Thursday, 22 September 2022
Volume 762
Sitting date: 22 September 2022
THURSDAY, 22 SEPTEMBER 2022
THURSDAY, 22 SEPTEMBER 2022
The Speaker took the Chair at 2 p.m.
karakia/prayers
karakia/prayers
GREG O’CONNOR (Deputy Speaker): Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom, justice, mercy, and humility for the welfare and peace of New Zealand. Amen.
Motions
Māori Fisheries Settlement—30th Anniversary
RINO TIRIKATENE (Labour—Te Tai Tonga): I seek leave to move a motion without notice and without debate on the 30th anniversary of the Māori Fisheries Settlement.
SPEAKER: Leave is sought for that purpose. Is there any objection? There appears to be none.
RINO TIRIKATENE: I move, That this House note the 30th anniversary of the signing of the Māori Fisheries Settlement at Parliament on 23 September 1992; that the Sealord deal, as it was coined, paved the way for iwi and Māori involvement in this country’s modern commercial fisheries; and that it allowed Te Ohu Kaimoana to help iwi establish administrative and management structures that have shaped iwi organisations and leadership in this modern age.
Motion agreed to.
Business Statement
Business Statement
Hon CHRIS HIPKINS (Leader of the House): Thank you, Mr Speaker. Legislation to be considered next week will include: the first readings of the Charities Amendment Bill, the Criminal Activity Intervention Legislation Bill, the Criminal Proceeds (Recovery) Amendment Bill, the Deposit Takers Bill, and the Fire and Emergency New Zealand (Levy) Amendment Bill; the second reading and committee stage of the Fisheries Amendment Bill; the committee stages of the Digital Identity Services Trust Framework Bill, the Hazardous Substances and New Organisms (Hazardous Substances Assessments) Amendment Bill, and the Plant Variety Rights Bill; and the third readings of the Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill, the Animal Welfare Amendment Bill, and the Screen Industry Workers Bill. There will be an extended sitting on the morning of Wednesday, 28 September.
Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. I appreciate the informative and heroically ambitious list of things the Government intends to get through next week; I wish them all the best. My recollection is that the Minister for the Environment indicated that legislation to reform the Resource Management Act would be introduced by October—I presume he meant October 2022. I wonder if the Leader of the House could give an update on the likelihood that that deadline will be met.
Hon CHRIS HIPKINS (Leader of the House): That actually is a question for the Minister for the Environment, rather than for me as Leader of the House. I can assure the member that it will be introduced as soon as it has been approved.
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 Puneet Saini requesting that the House inquire into whether unused and unexpired medicines can be appropriately donated or gifted for reuse.
SPEAKER: That petition stands referred to the Petitions Committee. No papers have been delivered to the Clerk for presentation. A select committee report has been delivered for presentation.
CLERK: Report of the Education and Workforce Committee on the 2020/21 Annual Review of Te Pūkenga - New Zealand Institute of Skills and Technology.
SPEAKER: The Clerk has been informed of the introduction of bills.
CLERK:
Deposit Takers Bill, introduction.
Oranga Tamariki (Repeal of Section 7AA) Amendment Bill, introduction.
Employment Relations (Restraint of Trade) Amendment Bill, introduction.
Sale and Supply of Alcohol (Cellar Door Tasting) Amendment Bill, introduction.
SPEAKER: Those bills are set down for first reading.
Oral Questions
Questions to Ministers
Question No. 1—Police
1. Dr EMILY HENDERSON (Labour—Whangārei) to the Minister of Police: What recent successes have Police had in relation to combatting organised crime in our communities?
Hon CHRIS HIPKINS (Minister of Police): Just this month, we’ve seen a number of successful raids on criminal activities as part of Operation Cobalt. On 4 September, a search warrant was executed at the address of a patched Killer Beez member in Counties Manukau district. Several firearms were found, including a loaded cut-down .22 semi-automatic rifle which the serial number had been removed from. On 1 September, the Auckland City district Operation Cobalt disruption team executed a search warrant in Remuera. A search of a vehicle located an AK-47 - style semi-automatic firearm with two full magazines. A patched Mongols member was charged with possession of a restricted weapon and possession of ammunition.
Dr Emily Henderson: What is the focus of Operation Cobalt?
Hon CHRIS HIPKINS: Operation Cobalt, which commenced in June this year, is aiming to deliver a nationally coordinated response to unlawful gang behaviour by enabling districts to prevent, supress, disrupt, and, where appropriate, prosecute offences through sustained intelligence enablement and enforcement activity.
Dr Emily Henderson: What national successes has Operation Cobalt seen at suppressing criminal activity?
Hon CHRIS HIPKINS: To date, Operation Cobalt has seen 441 search warrants executed, 225 warrantless searches undertaken, 155 firearms seized, and 10,125 criminal charges filed.
Hon Mark Mitchell: Why did the Labour Government not implement Operation Cobalt four years ago, as proposed by the National Party, and does he accept that there’d be a large number of victimisations that would have been avoided had they put Operation Cobalt in place four years ago?
Hon CHRIS HIPKINS: The member hasn’t been paying attention. Operation Tauwhiro was our precursor to Operation Cobalt. If he hangs on a moment, he’ll hear a bit more about it.
Jo Luxton: What specific successes have police had in fighting harm caused by drugs and organised crime in Ashburton?
Hon CHRIS HIPKINS: Operation Mastiff was terminated between 6 and 8 September in the Canterbury district. The biggest drugs operation Ashburton has seen in a very long time saw more than 160 charges laid against 18 people associated with gangs, following a series of search warrants. Seizures included cash, methamphetamine, cannabis, LSD, codeine, unidentified pills, firearms, and ammunition.
Dr Emily Henderson: What other successes have police had in seizing assets from criminals?
Hon CHRIS HIPKINS: Operation Samson began on 8 November 2021 and centred on the importation of methamphetamine. On 8 September, 12 Harley-Davidson motorcycles connected to a Hells Angels member were seized from a container as part of the ongoing asset recovery investigation; 16 other vehicles; and over $400,000 in cash was restrained following the termination of Operation Samson, which continues to investigate people and entities connected to the West Auckland Nomads chapter of the Hells Angels Motorcycle Club.
Dr Emily Henderson: How do these results build on previous police operations that were targeted at combating organised crime?
Hon CHRIS HIPKINS: An excellent question, and I’m sure Mark Mitchell will be listening intently to the answer to this one. Police seized firearms parts and ammunition through targeted enforcement as part of Operation Tauwhiro. At the conclusion in June 2022 of Operation Tauwhiro, they had executed 1,043 search warrants, 765 warrantless searches had been undertaken, 1,804 firearms had been seized, 1,457 arrests had been made, and 53 kilograms of methamphetamine had been seized.
Question No. 2—Social Development and Employment
2. RICARDO MENÉNDEZ MARCH (Green) to the Minister for Social Development and Employment: Does she stand by her reported statement from November last year that she would scrap the warrant-to-arrest sanction today if she could; if so, what is the barrier to removing the warrant-to-arrest sanction?
Hon CARMEL SEPULONI (Minister for Social Development and Employment): Yes. As I said yesterday, I believe the welfare system should not be used as a tool for the justice system. Our first focus was on removing sanctions that had the biggest impact on the wellbeing of children, and as a result we’ve seen an 87 percent drop in sanctions that impact children since June 2017. I received advice on the warrant-to-arrest sanction last year which outlined that further cross-agency work was needed before consideration could be given to addressing this sanction. Since then, I’ve decided to pause the work in order to prioritise the significant amount of work this Government has under way to improve the wellbeing of New Zealand families. This work includes the ongoing review of Working for Families, which has already resulted in an increase in incomes for 346,000 families; increasing access to hardship assistance like dental grants; and expanding successful training and employment programmes, including the Training Incentive Allowance, Mana in Mahi, and He Poutama Rangatahi, which has resulted in record numbers of exits off benefit and into work.
Ricardo Menéndez March: Does she think it’s acceptable that under this Government, more children have been affected by this sanction due to it being applied to their caregivers, and, if not, why is the sanction still being applied?
Hon CARMEL SEPULONI: The majority of people who have had this sanction applied don’t have children—although there are, of course, some, but the majority don’t have children. As I said, also, what we’ve seen is a massive reduction in the number of sanctions that have been applied to whānau who have children. And, also, it is not the Ministry of Social Development (MSD) that makes a random decision to apply this particular sanction; it is instigated by Justice and Police, and MSD then lawfully have to carry out the sanction.
Ricardo Menéndez March: Does she agree with the Welfare Expert Advisory Group that “The current benefit system is based on one of conditionality and sanctions. We heard overwhelmingly [throughout] our consultation that such a system diminishes trust, causes anger and resentment, and contributes to toxic levels of stress. The application of obligations and sanctions in New Zealand … is problematic.”, and, if not, why not?
Hon CARMEL SEPULONI: We committed at the beginning to reviewing sanctions and to getting rid of the excessive sanctions, and we’ve started that work: two of the most excessive have been removed already. I certainly think there’s room to do more in the future in this space, but we never committed as a Government to removing every sanction or obligation that is in place in the welfare system.
Ricardo Menéndez March: Is she or is she not committed to scrapping the warrant-to-arrest sanction so that we stop a growing number of people being stripped of their income, including families with children?
Hon CARMEL SEPULONI: As I said, that work has been paused.
Ricardo Menéndez March: Does she agree with Labour MP Jacinda Ardern, who in 2013, when debating and voting against the introduction of the warrant-to-arrest sanction by National, said, “[The] bill tears up the idea of a social contract. The message it sends is that the job seeker’s role is to look for work, and the Government’s role is no longer to ensure that there are jobs, to train, to educate, and to help you move into work. No, the Government’s role is simply to sanction … when you fail.”, and, if so, why is this Government continuing to sanction people in the welfare system rather than providing support?
Hon CARMEL SEPULONI: As I said, there has been an 87 percent reduction in the number of sanctions that are applied to whānau with children. I absolutely agree with what the member is saying and the Prime Minister had previously said in Opposition, and, in fact, said the same things. The issue is that when you are a Minister, you have a range of work that needs to be done and you’ve got to make decisions around prioritisation and what will happen and when that will happen. We as a Government have focused on particular areas where they have the biggest impact, in particular where we can get money into the pockets of households that need it, where we can invest in the upskilling and training that will help whānau get ahead, and those things have been my priority as a Minister. It means I haven’t been able to get on to everything, perhaps, that the member thinks I need to do, but that will be always the case for any Minister, with any portfolio.
Question No. 3—Health
3. Dr SHANE RETI (National) to the Minister of Health: How many people are there in total on the waiting list for first specialist assessment and the surgical waiting list?
Hon ANDREW LITTLE (Minister of Health): Every day, people are added to the health waiting lists, and every day people are taken off waiting lists because they have had their assessment or treatment or otherwise been discharged. I’m advised that as at 31 July 2022, 140,982 people are on the national waiting list for first specialist assessment, and 69,874 are on the national waiting list for surgical and other treatment. However, the meaningful performance measure of how responsive the system is is a waiting time of more than four months. For first specialist assessment, this is 37,239 people, and for surgical and other treatment, it’s 29,189 people. I just note that there is a two-month delay in reporting these statistics. Accordingly, 31 July is the most up to date information currently available. It should be noted that COVID-19 has caused unprecedented disruption to hospital medical services, and this has been compounded by extraordinary levels of flu infection in the winter just gone. As the hospital system has dealt with the level of demand for medical services alongside COVID and flu infections over the last three years, it has managed that demand by ensuring those with urgent need get their treatment and those who can be deferred have had their treatment postponed. Te Whatu Ora - Health New Zealand, in anticipation of assuming responsibility for managing expanded waiting lists, established a clinical task force in May this year to advise on steps to accelerate the reduction of waiting lists. That task force has made a number of recommendations to Te Whatu Ora to address the waiting lists, and Te Whatu Ora is expected to have an implementation plan for those recommendations shortly.
Dr Shane Reti: Has he or his officials given any instructions to reduce specialist waiting lists in hospitals by declining GP referrals, and, if so, what were those instructions?
Hon ANDREW LITTLE: No.
Dr Shane Reti: Why, then, do answers to written questions show more than 1,000 GP referrals to specialists in the Canterbury region have been declined every single month in the last year?
Hon ANDREW LITTLE: The work that Te Whatu Ora is doing to manage waiting lists has followed the work of the specialist clinical task force following clinical guidelines, and those lists are being managed down. What GPs do, and the basis on which they manage their patients, I cannot comment on.
Dr Shane Reti: Is it the Minister’s best effort that in response to an urgent letter I wrote to him this week about a 50-year-old man who is in intense pain waiting nearly a year for double hip replacements, and who is collapsing almost daily, resulting in bilateral fractures of his cheekbones, that, amongst other things, the Minister’s office’s suggestion was that he raise a complaint with the Health and Disability Commissioner? Is that really his best effort for this man?
Hon ANDREW LITTLE: As is now common with this member, he, of course, relays a small number of facts, and leaves out a number of other facts. I did receive a communication from that member—a two-sentence letter with an email message attached from a family member of, I think, the person he describes. That email message concluded with a very strong plea for that member not to breach the privacy of that person and publicise that person’s particular circumstances because of the condition they are in. That member has breached the basis on which that communication has been provided to him.
Dr Shane Reti: Does he accept that with all the money he has wasted on health restructuring and bureaucracy over the past two years, he could have reduced hospital wait-lists so that Kiwis in pain like this man do not have to wait nearly 12 months for the operations that they need?
Hon ANDREW LITTLE: What I can say is that this Government has increased funding for our hospital services by 44 percent since the time we’ve been in Government. We’ve not only significantly increased health spending, we’ve increased investment in health infrastructure after nine years of underfunding of health, underpaying our nurses, and failing to invest in health infrastructure. I’m very pleased with the work that Te Whatu Ora is now doing to pick up the extraordinary demands placed on our system, both as a consequence of COVID and because of the recent extraordinary flu season.
Dr Shane Reti: Doesn’t the explosion in hospital wait times show that the Minister has failed in a core duty to New Zealanders, and, if not, what do the long wait times show?
Hon ANDREW LITTLE: What that member’s question shows is a complete and utter ignorance of actually what has happened in this country in the last three years. So we have had a health system that, as a consequence of that member’s party in Government, was under-resourced, its people were underpaid. We have rectified many of those problems, and we have had a system that has led the world in responding to COVID and has now recently responded to the worst winter flu season in history in this country. I’m very proud of what our health workforce and our health system has done in the extraordinary circumstances they’ve been in, and I’m very confident that Te Whatu Ora - Health New Zealand, with the powers that it now has, and the context in which it now operates, will make good progress in reducing those waiting lists.
Question No. 4—Māori Development
4. ARENA WILLIAMS (Labour—Manurewa) to the Minister for Māori Development: What announcements has he made about supporting the future of the Māori media sector?
Hon WILLIE JACKSON (Minister for Māori Development): On 7 September 2022, I announced the Māori Broadcasting Strategy, which sets out the Government’s plan, over the next three years, to futureproof the Māori media sector. This includes setting clear outcomes and priorities for the sector, improving coordination with the wider public media system, and supporting workforce development. The strategy builds on our $40 million investment in Budget 2022 to support Māori media to transition to a new public media environment, and prepare it to increasingly deliver a fuller range of Māori content.
Arena Williams: How will the Māori Broadcasting Strategy contribute to the revitalisation of te reo Māori and the Government’s Maihi Karauna goals?
Hon WILLIE JACKSON: Te reo Māori revitalisation is at the heart of the outcomes and priorities in the Māori Broadcasting Strategy. Māori media plays a vital role in normalising and revitalising te reo Māori—the Māori language—as recognised in the Maihi Karauna. It contributes to the societal conditions needed for the language to thrive, while also transmitting directly into homes and communities where whānau can access culture and language most directly. Last week, we commemorated the 50th anniversary of the Māori language petition at Parliament, which called for the recognition of the Māori language. The livestreaming of the event on Whakaata Māori, and recording on iwi radio, shows how far we’ve come, as a nation, on these issues.
Arena Williams: What investments has this Government made in the Māori media sector, and how will this support the Māori Broadcasting Strategy?
Hon WILLIE JACKSON: The strategy identifies that Māori media requires increased funding to ensure a strong and sustainable sector that can deliver on a wide range of high-quality content across traditional and emerging platforms. The Government has made a start on this through our last two Budgets, with Māori media receiving $42 million in Budget 2021 and then $40 million in Budget 2022. This will position the Māori media sector well within the new public media environment, and grow its capacity and capability so it is ready to deliver on the wider aspirations of the Māori Broadcasting Strategy.
Arena Williams: How will the Government’s work to create a new public media entity and the Māori Broadcasting Strategy complement one another?
Hon WILLIE JACKSON: That’s a good question; and the Government is making a significant investment in the creation of a new independent and future-focused public media entity that will help to support the Māori media sector. This expectation is made clear through the requirement of a charter that makes specific mention of Māori language, culture, stories, and perspectives. A key focus of the Māori Broadcasting Strategy is improving coordination with the wider public media system on Māori media content, including shared arrangements for the commissioning and distribution of content. We need to ensure that the Māori media sector is on a strong footing in this new public media environment; and that’s why we invested $40 million in Budget 2022 to grow the sector’s capacity, capability, and the delivery of an innovative content.
Question No. 5—Justice
5. Hon PAUL GOLDSMITH (National) to the Minister of Justice: Is she confident the justice system is effectively responding to the recent surge in destructive retail crime and increased levels of violent crime?
Hon KIRITAPU ALLAN (Minister of Justice): To the first limb of the question, yes. As at 9 September, police have taken 251 prosecutions and 104 youth referrals for ram raids, since January, out of 391 ram raids, at a rate of approximately 90 percent. In addition, to support an effective response across all of Government, multiple initiatives have been taken, including the rolling-out of nearly 1,000 fog cannons so retailers have an immediate deterrent to theft; we have established the National Retail Investigation Support Unit; we’ve launched a Better Pathways package that aims to place more young people in education, training, or work, to drive down youth crime; and we are progressing significant legislation through the Criminal Activity Intervention Legislation Bill and the Criminal Proceeds (Recovery) Amendment Bill to give police additional powers to combat organised crime, building on the enactment of the Firearms Prohibition Orders Legislation Act.
Hon Paul Goldsmith: What does she say to a shopper at St Lukes mall who told Radio New Zealand, yesterday, after a daylight smash and grab, “[the] Police are doing what they can, but it’s the justice system … holding them back.”?
Hon KIRITAPU ALLAN: To that shop owner, I would say that across this House collectively, there is widespread shared concern about what we are seeing with this recent trend of a particular crime. And what I would also say to that shop owner is that across all of Government, we are taking both a preventative and rehabilitative approach, as well as a punitive approach where those offences have already occurred.
Hon Paul Goldsmith: What’s her response to another St Lukes shopper who said, “If you do something and you get away with it, sweet as, why wouldn’t you do it again?”, and is she concerned about public perception that there are few consequences for youth offenders?
Hon KIRITAPU ALLAN: In my original answer, I set out the police prosecution rate for ram raids, in particular, this year. There’s been about 391. Of those, there have been 251 prosecutions and 104 youth referrals since January. This is a system that is responding to an emerging and immediate issue, and we are providing the wrap-around support that the justice sector requires.
Hon Paul Goldsmith: Does she agree that the justice system needs to balance the desire to rehabilitate criminals alongside the need to denounce criminal acts, to demonstrate serious consequences for serious crimes, and to provide justice for victims?
Hon KIRITAPU ALLAN: As I just stated, yes, we do believe in those principles, and, indeed, that is what our justice system provides for.
Hon Paul Goldsmith: Does she think the justice system is effectively denouncing heinous acts and providing justice to victims, when a male convicted of raping four females receives nine months’ home detention for his crimes?
Hon KIRITAPU ALLAN: As the member across the aisle will be well aware, we don’t discuss the particular outcomes and determinations of the judiciary; I’m not responsible for those outcomes. However, what I will say is that we have a Sentencing Act here in New Zealand. The Sentencing Act that is in place today is the one that, too, was in place when that member’s party was at the helm of Government. This is a justice system that has served New Zealand well. There are always improvements that can be made. We are always looking at what we need to do as a Government to respond to emerging issues. And we are, indeed, doing that.
Hon Paul Goldsmith: Is she worried that a recent case, and others similar, signal a green light to young men that sex offending is accountability-free as long as you’re under 18 and promise to be good, while victims are left to deal with the trauma?
Hon KIRITAPU ALLAN: No. Further, I do want to just make an acknowledgment of the work that my colleague the Hon Marama Davidson is doing in family violence and sexual violence. There is a substantive amount of work that is going into ensuring that the victims of heinous crimes are being supported, and that, indeed, we, as a Government, have got the settings right when it comes to the justice sector, and also in terms of any other further additional measures that need to be wrapped around to provide support for victims.
Question No. 6—Immigration
6. LEMAUGA LYDIA SOSENE (Labour) to the Minister of Immigration: What recent reports has he seen about the Government’s work to enable pathways to residence for migrant communities?
Hon MICHAEL WOOD (Minister of Immigration): I’m pleased to confirm that this week I have seen reports confirming that 100,000 new Kiwis can now call New Zealand home as over half of all the 2021 resident visa (RV) applications have been approved. The people who have had their 2021 RV applications approved have critical skills to contribute to our economy, including over 3,700 health workers and over 11,300 construction workers. This visa provides migrants with certainty about their future here, giving them a pathway to residency while also helping to reunite families who were separated by the border restrictions that prevented COVID-19 from entering our community. Over the coming months, we can look forward to thousands more critical workers being able to commit to their future in New Zealand through RV 2021.
Lemauga Lydia Sosene: How is the processing of 2021 resident visa applications tracking compared to forecasts?
Hon MICHAEL WOOD: Interest in the 2021 resident visa has exceeded expectations, but we remain on track to meet our target of processing 80 percent of those applications by June of next year. More than 95 percent of phase one applications have now been processed, with 15,000 people approved across phase one and two over just the last month. These new Kiwis will contribute to our communities and help to relieve some of the pressures arising from global labour shortages.
Lemauga Lydia Sosene: What other steps is the Government taking to open pathways to residence for migrant communities?
Hon MICHAEL WOOD: In further good news this week, from 3 October, I’ve announced that registrations for the Samoan quota will reopen, and, from 5 October, registrations for the Pacific access category will reopen. Both of these categories have been closed due to COVID-19, and reopening them recognises the historic relationship between New Zealand and our Pacific neighbours. This is a major milestone as both are longstanding visa categories that enable people from our Pacific partner countries to become residents of New Zealand.
Lemauga Lydia Sosene: How many people will have a pathway to residence thanks to the reopening of the Samoan quota and Pacific access category?
Hon MICHAEL WOOD: Collectively, these pathways will provide for up to 5,900 people to become residents over the next two years, helping to reduce the impact of global labour shortages and to grow our economy. The 5,900 places over the next two years include unused places from the 2020-21 ballots which are being redistributed. The Pacific access category unused ballots will be reallocated across the 2022-23 years, while the Samoan quota ballots will be reallocated over the four years from 2022 through to 2025.
Lemauga Lydia Sosene: How does the reopening of these pathways to residence support the Government’s broader work to rebalance the immigration system?
Hon MICHAEL WOOD: The immigration rebalance provides pathways to residence for a range of critical roles, while streamlining settings to make the application process more straightforward for migrants, ensuring better settlement outcomes and reducing migrant exploitation. This is a Government that is committed to lifting wages and conditions for all workers and making New Zealand a more attractive destination for migrants to live and work in. The progress that we’ve made on opening pathways to residence via RV 21, the Samoan quota, and Pacific access categories reflects this commitment and our ongoing progress to reconnecting New Zealand.
Dr Gaurav Sharma: Supplementary?
SPEAKER: Question No. 7 in the name of Erica Stanford.
Hon Member: Point of order, Mr Speaker.
Dr Gaurav Sharma: Supplementary question?
SPEAKER: Oh, sorry. Dr Gaurav Sharma—sorry.
Dr Gaurav Sharma: Thank you. What does the Minister of Immigration say to the critical publication by the left-leaning World Party of Socialist Revolution on Government’s work to enable pathways to residence for migrant communities, where it says that migrant workers face discriminatory policies in New Zealand?
Hon MICHAEL WOOD: I haven’t read that publication, and I don’t agree with its assessment.
Dr Gaurav Sharma: What does the Minister say to offshore stuck migrants who, despite having valid visas, were stopped from entering New Zealand and are now not eligible for the pathways to residence for migrants?
Hon MICHAEL WOOD: I would say to people in that situation that most of New Zealand’s visa settings are now reopened and that people who wish to apply either for temporary work visas can do so through the accredited employer work visa scheme or can apply for a student visa. I’m sure that many of those people, should they explore those opportunities, will find pathways into New Zealand.
Question No. 7—Education
7. ERICA STANFORD (National—East Coast Bays) to the Minister of Education: Does he stand by all of his statements and actions?
Hon CHRIS HIPKINS (Minister of Education): Yes, in the context in which they were made or undertaken.
Erica Stanford: Can he explain why his actions to improve attendance over the last five years have seen the number of unenrolled students double to 8,500?
Hon CHRIS HIPKINS: The decline in attendance in New Zealand schools started in around 2015, and it has continued to decline in the time that we have been in Government. There are a range of factors that contribute to that. One, of course, is that the Attendance Services, which operate under relatively long-term funding contracts, have not been delivering the level of performance that we would expect of them. We’re currently in the process of reviewing that model.
Erica Stanford: How can he blame the changes made nine years ago to the Attendance Services when the number of children chronically absent for two or more terms has increased from under 7,000 when he became the Minister to 41,000 in 2019, before COVID even hit?
Hon CHRIS HIPKINS: Yes, I am concerned about those numbers and, as Minister of Education, it is my role and it is my job to make sure that we are doing more to make sure that we are targeting that. Ultimately, there are a whole lot of complex social issues that sit underneath those numbers. It is not my job as Minister to get those kids to school. That responsibility sits with their families. Having said that, we do want to see those kids re-engaging in education, and you’ll see that over the period of time that we have been in Government, we have continued to increase emphasis on that particular issue and we’ll continue to do so.
Erica Stanford: Can he explain how he expects the Blue Light South Auckland attendance service to make any meaningful and effective change to the lives of over 2,000 unenrolled young people on their books when their attendance officers have a caseload of 200 students each?
Hon CHRIS HIPKINS: We’ve increased the funding for the Attendance Services since we became the Government to address exactly those kinds of issues, after the funding for those services was effectively frozen during the time that National was in Government.
Erica Stanford: Can he explain, then, in light of that answer, why, in his half-decade as the education Minister, the average time taken to get an unenrolled student back to school is now 113 days in 2022, up from 84 days in 2017, despite his claims of all this additional funding?
Hon CHRIS HIPKINS: Because the Attendance Services are not performing as we would expect them to, and we are doing something about that.
Erica Stanford: What responsibility does he take as the Minister of Education over the last five years for the fact that every single one of the young people aged under 14 referred to the South Auckland cross-agency Social Wellbeing Board for being involved in ram raids were unenrolled or chronically truant?
Hon CHRIS HIPKINS: I am concerned about that. I’m also concerned about the fact that in terms of the data produced by the Social Wellbeing Board, 90 percent of the most at-risk young people in New Zealand identified by the Social Wellbeing Board have a parent who is in prison or who has been in prison. There is a range of complex factors underneath youth crime. There are no single causes and there are no single answers. What we have to do is make sure we’re approaching that from a range of angles, and that is exactly what this Government is doing.
Question No. 8—Justice
8. RACHEL BROOKING (Labour) to the Minister of Justice: What further changes is the Government proposing to ensure greater transparency for political donations?
Hon KIRITAPU ALLAN (Minister of Justice): On 8 September, I introduced a Supplementary Order Paper (SOP) to the Electoral Amendment Bill to provide a narrow and targeted solution to a loophole identified in the law. The SOP makes an amendment to the bill to clarify the definition of “party donation” in the Electoral Act and adds an offence for failing to comply with the existing obligation to transmit a political donation to the intended recipient.
Rachel Brooking: Why does the definition of a “party donation” need to be clarified?
Hon KIRITAPU ALLAN: As recent decisions have highlighted, they’ve paved the way for entities not involved in the governance and management of a political party to receive donations for the benefit of the party without having to declare it. The amendment clarifies that a party donation is when a person donates to a political party or any other person with the intention that the donation is for the benefit of the party. It is important to fix this before the 2023 general election, so that political parties cannot structure their financial affairs in a way that allows them to legally avoid having to disclose their political donations, and to uphold the transparency of the political donations regime.
Rachel Brooking: Why does an offence need to be added to the Act?
Hon KIRITAPU ALLAN: Currently, the Act requires every person to whom a candidate and party donation is sent, to transmit it to the candidate or party secretary within 10 working days. However, if they fail to do so, there is currently no corresponding offence in the Act. In line with other offences in the Act for similar behaviour, we are proposing a new offence with a maximum fine of $40,000 with a complete defence available for anyone who can demonstrate that they had a reasonable excuse for non-compliance.
Rachel Brooking: How can the public and experts in electoral law have their say on the proposed changes?
Hon KIRITAPU ALLAN: I’d like to particularly just acknowledge the Justice Committee for reopening submissions on the bill following the introduction of the SOP. Submissions are still open, and close on 3 October. I do encourage interested members of the public—particularly public law experts and those in the field of electoral law and political parties—to continue to engage the select committee process on this SOP.
Rachel Brooking: What other changes to the political donations regime are being considered?
Hon KIRITAPU ALLAN: The targeted changes contained in the SOP and the wider bill will increase transparency and improve trust and confidence in our electoral system, and will be made before the 2023 general election. In addition to this is the independent review of electoral law, which began earlier this year and has been tasked with considering the policy settings and rules for political financing and electoral expenditure, alongside a range of other areas. The Government looks forward to receiving the final report from the independent panel by the end of November 2023.
Question No. 9—Corrections
9. RAWIRI WAITITI (Co-Leader—Te Paati Māori) to the Minister of Corrections: Does he have confidence in the Department of Corrections, following a report that a policy of no face-to-face visits has now been in place for around a year and is currently impacting around 5,000 inmates?
Hon KELVIN DAVIS (Minister of Corrections): Yes, I have confidence in the Department of Corrections, and the assertion in the second half of the member’s question is wrong. There are visits occurring in half of our prisons. Three more prisons, hopefully, by the end of October will be able to have face-to-face visits, and the balance will when it is safe to do so.
Rawiri Waititi: How can he have confidence when there are currently 1,600 job vacancies across Corrections, including more than 500 prison officers, which has been used as an excuse to deny inmates their rights to face-to-face visits and even audiovisual links with whānau and lawyers?
Hon KELVIN DAVIS: Corrections and the unions have been working for some months now on a recruitment campaign. In August, we had 500 applications. Our daily applications have quadrupled, and we expect by the end of the year that we’ll make quite some progress to fill in those gaps.
Rawiri Waititi: What specific actions is he taking to ensure that the legal rights of inmates are upheld through consistent face-to-face visits and audiovisual links that actually work?
Hon KELVIN DAVIS: My expectation is that Corrections will ensure that the minimum rights of prisoners are upheld.
SPEAKER: Can he answer the question again.
Rawiri Waititi: What specific actions is he taking to ensure the legal rights of inmates are upheld though consistent face-to-face visits and audiovisual links that actually work?
SPEAKER: Yeah, the beginning part hasn’t been addressed—specific actions.
Hon KELVIN DAVIS: Specific actions—I have specifically made it clear to Corrections that the minimum rights of prisoners are upheld.
Question No. 10—COVID-19 Response
10. TANGI UTIKERE (Labour—Palmerston North) to the Minister for COVID-19 Response: What recent announcements has the Government made regarding the COVID-19 response?
Hon Dr AYESHA VERRALL (Minister for COVID-19 Response): Last week, the Prime Minister and I announced a suite of changes to our COVID response, including retiring the COVID-19 Protection Framework. New Zealanders now have two simple requirements of them: to wear a mask in healthcare settings, and to isolate for seven days if they test positive for COVID-19. The health advice tells us that with the lowest cases and hospitalisations since February, our population well-vaccinated, expanded access to antiviral medicines, New Zealand is now in a position to move forward.
Tangi Utikere: Why has the Government made these changes?
Hon Dr AYESHA VERRALL: The most recent health advice tells us that with cases and hospitalisations reducing, our population well-vaccinated, and expanded access to antiviral medicines, New Zealand can take this next step. With the tools that we now have, we can manage the virus without as many requirements on individuals.
Tangi Utikere: Where are masks still required to be worn?
Hon Dr AYESHA VERRALL: You’re no longer required by the Government to wear a mask anywhere, except in healthcare settings like hospitals, GPs, and aged residential care. In some places, like workplaces, marae, or at events, they may still ask you to wear a mask, but that is at their discretion.
Tangi Utikere: So what protections remain for vulnerable New Zealanders?
Hon Dr AYESHA VERRALL: I want to acknowledge that lessening restrictions leads to concern among some disabled or immunocompromised people. But I want to reassure those people that we are making these changes because risks have reduced. We now have layers of protection in place: high vaccination rates, high levels of immunity, widening availability of free antiviral medicines, free testing, and free medical or N95 masks.
Tangi Utikere: How do these changes impact our public health response?
Hon Dr AYESHA VERRALL: It’s important to note that our public health response continues in the background. We continue to monitor and test waste water, have capacity for genome sequencing, scan the international situation, and maintain a level of preparedness for new variants.
Dr Gaurav Sharma: What public apology has the Minister made, or is intending to make, to three women who travelled to Northland last year during lockdown but were wrongly blamed for using false information to obtain permits to travel and were wrongly labelled as sex workers related to gangs?
SPEAKER: In so far as it relates to the primary question and the Minister’s responsibility.
Hon Dr AYESHA VERRALL: That does not relate to the changes made in the COVID-19 response. What I can say is that where there was a situation of a lockdown in Northland, it was because there was COVID-19 there.
Question No. 11—Environment
11. MARK CAMERON (ACT) to the Minister for the Environment: Did he act upon the statement he made on 1 September 2022 and ask “officials to look into the expected number” of farms requiring resource consents for intensive winter grazing compliance; if so, is he aware that, of the estimated 3,500 farms in Southland that intensive winter grazed in 2021, Environment Southland has granted consents to just three?
Hon MEKA WHAITIRI (Associate Minister of Agriculture) on behalf of the Minister for the Environment: Yes, I did ask my officials to look into the expected number of consent applications for intensive winter grazing in Southland. The estimate the member refers to is wrong. They advised that only 6.5 percent of Southland’s winter forage crops are at a slope of greater than 10 degrees, which is the slope maximum in the intensive winter grazing module. I’m advised that as of today, Environment Southland has received 11 consent applications, of which four have been issued. There is plenty of time to go. I am further advised that Environment Southland has built an online tool which will allow farmers to easily find out whether they need a consent. Where farmers meet the permitted activity standards and do not need a consent, the tool will provide them with a record of this permitted activity status. Neither Environment Southland, the Otago Regional Council, or Environment Canterbury want to delay the rules applying to intensive winter grazing. They are helping improve outcomes.
Mark Cameron: Is the Minister concerned that an estimated 3,200 farms utilised intensive winter grazing in the Canterbury region in 2021, yet no consents have been granted and only one application has been lodged for intensive winter grazing consent in the past five years?
Hon MEKA WHAITIRI: On behalf of the Minister, if I use the answer to my primary question to that member, in terms of the 6.5 percent of forage crops at 10 degrees or higher, then it’s a hard fact, I think, to try and figure that in your primary question, 3,500 estimated farms are in that catchment area. It’s a small area. The point I’ve made in the primary question is that we’ve got plenty of time and there is help for farmers to put in their consent applications or to determine whether they actually need one.
Mark Cameron: Does the Minister agree that compliance in the Otago region is not much better, given that only three of the estimated 2,000 resource consents required for compliance have been issued as of 23 August 2022?
Hon MEKA WHAITIRI: I’ll refer the member again to the estimate figures that he is using, which are absolutely wrong. I’ve given the percentage of the slope, the 10 percent - plus slope, which kicks in the requirement for consent. Whether it’s in Otago, Southland, or Canterbury, that’s not a large number of farms. The point is that there are tools available with the councils. We’re asking farmers to reach in earlier. We’ve been advised also that councils are ready to process applications and work alongside farmers to complete what’s required of them.
Mark Cameron: Is the Minister concerned that between the Waikato, Hawke’s Bay, Greater Wellington, Bay of Plenty, Auckland, Marlborough, West Coast, Nelson, Northland, and Tasman councils, zero resource consents have been issued for the estimated 3,900 farms that intensive winter graze in these regions?
Hon MEKA WHAITIRI: To all those farmers, I ask them to reach out to their councils to help them identify. Each council will have the ability to work alongside the farmers to identify whether they need consents or not. The regulations are very clear. We have time on our side and councils are prepared. The numbers that you’re referring to are an estimate, and they’re probably over-inflated.
Mark Cameron: Point of order, Mr Speaker. I seek leave of the House to table multiple documents received under the Local Government Official Information and Meetings Act.
SPEAKER: You need to describe what they’re about.
Mark Cameron: That is an Official Information Act document sent to all local regional authorities in New Zealand—or several.
SPEAKER: Leave is sought for that purpose. Is there any objection? There appears to be none. They may be tabled.
Documents, by leave, laid on the Table of the House.
Question No. 12—Local Government
12. SIMON WATTS (National—North Shore) to the Minister of Local Government: What is the total amount that has been spent to date on the Government’s Three Waters reform programme, including development and communications, and does she believe that this represents good value for taxpayers’ money?
Hon NANAIA MAHUTA (Minister of Local Government): The total amount spent to date is $569 million, and it does represent good value for taxpayers’ money and real benefits to ratepayers. Significantly, $523 million of that total amount spent to date was stimulus funding and was provided to councils during the COVID period to invest in waters infrastructure work. This resulted in 291 kilometres of drinking-water pipe upgrades, 159 kilometres of waste-water pipe upgrades, 101 drinking-water treatment plant upgrades, and 128 waste-water treatment plant upgrades.
Simon Watts: What value have taxpayers got from the $523 million of stimulus funding, given the public still overwhelmingly opposed these reforms?
Hon NANAIA MAHUTA: A lot of value. A lot of work was brought forward to be able to ensure that people continued to be employed and work was being done. For example, the Western Bay of Plenty District Council used their funding to support infrastructure at local marae and papa kāinga housing, enabling them to upgrade their on-site effluent waste-water system or to connect them to council’s waste-water network. The infrastructure’s had a significant impact in these communities to not only minimise environmental effects but also to ensure sanitary conditions for residents. Let’s go on. Waitomo District Council used its funding to upgrade its water treatment plant to meet the demands of their community, which surges during the summer. It allowed for the installation of the new sand filter and dual UV disinfection at the plant, providing improved water clarity and treatment resilience to the drinking-water supply for the community and visitors. In Ōpōtiki, that district council used its funding to upgrade its degraded water supply pipe along Te Rere Pa Road, and this greatly improved the water supply pressure and fire flow to these communities, their facilities, and residents.
Simon Watts: Does she believe it’s acceptable that the Government has spent over $40,000 this year on a communications reset, and why are Kiwi taxpayers paying the price for her Government’s failure to sell three waters?
Hon NANAIA MAHUTA: I do believe that it’s important to ensure that ratepayers have good information, and the amount of funding spent in the communications space enables that.
Simon Watts: Can she explain to the House what a three waters virtual Australian roadshow is, and why it cost taxpayers over $100,000?
Hon NANAIA MAHUTA: I can explain that. And if the member had read the reply to the written request that he received, he would have found out that that amount of money went into ensuring that we could connect councils to a comparative example in Tasmania so that they could learn what another model of a similar nature to what they were seeking looked like. What it enabled, actually, was for councils to connect with real-time information from a comparative example in Tasmania so that they could ask the questions they wanted to ask around the benefits of aggregation.
Simon Watts: Does she believe it’s acceptable that the Government spent almost $15,000 on developing a job description for the CEO of the proposed water entities?
Hon NANAIA MAHUTA: Let’s not misrepresent the amount that was spent and what it was for. The $15,000 spent also went to ensure that a recruitment process was able to be achieved—including interviews—so that job descriptions for newly established water services entities could be created. And when we think about the fact that these are new water services entities of a size and scale where we need to create new job descriptions for CEs that will have a significant role, I do think it’s a fair amount spent.
Simon Watts: What does she say to New Zealanders struggling in a cost of living crisis, seeing that the Government has spent over $16 million on consultants for Three Waters in the last year alone?
Hon NANAIA MAHUTA: I would add that without reform, taxpayers and ratepayers would be paying significantly more over the next 30 years, when our water infrastructure is forecast to require $120 to $185 billion of investment in the network. That money’s got to come from somewhere. If we don’t do anything—if we do nothing—which is what the Opposition is wanting, then ratepayers will be paying more, taxpayers will be paying more, and the Government really doesn’t want to see that.
Simeon Brown: Stop the fake news; stop the fake news.
SPEAKER: Simeon Brown will stand, withdraw, and apologise.
Simeon Brown: I stand; I withdraw and apologise.
SPEAKER: Yeah, and now you’ll do it properly.
Simeon Brown: I withdraw and apologise.
Standing Orders
Definition of Working Day
Hon CHRIS HIPKINS (Leader of the House): I move, That Queen Elizabeth II Memorial Day is not a working day for the purposes of the Standing Orders, and that the definition of working day in Standing Order 3(1) be read accordingly.
II’s 70-year reign. This motion is a consequence of the passing of that legislation. It means that within Parliament the day will be treated in the same way as every other public holiday.
On Tuesday, the House passed a bill to create a one-off special public holiday, on the day of the national memorial service that will mark the end of Queen Elizabeth
If we didn’t pass this motion, next Monday, within the parliamentary precincts, would still be regarded as a working day, as defined by Standing Order 3. So therefore, the Office of the Clerk and other agencies within the complex would have to have their people working to process things like written questions and to carry out other functions of a parliamentary working day. With the passage of this motion, they will be free on that day to mark the holiday and to mark the passing of the Queen as they think appropriate, as every other New Zealander will.
SPEAKER: The question is that the motion be agreed to.
Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. On behalf of His Majesty’s loyal Opposition—that’s the first time I’ve said that, and it does take a bit of getting used to—I’m very pleased to support this motion; it’s necessary. The machinery of Parliament and Government does rely on the clear definition of working days, because so many of the obligations for things like reporting back on reports and so on does follow that metric. And, of course, as the Leader of the House said, the written questions process takes quite a bit of administration behind the scenes; we hit the button and off they go, and we know that there’s quite a bit to be done.
I just want to take the opportunity to acknowledge and thank the number of hard-working staff in the Parliamentary Service and in the Clerk’s Office who do us a great service and wish them a restful and happy memorial day—I say “happy” in the sense that any day you’re not working is probably a happier day than the alternative—and that they will reflect on the magnificent life well-lived of Her Majesty. Many of us will be at the memorial services in Wellington, Auckland, or around the country, but for those staff, however they mark that day, I hope they have a good rest.
Motion agreed to.
SPEAKER: I declare the House in committee for further consideration of the Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill.
Bills
Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill
In Committee
Debate resumed from 21 September.
Part 1 Amendments to principal Act (continued)
CHAIRPERSON (Greg O’Connor): Members, the House is in committee for further consideration of the Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill. When we were last discussing this bill, the question was that Part 1 stand part. The Hon Michael Woodhouse has one minute remaining if he chooses to use it.
Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. It might take me a little longer than a minute to get through the questions that I have for the Minister at the start, but, in any event, when we did adjourn I was talking about the impact of the changes to the law on both the treatment injury account and the earners account and the non-earners account. Currently, if a birthing parent suffers an injury—and that’s accepted by ACC; it’s considered a treatment injury, and that’s appropriate—the funding for that comes out of the account which is funded by the Crown. This change means that, as I understand it, all birthing injuries will now be allocated to either the earner account or the non-earner account, depending on the employment status of the mother at the time that the injury was sustained.
Now, this has a couple of impacts, because, firstly, there is a transfer of the cost from the treatment injury account to either of those other two accounts. Secondly, the changes that we are making are going to significantly increase the number of claims that are being made. The select committee, when considering a broadening of the definitions of birthing injury, were advised in the regulatory impact statement (RIS)—no, it wasn’t, I’m sorry; additional advice to the committee that as many as 85 percent of mums might have a valid claim for a first- or second-degree obstetric anal sphincter injury tear, and, further, 30 percent of first-time birthing parents could have an avulsion injury. So we’re now talking about, if there’s between 50,000 and 60,000 babies born every year—what’s that, over 40,000 potential extra claims.
So the question, really, is a pretty technical one, but we didn’t get the answers in the committee. I think this committee needs to know the impacts of these things. How much is currently being paid out of the treatment injury account for existing birthing injuries, and what will the overall cost of new claims under the amended legislation be, because in the RIS it was $25 million, and clearly that’s not going to be enough per year. That’s at 40,000-odd births; that’s only about $500 per claim.
Back to the issue of treatment injury, if there is a medical misadventure, under the old language, or an error, will any birthing injury ever be attributed to the treatment injury account? One of the things that the treatment injury account has done is shine a light on harm in hospitals, in treatment facilities. ACC has a much better understanding than it did perhaps 15 or 20 years ago, and that’s important in preventing injuries. Understanding the trend of injuries then gives ACC, its injury prevention team, a steer about what, perhaps, clinical practice or clinical guidelines could be issued in order to make sure that avoidable harm in the birthing process is actually followed through. So it is important to continue to understand the distinctions between a covered injury that is avoidable from one which is not, because at least then we’ll be able to prevent those avoidable ones.
Hon CARMEL SEPULONI (Minister for ACC): Just recognising that parts of the question or questions were asked pre - lunch break so, hopefully, I’m able to cover off the questions that the member has asked. The first question was: what will be the extra costs of the expansion to the range of injuries as agreed by the select committee? The select committee’s refining of the list of maternal birth injuries to more accurately reflect the injuries suffered by birthing parents didn’t impact the estimated costing prepared by officials. That’s because the initial estimated costings were conservatively based on estimates of the prevalence of all maternal birth injuries in the general population and not costings of the specific injuries in the bill. So being more explicit about the injuries and which ones are covered doesn’t necessarily mean there was an expansion. Because of the gaps in national data sets recording birth injuries, officials based their costings on experts’ experience of birth injury prevalence and cross-checked to international studies. As with any change to ACC cover entitlements, there’s no way of being absolutely sure of the exact costs, given that numbers and severity of injuries can change. Once the new maternal birth injury provisions are implemented and operational, ACC will then be able to build an evidence base of the types of injuries suffered and their costs.
What the experts do agree on is that of the number of injuries that are experienced, about 5 percent are likely to be severe injuries, which is around 160 injuries per year, and those more severe injuries are the ones that are likely to have the longer-term implications and therefore are likely to prevent them from being able to return to work.
The other question that was asked by the member was what happens around funding for the claims that would have been treatment injuries. Treatment injuries, as the member has rightly pointed out, are already funded, but the plan is for all, obviously, maternal birth injuries to be covered. And the issue in the past is that it was only when there was a treatment issue would there be cover. Regardless of whether a claim is for a treatment injury or for a maternal birth injury, the funding source for the claim depends on whether the client was an earner or a non-earner. Treatment injuries are funded from earner levies, of course, and, as the member has pointed out, non-earners appropriation. Maternal birth injuries will also be funded from the earner levies or the non-earners appropriation, depending, as the member again pointed out, on the earner status of the injured person.
Hon MICHAEL WOODHOUSE (National): I thank the Minister for the answer, and it’s slightly concerning, actually. I didn’t think that the initial regulatory impact statement estimates of $25 million were conservative at all. In fact, I thought they were a bit low even then. I will agree to disagree whether or not there’s—you know, we’re talking about a prediction of the future so there’s no point arguing over projections, except to the extent that the 150 or 160 severe injuries—I think the Minister mentioned—representing 5 percent of accepted claims seem to be very low given the information the select committee was given. I hope they’re right, because the fewer severe injuries that we have, the better.
But as she was going through those numbers, I was having a flashback to 2002 or so when I was chief executive at Mercy Hospital and president of the Private Hospitals Association—vice-president then. We submitted on the bill that changed the scheme from medical misadventure to treatment injury. I submitted that the cost estimates for the expansion of treatment injury from medical misadventure were heroically low, and that was as it turned out. The estimates that were projected for costs of treatment injury are now manyfold more than the projections that were made in 2002-odd.
I hope we don’t have a repeat of an underestimation, not because of the money, but because what that represents is, perhaps—two things. Obviously more harm than we want. But also—I say this carefully—ACC’s actually really good at projecting things; I think they’re missing the boat on this one, as they did with medical misadventure. So I’ll leave it there.
I would just say also—and it could come up with Jan Logie’s intervention on her amendment around mental health, which I won’t support, I’m afraid, but I completely understand the issue that that the member has been raising in select committee, and will again, which is that the risk is that ACC becomes the default health provider in this country as we expand the scheme—and the default mental health provider. The obstetrics side of our health system actually needs to continue to be the place where we do the primary care for those early injuries.
I’ll make this last prediction, actually, and it’s been a big bugbear of mine ever since I’ve been involved with ACC—and that wasn’t yesterday. The public health acute services levy—which I think is this year appropriated at about half a billion dollars; a little under—I reckon is about half the cost of what it costs to do the acute stage of accepted accidents.
Now what I don’t understand—it could can be quite helpful to get a sense of how ACC is going to deal with this. So the person admitted to a birthing unit or a maternity hospital is actually being paid for from Vote Health. What happens when the primary care—the acute care for a birthing injury—is provided by that same facility and a claim is subsequently accepted for information purposes? How is ACC going to know what costs were expended on the acute care that was required in those birthing suites? Because they’re basically there under one admission.
If I get hit by a car and get admitted to hospital, it’s automatically admitted as an accident-related acute case and will be subject to the Public Health Acute Services levy calculation. But in the birthing process, you’re already there for another reason. Suffer harm: primary intervention might be these for suturing, blood transfusions, admission to a surgical ward, perhaps, and all the costs encumbered on that. That becomes ACC’s responsibility. How is ACC going to discharge that responsibility to the public hospital and pay its portion of that care?
Now I think there’s a much broader issue around the Public Health Acute Services levy and when I’m Minister of ACC again, the officials can be sure that we’ll be diving deep into the weeds of how we ensure that our public hospitals are not underfunded—the accident-related acute gear.
Nicola Grigg: Next year. Next year.
Hon MICHAEL WOODHOUSE: Yes, just 12 short months away, Nicola Grigg. That’s right.
I think that’s some homework for officials to do about how they’re going to get maternal acute care separated from the other things that the public maternity facilities are providing.
Hon CARMEL SEPULONI (Minister for ACC): There was a lot covered in that; I don’t know if it was all completely related to Part 1. However, that broader issue that the member was talking about—that certainly is a broader issue, and isn’t covered in the bill and isn’t something that we’re going to be able to resolve here. I will say that, as Minister for ACC, when developing this up and thinking this through and working with our officials and policy team, I’ve also been having those conversations with the other relevant Ministers, including the Minister for Women, and the Associate Minister of Health who has responsibility for the Maternity Action Plan. And so we have been working together and thinking about the pressures in the workforce at the same time. It is important that those things are considerations.
JAN LOGIE (Green): Thank you, Mr Chair. In this contribution, I rise to ask some questions and have some discussion about the decision to have a defined list of birth injuries, while, again, acknowledging the significant progress that was made in the Education and Workforce Committee to ensure that the list covers the intent, as articulated by the Minister, of all birth injuries being covered.
But we had quite a lot of discussion about this as an approach, as opposed to one of the recommendations that birth be included within the definition of “accident” within section 25 of the Act so that there be a general cover for all birth injuries and that the exclusions would still be covered around babies—which I disagree with, and I’ll talk about that later—but also the boundaries around mental health—which, again, I disagree with, but would have enabled that but had a general cover.
Points were raised by submitters, and I particularly want to point to the submission of Dr Simon Connell and Dr Dawn Duncan, who are legal academics at the University of Otago who have a particular focus around the ACC scheme, so they have extensive experience of analysing how the system is working and how the law could deliver on the intent of the scheme. Their recommendation was for that change of definition in section 25. They saw that there was no principled reason for excluding birth injuries from the scheme on that broad basis and had a concern that the specified list approach is creating a novel approach to birth injuries, inconsistent with every other provision within the legislation.
So we’ve got gradual process which is treated as something that’s separate. But even for gradual process, there is a provision in the Act—so that’s a specified list for gradual process—that enables the case to be made for things that are not on that list, that are gradual processes.
So their very strong argument, which was supported by the Human Rights Commission and a number of submitters, was that there should be general cover, not a specified list, and that a specified list brings us into more definitional debates, more problems over delay in diagnosis, as well as diagnostic debates.
We heard somebody speaking from their own experience of trying to access ACC, and I think the words they had were that from their personal experience, the consequential diagnostic barrier is inequitable, and the evidence shows us that for Māori in particular, in terms of there being discrimination in the system in terms of diagnosis and being referred for support. So when we go for a list-based approach we risk amplifying that existing problem in the system.
It also increases the administrative costs. I do want to point to some of the research that’s telling us that the total annual cost of administration and rationing tools across ACC at the moment is estimated to be between $1.5 billion and $3 billion. It’s a huge proportion of the scheme. And that’s Warren Forster’s research that was recently published. So a huge proportion of the scheme is going into these assessment and rationing processes.
My concern is that by a defined list approach without a general provision clause, we risk increasing the cost to ACC. That was actually a point raised by—slightly tangentially—the New Zealand Public Service Association Inc., where they said in their submission that they’re “concerned … our members working at ACC and their colleagues may not be properly resourced to implement changes resulting from the amendments.”, because it is going to be really onerous. We want this cover, but general provision with internal appropriately co-designed general provisions, the Greens believe, would have been a better approach.
Another point I want to make that was raised consistently through the submissions is that this is a very Eurocentric and deficit-based approach to ensuring—[Time expired]
Hon CARMEL SEPULONI (Minister for ACC): Thanks to the member for raising the questions around why we are having a list. I certainly have been adamant, as the Minister, that we want to make sure that all birthing injuries are covered. What was compelling to me were the arguments around clarity, the clarity that can come with having a list. Where things are murky with any system, including with ACC, is that it can provide inconsistent approaches, it can mean that those receiving the services are unclear of what is covered and what is not covered, and it can lead to, in the case of ACC, unnecessary legal challenges because of the fact that there isn’t the clarity that we need. So that was compelling enough for me to actually see that having the list, a comprehensive list, as being of value to not only the medical profession but also the women that may have an injury that needs to be covered by this legislation. And so I was swayed to be in favour of actually having a comprehensive list.
What I was also very pleased with was the work of the select committee and the work they did to really flesh out what is on that list. The medical professionals themselves have largely agreed that the list that we’ve ended up with will provide the comprehensive cover that we are seeking. So that gives me relief and confidence that the list has been fleshed out to the extent that it could be and will provide the clarity and cover that we’re all seeking.
What we have done is to—you know, taking into consideration that science does evolve; we could end up with more information—put a review period in here for the list, and we can look at whether or not anything has changed over a three-year period. In saying that, if science was to give us information earlier than the three years and something compelling came up, there’s nothing to stop someone making an amendment to add to that list. So I’m confident that where we have landed, and by having the list in place, we are actually providing the comprehensive cover, the clarity, and the certainty that these women need if they do end up in a position where they have an injury.
JAN LOGIE (Green): Thank you, Mr Chair. I thank the Minister for that, and we heard those arguments around clarity within the committee, but we were also a people who were familiar with that argument, and I include Dr Simon Connell and Dawn Duncan amongst others who heard that argument and said that, actually, they didn’t think that that would necessarily provide more clarity and part of what we heard about was the diagnostic list. Then we still had DHBs, and different hospitals used different medical language, so there’s actually potential for confusion and barriers over those diagnostic tools, and it would have been entirely possible to come up with a kind of equivalent that could have been co-designed with community and put in place at an operational level and could have addressed those issues while providing the general provision in law without the requirement. And I commend the Minister for the three-year review and the work we all did in the select committee to get to this point of having expanded it. We tested really hard about what might be missing but also with the knowledge that there hasn’t been much research in this whole area. Medical science is an evolving thing, but the evolution is not going to finish in three years, right? And do we really want to be requiring legislative change at every single point when medical knowledge improves or clarifies injury? I would say no.
I did just want to speak and give voice to the point made a bit more by submitters around this being a problematic construct, particularly for Māori. The point too is partly the individualism, partly the requirement for the specific diagnoses and the privileging of the medical system in that process of getting support and treatment, which is—and we were told by the advisers to the committee that actually there is no need for a Te Tiriti clause in this and that it will be fine; it will just be done operationally. But the view from Māori submitters on the bill was that actually this is an inherently problematic approach. We are saying—and I’ll quote from one of the submissions—“The fact that the bill focuses only on the birthing woman, not more widely and holistically on whānau or any injury or trauma potentially caused to them does not acknowledge a Māori world view or provide for the collective responsibility that we share with hapū and iwi, noting the colonialism and institutionalisation of birth has systematically fragmented Māori women’s spiritual, spatial, and corporeal experiences of birth and have led to poor birth outcomes for women and babies, coupled with generations of women and whānau who have been denied access to whānau support, mātauranga Māori, rongoā tikanga pertaining to maternity and to lands and waters being used for healing.”
This, I know, has come up at the Mana Wāhine hearings, and yet here we are in legislation, while those hearings are going on, locking in a confirmation of that model that we know is causing harm. I hope that this will be mitigated, and I’d love to hear from the Minister any commitment to mitigating it in prevention work and what ACC may pick up around the prevention of birth injuries to help mitigate this, but acknowledging that it will just be a mitigation. There were submissions noting that they saw this as really—I guess that probably speaks to that point.
Dr DUNCAN WEBB (Chief Whip—Labour): I move, That the question be now put.
JAN LOGIE (Green): Thank you, Mr Chair. As signposted by Michael Woodhouse earlier, I would love to take the opportunity to speak to the amendment around the extension around mental injury. I do want to start, because I’m sure the Minister will do it anyway, but I’ll just take the moment to say that in the bill, while it’s not clear for people, and initially it was unclear to me, in terms of the extent of cover for mental injury that is included in this—actually, whenever there is a physical injury on this list and there is a mental injury, then there will be cover for mental injury, as through treatment injuries. That’s really, I think, important for people to understand and know because we want them to be able to access that support.
The point I would like to speak to today, though, is actually where there aren’t injuries on that list and yet there is a mental injury. I acknowledge that this is not a point where we’re going to get agreement with the Government, because the Government’s position is maintaining the existing boundaries around mental injury that exist within the ACC scheme, which is there needs to be a physical injury—it’s either, I think, section 21 in terms of sensitive claims or it’s a workplace-related injury. The Greens have a fundamental view that those boundaries are deeply problematic and are not working for our communities.
We know, in terms of perinatal mental health in this country, we have a real problem. Suicide is the leading cause of maternal death in this country. Fifty percent of women who suffer with anxiety or depression in pregnancy will develop perinatal depression. Twelve percent of pregnant women have severe anxiety or depression. And they’re separate issues; that is the broader context. But what we heard through the submission process was of people who had deeply traumatic births where there was not a physical injury. And one example was where somebody spoke of their friend’s experience, saying some difficult births can leave women labouring for days. This puts their nervous systems into high states of arousal for long periods. The post-traumatic stress disorder, which can result, can be very debilitating. One friend was exhausted from days of painful labour and then had to endure invasive medical interventions. These did not go well and led to her watching her blood shoot across the room at the same time as fearing for her life and the life of her baby. This led to many years of terrifying nightmares. That was a situation without an injury on this list. I do not get the logic of how that is different from an injury on this list, and it was not considered a treatment injury.
We also have heard the stories of women particularly in rural communities, where there may not be a birthing centre. I’ve heard this particularly from Queenstown, but I’m sure there are other areas as well where they need to be airlifted out under urgency, and if they have a partner, they’re often in a car driving, maybe with another child, not knowing if they’re going to live or die. And there’s no physical injury on this list at the end of that, but that is an entire family traumatised, and I don’t think the average person in the street understands why we wouldn’t get them the same support as we would get somebody if they’d also had a perinatal tear. I just don’t think it’s your average person’s logic to make that distinction, and I don’t think it understands birth in its wholeness and I don’t think it does credit to the sense and the importance of whānau, and particularly when in that situation and in others the midwife might get cover. It doesn’t make sense to me, Minister, and I understand existing boundaries, but sometimes it’s time to just blow them up and do what makes sense and is the best thing for our communities.
Hon CARMEL SEPULONI (Minister for ACC): I do note the points the member has raised; I won’t be supporting the Supplementary Order Paper. I do believe, though, that there is a broader piece of work that needs to be undertaken with regards to accident compensation cover for mental injury. That needs to be done in a comprehensive way, rather than a bitsy way that might concentrate on one particular mental injury, as opposed to not concentrating on something else. I have said to ACC that I want that work to begin next year, but this is not the place to fix everything. This particular bill is to cover the physical injuries that come about from giving birth, and, as the member has pointed out, where there is a mental injury that ensues because of the physical injury, then that will also be covered. The more comprehensive, broader issues that the member is talking about can’t all be covered in this one piece of legislation, but I do agree there needs to be that work done on mental injury. And as I have indicated publicly, that will start next year.
MAUREEN PUGH (National): Thank you, Mr Chair. I take this opportunity to make a short contribution and ask a couple of queries around the Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill. Thank you, sir.
I’d like to turn my attention, Minister, to clause 8, which is around the “Personal injury caused by work-related gradual process, disease, or infection”. It was raised early on in the earlier debates on this particular bill that that was referring to work-related injuries or illnesses that were caused by the gradual process or disease as a result of workplace exposure.
Of particular interest to me at the time was the firefighters who are exposed to toxic fumes, and a range of toxic fumes, as a result of the work that they do, going into burning buildings. On entering those burning buildings, they’re never quite sure about what it is they’re going to be exposed to, and over time, unfortunately, many of our firefighters do end up with cancer as a consequence of constant exposure. In fact, the New Zealand Professional Firefighters Union said that cancer is the greatest killer of firefighters globally, but many struggle to get it covered by ACC in New Zealand.
I did take the opportunity to visit with the firefighters at their training facility in Rotorua with my friend and colleague the Hon Todd McClay, and a fantastic—
Hon Todd McClay: Honourable.
MAUREEN PUGH: Very honourable—very honourable.
Hon Michael Woodhouse: Some days.
MAUREEN PUGH: Yes. And it was at that facility that it was explained to us about the constant exposure to these poisonous gases, etc.
Now, in the bill, it was considered in the beginning about exposure to these toxic fumes and gases, and I just wonder why, Minister, it has not been specifically outlined in the bill, or did the select committee give consideration to this particular workforce to include it as part of this bill, as a work-related gradual process, disease, or infection? It seems quite clear from the research that’s been done, and the firefighters have even referred to the World Health Organization’s research—
CHAIRPERSON (Greg O’Connor): Ms Pugh, I’ve asked you to keep it narrower. We’ve been on firefighters now for three minutes, so unless there’s a specific question—
MAUREEN PUGH: Yes, I’m talking to the exposure over time, which is the gradual process of disease and infection, and this is a particular workforce that is sensitive to this part of the bill. Can the Minister give us some feedback about the conversation that may have been had in the select committee? What was the information that was used, and did the consideration include that firefighters would be included in this bill, and can the Minister perhaps expand on section 30 to include that particular workforce? Thank you, Mr Chair.
Dr DUNCAN WEBB (Chief Whip—Labour): I move, That the question be now put.
CHAIRPERSON (Greg O’Connor): The question is—
Hon Michael Woodhouse: Come on, Mr Chair. We haven’t even spoken to the Supplementary Order Papers. Point of order.
CHAIRPERSON (Greg O’Connor): All those in favour—
Hon Michael Woodhouse: Point of order, Mr Chair.
CHAIRPERSON (Greg O’Connor): The point of order will not be on my decision to actually take a closure motion, will it?
Hon Michael Woodhouse: Well, if we don’t have a conversation, the Speaker may well be recalled. And I think it’d be good to avoid that.
CHAIRPERSON (Greg O’Connor): We’re going to actually carry on with this motion.
Hon Michael Woodhouse: This is outrageous. I’m out of here. What a load of shit, Greg.
CHAIRPERSON (Greg O’Connor): That member will stand, withdraw, and apologise.
Hon Michael Woodhouse: No, he won’t.
CHAIRPERSON (Greg O’Connor): The member will leave the Chamber.
Hon Michael Woodhouse withdrew from the Chamber.
A party vote was called for on the question, That the question be now put.
Ayes 65
New Zealand Labour 64; Sharma.
Noes 53
New Zealand National 33; ACT New Zealand 10; Green Party of Aotearoa New Zealand 10.
Motion agreed to.
CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendment set out on Supplementary Order Paper 238 be agreed to.
Amendment agreed to.
CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendment set out on Supplementary Order Paper 218 be agreed to.
Amendment agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendments inserting new clauses 5A, 8A, and 8B, and amending clauses 8 and 10, set out on Supplementary Order Paper 251, be agreed to.
A party vote was called for on the question, That the amendments be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendments not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment to clause 6(1) set out on Supplementary Order Paper 246 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment inserting clause 6(3) set out on Supplementary Order Paper 247 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that the Hon Michael Woodhouse’s amendment to clause 6A set out on Supplementary Order Paper 245 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 53
New Zealand National 33; ACT New Zealand 10; Green Party of Aotearoa New Zealand 10.
Noes 65
New Zealand Labour 64; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment replacing clause 7 set out on Supplementary Order Paper 249 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendments to clause 8 set out on Supplementary Order Paper 248 be agreed to.
A party vote was called for on the question, That the amendments be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendments not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment replacing clause 10 set out on Supplementary Order Paper 250 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Part 1 as amended stand part.
Part 1 agreed to.
Part 2 Consequential amendments to regulations
CHAIRPERSON (Greg O’Connor): Members, we now come to Part 2. This is the debate on clauses 18 to 21, “Consequential amendments to regulations”. The question is that Part 2 stand part.
Part 2 agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment to Schedule 1 set out on Supplementary Order Paper 249 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Jan Logie’s amendment to Schedule 1 set out on Supplementary Order 248 be agreed to.
A party vote was called for on the question, That the amendment be agreed to.
Ayes 10
Green Party of Aotearoa New Zealand 10.
Noes 108
New Zealand Labour 64; New Zealand National 33; ACT New Zealand 10; Sharma.
Amendment not agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Schedule 1 stand part.
Schedule 1 agreed to.
CHAIRPERSON (Greg O’Connor): The question is that Schedule 2 stand part.
Schedule 2 agreed to.
Clauses 1 to 3
CHAIRPERSON (Greg O’Connor): Members, we now come to our final debate, clauses 1 to 3. This is the debate on clauses 1 to 3—“Title”, “Commencement”, and “Principal Act”. The question is that Clause 1 stand part.
Clause 1 agreed to.
CHAIRPERSON (Greg O’Connor): The question is that clause 2 stand part.
Clause 2 agreed to.
CHAIRPERSON (Greg O’Connor): The question is that clause 3 stand part.
Clause 3 agreed to.
Bill to be reported with amendment.
House resumed.
CHAIRPERSON (Greg O’Connor): Madam Speaker, the committee has further considered the Accident Compensation (Maternal Birth Injury and Other Matters) Amendment Bill and reports it with amendment. I move, That the report be adopted.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the report be adopted.
Motion agreed to.
Report adopted.
Bills
Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill
First Reading
Hon MEKA WHAITIRI (Associate Minister of Agriculture) on behalf of the Minister of Agriculture: I present a legislative statement on the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill.
ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can found on the Parliament website.
Hon MEKA WHAITIRI: I move, That the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill be now read a first time.
I nominate the Primary Production Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 10 November 2022 and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 193, 195, and 196.
Fonterra is New Zealand’s largest dairy processor. It is a New Zealand - owned cooperative with a membership of around 10,000 farmers. The dairy sector, of which Fonterra is part, will this year earn around $22.1 billion in export receipts. It is therefore essential that Fonterra has the right settings to perform well. The Dairy Industry Restructuring Act, or DIRA, was passed in 2001 to allow for the formation of Fonterra. The DIRA included safeguards to ensure that Fonterra had the incentives to perform well. This was at a time when it accounted for about 90 percent of the farm-gate milk market. The safeguards have over time included certain disciplines around capital structure. Fonterra and its shareholders are free to determine the cooperative’s capital structure. The DIRA has aimed to ensure that whatever its form, the capital structure did not adversely affect contestability for farmers’ milk supply.
Last year, Fonterra’s farmer shareholders voted in favour of a new capital structure to replace the current trading among farmers structure. The new capital structure will make it easier for farmers to become shareholders in Fonterra and supply milk. Fonterra will be better placed to attract and retain milk supply in an environment where milk production is forecast to plateau or decline. This will ensure Fonterra can make optimum use of its investment in dairy processing, continue to compete strongly in global markets, and remain a mainstay of rural New Zealand.
The Government believes it is important for Fonterra to be able to make changes to respond to a changing environment and to be able to proceed with certainty. As part of its future capital structure Fonterra wants to partially de-link its unit fund from the farmers’ shareholders market. The linkage is a key part of the current trading among farmers capital structure and it is embedded in the DIRA. If the DIRA is not amended, Fonterra will face ongoing legal uncertainty. While the Government is prepared to support the change that Fonterra and its farmers want, we are also aware that the new capital structure carries potential risk—risk for farmers and the performance of the wider dairy sector, and also to Fonterra’s own performance over the longer term.
Fonterra will find it easier to attract and retain milk supply. That is a positive. But locking in farmers through new shareholding arrangements could have downsides if, for example, it stopped farmers supporting other potentially more innovative processes or stopped farmers moving from dairy into other land sustainable land uses. Fonterra needs a certain amount of competitive pressure from other dairy processors or from competing land-use. Competitive pressure ensures Fonterra performs at its very best. That performance means not only being the best at what it does now but also being an innovator and a driver of long-term sustainable dairying. So the bill amends some existing DIRA settings to help manage risk and support ongoing performance. These amendments relate to increased transparency, robust governance, and the independence of price-setting processes.
First, the bill improves the transparency and robustness of the governance, operation, and Commerce Commission oversight of Fonterra’s base milk pricing arrangements. A transparent, independent, and robust base milk price - setting process is important. Fonterra’s size in the market for farmers’ milk means it, essentially, sets the farm-gate milk price for the whole dairy industry. To attract and retain farmers’ milk supply, other processors need to exceed Fonterra’s farm-gate milk price, forcing efficiencies across the whole industry. The DIRA therefore includes provisions that govern the calculation of the base milk price, including monitoring by the Commerce Commission.
The bill has two features to improve transparency and independence of the governance and operation of the milk price - setting arrangements. The bill increases the number of ministerial nominees to Fonterra’s milk price panel from one to two, and it requires the chair of Fonterra’s milk price panel to be independent of Fonterra. Fonterra will also need the Minister’s approval of a candidate before it appoints a chair. Fonterra will also have to regularly change the milk price group. The milk price group is the external body contracted to administer the base milk price calculation. This is to ensure that the milk price manual remains fully independent from Fonterra’s board and management over time.
Secondly, the bill strengthens the Commerce Commission’s oversight of the base milk price - setting regime. It gives the Commerce Commission the ability to direct Fonterra on the rules in its milk price manual and the inputs, assumptions, and processes that Fonterra uses in the base milk price calculation. This is a change from the current settings. At the moment, the commission can comment, but Fonterra need not take account of those comments.
This amendment will enable the regulatory regime to address issues that have a material impact on the base milk price. It responds to longstanding concerns about the effectiveness of the base milk price - setting regulatory regime. It is worth noting that the Commerce Commission’s new powers of direction do not mean that the commission is setting the price that farmers get paid for their milk; the farm-gate milk price is Fonterra’s decision, and nothing in this bill affects that.
The bill will also support liquidity in the trade of Fonterra shares in its restricted farmer-only market. It improves transparency in relation to Fonterra’s performance.
Fonterra is moving to a farmer-only market for its shares. Because the market will be restricted, farmers could find it difficult to trade shares readily, to find a buyer in a timely manner or without undue financial cost. This could limit farmers’ ability to exit from Fonterra, either to supply other processors or consider alternative land-use. It’s great if farmers want to be shareholders in Fonterra, but they also need to be able to exercise choice, including the choice to exit.
The bill supports liquidity in two ways: by (1) requiring a market marker to be designated under NZX rules to support ongoing liquidity in the restricted farmers-only market; and (2) requiring Fonterra to make an independent market analysis of its performance, which is accessible to farmers and unit holders. The market marker will facilitate the buying and selling of shares where there is low demand amongst farmers. This will enable entry and exit in a timely manner. The publication of market analysis by Fonterra will help ensure that farmers, shareholders, prospective farmer shareholders, unit holders, and prospective unit holders remain well-informed about Fonterra’s performance to assist in participating in the shareholders market and related investment decisions.
The Dairy Industry Restructuring Act has evolved since 2001, when it was first passed to enable the establishment of Fonterra, and the amendments introduced by this bill continue that evolution. This bill recognises that Fonterra exists in a dynamic and changing environment. The cooperative and the legislation need to respond effectively.
Fonterra, and the dairy sector as a whole, are facing increasing challenges: environmental and resource limits, changes in social licence, volatile global markets, and changing consumer preferences. The bill is a measured response to changing circumstances. It enables Fonterra to move forward with confidence in an increasingly challenging commercial environment, while recognising the need for some continuing safeguards to encourage the performance of Fonterra and the wider dairy sector. I commend the bill to the House.
DEPUTY SPEAKER: The question is that the motion be agreed to.
BARBARA KURIGER (National—Taranaki - King Country): Thank you, Mr Speaker. First up on speaking to this Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill, I just want to congratulate Fonterra today on coming out with a final farm-gate milk price for the season just passed of $9.30. That is a record payout for Fonterra, and I’m sure that it will be much appreciated by the farmers of New Zealand but also by the economy of New Zealand. And before people start talking about us—you know, National just being about the economy—there’s a couple of other little stats that I’d actually like to give you in terms of what else Fonterra’s doing on behalf of farmers: 50 million kick-start breakfasts served, 12 million dairy serves donated to New Zealand’s food network, $13.7 billion is to the economy—which, we were talking about the economy a moment ago—6,200 farm environment plans delivered. And that’s really significant because what is really relevant here is that since 2018, 11.2 percent downward on greenhouse gas emissions for scope one and two. So that’s particularly relevant that farmers are not only being successful in terms of productivity and profitability but also making progress in the environmental space, which is excellent.
I also wanted to comment on this because Fonterra farmers have voted in support of this piece of legislation, and recently there was a comment out by the Parliamentary Commissioner for the Environment, and the Parliamentary Commissioner does some really good work, but I’m a little confused about this particular piece of work that says “Fonterra restructure law risks pushing up emissions and diminishing freshwater quality, environmental commissioner warns.” Part of the commentary was that the Government appears to be unmoved by those concerns. I have to say, in the National caucus supporting this piece of legislation, we don’t share the Parliamentary Commissioner for the Environment’s direct concerns in relation to this, because, actually, I think that if you went back 15 years ago and we were talking about the cost of the share price dropping, people would’ve seen that as an opportunity for more cows and more cows. But I’ve spent a lot of time talking to people lately about how we’ve reached pretty much “peak cow” in New Zealand—there’s a lot of catchments that are “cowed-out” if you like—and we do recognise now that probably 15 years ago going back that there wasn’t such a recognition of the environmental constraints.
So even though the share price will be lower, the ability to get resource consents will actually build on the cow numbers—with the environmental compliance that’s happening right now, it’s very unlikely this is going to happen.
And I also think the one good thing about this legislation that we tried to get in the last piece—we went round and round as a Primary Production Committee trying to find a way to get new shareholders into Fonterra, i.e., sharemilkers, contract milkers, farm lessors, associated shareholders, and because we were trying to define it quite tightly; there’s so many different types of equity forms out there that it was quite difficult to do. So when the Parliamentary Commissioner says doing so will be making it easier for new farmers to join the co-op, this is not, in our view, new farmers—as in more farms and more cows—it is actually new farmers who currently don’t have the ability to be part of the co-op.
I think if we’re looking after the succession plan of the future of Fonterra and New Zealand farmers by letting younger farmers and sharemilkers and contract milkers participate, that has to be a good thing. So the changes that are being proposed here have Fonterra adopting a more flexible shareholding structure, allowing farmers to hold fewer shares, and widening the pool, as I said, to let some newer farmers in.
Fonterra’s competitors don’t require their farmers to purchase shares to supply milk, and Fonterra’s concern is that it will become a smaller, less efficient business, that we’d continue to lose milk supply without this amendment, and that’s a fair comment because it is the cooperative which—you know, a lot of our businesses in New Zealand that have been extremely successful are cooperatives and have a shareholding base, and this one is no exception.
So when we went into the Dairy Industry Restructuring Act in the early 2000s, Fonterra was about 95 percent of the milk supply, or somewhere round there. It’s currently 79 percent, and what happened 20 years ago was really a lot of these rules were put around Fonterra to make sure that competition evolved, and, actually, competition has evolved to quite a substantial proportion over the last few years, and we wouldn’t want to weaken our large cooperative in terms of constraining it too much.
So there’s just a couple of concerns that the National caucus has with this piece of legislation, and we are supporting it, but we are concerned about increasing the number of ministerial nominees to Fonterra’s milk price panel from one to two. And the other piece of that is requiring an independent chair, appointed with the approval of the Minister. Now, when I spoke to the Minister about this, I said, “That’s three people”. The Minister made the case that it may be three people or it may be two people because one of those two ministerial nominees may well be a nominee and the chair, so that could be two or three. On this side of the House, we think that’s a bit much. We don’t really see that there’s been any evidence that Fonterra has tried to spin the wheels in any case in any of this, and everything’s been done open and upfront—in fact, I was on the shareholders’ council, back 20 years ago, when a lot of this milk pricing was worked out, and it’s worked out in a way that’s pretty logical and pretty fair.
The other one that we are not supportive of is to give the Commerce Commission power to issue binding directions to Fonterra following reviews. We see this as another piece in addition to the extra directors—will be just more and more obligations on Fonterra. And sometimes I think Governments create—or they go looking for answers for problems that don’t actually exist, and we don’t see why that extra step needs to be made. That’s something that we’ll be having a good conversation about when we go to select committee, because our cooperative does quite well and we don’t feel like it needs any more Government restrictions than we’ve already got.
So I just want to say, over the last month, six weeks, couple of months—depending on which part of the country people are in—we’ve had farmers out there who have been calving their cows, getting their calves fed, going through their farm duties in what has been some exceptionally bad weather in some parts of the country; it hasn’t been too bad where our farms are situated. And if people said to me, “How’s the weather been and how are the farms going?”, I’d say well, in all honesty, at times I would have to say, “A bit wet”, but “a bit wet” is in proportion to those people in Northland, Canterbury, East Coast—you know, look at Nelson Tasman, how it was hit.
And so I just want to give a shout-out to the farmers. As I say, a record payout today—but the thing is that farmers are now doing this environmentally in a much more friendly way than ever, creating a great lot of value for this country. We are the most efficient climate-emitter farmers in the world, and the goal is that if we continue to do the right things and continue to put the right steps in place, we will continue to be the most efficient farmers in the world.
So we support the piece of legislation, we look forward to the select committee process—we will be contesting a couple of these points and see where we get to, see if we can ask the Government if they can change their mind on those two points. But I commend this bill to the House, because we think it’s a very worthwhile piece of legislation. Thank you.
JO LUXTON (Labour—Rangitata): Thank you, Madam Speaker. It’s a pleasure to rise and take a call on the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill. As the chair of the Primary Production Committee, which will be looking over and progressing this bill, it makes it even more of a pleasure, and I’m looking forward to hearing from the public, from farmers themselves, from companies, from dairy co-ops, etc., about this piece of legislation. It is a short turn-round with the report-back date being set for 10 November, and I know that, as far as dairy farming goes, they are pretty much coming to or nearly finished carving. So I’m hoping there’ll be just a little bit of time there—enough time for them to be able to submit to this before they get too heavily into artificial insemination, which I know some of them probably are already undertaking at this stage.
I have to say the weather for us in the electorate of Rangitata, which I represent, hasn’t been too bad; it’s been reasonably kind. We have had a pretty good time, as far as weather goes anyway, for calving. I also want to acknowledge and join with my colleague Barbara Kuriger in congratulating Fonterra and farmers out there for this record payout. It just goes to show dairy farmers out there are a success story for our country and they contribute so much to our economy. In fact, as well as other primary producers, they have carried our economy through COVID and allowed us to be able to recover the way that we have.
I wanted to pick up on a couple of points that the previous speaker mentioned, and one of them was around the Parliamentary Commissioner for the Environment and the concerns that they raised in their report around the potential for this to increase emissions and impact on our waterways. I have to say I do agree with Barbara Kuriger on this matter that I don’t see that it necessarily means that because more farmers will be able to become shareholders that that means more dairy farms popping up, as Barbara Kuriger said. I think that the country realises and the farming community realises that they probably have reached “peak cow” and are looking at ways, whilst having reached “peak cow”, that they can just continue to improve practices, of which we have some of the best in the world as far as dairying goes.
I also like the fact that this does allow our younger farmers, our sharemilkers, to become shareholders—something that potentially they couldn’t have been able to do prior—and I think it’s really important, because often with different farming types it’s difficult to get into farming itself. If you think about sheep and arable, it’s often a family farm, and I think dairying is one of the only ways—albeit very hard—to work your way up through and into that farm ownership. Becoming a shareholder was something that was not able to be obtained and so I think that this piece of legislation will certainly look to allow that, and I don’t see that it will increase or assume that new dairy farms will pop up because of this change in this piece of legislation.
What we have here with this piece of legislation is the fact that Fonterra is a massive success story for our country. It’s been a fantastic success story as far as it’s a cooperative company, and the fact that it is 100 percent a New Zealand - owned cooperative is something that we should all be very, very proud of. I think it came about because of the Dairy Industry Restructuring Act—the DIRA, as it’s referred to—in 2001 which allowed this, the Fonterra, to be set up.
We know that, as I’ve said before, and various other speakers have said before, our dairy farmers are actually world-leading and the Fonterra co-op has been part of that—an essential part of that, actually. We heard before that the farmers providing milk to Fonterra—it’s around 79 percent of the milk that’s produced in New Zealand that goes through Fonterra, so it is a key part of our dairy industry here. We provide dairy exports to 130 countries, and 95 percent of all dairy milk produced in New Zealand is supported with expected revenue of approximately $19.1 billion a year. So it is worth a huge amount to our economy, and it also employs around 49,000 people within the industry throughout the country.
Given that DIRA and Fonterra were formed in around about 2001, times change, things change, practices change, and everything evolves. I think that it’s only right that we continue to look at and evolve this piece of legislation as is needed given that practices change and also the fact that we are facing changes within our climate and our environment. So it just makes sense that we continue to look at this piece of legislation and improve it.
There’s a couple of things that this piece of legislation does, but it does improve transparency and independence of the governance and operation of milk price settings in New Zealand. We heard before that Fonterra has the shareholders within its cooperative but other ones—not like Fonterra but others—they don’t make their farmers and suppliers become shareholders. So the issue is that with Fonterra collecting the majority of milk across the country, they pretty much almost set the price for milk, or the farm-gate price for milk. That has been a concern for other milk companies in order to remain competitive, and so I think what this piece of legislation does—and I know that the member opposite, Barbara Kuriger, has expressed concern around the way that perhaps the panels might be set up in so far as having ministerial nominees for the Milk Price Panel being increased from one to two. But I do think that it’s important because the price that Fonterra sets does impact across the sector, and we do need to make sure that we do have a level and an even playing field when it comes to the setting of the milk price.
So it’s important that there is some oversight, transparency for other agencies, and things like that, which gives comfort, I suppose, to suppliers, to farmers, to know that others don’t have to raise the milk prices in order to compete with Fonterra in order to keep their shareholders. I just think that with this bill, with the transparency that it will provide, it will certainly help keep that playing field somewhat even. I mean, I know that last year, the Fonterra shareholders voted in favour—I think 85.16 percent voted in favour—of their restructure out of 82.65 percent of eligible votes being cast, and so I think that’s a really clear indication that Fonterra itself were keen on having this restructure.
I think that it will be a really interesting process when we hear from—I’m hoping—many submitters. It is a short submission time frame, but I am looking forward to hearing from the submitters in that we might be able to address some of the concerns that Barbara Kuriger has raised, and perhaps there might be others that are raised throughout this this afternoon in these speeches.
So I think it’ll be a very interesting process, and I am looking forward to it. I think the select committee will be a pretty robust exercise hearing these submissions, but I do think we work as collegially as we can when it comes to our primary sector because it’s such an important one. I commend this bill to the House.
TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Speaker. Pleasure to take a call on this bill in its first reading here before the House today. I would like to start by also acknowledging the results announced by Fonterra today, a record milk price of $9.30 per kilogram of milk solids. That is a fantastic result. But, actually, I think it’s really important also alongside that to note that whilst that’s a record, we’re also seeing costs at record high levels—
Mark Cameron: Going through the roof.
TIM VAN DE MOLEN: —as well. Going through the roof, Mr Cameron; absolutely right. At a time when farmers are facing significant pressure on that front, having a record milk price, thankfully, helps to offset some of that cost—you look at it, whether it’s fertiliser, electricity, fuel, interest rates of course, labour, if they can get labour, of course, as well. There’s a whole range of areas where farmers are getting hit with increased costs. So it’s important that we do recognise that aspect, for anyone listening who doesn’t necessarily understand the farming system. A record milk price doesn’t just mean lots more money for farmers or lots more profit, I should say; it actually means that, you know, things are OK. They’re able to get through because we have seen that massive cost increase.
I also just want to highlight the fact that our food and fibre sector is absolutely vital for the future prosperity of New Zealand’s economy. We need to keep that front and centre as well. You know, there have been some challenges within that space and a number of pieces of proposed legislation, a lot of uncertainty for the industry that’s making it really tough, quite aside from the financial aspects, to be in the food and fibre sector as well. So I do want to acknowledge everyone involved in that sector, particularly the dairy farmers, on the basis of today’s piece of legislation. I thank them for their hard work and, for most of them, coming out the back end of calving, hopefully a bit of weight starting to come off the shoulders.
But just on the report back—and I do want to pick up on that, because it’s something that the previous speaker Jo Luxton commented on. We are seeing an incredibly short report-back period being proposed by this Government. Now, they are doing this time and time again on legislation across a whole range of different areas where it’s totally unacceptable. Why are they not prepared to give the industry sufficient time to consult in detail? It reeks of an arrogant Government that thinks they know best and aren’t interested in hearing the opinions of anyone else in the industries that are actually being impacted by the legislation brought forward. Seven weeks is ridiculously short, at a time when, yes, they’re coming out the back of calving, but, actually, they’ll be going into mating in only a few weeks’ time. There’s a lot of pressure on-farm. They’re not going to necessarily have the time, and we risk missing out on valuable opinions or valuable insights because the Government has put in a very short time frame. I don’t know why they’ve chosen that time frame. Perhaps we’ll hear more about that, and we may end up debating this point as well, because I think it is worth a discussion as to why we are shortening it so much in this regard as well.
On top of that, I do just want to, I guess, pick up on the fact that there are some concerns that have been raised. We’re supporting this bill at its first reading, but there are some concerns that have been raised by some players within the industry around some aspects of this piece of legislation. Now, as we heard from the previous speaker, 85 percent of Fonterra shareholders approved or supported the restructure at their vote last December. So that’s a very strong mandate—75 percent was the threshold, not 50 percent, so 75 percent. They got 85 percent—very strong mandate—and they want change, so this is looking to enact that. That’s all well and good, and on a number of aspects I absolutely support that, making it easier for sharemilkers or contract milkers to be able to be Fonterra suppliers in terms of reducing the requirement to purchase Fonterra shares. That comes at a pretty high capital cost for those businesses that are frequently lacking in capital. You know, they are usually young businesses, not particularly well advanced in their life cycle, and therefore don’t have significant equity behind them. So having to fork out what has been, up until now, a very high dollar price, but also backing every kilogram of milksolids with a share has put a significant capital cost on those farmers.
And, obviously, then, from the banking perspective, you look at debt-to-equity ratios, the security aspect in behind that as well.
Simon Watts: How are those interest rates?
TIM VAN DE MOLEN: And, of course, with rising interest rates, Mr Watts, that’s becoming challenging.
So these are all aspects that support the argument for changing this, to enable better access for those younger farmers, typically, to be able to get into Fonterra, to be part of Fonterra if they so choose.
I do just want to pick up on one other comment that was made around some of the other competitors not having the same model, so the barrier to entry of buying shares not being there or that may be the case—not in every instance; in some instances—but, actually, that comes down to different entity structures. Right, so in this model, it’s a cooperative. Suppliers are looking to buy shares. That gives them, then, more input and more say in how that business is run. When you look at some of the other models out there from dairy companies, they are different. They might be privately owned companies and therefore their suppliers have less control or less input into the management of that entity.
So, of course, those structures are quite different and reflect potentially different values or priorities for why people may choose to support one company over the other. It’s not just about whether or not they can afford to buy shares in Fonterra or choosing to be part of Fonterra on the basis of that; there are those other considerations that they may consider more important in selling the price point—i.e., around their ability to have more say in the nature of that business or indeed aligning more with the values of one particular business over another. A whole range of factors that influence a decision to supply.
One of the other aspects that I just wanted to touch on—I think it’s probably worth mentioning what that looks like. So what’s being proposed here is that instead of having to back every share or every kilogram of milksolid with a share, that’s cutting back to one-third. So it’s a significant reduction, and on that basis, a significant capital cost reduction as well. And having that fund size then capped at 10 percent of total shareholding allows for some flexibility.
There’s some concern around, well, what happens to the trading of shares between farmers in that model? The report, I think, was commissioned by Open Country Dairy, and suggested that there could be a significant devaluation in the share value of existing Fonterra shareholders—because, presumably, if you move into a model that has more access or more reliance on trading, then you start looking at discounted cash flows from a valuation perspective. And therefore, looking at that model would suggest that still further reduction in the current share price could be experienced by those shareholders. So that, again, impacts on their equity positions and potentially bank security positions as well.
So these are all things that will need to be considered throughout the select committee process, which I will reiterate is exceedingly short—far too short and should be extended, in my view, to allow for a fulsome consideration of a wide range of views on this topic.
But then also some concern around whether we might actually, on the flip side, also see an increase in land value. We heard comments from the Parliamentary Commissioner for the Environment that maybe this could lead to an increase in livestock numbers. I’m not sure that I support that. As we’ve heard from previous two speakers, my take is that, actually, we have, over a period of time now, shifted to a position where most farmers are more aware of value over volume. It has taken some time to get to that position, but if we look at the journey of farming, how we farm now is not how we farmed 10, 20, or 50 years ago and it won’t be how we farm 10, 20, or 50 years into the future. And we continue to evolve and adapt, so we need to be mindful of that in this context as well.
So there may be some unintended consequences. And, again, that’s where we need a robust select committee process to make sure we understand the potential implications of that. But within this legislation, we’ve seen a Government—this Government never misses an opportunity to take more control—
Hon Member: Right.
TIM VAN DE MOLEN: Right, and they’ve done that in this case by saying, “Hey, right, we’re going to move from just appointing one member on the Milk Price Panel to two. And we want to make sure that we decide who the independent chair is going to be. And we’re going to give the Commerce Commission the ability to direct Fonterra to act on any recommendations.” So a typical “Government knows best” approach as we’ve seen time and time again, which aligns also with the arrogance of experience with their shortened select committee process too.
So I’m looking forward to debating this in select committee. I do sit on the Primary Production Committee and I look forward to hearing a range of views from submitters on what this bill may or may not result in for them.
But ultimately, on the face of it, the Fonterra shareholders are in favour of it. There’s some good aspects to it, but I’m very keen to traverse those different views from submitters, and I would encourage the Government to reconsider their shortened time frame—given the farming calendar—to ensure that we do get the full range of views and can make good legislation. Ultimately, that’s what we should be doing here: passing good legislation, not just passing legislation for the sake of it off the back of what the Government thinks they know best. So we do support this bill and I look forward to the select committee process. Thank you.
ANGELA ROBERTS (Labour): Kia ora, Madam Speaker. It’s a great pleasure to stand today and take a call on the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill.
As most of you know, I love a teachable moment, especially when it involves economics, and even more especially when it involves a world-leading, innovative primary sector—and when you chuck in a capital restructure, well, I get a bit excited. As my esteemed colleague Dr Deborah Russell knows, there’s some things that only a few of us love.
As someone who lives in a community at the pointy end of the just transition, it’s really great to see this bill. We want our farmers to do well and we also want innovative competition that helps to continue to drive our dairy industry to be world-leading.
Again, like others in the House, I want to acknowledge the record payout. I guess, one little teachable moment here is about the concept of circular flow. I know what that payout does for a community like mine. For a little town like Inglewood, it isn’t just about the farmers having more money to spend; actually, that money gets spent at the local supermarket, it gets spent down at the garden centre, it gets spent at the school gala day, and I’m sure there’s the odd pair of flash new gumboots that get picked up down at Farm Source as well. That money then gets spent again in the community. It’s one of the things that helps us thrive, as small rural communities. So there you go, there’s your circular flow clip, level 1 economic students.
But the just transition is really important. We live at the pointy end in Taranaki, when we’re really struggling to continue to meet that challenge. It’s wonderful to see our dairy farmers stepping up, day after day, and meeting that challenge.
This bill will help us to make sure that the dairy industry continues to be competitive and that farmer choice will actually be incentivised. I note we’ve heard about some concerns that this will just make Fonterra all the more powerful and will mean that they will not be encouraged to really be focused on the environment and the changes they need to be sustainable, as they have done in recent times. But what this will do is it will incentivise more sustainable practice. We’ve seen some of the innovation that Fonterra have made, and how it’s encouraged and supported our young farmers to become organic, to be innovative, and to do that riparian planting, because Fonterra’s been able to reward that.
So the idea is that by having greater fluidity, it’s easier for farmers to go in and it’s also easier for them to step out. Now, when that happens, of course, there’s some accountability there. So when you’ve got young, innovative—well, not necessarily young, but it’s a bit skewed that way—farmers who are really keen, and when they look at Fonterra and they look at the proposition of Fonterra, if Fonterra can say, “We’re going to support you to continue to make progress.”, they need to make sure that they’ve got a proposition that’s attractive to those who are leading the way with our just transition for our dairy industry. So making it easier to leave or to make it a proposition for farmers to enter is a really, really important thing.
The concern, though, that’s been raised that there are going to be additional safeguards put in is a little disconcerting in that you want there to be an improved capital structure, but in order to have that capital structure—which I believe is fairly unique; it’s pretty unusual globally—and the idea that that capital structure just means that Fonterra’s going to be left to do what they want is naive. What we need is the safeguards to support liquidity in farmer choice. When you don’t have shares being traded on the open market and those signals are removed, and there are concerns about whether the share price is going to be reasonably set, you need your market maker. You need your financial institution, which will be contracted to continually buy and sell orders to make sure that there’s an appropriate spread between buying and selling and it maintains a means for shares to be traded and for that market to be retained.
I think it’s interesting that there are concerns that increased transparency is a bad thing. We’ve heard how important—how important—dairy is. We’ve heard the numbers—billions of dollars; huge percentages—and we have to make sure that we safeguard and protect Fonterra. We have to make sure they have access to capital. We have to make sure that they are able to be the best that they can be and continue to lead the world. It’s a challenge for Fonterra, of course, to balance the milk price paid, which is a cornerstone, of course, of their constitution, and retention for future investment in the absence of that external capital. So it will be really interesting to have this come to select committee and have those debates about—you know, we’re really clear about the intent, and this is about making sure that we’ve got this fabulous, world-leading dairy industry and the structures around Fonterra that will make sure that happens. We need to make sure that competition is healthy so that our dairy industry remains healthy.
I just want to reflect for a moment that it was wonderful and refreshing to hear from the other side of the House the support for a cooperative, and we’ve seen cooperative structures that’ve really, really supported our exporters because we are able to collectively take our product to the world. So it isn’t just about the outward-facing; it’s about that collective and cooperative way of having a market in New Zealand that means that we are strong and innovative and global leaders. A collective approach or, some might argue, a slightly socialist approach—and I’m really, really pleased to hear from the other side of the House that they love New Zealand’s socialist cows. It’s wonderful to hear from the other side of the House that when it comes to making sure that our primary sector is as good as it can be, a collective approach is a really good one. So I’m glad to see we’re converting you over on the other side of the House—it’s really wonderful.
We’ve heard Fonterra’s shareholders. We’ve heard how strongly they supported with their vote in December the capital restructure, and while we’ve obviously got some conversations to have about that capital restructure and the safeguards that we put in place, I’m a little confused about the concern about the time frame. It’s really, really clear, from those of us who understand the ebbs and flows of the dairy industry and how things work and how Fonterra works that there is a sense of urgency for this bill. This is in response to the needs of the sector, so we’re really, really pleased to be supporting the time frame that has been established for this bill.
It’s going to be really good to have this bill come to select committee and have a conversation. It’s always great to be sitting on the Primary Production Committee because the expertise in that room and the variety of world views means that we have robust debate and that, actually, in the end, we can be confident that we are going to come up with a piece of legislation that will support and futureproof and really ensure a just transition—not just for Fonterra but for all of the players in the dairy industry—and make sure that we continue to be proud of our global, innovative dairy industry and that we can continue to be the best with our socialist cows. To that point, I would like to commend this bill to the House.
TEANAU TUIONO (Green): I rise on behalf of the Greens to take a call on the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill. We’re here on Thursday afternoon, and I think I’m about to spoil the National Party – Labour Party love fest, because I actually couldn’t tell the difference between both sides of the argument happening here as well—except for when the previous speaker, Angela Roberts, started talking about socialist cows and socialism. So I would invite that side to have a glance through the old Wikipedia, they might see a few things in there that they like.
With a lot of the laws and the regulations that we pass in this House, I look at it from the perspective of a parent. You know, I worry about the future that we’re going to leave our children and our grandchildren, our tamariki and our mokopuna, because if you look around the world, you know, things are in dire straits. I was just thinking about Pakistan, the other day. The country’s floods were so bad they could see them from outer space. They were that bad. Puerto Rico’s also facing floods and storms as well, and there’s supposed to be a weather bomb hitting up north as well. We’ve had more than our fair share of floods and weather events that are related to climate change—weather events that are related to climate change. I’m mindful that, tomorrow, the climate strikers—the high school climate strikers, the school strikers—will be, once again, on the steps of Parliament; our children and our grandchildren asking us to do better, asking us to make sure that when we pass the laws that we pass in this House, we take those things into account.
So when I hear both sides of the House—that side, the Labour Party, and the National Party—say that they disagree with the Parliamentary Commissioner for the Environment, it concerns me—it concerns me. And it concerns me that the main thing that he was calling for was actually to get a climate assessment on what this bill will do—an independent climate assessment about what this bill will do.
There’s three ways of knowing in this world: there’s things that you know that you know, there’s things that you know that you don’t know, and there’s those things that you don’t know that you don’t know. For me, this bill falls in the middle of that category: we don’t know certain things, and we know that we don’t know them. The Parliamentary Commissioner for the Environment knows that we don’t know them. And if I look at the comments from the Ministry for the Environment (MFE), they also noted in their preliminary review that the proposals could lead to increased emissions—the proposals could lead to increased emissions. So if that’s the case, and this is the case that we’re dealing with now, why not have that climate assessment? I have heard, around the House, to say that our farmers are the most environmentally sound as possible. And I’ve met so many of them who do that, who are moving towards regenerative agriculture, who are doing all the right things as well. Why not give them the certainty? Why not give the sector the certainty and get that assessment done?
So the Greens think that this bill should be paused and a review should be done on its potential impact on the climate. It’s pretty simple, really, with the basic maths. Unless you do the assessment, you know, and actually find out that more cows mean more emissions, that’s just the basic maths of it. Putting a climate review in the too-hard basket and hoping for future tech fixes to cut agriculture emissions won’t make the problem go away. If you take your car out for a spin on the road, you’ve got to make sure that it’s warranted and registered. Is this bill warrantable? No, it is no—it is not, because we don’t know what that impact will be on the climate.
So we have three major concerns with this bill. The legislation is likely to have a negative impact on emissions reduction efforts, making it more difficult to leave Fonterra, and incentivising increased milk production, which will disincentivise sustainable land-use change and entrench intensive dairy farming. A climate impact policy assessment, which I talked about earlier, was not completed for the policy as it did not meet MFE requirements, which seem inadequate, given potential implications. However, MFE did note in their preliminary review that the proposals would lead to increased emissions. Do the assessment.
The regulatory impact statement noted that reduced shareholder requirements will free up farmer capital, which could be invested into sustainable climate improvements. And I did hear a bit of that on—I get you guys confused on this bill. However, there’ll be no requirement for investments to be focused on sustainability. They could equally be targeted at increasing production.
Our second major concern is around entrenching monopoly and stifling innovation. So I support the calls for actually taking a longer look at this bill, because it needs it. We need to take a longer look at this bill to make sure that we iron it all out and make sure that we do all those things well. Because when I think about monopolies, I think of the game; we all think about that game Monopoly. And I don’t know about members around the House, but it caused more than a fair few arguments in my house when I was growing up during the holiday times. When you played Monopoly, you’d go around the board and sooner or later there was one person left—one person left. And the concerns with the monopoly is that all of a sudden you’re going to have one bunch of people owning all the cows.
So our concern here is that the bill provides new measures to support the Dairy Industry Restructuring Act monopoly, including restricting Fonterra’s exposure to external ownership by delinking its unit fund and making it more difficult for other processors to compete with Fonterra by reducing barriers to entry. This will have the effect of stifling innovation in the sector. This is because, as a monopoly provider, Fonterra has less incentive to innovate and competitors face greater difficulty entering the market. These risks are particularly significant in the absence of robust pricing for agricultural emissions.
The Government has committed to measures to boost innovation, reduce emissions in the agriculture sector as part of its emissions reduction plan, and this proposal will likely make it more difficult—more difficult—for those initiatives to succeed. This exposes contradictory Government priorities, further entrenching the power of a State-regulated monopoly. To protect the dairy industry is not aligned with the goal of diversifying agriculture and reducing our national emissions footprint.
And our third concern is about the restrictions imposed on farmers. And I think we could all agree on making sure that we do the right things by farmers—putting in all those supports to help them to do the things that they need to do, working in with the land, making sure we can help those pathways for regenerative agriculture. While Fonterra shareholders voted for this capital restructure, it should be noted that there are potentially negative implications for some farmers with the proposals—effectively, devaluing farmers’ shares to protect Fonterra from external ownership may impact farmers closer to retirement, for example. These changes also make it more difficult to exit Fonterra where land-use change is desired—so those farmers that want to do all the things that they need to do to move towards more sustainable ways of land use. They incentivise increased milk production as the way to improve profitability as opposed to, for example, forestry conversions. This is understandable in the context of Fonterra attempting to protect its milk supply monopoly, but has wider implications for the choices of dairy farmers now and in the future.
Folks, we’ve got to do better, you know, for our children and our children’s children, our tamariki and our mokopuna. We can’t, on one hand, talk about doing all the things that we need to do to make sure that we have a climate-friendly future and then bring in something like this without an assessment to give us a steer on the impacts. We need to do better and so the Greens will not be supporting this bill.
MARK CAMERON (ACT): Thank you, Madam Speaker. Well, Fonterra’s an economic juggernaut, and thank goodness it is. What a success story, for all the reasons that the Green Party didn’t identify with. Granted, when it was first conceived, it had about 92 percent of the liquid milk supply, and just to point out to the member on my left, Teanau Tuiono, that has significantly reduced in terms of overall supplier base. It’s now 79 percent, so I’m not quite sure how you reconcile it’s a glaring threat to the environment. I haven’t quite reconciled how you make your sense of that one.
However, in the explanatory note, this Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill does speak to the 2001 Act in how it is being amended. There are a couple of things that need to be reconciled. It says that “New Zealand markets for dairy goods and services are contestable.” And the premise of it was quite obviously to make sure that there wasn’t a total rort by Fonterra or perhaps, you might say, a monopoly. And it also spoke to contestability in the market for farmers in the liquid milk supply. And I think we all acknowledge the importance of not having a monopoly. And that’s why, in its early inception, Fonterra, by its design in the early dairy industry Act, had to supply 10 percent of its liquid milk supply to its chief competitors at cost.
It is well understood that Fonterra’s a success story, and I think we all accept that reality. As previously canvased, it captured 90 percent of New Zealand’s liquid milk supply earlier on; however, we all acknowledge it’s a shrinking pool. I was down in Edendale fairly recently, and the suppliers of the Edendale dairy factory are acutely aware that they have a shrinking milk supply for all manner of reasons that I won’t canvas, given, in my short contribution this evening, I’m running out of time.
The current structure spoke to amending trading amongst farmers, which was the design in the earlier Act, which was created about 10 years ago. In part, it was to stave off the very things that we’re now concerned about, and that was farmers, effectually and effectively, leaving the industry. We know we’ve got a shrinking supply, and this seeks to arrest that concern by giving farmer owner-operators, sharemilkers, those that are supplying Fonterra, some degree of certainty.
However, the ACT Party does have some concerns, as the previous members on all sides of the House, including the Greens, have alluded to. Some of the critics of the legislation have suggested this is a capitulation by the Minister in such as it resulted in the appointment and he thus had to appoint an independent chair for the panel of milk pricing and two appointees. Now, dependant on which lens you look through, that may be the case. Digesting the bill is the real question—what it will ultimately mean for industry certainty. Will the restructuring Act, as drafted in this legislation, allow it to have a proper, clear, transparent entry-exit framework for supply to be well maintained? And I think that’s tantamount for all farmers and their certainty going forward.
A better pathway to join: I think that was canvased by the member Angela Roberts and others in the House previously—I totally agree. It’s seldom that ACT and some of the Labour members agree on all things dairy farming; however, you’re absolutely right. I know, myself, it’s becoming ever-increasingly more difficult for young farmers to get into the industry, and this will create the legal framework for it. It used to be one share, one kilo; now it’s one in four, and by virtue it will create an expedited pathway. And just interestingly, when you actually think about that, that is a massive capital investment upfront that young people historically used to have to have, and arguably that removes that constraint.
Now, I won’t pontificate like there’s a propensity to do by politicians in this place, given it’s now five to five on a Thursday afternoon, but I and the ACT Party will be supporting this bill to select committee so it can have all the necessary kinks ironed out. Thank you very much.
GLEN BENNETT (Labour—New Plymouth): I rise to speak for my full 10 minutes, I hope! No, I’m grateful to be taking a call on this, and I will be very brief, because I know that I am standing between people’s home time on a Thursday afternoon. But I suddenly feel very powerful. Ha, ha! Madam Speaker, apologies. I support this legislation, as does Labour. And I think the final comment that my friend from the ACT Party just made was around younger people being able to get into the industry. I know my father actually was a farmer in Waikato—John Luxton, actually, was his neighbour. And I know that, back in the day, when it was a small little farm that now it’s no longer small, and what was our family farm has now been bought out and bought out and bought out again. And so it’s hard for young people to get into this space, so I’m grateful that we can bring this to the House and I commend it to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): Members, the House stands adjourned until 2 p.m. on Tuesday, 27 September 2022. Ka kite anō.
Debate interrupted.
The House adjourned at 4.56 p.m.