Tuesday, 27 June 2023

TUESDAY, 27 JUNE 2023

TUESDAY, 27 JUNE 2023

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

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

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

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

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

SPEAKER: A petition has been delivered to the Clerk for presentation.

CLERK: Petition of Hauraki Gulf Alliance requesting that the House ban all forms of mobile bottom-contact fishing in the Hauraki Gulf Marine Park.

SPEAKER: That petition stands referred to the Petitions Committee. Ministers have delivered papers.

CLERK:

2023-27 statement of intent for the Takeovers Panel

2023-24 statements of performance expectations for the Financial Markets Authority, Southern Response Earthquake Services Ltd, and the Takeovers Panel.

SPEAKER: I present the report of the Controller and Auditor-General entitled Meeting the needs of people affected by family violence and sexual violence. Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Reports of the Environment Committee on the:

Natural and Built Environment Bill, and the

Spatial Planning Bill

report of the Foreign Affairs, Defence and Trade Committee on the Inspector-General of Defence Bill

report of the Intelligence and Security Committee on the 2023-24 Estimates for Vote Communications Security and Intelligence and Vote Security Intelligence

report of the Justice Committee on the Department of Corrections, Ministry of Justice, Oranga Tamariki, Crown Law Office, Serious Fraud Office Long-term Insights Briefing 2023

reports of the Petitions Committee on:

the petition of Jake Roos

the petition of Natalia Fernandes, and

the petition of Robyn Parnell

report of the Social Services and Community Committee on the 2021-22 annual review of Drug Free Sport New Zealand, and

report of the Transport and Infrastructure Committee on the report of the Controller and Auditor-General, Governance of the City Rail Link project.

SPEAKER: The bills are set down for second reading. The reports on the report of the Controller and Auditor-General and the report on the long-term insights briefing are set down for consideration. No bills have been introduced.

Oral Questions

Questions to Ministers

Question No. 1—Housing

1. TERISA NGOBI (Labour—Ōtaki) to the Minister of Housing: What progress has the Government made rebuilding New Zealand’s public housing stock?

Hon Dr MEGAN WOODS (Minister of Housing): I’m pleased to report that this Government has now delivered over 12,000 public housing places since October 2017. As of May 2023, this also includes over 10,000 public housing new builds. Our pace of delivery means this Government is delivering the most public homes since the second Labour Government under Walter Nash in the 1950s.

Terisa Ngobi: How has delivery improved in the regions?

Hon Dr MEGAN WOODS: We’ve made good progress in terms of regional delivery. In Gisborne, for example, there was a decrease of 33 Housing New Zealand homes between 2008 and 2017. Since we came into office in 2017, Gisborne has seen an increase of 71 public homes to May 2023. On the Kāpiti Coast there was a decrease of 14 Housing New Zealand homes between 2008 and 2017. Since we came into office in 2017, we’ve seen an increase of 24 public homes to May 2023. We are committed to public housing delivery across New Zealand, especially in our regions. Regional delivery will be a particular focus in the updated public housing plan, which I hope to announce in the coming months.

Terisa Ngobi: How have the recent severe weather events impacted delivery?

Hon Dr MEGAN WOODS: Prior to the severe weather events, Kāinga Ora was on track in January to meet the Government’s ambitious public housing plans of delivering 3,400 gross homes by June 2023. However, as mentioned previously in the House, several projects have been impacted by these weather events—along with construction projects across those regions—which have caused delays. By the end of June, we will have delivered a gross of 2,600 public homes, with the additional 800 homes experiencing an eight-week construction delay. Kāinga Ora has been focusing hard on delivering in spite of the weather events and remains on track to meet this new date.

Terisa Ngobi: What further work is the Government doing to support public housing?

Hon Dr MEGAN WOODS: Additional investment announced as part of Budget 2023 will fund 3,000 additional public housing places to be delivered by June 2025. This builds on the significant and ongoing investment in public housing. There are currently over 4,500 public homes under construction today. There will be a particular and continued focus on delivery in regions, new build supply, and partnerships with community housing providers, Māori, and iwi.

Question No. 2—Prime Minister

2. DAVID SEYMOUR (Leader—ACT) to the Acting Prime Minister: Does she stand by all her Government’s statements and policies?

Hon CARMEL SEPULONI (Acting Prime Minister): Yes. In particular, I stand by the Firearms Registry, which went live on Saturday, and it has so far seen 576 licence holders register 1,452 arms items. The register will provide us with a clear picture of guns in this country and will help stop firearms from being transferred into criminal hands. I also stand by the Corrections Amendment Bill, which is being read for the first time today, both in the House and, it seems, by the Opposition.

David Seymour: Can the Prime Minister please tell the House and New Zealanders how many gang members or holders of illegal firearms have registered their firearms with her new $200 million register in the time she mentioned?

Hon CARMEL SEPULONI: I don’t have that figure on me. However, the point of this is to ensure we have a clear understanding and knowledge of where firearms are and who owns them, with the purpose of ensuring that they do not end up in criminal hands. I do need to just quote the Police Association president when discussing ACT’s promise to repeal the register: “ACT cannot claim to be the tough on gangs party when they lobby to remove the best opportunity to prevent gangs from arming themselves”.

David Seymour: Is the Acting Prime Minister aware that spending per person on education has risen 8.4 percent faster than inflation since her Government has been in office, and, if so, can she really say that New Zealanders are getting better value for money in education when fewer kids are going to school and Kiwi kids are doing worse in every international comparison since her Government has been in office?

Hon CARMEL SEPULONI: I’m not going to apologise for being part of a Government that has increased spending in education. We take the education sector and the future of our children seriously. Also, I will note that when I’m out and about in my electorate, often I have schools pointing out the difference that the investment in property has made, pointing out the difference that free lunches in schools have made, and pointing out the difference that the amount of funding that we have put towards schools to cover off the need for them to charge donations to families—the difference that that has made. I’m very proud of our investment in education.

David Seymour: If the Acting Prime Minister won’t apologise for spending more money, will she apologise for spending more money only to have fewer kids going to school, learning less? It’s all there in black and white—will she apologise for that?

Hon CARMEL SEPULONI: I could rattle off some more investments in education if that member would like, including the announcement that we made at Budget to make it 20 hours free for two-year-olds for early childhood education and to invest in public transport so that our children who need to catch the bus to school don’t have to pay for their transport. Those things make a difference. All of the initiatives I’ve rattled off: public transport; food in schools; period products in schools, even—they make a difference to whether or not kids will show up to the classroom, so I do not apologise for that.

David Seymour: How is it possible that every time she’s challenged for spending more money to get worse results, she just lists more examples of spending that haven’t got results?

Hon CARMEL SEPULONI: I would refute the premise of that question and say that, actually, every time that member asks me a question in this House, it gives me an opportunity to talk about the importance of our investment and the achievements of this Government.

David Seymour: Does she agree with Prime Minister Chris Hipkins when he said, “it’s not right for households to be tightening their belts if the Government doesn’t too.”, and if she does agree with that statement from the Prime Minister, can she see the problem with her constantly standing up and talking about spending and investment without being able to point to a single thing that’s actually got better at the end of the day for Kiwis?

Hon CARMEL SEPULONI: Tightening our belts includes not promising New Zealanders tax cuts when they cannot be afforded and where, actually, there would be a requirement for there to be cuts elsewhere. Our Prime Minister, who I agree with always, has also made it clear that our focus as a Government is on the bread and butter issues affecting New Zealanders, and that was reflected very strongly in all of the investments that we saw at Budget 2023.

David Seymour: Would the Acting Prime Minister like just one more chance to tell the people of New Zealand what measurable outcome or final result has actually got better under her Government that spends 25 percent more per person after inflation? Just one measurable thing—not an investment, but an actual improvement in the outcome for the money that is being spent on behalf of taxpayers.

Hon CARMEL SEPULONI: Thank you. I will do better than that—I’ll give that member two. Firstly, just referring to what was spoken about by our Minister of Housing and the 12,000 additional public houses that we now have in this country, that comes off the back of inheriting a housing crisis where a Government had left fewer public houses than what had been in place when they first came into Government. Secondly, I also just want to refer to a report that came out on incomes this week, citing that those on the lowest incomes—our beneficiaries—are over 40 percent better off in terms of their incomes, even when inflation is taken into consideration, than what they were when we took office.

David Seymour: Who advised the Prime Minister to use housing as an example of something that’s got better under her Government when the prices are through the roof, rents are at record levels, and tens of thousands of people are living in motels under her Government?

Hon CARMEL SEPULONI: I certainly don’t need that member’s advice with regards to what will be in the content of my answer. I’m very proud of what we’ve achieved in housing. There is much more to do, and we are the political party and the Government to do that.

Question No. 3—Prime Minister

3. CHRISTOPHER LUXON (Leader of the Opposition) to the Acting Prime Minister: Does she stand by all of her Government’s statements and actions?

Hon CARMEL SEPULONI (Acting Prime Minister): Yes, particularly this Government’s delivery of over 12,000 additional public homes since October 2017. One in seven of all public homes in New Zealand have now been delivered by this Government. On an annual basis, this is the most public homes each year since the second Labour Government in the 1950s. There is more to do, but after a decade where National left New Zealand with 1,500 fewer public homes than it started with and failed to invest in new ones, we are making progress.

Christopher Luxon: Has New Zealand’s economy grown faster or slower than Australia’s in the last two quarters?

Hon CARMEL SEPULONI: Certainly, we are in the fortunate position of our economy now doing better than what it was during pre-COVID times. In terms of how we are doing in comparison to Australia, if we look at some measures including the unemployment rate—which for New Zealand is at near-record lows, at 3.4 percent—comparatively, we are still doing well.

Christopher Luxon: Point of order, Mr Speaker. It was a very clear question: is the economy growing faster or slower?

Hon Grant Robertson: Speaking to the point of order, Mr Speaker, the member’s primary question asked around all Government statements and actions. You’ve ruled previously that members can’t expect very specific answers to very specific—[Interruption]

SPEAKER: I’d like to hear this, thank you.

Hon Grant Robertson: Members can’t expect very specific answers to very specific supplementary questions when the primary question is as general as it was. Are you going to take any action against that, Mr Speaker?

SPEAKER: No. I’ll rule on this: the question has been addressed.

Christopher Luxon: Are any of Australia, the United States, Canada, China, Japan, or any other comparable country in the Asia-Pacific region in recession, or is it just New Zealand?

Hon CARMEL SEPULONI: If that member wants specific answers to specific questions, then I suggest that he put it in the primary question. However, I will say that, comparatively, with regards to our unemployment rate, with regards to our debt levels, and with regards to our exports, we are doing better than many. That doesn’t negate, though, from the fact that there are a number of New Zealanders doing it tough at the moment. We recognise that. We’re not alone—many countries are experiencing the same thing.

Christopher Luxon: Can she actually name a country other than New Zealand with all of a high current account deficit, a large fiscal deficit, high inflation, high interest rates, and a recession?

Hon CARMEL SEPULONI: As I said, every country around the world is experiencing impacts from global inflation and the increases that ensue. We are not alone in this. We recognise that on the ground, that has an impact on New Zealanders. When we look at how we are comparing to other countries, though, we aren’t doing as badly, but we’re focused on making sure that we implement policies that are going to help New Zealanders in their every day.

Christopher Luxon: So can she just name one country?

Hon CARMEL SEPULONI: I can name one country: Australia. I can name two countries: Australia and Canada. I can name three countries: Australia, Canada, Japan. I can keep going if that member would like me to.

Christopher Luxon: What is the current account deficit, and why does it matter so much to the credit agencies?

Hon Grant Robertson: 8.5 percent of GDP.

Hon CARMEL SEPULONI: Oh, thank you, finance Minister. I’ll recognise him: he said, “8.5 percent of GDP.”—thank you.

Christopher Luxon: And why does it matter so much to credit agencies?

Hon CARMEL SEPULONI: I don’t have the answer to that question in front of me, but we can certainly follow that up with the member if he would like us to.

Christopher Luxon: Why does her Government constantly try to claim credit for any success, but will then run a mile from responsibility when the New Zealand economy is underperforming the rest of the world?

Hon CARMEL SEPULONI: That is not fair, and that member knows that we are not underperforming with the rest of the world. We are focused on being as positive as we can as a Government in light of some of the challenges that we’re facing. We’re doing our best not to be wet, whiny, or losing the plot. We’re focused on making sure we’re doing things that matter for New Zealanders.

Christopher Luxon: Isn’t it embarrassing that having set out to do things so differently, she’s got the same failed approach to the economy, the same failed Minister of Finance, and the same failing results?

Hon CARMEL SEPULONI: No. What’s embarrassing is when someone says they supported the Crusaders since they were a child when they were 26 years old when the Crusaders were actually formed.

SPEAKER: Supplementary, the Hon Grant Robertson. [Interruption] Any time now, Mr Bishop.

Hon Grant Robertson: Can the Acting Prime Minister confirm that New Zealand’s level of public debt, at around 20 percent of GDP, is lower than almost every other country that we compare ourselves to; can she confirm that unemployment, at 3.4 percent, is in the lower third of the OECD; can the Acting Prime Minister confirm—

Hon Gerry Brownlee: Only two legs.

Hon Grant Robertson: Oh, a question or not, Mr Speaker?

SPEAKER: Yeah, the problem is you’ve already asked three.

Hon Grant Robertson: Oh well, I’ll keep going then, and they can keep yelling, Mr Speaker, if that’s all right?

SPEAKER: Well, not really. I think you should leave it there.

Hon CARMEL SEPULONI: I can confirm those things, and I can also confirm that it is with the efforts of a great finance Minister that we have ended up in this position.

Question No. 4—Education

4. CAMILLA BELICH (Labour) to the Minister of Education: What recent announcements has the Government made on extra support for the tertiary education sector?

Hon JAN TINETTI (Minister of Education): Earlier today, the Minister of Finance and I announced that this Government will provide an extra $128 million funding over two years for tertiary education providers for courses at degree level and above. This is in addition to the 5 percent increase provided at Budget 2023, the most significant funding increase in 20 years. This funding will help maintain the quality and breadth of our higher education offerings and research capability in our tertiary institutions. This is vital for our students, our tertiary workforce, our broader research system, and for economic and social wellbeing in New Zealand.

Camilla Belich: Why was this increase needed?

Hon JAN TINETTI: Budget 2023 provided for a 5 percent increase—the most significant funding increase in 20 years—but when we began our Budget process, universities and other degree providers were forecasting enrolment increases. The opposite has occurred, and it is clear that there is a need for additional support. Presently, our tertiary institutions are experiencing an unexpectedly large decline in domestic enrolments and increased cost pressures. In addition, although international enrolments are increasing, they remain well below pre-COVID levels. Similar issues are being faced by tertiary providers worldwide. The Government has heard the concerns of the sector and has acted.

Camilla Belich: What institutions will benefit from this increase?

Hon JAN TINETTI: While recent focus has been on Victoria University and Otago University, other institutions have previously managed declines in student numbers. We did not want to disadvantage these institutions, which in some cases had already made difficult decisions. The funding boost will go to all degree-granting institutions. I will report back to Cabinet by the end of July on whether recently announced changes represent a threat to capability of provision of programmes nationwide.

Camilla Belich: How will the Government ensure that higher education funding is fit for purpose going forward?

Hon JAN TINETTI: Today, we announced the Government will review higher education funding, including the Performance-based Research Fund. The current financial situation of some tertiary institutions points to the need to take this broader look into the way our higher education system is funded and financed. Today’s funding announcement is a temporary boost for two years. We need to take a thorough look at the funding system during this time. The Government remains committed in supporting and working with the tertiary sector so it meets the evolving needs of students and continues to make a critical contribution to the research and innovation in Aotearoa.

Chlöe Swarbrick: Will the review of the tertiary education funding model put the voice of students front and centre in the terms of reference in light of research which finds, for example, two-thirds of students regularly cannot afford the basics?

Hon JAN TINETTI: Absolutely, it will, and I look forward to working with students to hear about their concerns over the next few months.

Question No. 5—Finance

5. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: What advice, if any, has he had about the impact a new asset tax, such as, for example, a wealth tax, would have on the New Zealand economy, particularly in light of economic recession and the cost of living crisis?

Hon GRANT ROBERTSON (Minister of Finance): The Government, as all Governments do, seeks and receives a range of policy advice on New Zealand’s current tax settings. For example, we received advice on various new taxes, such as a wealth tax, from the Tax Working Group. The Tax Working Group produced an entire second volume of its final report on the taxing of the gains of assets—in particular, a capital gains tax. Treasury has regularly provided me and past Ministers of Finance with advice on the merits of asset taxes, including a capital gains tax, the impacts of which Treasury has said to include improved capital allocation and greater equity in the tax system. The impact of any taxes such as these is very dependent on their design and the subsequent use of the revenue. As previously stated in the House, the Government has no plans to introduce any such tax in this parliamentary term.

Nicola Willis: Has the Minister sought advice on tax policies recently agreed to by the Labour Party policy council, which I’m told recommend income tax reductions funded by a large new asset tax, together with a 45c tax rate for incomes $200,000 and higher?

Hon GRANT ROBERTSON: I’m obviously not responsible inside this House for the Labour Party’s policy council, but I can provide helpful advice to the member that that’s been the position of the Labour Party conferences over many years.

Nicola Willis: Well, has the Minister of Finance received official advice recently on proposals of that sort, and, allegedly, sought by the New Zealand Labour Party?

Hon GRANT ROBERTSON: I reject the connection that the member is making in her question.

Nicola Willis: Has the Minister of Finance shared advice prepared as part of the Budget process with the Labour Party?

Hon GRANT ROBERTSON: No.

Nicola Willis: Does the Minister of Finance think a wealth or asset tax of the sort proposed by the Green Party would be good or bad for the New Zealand economy?

Hon GRANT ROBERTSON: As I said in my primary answer, the Government has no intention of introducing a tax of that sort this term.

Nicola Willis: Does the Minister of Finance agree that in the middle of a recession and cost of living crisis, it would be reckless to impose a new asset and top tax on the New Zealand economy, sending a wrecking ball through our economy, resulting in job losses, capital flight, and lower growth?

Hon GRANT ROBERTSON: What would be reckless is proposing tax cuts at a time at which our public services are under extreme pressure and when the Government’s job, in part, is to help the Reserve Bank with bringing down inflation. That recklessness is the mark of the National Party’s policy.

Nicola Willis: Would the Minister like to take this opportunity to rule out introducing an asset or wealth tax while he is Minister of Finance, or does it remain firmly on the table, just after the election?

Hon GRANT ROBERTSON: I thank the member for her confidence in the return of the Labour Government and my ongoing role as Minister of Finance. I stand by my previous answer.

Nicola Willis: Why does the Minister of Finance think it is reckless to reduce people’s personal income tax, but it is perfectly responsible to impose an asset or wealth tax on the New Zealand economy when it is particularly fragile, in recession, and enduring a cost of living crisis?

Hon GRANT ROBERTSON: I did not say that. What I said was it was reckless at a time at which public services were under extreme pressure to be looking at across-the-board tax cuts that deliver very little to low-income earners. Rather, what I think the responsible approach is is to support people with cost of living increases and invest in our public services. The member will have to explain how she thinks she can do what she wants to do with her policy and properly fund public services—it doesn’t add up.

Question No. 6—Health

6. TANGI UTIKERE (Labour—Palmerston North) to the Minister of Health: What is the Government doing to reduce the cost of healthcare from 1 July?

Hon Dr AYESHA VERRALL (Minister of Health): This Government is proudly reducing the cost of healthcare for New Zealand households by removing the $5 copayment on prescription medicines. Removing the $5 charge will make it easier and cheaper for New Zealanders to access the medicines they need, having a meaningful impact for many households, particularly those with multiple prescriptions to fill on a regular basis. This Government is committed to ensuring our health system provides equitable access for New Zealanders so they can have the health services when they need and where they live.

Tangi Utikere: How many people will benefit from the removal of the $5 prescription fee for medicines?

Hon Dr AYESHA VERRALL: An estimated 3.5 million New Zealanders will no longer have to worry about having enough money in their account when they collect their medication. This will also benefit more than 800,000 New Zealanders over the age of 65 who received prescription medicines in the community last year and will no longer have to cut their pills in half or take it every second day. Last year, over 440,000 prescriptions for oral contraception were dispensed. From 1 July, that will be free.

Tangi Utikere: Why is the Government removing the $5 prescription fee for medicines?

Hon Dr AYESHA VERRALL: The $5 charge is a barrier to some New Zealanders getting the medicines they need. Removing the charge makes it easier and cheaper for New Zealanders to access medicine, having a meaningful impact for many households, particularly those with many prescriptions to fill. By removing the $5 co-payment on medicines, we’re investing in the simple treatments that can prevent chronic conditions becoming emergencies that need hospital treatment.

Tangi Utikere: How will the policy be implemented on Saturday?

Hon Dr AYESHA VERRALL: From 11.59 p.m. on 30 June 2023, no standard $5 prescription co-payments will be charged to people who collect their prescription from a pharmacy. People don’t need to do anything different from what they usually do—just turn up for the pharmacy and get their standard medicines for free.

Question No. 7—Justice

7. Hon PAUL GOLDSMITH (National) to the Minister of Justice: Does she agree with independent victims’ advocate Ruth Money, who says that discounts to sentences for convicted criminals are “getting out of control”, and how does allowing for sentence discounts to reach 73 percent fit with her stated pledge to be “victim-centric”?

Hon DAVID PARKER (Attorney-General) on behalf of the Minister of Justice: I agree that perpetrators of crime need to be held to account, and the more serious the crime, the greater the punishment justified. I note that the Government has not lowered any penalties for individual offences since we have been in office. Decisions on sentences are matters for the judiciary. There are no central sentencing guidelines because the last National-ACT Government axed them and the Sentencing Council. I respect Ruth Money for her advocacy, and I agree with her statement from 21 April in relation to a new bill the Government will be introducing to expand victim rights, when she said, “get in behind this”. On being victim-centric, the Government is proud of its track record. Since National left office, our Government has tripled funding for victim assistance schemes, doubled the funding for victim support, passed the sexual violence Act to improve outcomes for victims, and is establishing pilots to improve victims’ safety and ensure they’re heard in bail decisions, and to strengthen support for child victims of sexual violence.

Hon Paul Goldsmith: Does she think that Parliament should not be able to amend the Sentencing Act in response to what MPs on this side of the House, at least, regard as a widespread sense across the country that there are insufficient consequences for crime?

Hon DAVID PARKER: I, like every other politician in this House, respect the sovereignty of this Parliament to change the law. In respect of prison populations, New Zealand’s prison population is similar to Australia’s and is higher than in England and Wales, Portugal, Spain, France, Korea, Canada, Austria, Germany, Iceland, and Japan. We do not have low rates of imprisonment in New Zealand.

Hon Paul Goldsmith: Does she agree with National’s policy to take more than $6 million a year currently sent to Harry Tam and others to produce written cultural reports and to redirect it to provide extra funding to help the victims of crime?

Hon DAVID PARKER: Those reports are prepared under section 27 of the Sentencing Act 2002, which is very old legislation, and they can be requested by a court where an offender is appearing for sentence. The person or people from whom those reports are sought is not controlled by Government; that’s controlled by the courts in those court processes. That said, the Minister of Justice is on record in her concern for that cost centre growing, and has asked the Ministry of Justice to look at it.

Hon Paul Goldsmith: Is she comfortable with life-long Mongrel Mob member Harry Tam boasting on his website that defendants have received sentence discounts of up to 35 percent because of factors raised in his company’s cultural reports, and inviting people to contact him then for a quote?

Hon DAVID PARKER: As I said in response to the last supplementary question, the Minister has asked the Ministry of Justice to review changes in practice. When section 27 of the Sentencing Act was introduced, I’m advised that those reports were normally verbal. There’s become a habit where they are becoming expensive written reports. There is a question as to whether that is being appropriately controlled, and therefore the Minister has asked the Ministry of Justice to look into the matter.

Hon Paul Goldsmith: When she said in her stand up on Sunday of Chris Luxon, “He’s talking about being tough on crime, soft on crime. We don’t talk about those things. We talk about what works.”, was she thinking about the issue from the perspective of the victims of crime, and, if so, can she understand that the victim of a serious assault or a rape might not think this system is working when their attackers receive only home detention?

Hon DAVID PARKER: When she was reflecting on whether National is tough on crime, she was reflecting on the fact that between 2009 and 2013, 30 police stations closed, police funding was frozen relative to inflation, and they defunded the Police, which is why police numbers fell under their watch.

Question No. 8—Social Development and Employment

8. SARAH PALLETT (Labour—Ilam) to the Associate Minister for Social Development and Employment: What recent announcements has she made about Peke Waihanga?

Hon PRIYANCA RADHAKRISHNAN (Associate Minister for Social Development and Employment): Last week, I announced the opening of the new, state-of-the-art Peke Waihanga - Artificial Limb Service facility in Christchurch. I was pleased to open the new facility alongside their chief executive, Sean Gray, and board chair, George Reedy. The new facility features seven new clinical spaces, including three purpose-built rehabilitation areas. It also includes specific manufacturing technology for prosthetics and orthotics to be made in-house. Importantly, patients and amputees have had direct input into the design of Peke Waihanga, and that has led to this facility being truly designed around the needs of its users. This is a big step forward for an organisation that does extremely important work, and I am proud that this Government has been able to support it through a $6.1 million investment.

Sarah Pallett: How will the new centre support amputees and those at risk of amputation?

Hon PRIYANCA RADHAKRISHNAN: This facility will support over 600 amputees and nearly 3,000 others. In addition to providing high-tech prosthetics, Peke Waihanga also supports patients through a peer-support service that provides support to those adapting to limb loss by matching them with trained supporters who have themselves adapted to limb loss. The centre also supports those who are at risk of needing an amputation due to conditions like diabetes, through the provision of preventative measures such as orthotics. The advanced technologies in this centre, such as high-tech 3D printers will also mean, I’m told—when I visited the centre—that wait times for prosthetics will generally reduce from what used to be about a full day to just 90 minutes.

Sarah Pallett: How will this new facility support South Island communities?

Hon PRIYANCA RADHAKRISHNAN: The new Peke Waihanga facility is a great addition, and it will future-proof the region and the South Island to respond to the increasing demands of the ageing population and the implications of chronic disease. The development of the new centre builds on our Government’s investment in the disability sector, alongside other investments like the additional $863 million in Budget 2023.

Sarah Pallett: How will this new facility help to advance medical practice in prosthetic and orthotic care?

Hon PRIYANCA RADHAKRISHNAN: Medical students in their final year at Otago University will now be able to co-locate at the centre. This will enhance the students’ understanding of prosthetic and orthotic care and will provide research opportunities to improve patient care in the future. This is a truly exciting initiative, and I’m proud to be part of a Government that has supported it.

Question No. 9—Children

9. HARETE HIPANGO (National) to the Minister for Children: Is he confident children in the care of Oranga Tamariki are safe; if not, why not?

Hon KELVIN DAVIS (Minister for Children): The allegations that recently came to light are of grave concern to me and, as I have said previously, are totally unacceptable. Oranga Tamariki has appointed Mike Bush to undertake a rapid review of the specific allegations, as well as a broader review of how residences are operating. Oranga Tamariki has made the right call, and he will get to the bottom of what’s going on. I have a clear expectation that young people in any type of facility are supported and safe.

Harete Hipango: How many allegations has he been made aware of since the beginning of the year involving Oranga Tamariki staff acting inappropriately in residences?

Hon KELVIN DAVIS: I can’t give an exact number, but what I can say in terms of children in Oranga Tamariki care—so that is all children, including those in the community and with families—there have been 453 children who have findings of harm. Unfortunately, we can’t go back beyond 2019 because the previous Government didn’t collect that data, so we are not able to compare the numbers through now and previous to this Government.

Harete Hipango: Will the rapid review into Oranga Tamariki’s community-based homes also consider the actions of the four employees who remain suspended on paid leave from an Oranga Tamariki care and protection residence in Christchurch closed two years ago as a result of the investigation into the use of excessive force by Oranga Tamariki workers; if not, why not?

Hon KELVIN DAVIS: So the circumstances around that investigation are Sir Wira Gardiner at the time, who was the acting chief executive, immediately implemented the child protection protocol. That involved police doing an investigation, which took over a year. The situation around the now three workers is currently before the Employment Relations Authority, and that process needs to be allowed to happen.

Harete Hipango: Does he think it acceptable for an Oranga Tamariki employee to continue working at the Oranga Tamariki facility where and when there has been an allegation of sexual abuse made by a teenage resident against that staff member?

Hon KELVIN DAVIS: That allegation was made and police were involved in the investigation, and they did not come to a conclusion around that.

Harete Hipango: Does he accept that the youth residents in Te Puna Wai ō Tuhinapo, the youth justice facility at Rolleston, Christchurch, are safe and properly supervised when there have been at least two reported, separate incidents in just four months of youths taking to the roof of the facility?

Hon KELVIN DAVIS: Every child deserves to feel safe and secure in these residences. The incident that occurred at Te Puna Wai over the weekend was attended by police, with the safety of the other children in residence and of staff the top priority. Obviously, this incident and the response will be looked into, and if anything needs to change, it will.

Question No. 10—Housing

10. RICARDO MENÉNDEZ MARCH (Green) to the Minister of Housing: Is she committed to ensuring everyone on the public housing waiting list has an accessible, affordable, and healthy public home to live in; if so, why has her Government not committed to funding the public housing building programme beyond June 2025?

Hon Dr MEGAN WOODS (Minister of Housing): In answer to the first part of the question, yes, through a combination of our continued commitment to public housing, affordable rentals, and affordable housing settings more broadly. I’m proud that since 2017, we have delivered 12,000 more public homes. That is the most public houses being delivered each year since Walter Nash’s second Labour Government in the 1950s. In answer to the second part of the question, a future Labour Government will continue to build on the successive increases we’ve made to public housing since 2017. For example, when we came into Government, there was $900 million in baseline for income-related rent subsidy (IRRS) funding. In Budget 2023, there is now $1.6 billion—almost double what it was in 2017. It is this increased funding that has allowed for the largest housing-build programme adding to our State houses since the 1950s. We may be building the most public homes each year since Walter Nash, but we recognise the job is not done.

Ricardo Menéndez March: What is the estimated number of people that will still be on the public housing waiting list without a secure home in five years, based on the current number of public homes projected to be built by her Government?

Hon Dr MEGAN WOODS: As I said in the answer to the primary question, the way in which we clear a public housing waiting list isn’t only through the provision of public housing. For example, this Government has committed $350 million to work with community housing providers to rebuild a missing part of the New Zealand housing system, and that is in community-led, affordable rental properties. That will be an important part of the solution. Of course, a continued commitment to building public houses is a critical part of that, and I look to the 21,000 places that this Government has funded through to 2025. My only regret is that that is only just making up for the 20,000 fewer houses that we have in New Zealand today as a result of nine years of a National Government who did not build houses, and they ended up with 1,500 fewer houses, even after you account for the transfer to community housing providers. We’d have 20,000 more houses today.

Ricardo Menéndez March: What is the number of people that will still be on the public housing waiting list in five years, based on her current commitments, who sign up to the public housing waiting list to go into State housing?

Hon Dr MEGAN WOODS: I’ve given the answer to that in previous questions. It is impossible to give that number because there are a variety of ways in which people come off the public housing waiting list. Some of that will be into affordable, community provider - led housing, rather than through IRRS funding. Some of the people on the public housing waiting list, for example, may be youth who can be funded in some of the youth facilities that the member’s colleague is rolling out as part of her Budget funding. There’s a variety of ways in which that can be achieved, so it’s impossible to give that member that number.

Ricardo Menéndez March: If she acknowledges in her primary answer that there is more work to be done, why has her Government not committed to funding the public housing building programme beyond 2025?

Hon Dr MEGAN WOODS: We have funded the public housing build programme out to 2025. It will be up to each and every party in this House in their costed manifestos—costed manifestos—to show what their commitment is to public housing, both in terms of the capital needed for building but also in terms of the operational funding required to fund additional places. Labour will stand by its record. You do not add the most number of public houses since the 1950s without having a deep commitment to public housing like the Labour Party does.

Ricardo Menéndez March: Why does Kāinga Ora not collect data on how many times they’ve had to apply for consent to build higher density, and how does she know if planning barriers are holding back high-quality, medium-density public housing?

Hon Dr MEGAN WOODS: Kāinga Ora, obviously, does collect data around how it’s doing in terms of its intensification. It’s a large part of the work that we do in our large-scale projects, which is the redevelopment of several neighbourhoods in Auckland and, of course, the work that’s going on here in Porirua, closer to where we are. Density and intensification is a critical part of how we will increase our supply, but it is not the only way, because one of the areas where our Government is committed to focusing on delivery for the additional 3,000 places funded in this year’s Budget is building in some of those regional towns and centres that have not seen additional public houses for decades.

Question No. 11—Health

11. BROOKE VAN VELDEN (Deputy Leader—ACT) to the Minister of Health: What options is Te Whatu Ora considering for the repurposing or alternative use of the more than 17,839,000 rapid antigen tests (RATs) that as of 12 June had either expired or will not be dispatched because they are nearing expiry, and what does it cost Te Whatu Ora each month to store these expired or expiring RATs?

Hon Dr AYESHA VERRALL (Minister of Health): There was no crystal ball when the pandemic hit New Zealand. Minimising waste in the health system is always a priority. At a time of uncertainty and short global supply, it made it necessary to purchase large orders. This Government made the decision to be as prepared for the ongoing pandemic as possible, and stock was purchased to prepare us in the face of significant risk and uncertainty. Stockpiling is routine in pandemic preparedness and management. In answer to the first part of the question, I’m advised Te Whatu Ora are considering a range of options to mitigate product waste through expiry date extensions and deferring orders where possible. Te Whatu Ora continue to investigate ways to minimise the environmental impact of waste and provide a sustainable approach to the disposable COVID-19 products. They are actively scanning the market for these solutions. In answer to the second part of the question, I am advised that Te Whatu Ora does not have specific information on the warehousing costs of the expired component of the stockholding.

Brooke van Velden: Where are the rapid antigen tests being stored and by which organisations?

Hon Dr AYESHA VERRALL: Te Whatu Ora has stored the rapid antigen tests in a warehouse that they have contracted. I’m happy to give the member the name of the supplier, if they put it on notice.

Brooke van Velden: Who owns it, and how much are they spending on the contract?

Hon Dr AYESHA VERRALL: I’m happy to provide the cost of the warehousing overall for the member if the member puts that question on notice.

Brooke van Velden: Is she seriously saying she cannot answer how much they’re spending on storage of the expired or expiring RAT tests and does not know where they are being stored or by whom?

Hon Dr AYESHA VERRALL: No, I am saying that Te Whatu Ora does not have specific information on the warehousing costs of the expired component of the stockholding.

Question No. 12—Health

12. STEPH LEWIS (Labour—Whanganui) to the Associate Minister of Health: What recent measures have been put in place by the Government to help increase vaccination rates and accessibility to healthcare for mums and babies?

Hon WILLOW-JEAN PRIME (Associate Minister of Health): Last Friday, I was excited to launch, alongside Uri Ririki - Child Health Connection Centre, a new hauora van in Tāmaki-makau-rau, which will help protect hapū māmā, their pēpi, and tamariki from preventable diseases such as the flu and whooping cough. Being immunised is one of the best things we can do to protect ourselves, our whānau, and our communities. To lift our vaccination rates, our health services should be accessible and take different approaches to overcome potential barriers, and that’s what the hauora van does. It takes immunisation to where the people are and even lets vaccinators park outside a home, allowing hapū māmā to access the services right on their doorstep.

Steph Lewis: How will these measures increase accessibility to healthcare and vaccination rates?

Hon WILLOW-JEAN PRIME: Mobile health vans provide an accessible and convenient way for hapū māmā to provide antenatal immunisations, which is a key priority in Tāmaki-makau-rau in particular right now. There are several barriers to getting antenatal vaccinations, including time pressures due to work, as well as some hapū māmā who may feel anxious about getting a vaccine while pregnant. Our caring health kaimahi know how to engage and answer these concerns, and the hauora van means they are right there in our neighbourhoods to work their magic. Along with the mobile clinic that was launched on Friday, a sister van will be launched next month with similar details, promoting immunisation to our tamariki.

Steph Lewis: What other services will the hauora vans be able to provide?

Hon WILLOW-JEAN PRIME: Beyond being a moving billboard for immunisation, these vans are multi-use purpose-built health units. They have features like handwashing stations and electric chilly bins for vaccine storage. The vans can also be used for cervical screening and health checks, and will be able to be present at local events in conjunction with community providers. They’ll also be used to support immunisation in our secondary schools, as well.

Steph Lewis: Why is it important to increase access to antenatal immunisations?

Hon WILLOW-JEAN PRIME: The evidence is clear that antenatal vaccinations keep pēpi and māmā safe from serious diseases—for example, pregnant people can be three to five times more likely to be hospitalised with influenza than those who are not pregnant. However, as of December 2022, the antenatal influenza vaccination rate was only 38 percent across Auckland region. Measures such as these hauora vans are a further example of how the Chris Hipkins Government is focused on the fundamentals by increasing access to healthcare and investing to improve health outcomes for all families.

Appointments

Assistant Speaker

Hon GRANT ROBERTSON (Leader of the House): I seek leave to appoint the Hon Poto Williams as an Assistant Speaker until the end of Thursday, 29 June 2023, despite Standing Order 29.

SPEAKER: Is there any objection for that course of action being taken? There is none.

Supplementary Estimates Documents

Supplementary Estimates Documents

SPEAKER: Members, I present the Addition to the Supplementary Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2023. That paper is published under the authority of the House.

Bills

Imprest Supply (First for 2023/24) Bill

Introduction

SPEAKER: I understand it is the Government’s intention to introduce an imprest supply bill.

CLERK: Imprest Supply (First for 2023/24) Bill, introduction.

SPEAKER: The bill is set down for first reading immediately.

First Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Imprest Supply (First for 2023/24) Bill be now read a first time.

A party vote was called for on the question, That the Imprest Supply (First for 2023/24) Bill be now read a first 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 first time.

Bills

Appropriation (2022/23 Supplementary Estimates) Bill

Imprest Supply (First for 2023/24) Bill

Second Readings

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2022/23 Supplementary Estimates) Bill and the Imprest Supply (First for 2023/24) Bill be now read a second time.

This is a feature of the House’s programme of looking after expenditure in the House. I’m just looking at the—yes, Mr Speaker, that’s right: I’ve plenty to say, but don’t need a stopped clock to do so. This is a regular part of the—

Chris Penk: It just feels like it!

Hon GRANT ROBERTSON: Just like Mr Penk, a stopped clock tells the right time at least twice a day. It’s good to have it going now, though.

This is a regular part of the financial processes of this House, to put these two bills together and pass them in the way that we are. I think it might be helpful at the outset just to go through again for members exactly what these two bits of legislation do. The Appropriation (2022/23 Supplementary Estimates) Bill seeks appropriation by Parliament of changes to appropriations and new appropriations for the 2022/23 financial year that the Government agreed to between 22 April, when the 2022/23 Estimates were finalised, and 23 April, when the 2022/23 Supplementary Estimates were finalised. Spending against these appropriations has already been incurred under the authority of imprest supply, but unless this spending is appropriated by Parliament before the end of the 2022/23 financial year, it would become other unauthorised expenditure requiring validation by Parliament in the appropriation (confirmation and validation) bill. I want to thank members of the Finance and Expenditure Committee for their prompt—

Chlöe Swarbrick: Great committee.

Hon GRANT ROBERTSON: —indeed, a great committee—scrutiny of and report back to the House on the 2022/23 Supplementary Estimates bill.

The Imprest Supply (First for 2023/24) Bill is needed to provide the sole parliamentary financial authority for Government spending in 2023/24 until the Appropriation (2023/24 Estimates) Bill—the Budget—is passed. As the third reading on the latter bill must take place before the House rises on 31 August before the election, this imprest supply bill provides supply for the first two months of the 2023/24 financial year. In addition, it is standard practice for imprest supply bills to cover possible materialisation of fiscal risks and the uncertain timing and spread of expenditure.

On the imprest supply bill, just briefly, what it does this time around is seek sufficient authority for the Government to incur a maximum of $27 billion in expenses, $9 billion in capital expenditure, and $1 billion of capital injections. The total imprest in the bill is lower than what has been provided over the last three years. That’s partly because it’s dealing with only expenditure up until the general election but also because the amount provided has been declining over time as the COVID-19 emergency response spending has become a less significant part of what the Government is doing.

As I’ve said many times when I’ve spoken on imprest supply bills, these are limits; they are not targets. They provide room for the Government to be able to undertake the business of Government until such time as the Budget has passed, but they also by necessity build in a buffer to that approach in the unlikely event that something occurs that means we need to use expenditure that hadn’t otherwise been foreseen. Obviously, during the COVID period, this was happening on a much more regular basis, and therefore we were closer to the limits on occasions. I would expect in this case to be quite some distance from the limit unless there is some largely unforeseen thing that arises. So imprest supply is very much part of the way Government runs due to the timing of the return of the Budget from select committees, where it currently is being interrogated, and it is an important part of allowing the Government to get about its business until that time.

Returning to the Appropriation (2022/23 Supplementary Estimates) Bill, I do just want to take the time of the House to highlight the fact that this bill does contain the Supplementary Order Paper (SOP) that has just very recently been tabled into the House. That is not the normal practice when it comes to this kind of bill, but it does happen from time to time. I can recall debating it when I was in Opposition and I can also recall doing it during the COVID period. This occurs when we end up with some expenditure that is required by the Government to be undertaken after the time at which the Supplementary Estimates are finalised.

The Supplementary Order Paper in this case relates to the Government’s expenditure that we’ll be undertaking when it comes to the North Island weather events and the need to have a policy in place to be able to manage those who will have to relocate from their current residences, as well as some other expenditure that is required with relationship to support for councils to be able to undertake works. While not much, if any, of that expenditure will actually take place during this financial year, given that the Government has taken a decision that it will cost-share these situations with local government, it is necessary to reflect that into the Supplementary Estimates. So in many ways it is accounting that leads us to this place. While we don’t expect to pay out that money in the financial year, what the public finance rules tell us is that if the Government makes a serious determination that it will be doing this, we then have to account for it under the rules of good financial management.

So an amount has been put aside there for this. That is to make sure that we have appropriated the funding; it doesn’t meant that it will necessarily be spent. So I hope that that is clear for the House as to why that came about. It came about due to the timing of the decision to do that after the Supplementary Estimates closed.

There is, of course, a committee stage for this bill, which will take place immediately after the second reading, where we will be able to go into in any more detail that members want on the Supplementary Order Paper. Committee stages are not used to debate the individual Supplementary Estimates, but where there is an SOP, the committee stage offers an opportunity for us to be able to do that.

More broadly in terms of the Supplementary Estimates, what they show is that throughout the period of the year there have been reasons to alter appropriations. Sometimes I think when members are considering such matters, they consider perhaps that we’re talking about all new extra expenditure. That is not always the case. Sometimes an appropriation changes its nature, as opposed to the amount of money that is going in. Sometimes it is simply to enable spending to remain appropriated and fit within the appropriations. So an example for that was a change to Vote Conservation in the Supplementary Estimates this time around, where the Jobs for Nature funding had changed its nature, and rather than leave the appropriation as it was, that was altered and updated.

Sometimes it indicates that there has been a need for extra funding, and on a number of occasions in the Supplementary Estimates that are in front of the House today, that has been caused by the fact that the cost of doing things—the inflation issues that we’ve debated many times in this House—have affected Government expenditure. So one example of that is a change in Vote Corrections which is largely around the Waikeria Prison project and the fact that the expenditure on that has been greater than expected due to some of the finance costs and inflationary costs that are related to that. So that is a reason to be able to make changes.

Sometimes when we make changes to Supplementary Estimates, it’s because of circumstances well and truly beyond control. So, for example, in putting together the census, when Cyclone Gabrielle hit, there was a need to make changes to the way census collection occurred to ensure that we did have those in the areas affected by Cyclone Gabrielle counted, and so Vote Statistics has a change within the Supplementary Estimates here to make sure that we were able to count all of those people. So that’s an example of where some matter that was unforeseen means that an appropriation needs to change.

Sometimes it’s to do with the way in which we fund things. So members of the House will be well aware that the Government, over a reasonably long period of time now, has been subsidising the cost of fuel both through the fuel excise duty and road-user charges. What that means is that in order to make up the difference from what is required for the National Land Transport Fund, the Government has been topping that fund up, rather than it being through revenue. That has to be reflected in the Supplementary Estimates as a change in terms of the way that the Government goes about what it does.

So, essentially, the Supplementary Estimates reflect the activities of Government through the period of the year that weren’t foreseen or weren’t part of the original Budget documentation, and, as I say, along with the imprest supply bill that we have in front of us today, this is legislation that is usual and normal and part of our parliamentary process. The one exception this year, as I noted, is around the SOP that we have, which, as I say, we will be able to have the opportunity to go through during the committee stage of this debate. But I would just emphasise again that the timing of that decision came after the close-off of the Supplementary Estimates.

I hope members of the House would agree that providing certainty to those who are in areas that have been affected by the cyclone justifies the approach that we are taking here. But as I say, actually, this is simply to make sure that we record the decision as opposed to that expenditure taking place in the remaining week of the financial year, or, indeed, up until the audit of accounts is finished. It just makes sure that we have tidied away a decision that Government has made and that members of the House can be clear about that. With that, I commend these bills to the House.

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

NICOLA WILLIS (Deputy Leader—National): With this legislation, the Labour Government is, effectively, asking Parliament to sign off on continuing to fund its ongoing economic mismanagement, because in these two bills, we, the representatives of New Zealanders, are asked to say yes to that Minister of Finance’s proven record of failure in which we have an economy in recession, we have a cost of living crisis that has entered its third year, and in which New Zealanders from all walks of life are struggling to get ahead. These bills ask Parliament, in that context, to sign off on a Budget that fails to deliver overdue income tax reduction.

Members opposite, today, have crowed about that, that beneficiaries in New Zealand have had their incomes rise 40 percent, even when you account for inflation. Well, I would ask members opposite to reflect on what has occurred for the everyday wage earner, who, by almost any measure, has gone backwards, whose wages have not kept up with inflation, whose after-tax wages have fallen behind inflation, such that they are going backwards in real-income terms. That is the economic situation New Zealanders find themselves in under this Labour Government.

Faced with the opportunity to account for some of that inflation, to reduce the income tax that workers pay, to adjust tax thresholds to compensate for some of the inflation that Grant Robertson has let rip through the economy, this Budget has failed to do so.

So we on this side of the House will not say yes to bills that give that Minister of Finance another go with the money hose, because we’ve seen what he does with that money hose. He sprays it all around without discrimination, without targets, without accountability, without clarity for what will be achieved. The result is record levels of inflation, which we were told would be transitory but, in fact, has gone on into its third year—inflation that is still running at more than triple what it should be, according to the Reserve Bank mandate.

What we have had as a result is interest rates that have risen faster than at any time in the history of New Zealand’s official cash rate. We have in front of us a ticking time bomb when New Zealanders from across the economy—first-home buyers, small-business owners, farmers—will, in the next few months, have to switch their home loan or their fixed loan from a loan with a rate of 2 or 3 percent to a rate of 6 or 7 percent. Many of them will not be able to cope with that. That interest rate will be the final blow for them. That is a ticking time bomb. Those interest rates have risen that fast because inflation has run amok in this economy.

In that context, the Minister of Finance is asking us to sign off on a Budget that completely fails to bring back-office bureaucratic spending under control, a Budget that fails to put in place any specific targets for what the Public Service will deliver. I look through this Budget and I see lots of money for restructuring, whether it’s at Te Pūkenga, the polytech centralisation; whether it’s at Te Whatu Ora, where we’ve got the new organisational chart and lots of restructuring happening; where we have the plans to restructure across the Public Service; but what I don’t see in this Budget are specific targets for the increases in services that will be delivered to New Zealand as result. That is a great failure.

We on this side of the House think that where money is appropriated, it should be clear what it’s going to achieve, Ministers should hold themselves accountable for achieving it, and where it’s not achieved, the Prime Minister should hold people accountable. But, actually, what’s happened on the other side of the House, whether it’s the $1.9 billion that went into mental health and didn’t deliver additional mental health services; whether it’s the money that was appropriated for the Provincial Growth Fund, in which the Auditor-General, the Public Service watchdog, came out last week and said that they cannot be confident that it has delivered value for money because the record-keeping was so poor, the processes were so poor, that the Auditor-General can’t even work out what was going on with all of the cash.

So what we see is that members opposite have become so used to dipping into the public purse, to using more and more taxpayers’ money, that they have become sloppy with the way they account for the use of that funding. The result is a Budget that will put more pressure on inflation and will put more pressure on interest rates right at a time when New Zealanders are begging and asking for some relief.

This is a Budget that will send more New Zealanders to Australia, because, unfortunately, too many of them will look at what’s appropriated for in this Budget and they will say, “Actually, there’s nothing here for me. There’s no income tax relief. There’s no prospect of inflation getting under control. There’s no prospect of my mortgage becoming more affordable. Actually, I can look to get a better opportunity elsewhere.”

I want to turn now to this whole process that we’re in, in which, with the Supplementary Estimates, we’re appropriating the money in between Budgets, essentially. I think it’s timely that we do so, when we see just how rushed this year’s Budget was. The Budget hasn’t even been passed yet—that’s why we’re doing these Supplementary Estimates—and yet the Government are already having to correct mistakes that were made in it. You heard the Minister of Finance speaking in some detail about some of those mistakes, in his remarks.

What you didn’t hear about was the tertiary bailout that he’s already had to announce today. So distracted was the Minister of Finance and the Minister of Education by their plans to centralise the polytechs in the form of Te Pūkenga, so distracted was the Minister of Education by her appearances at the Privileges Committee, that it appears—

Camilla Belich: Point of order. It’s not permissible for the member to make references to the Privileges Committee in a debate.

DEPUTY SPEAKER: That’s actually correct. The member will stand, withdraw, and apologise.

Hon Michael Woodhouse: Speaking to that point. This is an important matter, Mr Speaker.

DEPUTY SPEAKER: No, no; it’s quite clear that the member cannot make reference to an appearance before the Privileges Committee. That’s not a matter of debate; that is a black and white.

Hon Michael Woodhouse: Perhaps the Speaker can take advice. It is strictly prohibited for any member to refer to the deliberations of a committee. The fact that something has been heard in public before a committee is a matter of public record and is not a breach of Standing Orders.

DEPUTY SPEAKER: Thank you. No, the member is actually correct. The fact of the appearance is public record, just what can’t be referred to is anything that came out of the debate. I withdraw my request. Did we stop the clock there? We did stop the clock. So the member has two minutes and 30 seconds left.

Camilla Belich: Point of order, Mr Speaker. I’m not debating your ruling; I just want to make sure that—

DEPUTY SPEAKER: Well, I hope not.

Camilla Belich: —you saw and referred to Speaker’s ruling 213/4, which states, “Once a matter of privilege has been raised with the Speaker, it is out of order to refer to it in debate in the House.”

DEPUTY SPEAKER: No, the fact that the member has been before the Privileges Committee is a matter of public record. That’s what my ruling will be based on. So the member may continue.

NICOLA WILLIS: Mr Speaker, you’ll appreciate that the situation at our universities is one that we here in Wellington have had good cause to reflect on. I have had people working in that system say to me, “Where was the Government when we were begging them to invite the international students back? Where was the Government when we were saying to them, ‘If you don’t give international students some better visas, then they’re not going to come and there’s going to be a hole in our books.’?” Well, the Government was prepared to ignore all of that. It put together a Budget, and now today has decided that they are going to put on another band-aid. That’s just one example of the holes that we’ve already seen in Grant Robertson’s Budget.

The second example of a hole in the Budget that’s already having to be repaired before the Budget has even passed is the proposal for 20 hours childcare for two-year-olds. The sector were so unhappy with that proposal that they described it as unworkable. Before the Budget had even passed, Ministers were having to change the design and structure of it. It remains unclear whether that policy can be delivered without many, many early childhood centres either being forced to close or to reduce the quality of care they provide to two-year-old students.

And then we have the public transport debacle, where, again, with the Government that governs by slogans, we have a commitment to ensure free transport for certain age groups—but, again, the councils who are being asked to implement that say, “Well, that’s unworkable in its current form.”

My point is this: we have a Budget that is full of holes and we have a Budget that I predict—I predict—there will be many, many band-aids applied to in the months ahead. This is particularly important in the context of the Supplementary Estimates bill and the imprest supply bill, because what we will see is, in order to make it all stack up, you’re going to see the Minister of Finance finding a lot more cash down the back of the couch, and it’s going to be very hard to take him seriously, because he does that again and again. This is a Budget that delivers more debt, more inflation, and higher interest rates. It’s a bad Budget. On this side of the House, we will not support it.

Hon Dr MEGAN WOODS (Minister of Housing): It’s my pleasure to take a call in this debate on the Appropriation (2022/23 Supplementary Estimates) Bill and Imprest Supply (First for 2023/24) Bill. I think it’s important that we go back to that description that the Minister of Finance laid out in his first speech: exactly what this debate is about, what it does. It’s a very technical debate. I would draw members’ attention to the fact that this isn’t the Estimates debate. This is a very technical debate that does specific things.

What it does is it looks at the wash-up that needs to be done. Now, the need for these—if you’d only listened to the previous speaker Nicola Willis’ speech, you’d think this was some kind of anomaly, where we’re here in the House debating this bill, and that somehow this was a fix-up, because Government hadn’t done things correctly. In fact, these go back to 1989 and are a standard practice of the way in which Governments operate, in terms of the need between the expenditure that occurs between the setting of the Budget and the passing of the bill that brings that into law and also the things that change over the period of time.

So I’d just like to take on some of the matters that the previous speaker raised. So she said that already we’re back here in this House and we’re having to correct mistakes, and she used the example of tertiary education. It’s actually good to have an opportunity to actually talk about why it is that sometimes appropriations change. As some members of this House who have been involved in this will know, the Budget-setting processes happen late in the year, prior to the Budget being read. In this case, if we’re talking about Vote Tertiary Education, one of the critical inputs into decision making around that is the enrolment forecast that our universities come forward with. Universities every year—and people who have had dealings with the sector and who have talked to universities in their own patches will know this. They will know that sometimes universities track very closely to what those enrolments are looking like. They have to make a forecast, and when they come to say what the student achievement component of funding will be, when they’re speaking with their Minister around what that is, the Minister needs to rely on those forecasts.

Actually, the bill that we have in front of us here actually tells the tale of two parts of this. What the announcement we saw today—that those enrolment levels and those forecasts were not fulfilled, that there were not as many students enrolled at most universities. I say most, because, in fact, there was one university that did reach its enrolment forecast—I’d just like to give a shout-out to the University of Canterbury, if I can be a little bit parochial for a moment there.

So we see that because of that, ours is a Government that has been willing to work with the sector to find solutions and put in place some ways in which we can remedy it. That is in no way an error on the part of the Government. So I think we just need to check our outrage at the door a little bit on the other side of the House.

The other place where, of course, it’s a really good example—if we work our way through these documents, we can see underspends. It’s not only in the funding that would go to universities that result from lower enrolments, but you also see it in terms of the payments for student allowance. Because when you have lower enrolments for students, there will also be lower payments paid out in terms of student allowance, and that is another area in this bill where we do see some adjustments being made.

So these are important documents. They’re important documents for any Government of the day to be able to make sure, because Estimates are just that—Estimates are forecasts of what is going to be spent. Anyone who has managed a budget in any organisation knows that the actuals against forecasts can move around and that you need to have a process for tidying that up, and that is exactly what this process is about and has been the case since 1989. Sometimes, actually, there are as many as three imprest supply bills that are passed in a given year—sometimes two, but sometimes as many as three. So before anyone gets too excited about that, I think that that’s an important part to note.

I think what this document does also show is it’s an important document that chronicles, really, the responsive and agile way that our Government has responded to what happened in January in terms of the cyclone, the fact that there did need to be expenditure. It wasn’t anticipated when that 2022-23 Budget was put together, when that 2022-23 Budget was passed. But none the less, this was an activity that the Government had to respond to. We needed to make sure that we had funding not only for some immediate repair work but also in terms of a range of supports for people in Auckland and on the East Coast and in other parts of New Zealand that were affected by those extreme weather events. You’ll see that right back through these imprest supply and Supplementary Estimates documents. I’m sure if you go back and look at those documents following the February earthquakes in Canterbury, you will see similar adjustments that had to be made because there were immediate things that needed to be done. I think anyone expects that every Government would come on to that.

We did see, from the deputy leader of the Opposition, the finance spokesperson of the National Party, a speech that was largely more about the Estimates. I found it a really depressing speech. If you were only to believe what was in that speech, that everything was terrible, that New Zealand was the worst place in the world to be—it was so negative. I think that one of the things that I know, when I’m out and about speaking to people, is that people acknowledge that it is really hard out there at the moment. People are doing it tough.

But if we look at the facts, if we look at the evidence—we had the previous speaker say that what was in these documents was driving inflation, it was spraying money around, it was leading to inflation that seemed to have no chance of ever coming down. That was the indication I got from the speech that I sat here and listened to. But, actually, if you listen to the economists, what we’re hearing is most economists are now thinking that inflation has peaked, that we’re looking at inflation coming down. It won’t come down straight away, but we will look at it getting back into range in the coming months ahead, and that is a credit—

Hon Michael Woodhouse: Eh? Month?

Hon Dr MEGAN WOODS: Well, months as a plural, Mr Woodhouse. It has an “S” on the end of it. So if we look out over the next 12 months, the next year, that what we see is we have economists from—

Matt Doocey: So years now.

Hon Dr MEGAN WOODS: No; months, Mr Doocey. We have a look at the Westpac economists saying that interest has passed its peak—and I think it’s really, really unfortunate that we have an Opposition that seems to find that that’s a negative thing, that inflation will begin to come down. We’re seeing this globally. Because, of course, inflation—and what we’re seeing isn’t something that is only being experienced in New Zealand. We’re seeing that play out in countries around the world, and for New Zealand that is something that is really positive for us, that we will see that come down.

But I think one of the things that has kept us going through this period in good shape is the fact that we still have those really low unemployment figures. That’s one of the things that is threaded through all of our finance documents and reflects the incredibly hard work that our Minister of Finance has put in. It is not by accident that we have such low unemployment rates in New Zealand; it is because of a determined programme of work by our Government and led by our excellent Minister of Finance, the Hon Grant Robertson, that we have put at the centre of so much of our decision making how it is that we’re going to ensure that people stay in work. That is important. It is fundamental. The name’s on the tin for us on this side of the House: we are the Labour Party and work and jobs are important. I think back to those months in March 2020 when that was such an important consideration, and we can see that that has flowed through into these Supplementary Estimates. We can see it in the imprest supply that these are the important things.

But I just would like to reiterate that this is standard practice. This is not an out-of-cycle bill that is being put to the House. This is what Governments have done since 1989. Each and every—each and every—Government has done it. It is a very technical debate. I think if you look through, as I did a couple of votes, you can see some really interesting threads to follow through, and it is important that we do that. These are difficult documents to deal with, the sheer bulk of them, but they do tell an important part and give an important insight into what is happening in the New Zealand economy. Thank you, Mr Speaker.

Hon MICHAEL WOODHOUSE (National): Well, on the last point that the Hon Megan Woods made, I would certainly agree with that—it’s a bulky document; the document that underpins this bill runs into 1,024 pages. And it is a technical discussion, on one level, but I think it is appropriate to highlight the context to which Supplementary Estimates have been considered in the last two or three years, because it is about unders and overs but there’s no doubt that since this Government came to office, there’s been a heck of a lot more overs than unders. They run into the billions of dollars.

It would be fine if we could see the progress that was being made with that investment, but on nearly every single measure of performance, this country is going backwards: financially, economically, socially. So we do need to scrutinise the performance of the Government in setting and following Budgets, because I think the count is now six where we’ve had a Budget Policy Statement which sets out the parameters of the spending of this Labour Government, and I think the score is six out of six for breaching the Budget Policy Statement constraints by the time the Budget is written. So it’s not even as if the Supplementary Estimates were the problem—they can’t even stick to their own disciplines in setting the Budget. And, once again, we saw that in Budget 2023. I have no doubt—well, actually, I do have extreme doubt that that will happen again, because the public will certainly pass judgment on that ill-discipline.

Now, the other issue is—

Hon Judith Collins: Good save.

Hon MICHAEL WOODHOUSE: Yeah, thank you, Mrs Collins.

The other issue is, of course, the unders doesn’t always mean it’s a positive thing. The way in which the Budget is set provides the opportunity for there to be what are known as “multi-year appropriations”, which is operational spending that goes over a series of years. So it’s not unusual—and indeed, Vote Health has a plethora of them—where underspends in one year are carried forward through the Supplementary Estimates of Appropriations. But the problem with that, and it is a bit masked in this document, is that it is falling considerably behind where the Government itself said it should have been in its investments, particularly around mental health. My colleague Matt Doocey has been prosecuting this extremely well by highlighting that of the new money in the $1.9 billion Budget announcement in 2019, some of it is still not spent four years later. New appropriations for mental health that should have had projects well advanced by now are still on the whiteboard. They haven’t even got off the ground.

So we can’t even say that underspending in this Budget is actually a positive thing, because what we really judge the Government by is their ability to get things done and their ability to improve the lives of New Zealanders. After all, they call them “Wellbeing Budgets”. Well, I think people, again, will make their own judgments about whether their wellbeing has been enhanced in the last 5½ years.

The Minister of Finance, in introducing the bill, talked about this being limits, not targets. And that’s true, except he doesn’t seem to act like it because he sets the targets so high that it’s almost impossible to meet. And that is the manifestation of the imprest supply bill. Now, I am pleased to note that this year the huge slush fund that they gave themselves in 2021, and a slightly less huge slush fund in 2022, is not being repeated in the imprest supply. As members should be aware, this is the authorisation to spend in the meantime while the main Budget bill is being deliberated on. But buried in amongst the $30 billion—I think it is—of appropriations is an allowance to account for “additional material risks” and the uneven timing of expenses within votes. That’s code for “It’s a new bit of money for stuff we haven’t thought of spending on yet, but we could in that period.”, and it’s $4.3 billion. Now, that might seem high, but actually it’s considerably lower than it was two years ago, and so it should have been. I have criticised the Government for the extraordinary amount of, effectively, slush funds that they give themselves in the imprest supply bill, so it is pleasing to note that that has gone down.

But what hasn’t gone down—if we return to the Supplementary Estimates of Appropriations—is how much this country is spending on servicing debt. On page 431 of the document, we find that the appropriation for, basically, interest—the cost of financing this spending has gone up by $752 million. That’s three-quarters of a billion dollars. So by the end of this financial year, we will have spent $5.32 billion servicing the debt that this Government has incurred over the last few years. Remember, our net core sovereign debt when they came to office was less than $6 billion, and now it’s nearly $800 billion—and that’s an offset, because the gross sovereign debt is around $214 billion. We are heading towards the sorts of appropriations to pay for the interest on that. That is double the police Vote, it’s double what we spend on early childhood education, or at least the Crown spends on it. So the higher that figure goes, the harder it will be to spend taxpayer money on the things that taxpayers want us to be spending on, and that is: keeping them safe, growing export markets, supporting those people who are in need through jobseeker supports and other benefits, supporting our elderly, maintaining our health services. Every dollar we spend on extra debt that is being incurred would be dollars that we wouldn’t be spending on those other things—if the Government had the fiscal discipline to stick to its own Budget Policy Statement.

So I get back to the original point: we are now at risk of coming into a vicious cycle of spend and pay for the debt through interest and having to borrow more, increasing our interest bill, and so on. We are in something of a cycle and a spiral that doesn’t appear to have a limit, so I’m particularly concerned about borrowing expenses.

I’m particularly concerned about the huge amount of money that we spend on vaccine costs. That was an extra appropriation—nearly $886 million purchasing potential and proven COVID-19 vaccines and other therapeutics. I’m not worried because we spent the money, I’m worried because they’re expiring in warehouses up and down the country. As we have found out, 17 million COVID vaccines are now expiring. So it’s a valid question to ask the Minister of Health: why on earth did we spend nearly $887 million on more vaccines at the same time as 17 million vaccines were going to waste? That suggests to me a ministry that has not got control of its stocks and does not know what’s going on in its portfolio.

There are a number—I would go into the transport Vote, I probably don’t have enough time, but there is a tremendous amount of money not being spent on transport issues. And when I see that the estimated amount to be spent on activities under the National Land Transport Programme as authorised by blah-blah-blah has gone down by $1.2 billion nearly, then I think there are serious questions that need to be asked about whether the funding that is taken in by NZTA through fuel excise is actually being spent. Because if we’ve got more than a billion dollars on National Land Transport Programme funds being underspent, then serious questions need to be asked.

Yes, it’s technical, and, yes, it’s necessary to keep the Government going, but there are significant questions about the quality of the spend and the lack of outcome that the taxpayer is getting for it. And we will continue to point those things out.

Hon DAVID PARKER (Attorney-General): Thank you, Mr Speaker. I rise to take a call in the debate on the Supplementary Estimates. Can I begin by thanking all of the select committees that dealt with the separate Estimates, committee by committee, and reported back to Parliament; and too the officials who serviced those select committees, including those from Government departments, but also from the Audit Office.

I hear, from the Opposition, claims about a blowout in expenditure that is being poorly spent by the Government. They use nominal figures, which do show that, in nominal figures, Government spending has increased by tens of billions of dollars. Of course, nominal GDP, which you should compare expenditure with, has also increased hugely—in 2017, nominal GDP was $275 billion. This year, it’s over $400 billion, so the economy has grown from the start of the period when we took Government of $275 billion—and a few hundred million—to over $400 billion projected for this year. Indeed, the forecast as at the time of the Budget Economic and Fiscal Update for the year ended 30 June 2024 was $415 billion, and it will be there or thereabouts.

So those numbers don’t mean much to people; they’re enormous numbers, and the House is better to consider core Crown expenses as a percentage of GDP in order to assess whether there’s been a massive explosion in Government spending. Core crown expenses—and I’ll use a slightly different time series here—in 2013, under the National Party, five years after the global financial crisis, the core Crown expenditure was 32 percent of GDP. This year, it’s projected to be 33 percent of GDP. Now, it’s true that, in the intervening years after 2013, National did drop expenditure as a percentage of GDP, because that’s what National Governments do—they have a fixation on reducing Government expenditure. Wise use of Government expenditure is always appropriate, but I can recall a speech of the then Minister of Finance—or he might have been, actually, by then, Prime Minister—in Australia, where he said his prime indicator of whether he was doing a good job was whether he was dropping Government expenditure as a percentage of GDP; that was his driver. From the point of view of the Labour Party, by the end of that period, when they had dropped expenditure further, we had virtually no new hospitals built—

Hon David Bennett: Waikato Hospital was rebuilt.

Hon DAVID PARKER: Beg your pardon?

Hon David Bennett: Waikato Hospital was rebuilt.

Hon DAVID PARKER: Waikato Hospital was rebuilt, that was—

Hon Dr David Clark: That was under us!

Hon David Bennett: No, it wasn’t.

Hon Dr David Clark: Well, I committed the funding.

Hon DAVID PARKER: So we heard, then, from the list member for Hamilton, claiming credit for the Waikato Hospital build, when it was the Labour Government that funded it because the capital funding hadn’t been provided by the National Government. And, indeed, the Hon David Clark just interjected to confirm that he was the Minister that authorised the expenditure.

In respect of other issues, of course, they ran down housing—and we had questions in the House today about housing. The number of State houses in New Zealand or public houses decreased under the term of the National Government, because they didn’t spend on them, and, in fact, they sold them off. They sold off the capital stock—they rented a few more; but they sold off and used the capital that they realised from those sales to put into other things, which is why, by the time they left office, they had less funding. They froze the funding for the police: in inflation-adjusted terms, they “defunded” the police. The so-called “party of law and order” defunded the police—the National - ACT Government—and by the end of their period they had fewer police officers employed by the Government than was the case earlier, which is why we’ve reversed that and now have more than 1,800 more police.

In respect of debt levels: in my opinion, New Zealand hasn’t had a fiscally irresponsible Government since the Muldoon government, when debt increased hugely, and it was on an unsustainable trajectory and there was no route back to surplus. The next Labour Government, the Lange-Douglas Government, got debt under control. The following Bolger Government continued that trend. The following Clark-Cullen Government probably had the best record of anyone: nine surpluses in a row which reduced net debt to—on the current measure—zero; in fact, we had net assets and well-funded public services as well. Then the last Government, they had to deal with the global financial crisis and the Canterbury earthquake rebuild, but they so reduced taxes that actually, during the period of their Government, net debt increased, for a start, quite substantially—before it reduced towards the end of their term. And they left office with net debt, excluding the super fund, at 18.7 percent. I’m reading the Budget documents here, Mr Bennett. You could read them; you pretend to be an accountant, but I don’t hear you actually opening up the Budget documents—referring to the actual documents—rather than making superficial, inaccurate comments that show your ignorance when it comes to the matter of public finances.

Hon DAVID BENNETT (National): Point of order. The member is very much aware of Helen Clark’s last Budget, and the deficits they left behind—

DEPUTY SPEAKER: No, no. I’m sorry—if the member is going to engage in vociferous debate, then that will, obviously, open the range of ability for a speaker on the other side to actually respond. Be aware. Carry on.

Hon DAVID PARKER: Thank you, Mr Speaker. So when we took office, net debt, excluding the super fund, was 18.7 percent, and net debt, including the benefit of the assets in the super fund, was 5.9 percent of GDP. That’s the 2017 figures. In 2018, net debt decreased to 3.8 percent under a Labour administration before COVID, and net debt, excluding the super fund, decreased to 17.2 percent. It’s the same the next year again: in the year ended in 2019, net debt, excluding the super fund, was 16.4 percent—again down—and net debt, including the super fund, was down to 1.8 percent. Then COVID hit, and COVID is the reason why—

Hon Members: No.

Hon DAVID PARKER: Oh, they say no—you know, the biggest increases in governance expenditure during those years were the expenditure on COVID support payments. There were lots of other supports that were necessary in the economy as well, but the biggest one was the wage supports that were paid through businesses. Those businesses were saved, partly because their employment costs were defrayed without laying off their staff. To this day, this country benefits from that, because even in the midst of a technical recession, unemployment is low—is it 3.4 or 3.3?

Hon Rachel Brooking: 3.4.

Hon DAVID PARKER: —3.4 percent unemployment: very low by the standards of New Zealand and lower than a lot of the countries that we compare ourselves to. Now, what happens going forward? Well, core Government expenditure as a percentage of GDP did go up to 34.6 percent of GDP in the year ended 2022. It has since dropped 33 percent of GDP this year, and drops further to 32.3 percent the year following, 32 percent the year after that, and 31.5 percent. And I again compare that to 2013—when it was 32 percent. What exaggerated rhetoric that we have from the Opposition, trying to present those facts as irresponsible spending on the part of a Government—

Sam Uffindell: Very irresponsible.

Hon DAVID PARKER: Oh, “very irresponsible”, we hear from the member for Tauranga. You never hear them talking about these percentages of GDP, because they’d rather talk about the gross numbers, and, as I say, those gross numbers are hard for people to interpret given that GDP has risen from 2017, $275 billion to $415 billion forecast for this 2023/24 year.

In respect of the Supplementary Estimates, other members have covered those in detail. I do note that the Supplementary Order Paper which has been presented—which I’m sure that Minister Robertson has spoken to or will speak to—has a single item in it, which is unusual, but it relates to the storm events and there is $500 million set aside for Crown payments to local authorities and other eligible stakeholders. That, of course, is something that is not the fault of the Labour Government, although it is our responsibility to help.

DAMIEN SMITH (ACT): Thank you. I rise on behalf of the ACT Party on the Appropriations (2022/23 Supplementary Estimates) Bill. The key thing with a bill of this nature is the key word, “appropriate”. That’s what it’s about, and this mechanism allows the Parliament to authorise Government expenditure and expenses of Government. But is this actually appropriate, given how it’s being done? We accept that the goal of a Budget and this bill is to change things—no Budget is perfect, but, jeez, there’s some spin going on today about what’s actually happening, and we wanted to punch a few holes into that.

We are in a background today where Minister Woods, Minister Parker keep talking about labour and unemployment. Westpac today published that the dream is coming to an end, where unemployment rates are going up and job ads are going down. We just aren’t moving, and we have a situation where now we have to interpret a 1,200 page document—the Robertson Da Vinci Code. Then we’ve got the—and I’ve always wanted to say this—the “pickety pocket or two” approach by our Minister of Revenue, who seems to tax us further and harder and deeper, and the harder we work the more we’re going to get taxed. There isn’t a lot of empathy or sympathy on that side of the House for rising costs and rising interest rates.

You know, if you look at this amount of cash, it’s big bags of cash. If you took it as US$100 bills, I just wonder, on those three planes that are going to China like some sort of narco deal, would you be able to fit this cash in the plane and get it out of here, and then just drop it on the economy and add to inflation? But let’s look at those bags of cash: $30 billion of expenditure in advance of the appropriation bill to many departments’ operating expenses. Another $9 billion in capital expenses is what we’re facing. It’s essentially to keep the lights on for the months between the start of the financial year until the appropriation bill is eventually passed. It shows the impact of inflation under Grant Robertson.

In 2017 and 2018, the similar imprest bill was only for $7 billion, and capital spending of $5.5 billion. It shows how this Government is so spendthrift and how Minister Robertson is one of the most extravagant finance Ministers in New Zealand history. The sheer margin of this bill is notable. We’ve just had a Budget, and already its estimates and assumptions are incorrect. How does that work? And as an example of that, the 20 hours free for two-year-olds was a promise that looked good for the media, only no policy work had been done before they rushed out with it. If the Government had spent half as much time doing the policy work and engaged in the early childhood education (ECE) sector as they did on the political communications, then the Budget announcement wouldn’t have been such a debacle. So, really, we don’t know how much that 20 hours of ECE policy would cost, because the Robertson Budget was just numbers on the back of an envelope.

Since the Budget, we’ve had another big hole, a fiscal hole in the Government’s finances, with the collapse of the second emissions trading scheme (ETS) auction. At least half a billion dollars down the drain because the Government got the ETS estimates so bloody wrong, not once but twice. Labour said that climate change is the challenge of our generation, but they’ve crashed the ETS not once but twice. To crash an auction once is a sign the seller got the market wrong; to do it twice requires a special level of incompetence. But because the credits unsold will transfer over to the next auction, it’s likely that this crash as well will have, within five weeks of this Budget, a likelihood of a billion-dollar hole. How can we have, within five weeks of this Budget, a billion-dollar fiscal hole?

The falling student enrolments, as mentioned earlier, and efficiencies of many New Zealand universities, have been known for a while. It was obvious that some New Zealand universities were under financial pressure, yet within five weeks of the Budget the Government runs out with a $128 million bailout—and it is a bailout. Let’s call it what it is. This was on top of a massive $180 million initiative for new enrolments to 2025, and $521 million for tertiary tuition fees for providers. Thankfully, we’re not being expected to undertake further funding of the disastrous public amalgamation which has already burned up another $220 million in the Budget. There’s another billion.

The Budget, just five weeks ago, forecasted the economy would grow. I would like to put it on the record in the House today, because it needs to be said, we now have the “Robertson recession”. With what appears to be long-term stagflation because of this Government’s addiction to spending and debt, the Budget’s predicted that the Government would be $7 billion in deficit. It’s safe to say that this estimate was wildly optimistic and that debt levels are already looking to go well past that.

The Government is now planning to borrow more than $10 million—more than forecast in the half-year update to December just seven months ago. Unemployment’s rising. Job ads are going down. Inflation is going nowhere. And housing rates are happening for longer. Meanwhile, we’ve still got the problem children that are inside this Budget: Auckland Light Rail, KiwiRail, our health system, our COVID response and the tail end of that, and this is having an effect on our coffers. How much “Mr Piketty Pocket or Two” can bring taxes in, it’s not going to balance the books—

DEPUTY SPEAKER: Mr Smith, this is a broad-ranging debate, relatively, but you have gone beyond the parameters. Could you come back, please, to relating it to the appropriations.

Camilla Belich: Point of order, Mr Speaker. This is the second time the member has referred to the Minister of Finance as a “pickpocket”, which I think is out of order.

DEPUTY SPEAKER: Look, this has been a relatively robust debate. I will ask Mr Smith—I’ve now brought you back to the bill, please, and so if you just reflect the comments that have been made today, and just reflect back to the bill, please. I won’t order on that, but just—decorum of the House.

DAMIEN SMITH: Point of order. I would like to clear up that I did not call the finance Minister a pickpocket.

DEPUTY SPEAKER: Well, rather than get into who said what, can you just continue with your speech, please, under the parameters that I’ve laid out.

Matt Doocey: He just steals it from the front; he doesn’t bother hiding it in the pocket.

DEPUTY SPEAKER: Mr Doocey, I’m ruling on a point of order. You will stand, withdraw, and apologise.

Matt Doocey: I withdraw and apologise.

DEPUTY SPEAKER: Right, has everyone had enough? Right, Mr Smith, under those guidelines could you continue your speech please.

DAMIEN SMITH: So with the appropriations bill, ACT will not support this bill, but it will support the expenditure in the Supplementary Order Paper to provide certainty for those affected regions. The Government can have confidence in us from that point of view.

Back to my earlier point, which is that an appropriations bill is about appropriate spending. Within five weeks of this Budget, the whole spending profile has been thrown out the window, and it’s not over yet. We would like to see some fiscal discipline injected into this Government’s approach in the next six weeks, to really ensure that New Zealanders can be confident in the expenditures of the Government—that it’s all appropriate and that it’s not just a Budget for the sake of it; it’s a Budget that actually means something, because it has been a Budget that has let the nation down.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. As the Hon Megan Woods said earlier—I believe, in the second or third speech in this debate this afternoon—what we’re not debating is the Budget. What we are debating is, of course, the Appropriation (2022/23 Supplementary Estimates) Bill. To that effect, what it is that we’re talking about is not anticipated spending but adjustments that have to be made in light of particularly unprecedented events such as, for example, as highlighted, flooding and cyclone events.

However, I think it is important to note, as many other speakers have in their contributions thus far, that all of the decisions made in here with regard to spending, and actually also the decisions that have been made to not spend in certain areas, are, of course, fundamentally political decisions. And to that effect, to those following along at home who may not be particularly familiar with the work of the Finance and Expenditure Committee—the wonderful committee that it is—and the levers that are available to us as a Parliament and the levers that are available to the Reserve Bank—because there’s been much made of, for example, increasing mortgage rates—I think it’s really important to kind of outline what those levers are that are available and how they work hand-in-glove, or are supposed to work hand-in-glove, together as economic levers at our disposal through requisite authorities that, of course, are empowered by the legislation of this place, our Parliament.

So fiscal policy is, of course, the stuff that the Government does. It is largely tax and spend. And even for members of the Opposition, I think they would agree and understand that Governments of all stripes do that thing of taxing and spending, and that again belies the kinds of behaviour that we want to incentivise inside our economy. As the Minister, the Hon David Parker, has made much of over the past few years, actually subsequent to the former National Government’s tax switch of increasing GST and decreasing income rates, that has resulted in changes in behaviour inside of our economy and some of that distortionary impact, which in turn has perhaps seen that aggregation of wealth in fewer and fewer hands.

However, Madam Speaker—just noting for those following along at home that we have the change of Speaker—fiscal policy is the stuff that the Government does. Monetary policy is the stuff that the Reserve Bank, our central bank does, and of course the main lever at our Reserve Bank’s disposal is the official cash rate (OCR), the ability to raise or to lower that. And we saw throughout our time in the Finance and Expenditure Committee, in the many hearings that we have had with the Reserve Bank, on record from the Reserve Bank Governor at the end of last year, an intention, as noted by Adrian Orr, to aggressively pursue the increasing of the official cash rate to—what he said in his own words, when I put that to him—“manufacture a recession”.

That is why it was a little bit confusing when we had seen those projections from the Treasury off the back of the Budget documents released a few months ago now—that we had a projection from Treasury that we would see the OCR remaining stable at that point. Obviously, just subsequent to that, we saw an increase of 0.25 basis points—but there was going to continue being this aggressive line pursued by the Reserve Bank of New Zealand (RBNZ).

RBNZ, of course, has a mandate that is twofold. The first is around financial stability and the second is around maximum sustainable employment. Just on that point, I think it would be remiss of me not to address the points made by the honourable member from the ACT Party Damien Smith about hard work and about who is rewarded for hard work in this economy and the society and the rules that we have put in place. And to that effect, I’d just really like to make it really, really clear that what we’re talking about, when we’re talking about hard work, is those who were at the front lines during our COVID-19 response throughout the pandemic, those who are out there working hard every single day and actually don’t necessarily see the benefits of it in terms of the income that’s afforded to them—our teachers, our nurses, our firefighters, and our front-line emergency workers. So when we’re talking about hard work in the context of the high-wealth individuals report, I’d just really like for members to be really explicit about what it is that they’re talking about and define what it is that they mean when they’re talking about hard work.

Now, we’ve heard from many, particularly in the context of the Supplementary Estimates that we’re debating this afternoon, about unprecedented impacts. And here again, it’d be remiss of me not to mention what’s just been occurring on the East Coast just over this weekend with the state of emergency. Once again, we are seeing climate change - charged weather events continuing to ravage cities and towns and communities and homes and whānau across this country. And I think that that’s where it’s really the place of this House to actually reconcile with the reality that this stuff just is not unprecedented any more.

We have the science very clearly, as we have had for decades, that if we continue to behave and operate our economies in the way that we presently are, then we will continue to see far more greenhouse gas emissions put into the atmosphere, which in turn will continue to supercharge these already climate change - charged weather events. And to that effect, speaking about the quality of spending or the types of spending that we’d like to see undertaken, I’ve noted that many have spoken about how we need to shift the focus from mitigation to, for example, adaptation. To those, we in the Greens say that genuine mitigation is in fact adaptation, not least, as the Hon Michael Woodhouse put in his contributions, when we’re talking about transport, for example.

If we want a resilient transport network, it is one that decarbonises and provides those transport opportunities for New Zealanders across our towns and cities and, indeed, in our rural landscapes as well. To that effect, all spending actually has to be climate spending because, unfortunately, unlike many in this space who like to pretend there is a trade-off between the economy and the environment, it so happens that the economy exists within the environment and that jobs happen on the planet. We need to consider these things, of course, holistically.

And, again, to that effect, we’ve heard a lot in this debate about GDP, a metric which, obviously, was refined by Simon Kuznets in the early 1900s, who took it to the US Congress and was like: hey, here’s a really good way to measure economic transactions inside of the economy, but, God forbid, do not use it as a measure of what he called welfare, and what we now call wellbeing, of those who operate and live in our communities. The reason for that is that GDP is simply a measure of economic transactions. It doesn’t measure the distribution of those transactions, the quality of them, or if we even want them to occur in the first place.

GDP goes up when there is a natural disaster, such as we’ve experienced across the North Island over the first six months of this year. GDP goes up when there is a car crash, when somebody gets cancer, because there has to be economic transactions in order to undo that social ill. That perhaps is the underlying perversity in those very Treasury projections with regard to GDP and with regard to how they had projected, as the member from the ACT Party noted, that we would avoid the technical recession that we are now in—ironically and perversely, by virtue of those climate change - charged weather events and the Government spending that was necessary to do the clean-up and the wash-up subsequent to it. That, again, is why we need to be looking at all of this stuff far more holistically and why the Greens consistently plead for us to have this climate lens to all of that spending that we as a Parliament are undertaking. Of course, that is precisely what it is that we are debating this afternoon.

If I may, just finally in wrapping up this contribution, which is the sole contribution for the Greens in this part of the debate on the bill—earlier today throughout this debate, we heard from the deputy leader of the Opposition, Nicola Willis. She was prosecuting largely the same point inside of question time earlier today—making the point that in a recession, technical or otherwise as it may be, we shouldn’t be looking to redistribute wealth and making the point that now would be a terrible time to impose, for example, an asset tax or a wealth tax or capital gains tax or otherwise; of course, completely neglecting the history of this very country where fewer than 100 years ago, in the midst of a Great Depression, there was the introduction of the Social Security Act 1938, which led to a pretty much guaranteed—

Hon Judith Collins: It was actually at the end of the Depression.

CHLÖE SWARBRICK: —standard of living for most New Zealanders and decades of prosperity, the Hon Judith Collins. That was paid for off the back of taxes imposed on those who had profited handsomely during a time that was incredibly challenging for many. It was the foundation of the social contract to say that all of us are in this together and actually you don’t end up with freedom of choice inside of an economy, inside of a society, if you don’t have access to those basic economic means for all of those who live within it.

So when we have IRD research that’s telling us that the top 311 families in this country own more wealth than the bottom 2.5 million New Zealanders combined and that they also pay a lower effective tax rate, less than half of what the average New Zealander pays—all of this is exposed. All of this is exposed to be simply a matter of political decisions and a reflection of the values of this House. The Greens are incredibly clear that we stand for people and planet. And while the Government has made some good moves in some good directions, there’s far more mahi to do. Thank you, Madam Speaker.

INGRID LEARY (Labour—Taieri): I’m so glad that the previous speaker, Chlöe Swarbrick, mentioned Michael Joseph Savage, because my father was one of the first beneficiaries of that social security system. Their family home burnt down, his mother was looking after six children, and they were able to be housed. Later on, he was able to win a scholarship to go to university, and that transformed the chances for my family. So I’m really glad that the previous speaker raised that, but it’s time for some myth-busting, because some of the claims from the other side of the House have been, quite frankly, outrageous. First of all, let’s be clear: the appropriation bill that is going through today, the Supplementary Estimates, is business as usual. This is a normal course of events in the budgetary cycle.

The second myth: that somehow this Government is sloshing money around. We’ve heard from the Hon David Parker that the correct measure, and I agree, is core Crown expenses as a percentage of GDP. Let’s go back to 2013: it was 32 percent; 2023 it is 33 percent. But what really galls is the notion that National and ACT somehow care for struggling New Zealanders. The difference is that they say that they are astute financial managers. I could save $100 a week if I was on a low income and say that I was an astute financial manager and I could send my children to school without lunch and without shoes and put them to bed in a poor, cold house, or I could look after them. So the idea that they say that fiscal discipline is needed—their fiscal discipline, in my view, is negative, wet, whining, and actually rigid as well.

May I also refer to the point made by Chlöe Swarbrick around the official cash rate and some of the conclusions that she made there. It was raised in the debate. There have been official cash rate rises; that lever has been used, along with a number of levers, to take the pain out of inflation. Those levers are working. Treasury predicts that we will reach target inflation, by 2 to 3 percent, at the end of next year. So just a point, really, that those levers are working.

Madam Speaker, I can see you looking at me, wanting me to go to the Supplementary Estimates, and can I just say it is a wide-ranging debate, but what I feel is that this is around a Government that listens versus a very rigid, negative, and whiny approach. We have seen it before, because the Opposition refuse to acknowledge that things happen in life after things have been budgeted for. Any household knows that, any mother who runs a household budget knows that, any business owner knows that, and that is why the appropriations are “estimates” and that is why there is a clean-up at the end: to account for the money, to explain the change, and also to explain any change in performance indicators.

Now, the Opposition may like to pretend things haven’t happened but, in fact, there has been COVID, there has been a pandemic of inflation, there has been cost of living pressures, the war in Ukraine, and look what difference that made. The war in Ukraine directly led to the petrol excise reduction of 25 percent; that would not have happened without the war in Ukraine. That is why we need the Supplementary Estimates.

If we look at the Provincial Growth Fund (PGF), which was raised by Nicola Willis in her contribution, I sat in the select committee that did the scrutiny of that, and it is fair for the Auditor-General to say that there needs to be adequate accounting for money, but the system itself does not allow for a quantifiable opportunity cost to be measured. It is very easy to sit with the benefit of hindsight and look at the systems that were used, without taking into account what would have happened to those communities if the money have not gone out the door.

Now, the Auditor-General’s office said, “Yes, you know, that’s why we haven’t been so tough in our comments.” There is no way, currently, in the system to numerate and quantify that. That is one of the issues with the system, and I can guarantee you that there were communities that would have fallen over, that were really struggling, where that PGF money made a significant difference, particularly to marae around the areas, and certainly in my own electorate in Taieri, where PGF funding has contributed to projects that are going to make a significant difference to those communities, kept people employed, kept the construction sector going, and kept unemployment low.

Now, if we look at what National would do, the last time there was a cost of living crisis National said they needed austerity. In 2012, instead of being flexible, instead of being able to provide flexibility to support struggling people, they imposed privatisation, job cuts, a tax on welfare and education; they gutted the Hillside Workshops in my own electorate of Taieri, which led to job loss; they actually gave tax cuts to the rich, which significantly impacted on poorer New Zealanders; and they increased the GST rate, which is regressive. All of this had a massive—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! If the member can just come back to this appropriations bill, please.

INGRID LEARY: Sure, thank you, Madam Speaker. My point, really, around this appropriation is there needs to be flexibility in the system, and the flexibility does need to be applied with discipline, as it has been, but if there is a rigid approach taken, as there was by the National Government in 2012, it leads to austerity and the social scarring that our finance Minister has spoken about so often.

Somebody has raised the fact that the universities have received $128 million of funding today. That is fantastic. That is an example of a supplementary appropriation that has been brought about by need, and it is an example of a Government that has listened. I just want to acknowledge, today, all those in my electorate and the electorate of the Hon Dr David Clark who have been grappling with the spectre of redundancy. I am hoping that this will put their minds at ease, because, actually, somebody said that this was foreseeable—I think it was Damien Smith—in fact, the Budget gave the university sector a 5 percent budget increase, which is a significant increase. What wasn’t taken into account when that Budget appropriation was happening was the numbers that would drop off, both from COVID, from inflation, but also the very tight labour market that we find ourselves in. So it is absolutely appropriate to be able to respond flexibly and provide additional funding so that those thought leaders in our community, those institutions of thought leadership, can continue.

If I look at Otago University, it is the jewel in the crown of Otago and it will, with the new Dunedin hospital, remain the jewel in the crown because it positions our city as being a leading city for medical leadership and education. So it’s really important that we do have those institutions. I was listening this morning to Andrew Geddis on national radio do a really interesting piece around electoral reform and the work that he’s done sitting on that panel. Now, that is the sort of thought leadership that universities can provide. We need to look after them, and in this case the Government has done that. But it is not doing that in an undisciplined way. It has also introduced a review on the higher education funding system. That’s entirely appropriate given that we find a number of universities in the same boat.

So, just to re-emphasise, really, this is business as usual. This is about Budgets being disciplined but having enough flex to respond to situations like pandemics, like weather events, like foreign wars, like inflation, which is being felt globally. That’s what this appropriation does. If we look at the alternative, which is to think that budgeting is somehow a perfect mathematical science—that there should be no flex, no wiggle room; only austerity, only cuts as a way to respond—that is going to leave not only struggling New Zealanders but middle New Zealanders behind.

So there are two choices, and our side of the House has very clearly shown that an ability to listen, and to budget in a disciplined way but listen to the electorate and respond where it’s appropriate, is the right way to approach the Budget and the Supplementary Estimates. That’s exactly what we’re seeing here now. The amount budgeted in the Supplementary Estimates is actually lower than it has been for a number of years, for the reasons that other speakers have said. So I just hope that listeners out there realise this is business as usual, that it suits the National Party to try to say that they are astute fiscal managers when their astute fiscal management, in my view, takes no account of wellbeing, takes no account of whether a child is sent to school with shoes on or whether they live in a warm, dry home. So there’s nothing more to say. It’s a great bill. I commend it to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call. I call on Sam Uffindell.

SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. I would refute that last comment by the previous speaker, Ingrid Leary.

Hon David Bennett: Refute the whole speech.

SAM UFFINDELL: I would probably do that as well—thank you, Mr Bennett—around this Government and their astute approach, as it was called! Let’s make sure the Hansard includes the sarcasm on that—that they are astute managers of the economy and looking after people. The way you look after people is to run the economy properly, keep inflation down, and keep the cost of living down, and it’s through a growing economy that you can then deliver the services that people need. We’ve seen six years of blown Budgets under this Government, and this is another one.

As we look through the Appropriation (2022/23 Supplementary Estimates) Bill and Imprest Supply (First for 2023/24) Bill—it’s a bit of a mouthful—what do we see? We see another blown Budget under this Government. And we haven’t seen anything in here to address the issues that are coming up. We don’t see any attempts to address the significant spending that this Government is undertaking. We don’t see anything to address the significant Government spending—the back-office spending. There’s no public service delivery targets. There’s a continuation of what I would call poor spending after poor spending. And we’ve seen operational spending up 80 percent since 2017, and I would challenge anyone in New Zealand whether they have seen an 80 percent lift in public services.

I just want to run over a few figures so it’s perfectly clear for everyone—and I’m sure there are many—watching at home around the situation here. Pre-COVID, net debt—which is a term that’s often used these days—was $5.4 billion. The Treasury forecast for 2024 is that it will be at $91.2 billion. That is a significant sum and interest needs to be paid on that.

When you’re Moody’s and Standard & Poor’s and you’re looking at how New Zealand is managing the economy—and they are looking at it, and they are starting to suggest that we need to get a little bit of a wriggle on and take the situation seriously or we may face a downgrade. The way things are looking, interest repayments will be our fourth-biggest expenditure going forward—after social welfare payments and super, after health, after education, it will then be interest repayments. That’s a really poor place to get to. Kiwis work really hard and they didn’t get a lot out of this Budget, and they certainly don’t want to see their hard-earned tax dollars going towards paying down a very big debt that this Government has built up.

We’ve been in deficit for a while now. We’re not expected to get back into surplus until 2026, under this Government—it’s only a minor one: half a billion. And I’m sure that won’t actually eventuate because we’ve seen it blown every time, too.

We heard core Crown expenses get mentioned today. I just want to go over some figures, here, because, in 2017, core Crown expenses, according to the Budget Economic and Fiscal Update, were $76.3 billion. The Estimates for next year are at $137 billion, and that is a significant increase in spending with very little delivery. This piece of legislation shows that this Government doesn’t have a plan to tackle the real issues, which is the cost of living crisis, it’s the inflation which we heard was transitory—it clearly is not; it is set in. We are in recession. The papers and the Government don’t like to talk about it much, but we are in recession. Our peer countries are not in recession, but New Zealand is in recession.

So National has a plan to get us out of recession. It has a plan to deal with the cost of living crisis. It has a plan to restore fiscal discipline. It has a plan to provide tax relief to hard-earning New Zealanders who are doing it really tough in the middle of a cost of living crisis. We’ve got a plan to lift incomes. And we know that sound economic management is what we need if we are going to be able to afford the healthcare, the education, the police, the justice, and the defence services that New Zealand desperately needs. If we are going to be able to build the infrastructure that we need, then we are going to have to get our books into order.

We’ve seen it six times in a row: this finance Minister and this Government are not capable of delivering the stability and the sound fiscal management that New Zealand needs. I thought Nicola Willis spoke extremely well in her speech earlier today—number two speaker—and I really look forward to her, hopefully, taking the reins soon, because we are in crisis at the moment. We are in a crisis under this Government, and I oppose this bill very, very strongly indeed. Thank you.

SARAH PALLETT (Labour—Ilam): Thank you, Madam Speaker. I appreciate the opportunity to stand and speak on these extremely interesting bills, the Imprest Supply (First for 2023/24) Bill and the Appropriation (2023/24 Estimates) Bill.

This is the first time that I’ve been speaking on the imprest supply bill, and I hope that won’t be too obvious. This is a technical bill, as many people are not aware, and, in fact, to be completely frank, I needed a bit of revision on what this actually meant. The Estimates are a forecast on what’s about to be spent, as everybody here knows. But what the impress supply Acts are, are a regular part of the annual Budget cycle, with the emphasis on regular. This is, as my colleague Ingrid Leary said, business as usual. For every political party that has stood here post-Budget, the Crown, as we know, cannot spend public money or incur expenses or capital expenditure without appropriation or other authority from Parliament. And that’s why we find ourselves standing here today. In other words, this is utterly normal—I hate to say the word “boring”, because who could possibly think that anything we do here is boring! Every financial year—speaking to the regularity—there are at least two imprest supply Acts. On occasion, there are more than two. Every Government has had multiple imprest supply bills in each financial year, and they cover the period from the start of the financial year until the main appropriations Act is passed.

So that’s enough of the technical stuff, because we’ve heard members talking about recession, about interest rates, and about unemployment. And I have to say, I did feel the need for a little, teeny, tiny bit of fact-checking; I like a bit of a fact-check. Because it’s true that we are in a technical recession at the moment. The word here is a “technical” recession, and words to go with that are “very shallow” technical recession. And this very shallow technical recession has been, as Chlöe Swarbrick said earlier, or I may be paraphrasing, “intentionally engineered by the Reserve Bank”. Because a true recession would be accompanied by high unemployment, and that’s where a little bit more fact-checking comes in. A true recession would be accompanied by high unemployment, but we are currently, in New Zealand, close to historically low unemployment rates, at 3.4 percent. The UK is sitting at 3.9 percent. We heard conversation a little bit earlier in Prime Minister’s questions, from the other side of the House, about how poorly the Government was doing. And, frankly, that’s utter nonsense. The UK is sitting at 3.9 percent, Australia 3.7 percent, and New Zealand 3.4 percent; near-historic lows.

Matt Doocey: Not in a recession, though, are they?

SARAH PALLETT: Inflation, Mr Doocey. I know you’re absolutely desperate to hear me talking about how well we’re doing in New Zealand, and that’s not to say that things are not tough. We as a Government recognise that people are doing it tough—6.7 percent inflation, Mr Doocey, but falling. The UK: 8.7 percent, and rising. Australia: 7.8 percent. It’s interesting for us all to realise that the economy is 6.7 percent larger than it was before COVID.

We had a little bit of conversation a bit earlier about debt to GDP ratios. Well, in the UK, for the first time since 1961, they’ve reached 100.1 percent—100.1 percent, whereas New Zealand is sitting at 35 percent debt to GDP ratio, which I don’t—I think I must be sitting sometimes in an alternate reality.

Andrew Bayly: That’s right!

SARAH PALLETT: I gave you that one, Mr Bayly, I gave you that one. But when I listen to what you’re saying from the other side of the House, I have to say I am, but I’m in actual reality. Heaven alone knows where you are, where you say, on the other side of the House—not you, Madam Speaker, when I refer to “you”. On the other side of the House, when you’re talking about the economy doing poorly, I find that extraordinary when we’re looking at the UK at 100.1 percent.

I know we’re all very excited, but let’s have a little look at what other people say. Let’s not just talk to each other because we can get a bit tied up with our own little bell jar here. The ANZ: “it’s hard to diagnose this ‘technical recession’ as anything but part of the necessary adjustment towards putting the economy back on a sustainable path”. And Westpac: this is “an economy that’s in a transition phase rather than outright recession”.

So I’m going to return to what I said earlier: the economy is 6.7 percent larger than it was before COVID. People are doing it tough, we know, and that’s why every single dollar that we have is directed towards supporting them with the cost of living crisis. And on Saturday, I look forward to $5 prescription fees being scrapped.

Hon PHIL TWYFORD (Labour—Te Atatū): Thank you, Madam Speaker. It’s a pleasure to take a call in the Supplementary Estimates debate—and not quite tail-end Charlie, but we’re getting down to the bottom end of this Supplementary Estimates debate, where the real quality comes out to play now. I want to really focus my comments in this debate on the Supplementary Order Paper (SOP).

Just for the sake of the folks at home who are watching, there are two bills that we’re debating in this debate. I’m going to focus my comments on one of them, which is the Appropriation (2022/23 Supplementary Estimates) Bill. Within that, we have an amendment to that bill, and it deals with the addition of half-a-billion dollars in appropriations specifically for the Government’s contribution to the extreme weather events recovery programme.

Now, just to say right from the outset, the Supplementary Estimates bill seeks appropriation by Parliament of the changes to the appropriations and the new appropriations for the 2022-23 year, the financial year that is just drawing to a close. It’s making changes to appropriations that were agreed by the Government between April 2022 and 2023 when the Supplementary Estimates were finalised. So that’s what we’re doing.

But I want to dig down a bit into this half a billion dollars that’s been appropriated for the cyclone recovery, why it’s been appropriated, and how that money will be spent. Cyclone recovery Minister Grant Robertson announced on 1 June that the Government’s entering into a funding arrangement with local councils in Tairāwhiti, down the East Coast, Hawke’s Bay, Auckland, and other places, like Coromandel and Northland that were so badly affected by Cyclone Gabrielle, and in Auckland, the anniversary weekend floods of 27 January. The payments are not going to be incurred, expenditure’s not going to be made in this financial year—there’s not much of it left—but the accounting rules stipulate that once the Government’s made a decision to do that, it becomes, essentially, a liability and it has to be accounted for in this financial year, hence the Supplementary Order Paper. This is a common occurrence, I should say. These events do happen. They must be dealt with within the Government’s accounting rules, and that’s what we’re doing here.

There is an historical parallel. In June 2011, the then National Government announced a buy-out scheme for the red zone properties in Christchurch, in the wake of the earthquakes there. Those costs were—

Hon Gerry Brownlee: Oh, that was quick!

Hon PHIL TWYFORD: —incurred, they were spent, but they weren’t appropriated, Mr Brownlee, because no parliamentary authority was sought. I make no judgment about that. But this SOP that we’re talking about today seeks to avoid a repeat of that unappropriated expenditure.

I wanted to make a point that this appropriation is very significant. It’s the practice in our country, after events like the anniversary weekend floods, in the aftermath for homeowners and property owners dealing with the destruction of, in this case, catastrophic flooding, to pick themselves up and, with the help of their insurers, to get on with their lives, to repair and rebuild. Normally, what we do is we leave it to people and their insurers to get on and repair and rebuild and get on with their lives.

Credit to Grant Robertson that very early on, after the floods in Auckland and Cyclone Gabrielle, it was clear to him—and he said to me at the time that he was of the view that it was not possible, given the scale of the events; given, for instance, the multiple floodings that many residents had experienced in Auckland, for example; the intensity of the flooding down in the Hawke’s Bay—that we needed to treat this as an exercise in climate adaptation.

I took the Hon Grant Robertson to Candia Road in Swanson, in my electorate. I took him to Mayfair and Clover in Henderson, one of the neighbourhoods in Auckland that was worst affected by the January anniversary weekend floods, where people were waiting neck-high in water in the streets and in their homes after those floods. We walked around that neighbourhood and we spoke with local residents, and the Hon Grant Robertson heard their stories first hand. This was when it was very raw, in the days immediately after the flood.

Credit to the Minister: I think he’s taken an approach of great flexibility, of great compassion, and he’s really been able to see the big picture and the need for Government to work—and Cabinet chose to work in a way that was locally led, supporting and empowering local councils to deliver a recovery programme.

It is fair to say that the Government system thought that climate adaptation was something that was becoming increasingly urgent, we needed some legislation—Minister James Shaw is working on the climate adaptation bill right now—but the extreme weather events earlier this year made it clear that we needed to act now, that we could not wait six months, a year, or two years to put in place the legislation.

So this appropriation, half a billion dollars, is the Government’s down payment on a massive nationwide climate adaptation programme to make the neighbourhoods safe again where our people learn.

In my electorate in West Auckland, about a thousand people on anniversary weekend experienced catastrophic flooding, sometimes half a metre of contaminated flood waters inside people’s houses, and it’s clear that there’s a huge programme of work that needs to be done to make those communities safe again.

This appropriation, half a billion dollars, will go towards the category 3 homes that will be under the system that’s been put in place. I think there’s an estimated 700 property owners nationwide whose properties face such severe ongoing flood risk, or risk of landslip, I think, that there’s no practical options for risk reduction and remediation, and the only sensible option is to offer those people the prospect of a voluntary buy-out.

Category 2: there’s an estimated 10,000 property owners, and these are people who are living with ongoing serious risk of future hazards, future disasters, floods, and slips, where it’s judged that it may be possible to reduce the risk to an acceptable level. That could be anything from fixing some failing infrastructure, it could be clearing or reengineering the streams that flooded so many homes in Auckland, it could mean lifting those houses up above the level of likely flood, it could mean implementing a number of flood-resilient design features in the repair of those homes—10,000 property owners. They are going to need some kind of financial assistance to undertake those measures, as will the people who are eligible for buy-outs.

There’s been an estimate that the cost of those 700 category 3 homes will be around a billion dollars. Now, much of that will come from insurance payouts. Undoubtedly, those property owners will have to contribute something of their own to the value of the buy-out. But the Minister has made it clear that the Government is committing to work with councils to ensure that, in the case of those 700 category 3 property owners, they won’t be forced to walk away losing the shirts on their backs. I think that’s the right thing to do, it’s the rational thing to do, to make these communities safe and resilient again and to look after people who, in many cases through no fault of their own, may have been exposed to catastrophic risk.

Now, there are category 1 people who will be deemed to be able to repair and rebuild. I wanted to take this opportunity to say to the councils who are delivering these recovery programmes that the flood-affected residents are desperate for action, they want progress, they want certainty. Our Government has fronted up with a policy framework and half a billion dollars to make this programme work, and our communities affected by floods desperately need the councils to make quick progress to tell them what category they’re in, and start the work of actually reducing the flood risk in those places and getting on with the process of putting voluntary buy-outs in place.

So thank you, Madam Speaker. I finally just want to, again, give credit to cyclone recovery Minister Grant Robertson for his leadership in this really important area of work.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker. It’s a pleasure to be talking on the imprest supply and the addition to the Supplementary Estimates, or appropriation, bills.

First of all, just in response to the member, the Hon Phil Twyford, who has just sat down—the previous Minister—when I was last in Hawke’s Bay, reviewing some of the flood-hit areas and talking to the people affected, they were crying out for leadership from the Government in terms of trying to deal with the events that have happened there. And when I saw my good colleagues Catherine Wedd, the candidate for Tukituki, and Katie Nimon, the candidate for Napier, in the weekend—again, there is an absolute need for clarity. Whilst the member has done their best to try and highlight what the Government is doing, it is now three months, four months since the flooding has occurred and there’s a desperate need. It’s no good and it shouldn’t be appropriate to just sit there and talk about the councils. It actually requires a Government-led response, and we’re not, unfortunately, seeing that quickly enough.

But I just returned from Christchurch this morning. I was meeting with between, I think, 80 and 100 business people, and they were talking about and asking questions about what was happening to the business environment, the economy in general. I think, apart from all of the general concerns they had—about a lack of staff, access to it, the rules and regulations, all those types of things that have been imposed on the business sector over the past six years—one of the underlying themes that came through is the level of wasted spending that the Government has undertaken. And of course that’s led to high interest rates which are feeding through and meaning that, for many customer-facing businesses—such as retail, the tourism sector—those types of sectors are still struggling. They were talking and asking about it and what we were going to do about it. We simply have a cost of living crisis, and to have one of the members stand up from Labour and say, “Look, it’s all down to excuses: it’s all down to COVID, it’s all down to inflation, it’s all down to Ukraine; nothing to do with us.”—actually, what about the Labour Government? Isn’t that the problem?

The issue is the Government has been on a spending spree, and these Estimates and supply arrangements enforce that even further. What we’ve seen is this Government dramatically increase expenditure over the past six years: from back in 2014, the Government spend was $71 billion; this year it will be $128 billion, a roughly $50-odd billion increase. And you would expect, even if you put COVID and say that had a major impact—what you would expect is the expense line of the Government to flatten off and be decreasing by now, because COVID is long passed from our shores. It is not affecting our businesses, it is not affecting the way people are going about doing their things.

But no: the Budget documents all highlight this continual extrapolation of Government spending, so that we’re going to see another $30-odd billion of spending increase each year by 2027—that is the issue that is driving high interest rates. And the worst thing about this is tax income from New Zealanders—paid by hard-earning, hard-working mums and dads out there, both in their businesses and people who are employed in New Zealand—is ripped from their pockets by this Government. We’ve seen this increase in tax take and it has been incredible. We’ve seen a massive increase in tax take, and what that’s led to is that we have continued to run deficits.

It’s interesting, just looking at the deficits. That’s where the Government is losing money, just like a household loses money and gets put under by their bank if they lose too much money. Over the last three years, the Government has piled up nearly $40 billion of losses—nearly $40 billion. Imagine what we could have done with $40 billion if we had spent it wisely. But $40 billion has been lost and we’re still projecting another three years of losses if Labour was to continue in this Government, and let’s hope it doesn’t.

The worrying thing about this in the Estimates is that the IMF recently did a review of the New Zealand economy, Mr Robertson, as you well know, and it said that the management of the pandemic had been very good, but it said the economy had been overheated because of a “generous”—inverted commas—financial monetary support and was now going through a necessary slow-down. “Macroeconomic policies should retain a restrictive bias.”—that means stop spending the excess money and get our Budget back in order, Mr Robertson. And that is what has been happening: it has never been back in order, we just keep spending everything we get. And what we’ve got in here is more money. And then it says: “A well-designed tax reform could allow for lower corporate and personal income tax rates.” Well, we know that’s not going to happen, don’t we, Mr Robertson? Nor do we know it from the Greens, who’ve come out with the most absurd wealth tax proposal that will still defy even just ordinary New Zealanders with just a reasonable home in Auckland. It will be the worst thing that could ever happen in New Zealand. But let’s hope that the Labour-Greens coalition never comes to pass, because that would be devastating for New Zealand.

But the worst thing about this is when I look at the Budget Economic and Fiscal Update, the documents states that “return to surplus … in 2025/26”—that’s a few more years away, unfortunately—“is underpinned by expected decline in … expenses and stable growth in revenue”. Well, there’s two issues with that. First of all, we’re now in recession—and all this stuff about a technical recession is garbage. On a per capita—when Mr Robertson was the Opposition finance spokesperson, he used to ask repeatedly about per capita, because it suited his argument. The last quarter, when we had this so-called technical recession quarter of 0.1 percent, on a per capita basis is 0.7 percent, and we had a previous quarter that was even worse. We are in recession. Just talk to any business owners—as I did this morning in Christchurch—and they will tell you that is the case.

So now we’re looking at our future tax revenues that are projected, and they will come under pressure because that is not what is anticipated in the Budget forecasts. That means that we’re more likely to have higher losses or deficits than is already projected in the documents, and then the other thing is about decreasing costs. Well, the one thing Mr Robertson has been good at—and it’s been consistent, and I’ve got to congratulate him for consistency, if anything—is his ability to spend even more money than even he budgets for. That has been the ongoing issue with this Minister of Finance, because, unfortunately, he spends, spend, spends and allocates stuff in Budget, and spends even more money.

The other thing that’s happening now is the current account deficit. The Budget projections thought we were going to have a reasonably high level of current account deficit, but it’s even much higher: $33 billion deficit just recently, 8.5 percent of GDP. We were at those levels miles ago, back in the seventies when we were really out of control and the IMF were worried about New Zealand. We’ve got this high level of current account, which means that, basically, New Zealand is not paying its way. Our exports are less in value than in terms of our inputs. So this imprest bill needs to be seen in this light: it continues spending, it makes generous allowances for even more spending that’s already provided for in the Budget, and we are just going to see this continued increase in debt—which I think is one of the most worrying things for New Zealanders. Our debt, back in 2014 when we left office, was $60 billion; now it’s about $150 billion. That is a staggering amount of increase over a mere 5.5 years.

The final bit is the lack of transparency of spending. We’ve had the Auditor-General come and talk to us, and the Finance and Expenditure Committee made public representations—actually being quite forceful, more forceful than virtually any other Government entity—and have made it clear that the transparency around Government spending, and particularly the slush fund called the COVID fund, which thankfully has now been disbanded, has been appalling. It has been very difficult to understand what the money has been spent on. New Zealand should be transparent about the way the Government is spending its money, but, unfortunately, that has not passed. We are going to have a big job to do if we were to win the election in October, but we’re up for it.

Hon Dr DAVID CLARK (Labour—Dunedin): Thank you, Madam Speaker. What a pleasure to speak into this debate, based as it is around an important parliamentary process where the Budgets, Supplementary Estimates, and imprest supply funding are given scrutiny of the Parliament. Of course, we had a Budget not so long ago which introduced some really important new measures—20 hours free early childhood education for two-year-olds; $5 prescription fees scrapped; free public transport for under-13s, half price for under-25s; 100,000 more warmer Kiwi homes. Those kinds of things are things that we will all be familiar with, and I want to congratulate the Hon Grant Robertson on another superb wellbeing Budget that he has delivered.

But just today we had an announcement from the Hon Jan Tinetti and the Hon Grant Robertson of some changes to appropriations, and they related to university funding. Now, those changes will be reflected in the next set of Supplementary Estimates, as some of the appropriations were changed to make sure that the funding goes to the most appropriate purpose. These are the things which we as parliamentarians have a job to scrutinise—these kinds of measures—and I do want to congratulate them on their announcement today, especially the $48 million total that will end up at Otago University, all private and personal interests aside.

So this Parliament, of course, has the job of scrutinising what is spent and what will be spent over the coming year. I want to acknowledge not just the process itself and the importance of it but also one of the characters who has advised this debate over many years, and that is the late Peter Lorimer ONZM, who died earlier this year and who had advised many across both sides of the House on the importance of parliamentary processes like this one. It is a shame that Peter is not here to hear this acknowledgment in the House, but I think members of both sides of the House have been guided by him over the years and would acknowledge the wisdom he’s brought to parliamentary debates in drawing distinctions between the technical matters that are dealt with by officials and the important public scrutiny which politicians lead on. And this is one of those debates where we have the public scrutiny of decisions that the Cabinet has made to fund things like, as has been debated in this debate, the merit of responding to weather events. I think the whole Parliament will agree that responding is essential, and that is often done through imprest supply.

Imprest supply Acts are a regular part of the annual Budget cycle. Basically, the Crown cannot spend public money or incur expenses or capital expenditure without appropriation or other authority from Parliament, and spending that occurs outside of these categories then becomes unauthorised expenditure. As someone who was once a Treasury analyst, I received instruction from Peter Lorimer, who I’ve mentioned earlier, on the importance of getting appropriations right. As the Minister of Finance said at the outset of this debate, these are not targets but they are a licence to spend this money as appropriate, as required, in the interests of the citizens of New Zealand. I want to thank all members for participating in this debate because I believe it is truly an important debate that we have in Parliament. Appropriations are a licence to spend, and that includes, I think—just for those watching the debate—things like, for example, if departments charge fees for certain things and then recycle that revenue into other activities. These things are all monitored by the Parliament; all gathering of revenue and spending of revenue is to be scrutinised, and that is indeed appropriate.

So the imprest supply bill that we have in front of us seeks to provide sufficient authority for the Government to incur a maximum of $27 billion of expenses, $9 billion in capital expenditure, and $1 billion in capital injections. That total imprest in the bill—what’s called “imprest supply”—is lower than what was provided in the last three years, and I think people will understand that, given the events of COVID. At that time, it was necessary to ensure sufficient money was set aside in a very uncertain environment. Imprest supply bills are there, in a way, to account for in advance some of the fiscal risks that Governments sit with, those risks of expenditure that may be incurred, that we can’t be certain we’ll incur, but money has to be set aside—it’s normal in any budget. In a household, there are things we know we will incur and there are things we think we might incur, put in simple terms, and those things we think we might incur are called “fiscal risks” in parliamentary terms.

There’s another factor which imprest supply bills deal with and that is uncertain expenditure in terms of timing—we don’t sometimes know when we will incur certain things. We might know that the clutch is wearing out in our vehicle but we don’t know quite when we’ll have to get it replaced, to use a household example. But we do know that we should account for that spending because it will be ahead of us. And this has been a Government that has been incredibly responsible in terms of management of the books. We have a debt amongst the lowest of those countries we like to compare ourselves to across the OECD—again I want to thank and congratulate the finance Minister for his leadership on that matter, and for the very proud record this Government has in Budgets and in accounting to the public for expenditure, and delivering on that expenditure. I commend this bill to the House.

A party vote was called for on the question, That the Appropriation (2022/23 Supplementary Estimates) Bill and the Imprest Supply (First for 2023/24) Bill be now read a second time.

Ayes 72

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

Noes 45

New Zealand National 34; ACT New Zealand 10; Whaitiri.

Motion agreed to.

Bills read a second time.

ASSISTANT SPEAKER (Hon Jenny Salesa): I declare the House in committee for consideration of amendments to the Appropriation (2022/23 Supplementary Estimates) Bill.

Bills

Appropriation (2022/23 Supplementary Estimates) Bill

In Committee

Clauses 1 to 4

CHAIRPERSON (Hon Poto Williams): The House is in committee on the Appropriation (2022/23 Supplementary Estimates) Bill.

Members, in the committee stage of an Appropriation (Supplementary Estimates) Bill, only the Minister’s amendments and any amendments to them are considered. There is therefore no debate on any provisions where there are no amendments proposed, which means in this case there will only be a debate on clause 5 and a debate on clause 6, which will include the amendments to Schedule 1.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 agreed to.

Clause 4 agreed to.

Clause 5 Interpretation

CHAIRPERSON (Hon Poto Williams): Members, we now come to the debate on the amendments proposed in clause 5. The question is that clause 5 stand part.

Hon GRANT ROBERTSON (Minister of Finance): Madam Chair, thank you very much, and I won’t take too much time over this. I did mention in the second reading stage that we did have a Supplementary Order Paper (SOP)—SOP 366 in my name. It creates a new appropriation to ensure that any potential expenditure in the 2022-23 year associated with the management of properties and land impacted by the North Island weather events is authorised by Parliament.

Colleagues will recall that on 1 June, the Government announced that we would enter into funding arrangements with local councils in cyclone- and flood-affected regions to support them to offer a voluntary buy-out for owners of category 3 - designated residential properties, as well as potential co-funding work to protect category 2 - designated properties. Payments are not actually expected to occur until the 2023-24 year, but our accounting rules mean that the Government must recognise this expense in this financial year because it links to the announcement that was made on 1 June. That, effectively, creates an obligation and, therefore, we need to deal with it in these Supplementary Estimates, even though the actual expenditure is not going to occur in the next week and will occur in the 2023-24 year.

Amendments to Supplementary Estimates aren’t common, but they also aren’t unheard of. Similar amendments have been necessary a number of times in the past decade, particularly for funding following adverse events. These include the Christchurch earthquakes in both 2011 and 2012, and in response to COVID-19 in 2020. The approach being taken here was informed by the 2011 red zone buy-outs. On 26 June 2011, the Government announced its voluntary buy-out scheme for red zone properties. Much of those costs were ultimately incurred as unappropriated expenditure because no parliamentary authority had been sought through the 2011 Supplementary Estimates. We’re trying to avoid that situation here, and so the SOP seeks to make sure that the appropriation exists, albeit that it will not be drawn on, I believe, in this financial year.

DAMIEN SMITH (ACT): Thank you, Madam Chair. It’s just a question to the Minister on the Supplementary Order Paper, which the ACT Party supports. I do seem to recall, however, that the Prime Minister at one stage mentioned that this money was already there. The question I have is: was the money there or is this new money?

Hon GRANT ROBERTSON (Minister of Finance): I thank the member for his question. The creation of an appropriation doesn’t mean that the money itself doesn’t exist somewhere in the system. I have indicated in comments that I have made that it is most likely that this funding would come from the National Resilience Plan funding that was in the Budget. What we didn’t have was a specific appropriation for this purpose, and so it’s to create the funding authority rather than to provide for the actual dollar amount.

DAMIEN SMITH (ACT): That interpretation is what I understood, but Mr Twyford today mentioned another strategy, in terms of climate adaption programme moneys. Have I got that correct?

Hon GRANT ROBERTSON (Minister of Finance): I’m sorry, Mr Smith, I wasn’t here to hear what Mr Twyford had to say, but what I’ve said is what we’re doing.

ANDREW BAYLY (National—Port Waikato): Yeah, just a continuation of colleague Damien Smith’s comments: so this a further amount of money. Just to understand the Minister of Finance’s response to him, is this—obviously, we’re setting aside this money, but where is the money coming from? Can he assure that it’s not going to be through additional debt but it’s going to come from existing redirection of resources—maybe in some other fund—and, if so, can he give us any more clarification on that?

Hon GRANT ROBERTSON (Minister of Finance): As I said, the most likely source of the funding is in fact the National Resilience Plan, which we talked about in this Budget—so that’s some funding that has been set aside. What we have to do is create an authority to spend that on this. So that is where that funding is coming from. And specifically, to answer the member’s question, arguably, that’s debt in the sense that it’s part of a Budget in which there is debt, but this is, obviously, an unforeseen expenditure that we didn’t think, when we were originally setting up the Budget, we would have to do. As the member’s well aware, we managed to find around $4 billion worth of savings and reprioritisations for the Budget. That in turn created the National Resilience Plan. So you could also argue it that way round and say that it came from that. In the end, it comes from the money we have set aside.

ANDREW BAYLY (National—Port Waikato): Thank you, Minister, for that. Just to be clear, in the addition, which is the second part of the Supplementary Order Paper (SOP) because the first, (a), was already in the legislation, but you’ve—and when I say “you”, I’m saying the Minister of Finance, through his SOP—added (b): “Addition to the Supplementary Estimates of Appropriations for the Government … for the Year Ending 30 June 2023”. So the expenses identified here in this document—is this what we’re covering off in this appropriation?

Hon Grant Robertson: So, that document? Sorry, what are you waving?

ANDREW BAYLY: Well, there’s an addition to the Supplementary Estimates here. In terms of understanding what the totality of the breakdown of what we’re agreeing to in (b)—

Hon Grant Robertson: Yeah, OK. Yep, yep.

ANDREW BAYLY: Yeah, can you—you know what I’m talking about?

Hon GRANT ROBERTSON (Minister of Finance): I do. I thank the member. Sorry, I couldn’t see the document that the member was waving at me. So the change we’re making updates Vote Finance, so this change falls within Vote Finance. The money that’s outlined here is separate to the additional $500 million that’s being discussed in the SOP—that gets added into Vote Finance.

ANDREW BAYLY (National—Port Waikato): So just continuing on that vein, if I look at the Vote Finance changes, so, for instance, there’s “Payments and Expenses in Respect of Guarantees and Indemnities … $1.094 billion”, this is on page—I don’t know what page it’s on. Anyway, first of all, is that being covered in this appropriation or not?

Hon GRANT ROBERTSON (Minister of Finance): No, no. The discussion in the committee stage is only about the SOP, it’s not actually about the rest of Vote Finance. The rest of Vote Finance has been through the normal process. We’re simply updating the greater Vote Finance with this change. So “no” is the answer to the member’s question, but it’s also not within the scope of the debate, in my opinion.

ANDREW BAYLY (National—Port Waikato): Well, thank you for helping on defining the debate. So what is the scope of the changes that are here? But not in terms of legislative changes; in terms of the vote monetary amount.

Hon GRANT ROBERTSON (Minister of Finance): Well that, as outlined in Supplementary Order Paper (SOP) 366, is $500 million—that’s it. The things the member is referring to are other matters contained within Vote Finance; they are not the subject of the SOP.

CHAIRPERSON (Hon Poto Williams): The question is that the Minister’s amendment to clause 5 set out on SOP 366 be agreed to.

Amendment agreed to.

Clause 5 as amended agreed to.

Clause 6 Appropriations for 2022/23 financial year

CHAIRPERSON (Hon Poto Williams): Members, we now come to clause 6, including the debate on the amendments proposed to Schedule 1. The question is that clause 6 stand part.

Andrew Bayly: Well, that’s a very timely—

CHAIRPERSON (Hon Poto Williams): Are you seeking the call?

ANDREW BAYLY (National—Port Waikato): Yeah—Madam Chair. Very timely, considering our last conversation. So the $500 million that’s been set aside for “North Island Severe Weather Events—Crown Payments to Local Authorities and Other Eligible Stakeholders”—because when I went through the documents, I could find $500 million in the Budget documents. So what I’m trying to understand is: is this an additional amount or is this that amount?

Hon GRANT ROBERTSON (Minister of Finance): Mr Bayly will need to tell me where in the documents he found $500 million. I’m not at all surprised in the greater Estimates that he found that number, because it’s a number and there are a lot of numbers in here. But the point that we’re making is this Supplementary Order Paper means that we amend Vote Finance in the Supplementary Estimates. It is $500 million that was not in the Supplementary Estimates until today. And the reason for that is the reason I gave earlier in my opening remarks that the decision about this came after we closed off the Estimates, just as has had to be done in the past with other matters like the Canterbury earthquakes and so on. So it is simply updating Vote Finance for that number.

ANDREW BAYLY (National—Port Waikato): So does this cover the Auckland wider area, the Coromandel, Northland, and Gisborne? So it covers all those events?

Hon GRANT ROBERTSON (Minister of Finance): Yes.

ANDREW BAYLY (National—Port Waikato): Right, and does the Minister expect that this will be the final amount that will be allocated to these types of arrangements, or is this again just for the next couple of months or so?

Hon GRANT ROBERTSON (Minister of Finance): It’s the best estimate that we can do for appropriations, as was stated a number of times in the earlier debate. Appropriations are not targets; they’re limits. There is a lot of work to do on both category 3 and category 2 properties, and so this is the amount that is the Estimate for the purposes of the appropriation, but, obviously, more work is required.

Clause 6 agreed to.

Clauses 7 and 8 and Schedules 1 to 3

agreed to.

Clause 7

agreed to.

Clause 8

CHAIRPERSON (Hon Poto Williams): The question is that the Minister’s amendments to Schedule 1 set out on Supplementary Order Paper 366 be agreed to.

Amendments agreed to.

Schedule 1 as amended agreed to.

agreed to.

Schedule 2

agreed to.

Schedule 3

Bill to be reported with amendment.

House resumed.

CHAIRPERSON (Hon Poto Williams): Mr Speaker, the committee has considered the Appropriation (2022/23 Supplementary Estimates) Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Appropriation (2022/23 Supplementary Estimates) Bill

Third Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2022/23 Supplementary Estimates) Bill be now read a third time.

A party vote was called for on the question, That the Appropriation (2022/23 Supplementary Estimates) Bill be now read a third time.

Ayes 72

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

Noes 45

New Zealand National 34; ACT New Zealand 10; Whaitiri.

Motion agreed to.

Bill read a third time.

Bills

Imprest Supply (First for 2023/24) Bill

Third Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Imprest Supply (First for 2023/24) Bill be now read a third time.

A party vote was called for on the question, That the Imprest Supply (First for 2023/24) Bill be now read a third time.

Ayes 72

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

Noes 45

New Zealand National 34; ACT New Zealand 10; Whaitiri.

Motion agreed to.

Bill read a third time.

Bills

Water Services Entities Amendment Bill

Instruction to Governance and Administration Committee

Debate resumed from 22 June.

Hon EUGENIE SAGE (Green): The Green Party will be supporting the amendment that’s being put forward by the National Party to extend the consideration of this bill until November. This is quite a significant bill. It does make changes that we support in terms of increasing the number of entities to 10, but the proposed consideration by a select committee reporting back by the end of July is too short.

The bill includes a number of detailed provisions affecting local authorities in terms of the transition to the water services entities and the fact that the establishment date for the entities has been pushed out by two years. So there are a number of provisions about how local authorities deal with that. We think these detailed changes do need to go out for public submissions for an adequate time, to have adequate time for the Governance and Administration Committee to properly scrutinise the bill and to consider it alongside the other legislation that has gone through.

It puts too much power in the executive and Government departments when legislation comes to this House and has a very truncated select committee process, so it does not get properly scrutinised. It means everyone is working under pressure. That potentially leads to mistakes and it means that the select committee process becomes much more of a rubber stamp. Changes as significant as the three waters changes deserve better than that. They deserve a proper select committee process with adequate time for submissions, select committee scrutiny, and any changes to the bill.

SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. I’d like to rise to acknowledge the previous speaker, the Hon Eugenie Sage—I completely agree with almost everything that she said there—and also to support Simon Watts’ amendment to extend the committee process until November this year.

They have been working on this bill for three or four years and there was significant public input—I think we had over 60,000 submissions—and then to come along and truncate it when you’re doing the amendments to one month, when the usual select committee process would be for a recommended six months, I think is denying people an opportunity to input on something of which there is considerable, considerable public interest.

As I mentioned before, 60,000 submissions at the first stage—there is clearly a lot of interest in this. You go around New Zealand, you will see many “Stop Three Waters” signs. There is clearly a lot of public interest. There will be a lot of people wanting to have a say on that. If we want to uphold the democratic process and allow people to have faith in how this House operates—how everything works here—then we need to allow proper submissions, and ramming this through before the election is not a fair way to go about it.

We really need to move this out, and I just want to acknowledge the previous speaker again. I support Simon Watts’ amendment to extend it to November.

A party vote was called for on the question, That the amendment in the name of Simon Watts that “27 July 2023” be omitted and replaced with “19 November 2023” be agreed to.

Ayes 54

New Zealand National 34; ACT New Zealand 10; Green Party of Aotearoa New Zealand 9; Kerekere.

Noes 63

New Zealand Labour 62; Whaitiri.

Amendment not agreed to.

A party vote was called for on the question, That the Water Services Entities Amendment 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, 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 62

New Zealand Labour 62.

Noes 55

New Zealand National 34; ACT New Zealand 10; Green Party of Aotearoa New Zealand 9; Kerekere; Whaitiri.

Motion agreed to.

Bills

Corrections Amendment Bill

First Reading

on behalf of the Minister of CorrectionsHon GRANT ROBERTSON (Minister of Finance): I present a legislative statement on the Corrections Amendment Bill.

ASSISTANT SPEAKER (Hon Poto Williams): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon GRANT ROBERTSON: I move, That the Corrections Amendment Bill be now read a first time. I nominate the Justice Committee to consider the bill.

The Corrections Amendment Bill makes a number of modernising changes to the Corrections Act. As a Government, we know the importance of supporting prisoners with rehabilitation, and our evidence-based approach is making a real difference when it comes to things like reconviction and re-imprisonment rates, which are all trending downwards.

I do note that it has been a bit of a focus in the past few days on support to remand accused prisoners to avoid future offending. This bill, tabled as it was in the House last week, will provide Corrections with the flexibility to offer more support programmes for this cohort. I strongly, strongly appreciate the support and endorsement for the legislation that I saw on the news during the weekend. There was a bit of rabbit staring into the headlights going on, people not entirely sure what had happened in Parliament last week, but it’s good to get some support for this legislation.

The Government is making sure our corrections law is fit for purpose as the people in our prisons change and the challenges that Corrections faces on a day-to-day basis changes. One example of this in the bill is enabling greater flexibility in dealing with remand prisoners, getting them access to more programmes in prison where the law used to get in the way.

Currently, the law prevents Corrections from mixing remand accused, and convicted people in prison unless there are exceptional circumstances such as a natural disaster. This means remand accused prisoners have limited access to programmes and services such as alcohol and drug treatment, because by law they cannot be mixed as they have not yet been found guilty of a crime.

This is based on the International Covenant on Civil and Political Rights, which requires the separation of accused and convicted prisoners to protect the presumption of innocence for accused prisoners. So this bill will allow the limited mixing of remand and convicted prisoners for educational, religious, kaupapa Māori, and therapeutic programmes essential for integrating back into society. This will increase remand accused prisoners’ access to support programmes such as the Māori Pathways initiative or intensive alcohol and drug treatment, and will enable Corrections to design more programmes focused on remand prisoners in the future.

Another key change in the legislation will build on Corrections’ current strategy, Hokai Rangi, to further improve rehabilitation and reintegration outcomes for Māori, who make up a disproportionate percentage of our prison population. Initiatives such as the Māori Pathways programme are making a real difference when it comes to things like reconviction and re-imprisonment rates, which, as noted, already are trending downwards.

When we improve outcomes for Māori, we improve outcomes for our whole society. This is the cohort where we have the biggest opportunity to reduce reoffending. The bill allows for incorporating new principles for the corrections system that are derived from the principles of Te Tiriti. It requires Corrections to develop, maintain, and implement a strategy that focuses on improving outcomes for Māori in the corrections system and that provides requirements for monitoring the strategy’s outcomes. It will provide for things such as temporary release to be used to access cultural activities by prisoners, not just for Māori prisoners but all prisoners.

The bill requires Māori prisoners and other prisoners to have access to cultural activities so far as is reasonable and practicable, regardless of the corrections prison in which they are detained. It also requires approaches to healthcare for prisoners in a prison to be guided by the health sector principles set out in section 7 of the Pae Ora (Healthy Futures) Act 2022—again, as far as reasonable and practicable.

It requires Corrections to provide access to matauranga Māori as part of the provision of information and education in prison. It also enables the views of whānau, iwi, and hapū to be taken into account where appropriate, insofar as reasonable and practicable, in decisions about which prison offenders are accommodated in.

The bill will require Corrections to work to reduce Māori overrepresentation while simultaneously helping Māori prisoners access the cultural support they need to better reintegrate into their communities and independent support networks—something that we know works, and this is a continuation of the Government’s evidence-based policy in this particular area of work.

Other updates to the Corrections Act in this bill are also being made, as the prison environment has changed rapidly, while ensuring prisoners are held to account for disruptive behaviour and any assaults on staff. This is an important focus. The staff who work in our corrections facilities do a very difficult job and it is, I believe, the obligation of this House to ensure that their safety is prioritised.

The bill will boost the safety of our prisons and community by boosting Corrections’ intelligence powers. We’re futureproofing the Corrections Act by introducing new powers enabling Corrections to monitor, collect, use, and disclose prisoner communications and information sources for intelligence purposes. While Corrections can currently monitor mail and phone calls of prisoners to ensure the safety of prisons, it has no ability to effectively monitor other technologies such as email, video calling, and internet services. These changes will allow Corrections to do this in limited instances to support prison and public safety, including for the victims of crimes.

One way Corrections maintains the safety and wellbeing of staff and prisoners is through internal disciplinary processes in prisons. The internal disciplinary process ensures that prisoner misconduct is dealt with through disciplinary hearings and the imposition of penalties by hearing adjudicators or visiting justices. The bill makes some improvements to the disciplinary processes for responding to prisoner misconduct. For example, some changes will support a timelier process and a new option to suspend penalties that will incentivise improved behaviour by prisoners. The bill will also allow disciplinary hearings to proceed without the prisoner present if they refuse to attend or are required to leave on grounds of disruptive behaviour, meaning that bad behaviour can no longer delay punishments and create backlogs in the system.

So in conclusion, the bill aims to improve wellbeing for prisoners and increase alignment with international obligations. This includes enabling wider use of body imaging scanners in place of more invasive personal searches of prisoners. The bill will allow remand accused prisoners to take part in some therapeutic programmes, while also protecting the important principle that they are treated as innocent—part of our binding international commitments.

This is a bill we are proud to progress. It makes targeted but important changes to modernise the Corrections Act in line with this Government’s focus on keeping our communities safe. I welcome the widespread support that this bill has had as people have caught up with it, and I recommend it to the House.

ASSISTANT SPEAKER (Hon Poto Williams): The question is that the motion be agreed to.

Hon MARK MITCHELL (National—Whangaparāoa): I want to address, first of all, the safety of our corrections officers in the jobs that they do. I was lucky enough to be invited by the Corrections union to their AGM this morning in Auckland to be able to address them and also get involved in some questions and answers. Basically, I’m not going to talk about the content of that meeting because we have an agreement that anything discussed inside the meeting will stay inside the meeting, but I do want to acknowledge them.

The one thing that actually really annoys me is that our corrections officers, when we talk about public safety, we often don’t refer to them, because they are largely invisible. We don’t see them. We don’t interact with them on a daily basis. But I want to highlight the incredible work that they do, the sacrifice that they make, the professional approach that they take to their role, to keeping our community safe. And not just keeping our communities safe; they are dedicated people that actually want to be able to deliver rehabilitation programmes to prisoners when they come into our justice system, because we want them to come back out and we want them to be able to re-join society and we want them to be able to make good decisions in their lives. But the reality of it is they have been under so much pressure and their numbers are so depleted that they can’t safely deliver those rehabilitation services, and you’ve seen a 35 percent reduction.

The Government made a big deal when we made our announcement on the weekend. They rushed out there. They somehow managed to convince some of our media that woke up to the fact that they were being tricked, and they came out and actually acknowledged that. They said, “Oh, we’ve already got a bill in the ballot. We’ve already got a bill coming into the House that will deal with rehabilitation to remand prisoners.” Well, you don’t. This is an abject failure. Our bill actually addresses the fact that we have 45 percent—45 percent—of the prisoners currently in the Corrections system on remand. That’s an abject failure in itself. But that’s an issue that relates to courts and relates to justice being delivered quickly, and at the moment it’s being denied.

On top of that 45 percent, you’ve got 20 percent—20 percent—of those remand prisoners that will complete their entire sentence on remand. That is completely, totally unacceptable. By the way, what are they doing while they’re sitting in the prison on remand? They are getting therapeutic—

Toni Severin: Nothing.

Hon MARK MITCHELL: —rehabilitation. Nothing; absolutely right. They’re getting therapeutic courses delivered to them. They should have access to meaningful rehabilitation that can deal with violent offending and can deal with sexual offending. This bill here doesn’t address either of those things. It’s ridiculous. It’s a joke. They came out and they tried to convince the country: “Oh, no; we’ve got a bill that deals with that.” It doesn’t. The announcement that National made over the weekend, it does deal with that. It does allow the system to be able to deliver the full 29 rehabilitation programmes and for these remand prisoners to have access to them.

We acknowledge that a remand prisoner hasn’t yet been convicted, but that doesn’t mean that they lose the right to be able to engage and have access to those programmes. By the way, when you’ve got 20 percent of them—20 percent—doing their entire time in prison on remand, it means that they’re coming back into society without the benefit of having access to those rehabilitation programmes.

So Mr Robertson can stand on the other side and talk about rabbits and things like that. The only one that’s searching for a rabbit is Mr Robertson, to try and pull it out of the hat, because he realises that they’re under serious pressure, and they are under serious pressure. They don’t even understand. It was clear by their rushing out with their comments and the statement they gave to our media and our press gallery that they didn’t even understand what was in their own bill. It’s a joke.

When I finished the meeting today with the Corrections union, I was very lucky and felt very fortunate. They had presented me with two things. One of them was a plaque and the other one was this was this pen. This pen has got an inscription on it. It’s a lovely pen. It’s got an inscription on it; the inscription is, “Where’s Kelvin?” Where is the Minister? Because the Minister is missing in action. Why you wouldn’t engage—to me, the meeting this morning was refreshing. Do you know why? Because I was actually hearing from the front line. I was hearing from the people that actually deliver the services, not the ones sitting in headquarters, not the boffins coming up with other new sort of programmes and new ideas and new red tape and new compliance that actually impacts the front line and the services that they are trying to provide; you actually get to hear from the front line, the corrections officers that are turning up every day and doing the hard work. For me, it was refreshing to be in that environment and be able to hear and get direct feedback in terms of what’s happening and what they need.

I just want to come back to the comment that the Minister made around Corrections staff and their safety. The best thing this Government can do is actually engage with them and listen to them, because they know what they need to do to try and make their workplace safer. They’ve got some very good initiatives that they’ve put together and worked up, and I’d encourage the corrections Minister to sit down and engage and get serious about how we make our prisons safer.

We had a ridiculous situation where we had Kiri Allan, the Minister of Justice, in the last few weeks come out in the public and say, “Our prisons are a university for criminals. Our prisons are a place for gang members to recruit.” That’s true. That’s true, because the way they’ve configured our prisons means that they’ve lumped all the gang members from one gang in together. It allows them the ability to be organised. It allows them the ability to try and intimidate and, on many occasions, assault our corrections officers. But then this Government brings a bill to the House whereby they are now going to mix young prisoners with those older, experienced gang members. So you’ve got the Minister of Justice, on the one hand, saying, “They are universities for crime and the gangs use them to recruit. But, oh, by the way, we’ll take those younger offenders that have come into the system and we’re going to mix them together. We’re going to give them more access. We’re going to put them together.” They’re completely, totally confused, and they’re contradicting themselves in terms of their approach to our criminal justice system, which is consistent with this Government and the approach that they’ve taken in the last six years.

So, again, I’d ask the next speaker to get up and address that and tell us why they think it’s a good idea to take younger offenders that are coming into the system, that are impressionable, that are at risk of being recruited by gangs, that should be kept away from them, but you’re proposing to now mix them and put them together so it actually increases their exposure and their risk to being recruited by the gangs.

In principle, we are going to support this bill because we do want to see steps in the right direction in terms of trying to make our corrections officers’ workplace safer. At the moment, it’s not. This Government has put millions of dollars into a recruiting scheme that’s delivered about 61 or 62 new corrections officers. They are seriously under-numbered, they’re seriously overwhelmed, and they need support. Before this Government can even talk about increasing the delivery of rehabilitation, they have to get the staffing right. They have to focus on retention. They have to focus on valuing the corrections staff that they have at the moment. Because I can tell you something: experience matters. When they’re dealing with what they’re dealing with at the moment, experience matters. They have to figure out how to get their recruitment right, how to identify—and, by the way, be realistic in expectations when they are recruiting new corrections officers, the environment they’re going into, because they’re not going into a risk-free environment; they’re going into an environment where the risk of assault is very real, and you have to be honest with people about that.

So those are the issues that need to be addressed. They’ve been failing on rehabilitation. We’ve put forward a policy where we’ve been very clear that we’re very serious in making sure that 45 percent of the prison population at the moment that is not getting the full range of those 29 programmes will. They bring a silly, weak, insipid bill that messes around on the fringes and says, “Oh, we’ll do a bit more therapeutic stuff.” It’s ridiculous. They have to focus on getting the prison officers recruited. They have to focus on making sure that our corrections officers have the staff and that they’re able to safely deliver those rehabilitation programmes, otherwise this bill, in terms of rehabilitation, is useless. Thank you very much.

VANUSHI WALTERS (Labour—Upper Harbour): Thank you, Madam Speaker. Well, on this side of the House, we’re a Government who are focused on addressing offending from all sides. That is prevention, that is also punishment, and it is rehabilitation. So it has been good to hear the National Party recognise that rehabilitation is part of the solution, although I am still a little confused about whether the National Party is supporting this move or not.

This is something that’s very important in terms of addressing the crime and offending that’s out there. In terms of rehabilitation, on this side of the House, we have invested in circuit-breaker programmes for young people, which has seen young people who are offending go through programmes that show that 72 percent of them then don’t reoffend. Rehabilitation works, and we need to make sure it’s also there for those who are in prison as well as those who are on remand.

Just addressing some of Mark Mitchell’s points that he raised, he spoke about a reduction in the provision of these services within the Department of Corrections. Initially, that was due to COVID, but as we heard when we spoke to the Minister in the appropriations hearing, it’s also because of a change in the nature of the programmes being delivered. You cannot—you cannot—cure an addiction issue with an eight-hour course, which has been the case in the past. We are changing the way in which we deliver these programmes so that they work.

Why therapeutic only? Well, that goes in part to the final point that Mr Mitchell made. There is mixing of some remand and prisoners, but for a limited purpose, and therapeutic courses is a logical place to draw that line. There are also practical reasons why some offenders on remand will not want to engage in more detailed programmes, because they may feel an indication of guilt. There is a rational, reasonable line for drawing the line at therapeutic aims, and I think we’ll see great results from this programme.

As the chair of the Justice Committee, I’m looking forward to receiving submissions on this bill, and I commend it to the House.

SIMON O’CONNOR (National—Tāmaki): Thank you, Madam Speaker. Look, to assist the last speaker, Vanushi Walters, the member who has taken her seat, the National Party is supporting this bill, but we’re supporting it in the same way that we’ve done with a number of bills in the justice or the law and order space. It’s because these are small, incremental, little steps forward; we don’t see it as problem, but we know in this space that we need to be taking great, bold, strong steps forward. So, again, we are happy to support this bill, but, be under no illusion, the National Party does not see this as a bold, strong set of steps that are particularly needed in the corrections space, and I will outline why.

Look, this is titled the Corrections Amendment Bill. There really is only one amendment which is needed to Corrections, and that’s to get rid of this Minister and this Government, and then we will set Corrections back on track. Fundamentally, it’s another area which is under enormous pressure. If, like the Hon Mark Mitchell or myself and others on this side, you are talking to those corrections officers, you’re talking to prisoners and others, you’ll understand that the system is under incredible pressure.

Unless something has changed remarkably in the last few weeks, there are very few prisoners who have received visitors this year. I just want to repeat that for those listening at home: prisoners, in most prisons, have received no visitors this year. That is a legal failure. I notice that the left wing have gone quiet, because they’re always banging on about UN rights and charters.

Hon Gerry Brownlee: Oh, it’s OK if they do it!

SIMON O’CONNOR: Exactly right. As the Hon Gerry Brownlee says, it’s OK if they do it. But, fundamentally, there are some very basic legal precepts and rules around what prisoners are entitled to. Again, I think I’m correct, it’s something like 30 minutes a week that they’re entitled to, and, again, some prisoners have had no visitors. In some prisons, the entire complex have had no visitors—that includes the likes of chaplains as well. So it’s not just a legal failure; it’s a moral and a social failure.

You might ask, Madam Speaker, why I am referencing this around the Corrections Amendment Bill. It’s this, and it’s simply this: all the pieces of paper, all the words on those pages, all the great intentions are going to run up against a system which cannot deliver. I want to be really, really clear: that’s not a reflection on our corrections officers, who are doing an incredible job, but they are stretched beyond capacity. The reason there are no visitors to prisoners is that there are not enough corrections staff. The reason that the likes of prison chaplains—and I used to be one—can’t go in as regularly as they want to is that there are not enough corrections officers. The reason why prisoners are being locked up for hours and hours a day is that there are not enough corrections officers. One of the key reasons that a lot of rehabilitation is not occurring in the prisons already is—no surprise—there are not enough corrections officers.

So, again, it’s a positive idea that we want to put more rehabilitation into prisons. National’s policy released over the weekend is much more comprehensive. But let’s be clear: to do rehabilitation, we need more prisoners on the ground.

Sadly, as the Government’s attempted to correct and amend Corrections, they’ve thrown millions and millions—I think, again, the last count, when I used to be the shadow Minister for Corrections, is something like $4 million - plus has been spent on an advertising campaign, and, basically, very few have come forward. Really importantly for the public, if the Minister and those talk about the numbers that have come forward, that’s only expressing their interest; those who have actually got to the front line: well, worryingly few. Speaking of the front line, I think we’re about 400 corrections officers down and about 1,800 corrections personnel short. This is a major problem—a major problem.

On the positive side—on the positive side—there are some good things here. The fact that this bill will allow better intelligence gathering by Corrections is exceptionally positive. I remember when I used to go in and visit in the old Mount Eden, a lot of these prisoners—I mean, let’s not take away from some of the terrible things they’d done—some of the skills they had, when you think about the skills they had to break into your car quite swiftly and easily and rewire it and take it away, kudos to them. I remember saying, particularly to the young ones, “It’s just a pity you couldn’t have used those skills in a much more constructive and positive way.” But we’ve got very smart people in prisons. Fundamentally, we need to have the intelligence operations to be able to deal with that, and we already know the number of contraband phones and phone parts, for example, which are going into prisons at the moment. Again, I would argue that it’s another failure on behalf of this Government that we don’t have enough corrections officers to do what’s necessary.

Look, there’s going to be changes to the disciplinary processes. Again, I’d like to tease this out in select committee. I think it’s important that we do have discipline processes, but also incentives for those who do well—and I want to acknowledge that I think that’s within the bill, which is a good thing. We do need to reward, within the prison, good behaviour, but we are not to tolerate poor behaviour. Certainly the feedback from a number of corrections officers is that they do not feel the backing of their Minister or this Government and that bad behaviour is tolerated in prisons, and that just a wet bus ticket, if that, is thrown at the prisoners. That’s a concern in itself.

There are some strengthening processes around the use of non-lethal weapons to be used within the prisons. I’m not going to elaborate on the various types that have been deployed or that they want to be deployed—again, this is for the safety of prison officers. I suspect, though, this is not enough. Again, talking to corrections officers, they don’t feel safe. There’s been a much-vaunted safety policy—I’m afraid I’ve forgotten the exact title of it—that the Minister’s been championing, but it’s, basically, stalled, and there’s not much confidence from the corrections staff that this is going to work. I think it’s, unfortunately, a situation in Corrections, again—and probably with this whole Labour Government; lots of great conversation and working groups and policy documents, but it just doesn’t make the front line. So put really simply: the corrections officers don’t feel safe, and that’s leading, unfortunately, in some wings of various prisons for, effectively, the gangs to be in control. Again, I really want to stress—I really want to stress—to those corrections officers that it’s not a reflection on them. On this side of the House, as best we can, because we are not—well, I’m not—on the front line, we understand the pressures that they are under.

However, as I keep saying, there are some good elements within here. Look, they’re wanting to improve rehabilitation and reintegration. A lot of it’s around outcomes for Māori and Pasifika—and, sadly, we know that those groups are overrepresented, so, yes, engaging there is positive. But our prisons, if you will, are broadly reflective of society, and there are people from a whole lot of other ethnicities, as well, and I think elements of where we, if you will, culturally appropriately—I don’t know why that’s such an awkward sentence; I’m going to have to think about it afterwards—work with Māori and Pasifika we should be doing the same for people who are Chinese or Indian or European or otherwise. So I just want to make sure that’s teased out as well.

As Mark Mitchell has pointed out too, this bill is actually going to allow remand prisoners to mix with sentenced prisoners. Now, that doesn’t make a lot of conceptual, academic, or practical sense to me. Why I say “conceptual” and “academic” is that remand prisoners are people who have been arrested but not yet found guilty; sentenced prisoners, strangely enough, have been. I don’t think mixing the two together is particularly smart. Again, I look back to previous work I have done where, often, younger prisoners were put in with older ones, and all you ended up with was a young one coming out of prison a lot more smart and criminally savvy than they were. So let’s not repeat that by mixing remand and convicted prisoners.

I think, as Mark Mitchell has pointed out, focusing rehabilitation on remand prisoners is a smart thing—and, again, partly driven by another Government failure, which is that our courts are so overburdened that people are sitting on remand not just for a long time but often for the length of their potential sentence. It’s absurd. It’s beyond absurd.

And finally—and finally—there are a whole lot of minor but quite important changes around the use of body scanners, particularly around heat signatures, which are going to be deployed. I think that’s a positive.

I want to bookend this in the way that I started. Look, we are supporting the bill. There are good aspects to this. But I’d prefer people at home not to think that this is some amazing amendment bill. It’s lots of little changes—a little bit like they’ve done in other spaces of law and order: little changes. Yep, they’ll do some good but nowhere near as good as is needed. As I say, fundamentally with an amendment bill like this, it really should read in Part 1 that come 14 October, Corrections will be amended by having the Labour Government thrown out.

ARENA WILLIAMS (Labour—Manurewa): Madam Speaker, thank you for the opportunity to speak on this important bill, the Corrections Amendment Bill, which will make the changes which are needed and are important to make our justice system function as it should. Reducing reoffending is some of the most important work that any public servant can do. Taking somebody who has been judged for the worst thing that they have ever done in their lives, isolated from their family and friends, and rebuilding them so that they are capable of re-entering a community that can then support them is a very difficult thing to do. This is what this bill will enable corrections officers to do. It is incredibly difficult work and we should thank them for their role in that process, which doesn’t only start with them; it starts with the whole community around them.

I say this because on that side of the House we have heard over and over again that this is caused by not having enough corrections officers, while at the same time Opposition members have given speeches about how corrections officials are boffins, that they sit in their offices and come up with ideas that we don’t need. Our corrections officials are doing the work that our justice system needs, to right wrongs of hundreds of years that have underserved our communities. I thank those men and women who go to work every day in our corrections system in South Auckland and Manurewa to make people’s lives better and to improve the work that their community are doing for these people who have suffered.

This bill will make those changes that we need. This bill is something that I look forward to having those conversations that we need to have within committee.

ASSISTANT SPEAKER (Hon Poto Williams): Before I call the next member, could I just ask the members on this side, if you’re going to have conversations with each other, could you sit next to each other or possibly just keep the volume down.

TONI SEVERIN (ACT): Thank you, Madam Speaker. I rise on behalf of the ACT Party on this Corrections Amendment Bill. We’re going to support it at the first reading because we want to hear from the submitters, because we have reservations about this bill. So does National.

Now, the great thing about it, when you read through the information, is that the Government has at least had a public consultation in August and September, which is a very large document which I managed to read last year, and it’s also had about 200 responses to the survey and 57 written submissions—also, that they partnered with iwi and key stakeholders and sought feedback from prisoners with workshops, with seven at the Christchurch Men’s Prison and six at the Christchurch Women’s Prison.

I’m glad you actually consulted, because this is where you learn what is needed on the ground. As Mark Mitchell said earlier, he had a meeting with the Corrections Association of New Zealand (CANZ) at their AGM today, and I’m very fortunate that I’ll be speaking to them tomorrow. They have concerns too; they’re upset that they can’t help prisoners because they are short of staff, and also rehabilitation programmes have been closed down that were making differences. If we can’t rehabilitate them, then we are going to continue the cycle of reoffending. The thing is that we’re all for this—we want our prisoners to come out with skills. We are desperate—myself who suffers from dyslexia, I hate to think how many are in our prisons that have dyslexia and neurodiversity. We’re not even getting them tested on that, and that is supposed to be part of the criteria. And it’s a sad reality that that is not happening.

Now, we were a bit concerned around the modernising and futureproofing of the Act to clarify Corrections’ powers to monitor prisoners’ communication and information source for intelligence, but once you get reading it, you realise that, yes, they’ve done their due diligence, and the Attorney-General has come back and said there is no hassles with this, because we don’t want any more people’s rights to be infringed when already, as we have said, they are not seeing loved ones or families in person. Some of them haven’t seen them in two years.

Now, also, prisoners have contacted me saying, “Hey, we want rehabilitation.”—but they’re not getting it. It’s a sad, sad reality today. But also moving forward into modern technology around video calling and internet services, well, why can’t we also move that into some of the rehabilitation phases where there’s possibilities—tablets, where you don’t have to have the internet but you’ve got programmes on it so that these ladies and gentlemen, while they’re in their cells, have actually things to do around learning or seeing videos on things that can be downloaded. It would be much appreciated if something like that was added into this bill to move us into this modern age. But there’s nothing there.

Now, we also have concerns around the remand prisoners being put with accused. I know it is limited, but, yes, again, there’s a huge problem there within Corrections, especially around staffing, because to move a remand prisoner around prison, they have to make sure other prisoners are locked up, let alone having to have classrooms or facilities where they are. So there’s going to be a huge change there that needs to be looked at. Also, you hear stories of remand prisoners that have been sitting in a prison waiting for their court case and two years, three years later they are released because it’s time served, and they have done nothing while they’ve been sitting there because of their remand. So we need to get our court system up and running so that these people are not sitting on remand for long periods of time and, if they are, let’s make sure they do get those basic needs of rehabilitation given to them.

Now, the other thing that they have in here is around making the disciplinary process for prisoners a lot faster and better. And as I talked to CANZ, actually, a few weeks ago, they said, like anything, you need what we call the carrot and the stick, right? Everybody understands that if you reward somebody, they will keep doing good behaviour, but if they misbehave then there needs to be punishment. Now this needs to be done more of because, at the moment, a lot of the corrections staff are seeing prisoners not being pulled up for misbehaviour within the prison system. And that’s not on, because how can you keep some form of control of these prisoners if you’re not pulling up bad behaviour and making it hard for our corrections staff? You know, they’re there, they’re facing it every day, and you don’t want them to go home to their loved ones with bruises and battered because of them being the ones that frustrations are being taken out on. We don’t want to see them go to hospital because of these frustrations that our current prisoners are facing—because they’re not getting rehabilitation programmes or seeing their loved ones in person because of the numbers of our corrections staff—and we’re losing huge numbers of experienced ones, and $4 million is only the tip of the iceberg that this Government is having to do for recruiting. It is going to end up being a hell of a lot more, which is quite sad because we can’t attract enough people here and we’re losing really good staff to overseas because they have not been heard.

Now, it’s not pay; it’s conditions. Now, the thing is, if we don’t make conditions good for everybody in the prison, then it’s just one big mess. Now, also in this is around the cultural. Now, we’re all for that because it’s all part of rehabilitation that people’s cultures need to be recognised. If you read information from overseas, it shows that family is a huge part of rehabilitation, and we’re saying it’s good to see Māori, Pasifika, but we need to recognise other cultures when possible. We need to recognise that we are a multi-ethnic society. In the prison, yes, proportionately it is more dominated by Māori, but we also have got to recognise those other cultures because that is part of who they are and we need to make sure they still feel that they are part of their community, and that’s a huge plus if we can get that running the way it says here.

Shanan Halbert: So you recognise ethnicity?

TONI SEVERIN: Well, I said we’re a multi-ethnic society, so not just one or two. We are multi-ethnic.

Shanan Halbert: So you’re recognising ethnicity—not colour-blind on this one.

TONI SEVERIN: Yes. Now the other thing is that we’ve always said that it should be based around that. Now, the other thing is these scanners. A couple of years ago, I was very fortunate, I was able to go and visit Christchurch Women’s Prison, where they had a scanner already in place trialling it, because for a lot of women it is quite embarrassing, depending on their circumstances of why they are being brought into prison, and if they have had abuse and many other things that have occurred for a lot of these female prisoners, having a pat down pat down is not the ideal situation, even if it is by a fellow female. So these scanners have come in and it’s made them feel a lot more comfortable, least aggravated. So I’m looking forward for them to be rolled out even faster and further.

There is one thing in here that’s going to be very interesting that I’m looking forward to talking to CANZ about and that is people’s identity. Now, I’m happy for people to identify as whoever they are. However, I still have a slight problem if there is a gentleman who is identifying as a female and requests for a female officer to be able to pat them down, the security around that. Because the thing is that we do know that there could be a size difference, a strength difference. Now, we don’t want to put our corrections people in danger. So we need to make sure there is safety measures in there for those corrections staff. Quite regularly we need to make sure that all prisoners are safe as well as corrections staff.

Now, in general, as we said, we’re supporting this bill at first reading because we want to hear from the important people that will help to administer many of these changes, and we also look forward to many of the organisations that help with rehabilitation programmes within the prison. And we look forward to that because they’re the ones with the feet on the ground as well as our corrections staff. So I’m looking forward to the unions, not only the CANZ union but the New Zealand Public Service Association, coming in and talking to us and giving us their opinions around how this is a good bill or how it can be improved to make everything better for our prisoners, to get the best rehabilitation so that we have less offending—and also, hopefully, we get the rehabilitation that’s in my member’s bill, if it is ever drawn before we finish, which is: no rehabilitation, no parole. But we need that rehabilitation to happen so they can get that parole.

ASSISTANT SPEAKER (Hon Jenny Salesa): The time has come for me to leave the chair for the dinner break. The House will resume at 7.30 pm.

Sitting suspended from 6.02 p.m. to 7.30 p.m.

ASSISTANT SPEAKER (Hon Jenny Salesa): Kia ora, members. Before we broke for dinner, we were debating the Corrections Amendment Bill. The next call is a Green Party call.

Hon MARAMA DAVIDSON (Green): Thank you very much, Madam Speaker, for the opportunity to stand. So I will be putting clear on record that we will be opposing this corrections bill. I’ll outline the main concerns, and I will also look at some of the things in the bill which we think are positive but which don’t go far enough and aren’t enough to combat the potential harm that we think this bill causes.

I first want to put on record that I understand the intentions behind the bill. The PR that was put out by my colleague, Minister Davis, today, talked about “boosting rehabilitation and reintegration of prisoners”—now, that we have long supported. What we are concerned about, in three main points, I think, is the Tiriti approach that is outlined, in our view, doesn’t go far enough—and because it is superficial in a certain way, what that means is that we could be excusing a less-than-deep approach to a truly Tiriti-led way of working around corrections. We definitely are concerned around the age-mixing of children and adults, and we maintain that that mixing is always a breach of the rights of the child, especially but not limited to international law, something that we’ve—as a Government, as a country—been rapped on the hands about for a long, long time. We do have concerns, as others have stated in the House, about the mixing of sentenced and remand prisoners together in rehabilitation. One of the main points there is that, absolutely, people, including remand prisoners, should be able to access good services and supports, including therapeutic support; there, in our eyes, is no need to enable mixing of prisoners to be able to do that.

So the Titiri concerns I’m happy to pick up in a little bit more detail. There is a reference incorporated to Te Tiriti on the paper that refers to—I think the language used is “engaging” with Māori on matters relating to rehabilitation, and to “provide access to mātauranga Māori”. All of these references fall far short of the true transformational reform that is needed to bring our system of justice actually in line with Tiriti justice and Tiriti obligations of actual Māori leadership, of Te Ao Māori - based justice. We therefore don’t want to kid the public or the House into thinking that this can start to serve the transformational and deeper requirements that are needed. The bill also requires Corrections to develop, maintain, and implement a strategy focusing on improving outcomes for Māori in the justice system—and here, again, we want to maintain that we keep our collective focus on the truly foundational changes that are needed.

I think here I was going to raise the example of the success of the rangatahi youth courts, and I’ve been privileged to be able to attend some of those hearings over the years. They have been in action for about 15 years now, and I think we’re up to around about more than 15 of those around the country. I was privileged to attend the launch of the Manurewa Kōti Rangatahi, which I believe was the second after Gisborne. So there have been authentic and enduring successes across those approaches, especially in terms of reducing and lowering re-offending rates—good, good, ka pai.

So the differences between those quite foundational changes in the ways of working and the quite superficial references in this bill to Tiriti justice and Tiriti accountability are quite stark, and there’s a massive contrast there. So that is a concern and we are highlighting that. I think we are also echoing other concerns that many members in here have raised with the staffing shortages and the existing centralised mega prison system developed by successive Governments.

Part of my role, especially as a prevention of violence Minister, is to visit prisons and meet with corrections staff. Many, many, many times over all of my years in Parliament—certainly recently—I’ve been hearing the concerns raised directly to me about shortages, which I know the Minister and Corrections are aware of, and I know that we are all wanting to support and see improvement in proper staffing and safe staffing. Safety for workforces is always a concern for the Green Party—and safety for everyone in prisons as well. So that was the first Tiriti-approach concern. If I can go a little bit more [Looks at clock]—oh, goodness, that goes fast—into age-mixing and mixing of sentenced and remand prisoners in rehabilitation, our system still lacks the properly resourced, evidence-based, and standardised rehabilitation programmes. So in terms of the current availability and quality of programmes on offer, there’s not good consistency between institutions, and existing sentenced prisoners are therefore regularly denied a place also in programmes like drug and alcohol rehabilitation, anger management, or literacy. Others have spoken about that quite scandalous gap of many people in prison actually having dropped through some quite scandalous gaps in education systems, for example, let alone mental health care.

So it’s still extremely unclear why the Government needs to make legal the mixing of convicted and remand prisoners to be able to offer that support. I’m really, really looking forward to what the Justice Committee contributions highlight in light of this particular breach of a long understood standard under international and domestic human rights laws.

And now I come to what is always a breach of the rights of the child: the age-mixing of children and adults. That on its own is a bridge too far for us to be able to outright support. And, again, I highlight the fact that there is any thinking that there are situations where mixing of young people and adult prisoners could be in the best interests of the child, given decades of extremely consistent research, ongoing binding international tool standards, and—what I said at the start—the specific and regular criticism that we’ve received over decades by the UN Committee on Rights of the Child. Yes, since 1990, so even more than I thought—which was of course the ratification of the convention, and that’s one of the most universally accepted and binding of human rights laws. So with those three concerns, we felt that threshold was far too potentially harmful for us to support this bill. Again, we look forward to select committee contributions.

I’m going to finish by acknowledging some of what we think are potentially good things, of course. So the process for authorising the use of non-lethal weapons and the legislating where the Minister must consider sufficient information relevant to the use of non-lethal weapons such as operational policies and training materials for staff—ka pai, good. There are a number of other miscellaneous amendments. Others have picked up on allowing body imaging technology to be used instead of a rub down. And, again, as a prevention of violence Minister, I absolutely support those amendments in this bill, but they could be done at an operational level and wouldn’t have needed legislation. They could be amended at the regulatory and operational level, and they are something that could have been done this whole time. I support those, but it’s still not enough to meet the threshold of potential harm. Thank you, Madam Speaker.

INGRID LEARY (Labour—Taieri): It’s really disappointing to hear that the Greens are not going to support this at first reading, because a number of the issues that the previous member, Marama Davidson, raised, in my view, could have been discussed and debated at the select committee stage. Certainly, around the mixing of children and adults, the preamble, the explanatory note to the bill, clearly states that it is where it is in the best interests of the child. That is unequivocal and what the member has done is, essentially, rule out that there could ever be a situation where that could be in their best interests.

The other element is around prisoners on remand mixing with convicted prisoners. Again, an assumption that this could never be in the interests of those who are presumed innocent—i.e., those on remand—when, in fact, we know that resourcing is such that sometimes these really important rehabilitative programmes cannot be delivered, either because there are not enough numbers or because it is cost prohibitive to do two courses.

So this is a practical way of the law following what is needed on the ground. And it’s really disturbing to hear the Opposition actually say that they care about rehabilitation when all the announcements I’ve heard from them recently have been about locking up more prisoners through their attempt to try and return the three strikes law.

Finally, it is abhorrent to hear people suggest that the Hon Kelvin Davis is missing in action. He has been a completely committed and dedicated Minister, who has worked tirelessly, particularly around the kaupapa of keeping Māori out of prison. We know that 53 percent of male prisoners are Māori, 67 percent women, when in fact in the general population it’s only 15 percent. That is why that Minister works so tirelessly and that’s why we are seeing the impacts that we are seeing in reducing prison rates and in seeing measures like this fantastic rehabilitation bill come before the House. I commend it.

ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call. I call the Hon David Bennett—five minutes.

Hon DAVID BENNETT (National): Thank you, Madam Speaker. Well, that last speaker has been getting very agitated in this House in the last couple of speeches that she has made, and I think it’s the stress of knowing she’s on the way out and her party is on the way out. I think that stress is showing in the tone that we’re seeing from that speaker.

Hon Grant Robertson: How can you be talking about things being on the way out?

Hon DAVID BENNETT: And it’s great to see Grant Robertson in the House here today. He should actually be in his office, trying to save the economy, instead of being down here, trying to look like he’s reading some material. But, you know—

Hon Grant Robertson: On the way out.

Hon DAVID BENNETT: On the way out—exactly what Grant Robertson is. You know, he’s the man that has caused a recession that the Labour Party called a technical recession today—they won’t actually admit that it’s a recession. [Interruption Then the Labour Party are constantly interjecting because they want to hear more about the recession that they have created, and Grant is—they can’t even say the word in question time any more. They can’t say the word “recession”—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! The member will come back to this particular bill, the Corrections Amendment Bill.

Hon DAVID BENNETT: Oh, thank you, Madam Chair. I was just responding to the Hon Grant Robertson’s interjections and just confirming what he’s done to this economy.

But this bill is about corrections, and anybody that’s been in a prison—and most politicians will actually have had the opportunity, I guess, in some way to go through a prison and see what it is actually like and to see how hard it is, and to see the young men, particularly, in there that can’t read and can’t write. They’re very angry. A lot of them are in a very dangerous position in their personal lives, at that young, formative stage. That’s why you need to do the rehabilitation, and that’s why we’re doing what we’re doing on our side when we’re supporting rehabilitation—like we’re supporting this bill.

It’s really important that we understand some of the aspects of those young men, particularly, and their journey in our prison system. There can be no excuse for the activities that have been undertaken to get someone into prison, and it’s very difficult to actually get to prison. We had a Crown prosecutor speak at a school event, and, basically, for anybody that can get through year 12, there’s virtually a zero percent chance that they will actually end up in prison. Basically, anybody that can get through year 12 virtually doesn’t go to prison unless they do some kind of fraud.

So, effectively, we need to look at some of the drivers in society as well, and that’s really where the National Party is coming from. We’re looking at a cohesive plan around education, around work, and around giving people incentives to actually have a better life, rather than glorifying gangs and rather than glorifying that aspect and saying that that’s a legitimate perspective of how people can get through in life. That’s the difference between National and Labour, and that’s the difference in how we approach these issues.

So we will be supporting this bill because there are some parts of it that reflect our desire to see more rehabilitation, and actual rehabilitation. We had the Department of Corrections come in front of the select committee last week, and, as is typical for the Department of Corrections, they were very defensive of the Government in the senior leadership there. One of the issues was around rehabilitation, because a lot of money has been spent on rehabilitation and not a lot of service delivery is actually being seen, and they couldn’t actually answer that question in the select committee. Now, they said that they’d get the information and send it through, but surely when you’re spending something like I think it was $170 million, you would know where that money would be going and you would know what you’re trying to do with that, and they couldn’t answer those questions. It really spoke volumes about their approach to rehabilitation.

Anyone that’s been in this House and been through a prison will know that the prison officers do a sterling job for this country. They do amazing work and we thank them, but we need a system that actually supports them as well, and a system that doesn’t give them the tools to deal with those prisoners isn’t supporting them. That’s where the National Party is coming from: we want a system that actually supports those prison officers so that they are safe and we actually get the results and less offending—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! The member’s time is up.

ANGELA ROBERTS (Labour): Thank you. It is a pleasure to rise and take a call on the Corrections Amendment Bill. It’s wonderful to hear across the House the unequivocal support for the workers in the middle of this and the professional perspective that unions and workers bring to resolving such complex issues as those that we have in our prisons. This bill addresses quite a few different aspects of the challenges within our prison system. So it’s great to hear the support from the other side. I expect we will hear more support as we go on, appreciating that the worker, the professional perspective, is critical when we’re trying to resolve such complex issues.

We’ve heard a lot about the intent of this bill being about improving access to what we need with regard to rehabilitation. We’ve heard about the overrepresentation in our prison system, both our men and our women—neurodiversity, substance use disorders, and challenges around literacy and numeracy and access to skills and qualifications, as well as, of course, mental health challenges.

The idea of improving access to these—we’ve heard about the practicalities in a very small and geographically dispersed prison population, about being able to provide in a practical sense the access to courses that prisoners need and those on remand could benefit from. The idea of improving prisoners’ access to literacy and numeracy enables their access and their ability to better engage with rehabilitation programmes and eventually gives them the confidence to seek and hold down meaningful work when eventually they come out back into society. I commend this bill to the House.

GLEN BENNETT (Labour—New Plymouth): I was just doing the numbers and reflecting, and it’s been at least 40 years since my first prison experience. My mother was a prison chaplain in Mt Eden women’s prison—don’t panic, nothing to hide here. Going into Mt Eden women’s prison in the early 1980s—a very different time back then in terms of accessibility to prisons for children. But then, through my years, all the way from Auckland down to Otago I have had experiences in a number of our corrections facilities, supporting, sadly, mostly young people who I was working and walking alongside. So I’ve seen firsthand, I’ve seen up close and personal the inside of how prisons operate and the impacts they have on prisoners and those who are on remand.

I do want to acknowledge victims of crime, and understand that prisons are a necessary part of our society, but from what I’ve seen and experienced working alongside people who are going through corrections and the prison process, we need to do everything we can. We need to do everything we can to ensure rehabilitation; to ensure that they have access to alcohol and drugs treatments; to ensure that they have access to whakapapa, to kaupapa Māori services; that they have access to their religious beliefs and what they follow; that they have access to therapeutic therapies to support them. And so in this legislation, when it comes around the potential moments of mixing remand and sentenced prisoners, if it’s around outcomes for the offenders, if it’s around bringing about healing, if it’s around them re-entering society as better contributing members, then we need to do it. I commend this bill.

SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. Good to rise and talk on this bill, noting that the National Party is in support of the Corrections Amendment Bill.

We do have a reduced prison muster at the moment that’s received plenty of attention over the past fortnight or so, and we believe that there are some steps in this that are positive. We support this bill through to the select committee stage and, of course, we’ll support common-sense measures to help those in our prison system. Obviously, this is an area where we want to reduce—where we want to get people rehabilitated. What we don’t want is a revolving door. But also what we don’t want is people in society who are, you know, a real and credible threat to society. I think that’s probably where this Government has overbalanced a little bit in depopulating the prisons. And as a result, we’ve seen crime numbers go up a fair bit; gang numbers are up significantly.

But on this, we support offence-based rehabilitation, and we would like to have seen rehabilitation services made available across all of the different programmes. We note that just under half of the prisoners in there are on remand and there’s a fair chunk of those who actually spend their entire sentence—they see out their sentence in remand. That’s probably a bit of a call-out to how poorly our justice system is operating at the moment. We have a Government that’s more focused on hate speech and other bits and pieces in the justice sector instead of actually getting the courts moving.

I note in my home town of Tauranga we had been promised a new courthouse, just to see the justice Minister recently kick that one down the road. That doesn’t help us get through with the processing, so, as a result, a lot of prisoners are spending their sentence in the remand facilities. And if they don’t have access to the whole range of services there and, you know, a fair chunk of them are spending a chunk of time in remand when they do their sentences, then they’re not going to be rehabilitated. That is a bad thing for the prisoner, it’s a bad thing for the victim, and it’s ultimately a bad thing for society, because what we are going to do is send these people back out into society no better off necessarily than they were when they went in there, and potentially they’re worse off.

If someone has got addiction issues, then we want them to be able to access those services when they are in the prison facilities, whether that be remand or the general jail system. If someone has more specific requirements, whether that be around violent or sexual offending or whatever it may be, then we believe that they should be able to access those services as soon as possible, because it’s essential that they do get that help that they need and not just generalised motivational courses or a few life skills courses. We really want those people to be getting the rehabilitation they need from day one when they get into the remand system.

And we note that prisoners have suffered a fair bit recently. Mark Mitchell called it out when he was speaking as the second speaker today on this bill, and noted that there are a shortage of corrections officers. We’re not talking about the officials in the back offices, but we’re talking about the people that are in the front lines, on the ground, doing the hard work and dealing with an increasingly violent prison arena. We note that violence against prison officers has escalated quite significantly. I think when I was looking at the statistics last year, it looked like it was up about 90 percent since 2017. And the net result of that is that people don’t necessarily want to do that job any more.

And then the Australians very cunningly put on a lot of ads, as they are right across the economy at the moment, trying to get our skilled workers over there. And, you know, from someone who has lived there, it’s a pretty good life. I think people are looking at that and an increased income and probably a corrections Minister and a system that backs them up a bit more, gives them what they need to defend themselves and their peers, and then they’re going, “Well, you know, I don’t necessarily want to be dealing with Mongrel Mob members all day and not having a system that backs me up. I might look at other options.”

But the net result of where I’m going with all of this is that quite often there aren’t the prison officers there on the ground, as Mark Mitchell referred to today, to allow those visitations to take place, which are such a key part of ensuring—often they are, you know, young, angry men—that they do get the support that they need from whānau, family, friends and loved ones to enable them to keep those key connections. It’s been noted that a lot of them spend a lot of time just on their own really, or maybe bunked up, but a lot of time disconnected from their loved ones and from their sense of belonging.

So if we were focused a little bit more on listening to the front lines—and I thought Mark Mitchell put it very well today when he said the best thing this Government could do in this area would be to listen to the officers on the front line, go out there and listen to them like he was today and make sure that they are getting backed up, because if they are feeling safe and they have the numbers there, then they will be doing their job properly. They will be safer, the prisoners will be safer, and ultimately they’ll be able to have a lot more of the visitation rights that they haven’t been able to have this year.

So while we support this bill, Mr Speaker—I note that you have switched from the previous Speaker during this call; I’m glad I got the pronoun correct—we do want to see some changes, some common-sense changes which I have outlined in this. And I will note that we support this bill. Thank you.

SARAH PALLETT (Labour—Ilam): Thank you, Mr Speaker, for allowing me to speak on the Corrections Amendment Bill at its first reading.

I, like many people, I imagine, had no experience with the inside of a prison until actually assuming this role and having the opportunity to visit the prisons on the outskirts of Christchurch. Like many, many people speaking before, I was really impressed by the dedication and hard-working nature of the people who work in corrections and their commitment to rehabilitation. I really just wanted to agree with Mr Uffindell that the people who are in prison—who are being held to account for their criminal behaviour—should leave in a better state than when they went in.

I think what we’re trying to do here is do a few simple things that will make life safer and more productive for our wonderful corrections officers and staff. But we’re also trying to weigh up the importance of the presumption of innocence for our remand accused prisoners with their need to participate in therapeutic programmes and other educational programmes so that they can integrate more successfully back into society. Because, as we’ve heard, they currently do have a limited access to programmes and services that will be of enormous benefit not only to them as well as, obviously, to the sentenced prisoners who they will be able to work together with—under very limited circumstances, as I said, so that we can protect that presumption of innocence.

Being committed to seeing people leave prison or leave remand in a better state than they went in is the goal here. As a result, I commend this bill to the House.

A party vote was called for on the question, That the Corrections Amendment Bill be now read a first time.

Ayes 107

New Zealand Labour 62; New Zealand National 34; ACT New Zealand 10; Whaitiri.

Noes 10

Green Party of Aotearoa New Zealand 9; Kerekere.

Motion agreed to.

Bill read a first time.

DEPUTY SPEAKER: The question is, That the Corrections Amendment Bill be considered by the Justice Committee.

Motion agreed to.

Bill referred to the Justice Committee.

DEPUTY SPEAKER: I declare the House in committee for consideration of the Deposit Takers Bill and the Fuel Industry Amendment Bill.

House in Committee

House in Committee

CHAIRPERSON (Hon Jenny Salesa): Members, the House is in committee on the Deposit Takers Bill and the Fuel Industry Amendment Bill.

Bills

Deposit Takers Bill

In Committee

Debate resumed from 21 June.

Part 4 Supervision of deposit takers (continued)

CHAIRPERSON (Hon Jenny Salesa): We come first to further consideration of the Deposit Takers Bill. When we were last debating this bill, we were debating Part 4. This is the debate on clauses 98 to 146, “Supervision of deposit takers”. The question is that Part 4 stand part.

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

CHAIRPERSON (Hon Jenny Salesa): Members, leave is sought for that purpose. Is there any objection? There is objection.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I don’t know why Shanan Halbert is so keen to close this debate down. He was doing it the other night when we were debating this same issue. He didn’t make one contribution other than trying to close down the debate. So I hope tonight he’s actually going to stand up and talk about it, because from my understanding, he does sit on the Finance and Expenditure Committee; he should know about this bill. He should be contributing, because it’s a very important part of the banking regulation of New Zealand. But, obviously, he’s not going to. Thank you for seeing the Minister in the chair.

I just want to talk about the issue of confidentiality. If the Reserve Bank appoints someone to undertake an investigation, they may, under clause 130(3), make a confidentiality order, which states that “The Bank may make the order on the terms and conditions (if any) that it thinks fit.” So it’s a very one-eyed, one-sided power granted in favour of the Reserve Bank in terms of confidentiality. Now, there’s obviously, in clause 131, some issues—consent must not be unreasonably withheld, and some other mitigating factors.

But just turning to clause 145—there are times when the person or the entity being investigated may believe that the investigation is unwarranted. I’m referring to clause 145A(2)(a): “the applicant has established a prima facie case that the exercise of the power in question is unlawful”. So, obviously, to get to that point, you would have had to have gone through a process where the bank has talked about investigating and undertaken an investigation, and it’s only subsequently you find out that prima facie there isn’t a case for it.

So can the Minister give some clarification and comfort that the Reserve Bank won’t unduly use its powers. Because if someone was investigating a non-bank deposit taker or whatever—an entity—and the entity concerned thought there weren’t proper grounds for it, it is highly unlikely that the Reserve Bank is actually going to grant them powers to rebut the confidentiality order that a bank may impose.

So how do we have comfort that the Reserve Bank is going to pursue cases where it thinks it’s fine and appropriate, but not actually allow the entity concerned the opportunity to talk about it, even if it is contrary to the Reserve Bank’s view or interest? Because I don’t think it’s necessarily precluded under clause 131.

SIMON WATTS (National—North Shore): Well, thank you very much, Madam Chair. Just leading off on the contribution from my colleague Mr Andrew Bayly, in regards to confidentiality, and I’m going to give a different part of the Part 4, but I’ll give an opportunity for the Minister of Finance, who I acknowledge in the chair, to come back on some responses.

So my questions are around Subpart 8 of Part 4, around “access to information by overseas supervisor”. For those of you sitting at home, watching this, going, “Ask him some questions.”—or those that are potentially going—this is an interesting aspect of the legislation, because, in effect, it provides the ability to have confidential information provided to an entity which is based outside of New Zealand. There’s a number of questions and considerations—and rightly so—and potentially some concerns in regards to the Act.

So my questions to the Minister really relate to providing a degree of comfort and assurance around this process and that due consideration and thought has been given around the protection. So my questions particularly relate to clause 141, and I’m interested, from the Minister, in terms of how does he foresee that the Reserve Bank will be able to achieve or obtain sufficient provision or assurance that the data that’s potentially shared, or acquired and shared, with the overseas supervisor—that the confidentiality of this information is protected? What are the grounds in which, potentially, the bank may consider or would not authorise that provision of information—I guess, take into account whether it’s going to be a framework or what consideration around where that threshold lies, because I think there’s obviously going to be an element of subjectivity involved in that.

The other question in regards to data: we’ve had a number of examples of data breaches over the years—

Andrew Bayly: Many.

SIMON WATTS: —many, as Andrew Bayly has noted—and the challenge becomes even, I think it would be fair to say, more complex when the data is being shared in overseas jurisdictions which don’t necessarily share—in many cases do not share—the same rules-based system that we benefit from in New Zealand. So there’s a conversation around the assurance of the storage of that data and the confidentiality. But, actually, the other aspect is, if you fast forward five or 10 years in regards to that data, ensuring the longevity of the protection of that data and the confidentiality of that data, because, while in a different example, we saw the firearms registry, and data was left in the cabinets in the police station in Auckland, and, some 20 years later, it got lost. Conceptually, applying that same methodology to this consideration, how is the bank going to be able to get assurance around the long-term aspect around that?

So what are the grounds, how will the bank get assurance, and, particularly, has the bank considered or is it considering around the ongoing nature of ensuring the protection of confidential information? I’ll leave it at that, and then we’ll come on to another couple of clauses soon.

ANDREW BAYLY (National—Port Waikato): I’m just giving the Minister time to reflect and hopefully get an answer from his good officials over there.

Just continuing on the same thought, or line of questioning, I’m talking about clause 145A, “Effect of Proceedings”. My question is, let’s say that the bank has started to undertake an investigation, and during the course of it the bank comes to a view that the investigation is not warranted or there’s issues with the way it’s being conducted or whatever. Can the Minister just help identify: is the only recompense for the entity concerned clause 145 where they have to issue proceedings, or is there any interim step where there can be another outcome that doesn’t necessarily end up going to court? Because I’m not sure what happens with the court case. Is there a lengthy delay between the filing of the proceedings and until the judgment or court case occurs? And in the intervening time the Reserve Bank carries on its merry way doing the investigation—which may or may not be proved in hindsight to be wrong or incorrect or actually doesn’t arise in anything—and, in fact, the Reserve Bank was wrong in undertaking the investigation.

The reason I’m just highlighting this is it’s like a market study. It’s like the banking study that the Government’s just kicked off, or the fuel study—they’re very expensive for the entities concerned. We know the Commerce Commission cost for the grocery study was roughly three million bucks, but from the other side of it I understand the grocery industry has spent probably close to $20 million defending themselves. So these things have bad or significant impacts on entities’ brands, it has impacts on people’s reputation. And so having safeguards to ensure that only legitimate and well-researched and bona fide situations where investigations are undertaken are undertaken, and they’re not used as a fishing trip or whatever.

Because, as my colleague Mr Simon Watts identified, market rumours—it’s a very small market—start to seep out into the market that someone’s under investigation by the Reserve Bank. That in itself can be poor—in terms of stiltifying people who might want to engage with that business, new customers not wanting to engage with those types of entities. So that’s why I think it’s very important that there is some form of mechanism to make sure that entities are protected and have the ability to protect themselves if they think, especially if they’re proved subsequently to be warranted exercise of power by the Reserve Bank.

SIMON WATTS (National—North Shore): Well, I’m enjoying this interaction between myself and Andrew Bayly. It would be good with the Minister, I’m looking forward to his contribution—

Shanan Halbert: Take it easy, Wattsy—take it easy.

SIMON WATTS: —into this, but in the interim we’ll continue to have a dialogue between ourselves. Maybe Mr Halbert from Northcote could step up.

But related, actually, to the points you’re raising, Mr Bayly, in regards to that—my questions relate to clause 126(3) which is around the aspect of instances which you’ve referred to where the bank can appoint an investigator. I think that’s all reasonable and people would expect that that be the case. So clause 126(3) refers to: “The investigator must be an employee of the Bank”—yep, that makes sense; no issues there—“or any other person who the Bank is satisfied is suitably qualified.” Any other person. And why that potentially—and the question for the Minister in regards to this is around, what is that criteria? Because “any other person who is suitably qualified” is reasonably broad. But the reality is, when you move into clause 127, that individual—who in this case may be any other person, not an employee of the Reserve Bank, any other person, just they need to meet a threshold of being “suitably qualified”—has the power to obtain quite significant information under clauses 127(1), (2), and (3). But I guess the risk is always there that that individual may not carry the same level of appropriateness as a member of the Reserve Bank, and, therefore, that information that they have the power to obtain could potentially be used in a manner which isn’t appropriate.

I guess my question is in regards to clause 126(3): why did the Minister feel it was appropriate to broaden that out in such a broad way? And can the Minister assure the House that the risk that I’ve just outlined is something that is unlikely to occur; but, if it does, what protections or mechanisms are in place to be able to, in effect, monitor that investigator and ensure that that investigator’s actions do not bring the Reserve Bank into disrepute? Because the Reserve Bank would, in effect, have a role in that process, but, more broadly, not bring into disrepute this aspect, because they will also be interacting with the deposit takers in a broader sense and the access to power of information and the access to request. When one has that degree of power, there is always a risk that the power may be used inappropriately. And so I am seeking reassurance that there will be processes and procedures in place that will mitigate that risk sufficiently.

DAMIEN SMITH (ACT): I’d like to refer the Minister, please, to clause 146(2) in Supplementary Order Paper 361 that the court in its discretion can order any information or copy of any document from a document that instead of being destroyed, be retained by the bank or an investigator subject to terms and conditions that the court imposes. It was interesting to note this week that JP Morgan’s retail division lost 50,000 emails on their clients’ activities. I just wondered in this clause if the advisers would take on board that maybe an overnight data feed between the bank and the deposit takers would make sense in terms of (a) protecting the integrity of the data and, secondly, if any fast decisions have to be made on the banking scenario, that this data was instantly there, instead of just being passive and waiting for it and waiting to go through the court system, that everybody was fully prepared.

Andrew Bayly: We are poised with expectation, hoping the Minister’s going to stand and actually answer one of our, I think, six questions.

CHAIRPERSON (Hon Jenny Salesa): Are you taking a call, though, Andrew, or are you still waiting?

Andrew Bayly: No, I’m just giving the Minister every opportunity.

CHAIRPERSON (Hon Jenny Salesa): There being no other calls, the question is that the Minister’s amendments to Part 4 set out on Supplementary Order Paper 361 be agreed to.

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

Ayes 106

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

Noes 10

ACT New Zealand 10.

Amendments agreed to.

A party vote was called for on the question, That Part 4 as amended be agreed to.

Ayes 106

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

Noes 10

ACT New Zealand 10.

Part 4 as amended agreed to.

Part 5 Enforcement

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to Part 5. Part 5 is the debate on clauses 147 to 188 on enforcement. The question is that Part 5 stand part.

Hon GRANT ROBERTSON (Minister of Finance): Just to briefly introduce Part 5, this is around enforcement. Essentially, the framework that we’ve set up here is to provide a range of options to allow for a proportionate response to misconduct in line with the approach and other comparable enforcement regimes. Obviously, the most serious offences are reserved for serious misconduct. The question of enforcement follows on from the question of supervision that we dealt with in Part 4.

There are three tiers of offences under the bill. The least serious offences are tier 1 offences, which, essentially, are things like failing to notify the bank on becoming aware of fit and proper concerns—that carries a fine of up to $500,000 for a body corporate or $50,000 for an individual. The most serious offences are tier 3—for example, carrying on a deposit-taking business without a licence, that would carry a fine of up to $5 million for a body corporate or, in the case of an individual, a fine of up to $500,000, or imprisonment for a term not exceeding two years, or both.

Throughout Part 5, you’ll see a variety of enforcement-related provisions, including the power to accept undertakings, pecuniary penalty levels, the procedure and related provisions to how that works in relation to criminal offences and infringement offences. It is an attempt to be proportionate, which is one of the concerns of the committee, and I think the part strikes that balance.

It’s worth noting that there is Supplementary Order Paper (SOP) 361 in my name, amending clause 177, which is intended to ban persons who engage in serious misconduct from participating in the deposit-taking business, including ownership. Given that many deposit takers are owned by a holding company, the ban would be ineffective, and so the SOP proposes to expand clause 177 to authorise the District Court to issue a banning order in relation to a licensed deposit taker and any holding company or subsidiary, so just to reflect the nature of the ownership of many deposit takers.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair, and I welcome the introductory comments by Mr Robertson. I thought we were going to have to rely on Shanan Halbert for some commentary on this section but we were holding our breath. We were holding our breath, Mr—

Stuart Smith: You can see the disappointment in his face.

ANDREW BAYLY: Yes. So what I wanted to talk about is clause 159, which did occupy the committee’s time quite significantly, as Mr Robertson highlighted. This is the “defences for person that contravenes prudential obligation”, and in plain terms this is about, what is the liability, particularly for directors, or senior management teams, in terms of meeting the requirements, and the ability to rely on other people within an organisation to provide the information.

I think the background to this is—personally I had a concern that we were running the risk with all the liability and the fines, etc., that if someone in a large organisation didn’t have some form of protection, inevitably what would end up occurring is that particularly directors would end up having to do their own due diligence and to make sure that, for instance, the bank was providing the right information to the Reserve Bank and the forms that were required, and if there were errors both in some of the figures or the way it was presented, potentially could give rise to a liability for that particular individual. The mere threat of that, especially when it was overlaid with significant fines, as the Minister has just highlighted, meant that progressively we may end up getting to the stage where already the regulation and regulatory oversight of banks is very significant, and we will end up possibly having people who are not prepared to go on boards of banks and other regulated financial institutions that are covered by this bill.

That would be a really bad outcome, and I think it’s slightly concerning that The Hongkong and Shanghai Banking Corporation has just recently pulled out of New Zealand. And one of the specific stated reasons for departing New Zealand and giving up its operations here is the degree of regulation—one of the explicit reasons given, not the only reason but it was an explicit reason. I think we’ve got to be mindful in New Zealand that we strike the right balance between adequate regulation, and one where we’re becoming overzealous and uncontrolled, and actually stifling competition, stifling innovation, but probably more importantly over time is actually stifling the appointment of good people who may want to be part of these organisations, but who look at their personal risk and say, “Look, I don’t want to be part of this because I cannot manage this risk adequately”.

Clause 159 does deal with that by providing a defence for someone that if a contravention, which, in terms of provision of information to the Reserve Bank, “was due to reasonable reliance on information provided by another person, other than a director, an employee, or an agent of A”—“It is also a defence for A to prove that—(a) the contravention was due to the conduct of another person”—or an accident, or some other cause beyond the control of A.

So what we sought to introduce in this section is really some mitigating factors because we do not want boards and directors of our large banks, and even large deposit takers having to get—coming to a view that they need to do all this work. So this is a way of dealing with it. I think hopefully we’ve struck a balance in terms of a defence. But I think, as I said before, we’ve got to be mindful that we do strike an adequate balance because that’s such an important part of our ecosystem—to have good, strong financial institutions, but at the same time we are promoting competition and innovation.

So I’d be keen on what the Minister’s view on it is, on those changes, and obviously he was supportive of them, but it’s a very important aspect, I think. It’s one of the most crucial aspects of this bill in terms of striking the right balance.

CHAIRPERSON (Hon Jenny Salesa): The question is that the Minister’s amendments to Part 5 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Part 5 as amended agreed to.

Part 6 Depositor compensation scheme

CHAIRPERSON (Hon Jenny Salesa): Members, we come now to Part 6. This is the debate on clauses 189 to 255, the depositor compensation scheme. The question is that Part 6 stand part.

Hon GRANT ROBERTSON (Minister of Finance): Thank you very much, Madam Chair. Part 6 covers the creation of the depositor compensation scheme, and at the outset of this part I do just want to make a couple of introductory remarks. This is a very important part of this bill and a very significant change in New Zealand’s history. We are one of very few countries in the OECD that doesn’t have some form of depositor insurance or depositor compensation. Over a period of time through the consultation work that we did with the Reserve Bank Act review, we have traversed the support for this proposal across both the banking sector itself and the deposit-taking sector itself, and also among the public, and there has been a strong level of support.

It was interesting to note that at the beginning of the year, when we had some issues in the United States with Signature Bank and Silicon Valley Bank, my email bag started to fill up with people saying, “Where is the depositor compensation scheme up to?” My replies to all of those people has always been to stress that in New Zealand, we have a very strong and robust banking sector. All of the things that we’ve just been discussing in the previous parts of this bill are all about the things that sit around our banking sector and make sure that it is robust. You can’t set a bank up in New Zealand as easily as you can in some other jurisdictions, and when you do set a bank up, there are far more supervisory and enforcement provisions around that.

So New Zealand does have a sound banking system, but when the worst happens, we need to give confidence to our people that their money will be safe. Again, we know that in our history there have been times where there have been issues, and people have turned to the Government quite quickly to say, “Will you bail us out? Will you help us out?” What we need—and what became clear from the consultation that the public agreed with us on—was a scheme that meant that we didn’t have an ad hoc response in those situations, but we’d have a response that was always available, always there, and always giving confidence.

So Part 6 creates that scheme. Subpart 1 is the various preliminary provisions to set up the scheme. Subpart 2 establishes the Depositor Compensation Fund, which will be owned and managed by the Reserve Bank on behalf of the Crown. Under clause 198, the fund may be used for paying the depositor compensation scheme compensation, paying the Reserve Bank’s expenditure in connection with this scheme, supporting a resolution measure in relation to a licensed deposit taker, paying tax liabilities in respect of the Deposit Compensation Fund, and to repay any money borrowed by the Reserve Bank where there is a deficiency in the fund. Subpart 3 provides for how the compensation for eligible depositors will be calculated, and Subpart 4 sets out the Reserve Bank’s rights in relation to deposits when compensation is paid to eligible investors.

We have over the course of this bill gone a bit round the houses about what level of deposit should be covered, and, obviously, we’ve landed on the $100,000 protection. That will protect around 93 percent of deposits in New Zealand. It protects most people. If you think about it, it’s $100,000 in each deposit, so people could have a number of different deposits in different institutions that are covered. We felt that that struck a good balance. There are always issues with things like moral hazard here in making sure that we actually make sure that people take responsibility for their actions, but, equally, we’ll want to provide that level of protection to New Zealanders. Common schemes overseas—some of them have slightly higher levels of protection, but we think this is the appropriate balance level for New Zealand.

So this is a part of the bill that I think is extremely important, and one that I’m very proud to present to the committee.

ANDREW BAYLY (National—Port Waikato): Yeah, that was a useful introduction. I suppose I’m interested in the issue around the $100,000 and what it covered, and particularly in clause 191. As the Minister was aware, there’s a great deal of debate around whether a New Zealander holding currency deposits offshore should be covered or not, or, if an offshore entity has currency deposits sitting in New Zealand, whether those are covered. And it might be useful for the Minister, just to help anyone who is listening, as to whether which of those two are covered under the deposit scheme set out in here.

The other thing, clause 191(2) refers to “protected deposit” and does not include a debt security, and that’s a defined term at the front. But, again, it would be useful for the Minister just to identify whether that covers a debenture, a bond, a commercial paper, or any of those types of instruments, which in some cases could move into quasi-equity debt instruments, quasi-equity debt—mezzanine equity instruments is probably the better term to use. Which of those might be covered? Again, it would be very useful for the Minister just to help us all understand exactly what’s in and what’s out.

SIMON WATTS (National—North Shore): Yeah, thanks, Madam Chair. Just following on from that contribution, I’m interested in regards to Subpart 2 around the “Depositor Compensation Fund” and, in particular, if the Minister could provide some context in terms of the funding profile which will be funded through the levy and at which point the appropriateness, or the target fund value, will be reached, and over how many years, potentially, that will take in order to get to a point where the fund reaches a threshold which is deemed adequate for a stress event that may trigger that—acknowledging there’s quite a significant range in terms of what those events could look like. But is there any consideration around that point, and over what time period would that look like, and in the interim period, in the initiation phases of the bill and while that is building up, what the funding dynamic looks like. I guess, assuming that the Crown would write a cheque, but I just want clarity around that.

The other aspect, I know the Minister is very supportive of inflation adjustment, but there’s 100 grand that we refer to—was any consideration given around a mechanism to review and adjust, particularly around the inflation aspects? Because, you know, the reality is, if we’re standing here in five years’ time, what is appropriate, particularly under the current inflationary environment, will no doubt be higher than the current numbers in there. And just what, if any, consideration has been given to ensuring that the numbers within that keep pace with the economic reality that we face here in New Zealand?

ANDREW BAYLY (National—Port Waikato): Yeah, I’m just conscious that the Minister’s getting some advice, so I appreciate that. I’ll just turn to a slightly different topic while the Minister’s getting that advice.

This refers to clause 233. There’s a number of clauses here that deal with the calculation of what is the nature, extent, of the deposit insurance money that’s going to be paid, and clause 233 provides for the bank “to appoint 1 or more persons as reviewer as soon as is reasonably practicable after (a) a resolution ends … or (b) the Bank pays money out of the fund”. So this is a review process and it goes through in clause 233(2), saying “Before appointing the reviewer, the Bank must be satisfied that the … [reviewer] has the appropriate knowledge, [and] skills”—that’s good. In clause 233(3), the reviewer must “(a) assess whether the Bank’s calculation of the maximum amount complies with (i) the regulations … [etc., etc., etc.] … (b) prepare a draft report … and (c) consult the Bank on the draft report; and [then] (d) provide a final report to the Bank” after taking account of the bank’s comments on the draft.

Then there’s a very important thing in clause 233(4): “The reviewer may, when acting under … [this provision], only take into account information known to the Bank at the time that it makes the calculation”. So you can’t be hammering people for things you didn’t know at the time that payments were made. And clause 233(5): “The Bank must publish the final report on its Internet site.” But the bit I want to highlight is in the next subclause. New subclause 233(6), states “The Bank may redact any information from the final report that is published”—remember, it’s got to be published and it’s got to be republished on the Reserve Bank’s internet site—“if the Bank considers there would be a good reason for withholding the information under the Official Information Act 1982 if a request for that information were made under that Act.”

Now, that’s an extraordinary little clause sitting in this Deposit Takers Bill. And to be honest, I hadn’t really noticed it until I was reading through this and having a pretty good look at it. So this is meaning that the bank could doctor the report and in some cases make it meaningless if it so felt. So if the Opposition finance member wanted to find out about it, if the bank wanted to find out about what was in the final report, all of that may be precluded and is allowed for in contravention to the Official Information Act 1982. So maybe the Minister can just help—why this extraordinary power is in this bill and why it is necessary.

Hon GRANT ROBERTSON (Minister of Finance): Just to just cover off a few of the questions and comments that have been made—with respect to Mr Bayly’s earlier remarks, the scheme is designed to cover New Zealand denominated accounts. There is a provision, which I think Mr Bayly probably knows about, for foreign currency to potentially come into the scheme at some point, but at this stage it isn’t in the scheme; it’s obviously accounts that operate through New Zealand banks or offshore-owned banks where there is a New Zealand subsidiary.

In terms of the comments made about the amount of money, the $100,000 level, it is commonplace in these sorts of pieces of legislation to insert a dollar amount. The idea of inflation indexing that would create a great deal of confusion, because inflation, obviously, does go up and down and there would be a need to work out how you would do that, on what basis—would you do it on a time basis? You know, every few years? In the end, as we do with most other bits of legislation, we put a dollar amount in. If the occasion arises in the future where we feel that not a sufficient number of depositors are covered by the Act, then one could come and amend the Act. But, as we would do in others, it’s pretty difficult to peg it to something that moves around so often that it would make it very confusing and I would imagine probably lower trust in the scheme. So that’s why we have the specific dollar amount.

In terms of Mr Bayly’s final point on clause 233—I mean, bear in mind that this is a very specific clause about an independent review of a resolution process under this part of the bill or of the Act. It would be normal, I would think, when you think about the kinds of entities that will be being discussed, the potential for particularly privacy issues—so sections 9(2)(a) and (b) of the Official Information Act cover the privacy of natural persons. And you can imagine when a review has been undertaken in this way that there may be a need to withhold some elements of the report.

I think, as in a few of the other comments made earlier this evening by the member and one of the other Opposition members, we always have to remember that the Reserve Bank is operating here in its independent way. It has a piece of legislation. It has to obey the law. It has to fit within the law, but it’s also responsible for some really important activities on behalf of New Zealanders: making sure in this case that they’ve been properly paid out, if the deposit compensation scheme is required to be put in place in other clauses around supervision of banking entities. They need the powers that they need in order to be able to give New Zealanders confidence. They also have to obey the law and I think that particular clause is appropriate in this place.

ANDREW BAYLY (National—Port Waikato): Thank you for that response, Minister. I suppose it’s the way that the clauses are worded. If the assertion of what the Minister’s just said, that the Reserve Bank can redact, under the current provisions of the oversight of the Official Information Act, then that’s fine. Because any entity has to comply with the Official Information Act and there are reasons why you can redact some.

But the way that this is worded in Subpart 6 maybe—and maybe this is what I’m trying to understand—implies that the Bank actually has a discretion even outside the Official Information Act requirements. Because it says the Bank may redact any information from the final report if the Bank considers there’s “a good reason”, not as allowed for or provided for under the Official Information Act.

So that’s the bit that I’m getting at. If it can redact, because it’s currently allowed under the Official Information Act, I get it; and I think that was the Minister’s assertion before. What this is saying—and it seems to suggest that the Reserve Bank has a discretion even outside the Official Information Act, to redact any information. That’s a bit I’m seeking clarification on, and I’m just conscious he may need to talk to officials, but I—

Hon GRANT ROBERTSON (Minister of Finance): No, no, I don’t. The point I make here is the member needs to go back and read what 233 is about. The person being appointed here is, in fact, independent of the Bank. So what the clause is trying to do is ensure that any actions from a report undertaken by someone who’s independent would also be covered by something akin to the Official Information Act (OIA).

Actually, I think, when the member takes the time to read that clause, he will see that the linkage actually makes it very strong that it would need to be a good reason for withholding information as if it was under the OIA. So I think it achieves the goal that we both want there.

DAMIEN SMITH (ACT): Thank you, Madam Chair. It’s a question with regards to the use of the Silicon Valley Bank as an example. That was technically a wholesale banking run, right? That’s where it started and that’s where the bailouts occurred. So we’ve obviously got examples closer to home in our recent history that fits these criteria better.

But I just have one question on moral hazard. As long as depositors are confident in choosing how our depository interests that the Reserve Bank of New Zealand (RBNZ) has their back, what could go wrong in terms of financial stability and risk? Should I repeat that?

Hon Grant Robertson: Yeah, I’m sorry.

DAMIEN SMITH: As long as depositors are confident when choosing higher deposit interests that the RBNZ has their back, what could potentially go wrong in terms of moral hazard?

Hon GRANT ROBERTSON (Minister of Finance): Well, I mean, a range of issues could occur but the point is that we’re trying to strike a balance here between confidence that people’s deposits are safe, that they know that if the worst thing happens, they can get at least up to a hundred thousand dollars back. The Reserve Bank’s overall regulatory policy framework and supervisory framework should be giving us confidence that the moral hazard is unlikely to take place or to occur, and people will need to monitor their risk, particularly if they’re outside of what is regarded as the Reserve Bank’s—you know, a deposit taker that is covered by the Reserve Bank’s core functions. But moral hazard exists simply by the nature of the scheme existing. What we’re trying to do is find a balance so that it doesn’t encourage or incentivise risky behaviour.

What would go wrong, to answer the member’s question, would be if the supervisory and conduct work that the bank does hadn’t worked up until that point, at which point we would have highly risky entities which would then likely see the scheme utilised more often. I don’t think that’s what will occur because of the mitigation put in place by having those conduct and supervisory provisions that are earlier in the Act.

SIMON WATTS (National—North Shore): Thank you very much, Mr Chair. I’ve got a question in regards to subparagraph (ii) of clause 198(a), “Payments out of fund”, and this relates to the paying out of the bank’s expenditure. So, as part of the Deposit Compensation Fund, there’ll be a fund built up. This provision allows payments to go out of that fund, as the Minister of Finance articulated in his opening address. But subparagraph (ii) of clause 198(a) relates to the portion of that fund being paid out is actually expenditure that’s incurred by the Reserve Bank in regards to the provision or running of the overall fund. I acknowledge that that is appropriate, but my questions are in regards to how much we expect that the bank is going to be spending on administrating this fund and whether any budgets or consideration around headcount or costs have been considered yet, and whether that is, in the context, material or not. The other aspect is whether that actual budget, which obviously takes it in, as a drawer, out of that overall fund—that means that that money is no longer available to be paid out to depositors in this scenario—will have any cap or whether any other budgetary restrictions will be placed around that, acknowledging that that will be a sub-portion of the budget within the Reserve Bank, so not a separate line item, or maybe it might be in regards to the appropriation to the Reserve Bank in regards to that.

My second question is in regards to clause 218 of Part 6, around “Payment of entitlements”. My question here is, and I guess it’s more of a generic question: in a scenario where a stress event triggers that a payment needs to be made out and the bank’s gone through the process to calculate what that payment is for a relative individual or an investor, what is the time period, or what is the expected time period, that individuals would expect to need to wait before they would be paid out from this compensation scheme? Because the Minister outlined, in his opening address, in regards to the recent example in the US around Silicon Valley Bank and that process, and a lot of this aspect or the anxiety related to banking collapse is not only in their compensation, which, obviously, this will deal with, but the certainty in terms of a time period in which that will be paid out. It’s not clear, necessarily, whether there is any set time frames in which there is an expectation that that will be resolved, but if the Minister could provide any clarity in regards to that, that would be appreciated.

Hon GRANT ROBERTSON (Minister of Finance): I just want to cover off a couple of those points. I mean, the first overall point is obviously that what happens once we pass this piece of legislation is that the final details of the scheme and of the fund will be agreed, and it’s important that the consultation takes place between those who will be regulated by the scheme and those who will be levied and the Reserve Bank itself. I would note that later on in Subpart 7, the Minister is obliged to publish a statement of funding approach, and then Subpart 6 that appears before is around the striking of the levies for the scheme. That includes the Governor-General, by Order in Council, making those regulations for providing the levies. That includes a series of recommendations based on the principles of levies being prescribed on the basis of the lists that are in subclauses (2) and (3) of clause 237, so there are a number of regulations that sit around that that will provide transparency to people around what money is being used for what purpose under the scheme.

In terms of the timing issue for the member Simon Watts, I will just seek a little bit of advice on that, but that is probably a matter that I imagine will be dealt with as the scheme is finally designed. In other jurisdictions, it is very important that people are paid out swiftly and rapidly, and that’s how we get confidence in the scheme.

CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendments to Part 6 set out on Supplementary Order Paper 361 be agreed to.

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

Ayes 107

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

Noes 10

ACT New Zealand 10.

Amendments agreed to.

A party vote was called for on the question, That Part 6 as amended be agreed to.

Ayes 107

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

Noes 10

ACT New Zealand 10.

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

Ayes 73

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

Noes 44

New Zealand National 34; ACT New Zealand 10.

Amendments agreed to.

Part 6 as amended agreed to.

Part 7 Crisis management and resolution

CHAIRPERSON (Greg O’Connor): Members, we come now to Part 7. This is the debate on clauses 256 to 421—crisis management and resolution. The question is that Part 7 stand part.

ANDREW BAYLY (National—Port Waikato): Mr Chair—

CHAIRPERSON (Greg O’Connor): A quick—

ANDREW BAYLY: Sorry, I was just waiting for Shanan Halbert to stand up and give us a contribution. I was just giving the opportunity to members of the Labour Party to actually make a contribution to this debate, so I apologise for being a bit tardy, Mr Chair.

So this is quite an important part of this bill—as the Minister no doubt knows—and I think it is fair to say after the CBL Insurance debacle, it is welcome that we now see, in this part, arrangements for an orderly and planned process if entities get into trouble and there’s a way for the banks to look after it.

I suppose my reading of it is it’s almost like an administration-type arrangement under the auspices of the Reserve Bank without formally going into a receivership situation, which means you’ve got to appoint a receiver; or even liquidation, where it’s subject to different law. My reading of this is this is undertaken where there’s a work-out opportunity or, in fact, there’s such a degree of risk or a potential impact on the financial sector that it is important for the Bank to manage it in an orderly way because it may impact on the standing of New Zealand internationally, but certainly may impact on the way depositors view entities in New Zealand.

So that part of it’s all pretty good. There’s a couple of little things I did want to talk about. Clause 295: “Bank is [the] resolution authority” and “the Bank must act as a resolution authority in relation to the resolution of the licensed deposit taker.” Then it states that the Bank can appoint a resolution manager—and the appointment of the resolution manager is covered in clause 354—which means that that resolution manager—can it be the Bank itself that’s expressly provided for, or in fact can it be someone else that the bank thinks is appropriate?

What may be useful is for the Minister just to set out what is the role of the resolution authority, and what is the role of the manager; and when might be appropriate that the Reserve Bank acts both as the resolution authority, as provided for under clause 295; and the resolution manager, as provided in the subsequent clauses. Because just understanding the context for this and how that comes about, and why we would end up with those sort of situations, would be useful to have an understanding on.

SIMON WATTS (National—North Shore): Thank you very much, Mr Chair. My questions relate to Part 7, clauses 346—which is part of Subpart 7, where the Minister may give directions.

I guess the point of clarity here is that we make a lot of the fact that the Reserve Bank, in particular, sits very much independent from the members of this House and, in particular, the Minister in regards to not taking direct direction. But these aspects of the bill do provide quite wide-ranging powers to the Minister.

I refer specifically to clause 347 in regards to where the Minister may direct the Bank relating to the exercise of resolution power. This can include whether a resolution is actually exercised or not, the manner in which it’s exercised, and the way in which that power is exercised in terms of both the terms and conditions that are set in regards to it, but also, you know, clause 347(f), which refers to—it’s another one of these catch-all statements—“take any other action that is specified to avoid or minimise, or otherwise manage the risk”, which is quite generic.

So I guess I’m seeking clarity from the Minister in regards to the appropriateness of the Minister getting involved to make directions to the Bank, the appropriateness of this, and in what circumstances would that be foreseen and the consideration around the threshold for which the Minister would consider it appropriate to step in to that aspect. Acknowledging the importance of the fact that the Bank is, and does, operate as an independent entity from the Minister in normal business.

Hon GRANT ROBERTSON (Minister of Finance): Both of the questions asked by Mr Bayly and Mr Watts are, in fact, laid out in the bill. I just take Mr Watts’ last statement: it’s very, very clear when one reads clause 346 exactly when this would apply. It wouldn’t be a matter of choice for the Minister at the time if they thought that this was something that they should do; it actually follows on very strongly that this is around public money. It’s the use of the word “and” that will help everyone follow clause 346 through. It has to involve public money and, indeed, that there would be a material risk to the prudent management of public money. That is the circumstances in which a Minister would be involved. Similarly, the role of the resolution authority and the resolution manager are laid out in a variety of clauses in the bill, which are quite easy to read and follow.

CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendments to Part 7 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Part 7 as amended agreed to.

Part 8 Miscellaneous

CHAIRPERSON (Greg O’Connor): Members, we come now to Part 8. This is the debate on clauses 422 to 471 and Schedule 2, “Miscellaneous”. The question is that Part 8 stand part.

The question is that the Minister’s amendments to Part 8 set out on Supplementary Order Paper 361 be agreed to.

Part 8 as amended agreed to.

Part 9 Repeals and amendments to other Acts

CHAIRPERSON (Greg O’Connor): Members, we come now to Part 9. This is the debate on clauses 472 to 490 and Schedule 3, “Repeals and amendments to other Acts”. The question is that Part 9 stand part.

SIMON WATTS (National—North Shore): Thank you very much, Mr Chair. My questions are in regards to the replacement sections that have been inserted under clause 486—in particular, replacement section 25C, inserted by clause 486 of the bill.

So this is “Expenses or capital expenditure in connection with financial institution in serious financial difficulties”. Obviously, the whole point of this bill is to provide a mechanism to deal with this exact scenario. What’s interesting around replacement section 25C(1) in particular is that it provides the powers to the Minister to approve the expenses for capital expenditure in relation to the situation, whether or not there is an appropriation by Parliament available. That’s pretty reasonable in regards to the powers that are being provided in regards to that, because normally in this House the allocation of any capital or expenditures is through a formalised appropriation.

Andrew Bayly: Not always.

SIMON WATTS: Not always, but in these instances, you know, the control environment around that is one in which I’m seeking some clarity from the Minister in regards to a scenario around what that would look like, and the process in which we would expect to ensure that where there isn’t an appropriation by Parliament—what that would look like.

Replacement section 25C(2) refers to “Public money may be spent, without further authority than this section,”—again, linking back to the other aspect. So a little bit of clarity in regards to that aspect and ensuring that Ministers are not off spending money willy-nilly without appropriate controls.

Hon GRANT ROBERTSON (Minister of Finance): I’d never do that. This, effectively, brings into line the regime that’s covered by this Act with what happens in a civil defence or health emergency. So, essentially—under various bits of legislation—it is possible to incur unappropriated expenditure because you just have to do it. You know, there is a major event occurring and there’s no time to come to Parliament and seek that appropriation. This sets up a similar process here. It’s a longstanding issue with the Public Finance Act.

It is limited by way of what is in the replacement section 25B(2), inserted by clause 486—this is obviously an amendment to the Public Finance Act we’re dealing with here—and it has to be in the “situation [where it] is necessary or desirable to do either or both of the following: (i) maintain the stability of the financial system: (ii) maintain the continuity of systemically important activities undertaken by 1 or more regulated entities; and (b) that there is no reasonable prospect of the situation being adequately dealt with to the Minister’s satisfaction in a timely and orderly way other than through exercising the power under section 25C.” So highly exceptional circumstances, the stability of the entire financial system, systemically important activities by a regulated entity—so, essentially, a Government entity being compromised—and that there would be no way of dealing with it under a normal circumstance.

Then, should it happen, replacement section 25C(3) means that we have to report it in the annual financial statements and it has to go through either a Supplementary Estimates, like we had today, or an Appropriation (Confirmation and Validation) Bill. So there’s plenty of checks and balances, but the kind of emergency is a financial emergency akin to a civil defence or a health one. This will make it consistent with those provisions.

ANDREW BAYLY (National—Port Waikato): Yeah, thank you, Minister—that was very useful. Maybe just a slight elaboration: could the Minister contemplate, given the history of New Zealand, what circumstances he may have applied it? For instance, when Bank of New Zealand was in trouble back in the 1980s, I presume that may have been one where we may have applied this. Certainly where the continuity of systemically important activities like the payments in New Zealand was to have trouble—I imagine that would probably lead to this power being exercised. But when you look at the make-up of the banking sector in New Zealand and the deposit-taking sector—obviously, we have four or five very significant banking operations, and then we have a number of smaller deposit takers. Would he envisage exercising these specific rules for a deposit taker who might have less than 1 percent of the market share? So I’m just trying to understand where his views would be that you would cut in, and where it might be, and using history to maybe demonstrate that wisdom that he may have to display—hopefully not in the next three months—but if he were.

Hon GRANT ROBERTSON (Minister of Finance): I don’t think there’s a need to stretch this particular part of the debate out. The clause that I read out, 25B(2) is very clear on the extent of the kind of issue here. It is not a minor or trivial matter; it is a matter where there is a systemically important entity involved or where the entire stability of the financial system is involved. Any Minister would take advice on where that kicks in, but it’s clearly not a minor matter. I’m not going to choose to speak about any specific event at this time.

A party vote was called for on the question, That Part 9 be agreed to.

Ayes 107

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

Noes 10

ACT New Zealand 10.

Part 9 agreed to.

Schedules 1 to 3

CHAIRPERSON (Greg O’Connor): We come to Schedule 1. The question is that the Minister’s amendments to Schedule 1 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Schedule 1 as amended agreed to.

CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendments to Schedule 2 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Schedule 2 as amended agreed to.

CHAIRPERSON (Greg O’Connor): We come to Schedule 3. The question is that the Minister’s amendments to Schedule 3 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Schedule 3 as amended agreed to.

Clauses 1 and 2

CHAIRPERSON (Greg O’Connor): Members, we come now to our final debate: clauses 1 and 2. This is the debate on clauses 1 and 2, title and commencement.

ANDREW BAYLY (National—Port Waikato): It would be useful for the Minister to just identify why, under clause 2(3), the commencement date for “Any part of the Act that has not come into for by”—originally, it was the fifth, and now it’s been amended to “the sixth anniversary of Royal assent”. Maybe it would be useful just for the Minister to state why that has occurred, because that’s obviously important in terms of its implementation date.

Hon GRANT ROBERTSON (Minister of Finance): We’ll let you know.

Clause 1 agreed to.

CHAIRPERSON (Greg O’Connor): The question is that the Minister’s amendments to clause 2 set out on Supplementary Order Paper 361 be agreed to.

Amendments agreed to.

Clause 2 as amended agreed to.

Bill to be reported with amendment.

Bills

Fuel Industry Amendment Bill

In Committee

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

CHAIRPERSON (Greg O’Connor): Members, we come now to the Fuel Industry Amendment Bill. We come first to Part 1.

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

CHAIRPERSON (Greg O’Connor): Leave is sought for that purpose. Is there any objection? There is none. The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part.

STUART SMITH (National—Kaikōura): Well, thank you, Mr Chair. It’s a pleasure to speak on this Fuel Industry Amendment Bill. The National Party doesn’t support this bill. In fact, we see some real risks with this particular bill. Price controls often have perverse effects. If they were a good idea, everything would be controlled—every price would be controlled, rather than it being a very rare event. We saw through the Economic Development, Science and Innovation Committee very little in the way of justification for price controls. There were some significant questions around that.

A good example of where price control doesn’t work is in the UK with the gas market over there, where price caps were brought in with rising wholesale gas prices, and, in fact, it led to widespread failures and a de facto nationalisation of the gas industry over in that area. What’s to say that’s not going to happen here? There certainly hasn’t been a case made for it other than wanting to have central control—unjustifiably, in our view.

But in new section 29A, “Interpretation and overview” inserted by clause 4, it goes through, particularly in new section 29A(2)(a): “the Commission holds an inquiry into whether to regulate the terminal gate prices, and then makes a recommendation to the Minister under section 29G:”. But in new section 29A(2)(d): “for each [of the] regulated terminal gate price (or group of regulated terminal gate prices), the Commission makes a determination under section 29L specifying the pricing principles or [the] pricing methodologies that apply.” So what I would like the Minister to tell us is what the definition is of the pricing principles. What pricing principles are acceptable? What pricing principles are not acceptable? I can’t see any definition in the bill of what those principles are, and I’d really like to hear from that.

It also says “or pricing methodologies that apply.” Again, I would like to know what the definition of those pricing methodologies is, and what would be viewed as good methodologies, what would be viewed as bad methodologies. What would lead to the Minister or the commission recommending to the Minister that price controls be implemented? That is a key part to this piece of legislation, and I think most members would agree that if you’re going to have price controls, that needs to be incredibly well defined. It needs to be beyond reproach.

It’s a significant impost on a free market, having a body like the Commerce Commission reaching into those businesses and actually telling them how to run their day-to-day business by setting a price. How do we know? Because what normally happens is that the market will settle, and the market will settle at a price that might be not the lowest price; they’ll work it out not by collaborating together, but with those sorts of controls in the market you’re not going to find the innovators. The innovations are not going to come to lead to lower prices, which is what, ultimately, the consumers would benefit from and our economy would benefit from, but, instead, we’ll end up with a controlled sector that will have unnecessarily high prices, probably. I think that’s a likely outcome from this particular bill. But if we could have an explanation for what those pricing principles are and what those pricing methodologies are, that might help us understand what was the genesis for this bill and how that’s mechanically going to be worked through so that we can see whether the actual work went in behind this before this came out, or was it a knee-jerk reaction?

There is a thing in the fuel sector known as the Gull effect—that is, where the Gull company goes and sets up in business, the prices drop in that region, which is exactly what a free market does. That’s what happens. Why don’t we allow that to happen? No, no, because we’re going to control it. It’s also Timaru Oil Services, and, in my patch anyway, NPD. They are probably the lowest. They’ve certainly had a lowering effect. All of the fuel companies try to keep up with them, but they have innovative pricing promotions that they put out on quite a regular basis. They email their customers when it’s coming up, and their fuel stations are widely frequented when they’ve got those low-price deals on.

So what I want to know is: will these pricing methodologies and pricing principles preclude companies from doing that? Why would they bother if the price is going to be fixed anyway by the all-knowing Commerce Commission? I think it’s highly unlikely we’ll end up with a very fair pricing regime at all; we’ll end up with more expensive prices. But I’m sure that the Minister’s going to give us a good answer and tell us exactly what those principles are.

Hon JUDITH COLLINS (National—Papakura): I follow on from my good colleague and friend Stuart Smith, who’s asked some really sensible questions. While the Minister’s considering how to answer those, perhaps she could also let the committee know where in the world the imposition of price regulation on a commodity product that we now import entirely has ever worked. She might recall that in the COVID lockdown times, we actually ended up at the bottom of the supply chain and that we lost supply not only so much of fuel but also of many commodities where we were the last ship coming in. All our ships went off to Australian ports, rather than ours, because they had more cargo on board. What’s the guarantee that price fixing by the Commerce Commission would actually not lead to some commodities, such as fuel, suddenly not turning up when it should?

I would have thought that, given that the Government has decided in its—I would have said “wisdom”, but that’s just too generous—has decided on a whim to end the offshore oil and gas exploration and to allow the Marsden Point refinery to close without a whimper—not even a whimper, the company told me. But they are actually now putting us in a difficult position of saying, “And now we’re going to be one of the very few liberal democracies in the world that thinks that a commerce commission, a Government entity, as such, has the right to determine the price of an internationally traded commodity.”

She might be well aware too that in some parts of the world where this has been tried, it can lead to all sorts of issues around supply. But also, as my colleague Stuart Smith pointed out, the issue around not actually encouraging competition, because certainly I am one of the many people who has the Gaspy app on my phone and I look at the fuel prices of various places when I’m going to fill up my car, and I make an informed decision based on the prices and what it is that I’m paying for and where I am and where those fuel companies are based. I’d like to hear from the Minister about where this has been tried and where it has worked. Has it led to less competition or more competition? Has it led to more supply or less supply?

The other thing, while the Minister is thinking of answers to these questions, she might like to answer: since the fuel taxes that are paid on fuel are, in fact, such a large proportion of the cost of fuel, and also to those of us who buy our fuel, she might want to ask whether the Government is going to continue down the path of taxing it at the level that it is, given that I note from 1 July that the rebate that had been granted on the fuel taxes is coming off and we are all expecting, those of us who pay for our own fuel, that our prices are going to go up around 29c a litre. None of that is money that is going to the fuel companies; all of it is money going to the Government’s coffers. So I think, if we’re going to have a restriction, or any threat of restriction, from the Commerce Commission—not always an entity that has always covered itself in glory on these matters—perhaps we might wonder whether or not they might consider, as the Government for the few months that they’re going to be there, whether or not they’d like to bring their own taxes down.

Hon Dr MEGAN WOODS (Minister of Energy and Resources): There are a couple of questions in there that I’d like to address with this contribution. A member asked about the principles and methodologies that lie behind this.

But before I get into that, I think it’s important to go through exactly what the purpose of this bill is, where it came from, and why it is happening, very briefly. This, of course, is not about a regime to set and to have Government setting the price of petrol in the ordinary course of events; what it is is providing a regulatory backstop where there is a consideration that the market is not functioning in a competitive way to the benefit of consumers. Of course, what we’re doing here was a recommendation of the fuel market study that the Commerce Commission carried out. Mr Smith talked at length about the Gull effect. Well, Gull have said that they wouldn’t be able to operate in parts of the country without the terminal gate pricing regime that was put in place under the original piece of legislation. They’ve come out and explicitly said that. The ability for us to actually have a more competitive South Island fuel market is down to the changes that have been affected by the legislation that has been put in place.

In terms of the questions around the principles and methodology, there was a piece of work that consciously decided that you could not get too prescriptive around what that would be. I’ll go through the section of the Act that sets out what the criteria for decision making of when to trigger the backstop comes through. But in terms of being able to anticipate every set of circumstances and prescribe that in the legislation, it was not the best way through.

But I will advise Mr Smith to turn to new section 29L, inserted by clause 4, of the bill, and about the commission determination about how the regulation applies. So in (1A) of that new section, it talks about “In considering whether the Act’s purpose is promoted in making a determination, the Commission must take into account the outcomes that would be expected in a competitive market, including wholesale suppliers’ incentives to invest to meet the demand of end users of engine fuel products.” So the scenario that the Hon Judith Collins was talking about in terms of the driving out competition wouldn’t apply, because this is triggering if there is a situation where it is demonstrably that a company is working outside of what you’d expect in a competitive market. It gives the Commerce Commission the ability to investigate that, to use the tools that it has at its disposal, and see whether that is the case.

I’ll also briefly address the points that the Hon Judith Collins made about security of supply. I guess the other important piece of work that we have been doing since the commercial decision was made to close down Marsden Point, of course, is about our onshore stockholdings. That’s not in this bill; that is a separate piece of legislation. But as that honourable member will know, who herself is a former Minister of Energy, that Marsden Point simply was not set up to refine the light crudes that we produce here in New Zealand. In order to do that, there would have had to have been a substantial reconfiguration of Marsden Point. I’m always interested when I hear the National Party discuss this, because I never once heard them suggest that they were going to put up the hundreds of millions of dollars to buy it and make that conversion. But if that’s a point of debate that they want to continue through, I think it would be an interesting one for us to have. Thank you, Mr Chairman.

SIMON COURT (ACT): Thank you, Mr Chair, and thank you, Minister, for the opportunity to ask some questions about this bill. Now, what is the problem that this bill tries to solve? Apparently, some fuel companies might set wholesale fuel prices that the Minister considers excessive or that somebody at the Commerce Commission decides, based on principles unknown, that a fuel company is charging an excessive amount for petrol and diesel at the terminal gate.

Well, we have terminal gate pricing. I’ve just jumped online and had a look at Z Energy and Mobil. If I was a registered terminal gate customer, I could send my truck and trailer there right now to pick up a load of gas from Wiri or, if I was in the South Island, from Timaru or Dunedin, and I know what the terminal gate price is. Now, that’s not to say I couldn’t get a better price if I was a bigger customer and I was filling up dozens and dozens of diggers and trucks a day, because terminal gate pricing is just one mechanism to indicate what the wholesale price is generally. But that’s not to say that some customers can’t get better deals because they buy more fuel. Maybe they pay on seven-day terms rather than on 28-day terms; maybe they’re just more trustworthy and have a better credit rating so they get better prices.

What is the problem this Government is trying to solve with this bill? Well, when I look at the wholesale price of fuel right now, for 91 petrol, the importer’s cost is $1.018, and this is according to the Ministry of Business, Innovation and Employment’s (MBIE) own weekly fuel price monitoring data, which is available to anybody who wants to jump on the MBIE website and search for it. So the cost of 91 petrol at the moment is about $1.01 per litre to import. The margin on that, the importer’s margin, is about 32.9c, but remember that’s margin; it’s not profit margin. They still have to pay costs out of that.

Then the ETS—the emissions trading scheme—price, which means that everybody who fills up with petrol and diesel pays for their emissions; the emissions trading scheme price on a litre of 91 is 13.8c per litre. The fuel excise duty is 86.3c per litre, and the GST is 30.6c per litre. So for a litre of 91 petrol, it costs $1.01 to get into the country. The importer makes 32c a litre gross, but the Government takes $1.30 a litre—the Government takes $1.30 a litre, and the importer’s margin is 32c. So if there was a problem with the cost of fuel, this Government just needs to walk up to a very small mirror, because it is the problem—a small mirror will show the Government that it is the problem.

So what would make New Zealanders feel better about paying this fuel tax—this $1.30 a litre? Is it because they get world-class roads? Is it because there’s no potholes on their journey? Even today, State Highway 1, Dome Valley, was closed due to a slip. Trucks and private vehicles were being rerouted along roads that New Zealand Transport Agency has said are unsuitable for heavy vehicles. How many times has Dome Valley been closed? Is this climate change? Is it excessive rainfall caused by climate change? Did this Government declare a nuclear-free moment—that climate change was this generation’s nuclear-free moment, and, if so, why aren’t they spending some of this fuel tax money they collect from motorists on actually fixing roads? Or maybe the problem’s not with the wholesale fuel price; maybe it’s that the public have lost trust in this Government to spend money on important things, things that New Zealanders need, like roads so they can get around safely, that don’t wash out or have rocks fall on to them every time there is a shower of rain?

So do you think it’s bad now that the price of 91 petrol—$2.65 a litre, roundabout, when you add up the stats on MBIE’s weekly fuel price monitor—that will soon go up 25c a litre; on 30 June the Government’s 25c a litre cut to fuel excise duty expires and so the petrol price that Kiwis will pay at the pump jumps from $2.65 to $2.90 a litre. So, Minister, a question: do you think Kiwis feel like they’re getting value for money for the $1.30 a litre, soon to be $1.55 a litre that they’re paying this Government to provide transportation services? Are Kiwis getting value for money—motorists getting value for money, Minister? Secondly—

CHAIRPERSON (Greg O’Connor): Mr Court, now, you’ve referred to the bill but you’re not talking to it. Can we come back to the bill; you’ve had a pretty good run. We are hearing it as one part so I’ve been fairly generous, but now you’re into your second five-minute slot; let’s talk about the bill, please.

SIMON COURT: Thank you, Mr Chair. So the question is: for $1.30 a litre, what additional increase in the wholesale fuel price—currently $1.01 per litre—how much would it have to move, to trigger the Government or the Commerce Commission, before they would look at the margin and they would say, “Crikey, a margin’s 32 cents a litre now.”? How much would that margin have to increase, Minister, before that would trigger a review of fuel prices and potential imposition of a wholesale price? Minister.

Hon Dr MEGAN WOODS (Minister of Energy and Resources): I’ll answer the question that came at the end of that contribution. I refer the member to new section 29C of the legislation about “When terminal gate prices may be regulated”. It’s for the relevant specified engine fuel and bulk storage facility that were above what would be expected in a competitive market. Now, obviously, in a competitive market, you’re going to have a broad spread of prices. Everybody can see when they’re driving around their own patch that prices at self-service petrol stations are much lower than they are at full-service petrol stations. There will also, therefore, be differences in terminal gate pricing in different places, but there are tests that need to be applied about what can be reasonably expected in a competitive market. This is about the functioning of that competitive market.

We go then through to 29D, which specifies and lays out how the inquiry would be triggered and, then, through to 29E, the “Commission inquiry into particular terminal gate prices”. So there are various ways that it can be triggered: the commission can do it itself; the Minister can write to the commission and request it, but then there has to be an inquiry—much like we have with the fuel market study. It’s not just the commission makes a decision that they think that there’s some anti-competitive behaviour and, therefore, can regulate the price at the terminal gate; there are specified processes that need to be gone through.

STUART SMITH (National—Kaikōura): Thank you, Mr Chair. Well, the Minister of Energy and Resources did attempt to answer the question I asked about pricing principles and methodologies, but she didn’t actually answer the question. All we found is—from her answer, to paraphrase her—they didn’t want too much control to limit their scope for making an inquiry and what actually defined the principles and the pricing methodologies.

But I’d turn your attention to new section 29C, inserted by clause 4, “When terminal gate prices may be regulated”, because it goes, “The Commission may make a recommendation that price regulation should be imposed on terminal gate prices only if it is satisfied that the relevant wholesale supplier has posted terminal gate prices, for the relevant specified engine fuel and bulk storage facility, that were above what would be expected in a competitive market.” In order to do that, you have to know—not you, of course, Mr Chair, but the Commerce Commission—would have to know what would be an expected price in a competitive market. One would expect that if they were to know that, they would need to know the principles and the methodologies that were utilised by other companies to ascertain those prices. But we didn’t hear that from the Minister, so that doesn’t seem like that’s part of the scope of the commission’s remit to investigate the market as to whether it’s competitive or not.

This is giving almost like “Henry VIII” - type powers to the commission on a whim, essentially, because either the Minister, in writing, or the commission can decide to undertake an inquiry themselves. They can go out and do it. If they say it’s not competitive, it’s not competitive. If they say the pricing methodologies are not good, they’re not good. If the principles that are used are not acceptable to their standards, they’re not acceptable. But any other type of regulation like this, we would all expect—I think very fair to expect—a definition that would be robust and would be able to be anchored in the legislation so that those companies that are subject to this, and the rest of the market in fact, can go back and look at that and say, “Well, actually, that’s fair enough, they’re right. The commission is right, that company is not sticking to good market practices.”, or not. But there’s nothing; there’s absolutely nothing. It was criticised by submitters that there was no definition. It’s, I think, criticised by any right-thinking business people that you would expect, and, I think, the legal professional as well. Why would you have something that’s not defined like that? That’s just unbelievable. Everyone has the right to know the law—you don’t have to know it, but you should be able to know it if you want to—and yet you can’t in this. We can’t; it’s just ridiculous.

So I don’t think that’s a good enough explanation, Minister. Your officials must surely have a better explanation than that. I mean, we’re talking about a serious issue here, and, going on and giving an example, it says, “However, if only 1 supplier at 1 bulk storage facility has posted terminal gate prices for diesel that were above what would be expected in a competitive market, the Commission may recommend regulation only in respect of the diesel terminal gate prices”. But how much difference does there have to be to trigger that? And I think the Minister alluded to not expecting all the companies to have the same prices in the same place, but it seems to me that that’s practically what they’re going to do. How much difference would be expected to trigger a non-competitive market, Minister? That’s what I’d like to know. Thank you.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. Look, first of all, I’m going to congratulate the Minister for doing Supplementary Order Paper 364, because at least the Minister has attempted to identify a couple of the costs: namely there is, publicly listed, the total excise duty and the total amount to be paid within the current market price of the emissions trading scheme. So it shows you can do some of it, but I think what my good colleague Mr Smith is talking about is very, very relevant. I used to chair a shipping company and we used to ship fuel, and I also sold New Zealand’s largest fuel bunker business some years ago, which was sold to a company called Stolt-Nielsen, on behalf of the owners from Norway. So I do have a little bit of understanding of the cost structure and the way the market works, and I find it absurd that the Minister is way up there in the stratosphere talking in this bill about, sort of—not even quite principles, because it’s not quite clear, when I look at new section 29D, inserted by clause 4, it is just a statement of intent, not even dealing with the issue of principles.

So, first of all, if we’re bringing fuel from now Singapore, which is the most likely place to bring fuel from now, the size of the ship will matter quite considerably. And when you get it here, you’ve also then got the issue of how you transport it to, maybe where Mr Smith comes from in Blenheim—whether you’re going to use the local shipping fleet or whether you’re going to ship it by trucks, and of course, both have quite different cost structures. So, even in the shipping side of the logistics chain, there are considerable differences, and I know that because we had to look at where we sourced the fuel from, and then how we shipped it.

The second thing is, actually, even around the logistics and the maintenance of bulk fuel tanks, whilst they do last for a long period of time, there are maintenance costs associated with them. Someone with an embedded advantage where they already have existing fuel tanks—maybe being modernised, maybe not—that will have a considerable bearing on the cost structure of the fuel container costs, so that’s another driver. And also the driver for the bulk fuel container business is how often they’re turning over stock, because, of course, the stock is a major part of that business. So all of those things—you know, if you’re from business, you understand these concepts around stock and the cost of holding stock. So, even if you’ve got a new operation vs an old one, there will be considerable differences in terms of the maintenance costs and all of those associated things.

Then you’ve got a third overlay, which is that people act differently in different times in markets, and you will get some people who choose to put a discount on, because, at that period in time, they want to buy a market share for a reason that—maybe they’ve got really old stock that they want to get rid of and therefore they will mark down the price and it’s perceived that they’re driving down the price. So those happen from time to time, and it happens every day in business. So there are three identified clumps of costs, and for someone to divinely come up with an assertion that “Hey, this is out of order”—that one particular supplier’s costs are so different that they are now going to be brought under this regime is a tall ask for the commission. I think, at best, the commission will be able to ascertain whether, in fact, the price of fuel that is acquired or purchased in Singapore—whether we’re paying differing amounts for volume and the price that that fuel is delivered to New Zealand—but beyond that, that is a really difficult undertaking to be able to make on behalf of the commission, and that’s why I’m so disappointed reading this bill.

I haven’t been part of the select committee, but I can understand why this is looking like just a bill to try and pass something to make us look good, but it provides no guidance; no instructions in terms of how the Commerce Commission will do its job, and certainly not for market participants.

SIMON COURT (ACT): Thank you, Mr Chair. Just following on from my colleague Stuart Smith’s comments—Minister, I’m really, really puzzled as to how a lack of competition in terminal gate pricing could possibly even be determined by the commission. When I look at the terminals shown here [Holds up an electronic tablet]—and this is available for download; this is available online right now—there is only one terminal in Northland, at Marsden Point; there is one in Auckland at Wiri; one in Napier, Nelson, Christchurch, Dunedin; two in Timaru, Wellington, and Tauranga. Most of the country, the major metros, have only one terminal—how is it possible to determine whether the price posted at the gate doesn’t reflect a competitive wholesale market? There’s only one terminal—I can’t send my truck and trailers down the road to fill up at someone else’s terminal. I can’t drive past the terminal and compare it to the next one down the road to get a feel as if someone’s paying too much. It just sounds completely impractical, Minister. It sounds like a response to the wrong problem.

Now, Minister, I don’t think it’s worthwhile, really, debating the merits of the bill, because, if there’s a change of Government, the ACT Party will act to repeal it, because we’re fundamentally opposed to the Government setting prices. But I do want to offer you an opportunity to comment on the Supplementary Order Paper on the amendment to the bill that ACT has proposed, that the terminal gate price [Refers to electronic tablet]—and here we have an example of terminal gate pricing: premium 95 $2.32; regular 91 $2.09; diesel $1.59. That’s at Marsden Point. What ACT is proposing—in an amendment to clause 6 in Part 2 of the bill—is that the terminal gate price must publicly list, as part of the overall price, the total excise duty and excise equivalent duty included in the price and cents per litre. That’s the amount of fuel tax that people will pay on that product and the total amount likely to be paid at the current market price of New Zealand units under the emissions trading scheme. It’s the total cost per litre that Kiwis will pay if they buy that fuel at a wholesale price on top of the wholesale price and the importers margin.

So, Minister, could you just firstly give your perspective: how are we to know whether competition is in fact insufficient when there is only one terminal in most of the metros? And secondly, Minister, will you support ACT’s proposed amendment that terminal gate pricing should include excise duty, fuel tax, and the emissions trading scheme cost? Thank you, Minister.

Hon Dr MEGAN WOODS (Minister of Energy and Resources): I will take a quick call to again address questions posed by Mr Court and Mr Smith around what is prescribed in new section 29C of the bill, inserted by clause 4, about when, and the test of when the terminal gate price may be regulated—what is the trigger for that happening? One of the things that I do point members to is that this is actually a recommendation of our market study into fuel pricing to protect consumers. I’m hearing a whole lot of arguments coming from that side of the Chamber about how we have to protect the oil companies and the fuel companies. What I’ve really considered is how we ensure that consumers are getting a fair deal when they go to the pump.

So prices that are not consistent with what is expected in a competitive market are terminal gate prices that are higher than would be experienced if competition were causing downward pressure on those prices. Since we began monitoring—and the Commerce Commission has the tools and the powers to begin monitoring this because of changes that we made—what we’ve seen is that early analysis indicates that terminal gate prices are being set higher than expected compared to average fixed wholesale contract prices and terminal gate prices in Australia. That’s when you adjust for all the differences. So I think what we’re seeing is that there needs to be vigilance, there needs to be the transparency around the pricing so it can be monitored, and if consumers are not getting a fair deal then there needs to be a way to deal with that.

I will also just answer Mr Court’s questions around whether or not the Government will be supporting his Supplementary Order Paper (SOP) 364. And I thank the member for taking the time to put the work in to put up an SOP, but we won’t be supporting it on this occasion and there’s some good reasons for that. The member is suggesting that we add into that the GST and the emissions trading scheme charging. This would not be meaningful in terms of the transparency. There are a number of other costs, if you were looking for full transparency, that you’d want to put in there. Some members have alluded to some of these as the complexity, and I think Mr Bayly talked about this, and this is something of course that the Commerce Commission has the powers to take into account, which is the full context—the operating costs of the terminal in its particular location.

We also have the capital costs and the way in which they can be fairly attributed in a working competitive market. These are all things that you would not be—you would not be displaying all of this. You also wouldn’t be putting in place the profit margins. So I’m sorry, Mr Court, but the advice that I’ve got is that although you could argue that there could be greater transparency by displaying all of these things, this would cause an increase in the regulatory burden on these businesses, and not something this Government is prepared to do.

MELISSA LEE (National): Thank you very much, Mr Chair. I’ve been sitting here listening to some of the pertinent questions that my colleagues have actually asked the Minister. I’m just a little bit baffled. In relation to new section 29C, it is about, “terminal gate prices only if it is satisfied that the relevant wholesale supplier has posted terminal gate prices, for the relevant specified engine fuel and bulk storage facility, that were above what would be expected in a competitive market.” So it could potentially be one supplier out of the five major ones—and there are a couple of others who actually do, in fact, supply—and I’d have thought that we wanted competitive pricing. If one goes over, doesn’t the market actually fix that anyway? The wholesale market would actually decide that they’re not going to purchase a very high-priced wholesaler. I thought the market actually fixes that problem.

Why are we wasting time wanting to make an inquiry? The Minister potentially could actually, on 29D, have an inquiry triggered. I know that my colleagues have talked about the trigger and the measurement, but I just don’t understand where this is actually going. I just thought if you leave it to the market, it’d be sorted. It’s not like we have two wholesalers, one who is going higher. Well, good luck to the one who’s actually supplying it cheaper, because they’ll get all of the customers. If one of them is actually selling it for a much, much more expensive price, that’s called market pricing. So if the market pricing is not complied to and with, we’re going to trigger an inquiry by the Commerce Commission or the Minister writing.

So I’m just trying to understand what the Minister’s reasoning is for actually doing this, because I am still really, really baffled. It’s sort of like saying, “Oh well, if you own a house—one in Christchurch and one in Auckland—the same house but one of them actually happens to sell at a much more higher price, let’s do an inquiry.” Well, it is the market that determines the price. If someone actually decides to sell it for a much, much higher price, the customer base would decide not to do it.

So I think it would be very, very pertinent if the Minister could actually tell us the answer in terms of how the Minister, on 29D, will decide—(1)(a)—where she says, “The Commission … must hold an inquiry if required to do so by the Minister in writing”. I’m trying to understand what will trigger the Minister to write to the commission, to do the inquiry, and what will be the reasoning behind it.

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

STUART SMITH (National—Kaikōura): Point of order. Thank you, Mr Chair. We did not object when they moved to take the whole bill as one part, and—

CHAIRPERSON (Greg O’Connor): Mr Smith, are you predicting what I was going to do?

STUART SMITH: No, I wasn’t. I was just going to say that in the spirit of an informed decision, we did that on the basis—

CHAIRPERSON (Greg O’Connor): Well, Mr Smith, I don’t need any advice, thank you. I will say to Ms Lee that coming in late doesn’t mean that a question hasn’t already been asked, which it has. However, the time has come for me to report progress on this bill.

Progress to be reported.

House resumed.

Report of Committee of the whole House

Report of Committee of the whole House

CHAIRPERSON (Greg O’Connor): Madam Speaker, the committee has further considered the Deposit Takers Bill and reports it with amendment. The committee has also considered the Fuel Industry Amendment Bill and reports progress. I move, That the report be adopted.

Motion agreed to.

Report adopted.

ASSISTANT SPEAKER (Hon Jenny Salesa): The Deposit Takers Bill is set down for third reading next sitting day, and the Fuel Industry Amendment Bill is set down for further consideration in committee next sitting day. The House stands adjourned until 2 p.m. tomorrow. Pō mārie.

The House adjourned at 9.59 p.m.