Thursday, 9 March 2023

THURSDAY, 9 MARCH 2023

THURSDAY, 9 MARCH 2023

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

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

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

Speaker’s Rulings

Ministerial Responsibility—Clarification

SPEAKER: Members have raised with me the responsibility of new Ministers for their portfolios prior to the time they were appointed to the portfolios. I wish to draw members’ attention to Speaker’s ruling 163/4-5. Speaker Smith ruled on this matter when a Minister was asked about a decision that occurred in his portfolio before he became a Minister. Dr Smith ruled that “Just because a Minister may not have been present at the time does not relieve them of being answerable for what took place.” Speaker Carter ruled in 2016 that questions relate to a portfolio and not to an individual person.

Ministers are answerable for the portfolio they currently hold and for activities in the portfolio, even before they were appointed to it. Of course, this responsibility does not go back in time indefinitely. Ministers are not responsible for the activities of a previous administration. “The defeat of a Government in an election marks the end of one administration and the commencement of another.”—Speaker’s ruling 164/7. So current Ministers are answerable to the House for decisions taken in their portfolios since the commencement of the Labour-led Government in 2017. They are only answerable for activities prior to that time if they have had to take some action in respect of them during the current administration—Speaker’s ruling 167/3. Kia ora.

Points of Order

House Bells—Failure to Ring

TTANGI UTIKERE (Chief Whip—Labour): Point of order. Thank you Mr Speaker. I think members will be aware that the bells which usually ring to allow members to make their way to the House did not occur this afternoon. In light of that, I wonder whether there were other provisions that had been put in place to ensure that members—even though most members should know that the House sits at 2 p.m.—whether there are any other mitigation aspects that have been put in place to address that concern.

SPEAKER: The Office of the Clerk only found out at the time that they didn’t ring, and myself also, so we will have to come back to the House and find out what has gone wrong. Apparently, this has not happened in anyone’s memory so there’s very little we can do right now, but I see the number of members in the House right now is similar to a usual Thursday.

Speaker’s Rulings—Ministerial Responsibility, Clarification

Hon JAMES SHAW (Minister of Climate Change): Point of order, Mr Speaker. Thank you, Mr Speaker. Just in relation to the ruling that you just gave about when an administration started and finished, I just wanted to check my understanding of it, because you did say, in one of those rulings, that an administration was essential between elections, but then, later, you said that current Ministers would be responsible for things not just from the last election but actually from the election before, which—from the 2017 election.

So is it per Parliament or is it essentially between a change between, say, a National-led Government to a Labour-led Government? Because that would mean the difference between three years, six years, or nine years.

SPEAKER: Yes, as I mentioned in the ruling, current Ministers are responsible for actions taken since 2017, at the beginning of the 52nd Parliament.

Hon Dr DEBORAH RUSSELL (Minister of Statistics): Point of order, Mr Speaker. I just wonder if we could clarify a little further on that, where the particular portfolio has changed from one party to another even though there has been no change of administration.

Hon Gerry Brownlee: What? How would that work?

Hon Dr DEBORAH RUSSELL: I don’t know. That’s why I’m asking for the clarification.

Hon Gerry Brownlee: Well, I could come up with a whole pile of hypotheticals—

SPEAKER: Order! Two things: points of order—speaking to them are held in silence, and I’m on my feet, so I really would like to answer the point of order. That doesn’t matter. As Speaker Carter said, you’re responsible for the portfolio and what happens in that time.

Business Statement

Business Statement

Hon GRANT ROBERTSON (Leader of the House): Next week, the House will consider urgent legislation relating to the cyclone recovery. The Business Committee will discuss how the bill will progress through its stages. Other legislation to be considered will include the committee stages of the Criminal Activity Intervention Legislation Bill, the Criminal Proceeds (Recovery) Amendment Bill, and the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2). There will also be a debate on the report of the Finance and Expenditure Committee on the Budget Policy Statement on Wednesday, which will also be the first members’ day of the year.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. I thank the Leader of the House for the update, and I’m very pleased to note that the first members’ day for 2023 will be next Wednesday. By my calculations, given that there had been a members’ day missed at the end of last year, which was intended to be caught up through extended hours in February, we’re now two members’ days behind, even with next week’s.

Can he confirm that it’s the Government’s intention to ensure that those two members’ days are caught up in the normal programme, without extended hours?

Hon GRANT ROBERTSON (Leader of the House): It is certainly the intention of the Government that those members’ days are caught up. The matter of whether extended sitting hours will be used for that is something the Business Committee may discuss in the future.

Hon MICHAEL WOODHOUSE (National): I thank the Leader of the House for that clarification. I just note that extended hours are not as long as a full members’ day, so that’s an issue to be dealt with.

Hon JAMES SHAW (Co-Leader—Green): Thank you, Mr Speaker, and thank you to the Leader of the House. I just wanted to ask that having almost managed to get through it in the rush before Christmas, I notice that the Organic Products Bill has dropped to No. 13 on the Order Paper, and I just was wondering what his time frame is for the introduction of the final parts of that bill.

Hon GRANT ROBERTSON (Leader of the House): Oh, I think on this occasion, 13 is not an unlucky number.

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

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

SPEAKER: No petitions have been delivered to the Clerk for presentation. No papers have been delivered to the Clerk for presentation. A select committee report has been delivered for presentation.

CLERK: Report of the Governance and Administration Committee on the 2021-22 annual review of the Office of the Ombudsman.

SPEAKER: No bills have been introduced.

Oral Questions

Questions to Ministers

Question No. 1—Finance

1. SHANAN HALBERT (Labour—Northcote) to the Minister of Finance: What recent reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): Thank you for the question. The resilience of the economy has been reflected in the Crown accounts. For the seven months to the end of January, the operating balance before gains and losses (OBEGAL) recorded a deficit of $2.4 billion. This was close to the forecast at December’s Half Year Economic and Fiscal Update and $5.6 billion lower than for the same period a year ago. The Government’s sound management of our finances shows that we are well placed to respond to the cost of living pressures and the impact of Cyclone Gabrielle and the flooding in January.

Shanan Halbert: What else did the report say about the impact of the economy on the Government’s books?

Hon GRANT ROBERTSON: Core Crown tax revenue was $430 million, or 0.7 percent, below forecast, at $64.7 billion. This was mainly due to lower-than-forecast GST returns. Core Crown expenses were $164 million, or 0.2 percent, below forecasts, at $71.7 billion.

Shanan Halbert: What did the report say about the Government’s debt position and its impact on the economy?

Hon GRANT ROBERTSON: Net debt stood at 18.9 percent of GDP, below the forecast of 19.8 percent of GDP, mainly due to market conditions affecting the financial portfolio of entities such as the New Zealand Superannuation Fund. Our debt levels are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent of GDP. This ensures we are well positioned to handle the impacts of Cyclone Gabrielle and future economic shocks.

Shanan Halbert: What reports has he seen on the international context for the New Zealand economy?

Hon GRANT ROBERTSON: The International Monetary Fund’s World Economic Outlook updates projects that global growth will slow from 3.4 percent in 2022 to 2.9 percent in 2023 and 3.1 percent in 2024. These are well below the historic averages for global growth. New Zealand is well positioned to face these global challenges and the recent extreme weather events with a solid balance sheet, near-record low unemployment, growing exports, rising tourist numbers, and an increasing number of overseas workers arriving to fill vacancies. The Government will continue to take a balanced and responsible approach in managing our finances.

Question No. 2—Building and Construction

2. BROOKE VAN VELDEN (Deputy Leader—ACT) to the Minister for Building and Construction: Does she expect that building and construction costs will continue to increase this year beyond the 10.4 percent seen in 2022, and does she expect the supply of building and construction materials will be able to meet the demand for new buildings and repairs following recent extreme weather events?

Hon ANDREW LITTLE (Minister of Defence) on behalf of the Minister for Building and Construction: It’s well known that there have been cost increases over the past couple of years due to supply chain constraints relating largely to COVID. While it is too early to speculate on the impact recent extreme weather events will have on prices and supply of materials, I continue to monitor the situation closely. Since January, we’ve been engaging with the sector to assess supply chain constraints following extreme weather events, to identify where there may be blockages and what needs to be done. My officials continue to engage with the Construction Sector Accord, building merchants, and the Critical Materials Taskforce to ensure we’re responding to any immediate material shortages. I’m also a member of the newly established Cabinet Extreme Weather Recovery Committee, which has been set up to coordinate and direct the Government’s response to recent weather events.

Brooke van Velden: Point of order, Mr Speaker. It wasn’t clear that the question was addressed about whether the Minister expected that the costs would increase. We heard about costs due to COVID, but not whether they’ll increase this year.

Hon ANDREW LITTLE: Speaking to the point of order, my answer said, while it is too early to speculate on the impact recent extreme weather events will have, I continue to monitor the situation closely.

Brooke van Velden: Is she concerned that some building merchants have already contacted their clients noting supplier price increases of up to 10.5 percent for Pink Batts, 16.5 percent for cement board, and 16 percent for framing connectors and brackets by the end of April this year?

Hon ANDREW LITTLE: On behalf of the Minister, the advice I’ve had from officials is they have not yet seen any material price increases as a result of the extreme weather events, and they keep the matter under close monitoring.

Brooke van Velden: Why is the Government progressing with new H1 building standards, which will add an estimated $15,000 of additional costs on to a new residential build when a report from the Ministry of Business, Innovation and Employment on the new standards noted that “consumers are already under financial pressure in light of cost of living increases”?

Hon ANDREW LITTLE: On behalf of the Minister, our country’s history is littered with times when we relaxed standards or abandoned standards altogether, and the consequence of that in the building sector was low-quality buildings. We don’t intend to repeat that.

Brooke van Velden: Has the Critical Materials Taskforce identified any equivalent materials that could be made available in New Zealand to mitigate any artificial shortages in the wake of Cyclone Gabrielle, excluding plaster board?

Hon ANDREW LITTLE: On behalf of the Minister, the role of the Critical Materials Taskforce is to monitor the availability of materials to support our construction activity, both in relation to responding to the extreme weather events we’ve had recently and just to continue the programme of work that this Government has promoted and encouraged to increase housing supply. They don’t deal in particular policy areas; that is a matter for the relevant ministry, and they keep abreast of what the sector needs from time to time.

Question No. 3—Health

3. Dr TRACEY McLELLAN (Labour—Banks Peninsula) to the Minister of Health: What recent announcement has she made regarding pay increases for nurses?

Hon Dr AYESHA VERRALL (Minister of Health): Yesterday, I announced a historic $540 million bump in pay for nurses. Backdated interim payments have now been completed across the Auckland region, and nurses throughout the country have received a much deserved increase. Although how much extra each nurse has received depends on their current rates, the increases range from 4.5 percent to 17 percent, but a large proportion of registered nurses are receiving an increase in base pay of around $12,000. This Government backs our nurses and has delivered a significant pay increase for them.

Dr Tracey McLellan: What does this mean for a nurse just starting out in the profession, and how has that changed since 2017?

Hon Dr AYESHA VERRALL: Newly qualified nurses in 2017 started work on $49,449 a year before overtime and allowances. This figure is now $66,570 a year. That is a considerable increase for our workforce, overwhelmingly female, that has traditionally been undervalued.

Dr Tracey McLellan: What does the payment mean for nurses represented by the New Zealand Nurses Organisation?

Hon Dr AYESHA VERRALL: Although further litigation has arisen, it was sensible that the Employment Relations Authority allowed Te Whatu Ora the ability to make interim pay equity payments while still awaiting a final result. This means nurses are able to have that money in their pockets now. I continue to urge parties to resolve the outstanding issues.

Dr Tracey McLellan: How do these interim payments deliver on the Government’s commitment to pay equity?

Hon Dr AYESHA VERRALL: What this payment does is ensure that nurses are getting more money in their pockets while they are feeling the pinch of the cost of living. While there is still more work to do in negotiating further on pay equity, this is an important step in showing our Government’s commitment to valuing nurses and paying a female-dominated workforce what they’re worth.

Question No. 4—Finance

4. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: When does he anticipate the economic conditions will be right for the introduction of an income insurance scheme, and what ongoing work, if any, is being done to develop such a scheme?

Hon GRANT ROBERTSON (Minister of Finance): To the member’s first question, we’ve been clear that there is a gap in looking after New Zealanders who lose their job through no fault of their own, but we would need to see a significant improvement in economic conditions before it is further advanced. While it’s not possible to put a date to that, we would need to see several matters resolved or improved, including a return to surplus and cost of living pressures significantly eased. To the second question, we have already announced that the New Zealand income insurance scheme will not proceed in its current form and that we have delayed the planned legislation and wound down implementation activity. As the Prime Minister indicated at the time of the announcement of this, there would be ongoing policy work to explore the best ways to address inequities in the long term.

Nicola Willis: How many people are still employed either directly or via consultancies or contractors to work on the matters just raised by the Minister?

Hon GRANT ROBERTSON: That work is being undertaken at the moment. I’m advised, and, indeed, written questions and answers have advised members of the Opposition, that the agencies expect that a considerable proportion of the funding that has been set aside will be returned but that a small team will continue this work.

Nicola Willis: Point of order, Mr Speaker. My question was quite precise in asking for a number and there was no address of the request for a number.

Hon GRANT ROBERTSON: Speaking to the point of order, that wasn’t the question that was put on notice, and I think the member will be well aware that matters relating to staffing within ACC would probably be best addressed to the Minister for ACC.

SPEAKER: Well, I’ll make a ruling on the point of order: the question was addressed.

Nicola Willis: Can he confirm that the Government’s recent Cabinet paper on income insurance concluded that such schemes can increase unemployment, and, if so, will he keep pursuing this policy even if he is told it will mean fewer Kiwis in work?

Hon GRANT ROBERTSON: That is one of the criticisms of social insurance schemes around the world. The actual facts of the matter don’t tend to bear that out around the world. What I can guarantee for the member is that, at this time, the implementation of an income insurance scheme has been paused, but there is ongoing work to see how we can fill the gap in our social security scheme that she seems to care so little about.

Nicola Willis: If the work, as he has claimed, has been paused, why is it that there are still people working on it being paid for by New Zealand taxpayers?

Hon GRANT ROBERTSON: As I noted, the pausing is about the legislation and the implementation of the scheme. It seems that the member is struggling a little bit on the difference between something being cancelled and something being paused, so I’ll try and put it in terms that she will understand. Her leadership ambitions have not been cancelled; they’ve just been paused.

Nicola Willis: Can he confirm that the Ministry of Business, Innovation and Employment concluded that a proposed income insurance scheme would place additional financial stress on some families, especially but not only on low-income families, meaning that many low-income workers would struggle to meet the cost of the proposed new levy; and why, with that advice, is it just on pause and hasn’t been killed?

Hon GRANT ROBERTSON: Again, it is the job of Government agencies to provide the pros and cons of any given policy. In terms of the way in which the Government views this, New Zealanders who lose their job through no fault of their own—sometimes because they might have got cancer or sometimes because they’ve been made redundant—deserve at least the consideration that a Government might think about how we can support them. Now is not the right time to do that because of the economic conditions that we are in, and that is the reason why the implementation of the scheme has been paused.

Nicola Willis: Can he confirm that he was also advised that his proposed scheme would impose massive costs on New Zealand small business, with the extra tax costing a typical small business $13,617 more a year; and what is it that makes him think there will ever be a time when New Zealand small businesses will welcome that cost?

Hon GRANT ROBERTSON: In answer to the latter part of that question, the member might want to recall that this proposal in fact came forward to the Government from Business New Zealand and the New Zealand Council of Trade Unions in a joint approach to the Government. That is because, among other things, social insurance schemes around the world, including the one that we had been working on, are designed to support the ability of businesses to find workers—workers who can be retrained, workers who can quickly move from one business to another. The Business New Zealand organisation might like to answer the question for the member about how they feel about that. We understand that there’s a variety of needs for small businesses—one of them is access to staff.

Nicola Willis: Why is the Government keeping this fatally flawed policy in zombie mode, when no matter the economic conditions, he knows it will drive up unemployment, cost a fortune, and take yet more hard-earned money away from working Kiwis?

Hon GRANT ROBERTSON: Apart from all the various assertions that were included in that question, the member might want to reflect on the number of countries around the world who have social insurance schemes. In fact, within the OECD there’s only a very small handful of countries who don’t have some form of social insurance scheme. We continue to believe that there are gaps in our social security framework, and we will continue to look for ways that we can fill those when economic conditions are right. When it comes to the member’s concern for low and middle income families that she’s discovered today, I would invite her to reflect on her failure to support lifts to the minimum wage, and her failure to support increases in benefits, increases in the family tax credit, and increases to the Best Start payment—all of the initiatives proposed by this Government which help low and middle income families, which the National Party oppose.

Nicola Willis: Point of order, Mr Speaker. I seek leave to table a series of documents. I’ve checked—they’re not publicly available; they’ve only been released to National under the Official Information Act. They include verification of claims I’ve made in the House, including, also, that the proposed unemployment insurance scheme would also place additional burdens on the health system, likely causing longer wait times for GPs and operations.

SPEAKER: Leave is sought for that purpose. Is there any objection to that? There is none. It may be tabled.

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

Question No. 5—Foreign Affairs

5. DAN ROSEWARNE (Labour) to the Minister of Foreign Affairs: What support has the Government given to Vanuatu following Cyclone Judy and Cyclone Kevin?

Hon NANAIA MAHUTA (Minister of Foreign Affairs): In response to requests from Vanuatu, we deployed a C-130 aircraft on Sunday, carrying relief supplies and a team of seven personnel from the New Zealand Defence Force, Fire and Emergency New Zealand, and the Ministry of Foreign Affairs and Trade, to help with damage assessments and inform a necessary response. The second C-130 flight left Whenuapai on Tuesday with further urgently needed relief supplies in the form of shelter tool kits, mother and infant kits, family hygiene kits, and agricultural kits. A third flight is due to leave today. In addition to relief supplies, it will also carry personnel and communications equipment from the New Zealand Red Cross. New Zealand has also made available $150,000 to rapidly support Vanuatu’s response, and that will be delivered through the New Zealand High Commission in Port Vila. We are also supporting NGO partner Adventist Development and Relief Agency to release humanitarian supplies that have been funded by our Government to the value of $340,000. We’re working closely with the Government of Vanuatu and our FRANZ humanitarian partners—Australia and France—to coordinate support. Any New Zealand assistance will not draw resources away from the Government’s domestic response efforts to Cyclone Gabrielle.

Dan Rosewarne: What information will Aotearoa New Zealand consider to assess its next contribution?

Hon NANAIA MAHUTA: We’ll consider the needs assessment based on aerial and on-the-ground assessments of the personnel that we have sent alongside Australia and France, and then we will consider the requests of the Government of Vanuatu, coordinate our efforts with Australia and France, and then respond accordingly.

Dan Rosewarne: What coordination is currently in place to ensure that relief efforts and a recovery response is not duplicated, as well as coordinated and aligned to other international partners?

Hon NANAIA MAHUTA: All relief activity is coordinated through the Vanuatu National Disaster Management Office (VNDMO). The New Zealand High Commission in Vanuatu has a longstanding relationship with the VNDMO. FRANZ partners are coordinating closely on the ground and between capitals. Daily calls and meetings ensure the most efficient use of military and civilian assets, appropriate provision of supplies, and close coordination with the Government of Vanuatu. The FRANZ partnership has operated for over 13 years, and we continue to coordinate our activities like that for Vanuatu.

Dan Rosewarne: Given the likelihood of more regular significant weather events and storms impacting on livelihoods in places such as Vanuatu and the Pacific, what steps is Aotearoa New Zealand taking to support the resilience of the Pacific?

Hon NANAIA MAHUTA: In October 2021, Aotearoa New Zealand announced its international climate finance commitment of $1.3 billion for the 2022-25 period. At least 50 percent of the commitment will support Pacific Island countries, and at least 50 percent will target adaptation and building resilience to the impacts of climate change. The International Climate Finance Strategy, Tuia te Waka a Kiwa, will guide the delivery of this commitment. Initiatives supported with this finance include early warning systems, disaster insurance, and efforts to improve water and food security in the face of climate change. New Zealand is supporting national disaster management officers and other first responders to strengthen their disaster preparedness and response capabilities.

Question No. 6—Health

6. Dr SHANE RETI (National) to the Minister of Health: Are the current shorter stays in emergency department performance metrics published on the Health New Zealand website accurate, and what were the figures for Northland in November 2022?

Hon Dr AYESHA VERRALL (Minister of Health): This morning, I was made aware of incorrect data on the Te Whatu Ora website for November and December 2022. On receipt of this information, I called Te Whatu Ora officials into my office this morning for an explanation, where they advised me of a publication error in their data. Te Whatu Ora apologised to me for this mistake, with an assurance that the underlying data collection, collation, and assessment is robust, and that its pre-publication assurance processes will be strengthened. Officials have informed me that the updated report will be on their website tomorrow. In regards to the second part of the member’s question, I am advised that the current short stay emergency department performance metric in Northland District in November 2022 was 78.7.

Dr Shane Reti: Why, earlier this week, did she use inaccurate data to say that there was a large improvement in emergency department (ED) wait times in Northland when there was not; and had she even seen the data when she made that comment?

Hon Dr AYESHA VERRALL: I did not make that comment, and media have updated their reporting.

Dr Shane Reti: What is her response to Health New Zealand medical director Pete Watson, who stated earlier today that the figures were “as accurate as we’ve got them at the moment” but “clearly [are] not accurate”; and has every single performance measure, including cancer and surgical wait times, been removed from the Health New Zealand website today because of concerns that all of it is inaccurate?

Hon Dr AYESHA VERRALL: I am aware of those comments, and no. As I said in my primary answer, the issue with the short stay emergency department target is that there was an error in the publication of the data, and that the underlying data used by decision makers in the districts, at the national level, and by the board, was accurate.

Dr Shane Reti: Then why have all of the performance metrics been taken down?

Hon Dr AYESHA VERRALL: I have sought Te Whatu Ora to provide an assurance that their underlying quality-assurance processes are correct. They need to go through that process. They have assured me that they will have the updated shorter stay in emergency department figures available by the end of the day tomorrow.

Dr Shane Reti: Is she deliberately inflating the figures to obscure deteriorating ED wait times?

Hon Grant Robertson: Point of order, Mr Speaker. While I know you adopt a fairly flexible approach with questions, that is calling in to question the character of a member and is outside of the Standing Orders.

SPEAKER: Yeah, that’s not the best way to phrase it. One, a reasonable New Zealander would take that as meaning that the Minister’s making it up, so you might want to rephrase the question.

Hon Mark Mitchell: They already think that.

SPEAKER: Who said that? You did. You know what to do.

Hon Mark Mitchell: I withdraw and apologise.

Dr Shane Reti: Do you want me to rephrase the question?

SPEAKER: Yes.

Dr Shane Reti: Are the ED wait time figures being obscured to make them look better than they actually are?

Hon Dr AYESHA VERRALL: As I’ve said, there was a publication error and that the underlying data that has been available throughout to decision makers will be made available shortly, and Te Whatu Ora has apologised for that error. I have not at all tried to sugar-coat the situations in emergency departments. I have visited three departments since I came into this role. I’ve seen my former colleagues and the circumstances that they are working in, and I want them to know that the Government understands they are under pressure, and they were rightfully, quite reasonably, disappointed by the incorrect reporting of those statements.

Question No. 7—Emergency Management

7. NAISI CHEN (Labour) to the Minister for Emergency Management: What announcement has he made on further support for the cyclone and flooding recovery?

Hon KIERAN McANULTY (Minister for Emergency Management): Today, the Government announced a contribution of $15 million to help local councils remove rubbish from cyclone-affected areas. Local authorities need to make urgent rubbish collections from residential properties. We’ve heard from some that they don’t have the financial capacity to deal with the issue, given the scale, so it’s important we support them to take immediate action. I note from my regular conversations with affected councils that further support will be required, but this funding is a welcome relief to those communities that are heading towards recovery. Local councils are having to face unprecedented damage from the cyclone, so I’m glad that we’re able to contribute funds that will enable them to help their communities as fast as possible.

Naisi Chen: How will this support work?

Hon KIERAN McANULTY: This funding will provide immediate financial support to the councils for the rubbish collections caused by cyclone damage. Councils are best placed to determine priority based on the worst affected areas and those that pose a higher public health risk. The funding also covers transport and disposal. This support is provided as an addition to the council’s own waste management funding streams, as well as insurance and Earthquake Commission arrangements.

Naisi Chen: How will the Government support the affected communities to deal with silt?

Hon KIERAN McANULTY: We’ve announced a $55 million primary sector support package that will help farmers and growers remove silt, but we’ve also directed officials to urgently provide advice on a long-term plan for the silt clean-up. This plan has been based on the most up-to-date environmental science so that our efforts are effective.

Naisi Chen: What other announcements has the Government made to support cyclone recovery?

Hon KIERAN McANULTY: Today, the Minister for Social Development and the Associate Minister for Cyclone Recovery announced a $15 million reimbursement package for marae, iwi, and recognised rural and community groups. These groups have used their own resources to provide welfare support to people affected by the cyclone. There is existing provision in the emergency management system for this kind of support, but it can take time to distribute and normally doesn’t extend to the community groups who have stepped up in the wake of Cyclone Gabrielle. We’ve streamlined this process and made more groups eligible so that they can be appropriately reimbursed for essential support that they have provided people.

Question No. 8—Justice

8. Hon PAUL GOLDSMITH (National) to the Minister of Justice: Does she stand by all of her statements and actions?

Hon DAVID PARKER (Attorney-General) on behalf of the Minister of Justice: Yes, in the context in which they were given and taken.

Hon Paul Goldsmith: How does she stand by her statement last October on TVNZ regarding hate speech: “I guarantee that I’ll be introducing a law that I intend to have concluded and put into law by the next election.”?

Hon DAVID PARKER: Well, that confirms that these matters must be taken within the context in which they are given. Of course, the Government has since said that all of those issues are now going to be considered by the Law Commission.

Hon Paul Goldsmith: Does she think it’s a good look for the country when guarantees given by its justice Minister aren’t worth anything and cannot be relied upon?

Hon DAVID PARKER: Oh, but that’s just not correct, as I have already explained.

Hon Paul Goldsmith: Does she agree with the Prime Minister that her proposed hate speech legislation “would have consumed the government’s time and energy at a time when it needed to focus” and that, in justice, the Government should be focused on combating the 33 percent increase in violent crime, the 500 percent increase in ram raids, and long delays to the courts?

Hon DAVID PARKER: I can confirm for the member that ram raids are down by two-thirds, which is very good news.

Hon Paul Goldsmith: Tell that to the people of Long Drive. Supplementary—

SPEAKER: Order!

Hon Paul Goldsmith: Why—

SPEAKER: Order! Was that your supplementary, that comment that you made, because really—you know, I think the member has been here long enough to know that you don’t start off a supplementary by giving a narrative on the previous answer; you ask a question. I’m just considering whether I should count that as the question. I think that, in this case, I’ll let you ask the question.

Hon Paul Goldsmith: Thank you, Mr Speaker. My supplementary question is: why, when the Government still hasn’t effectively addressed the 33 percent increase in violent crime, is her Government still devoting the Government’s time and energy to introducing legislation to lower the voting age to 16?

Hon DAVID PARKER: Well—as followers of the cricket might appreciate—in the style of Geoffrey Boycott and Mark Richardson, I can confirm that Cabinet has taken no such decision.

Question No. 9—Small Business

9. JAMIE STRANGE (Labour—Hamilton East) to the Minister for Small Business: What recent progress has been made on the roll-out of the Government’s fog cannon subsidy scheme for New Zealand small businesses?

Hon GINNY ANDERSEN (Minister for Small Business): Thank you, Mr Speaker. Last week, I visited the One Stop Shop convenience store in central Wellington to see a fog cannon installed and tested, after having received a voucher from the Government’s subsidy scheme. The scheme, which went live on 1 February of this year, has already seen over 500 applications approved across the country. I’m advised that 88 fog cannons have already been installed, with another 168 booked in for installation over the coming months. People deserve to feel safe in their workplace, and the Minister of Police and I are determined to make it as easy as possible for small businesses to take part in this scheme.

Jamie Strange: What is the criteria of the scheme, and how many small businesses are likely to receive support?

Hon GINNY ANDERSEN: To qualify for this scheme, the retail business’ main purpose must be to sell finished goods to the public, such as a dairy, bottle store, jeweller, clothes shop, or service station. Retailers will need to meet certain criteria to be eligible, including having no more than two outlets, five or fewer paid staff, and a street frontage. While it is difficult to accurately estimate the demand, for the rest of the financial year we are forecasting up to 1,500 vouchers being issued to small businesses around the country.

Jamie Strange: What has been the regional distribution of vouchers and installations to small businesses?

Hon GINNY ANDERSEN: Auckland and Christchurch have been in the majority of the approved applications to date, but there have been a regionally diverse range of installations, including 21 in Waikato, 13 in Auckland, 19 in Canterbury, four in Whanganui-Manawatū, seven in the Bay of Plenty, and 18 in Wellington.

Jamie Strange: Is it too late for small businesses to participate in the scheme; if not, how can they do so?

Hon GINNY ANDERSEN: Not at all. For small-business owners to participate in the scheme—not at all. It takes approximately 15 minutes to complete an online application, and if the applicant provides all of the eligibility and declaration information, the approval is instantaneous. To date, 70 percent of applications have been automatically approved. The business will immediately be emailed a voucher and a contact list of one of the 18 approved providers.

Question No. 10—Public Service

10. SIMEON BROWN (National—Pakuranga) to the Minister for the Public Service: Does he stand by his statement, “we now engage in active monitoring of the Public Service’s use of contractors and consultants”; if so, when did the active monitoring begin?

Hon ANDREW LITTLE (Minister for the Public Service): Yes, and I refer the member to my primary answer to his question yesterday.

Simeon Brown: As part of his active monitoring of the Public Service’s use of contractors and consultants, will he be sending a memo to the Minister of Transport, who spent over $51 million on contractors and consultants on the now cancelled Auckland cycle bridge?

Hon ANDREW LITTLE: I refer the member to the answer to the supplementary question along the same lines that the member asked yesterday, and I invite him to listen.

Simeon Brown: As part of his active monitoring of the Public Service’s use of contractors and consultants, will he be sending a memo to the Minister for Broadcasting and Media, who has so far spent $10 million on contractors and consultants on the failed TVNZ-RNZ merger, which he still says he wants to progress?

Hon ANDREW LITTLE: I am satisfied in the work of the Public Service Commission in continuing to monitor the use of contractors and consultants, including in the field of broadcasting.

Hon Grant Robertson: As part of his monitoring of contractors and consultants, will he be sending a memo to the Leader of the Opposition about their use of consultants in their first—oh, sorry, Mr Speaker.

SPEAKER: No, that’s completely out of order—I think the member knows that.

Simeon Brown: As part of his active monitoring of the Public Service’s use of contractors and consultants, will he be sending a memo to the Minister for the Public Service, whose department’s spend on contractors and consultants increased from $1.4 million in 2018 to $3.4 million last year?

Hon ANDREW LITTLE: I refer the member to his media release of Sunday just gone, where he acknowledged that it is appropriate for all Government departments at some point to use contractors and consultants.

Simeon Brown: As part of his active monitoring of the Public Service’s use of contractors and consultants, will he be sending a memo to the Minister of Education, where expenditure on contractors and consultants was over $600,000 per day last year, up from $100,000 a day when Chris Hipkins used to complain about that in Opposition?

Hon ANDREW LITTLE: I remain satisfied in the work of the Public Service Commission in its monitoring function of the use of consultants and contractors, and I’m pleased to see the member is taking good use of the information that that is yielding.

Question No. 11—Finance

11. CHLÖE SWARBRICK (Green—Auckland Central) to the Minister of Finance: Does he think that banks have unfairly profited from economic circumstances during the COVID-19 pandemic while ordinary people in Aotearoa are doing it tough; if so, what actions is he taking to redress the balance?

Hon GRANT ROBERTSON (Minister of Finance): In answer to the first part of the question, as the member and I have discussed several times before, banks in New Zealand have made large profits since well before the COVID-19 pandemic. In terms of the question of unfair profit, I would note, in terms of the pandemic, the approach taken by the Reserve Bank has mirrored most other countries in the face of enormous uncertainty about the volatility of bond markets and liquidity. In answer to the second part of the question, the Government acknowledges that many New Zealanders have been, and are, doing it tough. That’s why we have taken a number of actions to help ordinary people in Aotearoa, including increasing benefits, superannuation, the family tax credit, student allowances, and lifting the minimum wage. We’ve also provided a temporary cost of living payment, cut fuel excise tax and road-user charges, and halved the cost of public transport. We’ve increased access to subsidised childcare, made doctors visits cheaper, provided free lunches in schools, and introduced a winter energy payment. The Government is focused on easing the cost of living pressures on ordinary New Zealanders while also managing the books in a careful and responsible manner.

Chlöe Swarbrick: Is he aware if Adrian Orr’s recent comments that “revenue raising through other alternatives makes the job of monetary policy easier.”; if so, what fiscal initiatives is he considering to make the job of monetary policy easier?

Hon GRANT ROBERTSON: In answer to the first part of that question, yes.

Chlöe Swarbrick: Does he agree with former Prime Minister Jacinda Ardern, who said last year that bank profits are unjustifiable; or does he agree with current Prime Minister Chris Hipkins, who has said, “There are some New Zealanders who perhaps aren’t contributing their fair share.”?

Hon GRANT ROBERTSON: Yes.

Chlöe Swarbrick: Does he agree that a levy on excess profits in the banking sector would be an effective way to fund the recovery from Cyclone Gabrielle because it would avoid exacerbating inflation; if not, why not?

Hon GRANT ROBERTSON: As I’ve noted in this House, the Government is doing as the previous Government did in the wake of Canterbury earthquakes, taking our time to work through possible ways of funding the costs that inevitably come with the significant recovery and rebuild programmes. No final decisions have been made on that.

Chlöe Swarbrick: What genuine obstacles are there to the Government implementing an excess-profit tax on banks whose massive profits can be seen as linked to the unique economic circumstances of the COVID-19 pandemic economic response?

Hon GRANT ROBERTSON: I don’t think there are particular obstacles other than going through the process of thinking about how to make a decision like that. As I noted in my primary answer, bank profits in New Zealand have been high for a long period of time, so I don’t necessarily buy that part of the member’s argument with respect to COVID-19. As I’ve also said in the past, banks have to have an eye to their social licence. The way that they operate—for example, in response to a cyclone—is a way that both the Government and members of the public may judge their social licence.

Chlöe Swarbrick: Does he accept that urgent economic decisions made during the COVID-19 pandemic have resulted in a significant transfer of wealth to the richest few in Aotearoa; and if so, does he think that it is incumbent on a Labour Minister of Finance to redress that balance?

Hon GRANT ROBERTSON: The member and I have discussed this matter before as well. The only way that the number that I’ve heard about, which I noticed she chose not to use in the question, could be justified—$20 billion or something—would be by including every single transfer to a small-business owner in New Zealand. Not all small-business owners in New Zealand would be regarded as extremely wealthy. In fact, many of them do it very tough every day, just getting through. So I understand the point the member’s making, but I don’t think the way that it’s been expressed is entirely accurate.

Chlöe Swarbrick: Can he look the people of Aotearoa in the eye and tell them that everyone is paying their fair share of tax; and if not, when will he sort it out and tax the rich?

Hon GRANT ROBERTSON: In answer to the first part of the question, we always have to strive to make sure that all New Zealanders are paying their fair share, and, in fact, I think it was in the House last week that I expressed the view that we are not there yet, and I made particular reference then to the taxation of multinationals.

Question No. 12—Broadcasting and Media

12. MELISSA LEE (National) to the Minister for Broadcasting and Media: Does he stand by all of the Government’s views and actions regarding the proposals to merge RNZ and TVNZ into Aotearoa New Zealand Public Media?

Hon WILLIE JACKSON (Minister for Broadcasting and Media): Yes, at the time they were made.

Melissa Lee: Does the Minister stand by his statement, “When we don’t have a cyclone and we don’t have the floods of the century, [who knows] we might be able to roll that merger out.”

Hon WILLIE JACKSON: Oh, the member needs to put that in context in terms of the merger. The merger is well and truly over and yesterday we were talking in a different environment. The reality is that the merger is finished; the merger is over. We will not be bringing it back, not now and not in the future and not in the upcoming campaign.

Melissa Lee: Can he confirm that the Government is paying on the $1.19 million lease for empty office spaces in Wellington for the cancelled RNZ-TVNZ merger while overly generously paid consultants continue to assist his $8,000-a-day board for a wash-out report?

Hon WILLIE JACKSON: The establishment board has met 1½ times in the last month. We have to get a report; that’s the professional thing to do. And when you enter into lease agreements, the New Zealand law is you must pay them.

Melissa Lee: Is the reason the Minister only found out the RNZ-TVNZ merger “will stop on the day of the announcement, which is 8 February 2023”, because he hadn’t read his Cabinet papers or that the Cabinet paper was only tabled at the meeting?

Hon WILLIE JACKSON: No.

Melissa Lee: Who is correct: the Prime Minister saying the merger will stop or the broadcasting Minister saying that “Well, we might be able to roll out the merger.”?

Hon WILLIE JACKSON: I 100 percent support the Prime Minister. The reality is that the merger is over. I’m not sure how many times we need to say that. The Prime Minister announced that on 8 February and I’ll announce it now just for that member: the merger is over.

Urgent Debates Declined

Public Sector Leaders—Code of Conduct for Crown Entity Board Members

SPEAKER: Members, I have received a letter from Simeon Brown seeking to debate under Standing Order 399 the conduct of some public sector leaders, in respect of the Code of Conduct for Crown Entity Board Members. This is a particular case of recent occurrence for which there is ministerial responsibility. The test of whether a particular case requires the immediate attention of the House is a high one. I am not convinced that this matter warrants setting aside the business of the House today. Therefore, the application is declined.

Bills

New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill

First Reading

Hon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill.

SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website. And I would ask members leaving the Chamber to do so quickly and quietly, please.

Hon GRANT ROBERTSON: I move, That the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

I am pleased to be able to bring this legislation to the House. It marks a moment of the maturing of the New Zealand Superannuation Fund, or the way in which it operates. When the fund was established, it was established deliberately to not allow the Guardians of the New Zealand Superannuation Fund to take a controlling interest in an entity. This was done at the time because the establishment of the fund was obviously taking place and also because, at that point in history, sovereign wealth funds across the world weren’t tending to take controlling interests in their work. Over time that has changed, both in terms of the maturing of the fund here in New Zealand and the approach that is taken internationally.

We undertook, through the Treasury, to do a review of section 59, which prevents the New Zealand Superannuation Fund from taking a controlling interest in the entity, and that piece of work was completed in 2021. What that piece of work told us was that there was a pathway through for the fund to be able to move into this direction. The purpose of the legislation that is in front of us now is to take forward what was said in that report and put it in front of the House for debate.

When I was assessing whether or not it was a good idea to go ahead with this idea, I did speak to the late Sir Michael Cullen as the architect of this fund, and I was reassured in doing so that Dr Cullen thought that the time had come for this move, as he noted to me, as the fund grew in the size of its assets but also in the way that it invested. He had always felt that this would be a course of action that would make sense and he felt that the time for doing this was right. So today we come to the House with the bill that, as I say, amends section 59 of the New Zealand Superannuation and Retirement Income Act to allow the guardians to take a controlling interest in an entity.

The bill also makes a number of other amendments to ensure that the investment by the fund does not result in an entity being treated as part of the Crown, which was one of the concerns at the initiation of the original Act.

Part 2 of the Act makes some consequential amendments to the Ombudsman Act and the Official Information Act to make sure that a private sector subsidiary of the fund would not have the Act applied to them—however, the guardians themselves, of course, remain subject to the Act—and some changes to the Income Tax Act to address the removal of references to fund investment vehicles and to preserve the current tax treatment of New Zealand Superannuation Fund investments.

It is part of the rules of the Act that I consult with other parties about any changes to the Act. I did that across Parliament, and without wanting to put words into the mouths of any of my colleagues in the House, the feedback I received was broadly positive, although I’m sure we will hear from some members about some of the issues they have, and those issues I am confident will be able to be resolved at the select committee when we reach that point.

As the fund has grown and matured, it has increasingly developed the capability to take on a lead investor role with the ability to own businesses. The New Zealand Superannuation Fund wants this ability, and I do think it will provide a significant support to New Zealand’s capital markets. It also will allow the New Zealand Superannuation Fund, as I said before, to bring itself in line with global peers, who, of course, at this point, are in a different place than they were when the Act was passed some 20 or so years ago. Those global peers have shown that sovereign wealth funds can in fact play a significant role in not only the capital markets of their own countries but also in others when they do do this.

Removing the control that is currently in section 59 will enable the fund to access a wider group of viable investment partners and opportunities, especially in strategic infrastructure. It will, according both to the report done through the Treasury but also to the experience of other countries, attract institutional investors who are comfortable with the guardians’ due diligence practices and, as I say, therefore deepening capital markets for domestic transactions. It does also provide an opportunity set for New Zealand investments and the potential to increase the risk-adjusted return of the fund.

The guardians’ flexibility around their investment strategy that will be enabled by this Act should enable the portfolio to realise a greater return after costs for the level of risk taken. That is exactly the position I think New Zealanders would want the fund to be in coming up to a couple of decades past the institution of the fund. It continues to play an important role as a partner in a number of businesses both here in New Zealand and offshore, but this opens up a new pathway and a new strategy.

The guardians, through the amendments that we are making to section 59, may have controlling interests in a number of different ways. These include controlling an entity through ownership of shares, controlling a holding company, controlling their other ownership rights under a trust, contractual rights, or rights to appoint directors—and entities that are so controlled may in turn control other entities in different ways.

I understand that people will want to make sure that there are some checks and balances upon this approach. The bill provides for a review of these changes within 10 years as part of one of the regular five-year statutory reviews of the fund. It is important to note that this bill does not alter the statutory independence of the guardians from political influence in relation to investment decisions, which is provided for in section 64(2) of the Act. That independence is vital. This is simply a mechanism to enable a different form of investment through taking a controlling interest.

Another matter that was in fact raised in the Treasury’s review of section 59 was the question of how to create a framework that would be transparent for New Zealanders to understand the way in which the guardians will go about their work. So they will be including in the statement of investment policies, standards, and procedures the details of a governance framework for the operation and implementation of controlled entities. So I do think it is important that that provision exists so that New Zealanders can understand the way in which the Reserve Bank is going about its work and understand where that fits in. This was a particular matter that was raised in the review and I’m pleased that we’ve been able to pick that up and put it into the legislation.

So, from my perspective, this is a good piece of legislation that marks the further maturing of the New Zealand Superannuation Fund. It gives an opportunity for New Zealanders to know that greater returns will be made, which will enable the Superannuation Fund to grow and play its part in contributing to the future costs of New Zealanders’ superannuation. As a Government, I am especially proud of the fact that we reinstated contributions to the New Zealand Superannuation Fund, on coming into office, and that has seen the fund grow at a rate that unfortunately it missed out on for a few years. This bill will make sure that there is an additional incentive and opportunity for the Guardians of the Superannuation Fund to grow the wealth that we need to support New Zealanders having dignity in their retirement. I commend this bill to the House.

DEPUTY SPEAKER: The question is that the motion be agreed to.

NICOLA WILLIS (National): National is offering our cautious support for this bill to progress to select committee. I want to acknowledge the letter we received from the Minister of Finance in November under section 73 of the 2001 Act. He fulfilled his duty to consult with us before proposing amendments to the Superannuation Act.

I want to just talk in these remarks about the history of the Superannuation Fund and the changes that have occurred during the time it has been in place, and to highlight some of the risks we can see with this approach that we think it’s very important that the select committee examine carefully. I think the first thing to say is that we acknowledge the desire from many to see deeper domestic capital markets in New Zealand, and we acknowledge also the need to see investment in strategic infrastructure through those capital markets. Those are both things that we support and that we think are good. We also acknowledge that the New Zealand Superannuation Fund has matured and grown a lot since its inception in 2001, and so it is logical that there will, from time to time, be the need to modernise the legislative framework in which it operates—particularly to ensure it is up to international best practice. And it’s clear when we look across the world that direct investment into entities has become a much more common feature of best practice portfolio management, whether that be by sovereign wealth funds or other such funds. That has been a clear change that has occurred over the past 20 years.

National starts from the position that we want to see the Superannuation Fund delivering good returns to New Zealanders and to be performing well. However, what we don’t want to see is the Superannuation Fund potentially crowding out other investors in this market, and we’re particularly conscious that the New Zealand market is a small one and that the Superannuation Fund is relatively large within that context. So it’s our view that the select committee should be looking at not only what is best practice overseas, but what potential implications those practices would have in the smaller domestic context of New Zealand, and that is something worthy of examination and expert input. So we will be carefully listening to those who submit to the select committee and I will be encouraging a broad range of people to share their views.

So as I said, I want to talk a little bit about the history, because if we go back to the original restriction on the New Zealand Superannuation Fund from holding a controlling interest in entities, that was there right from the beginning, in 2001, and, actually, it was quite an important feature of the Act and of the creation of the fund. That was because the Superannuation Fund was conceived of as a portfolio of financial investments and not actually a direct operator of businesses, which are two quite different functions. It has been, in the past, as I said, normal practice for private investment funds to avoid controlling interests. There were good reasons for why the Crown would want to restrict that, particularly because there could be an implied guarantee by the Crown of the entities’ liabilities in the case of financial difficulty. To put it plainly, there is a risk that if there’s a situation where the Superannuation Fund chooses not to support a company that it has invested in that’s now failing due to commercial reasons: if it’s the company that’s not doing well, but the Superannuation Fund has that majority stake—but potentially that involves people losing their jobs; bad implications that none of us want to see—then the Government and the Superannuation Fund itself face significant political pressure to do a bail out. That creates risks for the way those investments are both selected and managed.

I do want to acknowledge that we’ve had evolution in this space already. In 2015, the then National Government passed the New Zealand Superannuation and Retirement Income Amendment Bill, and that allowed the New Zealand Superannuation Fund to hold a controlling interest in entities formed for the purpose of holding, facilitating, or managing the investments of the fund—so fund investment vehicles. And there was an exception to the restriction that the New Zealand Superannuation Fund does not hold controlling interests in entities. So there is some precedent here, although of course this bill takes it a step further. When the Superannuation Fund brought this to the attention of the Minister—and I understand it was there in black and white in their briefing to the Minister in 2020—they felt that this constraint meant that they had limits on their potential investment opportunities, particularly in markets like New Zealand, where investments tend to be smaller scale, and they felt that the constraint was unnecessary. I’d note that in response to that claim from the Superannuation Fund, Treasury undertook a review of the restriction, and as I’ve noted in my earlier remarks, they shared the view that direct investment has become a much more common feature of best practice portfolio management internationally.

However, there are still a couple of things we need to really watch for here. The first is, when we repeal section 59 of the Act, we do open up the potential for political pressure on the Superannuation Fund about the kinds of investments that it makes. Now, officials have made that warning clearly: they’ve said that they are concerned that removing the restriction on the Superannuation Fund from acquiring a controlling interest might lead to a crossover with ministerial interests, and that creates a risk of lobbying from other portfolio ministers. If I can just spell this out in black and white: imagine a scenario where Michael Wood really wants to get light rail across the line—there really isn’t the money in New Zealand to fund it, and it doesn’t fit within transport priorities for the Crown—and he decides that the way to make that happen is to put pressure on the New Zealand Superannuation Fund to instead make that investment where the Minister of Finance chooses; he won’t make it directly. Now those are the sorts of issues we as a select committee must confront, because I know it will be tempting for members opposite to say and think, “Well, nothing like that would ever happen. No, no, it won’t happen”, but it is our job to foresee things that may happen in the future and to ensure there are appropriate guards against it. So that is an issue that we National members on the select committee will be exploring in some detail because we think the risk of New Zealanders’ retirement savings fund being used for political purposes, for pet projects, is one that we can’t tolerate. So we need to guard against that risk.

The second issue that we think is very important for the select committee to look at in some detail is that issue of bailout expectations: ensuring that the Superannuation Fund is in some way controlled off from the expectation that the Crown will be bailing out companies where, in a normal commercial transaction, that wouldn’t occur. The third risk that I’d highlight is the issue of reputational risk to the Crown, and this is something that officials have seized on, where they’ve said there is potential that, where the Superannuation Fund is gaining controlling interests in an entity, then, from an offshore perspective—or even actually from the perspective of New Zealanders—that is seen then as a Government company and therefore all of its actions reflect on the frameworks of the Crown; reflect on what the Crown thinks is good, bad, or indifferent. I note that Treasury say there are some ways that that could be mitigated, but I think we need to explore that at the committee, because the separation between the Superannuation Fund and the Government is important and we are very conscious of the need to protect that separation.

Finally, I would say that National’s attitude to this bill is an example of our desire to be constructive about the way financial frameworks are formed in New Zealand. We want to see the Superannuation Fund performing well. We do think that there is a case for deepening capital markets, we do think that there is potential that the Superannuation Fund could both create value for New Zealanders and create value for the fund through these sorts of controlling interests. However, as I’ve said, we must proceed with caution, and we will be taking our roles on the select committee very seriously. This bill is a big change and we need to scrutinise it appropriately.

RACHEL BROOKING (Labour): Thank you, Mr Speaker, for this opportunity to speak on the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. As we’ve heard from the previous two speakers, the New Zealand super fund is a very important part of our financial system and, as the Minister said, it supports people having dignity in their retirement. So it is very important that any changes to the system—that we get it right.

What we’re wanting to do here is to improve the settings of the fund to make it more sustainable. As we’ve heard from the previous two speakers, the fund has matured so that—and we will investigate this at the select committee—that avoidance of a controlling interest is no longer needed and, in fact, it’s unhelpful and limits what the super fund can invest in. I appreciate, from across the House there, that everybody is wanting to support New Zealand’s capital markets, growing those, and this is intended to be one way that will, hopefully, provide comfort for other investors.

On to the bill itself, it’s a very small bill and it’s amending the primary legislation. So, really, you need to look at both the Act and the bill together. The purpose of the Act is to establish this fund and to provide for Government contributions to the fund, and that doesn’t change.

The main part of the Act that is changing relates to the section headed, “Investment of Fund” and that starts at section 58(1), which includes that “The Guardians are responsible for investing the Fund.”, and “(2) must invest the Fund on a prudent, commercial basis and, in doing so, must manage and administer the Fund in a manner consistent with—(a) best-practice portfolio management; and (b) maximising return without undue risk to the Fund as a whole; and (c) avoiding prejudice to New Zealand’s reputation”. So that’s not changing either.

But then we get to section 59, “No controlling interests”, and section 59A, “Fund investment vehicles”—and the previous speaker, Nicola Willis, was talking about that section earlier and amendments made under the previous Government; and section 59B, “Fund investment vehicles not required to prepare statements or annual reports”. So these three sections get replaced by section 59, in clause 6 of the bill, which allows for this change. So they will be replaced with new section 59, “Status of certain entities”, and it goes through what the other speakers have already spoken about, there. There’s also a change to section 61, in terms of “Contents of statements”, and the Minister spoke about that.

I think what is important to speak about, as well, in terms of the previous speech, is section 64. This is around “Ministerial directions” and is not changed by the bill. Hopefully, it will give some comfort to the previous speaker, but I do take her points that this is something that we do not want to get into ministerial interference. So section 64(1) says that “The Minister may, after consultation with the Guardians, give directions to the Guardians regarding the Government’s expectations as to the Fund’s performance, including the Government’s expectations as to risk and return.” But then it says at subsection (2), “Despite anything to the contrary in the Crown Entities Act 2004, the Minister—(a) must not give a direction that is inconsistent with the Guardians’ duty to invest the Fund on a prudent, commercial basis, in accordance with section 58; and (b) must not give a direction to the Guardians in respect of the Fund except in accordance with this section.”

Now, I’d like to just reflect on the slightly unusual process that happens with amendments to this Act, in that the Minister has to consult with the other parties. We’ve heard from the previous speaker that National is very interested in this bill and will be very engaged in the select committee, and I welcome that we will have a very good discussion around this bill and, I’m sure, welcome submissions on it as well.

Finally, I do want to say that it’s interesting that not only did the Minister have to consult with the members in this House, with the other parties, but he was also able to consult the late Sir Michael Cullen about it. It gives me some comfort that he approved of this process. So I commend the bill to the House.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. I think, in this country, we are well served by the two major sovereign investment funds that we have, the Guardians of New Zealand Superannuation and the investment arm of ACC, both of whom manage somewhere in the region of $55 billion to $60 billion. I’ve had a 27-year history with ACC—firstly as a manager, and more recently as the Minister for ACC and the ACC spokesperson. So I’ve got a reasonably deep understanding and admiration for the way in which their investment managers have been able to enjoy returns, on behalf of the New Zealand taxpayer, pretty significantly above the market rates.

Similarly, the Guardians of New Zealand Superannuation have an excellent team with whom I had developed quite a good relationship in my time as finance spokesperson, and I still keep in touch with them from time to time—they are really, really canny people. We often have some political tête-à-têtes over the level of remuneration and bonuses for people in those teams. Well, the reality is they could earn a huge amount more in other wealth funds, here in New Zealand and around the world, if they didn’t choose this form of—albeit highly paying—public service. So I just want to commend them for the work they do on behalf of the New Zealand taxpayer.

But I do share the concerns that were expressed by my colleague and friend Nicola Willis in our cautious support for this bill, the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill, at first reading, and I encourage those with views on both sides of the argument to come along and give the Finance and Expenditure Committee as good advice as we can get, because there are very strong pros and cons on the degree to which big levels of institutional ownership in a stock is a positive or a negative thing.

Now, institutions like this have access to the best analysis and the best sort of insight into whether or not holding majority or controlling interests in companies is a good thing for them. So what it tends to do is that people will follow those institutional investors. And so the naive investor or the common stockholder often looks to those institutional investors to see what they’re doing because they’ve obviously got a track record of getting returns above the market average. So they’re going to be drawn to it.

Now, there’s a double whammy in terms of that in respect to the fact that this is a Crown-owned wealth fund and, therefore, there’s this almost implied sort of Government guarantee to it. Now, we know that’s not the case, but that is a risk, and it’s actually, I think, a risk that was identified by Treasury in their advice on the bill. Conversely, there is—regardless of whether the wealth fund is sovereign or not—always this kind of drag when an institution sells large parcels and or the controlling interest in an organisation. Research that I’ve had a look at suggests that the stock price could drop by as much as 5 percent below its real value simply because an institutional investor has decided to sell down a large portion of its stock. It’s not appropriate to assign the blame or the cause of the drop in the stock’s value simply to an institutional investor’s sale of them, but it does highlight the fact that large controlling interests, in any event, can carry some value risk.

So I think that’s probably why, in 2001, when the scheme was set up, there was this control. Obviously, it was a risk management issue as well, because, you know, if you’re exposed to large parcels and things go bad, then that can be quite a big hit on what was then a relatively immature sovereign fund. Now, it’s had 22 years to mature. So it has been—in the past—normal practice to control a private investment fund’s controlling interests. I’m not sure that the case yet has been made that that restriction should be relaxed for the New Zealand Superannuation Fund, but we’ll keep an open mind on it.

Nicola Willis also raised—and, perhaps, to some quiet derision from the other side—the possibility that there could be political influence on and the use of these funds to substitute for borrowing—and to use an example of Michael Wood, as the Minister of Transport, wanting to dip into it.

Now, actually, Treasury also talked about the possibility that that pressure could be applied. Interesting to see that they warned that the risk of lobbying from other portfolio Ministers “could become more pronounced”. Implicit in that is the fact that they believe that exists now and needs to be resisted. But I think what she described is a sort of an odd form of public-public partnership. Now, I, in principle, quite strongly support the idea of public-private partnerships, actually. And it was a shame that things like Dunedin Hospital and one or two others weren’t actually actively pursued by this Government. But, actually, in the advice given to Ministers when we came to office in 2008—

Hon Dr David Clark: Ah, they want to privatise health. The agenda’s coming out.

Hon MICHAEL WOODHOUSE: See, there we go—see, there we go. Ideological blinkers—ideological blinkers—are staying on all the way to that member’s exit from the House. Well, that’s the point about a public-public partnership: the money is New Zealanders’, whether it’s borrowed or diverted from the super fund into those assets.

But I actually don’t think that’s the worst thing the New Zealand Superannuation Fund could invest in. But I do think there are serious, serious concerns about the extent to which they should be investing in those sorts of infrastructure assets. They have to be long run, but I don’t think they should be the sole investor or owner of them, because I think that’s a risk too big for them to carry. But what Nicola Willis was talking about and what Treasury advised could happen is the degree to which there is political pressure to draw on those funds to fund infrastructure assets into the future. I expect there to be some belt and braces controls around that sort of thing.

The other risk that was highlighted was the sort of bailout expectation—if a company does go bad because it fails due to commercial reasons, and the Government is pressured to support or bailout the company. Now, we saw that with Air New Zealand, actually. So it does happen. But the question is: if you take the politics one step removed—and the whole essence of the Superannuation Fund is that politicians and Ministers are not influencing their investments—then the risk that that could happen in a bailout situation is also quite real. It’s much, much lower-risk if the Superannuation Fund was prevented from having the controlling interest—then that pressure would never be brought to bear because they couldn’t increase the interest above 50 percent. Now, they could. So, yes, there are pros to this, but there are also some significant risks that need to be managed, particularly while there is a Labour Government.

I’ve just got to finish by the ridiculous continuation of the mantra that because the Key-English Government suspended contributions to the New Zealand Superannuation Fund, somehow New Zealanders were better off. Well, I would encourage Grant Robertson—

Hon Dr David Clark: $29 billion.

Hon MICHAEL WOODHOUSE: —or Dr David Clark to go along to their bank. Let’s say he goes along to his bank and he says, “I’ve got a great idea for investment in these shares but I haven’t got any money, so I’m going to borrow it. Please give me all that money and I’ll give you the shares as backing.” He would be laughed out of the bank. But that was exactly what David Cunliffe expected Bill English to do in about 2013, so confident was he that the stock market would go up. Now, had we been in the investment curve we’re in now, instead of whatever number Dr Clark called out, we could have been billions and billions of dollars in the red. And if the member doesn’t think that can happen, he should just go along to the Reserve Bank Governor and ask him what’s happened to the Crown balance sheet after the funding for the Large Scale Asset Purchase programme, which so far has cost this country $8 billion and counting. But you don’t hear the Labour Government talking about that.

I look forward to the select committee process, which should be a bit pointy-headed, but, actually, it will be a very interesting journey as we explore this bill.

HELEN WHITE (Labour): I’m pleased to take a call on this bill, and I’m quite interested in the process, but I think that the average public member probably doesn’t know why I would be, so I’m going to try and explain it. The first thing about the Superannuation Fund to get a hold of, if you aren’t familiar with it, is that there’s this thing that is called the “guardians”. The guardians are people who are a board and they’re independent from the Government, and they manage funds. They manage two funds: one is a super fund that is big and broad and it’s meant to really make sure that everybody has investments across the board, and then there’s another fund which is called Elevate, and it actually invests in all the little enterprises which have been funded a little bit, but just need that bit more to become bigger and become more thriving companies. So it’s a really interesting job that those people do, and they’re extremely skilled.

One of the things that’s really important about them is that they’re independent, and so here I totally agree with the Opposition. It’s incredibly important that if we’re going to change the nature of that investment, we change it so that we are entrenching that independence of those groups, so they’re not doing the bidding of the Labour Government or the National Government one day. That’s not going to happen, because those people are going to look after the interests of the investors—that’s all Kiwis—and they’re not going to be influenced. So, absolutely, that’s something that we should all keep an eye on. As my friend Rachel Brooking—who’s the chair of the Finance and Expenditure Committee and cares deeply about these things—says, it’s already kind of entrenched in the legislation that that won’t happen.

So it’s an important step that people have thought about before, but by all means it’s something that we should talk about at the select committee and make sure it can’t happen. I certainly don’t want it going into a hospital, because the suggestion would be it would be like a profit-making thing, and I don’t want that to happen, because the investment is not for that purpose. What I would like to see happen with such money, if there is a controlling interest ability, which is the change, is that the Superannuation Fund does invest in some of those big projects in New Zealand that need doing that probably aren’t suitable for the Government but they might be suitable for a big super fund—things like, perhaps, long-term rental. Overseas, we have super funds that build big apartments in places like Belgium, and those apartments are actually privately run, but they’re run by the big super funds. So they’ve got these big institutional investors going that really care about things like long-term rentals and having homes, etc.

What is happening here is the legislation’s been through one stage where it’s been guarded against a big investment in one thing, and we’ve got to the point where the guardians themselves and the way they’ve conducted themselves are so good that, actually, if the guardians took a controlling interest, we’d probably see investments from other super funds come alongside it, because they’d know this was a well-managed project. So, actually, we’re hopefully encouraging a whole other layer of investment that we need in this country, super fund to super fund or other big investor. I think we’re all agreed that this is the time for this to happen, because the fund’s got to that point where it’s mature.

I also point out that, actually, one of the things that is in this legislation is that the guardians are going to have to establish a statement of policies and standards and procedures. So they’re not just going to do whatever they want without anyone knowing; there’d be a thoughtful and transparent process that says, “These are the kinds of things we decided to invest in.” I’m particularly keen on someone investing in a dry dock up north, because if they do that—it’s a big investment and not many can, but if they did something like that, well, actually, that would be really good for Auckland because we’d get rid of all the big boats that clean themselves in Auckland harbour and they’d go to a place where they could be actually environmentally friendly and cleaned, and we’d have a better and prettier harbour. And it would help, obviously, my friend Emily Henderson up in Whangārei, because there is an opportunity for work, etc., there. So that’s the kind of potential I can see in this legislation. I can see it doing good things, and I can see the actual obligation to consult with the other parties being part of, really, that entrenchment of this as an independent thing, as a good thing to do, but not necessarily something that we should have as a party political point.

So, yes, I’m absolutely mindful. This would be the guardians being able to make those decisions, not with my choice—I couldn’t necessarily lobby for a dry dock—not with Mr Woodhouse’s choice; he couldn’t lobby for a hospital, but, actually, they will make rules and they will apply them and they will make good investments in this country. So I support this legislation going to the select committee.

RICARDO MENÉNDEZ MARCH (Green): Tēnā koe, Madam Speaker. I rise on behalf of the Greens to offer our support on the first reading of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. I’d like to start off by acknowledging that I think everyone in this House is interested in our senior citizens having a safety net. We may have differences about what that looks like and what people can access it, whether it is their retirement age or even residency settings, but the super fund is one of the mechanisms in which we, at the moment, have to maintain the sustainability of that safety net.

What this bill is aiming to do is, effectively, make changes so that the Superannuation Fund can take a controlling interest in an entity, and I note that speakers were talking about how the fund has matured and may be ready to do this. I also wanted to acknowledge previous comments around how this fund and decisions regarding this fund operate separate to the politicians. I’ve noted that it’s been described, on one hand, as apolitical, but I much prefer the sentiments by the previous speakers who spoke more about the separation of politicians and the decisions around the fund. Because everything is political and we can’t pretend, actually, that the guardians don’t have any sort of politics and are devoid of any ideology when it comes to making these decisions. So I would prefer for us to actually speak truth to the reality that you can’t actually be apolitical in how you act.

These changes to the Superannuation Fund do represent an opportunity to require the guardians, through legislation, to undertake more ethical investment practices. The Greens have been really clear that we have had historic concerns about the unethical nature of some of these investments, and the fact that, right now, they are not strong enough. Rather than just relying on behaviour, we should legislate to ensure that we can both protect that safety net and contribute to economic progress, while not investing in things like fossil fuels and other emissions-intensive, environmentally or socially harmful investments.

We would, ideally, be keen to ensure that there is a requirement that a portion of these funds be targeted towards social-impact investments, including emissions reductions—which would actually more broadly align with the Government’s goal of net zero carbon emissions by 2050. So we do think that there are improvements that we could be making and we do think that the process of this bill could enable for a rich discussion of how we do this.

I just, finally, would like to note that, ultimately, there is that broader conversation to be had about what kind of tax system we want to have that enables for enough revenue to be raised so that we’re also not just relying on this fund to continue having that safety net for our ageing population. So we look forward to conversations at a select committee stage and further debates regarding this bill. Kia ora.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Madam Speaker. I rise on behalf of the ACT Party to oppose, at first reading, the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. However, I do look forward to seeing this bill go through select committee, where it will be challenged by my colleague Damien Smith, who sits on the Finance and Expenditure Committee.

While the ACT Party was in consultation with the Minister of Finance about this particular bill, we wrote back to the Minister to suggest that, in principle, we were not opposed to the fund taking controlling interests in investments and in stocks, because it’s obviously a new level of sophistication that the Superannuation Fund has managed to mature and reach, and in doing so, a public entity will need additional oversight. So it’s important that the law is changed and it’s scrutinised heavily, in doing so, to allow for the maturity of the Superannuation Fund.

But where the ACT Party differs and why we won’t be supporting this bill—even though in principle we agree with the changes set out in it—is because we don’t believe that the Superannuation Fund should be contributing to investments in New Zealand or internationally. Essentially, what the Government is doing by continuing to invest is taking New Zealand taxpayers’ money and making a decision about what to do with it and investing on behalf of New Zealanders. Well, in the ACT Party, we believe that the best decision-making for investment can happen by taxpayers themselves rather than by their Government. And I think the perfect example was made by my Green Party colleague Ricardo Menéndez March standing before and saying, “Well, if we are going to invest in the Superannuation Fund, these are the types of investments we would like to see.”

So if you start to believe that the New Zealand taxpayers should have the Government spending their money to invest in the stock market, you then raise the question of, well, what is a sensible investment? And you start to get a lot of people having their own political ideas of what a good investment would be. I believe the New Zealand taxpayer knows what sort of investments they believe will be best for themselves. And so that’s why we believe that we would like to see capital markets in New Zealand grow. That means having a good regulatory system that enables people to be able to make those decisions for themselves and to have the confidence to invest in New Zealand’s capital markets. And this is not the correct debate for it, but I am very interested in how we can change our regulatory systems to enable more New Zealanders to further invest in our New Zealand capital markets, especially a lot of younger people. You know, the next generation are investing—

Angela Roberts: Sharesies.

BROOKE VAN VELDEN: —like my colleague across the House, Angela Roberts, says, in Sharesies. There are a number of other platforms. But we could particularly look at the technology side of these investments in online applications to ensure that younger people coming through have the knowledge and also have the ability with custodian rights under our New Zealand capital markets to make the best decisions and be actively involved in the sharemarkets.

But we do not believe that we should be, as taxpayers, pooling our money through the Government to have this money used for investments. So we do not believe in continuing the contributions to the New Zealand Superannuation Fund. But we do believe in paying down debt. You know, this Government spends an awful lot of money on wasteful spending. The Government wastes our money. There’s a lot that we could cut back on. But it’s also very important that we pay down our debts so the next generation are not facing ongoing taxes and increased taxes down the line. I think it’s very important that we keep our spending under check, that we stop the contributions to the Superannuation Fund, that we pay down our debts, and that we also remove wasteful spending where we can see it. That will keep costs of living under control. But it doesn’t make sense to take New Zealand’s taxpayer money and spend it on a bet. We’re betting other people’s money, and that money could be used better by New Zealanders themselves to invest where they think they can make a good decision, rather than where the Government thinks it can make a decision.

So we are not supporting this bill. We are, in principle, supporting the idea of changing the controlling-interests part of the Superannuation Fund and allowing for more accountability through the changes to these laws, and we look forward to working through that at the select committee, but we are opposed to the New Zealand Superannuation Fund, and we believe it would be better for the Government to be paying down its debts rather than borrowing and spending and using New Zealanders’ taxpayer money on the stock market.

SHANAN HALBERT (Labour—Northcote): Thank you, Madam Speaker. Can I just open this afternoon, albeit at the end of the week, just to acknowledge Tama Potaka in the House, a tuakana of mine and part of the ever-increasing representation of ngā iwi roa o [the confederated tribes of] Mōkai Pātea in Parliament. So, mihi atu ki a koe, te tuakana.

I’m pleased to speak on the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill this afternoon. This bill further strengthens Labour’s commitment to the New Zealand Superannuation Fund to ensure the sustainability of the New Zealand superannuation scheme into the future. We’ve heard that this bill will allow the Superannuation Fund to take a controlling interest in an entity by amending section 59 of the Act to do so; that’s in Part 1. So the fund can now take a controlling interest in a business or investment vehicle if the fund’s guardians wish to do so.

This bill strengthens the New Zealand Superannuation Fund to ensure the sustainability of the New Zealand superannuation scheme into the future. It’s a sensible change that would allow the fund to access a wider base of investment partners and opportunities, particularly from Aotearoa New Zealand.

The fund is mature now, of course, more than two decades on, with assets approaching $60 billion. It’s quite a legacy from the late Sir Michael Cullen and the fifth Labour Government. It is a sovereign wealth fund and this change doesn’t affect sovereignty, not for the fund and not for the Government. The bill does not affect the guardians’ independence from the political influence in relation to investment decisions, and the fund can maintain its exclusion list.

A reminder of some of the areas that the fund does not invest in: companies in the tobacco industry; companies involved in the production of nuclear weapons, cluster munitions, and anti-personnel mines; companies involved in the processing of whale meat; companies involved in the manufacture of civilian automatic and semi-automatic firearms.

Part 2 of the bill makes consequential amendments to the Ombudsmen Act so that the Act and Official Information Act do not apply to any private sector subsidiaries in which the guardians may hold a controlling interest, while preserving those Acts’ application to the guardians itself, and the Income Tax Act, to address the removal of references to the fund’s investment, vehicles, and to preserve the current tax treatment of the New Zealand Superannuation Fund investments. Allowing the New Zealand Superannuation Fund to hold controlling interests will have a limited impact on competition with other market investors.

As part of the Finance and Expenditure Committee, I think in the discussions that we have heard in the debating chamber this afternoon, it is important to offer the opportunity to the public and to key stakeholders to have their input into this bill, but as we know and as we’ve heard from the majority of the House, we do support this bill, we do support the progress of the New Zealand Superannuation Fund, and I commend this bill to the House.

TEMPORARY SPEAKER (Barbara Kuriger): This is a split call—five minutes.

TAMA POTAKA (National—Hamilton West): Talofa and kia orana koutou katoatoa. E te tuakana, Shanan, e mihi ana ki a koe. Thank you for the opportunity to speak to this bill. The Minister is at the intergenerational edge of responsible investment, and the purpose of the New Zealand Superannuation Fund is aspirational and pragmatic—sustainable investment delivering strong returns for all New Zealanders. Kia toitū te haumi hei hua mā ngā tāngata katoa o Aotearoa. [Let the investment be sustainable to provide for all people in New Zealand.]

The purpose of the bill, to allow the New Zealand Superannuation Fund to take a controlling interest in an entity, matches many of the murmurings of Friday night kombucha and sushi sessions I enjoyed as a minor staffer at the Guardians of New Zealand Superannuation Fund.

The National Party gives tautoko to this amendment, albeit at the first reading, and as my learned colleagues Willis and Woodhouse observed, there is some caution associated with this support. Political pressure and the risk of lobbying from other portfolio Ministers is real over time, particularly those with scale infrastructure responsibilities that have some poor yield and other return characteristics, and it could become more pronounced through the proposed pathway, so transparency around inter-ministerial communications is required.

Raiding of the MallowPuff jar should not be encouraged—using the Superannuation Fund as merely trigger capital for pet projects or life-saver capital for failed projects. Whilst spending quality time as a seeker, à la Harry Potter and the golden snitches at the Guardians of the New Zealand Superannuation Fund in the Zurich building in downtown Auckland, I had the phenomenal opportunity to meet some exemplary and sometimes quirky people. It is the likes of Matt Whineray, who now leads the Guardians of New Zealand Superannuation Fund, that this amendment eloquently—very eloquently—speaks to.

Look, the risk of bailout expectations is an important concern that we’ve referred to and alluded to, particularly on reputational grounds. From my own experience in observing the Superannuation Fund over time, it is acutely aware of those responsibilities of preserving the international and the domestic reputation of the Guardians of the New Zealand Superannuation Fund across the investor landscape, but I implore all members to be cautious around this and also demonstrate an ultimate curiosity for the potential that the New Zealand Superannuation Fund brings to our direct investment landscape, and that, as my role as a curator of deals that didn’t exist, was particularly a focus of mine.

I’m mindful also of the legendary Minister of Finance Bill English and his ministerial directive to the guardians many years ago—when I was a young man in Tāmaki-makau-rau—to identify and consider opportunities to increase the allocation of New Zealand assets in the fund, but not to be inconsistent with the duty, that important fundamental duty of the guardians, to invest in a prudent and commercial manner.

Those parameters, as articulated so brilliantly by the former Prime Minister Bill English as the Minister of Finance at the time, continue to be extant in our environment today. Those New Zealand opportunities will likely expand if this type of amendment carries through to the other side, and I would have thoroughly enjoyed—in my time at the Guardians of the New Zealand Superannuation Fund—the opportunity to interrogate and understand the Dunedin Hospital investment. That would have been absolutely marvellous and I could have attended Dunedin far more often, running up Baldwin Street and enjoying the cooler weather of Dunedin.

Madam Speaker, my rumblings are exhausted here; my murmurings are over. However, let’s cautiously proceed so that the select committees can see the sunlight and not get caught in the verbal shadows. Tēnā tātou katoa.

Hon Dr DAVID CLARK (Labour—Dunedin): Thank you, Madam Speaker. I’m enjoying the tone of this debate, the references to Baldwin Street, Dunedin Hospital, and, of course, the Superannuation Fund. It is good to debate with members and I look forward to hearing around the House how different parties approach this. It’s good to see the tentative support from across the House, at least to the select committee stage.

I am very confident that the concern expressed by members opposite around independence is covered off in this bill quite explicitly, and appropriately so. It is incredibly important that this fund acts independently, that it is independent from political influence, and when that’s laid down in statute, it becomes incredibly clear and sacrosanct. So the bill itself does not alter the guardians’ independence from political influence in relation to investment decisions. I just think that needs to be stated clearly and on record. That’s provided for in section 64(2) of the Act, for any members that want to check that up.

Now, it’s very much a story of then and now that we’re looking at today. When the fund was established in 2001, the rationale for the control restriction was that the fund’s purpose was to get exposure to investments and not to own businesses for itself. And, of course, it has been very successful in that regard. It has won numerous international awards, and one only has to go and visit the guardians’ website to see the lists of awards that it’s won, including a lot of global recognition for outstripping the performance of other sovereign wealth funds around the world. It’s done extraordinarily well.

But when it was established, it hadn’t, of course, established that track record of performance. That only came over time as it invested, did so successfully, and demonstrated its ability to do that year after year. It’s also true that the environment’s changed. When the fund was established originally, it was very uncommon for sovereign wealth funds to take a direct controlling interest in investments. But that’s changed—the practice around that has changed. And, of course, as the fund itself has matured in size, in capacity, it’s grown, it’s shown itself to be a very prudent investor, has got those returns that will ensure New Zealand’s future superannuation is provided for as was intended, and has done that, I think, in a way that has outstripped all expectations, and we need to acknowledge that in this House.

Interestingly, Michael Woodhouse brought this up earlier in the debate, anticipating that it would be spoken about—the very fact that National in 2009 suspended payments to this fund. On the guardians’ website, they have done the calculation of how much bigger this fund would have been had the National Party invested through their time as Labour Governments had, and the fund itself would be $28.6 billion larger if the National Party had continued to make contributions, such is the extraordinary return that they’ve made.

Rachel Boyack: How much?

Hon Dr DAVID CLARK: $28.6 billion larger had the National Party continued to contribute. But that’s the kind of thing that makes them nervous.

And we heard it from ACT over there, who were very much of a view that we shouldn’t be investing on behalf of New Zealanders; we should be only investing as individuals, despite all evidence to the contrary in terms of the value of the investment and the returns that have been achieved. I think, certainly in the ACT Party’s case, we can see that that’s just ideological claptrap—don’t let the facts get in the way of a good story!

But I am pleased to see National tentatively supporting this. I encourage them to support it right the way through, because it is a policy that benefits all New Zealanders and it is a good thing when a bill like this gets support across the House. We want that long-term investment. We want our citizens to benefit from the provisions that are made and from the extraordinary returns that the Superannuation Fund has secured over the years and, I’m confident, will continue to secure in the future.

There are a couple of other points to make before I close. The beauty of having a controlling stake in organisations such as is proposed in this bill is that the fund will have more flexibility, thus giving it the propensity to have even greater returns and also to influence ESG factors as well in their reporting—they can influence environmental, social, and governance things that are in the wider national interest too, and that would be terrific to see. There are many more reasons to support this bill, but my time is up.

ANGELA ROBERTS (Labour): Thank you, Madam Speaker. It is a pleasure to rise and—I’m not going to turn this into an economics lesson, I promise—speak in support of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. Actually, maybe it is an economics lesson, because I’ve been listening to the debate and I was really heartened as somebody who, hopefully, is around long enough to take advantage of the wise investment decisions made by the guardians in years to come.

I was really pleased to hear about the curiosity and engagement across the House as we recognise the maturity of the guardians and their governance capability, and how we can best enable the opportunities that arise from that as well as mitigating any potential risks. As we’ve heard earlier, we believe that both sides of that coin are very much addressed in this legislation.

I was heartened, and then I was gobsmacked to hear that the ACT Party not only want to stop contributions—which will cost, potentially, billions and billions of dollars—but actually they quite clearly state that they oppose the existence of the New Zealand Superannuation Fund, and just “Good luck, everybody.” I think it speaks volumes about their commitment, or lack of, to looking after the way we do our social contracts with each other in order to look after each other in our retirement. So I’m very proud to be able to speak in support of this legislation, because we believe, on this side of the House—and, I believe, on the other side of the House—that this is a really, really important part of our social fabric and how we look after each other.

We’ve heard about the why, now. As Treasury has noted, the guardians’ governance has evolved in line with the super fund investment capability over the years to provide effective oversight of really complex investment strategies, and that’s been recognised recently in an independent review done by Willis Towers Watson. So we’re really, really clear about the why. Things are very, very different from when the Superannuation Fund was established and the guardians first set off on their journey to do what they do—as we see now—quite, quite well.

This expansion—so why? This expansion of their tool kit enables a lot of opportunities. Their value proposition is quite unique. Their endowments, long-term investment horizon—which does open up different opportunities—their ability to tolerate a liquidity crunch, and the fund’s sovereign status means that their opportunities are much greater, and this bill will enable those opportunities to be taken. I look forward to seeing it progress to select committee.

SIMON WATTS (National—North Shore): Well, thank you very much, Mr Speaker. An absolute pleasure to rise to speak on the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill first reading. We’ve heard a range of comments this afternoon in regards to this bill, and I’m going to spend a little bit of time outlining a few of the areas that we’ve observed will need to be explored as this progresses through the select committee process. As our shadow finance spokesperson and deputy leader, Nicola Willis, has articulated, National are supporting this bill cautiously through to select committee. That is for a variety of reasons that we will canvas as we go through.

There was one reference from a prior speaker that did rise my eyebrows, and that was that “one can’t be apolitical in regards to the management of investments”. How timely that comment is—quite an insight into the context that, actually, it’s impossible for someone to be apolitical. Well, we’ll just leave that for Kiwis to have a think about whether they believe that or not.

In regards to this legislation, it’s quite interesting in terms of that fact that we’ll need to provide the ability for the New Zealand Superannuation Fund to be able to take a controlling interest in regards to investments. This is a long-term investment fund—primarily, in the nature; in terms of its investments, it’s passive. The reality of what we’re looking at here is for the Superannuation Fund to be able to take primarily more active fund investments and controlling interests, which basically means that they have the power and the ability to influence that and decisions through that.

I think the question and the issue that this particularly raises is in regards to having a clear governance situation. What I mean by that is that one of the challenges—and I’m sure that this will be thought through in the select committee phase—is how do we ensure that the impartiality that is implied in regards to investments where the Superannuation Fund does have a controlling interest, because that impartiality is one of the key pillars of good, strong corporate governance. One of the concerns, rightly so, by Kiwis is that when the Crown has the ability to have a controlling influence, then impartiality is very much a real risk and real issue.

Some of the considerations around how to mitigate that—whether that is through having no management roles on the entities in which the Superannuation Fund invest in, having no management influence, or even going to the point where the Superannuation Fund ensures there are independent board members that are in there or actually an independent majority on the board. I think all of those considerations around governance separation do need to be considered through this, and I’m confident the select committee, through feedback from experts and across the sector, will take into account some of those key components.

Because it is important, and political influence is real. I mean, if you give a scenario of, say, the Superannuation Fund was looking at undertaking an offshore wind farm investment, for example, and the Minister for the Environment came along and said, “Well, you know, I really want this to tick a couple of boxes on my priorities and promises.”—I mean, hypothetical, of course, but you can see where the element of political influence may drive a decision. And the prior speaker over there referred to it before. He said, “Don’t worry, it’s in the legislation that there needs to be prudent commercial basis.” Well, the challenge with the word “commercial”, when you’ve got 100 percent Crown ownership, is there’s a little bit of a contradiction between those two points, you see.

The point that, actually, the Crown is commercial is a long bow—it’s a long bow to draw. So prudent commercial basis when the Crown has a 100 percent stake is where there is an issue, and I think the select committee needs to work through that and ensure that we have confidence that those safeguards that have been highlighted by the other side of the House actually in reality will result in ensuring that that impartiality is maintained in terms of clear separation between the investment vehicle, which is a New Zealand Superannuation Fund, and the management and the board that actually executes the strategic direction of the company in which the Superannuation Fund will hold a controlling interest.

I think the other aspect which is interesting is if you look at significant sovereign wealth funds globally, it is right that many of those globally have the ability to take controlling interests within investments. The legislation that surrounds a number of those sovereign wealth funds is different, and I think part of the job of the select committee is going to be undertaking a bit of a scan globally and internationally in terms of the safeguards around the same type of funds in other jurisdictions to ensure that we’ve got the right, I guess, riverbanks in place to avoid the boat getting grounded. But that is important because having the right controls in place there is going to mitigate a lot of the risk.

The point around what you’re seeing with these sovereign wealth funds is quite a significant flow in terms of the ratio of investments that are under active investment. So that’s basically those that have fund managers that are making more active day-to-day decision-making in terms of those investments versus those that are passive. And you’re seeing very much a flow from active to passive. So while this aspect is looking more at the active side of that, there is a bit of an element and it’s probably not drawing too far out of piece to say that, actually, there is a potential for a little bit of distraction within the Superannuation Fund—that shiny investment, that shiny business over there; let’s get involved and let’s invest in that, and let’s chase that car for a while, when, actually, the reality of this sovereign wealth fund is it is a long-term passive fund and it takes a minimum of a 30-year investment horizon.

So we don’t want the fund to get distracted by the shiny car driving past and chase that, because we know already, as was highlighted when the Superannuation Fund came to the select committee, that they paid out about $16.2 million of performance bonuses last year when the fund dropped in value by 7 percent. Don’t get me wrong, performance bonuses for high performance are appropriate in a commercial environment, but when you pay every single one of your staff members—100 percent of the staff got a bonus for performance when the fund went backwards by 7 percent, and it actually went from $16.2 million, and the prior year was $9.4 million, and the average between the last four years was $26.4 million and $9.4 million. It went from $9.4 million to $16 million in one year and the CEO got a 40 percent pay rise in 12 months. Maybe I’m the only one that’s thinking, “Well, we just need to be a little bit cautious in terms of giving these guys a little bit more rope.”, because what that indicates to me is when you give them rope, they are quite willing to use that in a way in which it derives benefits. So I think that’s just a little bit of context that adds to that conversation.

The other aspect in the time that we’ve got—gee, there’s not much time to go, Mr Speaker. Maybe we have a little bit longer, but maybe we’re not going back to the second reading today. The other aspect that we want to—I think it was raised by the Hon Michael Woodhouse, who raised a good point. It was in terms of having a look at this in the context of ACC—because ACC, of course, is our other investment fund, with a long-term investment horizon. And I would expect that the select committee will also look at other similar legislations. That will be the Crown Entities Act 2004, section 100, for those that are reading the legislation at home while they’re watching the speech. But let’s see where the select committee goes. And, as I say, we’ll be cautiously supporting this legislation.

LEMAUGA LYDIA SOSENE (Labour): It gives me pleasure to be the final speaker for the Government in support of this very important bill, the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. In my short contribution, we have heard from across the House support for this bill at the first reading, and we’ve also heard from our Minister of Finance, who has outlined this New Zealand Superannuation Fund (NZSF), and the New Zealand Superannuation Fund has significantly matured in size and capability in the operating model. What this bill does, is Part 1 of the bill amends section 59 of the New Zealand Superannuation and Retirement Income Act 2001 to allow the Guardians of the New Zealand Superannuation Fund to take a controlling interest in an entity.

The bill also makes a number of other amendments to ensure that an investment by the fund does not result in any entity being treated as part of the Crown and subject to obligations that were designed for public-sector organisations. In Part 2, it also makes consequential amendments to the Ombudsmen Act so that the Act and the Official Information Act do not apply to any private-sector subsidiaries in which the guardians may hold a controlling interest, while preserving those Acts’ application to the guardians itself and the Income Tax Act to address the removal of references to fund investment vehicles and to preserve the current tax treatment of the NZSF investments.

And we’ve heard that the guardians’ governance—who have been entrusted with this role, who are skilled individuals with business acumen, and who are independent of the Government and politicians—have followed due diligence in the operations.

Now, just to end off, I am not a member of the Finance and Expenditure Committee, but I have every confidence that the members will initiate a transparent process in terms of hearing from the public and in terms of the submissions that are put forward, and they will be able to hear the recommendations by the different contributions to carry out the work, because we want good returns for the long-term investments for New Zealanders with this fund. On that note, I commend this bill to the House.

A party vote was called for on the question, That the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill be now read a first time.

Ayes 110

New Zealand Labour 64; New Zealand National 34; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 10

ACT New Zealand 10.

Motion agreed to.

Bill read a first time.

DEPUTY SPEAKER: The question is, That the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Bills

Forests (Legal Harvest Assurance) Amendment Bill

Second Reading

Debate resumed from 8 March.

RACHEL BOYACK (Labour—Nelson): Thank you, Mr Speaker. It’s a pleasure to take a short call on the Forests (Legal Harvest Assurance) Amendment Bill. Can I begin by congratulating the Primary Production Committee and their former chair Jo Luxton for their excellent work on this bill.

The objective of the Forests (Legal Harvest Assurance) Amendment Bill is to establish a legal harvest system to assist in combatting global trade in illegally harvested timber, to safeguard and enhance market access for New Zealand timber exporters, and to assure the legality of the source of timber imported into New Zealand.

As the member for Nelson, I just want to make the point that forestry is a very large part of the Nelson economy. It is important that it is protected for those who work in the industry in my region. This bill is also the right thing to do. Illegally harvested timber has an enormous impact on the environment. It has an impact on our biodiversity. It has a big impact on species who lose their homes when forestry is illegally harvested, meaning that species often lose the places where they have established themselves, and that can have an enormous impact on species loss across the world. It also has an impact on communities. There are human rights issues. There are issues in terms of access to economic development that occur in those areas. And one in particular that is important to my community is the community of Myanmar, where I visited, and where there is illegally harvested teak timber. And I know that it is an issue that people in Nelson, former refugees from Myanmar, care deeply about.

This is an excellent bill. It has been well looked at by the select committee with some excellent changes made to it, and I commend it to the House.

Hon EUGENIE SAGE (Green): Te Māngai o te Whare, tēnā koe. I’m pleased to take a call on the Forests (Legal Harvest Assurance) Amendment Bill, and it is what it says on the tin. It provides a legal harvest assurance system for forestry and the wood-processing sector, and it’s supposed to strengthen the integrity and resilience of the commercial supply chain. The Green Party is supporting it, but, as I said in the first reading, the bill is a lost opportunity because of its very limited scope, its narrow focus on timber products, and its lack of ambition in protecting the diversity of life in our forests from the scourge of deforestation and illegal logging, whether that is for timber or for other products like palm kernel expeller, or to convert those tropical forests into palm oil plantations, or whether it is to deforest to convert them into soya plantations.

The Green Party is not represented on the Primary Production Committee, and this bill is a real representation of why we need more Green MPs, so that we can cover all select committees fully and so that we can improve on legislation, because this bill is outdated. It was first promoted by a former Labour Minister—Pete Hodgson—18 years ago, under the fifth Labour Government. The world has moved on since then, and both the Ministry for Primary Industries (MPI) and the Government policy which is expressed in this bill haven’t caught up.

It is far too timid, given the huge scale of deforestation in tropical and temperate forests and the urgent need for action. As in 2021, a mere 9 percent of the world’s forests remained intact—just 9 percent. So, as others have said, the scale of illegal logging is enormous, and it’s doing immense harm to the lungs of the planet in places like the Amazon, to forests themselves, to plants, to wildlife, and to the indigenous communities that depend on forests for food and for their livelihoods, and as their home. It’s destroying the planet’s lungs and it’s destabilising our climate, and illegal logging contributes to corruption and criminal activity, it helps support corrupt Governments, and it means humans suffer and nature suffers.

We have in Aotearoa a history of forest destruction and loss, and maybe because of that we are late to regulate illegal logging. In terms of the United States, it has had law banning illegal timber and the trading in it since 1900.

This bill could have looked at what the European Union is doing. The European Union has recently had its environment Ministers pass regulation which both prohibits the placing of illegally logged timber products in the market, and is much more extensive in addressing legal and illegal deforestation and is much more expansive in the scope of the product that it requires to be legally harvested. This bill should include things like soya, cocoa, chocolate, beef, leather—all commodities which can lead to deforestation.

The departmental disclosure statement said that MPI consulted with environmental NGOs. They raised these concerns. The Green Party raised these concerns last term, in 2019-20, when the bill and legislation was being discussed. Those concerns and the need to widen it to these other products which cause deforestation were not heeded, nor were they heeded in submissions. We had submissions from Environment and Conservation Organisations of Aotearoa, Greenpeace, and our Royal Forest and Bird Protection Society, all highlighting the need for having a more expansive bill for it to do anything serious about deforestation. While the select committee did make a number of changes, it has kept the bill firmly focused on timber products.

One of the other issues with the bill is that the definition of legality is too narrow. There is no recognition and requirement in terms of the definition of legality that the indigenous people and local communities should have provided free and prior informed consent to any logging. It does refer to property rights in clause 77, I think, but it doesn’t provide that assurance that there has been consent by indigenous peoples and local communities.

The bill relies quite heavily on a due diligence system for an assurance that timber has been legally logged. One of the issues with these due diligence systems and requiring those that are doing the logging to have such a system in place is that they often rely on certification systems such as the Forest Stewardship Council system—they potentially allow illegal timber to be mixed with timber that’s been legally logged. So it’s not going to be totally watertight in that regard.

But one of the big issues is that the variety of life on the planet depends on healthy nature. Healthy forests are our lungs, and yet this bill is only focusing on timber, not the variety of other commodities—palm oil, soya beans, cocoa, chocolate, coffee, rubber—that we need to regulate to ensure that they are being legally managed and that they are not coming from areas that have been deforested.

So, yes, it’s good that Pete Hodgson’s original ideas are finally being implemented, but we could have followed international practice in the EU, could have been much more expansive, and could have done something serious to really restrain and prevent deforestation of our tropical and temperate forests.

This bill also covers log exports. How can we, when we’ve had such extensive damage being caused by forestry in Aotearoa, in Tai Rāwhiti, with all of that slash that has ended up on beaches, on farms and crops that at this moment is legally allowed—this bill doesn’t do anything to actually improve the regulation of forest management.

Hon Todd McClay: It’s not meant to.

Hon EUGENIE SAGE: Mr McClay says it’s not meant to, but it’s just showing how weak the legislation is that we can export those logs. The system can provide an assurance to importers overseas like China, where the bulk of our export logs go, that they’ve all been legally harvested. Yet, there is huge devastation that has been caused to communities throughout Tairāwhiti, from poorly managed harvested logs where you’ve had whole hillsides that are cleared, slash left behind in huge quantities, and that is still legal and they can be exported with the assurance that this is all being done legally.

So there’s an urgent need to improve our own forest management and regulation under the National Environmental Standards for Plantation Forestry and under the Resource Management Act because, at the moment, the damage that that slash causes is legal and it doesn’t face any penalties under this proposed regime. So the bill is a slight improvement on the status quo, but it won’t do anything serious to actually prevent deforestation. Kia ora.

SIMON COURT (ACT): Look, I’m speaking here this afternoon on behalf of ACT MP Mr Mark Cameron, who sits on our Primary Production Committee. The ACT Party will be supporting this bill. We’ve heard from submitters who have pointed out some flaws, some potential issues that need to be resolved, and so when this bill gets to the committee of the whole House stage, we’ll have questions for the Minister and we’ll be seeking further answers from officials.

Now, New Zealand’s forestry industry is our fourth-largest primary sector export earner, creating over $6 billion in revenues for the fiscal year 2020-21. The operational certainty, the integrity of the supply chain for forestry operators, for investors, and for their customers, both domestically and internationally, is vitally important to New Zealand, to our economy, and to those communities which absolutely depend on forestry for their income as well as for other things.

As noted by previous speakers, such as the Hon Eugenie Sage, this bill does create a legal framework to help futureproof the legal harvest of timber products, although this bill has taken a long time to get to this stage. However, the original problem that the bill was designed to solve—how can we be confident that the timber products that we purchase from the local merchant or that a builder supplies on to our project or into our home have been harvested in a way, and from a place, which meets a minimum level of environmental and socially responsible outcomes? So the ACT Party supports this bill, but we also want to raise some of the issues that submitters identified. There is an overlap with other regulation, such as the log traders regulation, which was introduced through the forest advisers amendment bill last year, and that may create some confusions between those administering the bill and all of those involved in the forestry industry who are tasked with submitting to the regulations.

That’s where the ACT Party differs from the Green Party in many ways. We heard from the Hon Eugenie Sage a very passionate articulation of the concerns that many of us have about the way timber is harvested, particularly in developing countries. If we think about the Asia-Pacific region, where large trees are taken from environments where threatened species live like Borneo, where I recently travelled, where species like sun bear, like orang-utan, like pygmy elephants—habitats are threatened by the removal of forest and the conversion of that land to other uses. So it is vitally important that we do have a regime which protects the habitat of places that those communities identify as special to them in the same way as in New Zealand we identify those habitats like national parks, for example, those places that are so special to us that we wouldn’t allow the trees to be harvested from those places.

But where ACT differs from parties like the Green Party is that we don’t think the regulation that applies to dealing with a specific problem like harvesting trees from tropical places should also be applied to drinking cocoa, for example, or the oil that ends up in our two-minute noodles. There is such a thing as regulatory overreach and an excess of red tape, and I think we heard the Hon Eugenie Sage articulate a vision that the Green Party has that the ACT Party fundamentally disagrees with.

But there are some economic issues that are raised by illegal forest harvesting, particularly in developing countries, that we don’t necessarily face here in New Zealand, and it’s where communities are forced to make terrible choices, where they’re faced with wicked problems.

It may well be because they have a less transparent democracy than New Zealand has, where the incentives to do bad things are much greater than the incentive to do good. So if a community is faced with choices between “Well, there’s some illegal logging going on, but that provides income; that provides resources for other things that we do, like building homes, for example, in our community, and maybe some of that timber is exported and we get cash for it”, but the alternative is “Well, imagine if we could actually exploit our natural resources, like through mining, for example, or oil and gas”—that many countries like the province of Sabah in Malaysian Borneo, where I visited recently, do have access to. If the option was to say, “Well, we could exploit those resources and generate wealth from those activities, then instead of this incentive to cut down old-growth forest and destroy the habitat of those threatened species, we could actually use the money we earn from developing our other natural resources, to protect that land and to give better economic and social opportunities to our people”—so, while the legislation we’re debating today provides for certification of timber, particularly from places where we might be concerned it’s not sustainably harvested, causing severe damage to the environment through those practices, the fundamental problem that this bill attempts to address is that, in those countries, the economic incentives are skewed, because, in many cases, local people cannot benefit from the development of their natural resources.

That’s why, when we think about New Zealand, the great opportunities that we have through our natural resources, whether it’s minerals that lie under the conservation estate, in what’s called the Schedule 4 lands, or those lands that were dumped into the conservation estate in 1987, during the reform of the State-owned enterprises, those lands that should be available for development of our natural resources—or whether it’s our oil and gas resources, which New Zealand has a bounty of but which the current Government has decided to make off limits through banning exploration offshore for oil and gas and, more recently, stopping the issuing of any more onshore permits. So, while this bill addresses a significant and real problem of where timber is harvested and how do we know that it’s been harvested in a way that is sustainable and protects the economic and social interests of the communities where that timber is taken from, also this bill underlines that there is a much more significant problem, not just for developing countries that have orang-utans but also for countries that still would like to consider themselves First World, like New Zealand, must address.

Concerns were raised by submitters about the size and the scale of the bureaucracy—the red tape this would impose on their industry—particularly for small forestry plot holders, who might have invested in a forestry block potentially as a future retirement income or a nest egg. They are not typically managing the forest on a daily basis; they’re certainly not involved in its logging and its marketing. They leave that to independent forest managers, and many of them pointed out that, by the time they have paid for certification for their small forestry block, they may well be barely in a break-even position. So any legislation that this House passes must also take account of the red tape and the cost on small business and small land owners. There’s about 14,000 of those small forest owners in New Zealand, whose economic sustainability may be put at risk through excessive red tape and regulation. So ACT will be continuing to focus on that when we consider the subsequent stages of the bill. However, other submitters have pointed out, in fact, that there are many jurisdictions we supply timber to, like Japan and others, which have a range of regulatory standards that we are required to meet in order satisfy the demands of that market, and so we should be prepared to accept some additional certification and controls so that they can be sure that timber harvested in New Zealand has not come from a place that it was not lawfully taken from.

So, look, this bill appears to be complex, but it certainly has a fundamental rationale—a problem-solving piece of legislation that ACT will get behind and support. ACT will support this bill. We will be voting for its second reading. We’ll have plenty of questions for the Minister and officials at the committee of the whole House stage, but we do support its intention.

ANGELA ROBERTS (Labour): It is a pleasure to rise and take a call on the Forests (Legal Harvest Assurance) Amendment Bill, not least because I spent many, many summers in the Rai Valley and in Havelock on my grandfather’s sawmill. There’s a long history with distant relatives, who may be Brownlees, who have, for generations, worked really hard in the forestry sector in the Pelorus and Rai Valleys. I acknowledge those pioneers who worked so hard. It is really interesting to be in the House today and continue to do what we can to support our forestry industry, which we’ve already heard about being so important and so valuable, to be progressive and continue to be world-leading.

This piece of legislation is important for two reasons. It is about ensuring that our trade agreements and our trading partners—we keep up and we make sure that we can hold our heads high on the international stage. But it also means that we are contributing to that global network and the attempts globally to do better—as we’ve heard, we must do much better to protect our planet.

We’ve heard about the Primary Production Committee submissions. It was a great process to be a part of. We got expertise at the table and they really helped us to grapple with the complexities and make sure that we could look to those global challenges, but also make sure that we didn’t forget the implications for our local forestry sector. They helped us to streamline, to strengthen, and to give some coherence to the issues in front of us and the bill. We heard about the need to align with other pieces of legislation, and I believe we managed to do that. I commend this bill to the House.

SAM UFFINDELL (National—Tauranga): Thank you, Mr Speaker, and a happy Thursday afternoon to everyone in this House. I rise to stand and speak in support of the Forests (Legal Harvest Assurance) Amendment Bill at the second reading.

Hon Kieran McAnulty: Ah, reading’s getting better!

SAM UFFINDELL: Now, we know—I just wanted to get the bill right, Kieran. I think I did.

Hon Kieran McAnulty: You nailed it.

SAM UFFINDELL: Thank you very much.

DEPUTY SPEAKER: We use full names in the House, please, Mr Uffindell.

SAM UFFINDELL: Certainly—the Hon Kieran McAnulty. I wanted to make sure I got the bill right.

Now, we know that illegal harvesting’s been a problem and we’ve seen the degradation that’s occurred in many parts of the world. Simon Court, before, was talking about his wonderful trip to Borneo and all of the issues he’d seen there. We all would have seen and heard stories about rainforests and forests which have been felled, causing significant devastation to the ecosystems and the cultural and societal aspects there. New Zealand is not immune from that. We have a significant forestry sector here in New Zealand. I think it’s our fourth-biggest exporter, about $6.3 billion, and we do import a considerable amount of timber as well—if my memory serves me correctly, 2.35 billion from June 2021. So the thing to note there is that it is sizable and that does increase the risks that we face. So it is good that we are in agreement on this, in that we are wanting to put in safeguards to ensure that harvesting of timber products is done in an ethical manner, and ensuring that the supply chains involved are all acting appropriately.

This bill amends the Forests Act 1949 to establish a new regulatory system, which assists in the prevention of international trade in internationally illegally harvested timber, and strengthens the international reputation through doing so. We need to safeguard and enhance our market aspect. As we have kept talking about on a number of different things, it is important for New Zealand to make sure that it’s doing its part to uphold ethics and make sure that supply chains are fair and equitable, to make sure that illegally sourced timber is not exported from New Zealand, and, just as importantly, is not imported into New Zealand. So this amendment to the bill will help address that.

Forestry, as I’ve noted, is a key part of the New Zealand economy, and this bill will help reinforce the integrity of New Zealand’s timber as a legally sourced product on the international market. The National Party supports this. We abhor illegal forestry activities. We worked and we did support this through to the Primary Production Committee. I wasn’t on that select committee, but I understand that it did work well and everyone noted the key points and we did support it through, and that’s why we are supporting it at the second reading. That is all I have to say on this matter. Thank you, Mr Speaker.

HELEN WHITE (Labour): Thank you. I’m pleased to take a call in support of this piece of legislation that we seem to have a lot of collegial support across the House for—for very good reasons. This is something that’s really appalling that we have put up with for so long—the bringing in of wood and the sending out of wood, without really any restrictions. And we will be in line with a whole lot of APEC economies—Australia, the United States, Indonesia, the Republic of Korea, Japan, Vietnam, and China—when we do this.

What we’re bringing in is the introduction of a legal harvest assurance system, and so everybody will know where that outdoor table comes from. And Simon Court’s quite right: it’s going to protect a lot of wildlife, it’s going to be a better option for people, and it’s going to be a big step towards making sure that we are environmentally sound in our choice of products. And I for one will be greatly relieved for that, because it is, as Simon Court has said, a pressure on people in other economies if this is a source of funding for them.

So it’s very important that we actually support these kinds of standards so it is actually something that becomes a brand issue for people so that they’re actually supporting the harvesting of wood in a proper way in those economies and, in fact, in our own, because it’s going to be important to our brand, too, that we are actually abiding by these kinds of systems ourselves. So, with that, I commend this bill to the House.

TERISA NGOBI (Labour—Ōtaki): Fakaalofa lahi atu, Mr Speaker, and thank you for the opportunity to take a call, albeit a short call, on this, the Forests (Legal Harvest Assurance) Amendment Bill—I also wanted to make sure I got that right. It is a short call because this is a no-brainer—really good to get agreement across the House that this is a no-brainer.

Essentially, this bill is about ensuring Aotearoa New Zealand only trades in legally harvested timber. That’s it in essence, right? This is also about supporting the international efforts to kerb the trade in illegally harvested timber. This bill does that in a few ways, and we’ve heard a few of those today, but I will go through it again. One of those is having that registration system for exported, primary processors, importers, and log traders. This is also about providing thresholds and exemptions, especially for those smaller entities as well. This is about requiring registered parties to have due diligence systems to check that timber has been legally harvested. This is also about making sure that we have people—that our forest owners and their agents make sure that they have the right paperwork, so providing those harvest information statements to those buyers and keeping good records.

This is a no-brainer. We’ve heard from many others—who doesn’t want to make sure that we’re saving our forests? So I commend this bill to the House.

Hon TODD McCLAY (National—Rotorua): The forestry industry in New Zealand is extremely important to us. In my area, and indeed around Taupō where I grew up, forestry was such an important part of the local economy and remains so throughout New Zealand. It provides a huge number of jobs and investment for various people around the country, but also provides wood to our sawmills to add value so we can use it in New Zealand to build some of the houses the Government fails to build, but, at the same time, to export products with value added to them.

I just want to say, before I come directly to the bill, to the forestry sector that, actually, although there is an inquiry the Government has put in place, which I think is important, into what’s happened along the Gisborne area, the coast, and down towards Napier, they remain important to us and we want to look constructively at how we can give assurance to those that live in those areas and elsewhere where there’s forestry and, at the same time, make sure that the forestry sector knows they have a future in New Zealand and they remain important to us and they remain valued.

This legislation has much less to do with New Zealand and more to do with setting international standards. For a long time, it has been illegal to illegally harvest wood products in New Zealand native forests and so on, and our officials pay a lot of attention to this. So I don’t think we do have a problem in New Zealand in respect of this, but that can’t be said for every other part of the world—countries that don’t have the same regulatory regime or approach to sustainability of natural forests or native forests as we do.

What it does do for our forest owners or wood exporters is it gives them certainty that they won’t face barriers or delays when their products are exported to other parts of the world, because, for them to leave these shores, they must be certified as sustainable and sustainable practices, as under this piece of legislation. We don’t import a lot of wood into New Zealand that one might argue could fall within what is not allowed through this legislation, although there will be occasions or times when people want to add things to their decks or houses, where we could ask the question, “How do we know that the harvesting of this wood is sustainable and it hasn’t harmed a natural environment?” Well, a certificate would need to be produced for it to come to the country, so it gives us certainty, and that is an important thing.

It’s not that long ago in this House where we came together and passed legislation—well, actually, a previous Government—when there was a great wood fall in the West Coast of the South Island following a storm event. Rather than it sit there and rot, the House passed a law to allow it to be harvested and to be used rather than to be wasted. In that case, it’s important that this legislation recognises that there will be an occasion in time when a protected natural resource might well be used—not cut down to be used, but used rather than being wasted, and whether or not under such circumstances that product can be exported or it must remain in New Zealand, and in the case that it must remain in New Zealand, that the practices of felling trees in New Zealand is not called into question as a result of that. You know, it’s not sustainable for us to say if wood has fallen as a result of a natural event, that we can’t use it because it’s no longer planted. We should be able to use it where we can.

We support this legislation. It’s an important step forward and tells our foresters we value the work that they do. Although, the inquiry will look at how we can better work together.

SORAYA PEKE-MASON (Labour): This is a short call on the Forests (Legal Harvest Assurance) Amendment Bill. Interpol estimates the international trade in illicitly harvested timber is valued at between US$51 billion to $152 billion annually. It accounts for 15 to 30 percent of all timber traded globally. Māori own over 400,000 hectares of indigenous forest and some 238,000 hectares of planted exotic forest. These forests contribute significantly to Māori socio-economic development. Māori involvement in commercial forestry commenced over 50 years ago with the planting of pine forests under forestry leases involving the Crown, companies, and Māori landowners. Many of these forests are at a second rotation. Māori participation is moving from being principally a source of labour, to stronger commercial involvement. This is the reason why I support this bill in its second reading to the House. Kia ora.

Motion agreed to.

Bill read a second time.

Bills

Family Court (Family Court Associates) Legislation Bill

Second Reading

Hon RINO TIRIKATENE (Minister for Courts) on behalf of the Minister of Justice: I present a legislative statement on the Family Court (Family Court Associates) Legislation Bill.

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

Hon RINO TIRIKATENE: I move, That the Family Court (Family Court Associates) Legislation Bill be now read a second time.

I would like to thank the Justice Committee for their work in considering this bill. They have recommended that it be passed with several amendments that I support in full. The committee received written submissions from 31 submitters, of whom 14 presented an oral submission. The submitters included the judiciary, professional organisations, iwi and their representatives, and interested groups and individuals. I want to thank those that made the effort to submit to the committee.

This Government is committed to strengthening the family justice system, and this bill forms part of a long-term programme of change. An accessible Family Court that operates without undue delay is core to a functioning family justice system. In 2019, the independent panel examining the 2014 family justice sector reforms reported that the family justice system was not performing as it should, and that delay of resolution of cases in the Family Court was widespread. The Family Court deals with diverse issues, including family violence, relationship, property, and the care and protection of children. The effect of delays in the Family Court can therefore be wide-ranging and intersectional. In care of children proceedings, delay can mean that children do not have contact with non-custodial whānau for significant periods of time, which can be detrimental to the wellbeing of tamariki and whānau.

The Family Court (Family Court Associates) Legislation Bill responds to a specific issue identified by the independent panel: that the high administrative workload of judges contributes to delay. The panel subsequently recommended that a new position be established in the Family Court. This bill establishes the Family Court Associate to take some of the workload off the Family Court judges. By making more effective use of judges’ time, this bill will reduce delay and assist in improving the process and experience of people participating in Family Court proceedings. A key feature of the role is that the Family Court Associate is a judicial officer who is independent from the executive. The bill already has some protections to ensure that the role is independent—for example, they’re appointed in the same way as judges, and their remuneration is independently set. The Justice Committee has recommended some changes to further protect their independence, which I’ll discuss in more detail shortly.

The Family Court Associate will be able to undertake both tasks currently performed by registrars and some Family Court judges’ workloads, including decisions made at the early stage of proceedings in interlocutory matters—such as directing parties to undertake dispute resolution, making orders by consent, appointing lawyers, and convening settlement conferences. The role is balanced to ensure that matters that are complex—or have a significant impact on people or human rights—will remain with judges, including final decisions on guardianship and those that materially affect children. We want Family Court judges to have the ability to concentrate on progressing cases that can be traumatic for children through the court system, instead of focusing on administrative matters. The Family Court Associate will enable them to do just that.

The Justice Committee has recommended some refinements to the bill to assist in reducing delay and to ensure the powers held by the Family Court Associate are appropriately delegated and maintain the independence of the role. The revised bill strengthens the independence of the Family Court Associate by requiring the role to fall under the jurisdiction of the Judicial Conduct Commissioner and Judicial Conduct Panel Act. This will provide a more transparent process for complaints regarding the conduct of a Family Court Associate. In line with judges and coroners who are subject to the Act, Family Court Associates will have narrower grounds for removal. This means that a Family Court Associate could be removed by the Governor-General on the grounds of inability or misbehaviour or in accordance with the Judicial Conduct Commissioner and the Judicial Conduct Panel Act.

The revised bill also expands the immunity of a Family Court Associate to be the same as that of a judge. The purpose of judicial immunity is to promote the independence of the judiciary in decision making and ensure that any judicial powers can be fairly and efficiently exercised without the fear of sanction. This immunity is not defined in legislation but is generally understood to be broad immunity from civil and criminal proceedings when acting in their judicial role.

Both these changes preserve the independence of the court and enable Family Court Associates to exercise their power without fear or favour.

Also included in the revised bill is a new clause requiring the Ministry of Justice to review whether the Family Court Associate role has assisted in reducing delays in the Family Court, and consider whether any amendments are desirable. This review will be undertaken five years after the commencement of the bill. I expect this review would also consider how the role has impacted on participants in the Family Court, including Māori, and this will ensure that we can assess whether the role is operating as intended.

Several more minor amendments have also been included in the revised bill. These amendments make small changes that will support the purpose and efficient operation of the role. They also ensure that tasks allocated to Family Court Associates are appropriate and that more significant or complex matters remain with a judge. Again, I’d like to express thanks to the select committee for their amendments to the bill.

So, in summary, introducing the Family Court Associate role is just one part of a long-term programme of change in the family justice system and one more step towards a system that is responsive to the needs of whānau and ensures timely access to justice. I commend this bill to the House.

DEPUTY SPEAKER: Mr Penk, you were to take a call, but I think, given the time, we could leave—

Chris Penk: Point of order, Mr Speaker. Thank you very much, Mr Speaker. I was just wondering if we can get your guidance on a scenario in which the House would benefit from a full 10 minutes’ worth of dissertation from me, but this is probably not the time of the week to hear it—so I wonder, in such a situation, if you might consider looking to check in case it’s ticked over to 4.55 p.m.

DEPUTY SPEAKER: Mr Penk, I’m sure that that would be a unanimous vote for the 10 minutes, were I to put it. However, to save the House the trouble, I will actually make a decision that we will avoid that and that I will now declare that the debate be interrupted and set down for resumption the next sitting day. So the House stands adjourned until 2 p.m. on Tuesday, 14 March 2023.

Debate interrupted.

The House adjourned at 4.55 p.m.