Tuesday, 16 May 2023

TUESDAY, 16 MAY 2023

TUESDAY, 16 MAY 2023

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

Hon JENNY SALESA (Assistant 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.]

Visitors

Australia—Australia Political Exchange

SPEAKER: I’m sure that members would wish to welcome the Australia Political Exchange delegation, led by Senator Jana Stewart, who are present in the gallery.

Ministerial Statements

Loafers Lodge Fire—Newtown, Wellington

Hon BARBARA EDMONDS (Minister of Internal Affairs): I wish to make a ministerial statement relating to the Newtown fire.

It is with great sorrow that I advise the House that there have been multiple deaths in a tragic fire in a residential building on Adelaide Road, Newtown this morning.

The Prime Minister and I, and local MPs Grant Robertson, Ibrahim Omer, and Paul Eagle, have just returned from Newtown. Along with Mayor Tory Whanau, we met with some of those affected. We met first responders and witnessed the distress on their faces. We heard stories of the scene that confronted Fire and Emergency and police when they first arrived.

At approximately 12.25 a.m. this morning, Fire and Emergency were called to what they knew would be a significant fire in a hostel in Wellington. I’m advised that the first fire truck arrived at 12.30 a.m. Crews found the fire was already well involved. The fire was quickly elevated to fifth alarm, the highest level. There were 20 fire appliances on the scene by 4 a.m. At its peak, there were 29 fire crews involved, with more than 80 firefighters from all over Wellington. Fire crews rescued five people off the roof, using a specialist aerial appliance. They helped save many, many lives. Fire and Emergency’s communication centre staff, who were taking 111 calls from people trapped in the building, did an exceptional job; they, too, undoubtedly saved lives last night.

The Prime Minister and I spoke with national commander Russell Wood and the incident controller, district manager Nick Pyatt, and firefighters at the scene this morning. The toll on our firefighters and communication centre staff is not to be underestimated. The devastation I saw on the faces of those involved was unmistakable. All I can say is thank you for your incredible service and your bravery.

Thank you also to police and Wellington Free Ambulance for the work they too have done overnight. Thank you especially to the staff at Wellington Hospital, literally just around the corner from the fire. Staff in the emergency department helped to triage patients and treat those most in need.

Fire and Emergency have told me that their key focus now is the wellbeing of its people and investigating the fire. At this stage, the cause of the fire is unexplained, and police will be working alongside Fire and Emergency to determine the cause. Police are asking people to please come forward if they or someone they know have been staying at the property; please contact 105, referencing Operation Rose.

The Ministry of Social Development and other agencies are working closely with Wellington City Council, which is leading the welfare response. Staff are onsite at the welfare centre at Newtown Park pavilion to look after those who have been affected. The residents have literally lost everything; maybe some, just the keys to the door of their room. We thank the Wellington City Mission and the Salvation Army as well for their support on the ground. We will work hard to ensure that those affected have a roof over their head.

Newtown is a microcosm of the Wellington region. The people who live there are a mix of working professionals, newly arrived migrants, refugees, students, young families, retired people, those living with the support of central and local government, and our community agencies, like the Salvation Army and City Mission. It is multicultural, full of character and diversity. Whether you are the Governor-General in the grandest house, or a newly arrived family fleeing a war zone overseas, there is a place for you in Newtown. The community is strong; people look after each other, and they love living there. This tragedy will hurt.

Our thoughts are with those affected, with the departed, and with their friends and family. To those who have passed, he aituā [a calamity]. Haere e ngā mate, haere, haere, haere atu rā. E mihi aroha ki ngā whanua pani. [To the departed, go on, depart, rest in peace. I greet with compassion those who are bereft.] Manuia lau malaga.

NICOLA WILLIS (Deputy Leader—National): On behalf of the National Party, it is with the deepest sadness that I join the Minister in expressing our condolences to the families and friends of those who have lost their lives this morning in Loafers Lodge, as well as those who have been displaced and dispossessed after the fire. People being pulled from the roofs of burning buildings or escaping by jumping out of windows is not something we expect to see in New Zealand, yet today we’ve seen it just down the road. The tragedy that we woke to this morning is not something we expect in 2023, and yet that is what has just unfolded.

Christopher Luxon and I have just returned from the site of the tragedy, where we met with survivors and first responders. We spoke with one man who had escaped the blaze, awoken only because he needed to go to the bathroom and saw smoke rolling down the corridor. He then had the opportunity to alert his friend in the neighbouring bedroom that they needed to escape. Tears rolled down his face as he recounted what had occurred in the night. Clearly traumatised, not only for fear of those who had lost their lives but also by what had occurred and the displacement that he will have to endure over the coming weeks as he tries to find a new home.

We spoke also with emergency personnel who have been responding to the fire since midnight. They are the very best of us. They were so brave, so self-effacing about their efforts. But they, in many cases, said that the work has only just begun. They have ahead of them a task which none of us would wish upon anyone, as they do the hard work—the gruelling work—to return those lost to loved ones.

One of the firefighters I spoke to told me of his concern for those on the communications lines overnight, some of whom, apparently, were speaking with those trapped in the building. Some of those calls ended very abruptly. The pain on the faces of the firefighters and emergency services staff was evident. Let there be no doubt that had it not been for their response last night and their valour, many more would have died. They are heroes, and their bravery in the face of danger and devastation is simply inspirational. They ran into a blazing fire, risking their lives in order to fight for the lives of others. The toll must be enormous. We say thank you, but we also pledge to help support them with the surely ongoing trauma from their involvement in this event.

I’m sure that over the coming hours and days, we will learn more of the true scale of this tragedy. Many people remain missing, and, as we sit here this afternoon, facts are still unfolding. There will come a time for questions, and those questions will deserve answers. Today is not that day, but I respectfully ask the Government: please engage the Opposition as you form terms of reference for the investigation into this event and how it came to pass.

Right now, my thoughts—and this Parliament’s thoughts, I’m sure—are with the mothers, the fathers, the wives, the husbands, the brothers, the sisters, the children who have lost loved ones, and also for those sick with worry waiting for news about whether their family members are safe. Just know that we are alongside you, waiting in hope with you. We are here to support you.

It is difficult to comprehend the terror and chaos that confronted residents of Loafers Lodge last night, but we know that in these times of desperation, there has also been immeasurable courage. I want to echo the Minister’s thanks to the paramedics at Wellington Free Ambulance and to the staff at Wellington Regional Hospital, caring for victims as we speak. I know that in this moment the Wellington community will step up to support those displaced and traumatised. We have already seen the Wellington City Mission and local churches come to the effort. These are some of our most vulnerable citizens and Wellington will stay with them. May the victims of this tragedy rest in peace. Our thoughts are with all affected.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. On behalf of ACT’s members of Parliament, I’d like to join this debate in support of the words of the two earlier speakers—the Hon Barbara Edmonds and Nicola Willis—offering our thoughts, prayers, and sympathies to those who have perished in this dreadful disaster.

I say “dreadful” because while New Zealand has its share of terrible tragedies, there are few that can bring the dread of people perishing in a fire. So our thoughts, prayers, and sympathies are with those people as deeply and sincerely as ever. That extends with our condolences for those who have lost loved ones: brothers and sisters; parents, mothers and fathers; sons and daughters; work colleagues; neighbours in the Newtown district—for whom this will be a terrible shock to wake up to this morning.

We also acknowledge—as so often at times like this—that the emergency services in New Zealand are a group of people who, time after time, rise to the challenge, instinctively know what to do, and save many lives even at great emotional cost and scarring to themselves often. And we should be truly grateful to live in a country where the innate character of the people who do those jobs means the best of them comes out precisely when it is needed to rise to that challenge.

I reiterate what we heard from the earlier speaker. There will be questions around the right policies and whether they were followed and whether there was wrongdoing or responsibility. But the time for those questions is certainly not today: it is when the full facts and evidence have been gathered by the appropriate authorities. I ask and urge—and I’m sure I don’t need to—that all people involved in the political sphere respect the people involved in this tragedy and follow that course of events properly.

Finally, I reiterate our thoughts, our prayers, and our sympathies for those who have perished in this dreadful tragedy, those who loved and lost them, and those still dealing with the immediate aftermath of what happened in the early hours of this morning. Thank you, Mr Speaker.

Hon JAMES SHAW (Green): Thank you, Mr Speaker. On behalf of the Green Party of Aotearoa / New Zealand and as an MP based in Wellington Central and just personally, I do want to extend, also, our deepest sympathies and condolences to the whānau and the friends and the colleagues of those who have lost their lives this morning.

Our thoughts are with those who have lost their lives and the residents who have lost so much as a result of the fire. It is a tragedy for those directly involved and for the Wellington community at large, and our hearts do go out to those who are affected.

I do want to acknowledge that those people who were affected by this were amongst the most vulnerable and marginalised members of our community, and they deserve our respect and our support.

I do want to acknowledge, also, the work of the firefighters and the healthcare workers who did an extraordinary job and who acted very quickly to ensure that this awful situation wasn’t even worse and saved many lives.

I am also very, very angry, because I do have a number of questions. And I do respect the calls of the last two speakers, but when they say that there is a time that we should be asking questions, I take a different view, as well, because the questions in my mind are: what kind of country are we that we allow this kind of thing to happen to our most vulnerable members of our community? What kind of country are we, where those people have so few options in life but to live in substandard accommodation with a reasonable chance of lethality? What kind of country are we, where we would not raise a building code because we’re worried we might be accused of issuing a “war on landlords”? I think: what kind of country are we where our firefighters lack or are at risk of not showing up with the most basic of equipment to be able to fight these kinds of events?

Those questions do need to be answered, I think, in the fullness of time. But I do have some questions today for the Minister of Internal Affairs. Firstly, has she had any conversations with Cabinet colleagues about the adequacy of the fire code and how fire safety requirements are applied to existing buildings, and will there be urgent moves to improve the approach to retrofitting sprinkler systems?

SPEAKER: Did the—

David Seymour: Sorry, does the Minister want to answer?

SPEAKER: Does the Hon Barbara Edmonds wish to respond?

Hon BARBARA EDMONDS (Minister of Internal Affairs): Thank you, Mr Speaker. To the question by the leader of the Green Party, I have had numerous conversations with both our Prime Minister and other Cabinet colleagues throughout the day. I am being informed of the progress as the day progresses through Fire and Emergency New Zealand. It is too early to rule anything in or out, and, right now, our focus is on supporting Fire and Emergency New Zealand and those who have been affected by this tragedy.

Hon JAMES SHAW (Co-Leader—Green): My second question relates to the resourcing of those firefighters. Is she aware that only a few days ago the firefighters union had reported that Wellington’s busiest fire truck was out of action for 58 hours due to a lack of staff, and, if so, what is she doing to ensure that our firefighters have the resources that they need to keep people safe in emergencies like this?

Hon BARBARA EDMONDS (Minister of Internal Affairs): Thank you, Mr Speaker. I have confidence in Fire and Emergency New Zealand to make the best decisions about how, when, and where to respond. In the end, no Minister or member of Parliament should try to substitute their opinion for the decisions of expert firefighters and search and rescue responders, who have to make split-second decisions based on the information in front of them.

Hon JAMES SHAW (Co-Leader—Green): Finally, we have learnt today that many of the people who were living in this accommodation were in very difficult circumstances. What conversations is she having with her colleagues about what the Government is doing to address the underlying support needs of vulnerable people and, secondly, as part of this, to build enough decent, safe housing for everyone regardless of their circumstances?

Hon BARBARA EDMONDS (Minister of Internal Affairs): First and foremost, I want to acknowledge the number of support agencies who are at the Newtown Park pavilion right now supporting all those who have been affected. The Ministry of Social Development and other agencies are working closely with the Wellington City Council to respond to their needs right now and obviously will be looking to the future. We will work hard to ensure all those who have been affected will have a roof over their heads.

RAWIRI WAITITI (Co-Leader—Te Paati Māori):

E ka hua au ki te uira e kanapa rā runga Kokotaiki e

Ko te tini o te mate ka riro atu rā ki te huinga kahurangi e

E hoki atu rā aku nui, aku wehi, aku whakatiketike e

Ki te pō uriuri, ki te pō tangotango, ki a Hine Nui i te Pō

Pō kia whakataukī au i konei: he tokotoru nā Hine Tama

Ka horu te moana e

E ngā mate o te wā, e te parekura nui kua whāwhāhia nei e ngā matikara o Mahuika, haere. Kotahi noa te kōrero ki a koutou: whoatu. Whoatu koutou i runga i te ara kōrero kua parangia e te tini, e te mano. Koutou kua haere ki tua o Reitū, ki tua o Reiao, hāunga rā ngā mahi kikokiko kua rongo nei i tēnei Whare, engari ko te whare nui o te Pāremata i te rangi e pōhiri nei i a koutou.

Inā ngā kōrero ki roto i ngā Karaipiture, i roto i te Paipera: ko te ahi te whakatinanatanga o te Atua. Koia hoki tā koutou whai, koia hoki tā koutou kapo i tēnei rā.

Nō reira ka whakamoemiti, ka whakamoemiti te mahi me te tuku, te tuku atu i ō koutou wairua ki te poho o te Runga Rawa hei piringa mōna. Ko ngā whakamoemiti hoki e rongo nei koutou i te hātere, i te hāwhā, i te tētere. Hei aha? Hei whakapaipai mō tōu matenga. Inā ko ngā kōrero tuku i a koutou i tēnei rā. Nō reira koutou e ngā mate, haere, haere, whakangaro atu rā.

Ā, ko ngā whakamoemiti anō hoki ki ngā kaiāwhina, ki ngā tāngata patu ahi, ki ngā pirihimana, ki a rātou i tuku atu, i toro atu i te ringa āwhina ki a koutou.

Nō reira kāti ake, kāre tēnei i te whakatō roa i ngā kōrero, engari i runga i te ngākau Māori, e Peeni, e Nanaia, tika tonu kia tuku atu i te hunga nei i tēnei rā. Nō reira ka tuku kia rite ki ō tātou marae, me tuku atu rātou, ā, ā tōna wā ka tarea e te kikokiko te whai i te kikokiko. Engari ko te ao wairua tēnei i tēnei wā tonu, nō te mea kei te tatari tonu, kei te whiriwhiri tonu kei hea wētahi.

Nō reira kei te mahana tonu tēnei tūāhuatanga, me waiho rātou ki a rātou, ko te mahi i tēnei wā ka tuku.

Nō reira e hika mā kāre tēnei i te whakatō roa i ngā kōrero, ka mutu au i runga i ngā kupu nei:

Waiata—Te Hokinga Mai

Kia ora tātou.

[I call to the lightning that flashes above Kokotaiki

The many deceased that have passed on to the gathering place of the nobility

Return, the great ones, the inspirational ones, the lofty ones

To the dark night, to the deep night, to the Great Lady of Death

I proverbialise here: the three of Hine Tama

The very ocean cries

To the recently departed, the great tragedy that was handled by the fingernails of Mahuika, pass on. There is only one thing to say to you: go on. Go on the proverbialised path that was blazed by the many, by the multitude. You who have gone beyond Reitū, beyond Reiao, notwithstanding the physical work that we hear of here in this House, but in the great house of Parliament in the heavens that welcomes you.

These are the statements within the Scriptures, in the Bible: fire is the embodiment of God. That is your goal, that is has caught you today.

So we give thanks, giving thanks is the task and to release, to release your souls to the bosom of the Most High for him to shelter. Thanks also as you hear the lute, the harp and the lightning. For what purpose? To serve as an embellishment for your passing. These indeed are the statements that release you today. So to the dearly departed, go, go, pass on.

And thanks also to the support personnel, to the fire service, to the police, to those who that offered, that reached out a helping hand to you.

So that will do, I am not merely prolonging the speech, but in the manner of a Māori heart, Peeni, Nanaia, it is appropriate that these people be sent on today. So the sending on should be the same as our marae, we should release them, and at an appropriate time the flesh can follow the flesh. But this instead is the spiritual realm at this time, because they are still waiting, they are still discussing where others might be.

So this phenomenon remains warm, we should now leave them to each other, the task at this time is to send them on.

So, my friends, I’ll not merely prolong the discussion, I will conclude with the following words:

Waiata—Te Hokinga Mai

Greetings to us all.]

Hon BARBARA EDMONDS (Minister of Internal Affairs): Thank you, Mr Speaker. Again, I’d like to thank the speakers in the House today for their words of support, and acknowledge those who have departed.

This morning, I was speaking to Major Joe Serevi from the Salvation Army in Newtown, and I just want to leave these words—his words, that he said to me this morning—“To everything there is a season, and a time to every purpose. A time to be born, a time to die. A time to love, and a time to hate.” At this time, we wrap our support and aroha around those who are affected. There will be a time for answers, and we will respond.

Petitions, papers, select committee reports, and introduction of bills

Petitions, papers, select committee reports, and introduction of bills

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

CLERK:

Petition of David Cumin requesting that the House does not appropriate funds that could go towards the United Nations Relief and Works Agency for Palestine Refugees in the Near East

petition of John Hearnshaw requesting that the House introduce legislation to limit light pollution.

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

CLERK:

South Canterbury District Health Board annual report 2021-22

World Trade Organization Agreement on Fisheries Subsidies, Ministerial Decision of 17 June 2022, together with National Interest Analysis

Ministry for Pacific Peoples, Long-term Insights Briefing 2023, Improving Pacific data equity: Opportunities to enhance the future of Pacific wellbeing

Fire and Emergency New Zealand statement of performance expectations 2022-23, amended March 2023.

SPEAKER: Members, I present the Register of Pecuniary and Other Specified Interests of Members of Parliament: Summary of annual returns as at 31 January 2023. Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Report of the Economic Development, Science and Innovation Committee on the Fuel Industry Amendment Bill

report of the Environment Committee on the petition of Todd Muller

report of the Primary Production Committee on the briefing to follow up on the inquiry into honey

report of the Regulations Review Committee on the complaint about the Lawyers and Conveyancers Act (Lawyers: Practice Rules) Regulations 2008.

SPEAKER: The bill is set down for second reading. The report of the Regulations Review Committee and the briefing are set down for consideration. The Clerk has been informed of the introduction of a bill.

CLERK: Land Transport (Road Safety) Amendment Bill, introduction.

SPEAKER: That bill is set down for first reading.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. RAWIRI WAITITI (Co-Leader—Te Paati Māori) to the Prime Minister: Well, this is very rare we get the first question. So my question is to the Prime Minister. Does he stand by his statement that “The Government will not introduce any major tax changes like a wealth tax or CGT in this Budget”; if so, what action will his Government take, if any, to shift more of the tax burden from the poor to the wealthy?

Rt Hon CHRIS HIPKINS (Prime Minister): Can I begin by acknowledging the tragic events at Loafers Lodge in Newtown and join with other members across the House in extending our condolences to those who have lost their lives, and our complete support for our first responders who have been doing an amazing job on the scene there.

I thank the member for his question. In answer to the first part of his question, yes. In answer to the second part of his question, I can confirm that the Budget will not contain measures that are designed to transfer more of the tax burden on to lower-income New Zealanders in order to provide tax cuts for those on the highest incomes, as some have been suggesting.

Rawiri Waititi: Does he agree with the need to shift the burden of tax from the poor to the rich in response to the recent report which is showing the wealthy paid only 9.4 percent in tax while the average person in Aotearoa is paying 20.2 percent; and if not, why not?

Rt Hon CHRIS HIPKINS: As I’ve already indicated, there won’t be significant changes in that area in this year’s Budget. Parties will put forward their tax policies before the election. I can assure all members that the Labour Party will put forward its tax policy well before the next election; members will be able to make their own judgments based on that.

Rawiri Waititi: Why will he not begin to reduce wealth inequity through common-sense changes to the tax system such as taxing capital gains and empty houses; is it because he is comfortable with the fact that the richest 2 percent own 50 percent of the wealth in this country?

Rt Hon CHRIS HIPKINS: This Government is absolutely committed to improving the lot of people on the lowest incomes, and I think our track record speaks to that. This year’s Budget, for example, contains the funding to, among other things, increase benefits—something that has already been announced and acknowledged. It contains funding to increase superannuation, something that has already been announced and acknowledged. This Government is absolutely committed to ensuring that lower-income New Zealanders are able to get ahead.

Chlöe Swarbrick: Does this Budget also contain or perpetuate a tax system which is found to be deeply inequitable such that the wealthiest pay an effective tax rate of half that of the average New Zealander?

Rt Hon CHRIS HIPKINS: I’ve indicated what tax changes the Budget does not involve, such as the introduction of a capital gains tax or a wealth tax. For more detailed questions, the member only has to wait two more days.

Question No. 2—Prime Minister

2. CHRISTOPHER LUXON (Leader of the Opposition) to the Prime Minister: Thank you, Mr Speaker. I also join with other speakers across the House to give my condolences and sympathies to the victims and families of the tragedy that we’ve seen overnight, and just to thank the fire service and also the first responders. Does he stand by all of his Government’s statements and actions?

Rt Hon CHRIS HIPKINS (Prime Minister): Yes, and, in particular, this Government’s work to fix the foundations of our education system after years of underfunding, overcrowding, and decay by upgrading every school in the country. We’ve already funded over 2,700 new classrooms to create space for 66,000 more students. Just yesterday, the Minister of Education and I announced the construction of four new schools to add to the 16 new schools opened under this Government. This is a Government that delivers.

Christopher Luxon: OK. Doesn’t he think a Prime Minister, two days before the Budget, should know how much his Government is spending on taxpayers’ behalf?

Rt Hon CHRIS HIPKINS: Yes, and I do. That doesn’t mean I’ve memorised every figure in the Budget.

Christopher Luxon: Why, when he was asked this morning, couldn’t he just say how much the Government is spending each year?

Rt Hon CHRIS HIPKINS: If the member wants to turn the election campaign into a pop quiz, I think he’ll probably come up short on a number of things as well, given that he can’t answer even the most basic questions about his own tax policy at this point.

Christopher Luxon: Isn’t it the case that, given his comments this morning, the person who is most in need of a taxpayer’s receipt is, in fact, the Prime Minister, who still doesn’t know how much he’s spending?

Rt Hon CHRIS HIPKINS: I note the member doesn’t know how much he’s going to spend on delivering those very tax receipts that he’s promising New Zealanders. In fact, I’d suggest maybe he should get someone other than AI to draft his supplementary questions for him.

Christopher Luxon: Is he aware that his Government is on track to spend $20 billion more this year than in 2020 and 2021, despite no lockdowns or no nationwide wage subsidies?

Rt Hon CHRIS HIPKINS: I note that the economy has been growing. I note that wages have been growing. All of those things flow through into the Government’s finances.

Ricardo Menéndez March: Does he agree with the Child Poverty Action Group, who said, “Struggling families need much more than an inflation top-up”; if so, will he commit to lifting main benefits beyond the indexation changes so families can thrive and not just survive?

Rt Hon CHRIS HIPKINS: As I have indicated and as has already been announced, the Government made the decision to switch the calculation for main benefit increases this year to ensure that those families can keep up with the increase in cost of living. In terms of what future decisions are taken on that matter, that will be the subject of future Budgets.

Ricardo Menéndez March: What steps, if any, is he taking to support the Sudanese community in Aotearoa calling for pathways to family reunification, the enabling of safe passage for citizens’ residency and temporary visa holders, the provision of humanitarian aid, and the commitment to a special visa category akin to the Ukraine special visa as a result of the conflict in Sudan?

Rt Hon CHRIS HIPKINS: The Government absolutely acknowledges the tragic situation that is unfolding in Sudan at the moment, and New Zealand is providing consular support to those New Zealanders currently in Sudan through our embassy in Ethiopia. We do not have an embassy presence in Sudan. In terms of our pathways for people to come to New Zealand, we manage that through our existing refugee quota for situations such as this. Of course, I acknowledge the Sudanese community in New Zealand, and there are provisions for them to support family members within our existing immigration settings.

Golriz Ghahraman: Does he agree with the sentiment expressed by the Hon Phil Twyford today on Parliament’s forecourt, when he said that this is a Government that supports recognition of Palestinian Statehood, and, if so, will he commit to formally recognising the State of Palestine?

Rt Hon CHRIS HIPKINS: The New Zealand Government supports a two-State solution; inherent in that is a sentiment towards a Palestinian State. Of course, there are a whole lot of diplomatic and international processes to go through with regard to that.

Christopher Luxon: How is it possible that his Government is spending $5 billion more on education, even while achievement has gone backwards and kids aren’t even showing up in class?

Rt Hon CHRIS HIPKINS: Well, of course, there are more students in this education system than there were when we became the Government, and I note that one of the biggest drivers of that increase has been teacher pay rises—something they didn’t get under the last National Government.

Christopher Luxon: Isn’t it true that, under his watch, spending on consultants has ballooned to $1.8 billion, despite promising in 2018 that he would reduce it?

Rt Hon CHRIS HIPKINS: I note that the member is not indicating which areas he would no longer have the Government working on. They just have this general policy that they’re going to cut spending, but they won’t say where. I’m sure he’s waiting for AI to tell him where the cuts are going to take place.

Christopher Luxon: Isn’t it the case that he’s actually addicted to spending as much as Grant Robertson, and when will this Government stop treating taxpayers like a bottomless ATM?

Rt Hon CHRIS HIPKINS: That is an absolutely ridiculous question. He needs to come up with some new material rather than relying on the pre-scripted supplementary questions provided either by the research unit or by AI. It seems to produce the same outcome.

David Seymour: Does the Prime Minister stand by the answers he gave this morning, when he was asked five times how much money his Government spent last year: “It’s not quite that simple. There are a number of different numbers I could quote, … I don’t play this game.”, and can he tell us now how much was core Crown expenditure by his Government last year?

Rt Hon CHRIS HIPKINS: Yes, I can—

David Seymour: How much?

Rt Hon CHRIS HIPKINS: —but; of course, it depends on which—there are a variety of numbers I could—

David Seymour: Core Crown—core Crown.

Rt Hon CHRIS HIPKINS: If it’s core Crown expenditure, it’s about $129 billion.

David Seymour: If I tell the Minister—[Interruption]

SPEAKER: Order! We’ve got a question here, thank you.

David Seymour: Does he now appreciate that core Crown expenditure will be up 61 percent, or $49 billion in five years to this year, at $129 billion, and can he name one service that his Government provides that is, overall, 61 percent better and how he’s measured it?

Rt Hon CHRIS HIPKINS: There is a lot of material in the member’s question, and it’s a pretty wide question that, basically, means I can answer whatever I want, so I will. There are programmes that this Government has introduced such as the Food in Schools programme that’s feeding 220,000 students every day. There have of course been across-the-board pay increases for our public servants like our teachers, our nurses, our firefighters, and our police that have happened under this Government. There have been a range of investments that this Government has made in the critical public services that New Zealanders rely on, such as our health system, such as upgrading the woeful state of our infrastructure that we inherited from the previous Government—all of these things that have taken place under this Government.

Hon Grant Robertson: What does the Prime Minister think the impact on New Zealand’s economy and society would be from the following measures being undertaken: removing the indexation of main benefits to the Consumers Price Index; abolishing the Climate Emergency Response Fund and the Clean Car Discount, abolishing fees-free, abolishing KiwiSaver subsidies, abolishing the Provincial Growth Fund, Callaghan Innovation, domestic film subsidies, international film subsidies, growth and development spending, and a large range of ministries; and halting contributions to the New Zealand Superannuation Fund?

Rt Hon CHRIS HIPKINS: Mr Speaker—

SPEAKER: I don’t think so.

David Seymour: What does it say that every single example in the Prime Minister’s previous answer was not a measured outcome for the people, but an example of spending more money, with no mention of the outcomes whatsoever?

Rt Hon CHRIS HIPKINS: Well, the member clearly wasn’t listening. The very first example I gave him involved 220,000 kids receiving lunch at school every day. If the member doesn’t think that that’s a positive outcome, then perhaps he needs to think again. On the other hand, given he is proposing to increase taxes for the lowest-income New Zealanders so that he can give tax cuts to the highest-income New Zealanders, I’m not surprised he’s somewhat confounded by my answer.

David Seymour: Does the Prime Minister stand by his statement, “It’s not right for households to be tightening their belts if the Government isn’t also being seen to be doing the same.”, and, if so, how many households wouldn’t even have a rough idea of the cost of what they consume or the value of what they provide, just like this Prime Minister on his Government’s expenditure and results?

Rt Hon CHRIS HIPKINS: As I indicated this morning, if any New Zealander wants to know how much tax they are paying, they can look that up right now on the myIR website, which will give them a breakdown of the tax that they are paying. If anybody wants to know what the Government is spending money on, that information is all transparently available through the Government’s finances, and, of course, that’s all about to be updated in two more sleeps, or, in the member’s case, probably three or four more.

David Seymour: Would the Prime Minister consider in its Budget a low and middle income tax credit and sharing revenue from the emissions trading scheme in a carbon tax refund that would leave lower-income New Zealanders better off, even after a change to a lower, flatter tax system—as in the ACT Party’s alternative Budget, which leaves every single worker better off—and, if not, why not?

Rt Hon CHRIS HIPKINS: Oh, I thank the member for that question. Adopting the types of policies that ACT are promoting would result in—it’s like reverse Robin Hood: robbing from the people who have the least in order to give more to the people who have the most. They want to cut public services—they want to cut public services that New Zealanders rely on every day—and have less funding available for health, for education, and for our law and order services. They want to cut funding for those things in order to provide tax cuts for the highest-income New Zealanders. The Labour Party does not support that approach.

Question No. 3—Education

3. ANGELA ROBERTS (Labour) to the Minister of Education: What recent announcements has the Government made about building more schools and classrooms?

Hon JAN TINETTI (Minister of Education): Yesterday, I joined the Prime Minister at Ridgway School to announce that Budget 2023 will build 300 more classrooms in new and existing schools across the country, helping to ease existing pressures while accounting for future population growth. This new targeted funding will ease pressure on our education sector, helping to further fix years of underfunding, overcrowding, and decay in schools and classrooms.

Angela Roberts: How will the funding be used?

Hon JAN TINETTI: Of the funding we’ve announced, $300 million will provide 6,600 new student spaces. An additional $100 million will be added to the education infrastructure funding pipeline, which will enable the construction of up to four new schools and new school expansions. The first two projects are in central Auckland and Pāpāmoa, with the remaining two projects to be announced in due course. This adds to the 16 schools opened under this Government so far.

Angela Roberts: How will these classrooms benefit students?

Hon JAN TINETTI: Schools and classrooms that are modern, warm, dry, and fit for purpose make teaching easier, kids more comfortable, and help to improve attendance and achievement. We want kids to look forward to coming to school and spending time in class, and parents to know their children are safe, well, and working to unlock their full potential. This investment will do just that.

Angela Roberts: How does this build on the Government’s legacy?

Hon JAN TINETTI: Since 2017, we have worked to fix the foundations of our education system by upgrading every school in the country and funding over 2,700 new classrooms to create 60,000 more student places. I’ve seen some of our ageing, damp, and cold classrooms up close—in fact, I’ve taught in them—and, frankly, it’s not good enough. Previous Governments may have been OK with that, but we’re not. I’m proud of the investment we have made to deliver warm, safe, and dry classrooms for our tamariki.

Question No. 4—Finance

4. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does he stand by his statement last week that “I know the member wants and is obsessed by giving tax cuts in this Budget. I simply believe it’s not the right time”; if so, when will it be the right time?

Hon GRANT ROBERTSON (Minister of Finance): For the first part of the question, yes, and for the second part of the question, that will depend on the economic conditions that are in place. It will also depend on what is needed to ensure that we have quality health, education, housing, and other public services New Zealanders need and deserve.

Nicola Willis: Why is it a good time to make inflation adjustments for seemingly every area, but for this finance Minister it is never the time to make inflation adjustments for ordinary taxpayers?

Hon GRANT ROBERTSON: As I’ve said on a number of occasions, all Governments would want, at various points, to be able to do what the member is asking, but it does depend on the conditions that we are in at any given time. The adjustments that we have made in the case of things like main benefits or superannuation is reflective of where we are at with inflation. Equally, at the very same time that decision was made, the data came out that average wages had increased by exactly the same amount.

Nicola Willis: Why can he find $1.8 billion for consultancy fees; tens of millions for light-rail plans, strategies, and visualisations; and tens of millions of dollars for Government advertising campaigns, but he can’t find savings for the ordinary taxpayer?

Hon GRANT ROBERTSON: Everything that we are doing in this Budget is about making sure that we can support all New Zealanders—whether we describe them as ordinary taxpayers or not—to be able to live their lives, to be able to have their children go to good schools, to be able to know that the health system will be there. These kinds of investments don’t just happen; they happen because the Government prioritises them. We know that because, when we came into Government, we inherited from a Government that didn’t prioritise public services.

Nicola Willis: If the Minister has done such a good job of spending in the health system, why is it that under his Government, people are waiting far longer for emergency care than they ever did under the last National Government?

Hon GRANT ROBERTSON: I am extremely proud of the fact that we have put resources into the health system that mean we’ve got 20 percent more nurses and about 20 percent more doctors, that we’re actually beginning to pay them what they need to be able to do the work that we want them to do. The health system is a difficult and complex system. We are investing to make sure New Zealanders get the best of it. The member will well know the under-investment that happened in the health system under her Government.

Nicola Willis: What is so difficult and complex about expecting the Government to deliver better results for its extra spending, rather than just crowing about the size of the cheques, which, by the way, are signed by everyday taxpayers who are doing it tough?

Hon GRANT ROBERTSON: This Government is well aware of how tough it is for many New Zealanders out there. It is the very reason why we have supported them to get through COVID, why we gave the wage subsidy, why we made sure that we put more resources into the health system to get through COVID, and then, on top of that, why we have supported low and middle income New Zealanders through things like the family tax credit, through the winter energy payment. All of these things are on the chopping block in the ACT-National Government.

Nicola Willis: Is the Minister of Finance slightly more au fait with the Government numbers than the Prime Minister, and, if so, can he tell us how much more tax is the Government forecast to collect this year compared to 2017?

Hon GRANT ROBERTSON: This year—if the member means the 2023 year—we are forecast to collect $118.1 billion in tax revenue this year. That is more than we collected in 2017. In part, that is because of inflation—the member has raised that—but it’s also in part because more people are in work, more people are earning more money, and companies are making more profits. The member needs to understand that, yes indeed, it does take a lot to run a Government, but I know that the hard-working New Zealanders out there will be asking big questions of that member as to whether she supports stopping contributions to super, does she support stopping the winter energy payment?—because, until it’s ruled out, that ACT policy is National’s policy.

Nicola Willis: Point of order, Mr Speaker. That was a slightly more impassioned speech than we’ve seen in a while, but the question—

SPEAKER: That’s not a point of order. That is not a way to start a point of order.

Nicola Willis: OK. My point of order is this, Mr Speaker—

SPEAKER: Well, it kind of rules out whatever you’ve got to say, but go ahead.

Nicola Willis: I asked how much more tax is the Government collecting this year, compared to 2017.

SPEAKER: I think just about every single one of your questions has had at least one assertion in it, and I think you might find, if you go back and have a look, that’s what’s been addressed.

David Seymour: Point of order, Mr Speaker.

SPEAKER: A new point of order?

David Seymour: A fresh point of order. Mr Speaker, your predecessors have ruled that it’s out of order for a Minister answering a question to bring a party not involved in the questioning into the debate. Now, I can understand why Mr Robertson would want to talk about ACT’s brilliant alternative Budget, but he’s still out of order in doing so.

SPEAKER: I’m going to go back to the time when I was asked to make sure that question time was more robust, which it is, and the member David Seymour is absolutely correct, actually. I mean, on this particular—I can go back through both this question and question No. 3, and there were several other instances as well. I think it’s properly noted, but I’m not going to ask the member to apologise for it. Actually, that’s based on—you know, there’s been a number of accusations, and the member himself in his supplementary questions, and I’m not going to do that.

Question No. 5—Transport

5. SHANAN HALBERT (Labour—Northcote) to the Minister of Transport: What announcements has he made about rebuilding transport networks in cyclone-affected regions?

Hon MICHAEL WOOD (Minister of Transport): Last Sunday, I announced the next steps in our work to repair road and rail networks across the cyclone-affected parts of the North Island. Our Government is stepping up to cover more of the costs of clearance and rebuild so that councils can progress the repair work without having to rely so much on increasing rates. We’ve earmarked $275 million of additional funding for Waka Kotahi and local councils to repair affected roads, and up to $200 million to repair the rail network; this is on top of the $250 million that the Government announced immediately after Cyclone Gabrielle, which has already helped to restore vital roading connections in recent months. Collectively, this funding means that Waka Kotahi will be able to consider requests from affected regions for higher levels of direct financial support to rebuild roads, taking pressure off local communities. The steps that we’ve taken will provide certainty to those communities that the Government will continue to support councils to ensure that necessary repairs can be done without them having to worry that ratepayers will be left to foot the bill alone.

Shanan Halbert: What key roads has the funding made available by the Government so far helped to reopen across cyclone-affected regions?

Hon MICHAEL WOOD: I want to thank Waka Kotahi, local councils, contractors, and workers all across cyclone- and flooding-affected areas for their hard work on restoring connections. A few key examples of important connections that have been restored include State Highway 1 over the Brynderwyns, which was reopened in March, thanks in part to our emergency funding, and further work to improve drainage and stabilise slips. State Highway 5 between Napier and Taupō was reopened in March as well, thanks to the tireless work of local roading crews, and work continues to restore it to normal levels of service. Just this weekend, my colleague the Associate Minister the Hon Kiri Allan marked the completion of the Waikari Bailey bridge, which means that State Highway 2 between Napier and Wairoa is now open—something that was very much welcomed by the affected communities. The funding we have made available so far has helped to reopen these key State highways and has supported hundreds of local roads to reopen across cyclone- and flooding-affected regions.

Shanan Halbert: How will the new funding that has been announced help to restore rail networks?

Hon MICHAEL WOOD: In addition to the investment in the roading network, we’ve also made new funding available to repair the rail lines that were damaged during the extreme weather. Repair work is and will be focused on the North Auckland line, the Palmerston North to Gisborne line, the Auckland metropolitan network, the North Island Main Trunk, and the East Coast Main Trunk. This will get our rail network back into action by investing to repair the rail tracks, sleepers, bridges, and other structures that were damaged, and to clear debris from the tracks caused by slips and wash-outs. This is a critical part of restoring local supply chains and getting freight moving again in the affected regions.

Shanan Halbert: What other milestones can he report on efforts to rebuild cyclone-affected transport networks?

Hon MICHAEL WOOD: Last week, I was very pleased in Thames to confirm, alongside Mayor Len Salt, that Waka Kotahi is starting work on a bridge to reconnect State Highway 25A across the Coromandel Peninsula. This is a crucial step in restoring connectivity for communities and businesses in the Thames-Coromandel region. We know that our regions rely on a resilient roading network to connect the smaller and more isolated communities, and our Government is committed to supporting them as we rebuild from the cyclone and floods from earlier this year. We continue to provide the financial support in response to this extreme event, and we will continue to do so to support our communities.

Question No. 6—Justice

6. Hon PAUL GOLDSMITH (National) to the Minister of Justice: Has she seen reports that 26 beds will be taken away from meth addicts if A Place to Be rehabilitation centre in Ōtāhuhu closes because funding is no longer available from the Proceeds of Crime Fund; if so, is that consistent with her statement that the Government will focus on prevention and intervention when dealing with violent crime?

Hon KIRITAPU ALLAN (Minister of Justice): Yes, I am aware of the claims that have been made in the media over the weekend, and yes.

Hon Paul Goldsmith: Isn’t it the case that community organisations like the Ōtāhuhu centre, which has helped a thousand people recover from addiction, can’t access the fund because this Government has allocated most of the fund barricading retail workers in their shops because crime is out of control?

Hon KIRITAPU ALLAN: No.

Hon Paul Goldsmith: How’s it possible that this Government has spent over $2.5 billion on justice and mental health, yet vulnerable New Zealanders with addictions are missing out on vital rehabilitation?

Hon KIRITAPU ALLAN: I absolutely refute the grounds and the statements made in that supplementary question. Let’s be very clear about what our Government is investing in terms of specifically methamphetamine rehabilitation programmes. I’m proud to be part of a Government that has invested millions of dollars to methamphetamine intervention prevention programmes up and down this country. For example, $20 million has been invested into over 17 programmes designed and targeted towards preventing and making interventions for those that have been caught up and embroiled within methamphetamine addictions. In addition, across the broad raft of areas and initiatives that the Government invests in to make interventions and preventions for those that have been using methamphetamine and the like, we have invested millions of dollars, both targeted towards younger members of society—$53 million through the Better Pathways programme just announced in September last year. This is a Government that is squarely focused on making meaningful interventions and supporting preventative measures for those that are both addicted to substances and engaged in crime.

Hon Paul Goldsmith: Isn’t one of the best ways to prevent repeat violent offenders from reoffending to intervene by putting them in prison, and, if so, why does her Government have a target to reduce the prison population by 30 percent, irrespective of the levels of crime in our community?

Hon KIRITAPU ALLAN: While I’m not sure that that question is directly related to the primary question that the member put to us, I will note that this Government has been very clear about our intentions to make measured investment into interventions for those that have been embroiled in the trajectory of crime. A successful example of that was the $53 million that was announced by my colleague the Deputy Prime Minister, Carmel Sepuloni, and other Ministers at making targeted interventions for those particularly young offenders who have been caught up. We’ve seen an over 50 percent reduction of crime committed by those particular young people because we are wrapping around support measures for those young people, making meaningful interventions.

Question No. 7—Foreign Affairs

7. SIMON COURT (ACT) to the Minister of Foreign Affairs: How much, if any, of the $30 million of funding for the Pacific Community Climate Change Flagship Programme will be directed to constructing climate resilient infrastructure in the Pacific, and how much, if any, will be spent on management and programme development?

Hon NANAIA MAHUTA (Minister of Foreign Affairs): To the first part of the question, the $30 million Climate Change Flagship investment will deliver capability and capacity across the region to enable 27 Pacific Island countries and territories of the SPC, the Pacific Community, to achieve their own climate change mitigation and adaptation priorities. This will help them access international climate finance. To be clear, climate resilient infrastructure is not a central part of this particular investment.

Simon Court: Point of order, Mr Speaker. I don’t believe the Minister addressed that question, because while the Minister did make the point that the programme’s not intended to invest in infrastructure—sadly—the second part of the question was how much will be spent on management and programme development, and I don’t believe that was answered.

SPEAKER: Yeah, but it was definitely addressed. You could ask more supplementaries about it.

Simon Court: Can the Minister explain why, according to her reply to written parliamentary question (PQ) 13298, $5.6 million of the Climate Change Flagship programme is going to project development, $3.9 million to project management, while only $760,000 is intended for direct support of Pacific nations?

Hon NANAIA MAHUTA: There were a number of PQs that were in response to questions asked by that member, but let me be very clear: I did clarify in written question 8330 that in relation to adaptation, $43.3 million has been spent on adaptation activities. If he cared to look at the range of adaptation activities that we support, we do help Pacific nations to devise their national infrastructure investment plans that help New Zealand to be able to target our funding towards projects within each of those Pacific nations to help their resilient infrastructure aspiration.

Simon Court: Can the Minister explain how using a “high level ‘programmatic’ funding model” helps build climate resilience in the Pacific, if at all?

Hon NANAIA MAHUTA: Quite simply put, there are four strategic pillars to our Pacific resilience approach and in being able to inform how climate finance can work for the Pacific. Firstly, we support the Pacific to accelerate climate change mitigation. We enable the Pacific to enhance their resilience and adaptation plans, as devised by them, to respond to direct climate change impacts. We support the Pacific through investing in regional institutions to improve access to climate finance through technical support, reducing administration to enable the backroom functions of targeted support to occur. And we also help to crowd in finance through the strategic investment of our own efforts so that the Pacific can be supported. If we did not do that, it would be very difficult for the Pacific to access international climate finance.

Simon Court: How much, if any, of this $30 million funding is going to pay the salaries of more than 54 full-time Ministry of Foreign Affairs and Trade (MFAT) staff working on climate change - related work, and why wasn’t this money simply given to Pacific countries to directly fund climate resilient infrastructure projects, like Australia and Japan are doing?

Hon NANAIA MAHUTA: That member misrepresents the nature of this particular funding, which goes to a regional institution, the Pacific Community. It will help the region to reduce duplication, improve coordination, create a platform to leverage additional funds to the region. It’s an important investment for the Pacific. MFAT is funded through its own baselines.

Question No. 8—Education

8. ERICA STANFORD (National—East Coast Bays) to the Minister of Education: Why has she been unable to deliver the 82 promised attendance officers in time for term 2, when she said, “It is urgent, we know that we have got an issue around attendance. We need to get the resources in front of our young people now”, and can she explain her statement in relation to why just one officer had started working with schools as of 9 May that “I have had constant discussions with my officials. There seems to be excuses all the time”?

Hon JAN TINETTI (Minister of Education): We are delivering the 82 attendance officers, and it is urgent. It was never the goal to have all 82 employed by the start of term 2; that’s just not feasible. The roll-out was always planned to start from term 2. To the second part of the question: at that point in time, I was frustrated by the lack of progress in hiring attendance officers. As of today, contract negotiations are under way with 76 of the 82 roles. The remaining six are set aside for services to Māori-medium schools. Nine percent of the positions are filled. That is very promising progress, but I will continue to keep a close eye on how that is tracking.

Erica Stanford: Why has the average time to re-engage an unenrolled student in Auckland more than tripled since 2017, increasing from 82 days to 260 days in March this year?

Hon JAN TINETTI: I want every student enrolled, attending, and engaged in school every day unless they are sick. These kids aren’t going to start attending overnight, but that doesn’t mean we have given up on them. We know that there is an issue, which is exactly why we are putting the measures in place that we are putting in place.

Erica Stanford: Why are the unjustified absences continuing to increase to the point now where they are the highest on record, an 80 percent increase since 2017?

Hon JAN TINETTI: As I have just said, we know that there is an issue. We also know that these do not turn around overnight, but we have seen pleasing progress in the term 4 data.

Erica Stanford: When she told Cabinet in February that there is a significant gap between her target of 70 percent of students attending school regularly by next year and current attendance rates, which are just at 50 percent, did she expect to only have delivered three officers after three months?

Hon JAN TINETTI: The member is wrong. We have more than three officers on the ground right now.

Erica Stanford: Why are schools turning down her attendance officers, with one principal reported as stating that “I was disappointed. It wasn’t what I thought or had been led to believe these positions would be.”?

Hon JAN TINETTI: I met with that principal on Friday, having set the meeting much earlier in the week. I spoke about the concerns that that principal had. I’ve instructed the ministry to work with her and that cluster to find solutions that work for them. I’m aware she was concerned the roles wouldn’t include a case management function, and I’ve ensured there is flexibility for this in the job description.

Question No. 9—Health

9. Dr ELIZABETH KEREKERE to the Minister of Health: Tēnā koe e te Māngai. E tautoko ana i ngā mihi kua mihia i tēnei wā pōuri. Haere e ngā mate ki te puna wairua, ki te puna roimata, ki te puna tangata, haere atu rā.

[Thank you, Mr Speaker. I support the acknowledgments made at this sad time. To our dearly departed, go on to the spiritual source, the source of tears, the source of humanity, go in peace.]

Does she agree with the report by BERL that the quantity of data on rare disorders is strikingly low, so it is not possible to accurately estimate their prevalence here; if so, what steps is Te Whatu Ora taking to collect such data to inform policies and improve health outcomes for people living with rare disorders in Aotearoa?

Hon Dr AYESHA VERRALL (Minister of Health): In answer to the second part of the question, we have made great steps to improve the health outcomes and policies for people living with rare disorders in Aotearoa. Following a boost in Government funding, Pharmac has recently made available drugs used to treat rare disorders, including risdiplam and nusinersen for spinal muscular atrophy, and Trikafta for cystic fibrosis. The funding of Trikafta supports an expected outcome of 27 years’ additional life expectancy. On the policy front, Manatū Hauora is leading development of a rare disorders strategy. This will include looking into how to further improve health outcomes and support for people with rare disorders. In answer to the first part of the question, it’s true there are thousands of rare disorders, and each may affect only a few New Zealanders. Currently, we do not have sufficient data to accurately measure how many New Zealanders are affected by rare disorders overall. As part of developing a strategy, the ministry and Te Whatu Ora, together with Rare Disorders New Zealand and other organisations, will consider how best to collect this data and also to provide digital support to help improve access to information and quality care.

Dr Elizabeth Kerekere: What rare disorders are currently coded for in the New Zealand health system, and what options are you considering to improve this?

Hon Dr AYESHA VERRALL: New Zealand currently codes hospital discharges according to the International Classification of Diseases system established and administered by the World Health Organization. This national-level data includes hospital discharges and associated diagnostic codes. There are some codes for rare disorders in there that are helpful to inform inpatient care. However, not all rare disorders are covered, or don’t have a specific enough code, and they may not allow reliable identification of people who have these disorders. Improving information about rare disorders will be considered as part of the ministry’s work on a strategy for rare disorders in New Zealand.

Question No. 10—Health

10. Dr ANAE NERU LEAVASA (Labour—Takanini) to the Minister of Health: How is the Government supporting the health and wellbeing of those significantly impacted by the recent North Island weather events?

Hon Dr AYESHA VERRALL (Minister of Health): On Sunday, I announced dedicated investment into mental health and wellbeing support as part of the Government’s cyclone recovery package. We know, from other disasters in New Zealand and globally, that mental health and wellbeing impacts emerge over months and years following a disaster. So, following on from our initial response, we’re now setting up services to support the community for the coming years. In addition, through the Access and Choice services that are already existing, we’ve been able to face this disaster with accessible services already on the ground.

Dr Anae Neru Leavasa: What mental health initiatives will be available for the impacted communities?

Hon Dr AYESHA VERRALL: The Government has set aside $6.3 million for locally led community-based initiatives to meet the wellbeing needs of people in the most impacted areas, with a focus on Māori, Pacific peoples, and youth. Recovery plans will be developed with local communities to identify their needs, along with proposed interventions such as initiatives for people who have lost their homes and boosting telehealth capacity. We are also providing additional funding to expand the successful Mana Ake programme to Hawke’s Bay and Tairāwhiti to provide mental wellbeing support in primary schools and for intermediate students.

Dr Anae Neru Leavasa: How will the Government support isolated communities?

Hon Dr AYESHA VERRALL: We also know the devastating weather events made it harder for some people to get to medical appointments or for specialists to get into affected regions to provide care. In response to this, the cyclone Budget package covers $8.9 million in funding for front-line health providers, supporting isolated communities in Northland, Tairāwhiti, and Hawke’s Bay. This includes funding for air and road transport, helping people get to appointments, medical outreach, and other hospital services in isolated communities.

Dr Anae Neru Leavasa: What support will there be for primary and community care?

Hon Dr AYESHA VERRALL: I’ve met with local GPs and community providers in the affected areas and heard about what they need. We are acting on those requests, which is why this Budget also provides $6.1 million to cover community, primary, and residential care. This funding provides workforce relief for locum GPs, pharmacy and nursing staff, an increase in funding for air ambulance for an additional six months, and improved access to online GP, community health, mental health and addiction, and registered nurse consultations.

Question No. 11—Transport

11. SIMEON BROWN (National—Pakuranga) to the Minister of Transport: Does he stand by his statement, “This over-egged story and headline are just wrong” in response to reports that the door was open to delaying the delivery of some of New Zealand’s most high-profile roading projects; if so, will he rule out any cuts to the NZ Upgrade Programme?

Hon MICHAEL WOOD (Minister of Transport): To the first part of the question, yes. The story in question, for example, listed one significant project as potentially being subject to delays—that is the Papakura to Drury State Highway 1 project, which is currently employing several hundred people and is in the middle of construction. To the second part of the question, I can rule out the prospect of any cuts to New Zealand Upgrade Programme. The Government is committed to the programme and is continuing to invest $8.7 billion to invest in critical projects up and down New Zealand, including the Ashburton rail hub, which received consent within recent weeks and is now getting on with construction.

Simeon Brown: Why did the Minister refuse to release this table from the July New Zealand upgrade project update, and which I then had to request the Ombudsman to force the Minister to release it, because it shows that a majority of the projects have an overall health red status, and does this mean that this Government is going to delay some of these projects, or does it just show the Government is poor at delivering major transport infrastructure?

Hon MICHAEL WOOD: In answer to the first part of the member’s question, because there is a longstanding practice that free and frank advice from officials is often redacted from Official Information Act releases. In the end, I’m not too worried about sweating the small stuff like the member; I’d rather focus on delivering these projects that our country needs.

Simeon Brown: So will I have to go to the Ombudsman again to get the next executive summary overall health status released, because there are more projects which have now got to red overall health status, and is this because some of these projects are going to be delayed, or is it, again, just because this Government is so poor at delivering transport projects?

Hon MICHAEL WOOD: As I have confirmed in my primary answer, none of these projects will be delayed, and I can also confirm that none of them will be put, for example, into a botched public private partnership, like Transmission Gully, that we had to fix up to deliver for the people of this region after the previous Government stuffed up its implementation.

Simeon Brown: Following what he said on Twitter, “I haven’t said anything about delays and we don’t intend to do this.”, will he rule out cutting or delaying the Ōtaki to Levin expressway promised to be completed in 2029?

Hon MICHAEL WOOD: Yes, I can absolutely and categorically rule that out. I don’t think I would be able to go into the caucus room with the local MP Terisa Ngobi if I did anything other than that, because she’s been a passionate advocate for it, and our Government’s going to get it delivered.

Question No. 12—Forestry

12. ANNA LORCK (Labour—Tukituki) to the Minister of Forestry: What recent announcement has he made about the Tairāwhiti and Hawke’s Bay regions?

Hon PEENI HENARE (Minister of Forestry): On Sunday, I announced a $10.15 million fund to clean up slash and debris throughout Hawke’s Bay and Tairāwhiti. Debris from forestry in these regions has had a devastating impact on infrastructure, rivers, and communities, and this fund will go some way to supporting the clean-up.

Anna Lorck: Can he explain how the funding will support the Tairāwhiti and Hawke’s Bay regions?

Hon PEENI HENARE: This funding aims to remove up to 70,000 tonnes of woody debris from rivers and catchment systems, and also support the establishment of slash management traps to contain debris from entering waterways in the first instance. This $10 million fund is on top of the $1 billion flood and cyclone recovery package recently announced by my colleague the Minister of Finance. That covers the basics of rebuilding roads, rail, and schools while preparing for future events, with a big investment in flood protection measures.

Anna Lorck: How does this announcement relate to the findings of the ministerial inquiry into woody debris—including forestry slash—and sediment in Tairāwhiti and Wairoa?

Hon PEENI HENARE: The inquiry’s report made it clear we need to get the woody debris out of the waterways, and I’m committed to supporting the communities to do this. The Government is also continuing to focus on initiatives that help reduce the impacts of severe weather events by investing $25.2 million over the next four years to protect around 21,000 hectares of erosion-prone hill country farmland across Aotearoa New Zealand. These initiatives directly support the findings and recommendations of the inquiry.

Anna Lorck: Does the Minister think this funding is enough?

Hon PEENI HENARE: This $10.15 million announcement is a start. While we’re urgently looking into the findings of the report, we need to get on with the clean-up, and this funding will start that. We all have a part to play: central government, local councils, iwi, the forestry industry, and our communities. We must urgently get on with the mahi to help the Tairāwhiti and Hawke’s Bay regions. As a Government, we are moving with urgency to provide support, as mentioned in my previous answers.

SPEAKER: I declare the House in committee for further consideration of the Appropriation (2021/22 Confirmation and Validation) Bill.

Annual Review Debate

In Committee

Debate resumed from 9 May on the Appropriation (2021/22 Confirmation and Validation) Bill.

CHAIRPERSON (Greg O’Connor): The House is in committee for the Appropriation (2021/22 Confirmation and Validation) Bill. This is the debate on the financial position of the Government and the annual reviews of departments, Officers of Parliament, Crown entities, public organisations, and State enterprises as reported on by select committees. There are 44 minutes remaining for this debate. The time for this debate has been allocated to parties on a proportional basis. Each debate will be led off by the chairperson or another member of the select committee that considered annual reviews most closely related to the Minister’s portfolios. The Minister of Agriculture is now available for the remainder of the debate to respond to members’ questions.

Agriculture

STEPH LEWIS (Chairperson of the Primary Production Committee): Thank you, Mr Chair. It’s my pleasure as the chair of the Primary Production Committee to lead this afternoon’s debate. I want to begin by thanking members of the Primary Production Committee, and our officials who responded to questions during the course of our hearings.

As per the previous two years, we decided to consider our report on the primary sector as a whole, rather than reporting on each separate entity. We’ve had hearings from the Ministry for Primary Industries (MPI), from Land Information New Zealand, Pāmu Farms, and Crown Irrigation Investments. We also had written reports from Animal Control Products Ltd, AssureQuality Ltd, New Zealand Walking Access Commission, and Quotable Value.

I want to also acknowledge, as the officials in our hearings and the Ministers in our hearings did, the impact that both Cyclone Hale and Cyclone Gabrielle have had on our primary industries—the devastation that our food producers and growers over the course of those two cyclones have experienced between Northland, all the way down as far as the Wairarapa, particularly impacted on the west coast. So I want to acknowledge all of those affected, and acknowledge as well the Ministry for Primary Industries, who, at the time of the writing of the committee’s report, had provided more than $55 million worth of support to our primary producers.

I’d like to comment on some of the topics that the committee canvassed with officials during the course of the hearings—in particular, around the international pressure to reduce emissions. We noted that the European Union’s Carbon Border Adjustment Mechanism—CBAM—which is a tariff on carbon-intensive goods entering the EU, such as fertiliser and cement, will take full effect by 2026. We heard from the Minister around the negotiations in the free-trade agreements and the need for us to strive to stay at the lower end of the emissions scale for our food production; provided we can do that, we will remain in a good position. We need to ensure that we are investing in emissions-reducing technologies elsewhere, just the same as our international competitors are doing. We heard as well that the Government is invested in an emissions-reduction programme, which was pleasing to hear; it includes launching the Centre for Climate Action on Agricultural Emissions, which was opened in November 2022. The centre’s purpose is to accelerate research and development and the commercialisation of tools and technology to help reduce agricultural emissions.

There’s been a lot of interest in forestry as well—in particular, the overseas purchase of productive New Zealand farmland and the conversion of that to forestry. We note that both the Minister of Agriculture and the Minister of Forestry said that highly productive farmland should not be converted to forestry. We had the opportunity to talk to Toitū Te Whenua—or Land Information New Zealand—about the special forestry test, and they advised us that both the special forestry test and the benefit to New Zealand test potentially support forestry; however, the special forestry test only allows overseas investment in existing forests, and therefore it doesn’t permit carbon forestry. The land must be currently forested and the test does not allow forests to be planted on land that has not been forested in the past.

Also of interest to members and the wider public was an update on the actions that MPI has taken in the last 12 months to protect New Zealand against a foot-and-mouth disease outbreak, which, obviously, we saw happen in Indonesia last year; also an update on the ministry’s efforts to eradicate Mycoplasma bovis, and we heard that we are making good progress to that end.

We also had an update on investment from the Sustainable Food and Fibre Futures fund. To date, the total investment is sitting just under $11 million. When asked for a specific example of investment there, the Minister mentioned the joint venture with the Wool Research Organisation of New Zealand. They’re working to develop a pure wool particle that has export potential in cosmetics, printing, luxury goods, and personal care industries.

CHAIRPERSON (Greg O’Connor): The Hon Todd McClay—but just before I start: if members take their full five minutes, I’m likely to take the next call; if they do it in a question and answer, they’re likely to get some continuity. It’s just the way we’ll do it.

Hon Todd McClay: If I may, point of order, Mr Chair. I’d just like clarification: that doesn’t mean we need to take a full five; someone else can intervene and we can come back for the remainder of the time by party?

CHAIRPERSON (Greg O’Connor): If the member takes the full five, then I’m likely to give the call to another member.

Hon TODD McCLAY (National—Rotorua): Thank you very much. Mr Chair, thank you, and I won’t take my full five but there will be many questions from this side of the House. The reason for that is—on behalf of farmers in New Zealand, what they want is short, sharp questions and short, sharp answers, and they want solutions. They don’t want very long explanations that are actually making it harder for them.

So I have some direct questions to the Minister about what’s happened over the last year. But going back longer than that, for the time that he has been the Minister of Agriculture, you’re going to see, all up and down the country, farmers saying to anybody who is talking to them, anybody that will listen, that it is now harder than ever before to be a farmer. And it’s harder because they don’t get the recognition that they deserve—they need—from the Government, and that more and more rules and regulations are being piled upon them. So my question to the Minister is: what did he do over the last year—or three or four years—to stop the excessive amount of rules and regulations that have been imposed upon farmers? More than 20 changes, and counting, and more, that are piling costs on them, many of which are not actually making the changes that the Government has said that they want to. So that’s a first question.

Second question would be: where is it that he, as a Minister, on behalf of farmers in New Zealand, is asking questions around the Cabinet table about if these rules are necessary and what is the extra cost and the extra burden? Because today the cost on farm is greater than it has ever been at any time in the history of this country—it costs farmers more today to run their farms. They spend 20 to 30 percent of their time filling out paperwork to send off to this Minister and his colleagues and it’s hard for them to do what we need them to do, which is actually continue to work hard in the rural communities and export for us.

And I want to give one example of this, and here is my third question for the Minister: when he and his Government decided that there was a blanket rule for the whole country around winter grazing for animals on slopes of greater than 10 degrees, did he decide at that time that that actually was necessary, even on parts of the country where there was no environmental harm being done? And did he ask for advice to decide that up to 10,000 resource consents that will be needed in New Zealand for farmers to be able to get on and just farm in areas they always have—where there isn’t any environmental risk or damage—at a cost of $100 million was justified and was OK? And when we came out a short while ago and said we wanted to make changes around this to protect the environment and go on a catchment-by-catchment approach, did he actually mean to say to farmers that these farmers need to understand that all the new rules and regulations that he and his Government are imposing on them are for their own good? Did he honestly think that, actually, they need a Minister of Agriculture that tells them they don’t know what they’re doing?

Hon DAMIEN O’CONNOR (Minister of Agriculture): Thank you, Mr Chair. I’m more than happy to answer some of the questions here. The member, who’s new to the portfolio and new to farming—I’m happy to give him some advice. What has got us to where we are now—and we are one of the proudest and most innovative and efficient farming countries in the world—won’t be enough to get us to where we need to go. And if he hasn’t noticed, and he should have as a former trade Minister, as you get out around the world, there are different requirements being imposed upon us and different expectations from consumers now than there were even five years ago, because the issues of climate change are now very acute. Be it fires and droughts around the world, or be it massive floods, people are aware that we all have to do our bit while producing food to feed the world. Aside from the fact that we waste one-third of all the food that we produce in the world, we in this country are efficient, but we are still challenged by some of those things.

His first question was: what did I do to advocate for farming. Well, he can go back many, many years to look at my advocacy for farmers, not just now but, actually, farmers for the future, because if we don’t have enough young people coming in to farming to learn the skills, to acquire the capital to take over, then the older farmers—and there are quite a few of them—won’t be able to sell their farms on to those other farmers. I have staunchly advocated for the requirements for new sustainable farming systems and I will continue to do that.

He asked another question regarding the costs on farmers. I acknowledge the war in Ukraine and global inflation has imposed, in the last 12 months, inflation on farming systems that is not sustainable. Thankfully, those prices on fertiliser and fuel in particular, are starting to come right back, and that’s great because I don’t think that our farming systems, no matter how good they are, could sustain those for too long. We now have talk of dairy farmers requiring an $8 per kilogram of milk solids payment to break even. Well, it’s not because of—and I contest his claim that farmers are having to spend hours and hours in compliance costs for the Government. Well, there are some for councils; there are some for their processing companies.

There are more requirements coming from the market back on traceability—National Animal Identification and Tracing (NAIT). When we got into Government, the previous National Government had ignored the value, the importance of the NAIT system. And so when they delivered to this incoming Government not only Mycoplasma bovis as a disease and had done nothing about it—nothing—and delivered for us a NAIT system that was failed and broken, we had to impose upon the farmers a bit more kind of discipline around NAIT and to get on with eradicating M. bovis. Now, we’ve got almost to that point, we have one farm. And I want to thank all of those farmers and thank all the people in the Ministry for Primary Industries and across this country who have committed a lot to try and eradicate M. bovis. There are more costs on farmers, there are more requirements because that’s what the market consumers demand, be they people at the supermarket shelf or be they customers like Nestlé, the single biggest customer to the single biggest company in this country, Fonterra. They are demanding of Fonterra and all their suppliers a whole lot more requirements.

Can I just refer to—there were claims of 10,000 consents. The kind of rhetoric and ranting that we saw when it came to what would be required for winter grazing. I think we’ve got about 100 consents or 200 consents that have been applied for, a small number in reality. And even if there are other farmers that maybe need one and haven’t applied, the reality is that the clear signals that we sent from this Government to farmers about those market requirements, that images of animals standing in half a metre of mud projected around the world are not good for our country and do not project the high standards that the vast majority of farmers in this country adhere to. Those farmers were saying “Deal to those farmers who don’t have proper winter grazing practice.” Indeed we have. We’ve moved on, and in fact we’ve put in place some clear guidelines and so that the number of consents applied for is minuscule compared to the number that were projected by the doomsdayers, sayers, and prayers and all the rest of them out there who said the sky was going to fall. And what I have to say is: $55 billion record exports from our primary producers.

I’d like to acknowledge my colleagues in the Primary Production Committee who have provided this overview. And, in fact, we hear claims of parties wanting to know where money is spent in Government. Well, I trust the Primary Production Committee—members from all parties, they can ask any question they like about any area of expenditure here and they have and good on you to know where money is being spent. We don’t need some kind of stupid system of receipts for every bit of each Government expenditure.

Can I also acknowledge, while I’m here, my ministerial colleagues in the areas of forestry and fishing; my associates, who have done an outstanding job to guide us in a time of so much change, of so many climatic adverse events and new expectations from the markets. We are taking our primary sectors—the most important part of our economy—into a sustainable future, not burying our heads in the sand like the previous National Government did when it came to agriculture.

MARK CAMERON (ACT): Thank you, Mr Chair. Well, Minister, I’m one of those people that actually goes home wondering why the hell I do it, to be quite frank with you. I’m a dairy farmer—operational dairy farmer. I don’t evangelise and offer priestly sermons about how other people should run their businesses, but I can tell you: $339 million on the Centre for Climate Change Action on Agricultural Emissions—what does that look like when an emissions pricing scheme is being asserted on a primary sector? Minister, can you please tell this committee today what annualised costs in terms of productivity losses we’re going to see?

To speak to the sheep meat sector, Minister; the wool sector—one in five of those people is potentially going out of business. Can you please reconcile that statement in a Government discussion document, as proposed, that suggested one in five people are going to go out of business? Now I’ve got to go home to these people and tell them it’s all good—that this Government actually cares. I can’t reconcile that.

And what of methane mitigation technology, Minister? When is it going to be commercially available? Boluses into 2.5 million animal ruminants in the beef sector that happen to be 600 and 700 kilograms? What kind of malarkey are we talking here? I understand mitochondrial DNA and ruminant bacteria; I work with it every day—every day. I understand what I put down my animals’ necks comes by virtue of outcomes as methane. What interventions are you asserting here in this Centre for Climate Change Action which will help ameliorate those emissions and not drive people off their farms? Minister, can you please answer this House?

Hon DAMIEN O’CONNOR (Minister of Agriculture): I’d hate to think that I don’t answer any of the questions, the relevant ones. Can I just, firstly, point out the ranting and rhetoric of the idea that one in five would go out of business.

Mark Cameron: It’s your document.

Hon DAMIEN O’CONNOR: It is not the document. What the document says—

Hon Members: They were your numbers.

Hon DAMIEN O’CONNOR: Can I read for the—would you like to listen? Would you like to listen? The discussion document models that sheep and beef net revenue and production could drop by about 20 percent. That makes no reference at all—no reference at all—to the viability. Can I suggest to the member, if he is a proper farmer, that he’s probably incurred that kind of drop in production through drought or through adverse events; the member’s still in business. The reality—and I have to acknowledge the resilience of New Zealand farmers and farming systems—is that they do incur, without subsidy, some huge variations in production costs from year to year because of a whole lot of climatic conditions. They’ve been able to mitigate that with some supplementary feeds at times, but through droughts and through floods and through the kinds of things that we’re now seeing in Hawke’s Bay, there are massive impacts, sometimes, on farmers’ production. This discussion document—on a model, which I personally think should be challenged, this is just modelling—said that net revenue could drop. That’s all it says; not that 20 percent are going to go out of business. That’s the kind of irresponsible leadership from members in the House for political purposes that has, understandably, caused concern across the farming sector.

Can I just go on to the $335 million—yes, we did commit that to climate change initiatives, to the Global Research Alliance and the Centre for Climate Change Action on Agricultural Emissions that we have here; $170 million in partnership with progressive New Zealand agribusiness firms, and more are interested in coming on board, and there are many areas of international research. I’ve just come from the biggest gathering of agriculture Ministers in the US that they’ve seen, last week, talking about climate change and about how we progress these areas of science. There are boluses being worked on that can be put into the animals and reduce methane.

Mark Cameron: Rubbish.

Hon DAMIEN O’CONNOR: There is—no, it’s not rubbish at all. If the member would lift his head up a little bit, there’s work going on with thanitropes. There’s selective breeding programmes. There’s monitoring of both cattle and sheep in New Zealand to identify those that, just because they are different, emit 20 percent less methane from the sheep or the animal beside them—just because of genetic difference. If we can identify those, as we have across all other areas of farming—we have the Livestock Improvement Corporation arguably being one of the best genetic livestock organisations in the world. They have identified those that produce more and selectively bred from them, just as we can with lower methane emissions from ruminant livestock.

This is one of a number of areas that is being worked on. There is Dutch technology that, if fed on a regular basis to animals, can reduce methane from those animals by up to 30 to 40 percent. We can’t apply that at the moment to a pastoral farming system, but those are the areas that are being investigated by the partnership, by the Global Research Alliance.

And, indeed, in summary from the few days I had in Washington, none of us had the magic answers, but I suggest that we as a country have a huge opportunity to lead the world, to share the technology, and to ensure that livestock ruminant farming can produce high-quality protein and lower the emissions, satisfying the expectations of consumers and of our customers to be better producers of food for the world.

CHAIRPERSON (Greg O’Connor): Nicola Grigg—can I say that the National Party have seven minutes and 30 seconds left.

NICOLA GRIGG (National—Selwyn): Thank you, Mr Chair. I’m pleased that the Minister has enlightened the Chamber that he’s just returned from America, because I have too. In the meetings that I had with farming producers—not Ministers, not people who sit in cushy offices; actual farmers—they talk about the targets being imposed on some states across America, and fear a food reduction of up to 40 percent, Minister. So we’ve got to get real about these things.

Can I also ask the Minister to enlighten himself in reading a very educative document—the National Party’s first tranche of its agricultural policy—called “Getting Back to Farming”, because that’s what we’re all here for, Minister: to represent a sector that just wants to farm; that just wants to produce food and create those $52 billion worth of exports that you have talked about and that your Government consequently taxes.

But what I would actually like to start asking the Minister of this afternoon is farmer confidence. As the rural community spokesperson for the National Party and our associate agricultural spokesperson, it sets cold fear in my heart when I start to see surveys from farming representatives and lobby groups that are the worst we have seen in decades—some might say since the 1980s crashes.

A net 81 percent of farmer respondents—Federated Farmers’ most recent survey—expect economic conditions to deteriorate in the next 12 months. Their top three concerns, Minister, are the climate change policy and the emissions trading scheme. We are talking about 5.4 percent of respondents expecting their production to decline over the next year and that their spending will increase—24 percent of them—over the next 12 months.

So while the Minister wishes away this country’s inflation and blames a war in the Ukraine, the Minister needs to turn to his own Government’s domestic spending and actually acknowledge that that is driving inflation in this country; that is driving the 20-odd percent of on-farm inflation.

I asked the Minister in the Primary Production Committee recently, and I wasn’t satisfied with the answer, so I ask it again: when the Prime Minister talked about his regulations bonfire and that too much, too fast has been occurring under this Labour Government, what has he looked at? What has he sought to review in the agricultural space, because the National Party has identified hundreds of double-ups across regulations that, yes, also include local government, but these are set by central government. What has he done to start to look for regulation reduction in the agricultural sector so that it does not harm on-farm productivity?

Hon DAMIEN O’CONNOR (Minister of Agriculture): I’ll start at the beginning, where the member set off, and that was saying to “Get Wellington out of farming; let farmers get on with it.” That’s a kind of a noble little rant, again, because when it comes to biosecurity, the first thing the farming sector needs is for us to run a really robust biosecurity system, checking on everything that’s imported into the country. [Interruption] Excuse me, excuse me. So do you think the farmers themselves can do that?

The second thing is food safety—

Nicola Grigg: Mr Chair, can I ask the question?

CHAIRPERSON (Greg O’Connor): No. The Minister has the floor.

Hon DAMIEN O’CONNOR: —so we can produce lots of things on the farm but they need to meet a standard that meets our market requirements. So if the member wanted to deliver on her little rant, it would be, “Get out of our food safety systems. Get out of our food safety systems.”, because I hear that kind of rhetoric coming from people all the time: “Get out of our lives.”

Nicola Grigg: Yes!

Hon DAMIEN O’CONNOR: Here we go again. So we’ll take away all the biosecurity systems in the country.

Nicola Grigg: I wasn’t asking about that.

Hon DAMIEN O’CONNOR: Oh, I see. You’re very selective of where you should be able to. It’s all very well to be selective. And then when it comes to things like adverse events, where in the 1990s under the National Government, there was no support—no support whatsoever—regardless of the events that occurred through this country. It was post-1980s; no subsidies, no support.

When we came into Government in 1999, a Labour Government said, “It’s not really sustainable; people in rural areas can’t handle this burden on their own.” So we intervened and we continue to do that. Hundreds of millions of dollars, literally, to Hawke’s Bay, Northland, and we will continue to do that because we value and understand the importance.

That’s not getting out of our lives; that’s supporting where necessary. And we will continue to do that through robust biosecurity systems, through food safety systems that maintain our reputation, because we might like to claim all the credit, but the reputation we have internationally for our food safety is because of what our ancestors did: adhering to the expectations of the markets and imposing upon themselves the self-discipline to make sure that nothing went offshore that was unsafe. That’s Government providing good guidance and regulations, not getting out of our lives.

If we can go on to animal welfare, because that was kind of taken for granted—we’re good animal farmers. Well, the reality is with social media and the world we live in now, one example of animal abuse can be around the world in the flash of an eye. Unfortunately—and we all accept there will be some odd occasions—without robust regulation, without Government guiding the farming sector and every other sector of our economy, we will be judged by the lowest common denominator. And that means that as food producers to the most discerning customers in the world, we would not have a future. So we need good regulation.

Where we make mistakes, we’re prepared to change them. The slope maps on the freshwater farm regulations—we’ve made the adjustments. We don’t claim to be perfect and we will work with the industry body and organisations to make the adjustment necessary. But you cannot get Government out.

Lastly, I’ll finish on the one intervention that we as a Labour Government are quite proud of—because the previous National Government said, “Well, we’re not going to get in there.”—which is the eradication of Mycoplasma bovis. We’re proud of that intervention, we’re proud of committing hundreds of millions of taxpayers’ dollars to help farmers so they can run efficient farming systems, because if Mycoplasma bovis was here, go and talk to a couple of farmers who were hit with it. We are lucky to have the systems we have in place now.

We will always be prepared, as a Labour Government, to intervene where necessary. And if it’s not perfect, we’ll make the adjustments to regulation. But it’s a partnership model, not some ideology that says, “We should get on and do what we want and get Government out of our way.” That’s idiocy and ideology.

CHAIRPERSON (Greg O’Connor): Teanau Tuiono—you have four minutes and 16 seconds.

TEANAU TUIONO (Green): Thank you, Mr Chair. First of all, I’d like to acknowledge the Minister’s work in terms of shepherding through the Organic Products and Production Bill. That was something that was widely celebrated around the organics community, and, in particular, from us here as the Greens as well. Yes, good things take time, like the old man in the cheese ad says, but this one finally got over the line.

But my questions are around just kind of dropping down in terms of that regulation space, in terms of the work that the Minister has done to support that sector around standard-setting, around education, possibly, but also around putting in that support to actually help the organics sector to realise the economic opportunities, but also stepping back from that, recognising that when you work well with the land, what that means in terms of the climate crisis that we’re living in at the moment.

On top of that, I was wondering if the Minister could also talk to us a bit about that time period between now and when the floods hit in Hawke’s Bay—as someone who lives on this side of the Ruahines, I saw the tonne of water coming down—and acknowledge that there needs to be a lot of work done to support farmers, to support the producers and growers as well, and the sort of work that he could be doing within that space in terms of supporting farmers to become more climate-resilient, but also looking at that mitigation space as well.

Hon DAMIEN O’CONNOR (Minister of Agriculture): Firstly, I’ll just get up and acknowledge that, actually, agriculture’s probably the least partisan of any issues across this Parliament. I acknowledge that support for the primary sectors from most MPs in this House. As I say, through the Primary Production Committee, I think there’s a whole lot of really good work, and all the members have spoken.

Briefly, on a couple of the issues raised: the organic legislation that we passed was our best attempt, and it was a request from the sector to say that we need some consistency so that when we go into different markets, people trust our brand. I think it was a huge step forward. It will offer some certainty for the organic growers.

In terms of education, two of the things that I think we are very proud of are Taratahi and Telford, two training establishments that have a long history, a proud history of bringing many people in. I heard last night that Telford had trained a number of the dairy industry winners—quite proud of that. These are people who started, went through these establishments—but they kind of ran amok, and, I have to say, it was the previous Government that tried to merge them and muck around with them, and they failed, and now we’ve been picking them up and trying to get them up and running again.

What is taught is different now. What needs to be taught is different, and so we’re working through the reforms—Te Ara Paerangi. They’re working through different programmes to ensure that what we do put up in front of these young people is relevant to both their employers but also to the future needs that they may be faced with.

I think that one of the things that was discussed—and I accept the previous speaker’s reference to, in the US, the farmers having these things imposed upon them by the states. Can I say that the reason for that is not because any legislators like to impose stuff on farmers; it’s that there’s a need for them. Just as it’s happening in the US, and farmers are struggling to understand it, the same thing is happening here. But there was a lot of talk of regenerative agriculture. For the most part, most New Zealand farmers actually operate a regenerative system—rotational, pastoral grazing, and looking after the soil and not being in such a scale as to destroy the values. That’s something that is an opportunity for us if we move forward with that.

Can I come back to the questions from the member there. It is through new, innovative ways of using our soil, protecting our water, and looking after our livestock and our people that, actually, we can be quite proud of the values that drive our agricultural systems. Those are the opportunities, or they create the base of opportunities for our country into the future.

CHAIRPERSON (Greg O’Connor): Joseph Mooney—just a warning that National have four minutes and 44 seconds.

JOSEPH MOONEY (National—Southland): Thank you very much, Mr Chair. To the Minister: our farmers produce $52 billion in export receipts. New Zealand is facing a pretty challenging 12 months ahead of us. We have the biggest balance of payment deficit in the developed world, so this country needs to sell more things to the world, because we’re, frankly, spending more than we’re earning. Why have we not heard more from the Minister about the critical importance of the primary sector for New Zealand? If New Zealand wants to buy cellphones, wants to buy Teslas, wants to buy fridges, etc., that are manufactured overseas and that New Zealand doesn’t have the capacity for, we need to be selling things to buy those, so why have we not heard more about that?

The other thing is, I note the point earlier about sheep and beef farming, that Government proposal which did say that it would reduce sheep and beef farming by 20 percent and beef and dairy by 5 percent by 2030. Two-thirds of the reduction in emissions in New Zealand could be undone by high emissions shifting overseas through doing that. Why haven’t we heard more about the fact that, for example, the sheep herd was almost 58 million in 1990, reduced to 26 million by 2020, so there’s been a huge reduction in the sheep herd in New Zealand. Why haven’t we heard more about the unique pastoral farming system in New Zealand, which is quite different from most other places in the world? We have a unique system in New Zealand. We have a, effectively, free-range farming system that most other places in the world can’t replicate. Why aren’t we telling this story more strongly to the world—the unique value that we have; the unique proposition that we make?

I’ll just note that people want food, and, yes, you need to listen to what the consumers want, but take eggs, for example. I went to the local supermarket with my youngest daughter. She wanted to make a cake for Mother’s Day. You couldn’t buy eggs. I mean, people want to be able to buy food. So how are we protecting our food producers, making sure that they can continue producing food for this country and for the world?

And I’ll just note the point that there have been more than 20 changes to legislation, regulation, and all new rules since Labour came into power in 2017. I talk to farmers regularly who have to spend at least two days a week in the home office, working on these compliance regulations that they have to do, rather than being out there farming. We need them out there farming and getting their goods out to the world. So why has there not been more focus on the integration required to bring this together so we can actually focus on good environmental regulations that can ensure our food producers can do well and get their food out to the world?

And I’ll just note one example, the significant natural areas (SNAs): they were so broadly defined that farmers faced the risk of being shut down. In 2021, a third of the Far North district—250,000 hectares—was tentatively declared an SNA, including 100 percent of some properties. I mean, we’re getting all these signals coming from the Government that aren’t well thought through. Why hasn’t there been more thinking at the Cabinet level to actually get a good signal out to our farmers, saying, “We recognise that you’re the most carbon-efficient in the world; we’re going to help you meet these environmental regulation outcomes that we want to achieve and produce food for the world and food for our country.”?

CHAIRPERSON (Greg O’Connor): The honourable Minister—three minutes 56 remaining.

Hon DAMIEN O’CONNOR (Minister of Agriculture): Look, thank you, some very good questions in there, I’ll try and whip through them. The story? Perhaps the member Joseph Mooney doesn’t come to enough of my speeches—and I repeat them within New Zealand and overseas. Believe me, what you were referring to is something we should be proud of and we should be shouting it from the rooftops. And I do—I can promise you that.

Can I just come back to—actually, Joseph Mooney’s a bit too young to remember, but, actually, we had 70 million sheep in the 1980s, and it’s now down to 26 million. We’re producing the same amount of meat and the same amount of wool; it’s just that the wool’s worth nothing, which is a tragedy, but I won’t go on to that for the moment. He said we have a challenging 12 months ahead. I’d suggest, actually—and the banks are saying as well, the economists—the 12 months ahead look a lot better than the 12 months we’ve just been through, because we’ve been through a period of excessive global inflation. The prices on most of the core inputs into farming are actually coming back, which is great. As I said right early on, it would have been hard to sustain that. And it’s not $52 billion; it’s $55 billion. You know, $3 billion—nothing to sneeze about.

And so the point about significant natural areas (SNAs) that he refers to—in fact, SNAs were identified in the 1991 National Party Resource Management Act piece of legislation. And so what happened is, actually, some councils got on and identified where they were, and some didn’t. In fact, now there’s been an obligation to get on and identify.

What has been seen as one of the biggest liabilities for the sheep and beef sector, because they’ll talk of about 1.4 million hectares and indigenous bush, and some of it might be kānuka and mānuka—actually, that’s an asset, not a liability. And the farmers—and there are many of them—have turned it from a liability into an asset. Where they thought they had to go on and keep clearing it, as we did in the past, they’re now leaving it to grow, to create mānuka honey, and to sequester. Now, we’re working through, and some—depending on when it was cleared, pre- or post-1990—of that is generating significant carbon credits for those farmers that are letting it grow back. And that will be the opportunities for sheep and beef farmers into the future. Thank you.

MARK CAMERON (ACT): Thank you, Mr Chair. Minister, you and I are pretty collegial most of the time, but I’m still trying to reconcile something to do with the national herd size. Go back to 2006, Minister, when you know that we had peak numbers in terms of the animals in the animal ruminant sector. Do you reconcile today, Minister, given that methane is a short-lived gas, we’ve got to have an honest conversation about what role methane has in terms of our emissions profile, what its actual net warming addition is? Sir, do you agree, yes or no, today, that in 2006 we had our peak national animal ruminant herd numbers? We’ve subsequently fallen since then. That’s the first question.

On the basis of your answer on that, what interventions are currently commercially available today to my people in the rural sector, i.e., dairy farmers, those in the beef sector, or the sheep meat sector, that we could use as interventions that will not actually have this—it’s nothing more than an arbitrary tax, and you know that I’m talking about He Waka Eke Noa. What interventions are commercially available, excluding the development of genetic material, which we know will take arguably six to eight years to be in the mean average herd or flock in New Zealand? Can you please, for the sake of this House and anyone listening, answer those very important questions?

Hon DAMIEN O’CONNOR (Minister of Agriculture): Thank you, Mr Chair. Can I say plantain has been acknowledged as reducing nitrates and nitrous oxide; EcoPond, which has been developed internationally and used by one of our major fertiliser companies to reduce the methane emissions from effluent ponds across the country; and selection—CRV, and I know the Livestock Improvement Corporation, too, are identifying sires that have lower emissions. Those are three available now, and there’s work going on on bolus and other issues—as I say, the Dutch technology, which claims a huge reduction in methane from animals that ingest this on a regular basis, and you can do that in an internal farming system. We haven’t worked out how to do it in a pastoral system; that’s why there’s more work needed. So there are some opportunities. They incrementally add up to and, I’m sure, will contribute to the 10 percent reduction target that we have by 2030, and that’s been acknowledged. In Ireland, they’ve targeted a 30 percent reduction in emissions from farm systems by 2030; we’ve set a 10 percent reduction in methane.

Can I just come back to the point around peak animals and methane; you see, we had a lot more animals in 2006, and now, than we had in 1900 or 1850. Global warming hasn’t happened overnight, and so what we’ve seen in the Hawke’s Bay, in my simple kind of physics, is that we’ve had a warming of the sea and we have more moisture go up into the atmosphere, and it’s coming down. Atmospheric rivers: not something I had ever, ever heard—I lived by the Buller River, not an atmospheric river, but now the Buller’s more threatened by atmospheric rivers than it is the Kawatiri, because of the warming and the effect that more moisture goes up and has to come down. That’s the reality we face.

SAM UFFINDELL (National—Tauranga): Thank you, Mr Chair. To the Minister: the horticulture sector is quite disappointed about the lack of response to Cyclone Gabrielle, and the project coordination group report recently noted that between $650 million and $960 million would need to be injected around clean-up, replanting, income continuity, financing arrangements, and a whole lot of stuff. What further steps, if any, will this Government take to help those growers impacted by Cyclone Gabrielle?

CHAIRPERSON (Greg O’Connor): Sorry, the Minister’s time has—

Hon Damien O’Connor: He won’t let me answer.

CHAIRPERSON (Greg O’Connor): The Minister needs to seek leave to answer that question.

MARK CAMERON (ACT): Thank you, Mr Chair. Very quickly, Minister—

CHAIRPERSON (Greg O’Connor): I’m sorry, but the time for this debate has expired.

The question is that the report of the Finance and Expenditure Committee on the annual financial statements of the Government for the 2021-22 financial year be noted.

Motion agreed to.

A party vote was called for on the question, That the reports of the committees on annual reviews be noted.

Ayes 75

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Motion agreed to.

Reports of the committees on annual reviews noted.

A party vote was called for on the question, That clauses 1 to 9 and Schedules 1 to 5 be agreed to.

Ayes 75

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Clauses 1 to 9 and Schedules 1 to 5 agreed to.

Bill to be reported without amendment.

House resumed.

CHAIRPERSON (Greg O’Connor): Mr Speaker, the committee has considered the Appropriation (2021/22 Confirmation and Validation) Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Appropriation (2021/22 Confirmation and Validation) Bill

Third Reading

Hon JO LUXTON (Minister of Customs) on behalf of the Minister of Finance: I move, That the Appropriation (2021/22 Confirmation and Validation) Bill be now read a third time.

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

A party vote was called for on the question, That the Appropriation (2021/22 Confirmation and Validation) Bill be now read a third time.

Ayes 75

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Motion agreed to.

Bill read a third time.

SPEAKER: I declare the House in committee for consideration of the Customs and Excise (Arrival Information) Amendment Bill, the Self-contained Motor Vehicles Legislation Bill, the Accident Compensation (Access Reporting and Other Matters) Amendment Bill, and the Grocery Industry Competition Bill.

House in Committee

House in Committee

CHAIRPERSON (Hon Jenny Salesa): Members, the House is in committee on the Customs and Excise (Arrival Information) Amendment Bill, the Self-contained Motor Vehicles Legislation Bill, and the Accident Compensation (Access Reporting and Other Matters) Amendment Bill, as well as the Grocery Industry Competition Bill.

Bills

Customs and Excise (Arrival Information) Amendment Bill

In Committee

Part 1 Amendments about requirement to provide information

CHAIRPERSON (Hon Jenny Salesa): Members, we come first to the Customs and Excise (Arrival Information) Amendment Bill. We begin with debate on Part 1.

SIMON O’CONNOR (National—Tāmaki): Thank you, Madam Chair, and may I, as others have done, in taking this first opportunity to speak, acknowledge the terrible loss of life here in Wellington overnight, and acknowledge, in particular, our fire crews and others for how they’ve handled everything.

Secondly, if I might, I acknowledge the new Minister of Customs. I’ve said in the House a few times that there’s nothing more exciting than a customs bill, and secondly there’s nothing more exciting than a new Minister of Customs! So welcome.

A couple of questions from me, because, first and foremost, as the Minister in the chair knows, National is supporting this bill. We, by and large, see this as positive. But if we’re dealing with Part 1—and I’ve got a few questions; about three of four, if that’s all right, and I’ll just go through one at time. I’m looking at new section 28A(2), inserted by clause 4—this is the information that’s going to be provided—and it says here “in the way prescribed by the chief executive’s rules”. Your officials will know that we have debated this, discussed this, long and at length—maybe add “boring—in terms of what the chief executive can or cannot prescribe. I’d just like the Minister here in this committee stage to give me and the committee some confidence—and this is no disrespect to the chief executive of Customs or the Ministry for Primary Industries or any other agencies, but to be abundantly clear that there are, in effect, some guidelines, some boundaries around what the chief executive can or cannot ask.

The concern, particularly for any members of the public listening, is that while we move from this paper copy arrival card—we’re all familiar with the little blue piece of paper we fill out; we’re moving on to a digital platform—there were some concerns coming out of the select committee—although, again, I want to say that they were addressed—that the chief executive of Customs, in particular, could put in a whole lot of other questions that we might not deem appropriate to this debate, as the Minister will know, of whether we should be prescribing this quite explicitly in the legislation. We were told clearly there was not a need for it, on the basis that the prescription by the chief executive is already within some sort of framework. So I wonder, as the first question, whether the Minister would be prepared to answer that.

CAMILLA BELICH (Junior Whip—Labour): I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Hon Jenny Salesa): Leave is sought for that purpose. Is there any objection? There is no objection.

Parts 1 and 2, the Schedule, and clauses 1 to 3

CHAIRPERSON (Hon Jenny Salesa): The question is that Parts 1 and 2, Schedule 1, and clauses 1 to 3 stand part.

Dr JAMES McDOWALL (ACT): Just a couple of issues to begin with—or questions, I should say, to the Minister. The first is around a new digitised system, which is something I spoke about at a previous reading. So if the form is filled out online in advance—and I guess there’s also another sub-question there: is the actual person who’s travelling filling out the form, and what is the enforcement around that? But if a form is submitted and the declaration is true at that given time but then circumstances do change and the traveller is now travelling to New Zealand and suddenly they do have amendments that they wish to make, how will that be treated? So how will the enforcement, sort of, approach to that be? How much leeway can be given, or is it possible to make those changes? And how would that work, or would they just rely on a manual card at that point and have to volunteer to go down that route?

SIMON O’CONNOR (National—Tāmaki): I’ll keep listing through a few questions. Obviously, the Minister’s taking a number at a time and will then respond, which is great. The second one—which has somewhat been described by my colleague who’s just taken his seat—in effect, is: is the Minister happy that this arrival card being filled out online is going to be done at the right time? The basic premise being there that—we’ve got the irony; again, discussed—it’s an arrival card which we’re filling out before we arrive. At the moment, I fill out the little blue piece of paper about an hour before I land. Strictly speaking, we could be doing this, Minister—well, it would be good for you to elucidate to the committee whether it’s 24 hours or 48 hours before. So it’s picking up on the previous question. We’re filling out an arrival card not at the moment of arrival but well before arrival, and does the bill—again, I do know the answers to this, I must admit, but it’s always good to have it on record in Hansard—is she confident that we’ll be capturing the right information? And to echo the previous person, the honourable member: how does change get effected if all of a sudden I find I am bringing stuff into the country that I was not necessarily anticipating?

The third question from myself relates to section 28B—in clause 4—which deal with offences. Does the Minister believe that $1,000 is the appropriate level, and—probably a question, through her, to her officials—does this align with other fines that we have? From vague memory—not that I’ve attempted to bring oranges, apples, and bananas into the country—I think we get hit with $400 or something. Do the fines align? And I’d prefer that we just hear that rather than I have to go and experiment and find myself paying a lot of money that I can’t justify to my wife.

Then we’re moving across to more general questions around memorandums of understanding. So we’ve talked about filling out the cards, and we’ve talked about whether or not the chief executive can—well, how much leeway she or he has to write questions. It’s also whether she feels that this law assures that the data is going to be sufficiently protected. We know there’s a number of memorandums of understanding between the likes of Customs and other departments—IRD being a good case in point. Is she confident that this bill will not impact on those memoranda and, secondly, that, yeah, it’s not going to impact on the use of those? And I think that’s where I’ll leave it for now, if I might.

Hon JO LUXTON (Minister of Customs): Thank you, Madam Chair, and thank you to the members for your questions. Firstly, the in terms of the question raised by Mr O’Connor around the chief executive rules, I am confident in those rules. They are secondary legislation, which means that they are subject to parliamentary scrutiny and can be disallowed, and they do allow for a more timely manner for things to be changed. For example, if we have a sudden product that is disallowed or becomes an illegal substance, he or she has the ability to make those changes necessary through a means that is quite scrutinised. It can be done in a more timely manner than should it be taken as legislation through the House.

People who change their information or want to bring more additional things into the country than they anticipated when they filled out their online form before leaving the country they are leaving from do have the ability to make changes when they arrive in the country, and as long as they do so, they will be fine. The $1,000 and $400 penalties align with other legislation, and so there is no issue there. And—can you remind me of the customs question that you had sorry?

SIMON O’CONNOR (National—Tāmaki): Sorry, I’m not sure if it’s appropriate protocol if I jump back up?

CHAIRPERSON (Hon Jenny Salesa): I call on Simon O’Connor.

SIMON O’CONNOR: It was more, is the Minister confident that this amendment bill is not going to affect the memorandum of understanding that Customs has with the likes of IRD and the Ministry of Social Development?

Hon JO LUXTON (Minister of Customs): Thank you, Madam Chair. That is correct and I am confident in that. Customs, as the member knows, has memorandums of understanding that other agencies can obtain information from Customs. It’s not a free-for-all; Customs cannot widely just go and share information about people. It must be requested of Customs in order to be shared.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. Just a brief question from me, if I may, following up on the line of discussion between the Minister and my colleague and friend Simon O’Connor. First, though, I begin by congratulating the Minister on her elevation to the ministry. She was already part of the executive, of course, being a Parliamentary Under-Secretary, but she’s been elevated to her new role and I congratulate her for that.

In relation to the data sharing, I think it’s helpful that we’ve got on record the Minister’s intention, as aligned, I think, pretty well with the select committee report understanding about those data-sharing agreements not being compromised or affected in any kind of way. But my question is in relation to how long that data would need to be held, and it might be that you’re not able to answer the question now. I say that not to put you on the spot, but if I can just express a hope—and the Minister may wish to respond—that data isn’t held for this purpose any longer than is necessary, because, of course, the purpose of the exercise is to make it easier to collect data, easier to hold data, and easier to share data. There are good reasons for that, and it sounds to me as though members across the committee are on board with the idea that we want to make life easier for those agencies, particularly the New Zealand Customs Service. But the flipside, of course, is that the easier it is to hold and share information, the more easily it can be hacked or otherwise obtained by those who have no right to it and might have malicious intent either in the way they would use the data or by way of holding the New Zealand Government or the individuals to ransom.

So I seek the assurance, I suppose, if anything, that the Minister would agree that the data should not only be collected for the right purpose and shared for the right purpose but also held as long as necessary but for no longer. I think, you know, if we’re going to require by force of law that people provide information—as, to be fair, was already the case, I’m not saying that’s a new element of the law; it’s just we’re doing it in a different way—then I think we owe those citizens and visitors the responsibility to retain that only to the extent that we actually need for these purposes.

Hon JO LUXTON (Minister of Customs): Thank you for the question. The information can only be held for as long as the lawful purpose remains, and the Act, however, only permits biometric information to be held for three years.

Dr JAMES McDOWALL (ACT): Thank you, Madam Chair. Just a few more questions following on from the same line of questioning. It’s regarding Simon O’Connor’s query around $1,000 and whether that’s appropriate and will work as intended. If we recall, as a House, we discussed a member’s bill from the Hon Jacqui Dean not so long ago where the advice from officials was that historically, when the fines were increased, it didn’t actually dissuade people—that the impact of that was not so meaningful. So I just want some clarity here, because it kind of feels like we’ve gone from, in the case of the Hon Jacqui Dean’s bill, saying that that increase in fine wouldn’t result in better outcomes and we shouldn’t do it to suddenly, in this bill, saying that, actually, that’s the right thing to do. So it’s just a little bit of a contradiction.

In addition to that, it’s obviously not a bad thing with the digitisation that changes can be made in a more timely manner, in the words of the Minister—perfectly sensible—but I wonder if the Minister’s received any advice as to how often requirements or the questions on the form may actually change, like the rules around alcohol and other regulations, because we’re kind of moving from a very slow, prolonged process now to, suddenly, things can be done kind of on the fly—for perfectly legitimate reasons, I’m sure. But going from one mode of slowness to suddenly very agile—has there been any advice about how often we actually might get changes? That could be quite confusing for travellers.

SIMON O’CONNOR (National—Tāmaki): My last question, just to help signal that. It’s to do with new Part 6 being inserted into Schedule 1. The Minister will know, long and short, those vessels—sorry, ships; I better get that right—that are under the control of our defence forces, and ships operated by the international cruise business are being pushed out to October, which is a different start date to everyone else. That’s my understanding—if we can quickly check that. It’s really asking, again—yeah that’s right. So the Act itself is coming into force on 21 June, which is one of the reasons why we’re moving at speed. But we’re pushing out until the end of October this legislation applying to His Majesty’s ships in the Royal New Zealand Navy and also those ships on international cruise business.

Once again, for the sake of the committee, I think I know—I do know—the answer, but I think it’s useful to have it on record. So if the Minister could explain why there is a little bit of delay in what her expectations are, particularly with international cruise ships or cruise business, how this is going to manifest, particularly for those who have not filled out that cards.

So that’s the second question. First, why delay by a couple of months, and, second, are we expecting, effectively, mobile computers, laptops, or machines to be at cruise terminals for those people who have not, for whatever reason, filled out their declarations while in transit?

Dr JAMES McDOWALL (ACT): Thank you. Last one, I promise! I just wondered about the concern—and thank you for your answer, Minister—around people who have changing circumstances; so they filled out their thing previously and now they’re, presumably, on the plane or at the airport. Is the Minister anticipating teething issues, in the sense that you come to the airport, you’ve got your goods to declare or no goods to declare—you know, are we suddenly going to have a third queue of people who are saying, “Well, now I do. I’ve changed my mind or changed my circumstances.”? Do we anticipate this to be, kind of, a bit of a rush of confusion? And will there be a sort of allowance, an introductory period, where enforcement might be on the more gentle side?

Hon JO LUXTON (Minister of Customs): Thank you, Madam Chair. In response to that member’s questions, you’ll be aware that there have been trials that have been carried out and they’ve been very successful, so I don’t anticipate teething issues at this stage. There are more trials planned as well, though, to ensure that any teething issues that may crop up are ironed out.

As far as the cruise ships and what have you, the question from the Hon Simon O’Connor, he will be aware that there is just a bit more time needed to work with cruise ships and the Defence Force on the implementation of the arrival card at this stage.

Parts 1 and 2, the Schedule, and clauses 1 to 3 agreed to.

Bill to be reported without amendment.

Bills

Self-contained Motor Vehicles Legislation Bill

In Committee

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to the Self-contained Motor Vehicles Legislation Bill.

SHANAN HALBERT (Junior Whip—Labour): Point of order, Madam Chair. I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Hon Jenny Salesa): Leave is sought for that purpose. Is there any objection? There is no objection. The question is that Parts 1 to 3, the Schedule, and clauses 1 and 2 stand part.

Parts 1 to 3, the Schedule, and clauses 1 and 2

Hon PEENI HENARE (Minister of Tourism): Just a slight recap, and also to speak to a Supplementary Order Paper that will be delivered in my name. Freedom camping is important to Aotearoa New Zealand, both for our people and our manuhiri. However, change is needed, and it’s become loud and clear from communities that the freedom camping system is no longer sustainable. We must practise kaitiakitanga by taking better care of our people and our whenua. A particular concern is those who freedom camp in vehicles that do not contain fixed toilets and are disposing of human waste inappropriately. This pollutes our environment and angers our communities. The cost to clean this up after irresponsible freedom campers has, historically, fallen on the environment and our communities.

Local ratepayers, taxpayers, and councils have asked for change and the Government has responded. The Government reforms address concerns by requiring fixed toilets in certified self-contained vehicles, ensuring that vehicle certification is consistent and high quality, and by giving local government more tools to address issues in their region.

Part 1 deals with the new national rule requiring that vehicle-based freedom campers use a certified self-contained vehicle when they stay on council land, unless the council designates the site as suitable for non - self-contained vehicles. The new rule is key in enabling local authorities to better manage freedom camping in their area and reduce pressure on public infrastructure.

The bill extends the Freedom Camping Act 2011 to include land managed by Waka Kotahi and Land Information New Zealand (LINZ), as freedom camping issues have occurred on both LINZ and Waka Kotahi land. Extending the Act in this way will provide Waka Kotahi and LINZ with additional management tools through the ability to prescribe restrictions on freedom camping as well as access to the offences and penalties regime.

The bill introduces a broader range of infringement offences to deter poor behaviour such as freedom camping in breach of the new national rule, not displaying a warrant card, or displaying an altered or fraudulent warrant card. It also enables infringement notices to be emailed to individuals who have committed an offence, to speed up the process and increase collection rates.

The bill provides for a two-year transition process to enable the gradual implementation of the regulatory regime. The transition period is essential for enabling new certification authorities to get approval from the Plumbers, Gasfitters, and Drainlayers Board (PGDB) and develop their services; vehicle inspections and certification to be staggered to minimise wait times for the public, and the public to be educated and informed about the new rules and requirements. I have also introduced a Supplementary Order Paper that introduces the ability to extend the transition period by up to 24 months by Order in Council if necessary. This amendment will enable some flexibility if there is insufficient capacity in the system during the original two-year transition period, while still enabling the reforms to be progressed if there is adequate capacity.

The policy objective of the bill is for those experiencing homelessness not to be penalised—and I want to repeat: not to be penalised—under the freedom camping rules. The Supplementary Order Paper adds a legislative exemption to protect those experiencing homelessness from receiving infringement for freedom camping offences. The proposed exemption will cover people residing in New Zealand who are staying in a motor vehicle or tent because they are unable to live in appropriate residential accommodation. This will encompass the broad range of circumstances that may lead to someone experiencing homelessness. This exemption will protect the interests and welfare of this vulnerable group, and the bill will also mandate a review of the impact of the reforms on those experiencing homelessness.

Part 2 of the bill amends the Plumbers, Gasfitters, and Drainlayers Act 2006 to establish the PGBD as a new regulator for the certification of self-contained vehicles. The primary purpose of the system is to ensure the sanitary plumbing requirements have been met for people to be self-contained when camping in a vehicle. The bill will require vehicles to have a fixed toilet to be certified as self-contained. This will build public confidence that if the vehicle is certified, it is equipped with a toilet that is more likely to be used than a portable toilet, and that the toilet has not been removed from the vehicle. This will contribute to reducing the costs borne by communities and the environment.

In my engagement with both councils and communities, as I’ve travelled the country, it’s become quite clear that we want to take our responsibilities of kaitiakitanga seriously, and what we also want to do is make sure that those who do visit pristine sites in this country, like lakesides, beachsides, and important significant sites around this country can do so without seeing the kind of human waste that we’re seeing in places like rest stops and on beaches and by lakes. I look forward to the engagement on this bill in the committee.

JOSEPH MOONEY (National—Southland): Thank you very much, Madam Chair. Thank you for this opportunity to ask the Minister of Tourism some questions about this bill. So, Minister, the issue was raised previously, and again in the first reading, that the requirement to have a fixed toilet will, effectively, punish the 70,000 responsible Kiwis who have suitable portable toilets in their vehicles and use them, leading to the somewhat odd situation of a camper with a fixed toilet, who doesn’t use it, not breaking the law, but a camper who has a non-fixed toilet and uses it will be fined.

I have had a look through Supplementary Order Paper 351, and I cannot see anything that addresses that issue. I wonder why that has not been addressed by the Minister, because I cannot see a rational reason for punishing 70,000 responsible Kiwis who have suitable portable toilets and use them. Obviously, we want to focus on those who don’t use them, and stop them from littering our roadsides or laybys, etc. But I can’t see any good reason for punishing 70,000 Kiwis who do use their portable toilets.

Just a corollary to that, I wonder whether the Minister has taken any advice on how many travellers are expected for the FIFA Women’s World Cup coming up on 20 July to 20 August, jointly hosted by Australia and New Zealand. I note that last time we had a major event in New Zealand, we did have some changes around these laws to reflect the fact that we had probably a lot more travellers and visitors to our country, which is a great thing, I would suggest, and I’m sure the Minister would agree with that, and we want them to have a great experience here in New Zealand.

There is a third point which I might just touch on here, just looking at this Supplementary Order Paper. I see the intention not to penalise people who are freedom camping because they cannot find appropriate residential accommodation. The way this definition is phrased, it says “a person is not freedom camping if the person—(a) is a person other than a person who is in New Zealand on the basis of a visitor visa (within the meaning of the immigration instructions)”. Is this intended to apply only to New Zealand residents and citizens who are unable to find appropriate residential accommodation, or does it include people who are on working visas in New Zealand who are unable to find appropriate residential accommodation?

Hon PEENI HENARE (Minister of Tourism): Can I thank the member for his questions, and I’ll start with the final question. The reason why we’ve made it rather specific—and that member will know that, for example, in places like Queenstown, in his own electorate, there are many on working visas—is that it was considered that the bill in its old state would continue to punish those people who are struggling to find accommodation, and we want to make sure that this bill clearly is designed, along with its policy intent, to make sure that it does not discriminate against or penalise those who, for one reason or other, or multiple reasons—and they’re often complex reasons, as many of the MPs in this Chamber will know as they work with those who find themselves homeless—find themselves in the situations that they find themselves in.

It also, of course, makes it clearer to the council, because it’s a requirement of the council to make sure that they’re able to administer this particular bill, this particular legislation, so the impetus is put on them, and there’s also an area there for discretion for them so that they are able to make sure that, once again, those who do find themselves homeless for whatever reason aren’t penalised unnecessarily.

To the second part, with respect to the member’s comments about FIFA, yes, I’m sure the entire country is looking forward to welcoming visitors here to this country. Of course, the encouragement from all of us is to get around and to get to as many games as possible, but just to make sure that our visitors have a good visit here to New Zealand. While the focus is on the games, we know many of them are going to travel around the country. We know that they’re going to visit key places and significant sites around the country. This, in particular, is intended to make sure that we can have a regime that will continue to support the way that visitors come into this country. But I will note, though—and the member will know this—that once the legislation is passed, there will be a regime afterwards to make sure that those who do actually responsibly have self-contained vehicles will be able to go through the registration process in order to be able to use their vehicle and go travel the country as they see fit.

So that brings me to the first question that the member asked. He quoted a number of numbers about those who were talking about using a portable toilet. Requiring a fixed toilet will continue to encourage increased usage and help reduce the improper disposal of waste. What we mean by that is: with a portable toilet, it undermines a system, and any place around the country, it can be taken out and disposed of—that’s as good as doing the act right there, which is the kind of behaviour that we’re trying to dispel.

What I also want to say, though, is an acknowledgment to all of those who are embracing these changes, who are making sure that their current vehicles that do have fixed toilets will come under the regime to be certified, to make sure that they are the right vehicles to be going places, but also an acknowledgment of those like the councils, the Department of Conservation, who acknowledge that camping in this country is still one of those things that our families and our young people and our travellers look forward to. So there are numerous sites, hundreds of sites around the entire country where people can still go along, still pitch a tent, and still do it within the parameters of this particular piece of legislation. That’s important to remind ourselves, because, as I said, it’s one of those almost rites of passage for Kiwi families, in particular, but also for visitors who come here, who like to pitch a tent, but we want to make sure that they do it in places that have the proper facilities.

I’m going to retell a story. Just recently, I went to Rotorua to speak on my other portfolio of forestry, and on the way back I stopped at the many rest areas along the way that look over Lake Karapiro , which is a beautiful view, if anybody’s interested. I saw two fixed-toilet campervans there and got to speak to the people there. They didn’t have a problem with what we were proposing. As I returned to my car, I noticed human faeces and toilet paper at the rest stop. It’s this kind of behaviour that I’m sure every Kiwi in the country will look to expelling out of what we see on our roads, around our beautiful, serene nature places around this country, to make sure that not only as an international visitor but those domestic who decide to go and visit other parts of the country can do so without seeing the kind of human waste that I noticed on the side of the road at a rest stop at one of the most beautiful places in the country, overlooking Lake Karapiro.

Hon TODD McCLAY (National—Rotorua): Madam Chair, thank you. Minister, thank you for that. And I want to debate that and to talk more about that, and I thank you for engaging on it. I must say, your approach when you became Minister for this portfolio has been refreshing because, indeed, the last Minister of Tourism actually really got to the point where he was saying to submitters and others that they were wrong and his officials were right and he wasn’t willing to engage in this anymore. And he could well be correct in that, but the job of this House and the committee here, during the committee stage, is to exhaustively look at these issues so at the very least members of the public who will be affected by this legislation—have costs placed upon them or their ability to do things that previously were lawful are no longer—at least understands why Parliament is making that decision. So I want to thank the Minister for constructively engaging.

Some of the things that he said, I agree with completely, but, Minister, I’m not sure the legislation will make the changes that you intend or hope to. So the example you gave near Rotorua where somebody has defecated in public, of course that should not happen, but the problem with this legislation is it doesn’t actually stop that because the people that you mentioned that had a fixed facility in their campervan, in camping there under the new regime where certified, they are meeting the requirement of the law, but the law does not say they have to use that. So they could climb over their campervan and they could defecate, actually, on the side of the campervan and they’re still certified because it’s fixed—that toilet in their campervan—but the law doesn’t say they have to use it; it just says it has to be fixed. Conversely, someone else could drive up and park beside you, Minister, in a campervan with a portable toilet, and they couldn’t be certified, and they use that portable toilet inside their campervan, and ultimately they are breaking the law. And that is where the challenge or the problem is with the legislation.

The intent is something that we accept. We have no problem with the intent. But I’ve got to say that some of the examples that were given to us—they weren’t the officials’ examples but the things the officials were being given to present to the committee, so the officials were doing a good job—actually didn’t lead us to the point of believing that, actually, all the solutions that were needed had been found or explored or put into legislation to ensure that people are responsible when they camp and they freedom camp and that, actually, imposing restrictions upon some Kiwis who have acted responsibly and continued to would be made illegal and it would impact upon the things that they were doing. You gave the example of how for New Zealanders all over the country, it’s a rite of passage and they go and camp in their tents. Well, of course, the legislation allows them to camp in a tent and not to have a toilet and, I suppose, do whatever they want with their business anywhere, so it doesn’t impact upon somebody who has a tent if they are travelling around the country, hitchhiking, and so on. It doesn’t deal with that because you can’t certify a tent. I suppose you couldn’t have a fixed toilet in the tent but you could have a portable one. The point is it doesn’t deal with any of that.

Our spokesman has brought forward a submission, and in the committee we made the case because, probably, of all the issues that were raised, the one that was the most contentious and raised the most concern from submitters—law-abiding Kiwis who just want to go and camp and they want to meet their obligations, they don’t want to ruin the environment, they’re responsible people—was the great cost and imposition placed upon them if they had to have a fixed toilet. So there’s a Supplementary Order Paper that’s been tabled that actually will deal with this. It says, actually, that you can use a non-fixed toilet, but it has to be described in regulation. The previous Minister said, “Well, people using buckets with lids—nobody believes that is a portable toilet.” But, actually, it should be around changing behaviour. And for the officials to say they’ve done research that merely says if somebody has a fixed toilet, they’re more likely to use it than if it’s a non-fixed toilet, actually I’m not convinced by it, because it means we probably just haven’t got those regulations right.

We also didn’t hear clearly from any submitter or any evidence or anything that says that people are less likely to take the responsibility to dispose of effluent that’s stored in a portable toilet less seriously than somebody with a fixed toilet. I guess there will be examples of that where people don’t do what they should—they’re not responsible. We should penalise and criminalise that, not criminalise somebody who has a portable toilet in their campervan, they use it, they dispose of it in a place that is identified for its disposal, but they’re breaking the law if they freedom camp because they can’t be certified. It’s a very small change that says, actually, if you are responsible and you have a portable toilet and you use it, you will be allowed to be certified and freedom camp. If you don’t use it, you would break the law, just as if you’re not using a fixed one you would break the law. It would mean tens of thousands of Kiwis are not inconvenienced and we could continue to focus on where the problem is.

Dr JAMES McDOWALL (ACT): Thank you, Madam Chair. Just in reference to the Supplementary Order Paper, which is fairly significant, and I’m thinking about the backdrop to this issue, and very commonly we saw in the media issues of tourists behaving badly. Remember the French tourists who were a good case study. In addition to the media coverage, we had the previous Minister, Stuart Nash, talk a lot about this, particularly these immigration changes in section 5(2A)(a), in clause 6, which now clarify that a person is not freedom camping if they’re on a visitor visa. I think it’s not quite in those words, but I think that’s what it’s trying to say.

If we sort of take a step back, doesn’t this kind of undermine one of the big reasons for this bill in the first place? Because it does seem like a pretty reasonable carve out. And similar, or connected to that, a slightly different question: can the Minister then confirm that this does not apply to Australian visitors to New Zealand—tourists who come here, because they don’t get visitor visas; they get residency upon arrival. So there’s a bit of discrepancy there. I’d like to hear the Minister’s feedback on that.

Hon PEENI HENARE (Minister of Tourism): Thank you, Madam Chair, and can I thank the members for their questions. I acknowledge the work that the Economic Development, Science and Innovation Committee did in hearing a large number of submissions, and also those who submitted to me directly via email and other means to bring their particular matters to the fore.

There are a couple of things here that I would like to highlight to the committee, and it is about the way that we try with this particular bill to deter bad behaviour. Members of the Opposition in particular will know that when it comes to something like this, if you want to deter them and if you want to deter bad behaviour, we want to make sure that there’s a punishment that will deter that behaviour. What we’ve done here is we’ve looked towards making sure that there’s a fit punishment for those who are caught breaking rules—those who are caught doing the kinds of deeds that were described and already accepted in this House as rather deplorable and disgusting—to make sure that that is the disincentive for people to do those kinds of things.

I want to note too that what we know is that when it comes to camping, for example, I’ve already mentioned that you can camp on campsites and you can camp at a number of Department of Conservation sites that are available to the public. As the bill makes clear, when it comes to private land, you can also go there and you can still feel free to camp there, as long as you’ve got the permission, or if you own the land, then that’s all fair and well.

I myself, for example, when I head up to the Far North, to where my mother’s family come from, we literally camp there, despite there being a house there. But there are facilities there. There are actual toilet and shower facilities, but we enjoy having our own space of a tent.

The research shows that tent-based freedom camping makes up only 4 percent of freedom camping in this country, so we want to just make sure that some of the facts are out there. What we also know too is that in this country, 85 percent of the domestic vehicles have fixed or fitted toilets already, and I want to acknowledge those who do do these things responsibly, who do make sure that they act in a way that the community can continue to support tourism activities within their community, and that’s absolutely fantastic.

A couple of questions from the members continue to focus on portable toilet matter. What’s clear is that fixed toilets are twice as likely to be used than a portable toilet. So if we’re trying to change behaviour here, it is my opinion and the opinion of this Government that this particular bill will do that.

Hon TODD McCLAY (National—Rotorua): If the Minister was able to show us very, very clearly that people with portable toilets and campervans were the ones causing the problems, it would be easy; he would have unanimity in the Chamber, but I’m sorry, Minister, I’m not sure it’s as straightforward as that. You gave the example, I suppose, of, you know, a case where people were camped near a house and there were facilities. There were other areas where people camp and somebody will bring in a portable toilet, a stand-up one—you open the door and you go into it—and they’ll use that as well. Of course, in the case that it was a freedom camping area and somebody had put it there, the person that had a certified campervan with a fixed toilet in it would be allowed to camp there. If there was a portable toilet brought, a tall one that you rent from, you know, Kiwi Hire or whatever it’s called—it’s put there—somebody who had a campervan with a portable toilet inside it would be breaking the law if they were in there. So I agree with you, Minister—if they were then camping there and using this other portable toilet. I agree with you that we should focus on the problem and penalise that problem. Nobody wants the waste that we see in places.

But the other problem we have with the legislation is it doesn’t deal with this, because it doesn’t say to somebody who has a certified campervan that they must use that toilet; they can do whatever they want with their business, and therein lies the problem. The issue is people not using facilities, portable or a fixed toilet, and where they don’t use those, they are the ones causing harm to the environment and to our tourist areas, and they should be stopped. They should be found, they should be fined, they should be made to pay those fines, and so on, but that’s not what this legislation does. What this legislation does punitively is focus on New Zealanders, whether there is a large percentage or a small percentage of them, who have campervans with portable toilets who are responsible. What it does is say to them, “You can no longer do this, even though you are not causing any harm.”, and I think that’s the bit that we need to focus on.

Now, the last Minister was correct: you do have people driving around in smaller than—they’re not really campervans; they’re in cars or station wagons, sleeping in the back, and they have a bucket in it and call it a toilet. Well, of course, that’s not what we’re talking about, but, actually, if we look at the great amount of regulation that this bill is going to create, a huge amount of regulation, it’s surely not too much for us to ask for plumbers or gasfitters or somebody else to do some work and come up with a clear definition of what a portable toilet is, the standards that are required—just as the standards that will be required for a fixed toilet will also be decided—and that it must be used, and where it is used, you are able to freedom camp. It may not be a large group of New Zealanders, it may not be hundreds of thousands of New Zealanders, but it probably is 10 or 20,000 Kiwis who are responsible. They do this often: they go camping, they have a portable toilet. Sometimes they’re in a campground with facilities; other times they’re not. They are in areas they’re allowed to camp, but under this legislation, under law, they won’t be able to, even though they’re being responsible and they’re using a portable toilet properly, responsibly—well, it’ll be breaking the laws and they will be up for a fine, and I think that is the largest part of the problem with this legislation.

To many, it may not seem like a big deal—well, they can go somewhere else—but what we are doing is saying that we are going to restrict their freedoms because some other people pollute and are not responsible, and there’s not many of you so it doesn’t matter. Well, I don’t think that is the responsible thing for this House to do. Actually, it’s a very, very large Supplementary Order Paper; there are lots of regulations that will come as a result of it. To get the officials to get it right, not us in this House but other experts can come up with a clear definition of what a portable toilet is, actually to a standard that’s acceptable, that will be used as much as a fixed one, and that if they are not used, that’s the penalty, not the penalty or the fine in using a portable toilet in a vehicle that’s not certified, then we would be doing a better job. It may only be 20 or 30,000 Kiwis, but these are hard-working people that are responsible New Zealanders that don’t deserve to be lumbered in with those who are not meeting their responsibility and defecating all over the country.

Hon PEENI HENARE (Minister of Tourism): If I can go back to one of the questions asked by the ACT Party member, Aussie residents are not here on visitor visas, so they would have entitlement of exemption, as they are given a resident’s visa for the time they’re visiting here. Hopefully, that addresses the member’s question.

Coming back to the Hon Todd McClay’s contribution, the Government has been quite clear, over a number of years, that we have supported local councils and local government to be able to invest in more facilities that can cater for visitor numbers, and building infrastructure for example. I myself visited Mount Ruapehu some time ago to open one such area that had proper facilities. It also had Wi-Fi, and it also had a very clear area where people were able to use the facilities but also stay there for the night. We’re quite clear in supporting local councils to build their infrastructure through matters like the Tourism Infrastructure Fund. This creates more opportunities for people to do the right thing. It creates spaces where people can go along and can continue to have trust that the facilities they are using clearly do not break the law.

What we do know is that the inappropriate disposal of waste is an offence anyway. So what we’re trying to do is support councils not only to stamp out this bad behaviour but also to invest in those spaces, so that people can continue to enjoy the freedom of travelling around this country, can continue to go to those key tourism destinations that our many international visitors enjoy, and our domestic tourism market can as well. The bill makes it quite clear that the penalties for committing this offence have increased from $200 to $400, just to send the right message, to change the behaviour that we’re talking about—the bad behaviour that we’re referring to.

Also, Cabinet agreed to a tiered infringement fee regime. That’s important as we look towards the way that we support councils in implementing this particular piece of legislation—the way that they enforce it and the way that we can continue to make sure that we stamp out this behaviour. It’s going to take some time, and we’ve made it clear, in order to get the right messaging out—whether you’re a domestic traveller or whether you’re an international visitor, those messages are clear to our people—in order to stop the behaviour that we’re seeing and, sadly, is being cleaned up by local authorities.

Hon TODD McCLAY (National—Rotorua): Madam Chair, thank you. Minister, I see that you had a note and you mentioned that it’s already an offence to not dispose of waste correctly, but that wasn’t the point that I was making. My point is—it’s a very clear question, I guess, and this will clear it up, to see whether the legislation or the Supplementary Order Paper that’s been put in by you, Minister, or by the Government, actually has fixed the problem or not. Is it against the law for somebody with a certified campervan who has a fixed toilet in it to not use that toilet and to go out and to defecate on the grass beside them? And is it lawful for somebody with a campervan that has a fixed toilet, who uses it, to freedom camp?

Hon PEENI HENARE (Minister of Tourism): Thank you, Madam Chair. Is it the responsibility of the health system to treat somebody’s sunburn when the person owned a hat or owned sunscreen? The kind of question that the member is posing—it just seems irrational that somebody would own a vehicle with a fixed toilet and continue to do their business outside. That just doesn’t make sense to me. And what we’re trying to do here, as I’ve continued to reiterate to the committee in this session, is to make sure that we can stamp out this behaviour. We do it through utilising our councils in a regime that will make sure that these vehicles are certified, and we’ve given time for that certification process to happen and for the regulatory framework to be built here. I’ve also mentioned that we have a very clear plan to make sure that the messages are being clearly explained to visitors and to people who travel the country to make sure that they aren’t unwittingly caught by this particular legislation, to make sure that we continue to stamp out the behaviour.

TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Chair. Look, I’m happy to take a call on this. I just want to give the Minister one quick example on his previous point about the irrational comment—or his perception that the comment or view was irrational—that Mr McClay made.

I think it’s quite plausible that there could be a scenario where someone would have a campervan with a fixed toilet in it, but not want to use that fixed toilet—for example, if they were hiring it and it had an additional cleaning charge to use that facility, and so then they may indeed wish to avoid that cleaning charge by not using the particular fixed toilet in that vehicle. So I think that’s quite a realistic example that Mr McClay was referring to that could indeed see someone not using that and looking to go in the bushes, as it were.

But, look, that aside, I’m interested to ask the Minister a couple of questions around this self-containment certification authority and the process for getting that certification for a particular vehicle—in particular, the initial process, once this legislation comes into play. So I’d like the Minister to give us some insight into exactly how many certifications he believes will be needed and how long he thinks it will take for all of those certifications to be given or made and then how many self-containment certification authorities would be needed to ensure that those self-contained certifications can be issued by those authorities.

So a few questions there: how many self-certifying authorities will be needed? How many vehicles are going to need to be given these certifications? What’s the time frame for that? Is he confident that could be met—once the legislation comes into play, that there will not be a significant lag where we therefore have thousands of vehicles that have been unable to secure the certification through no fault of their own, simply through the fault of a lack of processing capacity within the system that he is setting up? And does he have an expectation around a time frame that would be appropriate, both in the initial phase, and then further down the track for the certification process to take place on any given vehicle? Thank you.

JOSEPH MOONEY (National—Southland): Thank you very much, Madam Chair. Minister, I was just interested in your response before where you said that it would be illogical for someone to have a fixed toilet and not use it. My question is: wouldn’t it also be illogical for someone to have a portable toilet and not use it, and why the difference? Because if someone has a portable toilet, it makes, I would suggest, just as much sense for them to use that as it would a fixed toilet.

Obviously there needs to be the right regulatory framework to make sure that people aren’t taking the mickey and, you know, having a bucket or something as a portable toilet—it needs make sure that it’s of a good standard. But my question is: why hasn’t this bill addressed that point?

And on that point, there’s a Supplementary Order Paper which is on the Table, and I’d ask that the Minister has a look at it—Supplementary Order Paper 356, which has addressed this issue. It’s been placed there under my name, a proposed amendment which would replace clause 44 and make it clear that a vehicle is equipped with a toilet that is either “permanently fixed to the vehicle and usable within the vehicle; or is portable and otherwise meets the requirements set out in regulations”.

So I would suggest that the Minister adopt this Supplementary Order Paper, which would clarify this point and make it clear that some vehicles’ non-fixed toilets can be certified as “self-contained”, and that would be a sensible way, I would suggest, Minister, of addressing this particular issue and making it clear that we want people to be using their toilets and their vehicles, but also making it clear that there’s no true distinction between a proper portable toilet and a fixed toilet. If people are reminded and responsible to use either, they will use those.

There is one other point I’ll just briefly touch on. I want to make sure these decisions that we’re making in this committee are based on evidence and not just based on an incidental observation here and there. The observation the Minister made of stopping and seeing some waste close to the road—well, I understood the Minister’s comment, and the question is whether that was done by someone staying overnight or whether that was someone who was stopping, trying to find somewhere where there was no public toilet available and using it and then carrying on in their vehicle.

So we need to be making sure we address legislation towards an identified problem that’s based on sufficient and adequate evidence. And I would ask the Minister: are we making decisions, in this Chamber this afternoon, on that basis, or on the basis of an incidental observation without any evidence to really supplement or underpin the decisions that are made?

Hon PEENI HENARE (Minister of Tourism): Thank you to the members for their questions, and I’m going to try and address some of them in my contribution here. Independent research commissioned by the Ministry of Business, Innovation and Employment found that around 76 percent of New Zealanders thought that freedom camping has negative impacts on the local environment. If we’re looking towards clear research and evidence to make sure that the moves we are making here with this particular bill address these matters, it was through this particular research that it made it clear to us, as well as our engagement with local councils and local authorities, that something had to be done.

Around 55 percent of New Zealand residents would like to see more restrictions placed on freedom camping, and certainly in my engagements as well, once again with local authorities and local government in some of the most beautiful places, they talk about this ongoing challenge of cleaning up these areas because of the acts of irresponsible people. And so making sure that we can continue to support them with an evidence base and a research base with this particular bill has always been at the forefront of what we’re trying to achieve here.

The member Tim van de Molen asked about the time frames and about the length of time and also the numbers involved. So the transition is a two-year transition period—and that’s always been quite clear—at which point we expect all self-contained vehicles to be certified under the new system.

I did mention earlier, in my first contribution, that the Supplementary Order Paper introduces the ability to extend that transition period by up to two years if necessary—and there could be a number of complex factors as to why it might need that extension and to do it by Order in Council. But when working with the regulator here, we’re making sure that we’ve given enough time frame to be able to cater for any of those delays if they occur.

What it also does is it sets out quite clearly the job that we all have to do to make sure that we educate and inform visitors through that period—for those who are wishing to certify their vehicle, those who are looking towards doing so, but also those of the general public who need to understand these to make sure that we can continue to report bad behaviour, to make sure that we can continue to allow people who visit this country—and also domestic tourism markets—to travel more freely around this country and do so within the rules, whereby they’re respecting the environment, the place that they visit, and also the social licence that is gained and offered by community to places that are frequently visited by large numbers of people throughout the year.

TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Chair. That helps with one part of it, but I did really want to get a gauge on how long he feels it will take and whether, therefore, it’s likely to need that two-year extension or not, but, more specifically, how many of these self-contained certification authorities he believes will be needed to meet that requirement and whether he has confidence that many of those can indeed be certified.

Because we’re talking here about setting up a new system and therefore having to find a whole group of people who can act as self-containment certification authorities. And I’m interested in whether he has confidence that there are enough people to fill those roles, how many of those roles he thinks needs to be filled, and not just for the initial period but also ongoing—obviously, initially getting through that bulk load of vehicles will be a higher demand load, but also to the point around the time frame for certification after the initial period. So renewals or for new vehicles down the track, how long will they have to be certified, and does he have confidence that the number of certification authorities will be sufficient for that purpose? Thank you.

Hon PEENI HENARE (Minister of Tourism): I thank the member for his questions and I want to continue to reiterate that the register is a crucial part of the new system, and it’s that system that enables the enforcement officers and the public to determine whether a vehicle is self-contained or not. It talks about the displaying of a warrant to make sure that it is certified. I do have confidence in working with the regulator that we can, within the two-year period, probably do a really good job at making sure we can register and certify as many of these vehicles as possible.

But, as I mentioned, we do reserve the ability to extend that for whatever reason and, you know, this country has seen those kinds of left-field situations—that were unexpected—impact on this country. We talk about severe weather events, and the last time I checked Nostradamus wasn’t in the National Party. So we can’t predict weather events. We can’t predict global pandemics. We can’t predict many of the challenges that have impacted on global supply chains. And some of those matters were already canvassed in the submissions that were made to the committee, which is why we’ve made it quite clear that we want to have the two-year transition period, and, of course, we reserve the right to be able to extend that for a further two years if need be.

But overall, in response to that member: yes, I do have confidence that we can have the workforce and that we have the capacity to be able to deliver this.

Hon TODD McCLAY (National—Rotorua): Madam Chair, thank you very much. Just on the point that the Minister was making around the certification time of October, or other, but I see the member Anna Lorck was shaking her head a moment ago. I’m not sure whether it’s because she doesn’t understand the legislation, or she’s seen a poll in her electorate and knows she’s in trouble and has only five months left here.

But—coming more closely to this point—to the Minister; one of the concerns that was raised with this new regulatory regime being set up by the plumbers and gasfitters, was that people will have to be employed and they will have to work all of the things out, and it would help with the certification. No question about working out the rules around certification or the regulations and so on, but particularly around them once that’s in place, who gets to certify?

We know that up and down the country, if you have a motorhome of over 3.5 tonnes and you need to go and have, not the warrant of fitness but the certificate of fitness, I think it’s called—just as for many people getting a warrant of fitness, there can be quite long delays, and they are waiting for many hours, or, in some cases, half a day to get through the process. Having established this new system to certify a campervan, as this legislation is suggesting, as having a fixed toilet, or, as we would prefer, we would say a non-fixed toilet, Minister—whether or not the plumbers and gaslayers are the best people, or the only people, that should be then doing the certification, or whether the New Zealand Motor Caravan Association could also do it.

They already have a regime in place under the existing legislation where they are doing certification. I think that we all accept that that legislation doesn’t meet the requirements that the House would have in making sure that freedom camping is controlled well. Our issues over the types of campervans that are used aside, and whether or not we can decide that the New Zealand Motor Caravan Association—a majority of people who have motor homes, I think, are probably their members. We would ask whether they too should play a role and whether we should recognise that they are a certifying body.

So, Minister, it’s not to say that they decide what the conditions are to be certified or what are the regulations or rules, but, actually, just as a garage gets to go out and issue a warrant of fitness where the Ministry of Transport has decided what standards a car should meet to get that warrant of fitness, in this case the plumbers and gaslayers would be the certifying authority but the New Zealand Motor Caravan Association would also be that. My colleague Joseph Mooney has a Supplementary Order Paper in this area which would merely say that they can also certify under the conditions set by the legislation and set by the plumbers and gaslayers council.

Hon PEENI HENARE (Minister of Tourism): It’s the opinion of this Government that we have catered for that within the legislation. I expect, as the member pointed out, that the New Zealand Motor Caravan Association is likely to apply to be a certificating authority on the matter simply because of the points and the facts that the member has raised here.

But I want to highlight a particular matter that is important when we look towards setting up a regulatory regime here, and that is the independence factor, which is why we are still of the firm belief that the Plumbers, Gasfitters, and Drainlayers Board is still the right regulatory authority that we’ll be working with to establish the framework.

JOSEPH MOONEY (National—Southland): Thank you, Madam Chair. Minister, thank you for engaging in these questions that have been raised. There’s one point that I’m not still not entirely clear on—the Supplementary Order Paper around the definition of “persons not freedom camping”. As it’s framed—I’ll just read it out, it says “is a person other than a person who is in New Zealand on the basis of a visitor visa”. Does that mean a person who is on a visitor visa in New Zealand and freedom camps but can’t find appropriate residential accommodation will be subject to the restrictions in this bill, and a person who is on a visa that’s not a visitor visa won’t be if they are unable to find appropriate residential accommodation? So that’s a point that, as I read it, it seems to me to say that a person will be subject to the restrictions in this bill if they are on a visitor visa in New Zealand, but if they are on, say, a work visa, for example, they won’t be if they are a person who falls in this exception that they are unable to live in appropriate residential accommodation. I’d appreciate it if you could just make that clear, Minister.

I can continue, while the Minister’s looking at that. I would ask if the Minister would take on board Supplementary Order Paper 356 in my name, which does change the definition from a vehicle that’s equipped with a toilet that is permanently fixed to the vehicle and usable within the vehicle, or is portable and otherwise meets the requirements set out in regulations. So I would ask if the Minister would make it clear if that is being rejected by the Minister or whether the Minister is minded to accept that and take that on board. I would suggest that would be a sensible amendment to make to take into account the fact that there are people who are quite responsible and do use vehicles that have portable toilets in them. So I can take a seat now if the Minister is in a position to answer that question or I can continue. Continue? Thank you.

Tim van de Molen: Tell us a joke.

JOSEPH MOONEY: Mr van de Molen says I should say a joke. The only ones I can think of, that spring to mind, are probably not appropriate right now.

But, look, the other point I would ask some questions around is just around this change, the definition of “freedom camping” being amended to provide that a person who’s living in a tent or a motor vehicle because they aren’t able to live in appropriate residential accommodations are not freedom camping. I note that there is a new clause 38A which requires the Minister, no later than two years after the commencement date, to review and report to the House of Representatives on the effect of the bill on homelessness. And I would ask why the Government, or why the Minister, has settled on a date no later than two years rather than making that, say, a little bit shorter—for example, one year—to give some relatively rapid feedback to the House, but taking into account some time to elapse for the effect of this bill to become clear. Why is it two years as opposed to one year?

Hon PEENI HENARE (Minister of Tourism): In answer to one of the member’s questions, the homelessness exemption is based on the Stats New Zealand definition of homelessness. And to be clear to the member and others who have asked this question, travellers are usually excluded from the Stats New Zealand definition of homelessness, hence why it won’t apply to those on a visitor visa. I hope that clears the matter up for the member.

With respect to the member’s Supplementary Order Paper (SOP) that he mentioned and whether or not I’d be supporting that, much to my dismay I won’t be supporting the member’s SOP but I thank the member for his engagement with this particular bill from its genesis to now. He’s been an active member in continuing to promote his view, which is why I want to thank that member.

With respect to the time frame around reporting back to this House, in particular to Cabinet, around matters with respect to homelessness, it is because it is our expectation—that’s why we set the two-year parameters for the regulatory framework to be set up to give operators time to be able to make sure that they can certify their vehicles and make sure that they can, if needed, put work into their vehicles to fix the toilet in their vehicles. And I think it’s only fair that it’s that time we also take to make sure that we monitor the matter with respect to homelessness. I think it was a good point—and it was raised by the Green Party—about making sure that those who do find themselves homeless aren’t negatively impacted by this bill. And we can come back after a good length of time to see the way that this particular regulatory framework will look towards administering the bill to make sure we’re clear on matters of homelessness. But I want to be clear to the committee that, you know, homelessness matters don’t just reside under this portfolio; we take a view across our entire work portfolio to make sure that we can continue to monitor homelessness, but, more importantly, look towards solving it for the many people who find themselves there.

JOSEPH MOONEY (National—Southland): Thank you, Madam Chair. And thank you, Minister, again, for engaging in this. Just on that point of requiring the Minister no later than 2 years after the commencement date to review and report to the House of Representatives on the effect of the bill on homelessness—and, look, I support the intention of that, and I think it’s useful to have a requirement for the relevant Minister to report on the effect of this bill.

Just in that vein, Minister, I have another Supplementary Order Paper (SOP) in my name—SOP 355—and I would ask if the Minister would consider taking this on board, which would just expand that intent, and take it from just focusing on homelessness to also focusing on a few other matters which I think would be helpful both for the Minister and for the ministry and for the House. And this Supplementary Order Paper, Minister, says, “(1) The Department and the Department of Internal Affairs must, within 1 year of the end of the transitional period,—(a) review the operation of the Amendment Act, since the date of its commencement, in so far as it relates to its effect on—(i) costs to people freedom camping; and (ii) the usage of permitted freedom camping areas; and (iii) waste, generated while freedom camping, being deposited in and on permitted freedom camping areas (other than into an appropriate waste receptacle); and (iv) the proportion of people freedom camping using self-contained motor vehicles.” And then the department to “(b) prepare a report on the review for the Minister of Tourism.” And the requirement that “(2) The review must include recommendations to the Minister of Tourism on whether any amendments to the Act are necessary or desirable.” And finally: “(3) As soon as practicable after receiving the report, the Minister of Tourism must present a copy of that report to the House of Representatives.”

I would suggest, Minister, that those are, in the scheme of things, fairly apolitical things that would be quite useful for the department, firstly; and, secondly, for the Minister of Tourism to have that information; and, thirdly, for the House to have that information. And I suggest that that would be a nice addition to the intention here on reviewing and reporting to the House of Representatives on the effect of the bill on homelessness, and to add this as a requirement would make sure that we had a good piece of law that is being reviewed.

And, if not, the points that we have raised and our concerns that we have with this bill could be addressed by requiring this information to be collated and reported back to the House. Because, as my colleague the Hon Todd McClay said, we support the broad intention of this, but we are of the view that, unfortunately, the Government has got it slightly wrong in just focusing on fixed toilets as opposed to those that are not fixed but, in our view, can be up to standard, and really focusing the issue on those who are not using toilets in these areas and resulting their waste. So I would ask that the Minister would incorporate this into the review and report back to the House of Representatives.

Hon PEENI HENARE (Minister of Tourism): Once again I apologise to the member. We won’t be supporting Supplementary Order Paper 355 that he’s referred to. And there are a number of matters here that I want to just touch on. It’s that the review that the member is mentioning, to my perspective, is rather broad and potentially rather costly. And what we don’t want to be doing is heaping more cost on to local authorities. As we look towards the matters that the member raised, we do and will continue to monitor the implementation of this particular bill after it becomes legislation. But also I want to be clear to the member that there’s nothing to stop a more targeted review in the future if issues or opportunities eventuate, but it is the opinion of myself and the Government that that doesn’t need to be mandated as the member described in this particular bill.

Dr JAMES McDOWALL (ACT): Thank you, Madam Chair. So if I can just get the Minister to confirm that, under this law, this legislation, given the Supplementary Order Paper, visitors, tourists from Australia, will be treated differently—very differently—to tourists coming from, say, the United Kingdom. Immigration rules aside, I’d just like to know the justification behind that.

Hon PEENI HENARE (Minister of Tourism): Madam Chair, thank you again. Look, I’m prepared to work with the member to clarify more of this particular matter with him. What became clear as we looked towards the impact on those who visit was the New Zealand Bill of Rights Act. What we tried to do was make sure we’ve got balance here, but if the member will indulge me, I’ll be more than happy to come back to him with a very specific way that the intention with this Supplementary Order Paper is looking towards those who visit the country from Australia and other places around the world. But I note the member’s concern and question, and I’ll come back to him in the near future.

JOSEPH MOONEY (National—Southland): Thank you, Madam Chair. I just want to ask the Minister about clause 49 in the Supplementary Order Paper, which does insert a new section enabling regulations to be made that prescribe levies to be paid by owners of motor vehicles with self-contained certificates.

It’s amended to ensure that, in the first year, the Plumbers, Gasfitters, and Drainlayers Board sets levies and it can include in those levies any initial set-up costs incurred after the bill is enacted but before the amendments to the Plumbers, Gasfitters, and Drainlayers Act 2006 come into force.

So I’m just asking: are there any limitations to that regulatory power for the Plumbers, Gasfitters, and Drainlayers Board to set levies that include any initial set-up costs? Because I would imagine that there is the prospect that those potentially could be quite high.

Has the Minister set in place any limitations to ensure that any initial set-up costs aren’t prohibitive; that the Plumbers, Gasfitters, and Drainlayers Board can set a set-up that is prohibitive for those who have to comply with this and have to set this up? Because there is potentially a concern here that that could be quite significant.

I would ask if the Minister has addressed that issue or has tuned his mind to it and what, if any, advice has been given to the Minister on this particular point. If the Minister is able to address that point, it’d be helpful. Thank you.

Hon PEENI HENARE (Minister of Tourism): I thank the member for his question. The expected cost is to be approximately $120 for the certification process. But I note the member’s concern here, and it’s clear as we implement this particular framework, that we’ll continue to work with the regulator as those costs become very clear to us. But I want to be clear to the member that as we look towards this particular fee, we don’t want to be pricing our people out of paradise either.

SHANAN HALBERT (Junior Whip—Labour): Thank you, Madam Chair. I move, That the question be now put.

CHAIRPERSON (Hon Jacqui Dean): The question is that the question be now put.

Motion agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments set out on Supplementary Order Paper 351 be agreed to.

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

Ayes 72

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Amendments agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that Joseph Mooney’s amendment set out on Supplementary Order Paper 354 be agreed to.

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

Ayes 44

New Zealand National 34; ACT New Zealand 10.

Noes 72

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.

Amendment not agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that Joseph Mooney’s amendment set out on Supplementary Order Paper 356 be agreed to.

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

Ayes 44

New Zealand National 34; ACT New Zealand 10.

Noes 72

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.

Amendment not agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that Joseph Mooney’s amendment set out on Supplementary Order Paper 355 be agreed to.

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

Ayes 44

New Zealand National 34; ACT New Zealand 10.

Noes 72

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.

Amendment not agreed to.

A party vote was called for on the question, That Parts 1 to 3, Schedules 1 to 3, and clauses 1 and 2 as amended be agreed to.

Ayes 75

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Parts 1 to 3, Schedules 1 to 3, and clauses 1 and 2 as amended agreed to.

Bill to be reported with amendment.

Bills

Accident Compensation (Access Reporting and Other Matters) Amendment Bill

In Committee

Part 1 and 2, the Schedule, and clauses 1 to 3

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to the Accident Compensation (Access Reporting and Other Matters) Amendment Bill.

SHANAN HALBERT (Junior Whip—Labour): I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Hon Jacqui Dean): Leave is sought for that purpose. Is there any objection? There is none. Members—oh, I’m just going to find it. The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part.

Hon PEENI HENARE (Minister for ACC): Can I begin by acknowledging the Education and Workforce Committee for its diligent and thorough consideration of this bill. I also want to acknowledge everyone who has submitted on the bill during the select committee stage. I understand that the committee considered submissions from a range of organisations and representatives. Their input has been proven to be invaluable in this process.

The Accident Compensation (Access Reporting and Other Matters) Amendment Bill makes three changes to the Accident Compensation Act, all broadly focused on improving equity of access to the accident compensation scheme. The bill delivers on two of our 2020 election manifesto commitments. The first, which Part 1 deals with, is to return the Accident Compensation Corporation to its original purpose of assisting all New Zealanders who have had an injury. The second commitment we are delivering on, included in Part 2, is to address the changes that National made when last in office, which unfairly disadvantaged tens of thousands of New Zealand workers.

Part 1 of the bill sets up the new duty for ACC to report on access to the scheme by Māori and identified population groups. It also makes changes to the purpose of the Act and adds a corresponding function for ACC. These changes reaffirm ACC’s focus on all people with eligible injuries, rather than only on those who have made a claim.

The new access reports will focus on how many population groups experiencing barriers are accessing ACC, including women, disabled people, Pacific people, and Māori. Māori are specifically named for inclusion in the access reports to acknowledge their status as tangata whenua and Treaty partners to the Crown.

The new reporting duty will improve transparency around access to the scheme, and the reports will not only provide data on how the scheme is being used but will go a few steps further to understand why people are or are not accessing ACC when they are entitled to. We know that some groups are accessing and benefiting less from ACC than others, but we do not have a good insight into why, or the drivers of these disparities. If we are to remove barriers to ACC, this is where we need to start. As a Minister for ACC, I want to know what is causing any disparities so that we can begin to fix them. I want to know if it’s about how and where we are offering treatment or the cost of transport or a lack of trust or something else. These reports go further than anything we currently do or have previously done to understand access to the accident compensation scheme.

Part 2 of the bill brings forward eligibility for the minimum rate of weekly compensation from the sixth to the second week of a claimant’s incapacity to work, reversing a change from 2010. This means people will get access to a top-up to their weekly compensation earlier, supporting them in their recovery, a change that ACC estimates will help approximately 10,000 people. It also inserts a new Part 4 into Schedule 1AA of the Act. These provisions outline the requirements for the first and second access reports. The first two access reports have different staggered requirements to allow ACC to phase in its capability to understand what the data is showing and what are the causes of disparities in access to the scheme, and to produce the reports over three years.

Other changes to Schedule 1 of the Act state that the change to the timing of eligibility for the minimum rate of weekly compensation applies to claimants who first become entitled to weekly compensation on or after the date that the change comes into effect, and to claimants who were already entitled to weekly compensation and continue to be entitled to it when the change comes into effect.

Lastly, I want to acknowledge the differing views from parties across the House, as presented in the select committee’s report, and the Green Party’s additional views. I look forward to a robust debate on these particular issues, and I look forward to questions.

TIM VAN DE MOLEN (National—Waikato): I’m quite happy to remind the Minister of my questions, and indeed I thought it was quite interesting through his contribution that he talks about wanting to improve access for New Zealanders, and indeed we absolutely support that. This legislation talks about improving access for Māori, but improving access for all New Zealanders is a fantastic and admirable goal that we indeed support.

Now, the Minister also misconstrued my comments in relation to being able to ask for this information of ACC currently. I didn’t suggest that the information is readily available; I suggested indeed that the Minister should be able to pick up the phone and ask the CEO of ACC to compile a report exactly in the nature of what this legislation proposes. There is nothing currently that stops him from doing that. The information may not be available right now, but he can instruct the CEO of ACC to conduct a report to find out whether or not people are fairly accessing the scheme, and all the aspects mentioned under this legislation. That can be done right now. It does not need legislation to tell an agency to do a report. Goodness me, what are we coming to when we have to legislate for that sort of basic information? If the Minister disagrees with that, I’d be interested if he could point us to where in the legislation he is prevented from asking the CEO to deliver that sort of information to him right now.

Now, one of the questions I had was about the focus here on improving delivery of service and whether or not that restricted his ability to change access for any group that may ultimately be discovered to be receiving access over and above other groups; they may be getting an unfair advantage in terms of accessing the ACC scheme, for whatever reason. But this legislation outlines that the Minister now is only able to identify how to improve delivery of service and not to change or hold or maintain a level of service for any particular population groups. I am interested in whether he has any concerns around whether or not that will be fit for purpose. And, again, this highlights the clunky nature of putting a basic request like this into legislation. We just do not have the flexibility to alter or adapt your requirements over time. Indeed, the Minister would have to come back to the House with a new piece of legislation to change that if it was found that one particular population group was getting access over and above others and therefore needed a different focus. So I’m interested in that particular piece.

And also then to the other point around the access—the causes, factors, distributions contributing to the disparities and barriers—whether indeed there are some that he has seen right now in relation to Māori or to another population group that he may have on his mind. And also then, under new Part 4, section 14, around not requiring the reporting to be done in the second year. And this just seems like an interesting carve-out—is it then indeed happening in the first year or the third year or all subsequent years; simply not the second year? And that refers to the factors contributing to those disparities and barriers as identified by the corporation. So that’s 278B(2)(d), which in that section 4 then is specifically required not to be reported on. Surely that defeats the purpose of conducting the report. And if they don’t have the capacity to conduct the report, then why are we asking for it in the first place?

So I think it’s quite clear that we are talking here about a piece of legislation that is simply not fit for purpose and takes away the ability of the Minister to be flexible, takes away the ability of ACC to adapt to changing circumstances. Indeed, if we look back in history, actually under the Clark Government, there was this sort of information being provided. They got rid of it back in 2006, I believe it was—and Mr Woodhouse might have a better handle or memory on some of that information—but at the time, the Minister of the day was able to get exactly this sort of information and make decisions off the back of it. We do not need legislation for this and I would encourage the Minister to be practical, to get rid of that, to keep the last part about accessing the time frame, bringing it down from six to two, but I certainly appreciate his comments on those questions I’ve raised. Again, thank you.

Hon PEENI HENARE (Minister for ACC): The Crown Entities Act is quite clear in the way that Crown entities engage with Ministers. Simply, a Minister picking up a phone and calling the chief executive to give an imperative towards this particular work that we’re discussing in this bill actually isn’t correct. Legislation does that, however. It gives an impetus to ACC, and to counter one of the points that the member makes, actually, it gives it more tools. It also gives the Minister more tools in order to make sure that the ACC scheme is more equitable into the future.

I also would like to point out that with respect to those who might—I can’t quite remember, recall the words of the member in his question—over-receive, or those who might receive more than what they are entitled to, there are already provisions within the Act to make sure that there is no fraudulent activity for those who do look towards, and I can’t remember the words of the member, over-receiving, or, certainly “ripping the system off”, I think is the word that better describes it. There are already provisions in the Act that make it clear that that is an offence. You cannot do that. So with respect to those who might over-receive, we make sure that in a professional manner, ACC continues to deliver a scheme that meets the needs of New Zealanders. For those who might over-receive—one might call that “ripping the system off”—there are already provisions here to make sure we can look after that.

What isn’t clear, though, is the size of the disparity for those who don’t access the scheme, and the member asked me to point towards areas where we might notice this, and I myself have already mentioned with my other hat on, as associate health Minister: one need only look towards Wai 2575, the Waitangi Tribunal claim, where a number of factors were raised in that particular tribunal hearing about the under-access, or the inability for particular groups—in particular, Māori and rural—to access the ACC scheme. What we’re saying in this particular bill is “Let’s make it an impetus for the ACC scheme to make sure that they can serve New Zealanders better.”

And with respect to the member’s question around time and the time frames that we’ve put around the reporting on this particular matter, it’s important that we undertake this work in order for us to find where those disparities are. Those disparities don’t necessarily show themselves overnight, and if they did, that tells me that that member makes the assumption that that information already exists. I’m telling the committee right now that it does not.

Hon Michael Woodhouse: Then how does he know there’s a problem?

Hon PEENI HENARE: It’s in a very transactional manner. And if Mr Woodhouse wants me to send him the link to Wai 2575, it shows clearly that Māori, in particular, don’t access the ACC scheme; they don’t access healthcare the way that other New Zealanders do. And there’s a myriad of matters, complex matters, which mean that they don’t. There’s matters of trust, there’s matters of lack of funding, there’s a whole heap of matters here, and that information isn’t found in the transactional nature of the reporting that ACC can do right now.

TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Chair. Now, again, the Minister has misconstrued my comments. I wonder if it’s becoming an intentional effort to try and cover for a terrible piece of legislation. There was no comment whatsoever from me about suggesting that people were “ripping off the system”, as the Minister put it.

Indeed, my comment was around the level of access, as is required under this new piece of legislation—what happens in a scenario where they may be considering access for one particular group they’ve identified, only to find out that that group, indeed, has access over and above what other groups may already have. This legislation specifically says they can only look to “further improve” access for those groups. So why would it be appropriate to improve access for a group that may already have access at a level above what other groups have? Surely the intent, as the Minister, indeed, mentioned in his opening contribution, is to improve access for all New Zealanders. So why would we want to distort that by having a scenario where one group who may already have improved access is only able to have that further enhanced under this legislation? It simply doesn’t make sense.

SHANAN HALBERT (Junior Whip—Labour): I move, That the question be now put.

Hon MICHAEL WOODHOUSE (National): Well, we have got a long way to go, Mr Halbert. If that’s the extent of the debate that he thinks we get in the committee of the whole House—when we combine parts and titles and commencement, with the National Party’s agreement—that we should then spend five minutes on this, I think he’s in for a bit of a surprise after dinner.

Now, I want to just touch on a couple of things that the Minister for ACC has said. Now, in his rebuke of Mr van de Molen’s comments about “picking up the phone”, he said, “Well, look, we can’t just pick up the phone as Ministers. They’re independent Crown entities, and they can’t work like that.” Well, actually, I consider the euphemism of “picking up the phone” to be met by the Minister’s annual letter of expectations. The Minister’s predecessor actually wrote in her letter of expectations for ACC in December 2021, I think it was, that she expected that ACC continue to commission work and that the scheme settings that are “underserving women, Māori, Pacific peoples, disabled peoples, and ethnic communities” be addressed. “I look forward to continuing to work with you on these and other strategic developments in the year ahead.”

Now, whatever the answer to the questions of whether the case for inequities has been made—and I want to ask the Minister questions about that—this bill, as I said in my second reading, is a well-meaning waste of time. The letter of expectations did everything that this bill did, and more. So you could say pick up the phone, write a letter—it’s very clear that the Minister has the degree of influence over ACC’s performance that he stated that he didn’t.

But I do want to come to what I think were pretty loaded statements by the Minister about under-reporting of injury by Māori and disparities and that the data does not exist. He talks about Wai 2575, and we’ll get to that after dinner. He then said it’s clear that there are holes in the data. “We found that Māori were underserved by the ACC scheme”; those were the Minister’s words in his response to Mr van de Molen.

So my question for the Minister, which he can have an hour to think about and come back, is: where is the case for change? He’s asking this committee to accept proof of a negative—proof that there is no data. So if there’s no data, what’s the case for change? Statistics New Zealand and ACC themselves have plenty of data on Māori injury, serious harm, and death rates compared with the population. It’s an unfortunate reality that the Minister needs to address that, actually, Māori are overrepresented in too many of those statistics, particularly young Māori men.

So I think—regardless of whether or not we need this bill—we need to have the case for these disparities established, because a Minister for ACC that wants to serve Māori should be looking for fewer claims by Māori because they are harmed at a lower rate than they currently are.

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

Sitting suspended from 6 p.m. to 7 p.m.

CHAIRPERSON (Greg O’Connor): The committee is resumed on the Accident Compensation (Access Reporting and Other Matters) Amendment Bill.

Hon PEENI HENARE (Minister for ACC): Thank you, Mr Chair. Just in response to a number of the matters that were raised before the dinner break, the reason for the legislation—and the Hon Michael Woodhouse pointed to the letters of expectation. Yes, that is true; we write letters of expectation. He also pointed out that those letters of expectation—the ones he referred to—were in, I think he dated them, 2021 and 2022, if I recall correctly. In order for us to have an enduring capability, or ability here to be able to meet those expectations, we believe that putting it into legislation, to hold all those in the system accountable to what we’re trying to achieve here, is the best mechanism to do it. We need certainty in order to build a proper time series in the data and to be able to have the analytical capability to make sure that we are addressing those matters of inequities and disparities that I’ve already highlighted in my contributions to this particular matter.

The data that shows those disparities, as I’ve already mentioned, does exist. It exists not necessarily all at ACC but across different parts of the system, and we’ve already had some discussion around my role as an associate health Minister. But we need to dig and dive a little bit deeper into these particular bits of data. I want to use a particular example: what we know through the ACC data is that Pacific people tend to return to work quicker. Now, the challenge we have is that we can only guess why they do that, but we can’t be exactly sure. There could be a positive or a negative reason for why they return to work quicker. What the data suggests, though, more importantly, is that it may be because 80 percent of them are on a low income, and that means they’ve got to return to work sooner in order to be able to service their bills and their families. That’s why they might be going back to work sooner, and we want to make sure that we understand those matters. At the moment, the data isn’t there to inform those particular points, which is why we need a richer set of data—greater analytics.

More importantly, though, we need it to be enduring. Ministers come and go. Letters of expectation can continue to evolve and change. This piece of work is an evolution of the letters of expectation sent by my predecessor, and it is my opinion that this particular mechanism, by putting it into legislation, gives it an enduring aspect to allow us all to continue to hold ourselves and the system to account in making sure that communities in this country aren’t underserved by the ACC scheme. That’s a key driver for why we’re doing this.

PENNY SIMMONDS (National—Invercargill): Thank you, Mr Chair. I am supporting my colleagues in this, in that it does seem a slightly bizarre thing to be putting into legislation what has been able to be accommodated in letters of expectation. I’ve heard what the Minister for ACC said, that this makes it more enduring, but it also, I would have thought, takes the responsibility away from the Minister actually delving into that information and requiring ACC to provide that as required, as specific matters of concern come to the Minister’s attention.

The other thing—I’m slightly perplexed by it—is that missing mail thing. We don’t know if our mail is missing, if we weren’t expecting the mail. So how does the Minister know that there’s missing data? How does the Minister know that there are disparities? And what information is the Minister going to expect the department to use? Because, as he said, the reports were transactional. People had to have applied to ACC to be able to then formulate reports. So how do reports get derived on what hasn’t been reported? I’d like the Minister to explain to us just how ACC is going to be able to collect information that isn’t there. It does seem a bit of an odd one, for us.

Also, I suppose the other area that I was concerned about was the other communities and just who the other communities are. Is it women? Is it disabled? Just how is the Minister going to decide what other communities to target getting the information, which hasn’t come in on these communities? It just sounds very confusing about how we do get the information when, as the Minister is saying, he believes that these communities are not applying. And so, therefore, how will that information be gathered?

So if the Minister could give us more information on how that’s all going to occur, that would be useful. Thank you very much.

Hon PEENI HENARE (Minister for ACC): I thank the member for her questions. I mentioned earlier about this legislation giving impetus for ACC to be able to make sure that they collect the right data, that they’re able to address the disparities that, as I’ve already mentioned, Wai 2575—ACC has already presented evidence at that particular tribunal claim. I also know across my other portfolios that Māori are traditionally underserved by Government systems, of which the ACC is one.

So if there doesn’t seem to be an apparent problem identified by my colleagues in the Opposition, then what are we scared of? If, indeed, the analysis and the data gathering and the impetus we’re providing through this legislation gives the opportunity to show those disparities, which I’m going to suggest are there—and I suggest that because of the data sets that are quite clear in other spaces, and the Hon Michael Woodhouse did mention that there are data sets in health, there are data sets in other places. Well, guess what we did with health in the reform! We passed the Pae Ora legislation, put specifically in there a Tiriti o Waitangi clause to make sure that we do address those disparities, that we do collect the data to ensure that Māori receive equitable health outcomes. That’s a clear drive by this Government, which is what we’re doing with this particular bill, making sure that that impetus is there in order for ACC to look into these matters. And it’s the same to be said with other population groups which the member has asked about.

What we do know, for example, and I’ve said it on a number of occasions recently as we look towards updating Schedule 2 of the Act, is that women have been long underserved. The reason we know that is because when Schedule 2 was set, it was set in a time where there were fewer women in the workforce, where it only took predominantly the occupational diseases that were found in predominantly factory work and in areas dominated by male workers. What we now know, though, is the workforce has changed, the nature of work has changed, and it will continue to evolve into the future, which is why we need to make sure that the system that we’ve set up in order to support workers around the country who are injured, who need the support from the ACC scheme, continues to serve them.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair, and I thank the Minister for providing what he could, by way of explanation, to my questions before dinner. But the answers, I fear, actually underscore the confusion that we have here.

Nobody is questioning the value of good data and good information; what the National Party is saying is that this isn’t going to change things. We heard, firstly, a very good description of Pasifika people returning to work earlier than the average, and the Minister himself saying, “Well, we don’t know if that’s a good thing or a bad thing.” Well, I would be interested to know what data he is going to collect—if indeed they are one of the groups that might be focused on—how they’re going to work that through.

Secondly, he said, “We know there are disparities in Māori health.” Well then, if we are that confident, why are we wasting the House’s time on this? Now, Wai 2575 made it very clear that there were health inequities, certainly in outcomes. But in the 286 pages of the Wai 2575 report, ACC is—and the word “accident” is mentioned just four times and it makes no reference, actually, to a judgment in that claim that those inequities are actually around injuries and accidents. So I would like the Minister to just explain further why he’s so convinced that this is necessary.

What we do know, sadly, is that Māori are disproportionately represented in a number of harm statistics: serious injury and fatal injuries in a number of areas at work, because Māori are disproportionately represented in some of our highest-risk industries. They may make up, I think—the Minister can correct me—about 15 percent of the population, but they’re 34 percent of the forestry workforce. That is, as I understand it, still our most risky industry—construction is another one.

Also, Stats NZ tells us that Māori are more likely to be in temporary and precarious work and there’s a high correlation between that and injury rates. We know they’re more likely to be injured in a car accident, particularly young Māori males at about a one-third greater rate. We know that they’re more likely—three times more likely—to be victims of assault, and certainly they’re about 20-odd percent more likely to die in the workplace.

But we know all of that. The question isn’t, “How much more data can we gather?” The question is—and I would like the Minister to answer this—how does this contribute to the work that needs to happen to make sure Māori are less represented in these injury statistics? Because that, after all, has to be the goal. We want Māori to be injured less in motor vehicle accidents at work and by assaults.

So it’s well-meaning; nobody’s arguing the case for better equity—albeit that equity could mean lower rates, not higher rates of claims with ACC. But it seems to me—and this is the answer to the questions that I would like the Minister to address in defending the need for this bill. There are, I think, three questions.

One is: are Māori at greater or lesser risk of injury caused by an accident? Secondly, if they are injured, are they more or less likely to seek medical treatment, and, if they are less likely, what is the evidence for that? Because the Minister has already sort of said, as a matter of fact, that there are disparities, but I can’t see any data that would suggest that. Now, the Minister says, “Well, we’re going to collect the data.” What is that data; what’s missing? The third is: having been injured and claim accepted and being referred to health services, is there evidence that in engaging with the health and rehabilitation system they are then somehow discriminated against or treated differently from other population groups?

Again, the research from the University of Otago—the Ngāi Tahu Māori Research Unit there—said that, actually, that wasn’t the case; that, actually, Māori are being treated in the same way and at the same rate as non-Māori. So there are serious questions about the case for this even being necessary.

Hon PEENI HENARE (Minister for ACC): Just in response to the member’s contribution, as the Minister of Forestry, I can say that, yes, it is a predominantly Māori workforce with, yes, a high rate of injury, while I can also, sadly, acknowledge a high rate of death amongst Māori in that particular industry. It is a tough industry, and even before my time as the Minister of Forestry, I was a trustee of a Māori land forestry block in the Far North, and the reporting to us on the numbers of injuries and serious injuries—which was, of course, graded on a scale—was actually quite mind-blowing.

What we know is—and the member referred to it in Wai 2575. I’m glad he did a bit of research over the dinner break, because what we know is that for those who access ACC, it’s predominantly through a medical referral. So, if we are to use the basis of the discussion that the member is referring to there, then already, clearly, the evidence made in the health sector is quite clear that those referrals that are made through the health sector generally don’t mean better outcomes for Māori. We’ve got to explore why that is, whether it’s accessibility, or whether it’s the inability in places like remote areas to even receive the kinds of rehabilitation services that they might need.

Now, all I can sense in the member’s contribution is a fear of doing what’s right, and why I say that is because what the member is offering is the status quo: letters of expectation—making sure that we can continue to gather the same data. Well, ACC have made it clear that in order for us to understand these issues moving forward, we must have a greater set of data. What this bill does is make it enduring across a period of time in order to get quality data and to allow that expert analysis of that data to make sure that the accident compensation (AC) scheme serves the people of New Zealand, and that’s one of the other matters that we’re doing in this particular amendment. It is making sure and making it clear that we want the AC scheme to serve the people of New Zealand.

TANGI UTIKERE (Chief Whip—Labour): I move, That the question be now put.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Mr Chair. Is it annoying when politicians ask themselves questions and then answer them? Yes. Is it something I usually do? No. But am I going to do it tonight? Yes.

It’s a short contribution, but I think it’s worth teasing out what it is that we’re actually doing here tonight. First, we ask ourselves “Is ACC a good system?” Yes. Is it a perfect system? No. Are decisions that inform policy important to ensure that the system is improved going forward? Again, yes. Is data important to inform those policy decisions? Yes. Are population groups part of the picture of understanding how the ACC system can be more responsive to New Zealanders’ needs? Yes, at least some of the time. But is it also possible that there are other ways that we can understand what’s needed for ACC to be a more responsive system? Yes. Is this question and answer format getting really annoying? It is, so I’ll desist at this point.

Except to say, finally, the question that we should ask ourselves is: is this actually necessary to do the things that the Minister for ACC is saying? The things that he is saying are good—because, of course, ACC should serve all New Zealanders, and, yes, including Māori populations and other population groups. But, actually, you don’t need to have in primary legislation a thing that should be the result of basic leadership, culture, and decision making in the corporation—and, dare I say it, by the ACC Minister. I mean, are we seriously to understand that there are things that it would be good for the corporation to do that are not specified exactly in legislation—that we’re going to have a new bill every time there’s one of those? It just seems extraordinary to me.

By way of example—and I know that this will mean something to the Minister because he was recently also defence Minister—soldiers have been complaining for many years about repetitive-type injuries, whether it’s knees or backs, carrying heavy loads—the Minister is aware of the issue, and I thank him for acknowledging that—or hearing from discharging firearms, ears, themselves, obviously. These are questions that I think the ACC system should really respond to.

Firefighters are another classic case. Of course it would be remiss if I didn’t acknowledge the courage and the dedication of those fine members of New Zealand society, particularly on today, following the horrific tragedy across town in Wellington.

So there are groups who wouldn’t necessarily be described as population groups but who, nevertheless, by reason of their occupational activity, are particularly vulnerable. As far as I can tell, additional research into those groups—firefighters, soldiers, or other high-risk occupations—is not included in this legislation. But I really hope that’s not the case, and the Minister can confirm that there’s nothing to stop such research taking place, by reason of the fact that it’s not in this legislation.

So my colleague and friend Penny Simmonds has expressed this more eloquently than I did the other day; I used the example of elephants hiding in cherry trees, and explained it according to that old joke that you don’t know that they’re there and therefore they’ve either got a great disguise or they’re not there in the first place. Although, when Ms Simmonds said there was a problem with the missing mail, I didn’t know that she meant m-a-i-l, and I wondered if a missing male might be what she describes as what happens when you ask someone to do a chore around the house! But anyway, that’s obviously not what she meant, so I will exercise my privilege against self-incrimination; I won’t go any further.

So, anyway, just to that basic point, and I know it’s been made before but just, really, to sort of emphasise that there are vulnerable groups who would actually benefit from research, who aren’t necessarily defined as population groups, Māori or otherwise, in this bill. I really hope it’s the case that they’re not going to be precluded from the possibility that ACC be improved for their benefit as well, simply because it’s not in this bill.

Hon PEENI HENARE (Minister for ACC): I thank the member and I do want to acknowledge the example he uses. As the former Minister of Defence, he’s right: I’ve spoken to a number of soldiers who continue to carry injuries or have been rehabilitated through injury in order to serve our country, and I want to acknowledge that. And the answer to his question, in short, is no it doesn’t exclude them. I think the opportunity here—and I made clear in the session before dinner—for Māori is because we as a Government feel there’s an obligation for us to do that because of Te Tiriti o Waitangi. With respect to the classification of “other” in this, it will be up to ACC to continue to explore that as data comes in or submissions. As the member has rightly pointed out, it might become more apparent that, actually, it does need to start looking into these factors a bit more deeper.

TANGI UTIKERE (Chief Whip—Labour): I move, That the question be now put.

CHAIRPERSON (Greg O’Connor): The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part.

A party vote was called for on the question, That Parts 1 and 2, the Schedule, and clauses 1 to 3 be agreed to.

Ayes 75

New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 44

New Zealand National 34; ACT New Zealand 10.

Parts 1 and 2, the Schedule, and clauses 1 to 3 agreed to.

Bill to be reported without amendment.

TIM VAN DE MOLEN (National—Waikato): Point of order. Mr Chair, I believe we were only putting that the question be put. Mr Utikere moved that the question be put, so you then move the motion that the question is that the question be now put, so that’s what we’re voting on, rather than the actual bill itself—

CHAIRPERSON (Greg O’Connor): No, you are correct. I was getting ahead of myself there. So I didn’t actually put the question that the question be put, so I actually do need to—I did call that the question, that Parts 1 and 2 and the Schedule, be actually—so no, sorry, I correct my self-correction. I did actually get that right. But thank you for putting me to that test there, Mr van de Molen.

Bills

Grocery Industry Competition Bill

In Committee

Part 1 Preliminary Provisions

CHAIRPERSON (Greg O’Connor): Members, we come now to the Grocery Industry Competition Bill. We come first to Part 1. The question is that Part 1 stand part.

TANGI UTIKERE (Chief Whip—Labour): I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Greg O’Connor): Leave is sought for that purpose. Is there any objection? There is objection.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Mr Chair. It’s with great pleasure that I stand here today in this committee for the Grocery Industry Competition Bill. I must say, this is an important bill for the whole of New Zealand and for this Government at this time when the cost of living is front of mind. And I do want to thank the Economic Development, Science and Innovation Committee for considering the bill, and everyone who made a submission on the bill.

This bill is really about benefiting consumers at the checkout by improving competition in the grocery industry. Everyday New Zealanders are paying more for their normal weekly shop, and are being squeezed in the wallet as the largest expenses—things like housing and transport—are also rising significantly. Consumers have moved beyond skipping luxuries at the checkout and are straining just to buy the necessaries.

This Government is committed to making a grocery sector where grocery retailers have to give a fair deal both to consumers and to suppliers. We want a grocery industry that’s innovative and provides consumers with clever ways of shopping that save time and effort. And we want a grocery industry where suppliers have more grocery retailers that are interested in stocking their products and selling them to consumers. Thanks to the changes this Government has already made, and signalled it will make, we’re already seeing confidence in other players like The Warehouse investing in the grocery range and providing different offerings, and other newer internet providers trying to do things a little bit differently. I encourage new entrants to the market and encourage innovation; just different offerings so that families have choices and can help their families eat well and properly.

This bill addresses the outstanding recommendations—they are outstanding recommendations—made by the Commerce Commission’s 2022 study. Overall, the Grocery Industry Competition Bill will regulate the grocery industry to benefit consumers by providing a platform for retailers to enter and expand in the grocery industry and to compete directly with the existing duopoly. The bill will create a grocery commissioner to monitor and regulate the industry and keep the New Zealand public informed of what is happening. The bill will impose new requirements on the duopoly to facilitate commercial agreements for wholesale supply of groceries to other grocery retailers on the same advantageous terms they give their own supermarkets. And the bill will provide a flexible tool kit as a grocery supply backstop to allow the commission or the Government to impose additional regulation if improvement is needed. The bill will provide new protections to suppliers, such as a grocery supply code, to limit the ability of the duopoly to pressure suppliers into accepting contracts that are wholly one-sided. The bill also paves the way for a dispute resolution scheme to provide timely and cost-effective resolution of any issues for suppliers and wholesale customers of Foodstuffs or Woolworths.

The select committee unanimously reported this bill back to the House; that’s very gratifying. It recommended some amendments which this House accepts. The committee made some excellent adjustments—improvements to the bill—especially in the wholesale supplier space and in the supplier space with a grocery supply code. These have balanced the views of the suppliers, Foodstuffs, Woolworths, and prospective wholesale customers.

I’ll speak later about the Supplementary Order Paper that I have introduced. The Supplementary Order Paper makes four main changes to the bill as well as some editorial changes. These four changes relate to the grocery supply code, the dispute resolution scheme, the commission’s monitoring function, and the treatment of what are called “ancillary services” in the wholesale supply regime. Generally, my changes are consistent with the select committee’s intent, and in some places I needed to give effect to that intent.

I’m pleased to put the bill over to this committee of the whole House for wider discussion. Thank you.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I just acknowledge the Minister’s comments. I just think it’s worthwhile—this is obviously a very important bill, because getting better outcomes for New Zealanders when they go to buy their food and grocery items from the supermarket is really important. That’s why there is agreement across the House to make changes to this bill, with a view to trying to improve it, although there are some elements of the bill that there’s not absolute unanimous support on. None the less, I think what’s been achieved with the bill will go some way to trying to address some of the deficiencies that have been occurring in the industry.

I think one of the things I’m just quite keen to get the Minister’s view on is particularly around the commission’s functions in this Act—well, it will become an Act once the bill’s passed, of course, but particularly with regard to clause 4(2), which is a whole stack of new arrangements or functions, objectives, that were put for the commission: “understanding the current and emerging (or likely future) trends or issues in … the grocery industry … promoting transparency … supporting participants to understand and comply with [industry] regulation … contributing to a trading environment in which businesses compete effectively and consumers and businesses participate confidently … [and] improving awareness”. So just nice to hear what the overarching view of the Minister is around those particular ones, whether he thought there were others that we should be dealing with, and where he perceives there might be deficiencies in the bill that may need to be addressed in time, or, in fact, further improvements of the Act once it comes into play.

MELISSA LEE (National): Thank you very much, Madam Chair. I actually echo my colleague Andrew Bayly’s thanks to the Minister of Commerce and Consumer Affairs for laying out his vision. My question to the Minister is, I guess, in clause 3, in the purpose statement: “The purpose of this Act is to promote competition and efficiency in the grocery industry for the long-term benefit of consumers in New Zealand.” I mean, that is a lofty goal and I think it’s something that we should all aim for. But when you consider the fact that this basically gives powers to the Commerce Commission to monitor competition and efficiency in the grocery industry, how quickly he actually believes this will have an impact for the benefit of the consumers, considering the fact that there is a cost of living crisis at the moment. Every day when our families go to the supermarket and try and fill their trolleys—well, actually, they can’t fill their trolleys because it is so expensive and grocery costs have gone extraordinarily high. Food prices, even when you stick to food that is in season—for example, the vegetables and fruit, you buy it in season—it’s supposed to be cheaper, but the cost of grocery shopping is astronomically high. I often hear from constituents how expensive it is, and how quickly does the Minister think that this bill will have an impact on the cost of doing our groceries and shopping to promote the so-called competition? How quickly will that have an impact on daily shopping?

ANDREW BAYLY (National—Port Waikato): Oh good—I’m just waiting for the Minister the Hon Dr Duncan Webb to gather his thoughts. But, related to what my colleague Melissa Lee has just been talking about, I suppose the overriding concern from market participants—and, ultimately, consumers—is what certainty or assurance the Minister can give that the Commerce Commission will have the proper skills and expertise to actually do the number of express purposes set out in clause 4, and more generally in clause 3, to ensure that best market behaviours are put in place and that adverse market behaviours do not occur and are stopped if they occur.

So my question is about the resourcing and the appointment of a commissioner. What assurance can the Minister provide as to making sure that the commission appoints the right commissioner—and, obviously, the supporting staff that will underpin that function? We know that function is estimated to cost between $10 million and $12 million a year, and so, without a proper and well-experienced commissioner, a lot of these reforms will be academic in nature—

CHAIRPERSON (Hon Jacqui Dean): Order! I’m just going to pull the member back a bit. I’ve just been having a quick look at the bill, and the appointment of a grocery commissioner, in my reading, comes under Part 5. I’m very happy for the member to reference the Grocery Commissioner, but the member has Part 5 to be more fulsome around the Grocery Commissioner.

DAMIEN SMITH (ACT): Thank you, Madam Chair. To the Minister, just around Part 1, clause 3, “Purpose”, which has the definition of promoting “competition and efficiency in the grocery industry for the long-term benefit of the consumers in New Zealand.”, how does he see the day when this market is operating well, and what are the criteria around the purpose of this bill to actually guarantee that the market is fully functional and is being competitive?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. In respect of Mr Bayly’s first comment relating to clause 4(2), the monitoring and reporting function of the commission is actually a critical part of this bill because we know that information really is power in this kind of situation. We absolutely want to make sure that that information is properly gathered and that it is gathered in a fulsome way, and then, of course, important to that is its analysis and provision to the public so that there is transparency around exactly what’s going on in the market, what profits are being made, and where they’re being made. So I think that’s a really important part of those objectives.

Equally, in supporting participants to comply with and understand industry regulation, that’s also of course an important function of the commission. This bill does contain civil penalties, but by far and away the best way to get compliance is to encourage people to understand the regime and understand its detail of how to comply, and then what you’ll get is a much better-functioning market.

Then, of course, we will get a functional market where people can compete effectively and can have confidence when they compete with each other that they’re doing it on an even playing field. The member Melissa Lee asked how quickly. Good news: now. The fact that this bill is imminent and this legislation is going through the House has clearly influenced the market. We’ve already seen the major grocery retailers open up their wholesale network to others. We’ve seen competitors enter the market in anticipation of it becoming more competitive—like Costco, Circle K, and, of course, The Warehouse is having a dabble around the edges as well.

Mr Bayly referred to the Grocery Commissioner, and when we get to the relevant part, I’ll address those questions, unless, of course, the member would like to take the whole bill as one part. In terms of Mr Damien Smith’s question, essentially I think the question from Mr Smith was how we will know when we see success. That is why we have the Commerce Commission, because the grocery sector is complex. We need a high degree of expertise to measure the market and determine whether it is acting competitively, and that doesn’t just mean price competition.

It’s great to see prices going down, and if you shop around, Melissa Lee—and when you’re filling your supermarket trolley, do shop around because that’s the best way to effect competition. But it’s also seeing good innovation, a good range of services, and a good range of products, and seeing them delivered to the consumer in a different way.

Now, when that happens, that’s when the Commerce Commission will be able to look and report, using those functions in clause 4 to come back to us and say, “We think we’ve improved competition.” But can I also add this: competition is something we will always be striving for, and it’s an ongoing struggle to make sure markets remain competitive.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Thank you for the response. I suppose the overarching consideration: can the Minister just give us assurance that the monitoring powers and the recommendation powers that are laid out in these early sections are similar to, or if not enhanced, when compared to other functions that the Commerce Commission currently undertakes, such as in respect of airports, fuel, and other such activities? So is this the functions and powers of being able to undertake inquiries—there’s a list of them here, reports, etc.—are they exactly the same as the Commerce Commission has in other jurisdictions? That would be useful.

The other thing is just moving on slightly around the issue of designated regulator grocery retailers. The issue around that, which relates back to all this, is how do we know when you’re applying these powers that we have the right jurisdiction around who’s to be covered by these aspects as they relate to the grocery trade going forward? Because one of the things about making sure, when you’re looking at these powers, about understanding the current and emerging trends, you have to have regard to where future competition’s going to come into play. So that just comes back to my reference around particularly clause 4(2)(a).

MELISSA LEE (National): Thank you. I thank the Minister of Commerce and Consumer Affairs for suggesting that things will actually start to get cheaper from now. But it is ironic that the examples that he actually gave, in terms of Costco and other competitors coming in, they actually began before this bill has come into force, so I think the competition has already begun before this bill. So I think using this bill as an example of actually creating more competition is rather an empty answer.

I wonder if the Minister could look at the role of the Commerce Commission in Part 1, clause 4(2)(d), I think, it was. It, basically, talks about the Commerce “Commission’s objective in performing its monitoring and reporting functions under this Act is to promote the purpose of this Act, including by … (d) contributing to a trading environment in which businesses compete effectively and consumers and businesses participate confidentially”.

The Minister talked about the best way for someone to actually try and get cheaper groceries is, potentially, looking around. Having said that, I think everyone does nowadays, considering how expensive it is—whether it’s Countdown, New World, Pak ’N Save, Costco, or even the local markets in our communities. But it is so very expensive. So the question that I actually ask is: how will this promote that? I’m not so sure if the Minister actually answered that. Providing wholesale supply to other competitors is one way, but I’m not quite sure that it has immediate effect.

The question that I would like to ask is in terms of the trading environment and promoting competition effectively, in terms of the Commerce Commission being triggered when there actually is a complaint about a bad activity. Before someone complains about it, how will those bad behaviours be brought in line? So it’s based on somebody complaining. So whatever we’re doing here, yes, that’s usually the case, but immediately it has no impact or effect on consumers who are literally crying out for cheaper products at our supermarkets. I’m not so sure if it is actually quite the answer.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. This is a debate on the preliminary provisions at the moment, so it’s not appropriate for me to get into the detail of the substantive matters raised.

In terms of clause 4(2), which both members identified, they’re the objectives of the commission. The further provisions are how those are achieved, and it’s appropriate to debate those when we examine them.

In terms of designation, which was Mr Bayly’s other point, that isn’t in Part 1 either.

It clearly is appropriate for the commission to have the objective, as Melissa Lee identified, to contribute to a trading environment in which businesses compete effectively, and consumers and businesses participate confidently. If the member wants to debate whether that’s a good objective or not, I’m happy to do so, but I would be surprised if she thought otherwise.

Similarly, Mr Bayly referred to, I think it was, clause 4(2)(b) “promoting transparency”, that also is an excellent objective. I’d be surprised if he were to debate that that wasn’t the case.

But the time for debating the substance of the issues is when we get to the substantive parts.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair—only a short contribution from me. I was just interested in the Minister’s statutory interpretation skills. I know that’s something he’ll be interested in engaging with me on. The definition of “groceries”, within clause 5 of Part 1, lists among other product categories “non-alcoholic drinks”. I wonder if the Minister can just confirm that alcoholic drinks are deliberately and specifically excluded, and I wonder if, given the misleading name, the item known as Pub Mix from Costco would be included or not, noticing that it seems alcohol isn’t included in that. And the other one—while I’m on my feet—I notice, also within the definition of groceries product categories, there’s “meat, seafood, or meat-substitutes”, and I just wonder if seafood substitutes would be included as well.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): I’m not familiar with the products sold by Costco, so I can’t address that, but alcohol is explicitly excluded. One of the things this Government certainly does not want—and I hope other members will agree—is to have price competition around alcohol and have a drive for people to find where they can get their cheapest drink. So that was explicitly excluded. It is, however, noted that if alcohol is being used in an anti-competitive way, perhaps to draw consumers in, it can be captured as part of the information study done by the Commerce Commission.

DAMIEN SMITH (ACT): Thank you. I’d like to invite the Minister to Costco with me and we can have a look around. Just on Part 1, clause 4(2)(d), which he mentioned, which I think is very appropriate contributing to trading environments, it seems to be that the current strategy is to just get existing box shops to add on extensions of their business models. But does the Minister believe that this function of the commission actually looks at innovation and allows new entrants to bring new business models to New Zealand, which is packaged up with overseas investment sanction and local regulatory fast-track approvals? So I guess the question is, if they are comparing to a trading environment, if we want to bring in a Lidl here and they want to have two big stores and everything’s ordered over the internet and it drops off at your house and it’s all in different boxes, does that get covered in that clause?

ANDREW BAYLY (National—Port Waikato): I just want to turn to clause 4(1)(f). I know the Commerce Commission had a view that it shouldn’t be involved in making or providing advice on policy, and that’s why the word “policies” has been struck out twice in that subclause.

None the less, I just want to get to the Minister’s understanding of what might happen. Because in practice, what’s going to happen is, hopefully, we’ll end up with a very experienced Grocery Commissioner who understands what current practices and trends are, and that that may be an evolving process over time. But as a result of that, obviously there’ll be a lot of learnt experience that the commissioner will hold as a result of that experience.

What I’m seeking from the Minister is: what might be his understanding, whilst we obviously don’t want the Commerce Commission to be determining policy—to what extent would the Minister engage with the Commerce Commission when considering new policies?

Because otherwise it might run the risk of coming up with policies that are divorced from reality—and current reality or likely reality—and I think my question is: does he see a role of the Commerce Commission providing some input on policy, albeit not being the primary driver of that development of new policy?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): I’m very happy to go shopping with Damien Smith; I think that would be a fun outing. In terms of what I think was the thrust of his question, which is: what about overseas investment coming into New Zealand—what barriers there are. My view is—and it’s certainly the intention of this legislation to make it a more attractive place. What we can say is that for the past long time, there have not been overseas entrants into the grocery sector. So this change will be a change for the better there.

In terms of any amendment to the Overseas Investment Act, that wasn’t considered necessary. There is a balance to be struck. Supermarkets are important parts of our infrastructure, as recent disasters in the East Coast have shown us, and making sure that we have a responsible owner of a supermarket chain would be an important question. So that’s why the Overseas Investment Act still remains important.

In terms of Mr Bayly’s point, which relates to the function of the commission and keeping the law in practice under review, clearly there is a relationship that any Minister in a role like I’m currently holding has in engaging with the commission. And the commission has a huge amount of expertise in terms of how law hits the ground, so to speak, and what effects it has and whether it’s effective. It also has a huge amount of expertise in the practice of competition and in implementing competition policy overseas.

Obviously those things inform the policy discussion because whether something can or can’t be effectively implemented is an important part of that discussion, and they will have expertise in that. But clearly the question of policy is a question for the Government of the day, and that’s why that really doesn’t appear in that situation.

DAMIEN SMITH (ACT): Just back to clause 4(2)(d), one of the things that we found out is that one of the levers for actually reducing prices is to put some pressure on the big brands that are in stores, which are stocked reasonably lazily by the duopoly to actually offer the customer better value. One of the things that is missing, I think, from this is the duopolies also searching for product development and new products to provide price competition. Has the Minister thought about how—I’ll use soap powder as an example—if a New Zealand manufacturer wants to get involved with that game, that there’s a free and open market to do that?

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 353 be agreed to.

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

Ayes 106

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Kerekere.

Noes 10

ACT New Zealand 10.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Grocery supply code

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to Part 2. This is the debate on clauses 8 to 16, which is the grocery supply code. The question is that Part 2 stand part.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Obviously this part contains quite important elements. I suppose the first thing, when you read through the different elements, particularly clause 10, and then you go into the grocery supply code, it always requires the Minister to have final sign-off. And I suppose the question is: why did the Government go down the route of politicising the operation of this bill, or this Act as it will be, by involving the Minister extensively in some of the decision making, particularly, for instance, when you come to things like determining whether or not a company should be designated a regulated grocery retailer? Why was it felt necessary that that type of decision should come to a Minister as opposed to leaving it to the Commerce Commission, who are not only experts in the sense of monitoring and overseeing that but obviously are used to making those types of decisions? And it’s sort of a fundamental call because there’s a lot of ministerial oversight and involvement in this bill, and I just want to understand why the Government thought that was the best approach.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. I will quickly answer that. Look, there is a role for parliamentary oversight in such matters. Designation is a significant step. It’s drawing a supermarket into the regulatory net or a grocery retailer into the regulatory net. And obviously the position of the Commerce Commission is of the utmost importance in that as the expert. And a Minister who chose not to follow that advice would have to have very good reasons for doing so and be prepared to defend that in a public forum such as this House. However, it is, effectively, an extension of the legislation, and I think ministerial responsibility for such an extension is constitutionally appropriate.

ANDREW BAYLY (National—Port Waikato): Thank you, Minister. I think that sort of partially answered the question, but I suppose my nuance is that there are times when ministerial oversight should be involved in these types of decisions, and there are also other times when it shouldn’t be. For instance, the Overseas Investment Office decision-making around investment coming into New Zealand has been a vexed issue in terms of whether, in fact, it’s best undertaken by politicians—Ministers—or whether, in fact, it should lie with officials. So I suppose my question is more that there will be times when it should come to Ministers, but, in this case, this particular bill requires a lot of ministerial oversight and approval, and that was the question that I was aiming at.

The second thing I just wanted to move on to is this definition in clause 11(3) about when a business should be designated a regulated grocery retailer. Clearly, there’s one test, which is the turnover test—an absolute test—which says that if in a financial period the turnover of that business is more than $750 million, then automatically a grocery operator would become regulated. But then there are these other ones, in clause 11(3)(b)(ii): “the designation of A as a regulated grocery retailer would be likely to promote competitive neutrality”. So I’d quite like to hear what the Minister understands “promote competitive neutrality” to be. It does use the term “a level playing field” in the bill, but what does that mean? Does that mean, actually, now that you have a level playing field by the mere threat of, for instance, Costco coming in? Would it promote competitive neutrality? It doesn’t actually achieve it yet and it may not, but what is that term and when is competitive neutrality achieved—at what point does that occur? It goes on to say “otherwise promote competition”, but I’ll let the Minister just deal with that one, and then I’ve got a couple more on that same point. But what do you mean by that, Minister?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. Obviously, it’s important, and I imagine that the brightline of $750 million in turnover would be far and away the most likely way in which a grocery retailer would be designated. However, there is a scenario in which someone is operating in a way which is undermining competition, even though they might not hit that threshold, and whilst we may not immediately be able to imagine what that is, the possibility is there.

The idea of competitive neutrality, as I understand it, is simply that if you try to avoid the kind of pure economics of perfect competition—because we know that that’s an impossibility in a real market—competitive neutrality is where we approach that in the real world and where there’s no particular intervention which will improve competition. So where we have equal players, players of roughly equal force, competing equally, we’re going to have a competitively neutral—it’s not an anti-competitive market; it’s neutrally competitive. Any step—and this is the whole thesis of this bill—is to move towards a situation where we have a market where no one has particular market power over another party.

ANDREW BAYLY (National—Port Waikato): Thank you, Minister. I’m not quite persuaded by what you’ve just said there. I look at the three subparagraphs of clause 11(3)(b)—at one end of the spectrum, you’ve got an absolute test that says, if you hit $750 million, you’re automatically in the regulator conditions. The third subparagraph of that subclause (3)(b) says that if you are acting in a way that has “the purpose, effect, or likely effect of unduly hindering or obstructing suppliers from participating”, that is obviously a way to bring them into regulation. I understand why you might want to do that, because we don’t want people who are acting adversely and affecting the market and leading to higher prices potentially. So that’s why you’d want to capture the two ends of the spectrum. One is size; one is bad behaviour.

But the middle bit—subparagraph (ii)—is about promoting competitive neutrality. I saw it the other way, actually. It’s interesting how the Minister spoke of it in a negative sense. I saw it as: if they were promoting and achieving or were likely to achieve competitive neutrality, then, under this subparagraph (ii), that was a potential for that entity to be regulated. So I just want to get clarity around that. What side of the coin is that subparagraph (ii)? And I’d just say to the Minister that it’s not necessarily that a business may disrupt the market because of size. For instance, there is a company currently operating an online platform, right? And disruptive market forces have a major impact, and can have a major impact. If that were to occur, would you see this as, under subparagraph (ii), being a reason why they might be regulated? If they were a major disruptive cause to the market, even if it brought beneficial benefits to consumers, would that subclause mean that they potentially could be regulated?

MELISSA LEE (National): Hopefully I’m not throwing the Minister out of sequence in the way that he actually has to think about answers, but I wanted to go to clause 14A, “Grocery supply code may extend to related parties of regulated grocery retailers”. My thinking is that, often, grocery retailers—whether it’s actually Countdown or New World—have suppliers who supply them goods, and they have specific, let’s say, vegetable growers who have a particular contract with one particular supplier. They may not wish for their produce to be shared with other grocery retailers—and I can’t remember if we dealt with that specifically in the select committee. If that actually occurs, are they in fact going to be pinged according to this? That is something that has been playing in my head. And I think, when growers and retailers actually have an agreement to sell their produce at, you know, whatever, are we actually imposing on the contract they already have with the grower, in order to achieve the outcome of this bill? That’s the question that I have for the Minister.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. The concept of related party is set out in the Act, and in clause 14A(4) there you’ll see it’s an associated person, which is in turn defined in subclause (2) of the interpretation clause and wouldn’t capture your supplier. Then you’ve got paragraph (b) in subclause (4) there: “a person over whose business the regulated grocery retailer has material influence.” Obviously, that’s not a brightline rule, but I’d be very surprised if you would say that the regulated grocery retailer has material influence over a supplier in the way intended there.

In terms of Mr Bayly’s sort of second crack at competitive neutrality—and he talked of a disrupter—I’d be very surprised whether a disrupter was subject to designation when its behaviour was in fact improving the competitiveness. I guess one of the level playing field points is that it could conceivably be the situation where you have a company with a turnover in groceries of less than $750 million but they are in fact making profits which are super-profits because they’re not subject to designation, and so their perhaps larger competitors might almost justifiably complain that the smaller entrant to the market has in fact got a benefit by falling just outside of the regulatory regime. That would in fact be anti-competitive, because that party, because of their non-designation, could be doing things differently from someone just a little bit bigger than them. So it gives that ability to look not only at this brightline threshold but also at the market in real time as it is being conducted and saying, “Well, if we’re going to make it competitive, we need to draw that particular player in to make sure all participants are being treated equally and fairly.”

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I’d like to move to clause 16, “Commission must review and report on grocery supply code”, I think there is broad acknowledgment—including submissions to the Economic Development, Science and Innovation Committee—of the support for the role of the Commerce Commission. This specific clause refers to the reviews that the commission must undertake in order to provide back to the Minister.

My questions for the Minister are as follows: clause 16(1)(a) refers to a period of two years. So the first review that the commissioner undertakes is after a two-year period, and I’d like the Minister to provide some context around how that specific period was determined, taking into account the fact that this is quite a significant change to the nature of change and the speed of change of this industry, and whether two years is potentially too long in the context of being able to get some initial feedback in order for potential remediation from that.

And, subsequent to that, if you look at clause 16(2A), the ongoing interval for reviews is then set at five years. I guess, again, the conversation—and while the commissioner is going to have responsibility and obligations in terms of taking actions and remedial actions—and the integration with the viewpoint of the Minister; every five years—and, again, in an industry where, well, you just think about the technology changes that occur over that period. Again, what is the rationale around that period of time? And is the Minister confident that reporting on that level of cycle is going to provide the frequency of review that will enable sensible changes to be reflected back, in regards to that grocery supply code?

ANDREW BAYLY (National—Port Waikato): I was just giving pause to see whether the Minister was going to respond, but OK.

CHAIRPERSON (Hon Jacqui Dean): You either want the call or you want the call, right?

ANDREW BAYLY: I was just offering the opportunity for the Minister to respond; no doubt, he will.

I suppose the very good comment from my colleague Mr Watts very much related to that: how does he envisage the grocery supply code to operate? Is it a living document? Or does he expect that what the Commerce Commission will present, ultimately, is a document that deals more at a principle level as opposed to trying to deal with specific market practices? If it’s the former, then how does the commission react to changing market practices, such as whether a duty is placed on supply arrangements that a supermarket might impose on a supplier, or how they price their arrangements in the supermarket, whether it’s at the top of the shelf or at the bottom of the shelf, or whether it might be a marketing fee. How does the Minister expect the Commerce Commission to reflect those ongoing changes in market behaviour as they occur? Is that outside the code or is it going to be part of the code? So I’m just going to stop there, and, hopefully, the Minister might take the opportunity to talk.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. In respect of Mr Watts’ question, obviously the market study, which precipitated this legislation, itself took some time, and then, of course, it’s taken some time to get to this point. So two years seems to be a reasonable period of time to gather data, analyse it, and provide a review of the grocery supply code. Similarly, five years is a very common legislative cycle. I do note that clause 16 does provide that the commission may review the code at any time. So I think that’s important as well, that if information comes to hand, or markets behave in a particular way which need some kind of addressing, that can be done.

In respect of Mr Bayly and the code, I think it is important to note that it will be the Government that issues the first code, so that will set the tone. However, it’s really important to recognise, I think, that it is a living document—to use your words, Mr Bayly—and that if behaviours emerge, perhaps in response to the regime that’s imposed, that need addressing, they can, essentially, be addressed by the Commerce Commission, who will have custodianship of this code, making determinations through its own process as set out in the legislation. Whether it’s a high-level code or a down-in-the-weeds regulation, my hope is that it starts out as a high-level code, and my hope is that it stays there because it gives the guidance necessary. But I would expect that if that doesn’t work, the Commerce Commission will do the work to make rules of a more detailed nature if needed.

ANDREW BAYLY (National—Port Waikato): Thank you for that. First of all, I’d just like you to, Minister, let me know specifically where it provides for the code to be updated at an earlier date other than the two and five years specified in clause 14—that would be useful. Sorry, I’m just missing that reference. So that’s the first point.

I suppose the related point is: if the Commerce Commission does decide to update it, because it is a living document, what would be the trigger for the commission to do that? Does it just come to a view and then it makes a recommendation to the Minister that it needs to be updated?

The third point is—and this was an earlier point I made about ministerial oversight—that I find it slightly strange that the Minister has to sign off on a grocery supply code. Most commerce Ministers wouldn’t know much about grocery specifics, and, particularly, a supply code. Again, my point—and this is my earlier point—is that there seems to be a lot of ministerial oversight in that. So those are three points there.

I want to go back to clause 12, “Power to make grocery supply code”. Can the Minister confirm that the Ministry of Business, Innovation and Employment (MBIE) is preparing the first draft code? When he talked about how it is a Government code—I think those were the words he just used—is it MBIE doing the first draft and then the Commerce Commission doing subsequent drafts, or is it the Commerce Commission doing the initial draft? I’ll leave it there—that’s enough—and then I’ll come back. I’ve got some more.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): I did hear Mr Bayly say, “That’s enough.”; I tend to agree with him! This is about the code. The last question first: yes; it’s by Order in Council, and that will be done by the responsible Minister, and the responsible department is the Ministry of Business, Innovation and Employment. So that’s the answer there.

In respect of amendments, the review and the code amendments are two entirely separate things. So the review has its own special and separate cycle, and that’s important—that a thorough-going review occurs at the relevant intervals. But if a market behaviour emerges which clearly needs addressing, then the commission may make a determination to amend the code. The process for amending the code is set out in clause 12A of the bill there that talks about a draft determination and consultation and the relevant steps to be taken.

ANDREW BAYLY (National—Port Waikato): Thank you. So I’m just looking at—I presume you were referencing clause 12(2)(a), is that correct, Minister? I presume that’s what you’re referring to, where the commission can change the code, as you just referenced (a)—

Hon Dr Duncan Webb: 12A.

ANDREW BAYLY: 12? Clause 12(2)(a)?

Hon Dr Duncan Webb: I was referring to clause 12A—large “A”—of the Supplementary Order Paper.

ANDREW BAYLY: Oh, it was the Supplementary Order Paper; sorry. OK, fine.

Just on clause 12(4), which states, “The grocery supply code may apply to, and impose duties on,” I presume that duty is not a financial duty but actually an obligation to change practices—just to check that.

Just coming back to clause 13—and my colleague Melissa Lee raised this point earlier—one of the big things about the supply code is making sure that there’s adequate arrangements in place to be fair and equitable between suppliers and the grocery retailers. And one of the big issues is transparency around pricing. I think it comes under the supply code, but one of the issues—and Melissa Lee spoke about greengrocers, you know, vegetable crops, etc., and traditionally there’s been a market for them in places like the fresh food markets in Auckland—for instance, at Mount Wellington—that operated for many, many years. And there’ll be other parts around the country that operated, so there was always a very transparent pricing arrangement so people knew what the demand was and what the supply was and, ultimately, what the price was on particular days.

With the move progressively towards suppliers being required to bid to supply supermarkets and the pricing and the lack of transparency around the volume being offered and the pricing that was ultimately accepted and bid by the suppliers, the only groups that have access to that information are the operators of that bidding framework, which is the regulated grocery retailers at the moment. Does the Minister expect that the supply code will deal with the issue about making sure there’s greater transparency around when suppliers have to bid to supply the regulated grocery retailers, that there is transparency around the amount of volume bid and the final price and the price offered? So that’s a very, very important point because if the grocery supply code doesn’t deal with that, then the lack of transparency is a remaining issue in the industry.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. The content of the supply code, other than its broadest of outlines, as already mentioned, isn’t really an appropriate topic here. It’s still being worked through. But if Mr Bayly has views on what the content of that code might be, I’d be very happy to hear them in another forum.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s amendments to Part 2 set out on Supplementary Order Paper 353 be agreed to.

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

Ayes 106

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Kerekere.

Noes 10

ACT New Zealand 10.

Amendments agreed to.

Part 2 as amended agreed to.

Part 3 Wholesale supply of groceries

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to Part 3, and this is the debate on clauses 17 to 112, “Wholesale supply of groceries”. The question is that Part 3 stand part.

MELISSA LEE (National): Thank you, Madam Chair. Earlier, when I was talking about the growers, whether it’s actually green- or brown-potato growers—I think this section probably is where it fits, because it is actually about the wholesale supply. I think that when my colleague Andrew Bayly talked about that particular—actually, I think we were thinking similar things in that we actually want equitable ways that our suppliers could have their view and their produce marketed. As Andrew Bayly said—I think it was Turners and Growers that you were actually thinking about a long time ago—I remember going to Turners and Growers and actually putting hands up early in the morning to bid for those vegetables. They even had flowers there as well. But in terms of wholesale supply of groceries, I think what we want to see is a framework that provides transparency, and it actually says that in clause 18(2)(b)(i). We just want to make sure that the retailers will make decisions about price range, quantity, and frequency, in terms of conditions.

The question I actually had for the Minister of Commerce and Consumer Affairs was that concerns were raised with me that sometimes growers don’t necessarily want their produce to be sold at a particular retailer for whatever the reason. If they actually supply to an entity—some of these grocery retailers are also wholesalers as well, and when they actually supply, they currently only wholesale to their own market. But if they’re actually opened up so that they have to supply wholesale to other retailers, then they would have a problem with that. I think the question that I actually had earlier for the Minister fits into this section and I wonder if he could potentially address the concern of some of these growers who actually are brought into this scheme. But if they don’t actually open up—if their goods are not actually opened up to other people who are actually purchasing through the wholesale entity that they had a deal with, initially, to only supply to a particular market—they could actually be in trouble.

DAMIEN SMITH (ACT): Minister, do you believe that forcing supermarkets to act as wholesale suppliers to their competitors—would it discourage international food retailers from entering New Zealand, and, if not, why not? Is the Minister concerned that requiring supermarkets to act as wholesale suppliers to their competitors would encourage existing New Zealand retailers to raise their prices to cover losses they may incur as a result? Finally, in any socialist or capitalist country in the world, has the Minister or his advisers identified anything that shows that compulsory Government pricing is an effective tool of increasing competition?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): To the Hon Melissa Lee, it is an interesting point as to whether a supplier can require that their products, whatever they be, should be permitted to only have been sold through particular outlets. If it’s, you know, Nike or Lululemon, there’s probably not too much concern, but when you have a duopoly for food, such—I think they used to be called soulless agreements—sole supply agreements are problematic because they tie up the market. So, in fact, the fact that a supplier, if they want to sell into Foodstuffs, might also find themselves appearing in The Warehouse might not be a perfect outcome for that supplier, but I think we need to hold front and centre that this is about having fair agreements both at the supplier end but, more importantly, at the consumer end. If that means that that’s the outcome so that we get cheaper prices at the checkout, then that’s what will happen.

Mr Damien Smith: will it discourage international investment? Well, I’ll tell you what discourages international investment: the vertically integrated duopoly we’ve got now. It’s an absolutely impregnable market, and up until this Government commissioned this Commerce Commission market study, there was no movement whatsoever, and now we are seeing movement. What this does is it facilitates entry, so anyone can come to New Zealand or start up in New Zealand and, without having to have the barrier of standing up an entire supply chain, can be competitive. That’s because of the strength of their market position through the vertical integration of logistics, supply chain, and retailing. In terms of compulsion, on prices, there’s no compulsion in this legislation.

DAMIEN SMITH (ACT): Madam Chair, thank you. I know the Minister only shops at Moore Wilson’s, and I do look forward to taking him to Costco. Actually, I’ve courted Moore Wilson’s as well, just assessing the competition myself.

But he didn’t answer my question about whether the advisers and himself can show anywhere in the world where compulsory Government pricing is an effective tool in increasing competition—the question of the night.

MELISSA LEE (National): Thank you, Madam Chair. It’s a very quick one in relation to the answer that the Minister gave. I’m wondering if that changes if the supplier had a specific reason, like for religious purposes, that perhaps it was a halal issue or a cultural issue that they oppose a particular wholesaler to supply to other people for those particular reasons.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I appreciate there’s a little bit of competition on this side of the House this evening, isn’t there? What a good sign. I do want to just compliment my colleague Melissa Lee for her last contribution. But, Minister, I’m going to move to a different clause, if I may.

You’ve just mentioned a number of aspects around your keenness to see more competition in the grocery market and more international players coming in from overseas to compete in this market. I’m interested in your observations that one of the players within the duopoly—Foodstuffs—is 100 percent New Zealand - owned, owned by Kiwis, employs Kiwis, and, potentially, your policy of promoting overseas players that are going to come in from Europe and send their profits back overseas and not stay in New Zealand, for some, may be a slight issue.

I’m interested in your balancing act around the fact of whether you think, actually, nope, that’s all fair and dandy; as long as people get the lowest price at the checkout, then you’re not really that bothered around what happens and what are those organisations that are participating in the market. So that’s the first question.

The second question is in regards to clause 18(2)(a), which is in regards to “the Commission may hold an inquiry … into whether the wholesale supply of groceries should be subject to additional regulation”. Gilmours, I understand, is the wholesale entity under the Foodstuffs group. I guess what is being proposed here, and I’m just wanting to get the Minister to articulate the practicality of what’s being proposed, is that, in effect, Gilmours may be subject to a review and may be subject to additional regulation if they potentially, for some reason, don’t supply one of these international grocery providers that comes into the market.

One of the challenges, obviously, in the context of competition and low prices is that scale is a considerable factor, and, particularly in the New Zealand market, it is a small market. The reality is that subscale entities are going to potentially be more expensive. So the potential reality of trying to slice that up even more may actually lead to higher prices at the checkout, which doesn’t necessarily correlate with the Minister’s intent around what he is hopeful this will achieve.

So I think there’s two key questions there. [Interruption] Sorry, Simon O’Connor—

Simon O’Connor: I’m just saying it’s like the tenancy changes.

SIMON WATTS: Tenancy changes? No, good point. I didn’t take it from that perspective, but thanks for raising—maybe another bill will cover that point. Those two questions, Minister, if I may.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. Firstly, just a clarification in respect of Ms Lee’s earlier question around the suppliers having to sell their products. It’s just important to note, of course, that there is no compulsion for a supplier to sell into any particular grocery supplier. Obviously we want suppliers to do their part to improve competition, including taking up the opportunities to sell their products into new grocery retailers, either through an established wholesaler regime or directly.

This feeds into Mr Watts’ question, because if suppliers don’t and that was having an anti-competitive effect—and that is to say, it is lessening competition—then there is a backstop framework. This is the point that Mr Watts was referring, clause 18(2), that it’s possible to have backstop regulation which could conceivably pull suppliers in.

Now, that’s not going to be some small supplier who’s got a few lettuces or cabbages or some niche goods, but if some large manufacturer starts acting in a way, essentially throttling the supply chain, that would be problematic. So it’s not prohibiting exclusive supply agreements under the regime to facilitate wholesale agreements suppliers may choose to opt-in there.

In terms of overseas investments, profits going overseas, it’s interesting to hear the National Party being—

Simon Watts: Oh! Looking after your rich mates!

Hon Dr DUNCAN WEBB: —protectionist. I just have a little chuckle to myself in respect of that. The Labour Party and this Government are very happy to be an international player, to be promoting free trade, and to have appropriate and well-managed overseas investment. And if that’s an overseas player coming into New Zealand, whether in partnership with New Zealanders or otherwise to improve competition, to improve our market, and to lower prices, then that is a good thing. And, Mr Smith, there is no compulsory Government pricing.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Well, this part is probably the most contentious part of the bill, because what this part does is it legitimises and, in fact, encourages the regulated grocery retailers to move into wholesaling. And if this works well and it allows third parties to come into the market, that would be a great outcome. But the reason why this has probably got the most concern, and certainly some of National’s concerns about this part, is if it’s wrong and we don’t end up getting a better outcome, then what we’ve done is enabled the supermarkets, the large supermarkets, to increase their bandwidth from retailing right back into the wholesale chain. So there’s an underlying assumption the Government has adopted in this bill that by regulating this, you will get a better outcome, and the jury’s obviously out until we see that occur. That’s the first point. I’d just be interested to get the Minister’s reflections on why he believes this will be effective. It’s the difference from what is sought to be obtained, which is making products more available to a wider great group of competitors, but what assurance can the Minister give us that this will actually occur and we’re not here in five years’ time looking at this and saying, “Well, that didn’t work.”?

The second thing: the Minister made a comment about Costco and other competitors coming into New Zealand. One of the things I think I understand is that Costco actually hasn’t had to rely on these wholesale provisions to get established. And clearly they’ve got an operation in West Auckland and, hopefully, they’re going to roll out more operations across New Zealand. But I think that Costco, if my understanding is correct, has shown that, actually, a large competitor—Costco has always been mentioned; ALDI is another one—can actually enter the current market, contrary to the Minister’s assertion that it’s really difficult, by actually just entering into direct relationships with suppliers because they’re of a scale that suppliers want to offer them goods and services. So I just want to remind the Minister that that is the situation and so his assertion before, that this would encourage that—what I’d suggest to him is it’s already occurred without the effects of this bill coming into play.

Just a related question is what is the Minister’s view around the logistics and supply arrangements that come with this natural extension back into wholesaling? Does the Minister believe that the commerce role will extend to making sure that their logistical and wholesaling warehousing arrangements are also subject to oversight by the Commerce Commission, or is that not part of the remit of the Commerce Commission because you cannot talk about wholesale supply without actually also talking about the logistics and the warehousing of those products, because obviously they’re bought bulk and then distributed, and we’re trying to set up an arrangement around that. So I’ve got some more questions, but I just want to leave those three points there.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. In respect to the suggestion of a wholesale duopoly, this bill does anticipate that possibility and lays it off. In particular, this bill will encourage commercial wholesale by Foodstuffs and Woolworths, but it also includes several safeguards to stop a wholesale duopoly which include protections for the ability of suppliers and wholesale customers forming trading relationships and also, of course, probably most importantly, monitoring by the Grocery Commissioner to see if that looks like it’s emerging. And of course the backstop: the fact that the commission can impose regulations, appropriate regulations to address that, should it be seen as emerging.

I’m not quite sure, really, what the point is around Costco and the fact that it’s entered, and I think the suggestion was that this wasn’t related to the grocery reforms, the market study, the removal of land covenants, and the fact that this Government has at last created an environment where competition is on the horizon and people like Costco are happy to come in.

In terms of those other logistics and supply chain questions, one of the things in the Supplementary Order Paper that is scattered throughout it is the inclusion of ancillary services, which would capture things like cold storage or trucking services that an operator might use to gain advantage when they can’t price the goods themselves in any particular way. So they are drawn in for pretty much exactly that reason.

SIMON WATTS (National—North Shore): It’s always a pleasure when the Minister of Commerce and Consumer Affairs articulates that the Government are proponents of a free market and more competition and all of those aspects—if only that was the case.

But let’s take a look at clause 18(2)(b)(i). This is in regards to the overview of regulation of wholesale supply of groceries. It articulates the requirement of one or more of these regulated entities to have what is referred to as a framework, which provides transparency about how these retailers will make decisions about prices, range, quantity, frequency, terms, and conditions—all regulated aspects. In regards to that—gosh, that sounds like a blast from the past, if you go into Eastern Europe, in terms of the Government dictating the frequency of how many cauliflowers you can sell in Ōrewa. The Hon Mark Mitchell—good to have you here.

But the question, really, for the Minister, in regards to that framework, is that in reality, how does the Minister see that is going to work in practice? Is it genuinely going to be able to get to that degree of minutiae around the range of—well, let’s talk about some products you can buy at the local supermarket. Maybe eggs—free-range eggs, of course; we’re not into caged eggs. Free range. But there’s a huge variation in terms of the range of the size of the eggs, and all other factors around it. But is it going to get into that degree of detail? And I know that because I do the weekly shop on a Sunday, just for the record. Damien Smith’s looking at me, going, “Are you sure?” But no, I do do the weekly shop. And is—

Andrew Bayly: Oh, does he?

SIMON WATTS: What was that, Mr Bayly?

Andrew Bayly: I just wondered whether you did do the weekly shop.

SIMON WATTS: Can I just clarify that that’s not a question for the Minister, but he can answer it if he wants. In regards to that framework, how is it going to work in practice?

The other point around this is in regards to the compliance costs on these wholesale entities in regards to meeting these obligations. Who will bear the cost in regards to the obligations around meeting those wholesale frameworks and the frameworks that I’ve referred to? What is the estimated cost that the industry as a whole will bear as a result of this increased regulation? And has there been any consideration or assessment in regards to the additional cost burden that may be placed upon the industry and what that will result in, in terms of price increases for that carton of a dozen eggs that you pay at the counter when you come up? [Interruption] Sorry, what was that?

Sam Uffindell: If you can find them.

SIMON WATTS: If you can find them—and that may be an issue in some parts of the country, I acknowledge that. Thank you to the member for Tauranga there, articulating some good challenges of what is faced by many communities.

But interested in context around the cost that is imposed and whether any assessment or analysis will be done in terms of flow-through to the consumer.

ANDREW BAYLY (National—Port Waikato): Thanks, Madam Chair. Those were very good comments from my colleague Simon Watts there; I’m looking forward to the Minister of Commerce and Consumer Affairs’ answers.

The big question, apart from the issue of whether or not these regulations are going to work for wholesaling, is the vexed question of whether, in fact, the wholesaling arrangement should apply to the grocery retailers’ own brands. The bill states that it doesn’t. There’s an exclusion, as I understand it. Of course, the reality in the market is that when you go to a supermarket, there will be a lot of products in the name of the supplier and there will be significant numbers of products under the category of home brand. If you look at trends going forward in places like Europe, home brands now account for two-thirds of many of the product offerings, as I understand it. So they’ve increasingly over time become very significant. The interesting thing is that many of those home brands are exactly the same product that had been produced by the supplier but are just produced in a different carton and delivered to the supermarket.

So the issue is: why did the Minister believe that own-brand pricing arrangements for wholesale arrangements should be excluded? Again, there’s many people concerned that the supermarkets can leverage their scale to drive down the cost of home-brand products, but new competition, such as Costco or ALDI or whoever we envisage might be going to come in, can’t access those; they can only access the wholesale price that the supplier receives, not what it receives from the own brand product. So I’d be interested to understand from the Minister why the home-brand pricing arrangements, that are often cheaper, are not included in the bill.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. Thank you, Mr Bayly. I understand that, in fact, the Economic Development, Science and Innovation Committee did address that problem, and recognised it in that there’s no material differentiation between own brand or home brand—whatever you want to call it—and other products in the bill.

In respect of Mr Watts, I want to make it clear that the regulations he’s referring to are backstop regulations. They are regulations which will only be put in place where there is, essentially, market misbehaviour. You can have a read. You referred me to clause 18; if you’d read the whole section, you’d see that. So when you talk about, “Will it go down and get down into the minutia?”, it’s highly unlikely that that will be necessary, because the fact that that backstop is there will, in fact, create market discipline. But if there is market behaviour, I would expect the Commerce Commission to use it as a confident and responsible enforcer.

In respect of the cost, do you know what the cost is? The cost is between $350 million and $500 million a year, and the people who are bearing it at the moment are the consumer. That’s the real cost of not doing this before. So, yes, this does impose some costs on the retail duopoly, and that cost can be drawn from the super-profits that they’ve been making to date because they’ve been taking out of the pockets of ordinary New Zealanders.

ANDREW BAYLY (National—Port Waikato): Yeah, thank you, Madam Chair. I think I’ll leave my good colleague to respond to the other bit, but the Minister has not addressed the issue around own-brand pricing, and the assertion that own-brand pricing has little difference in the price paid to the supplier. I just want to clarify that that’s what the Minister believes, because if that is the case, I think the Minister perhaps needs to get out and talk to a few more people because that is not the situation. So there’s been a deliberate reason why own brands were excluded, and I’m very keen to understand from the Minister why he, as the Minister, thought that there should be a differentiation?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): It’d be helpful if Mr Bayly could show me where in the Supplementary Order Paper version of the bill own brands are referred to as excluded, because the Economic Development, Science and Innovation Committee addressed this matter.

SIMON WATTS (National—North Shore): I wanted to come back to the responses from the Minister in regards to my questions in clause 18(2)(b)(i). The response given referred to the concept of the reasons for these reforms being because of the super-profits that these grocery entities are making, and referred to numbers, I believe, around $1.5 million or so. My question is quite simple: does the Minister believe that the policy decisions by this Government in order to restrict people to only shop at the supermarkets during the lockdowns in Auckland and not allow consumers to shop at butchers, greengrocers, and small retail outlets led to an inflation of the revenue and the profitability of the entities of which the Minister has just articulated in his response to my question: the reason for this reform is because of those super-profits.

My challenge to the Minister is: actually, the reason why these entities in the period which is under review have made significant profits is because of Government policies that have led to a cost of living crisis in this country, and the Government policies that led to a restriction of consumers only being able to shop at these supermarket entities. So I don’t think it’s unreasonable to see that there is a little bit of a problem here in regards to the basis for the reforms actually being the result of this Government’s policies. And I’m interested in whether the Minister accepts that, or, if not, what factor, if any, did those policy responses make in regards to the profitability of these entities?

MELISSA LEE (National): Thank you, Madam Chair. I’d like the Minister of Commerce and Consumer Affairs to look at Part 3, clause 38, “Regulated grocery retailer must ensure transparent pricing under wholesale agreement”. The issue that I’d like to bring to the Minister is whether he actually believes that the practice that I’m going to sort of iterate for him is, in fact, transparent or fair, and should that continue, and how would that be made fairer or more transparent?

One of the things that actually happens with the big multimillion-dollar - making supermarkets who also own the supply wholesale business is that they spread their costs by—for example, they have Countdown or New World all over the country, and they may, from their own warehouse, supply to those supermarkets up and down the country, which are trucked to those places. But instead of charging different pricing for each truck that gets delivered to, let’s say, Invercargill or to Hamilton or Waipukurau, they spread the cost evenly so that the cost is sunk and the business shares the costing, so that it’s sort of not unfair for those more remote places to pay a higher transport cost. For example, when cyclones happen and bad weather hits, they often helicopter groceries to those remote places, and that cost is shared right across the business.

So in order to actually insist on their wholesale methods being more transparent in how they are calculated, is it really fair to say, that well, it’s spread right across their business. Now that new entrants come in—let’s say Costco wants to be part of the business that buys wholesale food—should Costco benefit in that sharing of that spread for transport costs, for example? Do you think there is a better way to make that cost more transparent and fair?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): In respect of Mr Watts’ contribution, the commentary around lockdown policies isn’t relevant to this debate, and didn’t feature in the Commerce Commission market study.

In respect of the honourable Melissa Lee’s contribution, it’s not for me to say what transparency is; that’s the role of the Commerce Commission when those decisions are made. I won’t venture into a specialist area tonight.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I’d like to move to clause 48 in Part 3, which is in regard to the commission’s inquiries, a new area that we haven’t traversed so far this evening. But I must acknowledge the Minister for his responses to the questions that we are asking and for doing so in a diligent manner, even though some of the responses don’t necessarily meet the threshold. But anyway, we are engaging in some form of to and fro, which is appreciated.

My question in regards to clause 48(1), in particular, is around how the commission’s inquiry is initiated, and the consideration and criteria around that. I would appreciate it if the Minister could provide some context in terms of how he envisages what the threshold is around the triggering of that inquiry and what are some of the considerations that would be considered. It says there “if required to do so by the Minister”—so giving us some context around at what point would the Minister consider it, taking into account the significance of such an exercise and the impact of that, both in terms of the entities under review but also the other parties.

The second aspect in regard to that inquiry is to look at clause 48(2) around the duration. So I’m interested to hear from the Minister in terms of providing context around how long the Minister would envisage such an inquiry taking. Are we talking about it being a year long or two years or three years, or more sort of short and sharp? Just a bit of context around that, taking into account the burden of such processes, and, actually, as a result of those inquiries in regards to potential recommendations, what the Minister’s expectations would be around how the translation of the recommendations—including those reports—will actually translate into action that will actually derive changes that the consumer may or may not see as a result of that piece of work. Thank you.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Just two things—the first one is about the regulatory backstop that the Minister referred to earlier. Can the Minister lay out what his expectations are of the possibilities of the regulatory backstop? There’s an assumption that it will require more legislation, more regulation. And, of course, having been through this bill, there is a significant amount of legislation already provided for. What further regulation would he envisage to take place if there was a regulatory backstop imposed? And does that go to the extent of requiring operations to be divested—so that’s one option; separation of operational arrangements between wholesale and retailing operations, both at a profit or company structure, or whatever that might be; or is it just, in his mind, tightening up regulations even further, and, if so, what potential areas? I’m just very keen that the Minister lay out for everyone what a backstop means.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Those two themes are, in fact, quite closely related, because they’re both asking about the exercise of ministerial discretion. In respect of the inquiry question and time, I think the really important point is that that depends entirely on what the inquiry is into. It could be a short, discreet matter—that could be a matter of weeks—or it could be a very complex and deep matter, which may be many months or possibly more. So it’s entirely impossible to say what that would be.

In respect of what would be the relevant considerations or when would further backstop regulation be triggered, or when would the inquiry be launched, I’m very aware that the words spoken in this Chamber sometimes are used as guidance in making those decisions, and one thing I certainly would not want to do is fetter that discretion. We know that any decision along those lines is reviewable. The basis upon which those decisions are made must be rational, using relevant considerations, and bear a rational connection to the outcome sought. But, other than that, it’s not for me to place fetters on a future Minister, whether from this side of the House or the other side of the House.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair, and I thank the Minister of Commerce and Consumer Affairs for his responses in regards to questions around clause 48.

I want to move now to clause 51; this takes us on to the actual preparation of the report. And a little bit more context would have been appreciated around the answer that the Minister proposed, which is “Well, it sort of depends, really, around what we’re going to do.” And I acknowledge there is a bit of variation, but that is pretty wide-ranging. But clause 51(2) provides a number of areas in which the commission may include other recommendations that it thinks fit, including recommendations, and it outlines, from (a) to (e), a number of those. I particularly want to look at clause 51(2)(b)—this is what the commission can recommend—“changes to the policies or practices of central or local government:”. You know, that’s sort of buried on page 40 of the legislation, but I think it’s—the context around the commission actually being able to have carte blanche ability to make recommendations around changes of policies and practices of central or local government pretty much means that it can make recommendations about anything in regards to Government.

So I’m interested around why that is such a broad-ranging aspect around recommendations, and is the intent of that, particularly around local government, that the commission is actually able to, you know, get into details such as the Resource Management Act, consenting, or zoning, or whether a food safety certificate is applied within a certain duration by a council—what is actually the expectation of what you would expect to see? What’s an example of one of the changes in policies around local government and the other aspect, around central government? Well, that includes all of central government, so, pretty much, you know, I can imagine—well, I don’t know if the commissioner is paid by the hour, but, I tell you what, if you were paid by the hour, jeez, you could come up with a lot of recommendations, couldn’t you, if that was the scope of your ability? I guess one has to be considerate around whether that’s actually going to add value or not. So some context around that subpoint would be interesting to hear.

I also—51(2)(e): “persons within the grocery industry changing their behaviour.” An interesting clause in itself in that now the commissioner has the remit to make recommendations around the behaviours of individuals, of persons, working within the sector and where they need to change their behaviour. And it sort of reminds me of the good old days of the school teachers sort of, you know, saying—I’m sure it wasn’t the case, the Hon Mark Mitchell, because you were always well behaved at school; we know that hypothetically—hypothetically—you were, maybe, on one day misbehaving, and a teacher had a little chat and said—well, saying “the Hon Mark Mitchell” for the purpose of this conversation—“You need to change your behaviour.” But, you know, what, realistically, are we talking about here? Because there’s a heck of a lot of people that work within the grocery sector, and this is right down to “persons within the grocery industry”—actually, it’s bigger than just that. You know, realistically, what are we talking about here in practice? Is the expectation that, actually, everybody is in scope, and what would be an example of the recommendation? Because it says that the commissioner, if they think fit—so, basically, if they feel like it—they can make a recommendation. Realistically, what’s going to happen? I appreciate context on clause 51 please.

ANDREW BAYLY (National—Port Waikato): Yeah, thank you. I just refer back to the Minister of Commerce and Consumer Affairs’ earlier response where he said, basically, he was very reluctant that any utterances in this Chamber might be used as a guiding principle if there were a court case or whatever—I think that was the implication—and therefore that’s why he wasn’t prepared to say what might be the process for implementing or initiating the regulatory backstop. But I did ask about what would be the range of measures that the Government and he, as the Minister, might contemplate in a regulatory backstop situation, because, I think, it’s very important. I would hasten to say that the former Minister of Commerce and Consumer Affairs has made comments around the possibility or not of requiring sale divestment of operations. But I gave three examples: operational separation or management separation, through to sales, through to just more regulation. So I think it would be useful for the Minister to be clearer about what might be ruled to be acceptable and, perhaps, what would be ruled not to be acceptable as an option that could be pursued under the regulatory backstop.

Related to that, under clause 79, I note that the bill provides that the Minister—the way that I read it—may propose, contrary to the recommendation of the commission, to make a recommendation of Order in Council—obviously, subject to the commission giving written advice. But this means we’ve got a new Minister who suddenly determines, yes, they do want to require the supermarkets to sell off a whole lot of their chains—would that be possible under clause 79? Is that what clause 79 provides for? So, again, I think the question that I asked earlier, in the context of what clause 79 lays out—what is the Minister’s expectation and even sort of the boundaries of which he might contemplate if he did go down the situation of imposing a regulatory backstop?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. In respect of Mr Watts’ contribution, once again, I don’t think it’s really for me to speculate on a hypothetical of what might happen in the future, in respect of an inquiry and what responses a commission, which is an independent entity—what suggestions to changes and policies local government or central government they might make. So that’s entirely speculative, and I won’t engage in that.

In respect of Mr Bayly, I think Mr Bayly’s real question, down to the nuts and bolts of it, is: would this bill enable some enforced structural change, such as divestment? This bill is about regulating the industry, not about breaking it up. So I don’t think that this bill equips the commission or the Minister through the second power, which Mr Bayly referred to, to require the divestment of any particular assets or any other fundamental structural change to the market itself.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. Look, I must say, I thought my questions in regards to clause 51(2)(b) and (e) were pretty reasonable in terms of just asking for one example that the Minister would foresee around those examples, taking into account the scope of those points are so wide ranging. But a sort of flippant far away comment that, you know, “I’m not going to get into the detail because it’s up to the commissioner” is, I don’t think, a satisfactory answer. But I’ll maybe give the Minister a little bit more time to think around a little bit more of a satisfactory answer, because I think that’s a reasonable question to ask.

I’ll move on to clause 52, which is below that and which is in regards to the consultation of the draft report, and I do ask the Minister to provide a response which is not just, you know, a throwaway comment. But the point of this clause 52(1) is that before the report or the inquiry report is finalised, not only should a draft report be published but, more importantly—and that point around my question—is that there is reasonable time allowed for comments on the draft.

And my question for the Minister in regards to 52(1)(b) is: does the Minister foresee that that process in the public forum would be that there would be a mechanism in terms of consultation that would be similar to, say, consultation that local government does around specific projects—i.e., there is a mechanism in which the public can provide submissions and there’s a mechanism for those submissions to be considered and heard and, potentially, feedback given back? What does the consultation of the draft report consider? Because I acknowledge that, as the Minister noted before, the scale of the inquiries may be big or small. I guess I’m particularly interested in when the inquiry is dealing with a large-scale issue which is meeting the threshold where it would be reasonable to expect that there is a public interest in regards to that. So can you give us some context in regards to how that consultation process would look. What would the Minister consider is a reasonable time? Are we thinking a reasonable time as in the context of what we would use in this House for a select committee process? And what are the mechanisms in which the public can engage in such a process to reduce the barriers of people being able to participate in such a feedback process, particularly where the scale of the inquiry is a degree of scale that has public interest.

I then want to move on to clause 54, if I can, and, just in the interest of time, this is where the Minister then gets back that report after that consultation and the report is finalised. This is clause 54, “The Minister must, within 1 month after receiving the final report, present the report back to the House of Representatives.” It’s interesting that that is such a prescriptive number—and Andrew Bayly is looking at me going, “You’re right, I didn’t pick up on that”, and I know he did because he was very diligently looking at this bill through the select committee process which we both were part of. And, you know, well, some may think a month is a long time. It’s a long time in politics, isn’t it, when you think about the last month in politics. Crikey, won’t get into that because it’s not part of the bill. But, geez, what a last month it has been for some parties in this House. The one month in terms of the scale, you know, how do we get to that; is it appropriate? We’re talking a large-scale review. Is that genuinely going to be enough time for the Minister to be able to take the recommendations, which, as I outlined in clause 51(2)(b) and (e), could be significant and wide ranging and of scale and be able to then provide that feedback back around the final report in order to then table it in the House. Some context around whether the Minister is comfortable that that is appropriate around what is required would be very helpful in that regard.

Dr TRACEY McLELLAN (Junior Whip—Labour): I move, That the question be now put.

DAMIEN SMITH (ACT): Thank you, Madam Chair. Just on the principle of clause 19, ACT normally is against any level of excessive bureaucracy, but I am beginning to think that you may have to become the “Minister of Groceries” full time, Mr Webb, to actually just see how the relationship between, under “wholesale offerings to wholesale customers”, the Minister and the commission will actually work. If you look at the clauses on pricing; range, quantity, and frequency; quality; and commercial relationships, there’s a lot of stuff there. In principle, how dynamic would that be, and how would the players in the market interact with the commissioner and yourself on that aspect?

ANDREW BAYLY (National—Port Waikato): This is an exciting and probably the most important part of the bill, so it’s well worth spending a bit of time on it. I want to return to clause 82 “When suppliers may opt out”. Obviously this lays out, essentially, four options for suppliers. And I just wanted to understand what the Minister’s view was around this, because I think there’s some anecdotal evidence already starting to occur or become available that larger suppliers are choosing to opt out of the wholesale arrangements. Of course, this bill provides for it. Many of those companies are very large and, in many cases, global, international-based companies who supply a range of food products to the New Zealand market.

And I suppose the question really is: is the Minister concerned that those very large, significant suppliers are choosing to opt out and many increasingly choose to opt out, which means this bill only really captures the smaller suppliers, and therefore does it undermine the concept that the whole raison d’être of putting in place a wholesale arrangement was that if you were a new competitor to the market, you could easily go in and replicate those wholesale arrangements across all the range very quickly, and therefore be able to get up and running on equivalent competitive terms? So the big question is: is he concerned that there might be a trend that we see many of those very large suppliers not actually participating in this market, and therefore undermining the whole purpose of this part of the bill?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. I thought I should just round off some of those questions while we’re winding up here. Look, Mr Watts, in respect of some of your questions, you asked me to look forward to a future, and it’s really not appropriate, on a hypothetical, for me to speculate about what the commission might do. Then you talked about what is a reasonable time—in respect of, I think it was, clause 52. Once again, it’s entirely circumstantial in terms of the time for a draft to be out there for responses. It’s not a consultation; it’s a draft being published and then people submitting. If it’s a short document, not very long; if it’s a long document, a long time. And, in respect of clause 54, which was the presentation, you need to do your time on the Regulations Review Committee, because presentation is a very formal thing, where it’s simply the provision of the document to the Clerk of this House, and there’s not really much involved in it at all, other than that.

In respect of Mr Smith’s comments around the wholesale market and dynamic competition, I think it’s a really good point that dynamic competition is what we want to see—competition that doesn’t stand still; a market which is rapidly changing—and I think you’re right that we do need to absolutely keep an eye on it. That’s one of the reasons why the commission will have a role to play in, essentially, maintaining the code and keeping it up. In terms of large suppliers, obviously that’s something that was before the select committee, and that’s why the commission does have a power, essentially, to carve out those large suppliers from the arrangements, so that those very large suppliers could exert market dominance. The commission can carve those out to ensure that that dominance isn’t affected.

Dr TRACEY McLELLAN (Junior Whip—Labour): I move, That the question be now put.

CHAIRPERSON (Hon Jenny Salesa): The question is that the question be now put.

ANDREW BAYLY (National—Port Waikato): Point of order, Madam Chair. Well, (a) you can’t make two closure motions, and, secondly, you can’t preface it with “Madam Chair”.

CHAIRPERSON (Hon Jenny Salesa): Sorry?

ANDREW BAYLY: Just in relation to that closure motion on this particular part of the bill. My understanding is that (a) a person can’t make two closure motions, particularly following one another, and the second thing is you can’t preface the closure motion by saying, “Madam Chair”; you stand up and say “I move that this motion” whatever. But the member who chose to make that closure motion didn’t do it in an appropriate manner.

Dr Tracey McLellan: Speaking to the point of order. I believe, Madam Chair, that I said “Madam Chair” to get the call, and said nothing else after taking the call, apart from the correct words of the closure motion.

CHAIRPERSON (Hon Jenny Salesa): That’s right. She did call out. There was no one else that actually took a call within those few seconds, and she was the one who first called out “Madam Chair”, so she was getting my attention.

Simon Watts: Madam Chair?

CHAIRPERSON (Hon Jenny Salesa): Are you taking a point of order?

Simon Watts: No; just a call.

CHAIRPERSON (Hon Jenny Salesa): I’ve accepted the closure motion, though. So the question is: is someone asking for a vote to be called?

SIMEON BROWN (National—Pakuranga): Point of order. I’m not sure how you can accept a closure motion which wasn’t put to you correctly.

CHAIRPERSON (Hon Jenny Salesa): She did actually put the point of order to me correctly. She called out “Madam Chair”, which—

SIMEON BROWN: The process is “Point of order. I move, That the question be now put.”, not “Point of order, Madam Speaker”.

Camilla Belich: Speaking to the point of order. Madam Chair, you will be aware, as all members of this House will, that often when we’re seeking the call, we need to make the call to the Chair or the Speaker on multiple occasion, and this is indeed what happened in this instance.

CHAIRPERSON (Hon Jenny Salesa): The Speaker’s ruling is that she is allowed, actually, to call out my name before she seeks the closure motion, but it can actually be asked for again—the closure motion.

CAMILLA BELICH (Junior Whip—Labour): I move, That the question be now put.

SIMON WATTS (National—North Shore): Thank you very much, Madam Chair. I’d like to move to clause 53 of the bill in regards to Part 3, a clause that we haven’t touched on yet. I’d be interested in the Minister’s comments in regards to where the “Commission must give report to the Minister and publish it”. This clause, in particular, outlines that the final report, which I questioned before in regards to clauses 52 and 54, which the Minister provided some response but not necessarily one that provided adequacy—refers to the fact that the final report on the inquiry to the Minister, which must be submitted “as soon as practicable after completing it”, which obviously makes sense, but my question is in regards to this point. It refers to 53(1)(b), which is “at least 10 working days later, publish the final report.” I’m interested in whether—well, that one looks to be a potential conflict in regards to those two specific clauses. How does point (b) in regards to the 10 working days later of publication of the report actually work in regards to that clause?

The second clause I want to get into is clause 56, another clause that we haven’t touched on yet this evening, which is in regards to the Minister publishing the Government’s response to this, and as we’ve articulated earlier this evening around some of these reports, which may be of scale and substance in dealing with issues in the public interest. In terms of what the Minister foresees in regards to what is a reasonable time after receiving the report that this final report is actually published, are we talking weeks or months or years? Sometimes, when we on this side of the House consider what is reasonable in terms of the provision of information which is in the public interest, that information is not readily available. So some context around what the Minister expects in regards to 56(1)(a) would be appreciated, and we’ll leave it at that.

Dr TRACEY McLELLAN (Junior Whip—Labour): I move, That the question be now put.

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

Ayes 109

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 10

ACT New Zealand 10.

Motion agreed to.

The result corrected after originally being announced as Ayes 111, Noes 10.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Minister’s amendments to Part 3 set out on Supplementary Order Paper 353 be agreed to.

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

Ayes 109

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 10

ACT New Zealand 10.

Amendment agreed to.

Part 3 as amended agreed to.

Part 4 Enforcement and dispute resolution

CHAIRPERSON (Hon Jenny Salesa): We come now to Part 4, which is the debate on clauses 113 to 159 and Schedule 2, “Enforcement and dispute resolution”. The question is that Part 4 stand part.

ANDREW BAYLY (National—Port Waikato): Yeah, thank you, Madam Chair. I think there’s sort of two crucial elements in this part, but the one I want to just turn to first—it’s probably of lesser importance, but important to understand—is the issue around maximum penalty, which is referred to in clause 122. There’s obviously different tiered penalties—clauses 123 and then 124 and 125. But I just want to refer to clause 122. The maximum amount of this—and this is subclause (3)—is a pecuniary penalty of $500,000 for a contravention, an attempted contravention, or an involvement in a contravention by an individual. So that makes sense that it relates to an individual, and I know the Economic Development, Science and Innovation Committee was very keen and actually ensured that the level of penalty was similar to other pieces of legislation.

The bit I just want to ask the Minister of Commerce and Consumer Affairs about is “(b) in any other case, the greater of—(i) $10 million; and (ii) either the amount referred to in subsection (4)(a)” and (b). Now, subclause (4)(a) and (b) have two options—and, remember, this is the “greater of”. The first one is under (a): if it can be readily ascertained and if the court is satisfied that contravention has occurred, then three times the value of the commercial gain. So that one, obviously, is a judgment call around what is the level of commercial gain that the grocery retailers achieved, and to put a three times multiple on it. Or (b): greater of 10 percent of the turnover the person that is liable to pay the penalty.

Now, it might be useful just for the Minister to talk about, because if we’re talking about the two existing players, the turnover of those—and he might have those figures to hand, and I’m hoping he does—what would be the turnover of those two companies currently, and what does 10 percent represent? Because if you follow through on the maths, I would imagine that 10 percent is a very large figure, and the way this is drafted means that you end up at the greater figure. And so I’m just really keen to understand what the Minister believes that potentially that greater figure could actually be, based on the current turnover of the two existing—well, will be, shortly—regulated grocery retailers. Hopefully, he’s got an answer.

SIMON WATTS (National—North Shore): While the Minister’s thinking of a response to that good question from my colleague Andrew Bayly, I’d like to refer to Subpart 5, which is in regards to dispute resolution provisions within Part 4 of this bill—in particular, clauses 147(1), (2), and (3). Clause 147(3)(a) outlines the scale of disputes that may be referred to the scheme. And it refers to disputes less than $5 million are within scope of this, and then goes on to outline the other considerations.

My question to the Minister is in regards to disputes that exceed $5 million: what is the expectation and the process and mechanism in order to deal with disputes of that scale? I think, when one considers the cost of food and other goods that flow through the grocery industry, the context around $5 million may seem a lot in this House, but the reality is for some of our large suppliers that may only represent a day’s worth of stock, potentially, depending on the scale and volume if you think about some of our large production entities. So how will we deal with entities and disputes in regards to exceeding that amount?

The other aspect is in regards to dispute resolution in terms of how the Minister envisages this process working in terms of getting the parties around the table and whether there has been any consideration in the drafting of this clause in relation to other dispute resolution clauses that lie within other aspects of legislation—obviously outside of the grocery industry but any other industry aspects that have a similar context. So those are the two points in regards to clause 147 that I’d appreciate some context from the Minister.

ANDREW BAYLY (National—Port Waikato): I’m just pausing because I want to give the Minister an opportunity to respond, and I’m just looking at him. OK, I’ll move on, and my good colleague here Simon Watts has just been referring to clause 147. I just want to refer specifically to clause 149, and this is the referral to a dispute resolution scheme. This was a change that the select committee put in place, which enables the supplier or wholesale customer to refer matters to a dispute tribunal process, provided, as Mr Watts has just said, it does not exceed $5 million.

The first question I’ve got for the Minister is: how do you define the $5 million? If you have a contractual supply—and that might be for a long-term supply over the course of a number of years—would that preclude that arrangement if the total value of that long-term supply was more than $5 million? Or is the dispute figure what triggers the $5 million? And how do you define that? If you’re talking about a particular supply arrangement and there is a dispute around marketing fees, is the cost of the marketing fees the dispute—and therefore that’s what’s captured by the $5 million—or is it, as Mr Watts was trying to indicate, if you are supplying and the total value of the goods that you supplied for that week was less than $5 million, you’re OK? So the first thing: a bit of definition around that.

The second one is about the three elements where the dispute can be referred, and it rises from the performance or non-performance of the grocery supply code. The second element is in relation to the wholesale supply of groceries code, or “falls within … [the] eligible disputes prescribed by regulations”. Now, that always gives MPs who have been in the House for a while the screaming heebie-jeebies, because that means no one in this House knows what the regulations might be, and only the Minister, who’s sitting in the chair, will know what those will be and publish them. Because, of course, regulations don’t need to come back before the House, nor in fact do they have to go back before the select committee. So I think it’s probably important—the second question is: what might the regulation envisage, and what might it preclude?—so we can get some sort of indication from the Minister about how that regulation framework would be drafted.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you, Madam Chair. In respect to Mr Bayly’s original question, I just note that the “3 times the value” or the “10 percent of turnover” in clause 122 are alternatives. So it’s not the higher of those two; the question is, whether we can determine three times the value of the wrong, in which case it’s that—or it’s 10 percent of the turnover.

In respect of the fact that 10 percent of the turnover—or indeed $10 million—is a very large number, it’s really important to recognise firstly that that is the upper limit. So think of the worst possible conduct and the largest financial consequence of that conduct. So this might be a situation where, by deception, one of the players has stripped profits from the New Zealand public to the tune of billions of dollars, right? Then obviously we have to have a significant disincentive, and we know in these areas that if there’s one wrong that’s been detected, there may often be other wrongs undetected, so we need to have a proportionate disincentive. So those are high penalties at the upper limit, but rightly so.

In terms of Mr Watts’ question relating to clause 147, I think he was asking about the $5 million limit and why it’s there. There are, of course, other ways to resolve a dispute—if it falls outside of it, whether that be through an arbitration in a private sense or using the High Court. So this scheme is very much tailored to ensuring a highly efficient and effective dispute resolution scheme that means that there’s not some grinding process where the market power of the main retailers can, in fact, be used to grind down the people who have a dispute. And that $5 million limit was thought to be appropriate there.

In terms of—Mr Bayly again touched on that—the section itself, it is relatively clear. He sort of said, “Is it the amount of goods that’s in question? Or does it include marketing costs?” Well, the question is, how much is in dispute? I think the words are, “What is the claim; the amount of the claim?” So that’s the short answer to that question.

In terms of eligible dispute, obviously, any regulations have to be consistent with the purpose of the Act. They are subject to the scrutiny of the Regulations Review Committee, and rightly so. But in terms of what else might crop up, we’ve talked about things like the use of logistics and supply chain as a lever to get excess profits. It could be anything along those lines. But, again, not for me to speculate what that might be.

CHAIRPERSON (Hon Jenny Salesa): Members, before I call on the next member to take a call, I need to correct the result of the vote on the question of the closure on Part 3. The result was announced as Ayes 111 and Noes 10; the correct result is Ayes 109 and Noes 10. The record will be corrected accordingly.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Well, I’m slightly disappointed that the Minister didn’t actually sit down and work out the figures. A quick Google search revealed—while he was talking, because I thought he was going to come up with some numbers, but he didn’t. The revenue, based on what’s in Google, of Foodstuff’s North Island group in a 52-week period—i.e., a year—was $6.7 billion. So I’m sure the Minister is very good—I know he’s an excellent lawyer, but he’s also an excellent mathematician, I’m sure! But 10 percent of 6.7 billion is a big sum. And so does he still think, potentially—true, that was just one example; Countdown and the Woolworths Group New Zealand obviously will have a very large turnover as well. So is 10 percent, in his view, an appropriate figure? Because that is a significant sum that potentially—and I take his point: that’s a maximum cap, but, none the less, the maximum cap dwarfs the $10 million figure. So, again, I’d just like the Minister to just think about the actual numbers and whether that figure is actually appropriate.

The second thing—I’m going to sit down and, hopefully, the Minister is going to take the opportunity to respond to that because I want to ask some further questions. Obviously, he’s not. Hopefully, if you need to calculate, I can give him a calculator if that’s useful. Maybe someone on the Labour Party has got a calculator, because you know, there’s a Budget coming up this week and I know they’re good at spending money, but maybe not calculating them. So moving along, hopefully the Minister’s got his phone on him because he can go 6.7 × 0.1 and he might get an answer.

I want to just turn back to clause 149. The issue here is that the supplier or wholesaler customer may refer certain disputes to a dispute resolution scheme. One of the questions that was considered by the Economic Development, Science and Innovation Committee, and I’m interested to hear what the Minister has to say, is whether in fact the regulated grocery retailers should in fact be able to refer matters of dispute to the arbitration process. And the argument for that, of course, was in the essence of trying to get speedy resolution and therefore dealing with disputes quickly, promptly, and equitably, and using a scheme that was cheap—relatively cheap compared to a court case—why the Government thought it was not appropriate that regulated grocery retailers should be able to refer matters to dispute provided they, for instance, were less than $5 million etc., etc. Why did they think that it was appropriate, and why does the Minister believe it’s appropriate, that the supermarkets shouldn’t be able to refer matters and therefore their only approach was either through negotiation, which would be unlikely to go through some arbitration dispute process, which is not compulsory, or, and more the reality, is to take those matters to court. Why was the differential approach adopted in the bill?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Well, thank you for that, Mr Bayly. In fact, you know, I can do this in my head, OK—which might not be as big as yours, but it’ll do! Look, I wasn’t going to respond on the revenue point, because I think I covered it pretty adequately before. But I’ve been given some information which is, firstly, that it is really important when I said that is the highest level for the most egregious conduct. And, even then, if we go to the 10 percent figure, the court always has discretion in the size of those penalties, and if it was disproportionate, you know, I’m very happy for our skilled judiciary to address that. It is interesting that that is also used in the Commerce Act.

In terms of the $5 million figure and why it’s the threshold, a lot of this, you know, has been drawn from the Australian framework, and that’s a similar threshold over there.

In terms of why can’t retailers access the dispute resolution scheme, to be perfectly honest, I haven’t yet heard them screaming “Bully-boy” because they’re being pushed around by some fruit and vegetable operator demanding more for their lettuces. This is about redressing a power imbalance and making sure that—because the main obligations in the supply code are of course placed on the retailers, on the grocery suppliers, and that’s where the rubber really hits the road. So that’s why it’s needed to redress that imbalance there. It’s simply not needed and they can easily have redress through other dispute resolution channels.

Dr TRACEY McLELLAN (Junior Whip—Labour): I move, That the question be now put.

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

Ayes 109

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 10

ACT New Zealand 10.

Motion agreed to.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Minister’s amendments to Part 4 set out on Supplementary Order Paper 353 be agreed to.

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

Ayes 109

New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.

Noes 10

ACT New Zealand 10.

Amendments agreed to.

Part 4 as amended agreed to.

Part 5 Miscellaneous

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to Part 5. This is the debate on clauses 160 to 190 and the miscellaneous provisions. The question is that Part 5 stand part.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. It’s been an exciting night, hasn’t it? I referred to this clause 160 before, at the start of the debate—I actually referenced it back to the functions, but I’ll take it up again: the appointment of a grocery commissioner. One of the things about this: you can write wonderful legislation with all the best intent, but the reality is, like all industries, the grocery trade is a dynamic industry that will be changing, evolving, hopefully for the better but sometimes it may be for the worse—we don’t know. But whatever the case is, to be effective this legislation relies on having a grocery commissioner with the requisite skills to do the job. In my personal view, and it’s something that National’s made very clear, without a commissioner with the requisite skills and ability to robustly go and do his or her job, then all of this good work in this bill is unlikely to result in substantial change.

So my central point to the Minister in the chair, Duncan Webb, is: what assurance can he give the committee that the appointment of the commissioner will be to ensure that that person has an in-depth, relevant market knowledge of the grocery sector? I don’t intend it to be an offence or anything, but to not make sure that that person gets appointed with other skills, such as because they might be a very good lawyer or whatever—because I think the importance of this role particularly is to have the understanding of the sector and the way it operates, and it is a large, complex sector. So can the Minister give assurance to the committee that in appointing the commissioner—and it will be for him to make the recommendation—such a person will be appointed and we don’t end up with someone who doesn’t have those requisite skills?

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Yes.

SIMON WATTS (National—North Shore): Well, I don’t think that was a very satisfactory answer in regards to the assurances around the point, because clause 161(2) actually articulates—as my colleague Andrew Bayly referred to—the type of experiences that this individual will have. And it says quite clearly in this clause that “by virtue of that person’s knowledge of, or experience in, the grocery industry”—which I don’t think anyone would argue, and I think that was your point, Mr Andrew Bayly, that that would be appropriate. But it then goes on “or”—and the old “or” word is always the “get out of jail” word, isn’t it: “or any other industry”. So there you go, Andrew. That doesn’t sound like the grocery industry, does it, because it says “or any other”. So you could be a jack of all trades but no expert in grocery and get this wrong.

It goes on: “commerce, economics, law”—

Andrew Bayly: Law.

SIMON WATTS: —law—

Andrew Bayly: Accountancy.

SIMON WATTS: —“accountancy, public administration, or consumer affairs.” So I think it’s reasonable to ask the Minister to articulate with a little bit more than a single word the assurance around why that clause in particular is going to ensure that the individual undertaking this—which is, as we’ve been through this evening and traversed the elements, a complex aspect of legislation. There is a huge number of areas and responsibilities that will be placed on this. They will be dealing with three significant entities of scale. So capability and competence in terms of being able to undertake the role with a degree of efficiency and effectiveness will be paramount.

So the risk, which I don’t think is unduly underestimated by this side of the House, is that it’s a lovely bill but the individual may not have the capability and competence based on the criteria articulated at clause 161(2) to actually be able to fulfil the scope of the role in a way in which will provide confidence (1) particularly to the Minister, other than the individual Minister’s opinion, but (2) to the broader public, of which this commissioner’s role is going to provide a public service in terms of building trust and confidence that we do have the appropriate level of competition within this important industry.

Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): To expand: absolutely yes. But, look, no, it’s a fair point. The Grocery Commissioner is a critical part of the infrastructure of this bill. This is a role which, obviously, will exist for a while. And it is important that we find someone who brings both the courage and determination as well as the right set of skills.

Now, I think the extensive list that Mr Watts referred to is there for a reason, and that is because we don’t want to constrain ourselves. We absolutely want the best person for this job; whether it be an accountant, even, or someone else who’s well versed in the area of grocery reforms. It’s important to recognise that the key requirement is that they are equipped to discharge their functions and powers and assist in achieving the purposes of this bill. The purposes of this bill are to enhance consumer outcomes or, to put it basically in simple terms, put money back in ordinary New Zealanders’ pockets so they can get a better deal at the checkout. That’s why we are here tonight.

So this Grocery Commissioner is absolutely a critical part of the infrastructure who needs to be both responsible in exercising the powers that are given to him or her, but also to be courageous and brave and exercise them where necessary, because what we’ve seen to date is that the system is broken, that we have monopoly profits—profits which are fundamentally taken from consumers and put into the pockets of big business, and that’s not right.

So the search for this Grocery Commissioner—as I’m sure Mr Bayly knows—is under way, because when this bill passes, we want to see it up and running as soon as possible. I’m confident that we will be able to recruit someone who’s not only got the technical skills but also the passion for doing what’s right by New Zealanders, because that’s what this bill is actually about.

So in terms of the skills necessary and Mr Watt’s point—exactly what those might be of that list or what mix, I don’t know. But this person will be a commerce commissioner, and that’s really important. They sit alongside in an organisation, with a set of skills so that they can have the peers to understand the competition and learn from them and be supported by them as well. So that is also a really important part of it. And sitting in the Commerce Commission, which has, of course, generated this market study where this came from, is a really important point.

So in terms of the point: are we going to get a good Grocery Commissioner? I’m absolutely confident that we will because that is the very critical foundation upon which the implementation of this—and should further regulations or tweaks to the grocery supply code be necessary, that will be an important part of that as well. But, fundamentally, this person will be implementing a policy of fairer prices at the supermarkets, and that’s the most important thing.

CHAIRPERSON (Hon Jenny Salesa): Members, the time has come for me to report progress.

Progress to be reported.

Report of Committee of the Whole House

Report of Committee of the Whole House

CHAIRPERSON (Hon Jenny Salesa): Mr Speaker, the committee has considered the Customs and Excise (Arrival Information) Amendment Bill and reports it without amendment. The committee has also considered the Self-contained Motor Vehicles Legislation Bill and reports it with amendment. The committee has also considered the Accident Compensation (Access Reporting and Other Matters) Amendment Bill and reports it without amendment. The committee has also considered the Grocery Industry Competition Bill and reports progress. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The House adjourned at 9.56 p.m.