Thursday, 18 May 2023
Continued to Friday, 19 May 2023 — Volume 768
Sitting date: 18 May 2023
THURSDAY, 18 MAY 2023
THURSDAY, 18 MAY 2023
The Speaker took the Chair at 2 p.m.
Karakia/Prayers
Karakia/Prayers
GREG O’CONNOR (Deputy Speaker): Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations, that we may conduct the affairs of this House with wisdom, justice, mercy, and humility for the welfare and peace of New Zealand. Amen.
Petitions, Papers, Select Committee Reports, and Introduction of Bills
Petitions, Papers, Select Committee Reports, and Introduction of Bills
SPEAKER: A petition has been delivered to the Clerk for presentation.
CLERK: The petition of Merran Davis requesting that the House urge Te Pūkenga’s board to remove the chief executive, urge the Government to remove Te Pūkenga’s board, and commission an independent public inquiry into Te Pūkenga’s performance.
SPEAKER: That petition stands referred to the Petitions Committee. Papers have been delivered to the Clerk for presentation.
CLERK:
Report of the Intelligence and Security Committee on the activities of the Intelligence and Security Committee in 2022
Te Aka Whai Ora Māori Health Authority, statement of performance expectations 2022-23.
SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.
CLERK:
Report of the Finance and Expenditure Committee on the Reserve Bank of New Zealand’s Financial Stability Report, May 2023.
report of the Transport and Infrastructure Committee on the report of the Controller and Auditor-General, Results of our 2019/20 audits of port companies.
SPEAKER: The reports are set down for consideration. The Clerk has been informed of the introduction of a bill.
CLERK: Appropriation (2022/23 Supplementary Estimates) Bill, introduction.
SPEAKER: That bill is set down for first reading.
Supplementary Estimates Documents
Supplementary Estimates Documents
Hon GRANT ROBERTSON (Minister of Finance): I present the Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2023.
SPEAKER: That paper is published under the authority of the House.
Budget Documents
Budget Documents
Hon GRANT ROBERTSON (Minister of Finance): I present the 2023 Budget speech; the Budget at a Glance 2023; the Wellbeing Budget 2023, including reports on the fiscal strategy, on child poverty, and the summary of initiatives; the Budget Economic and Fiscal Update 2023; and the Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2024.
SPEAKER: Those papers are published under the authority of the House.
Bills
Appropriation (2023/24 Estimates) Bill
Introduction
CLERK: Appropriation (2023/24 Estimates) Bill, introduction.
SPEAKER: The Appropriation (2023/24 Estimates) Bill is set down for first reading immediately.
First Reading
Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2023/24 Estimates) Bill be now read a first time.
A party vote was called for on the question, That the Appropriation (2023/24 Estimates) Bill be now read a first 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 first time.
Budget Statement
Second Reading
Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2023/24 Estimates) Bill be now read a second time.
Just before I begin my formal Budget speech, as the member of Parliament for Wellington Central I want to make a specific acknowledgment of the victims of the Loafers Lodge fire and all those who have been affected by it. I am sure that I can speak on behalf of the House in saying our aroha and thoughts are with all of those who have been affected.
It is my privilege to present New Zealand’s fifth Wellbeing Budget. As in each of these Budgets, we have taken into account the wellbeing of our people, the strength of our communities, the health of our environment, alongside the performance of our economy and finances. In doing so, we are striking a balance between supporting our people now with the pressure of the cost of living and investing in future jobs and economic security.
The backdrop to Budget 2023 is challenging. It is hard to remember a time in New Zealand’s history where there have been so many challenges to our economic, environmental, and social systems in such a short period of time. Individuals, families, businesses, and communities are feeling the impact of global economic and political turbulence, high inflation, the lingering hangover of the COVID emergency, and the impacts of climate change through more frequent and intense weather events.
Cost of living pressures are being felt across our communities. Budget 2023 responds to those pressures in a targeted and responsible way, building on what we have done over recent years and in a way that will not exacerbate inflation. There is a particular focus on parents and young families, including through the expansion of 20 hours’ early childhood education (ECE) support to two-year-olds, free public transport for children and half price for under-25s, and the scrapping of the $5 prescription charge for all New Zealanders.
We are also making a significant commitment to support the recovery and rebuild of those regions affected by severe weather events earlier in the year. This was an unwelcome and unplanned-for series of events. But our careful financial management, and the reprioritisation programme led by the Prime Minister, has allowed us to reallocate resources and meet the Government’s future contributions through the Budget allowances. We are on track to return to surplus within the forecast period, our net debt will peak at 22 percent of GDP—well below the ceiling set in our fiscal rules—and inflation is forecast to return to around 3 percent by the end of 2024.
Budget 2023 also looks ahead. We are very much focused on doing the basics well, with significant investment in education, health, and housing. These areas are the bedrock of opportunity for each and every New Zealander. At the same time, we are improving the resilience of New Zealand’s critical infrastructure and investing in a more productive, higher-wage, lower-emissions economy, including through research and technology.
The Budget strikes the critical balance between the support required today and the investment needs of the future. We have carefully cut our cloth as the emergency spending in response to COVID activities declines and we move to a more fiscally sustainable path.
New Zealand has withstood many shocks in recent memory and our wellbeing has generally held up well. However, absorbing these shocks has affected our wealth and we need to rebuild our resilience to the future challenges we know will come.
The Treasury’s first wellbeing report, Te Tai Waiora, provided a broad perspective on the range of things that matter for wellbeing. It highlighted that New Zealand is a good place to live, in many ways, and that many aspects of life have improved over the past 20 years. We enjoy cleaner air, longer life expectancy, and higher incomes.
However, New Zealand faces wellbeing challenges, particularly around mental wellbeing, education, and housing quality and affordability—and these challenges are, on average, felt more strongly by our younger people. These issues are longstanding and they have not lost their urgency, and they continue to be reflected in our wellbeing objectives.
We are in a good position to meet these challenges. The New Zealand economy emerged from COVID-19 well, with modest growth anticipated over 2023. Our economic recovery from COVID is in the top 10 of OECD nations.
At 3.4 percent, the household labour force survey measure of unemployment is currently equal or lower than any period prior to 2020. New Zealand continues to have some of the lowest public debt in the world, and Budget 2023 is another step in the direction of bringing core Crown expenses as a percentage of GDP back towards pre-pandemic levels. We remain committed to returning the operating balance before gains and losses (OBEGAL) to surplus within the forecast period, and keeping net debt below the ceiling of 30 percent of GDP.
In the context of our wellbeing approach, the Government remains committed to improving child wellbeing. The latest figures released by Stats NZ show that eight out of nine of the child poverty measures have seen a significant reduction since the baseline year of 2018.
Over the last two years, child poverty rates on the measures we have comparable data for are the lowest they have been since we started measuring, and rates have almost halved on two of them. This is a testament to the comprehensive package of investments that we have put in place to support families over several years, and are continuing to do so in Budget 2023.
It is worth noting our Wellbeing Budget approach applies a gender budgeting lens into Budget 2023, expanding on last year’s pilot programme. This year, it looked at 27 initiatives across 15 agencies, and this lens has influenced the range of investments, including in the cost of living space, and has been an important and useful indicator of whether the Budget is meeting our wellbeing objectives. [Applause from Government members] For example, we know that, on average, women have lower KiwiSaver balances and retirement income than men.
Hon Member: You forgot to clap!
Chris Bishop: That means clap—when Megan claps, you clap.
Hon GRANT ROBERTSON: Time out of the workforce for parenting responsibilities is one key reason for this.
Chris Bishop: You can’t coordinate spending—you can’t coordinate clapping.
Hon GRANT ROBERTSON: Settle down, Mr Bishop. The Government is addressing this through Budget 2023 by introducing a matching “employer” contribution to paid parental leave recipients. This recognises the unpaid nature of childcare, and supports savings for retirement. It is a small but significant boost to lifetime income for many women.
Budget 2023 builds on the support we have been providing to New Zealanders in the face of cost of living pressures. The global inflation crisis, which has seen prices rise faster and stay higher for longer, is causing strain for many people, particularly for low and middle income households and those with young children.
The Government has already delivered significant support through the cost of living payment, reductions to fuel excise duty and road-user charges, and half-price public transport. In addition, since 1 April, more than 1.4 million New Zealanders have benefited from increased assistance to help with the cost of living—including people receiving a main benefit, students, and superannuitants. This includes 354,000 low-income New Zealanders, who we’ve supported through a $311 million investment from this Budget to support main benefits to increase by 7.2 percent, in line with inflation.
Budget 2023 focuses on targeted cost of living support that will not exacerbate inflation pressures, while also laying the foundation for long-term benefits, including educational and health outcomes, and meeting our climate change goals.
We know the first five years of a child’s life are extremely important for development and learning. We also know that, right now, the cost of access to early childhood education and childcare can be a barrier for parents and caregivers wanting to enter or remain in employment, education, or training. Parents should not have to forgo ECE for their children because of the cost.
Budget 2023 responds to this by investing $1.8 billion in early childhood education. The flagship of this package is extending the 20 hours’ support to include two-year-olds, adding to the existing three- to five-year-olds. Based on average costs in 2023, families who were not previously receiving childcare subsidies would save an estimated $133.20 per week if their child attends ECE for at least 20 hours a week.
Alongside this, we are providing further support for pay parity for ECE teachers, giving an average 5.3 percent funding increase for ECE providers, and providing a sustainability grant for Playcentre Aotearoa. We are also expanding eligibility criteria for flexible childcare assistance for low to middle income working families, extending the duration period, and indexing the rates of flexible childcare assistance to the Consumers Price Index, which will support parents with informal care costs when formal care is not available.
Altogether, this package means we will relieve the pressure of an essential cost, while also ensuring that those who provide it are adequately funded to meet increases in demand and pay for those who work in the sector appropriately. It is a substantial investment in our children, in our parents, in our teachers and caregivers, and ultimately in New Zealand’s future.
In addition to these investments in our education system, Budget 2023 extends the Ngā Tini Whetū pilot run under the Whānau Ora umbrella. This focuses on ensuring that pēpi and tamariki are supported specifically in their first thousand days, alongside broader whānau aspirations.
For some New Zealanders, prescription costs are a barrier to receiving the healthcare they need, and lead to trade-offs with the purchase of other necessities. We know that in the 2021-22 financial year, 135,000 people did not collect their prescription because of the cost. I am pleased to say that from 1 July this year, we are removing the $5 prescription co-payment for all New Zealanders. This will reduce inequality in our health system and lead to better health outcomes for everyone.
We are also extending the Ka Ora, Ka Ako | Healthy School Lunch programme. Rising inflation on household incomes puts pressure on food security for families and whānau and we know learning is affected if children are hungry. Through Budget 2023, $325 million is being invested to continue this programme until the end of 2024. For families with two children, it is estimated the scheme saves, on average, $60 per week.
Access to affordable transport is a cost pressure for many New Zealanders. The Government has previously created the Community Connect public transport concession that provides half-price public transport to community services card holders. Today, I can announce that this is being extended to all under-25-year-olds and users of Total Mobility services. I know that this commitment will be welcomed particularly by tertiary students who are often reliant on public transport.
The Government has decided to go further in order to support families. Budget 2023 will fund free public transport for children aged five to 12 years.
This investment of $327.4 million will help passengers meet the costs of public transport, encourage increased use, and also support New Zealand to achieve its climate change goals. It is another example of where we can both relieve the cost of living pressures for some families and contribute to our emissions reductions.
We can also do this through household energy bills. A warm, dry home is key to improved health and wellbeing outcomes for New Zealanders. Homes that lack adequate insulation and efficient heating lead to higher energy bills and poor health outcomes.
That’s why Budget 2023 is funding the extension and expansion of the Warmer Kiwi Homes programme. This will see a further 100,000 insulation and heating installations, as well as the installation of efficient hot water heaters and LED lights. Warmer Kiwi Homes is estimated to have reduced electricity use by 16 percent on average over the winter months as well as cutting the risk of respiratory illness and making homes drier and more comfortable. It is a true wellbeing policy.
Budget 2023 funds the critical services that New Zealanders rely on day to day, including health, education, welfare, and housing. It is vital that we continue to deliver these basic services well. There are major challenges to doing so in a high-inflation environment.
Funding these services must come first in a constrained spending environment. We are investing significantly to maintain and enhance public services. This includes the public sector pay adjustment to settle a large number of pay claims across the core Public Service.
Education is critical to the success of New Zealand now and in the future. The Budget 2023 package provides $3.6 billion operating and $1.3 billion capital towards education, including tertiary education. As well as our flagship ECE package, there are a number of other key education investments.
A cornerstone is investing in a fit for purpose school property portfolio that reflects the ongoing needs of students and teachers. In Budget 2023, the Government is providing an additional 6,000 student places to the school network, and four new schools. This is in addition to $147 million to modify school buildings with automatic doors, lifts, and bathroom refits to support the needs of students.
We are also investing significant new funding to the ongoing Christchurch Schools Rebuild programme and to deliver property improvements to 175 more small, isolated schools across New Zealand.
To expand Māori-medium education infrastructure across kura, $21.9 million operating and $112.5 million capital will be invested, which will support the Government’s objective of 30 percent ākonga Māori learning in these environments by 2040.
The higher costs facing our education system is being recognised through an increase of $233.9 million for schools’ operational grants and a $521 million increase for tertiary tuition and training subsidies. That increase is the biggest increase in 20 years.
These are on top of the $260 million for ECE providers mentioned earlier. The overall investment of $1 billion will help ensure education providers are resourced to deliver quality educational outcomes across the entire system.
Among other education initiatives, a highlight is the further extension of the Apprenticeship Boost programme through to 31 December 2024. This programme was introduced during COVID to ensure there are skilled workers for key industries and that apprentices do not miss out on completing their qualification. This new investment is estimated to allow 30,000 apprentices to start or continue to receive support.
We recognise the importance of the work done to support the vulnerable in our community. The Community Connectors programme provided an important service to help individuals, families, and whānau navigate and access Government support throughout COVID-19. Given its success, we are funding 100 Community Connectors for a further two years. We also know that regions affected by the recent weather events are in particular need of support, so we are providing funding for an additional 65 Community Connectors to be based in these regions.
Through Budget 2023, we are delivering our manifesto commitment to permanently reinstate the Training Incentive Allowance to support sole parents, disabled people, and their carers to study.
Disabled people will benefit from Budget 2023 with an additional $864 million provided to Whaikaha - the Ministry for Disabled People to fund increasing demand and inflationary pressures for disability support services.
We are also working to end the discriminatory minimum wage exemption for around 800 disabled employees in New Zealand by mid-2025. This means they will no longer be paid less than the minimum wage for their work.
Budget 2023 will continue funding to deliver financial advice and debt services across New Zealand for those who are struggling financially. Funding of $29.2 million will help providers meet demand for one-to-one services and peer-led support for people with complex needs. We are also providing further funding for the Food Secure Communities initiative to support food rescue and food security, including in cyclone-affected regions.
The Government is undertaking a significant reform of the health system. To back this up, last Budget we moved to a multi-year funding approach to plan better and ensure more consistent health services. Relying on the annual Budget cycle for funding made it difficult to address long-term challenges in the health system.
Budget 2022 provided the largest health investment ever, with $11.1 billion in new funding to put our healthcare on a sustainable financial footing, including a $1.3 billion increase for the 2023-24 year to help address historic and future cost pressures.
One year on from the establishment of Te Whatu Ora - Health New Zealand and Te Aka Whai Ora, we are focused on supporting and growing the health workforce, increasing capacity in healthcare, and expanding GP services. The investment we have made means over $1 billion is being spent on increasing wages and staff numbers this financial year, including $63 million for safe staffing levels that will allow for an additional 500 new nurses.
As the Minister of Health has indicated previously, she is prioritising resources to front-line services where they are needed, such as nearly $100 million towards initiatives to deal with the winter peak, $118 million to reduce waiting lists, and $20 million to improve immunisation programmes and screening coverage for Māori and Pacific peoples.
These are just a few of the programmes of Te Whatu Ora and Te Aka Whai Ora. From 2024, we intend to move health budgets to a three-year funding cycle to align with the New Zealand health plans.
Last Budget, we instituted an integrated and long-term funding approach for our work in the justice and law and order area. Based on an agreed cross-agency plan, agencies have the certainty of a three-year pool of funding and the flexibility to move resources around to meet emerging needs. This approach is already proving successful with a fast tracking of an early intervention programme targeting recidivist young offenders in Hamilton, Auckland, and Christchurch. Less than 30 percent of those in the programme have been referred again after the intervention.
Part of the long-term funding is a commitment to keep police resources in line with the population. In addition to achieving the Government’s goal of 1,800 extra police, there are resources available to keep the ratio of one officer to every 480 people. This is a significant improvement on the ratio of one officer to every 544 people that we inherited in 2017.
In line with our wellbeing objectives, this Budget continues to support Māori and Pacific economic, social, and environmental aspirations.
A critical focus is in housing. In Budget 2023, the Government is making sizable investments in key infrastructure, such as an extra $23 million for Te Ringa Hāpai Whenua Fund to further invest in infrastructure on whenua Māori, and $200 million to increase the supply of Māori housing and to repair properties. In addition, targeted funding is provided for repairs to whānau-owned homes in cyclone-affected areas.
We are continuing to foster the growth of Māori and Pacific languages, culture, and identity. To deliver the Pacific Languages Strategy, we will improve access to Pacific language learning resources with a $13 million commitment, and add to our already significant te reo Māori revitalisation with a $10 million boost.
Key Māori cultural institutions will receive investments to maintain and grow their impact. This includes Te Matatini, who will receive $34 million over the next two years. We are also providing a further $18 million to support recognition and community involvement in the Matariki public holiday.
Our investments in education and whānau illustrate our commitment to laying the strongest foundations for our tamariki and supporting households experiencing cost of living pressures.
To strengthen Māori education, we are boosting teacher supply, in addition to investing significantly in the infrastructure of Māori-medium schools, as I mentioned earlier.
To ensure families continue to receive the support they need, Budget 2023 increases investment in Whānau Ora and further expands its services in addition to the funding for Ngā Tini Whetū.
We know that Pacific peoples are more likely than other New Zealanders to experience unemployment or low employment. That is why Budget 2023 is investing almost $13 million to implement the Pacific Employment Action Plan. This will bring Pacific workers into new employment and training opportunities, and deliver the Pacific Wellbeing Strategy, which will fund initiatives that grow the capability of the workforce.
The COVID-19 pandemic and recent extreme weather events earlier this year show just how important it is to improve our resilience as a country. Severe weather in the North Island at the start of the year caused widespread disruption and damage to people’s lives and properties—the scale of which will be felt for some time.
In the immediate aftermath of the events, we made urgent investments to support the response, including direct financial support to businesses and growers, repairing damaged infrastructure, and providing temporary housing and other assistance to affected families. In advance of the Budget, more than $800 million had been allocated to this emergency response work.
We are building on our immediate response by investing a total of $941 million of operating, and $195 million of capital, expenditure in Budget 2023 to support the recovery and invest in regional resilience. This package will help local government improve flood protection; invest a further $475 million to rebuild our railways, State highways, bridges, and local roads; repair damaged schools; rebuild damaged whānau homes; and ensure the provision of temporary accommodation for dislocated families. The package also invests in the provision of health and mental wellbeing services, including the extension of Mana Ake. This package also maintains our support for those people made vulnerable by these events. This includes $11 million to top up community support funds and reduce food insecurity, funding to help businesses retain staff and displaced workers to find new employment, and to help connect individuals and whānau to the support that they need.
Budget 2023 also continues our support for the recovery of the primary sector and rural communities, with an additional $30 million committed to address time-sensitive health and safety and animal welfare challenges.
This is all part of the “rolling maul” of support for weather-affected regions. There is further work under way on regional and sectoral strategies and on support for severely affected properties.
We are committed to a regionally led recovery where local voices are central to Government decisions. We are supporting regional recovery structures to coordinate recovery, as well as the Cyclone Gabrielle Recovery Taskforce and local Public Service coordination for each affected region.
While we are focused on supporting families with the immediate pressures and protecting our vital services, we need to also deliver on our plan to build a high-wage, low-emissions economy to ensure security for all New Zealanders.
Budget 2023 investments are the building blocks for addressing New Zealand’s longstanding challenges, and they lay the groundwork for taking advantage of opportunities to build a sustainable, globally competitive economy.
The Government has taken significant steps to address New Zealand’s infrastructure deficit. We have committed $71 billion of infrastructure investment over the next five years, in addition to the $45 billion we have spent on infrastructure in the past five years. This is the funding that builds our schools, our hospitals, public housing, and rail and road networks.
In the last term of Government, we set up the Infrastructure Commission / Te Waihanga, which developed the New Zealand Infrastructure Strategy, identifying the challenges New Zealand is facing over the next 30 years. We know we need to change how we think about infrastructure planning and resourcing.
Alongside this Budget, we have released our Infrastructure Action Plan, which supports our response to the strategy and which is crucial to continuing to deliver the infrastructure transformation required, while providing certainty to the construction sector. As the plan lays out, we need to futureproof our infrastructure for New Zealand’s growing and changing population, climate change events, and to make use of developing technology available to us. The North Island weather events added a level of urgency to our infrastructure investment planning and highlighted the importance of resilience in the face of climate change and increasing extreme weather events.
Today, I am announcing a major change in how we address our infrastructure deficit and build a more resilient nation. Through Budget 2023, we are investing $6 billion in the initial phase of a National Resilience Plan. This will support medium and long term infrastructure investment and focus in the first instance on building back better from the recent weather events. The initial focus of investments will likely be on road, rail, and local resilience, as well as telecommunications and electricity investment.
As indicated at Budget 2022, the change to the fiscal rules means we can use our balance sheet more effectively to support long-term productive investments such as this programme. For too long, Governments have kicked the can down the road when it comes to investing in resilient and essential infrastructure investment. Today, we embark on the long-term nation-building that I believe a responsible Government must do.
We continue to invest significant resources into public housing through Kāinga Ora and community housing providers. I am proud to say that Budget 2023 provides funding to deliver an additional 3,000 new public homes by June 2025.
The turnaround in the building of public housing is one of the signature achievements of our Labour Government. So far, we have delivered 11,830 more public homes and 4,131 transitional homes. There are close to 4,500 public housing places currently under construction. Budget 2023 also covers the increased costs caused by inflation for finishing that work.
New Zealand’s national rail network is critical for passenger transportation and freight services. In Budget 2023, we are providing $369.2 million to continue to develop a resilient and reliable national rail service.
To address cost increases, the Government is investing $9.4 million operating and $197 million capital in the Auckland City Rail Link project to provide a key link within Auckland’s public transport network.
Budget 2023 includes significant investments in research and development to deliver on the Future Pathways reforms of our public research system. This is consistent with our commitment to increase research and development expenditure to 2 percent of GDP. The centrepiece of this investment is the establishment of three new multi-institution research hubs focused on health and wellbeing; oceans, climate, and hazards; and advanced manufacturing, biotech, and energy.
This $451 million investment will drive innovation, collaboration, and export-earning potential. It is an exciting development bringing public and private sector together to solve significant problems and foster growth of our science sector. Backing this up is investment in research fellowships and an applied doctoral training scheme, for more than 260 people, to fill skills gaps and grow a sustainable research system.
Budget 2023 continues our investment in industries that will drive us towards a high-wage, low-emissions economy. We will invest a further $74.7 million in our Industry Transformation Plans. This includes $30 million for the horticulture technology sector, which we will assist to develop more productive ways of operating, including for those affected by the cyclone. The Budget also provides new investment in the digital and tourism transformation plans.
The game development sector is a growing part of our economy. In 2022, it contributed $400 million to GDP, and is the source of high-value jobs that are driving export returns. The sector is an internationally competitive one, and we are at risk of losing our talent overseas. Budget 2023 includes $160 million to establish a 20 percent rebate for video game developers, which will help grow and protect New Zealand’s domestic game development sector. Individual game developers will be able to access up to $3 million as part of the scheme.
In Budget 2022, the Government established the Climate Emergency Response Fund (CERF) as a permanent feature of the annual Budget process. The CERF supports New Zealand’s climate change objectives by providing dedicated funding to initiatives that support the transition to a low-emissions and climate-resilient economy. In Budget 2023, there is a $1.9 billion CERF package to further reduce emissions and enhance our resilience to climate change.
As already noted, we are expanding the Warmer Kiwi Homes programme and reducing the cost of public transport for hundreds of thousands of Kiwis.
In addition, we are expanding our electric vehicle (EV) infrastructure. In many areas of New Zealand, especially in rural communities, there is not the charging infrastructure to support the exceptional growth in the number of EVs. Budget 2023 will begin the roll-out of our EV charging strategy, which will see charging hubs every 150 to 200 kilometres on main highways, and public charging at community facilities for all settlements of more than 2,000 people.
Funding is also being made available to support the purchase of low-emission heavy vehicles, like trucks and buses, to build on the success of the Clean Car Discount and the Low Emissions Transport Fund. It is estimated that this will see 500 low-emission heavy vehicles on the road, saving operators’ fuel costs by up to 75 percent.
The CERF is also supporting the $300 million capital injection to the New Zealand Green Investment Fund, a renewable energy system for the Chatham Islands, and funding for community-scale renewable energy generation and storage.
The size and make-up of the Budget 2023 CERF package reflects the scale and breadth of the challenge ahead of us, while prioritising resources to where they can have the greatest impact.
Putting Budget 2023 together has required challenging trade-offs and decisions. Along with the investments we need to make to help reduce the pressure of the cost of living, delivering public services, and our resilience and recovery, we also have to move to a more sustainable fiscal position.
The last few Budgets have supported our response to, and our recovery from, the impact of COVID. This has necessitated significant spending, which is now reducing. The forecasts in this Budget see core Crown spending as a percentage of GDP tracking back to just above the long-term average at 31.5 percent by the end of the forecast period. We need to move carefully in reducing spending so we don’t undermine the investments we have made, but this direction of travel is important for the long-term prosperity of New Zealand.
Persistent inflation has meant that the costs of delivering Government services have increased. And it has been necessary to slightly increase the operating allowances set at the Budget Policy Statement for this year and in out-years in order to meet these costs, including the cyclone and flood recovery, rather than cut essential services.
The Treasury is forecasting inflation will decline across the next few years to 3.3 percent in 2024 and 2.6 percent in 2025.
Even with the investments that we have made, New Zealand continues to have some of the lowest public debt in the world. New Zealand’s net debt is forecast to peak at 22 percent of GDP next year before reducing to 18.4 percent at the end of the forecast period. This compares well, using IMF measures, with the likes of Australia at 36 percent, the United Kingdom at 95 percent, and the United States at 96 percent.
Anchored by the fiscal rules that we set at Budget 2022, we are on track to return the OBEGAL to surplus within the forecast period, although one year later than was forecast at the half-year update. The costs of responding to the cyclone and more persistent inflation are the cause of this, but it is worth bearing in mind that this will be the same length of time that the previous Government took to return to surplus after the global financial crisis (GFC). Average deficits as a share of GDP remain lower than in the wake of the GFC.
Our prudent fiscal strategy of running surpluses and reducing net debt before COVID meant that we had a stronger starting position than other countries. It meant we could use our balance sheet to protect lives and livelihoods during the pandemic. This has helped prevent a deep and long-lasting recession. Treasury is, in fact, forecasting that the economy will not now go into recession. New Zealand’s fiscal position remains strong, and the fiscal forecasts stronger than expected, even in the face of the increasing costs of delivering core Government services, and the recent weather disasters. In total, $4 billion in savings and reprioritisations have been achieved to offset new spending this Budget.
We will approach future Budgets with the same restraint to ensure a sure footing for our public finances for generations to come. As they were at this Budget, Ministers will be required to identify opportunities for the reprioritisation of resources and improvement of efficiencies within baselines before seeking new funding. Finding opportunities to cut back spending and to redirect funding from one activity to another helps us ensure that funding is directed to the highest-value activities and that the Government is focused on the issues most important to New Zealanders.
Significant reprioritisation of funding has been achieved for Budget 2023, including $280 million from reducing funding no longer needed for fees-free tertiary education, and $385.8 million from the COVID health tagged contingency, while still leaving enough support for our COVID response for this winter.
Alongside Budget 2023, the Government has refreshed its priorities to focus on the issues that are most important to New Zealanders. This also yielded significant savings which we have used to offset new spending at Budget 2023. This includes $364 million from stopping the TVNZ-RNZ merger, $585.1 million from stopping the Clean Car Upgrade and social leasing trial, and $500 million from the refocused water services reforms.
Budget 2023 also includes tax changes that improve the integrity of our tax system by bringing the trustee tax rate in line with the top personal rate. This change will help ensure that the top marginal tax rate applies more comprehensively to individuals with income over $180,000. This approach was recommended by officials when the top income tax rate was increased. Ministers undertook to monitor the situation and we are now acting. It is interesting to note that just 5 percent of trusts accounted for 78 percent of the income in the 2021 tax year. This change addresses a potential loophole while also making sure there is more equity in our tax system.
Our total savings and revenue changes have allowed us to keep core Government services running in a high-inflation environment, support New Zealanders with the rising cost of living, and respond to the recent North Island weather disasters—all while ensuring we keep net debt well below its ceiling of 30 percent of GDP, and that we are on track to deliver an operating surplus by 2025-26. That is a balanced fiscal strategy.
Budget 2023 comes at a time of considerable pressure on households, businesses, and amid international uncertainty, persistent high inflation, and global supply chain issues. It is a Budget that does exactly what it says on the tin: support for today and building for tomorrow. We know many New Zealanders are doing it tough right now, and we are here to support them as we have done over recent years.
Doing the basics well, including providing strong investment in the services that New Zealanders rely on, has to be the priority right now. There are many things the Government might like to do, or tax cuts that other parties might decide to promise, but, for me, keeping our children safe, warm, and dry at school has to come first. Building 3,000 more State housing places has to come first. Funding our health system for 500 more nurses has to come first. Having more police on the front line has to come first. Support for people with disabilities, older New Zealanders, and the vulnerable has to come first.
These investments don’t happen by chance, and they are ultimately at risk if there is not a Government determined that they will be there; they happen because a Government prioritises them and because we know they matter to our people.
We also know that, even in tough times, it is vital we look to a better tomorrow. Our investments in our people, our businesses, our communities, and our environment will guide us to that place. We are making investments in this Budget that will build our nation for the future.
We are a resilient and innovative country, and one where opportunities abound. Once again, through Budget 2023, this Labour Government is ensuring that each and every New Zealander can seize those opportunities and achieve their potential. Kia kaha, kia māia, kia manawanui. I commend the Wellbeing Budget 2023 to the House.
Budget Debate
Budget Debate
CHRISTOPHER LUXON (Leader of the Opposition): I move, That all the words after “That” be deleted and be replaced with “this House has no confidence in the Government because it cannot manage the economy properly, has no plan to tackle to the cost of living crisis, and New Zealand is going backwards.”
Well, that speech and this Budget is just another example of this Government gaslighting the country, because Chris Hipkins and Grant Robertson are trying to tell Kiwis that they’re doing a splendid job managing the economy and everything is just fine and being well managed. But I have to say it is not fine; New Zealanders know it’s not fine. I can tell you I know it’s not fine and deep down Chris Hipkins and Grant Robertson know it’s not fine either. Sadly, it isn’t fine and New Zealanders know it, and there’s 50 percent of Kiwis now who worry about money on a daily basis—they know it’s not fine. The 430,000 Kiwis who have debt arrears—they know that the economy’s not been well managed and things are not fine. Sadly, the 20,000 Kiwi families who actually are facing a loss of their houses because their mortgages—they can’t afford them anymore. They know things aren’t fine as well.
What they know today is that Budget 2023 doesn’t change their situation, because this was presented as the “no-frills Budget” but what we’ve got today is the “blow-out Budget”, because what we’ve seen is a continued addiction to spending: spending up to $137 billion—almost doubled since this Government came to power. We see a huge growth in debt to $97 billion by 2026. We are seeing massive Budget deficits, up $7.1 billion larger this year. And the implication of all of that is that we actually have Treasury—page 1 of the executive summary of the Budget—saying interest rates are going to remain higher for longer. Just think about the pain and suffering that causes for Kiwis who have a mortgage. Every single one of them doing it tougher, harder, for longer. Not a single cent of tax relief going to hard-working Kiwis; not nothing—not nothing.
So the Government said this is the “bread and butter Budget”, but it’s delivered on the backdrop of food prices up 28 percent, and the Prime Minister talks about bread and butter a lot, but bread is actually up 39 percent under Labour, and those sausage rolls that he likes to have selfies with, well, they’re actually up 36 percent under Labour.
So what we see in this Budget is no ideas—no ideas to drag New Zealand out of the economic hole, no ideas to tackle the underlying causes of inflation, and there are no ideas in here to stop single, young people shooting off overseas and joining the 25,000 other Kiwi citizens that have bought one-way tickets to Sydney or Melbourne or London. In fact, last night we saw a rather perverse thing happen. What we saw was Chris Hipkins has taken $10,000 of hard-working taxpayers’ money and he’s actually advertising in Australia to say how much easier it is to get ahead in Australia than it is here in New Zealand—unbelievable. I have to say, Prime Minister, your job is to fight to keep Kiwis here at home and to create a country that can deliver a better future for them here at home.
Now, this is the “blow-out Budget”, and it’s just spend more and expect Kiwis to pay for it—that’s what it is; that’s what we’ve come to expect. But I’m not surprised. You know, we’ve had a change of Prime Minister. He’s tried to adopt some new language and some new words, but the reality of it is just the same old Labour Government with the same tired, failed approach to running the economy. This is Grant Robertson’s sixth Budget but I sincerely hope, and for the sake of all New Zealanders, it has to be his last Budget because he is totally, utterly, completely addicted to spending. Every Budget he stands up and promises he’s going to deliver it this time—“This time I’ll get better; this time I’ll do better.” But every time he blows it out, and that’s because he’s addicted to spending and he’s an addict. As a result, he doesn’t want to admit that he’s got a problem.
The sad thing is that the new Prime Minister—his new boss—isn’t tough enough to tell him, “Hey, sunshine, we need to make an intervention here. That should get it sorted; get you back on track.” So it is very, very simple: the New Zealand people cannot afford another three years of this Labour Government.
Let’s talk about the economy, because the forecasts in this Budget make for incredibly grim reading. The books show us that there is more economic pain on the way, and that is thanks to this Government with no economic plan. Inflation is high, and the Government’s spending is going to make it worse. Interest rates, by their own admission, are going to be there for longer and stay higher for longer because of Grant Robertson’s and Chris Hipkins’ reckless addiction to spending. That will smash every single Kiwi with a mortgage up and down this country, and they’re going to feel that pain. The other thing that was obvious in the books is that unemployment is set to climb higher, and it’s higher thanks to this Government’s economic mismanagement.
Now, I want to be really clear. I want to explain to all New Zealanders, actually, how did we get here. How have Chris Hipkins and Grant Robertson so badly mismanaged this economy and got us into this mess? This is how it starts: it starts with record levels of Government spending—in fact, New Zealand was the second-highest in the development world in Government spending. Then they coupled that with extraordinary monetary policy. We were the fifth-highest country in the world printing cash. And then, just for good measure, they restricted immigration and shut the joint down and actually created domestic inflation. So what happened was New Zealand got flooded with money, it popped asset prices, and it embedded domestic inflation. That high inflation now means that we have to deal with high interest rates. It means that we deal with a shrinking economy and slowing growth for longer. That’s what’s happening here. That’s the pattern of economic history. Those are the lessons of economics that are well known.
I have to say, up and down this country, I go everywhere, every week, and I see New Zealanders that are doing it incredibly tough. They can gaslight as much as they want, and say that everything’s going to be fine and it’s all well managed; it’s not. I’ve sat across the table from families that are in budgeting services, and they are under immense stress and anxiety within that family, trying to work out how they reconcile their own Budget to pay for a big jump up in their mortgage costs. I’ve talked to Kiwis who have had to sit down with their kids and stop the music lessons and stop the swimming lessons, because they can’t afford it anymore because they’ve got to meet those mortgage repayments. I’ve actually gone and sat and talked with Kiwis who actually walk the supermarket aisles, looking for what they can buy, the basics that they want to be able to buy with the fixed budgets that they have, and they can’t, and so they go off to a food bank because that’s the only place they can get some support. Well, I want to say to all those Kiwis: you’ve got two people to blame on this; you’ve got to blame Chris Hipkins and you’ve got to blame Grant Robertson for creating that pain and suffering for you.
I want to tell you that it didn’t need to be like this. This Budget needed to deliver a plan for New Zealanders to grow the economy, and it didn’t. This Budget needed to deliver a plan to deal with the underlying drivers of inflation and not just more band-aids, but it didn’t. Because we know that a strong economy is the way in which we get to lift incomes, it’s how we get to borrow with the cost of living, and it’s how we get to afford the public services that we so desperately deserve, that’s why we care about this stuff. That’s why we care about good, strong economic management, because that’s what it enables us to do for this country. All we get is Labour’s plans to spend billions of dollars more in an inflationary bonfire. Let me be clear: Labour has blown the Budget, they have blown the books, and we are going to be suffering with more pain.
So let’s talk a little bit about spending, because, as I said, the addiction to spending is even more intense than it’s ever been before. I have to say, I thought it was quite outrageous, quite incredible that this week our Prime Minister couldn’t front up and actually explain how much his Government is spending—he didn’t know, and, frankly, didn’t think it was probably that important. I reckon all that is is just massive disrespect to taxpayers—massively disrespectful—because he doesn’t care, he doesn’t understand the numbers, and he just thinks it’s his money, he’ll just keep taking it, and actually treating them like a bottomless ATM machine.
Let’s work through those numbers, because we now have debt set to climb to $95 billion. Do you know what the interest bill on that is each day? It’s $22 million—$22 million that we don’t get to spend on something else. We’ve got Government spending ballooning out to $137 billion. How much do you reckon that costs each Kiwi family? It costs $23,000—$23,000 more each year because of Government spending. There is $61 billion more in spending, and absolutely nothing to show for it.
And what have we seen from this Government? We’ve just got a culture of excuses and we’ve got a culture of addiction to spending; $1.8 billion on consultants, yet Chris Hipkins told them “Don’t spend on consultants”, but they kept doing it anyway; $200 million on a failed polytechnic merger, 80 percent of the staff want to leave, 10 percent less enrolments and looking for more money with more deficits; $100 million on Government advertising; $500 million for very big companies on climate subsidies; almost $500 million on a health bureaucracy that should be going to the front line; $50 million on that bike bridge—that was special, wasn’t it? Wasn’t that just special? The bike bridge was very special! Willie spent $16 million on the Radio New Zealand - TVNZ merger, and we all know how that ended. And we’ve got 200 comms staff now at Health New Zealand and more at the ministry. Frankly, I’d sooner have more nurses. I’d sooner have 200 nurses, not 200 comms staff. And we’ve got a tenfold increase of comms staff at Michael Wood’s New Zealand Transport Agency. And then we’ve got the beauty, the $30 billion on light rail that just keeps sitting out there, coming one day—coming one day.
So let’s be clear: they have blown the budget. Grant Robertson spent billions of dollars. He’s blown out the books. We’ve got massive deficits. We’ve got years of deficits ahead of us based off this. He’s blown out the credit card and debt is spiralling up to $95 billion. And I have to say, Chris Hipkins doesn’t get it. After six years in Government he doesn’t get that every dollar the Government spends has to be earned by someone. It has to be earned by a Kiwi who’s building a business in very tough conditions at the moment. It has to be earned by a Kiwi who’s working hour after hour after hour just to put food on the table. And it has to be earned by Kiwis who get up and go to work, who get the kids to school, who make the school lunches, and, actually, want to get ahead. They pay the taxes and he spends it and he wastes it.
But rather than confront their own, you know, addiction to spending, what do they do? They look to blame others. And so they blame COVID—they blame COVID. And this year, they’re going to be spending tens of billions of dollars more than we had during the COVID period. Unbelievable—quite unbelievable. And they make any excuse to avoid actually facing up to their addiction.
Now, we heard a little bit of trying to be financially responsible in that speech. You know, Grant Robertson, at the end, he gave a good sort of pitch to say he’s being very responsible. You know, it just goes on and on. It’s quite incredible. But it was a grovelling speech. It’s a bit like saying, “I want the Diet Coke to go with the Double Quarter Pounder meal”; you know what I mean? “I feel better, you know, because I’m trying to do that”. But that’s what’s happened here. But, again, he’s like an addict who says, “I don’t have a problem, I’m going to be better this time, I promise”, you know? And we’ve had six of these things now, and he keeps saying, “I’ll get better” each and every time but it hasn’t been the case.
Now, let’s talk about tax, because it is incredible that under Labour it’s always a time to spend up but it’s never a time for tax relief for the good, hard-working people of New Zealand. They’re happy inflation-adjusting benefits, they’re happy inflation-adjusting the minimum wage, they’re happy inflation-adjusting superannuation payments and departmental budgets. But they refuse to inflation adjust tax thresholds for hard-working Kiwis getting up and going to work each day. And I’ll tell you why they won’t do it; it’s because they’ve got a culture of entitlement at the heart of this Government, right? They think they are entitled to your money. They think they are entitled to waste it. And as we’ve seen over the last few months with all the shenanigans and all the comings and goings, they think they are entitled to rule, and that’s just not the case.
So sun, wind, rain, or shine, Chris Hipkins and Grant Robertson keep coming up with excuses about why Kiwis don’t get their own money back, why they can’t spend it as they see fit. And that’s because they’ve got an addiction to spending—a billion dollars more each and every week is what they’re spending, $100 million extra in tax is what they’re raising each and every day, and they have carried on failing to address the drivers of the cost of living crisis, failing to do anything to grow the economy and failing to deliver meaningful tax relief for New Zealanders.
And I want you to be under no illusions, because if they get back in later this year they are going to hit Kiwis with more taxes, you know, because the addiction to spending doesn’t go away; you’ve got to go find the money to pay for it. And Chris Hipkins supported David Parker. David Parker noodles away on his Piketty projects. He’s the great man who gave us that genius idea of the KiwiSaver tax. Remember that one? Yep. So he’s down there in the basement somewhere, and he’s noodling away, and he’s dreaming up new ways for new taxes. Because they need it, right? They need it. They need to keep new taxes so they can fund that addiction that they’ve got going on.
That’s why you won’t hear Chris Hipkins rule out a capital gains tax, will you? You won’t hear him rule out a wealth tax. He’s still got David working away on it. You won’t hear him ruling out an inheritance tax. But I want New Zealanders to be under no illusion: it’s coming—it’s coming. If they get back in, they’re going there, rest assured. They have to go there because they’ve got such an addiction to spending; they’ve got so many deficits and so much more debt to pay off. I want to say to all Kiwis: if you’ve got a farm, watch out; if you’ve got a KiwiSaver account, watch out. I want to say to you: if you’re doing the right thing, trying to build up a nest egg for the future, watch out because they’re coming for you—they are coming for you, no doubt about it.
This Government, I think, is the “Gaslighting Government”. They are literally a gaslighting Government. They have the audacity to stand up and tell you how it’s all fine—“Actually, everything’s just great!”—and yet we know the reality is so, so different. They will look you in the eye and say everything is great. Remember Chris Hipkins said, “The healthcare system? It’s got so much better in the last three years—so much better.” I want to tell you that Kiwis know it: just saying it’s so doesn’t make it so. That’s not how it works. It can’t work that way, and it’s just time for this Government to start delivering.
We’ve talked a lot about the amount of spending that this Government is doing—that’s one thing—but they also need to be laser-focused on the quality of the spending that they’re delivering and the value for money that they’re delivering to the New Zealand taxpayer, because, putting aside the sheer amount of money they’re spending, that’s where I actually think this Government has failed. It has failed to deliver outcomes and to get things done for the New Zealand people. They talk about all the activity, but they never talk about achievement. They’re two different concepts—they are two different concepts. One is inputs and one is outputs. When you’re spending a billion dollars a week, we have so little to show for it.
Let’s just talk about education, because that track record is atrocious. I’ve got to say: who was the Minister of Education for the last five years? Who did that job? Oh, Chris Hipkins did that job! And now they’re spending $6 billion every single year, and they’ve got nothing to show for it. Here we are in a developed country and 53 percent of our kids do not go to school regularly. We have 100,000 chronically absent from school. Half of our kids arrive at high school not on expectations as to where they should be academically. We had half of our 15-year-olds fail the most basic maths, reading, and writing tests—that they need to succeed in the world. We had the Progress in International Reading Literacy Study reading score come through just yesterday: an all-time low—all-time low—and now we have New Zealand out of the top 10 countries in the developed world on maths, reading, and science. I think that’s just shocking.
So what do you need to do? You need to focus on the basics. You need to make sure you teach your kids an hour of maths, an hour of reading, and an hour of writing every single day in primary and intermediate school. That’s where your education priorities should be. That’s called “getting outcomes”. That shouldn’t be controversial, I would have thought—I wouldn’t have thought that would be controversial—but the reality is that Labour doesn’t support it. They’re not going to give it a chance, they’re not focused on the basics, and they have no ideas on education.
Let’s talk a little bit about health, in the time that we have, because that is another story: $12.4 billion more on the health system, and yet we have absolutely nothing to show for it. Just think about it: child immunisation rates have fallen off a cliff; surgery waiting times are at record highs; cancer treatment delays are at record highs; specialist waiting times are at record highs; and we’ve got emergency department (ED) waiting times at record highs. Once Ayesha Verrall sorts out the data, we still know that we’ve actually got record highs. Every single health performance measure in this country has gone backwards. It is utterly, utterly unacceptable, and we have spent so much money. What happened to the $2 billion on mental health—$2 billion on mental health? We have an individual spending 94 hours in an ED, waiting to get access to mental health services. The only area I think Health New Zealand has excelled in is that they have got a lot of communications staff, and there is no shortage of communications staff at Health New Zealand. Your surgery won’t happen on time but, if you look on the website, it looks just lovely! No ideas from Labour.
Now, what is obvious from this Budget is that this is a Government that has run out of ideas. It’s run out of energy, and you’ve only got to look at the Ministers opposite us to see that they’re dead inside. They should be getting Grant Robertson cost of living payment from last year! That’s how they are. But, I have to say, despite all the challenges, I remain incredibly optimistic about the future of this great country of ours. We have a great country. We’ve had some big challenges. They have to deal with a really unsupportive Government, but New Zealanders are extraordinary. They are determined and creative and innovative and hard-working people who want to get ahead, and we want Kiwis who get up and milk cows and go to work and get their kids to school and want the best for their family. We want to back them, and we are going to back them, because we have incredible Kiwis who want to go out in the world, and they want to beat the world. And that’s fantastic.
Under a National Government, we’re going to celebrate success, not tax it. We’re not going to tax it; we’re going to celebrate it. We are going to restore the promise of New Zealand, because the promise of New Zealand was very simple: it didn’t matter where you came from; it was about where you were going. That’s the deal. The other deal was that if you’re prepared to work hard, in the best country on earth, you can get ahead and you can do well for you and your family. We have a common-sense plan to do that. National is going to fix the economy so that we can deliver better health and education, and we can restore law and order. National is going to get New Zealand back on track.
Rt Hon CHRIS HIPKINS (Prime Minister): Budget day is a day for details, a day for plans, a day for vision. We just heard none of those things from the Leader of the Opposition. The biggest blowout that we have seen today was the release of hot air from the Leader of the Opposition opposite. It is no wonder his own colleagues have started to refer to him as “Captain Cliché”, because after three years to come up with a credible plan for what National would do for New Zealanders, we heard nothing today from the Leader of the Opposition about what a National Government would stand for, about what a National Government would do. All we heard, as we have heard for the last three years, is more running down of the New Zealand economy, more running down of New Zealanders—how out of touch can you get?
This is a great day for New Zealanders. It is a great Budget for Kiwi families. In a cost of living crisis, New Zealanders know that they can trust this Government to have their backs and to work to ease the pressure that they face, because that is exactly what we have done today. We know that families are under the pump at the moment; they are feeling the pressure. We know that household budgets are stretched, and the answer to that needed to be a Budget that is going to support families not just now but also in the future, one that lays the foundations for a better future for New Zealand, because that is what this Budget does. This Budget, unashamedly, is about balance. It is a proudly Labour Budget, about making targeted and affordable investments in the cost of living, in providing relief for New Zealanders who are needing that, and it is also about making sure that the future can be better.
When I became Prime Minister in January, I said that we would get back to basics, and that is what we have been doing. I said that we would prioritise bread and butter issues like the cost of living and investing in the public services that New Zealanders rely on every day, and that is what this Budget does. I said that we would be focused on infrastructure, because this is the Government of infrastructure. You might hear others talking about it, but they don’t deliver. This is the Government that is delivering when it comes to infrastructure. This is a Government focused on creating the conditions for a growing economy.
I heard the message from New Zealanders that they thought that in some areas we were doing too much, too fast, and that they wanted to see us focus on the basic issues that are affecting them right here and right now, and that is what we have been doing. The first step of that was a reprioritisation exercise, making sure that the Government’s energy, its resources, and funding are focused on the issues that are most important to New Zealanders right now. That meant focusing on the issues that are about supporting working families, supporting people in need, supporting our businesses, and building the infrastructure that we need, and that is what we have focused on.
We have saved $4 billion in this Budget to reinvest in those most important priorities, to focus on the things that matter. We’ve continued to deliver for families, for students, for older New Zealanders. We’ve freed up more money and more resource so that we can focus on making sure businesses have access to the skilled labour that they need. We have continued to boost funding for the public services that New Zealanders rely on every day, and, of course, I am very proud of the work that we have done in the past few months to progress our international trade agenda, including through bringing into force the free-trade agreement with the United Kingdom—something that is going to be a boon for New Zealand exporters.
We’ve continued to work on improving the pay and conditions of New Zealand workers, because on this side of the House, we believe that if you work hard, you should be able to get ahead and that that is not the preserve only of those on the highest incomes; that should go to those who are on the lowest incomes as well. We don’t call them “bottom feeders”, on this side of the House; we call them Kiwi workers. They deserve a Government that’s got their backs, and that’s what they have.
This is a Government that is focused on ensuring that New Zealanders get the support they need and that our Kiwi kids get the best start in life possible, and I am so proud of the work that this Government has been doing in that area. I’m also proud of the work that we have been doing to support older New Zealanders. We have increased superannuation—one of the biggest increases to superannuation that our older New Zealanders have seen in quite some time. There have been minimum wage increases to make sure that the Kiwis who go out to work every day and flog their guts out actually get rewarded for that and can actually make ends meet. We are making sure that our benefits are keeping up with the rising cost of living, and we’re providing support for students. These are all things we have invested in in this year’s Budget. We’ve supported over a million Kiwis with the winter energy payment—thank you, Grant Robertson, for that.
We are building 3,000 new classrooms because we are not content to have kids learning in hallways and gymnasiums and libraries, which is the situation we inherited from the last Government, and we are very close to putting 1,800 extra police on the beat since we became the Government, because under the last Government the ratio of police to New Zealanders went backwards. We have been focused on keeping our community safer by putting more cops on the beat because, again, those members might talk a big game when it comes to law and order, but they just don’t deliver. And I make no apology for the fact that under this Government, our teachers, our nurses, our doctors, our firefighters, our police, our social workers, and our front-line public servants have been receiving the pay increases that they deserve, which stands in stark contrast to the nine years prior to the time that we became the Government.
I want a country where if you work hard, you can get ahead. I want to live in a New Zealand where the circumstances into which you were born do not dictate the opportunities that you have in life or hold you back. I want a country where parents who work hard can provide a better life for their children, a better life than the one that they might have had, through their hard work. I want to live in a New Zealand where effort and contribution are recognised and celebrated and rewarded, and where all New Zealanders get a share in the future prosperity of this country.
I want to live in a country that is proud to care for the most vulnerable among us, and that is what our Government is delivering. But I also want New Zealand to be a country that is optimistic about the future, that is outward looking, and that is confident and ready to take on the world, and that is what this Government is committed to delivering. We are not running down the country; we are proud of New Zealand. We are proud to be Kiwis and we are proud to represent New Zealand on the world stage with optimism and with confidence because we know that that is what is going to deliver a better deal and a better economy for New Zealanders.
I spoke about the work we did after I became Prime Minister around reprioritisation, and today’s Budget is the second step in that plan. It is the Budget that sets out our new focus and new direction, one that supports Kiwi families today and builds for tomorrow. The cost of living package in this Budget will make a real difference for millions of New Zealanders, and it will make lives better. One of best investments we can make as a country is the investment we make in our children, our tamariki, and I am so proud of the work that we are doing in early childhood education. Through this Budget, 40,000 additional Kiwi kids will be eligible for 20 hours a week of free early childhood education. It was a Labour Government that introduced 20 hours a week of free early childhood education, and it is a Labour Government that is expanding it.
We are committed to addressing issues around the cost of healthcare and making sure that cost is not a barrier to Kiwis living healthy lives. The work that we are doing in this Budget to scrap the $5 prescription co-charge will deliver for New Zealanders. It will help to keep people out of the health system when they don’t need to be there. It will help those New Zealanders who aren’t collecting their prescriptions because they can’t afford to have them, and those are many of the same Kiwis that end up in our health system avoidably because cost is a barrier. The work to scrap the co-payment is in stark contrast with the last Government, who increased it. When the times got tough—when the going got tough, they decided to clobber New Zealanders who needed healthcare by increasing co-payments for prescriptions.
Our Government recognises that when times are tough, making sure Kiwis can access the healthcare they need is one of the most important things that a Government can do, and that is exactly what we are doing. Reportedly, 135,000 New Zealanders went without collecting their prescriptions because they couldn’t afford to collect them. This Budget delivers for them. It delivers for elderly New Zealanders who rely on those prescriptions. It makes sure that Kiwis can access the healthcare that they need. Costs should not be a barrier to healthcare.
But, furthermore, there is more around the cost of living. Making sure that Kiwis can get around is also a very important priority for this Government. This year’s Budget extends free public transport for five- to 12-year-olds indefinitely so that our children can get around on free public transport, and it extends half-price public transport for 13- to 25-year-olds, which is a real boon for our students getting around and a real saving to Kiwi families who are wanting to support their kids through their educational journey. It will make a very big difference: 1.6 million New Zealanders are now eligible for free or half-price public transport. To put that into context, for the average Kiwi family with two kids using public transport each week, they will be saving $30 a week. That is going to make a difference.
Since coming into Government, we have provided cheaper public transport fares for 2.7 million New Zealanders. We’re working to reduce their power bills too, with the Warmer Kiwi Homes retrofits: 100,000 more homes are warmer and drier because of the investments that we are making in this year’s Budget.
We know that after the last 18 months, it’s been tough for New Zealand families. Treasury is now forecasting yearly economic growth of 3.2 percent, and they are suggesting that we could avoid a recession altogether. That’s not by accident; it’s by careful economic management, and I want to acknowledge the work of our finance Minister, Grant Robertson, and his careful stewardship of our finances.
Most importantly, the Treasury are forecasting that our inflation rate will get back to within the 1 to 3 percent target rate by the end of next year. That will help New Zealand families to get ahead. One of the most important things that we can do in this Budget is to make sure that we keep the inflation rate pointing downwards, and that is what this Budget has been focused on doing.
But Budgets need to be about more than just the here and now; they’ve got to also be about investing for the future. Even in a cost of living crisis, we need to be building for tomorrow, and planning to come out the other side of the economic challenge that we have experienced. This Budget sets aside an additional $6 billion to build community resilience, and haven’t the events of the recent six months shown just how important that is. We want to build back better. We want to build back more resilient, and that is what we will do.
We inherited a housing crisis when we became the Government, and if there’s one thing you know about a housing crisis, it’s you don’t hock off the limited affordable rental houses you have; you build some more. That is what this Government is doing, and that work is continuing with the extra 3,000 public homes that we are investing in, in this year’s Budget.
I make no apology for the fact that we are spending an extra $1 billion on our health workforce. The people who go out there and deal with some of our most vulnerable New Zealanders every day—they deserve it. Our Budget is backing our exporters, and it’s backing new and emerging sectors of our economy—our game developers, our digital and tech sectors—because we know those are where the jobs of the future are going to be.
In the 20 minutes of hot air that we just heard, nowhere did we hear any suggestion of where the National Party think the jobs of the future are going to come from. Not one new idea about creating a higher-value economy or how we could grow the economy, or how we could grow incomes—nothing from them about it. But we did hear about that in the Budget because that is what the Budget is going to help to deliver for New Zealand.
This is a positive and pragmatic Budget. We’re looking at programmes that work and we’re making sure that they continue. A programme I am very proud of is the Apprenticeship Boost programme. After the global financial crisis, what did we see happen with apprenticeships under the last National Government? We saw them reducing the number of people in apprenticeships.
If we want to know why we’ve got critical skills shortages in areas like building and construction now, it was because of the under-investment of the last Government. We will not allow those mistakes to be repeated. Apprenticeship Boost is keeping our apprentices in work and it is resulting in more people taking up apprenticeships. That is going to be good for our future as a country, and we are focused on making sure that we are increasing the opportunities for our exporters. This Government doesn’t just talk a big game when it comes to international trade, we actually deliver. If you look at the trade agreements signed by this Government versus the trade agreements signed by that Government—the last Government—I will back this Government every day of the week.
But, more importantly, when we go abroad, we’re there to talk up New Zealand, not talk New Zealand down. We don’t go around the world complaining Kiwi businesses are too soft; we go around the world promoting Kiwi businesses because we are backing Kiwi businesses to create jobs and to help New Zealanders to get ahead.
We know that there are serious issues facing New Zealand, and what have we heard from the Opposition about what they might do and what their plans are? Well, so far, the biggest issue that seems to be confronting the National Party is that they think that they should start issuing tax receipts for New Zealanders. Well, I hope the National Party kept their receipt the last time they traded in their leader, because I think there’s a few backbenchers who are going to be looking for a refund, because after that woeful contribution that we just heard, I can tell that Nicola Willis is out of the House already, because she’s back in the boardrooms around Auckland touting her future prospects.
The “coalition of cuts” opposite has no positive and optimistic plan for the future of New Zealand. We know what would happen under a National Government. They haven’t really said much, but we can read it in the tea leaves and we can read it in their statement: Apprenticeship Boost—gone; Fees Free for those future workers like our future teachers, nurses, doctors—that would be gone under National; progress on climate change—gone; winter energy payments—finished; free and healthy school lunches—gone under National; school funding—reduced. As for workers’ pay and conditions, we know that they would be on the chopping block as well. Money for rail—chopped; State houses—sold off, because that’s what they did last time; the 10 days of sick leave introduced under this Government—back on the chopping block under a National Government.
I’ll tell you there’s one thing New Zealanders can be certain of under a National-ACT Government: one of the things that is absolutely clear is that both of those parties want to cut superannuation. They have both made it clear that they have plans to reduce eligibility for superannuation in New Zealand; they are united on that. The only question is: how deep are they going to cut it?
The ACT Party—for all of their faults, at least they have a plan, which is more than the National Party have. So it’s the team without a plan or the team with a plan. It’s probably the ACT Party’s plan that’s going to hold sway, and New Zealanders should be very, very worried about that, because the only thing that the ACT Party want to do, if David Seymour was Minister of Finance, which he seems to be lining up for—he’s nodding his head—is cut, cut, and cut. That is what a National-ACT Government would stand for.
But enough about them. Let’s finish on a positive note, and that is that I want to thank Grant Robertson for the work that he has done to support Kiwi families and to support Kiwi businesses. We know that the global economic conditions that we have faced in this Government have been tough. We know that there have been some tough choices in this Budget, and we know that Grant Robertson—as he always has, over the last six Budgets—has handled those well. He has given us a balanced approach to managing the New Zealand economy, one that is delivering for New Zealanders and one that will help to create a brighter future for New Zealand, not by ignoring the future, but by making sure that we are investing in it.
This is a Budget for the times. It is a no-frills Budget that’s delivering for New Zealanders. Well done, Grant Robertson; I am proud of the Budget that you have delivered.
SPEAKER: Just confirming that the question now is that the amendment in the name of the Leader of the Opposition be agreed to.
DAVID SEYMOUR (Leader—ACT): Well, I certainly rise in support of that question, and I just want to give a tip to the Labour backbenchers. You could see, in a Stalin-esque way, that they weren’t sure when to stop clapping. Let me clue them in: 14 October is when the show stops, after that performance by your excuse for a Prime Minister, Labour Party.
I say to that Prime Minister that it’s quite extraordinary how he forgets who he is and who’s been in Government for the last six years. There was a period there where he said, “I want a New Zealand where people can get ahead, where it’s fair, and where everyone has dignity.” Well, actually, we all want that. The difference is Chris Hipkins is the one who’s been in Government with Grant Robertson for the last six years, creating the problems that we have today.
The Labour Party likes to say, “Why can’t everyone just be positive? We’re doing our best. It’s a good job.” Well, maybe he should have a look at what New Zealanders are saying. Since June last year, every single reputable public opinion poll has the majority of New Zealanders saying that this country is going in the wrong direction, and, in the latest Curia poll, by two to one. So when this Government from Labour says, “Let’s be positive.” what they’re saying is that “We have never been more out of touch as a Labour Government.”, and that is why 14 October is judgment day and 15 October will be retirement day for all of those Labour backbenchers who don’t know when to clap.
This Budget should be named the “blow-out Budget”, because really, just for a moment—just for a moment—I almost believed Grant Robertson when he said he was going to be responsible and get spending under control. I thought that Grant Robertson, after he said he was going to spend $4 billion, will at least try and be a little bit responsible so that we can get inflation under control, so that mortgage rates can come down, and so that life can be more affordable. Surely, Grant Robertson would try and be a little bit more responsible. But, oh no, this is a reckless, irresponsible “blow-out Budget”, with $7.5 billion worth of deficit spending next year that will put all of this Government’s attempts to help with the cost of living in the shade.
The ACT Party predicts that with this massive blowout of borrowed money, mortgage rates will hit 10 percent next year on the floating rates, and that’s going to put pressure not just on people that have mortgages but on businesses and people that buy from them and on tenants who rent off landlords that also have mortgages. Adrian Orr will have been saying things in his office at the Reserve Bank that I’m not allowed to say in this House when he realises how irresponsible Grant Robertson is with his spending.
The problem with Grant Robertson is that he just doesn’t listen even to Chris Hipkins, because Chris Hipkins knows the problem. He said that it isn’t right for people to be tightening their belts if the Government won’t do the same. Well, we’re now going to see people up and down this country tightening their belts, trying to make their household budgets balance, because Grant Robertson can’t tighten his. His deficit spending is going to shoot inflation and mortgage rates through the roof, and he’ll come back and say, “Oh, but the Treasury says inflation will go down.” This is the same Treasury that two years ago said inflation would be 1.8 percent. This is the same Treasury that said last year that it would be 5.2 percent, and it’s now 6.7 percent. So when Treasury says that inflation next year will be 6.3 percent, it’s going to be higher, and when they say the official cash rate is going to be 5.5 or 6 percent, it’s going to be higher. This is all the symptom of a Government that has run out of excuses.
Excuses are the one thing that Grant Robertson has more than anything of. He’s got even more excuses than he’s got deficit dollars to spend. You see, Grant Robertson blamed COVID. Well, I’m sorry; it’s officially over—the world moved on over a year ago now. Then he blamed Vladimir Putin, and I can understand that as a political tactic, because he’s an extremely bad man. But the facts are that the oil price is now lower than it was before Putin started his war, so that excuse is gone. And then, perhaps most shamefully, he tried to use the victims of the floods and cyclones as an excuse for his endless addiction to spending other people’s money. Well, I’m sorry, but in this Budget, there’s $7 billion of borrowing and only $1 billion of extra spending for the cyclone and the floods; in fact, it’s not even that. There’s about $900 million of new spending to help people who in many cases have lost everything and still have no certainty about what that rebuild will look like.
So this is a Government that’s running out of other people’s money, it’s running out of excuses, it’s running out of options, and it’s going to do a huge amount of damage in the process. One day, people will write the history of Grant Robertson, and he’s no Caesar. What they will write is: “He came, he borrowed, he bankrupted all of us.” That’s what Grant Robertson will be remembered for.
There are reasons why people think that this country is going in the wrong direction by a ratio of two to one, and the reasons are all about us. I apologise to many people in the country, but I’m an Aucklander. I watch the news in my city, and every day it’s like a competition for a more grotesque crime. We saw it just yesterday. Somebody was brutally beaten on Quay Street outside the Ports of Auckland where the ships dock and tourists have their entrée to our country—disgraceful. A day before that, a 15-year-old teenage girl was shot in a road-rage incident on an Auckland motorway—you can’t make this stuff up. Sometimes I wonder if we’re talking about Māngere or Manukau or Mount Albert or Mogadishu when we hear about the crime in our country, and yet what is there in this Budget from this Labour Government to make the streets safer? It’s almost as though it’s not happening. They wonder why they’re saying, “Be positive, everybody.”, and yet the people look at them and ask, “What planet is this Labour Government on?” “Planet Out-of-Touch” is the planet that they’re on.
What about healthcare? This is the problem with Labour’s spending addiction. I wouldn’t mind the fact that they’re spending 61 percent more this year than they were spending five years ago when they came into Government, I wouldn’t mind the fact that their total spending will be up 80 percent in six years, I wouldn’t mind the fact they have borrowed over $100 billion in five years, and I wouldn’t mind the fact that they are taxing more than ever, if only they were getting some results. But where are those results?
Well, we’ve just heard it’s not in making the streets safer—victimisation is up in nearly every category—and think about what that means for New Zealanders. Think about the people who I regard as some of the greatest New Zealanders, who work long hours for little pay in dairies and convenience stores. They often have their family living behind or above their store. They are there after hours when it’s dark, and they don’t know where the next robbery or ram raid is going to hit. They don’t know if it’s going to be their place. They don’t know if any support will come, so they are starting to fight back. That’s what the lawlessness looks like—it looks like we are seeing vigilante justice. The other day in Auckland, I saw a group of people who actually locked a criminal inside their liquor store because the Government has given up on locking them into prisons. That’s what happens when the Government gives up upholding the law—people take the law into their own hands.
But what about health? You know, there’s been a 68 percent increase in healthcare expenditure in five years. That’s the basic facts—$18 billion in 2017, $28 billion now—and this is post-COVID. We can’t blame everything on COVID, remember—that’s the new rule for this debate. We don’t want to hear Labour blaming something that happened two years ago. You know, they used to blame the previous Government—they’re always blaming something that happened that’s no longer relevant. But $18 billion five years ago, now $28 billion in healthcare expenditure—a 68 percent increase in expenditure on healthcare.
If you were the Minister of Health in 2017 and someone had said, “We’re going to give you a 68 percent increase in budget in five years—another $10 billion to play with—do you think maybe you could get the hospital waiting lists a little shorter? Do you think you could get some more people to want to be GPs? Do you think you could get nurses happy in the workplace again?” I mean, with just $10 billion a year, would that do it—a 68 percent increase in expenditure? I think any sane Minister of Health would say, “Oh yes, I think that will be enough.” Well, they got the $10 billion a year, they got the 68 percent increase in expenditure, and what did they do? They decided to blow up the healthcare system and restructure it in the middle of a pandemic. They decided to rebuild our healthcare system around the ideology of identity politics, instead of the practicality of getting the operations done and the patients seen and the workforce happy in their jobs again. The result of that is a 68 percent increase in healthcare expenditure, and nobody is happy.
What about education? Well, sadly, it’s a similar story. We’ve seen the education budget go from $14 billion to $18 billion, a 38 percent increase in healthcare expenditure, and yet we have fewer kids going to school and learning less when they do. Once again, we have a Government that has put the ideology of identity politics well ahead of the practicality of transferring valuable academic knowledge to the next generation.
Now, it might surprise members to know, but I’m a bit of an old leftie when it comes to these things. I simply believe that people in this society, or in any free and fair society around the world, should have a place where their kids can go where they will be safe from bullying and violence, and where an adult they regard as respected and knowledgeable will transfer valuable academic knowledge that will equip them to navigate their future. That’s what I believe. That’s what the ACT Party believes. It’s one of the reasons the ACT Party was founded out of Labour, and yet where is the Labour Party on this question? They don’t even know how many kids went to school, and when they get there, they’re filled with ideological gobbledegook—anything but the facts of life and academia and reading and writing and arithmetic, which will actually get them able to navigate the 21st century.
In fact, it’s so bad that in the last 20 years, we have been overtaken by Russia at 10-year-olds’ reading scores. Just think about that for a moment: children growing up under a corrupt, megalomaniacal dictator called Vladimir Putin are getting better reading lessons than children growing up under John Key and Jacinda Ardern. That is how bad things are in education, and yet we do not have a commitment from this Government in this Budget to actually get back to teaching kids valuable academic knowledge without the ideological gobbledegook. In fact, we’ve got a commitment to more ideological gobbledegook, and the results for those kids that don’t get the valuable academic knowledge they need for their future are absolutely devastating.
Then there’s the cost of living. People don’t like to talk about the cost of living because they’re embarrassed that they work hard and they often lack the dignity to be able to make ends meet each week. People in that circumstance—they still tell me things occasionally. They say, “You know what? My front two tyres failed the warrant. It’s 200 bucks a corner. Now, I’ve got to balance my household budget for the next 12 weeks”—the next six pay days—“until I get back on an even keel, and I hope nothing happens like that again.”
Then there are people who are worried about the uncertainty. A young couple who bought a small house together when they had children have now decided that they’ve saved and paid off enough of their mortgage. They’ve got some equity. They’re thinking about buying a bigger house that has a bedroom for each of their kids, and they’re thinking maybe, at a stretch, they could keep their older, smaller unit and maybe use that as an investment for their retirement. Do you think they’re going to be doing that now, after this reckless and irresponsible inflationary Budget that will push up mortgage rates, when they’ve got a Labour Party that’s now going to campaign on introducing capital taxes that will whack them if their investment works out? Of course they’re not.
Then you hear from people in small business—restaurateurs—who say, “All our prices are up. We can’t afford to pay our staff any more. They can’t afford to drive to work. I’ve been slipping them petrol vouchers under the table so that they can afford to get in to work and do the job to keep my business running, where if I raise my prices any more, I lose my customers.” That is the inflationary cost of living crisis that is really a productivity crisis that has left New Zealanders, by two to one, saying that this country is going in the wrong direction.
But there is actually an alternative, and it doesn’t come from the National Party. It doesn’t come from telling people that if you vote for us, then we will send you a tax receipt in the mail—like it’s 1997—to tell you how much you have been paying in tax. People already know they’re paying too much tax, and the ACT Party is proud that we have published a fully costed alternative Budget that would cut out Government waste, invest in the areas that matter, and get this country flying again.
This alternative Budget reduces expenditure by $38 billion over four years, and we do that without touching a single front-line service—not one cop, not one teacher, not one nurse, not one doctor. In fact, as I come to it, we will pay some of them even more, and how do we do that? Well, it’s pretty simple. We’re going to reduce expenditure by $8 billion a year, but we’re doing that in the context of a Government that has increased its expenditure by $49 billion. We are offering to take about $1 in $5 of this Government’s extra spending and give it back to you in tax cuts, because I just so happen to believe that a Government as wasteful as this one could spend $1 less than $5 and give it back to the people who are struggling at home. That’s what our alternative Budget does.
But actually, it doesn’t give all of that extra dollar back; it invests some of it in critical areas. You see, there are some areas where the Government doesn’t spend enough. It’s too hard to get into a GP—we don’t have enough of them. Young graduates aren’t choosing the GP specialisation. We have GPs giving up and retiring, or not working the full week. We have GPs moving to Australia, where they get paid more, and, as a result of that, the average Aussie shares their GP with 574 other Australians and the average Kiwi shares their GP with 820 other Kiwis. So if you wonder why it’s hard to get in, we don’t have enough of them. That’s why the ACT Party would increase GP capitation fees by 13 percent so that it’s more attractive to be a GP and so that fewer will quit, more will train, fewer will leave, and more will come to be GPs in this country, and you might have a chance of actually getting seen—and, yes, that will save money throughout the secondary and tertiary healthcare systems.
In this country, we have taken defence for granted for far too long. We don’t live in Helen Clark’s benign strategic environment, and that’s why ACT’s alternative Budget would increase defence expenditure to 2 percent of GDP so that we can play our part and pull our weight in a fully interoperable ANZAC defence force to send a credible message to the rest of the world to back out of the South Pacific.
The biggest public policy failure in the last 30 years has been the failure to fund the infrastructure to build the homes so that the next generation can truly feel like they have a place in this country—not Australia—unlike our Prime Minister, who celebrates New Zealanders being able to move to Aussie and get a passport in another country. This alternative Budget would take $1.2 billion a year and give it to councils to fund the infrastructure so the next generation can build their homes.
When it comes to that, almost—how do you even describe it? You know what the streets of Auckland are like: it’s like that scene in The Lion King when Simba returns and the hyenas are running it. We’ve got to get serious about justice. We’ve got to stop the tag-and-release policy, where youth offenders just go in and out and in and out of prison. We need to start locking people up who have no other option and rehabilitating them, and not letting them out until they do. For that reason, in ACT’s alternative Budget, we take corrections for youth out of Oranga Tamariki, put them into the corrections system, and put some of these youth offenders—perhaps for the first time in their life—in a place where they have the mental health support, the physical safety, the nutrition, and the education. But we also make it clear that they’ve done wrong and they can’t leave until they’ve been rehabilitated.
We’d do the same thing for adult prisoners. Labour’s experiment of letting 2,000 or 3,000 people out of prison to see what happens to crime is complete. The jury is in: New Zealand becomes lawless and it’s not safe for many people to go about their lives. We will end that experiment and fund the imprisonment rates that we had in 2017, then start rehabilitating people, and not letting them out to see how much crime there is.
With all of that, we are able to cut taxes so someone—say, a nurse on 70 grand—would keep another $2,300 a year. That is what a responsible Budget would look like: back in surplus, cutting waste, funding the basics, and cutting taxes where possible.
There is a real choice for New Zealand, and it’s not between Chris and Chris, because it turns out that’s not much of a choice at all. The real choice is one of real change: to give your party vote to the ACT Party and choose a future for New Zealand where we truly become a prosperous, First World nation and an island paradise, which has always been New Zealand’s dream and ACT’s vision for our country. Thank you, Mr Speaker.
Hon MARAMA DAVIDSON (Co-Leader—Green): All right, the boys have had a little bit of a go. The Green Party will vote to pass this Budget. It includes some really important steps that will make a huge difference to people’s lives.
As a result of this Budget, people are going to find it so much easier to get on a bus or train. Thousands of families won’t be forced to pay through the roof to get their tamariki into early childhood education (ECE), and I do send a mihi to Minister Tinetti, and I understand how much of a difference that is going to make for so many people. I know that the ECE sector are going to be particularly happy about that. Households will get the help they need to make their homes warmer and healthier, and lower their power bills.
We are stoked that this Budget delivers a number of policies that the Green Party have campaigned on for over 10 years. Nine years ago, we promised to extend the 20 hours’ ECE subsidy to cover two-year-olds, and this has happened. Greens have campaigned for 10 years to deliver more affordable public transport, and now, in Government, this is a reality—yay! [Applause] Thank you, my colleagues.
Warmer Kiwi homes is also a longstanding Green commitment that dates back to 2009, when the previous Green Party co-leader Jeanette Fitzsimons won an agreement from the Government to insulate up to 180,000 homes. It was only when we got into Government in 2017 that we could scale this up to really make a difference. The key message from this Budget is that if Labour wants to keep working with us, we have plenty more ideas we can share.
The Budget also builds on the foundations that the Green Party has laid out over the last four years to take climate action in every part of Aotearoa, with another $1.4 billion towards cutting climate pollution. This is huge—[Applause]—yeah, please, pakipaki mai. This is huge, and it is on top of a $2.9 billion package in Budget 2022, and $865 million before that. But we absolutely need so much more. Overnight, some of the world’s leading scientists have confirmed that globally, we are now more likely than not to warm the planet by more than 1.5 degrees Celsius. This is the globally agreed limit for what we can safely deal with. Every fraction of a single degree matters. A 1.6-degree world is a lot less bad than a 1.7-degree world, but we simply cannot find out what 2 degrees of warming looks like, and that is up to all of us together. Every single tonne of climate pollution that is stopped matters. We are in a climate emergency, and it is time for everyone to act like it.
When I look across this Budget, I am struck not just by the impact the Green Party has had on people’s lives but by the breadth of issues on which we are making a difference. Is it enough? Not even close. So let me be clear: while we are pleased with large parts of this Budget, we know it still falls a long way short of what is needed. There is so much more that we could have done in this Budget now—not future ones, but now.
This was the Budget that could have reduced the outrageous and immoral level of income and wealth inequality we have in this country. It could have been the Budget that confronted climate change with the urgency and the scale that it demands, a Budget that made sure everyone in Aotearoa has what they need to have—kai on the table, a safe place to call home, and to be able to live a good life—a Budget that invested in action to protect our rivers, land, forests, beaches, and oceans, a Budget that can make sure that secondary teachers’ pay is in line with the rising costs of living, and a Budget that upholds Tiriti justice, returning resources directly back to iwi and hapū so that tangata whenua can finally have the autonomy and authority over our whenua and wellbeing that we were promised. It could have been a Budget that taxed the mega-rich to pay for it. Everything we need to make life better for people in Aotearoa exists, but what’s missing is the political willpower to use it.
Budgets are a political choice. These choices are meant to reflect the underlying values of the Government of the day. The reason we have a Budget is to allocate resources where they are needed so we can build the kinds of communities and society that are good for all people to live in, to create the conditions we need to support each other, to care for native wildlife, to cut climate pollution, and to make sure the richest few contribute more to cover the good things we all need. The Budget is one of the best chances the Government has to make clear to the people why it is in power and what it wants to do.
Today’s Budget will be talked about at length in the media, in our workplaces, around the dinner table, and amongst friends. In every case, it should be judged on the difference it will make to people’s lives. For many people, the struggle to put food on the table and to pay the bills is the concern that rises above all others. It’s the worry that keeps people up at night and the first thought people have when they wake up in the morning, and understandably so.
Inflation hits lower-income families the hardest—those whānau who spend the majority of their income covering the essentials like food and rent. One of the major drivers of inflation is corporate greed. Massive companies have cynically used global crises to push up their profits, and with it they have brought us more expensive groceries and higher energy bills. So while corporations like banks and supermarkets juice their profits, thousands of people are forced to struggle to get by: to put kai on the table, to pay the bills, and to heat their homes.
As I stand here, I feel the huge responsibility that is upon me and the Green Party to rewrite the rules around care, contribution, and connection; nurses and teachers being paid what they deserve; warm, affordable homes; thriving native wildlife; resilient communities with places for people to connect; fast, reliable buses and trains; and clean air to breathe. When thousands of our friends, our neighbours, and our whānau cannot afford to make ends meet, when we are facing more extreme weather super-powered by a fossil fuel industry whose political power has caused climate change, then we have a fundamental choice to make. We cannot allow the very rich to get even richer while everyone else struggles to get by. We can collect the resources we need from those most able to pay, and use that money to improve the lives of millions of people who have unjustifiably been missing out for generations.
Successive Governments have repeatedly denied their ability to fix major problems. They tell us that their hands are tied. Balancing the Budget has become an end in itself, so much so that it seems to be higher up the list of priorities of most political parties than actually helping people put kai on the table. The time to change that is right now. It’s simply not good enough for politicians to continue to rely on tired and disproven arguments about restraining spending.
Aotearoa is a wealthy country. We have what we need—there are no excuses for children going hungry. Putting a low spending to GDP ratio ahead of meeting the needs of everyone in our beautiful whenua is deeply flawed, it is economic nonsense, and, worst of all, it shows a lack of vision for building an inclusive Aotearoa that does work for everyone.
Ending poverty, ensuring everyone has a home and a high-quality health and education system, protecting our environment—as with any Budget, the only constraints a Government faces are those it places on itself. Right now, the biggest constraint of all is the money available and the tools we are not using to access it. This isn’t because the money is not there; it’s because Government after Government has actively decided not to use it.
It is simple: we must change Budget and tax rules so we can pay for the things that really matter to us. The money we need to support each other is already there. Some people have way more than enough, and others have been suffering through successive Government rules. There is no economic reason for these self-imposed revenue constraints. It’s a political choice—that’s it—and it’s a choice that comes with a cost. The rich get richer as they accumulate more and more unearned, tax-free wealth, while the rest of us struggle to get by, waiting for a bus that never comes, waiting for care from an over-worked nurse, or waiting for a decent, affordable home.
So if people want an answer to the question of why there is not more in this Budget to pay for the things we need, then look no further than the ongoing failure to fix the tax system. Cabinet has the tools it needs; it just needs more Green MPs to share our homework a lot more. At a time—[Applause] Oh, you’re so cute, my colleagues—I love it.
At a time of climate crisis and a time of massive wealth and income inequality, now is the time to completely change how we do things. Through political choice, wealth in this country is severely, severely out of balance. Right now, a tiny group of 311 people hold in their hands more wealth than nearly half of the entire population altogether. So this is a mega-rich group of families with a combined wealth of $85 billion, and yet they pay less than half the effective tax rate of a nurse. To put this into context, Government spending in 2022 on health, education, and welfare, including superannuation, was around $90 billion—only just above the combined wealth of these mere 311 individuals.
These individuals have, on average, wealth of $276 million each—$276 million each. The average house price in Aotearoa is $1 million, say, so that means 311 people own the equivalent of 276 houses each. That is immoral and unacceptable. Do you know how long it would take for the average nurse to earn that amount of money: 3,680 years. They talk to us about who works hard for their money—if that was the only definition, all nurses would be billionaires.
To stand by in the face of such a grotesque level of income and wealth inequality is stupid. Not only is it so obviously unfair; it is also counterproductive. It is starving our health, education, transport, and social services.
Make no mistake, we got here by political choices—a choice to favour a tiny group of people at the top of expense and at the expense of the rest of us. The fact that there are 311 people with enough money in their bank accounts or tied up in their tax-free property portfolios to lift every single family—
Matt Doocey: You’re giving them free prescriptions.
Hon MARAMA DAVIDSON: —in this country out of poverty—
Debbie Ngarewa-Packer: Oh look, the rich are triggered.
Hon MARAMA DAVIDSON: —overnight, we could all make this decision. Oh my, I’m shocked that the rich are triggered! I did not expect that. This Budget did not change those rules. It’s politicians who need to be triggered. We made these rules and we can change them, and the rest of you aren’t moving.
This House watches over one of the most egregious concentrations of wealth that I can think of. We must muster the collective political courage to do something about it. Well, the Green Party is up to it. We’re up for it.
The time is now to be bold. We need urgent action to cut climate pollution and build resilient communities where everyone has what they need to thrive; not just a few. We want to make sure everyone has what they need to have kai on the table and a safe place to call home, and to live a good life, not just a struggling, surviving one, but an actual, decent life. We need to stop large corporations trashing our environment. We need to restore our rivers, our oceans, our forests, and wildlife to health—to ora—for the benefit of everyone—
Debbie Ngarewa-Packer: Our seabed.
Hon MARAMA DAVIDSON: —and we need to allocate enough resources in our Budgets to do these things—yes, Debbie Ngarewa-Packer, including our beautiful moana and seabeds. The only way we can do that is by rewriting the rules to make sure the richest few people in Aotearoa provide more to cover the things we all collectively value. Ko tēnei te wā, kua tae te wā. [This is the time; the time has come.]
Today’s Budget makes it clear: if people want a Government that will build an Aotearoa that works for everyone and asks the most privileged members of our community to make it happen, the we need more Green MPs to influence the direction of the next Government.
Let me be up front about what needs to be put on the table and pushed for in any post-negotiations: a tax on the richest few that will raise money that we can use to build a climate-friendly, wiser, and more just, prepared Aotearoa that we can all be proud of, and an Aotearoa where everyone has a warm, affordable place to call home and kai on the table; where housing is treated as a human right and not just a get-rich scheme for the already wealthy; where people have the choice to walk or cycle or get on fast, frequent, affordable buses or trains to meet their friends, to get to the shops, to go to school, or to get to the park; where everyone has access to the healthcare they need whenever they need it, wherever they need it; where our nurses and teachers are all paid what they deserve; where all of our students can succeed without having to skip meals to make ends meet, like boosting student allowances to livable levels and making them available to all; where we have restored our awa, our moana, our ngahere, and our wildlife to health for the benefit of everyone; where Te Tiriti and mana Māori motuhake is honoured and embedded in everything we do and every decision we make; and where land is rightfully returned to tangata whenua so that we may have tino rangatiratanga over our whenua and resources.
I cannot say how the world will look for our mokopuna and mokopuna to come, but what I do know is that it will reflect the decisions we make today. The time is now to get those decisions right. No reira, tēnā koutou, tēnā koutou, tēnā tātou katoa.
RAWIRI WAITITI (Co-Leader—Te Paati Māori): Tēnā koe e te Pīka. Otirā tēnā tātou e te Whare. Well, it is yet another Budget year, where we all wait with bated breath to see who got the lollies from the lolly scramble. Three years of so-called “Wellbeing Budgets”, and the wellbeing of our people here in Aotearoa couldn’t be worse off. Let me start by saying that if we bought too much into the framing of the cost of living crisis so carefully orchestrated by my mates here on the right, the fact of the matter is that we have been living in poverty for a long, long time. Tangata whenua have been relegated as paupers on their own whenua, and it’s getting worse day by day.
It’s not until the wealthy are struggling to maintain their lifestyle that this House suddenly deems we have a cost of living crisis. It is a privilege to even discuss a cost of living crisis. Tangata whenua have never been afforded the privilege of experiencing a cost of living crisis, because they are still bearing the brunt of the cost of poverty—poverty orchestrated by and reinforced by the very parties that sit beside me and in front of me. This Budget chooses to prioritise the wellbeing of the rich over the wellbeing of the poor by ignoring the big elephant in the room: wealth tax.
Now, usually we will get up in this speech and do the courteous thing by thanking the Minister of Finance and thanking the Government for their work and being grateful for what we have been given. You know, nobody likes an ungrateful person, particularly an ungrateful native who has just been given some extra bucks. But I’m not going to do that today, because it’s not enough, and it will never be enough until this Government and successive Governments, in turn, meet their contractual obligations under Te Tiriti o Waitangi. Until such time as a Tiriti-centric Aotearoa is in full operation, reflected not only in the equal share of power and resource but in the return of our whenua, we will never be happy with any Budget that any Government proposes. So instead, today, for the slight increase to Māori we see in this year’s Budget, I pay tribute to the fierce advocates who made it happen: Merepeka Raukawa-Tait, the Whānau Ora Commissioning Agency—tēnā koutou—Herewini Parata, and Te Matatini ngā kapa katoa e te motu—tēnā koutou.
I just want to make reference and remind my Māori Labour caucus colleagues, thank you for going into the Māori Party manifesto, because it is there on page 17: allocate $19 million to Te Matatini. That comes in here. Now, we need you to go to page—well, you may as well do pages 1 to 20, and make sure that we get all of what our people deserve.
We are proud to have fought alongside you and delivered the largest ever increase in funding for Te Matatini, but we must ask: what happens after two years—why isn’t this baseline annual funding? Every year, successive Governments put forward a Budget that bamboozles the hell out of this nation. It bamboozles everyone into confusion and submission. Governments throw a few million dollars to Māori kaupapa to keep the natives quiet. They throw a few more millions into what is said to be Māori money, knowing full well it goes into a universal bucket. The intentional bamboozling leads Māori to believe they are climbing up the ladder when, in fact, the gap is growing wider and wider.
Governments know all too well that their Budgets for Māori don’t even scratch the sides of equity and equality. The small crumbs that are thrown our way is only playing bare minimum catch-ups for over 180 years’ worth of theft and oppression. This is why we are calling this a Budget for the rich. The “Sheriff of Nottingham Budget”: tax the poor and give to the rich. Through the conditioning of colonisation, us natives are expected time and time again to be grateful, and to smile and nod for the hands that feed us for the extra crumbs we receive—the narrative we will no longer accept, nor will we tolerate it.
Prior to 1840, 100 percent of these lands belonged to Māori, and 100 percent of the resource and power belonged to Māori. Today, we have less than 5 percent of our lands. Today, this Government offers 0.47 percent of the entire Budget, and you want us to be grateful? The epitome of our saying “Kei runga te kōrero; kei raro te rahurahu” [“Pleasantries on the surface to contradicted by unfavourable action below”]. Not only have not only have you consistently failed to uphold your obligation under the contract of the Treaty of Waitangi; you have you have consistently left your own people behind.
But let me move on to our solutions. Te Paati Māori envisions the promise of an Aotearoa hou, an Aotearoa hou that makes you feel like you would when you come on to our marae. We will welcome you. We will feed you. We will house you. We will connect you. We will educate you. We will care for you. We will heal you. We will love you.
Today, one-in-five tamariki Māori are living in poverty. This means that their whānau can’t afford a safe home, or essentials like regular, healthy food, doctors visits, or to pay their power bills. Food prices have gone up 12 percent in the last year, the biggest annual increase since 1989—poverty on steroids. While there are many things that can be done, the most important is ensuring people have more money. Our Aotearoa hou will look like everyone having the dignity to be able to put good, healthy kai on the table to feed their babies and their whānau. Our Aotearoa hou will look like higher incomes, ensuring an annual increase in the minimum wage to keep up with the living wage rate, removing sanctions and lifting benefits in line with inflation, extending the Working for Families tax credit to all whānau, removing GST off kai, and regulating price hikes from the supermarket duopoly.
Over 60,000 Māori are homeless because they can’t afford houses. Tangata whenua should never be homeless in their own homeland, yet the Government knows there are over 191,000 empty homes. That’s three times the supply to meet the demand, and we’ve spent more than $4 billion a year on housing subsidies and we’re not getting better outcomes. Aotearoa hou looks like every whānau in Aotearoa having a warm, secure, and affordable home—not just a house but a home. Aotearoa hou looks like putting a 2 percent tax on these empty homes.
We have a broken tax system in this country, which has fuelled extreme wealth inequity that is only getting worse. The richest 2 percent own 50 percent of the wealth in this country. Ordinary people and poor communities are subsidising the lifestyle of the rich. While the average person in Aotearoa is paying 20.2 percent in tax, the wealthy are only paying 9.4 percent. Estimates show that $7 billion per year is being stolen from Aotearoa taxpayers in tax evasion and tax avoidance enabled by a tax system that allows the rich to evade tax, further placing the burden on wage and salary earners.
Aotearoa hou looks like shifting the tax burden from the poor to the rich. It looks like a capital gains tax that if implemented in 2017, we would have made $200 billion in tax revenue. Just think about that for a moment: $200 billion. That is nearly two times the annual amount of revenue the Crown currently receives. Just think about what that could mean for improving the oranga of our people in an Aotearoa hou.
In their recent pre-Budget announcement, the Government celebrated that since they came into power in 2017, they have invested $4.7 billion in the defence budget, more than double what the previous National Government spent. Instead of investing in what matters—the oranga of our people and the oranga of our whenua—this Government is investing in weapons of war to prop up a global military industrial complex and imperial power games of Washington, London, Ottawa, and Canberra. Our Aotearoa hou looks like the $4.7 billion spent on defence could have been spent on ensuring everyone could afford the doctors visits and the dentists visits; on investing into marae and papakāinga and protecting them flooding and storms; on shifting that $4.7 billion to housing the homeless, lifting incomes, and enabling people to put kai on the table and pay their power bills.
Our Aotearoa hou will have a transformative defence and foreign affairs policy for Aotearoa, which asserts the mana Māori motuhake and tino rangatiratanga of tangata whenua. An Aotearoa hou looks like continuing to fund the Defence Force in the Pacific, for Te Moana-nui-a-Kiwa. With the events of the last few weeks, we’ve seen just how important it is that our Defence Force is focused on responding to threats to our own people. An Aotearoa hou is a military-neutral Aotearoa.
Climate change is one of the greatest challenges Aotearoa and Te Ao Māori will ever face. This Government continues to allow the granting of permits to drill, block offers of petroleum, gas exploration permits, and offshore seabed mining. The Labour climate scorecard is poor. As Aotearoa lives through the worst effects of climate change we have ever seen, this Budget delivers nothing but crumbs. We cannot overcome this crisis through electric cars alone.
There is nothing in this Budget to support the transition in our biggest-polluting industry: agriculture. Where is the funding to support a transition into regenerative and organic farming? An Aotearoa hou looks like futureproofing our communities, protecting our pepeha, and protecting the whakapapa of Papatūānuku. Our Aotearoa hou looks like whānau being able to swim and drink from their local awa without being worried about getting sick, gather kaimoana from their local pātaka without worry, and not have to deal with flooding week after week.
An Aotearoa hou looks like taking climate change seriously. It means investing in clean energy and restoring our taiao, protecting and preparing communities for climate adaptation, transitioning to regenerative and organic agriculture, and banning seabed mining. [Applause] Thank you, thank you. Our Aotearoa hou is what is needed right now, Mr Speaker, and that’s a different Mr Speaker—“The real Mr Speaker, please stand up!”
It is a place that is equal, equitable, fair, and just for all. It ensures the protection of the whakapapa of Papatūānuku. It ensures the mana of Te Tiriti o Waitangi at the centre of our country’s constitutional transformation, where tangata whenua and tangata Tiriti stand united, with honour and dignity.
Nā reira, come to the gateway of our marae, so we can welcome you all home to our Aotearoa hou. Kia ora tātou. [Applause] Thank you, thank you.
Hon Dr MEGAN WOODS (Minister of Housing): I move, That the debate be now adjourned.
Motion agreed to.
Debate interrupted.
Urgency
Urgency
Hon KIERAN McANULTY (Deputy Leader of the House): I move, That urgency be accorded the introduction and passing through all stages of the Energy Resources Levy Amendment Bill and the Energy (Fuels, Levies, and References) Amendment Bill; the introduction, first reading, and referral to a select committee of the Taxation (Annual Rates for 2023-24, Multinational Tax and Remedial Matters) Bill and the Taxation Principles Reporting Bill; and the first reading and referral to a select committee of the Land Transport (Road Safety) Amendment Bill.
Following long-established practice, the Government intends to progress bills through urgency as part of the Budget process. Two short energy bills will pass through all stages. The changes that they make are narrow and targeted. The purpose of the Energy Resources Levy Amendment Bill is to ensure that the Crown receives a fair financial return for its fossil gas. It must be passed quickly so as to avoid confusion over the current interpretation of the law, with possible losses of levy revenue to the Crown and the public.
The Energy (Fuels, Levies, and References) Amendment Bill aims to strengthen New Zealand’s fuel resilience and economic security. Urgency is being used to ensure that levy funding is available to roll out the fuel resilience policy package, as funding certainty is needed to finalise the arrangements for the reserve diesel stock arrangement by the end of 2023 and to administer the minimum stockholding obligation.
The urgency motion also includes three first readings so that each can be referred to select committee without delay, thereby maximising the time available for public consultation. The first of these is the Taxation (Annual Rates for 2023-24, Multinational Tax and Remedial Matters) Bill, which has to be passed by 31 March each year. Select committee scrutiny will be interrupted by the election. The bill also includes changes that are part of the Budget package. The Taxation Principles Reporting Bill proposes a statutory framework for the reporting of tax information based on core taxation principles. The Land Transport (Road Safety) Amendment Bill was introduced on Tuesday and strengthens powers to address unsafe behaviour on New Zealand’s roads.
A party vote was called for on the question, That urgency be accorded.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 47
New Zealand National 34; ACT New Zealand 10; Te Paati Māori 2; Whaitiri.
Motion agreed to.
Introduction of Bills
Introduction of Bills
SPEAKER: I understand it is the intention of the Government to introduce bills.
CLERK:
Energy Resources Levy Amendment Bill, introduction
Energy (Fuels, Levies, and References) Amendment Bill, introduction
Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, introduction
Taxation Principles Reporting Bill, introduction.
SPEAKER: The Energy Resources Levy Amendment Bill is set down for first reading immediately. The remaining bills in the urgency motion are set down for first reading presently.
Bills
Energy Resources Levy Amendment Bill
First Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I present a legislative statement on the Energy Resources Levy Amendment Bill.
SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.
Hon Dr MEGAN WOODS: I move, That the Energy Resources Levy Amendment Bill be now read a first time.
This bill clarifies the rules around royalties and will ensure that the Crown receives a fair financial return from fossil gas. The bill progresses a discrete change to the energy resources levy—that is an Act of 1976—to clarify who is exempt from the levy.
In a few moments, I’ll say more about the bill and how the amendment will support the collection of revenue from the Crown’s mineral estate, but first I’d like to explain to the House the background to the Government’s intention to introduce this bill and for it to pass through all stages under urgency. This context is important to understand why the Government is taking decisive steps, and I want to be transparent about this. All petroleum legislation, including the Petroleum Act 1937, and the Crown Minerals Act 1991 which superseded it, grant rights to mine Crown-owned minerals in exchange for a fair financial return to the Crown. The rights to extract fossil gas in certain areas are granted through licences and, more recently, permits. These are issued following the discovery of a deposit, and the licence or permit grants rights to an area that is deemed large enough to contain the reservoir intended to be mined.
There have been inconsistent approaches over time to achieving a fair financial return on the Crown’s fossil gas resources, with royalty rates dependent on when licences or permits were granted for gas discoveries. This is not uncommon and reflects the historical practice at the time those licences were granted. Licences granted under the old Petroleum Act 1937, resulting from a discovery before 1 January 1986, are subject to a royalty rate of either 5 or 10 percent. In comparison, post-1986 licences and modern permits granted under the Crown Minerals Act 1991 pay either 12.5 or 20 percent royalty rates. These rates are some of the lowest in the world.
To ensure the Crown receives a fair financial return from the pre-1986 licences with low royalty rates, the Energy Resources Levy Act 1976 imposes a levy on gas production. Discoveries made before 1 January 1986 are exempt from paying this levy. However, the use of the word “discovery” in the exemption clause could potentially lead to some confusion about whether fossil gas production from newly producing deposits within pre-1986 licence areas could be considered new gas discoveries for the purposes of the exemption. This could undermine the broader intent of the petroleum legislation to achieve a fair financial return to the Crown.
The Government recognises this is a problem and one that needs to be fixed. If this is ignored, the Crown could lose millions in revenue. I see this as a significant amount of money that the Crown is entitled to collect for the benefit of the New Zealand public. The bill will clarify that the levy exemption does not apply to gas produced from any land to which a licence relates if the licence was granted in relation to a discovery of gas that was made before 1 January 1986. This would clarify that the pre-1986 licence holders who operate on a low royalty rate must pay the top-up levy. The amendment will only apply prospectively, so it will not impact on previous payments or non-payments. This is fair, and this is reasonable.
The bill also validates past levy payments so that the public can have confidence that all past levy payments were proper and that the money received has always been lawfully collected and applied. So, to move forward, we are drawing a line under any possible confusion and are moving to ensure the regime is clear and the Crown receives a fair financial return on its fossil gas. I commend this bill to the House.
STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. Well, it is not a pleasure, actually, to speak on this Energy Resources Levy Amendment Bill. It’s still unclear exactly what we’re doing here. It seems a retrospective changing of the rules and, actually, natural gas—which we are really reliant on to keep the lights on in New Zealand, we’re reliant on to keep our businesses and manufacturing actually up and running. And those industries and anyone who’s investing in that area has already got very little confidence because of the sovereign risk in New Zealand when the former Prime Minister decided she wanted a good press moment overseas and decided to ban oil and gas exploration offshore in New Zealand, where we have huge resources, potentially, and large amounts of potential royalties that New Zealand could benefit from. But, in fact, I know from a personal contact—who was dealing with a banker overseas for a large project, nothing to do with oil and gas—who told me that the bank would not support that project because New Zealand used to be a low sovereign risk country. Since the oil and gas ban, it is now seen as a huge fiscal and sovereign risk because the rug could be pulled out from those businesses at any moment, because the Government will make a decision on a whim—on a whim—without any consultation. And we’ve just seen this bill, right now, and we heard a woolly speech from a Minister who should know what she’s talking about but appeared not to, telling us an explanation that doesn’t make any sense to me at this moment.
If they wanted to really do this and thought it was essential, you’d think there’d be a little bit of a take-aside, out the back in the Ayes or Noes lobby, with a bit of an explanation: “This is what we’re doing. We’ve got a problem here. We really need to do it.” But no, no; nothing from this Government on that. I mean, the lack of energy in the Prime Minister’s speech earlier on is a great sign of the symptoms and the problems going on. I think Napoleon’s sharpening his sword up, quite frankly, as we speak.
Hon Dr Duncan Webb: That’ll be Nicola Willis.
STUART SMITH: It’s ironic that they’re grasping at straws over here. The reality is that this is a very narrow bill which is attempting to change the rules retrospectively and disingenuously, and it will put another shock through the oil and gas sector, who are not actually keen to invest now anyway. It means, for every New Zealander, that the royalties that go into the consolidated accounts that help pay for all of our other services that we have will now be put at risk. Not only is it that; the Huntly coal-fired power station, which runs mostly a lot on gas as well, is burning so much coal because of that Government. That Government’s ban on oil and gas exploration has sent a shock through the system. We don’t have the exploration going on that we should have, so we don’t have the gas. We should have been burning more gas at Huntly than we are burning coal, but they won’t allow us to. That’s just outrageous.
Hon Gerry Brownlee: I’m looking at the actual bill.
STUART SMITH: Well, the actual bill’s got to—
Hon Gerry Brownlee: I’m just trying to make sense of it.
STUART SMITH: Well, yeah, I’d love to make sense of it as well. I haven’t had an opportunity to actually read it yet. But it shows how desperate they are. They don’t even show us the bill before it comes up.
Chris Penk: What a bullshit ambush.
STUART SMITH: It is a bullshit ambush, and let the record show that. I find it really strange. I just wonder why they would actually do this at this moment. I don’t know. We’ve got two very experienced former Ministers who actually knew what they were doing in the energy portfolio, the Hon Gerry Brownlee and here, on my right, the Hon Judith Collins. Both of those would know twice as much as the Minister across the way, who doesn’t seem to understand the sector, how it works, and how the people in that industry will actually see this bill. They will not like it, and quite rightly so.
I don’t know what the Minister thinks she is doing trying to increase the levy across different sectors when they had an agreement in the beginning. New discoveries are a different kettle of fish, but we’re not talking about that; we’re talking about pre-1986, and there’s going to be a top-up levy, which the Minister is putting out there. All the other providers—hopefully my colleagues are able to get through the very short bill while I am speaking to find something of substance, but I am seeing by the look on the Hon Gerry Brownlee’s face that—it’s a bit like the Minister—the bill’s got very little substance. What about you, Judith? No.
Hon Gerry Brownlee: They’re not even statute amendments.
STUART SMITH: They’re not even statute—
Hon Gerry Brownlee: It’s just the Government waving a flag, saying, “How clever we are.”
STUART SMITH: Yeah. Oh well, they are poor; they’ve spent all the money, as we’ve seen today. It is outrageous. It is such a worrying time for us in New Zealand. We have a Government that is addicted to spending—we know that—but they’ve left the books in such a state that, when we get the opportunity to sit on that side of the House in October we will find a lot of landmines in the books, I’m sure. We will wonder how we’ve got through to this stage actually keeping our head above water. I see a real risk now for us in New Zealand—already, before this bill came up—that we would suffer a credit downgrade. Now I think this sort of action is adding to that risk quite significantly.
So we oppose this bill. I take no great pleasure. I think, if there was something that would be useful to New Zealand, useful to the taxpayer, I would have been very pleased to stand up here and actually support the bill. I don’t want to be partisan for partisanship’s sake, but I’m left with little choice, having not been given the courtesy of any sort of a heads-up on this bill telling us why they are in trouble. Actually, it makes me really suspicious. Perhaps things are far worse—far worse—than we imagined. I’m not sure how we’re going to find out just how bad this is in the coming days, but I think that the Minister’s woolly speech actually gives us a—
Matt Doocey: No select committee.
STUART SMITH: Yeah, no select committee, and this is a time when a select committee—we could have accommodated a select committee overnight if it was a desperate measure to get some feedback from the industry. But no; no opportunity for that. Why? Are they afraid of something? Afraid of too much information getting out? I think that’s probably what it is. That’s why we wouldn’t get a heads-up. Why give us a chance to actually see what the real reason is behind this bill! I don’t know what it is. Neither do any of my colleagues. I’m not sure what we’re going to do with the—
Chris Penk: The ink’s drying on it for goodness’ sake.
STUART SMITH: Well, yes, the Minister’s got her head down. I’m quite sure she’d be worried about it. So we oppose this bill. We hope to get some more information from the speeches that come after this. It’s unlikely, but we will live in hope. And with that, I do not support this bill.
NAISI CHEN (Labour): Thank you, Mr Speaker. It really astounds me, the speed reading abilities of the other party. It’s a very, very short bill, and it’s actually a very, very clear, precise, and tight bill that we’re offering. Fairness is the word of this bill. It is to make sure that all of the licences that we’ve granted pre-1986—1986; am I allowed to say that was before I was born? So, before 1986, those licences paid the same amount as those of the gas exploration and discovery afterwards, and so it’s making sure that the levy gets added—that we actually have fairness in the way that we as the Crown receive our revenue from fossil gas.
Lots of the questions raised by the other side obviously are just coming from the fact that they haven’t read the bill. But some of the things I do want to address, in terms of making sure that the supply of gas—this is gas. So I heard a lot of details about petroleum, but this bill is actually about our gas exploration and our gas discoveries, and making sure that we actually clarify that confusion in the word “exemption”, whether it means discoveries or not. So it is discoveries after that 1986 date, and it actually clarifies that that is not an exemption, so that we actually have the levy, to make sure that we charge everyone for the same thing no matter when you explored and discovered gas in New Zealand shores.
There are hardly any impacts, actually, in terms of our gas supply in the country. The majority of them are actually the licensees. Those are sold under long term—so they’re fixed-price contracts—so making sure that New Zealand still has the supply that we need in our gas, and to make sure that there is actually fairness. I come back to the word “fairness”; no matter how long or how short you’ve been in this game, you’re not being advantaged just because you discovered gas on New Zealand shores earlier. So that’s why I commend this bill to the House.
Hon JUDITH COLLINS (National—Papakura): What a truly stupid comment from the Government side. They turn up here with some retrospective legislation, asking—asking—Parliament to rubber-stamp their attempt to change the rules on people who have had licences since 1986, or whatever; retrospective because it’s changing the rules for them. And that member, Naisi Chen, who’s resumed her seat, who’s been in this place five minutes and is going to be here for less than that, all she wants to do is say that we haven’t read the bill. The bill’s only just been tabled, and it was not sent to other parties. A draft was not sent to other parties. Not once did that Minister—whoever it is now; apparently it’s someone else, not Megan Woods—even bother to pick up the phone to the spokespeople in the National Party, or any other party that we’re aware of, and say there’s some issue that we want to solve.
It’s actually not an issue. I haven’t heard this Government talk about the wonderful funds and levies that they get off natural gas before, not since Jacinda Ardern, in her lack of wisdom, went and decided to ban offshore oil and gas—
Angela Roberts: We did not ban offshore—she’s got to get her facts straight.
Hon JUDITH COLLINS: —exploration for natural gas. And as for the cackling coming over from that side, might I remind them that this is an industry—oil and gas—that was once our largest export market to Australia. Oil was our largest export, and these people over there, cackling away with their knitting—oh, they actually don’t have their knitting, but if only they could do their knitting!
Hon Gerry Brownlee: That requires coordination.
Hon JUDITH COLLINS: The Hon Gerry Brownlee has very cruelly, but rightly, pointed out that it requires co-ordination. What they’ve done is they’ve turned up here and said, “Look, the rules that these people signed up to do this exploration, made in 1980-something—we want to change those now.”
When they made those decisions to actually try and get oil and gas out of, say, New Zealand waters, they made financial decisions based on things that they knew at that time. They knew what they were doing. And now, what they’ve done, over this side, is they’re going to make it less viable for people to bother to keep doing it. Like Stuart Smith rightly pointed out, businesses overseas, who can actually pick and choose which countries they go and work in and explore in, are looking at New Zealand now like a fruit-loop country that can’t make decisions and then stick to them. Instead, we’ve got flip-flopping around. This is their grab—grab—on natural gas and the explorers, who, by the way, have been helping to keep the lights on. And I see that member over there—I can’t be bothered learning her name, because I know she’s not going to be around long—carrying on as though she knew anything about this.
This is an enormously important industry for New Zealand. It should not be treated in a cavalier manner like this. And I know it is a cavalier manner because the Minister couldn’t even be bothered to pick up the phone to the other parties in Parliament. They sit over there, saying that we should support them. Well, why would we? We have a raft of legislation now, which they have put on the Table finally in Parliament, where they’re asking for all these different rules around energy levies and everything else. This is crucial. At a time when people are finding it really difficult to pay their power bills, we’ve got a Government that wants to increase a levy on natural gas. It is already expensive compared to what it was a few years ago. It is already expensive because the people who were looking, searching for natural gas, are wondering, “Well, if there’s another Labour Government—oh no, please don’t let that happen ever again in my lifetime.”
Then, what’s going to happen to their industry again? They’ll be treated like they have been under the Ardern-led Government. And now we’ve got a Hipkins-led Government, who are showing exactly the same disregard for business, disregard for the flow-on effects of people just saying, “You’re changing the rules on me. That’s not what we signed up to.”, because that’s what they have to look at—sovereign risk, as Stuart Smith said—and New Zealand has now become a sovereign risk for businesses—
Hon Dr Duncan Webb: Talking us down again.
Hon JUDITH COLLINS: —wanting to invest in New Zealand. And that person over there—that person, I can’t remember his name; no, no, Duncan Webb, I know that’s Duncan Webb—he says that we’re talking New Zealand down. No, actually, he said, “Talking us down.” Yeah, I’m going to talk Labour down. They’re the most useless Government I can remember in 21 years in Parliament—the most useless Government that can’t do anything except stick up taxes and waste money—
Hon Gerry Brownlee: What have they ever finished?
Hon JUDITH COLLINS: “What have they ever finished?” says Gerry Brownlee. Well, what about that cycle bridge over the Waitematā Harbour? Well, did that ever get finished, Gerry?
Hon Gerry Brownlee: No, no.
Hon JUDITH COLLINS: No, it did not. What about that Dunedin hospital that they campaigned on? Now, how’s that going? Six years on the job; what’s happened? Weren’t they saying that they were going to redo Hawke’s Bay Hospital, or was that just a pipedream?
Chris Penk: A broken promise is what it is.
Hon JUDITH COLLINS: It is just another broken promise. But, look, to be true, Chris Penk, who has interjected brilliantly with “another broken promise”, I point out: is it a broken promise if they really, really would like to have it happen but they just have no idea how to do it? Do you think that would be a broken—I think it probably is; it gets to that stage. What was the other thing that they were going to do? I know, light rail—light rail—
DEPUTY SPEAKER: Ms Collins, it’s not a general debate speech. Can we, at some stage, make some passing reference to the bill, please?
Hon JUDITH COLLINS: Oh, well, thank you, Mr Speaker. So, when I look at this bill, I see that there is nothing in here that tells me that this Government is prepared to address the cost of natural gas, except to put it up. This is going to increase the cost of natural gas. I want the listeners, the people of New Zealand, to realise that. As this Government over here talks fairness, you should think “unfairness”. As this Government talks about increasing levy payments to the Crown, people should think “taking more people’s money”, being paid for, ultimately, by the consumer, and then changing the rules on businesses so that the cost goes up, because they have to take that into account when they are looking at this Government. Thankfully, they won’t have to look at it much longer.
But it is really important that we consider in this bill why the Government refused or didn’t even bother to alert other parties in Parliament, suddenly tabled it, didn’t want to let us know what they were doing, didn’t let us have the opportunity to even speak to the sector, didn’t even let the sector have an opportunity to speak to Parliament, isn’t putting this through a select committee process, but is, in what’s going to be the dead of night soon, rushing through yet another tax. Well, I think we remember that they said they weren’t going to have new taxes this term. Oh, but, apparently, this bill, which is called the Energy Resources Levy Amendment Bill—a levy apparently isn’t a tax. Well, it is a tax—it is a tax. It’s a tax on the consumer, because the consumer will end up paying.
When we have to bring in more Indonesian coal—dirty, filthy coal coming in—when we’ve got lovely, beautiful New Zealand coal in this country, which we can’t use at the moment, and we can’t use lovely, gorgeous natural gas—instead it is again another tax on the consumer. And so this levy, this Energy Resources Levy Amendment Bill, is going to have the exact opposite effect than those people over there are screaming and shouting out at, and, actually, I have to say, looking pretty miserable about it, too.
They should be looking miserable, because this is another broken promise. It’s not even a broken promise to the people of New Zealand, it’s a broken promise to the industry and those that have stuck with New Zealand despite a flip-flopping Government that doesn’t seem to know that money that’s earned is not their money; it’s the people’s money. And what we’re seeing with this is yet another consumer cost going to be added, because, if it’s not going to be added, who else is going to pay for it? And that’s exactly what’s going to happen.
This bill should have been through a proper process, it should be going through a select committee process, and it should have been discussed across Parliament—it’s not being. Today, this Government wants it pushed through, and they want the people of New Zealand not to realise that this Government’s going to be at fault when the cost of natural gas goes up.
DEPUTY SPEAKER: The question is that the motion be agreed to.
GLEN BENNETT (Labour—New Plymouth): Kia ora, Mr Speaker, and thank you for allowing me the call this afternoon. A lot of negativity, as always, coming from the other side of the House, and, I guess, to run down this Labour Government by the previous speaker, the Hon Judith Collins, is a bit rich because she was leader of the National Party at the time that we were able to get the majority in this House. And so we have been cracking on and ensuring that we are making good legislation for the sake and the benefit of all New Zealanders. So thank you for your contribution this afternoon.
It’s important for us to look at fossil gas and how the levies are charged. As the Minister said earlier, we have some of the lowest rates in the world when it comes to levies for fossil gases. And I just want to pause and reflect on our Minister of Energy and Resources, the Hon Megan Woods. I want to thank her for the work that she does in this space, and I know she spends a lot of time in my electorate, in New Plymouth, coming to engage with the sector, to engage with iwi, to engage with our communities around our way forward, as we look forwards to 2050, to our low-carbon economy, as we look forward to what the possibility of offshore wind is, the possibility of green hydrogen, the possibility of what is to come for the future of Aotearoa New Zealand.
This legislation, the Energy Resources Levy Amendment Bill, is around fairness, as has been said already this afternoon. When you look at 12.5 percent, to other percentages, others paying 20 percent, depending on what year you’re involved, it’s important for us to get it right and to lock it down, to make sure it’s happening. So this legislation is simple. It moves things forward. I support our Minister in this, in terms of making sure we get it right. And I’m glad to see what we have, and what our horizons and future hold when it comes to a clean, green future. But fossil gases are part of that, and we will continue to move forward. I commend this bill to the House.
SIMON COURT (ACT): The ACT Party will be opposing this legislation. Despite what the bill says—that it’s not retrospective—either that’s a typo or it is retrospective. This Government has introduced a bill, under urgency, which applies costs to businesses, which will affect their rate of return on investments made in the genuine understanding about what levies they would have to pay in the future—if, for example, you’ve invested in a gasfield or oil field in Taranaki that might have been permitted pre-1986 and you’ve continued to invest in production equipment, in personnel, in training, in safety, in environmental protection, on the basis of a future revenue stream, and then it turns out that this Government introduces a bill to the House under urgency which undermines that revenue stream by applying, essentially, a gas tax on your business.
This is a very interesting proposition, though, because this is the Government that claimed there was a climate emergency, there was no future for hydrocarbons, and there was no future for natural gas and oil. In fact, this very Minister—the Hon Megan Woods—has claimed that New Zealand will achieve 100 percent renewable electricity by some arbitrary date. I think it was “2030” when she uttered it. I bet she’s hoping that everybody forgets it—[Interruption]—in the same way they’ll forget the names of those Labour backbenchers, who will be gone on 15 October.
If we want to consider just what it means to introduce retrospective legislation—the Energy Resources Levy Amendment Bill—what it means to people and to businesses that might consider investing in New Zealand over the next few years or decades, well, they’ll be afraid of the word “Labour”, because they know it means that any investment they might make could be undermined in future, without consultation and without any opportunity for natural justice. This bill will be introduced and pass all stages without the opportunity to hear from stakeholders, which means that it’s up to the MPs in the Chamber here tonight to tease out from the Minister and from officials what they think the reason for this bill is, what the costs and benefits are, who pays the costs, and who gets the benefits.
The Minister is going to have a lot of explaining to do when we get to the committee of the whole House, but I just want to raise some of the issues that are bound to come out: firstly, the Government changing the rules without notification or consultation; retrospective law changes that apply costs to businesses that affect their return on investment; the knock in confidence at a time when New Zealand is already hungry for foreign direct investment, when we’re short of capital to build infrastructure, and yet this Government takes another action to sterilise, to chill, to ward off that very foreign direct investment that New Zealand so desperately needs.
In fact, a few months ago, I attended a conference with investors who were part of an organisation that raised $172 billion in capital to invest in infrastructure in 2022 alone. I asked them: “How much of that are you bringing to New Zealand?” And they said, “None—none. We’re not bringing any to New Zealand, because we can’t trust the Government.” I said, “What would you invest in if you wanted to?” They said, “Wind farms—offshore wind farms for renewable energy.” But this Government—in fact, this Minister, as Minister of Energy and Resources—has not been able to bring any legislation or regulation to the House, or to any committee of Parliament, which even sets out how you might apply to establish an offshore wind farm.
So here’s a Government that complains that we’re all going to die because of climate change—there’s a climate emergency. Our children have no future!
Hon Gerry Brownlee: 15 years.
SIMON COURT: Is it 15 years now, Mr Brownlee?
Hon Gerry Brownlee: It was 12.
SIMON COURT: It was 12. The Minister extended it by a couple of years, and, yet, they can’t even bring legislation or a regulatory framework for someone to apply for an offshore wind farm. Of course, if I wanted to set up a new drilling rig for oil and gas in Taranaki, I could still do that, but I can’t apply—there’s no paperwork I can fill out to apply—for an offshore wind farm.
This Government’s got its priorities all wrong. It talks a big game on climate change; talks about cost of living. What does it do? It introduces legislation that’s going to add tax and cost to the gas sector, increase the cost of living for gas users, for New Zealand domestic gas users, because, if the Government’s taking money that the business can’t recover out of its bottom line, it’s going to pass that on to consumers. For members of the Labour Party who didn’t do fourth-form economics—even though they might have got a degree in something else, they have no practical experience in business—this might come as a shock to them: when the Government puts cost on businesses that they can’t find efficiencies in their business to deal with, they pass it on to the consumer, and that consumer is me.
I have an interest in this. I have gas hot water at home. It’s the best energy source you can get. Do you know why? Because I’ve got three teenage boys, and when they want a 20-minute shower each, do you think I’d get a hot shower? I tell you what, if we were living on electricity, if we had an electric hot water cylinder, it’d be empty after the first shower, there’d be a riot by the time the third boy got into the bathroom, and Dad would have to have a cold shower.
So there’s a reason why gas is part of our future. I just want to touch on that: clearly, the Minister and this Government also believe that natural gas is a big part of our future, because they’ve realised there is a significant resource available to New Zealand, and that we will continue to need it, and we will get it whether this Government likes it or not, whether they want to ban gas barbecues or not, whether they want to ban new gas connections in new homes or not. New Zealanders will continue to extract and use this natural gas, and, obviously, that’s come as a bit of a revelation to this Government and this Minister—“Crikey, there’s quite a bit of gas out there. Kiwis are going to keep using it even though we’ve said that they’re bad and naughty and we’ve tried to ban the stuff. Crikey, we’d better get our hooks into that, because that could be an earner for Government.”
It turns out this Government’s got an insatiable appetite for other people’s money for revenue. It hasn’t been able to find any ways to actually cut costs in this Budget that was announced today. So now they’re scratching around, looking for a bit more revenue, and, of course, like everything this Government does that’s a revenue hunt, it ends up costing consumers and costing taxpayers, sometimes both.
Now, I also want to reflect on some comments that the Minister made at a conference I attended recently. It was the Downstream energy conference in Lower Hutt, where the Minister made claims about 100 percent renewable electricity: that the Onslow dam project was going to help reduce the dry-year risk, there’s going to be a big battery to store up all the renewable energy, and it is going to recycle energy in a big dam that’s going to cost something like $16 billion, at the bottom of the South Island, drowning what are no doubt threatened species, and hundreds if not thousands of kilometres away from where people actually use the most energy and electricity in New Zealand, which is the top half of the North Island. The Minister is very proud of that project.
The Minister’s officials at the Ministry of Business, Innovation and Employment said this project is on track—you know, a business case is coming; great things are going to happen. There was no sense at the time that the Minister was considering applying fees, charges, or levies to the natural gas producers—those producers of valuable hydrocarbons that don’t just get used to run my hot water but that are also used to manufacture all kinds of very valuable chemicals that are incorporated in everything from waterproof raincoats and backpacks to paints and cosmetics, which are made from New Zealand hydrocarbons.
The Minister did not give the industry or any downstream users of gas the benefit of signalling at the downstream conference that policies which produced this legislation were coming. The Minister stood there cold as ice—and we know butter wouldn’t melt in her mouth—and claimed that 100 percent renewable electricity was the future: “Everything’s on track. Nothing to see here. Smile and wave, boys, and off we go.” Yet, what we see here today is another example of a callous Government, having identified an industry that is absolutely vital, that can’t pick up its business and go anywhere else, because their business is in delivering energy from New Zealand to Kiwis, that has decided to put a charge on them that’s going to end up hitting consumers in the pocket.
ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! The member’s time is up.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. Look, the Green Party is supporting this bill, the Energy Resources Levy Amendment Bill. Obviously, we’ve had some very alarming news overnight globally about the difficulty the world is facing in achieving our goals on keeping global warming to less than 1.5 degrees, and it’s very telling to hear the ACT Party leader and MPs moaning, because they clearly do not accept the science or the physics that we have to change how we live and how we use resources if we want to have a sustainable future. We’re already seeing the consequences of global warming here in New Zealand, and I hear David Seymour talking about how terrible it is in the aftermath of Cyclone Gabrielle and the flooding in Auckland, but there is a clear cognitive dissonance in the denial about what is needed to prevent those severe storms in the future.
The International Energy Agency and many, many scientists and experts in this subject have said that gas can’t be a transition fuel—that, if we’re going to meet our goals globally, we have to rapidly transition away from fossil fuel use—so the transition means not looking for more, which is why it makes sense to stop exploration for new gas, because we know we can’t afford to use all the fossil fuels we already have. And, at the very least, we can try to close this loophole, where, at the moment, we have very low royalties globally.
I thought it was really telling as well when the previous member, Simon Court, mentioned that people who are in the business of “producing gas” can’t just up and leave New Zealand. Why would that be? Because they don’t produce gas. The gas exists. They extract the gas. This is something that rightfully belongs to all New Zealanders, all people. All people who are born on to this earth should have a rightful share to natural resources. And that’s why it’s so outrageous that they are quite happy for some people—who at the right time in history acquired those resources or access to them—to not pay their fair share to use it. And that is the reality of what the ACT Party stands for: protecting the wealth and privilege of a few—mostly due to things that were decisions that were made in the past.
But, actually, all New Zealanders have the right to benefit from this gas, and it’s fair enough to close the loophole that means that, when new gas supplies are discovered in areas, or extracted and produced from areas where there was already a permit, we should have the ability to levy the same royalty rate that we do for modern permits. Of course, the Green Party will be supporting this. I think it absolutely is fair. But, of course, we need to go much faster and much further in terms of having a plan to phase out fossil fuel use here in Aotearoa.
INGRID LEARY (Labour—Taieri): As members on this side of the House have said, this bill is really a clarification. But what concerns me today, and what I’ve heard, is the climate denial coming from the other side of the House. We heard the ACT Party describe climate change as a topic which is around being “bad” and “naughty”—absolute denial of the up to $14 billion worth of damage done to New Zealand recently through the cyclones and weather events. This legislation is really about creating some fairness, because at the moment it’s complex. There’s between—
Hon Judith Collins: Point of order, Madam Speaker. Nobody on this side of the House has said what that member just said we said. None of us have said that. So is that acceptable that that member can stand up and say something entirely wrong against us?
INGRID LEARY: Speaking to the point of order, Madam Speaker. I inferred, from what I heard in the House, a level of climate denial. I think I am able to make that inference.
Hon Gerry Brownlee: There is a provision in the Standing Orders, which I’m sure you can get advice on, which does make it clear that, if an accusation is made against a member, they may stop the proceedings of the House and respond to that accusation. No one in here has said anything about the climate change situation that would suggest that they are in denial of it. If a member makes their own analysis of someone’s speeches to suit their own narrative, then, in fact, that would become a debating matter. But, without attributing it and saying, “I have heard”, that is an accusation against members on this side of the House that is unacceptable.
Hon Kieran McAnulty: Speaking to the point of order. Thank you, Madam Speaker. These aren’t points of orders. These are debating points. No single member was singled out. This is a delaying tactic, which shouldn’t be tolerated.
ASSISTANT SPEAKER (Hon Jenny Salesa): This was actually the point that I was about to make as the Speaker that’s sitting here in the House. It was actually a debating point, and I did not hear the member refer to any particular member. Can I just ask the member, though, in the rest of her speech, to make sure that she doesn’t carry on in a similar vein.
INGRID LEARY: Thank you, Madam Speaker. I just turn now to the principle of retrospectivity. I absolutely take the point that legislation shouldn’t be retrospective usually. There are some exceptions, and that is where there is inherent unfairness. Currently, if people are paying a levy of 5 percent versus up to 20 percent simply by virtue of when they obtained their licence, that is inherent unfairness. And, in my view, that justifies being able to pass law to make it fairer.
I do worry when I hear the enthusiasm for the extractive industries from the other side of the House around needing more extracting of fossil fuels. I reference that with the announcement recently by the ACT Party that they would reverse the zero carbon Act if they were in Government. I just remind viewers of that.
When I look at who benefits from this levy, it is not the Government; it is the taxpayers of New Zealand who benefit from targeted support and from the public good that this Government delivers. Today, we’ve heard about that being for people in my electorate, some hard-working parents being able to save up to $133 a week so that they can get their two-year-olds into childcare, return back to work. That’s going to be a huge help to mothers. This is the point about [Interruption]
ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! I know that there are members on one side of this House that are not really in agreement with this member or the bill, but I actually would like to hear what this member is saying, and other members of this House will also have an opportunity to debate this by giving a speech.
INGRID LEARY: Thank you, Madam Speaker. I’m flattered that the Opposition are listening so carefully to what I have to say! This simple, technical bill has elicited a huge emotional response, which is really interesting. I go back to what my colleague Naisi Chen said: this is a clarification. It’s about making the system fairer for those in the business, so that one set of business people are not paying a levy that is different to others. It’s also about clarifying that discoveries cannot happen before 1986, which is perfectly rational. It’s a good bill; I commend it to the House.
BARBARA KURIGER (National—Taranaki-King Country): Thank you, Madam Speaker. What an outrageous piece of legislation this is. How many people make a deal 37 years ago, and next thing the Government comes back and starts trying to claw something back off them?
You’ve just got to look around Taranaki. This industry and the dairy industry have built Taranaki, and they’re not big. As someone said before, “Oh well, it’s all right because they’re big multinationals.” Well, they are big multinationals—some of them—but, actually, they’ll just stop coming. Then we’ll have nothing, because, if it wasn’t bad enough, in 2018 this Government sent a very clear message to this industry that they weren’t welcome, and now it’s sending another message to the industry that they’re still not welcome here. It seems all fine with this Government that they can bring in heaps and heaps of unprecedented amounts of Indonesian coal to replace what they have taken away from this industry, and I don’t know how any Taranaki MP can actually sit in the House and debate for this bill.
What I can tell you about this bill is that it’s a Government that looks like: “Oh, here’s a way to get some cash, because we want to try and balance future Budgets because of our wasteful spending.” Well, hopefully, there will be no more future Budgets.
This bill was done on a whim, and I’ll tell you why. It’s because the regulatory impact statement said, “Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill? No. Does this Bill seek to give effect to New Zealand action in relation to an international treaty? No. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill? No. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill? No.”
So there is also no analysis on the size of the potential costs or the benefits of this bill, or for the potential of any group or persons to suffer a substantial or unavoidable loss of income or of wealth. So, to go back to 1986 and start scrounging around through pieces of legislation to see where this Government can get some money on Budget day, to actually balance up the books because they’ve made a terrible job of overspending—and worse still, they’ve actually made a terrible job of overspending and they’re just trying to find some cash to make it all work.
Now, the other thing is that I’ve heard in this House today comments coming from the other side about a just transition. We don’t see any just transition. Is a just transition disabling the gas industry so we can bring shiploads of coal in from Indonesia? That is not a just transition. A just transition would be if all those magical answers that the Government has that are going to replace gas were developed and they were there, and then we could transition from gas to the new thing. But what this Government has done is a very unjust transition by going from a much cleaner energy—gas—back to Indonesian coal.
Now, someone’s got to tell the National Party how that’s going to benefit climate change, because we sat in the House this afternoon and we got all sorts of attacks from the other side about how we’re climate change deniers. We’re just concerned about why we would be cutting off gas and replacing it with Indonesian coal. That makes no sense at all—no sense at all. So a just transition is not even a thing, but to scrape the barrel to balance the Budget—and not only to go back 37 years to an industry that they have disabled but to turn round then and kick this industry after they’ve disabled it for their own benefit, in order to look good and to balance the Budget in the interests of climate change—does not fly with the National Party.
We, over this side of the House, are absolutely outraged that this bill has come up today, and we have no intention of supporting it. It hasn’t gone to a select committee. I think that’s because the Government like to shut their ears on these sorts of things. They don’t want submitters to come in. They don’t want to actually hear the real facts and processes around this industry. So, this afternoon, it is with great pleasure that I stand against this bill, and I do not intend—and neither does my team—to commend it to the House. Thank you, Madam Speaker.
ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a five-minute call.
ANGELA ROBERTS (Labour): Thank you, Madam Speaker. I rise to take a call—and, yeah, inevitably there’s a bit of an economics lesson or a history lesson involved; I suppose I do revert to type—but I just need to just query whether or not anyone on the other side of the House can actually pat their head and rub their tummy at the same time, because it is possible to hold two thoughts in your head at the same time. In Taranaki, we have been leading on energy—first in the Commonwealth to discover oil—since 1865, and it is possible to continue to pay attention to oil and gas and, at the same time, pay attention to a just transition in the broader energy context as we decarbonise. It is possible to do both.
So it’s really interesting to hear that the member opposite, Barbara Kuriger, says that we’ll have nothing. She obviously hasn’t been hanging around Taranaki much recently, with the significant conversations around offshore wind and the ability to, I don’t know, maybe have a windmill that helps to make urea. So, you know, it’s really—
Steph Lewis: Green hydrogen.
ANGELA ROBERTS: —interesting. Oh, green hydrogen; yeah, there’s another one. So it’s really interesting that there is this inability to be incredibly ambitious for this country, and incredibly resourceful and collaborative about building a great future in energy, and at the same time pay attention to what is currently happening.
We haven’t remained stagnant; we’ve been passing legislation around energy since 1937. We have been ambitious. We dug our first oil wells on that beach at Ngamotu in 1865. We discovered oil and gas offshore in, oh, I don’t know—Māui was discovered in 1969; a really good year for some reason other than Māui gas discovery; 1984, the methanol plant, and we’ve had a really progressive oil and gas industry.
The conversation we have now isn’t about oil and gas; it is about energy. I talk to the engineering companies in New Plymouth. We talk to all of the other amazing, progressive energy players in the sector, and we can do that at the same time as we can pay attention to oil and gas. It is absolutely appropriate that the clarity that will be put into this with this bill, that helps to ensure a fair return for New Zealanders—we should be able to benefit fully from the extraction of oil and gas. And, because of that, I commend this bill to the House.
RACHEL BOYACK (Labour—Nelson): Thank you, Madam Speaker. It’s a pleasure to take a call on the Energy Resources Levy Amendment Bill. This is a very straightforward bill, despite some of the wailing and gnashing across the House this afternoon. It’s a very straightforward bill. The Government is putting it forward because there have been inconsistent approaches to achieving a fair financial return on the Crown’s natural gas resources. We’ve had inconsistency in the royalty rates between earlier permits and later ones, and that’s unfair on the sector. It also denies New Zealanders revenue that should, rightfully, be coming into the Crown accounts to help fund the services that we deliver across New Zealand. So it’s a very straightforward bill. I don’t quite understand why the other side are causing a big fuss about it, because it’s about fairness, it’s about consistency, it’s an excellent bill, and I commend it to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): I call on the Hon Gerry Brownlee—it’s your time.
Hon GERRY BROWNLEE (National): Thank you, Madam Speaker. What an irony it is that, on the day the Government has been crowing about what they call a “Wellbeing Budget”, where the Prime Minister and the finance Minister speak about how much they’re doing to address the cost of living for New Zealanders, the very first bill they bring into the House under urgency related to the Budget is going to push costs up for New Zealanders. One of the things that’s most staggering is, quite apart from the fact that this is about a hundred-word bill in substance—about a hundred words; not much more—it simply increases the levy that’s allowed to be taken on some gases.
It’s interesting to note the departmental disclosure statement from the ministry of—what are they called?—innovation, business, etc., who has energy inside it—MBIE; they don’t like being called MBIE, but I’ll call them that. This disclosure is to tell the public of New Zealand what work is being done to prepare the bill. Well, there are multiple points all the way through here—and I’ll talk to some of them—where the answer is, no, they haven’t done it. There is one here, though, that is most concerning, which is a no, which asks that question about: is this a policy that, if enacted into an Act of Parliament, will cause extra costs for New Zealanders? The answer to that is—sorry; the analysis was: can you quantify the size of what the potential costs might be to New Zealanders? The answer is, no, they can’t.
Now, that would leave it for me to say, quite comfortably and uncontestably, that this will put power bills up by 30 to 40 percent. All those people across the North Island tonight who are relying on gas for their cooking, for their heating, for their showers—as my colleague from the North Shore was talking about before—their energy bills will go up as a consequence of this. There’s no way that it can be looked at any other way. The members over there can shake their heads; they haven’t been able to control a single other price related to cost of living in the whole five years they’ve been in Government.
Hon Dr Duncan Webb: Price controls now—price controls—“Muldoonism”.
Hon GERRY BROWNLEE: Here it is in black and white from the ministry—and I can see I’m being heckled by the “Minister of Weights and Measures” over there; it might have been good if he’d actually got on to here and done a bit of analysis. It’s quite clear: is there any work done to find out what the costs might be on New Zealanders? The answer: no.
Then, of course, diving a little bit deeper into the same document—the departmental disclosure statement—it’s no wonder there’s no departmental officials here; deeply embarrassed by a bill like this, I’m quite sure. It says: “Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?” The answer is: “Yes”. One of only two yeses in about 20-odd questions that they have answered on this particular bill. So there’s no doubt about it: it’s a tax and it is raising costs for New Zealanders.
One of the things that’s been interesting in the last few minutes is the previous speaker, Angela Roberts, talking about the so-called just transition. I feel for her because quite clearly that member is a victim of the sloganeering that comes out of the Minister of Energy and Resources when it comes to all of these matters.
The Minister said, some years ago, when the offshore exploration was cut—an industry, by the way, that was a worth about a billion dollars a year to New Zealand; a billion dollars of hard cash coming in that might have made a difference to the lives of some New Zealanders, but that was closed off, all gone—“Well, there’s plenty of gas onshore and that gas can be extracted and that will fill up the gap for the just transition.” Well, the question is: why is Huntly short of gas; so short of gas that it’s now got the coal pots burning flat tack? Not coal that’s extracted from a short distance away, the Huntly coal line, but coal that’s extracted from some very, very questionable operation—by way of climate change, I mean; it’s probably a good company, I don’t know—from Indonesia. And so traveling all the way across the Tasman, to New Zealand, and apparently this is part of the just transition of energy.
Look, I’m attending, in a short while, in about a few days’ time, a conference that is looking at hydrogen as a future fuel for New Zealand. I think that’s great. I think that’s absolutely wonderful. But if anyone thinks that fossil fuel is suddenly going to be off the agenda on a particular day, they are seriously deluded. It’s just like anything else. There is a slow transition that can occur, but it’s not helped by this sort of dopey legislation that retrospectively puts unreasonable costs, potentially, because there’s also, in that disclosure statement, no indication of what levy will be applied. All we get is that, at the moment, they’re paying between 5 and 10 percent as a levy or a royalty, and, in the future, they’re going to be paying a levy on top of that—very explicit in the bill. So their costs for that part of it, of their expense in their business, are going to go right up.
So I’m saying that you can’t expect to have that transition if the fuel source for that very transition is cut off. No one argues that we should use less coal. But, if we are using coal, it should be from a source that does not see our emissions profile artificially lowered while we increase someone else’s. That’s no contribution to the world whatsoever. It is a complete head-in-the-sand, ostrich approach to the idea that you’re going to transition energy over a period of time.
Some of these other things in here I think are quite worrying. The question is: “Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?” Now, what that means is it’s a question: is there some expertise out there that has suggested this is a good idea? Is there some sort of compelling economic reason for going down this track? Are there any documents that can support the reason for this, other than the whim of the Minister and the will of the Government to take more cash off New Zealanders so that they can spend it, because they apparently know better than New Zealanders? The answer is: no, there’s not—no, there’s not.
So I say again that I’m not surprised there are no officials here. They’ve probably done a reasonable job of writing the bill, but do they support it? Clearly not in the documents that they have provided to go alongside the bill.
Look, I think the real problem here is that there are no specifics within the legislation—no specifics in the departmental statement. There is no New Zealand Bill of Rights Act report, because the Ministry of Justice, who looked at it, clearly thought, “Well, actually, it’s not even worth writing anything about this; it’s so patently clear that there are injustices in it.”
That is why, during the question period that comes with the committee stage, there will be a lot of questions for the Minister. I hope, over the coming dinner break, that the Minister is able to get some of those more quantifiable numbers that might make us think some of the aspects of this bill are reasonable; at the moment, none of them are.
The other thing that is slightly chilling about any legislation that is retrospective is that anybody who has made an investment on the basis of a contract will now feel a little bit uncomfortable about the prospect of the Labour Government simply coming into the House, using their majority under urgency, and changing the basis of that contractual arrangement. I think that is a chilling aspect that is, perhaps, not well-enough understood by people across the country.
In the meantime, can I just say to those people who are preparing their evening meal, who probably have the heating on in the colder weather, looking forward to a warm shower later tonight or first thing in the morning, wanting to keep the kids—you know, the kids who we’re all worried about—in nice, safe, warm conditions: don’t feel too threatened by this ridiculous bill, because there is change coming, because we do need to get New Zealand back on track; we do need to get New Zealand thinking about the welfare of people in a much broader fashion than the narrow “We’ll take the money in and spend it on your behalf” approach of the current Government.
This is not a bill that we can support, but we do look forward to the Minister attempting to answer some of the very reasonable questions that will come in the committee stage.
Hon Dr DAVID CLARK (Labour—Dunedin): Thank you, Madam Speaker. I want to begin my contribution, which I hope will be a relatively short one, by just pointing out a couple of very odd statements that have been made from the other side of the House.
Gerry Brownlee, who’s just taken a seat, spent the greater part of 10 minutes railing—railing—against the fact that there was not a regulatory impact statement provided to inform the policy decisions that led to this bill. He’s read 2.3 in the departmental disclosure statement, and he—it says next to it, “No”—“No.” He spent 10 minutes railing on that topic. What he failed to do was read the paragraph that follows—the paragraph that follows. I will read it out for the benefit of the House. “The Treasury’s Regulatory Impact Analysis team determined that the proposed amendment to clarify obligations relating to the fossil gas levy exemption in the Energy Resources Levy Act 1976 is exempt from the requirement to provide a Regulatory Impact Statement on the grounds”—wait for it—“that it has no or only minor impacts on businesses, individuals, and not-for-profit entities.” Yet Mr Brownlee spent 10 minutes trying to tell the House that the sky was going to fall in, the sky is falling in, and it’s going to cost, cost, cost, cost, cost.
Well, this is actually a very simple bill that fixes a small loophole that has been identified in the legislation that we’re looking at. Business—industry—has asked for clarification, and the Government is providing clarification; a simple tidy-up. Our tax system in this country is based on being low rate - broad based. That’s how our tax system works, and occasionally we tidy up the odd loophole, or the odd thing that’s been identified that might be inconsistent, or that business or industry asks for clarification on. We say, “We’ll help you out; we’ll clarify things. We’ll tidy it up so there’s no ambiguity.”
That’s what we’re doing here today. It’s a very, very simple bill that tidies up what could be a potential loophole in the legislation. The query was made; we’re tidying it up. So the Chicken Littles on the other side of the House, worried that the sky will fall in with this legislation, need to kind of read the papers that have been provided—that will explain clearly that it’s just a simple loophole that we are tidying up.
I’ll leave my other points because they pale in comparison to just drawing attention to that idiosyncratic speech and the fact that it’s really identifying a problem that does not exist.
A party vote was called for on the question, That the Energy Resources Levy Amendment Bill be now read a first time.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 44
New Zealand National 34; ACT New Zealand 10.
Motion agreed to.
Bill read a first time.
ASSISTANT SPEAKER (Hon Jenny Salesa): This bill is set down for second reading immediately.
Second Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I move, That the Energy Resources Levy Amendment Bill be now read a second time.
As discussed in the previous reading of this bill, this legislation is a simple piece of legislation. It is tidying up an anomaly that exists within the legislation as a result of industry asking for clarification. It is seeking to look for a discrete change to the Energy Resources Levy Act to clarify who is exempt from the levy—a relatively simple change—because we have a situation where we have licences and permits that have been granted under various regimes, and they have differing rates of royalties that are paid. Most of those royalties cannot be changed. So we had the Energy Resources Levy Act that was passed so a levy could be put on to equalise.
Now, the practice of doing this—that the National Party are railing against—is in fact a piece of legislation that was passed in 1976 when Robert Muldoon was Prime Minister. This is a practice that was introduced by the Muldoon Government that the National Party see as the most egregious thing that a Labour Party should do. Sometimes it can be as simple as needing to clarify when it is that exemptions apply, because where it is that industry have sought that clarification is the use of the word “discovery” in the exemption clause, which has potentially been leading to confusion about whether gas production from newly producing deposits within pre-1986 licence areas could be considered new gas discoveries for the purposes of exemption. And that is what this piece of legislation is seeking to tidy up.
As my colleague, in the first reading of this bill, the Hon Dr David Clark pointed out, Treasury, in assessing this, decided that this is a piece of legislation that did not need a regulatory impact statement because the impacts are either small or having no impact on business. But this does have an impact for the New Zealand public. If we do not clarify this, New Zealanders could potentially miss out on millions of dollars in levies and royalties that are due to them.
We have had some commentary in the first reading of this bill about whether or not this was retrospective or prospective legislation. This is prospective legislation. In fact, the legislation is explicitly making that clear that this is drawing a line and saying, “Money that has been paid or unpaid in the past—that is not going to be touched.” This is about what happens going forward. And when we made the decision to end the granting of new exploration permits for oil and gas offshore in 2018, we always said that we would allow the continuing permits to run their course—whether that be from exploration to production. This is about making sure that we have a regime that is fair for New Zealanders as we go through that transition.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.
STUART SMITH (National—Kaikōura): Thank you, Madam Speaker. For the benefit of those watching at home, this is the second reading of the Energy Resources Levy Amendment Bill. This is a time when we discuss what evidence we’ve heard at select committee and we come back and we debate the select committee report, essentially.
David Seymour: What happened to the select committee?
STUART SMITH: Well, I’m coming to that, Mr Seymour. If we’d had a select committee hearing, that would have been a very good, appropriate time for us to all learn about what this bill is really going to mean. At the moment, we have the Minister’s word—or assessment of it—that it’s very good, it has little or no impact, where we have to take her at her word.
But actually, going to the departmental disclosure statement, which one of the members just before—Dr David Clark, who just took a seat—was at pains to read out, in 2.3 what was written underneath it, “That the Treasury’s regulatory impact analysis team determined that the proposed amendment to clarify obligations relating to the fossil gas levy exemption in the Energy Resources Levy Act 1976 is exempt from the requirement to provide a regulatory impact statement on the grounds that it has only minor impacts on businesses, individuals, and not-for-profit entities.” What he didn’t say is further down in 2.5(b); it goes into the explanation underneath, it says—and I’m just going to the last sentence—“No quantified estimates are available as costs and benefits cannot be accurately estimated for levies that may be claimed as exempt, but the amounts involved could be significant, involving millions of dollars in lost levies.”
In a select committee, that’s where we would tease these things out; we would actually ask that question. How can they have no effect, and on the other hand it can have millions of dollars? Mind you—silly me—we have just had a Budget where billions have been thrown out; $7.1 billion of extra funding. So a few millions of dollars is nothing to this Government. Billions mean a lot to them, but millions don’t. It’s easy to spend other people’s money when you don’t care about where it’s coming from—
Melissa Lee: That’s so Labour.
STUART SMITH: It is so Labour. You’re quite right, Melissa Lee. I want to go now to who we may have had evidence from at our select committee hearing. I would expect we’d have had the oil and gas companies. They would have come along and they would have highlighted to us what impact this would have on them.
I’ve just put some thoughts down on paper. I think the economics of a field are based on—parts of that assessment would be the levy that was liable in that field. Now, that could put that at risk, so that changes the whole economics of the field, which means it’s probably uneconomic or it may well be. So that means it’s another hammer blow to the oil and gas industry, which I think is ironic.
Because, if I can give a little analogy here, when Henry Ford’s first Model Ts rolled off the production line—which made the first motor vehicles available at much lower prices and they were available to all—they had a significant problem with pollution in New York. Horse manure was stacking up; dead horses in the streets. They really needed to deal with that, and along came Henry Ford in the nick of time. So we saw a massive change from horse-borne transport in New York to motor vehicles.
But what they didn’t do was they didn’t go around and shoot all the horses. They didn’t say, “We’ve got cars now. We’re just going to shoot all the horses, we don’t need them any more.” But that’s, essentially, what this Government is trying to do. It’s another hammer blow to the oil and gas industry: “Let’s get rid of it; let’s destroy their confidence. They won’t invest; they’ll slowly wind down.”
But what they’ve forgotten is the lessons from history, and they should listen to history because they’re all history—most of them—on 14 October. But it’s absolutely putting energy security at risk. We would have heard all this from the oil and gas companies. But we could have also heard from the oil and gas users. That would be someone like—oh, I don’t know—Genesis, Contact Energy, Nova Energy, and then, of course, not to mention the glass companies, the steel mill, all of those companies who are reliant on gas.
One of the things we have to remember about a just transition is that it is completely unjust if you want to decarbonise by deindustrialising. But these guys are deindustrialising New Zealand to decarbonise, but they are doing it by accident. They don’t even know what they’re doing, because they don’t understand business and how it works. It’s basic economics, but I digress. So those oil and gas users would have given us valuable information at the select committee hearing.
Energy experts—they would have also given evidence at the select committee, and that would have been very helpful to inform the committee on the benefits or otherwise of this bill, and from a more dispassionate view—they aren’t necessarily invested one way or another in the oil and gas industry. So that would have been very valuable information for the committee. We could have heard from economists. We probably would have heard from an excellent think tank such as the New Zealand Initiative, who do a really good analysis on things like this—independent analysis that would have really informed the select committee’s decision-making processes.
I think one of the things that they would have pointed out is the costs at the margin that really drive prices in the market. And this bill will have an impact on the costs at the margin. It will drive up prices; it will increase energy costs. As we all know—well, most of us do—the cost of energy drives the cost of just about everything else.
We are in the midst of a cost of living crisis, and as my colleague, Hon Gerry Brownlee, pointed out in his speech, the Government or the Prime Minister and the Minister of Finance in their speeches—I made a comment on the quality of them earlier so I’ll resist doing it again—talked a lot about the cost of living crisis and how they were trying to do something through this Budget to alleviate it. And yet, the first bill that we are debating is going to add to it. It will add to inflation, which will add to the costs of every household. They don’t have to be someone who enjoys a gas-heated shower as I do as well. Either way, I also enjoy—
David Seymour: How long?
STUART SMITH: I don’t time how long it is. You can get an app to do that now, but I don’t do that. But those people will find it and the costs of other everyday goods and services, because they are reliant on gas and energy to survive.
So it’s a great pity that they didn’t think about this further. It’s a disservice to New Zealanders that this did not go before a select committee to have, though, all the evidence from those groups and members of the public no doubt. I expect we would have heard, probably, from the Taranaki Chamber of Commerce. I think they would have come along and given a view on that and it would be a valuable one. They would know—they’re out on the cutting edge of it. But also there are being oil and gas discoveries, or certainly good shows, in other parts of the country as well. Unfortunately, all of the potential royalties from those could have left billions on the table—not millions, billions. But that is unfortunately not going to happen now.
I think that we have come to a point where New Zealand is on the cusp. We are really at significant risk, and the sovereign risk that this will be increased because of this bill and because of the hastily, ill-thought out, ill-prepared oil and gas exploration ban that was announced by the Prime Minister in front of schoolchildren in Paris—well, that’s probably appropriate actually, quite frankly—just for a photo opportunity and putting all of our economic futures on the line.
I think it’s a pretty poor effort to do this, and if the Minister had believed this was a worthy bill, she would have come and talked to us. But she didn’t. So we oppose this bill.
GLEN BENNETT (Labour—New Plymouth): I’m proud to be part of a Government that today delivered its Wellbeing Budget. And yes, as the previous speaker, Stuart Smith, said, there is a cost of living crisis. I didn’t quite understand—on the cusp of something he mentioned, but I’m guessing what was on the tip of his tongue was the cusp of a third-term Labour Government. But when he talks about how it’s going to hurt everyday mums and dads, when it’s going to hurt households, in terms of the cost of living crisis—did you know that only 9 percent of New Zealand’s gas is used for residential, for things like cooking or heating your water or those types of things.
So this where we look at it. We just want to ensure, as it says in the overview here, “To amend the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on its natural gas, now commonly referred to as fossil gases.” This is good legislation. We need to get on with it. I commend this bill to the House.
Hon JUDITH COLLINS (National—Papakura): Thank you, Madam Speaker. Now that contribution was from Glen Bennett—Mr Glen Bennett—he’s the MP for New Plymouth.
Glen Bennett: You know my name.
Hon JUDITH COLLINS: And I know his name because we’ve been on select committee together, but I’ll never have to know his name after 14 October because he won’t be with us, I’m sorry to say that. Well, I actually am not sorry at all really because he won’t be, but he’ll have a really good MP there—the National candidate will be there: David McClean. He’ll be excellent. And I’m sure that he will understand—and David, I know that he will—
Hon Member: I don’t know who David McClean is—never heard of the guy.
Hon Kieran McAnulty: David MacLeod, but anyway, carry on.
Hon JUDITH COLLINS: Thank you for correcting me. They know his name because he will be here. Ha, ha! And you fell for it—and they fell for it.
ASSISTANT SPEAKER (Hon Jenny Salesa): If the member can just come back to the bill.
Hon JUDITH COLLINS: Coming back to the bill—and they fell for it, well done.
Energy Resources Levy Amendment Bill—what a bill. All this talk today about the bill; nothing from Labour about the cost of living crisis apart from the fact that now more people should pay more. If we look at this bill—coming back to this bill—it is supposed to be responsible. What is it supposed to do? It’s about fairness. Well, what we’ve learnt from this Labour Government is that every time they say fairness, they mean unfairness. When they say up they mean down, when they say down they mean up, when they say there’s a crisis it’s only when National’s in Government, and when there’s actually a housing crisis, as there is now, that’s actually under them, and when there’s actually a crisis of cost of living, it is again under them. And what is their answer to that? There answer is that we’re going to put up levies for those people who are licensed to take natural gas—because these people already pay various royalties and levies and things anyway—they’re going to put them up now for people who signed up under an old regime. So they’re going to put it up for new stuff.
But that’s forgetting the fact that when the deals were done, when the decisions were made—when the decision was made to go out and prospect and look for that oil and gas, the decisions were based on what was the law at that time. So what we’ve got now is this Government yet again coming along and just changing the rules, and that’s without proper consultation. We know there’s no consultation, because it, basically, says that. I’ve heard from the Minister today, who said, “This is what the industry wants.” Well, Stuart Smith and I have both heard from the industry this afternoon and they are not actually at all happy with what is being said by the Government. And we know from the departmental report that they couldn’t be bothered doing a regulatory impact statement. We know from it that they know that this is an extra tax, because even the departmental report written by the Ministry of Business, Innovation and Employment tells us that, yes, they do know that that is a tax. The Hon Gerry Brownlee pointed this out, and I haven’t heard that properly answered. So it’s yet another tax. And who pays for those taxes? Ultimately it’s the consumer.
So when people are looking at the cost of gas for their barbecues or their hot water or for their stoves, they know that the cost of gas is going up. Gas is seriously one of those gases that helps New Zealand, particularly in times when we don’t have enough hydro or other renewable energy available. Gas is a wonderful opportunity for us not to have to build yet another dam somewhere. This is what gets me on these energy issues. And coming back to the bill—this is the same party over there and their friends who support them who opposed all those hydro dams that were built.
I heard the Hon Dr Megan Woods talking about Rob Muldoon in 1976. Well, she may well have known him well but I didn’t. Secondly, might I point out that she wants to tar the National Party of today with everything that Rob Muldoon might have said or done. Well, I’d like to tar her then with Roger Douglas and all the excellent work that he did. So I suggest that she understands that two can play at that game. And by the way, Roger Douglas did some very good work. It was pretty hard on farmers, of course, but at the same time what we’re seeing is that if she wants to play that game we can both do that.
I think too that we might want to consider in this bill why it is so urgent. What is the urgency? So we’re going to be sitting in Parliament for the next day-and-a-half or two days for this supposedly urgent bill that’s of absolutely no importance, because the Minister couldn’t be bothered sending it around or even discussing it with other members of Parliament. So why wouldn’t she have done that? Why wouldn’t she have allowed this to go to at least a select committee if it’s not particularly important—or of no particular relevance? Why wouldn’t she have done that? And the answer is because they don’t want to answer the question about what happened to that promise of no new taxes when their own departmental report is really clear: this is a new tax—really clear. And who ends up paying it? It’s always the consumer.
So when they talk about how they’re worrying about the cost of living, they’re not worrying about the cost of living, they’re worrying about the fact that they’re not going to be in Government after 14 October. That’s the only thing they’re worrying about. They’re trying to get every single little cent so that they can waste it. We saw some astonishing waste today. We’ve seen some astonishing waste in the last six years. We’ve seen time and time again. And I know that Glen Bennett, MP in New Plymouth at the moment, who I noted was very keen to talk about the fact that I had been a previous Leader of the Opposition—and I’m looking forward to Glen possibly wanting to be the Leader of the Opposition one day, but, of course, it’s pretty hard to do that when you’re not in Parliament. So I suggest that that would probably be something that he could still put on his wish list, but it’s going to be a cold day in Hades when that bloke comes back in and when he ever gets a chance to the Leader of the Opposition.
This bill, though, coming back to it—Ha, ha!—is all about tax. It’s all these guys understand, isn’t it? It’s only ever “Someone else might be getting something more so we’ll take it. Somebody else might be getting something more so we’ll stick a tax on that.” How about growing the economy? There is nothing in this bill about growing the economy. There is nothing in here about giving people confidence to come and invest in New Zealand. There’s nothing in here, in this bill, about giving New Zealanders confidence to invest in New Zealand—nothing at all. It’s all about tax. It’s all about trying to take something that wasn’t there before for them—it’s always about that. Instead of coming honestly and with full disclosure to other members of Parliament to discuss it, what do they do? They come in here, sneak it into urgency. Never give anyone any heads up about it. Never involve the industry, because I don’t believe a word about that consultation, because the disclosure statement makes it really clear: no consultation. They’ve just decided it’s not that important because it’s not them paying the bills; it’s other people.
Stuart Smith: It never is.
Hon JUDITH COLLINS: It never is, as Stuart Smith says.
Another example of a Government that has lost the will to live. It should go. It should get out now, and they should just let some people who know how to run things get things done. And before I see Steph—Steph, Steph from—
Stuart Smith: Steph Lewis
Hon JUDITH COLLINS: —Steph Lewis about to rise and speak—I should know Ms Lewis because she’s on my select committee, which I so ably chair but with such humility, don’t we know! She’s going to say something, and it’ll tell us all about climate change. And wasn’t that a shocking contribution from that Ingrid Leary, claiming when we’re discussing this bill that we were climate deniers—what absolute tosh. Honestly, the cheek of it. I understand that she is a former journalist, but I expect better.
STEPH LEWIS (Labour—Whanganui): Every sitting week for the better part of the last year, I have brought my infant son in with me to sit in this House. And after sitting here for the last hour, listening to the offerings of the Opposition, I despair for his future if they ever get back into Government, because they have no ideas when it comes to climate change, they have no ideas when it comes to a just transition. And Ms Judith Collins, who’s just walking out—sorry, Judith Collins, who just spoke previously—talked about worrying; she talked about worrying for the future. Where is their worrying for the future of children like my son and my daughter when it comes to having a climate that is habitable?
Hon Judith Collins: Point of order, Madam Speaker. The member who’s just resumed her seat referred to me “leaving the House”. That is actually a breach of Standing Orders. I expect that you will want her to deal with that properly.
Hon Kieran McAnulty: Speaking to the point of order, it is quite clear to everybody that was in the House that the member corrected herself at the moment.
David Seymour: Speaking to the point of order.
ASSISTANT SPEAKER (Hon Jenny Salesa): I don’t need any more help, thank you. Steph Lewis, can you just correct and apologise for the fact that the Hon Judith Collins was actually in the House when you made that referral that she was out of the House?
STEPH LEWIS: I did in my speech, but I will apologise again; she is in the House.
As I was saying, I despair for my children’s future because they have not put a single idea on the table all afternoon or all year to show us what they’re going to do to transition us to a low-carbon economy, to transition us to 100 percent renewable energy. They have no ideas. We do have a plan, and coming to previous members’ comments around regulatory impact statements and one not being completed, I refer to my colleague Dr David Clark’s comments earlier around the statement that, actually, it was not required on the grounds that this bill has no or only minor impacts on businesses, individuals, and not-for-profit entities. Further, in here, the bill itself does not make any changes to levies prescribed within it. Instead, it clarifies who is exempt from paying the energy resources levy for natural gas.
We have a plan. We have a vision. We will do transition justly. I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): 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.
ASSISTANT SPEAKER (Hon Jacqui Dean): Members, the House is resumed. When the House rose for the dinner break, we were considering the second reading of the Energy Resources Levy Amendment Bill. I call David Seymour.
DAVID SEYMOUR (Leader—ACT): Well, thank you very much, Madam Speaker. I rise on behalf of ACT in opposition to this Energy Resources Levy Amendment Bill, and I’d like to organise my comments into three areas. One is around the retrospectivity issue. Two is around the process and procedure that has brought about this debate. And three is around the wider issue of energy, and in particular the drilling for and exploration for and discovery of natural gas in New Zealand, and the way that New Zealand’s regulatory environment—and particularly the laws made by this Parliament—affect the prospects of investment, jobs, and growth for this country.
To take, first and foremost, the retrospectivity argument: let’s be clear that retrospectivity doesn’t just mean the rule will only apply for revenue taken on gas today. So right now, if you take gas in New Zealand, then you will pay a royalty to the Government, because the Government has claimed that it has a right over that and you have to pay them and that’s just the way it is. That royalty can be anywhere from 5 percent to 20 percent of that value, and how much you pay depends on when you discover the gas. What this Government is saying is, “Oh, no, no, no, no, no. That doesn’t matter any more. You won’t get any kind of exemption from paying higher royalties because of when you discovered it—you will now pay the rate that we say.” And they are right that it’s not retrospective, in the sense that you’ve got to pay money on gas that you extracted in the past, but that is a very narrow and naive view of what retrospectivity means. What retrospectivity means is that decisions you made in the past under one set of laws will now be judged differently under the law of today. And it’s an important point.
We don’t need to explain why it is that many things that people did in the past should now be judged by today’s laws. The question is always: can you be prosecuted based on the law at the time you did the act? It’s crystal clear in the criminal area. If we had a world where Parliament could change the law and then ban things that certain people had done in the past and then punish them, even though it wasn’t illegal to do it at the time, we would be a very different kind of country. In actual fact, when it comes to retrospectivity, there’s a very salient example in the world today: President Xi came to power by persecuting—or prosecuting, depending on your opinion—many people who did things years ago when they were thought to be OK, under new rules that he has since implemented.
That is why you need the rule of law. That is why people need to be able to invest in New Zealand—knowing that if I decide to invest in New Zealand under a law right now, then I am not going to have the rules changed on me by some future Government and the returns on that investment decision I made—way, way back when—are suddenly less than I might have thought because the Government changed the rules even for decisions I made in the past. In that very real sense, this legislation is retrospective, because it changes the rules on people who thought they had a deal. People say, “Oh, but it was 36, 37 years ago, to 1986.” But that is the nature of capital investment. When you’re in the oil and gas industry, you spend billions of dollars in the hope of getting returns over a long period of time.
So that just shows the total unreality, the impracticality of this Labour Government. Perhaps the most extraordinary contribution of all was from one Labour member, who agreed that it was retrospective but said it was OK to have retrospective legislation if and when something is inherently unfair. Now, you just think about that for a moment. The whole purpose of the rule of law is actually that you have a set of rights that you can objectively defend against improper prosecution or improper prejudice from the State. And then you have a Labour member who says, “Yeah, we agree in the rule of law, until we decide that something is inherently unfair.” Well, that is completely insane, and shows a total misunderstanding of the rule of law and retrospective legislation.
That brings me to the second part of my address, which relates to the procedure. It’s going to be very interesting to ask the Minister of Energy and Resources who were all of these people that—she said in the House—approached her and asked for clarification. Because as she would have you believe, people who pay the royalties—I think this is what she was saying, the Minister—actually came to her and said, “Please, we would like to pay more. Can you clarify that we have to pay more? We’re sick of these loopholes where we can’t pay as much, you know, tax as we’d like to.”
Hon Gerry Brownlee: They’re embarrassed.
DAVID SEYMOUR: That’s what they were. They were probably the people that signed that letter. They might have been some of the people that signed that letter. They wanted to pay more tax. I think the Minister should get up and explain who they were and why they wanted to pay more tax, why they wanted this “just clarification”, as David Clark explained in a rather Orwellian manner.
Now, it’s just a clarification, but I think also the reason that the Minister should do that—because in some circumstances, she might say, “Well, it’s private and confidential.” But there’s something really interesting that’s happened here. You see, normally a law is put out and it’s introduced, and everyone can view it for three days and look at it and think about what they’re going to say and whether they’re going to vote for it. This one was just dropped on the Table at about 4.30 today, and we’ve had a couple of hours in order to actually think about it and analyse it, let alone see what people in the community think. So I think it behoves the Minister, who has said she was approached by people in the industry, to explain who those people were and why they suddenly wrote to her—because we’re not going to get any other chance. There’s no select committee hearing. You see, for folks watching this at home, they’re rushing it under urgency.
And that takes me to the third and final point, which is about how New Zealand attracts investment jobs and growth, and how New Zealand transitions to a lower-carbon future. I just make two points. One is that when the Government frequently changes the rules, and especially retrospectively, people who have money and want to invest it—they actually have to think hard about what’s our scenario 10, 20, 30 years down the track. What sort of place is this New Zealand? Because for a long time, the New Zealand reputation has been: well, look, New Zealand doesn’t really have a huge amount of oil and gas, but when you go down there, you can trust the people, you can trust the courts, you can trust the Government. Those people in New Zealand, they are fundamentally good people. They wouldn’t just change the rules on you because the leader of the country’s Government decided she wanted a PR opportunity at Victoria University. You know, they wouldn’t change fundamental practices in the industry without so much as a Cabinet paper, let alone a consultation—or at least that’s what people used to think about New Zealand.
What I say on behalf of myself and, I’d dare say, the National Party, is when we win this election, we can change the laws back to be rational. But the thing that we can’t do is persuade the world that New Zealand is a safe place, because it’s the other guys they can’t trust. The damage that this Government has done to New Zealand’s international reputation, as we’ve seen from the various Labour Party speeches, they don’t understand. Perhaps the saddest part of this whole debate has been the two members, one from New Plymouth and one from Taranaki-King Country, I think, who seem to have no idea why they’re here. They represent the people of Taranaki, and yet they’re totally unable to say anything other than the one minute that they’re allowed by the Labour Party whips to speak. To give out pleasantries and pointless, illogical word soup about, you know, can I rub my belly and touch my head or something—I mean, people of Taranaki, those are your representatives.
I’m sorry that you’ve had to suffer this for three years, but I hope you’ll make better decisions next time, because New Zealand is not going to achieve its dream of being a First World nation and an island paradise when we have Governments that are so hostile to people who come from across the seas to do business with us, to trade value for value, and to get stronger together. We will become more kind of a big Fiji, and that is not a vision that the ACT Party wants to see for New Zealand. Thank you, Madam Speaker.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Speaker. As I said in my first reading speech, the Green Party supports this bill. It is absolutely sensible economics and it makes sense for the people of a country to benefit from the natural resources in their country. And that’s why we’ve long said that our royalties on oil and gas should be raised to reflect the value of New Zealand. Now, of course, the people on the right, particularly David Seymour, will pretend that somehow foreign companies coming to New Zealand are doing us some huge favour by taking our natural resources and making huge profits off it. But, in reality, most countries, and particularly those that we would aspire to be like, understand that it’s important for New Zealanders to benefit from that, and that’s why we have resource rentals. But mostly, and most importantly, is that it’s really important to send the signal that there is value to this—that there’s a cost to it—and that when we’re using fossil gas, it’s contributing to climate change and it is a natural resource that doesn’t belong to the company that’s invested in the infrastructure; it belongs to all New Zealanders and it makes sense for us to get some collective benefit from that.
Closing the loophole to make sure that all of the gas is paying the same royalty, or is able to pay the same royalty, makes sense to me. People made investment decisions in the 1980s and the world has moved on and changed. It’s been nearly 50 years since the 1980s, and it makes sense for us to close this loophole and have an equivalent level of royalty applied to all of the natural gas—you know, if that is the way that, indeed, this change enables that clarification.
So it’s really hard to sympathise at all with the ACT Party and the National Party acting like this is some big outrage. I mean, what I think is outrageous is the way that they want to let the rich get richer, the planet get trashed, and then claim that somehow people are doing us this huge favour while they trash our planet and get richer at our expense. But look, that’s their world view. They’re here to defend the status quo at all costs because they have no imagination and no values. They have no values. They have no ability to understand that New Zealanders value our natural environment, they value a stable climate, and they value equality.
What I really love is hearing David Seymour refer to the wealthy people who are saying, “Actually, it does make sense for us to pay more tax. Please make our tax system fairer.” And he’s like, “How dare they? How dare they have that opinion?”—ha, ha!—because it conflicts with his opinion, which is that a very small number of people should get outrageously wealthy while trashing the planet and eroding workers’ rights. But, luckily, I do think that most New Zealanders are going to start to see how important it is that we work together, that we work together to take action on climate change, to protect our environment, and to have an economy that works for everyone, not just the wealthy few, and certainly not just billionaires whose own Governments have failed to tax them appropriately. So I have no doubt that we’re actually going to get a really good outcome this election. I’m feeling really good about it.
SARAH PALLETT (Labour—Ilam): Thank you so much, Madam Speaker. It’s with pleasure that I rise on this very exciting Budget day to speak briefly on the Energy Resources Levy Amendment Bill, which is pretty simple in its intention—really struggling to find out why it seems so hard to understand, but I’ll just outline it a little. Basically, what we have is some inconsistent approaches that enable—we basically need to achieve a fair return to the Crown. Licences granted under the old Petroleum Act in 1937 resulting from discoveries before 1 January 1986 are subject to royalty rates of either 5 or 10 percent, but post-1986 licences and modern permits granted under the Crown Minerals Act pay either 12.5 or 20 percent. But to ensure that we get a fair return from the pre-1986 licences with low royalty rates—I refer you back to those either 5 or 10 percent—this Energy Resources Levy Act 1976 imposes a levy on gas production.
Really, what we’re doing with this bill, which as I said is extremely simple in its intention and clarifies and really just makes sure that there’s fairness and equity—which I appreciate are qualities that are sometimes lost on the Opposition. They just are highlighting the fact in this bill that the word “discovery” can lead to some confusion about whether wells within the pre-1986 licence areas can be considered new gas discoveries. This clears it up, it makes it fair, and it ensures that the Crown gets a fair return for fossil gas extracted from our beautiful country. Thank you.
ASSISTANT SPEAKER (Hon Jacqui Dean): Barbara Kuriger—five minutes.
BARBARA KURIGER (National—Taranaki-King Country): Thank you, Madam Speaker. I just want to perhaps note for the previous speaker, Sarah Pallett, that there’s nothing fair and equitable about going back, 37 years after a contract is formed, and putting some extra costs on it to cover the deficit in Budgets that don’t seem to be working for the Government at the moment.
Now, in terms of this not having a select committee stage, there will be a lot of questions that come up in the committee stage, but there’s a couple that I just want to bring attention to from earlier. So the Minister actually said before that she had been asked by people in the industry if she would take a look at this, but if you look at 3.6 in the departmental disclosure statement, it says, “Has there been any external consultation on the policy to be given effect by this bill or on the draft of the bill?”, and the answer is no: “No external consultation was undertaken on this policy.” Now, people talking to each other from within and without this building is actually consultation, whether it’s formal or not. It’s actually having a conversation and talking to people.
The second part that I’m a bit confused about is that when Dr David Clark got on his feet, he talked about how the Treasury’s regulatory impact analysis team determined that the proposed amendment to clarify obligations relating to the fossil gas levy exemption and the Energy Resources Levy Act 1976 is exempt from the requirement to provide a regulatory impact statement on the grounds that it has no, or only minor, impacts on business, individuals, and not-for-profit entities. The Minister then went on to say that there are actually millions of dollars that are being lost to the taxpayer. So that’ll be one of the questions that I’ll be looking for answers to: is it not worth doing, or is it in fact worth millions of dollars?
It was really interesting—there’s a couple of other questions before. So the list MP for Taranaki-King Country did stand up and say, “Well, it’s all right; we did do the gas thing in 2018, but we’ve got all these things. It’s all right. We have a plan.” And can I just tell this Government that when you’re doing a just transition—and that’s not what this Government is doing; there is no transition, because all the magical things that they’re talking about on the other side don’t yet exist—that is not a just transition; that is dumping something and hoping for a future and having a plan and expecting people’s gas cookers and heating and everything to go ahead when the gas runs back, or bringing Indonesian coal into the country and then having the gall to tell us that we’re not wanting to do anything about climate change. There’s a whole oxymoron about that, because we know that gas is far more effective a fuel than what Indonesian coal is.
The other thing is that we were told by one of the members across the House, earlier, that it wasn’t really going to affect people and their cost of living in terms of households, because only 9 percent of the gas went to households. Now, it would be worth, actually, clarifying that one as well, because it might seem like a small amount, and it’s 9 percent of the gas, but what one really needs to ask is: how many connections and how many households will that be affecting with that 9 percent of the gas? Because it could actually be quite a proportion of the connections. So, little bit by little bit, it adds up to affecting a whole lot of households that will be affected by the cost of living, who won’t want to turn on their gas, because they won’t want to pay the extra cost that’s going to be driven by what the Government is trying to do.
And the Government can call it a levy amendment bill and they can go around saying that there weren’t going to be any extra taxes in this Budget—and I noticed one or two others did sneak in today, as well—but this is definitely a tax. This is a desperate attempt by a Government who’s running short of money to go back and look at a contract that was made 37 years ago. And I’d like to ask anyone on the other side of the House who’s actually old enough to remember 37 years ago how would they like it if someone knocked on their door after 37 years and asked for some more money for a contract that they thought was well done and dusted? We are never going to get any investment in this country—and others have said it before me on this side of the House—if we’re going to treat our investors like that; it’s just going to be impossible. Thank you, Madam Speaker.
Hon MEKA WHAITIRI (Ikaroa-Rāwhiti): Can I first acknowledge Te Paati Māori for allowing me to take their call. Can I just say this is hardly a bread and butter issue—this is hardly a bread and butter issue—but here we are, under urgency, discussing the Energy Resources Levy Amendment Bill. I want to agree with the Hon Judith Collins, who said that we should have had time to consider this bill, to give it full scrutiny. I want to join and add my concern that we are not going to have this bill properly scrutinised.
It really hurts me that, for some of the members across the way that purport to represent the mighty Taranaki—they would know that the iwi of Taranaki have a concerted effort and interest in Crown minerals, including petroleum and including this legislation. I want to hear from that side of the House where the rights and interests of iwi are in this, and I want to say that the regulatory impact statement that I read said that the Ministry of Business, Innovation and Employment (MBIE) did not consider that there was an issue. But who is MBIE? Do they represent a Tiriti partner?
I want to turn the House’s attention to Wai 796, which does lay down iwis’ rights and interests to Crown minerals. In the Tribunal hearings, they have acknowledged that those regions that derive benefit, in terms of energy, have a case to be heard around the returns of that energy. So I want to put to the House, to the Government of the day, like Taranaki iwi have said, that if we are using our whenua and our moana to extract Crown minerals, and in this case energy, then they should go back to the region. They should go back to the region. But we didn’t hear that in the passing of the Energy Resources Levy Amendment Bill. I think they should consider that, because that is what the rights and interests of our Treaty partner have asked for. And yet I have not heard anything from that side of the House that knows, particularly our Taranaki-based MPs, the significance of this bill to their mana whenua statement and also the importance of their whakapapa to their region of Taranaki. So I do hope those MPs that purport to represent Taranaki stand in this House and explain to the iwi of Taranaki where their rights and interests lie within this levy.
If you look at the explanation of this bill, it does talk about inconsistent approaches over time to achieving a fair financial return. That’s the purpose of this bill. Why didn’t they consider the rights and interests of iwi when they thought the inconsistent approach didn’t include the Tiriti partner? That the question I want to put to the other side of the House. They talk about a balance between 5 percent to 10 percent royalty, and going up to 12.5 to 20 percent royalty, but I didn’t actually hear from the Minister’s first speech about where they’re going to land. But, again, this is what happens when you’re considering considerable legislation in urgency: the public of New Zealand, and particularly, in this case, the iwi of Taranaki, do not have the opportunity to put down their concerns and therefore we have better legislation that we in this House pass.
But that is not to be in this House, because the Government feels that this is really critically important. My challenge is: as all Governments have the right and the numbers to pass legislation, when are the rights of the Tiriti partners going to be considered in their rushing of bills? This is the opportunity for the Government to show a bit of mettle in this space, but clearly they fail. They absolutely fail. So it will be no surprise to anyone in this House that I and Te Paati Māori are opposing this bill, for the very reason that they haven’t allowed the Tiriti partner the right to have their say through a full select committee. That is why we will be opposing this bill.
TERISA NGOBI (Labour—Ōtaki): Thank you, Madam Speaker, and, as always, it’s an honour and a privilege to take a very, very short call in the House tonight on this, the Energy Resources Levy Amendment Bill, which amends the Energy Resource Levy Act 1976, to ensure the Crown receives a fair financial return on fossil gas.
As we’ve heard from others tonight, this bill clarifies that the levy applies to all gas produced from licences granted prior to 1 January 1986. This change is for the better. This is about fairness, and this is also about doing the right thing. I heard someone earlier—I think it was Mr Seymour—talking about the rule of law. The rule of law has to be reviewed; we have to look and make sure that it is still fit for purpose. And if it’s still fit for purpose, then we leave it alone, if it’s working. This clearly is not. Currently this is not fit for purpose, and that is why we are making the change that fits, and we are making the change that is fair. And we know this fits with the larger Labour Government’s goals of making sure that there’s fairness, but also tackling climate change.
As a Pacific woman, I look across to our Pacific Islands and I see islands like Kiribati, which is eroding, and I know and I’ve heard from them around—Pacific Islanders are the least to add to our climate issues and yet they are the most vulnerable and the most affected. We know that they won’t be able to take some of their grandchildren back to their island, because it will be gone, because of the climate change issue—because climate change is real.
So I fully support this bill; I fully support what this bill is trying to achieve, and making—like what this Labour Government is doing—good laws to ensure fairness, we ensure we are tackling climate change, we ensure those people can keep in their islands, and we ensure they can go back. It’s a great piece of legislation. I’m really proud, on this side of the House, to be tackling climate change. Thank you, Madam Speaker.
Hon GERRY BROWNLEE (National): There’s something really strange about this bill. It is strange in so much as it’s hard to understand why it is that on a day the Government reads the Budget, on which it crows about the efforts it’s making to reduce the cost of living for New Zealanders, the first bill, as I’ve said earlier, that they bring into the House is a bill that will raise the cost for many, many New Zealanders. Not just those who have gas reticulated through their homes, mainly in the North Island, but also for the many thousands who rely on the energy source for the jobs that they’re doing today, for the incomes they receive.
Looking at the bill—again, it’s a very, very simple sort of structure. The main part of the bill is not much more than a hundred words. We’ve had it described by members on the other side as being “minor”, as being a “solution to anomaly”, as “closing a loophole”, as “getting clarification for”—apparently—“large numbers of industry sources” who were beating down the door of the Minister saying that “we’re terribly worried that we’re not paying you enough royalty, and we need you to clarify in the bill the way in which we can pay even more”. I don’t believe that for a minute. And then, of course, there is the suggestion that I’ve just heard from the previous speaker, Terisa Ngobi, “it’s about fairness”.
I think all of that misses a couple of very important points. The first is, any speculation on the discovery of a gasfield or an oil field can be massively expensive if it fails. It really is, I think, important, given that the legislation around the Crown Minerals Act—1937, 1976, and then 1991—the Government is very involved, up to those points, in encouraging the expenditure of that capital to look for gas because it’s good for the economy. And while there is a levy and a royalty extracted, it is, in fact, the effect that it’s had over a long number of years on our balance of payments, which, by the way, is now completely tatters. That can’t be misunderstood in all of this.
The Government has tried to say it’s not retrospective, but I think it’s worth just looking back a little bit. You know, go back 54 years to the discovery of the Māui field. It was known that the Taranaki Basin was oil- and gas-producing, potentially. But it was the Government who got very involved and encouraged the investors into that field. So it was Royal Dutch Shell—and a couple of others; I can’t remember exactly who they all were—put their capital—
Chris Bishop: Shell Todd.
Hon GERRY BROWNLEE: Shell Todd came in a bit later I think. They put their capital on the line, and in 1969, they made that discovery. It was considered, at the time, massive—an absolutely massive field that was going to transform New Zealand.
You could argue that it did. It made a huge difference, as I said before, to the balance of payments. But, more than that, it gave a fuel source that was able to be secure for investment in a whole lot of other industries—urea, for example. There was the Petrocorp, which was Government-owned at one stage—a number of these things that were big producers for New Zealand. It’s also worth noting that it took the investors in that field 10 years to get it to a producing state. So it wasn’t until 1979 that it started produce that gas.
Now, I wouldn’t mind betting that that’s one of the fields that’s caught up in this particular argument. What’s interesting about it is they made that investment initially on the basis that this massive field might last 30 years. Well, as we know, it’s now 44 years since it went into production—45 nearly—and it now has a situation where it will last at least another 10 years, with its economic life. During that time, it will produce just under 400 petajoules of gas, available for the New Zealand economy.
The question would be, what if that’s not there? What if it wasn’t there? There would be massive losses of jobs and a huge price increase for gas across the country. We’d probably end up being, much as we are with coal, importing liquid gas from other countries. We would be patting ourselves on the back, apparently, for our low-carbon profile with no regard for the fact that it’s been extracted from Indonesia or from anywhere around that part of the world where we might get that natural gas from—no regard for that. So what is happening here, I think, is a very blinkered approach to the issue of climate change, which is also being thrown up as a reason for bringing this new legislation to the House.
I think we can’t underestimate what the effect would be of losing 18 percent of the country’s gas production in one hit. I don’t think they’ll walk away; I don’t think that for one minute. But there is no encouragement to continue looking for gas deposits or expanding existing reserves when it’s well known now that, at any time, the Government may change the rules under which the original extraction was undertaken.
I think when people stand up in this House and say, “We’ve got to get a fair go for New Zealanders”, there is a complete ignoring of the history of gas extraction in this country and what this extraction has contributed to our economy, the jobs that it’s enabled, tens, if not thousands; and the changes that it allowed New Zealand to make at a very difficult time, in the early 1970s, for this country to completely reverse the dire predictions about our economic state and our balance of payments which were so savagely upset by the EU arrangements entered into by Britain.
If we look at the current reserves that are predicted just for that one field, Māui, the one that was supposed to be extinct 15 or 20 years ago, it’s around about 15 billion cubic metres of gas; that’s the best way to look at it. Most people don’t understand petajoules; it’s a difficult concept. But you think of 15 billion cubic metres of gas. Think of how many barbecue gas bottles that would fill; an enormous number—probably about 50 billion of those gas bottles.
Chris Bishop: Be enough for my barbecue.
Hon GERRY BROWNLEE: Well, Chris, I’ve seen some of your barbecues, and it might just start to run the supply low. I think the point here is that extra reserve is now going to come at an increased cost to the producers. Everyone knows that that cost is passed on.
So the question for the Minister today, and I’m sure that she’s going to answer this in the committee stage—oh look, she’s nodding her head; this is good. She doesn’t even know what the question is, but she’s nodding her head. That’s the way the Labour Government works: “We’ve got all the answers, don’t worry. Just come up with a question, we can answer it.”! There’s not a lot of thought gone into this, in my reading of it.
The first question that will need to be asked is: what is the value that is expected to be gained by this? What are the potential losses to what might be the industries that rely on that gas? Not an easy question to answer, but one that I would have thought should have been answered, and one that was not answered in the departmental disclosure document. I think that’s a bit of an indictment—actually, it’s an indication that this bill is here largely because the Minister thinks it’s a great idea, but hasn’t taken the level of advice that might be necessary to convince the rest of the country that it’s a good thing.
I’ll just finish by saying to all those people who are at home, cooking with gas, tonight: from the passing of this bill, there’s a high chance that the gas bill is going to rise even more than it might have under the inflationary times led by this Government.
IBRAHIM OMER (Labour): It’s a pleasure to take the final call on the Energy Resources Levy Amendment Bill. Mr Brownlee, stop scaremongering. Mr Brownlee said that gas extraction contributes a lot of money in our economy—yes, in the short term, but in the long term it’s going to cost us more. It’s going to cost a lot more in the long term.
In October, I was in Africa, visiting Ethiopia and Rwanda, and I’ve seen the impact of climate change. For five years, there was not one drop of rain and the people lost all livestock, millions of livestock, and they were left exposed to the danger of deaths. People are dying—
Simon Court: It’s called a drought.
IBRAHIM OMER: —and you’ll have seen—it’s the impact of climate change. It is the impact of climate change. The last two, three months, we have seen it in action.
The Energy Resources Levy Amendment Bill amends the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on fossil gas. The bill clarifies that the levy applies to all gas producers from licences granted prior to 1 January 1986 and eliminates the risk of inconsistency in achieving a fair financial return for the Crown. The amendment will ensure that the Crown receives a fair financial return. In a nutshell, this is a good bill. I commend it to the House.
A party vote was called for on the question, That the Energy Resources Levy Amendment Bill be now read a second time.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 47
New Zealand National 34; ACT New Zealand 10; Te Paati Māori 2; Whaitiri.
Motion agreed to.
Bill read a second time.
DEPUTY SPEAKER: This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Energy Resources Levy Amendment Bill.
In Committee
Parts 1 and 2, the Schedule, and clauses 1 to 3
CHAIRPERSON (Hon Jacqui Dean): Members, the House is in committee on the Energy Resources Levy Amendment Bill.
SHANAN HALBERT (Junior Whip—Labour): Point of order, Madam Chair. I move that the two parts be taken as one.
CHAIRPERSON (Hon Jacqui Dean): Leave is sought for that purpose. Is there any objection? There is. So we turn to Part 1 first. This is the debate on clauses 4 and 5, “Amendments relating to sectors”. The question is that Part 1 stand part.
SIMON COURT (ACT): Would we be able to seek the leave of the House to ask that question again?
CHAIRPERSON (Hon Jacqui Dean): Sorry, was that a point of order?
SIMON COURT (ACT): Sorry, Madam Chair. Point of order. We seek leave from the House to have that question put again regarding leave to take the bill as one question.
CHAIRPERSON (Hon Jacqui Dean): OK. Leave is sought for that purpose. Is there any objection? There is none.
SHANAN HALBERT (Junior Whip—Labour): Point of order, Madam Chair. I seek leave to move that the two parts be taken as one.
CHAIRPERSON (Hon Jacqui Dean): Leave is sought for that purpose. Is there any objection? There is none. The question is that Part 1 stand part.
CHRIS BISHOP (National): Thank you very much, Madam Chair.
CHAIRPERSON (Hon Jacqui Dean): Sorry, sorry, as you were. Sorry. The question is that Parts 1 and 2, and clauses 1 to 3, and the Schedule stand part.
CHRIS BISHOP: Madam Chair, thank you. This is my first contribution in this unusual bill, and I know members on this side of the House, and I think from the ACT benches as well, have a number of questions, and we want to get through those.
The first one, I suppose, for the Minister is what is the retrospective effect, if any, of this bill? Because I’m someone who’s a bit of a constitutional purist in the sense that it’s not good to retrospectively alter arrangements, particularly commercial arrangements, that the Crown has set for players in an industry. And it’s a very technical bill, and I accept that it deals with legislation going all the way back to the Muldoon era—that was when the New Zealand Government was interested in energy, and did a few things. And I accept the energy resources levy is an old—it’d be fair to say it’s an old piece of legislation, and it dates back to the Muldoon era.
But I am genuinely interested in just how much retrospective effect it has. My read of the bill is that it does alter arrangements for some licence holders, and I suppose the follow-up question from that is: how many people, or how many companies, or licence holders are we talking about? Because, and if I could just make a general complaint, there’s a real paucity of information about this bill, a really scant identification of the problem that we’re talking about, how much money is affected by this for the Crown, if any. At various points, members on the other side said, “Well, it’s about getting fair return and getting more money for the Crown.”, and at other points they said, “Oh, it’s very, very minor.” So we want to know on this side of the House: how much are we talking about?
Unfortunately, I’ve read the—again—very scant departmental disclosure statement and it says, “The size of potential costs or the benefits to the Crown are largely dependent on the amount of the levy payable on any fossil gas produced that is claimed to be a discovery”, etc. “No quantified estimates are available.” Well, why not? Why are there no quantifiable estimates available? It does say at one point the amounts involved could be significant, but we really have no idea. And, frankly, I think that’s pretty suboptimal when Parliament’s being asked to change the law.
So those are a few starters for 10, but I’m sure other members will have many other questions to get into.
SIMON COURT (ACT): Minister, I have a number of questions. This bill’s been brought to the House under urgency with no opportunity to consult with stakeholders, we assume, no opportunity for a select committee inquiry, no matter how truncated, and I just want to observe that a number of bills have been passed through this House this year alone, such as the severe weather emergency legislation bills, which have offered even one day or 20 hours—sorry, let me just correct it: 20 hours—for submissions and then a day for hearings for submitters. And yet this bill, Minister—not even a day for submitters to offer their view on the bill and to help provide clarity to legislators, many of whom, particularly on the Government side, seem to have absolutely no idea what the effects of this bill are. So, Minister, I have a series of questions. They’re very specific. I will ask them as if I was a stakeholder, as if I was an affected party who is not able to have their say and who is not able make a submission, and I trust you will give us the decency of replying directly. Firstly, what advice has the Minister had on the costs and benefits of this proposal?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I will in the course of this committee stage be bundling up questions and answering them as they arise. Two of the speakers that have spoken have asked what advice I’ve had on the potential benefits to the Crown. What we are talking about here—and I think it’s really important that we do understand that this is actually about New Zealanders getting a fair return on the resources of the Crown mineral estate. The best estimate that officials have been able to give me, at this stage, is that unless we clarify this, unless we tidy this up, the New Zealand taxpayers could miss out on around $50 million.
Hon Member: Per year, or—
Hon Dr MEGAN WOODS: Overall.
In terms of the retrospective nature of this bill, that Mr Bishop brought up, I think one of the really important things to understand about this is that this is only talking about any natural gas which is produced from land to which a licence relates if the licence was granted in relation to a discovery of natural gas made before 1 January 1986, even if the licence was extended under that date. So there could be some fields, and Mr Brownlee was talking about them, that have been in production for a period of time. It won’t apply to that. It’s about new wells, it’s about new areas within that field that is pre-1986.
We are in this position because in 1976, the Muldoon Government decided that it wanted a greater return on the Crown mineral estate. What they found is that, according to the licences that had been granted, you could not alter the royalty payment. So instead they imposed a levy. When the legislation was changed—and post-1986, we’ve ended up with some disparate royalty and levy arrangements. So we have a range that goes from around 5 percent under some of those early—that require the levy to top them up. Post-1986, those are more like 12.5 percent, 20 percent royalties that are imposed. So this is actually about trying to—it’s been used since 1986, the levy, and it has been in all that period of time, to try and equalise the return that the New Zealand public get from the Crown mineral estate. This is about New Zealanders getting a fair return from those companies that come in for a profit to extract oil and gas from New Zealand. Every country around the world that allows those companies to do that charges a royalty. New Zealand has some of the lowest royalties in the world and it was brought to my attention that we needed to clarify this and I want to ensure that New Zealanders get a fair rate of return.
Hon GERRY BROWNLEE (National): Well, that’s very interesting, Minister. It would have been good to hear some of that earlier. It might have helped us understand a little bit better about what the Government was attempting to do. It’s certainly not as clearly articulated in the explanatory note of the bill.
But it is interesting to consider a couple of points, and I’d like your view on it. So let’s say one of those early gasfields is theoretically not going to be covered by this because there’s nothing new about it, but we all know that on the Māui field there’s only two platforms, but there are multiple well heads. So does this apply to new well heads? Because you’ve got, as I said before, 500 petajoules of gas there. A huge amount: 15 billion cubic metres that could be extracted over the next 10 years. You’d think that that $50 million that the Minister spoke of is going to have to be charged somewhere. So the question also arises: where there are currently gas contracts in place, based on a price for supply, that recognise the current levy or royalty arrangement, would the Minister consider putting savings provisions into the bill that would enable those persons not to suffer losses?
The thing that has been stated by the disclosure statement is that this is a tax and, as such, ultimately all taxes from revenues derived by those who are selling something, whether it’s a product or service, and in this case, it’s a product, it’s ultimately the consumer who pays. It’s kind of interesting to say, “Well, New Zealanders are going to benefit from this.” when so many are clearly not.
CHRIS BISHOP (National): Thank you, and I do genuinely want to thank the Minister for that explanation. It was genuinely really useful. To be honest, if that had been made clearer in the bill and the departmental disclosure statement, I think we all would have had an easier time understanding it. Frankly, I mean I suppose the first issue is: why are we doing this under urgency through all stages tonight? This is precisely the sort of small but technical and complicated bill that deals with rights and obligations of commercial companies and the Crown fiscal position that should go to a committee—just send it there for a month. I don’t understand why we’re having to do it at the tail end of Budget urgency when no one’s paying attention.
But, be that as it may—we are where we are—the follow-on question is why now, because, well, I don’t disagree with anything the Minister has said about the Crown getting a fair rate of return. These are non-renewable resources, we have nationalised minerals in this country, and it’s right and proper that the Crown gets a fair return for that. No one has any objection to that and no one has any objection to the energy resources regime to make up for deficiencies from the post-1937 nationalisation and the various royalties issued under then—I mean, the entire House was not alive back then.
So we are where we are, but why now—I mean, we’re at 2023. The Energy Resources Levy Act has been in place now for 47 years. Presumably, this problem has been around for a while, but there must be a kind of impulse for the Government to do this. I mean, it can’t be the case—and maybe I’m wrong; I’ll wait for the Minister’s response—that the Minister just woke up one morning and said, “That little problem that I’ve had kicking around for years and years and that successive energy Ministers have probably been advised about.” I’ve got a former energy Minister here in the House in the Hon Gerry Brownlee, and—
Hon Judith Collins: And me.
CHRIS BISHOP: I’m sorry—sorry. The Hon Judith Collins is sitting behind me and I did not realise. The Hon Judith Collins was one as well.
Hon Judith Collins: I’m looking after your back.
CHRIS BISHOP: She’s looking after my back—yeah, that’s right. There are many jokes I could make, but I won’t, I say to the Hon Judith Collins. So, no doubt, the two other energy Ministers in the House received similar advice that it would be a pretty good thing to clear this up at some point and to clarify this. There’s clearly evidence of a bit of a discrepancy or, in the Minister’s words, a disparate regime—fair enough. But why now—I mean why in May 2023, a few months out from the election, on the back of Budget urgency; why now?
This is the suspicion that I think a few of us have had, which is that there’s been a discovery, or there’s potentially a discovery, where the Crown may be missing out on revenue, and the Minister’s given us the best available estimate, I think her words were—I wrote it down. The best estimate from officials is $50 million overall. So, look, is that $50 million the Crown would prefer to have? Absolutely—times are tight for the Crown as well, and I’m sure everyone in the House would love the Crown to have that. But why now?
Has there been a development in the industry that requires us to do this, firstly, now, and, secondly, essentially immediately? I mean, this will be law by probably midnight, or at least tomorrow morning when the Governor-General signs the bill into law.
SIMON COURT (ACT): Thank you, Madam Chair. Just further to that: why now? Minister, you did describe benefits to the Crown of approximately $50 million. That means an organisation which participates in gas production or multiple organisations collectively are going to have to pay the Crown, let’s assume, $50 million. In order to generate profit from a business, typically for every $7 you earn, you get $1 in gross profit—based on my experience working in different industries. So what are we saying here? That these organisations now have to generate $350 million worth of additional revenue in order to cover this $50 million cost? It’s not clear whether the impact of this cost, on top of a host of other costs that the Government has imposed on this industry, including what appear to be excessive decommissioning costs—will these costs, which the Minister hasn’t been able to articulate—I’m picking that the industry might have to generate $350 million extra revenue in order to cover this $50 million impost.
Will all of these costs hasten the end of field life? Will these costs reduce incentives to invest in plant and equipment and production, in hydraulic fracturing—that wonderful technique developed to extract residues from gasfields that were once thought to be uneconomic? Will all of this negativity towards the gas industry, this imposition of cost, imperil New Zealand’s security of supply at a time when the international strategic situation is becoming so uncertain that our neighbours in Australia are now starting to invest in long-range missiles to defend themselves from threats to the north? Security of supply, Minister.
Will the effect of adding cost to gas production flow on to customers, to the tune of $50 million, $100 million, $300 million? And what about industrial and major users? There is a lot of major users that use natural gas—like Oji Fibre—to recycle paper that’s in cardboard collected from kerbside; like O-I Glass, who recycle glass collected from all around New Zealand. They’re the only ones who do that in New Zealand. And, of course, Methanex, which generates methanol—a product that, if you’ve got a raincoat or you’ve got a backpack and it’s water-repellent, it has probably got some methanol in it that is quite likely to have come from Methanex in Taranaki. If you use a high-end cosmetic, if you use paint, if you use any kind of petroleum hydrocarbon - based chemical in your home or in your business, it’s quite likely you have Methanex methanol in it.
So all of these costs are going to flow through into the economy and to the consumer. You described the benefit to the Crown, but you haven’t articulated the cost to the consumer and to business. And, Minister, on top of cost, I would like to know whether the Minister has been contacted by any sector representatives, anyone from the energy sector, or any stakeholders since the bill was tabled this afternoon.
STUART SMITH (National—Kaikōura): Thank you, Madam Chair. It’s good to take a call in this committee of the whole House. Yeah, I find it really strange. I would like to know if there is a single company that has triggered this. Have the officials identified a company that has a resource on a pre-1986 licence that is potentially about to drill, and do some exploration? Are they doing that? Is that what’s triggered this?
The other part of my question—because, if that is the case, I mean, we should know, and we will find out, in the fullness of time, and there’s no doubt about that—but it’s such a strange thing. It doesn’t make sense to us, on this side of the House, and nothing we’ve heard from the Government members has thrown any light on to this at all; in fact, it’s made it more confusing, you know, so that makes us even more suspicious.
My second question is around if we have a platform and there’s another well drilled, another hole drilled, into the same field, horizontally drilling into that same structure—is that a new well? Or is that the same well in the same field?
Hon Gerry Brownlee: It’s a question I asked. It hasn’t been answered.
STUART SMITH: Yes, I know, and I haven’t heard an answer, and I think that’s a very fair question. Also, you can redo those particular holes, and that happens quite frequently. Is it geographically defined within a particular licence? Is it where the well penetrates the surface, whether that be the seafloor or the surface of the earth, on dry land? Or is it dependent on where the hole goes once it’s into the structure? Is it if it’s in the same layer of the structure—how far away from it before it becomes a new well?
I deeply suspect you don’t know, Minister. I deeply suspect that the officials don’t know; I deeply suspect that they haven’t done any work on it, because this whole bill has been rushed. It’s quite clear it’s been rushed. It’s quite clear that there has been very little work go on behind the scenes. If the best estimate that they can come up with is $50 million, what does that mean? Is that a wet finger in the air exercise in terms of the value of that? How did they assess that particular number? All these things would have been probably teased out, I would think—even in a quick select committee process, we would have got to the bottom of those details—but, under urgency, we are putting this bill through for some unknown reason. We could have got this through before the election. Well, maybe there’s an early election coming. Perhaps that’s the explanation.
Hon Gerry Brownlee: I think that’s happening.
STUART SMITH: I think it is. I mean, quite clearly, they’ll see that they won’t get much of a bump out of this Budget, and it’s probably a good idea to staunch the bleeding while you can, take what little—I mean, there’ll be a big disappointment that they got nothing out of the Coronation, given to the—
CHAIRPERSON (Hon Jacqui Dean): Order! Back to the matter in hand.
STUART SMITH: Well, I’m getting there, Madam Chair.
CHAIRPERSON (Hon Jacqui Dean): Back to the matter in hand.
STUART SMITH: Well, the reason that we’ve got these strange bills here is, I think, because of the worries that they have about the stability of the Government and the party dysphoria being exhibited by some people who want to hop from one party to another, not quite sure which one they belong to, and so they’re going to get these things through at the last minute and it just seems quite strange.
CHAIRPERSON (Hon Jacqui Dean): OK. Order! Order! No. Order! I did ask the member to come back to the matter in hand, and by that I meant the bill for which we are in the committee stage, and I think that beginning to disregard the warnings of the Chair is just not a respectful way to treat this committee process.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): Thank you, Madam Chair. There’s a couple of questions floating around which I will address. The Hon Gerry Brownlee asked if this would apply to new deposits in the Māui field. Yes, it would, because, as you know, Māui is a pre-1986 licence; so by definition. Also, there was a question about whether this pertained to one company. I think if anyone does a scan of the licences that exist out there, there are two fields that exist in the pre-1986 regime, and that is McKee and it is Māui. So I think it’s more useful for members to think about it in terms of the fields that are there.
The previous speaker, Stuart Smith, did ask a question about what constitutes a new well. That is not the question that should be being asked. This is about deposits, so not necessarily wells. It’s about new deposits within those licensed areas. So I think that probably it’s unhelpful to think about it in terms of those.
There was a question about why now? Why now is because we have had industry seeking clarity around just these questions, around new deposits within these pre-1986 licensed areas. I think all members just need to take this back: what we are saying is: should someone who is extracting from the New Zealand owned - Crown mineral estate be paying the top-up levy to take them to what they would be doing if it was a post-1986 licence? I think everyone just needs to get this in perspective. This is about making sure that New Zealanders are getting the fair value from the Crown mineral estate, which belongs to all of us, and our Government makes absolutely no apology for standing up for New Zealanders getting the value of that estate, rather than saying that we should be charging 5 or 10 percent royalties to a company that is out of kilter with royalties that they’re paying anywhere else in the world when they’re extracting the Crown mineral estate and, indeed, that that same company would be paying in terms of the royalty plus levy if it was a post-1986 area. It is an absurdity. This is clarifying it and this is making sure that New Zealanders can extract that value.
Hon GERRY BROWNLEE (National): A question for the Minister: given that there has, post the dinner break, been quite a few answers to questions that were raised in the first and second readings, how long ago was the first advice paper provided to the Minister on this? And would the most recent advice paper that led to the drafting of this bill contain this information?
And then it’s inexplicable, in my head, as to why—when it’s also plausible, as the Minister puts in her answers—was there no advice from the department that this could be a consulted matter that was dealt with by way of statute amendment? See, what’s still perplexing us is why something that is being blasély passed off as simple and, you know, of only just an updating sort of thing—bringing us up to the mark, etc.—has got its own legislation under urgency on Budget day.
So the question is: when was the first advice provided to either the Minister or a Minister; and would the latest advice have all of the information in it that the Minister’s been able to give the House this evening? We’ll get it eventually.
STUART SMITH (National—Kaikōura): Thank you, Madam Chair. I will behave myself this time. The Minister has just confused matters even more. So now we know that it is a new deposit in a licence area. That’s fantastic, but I can’t see a definition of a deposit. What is a deposit? How do you define it? Is it in the same structure, is it in the same field, and is it another deposit in the same field if it is? What is that definition, and how is that determined? Is that determined by geological survey, is that determined by the company concerned identifying it through its well logs as being a different structure? How do they ascertain that that is that different structure? I mean, it’s quite a technical area, and I would suggest, as we can’t go down below the ground and have a look—
Hon Gerry Brownlee: It’s a question about stated reserves.
STUART SMITH: Stated reserves. Well, if that’s the case, we know that they change over time, as the Hon Gerry Brownlee pointed out earlier in one of his contributions, and the Māui field was estimated to go for how long?
Hon Gerry Brownlee: 30 years.
STUART SMITH: 30 years. It’s gone 45. So the stated reserves were clearly exceeded—clearly exceeded. Were they the same deposit in the Māui field? Were they not?
So this is not a simple thing, and the Minister passed it off as though it was. It’s not like a gas station. You drive along the road and you’re either at the Z garage or you’re down at the BP. It’s not quite like that; it’s much more complicated than that. But we need to know: does the Minister actually have advice on that? Because this is a pretty important point in a bill that has been rushed before this House that seems to have little in the way of justification and has certainly had little in the way of work. We understand she had some advice in December and started a work stream after that—probably after the holidays, I’d say, before any work was done. And how deep did that go? No pun intended there in terms of a well, but I would really like to have an answer to that question. Thank you.
Hon JUDITH COLLINS (National—Papakura): Thank you, Madam Chair. I’d like to ask the Minister about what exactly has triggered this whole debacle of a piece of legislation being rushed through Parliament tonight, in urgency, on Budget day, when the Minister has just told us that she had advice on this in December last year.
What is the very urgent and obviously very secret nature, given that no other party in Parliament that we’re aware of—it may have been the Greens, but who would know?—was consulted, or even advised that this was coming?
Stuart Smith: The backbench didn’t know.
Hon JUDITH COLLINS: The backbench didn’t know, but that’s not that unusual given them.
So I have a question about that, which is: is there any particular instance, and does it have anything in particular to do with the fact that New Zealand Petroleum and Minerals—which is, obviously, the sector regulator and part of Ministry of Business, Innovation and Employment—initially declined the application of Greymouth Gas Turangi and that that decision was overturned by the courts as being, obviously, not within the law? It was judicially reviewed, so I just wonder if that has anything to do with it. If it’s not, then that timing is interesting. So if it’s not that case that’s driven the Government to spend all of this parliamentary time on this bill that would normally be going through a normal phase with a select committee, is there some other discovery or some other permit that the Government hasn’t alluded to yet that it’s most concerned about?
SIMON COURT (ACT): I just want to come back to some questions for the Minister that I pitched a couple of minutes ago about cost. And we do appreciate that the Crown is entitled to gain royalties from minerals, including hydrocarbons—not commonly known as “fossil gas”, as described in the legislative statement, not to any normal person who operates in the sector, anyway. Minister, what is the cost of this policy—cost to consumers, cost to the business owners? Have they provided any feedback to officials or to the Minister herself since they became aware of this legislation, or prior? Who knows—stakeholders may well have been consulted, they might have been contacted this afternoon.
Minister, what are the costs? Have any stakeholders been contacted, and have they given any feedback to officials or the Minister?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): Madam Chair, just in answer to the question—I have addressed it multiple times, but I will answer it again, and, hopefully, that will be the end of the question in terms of what triggered this legislation. As I have said multiple times, what triggered this is the fact that there were members in the industry that were seeking clarity. It was unclear. It needed to be made clear. That is what has triggered the need for this legislation. I know that there is a desire on one side of the House to make it a whole lot more interesting than it is.
In terms of the question asking is there anything in particular that triggered it: no, other than officials brought to my attention the fact there was an area that needed clarity. Is it connected with the Greymouth decision? No, not to my knowledge.
In terms of feedback that I have received since this bill was tabled: no, I personally have not received feedback from the industry on it. I have not had a chance to catch up with my officials over the dinner break about whether or not they received feedback.
Hon JUDITH COLLINS (National—Papakura): Thank you to the Minister for providing us with that answer. So if she hasn’t received feedback from the sector, then why would that be, when she tells us that she received feedback from the sector asking for this matter to be dealt with in this way?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I note in some of the speeches in the second reading of the bill there was somewhat of a misrepresentation of what I had said in my earlier speech. I said, “The industry had indicated that they wanted clarity.” This was when they were dealing with officials, when they were talking about the lifetime of the permit and developments that might be happening within particular licences. Of course, there is ongoing relationships and conversations between officials and permit and licence holders, and I, myself, meet with members of the industry.
Hon GERRY BROWNLEE (National): I’m sure that the answer’s just been given, or will be the subject of a little more questioning from my colleague, but the thing that’s struck me is that tonight in the committee, the Minister of Energy and Resources—as Minister, you’ve said that there are only two fields that would be affected here: Māui and McKee. The permits for those fields are for the whole of the Māui field and the whole of the McKee field. So does that mean that if they continue extracting gas and can find a way to extract gas from their existing wellheads, then there is no increase in charge? Or does it mean, in fact, that if they try to increase the size of the reserve by putting another wellhead off one of the two platforms—there aren’t that many platforms out there—they would then be subject to this higher cost? I’m simply trying to make the point between trying to attract investment to get as much out of those fields as possible before they run out, while there is this supposed just transition occurring, because we don’t have an immediate fuel source available to replace the gas that’s being used inside the New Zealand economy at the present time.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): As I have previously answered, this is about deposits, not wells. So that’s the more useful way to think about it.
Hon GERRY BROWNLEE (National): No, no, you’re missing the point, I’m sorry. Let’s clarify that, because I saw your official run up to you. There is a thing called a licence, and the licence is issued over a geographic area, where it is assumed it is gas-controlling. So if you go outside of that area, I would say that, yes, that is a new deposit. But if it’s inside that area, it’s expected and it’s part of the capital commitment that’s been made by those companies.
As I’ve just said before, I think the P1 estimate for Māui is quite considerable—it’s another 10 years. It’s, as I’ve said over and over, 15 billion square cubic metres, I should say, of gas—a lot of gas. It’s very valuable to the New Zealand economy, providing lots of jobs on a daily basis, and needs to be there as a stopgap as other fuels are brought on to line, if, in fact, they are able to be brought on to line in that period of time. The question is: are we, in fact—well, how is that definition changing from what it’s always been, which is a licence over a geographic area, compared to a new deposit?
STUART SMITH (National—Kaikōura): Thank you, Madam Chair. I’ve just done a quick word search on the primary legislation. I can’t find any reference to “deposit” in there.
We now have the Minister claiming that it is a deposit that’s important, and she’s said that several times. What is a deposit? We have to have a definition for a deposit, otherwise this is a hopeless piece of legislation if it doesn’t even mention it in there. But the definition, quite clearly—and the courts will go to the Minister’s utterances on this bill, and they’ll say, “Oh, it has to be a deposit.” What is a deposit? There is no legal definition in the levy Act, so, therefore, what does it mean? It doesn’t mean anything.
Hon Gerry Brownlee: This’ll be good.
STUART SMITH: Yeah. Well, we’ll give the Minister a minute to read the note and, hopefully, come up with something a lot better than she’s managed to give us, other than more confusion.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I repeat what we have been discussing through this committee stage: what this bill does is it will ensure that new deposits in old licensed areas are payable at the same as the deposit that the licence was granted on.
STUART SMITH (National—Kaikōura): Thank you, Madam Chair. Well, that was a Sir Humphrey answer—there was nothing in that answer. We don’t know what a deposit is, Minister—that’s the point, which seems to be lost on you. The courts will not be lost on that. They are looking for this. This is a licensed area, pre-1986, and what we’ve found is that you’ve said that it’s not a new well, but it’s a deposit. It’s a new deposit—what is a new deposit? We don’t know. We’re just going round in circles. It’s a shambles—it really is.
Hon JUDITH COLLINS (National—Papakura): Madam Chair, I’ve given this some quite serious thought. The only time I can see “deposits” being used is in the explanatory note, which, of course, is not actually the bill. The Minister said “the new deposits”. Well, what, is someone going out there creating new natural gas? Is that what it is? What is this? Are these new discoveries? It’s certainly not new deposits. Someone is not out there pumping some natural gas in, are they?
Simon Court: If only!
Hon JUDITH COLLINS: If only they were, says Mr Court. But we really do need to have this sorted, because it just doesn’t make sense—what the Minister has told us—and, again, the term “deposit” doesn’t seem to have any definition in the primary legislation or in this bill. So I’m just wondering: is there some other piece of legislation that the Minister can refer us to, to help give some form of explanation as to what it is we are talking about?
SIMON COURT (ACT): Thank you, Madam Chair. I wonder if one of the problems this bill is designed to solve might be revealed at the foot of the legislative statement where it describes transitional provisions. In the final sentence, Minister, the bill “validates all past levy payments as proper, and the money received has always been lawfully collected and applied.” Is there a situation, Minister, where, unless this is passed, money may have been collected and applied unlawfully or not in accordance with any particular statute?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): The purpose of that clause is to make abundantly clear that this is prospective and not retrospective legislation.
Hon GERRY BROWNLEE (National): We haven’t had an answer yet to this question about what constitutes a “deposit”. So my understanding—and I’m sure it’s the understanding shared by the entire geology profession—is that a gasfield is a geological structure that may expand or may be many, many square metres, if not square kilometres, of geological structure likely to contain gas. And the point about putting down a well is that it creates an escape and the pressure that the gas is trapped in is released and the gas flows to the surface. That’s roughly what happens.
But the idea that somehow there are discrete little bundles—or whatever you want to call it, like little underground lakes of gas—is complete rubbish. And I don’t know how the officials from the Crown minerals department of the Ministry of Business, Innovation and Employment can be so confused. A deposit of perhaps iron ore is very clear, because it’s one location and it’s extracted from that location. But a gasfield is vast. It’s a geological structure where tapping into it releases the pressure and lets the gas flow up.
If someone decides then what the Minister is saying—if it’s what I think you’re saying, Minister—is that if from one of Māui platforms, they put the big LiDAR lines out and they put one of those seabed well heads on and go into the structure that is part of their licence, somehow if gas flows into it, it’s a new deposit. It can’t possibly be. It is either in the structure or it’s not.
The reality is that the licence is given on the basis that the structure, in its entirety, contains gas, and that’s the reason why the upper estimates of what the field can produce keep changing. That’s why it was thought that 20 years ago it was all over. I can remember a point where they were saying that in 18 months, it’s all done and dusted. Then, next minute—or, as another sort of Taranaki-type saying would go, “Nek minnit”—the estimate is enlarged. And now we’ve gone a full 20 years over those times, and we’re getting another, apparently, 10 years under current projections of what the field can produce—it’s a 1P field.
So it’s very hard to understand why this term “new deposit” is being used. Why not just be straight upfront in the legislation and say that, “Well, from now on, the levy arrangements that were in existence before 1986 are gone, and these are the new levy arrangements.”? That would be much more honest with the public of New Zealand and certainly with the industry itself. And I think we do need an answer as to why the officials have given you advice that there is such a thing as a deposit inside a gasfield.
HELEN WHITE (Labour): I move, That the question be now put.
BARBARA KURIGER (National—Taranaki-King Country): Thank you, Madam Chair. I’m getting more confused as the Minister attempts to answer more questions. So on this issue of what is an existing deposit and what is a new deposit, back in 2018, the Government passed a law that banned any new permits. Therefore, the only place that people can currently go to get more gas is within existing permits. So I think we need to have a very clear understanding of what this word “deposit” means, because if it’s not a new permit, then it’s something existing within an existing permit. And we’re all sitting here, not clear at all on what that means in terms of new deposits, because they must all be within existing gasfields.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I think the discussion we’re having tonight in this committee exemplifies exactly why there does need to be clarity over what the exemption is. And I want to take this back. This is about the exemption, and I’m going to direct members to new subsection 6(3) in clause 5 in Part 1 of the bill that we are debating here, and I’m going to read this out: “The exemption in subsection (1)(a) does not apply to any natural gas produced from any land to which a licence relates if the licence was granted in relation to [the] discovery of natural gas made [after] 1 January 1986”—
CHAIRPERSON (Hon Jacqui Dean): Before.
Hon Dr MEGAN WOODS: Sorry, “made before”—that’s material, thank you, Madam Chair—“1 January 1986 (even if the licence was extended on or after that date).”
The wording in the exemption clause is leading to confusion. It is exactly why industry has come to officials at the Ministry of Business, Innovation and Employment asking for clarity around that. It’s about whether fossil gas production from newly producing deposits within these pre-1986 licence areas can be considered “discoveries” for the purposes of the exemption—and that is the critical part. So a newly identified deposit of gas may be found within the bounds of an old licence area, and that licence area could well be in a pre-1986 licence area. It should be payable as a levy and a low royalty rate.
Hon DAVID BENNETT (National): Thank you, Madam Chair. Is the Minister aware of any new deposits in those fields?
GLEN BENNETT (Labour—New Plymouth): I move, That the question be now put.
CHAIRPERSON (Hon Jacqui Dean): Just before we continue, I’m not going to accept the motion, because while we are getting close to exhausting new areas in the bill, I think there is still enough interest across the House to warrant taking some more calls. But I do note that a considerable amount of time has been spent exploring a very, very similar question. It’s not for me to judge whether that has been answered, but I would be suggesting to the committee that if they wish to keep this committee stage going, then I would imagine that exploring other aspects of this bill would be a good thing to do.
Hon MEKA WHAITIRI (Ikaroa-Rāwhiti): Thank you, Madam Chair. To the Minister—because I am aware that the Minister has done quite a bit of work in Taranaki—the question is one of consultation. What consultation has she had with iwi, who value and have a view around Crown minerals, particularly in the Taranaki area—if she has felt and whether she can share with the committee her consultation process, knowing that the Ministry of Business, Innovation and Employment said there was no Treaty implications from this. I’m just interested in the Minister’s view on what iwi have said around this and, I guess, the ongoing challenges they have around particularly Wai 792 and whether that has been factored in her decision here. So it’s a process question, Mr Chair.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): The consultation or the conversations that officials have had have been with licence or permit holders, and, as the member will be aware, we do not have any iwi that hold, under the Crown Minerals Act, any oil or gas exploration permits. As the member will also be well aware, when we’re looking at what the new energy future looks like, particularly in our offshore new energy, the work that we are doing and progressing well around offshore wind, that is something we’re seeking to rectify, because I want our new energy future to be one that is far more inclusive.
CHAIRPERSON (Greg O’Connor): Just before I take Mr Bennett, I’ll just say that I have been watching this debate. I heard the previous Chair, the Hon Jacqui Dean, and I am as one with her.
Hon DAVID BENNETT (National): Yes, I understand, Mr Chair. The Minister has talked about the definition of deposits and things like that. I asked her a specific question just before that last change over in Chair.
Is the Minister aware of any new deposits? The Minister didn’t have a chance to answer it at that time. Would the Minister please answer that question now?
CHAIRPERSON (Greg O’Connor): In so far as it is relevant to the bill.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): Mr Chair, yes. I think if the member had been following the debate, he would have already heard me address a similar question by one of his colleagues.
CHAIRPERSON (Greg O’Connor): Simon Court—
Hon DAVID BENNETT (National): Point of order. The Minister has not addressed that particular question. If she has, then great, but she hasn’t.
CHAIRPERSON (Greg O’Connor): The Minister has addressed the question. The member might not be happy with the answer, but she has addressed the question.
SIMON COURT (ACT): Thank you, Mr Chair. Minister, I just want to come back to transitional provisions. I asked you previously about this description in the legislative statement: “The bill validates all past levy payments as proper.” Your response was that the bill does not do anything retrospective, and it states quite clearly that amended section 6 does not apply retrospectively. However, this is very clear language, Minister. It says the bill validates all past levy payments, which appears to be retrospective and gives rise to a concern that levy payments may have been unlawfully collected and applied. Would you please clarify, Minister?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I’m happy to clarify that. What that is saying is that it is validating all the payments that have been paid in the past according to the law as it was there, and not attempting to apply this new legislation to payments that have been made before the passage of this legislation. It is making it crystal clear that this is prospective, not retrospective.
Hon JUDITH COLLINS (National—Papakura): Thank you, Mr Chair. I’d like to ask the Minister for Energy and Resources—and it has been asked, but it hasn’t been answered—why this particular bill has not gone through a select committee process. Why is it her decision to rush this through in urgency, when there is clearly a lot of interest in the bill and what its implications are for the oil and gas industry?
Dr TRACEY McLELLAN (Junior Whip—Labour): I move, That the question be now put.
Hon MEKA WHAITIRI (Ikaroa-Rāwhiti): Thank you, Mr Chair. Just a follow-up—and I want to say thank you to the Minister. That clarified her answer to consultation with iwi, and, obviously, this is around permit-holders. I just want to follow up on that question to the Minister. In their current Treaty claims, one of the issues—particularly from the Taranaki iwi—is really around ensuring that no future breaches will occur. So the question I have to the Minister: is she comfortable that the bill that we’re passing through under urgency will not further disadvantage the iwi of Taranaki as they are processing their Treaty claims to Crown-owned minerals, or to any other iwi who have an issue in this space?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I’m happy to answer the two questions that have been put. The one from the Hon Judith Collins about why we’re using this Budget urgency: what we want to do is we want to clarify this. We want to get this fixed up. We do want to be in a position that, actually, we can get that fair return for New Zealanders from the Crown mineral estate. Once you know about one of these things, it is your job as a Minister to get this fixed as quickly as possible, especially if New Zealanders may be forgoing lost revenue, which at the moment is $50 million. I can think of lots of ways in which we could help New Zealanders with $50 million.
In terms of the questions from the Hon Meka Whaitiri, I haven’t had specific advice around that. But what I would say relates to my previous answer, which is that this is actually about getting a fair return that we can then spend on our health system and on our education system, where we can address a number of things. But, as I indicated in a previous answer, it is my determination that the next phase of the energy future in Taranaki will be a far more equitable one.
A party vote was called for on the question, That Parts 1 and 2, the Schedule, and clauses 1 to 3.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 47
New Zealand National 34; ACT New Zealand 10; Te Paati Māori 2; Whaitiri.
Parts 1 and 2, the Schedule, and clauses 1 to 3 agreed to.
Bill to be reported without amendment.
House resumed.
CHAIRPERSON (Greg O’Connor): The committee has considered the Energy Resources Levy Amendment Bill and reports it without amendment. I move, That the report be adopted.
A party vote was called for on the question, That the report be adopted.
Ayes 106
New Zealand Labour 62; New Zealand National 34; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 13
ACT New Zealand 10; Te Paati Māori 2; Whaitiri.
Motion agreed to.
Report adopted.
The result corrected after originally being announced as Ayes 116, Noes 3.
ASSISTANT SPEAKER (Hon Jacqui Dean): This bill is set down for third reading immediately.
Third Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I move, That the Energy Resources Levy Amendment Bill be now read a third time.
The bill will ensure the Crown receives a fair financial return on its fossil gas. To ensure the Crown receives that fair financial return from our pre-1986 licences with low royalty rates, the Energy Resources Levy Act of 1976 imposes a levy on gas production.
The bill progresses a discrete change to the Energy Resources Levy Act to clarify who is exempt from this levy. This would clarify that production from deposits within pre-1986 licences operating on low royalty rates cannot be exempt and must pay the top-up levy on all gas that is produced. This will avoid any risk of confusion that licence holders could operate on a low royalty rate and not pay up the top-up level by claiming a discovery. The amendments will only apply prospectively, so will not impact on previous payments or non-payments. It also validates those past levy payments.
This bill ensures the Crown—and New Zealanders—continue to receive the levies it is entitled to collect. This is for the benefit of all New Zealanders. I commend this bill to the House.
DEPUTY SPEAKER: The question is that the motion be agreed to.
STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. It is a pleasure to take a call on this bill, and this has been an illuminating session.
Hon Member: Well, not really.
STUART SMITH: Well, it has because we found out how little we do know, because the Minister doesn’t know much either about it. It’s quite surprising, actually. And I can see future court cases coming up here. We have a Minister that has no idea, absolutely no idea, what will actually qualify for the exemption or not. What we’ve heard was it was new discoveries; no, then it’s new deposits. We don’t know what a deposit is because there is no definition. I mean, you could take one definition of a new deposit as the gas being new, but all those deposits are millions of years old, so how would you define that? In a field that we know if it’s drilled from the same place but it’s a new deposit, then it applies. If it’s not, it doesn’t. But if we don’t have a definition of what a new deposit is, then the whole bill has been a waste of time.
So the estimate of $50 million might be five, could be less, might be nothing. And the potential, to use the Minister’s words, of lost revenue could be, you know, $50 million or more because the bill is simply ineffective. So we don’t know why this bill was brought to the House. It doesn’t make any sense at all. We’ve had several explanations about what the genesis of this bill was. Initially, it was that the Minister had had representations from the industry, but it doesn’t say anything about that in the documentation provided. In fact, it says here “are there any publicly available inquiry, review or evaluation reports that have informed or are relevant to the policy to be given effect to by this bill?” Answer: no.
So, was there a secret meeting? Maybe. Is there a discovery that is potentially about to be exploited that has a significant revenue stream? Maybe; I would say highly likely. I would say there’s been meetings about this sort of stuff in the Minister’s office. They’ve had a run around and they’ve got a bit of a panic going there. I think it’s almost certainly the case, and this will come out in the fullness of time—probably, by the time it comes out, the Minister will no longer be in Parliament—in November or somewhere. But it is really very disappointing that we could come through, when we didn’t have the benefit of a select committee process where these things could have been explored so we could see what was at stake here.
This is really fast and loose with the legislation process. We could have heard from the oil and gas companies; it would be really good to hear from them in the select committee. They would no doubt have submitted; I’m sure they would have. We could have heard from the oil and gas users, and we are all—
Simon Court: You could have got Glen to ask them some questions.
: Well, that’s right. It would have been fascinating.STUART SMITH Well, oil and gas users are really important in this process because, actually, what I’ve heard from sources throughout the course of the afternoon, since this bill actually landed on the table, is the chilling effect that it is already having on the industry. The thing that people forget about with natural gas is that, if they stop exploring, if they stop drilling new wells, actually, it almost immediately—the access to that gas starts to decline. It is not like a water well that you drill a hole into an aquifer and the water just keeps replenishing from water coming from rainfall percolating through into the aquifer. This is quite different; the natural gas deposits were laid down millions of years ago. They’re sitting there waiting, under pressure, and we can exploit them to use them, and natural gas is a much cleaner alternative. As I said in one of the earlier debates on this bill, in the UK, they lowered their carbon dioxide emissions by 45 percent by switching from coal to natural gas.
In New Zealand, we have gone from natural gas to coal and we’ve done that because of a very unwise decision to give a former Prime Minister an opportunity to star in the media, in front of some schoolchildren in France—in Paris, actually—to give an outrageous decision that has to ban oil and gas exploration offshore, which has had a chilling effect, a significant effect, on our sovereign risk profile. And the members on the other side might not think that’s important. Perhaps they’ve never been in a business transaction dealing with international financiers. Perhaps they’ve never been in a trade negotiation. These things are very, very important. They are taken very seriously in international fields.
I think it’s an absolute disgrace that this bill has had such little scrutiny, and it was appalling. If it was so important, and so important for New Zealanders, in a fiscal sense, and was a technicality that could have been dealt with, the way to deal with that would have been for the Minister to approach the Opposition and the Opposition parties, and inform them of the issue, and work with us. We may not have supported it anyway—in fact, we wouldn’t because of what we know now—but if it was a legitimate case or the case that the Minister has tried to make, unsuccessfully—I mean, we’ve got two former energy Ministers, very experienced people in this field on this side of the House, who should know if this was a good bill; they would know. And they don’t. They do not follow the logic behind it.
I know that, on the other side, they are following speaking notes that were given to them. They haven’t had the benefit of any more information than we have. In fact, I suspect that the only person with information is the Minister, and quite clearly she doesn’t understand it all. She doesn’t understand what a deposit is. She doesn’t understand the technicalities of, actually, how these fields are maintained, how the flows are kept going at a rate that is economic. They don’t understand that natural gas is far more important than just generating electricity, although that’s incredibly important.
I think people underestimate the importance of methanol. It is almost in everything. I think, even though I’ve got a wool suit, I’m pretty sure that the dye in this suit will have a component of methanol in the manufacture of that dye. It’s almost in everything, or that industry here in New Zealand is dependent on the continual investment, and the oil and gas sector to maintain those fields. And yet this bill is sending a chilling effect to those investors, and those companies are not just sitting there with a pile of cash, wondering what to do with it. They have to go out and approach people on international money markets and say, “I’ve got this proposal; I want to develop this well further, extend its life.”
As we’ve heard, Māui has been extended by a significant amount. It should have closed down many years ago and has continued to develop and produce income for New Zealand, actually, and royalties for New Zealand. But that has all been put at risk by a shoddy process. This will likely fail, I would think. I think that any company that wants to get around this, it’s going to be pretty easy because there is no definition of what is one—
Simon Court: Unless they ask for it.
STUART SMITH: Well, did they ask for it? We have no evidence that they asked for it whatsoever, but we won’t go there as to what that implication would be for the Minister. But the reality is we’re here tonight. This is a poor bill—it’s poorly thought-out, not understood by the person who’s promoting it, and I think it is a really shonky process, and we oppose this bill vigorously.
NAISI CHEN (Labour): Thank you, Mr Speaker. This bill is actually a really, really simple bill. Like I said at the very beginning, in the first reading—and this hasn’t changed—it is a matter of fairness.
When we put people who’ve been in the field since 1976, so we’re talking about the 1976 Act, and those in who had licences pre-1986—they should not be paying a lower levy than those who are post-1986.
It is a matter of actually making sure that all of the people within the same industry are paying at the same rate to make sure that there’s fairness, in terms of the Government’s levy, from all companies. No matter how long you’ve been in the industry, you should not be paying any less just because you’re here earlier. That’s why I commend this bill to the House.
Hon JUDITH COLLINS (National—Papakura): Thank you, Mr Speaker. It’s such a delight to follow that woman-splaining from Naisi Chen, the list MP for the Labour Party, telling us that we don’t understand these things. Well, I’ve got to say, I felt this evening that the Minister, the Hon Megan Woods, has been somewhat struggling, too, and perhaps she might have benefited from coming to the select committee which didn’t eventuate.
Hon Member: Oh, come on!
Hon JUDITH COLLINS: Why I say that—and I hear some shouting coming over from the Labour Party, but I must say they’re not looking that good in their red. They wonder why I would say that. Well, that’s because, when I was asking the Minister, when she was in the chair in the committee stage, where these new deposits were that she had started talking about, she couldn’t come up with them. My colleague Stuart Smith rightly asked, “Well, what are these? What is a ‘deposit’? Where’s the definition?” It’s not in the bill. We went back to the primary legislation—as you would expect me to do—and we could not find it there either. We have wondered whether or not there was any legally defined “deposit”, and perhaps there is, but the Minister seemed unable or incapable of actually finding that for us or telling us. The only part that I could see it referred to was in the explanatory note, which, as we know, is actually not the legislation; it’s an explanatory note. Perhaps it’s because the Minister has rushed this through without the proper process of a select committee.
I understand, from the Minister, that this could amount to around $50 million—did she really say that?—for the Crown. And that was a wonderful thing. The issue is, of course, that that $50 million is apparently, according to the Minister, being demanded to be paid, or collected, from the very industry that’s going to be the one paying it. That I find just staggering. I’ve heard of all sorts of virtue-signalling, and I think we’ve all seen some examples of that, even relatively recently, of people who demand to pay more money for things. Well, I just don’t know, from my experience as the former Minister of Energy and Resources, that that many businesses and people who are in the business of extracting natural gas, very clean-burning natural gas—and using them in our barbecues, by the way, and all those other things that we use them for—would be offering and demanding, demanding, demanding that the law change so they could pay another $50 million. That just doesn’t ring true.
When I asked the Minister, quite genuinely, “Who were these people demanding? And where?”, she said they’d apparently been demanding this of the officials. Well, again, I’m finding this one really hard, because, when we got this bill this afternoon, after the Budget, we decided, on reading it, that this was not the sort of piece of legislation that we would want to rush through during urgency—that we would want to consult with the industry; we would want to hear advice from the officials. And we decided that we would not support this bill. We thought it was very strange that the Minister, on a bill which she says is just correcting a misunderstanding or misinterpretation, wouldn’t have reached out across Parliament to say, “This is what this is. Can you please support it?” But no, she didn’t, and I just thought that was very strange, too. She couldn’t come up with any of these people who had demanded—the names of any of these companies that had demanded—to pay more money. When she said that they had been demanding it—you know, the officials—she just couldn’t say anything about what they’d actually demanded, other than they really wanted to pay more.
Look, I don’t want to be cynical about this one, but I’m not too sure that that really rings quite true with the nature of what this is: a $50 million extra payment to the taxpayer—well, the Government. How does that work?
Hon Member: People like paying their fair share.
Hon JUDITH COLLINS: And I hear from someone—Ms Lorck? She’s desperate for me to name her, because she won’t be named here anymore after 14 October. She’s desperate for me to name her; so I’ll just do it so she can get in the Hansard—poor person. She’s asking, “Well, these people just want to pay their fair share.” But that’s not what we’re hearing from the Minister.
Marja Lubeck: They’re desperate.
Hon JUDITH COLLINS: Thank you. That’s not what we’re hearing from the Minister. What we’re hearing from her is that they demanded it of her. Then, when we asked her, “When? Where?”—whatever—apparently they demanded it of the officials. Which officials? When? And who was doing the demanding? It just doesn’t ring true.
Then, if we have a quick look on what was actually happening around that time, New Zealand Petroleum and Minerals (NZPM), which is the official arm within the Ministry of Business, Innovation and Employment that actually deals with permits, had been very successfully sued and had had a really good telling-off in the court, on a judicial review by Greymouth Petroleum to get, in fact, a permit on oil and gas in seams in the Taranaki area—and I’m not sure which basin it was in. The Minister wasn’t too clear on that one, either. But she said, “Nothing to do with it.” I just think it’s amazing that it had nothing to do with it, when, in December last year, when apparently this was being demanded by somebody unnamed, somebody in the industry—it just happened. And then, at that time, given that the court was handing, I would say, or letting no doubt New Zealand Petroleum and Minerals know—it was pretty clear, I would have thought—an indication at that stage just how badly their case was going, that you just have to wonder: is there no connection at all? And the Minister has assured us tonight that there’s none. But I think there’s going to have to be some Official Information Act requests going in. I feel that our colleague Stuart Smith is going to be prosecuting this one, because it just is a little bit cute.
Then we have to ask ourselves: and why is this so urgent today? The Minister has explained: because the Government needs this money. Well, didn’t they need it 42 years ago? Didn’t they need it six months ago? Why couldn’t they have said before, in December, when they apparently were being demanded that they clarify this issue? Why didn’t they then put the matter to other parties in Parliament or even bring it here? We’ve had urgency, haven’t we, between then and now? It’s a very teeny-weeny little bill. I mean, it’s just a teeny-weeny little thing. And, yet, apparently it’s taken them six months to do it, and it all has to be without the industry actually being consulted at all—absolutely no consultation. Because we have heard this afternoon from people in the industry, people who actually represent the industry, not just those who might know somebody in the Minister’s office, who’ve said that they are delighted we are opposing this bill, because, no, they did not ask for it. So I am going to be really interested to find out what, who exactly, and when, and to whom.
And I know that some people might find that really strange—that a Minister would do that—but that’s six months, $50 million. Why wasn’t it done beforehand? And the answer is: because I don’t think it is anything more than an attempt to perhaps set a complete destruction of the oil and gas industry. We look at the way that the Minister, who is the Minister of Energy and Resources, refers to natural gas. She refers to it as “fossil gas”. Well, I hope she enjoys her fossil gas barbecues! I hope she’s thinking like that when she’s, you know, starting up the barbie! I really do think that having a Minister of Energy and Resources who has such contempt for the industry, such contempt for a sector that has been a major exporter for us—and when we were in Government, and the Hon Gerry Brownlee will certainly remember from his time as the Minister, crude oil was our No. 1 export to Australia, and No. 2 was gold. This Government, using NZPM—that used to have some really good people; I’m sure that they still are there, hiding—must be really worried about the fact they’ve got a Minister who has no respect for the sector, no respect for the industry, and they hear the rubbish I’ve heard today about how somehow this has got something to do with climate change.
It’s got nothing to do with it. Nothing in here will make any scrap of difference to our climate change obligations. In fact, it’s quite the opposite. What it’s going to do is actually have less natural gas being looked for and more coal being imported from Indonesia and more coal being burnt and our emissions continuing to rise because this Government went and did some virtue signalling.
Hon Julie Anne Genter: You’ve got no idea what you’re talking about.
Hon JUDITH COLLINS: And I wish that person would just be quiet when I’m speaking. It’s not her time. Why doesn’t she just take her turn?
DEPUTY SPEAKER: The member’s time is completed.
ANNA LORCK (Labour—Tukituki): Thank you, Mr Speaker. The Energy Resources Levy Amendment Bill is about clarity. And the only ones that seem confused are those in the National Party, which we saw from the previous speaker, Judith Collins, as she did nothing but twist and turn everything to show once again the negative, negative National Party that we have on the other side of the House.
This is about levelling the playing field to get a fair deal—a return for New Zealanders on the Crown’s fossil gas. The Minister has said there could be $50 million to be returned in levies, and that could be spent on housing, education, and backing places like Hawke’s Bay. I commend this bill to the House.
SIMON COURT (ACT): What a performance tonight from the Labour Government, introducing another bill under urgency, again violating normal democratic principles. Discarding principles like the rule of law which, essentially, if I was to summarise it for Labour members over there who aren’t familiar with this concept, is that everybody should know what the law is, how it applies to them when they take an action in advance so they can make sensible, logical actions. If a Government’s going to change the law that affects people who’ve made investments or have this thing called skin in the game—in other words, they actually produce things and make things for New Zealand—then it should go and consult with them, because I think the Minister made a good point, which was that the New Zealand Government, the Crown, has the right to royalties from New Zealand’s petroleum and mineral resources. They belong to the Crown, and if the Minister and officials wanted to make the case that the royalty regime was out of date and needed to be updated because we’re going to be using gas for a lot longer and we’re going to be getting all of our gas out of the ground, we’re going to find more and more gas, and we’re going to keep using it, maybe for another 50 or 100 or 200 years—
Simeon Brown: More barbecues.
SIMON COURT: Not just for barbecues, Mr Brown, but, potentially, hot showers and, potentially, to manufacture things like methanol, like ammonia urea fertiliser at Kapuni. Gas is not just for energy; gas is also a vital chemical in manufacturing products that New Zealand uses here domestically and exports to the world. So if the Government wanted to change the royalty regime, they could have consulted with the industry, consulted with the New Zealand public, asked for advice from economists, from geologists, from all kinds of experts, and they could have proposed and then passed a new regime for royalties, but they didn’t do that.
They’ve come to the House and made the most obtuse, vague series of explanations as to why this bill needs to be passed tonight. That is why the ACT Party says this is not in accordance with the principles around the rule of law and it is not fit for a democracy like New Zealand’s to pass laws in this way.
I also want to address the issue that the Minister raised, having finally admitted there was a potential benefit of $50 million to the Crown, which is no insignificant amount of money. I mean, it’s about as much as they blew on consultants for a bike bridge that never got built, so they’ve got to keep finding these $50 millions down the back of everyone’s couch, otherwise they won’t be able to employ any more consultants to design things that won’t get built, like Let’s Get Wellington Moving or Auckland light rail. So we understand they need the money, but when I asked the Minister about the costs: what are the costs that business and consumers have to pay? Will this $50 million that the Government gets become a lot bigger number in terms of the costs to the industry, to the gas producers, and to those who manufacture and consume gas, and eventually to the consumer—to the Kiwis who rely on affordable energy, on affordable products? Whether they be paints or resins or waterproof raincoats, which is what methanol is used to manufacture, or kids’ waterproof backpacks so that their books don’t get wet when they go to school—assuming that this Labour Government cares whether kids go to school or not—all of those products are extracts from natural gas made in New Zealand. It’s natural gas produced in New Zealand for the benefit of all New Zealanders.
So when I asked the Minister about what the costs of this policy are, the Minister did not address that at all in the committee stage. She continued to describe the benefits but refused to venture anywhere near the costs, because all of the costs will flow through to the consumer in one way or another, or if these costs flow into the manufacturing sector, then the manufactured goods like methanol—of which New Zealand produces 3 percent of the world’s methanol—those costs will be added on to the cost of our manufactured products.
They will be less competitive in the international market, which means New Zealand will receive less money from our international customers, which means that our balance of payments deficit—which is the difference between what New Zealand sells to the world and earns and what we spend, what we import from the rest of the world, have to pay for—will get worse because our manufacturers won’t be selling as much if the price goes up and they have to compete with cheaper manufacturers. Just to give you an example: cheaper manufacturers of methanol are based, for example, in China, where they make methanol not from clean natural gas but from gasifying coal in a coal gasification process that New Zealand abandoned in the 1970s because it created so much toxic waste in the form of polycyclic aromatic hydrocarbons, coal tars, and all kinds of other carcinogenic chemicals.
So what this Government’s really saying is, “We want to put costs on our clean natural-gas industry so they become less competitive with the rest of the world, and we don’t really care.”, and that makes us less competitive with the dirtiest, most polluting manufacturers in the world. None of this makes any sense if you really care about the environment, if you really care about climate change, and if you really care about the socio-economic fabric of New Zealand society and of great places to live and work, like Taranaki, which have the highest incomes in any regional economy in New Zealand.
So what the ACT Party would be saying to the Minister is that you’re happy to talk about the benefits to the Crown and why this Government needs another $50 million—no doubt to waste on projects that will never be delivered, by the by—but we didn’t hear anything about the costs and the opportunity cost, because the signal this sends is that New Zealand’s not a safe place to send your money to start a business. If you’re a foreign organisation, you’re a forestry company, you’re a manufacturer, or you’re a distributor of products, and you want to come and set up in New Zealand, this bill raises the risk profile for international investors. It’s another way that this Government has iced, has sterilised, and has frosted up the windscreen on the New Zealand economy.
So it’s less likely that foreign investors will come and send us their money, because we are short of capital. We know that, because we have an infrastructure deficit of hundreds of billions of dollars, and this Government has no solution for that. International foreign direct investment could help with our infrastructure deficit. All of this rushed legislation, violating the principles of the rule of law without consultation, and failing to account for the costs and the benefits undermines New Zealanders’ and our trusted international partners’ confidence in New Zealand as a place to invest, a place to work, and a place to live.
Of course, we hear a lot from this Government about disinformation, about a loss of trust in the democratic process, and yet here this Government is, this Labour Government, introducing a bill under urgency, having claimed that they’ve been begged to apply a new levy regime by those who wish to pay the levy. This almost fantastical notion that there’s a queue of people outside the Beehive who have big businesses or big profits and want to pay more money to the Government because they’re so confident it will be spent wisely—I mean, this sounds like a bedtime story you’d read to young socialists, but I tell you what: it’s not true, and Kiwis don’t believe it. People who’d like to bring their money and invest in New Zealand because they like Kiwis don’t believe it, either. That’s why the ACT Party says it’s not credible, Minister.
Then we think about our high-value resources. New Zealand is resource rich. We’re resource-rich in our people and our skills but also the minerals: the petroleum, the gold, all of those rare earth minerals that we find in all kinds of places Kiwis might not have thought to look—whether it’s lithium deposits around the Taupō volcanic zone, whether it’s some of the purest gold, deep, deep, deep underground underneath the Coromandel ranges, where a company called OceanaGold has undertaken to drill a 10-kilometre tunnel underground to get the gold out without disturbing the surface of a national park. That’s how good Kiwis are at caring for our environment, getting our minerals and resources out of the ground, and actually making us wealthy as a nation.
ACT can’t support this bill, because it makes New Zealand poorer. But we’ll be working very hard when we have an opportunity as part of a future Government, a centre-right Government, to make sure New Zealand becomes a wealthier place and that our environment and our people are wealthier too.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Mr Speaker. I’m only going to take a short call on this third reading. As we’ve already traversed, it does make sense to close the loophole which means that some people who are extracting natural gas, who have found ways to extend fields that originally had licences or permits in the early 1980s, will pay the same royalties as anyone else. It seems fair.
The Green Party has long said that our royalties on oil and gas are too low, by international standards. At the same time, it’s fair to charge an appropriate royalty because, ultimately, it is a collective natural resource that everyone in New Zealand deserves to benefit from. That’s why it makes sense for the Government to charge higher royalties which can then go to pay for infrastructure and public services that will help us transition away from fossil fuels.
The climate science is that we have to rapidly phase-out the use of fossil fuels if we want to have a habitable climate. You would think that people in this House would realise that we have a climate crisis because we’re getting hit by extreme weather events at a much faster rate—exactly as the Green Party said 20 and 30 years ago, when we were talking about how we needed to act on climate change and to transition away from fossil fuel use.
It’s hard not to feel compelled to stand up and just say that I think most New Zealanders know that it doesn’t make us rich to sell our non-renewable natural resources at a very low rate to overseas interests. When they talk about foreign direct investment somehow making us richer, I don’t think it’s the case that there’s a lot of people who are going to come here and build infrastructure for free; they’re going to expect a return on that.
The reality is that we can live good lives and work together to address climate change. We do that by addressing inequality. We don’t do that by selling off our natural assets and helping small private interests make huge profits off trashing the planet, off taking our non-renewable resources. We do it by investing wisely in sustainable infrastructure, sustainable energy.
And I do have to mention that, earlier, the Hon Judith Collins was talking about Indonesian coal. I think her talking points from Mike Hosking and the right wing are a little out of date, because it is not the case that there is huge amounts of coal being used to generate electricity right now. But if, as the Green Party campaigned on in the early 2000s, the Government had actually invested in a plan to transition off Huntly, as Jeanette Fitzsimons called for when that member was Minister of Energy and Resources and did nothing of the sort to prepare us for climate change, we wouldn’t be in the situation where, in a dry year, we had to rely on burning coal.
New Zealanders know this. They’re starting to realise climate change is a real issue, and they will very quickly realise that that side of the House has nothing to offer, no vision, no imagination, no belief in our ability to tackle our environmental challenges and to address inequality in this country. They just want to bring back $5 charges for drugs at the drug store. So good luck to you—good luck to you. I commend this bill to the House.
INGRID LEARY (Labour—Taieri): Well, the National Party have really shown their true colours tonight. They’ve shown that they’re in the pocket of oil companies who owe money to New Zealanders.
Hon Gerry Brownlee: Point of order, Mr Speaker. You know that that was a massive breach of Standing Orders. There should be a withdrawal and apology for making that statement.
DEPUTY SPEAKER: Could you be more specific, Mr Brownlee? I didn’t hear anything that actually—
Hon Gerry Brownlee: I’m not going to repeat what she said, and you should be listening, but when one member accuses others in this House of being in the pocket of someone else, that is unacceptable. It is a breach of Standing Orders.
DEPUTY SPEAKER: I’ve taken some advice on this and it’s very much a marginal call about whether we’ve actually been influenced or corrupted. I will tell the member just to steer clear of that for the rest of her speech.
INGRID LEARY: Thank you, Mr Speaker. What is really clear to me is the love of the extractive industries of the Opposition, and the fact that they are willing to back oil companies rather than go into bat for taxpayers who rightfully can take this money because this is what is owed to them and this is what this law is making clear. It is unfair on taxpayers to have different levies when actually what they need is the fair amount of tax that is payable to them. That is what this law does. It’s a very, very simple matter and I commend this bill to the House.
BARBARA KURIGER (National—Taranaki-King Country): It never fails to amaze me how the connection between putting higher costs on gas extraction, or not, actually extrapolates its way up to the customer. Today all we hear about is the bread and butter and the higher cost of living and what the Government’s doing about it, and the National Party cannot see any connection between what’s going on here and keeping the costs down for members of the New Zealand public—because there is no connection. We’ve been really disappointed tonight, in that we have not received the answers that we needed to receive in the interests of making good legislation.
I remember back to 2018, and I often refer to the former member of Parliament for Taranaki, Jonathan Young, who was our energy spokesperson, who predicted everything that would happen after that 2018 legislation—I often refer to it as Jonathan Young’s crystal ball. The Hon Megan Woods at that time said to Jonathan Young, “Well, don’t worry, the sky is not falling in.” Well, I can tell you that we’ve gone to 20 percent of the available reserves now than we had back then, and now the reserves that we have got we are failing to get clear answers from the Minister about in the detail around this bill. It’s a very thin bill. It hasn’t got a lot on it. It obviously needs a little bit more. We’ve been looking for the definition of a deposit.
Now, in 2018, as we know, there were no more permits to be issued offshore. So if this is in fact a new deposit, it can’t come from a new offshore field. So we are actually grappling, over here, to understand—we know that technology improves all the time and we know that these industry groups are spending millions of dollars on new technology that can actually extract more from the same field. So we don’t actually know—it’s not clear to us, and the Minister has not been able to explain to us tonight—exactly what this new deposit is.
We’re also very unclear about the lack of consultation. Back in 2018, the select committee refused to come to Taranaki to talk to something that would affect Taranaki greatly, and now, tonight, we’re even refused the possibility of having a select committee. So when asked, “Has there been any consultation?”, no, there’s been no external consultation. But then someone approached the officials in December—that is six months ago. Why are we standing in the House in urgency, not being told why, or what were the reasons, or has there been another field found? It seems like there may not have been, or there may have been. Nothing seems to be very clear tonight, but it’s taken six months from that event, when somebody in the industry approached the officials, and now we’re sitting here six months later doing something in urgency, getting no explanations, and not understanding what this extra royalty is going to apply to.
Now, if it was something new, we could understand that, but we’re not convinced that that fits under this bill. And when you go back to someone—sorry, not you, Mr Speaker. But when the Government goes back to someone, after 37 years, to change the rules, I think it’s fair for this Parliament to understand a lot more detail than what we’ve been able to get hold of tonight. We were first told that there was no regulatory impact statement, on the grounds that it had no or only minor impacts on businesses, individuals, and not-for-profit entities. And then, in the Minister of Energy and Resources’ speech, she talked about millions, and then, when we had the committee stage, the Minister actually said $50 million.
So the whole story, as we’ve been going tonight, feels like all of this has been made up on the fly. Whether it was written overnight, last night, we’re not sure, but it just seems to be a very bad way to do legislation. If you give people the same information when they’re making a decision—I know in Parliament we often have different views, but you’ve got more chance of getting people on the same page if all of the information is available. Even though the lights are on here, in urgency in Parliament tonight, we feel very much in the dark around what has happened. For that reason, we are unable to support this bill. Thank you, Mr Speaker.
DEPUTY SPEAKER: Meka Whaitiri.
Hon MEKA WHAITIRI (Ikaroa-Rāwhiti): The Hon Meka Whaitiri, thank you, Mr Speaker.
DEPUTY SPEAKER: The Hon Meka Whaitiri.
Hon MEKA WHAITIRI: Listen, I want to just add again, from the contributions I’ve made on this bill, that I fail to see the urgency. I fail to see the urgency in why this bill is coming to the House. I do want to acknowledge the Minister’s answer to my question around the preservation of the Tiriti partners’ rights. She did underscore that this is permit holders. She further underscored that there will be no further breaches for those iwi who currently have claims to Crown minerals around the country, and I think that’s important that that underscoring goes on the record for those iwi.
The reason why I’m opposing it is because it’s not been given due consideration, particularly around going to select committee and hearing from those impacted iwi who have years and years of case law and, I guess, case claims to the fact that they have interests and rights in Crown minerals. Like I said, the Minister did answer the question around why there’s distinction around this bill to what I’ve raised earlier, which is that this is just for permit holders. But, again, we haven’t allowed our Treaty partners to have a say in how this is going to impact, and so it is unclear to me what the urgency is.
I have listened to why there is urgency; I can’t find it. There are members of the Government that just say that it’s a simple bill, but those are the ones that often alienate the Treaty partners in this country—it’s those simple bills. But, again, we’ve got a democracy in this country. We test it, and it goes off to the select committee, but in this case we’ve bypassed that. Members on that side feel that that’s OK, and yet members on that side, who represent a particular region, who have for years and years put claims around their rights and interests to what we’re talking about here tonight—I think that speaks for itself.
So I stand again, as I did in the second reading and through the committee stage, to oppose this bill, because it has not been given due consideration. It has not allowed the Tiriti partner to put down what they think. Even though they may not be permit holders, they do have rights and interests and want to test that their rights going forward aren’t further breached. We just heard tonight from the Minister that she felt the advice that she got was that it would not be further breached, but, again, we haven’t heard from the other side of the coin. That was my whole point in asking the questions I did to the Minister.
So people will now hear—it is on record in this House—that this passage of this bill does not impact iwi rights and interests, that it’s limited to those with permit holders, and that future considerations will be not impacted. But, again, that’s purely from the Government’s side. It would have been balanced if we allowed it to go to select committee to hear, like I said, from the Treaty partners. So it’s sad, because we do have the Wai 796 Petroleum Report that has been tabled. It did declare iwi rights and interests to petroleum and minerals on their land, which this bill does have an impact on. But, again, we don’t need to hear from them because it doesn’t impact on them and it doesn’t impact on their future claims. Therefore, we are hearing tonight from the Government that there are no further future breaches of Te Tiriti.
So we’ll leave that there, because, again, there are contemporary claims. But for those that currently have claims, it is now on record that the Government feels that there is no future breach and it doesn’t impact on them, and I’m sure that that will go some way in furthering their claims when we talk about this Energy Resources Levy Amendment Bill. So with those few words, we will oppose this bill.
MARJA LUBECK (Labour): Thank you, Mr Speaker. Delightful to take a split call on the Energy Resources Levy Amendment Bill.
As we have heard, it’s a bill to ensure the Crown receives a fair return from its fossil gas. We have heard tonight, extensively, about the need for the introduction of this bill. The main argument from the National Party seems to be that they don’t understand the bill and that’s why we shouldn’t be doing anything about it and keep it status quo. Which is no surprise, because the National Party is the party of the status quo and kicking the can down the road.
It’s really clear, from what we’ve heard, that due to historical practices over time, there could be some risk of confusion to achieve a fair financial return on the Crown’s fossil gas resources and there could be some problems—and that needs to be resolved. So, as the Minister has said very clearly, it is time that we draw a line under any possible confusion and, therefore, I commend it to the House. Thank you.
Hon GERRY BROWNLEE (National): Well, far from clarifying anything and getting over any confusion, this bill is written in a way that doesn’t appear to deliver what the Minister of Energy and Resources and what subsequent Labour Party speakers have had to say. If one looks at the amendment to section 6—clause 5 of this bill—about exemption from the levy, what that’s saying is that under the principal Act any exemption that might have existed no longer exists, but then it qualifies it by saying that, actually, anything that’s been taken out under the exemption and paid under the exemption is perfectly lawful and quite reasonable.
So the question that sort of comes into my head is: why wasn’t there a bill that simply said this is the new regime for the Crown’s interests in levies and royalties on gas? It would’ve been a very simple bill—so simple that it raises the question of why it wasn’t dealt with in simple statute amendment, which would’ve meant that the Minister would’ve had to go through the arduous process, I suppose, of talking to other parties in the House, making the reasonable case that she claims she has made and getting agreement for it to go through in a statutes bill. That would’ve been, I think, something that could’ve been achieved in the last five months—after all, speaker after speaker after speaker from the other side of the House, all victims of the sloganeering of the current Government, has said that the changes were minor, that the changes were fixing an anomaly, that the changes were closing a loophole, and that it was simply a matter of clarification. All of those are circumstances that are required for a statutes amendment, but, no, we’ve got a bill. After the Minister was first notified of the potential for this in December of 2022, we go through five months—no consultation with the industry, no discussion with other parties in the House, and suddenly, on the day that the Government has brought down a Budget that they claim is about the cost of living, a bill is brought into the House that’s going to put extra costs on to New Zealanders. It doesn’t make sense. So from a political strategy point of view, this has got to be an absolute loser.
When it comes to bills like this, we have had very legitimate questions that’ve been put to the Minister. One of those was how it will apply that pre-1986 and post-1986 arrangement that appears to be in place, although the bill actually says anything before 1986 is now gone, except that the main bill—this is the confusion—still leaves discretion for that with the Minister. So it’s an all over the place sort of bill, and the claims on the other side that it’s all very simple are actually an indication that there has not been great consultation even inside the Labour caucus, which is most alarming, in my opinion.
We heard that there is to be, in the Crown minerals department inside the Ministry of Business, Innovation and Employment, a new determination for what a gasfield is. So what we understand—what’s always been understood—is that a gasfield is a geological structure that exists somewhere in the Earth’s crust, and that it can be defined by an area and therefore lines on a map. That is what the licence is issued for, for the extraction of gas in that gasfield. What we’ve heard tonight from the Minister is that there are only two fields that are affected here—one is Māui and the other is McKee—and that if there are to be new wellheads put on those existing fields, then that is considered to be new deposits or new discovery and therefore caught by the new legislation. That seems to be fundamentally mixed up. It goes back to my point: if it is just to change the royalty structure, to bring it all into line, to simplify it, to overcome an anomaly, to make a minor change to bring it all into a clarified situation that avoids a loophole, why have that extra construction put on it?
Why were the advisers coming up to the Minister and giving her advice that this would constitute a new deposit? There’s no such thing as a new deposit inside an identified gasfield. It is either a gasfield or it’s not. That is the reason why, across those two big fields—or certainly across Māui, I should say, there are only two platforms, but there are multiple wellheads, multiple extractions from in that reserve.
We heard also that if we don’t do this, then the Crown could be missing out on $50 million in revenue. That number appears to have been plucked out of the air. Why wasn’t it in the explanatory notes? Why wasn’t it in some sort of discussion that was had with parties around the House? No one’s going to say, “Oh, that’s a bit silly. We won’t take that.” Instead, we got this ludicrous argument that there were hoards of the oil industry banging down the Minister’s door begging to pay more tax. That’s complete rubbish. Be upfront about what’s going on. If it’s just the change to the royalty structure, the levy structure, then have a bill that says that, not this convoluted arrangement that we’ve got here in front of us tonight.
When we look at oil and gas in New Zealand, particularly gas, it is a massive transition fuel—no question about that. I don’t have any doubt in my mind that, over the next few decades, the energy picture for New Zealand will change. We should be looking to that future. But it’s not here now; it won’t be here in five years’ time. It might be a little closer in 10 years’ time, but gas is going to be a transition fuel in the New Zealand economy for a long time.
So what we would question is why there isn’t a more upfront approach about what’s happening here? Because it also seems to me that if you look at just Māui alone, it was supposed to be extinct 20 years ago. It’s had two revisions of its potential, and the latest revision says, “Well, it’s got another 10 years with about 500 petajoules of energy likely available for extraction during that time.” I suspect that that’s about to be recalculated. I suspected that there is a new—they call it the “P” reserve figure that’s likely to go up. I think that’s probably one of the motivations here.
I can’t help thinking that the Government is slightly embarrassed, having gone on for so long about an energy transition, an economy that is going to be run on these new fuels which are not in sight—absolutely not in sight—knowing that for the next few decades we’re going to be relying on that big resource, and so they want their extra royalty out of it.
In principle, we don’t oppose royalties. But we do oppose the fact that this has been done very, very quickly; it’s been done without consultation with the industry; and it’s been done in a way that makes everything look just a little bit shifty. I heard some ridiculous comments from the Green member before about the balance of payments. I mean, you would swear that you could grow money on trees with the way those people talk. It’s just not possible. You would swear that there is some kind of alchemy that would make gold available at the swizzle of a stick inside a glass somewhere. It’s just not possible.
Looking at what Māui and McKee and Pohokura and any other gasfield that you like to mention has contributed to the economy of New Zealand over those last 50 years, it’s just extraordinary. Imagine what our balance of payments would be if we were as reliant on gas as we have deliberately made ourselves reliant on coal. It would be an absolute disaster—a greater disaster than we’re already seeing with the burning of coal at Huntly.
So any suggestion that this bill has got even an inkling of purpose in reducing carbon emissions in New Zealand is just out to lunch. We know that the burning of gas is a cleaner option than burning coal; everyone knows that. We know that doing that efficiently is even better. We know that, beyond that, when there is another fuel that can replace that, and it’s clean, that will be even better again. But in the meantime, we need to have a less-confused energy policy and a policy that does not make new definitions for the industry.
Dr ANAE NERU LEAVASA (Labour—Takanini): Thank you, Mr Speaker, for the opportunity to take a brief call on the Energy Resources Levy Amendment Bill, third reading. Just to use one of the words that the Opposition members have used, this bill has seen an illuminating debate.
I want to thank the Minister Megan Woods for bringing this to the House and also for answering some of those questions during the committee of the whole House stage. I note that there have been some other questions still firing in the last few contributions; they ran out of steam during the committee stage where they could have asked and clarified a bit more. So I thank the Minister for providing those clarifications for us.
So we know what this bill does. It amends the Energy Resources Levy Act 1976. What it does is it provides that fair play and fair financial return on the Crown’s fossil gas resources. It is what we need. That’s why I commend this bill to the House.
A party vote was called for on the question, That the Energy Resources Levy Amendment Bill be now read a third time.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 47
New Zealand National 34; ACT New Zealand 10; Te Paati Māori 2; Whaitiri.
Motion agreed to.
Bill read a third time.
Bills
Energy (Fuels, Levies, and References) Amendment Bill
First Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I move that the Energy (Fuels, Levies, and References) Amendment—
DEPUTY SPEAKER: Sorry, a legislative statement?
Hon Dr MEGAN WOODS: Oh, yes—sorry. I present a legislative statement on the Energy (Fuels, Levies, and References) Amendment Bill.
DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.
Hon Dr MEGAN WOODS: I move, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a first time.
This bill proposes an amendment to the Energy (Fuels, Levies, and References) Act so that the petroleum or engine fuel monitoring levy can be used to cover the costs of strengthening New Zealand’s onshore fuel resilience in addition to its existing purposes. One of the existing statutory purposes of the levy is to meet the reasonable cost of complying with New Zealand’s 90-day oil reserve obligation under the International Energy Agreement (IEA). However, it is unclear whether the levy can be used for initiatives that aim to improve resilience of fuel supplies in New Zealand, specifically, particularly Government procurement of onshore reserve diesel stock.
These initiatives may not meet the reasonable cost test as there is a much cheaper alternative for meeting the IEA obligation—namely, purchasing offshore oil tickets. Those tickets give the Government the right to purchase oil and fuel stocks held overseas at market prices during an IEA-declared oil supply emergency. They are useful for our contribution to managing international fuel supply disruptions, and we have had cause to release some of our offshore tickets during the Ukrainian conflict, to help in international efforts to stabilise the fuel markets. However, they are not physically held in New Zealand and they do not support our domestic fuel resilience.
This bill will ensure that the Government will have the flexibility to use the levy to fund onshore fuel resilience initiatives other than purchasing oil tickets. In October 2022, the Government announced a Fuel Resilience Policy Package that aims to strengthen New Zealand’s fuel resilience and economic security. The package includes introducing a minimum fuel stock obligation on fuel importers, which will be legislated through a separate piece of legislation—that is not what this bill is doing. The package also included Government procurement of services relating to storage and management of at least 70 million litres of reserve diesel stocks to be held onshore. This will boost our diesel stock levels to about 28 days of cover, on average, and will mitigate the risk of disruption to diesel supply, which is the most important fuel for critical services.
The bill will enable the levy to be used to cover the additional Government administration and procurement costs associated with implementing the Fuel Resilience Policy Package, as well as the costs of other potential measures for improving fuel resilience. I intend to have the minimum obligation coming into effect in the coming months, so the Government will start incurring costs of administering it soon. These administration costs are expected to be covered by the levy. I also expect the agreements for operationalising the reserve diesel stock arrangements to be finalised by the end of 2023. To make further progress in the relevant procurement processes, the Government needs certainty that it can use the levy for this arrangement.
In light of this, I am seeking to take this bill through all stages under urgency this evening. This bill will enable a smooth roll-out of the Fuel Resilience Policy Package and will better strengthen New Zealand’s fuel resilience and economic security. I commend this bill to the House.
STUART SMITH (National—Kaikōura): Well, thank you, Mr Speaker. It is a pleasure to speak on the Energy (Fuels, Levies, and References) Amendment Bill.
DEPUTY SPEAKER: Sorry, could I just say, the question is that the motion be agreed to. Carry on.
STUART SMITH: Thank you, Mr Speaker. I do have news for the Minister. She won’t be getting this through all stages tonight—in 10 minutes. I don’t think that’s possible, even though we are going to be cooperative.
First, the National Party does support this bill, but we do have reservations, and we have significant reservations because, yet again—yet again—a lazy Government hasn’t got themselves organised to be able to take this through a proper process. We should have a select committee process. This is an outrageous waste of Parliament’s time, putting us through urgency, when they clearly cannot get themselves organised. We should, at the very least, hear in select committee from the fuel companies, from the AA, and from the Motor Trade Association as well. All of these things are important issues for us.
The Minister mentioned fuel tickets, and I think that that’s a very good point to make. We don’t have the tankage onshore to have the storage that we necessarily need in New Zealand, and the closure of Marsden Point was supposed to not put our fuel security at risk. Yet since it’s closed, we have had two instances of shortage of fuel supplies at great cost, I’d say, to consumers, with airlines having to tanker fuel into airports—that means filling their tanks to the brim, burning more fuel to get to the airport where they don’t have the fuel supply, raising emissions, and then, of course, having enough fuel for the return journey. Similar, in a slightly different way, in overseas international travel, with aircraft leaving Auckland, for example, doing a short hop to Sydney or Fiji to refuel at great expense. Having an extra take-off burns a lot more fuel instead of climbing up to altitude where they use much less fuel rather than flying low. That all burns money. It costs airlines a lot of money. They don’t like it. And, ultimately, while the airlines pay the money upfront, in the end it flows through to the consumer in higher ticket prices. So we all pay.
We have found how vulnerable we are—and this is diesel we’re talking about here. But as you might be surprised, not all diesel is the same. It comes under different specifications, and so the diesel coming in to New Zealand will be tested in every shipment. We could have the same scenario that we had with the jet fuel, although we won’t be worrying about a freezing point, although diesel does have additives in the winter to stop it from freezing—it goes waxy in the fuel lines when temperatures are too cold. I know that from experience when I was farming in Canterbury and we got quite a bit of snow, so I know that that is an issue.
So we’re putting ourselves at risk, and so we do need to get fuel security sorted here in New Zealand. But tickets are not the panacea that has been alluded to. Marsden Point’s closure, which I alluded to before, is more serious than fuel security, although it is a really important part of it. But the much-needed, high-paying, highly skilled jobs in Whangārei all were lost as a result of the closure of Marsden Point, a massive cost and yet another example of a Government so hell-bent on lowering emissions that they want to de-industrialise and to decarbonise everything. They’re quite happy to do that, and I think that is outrageous and poor Government policy.
And we know that the Government at least had a part to play in it, because Naomi James, the former chief executive of the Marsden Point, wrote to the to the finance Minister, Grant Robertson, and asked him, essentially, to get ACC, who are a major shareholder of Marsden Point refinery and who had been instructed to divest themselves of fossil-fuel investments when Marsden Point refinery company was going through pretty difficult times, to help Marsden Point. The Minister wrote back and said, essentially, no, he wouldn’t do anything about it, so they had to actually make the decision to close the refinery. They may have done it anyway, but we will never know. And I suspect that was the straw that broke the camel’s back.
Unfortunately, these things have far-reaching consequences, and now we’re dealing with this bill under urgency tonight. So we’re only talking about 28 days of onshore storage—the International Energy Agency recommendation is 90 days of storage. We don’t have that. Diesel is the essential fuel we have for our emergency services and for transport, all of our food, and the supermarkets—supermarkets run out of food and they need to be restocked at least every 24 hours. We need fuel to run that. Our rail, for what it does—and that’s questionable at times—it also runs on diesel. And our ships are going have to run on diesel to meet MARPOL Annex VI, which is an emissions profile.
DEPUTY SPEAKER: This is fairly broad. Can we talk about the levy, which is actually the point of the legislation—but carry on, Mr Smith.
STUART SMITH: Fuel security is a very important part of this. Why are we doing this under urgency? We still haven’t had an answer for that, although the Minister couldn’t answer the simple questions in the last bill. In fact, she caused more confusion than any light that she might have put on the issue at hand. What we don’t know from this is what the time line is that we’re going to get, and I’ll be looking forward in the committee of the whole House to getting some answers on this question. How long is it going to take to get the 28 days of supply onshore? That will be very interesting to learn. All these things, as I said, could have been teased out in a much more fulsome way in select committee, but we didn’t get the opportunity for that.
So, as I said, the National Party, supports it. We will help the Government out at this time. They desperately need help. We know that. But we do not like the process. We do not like urgency being abused in the way it is constantly—constantly—by this Government. It just shows how poorly organised they are. So we will support it, but we will be asking some hard questions during the committee of the whole House process—and that will be for the Minister’s benefit—tomorrow. And so we look forward to that tomorrow in the committee of the whole House. So with that, I recommended it to the House.
DEPUTY SPEAKER: It’s time to rise from the Chair. The House is suspended until 9 a.m. tomorrow.
Debate interrupted.
Sitting suspended from 9.58 p.m. to 9 a.m. (Friday)
THURSDAY, 18 MAY 2023
(continued on Friday, 19 May 2023)
Bills
Energy (Fuels, Levies, and References) Amendment Bill
First Reading
Debate resumed.
ASSISTANT SPEAKER (Hon Jacqui Dean): Good morning, members. When we broke last night, at 10 p.m., the House was considering the Energy (Fuels, Levies, and References) Amendment Bill. I’d now like to call the next speaker.
NAISI CHEN (Labour): Thank you, Madam Speaker. Happy Pink Shirt Day. It’s my pleasure to take a call on the Energy (Fuels, Levies, and References) Amendment Bill.
This bill is to ensure that the levies we collect go towards making sure that our onshore supply is one that is capable of seeing New Zealand through hard times. This is especially important when there are global disruptions, supply chain disruptions, and weather events. Doesn’t that sound familiar to us? Hasn’t that been exactly what’s been happening in New Zealand for the last four years? This is to make sure that the money that we collect from levies actually goes to ensuring that New Zealand keeps moving. It’s to make sure that our onshore oil supply, petroleum supply—our energy supplies—are actually up to the fact that our economy does not see the disruption that we saw in the last four years, and that we’re prudent to avoid those rainy days. So that’s why I commend this bill to the House.
Hon JUDITH COLLINS (National—Papakura): What the member who’s just resumed her seat, Naisi Chen, forgot to say is that we didn’t use to have this, and it wasn’t because of offshore operations but it’s because Marsden Point has been closed down. The companies that owned Marsden Point, or those who are the shareholders in it, they were quite shocked when the Minister didn’t bat an eyelid and said they were going to close down Marsden Point. What is true is we now have a situation where we don’t have security of supply, of fuel, and, of course, we’ve got a Government which has been anti the oil and gas industry from day one, although when they were last in Government, before that, they understood that it was an important part of our economy and our security. So they’ve let Marsden Point close and now there’s a problem—well, they walked away from that, but what they forgot to do is to actually make sure that there was that supply and the capacity to hold the supply.
So this fuel levy, which is, by the way, the sort of levy that most people would think was paying their fuel taxes so that the roads could be built, is now going to be used to hold storage of diesel. The issue about diesel supply in New Zealand and storage is, actually, critical. So given the fact that the Government allowed Marsden Point to be closed without any attempt being made to find an alternative, this is why New Zealanders are going to see their fuel taxes going to pay for diesel storage. One of the things that we’ve seen in the last six years has been a massive rise in inflation, particularly the last few years, and part of that is around the cost of fuel, and a lot of that cost is actually Government taxes and levies anyway. And on 1 July this year, it’s going to go up yet again, and that is one of the things that’s driving up the cost of fuel in this country.
So rather than worrying so much about, you know, every little dollar here and there around prescriptions, how about just looking at this, because we’re going to have to support this today as the Government has allowed Marsden Point to be closed without an alternative, without requiring the fuel companies to look for other storage, or for the Government to provide that storage, and they’ve allowed this situation to occur?
So I’m sorry to say we’re going to have to support them on it, because we can’t allow the country to not have enough storage of diesel. It’s a problem that the Government has allowed to happen. The energy Minister was consulted, I understand, by the owners of Marsden Point, when the decision was being made to close it, mothball it, and they tell me that they were really shocked that she said, “Yeah, no, that’s fine—it’s your decision.” Maybe she didn’t understand how important storage of diesel is to this country, given that our heavy transport fleet does not run around on electric vehicles (EVs) and it’s very hard to have any truck that’s an EV given the weight of that truck and given the range that it doesn’t have.
So it really is that they’ve basically cut the fuel security out from under New Zealanders without another plan, so therefore we’re going to have to support it today.
INGRID LEARY (Labour—Taieri): If there’s one thing that 2023 has taught all of us, it’s the need to be resilient and to plan for the future, and to realise that shocks that we thought were happening once in 100 years can happen several times in a year. We need to be prepared, and failing to plan is planning to fail. What this piece of legislation does is enable the Government to be more prepared, to be able to ensure that we have the stocks that we need onshore so that we can be resilient if there is some kind of devastating international event or a disruption to our supply chains. It means that we have, in a way, a nationwide business continuity plan, something that just gives us a buffer to be able to continue to trade, continue to get in our cars, get our kids to school, go to work, get to the doctor, as we then work out the bigger plan for dealing with some of these shocks that were almost inconceivable a few years ago.
Climate change is upon us. We’ve also seen other things that were not wholly predicted, such as the invasion of Ukraine and the impact that’s had on oil supplies around the world. This legislation is very much just about planning to be resilient, to have a plan, and to be able to have a buffer so that we can continue business and not have devastating impacts that would otherwise occur. It’s a good bill. I commend it to the House
SIMON COURT (ACT): Thank you, Madam Speaker. ACT will be supporting this bill. We believe that it’s important that New Zealand has a secure energy supply, including high density liquid fuels like petrol, diesel, and jet fuel, because that is what our economy runs on. That is how we’re connected to the rest of the world. The problem the Government is trying to solve is security of supply.
Now, we’ve heard from many concerned citizens over the past couple of years that they are very worried by the closure of the Marsden Point oil refinery, which means that New Zealand no longer has offshore processing capability for crude oil into a range of products, and it’s true that that has major implications for our economy. For example, crude oil, when it arrived in New Zealand, had a relatively high sulphur content, and New Zealand’s refining processes at Marsden Point removed that sulphur to produce a high quality low sulphur diesel. That sulphur that was removed was then itself polished and refined and made available as a commercial chemical product, elemental sulphur, to be used in all kinds of processes, including manufacturing sulphuric acid and adding sulphur to phosphate and other fertilisers to create a product that Kiwi farmers might be familiar with: superphosphate.
Now, it’s also resulted, the closure of Marsden Point, in the loss of a source of carbon dioxide, which is a by-product of refining crude oil into petrol and diesel. That carbon dioxide is used to package food, to preserve food, it’s used in greenhouses and all kinds of other industrial applications where industrial gases like carbon dioxide are very valuable. So the closure of Marsden Point oil refinery has not just raised issues about security of supply for onshore fuel stocks but also the availability of other by-products from the manufacturing of petrol and diesel and jet fuel at Marsden Point.
That actually shows what New Zealand’s big problem is: 5 million people at the bottom of the world, at the end of a global supply chain, who don’t have many options and who need to consider very, very carefully when decisions are made around public policy that might affect the things that businesses want to do. Last night in the House, for example, the Government pushed through a piece of legislation under urgency which would apply a levy on natural gas—natural, clean gas extracted from existing reservoirs in Taranaki—retrospectively, which means that business investment decisions made in the past decade or so about investing in production, investing in people, investing in personnel, and investing in technology are at risk by a Government increasing its take of royalties from 5 to 10 percent up to 20 percent on the natural gas removed from existing reservoirs. It’s decisions like that that cause businesses, particularly those funded by foreign direct investment or with a share of foreign ownership—which we absolutely depend on to underpin our local domestic economy—to be concerned about their risk of operating in New Zealand.
That’s a concept called sovereign risk. When Governments pass bad laws or push bad policies or push through bills under urgency, as this one is, or announce things without having done the policy research or a benefit-cost analysis, that’s what causes Kiwi investors and international investors to think twice about coming to New Zealand, and that may well have played into the thinking behind the closure of Marsden Point, which was a privately owned facility which got to a certain point in its asset life where the owners of that facility had to make a decision. “We’ve got 5 million customers in New Zealand. They don’t earn as much as their neighbours across the ditch in Australia; they can’t pay as much for stuff. If we want to continue processing crude oil into refined petrol, diesel, and jet fuel in New Zealand, our asset’s at the end of its life, or nearing it. We’re going to need to make a huge investment, potentially in the billions of dollars.”
The New Zealand Government has taken a stake in that oil refinery at Marsden Point in the past, under a previous National Government. Over a billion dollars was tipped into that refinery to stand up additional hydrocarbon cracking and processing equipment back in the 1980s. The New Zealand Government, the taxpayer, is not about to tip a billion dollars into an oil refinery in 2023—that was never going to happen—but private sector would still continue to invest in plant and equipment if they thought that there was a long run available for them to recover their cost of capital and that there was no additional risk of a Government like this Labour Government passing laws in the night under urgency with no consultation, like they did last night with the levy on energy resources—natural gas.
So there’s an issue with security of supply, there’s an issue with infrastructure, and then there’s an issue with this Government and its absolute allergy to foreign direct investment. Again, we saw that in yesterday’s Budget. There’s not enough money to rebuild the infrastructure that we need that was damaged by cyclones and storms—only a few hundred million dollars to what the Government has said is a multibillion-dollar damage bill. There was no provision for public-private partnerships, where the Government might chip in some money in expectation of doing a deal with the private sector investors, say, to invest in new roads or rail or other types of infrastructure New Zealand vitally needs. This Government is allergic to private sector capital and investment, and that is one of the reasons, I surmise, that the Marsden Point oil refinery closed and we find ourselves in this situation.
Then, I want to come to the issue of resiliency.
Hon Julie Anne Genter: What are you talking about?
Hon Andrew Little: Corporate welfare—he supports corporate welfare.
SIMON COURT: Last year—
Hon Gerry Brownlee: Well, Labour are good at that!
SIMON COURT: Now, I want to be—
Hon Gerry Brownlee: Look at the Budget! Unbelievable! The corporate welfare in that—
SIMON COURT: Mr Brownlee makes a good point. This Government is tipping hundreds of millions of dollars into green initiatives that don’t reduce emissions by a single tonne of carbon, because New Zealand’s emissions are already capped under the emissions trading scheme, and is making all kinds of excuses about why it can’t do things when it comes to investing in infrastructure.
Now, ACT’s not advocating for corporate welfare, and here comes the dilemma—here comes the dilemma—because New Zealand, at the end of a global supply chain, does need to have regard for its resilience and security of fuel supply. Now, last year, in October 2022, I asked the Minister what is New Zealand’s total stock of fuel held onshore at any one time in tonnes and days, and the Minister replied: 25 days’ worth of diesel, 47 days’ worth of petrol, and 94 days’, or three months’, worth of jet fuel, which is quite helpful, but remember at that time we still weren’t quite sure whether we could leave the country without some kind of passport, or whether we’d be allowed to come and go. So I’m not surprised there was a big stock of jet fuel back in October.
Now, 25 days’ worth of diesel: the New Zealand economy runs on diesel. That’s milk tankers picking up the milk from farms, that’s trucks taking food from distribution warehouses to supermarkets. The entire economy runs on diesel, but, fortunately, there are some great Kiwi investors and entrepreneurs, technical specialists, who are introducing hydrogen into the diesel supply chain in the form of hydrogen injectors to decarbonise and reduce the amount of emissions from diesel. So it’s not all downside if you’re an environmentalist and you’re concerned about protecting the climate.
But when I asked this question in October 2022, the Minister then replied to say the Government was going to procure 70 million litres of diesel to hold onshore, and this was back in November last year. So now we’re in May, nearly June. The Minister promised that this would be a matter of urgency because of our issues around security of supply and risk, and yet it’s May and the bill’s been dropped under urgency.
So the ACT Party doesn’t believe it’s really been a priority for the Government. They’ve been focused on other things, like finding more money like the $50 million they found last night from taxing natural gas, finding more money down the back of the couch to pay for their pet projects. No doubt there’ll be more bike bridges, cycle lanes, and all kinds of other things that hardly anyone will use and are unlikely to get built announced between now and the election. The ACT Party says this Government needs to focus on its priorities. That’s delivering infrastructure so that Kiwis can have better and healthier lives, and if that includes spending money on things like roads, bridges, and other ways for people to get around efficiently, then that’s what they should be doing. But the ACT Party will support this bill—disappointed it’s under urgency; the problem’s been known about for a long time.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. This bill is perfectly reasonable. The Green Party is supporting the bill. It is something that we’ve been talking about for quite a long time, the importance of both managing a transition away from fossil fuels and ensuring resilience and security of supply during that transition. Of course, we should have started planning for this a long time ago—20 years would have been good. Back in 2008, I remember, as oil prices were shooting through the roof, I was working as a consultant to the New Zealand Transport Agency, which had just been formed, on managing transport challenges as oil prices rise. Everything that we laid out in that report is still absolutely relevant today. We knew that there could be sudden disruptions to the supply of fossil fuels, because our transport system is so heavily reliant on fossil fuels, which is not inevitable—it doesn’t have to be that way; that’s a consequence of decisions that previous Governments and local governments made. We could have a transport system that is much less reliant on fossil fuels.
Indeed, we will have to have one that is much less reliant on fossil fuels and can use clean, renewable electricity but also one that moves people and goods at much lower energy cost. We can do that in our towns and cities and have massive benefits, because it means more people-friendly cities with really excellent public transport, with walkable neighbourhoods, with cleaner air, and with quieter neighbourhoods.
And in terms of moving goods, we obviously need to have a joined-up approach where we’re looking at the opportunities to really utilise coastal shipping, which will also help us with resilience to events that disrupt the road network—whether that be earthquakes or heavy-rain events. We did see coastal shipping was very instrumental in keeping the South Island and North Island connected after the Kaikōura earthquake and in the wake of—
Hon Gerry Brownlee: What a load of—
Hon JULIE ANNE GENTER: Well, I mean it was necessary. There obviously wasn’t a built-up system of coastal shipping services, because the Government didn’t do anything to prepare for that or plan for that. But sea freight will be vitally important as a means of resilience and as a means of transition, and joining up rail and sea freight will be really important.
I am intrigued at the ACT Party’s philosophy, because, on the one hand, they don’t think Government should be responsible for anything or planning anything, but, on the other hand, when the Marsden Point oil refinery closed down, which was entirely privately owned, they are somehow blaming the Government for that. It just doesn’t add up, this philosophy. The truth is there’s a bunch of things that we do better together, and that’s the role of Government, and that’s why we collectively pool our resources to pay for infrastructure and services that we can pay for together. And there is a role for the private sector in working alongside and partnering to supply some things.
But, ultimately, it’s us together through this democratic process who determine what our goals are. And one of the goals that we have is transitioning to a resilient economy that is net zero, which means we’ll be able to protect our climate, look after our environment, and look after our people. It is absolutely untrue that we need to somehow allow those extracting fossil fuels to not pay their fair share from extracting those, which is why the bill last night made sense, closing a loophole to make sure that new gas that’s extracted is all subject to the same royalty rate, and it makes sense for us to work together. So the Green Party supports the bill.
Hon Dr DAVID CLARK (Labour—Dunedin): Thank you, Madam Speaker. I want to take just a quick minute to reiterate what the bill does so that those who have tuned in this morning and perhaps weren’t watching when this bill was introduced last night into the House—maybe they were celebrating the changes to prescription charges, the fact that the health system will be relieved of tens of millions, probably hundreds of millions of dollars with the burden—
ASSISTANT SPEAKER (Hon Jacqui Dean): We’re getting back to the bill.
Hon Dr DAVID CLARK: —if they were doing something else last night and missed the start of the bill.
Hon Damien O’Connor: A stitch in time saves nine.
Hon Dr DAVID CLARK: It is a bill that has a similar purpose—as my colleague the Hon Damien O’Connor says, a stitch in time saves nine. It’s the same general principle, right?
So making sure that we have the supply chain resilience—similar to the announcement around the prescriptions—having that thing done early so you save costs later on. The same kind of principle, the preparedness principle, in action.
This bill amends section 14 of the Act so that the fuel levy can be used for the purpose of “meeting the reasonable costs and expenses of the Crown on promoting resilience of engine fuel supplies in New Zealand.” It’s part of a wider package the Government’s settled on just to make sure we have those supply chains as resilient as they can be. Because we’ve seen—in the face of the cyclones, the natural disasters—how important it is to have stock on hand.
The change to the levy’s purpose through this change in the Act will give the Government more flexibility to use the levy funding for initiatives that would improve resilience of fuel supplies in New Zealand. At its most basic, it goes to things like getting good information, to planning ahead as to what a good set of reserves would look like, to procurement of those same reserves, and to any mitigating action if there are disruptions. Those are the things that this bill will achieve through the change in purpose of this levy.
For New Zealanders who are facing that disruption of natural events, we know that one of the best things that people can do is remember that they have a car with fuel in it, and they can go and check their radio to get emergency updates—some of the things are really simple that are enabled by having good, resilient supply chains for fuel.
So I want to support this bill. It is a sensible bill looking to the longer term, and I think from what we’ve heard, the whole House is supporting this bill. So I’m imagining most of the speeches will be very short. And on that note, I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jacqui Dean): Sam Uffindell—five minutes.
SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. I will also rise to support this bill. We are rushing this through under urgency today. I’m not sure if that’s the best way to go about it, but here we are—we’re doing that.
We don’t have a lot of resilience in our supply chain at the moment, and I think that we saw that we had a couple of bad batches that came in last year. They were talking about having to ground planes or limit the amount of time that they could fly. Not ideal—it’s a long way from Tauranga to Wellington—but, thankfully, that was averted.
We note that there are quite low diesel stock holdings, and that’s a challenge as we no longer have the ability to refine onshore. We don’t have that independence or that resilience, so this bill is coming in to help address that, and the fuel companies—I’m not sure whether they were consulted. I’m going to hazard a guess that they probably weren’t, but it was noted that there is quite a lot of infrastructure that needs to be built out and they may not be able to do that. So through the levies, they will get some support from the Government, which is good. It’s not an ideal situation, but here we are, with no Marsden Point.
We will support this bill. Thank you.
ARENA WILLIAMS (Labour—Manurewa): Good morning, and happy Pink Shirt Day. It’s a pleasure to rise to speak on this bill, the Energy (Fuels, Levies, and References) Amendment Bill, for its first reading in the House. I will be taking a second call in the House so you can expect to hear from me again.
Hon Members: Whoa!
ARENA WILLIAMS: My colleagues on the other side of the House aren’t very excited about that.
Let me tell you that this is an important bill, and I can speak from experience. Recently, I was travelling in the US with my colleague who has just resumed his seat, Sam Uffindell. We had the opportunity to go to the UN and to speak with our ambassador there about energy policy and climate change and how it is destabilising the States around the world that we care about, particularly our neighbours in the Pacific. This bill is relevant to our policy at home, about how we respond to those challenges which are inherently global, our climate change challenge that we all must respond to. This is part of a package of wider fuel resiliency policy announced by the Government in November 2022.
It also means we’re making changes to introducing minimum onshore fuel stockholding obligations, and a dedication of additional resources to operating the National Fuel Plan. It means that we are setting ourselves up so that we do not have the kind of reliance that we have previously seen on offshore fuel lines. But it also means that it should be read in a broader package of moving our transport fleet into cleaner, greener opportunities. It also should be read in the context of us moving to a future where we have less reliance on offshore.
So this is a good bill. As part of that, it should be read together and I look forward to speaking on it in the second reading.
ANNA LORCK (Labour—Tukituki): Thank you, Madam Speaker. We know fuel is a lifeline service. In the immediate aftermath of Cyclone Gabrielle, fuel played an essential role. We had to ensure we could get diesel and LPG gas out to isolated communities. This required a huge response from our helicopter pilots and the air force and military to make sure that we could get out to those communities. We are acting, now, to improve fuel resilience so we are confident that we have got the stocks onshore that we need for when we do run—never ever ever run out.
Storing more fuel such as diesel in New Zealand will help protect us against disruption to critical services. And this includes things such as getting food out to these communities and to give us peace of mind that emergency services have the capability to get out and help those in need every time we need them. And this bill does what has needed to be done. I’m pleased to see that support across the House for business continuity and making sure that we can keep going forward as a country that’s more resilient and looks after each other. Thank you, Madam Speaker, I commend this bill to the House.
Hon GERRY BROWNLEE (National): Those are two extraordinary speeches we’ve just heard from the other side of the House. The first, from Arena Williams, made that impassioned plea that this is part of our transition to a clean, green economy, but it also managed to say that this is a global challenge, and it seemed to forget that New Zealand was once about 50 percent self-sufficient, in net terms, in hydrocarbon product—that’s now fallen by the wayside—and we had a refinery here, which meant that we could bring in crude oil, clean that crude oil up quite considerably into high-quality motor spirit and other product, and get a whole lot of benefit from the by-product of that exercise. But now, the Government, having seen the closure of Marsden Point—because the company recognised that the cost of buying offset carbon in New Zealand just didn’t make it economic to stay here and it decided to shut the thing down, putting this country into the position where we are now 100 percent dependent on other nations for our motor fuel. Now, who pays the carbon price on that?
This is the sort of fallacy that you get from the Green Party and the Labour Party about this transition with New Zealand becoming a wonderfully clean, low-carbon - emitting country, etc., but we’re simply transferring some of our obligation on to other nations. Then they’re standing up and piously saying, “Oh, it’s a global challenge and we’re all in it together.”—well, this is a Government that’s pulling us right out of that when it comes to our motor spirit requirements.
The other thing that we’ve heard is the member Dr David Clark over the other side there quoting one of his colleagues saying that this was a stitch in time measure—a stitch in time measure. Well, 12 months ago, we went into a position where we were 100 percent dependent on imported fuel, and for 12 months there’s been nothing, until in Budget legislation—Budget legislation—under urgency, we’re apparently taking a stitch in time. This is complete and utter rubbish, and we are in this situation because the Labour-led Government and the Labour Government that followed it have taken their eye off the ball and failed to recognise that if we are going to have a transition in New Zealand from carbon-emitting fuels and other carbon-emitting processes, it takes time. It takes time, and what we’ve got today, effectively, in this bill is an admission from the Labour Government that they’ve got it wrong and that they should have sat down with the owners of Marsden Point and should have negotiated a way through that would not leave this country so dreadfully exposed, as we are at the moment.
It’s here because the certain circumstances that are surrounding the Ukraine war and the potential for escalation there could put us in a difficult position. I do want to say, though, that it’s noticeable that over the last 12 months of absolutely horrific casualty, death, destruction, and dispossession inside Ukraine, international oil prices have fallen, which is quite an interesting sort of thing. It means someone is buying somewhere from countries that perhaps they shouldn’t be buying from, and it would raise the question about where does all of our refined oil come from and what is the base source of that fuel before it gets here—what is the base source of the crude that gets refined and, ultimately, exported to New Zealand?
My point is that New Zealand is at the bottom end of a supply chain. I don’t know what the supply chain looks like now, but it for decades was around about seven to 12 weeks. In other words, if an oil company ordered fuel, they could expect delivery of that inside that time line. So we’re supporting this bill today, not because we are supportive of the Government’s ridiculous position that it’s a stitch in time, but simply because it is desperately needed to ensure that we do have that continuity of supply available to us and that we do have motor spirit, which is the lifeblood still of the New Zealand economy, in good supply in all parts of the country. I think it’s fascinating that we’ve got a Budget predicting 3.5 percent economic growth in the coming year, but at the same time, just quietly, the Government is going into a little bit of panic about whether or not we might be in a position where the motor fuel is not available to fuel that economic growth.
So many things that we see from the current Government are contradictions of former policy, and I think it is time that we actually had an energy policy that was more clearly stated to New Zealanders about where we’re going and what we expect to achieve over a period of time. The sort of vague references out there to transition, to new fuels, and to all sorts of opportunities that sound great on paper but are not backed up by any particularly practical activities is borne out by the fact that we are here today, chasing this piece of legislation through so urgently.
I’m aware of a large trucking company in the south of New Zealand, the Richardson Group, who have decided that they are going to convert their trucks to hydrogen, and they’re doing that at a huge expense of around about $150,000 per unit. I take my hat off to them because they are saying, in a practical sense, “We can see the value of doing this. It’s worth it for us in the long run.” But that hydrogen and those conversions, admirable as they are—and I really do mean that—will still mean that they need motor fuel, because there are so many parts of the country where they won’t be able to fill up with the hydrogen.
I say this as an example of the transition that we’re going through. Yes, there will be uptake of those new fuels, and that’s good. There seems to be not a lot of encouragement for people to do that. I can’t imagine that there’s any particular and actual incentive for that company to make that decision—
Hon Dr Megan Woods: Did you read the Budget?
Hon GERRY BROWNLEE: I beg your pardon?
Hon Dr Megan Woods: Did you read the Budget?
Hon GERRY BROWNLEE: Now, here’s the Minister who could not understand her own bill in the House last night—a piece of Budget legislation—calling across the House, “Did you read the Budget?” Well, I read the Budget and there’s $75 million worth of transition money in that Budget, but I also heard from Andrew Little that that’s not corporate welfare. So there is just another example—
Hon Dr Megan Woods: No, did you read the hydrogen initiative? Read the hydrogen initiative.
Hon GERRY BROWNLEE: —of the massive confusion inside the Labour Government at the present time, and it won’t matter just how much the Minister wants to squabble on over there. It is a fact that very few Ministers in that Government understand what their Budget is really doing.
If anyone wants to know, here’s the deal: they’ve found $4 billion in savings, they overspent by $7 billion—that’s the deficit. It’s a four-year deal, we’re $11 billion in the hole, and they’re telling us that we’re all in great shape.
ASSISTANT SPEAKER (Hon Jacqui Dean): Order!
Hon GERRY BROWNLEE: Unbelievable—unbelievable!
ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Back to the bill—back to the bill.
Hon GERRY BROWNLEE: So while I respect the Minister as a member of Parliament and a fellow Christchurch MP, I have to say that her calling across the House of “Did you read the Budget?” is an utter joke, because, quite clearly, most of the Cabinet didn’t read the Budget, and there’s been absolutely no justification why a bill like this is so particularly urgent, other than the fact that, quite clearly, there’s a rough time on the way somewhere and the Government doesn’t want to be caught napping as badly as it has been for so long.
I’ve got to say to Minister O’Connor that if this is a stitch in time, I’d hate to see what’s unravelling in his portfolio—I’d hate to see what’s unravelling in his portfolio. Unbelievable, because here it is: 12 months after the problem potentially emerged, we’re now getting some legislation.
So, I say again, we are supporting it. We’re supporting it—and I make this statement again—not because we think the Government is worthy of that support, but because the people of New Zealand are, and because it recognises that, finally, the Government have woken up and realised that all of their wild talk about transition and about a new economy, the green economy and everything else, does require practical steps to ensure that people can step their way towards that, and this bill is part of that. So, as I come to the concluding seconds of my time, can I simply say that it is utterly ridiculous that a bill like this took 12 months to get to the House and it is now being done with some urgency.
TĀMATI COFFEY (Labour): Thank you, Madam Speaker. I too will support this bill, the Energy (Fuels, Levies, and References) Amendment Bill, like other members of the House. For that reason, I don’t need to go on very much more. We’ve had lots of contributions today. This bill is going to pass through urgency, and it’s very needed for the reasons that previous speakers have outlined. For that reason, I commend it to the House.
A party vote was called for on the question, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a first time.
Ayes 115
New Zealand Labour 62; New Zealand National 34; ACT New Zealand 9; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 3
Te Paati Māori 2; Whaitiri.
Motion agreed to.
Bill read a first time.
ASSISTANT SPEAKER (Hon Jacqui Dean): This bill is set down for second reading immediately.
Second Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I move, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a second time.
I think it’s probably worth just taking 30 seconds to remind members opposite exactly what it is that this piece of legislation does. It’s part of a wider piece of fuel resilience policy work that this Government has been undertaking for a long period of time now. Once the decision was made, the commercial decision was made for Marsden Point to shut down, a package of policies was put together. Consultation on that work went out in early 2022. In November of last year, the Government made announcements around what that work would look like. It’s going to introduce minimum onshore fuel stockholding obligations, but it’s also going to have Government procurement of storage and management of at least 70 million litres of reserve diesel stock to be held onshore.
What this legislation does today is it ensures that the Petroleum or Engine Fuel Monitoring Levy—the levy that we’re talking about here that is already collected—can be used to recover the cost of promoting onshore fuel resilience initiatives, in addition to the very narrow existing purposes that define what the levy can be used for. What we have is that the levy basically says that you have to use it only to cover the lowest cost options. The lowest cost options are always going to be buying oil tickets to be held internationally. This is the right thing for us to do in terms of our international obligations around fuel security and what we do as a member of the International Energy Agency.
But what we are concentrating on today is domestic fuel security, and it would not be useful for us to be holding those tickets internationally and that diesel not to be onshore for the use of New Zealanders, as part of the suite of policy around fuel resilience. So it is saying that that levy can then be used for that purpose. So it is a very narrow piece of legislation. The only part of the fuel resilience policy that it is addressing is the use of the levy and what we can use the levy for, and this will enable the levy to be used for the roll-out of the policy package which aims to strengthen our fuel resilience and our economic security.
The levy will be needed for covering the Government administration costs associated with the minimum stockholding obligation, which is expected to come into effect in the coming months. The levy will also be needed for entering into agreements for operationalising the reserve diesel stock arrangement, and I intend to have these arrangements finalised by the end of 2023, so we need funding certainty for the arrangements as soon as possible.
The other measures that I’ve talked about, the other parts of the suite of policies around fuel resilience that I’m sure the Opposition members who are thinking that this is covering all of it—I’m sure they read the consultation documents and understand the different components of the resilience policy as it stands, but this is a very narrow piece of that work. I commend this bill to the House.
STUART SMITH (National—Kaikōura): I think you have to say, “The question is …”. She’s moved the second reading.
ASSISTANT SPEAKER (Hon Jacqui Dean): Sorry, I was distracted. Is the member calling for a point of order?
STUART SMITH: No. I am seeking a call.
ASSISTANT SPEAKER (Hon Jacqui Dean): You are taking a call?
STUART SMITH: Yes.
ASSISTANT SPEAKER (Hon Jacqui Dean): Stuart Smith.
STUART SMITH: I think you need to say, “The question is that the”—
ASSISTANT SPEAKER (Hon Jacqui Dean): Oh, thank you. Thank you for that. Yes, I should have. The question is that the motion be agreed to. Stuart Smith.
STUART SMITH: Thank you very much, Madam Speaker. It is a narrow bill—I understand that—but as has been pointed out several times in this debate, both last night and this morning, the closure of Marsden Point oil refinery in New Zealand has made New Zealand’s fuel supply more tenuous than it might otherwise be.
While that closed in April last year, the invasion of Russia into Ukraine and the sanctions that followed—in fact, we passed a bill in this House on 9 March 2022, the Russia Sanctions Act, as it is now, to ensure that we do not support the Russian regime economically in any way. However, I am sure you will be interested to know of what’s happened in the fuel industry international markets. The Americans have sanctions and are not allowed to import Russian oil or Russian diesel, and they used to import quite a bit of diesel from there.
Actually, what’s happening now is Saudi Arabia is importing Russian refined diesel. Saudi Arabia already has plenty of diesel and, as you know, they produce a lot of oil. But they are importing Russian diesel and exporting their own diesel to the US, thereby getting around the Russian sanctions. Some refineries in India are buying Russian crude and refining it into diesel—or most of it into diesel—and sending that to Russia, thereby getting around the sanctions.
The question for us is, now that we only import diesel—we don’t actually make any diesel in New Zealand. If you’re importing crude, as Marsden Point did, there’s no doubt where the crude comes from. Importing refined fuels, what was the source of the crude that went in to make that? Are we importing Russian diesel into New Zealand? I don’t know. I can guarantee the Minister doesn’t know. But the way the international market works, we could actually be supporting the Russian economy indirectly by importing Russian diesel refined from Russian crude. We don’t know. Unless there’s a lot of work done behind there—and I guarantee almost certainly we’ll find out in the next stage that that hasn’t been thought of.
So we do support this bill, but we don’t understand the need for the urgency that it has. None the less, we do support it. But with those comments, I commend it to the House.
IBRAHIM OMER (Labour): Thank you, Madam Speaker. I rise to take a short call on the Energy (Fuels, Levies, and References) Amendment Bill. This bill is part of a wider fuel resilience policy package announced by Government in November 2022 which includes introducing a minimum onshore fuel stock-holding obligation and dedicating additional resources for operating the national fuel plan.
As the MP for Tukituki, Anna Lorck, rightly pointed out, we are living in a very volatile environment internationally and locally. We have seen what Cyclone Gabrielle has done to our infrastructure. In events like that, having a resilience to be flexible with so we can operate our emergency services is important. It actually does save lives. So this bill is going to help with that. It’s all about fuel resilience, it’s all about flexibility. It’s a good bill, I commend it to the House.
TAMA POTAKA (National—Hamilton West): Kia ora tātou. I acknowledge “Salmon Shirt Day” today—or some people call it Pink Shirt Day—and what it represents: anti-bullying. The different types of pink I’ve seen today—blush, rose, fuchsia, rosewood, taffy, bubbly, magenta, and, my personal favourite, watermelon—give us great hope for bullying and harassment to stop.
Indeed, the party sitting on this right side of the House are not as righteous as the Government, and feel harassed and bullied into this position. The need for fuel security—nothing new. There are plenty of farms and industrial businesses throughout the country that have those little tanks on their properties—hard-working people who use fuel for farming and other purposes didn’t get much support; there wasn’t much support for them, yesterday, actually. It reminds me of that famous Ruakāka moment about six years ago when someone hit the jet fuel line and temporarily cut it—that was a shocker.
The bill gives me the first of many—like my colleague Williams—opportunities to speak briefly today and tautoko my esteemed colleague Gerry, gone but not forgotten from this moment, and other National kaumātua: Collins, Stuart Smith, Brownlee, Bayly, not Harete, she’s rangatahi—kei te rangatahi tonu—along with my by-election buddy Uffindell.
But maintaining fuel continuity and supply is fundamental for the country to function, and that’s why we’re supporting this bill. Domestic fuel security—that’s critical for the country’s productivity. The closure of Marsden Point, facilitated by this Government, was unnecessary. Having the levy recoverable by the Crown for promoting resilience in the security of supply, though, that’s important—that’s absolutely given a lot of tautoko—and to improve monitoring and collecting information on resilience. It’s sort of like energy security: you can’t keep getting rid of all the options indefinitely. Who knows? We might have to go back to Commodore 64s and Ataris sometime too, instead of the HPs we currently use.
The urgency accorded to this bill has been unhealthy, and, some would say, undemocratic.
Simon Court: I reckon the VK Commodore was the best one.
TAMA POTAKA: That’s right—and Linux. Today, it’s energy security—urgency on energy security—tomorrow it could be urgency on the voting age, and Sunday it might be constitutional arrangements. Select committee processes allow those affected, the industrial players in this space, to be engaged, to have their chance, to have their time in the sun, and to give their views. But policy process based on a few coffee conversations at Bellamy’s raises unnecessary risks.
Somewhere out there is a world where we don’t use diesel, we don’t use coal, and we don’t use petroleum. That world, which some members of the Green Party want us to live in, was also known as Gondwanaland, and it’s long gone. This is 2023 and it’s time to pull up our pink stockings and sharpen our pink collars. If anyone is this House thinks that we’re going to survive and thrive in the changing climatic conditions only by using electric vehicles and tools, they continue to live in a fable written by the Brothers Grimm—it might be Rumpelstiltskin or Little Red Riding Hood, or one of the many Studio Ghibli Japanese animation movies like Nausicaä of the Valley of the Wind, where our communities live in a beautiful but very difficult situation.
We are 100 percent dependent on other nations for our motor fuel, but we’re subject to the sort of global bullying and harassment at a global level, that, at a personal level, today, on “Salmon Shirt Day”, we stand against. I echo my learned gentleman colleague Gerry Brownlee’s concerns: we support the bill but believe the ridiculous situation has been caused by unreasonable Government decision-making that harassed the long-term good of this fine country. Kia ora.
SORAYA PEKE-MASON (Labour): Tēnā koe, Madam Speaker. Whai korōria, hareruia ki a Ihowa o ngā mano. Ko te Matua, Tama, Wairua Tapu, ngā Anahera Pono me te Māngai, āianei, āke nei, āe. Haere atu rā e ngā anahera tapu ki te torōna o Ihowa o ngā mano, haere, haere, moe mai rā. Nui te aroha ki a koutou, te whānau pani.
[Glory and halleluiah to Jehovah of the masses. Father, Son, Holy Spirit, the True Angels and the Prophet, now and for ever, yes. Rest in peace the sacred angels at the throne of Jehovah of the masses, go on, go on, rest in peace. Much love to you all, the family that is bereft.]
It’s appropriate for me to stand and to acknowledge the pōuritanga in our rohe—the sadness in our rohe—at this time, as I stand to speak for the first time today.
I am pleased to take a call on the Energy (Fuels, Levies, and References) Amendment Bill. Clearly there needs to be change in terms of this legislation for the purposes of being able to utilise that levy to the best of our advantage.
This is about continuity and economic security of supply. It’s about building that resilience. It’s about everything that everyone has already spoken about before me. Managing the transition to a future of self-determination for Aotearoa is very, very important. We can uphold, as a country, our own mana motuhake.
I want to thank the Opposition for seeing the sense and the value in this bill and supporting it. I commend this bill to the House. Kia ora.
SIMON COURT (ACT): The ACT Party will be supporting this bill, but I just want to cover off a few things that are really important that introducing this bill under urgency has raised that the ACT Party wants to get on the record. It’s true that New Zealand, at the end of a global supply chain, has problems with security of supply of everything, and fuel is just one of those things. Before the Marsden Point oil refinery closed, we were not sourcing all of our fuel from onshore production. In fact, a large amount of it was imported from refineries in Singapore and Brisbane, for example, supplied by a company called Ampol, which supplied fuel to the Gull chain and Waitomo and others. So New Zealand has always had a component of imported refined fuel as well as, until Marsden Point closed, a refinery to refine crude oil.
Now, when we think about New Zealand having to deal with this issue of security of supply, how do we become more resilient and what does resilience mean? I asked an official from the Ministry for the Environment yesterday what was their definition of “resilience” in relation to a bill going through that select committee, the Natural and Built Environment Bill. They couldn’t tell me; they said they’d get back to me. Well, I want to offer the Government a vision of what ACT thinks resilience means for New Zealand when it comes to fuel security and the strength of our economy in our communities. Because this bill is intending to raise a levy, which the Minister said that by the end of the year she will know how it’s to be spent on buying essentially 70 million litres of diesel and storing it somewhere in New Zealand.
Well, I’ve spoken to the fuel companies and I’ve spoken to major users of diesel, and they’ve said that it’s no good just adding a few more tanks to the Channel Infrastructure tank farm at Marsden Point, and it’s no good just standing up a few more tanks at the Wiri tank farm in Auckland, or at Petone. We actually need to think about where diesel fuel, which is the mainstay, the backbone of our economy, of industrial production, of our road freight and transport—actually, diesel was used to power generators to keep the cellphone network running in Hawke’s Bay recently after the electricity was disconnected. Diesel is still the lifeblood of our economy. So I’ve asked stakeholders, what does resilience mean, where should the storage go? And they’ve said, “Everywhere”. Because if you think about the kind of natural hazards that New Zealand’s subject to—the alpine fault in the South Island letting go, potentially releasing devastating earthquakes of magnitude eight or nine. There’s a 75 percent probability of that earthquake occurring in the next 50 years. As an engineer, I think I would bank on that happening. I wouldn’t be banking on it 25 percent not happening. I’d be thinking that alpine fault is a clear and present risk to the resilience—in fact, to the survival—of many of our communities, particularly on the West Coast of the South Island and other places which are dependent on road transport over very vulnerable routes in order to maintain their lifelines.
So the ACT Party will be asking the Minister, when we get to committee stage, “Where is the storage, what does resilience mean, and what are the plans for the future?” Because 70 million litres sounds like a lot, but New Zealand used over 3,200 million litres, which is about, what are we thinking? Quite a lot more than—forgive me, it’s early; I need a calculator. But 70 million litres, or 70,000 tonnes, compared to 3.2 million tonnes is not a lot. It’s a drop in the bucket. It’s a few days’ supply of what New Zealand uses on an annual basis. So we’ll have a few questions for the Minister when we get to committee stage: what does resilience mean, where will this fuel be stored so it’s actually of benefit, and is the Government about to get into supplying diesel itself like they promised they would get into supplying bitumen themselves through Waka Kotahi because they weren’t able to procure it at a decent rate. So ACT will support this bill because we believe it’s important to have a secure fuel supply for communities around New Zealand, but we have questions for the Minister, particularly around why urgency, why now—when this problem has been known about for a couple of years—and what does resiliency mean? Thank you.
Hon JULIE ANNE GENTER (Green): Just a short call on the second reading. I did want to make one point around why it’s so important to have a transport system and our land-use development undertaken in a way that reduces a reliance on fossil fuels, and this is a point that goes back to 2008, when we were worried about security of supply and high oil prices. Ultimately, it’s decisions that Government and local government make about land-use planning and about investment in transport infrastructure that has an impact on how people and goods can move around the country. Obviously, in the 20th century, we had a big push for roads and motor vehicles.
One of the costs that is not considered for New Zealand is just how much the private cost of cars, trucks, and fuel is. So Government might be putting $5 billion, maybe a little bit more, into the transport network each year, in terms of building infrastructure, maintaining it, watching the enforcement of rules, etc., but New Zealanders, on the private side, have to spend many times more than that to use the roading network. There was a recent report—I don’t know if it’s been published yet, but we saw a presentation of it in select committee—talking about the cost of our transport system to GDP, and once you tally up all the costs, it’s something like $60 billion a year. I mean, that is huge. That is nearly 20 percent. So anything that we do to reduce people’s reliance on vehicles, because we’re providing more passenger services or because we’re investing in freight network and services that means that things don’t have to move on the road, reduces that cost for vehicles and fuel. It also improves our resilience, because then, if there are spikes in the oil price, if there’s a disruption to supply, it doesn’t matter because we have alternatives. So that’s the kind of preparedness that the Green Party has been talking about for 20 years. It’s something we still need to do. We have seen other countries move quite quickly—that have certain things in common with us—to switch to electrification of their fleet.
But it’s not just electrification of the vehicles that are currently moving in the way they are; it’s also improvements in energy efficiency, relying less on really heavy vehicles to move goods. There’s all sorts of opportunities and logistics and whatnot, but it’s not something that’s going to happen without coordinated Government leadership at both central and local government level. And I guess that’s, you know, the point that we’re making—that we need Government to set the direction and to put in place the supportive initiatives, investment, and support so that everyone in New Zealand, no matter what they’re doing, can take the steps they need to to futureproof our society to climate change and to increase severe weather events. But also reducing carbon emissions is really important because, at a certain point, we won’t be able to adapt if we don’t reduce emissions. Adaptation is no longer possible.
The benefit of that is it also has these energy efficiency benefits. It’s more resilient to potential disruption in crude oil globally, and because we’re having to import all of this, anyway, it’s sort of like a direct cost to our economy. So the less oil we have to import to move people and goods around the country, the better off we are. But we need coordinated Government investment in infrastructure to get us to the point where we aren’t so reliant on that.
Hon POTO WILLIAMS (Labour—Christchurch East): Thank you, Madam Speaker. I’m going to take a relatively short call in this debate, but there are a couple of things that I would just like to highlight. We’ve got broad support for this particular bill, which is really important, but there have been some themes that have been promoted during the course of this debate and the first reading, and some of those are around—we are in uncertain times. There’s the war in Ukraine, and there is a requirement upon us to view these uncertain times in terms of the planning and forward-thinking that we need to do right now. There have been massive disruptions to supply chains over the last few years, and how do we ensure that we have built resiliency into our system, not just around fuel but around a whole lot of issues, and the issue that the Green Party so articulately described to us, in that we are a country in transition and exploring options for other ways to use energy to support our transport infrastructure, to support how we move ourselves around in the everyday things that we need to do and how we build resiliency into that.
Also, just to quote members from the Opposition, they say we are taking practical steps to build our resiliency. Now, whilst this is all very good in the broader context of the energy proposals as have been promoted by this Government, speaking specifically to this bill, this is about ensuring that the levy that is quoted in section 14(2) of the Energy (Fuels, Levies, and References) Act of 1989 can be used specifically to build resiliency of our fuel stock to ensure that we have 90 days’ supply, because there is no doubt that we are living in uncertain times and we need to ensure that we have backup and backstops in case that occurs.
The Opposition have indicated they will be speaking to certain aspects in the committee stage, and I support that discussion. One point I do want to illuminate and highlight which will be of useful discussion for us to have in the committee of the whole House is about the source of supply. I think that’s been raised by members of the Opposition, and I am looking forward to the Minister of Energy and Resources participating in that broader debate. On that note, I don’t want to hold up the debate any longer. I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to. All those of that opinion will say Aye; to the contrary, No. The Ayes have it.
Ricardo Menéndez March: Party vote called for—for the proxy votes.
ASSISTANT SPEAKER (Hon Jacqui Dean): I had already ruled, but let me just double check.
Motion agreed to.
Bill read a second time.
ASSISTANT SPEAKER (Hon Jacqui Dean): This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Energy (Fuels, Levies, and References) Amendment Bill.
In Committee
Clauses 1 to 4
CHAIRPERSON (Hon Jenny Salesa): Good morning, members. The House is in committee on the Energy (Fuels, Levies, and References) Amendment Bill.
CAMILLA BELICH (Junior Whip—Labour): Point of order. 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 clauses 1 to 4 stand part.
STUART SMITH (National—Kaikōura): Thank you, Madam Chair. We, obviously, support this, so we’re not going to take a lot of time on it, but I would like, seeing we don’t have a select committee process, for the Minister to answer the question of whether she has had officials look through to ensure the provenance of the diesel that we are importing into New Zealand, that it has not been a source—that the crude oil that it’s been refined from does not come from Russia, which would breach our sanctions. Now, I gave in my speech in the second reading two examples of the sanctions being breached in the US by a roundabout way where diesel has been imported into Saudi Arabia, and diesel that has been manufactured or processed in Saudi Arabia from their own crude oil was actually exported to the US, thereby getting around that sanction. I also gave the example of the refineries in India that are sourcing crude oil from Russia and refining that into diesel and exporting it to the US.
So are we in that similar situation, not just with diesel—jet fuel, Jet A-1, and petrol, and the like? Are we actually supporting the Russian regime? Has there been any work done on that? If there hasn’t, we should know that. If there has been a cursory look, that’s OK, but we actually really need to go right into this. It’s not a simple thing of asking where the diesel came from; we need to know what the provenance of the crude oil is that that diesel was refined from.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): In answer to the question that the member put, the member might recall that there was quite a lot of discussion, and, in fact, the Government spoke about this at the time that the sanctions were put on. So this is not a new question and there’s a lot of information in the public domain about this. Yes, the supply chains of refined product all around the world have been the subject of a great deal of scrutiny. The New Zealand agency that is responsible for that is no different than its counterparts in countries that have put sanctions on. And those questions are being looked at. There has been a lot of work internationally that has been happening around supply chains to ensure that there aren’t inadvertent back doors for sanctions to be broken.
In terms of the refineries that the member talked about, in terms of where he might have a concern about where that diesel is coming from, by and large New Zealand diesel does not come from refineries in those countries. Our diesel—the New Zealand import—largely comes from the Asian refineries in Singapore and North Korea. Of course, the fuel companies who do import the diesel are also doing a huge amount of work around their supply chain, because they also want to ensure that they are upholding global sanctions that have been put on for a reason.
STUART SMITH (National—Kaikōura): Point of clarification from the Minister. She just stated that we are importing refined fuel from North Korea—that would also be in breach of our sanctions, so I’d just like that to be clarified.
Hon Dr Megan Woods: Madam Chair—
STUART SMITH: I’m still making a point here. While I gave the example of two refineries, that was not the only way around these things. I just gave two examples, and I still haven’t really had a direct answer. Has there been any work done to check the provenance of imported fuels into New Zealand to ensure that there is not a switch around—as is the case in Saudi Arabia that I gave—or that the fuel has been refined from Russian crude? Thank you.
Hon Dr MEGAN WOODS (Minister of Energy and Resources): Sorry for the excitement, Madam Chair, that I caused. Of course, New Zealand is not importing diesel from North Korea. I misspoke; that is South Korea. In answer to the second question that the member re-asked—which I’ve already addressed—“Has work been done?”, I gave quite a lengthy answer. The answer is, “Yes, a lot of work has been done examining supply chains.”
SIMON COURT (ACT): Madam Chair, thank you. I have a couple of questions for the Minister. Minister, what is the likely cost to consumers from the application of the levy, in terms of cents per litre on diesel?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I’m happy to answer that, and I did address this in my second reading speech on this bill. This is actually just changing the rules around the levy of how what is already collected can be used. So it is not an increase in the levy; it’s around the criteria of where it can be used. The levy, at the moment—the way in which it’s written—can largely only be used by international oil tickets. That does not address New Zealand’s domestic fuel security. So it’s changing the rules because it is not the least-cost option; it will be more expensive to have onshore stockholding, but that is critical to our domestic security. So there isn’t an increased cost to consumers.
SIMON COURT (ACT): Thank you for clarifying that, Minister. That will be seen as a small mercy for all of those subject to the inflationary pressures they’re suffering in this cost of living crisis. Imagine that. The Government knows how to reallocate, reprioritise spending—all it took was a little tweak to a levy! But thank you, Minister.
Look, back to business: have you had any advice, Minister, on where fuel needs to be stored? What are those locations? What does that mean in terms of resilience? How does the Minister define resilience, and how will we know we’ve achieved it?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): As to the locations of where the fuel will be stored, that is obviously something that is a critical part of this work. If we’re talking about resilience, where it is that we have that fuel stored and the ability to transport it—if that is what is required—is critical. There will be a full request for proposal (RFP) process, and part of that RFP will be around geographical location as well.
SIMON COURT (ACT): Thank you, Madam Chair, and thank you, Minister; that’s very helpful.
Andrew Bayly: No it’s not.
SIMON COURT: Mr Bayly says it’s not helpful, but it is helpful to me and my line of questioning, Mr Bayly. So thank you, Minister. So you’ve confirmed that the Government will procure fuel for storage somewhere yet to be determined. I’m assuming that through developing the scope of the request for proposal, there will be some measures that those responding will need to address.
I’m also interested in how the stock is managed. Has any consideration been given to the fact that diesel has a shelf life? So if diesel is stored somewhere and not used, it could be subject to biological contamination from what they call “diesel bug” in the trade. When I worked as a civil engineer, every now and again, we’d go to start up a machine or we would use fuel from onsite storage, and we’d discover that the fuel had actually grown algae which live on diesel. That’s because if the fuel is not regularly used, if the tanks are not essentially flushed with new fuel continuously, then there’s a risk of biological contamination and the fuel is ruined or rendered unsuitable. So, Minister, has any consideration been given to how the stock is managed and what storage actually means?
Hon Dr MEGAN WOODS (Minister of Energy and Resources): Thank you, Madam Chair. Yes, a great deal of consideration has been given to the integrity of the fuel that is being stored. There’s a number of measures that will be put in place. The request for proposal will be around winter-specified diesel so that it does have more resilience in that respect. There will also be a turnover regime for the fuel, and there will be a regular testing regime to ensure that the diesel is fit for purpose if it is called up for those purposes of fuel security.
A party vote was called for on the question, That clauses 1 to 4 be agreed to.
Ayes 115
New Zealand Labour 62; New Zealand National 34; ACT New Zealand 9; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 3
Te Paati Māori 2; Whaitiri.
Clauses 1 to 4 agreed to.
Bill to be reported without amendment.
House resumed.
CHAIRPERSON (Hon Jenny Salesa): Mr Speaker, the committee has considered the Energy (Fuels, Levies, and References) Amendment Bill and reports it without amendment. I move, That the report be adopted.
Motion agreed to.
Report adopted.
DEPUTY SPEAKER: The bill is set down for third reading immediately.
Third Reading
Hon Dr MEGAN WOODS (Minister of Energy and Resources): I move, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a third time.
This is a bill that has a very narrow scope of focus, but it is a bill that is incredibly important to ensuring that we have fuel security in New Zealand. It is about ensuring that we have the ability to use our levy for domestic onshore stockholding of diesel, to ensure that we do have that resilient supply of fuel, should we require it. It is part of a suite of policies that this Government has been putting in place to ensure that New Zealand does have fuel resilience. This is one small part of it; there is more to come. This is work that began a long period ago and has been working through the system with good consultation. A number of people have given some very, very good input, and I am confident that we are getting to a place where New Zealand’s fuel security can be assured. New Zealand needs to ensure that as the world changes around us, with mega-refineries coming to the fore, we are ensuring that we always have the ability to have the fuel that we need. This is a critical part of that. I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.
STUART SMITH (National—Kaikōura): Thank you, Madam Speaker. Well, I think the Energy (Fuels, Levies, and References) Amendment Bill has been well traversed in the readings to date. We do support this bill. We do have concerns post the closure of Marsden Point, which we think should have been more carefully approached than it was—bit of a cavalier approach from the Government. Fuel security is paramount for us, as is energy security. We are transitioning to a lower-emissions economy but we cannot put fuel security aside cavalierly. We need to actually be very careful about security, both for the energy system as a whole but particularly for fuel security now that we are not able to refine fuels here in New Zealand.
I have identified a rich vein for written parliamentary questions during this process, and I know the Minister loves answering my written questions. It occupies a bit of her time but I know the passion she puts into the answers is much appreciated and so I look forward to getting those answers back on, particularly, the work that has been done or not done to ensure that we are not breaching the sanctions that we have on Russia. We found out today, fortunately, that the Government is not importing any oil or fuels refined in North Korea, which is a great relief to us all. So, with that, I commend the bill to the House.
NAISI CHEN (Labour): Thank you, Madam Speaker. It’s always good to recognise that it’s a cross-partisan effort in trying to secure the security of our fuel supply. It is really important that this bill, the Energy (Fuels, Levies, and References) Amendment Bill, really helps our country keep moving. There are big events happening around the world right now. There’s lot of incidents and lots of disruption in the day and age we live in, and we’re making sure that the Government plans for those unexpected events and disruptions that we know will start to occur more and more frequently, especially on the weather side. This makes sure that New Zealand has the confidence to see this country through those rainy days, and it makes sure that we have the responsibility and the planning ahead. This is what this Government does, and that’s why I’m proud to commend this bill to the House.
TAMA POTAKA (National—Hamilton West): It’s unfortunate that the Minister has departed so early without listening to one of my brief tomes.
ASSISTANT SPEAKER (Hon Jenny Salesa): Order! The member cannot refer to other members who are not in the Chamber. Go ahead, Tama Potaka.
TAMA POTAKA: I withdraw and apologise. OK, kia ora. Thanks to the National and ACT speakers for raising relevant observations today. Now, New Zealand is at the end of the global supply chain, and our country exists with the tyranny of distance but enjoys also the strength of solitude.
It actually reminds me of a sentence from a book called 100 Years of Solitude by Gabriel García Márquez, the famous Colombian writer who spoke about the Buendia whānau in Macondo. “The secret of a good old age is simply an honourable pact with solitude.” Folks, the secret of a good country is simply an honourable pact with reality.
The reality of this bill is that it’s run faster than my escaped ginger cat chasing skinks while the next atmospheric river abates. It’s been a real eye-opener for a fresh parliamentarian to see the pace of legislative change, and gives me some pause to evince my concern about the meanderings of the Government.
Ultimately, the National Party supports this bill. What we don’t want to do is to make poor decisions, only to spend an inordinate amount of energy to fix up problems caused by those poor decisions—this case in point being Marsden Point.
The bill is less about continuity and it’s more about control of the narrative, and we’ve dealt with this matter for now. But the long-term question remains: do we want to live in a country that relies on an honourable pact with one another in reality, or one that does not? We support this bill. Kia ora.
SIMON COURT (ACT): Thank you, Madam Speaker. The ACT Party will be supporting this bill. We’re absolutely committed, through our own policy development in the initiatives that we would introduce should ACT be part of a future Government, to ensuring that the supply chain is resilient and that New Zealand has a brighter future, because New Zealand is extremely vulnerable, with 5 million people living on an island the size of Japan, riven with earthquake faults, spotted with volcanoes, and subject to tsunami, cyclone, and all kinds of extreme weather events. New Zealand is a vulnerable country in the South Pacific.
And that means at the end of a global supply chain, with 5 million consumers—probably only 3 million of which are actually earning enough to be net taxpayers—we don’t have a lot to offer the rest of the world except a friendly environment to invest, affordable homes for people to live in, and higher wages. Except under this Labour Government, New Zealand is not seen as a friendly destination to invest in. Housing affordability has got worse under this Government. Not that long ago in Auckland, where I live, the difference between the median wage or salary and the cost of a home—the cost of the home was six times the median wage or salary. Now it’s 10 times. And when you think about our wages, the average Australian is earning $23,000 more than the average Kiwi doing the same work. So if only New Zealand was an easier place to invest and this Government didn’t treat foreign direct investment as if people trying to send money here were criminals, if only our homes were affordable, and if only our wages were higher.
And this Government’s response to trying to solve problems around security of supply for fuel and supply chain resilience—in fact, every single problem this Government tries to solve, it tries to solve through regulation and more red tape. Now, I asked the Minister at committee stage, “Would there be any additional cost?” The Minister said no. Well, I want to raise this issue, because it’s going to come up. Currently, New Zealand relies on tickets, which guarantee that New Zealand meets its 90-day fuel storage obligation, which is an international commitment which we’ve signed up to in terms of the International Energy Agency, that we will retain 90 days of fuel stockpile. But most of that stockpile is floating around somewhere between the Gulf of Arabia and North Korea, as the Minister accidentally pointed out, and New Zealand. It’s on the high seas somewhere, or potentially it’s just an IOU in someone’s bottom drawer.
That’s what security of supply and resilience means right now. Well, a bit of paper, a scrap of paper, doesn’t cost much. I mean, these were probably arranged at a time when fax machines or even telex machines were still in common use. An IOU sent to another country doesn’t cost much. But what the Minister is proposing is that the Government will procure storage or procure fuel management, testing regimes, and a higher specification—a winter specification—for diesel, to store 70 million litres onshore in addition to what’s currently stored. There will be an extra cost to build tankage, pipe networks, construction, consents, and that’s when we get to the rub of it. If this was a simple thing to organise, the Minister could have simply written to the fuel companies and said, “Would you please give us your plan to store more fuel on site in New Zealand? We’d really appreciate your advice, and if you think there’s any additional cost to that would you please tell us how you think that should be apportioned?” Because there is a cost for paying for security, whether it’s security in your shop—if you’re a retailer these days, you might have to invest in cages, you might have to invest in CCTV. Security costs money, whether it’s building tankage for more onshore fuel storage or whether it’s security for your home and business. Security costs money.
But how easy is it and how affordable is this extra security? I just want to bring the House’s attention, and the attention of people who might be watching this debate on a Friday morning or in the future on demand, because everything that’s said in this House is available for New Zealanders to inspect at their leisure on Parliament TV On Demand. I want to pose this question: let’s imagine that the Government procures additional fuel storage, 70 million litres of tankage, and then in the request for proposal the tenderer offering to build more storage for a price says, “By the way, we’re tagging out resource consenting, because if we have to go and get consents under the Resource Management Act (RMA) or whatever Minister David Parker thinks the future of environmental law might be, we can’t guarantee we’re going to get a consent, because under the current RMA, it says any decision maker has to take account of the effects of climate change on the planet.”
So can you imagine a Government agency procuring fuel storage having to explain to an Environment Court judge why they should be allowed to build diesel tanks, even though there’s a law on the books—which Labour passed, an amendment to the RMA—that said every decision maker needs to take account of climate change? Well, this Government declared a climate emergency and has been fearing up the kids and fearing up the public about climate change for five or six years. And yet, now, reality bites, and they need to pay for onshore diesel storage. These two things cannot exist in the same universe. Either you want to focus on a resilient economy and resilient communities, and give Kiwis options about how they achieve that resilience, or you wrap them up in red tape and you let more and more people object to doing things that are just sensible.
Now, I will give an example: we’ve got a proposal in Taranaki to stand up a wind turbine that would generate hydrogen that would reduce the amount of natural gas being used to make fertiliser at Ballance Agri-Nutrients Kapuni, and Greenpeace has objected to it. If we want to actually become more resilient as a nation, more resilient in our far-flung communities subject to natural disasters, the Resource Management Act has to be reformed, but not in the way this Government proposes. We need to make it easier to build things like fuel storage tanks, and we need to make it easier to move goods and services around the country. Not everything can be done digitally. Even though this Government told people during COVID to put a teddy in the window and stay home, a lot of businesses can’t operate by putting a teddy in the window and staying home. They actually need to get out on the road—we need to put trucks on the road, we need to put things in those trucks, and we need to deliver things to customers.
So it’s not just about building some tank storage somewhere. The Minister wasn’t able to explain where that is, although I’ve offered a few suggestions: it might be the West Coast of the South Island, for example. But we also need ports that are resilient. What we saw during the Blenheim / Kaikōura earthquake sequence, actually, Wellington CentrePort fell down, fell into the harbour, wasn’t able to be operated. We’ve got different port ownership around New Zealand: local government ownership—local government’s cash strapped; they can’t afford to invest in resilient port infrastructure. So buying additional onshore tankage or storage is just one part of New Zealand’s resilience problem.
Then we come to the road network. What did we see during Cyclone Gabrielle? Roads all over the country, particularly in the top half of the North Island, were blown out by floods and storms. Now, a lot of those roads were built to 1980 standards, with culverts and bridges designed between the 1950s and the 1980s when we didn’t understand what we do now about the likely intensity of storm events. And so building tank storage in different places around the country won’t help unless we can transport the fuel to those storage facilities by ship or by road or by rail.
And so this Government has failed to solve the problems of how to make New Zealand’s infrastructure and communities more resilient. It’s failed. That’s why the ACT Party says we’ll support this bill—put to the House under urgency today—but we will be demanding that New Zealand’s Government of the future invests more in infrastructure so that we can become more resilient, and we will be seeking foreign direct investment to help pay for that infrastructure, because the New Zealand taxpayer and consumers are tapped out, tapped out by this Labour Government. ACT will support this bill, but watch out.
Debate interrupted.
Voting
Correction—Energy Resources Levy Amendment Bill
ASSISTANT SPEAKER (Hon Jenny Salesa): Members, before I call the next member, last night when the House adopted the report of the committee on the Energy Resources Levy Amendment Bill, the results of the vote were incorrectly announced as Ayes 116 and Noes 3. The correct result is Ayes 106 and Noes 13. The record will be corrected accordingly.
Bills
Energy (Fuels, Levies, and References) Amendment Bill
Third Reading
Debate resumed.
RICARDO MENÉNDEZ MARCH (Green): Thank you. I have yet to master the art of being tangential enough to fill a whole slot, and today won’t be the day. Look, the Green Party supports this bill, the Energy (Fuels, Levies, and References) Amendment Bill, because we believe that meeting our goals to decarbonise our economy and secure a livable planet does not have to be a conflict with ensuring that we have energy resilience in the case of emergencies. The purpose of being able to apply the levy under the Petroleum or Engine Fuel Monitoring Levy for things like emergencies is a good thing. As the previous speaker from the Greens, the previous call, has said, as we see the passage of this bill, it is important that the Government maintains a strong focus on continuing to decarbonise our economy and build that resilience so that we rely less on fossil fuels in order to be resilient when it comes to energy. So we look forward to the passing of this bill and the Government introducing further legislation to meet our climate goals.
A party vote was called for on the question, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a third time.
Ayes 115
New Zealand Labour 62; New Zealand National 34; ACT New Zealand 9; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 3
Te Paati Māori 2; Whaitiri.
Motion agreed to.
Bill read a third time.
Bills
Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill
First Reading
Hon DAVID PARKER (Minister of Revenue): I present a legislative statement on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill.
ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.
Hon DAVID PARKER: I move, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.
Some of the main features of the bill focus on improving fairness in the tax system. We all use Government services and infrastructure that taxpayer dollars pay for, so it’s only right that all contribute fairly. One of the key features of this bill is to ensure that multinationals pay their fair share of tax. It achieves this by including measures developed by the OECD as part of their drive to reform international income tax—the framework for large multinational companies. The bill allows New Zealand to take part in this global minimum tax of 15 percent, which is being introduced around the world for large multinational enterprises. The objective of this work is to stop the race to the bottom amongst Governments attempting to attract the mobile income of large multinationals by offering low effective tax rates. This initiative puts a floor on tax competition by creating a minimum rate.
The OECD-led work, which is endorsed by more than 130 countries, will help both developed and developing countries raise revenue from multinational enterprises. It will reduce undesirable tax competition between countries without preventing the use of tax incentives by those countries to attract real investment. The OECD has estimated that it will increase global tax revenues from large multinationals by about US$220 billion a year, or 9 percent of their current level. This tax is often referred to as the Global Anti-Base Erosion, or GloBE, tax. It is only payable where profits in a country are taxed at an effective rate of less than 15 percent.
New Zealand already has a 28 percent corporate tax rate and a robust international tax regime, so it’s unlikely that the tax will raise much revenue directly in New Zealand. There are only about 20 or 25 New Zealand - based multinationals that are in scope of the GloBE rules. You have to have a high turnover to be caught up in this. But participation in the system will mean that those New Zealand multinationals can pay any GloBE tax they owe to New Zealand rather than paying that same amount of tax under those rules to an overseas jurisdiction, which would, of course, not be benefiting the New Zealand tax system. In fact, most of the locally based multinationals have told Inland Revenue that they prefer to deal with Inland Revenue in New Zealand alone rather than a range of other tax jurisdictions in respect of this issue. If this legislation was not passed, then those multinationals, once this rule comes into effect, would in effect have to be dealing with those overseas tax jurisdictions in respect of the same issue, which would be more complex for them. The change is estimated to raise about $25 million of top-up tax a year from 2026-27 onwards. It’s a relatively small amount, but it’s about New Zealand doing its right thing by playing its part in this global effort. In its recently announced Budget, Australia is introducing the same GloBE rules proposed in this bill for the same reasons.
Another fairness-related measure in the bill deals with the tax treatment of backdated lump sum, ACC and Ministry of Social Development payments. A person might receive a lump sum of money from those agencies when they should have received smaller regular payments over an extended period of prior years. The tax system currently treats the lump sum as all taxable in the year they receive it. This can mean that the person has more tax to pay on that lump sum than if they had been receiving smaller amounts over the preceding period when they were entitled to it. In some cases, receiving the lump sum pushes the person into a higher tax rate so they receive less of the money that they should have received. From 1 April 2024, people receiving a lump sum ACC payment will pay tax on it at the average of their applicable tax rates over the previous four years, and this then provides a fairer outcome. This has been a longstanding problem causing some people distress, so I’m pleased that we’re able to address it.
As the finance Minister announced yesterday, the bill will also align the top tax trustee tax rate with the top personal tax rate from 1 April 2024. Aligning the trustee and top personal tax rates at 39 percent will make the tax system fairer. It will also slightly improve its progressivity. The change is about preventing high-income earners from circumventing the top tax rate. About 78 percent of trustee income is earned by 5 percent of all trusts, and that becomes even more concentrated at the very top end of those top 5 percent—these really are the big trusts, the super-wealthy. I had a look at the stats yesterday. The bottom, if you like, 50 percent of trusts, by my calculation, on average will pay less than $20 a week extra in tax as a consequence of this measure. The tax shifting, or the income shifting, for tax reasons really is concentrated at the very top.
Inland Revenue has evidence of big shift in income to trusts when it became widely known that the Government was going to increase the top personal tax rate. We said we’d monitor it, and we’re now addressing the issue. I want to be clear that this isn’t targeting the smaller family trust that might own a rental property, for example. These smaller trusts can continue to use existing rules to allocate their income to trust beneficiaries who are taxed at their personal tax rates. That doesn’t change. The Government is also proposing targeted measures to help prevent the over-taxation of trusts in certain circumstances, such as estates and trusts for disabled persons. That’s already a problem in the current system—in some of those situations the effective trust taxation rate at 33c in the dollar is taxing those trusts following the death of someone, at higher than the effective tax rate of the taxpayers that are involved in that estate. The Inland Revenue Department will continue to monitor the use of structures that undermine the 39c personal tax rate. The proposals apply for the 2024-25 and later income years.
The Budget also implements another measure, announced by the finance Minister in his Budget speech yesterday, to assist predominantly women who typically retire with a smaller nest egg than their male counterparts, in part because of their childcare responsibilities. On retirement, women are typically less financially secure than men whose savings on average are higher than women’s. The reason for this, as I’ve said, is that women often take time out of the workforce to provide childcare, and their KiwiSaver contributions dry up. So the Government’s proposing to pay a 3 percent KiwiSaver contribution to the KiwiSaver accounts of paid parental leave participants. The person would need to make their own 3 percent contribution of their KiwiSaver fund whilst on paid parental leave, essentially out of their paid parental leave payment. The proposal recognises the unpaid nature of childcare, the desirability of childcare, but its obvious impact on earning and savings potential.
The bill also implements a measure the Government announced to assist businesses hit by the North Island floods. Some of the businesses receive what is currently taxable income from insurance or compensation for their assets destroyed by floods. The last thing the businesses want to do is to have to pay a tax wedge on that insurance pay-out rather than reinvest it in the asset that needs replacing. So the bill proposes temporary tax relief, allowing taxation essentially, in effect, to be deferred, providing the assets are replaced.
Finally, the bill includes a measure extending the existing five-year income tax extension on the income of non-resident overseas oil rig and seismic vessel operators. This exemption removes the incentives for these rigs and vessels to churn in and out of New Zealand waters within 183 days to ensure the income of those people working on those vessels is not taxable. This would be inefficient and can have negative environmental impacts. I commend the bill to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.
ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker, and a pleasure to be talking on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, first reading under Budget urgency. Gee, all this speculation about what Mr Parker would be doing in tax—Wellington was awash with rumours of what he might be doing: pushing up the top tax rate, making the first tax rate free, pushing out the trust tax rate. Gee, there was a lot of speculation. Finally, we heard yesterday the first part of Mr Parker’s programme of tax reform, and no doubt in the next few weeks we’re going to hear some more from Mr Parker—no doubt picking up on Mr Piketty’s reforms of the tax system that he so keenly observes and follows.
Hon David Parker: More phantom policy from the Opposition.
ANDREW BAYLY: Oh, phantom—ha, ha! I’ll tell you what, one of our policies which is not a phantom policy, Mr Parker, is that we want people to keep more of what they earn. That’s why we want to stop them paying more tax so people like Mr Parker, so that Government, that wasteful Government over there, can spend it on all these useless projects that they’ve been doing over the last six years. We just would like a Government that would actually take people’s money and spend it appropriately. Anyway, I’m slightly off the point, Madam Speaker.
ASSISTANT SPEAKER (Hon Jenny Salesa): It’d be great to come back to the bill, thank you, Mr Bayly.
ANDREW BAYLY: Yeah, that’s what I thought you might say.
Anyway, that Budget yesterday, gee. Of course we oppose this bill. We’ve got to oppose this bill, and, of course, most New Zealanders were opposed to this bill, because there’s not a single cent in this bill for the hard-working mums and dads who are out there struggling every day. It’s fine if you want to put your children on a bus or something, but, you know, in Pukekohe not many people want to put their kids on a bus, because it doesn’t go anywhere. So we oppose this.
Of course, this bill reinforces the annual tax and the current tax rates, and, of course, National has, contrary to the Minister’s assertion that we’ve a phantom—we have made it very clear that we want to change the tax rate, reduce it so that New Zealanders keep more of the money rather than going into the Government’s coffers.
Of course, that deals with the greatest theft of them all, inflation, which again has been stoked by this Government’s wilful and unleashed spending, which—even Mr Robertson couldn’t contain himself yesterday.
Tama Potaka: How much?
ANDREW BAYLY: Well, that’s right—blew out the Budget yesterday. Anyway, I think the interesting bits about this—there are probably a couple of bits I do want to cover off on. The first one is the Global Anti-Base Erosion rules that Mr Parker spoke about. We were concerned, and I’ve been particularly concerned, that Mr Parker was going to go down a headlong approach that previously the IRD had been looking at, which was New Zealand imposing a digital services tax. Of course, that had been what had been talked about—what IRD had talked about. We are at least grateful that somehow we’ve been pulled back from the brink of that, because countries such as France went down this route of imposing a digital services tax, and it resulted in retaliation from the US, particularly Mr President Trump, who immediately said he’d slap a great deal of duties on a number of French products, and as a result even a large economy like France pulled back. England tried it and have also now agreed to scale back such an approach of imposing a digital services tax.
So what this bill does, which is a far more pragmatic approach, is to say, look, we will work collaboratively with the OECD and come to a view and work collaboratively so we impose rules alongside all or most of the other countries in the world to deal with the issue of large multinational digital companies, and I think that’s right. A couple of aspects in the bill that we will no doubt canvass in the select committee stage, first of all, is the reference to the OECD rules; it’s just going to be referenced. The OECD rules are about 76 pages long and have a whole lot of commentary, going up to about 220 pages. We are concerned that that would mean that we would lose sovereignty over those types of rules, so we would probably be of the making that they should be much more specific, Mr Parker.
So that’s one of the big issues about it, but there is a backstop in these provisions which means that if there wasn’t sufficient progress by the OECD, then those rules we would revert back to digital service tax on our own. That would be a pretty risky undertaking unless we did it well, because the big issue about the overseas base erosion issues is that companies such as Fonterra, Air New Zealand, which meet the €750 million threshold, might actually get captured by these rules. So we want to make sure that that is very, very specific and well-tailored.
But the second big thing about this bill is increasing the trust tax rate to 39 percent, and, of course, this is an issue of Mr Parker’s own undertaking. He made this problem, because Labour, contrary to what they said they weren’t going to do, shoved up the top tax rate to 39 percent. Of course, even the IRD, at the time they did that last year, in the RIS—in the regulatory impact statement—said this is likely to lead to problems with people using trusts. Of course, Mr Parker—and it’s now clear in the documentation that the Minister’s made the decision to increase this trust rate up to 39 percent. It certainly doesn’t appear to be the recommendation of the IRD. Because Mr Parker shoved up the top marginal tax rate to 39, he was forced to do this—he was forced to.
So now the big issue is, if this all goes through, and I presume because Mr Parker’s got all those people over there and they’re going through—what’s he going to do with the company tax rate; Mr Parker? Are you going to shove up the company tax rate? Are you going to shove up portfolio investment entities (PIEs)? Now we have the biggest separation since 1986 between the top tax rate of 39 and the bottom tax rate of 28 percent for company and PIE rates. I reckon—let’s hope it doesn’t happen, but if Mr Parker was the revenue Minister in the next Government, imagine what would happen. I reckon we’d see company tax rates going up. Yes, that would—
Hon David Parker: More phantom policy coming from the imagination of Mr Bayly.
ANDREW BAYLY: No, it’s not phantom policy, because that’s what’s going to happen, right? That’s what’s going to happen.
So, having now created this problem for himself, he was sort of forced to do this, and the big issue—and, of course, he sort of talked about making some adjustments. I don’t know what the adjustments—it’s not clear in the bill what trusts would be excluded, but there are four examples where this will be much worse for a lot of New Zealanders. The first example is where beneficiaries of deceased estates get given money in their trust, and now it appears that that money has to be paid out within 12 months. In many cases when people die, let’s say mother dies of cancer or whatever, let’s say those dreadful situations—and this happens, unfortunately. People often quite diligently and appropriately leave their money in their trusts until the beneficiaries, their children, get of a certain age. Of course, under this 39 percent rule, they will now be paying 39 percent on that money. That is wrong, Mr Parker.
Second option is where a trust is established for disabled people and you deliberately want to build up a capital structure—and I am listening to my colleague Penny Simmonds, who’s our disability spokesperson. That money will now be subject to 39 percent—that is wrong, Mr Parker. And there are issues about people just using trusts to protect their assets; they are now going to be subject to 39 percent—that is wrong, Mr Parker. These are the types of rules—there are more examples, but I’m running out of time. This is the type of blowtorch we’ll be putting on in the select committee, because we need to protect ordinary New Zealanders against the Labour Party.
Hon Dr DEBORAH RUSSELL (Associate Minister of Revenue): I’m very pleased to have an opportunity to correct some of the misapprehensions that have been lobbed at us from the Opposition benches. A speech that was full of mere speculation for a large part of it. The member then continued with speculation and “what ifs” and “what might bes”. It is clear he has not bothered to engage with the bill.
So I want to address, in particular, the issue around the trustee rate and raising the trust rate to 39 percent. The previous speaker, Andrew Bayly, said, “Well, there’s a number of problems with what you are going to do—there’s a problem”. And, in particular, he said that the reason that the trust rate is going up to 39 percent was because we on this side of the House had created a problem by increasing the top personal tax rate to 39 percent, so it was our fault that there was a problem. But I want to say that that is an incorrect idea and it’s incorrect because it misunderstands what trusts are supposed to be used for. It misunderstands the nature of trusts, and I want to take it back quite some distance and talk about where trusts came from in the first place.
Now, Mr Speaker, I know that you in particular will enjoy this story—because you’re a great storyteller—about how trusts came into being. They first sort of came into being as instruments during the Crusades called “uses”. And what would happen was a knight, a lord, a baron would want to head off to the Crusades to save his immortal soul by doing whatever it is he was going to do, but he would be leaving behind his wife, his children, his estates, and, of course, they were being left in a vulnerable position because their protector was not there. So what the knight, the baron, the lord would do, he would assign the use of his assets to a trusted friend. And the trusted friend was to use those assets in order to support the wife and the children, to support the vulnerable. It was a way of protecting the assets in order that vulnerable people would not lose them.
Penny Simmonds: And that’s what it’s used for now.
Hon Dr DEBORAH RUSSELL: And indeed that carried on. People being people, they were called uses back then and they were put to all sorts of uses which really undermined the Government of the day and eventually Henry VIII abolished them. But they came back in the form of trusts, and trusts do have a very specific purpose—it is in order to ensure that assets, that activities belonging to vulnerable people, are not exploited; that we support vulnerable people. That is what trusts are supposed to be used for. But, as it turns out, in many places around the world, and particularly in New Zealand—we seem to have a fetish for trusts—what is done with it is it is used to shelter income. It is used to ensure that, instead of genuinely passing over the benefits of a trust to vulnerable people, income can be cycled through a trust and can be sheltered from taxation.
So we have changed the way that trusts are used. That is where the problem is created. And it is absolutely fascinating because we know, as the Minister told us, that trusts have been used in many ways to avoid paying income tax. We know that about 78 percent of trustee income tax is earned by 5 percent of the top earning income trusts—78 percent of trustee income. It’s not to do with protecting vulnerable people. It’s not to do with ensuring that someone can—it is all to do with avoiding taxation. That is the problem that we are fixing. So that is exactly what we’re doing there. Now, the previous speaker asserted that we had actually created a real problem for exactly the people that trusts were supposed to expect—people with disabilities, testatory trusts, and so on. There is a specific carve-out in the bill. We are actually going to protect those trusts where people are using them for the genuine purpose for which trusts were supposed to be established. So there is a carve-out there and I know the member Penny Simmonds will be delighted to hear that and will support that carve-out. So there is a carve-out for testatory estates. There is a carve-out for vulnerable people. We’ve actually paid attention to that particular issue.
Then the member speaking previously said that one genuine purpose of a trust was to protect assets. Protect assets from what? That “protecting assets” will be preserved. What is being changed is that people will not be able to flow income through a trust in order to avoid paying the top income tax rate. That is exactly the purpose of what is going on here. And then the previous speaker continued to engage in speculation about what might possibly happen to the company tax rate given that that was now going to be left sitting at 28 percent and the trustee rate was going to come in at 39 percent. We already have pretty significant rules in place to ensure that that 28 percent rate is not exploited by people who have a higher personal income tax rate.
I just want to point out to the members on the other side and, in particular, to the previous speaker, that one very standard way and one way that is still completely possible for people to pay an appropriate rate of tax, to not pay the 39 percent on the trustee income, is to actually allocate the income to the beneficiaries of the trust. So if the income from the trust is allocated to the beneficiaries of the trust and those beneficiaries have a lower tax rate—so, for example, if the income from a trust is allocated to a beneficiary who is on the 17.5 percent tax rate, then that is the rate of tax that is paid. All that has to be done is that the trust has to be used for the purpose for which it was established to flow the income through to the beneficiaries, and then the beneficiaries pay that tax rate. It is simple. It is simple to not pay the 39 percent rate as long as the trust is used properly and the income is flowed through to the beneficiaries of the trust.
Now, in the case where the beneficiary of the trust is on the 39 percent rate, then it’s all standard. But if the beneficiary of the trust is on a lower rate, then that is the rate that is paid. So it is a very simple measure and it is sitting in the law already. So the scaremongering from the Opposition over this rate is absolutely absurd. It is based on speculation and hyperbole and it does not attempt to address the fundamental problem that is sitting in our tax system around the fairness of taxation. And, in fact, what they are doing is undermining a very small measure that we are taking in order to enhance the fairness of the tax system, the tax system that supports all New Zealanders. I commend this bill to the House.
SIMON WATTS (National—North Shore): What is really disappointing about that contribution of the last speaker, the Hon Dr Deborah Russell—and I must say, it was a lecture, actually, in most elements, which is not uncommon for that Minister of the House; I don’t know why my colleagues are laughing when I say that. But what the Minister does not understand, in regards to this specific carve-out around disabled beneficiary trust, is that when a disabled person reaches the age of 65, they no longer receive the supported living payment. That is the threshold in which this carve-out will not apply.
This Minister is so out of touch on the detail that she has ignored the fact that disabled people over the age of 65 will be not carved out of this legislation. They will be impacted, and they demonstrated through that change that they are a heartless Government. They are a heartless Government to those thousands of individuals over the age of 65 who are disabled and who rely on this. But, no, in their haste to try to push through this legislation, which personifies the way in which this Government operates, they leave elderly people with disabilities in the cold. That is the cold hard reality of this Government. I only hope, like she said with the census when it didn’t get to 90 percent, “I’ll put my career on it.” Remember that? How’s that going, Minister? But we’ll get back to the bill.
The Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill is a complete wasted opportunity. It is so disappointing that, time after time, we come to this House and this Government failed to use the opportunity that is presented in front of it to actually do something positive for hard-working Kiwis across this country. The annual rates section of this bill does nothing to consider the appropriateness of the thresholds of taxation on Kiwis. It does nothing in order to provide relief to those Kiwis which are dealing with a cost of living crisis. This Labour Government’s policy has created the cost of living crisis that Kiwis across this country are facing. This Government is accountable for the pain and suffering of Kiwis across this country. When will those members take accountability for the actions that they have done that is causing people in this country to be suffering the way in which they are? They will not, but in 153 days from today, New Zealanders will have an opportunity to reflect and tell this Government that they have not listened.
DEPUTY SPEAKER: In the meantime, you’ve got the opportunity to talk about the bill now, Mr Watts.
SIMON WATTS: Thank you very much, Mr Speaker. I appreciate that guidance. Let’s talk about the trustee tax rate. The trustee tax rate—a Government that said they would never increase taxes before this election. What have they done? In this bill, they’ve increased the trustee tax rate. I went to school; I wasn’t an A-grade student in everything, but I can tell you what, when someone says, “I’m not going to increase taxes.”, and 72 hours later, they increase taxes, will I trust them? No. Will Kiwis trust you? No—and “you” as in the context of the Labour Party.
So trustee tax rate—the issue with this: the unintended consequences of this change have not been thought through. What consultation has been taken in regards to increasing the trustee tax rate? Any idea? No? Not much—not much. But that’s not out of sync. The elements around the lack of consultation will mean that these proposals around the increasing of the trustee tax rate are going to cause unintended consequences, and that is going to have a significant implication.
The other thing is—which, again, for most people out there that have a degree of understanding around the topic—that this Labour Government’s policies have created the environment in which they have basically had to undertake this change in policy. The increasing of the personal tax rate to 39 percent created a differential between the corporate tax rate and the personal tax rate. Historically, 6 percent differential was the gap; they’ve opened it up to nearly 11 percent. Do you know what people do when there’s such a big gap? They think, “Well, you know what? I’m seeing all my tax money being wasted on $52 million bike bridges. I don’t really feel like it’s the best use of my tax money going into their big empty bucket, which goes on wasteful spending.” So they use, and rightly so—and it is absolutely within the law—trustee mechanisms to deal with that.
So what the Minister, as a result of increasing the personal tax rate, has caused is a significant differential. That has therefore meant that trustee element has been utilised. And now it’s like “Whoops-a-daisy, now I have to increase the trustee tax rate.” Well, I tell you what, and Andrew Bayly mentioned this before, going on the thematic of, “We’re not going to announce any new taxes before the election”—which was a complete load of bollocks, because they’ve just done it today. But ignore that, let’s just say that was a bit of an oversight, like the KiwiSaver tax—remember that one that the Minister threw through but the Cabinet were asleep that day, which is probably every other day. But the thing that’s going to happen—the corporate tax rate is the next thing that’s going to go up, isn’t it? Because now we’ve got this 28 percent, and the Minister’s going, “Gee, we’re spending a lot of money. We’re spending a lot of money. How are we going to pay for it?” Well, we’re going to the only way the Minister—and his colleague Grant Robertson—knows: to feed that addiction to spending, let’s tax people more. So they’re going to increase the corporate tax rate probably next. They’ve created this; all their policies have created this scenario. For most people, it’s like that’s no surprise, but anyway.
Let’s have a talk about the OECD, just for those at home thinking, “Gee whiz! I wish he’d talk about the OECD provisions in this tax bill.”, because that is the most exciting part, and the Minister, I know, does find these provisions—26 abbreviations in the bill in regards to that section. When you have to do 26 abbreviations on any type of policy, you are pretty much trying to say, “Who the heck is really going to get this?”, and the reality is, not too many people.
The other little detail in there is that processors and submitters in regards to this have a bit of an issue around the ceding of sovereignty to the OECD. These points don’t seem to be referenced in the regulatory impact statement (RIS) or the disclosure note. So I think that will cause concern for a few people out there. What are the rights that the Government is, in effect, ceding over to the OECD in regards to these clauses around OECD Pillar Two global things?
Hon David Parker: None—none.
SIMON WATTS: The Minister’s saying “None”. Well, why didn’t you say that in the RIS? A nice simple question, we can go into committee stage now, if you want, Minister. No, we’re not going to do that—you don’t want to do that because you know what’s going on here.
DEPUTY SPEAKER: No, I don’t know anything. You’re talking about the Minister.
SIMON WATTS: Thank you, Mr Speaker. I acknowledge that. Let’s get a little bit in—because we’re running out of time, and, as usual, I could do with another 10 minutes. We won’t have that today, but there will be plenty more opportunity when this gets to select committee, won’t it? I’m glad at least the Minister has decided to put this to select committee—
Chlöe Swarbrick: Great committee.
SIMON WATTS: —unlike the other bills pushed through under haste. I’m hearing my colleague here from Auckland Central—
Chlöe Swarbrick: Great committee.
SIMON WATTS: Great committee, and, yes, the Finance and Expenditure Committee is a great committee.
Anna Lorck: Love those doughnuts.
SIMON WATTS: A lot of collegial behaviour. Doughnuts; we’re going slightly—this is doughnut economics from this Minister. How about that?
Let’s get back to the bill, ladies and gentlemen. So we talked about the fact that this bill has not used the opportunity in front of us to adjust the annual tax rate to make sure that those rates are applicable and provide relief to hard-working Kiwis. It would have been very simple, ladies and gentlemen, to be able to make those changes in this bill. It would have brought back a little bit of credibility that this Government is actually listening to the pain that hard-working middle-class families across this country are feeling at the moment. But, no, they have demonstrated through this bill that they are not willing to listen, that they are not willing to deal with the underlying issues that our communities are facing, that they’re not willing to deal with the core drivers of the cost of living crisis, and the core drivers of the cost of living crisis is this Labour Government’s policies. Do not believe them when they talk about other factors.
But, in 154 days, ladies and gentlemen, this Government will be held to account, and I’m pretty sure that Kiwis are going to do the sensible thing.
MATT DOOCEY (National—Waimakariri): Point of order. I seek leave for Simon Watts to take another 10-minute call.
DEPUTY SPEAKER: I’ll take that as a frivolous point of order.
MATT DOOCEY: I’m putting it to the House, Mr Speaker.
DEPUTY SPEAKER: Is there any objection?
Hon Members: Yes.
Hon Dr DAVID CLARK (Labour—Dunedin): Thank you, Mr Speaker. I will try to keep my comments brief, because the last thing we need is a great deal of repetition, although we’ve just had a lot, and a little bit of it needs to be corrected, because it’s clear that members opposite are struggling with some of the simpler points in the bill. The Hon Deborah Russell gave a very erudite explanation, I thought, of why the trustee tax rate is increasing to 39 percent, and members opposite seem not to have listened particularly closely to that. She explained that there is a very legitimate and straightforward way to not pay the higher tax rate, and that is to allocate income that has been gained in that trust through to beneficiaries.
The rule is there to address distortions in the tax system that have been observed, and I would have thought members opposite, who I do believe support a broad-based - low rate tax system, would have wanted a system that does address distortions in the tax system. But perhaps because a large volume of those distortions are driven by the behaviour of the mega-rich, they may be taking a different view, but they’re being a little bit shy about putting that point up front. We know that the vast majority of trusts will be almost completely unaffected by this legislation, and so most Kiwis that are operating trusts for legitimate reasons will not have any real effects from this legislation.
I want to speak very briefly about the KiwiSaver top-ups for child carers taking paid parental leave. The latest report on this matter is from the Retirement Commission, Te Ara Ahunga Ora. The Retirement Commissioner engaged actuaries to work out the difference in retirement savings, and it’s true that males’ retirement savings balances currently are around 20 percent higher than the average balance for females in the KiwiSaver scheme. It’s not a small amount. This measure in the bill, and this Budget measure, will actually be very good—particularly for women, who are more inclined to take parental leave than men—in addressing that gender gap that we see in retirement savings. I think it is a real shame that members opposite want to oppose women having KiwiSaver balances that are closer to those of men. I think it’s actually quite shameful that you might want to oppose that measure.
By opposing this bill, the members opposite are also opposing multinationals paying a minimum rate of tax. New Zealand is joining global efforts just to make sure there’s a minimum rate of tax paid by multinationals. They’re also opposing a measure that’s really taken as a compassionate measure around ACC and Ministry of Social Development lump-sum payments to reduce the amount of tax paid on them for people who don’t have a great deal of income over the years. They’re also opposing implementing changes to the trustee tax, and tax relief for flood-hit businesses.
So I think that is where I really want to leave this contribution. I do want those following the debate at home to be considering the kinds of things this National Opposition is opposing because they like to make politics on tax bills. These are measures that will benefit many New Zealanders around the country, and I think it should really give everyone pause for thought that we have an Opposition that wants to oppose these very sensible, sensible measures of change in our tax system.
DAMIEN SMITH (ACT): Thank you, Mr Speaker. The only crusade in this House today is the pursuit of higher taxes by this Government. The policy objective of this bill is to set the rates of income tax for the 2023/24 tax year. We have in our position the holy water and the stake to the heart of Thomas Piketty in the ACT alternative budget, which gives New Zealanders a fair go and gives them an alternative to vote on against this high-raising taxing Government. Then we will see where the public fits.
So the Budget itself, because it’s important to put this in the context before going to the bill, has unveiled weaker profiles for budget balances and upward trends in debt and bond issuance, largely driven by higher Government spending. There’s been lots of pictures of cute little toddlers and mums in the newspapers today, but the media has failed to see that we are spending more, which means we have more debt, and now we will have higher interest rates. This bill contains a major tax change, whether the Minister wants to admit it or not. Labour’s build-back project has left us all waking up this morning across the country to a situation where taxes have gone up $86 billion, 40 percent. We can’t keep doing this and we have to actually get to the stage where some serious pragmatic decisions have to be made.
Mums and dads who have a house, who have a rental property and family trusts and a bank account that’s earning a little bit of interest and rental income—these are not mega-rich people. I don’t know what this is being discussed for in terms of targeting the mega rich, but the real damage here is to the 400,000 registered trustees, people who are waking up this morning trying to explain to their kids and partners what this means. In lunch arenas around Auckland today, the tax lawyers and tax accountants will be contemplating a decision that was clearly premeditated. It’s sad when the economic hitmen and hitwomen that usually come into our country are sitting in our front benches and doing these sorts of perverse distortions of people’s wealth.
Just to get on to the bill, the rules, as my colleague has said, on the Tax Administration Act, around Global Anti-Base Erosion are very complicated, and it does need a glossary to understand the 26 abbreviations. Submitters have strongly advocated the position of the Government ceding sovereignty to the OECD. We will not be ceding sovereignty to the OECD in anything, and this may be a legitimate exit route for some of the economic managers in the Labour Party, but it’s certainly not going to be the destiny of this country where we allow super-national organisations to tailor our tax policy in a way that can’t be explained.
You know, quite clearly, the material that’s been given us, the disclosure notes, hasn’t stated if there are any New Zealand Bill of Rights Act issues. The Justice website hasn’t been updated to cover this bill, and it includes a short statement about the legislation design and advisory committee who have agreed that New Zealand should just incorporate OECD rules into our legislation, with no further explanation analysis. This bill gives the Governor-General the power to decide when the legislation applies from. How can this be happening in a modern democracy?
Moving on to the many New Zealanders who have a family trust, they’re going to be really unhappy to learn that the Budget has increased their trustee tax rate from 33 percent to 39 percent, with effect from 1 April 2024. For a Budget that was badged with no major tax changes, this feels like a major change for the 400,000 trusts registered in New Zealand. The trust has gone out of trusts when it comes to the economic management of New Zealand’s tax policy. This move follows the introduction of significant disclosure requirements, which trustees will have recently grappled with in their 2021-22 tax returns, and support for the change comes in the following comment in the Budget press release: “Ministers made clear then that if analysis indicated high income earners were circumventing the rate through the greater use of trusts, the Government would move to address this issue. New information from the Inland Revenue has shown an almost 50 percent spike in income subject to the trustee rate, from $11.4 billion in the 2020 tax year to $17 billion”.
Given this statistic predates the trust disclosure data, which has just been collected, it’s not clear what the real purpose of the disclosure rules was, and the decision to increase the trustee rate hasn’t been based on that data. The increase in income in 2021 is hardly a surprise, as a natural and expected reaction is to increase the personal tax, and something that Inland Revenue has indicated they didn’t have a concern with. The Budget press release attempts to suggest this change wouldn’t materially impact most trusts, with the comment that only a small proportion of trusts will pay most of the additional tax. The top 5 percent of trusts with some taxable income in the 2021 tax year accounted for 78 percent of all trustee income. That’s $13 billion out of $17 billion. This is estimated to raise only $350 million per year. The fact that the majority of trusts will not be paying the majority of tax will be of little comfort to the significant number of trusts held by regular New Zealanders, with a marginal tax rate of 33 percent or lower. The change to the trustee tax rate is included in legislation on this table. Thankfully, it will be subject to a select committee review and lots of questions will have to be asked then.
Moving on to other policy aspects—we’ve touched on the *Global Anti-Base Erosion rules, but the lack of consultation means that we don’t understand the consequences. The taxation of back-dated lump sums—we’ve been through the detail and it seems sensible and overdue. The payment of KiwiSaver contributions to paid parental leave seems fine. The taxation rule over relief—it’s sort of fine but complicated and based on the Christchurch earthquake rules. Schedule 32 of the overseas donee status seems fine, and extending the tax exemption for non-resident offshore oil rig and seismic vessel upgrades, which comes up every few years, is important as otherwise oil rigs wouldn’t come here or they will change a lot more. On the remedial matters, generally these seem fine but haven’t been looked at in detail.
The main home exclusion construction period is just an example of how these rules are punitive. The flooding tax relief remedials we support, and we support the targeting of helping the female population with regards to KiwiSaver.
So we would say this is a major tax change. There’s more spending, more debt, by this Government, which means that they have to pursue more revenue. However, the beneficiaries—and if you are a retiree or a superannuitant today, you’d be seriously annoyed with this Government, because any little small piece of revenue that you’ve got above your pension is now suddenly going to be taxed at a higher rate.
Hon David Parker: That’s not correct.
DAMIEN SMITH: It is correct.
Hon David Parker: That’s not correct.
DAMIEN SMITH: So let’s challenge that in the committee and let’s have a look at that.
So we, the ACT Party, do not support this bill. The Government is now planning to borrow $10 million more than forecast by the half-year update in December, just six months ago. And this is all inflationary. There’s no free lunch except if you’re sitting over in the Beehive and the balance payments record at $34.6 billion is blowing out. So there’s two tribes emerging now: if you’ve got children, you get benefits plus interest and inflation; if you’re on the other side in the productive economy, you get inflation, and you get higher interest rates and higher taxes. Even though little things have been handed out for childcare, this Budget has meant that every household is now $11,000 worse off and further in debt as a nation.
CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe, tēnā koutou e te Whare. It probably makes sense to start my contribution by just referring to some of the comments made by the ACT Party speaker Damien Smith, just before he sat down, about the productive economy. We have extensive research in this country, not least in the recent IRD and Treasury reports, released last month, that show us that, in fact, we have tax and trust settings in this country which are actually anti the productive economy. They are channelling and funnelling resources and capital into unproductive assets where they sit and they accumulate more and more of that untaxed wealth. These are the fundamental premises that we’re talking about when we’re talking about this Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, to bring it back to the legislation.
So to bring it back to the legislation is to talk about the tax settings that we have available to us, and obviously this being a piece of legislation debated under Budget urgency. We’re talking about the revenue that the Government is affording itself to pay for the things that all of us need. And I found it really fascinating listening to the Leader of the Opposition, Mr Luxon, on the radio, on RNZ, on Wednesday morning, when he said, “We have to grow the economy, and if we do that, we grow the tax base, and growing the tax base helps us to pay for things.” He was so close—he almost got it. He was nailing it, and then he understood and he outlined explicitly that taxes pay for things, and Governments of all stripes do that taxation based on the values and the ideologies and the things that we believe in about how our economy should best be geared.
So what’s outlined in this legislation: well, as others have well canvassed, the key kind of thing here is the raising of the trustee tax rate to 39 percent. That, of course, is to bring it into line with the top income tax rate of 39 percent. Actually, funnily enough, as members of the Opposition themselves have raised, this is all about making sure that we address potentially distortionary impacts in terms of where people are putting their money in order to potentially avoid paying taxes. And, as we canvassed just yesterday in the House as well—actually, Andrew Bayly put it best a while ago in one of the many debates that we’ve had this term on the state of taxes and the economy and productivity and otherwise, where there is, and I quote, “such a thing as legitimate tax avoidance”. That is the inherent problem—the way that we have set up our economy, our tax, and our trust rules, such that people can get around the system, and those who have the most resources end up paying far less than is fair but also far less than they should be in terms of just actually an equivalence with the average New Zealander.
Another really important thing in this legislation is the establishment for multinationals headquartered in Aotearoa to be required to pay a top-up tax to the IRD if their effective tax rate is lower than 15 percent. This, of course, is part of an international push by the OECD to implement a set of rules to stop a race to the bottom in corporate taxation. Also, really peculiar points from the Opposition there about how we’re somehow ceding our sovereignty to the OECD. I thought the whole point of tax systems being aligned internationally is that we actually ended up with far better coordination and, again, not being one of those countries that people come to in order to avoid taxation—taxation which, and it appears there’s at least consensus across the House, helps to pay for the public infrastructure, the public services, and the public good that all of us need and use and that keeps this country going.
Another really important component of this legislation is around changing the tax treatment of backdated lump-sum ACC and Ministry of Social Development payments. This is just, effectively, about ensuring that there is an equivalence too, were there to not be a lump-sum payment but those payments were properly paid out, that somebody is not getting taxed higher on them, and therefore that we don’t end up with a situation where they have lower contributions than would have been fair had those been paid out properly in the first place. It’s just about fairness.
Another really important component, as, of course, canvassed by speakers, is the Government matching the 3 percent contributions to KiwiSaver made by those on paid parental leave. Here I need to shout out to my Green colleague the Hon Julie Anne Genter, who, in her capacity as the Minister for Women last term, I believe had some conversations with Government colleagues about initiating this process of work. And, as others have alluded to, we see particularly disproportionate impacts on women who do take paid parental leave and aren’t able to make those contributions when it comes to retirement savings in particular.
As others have, and, Mr Speaker, I hope you’ll allow me to reflect on the broader context that we are debating in this legislation and therefore in this Budget as we sit under Budget urgency on not this Friday but Thursday, given that we’re stuck in Thursday, as far as the House rules go—
DEPUTY SPEAKER: Well, we’ve been fairly broad to date, Ms Swarbrick, so we’ll start moving towards the bill.
CHLÖE SWARBRICK: Mr Speaker—absolutely. The point, though, is that this legislation concerns the taxation rates that the Government is setting, that it is addressing some of the distortionary impacts inside of our current tax and trust system, but that there are other places that they could go. This exists within the context of the Government releasing, just last month, those IRD and Treasury reports that tell us about the fact that the wealthiest 311 families in this country pay less than half the effective tax rate of the average New Zealander. So, to the core premise and principle of this bill—that is, increasing fairness and equity of our tax system—there was an opportunity to go far further.
The majority of New Zealanders agree, as reflected in the Newshub poll this week, where we saw that 52 percent of New Zealanders want to see this Government, or would support this Government, implementing a wealth tax, something which the National Party seems to think that the Labour Party is cooking up—I think that would in fact be Green Party policy, but, none the less, we would hope that the Hon David Parker does do those things that the National Party thinks are currently being cooked up, because the majority of New Zealanders agree and support it, and it would enable us to grow the tax base to pay for things that all of us need to see.
Some economists estimate that we have a deficit of approximately $100 billion in our public infrastructure. We will always be playing catch-up unless we address these things. In this country, every 40 or so years we have a form of economic transformation. In the 1930s and 1940s, we instituted the welfare State, and we paid for it by imposing greater taxes on those who had profited handsomely during a time that was incredibly challenging for many. In the 1980s and 1990s, there was a concerted effort to shred that social contract, and my colleagues in the ACT Party seem to be advocating for the continuation of that shredding of the social contract.
I just finally do need to address the point that was also made about this apparent or supposed attack on landlords in this country. And, again, it’s a constant refrain that we hear from members of the Opposition, whenever we’re talking about fair tax—
DEPUTY SPEAKER: Yeah, well, just talk about how that appears in the bill.
CHLÖE SWARBRICK: Mr Speaker, it—
DEPUTY SPEAKER: Because that’s what we’re here to talk about, Ms Swarbrick.
CHLÖE SWARBRICK: Understood—
DEPUTY SPEAKER: I’ve been fairly indulgent to date, so just—you’ve got two minutes left. So let’s just—when you bring a point like that up, just relate it to the bill.
CHLÖE SWARBRICK: Mr Speaker, appreciate the fact that others have been raising far broader points throughout this debate, and in responding to those points, I think it’s well within my remit as a member, but, none the less, the Greens will support this bill. It can and should go a lot further, because, as the Minister well knows, there are far bigger distortions in our tax system, which result in unproductive outcomes, and I look forward to submissions from the general public at the Finance and Expenditure Committee.
INGRID LEARY (Labour—Taieri): As the chair of the Finance and Expenditure Committee, I really welcome this bill, because it is about fairness. I know all New Zealanders share the belief that the tax system should be fair. That is what makes for economic stability. It is what makes for social cohesion. It allows us to get on with having a First World country where everybody knows that the tax system that is treating them in a particular way is treating their neighbour and their neighbour’s neighbours and people in other suburbs the same way. That is the basis of our tax system.
But what is particularly good about this bill is it is great news for women. It is great news for women, because it is enabling women who are choosing to stay at home, look after their children, and provide around reproduction, not just production—they are able to contribute to their KiwiSaver and the Government will now top them up by 3 percent. That is going to have a massive impact on women, and, even better, if we think about it in the context of the early childhood education changes that have been announced in the Budget, that means that when they do choose to go back to work, they will save up to $133 per week if they put their children in childcare from the age of 2, due to those extensions.
The second reason this is good for women is because of the changes to the trust tax laws—mainly because the 311 families that the previous speaker, Chlöe Swarbrick, alluded to, the beneficiaries of those very, very wealthy trusts, are mainly men. So it is good for women to know that the increase of what should be taxed flowing through to trusts in order to avoid the 39 percent threshold—it is good for women to know that that will now be taxed fairly.
The third reason is around the Global Anti-Base Erosion (GloBE) rules. Now, this is only going to bring in a small amount to New Zealand, because we already have a 28 percent corporate tax rate. But the benefit of this is around the coalition of the willing, globally, to ensure that it is not a race to the bottom, and that race to the bottom affects women more. The opportunity cost for women in the countries where that tax is not collected is that those countries tend to use consumption tax. Consumption tax is regressive and it impacts more on women in a double-edged sword, because women are more likely to be purchasing for their families as well.
So by New Zealand playing its part in the global economy and ensuring that our GLoBE rules accord with the OECD, we are not ceding sovereignty, as Damien Smith so bizarrely alluded to; we are actually ensuring that there is an ethical framework globally around tax which doesn’t disadvantage poorer countries and which, particularly, doesn’t disadvantage the women in those countries. This is a great bill. It is about fairness, and it is particularly good news for women. I commend it to the House.
SAM UFFINDELL (National—Tauranga): Thank you, Mr Speaker. Well, another wasted opportunity on this bill. We listened to the Budget yesterday and there was nothing in there for hard-working, taxpaying New Zealanders. We’ve got a Government over the other side of the House that’s addicted to spending, and this bill further inflates that. There’s no measures in here to give anything back.
Kiwis are struggling. We’ve got a cost of living crisis; we’ve got runaway inflation; we have had no tax relief in six years for any hard-working taxpaying Kiwis. For all of those Kiwis at home looking at this Budget hoping for a bit of a break, hoping for something back, hoping that their lives might be made a little bit easier—what did they get? They got nothing. In fact, they’re going backwards; they’re losing money. They are going backwards under this Government as inflation, day by day, takes money out of their pocket.
Now, we heard the Minister earlier saying there was going to be no new tax, as well, in this bill—there is. There’s an increase to the trust tax rate. That’s another broken promise by this Government. We’ve heard people on the other side of the House, we’ve heard Chlöe Swarbrick, we heard Te Paati—
Chlöe Swarbrick: Swarbrick.
SAM UFFINDELL: People get my name wrong all the time, my apologies. We heard Te Paati Māori yesterday saying that they’re going to be introducing—or very keen on—a wealth tax, and that’s what you run.
This Government has been saying that there will not be a wealth tax. There will be a wealth tax if Labour wins the election, because it will be a requirement in coalition agreements with both the minor parties. What is that going to look like? Is that going to be a land tax that comes out every year, or are people going to have to shell out $20,000 because they own a property worth $1 million? No one knows what that’s going to look like.
Kiwi families are really struggling, and they are going to struggle even more under this Government. We saw recently there was a tax review. Now, I just want to talk to that because that’s building the foundations for what is going to be a wealth tax. They looked at wealthy New Zealanders and they said they’re paying under 10 percent tax. They’re looking at unrealised capital gains, and there’s no system that ever looks at taxing unrealised capital gains. Then they compare that with your average New Zealander, and what do they look at for that? They looked at PAYE income only and took no consideration of whether they owned a house or whether those people had unrealised capital gains as well. It is an apples comparison with oranges, it is totally disingenuous, it is gaslighting, and it’s setting the way. David Parker won’t announce it, but the Greens and Te Paati Māori will ensure there is a wealth tax under this Government.
Now, we would present an alternative view of this bill. We would make sure that we deliver tax relief to hard-working, taxpaying New Zealand families. We would increase tax brackets in line with inflation. It’s not going to make anyone wealthy, but it will make it a little bit easier for them to get ahead. And under National, when we come into office, someone on the average wage would be $800 better off every year; the average family will be $1,700 better off this year.
Back to the bill. Thank you, Mr Speaker. You didn’t have to say it—you used your hand signal, so I appreciate that. I knew what you were meaning.
We did note around gender equity—around boosting KiwiSaver payments for paid parental leave. Look, I think that’s a pretty good step to take. I think that it actually does address some issues that females face when they’re spending time out of the workforce bearing and rearing children. So you always have to throw the Government a bone, and I will on that front. But that’s about where it ends.
When your normal family’s looking at this, they’re getting poorer every day. They’ve had the prices of fresh fruit and vegetables up over 20 percent. They’ve got big mortgage payments coming up. They’ve probably just re-fixed from 2.25 to 6.35 percent. That’s going to punish them. Nicola Grigg knows it’s going to punish them, I know it’s going to punish them, and this Government is doing nothing to address the cost of living crisis.
National has a plan. We’ve got a well-costed, well - laid-out plan. People have got a very stark contrast when it comes to 14 October. Are they going to vote for the National Party, who is going to put money back in their pockets, that trusts them to spend their money better than the Government does? Or are they going to vote for Labour, who keeps taking money away, thinks they know how it should all be spent, doesn’t give a damn for your average family out there that’s doing it really tough, really hard to make ends meet, gives them nothing back—nothing back for your average, hard-working taxpayer?
They’ve got a very stark contrast and some very clear choices, and I have confidence that the wise people of New Zealand will vote accordingly. I oppose this bill.
HELEN WHITE (Labour): I’m pleased to take a call in support of this bill. I’m going to just focus on one issue, and that is the support to Kiwis wanting to take parental leave. It was described by Sam Uffindell, the last speaker, as a female space, but I’m not quite sure that that’s entirely what it is any more. I hope that all parents will take the opportunity for parental leave.
When I was having my own children, there was absolutely no support. I got no support because I’d moved into a job, and it meant that we were absolutely—we had no money in the bank account. When I had my first baby, we had to borrow $500, and so I’m really pleased to see this happen.
The stats show that, at the moment, the average savings for a male at 40 in the KiwiSaver scheme is $43,000 and the average savings for a female at the same time is $36,000. There it is—a stark contrast.
Once you start seeing where that money goes, it’s a significant gap at that point when you retire, and I’d just remind the public that the New Zealand National Party would like to move that retirement date up, and so people would actually have longer until that time happens. They’ll be working longer, and that is also something that our party—the Labour Party—is committed not to have happening. We’re actually keeping that at 65 years, which makes a big difference if you’re in work and in manual work, etc.
So I just wanted to focus on that one thing—that’s the gap. That gap will be closed by this. This will be a big help in terms of closing that gap. That’s incredibly important for people who take on the parental leave responsibilities for their children, and that’s better for our children and our families and New Zealand.
ANNA LORCK (Labour—Tukituki): Thank you, Mr Speaker. We’ve heard that the National Party is opposing this bill. There is an important part of this bill which talks about the tax rollover relief in response to recent flood events. The bill would mean that the rollover would ensure relief for assets destroyed or made economically useless by the flood and by the cyclone. Now this bill, the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, ensures that the proposed rollover relief will be to defer the recognition of income from the receipt of insurance proceeds for destroyed assets, provided that there is a commitment to rebuild or replace the destroyed revenue account buildings or depreciable assets.
So for the National Party to stand here today and say they oppose this bill when this is something that is so significant for Hawke’s Bay, it just shows how much noise and negativity the National Party is prepared to play for politics. Now, this noise that’s been coming from the National Party reminds me more that, actually, the National Party loves tax. They love tax so much and talking about tax so much. And, as a business owner, I can remember very, very well when the National Party said they would not increase tax, and they came straight in and increased GST. That’s what the National Party does. You can never ever trust the National Party on tax. They love tax, and they’ll tax New Zealanders till the cows come home. Thank you; I commend this bill to the House.
TAMA POTAKA (National—Hamilton West): Kia ora, and thanks for this opportunity to speak on the taxation bill in the name of Minister Parker. Yesterday, we expected that the Budget would bring a plan for economic growth, some fiscal discipline, and, importantly, some tax relief. Today, I cannot see any of those three matters being satisfied. Instead, we will keep on spending—now nearly $1.2 billion extra weekly than the Government did in 2017.
Now, taxation law was a favourite course at Victoria University law school. I didn’t take it, as I was far more interested in Anton Piller orders and Mareva injunctions, along with human rights. Professor John Prebble, the brother of a well-known politician of this House and the father of a well-known actress, was the eminent tax lecturer and taught the tax basics brilliantly, often with baroque music playing in the background—tax and opera, all in one. Prebble would have given Thomas Piketty a run for his money in any New Zealand tax debate, and the Minister and I would be the flies on the wall for that one.
It was, therefore, illuminating to hear the tax and trust lectures provided by our Government colleagues today. I’d expected to hear about the Quistclose trust and observations around the equity courts as well there too, but, alas, no. We, instead, heard about the knights of the Crusades. Today we have various ministerial knights, and, as the dark knight of Hamilton West, I say it is a very dark night for the average voter.
I also just heard an astonishing observation from my educated Green colleague that taxes pay for things. I always thought people in Government pay for things using taxes. And when the Government wants to pay for lots of unnecessary things, they start chasing hard-working people like Mr Bayly over here for tax.
Now, a core value of the National Party is competitive enterprise and rewards for achievement—work hard; get the rewards. As I grew up in the rural surrounds of Rangitīkei, Mr McKelvie, I saw where hard work took people. It took them to a happy place. People like John McManaway and his whānau in Rata farming dairy cows, people like Shane Ratima, of the local shearing gang in Hunterville. Those who did not work generally found it very hard to be happy or even satisfied; instead they found it very easy to fritter away life and love—ditto 2023, whānau. Our Government is spending over a billion—nearly $1.2 billion—a week more than in 2017, and yet with worse outcomes across health, education, Māori, justice, social development—yada, yada, yada.
The core behaviour of the current Government means that you don’t need to work hard and you still get the rewards. In the words of the famous Budweiser advertisement, “Whassup?” “One tax, two tax, app tax more. Flatulence tax, jobs tax, ute tax more.”
This Government is trying to sneak all sorts of tax past the Opposition goalie. This bill is not about fairness; it is about the subjective views on fairness by the Government. Because if you want to have a real debate about fairness, let’s start that debate. That debate does not start with the Crusades, people. That debate starts with outcomes, and at the moment, we’re not getting many.
It won’t surprise you that the National Party opposes this bill, and so do I. I thoroughly enjoyed the pleasant musings of my uncles Bayly and Watts, and my Chiefs brother Uffindell, last seen chasing the Hurricanes game. There’s no tax relief this week for hard-working New Zealanders—hard-working Māori, hard-working Kiwis, hard-working people in Invercargill, Selwyn, Waimakariri, Tauranga, or Auckland Central. Instead, it’s more tax to feed the ongoing addiction to spending, like $3 billion yesterday for 3,000 houses. Wow! A million dollars a house. It must be in Tukituki or Upper Harbour. There’s not a single cent of income relief in the bread and butter Budget, notwithstanding increased costs of living, the jacked-up interest rates, and the honey and jam given to kapa haka throughout the country—albeit it took my Māori caucus colleagues in Government six years to act like Mr Mistoffelees and conjure an increase to that important take [issue], and all in advance of the election.
Not once in six Budgets has Labour delivered income tax relief, and that is a crying shame. Kiwis have not been rewarded for their hard work through adjustment to tax. Instead, they are given a few more kongakonga, maramara—crumbs—to keep moving. Many of our constituents will get up and go to work next Monday at 8 a.m. through to lunch time on Tuesday—maybe to dinner time on Tuesday—with the knowledge that all the money that they work for in those two days—standing in a pit milking cows, washing down the yards, working at the wānanga to give second-chance learners a go, helping patients who are waiting for hours in ambulances and hospitals, or by driving the Mainfreight truck to the local depot and drop-offs, for the Government to use at that whim. The hard-working people of Hamilton West and sometimes Hamilton East—where’s David Bennett?—tell me that inflation is the thief in the night. I reply that this Government is a thief from the day. Our front pockets have been ripped by inflation and our back pockets by this Government. Kei te hē—it’s wrong.
In October 2023, the blue waka—maybe with friends—will deal with those two thieves, recalibrating the presence of inflation and the role of Government. We will adjust tax brackets for inflation. We have a difference of opinion, Minister, you and I. National believes that the money you earn is your money, and we have the privilege to use that money prudently to provide needed services, whereas this Government believes that the money you earn is actually their money, and you have the privilege to keep some of it for your whānau.
DEPUTY SPEAKER: Mr Potaka, there’s nothing about the National Party manifesto in the bill, so can we just come back to the bill.
TAMA POTAKA: Increasing the tax rate from 33 to 39 percent is yet another tax grab. This is from a team who said, “No, we won’t change tax before the election.” I acknowledge the exclusions and exemptions set out in the bill, and there are some minor items that we can support therein, although I believe they could be explained far more eloquently—save it for the select committee. Note this: disabled over-65s need a carve-out as well.
The change to the tax rate will be taken to select committee, and I can’t wait to be invited to that discussion. I look forward to the Government’s engagement of many iwi and Māori trusts who are very, very happy on 33 percent tax rates, and at 39 percent, let’s see how the Māori caucus fares in front of those kaumātua and rangatira—
Hon Peeni Henare: Oh, come on.
TAMA POTAKA: —given the dire economic situation we have. As a final comment for the lecturer on the other side today, there is a little rule in equity, if you study that, and any student of trust law will know this: come to equity with clean hands. In this instance, the Government’s hands are very unclean with tax dirt. National opposes this bill. Why tax hard-working Kiwis more to justify bigger debt? Why tax hard-working New Zealanders to feed more unambitious spending? The best step right now is to reduce tax and unreasonable spending, and adjust the tax brackets, as National has suggested. Kia ora tātou.
DAN ROSEWARNE (Labour): Kia ora. Thank you, Mr Speaker. It’s my pleasure to take this last call on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. This bill addresses various tax-related issues with the aim of making our tax system fairer. And one thing I just want to touch on today is one of the features of the bill, the introduction of the global minimum tax of 15 percent for large multinational enterprises. This is an initiative developed by the OECD and endorsed by more than 130 countries. Its aim is to reduce the ability of large multinationals to make different Governments compete against each other to lower their tax rate and leading, essentially, to a race to the bottom.
A recent Oxfam report found that tax competition among countries and the growth in the use of tax havens has meant that States find it increasingly difficult to tax income from capital. Consequently, either tax revenue has declined, or the burden of tax has shifted more heavily on to labour.
Andrew Bayly: Say it like you mean it.
DAN ROSEWARNE: Ultimately, the most harm falls on to the public, Mr Bayly, which has faced the triple impacts of a higher tax burden, declining public goods and services, and having to subsidise corporate profits and private wealth. So, it’s a good bill, and I commend it to the House.
A party vote was called for on the question, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a first time.
Ayes 75
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.
Noes 43
New Zealand National 34; ACT New Zealand 9.
Motion agreed to.
Bill read a first time.
ASSISTANT SPEAKER (Hon Jacqui Dean): The question is, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be considered by the Finance and Expenditure Committee.
Motion agreed to.
Bill referred to the Finance and Expenditure Committee.
Bills
Taxation Principles Reporting Bill
First Reading
Hon DAVID PARKER (Minister of Revenue): I present a legislative statement on the Taxation Principles Reporting Bill
ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.
Hon DAVID PARKER: I move, That the Taxation Principles Reporting Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 27 July 2023 and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196.
One thing I as revenue Minister have in common with my predecessors is a desire to ensure the tax system delivers the revenue that Government needs in a sustainable and fair way. We all benefit from a system that is as fair and efficient as possible. Successive New Zealand Governments have made changes in the name of fairness—in the way in which they see that. A fair system, in my view, collects as little tax as possible but as much as is necessary. How the tax system does that, who pays what, and what economic efficiencies are created or avoided are all important. A tax system needs to be sustainable over time. It needs to factor in the impact it has on decisions that people make. Determining whether a tax system is efficient, sustainable, and fair is a constant challenge. Circumstances change.
Over the years. Governments of all stripes have set up working groups and review committees to pursue the Holy Grail of an efficient, fair tax system. The most recent was the 2019 Tax Working Group, chaired by the late Sir Michael Cullen. Before that, there was the 2010 Victoria University of Wellington Tax Working Group. In 2001, we had the McLeod Tax Review. Before that, there was the Valabh committee, and before that, the Richardson committee. These inquiries in New Zealand, and others overseas, have all described the main principles of a good tax system.
Yet here we are, after all those reviews, still striving for fairness. In the absence of facts about actual outcomes, half-truths can be too easily manipulated to suit political objectives and vested interests. That’s why we commissioned the Inland Revenue to research the effective tax rates of high-wealth individuals. We wanted evidence based on real dirt—data—not surveys alone, which are inaccurate at the top, in order to assess the fairness of our current tax system. Now we have that evidence. Inland Revenue’s internationally ground-breaking study shows beyond doubt that New Zealand’s wealthiest citizens pay tax on their economic income at a rate that is less than half of what other New Zealanders pay on theirs. Now, it was not surprising that some gap existed, for the obvious reason that very wealthy people earn a higher proportion of their income from sources like gains on investment that are not taxed. Most New Zealanders make do with their regular pay packets, which are all subject to income tax.
But what was surprising is the extent of the gap, and it turns out that an average of 93 percent of the income of the high-wealth group comes from returns on investments. It’s now been well-reported that a person whose income is an $80,000 salary or wage pays an effective rate of 30 percent when you include their income tax and GST. By contrast, the high-wealth people in the Inland Revenue study pay an effective tax rate of just 9.4 percent including the GST they spend on their GST-inclusive purchases. Their average assets were $276 million. Rather than trickle down, it’s been gushing up for this group, and the Inland Revenue study shines a light on how extreme the wealth disparity has become in New Zealand and how lower effective tax rates have contributed to that.
The study has given us a solid stake in the ground in terms of assessing the fairness of our system. This bill continues the good work of shining a light on the fairness of our tax system. Tax policy development should not be like a reed in the wind of political change; it’s much too important. Our tax system is a national asset, raising vital revenue and impacting on the decisions of people and businesses as they invest every day. Taxes pay for services that make society more prosperous, fairer, and more peaceful: education, health, roads, the police, the justice system that protects the property rights and contracts of those with investments. All of these are essential to our economy and society. Taxes have a direct effect on the prosperity of us all. Tax policy settings affect investment returns. Bad laws can distort investment into speculative asset classes, rather than encouraging investment in the productive sectors that create jobs and earn exports.
Yet, despite the importance of the tax system, the fundamental facts are often treated as a matter of opinion. The tax debate in New Zealand has become mired in unnecessary controversy, and ordinary citizens can quite properly become confused about what constitutes good tax policy. So, today, we’re cutting that away. This bill introduces a series of sound tax principles that enable a reporting framework to help people understand how the tax system is measuring up against those principles. They are settled, they’re well established, and they’re generally accepted amongst tax academics, professionals, and the OECD as the hallmarks of a good tax system.
I’ll briefly describe them. The first is horizontal equity. In other words, people with the same levels of income should pay similar amounts of tax. Along with that is vertical equity. That is that the overall system should require people with higher levels of economic income to pay a higher proportion of that income in tax. Now, not all taxes need to be progressive. For example, GST is regressive—more regressive in New Zealand than virtually any other OECD country. But the overall system should be progressive, and that requires an analysis of transfer payments also, although those phase out at middle-income levels and don’t really confuse the picture at higher levels. Together, horizontal and vertical equity are often described as the key measures of fairness of a tax system. The other important principles are efficiency, minimising administration and compliance costs, revenue integrity, certainty, predictability, and, finally, flexibility, and adaptability.
Enshrining these principles in legislation will mean that the fundamentals of a good tax system will clearly be set out for all to refer to. It will provide direction to officials on what information about the tax system should be reported on. This bill proposes that officials periodically report on the operation of the tax system, using the principles set out in the legislation as the basis for their reporting. It’s not a straitjacket. Different Governments will want to focus on different aspects of the system at different times to deal with the challenges of the day. Political parties can quite properly have different views on how progressive the tax system should be, but it should be a fact-based discussion. The reports will build up a time series showing how the tax system is changing in relation to these core principles. And by providing information to the public, like that presented in the high-wealth individuals report, we can have an informed debate on tax, using solid evidence.
All New Zealanders should be able to trust the fundamentals and know the facts about our tax system. So officials will report actual outcomes of the tax system in relation to these principles. This will improve transparency. For instance, people will be able to see levels of taxation across society and who is, effectively, exempt from tax and who isn’t. Debates about any changes to the tax system can then be fact based.
I’ve written to all of the political parties inviting them to support this bill and inviting them to talk about what those principles should say in the legislation. We’re open for discussion about that, but we believe that an evidence-based principles approach to assessing our tax system should be easy for all parties to support. It doesn’t in any way prescribe what tax policies they might want to adopt; it simply gives an objective basis for determining fairness of the current system. It’s not intended to be political, and we are happy to talk about the guard rails that are here. Ultimately, this is about what is good for the health of the tax system and the economy. To protect our way of life, to improve our standard of living, we need a fair and efficient tax system, a tax system that works for all citizens and encourages productive use of both labour and capital. That is the object of this bill. So, with pleasure, I commend it to the House.
ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.
ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker. Well, here we are, the day after the Budget, and we’re talking tax. I can see Dr Deborah Russell at the back there just slathering away to tell us about this Taxation Principles Reporting Bill. So it is with pleasure that I talk on this bill. I’m not quite sure why we might be rushing this through under urgency on a Friday when the House normally doesn’t sit, but I suspect it might have something to do with what’s going to happen in October—and it’s called an election.
This is about, I think, Mr Parker pursuing his long-held dream of being able to tax people even more. And, of course, he made the statement—and I quote, and I hope it’s right. I wrote it down, Mr Parker: “You believe we should collect as little tax as possible.” Well, we’ve just finished, 10 minutes ago, putting through a new piece of legislation, driven, of course, by the Hon David Parker, to tax New Zealanders more if they have a trust. And, of course, that was his own making—he shoved up the top tax rate even though Labour said they wouldn’t be doing that, they wouldn’t be increasing taxes, but, hey presto, they did, and they did it yesterday.
Rachel Boyack: The top tax rate increase was in our manifesto.
ANDREW BAYLY: Yeah, but not pushing up the trust rate, was it; not pushing up the trust rate. The trust is a new tax. That’s what the bill was about—about five minutes ago, if you’d been listening, right? That is a new tax. Anyone owning or a beneficiary of a trust will pay 39c. Even someone with disabilities, as Penny Simmonds talked about, is now going to pay 39 percent. So in terms of this issue, we do not need a tax principles bill.
We do support a good tax system that is fair, simple, transparent, administratively easy, and adequate to service a country’s revenue needs. In fact, my personal view is that what Adam Smith wrote back in 1776 wasn’t a bad piece of advice about tax.
Hon Michael Woodhouse: Was he a nice bloke? Did you know him well?
ANDREW BAYLY: No, I didn’t know him well! But in the wealthy nations that most economists love to talk about, he said there were four principles: equity and fairness: similarly situated taxpayers should be taxed similarly; certainty: the tax rules should clearly specify how the amount of tax is determined, when payment of tax should occur, and how payment is made. And, of course, one thing about certainty that he didn’t talk about is when you have rapidly changing Government policy where you change tax rates all the time, pushing them up—inevitable if you have a Labour Government. The third thing is convenience of payment—facilitating the required tax payment at a time and in a manner that is most likely to be convenient for the taxpayer is important. Good stuff—an effective tax administration, effectively saying that the cost to collect the tax should be kept to a minimum.
Those are good principles. I know the Hon David Parker loves Thomas Piketty, and so I was just having a look at his fine book, published in 2013. Capital in the Twenty-First Century is the grand title of it.
Hon David Parker: Fantastic book.
ANDREW BAYLY: There he is—Mr Parker—saying it’s a fantastic book. Anyway, the big proposition that Mr Piketty was saying is that the return on capital, RC, is greater than economic growth, and that leads to inequity. That’s the principal part of his economic theory that was published in his report. So I thought I’d just see what people thought about it, and I came across this. The Washington Post said at the time the book was published—they did a review of it—that Piketty’s work was a landmark in economic literature that significantly improved and expanded upon Karl Marx’s ground-breaking scholarship in Das Kapital. If I remember rightly, Karl Marx had a bit to do with Russia, didn’t he?
Hon Michael Woodhouse: Yes, he did. Well, kind of.
ANDREW BAYLY: Sort of—sort of.
Hon Michael Woodhouse: He wrote the manuscript for communism.
ANDREW BAYLY: That’s right. My good colleague the Hon Michael Woodhouse says he wrote the manuscript for the new Russian State.
Hon Michael Woodhouse: That cost about 60 million lives.
ANDREW BAYLY: Well, don’t talk about the lives that were lost. Didn’t it also go on to say that his prose was rather dense and rather repetitive? Sounds like the Hon Dr Parker.
But I think the big issue about these tax principles is that what we’ve seen is the Labour Government prepared to use the IRD to undertake an investigation into certain families’ wealth under a very special clause that was inserted by the Labour Government. So the first point about that is whether in fact that is proper. The clause is a very invasive clause. There’s a general principle about doing investigations about the protection of privacy, and there are significant concerns that the Labour Government has used the IRD to provide some evidence about how they would then implement their own policies.
The second thing is that this bill is Mr Parker’s attempt to use Parliament to pursue Labour’s own tax concepts, and I think that is not right. I’m also concerned about the short report back, by 27 July. Why the dickens does a bill like this, which only runs to four pages, have to be reported back by 27 July? The issue is that we have an election coming up on 14 October, and, of course, this is what’s driving this. This is wrong, and we will be opposing this bill. The reality is that we do believe in a fair tax system, but this is going to require a bureaucratic rambling on of reports from time to time, but I think the real essence of this is what it will say in the first time. We accept the principles, as we set out before, that a good tax system should be fair, simple, transparent, administratively easy, and adequate to service a country’s revenue needs.
New Zealand has a tax system that in the main is the envy of the world. And we have now got a Labour Government and a Minister that is continuously tweaking it. And I’ll tell you what—on his issue about making it consistent and not complicating it, the mere fact that Mr Parker raised the top tax rate to 39 percent has created in its own right the issue that we have to address in the bill that’s just been before this House, which, again, will be rammed though. That’s what’s going to happen. But luckily they pulled back on the KiwiSaver tax—of course, that’s going to get rammed through if they win the next election. We had the app tax. We’ve had all these other taxes come through, all the stuff around property and all that sort of stuff.
Look, tax policy is the domain of Governments. Everyone understands the issue around having good, simple tax policy. We simply have a divergence on the way it should be implemented. Labour have chosen to go down the route of choosing to tax people more. If that’s their thing, that’s obviously what happens at an election. National believes that people should retain as much as they can of the income they earn so that they can pay for their lives, look after their children—
Hon Phil Twyford: How about fairly distributing the burden?
ANDREW BAYLY: The question was: what about fairly distributing the burden? Well, the issue is that if you don’t have a wasteful Government that blows money in ways that are unbelievable—even in this Budget announced yesterday, there’s a $7.1 billion increase, just because the Government cannot balance its books, even though its tax revenue went up by something like $11 billion, projected—
Hon Phil Twyford: What about distributing the burden?
ANDREW BAYLY: The issue is that if you stop wasting money and spend it on the right people, if you fix up the holiday pay for the nurses and the teachers, if you paid them more and you looked after people, then you wouldn’t have to waste money, like what’s happening right now under this Government, and shove up the taxes. All David Packer wants to do is he wants to push up the tax for New Zealanders.
Hon Dr DEBORAH RUSSELL (Associate Minister of Revenue): I want to speak about this Taxation Principles Reporting Bill, and I want to refer to the speech of the previous member, Andrew Bayly, because it was misleading and obfuscating, and that is precisely what this bill is setting out to fix.
ASSISTANT SPEAKER (Hon Jacqui Dean): No, no, no. The member—
Hon Dr DEBORAH RUSSELL: I withdraw and apologise, Madam Speaker.
ASSISTANT SPEAKER (Hon Jacqui Dean): Good call.
Hon Dr DEBORAH RUSSELL: I wish to refer to the previous member’s speech, in which he left out an important aspect of Adam Smith’s principles of taxation. It shows exactly why this bill is needed; we actually need a full and transparent discussion about how we go about taxation in this country and which principles it should be based on. We need that clear and transparent discussion, and this is what this bill will facilitate. So it is gobsmacking that other parties in this House would oppose it.
I wish to go back to Adam Smith’s principles of taxation, which the previous speaker said their party thought were important. I got “a tax system should be fair, simple, transparent, easy to administer, adequate” and a couple of other words—in fact, all concepts that are imbedded in the taxation principles in Schedule 1 of this bill. This bill does set out to ensure that those principles, enumerated by that speaker, will be discussed and reported on in a transparent way so that this country can engage in a well-informed debate about how much taxation there should be and where it should be levied.
However, the speaker left out one very important principle from Adam Smith, and it is a principle that is nevertheless sitting in this bill. Adam Smith’s four canons of taxation in his great 1776 work The Wealth of Nations set out four principles of taxation. The first one is fairness. Now, the previous speaker said that related to people in the same position paying the same amount of tax—agreed, horizontal equity. What he left out was vertical equity, and this is something that Adam Smith, in that book, advocated for. He said that those who are in a position to pay more tax should do so. That’s vertical equity. That is what we do not understand in New Zealand’s taxation system at the moment. Until very recently, we did not have good data on whether that principle, dating back to Adam Smith in 1776, was being embodied by our tax system.
So I invite the National Party to reconsider its position. These principles are exactly what Mr Bayly said the National Party wanted in a tax system. But he left out that one thought from Adam Smith, that vertical equity must too be considered in our tax system, and that is embodied in these principles too.
If the National Party genuinely wants to have a fair, simple, transparent, easy-to-administer, and adequate tax system, then I suggest that they support this bill forthwith.
Hon MICHAEL WOODHOUSE (National): Earlier this week, in a speech I did on an ACC bill, I talked about the number of pieces of legislation that were coming through this House that were a well-meaning waste of time—that there were a lot of things that were in those bills that did not need primary legislation to enable them to occur. Well, I’m going to add this bill to that list, with one exception: there’s nothing well meaning about this. This is a “Petty Picketty Parker” jealousy bill that reveals the envy that he lives with every single day. If he had his way and he got his way with his Cabinet, we would be discussing today a wealth tax, a capital gains tax (CGT), an “anything to tax the rich” tax, because that’s the modus operandi (MO) of Mr Parker. And I thought it was really interesting, his Freudian slip when he said he intended to say that he wanted to gather real data, but actually he revealed his bias by saying he wanted to gather real dirt, and, actually, he got it right the first time—it is dirt digging, and it’s unfortunate.
The other thing I would say about this bill is the word “Principles” is in the bill, is in the title. Well, this bill is anything but principled; it is mean and nasty and it takes a lens not only into data on the wealthy, but it actually interferes with the statutory independence of the Commissioner of Inland Revenue. This part of this Government’s MO since they came to office—we can think about the Reserve Bank of New Zealand; we can think about Treasury; we can think about the Police, where the Misuse of Drugs Act was changed, directing the way police and when police should take prosecutions, compromising that very important constitutional separation between the executive and the New Zealand Police. So to that list we can add the Inland Revenue Department, who under the Tax Administration Act 1994 has very clear responsibilities for both independence and privacy, and they are being undermined by this bill.
So let’s have a look at these so-called principles—let’s have a look at these so-called principles. They include principles for gathering information to establish income distribution and income tax paid. We already know that—we already know that. What Mr Parker doesn’t say and is not up front about, when he says he wants a tax system that’s fair and that he doesn’t think our tax system is progressive enough, is that he conveniently left out the fact that 20 percent of Kiwis are paying two-thirds of the income tax burden in this country.
Chlöe Swarbrick: Maybe that speaks to distribution.
Hon MICHAEL WOODHOUSE: Yes, exactly. That’s right. And I think that is fair, and it’s also fair that the bottom 48 percent of Kiwis are paying just 8 percent of income tax in this country. I think that’s fair too. What’s not fair is to release the nonsense reports that he got IRD to do—
Andrew Bayly: On unrealised gains.
Hon MICHAEL WOODHOUSE: —which takes unrealised gains and says we should tax them. When he was challenged on that on the radio about how an unrealised gain could be taxed and the cash-flow implications of that, he glibly replied that when people are worth an average of $276 million, they must have some cash sloshing around somewhere that they can pay his unrealised wealth tax that is coming to a campaign near this country.
That’s what Mr Parker needs to do: he needs to front up and firstly be honest about who is actually carrying the lion’s share of the income tax burden in this country—and it is the top 20 percent of income earners, and that’s appropriate—but to avoid actually reminding New Zealanders of that is, I think, disingenuous. Then he needs to be upfront about what his intentions and his Government’s intentions are for CGT and for a wealth tax, because for a Government that insists that that’s not on their agenda, they seem to spend a heck of a long time talking about it. Although, I do wonder quite how much support the Minister of Revenue has from the Prime Minister who actually wants to keep his job. Well, I would encourage him to go out and talk about that as much as he likes.
Chlöe Swarbrick: Fifty-two percent of New Zealanders want it.
Hon MICHAEL WOODHOUSE: Well, then 52 percent of New Zealanders should have all of the information about what this Government’s intentions are in order that they can make this decision.
Chlöe Swarbrick: That’s the point of the bill—that’s the point of the bill. That’s the point of the legislation.
Hon MICHAEL WOODHOUSE: No, that’s not what this bill does. This is another little incremental creep into the lives of the people Mr Parker spends his life being jealous of.
Chlöe Swarbrick: It’s about data. Come on, Michael—it’s about data. Don’t be so disingenuous.
Hon MICHAEL WOODHOUSE: We have the data, Ms Swarbrick. Here’s the other little hit on the wealthy: the fourth principle in this bill is about compliance with the law by taxpayers, as if taxpayers are somehow not complying with the law. Now, we know that happens sometimes, but when it happens, IRD investigate. They’ve got a very big compliance unit. They go out and they have a look at—for example, when I was Minister, I think we doubled the size of the unit that went out and had a look at residential property development, particularly in the Queenstown Lakes area, to make sure that people were paying income tax on the profits that they were making from property development and they couldn’t mask their intention on purchase, which were the rules in those days, and they do a very good job of that.
I think we have a very high level of compliance with our tax law. And he was actually at pains to point out, when his “famous” report was released, that he didn’t believe people were evading tax; he just didn’t like the tax system that we had. So the Minister of Revenue says, “I don’t like the tax system—oh, but I’m not going to change it. I’m just going to get more reports about it and write more pejorative comments about our wealthy.” Well, that’s a bit like what Norway did, Mr Parker, and the very, very wealthy in Norway—and 10 years ago, in France—they voted with their feet and with their chequebooks and billions of dollars of wealth was lost from those countries because of the Parker-like approach that those countries used.
Now, it is true there are problems, and one of the biggest problems is the profit-shifting by multinational countries into tax havens. It’s known as BEPS—base erosion and profit shifting—the sort of transfer pricing that is quite endemic, actually, amongst multinationals, particularly those with weightless goods or tech goods, and that is a problem to be solved. It was a problem when I was the Minister, it’s still a problem now, and the fact that we haven’t been able to make more progress is an indication, I think, of quite how notoriously difficult it is to create a framework that addresses those issues. Because countries are competitive, they do have different company tax rates, and companies will naturally gravitate their permanent establishments to those countries. It needs to be dealt with by the OECD as a collective, not by individual countries trying to pick those companies off. But it’s not going to be solved by this sort of silly legislation, which, if the Commissioner of Inland Revenue had a mind to do, already has the power to report on income distribution, to report on distribution of exemptions from tax, to report on perceptions of the integrity of the tax system—and we certainly know what the perception of the Minister is on the tax system, and it’s not a good one—and they certainly ensure that all taxpayers comply with the law. I think we have a very high level of compliance in this country. But simply asking this question in law suggests that the Minister doesn’t think that’s the case and he wants to lift the bonnet and find out what those nasty tax evaders are actually doing.
Chlöe Swarbrick: What are you so scared of?
Hon MICHAEL WOODHOUSE: I’m not scared of anything, Ms Swarbrick. I just think this is a really, really nasty waste of time, and here we are in Budget urgency with one of Mr Parker’s pet projects.
By the way, when we come to this in the debate actually on the report-back date, I will be asking the Minister to explain why, if the select committee is not reporting back until 27 July, the bill actually says it comes into force on 1 July this year—seems complete ridiculous, but one of the many ridiculous features of this nasty piece of legislation.
Hon PHIL TWYFORD (Labour—Te Atatū): On this side of the House, we stand for transparency, facts, data, and an informed national conversation about tax. On that side of the House, they stand for obfuscation. They want to confuse the public. In fact, it was very, very telling, in that last contribution from Michael Woodhouse, when he said that everybody knows that the top 20 percent pay the most in tax. Yeah; everybody does know that. But the real question is: how progressive, how fair, how logical is our progressive tax system?
What David Parker’s trying to do here is actually bring some structure to this debate and shed some light on it. I want to thank David Parker for his work on this. He’s demonstrated, not only with this bill but also with the work that he had the Inland Revenue do recently, looking at how much tax, drawing on real data—a world-leading study that generated facts and real information for this debate. The Minister demonstrated an actual commitment to transparency, but on that side of the House, they talk about transparency, except when it comes to their rich mates. When it comes to that, they don’t want to shine a light on tax. They don’t want facts. They don’t want the public to know what’s really going on. I commend this bill to the House.
DAMIEN SMITH (ACT): That is highly amusing coming from the least transparent Government in recent history. I have a problem because this bill has left me speechless at these so-called tax principles—that it’s absolutely appalling. This is legislation for the taxation of all economic income. So with nine minutes and 30 seconds left, it’s hard to remain speechless, but that’s how I feel.
This Taxation Principles Reporting Bill was dreamt up in the hot, steamy bathroom of the Minister of Revenue, with a mulled whisky, and he said, “Oh, let’s just write my opus now. Let’s redefine the tax principles.” And they are off to, really, what I would call an unprincipled start. So let’s call this bill the “Tax Unprincipled Act”, which, if you want to look for a progressive solution, all you have to do is reach to the ACT alternative budget, which is available to the public for their decision making.
It’s no secret that Inland Revenue has been working on the development of the Taxation Principles Reporting Bill. The item has been on the tax policy work programme and has been referenced by the Minister during his 2020 and 2022 speech on tax fairness. And we don’t believe that tax unfairness should be defined by one man. We’d rather have a flat rate tax system which was understood by every single person in the country and by everybody who has to modify these tax changes in law.
In 2022, the Minister advised an important stage of the project will be wide public consultation on the proposed principles and reporting framework, and we’d be going around that in the middle of the year, we’d share your views. I would like to see these principles enacted in a bill before the end of the current parliamentary term. Well, mid-2022 came and went and there was no consultation. So it was with some surprise—but not really, given recent history—that the Government made the decision to once again bypass seeking public feedback on a proposed tax law, and it’s instead gone straight into legislation in the form of the “Tax Principles (Unprincipled) Reporting Bill”. This bill will be tabled as we speak today and is expected to swiftly proceed through its parliamentary processes in a time frame that will leave the Finance and Expenditure Committee breathless, no doubt. At one stage, I thought this was not even going to go to a select committee process.
Those who are the keen followers of the tax system would probably say their number one tax principle would be that we follow the generic tax policy process, the GTPP. The GTPP has been in place since 1994 and is designed to ensure that tax laws are well thought through and stakeholders have the opportunity to contribute to the design of laws. The decision to bypass consultation on the bill goes counter to the GTPP and rewrites history, and is another example from this Government of reducing trust, disclosure rules, and extensive information-gathering powers after the 2020 election. The irony of the lack of GTPP on tax principles will not be lost on the tax community.
So what are the tax principles that should be followed? Well, just having seen the legislation, we can only speculate that they’re based on what the Minister’s preview listed as his principles: horizontal equity, vertical equity, administrative efficiency, and the minimisation of tax-induced distortions. You would expect, in many cases, tax proposals will not satisfy all of these principles. For example, the denial of interest rate deductibility on residential property would probably fail all principles.
The next outcome could be tax policy developments that get tied up in knots, and given the possibility that this legislation will be based around investments in the economy—aside from having principles to comply with, the bill is expected to include information collection and monitoring requirements. How is the new tax law expected to satisfy the principles; has it actually achieved its purpose, etc.? And now, it’s being pushed through under urgency. It sets the scene for an election period where all the political parties’ policies will be debated against these principles. And given the lack of consultation on what the tax principles are, it hardly seems a principle and perhaps gives a glimpse of what may be coming from the Labour Party tax policy: a simple tax change which increases horizontal and vertical equity. As with most things tax related, the devil will be in the detail, and we’ll be preparing a further summary once that has been proposed.
But as I can see—going on to the bill—you can look at the bill itself and ask yourself: did the Minister bottle it at the end? If you look at clauses 6, 7, and 8, and what’s related to the commissioner, he’s backed out at the end. So this isn’t a full-on commitment or full-scale commitment to principles. If you look at the treatment of Māori rights, you could actually get a smart, young Māori lawyer to drive a truck through the tax system, based just on that statement alone, and hold the tax system to ransom. And everybody, whether it’s a Māori trust or an independent trust, should have the same principles and rights and understandings.
The disclosure statements were less than adequate. We’ve talked about consultation. The regulatory impact statement—based on limited feedback, the Government said there’s a high level of support for core tax principles for improving transparency. Really? Well, that has to be discussed.
The Minister is guilty of using incorrect information and misunderstanding of information, which can lead to mistrust and cherry-picking data from the high-wealth report, and that’s not correct.
The article of the principles in Schedule 1 of this bill is criticised by officials and is worth mentioning. The explanation of tax principles include stated assertions commonly associated with the expression of these principles and Inland Revenue’s views. The inclusion of these statements could present a risk to the integrity, independence, and assurance of the reporting framework. An explanation of horizontal equity would usually not include reference to the time value of money, and, similarly, an explanation of vertical equity would typically refer to people in different positions rather than wealthy people. An explanation of this principle of flexibility and adaptability would usually not include explicit references to changes in equality. The inclusion of contested statements—that GST is regressive—concerns the distributional impact of a tax on consumption and remains an area of ongoing inquiry.
For presuming decisions about trade-offs, this is not the justification for a substantial unfairness, and within the explanation of the principles, a ranking of principles amongst themselves leaves a lot to be desired. The bill commentary itself and report timing on the full report is aggressive, and the annual report should only include information that’s been based on the most recent tax year.
So we, overall, are not really clear that this is actually required, as the Minister himself is already manipulating data and setting an agenda that is against the spirit of tax manufacturing in this country and is suited for political arguments, which is unacceptable, and we should scrutinise it when this bill comes to the committee. Thank you, Madam Speaker.
CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. I’ve got to say, yeah, very disillusioned—unusually—by this debate this morning. I can’t seem to really follow the threads of argument as raised, particularly, by the Opposition. So I guess, just to kind of outline it as I’ve been listening to the points that have been raised and to try and bring it back to what it is that we’re actually debating and discussing, there are two things here and they’ve been the core threads of many of the contributions so far. The first is what this bill actually seeks to do, which is to collect data to inform an informed, public, evidence-based debate on what kind of tax system we should have; whether we do—as the National Party is so terrified of—conceptualise income to include economic income. And the second part of the question, which is more the ideological and values-based one, is what fairness looks like; what kind of system, what kind of economy, what kind of society, and what kind of communities we want to create legislation and policy to inform. And the kind of conflation between those two things has perhaps been the most frustrating element of this debate, because all this bill does is create a framework for reporting on an annual basis—and a more detailed form of reporting every three years—on income in this country. It also outlines, as members of the Opposition put forward, a range of tax principles, which I heard they in general, kind of, seemed to agree with.
So my question is: what are they so afraid of? The very points that they’ve been raising in debate about how they don’t think that economic income or accumulation of capital wealth is the equivalent of income in the way that we tax it with PAYE, well, that’s outlined. It’s in the IRD and Treasury reports. It’s not hidden. They make their methodology and their assumptions crystal clear. And that’s the point; we should be having a data-driven, evidence-based discussion about where income and capital accumulation exists in this country, because then, God forbid, we can have an informed and robust debate that New Zealanders deserve. So to that effect, I do need to applaud the Minister of Revenue for the work that he’s been doing, pushing all of it up a hill against real nonsense that’s been coming out of the Opposition, so terrified of the premise that Jeanette Fitzsimons put so well, that sunlight is the best disinfectant.
So the Greens will be supporting this legislation, because it’s common sense. We should have information about what it is that we are doing—the impacts of our policy and our tax settings in this country—to help inform how we do that better, how we improve as a country. And I don’t know why that’s so terrifying. Because that then brings us to the second point, which is, as I said, being conflated with this first one. It is the notion of fairness. It is the reality that all of us in this place are inherently ideological, because we have ideologies. Those are things that we believe in and will go out to the electorate and campaign on in October. The point, again, of an election: to go out and put forward our policies and have the New Zealand public decide what they want to see implemented. All of us are ideological, all of us have ideologies, and we should be upfront about those. The Greens are incredibly explicit; in 2020 we ran our poverty action plan policy and it was incredibly popular. It proposed a wealth tax, the very wealth tax that the National Party continues to accuse the Labour Party of wanting to do. But, guys, you’re looking at our manifesto, not theirs. So if New Zealanders, the 52 percent of them who, polled this week, said they want to see that happen, well, guys, you can put your vote here and see us continuing to work for it.
But what we also saw, as reflected, again, in that research out of the IRD and Treasury, is that not only do we have a system that—we are incredibly clear—we believe is deeply unfair, and it seems the majority of New Zealanders agree, because the wealthiest people in this country are paying an effective tax rate at less than half of the average New Zealander; less than half of our front-line emergency workers, our nurses, our doctors, our supermarket checkout operators. And that is because of the way that we have set up the system. The same allegations that the National Party and the ACT Party are making about how this is some big interrogation and some big inquest to get access to information—again, God forbid, so that we can create an evidence-based tax base and economy—are the same arguments that were raised when this House was debating the introduction of PAYE and income taxes.
We need to have data in order to have a robust system of tax and to create, as we would hope, informed policy about the kinds of incentives and outcomes that we want from our economy. Because, so frequently, we hear the economy used as a refrain for why we can’t or shouldn’t do certain things, not least in the tax debate. And to that effect, I think it’s really important that we’re all just really clear about what we’re talking about when we’re talking about the economy, because what we’re talking about in the Greens is all of us, all human beings and the stuff that we create and the planet that we live on and the resources that we use and the rules that we put in place to try and incentivise or disincentivise certain ways of behaving inside of that economy.
Simeon Brown: And the best incentive is capitalism.
CHLÖE SWARBRICK: We do not live in a game of Monopoly, which, by the way, was invented by a woman called Lizzie Magie in the early 1900s to demonstrate precisely the problems with an economy that is premised on land speculation and the accumulation of capital in the hands of fewer and fewer people—to teach kids those things, Simeon Brown.
And to that effect, we can change the rules when they do not work for the majority of us. That is the point of this House. We saw it in the 1930s and 1940s when we had the introduction of the welfare state, the ostensible 40-hour work week, massively eroded by this point in time, with weekends, with public holidays. Then, in the 1980s and 1990s with the shredding of that social contract. And 40-odd years on, in 2023, confronted with the climate change - charged weather events that are ravaging particularly the North Island at the moment, we are presented with exactly those same choices, those political choices, as a House. What kind of society do we want to build? Because—to connect all of this to everyday people out there, and I’m sure that this is a sentiment that many of us have seen when out in our electorates and talking to the average New Zealander, the average Kiwi that we all like to bang on about, despite being so far removed from their realities—the average New Zealander, at least in terms of my interactions, is exhausted. They are exhausted from fighting against the system, of existing inside of a system that feels deeply inequitable.
That might be why we saw that reflected in that Newshub poll, that 52 percent of New Zealanders want a wealth tax to pay for the things that all of us rely on—by the way, not least the wealthy, who rely on public infrastructure, perhaps, for example, our court system to uphold the contracts which enable them to do business in the first place. This is about how do we create an evidence base, a data-driven conversation about the kind of tax system that we want in the first place. Unfortunately for the Nats, there’s not a wealth tax or a capital gains tax hidden in here. It’s just about the data. It’s just about the evidence.
And to that point about the exhaustion that I think is out there and felt by many New Zealanders who have been confronted with so many issues, whether it is the weather, whether it is COVID-19, whether it is these inflationary pressures, I think it’s important to reflect, actually, on something that hits all of us quite hard and personally, which is mental health in this country. The Government commissioned, released, and tabled the mental health and addiction inquiry, He Ara Oranga, just last term, and it told us, in essence, what all of the contemporary research on mental health and addiction tells us, which is that all of us are born with genetics that we’ve inherited from our parents and our grandparents. But, effectively, it is our environments, the social and environmental variables, which can turn the potential propensity for the manifestation of mental ill health and addiction up or down a notch.
Those kinds of variables are very similar to public health determinants. They are a sense of security, whether that be in one’s income, one’s ability to plan for the future, one’s housing situation. And, again, you only need to look at the bald facts that we have the lowest rates of homeownership since the 1960s, we have the highest rates of wealth inequality that we’ve ever had on record in this country, to see precisely why we have these rates of mental ill health. People are being bombarded with these challenges. Because resilience, particularly in the mental health space, is not a commodity that you can buy off of the shelf. It is a social contract that says that all of us are going to look after each other, and that is the role that we in this House have—to ensure that we have a framework which is reflective of how to best achieve that.
That’s why I just can’t understand that anybody would oppose us getting evidence so that we, for once, can have an evidence-based discussion about taxation and where fairness sits in this economy. Because we can do a lot better, and I think the majority of New Zealanders know that. The Greens support this bill.
Hon Dr DAVID CLARK (Labour—Dunedin): Every year we come to this House to set or adjust the tax rates for this country, and we come here with some information, but not the ideal information, that we would want to have when we’re having these debates in the House about how best to reflect the interests of our whole country.
The Taxation Principles Reporting Bill is there setting out a range of principles that we want to have in our tax system. They’re internationally well-recognised. Horizontal equity—people with similar incomes should pay similar amounts of tax. Vertical equity—the system should be progressive; people on higher incomes pay a higher proportion of their income in tax. And then principles around collection of revenue efficiently; principles around minimising compliance and administration costs; and making sure that the revenue that we’re getting to buy the things that we need for public services is predictable each year so that we can have a system set up to support New Zealanders; and, of course, the system has to be flexible and adaptable—those principles are well understood internationally. They are not particularly new; though, bringing them into this kind of bill would be new for New Zealand—bringing them into a reporting regime, which is precisely what this legislation does.
It is a fantastic piece of legislation that will collect data to make informed decisions in this House every year when we change the tax rates. Every year in this House when we debate what our tax rates in this country should be, we want to be informed by the best information. Here is a bill that seeks to do that, to actually gather the data to make informed choices on behalf of New Zealanders. I think we’ll continue to see through this debate National arguing against transparency. They simply do not want a light shone on what is going on in the tax system, because they’re afraid it will show where people are being advantaged and where people are being disadvantaged. We, on this side of the House, think the tax system needs to be fair and principles-based and so we will defend this legislation, and I really want to commend this bill to the House.
ASSISTANT SPEAKER (Hon Jacqui Dean): Members, the time has come for me to leave the Chair for the lunch break, and the House will resume at 2 p.m. this afternoon.
Sitting suspended from 1 p.m. to 2 p.m.
ASSISTANT SPEAKER (Hon Jenny Salesa): Members, before we broke for lunch, we were debating the Taxation Principles Reporting Bill. The next call is a split call.
SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. Well, as we rejoin after lunch, it’s great to be able to stand and rise and speak against the Taxation Principles Reporting Bill. We heard some novel suggestions from one of the previous Labour speakers—that they are so committed to transparency—and I would laugh at that and say that this is one of the least open and least transparent Governments that New Zealand has ever had. Now, there is a bit of nobility around wanting to increase the information, and we all want transparency and we want a tax system that is open and transparent and, importantly, easy to administer. I’m not sure that we’re going to get that with this, because if we look at the other tax increases that this Government has brought in around interest deductibility, around the brightline test, that has significantly increased the administrative burden and cost on the New Zealand tax system.
We saw an investigation that the Minister set off recently into 311 wealthy New Zealanders, and it was about increasing transparency, supposedly—I would challenge that and say that it was about laying the groundwork for a wealth tax. We know that this Government has said that they will not have a wealth tax, but the reality is if Labour wins the next election they will be in coalition with the Green Party, with Te Paati Māori, who have both over the past 24 hours said that they are ardently committed to a wealth tax. So the reality for New Zealanders is if there is a Labour Government next term, it will have a wealth tax component as part of any coalition agreements.
I will go back to that study, and I raised it earlier today, that it wasn’t an accurate study and it didn’t give New Zealanders a fair reflection, because it looked at the wealthy New Zealanders and it took into account unrealised capital gains, but when it looked at the average New Zealander, it only included PAYE income, which is completely misleading and didn’t account for their unrealised capital gains.
I will also point out something that I read. This Government likes to say about how they’re for the working class and how they’re for the average people; they show themselves, you know, to be committed to every average New Zealander. This Government has presided over the greatest wealth transfer from the lower and middle classes to the wealthy in New Zealand’s history. That report showed that, in 2017, those 311 individuals took an income of $1 billion. You fast-forward to March 2021, and, under this Government, that had skyrocketed to $14.7 billion. So that is what these champagne socialists do. They preside over inequities, they preside over incredible wealth transfers, and they claim to be open and transparent about it.
Now, we don’t need a taxation principles bill to show us what our principles should be around taxation. We want it to be open, fair, and easy to administer. The National Party’s principles on tax are simple: we want Kiwis to keep more of their hard-earned dollars, because on this side of the House, we fundamentally believe that New Zealanders deserve to keep more of their money and they know how to spend it a lot better than the Government does.
Now, the socialists on the other side of the House will disagree with me on that and they will think that the Government knows better. We heard that there were piles of wealthy people ringing in to hand out more money, wanting to give more. You would think—and the ACT Party put it quite well yesterday—there was a line of people lining up outside the Beehive to hand over more money to this Government in the belief that this Government does such a good job with it. That’s the sort of happy fairy tale that you read to young socialists at night, but on this side of the House we fundamentally believe that hard-working New Zealand taxpayers deserve to keep more of their money. We don’t believe this bill will enhance that. We don’t believe it is a bill with a purpose. We don’t believe there are any substantive ideas in the framework of it, and the bill is also very light on the details around what reporting would be required. So I quite clearly stand to oppose this bill.
ASSISTANT SPEAKER (Hon Jenny Salesa): I call on Rachel Boyack for five minutes.
RACHEL BOYACK (Labour—Nelson): Thank you, Madam Speaker. It’s a pleasure to take a short call on the Taxation Principles Reporting Bill. Just in response to Sam Uffindell, the former speaker, about the bill’s purpose: the bill’s purpose is very clear. It actually states in the general policy statement that “The reporting framework is intended to increase the availability of information about the operation of the tax system and contribute to an improved understanding of tax policy among the general public.” That is the purpose of the bill. It is about providing information to the public about how New Zealand’s tax system operates in line with New Zealand’s tax principles.
It’s a very straightforward, non-political bill. It’s quite bizarre that the other side thinks there’s some kind of conspiracy theory going on about this bill—because that’s exactly what it is. It is literally a conspiracy theory from a party that thinks its answer to supporting working people is to give working people $2 a week in a tax cut.
On this side of the House, we have a bill that is about ensuring we have a good line of sight over our tax system and how it is operating, and I commend the Minister of Revenue for his work on this bill. I look forward to hearing on it as it reports back from the select committee, and I commend it to the House.
TANGI UTIKERE (Labour—Palmerston North): Tēnā koe, Madam Speaker. Thank you. It’s a pleasure to rise in what will be a brief call on the Taxation Principles Reporting Bill, and the reason for that is I want to commend the Minister, Minister Parker, for bringing this bill to the House. His comments earlier were around “In the absence of facts about actual outcomes, those half-truths can be … easily manipulated to suit political objectives and vested interests.” And haven’t we heard a wee bit about that from members opposite, today?
This is a bill that is based on evidence, and what is fundamental is this issue of fairness. Kiwis all around Aotearoa New Zealand, in communities up and down this country, expect fairness when it comes to the principles of taxation. And that is why I commend this bill to the House.
SIMON WATTS (National—North Shore): Well, thank you very much, Madam Speaker. It’s an absolute pleasure to rise to speak on the Taxation Principles Reporting Bill, first reading. Hasn’t it been interesting this morning and this afternoon to hear some of the commentary from the other side? Comments such as that from the Hon Minister Twyford about how transparent this Government has been in regards to taxation and their principles; how the Minister in their speech said very genuinely, “I’ve written to all political parties and we are open for discussion.”—if I quote the Minister in regards to his comments on this bill only a few hours ago.
Well, on 9 May, in the Finance and Expenditure Committee (FEC), in regards to this exact topic around the IRD departmental report, I tabled a motion to move that the committee call for relevant officials from IRD for a one-hour briefing on the high-wealth individuals research project, published in April 2023—a simple request, a simple motion, in order that the Finance and Expenditure Committee, of which a number of members are in this House right here, could actually get officials to come in and outline more background on the underlying principles of which this bill is based upon. And, as has been outlined, in terms of the Minister’s letter, I am open for discussion. When that motion went to the committee, it was supported by, of course, National, ACT, and even the Greens supported that motion. But Labour members voted that motion down. They voted down the principle of transparency of getting the Inland Revenue in to explain some background around the tax principles in the research report that underpins this bill. They voted that down. So all this narrative from the Minister and the members on the other side holds absolutely no water. They have no credibility. They are simply words. The evidence and the substantiation around driving more transparency, being willing to discuss this in open forum, was shot down in flames.
That personifies a Government that is all talk and no action. How could you hide behind the fact that you do not want to talk about the integrity of this report? Sure, many will see pros and cons around this, but I think it has placed in particular our Inland Revenue Department, which was, for the record, the first organisation that I was employed in at university—right? I was a summer intern for the Inland Revenue Department, working in Manners Mall in personal customer services—that was a department back in those days—and it was an absolutely exceptional organisation. I worked with, and learnt from, some of the best people. But I believe that they will be very disappointed by this bill because this bill, and the underpinning report that they were commissioned to do by the Minister, has become politicised, and that is a great shame in terms of the integrity of our tax system.
Schedule 1 of this bill talks about tax principles. It outlines a number of aspects in regards to concepts of horizontal equity, vertical equity efficiency, and likewise. A number of speakers on the other side have articulated that these are all well-established principles. Well, they are not. They are not well-established principles. There is significant commentary and also criticism from officials in regards to the explanation of some of these principles, some of the assertions and unfamiliar nature of the statements—in particular, the unfamiliar statements around horizontal equity, which is one of the principles here on the sheet—absolutely acknowledging that there are different positions on these aspects. Inconclusive and contested statements—the comments from officials—around GST is regressive. We heard the Minister speak exactly that statement in his speech today in regards to that.
But there is ideological overlay in regards to that, and the way in which this has been blended into this bill means that this is simply not credible. The Minister is using incorrect information, or, potentially, the Minister is misunderstanding the information, which, as a result of that, can lead to mistrust. What I mean by that is the Minister is cherry-picking particular aspects from that IRD high-wealth report. I’ll give you an example of what I mean by that. He consistently refers to the mean wealth of $276 million, when the median wealth is actually $106 million, a far more appropriate measure. But the element that the Minister is deliberately using in regards to referring to mean wealth indicates a completely different quantum of differential. That use of incorrect information—or potentially he misunderstands the information, or misunderstands the difference between “mean” and “median”, which, I don’t know, maybe he does. Something’s going on, but the use of that incorrect information is causing mistrust and that is well known and that is established in terms of what the Minister has articulated.
The other aspects that the Minister has referred to in regards to some of those principles—he said in his speeches earlier today that the bill includes sound principles; another quote: “generally accepted principles”. Well, I’m sorry, that is a perspective from a Minister that is trying to drive through ideological tax reform and they are not based on getting a wide perception of feedback from tax experts and specialists across this country.
This leads me on to the process, if any, in terms of the substance of the consultation that has been undertaken leading up to the provision of this bill. Because, for what we know, the consultation on this bill has been lacklustre. It has been limited. And while there was some consultation, it is very clear, from some of the official reports, that the people who were consulted around this bill do not fully endorse this bill, and that is the reality of what we are seeing. That’s a shame, because if you only consult a very narrow group, you’re only going to get a very narrow aspect of feedback. But then if that narrow group doesn’t necessarily endorse this bill, then one would expect that maybe you should go a little bit wider before tabling a bill under urgency in this House, with a shortened report back, in regards to pushing this through under pace. I mean, there are probably only a couple of reasons why you would want to do that for a bill. Or there could be a couple of reasons why you’d want to do that: one, you’re sitting on your policy tax agenda for the election and you need some of this stuff in the play to allow that to be endorsed or substantiated. The other reason is—well, who knows?
The other factor around this bill is in regards to the costs of actually funding and administering this bill. There’s nothing in the clarity in terms of what it is going to cost. What are the resources? Is IRD going to be receiving any additional information in regards to being able to administer this Act, and what will that look like? So there is a cost of doing this and there is no clarity around what that would be. Well, there actually is, in terms of some of the cost benefits and the number of fulltime-equivalents, but there’s no clarity in terms of how that will be funded.
So we’ve talked about funding. We’ve talked about consultation. We’re talking about the things that people who were consulted have not endorsed. We’ve talked about the principles which are not generally accepted. We’ve talked about the fact that when they say transparency, they act completely differently. And we’ve evidence that substantiated that, with an example in real life in FEC where that was in exactly this area on exactly the same topic. We’ve talked about the use of incorrect information by the Minister.
Lastly, I’ll finish off with the powers within this bill to be able to request data from the public. It is without doubt that this bill opens up the ability for Inland Revenue to collect data from New Zealand citizens in an unfettered manner. That should be raising significant flags in terms of the scope of what that information will be used for. New Zealanders don’t need more big government in their lives. This bill is a bad bill and, for that reason, we will be opposing it.
INGRID LEARY (Labour—Taieri): As I listen to speakers on the other side, I keep wondering: why are they afraid of this bill? Why are they afraid of putting sunlight on to data, unless it is because they are scared that it will change the status quo?
What is the status quo? Well, until recently, there was a sense of growing inequality, an understanding of massive inequality in this country. And then recently, now, we have the high-wealth report, which has evidence, and that is a masterful project that I think will be the signature project of our Minister Parker for actually getting data into the tax system, to say let’s get some principles that we can all agree on so that we can have a fair playing field.
I am shocked that the previous member would question tax principles that are almost universally accepted around horizontal equity; vertical equity; revenue integrity; certainty; predictability; the ability for a system to be flexible, for it to be adaptable, for it to be efficient. These are well-established principles that are in every tax regime worth its salt around the world. What is being proposed is that these are accepted and they benchmark so that we can have data that is fair, that is open, and I certainly think that it is very fair, as a taxpayer, to know whether other taxpayers are paying their fair share or not.
So the only conclusion I can draw is that the resistance from the Opposition is because they are fearful of this legislation, they do not want to see the status quo change, they like to see the inequality in this society, and they are afraid of the sunlight that this bill will put on to our tax system. It’s an excellent piece of work, I commend the Minister, and I commend this bill to the House.
A party vote was called for on the question, That the Taxation Principles Reporting Bill be now read a first time.
Ayes 75
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.
Noes 43
New Zealand National 34; ACT New Zealand 9.
Motion agreed to.
Bill read a first time.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is, That the Taxation Principles Reporting Bill be considered by the Finance and Expenditure Committee.
Motion agreed to.
Bill referred to the Finance and Expenditure Committee.
Instruction to Finance and Expenditure Committee
Hon DAVID PARKER (Minister of Revenue): I move, That the Taxation Principles Reporting Bill be reported to the House by 27 July 2023 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196.
The Taxation Principles Reporting Bill needs to be passed by the end of the year to ensure that that the requirement outlined in the legislation to provide its first report at the end of 2023 is met. The legislation empowers Inland Revenue to achieve this. In order for that to happen, there’s also a two-month lead-in period for the report to allow the commissioner to publish new measurements referred to under clause 14 of the bill. That’s why, in order to facilitate this, I’m moving that the select committee meet at other times to properly consider the legislation and ensure that the committee process is fulsome but completed in an appropriate time. It’s a relatively short bill—it’s five pages in length. There’s sufficient time for public submissions and consideration of that by the committee. The interruption caused for the House by rising due to the election and the requirement for this legislation to be in place by the end of the year makes a shorter select committee process appropriate. Finally, before I hear the howls of outrage from the Opposition, I would note that in 2015 when National introduced the brightline test, they gave a six-week select committee period, which took from 8 September to 20 October 2015. In contrast, this period is 10 weeks.
ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker. I rise to oppose that motion, on a number of grounds.
The first ground is a technical one—and Mr Parker, you might want to listen to this. The Minister has said that the report back date was 27 July 2023. The bill specifies that the Act comes into force on 1 July 2023, so there’s an issue in mathematics. Because how can you have a report back date that is after the commencement date of the bill? So technically, I’m just hoping the Minister might have the opportunity to hear what I might be saying to him, because it sounds like it’s a screaming, clashing mistake. And it seems like a sort of 101 mistake, where you have a report back date after the bill comes into force.
Even with Labour doing retrospective tax legislation and doing other stuff like that retrospectively, you’ve got to say that’s number one. I think that’s the best example of trying to impose something before you’ve even finished talking to people about it. That’s a beauty. I’m just looking at my good colleague here, Louise Upston. Have you ever seen anything like this?
Hon Louise Upston: Crazy.
ANDREW BAYLY: How many years have you been in here? What a clanger. I’m just looking across the other side and, of course, they’re all pretty much new MPs. That’s why they’re here on an urgency motion. All the Ministers have disappeared; of course, it’s all the young new MPs sitting over there. Of course, they’ve got no experience about what I’m talking about here. So that’s the first thing. What a clanger. What a clanger.
But the second thing is there is absolutely no reason why this bill has to go through urgency, nor does it have to go before the select committee. Of course, this Government doesn’t worry about the private sector. You know, they might be a bit busy, particularly accountants. What do you do at the end of 31 March? Accountants are sort of slightly busy, aren’t they? I’m just looking at my good colleague Simon Watts, here. What do accountants do after the end of the balance date that most entities—only the Government uses a 30 June balance date, but most companies have a 31 March, so a lot of accountants are actually pretty busy right now.
Of course, the Minister’s so devoid of reality and so disconnected with what’s going on in the business community, he’s proposing that right in their busiest time, for some useless reason like this bill—he wants those people to put down their work for their clients and roll along and come to talk to the Finance and Expenditure Committee, because this is so pressingly, desperately needed.
It is not needed because this bill is not an absolute requirement; it is a good thing it’s a final hurrah from David Parker before he disappears after the election. And what’s driving this ultimately—and he should have been honest about it—is that they want to have this in place, because this is a launch pad for the start of the election campaign, which starts officially about 1 September. So by having this in place, this is what gives them the leverage to be able to talk about capital gains tax, increasing company and portfolio investment entities rates, because that’s the next evolution of what’s happened today by increasing the trust tax rate.
This is a sham. It’s a shocker, and the Minister’s made an absolute blue and he needs to fix it up. And we’re opposing it as we’re opposing this bill. What a waste of Parliament’s time on a day when we could be out talking to constituents, looking after people, dealing with their complaints, dealing with their issues—many of them by that Government over there. People who can’t get a hospital time, can’t get operations, can’t get ACC—all the good stuff that all of us are going to have to try and deal with tomorrow, Saturday. Oh, but some of our members over the other side, the list MPs, of course, don’t have to do that.
DAMIEN SMITH (ACT): Point of order, Madam Speaker. Thank you, Madam Speaker. We have grave concerns that the Finance and Expenditure Committee won’t be able to meet this time frame, so we will be moving a motion for an extension of time on the basis that the date in the bill is wrong, and we will also be looking at the actual submission process very closely and who’s invited to that. We encourage the industry to actually get together very quickly—even this weekend—to meet these time frames, because this is a quintessential bill. It’s not necessary. We believe it should be put in the shredder, and we will be—
ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! The point of order that the member is actually trying to raise here about a select committee is not a valid point of order.
SIMON WATTS (National—North Shore): Look, in response to this point, there is just one short aspect I want to comment on, and that is in regards to the fact that this is an indictment on our democracy in regards to the shortened report-back. We have already articulated, this afternoon, around the fact that this Labour Government have already blocked the transparency required in order to bring the IRD in to talk about the exact report that underpins this bill. And now what we’re seeing is a Government rushing this through without allowing due public consultation or public input into a significant tax principles bill.
What is that side of the House scared of? Why will they not allow the public to be involved in consultation on a bill that may lead to more taxation out of their back pockets? Well, I can tell you why: it is because they do not want to talk about this bill. The shortened report-back option is on the table. Not only, as the member Andrew Bayly has articulated, is the report-back date after the commencement date of the bill—and I’m looking forward for the Minister to comment and provide an explanation of why that is the case, because it seems completely at odds with any logic, but very consistent with that side of the House in terms of how they operate. Why are we not allowing due public consultation? Why are we blocking New Zealanders being able to input and go through a normal, standard consultation around this? Why are we not letting Kiwis’ voices be heard in regards to what is significant, underpinning legislation around our taxation system? Why? People need to question: why is this Government pushing this through? I think it’s absolutely unacceptable. I think Kiwis need to absolutely open their eyes to what this Government is trying to do. They are simply not a Government of transparency. They want it all for themselves.
DAMIEN SMITH (ACT): I move, That the motion be amended so that the 27 July date is replaced with 1 September 2023.
ASSISTANT SPEAKER (Hon Jenny Salesa): You’re welcome to give your speech to that motion that you just gave—whatever speech you were going to give.
DAMIEN SMITH: The significance of this bill is such that it requires the industry and anybody who is involved with the tax code to reply in a sensible and a well-thought-through fashion. We don’t believe that the time frame that’s been proposed can be met, and the Finance and Expenditure Committee will struggle to actually do its work in a proper fashion, hence the extension of the date.
Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Speaker. We would support the motion put by the member of the ACT Party. In support of the fact that the bill is wrong—the dates are wrong, and the report back is after the time frame of when the legislation would start—the amendment to 1 September would make sense.
TANGI UTIKERE (Labour—Palmerston North): Speaking to the proposed amendment, the Government is not in support of Mr Damien Smith’s suggestion. The reason is that the Minister had articulated very clearly in his justification for the referral motion for the time frame. It is over to the House to determine whether it is a suitable time frame; the Government’s position is unchanged in that respect.
ANDREW BAYLY (National—Port Waikato): Yeah, thank you, Madam Speaker. I know that the whip is doing a valiant attempt to try and justify something which I’d suggest, respectfully, that maybe he doesn’t understand the realities of what this meant, whether it’s an intentional or unintentional—I suspect very much unintentional—mistake by the Minister. But you cannot have an Act come into force before you’ve had the report-back date from the bill being considered by the select committee, because for it to be considered by the select committee you’ve got to then come into this Chamber, it’s got to go through the process of a second reading, then the committee of the whole House, and then the third reading, all of which takes some time. But if you’ve got a report-back date of 27 July, inevitably we’re going into August, and, of course, the House finishes at the end of August. So it’s logistically illogical and inappropriate, and I think it’s a genuine mistake. I know the whip’s trying to support his Minister, but this is a clanger—it’s an absolute clanger of process.
Hon ANDREW LITTLE (Minister of Defence): Speaking to the amendment proposed by the ACT Party member, the arguments advanced by the members opposite are a contrivance. The reality is that the bill is not law. A bill is not law; it is a proposal for a statutory change or addition for consideration by the House, and normally consideration by a subcommittee of the House in the form of a select committee.
My colleague the Minister of Revenue has introduced a bill as part of the Budget measures, which is a bill that has a commencement date—as part of the draft bill—but that is up for consideration by the select committee, and what is being moved now is a select committee with a slightly truncated time frame, which is ordinary for the consideration of that bill. It will be a matter for members of the select committee to recommend any changes to the bill, including the commencement date, and it’s ultimately for this House, in the second reading, the committee of the whole House, and the third reading, to determine the commencement date of that bill, having gone through public submissions and a consideration process in the truncated select committee process. There is no clanger. There is no contravention of basic constitutional principles when it comes to revenue statutes. It is entirely proper and appropriate, and the time frame proposed by the Minister of Revenue is an absolutely proper time frame in the circumstances.
ANDREW BAYLY (National—Port Waikato): I’m just responding to Minister Little and his contribution there. Either the Minister of Revenue has got it totally wrong, because he was the one who would have made sure that the bill actually said that the commencement date is 1 July—so the bill is in his name. It’s in Mr Parker’s name, this bill, and it states categorically in the commencement clause at clause 2 that “The Act comes into force on 1 July 2023.” Now, the Minister has just been talking about this as if it is a bill; it’s not. When it comes into force, it is an Act—right?—and it specifies that it comes into force on 1 July 2023, which means that that is before the date for the select committee to report back on it. So can I suggest to the member that his logic is absolutely flawed.
A party vote was called for on the question, That the motion be amended so that the 27 July date is replaced with 1 September 2023.
Ayes 43
New Zealand National 34; ACT New Zealand 9.
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 the Taxation Principles Reporting Bill be reported to the House by 27 July 2023 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196.
Ayes 72
New Zealand Labour 62; Green Party of Aotearoa New Zealand 9; Kerekere.
Noes 43
New Zealand National 34; ACT New Zealand 9.
Motion agreed to.
Bills
Land Transport (Road Safety) Amendment Bill
First Reading
Hon ANDREW LITTLE (Minister of Defence) on behalf of the Associate Minister of Transport: I present a legislative statement on the Land Transport (Road Safety) Amendment Bill.
ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.
Hon ANDREW LITTLE: I move, That the Land Transport (Road Safety) Amendment Bill be now read a first time. I nominate the Justice Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 20 July 2023 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196.
This bill amends the Land Transport Act 1998 and the Sentencing Act 2002 and delivers on the Government’s promise to crack down on dangerous and reckless drivers who flee police and put innocent lives at risk. Those who attempt to evade the law need to be held to account. This bill will ensure there are increased and serious consequences for this behaviour. Put simply, if you flee police, be prepared to lose your ride.
First of all, some context behind why we’re taking this action: fleeing-driver events have been steadily increasing in New Zealand over the last decade. There were 9,765 fleeing-driver events last year; this is up from 6,757 just the year before. Already this year we’ve had a number of fleeing-driver events which have proved to be either injurious or fatal. In April, two people fled police in Auckland and crashed into an innocent driver, who was injured. In March, two people were killed after the driver fled police in Wellington; two other people were injured. This behaviour raises serious safety risks to both the drivers themselves and to passengers and other road users, and, potentially, police officers themselves. Fleeing drivers put innocent lives at risk every day. It’s simply not acceptable, and the Government is doing something about it by ensuring that there are serious consequences for this behaviour.
Fleeing drivers often participate in other road safety offences such as dangerous driving. For example, 30 percent of those charged with a first offence for failing to stop were also found to be speeding or driving dangerously. At the same time, police are facing challenges identifying and apprehending fleeing drivers under current legislative and policy settings. Under the current pursuit policy, police focus more on post-event investigations rather than pursuing fleeing drivers. That’s a question of their safety, amongst others. While this approach has saved lives, it means post-event investigations are crucial for identifying drivers so they can be held to account. Police currently have the power to request that the registered owner of a vehicle—and by “registered owner” I mean the person whose name appears on the registration details of the vehicle, not necessarily the legal owner, which can be separate. But the police have the power to request that registered owner information or that the registered owner provide information to help identify the offending driver under the Land Transport Act 1998.
However, there have been cases where the registered owner has not cooperated with police in providing this information. We’ve already seen the impact of this in the number of fleeing-driver offenders being identified. In the year prior to Police’s pursuit policy change, they identified, on average, 52 percent of all offenders. Since then, police are identifying on average 34 percent of all offenders. This demonstrates the urgent need for change to ensure police have the ability to carry out appropriate action. We also want to make it clear that there will be strong penalties for anyone who decides to flee from police.
This bill supports this need for change by, firstly, enabling police to seize and impound a vehicle for a period of six months if the officer believes, on reasonable grounds, that a person driving the vehicle has failed to stop; secondly, creating a new power for police to seize and impound a vehicle for 28 days if the registered owner of that vehicle fails to provide information about a fleeing driver; thirdly, increasing the period of driver licence disqualification after a second conviction for a failing to stop offence from one year to between one and two years; and, finally, creating a new sentencing option enabling the courts to order that a vehicle be forfeited on conviction for a failing to stop offence. These new tools make it clear that drivers, vehicle owners, or people obstructing police’s work will face serious consequences if they continue their behaviour. These measures also complement the changes made by the Government earlier this year through the Criminal Activity Intervention Legislation Act, which expanded the range of offences where police can seize and impound cars, motorbikes, and other vehicles.
The bill will enable the use of technology to increase the speed of enforcement and widen the ability to detect events as they occur. This bill gives effect to more of the Government’s commitments in Road to Zero, our road safety strategy through to 2030. In Road to Zero, we proposed a new approach to safety cameras. Waka Kotahi will take over ownership and operation of the safety camera network from police and will be expanding that network to include point-to-point cameras which will calculate the average speed over a surveyed distance to detect instances where this is exceeded. Safety cameras will also be used to detect average speed, distracted driving, and seatbelt-related offences.
International studies have shown that deaths and serious injuries have halved on roads where point-to-point speed enforcement has been installed. The effects of point-to-point speed enforcement were also found to be greater than fixed-spot speed cameras, with studies in Europe showing point-to-point cameras being 50 percent more effective at reducing crashes than fixed-spot speed cameras. Research on public opinions regarding the use of point-to-point cameras suggests a high level of support. In the United Kingdom, for example, a survey of motorists found that 81 percent believed that average-speed cameras were fairer than fixed-speed cameras and promoted more consistent speeds.
We’re also introducing electronic servicing and automated issuing of infringement notices. These changes will modernise our regulatory system and make better use of technology. Electronic service of documents would include infringement notices resulting from safety camera detection of speed offences. It would also include notices to revoke driver licences due to medical grounds. Electronic service of documents enables Waka Kotahi to send documents to people quickly, which provides benefits for road safety. Research from Waka Kotahi shows that early intervention significantly reduces future traffic offending. Enabling these notices to be sent by email also recognises that the way many New Zealanders receive information is changing. We know that, increasingly, New Zealanders’ email addresses and phone numbers tend to remain unchanged for longer than their physical home addresses. Studies carried out by Statistics New Zealand in 2020 show that 40 percent of people renting from private landlords have been at their address for less than 12 months. The current reliance on a physical home address for sending notices has an effect on those who tend to move physical address on a regular basis.
We’re also introducing changes to enable automated issuing of infringement notices. This will mean that instead of a human issuing the infringement notices in accordance with the necessary business rules, an automated process will do this, but there will be appropriate safeguards in place. It’s expected that this automated process will be quick, accurate, secure, and consistent.
We’re acting quickly to make these changes. As I mentioned at the start of my speech, I intend to move that the bill be reported back to the House on 20 July 2023. We’re acting quickly to make sure police have the tools they need to address fleeing drivers when their revised pursuit policy is implemented later this year. Police are concerned about the escalating fleeing-driver numbers and the low number of offenders identified. If they don’t have the necessary enforcement tools to hold offenders to account, we’ll continue to see an increase in high-risk driving behaviour.
The additional tools in the Land Transport (Road Safety) Amendment Bill are crucial to support the work that Police is doing to keep our roads safe. This bill, combined with Police’s revised pursuit policy, will provide greater road safety outcomes and sends a strong, clear warning to fleeing drivers that you are now more likely to be caught and to face greater consequences. However, the bill needs to be enforced in time for the implementation of Police’s revised pursuit policy to provide the greatest road safety outcomes.
Average speed - related proposals will also help implement action points under Road to Zero, the Government’s road safety strategy. We know that this will be one of the key pillars in helping reduce deaths and serious injuries on our roads. Waka Kotahi will be taking over the camera network, as I said, from the police later this year and have already invested in expanding that camera network in preparation.
The amendments in this bill are critical for reducing unsafe behaviour to ultimately improve safety on our roads. This is legislation that was first announced at the end of last year, and the Government is delivering on what it promised. The bill will enable our land transport system to make better use of technology and to ensure New Zealanders can receive information quickly and more conveniently. On that note, I commend the Land Transport (Road Safety) Amendment Bill to the House.
ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.
Hon PAUL GOLDSMITH (National): Thank you, Madam Speaker. The National Party will be supporting this bill. It will help with a problem that has been largely of this Government’s own making because they have, in their “soft on crime” way, with the encouragement of the Police, thought it would be a good idea never to chase anybody that puts their foot down and takes off. And, lo and behold, amazingly, unbelievably, people figured out that if all you have to do if you are stopped by police is put your foot down and drive off and nobody will ever chase you, well, unbelievably, a lot more people will do it! And we’ve seen the figures that there’s been a doubling of the number of people taking off and racing off.
We’ve seen, over the past five years, the explosion in ram raiding and a 500-plus percent increase in the number of ram raids where people smash their car into something, steal something, smash another car, and take off. And the police don’t chase them, and, lo and behold, there’s been a problem. And so the Government is finally, having point blank refused that there was an issue, and said, “Oh, no, no, no, there’s no problem. Criminals will”—well, I don’t know what they thought they were going to do, but there wasn’t a problem, they said. And six years later, when we see law and order breaking down in our communities, people driving around doing smash and grabs, ram raids on the rise, a doubling of the number of people taking off when the police try and stop them, they finally come around and say, “Well, yes, maybe we should do something about it.”, and the Police are revising their chase policy.
There has to be a risk that you will be chased. If there’s no risk that you will be chased, then the behaviour is going to be obvious. And this bill, of course, brings in some ability for cars to be impounded. Well, yep, OK, and we agree with it. But I suppose the obvious point one would make is that most of the cars involved in ram raids, for example—it’s not that you take your car along and ram-raid it into a house and then when the police see you, you take off. It doesn’t tend to be your car that you’re using. It doesn’t tend to be your car that you’re using. It tends to be somebody else’s car that you’ve stolen, that you’re driving, and that you take off when the police try and stop you.
And so we’ve got this legislation that will say: so you woke up in the morning, you find that somebody has stolen your car and used it for criminal activity—which is pretty upsetting, pretty bad, when somebody steals your car and uses it for criminal activity—but then you find you get a notice that your car is going to be impounded because somebody else has stolen your car and used it for criminal activity. That would be a bit odd. So that is a bit of an issue. So, yes, it will affect a few people who do this in their own car, and it may, combined with a change to the pursuit policy—because at the moment I think it’s about only 18 percent of ram-raiders and people who take off when police try and stop them who are ever identified. So it may help in a few instances.
But I think the broader issue that we have to deal with is what this bill doesn’t change, which is the culture of excuses that this Government has on crime. And it doesn’t change the fact that the only target this Government has in the justice space is to reduce the prison population irrespective of what’s happening in the community, irrespective of violent crime. That’s the only target. We on this side of the House believe the only target in justice should be to reduce the number of victims of crime. That should be the focus, rather than an arbitrary reduction in prison numbers. That arbitrary reduction in prison numbers, combined with a “soft on crime” approach, and “soft on the causes of crime” approach, as well, because they don’t deal with the long-term drivers, that combination, combined with an attitude that if you put your foot down you’ll be fined and nobody will chase you—all that has led to this explosion in law and order descending in our country.
It’s lagged to the point that if you live in Auckland, every night you hear the chopper whirring overhead trying to find somebody that’s taken off. And if you happen to own a retail store, or if you happen to work in a retail store, you go in to work every day, and if you happen to be working for Michael Hill Jeweller, for example, you go into work every day wondering if today is going to be the day that your shop is bowled over. In Takapuna it’s happened so many times that they’ve given up—because of the breakdown in law and order under this Government.
So, yes, we support this bill—good—it’ll make some difference, but, boy, there’s so much more to be done. And when we look at this Budget as a whole—we’re in the Budget debate—there was a lot of extra spending, nothing done to grow the economy, and very little on the law and order front. And that, I think, is out of touch with the concerns and the needs of our community right here, right now. Thank you, Madam Speaker.
SHANAN HALBERT (Labour—Northcote): Thank you, Madam Speaker. Can I just start this afternoon by acknowledging all of our colleagues wearing pink shirts today to support the cause; thank you very much.
This particular bill—it’s interesting because the Opposition is supporting it, but will challenge us on our stance of crime. The reality is that fleeing drivers aren’t a new thing; it’s something that has been going on for decades. In particular, this bill is actually about taking action, improving our response to policing offenders, and the Government delivering on its promise to crack down on dangerous and reckless drivers who flee police and put innocent lives at risk.
This will allow police to seize and impound a vehicle for a period of six months if it fails to stop. It will allow police to seize and impound a vehicle if the registered owner fails to provide information about a fleeing driver and impounding the vehicle is necessary to prevent a threat to road safety. So it’s a bill very clear about its intention, and I commend it to the House.
CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Speaker. Well, it must be election year. So unless we’re going to have any more time travel of the kind needed to make sense of the Government’s report-back date in the select committee in the previous bill, then election year will continue in the usual fashion—in a forward kind of motion—and we will see increasingly, as the election date approaches, Labour discovering the desire to keep New Zealanders safe, which, it seems, given the change of stance in this particular area and plenty of others besides, is something that appears to be motivated with one eye on the ballot box and only one eye on the speed cameras, and so forth.
As my colleague and friend the Hon Paul Goldsmith has said, we support the bill. We think it does a useful thing, particularly noting that it undoes a non-useful thing that had been done previously under this Government’s watch. Paul Goldsmith has outlined, in typically coherent fashion, the logic that has prevailed whereby we’ve told people that if they can think to speed up only when they would otherwise be apprehended, then we should not be surprised that they do exactly that, with all the consequent damage that’s caused as a result.
I think that’s tolerably clear, and so I’ll just look reasonably briefly, at this stage of the week, at what the bill actually does to try to meet these aims, which are excellent in themselves. They’re excellent aims, but just a bit too little, too late, to reduce unsafe behaviour on New Zealand’s roads by “increasing the speed and severity of enforcement.” Well, that’s all very well.
So to seize and impound a vehicle—that period is going to be expanded from 28 days to six months “if the officer believes on reasonable grounds that the person driving a vehicle has failed to stop”. It’s interesting that just reasonable grounds are needed. That’s a pretty low bar, really. It’s certainly not the usual criminal standard, and, obviously, we’re talking of something less than a serious Crimes Act offence, for example.
But I wonder, and this is maybe something that the select committee—and, I know, the chair will take great interest in this, being a human rights aficionado. Will there be some sort of trade-off? Will it be more able to be contested whether reasonable grounds were held for the impounding of a vehicle to reflect the fact that that 28-day period is going to become six months? By my maths, that’s about a sixfold increase in the amount of time, so I wonder if there’s any sort of trade-off in terms of the robustness of that assessment of whether it’s just, as I say, reasonable grounds that the person has failed to stop.
We see, as well, that there’ll be a new power for the police to seize and impound a motor vehicle—that one is 28 days—if the owner of the vehicle “fails to provide information about a fleeing driver” and the police think that “impounding the vehicle is necessary to prevent a threat to road safety.” It’s interesting to compel that information to be provided. It’s not entirely without precedent in the criminal law. To the extent that it might require self-incrimination and violate that traditional right to silence is, I think, something interesting that the select committee should look at, and whether there are any broader public policy implications of requiring them to provide information about someone who is a close family member.
I remember this Parliament a couple of years ago—actually, it was in the previous term—removed spousal immunity, as I think it was named. It’s a slightly quaint expression now, I suppose, but, roughly speaking, that was the concept we had on the statute book, whereby a person can be required to tell the long arm of the law a thing that one’s spouse, partner, or significant other, etc., might have done that was criminal. So it’ll be interesting to see how that plays out. I’d be curious to see what kinds of submissions come in at the select committee process on that one.
Then we’ve got the “period of licence disqualification”—so you lose your licence by having done these things—“after a second conviction for an offence of failing to stop”. So the second conviction would be treated more harshly than the first—well, that’s interesting, because the argument against the three-strikes regime in relation to other legislation that’s gone through in this Parliament was that every case should be on its merits. Every case should be—and, of course, that should be when we’re determining whether someone is guilty or not. But the idea that disproportionate punishment at a second or third offence in the case of the other law is, somehow, anathema to the idea of the rule of law and, in the real New Zealand Bill of Rights Act kind of speak, that would be a disproportionate punishment because like cases aren’t treated alike. Well, that’s interesting. It’s a bit of a departure from that, but on the other hand, it’s completely consistent with the idea that a first-time offender will get some sort of discount for the fact that they haven’t done it before or haven’t got caught before.
There’s lots to find interesting in this and lots to pick over, come the select committee, and I will actually just give a shout-out on a slightly more positive note to say that there’s going to be a bit better use of technology to enable this. So electronic service of notices and, of course, electronic service and ways of doing things in the digital environment is something that could be more usefully employed in the courts. I know that the Minister for Courts takes these matters seriously, and if I hadn’t put him to sleep, he’d probably be taking that point in right now. But that’s on me, not him—again.
So anyway, as I say, we support the bill. We think it’s a good thing, even if it’s amusing or bemusing that it’s come so late in the piece in this parliamentary term and in the life of the Government that they’ve woken up to the need for this legislation.
VANUSHI WALTERS (Labour—Upper Harbour): Thank you, Madam Speaker. I just first want to acknowledge my National Party colleague Chris Penk for the invitation for the Justice Committee to consider whether we might want to soften some of the provisions in light of human rights law. He is more than welcome to substitute in for his colleague Paul Goldsmith should he wish to.
I want to start by commending the Minister of Justice and the Minister of Police, who are focused on community safety. On this side of the House, we know that securing community safety means using all the levers of justice available to us.
What that means is ensuring that we’re preventing where we can. What that means is fair wages, wellbeing, free lunches, making apprenticeships available. What that means is rehabilitation, which put into place through the circuit-breaker programmes that we’re now expanding. What that means is police presence, and we’re growing our police force to 1,800—to, I suspect, the annoyance of Mr Goldsmith, who seemed to be annoyed by the police helicopters that are out monitoring community safety in Auckland. And yes, that does mean punishment as well.
This is merely one of the levers that we are using, but it is a lever that we are taking very seriously. It goes alongside the changes that we’ve made in terms of tackling gang crime as well.
As chair of the Justice Committee, I do look forward to a constructive discussion with colleagues, to submissions, and to bringing this bill back to the House. I commend this bill to the House.
NICOLE McKEE (ACT): Thank you, Madam Speaker. I stand on behalf of the ACT Party while we are under urgency—yet again—to put through another bill—yet again—under urgency, in support of this, the Land Transport (Road Safety) Amendment Bill. But we do support it with some trepidation.
Since Police changed their pursuit policy back in 2020, we’ve seen more and more people seek to evade police by speeding off. They know New Zealand Police will not pursue, and I think my colleague Paul Goldsmith went into that in quite some detail. We are all aware of what is happening and what has happened since 2020. This policy changed due to public pressure after the deaths of young people who were being pursued.
In 2017, there were 11 people who died while fleeing police, often at speed and in vehicles. A further eight people died in 2018; six in 2019. When the Police policy changed in 2020, the number dropped to two deaths and one death in 2021. The policy is saving lives, but the number of pursuits is on the rise because fleeing drivers now see the no-pursuit policy as the potential get-out-of-jail-free card for them. This leaves police having to identify and apprehend fleeing drivers after the fact. Police tell us that often the owners of vehicles do not cooperate with police by telling them who was driving the car that fled from them.
We need to talk about putting our front-line police in between a rock and a hard place. Because that’s, effectively, what we’ve done by introducing—or them introducing—their 2020 policy. Not being able to pursue, they’re kind of stuck. So we have to do something in legislation to help them.
So let’s look at the stats that I mentioned earlier around the rise in fleeing driver events. In 2015, there were 2,997 fleeing driver events. But in the first seven months of 2022, there were 8,673. We know that in 2021, only 17 percent of fleeing drivers were subsequently apprehended, compared to 41 percent in 2017.
So we support our front-line police to do what it takes to crack down on crime, on harm, and to keep our communities safe. They’re looking for more deterrents and tools to help them apprehend and to hold to account those that behave outside the law and think that it’s OK to do so. The bill introduces longer penalties for those found guilty of fleeing for the second time, from one year up to two years.
So we are supporting this bill in its first reading, but we do have several concerns with some aspects of it and expect these to be fleshed out further during the select committee stage. This bill allows for the seizure and impoundment of the vehicle for up to six months, with costs for towage, storage, and other fees being payable by the registered owner of the vehicle—not the offender. We’ve got a lot of questions around this.
A person who is not involved in a criminal activity becomes financially responsible and is ultimately punished by having their car impounded for six months for the act of another. It’s not cheap either. Towing fees depend on the weight of the vehicle, the time that it’s towed, the distance that it’s towed, and then there are the storage fees on top of that. If a vehicle weighs under 3.5 tonnes, you’ll pay up to $71.56 for it to be towed. If it weighs over 3.5 tonnes, it’s $204.44, plus $3.07 for every kilometre that it’s towed. Storage for 28 days for a vehicle under 3.5 tonnes is $306 and then $12.27 per day after. If it’s over 3.5 tonnes, it’s $715 and $28 per day thereafter.
So if you don’t have a heavy ute or a van—that is, you’re under 3.5 tonnes—you’re looking at a bill of around $2,500 for six months, plus no vehicle. And you may not have done a thing wrong yourself. That’s what is concerning us. More than double that amount will occur if your vehicle does weigh over 3.5 tonnes. Some Ford Rangers with all the accessories on them do weigh over that amount.
So we have questions about impounding a car as well—one that has a car finance on it. So we’re looking for clarity around that as well. Questions that we have around disproportionate penalties: the absconding driver may get one, two, or even three months’ loss of licence, but the vehicle owner—who may have done nothing wrong—loses their vehicle for six months and could have thousands of dollars to pay to get their car back at the end of it. If they can’t afford this and they don’t claim their car, then their car may be forfeited by the courts and the taxpayer ends up paying the fees because Waka Kotahi are going to pick up the tab.
Where are these nearly 9,000 vehicles going to be stored? And how much are the taxpayers going to have to pay? Because say—just say—out of those 9,000 vehicles, if it’s at full cost at $2,500, this is around $22 million of taxpayer money.
This bill also prevents anyone who’s had their car forfeited from being able to purchase another car for 12 months. Again, I state: they may not have done anything wrong themselves.
I have another issue: Labour’s obsession with looking at everything through the lens of race and looking at everything through the lens of the Treaty. It’s taking into a whole new level, and this law in particular. The officials say people who flee from police are more likely to be young Māori men. It says taking action against people who are more likely to be young Māori men might breach the so-called Treaty obligations, so it’s going to make some of the powers discretionary rather than compulsory. I mean, give me a break.
This is the sort of nonsense that police have to put up with when they’re just trying to do their jobs. Their hands are being tied to really fight crime by so-called Treaty obligations, and it’s absolute nonsense. Let’s give the police the powers that they need to let them get on with their job.
We would like to see a discussion around how we ensure that the property rights of innocent people are maintained against how we can support police to keep lowering the number of deaths, but get the escalating numbers of fleeing drivers down.
Aerial surveillance plays an invaluable role in mitigating some of the risks associated with fleeing driver events, yet it’s not even mentioned nor considered in this bill. Were police even asked or involved in the bill’s development? The police aerial support units can provide information to those on the ground as to the location of a driver, the behaviours of that driver, as well as traffic conditions in the area.
The Eagle can accurately track an offender without them knowing. It’s reported on the New Zealand Police fleeing driver review report. It means the actual driver—not the owner of a vehicle—can be passively tracked and apprehension is more likely, maintaining the reduction in deaths and lowering the number of fleeing incidents. Going after the offenders and ultimately punishing them—not those known to them or perhaps related to them—is where we should be focused.
There are other aspects to this bill, another bill being heard under urgency. It will require electronic addresses, emails where available for driver licences, upgrades, the ability to send out electronic notices, and it introduces the point-to-point revenue cameras.
There is much to be done here, and we would like to continue to support this bill as it moves through its stages. Here’s hoping we have a robust select committee stage, and changes are made that target the actual offenders of crime and support our front-line police. So at this stage, we are happy to support the bill in this first reading.
Hon JULIE ANNE GENTER (Green): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. The Green Party supports some aspects of this bill, particularly around issuing point-to-point safety cameras that can be used as an enforcement tool for speeding offences; that’s something I worked on as Associate Minister of Transport, because it is a more effective way to identify when travelling above the safe and legal speed limit is occurring. We’re also quite fine with providing for the electronic service of fines and infringement notices with email addresses; I think that’s very practical and will be much more convenient for people than the old paper-based system.
I did think there were some really great points raised by the previous speaker, Nicole McKee—that the purpose of the Police change in policy around pursuit of drivers was predominantly to prevent serious harm, and it has done that. An unacceptable number of people lost their lives due to police pursuit, and that is something that I thought it was really important to change the policy on.
We do understand where the other provisions in this bill are coming from; however, we certainly haven’t seen sufficient evidence that enabling some of these discretionary powers and the ability of police to seize and impound vehicles will deter the behaviour.
I guess that’s the fundamental challenge with our approach to crime: how do we address the drivers of crime and enable people to make better, less harmful, more responsible decisions when we’re currently in a situation where there is inequality in our society. We’re starting from a base of inequality, and some people—particularly young people—don’t always have the fully formed ability to make good decisions. We know that; brain development is going on until the age of 25. I certainly know that, as a teenager, I was responsible for making decisions that weren’t in my best interests or the interests of people around me. So we have to identify ways of putting that wraparound support around people and addressing the true drivers of the issue, and it’s not clear at all that this will have the intended impact of deterring the behaviour and preventing more harm.
We aren’t able to support the bill at this first reading, and we will be watching the bill very carefully during the select committee process.
I know there was this old-fashioned belief that if you threatened offenders with punishment, that would somehow deter the behaviour, but I think it’s been absolutely debunked by the evidence. The way to reduce crime is not to threaten harsh punishment, but to enable people to be in a position to make better decisions. That starts very early on in life. We need to have better support for babies, for mothers, for whānau, and we need to address systemic inequality in this country.
One thing that I would really love to see that I don’t see in this bill—and that we thought about quite a lot last term and I’m still keen to see it developed in Government—is switching to income-related thresholds for traffic infringements and fines. The reality is that if you’re going to use infringements and fines to incentivise or disincentivise behaviour, it’s not fair when people have radically different levels of income.
In some other countries, Nordic or Scandinavian countries, they have income-related thresholds so those on very high incomes pay much higher fines if they have some sort of traffic violation or infringement, and those on lower incomes that have something that’s proportional to their income and wealth. It makes it very difficult to use fines and infringements to incentivise behaviour when we have this inequality and the infringements themselves are not related to people’s income.
So because we are in a situation of inequality and because there are certain groups of people who are more likely to suffer under the provisions in this bill, I think it’s really, really important that we look carefully at what the evidence is of what the impact will be.
I think there’s a more complicating factor in that currently our transport system is very dependent on cars, and in many cases, some of the people offending in cars are not the owners of those cars, so if the car is to be impounded, it might actually reduce access for other people in the whānau or family who need to get to work, who need that vehicle in order to undertake a whole lot of other things in their life.
For those reasons, and our concern about whether it’s going being effective at getting the outcome we want, the Green Party cannot support this bill at the first reading.
Hon STUART NASH (Labour—Napier): Thank you, Madam Speaker. I stand to support the Land Transport (Road Safety) Amendment Bill. Paul Goldsmith in his contribution suggested that Labour’s tough law and order stance has meant that there are more fleeing drivers. That is absolute rubbish. Let me tell the House, from experience, that politicians are not allowed to call the police commissioner and tell him what to do. We did not call the police commissioner and suggest in any way, shape, or form that he should change the policy. In fact, I was the Minister of Police at the time, and I can assure the House and the Ombudsman that I did not call the commissioner at all.
In fact, Labour did not decide to change this policy. It is the police who make these decisions around whether to pursue or not, and it’s actually done after a reasonably robust real-time process that is based on a risk assessment. And there is no doubt about it: the police should pursue when they believe, based on their experience—and not just the experience of the officers chasing but the experience of the men and women who are following the situation from the station. It’s a risk-based approach. Then they either go hard or they pull back. But it’s a risk-based approach, taking into account a whole lot of factors, including, and actually most importantly, the health, wellbeing, and safety of the officers and the innocent.
The last thing we want to see is these people taking off, being chased by police at high speed through suburban streets, crashing, and killing innocent bystanders. So it is a risk-based approach. But one thing we can do as politicians is back the police in terms of penalties dished out to those who think that they can get away with it. They can’t. The police will find them—and the majority of the time, they do. Just because someone flees, that is not the end of the case by any stretch of the imagination.
With 1,800 more police—that’s 1,800 over and above the numbers that were there when we came into Government—and with greater technology, more resources, and tougher laws for those who break the social contract that exists between members of our communities, we will hold those who break the law to account. And I tend to disagree with the Greens on this one. If members of our community break the rules, then they will be held to account. These tougher penalties will ensure that those who flee will feel the full force of the law. I commend this bill to the House.
ASSISTANT SPEAKER (Hon Jacqui Dean): Harete Hipango—a five-minute call.
HARETE HIPANGO (National): Thank you. So in addressing the House on the Land Transport (Road Safety) Amendment Bill, I’ve listened with interest to the contributions in the House and it’s been a variety of thoughts in relation to this bill, which has two main objectives, and that is in relation to promoting road-user safety by drivers. So it is about ensuring that the unsafe practices of fleeing drivers—there is the measure of accountability with amendments to the current law under the Land Transport Act 1998 with an expansion of forfeiture powers from 28 days, effectively impounding a vehicle, and then after that period of time looking at forfeiture. So to expand that period from 28 days, initially, to six months, and then, also, the other new power that’s been created is for the police to seize and to impound the motor vehicle for 28 days if the driver or registered person of that vehicle fails to provide information. So that’s the important part about the second limb to this proposed amendment, is the failure to provide information about a fleeing driver.
In the days of my practice as a criminal court lawyer, there were a number of defendants that I appeared for and advocated for in terms of land transport contravention breaches, charges, and subsequent penalties that were imposed. And one of the concerns that I share with the House in terms of the impounding, and it’s been identified in the debate today that those vehicles that are—and I’m talking about my youth justice clients, but also recidivist offenders, those people who have repeatedly offended, either failing to stop, failing to have albeit a registered or licence-holder driver and therefore a continuum throughout a series of their life of disqualifications and fines that have continued to be incurred where often that could mean people are imprisoned for repeat disqualifications or the fact that the fines are so significant they do a term of imprisonment. So I would invite the select committee, when considering submissions from the public to factor that in, because it is about whether or not this law is going to be of sufficient consequence to deter repeat offending.
This has focused very much on fleeing drivers. A fleeing driver is a driver who has been required to stop by the police and they have failed to stop. So there’s provisions within section 114 of the Land Transport Act, which addresses those qualifying factors of what failing to stop is. This law is talking about those drivers who fail to stop and they are fleeing drivers.
I listened with interest to the contribution from the Green Party member around the equitable imposition and adjustment of a tariff according to the socio-demographic. And the reality is this is the socio-demographic that many of us, as defence counsel, with repeat or recidivist driving offenders that come from that lower decile of our socio-economic-demographic community. So this is about striving to keep our communities safe, but to deter offenders.
So it’s going to be interesting, and I have glanced at the regulatory impact statement, which brings me to, again, that socio-demographic. The fleeing driver’s profile: the profile of a fleeing driver, including age, differs depending on circumstances and whether the driver is a first time or repeat offender. However, the research shows that fleeing drivers are more likely to be younger and male. And having practised in the area of child welfare, care and protection, and youth justice, it’s a known scientific fact, particularly with our young men, that their cognitive and their rationale for assessment and judgment isn’t fully functioning until approximately the age of 25. So they’re younger and male, identify as Māori, have criminal and traffic offence histories, do not have a current driver licence—again, often associated with socio-economic demographics—or have been disqualified or suspended. Again, those are some areas that I’ve touched on. I invite the select committee to turn their minds to addressing how effective this legislation will be in terms of dealing with fleeing drivers.
ASSISTANT SPEAKER (Hon Jacqui Dean): Lemauga Lydia Sosene—five minutes.
LEMAUGA LYDIA SOSENE (Labour): Thank you, Madam Speaker. Thank you for the opportunity to do a short contribution on the Land Transport (Road Safety) Amendment Bill.
As a list member from South Auckland, there is a huge problem of young drivers, specifically, in our area. To address that huge problem, this bill is common sense to help keep communities safe. This is one of the enforcement tools that is required by police to strengthen their needs in terms of police having to spend valuable police time unnecessarily chasing fleeing drivers.
On this side of the House, this bill will crack down on fleeing drivers’ bad behaviour, who make reckless choices in putting innocent lives at risk. Those fleeing drivers, as you’ve heard from other speakers, need to be held to account. Police will have this lever, will have this tool in its necessary kete so that those fleeing drivers can face stronger consequences.
It also promotes better road safety that is required to reduce serious road deaths, to help to keep our community members alive. I commend this bill to the House.
TERISA NGOBI (Labour—Ōtaki): Thank you, Madam Speaker, and I rise to take a very short call on this bill today because it’s a no-brainer. This bill backs police and it backs New Zealanders, and it keeps us safe on our roads. The Land Transport (Road Safety) Amendment Bill reduces unsafe behaviour on our roads. In particular, it is in response to the unsafe behaviour exhibited by fleeing drivers, as we heard already. We also heard the Minister the Hon Andrew Little talk about this and the sad statistics around this.
So, in particular, this bill will expand the period the police may seize and impound the vehicle from 28 days to six months, which is good. It also gives the police new powers to be able to impound that motor vehicle for 28 days if the owner of the vehicle fails to give the name of the person who fled.
There are many more really good pieces in this legislation. It’s a no-brainer. I commend this bill to the House.
SIMON O’CONNOR (National—Tāmaki): “Fleeing” seems to be the word of the day. And initially I thought it was about MPs fleeing their parties. I thought it was also, maybe, about how much money flees Kiwis wallets because of the cost of living. But, no, when I looked at the bill, this is actually about land transport, not about MPs or the cost of living. It’s about those who flee police and the consequences that this bill tries to address.
Unfortunately, fleeing drivers is well-known in my electorate of Tāmaki. We’ve had over 40 ram raids in the last year, and I’ve been able to visit just about all, if not all, those businesses. And as many, I think, have indicated in the House, often it’s young people in stolen cars. Actually, kudos to our local police; they’ve caught most of those young people. But fleeing drivers is a major issue, not just with the ram raids—in fact, our Eastern Bays Community Patrol, the other week, identified a fleeing car in Glendowie and were part, ultimately, of the result where the vehicle—actually riding on its rims, of all things—was caught by police in Ōtāhuhu.
Again, fleeing drivers is well-known, so, look, National supports this bill, but it doesn’t go far enough by any means. First and foremost, it doesn’t address the very fact that people are fleeing the police already, which tells you they are not as afraid, if you will, of police as people should be. Secondly, we also know that the police don’t have the same operational powers, ultimately, to actually pursue. As many people have noted, once someone decides to put their foot down, the police, effectively, rely on the Eagle helicopter, or others in Auckland, to work out where the vehicle is going to stop. They do not pursue as frequently as they used to. That’s a fundamental problem. The second thing that I also alluded to very early on is that these cars are stolen. So it’s all well and good to talk about “We’re going to impound the vehicle.”; well, OK, but they’re usually stolen—and that’s multiple vehicles, by the way; certainly with the ram raids in Tāmaki, we’re talking two or three cars—so there’s no point in impounding the stolen vehicle.
And I would just hope that the select committee addresses this in some ways to go, “Actually, the person who has done the thieving or the fleeing—let’s take their car, not the one that they’ve already stolen.” So that’s something we need to address. But as I say, unfortunately, fleeing drivers’ criminal behaviour is well-known in my electorate. It’s something which I will continue to push against and demand more action from this Government. And while I support this bill, the Labour Government needs to do much, much more to restore law and order to this country.
RACHEL BOYACK (Labour—Nelson): Thank you, Madam Speaker. Kōrero mai, kōrero atu, mauri tū, mauri ora. Like my colleague Shanan Halbert, I also want to acknowledge colleagues across the House who have been supporting Pink Shirt Day today and standing up for diversity and against bullying.
It’s a pleasure to take the last call on the Land Transport (Road Safety) Amendment Bill. Many people have traversed the details of the bill, and I want to finish the speeches on this bill today by going back to the heart of what this bill is about, which is the goal, I believe, of all MPs: to reduce the number of fatal and serious-harm car crashes in Aotearoa. We need to take all the steps that we can to do that. I’m certain that every MP in this House has members of their family and friends, and acquaintances who they know, who have been killed or seriously harmed in a vehicle incident.
When it comes to the issue of speeding and fleeing drivers in my own electorate, I just want to acknowledge the devastating crash, as a result of a fleeing driver, in 2018 that killed an innocent Nelson woman, and also acknowledge another crash in my electorate that was devastating, where we lost a young woman I knew with a very bright future: Christine Kelly. She lost her life due to a driver travelling at a speed of 98 kilometres, and with alcohol, along one of our State highways.
This is what we’re here to do; this is what this bill is about: it’s another tool in the tool box to prevent serious harm and crashes in our country, which is something I believe we all are committed to doing. On that note, I commend this bill to the House.
A party vote was called for on the question, That the Land Transport (Road Safety) Amendment Bill be now read a first time.
Ayes 105
New Zealand Labour 62; New Zealand National 34; ACT New Zealand 9.
Noes 13
Green Party of Aotearoa New Zealand 9; Te Paati Māori 2; Kerekere; Whaitiri.
Motion agreed to.
Bill read a first time.
ASSISTANT SPEAKER (Hon Jacqui Dean): The question is, That the Land Transport (Road Safety) Amendment Bill be considered by the Justice Committee.
Motion agreed to.
Bill referred to the Justice Committee.
Instruction to Justice Committee
Hon ANDREW LITTLE (Minister of Defence) on behalf of the Associate Minister of Transport: I move, That the Land Transport (Road Safety) Amendment Bill be reported to the House by 20 July 2023, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196.
The reason for the truncated consideration by the select committee is because this legislation is aligning with the work of the police; they are amending their fleeing driver policy, it takes effect a little later this year.
No one in this House, whether the Minister or members opposite, get to instruct the Commissioner of Police on their utilisation of resources, or the policies they use to enforce the law. What we can do, however, is make sure that, with the power of Parliament, there are complementary laws that assist the police in achieving their objective of effective law enforcement.
When it comes to fleeing drivers, in the first reading of the bill, there’s been a good indication about where there are points that the House wishes to consider. Members of the National Party want it both to be harsher—except if you’re Chris Penk, who wants there to be some sort of proper respect for New Zealand Bill of Rights Act considerations. The Green Party is considerably opposed to it. The ACT Party even raised issues about the innocent vehicle owners, even if those innocent vehicle owners are obstructers of police inquiries and who are fleeing drivers.
There are some issues to consider and there’s an effective time for the select committee to do that, but it is important that this law gets in place so it fully and properly complements the work of the police when they implement their new policy on fleeing drivers. On that basis, I have made this motion to the House to truncate the select committee process.
ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.
SIMON O’CONNOR (National—Tāmaki): I’m not going to take a long call, but I do want to put out National’s reservations that once again we’re seeing truncated legislation. I think the Minister himself has articulated why we need more time. This is not so much a complex but a complicated piece of legislation. The Minister has noted a number of the reservations that are being put forward by members of the House, and I’m pleased he’s heard that. And even though I sit on the Justice Committee and, without sounding vainglorious, we’re a pretty smart bunch of cookies, it’s still not enough time for us to property consider the bill.
I think it’s also not enough time for the public to understand that this law is going through and to submit. And let’s be very, very clear—a good chunk of that time is the recess of Parliament, and I think it’s really important for people at home to understand that the recess doesn’t mean that the parliamentarians are having a break. We’re actually back in our electorates working and engaging with the community, and now we have to push that to the side in order to rush this piece of legislation through.
This legislation is impacting not only on operational police work. It does have justice issues: whose vehicle, whose ownership, whose consequence should be paid? These need to be properly considered, and, unfortunately, we have a bit of form coming from this Government of rushing things through and then getting it wrong. In the social development and welfare space, a number of times we’ve had to come back to amend amendment bills—
ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Bring it back.
SIMON O’CONNOR:—because we’ve made mistakes, or rather, this House, or Government.
ASSISTANT SPEAKER (Hon Jacqui Dean): No. This is a very narrow debate. The member is to address only the question that has been put.
SIMON O’CONNOR: My concern remains that with this land transport bill, if we do not have sufficient time for the select committee, we are going to find errors, which means that we’re just going to cause more trouble. So I would ask the House to oppose this motion. I take on board what the Minister says, and I don’t think anyone disagrees that we want to see any law that’s going to increase the safety of the country move through and be on the books, but we should not do it at the cost of getting the bill right. So I just want to put that on the record and assure the House that if the Government uses its majority to push this through, those of us on the Opposition side, certainly in the National Party, will do our best to address the shortcomings.
A party vote was called for on the question, That the motion be agreed to.
Ayes 62
New Zealand Labour 62.
Noes 53
New Zealand National 34; ACT New Zealand 9; Green Party of Aotearoa New Zealand 9; Kerekere.
Motion agreed to.
Bill referred to the Justice Committee.
ASSISTANT SPEAKER (Hon Jacqui Dean): Members, that is urgency concluded. Before I adjourn the House, I just want to pass on the House’s thanks to the Hansard team; the Chamber staff, who have looked after us so well; the Office of the Clerk; and the Office of the Speaker, all of whom have been working very hard behind the scenes to support the work of this House. The House stands adjourned until 2 p.m. next sitting day.
The House adjourned at 3.41 p.m. (Friday)