Thursday, 23 June 2022
Volume 760
Sitting date: 23 June 2022
THURSDAY, 23 JUNE 2022
THURSDAY, 23 JUNE 2022
The Speaker took the Chair at 2 p.m.
Karakia/Prayers
Karakia/Prayers
ARENA WILLIAMS (Labour—Manurewa): E te Atua kaha rawa, ka tuku whakamoemiti atu mātou, mō ngā karakia kua waihotia mai ki runga o Aotearoa. Ka waiho nei i ō mātou pānga whaiaro katoa ki te taha, nei rā ēnei e inoi atu ana mō tō ārahitanga i roto i ō mātou whakaaroarohanga, ā, kia whakahaere ai e mātou ngā take o te Whare nei, i runga i te mōhio me te whakaiti mō te oranga me te maungārongo o te tūmatanui o Aotearoa. Āmene.
[Almighty God, we give thanks for the blessings which have been bestowed on New Zealand. Laying aside all personal interests, we pray for guidance in our deliberations, that we may conduct the affairs of this House with wisdom and humility, for the welfare and peace of the public of New Zealand. Amen.]
Business Statement
Business Statement
Hon CHRIS HIPKINS (Leader of the House): The legislation the House will consider next week will include the remaining stages of the Appropriation (2021/22 Supplementary Estimates) Bill, the Commerce (Grocery Sector Covenants) Amendment Bill, and the Local Electoral (Advertising) Amendment Bill, and also the first readings of bills that were introduced this week. The House will debate motions to continue the COVID-19 Public Health Response Act 2020 and to confirm orders made under that Act. Wednesday, 29 June, will be a members’ day.
Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker, and I thank the Leader of the House for that update. I note that the Government isn’t intending to progress the Data and Statistics Bill before the winter recess. Given that the Government intends to make a decision on whether the census next year will go ahead in 2023 and needs the legal basis to make a postponement decision, can he confirm that it’s the Government’s intention to do so before the end of July?
Hon CHRIS HIPKINS (Leader of the House): Questions around the decision-making process for the census are ones for the Minister of Statistics.
Hon JAMES SHAW (Co-Leader—Green): Thank you, Mr Speaker. Thank you to the Leader of the House. I just wonder if he has a time estimate for item No. 8 on the Order Paper.
Hon CHRIS HIPKINS (Leader of the House): It depends how fast the House goes.
Petitions, Papers, Select Committee Reports, and Introduction of Bills
Petitions, Papers, Select Committee Reports, and Introduction of Bills
SPEAKER: A petition has been delivered to the Clerk for presentation.
CLERK: Petition of Open Forum for Health Information requesting that the House replace the existing nutrition guidelines for schools with the requirement that all schools, including kaupapa Māori, supply healthy, nutritious food and create a duty to only provide healthy drinks and food.
SPEAKER: That petition stands referred to the Petitions Committee. Ministers have delivered papers.
CLERK: City Rail Link Ltd Statement of Intent for Financial Years 2022-25 and Statement of Performance Expectations 2022-23.
SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.
CLERK:
Report of the Environment Committee on the Palmerston North Reserves Empowering Amendment Bill
report of the Finance and Expenditure Committee on the He Puna Hao Pātiki 2022 Investment Statement
report of the Regulations Review Committee on the Examination of COVID-19 order presented 31 May 2022.
SPEAKER: The bill is set down for second reading. The reports of the Finance and Expenditure Committee and the Regulations Review Committee are set down for consideration. The Clerk has been informed of the introduction of a bill.
CLERK: Aotearoa New Zealand Public Media Bill, introduction.
SPEAKER: That bill is set down for first reading.
Oral Questions
Questions to Ministers
Question No. 1—Education
1. ANGELA ROBERTS (Labour) to the Minister of Education: Mānawatia a Matariki, Mr Speaker. What advice has he received about the results of the Government’s School Investment Package?
Hon CHRIS HIPKINS (Minister of Education): The School Investment Package, which we announced in December of 2019, gave all schools up to $400,000—around $693 per student—to bring forward and complete much-needed property projects. State schools have made thousands of site, infrastructure, and classroom improvements, as well as upgrades to sports facilities and playgrounds over the last 2½ years. There are thousands of projects that are now finished, and they’re making a positive difference to young people’s lives. These are improvements that schools wouldn’t have been able to do because of other cost pressures, and they provide significant benefit to the students, the teachers, and the wider community. The funding has contributed to make sure that classrooms are fit for purpose, that there are vibrant spaces for our kids to learn and play, and that schools have got decent sports facilities. The Government is delivering on its commitment to make schools places that all young people want to be.
Angela Roberts: Can he give practical examples of what this programme has meant for individual schools?
Hon CHRIS HIPKINS: Heaps, but I’ll only pick a few; I certainly can do that. Silverstream School in Upper Hutt used some of its funding to replace an old building and upgrade their learning spaces, and they’ve refitted the school hall. Highlands Intermediate in New Plymouth used the funding to help complete a classroom project, remodelling one classroom and replacing two of them. East Otago High School renovated its library and refurbished one of its teaching blocks to include new teaching and breakout spaces, new heating and lighting—
SPEAKER: One more.
Hon CHRIS HIPKINS: One more? Oh, I’d give you two: Bailey Road—
SPEAKER: One.
Hon CHRIS HIPKINS: —and Macleans College in Auckland both put their allocations towards new sports turfs.
Angela Roberts: What is the range of projects the School Investment Package has supported?
Hon CHRIS HIPKINS: There are 4,500 projects that were made possible by the $400 million Government investment, the biggest investment in school maintenance in 25 years: 780 classroom upgrades; 737 site improvements like car parks and landscaping; 515 infrastructure improvements like drinking fountains, heating, and plumbing and drainage; 1,117 upgrades to sports facilities and playgrounds; 687 improvements to non-teaching spaces; 376 to access to shade; and 260 other learning area upgrades, including to gyms and outdoor learning areas.
Question No. 2—Finance
2. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does he stand by his statement that “There will be individual households who will suffer stress as the result of interest rates going up”, and in what ways does he expect this will “feed through to the economy”?
Hon GRANT ROBERTSON (Minister of Finance): I stand by my full statement, “I get advice from a range of sources about the impact of the global inflation shock on New Zealanders. The Reserve Bank publishes regular material on the stability of New Zealand’s financial system. What that material shows us is that New Zealand has a robust financial system. There will be individuals who will suffer stress as a result of interest rates going up. The Government is prepared to support them.”, in light of that answer. In answer to the second part of the member’s question, the Government’s measures to support these households will provide them support and across the economy as we face this global inflation spike, which is causing central banks around the world to raise interest rates.
Nicola Willis: Does he agree with the Reserve Bank, who stated in May that the proportion of risky lending increased sharply in recent years, and is he concerned that recent house buyers with limited equity are particularly vulnerable?
Hon GRANT ROBERTSON: I certainly accept the Reserve Bank’s analysis of the numbers that came through, and they do indeed say that recent borrowers are those who will be particularly exposed, but they also say, in the same report, that most mortgage borrowers would be resilient.
Nicola Willis: Has he seen an analysis published by Bloomberg that puts New Zealand at the top of the list of the bubbliest housing markets in the world, and does he agree with Bloomberg’s analysis that there are warning signs flashing?
Hon GRANT ROBERTSON: I don’t believe I’ve seen that specific report, but I certainly have seen plenty of reports over the years expressing concern about New Zealand’s housing market. I vividly remember reports about the fact that the previous National Government failed to build the houses that New Zealanders needed throughout their term in Government. I’ve also seen reports about the fact that this Government is building more houses than any Government since the 1970s.
Nicola Willis: Well, has he seen analysis published by Infometrics that says this is the worst time since 1957 for first-home buyers trying to get into the housing market in New Zealand, and does he think his Government has lived up to its commitment to give Kiwis a better chance at purchasing a home?
Hon GRANT ROBERTSON: I have indeed seen that report, and, without taking too much time out of the House, the measure that the economists who’ve written that report put forward is, essentially, about the capital gain that a first-home buyer would get from purchasing right now. In terms of what this Government has done for first-home buyers, what we’ve made sure is that we’ve levelled the playing field up by removing the interest deductibility for speculators, and by extending the brightline test. It’s all very well to get up in the House and support first-home buyers, but, actually, this Government has taken initiatives to try to improve the lot of first-home buyers.
Hon Stuart Nash: What role does the Minister directly have in setting the official cash rate and/or commercial bank lending rates?
Hon GRANT ROBERTSON: That is, indeed, a very good question, because, actually, as most members of the House, I expect, would know, the Reserve Bank independently sets the official cash rate, and it does appear, from the line of questioning from the Opposition, they are looking at a policy change where the Minister of Finance should set the official cash rate, or if that isn’t what it is, that National, if they were in Government, would bail out people who had higher interest rates. The member might like to enlighten people as to what the policy is.
Nicola Willis: Supplementary question, Minister.
Hon Dr Megan Woods: Oh, good!
Nicola Willis: Does he agree—
SPEAKER: Order! Ms Allan, was that—it was Megan Woods. Stand, withdraw, and apologise.
Hon Dr Megan Woods: I withdraw and apologise.
Nicola Willis: Does he agree that the rapid interest rate hikes occurring now are much more painful for the economy and New Zealanders than in the past because house prices under his Government are so much higher?
Hon GRANT ROBERTSON: What I do know is that if the National Party, when they had been in Government, had built houses at the rate that this Government was building them, we would not have the housing crisis that we have.
Nicola Willis: What does he say to New Zealanders who are now lying awake at night worrying about how they will pay for the growing cost of their mortgage, as inflation persists and interest rates continue to climb, and is it really his position that they shouldn’t worry because he thinks it’s all National’s fault?
Hon GRANT ROBERTSON: What I would say to those members is that they have a Government that is looking after New Zealanders, that has invested significantly in supporting households and businesses through COVID-19, and is making sure that we have a more level playing field in the housing market for first-home buyers, and is making sure that we’re building more houses.
Simon Watts: No, you’re not.
SPEAKER: I’m certainly not.
Nicola Willis: Does he stand by his statement in Parliament this time a year ago that New Zealand has seen a “spectacular economic recovery”, and how does he reconcile that analysis with the cost of living crisis and the growing instability in the New Zealand economy?
Hon GRANT ROBERTSON: I stand by the statements I have made in this House, and we have had the OECD, the IMF, Moody’s, Standard & Poor’s, all of the international agencies, say that New Zealand’s economic recovery is indeed among one of the best in the world. We also live in the real world, and in the real world we’re seeing inflation go over 9 percent in the United Kingdom, just overnight. We are seeing the impacts of global inflation everywhere in the world. Of course, New Zealand is not immune to that, but what this Government has done is stepped in to support low and middle income households to make sure that they can get through this, as opposed to the member, whose party wants to give tax cuts to the wealthiest New Zealanders.
Question No. 3—Health
3. TANGI UTIKERE (Labour—Palmerston North) to the Minister of Health: Mānawatia a Matariki. What recent announcements has he made about the expansion of Te Ara Oranga?
Hon ANDREW LITTLE (Minister of Health): On Friday, I announced the roll-out of the free methamphetamine harm reduction programme Te Ara Oranga to the Eastern Bay of Plenty, with services now available in Murupara. In addition to services rolling out in Murupara, $3.5 million of funding from Budget 2022 will enable Te Ara Oranga to expand and cover a geographical area from Whakatāne to Rotorua, and include Ōpōtiki and Kawerau. Te Ara Oranga was successfully piloted in Northland and has been acknowledged as a game-changer in the fight against methamphetamine and drug-related crime. Demand for addiction treatment services has grown steadily over the past decade, and we need to do more to support people in communities struggling with drugs to get the wraparound support that they need.
Tangi Utikere: What does the Te Ara Oranga programme consist of?
Hon ANDREW LITTLE: Te Ara Oranga is a unique partnership between police, mental health and addiction services, community groups, and iwi service providers. It gives methamphetamine users the opportunity to get culturally appropriate therapeutic help, with an approach specially tailored for the local community. It’s an example of a community-wide and -led programme that works and changes lives, and we want more New Zealanders to benefit from it.
Tangi Utikere: What are some of the benefits of Te Ara Oranga?
Hon ANDREW LITTLE: More than 3,000 Northland people and their whānau have now been helped since the programme was first started. For every dollar spent on the programme, there has been a return of between $3 and $7 and a 34 percent reduction in drug-related crime. The Eastern Bay of Plenty region has been identified as a community experiencing a high level of drug-related harm. It has higher than average methamphetamine use and possession-related offences, waste-water testing results, and the proportion of people seeking help to get on top of drug addictions. This Government is committed to a health-based response for those who experience drug addiction, and making the benefits of Te Ara Oranga available in the Eastern Bay of Plenty is part of that.
Question No. 4—Justice
4. Hon PAUL GOLDSMITH (National) to the Minister of Justice: Does she stand by all her statements?
Hon KIRITAPU ALLAN (Minister of Justice): Yes. In particular, I stand by my statement that my priorities include 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; working to continue to reduce case backlogs in the courts; and ensuring a victim-centric approach to the portfolio, so that all New Zealanders are treated fairly and appropriately within the justice system.
Hon Paul Goldsmith: Does she stand by her statement that reference to the Government being soft on crime is “abhorrent”, in the light of a recent Newshub poll which indicated 68 percent of Kiwis agreed with the proposition that Government Ministers were soft on crime?
Hon KIRITAPU ALLAN: I stand by my statement that the Opposition’s framing is unhelpful. This is a critical issue for all New Zealanders. Our side of the House is committed to focusing on making sure that the right settings are in place when it comes to our criminal justice system.
Hon Paul Goldsmith: In her mind, was Newshub being abhorrent by asking if a Government Minister was soft on crime, or was it the 68 percent of respondents who agreed that Ministers were soft on crime?
SPEAKER: I’m not sure she has responsibility for either, but the Minister can answer.
Hon KIRITAPU ALLAN: I was just going to point out that I don’t have responsibility for what Newshub thinks.
Hon Paul Goldsmith: Rather than denigrating widely held opinions of Kiwis, wouldn’t it be more constructive if she, as Minister, focused on changing her—
SPEAKER: Right. Order! Order! I’m going to get the member to start the question again without an assertion.
Hon Paul Goldsmith: Wouldn’t it be more constructive if she, as Minister, focused on changing her Government’s justice policies so that they were no longer soft on crime, rather than referring to people who criticised them as “abhorrent”?
Hon KIRITAPU ALLAN: What would be constructive is focusing on our side of the House and what we’re doing to tackle rising violent criminal rates by ensuring that the system settings are correct. Working alongside my colleague the Minister of Police, the Hon Chris Hipkins, we are working with the Police to ensure that they have the right tools to ensure that we are able to ensure that New Zealanders are kept safe at night. Further, what I would add is that in the week or so that I’ve held the warrant as the Minister of Justice, the number of written questions that we’ve received from the Opposition member, with respect to my social media and Facebook posts, would indeed suggest that, actually, our side of the House is focused on making sure New Zealanders are kept safe at night—not trawling through social media posts. We’re focused on the task at hand.
Hon Paul Goldsmith: With regard to that statement right then, is it not the case that we are trying to find out whether she liked a page that was electioneering on election day, in breach of the electoral finance laws, in her first week as the Minister of Justice?
SPEAKER: Order! The Minister can answer in respect of her role as Minister of Justice.
Hon KIRITAPU ALLAN: I can confirm to this House that I personally did not thumbs up, thumbs down, heart, or any other emoticon any social media post on the Tauranga by-election date endorsing any political candidate.
Hon Stuart Nash: What role does the Minister have in sentencing people who come before the courts?
SPEAKER: No, no; I’m actually going to rule that that’s ironic. Yeah, if it had been another member who asked it, I might have thought that they didn’t know and they weren’t being ironic; I think this member does know. It’s not whether the public knows.
Question No. 5—Immigration
5. GOLRIZ GHAHRAMAN (Green) to the Minister of Immigration: Will he give effect to New Zealand’s commitment to assist in the global refugee crisis with resettlement policies that are safe and inclusive, in honour of World Refugee Day this week?
Hon MICHAEL WOOD (Minister of Immigration) (remote): Firstly, I acknowledge both the member asking the question and Ibrahim Omer as two former refugees who now play an important role in this House. Our Government has shown a strong commitment to providing ongoing safe and inclusive pathways for refugees to come to New Zealand and to settle in to our communities. From July 2020, New Zealand’s annual refugee quota increased to 1,500 individuals; however, due to the impact of COVID-19, the quota was only partially met in 2020/21. We’ve also expanded the number of refugee families able to be reunited with their loved ones, by doubling the refugee family support category from 300 to 600 places as of July 2022—that’s next month. Since then, we’ve also responded quickly to support people fleeing conflicts by opening up over 1,600 places to refugees from Afghanistan, and creating the 2022 Special Ukraine Visa to provide a safe pathway for those seeking refuge from Ukraine following Russia’s invasion. We stand by our commitment to provide the best possible refugee resettlement experience, by ensuring that we’re providing certainty, stability, and wraparound support for people being resettled in Aotearoa New Zealand.
Golriz Ghahraman: Will the Minister commit to ensuring New Zealand resettles 1,500 people—our full annual refugee quota commitment—in this year’s resettlement round for the first time since the start of the COVID-19 pandemic?
Hon MICHAEL WOOD: As I confirmed at the World Refugee Day event at Parliament earlier this week, that is indeed the Government’s intention, and we will be very pleased to be able to reach that target after two years of significant disruptions due to COVID-19. Of course, it is always the case, in the challenging international circumstances that we find, that there could be disruptions, but that is absolutely our intention.
Golriz Ghahraman: Will the Minister commit to us filling all 600 annual placements for family members being reunified with their refugee loved ones here, who are separated by war or persecution—a Green Party win in doubling that number last term—
SPEAKER: Order! Order! The member’s just used her supplementary by being out of order.
Golriz Ghahraman: Sorry.
SPEAKER: If the member wants a further supplementary, she can have it now.
Golriz Ghahraman: Will the Minister commit to filling the 600 annual placements for family members separated by war or persecution, including using the funding set aside last term, and will he commit to backfilling those numbers left behind due to the COVID pandemic, both in the quota and the family reunification programme?
Hon MICHAEL WOOD: In respect of family resettlement, I expect that that will be somewhat dependent on the number of applications that are made within that category, although it’s a reasonable assumption that it will be somewhere near the maximum cap that we are providing for. So we’ll just have to see how that goes, but I do expect that there will be a large number of applications made through that process. In respect of backfilling, I have to be somewhat more cautious in that one of the key things about New Zealand’s resettlement programme is that we do focus on a quality resettlement outcome—we fund that, we provide that through the Māngere resettlement centre and other support services, and were we to effectively increase the numbers coming in over the coming years, yeah, we would potentially compromise on the quality of that resettlement. So we don’t expect to be doing that.
Golriz Ghahraman: Will the Minister commit to extending the same legal rights and resettlement support to convention refugees who arrive here as asylum seekers, as those arriving as quota refugees?
Hon MICHAEL WOOD: As the member will be aware, there are different processes that apply to both of those groups, but we in New Zealand do ensure that we have an appropriate response that is cognisant of our human rights and international obligations in terms of how we respond to requests for asylum in New Zealand.
Golriz Ghahraman: Will he commit to implementing the recommendations of the recent Casey report by banning detention of refugee applicants who then become convention refugees in criminal prisons?
Hon MICHAEL WOOD: That report is being considered by myself and Cabinet colleagues, and I hope to be able to confirm our position in the near future. I would note that in recent years the number of detentions has significantly reduced, and I believe that’s positive.
Question No. 6—Trade and Export Growth
6. INGRID LEARY (Labour—Taieri) to the Minister for Trade and Export Growth: What recent announcements has he made following the WTO meeting in Geneva?
Hon DAMIEN O’CONNOR (Minister for Trade and Export Growth): Thank you. After over 20 years of advocacy from various New Zealand Ministers and officials and five days of tough negotiations, I was pleased to be able to announce a new World Trade Organization (WTO) agreement on fisheries subsidies. New Zealand has been at the forefront of calling for a binding WTO agreement to discipline harmful fisheries subsidies for over 20 years. I’m proud to be part of a Government that is continuing to advocate for sustainable fisheries practices globally. This agreement is significant. It includes prohibitions on the granting of subsidies for illegal, unreported, and unregulated fishing; prohibition on subsidies for fishing of over-fished stocks; prohibition on subsidies for fishing in the unregulated high seas. The agreements will have real impacts for the protection of fish stocks and will also benefit New Zealand’s unsubsidised fishing industry. I’d like to thank all New Zealand and World Trade Organization officials who made this progress possible—in particular, Vangelis Vitalis and his superb team; my fellow chair, ambassador Santiago Wills of Colombia; as well as all those who have worked hard on this area for over 20 years.
Ingrid Leary: What other progress was made at the conference?
Hon DAMIEN O’CONNOR: I was also pleased to announce significant progress on a range of topics, including a package of response to future emergencies, including pandemics, which build on the lessons of our respective experiences in responding to COVID-19. This includes a partial Trade-Related Aspects of Intellectual Property Rights waiver on COVID-19 vaccines, which is designed to facilitate the production and distribution of vaccines in developing countries. This was a priority for New Zealand and should see us make further progress on ensuring vaccination rates are lifted around the world. I was also pleased to announce that New Zealand contributed to a positive outcome in renewing the e-commerce moratorium until the next ministerial conference. This continues a longstanding practice of not applying tariffs or duties to electronic transmissions and is a key enabler of predictable global digital trade, particularly in times of the pandemic.
Ingrid Leary: Were all of New Zealand’s goals for the conference achieved?
Hon DAMIEN O’CONNOR: As I’ve said, there were significant and positive outcomes. However—[Interruption]—negotiators were unable to find agreement on all disciplines.
SPEAKER: Order! Some of us are interested.
Hon DAMIEN O’CONNOR: Thank you, Mr Speaker. We were disappointed with the failure to make significant progress on agricultural subsidies reform, but WTO members have agreed to continue negotiations on these important issues ahead of the next WTO ministerial meeting, which is expected to be held next year, where New Zealand will continue to push for the removal of harmful agricultural subsidies. The negotiations took place at a time when the world is emerging from a global pandemic, as well as dealing with rising geopolitical tensions, and all 164 countries were pleased that outcomes were achieved, and this does provide a much-needed boost for multilateralism.
Question No. 7—Social Development and Employment
7. Hon LOUISE UPSTON (National—Taupō) to the Minister for Social Development and Employment: What is the percentage increase, if any, in the number of people in receipt of jobseeker support for three to five years in consecutive duration when comparing the March 2022 to the September 2017 quarter?
Hon CARMEL SEPULONI (Minister for Social Development and Employment): As the member has been made aware, there was a minor administrative error in WPQ 12331. The correct number of people who have been receiving a main benefit for three to five years, as at September 2017, was 11,955. Of those, 6,900 received the health and disability exemption and 5,058 were considered work-ready. As at the end of March 2022, there were a total of 23,001 people receiving jobseeker support for between three to five years. Of those, 12,948 received the health and disability exemption and 10,056 were considered work-ready. The percentage difference is around 92.4 percent and represents 11,046 people, of which 4,998 were work-ready. In Budget 2020 and consecutive Budgets, we have invested heavily in work-focused case management and additional front-line staff. We are now seeing record numbers of people moving off benefit and into work. We have come through the pandemic in better shape than Treasury predicted and have been working hard to ensure people on jobseeker are supported into employment.
Hon Louise Upston: If the Minister still thinks that COVID-19 is to blame, why has the number of people stuck on the jobseeker benefit for three to five years increased by 92 percent, when every one of these people would have gone on to the benefit before the pandemic?
Hon CARMEL SEPULONI: If we keep it in context and reflect on what we’ve seen over the last couple of years, currently we have just over 100,000 people on jobseeker benefit. That’s 11,000 fewer people than were on this time last year. With regards to the increase of people who may have been on benefit for three to five years, we saw that trend starting between 2016 and onwards, under the previous Government. Part of the reason for that—a big part—was the lack of investment in front-line, work-focused case management. We saw that when we came in and we started that investment in 2019.
Hon Louise Upston: Why, when most industries are suffering from a labour shortage, has the number of people on the jobseeker benefit for two to three consecutive years increased by 112 percent, or 24,000 people, under Labour?
Hon CARMEL SEPULONI: It’s really important that we look at the full number of people that are on a benefit. What we are seeing are more exits off benefit into employment than we have seen since electronic records were kept. We’re also seeing some very promising results with our front-line staff being able to work effectively with those that come on to benefit, getting them into work as quickly as possible. What we know is that long-term welfare dependency is more likely the longer that you are on benefit. What we’re doing is investing to work with people as soon as they come on benefit. We’re seeing the results and I think that sets us in good stead for the longer-term trajectory.
Hon Louise Upston: Can she explain why, at a time of record job vacancies and businesses begging for staff, more people are stuck long term on the jobseeker benefit under Labour?
SPEAKER: Order! I’m going to let the question go, but the suffix that is beginning to occur in the member’s questions is to cease.
Hon CARMEL SEPULONI: Yesterday, we had Estimates and we got to interrogate some of these numbers a little bit more fulsomely. There are some results that are giving me some relief and surely us as a Government, and we should feel some relief as a country as well. I think 25 percent of those in the last year who have gone off benefit and into work were on a benefit between one and three years compared to a year ago when it was only 14.7 percent. The investment that we are putting into work-focused case management and into upskilling and training opportunities, and into the broader context with regards to employment across Government agencies is paying off and will mean that our people are better placed with the skills that they need to remain in, and sustain, employment, and that’s what was not focused on by the previous Government.
Hon Louise Upston: Isn’t she concerned that the legacy of this Government’s six years in office will be thousands more children growing up in benefit-dependent homes and thousands more people consigned to a life of long-term benefit dependency?
Hon CARMEL SEPULONI: When this pandemic hit, Treasury forecast that we would see 487,000 New Zealanders on benefit by January 2021. We got to 397,000 at the worst, and now we are on a trajectory downwards, currently at around 345,000. We continue to make the investments where they matter, and we are absolutely prioritising this as a Government.
Hon Michael Woodhouse: Point of order, Mr Speaker. I just wanted to wait until the end of that question to come back to the rebuke that you made, which I absolutely accept, but I would also just point out that if many of the Government’s answers both today and on previous days flowed very close to breaches of Speaker’s rulings 191/1-3 and have similar party-focused references to them, so, as a good referee, I’m sure you’ll be consistent.
SPEAKER: Yes. I have been watching that matter really carefully. The member is aware it is a matter for judgment for me, and not for a point of order. The other point that I will make is that I’m trying to get a balance between length of answers and these have been, I think, a bit long, but also we had, yesterday, people who were missing out on supplementary questions, basically because the original answers were too narrow. So it’s a matter of just trying to get that balance right.
Question No. 8—Whānau Ora
8. SHANAN HALBERT (Labour—Northcote) to the Minister for Whānau Ora: E te Māngai, mānawatia a Matariki. How will Budget 2022 ensure that Whānau Ora can continue to provide support to whānau as Aotearoa recovers from the impacts of COVID-19?
Hon PEENI HENARE (Minister for Whānau Ora): Whānau Ora will receive $166.5 million over four years through Budget 2022 to help whānau maintain and build their resilience as Aotearoa moves forward from COVID-19. This funding secures the future of Whānau Ora and it represents a 50 percent baseline funding increase per year for the commissioning agencies. This Government is committed to Whānau Ora and we recognise that in communities they know what’s best for community and we’re here to support that.
Shanan Halbert: Why was this funding boost important in the context of the COVID-19 recovery?
Hon PEENI HENARE: As I noted, this funding is to boost baseline and to help whānau maintain and build their resilience on a longer-term basis as Aotearoa moves forward from COVID-19, rather than being tied to a specific period as we responded to COVID-19. This ensures that Whānau Ora commissioning agencies and their providers can continue to help the tens of thousands of whānau they provide support to every year, including those who receive support during the pandemic and who are now regularly engaged in Whānau Ora services. I acknowledge all of the providers for the work that they’ve done. The commissioning agencies received specific additional funding throughout the COVID-19 response, including the Delta and Omicron outbreaks, which allowed them to take on significantly more whānau during the pandemic. In fact, during the Omicron outbreak, our commissioning agencies distributed more than 70,000 support packages to whānau in need—an uplift of approximately 40 percent.
Shanan Halbert: What does the baseline increase in funding mean for whānau?
Hon PEENI HENARE: This funding enables continuity of support and provides certainty for whānau who engage with Whānau Ora. Baselining also secures security of workforce, which is important to acknowledge. Since 2018, the number of navigators has increased by over 100, and this positively impacts thousands of whānau across Aotearoa. This includes several new navigators who joined Whānau Ora during the COVID-19 pandemic. In the South Island alone, the number of navigators has increased from 61 to over 116 since the pandemic started. This funding will secure that employment and also the future of the families who engage with Whānau Ora.
Question No. 9—Immigration
9. Dr JAMES McDOWALL (ACT) to the Minister of Immigration: Does he agree with the Prime Minister’s statement yesterday that nurses “are on a fast track to residency”, and does he further support her statement that nurses have “guaranteed residency”?
Hon MICHAEL WOOD (Minister of Immigration) (remote): To the first part of the question: yes. To the second part of the question: also yes, provided the criteria are met, which will be set out in immigration instructions fairly shortly.
Dr James McDowall: Does the Minister understand that there is no such thing as guaranteed residency, and, if so, how can he possibly support the Prime Minister’s statement?
SPEAKER: Well, no—
Hon MICHAEL WOOD: I can support—
SPEAKER: The Minister can answer the question, even though it started with an assertion that it shouldn’t have.
Hon MICHAEL WOOD: Well, I can certainly support the Prime Minister’s statements and the policy at hand because we’ve taken a policy decision here to provide a far quicker and more certain pathway for nurses than has previously been available, including under the last Government, of which that member’s party was a member.
Dr James McDowall: If it is guaranteed residency, does that mean neither the nurse nor any family members on the application will be subject to character or health requirements and that the policy won’t change at all within two years?
Hon MICHAEL WOOD: Well, as I’ve said in my answer to the primary question, this will, of course, be subject to immigration instructions and basic and reasonable expectations. I’m sure, for example, that the member wouldn’t expect that we would provide residency to people who engaged in criminal activity.
Dr James McDowall: Does he agree with the Prime Minister’s view that migrant nurses should be bonded to nursing, and, if so, why won’t he use section 50 of the Immigration Act to accomplish this whilst simultaneously granting nurses fast-track residency?
Hon MICHAEL WOOD: I think that with these matters, it is always a sensible place to start to determine what the problem is that we’re trying to overcome, and, in this case, it’s trying to make sure that we have sufficient nurses to meet New Zealand’s needs. Therefore, it is a reasonable and rational policy to ensure that when people come here to work as nurses, for at least some period of time they do work as nurses.
SPEAKER: Question—
Dr James McDowall: Supplementary?
SPEAKER: No. The member’s leader has used quite a few questions over the last couple of days.
Question No. 10—Immigration
10. ERICA STANFORD (National—East Coast Bays) to the Minister of Immigration: Why are nurses on a two-year Work to Residence pathway, when multimedia specialists specialising in game development are on the Fast Tracked “Straight to Residence” pathway, and when will the immigration instructions containing the criteria for the Green List Work to Residence pathway be released?
Hon MICHAEL WOOD (Minister of Immigration) (remote): In response to the first part of the question, the rationale for nurses being on a two-year work-to-residency pathway has been well traversed in the House this week and in previous weeks. For the first time in recent history, our Government has put nurses in hospitals on the fast track to residency or asking, as a part of that, that there is a commitment to work as a nurse for up to two years and then residency is achieved. We’ve set up our immigration system for long-term sustainability. The immigration rebalance is about striking an appropriate balance to meet New Zealand’s workforce needs across all sectors. In response to the member’s second question, the straight-to-residence pathway will be available for migrant workers from September 2022. Green List immigration instructions will be available from approximately the end of July.
Hon Michael Woodhouse: I raise a point or order, Mr Speaker. The first part of the primary question, in my view, wasn’t addressed because the Minister simply re-articulated the criteria for nurses. The part of the question asks why is that criteria for nurses and not for multimedia specialists—and that bit wasn’t addressed.
SPEAKER: The question is whether the question was addressed, and it certainly was.
Erica Stanford: Can the Minister explain why nurses are on a two-year wait-to-residence to keep them nursing, and yet there is no requirement for doctors to work as doctors for two years on a work-to-residence pathway?
Hon MICHAEL WOOD: I’m very happy to elucidate for the member because she and her colleagues and others—quite rightly—have pointed out that there is a need to supplement the nursing workforce in New Zealand. As such, and as I covered in my primary question, we think it’s a reasonable and rational approach to say to those nurses, who might seek residency in New Zealand, that we would require that they work in that profession for that period of time to give New Zealand that particular benefit. I think the member shouldn’t also undersell what a significant step forward it is to provide residency after just two years through a very, very simple process—much simpler than most other countries and certainly much simpler than was previously in place, including under the previous Government.
Erica Stanford: I raise a point of order, Mr Speaker. I don’t believe that he addressed the question.
SPEAKER: Well, it’s a pretty simple question and it was around “why this?”, and the answer was almost certainly far too long, but the beginning of it was because the member and her party asked him to.
Erica Stanford: Who has the more attractive immigration policy for nurses: Australia, who has an immediate residence pathway with policy criteria on their website; or Immigration New Zealand, with a two-year wait to apply for residence, and a website that six weeks after the policy announcement still reads “we will provide more detail on this residence pathway”?
Hon MICHAEL WOOD: As I’ve outlined in previous answers, immigration instructions will be confirmed by approximately the next month. But I would caution the member against over-simplifying the differences between different countries’ immigration regimes—she did get pulled up by Jack Tame about that over the weekend when she got details wrong. For example, in New Zealand, there’s an age limit of 55 under this pathway; it’s only 45 in Australia.
Erica Stanford: How many migrant nurses could we have attracted if the Government had released the detailed Green List residency visa criteria in the 10 weeks from the policy to next month?
Hon MICHAEL WOOD: That’s a purely hypothetical question.
Erica Stanford: What responsibility does he take for this Government’s inability to prioritise nurses on a fast-track, immediate residence pathway, resulting in our hospitals being dangerously under staffed?
SPEAKER: Order! Does the member have another supplementary?
Question No. 11—Arts, Culture and Heritage
11. WILLOW-JEAN PRIME (Labour—Northland) to the Associate Minister for Arts, Culture and Heritage: What is the Government doing to mark the first Matariki public holiday?
Hon KIRITAPU ALLAN (Associate Minister for Arts, Culture and Heritage): Mānawatia a Matariki, Mr Speaker. Tomorrow, the Prime Minister and the ministerial delegation will attend a traditional hautapu ceremony to celebrate Matariki at Te Papa, and many of my other colleagues will be attending Matariki events around the country. There will be a live broadcast of Matariki festivities at Te Papa across almost all media channels, beginning at dawn with the hautapu ceremony, and giving all of Aotearoa the opportunity to understand the traditions and to be a part of creating our new own ones right here at home. Te Arawhiti’s Matariki Ahunga Nui fund is also supporting 60 groups undertaking Matariki kaupapa across the motu. They range from marae-based wānanga that explore traditional Matariki ceremonies, to albums promoting Matariki waiata that tell the stories about connection to this place, our stars, and our relations across the Pacific.
Willow-Jean Prime: How will the Government support Matariki celebrations in future years?
Hon KIRITAPU ALLAN: Budget 2022 made available more than $8 million over four years to embed celebration of Matariki into Aotearoa New Zealand’s national fabric over the long term and to support community celebrations for Matariki across the country. With the many events across Aotearoa to mark this first Matariki public holiday and with the high level of enthusiasm for Matariki across the land, our collective knowledge and celebration of Matariki will develop and grow each year, and I look forward to the Government taking an active role to support this kaupapa and mātauranga Māori - based event.
Willow-Jean Prime: In her capacity as the sponsor for Te Pire mō te Hararei Tūmatanui o te Kāhui o Matariki/Te Kāhui o Matariki Public Holiday Bill, can she confirm what stars Matariki is comprised of?
Hon KIRITAPU ALLAN: Mr Speaker, I can: Waitī, Waitā, Waipunarangi, Tipuānuku, Tipuārangi, Ururangi, Pōhutukawa, Hiwa i te Rangi, Ēi Matariki. Tēnā koe.
Question No. 12—Building and Construction
12. ANDREW BAYLY (National—Port Waikato) to the Minister for Building and Construction: Does she stand by her statement that the Government began working on the plasterboard shortage “months ago”; if so, why did the Government only appoint their reported high-level taskforce at the start of the week?
Hon Dr MEGAN WOODS (Minister for Building and Construction): Yes. In answer to the second part of the question: because this was the logical next step in a series of Government actions ongoing since 31 August 2021.
Andrew Bayly: Why, if imported plasterboard meets NZS 2588 standard, can’t she instruct the Ministry of Business, Innovation and Employment (MBIE) to issue the acceptance notice and require councils to allow builders to use it immediately?
Hon Dr MEGAN WOODS: As we’ve been discussing throughout the week, that guidance has been issued. The first step of it was at the end of last year. Further guidance has been issued to building and consent authorities in June of this year. If the member is suggesting that we should take the approach that is contained in his member’s bill, we will end up in a situation where buildings do not get issued with code of compliance. The flow-on effects of that is they will not be insured, banks will not lend on them, and the buildings will not be able to be sold.
Andrew Bayly: If the plasterboard meets the New Zealand standard, why wouldn’t she tell MBIE to issue a guidance notice to the councils that they must accept it on site because it already meets the New Zealand standard?
Hon Dr MEGAN WOODS: As we’ve been through—and I encourage the member to go and have a look at the guidance that has been issued to the building and consent authorities—for those plasterboards that do meet the functional requirements around either structural or fire retardant, there has been guidance issued to building and consent authorities to use those products as a substitution.
Andrew Bayly: Is she aware, in June last year, that the then Minister for Building and Construction, Poto Williams, said in a select committee that in respect of building material shortages, including plasterboard, “This is a very live issue for everybody. It’s an issue for developers, it’s an issue for builders, it’s an issue for the sector, so we are not going to let this lie.”?
Hon Dr MEGAN WOODS: I’m not aware of the exact comments, but I’m not surprised. Nor am I surprised by a series of events only a couple of months after that when, on 31 August, Fletcher Building wrote to MBIE regarding the alert 4 implications that there were for plasterboard.
Hon Todd McClay: What happened?
Hon Dr MEGAN WOODS: And then on the—I’m glad you asked, whoever that was. On 1 September, one day after receiving that letter, there was an initial briefing to Ministers on the Fletcher Building letter. On 3 September, the proposal to address issues was outlined in the Fletcher Building letter, in the briefing to Ministers. On 7 September, the proposal was discussed and agreed to at the COVID-19 Ministerial Group. And on 10 September, only 10 days after receiving that letter, the MBIE chief executive authorised certain businesses or services that were located in the alert level 4 area to operate at alert level 4 for business manufacturing. I think we can see that our Government has taken swift action over a number of months on this issue.
Andrew Bayly: Isn’t it the case that, apart from issuing new guidance by MBIE last November, in announcing a new working group this week, neither the Minister nor her predecessor has done anything to address the plasterboard crisis?
Hon Dr MEGAN WOODS: I encourage that member to actually listen to answers to the supplementary questions that he asks. I just went through a sequence of events where a health order allowed for the manufacture in alert level 4 conditions of Gib plasterboard.
Andrew Bayly: Does she stand by her statement that “This is a group of private sector experts brought together to advise me, to ensure the effective and swift execution and implementation of measures taking place.”; if so, will the Government take another 12 months to implement her “swift executions”?
Hon Dr MEGAN WOODS: In answer to the first part of the question, yes. In answer to the second part of the question, no.
Andrew Bayly: Does she agree with her statement yesterday that “I fail to see why it is the Opposition are so adverse to working with the private sector on solving this.”; if so, why doesn’t she support the bill from this side of the House that did involve extensive consultation with the private sector and drew on the expertise of legal experts?
Hon Dr MEGAN WOODS: I’ve already given an answer to that in the answer to an earlier supplementary question. The advice I’ve got is that the bill that the member has introduced further complicates and actually makes more bureaucratic the process which we’ve improved by issuing guidance. But furthermore, and more concerning to me, is we’d have a situation, under that member’s proposals, where buildings would not be issued with code compliance, they would not be able to be insured, banks would not lend on them, and those that owned those buildings would not be able to sell them.
SPEAKER: I declare the House in committee for further consideration of the Commerce (Grocery Sector Covenants) Amendment Bill.
Bills
Commerce (Grocery Sector Covenants) Amendment Bill
In Committee
Debate resumed from 22 June.
Part 1 Amendment to Part 2 of the Act (which relates to restrictive trade practices) (continued)
CHAIRPERSON (Ian McKelvie): The House is in committee for further consideration of the Commerce (Grocery Sector Covenants) Amendment Bill. I know we don’t need to remind members of Zoom, but, please, if you’re on Zoom or coming in via Zoom, make sure you signal to us and make sure you pay attention. When we were last considering the bill, Part 1 was being debated. This is the debate on clause 4, which is the debate on the amendment to Part 2 of the Act, which relates to restrictive trade practices.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I will answer the member Andrew Bayly’s questions in consecutive order. I thought that they were all important questions worthy of putting answers on record. If they inspire further questions, I will certainly welcome them.
In the first instance, I made it clear to the commission in a recent letter of expectation that it should devote resources to implementing this bill. I have communicated with them an expectation that they are proactive in their stance. The commission has also been kept informed of the Economic Development, Science and Innovation Committee’s expectation that it take a proactive approach to monitoring, as well, using the powers given to it under the bill. The commission advised the select committee, via officials, that it has already identified further investigation of covenants at issue and the bill as a priority area. So we can see that that is something that is being picked up. It has enforcement criteria it uses to prioritise compliance monitoring and enforcement activities, of course.
The Supplementary Order Paper (SOP) 174 itself improves on the monitoring function already in the bill. The SOP replaces the new monitoring function in new section 28A(3A) with a bespoke information-gathering power. The new power slightly increases the range of agreements and covenants the commission can require information about. It also makes it clear that the commission can require that information in order to assess compliance with a range of provisions, both under the Commerce Act and the Fair Trading Act.
To add to those two aspects, which, I think, address something of the member’s questions, I’d also like to draw attention to the fact that in the market study, the commission itself pointed to areas it thought worthy of further investigation from its own initial studies. The commission is reported as having opened three investigations subsequently into restrictive covenants and exclusivity covenants on leases, which it signalled in the report in paragraph 9.67. The commission states in the report that it’s reviewing the historical and current use of restrictive covenants and exclusivity covenants and leases that might be at risk of breaking sections 27 or 28 of the Commerce Act. So it has now, I’m informed, opened three investigations into that matter.
Refusal to supply, by suppliers, to low-price retailers: the commission, likewise, in the grocery report indicated its intent to open an investigation on that matter—that’s paragraphs 6.187 to 6.191 and 9.135 in the report itself. It’s received some information which relates to suppliers indicating they’re only willing to supply if a grocery retailer does not undercut the retail prices set by other grocery retailers of the suppliers’ products. That information included examples of the supplier refusing to supply a low-price retailer, and, in some cases, that the suppliers’ refusal to supply in favourable terms to a retailer followed a concern being raised by another grocery retailer about the supply of trades.
And then, also, land banking is another area that the commission indicated that it would review whether there was any historical or ongoing matters raised in the context of acquisition of land that might be at risk of breaching section 47, anti-competitive acquisitions, or section 27, anti-competitive arrangements, of the Commerce Act. So my understanding is that it’s currently reviewing in that area whether investigations should take place.
Other strategic conduct, such as best-price clauses or exclusive supply agreements, is also something that the commission is considering whether appropriate action might be undertaken.
The Fair Trading Amendment Act 2021 also comes into force on 16 August 2022, with a new prohibition against unconscionable conduct. So it’s also just received some new powers granted by this House that come into effect very shortly, and it will then consider the appropriate use of the full range of its Fair Trading Act compliance and enforcement functions and powers now granted by the Parliament.
The final one I’d mention is just around pricing and promotional practices. Independent of the market study, the commission noted it has received a number of complaints, under the Fair Trading Act, related to supermarkets. While not currently investigating, the commission noted it may, at any stage, of course, utilise its Fair Trade Act compliance and enforcement functions and powers.
There is work progressing, I know, by the supermarkets themselves to try and simplify their pricing structures to make them clearer to understand, and so on. I wrote to them to ask them to progress the recommendations in the market study—immediately, I received that market study—because I saw that was something that the supermarkets themselves could get on with in order to make their pricing more transparent so consumers could make better decisions.
So I thank the member for those questions. I do think it’s very clear that there is an expectation that the commission will be proactive in monitoring, and, if we pass this bill, it will have new monitoring functions with bespoke information-gathering powers necessary to perform that task.
ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. I’m appreciative that the Minister has responded to those questions I put to him late last night. I think it’s important, if the courts are looking for direction, it’s clear what the intent of the bill is and the intent of the committee and the Minister. So that’s very useful background.
I suppose, just carrying on, obviously these additional powers that the Minister’s put through under Supplementary Order Paper (SOP) 174 deal with the immediate issue of monitoring of these arrangements. First of all, there’s a resourcing issue, and I take the Minister’s comment saying that the Commerce Commission will devote sufficient resources; hopefully not to the detriment of other important parts of the Commerce Commission. But I suppose it gives rise to what is the future position, because these measures that were proposed by the committee is a short-term stopgap, because I think the intent—and the Minister has certainly talked about this previously—is that, ultimately, there will be a grocery regulator.
So, for the committee, one of the biggest issues in dealing with this new sections 28A and 28B is the issue about what might be the role of the grocery regulator and whether, in fact, that grocery regulator may actually take over the powers that are covered under section 174, or whether the Minister has the intent of retaining that within the Commerce Commission, which is probably more an area where you’d, rightfully, normally find these types of powers. But, obviously, we don’t know what the grocery retailer obligations or arrangements might be. I understand the Minister’s going to be introducing them. So, again, it’d be useful for the Minister to talk about when he might be introducing that legislation around the grocery retailer; what might be the scope of the grocery retailer; whether, in fact, they might take on some of these roles that we’ve passed in 174, or propose to; and just, generally, the structure of the interplay between the grocery regulator and the Commerce Commission in the future.
CHAIRPERSON (Ian McKelvie): I call Michael Wood. Oh, the Hon David Clark—apologies.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Ha, ha! I’m not sure who you’ve offended more. Indeed it is the Government’s expressed intention to establish a retail grocery regulator to oversee and monitor the retail grocery sector, and that was something that we highlighted in our response to the commission’s recommendations. I’ve indicated that I’ll be bringing a bill to this House later in the year to give effect to the Government’s intention to put in place measures that respond to those recommendations from the commission.
If we put out the lay of the land, obviously we have a situation where there’s global inflation and Kiwis are not exempt from that. So Kiwis are feeling the pinch here at home. You know, it’s why we have the cost of living package in the Budget. But, also, it’s clear right now that the grocery retailers have been making these extraordinary profits over many years, documented in the Commerce Commission’s report of what were considered excess profits of conservatively estimated at a million dollars a day, every day of the year, out of Kiwis’ pockets. That is something we can tackle as a Government to help ease the burden on families at this time when cost of living is making many Kiwi families do it tough.
So we’re determined to do that, and we responded to the Commerce Commission’s recommendations by accepting the majority but rejecting two, because we wanted to go further and faster. That included reviewing sooner and we’ll have an expectation that the regulator, when they’re appointed, will review the sector with an annual report rather than a three-yearly review. Also, we also were not comfortable with just having a wholesale access regime on good-faith terms. I’ve signalled a mandatory backstop to ensure that there is a regime in place if we don’t see the outcomes we would expect from a good-faith access regime in the wholesale sector. So the Government has gone, obviously, further than the Commerce Commission was ready to recommend, but we make no apology for that because we want to see Kiwis get a fair deal at the supermarket.
Those other recommendations we’ve accepted, and where we’ve gone further we will be making very clear when we bring legislation to the House. Of course, we’re wanting to go through that detail very carefully to make sure that there are no loopholes, that we are getting things right, so that Kiwis really do get a better deal in a more competitive market as the year progresses. But I would note, already, and I would say, as a result of the market study, we’re seeing significant change in the market. We’ve seen the duopoly welcome a code of conduct for the first time, and participate in helping it get developed. We’ve seen the duopoly welcome a regulator come in. We’ve seen these remarkable, in my view, acceptances that it’s a good idea to get rid of covenants that have been in place for years and years and years, blocking competition in this sector. The supermarkets have said, “Well, we can see that that’s no longer acceptable and we are going to change.”
We’ve seen price freezes put in place. They’re temporary. We want to attack the long-term structural issues here. But they are promising signs. We are seeing also the supermarkets, the duopoly, signalling they want to open up wholesale. So we’re seeing some promising responses right now, but we want to make sure that over the longer term we’ve got the structural issues right so that we see competition longer term in the sector that benefits Kiwi consumers.
MELISSA LEE (National): Thank you, Mr Chair. Thanks to the Minister, the Hon David Clark, who has actually been very helpful in explaining last night and today in relation to Supplementary Order Paper 174, and explaining that, through the select committee process, there were many things due to the time constraint—that the select committee actually met—that it was quite difficult to explore further, some of the issues that we were rather concerned about. And I acknowledge the select committee chair, Jamie Strange, who has actually worked very cooperatively with our spokesperson, Andrew Bayly, who’s to my left.
I believe the empowering of the commission to designate grocery retailers to supply information, I think, is something that the select committee recommended through our report. One thing that does actually worry me—there is another aspect that the committee was very concerned about—and that is the compensation side, which I spoke about during the second reading. That is, when a grocery retailer which is a duopoly now is in an exclusive covenant, for example, in a big supermarket chain like a Westfield’s shopping complex—it is Westfield versus, let’s say, Countdown—they are two big entities. So the power in, for example, debate over the lease negotiation is actually quite equal, in the sense that they’re both equally powerful, but when you have a landlord that is in a very small town, regional centre where the supermarket may have been located and they have negotiated an exclusivity covenant or a restrictive covenant preventing the land from being developed so another supermarket cannot be built, there is a power imbalance with the supermarket chain versus the “ma and pa” landlord.
I thought that the Minister was going to be dealing with that compensation issue, because we are in this House removing the covenants that the supermarkets currently have, and saying that it is not a practice that we support and it is going to be illegal to put them in leases. If that is the case, the hypothetical loss of revenue—the potential revenue that they’re going to equate to those covenants—may potentially end up in court, where the smaller ma and pa landlords might have to cough up money for the potential loss of hypothetical revenue, because they’re not a big entity with big law firms behind them to support them. I would like to ask the Minister what kinds of remedy there are for situations like that, and does the Minister believe that the current laws that are in place actually guarantee that those legal actions would not take place. Otherwise, how would he actually make us feel, I guess, more comfortable and confident that the law that we are passing today will cover those issues?
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Mr Chair. I canvassed, you’ll appreciate, in my introductory comments these issues, but I’m happy to go over them again because I think they are important. I think these are really important questions about how this plays out.
The committee itself, as the member Melissa Lee said, 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 exclusivity covenants in their lease unenforceable. And that’s the nub of it. Section 89 of the Commerce Act has the potential to facilitate a process of renegotiating the lease, if this is appropriate, to reflect actual losses incurred by the supermarket from greater exposure to competition in the area. The committee’s concern—at least, as I understand it—was about landlords having little protection against the potential for supermarkets to abuse that process.
So I’ll say some more general things and then come back to the Supplementary Order Paper (SOP). There are general provisions in contract law, the Commerce Act, and the Fair Trading Act which prohibit the kinds of behaviours that the committee was concerned about—for example, undue influence, coercion, and unconscionable conduct. Now, at a theoretical level, these provisions should provide protection to mall and shopping centre owners. However, what I would say is that what gives this more legs is the SOP, because I consider that the Government SOP will help mitigate some of the concerns by giving the commission the power to actively monitor those arrangements to assist with compliance with both Acts.
The recommendation of the committee was unanimously agreed upon. The Supplementary Order Paper, under Standing Order 315, gives effect to the recommendation of the committee. The SOP enables the commission to obtain any contracts, arrangements, or understandings to which section 28A may apply, including information relating to the renegotiation of those arrangements. The section provides that this information may be used to assess compliance with specified provisions in both the Commerce Act and Fair Trading Act relating to anti-competitive conduct and unfair conduct.
So that “proactive monitoring” thing, which is what it comes back to, is there for them to monitor any such negotiations or rearrangements as they see fit around that, and that, I think, is the strength of the SOP. The committee put forward a recommendation that we should do that, and the time available was challenging. We have had the time to make sure the SOP gives those powers in a way that’s appropriate so that the commission can proactively monitor for that.
DAMIEN SMITH (ACT): Thank you, Mr Chair. The Government could today, as ACT suggests, add some real value to this bill by instructing the Overseas Investment Office to consider retail grocery to be in the national interest and to approve every application to build a new grocery store. That would be the element that would drive this—not just covenant removal, which we agree with, or the duopoly managing their estate. But it has been known for 10 or 15 years that those practices have gone on, and no Governments have addressed that. In terms of questions for the Minister, I’d like him to consider that instruction to the Overseas Investment Act because it can happen next week.
We’ve been looking through the research to quantify any impact which restrictive land covenants specifically ought to be having on the course of groceries, and we can’t make that direct correlation. The excessive profits that the Minister talks about are 20c per day per New Zealand citizen. The other question that we have is: how many reports, if any, has he received on new market entrants choosing not to enter the market due to restrictive land covenants? And will the Commerce (Grocery Sector Covenants) Amendment Bill really reduce costs further for the squeezed middle New Zealanders?
We also can’t find any quantifiable estimations of the effects of removing covenants, so we are suggesting at the ACT Party that we need to make grocery retail competition as open as possible. Why would you come to this part of the world? No grocery business would consider entering a small market as far away as New Zealand under the restrictions that we have and that the Commerce Commission has identified. So let’s say we deal with securing sites and we deal with opening up the market, the question is: why can’t we bring capital in really quickly through a national interest statement, which will allow us to actually build supermarkets fast? Otherwise, it will be three years’ time, and we won’t have another player here.
So I’d like to plead to the Minister that there’s still time to do that and that we would actually add value to the bill by doing that. And he knows that from the Act’s perspective, it’s got to be less hard to do business here and there’s got to be less regulation, which involves also addressing local councils under instruction with the Resource Management Act to make this a reality. So there are several elements here that could be added, which would actually fast track this time frame. And as Mr Robertson said, “OK, tomorrow or when we pass the bill, people can simply and quickly get on at looking at sites.” But that’s not going to satisfy a business plan, given the restrictions we’ve got around the competitive wholesale market and alcohol and liquor provision and actually then getting through the local council quagmire. So I’d like the Minister to consider the Overseas Investment Act instruction and to bring friendly capital, if it necessary, from overseas to be in the national interest, immediately.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you, Mr Chair. With your blessing, I would like to address the member’s questions, although they are, obviously, outside the scope of the bill. The Official Information Act has just recently been reviewed, and that review has been completed, and so the commission recommended that that be kept an eye on, and Treasury indeed will be monitoring the performance of the Act. As to whether there should be a national interest allocation, you know, that, obviously, is quite outside the scope of this bill, and I’m not convinced, as the member seems to be, that foreign direct investment finds that particular barrier the one that’s a bridge too far to coming here, historically. Indeed, even under the current market conditions, before the Government announced its response and before we’ve seen the change we’ve seen, Costco has very clearly indicated its intention to come to New Zealand, and, indeed, I believe the subscription that Costco’s had in New Zealand is the biggest they’ve had anywhere in the world prior to opening. So that is an outfit that is already coming here—quite before any of the change that we’re contemplating now.
And the member—and others have, too—and I myself, also, have, in the debate, referenced the wider work that’s happening. This bill itself is focused very much on the restrictive leases and covenants question, and that question is something I have had conversations with supermarkets about, and they indicate it’s one of many factors. So I completely accept the argument there are other factors that need to be worked through. That’s why we accepted the 12 recommendations that the commission rejected too, because we wanted to go further. It is why we think that a whole market change is required in order to create the optimal environment to ensure we have good competition.
Now, whether that competition comes from domestic operators expanding or whether it comes from overseas participants—and the degree to which it comes from overseas participants—is yet to be seen, and I think the most important thing, though, that we can do is, as a House, promptly pass this piece of legislation, which gets one important piece of the puzzle sorted. And I look forward to the member’s supporting the further legislation that comes to the House this year to address the other recommendations that the Government has agreed to from the Commerce Commission report.
ANDREW BAYLY (National—Port Waikato): Thank you. I just want to ask a technical question. So under Part 1, clause 4, which inserts new section 28A(4)—so it talks about the exclusivity covenant. I’ll just read it: “includes, without limitation, a right of first refusal”. But then overleaf, it defines what “grocery product” is, and it says, “means goods in any of the following product categories: bread, dairy products, eggs [and] egg products, fruit, vegetables, meat, fish, rice, sugar, manufacturer-packaged food, and medicine other than prescription medicine”.
So can the Minister just be absolutely clear, by defining it this way—and most people would agree that this is what a grocery retailer does and sells, and we saw many examples in lease agreements that the large supermarkets already have in place, that they exclude a whole lot of other activities—can you be assured that the supermarkets won’t also take the opportunity to say, “Well, we will put a restriction on pet food operators.”, as an example, or alcohol operations around their supermarket operations, as an example?
So I suppose what I’m just asking is: by defining it so closely, have we led inadvertently to the situation where we still allow supermarkets to stop certain other competitors? I think it’s a pretty important point to clarify—whether, in fact, that’s the case.
MELISSA LEE (National): Thank you, and I’d like to add to what my colleague Andrew Bayly has actually said. Even though supermarkets in many suburbs exist and actually do sell meats and fruits and vegetables, there are many people who prefer to go to the local market or even the fruit and vegetable shop—which are speciality shops—or the butchery, because they have had a long-term relationship. I really wonder by just specifying these specific things whether, although we’re removing the covenants, the supermarkets could potentially say, “This is our territory.”, and they actually may be able to prevent other smaller shops, specific shops that actually do specialities, like fruit and vegetable shops, the bakery, the butchery, or even, I don’t know, a local pharmacy from selling these things, even without an exclusive covenant to prevent them from being in those shops. I think it’s really interesting when you actually dig into it. I wish we had more time at select committee.
Having said that, I just would like to get back to what the Minister had in fact said, because we are wanting to improve competition in the market, and hence we are dealing with the covenants of the duopoly which actually restricts certain trade or build which are designed to actually bring about competition, perhaps, and also an exclusivity covenant within a shopping complex. But the issue we also have is that there are dairies who supply to citizens who may not live close to a supermarket, or who may not have the vehicles to actually get to a supermarket, and their corner dairy is their supermarket to actually get their daily supplies. But the wholesalers are controlled by the duopoly. It is the company that owns the duopoly supermarket that run the wholesale where the dairies go to shop at. Does this actually fix that issue? I don’t think it does. How are we going to do that, and will the Minister bring about further changes so we can actually deal with the wholesale of groceries that actually go to citizens that may not necessarily go through the route of the supermarkets?
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): So I’ll take those two speakers in the opposite order. To Melissa Lee’s question around wholesale: no, that is completely outside the scope of this bill. But as I indicated in my prior answer, it is in the Commerce Commission’s report that we should address wholesale access—and indeed, as I signalled in some of my previous answers, we’ve gone beyond the Commerce Commission report’s requirement for an open-access regime on good faith and said there’s going to be a mandatory backstop. So, essentially, if the supermarkets don’t make good on their promises to open up wholesale access, we will help them.
To go then to Andrew Bayly’s question—littered through the Part 1, the member will see, for example, in new section 28A(2)(a)(ii), inserted by clause 4, “any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer”. In new section 28A(2)(aa)(ii): “(B) any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer”, and so on. That same formula appears at various points through the Act to indicate that it isn’t just those that are operating selling eggs, bread, dairy products, fruit, vegetables, meat, fish, rice, sugar, manufactured packaging, food, and medicine or other prescription products that are excluded from those from having exclusivity. It’s a broader thing which is intended to capture anyone in any arrangement that’s designed to exclude competition to a grocery retailer. I hope that answers the member’s question.
MELISSA LEE (National): I am just wanting to address the issue in terms of the point that I made about the local market and the fishmongers and the butchers in the local suburbs, and I don’t think the Minister, in fact, actually had anything to say about that. Do you have an opinion, Minister Clark? If you could address that that would be really helpful.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I’m not sure, then, that I’ve understood the member’s question correctly. I haven’t understood—if the member could rephrase it, I will happily seek to answer it.
MELISSA LEE (National): Thank you, Mr Chair. I think that a couple of speakers before, the Minister addressed our questions and then we’re trying to remember what the question was. I was adding on to what Mr Bayly had said in terms of the point that was actually made in terms of exclusive covenants. I know we’re actually getting rid of it, but when we define grocery products in such a way, where supermarkets have leases that suggest that supermarkets have certain activities which include everything from bread, eggs, even men’s shoes—all of those things—even though we’re getting rid of this exclusive covenant and the restrictive covenants from the leases, are we not stuck in the position where we’re not fixing it? Because a definition of what a “supermarket” is in the lease, for example, as those things, supposedly supermarket activity, even without those covenants—when we remove them—and they can still act as though the covenants exist because it will include everything from pet food, and shoes, and even day-care centres, potentially, because that’s supposed to be a supermarket activity.
ANDREW BAYLY (National—Port Waikato): Just while the Minister’s cogitating, the point my colleague was making before was that a market store, like on a Sunday morning, may be occasional, but it will probably more than likely cover everything covered under the grocery product range, right? Dairy products, eggs, whatever. And so the question was: is there any possibility that inadvertently some of these other activities might be captured under that arrangement? So that was the question. I’ll let the Minister—and then I’ll come back to it with a new question.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): No. If I’ve understood the question correctly, the selling of those things in a store that happens to be near a major designated grocery retailer is—now, how am I going to best express this? First, it has to be by a designated grocery retailer where they’re acting in an anti-competitive way; that is stopped. But if it’s not a designated major grocery retailer doing it, then it’s not stopped, if that makes sense, and I hope that I’ve understood the member’s question correctly.
ANDREW BAYLY (National—Port Waikato): OK. Well, I know you’ve got the good officials there, so they might just help you on that matter.
Can I just turn to a slightly different issue. Clause 4, which inserts new section 28B, “Process for designations”—so this is a forward-leaning provision which is saying we might designate people in the future as being a grocery retailer and, therefore, subject to all these constraints; this is what the bill is about. What it notes is that the Minister may recommend to the Governor-General that someone be designated, and it goes on to define in new section 28B(3) that you’ve got to consult, but, secondly, that the commission needs to take into account the following criteria: “whether the person carries on, or is likely to carry on, a business of supplying all or a majority of categories of grocery products to consumers;”—so we’ve been having that conversation—“and (ii) whether designation of the … designated grocery retailer would be likely to promote competitive neutrality (that is, a level playing field) or to otherwise promote competition”.
So, I suppose, you’ve talked about Costco, and there’s been rumours about ALDI coming into New Zealand for the last 20 years. What I was trying to understand is a lot of this power rests with the Minister and will be done by regulation and recommendation through to Order in Council. What are the likely criteria? How would we ensure someone like the third-largest grocery trader, such as Night ‘n Day, who has a relatively small market share, albeit an important market share—what would be the criteria at which point someone might be designated in the future as being a designated grocery retailer? Obviously, striking the right balance is really, really important. If you had Costco coming in—who’s a heavyweight from overseas, but actually minuscule in New Zealand—or an ALDI, what would be the criteria? I’m just keen to get an understanding of that.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Very good. Ultimately, obviously, the Minister is only able to take decisions upon the recommendation of the Commerce Commission, and I would expect the Commerce Commission to be employing their technical expertise in making those recommendations. Now, at this point, I’m speculating on what process they might go through, but I would expect that they would look at aspects and measures of competition in the market—you know, how concentrated the market is, whether prices are shifting, as retailers come and go from a geographic area. In their report, they found that there is no statistically significant change in prices currently, when a grocery retailer turns up in town or leaves, whether or not there’s someone else there at the time, that those prices do not seem to be moving in the market. They are set at a national level, and they’re not affected by any local level competition factors, as you might expect in other markets.
So it’s those kinds of factors, I imagine, they would be looking at and the extent to which that occurs—this would be one factor, I imagine, they look at—would be determined by how much of a threat a would-be competitor is in the market, whether they are really going to turn the dial, whether they have sufficient scale to enter into a battle or competition in any meaningful way that’s going to upset the market as a whole. Whether that’s good for the market and where that threshold sits will be technical questions that the Commerce Commission, I imagine, will work through, both using those kinds of measures and also benchmarking where it’s available from overseas and benchmarking against other industries in New Zealand around similar measures.
But, ultimately, those are technical questions for the Commerce Commission to dig into; not for the Minister to prescribe, other than in the actual law as it’s laid out here, where it does set out some of the high-level criteria that would be applied—then the recommendation would come to the Minister for a designation.
DAMIEN SMITH (ACT): Minister, it would be great if you could clarify, from the date of when the law is actually passed, whether the advisers—and pardon the pun—had contemplated any sort of countdown mechanism for when a release, an occupation, set of dates, or the market could be moved on or the local urban area or a selection of a site, could be actually chosen and that the competitor didn’t receive any sort of dissonance to getting on with the job. So did the advisers contemplate anything in that area, apart from just passing a law, but there’s time frames for doing things?
ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. Yeah, just going back to the question before—I suppose the first question is: is the Minister proposing to give the Commerce Commission any sort of additional framework other than what’s set out in new section 28B? The criteria for the Commerce Commission to assess whether, in fact, someone should be designated as a grocery retailer is actually pretty light. Basically, it sits under those two subclauses that I mentioned. So the first question: is the Minister proposing, even by regulation, to give further framework for the Commerce Commission to designate someone?
But the second thing is: it’s pretty easy to sort of contemplate the grocery industry as just going to your supermarket and what you buy, right? As we all know, it’s the whole value chain. We’ve got important suppliers, particularly growers—and vege-growers in my area of Pukekohe who supply supermarkets—you’ve got the logistics of transporting that, you’ve got storage facilities that the supermarkets operate, they have their internal transport arrangements, and then you have the retail distribution outlets. Now, all of those contribute to the cost of the ultimate product. In fact, if you’re talking about how much you’re going to pay the wholesaler, for instance, through a Gilmours arrangement, or whoever it might be, or how much the supermarket charges for the internal transport, all those things go to make up the pricing. As the Minister said before—what you’re suggesting is that the Commerce Commission is likely to have a view on what will lead to a change in price. So do you anticipate that the Commerce Commission might take a disaggregated look at the supply chain of the supermarkets, rather than just focus on the end price of what you might pay for a roll of toilet paper?
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): In response to the member’s first question, more specifically, no. It kind of relates to his second question.
The Commerce Commission is populated by technical experts with the necessary and requisite skills in competition law. I think it’s important that they make independent judgments—they are an independent agency—independent from Government. We would expect them to use their expertise to make those judgments and not have us as politicians telling them, in too greater detail, what constitutes competition, because the measures and the factors that will be taken into account will vary over time.
ANDREW BAYLY (National—Port Waikato): Can I turn to the new Supplementary Order Paper (SOP), and it doesn’t actually have a number on it—
Hon Dr David Clark: 174.
ANDREW BAYLY: —oh, it was 174, OK. So it’s clause 4, new section 28A. This is in relation to exclusivity covenants—for anyone listening, if they’re finding this interesting. But an “exclusivity covenant” is a provision or lease that has the purpose, or has, or will likely have, the effect of impeding another person, such as a retail grocery store or another store—whatever. So it’s really one around area—stopping competition in a certain area—as opposed to the restrictive covenant, which is separate around products.
So the SOP that you put forward has changed and what it says is “an exclusivity covenant or other provision in a lease”—and that’s important—“and the provisions of any other contracts, arrangements, understandings, or covenants, if”—and the current wording is—“the exclusivity covenant has 1 or more of the same parties as the contract, arrangement, understanding, or covenant.” I understand, from your SOP, you want to change “exclusivity covenant” to “lease”.
So I’d quite like to understand what that is about because, as you will know from the deliberation of the Economic Development, Science and Innovation Committee, we were very, very concerned that the arrangements that a supermarket might have might be a number of different arrangements with a tenant. It might be a tenancy agreement that’s registered, it might be a separate letter that covers other things like first right of refusal, and it might be a different type of arrangement that is actually filed on the title.
So what I’m trying to understand is why you want to limit new section 28A(2)(c)(i) and amend it from “exclusivity covenant” to “lease”.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I apologise for suggesting to the member it was SOP 174; it’s actually a different one. But the piece of paper, the SOP that the member refers to—the number of which I don’t have in front of me either—actually fixes a typographical error. There’s an attempt to—
Andrew Bayly: So it should be “lease”?
Hon Dr DAVID CLARK: It should be “lease”. The whole new section is about aggregating, bringing together the different parts—as I understand it—that might have the effect, or likely effect, of impeding competition. So it’s only to describe those different parts.
ANDREW BAYLY (National—Port Waikato): I see the officials helping, which is good, because this is a change. What I’m concerned about is that the change inadvertently restricts the exclusivity covenant to just a lease, and the big issue we’ve got is that that might not be the case; it might be a letter. So I’m just trying to understand the rationale why that specific part of new section 28A(2)(c)(i), inserted by clause 4, has changed from “exclusivity covenant”, which is much wider, to just “the lease”. I’ll keep talking, if that’s OK, while the Minister gets some advice on that.
I suppose this includes things like right of first refusal as well, because that is one of the things that the committee was particularly concerned about, and issues such as requiring landlords to actually go out and make changes or advocate against planning rules if it was disadvantageous to a supermarket. So those are the types of provision that we were particularly concerned about. Now, they may not be included in a lease. I’m going to hand over to the Minister because I think he’s got the answer now.
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you. It was as I explained, but perhaps not as eloquently as I might have. New Section 28A(2)(c), inserted by clause 4, if the member has a look, talks about “an exclusivity covenant or other provision in a lease, and the provisions of any other contracts, arrangements, understandings, or covenants, if—” The paragraph (i) to that is actually about describing who the parties are: somebody has to be a party to the lease for this to take effect, and then the next part describes the lack of competition arising from the arrangement. So it’s trying to specify that they have to be a party to that lease to be regarded—because there’s an “and” at the end of (i) before (ii)—as part of the anti-competitive behaviour that surrounds that if it comes through another form.
CHAIRPERSON (Ian McKelvie): The question is that the Minister’s amendments set out on Supplementary Order Paper 174 and the tabled amendment to new section 28A be agreed to.
Amendments agreed to.
Part 1 as amended agreed to.
Part 2 Transitional and savings provisions
CHAIRPERSON (Ian McKelvie): Members, we now come to Part 2. This is the debate on clause 5 and the Schedule, “Transitional and savings provisions”. The question is that Part 2 stand part.
Part 2 agreed to.
CHAIRPERSON (Ian McKelvie): We come to the Schedule now. There’s no debate on the Schedule. The question is that the Schedule stand part.
Schedule agreed to.
Clauses 1 to 3
CHAIRPERSON (Ian McKelvie): Members, we now come to our final debate: clauses 1 to 3. This is the debate on clauses 1 to 3, the title, commencement, and principal Act. The question is that clause 1 stand part.
Clause 1 agreed to.
Clause 2 agreed to.
Clause 3 agreed to.
Bill to be reported with amendment.
House resumed.
CHAIRPERSON (Ian McKelvie): The committee has considered the Commerce (Grocery Sector Covenants) Amendment Bill and reports it with amendment. I move, That the report be adopted.
Motion agreed to.
Report adopted.
Bills
Financial Markets (Conduct of Institutions) Amendment Bill
Third Reading
Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Financial Markets (Conduct of Institutions) 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 Financial Markets (Conduct of Institutions) Amendment Bill be now read a third time.
Until now, providers of banking and insurance services in New Zealand have not been subject to any general obligation to treat their customers fairly. I’m pleased to say that this bill we’re debating here today will change that.
Before we get into the detail, I’d like to start by thanking everyone who has contributed to the bill reaching this stage. I want to start by acknowledging and thanking my predecessor the Hon Kris Faafoi, who introduced this bill in December 2019. I had the privilege of inheriting a number of bills from the Hon Kris Faafoi when I arrived as the commerce Minister. Ten pieces of legislation were in development or in the House, and three of them were already introduced in the House at that stage. The Hon Kris Faafoi is a very busy and hard-working Minister and one who will be missed, and we look forward to hearing his valedictory speech later today.
Thank you also to the officials who have worked on the bill during its development, and to members of the Finance and Expenditure Committee for their hard work considering the bill. Finally, thank you to everyone who has submitted on this bill and taken the opportunity to share your feedback. I do really appreciate the efforts that people go to in terms of making the time to submit on these bills, because they are improved by select committee processes—there is no two ways about it—and with officials then working with industry and others, we ensure that we protect the interests of consumers, as is intended with the intent of the bill.
Banking and insurance are essential services. All New Zealanders use these services at some point during their lives, whether through having a bank account, a mortgage, or insurance to protect you if something goes wrong with your car, your house, or your health. If there are issues with these services, it causes great harm, and not just for individual consumers but also for our wider society and economy.
Since the global financial crisis in 2008, Governments and regulators around the world have moved away from product-focused regulation and a buyer-beware approach and have started paying closer attention to the conduct and culture of financial institutions. In 2018, an Australian royal commission found serious and systemic misconduct in the banking and financial services industry in Australia. Subsequent reviews here in New Zealand by the Financial Markets Authority (FMA) and the Reserve Bank identified worrying weaknesses in the conduct and culture of banks and insurers on this side of the Tasman. These reviews identified failings such as poor systems for managing conduct risks, poor accountability for conduct, and sales incentives that put profits before people.
If these issues were ignored, they could have caused significant consumer harm and damaged confidence in our financial systems and markets. The COVID pandemic has further demonstrated how important it is for financial institutions to support consumers, especially those who find themselves in vulnerable circumstances.
The bill introduces a conduct-licensing regime for banks, insurers, and non-bank deposit takers. These financial institutions will be required to treat customers fairly, and that’s what’s known, of course, as the fair conduct principle. They will need to have fair conduct programmes in place that set out how they will comply with the fair conduct principle—in other words, what concrete actions they’ll take to treat their customers fairly. These programmes will cover a wide range of areas—for example, a financial institutions distribution arrangement, oversight of sales incentives, and training and management of employees. These programmes won’t be “set and forget”; they’ll be living documents that will require financial institutions to continually think about how to ensure fair outcomes for all consumers.
The regime also isn’t one-size-fits-all. In designing their fair conduct programmes, financial institutions will be able to take a proportionate approach, taking into account the size, nature, and complexity of their businesses. For example, the conduct programme of a credit union is expected to look different to the conduct programme of a large bank.
Financial institutions have generally supported the policy intent behind the bill, and their feedback has been taken into account throughout the development of the bill. A number of valuable changes were made by the Finance and Expenditure Committee, and we’ve since further amended the bill through a Supplementary Order Paper (SOP). These changes mean that the new regime will enable financial institutions to design processes which best fit their own business models whilst still upholding a high standard of conduct and consumer protection.
Financial institutions will need to apply for a conduct licence from the Financial Markets Authority, which will be supervising, monitoring, and enforcing the regime. Strong financial penalties will be imposed if a financial institution breaches one of its obligations under the bill. The FMA, of course, as members of this House know, is a risk-based regulator and will take a proportionate approach to guiding the sector and regulating compliance. The FMA, I’m informed, has already started engaging with financial institutions to ensure they’re prepared for the new regime and for licensing applications to open in mid-2023.
We’ll also be introducing some regulations to support the bill. The Government has already agreed that it is essential to ban incentives that are based on volume or value targets such as an overseas trip as a reward for selling a certain number or value of insurance policies. These kinds of incentives create a strong potential for conflict of interest, particularly as a person nears their sales target. The full regime is planned to come into force in early 2025 after a transitional period.
I do want to mention and acknowledge that the SOP that has been progressed through committee of the whole House has provided increased flexibility for agents, for those intermediaries, to be governed appropriately, and I do want to thank industry for their feedback on that. We do want this regime to be one that is suitable for implementation and one that has customer protection at its heart.
In closing, New Zealand has been an outlier internationally in not having a conduct regulation of banking and insurance services. The bill will fill that regulatory gap. It completes the Government’s response to misconduct issues in the banking and insurance sectors and it will ensure consumers are treated fairly when they deal with financial institutions. I’d like to thank again all of those who have had input into the development of the bill and helped it reach this stage. I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.
ANDREW BAYLY (National—Port Waikato): Yes, it’s my duty to talk on the third reading of the Financial Markets (Conduct of Institutions) Amendment Bill at its third reading, commonly referred to as the COFI bill. Unfortunately, National does not support and will not be supporting this bill. This is a bill that offers a solution looking for a problem. We don’t know what we’re trying to solve with this bill, and that is why National opposes this bill.
I think it’s useful to talk about the review last year that the Minister referred to, which was undertaken by the Financial Markets Authority (FMA) and the Reserve Bank. I actually sat on the select committee last year—I think it was last year—when the FMA and the Reserve Bank fronted up to the Finance and Expenditure Committee and talked about their big review that they’ve undertaken into the insurance and the banking sector. The broad conclusion was “We’ve found no systemic issues.”—right? That was the clear takeaway. But what happened—what happened? There were some examples. I was trying to talk about this last night with Mr Todd McClay, my good colleague here, and thinking how many banking and insurance transactions take place in New Zealand every year. I thought he said 4 billion last night, but I’m not sure. There must be billions of transactions that take place and sometimes people make some mistakes.
I’ll tell you who also makes mistakes: the Labour Party make mistakes. The Government makes mistakes, and sometimes they have to fix up legislation, particularly things like the Credit Contracts and Consumer Finance Act (CCCFA) amendments, which have caused such devastating impact on the financial sector.
Hon Dr David Clark: Point of order, Madam Speaker. Just seeking some guidance. The member is referring to a bill we’re not debating which his party voted for, and yet he is arguing now it was somehow a mistake. I wonder how he is allowed to continue to debate about a bill that’s not even in the House that his party voted for.
ASSISTANT SPEAKER (Hon Jenny Salesa): I will ask the member to continue his speech, and can I remind members that it is up to the Chair to decide whether or not a debate is actually relevant. But do come back to the bill please, Andrew Bayly.
ANDREW BAYLY: Just to respond to the Minister’s untimely and inappropriate interjection, as he knows, under the Standing Orders. The CCCFA bill is very, very related to this, and I will be talking about it extensively in a moment. But this bill creates a raft of new compliance on banks and insurance companies, and the issue is it talks about codes of compliance and it talks about codes of responsibility.
The issue, and the reason why I was talking about the infamous CCCFA, is that this Minister, because he’s so keen to introduce some legislation and, unfortunately, doesn’t have a good enough grasp of the financial sector, what has happened now is that if we talk about the group that is captured by this called regulated financial institutions—and, just to educate members on the other side, that includes banks, non-bank deposit takers, and also in the case of this bill it includes insurance companies. What it means under the CCCFA is that they have to prepare a code of conduct, and, of course, that is being administered by the Ministry of Business, Innovation and Employment (MBIE), and then we had the Commerce Commission last year scaring the bejesus out of directors and banks and insurance companies by wandering around saying, “If you do not comply with this, you will know that as a company, you’ll be fined $6 million, and then as a director, you’re up for hundreds of thousands in penalties.”
So that’s why we’ve stultified between 6 and 10 percent of loans that otherwise would have been approved last year up to 1 December which are no longer being approved. What this bill does is it creates another responsibility, another code, and this time is it going to be overseen by MBIE or the Commerce Commission? No—no. It’s going to be overseen by the FMA.
So here we are. I’m a director of a small bank—maybe Kiwibank, right—so who am I responsible to? Well, first of all, I’ve got the Reserve Bank breathing down my neck—and, by the way, most appropriately—to make sure I’m doing appropriate lending and all my prudential stuff and all that sort of stuff, and I’ve got all that compliance to do—good stuff. Then I’ve got this infamous CCCFA bill and the new code, so I’ve had to prepare that. I’m in the process of preparing that, about how I’m going to act as a bank or insurance company—how I’m going to act—and then I’ve going to make sure that MBIE and the Commerce Commission are happy with it. Then—oh, just a couple of months later—well, now I’ve got to do another code. I can’t take the same code; I’ve got to create a new one, and walk on down to the FMA and say, “Here’s my new code. Is it OK?” Now, you tell me, who’s got ultimate responsibility between MBIE and the Commerce Commission and the FMA under this bill? No one can say that.
What this Minister is doing is crippling the financial sector. We believe that banks and insurance companies should operate appropriately, and if they don’t, they should be subject to all the changes and all the duties and responsibilities and the penalties, and a lot of those are already covered. They’re already provided for—they’re already provided for. There are lots of fees and issues and compliance requirements, but this another layer put on top of those, and if you are a director, or even if you’re an executive—if you’re a CEO of a bank or in the senior management team—guess what! “Mr Stuart Smith, you’re the HR person today. Can you go out and hire a whole lot more people? Oh no, you can’t, because we haven’t got anyone to employ in New Zealand and we can’t bring in immigrants from overseas.” Well, maybe you could leave your job and go and get this, because I’m sure he’d be well paid. You would be spending all day long doing compliance.
Why can’t we just let the regulations that exist at the moment—there is no problem. There is no systemic issue. Why can’t you just look at those? If you want to beef them up, that’s fine. What the Minister could have done, if he’d been challenging of his officials, was he might have said, “Well, OK, what are the options other than passing this new bill? What are the options, officials?”, and they could have said, “Yes, improve the CCCFA. Let’s just tweak it a little bit more. Maybe there’s an area that we need to make sure in the code that covers this new bit.” The Minister might have said, “Hmm, that’s a pretty good idea. I quite like that.”
The other thing that the officials could have said is “Why don’t we beef up the Banking Ombudsman’s role? Why don’t we give her some more responsibility, more funding, and more powers?” That’s obvious—she’s already in place. Why not?
But what did the Labour Government come up with and what did this Minister come up with, who is just so desperate to put through legislation through this House? A brand new bill that will cost millions—millions—and guess who’s going to bear the brunt of that!
Hon Todd McClay: Who’s that?
ANDREW BAYLY: I’ll tell you. It’s going to be the first-time buyers, the ones who can’t get a loan—and they’re not going to bear it, are they? That means all the other mortgage holders, they’re all going to bear this because unless the Government is prepared to pick up the tab, what do you think that organisation is going to do? What are the insurers going to do—what are they going to do? All the international insurers in New Zealand, what are they going to do? Are they going to do New Zealand a favour and say, “We’ll bear that cost. We’ll bear that additional cost because we like what Labour’s doing to us.”?
I’ll tell you what: I think they might put up the prices. So, particularly, vulnerable people on fixed incomes—guess what’s going to happen to their insurance premiums! Their insurance premiums are going to go up. Now, tell me how that’s kind.
This is a very damaging, very poor piece of legislation, and one of the big things we’re going to have to do when we come into power—the first thing we’re going to have to do is learn to support our financial sector. We’re going to have to declutter this stuff so that people, banks, and insurance companies are accountable to make sure we’ve got the right framework. But what we’re not going to do is overladen them with a whole lot of compliance just for the hell of it so that the Minister can put a new piece of legislation through the House and look good. It’s not looking good, it’s a waste of time, and we’re going to oppose it.
BARBARA EDMONDS (Labour—Mana): Thank you, Madam Speaker. It’s always quite difficult to go after a speech that is loud in volume but not loud in solution. Andrew Bayly, the National member who’s just sat down, said that this bill is a solution looking for a problem. So let me set out in the third reading of this bill what the problems are that this bill is trying to solve, because, unlike the other side of the House, the Labour Party stands up for consumers. It stands up for those small people who are consumers being sold insurance policies that they are ineligible to claim upon. We stand up for those customers who have sales incentives that lead them to being sold products that they don’t need or that don’t suit them. We stand up for life insurance customers who’ve been churned from one policy to another policy, which can result in a loss of their cover. We stand up for people and consumers where there is poor accountability in the financial institutions in which they invest their money. That is what the Labour Party and what this side of the House is standing up for.
If the other side of the House doesn’t believe us, then have a look at a couple of the reviews that actually said there are problems here. The Financial Markets Authority (FMA) and the Reserve Bank conduct and culture reviews identified evidence of poor conduct but, more broadly, serious risks and regulatory gaps in our financial system. Again, if you don’t believe the Reserve Bank and if you don’t believe the Financial Markets Authority, how about you believe the International Monetary Fund?
The International Monetary Fund said they identified gaps in our regulatory system in the way that our insurers conduct themselves and it recommended that we fill those gaps, and that’s exactly what the Minister said in his speech. New Zealand has been an outlier internationally—an outlier internationally—in not having conduct regulation of banking and insurance services. Again, this bill will fill that gap.
It’s unfortunate. The member on the other side of the House who said that he sat and he listened and he was vigorous in his contribution and interactions as part of this bill process—well, unfortunately, he failed to listen to the committee of the whole House debate, where the Minister clearly outlined that a small sample was taken by the FMA and the Reserve Bank and that there are about 10 insurers with a total remediation of $1.4 million. Now, $1.4 million may not be an issue for Andrew Bayly, but it is for consumers. It is for the working people of New Zealand, so that’s why this side of the House is filling that regulatory gap. That’s why this side of the House agrees with the International Monetary Fund that we are an outlier and there is regulation that needs to be filled, and so are coming up with solutions.
Again, if the members on the other side of the House actually paid attention and looked at the bill, they would notice that there is one very clear safety gap, and it was a small change made by the Finance and Expenditure Committee, which was to have a statutory review in five years’ time. So, therefore, whenever they decide to come back into Government and whenever they decide to unpick a whole lot of changes that are about consumer protection, wait for the five years after this bill has been passed, wait for that statutory review, because the Financial Markets Authority, the Reserve Bank, and the International Monetary Fund all believe there’s a gap. They all believe that this needs to be changed. This side of the House is committed to consumer protection, and therefore I commend this bill to the House.
Hon TODD McCLAY (National—Rotorua): Kris Faafoi, as a Minister, started this many, many years ago, and today, as a formerly hard-working constituent MP for Mana, he is retiring. Can I say to that member Barbara Edmonds that she should be as hard-working as he was and retire as well, because that was an appalling speech. All that we actually see from the Government is a desire from Government backbench MPs to read their notes, but not to actually have any understanding of what it means. That member said that the Labour Party stands up for consumers, but she forgot to say “by making everything more expensive”, and that’s the problem here.
The Financial Markets Authority (FMA) and the Reserve Bank did do an investigation. They did not find systemic problems in this area in New Zealand. They said that there are things that might be or could be addressed, but they didn’t say that there is a huge gap that insurance companies and banks and others are taking advantage of and that there are consumers up and down New Zealand who are being ripped off. But I tell you where they are being ripped off, again and again and again: it’s by this Government, who believes that the very best way to show that they are hard-working is to pass more rules and more regulations that cost money that are passed on to those consumers.
If you think about that Credit Contracts and Consumer Finance Act (CCCFA) legislation—and this same Minister stood in this House last year and gave an absolute guarantee and assurance that the legislation was necessary and needed and that it would protect the consumer and it would make sure that lenders weren’t taking advantage of them all up and down the country—well, actually, it’s the Government that’s taking advantage of them with that legislation, because that Minister was wrong, and we find now that the banks and others and the lenders have had to interpret the Government’s desire to make the consumers safer when they want to borrow, and guess what! So many of them are not getting to borrow any more in New Zealand because the legislation the Minister stood behind and said was good and wouldn’t harm has meant that banks have got to go and have a look and see whether people are buying fish and chips, we even find, and can they afford that mortgage? Mortgages they could have afforded before they no longer get loans for, and they don’t get their homes.
Hon Dr David Clark: What about this bill?
Hon TODD McCLAY: I think this legislation is exactly the same. The members opposite say, “What about this bill?” Well, we just heard the Minister in every stage of this legislation, supported by backbench MPs who are reading their notes, saying that this is necessary.
The Minister just days ago in this House gave examples of insurance companies selling insurance policies and taking premiums for people who were not alive. That’s fraudulent. It’s already illegal in New Zealand—you can’t act fraudulently. We have laws everywhere to deal with this. This legislation doesn’t fix that. You can’t make something that’s already fraudulent more fraudulent. All you do by creating more legislation and more regulation is add costs up and down the country.
I do want to say, though, to the Minister that he is working very, very hard. He is bringing a lot of legislation to the House, but bringing in more legislation doesn’t mean you’re doing your job properly. The Hon Dr David “Red Tape” Clark is actually a moniker that he will develop and get because he brings red tape and regulation again and again and again, and it is not free. It does actually cost, and it is costing the consumer.
Actually, if you think about it, we just had debates throughout New Zealand about the cost of living, and everything the Government is involved in costs more, from food to petrol, to rent, to mortgages, and to insurance, and in this case it makes it worse, not better. Now, if the Minister came here and said there are systemic problems in New Zealand, as they have found in other parts of the world—in Australia—and we have huge numbers of New Zealanders that have been taken advantage of and we’re going to change this, there will be a saving for them, and, actually, products that they rely upon will be cheaper, well then, that would be a good thing. But I’m not sure there’s a single thing this Minister or this Government has done in 4½ years in passing legislation that has made it cheaper for the consumer, and this certainly won’t do that.
All you’ve got to do is go and talk to the banks themselves, the businesses around the country, and, actually, everyday consumers who want to do things, about where their greatest grievance is, and it’s always more and more regulation. You see, if you focus on solving a problem and hold those to account that are causing the problem, well, that’s one thing. But, actually, this is a burden that is placed upon every single institution in New Zealand, and there is a cost to that. There will be institutions that don’t come anywhere near the issue that the Minister is trying to solve, and it’s not overly apparent that it is a big problem in New Zealand, but if all you’re doing is creating legislation and bureaucracy and red tape which means they employ more people and they take more time away from being productive, and you don’t actually solve a problem because there wasn’t a big one there to start with, there is cost.
Members opposite say, “Well, actually, it doesn’t matter about that.”, but all they’ve got to do is go and have a little look at what’s happening around consumer confidence in New Zealand, and, actually, the number one issue at the moment, which is the cost of living for almost every single household. They don’t realise that it’s legislation like this, as well meaning as it seems, that is part of the reason that everything—everything—has become more expensive in New Zealand.
Minister, you didn’t give good examples of what the actual problem was. You talked a lot about overseas, previously, and you talked a lot about Australia and you said that there had been investigations everywhere. But the Reserve Bank and the FMA did not find a systemic problem. They did not say that, actually, there is a huge issue here in New Zealand. It’s not so much that this is a solution looking for a problem; this is a Government looking for things to do so that they seem to be busy and doing things, but more government is not always good government, because it comes at a cost.
We are opposing this for the same reason, actually, I believe, we should have opposed the CCCFA. We shouldn’t have taken the Minister at his word that it was a good piece of legislation and it would help. We shouldn’t have taken him at his word when he said that it would only focus on the parts of the industry that were harming people, because it has done a lot of harm across New Zealand to many people who now find either they actually can’t get the bank loans they need, or the cost of those bank loans has gone up because of the long bureaucratic processes and information they must provide for the banks to make decisions that were easy previously, and I fear this will be exactly the same thing.
So when consumers call up the financial institution, their banks, or the insurance company and say, “I want a new piece of insurance, please, Mr Insurance Co.”, well, the cost is going to be greater once this legislation enters into force than it was before this Government started this process, and the reason for that is that there is extra cost being placed upon business and it always gets passed on to the consumer. It’s never the Government that meets it; it’s passed on to the consumer.
Finally, in respect of this, I would ask the Minister, actually—and the last speaker said it—not to rely upon a revision clause you put in legislation in five years’ time, because, actually, it will be too late in five years’ time to reimburse the extra cost that’s been placed upon the consumer as a result of this. There is always in good legislation the opportunity to do a review at a point in the future. But we shouldn’t say, “Well, actually, there’s no systemic problem here. We’re not like other parts of the world. We haven’t really identified, actually, much challenge. There will be people acting fraudulently, but, guess what! That’s already covered by law in New Zealand. So we’re going to create a whole lot more regulation and cost to place on the consumer and take time away from our financial institutions from being productive—because productive institutions work well and don’t have unnecessary costs that have to be passed on—and say, ‘But don’t worry, if we’ve got it wrong, we’ll go back and review it in five years’ time.’ ”
Well, with the CCCFA legislation, the Minister has already said that there’s going to have to be some changes. It’s not five years later; it’s not even a year later, and the Minister actually should be getting these through the House as quickly as he can and not taking his time, because every single day, people that want to borrow and who can afford those loans are finding it more difficult than they should or more costly than it needs to be to get their loan, and, sadly—as far as this legislation’s concerned; as well meaning as it is—the same will be the case. There’s extra cost without any real, clear benefit for the consumer.
Governments have to legislate—we get that—but Governments should do less, not more, and, actually, in this case, they are doing not less, but more cost upon the consumer. We’ll see much more of this.
GREG O’CONNOR (Labour—Ōhāriu): It’s very serendipitous that this bill is coming for its third reading today. I welcome the gallery full of, I presume, many people from the Mana electorate, who will very proudly know that it was Kris Faafoi, their MP before the current MP Barbara Edmonds, who actually brought this bill to the House. I think on the day of his valedictory, it is incredibly serendipitous that it is going through the House because this bill is about looking after those who are preyed on by institutions.
Those of us who have electorates know, and most people here have an office somewhere where, often, we have people who have come in who have found themselves in incredible financial situations, and you don’t need to dig very deep to work out many of them are paying for products they simply don’t need. They were people who, when they were confronted by someone selling them a product, whether it be a relatively low-cost insurance one, right up through to perhaps a loan that they could have actually got the money elsewhere. They are the people who do need some protection.
Banks are very powerful institutions, in particular. In fact, they are such powerful institutions that they have had to be secured and saved many times in history, with the most recent time in 2008, when most of them nationalised their debts, because had they been let go, we would have been in the 1929 situation. So what did the world do? The world printed lots of money to give to the banks so they could keep operating. Now, that would have been a good way if that had been in some way returned to the public, but all that happened was that money then was spent on houses and other things that we’re now paying the price of.
So the world does need protection—people do need protection—from these institutions. They are not bad people. I know a lot of people who work in the financial world, and they’re not bad people. They’re doing the job they’re incentivised to do, and that’s what this bill is about: making sure we don’t provide perverse and wrong incentives to people to actually force them, often against their will, but because they need to make a living, to prey on people who are the most vulnerable. That’s what this bill is about. It’s just ensuring that people who trust those who come in, and there are people who trust those who come in with a degree who, basically, come from another side of town than they do, and actually they don’t have really the wherewithal or the ability to stand up—and they end up signing on the dotted line, and that’s why we need a bill like this. In fact, some of the people whom this is giving protection to are those who will have been forced as part of their living to actually sell these products.
It’s quite interesting. The previous speaker Todd McClay talked about “We don’t need this in New Zealand. A lot of the talk about this came from what happened in Australia.” Well, when we start comparing ourselves with Australia, yes, like with many things, we weren’t as bad as the Aussies, but boy, that doesn’t make us good. It just meant that, actually, we may not have needed quite the heavy fix that the Aussies needed, and they did need a heavy fix as a result of their commission of inquiry. Anyone who wants some good bedtime reading, read that commission of inquiry and you’ll find out what goes wrong when you actually end up with the institutions running the manor.
Sorry, Mr Faafoi—
Hon Kris Faafoi: No, no—no, no.
GREG O’CONNOR: —I’m on a roll. Mr Faafoi was a whip in this House when I first arrived, and the whips, for those who don’t know, have ultimate power in this House. When they stand up and say, “shut up”, you shut up. But Mr Faafoi, you’re on your last day—I’m going to talk for another 10 minutes, and you’re going to stop me. As they always say, “Once a whip, always a whip.”
Anyway, I think I’ve forcibly made my point that, yes, there is absolutely a need for this legislation. Yes, as a dying legacy of this member who is actually leaving here today, if he can be proud of the many things he has done here, he can leave and know that he’s done his electorate people proud, who need protection from those from financial institutions who prey, willingly or not, on them.
RICARDO MENÉNDEZ MARCH (Green) (remote): Tēnā koe, Madam Speaker. I’m speaking on behalf of the Green Party in the third reading of the Financial Markets (Conduct of Institutions) Amendment Bill. Like many other speakers, I want to acknowledge the long journey that this bill has had of almost three years, and acknowledge former Minister of Commerce and Consumer Affairs Kris Faafoi, who is, I believe, sitting in the House—I can see him, I think, via the Zoom screen. Just wishing the member well, and good on him for taking some time to be with his whānau.
During this debate, I’ve heard the previous National Party speaker Todd McClay berating his Labour counterparts for just taking time to read off their notes. I just want to say that I am deeply impressed as well at the National Party members being able to fill 10 minutes of time talking about many things, but not a lot to do with the bill.
The bill itself is just creating a licensing regime for banks, insurers, and non-bank deposit takers in respect to their general conduct, including aspects of how they design and offer sales incentives. It will also make licensed entities accountable for non-advised sales by intermediaries, and prohibits sales incentives based on volume or value sales targets.
Like other speakers said, there were issues identified overseas on the operations of banks, and we’ve been called out by many institutions by the lack of regulations that we have in this area, so I do think it is timely that we move on to introduce some of these regulations. I don’t think we need to be waiting for things to go catastrophically wrong to put in place regulations when overseas examples exist of banks going awry, and the member Greg O’Connor touched on some of those examples.
So the Green Party does support having a transparent and well-regulated and accountable financial services sector. I think this bill goes some way towards that. If the previous National Party speaker ends up being correct and there are some unintended consequences from this bill, I trust the Government will promptly go back and fine-tune those issues that may arise. But having read the Finance and Expenditure Committee’s report, I think, if anything, there was plenty of collaboration going into producing amendments that would make this bill as constructive as possible, so I hope that there will be none of those issues that the National Party member was speaking of.
Ultimately, I think banks as an institution do need regulation. They are massively powerful entities and, again, I think it is time that New Zealand has proper regulations on this issue. So we’re happy to commend this bill to the House. Thank you.
ASSISTANT SPEAKER (Hon Jenny Salesa): Before I call the next speaker, I’d like to acknowledge and thank the Hon Kris Faafoi, our friend and colleague. We will really miss you from this House.
DAMIEN SMITH (ACT): Thank you, Madam Speaker. On behalf of the ACT Party of New Zealand, New Zealand’s fastest-growing party, we’d like to thank Minister Faafoi for all his service and wish him the best with the next stage of his life and enjoying his family.
We will keep this short. We’re not here to ostracise the bill itself. Some of it is laudable, but it sort of misses the target. There’s a lack of clarity around this bill, which I think needed to be required, and this uncertainty comes at a time when institutions are already trying to adapt to other financial services legislation, and it did bring into question the ACT Party’s supporting this bill because of its fitness for purpose.
Bad behaviour is the intended target of this bill, but it’s not to be fixed by regulations. If one financial institution is behaving badly, consumers will move away from that and they’ll go to an institution that provides a better service, and this competition would be a far better way to address bad behaviour than imposing a sort of vague requirement to have a fair conduct policy. So the problems identified by the Ministry of Business, Innovation and Employment, I think, have been overblown. The problems around incentives in this country are not the same issues you have in the United States model, and the issue of functioning in the free market should be that greater competition and other methods that are proposed in this bill should have been allowed to take over and regulate that.
The one final issue that we had in the bill which we think still hasn’t been got right is that the regulatory perimeter should not have been based on licences issued by the Reserve Bank of New Zealand. Accordingly, setting the regulatory perimeter of the bill is based on a licence. It does not relate to the activities the bill intends to relieve, so it’s not actually logical, and it has caught in its net non-bank deposit lenders and a vast majority of financial institutions that have not had anything to do with deposit-taking, or if they have had to do with deposit-taking, they’ve put at the centre of their business models the treatment of customers fairly.
I reiterate my passion and belief that business societies and credit unions should have been exempted from this and that we must address this issue to help society, especially in the metro areas and in the regional areas of New Zealand. So ACT opposes this bill, but it could have been something that we may have supported.
INGRID LEARY (Labour—Taieri): Thank you, Mr Speaker. It’s a little daunting standing up with this many people in the gallery, who have probably not come to listen to the legislative statement or the debates on the Financial Markets (Conduct of Institutions) Amendment Bill. However, it is a testament to my friend and colleague the Hon Kris Faafoi that the place is so full both with colleagues and with people in the gallery. So if you will indulge me, Mr Speaker, I’d just like to refer to the ministerial portfolios that the Minister has held because, indeed, this piece of work is a legacy piece of work from that Minister, who has been Minister of Justice, Minister of Commerce, Broadcasting and Media, Minister of Immigration, Minister of Commerce and Consumer Affairs, Minister of Government Digital Services, Minister of Civil Defence, and Minister of Customs. He’s the former MP for Mana. He’s a fantastic father, which I think is why he’s leaving us, and we found out last night he’s also an excellent karaoke singer.
However, to much more riveting things—back to this bill. Seriously, what we’ve heard today is a bit of an argument about what is the problem we’re trying to solve, and members of the Opposition would say that there is no problem. But, actually, I’ve spoken before in this House about the New Zealand Credit Union credit care service and my constituent, John Cavanagh. He’s a 73-year-old from Milton who for 40 years paid into an insurance scheme which, very sadly, closed last year, and his payout from that scheme—because he was over the age of 73, he was given $50 compensation. Now, that was a funeral insurance scheme. It was designed for people to receive $10,000 cover so that they could do the right thing by their friends and whānau and leave something so that their funerals were taken care of, but, sadly, there was falling membership and increasing payouts. Now, that is something that was entirely predictable, if I can say so. But there was nobody there looking over the sector to see that something like this would happen, and people like John Cavanagh got a measly $50 payout after contributing to that scheme for 40 years. That is simply unacceptable. That is a real problem, and the problem is because there hasn’t been regulation.
Now, this Government doesn’t take regulation lightly. We know that with policy responses, the common saying is that there are carrots, sticks, and sermons. Sermons haven’t worked with this sector and incentives don’t work with the sector, and certainly in the regulatory statement, the officials have said there is “strong evidence of conduct risks and issues”. There have been several “thematic reports into bank incentives and soft commissions in the life and health insurance industry.”, and there is plenty of evidence to show that this is a problem and it requires regulation. It requires the sticks in order to make sure that people like John Cavanagh of my electorate and many others in his situation in the South are not ripped off, either intentionally or just through simply an insurance scheme that didn’t quite work.
When we look at intentionality, we’ve heard today in the House that there are incentives for some insurance brokers where, if they can get 10 people to get over the line with purchasing insurance, they might get, say, a trip to Hawaii or another incentive. That is not something that should be encouraged. If it is encouraged, then it should be clear to the consumers so they know what is motivating the person who is saying that they are acting in their best interests.
All of this is about levelling the playing field, and I have to say that my good friend and colleague the Hon Dr David Clark, who has taken over shepherding this bill, has put in several pieces of legislation. As the Opposition has quite rightly said, he has been very busy, and that is because we believe in competition and we believe in protecting the rights of consumers so that we can level the playing field and have some equity in our financial services. It’s not just about doing the right thing; it is also about financial stability, because without that equity in the finance system, there can be instability.
So I’m really pleased that the people in the gallery have stayed to listen to this really important debate on the conduct of financial institutions. Once again—being maybe the last speaker before we go to the valedictory—I’d just like to acknowledge my friend and colleague the Hon Kris Faafoi and wish him really well on his journey. With that, I commend this bill to the House.
STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. As there is a bit of time, I won’t steal your thunder, Mr Faafoi, but, look, it gives me great pleasure to speak on the Financial Markets (Conduct of Institutions) Amendment Bill.
The fact is that Labour loves red tape, and that’s what this bill is all about. The Hon Jacqui Dean went around the country talking to people about red tape. She was overwhelmed by people talking to her about red tape and what we don’t want. What’s the sand in the gears of the economy? It is red tape, and that’s what this bill is all about.
We’ve got this on top of the Credit Contracts and Consumer Finance Act. As my colleague Andrew Bayly said earlier in the day, 6 percent to 10 percent of loans didn’t go ahead because of the effects of that particular Act. We’re going to see a similar impact from this sort of thing, as well. It’s well-intentioned, but good intentions are really not enough.
There has to be a much better effort from the Government to actually not bring in unnecessary laws such as this one. We oppose it. We are actually a party that stands for smooth and necessary regulations, not unnecessary ones.
SPEAKER: Order! This debate is interrupted and set down for resumption next sitting day.
Debate interrupted.
Valedictory Statements
Valedictory Statements
SPEAKER: Members, I’ll indicate now that at the conclusion of the Hon Kris Faafoi’s valedictory, the House will adjourn until 2 p.m. on Tuesday, 28 June 2022, so I don’t have to interrupt the commiserations or the celebrations that occur when his speech ends. I call on the Hon Kris Faafoi to make his valedictory statement.
Hon KRIS FAAFOI (Labour): Mālō ni, Mr Speaker. The beginning, they say, is a very good place to start, and there was a moment in the Mana by-election back in late 2010 when I knew that politics was going to be a great mixture of challenge and fun. My National Party opponent was the Hon Hekia Parata—and can I acknowledge her and the late Sir Wira Gardiner. During that campaign, Hekia and I were being labelled as carpetbaggers—outsiders being choppered in to run in an electorate. It was not unfair!
To make this point, during a debate in Cannons Creek, some clever bastard decided to ask every candidate, “How much time have you actually spent investing in our community?” I fluffed through an answer that would have the current Kris Faafoi with his face in his hands. Then the microphone was passed to the Aotearoa Legalise Cannabis candidate, Julian Crawford, who gave one of the best answers I have seen at a local debate: “Well, actually,” he said, “with certainty I’ve invested 120 hours of my life in this community.”
And what a community Mana is, now in the hands of my friend, the amazing and talented Barbara Edmonds, who has a long future in that seat, and I am sure she will make a massive contribution to the country during her tenure. From Linden, in the south, encompassing all of Porirua, and stretching north to take in the southern part of Kāpiti, I was honoured to spend 10 years representing the people of Mana. I love and miss seeing those people on a daily basis.
Can I thank those people who sat on our local electorate committee during my time: Lynne Renouf; John Grundy; Jenny Dawson and her husband, Jim McAloon; Ken Douglas; Phil Major; Sheryn Elborn; Mark James; and many more. I also want to thank those who helped me at the very outset: Shane Laulu, Litea Ah Hoi, the late Murdo MacMillan, our Wellington power-broker Paul Tolich, and John Ryall. John, I know you’re going through health challenges; the Labour whānau sends our love to you and yours.
I also want to mark a very special community leader in Porirua East: the late Reverend Perema Leasi. He was a staunch supporter for more quality social housing, especially on a piece of land that stood vacant for nearly a decade, on what is known locally as the Castor Loop. I’m proud that a Labour Government delivered that, but also sad that Perema was not there to see those families move into those homes. His daughter Brenda is with us today. To Brenda and family: you know how much we loved your dad. He has left a legacy.
Politics is a funny business. I never thought, when I first walked on to this precinct as a junior journalist running errands for Duncan Garner and Mark Sainsbury, that I’d be an MP, let alone sit around the Cabinet table. So I want to acknowledge Phil Goff, our former leader, who hired me in his media team. I also served a short stint as his chief press secretary. When preparing for a media interview, Phil, without fail, would ask, “Yeah—now, what I really need is everything on that topic.”
On one occasion, The Herald on Sunday wanted to do a colour piece on Phil. True to form, the words came: “Yeah—now, what I need is everything on …”, and I cheekily fired back “Phil Goff?” There was a moment of silence, some awkwardness, and, as everyone who knows Phil, raucous laughter. I survived that. Who knows what would’ve happened if I hadn’t. Some of my friends from that office are still around: the Prime Minister’s Chief of Staff, Raj Nahna; Richard Trow; our pollster, David Talbot; and Philippa Bell, just to name a few. And I can’t not thank my friend Gordon Jon Thompson. Before the meeting when Phil and Annette sounded me out about running for Parliament, I asked GJ what the meeting was about. With a shrewd grin, he told me, “I don’t know, but whatever they ask, say no.” Also, to John Harvey, I haven’t seen you in a while, Harv, but I think of you lots. Thanks for supporting me.
That brings me to John’s old boss and co-conspirator, the Hon Dame Annette King. Annette’s role in keeping this party together needs recognition. In Opposition, there was no better camp mother than Annette King. She would dish out political, financial, relationship, career, and dental advice to those who did and did not seek it. I spent many an occasion receiving wisdom from her as she read Official Information Act requests, wrote written questions, prepared oral questions, and played Candy Crush all at the same time. Annette and Ray, thank you; you’ve given my family so much love. On behalf of Mae and I and the boys, we love you.
Friends away from politics also need to be thanked for letting me know when my head needed to be removed from my backside after spending too much time around this place. My mates Ricky Winter, Vincent Foleni, and Joseph Tulia and their wonderful partners are in the gallery today. Thanks, lads, and to all the boys from Christchurch: go the Crusaders. We are Rowley for life. I can say that now!
To Eleisha McNeill, Andrew and Jenny Frazer, also our old St Austell Close neighbours—Adam, Nadia, Mitch, Phil, Deano and the crew—thanks for keeping an eye on Mae and the boys, especially when Theo was young and not well. Mischa and Dixon, thanks for your friendship in Greytown. And in Tītahi Bay, the Dawsons, Glen Timihou, the crew at the RSA, the bowling club, the surf club—which all had bars—and Kerry Delaney all need thanking.
Politics is hard, and it’s not the easiest place to make friends, but by osmosis that does happen. Some special mentions need to be made: first, to my mate Clayton Cosgrove. You’re as loyal as the day is long. You don’t suffer fools, and we’ve passed judgment together on a number of them. As whip, I could never find you when you were on House roster, so it’s wonderful to see you in the House today. I apologise for spreading that rumour that you were going into business with a certain former colleague of ours, but Woodsy put me up to it.
To Grant Robertson, I struggle to put into words how much I’ve appreciated your wealth of wisdom, compassion, intelligence, and judgment. I will miss having you in my life on a regular basis. You are our Cullen.
To my office neighbour for the last few years, Damien O’Connor, thanks for your direct and friendly wisdom and advice. Same to you, Stu—love to you and Sarah. And to the Rt Rev Hon Dr David Clark, you’ve been a great and true friend.
To Andrew Little, you rebuilt our caucus after 2014. It was not in a good way, and history needs to know that while that rebuild may not have shown in the polls, you need credit for getting the party to where it needed to be. To other friends who went through those tough times—Carmel, Chippy, Peeni, Kelvin, Jenny, Parker, yourself, Mr Speaker, and others—go well. McAnulty, it’s good to see you in a ministry.
To my mates to my right. Megan, I will miss our chat times. You have kept me sane and grounded in this weird and wonderful place. I will not miss your constant jibes and willingness to tell anyone that I am the only Pacific Islander alive that is allergic to seafood. You’ve been my best mate, and the friendship I know will endure.
To my Pacific caucus colleagues, fakafetai lahi lele. Our Pacific caucus shows the connection that Labour has to our Pacific community. I’m not sure when we’ll get another Tokelauan, but we will, and I’m sure Anahila will be there to take a selfie.
Prime Minister, can I thank you. You are world class. While many of us were part of the Government that implemented our response to COVID, you led it. You stayed ahead of its curve, understood its threat, and took the country with us. We are, unfortunately, seeing every day families suffering loss from Omicron. However, there are people alive today because of you Prime Minister. You took in expert advice, trusted the science, and led brave and difficult decisions.
Prime Minister, I have had one outstanding issue, though, since Pasifika in 2012. I know you remember. I said I’d donate $500 to your campaign if you got up and danced on stage with a group. I never thought you’d do it, and you did. Prime Minister, I know it’s been 10 years, but earlier this week I donated $500 to the Mt Albert Labour electorate committee. That’s the receipt. I thought about adjusting it for inflation, but—ha, ha!
PM, my final note to you is to say it was a deep honour to accompany you on our visit to Tokelau. It meant so much to the people on the islands and here at home. The time on the HMNZS Otago will have to go down as a highlight of my last five years. Prime Minister, the experience of going back to the place my mother and father were born and raised meant so much, and to do it accompanying you as our PM was next level. You took the climate change concerns of young children in Tokelau and amplified them in the United Nations General Assembly. Jacinda, I will miss being part of your team. Lots of love to you and to Clarke.
It’s obvious that being a Minister is massive privilege, but it’s a responsibility that arrives with a force. Back in 2017, I was still sitting amongst moving boxes in the first 24 hours of Government when then Civil Defence Director Sarah Stuart-Black—or Norm, as we know her—and the ever ready Civil Defence Private Secretary Stefan Weir arrived and—excuse my French, Mr Speaker—scared the shit out of me. One minute I was stressing about cardboard boxes, the next minute two strangers calling me Minister were telling me that “if the ‘big one’ happens, we’re coming to get you wherever you are, whatever you’re doing.” I want to acknowledge the emergency management sector—you are all great people. I’m proud of the work this Government has done to reform and resource emergency management.
The changes and responses that the Government made in the commerce space I am also proud of. From introducing market studies, cracking down on loan sharks, and better ensuring financial advice suits consumers. I thoroughly enjoyed engaging with everyone in that sector, especially as we all banded together when COVID hit.
Immigration, at the best of times, is always a challenging portfolio. I don’t wish the circumstances of the last two years on any other immigration Minister. Closing our border was the right thing to do; it kept New Zealand safe. But it created difficulties, and very few, if any, levers that didn’t pose heightened COVID risk. I am proud of the 2021 residence visa, our rebalance, and our response to the humanitarian crises in Afghanistan and in the Ukraine. I’d also like to thank the hort sector for the way we have engaged over the last two years. Yes, it was difficult at times, but it was also respectful.
I want to wish my colleague Willie Jackson all the best as he steers a new public media entity towards its new journey. It’s been a piece of work that I am proud of and must be done. To the naysayers on both left and right: you need to get with the times. You also need to realise that public media is for all the public, and not just those who like to listen to the conundrum. The real conundrum is this: if public media doesn’t change, the very people who need trusted sources of news, information, and their identity won’t have it available to them as previous generations have. We know that right now those audiences are not engaging with public media. In the new future, the orchestra, the opera, Ōtara, and Oxford, will all be at home on the platforms of the new media entity.
One of my favourite experiences in that broadcasting portfolio was a Friday afternoon visit to offices of New Zealand Media and Entertainment in Auckland. I was given a tour of the newsroom and then found myself in the Radio Hauraki office at happy hour. After obliging an offer of an ice-cold Wakachangi beer, I was invited into the studio and offered another ice-cold beer, which I must admit was going down very well after a busy week. They gave me a guitar to take part in an on-air competition which, unbeknown to me, was won by an old school friend in Christchurch. But my most vivid memory was of the immense unease of my broadcasting private secretary, feeling like she was losing control of the situation and of her Minister. I left after the second Wakachangi despite being offered a third.
Right. The final stretch—more thankyous. To all my former electorate office staff: special mention to Geoff Hayward, Naomi Siania, Brenda Leasi, Maryke Barnard. To all the amazing private secretaries who we’ve had the pleasure of working with over the last five years: we have been blessed with the Public Service’s best—you are all amazing. To the political staff, past and present—to Esther, Lindsay, Peter Stevens, Kurt McLauchlan somehow snuck on to the list, as has Sally Page, Maryke Barnard again, and more recently, the talented Tabitha McMaster, Alexi Grimstrupp, and Jo Ramsay. Thank you and sorry for when I forgot to, or wilfully didn’t take, your wise counsel. To my long-serving electorate office extraordinaire and senior private secretary Miranda Livapulu. Miranda, you’ve put up with me for 10 years, and I think I saw a hint of relief last Monday when I announced my resignation. Love to you and to Don and your amazing kids.
To Matt Swann and James Baigent, two of the best men an MP could ever hope for. From young members, campaign powerhouses, MP’s support and then ministerial advisers—your enthusiasm during street corner meetings, sign waving, putting up election signs, and sausage sizzles was epic. On one day of campaigning, I recall there being at least a dozen sausage sizzles that we had come into close contact with. As the day wore on, we had dutifully, and increasingly reluctantly, purchased the small goods in support of good causes. Early that evening, we thought we were done, until we pulled up to Pak ’N Save Porirua and right in front of our carpark was sausage sizzle No. 13. What happened next was pure campaign farce, as I looked back at them and said, “Which one of you bastards is eating this sausage?” Matt, you were a great executive assistant and, James, the last three years having you as my ministerial adviser has been one of the pleasures of being a Minister.
To my family, to my siblings Lance, Jason, and Maria, and your amazing families, your children Charlie and Jess, your partner Denzel, and your beautiful daughter, my grand-niece Lauryn, you’ve always been there to support me—thank you.
To Mum, I love you. My mum is a habitual watcher of Parliament TV. If I was absent from the House during question time, it would be not uncommon to get a text from Mum: “Where are you?” And if I got told off by the Speaker, Mum might message: “What did you say?”—sorry, Mum.
We lost Dad in 2013. We miss him every day. It would have been great to lean on him for advice, especially in the last five years.
To my, hopefully, soon to be in-laws, Chris and Christine, Emma and George, Sam and Maggie, thank you for being so loving and supportive of us. George and Emma, you are a wonderful uncle and auntie, and Chris and Christine, you are a wonderful Nannee and Tramps to the boys. Your home in Pohangina has been an awesome place to get away from politics, and we look forward to spending more time on the farm.
To George, Fred, and Theo, three young men I love so much, I hope the excitement of being around me doesn’t rub off too quickly—I don’t hold out much hope. I am so proud of you. George, you’re an amazing young man. George wrote me a note the day after the 2017 election. It said, “Hard luck, Dad—you still have the specials.” George was right—the specials came through. Thank you, George.
Fred, I love you so much. You were the first person to text when the PM announced my leaving politics. You said, “Congratulations, Dad. Love you”. Fred, your dad was so nervous at that moment, but you cut through all of that. You reinforced that I’d made the right decision—thank you.
To Theo, happy birthday for yesterday! You are five. School is cool, and so are you. I have threatened that I will come to school every day with you as my new job, but I promise I won’t do that.
George, Fred, and Theo, you are a wonderful reason to make this hard decision to leave politics.
To Mae, you are an amazing and wonderful mum to Theo, and step-mum to George and Fred. Your support over the last eight years has been massive. This year, we were meant to get married; COVID got in the way. Let’s do that soon. I’ll be home more now and I’m worried that you will change your mind. If you marry me, I promise I will stop calling our joint account “the flat account”.
Well, that is it. A few final thanks. To VIP, thank you so much for looking after us. You see every side of the ministerial life, but especially you look after our families. That has meant so much. I’ve enjoyed our journeys and chats to escape politics.
To everyone in this building that make things tick, who protect us, feed us, and fix the things we break; to the Clerk’s Office, the House staff, and the Cabinet office. To our parliamentary rugby team and cricket team, thanks for the good times—Bish, good luck for the next couple of days. To all MPs in this House, thank you. It’s been fun, fierce, and fair. To all my Labour colleagues, you are my tribe and I wish you all the best. It has been a roller coaster ride, an honour, and a privilege, and I look forward to new beginnings and am thankful for the experiences of serving in New Zealand’s Parliament.
I’m not sure if my mate from the Legalise Cannabis Party has done any more community service. But, as I finish today, I have calculated that I served 105,233 hours in this House and to the Labour Party, and during that time, even the bad times were good.
To all, have a Happy Matariki. Fakafetai, fakafetai, fakafetai lahi lele. Thank you.
Waiata
The House adjourned at 4.58 p.m.