Tuesday, 21 June 2022

TUESDAY, 21 JUNE 2022

TUESDAY, 21 JUNE 2022

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

Hon JENNY SALESA (Assistant Speaker): Mānawatia a Matariki. 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.

[We welcome and celebrate Matariki. 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.]

Obituaries

Richard Prosser

SPEAKER: Members, I regret to inform the House of the death on 10 June 2022, in the United Kingdom, of Richard Prosser, who was a list member for the New Zealand First Party from 2011 to 2017. He served on the Law and Order Committee and the Primary Production Committee. I desire, on behalf of this House, to express our sense of the loss we have sustained, and our sympathy with the relatives of the late former member. I now ask members to stand with me and observe a period of silence as a mark of respect to his memory.

Members stood as a mark of respect.

Resignations

Hon Kris Faafoi, New Zealand Labour

Hon Kris Faafoi

SPEAKER: I wish to advise the House that I have received a letter from the, resigning his seat in the House with effect at Saturday, 23 July 2022.

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

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

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

CLERK:

Petition of James Hita requesting that the House ban seabed mining in the waters around Aotearoa New Zealand, including in our exclusive economic zone

petition of Riley Hay requesting that the House urge the Government to make more sustainable plastic recycling options that motivate the public to recycle plastic instead of it going into the general waste.

SPEAKER: Those petitions stand referred to the Petitions Committee. Ministers have delivered papers.

CLERK:

Revisions to the Radio Regulations adopted by the Final Acts of the World Radiocommunication Conference 2019 and the associated National Interest Analysis

Government Response to the Report of the Social Services and Community Committee on the Human Rights (Disability Assist Dogs Non-Discrimination) Amendment Bill

Takeovers Panel, Statement of Performance Expectations 2022-2023

Children’s Commissioner

Statement of Intent 2021-2024

Statement of Performance Expectations 2021-2022

SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation; there are quite a few.

CLERK:

Reports of the Economic Development, Science and Innovation Committee on:

the Commerce (Grocery Sector Covenants) Amendment Bill

the Inquiry into the Review of the Radio New Zealand Charter, and

the Report of the Ombudsman: OPCAT Report, Thematic report on inspections of Managed Isolation and Quarantine Facilities under the Crimes of Torture Act 1989

reports of the Health Committee on:

the Medicines Amendment Bill (No 2)

the Petition of Jenn Hooper, and

the further Petition of Jenn Hooper

report of the Justice Committee on the Security Information in Proceedings Legislation Bill

report of the Māori Affairs Committee on the Maniapoto Claims Settlement Bill

reports of the Petitions Committee on the petitions of Connor Sharp, Emily Shute, Jade Varney, Joanna Harris, Rachel Booth, and Raymond Hellyer

report of the Regulations Review Committee on the Examination of COVD-19 order presented 23 May 2022

reports of the Social Services and Community Committee on:

the Oranga Tamariki Amendment Bill

the Oversight of Oranga Tamariki System and Children and Young People’s Commission Bill

the petition of Deaf Action Aotearoa New Zealand, and

the petition of Sue Brown

reports of the Transport and Infrastructure Committee on the petitions of Cory Alexander Aitken, Lance Priestley, and Nikkita Eilenberg.

SPEAKER: The bills are set down for second reading. The inquiry, the report of the Regulations Review Committee, and the report of the Ombudsman are set down for consideration. The Clerk has been informed of the introduction of bills.

CLERK:

Foreign Affairs (Consular Loans) Amendment Bill, introduction.

Electoral (Māori Electoral Option) Legislation Bill, introduction.

Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill, introduction.

Support Workers (Pay Equity) Settlements Amendment Bill, introduction.

SPEAKER: Those bills are set down for first reading.

Amended Answers to Oral Questions

Question No. 7 to Minister, 8 June 2022

Hon ANDREW LITTLE (Minister of Health): Mr Speaker, I seek leave to make a personal explanation under Standing Order 366 to correct the record in relation to oral parliamentary question No. 7 on 8 June 2022.

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

Hon ANDREW LITTLE: I advised the House, in answer to a question from Dr Shane Reti, that as at 31 March 2022 there were 310 fulltime-equivalent vacancies from midwives and 2,663 fulltime-equivalent vacancies for nurses in the public health system. I’ve received advice from the Ministry of Health that the vacancy numbers in relation to midwives should have been 374, and for nurses should have been 2,593.

Oral Questions

Questions to Ministers

Question No. 1—Finance

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

Hon GRANT ROBERTSON (Minister of Finance): The GDP figures released last week and today’s consumer confidence figures are both indications of the global challenges that are facing the New Zealand economy. Stats New Zealand reported last week that GDP edged down by 0.2 percent in the March 2022 quarter. It is worth noting that on an annual basis the economy grew 5.1 percent and is 3.3 percent higher than the pre-pandemic December 2019 quarter. The quarterly decline in GDP was mainly due to exports falling by 14.3 percent compared with the previous December quarter, reflecting the volatile global situation from the pandemic, ongoing supply chain disruption, and Russia’s invasion of Ukraine. For the year, though, exports were still up 1.9 percent. Excluding the external sector, the domestic economy remained resilient, led by household spending and business investment. This is a tough period for many households and businesses, but the New Zealand economy is well positioned to deal with these global challenges. Unemployment is at a record low. We are in a strong fiscal position, with debt levels well below those of countries we compare ourselves with and we are one of only a small number of countries with the highest credit rating available from the two leading rating agencies.

Barbara Edmonds: What indications has he seen about the prospects for the economy?

Hon GRANT ROBERTSON: Activity in the services sector picked up in May. The seasonally adjusted BNZ - Business New Zealand Performance of Services Index for May was released yesterday and rose three points to 55.2, its highest level since June 2021, and above the long-term average. Both new orders at 62 and sales at 59.6 jumped, while employment declined slightly and deliveries recovered from earlier lows. The BNZ’s economist said the data was supportive of their view that there will be a solid bounce in GDP in the June quarter. Nevertheless, we do know that 2022 is continuing to be a tough year for households and businesses. We will continue to support those that have been affected the most, and the easing of restrictions and opening up to skilled workers and tourists will help business and the economy rebuild.

Barbara Edmonds: How is the global environment impacting the New Zealand economy?

Hon GRANT ROBERTSON: The volatile global environment has led the World Bank and the OECD to lower global growth forecasts and upgrade inflation estimates. The Ukraine war is the main driver of the downgrades, pushing up energy and food prices in many countries. Inflation rose to 8.6 percent in the United States and is forecast to go above 10 percent in the United Kingdom. Central banks around the world are now raising interest rates to bring inflation down. For New Zealand, a slowdown in growth among our trading partners will have an impact on our prospects. Current economic forecasts are that New Zealand’s growth will slow from what we have experienced and they will continue to be updated as new data comes in. But as I have said before, New Zealand finds itself in one of the strongest positions in the world to support Kiwis as we navigate our way through these challenging times.

Nicola Willis: Has the Minister seen the IMD world economic competitiveness rankings in which New Zealand plummeted to 31st place, the biggest drop of all 63 countries included in the survey this year and down from 16th when National left office?

Hon GRANT ROBERTSON: Funnily enough, I have seen that survey and I note in the latest version of it the following areas where New Zealand has improved: real GDP growth—

Nicola Willis: Ha, ha!

SPEAKER: Order!

Hon GRANT ROBERTSON: The member asked the question. Real GDP growth; real GDP growth per capita; labour force - long-term growth; long-term unemployment; GDP per capita; the unemployment rate; export of goods; medium- and high-tech value-added; unemployment rate - gender ratio. Yes—

SPEAKER: Order! Order!

Question No. 2—Prime Minister

2. CHRISTOPHER LUXON (Leader of the Opposition) to the Prime Minister: Does she stand by all of her Government’s statements and actions?

Rt Hon JACINDA ARDERN (Prime Minister): Yes, particularly the progress being made on this Government’s plan to reconnect New Zealand to the world. From midnight last night, travellers no longer need, for example, a COVID-19 pre-departure test to enter New Zealand, and we know that that will be welcome news for many from our tourism sector. And, at the end of this week, I will travel to Europe to promote Aotearoa New Zealand’s trade and tourism interests, which will build on the progress we’ve made with the recent free-trade agreement with the United Kingdom. Our borders being open and the removal of pre-departure testing represent important milestones in our reconnecting strategy that creates real opportunities for our recovery. We’re letting the world know that we are open for business, study, trade, and travel.

Christopher Luxon: Does she agree with her health Minister that the system is “coping”, and, if so, why are thousands of people waiting longer than six hours in the emergency department and elective surgeries are being cancelled?

Rt Hon JACINDA ARDERN: What, of course, the Minister will be reflecting is that we often in New Zealand see over the winter periods pressure in our health system. But, as we flagged at the beginning of the year, we anticipated that this period would be worse than most, because those things that exacerbate pressure in our system include, for instance, seasonal illnesses, and influenza has not been present circulating in New Zealand for two years and is now circulating in Australia and New Zealand with a vengeance. Flu is outstripping, for instance, COVID-19 hospitalisations when it comes to respiratory illness in our Auckland hospitals. But we are encouraging and working alongside the health sector on innovative solutions, such as those you’ve seen in Counties Manukau, and, of course, an increase in the availability and subsidies around flu vaccines, all in an effort to ease those pressures.

Christopher Luxon: Why, then, did the Government exclude nurses from the fast-track, straight-to-residency immigration pathway when we have a nursing shortage of more than 4,000?

Rt Hon JACINDA ARDERN: I’ve seen some of the Opposition’s statements in this area which are completely misleading and wrong. The most important factor here is that New Zealand needs new nurses, so for the first time we are fast-tracking them to residency on the basis that they are willing to be a nurse. Now, if the member thinks that the best option is for us to remove the criteria that they continue to be a nurse, I don’t see how that helps our nursing shortage.

Christopher Luxon: What message does it send to the overseas nurses we are trying to attract when Australia offers them immediate residency but this Government refuses to do so?

Rt Hon JACINDA ARDERN: Again, misleading. Our message is “Come to New Zealand and you will be fast tracked for residency.”, and our only ask is that you continue to be a nurse. So, Mr Luxon, if your proposal is that we don’t ask people to be nurses when they come in, it will hardly support our efforts.

Hon Grant Robertson: Which approach does the Prime Minister think will help address issues in the health system: consistently increasing the funding for the health system or not funding it enough for population growth and demographic changes?

Rt Hon JACINDA ARDERN: The member is correct. Of course, one of the most significant issues that we have raised by our health workforce is the fact that we have had under-investment over a number of years in health, and that includes, of course, at an operational level, but it includes at a capital level as well. We have worked to rectify both. We’ve increased the number of nurses by thousands, but we still carry vacancies and need to continue to recruit. We’ve funded the ability to do that, and we are recruiting offshore and, for the first time, fast-tracking—not something I saw the National Government do, because they didn’t increase the number of nurses either.

Christopher Luxon: Why, despite all this spending, have health outcomes like emergency department wait times and faster cancer treatment got worse under this Government?

Rt Hon JACINDA ARDERN: Of course, we’ve put hundreds of millions into the catch-up campaign following the global pandemic that is COVID-19. The appropriate point of comparison would not be New Zealand against itself but globally on the impact on the health systems because of the pandemic, where prolonged lockdowns in other countries led to delays in planned care. Yes, there has been an impact in New Zealand but, relative to other countries, not nearly what it would otherwise have been.

Christopher Luxon: Why did her Government decide to scrap the national health targets, including the target for emergency department wait times, which University of Auckland research found had saved thousands of lives?

Rt Hon JACINDA ARDERN: Because we saw that some of those measures caused distortionary behaviours in order to be seen to meet the targets. What our health system needed from the National Government of the day was investment; that is what it lacked.

Christopher Luxon: Does she accept that if her health Minister spent less time focused on building the health bureaucracy in Wellington and more time focused on the front-line health workforce in our hospitals, people wouldn’t be waiting as much as 32 hours in the emergency department or having their surgeries cancelled?

Rt Hon JACINDA ARDERN: The member has displayed his complete lack of understanding of what Health New Zealand is designed to do. One of the issues that we have is we essentially run 20 distinct health systems, almost, in New Zealand. We are not a country that can sustain that, and we’ve seen the impact of that. What we need is the ability for our health network—particularly tertiary care—to work together. We’ve seen the signs of the benefits that can bring when those providers have worked together through COVID. We need the ability to move our health workforce around where the need is. We need the ability for different tertiary institutions to focus on the specialist care that they can provide nationally. We need to make sure that we are funding our community-based provision and ensuring that we have health resource in the places people access it when they need it and not a nine-to-five. These are failings we cannot overcome unless we move to a more national service. That is what Health NZ is. The member continues to call it a bureaucracy; he clearly doesn’t understand the reforms.

Question No. 3—Social Development and Employment

3. DEBBIE NGAREWA-PACKER (Co-Leader—Te Paati Māori) (remote) to the Minister for Social Development and Employment: Does she agree with the widespread concerns about the Oversight of Oranga Tamariki System and Children and Young People’s Commission Bill, including from Hāpai Te Hauora, who said that it will “not only stagnate any attempts to pursue better outcomes for tamariki and whānau engaged with Oranga Tamariki but may even perpetuate the harms and dysfunction of the current Oranga Tamariki system at disproportionate and irreparable rates”?

Hon CARMEL SEPULONI (Minister for Social Development and Employment): I do not believe it will perpetuate the harms and dysfunctions of the current system; I think, in fact, this bill reflects important steps to doing the complete opposite. I believe that we all have the same goal of improving outcomes for our tamariki and rangatahi. This bill alone will not address every challenge pertaining to Oranga Tamariki; my colleague Minister Davis has considerable work under way to reform Oranga Tamariki. What this bill will do is ensure we have independent monitoring, strong advocacy, and an accessible complaints system in order to ensure Government is held accountable, so we start to actually see real change for our children and young people who are in the system now.

Debbie Ngarewa-Packer: Why is Government determined on changing the monitor of Oranga Tamariki from an independent Crown entity to a departmental agency when this inevitably reduces the independence of the oversight?

Hon CARMEL SEPULONI: I think it’s very important that we are clear on what system we currently have in place. The Children’s Commissioner between 2015 and 2019 had 78 complaints that were put through them that they then put on to the Ombudsman because the Ombudsman has had the lead role with regards to addressing complaints. The Children’s Commissioner last undertook an investigation back in 2010. In 2019, we set up the Independent Children’s Monitor. We set it up within the Ministry of Social Development (MSD) so it had the support to be initiated and to start up, but with the intention of always removing it out of the Ministry of Social Development. The Kāhui Group that were established to advise the Government on this, by and large, have their recommendations reflected in this bill. The one point of difference is they did think that we should establish a Crown entity for the Independent Children’s Monitor. Where we have landed is a departmental agency that will still have sufficient independence, that will be hosted by Education Review Office, that can’t be told what not to do by the Government, and that will sit alongside the advocate that continues to exist in the Office of the Children’s Commissioner, as well as a strengthened complaints avenue process through the investment that we have put into and will continue to put into the Ombudsman.

Debbie Ngarewa-Packer: Can she identify how the bill provides from Te Tiriti o Waitangi guarantee of the tino rangatiratanga of whānau, hapū, and iwi over the care and protection of tamariki Māori?

Hon CARMEL SEPULONI: There’s been much discussion about whether or not we have consulted broadly enough with regards to this bill. I want to remind the House that there was the Kāhui Group that were put in place to advise the Government and to support the Government’s consultation with Māori. Twenty-two hui were held across the country, with respect to this particular issue—this very important issue. The bill reflects the conversations of those 22 hui that we engaged with. Working with Māori to develop the Treaty components of the bill have been critical to us as a Government. The bill’s Treaty provisions were carefully crafted with Te Kāhui Kāhu, who supported MSD’s consultation with Māori across the country. From the hui, we also heard that people wanted to ensure advocacy wouldn’t be diluted by the monitoring function and were concerned about a conflict between advocacy and monitoring. The changes that we have made keep those two functions clearly separate. From the hui, we heard that there was limited information currently about complaints. The bill places a duty on the Ombudsman to ensure that complaints processes are visible and accessible for children and young people, and their family, whānau, hapū, and iwi. The rights of Māori and Māori children in the system have been front of mind during this whole process of development. We as a Government are comfortable with where we have landed.

Debbie Ngarewa-Packer: Point of order, e te Pīka. The question wasn’t to ask how consultation happened; it was very specific. Can she please address it.

SPEAKER: The Minister did address the question. It was a very long answer and had some extra material, but the question was addressed.

Debbie Ngarewa-Packer: What is her response to the Hon Dame Tariana Turia, Dame Areta Koopu, Dame Iritana Tāwhiwhirangi, Merepeka Raukawa-Tait, and Lady Tureiti Moxon, who pointed out in their submission that the bill relegates Māori to the provider level, and, effectively, maintains a system that is disruptive?

Hon CARMEL SEPULONI: I disagree with those assertions. The bill creates obligations on the oversight bodies to uphold Te Tiriti o Waitangi. The specific clause in the bill directly emerged from key Māori stakeholders, who called for specific obligations to be placed on the oversight bodies, rather than a broad Treaty of Waitangi clause. A broad clause can be open to interpretation and run the risk of diluting the obligations on agencies. We have consulted broadly. This is a huge departure from the system that has been in place. We need to act with urgency to ensure that we do have a very clear and accountable monitoring system in place, as well as support the advocacy that the Children’s Commissioner does, and bolster the complaints process so it is accessible and visible for our children. That is exactly what we are doing through this bill.

Debbie Ngarewa-Packer: Will the Minister strengthen oversight by listening to calls from Māori to have independent tangata whenua monitoring of Oranga Tamariki that truly reflects Te Tiriti partnership, not just a Māori advisory board under a Crown agency within the Education Review Office (ERO); and, if not, why not?

Hon CARMEL SEPULONI: The Independent Children’s Monitor will be hosted by ERO; it has not been subsumed by ERO. They will share backroom functions. We are bolstering the role for Māori at the table, particularly when we look at the Children’s Commissioner. We heard from the submitters. There will still be a chief Children’s Commissioner who will chair the board, but sitting at that table, alongside the Children’s Commissioner, will be Māori. There has been an absence of Māori at that table in the past. With all due respect to the nine Children’s Commissioners that we have had over the years—all of whom have done a very good job—seven of them have not been Māori; only two of them have been Māori women. We are bolstering the role with regards to Māori and being able to oversee this system, and that can only help our Māori children and rangatahi.

Harete Hipango: Does the Minister agree with the comments of Minister for Children, Kelvin Davis, who has publicly stated, in relation to the submitters on the bill, “To be honest I don’t know what the concerns are—I think it’s just something to grizzle about,”; and why is she not listening to the children and the people with lived experience of the Oranga Tamariki system, who all oppose the bill?

Hon CARMEL SEPULONI: I absolutely support my colleague in his support for the system, in trying to make Oranga Tamariki work better for children. He has been very up front himself about the fact that the system has failed children for far too long, and I’m absolutely with Minister Davis on that. I did receive that member’s minority view on the bill. She was somewhat confused, thinking that Minister Davis was in charge of this bill, and actually stated in her minority view that she didn’t support independent—

SPEAKER: Order! Order! I think we’re now getting into areas for which the Minister does not have responsibility.

Question No. 4—Finance

4. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Has he seen a report published by Westpac today stating, “Confidence among New Zealand households has plummeted, dropping to its lowest levels since we began surveying consumers back in 1988”, and does he believe that the Government’s economic management approach is contributing to New Zealanders’ growing pessimism about the economy?

Hon GRANT ROBERTSON (Minister of Finance): Yes, I have seen the report, which contains a number of confidence measures. Regarding the headline confidence measures, Westpac noted that confidence had only come close to these sorts of lows twice before—first during the recession in the early 1990s and then again during the global financial crisis in 2008-09. With regards to the second part of the question, the Government’s economic management approach has been endorsed by the likes of the IMF, the OECD, Standard & Poor’s, and Moody’s in recent times. This is a tough time for many households and businesses, but we believe we’ve got the balance in our approach about right.

Nicola Willis: Is he concerned that unlike in other countries, New Zealand consumer confidence is lower today than it was in the depths of the global financial crisis, during the COVID lockdowns, or during the recession of the 1990s?

Hon GRANT ROBERTSON: As I said, Westpac noted that confidence had only come close to these sorts of lows twice before—first during the recession in the early 1990s and then again during the global financial crisis in 2008-09. We’re very well aware on this side of the House just how tough things are for many businesses and households at the moment and that’s the reason why the Government has put so many resources into supporting particularly those in low and middle income households but also on businesses as we’ve gone through the COVID-19 pandemic.

Nicola Willis: What is his explanation for why, despite facing the same global economic challenges as New Zealand, the Australian economy is growing faster than ours, with lower inflation and interest rates and consumers who are far more confident about their economic prospects?

Hon GRANT ROBERTSON: As we covered in the House last week, or the week before last, we know that different countries experience the impacts of a global slow-down at different times. I was in Australia towards the end of the last week. There is significant concern there about, for example, household energy costs along with the food prices that are being paid over there as well. New Zealand is in one of the better positions of countries across the world to be able to deal with this challenging economic environment, because we have low unemployment, we have low debt, and we have had strong growth. New Zealand’s prospects are good but this is a tough time for many people.

Nicola Willis: Was he concerned to see New Zealand’s collapse in our global economic competitiveness rankings, accompanied by commentary highlighting low productivity, labour shortages, and short-term policy thinking?

Hon GRANT ROBERTSON: I’m pleased the member’s allowed me to return to the list I was reading out earlier on about the areas where New Zealand had improved. Just to recap, that’s real GDP growth, real GDP growth per capita, long-term growth in the labour force, long-term unemployment coming down, GDP per capita, unemployment rate, export of goods, medium- and high-tech value-added goods, and the unemployment rate to gender ratio. I do note that an area where the survey authors were concerned was the growth in Government subsidies. That means that if the National Party is agreeing with the survey authors, they now no longer support the wage subsidy scheme that kept a million jobs going in New Zealand, made sure that people stayed attached to their jobs and has unemployment at 3.2 percent. That’s not what we heard from National at the time, but if they want to flip-flop and change their tune, that’s up to them.

David Seymour: Why didn’t the Minister mention that in that world competitiveness index, the headline figure for Government efficiency saw New Zealand fall 10 places, from seventh in the world to 17th in the world over the five years that Labour have been in Government?

Hon GRANT ROBERTSON: Because I look at the things that the Government is judged on—things like GDP growth, unemployment, GDP per capita, and making sure that we actually keep people in work. We’ve had reports from the OECD, the IMF, Standard & Poor’s, and Moody’s who have all said that the New Zealand economy is in relatively good shape. I know the member is a half-glass empty person. New Zealand has a resilient economy. These are tough times but we’ll get through them.

David Seymour: Why can’t the Minister accept that the one part of that survey that he is truly able to influence—Government efficiency—is the part of the survey in which New Zealand dropped the most? Why can’t he just accept that?

Hon GRANT ROBERTSON: What I can accept is that the Government is responsible for real GDP growth being improved, for the labour force long-term growth being improved, for long-term unemployment being better, and for GDP per capita being better. We know that these are tough times for many households and many businesses. We’ve put in place initiatives to make sure we support New Zealanders. Those have been opposed by the member and indeed by the National Party.

Nicola Willis: Does the Minister agree with Westpac’s Michael Gordon that Kiwis are being squeezed in a way that they haven’t been for decades, and does the Minister accept any responsibility whatsoever for the fact that under his Government New Zealanders are facing more financial pressure than ever before?

Hon GRANT ROBERTSON: On many occasions in the House I have stood up and acknowledged that this is a very tough time for many New Zealand businesses and many New Zealand households. That’s the reason why we have provided significant financial support to New Zealand households and businesses. For example, we’ve lifted main benefit rates in 2020, 2021, and 2022—each one of those opposed by the National Party. We’ve lifted the minimum wage—opposed by the National Party. The member might like to actually come up with some positive ideas instead of constantly going on and on about what’s wrong in the economy rather than supporting New Zealanders to get through this difficult time.

Question No. 5—Building and Construction

5. GREG O’CONNOR (Labour—Ōhāriu) to the Minister for Building and Construction: What action is the Government taking to address the shortage of plasterboard in New Zealand?

Hon Dr MEGAN WOODS (Minister for Building and Construction): Today, I announced the Government is establishing a ministerial task force of leading construction and supply chain experts to develop further measures—[Interruption]

SPEAKER: Order! Order! The member will resume her seat. [Interruption] And, when I stand, people will be quiet, Mr Doocey. This is an area where there is a lot of concern. Even if no other member wants to hear the answer, I do. The Hon Dr Megan Woods, please start again.

Hon Dr MEGAN WOODS: Today, I announced the Government is establishing a ministerial task force of leading construction and supply chain experts to develop further measures to ease the plasterboard shortage that New Zealand’s building sector is currently facing. Fletcher Building, with its Gib brand, currently makes up around 95 percent of New Zealand’s plasterboard market and has not been able to keep up with current demands. And this, as we all know, is having a significant negative impact on construction companies across the country—both big and small. The task force will develop quick solutions for the current supply chain constraints, such as examining whether legislative or regulatory change is needed, and streamlining the use of products approved elsewhere to be used here. Additionally, yesterday I wrote to Fletcher Building seeking confirmation that they would not enforce their trademark to protect the use of the colours of the Gib products, which can be a significant barrier to importing alternative plasterboard products. I’m happy to confirm they are not enforcing their trademarks and have assured me they will not do so until May 2023.

Greg O’Connor: What else will the task force consider to free up supply of plasterboard?

Hon Dr MEGAN WOODS: The ministerial task force, which will report to me as the Minister for Building and Construction, will also look to ways to streamline the approval of products that are approved in other countries for use in the New Zealand market; explore new distribution models; ensure there is a consistent approach to consenting across New Zealand; and act as a forum for related supply chain concerns. The task force will be comprised of Naylor Love CEO Rick Herd, Master Builders CEO Dave Kelly, Simplicity Living’s Shane Brealy, Sir Stephen Tindall, a representative from Local Government New Zealand, and businessman Tex Edwards. The task force will be supported by the Construction Sector Accord and will deliver real solutions to the current plasterboard supply constraints.

Greg O’Connor: How is the Government ensuring that New Zealand’s residential building products market is fair for consumers?

Hon Dr MEGAN WOODS: The ministerial task force is a pragmatic but short-term approach for dealing with the current and immediate plasterboard shortage. That’s why the Government has also asked the Commerce Commission to understand if competition in our residential building supplies market is working, to answer questions surrounding the high concentration of some brands in the supply chains. The Minister of Commerce and Consumer Affairs will receive the commission’s final advice in December, which will provide the tools for the Government to address material supply constraints for other building products before they impact on our construction sector.

Andrew Bayly: Will she fast track legislation this week to enable new international sources of plasterboard to immediately supply the New Zealand market, provided that plasterboard meets the New Zealand standards, and, if not, why not?

Hon Dr MEGAN WOODS: One of the considerations that the task force will have will be whether or not there needs to be legislative or regulatory change—[Interruption]

SPEAKER: Order!

Hon Dr MEGAN WOODS: Mr Speaker, if only the world was as simple as the member opposite—[Interruption]

SPEAKER: Order! Order! I think the member probably didn’t make an offensive comment then, but I can’t tell because of the noise that is coming, all right? I want to be able to hear the Minister’s answer and not place at risk suggestions that the Minister is acting inappropriately.

Hon Dr MEGAN WOODS: As I was saying, if only the world were as simple as the member is suggesting. One of the issues that will need to be considered, and that we already have been considering, is the way in which guidance is issued to our Building Consent Authorities (BCA). New Zealand tends to use plasterboard in a slightly different way than most jurisdictions. It is used more as a structural element in construction, compared to Australia. Also, from what I’ve seen in media reports of the member’s proposed member’s bill, which I believe hasn’t been lodged—

SPEAKER: Order! Order! The member’s now got way beyond her responsibility.

David Seymour: What will the ministerial task force be able to achieve that herself and all of the Ministry of Business, Innovation and Employment (MBIE) haven’t already being able to do, and, if nothing, then isn’t this just window dressing—

SPEAKER: Order! Order! Order! Mr Doocey, stand, withdraw, and apologise. Was that the member who made that noise, or was it the member sitting next to him? Mr Doocey, did you make a noise during that question? Mr Brown, did you? Ask the question again.

David Seymour: Thank you, Mr Speaker. Can the Minister explain what this ministerial task force will be able to achieve that herself and all of MBIE haven’t been able to do to date, and, if she can’t explain it, is this not just window dressing for having no solution?

Hon Dr MEGAN WOODS: What this task force will do is work in partnership with our Government, because we are a Government that believes in working in partnership with industry. A number of the people that are on this task force that we’ve been working with for a number of weeks now actually have 28 containers full of Gib on the way to New Zealand. What we want to do is ensure that we are working with industry in partnership to ensure there are no impediments to the private sector being able to achieve what they need to.

David Seymour: Is not the task force going to ultimately recommend that councils be required to accept suitable substitutes to Gib board as plasterboard in New Zealand, and, if that is the case, why don’t we just have MBIE keep a material equivalent register—as recommended by ACT—right now, solve the problem, done?

Hon Dr MEGAN WOODS: As I said, if only the world were as simple as some members in this Chamber tend to think it is. One of the issues we will need to look at is what further resourcing brands may need in order to do certification of new products that are coming in. We also need to look at the issues around risk and how we manage that with the BCA.

Question No. 6—Social Development and Employment

6. JAN LOGIE (Green) to the Minister for Social Development and Employment (remote): Does she agree with the widespread concerns about the Oversight of Oranga Tamariki System and Children and Young People’s Commission Bill, including from VOYCE - Whakarongo Mai, who said, “The Government has not listened to a single recommendation from young people with lived experience … These young people have been effectively silenced, and the new systems outlined by the Bill is designed to further muffle and weaken their voices”?

Hon CARMEL SEPULONI (Minister for Social Development and Employment): I believe we have a common purpose, which is to ensure the oversight of the Oranga Tamariki system is strong. Our children deserve a system that works for them. This process began for this bill in 2018 through specific engagement with children and young people to hear their views, which informed the Beatie report. We heard from children and young people that they currently did not know where to go when they had a complaint. This bill makes it clear that the Ombudsman investigates complaints and requires them to have a complaints process that is accessible for children. We heard from children and young people that they wanted advocacy services that were diverse ethnically and in terms of life experience. The bill strengthens advocacy by ensuring there is more diversity in the governance at the Office of the Children’s Commissioner. The select committee have made further changes to the bill in response to submissions, which include strengthening the independence of the monitor by adding in a duty to act independently, providing for a named Chief Children’s Commissioner, who will be a visible vocal advocate for children and young people, and ensuring the commission can report directly to the Prime Minister. The bill is not intended to address all of the issues pertaining to Oranga Tamariki, but it will provide a way of monitoring it and holding it to account. It is a vital part of the overall system and it is imperative we strengthen it as soon as possible.

Jan Logie: Why is the bill being allowed to progress when only eight out of 403 submitters supported the bill and when there is such strong opposition from children, young people, Māori, and the social services considered to be experts in the care and protection of children?

Hon CARMEL SEPULONI: A number of the submissions traversed the same themes when they came in, and many of them touched on some of the issues that I covered in my answer to the primary question. Much of that, I believe, the select committee has done a good job at resolving. It was very clear that people still wanted a Chief Children’s Commissioner, but we still believe that a board is required to strengthen the advocacy of the Office of the Children’s Commissioner. It was very clear that there were areas in the bill where it wasn’t articulated strongly enough with regards to the independence of the monitor, and that certainly has been enhanced. We heard loud and clear—I believe the select committee did—that people still felt that there needed to be a direct ability for the Children’s Commissioner to contact the Prime Minister directly. So that is another area that the select committee covered off. In the revised version of the bill, that has been included. There are a number of other areas where there is change. They came directly from the submissions that were put forward, and I am confident with where the select committee has landed.

Jan Logie: How does the Minister say that the bill reflects consultation with Māori when the key recommendation from the Kāhui Group was for an independent Crown entity, and when Waikato-Tainui specifically told the select committee that the bill does not reflect the consultation they participated in?

Hon CARMEL SEPULONI: I think that all of the recommendations and all of the insights that came from the Kāhui Group and the 22 hui across the country were important to informing the bill. As I said earlier in response to the Māori Party question, the only area where I do see a difference, with regards to what we received in terms of feedback and what is in the bill, is with respect to the form of the Independent Children’s Monitor. Yes, they asked for a Crown entity; where we have landed is a departmental agency hosted by the Education Review Office (ERO). It still has the level of independence that we were all seeking. If the Independent Children’s Monitor, when it sits within ERO, decides to investigate something or monitor something, the Government can’t tell it otherwise, and the select committee have made sure that they’ve strengthened the language in the bill to ensure that that is clear and it is in the legislation.

Jan Logie: How will the Minister guarantee child protection for children in the Oranga Tamariki system under the new bill, given the monitor is unable to visit Oranga Tamariki care and protection residences without notice, leaving room for abuse and harm to children to be hidden, as has occurred previously?

Hon CARMEL SEPULONI: The absolute role of Oranga Tamariki, with regards to protection of children, extends beyond the monitor and the advocacy and the complaints process. So I do want to remind the House that there is a much more fulsome programme under way being led by Minister Davis with regards to the reform of Oranga Tamariki and ensuring that our children are protected. What we are putting in place is a monitoring, advocacy, and a complaints process that really has been missing up until now with what we see in the bill. It is strengthened and absolutely goes above and beyond what we have seen before, and I do believe it will make a difference for the children in care.

Karen Chhour: Does the Minister agree that the kindest approach would be to go back to the drawing board with this bill, after 311 submitters—including abuse-in-care survivors, VOYCE – Whakarongo Mai, Save the Children, and the Children’s Commissioner—condemned the bill, and many others felt their voices were deliberately silenced due to the submission period being over Christmas?

Hon CARMEL SEPULONI: I do not believe that it would be kind to the children who are in care not to act with urgency with regards to getting oversight in place for the children that are in care. The Beatie report was very forthright with respect to this and said we need to act with urgency. What we have done is ensured that there is a provision in the bill that states that this must be reviewed within five years. That doesn’t mean that it needs to be the whole, entire five years. If something arises—particularly in relation to the inquiry into State care that is being undertaken—that pertains and is relevant to this particular area, then that can be taken into consideration in a review. As I said, that review must be held within five years; that doesn’t mean it has to be five years out if there’s something that arises that requires more urgency with respect to change.

Jan Logie: Is it not true that if the bill was paused, the monitor would still be able to keep monitoring, the Ombudsmen would still be able to keep investigating, and the Children’s Commissioner could have an increase in funding to increase their role so there’s actually no need for the bill to pass before the royal commission has reported?

Hon CARMEL SEPULONI: As the member has pointed out, there has been a level of independence called on for the Independent Children’s Monitor. If we were to delay, then the Independent Children’s Monitor would remain with the Ministry for Social Development, its powers would continue to be limited to only monitoring the care standards and not the entire system, we wouldn’t have the bolstering of the commission with regards to the diversity at the governance table that we need, and we wouldn’t have the visibility with regards to a complaints process in the Ombudsman’s office that the children so desperately need.

Jan Logie: Does the Minister agree with advice given to her by her own officials that “Ministers will need to balance the perception of the entity being sufficiently independent against the need for Ministers to maintain a degree of control over the nature of the monitoring arrangements”, and, if so, why do Ministers need control over the monitoring of Oranga Tamariki?

Hon CARMEL SEPULONI: The one advantage that we have to the form being a departmental agency is that although we can’t stop the monitor with regards to any work that they may want to undertake or need to undertake to ensure that the system is working for the children, a Government can say to the monitor, “We also need you to look at this.” And that actually, I think, strengthens the power of the monitor for the children that we are all putting first and foremost in this discussion and this debate.

Jan Logie: Will the Minister withdraw this bill and listen to the voices of our tamariki and rangatahi and State-abuse survivors, like Tupua Urlich, who are saying, “This bill is a disservice to our voices and suffering at the hands of the State. We are doomed to repeat history.”?

Hon CARMEL SEPULONI: If I truly believed that was the case, then of course we would. But I think that we would be doing a disservice to the young people that are in care if we delayed this bill any further, and I stand by it.

Question No. 7—Police

7. GINNY ANDERSEN (Labour—Hutt South) to the Minister of Police: What recent briefing has he received on the Police portfolio?

Hon CHRIS HIPKINS (Minister of Police): Over the last week, I’ve had several conversations with the Commissioner of Police and received my first formal briefings in my new role as Minister of Police. These briefings have highlighted the challenges in the work undertaken daily by our police to protect our communities. I’m looking forward to the challenges in the new portfolio, and, in the coming weeks, I intend to get out and about and meet as many of our front-line staff as I can, and hear from our local communities.

Ginny Andersen: What will be his first priority as Minister of Police and how does he propose to tackle the challenges facing police in New Zealand today?

Hon CHRIS HIPKINS: My first job as Minister of Police will be making sure that police have everything they need in order to do their job effectively. That includes making sure that we have the right laws in place for effective policing, that police have what they need to do their job well, and that the public can have confidence in the police and feel safe. My view is that the best way to be effective is to tackle crime at both ends, which is to have an equal focus on ensuring that there are strong public safety measures in place whilst doing everything that we can to provide meaningful crime prevention. I’m interested in what works, not empty slogans. As the Minister, I see that there is significant opportunity for us to better connect the police with our education providers to help deal with some of the underlying drivers of criminal activity amongst our young people, most notably disengagement with education, training, and employment.

Ginny Andersen: What actions is the Government taking to address gang-related crime?

Hon CHRIS HIPKINS: I do want to acknowledge there has been an escalation in gang-related tensions. That’s one of the reasons why the Government has boosted police funding by $562 million and doubled the number of people working on organised crime. What keeps communities safe is more police on the beat with better training and more tactical options available. That’s why we’ve committed to a police-to-population ratio. So, rather than seeing the number of police relative to the size of the population decline, as we were seeing before we became the Government, we want to make sure that we are seeing at least the number of police relative to the ratio of the population on the beat, and that’s why we’ve invested $185 million in front-line safety. Over the next few weeks, I’ll be talking to police and justice officials alongside my colleague the new Minister of Justice, the excellent Kiritapu Allan, to identify other potential future changes to the legislative settings that might help police tackle organised and gang-related crime.

Ginny Andersen: How does he intend on ensuring the long-standing convention of operational independence is maintained between the Minister of Police and the New Zealand Police Service?

Hon CHRIS HIPKINS: Like previous Ministers, I intend to closely observe the long-held position of having a clear line between operational matters of police and the role as politicians. Section 16 of the Policing Act is one that members should make themselves familiar with. It explicitly states that the Commissioner of Police is not responsible to, and must act independently of, any Minister of the Crown regarding the enforcement of the law and the investigation and prosecution of offences. While I intend to work closely with the Commissioner of Police and ensure that he’s constantly aware of my expectations of police, I will not be looking at telling police how to do their jobs. Come on, Mark!

Question No. 8—Prime Minister

8. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does she stand by her statement, “A lot of the advice we’re receiving is that if we are not careful, we’re not targeted, we can make inflation worse”; if so, can she explain whether her Government has followed this advice?

Rt Hon JACINDA ARDERN (Prime Minister): Yes, I stand by my full statement. I note that the second half of the statement the member is quoting was “That’s why things like general tax cuts aren’t the answer because … they don’t deliver much to the majority of people who need a bit of relief and, secondly, they can make inflation worse.” To the second half of the question, the Government needs to weigh up a range of considerations. We considered Treasury analysis that inflationary pressures have almost double the immediate impact on lower and middle income households versus higher-income households, and their advice to target support to those who need it the most. In doing so, we needed to get the balance right between providing support through this challenging period while not unnecessarily exacerbating the issues of inflation. This is why our cost of living payment is targeted to those earning $70,000 or less and why we’ve rejected the Opposition’s plans for untargeted tax cuts that disproportionately benefit the most wealthy New Zealanders.

David Seymour: Did the Treasury advise in respect of the $350 cost of living payment “A broad-based one-off payment of this magnitude would add to inflationary pressures in the short-term … This makes a one-off payment a poor mechanism for supporting households with a longer-term problem,”, and, if so, why didn’t the Government follow that advice as she just claimed?

Rt Hon JACINDA ARDERN: The member is selective in what he is choosing to share with this House, as he was with my quote in the primary question. Treasury also said “although the risk to longer-term inflationary pressures is relatively small assuming any interventions of this nature were temporary.” Temporary and targeted—that was the approach the Government took. I note that the member is somewhat contradicting himself, though, because his own proposals are not temporary nor targeted.

David Seymour: How can the Minister seriously stand there and argue that her policies will not create long-term inflation because they won’t solve the problem in the long term either?

Rt Hon JACINDA ARDERN: That was not the statement I was making. I was reading the statement from Treasury, which was that because they are temporary and targeted, that minimises the inflationary impact in the long term.

David Seymour: Does the Prime Minister believe New Zealanders are able to see the blatant contradiction between taking advice that giving $350 to a whole lot of people is inflationary and trying to claim that her policies are not inflationary?

Rt Hon JACINDA ARDERN: What I’m reflecting in the answer is that Treasury is differentiating from different types of payments and pointing out—because, of course, they recommended using the benefit system for a one-off payment—that there are ways to do this that have less of an inflationary effect than, say, for instance, broad-based tax cuts. The other point I would make is that the member seems to be implying that that specific decision is the cause or will be a significant contributing factor to the inflation that New Zealand is currently experiencing. The member only need look at what is being experienced globally. OECD inflation is averaging 9.2 percent. The EU is roughly 8 percent. New Zealand at 6.9 percent, yes, is high and we must do what we can to support New Zealanders through this period, but to argue that it is Government spending decisions that are driving those increases in inflation is patently wrong.

David Seymour: Is the Prime Minister aware that the Government of the United Kingdom just increased spending by around 35 percent to exceed a trillion pounds for the first time in the history of that country, that President Biden just brought out US$1.9 trillion of stimulus, and her own Government just increased expenditure from $87 billion a year pre-COVID to $128 billion a year now, and has it occurred to her that maybe all this Government spending and all this inflation in all of those three countries might somehow be connected?

Rt Hon JACINDA ARDERN: The alternative proposal, I can only assume, from the member is that we should have had no support mechanisms through COVID and that, as a result of that, likely we’d be experiencing right now much higher levels of unemployment, which has its own significant economic impacts. I stand by the decisions that we made.

Question No. 9—Health

9. Dr SHANE RETI (National) to the Minister of Health: Does he stand by his statement that the health system as a whole is “coping”, and what then is the current national percentage of people being seen in emergency departments within six hours?

Hon ANDREW LITTLE (Minister of Health): In response to the first part of the member’s question, I stand by my full statement, which was, “As the minister I look at the system as a whole. I know there are individual hospitals facing very, very serious pressure, but, as a whole, the system is coping.” In response to the second part of the member’s question, I’ve been advised that the preliminary data for the week ending 12 June 2022 indicates that the national percentage of people being seen in emergency departments within six hours is 74.1 percent. I note that the final data is reported to the Ministry of Health a month later, so we won’t have an accurate picture of what has been happening this month until the end of next month. For the sake of completeness, the member should be aware that the three months down to 31 March 2022 shows the range of performance against the target for people being seen in emergency departments within six hours goes from 63.5 percent at MidCentral District Health Board to 95.4 percent at Tairāwhiti District Health Board. The overall average across the hospital network for the third quarter was 78.5 percent.

Dr Shane Reti: When National handed over in 2017-2018, was the six-hour emergency department (ED) wait time better than 90 percent against target, and what responsibility does he take for the 74.1 percent figure he has given to this House today?

Hon ANDREW LITTLE: No; the target number has fallen over the last five years and that is largely as a consequence of the response to COVID that caused a major difference, but also because, with a system that has had more people added to it, even accounting for the various vacancies that we have at the moment, more people turning up to EDs, it is a system under greater pressure. And in a winter when we have a flu season such as we have not had for at least three years, it is putting even more pressure on the system, and that’s reflected in these measures.

Dr Shane Reti: Does he agree that people being made to wait as long as 32 hours in the emergency department, and elective surgeries being cancelled due to unsafe staffing levels, are both signs that the health system is, in fact, not coping as a whole?

Hon ANDREW LITTLE: It is a standard measure every winter for hospitals to manage down their planned care in response to expected increases in presentations of respiratory conditions, including the consequences of flu. So there is nothing unusual in that respect. In terms of waiting times in ED, it is correct that there are more people waiting longer. That is a fact. But right now we have roughly 90,000 people presenting to all our ED departments in a month. And of those, regrettably, about 200 are waiting longer than 24 hours.

Dr Shane Reti: Which DHBs currently have ED waiting times worse than Middlemore and will they get free weekend GP visits also?

Hon ANDREW LITTLE: The figure released for Counties Manukau DHB is 76.3 percent on that target for waiting no more than six hours. As I said in my answer to the primary question, there is a range of measures against that target, but there are some EDs where people are waiting longer on average than at Counties Manukau and there are some where they’re waiting less on average than at Counties Manukau.

Dr Shane Reti: Which DHBs currently have ED waiting times worse than Middlemore?

Hon ANDREW LITTLE: I can go through the list of 20 DHBs, if the member would wish—it would take a long part of the time. But I think it is fair to say that, as I indicated, there are some EDs where people are waiting longer than six hours and some where they’re waiting shorter than six hours. Counties Manukau sits around that mid-70s percent mark. There are others—as I’ve indicated, Tairāwhiti sits in the 90s; you’ve got others: Taranaki, Waikato, all in the 70s; you’ve got Auckland DHBs, 79, nearly 80 percent; Bay of Plenty at 78 percent; Canterbury at 81 percent. There’s a range of performances against the measures. I think the critical thing is—because listening to that member and his leader earlier today, there’s sort of a message that somehow this measure is not being kept—this measure is being kept. The difference is that, unlike the previous Government that punishes hospitals for not meeting the target, we use this as a reason to exercise a management intervention to improve the performance of these EDs.

Question No. 10—Education (School Operations)

10. MARJA LUBECK (Labour) to the Associate Minister of Education (School Operations): What recent announcements has the Government made about supporting attendance and engagement at school?

Hon JAN TINETTI (Associate Minister of Education (School Operations)): Earlier this month, the Government launched our comprehensive Attendance and Engagement Strategy that sets expectations and targets to turn around years of declining attendance rates. School attendance has been declining since 2015, and COVID-19 has made it worse. Throughout the pandemic, the Government has provided targeted resources and support for schools to respond to any disengagement by students through the Urgent Response Fund (URF). The URF model was distributed during a crisis response; it was during a global pandemic and one of the most challenging times in our recent history. Distributing this funding during this time was never going to lift overall attendance rates higher as we fought COVID-19. It was designed to be responsive to the situation. The strategy we have just launched takes the next steps. It will help us address longstanding issues around attendance and engagement through working closer with communities and addressing the causes.

Marja Lubeck: What targets and expectations have been set by the Government to lift attendance?

Hon JAN TINETTI: In consultation with schools and communities, we have set ambitious targets for students who fall within the chronic, moderate, and irregular attendance categories. Our headline target is that at least 70 percent of students will be attending class regularly by 2024, and 75 percent by 2026. This takes us back to an even higher rate of attendance than 2015 when the decline started to occur. To put this into context, regular attendance is attending school 90 percent of the time, or nine out of 10 days. Currently only about 60 percent of students are attending at this level. We will achieve this by prevention—identifying early trends of irregular attendance. This is why we have set a new target for schools to notify parents and caregivers on the day of absence, and to establish dedicated action plans to prevent further absences.

Marja Lubeck: What supports are being provided to schools to implement these targets?

Hon JAN TINETTI: Schools, parents, and wider communities will be well supported with targeted and evidence-based resources. For example, Budget 2022 delivered an $88 million package of proven initiatives, such as $15.5 million for a scale-up of Te Aho o Te Kura Pounamu, support for at-risk ākonga to re-engage in school in line with its proven big-picture approach—supporting around 3,500 at-risk students annually. I know that these targets will be challenging to meet, but it’s vital New Zealand children and young people attend school and get the education they need to set themselves up for life.

Question No. 11—Justice

11. Hon PAUL GOLDSMITH (National) to the Minister of Justice: What are her priorities for the Justice portfolio?

Hon KIRITAPU ALLAN (Minister of Justice): I thank the member for his question and welcome his support for our justice policies over the term. As that member may expect, I am proud to stand behind Labour’s 2020 manifesto and we are committed to working harder and smarter to keep our communities safe, break the cycle of offending, tackle the root causes of crime, and right historic wrongs. Key areas I will look to quickly engage in are: working to prevent and deter organised criminal activity, including progressing changes to the criminal proceeds legislation; advancing the implementation of the Government’s response to the royal commission into March 15; advancing electoral reform changes; building on the work of the previous Minister to provide greater access to justice through significant funding for legal aid; and working to continue to reduce case backlogs in the court. Alongside this work, I want to ensure a victim-centric approach to the portfolio so that all New Zealanders are treated fairly and appropriately within the justice system. There will be much more to do, and I’m looking forward to building on the work this Government has already undertaken within the justice system to date.

Hon Paul Goldsmith: While advancing electoral reform, will it be a priority for her to defend the principle of equal voting rights for all New Zealanders across all levels of Government?

Hon KIRITAPU ALLAN: Equal voting rights are critically fundamental to New Zealand’s democracy. And if I think about what we are doing across a broad platform of electoral law reform, the member will be well aware that we are taking some targeted measures before the next election to ensure that our electoral laws are fit for purpose. We also have established a bipartisan independent panel appointed to review our electoral law platforms, which I look forward to the member’s active engagement on in due course.

Hon Paul Goldsmith: Then will she advocate, as Minister of Justice, against the Canterbury Regional Council (Ngāi Tahu Representation) Bill, which explicitly moves away from the principle of equal voting rights?

Hon KIRITAPU ALLAN: As the member is well aware, that bill is not a Government bill and therefore I have no responsibilities. What I will say, though, it’s a stark contrast, or almost a bit of a situation of the pot calling the kettle black—in that member’s term of Government, of course, they removed regional councillors in 2010 and they established commissioners. What we are doing is ensuring that we support regional democracies, and that indeed is the role of central government. The regional council have come to—

David Seymour: The Minister explicitly said she had no responsibility for the matter, then carried on. Surely that’s out of order—

Hon Kiritapu Allan: I’m happy to answer the question.

SPEAKER: Yes, and the question wasn’t whether she had responsibility. The question was “Would she advocate?” and she is answering that question. It’s, you know, sometimes Ministers do and they should be congratulated.

Hon Paul Goldsmith: Can I take it from her refusal to say she will advocate against the Canterbury bill that it is now Government’s position that the key constitutional principle of equal representation and a representative democracy no longer applies?

Hon KIRITAPU ALLAN: The member can take it from my answer that first, I do not have any responsibility for that bill. It is a local government bill. And what we do believe, on this side of the House, is ensuring that democracy is supported by us at a central government level. You have elected representatives from that region that have presented this bill to this House. We will be supporting that bill.

Hon Paul Goldsmith: Is it one of her priorities to uphold the rule of law; if so, has she reported herself to the Electoral Commission for breaking a law by electioneering on social media on the day of a by-election?

Hon KIRITAPU ALLAN: That member will be well aware that I did not break any electoral laws and that I was not electioneering anywhere.

Hon Paul Goldsmith: Point of order, Mr Speaker. I seek leave to table a document. It’s a screenshot of a Facebook post from the Labour Māori caucus, including one Kiritapu Allan, on the day of the by-election, saying to support Jan Tinetti, Labour candidate for today’s by-election.

SPEAKER: Now, speaking to the—

Hon KIRITAPU ALLAN: Point of order.

SPEAKER: It’s unusual before seeking leave, but I think, in this case, we can hear from the member.

Hon KIRITAPU ALLAN: The screenshot that the member may have is not done by me, not done in my name, and therefore, to his original request, did I campaign on that electoral day? No, I did not. Therefore, it’s out of scope and it should not be tabled.

SPEAKER: OK. I can now put the question as to whether there is any objection. I’m going to ask the member: did the member describe it as being authorised by the member?

Hon Paul Goldsmith: No; I just said it’s a screenshot of a Facebook post.

Dr Duncan Webb: Speaking to the point of order, Mr Speaker.

SPEAKER: Well, no, I am going to put the leave to the House. Everyone has heard—

Dr Duncan Webb: But it’s publicly available.

Hon Paul Goldsmith: Sorry, I’ll just respond to that interjection by the member. Of course, it has been taken down; so it is not publicly available.

SPEAKER: Well, it just shows how unhelpful that was. Is there any objection to that screenshot being tabled? There is none.

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

Hon Paul Goldsmith: Is she surprised that, when the Government carries on prioritising reducing prison sentences for the nation’s worst three-strikes offenders, at a time of rising violent crime, some people conclude that the Government is soft on crime?

Hon KIRITAPU ALLAN: I’ll reiterate remarks I’ve made previously this week: that framing is completely unhelpful, first and foremost. I will reiterate the remarks of their former leader that, within the criminal justice sector, there have been moral and fiscal failures throughout the criminal justice approach—by that previous Government, I might add. When we are removing three-strikes legislation, we are upholding the integrity of our constitutional fundamentals. When that previous Government introduced that three-strikes law, there was no evidence to support that Act as a deterrent. It was criticised roundly as having no evidential foundation, and we are upholding our 2020 manifesto commitment to ensure that we are removing that sentencing reform from this House. And it should have no place in any future Government.

Hon Paul Goldsmith: Supplementary?

SPEAKER: No; the member’s used his supplementaries.

Question No. 12—COVID-19 Response

12. SHANAN HALBERT (Labour—Northcote) to the Minister for COVID-19 Response: Mānawatia a Matariki, Mr Speaker. What recent announcements has she made about reconnecting New Zealanders to the world?

Hon Dr AYESHA VERRALL (Minister for COVID-19 Response): From midnight last night, travellers to New Zealand are no longer required to take a COVID-19 pre-departure test when entering the country. The Government was clear: we intended to remove this requirement for travellers by 31 July. I’m happy to say, we have been able to bring the time line forward as COVID-19 cases have continued to decrease despite nearly 400,000 arrivals since the border reopened. Of those arrivals, 90 percent are undertaking their required testing once they’re in the country and only a fraction of those are returning positive results. Removing pre-departure testing is just one more step the Government is taking to safely reconnect New Zealanders to the world.

Shanan Halbert: Why has the Government removed pre-departure tests?

Hon Dr AYESHA VERRALL: The Government has been aware of the challenges that pre-departure testing is posing to those wishing to travel to New Zealand. This includes the availability and cost of getting a test in other countries, and the context of others winding back testing availability or requirements themselves. In addition, the level of compliance for international arrivals undertaking their post-arrival testing in New Zealand is very high, while the positivity rate is very low at around 2 percent of tested arrivals. This provides us assurance there’s a very small number of cases entering New Zealand and that we have the tools in place to detect if a change occurs.

Shanan Halbert: What other protections remain at the border?

Hon Dr AYESHA VERRALL: While we are removing the need for a pre-departure test, we are keeping in place a robust set of surveillance measures to detect any possible new variants of COVID-19. This includes retaining the requirement for self-tests on day 0/1 and day 5/6, and a follow up PCR test if either of the rapid antigen tests turn up positive. These PCR samples will continue to be sequenced, which gives the Government the best possible indication of variants arriving in New Zealand.

Bills

Medicines Amendment Bill (No 2)

Second Reading

Hon ANDREW LITTLE (Minister of Health): I present a legislative statement on the Medicines Amendment Bill (No 2).

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

Hon ANDREW LITTLE: Thank you, Mr Speaker. This is a very simple bill. It does a very simple thing. It gives the Director-General of Health the power to—

SPEAKER: Order! I think the member needs to move the bill.

Hon ANDREW LITTLE: Oh! I’m obliged, Mr Speaker. I move, That the Medicines Amendment Bill (No 2) be now read a second time.

This amendment bill does a very simple thing. It gives the Director-General of Health the power to make an appropriate order to make a vaccine otherwise not available, available for widespread use. The background to this is, of course, COVID 19, and we have a recognised vaccine, the Comirnaty vaccine produced by Pfizer. Pfizer applied for and obtained from Pharmac approval for the use of that vaccine in accordance with the terms applied for by Pfizer, and that allowed the vaccine to be administered within New Zealand to a number of New Zealanders over a certain age, and a certain number of doses certain periods apart. It is clear from information available that this vaccine, like most vaccines, has a waning efficacy and, as many other countries have found, we wanted to make sure that particularly vulnerable parts of our population continued to get access to the vaccine while COVID remains a real risk.

Pfizer has indicated they don’t intend to make any further application for use of the vaccine beyond the two doses and a booster dose, although for some people they, effectively, receive four doses, although a growing body of international evidence suggests that it would be a useful thing for a further dose to be available to some parts of the population. The vaccine is available to anybody whose GP is prepared to prescribe it on an off-label basis, and so what is being sought here is not something that is out of the realms of possibility otherwise, but it would be an enormous exercise, of course, if everybody who wanted to get it as a further reassurance because of waning efficacy had to go to the GP, had to seek a prescription off-label, and had to go through that process. This simply allows the director-general who would be required in terms of the amendment bill to obtain appropriate advice, which the director-general would do, to allow the vaccine to be available on a broader basis.

That is, effectively, what the bill does. I’m very thankful to the Health Committee, who met in short order, including during the recess week to obtain information and to hear from some stakeholders, who have indicated their support for the bill. On that basis, I commend the bill to the House.

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

Dr SHANE RETI (National): Thank you, Madam Speaker. It’s a pleasure to speak to this bill. I want to thank the select committee and officials, who met in a truncated process, and I also want to thank our team and shadow Leader of the House, who made persuasive arguments for us to have a truncated process, so at least we could have some feedback on this bill.

The select committee met with oral submitters and received written submissions. To each oral submitter, we asked several questions: are they comfortable proceeding without waiting for the Pfizer data, which we were told would be available in a month or so, or in the coming months, quote, unquote, is what Pfizer says. Every oral submitter said to us, “Yes”. We then asked: do they believe progressing without the Pfizer data on the basis of the international evidence provides more benefits than waiting for that data? Again, every submitter said yes.

Of the written submissions, I want to just recall for a moment the very valuable submission from Te Rōpū Whakakaupapa Urutā, whose data through the COVID pandemic has been very useful. Their response to the committee was “At our meeting last night we discussed the purpose of the amendment and agreed that the proposed amendment is sensible. It is pleasing to note this determination to improve access to COVID-19 vaccines for Māori and other New Zealanders. We are supportive of the amendment and are of the view that it will ease access to further COVID-19 vaccinations when and if required.” Te Rōpū Whakakaupapa Urutā—that is their submission.

We asked several questions of officials. We asked them: “Is this bill in any way mandating the fourth dose?” The answer we got was “No”. “Is this bill only related to the current assay?”—that is, if the Pfizer vaccine changes in any way, is that being permissioned by this bill? We were told that this bill is specific to the current Pfizer assay; any changes would need new legislation.

The Royal New Zealand College of GPs presented and raised a really interesting question, because conceptually this is an off-label - type process under section 23, and they raised the question that with most off-label medicines there’s a much more involved and engaged, informed consent process that is required. They had concerns that for the number of vaccines that might be being looked at, that informed consent process for off-label could be cumbersome. Officials replied that the consenting process for the COVID vaccine is now mature, and the college should be reassured that the burden of any new consent will not fall on them—that is, the standing consenting mechanisms should suffice for what is required for this slight variation of off-label.

We were reassured by the submissions that we heard. If we just remind ourselves what we’re doing here, treatments provided under section 23 go through a Medsafe approval process. Due to the timing and the urgency, this particular booster—the second booster, the fourth dose—is unable to go through that same process. There’s currently six preparations approved under section 23, provisional consent: two types of contraceptives, two pandemic flu vaccines, the Pfizer COVID-19 vaccine, and an electrolyte solution used in hospitals. So there is some use of provisional consent, section 23—a little bit of section 20 as well—already out in the environment.

Of the submissions that we heard that addressed the bill, we were reassured that some of the issues that we have grappled with they were comfortable with, and many of them are much greater experts than we are in this domain. More particularly, we were reassured by their assay of the international evidence—which, in the absence of the Pfizer application to Medsafe, which they wrote to us saying it would be in the coming months—that suggests that there are more benefits to proceeding now rather than waiting for that application to Medsafe. So here in the second reading, it has an assessment of what the select committee did. National will be continuing to support this bill in the committee of the whole House. There will be a few points that we’ll just raise for discussion, but here in the second reading we are supporting this bill. Thank you, Madam Speaker.

TANGI UTIKERE (Labour—Palmerston North): Thank you, Madam Speaker, and I’m happy to rise in support of the second reading of this bill. As chair of the Health Committee that dealt with the consideration of this bill, can I just acknowledge colleagues from all around the House for their collegiality as part of that process, but also the select committee staff, the Ministry of Health advisers, and also the Parliamentary Counsel Office, because this was a bill that went through a shorter time frame that was determined by the House.

I acknowledge Dr Reti’s contributions as part of that process around the submissions that were received by the select committee. Five of the six submissions that were received were in support. The outstanding one was that of Pfizer, who didn’t explicitly comment in favour or against the bill. The committee, in its report, notes that that’s appropriate given the commercial relationship that Pfizer has with the Government. We also heard from the Minister for COVID-19 Response and was reassured with the responses that he was able to provide to the select committee.

This bill delivers a rather discrete change to the Medicines Act. It inserts new section 34A, and that will allow the director-general to issue a notice that would allow for the fourth dose of the COVID vaccine and only the COVID vaccine, which was a point that was traversed by the Health Committee at the time, to be administered by ways in which we are all familiar with, out in community clinics, community providers, and the like.

There were a couple of issues that were raised during the select committee process. The first is the suitability of this opportunity or whether the IMO, the immediate modification order that exists under the Epidemic Preparedness Act, was more appropriate. What we heard was that that is an emergency power component and therefore it was not appropriate to be utilised for the purpose of what this particular bill or amendment was seeking.

The second was around transparency. Some of the submitters asked questions around whether the information that would be made available to the director-general, in the process of them making a determination to issue the notice or not, would be publicly available. And we heard that that would be no different than what was currently the approach by the COVID-19 Vaccine Technical Advisory Group, which is published on the Ministry of Health’s website.

So I’m delighted that the select committee has returned a report to the House which seeks no amendments to the bill, that it suggests or recommends that the bill be passed, and that it is the unanimous position of the select committee. I commend this bill to the House.

CHRIS BISHOP (National): Thank you very much, Madam Speaker. I want to start by saying that the process this bill went through was a very good one—a very shortened process—and I will say that we in the National Party, in the Opposition, were a little bit uncomfortable about the process that was originally envisaged by the Government for the process of this bill, which was, essentially, to put the bill through without any time at the select committee. Our view was that that ran uncomfortably up against our traditions of spending time at a select committee, running through the bill properly and just getting to grips with the precise nature of what we were dealing with. That’s not to say bills can’t skip the select committee process. Clearly, bills can, and bills will continue to have that happen to them in the future. But for something important like this—Parliament, essentially, legislating the authorisation for a fourth dose, or at least the authorisation for the director-general to allow a fourth dose—we’re a bit uncomfortable around doing that holus-bolus without any select committee scrutiny. So I want to credit the Government for acknowledging that and stepping back a bit and saying, “Yeah, we’ll send it to a select committee for a short amount of time.”

I was in isolation last week, so I haven’t had a chance to sit on the committee, but I’m aware that the committee has done a good job very quickly getting to grips with the issues behind the legislation. I think a couple of points come out at me. The first is that a fourth dose is going to be useful for some people—probably not everyone, and it will be voluntary—and I’m already getting emails from a few people who are saying they’re really keen to go and get a fourth dose. I’d encourage those who are eligible and who would find it helpful to go and do that at the appropriate time, which is not too far away. I think the science is relatively clear.

The issue that I had in particular when it came to considering the bill at the start was whether or not we had to legislate and whether or not we had to pass an entirely new Act of Parliament, and whether or not there could be an immediate modification order process gone through to authorise this so that the Parliament didn’t have to sit. Look, reasonable people can disagree about this. At the end, the committee has determined that the bill should proceed, and we’re not going to stand in the way of it. I think it was a pretty collegial process, so we will support it.

I’d just note in passing—and perhaps in closing—that we are going to have to come back to the Medicines Act. This is one of these important, architectural pieces of legislation, and by that I mean the framework with which our health system operates. It’s not political, to be honest—it’s not party political. It’s just important that we get the law right and it’s important that the underlying legislative framework that the health system operates in is well-constructed, and, look, the Medicines Act 1981—there’d be a few members of the House who were around then; I certainly wasn’t. So it’s now 40, 41 years on and we’re going to have to come back and do a thoroughgoing review of it. It may be this Government that does it. I suspect it will end up being the next, National-led Government, but that’s OK. We will do the work as and when it is required.

The other point I’d just finally make in closing is that I was struck by the fact that every submitter to the bill was in support of it, so this is not a particularly contentious issue. This is a bill where we quite rightly said, “OK, let’s just hold fire for a week. Let’s send it to a committee just to make sure we’re really doing the right thing here. Let’s just ventilate the arguments. Let’s just ventilate the issues a bit. Let’s kick it around for a week.” We sent it off to the committee—

David Seymour: Love a bit of ventilation.

CHRIS BISHOP: What was that?

David Seymour: Love a bit of ventilation.

CHRIS BISHOP: Love a bit of ventilation, yeah. If we’d had a bit more in the managed isolation and quarantine hotels, we might not have had the Delta outbreak. But, anyway, I digress.

We kicked it round at the committee and every submitter was in support of it, and, of course, the hard-working health officials gave their support as well. So we’re very happy to continue to support this bill all the way through the House, and I don’t think the House need spend a huge amount of time on it in the forthcoming couple of hours. Thank you.

Dr TRACEY McLELLAN (Labour—Banks Peninsula): Thank you, Madam Speaker. Yes, the bill actually just provides a permanent and futureproof solution to what is going to be ongoing vaccination requirements. As said by the previous speaker, Chris Bishop, whilst we acknowledge the select committee and thank the submitters, all of them were in favour so there’s nothing controversial here.

It, essentially, just allows the Director-General of Health specifically to authorise the ongoing use and to do so in an equitable way, which I think is a point that we should potentially add, in so far as the Ministry of Health data very specifically showed that most people didn’t go to their GP to get their vaccinations. Nearly half visited a local pharmacy or they went to community sites or community group sites. So it’s really important that this bill allows all of the COVID-19 vaccinators to continue to do so, which should improve the equitable community access to the fourth dose should those vulnerable groups, who the director-general deems may need that second booster, to be able to do so in a reasonable manner. So I have no hesitation in commending this bill to the House.

TEANAU TUIONO (Green): Kia ora. Thank you, Madam Speaker. It’s good to be back here in the House. It’s been a while for me, actually, and I kind of get the urgency around getting this sort of thing over the line. Parents around the House will know that, with the borders being relatively closed over the last couple of years, we’re getting three years or two years, or whatever it is, worth of winter infections coming into our homes via our kids. So I understand the need to have a select committee process despite the urgency, and I was just finding myself, for once or twice in the history of my short time in the House, agreeing with that corner: that it is actually really important to have that select committee process; that it’s really important to have that transparency, even if it is a shortened process as well; just to kick it around a little bit, get stuff written on the record to make sure that when people go back and reflect on the decisions that we’ve made, that there is some clarity around that.

So it’s good to see that and it’s also good to see the relative ascension of Mr Tangi Utikere to the chair of the Health Committee as well. I’m not a frequent visitor to the Health Committee but I am always impressed by the number of doctors and health professionals at this Health Committee as well. I’ve just got a humble law degree, like I think a fair number of us around here in the House as well. So to have that health expertise embedded into this select committee is a good thing. And I was just thinking, what better person to wrangle all those doctors than a teacher, and Mr Utikere—I can speak to him—he is a good teacher. He taught one of my kids and I have nothing but the utmost respect for all of the teachers that have had the fortune to teach my children.

So the purpose of this bill is to allow for another COVID-19 booster. We are doing it through the legislative process as well. We are in the midst of a pandemic as well, so it is important that we have some way to actually move this stuff forward. The bill would insert new section 34A into Part 2 of the Medicines Act, which relates to medicines and medical devices. New section 34A would enable “the Director-General of Health, by notice, to authorise the administration of a COVID-19 vaccine other than in accordance with the data sheet”. The proposed amendment would enable the director-general to specify by notice one or more of the following: “(a) who the vaccine may be administered to: (b) the recommended number and frequency of doses: (c) the recommended manner of administration: (d) [and] any other circumstances” as well.

As previous speakers have said before, we got support, both from oral submissions and written submissions, and there were questions put to those submitters just to get that clarity from them that they saw that this was the process that we were going through, because there is that Medsafe process there as well. But because of the situation that we’re in, let’s ask the experts, let’s ask those submitters whether they thought this was the right process moving forward, and they all said yes.

I guess, for me, the bit on transparency is really important. What I have learnt and maybe what we all have learnt—hopefully we all have—is that we should trust the experts. We should trust the health experts, those with the very specific expertise in those areas: epidemiologists, microbiologists, etc. I was just thinking, you know, if you get a plumber that comes into your house, you trust them to fix the plumbing in the sink, you don’t then go and double question them and go on to YouTube and double check to see if they really know what they’re talking about; you trust the expertise that they have. Starting off with that basis of trust is a really, really important thing. So having this select committee process, even though it was short, was also quite important as well.

I guess the other theme that keeps popping up for me, when we talk about the COVID-19 response, is the key element of communication. I was just reflecting on the report that came out last week about the Government’s response to Delta, and the lesson in there was around making sure that we allow those leaders in Māori and Pasifika communities and making sure that we centre the voices of our immunocompromised and disabled whānau as well.

It would be good to have a line of sight from the sorts of things that we are deciding to do today, but also moving forward as well. Things like a school plan, because when I meet with teachers they are wondering, “Well, what’s happening here?” We’ve got things that are impacting upon teachers and impacting on relief teachers, disregarded sick leave and so on and so forth. So having that plan in place would be really important for them, but also really important for their parents, of which a number of us around the House are those parents.

We’ve got a nice, sharp, short, written submission from Te Rōpu Whakakaupapa Urutā. They said, “Thank you for the opportunity to make a submission on the Medicines Amendment Bill (No 2). At our meeting last night we discussed the purpose of the amendment and agreed that the proposed amendment is sensible. It is pleasing to note this determination to improve access to COVID–19 vaccines for Māori and other New Zealanders. We are supportive of the amendment and are of the view that it will ease access to further COVID-9 vaccinations when and if required.” And so, if it’s good enough for the good doctors, then it’s good enough for the Greens. Thank you, Madam Speaker.

DAVID SEYMOUR (Leader—ACT): Madam Speaker, thank you. I rise on behalf of ACT in support of this Medicines Amendment Bill (No 2) at the second reading of it. I couldn’t help but think about what the member Teanau Tuiono, who just sat down, was saying. He said something very interesting: “We should trust the experts.”, and I thought that’s very interesting. That was the way for thousands of years, and one of the greatest advances in the last few centuries was the idea that ordinary people could read the Scriptures for themselves and didn’t have to be told what to think by the experts. They called that the Reformation.

Then there was the Enlightenment and the scientific revolution—the idea that people actually could think for themselves and challenge. He said that we should trust the experts because you wouldn’t second-guess your plumber. Well, actually, if you’ve never been ripped off by a cowboy tradie, I guess that’s probably a reasonable way to be. Well, I think it’s important for this particular debate that, actually, we have a balance between trusting and respecting expertise and merit, but also being prepared to question and actually challenge authority, because I think we’ve got that balance wrong through a lot of our COVID response.

We are now seeing many, many different costs to our COVID response that are the result of failing to challenge authorities that turned out to be wrong in hindsight. I’ll just give you one example. We were told unquestioningly that we needed to have a COVID-19 managed isolation and quarantine (MIQ) system to keep us safe from the virus. Well, actually, as it turns out, behind closed doors in as early as October, there was conflicting advice and debate about whether that indeed was true. But that debate was kept from us for a further four months, during which time we spent $220 million on MIQ and we kept people out of the country, at enormous human cost—and we’ve only just had an acceptance, but not an apology, that that was wrong—all because we believed the mantra that you should accept what the experts are saying, even to the point that debates are concealed from us and we don’t participate in them.

So I’d just say to the member that trusting the experts—that was the mantra of humanity for many millennia. But, actually, critical thinking, the Enlightenment, and the ability to challenge, debate, and think for ourselves are equally important and would have improved our situation in material ways as we have responded to the COVID-19 pandemic. I digress.

This Medicines Amendment Bill (No 2) is not a particularly complex thing, although I differ slightly in my reading of it from Shane Reti, which I hesitate to do because his expertise and sincerity in all matters medical is beyond reproach. But he said this would only be for the Comirnaty vaccine. It says if there’s been provisional consent to “a” COVID-19 vaccine, then the director-general can change the way that it is administered, how often it’s administered, in what doses, frequency, administration, the way that it’s administered—those things can be varied. So, for example, without a data sheet, we can have a fourth dose where, previously, consent was given only for a third dose. But I would imagine that that applies not only to Comirnaty but to any other vaccine that has been consented through the normal process. Those ones could also have their conditions varied under this.

Where that gets interesting is a question that we’ll have at the committee stage, and one that I know that many people have, which is will this law allow the director-general to approve Comirnaty in much smaller doses—I think it’s three—for six-month-old to five-year-old children, because there are a great many parents out there who would like to be able to immunise their little ones. I accept there are others who don’t want to, and that’s just fine. But we’re here for freedom and choice and accepting other people’s choices—we need a lot more of that sort of sentiment in our world today—and there’s a lot of parents of young ones who would like that choice.

In theory, reading this legislation, it will allow the Director-General of Health to vary the administration of the Pfizer Comirnaty vaccine—it’s a problem when you say things you’ve only ever read—and allow it to be administered not just as a fourth dose but also to younger New Zealanders. I know there’s a lot of parents who are fearful and they believe that if their kid is going to get COVID at some point in their life, then giving them some baseline immunity now is a worthwhile preparation. I think they should be allowed to do that and I think the director-general should use the law that way. We’re looking forward to asking the Minister if the Minister believes that they will.

With that thought in mind, I think this bill also points to wider issues in the way that we regulate, and other members have referred to this, saying that perhaps our Medicines Act 1981—it’s older than me—should be kept as it is, or it needs a serious do-over. Actually, I would argue that New Zealand’s duplication of regulatory systems, where we have our own system in parallel to Australia and the US and the EU and UK and Japan, is completely nuts. I mean, this is a supposedly First World, industrialised, developed country that is having conniptions where the leading article in the news most nights is about the shortage of a sandwich of cardboard and plaster of Paris—you can’t make this up. But the fact is that because we’ve duplicated our regulatory systems—we’ve said we’ve got Australia standard, New Zealand standard—AS/NZS—for building products, we’ve got brands, and we’ve got the councils and architects having their 10 cents, there’s only one particular type of plasterboard that’s managed to run the gauntlet and get 96 percent market share. Now, they can’t supply the market and we’re in crisis, but, as it turns out, plasterboard is on the critical path for most building.

I’ve raised this because, actually, we have a similar problem right across our regulatory regimes, and it’s been very true during COVID in our response to it. It’s been true across medicines. The fact that we need this bespoke legislation so we can approve something that other countries have been doing for months—that is, giving a fourth dose—tells us that our regulatory system is duplicative and broken, and we need to fix that. But, actually, we need to fix our regulatory systems and duplication thereof right across the board when it comes to product markets.

We particularly needed to do it, and this has been ACT’s policy for about two years now—that if a COVID treatment or technology or test is available in those other jurisdictions of Europe, the US, Japan, Australia, and the UK and if it’s good enough for them, it should be good enough for us. If we’d done that, for example, with rapid antigen tests, we would have had a much more advanced response and we’d be a lot further down the track back to normalcy. Instead, we are accepting and absorbing all of those costs of our COVID response that may not have been obvious at the time, but are becoming obvious now in so many ways. You know, kids that weren’t intensively worked on by youth aide police officers are now doing ram raids. Actually, it’s happening around the Western world as a response to COVID response.

I’ll finish by making one comment that I know will be on the minds of people with anything to do with the regulation, permitting, or consenting of vaccination, particularly around COVID-19. Some people believe that this will somehow be a precursor to mandating and making it compulsory—you will have to be vaccinated—and I can understand the distrust, because the Prime Minister of New Zealand stood up and said, “You’ll never be penalised for not being vaccinated.”, and then it actually turned out that you would be. That has eroded our social capital and our trust in institutions, as we saw in our conflagration outside Parliament, which was the irrational, extreme end of that eroded trust.

I think we need to be clear as a Parliament that nothing in this legislation will lead to it being mandatory, and there is something the Government could do, which is to actually remove the remaining mandates for medical workers, because here’s a situation: we are currently, depending on who you ask—the Minister had to correct himself today—2,500 to 4,000 nurses short. Nurses are vaccinated at a rate of about 40 percent for the flu, but are mandated to be boosted for COVID, and yet there’s now more flu in the hospitals than COVID in the hospitals, and there are 518 nurses currently mandated out by the requirement for boosters. So can we afford to have 500 nurses missing because they’re not vaccinated for COVID? Meanwhile, the hospitals are filled with nurses who haven’t had their flu shot and the hospitals are full of flu. Where’s the logic here?

A gesture that the new Minister for COVID-19 Response, Ayesha Verrall, could make is to stop the mandates for nurses and get the nurses back into the hospitals, and if she’s not prepared to do that, why doesn’t she mandate them for the flu shot? If she ain’t going to do that, there’s no logic in requiring the COVID one, because there’s more flu than COVID in the hospitals.

That would be a gesture that would help reassure people around this legislation. But it’s absolutely the right thing to do, and ACT absolutely supports it. Thank you.

Dr ANAE NERU LEAVASA (Labour—Takanini): Mālō e leilei, Madam Speaker. It’s great to back in the House after taking time out with my now eight-week-old baby girl. So it’s good to be back. It’s just, I guess, a good reminder that our families do sacrifice for us to be here doing the work here, as well.

It’s good to rise to support the second reading of this bill. It’s good to ease back into work as well, sitting on the select committee last week and hearing our submitters come in. I acknowledge my colleagues from the Royal New Zealand College of GPs and hearing what they had to say, but it’s good all round to get reassurance that all our submitters supported the bill, bar Pfizer because of their interests in it.

I do want to mention in terms of this bill making it easier that it is all about equity, it’s about access, and it’s about protection of our whānau. I think about my nanna with mobility issues. If she had to go get a prescription, the timeliness of getting that, and then also getting the vaccination done—this bill will help improve that process and make it better not only for the patient but for the provider as well.

So I’ll be brief: I support this bill. Thank you.

ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call.

SIMON WATTS (National—North Shore): Thank you very much, Madam Speaker. I rise on behalf of the National Party and as the member of Parliament for North Shore to talk on the Medicines Amendment Bill second reading.

I want to recognise Dr Leavasa—welcome back to the House, and also a good and consistent member of the Health Committee, of which previously he was a part of, but I do acknowledge our members on this side of the House Matt Doocey and Dr Shane Reti for their contribution in regards to that Health Committee, which has reviewed the bill that is in front of us. I think the review by that committee was an important aspect in terms of being able to put thought and get feedback from the six submitters that did provide feedback, including the Ministry of Health, in terms of some of the practical implications and challenges in regards to this bill.

I pick up from David Seymour’s comments before around that regulatory complexity. I think I would agree with that in regards to the fact that throughout COVID—and having been a member of the Health Committee throughout that period—I think one of my memories will be around the fact of the challenges around our system in terms of being able to balance the need for the regulatory impact, which is articulated, highlighted, and amplified, in a bill such as this, but also the need to be agile to the rapidly changing environment. I think our regulatory complexity that we do have is an area that does need to be reviewed and simplified. The reality is, as has been canvassed, regulatory complexity and burden does bring a cost, not only a fiscal cost but also a cost in terms of decision making and delay, which can and does have implications more broadly.

I wanted to recognise the submissions. While there was only a small number that were made in regards to this bill, my understanding from those on the committee is that it was comprehensive and it did provide clarity and context in regards to this area, which gave the committee confidence in terms of continuing to support this bill.

I think the other element in terms of that—it has been already made as well—is in regards to that trust and confidence. You can definitely see that trust and confidence in Government has significantly reduced, particularly over the past five years. I think, post-COVID, that trust and confidence, or lack of, has been amplified, and definitely the way in which elements of the response in regards to COVID, particularly around vaccination, has definitely played a factor in regards to that. That’s a real issue, and something that has and will be canvassed. I’m obviously looking forward to the point at which we actually undertake a review of our COVID-19 response in this country and actually undertake a thorough exercise, which I do note that the UK Government actually started to commission last year, so they’ve already started and are well into it.

The reality of any review of a response is, one, at a primary level, to be able to learn from what did occur and what didn’t occur so that those improvements can be made. I think this bill, or the lack of that review not even being started or commissioned or planned, remains a considerable issue, I think, in terms of New Zealand’s resilience to be able to deal with—

Hon Andrew Little: I thought the member didn’t like working groups.

SIMON WATTS: —future challenges in regards to that. And I can hear members on the other side just commenting around that, and I’m still not clear on why they aren’t supporting those reviews to be undertaken, but I’m sure we will continue to call for that transparency.

I think, lastly, the point around the fact that there is nothing in this bill that would mandate this vaccination I think is important to make. We have moved on in terms of where we are in regards to that conversation and again, reinforcing that point that this bill does not do that, but, of course, those decisions can be taken by Government, and we’ve seen the implications of that in the past.

That’s pretty much all I wanted to cover in regards to the second reading of this bill. Obviously, a comprehensive process undertaken, which I think has added value in regards to where we are. I think, obviously, in terms of the ability now for this to be implemented to ensure that everyone who requires this will have the ability to have access to this medicine—as a result of this, they now will be in that position. So I’d like to commend this bill to the House.

BARBARA EDMONDS (Labour—Mana): Thank you, Madam Speaker. Very much like the member for the Green Party Mr Tuiono, I also am not an expert in health and am just a humble lawyer. So I wasn’t there to scrutinise this particular bill as part of the select committee. But what I did quickly have a look at were the experts who did submit on the bill—the five that did agree with it.

I just want to basically confirm and affirm my support for the Immunisation Advisory Centre’s submission, which is, very briefly, that they approve the use of the vaccine that already had consent or provisional consent for use as a new medicine. They believe that this bill will help to manage the risks of COVID-19’s spread and provide therapeutic value to those being vaccinated. They also supported this bill because it allowed for our vaccination workforce to administer further doses of the COVID-19 vaccine in the same way they have for the primary courses and the first booster doses. And they paid particular question to the House to just pay heed to targeting Māori and Pasifika. So, on that note, I commend this bill to the House

SARAH PALLETT (Labour—Ilam): Thank you, Madam Speaker. This is, as Mr Little said, a very simple bill which allows the 834,000 people who would benefit from a fourth dose to receive it if they wish—if they wish—in a much swifter and more equitable way. The people that we are referring to here are people who are over 65, Māori and Pacific people over 50, and those who are severely immunocompromised.

I just want to follow up very briefly on the conversation that we heard a little earlier about flu. Influenza is indeed an extremely serious illness, but COVID and flu are not directly comparable. To the unvaccinated person becoming infected, COVID has a substantially higher, up to 10 times higher, rate of mortality—that is, it will kill 10 times as many people as the flu does. The moral of the story is please get vaccinated, and vaccinated against flu too. Thank you.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. I think the fact that the Health Committee in its deliberations has recommended no change to the bill does not undermine the importance of the process that was followed in the last 10 days. I want to commend submitters and the committee for their work in that regard. I think some of the questions that I had at first reading have been answered. Others have not, and I think we need to explore a little bit of that in the committee of the whole House.

In my first reading speech I talked about the committee asking two questions: is this the right thing to do, and is this the right way to do it? Now, to the degree that we are seeking equity and removing barriers to people actually getting their fourth dose if they are eligible for it, we are achieving that goal, and people have talked in this reading about the evidence of benefit. I’m not convinced it’s as strong as people would suggest. The Minister talked about the plethora of countries that are doing this—the second booster—and by my count there are only seven, which leaves over 190 countries that are not doing it. As recently as last month, the World Health Organization reviewed the evidence for a fourth COVID dose and said that the lack of data exists and it may show some short-term benefit for those over the age of 60, but a very tenuous benefit for anybody else. Pfizer themselves, in their four-paragraph submission to the committee, made a telling comment: “Recommending the use of an additional booster is a decision for the New Zealand Government”. So they were ambivalent, at best, about it.

Like Mr Seymour, I was interested in Teanau Tuiono’s comments about trusting the evidence of the experts. The plumbing analogy: I would have a slightly different take on it. It would be analogous to a qualified plumber coming in and fitting systems that had not been approved by any standards organisation, and everybody going, “Well, they’re the experts. That’s OK”. Now, it is slightly different, but I think we should be healthily cautious about the expertise.

So to the issues that were raised, I think the two really important things are that this isn’t going to be mandated—that was very clear to the select committee—and the application would be required if the assay changes, although I note that assay is only one aspect of dose management. There’s also the frequency and quantum of the dose that’s administered in any pharmaceutical. I doubt that that will be amended, but technically it could be.

The things that I’m worried about still are whether changing the legislation is necessary. I still believe the immediate modification order is a perfectly legitimate way to continue to do the things that the Government has already done with a third dose.

The refusal to consider a sunset clause on the basis that the Medicines Act will at some stage in the future be repealed and replaced—well, we’ve been talking about that for 10 years. The previous Government was talking about it. The next Government will be talking about it. I don’t think that was a case for not having a sunset clause on what’s a pretty broad mandate.

The fact that there’s no benefit-cost analysis: I’ll be raising this in the committee of the whole House with the Minister, but I would encourage the select committee, in taking advice from Pfizer, to actually do it by way of an inquiry and I trust Mr Utikere, with his Labour colleagues, to consider that very carefully. I think two things would be considered in such an inquiry that we could hold in the spring or early summer, and that is: what is the evidence of benefit for the fourth dose, or the second booster, and what was the cost of administering 830,000 doses of that fourth dose, and was that matched by, as the regulatory impact statement (RIS) said, the number of avoidable hospital admissions, harm, and death—because I think the RIS has a much stronger sense of the benefit here than the World Health Organization did in its article last month.

So there’s still quite a bit to be done. While the House is obviously going to support this, there are still some caveats. We can explore them in the committee of the whole House, but I do implore the Health Committee to keep in touch with Pfizer and with Treasury or the Ministry of Health on whether or not the extraordinary further outlay is going to be exceeded by the benefits in reduced harm.

Dr GAURAV SHARMA (Labour—Hamilton West): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. Before I speak on this bill, I just want to wish everyone in the House Mānawatia a Matariki—happy Māori New Year—as well as acknowledge that today is international yoga day, which is being celebrated across the world in over 150 countries. Today, I had the pleasure of hosting it here in New Zealand with the honourable Ginny Andersen, being the first country in the world to host it. I just want to thank all the members who actually came early in the morning to join us for yoga.

Just coming to the bill now, the Medicines Amendment Bill (No 2), the House has been in recess in the last week. I was out in the community meeting people and talking to them and I got asked about six times when the fourth dose of vaccine is on its way. So it was really good to see, out in the community, that people are interested in having another booster shot, which will eventually help our communities keep away from hospitals, keep away from sickness. As my colleague, and former midwife, Sarah Pallett said, it is also a good reminder now to make sure that you get your flu shots at the same time to make sure that we are doing a good service and keeping the waiting lists of the hospitals low.

I also want to acknowledge, as a member of the Health Committee, the submissions we did receive in the tight time lines we had, especially from organisations and people who are involved in looking after our communities, because it does make a huge difference when these people are involved and support the work we are doing through this bill. I also want to quickly acknowledge parties across the House who all agree on this bill, and I would like to recommend the bill to the House. Thank you.

Motion agreed to.

Bill read a second time.

ASSISTANT SPEAKER (Hon Jenny Salesa): In accordance with a determination of the Business Committee, this bill is set down for committee stage forthwith. I declare the House in committee for consideration of the Medicines Amendment Bill (No 2).

In Committee

Clauses 1 to 5

CHAIRPERSON (Hon Jenny Salesa): I call on Dr Shane Reti.

BARBARA EDMONDS (Associate Whip—Labour): Point of order, Madam Chairperson. My apologies; I was waiting for instructions but I’ve just missed it. So I seek leave for all provisions to be taken as one debate.

CHAIRPERSON (Hon Jenny Salesa): Leave is sought for that purpose. Is there any objections? There are no objections. The question is that clauses 1 to 5 stand part.

Dr SHANE RETI (National): Thank you, Madam Chair. I just have a few questions which we actually note in our report. Just to record and double check with the Minister, can I just reply to my colleague David Seymour, his very good question—I interpret it the same as what David does. Pretty sure I talked about that the assay can’t change, so it can’t be a different strain added into what we currently have, that it has to stay this dose and frequency or it comes back. That’s my interpretation as well, because we did ask questions about the flu vaccine and different strains and how that got a different set of legislative requirements.

The questions we want to ask the Minister, and it has been touched on in second reading, is he certain that there need be no requirements—and my colleague Simon Watts raised points of this type as well—no provisions, or it is not necessary to have provisions to review this Act at some point in the future? Let’s remember it hasn’t had a New Zealand Bill of Rights Act (BORA) vet, it hasn’t had a regulatory impact statement (RIS), it hasn’t had an impact analysis, and even though the therapeutic products bill is promised, it is some point in the future and doesn’t really address these questions that we’d have with any other normal legislative process. So I’m just looking for some reassurance from him or reasons as to why not or that maybe it could be considered.

The second question I’d ask—and it’s been raised by my colleague the Hon Michael Woodhouse—is around the sunset clause. It was raised by submitters; again, it’s being held for—as we understand it—the therapeutic products bill, which has been on the order sheet, I believe, over several Governments. So it might be a bit wishful to say this is a temporary measure, and if that temporary becomes a lot longer—and we know that with COVID vaccines there’s been issues with temporality in front of the courts anyway.

So I think we want to have this sort of tidied up so, two questions to the Minister. One, a consideration of review, RIS, BORA, and efficacy. Then second, the provision of a sunset clause.

Hon ANDREW LITTLE (Minister of Health): Thank you, and I thank the member for his questions. In case it hadn’t already become apparent to the member, he will know that I’m a Minister that gets things done. So having picked up the therapeutic products bill that was started under the previous Labour Government and made absolutely no progress under the previous Government, I have picked it up, and I can assure the member that that bill will be introduced before the end of this year. In fact, there’s a fair amount of work going into it, and we thought very carefully about the amendment to the Medicines Act for this purpose and its relationship to the therapeutic products bill. So I can assure the member that we will have a therapeutic products bill in this House, and that will be an opportunity to look at the full regime and to draw on any lesson we’ve learnt from this particular provision. That’s the reason we didn’t consider that there needed to be a sunset clause because the days of the Medicines Act 1981 are going to draw to a close. We will have a modern therapeutic products piece of legislation before too long.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Chair. I just wanted to ask the Minister about how he interprets the legislation before us. It says that if the Minister has given consent or provisional consent to a COVID-19 vaccine and a data sheet is approved for the vaccine under the regulations, the director-general (DG) can authorise a different way of administering it. In other words, that would mean that a vaccine that’s already being used for COVID—and I assume that would include several, and I wonder if he could tell us which ones—the way it’s administered, the doses, the frequency, perhaps even how it’s injected, could be changed. Could he just confirm that is really what this is about. It’s not about new vaccines; it’s about the administration of those that have been consented, and, if so, which ones will it apply to that are currently consented COVID-19 vaccines?

The reason I ask that, as a secondary part, is I know there are people—and I have constituents in the Epsom electorate—who are interested in whether this will allow the director-general, if they were to choose, to allow the administration of Comirnaty to younger New Zealanders. Because the Food and Drug Administration and the Centers for Disease Control and Prevention in the United States have just said that you can now give a Comirnaty—three doses over, I think, 11 weeks—to a six-month- to five-year-old child. Currently, that’s not allowed in New Zealand but there’s certainly a lot of parents who would like that to be an option. So I think it would be really helpful for the Minister to tell us if that will be possible, theoretically. If not, then I think we should discuss, perhaps, how the legislation could even be amended to allow it in this committee.

The third question, I guess, is: what is his position as the Minister of Health? Will he use his influence? Will he consider, perhaps, writing to the director-general and asking that the director-general should make it available for six-month- to five-year-olds and—assuming that I’ve interpreted the law correctly, it would allow for six-month- to five-year-olds to have a Pfizer vaccine—will he then encourage that to happen rapidly? Because, as I said in my second reading speech—and I’ll just give the Minister a bit more time as he’s consulting his officials—I think this whole episode, while we support the legislation and think it’s a good idea and it should go through as quickly as possible, has exposed some weaknesses, I guess, in our legislation, our regulatory regime for medical products and medications; perhaps, actually, a weakness in our regulatory regime for all sorts of products, which I believe, and ACT believes, are very duplicative, whether it’s plasterboard or whatever.

So I hope the Minister can answer those three questions. Does this mean any currently consented COVID vaccine and, if so, which ones would this law apply to right now? Second of all, could that mean that we could allow it to be applied to six-month- to five-year-olds, as has just been allowed in the US and, if so, will he encourage the DG to do that?

Hon ANDREW LITTLE (Minister of Health): Thank you, Mr Chair, and thank you to the member. He is right: this is simply about the administration of vaccines. The bill makes it clear that it does not allow for the approval of new vaccines. So it’ll be existing vaccines approved by Medsafe and Pharmac—so Comirnaty but also the other ones that we have, the AstraZeneca—

Dr Shane Reti: Novavax.

Hon ANDREW LITTLE: Novavax. Thank you, Dr Reti. So it won’t allow the director-general to issue a notice in relation to any vaccine for COVID-19 other than those that have already been approved.

In relation to whether it could be administered to age groups not so far the subject of an application by Pfizer, I’d just draw the member’s attention to clause 4 of the bill. It does require the director-general, in issuing the notice, to have access to data to justify the notice that the director-general might give and having regard to the likely therapeutic value of the administration of the vaccine and any risk and that it’s an appropriate measure. So the director-general has to be satisfied of that. In reality, that data is going to be most likely obtained from the pharmaceutical companies, so the director-general would be reliant on that. So unless there is some other source of data—

David Seymour: Such as the FDA committee?

Hon ANDREW LITTLE: Well, decisions about the use of particular pharmaceuticals is typically reliant on data provided by the pharmaceutical company applying for the application to distribute and sell in the country. So I expect the director-general would be reliant on that as opposed to third-party sources of it. In your third question—would I prevail upon the director-general to make representations about how it should be administered—no, I do not have a clinical background. I do not regard myself as having clinical expertise. I’m reliant on advice from the director-general. I might ask the director-general from time to time what is an appropriate regime for New Zealand, but I am reliant on the director-general and the other experts that the director-general calls upon before any such decision would be made.

DAVID SEYMOUR (Leader—ACT): Just very quickly in response to the last comment: I recognise that the Minister of Health is a trained lawyer and not a medical expert. I certainly wouldn’t ask him to approve a vaccine. But he’s also an elected representative of New Zealand. And if you believe that New Zealanders wanted the Director-General of Health to consider it, then he might think about passing on that message in the spirit of being an elected representative; not to force the decision but to actually draw it to the director-general’s attention, I think, would be a helpful thing to do in a representative democracy.

But can I just—you know, one more follow-up to that previous question, which really was that the Minister’s drawn our attention to clause 4, that says that “Before issuing a notice … the Director-General must—(a) have regard to the likely therapeutic value of the proposed administration of [a vaccine and the risk]; and (b) be satisfied that the proposed administration … is an appropriate measure to manage the risks associated with the outbreak or spread of COVID-19.” I thought it strange that the Minister, despite having said, “Look, I don’t have the expertise here.”, was quite adamant that if the director-general was going to make a decision, then he could certainly use datasheets from Pfizer, but he couldn’t consider the fairly fulsome proceedings of the Food and Drug Administration (FDA) which has been published in the US in the last week. Surely he’s not saying this statute as we’re currently proposing it would prevent the director-general from having a look at the proceedings of the FDA and the decisions of the Centers for Disease Control and Prevention in the last few days and referring to those, and, if so, do we need to consider whether this legislation is overly prescriptive? I don’t think the legislation supports the comments the Minister’s made, but, if he could clarify, I think that would be very helpful.

Finally, we know that vaccination and some of the Government’s policies in response to COVID-19 have led to enormous resentment and distrust and erosion of social capital—and we saw the irrational extremes of that on the front lawn of our Parliament. I know that in response to this legislation, which ACT supports and which is fairly straightforward, there will be people who will ask, “Is the possibility of a fourth dose a precursor to the requirement under certain circumstances for people to have a fourth dose?” And I think it would just be helpful for the Minister to state whether he’s had any advice about that or any communications or consideration of a fourth dose being required in any context, particularly in relation to the health system where he has ministerial responsibility once it’s allowed? I think it would be helpful for New Zealand for the Minister to get up and make a very candid statement about where he lands on that particular issue. So there are two questions there. I’d really like to hear the Minister’s answers.

Hon ANDREW LITTLE (Minister of Health): I thank the member again. In relation to my earlier comments, I said that I’d expect the director-general to be reliant on information provided directly by a pharmaceutical company, as opposed to third-party sources. The information that the Food and Drug Administration considers typically comes directly from pharmaceutical companies, and I therefore think that it is likely, if not probable, that were the director-general to be of a mind to, the director-general could consider data that had been considered and accepted by the Food and Drug Administration in the US, providing that the director-general was satisfied that the information had come from a reliable and credible source. If it comes from a pharmaceutical company, it is the same source that our Pharmac and Medsafe use, so I think it would most likely meet that standard. So I hope that answers that question for the member.

Secondly, I accept the member’s point about the erosion of social capital that we have suffered as a consequence of the dynamics that have built up around the COVID response. I can say to the member that the very reason we’re taking this approach is that it is not this Government’s intention at all, and the Government will not be mandating a fourth dose. This is on a voluntary basis because of the available evidence that there is waning immunity for some parts of the population—the more vulnerable parts of the population. Therefore, if those parts of the population wish to avail themselves of a fourth dose without having to go through the named-patient process, which is very cumbersome, then they will be able to do so, but we will not be making a fourth dose mandatory for anybody.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. Mr Seymour’s questions around the breadth of the bill was one of my questions, and the Minister has answered that satisfactorily. This is not just about Pfizer; it’s about all of the vaccines that have been approved so far, although I note that Pfizer was the only one mentioned in the regulatory impact statement, which is rather unusual and probably reflects a degree of influence of, and breadth of the use of, that vaccine.

What I then heard, I think, David Seymour ask was about the potential for vaccines to be administered to children between the ages of six months and five years. I may have misheard the Minister’s answer but it seemed to me that he was saying to the committee that when this bill is passed, that could happen under a consent granted by the Minister under section 34A(1)(a), which seems quite surprising and a bit concerning to me because what I thought we were doing was extending the number of doses to people in an age range, and with certain conditions, like being immunosuppressed, who have already had the dose. Now, at six months to five years they haven’t had the dose yet, and it surprises me—if I heard right, and I think we need to have that clarified—that this Act could then enable the director-general to authorise the administration of Pfizer vaccines, for example, for that age group when (a) Pfizer hasn’t applied for it and (b) they haven’t previously had that. And I think that takes us into a realm that I wasn’t expecting. So some clarity on that—if I misunderstood—would be helpful.

The second question I have is around the immediate modification orders (IMOs) and the rather extraordinary comment in the regulatory impact statement that basically said that Ministers didn’t think that an IMO was an option. I think we need to flesh that out, because I have previously heard the previous Minister for COVID-19 Response giving the country a bit of an expectation that we were going to be in orange for the foreseeable, and certainly past the winter period that we are concerned about right now.

Two things: what was the nature of the discussion between Ministers that had formed the regulatory impact statement, and what is his level of confidence? Has he had an exchange of views with either the previous or the current Minister for COVID-19 Response about the likelihood that the epidemic notice, which, actually, expired last week, was renewed? I didn’t see any press release on that. I think it was due to expire on 17 June, which was four days ago. If it didn’t, that may answer my question. Was it extended and, if so, why wouldn’t an IMO have been appropriate? And, in fact, if it wasn’t extended, why not? Why are we still in orange if the epidemic notice wasn’t extended?

The third question relates to the question of page 3 of the regulatory impact statement, which is around the benefits. Firstly, there’s been no financial data on this at all. How much is it going to cost and how much is it going to benefit? There’s a pretty standard equation in a regulatory impact statement. We know there are more than 800,000 doses expected to be administered once the bill passes. What is the cost of that administration for both vaccine and the fees to the people who will be administering them? And then at the bottom of page 3 it talks about the benefit, which is basically a reduction in the risk of infection and severity of the illnesses—approximately two to four times less likely for those aged between 60 and 100 years, and a 78 percent lower mortality rate from COVID than those who only received a third dose. I wonder what the research was. How much is that in quantity of the reduction in harm? That’s usually pretty easily able to be measured by QALYS, or quality-adjusted life years, or some other kind of metric. And did any analysis take into account the fact that many of those people would not only have had three doses but would’ve also had COVID and therefore by dint of that would’ve had a boosted natural immunity, which may have the same effect as a fourth dose? That, for me, I think, actually underscores why the World Health Organization were pretty equivocal about the benefits of the fourth dose.

But my question really is: what analysis, if any, was done? I don’t want to bring it down to dollars and cents—this is actually about benefits as well as the cost. But what analysis, at all, was done or was this just done on a whim and emotion?

Hon ANDREW LITTLE (Minister of Health): I’ll attempt to respond to the member’s questions. On the extent of the director-general’s approval—and the member, I think, wrapped it up in what discussions or what advice did Ministers have about the background to this. What we were invited to consider was, first of all, the growing international evidence that there is waning immunity—particularly for vulnerable populations—when it comes to COVID vaccines, and, therefore, for those vulnerable populations, should we be considering further assurance, if you like, through more doses of the vaccine to afford greater protection. We considered the advice we received and we took the view that it was appropriate to make a fourth dose available to those populations. We weren’t prepared to mandate it, but we thought it should be an option that is available for those who wish to do it. So that is the background to it and what we have approved.

On the reading of the bill, it is possible that the director-general, in giving a notification under these provisions, could provide for vaccination to be available to those currently not covered by approvals of Pharmac or Medsafe, but in order to do so, the director-general has to have access to relevant data and has to be sure about the safety and therapeutic benefit of doing so. That’s what clause 4 largely takes us to.

So I don’t think people should be particularly worried that there is now some sort of recipe to expand the use of vaccines to parts of the population who do not currently have access to it. The focus right now is on those vulnerable parts of the population who are looking for further assurance through an additional dose.

The member raised a question about the epidemic notice, and it goes right outside the scope of the bill. So, apart from saying that, in all things that the Government does, we act lawfully and we will continue to do so.

The final question the member raised was about cost. What I can say is that this Government has procured enough of the vaccines, including the Pfizer vaccine Comirnaty, to administer additional doses. There will be no additional cost to the Government in doing so. We have enough doses installed.

Clauses 1 to 5 agreed to.

Bill to be reported without amendment.

House resumed.

CHAIRPERSON (Ian McKelvie): Madam Speaker, the committee has considered the Medicines Amendment Bill (No 2) and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Third Reading

Hon ANDREW LITTLE (Minister of Health): I move, That the Medicines Amendment Bill (No 2) be now read a third time.

I thank the House for their attention to this bill that will make a difference to more vulnerable parts of our population who seek the further assurance of an additional dose of an appropriate COVID vaccine. Our vaccination programme is dominated by the Pfizer vaccine—the brand name Comirnaty—but we have had two or three other vaccines as well, as part of our programme. AstraZeneca is probably the next most used, and there’s Novavax as well. So this bill simply allows the director-general, through an appropriate notice and on appropriate assurances, to approve a further dose being given, and the basis of that dose as well. This simply reflects the fact that there is international evidence that, for some parts of the population, the vaccine wans in efficacy. For those who are concerned about that, and where it’s medically appropriate, they can get an additional dose of that.

The alternative is to rely on the pharmaceutical company themselves to make an appropriate application to Pharmac. They haven’t done that. The alternative then would be for each individual person who wanted a further dose to go through their doctor, to go through the named patient regime for off-label use. This process obviates the need for that and makes it available on a broad basis for those defined in the notice and for whom the director-general is satisfied there is a therapeutic benefit and for whom it is safe to further administer that dose. It is a very simple process in that respect. But, as members have raised in the debate in the House, this House can look forward to—and I know they will in eager anticipation—a recasting of our legislation that governs pharmaceuticals and medicines and other products claimed to have a therapeutic benefit, with the forthcoming therapeutic products bill. I can assure the House that there has been considerable work done—with, I might say, a sense of alacrity—and they won’t have to wait too much longer. That bill is churning its way through.

Todd Muller: What about sunscreen?

Hon ANDREW LITTLE: And I’m obliged to the member for Bay of Plenty for the work he has done on a therapeutic product, namely sunscreen. I think that member will find that his hard work, his labours, will be fully absorbed, no pun intended, into the therapeutic products bill, and his work will itself provide a therapeutic benefit to the therapeutic products bill. But this bill provides a very effective remedy to a problem, but, most importantly, allows people to get that additional dose, by way of further reassurance, to a virus that we all want to see the back of just as quickly as we can. On that note, I commend the bill to the House.

Dr SHANE RETI (National): Thank you, Mr Speaker. This bill seeks to insert new section 34A into Part 2 of the Medicines Act. It operates primarily on section 20, or section 23, where provisional consent requires an application to Medsafe. What this bill, effectively, does is removes the prerequisite to have that consent from Medsafe.

We’ve talked about a number of things in the committee of the whole House. It’s interesting to consider the prospect of the therapeutic products bill maybe being the reason why this bill doesn’t require a sunset clause. It may well be introduced at the end of this year, but that could be a three- to six-month process to actually make its way through. So we’ll have to see if it’s actually going to provide any remedy here, and if the Government wanted to be cautious, they could have put a time frame on, themselves, in this bill—a sunset clause—to make sure that the therapeutic products bill was going to meet the ambitions that have been described in this House.

There were a couple of options. A section 25 option, where, on a prescription from a GP, one can purchase the vaccine, get it off-label—that’s actually what’s been happening to vulnerable communities at the moment. Not really tenable. One is the cost of access, two is GPs are already overwhelmed, and three is the burden of going through that off-label sort of process. It wouldn’t have really been able to roll it out in the way that we like a national vaccine programme to roll out. As you heard my colleague the Hon Michael Woodhouse comment, immediate modification orders are another option. The Government has put to us that the temporal nature of them doesn’t suit what we’re wanting to achieve here, and we tried to remediate that with some thinking in select committee.

It’s very clear that there is some urgency. All the experts have expressed concerns to us around maybe wave two, expressed concerns around the co-determinants of being in winter and the increased risk of spread, and certainly those who are knowledgeable in this space weighed up the benefits and the disadvantages. The disadvantage of not having the Pfizer data through Medsafe and through to the officials to follow normal processes versus the urgency of all these other things around COVID that would increase the risk particularly to the vulnerable, those immunocompromised and older people—weighing all of that up. What we’ve heard from the experts is that there are merits in progressing without approval from Medsafe and that there are more benefits relying substantively on the international evidence. We’ve listened. We’ve heard. We’ve expressed our concerns and some suggestions as to how this bill could be made better. But, at the end of the day, we’ve taken the advice of experts and the science and we will be supporting this bill in its final reading here today. Thank you.

TANGI UTIKERE (Labour—Palmerston North): Thank you, Mr Speaker. I don’t intend to take the House’s time this afternoon except to say that in the first reading, my contribution was around the hope that this would be a bipartisan or multipartisan approach of supporting this piece of legislation, and what we are experiencing in the House this afternoon is exactly that, because there are many tools in the tool kit when it comes to tackling the pandemic, and vaccination is a pretty crucial one around that. And what we have at the moment without this piece of legislation is a requirement for anyone who wishes to obtain a fourth dose, to make arrangements to go and see a GP to get a script in order to receive it. And what this particular bill does is it makes it easier; it makes it more accessible for whoever may wish to access the fourth dose. And, on that basis, I commend this bill to the House.

SIMON WATTS (National—North Shore): I rise on behalf of National as the member of Parliament for North Shore on the Medicines Amendment Bill (No 2) third reading.

I just wanted to make three key points, really. As has been articulated before, this is a reasonably simple bill which is, in effect, going to provide a remedy in terms of the problem that’s been articulated around access to this vaccination. The second element is in regard to, I think, highlighting the complexity in the regulatory burden and the complexity around the Medicines Act; I think that is something that is coming through via this process. I think the learnings that we have taken on board, as we’ve gone through the COVID response phase, also has highlighted some of the aspects around getting that balance between regulatory oversight and feedback from experts and the ability to move fast and be agile. I think that will no doubt be a key element in terms of any subsequent review that is undertaken in terms of the Government’s response to COVID in this country and, hopefully, a process that will be initiated as soon as practicable.

I think the third point I want to recognise, and the Minister Andrew Little has clarified this very clearly in the House today, is that there will be no mandating of a fourth dose of vaccination. The Minister said that in his remarks today, and I think that was a point that was raised in the first and second readings, in terms of clarity on that. So for those out there who have that question, it provides that aspect.

I think the conversation more broadly around that, that only 42 percent of our health workforce are currently vaccinated for the flu—that is a key contributor in terms of hospital admissions or presentation admissions at the moment—is obviously a significant issue. When I was part of the health system before this role, we had numbers in the region of 70 to 75 percent that were getting vaccinated for flu and influenza at that point, and so 52 percent is quite a considerable decrease versus where we have been previously. So, obviously, that’s part of this broader conversation.

We’ve covered elements, lastly, around the sunset clause, and the Minister’s provided some confirmation around the therapeutic products bill, and, no doubt, that shines a little bit of light for the member of Parliament for Bay of Plenty in terms of his contribution in regards to that very bright and positive bill. So, with no further ado, I will commend this bill to the House.

Dr TRACEY McLELLAN (Labour—Banks Peninsula): Thank you, Mr Speaker. The COVID-19 pandemic—the tricky sort of pandemic—has highlighted several things, but among them it’s highlighted that provisions in the Medicines Act were not designed to be particularly sort of rapid, certainly not very flexible, and not designed to be particularly equitable in terms of our response that we find ourselves in in emergency situations. Specifically, the Act doesn’t facilitate a very timely or a very efficient roll-out of already consented vaccines and the types of things that we use to manage evolving public health risk.

As has been mentioned in a previous stage of this bill, the changes that we’ve made prior to this to the vaccine schedule—such as reducing the dose interval for that third dose—have been enabled through immediate modification orders under the Epidemic Preparedness Act, but it’s certainly our belief on this side of the House that it’s now necessary to enable enduring mechanisms that don’t specifically rely on the use of emergency powers. And, on that basis, I commend this bill to the House.

TEANAU TUIONO (Green): Thank you, Mr Speaker. It feels like an age since we were last here reading the second reading of this bill, approximately about an hour and a half.

The Greens will be supporting this bill. It would insert a section 34A into Part 2 of the Medicines Act, which relates to “medicines and medical devices”. This will allow COVID-19 boosters to be rolled out for those who are of high risk for COVID-19. I appreciate the conversations that we’ve had around the House this afternoon around ensuring that we are mindful of the information that we get from people. So making sure of the source that we get that information from and having experts come in and give us that advice is really important.

I attempted a plumbing analogy, which fell flat with a few members around the House as well, but it just reminds me that I should try to think carefully before clogging the drains with any metaphors. It is also great to see the bipartisan support for this bill, as well; often that’s just a pipe dream. It would be good to see that across the House.

But also there were a number of questions that were raised around the committee stage and different points that members have raised, which I think is really important that when experts and advisers come to us that we have that time to actually go through it and ask those questions that our constituents and interested parties would ask those experts as well. But it’s important that we don’t get any Tom, Dick, and Harry with a YouTube account showing up to the select committee; that we get those people that have the background expertise in that, and we put those questions to them as well.

So the select committee process was short. I do understand the motivation for why it was truncated, but it was also incredibly important to get those perspectives on paper, as with the contributions made by members around the House as well.

I guess the thing for me that lands most that I am learning and continue to learn, and I hope others around the House are learning that as well, is that when we get leaders from our communities—from impacted communities—that empowers appropriate decision-making, because people are more likely to take on board those messages when you have leaders from those communities. I was reflecting in my second reading speech around some of the lessons learnt around the Delta outbreak: how when Māori and Pasifika leaders, particularly health leaders, say certain things that the Government should actually be engaging with those and prioritising those voices—particularly our immunocompromised and disabled whānau.

And also being mindful, I guess, for many of us who are both parents or grandparents, uncles and aunties, about the winter of infections along with COVID coming in from our schools and the importance of having a school plan in place to help to support our school communities, because they’re asking for that. I hope that’s on the agenda for the Government. The Greens will be supporting this bill.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. I rise on behalf of ACT in support of the third reading of this Medicines Amendment Bill (No 2). I think it’s been an interesting process, particularly an interesting discussion at the committee of the whole House stage, and, in particular, the question of whether or not this legislation will not only allow a fourth dose but also allow those parents of six-month-old to five-year-old New Zealanders, with the agreement of the Director-General of Health, to be able to immunise their young ones against COVID-19, as young American children are now able to thanks to developments from the Food and Drug Administration and Centers for Disease Control and Prevention over the past week.

As we’ve traversed, it’s also instructive that New Zealand’s regulatory systems are at a stage where we have to do these kind of truncated, half-arsed—that’s a parliamentary term, Mr Speaker!—legislative manoeuvres in order to—I’m sure it is in Rangitīkei, Mr Speaker!—get through an impasse where people can’t get access to a vaccination because of the regulatory situation. I think that’s possibly the beginning of a much more sophisticated and very necessary debate about the duplication of our regulatory systems. These are the regulations that are passed in other countries.

But, in the meantime, this is absolutely the right thing to do. It is absolutely a choice. It was absolutely reassuring to hear from the Minister that the Government has not considered and will not make it in any way compulsory for anyone, for any condition, for any reason, to have a fourth dose. But what it will do is allow people who might not have the time or capacity to get to their GP who do want a fourth dose to have one, and possibly for more younger New Zealanders whose parents want it to be able to get that protection for them as well. I think that’s a very positive development for our country, and the ACT Party stands in favour of this legislation. Thank you, Mr Speaker.

Motion agreed to.

Bill read a third time.

Bills

Commerce (Grocery Sector Covenants) Amendment Bill

Second Reading

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

ASSISTANT SPEAKER (Ian McKelvie): That legislative statement is published under the authority of the House and can be found on the parliamentary website.

Hon Dr DAVID CLARK: I move, That the Commerce (Grocery Sector Covenants) Amendment Bill be now read a second time.

Groceries are an essential purchase and a major expense for most households in New Zealand. Competition is a key driver of price, quality, range, and service offered by grocers in New Zealand. Back in March, the Commerce Commission published its final report on the market study into New Zealand’s retail grocery sector, and that report found that competition was not working well for consumers in New Zealand, with excess profits estimated conservatively at $1 million a day accruing to the duopoly, straight out of Kiwi’s pockets—a million dollars a day every day over a period of some time.

The bill addresses the weak competition by giving effect to one of the Commerce Commission’s recommendations. I intend to introduce the second bill addressing the commission’s other recommendations later this year. The commission confirmed what was already suspected: that the duopoly had been engaging in anti-competitive land wars, where they buy up land or dictate the terms of leases to block their competitors from getting a foothold in any particular area. The Commerce (Grocery Sector Covenants) Amendment Bill amends the Commerce Act 1986, banning restrictive covenants on land and exclusive covenants on leases, and it also makes existing covenants unenforceable.

The bill will apply to the duopoly: so to Foodstuffs North Island Ltd, Foodstuffs South Island Ltd, and Woolworths New Zealand, including any successors, franchisees, or transacting shareholders of these companies. And it also provides the flexibility for including other grocery retailers—and that would be designated by Order in Council in the future under that provision.

I would like to thank members of the Economic Development, Science and Innovation Committee for their consideration of this bill. I do want to acknowledge the chair, Jamie Strange, for leading this work and for his contribution, and also want to acknowledge Opposition spokesperson Andrew Bayly for the constructive way he has engaged on these matters. I’d also like to thank all the submitters who considered the bill and took the time to provide feedback, especially given the shorter time frame. The committee received 22 written submissions on the bill, and heard oral evidence from five interested parties. Most submissions were either supportive of the bill or supportive of its intents and purposes. Some submitters considered the bill was an important first step but want further measures in future to improve competition; I agree with them, and that will be covered off in the second bill coming through. Two submitters considered the bill would be ineffective or harmful to business confidence—I say for completeness.

On 16 June, the committee unanimously reported the bill back to the House, recommending some amendments which I endorse. And I would like to mention five of these changes. Again, as I do that I do want to acknowledge the committee and I do want to acknowledge Jamie Strange’s leadership but also Andrew Bayly’s constructive engagement on these matters, as the detail was worked through by the committee over a brief period of time. So the committee raised concerns that that new section 28A of the bill may not be effective in capturing the full range of anti-competitive agreements supermarkets might use to limit the availability of land to others. And to address that, the bill as reported back includes several changes to new section 28A. And the Economic Development, Science and Innovation Committee recommended therefore that amending the definition of an exclusivity covenant to explicitly include rights of first refusals that the landlord might give the supermarket should be included. I think that’s a sensible thing to do.

Extending new section 28A to include other provisions in a lease or agreements outside the lease or land covenant that may contribute to a purpose or effect of impeding use of a site by competing retailers—and that’s to prevent designated grocery retailers obtaining the same benefit by combing covenants with other restrictive provisions. Broadening the scope of other retailers who might be affected by covenants the bill prohibits—and so that’s another recommendation. The bill would also apply therefore to covenants that impede other non-grocery retail stores that may compete with a designated grocery retailer. And the committee also recommended limiting the exception for covenants on retail fuel sites to those which are reasonably necessary for environmental impact reasons.

So the reported-back version of the bill also contains a process to make it easier for designated grocery retailers to voluntarily remove covenants affected by the bill from the title of the burdened or benefiting land or to modify the covenant so that it no longer contravenes new section 28A. This process would be available where a designated grocery retailer would, if not for Part 2 of the Act as amended, be entitled to enforce the covenant. Finally, the reported-back bill clarifies the possible ways a designated grocery retailer may have an interest in a covenant. This is to make this provision more explicit.

So the Government Supplementary Order Paper (SOP): I want to say a few things about that. The committee recommended creating a new power for the Commerce Commission to require information directly from designated grocery retailers about relevant contractual arrangements and the process for negotiating those arrangements. This would allow the commission to proactively monitor compliance with the provisions of the bill, the Commerce Act, and the Fair Trading Act 1986. This power would eventually be replaced by the powers given to the regulator of the grocery retail sector once that position is established. This recommendation was unanimously agreed on by the committee, but it was not included in the bill because it would likely have been struck out as beyond the scope of the bill. Instead, the committee opted for a provision it has inserted as new section 28A subsection 3A, which would give the Commerce Commission a monitoring function in relation to the bill.

So apropos the earlier point, I accept the committee’s view that a bespoke information-gathering power along the lines that were suggested would work better than the new monitoring function in subsection 3A. So I therefore intend to table a Supplementary Order Paper under Standing Order 315 to give effect to that recommendation. To address the scope issue, the SOP specifies that the commission’s power is limited to contracts, arrangements, understandings, or covenants to which new section 28A may apply. These requests for information would also be limited to the purpose of assessing compliance with specified provisions in the Commerce Act and Fair Trading Act.

Finally, I note the committee raised concerns that a designated grocery retailer may be able to make unreasonable claims for compensation or damages from their landlord because of the bill making the exclusivity covenant in their lease unenforceable. So section 89 of the Commerce Act has the potential to facilitate a process of renegotiating the lease to reflect actual losses incurred by the supermarket from greater exposure to competition in the area. The committee’s concern was about landlords having little protection against the potential for supermarkets to abuse that process. There are general provisions in contract law, the Commerce Act, and the Fair Trading Act which prohibit the kinds of behaviours the committee was concerned about—for example, undue influence, coercion, or unconscionable conduct. I considered these provisions should provide protection to mall and shopping centre owners. I also considered that the SOP would help mitigate some of these concerns by giving the commission the ability to proactively monitor these arrangements, including the process of renegotiating them as a result of the bill to assess compliance with both the Commerce Act and the Fair Trading Act.

So the bill will remove an important barrier to the availability of land for grocery retail, increasing the likelihood of a competitor to rival the current duopoly emerging in the retail grocery market. We are moving with speed because this is one of the more straightforward aspects of the Commerce Commission’s report to implement. I do thank again the members of that committee, because I do believe in the time frame that we’ve set, significant value has been added by the contributions both of the Government members—and I singled out Jamie Strange—and the Opposition’s Andrew Bayly to improve the bill to make sure that the purposes we laid out have been achieved and that the commission is set to have the monitoring powers it requires to do the job that will make for a more competitive grocery retail sector as a result of this bill, and therefore I commend this bill to the House.

ASSISTANT SPEAKER (Ian McKelvie): The question is that the motion be agree to.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Speaker. It is a pleasure to be talking on the Commerce (Grocery Sector Covenants) Amendment Bill’s second reading. First of all, I’d like to acknowledge the Minister, and also I just want to make a call-out to the committee. It was a very constructive committee who looked at this bill, and I not only acknowledge members from Labour but also my good colleague Melissa Lee from National, who played an important role in this deliberation of a very important aspect of our lives. And of course the backdrop to this is that New Zealanders are suffering from a cost of living crisis that is growing ever more increasing and worrying for many New Zealanders because we have just got a rapid escalation in a whole range of costs: rents, fuel, and interests costs. But, of course, this bill deals with the issue around grocery, and, of course, we’ve seen significant increases in grocery prices in recent history.

I think it’s important—just for the context of this bill, which we’re talking about tonight—that this should be seen as one of a part or suite of changes that need to take place if we are to make sure that New Zealanders are in a better position to be able to live lives and afford good food, which is the hallmark of a good society. And I think it’s important that other proposals that have yet to be tabled in this House are tabled in this House to make sure that we do address this big issue. And I’m talking about the issue of a mandatory code of conduct that the Commerce Commission has felt in its report needs to be put in place and needs to have some real teeth about it to be enforced. We also need to make sure that suppliers are treated appropriately—there have been serious concerns about some of the treatment that certain grocery retailers have been applying on suppliers of food and products to the grocery trade. We want to make sure that consumers get greater access to information and that the grocery regulator, if it is a grocery sector regulator—which is a moot point because we haven’t yet seen this; it was one of the considerations of the committee. We understand the bill will come through later in the year, so we want to make sure that the regulatory power is appropriate and enforceable.

So this bill deals with the final aspect of the Commerce Commission’s recommendations, which is about restrictive covenants, and I think it’s a pity that this bill is being rushed through the House. Obviously, it was introduced under urgency on Budget night. The committee literally had, I think, 10 days to basically work its way through the proposed bill. We heard from five submitters, and there are a number of submitters who made very compelling submissions. I particularly wanted to call out Katherine Rich and the grocery retailers association who did a very good submission, but there are a number of other very good submissions that were helpful in the deliberation of the committee. And I think, as a result, we have probably ended up in a far better place than where we started on Budget night with a draft bill.

The first thing that we were occupied on as a committee is around the issue of what covenants should be kept under this bill. And we heard from Katherine Rich, particularly, who identified a whole raft of covenants that grocery retailers have already put in place—and they are very varied. So we worked our way through the different types, and the first question is: are we capturing all the appropriate covenants? And what we were concerned with in the original definition in the bill was a sort of limiting factor around how you define covenants. And, to some extent, we were particularly concerned about side letters. You might enter into an agreement in a land arrangement with a landlord to tenant a property, but there might be a different agreement that deals with how you’re going to pay the landlord, which might be based on a turnover arrangement that may in fact be in a separate agreement. And then there might be a side letter which says if there are going to be changes to the planning laws in this area that you operate in and you have your supermarket or you own a mall, then we require the landlord, in this case, to pose those changes in planning laws. And, again, that might be captured in another area of documentation. So the first thing was to make sure that the definition was broad enough to capture what was meant by “agreement”, and, obviously, the changed or amended wording captures and adds things like arrangements and other such technical terms to describe broadly agreements that may exist in varying forms between the grocery retailer and the landlord. So that was the first thing.

The other thing related to this is the first right of refusal obligations, and these are very significant arrangements where a grocery retailer—and there have been many examples of this that the Commerce Commission identified—will take a first right of refusal on using potential land that may become available in the future. It may even want to see that right after the supermarket is long gone and no longer occupying the premises. We were particularly concerned about those arrangements because that was another way of a grocery retailer potentially and, in some cases, actually stopping other competitors—other grocery chains—coming into New Zealand and setting up operations, because there may be an arrangement that goes back many years that still applies and that stops the landlord from basically being able to tenant that area to a new competitor.

Then we saw many examples—and Katherine Rich was particularly good on this—about what is meant by a “grocery retailer”. And the definition was extraordinarily wide in some lease agreements. It extended to provision of insurance schemes, and it extended to the sale of TVs, and a whole raft of areas—restaurants, cafes, or anything that could be construed as a potential competitor—had been and has been written into many retail grocery lease agreements. And, again, what this means is the footprint that the grocery retailers are able to exert over “potential competitors”—and I’ll say competitors in inverted commas because in many cases, it was hard to construe how they might even contemplate being a potential competitor or existing competitor of a grocery retailer. So that definition was very, very significant, and we were concerned that we captured that, and I think we have largely with the definition around covenants covered in the new section 28A and 28B.

One issue that we turned our mind to was the issue around compensation. We were concerned that grocery retailers might say, “Look, this is a Government-imposed change to our lease arrangements that we’ve had in place with you, landlord. We might want to see some compensation because, effectively, we’ve seen a loss of value through Government-imposed changes to our lease arrangement.” We considered that very, very significantly and for some period of time in the committee. We think this is an issue that is OK, because what we don’t want to see is retailers actually going to vulnerable landlords and trying to seek compensation.

The other one—and this is a very significant one—is the power of the Commerce Commission, and there were some discussions with the Minister about making sure that the Commerce Commission has the power to be proactive in monitoring these arrangements. At the moment, the Commerce Commission often responds to complaints, but we didn’t think that that was sufficient. We think that the Commerce Commission, first of all, needs to have the ability to be proactive and, secondly, to have the resources to do that. And so we’re looking forward to debating and discussing the Supplementary Order Paper that the Minister’s put forward, but I think we’ve landed in a pretty good shape, and I want to acknowledge all the committee and officials, but we’ll be talking more in time about this.

GLEN BENNETT (Labour—New Plymouth): Kia ora, Madam Speaker. Thank you for this opportunity to speak and to acknowledge the previous speaker, Andrew Bayly. It’s nice to see some cross-party support for this, the Commerce (Grocery Sector Covenants) Amendment Bill. In the 2020 election, Labour campaigned on ensuring that shoppers pay a fair price at the checkout, and this piece of legislation is a small piece that goes towards ensuring that we fulfil that promise.

Now, in the first reading, I remember the Minister Dr David Clark spoke around good quality services, and that has four factors, around price, quality, range, and service. Looking at what is going on with the duopoly, the fact that they are often able to have a monopoly over the range is a challenge for those often in communities that are in my electorate of New Plymouth, where people have to use the service near them—in terms of what they’ve been able to do around these covenants. So this is a simple but good piece of legislation, and I commend it to the House.

MELISSA LEE (National): I just want to just start off by saying it was a bit of a shock and that I was hoping that Glen Bennett might actually speak for a little bit longer to give me time to sort of relax into this bill. But it’s nice to actually see the member, because I think he’s been moved on to another select committee, and I haven’t actually seen him in the Economic Development, Science and Innovation Committee. But nice to have him back.

It is actually a pleasure to speak on the second reading of the Commerce (Grocery Sector Covenants) Amendment Bill in its second reading. As my colleague did, I’d like to first of all acknowledge the Minister for bringing this bill to the House, but I’d also like to acknowledge my colleague Andrew Bayly, who has actually done some substantive work in this bill, and all of the select committee members, given the fact that this bill was introduced in urgency and the select committee literally only had a very short time to actually get this back to the House. I’d like to commend the work of everyone involved, including the chair, Jamie Strange, who has actually worked really, I guess, cooperatively with Andrew Bayly, who is our spokesperson in this area, as well as all of the select committee staffers and officials who have actually come to help the select committee get to this point.

As Mr Bayly has actually said, the National Party will be supporting this bill, but there are some issues that we had, in fact, identified during the select committee process, which I’m sure that the Minister is actually well aware of.

Initially, when I saw this bill, I thought “Yep, this is quite a simple bill dealing specifically with two covenants that the Commerce Commission had actually identified.”, and they are the restrictive covenants that actually put restrictions on how land can be actually developed for land that might be attached to a shopping complex that the supermarket doesn’t actually—or the grocery entity, the two big duopolies might be connected to. They could potentially put restrictions on how those lands can be developed, to make sure that competition doesn’t actually develop. The other is the exclusive covenant provision that is often placed in, for example, big shopping complexes where they don’t actually want another competitor in the same complex—for example, let’s say in a Westfield shopping complex, they might have one grocery entity and they don’t actually want their competitor to actually have leases on that area.

And we’re identifying that when you have a situation like we have currently, when there is a huge cost of living crisis, you actually want to make sure that there is enough competition in place so that the prices will go down. I’m not quite sure that removing these two covenants will actually immediately produce that, but I commend the Minister for starting the work, and I look forward to more work in this space, because, at the moment, grocery is so expensive, and I think every household in New Zealand understands what it’s like to go shopping at the supermarket, whether it’s actually New World or Countdown. Both are just as expensive, as well as Pak ’N Save. But they’re owned by two entities. It is a duopoly. And the very fact that even our local dairies are owned by one of them and the wholesale shop, where dairies and other little shops actually go to do the shopping for the customers, is actually controlled by one of these two entities means that the duopoly could, effectively, control how much everyone actually pays for their groceries and their daily requirements. So putting any kind of legislative process, any kind of bills that would actually restrict their control over how much they charge, is, I think, a good thing.

But one of the things that I know that Mr Bayly did very well in explaining is that when we heard the submissions in select committee, I was, effectively, shocked to find out that within some of these covenants and the lease agreements that these supermarkets, in fact, go into with their landlords, there is a major restriction in what other shops can actually take lease. For example, the definition of “supermarket” seems to be extremely wide. When normal people think of a supermarket, you actually think about things like grocery shopping, whether it’s actually breads and meats and fish, fresh vegetables, and fruit. You often get things like Panadol, and there’s a bit of, you know, a section of pharmaceutical things that you can actually get for emergencies, for example. But you wouldn’t, effectively, think that it will prevent an actual pharmacy from setting up next to a supermarket, but the exclusive covenant could potentially restrict these shops from actually setting up.

For example—and I know that the Food & Grocery Council’s Katherine Rich’s submission was actually quoted by Mr Bayly. But would you think that even childcare services is considered a supermarket activity? Banking, finance, arts and craft, even men’s shoes and hairdressing is considered supermarket activity, and it is actually built into some of these leases, which makes it potentially unable for one of these shops, a hairdressing salon, to open up at these stores, whether it’s actually a Westfield, that one of the supermarkets might have an exclusive covenant in. So it could also mean that a childcare centre could not potentially open up, because it would be deemed part of the lease where the supermarket entity, the grocery entity—one of the two duopolies—have an exclusivity with the landlord. I’m sure that that’s not what they intended to do, perhaps, but it is there and it does actually prevent these entities from actually opening up other competition to the supermarket entity that exists.

New Zealand is at a time—I mean, the world is, I guess, and New Zealand is currently going through this huge cost of living crisis, and anything we can actually do to reduce costs for mums and dads out there who have to go to the supermarket and see the prices for meat, for example, or fresh vegetables currently. It is shocking, and we need to do more to make sure that we create competition in the market to bring down the prices. This bill doesn’t actually bring about that competition immediately, but it does actually start the process, and I look forward to the next bill that the Minister will actually bring.

One of the things that we were quite concerned about, which Mr Bayly actually did a lot of work on, was in terms of the compensation that the supermarket entities could potentially ask of the landlords when these covenants are actually removed or become illegal, because they might actually have the power to say, well, effectively, by removing the exclusivity rights and also the restrictive covenants where they actually prevent the land from being developed to actually build another supermarket nearby might mean that they are losing, you know, hypothetical revenue, and they could potentially get the landlord to compensate them. It could be huge amounts of money.

I think, effectively, when the supermarket chains are actually dealing with an entity like Westfield, it’s a big, big, big entity versus another big entity, so it won’t be such a big problem, but when you talk about a mum and dad landlord who might live in regional New Zealand or a smaller town New Zealand where they do not have the power base, they have a power imbalance and the landlord doesn’t have the kind of power that these supermarket chains actually have, and that is something that we would like to make sure that we provide in the bill. So I look forward to the Supplementary Order Paper that is actually coming, and, hopefully, we can talk more about that. I too commend this bill to the House, and I support it fully.

Dr TRACEY McLELLAN (Labour—Banks Peninsula): Thank you, Madam Speaker. As a relatively new member of the Economic Development, Science and Innovation Committee, I also wanted to thank submitters and acknowledge the collegial and really valuable contributions made by members across the House—in particular, Andrew Bayly.

The bill focuses on covenants, and it is being progressed quickly because the bill signals this Government’s commitment to responding to the Commerce Commission’s grocery retail market study. It’s relatively straightforward, it has the support of the major grocery retailers, and further reforms—as we have heard—will be considered later on this year.

In a nutshell, anything that we can do to improve competition by enabling new entrants or by the expansion of smaller players will provide consumers with greater choice, whether that be range of goods or whether it is in relation to quality, but, most importantly, it will impact price. It’s difficult to assess the impact on any one element of this reform programme, but, as a package, this Government is really confident that the reforms will deliver change and make things fairer for people at the checkout. So I’d like to thank Minister Clark and commend this bill to the House.

RICARDO MENÉNDEZ MARCH (Green) (remote): Tēnā koe, Madam Speaker. I’m privileged to be speaking in the second reading of the Commerce (Grocery Sector Covenants) Amendment Bill. I want to mihi the Economic Development, Science and Innovation Committee. I met some of the members who have spoken in today’s reading, and acknowledging that the history of this bill comes from an extensive report by the Commerce Commission, and actually, people on the ground who have been signalling for many years that the supermarket industry is broken, that the duopoly is taking advantage of ordinary people, and that there needs to be urgent changes to the legislation that enables this anti-competitive behaviour. So we welcome the introduction of this bill.

We of course would have liked a much more robust and thorough select committee process, but I also want to acknowledge that sense of urgency by Government to address some of these issues. I echo the sentiment that while this bill is really needed, we need more reforms to address those immediate needs that families are facing when it comes to meeting the cost of living. This bill may not have an immediate impact on people’s ability to provide for their families, but it is so important that we address what is, effectively, corporate greed via the use of land to prevent competitors from being there to help lower food prices. This kind of use of land for the purposes of, basically, preventing competition should have no place in Aotearoa, but I do also want us to look beyond the idea of simply increasing competition as a way to ensure that everybody has access to kai. As part of the Government’s overhaul of the legislation that dictates how supermarkets can operate, I think it’s also important that we look at supporting many indigenous practices that have been here for centuries that have provided food for their communities. So I look forward as well to commitments around increasing funding for papakāinga.

In relationship to the select committee’s recommendations, I wanted to particularly welcome the recommendation to broaden the scope of the proposed new section 28A to ensure that, basically, the intent of the bill is met. I think, as others spoke about, there were some really important issues being raised at the select committee, particularly on issues of compensation. As one of the previous speakers—Melissa Lee—noted, it does seem like the issue of compensation between, effectively, commercial landlords and supermarkets will often be fought between two big players. I do think it’s interesting that supermarkets could be raising the issue of a loss of revenue as a result of this change of legislation when the reports have told us that supermarkets are making massively excessive profits. So I think this is a price that supermarkets should be ready to pay, and, in fact, I think part of the aim of this will be to reduce the excessive profits that this sector is making at the expense of ordinary New Zealanders.

So the Green Party is happy to support this bill through this stage, and we look forward to the Supplementary Order Papers being introduced later.

DAMIEN SMITH (ACT): It’s great to hear about duopolies, as we’re in this House with the Labour duopoly over there and the National duopoly over here, and the emerging market player, the ACT Party, who is expanding in this market. There’s a simple analogy here that what’s good for the goose is good for the gander. I’m going to set it straight: the Government’s pledge to help supermarket shoppers get a fair deal and why there is a bit of a myth here around some of the facts. Let’s start with those, and we’ll talk about market intervention at the end.

Food prices are being pinned on supermarkets as their fault, yet in the year from March 2021 to March 2022, food prices increased by 6.7 percent. The Government’s go-to excuse is to blame the greedy supermarkets. Though ACT agrees that New Zealand needs competition—and where there’s a market failure, we will intervene—Countdown and New World are not to blame for the food price explosion. The Commerce Commission report on the sector found that excess profits—and I’d really like to clear this up—which gets the blame for the legislation and sort of moral virtue of this rejig, were at almost $86 per New Zealander. Now, that’s less than 2 percent of the average New Zealander’s annual grocery spend. So between March 2021 and March 2022 alone, prices have increased by $282 per person, and even if the Government wants to focus on supermarket profitability, they’ve no one to blame but themselves.

New Zealand has the most stringent foreign investment laws in the OECD. The Resource Management Act (RMA) makes it exorbitantly expensive to build new supermarkets with scale and facilities that actually can compete. Several analysts actually argue: is there any space left to do this? Is there any growth left in the market to make this work? Our strict liquor laws give competitors another tool with which to bludgeon newcomers, and all the while, the Government is threatening any newcomer that they might be forced to share their expensive new supply chains with their competitors. So is it any wonder that foreign supermarket chains don’t want to see New Zealand as an attractive destination for expansion and would probably rather go to Australia?

Instead, the skyrocketing cost of food is driven by global forces, as we hear, compounded by bad Government policy, and red tape is constantly pushing up costs at the farm gate. According to Beef and Lamb New Zealand, on-farm price inflation from March 2021 to 2022 was more than 10 percent. This is exacerbated by excessive restrictions like national winter grazing rules that ignore regional differences and, simply, the RMA makes it more difficult for farmers to respond to higher prices by expanding facilities, and in some areas where New Zealand producers supply the vast majority of our needs and set local prices, these cost pressures may be transmitted on to the consumers in the form of higher prices.

To bring food prices under control, we need to kill inflation. It doesn’t matter how we structurally rejig buildings in various towns and cities, that is the key goal. To bring food prices under control, we need to free up the supply chain from the farm to the fruit and vege aisle. So ACT has got some additional ideas. To start on from the rejigging of the covenant base of the existing duopolies, it’s that we need to repeal and replace the Resource Management Act to make it clearer and easier to build new supermarkets and farm facilities and repeal stifling new regulations on farmers, including input costs and management, and we need to exempt OECD members from the Overseas Investment Act, allowing foreign supermarket chains like Aldi and Costco to invest in New Zealand with certainty. Why would you invest here if you didn’t have that certainty?

So this is one of the few situations in which ACT supports State intervention for market failure. If supermarkets are going to be brought on-stream and are using covenants in an anti-competitive way, this does merit Government intervention, but let’s be honest in the House and say that inflation is the driver of supermarket prices and that the important thing for New Zealanders is that food arrives on time, on the shelf, in the right place to feed the families of New Zealand. Thank you.

INGRID LEARY (Labour—Taieri): I’m not sure what bill that member Damien Smith was speaking on, but I’d like to bring us back to this bill if I may, which is a clear and simple case of market failure—which I think the member got to at the end of his speech—and the need for the Government to intervene. In the brief time that I was able to sit on the Economic Development, Science and Innovation Committee as a guest, it was really great to see the rigour which all the committee members applied to what things supermarkets might to do in order to get around the legislation. I’m not saying they’re wrong to do that—that is how markets work—and the contributions of people like Andrew Bayly were really helpful.

I’d like to commend the Minister for the changes that he has made in the Supplementary Order Paper that he is introducing, which takes those comments into account, and also giving thought to the Commerce Act and the Fair Trading Act and their application to compensation and saying “No, we don’t need to do anything additional.” So it’s a great piece of legislation, and I commend it to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): Joseph Mooney—five-minute call.

JOSEPH MOONEY (National—Southland): Thank you, Madam Speaker. I rise to speak on the Commerce (Grocery Sector Covenants) Amendment Bill. The National Party supports this bill, which amends the Commerce Act 1986 adding new section 28A, in clause 4, which will apply to covenants that have the purpose or effect of impeding the development of land or the use of a site for a grocery retail store, deeming such covenants as having the purpose or effects of substantially reducing competition in the relevant market. The National Party very much supports enhanced competition in markets and seeing regulations and law that actually makes it easier for that competition to happen.

We are in an extraordinary environment at the moment with inflation at 30-year highs, in New Zealand, and food, as a consequence, is on everyone’s mind. Although this will certainly not address a lot of those issues, it will make it easier for competition in the grocery retail sector, which is something that is to be supported.

According to the Commerce Commission, restrictive covenants are promises not to do something that are registered against land and impose restrictions on how that land can be developed or used. They bind any third parties who subsequently acquire or lease that land. Examples are that, first, on the sale of land by a grocer retailer to a third party and a consideration for that purchase, the vendor agrees to register a covenant against other land in the area that the vendor is retaining. Exclusive covenants are provisions contained in leases that restrict competitors from operating the same shopping centre. The Commerce Commission found that these generally have durations of 20 or more years, so, in effect, this has reduced local competition, which is what we have been advised. This bill will do something to actually make it easier for other competitors to come into the market and will, hopefully, address some of those competitive pressures that are needed to actually drive a better market.

We would certainly like to see some attention by this Government on food. Food is a crucial issue globally as well as domestically. The security of food supply is something that is an increasing issue around the world and the price of food is something that’s really, really important for everybody. We need water, we need food, we need shelter, and this is a bill that goes a small way but an important way to addressing the issue of food.

In terms of the select committee report, the Economic Development, Science and Innovation Committee has examined this bill and recommends that it be passed and recommends all amendments unanimously. So it recommends broadening the scope of new section 28A, which has a number of changes—to broaden the scope of the proposed section to ensure that it appropriately covers the types of behaviour that this bill seeks to prevent. They recommend inserting another section to state that “any other provision of a contract, arrangement, understanding, or covenant can be taken together with that restrictive covenant to determine whether section 28A applies. This would apply to provisions in other contracts, arrangements, understandings, or covenants that have 1 or more of the same parties as a restrictive covenant (‘side agreements’). … [The] proposed section 28A(2)(ba) would achieve the same effect for exclusivity covenants.”

The committee was concerned that agreements such as side letters were not covered in the terms of the initial drafting of the bill. Submitters also said that some exclusivity clauses can impede retail grocery stores at other locations, not just at the same site. However, the committee “did not see any reason for distinguishing between exclusivity covenants that affect the same site and those that affect other sites. Given that the bill’s intent is to improve competition in the retail grocery sector, the focus,” the committee felt, “should remain on whether the covenant impedes another person from operating a retail grocery store.” Therefore, the committee recommended removing the words “at the same site (for example, a mall or a shopping centre)” from the proposed section.

Some submitters also said that “limiting the target of the covenant to retail grocery stores would not prevent large grocery retailers from using restrictive and exclusive covenants that impede other retail developments.” To restrict that type of anti-competitive behaviour, the committee proposed “broadening the scope of covenants affected by the bill to recognise other retailers that may compete with a designated grocery retailer.” For example, I do not want to see the grocery trade continue to have the ability to restrict so-called competitors, such as those selling alcohol or pet food. And the committee recommended amending new section 28A(2)(a) to state that: section 28A also applies to impeding “any other retail store that is likely to compete with the designated grocery retailer.” It recommends similar amendments to new sections 28A(2)(aa), (b), and (ba).

It recommends adding an express provision to the bill to ensure that the Commerce Commission would have sufficient powers to monitor and enforce 28A. The commission does have existing powers that it can use to carry out its functions under the Act. They include powers to require people to supply—[Time expired]

ASSISTANT SPEAKER (Hon Jacqui Dean): I call Camilla Belich—five minutes.

CAMILLA BELICH (Labour): Thank you, Madam Speaker. It’s a pleasure to stand in support of this bill—the Commerce (Grocery Sector Covenants) Amendment Bill. This is a bill that was introduced around about the time of the Budget and addresses some of the issues that we have with the duopoly in the supermarket sector.

There seems to be general agreement as to the need for this particular piece of legislation and also that it is a good idea. So I commend the select committee for its quick work on this bill and also the Supplementary Order Paper as introduced by the Minister.

This bill will address the current duopoly that we have in the supermarket sector and address some of the higher prices that New Zealanders are facing when paying for groceries. It’s the Government recognising that and making sure that we secure our recovery and provide a better deal for all New Zealanders when they’re doing their grocery shopping. I commend it to the House.

Dr EMILY HENDERSON (Labour—Whangārei): Kia ora, Madam Speaker. This bill demolishes a barrier to the availability of land for grocery retailers and increases the ability and the likelihood that we’re going to get some real competitors to the current duopoly. It is extremely heartening to take part in the first stage of busting this duopoly, the duopoly currently holding customers and would-be retailers to ransom.

I was not on the select committee, but it is heartening to also note that the Economic Development, Science and Innovation Committee has reported back unanimously, including agreeing a number of improvements. These are improvements that Minister Clark has, of course, endorsed. In particular, I was heartened to see the rescue of the interim information-gathering powers by Supplementary Order Paper.

It is quite staggering to understand the scale of the covenants that supermarkets have managed to wheedle out of landowners. It is very concerning to know that and it is chilling. And the people, of course, most affected by the cold wind are the consumers that we are here to protect, who have been forced into dependency on our duopoly. We campaigned to bring fairness to the sector. Minister Clark is here to deliver. I commend it to the House.

Hon TODD McCLAY (National—Rotorua): I start by saying National will support this legislation, or continue to support it, because it is a step in the right direction, albeit a small one of the 14 recommendations that came forward from the Commerce Commission. This is around two of them, and I’ve got to say, for those out there who are struggling with the cost of living and think the food costs are too high and they’re having to face choices over feeding their kids or paying the bills, for the Government to send this to committee with nothing else around it actually will leave them wanting and disappointed.

The reason for that is that, yes, there is an anomaly in law that means that others have been able to put covenants on land, which in the end stifles competition—whether they did that knowingly, willingly, or for other reasons, it did have that effect. But this piece of legislation itself, when it goes through the House, won’t do a single thing in the short or medium term when it comes to the cost of living crisis that every household in New Zealand is currently facing—nowhere more so than their rents and the food that they buy. I’ve got to say to the Minister, it is a step, albeit a small one, but it is nowhere near enough.

Some time ago, when I was on the committee that dealt with this, the Economic Development, Science and Innovation Committee, the Commerce Commission came before us for a hearing and we talked about this and I pushed them on whether or not they were looking at other reasons why the cost of food had increased and was going up. They said no, the Government had directed them with a very narrow scope only for the supermarkets. They therefore didn’t look at the role that the Government themselves has played in the escalation of the cost of food, not just on the supermarket shelf but on every single shelf in New Zealand. I’m sure we’ll hear from Government members that it’s just the supermarkets alone and those bad people from Australia who are solely responsible. But what they are not able to answer is, if it is the supermarkets alone, why is it when you go to a market as far away from a supermarket as you can find, without restrictions of covenant over the land or trading, that those costs have gone up as well? And why is it that in the takeaway shops and the fish and chip shops that every single part of New Zealand where food is sold fresh, frozen, processed, or cooked, the costs have gone up? That is because of the role that this Government has paid in red tape, in rules, in bureaucracy and actually, I think, in deciding that businesses can just suck up extra costs imposed on them by Government, and it has no implication at all.

We’re very happy to support this. We equally will be happy to support more meaningful changes the Government brings forward that mean that food prices already stop escalating so very, very quickly, but actually perhaps have a chance to go down. But, sadly, I think we’ll be waiting a long time. Because it feels that when the Government came under pressure before the last election—because things were so very expensive and going up quickly—they called for an inquiry on the part of the Commerce Commission exactly the same as in their first term in Government at the very beginning when fuel prices were ramping up and the Government was piling taxes on fuel. When they came under pressure, what did they do? They didn’t take tax off then. They didn’t actually have a look and decide for themselves what to do to help the poor old motorists—and by the way, when the Government puts tax on fuel and prices go up, that flows through to the cost of food as it’s driven around the country, from the producer to the supermarket or to the shelf. What did they do? They called for an inquiry into the petrol stations themselves, and when that inquiry came forward with recommendations, they put a lot of money aside for the Commerce Commission to continue to monitor it, but actually continued to put tax up until very, very recently where we have a short-term relief of tax, even though petrol is through the roof and that tax is flowing through.

So in this respect, I am quite deeply concerned that all we will see from the Government is this inquiry. They’ll pick up a couple of things in it, but they will continue to pass laws or pass regulations that have the impact or the consequence of prices going up in New Zealand, particularly on food. It’s not good enough for the Prime Minister to send this Minister out—who is very, very hard-working; actually, he’s probably done more in the area of commerce under extremely narrow circumstances, in as far as what the Prime Minister and Cabinet will allow him to do. But it’s not good enough for her to send him out and say, “Here’s a report into supermarkets, go and do a little bit there and if it gets really bad—I know, we’ll call for another inquiry.” We see this time and time again. And I’m making the point through other examples of where the Government does this to show why this isn’t going to have the impact that the Government is saying it will, and prices will continue to go up in every single outlet that sells food in New Zealand because of Government action and, in this case, inaction.

Think about what we’ve seen just recently for our builders and homeowners and those who are struggling because there’s not enough plasterboard in New Zealand. Do you know what the Government’s done? They haven’t gone out and sourced more. They haven’t changed the rules instantly so we can bring it in from overseas and actually have it available so the houses that are sitting there not finished will get built. What have they done? They’ve called for another inquiry. Another inquiry. Well, the point of this is the Minister has stood up and every other Labour MP has stood up and taken at least two minutes of their 10 minutes to say, “What a wonderful thing this is!” and “Aren’t we all doing a great job?”. But in the case of fuel, in the case of plasterboard, all they do is call for inquiries and make the bare minimum of change so that the public is led to believe, or hopes—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! Can I invite the member to now come back to the bill.

Hon TODD McCLAY: I will. So the good news here for New Zealand households is that no longer will supermarkets and others be able to put covenants on land that don’t have supermarkets on them, and therefore stop them from being able to sell food. But what we know is the speed with which it takes consent to be issued in this country, through building consents and resource consents and other things, I guarantee that as a result of this legislation we won’t see a single additional extra supermarket built anywhere, chain or otherwise, between now and the next election, and that food prices will continue to go up during that period of time.

So the Government needs to look at itself. This is good in that it is dealing with two of the 14 recommendations issued by the Commerce Commission on the very narrow scope they were given in their inquiry, but there are things that the Government can do right now, today, to relieve the pressure on households who are struggling, and they need to dig more deeply and do that. The reason they need to do that is the majority of people in New Zealand don’t have the luxury of the large salaries that a Cabinet Minister has when it comes to meet extra costs going up. And that’s why this country needs these Cabinet Ministers to do their job properly, to work harder and to identify things they themselves have done that are pushing the cost of food up.

I say it again, actually: if it was solely the responsibility of the supermarket and these two chains—the reason that the prices have gone up so much—as the Government has said to New Zealanders when they called for the inquiry with that very narrow scope, then it would only be food in supermarkets that had increased in cost. But it’s not, it’s in every market, it’s in every fast food outlet, it’s everywhere that food is wholesale or retail in New Zealand. The Government bears as much, if not more, responsibility for that as the supermarkets do themselves.

We’ll support this because it’s a small step in the right direction. But if this is the only step the Government delivers between now and the next election, it will be the same as what’s happening with plasterboard. It’s the same as what happened with fuel. These costs will continue to go up because of the Government’s role in this, not the people in the marketplace alone.

SHANAN HALBERT (Labour—Northcote): Mānawatia a Matariki, Madam Speaker. Can I round this debate off by acknowledging the Hon Dr David Clark for his work in the Commerce (Grocery Sector Covenants) Amendment Bill. This bill demonstrates the value of extra powers the Government gave to the Commerce Commission in 2018 to undertake market studies in areas where there are demonstrable failures in the market.

To round it off also, can I acknowledge the Opposition for supporting this particular bill. A lot of their big talk this evening has been about the cost of living. In fact, I’m happy that you’re supporting this bill, because where it makes real change for families in New Zealand, you haven’t supported those bills out of Budget 2022—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member won’t bring the Speaker into the debate. Thank you.

SHANAN HALBERT: Apologies, Madam Speaker. Supermarket chains have been able to act against the interest of consumers and ordinary families for far too long. This bill sets out to change that, and I commend this bill to the House.

Motion agreed to.

Bill read a second time.

ASSISTANT SPEAKER (Hon Jacqui Dean): I declare the House in committee for consideration of the Financial Markets (Conduct of Institutions) Amendment Bill.

Bills

Financial Markets (Conduct of Institutions) Amendment Bill

In Committee

Part 1 Amendments to Financial Markets Conduct Act 2013

CHAIRPERSON (Ian McKelvie): Members, the House is in committee on the Financial Markets (Conduct of Institutions) Amendment Bill. We come first to Part 1.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Mr Chair. I’m pleased to open proceedings on the Financial Markets (Conduct of Institutions) Amendment Bill. The bill represents a fundamental evolution of the regulation of the retail, banking, and insurance sectors. It introduces a conduct licensing regime for financial institutions such as banks, insurers, and non-bank deposit takers, to ensure they treat customers fairly. This bill is the final piece of the Government’s response to misconduct issues in the banking and insurance sectors. Before we get into the details, I do want to thank the Finance and Expenditure Committee for its consideration of the bill. I also want to thank all who made written and oral submissions through the select committee process and beyond.

Several reviews were held in 2017 and 2018 which examined the conduct of New Zealand’s financial institutions. These included reviews by the International Monetary Fund, the Financial Markets Authority (FMA), the Ministry of Business, Innovation and Employment, and the Reserve Bank. These reviews identified significant weaknesses in the conduct and culture of institutions in New Zealand’s financial sector. If these risks were left unaddressed, it would result in significant harm to consumers, and, therefore, also damage confidence in New Zealand’s financial services.

Our recent experience with COVID has further highlighted why this regime is needed. COVID has resulted in enormous pressures being felt by financial services, businesses, and by consumers. While I acknowledge the steps the sector has taken to support consumers through difficult times, these measures that they’ve taken are entirely voluntary for that period of time, and they rely on goodwill. Many of these positive measures are likely to expire, while consumers’ ongoing needs will continue. That shows the importance of financial institutions having the capacity and incentive to always address the changing interests and needs of consumers, particularly those who find themselves in vulnerable circumstances.

The bill I’m presenting today will create a regime that governs the conduct of key financial institutions to address the risks and gaps that we have identified through those reviews. The ultimate intention of this new regime is for financial institutions to better serve the interests of consumers, improving trust and confidence in the financial sector. With all of that comes an improvement in consumers’ wellbeing—financial wellbeing, first and foremost, in this regime, but that has a knock-on impact, of course.

This regime will apply to banks, insurers, and non-bank deposit takers. There has been much discussion about the scope of the regime. The scope has been deliberately set to capture those areas where there is the clearest and greatest evidence of harm. The evidence gathered through previous reviews found that this risk lay with banks, life insurers, and general insurers. On the one hand, I’ve received feedback that the scope of the bill is too narrow and that it should be expanded to include all financial service providers. I acknowledge that some financial service providers, like finance companies, will be subject to a different level of regulation. However, these entities and the products that they offer are already subject to regulation, such as the responsible lending obligations under the Credit Contracts and Consumer Finance Act, and product-specific obligations under the Financial Markets Conduct Act. The scope of the regime can be extended in future, though, if it’s deemed to be needed to achieve the purposes of the Act—if we identify any gaps that need to be addressed.

So on the one hand I’ve received that feedback that the scope of the bill is too narrow; on the other hand I’ve also received feedback that the scope of the bill is too broad, and that non-bank deposit takers—such as credit unions—should be excluded from the regime. However, it is my view, and the Government’s view, that non-bank deposit takers offer a wide range of bank-like services to consumers and face similar governance and conduct risks. Therefore, my view is that they should remain subject to the bill. Their inclusion in the regime is also consistent with the Government’s June 2019 decision to bring prudential regulation of banks and non-bank deposit takers within a single deposit taker regime.

So the bill—what does it do? It establishes a new regulatory regime for the conduct of financial institutions. That regime will give consumers confidence that the financial institutions meet appropriate standards of conduct by requiring financial institutions to be licensed by the Financial Markets Authority. The bill also gives the FMA—the Financial Markets Authority—a range of tools to supervise, monitor, and enforce the new conduct regime. Strong civil pecuniary penalties can be imposed if a financial institution or intermediary contravenes an obligation in the bill, bringing New Zealand, with that, in line with overseas jurisdictions.

Fairness is essential in building trust in the financial sector, which is why the bill seeks to ensure consumers are treated fairly by their financial institutions. The bill introduces a fair conduct principle. It also requires financial institutions to establish, implement, and maintain an effective fair conduct programme. This means financial institutions must turn the fair conduct principle into concrete policies, processes, systems, and controls, to make sure that they are considering consumers’ interests as a part of their regular business, and make sure that they are treating them fairly.

Now I want to say something about sales incentives and the Government’s Supplementary Order Paper before I close. Sales incentives can create conflicts between the interests of those who are selling or advising on products and services, and the interests of consumers. Those conflicts can cause sellers or advisers to prioritise their own interests over the interests of their customers in the pursuit of a reward. I understand that incentives are an important part of remuneration structures for salespeople and financial advisors. However, it’s also important that financial institutions turn their minds to the potential risks when designing or managing these incentives. The bill requires, therefore, financial institutions to have effective systems and controls in place to mitigate or avoid consumer harm from sales incentives.

So to the Government Supplementary Order Paper: following feedback from public consultation on two discussion documents, I am tabling a Supplementary Order Paper—an SOP, as they are commonly known in this House. The amendments in the SOP will make sure the bill works across different types of financial institutions and business models. So as far as intermediaries are concerned, the bill—as drafted—included prescriptive requirements on financial institutions to closely train and manage or supervise intermediaries. Industry have raised what I consider to be reasonable concerns that these requirements are too detailed, capture too many intermediaries, and may overlap with the new regulatory regime for financial advice. So to ensure the bill works across different types of financial institutions and business models, I propose the bill take a more principles-based approach, rather than prescribing requirements in detail. This will ensure the new regime enables financial institutions to design processes which best fit their own business models while still upholding a high standard of conduct.

The SOP also makes other amendments to the bill to ensure the Lloyd’s insurance market, for example, is treated similarly to other insurance providers, and to ensure that financial institutions take into account the potential for consumers to be in vulnerable circumstances.

Finally, before I close, the bill provides for regulations to be made to support the regime. A big gap, currently, is the lack of regulation regarding sales incentives based on volume, or value targets such as overseas trips, as a reward for selling a certain amount of insurance policies. These kinds of incentives create a strong conflict of interest, particularly as a person nears their sales target. Accordingly, the bill enables the making of regulations to prohibit the offering and use of these incentives. These will be developed after the bill has passed. Otherwise, I do not propose to make further supporting regulations at this time. The FMA will work with industry to ensure that the expectations on financial institutions are clear, including by issuing guidance where appropriate. Further regulations can always be made in the future if it becomes apparent that more prescription is needed to achieve the desired outcomes of the regime.

So in closing, the bill completes the Government’s response to misconduct issues in the banking and insurance sectors, and sets in place an important regime to ensure consumers are treated fairly when they deal with financial institutions. Once the bill’s passed, the FMA will work with financial institutions to ensure they’re prepared for the new regime and for licensing applications to open in mid-2023. The intention is that the regime commence in early 2025. I’m very much looking forward to the discussion at the committee stage of this debate, but hope that those opening comments may provide some guidance as to why we’ve taken the steps with the SOP and why we have continued to operate with the scope such as it is.

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

Sitting suspended from 6.01 p.m. to 7 p.m.

CHAIRPERSON (Ian McKelvie): Members, the House is resumed. We are in committee.

Dr DUNCAN WEBB (Chief Whip—Labour): Point of order. Mr Chair, I seek leave that this bill be taken as one part.

CHAIRPERSON (Ian McKelvie): The question is that the bill be taken in part. Is there any objection? There is objection. [Interruption] Order! Who’s seeking the call? So no one’s taking a call? I call Andrew Bayly.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. Oh, I was waiting for Minister Clark to complete his speech—he was just talking before the break, of course.

The first thing I think ought to be clear is that National still opposes this bill. I will acknowledge that there have been some improvements to it, and I also acknowledge Supplementary Order Paper 173 by the Minister, which has been tabled in the House. But the reality is, this is a bill that’s still looking for a problem to solve. We do not believe that this bill is necessary, because the regulator of financial institutions—and this bill covers, basically, banks and credit cards and non-deposit takers—just foists on the industry, who are already highly regulated, another set of codes or responsible lending criteria. What’s interesting, if we look at the landscape that the Minister’s overseeing, we’ve got these regulated financial institutions—and that’s the technical term that covers those groups—most of those institutions are already regulated heavily by the Reserve Bank. And, of course, the Reserve Bank is, for all its faults, a good regulator of financial institutions.

Stuart Smith: Guided by Tāne Mahuta.

ANDREW BAYLY: So—guided by Tāne Mahuta, that’s right. So that’s the first piece of oversight. Then we’ve had that dreadful piece of legislation called the Credit Contracts and Consumer Finance Act (CCCFA), which imposed further requirements on responsible lending codes—

Hon Dr David Clark: Yet you voted for it.

ANDREW BAYLY: And—no, we did not. And what we saw in it, unfortunately, is the Minister had got hoodwinked by his officials, because that CCCFA legislation provides a framework for a responsible code that has, as its overseeing bodies, the Commerce Commission and the Ministry of Business, Innovation and Employment (MBIE). And, of course, the Minister got hoodwinked, because rather than do what the intent of the bill was, which was to focus on high-cost lenders, what he did is he extended the code of responsible lending from 64 pages to 105, and put in a whole lot of stuff about how a bank is supposed to lend to its customers, including—on, I think, page 28—a requirement to review 90 days of transactional history. Now, the Act already provided for a differential approach between our licensed financial institutions, like a bank, and other types, like high-cost lenders. But, unfortunately, our Minister had got hoodwinked or he didn’t know enough about it, didn’t ask enough searing, searching questions, and passed through regulation which didn’t come back through this House—

Hon Dr David Clark: Point of order, Mr Chair. I wonder whether the member could actually address the bill in his first contribution. He seems to be off on quite a different tangent—

CHAIRPERSON (Ian McKelvie): Order! I’ll be the judge of that, thank you.

ANDREW BAYLY: So passed a code of responsible lending that went from, basically, 60 pages to 105 pages, and imposed all these regulations administered by Commerce Commission and MBIE. Now we’ve got what is called the conduct of financial institutions, and guess what it’s about! It’s about imposing another code on responsible lending. And who’s this going to be administered by? Well, actually, the primary organisation is going to be the Financial Markets Authority (FMA). So if you are one of those banks or non-deposit takers, you’re subject to the Reserve Bank, the Commerce Commission, MBIE, and then if you’re going under another code, you’re now going to have the FMA.

What is the Minister doing? The first thing we will have to do when we get back into power is deal with how we get one set of responsible code of lending, so we don’t end up with multiple codes and we don’t end up with multiple jurisdictions. Because the first question with this bill, Minister, is how do you deal? How’s a bank, for instance, going to have to deal with the issue of having two competing codes? And, by the way, if you want to make sure unemployment is low, just make the banks and other types of financial institutions go out and hire a whole stack of people to deal with the additional compliance that this bill imposes on them. That is what is wrong with this bill. It is a bill looking for a problem, and it doesn’t need competing regulatory authorities looking over and administering responsible codes of lending.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I did forensically listen to the member Andrew Bayly’s contribution, and I identified a question in there, which I’m going to address, and that was, really, where does this bill sit in the landscape of regulation. As I said—and so I’ll repeat it for the member, because he may have missed it in my initial contribution—by introducing a conduct-licensing regime for financial institutions such as banks, insurers, and non-bank deposit takers, we are ensuring that we treat customers fairly.

This bill is the final piece of the Government’s response to misconduct issues in the banking and insurance sector. So, effectively, this piece of legislation sits across the top—an umbrella-type regime, if you like—across things like the Financial Services Legislation Amendment Act, the Credit Contracts and Consumer Finance Act, the Fair Trading Act, and the Consumer Guarantees Act, those pieces of legislation that are responsible for specific parts or regulating particular products or services. This is the regime that sits across the top and ensures that there are principles, and if there is compliance with those other regimes, that can be brought as evidence of compliance with this regime, so there is not the duplication.

If I go to the member’s other question where he suggested that perhaps there was—because there was a second question buried in there. It was buried as a statement. He asserted that this was a piece of legislation in search of a problem, and I want to just challenge that, because this legislation and those other bits that address particular products and services came about after a series of reviews, including, in 2018, one by the Financial Markets Authority and one by the Reserve Bank of New Zealand.

Through those reviews, they identified actual evidence of misconduct and harms identified through the reviews, and I’ll list a few for the committee: there was a bank that charged customers for credit card repayment insurance for which the customer received no benefits in return, for example, due to customers being ineligible for the product at the point they were sold it, or because they were sold and charged for multiple identical policies when they would only ever be able to claim for one. The second example: a bank continued to charge deceased clients premiums for credit card repayment insurance and life insurance. Another: an insurer continued charging customers for payment protection insurance after loans had been fully repaid and, therefore, the product provided no benefit for the customers. Another example: poor administration of products leading to overcharging—e.g., increased premiums to account for inflation, but at a rate higher than inflation, as evidenced in the Consumers Price Index. And another: instances of consumers paying premiums over a long period of time for insurance they did not know they had.

Now, what those reviews identified in all of those instances of behaviour was negligence, effectively: a culture in banks and life insurers where those institutions lacked a focus on customer outcomes and had serious weaknesses in their internal systems and controls—and that’s the findings of those reviews. That creates real risk of widespread harm for consumers if left unchecked. So what we’re doing here is making sure that those harms are not presented to consumers.

If the member simply doesn’t care and thinks it’s fine for people to charge for life insurance when they’re dead—if he thinks that’s OK, he’s definitely on a different side of this argument. But I would think he would want to see consumers protected. He would want to see banks and insurers acting in the interests of their customers, and that is what this legislation is designed to do.

I could give examples, and I may do, if the member wants more, from the Australian royal commission, which found even more egregious examples. They had a royal commission which dug even deeper into the parents of the same banks and found some quite horrific examples of banking and insurance practice. That’s the genesis of this piece of legislation. Those very specific pieces of legislation that deal with particular products or services the member mentions are a part of that picture. But the Financial Markets (Conduct of Institutions) Amendment Bill we’re debating here today sits over the top of those other bills and makes sure that we have the right principles across them and that everything is joined up, and compliance with those other bills can be used as evidence of compliance with this legislation. It’s intended to avoid duplication. Thank you, Mr Chair.

ANDREW BAYLY (National—Port Waikato): Thank you. Well, there’s the reason, eh? How many transactions do you think banks alone process every year in New Zealand? What do you reckon, Mr McClay? Four billion? Well, I’ll tell you what. There will be billions and billions of transactions that take place, and, actually, unlike the Minister, I was actually on the Finance and Expenditure Committee when the Financial Markets Authority (FMA) and the Reserve Bank’s Adrian Orr, presented to the Finance and Expenditure Committee about the review of findings, and I think the Minister has very carefully taken snippets of billions of transactions that take place in New Zealand. He’s quoted about four or five examples. The one thing he missed, from what he was saying there, is that the Reserve Bank and the FMA were clear to say they found no systemic issues of wrongdoing in New Zealand. They found isolated examples of cases, unlike in Australia, where they certainly found lots of cases. But the New Zealand review showed that there was no systemic issue. So to quote those and to say that is the excuse for how we’re going to impose millions of dollars of additional compliance on top of all these financial institutions I think is a very poor excuse.

The question is: why wouldn’t you have made sure that you actually got the Credit Contract and Consumer Finance Act legislation right rather than try and go and create a whole new plethora of legislation requirements under this and all the attendant costs? Because I think, at the end of the day, what we’re going to end up with is competing jurisdictions that these institutions are going to have to be accountable to: FMA, and then, on the other side, the Ministry of Business, Innovation and Employment, and the Commerce Commission, and out to the side the Reserve Bank. Who has priority? Who do I respond to? How do I make sure this code is not competing with another code, and how do I know that the FMA is not going to reinterpret the code to suit their ends? That is the inherent conflict of what this legislation is about.

So let’s deal with a little bit of detail on the bill. So new subpart 446M, “Minimum requirements for fair conduct programmes”—there’s a whole lot of clauses here under what the minimum requirement is. It is amazing: (a), (ab), (ac), (ad), (bb), (bc), (bd)—and there’s subclauses under each of these—(bc), (be), (bf), (d), (e), (f), (1A), (1B). They just keep going, right? Woah. So, in the second one—this is (ab)—this is a new insertion, the minimum requirements for a fair conduct programme, that says “designing, and [maintaining] the provision of, the financial institution’s relevant services and associated products, including regularly reviewing”. Well, my first question is: how often is that going to be? Does the FMA tell them that or does the bank or the non-deposit taker? But it’s not all non-bank deposit takers; they’re actually big organisations.

“(i) the relevant services or associated products that are provided to consumers on an ongoing basis to determine whether they are likely to continue to meet the requirements and objectives of those consumers (when viewed as a group);”. Wow. I’m the new recruit to one of the non-deposit takers and I’ve been asked to do the compliance on that. What in the dickens does that mean, Minister? Because I can take a view from the non-bank deposit taker’s view. I could take it from the view of a consumer. I can take it from the view of the FMA—that’s the regulatory oversight. How do I justify that? Do I have to lay out all the different positions and then come to a view?

The next point, a subpoint on that same thing, which we were referring regularly—I don’t know what that means—“(ii) whether enhancements or improvements in the financial institution’s relevant services or associated products should be made available to those consumers (when viewed as a group);”. This is just the first one. Let’s start with this, Minister.

Hon TODD McCLAY (National—Rotorua): Mr Chair, thank you very much. I’m trying my very best to find the reason for this legislation other than a Minister who is busy, who wants to look busier, in a Government that actually is not doing that very much at all. Sadly, I can’t be kind because this does feel like, as the last speaker said, a solution looking for a problem. It’s easy, Minister, when you’ve got lots of officials paid for by the taxpayer, to say, “I’ve got this legislation. I’m coming under abject pressure from Andrew Bayly, and what I need you to do is to go and find for me a few reasons why actually this is a good idea.”

I’ve got to ask the Minister—and I think in the new process we have in the committee, we’re allowed to ask questions and occasionally they’ll answer without us using up all of our time. My question is: Minister, on how many occasions in New Zealand in the last decade have banks sold life insurance to people who are dead, and wouldn’t you then be able to claim upon that life insurance? In fact, my great-great-grandfather is no longer with us. Can you find me a bank, Minister, that I can go in and take an insurance policy on his life? I’ll happily pay it now and therefore be able to claim it. Because actually, unless it is endemic in the system, along with all of the other examples you gave, then, merely, there is a cost to this.

Yep, banks make lots of money and others do, but the last time we were before this House, Minister, when you said “We are here to do what’s right for the poor old consumer, because there are lenders out there who take advantage of them; let’s pass this piece of legislation, the Credit Contracts and Consumer Finance Act”—well then, all of a sudden we’re reading in our newspapers over Christmas that banks are asking you about whether you’re having fish and chips or what you spent money on, and not lending. That wasn’t the intention of that legislation. I know it wasn’t the Minister’s intention for banks to decide that because of the way the regulator would interpret his legislation, they had to delve into the deepest part of people’s lives. If you happen to watch a movie on Sky TV and pay extra for it, or, as some Labour MPs do in Opposition, watch movies in hotel rooms, well, ultimately the point here is that it shouldn’t get in the way of your enjoyment of a house.

So, Minister, will you give us an assurance that there won’t be extra costs imposed through bureaucracy on businesses, on banks, that are always passed on to the consumer? And why are we dealing with this legislation today? Because it’s not obvious that there are as many problems endemically, as he says. And why don’t we have a quick fix before us so that banks realise that they don’t have to look at whether people are having fish and chips, watching movies, or doing other things to enjoy themselves, so that actually they can get loans and buy houses?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Mr Chair. The member again asserted that this is some kind of bill in search of a reason, and I think it shows how out of touch the National Party really are. They don’t mind thinking that it’s fine that a bank’s charging customers for credit card repayment insurance for which the customer receives no benefits. They don’t think it’s fine for a bank to continue to charge deceased clients premiums for credit card repayment insurance and life insurance. They don’t think it’s fine, and so on, and so we can go through this list of all of these instances—

Hon Todd McClay: How often?

Hon Dr DAVID CLARK: And then the member asks how often; he wants some details. And I’m sure some details will just convert him.

Hon Todd McClay: Yes, it will.

Hon Dr DAVID CLARK: It will, he says. He’ll be right with us. OK, so the Financial Markets Authority (FMA) and Reserve Bank review identified 16—so this is just a simple sample they’ve done—specific remediation activities from their 2019 review, across 10 insurers with a total remediation of $1.4 million. Now, subsequent to that, the FMA has had ongoing conduct and culture work because this triggered—this triggered—a search for more examples. So we’ve already got examples.

Andrew Bayly: Outrageous!

Hon Dr DAVID CLARK: I know $1.4 million is nothing to Andrew Bayly but to a consumer who is struggling with the cost of living, or with any other particular issue, $1.4 million might be quite a lot of money. To the National Party, nothing; they’d rather defend the banks’ rights to carry on doing loose processes. But after that review, they then set about looking at other examples, to see what else was out there.

So, with remedial work carried out after the culture and conduct reviews, life insurers have now identified another $7.8 million in remediation and approximately 400,000 customers affected. Subsequent disclosures from some general insurers identified another $8 million in remediation. These are the kinds of examples, I say across the House, where consumers are at risk—and it’s been identified through reviews and then follow-up work has identified yet more examples and more risk—and these reviews also have highlighted that there is a large regulatory gap here in New Zealand, and that we do not currently have any general oversight or regulation of retail banking insurance, unlike comparable jurisdictions like Australia or the United Kingdom. That means that the institutions themselves just don’t have regulators who are able to detect these issues and risks, so it’s only these reviews we have to go on.

They’ve already identified hundreds of thousands of New Zealanders who’ve been ripped off—hundreds of thousands of New Zealanders, millions of dollars. Furthermore, in Australia, where the parent companies of many of the banks operating here operate today, they had a royal commission at a similar period of time, led by Commissioner Sir Kenneth Hayne—the same institutions, with similar cultures; parent organisations. They had people confessing to ranges of crimes and breaches, including falsified client records, forged signatures, privacy breaches, insider trading, under payment of $80 million of employees’ superannuation benefits—Commonwealth Bank of Australia, parent of ASB; Westpac staff manipulating internal systems such as unauthorised opening of accounts and false recording of offers being made to customers, in order to trigger bonuses; ANZ employee falsified more than 100 loan applications, and two business bankers who colluded with third parties to make 47 fraudulent loans. These are examples where they have dug a bit deeper. They got a royal commission. But here in New Zealand, they uncovered it, and then they kept digging, and they found hundreds of thousands of New Zealanders affected—even here in New Zealand without a royal commission—and millions of dollars owed. We have a regulatory gap here where we don’t have the oversight that they have in Australia and the UK, so we’re actually more vulnerable to this kind of behaviour.

So I think the case is pretty clear. If you believe in the rights of consumers and you want to make sure that consumers are getting a fair deal, you back this bill. If, however, you want the banks to be able to, carte blanche, rip people off, or insurers—hundreds of thousands of people, without consequence—then you vote like the National Party intends to vote.

Hon TODD McCLAY (National—Rotorua): Thank you very much. Minister, what you just said is we need legislation because there are people in banks acting fraudulently. Fraud is already against the law. You can’t make it more against the law. It’s already against the law. So in the case you gave that I think wasn’t in New Zealand but was in Australia, where one person signed hundreds of loan applications fraudulently, in New Zealand they would be found, they would be caught, and they would go to jail. Fraud is already against the law. So what you’re actually saying is using examples of other countries that have legislation that we don’t have here, to catch fraudulent behaviour; fraud is against the law in New Zealand.

Minister, you also said that the problem is the regulators are not able to do their jobs properly. Then fix the regulators. Don’t bring more legislation to paper over something that the Minister says is not working, because with every single piece of legislation this Minister brings to the House, there is a cost. And we’ve seen the significance and effect of the cost with the last bit of legislation, where he said at the time, “They have it in Australia. We don’t have it here, and all these poor consumers are being ripped off everywhere, and there are nasty people out there giving them loans and so on.” Actually, Minister, as a result of that last piece of legislation, that is still happening for those who are already acting illegally. You can’t make something that’s wrong or illegal more illegal. But all that the Minister has done through rushing that legislation through the House last year and giving guarantees to everybody they would be better, is that those that should be able to afford a house and get a loan for it are now not able to.

Minister, you mentioned in one of your examples that $1.4 million may not be a lot of money for the National Party. It’s quite a significant amount of money, no question there—with the exception perhaps of contracts issued by the Ministry of Business, Innovation and Employment to Nanaia Mahuta’s husband. It is a lot of money, but the point of this, however, is that, actually, once again, this Minister is bringing forward legislation that says, “Trust the Government. It actually is to do the right thing.” And based on the last piece of legislation put through this House by this Minister when he said the same thing, there are New Zealanders today who cannot get loans to buy homes, who would have been able to before the legislation and they weren’t in danger of being ripped off or taken advantage of.

Minister, can you give this House an iron-clad, absolute guarantee that, actually, this legislation will do only what you’re saying it will do, and that there won’t be any additional cost imposed upon these institutions—because, as the Minister says, the regulators can’t do their job—and that that cost won’t be passed on to the consumer.

Dr Duncan Webb: I raise a point of order, Mr Chair. The member made some statements about family members of members of this House, which is—

CHAIRPERSON (Ian McKelvie): No, that’s not a point of order. I heard it very clearly, and I think it was a legitimate use of the House’s time and the member is perfectly entitled to do whatever they see fit.

DAMIEN SMITH (ACT): Thank you, Mr Chair. I’d like to keep this question very specific. I’d like to probe the Minister’s position further on building societies and credit unions. They are already legislated to act in the best interests of members at all times. They don’t have the support of the Reserve Bank from a liquidity and balance sheet point of view, and increasingly our research shows that in New Zealand people are going more and more to credit unions and building societies than banks on a percentage basis because the service is great and they actually have the opportunity to get a fair hearing, fair products, and a fair explanation of what it is they’re buying into. So if you look at all the people that have been excluded from this legislation in terms of lenders, I find it tough that over the last year I’ve asked in the House and to Adrian Orr and Grant Robertson and the Minister of Revenue why we can’t be more sympathetic to credit unions and building societies and let them perform a service out there that is not burdened by this extra legislation. And I’d like to ask the Minister: why can’t they be exempt from this?

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. I found the Minister’s argument very interesting: $1.4 million. I suppose my first question is—and this has been the central thing—banks and financial institutions make mistakes, and we don’t want them making mistakes. We’ve already got the Credit Contracts and Consumer Finance Act (CCCFA) legislation; that’s already been in place. What this bill does is put another architecture over the top of it and doubles it up—doubles up the requirements on financial institutions to hire lots of people to do lots of compliance. So I suppose my question to the Minister is: what is the benefit-cost ratio of this and how much have the officials estimated these reforms, these new compliance regulations, will cost financial institutions to implement? I’d love to know whether there’s been any assessment of the cost of financial institutions implementing this, particularly when they’ve already had to gear up to meet the CCCFA requirements.

As my good colleague Hon Todd McClay said, between 6 and 10 percent of loans are not now being processed by the banks that would have otherwise been processed up to 1 December last year before the new CCCFA regulations came into force. It has been a disaster. Talk about cost—that’s a real cost, particularly for first-time buyers who are wanting to buy a property or people who are really struggling to get credit who want to buy a car or whatever. What that legislation’s done is stop banks—probably the lowest cost lenders—and driven those people in to high-cost lenders. It’s absolutely been a perverse outcome; and, if you talk about financial cost, the serious personal cost to those individuals has been severe.

So I did ask a question about new section 446M before because I’m trying to understand some of these regulations. They are just unbelievable. Why don’t we try another one—why don’t we try another one, Minister? So I’ve slipped past paragraph (a), (ab), (ac), (b), (bb)—don’t worry, we’re only a quarter of the way through these new regulations! So the minimum requirements for fair conduct programme requires initial and regular ongoing training for each of those employees, agents, and intermediaries. I’m hoping that this is going to be dealt with in the Supplementary Order Paper on the following matters.

So on the relevant services fair conduct programme—so, of course, if you change your fair conduct programme, presumably you have to pull back all your intermediaries. So if you’re a bank selling probably, what, 100 different products—KiwiSaver, insurance, different banking products—every time you make a change in your fair conduct programme I presume you have to call them back and retrain them, including your intermediaries, I think. Checking that each of those employees, agents, and intermediaries has completed the training—so you’ve got to do the old tick box. So a bank like ANZ—I wonder how many intermediaries it’s got. Have you ever worked it out? It would be interesting.

Minister, the second question: do you know how many intermediaries a large bank might have? Because presumably you’ve now got to pull them all back in and ask them somehow whether they’ve completed that training and have a reasonable understanding of the matters that have been covered by the training. So it’s not just a case of turning up and saying, “Did you attend the training?” You actually have to sit down with Mr Penk, Mr Smith, whoever, and say, “Now, tell me, did you understand it all?” And what happens if Mr Penk’s a bit slow? You might have to do retraining. So how does a director know that Mr Penk—an intermediary selling some obscure insurance policy out in the Chatham Islands—actually has understood the new code?

And then we’ve got to do—no, I’m just rapidly ripping through here paragraph (bd) “managing or supervising each of those employees, agents, and intermediaries to ensure that they are supporting the financial institution’s compliance with the fair conduct principle, and monitoring whether those persons are giving that support”—and gee we’ve got a whole lot of stuff we can talk about. Well, can the Minister please just provide a little bit of clarity.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Indeed, as the member Andrew Bayly intimated in his first question, before he got carried into the flow of the argument, indeed that matter is dealt with in the Supplementary Order Paper. The bill previously treated agents the same way as employees, being subject to prescriptive control from financial institutions. However, through discussions with industry, we identified a number of concerns with that position, such as uncertainty over who would even be covered by the term “agent”. So retaining that approach would also have undermined Cabinet’s policy decision to take a less prescriptive approach. In relation to intermediaries, some intermediaries act as agents for financial institutions almost directly while others are more fully independent. So I consider a less prescriptive and more flexible approach is appropriate in relation to agents, and that’s consistent with the principles-based nature of the regime generally.

If I can also just cover off the point raised by the member Damien Smith, it was something I covered off in my initial contribution, but it’s an important question so I’m happy to repeat, around non-bank deposit takers being included in the scope—you know, the community institutions that people attach value to and are using as alternatives to the big banks: credit unions and so on. The suggestion that non-bank deposit takers should be excluded from the regime—it’s the Government’s view that non-bank deposit takers offer a range of bank-like services to consumers and face similar governance and conduct risks, and therefore it’s my view that they should remain subject to the same requirements in the bill. Their inclusion in the regime is also consistent with the Government’s June 2019 decision to bring prudential regulation of banks and non-bank deposit takers within a single deposit-taker regime. I would add that I expect this to be policed, effectively, in a proportionate way—proportionate to the risk and taking into consideration the size and nature of the risk. If they’re smaller institutions, that’s a smaller risk presented overall. But the risks are ultimately the same and, if harm is identified as a particular risk, it should be investigated in the same way, in my view.

CHAIRPERSON(Ian McKelvie): I call Andrew Bayly.

ANDREW BAYLY (National—Port Waikato): Oh, good! Thank you to the Minister for referring to the new definition of intermediary in Supplementary Order Paper (SOP) 173. I was looking at that, Minister. It states in the new section 446SA “Meaning of intermediary” that a person is an intermediary if that person is involved in the provision of a relevant service or associated product to a consumer; a person is paid or provided with a commission; or the commission or consideration is paid or provided directly or indirectly on behalf of a financial institution. That sounds pretty cool. But then the definition of what is not an intermediary—this is what I’m just trying to get my mind around. A person is not an intermediary—this is 446SA(2), Minister; just to help you—if the person is involved only as an employee of a financial institution or an employee of an intermediary.

Well, I struggled a little bit with that. But you are involved if you arrange a contract—presumably you can still be an employee and arrange a contract, and therefore you’re captured by being an intermediary—or you give regulated financial advice. But you’re not involved if you’re distributing an advertisement of promotional materials or you’re carrying out a prescribed occupation—maybe the Minister could tell us what a prescribed occupation is—in relation to their service or carrying out a prescribed activity. It would be maybe quite useful, given these are quite new clauses, knowing what a prescribed occupation and prescribed activity are. Maybe the Minister could give us a very clear synopsis of who within an intermediary is actually captured under these rules, because presumably, if you’re providing the service and getting paid for it, you are, but you’re not if you’re doing promotional activity and you’re not if you’re an employee—apparently. So can I just ask the Minister to clarify that aspect given it’s his SOP?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): A “prescribed activity” will be set under regulation and will be duly consulted on to make sure that it’s appropriate definition for the industry.

ANDREW BAYLY (National—Port Waikato): Please! This is your Supplementary Order Paper (SOP), Minister—sorry, this is the Minister’s SOP. I would dearly like—and it’s a genuine question, right? I’ve got to suggest on the first blush—and I did read it through most of the dinner break trying to get to grips with what is the definition of an “intermediary”—you’ve set out there, there are certain exemptions for not being involved and deemed an intermediary, which obviously has a huge impact. It’s quite clear that you’re not distributing an advertisement. I’d presume if you’re doing administration, you’re not going to be captured under these rules. I presume if you’re running a website on behalf of a bank, you’re not going to be captured under these rules. But if you’re managing the website and using it to gather revenue then you would. But it says expressly, “carrying on a prescribed occupation” or “carrying on a prescribed activity”—these are two exclusions. Surely the Minister must be able to give a couple of examples of each of those.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Sorry, Mr Chair, I’m just wrestling with my mask. As I said to the member, these things will be worked through in regulation if needed. The intention here is to create the space should there be activities that emerge that are contrary to the purposes of the Act. Rather than spelling out in red tape or creating an Act that is no longer fit for purpose the day it’s printed, there is room to create regulation, should it be required, to ensure consumer protection without trying to prescribe every kind of future behaviour that might be contrary to the purposes of the Act.

ANDREW BAYLY (National—Port Waikato): Well, apart from saying that that answer is thoroughly unsatisfactory, not just for me and members of this House but if you’re a financial institution—and there are many, many covered by this—if you’re listening to this you must be wondering what the dickens is going to happen. Because we know how damaging regulations can be, as we saw with the Credit Contracts and Consumer Finance Act regulations that came out and stunned everyone and led to between 6 percent and 10 percent of loans not now being approved that otherwise would have been approved until the change was brought in on 1 December last year.

So why don’t we try another one, I’ll give the Minister another chance. We’ll go back to the primary legislation, clause 6A: “Section 389 amended (Exemptions from need for market services licence). After section 389(3), insert: Exemption for service of acting as financial institution (4) A person is exempt from the licensing requirement under section 388(ca) in respect of a service to the extent that the service is a prescribed exempt service.”

So my question to the Minister: what organisations are proposed to be excluded under clause 6A primary legislation?

CHAIRPERSON (Ian McKelvie): The question is that the Hon David Clark’s amendments to Part 1—

Andrew Bayly: Oh, sorry, Mr Chair—we’re not going to get a speech?

CHAIRPERSON (Ian McKelvie): You’re too late.

The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 173 be agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Amendments agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Part 1 as amended agreed to.

Part 2 Other amendments

CHAIRPERSON (Ian McKelvie): Members, we now come to Part 2. Part 2 is the debate on clauses 19 to 21 and Schedule 2—“Other amendments”. The question is that Part 2 stand part.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. We’re having a great night, aren’t we? I thought I’d look at new section 113A in clause 20, which deals with sharing of information and documents with the Financial Markets Authority. It states here that “(1) The Commission may provide to the Financial Markets Authority any information, or a copy of any document, that the Commission—(a) holds in relation to the exercise of the Commission’s powers, or the performance of its functions and duties, in respect of this Act; and (b) considers may assist the Financial Markets Authority in the exercise of its powers,”—and this is the important part—“(2) The Commission may use any information, or a copy of any document, provided to it by the Financial Markets Authority under section 30 of the Financial Markets Authority … in the Commission’s exercise of its powers, or the performance of its functions and duties, in respect of this Act.”

So I suppose this is an issue about privacy. It’s about making sure that Government agencies don’t pass over information they shouldn’t pass over and retain what should be kept confidential as confidential information. What assurance can the Minister give the committee that that broad power in new section 113A is actually appropriate and doesn’t actually end up granting the commission—and, actually, the Financial Markets Authority as the recipient—undue access to information that it should not otherwise hold?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I appreciate the member reading through the bill. If he reads two paragraphs further on, also under new section 113A in clause 20, he will see that nothing in this section limits the Privacy Act 1993.

ANDREW BAYLY (National—Port Waikato): That is true—the Privacy Act is one issue around privacy of client information—but that’s not my point. My point is: there are different types of commercial information, and what this doesn’t do is provide even a clarity that only information that is most relevant to the situation should be provided. What this is is an open-ended power for the commission to grant that information to the Financial Markets Authority. So it’s not about the general Privacy Act, because that underpins all legislation—that’s like 101 in the first year of university—but what I’m getting at is: what makes sure that information that should not otherwise be provided from one entity to another isn’t actually provided? So that’s the point of nuance I’m asking.

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I do need to apologise to the member, because the copy of the bill that’s on the Table, of course, doesn’t take into account the changes in Supplementary Order Paper (SOP) 173, and that section is actually deleted from the final bill. So my answer to him: I hadn’t appreciated that. That was the original mitigation, but it’s deleted in the SOP 173 because a similar provision in the Commerce Amendment Act 2022 already exists, so that protection is already provided.

ANDREW BAYLY (National—Port Waikato): Thank you, and I appreciate the Minister helping with that. The other one I just want to turn my mind to is Schedule 1. This is dealing with provisions relating to the Financial Markets (Conduct of Institutions) Amendment Act 2019, which we’re talking about—clause 91. This deals with the transfer of the licence for a financial institution from existing banks, insurers, and non-bank deposit takers. So there’s quite a few organisations involved in this, and what this does is it sets out that the clause means that, basically, the licence should be transferred, provided that the Reserve Bank actually agrees to it.

What subclause (3) talks about: “The Reserve Bank may withhold its consent only if the Reserve Bank is satisfied” that the financial institution should not have the consent “for maintaining a sound and efficient financial system:”, which means, basically, it’s going broke or trading inappropriately, or “(b) in a case where [a non-deposit taker or a licenced insurer] that withholding the consent is necessary for maintaining [for the insurance sector] a sound and efficient insurance sector.” That all makes sense, but the next clause says, “If the FMA has asked for the Reserve Bank’s consent but the Reserve Bank refuses to give its consent, the FMA must accept the application”—must accept the application—“even if it does not consider that 1 or more of the requirements referred to in section 396 or 400 are satisfied.”

So this just seems weird that on the face of it—and, hopefully, the officials can help here—the Reserve Bank might say, “Look, don’t transfer this organisation.”—and I don’t know why it would only happen in a transition anyway, because the Reserve Bank would normally have stopped—

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Point of order. Checking my facts before I brought up the point of order, but this part of the Schedule actually relates to Part 1, section 18. So it’s not in the current part that we’re debating; it’s already been passed. I’d just draw the member’s attention to that.

Andrew Bayly: So would you like to answer the questions?

Hon Dr DAVID CLARK: Good try.

ANDREW BAYLY (National—Port Waikato): Point of order. It may relate but it’s still set out in Schedule 1 of Part 2.

CHAIRPERSON (Ian McKelvie): No; the Minister is correct on this occasion. The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 173 be agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Amendments agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Part 2 as amended agreed to.

Schedule 1

CHAIRPERSON (Ian McKelvie): The question is that the Minister’s amendments to Schedule 1 set out on Supplementary Order Paper 173 be agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Amendments agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Schedule 1 as amended agreed to.

Schedule 2

CHAIRPERSON (Ian McKelvie): The question is that the Minister’s amendments to Schedule 2 set out on Supplementary Order Paper 173 be agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Amendments agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Schedule 2 as amended agreed to.

Clauses 1 and 2

CHAIRPERSON (Ian McKelvie): Members, we now come to our final debate, clauses 1 and 2. This is the debate on clauses 1 and 2, “Title” and “Commencement”. The question is that clauses 1 and 2 stand part.

ANDREW BAYLY (National—Port Waikato): I suppose the first question is on the commencement date. The bill provides for a dual commencement date. Sections 16 and 17 come into force immediately, but the rest of the bill, basically, comes in—and it’s been changed from the second to the third anniversary of the date of Royal assent.

So the first thing we’d like to say is: we don’t think it should come into force at all—it shouldn’t come into force. This is a wasted bill that is going to impose millions of dollars’ worth of additional cost and compliance costs on banks and make it harder for them to lend. It’s going to drive up their prices and also make it worse for ordinary New Zealanders trying to access credit. This bill should have been captured under the Credit Contracts and Consumer Finance Act (CCCFA), and we should have done that properly rather than muck that up. And so our first point is it shouldn’t have taken place. We shouldn’t even be discussing this.

But I suppose the issue about extending the date from the second to the third—I know this was sort of a poisoned chalice from the financial institutions’ perspective, because they don’t want to see this come in, but they did try and get to a point of if they had to have it come in, what would be an appropriate date to give time to put all these arrangements in place. But I suppose it gives an issue about if we’re waiting for three years for this bill to come into effect—and the Minister couldn’t even answer some of the issues that will be covered by regulation which he was asked about tonight—then I think: why the dickens are we doing this bill? Why doesn’t the Government take it back, fix it up, and deal with the regulations so that there’s absolute clarity? The regulations and the compliance involved in this is significant. It will require a lot of additional people. Why doesn’t the Minister actually go away, do the homework, get it in place, make it clear as to what’s going to come in place, make sure it doesn’t overlap, or conflict with the CCCFA changes, and actually then put through a good piece of legislation? If he did that, I would think that we may possibly support a bill of that ilk.

But what we’ve ended up with is a double-headed monster for financial institutions, with competing regulatory bodies that are going to have to be accountable for—and I don’t think this will make a jot of difference to people trying to get a loan, trying to buy a house; all it’s going to do is make their loan harder to get and more costly to get. One of the questions I did ask the Minister, which he refused to answer, was: how much additional costs is this going to take and impose on financial institutions who, in the main, do a pretty good job in New Zealand? But we don’t know what it is. It’s certainly more than $1.4 million. Financial institutions do make mistakes. It could have been adequately catered for in the CCCFA. This is a bit of a clown of a piece of legislation.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Clause 1 agreed to.

CHAIRPERSON (Ian McKelvie): The question is that the Minister’s amendments to clause 2 set out on Supplementary Order Paper 173 be agreed to.

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

Ayes 75

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Amendments agreed to.

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

Ayes 77

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

Noes 42

New Zealand National 32; ACT New Zealand 10.

Clause 2 as amended agreed to.

Bill to be reported with amendment.

House resumed.

CHAIRPERSON (Ian McKelvie): Madam Speaker, the committee has considered the Financial Markets (Conduct of Institutions) Amendment Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Forests (Legal Harvest Assurance) Amendment Bill

First Reading

Hon STUART NASH (Minister of Forestry): I present a legislative statement on the Forests (Legal Harvest Assurance) Amendment Bill.

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

Hon STUART NASH: I move, That the Forests (Legal Harvest Assurance) Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider the bill.

Today, I stand to explain to the House why the introduction of the Forests (Legal Harvest Assurance) Amendment Bill is a priority for the Government and should be of importance to everyone with an interest in the integrity of our forest and timber industry.

The introduction of an insurance system for timber products is a tangible step New Zealand can take to support the international efforts to curb the trade in illegal timber products. At the same time, it provides importers and our domestic processors and exporters with a framework for demonstrating that due diligence has been completed on the legal harvest of timber products they are trading. This bill will be comprehensive and will cover exported and imported timber products, as well as our domestic supply. How New Zealand responds to the issue of illegally harvested timber has been debated since before I entered this House. A number of voluntary actions have been taken and I would like to recognise the efforts of importers and domestic producers in this respect. But we have reached a point where consumers and markets are expecting more in the way of formal assurances.

If we do not respond to these calls, consumer confidence could be impacted and log and timber product exporters could face increasing difficulties in maintaining market access in an increasingly competitive global environment. The sale of illegally harvested timber is a major problem in the world today. It is the harvesting of timber in contravention of the laws and regulations of the country of harvest, and there are many ways that this might happen. It is difficult to assess the extent of illegal logging; however, Interpol estimates the illegal timber industry is worth around US$152 billion a year. And the World Bank estimates that the global annual market value of losses from illegal cutting of forests at over US$10 billion. Approximately 10 percent to 30 percent of the global timber trade involves illegally harvested timber.

Illegal logging not only destroys forests and fragile ecosystems, it strips the economic livelihood of local communities and responsible companies. Timber that is logged without payment of duties and tax pushes down the market price of timber, which acts as an incentive for other loggers to follow the same practice. This further increases losses to communities and Governments and starts a vicious circle in the market.

When it comes to New Zealand, we are mainly an exporter of timber products; however, timber imports have increased by approximately 70 percent over the last decade to $2.35 billion of timber products imported in 2021. The rising volume of timber imports into New Zealand increases the risk that we become a destination for any illegally harvested timber products. This is because we do not have any mandatory timber assurance measures and we are largely dependent on the voluntary assurance measures that are in place through industry initiatives and environmental certification. This bill will create a due diligence system that will shut the door on illegally harvested timber products and will show the global community that New Zealand is committed to helping eradicate this problem. Our primary processors—importers and exporters—will need to check and validate the integrity of the information provided by the grower, or person they bought the timber from, to assess whether it has been illegally harvested. This due diligence system may be streamlined through using an approved template or by being a member of an existing forestry certification scheme such as the Forest Stewardship Council or the Programme for the Endorsement of Forest Certification. This is to alleviate the burden of the new regulatory system.

The second issue this bill will seek to address is how we maintain market access for our exporters who are trading timber into markets that are introducing timber legality requirements. Forestry is an important industry for New Zealand, it contributes around $6.7 billion to our annual gross income and employs approximately 35,000 people. Timber products are our fourth-largest export earner behind dairy, meat, and horticulture, and forestry export revenue is forecast to increase by 3 percent in 2022 and 2 percent in 2023.

More and more countries are introducing formal requirements to prove legal harvest. Several of our key forestry trading partners—including Australia, the United States, Indonesia, Republic of Korea, Japan, Vietnam, and China—have implemented or are developing their own legislation to prevent the import or export or trans-shipment of illegally harvested timber. We export nearly 85 percent of our timber products to these countries. Third-party environmental certification has, to date, been accepted by most of our trading partners as a means of demonstrating legality. However, private certification is not a viable financial option for the majority of our smaller growers, who represent approximately 30 percent of the estate and who are supplying up to 40 percent of the harvest during the 2020s, due to the age of their forests. With the building of international efforts to ensure that traded timber products are legally sourced, we also need to ensure that we have a legal harvest assurance in place. If we do not do this, we run the risk that we no longer can export to these markets.

This bill has several components. One is the due diligence system I mentioned earlier. But there are other key components, such as a definition of what is “legally harvested”, a registration system, and harvest and exporter statements. These will form a robust programme which will simultaneously strengthen the international reputation of our foreign sector and safeguard and enhance market access for our forestry exports. Guidance for our registered parties will be provided at each step of the process, and we are drawing on international experience to identify how this works in overseas jurisdictions. Forest owners will not need to be registered, but they will have an obligation to provide a statement confirming their right to access the timber.

By curbing the importation of illegally harvested timber products, it ensures that New Zealand’s forest growers are operating on a level playing field and that pricing reflects the cost of production. In developing the regulatory proposals, the Ministry for Primary Industries has worked with affected parties to ensure that the system is fit for purpose, cost-effective, and not overly burdensome for the individuals and companies operating in this space. In 2020, the Forests Act was amended to introduce a new registration system for forestry advisers and log traders, as log traders will need to also register for legal harvest, this bill aligns with the registration system currently being implemented for log traders.

The purpose of the 2020 amendment was to ensure forest owners received better advice and there was more transparency in the market. This bill complements the amendment Act by strengthening the resilience of the supply chain and the reputation of New Zealand forestry. I commend this bill to the House.

ASSISTANT SPEAKER (Ian McKelvie): The question is that the motion be agreed to.

TODD MULLER (National—Bay of Plenty): Thank you, Mr Speaker, and it is a great privilege to stand and speak on the Forests (Legal Harvest Assurance) Amendment Bill. I thank the Minister for his pretty comprehensive summary of the purpose of the bill and what the Government is seeking to do. I can confirm that the National Party supports the bill. It’s a solid piece of legislation and does tidy up an area which, as the Minister has noted, has needed some focus. There’s been some good voluntary frameworks in place, particularly on the importer side, and this is the appropriate step forward.

I do have a few comments that I’d like to share with the House this evening. Firstly, in terms of the detail of the bill and how it is structured, I’d like to just build a little bit on what the Minister has said. The proposed bill does amend the Forests Act 1949, and it will be three new parts in that Act: Part 5 talking about legal harvest assurance, Part 6 around log trading, and Part 7 around cost recovery.

As you look through the proposed legislative changes that are listed in the bill, they all make sense, but there is an issue that jumps out to me, Minister, and I would hope that we explore this as we work through the select committee process. There has been a lift in imports of timber into this country, and, as the Minister says, a 70 percent increase now to $2.3 billion. That’s a higher number than I expect most people listening tonight would have expected. Most people, when we reflect on our forestry sector, see it through the lens of exporting to the rest of the world, as opposed to the quantum and value of the imported product. I also accept, and the National Party accepts, that we are part of a global trading environment, a multilateral global environment that has been seeking to put into practice greater assurances and compliance for all trading of wood products globally to ensure that illegal harvesting doesn’t occur. So we, of course, accept that, as part of that commitment, we are going to need to put obligations on our exporters to ensure that they meet the standards that are being taken up across the world.

Now, we have absolute confidence that our exporters do. We are known for our quality of exporting to the world, the quality of the wood both in terms of native and exotic products. So from our perspective, from an exporter perspective, it is overlaying a compliance framework that confirms what we already are doing. That is accepted, no doubt in some corners reluctantly, as the price of doing business in a global world, that people need the assurance and it needs to be buttressed, if you like, with a formal certification process. But when I look through the bill and the detail that is suggested, most of the focus is on ensuring that our exporters are very clear around what the obligations are for them to meet the certification and to formalise the compliance—little acknowledgment that they largely do this already.

It is quite an explicit framework of additional cost and effort that they will need to go to to ensure that they meet these expectations. It is relatively silent on the core issue that has brought this to the House, which is the challenge of ensuring that what you import into this country has actually come from an appropriately sourced harvest in a country that has met the standards that we apply to ourselves. That is the critical part of this bill.

Now, it is noted in here that it is part of the framework, but the detail that this bill outlines is heavily weighted to framing the compliance obligation on the exporters of wood products to the rest of the world. It is relatively silent on what the obligations are going to need to be for those importers and how they are going to assure themselves that what they are bringing into this country meets the standards that we are committing to in terms of our exporting around the world. I think that’s an area that needs further exploration in the select committee.

We all understand the importance of demonstrating that you are best practice in terms of a certification framework. That’s a given. A lot of our exporters understand that regarding a product, particularly in an agri-sector. Like I say, there will be some frustration that it is more compliance on a sector that feels particularly weighed down by additional compliance year in, year out from this Government, but if they helicopter up and look at the global trade context, I think it actually makes some sense.

But I return to that issue: when you look through this bill—and I will listen intently for those who are yet to speak—where is the fundamental change of ensuring that the importers have the confidence of their supply chain that they actually can look back through their customers to give the New Zealand public the assurance that, actually, it has been sourced sustainably and sourced appropriately? That has to be more than simply saying that the person that you bought it off in the particular country just confirms that it was sourced appropriately; it needs to match the obligations, the significant obligations, that we have put on our exporters in terms of their “harvest” definition, their confirmation that we have done everything according to this new framework. It needs to be just as explicit and just as demanding and just as transparent, or we are weighting this too much, frankly, against our exporters and not demanding enough of importers.

The other issue that I just want to quickly touch on is the exception with respect to indigenous timber. That is an exception of this framework because it is apparently already regulated under Part 3A of the Forests Act. I just want to test that, because why is it that indigenous exports and imports are exempt, but non-indigenous wood and timber isn’t? Why do we have the confidence that Part 3A provides the protections, the confidence of appropriately high-quality assurance in terms of the harvesting in a New Zealand context, but the exotics we do not? It is lacking in the exotic space that needs this new framework.

I’m not convinced from the Minister’s answer and speech here this evening that there is enough clarity as to why the exotic timber harvesting and products need this new framework but the indigenous timber and harvesting does not, and particularly in the context, again, of the import context, because when you reflect as a potential consumer of imported timber from around the world, often it is framed up in some of those places that you can buy exotic timber or indigenous timber that you’ve imported as very special qualities that have come from a particular space in the world. It was pleasing to hear that Indonesia has made a commitment to this sort of framework, but it is not just Indonesia from which we import timber that is promoted as special indigenous timber.

Again, we’ve got to ensure that we’ve got consistency, comparability between the exotic and indigenous timber trading, and that it is fair and efficient. But, overall, this is a step in the right direction. We support it with those caveats. I won’t be sitting on the Primary Production Committee—I’ve got too much on in the oceans and fisheries space—but I look forward to hearing how that committee progresses those issues. It is a committee that is known for its thorough investigation of bills such as this, and often in quite a bipartisan way. I hope they bring the best of their thinking and ensure that what we get back in the second reading is a further step forward again. Thank you.

JO LUXTON (Labour—Rangitata): Thank you, Mr Speaker. I’m really pleased to rise and take a call on the Forests (Legal Harvest Assurance) Amendment Bill as the chair of the select committee that will be looking after this piece of legislation. As the Minister outlined in his contribution, the economic and ecological losses from illegally harvested forests have massive impact right across the world. We heard that, for our economy, it’s worth $6.7 billion and we employ 35,000 people within the forestry sector, so it makes absolute sense that we would look to bring this piece of legislation in.

I just want to acknowledge the contribution that the previous speaker Todd Muller made, and I do look forward to the committee being able to further investigate and address some of the issues that he raised. He is right in the fact that the Primary Production Committee works in a pretty bipartisan way to get the best outcomes for legislation that comes before us.

We heard from the Minister that this piece of legislation is about protecting the integrity of our export forestry, and I think that’s really important for New Zealand. The purpose of the bill, though, is to ensure that timber that is grown in New Zealand and imported into New Zealand is legally harvested. The definition of “legally harvested” is going to be a key concept under this bill. It’s about ensuring that the person who harvests it has the right to harvest it, has the necessary legal authority to exercise that right, and does not contravene the harvest laws of the place or country of harvest when carrying out the harvest, and the member previously talked about the rules and obligations for harvest in other countries. So that’s a really interesting point that the member did make, and one that I’m sure that the select committee will look to delve into a bit further.

Again, I’m looking forward to having this bill before our select committee, looking forward to hearing submissions on it and shepherding it through the House. So I commend this bill to the House.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Mr Speaker—good choice, sir, if unexpected for a few people. I have great pleasure in speaking to the Forests (Legal Harvest Assurance) Amendment Bill. As the MP for Kaipara ki Mahurangi, I should take an active interest in such matters: there are a large number of forests covering a considerable area of that, the most wonderful electorate in New Zealand—indeed, the world.

Obviously, at the first reading, we are interested in sort of general principles. We’re also interested in the basic mechanisms of how it works. The relevant select committee, obviously, will have a really close look—I don’t have the pleasure of being on that select committee, but colleagues here, no doubt, will have great pleasure and apply considerable diligence to that task, and I wish them well in it.

But, at a reasonably sort of high level, it does seem to me that a number of different themes are palpable, if I may. One is an environmental category, and I refer to my colleague and friend Todd Muller’s contribution, which emphasised that along with the commercial imperatives that are important not only for those in New Zealand who are engaged in the trade but also those overseas.

And, of course, it’s the trade, in that import-export sense, that is so important for the balance. Again, I refer to Mr Muller’s contribution and talk about the importance of those being aligned, such that we don’t have a mismatch that ends up with an unfairness from the perspective of those in this green and pleasant land to engage in the activity, but also in terms of a fair trading environment, a level playing field—if that’s not, you know, mixing my metaphors in terms of forests. Obviously, that’s really important so that we don’t end up with distortions such that we unwittingly incentivise practises that are less efficient, less environmentally friendly, and certainly those that are not legal.

So, in that sense, I would argue that there’s a third main rationale alongside the environmental and the commercial, which I might refer to as architectural. Not in the sense that the timber itself is used for building of physical dwellings and other buildings—of course it may be—but architectural in the sense of the rules-based order being held up by these principles that we’re discussing tonight.

The objectives of the bill, obviously, are very worthy, as expressed within the legislative statement. I’ve had the benefit of reading that, as well as hearing an oral presentation of, essentially, the same material by Minister Nash, and it seems that combating the global trade in illegally harvested timber is actually a very real issue, a live issue. Another friend and colleague of mine knows a lot about this, actually, Mr Speaker—and I can’t bring you into the debate, so I would just say that that member is not a million miles away from the Speaker’s Chair as we speak. I’m hoping that he will smile kindly upon my contribution.

Nicola Grigg: For Rangitīkei.

CHRIS PENK: That’s right. As my other colleague and friend Nicola Grigg points out, that person may also be the member for Rangitīkei.

The bill looks to strengthen the international reputation of our forestry sector, and it looks to reduce the risk of importing timber into New Zealand that’s not legally harvested. So it’s really a combination of those two things, I think, that enables us to say that we will reduce international trade in timber that is not legally harvested. The outgoing and incoming both, obviously, need to be kosher, and that’s to the benefit of, you know, everyone engaged in the trade and, obviously, ultimately, the consumers of the products, which is everyone who has something to do with timber, I suppose, ultimately. And here we are, surrounded by the stuff, and what beautiful carved timber it is too, in this House.

I was actually quite struck by reading in the legislative statement the extent to which we import timber, as well as the export. Again, Mr Muller referred to that. So the balance of trade calculation is interesting. As an export earner, some $6.3 billion worth in the year ending June of last year, and in the equivalent period, $2.35 billion going the other way. So we do win overall on that equation, but it’s not insignificant that we have timber from other nations coming in. And so, of course, we want to assure ourselves as to the legal provenance of that. Of course, New Zealand has a reputation already as a high-quality exporter of timber products. We do trade on our reputation, quite literally, in the sense that we want those international markets not only to consider us “100% Pure”, as the marketing campaign goes, in an environmental sense, but also in assuring the purity of our products, in the sense that it is legally pure, almost morally pure, if we’re talking about, again, the environmental aims that go alongside the commercial imperatives to protect the trade.

It’s interesting, the way that the bill seeks to achieve these things. It’s got a number of different mechanisms within it. One is that it actually requires certain compliance activities by those who are engaged in timber exporting, for example, and your administrative measures to help exporters furnish proof of legality. And that might sound like a burden on them—and, no doubt, to some extent it is—but the burden is designed, ultimately, to provide a benefit, which is to provide the assurance to the end-user or the purchaser or the export market of the bona fides of the timber. And so, to that extent, it’s actually for the benefit of the New Zealand market and, indeed, the New Zealand provider—the harvester of the timber, if you will—to comply with those.

We have mandatory registration, therefore, for those who are engaged to a certain level, and we’ve heard about specified thresholds. I don’t know what those thresholds are, whether they’re appropriate, but, no doubt, again, that’s the select committee’s work to determine whether those are set at an appropriate level. No doubt, submitters who are actively engaged and knowledgeable in the sector will have a clear view on that. No doubt, the select committee will hear and act as appropriate if amendments should be required.

Also interesting, a voluntary registration scheme for those engaging in activities on a smaller scale. Why would someone voluntarily register? Why would they go through that burdensome process? Well, I think, again, the answer is that, actually, it might ultimately be for their benefit. And so the purpose of the bill—which, as Mr Muller has explained, we do support—is, of course, to enhance that reputation for “New Zealand Inc.” as a whole, and, indeed, those involved actively in the industry. The way it’s achieved, a legal harvest statement and declaration—and, of course, if that’s to be relied upon, then those who are making the statements and engaged in the industry must have some sort of credibility and weight behind them, and so it is that there is a fit and proper person test. Lawyers have a fit and proper person test, and if a lawyer can be a fit and proper person, I suppose a forestry harvester certainly can be. I feel like I can say that—and my colleague and friend Harete Hipango seems to enjoy that. She’s a very fit and proper person herself, in every sense of that phrase, no doubt. And so there’s a due diligence system to maintain the standards and to minimise the risk that illegally harvested forests will be trafficked, so to speak—or that they’ll be illegally harvested in the first place, I suppose, more helpfully.

And a bit of a mix of private and public, where there’s a certification scheme within the due diligence system, actually, that appears to be in the manner of self-regulation, but which is recognised, none the less, in the certification. So I would say, and I think those on this side of the House would say, if there’s an opportunity for the State not to duplicate processes that are designed well, are followed in good faith, and have credibility in themselves, there’s no need for that to be replicated. So I do give some credit to the Government for acknowledging that a private certification scheme can be part of that architecture as a whole in protecting the industry.

There’s a principles-based cost recovery framework, we hear, and to members of the Regulations Review Committee—and I just pause in case there are any in the House, because, inevitably, there will be a roar of approval. There is none.

Hon Members: Hooray!

CHRIS PENK: There’s a roar of some kind. I don’t know that it’s—

Hon Member: Timber.

CHRIS PENK: The roar is timber, appropriately. That’s right. That’s right. [Interruption] Maybe Tāne Mahuta as the Reserve Bank Governor’s about to fall. I don’t know, that wouldn’t be within the context of the bill, so I wouldn’t suggest such a thing.

Anyway, so there’ll be a set of principles that are founding or underlying a cost recovery framework, so it’ll be important that the regulations setting those up take due regard to the way that the system needs to be able to carry itself, from a financial sustainability point of view—again, mirroring the environmental sustainability imperatives that underlie this work as well. There’ll be the ability for regulated parties to seek a review of the decision—again, that’s something that we will look at very seriously at that other select committee, and want to understand that there are fair processes involved for all those concerned.

I seem to have run out of time, to the great disappointment of all, except mine. So I shall leave it there, but say—

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

ANGELA ROBERTS (Labour): Kia ora, Madam Speaker; thank you. It is a pleasure to take a call on this bill, the Forests (Legal Harvest Assurance) Amendment Bill. I just want to take a moment to acknowledge the broader context within which this bill sits—that is, helping us to secure our future. Te Uru Rākau, the New Zealand Forest Service, is in the process of developing a forestry and wood-processing industry transformation plan. This bill will support the aims of this plan. It’s a fantastic process. Collaboration is always messy and time-consuming but they’re getting there, and there’s some really exciting stuff coming out as a result of the collaboration.

One of the aims that this bill will contribute to is that forestry will be able to contribute more to the New Zealand economy by ensuring access to markets—specifically the growing number of markets that are requiring us to demonstrate the legality of our timber products. As we’ve already heard tonight, this is a significant and growing industry—a 70 percent increase in the last decade alone—and so it’s really, really important that we protect and futureproof our export markets. Another aim of the industry transformation plan is that we unlock the sector’s potential to support our climate change goals. Our historic emissions reduction plan talks about how we can better prepare for a low-emissions future and protect our economic security, and forestry covers so many bases when it comes to meeting those obligations. We’ve heard about illegal harvesting globally, and the contribution it makes to deforestation, degradation of ecosystems, and the damaging economic and social impacts.

This is an important piece of legislation, and we really look forward to it coming to select committee. It’s great to hear the support from across the House, which means we’ll be able to put all of our energy into making this a great piece of legislation. I recommend this to the House.

Hon EUGENIE SAGE (Green): Tēnā koe, Madam Speaker. Thank you. I’m pleased to take a call on the Forests (Legal Harvest Assurance) Amendment Bill. The Green Party is supporting this bill, which will amend the Forests Act 1949 to create a legal framework for ensuring that wood imported into, and exported from, Aotearoa is harvested legally. We’re supporting it because it is an improvement to the status quo, but it is a lost opportunity. The Green Party wants a much-stronger purpose, stricter liability provisions, and changes to the bill to widen its scope and to ensure that it is effective in outlawing illegal logging rather than providing a fig leaf to cover it.

This bill needs to be about much more than safeguarding market access for New Zealand logs and timber. It needs to prevent the curse of deforestation in temperate and tropical rainforests. It needs to be strengthened if it’s going to have any significant impact in outlawing illegal logging and ending the human rights abuses that logging has on customary forest owners and on indigenous peoples. And the Green Party will be looking for changes in the Primary Production Committee to ensure that the bill has a robust regime in terms of what constitutes legal and illegal harvest. And we want to see its scope expanded beyond timber products to include all forest products, including palm oil and palm kernel expeller (PKE), because, as the Minister noted, the scale of illegal logging is enormous and it’s having huge impacts not only on plants and wildlife and the integrity of the forest but on the indigenous communities that depend on those forests for their cultural and social identity and wellbeing, and it’s having huge impacts on the climate because deforestation and the change in land use to farming involves enormous loss of carbon. Illegal logging is violence against people, against nature, and against the climate.

And the Minister recognised the efforts of importers and timber producers, but the people we really have to thank and acknowledge for the fact that Parliament is even considering this legislation are courageous activists from Brazil to Indonesia and environmental organisations such as Greenpeace. It is their strength, their determination, and not that of Governments and Government agencies, which have exposed the seriousness, the extent, and the impacts of illegal logging and what this heinous trade in illegal timber is doing to nature, the climate, and the ability of the planet to support the amazing web of life which is found in unlogged tropical and temperate rainforests. And can I pay tribute and extend the condolences of the Green Party to the family, friends, and colleagues of the Guardian journalist Dom Phillips and Brazilian activist Bruno Pereira. They’ve been missing in the Amazonian rainforest since 5 June and are widely thought to have been murdered while they were looking at the impacts of cocaine trafficking and illegal poaching on the Amazonian rainforest and on the indigenous people who live there.

This Parliament has a duty to strengthen and expand the scope and effectiveness of the bill. So it certainly puts in place a framework and puts the onus on proving legality on importers, exporters, log traders, and primary processors, who will be required to establish due-diligence systems. It allows for the recognition of private certification systems, such as the one organised by the Forests Stewardship Council. It defines timber as “FMPI legally harvested” if the harvester has the right to harvest the wood, has the necessary legal authority to exercise that right, and doesn’t contravene the harvest laws of the place or country of harvest. But this definition is too weak because, in terms of the applicable legislation in the country of harvest, if you have loose legislation, official documents won’t often provide adequate proof that it’s being logged legally without threat, intimidation, violence, or abuse of the rights of indigenous people. There needs to be a look behind that country-of-origin documentation. There needs to be additional investment into site visits, third-party auditing, verifying species and the origin of timber through DNA and isotope testing.

And the Ministry for Primary Industries (MPI) needs to work with organisations, like Greenpeace, which have investigated supply chains and gone behind those official documents, because Greenpeace, in its studies on the Brazilian logging, has shown that huge indiscriminate and illegal logging is occurring there. Loggers are after trees like the ipe tree, which, when it’s processed into flooring and decking, can fetch up to US$2,500 a cubic metre. And all of the satellite imagery that Greenpeace and others have shown there is that logging is spreading right into the core of the Amazonian rainforest. And when the logging penetrates, illegal roads go in further, and more logging happens. So we’re seeing a huge destruction of biodiversity and an intensification of violence—people terrorised, intimidated, and murdered. And we’ve had decades of violence because the Brazilian Government has been able to get away with not doing the enforcement and prosecution that’s required. There’s a weak licensing process in Brazil for forest management plans, there are no field inspections, there are poor estimates of timber volumes in forests, and there are changes to the accounting in terms of sawmills and tree species not being properly identified.

So MPI needs to work with the environmental organisations that have got the data on this. And this bill needs to apply not just to timber products but to any forest products that are associated with illegal logging, because in a report that Greenpeace did last year—it was a very detailed report called Deceased estate: illegal palm oil wiping out Indonesia’s national forest—Greenpeace has described the illegal palm oil plantations and their expansion into the rainforests in Indonesia’s forest estate as, I quote, “the largest single cause of destruction of critical Indonesian rainforests over the last two decades.” And who benefits from that encroachment? Not the forest, not the customary indigenous owners, but industrial agriculture in Aotearoa New Zealand and the New Zealand dairy industry. One of four palm oil producers with more than 50,000 hectares in the Indonesian national forest estate is Wilmar International, and it’s a major importer of palm kernel expeller into New Zealand as a supplementary feed for the dairy industry. And, of course, Aotearoa is the world’s largest importer of PKE, so we are directly involved in the destruction of rainforests. This bill will do nothing—nothing—to stop that. It will do nothing to stop the forest destruction caused by the illegal expansion of palm oil plantations. So that’s where the bill needs to change, and if it changes there, then it would do something about protecting the 2,000 indigenous communities in the Indonesian rainforest. It would help protect the habitat of orang-utan, of elephants, and of the Sumatran tiger, and it would help reduce the climate pollution and the carbon loss from the land-use change involved in deforestation.

MPI also needs a major change in culture if the system is to be robust. We have seen what happened with the swamp kauri debacle in Aotearoa where it took the Northland Environmental Protection Society—taking MPI all the way to the Supreme Court—to establish that the export of sawn planks did not qualify as finished products or tabletops as the swamp kauri miners were claiming. And that was NGOs again. So there needs to be, behind this bill, a complete change in MPI’s culture so that the legislation, when it’s passed, is actually properly enforced, because we need to stop this illegal logging. The life of the forests depends on it. The lives and wellbeing of indigenous communities who depend on those forests also depend on it. The bill needs to be significantly strengthened. Kia ora.

MARK CAMERON (ACT): Thank you, Madam Speaker. It’s a pleasure that the Minister has brought this piece of legislation, the Forests (Legal Harvest Assurance) Amendment Bill, to the House. I think it’s a good piece of legislation, quite candidly, and although I just want to touch on my Green colleague’s previous assertions about confusing palm oil and the palm kernel industry as a—I mean, palm kernel is a by-product of palm oil production and if she really believed in that, she wouldn’t eat anything with palm oil in it. It’s in one in five foods in New Zealand, so I can’t see the nonsensical argument there—but anyway.

None the less, let’s get to the bill. I think this bill creates a new regulatory framework for the illegal harvest assurance of illegal timber products. I can speak to this personally. I travelled to Brazil five times over a decade ago and it was a profound problem. I was in the cities of Rio, Sao Paulo, and a city called Belo Horizonte, and it’s a real problem over there. So, I think, as the member Todd Muller pointed out, the real crux of this legislation, which potentially really needs honing in on, and I think the Primary Production Committee will do that, is about the import of timber products.

Timber products produced here, as we’ve well canvassed, are worth $6.3 billion. I mean, it’s a wonderful industry in New Zealand, the fourth-largest exporter. I would maintain, hand on heart, it’s probably an integral part of New Zealand—I think everyone would agree with that—and it’s probably not permeated with a lot of illegal timber product. However, the import industry is where the concern really lies, and I think we contextualised the problem here. This is $152 billion—I think the Minister quoted before. These are figures out of Interpol, this global trade of illegal timber products. The Green member the Hon Eugenie Sage pointed out the effects to the indigenous people all around the world, and she’s absolutely right in that regard. As I say, again, I was in Brazil and this is a profound problem in that part of the world, and it’s damnably hard for us as importers to have a fair and honest understanding of the certification process and what it means when we are importing these products.

The illegal trade counts for about 30 percent of the global trade of timber products. It contributes 50 percent of the tropical deforestation. Now, that’s a monumental geographical area, and, suffice to say, it displaces all manner of indigenous people and natural wildlife. Damage to local forests and communities—and I think we’ve well canvassed this tonight—is significant for producer countries, diluting their legitimate timber market and by virtue exacerbating the problem of what is illegal and what is not. Habitat lost—that’s been well canvassed in the House, and I think we all agree this trade accentuates and threatens the ecosystem, endangering further ecological damage to various species, which are on the brink of potential extinction etc., in many parts of the world.

We need to be in line with our trading partners. We need a clearer certification process for New Zealand to have assurances in our export trade of timber, and, by virtue, equally, have a clear line of clarity when we are importing timber products, whether they are furniture or whether it’s framed timber etc., or decking, which seems to be routinely a concern. Better codes of practice in the retail sector—and I think if New Zealander retailers here and members of the New Zealand Imported Timber Trade Group are involved in this, it can only further add assurance. Consumer confidence—we trade on our reputation which has been well canvassed tonight. Clarity around not only our exports but, most importantly, as the member Mr Muller highlighted before, around imports. We absolutely need certainty.

This is a great piece of legislation. ACT will fully support it in this first reading. I look forward to further canvassing this in the select committee process with my colleagues on the other side of the House, and over this side, and, hopefully, we can iron out any kinks along the way and really make this a wonderful piece of legislation going forward. Thank you very much, Madam Speaker.

ANNA LORCK (Labour—Tukituki): Thank you, Madam Speaker. We’ve heard tonight that the scale of illegal logging across the world is enormous. As a member of the Primary Production Committee, I’m looking forward to hearing more through the submissions process around the import of illegal logging materials into New Zealand and the scale of that and how we measure it.

I’d just like to acknowledge the Green Party member Eugenie Sage for the passion that she spoke with tonight. And listening to the significant issues that she has raised, I think it’s imperative for us as a select committee to listen to those issues that have been brought up. I recommend this bill to the House. Thank you, Madam Speaker.

NICOLA GRIGG (National—Selwyn): Madam Speaker, I just popped a Fruit Burst in my mouth and Anna Lorck was very quick to finish. Excuse me—excuse me.

I rise just to take a very quick call—now that I’ve finished my Fruit Burst—on the Forests (Legal Harvest Assurance) Amendment Bill. As has been acknowledged before me, the National Party will be supporting this bill to select committee, and I sit on the Primary Production Committee so I, too, like my colleagues Anna Lorck and Mark Cameron, will be looking forward to hearing the submissions on this.

I was very surprised to read in the notes that for the past 20 years or so, this has been a largely unregulated sector of the forestry industry, and I think it speaks volumes for those who own and operate businesses in New Zealand that thus far these seem to have been self-moderating, to a degree. We do like the idea that within this bill, it will seek to address illegal forestry and illegal harvest practices by ensuring that wood harvested would have to be verified as legally harvested. And indeed, I think that’s one of the first more important steps, to define what is “legally harvested”, which is also a caveat in the bill. More importantly, I think, is to ensure that imported timber is not illegally sourced. Already a number of speakers have mentioned—I think the most obvious example to most people in the general public is the state of rainforests in the Amazon basin and the detrimental impact that has been had on (a) the forests, (b) the ecology, and (c), probably most importantly, the peoples that live in and live off those forests.

This bill will also help, I think, to reinforce the integrity of the New Zealand timber export industry, and that is an incredibly important mechanism to put in place, as we know. We’ve seen, I think—thrown into stark relief in the last couple of years—that this country really, really does rely on our export industries, particularly the primary industries. We know in a world of digital and data capability that traceability is easy, but also incredibly important. And this is the kind of traceability mechanism that will help to ensure the robustness of this system.

We do support legislation aimed particularly at preventing illegal harvesting, and most New Zealanders will think with some horror of the examples that we’ve seen over the years of the illegal harvest, particularly of swamp kauri, and the export of those largely untreated logs offshore to never return to New Zealand shores again.

Like my colleague Todd Muller made reference to, we do think that this bill is largely silent on the obligations on importers, and we do hold out some concern that more and more regulation layered on to the exporters will prove to be overly onerous and burdensome. And I know that those of us on our side of the House, when we do consider this bill at the select committee, will be at pains to ensure that that does not actually occur. As I mentioned earlier, we are acutely aware of the importance that the export industry plays to the New Zealand economy, and I think the last thing that any export industry needs is more and more paperwork that is actually going to prevent them getting product to market and, indeed, doing business. It is already a heavily regulated industry and it does, to be fair, have a difficult health and safety track record, and we just need to ensure that more paperwork isn’t actually going to prevent businesses being viable and being able to operate.

When I looked at various clauses within the bill, particularly Part 5—being responsible for the legal harvest assurance and establishing that regulatory system for legal harvest—I was particularly interested to read that it would require a person “who is responsible for harvesting regulated timber to (i) provide … legal harvest information about … timber … (ii) keep the legal harvest information up to date; and (iii) keep records of any legal harvest information they have provided”. Again, when we do come to consider this bill, I certainly will be asking the Ministry for Primary Industries, in particular, what kinds of programmes, what kinds of systems, what kinds of technologies are in existence or are already in place or are commercially available to this sector to be able to incorporate this new system of regulatory requirements. So we do look forward to considering this bill, and may I also join my colleagues in commending it to the House.

TANGI UTIKERE (Labour—Palmerston North): Thank you, Madam Speaker. It’s a pleasure to take a brief call in support of the Forests (Legal Harvest Assurance) Amendment Bill in the name of the Minister of Forestry, the Hon Stuart Nash. Can I thank him for bringing the bill to the House, because we all know that forestry is absolutely important to our primary sector and the success of that sector, but so too is the reputation around timber harvesting, here domestically but also the products that are imported into this country as well. So that sense of global confidence in the systems that we have here and those elsewhere around the world leads to that integrity within the forestry supply chain, which obviously is an advantage.

I know that members of the select committee—we’ve heard from many of them this evening—obviously are really looking forward to engaging with a number of submitters as part of this process, and I certainly wish them well for that. I commend this bill to the House.

TĀMATI COFFEY (Labour) (remote): Thank you, Madam Speaker. The previous speaker was right: in terms of this bill, global consumers really want those assurances about our high-quality primary products. I live in Rotorua. We’re on the doorstep of the Kaingaroa Forest. We need to have absolute certainty that our forest products that we have in New Zealand, but also things that we’re domestically importing from overseas, are harvested in the right way. The illegal harvesting of wood is a significant problem globally, as previous speakers have gone and said. They contribute to deforestation, the degradation of ecosystems, and damaging economic and social impacts. In New Zealand, we have to be committed to trade only in legally harvested timber, and this bill looks to do that today. So I commend this bill to the House.

SIMON WATTS (National—North Shore): Thank you very much, Madam Speaker. It’s an absolute pleasure to be rising on behalf of the National Party, as the member of Parliament for North Shore, to be talking on the Forests (Legal Harvest Assurance) Amendment Bill’s first reading.

When I was reflecting long and hard about what I would say this evening in regards to this bill, I thought back to my younger days, when the way in which I funded my university study was through pruning pine trees on a number of forestry plantations in the mighty Waikato. So I have some connection to this important topic. Those were long and challenging days, but I did my small part to contribute to what is a significant and very important sector, and I hope those trees are still growing as strong and hard as they were many years ago.

Anyway, in regards to this bill, National will be supporting this bill. That’s important because of the fact that in our current environment we have a regime which is primarily voluntary. We have, within a domestic sense, aspects and considerations but the reality is, as many speakers, including the MP for Selwyn, Nicola Grigg, in terms of her comment and contribution—quite comprehensive, obviously—said before, there are some gaps that exist in regards to the importation aspect around timber product. That element, in terms of risk, absolutely has impacts in regards to not only environmental consequences but also commercial consequences, and also the element of an unfair playing field as well, in regards to when those products come into this country. So anything that we can do, in regards to alignment, around making sure that we’ve got robustness in terms of the regulatory environment that deals with the outcome, which primarily is to ensure that forestry products that do come into this country are not from or sourced through illegal means, will bring significant benefit in terms of the overall system—I think, as I said, providing that even playing field to our domestic providers as well.

I was interested to hear also—it might have been Mark Cameron, actually, in terms of his contribution—the scale of the sector. I think he’s right: $6 billion or so in terms of the forestry sector, the fourth-largest sector, as I understand. Yeah, the thumb’s up from down that end, from Mark Cameron. He’s right. It’s a great sector. It employs a lot of hard-working Kiwis. And so the significance of the fact that the domestic portion is $6 billion, but that international element, in terms of what’s imported, is about a third of that, just over $2.75 billion and growing—and I think, in the region of what the bill says, it’s gone up 70 percent in the last decade. The importance of having a robustness in terms of our regulatory framework in play, to make sure that what’s flowing in is coming from appropriate sources, is really, really important. So that is probably one of the key elements around why National are supporting this bill.

The other aspect I wanted to talk about is that with the impacts of COVID, and it’s referred to in the bill there, that volatility within the international market space—and we’re seeing this across the board at the moment, but, in particular, the volatility in regards to the trade environment, supply chain, and costs in terms of supply chain as well—means that people are going to be looking for opportunities in terms of the importation of forestry products to be able to cut corners. And so in order to achieve that degree of margin and profitability, if there’s going to be an easier way to do things, then they’re going to be trying to find those opportunities. And so that opens us up more—so around the element around illegally harvested timber and the importance that we have, as I said, a regulatory environment that deals with mitigating the risk around that. And the contrast again is that New Zealand is seen as reasonably low risk in terms of our overall processes, our risk profile is the stuff that’s coming in, and, as I said, quite exponentially growing as well, in terms of the trajectory as well.

I think one of the benefits that we can look to see in terms of this overall legislation—I, sadly, don’t sit on the Primary Production Committee. I know there’s pretty big competition within our caucus to get on to that team. And we’ve got a number of very astute members that will be sitting there going through this bill, no doubt, in significant detail, and asking those good and proper questions as any select committee should. But the process around ensuring that we’ve got the balance right in terms of this legislation, and the fact that, actually, is it going to achieve the outcomes that we need it to achieve, in regards to mitigation of the risks around that illegally harvested timber and getting that balance between regulatory burden that that places on domestic providers—getting that balance between the two is going to be very important. I can imagine the select committee process that will follow this will go into that. And so I’m looking forward to having a little bit of a read through the select committee’s findings in regards to this bill, because I’m sure there’s going to be a lot more that will come out of that process.

I think the element that was mentioned before, just referring to what clause it was, but there was an element around establishing the due diligence in the systems and the processes. And people at home watching this, at this hour of the night, and I’m sure there’ll be a lot of people sitting back—

Hon Michael Woodhouse: Oh, in their tens of thousands!

SIMON WATTS: —particularly in the mighty Waikato, no doubt, the Hon Michael Woodhouse and maybe a few down in Dunedin, I’m sure!—they’ll be thinking “Well, crikey, what are the processes and systems that they’re going to put in play here?” and it’s going to be “Geez, this sounds complex.” I think that’s a reality, which is going to be: how are you going to get that balance in terms of that register, as it says, that due diligence process, trying to be able to record the source of where these timber products have come from, be able to see that audit and flow through from source to once they actually land in New Zealand. And I guess the substantiation process around actually being able to evidence and substantiate the documentation around timber products that are being imported into New Zealand actually is legitimate, because that’s a big issue.

I mean, some of these countries that these products are going to come from—not everyone’s operating under the same rules, right? And so the risk around, you know, that not being robust enough or getting that right balance is going to be an important aspect. It doesn’t matter if you’ve got a good law, if you haven’t got the processes and procedures and the systems in place in order to make sure that, actually, all those legal elements are actually implemented and we achieve the right outcomes, then we’re not going to get maximum value in regards to this legislation.

The other element I think it’ll be interesting to hear and see how the select committee deal with is around the scope of this legislation. So where do you draw the line in terms of requirements? And I think, again, my colleague Nicola Grigg talked about some of the domestic elements around timber production in the New Zealand context and where do you draw the line around the different types of trees. I won’t get into a full detailed conversation around that, but you can imagine there’s a wide range of different types of trees. The scope of that bill will need to consider around that aspect as well, and that will be important.

Just in my closing comments—I’ve got quite a lot more to say, but I’m running out of time, so that’s a shame. But anyway, I’m sure there’ll be other opportunities. The commencement of this bill was something that I was actually taking a look at, and it’s interesting—

Nicola Grigg: Ha, ha!

SIMON WATTS: I’m getting a lot of support here! But the point that it makes here is it says that the bill will come into force around the earlier of three years after Royal assent or the date—there is a three-year lead-in process in regards to this. And I guess that’s the challenge around, again, thinking about it, three years being a long time. The points made during the Green Party speech before around the impact—you know, this is illegal harvesting happening and is that period of time too long or too short? Probably more the former in regards to how practically we can get this legislation into play. I guess the challenge for the select committee process will be actually: where can we get that point at which we can get maximum value and outcomes from this legislation without having to wait three years in order to achieve it? But we’ll see what the select committee come up with in that regard.

I think that pretty much sums up what I wanted to cover in terms of this first reading. It’s obviously a broad overview in terms of this bill, but, as I said, National supports, in principle, the elements around this bill. We’re really looking forward to contributing and hearing the submissions as part of the select committee process which, no doubt, will be very solid and robust, and National supports this bill.

TERISA NGOBI (Labour—Ōtaki): Mālō ‘aupito, Madam Speaker. As always, it’s a privilege and an honour to take a call in this Fale of change.

It’s been some time since I’ve been able to take a call in the Chamber. Some of that was due to illness, but some of that was also due to the weather events that have been happening throughout Aotearoa but also hitting the Ōtaki electorate quite bad—not just in terms of the flooding but also we had hurricanes, something that we have very rarely seen in the Ōtaki electorate. This is evidence that Papatūānuku and Ranginui are not happy. This is evidence that climate change issues are real. This bill supports the need to make sure that we get our actions in terms of climate change right by stopping illegal logging.

As has been said already by many throughout the House, this bill also ensures that timber that is being imported to Aotearoa, as well as the home-grown timber here in Aotearoa, is legally harvested. This we know will uphold the mana—or the reputation—of our forestry industry here in Aotearoa. For that reason, I commend this bill to the House.

Motion agreed to.

Bill read a first time.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is, That the Forests (Legal Harvest Assurance) Amendment Bill be considered by the Primary Production Committee.

Motion agreed to.

Bill referred to the Primary Production Committee.

Bills

Companies (Levies) Amendment Bill

First Reading

Hon Dr DAVID CLARK (Minister for State Owned Enterprises): I present a legislative statement on the Companies (Levies) Amendment Bill.

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

Hon Dr DAVID CLARK: I move, That the Companies (Levies) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 10 November 2022.

The Government’s intention in introducing this bill is very simple: it’s to give the New Zealand Companies Office the ability to charge users of those registry services levies as well as fees as it does now. It needs the ability to be able to charge for the services that it provides. The new levies, which will be set by regulations after public consultation, will help the Companies Office run its registry services in a modern, efficient, and transparent way. As members of this House will recall, two weeks ago on Budget night, the Companies Office Registers Funding Validation Bill 2022 was passed under urgency. During the passage of that legislation, I explained to the House the difficulties that our Companies Office has run into with its funding. In a nutshell, it’s been moving funding between registers in a way that is not in line with the legislation or with the expectations of the Parliament or, indeed, as intended by Parliament when the process was originally set up.

As I explained to the House on Budget night, since we discovered the issue last year, the Government’s been working on short-, medium-, and longer-term solutions to the issue. Essentially, that boils down to two statutes. The first of those was passed on Budget night, and I want to thank members across the House for their support with that retrospective validating legislation that validated the collection and use of fees by the Companies Office. The second piece of legislation is this levies bill we’re looking at now, which looks forward, provides a long-term funding solution to help the Companies Office to efficiently administer its registers.

I’m pleased, in a way, that we’re able to turn a problem here into an opportunity—an opportunity to move the Companies Office forward. Originally, it was there with a few paper-based registers that it was designed to oversee. Of course, the world moved on. Today, it administers 16 different online registers, and they include registers of entities such as companies, incorporated societies, and retirement villages, professional services registers for licensed auditors and insolvency practitioners, and registers for disclosure of financial products and security interests over personal property.

So by effectively managing those registers, what the Companies Office does is not only make that information available to the public as it’s needed or required but also helps to build trust and confidence in the transparent, fair, and easy domain. We pride ourselves in New Zealand as a place that’s easy to do business, but it’s important to be also recognised for transparency and fairness. So the Companies Office thereby provides wider benefits as well by also registering not-for-profits and providing the public with access to important information.

The Companies Office has, of course, over all that time, taken on more and important responsibilities, as I’ve outlined. But it’s also had to, with that, make the most of the advances that have come about through modern information technologies. So its evolutions have been of significant value, making it easier and quicker for people to interact with the Companies Office and search online for information they need from the registers. And although the Companies Office has been growing and evolving, we’ve still got the original legislation which speaks to how it’s funded, and it is time to update that.

As it stands, the Companies Office is still required by legislation to charge and use money collected as fees separately for each of its 16 different registers. Money collected from users can’t be used to fund the administration of another register—that’s the way the legislation is currently drafted. It can’t pool any of those funds to use for the good of the registry systems as a whole, nor to make things fairer for the smaller users of registry systems; for example, the incorporated societies, trusts, and others that also use registry systems. So once regulations are set using the levy-making power in the bill, the Companies Office will be able to collect and use money more flexibly across the registry system as a whole, and that will lead to more appropriate and efficient use of the money by the Companies Office.

Due to the need to move quickly towards a new funding model for the Companies Office, we’ve introduced this bill without public pre-consultation on the underlying policy. And I have to say, as Minister, I’m very conscious of that. The users of the registry will want to have a say in how the registry operates and how the levy-making power is used, and how much they, of course, each will need to pay when they use the register in future. So I’m pleased therefore that they’ll be able to participate in the select committee process of this bill in the coming months. That will provide the opportunity for the public, for users of the various registries to have their say, and perhaps more importantly again, the bill provides for a requirement that before any levies are set by regulations themselves, there needs to be a full consultation with those who are affected. The consultation will cover who is charged and how much, what the money is intended to be used for and why, and how the levies will be paid.

As well as consultation, the bill provides other safeguards to make sure that the levies are set at a fair and appropriate level. These include principles that have to be adhered to and an express stipulation that the Companies Office cannot collect more money from users than it needs to recover its overall costs. So you can see that the framework as it’s set out in the legislation is aiming to achieve a fair and efficient system—one that will support the registers to operate efficiently, provide transparently the information that people would seek from them, and to do it in a way that does not collect more money than is required to fund the use of the system.

So I’m looking forward to the committee’s consideration and report back to the House of this bill, and I commend this bill to the House.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker. It’s a pleasure to be talking on the Companies (Levies) Amendment Bill, first reading. Well, here’s a Minister who tonight has had a very busy role, actually. We’ve had three bills—one we agree with. The last one, the Financial Markets (Conduct of Institutions) Amendment Bill, was an absolute waste of time, and I’ve got to say this is a waste of time as well, because this bill should not be coming before Parliament. This bill goes contrary to all the good principles of Government. This bill goes against the principles that were set out in the original legislation that created all these registers.

This bill is simply wrong, and I’ll tell you why. We did correct the mistake that the Companies Office had inadvertently done, and we did it with the blessing of the Minister and with the blessing of the House. That was the Companies Office Registers Funding Validation Act 2022. We did that because there was a wrong. We did that because the funding that had built up and had been inappropriately applied by the Companies Office was wrong. We did it because the legislation that set up the 16 registers required that funding levies should be done on a cost basis. That’s why we agreed to amend and support the bill that was put through under urgency on Budget night.

But it is absolutely wrong to perpetuate a wrong, and this is what this bill does. It says, “Look, we corrected what was going on incorrectly for the last few years.”, but then to put up another bill to say, “We’ll just keep doing the same thing.” is absolutely wrong, and I don’t know why a Minister is actually in the chair trying to promote this as a good reason. I haven’t heard, in the speech that he gave before, what is absolutely driving this bill that cuts across the core of how Government departments should charge—namely, on a cost recovery basis.

I used to sit on the Regulations Review Committee for three years. A number of members in this House sit on the Regulations Review Committee. It is going to the Finance and Expenditure Committee, and I would be absolutely surprised if the Regulations Review Committee don’t write a nasty letter to the chair of the Finance and Expenditure Committee and say, “This is wrong.” So why is the Minister so hell-bent on bringing legislation to this House and wasting the House’s time trying to perpetuate these types of bills? It is wrong, Minister. You have a better responsibility than to do this.

I’ll suggest to you why this is wrong: the first thing is that levies are specific in that they are to achieve a revenue to recover the cost—the cost, and no more. When I sat on the Regulations Review Committee, there were a number of Government departments we took before us and made sure that their charging was appropriate. In some cases, it wasn’t and it had to be changed. The second thing is it’s contrary to the original legislation. That is a fundamental change, and why should a new Minister set about amending what was in the original legislation?

The second thing is it’s actually unfair. It is unfair because, if it was to be fair and if it was to be equitable, you would have to have the same users of all 16 registers experiencing the same outcome. That is not the case. Because the registers administered by the Companies Office are so varied, there will be inherent inequities in the arrangements.

I’ll just note that we talked about the Companies Office, but it includes the incorporated societies registers, and we talked about the financial services provider register, limited partnership, disclosure register, auditors register, retirement villages register, friendly societies, credit unions, building societies register. Now, none of those has overlapping requirements or fees that should be charged as part of the 16 registers approved or overseen by the Companies Office.

This is fundamentally inequitable. There will be some users of some of the registers who will be seriously disadvantaged, and we know that under the previous bill that we passed under urgency, over $3.7 million was actually misallocated by the Companies Office. So there is no way this bill could ever result in a fair and equitable outcome for the users of those registers.

The other thing about this is that it is a bad precedent to be setting in this House. There is no way that we should be moving to a system where we allow Government departments by regulation to set fees and levies without being explicit what the basis is and making sure costs lie where they ought to. It is wrong, and the National Party will not be party to any bill that changes that precedent and that principle that has underwritten a lot of legislation to date.

The whole issue about the regulations in the regulation power set out in the bill is it is absolutely wide-ranging, and so even if you accepted the principle, what’s set out under clause 4(5) is tantamount to allowing a free carte blanche to officials, who will lobby their Minister to get an outcome that may be appropriate and easy to achieve but is actually wrong and maybe, in many cases, I suspect, will always be unfair for many users of those registers. I just reiterate that we do not support this, and in fact it’s interesting some of the commentary that has been already written about this pretty uninspiring bill that was passed under urgency. Already, people have written—particularly, for instance, Ian Llewellyn from BusinessDesk: “While the original validation law was passed, officials said it was ‘unusual’ for the Government to be retrospectively correcting a historic mistake, but the harm done was minimal and the Companies Office has been acting in good faith to keep overall costs down.”

That is correct, and that’s why we all supported that bill back in the Budget. It is fundamentally wrong to be supporting this bill tonight, and we will oppose it throughout all stages of its progress, but, unfortunately, we know we’ve got a Government that will be blind to representations from people who, no doubt, will make submissions to the Finance and Expenditure Committee, and they will be blind, ultimately, to the people who will say, “These levies are unfair for us. You should not be doing that. You’re cutting across the principles that were enshrined in the original legislation.”

So that’s why we will end up with a fee structure that is inappropriate, and I’d have to say that I think this is a lazy piece of legislation. The Minister should not be supporting it. He should have beaten this back and said to the officials, “There’s no way I’m going to stand up in the House and promote this type of retrospective and prospective legislation that will create further harm to many ordinary New Zealanders in New Zealand, at a time when we’ve got a cost of living crisis.” This is a particularly bad bill.

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

GLEN BENNETT (Labour—New Plymouth): Kia ora, Madam Speaker. I’m not sure if Mr Bayly was listening to our busy Minister Clark, who has this as his third piece of legislation, as you said, tonight. But I think he made it very clear in his opening remarks about why this is important.

This legislation, since its conception in 1993, has been flawed. There have been issues with it, and even looking back in 2012, when the Ministry of Business, Innovation and Employment was established, there were challenges that our officials have been trying to figure out on this. Now, with our modern IT systems putting things in place, this very much is a process of unders and overs and looking at it. It’s not, as the previous speaker said, about being unfair; I think it’s finding a way that we can actually have a fairer system.

I want us to trust the public on this one and to take it, obviously, to select committee to hear what the public has to say, because I think we can trust them, and, Mr Bayly, I hope you can trust them too. I commend the Companies (Levies) Amendment Bill to the House.

MELISSA LEE (National): Thank you, Madam Speaker. I’m not sure if I should actually say it’s a pleasure to get up and speak on this bill in its first reading, the Companies (Levies) Amendment Bill. As Andrew Bayly has laid out, the National Party will be opposing this bill, but, no doubt, because of the majority that the Government has, it will go to select committee, and the Finance and Expenditure Committee will look forward to the submissions of the public. I’m sure that there’ll be lots of people who will be complaining about this.

The issue that I have with this is that there are 16 different registers, including entity registers like the companies register and occupational licensing registers, and each of these registers were actually established with separate pieces of legislation guiding their operation. As Andrew Bayly has said, levies are set for the purposes of collecting the cost of doing the business—as in Government administering the register, the cost of doing that. So for example, if the Minister was collecting a levy for his work in terms of his portfolio, and his colleague sitting next to him was collecting a separate levy for doing his piece of work, imagine if his colleague, who has a much smaller portfolio which requires less money, dipped into the pool of the Minister’s levy collection. This effectively means that it’s an uneven playing field for different registers, and yet it is pooled into one.

That is cross-subsidisation, and if this bill supposedly, as the Minister said, evens out and makes things fair, does that mean that every single person who is on a different register will be paying exactly the same levy? Because paying exactly the same levy when it is actually pooled and everybody is dipping into that one pool is what I call fair. But if they are all paying different levies because they belong to different registers and yet the administration of it is being done by one entity and one pool of money where anybody or any entity out of the 16 registers can dip into, that is what I’d call a slush fund for the Government. Effectively, that should be called a tax, not a levy, because a levy is only about recovering the cost. The only way that it can cross-subsidise an unprofitable register is because another register is making a profit. The intention of the original pieces of legislation would have never, and the Parliament that actually made that law would not have made it, because the Government wanted to make a profit by giving a levy or charging a levy to people who were registering for the purposes or registering a company with the companies register, for example. It was purely for the collection of money.

The change that we instituted during the urgency during the Budget process is because it was discovered that this was actually happening for decades. What was meant to be 16 different registers supposedly charging a different levy were supposed to have been managed individually, not dipping into another register’s funding. But this activity was happening for decades and it was illegal. So, effectively, what Parliament actually did under urgency was making—the Companies Office Registers Funding Validation Act 2022, the validation Act, literally made illegal legal. So I would have thought that the Minister, having done that—making that illegal activity legal—would go back to his office and figure out how to make it fair and actually make the practices legal, and not make illegal legal again.

This is like an extension of the illegal activity that was what we validated. I just don’t understand how he could actually call this a fair system where, as I said, effectively the 16 registers still collect different levies and now charging a fee as well. I’m unsure how the entities are going to be charging every person who registers a fair fee when the money that they collected is not just for the operations of the register, as in cost recovery, but some other register, effectively, has dibs into that pool of money that the Government is creating.

I believe that this is actually a very poor piece of legislation—

Hon Michael Woodhouse: Lazy.

MELISSA LEE: —and very lazy—you’re right, Mr Woodhouse—and I don’t think that members of Parliament who passed the original pieces of legislation, who wanted cost recovery only from taxpayers, would be happy with what the Government is now trying to do, because levies are not meant to be a profit-making activity by the Government or a slush fund for the Government, effectively becoming a tax. I do not support this bill.

Dr TRACEY McLELLAN (Labour—Banks Peninsula): Thank you, Madam Speaker. The New Zealand Companies Office, as we’ve heard tonight, administers the corporate registry system of 16 registers—and supports other statutory functions as well, I think it should be noted—and this bill, the Companies (Levies) Amendment Bill, simply amends the Companies Act 1993 to create a new regulation-making power, essentially providing for levies to be paid by users. That makes it fairer.

Our Companies Office has been a critical part of our economy and our society for many years, and I think it’s well known that the office maintains a register, that it’s made public, and that it’s part of something that builds the trust and confidence of people in the economy, because it makes sure that that information is transparent and fair and that people can understand it. And certainly with the passage of the validation bill that passed on Budget night, this levies bill will allow for the introduction of levies that can be used, as has been said, across the 16 registers that the Companies Office operates, which is a good thing. For that purpose, I commend this bill to the House.

RICARDO MENÉNDEZ MARCH (Green) (remote): Tēnā koe, Madam Speaker. It’s a pleasure to speak on the first reading of the Companies (Levies) Amendment Bill, and just noting that this bill is coming after the Companies Office Registers Funding Validation Bill and this kind of ties everything together by effectively amending the Companies Act of 1993 to create a new regulation-making power that will enable regulations to be made that impose levies on certain users of the register administered by the New Zealand Companies Office. I think what it is important to note here is that these powers will expressly provide that the money collected in levies can only be used to fund the registry system as a whole rather than on a register-by-register basis.

I note that the Minister has had several bills come today. I also wanted to acknowledge his comments around the lack of public consultation prior to this bill coming forward. I do think the select committee stage will provide an opportunity for public scrutiny and for some of the concerns raised by the members of the National Party to be addressed around whether this bill actually creates inequities within the systems and perhaps puts some companies at the disadvantage. I think this is what the select committee is there for. Otherwise, for us, it’s a common-sense bill and a relatively minor technical bill to tie the validation bill together. So we commend this bill to the House.

DAMIEN SMITH (ACT): The Government has introduced this bill, which allows them to consolidate the charging models for the Companies Office register. At the moment, what is happening with the services costs for each register and how it’s being cross-subsidised is actually unlawful and against the law. So ACT’s view is that we will be supporting this bill to select committee to get to the bottom of how this should be done better, and also how this bill, which amends the Companies Act 1993, will help to regulate Companies Office activities. It’s a package that we supported, which will run alongside the Companies Office Registers Funding Validation Act 2022.

So my understanding of this bill is it permanently puts in place charges made under the Companies Office registers, which allows the Companies Office to manage the portfolio in collecting and administering fees. That’s what I’ve interpreted the bill to be. And it makes legal any prevailing practice of using levies from large registries to fund small ones. The bill amends the Companies Act 1993 to create a new regulation-making power that will enable regulations to be made that impose levies on certain users of registers administered by the New Zealand Companies Office.

The regulation-making power would expressly provide that the money collected in levies can be used to fund the registry system as a whole, rather than on a register-by-register basis. The New Zealand Companies Office business unit of the Ministry of Business, Innovation and Employment will administer the companies registry system. And, as my colleagues in the National Party point out, there are 16 different registers, including entity registers, the Companies Register, occupational licences, insolvency practitioners, and other property services.

The Companies Office also supports other statutory functions of the various registrars responsible for these registers, and each register was established under separate legislation. So the legislation requires each register to be independently funded from fees charged to the users of the relevant register. This funding model was predicated on each register being operated separately. Over time, the Companies Office has moved towards providing shared services to the registers. A unified approach to the register allowed the Companies Office to establish an organisational structure, an operating model that produces economies of scale in the delivery of registry services and has the ability to leverage technological developments, enabling registry services to be centralised and shared across registers.

These changes have contributed to reduce costs to users. However, it has also made it increasingly difficult to distinguish between the costs of providing the service for each register. In addition, the fees charged in some smaller registers have not kept up with the costs of upgrading them. This shortfall has been met from surpluses that have been generated from fees collected under legislation governing other registers. This practice is not authorised by the legislation. The Companies Office’s unauthorised funding practices have been addressed by the Companies Office Registers Funding Validation Act 2022—the Validation Act—by retrospectively validating the Companies Office charging and expenditure practices.

This bill, which forms a package with the Validation Act, supports the Companies Office approach to running the corporate registry system by moving away from being entirely funded on a register-by-register basis, as it is now. This bill, we believe, achieves this by amending the Companies Act 1993 to allow for regulations to be made for the Companies Office to charge its users levies as well as fees. The money collected in levies will be able to be used across different registers to fund the shared registry system, and the bill provides that the levies will be set by regulations following consultation. It also sets out the purpose of the levy-making power, which the Minister must have regard to in recommending to the Governor-General that regulations should be made by Order in Council.

So the major area of change in this bill is to allow the register to charge levies as well as fees, which go towards supporting all 16 registers listed in the newly added Schedule 14. The benefits and costs of the standard practice of using fees from all 16 registers is made legal and the main beneficiaries—theoretically, entities on the smaller of the 16 registers are beneficiaries, as this bill enables companies to be charged levies to help fund their registers. However, the reality is that this is not currently the status quo. So in terms of cost, theoretically, entities on the Companies Register are paying the price, as the bill enables companies to be charged levies to help fund the registers. However, the reality is that this status quo—and we’ve already supported the Companies Office Register Funding Validation Act—needs to be brought in line. So we look forward to the Minister’s commitment to allowing for submissions at the select committee, and as part of the Finance and Expenditure Committee, we’ll be going through this thoroughly. ACT supports the bill on its first reading.

INGRID LEARY (Labour—Taieri): I’m not sure I can add much more to the excellent explanation from the previous member, Damien Smith. This bill is about efficiency and about equity. It’s efficient because it brings one less bureaucratic system into play, taking away from the 16 that were previously having to do their bureaucratic churn, and it’s equitable because more fees can’t be collected than what is necessary. So there’s not much more to add. It enables economies of scale. I feel the Opposition is catastrophising what is a very simple thing around efficiency and equity. I commend the bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call. I call on Simon Watts for five minutes.

SIMON WATTS (National—North Shore): Thank you very much, Madam Speaker. I rise on behalf of the National Party and as a member of Parliament for North Shore on the first reading of the Companies (Levies) Amendment Bill. National will be opposing this bill for a number of reasons, I must say, many of which have been canvassed already. But this is a remarkable bill—I mean, I actually wasn’t sure whether my colleagues down the end there in ACT support it or oppose it. I think they said they support it, but anyway we won’t get caught in the detail. Maybe they’re not reading the same bill I’ve just read.

This bill is absolutely a solution looking for a problem, and the context in which we’ve heard already that, actually, they’re trying to implement—look, let’s get back to basics. Why are they doing this? They, basically, need to collect more revenue to cover more overheads in a system, and this is a great way in which they think they can do it. It’s, basically, another tax system that they’re going to try and implement. The fact that this is being used to cross-subsidise other aspects of expenditure and going across the core principles around cost recovery is, as my colleague Andrew Bayly says, just completely inappropriate, and the role in which these charges should be to just simply cover costs is around the fact that that cost-adequacy model needs to be balanced. But, in effect, what this is going to allow is just simply a charging model that is disproportionate and is going to be used and soaked up in other aspects of the broader system. For that reason, that’s why we’re opposing it.

The other point that was made earlier on from my colleagues was around the challenges around the fee structure actually going to be unfair and unjust in terms of it as a broader system as a result of this legislation. That is a real concern, and I think that fairness element in terms of the way in which this will be implemented is really important. I think, again, in the way in which this bill is drafted—and we’ll see where this goes as part of the select committee process. But if it follows its normal trajectory in terms of how things happen in this House, then I’m not holding out too much hope that we’re going to see significant reform or have the select committee saying, “Actually, let’s just throw this bill out well and truly.”

Probably, that would be the most sensible thing to be doing, but, as I say, while we’ll be hoping that that happens, hope is not a strategy, is it? We know that. The reality is these guys will ram through this legislation, using their majority at any cost, and that is a real shame, because the fee structure of the system in which this legislation will oppose will be unfair and unjust, and the harm that is being done in regards to current state—as has being quoted—is minimal.

So what’s the case for change? I listened to the Minister, and I hear on the other side all the gratitude to their Minister for all the good work, etc., etc. Well, he stood up and gave his opening gambit around the bill and didn’t actually articulate what’s the problem statement that this legislation is actually up to resolve. What is the problem that this is going to fix? He didn’t say it at all, and sort of from a first-principles point of view, surely a piece of legislation like this should be trying to solve, or should be solving, a significant issue that’s going to bring value in terms of the broader system.

This thing fails on all levels, and, as my colleague Michael Woodhouse mentioned as well, the wastage of time of putting through a bill like this, which is not going to achieve outcomes, which is going to reinforce the lack of harm that’s being done in the system, and which implements something that’s going to be unfair and unjust, is just ridiculous. But, as we know, that’s pretty much status quo for this Government, and we’ll continue to see how that progresses as we go through.

I think the other element here—and it was good see it’s going to the Finance and Expenditure Committee (FEC). As a member of the FEC, I’m going to enjoy putting some good, tough questioning around this and seeing what type of responses we get back, because this is just opened up for a whole lot of challenge. So we’ll go through that process and we’ll see where we go. But, as I said, National do not support this legislation. We don’t believe that it’s going to achieve the outcomes that it is intending to do, and for that very basis, National will be opposing this bill.

RACHEL BOYACK (Labour—Nelson): Thank you, Madam Speaker. It’s a pleasure to take a short call on the Companies (Levies) Amendment Bill. The previous speaker, Simon Watts, just noted he wasn’t sure what the problem was that this bill is seeking to address, so I just thought I might remind him that earlier this year, it was discovered that there had been a mismatch between the fees set and the different registers that are covered already by the legislation. So it was addressed under urgency, but there needs to be a longer-term solution in place, which is what the Minister is bringing forward.

I just want to reassure members on the other side, who seem to be claiming that the sky is going to be falling, that the bill actually inserts new regulation-making powers for the Minister, and one of the recommendations here is that the levy should be set to recover no more than a portion of the cost of operating the registers, the cost of a registrar performing or exercising their functions, duties and powers, and the costs of recovering the levy moneys.

So on that note, this is an excellent bill. It will go through the select committee process so that members of the public can have their say, and I commend it to the House.

HELEN WHITE (Labour): Thank you. It’s a pleasure to rise in support of the Companies (Levies) Amendment Bill. I’ve been sitting in this House listening, too. I agree with my friend and colleague Ingrid Leary that there’s been a little bit of catastrophising going on about this. This is a situation where it’s really simple. This matter will be consulted upon with the public, will come to the Finance and Expenditure Committee. It will go through a process where, actually, after public consultation, there will be a Minister’s recommendation. It will then go to the Governor-General. It will be signed off; a levy will be allocated. If people do not pay the levy, they will not get the service. If they do pay the levy, they will be getting quite good value for money out of our Companies Office, because that office has changed enormously since 1993. So it is a situation where I am very happy to hear the matters about this at the Finance and Expenditure Committee shortly. Thank you. I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): Well, thank you, Madam Speaker. In summary, this is a lazy piece of legislation from a lazy Minister and a lazy Government who can’t count, can’t tot things up, and takes the easy way out by sticking in a slush fund and picking from that any levy, which is, effectively, against the laws that are already in place.

Now, let’s refresh. There was a problem. It was a plague on both Governments because the Companies Office were acting ultra vires. They were acting outside of the laws, and, frankly, the conventions that go around levy-setting processes. We had to fix that. We fixed that in Budget urgency, and the National Party supported that because there was an element of responsibility for where we’d got to. What we did not contemplate was the fact that not only do we do that retrospectively, we go, “Oh, well, the sky didn’t fall in; let’s just keep doing that.”, and provide ourselves with the legal framework to do bad levy-raising into perpetuity.

Hon Mark Mitchell: Not appropriate.

Hon MICHAEL WOODHOUSE: And it isn’t appropriate, Mr Mitchell; you’re absolutely right, because the difference between a tax and a levy is that levies have to be specific to the costs that are incurred in producing the service. We have a plethora of them right across the Public Service. As Minister of Immigration, I looked after a very large number of immigration fees and levies. [Interruption] Well, thank you for the nostalgic reflection, Mr Watts. I do, too, but it’s only 16 short months away, maybe less, before there is a change and order will be restored to so many public services.

But it’s actually a legal requirement to make sure that the revenue collected in levies matches and is not more than the costs incurred in providing the service. It’s not like a general slush fund. It’s not like a GST or an income tax. There were 16 of them for a reason, because each one of those levies incurred a different set of costs incurred by the Companies Office to manage the various registers that they did. There was nothing wrong with the framework. The framework was sound. It’s the same as what we do in immigration. It’s the same as what we do under the ACC legislation, biosecurity levies, aviation levies, energy resource levies—any number of levies that we could think of are legally required to be set up in exactly the same way as the 16 Companies Office levies were. What’s the difference? Lazy Government, lazy Minister.

Just imagine if the ACC scheme came along and said to the ACC Minister, “Look, we manage four or five funds. They all have different costs and we impose different levies, but that’s all a bit hard. Let’s just chuck it in a single slush fund, divide it by four, and put it out to the various funds. The motor vehicle levy could be the same as the work account levy or the same as the treatment injury levy.” There would be an outrage, and rightly so, because, of course, those costs don’t fall proportionately across those levies. They don’t here either. And the idea that this is somehow minor and inconsequential, giving the Government a reason to be lazy is quite wrong.

These 16 funds should be managed appropriately the way all the other levies are. My colleague Simon Watts, a very good chartered accountant and I’m sure he knows management accounting principles—I also, having been an accountant for 25 years, know actually that this stuff isn’t that hard. It’s not that hard. It’s not a manual process.

The cost allocation methodologies, the systems that underpin them, are actually pretty easy, and it’s important because if I was the levy-payer for an incorporated society, I would want to know I was only paying only the costs of managing that register and not the much larger costs of managing, for example, the Companies Office register. That’s not fair, but under regulation-making powers that’s exactly what could happen.

Now, I will be very, very interested to know not only what the submitters have to say to the select committee but what the very fine chairman of the Regulations Review Committee will say about the legality of the regulation-making power in these circumstances. Now, I’ve read McGee. He’s not that specific about it, but he strongly implies that the levy needs to be matched to the cost, and slush funds of this nature may well fall foul of the Regulations Review Committee. In fact, it’s probably necessary and, I think, appropriate for the Regulations Review Committee themselves to make a submission before the select committee. We could have one select committee making a submission to another select committee. We have select committees that meet jointly. Why not have them across the table and actually duke this out? Because this is very poor regulation-making power and it’s certainly very lazy lawmaking power.

I have every confidence that my colleagues in the Finance and Expenditure Committee, a committee I’m very fond of—I’ve been a member of it twice, and I think Mr Smith is also on the committee. I think ACT are supporting the bill at first reading, but perhaps as they listen to the arguments that we are making against this bill, because it’s lazy, because it’s being led by a lazy Minister, a lazy Government, into lazy legislation—actually part of a track record, I think, of that Minister—then maybe the ACT Party might have a different view of that when they hear the submissions.

The reality is that those 16 funds actually comprise probably hundreds of thousands of levy payers, and those hundreds of thousands of levy payers rely on us elected representatives of this House to make sure that we do right by them, that we understand the law and the legal frameworks and the conventions and the constitutions that go along with raising levies. Goodness knows they’re high enough as it is, even when the costs are appropriately gathered where they fall and those levies do reflect accurately. But the risk of cross-subsidisation that will go on if this law is passed and the Government passes regulations exactly as they have said they will makes this quite the wrong thing to do, and I think even the Labour members of the Finance and Expenditure Committee need to look within themselves. They aspire to ministry. They know that there are Ministers holding seats around the Cabinet table that might be not that long for this world. Maybe they can impress the Prime Minister and the Deputy Prime Minister, who will soon be the Prime Minister, with their acumen, their honesty, their integrity around passing very, very robust legislation, not lazy law, and maybe come up.

I think that could be an awkward conversation in the Labour caucus room when they realise quite how slack this piece of legislation is, and I’d love to be a fly on the wall when that happens, but the reality is this is not good law. It’s bad law. It’s lazy law. It may be unlawful law in the context of the regulation-setting process, and we cannot support it. I look forward to the hard work that the committee will do. I look forward to their findings, and I can’t commend it to the House.

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

Hon Michael Woodhouse: Point of order, Madam Speaker. Standing Order 53(1) enables the House to go past 10 o’clock for the purposes of not interrupting a member’s speech. That time having been come, it wasn’t the time to put the question to the House, under 53(2), as there was one more speech to go. The fact that nobody called for it is not actually a reason to go to the vote.

Tangi Utikere: Speaking to the point of order, Madam Speaker. The Speaker, you, moved to put the vote and the member took the point of order at the time that the vote was being taken.

Hon Michael Woodhouse: Speaking to that point. If Labour had decided not to take the call, call 12, that it was entitled to, there was every possibility that one of my colleagues in either the ACT Party or National Party would have taken that call.

ASSISTANT SPEAKER (Hon Jenny Salesa): The Hon Michael Woodhouse can take his seat. No one else actually took a call.

Hon Michael Woodhouse: They didn’t get the chance, Madam Speaker. You went straight to the vote.

ASSISTANT SPEAKER (Hon Jenny Salesa): Well, no one else actually stood up, and you had finished your call. So no; it is now my turn to go ahead.

Hon Michael Woodhouse: It’s still a breach of Standing Orders, Madam Speaker.

ASSISTANT SPEAKER (Hon Jenny Salesa): It is not a breach of Standing Orders. No one was taking the call. I will now go ahead with: the question is that the motion be agreed to.

A party vote was called for on the question, That the Companies (Levies) Amendment Bill be now read a first time.

Ayes 87

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

Noes 32

New Zealand National 32.

Motion agreed to.

Bill read a first time.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is, That the Companies (Levies) Amendment Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Instruction to Finance and Expenditure Committee

Hon Dr DAVID CLARK (Minister for State Owned Enterprises): I move, That the Companies (Levies) Amendment Bill be reported to the House by 10 November 2022.

Motion agreed to.

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

The House adjourned at 10.04 p.m.