law is passed. But I also think they should stop making commencement clauses like this, because this has not only an effect in this bill but it has an effect for all of our laws across New Zealand, because we want people to invest in New Zealand. We want foreign direct investment. We want a stable economy where people feel like they know what the laws of New Zealand will be, at any given time, and going against that means that we are less reliable for people to send their money to. Because, who knows? You might invest in a massive building development tomorrow and, low and behold, the Government comes along and creates a new law from press release and says, “You’re not allowed to build in that piece of land any more.”, but it’s not actually the law. That instability and that uncertainty of what the laws are does not make New Zealand a good place for investment, development, and growth, which we need to make New Zealand a prosperous, growing society where people want to send their money to, and where we can become wealthier as a country and as a nation. That instability means that somebody else could potentially think of sending their money to Australia, or sending their money to the USA, instead of New Zealand, where we desperately need to increase productivity for the wealth of all New Zealanders. 

These laws should not be retrospective. The Government should own up to the fact that they have created laws by PR, rather than actually putting them in black and white so people know what they are any given time, and they should change them—change them for all the people who are blind-sided by the rules that came in last year, and change them so that we have stability for our economy, going forward.

HELEN WHITE (Labour) (remote): I move, That the question be now put.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Minister’s amendment to clause 2 set out on Supplementary Order Paper 134 and the Minister’s tabled amendment 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.

CHAIRPERSON (Hon Jenny Salesa): David Seymour’s amendment to clause 2 set out on Supplementary Order Paper 140 is out of order as being inconsistent with a previous decision of the committee.

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

Clause 2 as amended agreed to.

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

Clause 1 agreed to.

Bill to be reported with amendment.

Bills

Maori Commercial Aquaculture Claims Settlement Amendment Bill

In Committee

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to the Maori Commercial Aquaculture Claims Settlement Amendment Bill. I remind members that they’re able to participate remotely. If you’re on the Zoom and want to take a call, please type “call” into the chat. You’ll also be able to use chat if you’d like to raise a point of order. If we receive new tabled amendments, I’ll advise members so that they can refresh the House page to see the new amendment. Finally, it would be helpful for members to ask multiple questions, if they have them, of the member in charge during their call. I call on Duncan Webb, who is joining us remotely.

Dr DUNCAN WEBB (Junior Whip—Labour) (remote): Thank you, Madam Chair. I have a point of order. I seek leave that all parts be taken as one question in this debate.

CHAIRPERSON (Hon Jenny Salesa): The question is that the motion be agreed to. All those in favour, say Aye; to the contrary, No. The motion is passed.

Clauses 1 to 8

STUART SMITH (National—Kaikōura): Thank you, Madam Chair. It is a pleasure to have a call on the Maori Commercial Aquaculture Claims Settlement Amendment Bill.

I note from the select committee report that there were quite a few submissions on clause 4—in particular, to widen the definition of what defines a relevant iwi, and that was to include hapū and whānau in its interpretation. When I read clause 4, it says, “In section 4, insert in its appropriate alphabetical order: relevant iwi, in relation to an allocation of assets, means those iwi in a region who, in the trustee’s opinion, are directly affected by the allocation”. I think to say that is a broad definition is a pretty fair statement. That doesn’t really define it at all. All it actually means is it swings completely on the trustee’s opinion. There is no direction to the trustee. It is merely their opinion and yet it was quite clearly an intention from submitters to have a wider definition to allow iwi and hapū. So my question to the Minister is: is the advice that that definition does, in fact, include whānau and hapū in that definition or what does it actually mean, and is the potential here for actually muddying the waters—no pun intended—quite substantially in that this could, in fact, cause more claims to be lodged in the future as a result of the opaqueness of this particular clause? So I really look forward to hearing from the Minister.

CHAIRPERSON (Hon Jenny Salesa): The question is that clauses 1 to 8 stand part.

Hon DAVID PARKER (Minister for Oceans and Fisheries): Responding to the member, the bill is as it went to select committee. It came back without amendment because the select committee, having heard all of the submissions, thought that no amendment to it was necessary. The member is correct in the reading of amended section 4, set out in clause 4. As he says, it defines relevant iwi in relation to the allocation of assets being “those iwi in the region who, in the trustee’s opinion, are directly affected by the allocation” and I don’t understand there to be any change in the way in which subgroupings with Māori are being dealt with in respect of their settlement of Māori commercial aquaculture claims in that regard.

The bill is very simple and narrow in that it is trying to create a mechanism where iwi within a region have reached agreement as to what is an appropriate settlement for them, and Te Ohu Kai Moana agree—everyone agrees—but there is an inability to reach unanimity within a region because there may be, for example, an unsettled iwi. There is agreement amongst Māoridom that that circumstance ought not to prevent settled iwi whose entitlement is uncontroversial from receiving it, and so this bill attempts to remedy that problem and doesn’t change those underlying relationships.

Clauses 1 to 8 agreed to.

Bill to be reported without amendment.

House resumed.

Report of Committee of the Whole House

Report of Committee of the Whole House

TEMPORARY CHAIRPERSON (Andrew Bayly): Madam Speaker, the committee has considered the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill and reports it with amendment. The committee has also considered the Māori Commercial Aquaculture Claims Settlement Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

ASSISTANT SPEAKER (Hon Jenny Salesa): The Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill is set down for third reading next sitting day. The Māori Commercial Aquaculture Claims Settlement Amendment Bill is set down for third reading the next sitting day.

Bills

Commerce Amendment Bill

Third Reading

Hon ANDREW LITTLE (Minister of Health) on behalf of the Minister of Commerce and Consumer Affairs: I present to the House a legislative statement on the Commerce Amendment Bill.

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

Hon ANDREW LITTLE: I move, That the Commerce Amendment Bill be now read a third time.

It brings me great pride to rise for this third reading. Although it’s primarily focused on implementing two policy changes, this bill now comprises a package of reforms I’m confident will support competition law and infrastructure in this country to function more effectively. This House has carefully examined the possible consequences of the changes made by the bill. It has also taken the opportunity to make some further improvements to the Commerce Act, such as to the scheme for authorising conduct that is in the public interest.

Perhaps the most notable of this bill’s achievements is that it consummates, along—good grief, who wrote this speech? Someone is trying to obviously sex up the Commerce Amendment Bill late on a Thursday afternoon. But anyway, according to my notes, this bill’s achievements—one of the most important ones—is to consummate a long-held desire to make section 36 fit for purpose.

Andrew Bayly: Did he use the word “sex”?

Hon Member: Sexy afternoon!

Hon ANDREW LITTLE: I can hear the excitement in the House as the Commerce Amendment Bill makes its way through. The Commerce Act is prohibition legislation; section 36 is one of its central pillars. It stops anti-competitive unilateral conduct. The intention behind section 36 has always been to deter firms with substantial market power from harming competition.

When the Commerce Act was first passed in 1986, section 36 did this by prohibiting firms from “using” their position of power in a market to exclude or inhibit their rivals. In 1994, the Privy Council decided the plaintiff in a case would have to construct a hypothetical market for the court in which the defendant firm lacks substantial market power and demonstrate that the defendant would not have undertaken the conduct in that hypothetical market. In 2001, Parliament tried to express its dissatisfaction with this approach by amending section 36. Instead of prohibiting dominant firms from using their market power in anti-competitive ways, section 36 prohibited them from taking advantage of their market power. The 2001 amendment did not ultimately spare the prohibition from these thought experiments. With time, the complexities involved in satisfying the counterfactual test have become increasingly apparent and obstructive to the effective enforcement of section 36.

In 2014, the Productivity Commission recognised these problems with section 36 and the attendant costs to our economy of large firms suppressing competition and innovation from new, smaller firms. Of the counterfactual test, the Productivity Commission said that it “causes problems because it focuses on the actions of firms in the hypothetical counterfactual world where a firm lacks substantial market power rather than on market outcomes.” Now Parliament is finally in a position to resolve this.

The new section 36 prohibition inserted by this bill finally dispenses with the counterfactual test. It finally focuses the prohibition on market outcomes. It finally fulfils the original aim of deterring dominant firms from actions harmful to the competitive process. The way the bill achieves this is relatively straightforward. It simply asks whether a firm with substantial market power has acted with purpose, effect, or likely effect of substantially lessening competition in a relevant market. This test is not a novel one. It operates already in the Act’s prohibitions against anti-competitive agreements and anti-competitive mergers or acquisitions. It also operates in Australia’s prohibition against anti-competitive unilateral conduct.

It’s natural that the reforms have raised some concerns, but Parliament has had the opportunity to consider these in depth. We have thought carefully about how the new prohibition might be applied in various situations by the courts and by large firms attempting to manage their liability, and this has given me comfort that the risks with the reforms are modest.

The conclusion I hope we have all reached is that the process of firms competing on their merits for market share and the wallets of consumers would be better protected by these reforms to section 36.

I can make similar remarks about the other main policy of the bill, which is to get rid of provisions that prevent scrutiny of certain conduct involving intellectual property. So long as there are possible instances—competition harm safe harbours will undermine the Act’s promise to protect competition. As I hope I’ve made clear already, I do not believe practices involving intellectual property are always anti-competitive. Intellectual property rights are typically used in ways that advance the aims of competition law. But it’s not safe to assume this conduct is never anti-competitive just because it involves intellectual property. The bill repeals these provisions to reflect the Government’s view that intellectual property rights should be treated no differently under competition law to any other form of property.

There are other improvements to the law, however. Far less has been said in this House about some other worthwhile amendments that the bill makes. I wish to highlight just a couple of them—firstly, the inclusion of covenants in our cartel regime. In 2017, Parliament made some significant reforms to the cartel regime. The prohibition against cartels is the way the Commerce Act creates direct or per se liability for certain features and agreements between competitors that are generally harmful to competition. The Act now defines cartel provisions as provisions that involve price fixing, market allocation, or restricting output. The Act also provides a range of exceptions, recognising cases in which a cartel is unlikely to be anti-competitive in practice.

Cartel provisions can also be found in land covenants. Covenants were overlooked by the 2017 reforms to the cartel regime. This bill proposes to rectify that. No longer will land covenants provide an opportunity to restrict the productive use of land by a competitor. That would be something that, no doubt, the supermarket chains will be most interested in.

Tougher penalties for anti-competitive mergers is the other aspect that I wish to comment on. Another important way that the Act protects the competitive process is through its prohibition against anti-competitive mergers or acquisitions. For this prohibition to be effective, it needs to be able to deter entities that may benefit significantly, in commercial terms, from the merger. The bill ensures this can happen by increasing the monetary penalty the courts can impose if entities are found to have contravened the prohibition. The Act increases the monetary penalty that courts can impose, to be in the order of $10 million.

I extend my thanks to everyone who has played a part in the development and the scrutiny of these improvements to the Commerce Act. Particularly in relation to section 36, I’d like to acknowledge that I am one among a series of actors who have sought to reform this area—or at least I can say that the Minister of Commerce, the respective Ministers of Commerce, in this Government and previous Governments, have done that. I’m proud of the contribution that this bill will make to the state of competition in the interests of consumers in this country, and the general excitement that it has added to a Thursday afternoon sitting of this House. Madam Speaker, I commend this bill to the House.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker. I do acknowledge the Hon Andrew Little, the speaker who’s just sat down—the stand-in Minister—and I think he did a great job. I compliment him on trying to “sex up”, I think was the term, quote, unquote—wasn’t it, Minister?—the Commerce Amendment Bill’s third reading. Very important, these things, of course, and what this bill is about is a vital part of the engine room around how New Zealand businesses can operate in New Zealand.

At the outset, I will say that National will be supporting this bill because we think it’s vital for a small economy that we have a dynamic market where people can operate efficiently and effectively and be competitive. So that part of what this bill is seeking to do is incredibly important for New Zealand to get right.

Notwithstanding that, there are some issues with this bill that we have had concerns with, and we certainly discussed those at great length during the committee of the whole House stage. They really relate to the two big, core aspects of this bill—namely, the new section 36 issue of misuse of market power, and the second one is the intellectual safe havens component. My good colleague the Hon Todd McClay had put up three Supplementary Order Papers which we thought would be useful in terms of trying to refine what was in this bill to more adequately reflect and create the right playing field for businesses to actively compete in the New Zealand market place.

So I just want to turn to both of these two components, and I’ll just address my first comments to new section 36 in clause 14. What new section 36 states is that it prohibits firms with substantial market power from taking advantage of that power for an anti-competitive purpose. Of course, if you look at the business dynamics of New Zealand, unfortunately, we have arrived in many industries where there’s two or maybe three major players that dominate the market—and I use that word in the general sense and not in the Commerce Commission sense, because if you’re dominant, it has a whole different meaning from that perspective.

But that is where, unfortunately, the New Zealand market place has ended up. We have these major players, and then we often have a raft of mid-tier and small-tier players underneath. So to make sure we’ve got the right dynamic, we need to have regard for what is the reality of today, which is that there are often duopolies in place. The Minister referred to the supermarket study that’s under way, and, of course, there’s been the fuel market study that was conducted last year. Unfortunately, we haven’t seen any benefit come out of that one, but, hopefully, we might do out of the supermarket study. So what the bill does is replace the phrase “taking advantage”, which is a test at the moment, to move it from an intention test to an effects-based test, and it has an explicit prohibition on firms with a substantial degree of market power engaging in conduct that has the purpose, effect, or likely effect of substantially lessening competition.

Now, the changes that are being put in place to some extent reflect what’s gone on in Australia. Australia, under Malcolm Turnbull, did a review of this sector and made some changes, and this is quite a substantive change. It may not mean much, but it moves us from an intention test to an effects legal test. What we’re concerned about is what that actually means and what it means for firms that have to now think in terms of that new test.

So the Ministry of Business, Innovation and Employment’s view on the current section 36 is that they think it’s flawed. They state that it has potential to fail, to deter, or penalise some forms of anti-competitive conduct; it’s costly and complex to enforce; and, arguably, creates some unpredictability. So my good colleague put up Supplementary Order Paper (SOP) 92, which amends clause 14.

So in that current wording that is going to pass through this House, because the Labour Party has control of it, is just rather than use the term “purpose” or “has or is likely to have an effect”, just to simplify it to say “has the purpose or is likely to have an effect.” So what it’s done is reduce the impact or the aspect about it in terms of requiring companies to think about the immediate impact of what their actions are going to have in terms of how it’s regarded from a competitive situation.

So, if I give you an example, if a company is operating—it’s a mechanical shop, let’s say—and offers a big discount to some of its big customers, as a reward for the type of service and the extent of service that they bring to that business, and if that is offered—and, in effect, it is a loyalty payment or a discount—this might have the unintended consequences of driving smaller truck operators—let’s say in the same town or in the region—out of business because the firm has the ability to discount the price.

Now, in many cases, that’s common practice because a firm will want to recognise large customers who bring a lot of business to them, and, obviously, discount the price. But under this arrangement, what we’re worried about is, to the extent that it does drive the competitor out of the market, then this will now be caught under this new test, and we’re worried about that effects-basis to this test. It’s quite difficult for companies to assess what the likely impact is of certain aspects or how they’re conducting their business and what it will mean for their competitors. So that’s the first major thing. I think it’s a shame that the House and the Government hasn’t picked up the SOP that the Hon Todd McClay put up.

The other one is in regards to the intellectual property aspect. I’d draw the House’s attention again to the letter that was sent to the Minister but was also sent to us around the intellectual property (IP) issue of safe havens. This letter is signed by the chief executive of the Screen Association, executive director of the New Zealand Writers Guild, the chief executive of the Interactive Games and Entertainment Association, and the executive director of the Screen Production Development Association. Basically, this letter says that they are very, very worried about the way that international firms will now regard New Zealand as a place to invest or to conduct business in because of the changes in the bill regarding the safe haven of intellectual property. Specifically, what it says is “We worry that these unnecessary legislative changes will discourage overseas film studios from licensing their intellectual property to New Zealand; secondly, it discourages international investment in the New Zealand film industry and discourages local film makers and writers from realising the true value of their creative products.” It also talks about the video gaming industry.

One of the most disappointing things during the debate is that I asked the Minister directly whether he had spoken to the New Zealand gaming association about these IP changes, which I think are incredibly significant. We’ve got a growing, exciting gaming industry, probably worth about $300 million at the moment, and it’s a dynamic growth path. Obviously, they’re having trouble getting people from overseas to come and work here, but it opens huge opportunities for our young people, Māori, Pasifika, because of the creative skills that they bring to the gaming industry. And yet here we are, we’re going to pass a piece of legislation that cuts to the core of that particular industry, but also the film industry and the writers. These are hardly people that are out there advocating on a scale that is unreasonable; these are people who want to see the creative industry in New Zealand flourish, and we’re not going to help them with this bill.

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

JAMIE STRANGE (Labour—Hamilton East) (remote): Thank you, Madam Speaker. I appreciate the opportunity to take a brief call on the third reading of the Commerce Amendment Bill. As the chair of the Economic Development, Science and Innovation Committee I’d like to also thank all of those who have contributed to this bill: the officials, the Minister, the select committee members, and those who made submissions on this bill.

The Commerce Amendment Bill amends the Commerce Act 1986 to improve the reach and functioning of competition law, consistent with the Act’s purpose of promoting competition in markets for the long-term benefit of consumers within New Zealand. The reality is we do have a small market here in New Zealand, and at times we do need the Government to offer support to the market because it can be susceptible to anti-competitive behaviour. We’ve already heard in the speeches on this third reading some examples of that. So this is legislation that is certainly needed and is certainly important.

The reality is that we need to have effective protections against firms with substantial market power who may be engaging in anti-competitive conduct, and the Commerce Commission needs this legislation in order to enforce that. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): This debate is interrupted and is set down for resumption next sitting day. The House stands adjourned until 2 p.m. on Tuesday, 29 March 2022.

The House adjourned at 4.55 p.m.